SUNNYVALE, CA -- (Marketwired - December 10, 2015) - Finisar Corporation (NASDAQ: FNSR), a global technology leader for subsystems and components for fiber optic communications, today announced financial results for its second quarter of fiscal 2016, ended November 1, 2015.
COMMENTARY
"Revenues for our second fiscal quarter were $321.1 million compared to $314.0 million in the prior quarter; an increase of approximately 2.3%. This increase was primarily driven by growth in 100 gigabit Ethernet transceivers and 10 gigabit tunable transceivers and wavelength selective switches for telecom WDM applications," said Jerry Rawls, Finisar's Chief Executive Officer.
FINANCIAL HIGHLIGHTS - Second Quarter Ended November 1, 2015 Summary GAAP Results Second First Quarter Quarter Ended Ended November 1, August 2, 2015 2015 ------------ ------------ (in thousands, except per share amounts) Revenues $ 321,136 $ 314,030 Gross margin 27.7% 27.8% Operating expenses $ 79,723 $ 80,316 Operating income (loss) $ 9,368 $ 7,061 Operating margin 2.9% 2.2% Net income (loss) $ 6,644 $ 3,393 Income per share-basic $ 0.06 $ 0.03 Income per share-diluted $ 0.06 $ 0.03 Basic shares 106,635 105,286 Diluted shares 107,493 108,107 Summary Non-GAAP Results (a) Second First Quarter Quarter Ended Ended November 1, August 2, 2015 2015 ------------ ------------ (in thousands, except per share amounts) Revenues $ 321,136 $ 314,030 Gross margin 30.0% 30.2% Operating expenses $ 68,025 $ 68,406 Operating income $ 28,274 $ 26,511 Operating margin 8.8% 8.4% Net income $ 26,857 $ 24,532 Income per share-basic $ 0.25 $ 0.23 Income per share-diluted $ 0.25 $ 0.23 Basic shares 106,635 105,286 Diluted shares 107,493 108,107
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(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.
Financial Statement Highlights for the Second Quarter of Fiscal 2016:
-- Revenues increased to $321.1 million, an increase of $7.1 million, or 2.3%, from $314.0 million in the preceding quarter. -- Sales of products for datacom applications increased by $0.5 million, or 0.2%, compared to the preceding quarter, primarily driven by growth in 100 gigabit transceivers offset by a decline in 40 gigabit transceivers, after a record quarter for 40 gigabit transceivers in the preceding quarter. -- Sales of products for telecom applications increased by $6.6 million, or 8.2%, compared to the preceding quarter, primarily driven by growth in 10 gigabit tunable transceivers and wavelength selective switches. -- GAAP gross margin was 27.7% compared to 27.8% in the preceding quarter. -- Non-GAAP gross margin was 30.0% compared to 30.2% in the prior quarter. -- GAAP operating expenses were $79.7 million compared to $80.3 million in the prior quarter. -- Non-GAAP operating expenses were $68.0 million, or 21.2% of revenues compared to $68.4 million, or 21.8% of revenues, in the prior quarter. -- GAAP operating income increased by $2.3 million, to $9.4 million or 2.9% of revenues, compared to $7.1 million or 2.2% of revenues in the preceding quarter, primarily due to the higher revenue level. -- Non-GAAP operating income increased by $1.8 million to $28.2 million, or 8.8% of revenues, compared to $26.5 million, or 8.4% of revenues, in the preceding quarter. -- Cash, cash equivalents and short term investments increased $25.1 million to $520.8 million at the end of the second quarter, compared to $495.7 million at the end of the preceding quarter.
OUTLOOK
The Company indicated that for the third quarter of fiscal 2016 it currently expects revenues in the range of $300 to $320 million, non-GAAP gross margin of approximately 30%, non-GAAP operating margin of approximately 7.5% to 8.5%, and non-GAAP earnings per diluted share in the range of approximately $0.19 to $0.25.
