-- GAAP revenues for the fourth quarter of 2009 were $90.2 million compared
to $83.4 million in the third quarter of 2009 and $86.2 million on an
adjusted GAAP basis in the fourth quarter of 2008.
-- GAAP gross margins for the quarter were 38%. Excluding restructuring and
other related costs and non-cash stock-based compensation, non-GAAP gross
margins were 40% compared to 38% in the third quarter of 2009 and 36% on an
adjusted GAAP basis in the fourth quarter of 2008.
-- GAAP net loss for the quarter was $18.7 million, or $0.19 per share.
Excluding restructuring and other related costs and non-cash stock-based
compensation, the net loss on a non-GAAP basis was $6.5 million, or $0.07
per share, compared to net loss of $3.1 million, or $0.03 per share in the
third quarter of 2009 and net loss on an adjusted GAAP basis of $9.0
million, or $0.10 per share, in the fourth quarter of 2008.
Results for Fiscal 2009:
-- GAAP revenues for the year ended December 26, 2009 were $309.1
million compared to $353.4 million on an adjusted GAAP basis in 2008.
-- GAAP gross margins for the year were 33%. Excluding restructuring and
other related costs and non-cash stock-based compensation, gross margins
were 36% in 2009 compared to 43% on an adjusted GAAP basis in 2008.
-- GAAP net loss for the year was $86.6 million, or $0.91 per share.
Excluding restructuring and other related costs and non-cash stock-based
compensation, the net loss on a non-GAAP basis was $45.4 million or $0.48
per share in 2009, compared to net income on an adjusted GAAP basis of
$14.3 million or $0.15 per diluted share in 2008.
Management Commentary
"We are pleased with the continuation of our sequential growth in revenues
and gross margins in the fourth quarter as well as our record bookings for
the quarter and year, reflecting our success in expanding our customer
footprint throughout fiscal year 2009, " said Tom Fallon, president and
chief executive officer. "In the fourth quarter, we invoiced our highest
level of tributary adapter modules (TAMs) in six quarters and saw continued
strength in our common equipment sales."
"We are seeing good opportunities with both current and prospective
customers across all served markets," said Fallon. "The market continues
to embrace Infinera's disruptive PIC-based approach of providing the best,
most cost-effective and most flexible optical networks to address their
bandwidth needs -- both with our existing products and the new products on
our roadmap. To meet these needs, we are committed to continuing to invest
in technologies and products that will advance Infinera's technology
leadership position across our expanded addressable markets of submarine,
ultra long haul, long haul, metro core, and metro edge."
The company noted the following additional developments:
-- The addition of three new customers bringing the company's total
customer count to 69.
-- Among the new customers was Tiscali, one of the leading
telecommunications companies in Italy, which selected both the Infinera DTN
and ATN for its nationwide Italian backbone and metro networks.
-- Shipment of Infinera equipment for a nationwide build-out for an
unnamed leading internet content provider in the fourth quarter -- for a
win that was achieved and for which initial orders were received in Q3. As
a result of this rapid deployment, the customer finished as Infinera's top
customer for the first time in Q4.
-- The other large Q4 customer was Level 3, which contributed 12% of
revenues vs. slightly less than 10% in Q3.
-- The top 5 customers for the quarter included two of the largest
internet content providers in the world, two established European
customers, as well as Level 3.
-- In addition to previously announced submarine network wins in the
Americas with Global Crossing and Telefonica, the company recently won a
6,000 kilometer Trans-Atlantic submarine route with an existing customer.
----------------------------------------------------
Note: For an explanation of our use of Non-GAAP and Adjusted GAAP measures
and a full reconciliation of these measures to our GAAP results, please see
the section of the accompanying tables titled "GAAP to Non-GAAP and
Adjusted GAAP Reconciliations." We have not shown comparisons to our fourth
quarter and fiscal 2008 GAAP results in the body of this press release
because those results were significantly affected by the recognition of
ratable product and related support and services revenue from shipments
made prior to the fourth quarter of 2008, which we believe makes those
comparisons less useful for investors. See our GAAP Condensed Consolidated
Statements of Operations attached to this release for these GAAP to GAAP
comparisons.
Conference Call Information:
Infinera will host a conference call for analysts and investors to discuss
its fourth quarter results and first quarter outlook today at 5:00 p.m.
Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference
call will also be accessible from the "Investor Relations" section of the
company's website at www.infinera.com. Following the webcast, an archived
version will be available on the website for 30 days. To hear the replay,
parties in the United States and Canada should call 1-866-416-4355.
International parties can access the replay at 1-203-369-0719.
About Infinera
Infinera provides Digital Optical Networking systems to telecommunications
carriers worldwide. Infinera's systems are unique in their use of a
breakthrough semiconductor technology: the Photonic Integrated Circuit
(PIC). Infinera's systems and PIC technology are designed to provide
optical networks with simpler and more flexible engineering and operations,
faster time-to-service, and the ability to rapidly deliver differentiated
services without reengineering their optical infrastructure. For more
information, please visit www.infinera.com.
