Audience, Inc. Condensed consolidated statements of comprehensive income (in thousands, except per share data) (unaudited) Three months ended Twelve months ended December 31, December 31, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- ---------Revenue: Hardware $ 34,462 $ 17,952 $ 107,267 $ 97,668 Licensing 4,227 - 36,638 - --------- --------- --------- --------- Total revenue 38,689 17,952 143,905 97,668 --------- --------- --------- ---------Cost of revenue 17,855 9,962 62,247 45,707 --------- --------- --------- --------- Gross profit 20,834 7,990 81,658 51,961Operating expenses: Research and development 8,473 6,973 31,520 21,578 Selling, general and administrative 10,498 6,367 35,271 21,237 --------- --------- --------- ---------Total operating expenses 18,971 13,340 66,791 42,815 --------- --------- --------- ---------Income (loss) from operations 1,863 (5,350) 14,867 9,146Interest income (expense), net 74 (3) 164 (8)Other income (expense), net (82) (286) (586) (843) --------- --------- --------- ---------Income (loss) before income taxes 1,855 (5,639) 14,445 8,295Income tax benefit 1,204 - 772 - --------- --------- --------- ---------Net income (loss) $ 3,059 $ (5,639) $ 15,217 $ 8,295 ========= ========= ========= =========Net income (loss) per share: Basic $ 0.15 $ (5.56) $ 0.71 $ 0.16 ========= ========= ========= ========= Diluted $ 0.14 $ (5.56) $ 0.63 $ 0.14 ========= ========= ========= =========Weighted average shares used in computing net income (loss) per share: Basic 20,587 1,014 13,377 948 ========= ========= ========= ========= Diluted 22,460 1,014 15,687 3,384 ========= ========= ========= =========Other comprehensive income (loss): Foreign currency translation adjustments $ - $ (18) $ 31 $ (59) Unrealized gain on marketable securities 3 - 3 - --------- --------- --------- ---------Net comprehensive income (loss) $ 3,062 $ (5,657) $ 15,251 $ 8,236 ========= ========= ========= ========= Audience, Inc. Consolidated statements of operations GAAP to Non-GAAP net income reconciliation (in thousands) Three months ended Twelve months ended December 31, December 31, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- ---------GAAP net income (loss) $ 3,059 $ (5,639) $ 15,217 $ 8,295 Stock-based compensation 944 606 3,134 1,390 Non-cash rent expense 431 - 579 - Revaluation of warrant liability - 267 290 823 Valuation allowance (1,225) - (1,225) - --------- --------- --------- ---------Non-GAAP net income (loss) $ 3,209 $ (4,766) $ 17,995 $ 10,508 ========= ========= ========= ========= Audience, Inc. Unaudited computation of GAAP earnings per share (in thousands, except for per share amounts) Three months ended Twelve months ended December 31, December 31, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- ---------Computation of GAAP net income (loss) per share:GAAP net income (loss) $ 3,059 $ (5,639) $ 15,217 $ 8,295Non-cumulative dividends to preferred stockholders - - (2,247) (5,993)Undistributed earnings allocated to preferred stockholders - - (3,481) (2,148) --------- --------- --------- ---------Net income (loss), basic 3,059 (5,639) 9,489 154Adjustments to net income (loss) for preferred anti-dilutive - - 390 315 --------- --------- --------- ---------Net income (loss), diluted $ 3,059 $ (5,639) $ 9,879 $ 469 ========= ========= ========= =========Weighted average shares used in computing net income (loss) per share: Basic 20,587 1,014 13,377 948 ========= ========= ========= ========= Diluted 22,460 1,014 15,687 3,384 ========= ========= ========= =========Net income (loss) per share: Basic $ 0.15 $ (5.56) $ 0.71 $ 0.16 ========= ========= ========= ========= Diluted $ 0.14 $ (5.56) $ 0.63 $ 0.14 ========= ========= ========= ========= Audience, Inc. Unaudited reconciliation of GAAP to non-GAAP diluted earnings per share (in thousands, except per share amounts) Three months ended Twelve months ended December 31, December 31, ------------------ --------------------- 2012 2011 2012 2011 -------- -------- -------- --------GAAP net income (loss) $ 3,059 $ (5,639) $ 15,217 $ 8,295Non-cumulative dividends to preferred stockholders - - (2,247)(B) (5,993)Undistributed earnings allocated to preferred