Finisar Announces Record Annual Revenues for Fiscal 2011Record Annual Revenues of $948.8 Million, 50.6% Y-Y Growth
Annual Non-GAAP Operating Margin of 15.6%
Record Annual Non-GAAP Earnings per Diluted Share of $1.55
SUNNYVALE, CA -- (Marketwire - June 15, 2011) - Finisar Corporation (NASDAQ: FNSR), a global technology leader for subsystems and components for fiber optics communications, today announced financial results for its fourth quarter and fiscal year ended April 30, 2011.
COMMENTARY
"In our just completed fiscal year ended April 30, 2011, our revenues were a record $948.8 million, which represented 50.6% growth over fiscal 2010. In addition, we achieved records for fiscal year operating profit, net income, and earnings per share. For the fourth fiscal quarter, our revenues were $236.9 million, 25.7% greater than the prior year period and 9.9% less than the prior quarter. The sequential decline in revenues was primarily driven by soft demand from our telecom customers, particularly Chinese OEMs. Despite the decline in revenues compared to the prior quarter, we were able to achieve non-GAAP gross margin of 34.2%, exceeding our prior guidance of 32% to 33%, through a combination of reduced spending and improved manufacturing yields. Our non-GAAP earnings per diluted share was $0.33," said Jerry Rawls, Finisar's executive Chairman of the Board.
"During the quarter we continued to invest in our new product development programs, including tunable XFP, to generate a significant pipeline of new products. We expect this pipeline will enable us to win new opportunities with both LAN/SAN and telecom customers and expand our market share. We are currently in qualification with fifteen customers for our tunable XFP transceiver and expect production of this product to start to ramp during the first fiscal quarter of 2012. In addition, on May 18, we successfully closed our previously announced cash tender offer for the shares of Ignis ASA. We now hold approximately 81% of the outstanding shares of Ignis. We believe Ignis's whole-owned subsidiary, Syntune, will provide us a secure supply of superior tunable lasers used in producing our tunable XFP transceiver," said Eitan Gertel, Finisar's Chief Executive Officer.
FINANCIAL HIGHLIGHTS - FOURTH QUARTER ENDED April 30, 2011
Fourth Fourth Third
Quarter Quarter Quarter
Summary GAAP Results Ended Ended Ended
April 30, April 30, January 30,
2011 2010 2011
--------- --------- ---------
(in thousands, except
per share amounts)
Continuing operations
Revenues $ 236,946 $ 188,490 $ 263,016
Gross margin 31.6% 31.2% 32.0%
Operating expenses $ 53,644 $ 45,932 $ 53,466
Operating income $ 21,265 $ 12,919 $ 30,599
Operating margin 9.0% 6.9% 11.6%
Income $ 16,352 $ 14,111 $ 18,821
Income per share-basic $ 0.18 $ 0.20 $ 0.24
Income per share-diluted $ 0.17 $ 0.19 $ 0.22
Basic shares 89,584 70,596 80,080
Diluted shares 97,837 82,351 93,388
Fourth Fourth Third
Quarter Quarter Quarter
Summary Non-GAAP Results (a) Ended Ended Ended
April 30, April 30, January 30,
2011 2010 2011
--------- --------- ---------
(in thousands, except
per share amounts)
Continuing operations
Revenues $ 236,946 $ 188,490 $ 263,016
Gross margin 34.2% 32.6% 34.7%
Operating expenses $ 48,043 $ 43,186 $ 46,423
Operating income $ 33,069 $ 18,331 $ 44,735
Operating margin 14.0% 9.7% 17.0%
Income $ 32,113 $ 16,685 $ 42,521
Income per share-basic $ 0.36 $ 0.24 $ 0.53
Income per share-diluted $ 0.33 $ 0.22 $ 0.47
Basic shares 89,584 70,596 80,080
Diluted shares 97,837 82,483 93,388
(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 Finisar's
core 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.
Highlights for the fourth quarter of fiscal 2011 under GAAP:
-- Revenues of $236.9 million increased $48.5M, or 25.7%, from $188.5
million in the fourth quarter of the prior year, but were down $26.1
million, or (9.9)%, from $263.0 million in the preceding quarter.
