Finisar Corporation
FINISAR CORP (Form: 8-K, Received: 03/09/2017 16:07:00)
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): March 9, 2017  

Finisar Corpation
(Exact Name of Registrant as Specified in Charter)

Delaware 000-27999 94-3038428
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number)

 

1389 Moffett Park Drive, Sunnyvale, CA 94089
(Address of Principal Executive Offices) (Zip Code)

408-548-1000
(Registrant's telephone number, including area code)


(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  [   ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  [   ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  [   ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  [   ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

Item 9.01. Financial Statements and Exhibits.

On March 9, 2017, Finisar Corporation issued a press release announcing its financial results for the third quarter of fiscal 2017 ended January 29, 2017. A copy of the press release is attached hereto as Exhibit 99.1. 

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

(d) Exhibits

Press Release of Finisar Corporation dated March 9, 2017


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  Finisar Corpation
     
   
Date: March 9, 2017 By:  /s/ Kurt Adzema        
    Kurt Adzema
    Chief Financial Officer
   


EXHIBIT INDEX

 

Exhibit No.   Description
     
99.1   Press Release dated March 9, 2017
 
 
 
 
 
 
 
 

Exhibit 99.1

Finisar Announces Record Third Fiscal Quarter Revenues

SUNNYVALE, Calif., March 09, 2017 (GLOBE NEWSWIRE) -- Finisar Corporation (NASDAQ:FNSR), a global technology leader for subsystems and components for fiber optic communications, today announced financial results for its third quarter of fiscal year 2017, ended January 29, 2017. 

COMMENTARY

“I am pleased to announce that Finisar achieved another new all-time quarterly records for revenues and Non-GAAP profits in our third quarter. Revenues were $380.6 million, an increase of $10.7 million, or 2.9%, over the second quarter and 23.1% over the third quarter a year ago. This growth was primarily driven by strong demand for 100G transceivers. In addition, customer demand for wavelength selective switch and ROADM line card products continued to be strong,” said Jerry Rawls, Finisar’s Chief Executive Officer.

FINANCIAL HIGHLIGHTS – Third Quarter Ended January 29, 2017
       
Summary GAAP Results Third   Second
  Quarter   Quarter
  Ended   Ended
  January 29, 2017   October 30, 2016
  (in thousands, except per share amounts)
       
Revenues $ 380,588     $ 369,863  
Gross margin   35.9 %     36.1 %
Operating expenses $ 81,731     $ 80,853  
Operating income $ 54,906     $ 52,828  
Operating margin   14.4 %     14.3 %
Net income $ 46,387     $ 48,765  
Income per share-basic $ 0.42     $ 0.44  
Income per share-diluted $ 0.40     $ 0.43  
       
Basic shares   110,956       110,407  
Diluted shares   114,873       113,192  
       
       
       
Summary Non-GAAP Results (a) Third   Second
  Quarter   Quarter
  Ended   Ended
  January 29, 2017   October 30, 2016
  (in thousands, except per share amounts)
       
Revenues $ 380,588     $ 369,863  
Non-GAAP Gross margin   37.0 %     37.2 %
Non-GAAP Operating expenses $ 70,538     $ 69,418  
Non-GAAP Operating income  $ 70,375     $ 68,250  
Non-GAAP Operating margin   18.5 %     18.5 %
Non-GAAP Net income  $ 67,204     $ 65,154  
Non-GAAP Income per share-basic $ 0.61     $ 0.59  
Non-GAAP Income per share-diluted $ 0.59     $ 0.58  
       
Basic shares   110,956       110,407  
Diluted shares   114,873       113,192  

_____________

(a)  In evaluating the operating performance of Finisar’s business, Finisar management utilizes financial measures that exclude certain charges and credits required by U.S. generally accepted accounting principles, or GAAP, that are considered by management to be outside of Finisar’s core ongoing operating results A reconciliation of Finisar’s non-GAAP financial measures to the most directly comparable GAAP measures, as well as additional related information, can be found under the heading “Finisar Non-GAAP Financial Measures” below.

