FINISAR FINANCIAL HIGHLIGHTS - SECOND QUARTER ENDED NOV. 1, 2009
Second Second First
Quarter Quarter Quarter
GAAP Results Ended Ended Ended
Nov. 1, Nov. 2, August 2,
2009 2008 2009
----------- ---------- ----------
(in thousands, except per share amounts)
----------- ---------- ----------
Continuing operations
Total optics revenues $ 145,730 $ 147,746 $ 128,725
Gross margin 27.3% 27.0% 22.8%
Before impairment-
restructuring-retirement:
Operating expenses $ 37,583 $ 51,329 $ 38,188
Operating income (loss) $ 2,210 $ (11,372) $ (8,786)
Operating margin (deficit) 1.5% (7.7)% (6.8)%
Impairment-restructuring $ (6,173) $ (178,768) $ -
Loss on retirement of notes $ ( 25,067) $ (231) $ -
Loss $ (31,417) $ (189,135) $ (11,116)
Loss per share-basic and diluted $ (0.49) $ (3.55) $ (0.18)
Basic and diluted shares 64,198 53,325 60,181
Discontinued operations Income
(loss) $ (67) $ 1,115 $ 37,079
Income (loss) per share-basic $ 0.00 $ 0.02 $ 0.62
Income (loss) per share-diluted $ 0.00 $ 0.02 $ 0.59
Basic shares 64,198 53,325 60,181
Diluted shares 64,198 53,748 62,763
Second Second First
Quarter Quarter Quarter
Non-GAAP Results (a) Ended Ended Ended
Nov. 1, Nov. 2, August 2,
2009 2008 2009
----------- ---------- ----------
(in thousands, except per share amounts)
Continuing operations
Total optics revenues $ 145,730 $ 147,746 $ 128,725
Gross margin 29.6% 32.7% 28.8%
Operating expenses $ 34,201 $ 37,374 $ 33,760
Operating Income $ 8,912 $ 10,980 $ 3,260
Operating margin 6.1% 7.4% 2.5%
Income $ 7,544 $ 8,572 $ 1,765
Income per share-basic $ 0.12 $ 0 .16 $ 0.03
Income per share-diluted $ 0.11 $ 0 .16 $ 0.03
Basic shares 64,198 53,325 60,181
Diluted shares 65,655 53,778 61,076
Discontinued operations
Income (loss) $ (67) $ 1,819 $ 733
Income (loss) per share-basic and
diluted $ 0.00 $ 0.03 $ 0.01
Basic shares 64,198 53,325 60,181
Diluted shares 65,655 53,778 61,076
(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 quarter per GAAP include the following:
-- Total revenues from continuing operations increased to $145.7 million,
up $17.0 million, or 13.2%, from $128.7 million in the preceding quarter
and decreased $2.0 million, or 1.4%, from $147.7 million in the second
quarter of the prior year, which also marked the first quarter in which the
results of Optium were included following the completion of the merger on
August 29, 2008;
-- Of the $17.0 million increase in revenues from the preceding quarter,
the sale of LAN/SAN products for applications less than 10 Gbps increased
$6.9 million and the sale of ROADM products increased $4.5 million while
revenues from 10 Gbps products increased $3.4 million;
-- Of the $2.0 million decrease in revenues from the second quarter of
the prior year, revenues from products for applications less than 10 Gbps
decreased $11.7 million, partially offset by an increase in revenues from
the sale of ROADM products of $6.7 million, an increase in revenues from
CATV products of $1.7 million and an increase in revenues from 10/40 Gbps
products of $1.3 million;
-- Gross margin from continuing operations increased to 27.3% from 22.8%
in the preceding quarter and 27.0% in the second quarter of the prior year;
-- Operating income from continuing operations (before a charge for
restructuring and the impairment of goodwill and minority investments) was
$2.2 million, or 1.5% of revenues, compared to an operating loss of $8.8
million, or (6.8)% of revenues, in the preceding quarter and an operating
loss of $11.4 million, or (7.7)% of revenues, in the second quarter of the
prior year;
-- Non-recurring charges totaling $6.2 million were recognized in the
second quarter of which $4.2 million was related to a portion of the
Company's facility in Allen, Texas that is no longer occupied following the
transfer of certain production activities to the Company's facility in
Ipoh, Malaysia; and $2.0 million was for the impairment of a minority
investment;
-- In August 2009, the Company retired $47.5 million principal amount of
the Company's 2.5% convertible notes via an exchange offer for $24.9
million in cash and the issuance of 3.5 million shares of common stock. The
total consideration paid in the exchange was less than the par value of the
retired notes. However, because shares were used as part of the exchange
consideration, pursuant to FAS 84 the Company was required to account for
the retirement of the notes as if they had been converted according to
their original terms in accordance with FAS 84, with that value compared to
the total consideration paid in the exchange offer. As a result, the
Company recorded a non-cash charge of $25.1 million related to the exchange
offer, net of gains recorded on additional cash purchases totaling $57.7
million that retired an additional $59.4 million in aggregate principal
amount of notes;
-- Loss from continuing operations was $31.4 million, or $(0.49) per
share, compared to a loss of $11.1 million, or $(0.18) per share, in the
preceding quarter and a loss of $189.1 million, or $(3.55) per share, in
the second quarter of the prior year, which included a charge for the
impairment of goodwill totaling $178.8 million and $10.5 million for
