Finisar Corporation Reports Record Revenue for the Fourth Quarter and Fiscal Year Ended April 30, 2005SUNNYVALE, CA -- 06/09/2005 -- Finisar Corporation (NASDAQ: FNSR), a technology leader in gigabit fiber optic solutions for high-speed data networks, today reported its financial results for its fourth fiscal quarter and fiscal year ended April 30, 2005. The results are still subject to completion of the Company's year-end audit which is still in progress.
Finisar plans to review its fourth quarter results and discuss its current business outlook during a conference call for investors at 5:00 p.m. EDT (2:00 p.m. PDT) today, June 9, 2005. The call will be broadcast live over the Internet on the Investor Relations section of Finisar's web site, located at www.Finisar.com. To listen to the Webcast, interested investors are encouraged to log onto the broadcast at least 15 minutes prior to the call. Participating in the call will be Jerry Rawls, Finisar's President and CEO, and Steve Workman, Finisar's CFO.
Total revenues in the fourth quarter of fiscal 2005 were $74.9 million, up 2% on a sequential basis from $73.1 million in the third quarter and up 31% from $57.0 million in the fourth quarter of the prior year. For the third consecutive quarter, the Company's revenues set a new all time record. Total revenues from the sale of optical subsystems were $64.5 million in the fourth quarter, up 2% on a sequential basis from $63.4 million in the third quarter and 33% from $48.7 million in the fourth quarter of the prior year. Sales of network test and monitoring systems were $10.4 million in the third quarter, up 7% on a sequential basis from $9.7 million in the third quarter and 24% from $8.3 million in the fourth quarter of the prior year.
For the full fiscal year, total revenues were $280.8 million, up 51% from $185.6 million in the prior year. The Company's revenues were an all time high surpassing the previous record of $188.8 million established in fiscal 2001. Total revenues from the sale of optical subsystems were $241.6 million, up 51% from $160.0 million in the prior year. Sales of network test and monitoring systems were $39.2 million, up 53% from $25.6 million in the prior year.
"Our revenue growth underscores our commitment to providing our customers with the broadest portfolio of leading edge products in the industry," said Jerry Rawls, Finisar's President and CEO. "Our continuing execution at the top line combined with a number of cost reduction initiatives should help us accelerate our timetable for returning to profitability."
OPERATING RESULTS
The Company reported a net loss of $36.5 million, or $0.14 per share, for the fourth quarter of fiscal 2005, compared to a net loss of $33.0 million, or $0.15 per share, in the third quarter and a net loss of $24.5 million, or $0.11 per share, in the fourth quarter of fiscal 2004. The current quarter results include a writedown of $10.5 million associated with minority investments in privately held companies, while the previous quarter included an $18.8 million charge associated with the impairment in the value of a facility that was sold and leased back. The Company's gross profit for the fourth quarter was $10.4 million, or 13.9% of total revenues, compared to 22.8% in the third quarter and 16.5% in the fourth quarter of fiscal 2004.
The Company's operating results include a number of non-cash and cash charges, principally related to acquisitions and financing transactions. A table is included which summarizes these items. For the fourth quarter of fiscal 2005, these items totaled $24.7 million, or $.10 per share, and include, among other items, a $10.5 million impairment in the value of a minority investment and $5.7 million in amortization of current technology associated with a number of previous acquisitions. Also included in the current quarter is a non-cash tax provision resulting from timing differences associated with the amortization of goodwill for tax reporting purposes related to two acquisitions which is not amortized for financial reporting purposes.
Excluding these items, the Company's net loss for the fourth quarter of fiscal 2005 would have been $11.7 million, or $.05 per share, compared to $7.9 million, or $.04 per share, in the third quarter and $14.2 million, or $.06 per share, in the fourth quarter of the prior year, and the Company's gross margin in the fourth quarter would have been $19.5 million, or 26.1% of revenues compared to 29.8% in the third quarter and 21.9% in the fourth quarter of the prior year.
For the full fiscal year, the Company reported a net loss of $112.7 million, or $.49 per share compared to $113.8 million, or $.53 per share in the prior year. The Company's gross profit for fiscal 2005 was $49.5 million, or 17.6% of total revenues, compared to 12.3% in the prior year. Included in these results are a number of non-cash and cash charges as noted above. These items totaled $69.7 million, or $.30 per share, in the fiscal year and include $26.4 million in amortization of current technology associated with previous acquisitions, a non-cash charge of $18.8 million related to an impairment in the value of a facility that was sold and leased back, a non-cash charge of $11.8 million related to writedowns of minority investments in privately held companies and $4.3 million in amortization of discount related to the issuance of convertible notes. Excluding these items, the Company's net loss for fiscal 2005 would have been $43.1 million, or $.19 per share, compared to $53.2 million, or $.25 per share, in the prior fiscal year.
