SGI Reports Fourth Quarter and Fiscal Year 2008 Results
SUNNYVALE, Calif., Aug. 28 /PRNewswire-FirstCall/ -- SGI (Nasdaq: SGIC)
today announced financial results for the fourth quarter and fiscal year 2008
ended June 27, 2008. The Company achieved its stated objectives for the fiscal
year of strong growth in bookings, a strengthened leadership team, an array of
new products and services, and penetration into new customer accounts.
Fiscal Year 2008 Highlights
In fiscal 2008, SGI:
* Grew bookings 25 percent year-over-year to $356 million through a
mix of high performance compute, storage and visualization solutions
and services.
* Saw backlog more than double year-over-year, putting the Company in
a stronger position heading into fiscal 2009 with beginning backlog
of $147 million compared to $66 million at the end of the prior
year.
* Strengthened its leadership team with the appointment of key
executives including Barb Stinnett to lead the global services
organization; Irene Qualters to head the software and storage
organization; Douglas Britt to direct worldwide sales; Bob Pette to
form a new group focused on leveraging the Company's extensive
intellectual property to deliver visualization solutions; and Shahin
Khan to drive marketing.
* Launched and shipped new products and services including: SGI(R)
Altix(R) ICE, an ultra-dense blade platform that began shipping in
volume in the first quarter of the fiscal year; SGI(R) Virtu VN200
to power the performance visualization needs of HPC and business
users; SGI(R) InfiniteStorage 4600, a new flagship RAID product; the
SGI(R) InfiniteStorage NEXIS NAS family of high-performance storage
systems; Solutions Support Plus, a new multi-vendor support service;
and new cluster nodes and processors aimed at increasing the
performance of SGI(R) Altix(R) XE clusters and SGI Altix systems.
* Accelerated its Industrial Strength Linux(R) Environment software
strategy by acquiring key IP assets formerly owned by Linux Networx.
* Delivered and gained acceptance on several significant orders
including: a major online trading community, multiple Hollywood and
international film and television production companies, the National
Basketball Association, Chrysler, Honda Racing, Sikorsky Aircraft,
Total Exploration and Production, GENCI (Grand Equipement National
de Calcul Intensif), North German Supercomputing Alliance (HLRN),
New Mexico Computing Applications Center, NASA, Merck, and
Sanofi-Aventis.
'We're very encouraged by the progress we've made over the past fiscal
year,' said SGI CEO Robert 'Bo' Ewald. 'We've achieved significant bookings
and backlog growth which positions us well as we enter fiscal 2009 to execute
on the second year of our three-year plan to achieve a profitable operating
structure. With our new products and services, we've seen acceptance of our
solutions across all targeted technical and commercial environments.'
Fiscal 2008 and Fourth Quarter GAAP Results
Revenue for the fourth quarter was $93.9 million, compared to
$79.1 million in the third quarter and $122.3 million in the fourth quarter of
the prior year, representing an increase of 19 percent and a decline of 23
percent, respectively. Revenue for fiscal 2008 was $354.1 million, a decline
of 24 percent from the prior fiscal year.
The fiscal 2008 operating loss was $127.2 million, compared to a loss of
$101.2 million for the prior fiscal year. The fourth quarter operating loss
was $28.6 million, compared to $40.6 million in the third quarter and
$24.8 million in the fourth quarter of the prior year. Operating expenses for
fiscal 2008 were $230.7 million, a decrease of $4.6 million, or 2 percent
year-over-year. Operating expenses were $58.1 million for the fourth quarter
of fiscal 2008, compared to $59.2 million for the third quarter and
$56.9 million in the fourth quarter of the prior year.
For purposes of comparison, fiscal year 2007 figures comprise three months
of results, ended September 29, 2006, for the Company existing before the
Company's reorganization and emergence, and 9 months of results, ended June
29, 2007, for the Company existing after the reorganization.
Pro Forma Results
Pro forma results comprise non-GAAP financial measures that facilitate
comparison of the Company's results of operations in previous fiscal years.
Pro forma revenue was $121.5 million in the fourth quarter of fiscal 2008,
compared to $80.9 million in the third quarter of fiscal 2008. Pro forma
revenue excludes the impact of fresh start accounting and the deferral of the
Company's recognition of revenues for certain of the Company's transactions
where software is more than incidental to the overall solution. Pro forma
gross margin for the fourth quarter of fiscal 2008, which is adjusted for
similar items and also for amortization of intangibles and stock-based
compensation, was 37 percent, compared with 27 percent in the third quarter of
fiscal 2008. Pro forma operating expenses, which exclude restructuring, stock-
based compensation expense, amortization of intangibles, the non-cash impact
of Linux Networx asset acquisition, and the impact of fresh start accounting,
were $53.2 million in the fourth quarter of fiscal 2008 and $52.7 million in
the third quarter of fiscal 2008. Adjusted pro forma earnings before interest,
taxes, depreciation, amortization, and restructuring (EBITDAR) for the fourth
quarter of fiscal 2008 was a loss of $3.0 million, compared with a loss of
$25.7 million for the third quarter of fiscal 2008.
'We are pleased with bookings performance year-over-year as a leading
indicator of the market's acceptance of our solutions,' said Kathy Lanterman,
SGI's Chief Financial Officer. 'Our fiscal 2008 financial goals were to
generate double-digit bookings growth, stabilize revenue and manage cash and
expenses. We largely achieved these goals, particularly through the growth in
our core products bookings, although the timing of customer acceptances did
impact revenue for the year.'
Ewald added that new server, storage and visualization products helped
drive bookings growth by giving SGI the winning edge in several competitive
sales situations, including a contract to supply NASA with its next major
supercomputer. 'These new products have allowed us to capture some of the
world's most coveted HPC wins, while placing us in new accounts like a major
online trading community,' said Ewald. 'Developments like these give us great
confidence about the validity of our strategy and direction.'
In this press release, SGI uses certain financial measures, including the
'pro forma' financial measures, bookings and backlog that are not determined
in accordance with generally accepted accounting principles (GAAP) in the
United States. Bookings, also referred to as orders, reflect authorized orders
for SGI products and professional services accepted in the period that are
expected to ship in the next twelve months. Backlog is the cumulative bookings
for which the Company has not yet recognized revenue. Management believes that
these non-GAAP financial measures, bookings and backlog, are useful to
investors because they facilitate period to period comparisons of SGI
performance and because they help investors view the Company's results of
operations through the eyes of management and the Company's lenders. SGI
credit line covenants, management reporting and incentive plans are measured
against certain of these non-GAAP financial measures.
A reconciliation of the non-GAAP financial measures used in this press
release to the Company's GAAP results of operations, including an illustration
of the impact of the Company's fresh start accounting and the impact of the
implementation of Statement of Accounting Position 97-2, 'Software Revenue
Recognition' (SOP 97-2) is attached to this press release and is also
available at http://www.sgi.com/company_info/investors.
Anthony Grillo Named Chairman of SGI Board of Directors
As it embarks on the second phase of its growth strategy, SGI also
announced today that Anthony Grillo has been named the Chairman of its Board
of Directors. Grillo has served on the SGI Board of Directors since October of
2006.
'I look forward to continuing to work closely with management and my
fellow Board members,' said Grillo, who is founder and CEO of American
Securities Advisors, LLC.
