Delaware | 000-50350 | 77-0419172 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description | |
99.1 | Press Release, dated February 4, 2016 |
• | Fourth quarter 2015 net revenue of $360.9 million, as compared to $353.2 million in the comparable prior year quarter, increase of 2.2%. |
• | Fourth quarter 2015 GAAP net income per diluted share of $0.66, as compared to $1.16 net loss per diluted share in the comparable prior year quarter. |
◦ | Fourth quarter 2015 non-GAAP net income per diluted share of $0.83, as compared to $0.65 in the comparable prior year quarter. |
• | 2015 net revenue of $1.30 billion, as compared to $1.39 billion in 2014, decrease of 6.7%. |
• | 2015 GAAP net income per diluted share of $1.44, as compared to $0.24 in 2014. |
◦ | 2015 non-GAAP net income per diluted share of $2.23, as compared to $2.54 in 2014. |
• | Company expects first quarter 2016 net revenue to be in the range of $290 million to $305 million, with non-GAAP operating margin in the range of 9.5% to 10.5%. Additionally, the Company expects the non-GAAP tax rate to be approximately 34%. |
NETGEAR, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands) |
(Unaudited) |
December 31, 2015 | December 31, 2014 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 181,945 | $ | 141,234 | |||
Short-term investments | 96,321 | 115,895 | |||||
Accounts receivable, net | 290,642 | 275,689 | |||||
Inventories | 213,118 | 222,883 | |||||
Deferred income taxes | — | 29,039 | |||||
Prepaid expenses and other current assets | 39,117 | 38,225 | |||||
Total current assets | 821,143 | 822,965 | |||||
Property and equipment, net | 22,384 | 29,694 | |||||
Intangibles, net | 48,947 | 66,230 | |||||
Goodwill | 81,721 | 81,721 | |||||
Other non-current assets | 76,374 | 48,077 | |||||
Total assets | $ | 1,050,569 | $ | 1,048,687 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 90,546 | $ | 106,357 | |||
Accrued employee compensation | 27,868 | 21,588 | |||||
Other accrued liabilities | 166,282 | 143,742 | |||||
Deferred revenue | 29,125 | 30,023 | |||||
Income taxes payable | 1,951 | 2,406 | |||||
Total current liabilities | 315,772 | 304,116 | |||||
Non-current income taxes payable | 14,444 | 15,252 | |||||
Other non-current liabilities | 11,643 | 7,754 | |||||
Total liabilities | 341,859 | 327,122 | |||||
Stockholders' equity: | |||||||
Common stock | 33 | 35 | |||||
Additional paid-in capital | 513,047 | 454,144 | |||||
Accumulated other comprehensive income | 3 | 38 | |||||
Retained earnings | 195,627 | 267,348 | |||||
Total stockholders' equity | 708,710 | 721,565 | |||||
Total liabilities and stockholders' equity | $ | 1,050,569 | $ | 1,048,687 |
NETGEAR, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands, except per share and percentage data) |
(Unaudited) |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2015 | September 27, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||||||
Net revenue | $ | 360,863 | $ | 341,893 | $ | 353,182 | $ | 1,300,695 | $ | 1,393,515 | |||||||||
Cost of revenue | 255,447 | 245,566 | 252,708 | 933,016 | 995,597 | ||||||||||||||
Gross profit | 105,416 | 96,327 | 100,474 | 367,679 | 397,918 | ||||||||||||||
Gross margin | 29.2 | % | 28.2 | % | 28.4 | % | 28.3 | % | 28.6 | % | |||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 23,373 | 21,572 | 22,908 | 86,499 | 90,902 | ||||||||||||||
Sales and marketing | 39,256 | 35,923 | 39,644 | 146,794 | 157,017 | ||||||||||||||
General and administrative | 12,121 | 11,803 | 11,557 | 45,313 | 46,552 | ||||||||||||||
Restructuring and other charges | 14 | 1,016 | 19 | 6,398 | 2,209 | ||||||||||||||
