Dot Hill Systems Corp. News
Dot Hill Reports First Quarter 2008 Results
Excluding the
Net loss was
On a non-GAAP basis after adjusting for the impacts from the issuance of a warrant to Hewlett-Packard, the legal settlement benefit, share-based compensation expense, foreign currency translation gains and severance costs, net loss for the first quarter of 2008 was
Gross margin for the first quarter of 2008 was 7.9 percent as compared to first quarter 2007 gross margin of 12.5 percent and fourth quarter 2007 gross margin of 12.2 percent. The decrease in gross margin percentage on a year-over-year and sequential basis was due primarily to the reduction in revenue associated with the warrant issued to Hewlett-Packard and secondarily to a change in the company's product sales mix. Adjusting first quarter 2008 results for the reduction in revenue, share-based compensation expense and severance costs, non-GAAP gross margin percentage was 12.0 percent.
The company exited the first quarter of 2008 with cash and cash equivalents of
"Since last quarter, Dot Hill has made some significant progress on several fronts," said
The company is targeting second quarter 2008 net revenue in the range of
Dot Hill's first quarter 2008 financial results conference call is scheduled to take place on
About Non-GAAP Financial Measures
This press release contains financial results that exclude the effects of the issuance of warrants to Hewlett-Packard, goodwill impairment charges, stock-based compensation expense, severance costs, foreign currency adjustments and costs associated with legal settlements, and are not in accordance with U.S. generally accepted accounting principles (GAAP). The company believes that these non-GAAP financial measures provide meaningful supplemental information to both management and investors that are indicative of the company's core operating results and facilitates comparison of operating results across reporting periods. The company used these non-GAAP measures when evaluating its financial results as well as for internal resource management, planning and forecasting purposes. These non-GAAP measures should not be viewed in isolation from or as a substitute for the company's expected financial results in accordance with GAAP.
About Dot Hill
Delivering innovative technology and global support, Dot Hill empowers the OEM community to bring unique storage solutions to market, quickly, easily and cost-effectively. Offering high performance and industry-leading uptime, Dot Hill's RAID technology is the foundation for best-in-class storage solutions offering enterprise-class security, availability and data protection. The company's products are in use today by the world's leading service and equipment providers, common carriers, advanced technology and telecommunications companies as well as government agencies. Dot Hill solutions are certified to meet rigorous industry standards and military specifications, as well as RoHS and WEEE international environmental standards. Headquartered in
Statements contained in this press release regarding matters that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such statements include statements regarding: Dot Hill's projected financial results for the second quarter of 2008; Dot Hill's ability to achieve profitability; and continued diversification of Dot Hill's revenue stream. The risks that contribute to the uncertain nature of the forward-looking statements include, among other things: the risk that actual financial results for the second quarter 2008 may be different from the financial guidance provided in this press release; the fact that no Dot Hill customer agreements provide for mandatory minimum purchase requirements; the risk that one or more of Dot Hill's OEM or other customers may cancel or reduce orders, not order as forecasted or terminate their agreements with Dot Hill; the risk that Dot Hill's new products may not prove to be popular; the risk that one or more of Dot Hill's suppliers or subcontractors may fail to perform or may terminate their agreements with Dot Hill; unforeseen technological, intellectual property, personnel or engineering issues; and the additional risks set forth in the form 10-K and most recently filed by Dot Hill. All forward-looking statements contained in this press release speak only as of the date on which they were made. Dot Hill undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.