-- Compared to the fourth quarter of the prior year, the sale of 10 Gbps or
faster products increased by $35.5 million, or 48.0%, the sale of less
than 10 Gbps products increased by $6.9 million, or 8.3%, the sale of
WSS/ROADM line card products increased by $ 7.1 million, or 26.4%, and
the sale of products for analog and CATV applications decreased by $1.1
million, or (24.8)%.
-- Compared to the preceding quarter, the sale of 10 Gbps or faster
products decreased by $8.2 million, or (7.0)%, the sale of less than 10
Gbps products decreased by $3.6 million, or (3.9)%, the sale of
WSS/ROADM line card products decreased by $13.7 million, or (28.7)%, and
the sale of products for analog and cable television (CATV) applications
decreased by $0.5 million, or (13.6)%.
-- Gross margin increased to 31.6% of revenues from 31.2% in the fourth
quarter of the prior year and decreased from 32.0% in the preceding
quarter.
-- Operating income increased $8.3 million to $21.3 million, or 9.0% of
revenues, compared to $12.9 million, or 6.9% of revenues, in the fourth
quarter of the prior year. Operating income decreased from $30.6
million, or 11.6% of revenues, in the preceding quarter. This decrease
in GAAP operating income was primarily the result of the impact of
reduced revenue levels.
-- Income from continuing operations was $16.4 million, or $0.17 per
diluted share, compared to $14.1 million, or $0.19 per share, in the
fourth quarter of the prior year and $18.8 million, or $0.22 per diluted
share, in the preceding quarter.
-- Cash and cash equivalents totaled $314.8 million at the end of the
fourth quarter compared to $310.2 million at the end of the preceding
quarter.
-- On March 11 and 12, 2011, Finisar acquired 18.3 million shares of Ignis
from certain existing Ignis shareholders, for NOK 8 per share in cash,
or an aggregate purchase price of NOK 147 million or approximately USD
$26 million. These purchases brought Finisar's total ownership to
25.7 million shares, or approximately 32% of the outstanding Ignis
shares on a fully-diluted basis. In addition, during the quarter,
Finisar made a voluntary public cash offer to acquire all of the
outstanding shares of Ignis that it did not already own for NOK 8 per
share.
-- Subsequent to the end of the quarter, the voluntary tender offer closed
with Finisar acquiring approximately 37.9 million additional shares of
Ignis, representing approximately 48% of the outstanding shares. These
shares, combined with the 25.7 million shares held by Finisar before
the offer, brought Finisar's total ownership to approximately 81% of
the outstanding Ignis shares.
-- Finisar subsequently launched a mandatory tender offer for the
remaining shares of Ignis at a purchase price of NOK 8 per share. The
offer period is scheduled to end on June 22, 2011, unless extended by
Finisar.
-- Days sales outstanding were 65 days compared to 61 days in the prior
quarter. Inventory turns decreased to 3.4 compared to 4.0 in the
preceding quarter.
-- Capital expenditures were $19.4 million compared to $19.0 million in
the preceding quarter.
-- Under Finisar's $70.0 million secured credit facility with Wells Fargo
Foothill, LLC, no borrowings were outstanding and $66.6 million was
available to borrow at the end of the fourth quarter.
-- As previously announced, in several privately-negotiated transactions
completed during the early part of the quarter, Finisar exchanged an
aggregate of approximately $17.8 million of its outstanding 5%
Convertible Senior Notes due 2029 for approximately 1.7 million shares
of the Company's common stock, based on the conversion price of the
notes of approximately $10.68 per share, plus a total of approximately
75,000 additional shares, including approximately 8,000 shares issued
in payment of accrued and unpaid interest. At the end of the quarter,
approximately $40.0 million in principal amount of the notes remained
outstanding.
In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, or GAAP, Finisar provides supplemental information regarding its operating performance on a non-GAAP basis. Finisar believes this supplemental information provides investors and management with additional insight into its underlying core operating performance by excluding a number of non-cash and cash charges, as well as infrequently occurring gains or losses principally related to acquisitions, the sale of minority investments, restructuring or other transition activities, legal settlements, impairments and financing transactions. For the fourth quarter of fiscal 2011, items related to continuing operations representing a net charge of approximately $15.8 million were excluded. Excluded charges included $5.6 million in non-cash stock-based compensation expenses; $1.5 million in non-cash amortization charges related to acquired developed technology and other purchased intangibles arising from previous acquisitions; a non-cash charge of $413,000 related to the Company's equity interest in the net loss of Ignis due to Finisar's 32% ownership position in Ignis; a charge of $389,000 representing the difference between cash payments for income taxes and the related GAAP tax provision, less non-recurring items; a $574,000 non-cash charge related to foreign exchange losses; $3.7 million in non-cash charges related to slow-moving and excess inventory; a non-cash charge of $2.4 million for induced conversion expense related to the exchange of convertible notes for common stock; a $258,000 non-cash charge for acceleration of the amortization of previously paid fees associated with the original issuance of the exchanged portion of the notes; and $1.0 million in non-recurring transaction expenses related to the acquisition of the Ignis shares. Other excluded items are described in Finisar Non-GAAP Financial Measures below.