The company also announced that Kevin Katari and Chun Won Yi have resigned
from its Board of Directors. Both have been members of the Board since October
of 2006, with Katari serving as Chairman since joining the Board.
'I am pleased to have worked with the Company during this transition, and
I have confidence in Bo and Tony in leading SGI forward,' said Katari.
Yi added, 'I have enjoyed being on the Board and assisting SGI since its
successful reorganization, and the Company continues to have my full support.'
'I would like to express SGI's appreciation and thanks to both Kevin and
Chun,' said SGI CEO Bo Ewald. 'They have worked closely with the Company and
we look forward to continuing our relationship with them as significant
investors.'
Conference Call
SGI will conduct a conference call today at 2 p.m. Pacific Daylight Time
(PDT) to provide additional details. The webcast and presentation materials
are available at http://www.sgi.com/company_info/investors/webcast.html. The
conference call can be accessed by dialing (877) 495-0297, or (706) 643-9931
for participants outside of North America, conference ID: 59920311. An audio
replay of this call will be available after 5 p.m. PDT today at (800) 642-1687
or (706) 645-9291 (passcode: 59920311) and will be available until September
4, 2008. All links to the archived webcast, presentation materials and audio
replay are available through the SGI web site at
http://www.sgi.com/company_info/investors/.
Additional Resources:
* National Basketball Association (press release April 14, 2008)
http://www.sgi.com/company_info/newsroom/press_releases/2008/april/nba.html
* 'Supporting Honda's Environmental Approach to Formula One' article
in SGI Magazine
http://www.sgi.com/subscribe/sgi_magazine/08_june/08SupportingHonda.html
* Total Exploration Production (press announcement June 15, 2008)
http://www.sgi.com/company_info/newsroom/press_releases/2008/june/top10.html
* GENCI (Grand Equipement National de Calcul Intensif) (press release
June 17, 2008)
http://www.sgi.com/company_info/newsroom/press_releases/2008/june/genci.html
* North German Supercomputing Alliance (HLRN) (press release July 3,
2008)
http://www.sgi.com/company_info/newsroom/press_releases/2008/july/hlrn.html
* New Mexico Computing Applications Center (press release January 28,
2008)
www.sgi.com/company_info/newsroom/press_releases/2008/january/nmcac.html
* NASA (press release May 6, 2008)
http://www.sgi.com/company_info/newsroom/press_releases/2008/may/nasa.html
SGI - Innovation for Results(TM)
SGI (NASDAQ: SGIC) is a leader in high-performance computing. SGI delivers
a complete range of high-performance server and storage solutions along with
industry-leading professional services and support that enable its customers
to overcome the challenges of complex data-intensive workflows and accelerate
breakthrough discoveries, innovation and information transformation. SGI
solutions help customers solve their computing challenges whether it's
enhancing the quality of life through drug research, designing and
manufacturing safer and more efficient cars and airplanes, studying global
climate, providing technologies for homeland security and defense, or helping
enterprises manage large data. With offices worldwide, the company is
headquartered in Sunnyvale, California, and can be found on the Web at
http://www.sgi.com.
(C) 2008 SGI. All rights reserved. SGI, the SGI cube, Altix, and the SGI
logo are registered trademarks and CXFS and Virtu are trademarks of SGI in the
United States and/or other countries worldwide. All other trademarks mentioned
herein are the property of their respective owners.
This press release contains forward-looking statements, including
statements relating to continued execution of the SGI's strategic plan and
market acceptance of SGI's solutions, that are subject to risks and
uncertainties that could cause actual results to differ materially from those
set forth herein, including the risks and uncertainties discussed under the
caption 'Risk Factors' and elsewhere in SGI's Form 10-K or Form 10-Q most
recently filed with the Securities and Exchange Commission. These forward-
looking statements speak only as of the date hereof. SGI disclaims any intent
or obligation to update these forward-looking statements.
MEDIA CONTACT
Marla Robinson
marlar@sgi.com
256.773.2371
SGI PR HOTLINE
650.933.7777
SGI PR FACSIMILE
650.933.0714
Calculation of Non-GAAP Revenue by Reporting Segment
Successor Company
Three Months Ended: 27-Jun-08 28-Mar-08 28-Dec-07 28-Sep-07
(in thousands)
Core systems:
Shared memory products
(GAAP) $23,746 $15,031 $19,312 $21,318
Plus: Fresh-start accounting
adjustments - 306 196 22
SOP 97-2 revenue deferrals (601) (1,949) 6,167 16,788
Non-GAAP shared memory
products revenue 23,145 13,388 25,675 38,128
Cluster products (GAAP) 8,194 7,672 3,970 10,309
Plus: Fresh-start accounting
adjustments - - - -
SOP 97-2 revenue deferrals 16,735 1,603 6,157 4,099
Non-GAAP cluster products
revenue 24,929 9,275 10,127 14,408
Storage products revenue
(GAAP) 10,330 8,374 13,505 8,233
Plus: Fresh-start accounting
adjustments - - - -
SOP 97-2 revenue deferrals 4,203 203 2,303 3,377
Non-GAAP storage products
revenue 14,533 8,577 15,808 11,610
Non-GAAP core systems
revenue 62,607 31,240 51,610 64,146
Legacy systems:
Server products (GAAP) 3,800 4,523 6,216 4,887
Plus: Fresh-start accounting
adjustments - - - -
SOP 97-2 revenue deferrals 2,439 (296) 1,223 516
Non-GAAP server products
revenue 6,239 4,227 7,439 5,403
Storage products (GAAP) 246 332 410 849
Plus: Fresh-start accounting
adjustments - - - -
SOP 97-2 revenue deferrals 466 (52) (33) (92)
Non-GAAP storage products
revenue 712 280 377 757
Non-GAAP legacy systems
revenue 6,951 4,507 7,816 6,160
Global services:
Customer support (GAAP) 36,784 35,163 40,193 38,231
Plus: Fresh-start accounting
adjustments 1,557 1,345 1,898 3,813
SOP 97-2 revenue deferrals 171 (316) (2,215) 77
Non-GAAP customer support
revenue 38,512 36,192 39,876 42,121
Professional services
(GAAP) 10,769 7,983 6,505 7,258
Plus: Fresh-start accounting
adjustments - 395 - -
SOP 97-2 revenue deferrals 2,622 554 3,333 1,048
Non-GAAP professional
services revenue 13,391 8,932 9,838 8,306
Non-GAAP global services