Forward-Looking Statements
This press release contains forward-looking statements, including
statements about our belief that we are seeing good opportunities with both
current and prospective customers across all served markets, our belief
that our PIC-based approach of providing the best, most cost-effective and
most flexible optical networks to address our customer's bandwidth needs,
our commitment to continuing to invest in technologies and products that
will advance Infinera's technology leadership position. These
forward-looking statements involve risks and uncertainties, as well as
assumptions that if they do not fully materialize or prove incorrect, could
cause our results to differ materially from those expressed or implied by
such
forward-looking statements. The risks and uncertainties that could cause
our results to differ materially from those expressed or implied by such
forward-looking statements include our ability to react to trends and
challenges in our business and the markets in which we operate; our ability
to anticipate market needs and develop new or enhanced products to meet
those needs; the adoption rate of our products; our ability to establish
and maintain successful relationships with our customers; our ability to
reduce customer concentration; our ability to compete in our industry;
fluctuations in demand, sales cycles and prices for our products and
services; shortages or price fluctuations in our supply chain; our ability
to protect our intellectual property rights; general political, economic
and market conditions and events; and other risks and uncertainties
described more fully in our documents filed with or furnished to the
Securities and Exchange Commission (SEC). More information about these and
other risks that may impact Infinera's business are set forth in our annual
report on Form 10-K, which was filed with the SEC on February 17, 2009, as
well as subsequent reports filed with the SEC. All forward-looking
statements in this press release are based on information available to us
as of the date hereof, and we assume no obligation to update these
forward-looking statements.
Non-GAAP and other Financial Measures
In addition to disclosing financial measures prepared in accordance with
United States Generally Accepted Accounting Principles (GAAP), this press
release and the accompanying tables contain certain non-GAAP and other
financial measures that reflect adjusted GAAP revenue and exclude non-cash
stock-based compensation expenses and non-recurring restructuring and other
related costs. For a description of these non-GAAP financial measures,
including the reasons why management uses each measure, and reconciliations
of these non-GAAP financial measures to the most directly comparable GAAP
financial measures, please see the section of the accompanying tables
titled "GAAP to Non-GAAP and Adjusted GAAP Reconciliations" as well as the
accompanying notes on the use of certain non-GAAP measures. We anticipate
disclosing forward-looking non-GAAP and other financial information in our
conference call to discuss our fourth quarter 2009 results, including an
estimate of non-GAAP earnings for the first quarter of 2010 that excludes
non-cash stock-based compensation expenses.
A copy of this press release can be found on the investor relations page of
Infinera's website at www.infinera.com.
Infinera Corporation and the Infinera logo are trademarks or registered
trademarks of Infinera Corporation. All other trademarks used or mentioned
herein belong to their respective owners.
Infinera Corporation
GAAP Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
-------------------- --------------------
December December December December
26, 27, 26, 27,
2009 2008 2009 2008
--------- --------- --------- ---------
Revenue:
Product $ 82,100 $ 80,045 $ 276,012 $ 306,808
Ratable product and related
support and services 1,025 12,243 4,231 193,705
Services 7,056 7,056 28,858 18,699
--------- --------- --------- ---------
Total revenue 90,181 99,344 309,101 519,212
Cost of revenue (1):
Cost of product 52,686 52,306 189,723 184,234
Cost of ratable product and
related support and services 399 5,088 1,931 91,625
Cost of services 2,627 3,984 12,308 9,798
Restructuring and other costs
related to cost of revenue 302 - 3,038 -
--------- --------- --------- ---------
Total cost of revenue 56,014 61,378 207,000 285,657
Gross profit 34,167 37,966 102,101 233,555
Operating expenses (1):
Sales and marketing 13,446 10,985 48,391 43,262
Research and development 26,829 23,256 97,178 80,428
General and administrative 13,291 10,650 45,269 36,282
Restructuring and other costs 213 - 814 -
Amortization of intangible
assets 14 39 110 150
--------- --------- --------- ---------
Total operating expenses 53,793 44,930 191,762 160,122
Income (loss) from operations (19,626) (6,964) (89,661) 73,433
Other income (expense), net:
Interest income 732 1,313 2,688 8,549
Interest expense - - - (3)
Net impairment losses
recognized in earnings (2) - - (1,094) -
Other gain (loss), net (288) (1,741) (426) (528)
--------- --------- --------- ---------
Total other income
(expense), net 444 (428) 1,168 8,018
Income (loss) before income
taxes (19,182) (7,392) (88,493) 81,451
Provision for (benefit from)
income taxes (531) (704) (1,871) 2,723
--------- --------- --------- ---------
Net income (loss) $ (18,651) $ (6,688) $ (86,622) $ 78,728
========= ========= ========= =========
Net income (loss) per common
share:
Basic $ (0.19) $ (0.07) $ (0.91) $ 0.85
========= ========= ========= =========
Diluted $ (0.19) $ (0.07) $ (0.91) $ 0.81
========= ========= ========= =========
Weighted average shares used
in computing net income
(loss) per common share:
Basic 96,573 93,449 95,468 92,427
========= ========= ========= =========
Diluted 96,573 93,449 95,468 97,088
========= ========= ========= =========
(1) The following table summarizes the effects of stock-based compensation
related to employees and non-employees for the three and twelve months
ended December 26, 2009 and December 27, 2008:
Three Months Ended Twelve Months Ended
-------------------- --------------------
December December December December
26, 27, 26, 27,
2009 2008 2009 2008
--------- --------- --------- ---------
Cost of revenue $ 515 $ 308 $ 1,861 $ 1,086
Sales and marketing 1,782 1,176 6,505 4,440
Research and development 3,236 1,821 10,302 6,543
General and administration 4,919 1,933 15,061 7,463
--------- --------- --------- ---------
10,452 5,238 33,729 19,532
Cost of revenue - amortization
from balance sheet* 1,189 738 3,646 4,287
--------- --------- --------- ---------
Total stock-based
compensation expense $ 11,641 $ 5,976 $ 37,375 $ 23,819
========= ========= ========= =========
* Stock-based compensation expense deferred to inventory and to deferred
inventory costs in prior periods and recognized in the current period.