Litigation reserves, net | 8 | — | (1,265 | ) | (2,682 | ) | (1,011 | ) | |||||||||||
Goodwill impairment charges | — | — | 74,196 | — | 74,196 | ||||||||||||||
Total operating expenses | 74,772 | 70,314 | 147,059 | 282,322 | 369,865 | ||||||||||||||
Income (loss) from operations | 30,644 | 26,013 | (46,585 | ) | 85,357 | 28,053 | |||||||||||||
Operating margin | 8.5 | % | 7.6 | % | (13.2 | )% | 6.6 | % | 2.0 | % | |||||||||
Interest income | 111 | 65 | 79 | 295 | 253 | ||||||||||||||
Other income (expense), net | (21 | ) | (199 | ) | 544 | (88 | ) | 2,455 | |||||||||||
Income (loss) before income taxes | 30,734 | 25,879 | (45,962 | ) | 85,564 | 30,761 | |||||||||||||
Provision (benefit) for income taxes | 8,927 | 10,780 | (5,609 | ) | 36,980 | 21,973 | |||||||||||||
Net income (loss) | $ | 21,807 | $ | 15,099 | $ | (40,353 | ) | $ | 48,584 | $ | 8,788 | ||||||||
Net income (loss) per share: | |||||||||||||||||||
Basic | $ | 0.68 | $ | 0.47 | $ | (1.16 | ) | $ | 1.47 | $ | 0.25 | ||||||||
Diluted | $ | 0.66 | $ | 0.47 | $ | (1.16 | ) | $ | 1.44 | $ | 0.24 | ||||||||
Weighted average shares used to compute net income (loss) per share: | |||||||||||||||||||
Basic | 32,275 | 31,979 | 34,726 | 33,161 | 35,771 | ||||||||||||||
Diluted | 33,110 | 32,335 | 34,726 | 33,788 | 36,445 |
NETGEAR, INC. |
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES |
(In thousands, except percentage data) |
(Unaudited) |
STATEMENT OF OPERATIONS DATA: |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2015 | September 27, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||||||
GAAP gross profit | $ | 105,416 | $ | 96,327 | $ | 100,474 | $ | 367,679 | $ | 397,918 | |||||||||
Amortization of intangibles | 2,394 | 2,394 | 2,625 | 9,884 | 10,488 | ||||||||||||||
Stock-based compensation expense | 376 | 358 | 504 | 1,566 | 2,037 | ||||||||||||||
Losses on inventory commitments due to restructuring | — | — | — | 407 | — | ||||||||||||||
Non-GAAP gross profit | $ | 108,186 | $ | 99,079 | $ | 103,603 | $ | 379,536 | $ | 410,443 | |||||||||
Non-GAAP gross margin | 30.0 | % | 29.0 | % | 29.3 | % | 29.2 | % | 29.5 | % | |||||||||
GAAP research and development | $ | 23,373 | $ | 21,572 | $ | 22,908 | $ | 86,499 | $ | 90,902 | |||||||||
Stock-based compensation expense | (956 | ) | (877 | ) | (1,038 | ) | (3,451 | ) | (4,916 | ) | |||||||||
Non-GAAP research and development | $ | 22,417 | $ | 20,695 | $ | 21,870 | $ | 83,048 | $ | 85,986 | |||||||||
GAAP sales and marketing | $ | 39,256 | $ | 35,923 | $ | 39,644 | $ | 146,794 | $ | 157,017 | |||||||||
Amortization of intangibles | (1,771 | ) | (1,771 | ) | (1,771 | ) | (7,085 | ) | (7,085 | ) | |||||||||
Stock-based compensation expense | (1,184 | ) | (1,173 | ) | (1,409 | ) | (5,022 | ) | (6,168 | ) | |||||||||
Non-GAAP sales and marketing | $ | 36,301 | $ | 32,979 | $ | 36,464 | $ | 134,687 | $ | 143,764 | |||||||||
GAAP general and administrative | $ | 12,121 | $ | 11,803 | $ | 11,557 | $ | 45,313 | $ | 46,552 | |||||||||
Stock-based compensation expense | (1,792 | ) | (1,703 | ) | (1,837 | ) | (6,786 | ) | (6,893 | ) | |||||||||
Acquisition related expense | — | — | — | — | (8 | ) | |||||||||||||
Non-GAAP general and administrative | $ | 10,329 | $ | 10,100 | $ | 9,720 | $ | 38,527 | $ | 39,651 | |||||||||
GAAP total operating expenses | $ | 74,772 | $ | 70,314 | $ | 147,059 | $ | 282,322 | $ | 369,865 | |||||||||
Amortization of intangibles | (1,771 | ) | (1,771 | ) | (1,771 | ) | (7,085 | ) | (7,085 | ) | |||||||||
Stock-based compensation expense | (3,932 | ) | (3,753 | ) | (4,284 | ) | (15,259 | ) | (17,977 | ) | |||||||||
Restructuring and other charges | (14 | ) | (1,016 | ) | (19 | ) | (6,398 | ) | (2,209 | ) | |||||||||