revenue 51,903 45,124 49,714 50,427
Non-GAAP revenue $121,461 $80,871 $109,140 $120,733
Successor Company Predecessor
Company
Three Months Ended: 29-Jun-07 30-Mar-07 29-Dec-06 29-Sep-06
(in thousands)
Core systems:
Shared memory products
(GAAP) $43,526 $30,328 $39,237 $34,331
Plus: Fresh-start accounting
adjustments 332 1,100 1,091 -
SOP 97-2 revenue deferrals 4,955 4,834 3,912 2,304
Non-GAAP shared memory
products revenue 48,813 36,262 44,240 36,635
Cluster products (GAAP) 4,400 2,364 1,717 583
Plus: Fresh-start accounting
adjustments - - 18 -
SOP 97-2 revenue deferrals 1,112 23 163 -
Non-GAAP cluster products
revenue 5,512 2,387 1,898 583
Storage products revenue
(GAAP) 14,486 12,063 10,920 12,750
Plus: Fresh-start accounting
adjustments 293 - 320 -
SOP 97-2 revenue deferrals 5,392 2,676 3,834 1,584
Non-GAAP storage products
revenue 20,171 14,739 15,074 14,334
Non-GAAP core systems
revenue 74,496 53,388 61,212 51,552
Legacy systems:
Server products (GAAP) 11,265 12,612 10,966 12,324
Plus: Fresh-start accounting
adjustments - 37 1,588 -
SOP 97-2 revenue deferrals 176 600 703 (504)
Non-GAAP server products
revenue 11,441 13,249 13,257 11,820
Storage products (GAAP) 581 1,204 842 618
Plus: Fresh-start accounting
adjustments - - 364 -
SOP 97-2 revenue deferrals 83 34 192 (76)
Non-GAAP storage products
revenue 664 1,238 1,398 542
Non-GAAP legacy systems
revenue 12,105 14,487 14,655 12,362
Global services:
Customer support (GAAP) 39,332 37,527 35,080 48,396
Plus: Fresh-start accounting
adjustments 4,789 6,545 12,228 -
SOP 97-2 revenue deferrals 677 159 231 144
Non-GAAP customer support
revenue 44,798 44,231 47,539 48,540
Professional services
(GAAP) 8,705 14,948 8,961 12,803
Plus: Fresh-start accounting
adjustments 58 647 268 -
SOP 97-2 revenue deferrals 1,331 2,066 1,509 1,702
Non-GAAP professional
services revenue 10,094 17,661 10,738 14,505
Non-GAAP global services
revenue 54,892 61,892 58,277 63,045
Non-GAAP revenue $141,493 $129,767 $134,144 $126,959
SILICON GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
Predecessor
Successor Company Company
Nine Three
Year Months Months
Three Months Ended Ended Ended Ended
Jun. 27 Jun. 29, Jun. 27, Jun. 29, Sep. 29,
2008 2007 2008 2007 2006
Product and other
revenue $39,909 $73,008 $150,103 $187,805 $45,229
Product revenue
from related
party(1) 6,407 1,250 21,154 8,706 15,377
Global services
revenue 47,553 48,037 182,886 144,553 61,199
Total revenue 93,869 122,295 354,143 341,064 121,805
Costs and expenses:
Cost of product
and other
revenue 32,743 61,114 137,411 162,362 42,710
Cost of global
services
revenue 31,608 29,034 113,253 91,446 32,265
Research and
development (2) 14,308 14,870 58,588 44,040 16,007
Selling, general
and
administrative 43,179 41,697 171,050 125,320 42,359
Other operating
expense, net 603 358 1,028 3,601 3,926
Total costs
and
expenses 122,441 147,073 481,330 426,769 137,267
Operating loss (28,572) (24,778) (127,187) (85,705) (15,462)
Interest expense (1,691) (1,340) (6,312) (4,532) (7,688)
Interest expense
from related
parties (1,602) (1,545) (6,893) (4,347) -
Interest and other
income (expense),
net (3) (1,154) (1,728) (3,511) (355) 11,391
Loss before
reorganization
items and income
taxes (33,019) (29,391) (143,903) (94,939) (11,759)
Reorganization
items, net - - - - 340,397
Income (loss)
before income
taxes (33,019) (29,391) (143,903) (94,939) 328,638
Income tax
provision 2,134 7,537 9,352 8,703 2,382
Net income (loss) $(35,153) $(36,928) $(153,255) $(103,642) $326,256
Net income (loss)
per share:
Basic $(3.03) $(3.32) $(13.55) $(9.32) $1.20
Diluted $(3.03) $(3.32) $(13.55) $(9.32) $0.77
Weighted-average
shares used to
compute net income
(loss) per share:
Basic 11,585 11,125 11,307 11,125 271,563
Diluted 11,585 11,125 11,307 11,125 423,875
(1) Represents product sales to SGI Japan, a related party of which we
owned a 10% interest at June 27, 2008 and at September 29, 2006.
(2) Fiscal 2008 includes approximately $2 million of in-process
research and development resulting from our acquisition of certain
assets formerly owned by Linux Networx, Inc.
(3) Fiscal 2008 includes a gain of approximately $4 million on the sale
of our investment in MicroUnity Systems Engineering, Inc. and a
write-down of approximately $6 million of our equity investment in
SGI Japan to the estimated fair value of the investment, which was
approximately $15 million at June 27, 2008. The three-month period
ended September 29, 2006 includes a pre-tax gain of approximately
$10 million on the sale of a portion of the Predecessor Company's
investment in SGI Japan.
SILICON GRAPHICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 27, 2008 June 29, 2007
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $39,552 $69,887
Short-term marketable investments 258 223
Short-term restricted investments 4,292 6,763
Accounts receivable, net 53,816 47,643
Inventories 72,601 54,354
Prepaid expenses 7,772 6,153
Other current assets 51,720 49,576
Total current assets 230,011 234,599
Restricted investments 1,872 302
Property and equipment, net 40,917 43,392
Other intangibles, net 55,399 71,264
Other non-current assets, net 86,996 59,501
Total assets $415,195 $409,058
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $34,492 $14,387
Accrued compensation 28,878 35,382
Income taxes payable 2,798 2,209
Other current liabilities 38,502 44,420
Current portion of long-term debt 12,750 261
Current portion of deferred revenue 126,138 84,798
Current portion of restructuring
liability 1,242 1,410
Total current liabilities 244,800 182,867
Long-term debt 119,750 85,000
Non-current portion of deferred revenue 70,524 32,362
Long-term income taxes payable 23,715 20,902
Other non-current liabilities 12,782 3,468
Total liabilities 471,571 324,599
Total stockholders' equity (deficit) (56,376) 84,459
Total liabilities and stockholders'
equity $415,195 $409,058
Calculation of Non-GAAP Quarterly Backlog
Successor Company
Three Months Ended: 27-Jun-08 28-Mar-08 28-Dec-07 28-Sep-07 29-Jun-07
(in thousands)
Total beginning
backlog (GAAP) $202,146 $163,215 $112,847 $88,679 $117,751
Plus: Bookings 96,226 82,846 100,286 77,022 53,891
Products and
professional
services revenue
(GAAP) (57,085) (43,915) (49,918) (52,854) (82,963)
Total ending