(2) The following table summarizes the components of net impairment losses
recognized in earnings:
Three Months Ended Twelve Months Ended
-------------------- --------------------
December December December December
26, 27, 26, 27,
2009 2008 2009 2008
--------- --------- --------- ---------
Total other-than-temporary
impairment loss $ - $ - $ (2,747) $ -
Portion of gain (loss)
recognized in other
comprehensive loss - - 1,653 -
--------- --------- --------- ---------
Net impairment losses
recognized in earnings $ - $ - $ (1,094) $ -
========= ========= ========= =========
Infinera Corporation
GAAP to Non-GAAP and Adjusted GAAP Reconciliations:
---------------------------------------------------------------------------
Infinera Corporation
GAAP to Non-GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 26, 2009
-----------------------------------------------------------
Non-GAAP
Restruct- excluding
uring Restruct- Stock
GAAP Charges(1) uring Comp(2) Non-GAAP
-------- --------- -------- -------- ----------
Revenue
Product and
ratable
revenue $ 83,125 $ - $ 83,125 $ - $ 83,125
Services
revenue 7,056 - 7,056 - 7,056
-------- --------- -------- -------- ----------
Total revenue 90,181 - 90,181 - 90,181
Cost of
revenue 56,014 (302)(a) 55,712 (1,704) 54,008
-------- --------- -------- -------- ----------
Gross profit 34,167 302 34,469 1,704 36,173
Gross margin 38% 40%
Operating
expenses 53,793 (213)(a) 53,580 (9,937) 43,643
-------- --------- -------- -------- ----------
Loss from
operations (19,626) 515 (19,111) 11,641 (7,470)
Other income
(expense),
net 444 - 444 - 444
-------- --------- -------- -------- ----------
Loss before
income taxes (19,182) 515 (18,667) 11,641 (7,026)
Benefit from
income taxes (531) - (531) - (531)
-------- --------- -------- -------- ----------
Net loss $(18,651) $ 515 $(18,136) $ 11,641 $ (6,495)
======== ========= ======== ======== ==========
Net loss per
common share:
Basic $ (0.19) $ (0.07)
======== ==========
Diluted $ (0.19) $ (0.06)*
======== ==========
Weighted
average
shares used
in computing
net loss per
common share:
Basic 96,573 96,573
======== ==========
Diluted 96,573 100,297*
======== ==========
(1) In the fourth quarter of 2009, we recorded restructuring and other
related costs of $0.5 million pursuant to our plan announced on
July 21, 2009, involving the closure of our Maryland based
semi-conductor fabrication plant ("FAB") and the consolidation of
these activities into our primary FAB location in Sunnyvale,
California.
(2) See footnote to the Condensed Consolidated Statements of Operations
for a summary of the effects of stock-based compensation related to
employees and non-employees for the three months ended December 26,
2009.
* Diluted shares used to calculate net loss per share on a non-GAAP
basis provided for informational purposes only.