Highlights for the fourth quarter of fiscal 2011 on a non-GAAP basis:
-- Non-GAAP gross margin increased to 34.2% of revenues from 32.6% in the
fourth quarter of the prior year and decreased from 34.7% in the
preceding quarter. The improvement compared to the prior year reflects
both a favorable shift in product mix and a reduction in manufacturing
unit costs due to higher shipment volumes. The decrease in gross margin
compared to the preceding quarter was due primarily to the lower revenue
levels.
-- Non-GAAP operating expenses increased $4.9 million from $43.2 million in
the fourth quarter of the prior year and increased $1.6 million from
$46.4 million in the preceding quarter driven by higher research and
development expenses associated with the development and qualification
of new products, including the tunable XFP transceiver. Non-GAAP
operating expenses as a percent of revenues decreased to 20.3% from
22.9% in the fourth quarter of the prior year due primarily to revenues
growing faster than expenses and increased from 17.7% from the
preceding quarter due primarily to the lower revenue level.
-- Non-GAAP operating income was $33.1 million, or 14.0% of revenues, up
$14.7 million from $18.3 million, or 9.7% of revenues, in the fourth
quarter of the prior year and a decrease of $11.7 million from $44.7
million, or 17.0% of revenues, in the preceding quarter.
-- Non-GAAP income from continuing operations was $32.1 million, or $0.33
per diluted share, compared to $16.7 million, or $0.22 per diluted
share, in the fourth quarter of the prior year and $42.5 million, or
$0.47 per diluted share, in the preceding quarter.
-- Non-GAAP EBITDA increased to $43.0 million from $26.0 million in the
fourth quarter of the prior year and declined from $53.6 million in
the preceding quarter.
FINANCIAL HIGHLIGHTS - FISCAL YEARS ENDED APRIL 30, 2011
Fiscal Year Fiscal Year FY2011
Summary GAAP Results Ended Ended Higher
April 30, April 30, (Lower) Than
2011 2010 FY2010
---------- ---------- ----------
(in thousands, except per share
amounts)
Continuing operations
Revenues $ 948,787 $ 629,880 $ 318,907
Gross margin 32.9% 28.5% 4.4%
Operating expenses $ 200,556 $ 168,445 $ 32,111
Operating income $ 111,716 $ 11,296 $ 100,420
Operating margin 11.8% 1.8% 10.0%
Income (loss) $ 88,379 $ (22,806) $ 111,185
Income (loss) per share-basic $ 1.10 $ (0.35) $ 1.45
Income (loss) per share-diluted $ 1.00 $ (0.35) $ 1.35
Basic shares 80,582 64,952 15,630
Diluted shares 92,715 64,952 27,763
Fiscal Year Fiscal Year FY2011
Summary Non-GAAP Results (a) Ended Ended Higher
April 30, April 30, (Lower) Than
2011 2010 FY2010
---------- ---------- ----------
(in thousands, except per share
amounts)
Continuing operations
Revenues $ 948,787 $ 629,880 $ 318,907
Gross margin 34.9% 31.0% 3.9%
Operating expenses $ 183,294 $ 150,811 $ 32,483
Operating income $ 147,744 $ 44,675 $ 103,069
Operating margin 15.6% 7.1% 8.5%
Income $ 138,748 $ 37,462 $ 101,286
Income per share-basic $ 1.72 $ 0.58 $ 1.14
Income per share-diluted $ 1.55 $ 0.56 $ 0.99
Basic shares 80,582 64,952 15,630
Diluted shares 92,715 66,704 26,011
Highlights for fiscal year 2011 under GAAP:
-- Total revenues increased to $948.8 million, up $318.9 million, or 50.6%,
from $629.9 million in the prior year.