backlog (GAAP) $241,287 $202,146 $163,215 $112,847 $88,679
Total non-GAAP
beginning backlog $133,746 $95,579 $64,557 $66,147 $108,951
Plus: Bookings 96,226 82,846 100,286 77,022 53,891
Non-GAAP products
and professional
services revenue (82,949) (44,679) (69,264) (78,612) (96,695)
Total non-GAAP
ending backlog $147,023 $133,746 $95,579 $64,557 $66,147
Calculation of Non-GAAP Quarterly Products Standard Profit Margin
Successor Company
Three Months Ended: 27-Jun-08 28-Mar-08 28-Dec-07 28-Sep-07 29-Jun-07
(in thousands)
Total products revenue
(GAAP) $46,316 $35,932 $43,413 $45,596 $74,258
Less: Other revenue (305) (1,015) (286) (395) (810)
Plus: Fresh-start accounting
adjustments - 306 196 22 625
SOP 97-2 revenue
deferrals 23,242 (491) 15,817 24,688 11,718
Non-GAAP total
products
revenue 69,253 34,732 59,140 69,911 85,791
Products standard cost
of revenue (GAAP) 23,575 20,549 24,919 28,163 48,084
Plus: Fresh-start
accounting
adjustments - (441) (2,521) (1,555) (5,144)
SOP 97-2 revenue
deferrals 14,290 (50) 9,913 18,092 7,966
Non-GAAP products
standard cost of
revenue 37,865 20,058 32,311 44,700 50,906
Products standard margin
(GAAP) 22,436 14,368 18,208 17,038 25,364
Plus: Fresh-start
accounting
adjustments - 747 2,717 1,577 5,769
SOP 97-2 revenue
deferrals 8,952 (441) 5,904 6,596 3,752
Non-GAAP products
standard margin 31,388 14,674 26,829 25,211 34,885
Non-GAAP products
standard margin 45.3% 42.2% 45.4% 36.1% 40.7%
Calculation of Non-GAAP Quarterly Results of Operations and EBITDAR
Successor Company
Three Months Ended: 27-Jun-08 28-Mar-08 28-Dec-07 28-Sep-07
(in thousands)
Total revenue (GAAP) $93,869 $79,078 $90,111 $91,085
Plus: Fresh-start accounting
adjustments 1,557 2,046 2,094 3,835
SOP 97-2 revenue
deferrals (1) 26,035 (253) 16,935 25,813
Non-GAAP total revenue 121,461 80,871 109,140 120,733
Cost of revenue (GAAP) 64,351 60,484 62,248 63,581
Plus: Fresh-start accounting
adjustments (1,274) (1,492) (3,834) (2,762)
SOP 97-2 revenue
deferrals (1) 13,738 286 11,794 18,576
Depreciation &
amortization -
Linux Networx (130) (45) - -
Stock-based compensation
expense (90) (84) 8 (87)
Non-GAAP cost of revenue 76,595 59,149 70,216 79,308
Research and development
expense (GAAP) 14,308 16,520 14,464 13,296
Plus: Fresh-start accounting
adjustments (169) (108) (12) 47
Depreciation &
amortization -
Linux Networx (226) (60) - -
Write-off of in-process
R&D - Linux Networx - (2,400) - -
Stock-based compensation
expense (317) (320) (253) (309)
Non-GAAP research and
development expense 13,596 13,632 14,199 13,034
Selling, general and
administrative
expenses (GAAP) 43,179 42,484 44,163 41,224
Plus: Fresh-start
accounting adjustments (2,710) (2,545) (2,525) (2,076)
Restructuring and
bankruptcy
related expenses - - - -
Goodwill impairment - - - -
Depreciation &
amortization -
Linux Networx (173) (118) - -
Stock-based
compensation
expense (724) (705) (530) (718)
Non-GAAP selling,
general and
administrative
expenses 39,572 39,116 41,108 38,430
Other operating
expenses (GAAP) 603 230 20 175
Plus: Restructuring and
bankruptcy
related expenses (603) (230) (20) (175)
Non-GAAP other
operating expenses - - - -
Operating expenses (GAAP) 58,090 59,234 58,647 54,695
Plus: Fresh-start accounting
adjustments (2,879) (2,653) (2,537) (2,029)
Stock-based
compensation
expense (1,041) (1,025) (783) (1,027)
Goodwill impairment - - - -
Depreciation &
amortization -
Linux Networx (399) (178) - -
Write-off of in-process
R&D - Linux Networx - (2,400) - -
Restructuring and
bankruptcy
related expenses (603) (230) (20) (175)
Non-GAAP operating
expenses 53,168 52,748 55,307 51,464
Operating income (loss)
(GAAP) (28,572) (40,640) (30,784) (27,191)
Plus: Fresh-start accounting
adjustments 5,710 6,191 8,465 8,626
SOP 97-2 revenue
deferrals (1) 12,297 (539) 5,141 7,237
Stock-based
compensation
expense 1,131 1,109 775 1,114
Goodwill impairment - - - -
Depreciation &
amortization -
Linux Networx 529 223 - -
Write-off of in-process
R&D - Linux Networx - 2,400 - -
Restructuring and
bankruptcy
related expenses 603 230 20 175
Non-GAAP operating income
(loss) (2): (8,302) (31,026) (16,383) (10,039)
Plus: Depreciation 5,306 5,375 5,414 6,224
EBITDAR (2,996) (25,651) (10,969) (3,815)
Successor Company
Three Months Ended: 29-Jun-07 30-Mar-07 29-Dec-06
(in thousands)
Total revenue (GAAP) $122,295 $111,046 $107,723
Plus: Fresh-start accounting
adjustments 5,472 8,329 15,877
SOP 97-2 revenue deferrals (1) 13,726 10,392 10,544
Non-GAAP total revenue 141,493 129,767 134,144
Cost of revenue (GAAP) 90,148 74,355 89,305
Plus: Fresh-start accounting
adjustments (6,644) (4,703) (12,549)
SOP 97-2 revenue deferrals (1) 8,213 3,574 6,293
Depreciation & amortization -
Linux Networx - - -
Stock-based compensation
expense (57) (45) (12)
Non-GAAP cost of revenue 91,660 73,181 83,037
Research and development expense
(GAAP) 14,870 14,186 14,984
Plus: Fresh-start accounting
adjustments 65 52 (348)
Depreciation & amortization -
Linux Networx - - -
Write-off of in-process R&D -
Linux Networx - - -
Stock-based compensation
expense (257) (200) (58)
Non-GAAP research and
development expense 14,678 14,038 14,578
Selling, general and
administrative expenses (GAAP) 41,697 42,017 41,606
Plus: Fresh-start accounting
adjustments (2,580) (2,587) (2,635)
Restructuring and bankruptcy
related expenses - - -
Goodwill impairment - - -
Depreciation & amortization -
Linux Networx - - -
Stock-based compensation
expense (581) (949) (54)
Non-GAAP selling, general and
administrative expenses 38,536 38,481 38,917
Other operating expenses (GAAP) 358 358 2,885
Plus: Restructuring and bankruptcy
related expenses (358) (358) (2,885)
Non-GAAP other operating
expenses - - -
Operating expenses (GAAP) 56,925 56,561 59,475
Plus: Fresh-start accounting
adjustments (2,515) (2,535) (2,983)
Stock-based compensation
expense (838) (1,149) (112)
Goodwill impairment - - -
Depreciation & amortization -
Linux Networx - - -
Write-off of in-process R&D -
Linux Networx - - -
Restructuring and bankruptcy
related expenses (358) (358) (2,885)
Non-GAAP operating expenses 53,214 52,519 53,495
Operating income (loss) (GAAP) (24,778) (19,870) (41,057)
Plus: Fresh-start accounting
adjustments 14,631 15,567 31,409
SOP 97-2 revenue deferrals (1) 5,513 6,818 4,251
Stock-based compensation