Infinera Corporation
GAAP to Non-GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 26, 2009
-----------------------------------------------------------
Non-GAAP
Restruct- excluding
uring Restruct- Stock
GAAP Charges(1) uring Comp Non-GAAP
-------- --------- -------- -------- ----------
Revenue
Product and
ratable
revenue $ 74,582 $ - $ 74,582 $ - $ 74,582
Services
revenue 8,826 - 8,826 - 8,826
-------- --------- -------- -------- ----------
Total revenue 83,408 - 83,408 - 83,408
Cost of
revenue 55,702 (2,736)(b) 52,966 (1,477)(c) 51,489
-------- --------- -------- -------- ----------
Gross profit 27,706 2,736 30,442 1,477 31,919
Gross margin 33% 38%
Operating
expenses 46,949 (601)(b) 46,348 (8,609)(c) 37,739
-------- --------- -------- -------- ----------
Loss from
operations (19,243) 3,337 (15,906) 10,086 (5,820)
Other income
(expense),
net 1,150 - 1,150 - 1,150
-------- --------- -------- -------- ----------
Loss before
income taxes (18,093) 3,337 (14,756) 10,086 (4,670)
Benefit from
income taxes (1,561) - (1,561) - (1,561)
-------- --------- -------- -------- ----------
Net loss $(16,532) $ 3,337 $(13,195) $ 10,086 $ (3,109)
======== ========= ======== ======== ==========
Net loss per
common share:
Basic $ (0.17) $ (0.03)
======== ==========
Diluted $ (0.17) $ (0.03)*
======== ==========
Weighted
average
shares used
in computing
net loss per
common share:
Basic 95,864 95,864
======== ==========
Diluted 95,864 99,293*
======== ==========
(1) In the third quarter of 2009, we recorded restructuring and other
related costs of $3.3 million pursuant to our plan announced on
July 21, 2009, involving the closure of our Maryland based
semi-conductor fabrication plant ("FAB") and the consolidation of
these activities into our primary FAB location in Sunnyvale,
California.
* Diluted shares used to calculate net loss per share on a non-GAAP
basis provided for informational purposes only.
Infinera Corporation
GAAP to Non-GAAP and Adjusted GAAP Reconciliations (Continued):
---------------------------------------------------------------------------
Infinera Corporation
GAAP to Adjusted GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 27, 2008
-----------------------------------------------------------
Adjusted Adjusted
Deferral Adjusted GAAP GAAP
Adjust- GAAP Stock Excluding
GAAP ments Results Comp(1) Stock Comp
-------- --------- -------- -------- ----------
Revenue
Product and
ratable
revenue $ 92,288 $ (13,102)(d) $ 79,186 $ - $ 79,186
Services
revenue 7,056 - 7,056 - 7,056
-------- --------- -------- -------- ----------
Total revenue 99,344 (13,102) 86,242 - 86,242
Cost of
revenue 61,378 (4,951)(e) 56,427 (904)(f) 55,523
-------- --------- -------- -------- ----------
Gross profit 37,966 (8,151) 29,815 904 30,719
Gross margin 38% 36%
Operating
expenses 44,930 - 44,930 (4,930) 40,000
-------- --------- -------- -------- ----------
Loss from
operations (6,964) (8,151) (15,115) 5,834 (9,281)
Other income
(expense),
net (428) - (428) - (428)
-------- --------- -------- -------- ----------
Loss before
income taxes (7,392) (8,151) (15,543) 5,834 (9,709)
Benefit from
income taxes (704) - (704) - (704)
-------- --------- -------- -------- ----------
Net loss $ (6,688) $ (8,151) $(14,839) $ 5,834 $ (9,005)
======== ========= ======== ======== ==========
Net loss per
common share:
Basic $ (0.07) $ (0.10)
======== ==========
Diluted $ (0.07) $ (0.09)*
======== ==========
Weighted
average
shares used
in computing
net loss per
common share:
Basic 93,449 93,449
======== ==========
Diluted 93,449 97,167*
======== ==========
(1) See footnote to the Condensed Consolidated Statements of Operations
for a summary of the effects of stock-based compensation related to
employees and non-employees for the three months ended December 27,
2008.
* Diluted shares used to calculate net loss per share on an Adjusted
GAAP basis provided for informational purposes only.
Infinera Corporation
GAAP to Non-GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Twelve Months Ended December 26, 2009
-----------------------------------------------------------
Non-GAAP
Restruct- excluding
uring Restruct- Stock
GAAP Charges uring Comp(1) Non-GAAP
-------- --------- -------- -------- ----------
Revenue
Product and
ratable
revenue $280,243 $ - $280,243 $ - $ 280,243
Services
revenue 28,858 - 28,858 - 28,858
-------- --------- -------- -------- ----------
Total revenue 309,101 - 309,101 - 309,101
Cost of
revenue 207,000 (3,038)(g) 203,962 (5,507) 198,455
-------- --------- -------- -------- ----------
Gross profit 102,101 3,038 105,139 5,507 110,646
Gross margin 33% 36%
Operating
expenses 191,762 (814)(g) 190,948 (31,868) 159,080
-------- --------- -------- -------- ----------
Loss from
operations (89,661) 3,852 (85,809) 37,375 (48,434)
Other income
(expense),
net 1,168 - 1,168 - 1,168
-------- --------- -------- -------- ----------
Loss before
income taxes (88,493) 3,852 (84,641) 37,375 (47,266)
Benefit from
income taxes (1,871) - (1,871) - (1,871)
-------- --------- -------- -------- ----------
Net loss $(86,622) $ 3,852 $(82,770) $ 37,375 $ (45,395)
======== ========= ======== ======== ==========
Net loss per
common share:
Basic $ (0.91) $ (0.48)
======== ==========
Diluted $ (0.91) $ (0.46)*
======== ==========
Weighted
average
shares used
in computing
net loss per
common share:
Basic 95,468 95,468
======== ==========
Diluted 95,468 99,036*
======== ==========
(1) See footnote to the Condensed Consolidated Statements of Operations
for a summary of the effects of stock-based compensation related to
employees and non-employees for the twelve months ended December 26,
2009.