acquired research and development associated with the Optium merger;
-- Loss net of taxes from discontinued operations was $67,000, or $0.00
per share, compared to net income of $37.1 million, or $0.59 per diluted
share, in the preceding quarter, which included a gain recognized on the
sale of the Company's Network Tools Division, and net income of $1.1
million, or $0.02 per diluted share, in the second quarter of the prior
year;
-- Cash and short-term investments, plus other long-term investments that
can be readily converted into cash, totaled $80.7 million at the end of the
second quarter compared to $60.4 million at the end of the prior quarter,
reflecting net proceeds of $98.8 million from the sale of a new series 5.0%
convertible notes partially offset by the use of $82.6 million of cash in
connection with retiring $106.9 million aggregate principal amount of
existing 2.5% convertible notes. Excluding these transactions, the
Company's cash position increased by approximately $4.1 million during the
quarter. Finisar has classified certain of its investments as long-term
based on its intent to hold these securities until maturity, although they
can be readily sold if required; and
-- During the second quarter, the Company established a new secured
credit facility with Wells Fargo Foothill, LLC, totaling $70.0 million
under which $58.2 million was available to borrow at the end of the second
quarter. No borrowings were outstanding at the end of the second quarter.
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 additional 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
gains or losses principally related to acquisitions, the sale of minority
investments, restructuring or other transition activities, impairments and
financing transactions. For the second quarter of fiscal 2010, these
excluded items included, among other items described in Finisar Non-GAAP
Financial Measures below, a non-recurring charge of $25.1 million related
to the use of common stock as consideration in an exchange offer for the
Company's 2.5% convertible notes partially offset by a non-recurring gain
of $1.8 million resulting from the purchase of additional notes for cash at
less than par value; a $4.2 million non-recurring charge related to the
remaining lease payments associated with a portion of a facility that is no
longer occupied; a $2.0 million non-cash charge for the impairment of a
minority investment; a $0.8 million charge for slow moving and obsolete
inventory; $3.9 million in non-cash stock-based compensation expense; $1.7
million in non-cash amortization charges related to acquired developed
technology and purchased intangibles arising from previous acquisitions;
and a $1.1 million non-cash charge for imputed interest expense on the
Company's debt obligations.
Excluding these items:
-- Non-GAAP gross margin from continuing operations was 29.6% in the
second quarter compared to 28.8% in the preceding quarter and 32.7% in the
second quarter of the prior year. The sequential increase in non-GAAP gross
margin reflects the impact of higher product shipment levels and the
incremental contribution margin thereon, partially offset by lower
production yields associated with a ramp in production volume for several
high-speed products, while the decrease compared to the prior year reflects
the impact of lower revenues and lower yields associated with manufacturing
certain of our higher speed products;
-- Non-GAAP operating expenses for continuing operations were $34.2
million in the second quarter, an increase of $0.4 million, or 1.3%, from
the preceding quarter and a decrease of $3.2 million, or 8.5%, from the
second quarter of the prior year;
-- Non-GAAP operating income from continuing operations was $8.9 million,
or 6.1% of revenues, in the second quarter, up $5.7 million from $3.3
million, or 2.5% of revenues, in the preceding quarter, and down $2.1
million from $11.0 million, or 7.4% of revenues, in the second quarter of
the prior year. The increase in operating income from the previous quarter
was due primarily to higher gross profit levels on higher revenues
partially offset by slightly higher operating expenses. The decline from
the prior year was primarily related to lower gross profit margins on
similar levels of revenue partially offset by lower operating expenses;
-- Non-GAAP net income from continuing operations was $7.5 million, or
$0.12 per basic share and $0.11 per diluted share, compared to net income
of $1.8 million, or $0.03 per basic and diluted share, in the preceding
quarter and net income of $8.6 million, or $0.16 per basic and diluted
share, in the second quarter of the prior year;
-- Non-GAAP EBITDA from continuing operations rose to $16.0 million in
the second quarter compared to $10.4 million in the preceding quarter and
$18.2 million in the second quarter of the prior year; and
-- Non-GAAP loss net of taxes from discontinued operations was $67,000,
or $0.00 per share, compared to net income of $0.7 million, or $0.01 per
basic and diluted share in the preceding quarter and net income of $1.8
million, or $0.03 per basic and diluted share, in the second quarter of the
prior year.