expense 895 1,194 124
Goodwill impairment - - -
Depreciation & amortization -
Linux Networx - - -
Write-off of in-process R&D -
Linux Networx - - -
Restructuring and bankruptcy
related expenses 358 358 2,885
Non-GAAP operating income
(loss) (2): (3,381) 4,067 (2,388)
Plus: Depreciation 6,169 6,128 6,552
EBITDAR 2,788 10,195 4,164
Predecessor Company
Three Months Ended: 29-Sep-06 30-Jun-06 31-Mar-06 30-Dec-05 30-Sep-05
(in thousands)
Total revenue (GAAP) $121,805 $115,708 $105,562 $136,796 $160,739
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 5,154 13,476 2,112 7,597 8,938
Non-GAAP total
revenue 126,959 129,184 107,674 144,393 169,677
Cost of revenue (GAAP) 74,975 70,532 68,227 80,952 100,722
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 2,795 4,675 1,334 3,366 4,810
Depreciation &
amortization -
Linux Networx - - - - -
Stock-based
compensation
expense 7 22 (53) (71) (228)
Non-GAAP cost of
revenue 77,777 75,229 69,508 84,247 105,304
Research and
development expense
(GAAP) 16,007 18,220 20,838 21,254 23,365
Plus: Fresh-start
accounting
adjustments - - - - -
Depreciation &
amortization -
Linux Networx - - - - -
Write-off of in-
process R&D -
Linux Networx - - - - -
Stock-based
compensation
expense 5 32 (112) (231) (300)
Non-GAAP research
and development
expense 16,012 18,252 20,726 21,023 23,065
Selling, general and
administrative
expenses (GAAP) 42,359 42,903 59,722 57,627 59,865
Plus: Fresh-start
accounting
adjustments - - - - -
Restructuring and
bankruptcy related
expenses - - (3,452) (6,413) (2,082)
Goodwill impairment - - (8,386) - -
Depreciation &
amortization -
Linux Networx - - - - -
Stock-based
compensation
expense (134) (64) (344) (381) (455)
Non-GAAP selling,
general and
administrative
expenses 42,225 42,839 47,540 50,833 57,328
Other operating
expenses (GAAP) 3,926 (7,694) 11,550 10,114 7,185
Plus: Restructuring and
bankruptcy
related
expenses (3,926) 7,694 (11,550) (10,114) (7,185)
Non-GAAP other
operating expenses - - - - -
Operating expenses
(GAAP) 62,292 53,429 92,110 88,995 90,415
Plus: Fresh-start
accounting
adjustments - - - - -
Stock-based
compensation
expense (129) (32) (456) (612) (755)
Goodwill impairment - - (8,386) - -
Depreciation &
amortization -
Linux Networx - - - - -
Write-off of in-
process R&D -
Linux Networx - - - - -
Restructuring and
bankruptcy related
expenses (3,926) 7,694 (15,002) (16,527) (9,267)
Non-GAAP operating
expenses 58,237 61,091 68,266 71,856 80,393
Operating income
(loss) (GAAP) (15,462) (8,253) (54,775) (33,151) (30,398)
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 2,359 8,801 778 4,231 4,128
Stock-based
compensation
expense 122 10 509 683 983
Goodwill impairment - - 8,386 - -
Depreciation &
amortization -
Linux Networx - - - - -
Write-off of in-
process R&D -
Linux Networx - - - - -
Restructuring and
bankruptcy related
expenses 3,926 (7,694) 15,002 16,527 9,267
Non-GAAP operating
income
(loss) (2): (9,055) (7,136) (30,100) (11,710) (16,020)
Plus: Depreciation 6,467 10,003 10,898 11,959 13,379
EBITDAR (2,588) 2,867 (19,202) 249 (2,641)
Three Months Ended: FY2008 FY2007 FY2006
(in thousands)
Total revenue (GAAP) $354,143 $462,869 $518,805
Plus: Fresh-start accounting
adjustments 9,532 29,678 -
SOP 97-2 revenue deferrals (1) 68,530 39,816 32,123
Non-GAAP total revenue 432,205 532,363 550,928
Cost of revenue (GAAP) 250,664 328,783 320,433
Plus: Fresh-start accounting
adjustments (9,362) (23,896) -
SOP 97-2 revenue deferrals (1) 44,394 20,875 14,185
Depreciation & amortization -
Linux Networx (175) - -
Stock-based compensation
expense (253) (107) (330)
Non-GAAP cost of revenue 285,268 325,655 334,288
Research and development expense
(GAAP) 58,588 60,047 83,677
Plus: Fresh-start accounting
adjustments (242) (231) -
Depreciation & amortization -
Linux Networx (286) - -
Write-off of in-process R&D -
Linux Networx (2,400) - -
Stock-based compensation
expense (1,199) (510) (611)
Non-GAAP research and
development expense 54,461 59,306 83,066
Selling, general and administrative
expenses (GAAP) 171,050 167,679 220,117
Plus: Fresh-start accounting
adjustments (9,856) (7,802) -
Restructuring and bankruptcy
related expenses - - (11,947)
Goodwill impairment - - (8,386)
Depreciation & amortization -
Linux Networx (291) - -
Stock-based compensation
expense (2,677) (1,718) (1,244)
Non-GAAP selling, general and
administrative expenses 158,226 158,159 198,540
Other operating expenses (GAAP) 1,028 7,527 21,155
Plus: Restructuring and bankruptcy
related expenses (1,028) (7,527) (21,155)
Non-GAAP other operating
expenses - - -
Operating expenses (GAAP) 230,666 235,253 324,949
Plus: Fresh-start accounting
adjustments (10,098) (8,033) -
Stock-based compensation
expense (3,876) (2,228) (1,855)
Goodwill impairment - - (8,386)
Depreciation & amortization -
Linux Networx (577) - -
Write-off of in-process R&D -
Linux Networx (2,400) - -
Restructuring and bankruptcy
related expenses (1,028) (7,527) (33,102)
Non-GAAP operating expenses 212,687 217,465 281,606
Operating income (loss) (GAAP) (127,187) (101,167) (126,577)
Plus: Fresh-start accounting
adjustments 28,992 61,607 -
SOP 97-2 revenue deferrals (1) 24,136 18,941 17,938
Stock-based compensation
expense 4,129 2,335 2,185
Goodwill impairment - - 8,386
Depreciation & amortization -
Linux Networx 752 - -
Write-off of in-process R&D -
Linux Networx 2,400 - -
Restructuring and bankruptcy
related expenses 1,028 7,527 33,102
Non-GAAP operating income
(loss) (2): (65,750) (10,757) (64,966)
Plus: Depreciation 22,319 25,316 46,239
EBITDAR (43,431) 14,559 (18,727)
Calculation of Non-GAAP Revenues by Reporting Segment(1)
Successor Company
Three Months Ended: 27-Jun-08 28-Mar-08 28-Dec-07 28-Sep-07
(in thousands)
Core systems:
Server products (GAAP) $31,940 $22,703 $23,282 $31,627
Plus: Fresh-start accounting
adjustments - 306 196 22
SOP 97-2 revenue
deferrals (2) 16,134 (346) 12,324 20,887
Non-GAAP server products
revenue $48,074 22,663 35,802 52,536
Storage products revenue
(GAAP) 10,330 8,374 13,505 8,233
Plus: Fresh-start accounting
adjustments - - - -
SOP 97-2 revenue
deferrals (2) 4,203 203 2,303 3,377
Non-GAAP storage products
revenue 14,533 8,577 15,808 11,610
Non-GAAP core systems
revenue 62,607 31,240 51,610 64,146
Legacy systems:
Legacy systems (GAAP) 4,046 4,855 6,626 5,736
