Form 8-K Ubiquiti Networks, Inc. For: Aug 04
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 4, 2015
UBIQUITI NETWORKS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
|
001-35300 (Commission File Number) |
32-0097377 (IRS Employer Identification No.) |
2580 Orchard Parkway
San Jose, CA 95131
(Address of principal executive offices, including zip code)
(408) 942-3085
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On August 6, 2015, Ubiquiti Networks, Inc. (the “Company”) issued a press release announcing its preliminary financial results for the fiscal quarter ended June 30, 2015. A copy of the press release is attached hereto as Exhibit 99.1.
The Company hereby furnishes the information relating to its preliminary financial results for the fiscal quarter ended June 30, 2015 set forth in the press release issued on August 6, 2015 and which is incorporated herein by reference. This information is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Registration statements or other documents filed with the Securities and Exchange Commission shall not incorporate this information by reference, except as otherwise expressly stated in such filing.
Item 8.01 Other Events.
Business Fraud
On June 5, 2015, the Company determined that it had been the victim of a criminal fraud. The incident involved employee impersonation and fraudulent requests from an outside entity targeting the Company’s finance department. This fraud resulted in transfers of funds aggregating $46.7 million held by a Company subsidiary incorporated in Hong Kong to other overseas accounts held by third parties. As soon as the Company became aware of this fraudulent activity it initiated contact with its Hong Kong subsidiary’s bank and promptly initiated legal proceedings in various foreign jurisdictions. As a result of these efforts, the Company has recovered $8.1 million of the amounts transferred. Furthermore, an additional $6.8 million of the amounts transferred are currently subject to legal injunction and reasonably expected to be recovered by the Company in due course. The Company is continuing to pursue the recovery of the remaining $31.8 million and is cooperating with U.S. federal and numerous overseas law enforcement authorities who are actively pursuing a multi-agency criminal investigation. The Company may be limited in what information it can disclose due to the ongoing investigation. The ultimate amount of the loss will depend, in part, on the Company’s success in recovering the funds. The Company may not be successful in obtaining any insurance coverage for this loss. The Company currently believes this is an isolated event and does not believe its technology systems have been compromised or that Company data has been exposed. While this matter will result in some additional near-term expenses, the Company does not expect this incident to have a material impact on its business or its ability to fund the anticipated working capital, capital expenditures and other liquidity requirements of its ongoing operations.
The Audit Committee of the Company’s Board of Directors has conducted an independent investigation into this matter with the assistance of outside advisors. The investigation concluded on July 17, 2015. The investigation uncovered no evidence that our systems were penetrated or that any corporate information, including our financial and account information, was accessed. The investigation found no evidence of employee criminal involvement in the fraud. As a result of this investigation, the Company, its Audit Committee and advisors have concluded that the Company’s internal control over financial reporting is ineffective due to one or more material weaknesses. The Company has implemented enhanced internal controls over financial reporting since June 5, 2015 and is in the process of implementing additional procedures and controls pursuant to recommendations from the investigation.
| 2 |
Share Repurchase Program
On August 4, 2015, the Board of Directors of the Company approved a $100 million stock repurchase program. Under the new stock repurchase program, the Company may repurchase up to $100 million of its common stock. The plan expires on June 30, 2016. As part of the share repurchase program, shares may be purchased in open market transactions, including through block purchases, through privately negotiated transactions, or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Exchange Act. The timing, manner, price and amount of any repurchases will be determined in the Company's discretion and the share repurchase program may be suspended, terminated or modified at any time for any reason. The repurchase program does not obligate the Company to acquire any specific number of shares, and all open market repurchases will be made in accordance with Exchange Act Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of open market stock repurchases.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On June 29, 2015, the Company entered into an agreement for advisory and interim management services with FTI Consulting, Inc. (“FTI Consulting” or “FTI”). In connection with this agreement, the Company appointed Mark C. Spragg as Interim Chief Accounting Officer effective August 4, 2015. FTI Consulting will receive a monthly fee of $185,000 for the advisory and interim management services provided by Mr. Spragg and one additional consultant to the Company.