"Incoming orders continued to be strong during the quarter, particularly
for transceivers used in less than 10 Gbps LAN/SAN applications," said
Jerry Rawls, Finisar's executive Chairman of the Board. "The other area of
strength was in ROADMs for telecom WDM networks. And our backlog position
suggests that we can look forward to another sequential increase in
revenues next quarter led by a surge in demand for 10 Gbps products."
"We continue to work on the transfer of additional production activities to
our off-shore locations," said Eitan Gertel, Finisar's Chief Executive
Officer. "It appears that this work will largely be completed by the end
of the fiscal year as we also work in the interim at those facilities to
ramp several new products. We expect continued improvements in our
profitability in the meantime in conjunction with a rising top line."
OUTLOOK
The Company indicated that it currently expects revenues for its third
fiscal quarter ending January 31, 2010 will likely range from $148 to $158
million. On a GAAP basis, gross margins are expected to range from 27% to
29% with operating margins ranging from 1% to 3%. Additional non-recurring
or non-cash charges excluded from non-GAAP results in calculating operating
income are expected to total approximately $7 to $8 million. As a result,
on a non-GAAP basis, gross margins are expected to range from 30% to 32%
with non-GAAP operating margins ranging from 6% to 8%.
CONFERENCE CALL
Finisar will discuss its financial results for the second quarter and its
current business outlook during its regular quarterly conference call
scheduled for today, December 3, 2009, at 2:00 p.m. PST/5:00 EST. To
listen to the call you may connect through the investor page of Finisar at
www.finisar.com or dial 866-393-6455 (domestic) or 706-643-4465
(international) and enter conference ID 40828137.
A replay of the webcast will be available shortly after the conclusion of
the call on the Company's website until the next conference call to be held
approximately 90 days from today. An audio replay of the call will be
accessible to the public by calling (800) 642-1687 (domestic) or (706)
645-9291 (international) and then, following the prompts, enter conference
ID 40828137 and record your name, affiliation, and contact number. The
audio replay will be available for two weeks following the 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; 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 9, 2009) and quarterly SEC filings.
ABOUT FINISAR
Finisar Corporation (
Finisar Corporation
Consolidated Statements of Operations
Three
Months
Three Months Ended Six Months Ended Ended
-------------------- -------------------- ---------
November November November November August
1, 2009 2, 2008 1, 2009 2, 2008 2, 2009
--------- --------- --------- --------- ---------
(Unaudited)
(in thousands, except per share data)
Revenues $ 145,730 $ 147,746 $ 274,455 $ 263,520 $ 128,725
Cost of revenues 104,745 106,536 202,875 180,671 98,130
Amortization of
acquired developed
technology 1,192 1,253 2,385 2,103 1,193
--------- --------- --------- --------- ---------
Gross profit 39,793 39,957 69,195 80,746 29,402
Gross margin 27.3% 27.0% 25.2% 30.6% 22.8%
Operating expenses:
Research and
development 21,575 21,774 42,622 39,187 21,047
Sales and
marketing 7,313 7,903 14,132 14,779 6,819
General and
administrative 8,177 10,538 17,798 19,049 9,621
Acquired
in-process
research and
development - 10,500 - 10,500 -
Amortization of
purchased
intangibles 518 614 1,219 743 701
Impairment of
goodwill and
intangible
assets - 178,768 - 178,768 -
Restructuring
costs 4,173 - 4,173 - -
--------- --------- --------- --------- ---------
Total
operating
expenses 41,756 230,097 79,944 263,026 38,188
--------- --------- --------- --------- ---------
Loss from
operations (1,963) (190,140) (10,749) (182,280) (8,786)
Interest income 9 657 19 1,625 10
Interest expense (2,167) (4,113) (4,601) (9,356) (2,434)
Loss on
repayment/purchase
of convertible