Plus: Fresh-start accounting
adjustments - - - -
SOP 97-2 revenue
deferrals (2) 2,905 (348) 1,190 424
Non-GAAP legacy systems
revenue 6,951 4,507 7,816 6,160
Non-GAAP products
revenue 69,558 35,747 59,426 70,306
Global services:
Customer support (GAAP) 36,784 35,163 40,193 38,231
Plus: Fresh-start accounting
adjustments 1,557 1,345 1,898 3,813
SOP 97-2 revenue
deferrals (2) 171 (316) (2,215) 77
Non-GAAP customer support
revenue 38,512 36,192 39,876 42,121
Professional services
(GAAP) 10,769 7,983 6,505 7,258
Plus: Fresh-start accounting
adjustments - 395 - -
SOP 97-2 revenue
deferrals (2) 2,622 554 3,333 1,048
Non-GAAP professional
services revenue 13,391 8,932 9,838 8,306
Non-GAAP global services
revenue 51,903 45,124 49,714 50,427
Non-GAAP revenue $121,461 $80,871 $109,140 $120,733
Successor Company
Three Months Ended: 29-Jun-07 30-Mar-07 29-Dec-06
(in thousands)
Core systems:
Server products (GAAP) $47,926 $32,692 $40,954
Plus: Fresh-start accounting
adjustments 332 1,100 1,109
SOP 97-2 revenue deferrals (2) 6,067 4,857 4,075
Non-GAAP server products
revenue 54,325 38,649 46,138
Storage products revenue
(GAAP) 14,486 12,063 10,920
Plus: Fresh-start accounting
adjustments 293 - 320
SOP 97-2 revenue deferrals (2) 5,392 2,676 3,834
Non-GAAP storage products
revenue 20,171 14,739 15,074
Non-GAAP core systems revenue 74,496 53,388 61,212
Legacy systems:
Legacy systems (GAAP) 11,846 13,816 11,808
Plus: Fresh-start accounting
adjustments - 37 1,952
SOP 97-2 revenue deferrals (2) 259 634 895
Non-GAAP legacy systems
revenue 12,105 14,487 14,655
Non-GAAP products revenue 86,601 67,875 75,867
Global services:
Customer support (GAAP) 39,332 37,527 35,080
Plus: Fresh-start accounting
adjustments 4,789 6,545 12,228
SOP 97-2 revenue deferrals (2) 677 159 231
Non-GAAP customer support
revenue 44,798 44,231 47,539
Professional services (GAAP) 8,705 14,948 8,961
Plus: Fresh-start accounting
adjustments 58 647 268
SOP 97-2 revenue deferrals (2) 1,331 2,066 1,509
Non-GAAP professional services
revenue 10,094 17,661 10,738
Non-GAAP global services
revenue 54,892 61,892 58,277
Non-GAAP revenue $141,493 $129,767 $134,144
Predecessor Company
Three Months Ended: 29-Sep-06 30-Jun-06 31-Mar-06 30-Dec-05 30-Sep-05
(in thousands)
Core systems:
Server products
(GAAP) $34,914 $21,168 $20,484 $28,182 $53,993
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (2) 2,304 3,895 30 2,485 2,524
Non-GAAP server
products revenue 37,218 25,063 20,514 30,667 56,517
Storage products
revenue (GAAP) 12,750 13,134 11,798 11,185 13,816
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (2) 1,584 1,288 854 2,070 2,766
Non-GAAP storage
products revenue 14,334 14,422 12,652 13,255 16,582
Non-GAAP core
systems revenue 51,552 39,485 33,166 43,922 73,099
Legacy systems:
Legacy systems
(GAAP) 12,942 14,701 13,810 27,095 22,729
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (2) (580) 7,169 1,338 2,933 2,940
Non-GAAP legacy
systems revenue 12,362 21,870 15,148 30,028 25,669
Non-GAAP products
revenue 63,914 61,355 48,314 73,950 98,768
Global services:
Customer support
(GAAP) 48,396 49,552 52,053 55,304 57,174
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (2) 144 1,299 (190) (317) 97
Non-GAAP customer
support revenue 48,540 50,851 51,863 54,987 57,271
Professional
services (GAAP) 12,803 17,153 7,417 15,030 13,027
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (2) 1,702 (175) 80 426 611
Non-GAAP
professional
services revenue 14,505 16,978 7,497 15,456 13,638
Non-GAAP global
services revenue 63,045 67,829 59,360 70,443 70,909
Non-GAAP
revenue $126,959 $129,184 $107,674 $144,393 $169,677
Three Months Ended: FY2008 FY2007 FY2006
(in thousands)
Core systems:
Server products (GAAP) $109,552 $156,486 $123,827
Plus: Fresh-start accounting
adjustments 524 2,541 -
SOP 97-2 revenue deferrals (2) 48,999 17,303 8,934
Non-GAAP server products
revenue 159,075 176,330 132,761
Storage products revenue
(GAAP) 40,442 50,219 49,933
Plus: Fresh-start accounting
adjustments - 613 -
SOP 97-2 revenue deferrals (2) 10,086 13,486 6,978
Non-GAAP storage products
revenue 50,528 64,318 56,911
Non-GAAP core systems revenue 209,603 240,648 189,672
Legacy systems:
Legacy systems (GAAP) 21,263 50,412 78,335
Plus: Fresh-start accounting
adjustments - 1,989 -
SOP 97-2 revenue deferrals (2) 4,171 1,208 14,380
Non-GAAP legacy systems
revenue 25,434 53,609 92,715
Non-GAAP products revenue 235,037 294,257 282,387
Global services:
Customer support (GAAP) 150,371 160,335 214,083
Plus: Fresh-start accounting
adjustments 8,613 23,562 -
SOP 97-2 revenue deferrals (2) (2,283) 1,211 889
Non-GAAP customer support
revenue 156,701 185,108 214,972
Professional services (GAAP) 32,515 45,417 52,627
Plus: Fresh-start accounting
adjustments 395 973 -
SOP 97-2 revenue deferrals (2) 7,557 6,608 942
Non-GAAP professional services
revenue 40,467 52,998 53,569
Non-GAAP global services
revenue 197,168 238,106 268,541
Non-GAAP revenue $432,205 $532,363 $550,928
(1) For each of the periods indicated, non-GAAP core systems revenue is
obtained by adding non-GAAP server products revenue and non-GAAP
storage products revenue, non-GAAP products revenue is obtained by
adding non-GAAP core systems revenue and non-GAAP legacy systems
revenue, non-GAAP global services revenue is obtained by adding non-
GAAP customer support revenue and non-GAAP professional services
revenue and non-GAAP revenue is obtained by adding non-GAAP products
revenue and non-GAAP global services revenue. This table includes a
reconciliation of each listed component to the comparable GAAP
figures.
(2) The non-GAAP adjustments for SOP 97-2 are indicative of the revenue
results the company would have recorded without the effect of SOP
97-2, although these are unaudited adjustments. We believe that this
presentation more closely matches the results that would have been
recorded had SAB 104 been applied, in which case the revenue for the
hardware components of the arrangement would have been recorded when
those deliverables were completed, and the primary remaining
deliverable is customer support. Generally, this presentation matches
the timing of billings to customers for the hardware deliverables, and
therefore allows more transparency to cashflows.