stockholders - - (3,481) (2,148) -------- -------- -------- --------GAAP net income (loss) - basic 3,059 (5,639) 9,489 154Adjustment to two-class method diluted net income (loss) - - 390 315 -------- -------- -------- --------GAAP net income (loss) - diluted 3,059 (5,639) 9,879 469Non-GAAP adjustments: Stock-based compensation 944 606 3,134 1,390 Non-cash rent expense 431 - 579 - Revaluation of warrant liability - 267 290 823 Valuation allowance (1,225) - (1,225) -Non-GAAP as if converted method - - 5,338 (A) - -------- -------- -------- --------Non-GAAP net income (loss) - diluted $ 3,209 $ (4,766) $ 17,995 $ 2,682 ======== ======== ======== ========GAAP - diluted weighted average shares 22,460 1,014 15,687 3,384 ======== ======== ======== ========Non-GAAP - diluted weighted average shares 22,460 1,014 20,558 3,384 ======== ======== ======== ========GAAP - diluted net income (loss) per share $ 0.14 $ (5.56) $ 0.63 $ 0.14Non-GAAP adjustments: Stock-based compensation 0.04 0.60 0.15 0.41 Non-cash rent expense 0.02 - 0.03 - Revaluation of warrant liability - 0.26 0.02 0.24 Valuation allowance (0.06) - (0.06) -Non-GAAP as if converted method - - 0.11 (B) - -------- -------- -------- --------Non-GAAP - diluted net income (loss) per share $ 0.14 $ (4.70) $ 0.88 $ 0.79 ======== ======== ======== ======== (A) For the twelve months ended December 31, 2012, non-GAAP net income was adjusted by $5,338 to give effect to the conversion of our convertible preferred stock and certain preferred stock warrants using the as-if converted method into common shares as if the conversion had occurred as of the beginning of the period presented. (B) For the twelve months ended December 31, 2012, non-GAAP diluted EPS was computed to give effect to the conversion of our convertible preferred stock and certain preferred stock warrants using the as-if converted method into common shares as if the conversion had occurred as of the beginning of the period presented. Therefore to bridge the GAAP to non- GAAP EPS the $2,247 non-cumulative dividends to preferred stockholders should not be allocated to stockholders. Audience, Inc. Non-GAAP condensed consolidated statements of operations Impact of Non-GAAP adjustments on reported GAAP net income (loss) (in thousands, except per share data) (unaudited) Three months ended December Three months ended December 31, 2012 31, 2011 ---------------------------- ---------------------------- Reported Adjust- Non- Reported Adjust- Non- GAAP ments GAAP GAAP ments GAAP -------- ------- ------- -------- ------- -------Revenue: Hardware $ 34,462 $ -- $34,462 $ 17,952 $ -- $17,952 Licensing 4,227 -- 4,227 -- -- -- -------- ------- ------- -------- ------- ------- Total revenue 38,689 -- 38,689 17,952 -- 17,952 -------- ------- ------- -------- ------- ------- Cost of revenue 17,855 (45)(A) 17,810 9,962 (24)(B) 9,938 -------- ------- ------- -------- ------- ------- Gross profit 20,834 45 20,879 7,990 24 8,014 Operating expenses: Research and development 8,473 (565)(A) 7,908 6,973 (132)(B) 6,841 Selling, general and administrative 10,498 (765)(A) 9,733 6,367 (450)(B) 5,917 -------- ------- ------- -------- ------- ------- Total operating expenses 18,971 (1,330) 17,641 13,340 (582) 12,758 -------- ------- ------- -------- ------- -------Income (loss) from operations 1,863 1,375 3,238 (5,350) 606 (4,744)Interest income (expense), net 74 -- 74 (3) -- (3)Other income (expense), net (82) -- (82) (286) 267 (D) (19) -------- ------- ------- -------- ------- -------Income (loss) before income taxes 1,855 1,375 3,230 (5,639) 873 (4,766)Income tax benefit (expense) 1,204 (1,225)(C) (21) -- -- -- -------- ------- ------- -------- ------- -------Net income (loss) $ 3,059 $ 150 $ 3,209 $ (5,639) $ 873 $(4,766) ======== ======= ======= ======== ======= =======Net income (loss) per share: Basic $ 0.15 $ 0.16 $ (5.56) $ (4.70) ======== ======= ======== ======= Diluted $ 0.14 $ 0.14 $ (5.56) $ (4.70) ======== ======= ======== =======Weighted average shares used in computing net income (loss) per share: Basic 20,587 20,587 1,014 1,014 ======== ======= ======== ======= Diluted 22,460 22,460 1,014 1,014 ======== ======= ======== ======= (A) Stock-based