Effective August 4, 2015 and in connection with the appointment of Mr. Spragg, Mr. Rohit Chakravarthy will no longer serve as Chief Accounting Officer of the Company. Mr. Chakravarthy’s duties as principal financial officer and principal accounting officer will be performed on an interim basis by Mr. Spragg. On August 4, 2015, Mr. Chakravarthy informed the Company of his intention to resign from the Company effective August 14, 2015 and he will remain available to the Company in an advisory capacity to assist with the transition of his responsibilities and other related matters. Mr. Chakravarthy’s resignation was not due to any disagreement with the Company regarding its operations, financial reporting, policies or procedures.
Mark C. Spragg, 54, has been a senior managing director in the Telecommunications, Media & Technology practice of FTI Consulting since joining FTI in 2002. Prior to joining FTI Mr. Spragg was a partner with a globally-recognized public accounting firm in their financial advisory services practice. Mr. Spragg has more than 30 years of experience in the public accounting, private industry and consulting sectors, and is a certified public accountant. He specializes in the telecommunications industry, including mobile wireless, satellite, subsea cable, and broadband. Mr. Spragg’s services to the Company are billed by FTI Consulting. He will not be separately compensated by the Company for his services as Interim Chief Accounting Officer.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. | Description | |
| 99.1 | Press Release dated August 6, 2015. |
| 3 |
Forward Looking Statements
Certain statements in this Current Report on Form 8-K are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements other than statements of historical fact including words such as “look”, "will", “anticipate”, “believe”, “estimate”, “expect”, "forecast", “consider” and “plan” and statements in the future tense are forward looking statements. The statements in this Current Report on Form 8-K that could be deemed forward-looking statements include statements regarding the nature and duration of the advisory and interim management services, our expectations for our financial results for the fourth quarter ended June 30, 2015, and statements regarding the criminal fraud event, including our plans and expectations regarding the recovery of the transferred funds and the timing related thereto, the ultimate amount of the loss, our belief that this is an isolated event and that our technology systems have not been compromised, expected additional near-term expenses, and our expectation that this event will not have a material impact on our business or ability to fund the anticipated working capital, capital expenditures and other liquidity requirements of our ongoing operations. Forward-looking statements are subject to certain risks and uncertainties that could cause our actual future results to differ materially, or cause a material adverse impact on our results. Potential risks and uncertainties include, but are not limited to, fluctuations in our operating results; varying demand for our products due to the financial and operating condition of our distributors and their customers, and distributors' inventory management practices; political and economic conditions and volatility affecting the stability of business environments, economic growth, currency values, commodity prices and other factors that may influence the ultimate demand for our products in particular geographies or globally; impact of counterfeiting and our ability to contain such impact; our reliance on a limited number of distributors; inability of our contract manufacturers and suppliers to meet our demand; our dependence on Qualcomm Atheros for chipsets without a short-term alternative; as we move into new markets competition from certain of our current or potential competitors who may be more established in such markets; our ability to keep pace with technological and market developments; success and timing of new product introductions by us and the performance of our products generally; our ability to effectively manage the significant increase in our transactional sales volumes; we may become subject to warranty claims, product liability and product recalls; that a substantial majority of our sales are into countries outside the United States and we are subject to numerous U.S. export control and economic sanctions laws; costs related to responding to government inquiries related to regulatory compliance; our reliance on the Ubiquiti Community; our reliance on certain key members of our management team, including our founder and chief executive officer, Robert J. Pera; adverse tax-related matters such as tax audits, changes in our effective tax rate or new tax legislative proposals; whether the final determination of our income tax liability may be materially different from our income tax provisions; the impact of any intellectual property litigation and claims for indemnification and litigation related to U.S. Securities laws and economic and political conditions in the United States and abroad. We discuss these risks in greater detail under the heading “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended June 30, 2014, and subsequent filings filed with the U.S. Securities and Exchange Commission (the SEC), which are available at the SEC's website at www.sec.gov. Copies may also be obtained by contacting the Ubiquiti Networks Investor Relations Department, by email at [email protected] or by visiting the Investor Relations section of the Ubiquiti Networks website, http://ir.ubnt.com. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date made. Except as required by law, Ubiquiti Networks undertakes no obligation to update information contained herein. You should review our SEC filings carefully and with the understanding that our actual future results may be materially different from what we expect.