Successor Company
Three Months Ended: 27-Jun-08 28-Mar-08 28-Dec-07 28-Sep-07
(in thousands)
Products revenue (GAAP) $46,316 $35,932 $43,413 $45,596
Plus: Fresh-start accounting
adjustments - 306 196 22
SOP 97-2 revenue
deferrals (1) 23,242 (491) 15,817 24,688
Non-GAAP products revenue 69,558 35,747 59,426 70,306
Global services revenue (GAAP) 47,553 43,146 46,698 45,489
Plus: Fresh-start accounting
adjustments 1,557 1,740 1,898 3,813
SOP 97-2 revenue
deferrals (1) 2,793 238 1,118 1,125
Non-GAAP global services
revenue 51,903 45,124 49,714 50,427
Total revenue (GAAP) 93,869 79,078 90,111 91,085
Plus: Fresh-start accounting
adjustments 1,557 2,046 2,094 3,835
SOP 97-2 revenue
deferrals (1) 26,035 (253) 16,935 25,813
Non-GAAP total revenue 121,461 80,871 109,140 120,733
Products cost of revenue (GAAP) 32,743 32,038 34,938 37,692
Plus: Fresh-start accounting
adjustments (1,196) (1,588) (3,789) (2,718)
SOP 97-2 revenue
deferrals (1) 14,290 (50) 9,913 18,092
Depreciation &
amortization -
Linux Networx (50) (24) - -
Stock-based compensation
expense (38) (39) (34) (27)
Non-GAAP products cost of
revenue 45,749 30,337 41,028 53,039
Global services cost of revenue
(GAAP) 31,608 28,446 27,310 25,889
Plus: Fresh-start accounting
adjustments (78) 96 (45) (44)
SOP 97-2 revenue
deferrals (1) (552) 336 1,881 484
Depreciation &
amortization -
Linux Networx (80) (21) - -
Stock-based compensation
expense (52) (45) 42 (60)
Non-GAAP global services
cost of revenue 30,846 28,812 29,188 26,269
Cost of revenue (GAAP) 64,351 60,484 62,248 63,581
Plus: Fresh-start accounting
adjustments (1,274) (1,492) (3,834) (2,762)
SOP 97-2 revenue
deferrals (1) 13,738 286 11,794 18,576
Depreciation &
amortization -
Linux Networx (130) (45) - -
Stock-based compensation
expense (90) (84) 8 (87)
Non-GAAP cost of revenue 76,595 59,149 70,216 79,308
Products gross profit (GAAP) 13,573 3,894 8,475 7,904
Plus: Fresh-start accounting
adjustments 1,196 1,894 3,985 2,740
SOP 97-2 revenue
deferrals (1) 8,952 (441) 5,904 6,596
Depreciation &
amortization -
Linux Networx 50 24 - -
Stock-based
compensation
expense 38 39 34 27
Non-GAAP products gross
profit 23,809 5,410 18,398 17,267
Non-GAAP products gross
profit margin 34.2% 15.1% 31.0% 24.6%
Global services gross
profit (GAAP) 15,945 14,700 19,388 19,600
Plus: Fresh-start accounting
adjustments 1,635 1,644 1,943 3,857
SOP 97-2 revenue
deferrals (1) 3,345 (98) (763) 641
Depreciation &
amortization -
Linux Networx 80 21 - -
Stock-based compensation
expense 52 45 (42) 60
Non-GAAP global services
gross profit 21,057 16,312 20,526 24,158
Non-GAAP global services
gross profit margin 40.6% 36.1% 41.3% 47.9%
Gross profit (GAAP) 29,518 18,594 27,863 27,504
Plus: Fresh-start accounting
adjustments 2,831 3,538 5,928 6,597
SOP 97-2 revenue
deferrals (1) 12,297 (539) 5,141 7,237
Depreciation &
amortization -
Linux Networx 130 45 - -
Stock-based compensation
expense 90 84 (8) 87
Non-GAAP gross profit 44,866 21,722 38,924 41,425
Non-GAAP gross profit
margin 36.9% 26.9% 35.7% 34.3%
Successor Company
Three Months Ended: 29-Jun-07 30-Mar-07 29-Dec-06
(in thousands)
Products revenue (GAAP) $74,258 $58,571 $63,682
Plus: Fresh-start accounting
adjustments 625 1,137 3,381
SOP 97-2 revenue deferrals (1) 11,718 8,167 8,804
Non-GAAP products revenue 86,601 67,875 75,867
Global services revenue (GAAP) 48,037 52,475 44,041
Plus: Fresh-start accounting
adjustments 4,847 7,192 12,496
SOP 97-2 revenue deferrals (1) 2,008 2,225 1,740
Non-GAAP global services
revenue 54,892 61,892 58,277
Total revenue (GAAP) 122,295 111,046 107,723
Plus: Fresh-start accounting
adjustments 5,472 8,329 15,877
SOP 97-2 revenue deferrals (1) 13,726 10,392 10,544
Non-GAAP total revenue 141,493 129,767 134,144
Products cost of revenue (GAAP) 61,114 41,330 59,918
Plus: Fresh-start accounting
adjustments (6,814) (5,329) (12,875)
SOP 97-2 revenue deferrals (1) 7,966 2,454 5,318
Depreciation & amortization -
Linux Networx - - -
Stock-based compensation
expense (24) (21) (6)
Non-GAAP products cost of
revenue 62,242 38,434 52,355
Global services cost of revenue
(GAAP) 29,034 33,025 29,387
Plus: Fresh-start accounting
adjustments 170 626 326
SOP 97-2 revenue deferrals (1) 247 1,120 975
Depreciation & amortization -
Linux Networx - - -
Stock-based compensation
expense (33) (24) (6)
Non-GAAP global services cost
of revenue 29,418 34,747 30,682
Cost of revenue (GAAP) 90,148 74,355 89,305
Plus: Fresh-start accounting
adjustments (6,644) (4,703) (12,549)
SOP 97-2 revenue deferrals (1) 8,213 3,574 6,293
Depreciation & amortization -
Linux Networx - - -
Stock-based compensation
expense (57) (45) (12)
Non-GAAP cost of revenue 91,660 73,181 83,037
Products gross profit (GAAP) 13,144 17,241 3,764
Plus: Fresh-start accounting
adjustments 7,439 6,466 16,256
SOP 97-2 revenue deferrals (1) 3,752 5,713 3,486
Depreciation & amortization -
Linux Networx - - -
Stock-based compensation
expense 24 21 6
Non-GAAP products gross profit 24,359 29,441 23,512
Non-GAAP products gross profit
margin 28.1% 43.4% 31.0%
Global services gross profit (GAAP) 19,003 19,450 14,654
Plus: Fresh-start accounting
adjustments 4,677 6,566 12,170
SOP 97-2 revenue deferrals (1) 1,761 1,105 765
Depreciation & amortization -
Linux Networx - - -
Stock-based compensation
expense 33 24 6
Non-GAAP global services gross
profit 25,474 27,145 27,595
Non-GAAP global services gross
profit margin 46.4% 43.9% 47.4%
Gross profit (GAAP) 32,147 36,691 18,418
Plus: Fresh-start accounting
adjustments 12,116 13,032 28,426
SOP 97-2 revenue deferrals (1) 5,513 6,818 4,251
Depreciation & amortization -
Linux Networx - - -
Stock-based compensation
expense 57 45 12
Non-GAAP gross profit 49,833 56,586 51,107