Financial Statement Highlights for the Third Quarter of Fiscal 2017: 

OUTLOOK

Finisar indicated that for the fourth quarter of fiscal 2017 it currently expects revenues in the range of $360 to $380 million, non-GAAP gross margin of approximately 36%, non-GAAP operating margin of approximately 17%, and non-GAAP earnings per fully diluted share in the range of approximately $0.50 to $0.56.

Finisar has not provided a reconciliation of its fourth quarter outlook for non-GAAP gross margin, non-GAAP operating margin and non-GAAP earnings per fully diluted share because estimates of all of the reconciling items cannot be provided without unreasonable efforts.  It is difficult to reasonably provide a forward-looking estimate of certain reconciling items between such non-GAAP forward-looking measures and the comparable forward-looking GAAP measures. Certain factors that are materially significant to Finisar’s ability to estimate these items are out of its control and/or cannot be reasonably predicted, including with respect to restructuring charges, litigation settlements and resolutions and related costs, and the timing of tax related adjustments. Accordingly, a reconciliation of such non-GAAP forward-looking measures to the comparable forward-looking GAAP measures are not available within a reasonable range of predictability. 

CONFERENCE CALL

Finisar will discuss its financial results for the third quarter and current business outlook during its regular quarterly conference call scheduled for Thursday, March 9, 2017, at 2:00 pm PT (5:00 pm ET).  To listen to the call you may connect through the Finisar investor relations page at http://investor.finisar.com/ or dial 1-855-473-9088 (domestic) or 1-720-405-0995 (international) and enter conference ID 59806101.

An audio replay will be available for two weeks following the call by dialing 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and then following the prompts: enter conference ID 59806101 and provide your name, affiliation, and contact number.  A replay of the webcast will be available shortly after the conclusion of the call on Finisar’s website until the next regularly scheduled earnings conference call.

SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release contains forward-looking statement concerning Finisar’s expected financial performance. These statements are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements are based on our current expectations, estimates, assumptions and projections about our business and industry, and the markets and customers we serve, and they are subject to numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Finisar assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those projected. Examples of such risks include those associated with:  the uncertainty of customer demand for Finisar’s products; the rapidly evolving markets for Finisar’s products and uncertainty regarding the development of these markets; Finisar’s historical dependence on sales to a limited number of customers and fluctuations in the mix of products and customers in any period; ongoing new product development and introduction of new and enhanced products; the challenges of rapid growth followed by periods of contraction; and intensive competition.  Further information regarding these and other risks relating to Finisar’s business is set forth in Finisar’s annual report on Form 10-K (filed June 17, 2016) and quarterly SEC filings.

ABOUT FINISAR

Finisar Corporation (NASDAQ:FNSR) is a global technology leader for fiber optic subsystems and components  that enable high-speed voice, video and data communications for telecommunications, networking, storage, wireless, and cable TV applications. For over 25 years, Finisar has provided critical optics technologies to system manufacturers to meet the increasing demands for network bandwidth and storage.  Finisar is headquartered in Sunnyvale, California, USA with R&D, manufacturing sites, and sales offices worldwide. For additional information, visit www.finisar.com.

FINISAR FINANCIAL STATEMENTS

The following financial tables are presented in accordance with GAAP.

Finisar Corporation
Consolidated Statements of Operations
 (Unaudited, in thousands, except per share data)
                   