| 4 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: August 6, 2015 | Ubiquiti Networks, Inc. | |
| By: | /s/ Robert J. Pera | |
| Name: | Robert J. Pera | |
| Title: | Chief Executive Officer | |
Exhibit 99.1
UBIQUITI NETWORKS REPORTS FOURTH QUARTER FISCAL 2015 FINANCIAL RESULTS
~ Achieves Solid Revenue and Earnings ~
~ Non-GAAP Diluted EPS of $0.50 Per Share ~
SAN JOSE, Calif. – Aug. 6, 2015 - Ubiquiti Networks, Inc. (NASDAQ: UBNT) (“Ubiquiti”) today announced results for the fourth fiscal quarter of 2015, ended June 30, 2015.
Fourth Quarter Financial Summary
| • | Revenues of $145.3 million |
| • | GAAP gross profit of $66.1 million and non-GAAP gross profit of $66.3 million |
| • | GAAP net income of $4.5 million and non-GAAP net income of $44.1 million |
| • | GAAP diluted EPS of $0.05 and non-GAAP diluted EPS of $0.50 |
| • | GAAP net income and diluted EPS include a $39.1 million business e-mail compromise ("BEC") fraud loss as disclosed in the Form 8-K filed on August 6, 2015 |
Recent Financial Highlights
| • | Enterprise Technology revenues increased over 26% year-over-year, fueled by UniFi® access points and other industry-leading products targeting the Enterprise market |
| • | Initiated a new stock repurchase program, authorizing the Company to repurchase up to $100 million of its common stock as disclosed in the Form 8-K filed on August 6, 2015 |
| • | Shipped in volume our new Enterprise products, including UniFi Video products, the UniFi Switch and our newly released EdgeRouterTM X and EdgeRouterTM X SFP |
| • | Announced Ubiquiti NEXT Event to be held on October 12, 2015 at the Wynn, Las Vegas. At this event, Ubiquiti’s founder and Chief Executive Officer, Robert J. Pera, will discuss future of WISP products as well as some of Ubiquiti’s newer products |
Recent Product Highlights
| • | Announced Deep Packet Inspection technology for the mainstream market with the latest software release (v1.7.0) for our EdgeRouter™ Lite, EdgeRouter PoE, EdgeRouter, and EdgeRouter PRO routers |
| • | Set a new world distance record for wireless broadband with our airFiber® 5X, a ruggedized outdoor Point-to-Point radio designed for the global unlicensed frequency bands |
| • | Released airOS® 5.6.1, a new operating system for our airMAX® ac products that provides powerful features, including full Simple Network Management Protocol (SNMP) |
| • | Announced the LiteBeam™ M5, a long-range, disruptively-priced, lightweight airMAX® CPE |
| • | Announced an ISO series of our ac PowerBeam® series, an ideal solution for deployments requiring maximum performance and RF isolation. We expect the PowerBeam® ac ISO to expand deployments of our airMAX ac products |
Financial Highlights ($, in millions, except per share data)
| Income statement highlights | F4Q15 | F3Q15 | F4Q14 | |||||||||
| Revenues | 145.3 | 147.5 | 156.0 | |||||||||
| Service Provider Technology | 104.8 | 106.3 | 124.0 | |||||||||
| Enterprise Technology | 40.5 | 41.2 | 32.0 | |||||||||
| Cost of Revenues | 79.1 | 81.5 | 87.1 | |||||||||
| Gross Profit | 66.1 | 66.0 | 68.9 | |||||||||
| Gross Profit (%) | 45.5 | % | 44.7 | % | 44.1 | % | ||||||
| Total Operating Expenses | 58.8 | 20.7 | 16.1 | |||||||||
| Income from Operations | 7.3 | 45.2 | 52.8 | |||||||||
| GAAP Net Income | 4.5 | 41.1 | 49.4 | |||||||||
| GAAP EPS (diluted) | 0.05 | 0.46 | 0.55 | |||||||||