DAVID FRIES OF VANTAGEPOINT VENTURE PARTNERS NAMED TO BOARD OF DIRECTORS
Finisar also announced that David Fries, Managing Director and Co-Head, Semiconductor & Components Practice of Vantage Point Partners, was named to Finisar's Board of Directors on June 7, 2005. VantagePoint recently purchased 34 million shares of Finisar common stock from Infineon Technologies A.G. who had acquired the shares in conjunction with the sale of assets associated with Infineon's transceiver product lines to Finisar in the fourth quarter of fiscal 2005. Mr. Fries has been a senior-level venture capitalist for more than 20 years. He began his career at General Electric Company where he served 17 years in numerous executive roles. Mr. Fries is a graduate of Florida Atlantic University (BS) and has a PhD in Physical Chemistry from Case Western Reserve University.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACTS 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, including statements regarding Finisar's expectations, beliefs, intentions, or strategies regarding the future. All forward-looking statements included in this press release are based upon information available to Finisar as of the date hereof, and 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. These risks include those associated with 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 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; intensive competition; and potential problems related to the assimilation and integration of the operations, technologies and products of several recently acquired companies and product lines, including the assets related to the transceiver product lines of the Fiber Optics Business Unit of Infineon Technologies A.G. acquired in January 2005, the acquisition of I-TECH Corporation in April 2005 and the acquisition of InterSAN Corporation in May 2005. Other risks relating to Finisar's business are set forth in Finisar's Annual Report on Form 10-K and other interim reports as filed with the Securities and Exchange Commission.
ABOUT FINISAR
Finisar Corporation (NASDAQ: FNSR) is a technology leader for fiber optic subsystems and network test and monitoring systems. These products enable high-speed data communications for networking and storage applications over Gigabit Ethernet local area networks (LANs), Fibre Channel storage area networks (SANs), and metropolitan area networks (MANs) using both IP and SONET/SDH-based protocols. The Company's headquarters is in Sunnyvale, California, USA. www.Finisar.com.
Finisar Corporation
Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited) (Unaudited) (Unaudited) (Audited)
Three Months Ended Twelve Months Ended
April 30, April 30,
2005 2004 2005 2004
-------- -------- --------- ---------
Revenues
Optical subsystems
and components $ 64,503 $ 48,664 $ 241,582 $ 160,025
Network test and
monitoring systems 10,356 8,331 39,241 25,593
-------- -------- --------- ---------
Total revenues 74,859 56,995 280,823 185,618
Cost of revenues 58,760 42,304 204,981 143,585
Impairment of acquired
developed technology - - 3,656 -
Amortization of acquired
developed technology 5,692 5,271 22,719 19,239
-------- -------- --------- ---------
Gross profit (loss) 10,407 9,420 49,467 22,794
13.9% 16.5% 17.6% 12.3%
Operating expenses:
Research and development 15,035 14,734 62,688 62,193
Sales and marketing 8,062 6,301 29,962 20,063
General and administrative 7,665 3,912 22,818 16,738
Amortization of deferred
compensation 20 133 162 (105)
Acquired in-process research
and development 1,240 6,180 1,558 6,180
Amortization of purchased
intangibles 170 143 653 572
Restructuring costs - (791) - 382
Impairment of assets - - 18,798 -
Other acquisition costs - (17) - 222
-------- -------- --------- ---------
Total operating expenses 32,192 30,595 136,639 106,245
Loss from operations (21,785) (21,175) (87,172) (83,451)
Interest income
(expense), net (3,065) (2,632) (12,139) (25,701)
Other income (expense), net (10,827) (640) (12,581) (4,347)
-------- -------- --------- ---------
Loss before income taxes (35,677) (24,447) (111,892) (113,499)
Provision (benefit) for
income taxes 799 45 856 334
Net loss $(36,476) $(24,492) $(112,748) $(113,833)
======== ======== ========= =========
Loss per share -
basic and diluted $ (0.14) $ (0.11) $ (0.49) $ (0.53)
======== ======== ========= =========
Shares used in per-share
calculation-basic and
diluted 258,850 221,052 232,210 216,117
Finisar Corporation
Consolidated Balance Sheet
(In thousands)
(Unaudited) (Unaudited) (Audited)
April 30, January 31, April 30,
2005 2005 2004
------------ ------------ ------------
ASSETS
Cash and cash equivalents $ 29,431 $ 25,753 $ 69,872