-- Of the $318.9 million increase in revenues, the sale of products for
applications equal to or greater than 10 Gbps increased $180.1 million,
or 72.4%, the sale of products for applications less than 10 Gbps
increased $64.3 million, or 22.2%, the sale of WSS/ROADM line card
products increased $78.5 million, or 108.4%, and the sale of products
for analog and CATV applications decreased $3.9 million, or (20.6)%.
-- Gross margin increased to 32.9% from 28.5% in the prior year.
-- Operating expenses totaled $200.6 million, up 19.1%, from $168.4 million
in the prior year.
-- Operating income increased by $100.4 million to $111.7 million, or 11.8%
of revenues, compared to $11.3 million.
-- Net income totaled $88.4 million, or $1.00 per diluted share, compared
to a net loss of $(22.8) million, or $(0.35) per share, in the prior
year, which included a charge of $4.2 million for the non-cash
restructuring expenses.
-- Loss from discontinued operations totaled $(284,000), or $(0.00) per
diluted share, compared to income of $36.9 million, or $0.57 per
diluted share, reflecting the sale of the Company's Network Tools
business in the prior year.
For fiscal 2011, items excluded under non-GAAP results totaled a net charge of $50.4 million. Excluded benefits and charges included a non-recurring benefit of $2.5 million representing the portion of the cash received under the settlement and cross license agreement with Source Photonics that was attributable to past damages, net of related legal fees; a $3.5 million non-recurring charge representing the amount of an adverse judgment related to patent litigation with Emcore; $8.3 million in non-cash charges for induced conversion expense related to the exchange of convertible notes for common stock; a $878,000 non-cash charge for acceleration of the amortization of previously paid fees associated with the original issuance of the exchanged portion of the notes; $1.0 million in non-recurring transaction expenses related to acquisition of the Ignis shares; $18.5 million in non-cash stock-based compensation expenses; $6.2 million in non-cash amortization charges related to acquired developed technology and other purchased intangibles arising from previous acquisitions; $9.3 million in non-cash charges related to slow-moving and excess inventory; $742,000 in non-cash charges for imputed interest expense on the Company's debt obligations; $2.4 million in non-cash losses on foreign currency translation; a non-cash charge of $413,000 related to the Company's equity interest in the net loss of Ignis due to Finisar's 32% ownership position in Ignis; and a $1.5 million charge representing the difference between cash payments for income taxes and the related GAAP tax provision, less non-recurring items. Other items are as described in Finisar Non-GAAP Financial Measures below.
Highlights for fiscal 2011 on a non-GAAP basis:
-- Non-GAAP gross margin was 34.9% compared to 31.0% in the prior year.
-- Non-GAAP operating expenses totaled $183.3 million, an increase of
$32.5 million, or 21.5%, from $150.8 million in the prior year, due
primarily to an increase in spending for research and development.
-- Non-GAAP operating income totaled $147.7 million, or 15.6% of revenues,
compared to $44.7 million, or 7.1% of revenues, in the prior year.
-- Non-GAAP income from continuing operations totaled $138.7 million, or
$1.55 per diluted share, compared to income of $37.5 million, or $.56
per diluted share, in the prior year.
-- Non-GAAP EBITDA increased to $183.4 million compared to $74.0 million
in the prior year.
-- Capital expenditures totaled $64.0 million compared to $31.4 million
in the prior year.
OUTLOOK
During the first quarter ending July 31, 2011, prior to reflecting the impact of consolidation accounting associated with Finisar's ownership stake in Ignis, the Company indicated that it currently expects revenues to be in the range of $215 to $230 million; GAAP operating margin to be in the range of approximately 4% to 6%; non-GAAP operating margin to be in the range of 8% to 10% and non-GAAP earnings per diluted share to be in the range of approximately $0.17 to $0.21.
During the first quarter ending July 31, 2011, Finisar will apply consolidation accounting for its ownership interest in Ignis from May 18, 2011, the date Finisar acquired a controlling interest in Ignis, through June 30, 2011, the end of Ignis's fiscal quarter, or approximately 50% of Finisar's first fiscal quarter. Finisar expects the impact of the consolidation (including the elimination of any intercompany revenue and other items) will be (i) additional revenues of approximately $6.5 million, with a non-GAAP gross margin of approximately 23-24%, (ii) an additional non-GAAP net operating loss of approximately $1.0 million and (iii) a negative impact to non-GAAP earnings per diluted share of approximately $(0.01). As previously announced, Finisar expects the transaction with Ignis to be accretive to non-GAAP earnings per diluted share within one year following the closing of the tender offer, subject to the achievement of anticipated synergies.
