PRESS RELEASES
Finisar Announces Sixth Consecutive Quarter of Revenue Growth
COMMENTARY
"I am pleased to report third quarter revenues were
"During the quarter, we continued to make significant strides in new product development. We are scheduled to make several important product announcements and demonstrations at the
FINANCIAL HIGHLIGHTS - THIRD QUARTER ENDED |
||||||||
Summary GAAP Results | Third | Second | ||||||
Quarter | Quarter | |||||||
Ended | Ended | |||||||
(in thousands, except per share amounts) | ||||||||
Revenues | $ | 294,018 | $ | 290,722 | ||||
Gross margin | 35.9 | % | 35.6 | % | ||||
Operating expenses | $ | 72,593 | $ | 73,264 | ||||
Operating income | $ | 33,096 | $ | 30,109 | ||||
Operating margin | 11.3 | % | 10.4 | % | ||||
Net income | $ | 27,061 | $ | 29,965 | ||||
Income per share-basic | $ | 0.28 | $ | 0.31 | ||||
Income per share-diluted | $ | 0.26 | $ | 0.29 | ||||
Basic shares | 96,394 | 95,941 | ||||||
Diluted shares | 104,361 | 103,696 | ||||||
Summary Non-GAAP Results (a) | Third | Second | ||||||
Quarter | Quarter | |||||||
Ended | Ended | |||||||
(in thousands, except per share amounts) | ||||||||
Revenues | $ | 294,018 | $ | 290,722 | ||||
Gross margin | 37.2 | % | 37.1 | % | ||||
Operating expenses | $ | 63,209 | $ | 63,159 | ||||
Operating income | $ | 46,295 | $ | 44,767 | ||||
Operating margin | 15.7 | % | 15.4 | % | ||||
Net income | $ | 44,993 | $ | 43,767 | ||||
Income per share-basic | $ | 0.47 | $ | 0.46 | ||||
Income per share-diluted | $ | 0.44 | $ | 0.43 | ||||
Basic shares | 96,394 | 95,941 | ||||||
Diluted shares | 104,361 | 103,696 | ||||||
_____________
(a) | In evaluating the operating performance of |
Financial Statement Highlights for the third quarter of fiscal 2014:
- Revenues increased to
$294.0 million , up$3.3 million , or 1.1%, from$290.7 million in the preceding quarter. - The sale of products for datacom applications increased by
$ 6.1 million , or 3.0%, compared to the preceding quarter. - The sale of products for telecom applications decreased by
$2.8 million , or (3.2)%, compared to the preceding quarter, primarily driven by the impact of one month of the annual price reductions for telecom products that typically take effect on January 1st. - GAAP gross margin increased to 35.9% from 35.6% in the preceding quarter.
- Non-GAAP gross margin increased to 37.2% from 37.1% in the preceding quarter.
- GAAP operating income increased
$3.0 million to$33.1 million , or 11.3% of revenues, compared to$30.1 million , or 10.4% of revenues in the preceding quarter. - Non-GAAP operating income increased
$1.5 million to$46.3 million , or 15.7% of revenues, compared to$44.8 million , or 15.4% of revenues, in the preceding quarter. - Cash, cash equivalents and short term investments increased
$238.2 million to$554.7 million at the end of the third quarter, compared to$316.5 million at the end of the preceding quarter, principally reflecting the net proceeds of approximately$255.0 million from a convertible debt offering completed during the quarter. - During the quarter, the Company announced that it entered into an agreement under which
Finisar would acquire 100% of the equity interests in u2tPhotonics AG for approximately$20 million in cash, subject to certain adjustments and thatFinisar would also assume net debt of approximately$7 million . This transaction closed on January 31st, one week into the fourth fiscal quarter.
OUTLOOK
Without taking into account the acquisition of u2t, the Company indicated that it currently expects revenues for the fourth quarter of fiscal 2014 to be in the range of
After taking into account the acquisition of u2t, including the elimination of any intercompany revenue or expense transactions with
The Company expects the acquisition of u2t to be accretive to non-GAAP earnings per diluted share in approximately one year as it realizes cost and other synergies over time.
CONFERENCE CALL
An audio replay will be available for two weeks following the call by dialing 1-888-203-1112 (domestic) or +1-719-457-0820 and then following the prompts: enter conference ID 7659562 and provide your name, affiliation, and contact number. A replay of the webcast will be available shortly after the conclusion of the call on the Company's website until the next regularly scheduled earnings conference call.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements included in this press release are based upon information available to
ABOUT
FINISAR FINANCIAL STATEMENTS
The following financial tables are presented in accordance with GAAP.