DOT HILL SYSTEMS CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In Thousands, Except Per Share Amounts) Three Months Ended March 31, 2007 2008 NET REVENUE $53,441 $52,826 COST OF GOODS SOLD 46,767 48,660 GROSS PROFIT 6,674 4,166 OPERATING EXPENSES: Sales and marketing 3,908 4,272 Research and development 6,074 7,424 General and administrative 3,670 3,043 Legal settlement - (3,836) Total operating expenses 13,652 10,903 OPERATING LOSS (6,978) (6,737) OTHER INCOME: Interest income, net 1,308 708 Other income, net - 79 TOTAL OTHER INCOME, NET 1,308 787 LOSS BEFORE INCOME TAXES (5,670) (5,950) INCOME TAX EXPENSE 292 160 NET LOSS $(5,962) $(6,110) NET LOSS PER SHARE: Basic and diluted $(0.13) $(0.13) WEIGHTED AVERAGE SHARES USED TO CALCULATE NET LOSS PER SHARE: Basic and diluted 45,157 45,956 COMPREHENSIVE LOSS: Net loss $(5,962) $(6,110) Foreign currency translation adjustments (604) (231) Comprehensive loss $(6,566) $(6,341) DOT HILL SYSTEMS CORP. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands Except Per Share Amounts) December 31, March 31, 2007 2008 ASSETS Current Assets: Cash and cash equivalents $82,358 $77,406 Accounts receivable, net of allowance of $302 and $195 32,445 36,569 Inventories 9,013 14,430 Prepaid expenses and other 3,968 4,626 Total current assets 127,784 133,031 Property and equipment, net 9,599 8,819 Intangible assets, net 2,280 1,873 Other assets 264 236 Total assets $139,927 $143,959 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $28,472 $35,738 Accrued compensation 3,115 3,612 Accrued expenses 6,227 5,588 Deferred revenue 1,409 1,284 Income taxes payable 143 270 Total current liabilities 39,366 46,492 Other long-term liabilities 4,132 3,769 Total liabilities 43,498 50,261 Commitments and Contingencies Stockholders' Equity: Preferred stock, $.001 par value, 10,000 shares authorized, no shares issued and outstanding - - Common stock, $.001 par value, 100,000 shares authorized, 45,781 and 46,055 shares issued and outstanding at December 31, 2007 and March 31, 2008, respectively 46 46 Additional paid-in capital 294,193 297,803 Accumulated other comprehensive loss (3,100) (3,331) Accumulated deficit (194,710) (200,820) Total stockholders' equity 96,429 93,698 Total liabilities and stockholders' equity $139,927 $143,959 DOT HILL SYSTEMS CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Three Months Ended March 31, 2007 2008 Cash Flows From Operating Activities: Net loss $(5,962) $(6,110) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,775 1,465 Gain on disposal of property and equipment - (5) Provision for doubtful accounts - (171) Issuance of warrant to customer - 2,282 Share-based compensation expense 225 665 Changes in operating assets and liabilities: Accounts receivable 2,109 (4,032) Inventories (195) (5,390) Prepaid expenses and other assets 1,042 (626) Accounts payable (417) 6,987 Accrued compensation and other expenses (2,250) (121) Deferred revenue 28 (151) Income taxes payable 158 126 Other long-term liabilities 16 (363) Net cash used in operating activities (3,471) (5,444) Cash flows from investing activities Purchase of property and equipment (945) (268) Net cash used in investing activities (945) (268) Cash flows from financing activities Proceeds from sale of stock to employees 508 465 Proceeds from exercise of stock options and warrants 94 198 Net cash provided by financing activities 602 663 Effect of exchange rate changes on cash 64 97 Net decrease in cash and cash equivalents (3,750) (4,952) Cash and cash equivalents beginning of period 99,663 82,358 Cash and cash equivalents end of period $95,913 $77,406 Supplemental disclosures of cash flow information Cash paid for income taxes $125 $35 Supplemental disclosures of non-cash investing and financing activities Construction in progress costs incurred but no paid $481 $142 DOT HILL SYSTEMS CORP. RECONCILIATION TABLE OF NON-GAAP MEASURES (In Thousands, Except Per Share Amounts) (Unaudited) Three Months Ended March 31, 2007 2008 Net loss $(5,962) $(6,110) Effect of issuance of warrant to customer - 2,282 Effect of legal settlement - (3,836) Effect of currency gain (241) (294) Effect of share-based compensation 225 665 Effect of severance costs - 322 Net loss as adjusted $(5,978) $(6,971) Net loss per share: Basic and diluted $(0.13) $(0.15) Weighted average shares used to calculate net loss per share: Basic and diluted 45,157 45,956 Net revenue $53,441 $52,826 Effect of issuance of warrant to customer - 2,282 Net revenue as adjusted $53,441 $55,108 Gross profit $6,674 $4,166 Effect of issuance of warrant to customer - 2,282 Effect of share-based compensation 103 96 Effect of severance costs - 50 Gross profit as adjusted $6,777 $6,594
SOURCE Dot Hill Systems Corp.
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