notes (25,067) (231) (25,067) (231) -
Other income
(expense), net (2,191) (3,051) (1,938) (2,948) 253
--------- --------- --------- --------- ---------
Loss from
continuing
operations before
income taxes (31,379) (196,878) (42,336) (193,190) (10,957)
Provision for
(benefit from)
income taxes 38 (7,743) 197 (6,997) 159
--------- --------- --------- --------- ---------
Loss from continuing
operations (31,417) (189,135) (42,533) (186,193) (11,116)
Income (loss) from
discontinued
operations, net of
taxes (67) 1,115 37,012 990 37,079
--------- --------- --------- --------- ---------
Net income/(loss) $ (31,484) $(188,020) $ (5,521) $(185,203) $ 25,963
========= ========= ========= ========= =========
Loss per share from
continuing
operations - basic $ (0.49) $ (3.55) $ (0.68) $ (4.06) $ (0.18)
Income (loss) per
share from
discontinued
operations - basic $ (0.00) $ 0.02 $ 0.60 $ 0.02 $ 0.62
Income (loss) per
share from
discontinued
operations -
diluted $ (0.00) $ 0.02 $ 0.60 $ 0.02 $ 0.59
Shares used in
computing net loss
per share from
continuing
operations - basic
and diluted 64,198 53,325 62,157 45,889 60,181
Shares used in
computing net
income (loss) per
share from
discontinued
operations - basic 64,198 53,325 62,157 45,889 60,181
Shares used in
computing net
income (loss) per
share from
discontinued
operations -
diluted 64,198 53,325 62,157 45,889 62,763
Finisar Corporation
Consolidated Balance Sheets
(In thousands)
November 1, August 2, April 30,
2009 2009 2009
---------- ---------- ----------
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 80,595 $ 60,327 $ 37,129
Short-term available-for-sale
investments 79 92 92
Accounts receivable, net 95,924 99,466 81,820
Accounts receivable, other 9,747 8,512 10,033
Inventories 113,133 108,686 107,764
Prepaid expenses 6,738 5,568 6,795
Current assets associated with
discontinued operations - - 4,863
---------- ---------- ----------
Total current assets 306,216 282,651 248,496
Property, plant and improvements, net 81,077 79,492 81,606
Purchased technology, net 14,074 15,267 16,459
Other intangible assets, net 12,559 13,102 13,427
Minority investments 12,289 14,289 14,289
Other assets 6,183 2,427 2,584
Non-current assets associated with
discontinued operations - - 3,527
---------- ---------- ----------
Total assets $ 432,398 $ 407,228 $ 380,388
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 54,915 $ 52,264 $ 48,421
Accrued compensation 10,885 9,048 11,428
Other accrued liabilities 25,403 25,102 30,513
Deferred revenue 2,079 2,073 1,703
Current portion of Convertible
notes 33,334 - -
Current portion of long-term debt 6,241 6,173 6,107
Non-cancelable purchase obligations 596 657 2,965
Current liabilities associated with
discontinued operations - - 3,160
---------- ---------- ----------
Total current liabilities 133,453 95,317 104,297
Long-term liabilities:
Convertible notes 100,000 135,490 134,255
Long-term debt 12,151 13,737 15,305
Other long-term liabilities 5,832 2,352 2,511
Deferred income taxes 1,136 973 1,149
Non-current liabilities associated
with discontinued operations - - 650
---------- ---------- ----------
Total long-term liabilities 119,119 152,552 153,870
Stockholders' equity:
Common stock 65 61 60
Additional paid-in capital 1,887,167 1,838,508 1,831,224
Accumulated other comprehensive
income 9,840 6,552 2,662
Accumulated deficit (1,717,246) (1,685,762) (1,711,725)
---------- ---------- ----------
Total stockholders' equity 179,826 159,359 122,221
---------- ---------- ----------
Total liabilities and stockholders'
equity $ 432,398 $ 407,228 $ 380,388
========== ========== ==========
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, 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);
-- Duplicate facility costs during facility move (non-recurring charges);
-- Stock-based compensation expense (non-cash charges);
-- Purchase accounting adjustment for sale of acquired inventory (non-
cash and non-recurring charges); and
-- Reduction in force costs (non-recurring charges).