Non-GAAP gross profit margin 35.2% 43.6% 38.1%
Predecessor Company
Three Months Ended: 29-Sep-06 30-Jun-06 31-Mar-06 30-Dec-05 30-Sep-05
(in thousands)
Products revenue (GAAP) $60,606 $49,003 $46,092 $66,462 $90,538
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 3,308 12,352 2,222 7,488 8,230
Non-GAAP products
revenue 63,914 61,355 48,314 73,950 98,768
Global services revenue
(GAAP) 61,199 66,705 59,470 70,334 70,201
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 1,846 1,124 (110) 109 708
Non-GAAP global
services revenue 63,045 67,829 59,360 70,443 70,909
Total revenue (GAAP) 121,805 115,708 105,562 136,796 160,739
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 5,154 13,476 2,112 7,597 8,938
Non-GAAP total
revenue 126,959 129,184 107,674 144,393 169,677
Products cost of revenue
(GAAP) 42,710 36,218 35,042 43,517 62,550
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 2,114 4,518 1,180 2,941 4,215
Depreciation &
amortization -
Linux Networx - - - - -
Stock-based
compensation
expense - 4 (14) (24) (54)
Non-GAAP products
cost of revenue 44,824 40,740 36,208 46,434 66,711
Global services cost of
revenue (GAAP) 32,265 34,314 33,185 37,435 38,172
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 681 157 154 425 595
Depreciation &
amortization -
Linux Networx - - - - -
Stock-based
compensation
expense 7 18 (39) (47) (174)
Non-GAAP global
services
cost of revenue 32,953 34,489 33,300 37,813 38,593
Cost of revenue (GAAP) 74,975 70,532 68,227 80,952 100,722
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 2,795 4,675 1,334 3,366 4,810
Depreciation &
amortization -
Linux Networx - - - - -
Stock-based
compensation
expense 7 22 (53) (71) (228)
Non-GAAP cost of
revenue 77,777 75,229 69,508 84,247 105,304
Products gross profit
(GAAP) 17,896 12,785 11,050 22,945 27,988
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 1,194 7,834 1,042 4,547 4,015
Depreciation &
amortization -
Linux Networx - - - - -
Stock-based
compensation
expense - (4) 14 24 54
Non-GAAP products
gross profit 19,090 20,615 12,106 27,516 32,057
Non-GAAP products
gross profit margin 29.9% 33.6% 25.1% 37.2% 32.5%
Global services gross
profit (GAAP) 28,934 32,391 26,285 32,899 32,029
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 1,165 967 (264) (316) 113
Depreciation &
amortization -
Linux Networx - - - - -
Stock-based
compensation
expense (7) (18) 39 47 174
Non-GAAP global
services
gross profit 30,092 33,340 26,060 32,630 32,316
Non-GAAP global
services gross
profit margin 47.7% 49.2% 43.9% 46.3% 45.6%
Gross profit (GAAP) 46,830 45,176 37,335 55,844 60,017
Plus: Fresh-start
accounting
adjustments - - - - -
SOP 97-2 revenue
deferrals (1) 2,359 8,801 778 4,231 4,128
Depreciation &
amortization -
Linux Networx - - - - -
Stock-based
compensation
expense (7) (22) 53 71 228
Non-GAAP gross profit 49,182 53,955 38,166 60,146 64,373
Non-GAAP gross profit
margin 38.7% 41.8% 35.4% 41.7% 37.9%
Three Months Ended: FY2008 FY2007 FY2006
(in thousands)
Products revenue (GAAP) $171,257 $257,117 $252,095
Plus: Fresh-start accounting
adjustments 524 5,143 -
SOP 97-2 revenue deferrals (1) 63,256 31,997 30,292
Non-GAAP products revenue 235,037 294,257 282,387
Global services revenue (GAAP) 182,886 205,752 266,710
Plus: Fresh-start accounting
adjustments 9,008 24,535 -
SOP 97-2 revenue deferrals (1) 5,274 7,819 1,831
Non-GAAP global services
revenue 197,168 238,106 268,541
Total revenue (GAAP) 354,143 462,869 518,805
Plus: Fresh-start accounting
adjustments 9,532 29,678 -
SOP 97-2 revenue deferrals (1) 68,530 39,816 32,123
Non-GAAP total revenue 432,205 532,363 550,928
Products cost of revenue (GAAP) 137,411 205,072 177,327
Plus: Fresh-start accounting
adjustments (9,291) (25,018) -
SOP 97-2 revenue deferrals (1) 42,245 17,852 12,854
Depreciation & amortization -
Linux Networx (74) - -
Stock-based compensation
expense (138) (51) (88)
Non-GAAP products cost of
revenue 170,153 197,855 190,093
Global services cost of revenue
(GAAP) 113,253 123,711 143,106
Plus: Fresh-start accounting
adjustments (71) 1,122 -
SOP 97-2 revenue deferrals (1) 2,149 3,023 1,331
Depreciation & amortization -
Linux Networx (101) - -
Stock-based compensation
expense (115) (56) (242)
Non-GAAP global services cost
of revenue 115,115 127,800 144,195
Cost of revenue (GAAP) 250,664 328,783 320,433
Plus: Fresh-start accounting
adjustments (9,362) (23,896) -
SOP 97-2 revenue deferrals (1) 44,394 20,875 14,185
Depreciation & amortization -
Linux Networx (175) - -
Stock-based compensation
expense (253) (107) (330)
Non-GAAP cost of revenue 285,268 325,655 334,288
Products gross profit (GAAP) 33,846 52,045 74,768
Plus: Fresh-start accounting
adjustments 9,815 30,161 -
SOP 97-2 revenue deferrals (1) 21,011 14,145 17,438
Depreciation & amortization -
Linux Networx 74 - -
Stock-based compensation
expense 138 51 88
Non-GAAP products gross profit 64,884 96,402 92,294
Non-GAAP products gross profit
margin 27.6% 32.8% 32.7%
Global services gross profit (GAAP) 69,633 82,041 123,604
Plus: Fresh-start accounting
adjustments 9,079 23,413 -
SOP 97-2 revenue deferrals (1) 3,125 4,796 500
Depreciation & amortization -
Linux Networx 101 - -
Stock-based compensation
expense 115 56 242
Non-GAAP global services gross
profit 82,053 110,306 124,346
Non-GAAP global services gross
profit margin 41.6% 46.3% 46.3%
Gross profit (GAAP) 103,479 134,086 198,372
Plus: Fresh-start accounting
adjustments 18,894 53,574 -
SOP 97-2 revenue deferrals (1) 24,136 18,941 17,938
Depreciation & amortization -
Linux Networx 175 - -
Stock-based compensation
expense 253 107 330
Non-GAAP gross profit 146,937 206,708 216,640
Non-GAAP gross profit margin 34.0% 38.8% 39.3%
SOURCE SGI