Acquisition related expense | — | — | — | — | (8 | ) | |||||||||||||
Litigation reserves, net | (8 | ) | — | 1,265 | 2,682 | 1,011 | |||||||||||||
Goodwill impairment charges | — | — | (74,196 | ) | — | (74,196 | ) | ||||||||||||
Non-GAAP total operating expenses | $ | 69,047 | $ | 63,774 | $ | 68,054 | $ | 256,262 | $ | 269,401 |
NETGEAR, INC. |
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED) |
(In thousands, except percentage data) |
(Unaudited) |
STATEMENT OF OPERATIONS DATA (CONTINUED): |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2015 | September 27, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||||||
GAAP operating income (loss) | $ | 30,644 | $ | 26,013 | $ | (46,585 | ) | $ | 85,357 | $ | 28,053 | ||||||||
Amortization of intangibles | 4,165 | 4,165 | 4,396 | 16,969 | 17,573 | ||||||||||||||
Stock-based compensation expense | 4,308 | 4,111 | 4,788 | 16,825 | 20,014 | ||||||||||||||
Restructuring and other charges | 14 | 1,016 | 19 | 6,398 | 2,209 | ||||||||||||||
Acquisition-related expense | — | — | — | — | 8 | ||||||||||||||
Losses on inventory commitments due to restructuring | — | — | — | 407 | — | ||||||||||||||
Litigation reserves, net | 8 | — | (1,265 | ) | (2,682 | ) | (1,011 | ) | |||||||||||
Goodwill impairment charges | — | — | 74,196 | — | 74,196 | ||||||||||||||
Non-GAAP operating income | $ | 39,139 | $ | 35,305 | $ | 35,549 | $ | 123,274 | $ | 141,042 | |||||||||
Non-GAAP operating margin | 10.8 | % | 10.3 | % | 10.1 | % | 9.5 | % | 10.1 | % | |||||||||
GAAP other income (expense), net | $ | (21 | ) | $ | (199 | ) | $ | 544 | $ | (88 | ) | $ | 2,455 | ||||||
Gain on litigation settlements | — | — | — | — | (2,800 | ) | |||||||||||||
Non-GAAP other income (expense), net | $ | (21 | ) | $ | (199 | ) | $ | 544 | $ | (88 | ) | $ | (345 | ) | |||||
GAAP net income (loss) | $ | 21,807 | $ | 15,099 | $ | (40,353 | ) | $ | 48,584 | $ | 8,788 | ||||||||
Amortization of intangibles | 4,165 | 4,165 | 4,396 | 16,969 | 17,573 | ||||||||||||||
Stock-based compensation expense | 4,308 | 4,111 | 4,788 | 16,825 | 20,014 | ||||||||||||||
Restructuring and other charges | 14 | 1,016 | 19 | 6,398 | 2,209 | ||||||||||||||
Acquisition-related expense | — | — | — | — | 8 | ||||||||||||||
Losses on inventory commitments due to restructuring | — | — | — | 407 | — | ||||||||||||||
Litigation reserves, net | 8 | — | (1,265 | ) | (2,682 | ) | (1,011 | ) | |||||||||||
Goodwill impairment charges | — | — | 74,196 | — | 74,196 | ||||||||||||||
Gain on litigation settlements | — | — | — | — | (2,800 | ) | |||||||||||||
Tax effect and tax related adjustments | (2,800 | ) | (2,652 | ) | (18,898 | ) | (11,051 | ) | (26,477 | ) | |||||||||
Non-GAAP net income | $ | 27,502 | $ | 21,739 | $ | 22,883 | $ | 75,450 | $ | 92,500 |
NETGEAR, INC. |
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED) |
(In thousands, except per share data) |
(Unaudited) |
STATEMENT OF OPERATIONS DATA (CONTINUED): |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2015 | September 27, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||||||
NET INCOME (LOSS) PER DILUTED SHARE: | |||||||||||||||||||
GAAP net income (loss) per diluted share | $ | 0.66 | $ | 0.47 | $ | (1.16 | ) | $ | 1.44 | $ | 0.24 | ||||||||
Amortization of intangibles | 0.13 | 0.13 | 0.12 | 0.50 | 0.48 | ||||||||||||||
Stock-based compensation expense | 0.13 | 0.13 | 0.14 | 0.50 | 0.55 | ||||||||||||||
Restructuring and other charges | 0.00 | 0.03 | 0.00 | 0.19 | 0.06 | ||||||||||||||
Acquisition-related expense | — | — | — | — | 0.00 | ||||||||||||||