Consolidated Statements of Operations | ||||||||||||||||||||||
(Unaudited, in thousands, except per share data) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Three Months Ended | ||||||||||||||||||||
Revenues | $ | 294,018 | $ | 238,351 | $ | 850,808 | $ | 690,918 | $ | 290,722 | ||||||||||||
Cost of revenues | 187,368 | 168,377 | 546,638 | 496,001 | 186,168 | |||||||||||||||||
Amortization of acquired developed technology | 961 | 1,930 | 3,735 | 5,202 | 1,181 | |||||||||||||||||
Gross profit | 105,689 | 68,044 | 300,435 | 189,715 | 103,373 | |||||||||||||||||
Gross margin | 35.9 | % | 28.5 | % | 35.3 | % | 27.5 | % | 35.6 | % | ||||||||||||
Operating expenses: | ||||||||||||||||||||||
Research and development | 46,734 | 39,725 | 135,223 | 117,514 | 44,959 | |||||||||||||||||
Sales and marketing | 10,911 | 10,398 | 35,038 | 31,291 | 12,322 | |||||||||||||||||
General and administrative | 14,353 | 12,797 | 38,081 | 39,058 | 15,388 | |||||||||||||||||
Amortization of purchased intangibles | 595 | 1,035 | 1,785 | 2,906 | 595 | |||||||||||||||||
Impairment of long-lived assets | - | 4,886 | - | 4,886 | - | |||||||||||||||||
Total operating expenses | 72,593 | 68,841 | 210,127 | 195,655 | 73,264 | |||||||||||||||||
Income (loss) from operations | 33,096 | (797 | ) | 90,308 | (5,940 | ) | 30,109 | |||||||||||||||
Interest income | 335 | 186 | 834 | 544 | 282 | |||||||||||||||||
Interest expense | (1,663 | ) | (648 | ) | (2,582 | ) | (2,045 | ) | (367 | ) | ||||||||||||
Other income (expenses), net | (1,873 | ) | (275 | ) | (890 | ) | (295 | ) | 495 | |||||||||||||
Income (loss) before income taxes and non-controlling interest | 29,895 | (1,534 | ) | 87,670 | (7,736 | ) | 30,519 | |||||||||||||||
Provision for income taxes | 2,827 | 2,153 | 4,816 | 1,733 | 568 | |||||||||||||||||
Income (loss) before non-controlling interest | 27,068 | (3,687 | ) | 82,854 | (9,469 | ) | 29,951 | |||||||||||||||
Adjust for net (income) loss attributable to non-controlling interest | (7 | ) | 280 | 183 | 136 | 14 | ||||||||||||||||
Net income (loss) attributable to |
$ | 27,061 | $ | (3,407 | ) | $ | 83,037 | $ | (9,333 | ) | $ | 29,965 | ||||||||||
Net income (loss) per share attributable to |
||||||||||||||||||||||
Basic | $ | 0.28 | $ | (0.04 | ) | $ | 0.87 | $ | (0.10 | ) | $ | 0.31 | ||||||||||
Diluted | $ | 0.26 | $ | (0.04 | ) | $ | 0.82 | $ | (0.10 | ) | $ | 0.29 | ||||||||||
Shares used in computing net income (loss) per share - basic | 96,394 | 93,097 | 95,649 | 92,624 | 95,941 | |||||||||||||||||
Shares used in computing net income (loss) per share - diluted | 104,361 | 93,097 | 103,491 | 92,624 | 103,696 | |||||||||||||||||
Consolidated Balance Sheets | ||||||||||||||||||
(in thousands) | ||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 374,902 | $ | 316,488 | $ | 288,433 | $ | 289,076 | ||||||||||
Short-term held-to-maturity investments | 179,847 | - | - | - | ||||||||||||||
Accounts receivable, net | 195,442 | 186,486 | 171,823 | 149,612 | ||||||||||||||
Accounts receivable, other | 24,274 | 25,890 | 34,386 | 16,538 | ||||||||||||||
Inventories | 247,126 | 231,235 | 207,029 | 200,670 | ||||||||||||||
Prepaid expenses | 22,764 | 20,902 | 19,533 | 18,402 | ||||||||||||||
Total current assets | 1,044,355 | 781,001 | 721,204 | 674,298 | ||||||||||||||
Property, equipment and improvements, net | 247,394 | 231,022 | 213,044 | 201,442 | ||||||||||||||
Purchased intangible assets, net | 21,976 | 23,587 | 25,416 | 30,457 | ||||||||||||||
Goodwill | 90,986 | 90,986 | 90,986 | 90,986 | ||||||||||||||
Minority investments | 2,041 | 1,841 | 1,711 | 884 | ||||||||||||||
Other assets | 21,034 | 16,946 | 12,954 | 9,780 | ||||||||||||||
Total assets | $ | 1,427,786 | $ | 1,145,383 | $ | 1,065,315 | $ | 1,007,847 | ||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 96,723 | $ | 98,220 | $ | 90,488 | $ | 77,630 | ||||||||||
Accrued compensation | 46,402 | 48,182 | 32,001 | 31,492 | ||||||||||||||