Therefore, taking into account the impact of the consolidation of Ignis, the Company indicated that it currently expects first fiscal quarter revenues to be in the range of $221 to $236 million; GAAP operating margin to be in the range of approximately 3.3% to 5.3%; non-GAAP operating margin to be in the range of 7.3% to 9.3% and non-GAAP earnings per diluted share to be in the range of approximately $0.16 to $0.20.
CONFERENCE CALL
Finisar will discuss its financial results for the fourth quarter and current business outlook during its regular quarterly conference call scheduled for Wednesday, June 15, 2011, at 2:00pm PDT (5:00pm EDT). To listen to the call you may connect through the Finisar investor relations page at http://investor.finisar.com/ or dial 1-866-288-0543 (domestic) or (913) 312-0962 (international) and enter conference ID 8133127.
An audio replay will be available for two weeks following the call by dialing 1-888-203-1112 (domestic) or (719) 457-0820 and then following the prompts: enter conference ID 8133127 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 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. 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; challenges related to the integration of the Ignis acquisition and realizing anticipated benefits of improved access to a supply of tunable lasers; 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 July 1, 2010) 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 more than 20 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
Three
Months
Three Months Ended Twelve Months Ended Ended
-------------------- -------------------- ---------
April 30, April 30, April 30, April 30, January 30,
2011 2010 2011 2010 2011
--------- --------- --------- --------- ---------
(Unaudited)
(in thousands, except per share data)
Revenues $ 236,946 $ 188,490 $ 948,787 $ 629,880 $ 263,016
Cost of revenues 160,966 128,447 631,831 445,370 177,730
Amortization of
acquired developed
technology 1,071 1,192 4,684 4,769 1,221
--------- --------- --------- --------- ---------
Gross profit 74,909 58,851 312,272 179,741 84,065
Gross margin 31.6% 31.2% 32.9% 28.5% 32.0%
Operating expenses:
Research and
development 32,909 27,256 117,281 94,770 29,607
Sales and
marketing 9,025 8,648 36,165 30,702 8,818
General and
administrative 11,328 9,645 45,579 36,772 14,658
Amortization of
purchased
intangibles 382 383 1,531 2,028 383
Restructuring
costs - - - 4,173 -
--------- --------- --------- --------- ---------
Total
operating
expenses 53,644 45,932 200,556 168,445 53,466
--------- --------- --------- --------- ---------
Income from
operations 21,265 12,919 111,716 11,296 30,599
Interest income 91 40 530 144 204
Interest expense (668) (2,115) (6,365) (8,957) (1,465)
Loss on repayment/
purchase/conversion
of convertible notes (2,394) - (8,340) (25,039) (5,946)
Other income
(expense), net (1,311) 1,009 (4,715) (1,890) (3,404)
--------- --------- --------- --------- ---------
Income (loss) from
continuing
operations before
income taxes 16,983 11,853 92,826 (24,446) 19,988
Provision for
(benefit from)
income taxes 631 (2,258) 4,447 (1,640) 1,167
--------- --------- --------- --------- ---------
Income (loss) from
continuing
operations 16,352 14,111 88,379 (22,806) 18,821
Income (loss) from
discontinued
operations, net of
taxes - 56 (284) 36,937 -
--------- --------- --------- --------- ---------
Net income $ 16,352 $ 14,167 $ 88,095 $ 14,131 $ 18,821
========= ========= ========= ========= =========
Income (loss) per
share from
continuing
operations - basic $ 0.18 $ 0.20 $ 1.10 $ (0.35) $ 0.24
Income (loss) per
share from
continuing
operations -
diluted $ 0.17 $ 0.19 $ 1.00 $ (0.35) $ 0.22
Income (loss) per
share from
discontinued
operations - basic $ - $ 0.00 $ (0.00) $ 0.57 $ -
Income (loss) per
share from
discontinued
operations -
diluted $ - $ 0.00 $ (0.00) $ 0.57 $ -
Shares used in
computing net loss
per share from
continuing
operations - basic 89,584 70,596 80,582 64,952 80,080
Shares used in
computing net loss
per share from
continuing
operations -
diluted 97,837 82,351 92,715 64,952 93,388
Shares used in
computing net
income (loss) per
share from
discontinued
operations - basic 89,584 70,596 80,582 64,952 80,080
Shares used in
computing net
income (loss) per
share from
discontinued
operations -