CONFERENCE CALL
Finisar will discuss its financial results for the second quarter and current business outlook during its regular quarterly conference call scheduled for Thursday, December 10, 2015, 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 800-500-0177 (domestic) or +1.719.457.2602 (international) and enter conference ID 1806814.
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 1806814 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
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 19, 2015) 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 25 years, Finisar has provided critical optics technologies to system manufacturers to meet the increasing demands for network bandwidth. 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 Three Months Ended Six Months Ended Ended ------------------ ------------------ -------- Nov 01, October Nov 01, October Aug 02, 2015 26, 2014 2015 26, 2014 2015 -------- -------- -------- -------- -------- Revenues $321,136 $296,981 $635,166 $624,619 $314,030 Cost of revenues 230,610 210,625 454,757 438,010 224,147 Impairment of long-lived assets - - 1,071 - 1,071 Amortization of acquired developed technology 1,435 1,435 2,870 2,869 1,435 -------- -------- -------- -------- -------- Gross profit 89,091 84,921 176,468 183,740 87,377 Gross margin 27.7% 28.6% 27.8% 29.4% 27.8% Operating expenses: Research and development 50,972 51,184 103,380 102,190 52,408 Sales and marketing 11,897 11,487 23,099 23,452 11,202 General and administrative 16,186 28,772 31,394 43,491 15,208 Impairment of long-lived assets - - 830 - 830 Amortization of purchased intangibles 668 737 1,336 1,498 668 -------- -------- -------- -------- -------- Total operating expenses 79,723 92,180 160,039 170,631 80,316 -------- -------- -------- -------- -------- Income (loss) from operations 9,368 (7,259) 16,429 13,109 7,061 Interest income 469 342 834 954 365 Interest expense (2,917) (2,867) (5,800) (6,001) (2,883) Other income (expenses), net 445 33 1,326 (1,993) 881 -------- -------- -------- -------- -------- Income (loss) before income taxes 7,365 (9,751) 12,789 6,069 5,424 Provision for income taxes 721 1,610 2,752 3,187 2,031 -------- -------- -------- -------- -------- Net income (loss) $ 6,644 $(11,361) $ 10,037 $ 2,882 $ 3,393 ======== ======== ======== ======== ======== Net income (loss) per share attributable to Finisar Corporation common stockholders: Basic $ 0.06 $ (0.11) $ 0.09 $ 0.03 $ 0.03 Diluted $ 0.06 $ (0.11) $ 0.09 $ 0.03 $ 0.03 Shares used in computing net income per share - basic 106,635 99,621 105,961 98,931 105,286 Shares used in computing net income per share - diluted 107,493 99,621 108,238 102,390 108,107
Finisar Corporation Consolidated Balance Sheets (in thousands) Nov 01, Aug 02, May 03, 2015 2015 2015 ----------- ----------- ----------- (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 258,270 $ 232,997 $ 197,443 Short-term held-to-maturity investments 262,500 262,695 292,748 Accounts receivable, net 230,065 234,798 213,234 Accounts receivable, other 39,982 40,807 40,650 Inventories 264,706 282,093 283,670 Prepaid expenses and other assets 20,538 22,649 36,518 ----------- ----------- ----------- Total current assets 1,076,061 1,076,039 1,064,263 Property, equipment and improvements, net 344,695 322,043 315,777 Purchased intangible assets, net 22,983 25,086 27,188 Goodwill 106,735 106,735 106,735 Minority investments 3,647 2,997 2,847 Other assets 23,133 34,960 35,072 ----------- ----------- ----------- Total assets $ 1,577,254 $ 1,567,860 $ 1,551,882 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 133,220 $ 139,600 $ 131,510 Accrued compensation 31,680 26,392 24,918 Other accrued liabilities 43,301 39,753 39,238 Deferred revenue 12,438 11,480 9,850 ----------- ----------- ----------- Total current liabilities 