* Diluted shares used to calculate net loss per share on an Adjusted
GAAP basis provided for informational purposes only.
Infinera Corporation
GAAP to Non-GAAP and Adjusted GAAP Reconciliations (Continued):
---------------------------------------------------------------------------
Infinera Corporation
GAAP to Adjusted GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Twelve Months Ended December 27, 2008
-----------------------------------------------------------
Adjusted Adjusted
Deferral Adjusted GAAP GAAP
Adjust- GAAP Stock Excluding
GAAP ments Results Comp(1) Stock Comp
-------- --------- -------- -------- ----------
Revenue
Product and
ratable
revenue $500,513 $(165,787)(h) $334,726 $ - $ 334,726
Services
revenue 18,699 - 18,699 - 18,699
-------- --------- -------- -------- ----------
Total revenue 519,212 (165,787) 353,425 - 353,425
Cost of
revenue 285,657 (78,401)(i) 207,256 (4,491)(f) 202,765
-------- --------- -------- -------- ----------
Gross profit 233,555 (87,386) 146,169 4,491 150,660
Gross margin 45% 43%
Operating
expenses 160,122 - 160,122 (18,446) 141,676
-------- --------- -------- -------- ----------
Income from
operations 73,433 (87,386) (13,953) 22,937 8,984
Other income
(expense),
net 8,018 - 8,018 - 8,018
-------- --------- -------- -------- ----------
Income before
provision
for
income taxes 81,451 (87,386) (5,935) 22,937 17,002
Provision for
income taxes 2,723 - 2,723 - 2,723
-------- --------- -------- -------- ----------
Net income $ 78,728 $ (87,386) $ (8,658) $ 22,937 $ 14,279
======== ========= ======== ======== ==========
Net income per
common share:
Basic $ 0.85 $ 0.15
======== ==========
Diluted $ 0.81 $ 0.15
======== ==========
Weighted
average
shares used
in computing
net income
per common
share:
Basic 92,427 92,427
======== ==========
Diluted 97,088 97,088
======== ==========
(1) See footnote to the Condensed Consolidated Statements of Operations
for a summary of the effects of stock-based compensation related to
employees and non-employees for the twelve months ended December 27,
2008.
Use of Non-GAAP and Adjusted GAAP Information:
As described below, Infinera uses various non-GAAP and adjusted GAAP
financial measures to supplement our condensed consolidated financial
statements presented on a GAAP basis. We believe these adjustments are
appropriate to enhance an overall understanding of our underlying financial
performance and also our prospects for the future and are considered by
management for the purpose of making operational decisions. In addition,
these results are the primary indicators management uses as a basis for our
planning and forecasting of future periods. The presentation of this
additional information is not meant to be considered in isolation or as a
substitute for net income or basic and diluted net income per share
prepared in accordance with GAAP. Non-GAAP financial measures are not
based on a comprehensive set of accounting rules or principles and are
subject to limitations.
Our usage of these non-GAAP and adjusted GAAP measures are further
explained below:
-- Effective April 2008, we had established VSOE of fair value for most
of our service offerings. From the second quarter of 2008 to the fourth
quarter of 2008, we used adjusted GAAP measures of operating results, net
income and net income per share. Adjusted GAAP results reflected our GAAP
results reduced for amounts released from deferred revenue and deferred
cost of inventory balances recorded prior to the second quarter of 2008 and
previously reported in our invoiced shipment results. Deferred services
and deferred ratable and product revenue and cost amounts recorded after
March 29, 2008 were not adjusted and were recognized on a GAAP basis in
arriving at the adjusted GAAP results. We presented these non-GAAP
measures of operating results, net income and net income per share, which
included adjusted GAAP results and excluded non-GAAP stock-based
compensation expense for these periods.
-- In the first quarter of 2009, we began using more traditional non-
GAAP financial measures, which reflect our GAAP results and exclude non-
recurring restructuring and other related costs and stock-based
compensation related expenses. All material deferred revenue and deferred
cost of inventory balances recorded prior to the second quarter of 2008 and
previously reported in our invoiced shipment results were recognized in our
GAAP results prior to December 27, 2008. Therefore, no further adjustments,
other than the exclusion of non-recurring restructuring and other related
costs and stock-based compensation expense will be made to our GAAP results
on a go-forward basis.