  Three Months Ended   Nine Months Ended   Three Months Ended
  Jan 29, 2017   Jan 31, 2016   Jan 29, 2017   Jan 31, 2016   Oct 30, 2016
Revenues $ 380,588     $ 309,206     $ 1,091,776     $ 944,372     $ 369,863  
Cost of revenues   242,961       219,836       709,790       674,593       235,192  
Impairment of long-lived assets   -       -       -       1,071       -  
Amortization of acquired developed technology   990       1,630       3,503       4,500       990  
Gross profit   136,637       87,740       378,483       264,208       133,681  
Gross margin   35.9 %     28.4 %     34.7 %     28.0 %     36.1 %
Operating expenses:                  
Research and development   54,691       49,840       158,941       153,220       53,242  
Sales and marketing   13,092       11,899       38,322       34,998       13,367  
General and administrative   13,235       14,875       43,126       46,269       13,576  
Impairment of long-lived assets   -       -       -       830       -  
Amortization of purchased intangibles   713       668       2,049       2,004       668  
Total operating expenses   81,731       77,282       242,438       237,321       80,853  
Income from operations   54,906       10,458       136,045       26,887       52,828  
Interest income   1,717       709       3,464       1,543       1,021  
Interest expense   (5,399 )     (2,933 )     (11,410 )     (8,733 )     (3,025 )
Other income (expenses), net   (338 )     1,968       398       3,294       795  
Income before income taxes   50,886       10,202       128,497       22,991       51,619  
Provision for income taxes   4,499       (1,882 )     9,396       870       2,854  
Net income $ 46,387     $ 12,084     $ 119,101     $ 22,121     $ 48,765  
                   
Net income per share attributable to Finisar Corporation common stockholders:                  
                   
Basic $ 0.42     $ 0.11     $ 1.08     $ 0.21     $ 0.44  
Diluted $ 0.40     $ 0.11     $ 1.05     $ 0.20     $ 0.43  
                   
Shares used in computing net income per share - basic   110,956       107,180       110,061       106,367       110,407  
Shares used in computing net income per share - diluted   114,873       108,128       113,506       108,488       113,192  


Finisar Corporation
Consolidated Balance Sheets
 (in thousands)
                   
    Jan 29, 2017   Oct 30, 2016   Jul 31, 2016   May 1, 2016  
    (Unaudited)   (Unaudited)   (Unaudited)      
ASSETS                  
Current assets:                  
Cash and cash equivalents   $ 240,593     $ 282,963     $ 280,414     $ 299,221    
Short-term held-to-maturity investments     973,675       343,319       313,389       263,255    
Accounts receivable, net     280,098       277,667       255,036       249,257    
Accounts receivable, other     58,498       49,997       43,678       44,576    
Inventories     312,271       292,439       272,592       273,291    
Prepaid expenses and other assets     20,526       17,140       18,646       18,483    
Total current assets     1,885,661       1,263,525       1,183,755       1,148,083    
Property, equipment and improvements, net     357,039       341,563       338,918       348,613    
Purchased intangible assets, net     14,638       16,339       16,197       18,388    
Goodwill     106,735       106,735       106,735       106,735    
Minority investments     3,322       3,893       3,974       4,051    
Other assets     24,275       18,008       18,928       19,501    
Total assets   $ 2,391,670     $ 1,750,063     $ 1,668,507     $ 1,645,371    
                   
LIABILITIES AND STOCKHOLDERS' EQUITY                  
Current liabilities:                  
Accounts payable   $ 155,916     $ 153,023     $ 136,317     $ 141,591    
Accrued compensation     50,640       45,213       36,332       36,084    
Other accrued liabilities     43,081       36,736       39,201       42,206    
Deferred revenue     14,965       17,818       16,468       13,529    
Total current liabilities     264,602       252,790       228,318       233,410    
Long-term liabilities:                  
Convertible notes     699,903       234,679       232,016       229,393    
Other non-current liabilities     12,594       13,279       14,056       14,882    
Total liabilities     977,099       500,748       474,390       477,685    
Stockholders' equity:                  
Common stock     111       111       110       108    
Additional paid-in capital     2,768,396       2,639,355       2,621,260       2,605,859    
Accumulated other comprehensive income (loss)     (59,944 )     (49,772 )     (38,109 )     (25,188 )  
Accumulated deficit     (1,293,992 )     (1,340,379 )     (1,389,144 )     (1,413,093 )  
Total stockholders' equity     1,414,571       1,249,315       1,194,117       1,167,686    
Total liabilities and stockholders' equity   $ 2,391,670     $ 1,750,063     $ 1,668,507     $ 1,645,371    
                   
Note - Balance sheet amounts as of May 1, 2016 are derived from the audited consolidated financial statements as of the date.  