| Non-GAAP Net Income | 44.1 | 42.0 | 50.2 | |||||||||
| Non-GAAP EPS (diluted) | 0.50 | 0.47 | 0.56 | |||||||||
Balance Sheet Highlights
Total cash and cash equivalents as of June 30, 2015 were $446.4 million, compared with $451.2 million as of March 31, 2015. The sequential decrease in cash and cash equivalents during the fourth quarter of fiscal 2015 is primarily due to the following factors:
| • | We repurchased $19.7 million of our common stock |
| • | As disclosed in the Form 8-K filed on August 6, 2015, we lost $39.1 million in connection with a business e-mail compromise (“BEC”) fraud involving employee impersonation |
Excluding the impact of the BEC fraud loss and related expenses, our cash from operating activities for the fiscal fourth quarter would have been $57.3 million, a 56% increase sequentially. We generated $18.2 million of cash from operating activities, which is net of the BEC fraud loss and related expenses.
This quarter we saw days sales outstanding in accounts receivable ("DSO") of 41 days, compared with 43 days in the prior quarter, and 32 days in the fourth quarter of fiscal 2014.
Business Outlook
Based on recent business trends, Ubiquiti currently believes the demand environment in its end markets supports the following forecast for the Company's first fiscal quarter ending September 30, 2015. The following are Ubiquiti’s financial performance estimates for the first quarter of fiscal 2016:
| • | Revenues of between $145 million and $155 million |
| • | GAAP diluted EPS of $0.46 - $0.51 |
| • | Non-GAAP diluted EPS of $0.47 - $0.52 |
Conference Call Information
Ubiquiti Networks will host a Q&A-only call to discuss the Company’s financial results at 2:00 p.m. Pacific Time today. Management’s prepared remarks can be found on the Investor Relations section of the Ubiquiti Networks website, http://ir.ubnt.com/results.cfm.
To listen to the Q&A call via telephone, dial (877) 291-1296 (U.S. toll-free) or (720) 259-9209 (International) to be connected to the call by an operator. Participants should dial in at least 10 minutes prior to the start of the call. Investors may also listen to a live webcast of the Q&A conference call by visiting the Investor Relations section of the Ubiquiti Networks website at http://ir.ubnt.com.
A recording of the Q&A call will be available approximately two hours after the call concludes and will be accessible on the Investor Relations section of the Ubiquiti Networks website, http://ir.ubnt.com.
About Ubiquiti Networks
Ubiquiti Networks (NASDAQ: UBNT) is closing the digital divide by building network communication platforms for everyone and everywhere. With over 28 million devices sold worldwide, Ubiquiti is transforming under-networked enterprises and communities. Our leading edge platforms, airMAX®, UniFi®, airFiber®, UniFi® Video, UniFi® VoIP, UniFi® Switch, mFi® and EdgeMAX®, combine innovative technology, disruptive price-to-performance and the support of a global user community to eliminate barriers to connectivity. For more information, join our community at http://www.ubnt.com.
Ubiquiti, the Ubiquiti U logo, Ubiquiti Networks, UBNT, airMAX, airFiber, airCRM, airOS, UniFi, mFi, EdgeMAX, EdgeRouter, LightBeam and PowerBeam are registered trademarks or trademarks of Ubiquiti Networks, Inc. in the United States and other countries.
The Ubiquiti Networks, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=24865.