Other accrued liabilities | 26,370 | 32,943 | 31,542 | 23,533 | ||||||||||||||
Deferred revenue | 15,620 | 14,235 | 12,582 | 9,182 | ||||||||||||||
Short term debt | 4,230 | 4,700 | - | - | ||||||||||||||
Current portion of convertible notes | 40,015 | 40,015 | - | - | ||||||||||||||
Total current liabilities | 229,360 | 238,295 | 166,613 | 141,837 | ||||||||||||||
Long-term liabilities: | ||||||||||||||||||
Convertible notes, net of current portion | 210,029 | - | 40,015 | 40,015 | ||||||||||||||
Other non-current liabilities | 11,680 | 12,756 | 12,908 | 13,480 | ||||||||||||||
Total liabilities | 451,069 | 251,051 | 219,536 | 195,332 | ||||||||||||||
Stockholders' equity: | ||||||||||||||||||
Common stock | 97 | 96 | 96 | 94 | ||||||||||||||
Additional paid-in capital | 2,440,849 | 2,377,198 | 2,363,514 | 2,350,146 | ||||||||||||||
Accumulated other comprehensive income | 18,980 | 27,315 | 22,397 | 28,525 | ||||||||||||||
Accumulated deficit | (1,488,923 | ) | (1,515,984 | ) | (1,545,949 | ) | (1,571,960 | ) | ||||||||||
971,003 | 888,625 | 840,058 | 806,805 | |||||||||||||||
Non-controlling interest | 5,714 | 5,707 | 5,721 | 5,710 | ||||||||||||||
Total stockholders' equity | 976,717 | 894,332 | 845,779 | 812,515 | ||||||||||||||
Total liabilities and stockholders' equity | $ | 1,427,786 | $ | 1,145,383 | $ | 1,065,315 | $ | 1,007,847 | ||||||||||
Note - Balance sheet amounts as of |
||||||||||||||||||
FINISAR NON-GAAP FINANCIAL MEASURES
In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, or GAAP,
In calculating non-GAAP gross profit in this release, we have excluded the following items from cost of revenues in applicable periods:
- Changes in excess and obsolete inventory reserve (predominantly non-cash charges or non-cash benefits);
- Amortization of acquired technology (non-cash charges related to technology obtained in acquisitions);
- Stock-based compensation expense (non-cash charges);
- Acquisition method accounting adjustment for sale of acquired inventory (non-cash charges);
- Reduction in force costs (non-recurring cash charges); and
- Acquisition related retention payments (non-recurring charges).
In calculating non-GAAP operating income in this release, we have excluded the same items to the extent they are classified as operating expenses, and have also excluded the following items in applicable periods:
- Gain or loss on litigation settlements and resolutions and related costs (non-recurring cash charges or benefits);
- Shareholder class action and derivative litigation costs (non-recurring cash expenses associated with the derivative litigation related to our historical stock option granting practices and related to the class action and derivative litigation related to our
March 8, 2011 earnings announcement); - Acquisition related costs (non-recurring cash charges);
- Impairment of long-lived assets (non-cash charges); and
- Amortization of purchased intangibles (non-cash charges).
In calculating non-GAAP income and non-GAAP income per share in this release, we have also excluded the following items in applicable periods:
- Gains and losses on sales of assets (non-recurring or non-cash losses and cash gains related to the periodic disposal of assets no longer required for current activities);
- Gains and losses related to minority investments (non-cash or non-recurring benefits or charges);
- Other miscellaneous expenses (income) (non-recurring charges or benefits);
- Dollar denominated foreign exchange transaction losses (gains) (non-cash charges or benefits);
- Amortization of debt issuance costs (non-cash charges);
- Debt extinguishment loss (non-cash charges);
- Non-controlling interest non-GAAP adjustment (non-cash and/or non-recurring charges or benefits attributable to the non-controlling interest in majority-controlled subsidiaries); and
- Differences between cash payable for income taxes and the provision for income taxes in accordance with GAAP, less discrete items.