diluted 97,837 82,351 92,715 64,952 93,388
Finisar Corporation
Consolidated Balance Sheets
(In thousands)
April 30, January 30, October 31, August 1, April 30,
2011 2011 2010 2010 2010
---------- ---------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash
equivalents $ 314,765 $ 310,232 $ 184,928 $ 192,152 $ 207,024
Accounts
receivable,
net 168,386 175,173 173,243 152,477 127,617
Accounts
receivable,
other 12,733 13,910 11,826 9,885 12,855
Inventories 187,617 176,811 167,021 154,586 139,525
Deferred tax
assets - 2,437 1,559 852 2,238
Prepaid expenses 9,906 11,253 9,571 7,306 6,956
---------- ---------- ---------- ---------- ----------
Total current
assets 693,407 689,816 548,148 517,258 496,215
Property,
equipment and
improvements,
net 125,693 112,324 100,960 93,386 89,214
Purchased
technology, net 7,332 8,403 9,576 10,497 11,689
Other intangible
assets, net 10,107 10,509 10,910 11,312 11,713
Minority
investments 12,289 18,610 18,169 12,289 12,289
Equity method
investments 31,142 - - - -
Other assets 5,179 4,178 4,995 5,131 5,610
---------- ---------- ---------- ---------- ----------
Total
assets $ 885,149 $ 843,840 $ 692,758 $ 649,873 $ 626,730
========== ========== ========== ========== ==========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current
liabilities:
Accounts
payable $ 76,288 $ 83,263 $ 86,598 $ 79,121 $ 76,838
Accrued
compensation 24,525 21,872 21,861 14,479 18,289
Other accrued
liabilities 25,112 25,101 20,739 20,206 21,798
Deferred
revenue 8,064 7,186 8,475 6,290 6,571
Current
portion of
convertible
notes - - - 29,214 28,839
Current
portion of
long-term
debt - - 4,000 4,000 4,000
---------- ---------- ---------- ---------- ----------
Total current
liabilities 133,989 137,422 141,673 153,310 156,335
Long-term
liabilities:
Convertible
notes, net
of current
portion 40,015 57,850 100,000 100,000 100,000
Long-term debt,
net of current
portion - - 13,250 14,250 15,250
Other
non-current
liabilities 11,988 12,706 12,762 6,102 6,260
Deferred tax
liabilities - 387 328 255 239
---------- ---------- ---------- ---------- ----------
Total
liabilities 185,992 208,365 268,013 273,917 278,084
Stockholders'
equity:
Common stock 90 87 77 76 76
Additional
paid-in
capital 2,275,600 2,239,726 2,048,708 2,038,636 2,030,373
Accumulated
other
comprehensive
income 32,966 21,513 20,632 15,712 15,791
Accumulated
deficit (1,609,499) (1,625,851) (1,644,672) (1,678,468) (1,697,594)
---------- ---------- ---------- ---------- ----------
Total
stockholders'
equity 699,157 635,475 424,745 375,956 348,646
---------- ---------- ---------- ---------- ----------
Total liabilities
and stockholders'
equity $ 885,149 $ 843,840 $ 692,758 $ 649,873 $ 626,730
========== ========== ========== ========== ==========
FINISAR NON-GAAP FINANCIAL MEASURES
In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, or GAAP, Finisar provides supplemental information regarding the Company's operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or which occur relatively infrequently and which management considers to be outside our core operating results. Some of these non-GAAP measures also exclude the ongoing impact of historical business decisions made in different business and economic environments. Management believes that tracking non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income and non-GAAP net income per share provides management and the investment community with valuable insight into our current operations, our ability to generate cash and the underlying business trends which 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 non-recurring and infrequently incurred 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:
-- 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);
-- The cost of covering employee and employer tax liabilities
(non-recurring cash charges) arising from the special investigation into
our historical stock option granting practices;
-- Purchase accounting adjustment for sale of acquired inventory (non-cash
charges); and
-- Reduction in force costs (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:
-- Transaction fees associated with acquisitions (non-recurring charges)
-- Gain or loss on settlement of lawsuits (non-recurring charges);
-- Amortization of purchased intangibles (non-cash charges); and
-- Restructuring costs (non-recurring charges).