Short-term investments 72,931 75,815 73,526
Restricted investments 3,717 3,734 6,329
Accounts receivable, trade
(net) 42,601 33,466 28,481
Accounts receivable, other 11,371 9,517 11,314
Inventories 35,355 36,296 34,717
Prepaid expenses 4,267 7,464 4,736
Deferred income taxes - 28 2,045
------------ ------------ ------------
Total current assets 199,673 192,073 231,020
Property, plant, equipment
and improvements, net 86,752 82,848 107,736
Restricted investments,
long-term 5,393 7,204 8,921
Purchased intangibles, net 36,720 36,066 47,961
Goodwill, net 120,807 67,232 60,620
Minority investment 21,366 24,004 24,227
Other assets 17,571 15,403 14,220
------------ ------------ ------------
Total assets $ 488,282 $ 424,830 $ 494,705
============ ============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable $ 28,854 $ 19,557 $ 29,460
Accrued compensation 4,497 4,935 4,376
Other accrued liabilities 20,186 14,666 15,254
Current portion of other
long-term liabilities 2,460 2,000 2,000
Convertible notes 15,811 - -
Non-cancelable purchase
obligations 6,449 6,223 7,038
------------ ------------ ------------
Total current liabilities 78,257 47,381 58,128
Deferred income taxes 1,632 28 2,045
Convertible notes 250,019 247,962 229,493
Other long-term liabilities 12,725 125 2,194
------------ ------------ ------------
Total long-term 264,376 248,115 233,732
Common stock 259 224 222
Additional paid-in capital 1,314,960 1,262,324 1,259,759
Notes receivable from
stockholders - - (481)
Deferred stock compensation - (20) (162)
Accumulated other comprehensive
income 381 281 710
Accumulated deficit (1,169,951) (1,133,475) (1,057,203)
------------ ------------ ------------
Total stockholders' equity 145,649 129,334 202,845
------------ ------------ ------------
Total liabilities and
stockholders' equity $ 488,282 $ 424,830 $ 494,705
============ ============ ============
Finisar Corporation
Certain non-cash and Cash Items Included in financial statements
(In thousands, except per share amounts)
(Unaudited) (Unaudited) (Unaudited) (Audited)
Three Months Ended Twelve Months Ended
April 30, April 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Cost of revenues items
Inventory write off net of sales
of inventory previously
written off $ 1,127 $ (2,210) $ 699 $ 214
Network Tools warranty
accrual 1,638 - 1,638 -
Redundant facility costs 422 - 422 -
Costs for reduction in force 216 - 216 -
Profit on sales of acquired
finished goods inventory - - 445 -
Charge for rework material - - - 2,906
Final settlement of vendor
materials liability - - - (1,718)
Amortization of acquired
developed technology 5,692 5,271 26,375 19,239
--------- --------- --------- ---------
Total 9,095 3,061 29,795 20,641
Research and development
expense items
Non-employee option expense - - - 135
Sales and use tax audit 773 - 773 -
Closure of operations - - (318) -
Costs for reduction in force 9 - 47 -
Loss on sale of equipment - - 909 -
--------- --------- --------- ---------
Total 782 - 1,411 135
Sales and marketing
Costs for reduction in force - - 67 -
--------- --------- --------- ---------
Total - - 67 -
General and administrative
expense items
Costs for reduction in force 52 - 52 -
Lease set-up costs 748 - 748 -
Patent write-off 130 - 130 -
Closure of operations - - (96) -
Non-employee option expense - - - 756
Settlement of claim - - - 750
--------- --------- --------- ---------
Total 930 - 834 1,506
Amortization of deferred
compensation 21 134 163 (104)
Amortization of purchased
intangibles 170 143 653 572
Acquired in-process R&D 1,240 6,180 1,558 6,180
Impairment of facility - - 18,798 -
Other acquisition costs - (17) - 222
Restructuring costs items - - - 281
Interest (income) expense items
Debt conversion costs - 3 - 10,816
Amortization of discount on
convertible notes 1,058 1,094 4,256 10,220
--------- --------- --------- ---------
Total 1,058 1,097 4,256 21,036
Other (income) expense items
Write down in value of
investment - - - 250
Minority investment write-off 10,542 374 11,765 2,932
Closure of operations - (791) - 6,942
Debt extinguishment costs - - - (86)
(Gain)/loss on sale of
equipment 41 91 (461) 91
--------- --------- --------- ---------
Total 10,583 (326) 11,304 10,129
Income Taxes 859 - 859 -
--------- --------- --------- ---------
Net effect on GAAP net loss $ 24,738 $ 10,272 $ 69,698 $ 60,598
========= ========= ========= =========
Net effect on loss per share
- basic and diluted $ 0.10 $ 0.05 $ 0.30 $ 0.28
========= ========= ========= =========
Shares used in per-share
calculation-basic and
diluted 258,850 221,052 232,210 216,117
Contact:
Steve Workman
VP Finance, Chief Financial Officer
408-548-1000
Ed Lamb
Investor Relations
408-542-5050
investor.relations@Finisar.com