A reconciliation of this non-GAAP financial information to the corresponding GAAP information is set forth below:
Reconciliation of Results of Operations under GAAP and non-GAAP | ||||||||||||||||||||||
(Unaudited, in thousands, except per share data) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Three Months Ended | ||||||||||||||||||||
GAAP to non-GAAP reconciliation of gross profit: | ||||||||||||||||||||||
Gross profit - GAAP | $ | 105,689 | $ | 68,044 | $ | 300,435 | $ | 189,715 | $ | 103,373 | ||||||||||||
Gross margin - GAAP | 35.9 | % | 28.5 | % | 35.3 | % | 27.5 | % | 35.6 | % | ||||||||||||
Adjustments: | ||||||||||||||||||||||
Cost of revenues | ||||||||||||||||||||||
Change in excess and obsolete inventory reserve | 384 | 989 | 55 | 7,858 | 1,199 | |||||||||||||||||
Amortization of acquired technology | 961 | 1,930 | 3,735 | 5,202 | 1,181 | |||||||||||||||||
Stock compensation | 2,374 | 2,140 | 6,207 | 5,502 | 2,056 | |||||||||||||||||
Acquisition method accounting adjustment for sale of acquired inventory | - | - | - | 1,363 | - | |||||||||||||||||
Reduction in force costs | 34 | 17 | 104 | 801 | 47 | |||||||||||||||||
Acquisition related retention payment | 62 | 73 | 194 | 146 | 70 | |||||||||||||||||
Total cost of revenue adjustments | 3,815 | 5,149 | 10,295 | 20,872 | 4,553 | |||||||||||||||||
Gross profit - non-GAAP | 109,504 | 73,193 | 310,730 | 210,587 | 107,926 | |||||||||||||||||
Gross margin - non-GAAP | 37.2 | % | 30.7 | % | 36.5 | % | 30.5 | % | 37.1 | % | ||||||||||||
GAAP to non-GAAP reconciliation of operating income: | ||||||||||||||||||||||
Operating income (loss) - GAAP | 33,096 | (797 | ) | 90,308 | (5,940 | ) | 30,109 | |||||||||||||||
Operating margin - GAAP | 11.3 | % | -0.3 | % | 10.6 | % | -0.9 | % | 10.4 | % | ||||||||||||
Adjustments: | ||||||||||||||||||||||
Total cost of revenue adjustments | 3,815 | 5,149 | 10,295 | 20,872 | 4,553 | |||||||||||||||||
Research and development | ||||||||||||||||||||||
Reduction in force costs | - | 11 | 28 | 188 | 16 | |||||||||||||||||
Acquisition related retention payment | 190 | 213 | 571 | 435 | 190 | |||||||||||||||||
Stock compensation | 3,995 | 2,601 | 11,589 | 8,940 | 4,069 | |||||||||||||||||
Sales and marketing | ||||||||||||||||||||||
Acquisition related retention payment | 17 | 17 | 51 | 37 | 17 | |||||||||||||||||
Stock compensation | 1,369 | 885 | 3,935 | 2,964 | 1,382 | |||||||||||||||||
General and administrative | ||||||||||||||||||||||
Reduction in force costs | (82 | ) | 25 | 158 | 94 | 173 | ||||||||||||||||
Acquisition related retention payment | (11 | ) | 223 | 1,036 | 476 | 830 | ||||||||||||||||
Stock compensation | 2,618 | 2,218 | 7,704 | 8,003 | 2,663 | |||||||||||||||||
Acquisition related costs | 591 | 731 | 940 | 1,152 | 124 | |||||||||||||||||
Litigation settlements and resolutions and related costs | 5 | - | 10 | 13 | - | |||||||||||||||||
Shareholder class action and derivative litigation costs | 97 | 180 | (4,951 | ) | 189 | 46 | ||||||||||||||||
Amortization of purchased intangibles | 595 | 1,035 | 1,785 | 2,906 | 595 | |||||||||||||||||
Impairment of long-lived assets | - | 4,886 | - | 4,886 | - | |||||||||||||||||
Total cost of revenue and operating expense adjustments | 13,199 | 18,174 | 33,151 | 51,155 | 14,658 | |||||||||||||||||