220,639 217,225 205,516 Long-term liabilities: Convertible notes, net of current portion 226,151 223,760 221,406 Other non-current liabilities 23,195 21,545 21,167 ----------- ----------- ----------- Total liabilities 469,985 462,530 448,089 Stockholders' equity: Common stock 107 107 104 Additional paid-in capital 2,577,246 2,564,506 2,551,114 Accumulated other comprehensive income (loss) (31,835) (14,390) 861 Accumulated deficit (1,438,249) (1,444,893) (1,448,286) ----------- ----------- ----------- Total stockholders' equity 1,107,269 1,105,330 1,103,793 ----------- ----------- ----------- Total liabilities and stockholders' equity $ 1,577,254 $ 1,567,860 $ 1,551,882 =========== =========== =========== Note - Balance sheet amounts as of May 3, 2015 ae derived from the auditd 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, non-GAAP income per share, and Non-GAAP EBITDA. These non-GAAP financial measures are 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. 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 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:
-- 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); -- Duplicate facilities costs during facilities move (non-recurring cash charges) -- Stock-based compensation expense (non-cash charges); -- Impairment of long-lived assets (non-recurring non-cash charges); -- Reduction in force costs (non-recurring cash charges); and -- Acquisition related retention payments (non-recurring cash 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 in this release:
-- Gain or loss on litigation settlements and resolutions and related costs (non-recurring cash charges or benefits); -- Employee and employer tax liabilities related to the 2006 special investigation into our historical stock option granting practices (non- recurring cash charges); -- Acquisition related costs (non-recurring cash charges); -- Amortization of purchased intangibles (non-cash charges); and -- Impairment of long-lived assets (non-recurring 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 in this release:
-- Imputed interest expenses on convertible debt (non-cash charges); -- Imputed interest related to restructuring (non-cash charges); -- Gains and losses on sales of assets (non-recurring and/or non-cash losses and cash gains related to the periodic disposal of assets no longer required for current activities); -- 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); 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:
Finisar Corporation Reconciliation of Results of Operations under GAAP and non-GAAP (Unaudited, in thousands, except per share data) Three Months Three Months Ended Six Months Ended Ended ------------------ ------------------ -------- Nov 01, October Nov 01, October Aug 02, 2015 26, 2014 2015 26, 2014 2015 -------- -------- -------- -------- -------- GAAP to non-GAAP reconciliation of gross profit: Gross profit - GAAP $ 89,091 $ 84,921 $176,468 $183,740 $ 87,377 Gross margin - GAAP 27.7% 28.6% 27.8% 29.4% 27.8% Adjustments: Cost of revenues Change in excess and obsolete inventory valuation adjustments 2,402 2,048 3,832 3,769 1,430 Amortization of acquired technology 1,435 1,435 2,870 2,869 1,435 Duplicate facility costs during facility move 4 766 86 766 82 Stock compensation 2,922 2,588 5,614 4,864 2,692 Impairment of long-lived assets - 124 1,282 124 1,282 Reduction in force costs 417 319 971 794 554 Acquisition related retention payment 28 89 93 207 65 -------- -------- -------- -------- -------- Total cost of revenue adjustments 7,208 7,369 14,748 13,393 7,540 -------- -------- -------- -------- -------- Gross profit - non-GAAP 96,299 92,290 191,216 197,133 94,917 -------- -------- -------- -------- -------- Gross margin - non-GAAP 30.0% 31.1% 30.1% 31.6% 30.2% GAAP to non-GAAP reconciliation of operating income: Operating income (loss) - GAAP 9,368 (7,259) 16,429 13,109 7,061 Operating margin - GAAP 2.9% -2.4% 2.6% 2.1% 2.2% Adjustments: Total cost of revenue adjustments 7,208 7,369 14,748 13,393 7,540 Research and development Reduction in force costs - 353 288 685 288 Duplicate facility costs during facility move 49 767 270 767 221 Acquisition related retention payment 67 166 158 359 91 Stock compensation 4,970 4,727 9,808 9,163 4,838 Impairment of long-lived assets - - 287 - 287 Sales and marketing Reduction in force costs 117 - 180 - 63 Acquisition related retention payment 3 9 13 29 10 Stock compensation 1,718 1,625 3,425 3,154 1,707 General and administrative Reduction in force costs 963 59 1,315 54 352 Duplicate facility costs 8 116 17 116 9 Acquisition related retention payment - (55) (5) (39) (5) Stock compensation 2,757 2,617 5,517 5,429 2,760 Payroll taxes related to options investigation - 17 - 17 - Acquisition related costs 378 8 396 238 18 Litigation settlements and resolutions and related costs - 13,728 16 12,416 16 Amortization of purchased intangibles 668 737 1,336 1,498 668 Impairment of long-lived assets - - 587 - 587 -------- -------- -------- -------- -------- Total cost of revenue and operating expense adjustments 18,906 32,243 38,356 47,279 19,450 -------- -------- -------- -------- -------- Operating income - non-GAAP 28,274 24,984 54,785 60,388 26,511 -------- -------- -------- -------- -------- Operating margin - non-GAAP 8.8% 8.4% 8.6% 9.7% 8.4% GAAP to non-GAAP reconciliation of income attributable to Finisar Corporation: Net income (loss) attributable to Finisar Corporation - GAAP 6,644 (11,361) 10,037 2,882 3,393 Adjustments: Total cost of revenue and operating expense adjustments 18,906 32,243 38,356 47,279 19,450 Non-cash imputed interest expenses on convertible debt 2,391 2,279 4,745 4,522 2,354 Imputed interest related to restructuring 44 50 89 101 45 Other (income) expense, net Loss (gain) on sale of assets 85 (27) (100) 211 (185) Other miscellaneous income (120) (10) (137) (11) (17) Foreign exchange transaction (gain) or loss 51 327 (642) 2,318 (693) Amortization of debt issuance cost 154 154 308 308 154 Provision for income taxes Income tax provision adjustments (1,298) (190) (1,267) (813) 31 Total adjustments 20,213 34,826 41,352 53,915 21,139 -------- -------- -------- -------- -------- Net income attributable to Finisar Corporation - non- GAAP $ 26,857 $ 23,465 $ 51,389 $ 56,797 $ 24,532 ======== ======== ======== ======== ======== Non-GAAP income attributable to Finisar Corporation $ 26,857 $ 23,465 $ 51,389 $ 56,797 $ 24,532 Add: interest expense for dilutive convertible notes - 533 - 1,072 - -------- -------- -------- -------- -------- Adjusted non-GAAP income attributable to Finisar Corporation $ 26,857 $ 23,998 $ 51,389 $ 57,869 $ 24,532 ======== ======== ======== ======== ======== Non-GAAP income per share attributable to Finisar Corporation common stockholders Basic $ 0.25 $ 0.24 $ 0.48 $ 0.57 $ 0.23 Diluted $ 0.25 $ 0.23 $ 0.47 $ 0.55 $ 0.23 Shares used in computing non-GAAP income per share attributable to Finisar Corporation common stockholders Basic 106,635 99,621 105,961 98,931 105,286 Diluted 107,493 105,340 108,238 106,133 108,107 Non-GAAP EBITDA Non-GAAP income attributable to Finisar Corporation 26,857 23,465 51,389 56,797 24,532 Depreciation expense 20,989 20,915 42,354 40,563 21,365 Amortization - 33 - 72 - Interest expense (141) 196 (176) 424 (35) Income tax expense 2,019 1,800 4,019 4,000 2,000 -------- -------- -------- -------- -------- Non-GAAP EBITDA $ 49,724 $ 46,409 $ 97,586 $101,856 $ 47,862 ======== ======== ======== ======== ========
Finisar-F
Investor Contact: Kurt Adzema Chief Financial Officer 408-542-5050 Investor.relations@finisar.com Press contact: Victoria McDonald Director, Corporate Communications 408-542-4261