Investor Relations Contact
Anne Fazioli
Ubiquiti Networks, Vice President of Investor Relations
Safe Harbor for Forward Looking Statements
Certain statements in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements other than statements of historical fact including words such as “look”, "will", “anticipate”, “believe”, “estimate”, “expect”, "forecast", “consider” and “plan” and statements in the future tense are forward looking statements. The statements in this press release that could be deemed forward-looking statements include statements regarding expectations related to our cash position, expenses, new products, and financial performance estimates including revenues, GAAP diluted EPS and non-GAAP diluted EPS for the Company's fiscal quarter ending September 30, 2015, and any statements or assumptions underlying any of the foregoing.
Forward-looking statements are subject to certain risks and uncertainties that could cause our actual future results to differ materially, or cause a material adverse impact on our results. Potential risks and uncertainties include, but are not limited to, fluctuations in our operating results; varying demand for our products due to the financial and
operating condition of our distributors and their customers, and distributors' inventory management practices; political and economic conditions and volatility affecting the stability of business environments, economic growth, currency values, commodity prices and other factors that may influence the ultimate demand for our products in particular geographies or globally; impact of counterfeiting and our ability to contain such impact; our reliance on a limited number of distributors; inability of our contract manufacturers and suppliers to meet our demand; our dependence on Qualcomm Atheros for chipsets without a short-term alternative; as we move into new markets competition from certain of our current or potential competitors who may be more established in such markets; our ability to keep pace with technological and market developments; success and timing of new product introductions by us and the performance of our products generally; our ability to effectively manage the significant increase in our transactional sales volumes; we may become subject to warranty claims, product liability and product recalls; that a substantial majority of our sales are into countries outside the United States and we are subject to numerous U.S. export control and economic sanctions laws; costs related to responding to government inquiries related to regulatory compliance; our reliance on the Ubiquiti Community; our reliance on certain key members of our management team, including our founder and chief executive officer, Robert J. Pera; adverse tax-related matters such as tax audits, changes in our effective tax rate or new tax legislative proposals; whether the final determination of our income tax liability may be materially different from our income tax provisions; the impact of any intellectual property litigation and claims for indemnification; litigation related to U.S. Securities laws; and economic and political conditions in the United States and abroad. We discuss these risks in greater detail under the heading “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended June 30, 2014, and subsequent filings filed with the U.S. Securities and Exchange Commission (the SEC), which are available at the SEC's website at www.sec.gov. Copies may also be obtained by contacting the Ubiquiti Networks Investor Relations Department, by email at [email protected] or by visiting the Investor Relations section of the Ubiquiti Networks website, http://ir.ubnt.com.
Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date made. Except as required by law, Ubiquiti Networks undertakes no obligation to update information contained herein. You should review our SEC filings carefully and with the understanding that our actual future results may be materially different from what we expect.
Use of Non-GAAP Financial Information
To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we use non-GAAP measures of net income and earnings per diluted share that are adjusted to exclude certain costs, expenses and gains such as stock based compensation expense, purchase commitment termination fee, loss as a result of a BEC fraud and the tax effects of these non-GAAP adjustments. Reconciliations of the adjustments to GAAP results for the three and twelve months ended June 30, 2015 and 2014 are provided below. In addition, an explanation of the ways in which management uses non-GAAP financial information to evaluate its business, the substance behind management's decision to use this non-GAAP financial information, material limitations associated with the use of non-GAAP financial information, the manner in which management compensates for those limitations, and the substantive reasons management believes that this non-GAAP financial information provides useful information to investors is included under "About our Non-GAAP Net Income and Adjustments" after the tables below.