Operating income - non-GAAP | 46,295 | 17,377 | 123,459 | 45,215 | 44,767 | |||||||||||||||||
Operating margin - non-GAAP | 15.7 | % | 7.3 | % | 14.5 | % | 6.5 | % | 15.4 | % | ||||||||||||
GAAP to non-GAAP reconciliation of income attributable to |
||||||||||||||||||||||
Net income (loss) attributable to |
27,061 | (3,407 | ) | 83,037 | (9,333 | ) | 29,965 | |||||||||||||||
Adjustments: | ||||||||||||||||||||||
Total cost of revenue and operating expense adjustments | 13,199 | 18,174 | 33,151 | 51,155 | 14,658 | |||||||||||||||||
Non-cash imputed interest expenses on convertible debt | 927 | - | 927 | - | - | |||||||||||||||||
Imputed interest related to restructuring | 54 | 148 | 167 | 374 | 56 | |||||||||||||||||
Other (income) expense, net | ||||||||||||||||||||||
Loss (gain) on sale of assets | (30 | ) | 38 | (135 | ) | (151 | ) | 5 | ||||||||||||||
Gain related to minority investments | - | - | (743 | ) | - | - | ||||||||||||||||
Other miscellaneous income | (3 | ) | (101 | ) | (5 | ) | (261 | ) | (2 | ) | ||||||||||||
Foreign exchange transaction (gain) or loss | 2,200 | 431 | 2,559 | (180 | ) | (208 | ) | |||||||||||||||
Amortization of debt issuance cost | 76 | - | 76 | - | - | |||||||||||||||||
Debt extinguishment loss | - | - | - | 573 | - | |||||||||||||||||
Provision for income taxes | ||||||||||||||||||||||
Income tax provision adjustments | 1,327 | 1,107 | 621 | (711 | ) | (832 | ) | |||||||||||||||
Non-controlling interest non-GAAP adjustment | 182 | - | 374 | - | 125 | |||||||||||||||||
Total adjustments | 17,932 | 19,797 | 36,992 | 50,799 | 13,802 | |||||||||||||||||
Net income attributable to |
$ | 44,993 | $ | 16,390 | $ | 120,029 | $ | 41,466 | $ | 43,767 | ||||||||||||
Non-GAAP income attributable to |
$ | 44,993 | $ | 16,390 | $ | 120,029 | $ | 41,466 | $ | 43,767 | ||||||||||||
Add: interest expense for dilutive convertible notes | 539 | 539 | 1,617 | 1,618 | 539 | |||||||||||||||||
Adjusted non-GAAP income attributable to |
$ | 45,532 | $ | 16,929 | $ | 121,646 | $ | 43,084 | $ | 44,306 | ||||||||||||
Non-GAAP income per share attributable to |
||||||||||||||||||||||
Basic | $ | 0.47 | $ | 0.18 | $ | 1.25 | $ | 0.45 | $ | 0.46 | ||||||||||||
Diluted | $ | 0.44 | $ | 0.17 | $ | 1.18 | $ | 0.44 | $ | 0.43 | ||||||||||||
Shares used in computing non-GAAP income per share attributable to |
||||||||||||||||||||||
Basic | 96,394 | 93,097 | 95,649 | 92,624 | 95,941 | |||||||||||||||||
Diluted | 104,361 | 99,094 | 103,491 | 98,891 | 103,696 | |||||||||||||||||
Non-GAAP EBITDA | ||||||||||||||||||||||
Non-GAAP income attributable to |
$ | 44,993 | $ | 16,390 | $ | 120,029 | $ | 41,466 | $ | 43,767 | ||||||||||||
Depreciation expense | 15,960 | 13,306 | 44,508 | 39,123 | 14,621 | |||||||||||||||||
Amortization | 94 | 86 | 282 | 559 | 94 | |||||||||||||||||
Interest expense | 347 | 314 | 654 | 1,127 | 29 | |||||||||||||||||
Income tax expense | 1,500 | 1,046 | 4,195 | 2,444 | 1,400 | |||||||||||||||||
Non-GAAP EBITDA | $ | 62,894 | $ | 31,142 | $ | 169,668 | $ | 84,719 | $ | 59,911 | ||||||||||||
Finisar-F
Investor Contact:
Chief Financial Officer
408-542-5050
Investor.relations@finisar.com
Press contact:
Director, Corporate Communications
408-542-4261
Source:
News Provided by Acquire Media