FINISAR NON-GAAP FINANCIAL MEASURES

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, or GAAP, Finisar provides the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission: non-GAAP gross profit, non-GAAP operating income, non-GAAP income and non-GAAP net income per share. These non-GAAP financial measures are supplemental information regarding Finisar’s operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be outside of our ongoing core operating results.   Management believes that tracking non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share provides management and the investment community with valuable insight into our ongoing core current operations, our ability to generate cash and the underlying business trends that are affecting our performance.  These non-GAAP measures are used by both management and our Board of Directors, along with the comparable GAAP information, in evaluating our current performance and planning our future business activities.  In particular, management finds it useful to exclude non-cash charges in order to better correlate our operating activities with our ability to generate cash from operations and to exclude certain cash charges as a means of more accurately predicting our liquidity requirements.  We believe that these non-GAAP measures, when used in conjunction with our GAAP financial information, also allow investors to better evaluate our financial performance in comparison to other periods and to other companies in our industry.

In calculating non-GAAP gross profit in this release, we have excluded the following items from cost of revenues in applicable periods in this release:

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 in this release:

In calculating non-GAAP income and non-GAAP income per share in this release, we have also excluded the following items in applicable periods in this release:

In addition, in this release we have adjusted non-GAAP income and non-GAAP income per share for the difference between GAAP income taxes and non-GAAP income taxes.

A reconciliation of this non-GAAP financial information to the corresponding GAAP information is set forth below: 


Finisar Corporation
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
  Jan 29, 2017   Jan 31, 2016   Jan 29, 2017   Jan 31, 2016   Oct 30, 2016
GAAP to non-GAAP reconciliation of gross profit:                  
Gross profit - GAAP $ 136,637     $ 87,740     $ 378,483     $ 264,208     $ 133,681  
Gross margin - GAAP   35.9 %     28.4 %     34.7 %     28.0 %     36.1 %
Adjustments:                  
Cost of revenues                  
Change in excess and obsolete inventory valuation adjustments (1)   -       1,293       -       5,125       -  
Amortization of acquired technology   990       1,630       3,503       4,500       990  
Duplicate facility costs during facility move   10       7       26       93       8  
Stock compensation   3,182       2,539       9,178       8,153       2,949  
Impairment of long-lived assets   -       -       -       1,282       -  
Reduction in force costs   68       364       184       1,335       14  
Acquisition related retention payment   26       28       71       121       26  
Total cost of revenue adjustments   4,276       5,861       12,962       20,609       3,987  
Gross profit - non-GAAP   140,913       93,601       391,445       284,817       137,668  
Gross margin - non-GAAP   37.0 %     30.3 %     35.9 %     30.2 %     37.2 %
                   
GAAP to non-GAAP reconciliation of operating income:                  
Operating income - GAAP   54,906       10,458       136,045       26,887       52,828  
Operating margin - GAAP   14.4 %     3.4 %     12.5 %     2.8 %     14.3 %
Adjustments:                  
Total cost of revenue adjustments   4,276       5,861       12,962       20,609       3,987  
Total operating expense adjustments                  
Operating expenses - GAAP   81,731       77,282       242,438       237,321       80,853  
Research and development                  
Reduction in force costs   30       230       292       518       88  
Duplicate facility costs during facility move   10       7       24       277       7  
Acquisition related retention payment   32       32       96       190       32  
Stock compensation   5,461       4,723       16,124       14,531       5,552  
Impairment of long-lived assets   -       -       -       287       -  
Sales and marketing                  
Reduction in force costs   -       44       29       224       -  
Acquisition related retention payment   -       2       -       15       -  
Stock compensation   1,921       1,713       5,549       5,138       1,877  
General and administrative                  
Reduction in force costs   20       39       53       1,354       20  
Duplicate facility costs   168       150       465       167       154  
Acquisition related retention payment   -       -       (2 )     (5 )     -  
Stock compensation   2,807       2,343       8,349       7,860       2,989  
Acquisition related costs   21       39       54       435       2  
Litigation settlements and resolutions and related costs   47       -       93       16       46  
Unclaimed property tax audit accrual   (37 )     -       (37 )     -       -  
Amortization of purchased intangibles   713       668       2,049       2,004       668  
Impairment of  long-lived assets   -       -       -       587       -  
Total operating expense adjustments   11,193       9,990       33,138       33,598       11,435  
Operating expenses - non-GAAP   70,538       67,292       209,300       203,723       69,418  
Operating income - non-GAAP   70,375       26,309       182,145       81,094       68,250  
Operating margin - non-GAAP   18.5 %     8.5 %     16.7 %     8.6 %     18.5 %
                   