In calculating non-GAAP operating income, 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:
-- Options investigation costs included in general and administrative
expense (non-recurring cash charges related to the special investigation
into our historical stock option granting practices) and the cost of
covering employee and employer tax liabilities (non-recurring cash charges)
arising from that investigation recorded in each line of the income
statement;
-- Disposal of a product line (non-recurring charges);
-- Gain or loss on settlement of lawsuits (non-recurring);
-- Acquired in-process research and development expense (non-recurring
and non-cash charges);
-- Amortization of purchased intangibles (non-cash charges related to
prior acquisitions);
-- Restructuring charges associated with the abandonment of certain
facilities (non-recurring); and
-- Impairment charges associated with intangible assets (non-cash and non-
recurring).
In calculating non-GAAP net income from continuing operations and non-GAAP
net income from continuing operations per share, we have also excluded the
following items in applicable periods:
-- Amortization of discount on convertible debt and imputed interest
expense (non-cash charges);
-- Gains and losses on debt extinguishment (non-recurring and non-cash
charges or income);
-- 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 and non-cash income or loss from these
investments accounted for under the equity method);
-- Foreign exchange transaction losses (non-recurring and non-cash
charges);
-- Tax charges arising from timing difference related to asset purchases
(non-cash provision); and
-- Cumulative effect of a change in accounting principle (non-recurring
and non-cash charges or income).
In calculating non-GAAP income (loss) from discontinued operations and
non-GAAP net income (loss) from discontinued operations per share, 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 Six Months Ended Ended
------------------- ------------------- --------
November November November November August
1, 2009 2, 2008 1, 2009 2, 2008 2, 2009
-------- --------- -------- --------- --------
(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 $ 39,793 $ 39,957 $ 69,195 $ 80,746 $ 29,402
Gross margin, GAAP 27.3% 27.0% 25.2% 30.6% 22.8%
Adjustments:
Cost of revenues
Change in excess and
obsolete inventory
reserve 805 4,785 6,059 4,500 5,254
Amortization of
acquired technology 1,192 1,253 2,384 2,103 1,192
Duplicate facility
costs during
facility move - 117 - 287 -
Stock compensation 1,288 840 2,319 1,661 1,031
Purchase accounting
adjustment for sale
of acquired
inventory - 1,402 - 1,402 -
Reduction in force
costs 35 - 176 36 141
-------- --------- -------- --------- --------
Total cost of
revenue
adjustments 3,320 8,397 10,938 9,989 7,618
Gross profit, non-GAAP 43,113 48,354 80,133 90,735 37,020
Gross margin, non-GAAP 29.6% 32.7% 29.2% 34.4% 28.8%
Reconciliation of GAAP
operating income
(loss) to non-GAAP
operating income
(loss):
Operating loss per GAAP (1,963) (190,140) (10,749) (182,280) (8,786)
Operating margin, GAAP -1.3% -128.7% -3.9% -69.2% -6.8%
Adjustments:
Total cost of revenue
adjustments 3,320 8,397 10,938 9,989 7,618
Research and
development
Reduction in force
costs - 76 29 76 29
Stock compensation 1,490 1,509 3,015 2,369 1,525
Sales and marketing
Stock compensation 431 440 1,009 767 578
General and
administrative
Reduction in force
costs 200 - 249 - 49
Stock compensation 726 686 1,762 1,201 1,036
Payroll taxes
related to options
investigation 17 - 200 - 183
Costs related to
options investigation - 130 - 276 -
IPO Laddering
Settlement - - 327 - 327
Amortization of
purchased intangibles 518 614 1,219 742 701
Acquired in-process R&D - 10,500 - 10,500 -
Restructuring costs 4,173 - 4,173 - -
Impairment of
intangible assets - 178,768 - 178,768 -
-------- --------- -------- --------- --------
Total cost of
revenue and
operating expense
adjustments 10,875 201,120 22,921 204,688 12,046
Operating income,
non-GAAP 8,912 10,980 12,172 22,408 3,260
Operating margin,
non-GAAP 6.1% 7.4% 4.4% 8.5% 2.5%
Reconciliation of GAAP