Losses on inventory commitments due to restructuring | — | — | — | 0.01 | — | ||||||||||||||
Litigation reserves, net | 0.00 | — | (0.04 | ) | (0.08 | ) | (0.03 | ) | |||||||||||
Goodwill impairment charges | — | — | 2.10 | — | 2.04 | ||||||||||||||
Gain on litigation settlements | — | — | — | — | (0.08 | ) | |||||||||||||
Tax effect and tax related adjustments | (0.09 | ) | (0.09 | ) | (0.53 | ) | (0.33 | ) | (0.72 | ) | |||||||||
Non-GAAP net income per diluted share * | $ | 0.83 | $ | 0.67 | $ | 0.65 | $ | 2.23 | $ | 2.54 | |||||||||
Shares used in computing GAAP net income (loss) per diluted share | 33,110 | 32,335 | 34,726 | 33,788 | 36,445 | ||||||||||||||
Shares used in computing non-GAAP net income per diluted share | 33,110 | 32,335 | 35,348 | 33,788 | 36,445 |
SUPPLEMENTAL FINANCIAL INFORMATION |
(In thousands, except per share data, DSO, inventory turns, weeks of channel inventory, headcount and percentage data) |
(Unaudited) |
Three Months Ended | |||||||||||||||||||
December 31, 2015 | September 27, 2015 | June 28, 2015 | March 29, 2015 | December 31, 2014 | |||||||||||||||
Cash, cash equivalents and short-term investments | $ | 278,266 | $ | 263,848 | $ | 212,915 | $ | 247,405 | $ | 257,129 | |||||||||
Cash, cash equivalents and short-term investments per diluted share | $ | 8.40 | $ | 8.16 | $ | 6.21 | $ | 7.01 | $ | 7.40 | |||||||||
Accounts receivable, net | $ | 290,642 | $ | 274,173 | $ | 246,493 | $ | 254,745 | $ | 275,689 | |||||||||
Days sales outstanding (DSO) | 77 | 73 | 78 | 73 | 73 | ||||||||||||||
Inventories | $ | 213,118 | $ | 170,013 | $ | 188,668 | $ | 200,948 | $ | 222,883 | |||||||||
Ending inventory turns | 4.8 | 5.8 | 4.5 | 4.4 | 4.5 | ||||||||||||||
Weeks of channel inventory: | |||||||||||||||||||
U.S. retail channel | 8.4 | 9.2 | 7.0 | 7.7 | 7.8 | ||||||||||||||
U.S. distribution channel | 5.7 | 7.9 | 10.1 | 11.5 | 12.0 | ||||||||||||||
EMEA distribution channel | 4.6 | 5.3 | 4.8 | 4.4 | 5.4 | ||||||||||||||
APAC distribution channel | 7.0 | 7.3 | 7.1 | 7.4 | 7.2 | ||||||||||||||
Deferred revenue (current and non-current) | $ | 33,331 | $ | 34,154 | $ | 31,116 | $ | 25,802 | $ | 31,621 | |||||||||
Headcount | 963 | 959 | 967 | 979 | 1,038 | ||||||||||||||
Non-GAAP diluted shares | 33,110 | 32,335 | 34,308 | 35,285 | 35,348 |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||
December 31, 2015 | September 27, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||||||||||||||||
Americas | $ | 231,765 | 64 | % | $ | 219,736 | 64 | % | $ | 194,673 | 55 | % | $ | 797,746 | 61 | % | $ | 770,890 | 56 | % | |||||||||
EMEA | 86,887 | 24 | % | 77,725 | 23 | % | 106,237 | 30 | % | 321,714 | 25 | % | 421,887 | 30 | % | ||||||||||||||
APAC | 42,211 | 12 | % | 44,432 | 13 | % | 52,272 | 15 | % | 181,235 | 14 | % | 200,738 | 14 | % | ||||||||||||||
Total | $ | 360,863 | 100 | % | $ | 341,893 | 100 | % | $ | 353,182 | 100 | % | $ | 1,300,695 | 100 | % | $ | 1,393,515 | 100 | % |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||
December 31, 2015 | September 27, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||||||||||||||||
Retail | $ | 197,520 | 54 | % | $ | 164,081 | 48 | % | $ | 147,864 | 42 | % | $ | 614,367 | 48 | % | $ | 508,100 | 36 | % | |||||||||
Commercial | 63,911 | 18 | % | 65,187 | 19 | % | 79,393 | 22 | % | 264,846 | 20 | % | 305,677 | 22 | % | ||||||||||||||
Service Provider | 99,432 | 28 | % | 112,625 | 33 | % | 125,925 | 36 | % | 421,482 | 32 | % | 579,738 | 42 | % | ||||||||||||||
Total | $ | 360,863 | 100 | % | $ | 341,893 | 100 | % | $ | 353,182 | 100 | % | $ | 1,300,695 | 100 | % | $ | 1,393,515 | 100 | % |
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