GAAP to non-GAAP reconciliation of income before income taxes:                  
Income before income taxes - GAAP   50,886       10,202       128,497       22,991       51,619  
Adjustments:                  
Total cost of revenue adjustments   4,276       5,861       12,962       20,609       3,987  
Total operating expense adjustments   11,193       9,990       33,138       33,598       11,435  
Other interest income   -       (113 )     -       (113 )     -  
Non-cash imputed interest expenses on convertible debt   4,464       2,411       9,442       7,156       2,509  
Imputed interest related to restructuring   34       42       109       131       37  
Other (income) expense, net                  
Loss (gain) on sale of assets   35       (644 )     10       (744 )     (17 )
Loss related to minority investments   643       -       643       -       -  
Other miscellaneous income   (280 )     (1,503 )     (280 )     (1,640 )     -  
Foreign exchange transaction (gain) or loss   (204 )     1,205       (1,203 )     563       (970 )
Amortization of  debt issuance cost   257       154       565       462       154  
Total Interest and other adjustments   4,949       1,552       9,286       5,815       1,713  
Income before income taxes - non-GAAP   71,304       27,605       183,883       83,013       68,754  
                   
GAAP to non-GAAP reconciliation of net income:                  
Net income - GAAP   46,387       12,084       119,101       22,121       48,765  
Total cost of revenue adjustments   4,276       5,861       12,962       20,609       3,987  
Total operating expense adjustments   11,193       9,990       33,138       33,598       11,435  
Total Interest and other adjustments   4,949       1,552       9,286       5,815       1,713  
Income tax provision adjustments   399       (2,883 )     (304 )     (4,150 )     (746 )
Total adjustments   20,817       14,520       55,082       55,872       16,389  
Net income - non-GAAP $ 67,204     $ 26,604     $ 174,183     $ 77,993     $ 65,154  
                   
Non-GAAP net income for diluted earnings per share calculation                  
Non-GAAP net income $ 67,204     $ 26,604     $ 174,183     $ 77,993     $ 65,154  
Add: interest expense for dilutive convertible notes   -       -       -       -       -  
Adjusted non-GAAP income $ 67,204     $ 26,604     $ 174,183     $ 77,993     $ 65,154  
                   
Basic non-GAAP income per share                  
GAAP earnings per share $ 0.42     $ 0.11     $ 1.08     $ 0.21     $ 0.44  
Impact of all non-GAAP adjustments $ 0.19     $ 0.14     $ 0.50     $ 0.52     $ 0.15  
Non-GAAP earnings per share $ 0.61     $ 0.25     $ 1.58     $ 0.73     $ 0.59  
                   
Diluted non-GAAP income per share                  
GAAP earnings per share $ 0.40     $ 0.11     $ 1.05     $ 0.20     $ 0.43  
Impact of all non-GAAP adjustments $ 0.19     $ 0.14     $ 0.48     $ 0.52     $ 0.15  
Non-GAAP earnings per share $ 0.59     $ 0.25     $ 1.53     $ 0.72     $ 0.58  
                   
Shares used in computing non-GAAP income per share                  
Basic   110,956       107,180       110,061       106,367       110,407  
Diluted   114,873       108,128       113,506       108,488       113,192  
                   
(1) Non-GAAP adjustment no longer made effective fiscal 2017.                  

Finisar-F

Investor Contact:
Kurt Adzema
Chief Financial Officer
408-542-5050 or Investor.relations@finisar.com

Press contact:
Victoria McDonald
Director, Corporate Communications
408-542-4261