Ubiquiti Networks Inc.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
| Three Months Ended June 30, | Years Ended June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014(1) | |||||||||||||
| Revenues | $ | 145,267 | $ | 156,007 | $ | 595,947 | $ | 572,464 | ||||||||
| Cost of revenues | 79,129 | 87,146 | 333,760 | 318,997 | ||||||||||||
| Gross profit | 66,138 | 68,861 | 262,187 | 253,467 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 14,672 | 10,155 | 54,565 | 33,962 | ||||||||||||
| Sales, general and administrative | 5,039 | 5,912 | 21,607 | 23,560 | ||||||||||||
| Business e-mail compromise ("BEC") fraud loss | 39,137 | — | 39,137 | — | ||||||||||||
| Total operating expenses | 58,848 | 16,067 | 115,309 | 57,522 | ||||||||||||
| Income from operations | 7,290 | 52,794 | 146,878 | 195,945 | ||||||||||||
| Interest expense and other, net | (326 | ) | (556 | ) | (1,130 | ) | (1,334 | ) | ||||||||
| Income before provision for income taxes | 6,964 | 52,238 | 145,748 | 194,611 | ||||||||||||
| Provision for income taxes | 2,446 | 2,820 | 16,085 | 17,674 | ||||||||||||
| Net income and comprehensive income | $ | 4,518 | $ | 49,418 | $ | 129,663 | $ | 176,937 | ||||||||
| Net income per share of common stock: | ||||||||||||||||
| Basic | $ | 0.05 | $ | 0.56 | $ | 1.47 | $ | 2.02 | ||||||||
| Diluted | $ | 0.05 | $ | 0.55 | $ | 1.45 | $ | 1.97 | ||||||||
| Weighted average shares used in computing net income per share of common stock: | ||||||||||||||||
| Basic | 87,685 | 88,122 | 88,008 | 87,772 | ||||||||||||
| Diluted | 89,110 | 89,821 | 89,569 | 89,715 | ||||||||||||
Ubiquiti Networks Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands, except per share data)
(Unaudited)
| Three Months Ended June 30, | Years Ended June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net income | $ | 4,518 | $ | 49,418 | $ | 129,663 | $ | 176,937 | ||||||||
| Stock-based compensation: | ||||||||||||||||
| Cost of revenues | 161 | 145 | 601 | 590 | ||||||||||||
| Research and development | 355 | 744 | 2,854 | 2,423 | ||||||||||||
| Sales, general and administrative | 297 | 387 | 1,537 | 1,893 | ||||||||||||
| Business e-mail compromise ("BEC") fraud loss | 39,137 | — | 39,137 | — | ||||||||||||
| Purchase commitment termination fee | — | — | 5,500 | — | ||||||||||||
| Gain on reversal of charge for an export compliance matter | — | — | — | (1,121 | ) | |||||||||||
| Tax effect of non-GAAP adjustments | (325 | ) | (510 | ) | (2,656 | ) | (1,514 | ) | ||||||||
| Non-GAAP net income | $ | 44,143 | $ | 50,184 | $ | 176,636 | $ | 179,208 | ||||||||
| Non-GAAP diluted EPS | $ | 0.50 | $ | 0.56 | $ | 1.97 | $ | 2.00 | ||||||||
| Weighted-average shares used in non-GAAP diluted EPS | 89,110 | 89,821 | 89,569 | 89,715 | ||||||||||||
| (1) | Derived from audited consolidated statements as of and for the year ended June 30, 2014. |
Ubiquiti Networks Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)
| June 30, | ||||||||
| 2015 | 2014(1) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 446,401 | $ | 347,097 | ||||
| Accounts receivable, net | 66,104 | 54,871 | ||||||
| Inventories | 37,031 | 46,349 | ||||||
| Current deferred tax asset | 1,535 | 884 | ||||||
| Prepaid income taxes | 2,566 | 3,256 | ||||||
| Prepaid expenses and other current assets | 27,709 | 13,267 | ||||||
| Total current assets | 581,346 | 465,724 | ||||||
| Property and equipment, net | 15,602 | 7,260 | ||||||
| Long-term deferred tax asset | 1,515 | 1,255 | ||||||
| Other long–term assets | 2,109 | 1,912 | ||||||
| Total assets | $ | 600,572 | $ | 476,151 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 43,856 | $ | 33,933 | ||||
| Income taxes payable | 1,108 | 2,499 | ||||||
| Debt - short-term | 10,000 | — | ||||||
| Other current liabilities | 15,170 | 15,883 | ||||||
| Total current liabilities | 70,134 | 52,315 | ||||||
| Long-term taxes payable | 19,810 | 15,346 | ||||||
| Debt - long-term | 87,500 | 72,254 | ||||||
| Deferred revenues - long-term | 974 | 972 | ||||||
| Total liabilities | 178,418 | 140,887 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 87 | 88 | ||||||
| Additional paid–in capital | — | 145,872 | ||||||
| Treasury stock | — | (123,864 | ) | |||||
| Retained earnings | 422,067 | 313,168 | ||||||
| Total stockholders’ equity | 422,154 | 335,264 | ||||||
| Total liabilities and stockholders’ equity | $ | 600,572 | $ | 476,151 | ||||
| (1) | Derived from audited consolidated statements as of and for the year ended June 30, 2014. |
Ubiquiti Networks Inc.