compensation expense total - $944 and Non-cash rent expense total - $431 (B) Stock-based compensation expense total - $606 (C) Valuation allowance - $1,225 (D) Quarterly warrant revaluation - $267 Audience, Inc. Non-GAAP condensed consolidated statements of operations Impact of Non-GAAP adjustments on reported GAAP net income (in thousands, except per share data) (unaudited) Twelve months ended December Twelve months ended December 31, 2012 31, 2011 ------------------------------ ---------------------------- Repor Repor -ted Adjust -ted Adjust Non- GAAP -ments Non-GAAP GAAP -ments GAAP -------- -------- -------- ------- -------- -------Revenue: Hardware $107,267 $ -- $107,267 $97,668 $ -- $97,668 Licensing 36,638 -- 36,638 -- -- -- -------- -------- -------- ------- -------- ------- Total revenue 143,905 -- 143,905 97,668 -- 97,668 -------- -------- -------- ------- -------- -------Cost of revenue 62,247 (150)(A) 62,097 45,707 (90)(B) 45,617 -------- -------- -------- ------- -------- ------- Gross profit 81,658 150 81,808 51,961 90 52,051Operating expenses: Research and development 31,520 (1,338)(A) 30,182 21,578 (416)(B) 21,162 Selling, general and admini- strative 35,271 (2,225)(A) 33,046 21,237 (884)(B) 20,353 -------- -------- -------- ------- -------- ------- Total operating expenses 66,791 (3,563) 63,228 42,815 (1,300) 41,515 -------- -------- -------- ------- -------- -------Income from operations 14,867 3,713 18,580 9,146 1,390 10,536Interest income (expense), net 164 -- 164 (8) -- (8)Other income (expense), net (586) 290(C) (296) (843) 823(D) (20) -------- -------- -------- ------- -------- -------Income before income taxes 14,445 4,003 18,448 8,295 2,213 10,508Income tax benefit (expense) 772 (1,225)(E) (453) -- -- -- -------- -------- -------- ------- -------- -------Net income $ 15,217 $ 2,778 $ 17,995 $ 8,295 $ 2,213 $10,508 ======== ======== ======== ======= ======== =======Net income per share: Basic $ 0.71(F) $ 0.99 $ 0.16(G) $ 2.50(I) ======== ======== ======= ======= Diluted $ 0.63(F) $ 0.88 $ 0.14(G) $ 0.79(I) ======== ======== ======= =======Weighted average shares used in computing net income per share: Basic 13,377 18,248(H) 948 948 ======== ======== ======= ======= Diluted 15,687 20,558(H) 3,384 3,384 ======== ======== ======= ======= (A) Stock-based compensation expense total - $3,134 and Non-cash rent expense total - $579 (B) Stock-based compensation expense total - $1,390 (C) Twelve months ended December 31, 2012 warrant revaluation - $290 (D) Twelve months ended December 31, 2011 warrant revaluation - $823 (E) Valuation allowance - $1,225 (F) GAAP basic and diluted EPS was calculated using the two-class method until our convertible preferred stock converted to common stock upon the closure of our initial public offering. Therefore, our GAAP net income was adjusted by a decrease of $5,728 and $5,338 in arriving to "net income" for the calculation of basic and diluted GAAP EPS, respectively. (G) GAAP basic and diluted EPS was calculated using the two-class method. Therefore, our GAAP net income was adjusted by a decrease of $8,141 and $7,826 in arriving to "net income" for the calculation of basic and diluted GAAP EPS, respectively. (H) Non-GAAP basic and diluted EPS was computed to give effect to the conversion of our convertible preferred stock and certain preferred stock warrants using the as-if converted method into common shares as if the conversion had occurred as of the beginning of each period presented. (I) Non-GAAP basic and diluted EPS was calculated using the two-class method. Therefore, our Non-GAAP net income was adjusted by a decrease of $8,141 and $7,826 in arriving to "net income" for the calculation of basic and diluted Non-GAAP EPS, respectively. Audience, Inc. Estimated computation of GAAP to non-GAAP diluted earnings per share Three months ending March 31, 2013 --------------------Estimated GAAP diluted net income per share $0.08 - $0.12Estimated stock-based compensation expense per share $0.04Estimated non-cash rent expense per share $0.03 --------------------Non-GAAP - diluted net income per share $0.15 - $0.19 ====================
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