In calculating non-GAAP income from continuing operations and non-GAAP income from continuing operations per share in this release, we have also excluded the following items in applicable periods:
-- Amortization of discount on convertible debt and imputed interest
expense (non-cash charges);
-- Losses on repayment/purchase/exchange of convertible notes
(non-recurring and non-cash charges);
-- Debt conversion inducement expense (non-cash charges associated with
the issuance of additional shares in connection with the exchange of
convertible notes as well as acceleration of the amortization of
previously paid fees associated with the original issuance of the
exchanged portion of convertible notes)
-- Imputed interest related to restructuring (amortization of imputed
interest expense associated with previously incurred restructuring
costs);
-- 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 on minority investments (infrequently occurring and
principally non-cash gains and losses related to the disposal of
investments in other companies);
-- Other miscellaneous income;
-- Dollar denominated foreign exchange transaction losses (gains)
(non-recurring and non-cash charges);
-- Charges related to the non-controlling equity interest in the net
loss of an investee (non-cash charges); and
-- Differences between cash payable for tax and GAAP provision, less
non-recurring items.
In calculating non-GAAP income (loss) from discontinued operations and non-GAAP income from discontinued operations per share in this release, we have also excluded gains on disposal of a product line and disposal of discontinued operations.
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
Three
Months
Three Months Ended Twelve Months Ended Ended
-------------------- -------------------- ---------
April 30, April 30, April 30, April 30, January 30,
2011 2010 2011 2010 2011
--------- --------- --------- --------- ---------
(Unaudited)
(in thousands, except per share data)
Reconciliation of
GAAP income (loss)
to non-GAAP income
(loss) from
continuing
operations
Reconciliation of
GAAP Gross Profit
to non-GAAP Gross
Profit:
Gross profit per
GAAP $ 74,909 $ 58,851 $ 312,272 $ 179,741 $ 84,065
Gross margin, GAAP 31.6% 31.2% 32.9% 28.5% 32.0%
Adjustments:
Cost of revenues
Change in excess
and obsolete
inventory
reserve 3,737 491 9,306 6,526 4,589
Amortization of
acquired
technology 1,071 1,192 4,685 4,768 1,222
Stock compensation 1,388 983 4,797 4,211 1,353
Payroll taxes
related to options
investigation - - (83) - (83)
Purchase
accounting
adjustment for
sale of acquired
inventory - - 11 - 11
Reduction in
force costs 7 - 50 240 1
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Total cost of
revenue
adjustments 6,203 2,666 18,766 15,745 7,093
Gross profit,
non-GAAP 81,112 61,517 331,038 195,486 91,158
Gross margin,
non-GAAP 34.2% 32.6% 34.9% 31.0% 34.7%
Reconciliation of
GAAP operating
income to non-GAAP
operating income:
Operating income per
GAAP 21,265 12,919 111,716 11,296 30,599
Operating margin,
GAAP 9.0% 6.9% 11.8% 1.8% 11.6%
Adjustments:
Total cost of
revenue adjustments 6,203 2,666 18,766 15,745 7,093
Research and
development
Reduction in force
costs 21 - 51 49 25
Stock compensation 2,162 1,143 6,509 5,521 1,608
Payroll taxes
related to options
investigation - - (118) - (118)
Sales and marketing
Reduction in force
costs 46 35 270 35 69
Stock compensation 653 385 2,168 1,857 536
Payroll taxes
related to options
investigation - - (42) - (42)
General and
administrative
Reduction in force
costs 15 90 136 393 29
Stock compensation 1,421 816 5,057 3,357 1,189
Payroll taxes
related to options
investigation - - (73) 200 (73)
Acquisition related
costs 995 - 995 - -
Litigation
settlement (94) (106) 778 21 3,437
Amortization of
purchased
intangibles 382 383 1,531 2,028 383
Restructuring costs - - - 4,173 -
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Total cost of
revenue and
operating expense
adjustments 11,804 5,412 36,028 33,379 14,136
Operating income,
non-GAAP 33,069 18,331 147,744 44,675 44,735
Operating margin,