Revenues by Product Type
(In thousands)
(Unaudited)
| Three Months Ended June 30, | Years Ended June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Service provider technology | $ | 104,788 | $ | 124,005 | $ | 418,021 | $ | 450,663 | ||||||||
| Enterprise technology | 40,479 | 32,002 | 177,926 | 121,801 | ||||||||||||
| Total revenues | $ | 145,267 | $ | 156,007 | $ | 595,947 | $ | 572,464 | ||||||||
Ubiquiti Networks Inc.
Revenues by Geographical Area
(In thousands)
(Unaudited)
| Three Months Ended June 30, | Years Ended June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| North America | $ | 44,293 | $ | 43,260 | $ | 197,693 | $ | 142,438 | ||||||||
| South America | 25,876 | 35,757 | 97,118 | 109,584 | ||||||||||||
| Europe, the Middle East and Africa | 56,909 | 57,418 | 234,383 | 247,009 | ||||||||||||
| Asia Pacific | 18,189 | 19,572 | 66,753 | 73,433 | ||||||||||||
| Total revenues | $ | 145,267 | $ | 156,007 | $ | 595,947 | $ | 572,464 | ||||||||
About our Non-GAAP Net Income and Adjustments
Use of Non-GAAP Financial Information
To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we use non-GAAP measures of net income and earnings per diluted share that are GAAP net income and GAAP earnings per diluted share adjusted to exclude certain costs, expenses and gains/losses.
We believe that the presentation of non-GAAP net income and non-GAAP earnings per diluted share provides important supplemental information regarding non-cash expenses, significant items that we believe are important to understanding our financial, and business trends relating to our financial condition and results of operations. Non-GAAP net income and non-GAAP earnings per diluted share are among the primary indicators used by management as a basis for planning and forecasting future periods and by management and our board of directors to determine whether our operating performance has met specified targets and thresholds. Management uses non-GAAP net income and non-GAAP earnings per diluted share when evaluating operating performance because it believes that the exclusion of the items described below, for which the amounts or timing may vary significantly depending upon the Company's activities and other factors, facilitates comparability of the Company's operating performance from period to period. We have chosen to provide this information to investors so they can analyze our operating results in the same way that management does and use this information in their assessment of our business and the valuation of our Company.
Use and Economic Substance of Non-GAAP Financial Measures used by Ubiquiti Networks
We compute non-GAAP net income and non-GAAP diluted earnings per share by adjusting GAAP net income and GAAP earnings per diluted share to remove the impact of certain adjustments and the tax effect of those adjustments. Items excluded from net income are:
| • | Stock-based compensation expense |
| • | Amounts relating to a purchase commitment termination fee |
| • | Gain on reversal of charge for an export compliance matter |
| • | Loss as a result of a BEC fraud |
| • | Tax effect of non-GAAP adjustments, applying the principles of ASC 740 |
Usefulness of Non-GAAP Financial Information to Investors
These non-GAAP measures are not in accordance with, or an alternative to, GAAP and may be materially different from other non-GAAP measures, including similarly titled non-GAAP measures used by other companies. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income or earnings per diluted share prepared in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results.
For more information on the non-GAAP adjustments, please see the table captioned “Reconciliation of GAAP Net Income to Non-GAAP Net Income” included in this press release.
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