(a) Adjustment amount represents restructuring and other related costs
recorded in the fourth quarter of 2009 related to the closure of our
Maryland FAB announced on July 21, 2009. These amounts have been adjusted
in arriving at our non-GAAP results as they are non-recurring in nature and
the adjusted numbers provide a better indication of our underlying business
performance.
Three Months Ended
December 26, 2009
-------------------------------
Cost of Operating
Revenue Expenses Total
--------- --------- ---------
(In thousands)
Severance and related expenses $ (157) $ 57 $ (100)
Equipment and facility-related costs 459 (255) 204
Lease termination - 411 411
Other - - -
--------- --------- ---------
Total $ 302 $ 213 $ 515
========= ========= =========
Restructuring and other related costs in the fourth quarter of 2009 include
non-cash charges of $0.6 million.
(b) Adjustment amount represents restructuring and other related costs
recorded in the third quarter of 2009 related to the closure of our
Maryland FAB announced on July 21, 2009. These amounts have been adjusted
in arriving at our non-GAAP results as they are non-recurring in nature and
the adjusted numbers provide a better indication of our underlying business
performance.
Three Months Ended
September 26, 2009
--------------------------------
Cost of Operating
Revenue Expenses Total
---------- ---------- ----------
(In thousands)
Severance and related expenses $ 804 $ 97 $ 901
Equipment and facility-related costs 1,900 415 2,315
Other 32 89 121
---------- ---------- ----------
Total $ 2,736 $ 601 $ 3,337
========== ========== ==========
Restructuring and other related costs in the third quarter of 2009 include
non-cash charges of $2.4 million.
(c) The following table summarizes the effects of stock-based compensation
related to employees and non-employees for the three months ended September
26, 2009:
Three Months
Ended
------------
September
26,
2009
------------
(In thousands)
Cost of revenue $ 490
Sales and marketing 1,710
Research and development 2,915
General and administration 3,984
------------
9,099
Cost of revenue - amortization from balance sheet* 987
------------
Total stock-based compensation expense $ 10,086
============
* Stock-based compensation expense deferred to inventory and
deferred inventory costs in prior periods and recognized in
the current period.
(d) Adjustment amount represents the release of ratable and product
deferred revenue amounts related to periods prior to March 29, 2008 as
these amounts have been previously reported as invoiced shipments. No
adjustment has been made for changes in deferred services revenue as these
amounts relate to future service deliverables and are appropriately
deferred. Deferred ratable and product amounts recorded after March 29,
2008 have not been adjusted as these amounts are recognized on a GAAP basis
in arriving at the adjusted GAAP results.
The deferred revenue adjustments recorded above are reconciled to the
deferred revenue balance on our balance sheet in the table below:
Three Months Ended December 27, 2008
--------------------------------------------------
Pre Mar 29, Post Mar
2008 29, 2008
Ratable and Ratable and
Product Product
Deferred Revenue Revenue Revenue Services Total
----------- ----------- ----------- -----------
(In thousands)
Beginning balance $ 21,752 $ 4,296 $ 6,408 $ 32,456
Additions to deferred
revenue - 1,086 7,577 8,663
Amortization to
revenue (13,102) (1,205) (4,405) (18,712)
----------- ----------- ----------- -----------
Ending balance $ 8,650 $ 4,177 $ 9,580 $ 22,407
=========== =========== =========== ===========
Change in deferred
revenue balance $ (13,102) $ (119) $ 3,172 $ (10,049)
=========== =========== =========== ===========
(e) Adjustment amount represents the release of ratable and deferred
product cost amounts related to periods prior to March 29, 2008 as these
amounts were previously included as invoiced shipments. Deferred ratable
and product amounts recorded after March 29, 2008 have not been adjusted as
these amounts are recognized on a GAAP basis in arriving at the adjusted
GAAP results.
The deferred cost of inventory adjustments recorded above are reconciled to
the deferred cost of inventory balance on our balance sheet in the table
below:
Three Months Ended December 27, 2008
-------------------------------------
Pre Mar Post Mar
29, 2008 29, 2008
Ratable and Ratable and
Product Product
Deferred Inventory Cost Cost Cost Total
----------- ----------- -----------
(In thousands)
Beginning balance $ 8,172 $ 1,120 $ 9,292
Additions to deferred cost of
revenue - 32 32
Amortized to cost of revenue (4,951) (136) (5,087)
----------- ----------- -----------
Ending balance $ 3,221 $ 1,016 $ 4,237
=========== =========== ===========
Change in deferred inventory
cost balance $ (4,951) $ (104) $ (5,055)
=========== =========== ===========
(f) Excluded amount represents stock-based compensation expense on a
non-GAAP basis. Stock-based compensation is a
non-cash expense accounted for in accordance with the fair value
recognition provisions of the fair value provisions of the Equity Topic of
the Accounting Standards Codification. While this is a large component of
our expense, we believe investors want to evaluate our financial results
both including and excluding the effects of
stock-based compensation expense in order to compare our financial
performance with that of other companies and between time periods.