non-GAAP 14.0% 9.7% 15.6% 7.1% 17.0%
Reconciliation of
GAAP income (loss)
to non-GAAP income
(loss) from
continuing
operations:
Income (loss) per
GAAP from
continuing
operations before
cumulative effect
of change in
accounting
principle 16,352 14,111 88,379 (22,806) 18,821
Total cost of
revenue and
operating expense
adjustments 11,804 5,412 36,028 33,379 14,136
Non-cash imputed
interest expenses
on convertible debt - 359 742 3,033 -
Loss/(gain) on
repayment/purchase
of convertible
notes - - - 25,039 -
Imputed interest
related to
restructuring 73 - 147 - 74
Other income
(expense), net
Loss/(gain) on
sale of assets (144) 4 17 289 154
Loss related to
minority and
equity method
investments 413 - 413 1,625 -
Other misc income - - (61) (2) (3)
Foreign exchange
transaction
loss/(gain) 574 (1,202) 2,393 (1,096) 2,357
Debt conversion
expenses 2,652 - 9,218 - 6,566
Provision for income
tax
Timing differences 389 (1,999) 1,472 (1,999) 416
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Total adjustments 15,761 2,574 50,369 60,268 23,700
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Income, non-GAAP,
from continuing
operations 32,113 16,685 138,748 37,462 42,521
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Reconciliation of
GAAP income (loss)
to non-GAAP income
(loss) from
discontinued
operations:
Income (loss) per
GAAP from
discontinued
operations - 56 (284) 36,937 -
Adjustments:
Reduction in force
costs - - - 6 -
Stock compensation - - - 704 -
Amortization of
acquired
technology - - - 170 -
Amortization of
purchased
intangibles - - - 77 -
Gain/(loss) on
disposal of a
product line - - - (1,250) -
Gain on disposal
of discontinued
operations - - - (35,888) -
--------- --------- --------- --------- ---------
Total adjustments - - - (36,181) -
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Income from
discontinued
operations,
non-GAAP - 56 (284) 756 -
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Reconciliation of
GAAP net income to
non-GAAP net
income:
Net income per GAAP 16,352 14,167 88,095 14,131 18,821
Total adjustments
from continuing
operations 15,761 2,574 50,369 60,268 23,700
Total adjustments
from discontinuing
operations - - - (36,181) -
--------- --------- --------- --------- ---------
Total adjustments 15,761 2,574 50,369 24,087 23,700
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Net income, non-GAAP $ 32,113 $ 16,741 $ 138,464 $ 38,218 $ 42,521
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Income per share
from continuing
operations - basic $ 0.36 $ 0.24 $ 1.72 $ 0.58 $ 0.53
Income per share
from continuing
operations -
diluted $ 0.33 $ 0.22 $ 1.55 $ 0.56 $ 0.47
Income (loss) per
share from
discontinued
operations - basic $ - $ 0.00 $ (0.00) $ 0.01 $ -
Income (loss) per
share from
discontinued
operations -
diluted $ - $ 0.00 $ (0.00) $ 0.01 $ -
Shares used in
computing net
income per share -
basic 89,584 70,596 80,582 64,952 80,080
Shares used in
computing net
income per share -
diluted 97,837 82,483 92,715 66,704 93,388
Continuing
operations
Net income, non-GAAP $ 32,113 $ 16,685 $ 138,748 $ 37,462 $ 42,521
Depreciation expense 9,922 7,531 35,694 29,523 8,922
Amortization 208 289 1,050 888 264
Interest expense 504 1,716 4,946 5,780 1,187
Income tax expense 242 (259) 2,976 359 751
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Non-GAAP EBITDA $ 42,989 $ 25,962 $ 183,414 $ 74,012 $ 53,645
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Discontinued
operations
Net income (loss),
non-GAAP - 56 (284) 756 -
Depreciation expense - - - 119 -
--------- --------- --------- --------- ---------
Non-GAAP EBITDA $ - $ 56 $ (284) $ 875 $ -
--------- --------- --------- --------- ---------
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Total Non-GAAP
EBITDA $ 42,989 $ 26,018 $ 183,130 $ 74,887 $ 53,645
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Investor Contact:
Kurt Adzema
Chief Financial Officer
408-542-5050 or Investor.relations@finisar.com
Press contact:
Victoria McDonald
Sr. Manager, Corporate Communications
408-542-4261