income (loss) to
non-GAAP income (loss)
from continuing
operations:
Loss per GAAP from
continuing operations
before cumulative
effect of change in
accounting principle (31,417) (189,135) (42,533) (186,193) (11,116)
Total cost of revenue
and operating expense
adjustments 10,875 201,120 22,921 204,688 12,046
Amortization of
discount on
convertible debt - 671 - 1,817 -
No cash imputed
interest expenses on
convertible debt 1,056 1,235 2,291 2,470 1,235
Loss on
repayment/purchase of
convertible notes 25,067 231 25,067 231 -
Other income (expense),
net
Loss (gain) on sale
of assets 254 (20) 275 393 21
Loss on minority
investments 2,000 1,197 1,625 797 (375)
Other misc income - (58) (2) (558) (2)
Foreign exchange
transaction loss/
(gain) (291) 1,729 (335) 1,729 (44)
Provision for income
tax - -
Timing difference
related to asset
purchases - (8,398) - (7,847) -
-------- --------- -------- --------- --------
Total adjustments 38,961 197,707 51,842 203,720 12,881
-------- --------- -------- --------- --------
Income, non-GAAP, from
continuing operations 7,544 8,572 9,309 17,527 1,765
-------- --------- -------- --------- --------
Reconciliation of GAAP
income (loss) to
non-GAAP income (loss)
from discontinued
operations:
Income (loss) per GAAP
from discontinued
operations (67) 1,115 37,012 990 37,079
Adjustments:
Reduction in force
costs - 19 6 119 6
Stock compensation - 296 704 831 704
Amortization of
acquired technology - 250 170 646 170
Amortization of
purchased
intangibles - 139 77 278 77
Gain (loss) on
disposal of a
product line - - (1,250) 919 (1,250)
Gain on disposal of
discontinued
operations - - (36,053) - (36,053)
-------- --------- -------- --------- --------
Total adjustments - 704 (36,346) 2,793 (36,346)
-------- --------- -------- --------- --------
Income (loss) from
discontinued
operations, non-GAAP (67) 1,819 666 3,783 733
-------- --------- -------- --------- --------
Reconciliation of GAAP
net income (loss) to
non-GAAP net income
(loss):
Net loss per GAAP (31,484) (188,020) (5,521) (185,203) 25,963
Total adjustments from
continuing operations 38,961 197,707 51,842 203,720 12,881
Total adjustments from
discontinuing
operations - 704 (36,346) 2,793 (36,346)
Cumulative Effect
Cumulative effect
of change in
accounting
principle - - - - -
-------- --------- -------- --------- --------
Total adjustments 38,961 198,411 15,496 206,513 (23,465)
-------- --------- -------- --------- --------
Net income, non-GAAP $ 7,477 $ 10,391 $ 9,975 $ 21,310 $ 2,498
======== ========= ======== ========= ========
Income per share from
continuing operations
- basic $ 0.12 $ 0.16 $ 0.15 $ 0.38 $ 0.03
Income per share from
continuing operations
- diluted $ 0.11 $ 0.16 $ 0.15 $ 0.38 $ 0.03
Income (loss) per share
from discontinued
operations - basic $ (0.00) $ 0.03 $ 0.01 $ 0.08 $ 0.01
Income (loss) per share
from discontinued
operations - diluted $ (0.00) $ 0.03 $ 0.01 $ 0.08 $ 0.01
Shares used in
computing net income
per share - basic 64,198 53,325 62,157 45,889 60,181
Shares used in
computing net income
per share - diluted 65,655 53,778 63,442 46,225 61,076
Continuing operations
Net income, non-GAAP $ 7,544 $ 8,572 $ 9,309 $ 17,527 $ 1,765
Depreciation expense 7,182 7,245 14,354 13,413 7,171
Amortization 181 212 308 468 127
Interest expense 1,102 1,550 2,291 3,444 1,189
Income tax expense 38 655 197 850 159
-------- --------- -------- --------- --------
Non-GAAP EBITDA $ 16,047 $ 18,234 $ 26,459 $ 35,702 $ 10,411
-------- --------- -------- --------- --------
Discontinued operations
Net income (loss),
non-GAAP (67) 1,819 666 3,783 733
Depreciation expense - 200 119 423 119
-------- --------- -------- --------- --------
Non-GAAP EBITDA $ (67) $ 2,019 $ 785 $ 4,206 $ 852
-------- --------- -------- --------- --------
-------- --------- -------- --------- --------
Total Non-GAAP EBITDA $ 15,980 $ 20,253 $ 27,244 $ 39,908 $ 11,263
======== ========= ======== ========= ========
Contact Information: Contact: Steve Workman Chief Financial Officer 408-548-1000 Victoria McDonald Senior Manager, Corporate Communications 408-542-4261 investor.relations@Finisar.com