The stock-based compensation expense excluded from cost of revenue is a
non-GAAP financial measure and is reconciled to the corresponding GAAP
amount in the table below:
Three Twelve
Months Months
Ended Ended
----------- -----------
December 27,
2008
------------------------
(In thousands)
GAAP stock-based compensation in cost of
revenue $ 308 $ 1,086
GAAP stock-based compensation in cost of
revenue - amortization from balance sheet 738 4,287
Stock-based compensation not deferred to
deferred inventory cost - 215
Stock-based compensation previously
recognized on invoiced shipment basis (142) (1,097)
----------- -----------
Non-GAAP stock-based compensation in cost of
revenue $ 904 $ 4,491
=========== ===========
(g) Adjustment amount represents restructuring and other related costs
recorded in the twelve months ended December 26, 2009 related to the
closure of our Maryland FAB announced on July 21, 2009. These amounts have
been adjusted in arriving at our non-GAAP results as they are non-recurring
in nature and the adjusted numbers provide a better indication of our
underlying business performance.
Twelve Months Ended
December 26, 2009
--------------------------------
Cost of Operating
Revenue Expenses Total
---------- ---------- ----------
(In thousands)
Severance and related expenses $ 647 $ 154 $ 801
Equipment and facility-related costs 2,359 160 2,519
Lease termination - 411 411
Other 32 89 121
---------- ---------- ----------
Total $ 3,038 $ 814 $ 3,852
========== ========== ==========
Restructuring and other related costs in the twelve months ended December
26, 2009 include non-cash charges of $3.0 million.
(h) Adjustment amount represents the release of ratable and product
deferred revenue amounts related to periods prior to March 29, 2008 as
these amounts have been previously reported as invoiced shipments. No
adjustment has been made for changes in deferred services revenue as these
amounts relate to future service deliverables and are appropriately
deferred. Deferred ratable and product amounts recorded after March 29,
2008 have not been adjusted as these amounts are recognized on a GAAP basis
in arriving at the adjusted GAAP results.
The deferred revenue adjustments recorded above are reconciled to the
deferred revenue balance on our balance sheet in the table below:
Twelve Months Ended December 27, 2008
----------------------------------------------
Pre Mar Post Mar
29, 2008 29, 2008
Ratable Ratable
and and
Product Product
Deferred Revenue Revenue Revenue Services Total
---------- ---------- ---------- ----------
(In thousands)
Beginning balance $ 174,437 $ - $ - $ 174,437
Additions to deferred
revenue 29,639 8,140 19,356 57,135
Amortization to revenue (195,426) (3,963) (9,776) (209,165)
---------- ---------- ---------- ----------
Ending balance $ 8,650 $ 4,177 $ 9,580 $ 22,407
========== ========== ========== ==========
Change in deferred
revenue balance $ (165,787) $ 4,177 $ 9,580 $ (152,030)
========== ========== ========== ==========
(i) Adjustment amount represents the release of ratable and deferred
product cost amounts related to periods prior to March 29, 2008 as these
amounts have been previously included as invoiced shipments. Deferred
ratable and product amounts recorded after March 29, 2008 have not been
adjusted as these amounts are recognized on a GAAP basis in arriving at the
adjusted GAAP results.
The deferred cost of inventory adjustments recorded above are reconciled to
the deferred cost of inventory balance on our balance sheet in the table
below:
Twelve Months Ended December 27, 2008
-------------------------------------
Pre Mar Post Mar
29, 2008 29, 2008
Ratable and Ratable and
Product Product
Deferred Inventory Cost Cost Cost Total
----------- ----------- -----------
(In thousands)
Beginning balance $ 81,622 $ - $ 81,622
Additions to deferred cost of
revenue 11,162 1,202 12,364
Amortized to cost of revenue (89,563) (186) (89,749)
----------- ----------- -----------
Ending balance $ 3,221 $ 1,016 $ 4,237
=========== =========== ===========
Change in deferred inventory
cost balance $ (78,401) $ 1,016 $ (77,385)
=========== =========== ===========
Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands, except par values)
(Unaudited)
December 26, December 27,
2009 2008
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 109,859 $ 166,770
Short-term investments 143,350 68,232
Short-term restricted cash 1,533 720
Accounts receivable, net of allowance
for doubtful accounts of $0 in 2009
and $1,700 in 2008 69,483 69,354
Other receivables 927 1,085
Inventories, net 68,872 58,986
Deferred inventory costs 5,891 1,744
Prepaid expenses and other current assets 8,313 6,311
------------ ------------
Total current assets 408,228 373,202
Property, plant and equipment, net 43,656 46,820
Intangible assets 961 1,276
Deferred inventory costs, non-current 4,438 2,493
Long-term investments 18,255 74,684
Long-term restricted cash 2,480 2,179
Deferred tax asset 12,449 5,743
Other non-current assets 1,478 670
------------ ------------
Total assets $ 491,945 $ 507,067
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,129 $ 34,048
Accrued expenses 13,929 10,349
Accrued compensation and related benefits 19,248 13,472
Accrued warranty 6,091 5,205
Deferred revenue 18,295 14,683
Deferred tax liability 12,649 5,743
------------ ------------
Total current liabilities 101,341 83,500
Accrued warranty, non-current 5,049 4,735
Deferred revenue, non-current 8,080 7,724
Other long-term liabilities 8,968 5,645
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value
Authorized shares - 25,000 and no shares
issued and outstanding - -
Common stock, $0.001 par value
Authorized shares - 500,000 in 2009 and 2008
Issued and outstanding shares - 96,874
in 2009 and 94,163 in 2008 97 94
Additional paid-in capital 747,580 699,705
Accumulated other comprehensive loss (1,810) (3,598)
Accumulated deficit (377,360) (290,738)
------------ ------------
Total stockholders' equity 368,507 405,463
------------ ------------
Total liabilities and stockholders' equity $ 491,945 $ 507,067
============ ============
Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Twelve Months Ended
--------------------------
December 26, December 27,
2009 2008
------------ ------------
Cash Flows from Operating Activities:
Net income (loss) $ (86,622) $ 78,728
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization 16,547 12,975
Provision for (recovery of) doubtful accounts (1,700) 1,700
Non-cash restructuring and other costs 2,973 -
Net credit impairment losses in earnings 1,094 -
Amoritization of premium (accretion of
discount) on investments 604 (893)
Stock-based compensation expense 37,375 23,819
Unrealized (gain) loss on Put Rights 3,761 (15,866)
Unrealized holding (gain) loss for trading
securities (4,584) 16,762
Tax benefit (reversal) from stock option
transactions (593) 593
(Excess) reduction of tax benefit from stock
option transactions 248 (248)
Non-cash tax benefit (315) -
Gain on disposal of assets (284) (1,107)
Other (gain) loss (134) 7
Changes in assets and liabilities:
Accounts receivable 1,834 (31,796)
Inventories, net (8,618) (821)
Prepaid expenses and other current assets (2,244) (2,463)
Deferred inventory costs (6,180) 76,538
Other non-current assets (7,345) (6,081)
Accounts payable (2,594) 16,767
Accrued liabilities and other expenses 18,874 3,387
Deferred revenue 3,968 (152,030)
Accrued warranty 1,199 (53)
------------ ------------
Net cash provided by (used in)
operating activities (32,736) 19,918
Cash Flows from Investing Activities:
Purchase of available-for-sale investments (163,870) (226,014)
Proceeds from sale of available-for-sale
investments 1,536 108,190
Proceeds from maturities and call of
investments and restricted cash 143,682 183,778
Proceeds from disposal of assets 699 1,192
Purchase of property and equipment (15,961) (22,941)
------------ ------------
Net cash provided by (used in)
investing activities (33,914) 44,205
Cash Flows from Financing Activities:
Proceeds from issuance of common stock 9,310 11,482
Excess (reduction of) tax benefit from stock
option transactions (248) 248
Repurchase of common stock (31) (29)
Proceeds from purchase of assets under
financing arrangement 657 -
Payments for purchase of assets under
financing arrangement (87) -
------------ ------------
Net cash provided by financing
activities 9,601 11,701
------------ ------------
Effect of exchange rate changes on cash 138 (263)
Net change in cash and cash equivalents (56,911) 75,561
Cash and cash equivalents at beginning of
period 166,770 91,209
------------ ------------
Cash and cash equivalents at end of period $ 109,859 $ 166,770
============ ============
Supplemental disclosures of cash flow
information:
Cash paid for interest $ 5 $ 3
Cash paid (received) for income taxes $ (316) $ 1,036
Infinera Corporation
Supplemental Financial Information
Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09
----- ----- ----- ----- ----- ----- ----- -----
Revenue $95.5 $90.8 $80.9 $86.2 $66.6 $68.9 $83.4 $90.2
Gross Margin % 45% 47% 42% 36% 31% 31% 38% 40%
----- ----- ----- ----- ----- ----- ----- -----
Invoiced Shipment
Composition:
Domestic % 82% 78% 81% 73% 74% 64% 63% 74%
International % 18% 22% 19% 27% 26% 36% 37% 26%
Largest
Customer % 31% 21% 27% 23% 30% 20% 15% 17%
----- ----- ----- ----- ----- ----- ----- -----
Cash Related
Information:
Cash from
Operations $ 9.8 $ 5.6 $ 9.9 $(5.4) $(2.9) ($18.8) $(8.3) $(2.7)
Capital
Expenditures $ 4.5 $ 4.8 $ 5.9 $ 7.8 $ 6.0 $ 2.8 $ 2.8 $ 4.4
Depreciation &
Amortization $ 2.6 $ 2.9 $ 3.4 $ 4.1 $ 3.9 $ 4.0 $ 4.2 $ 4.5
DSO's 42 57 55 74 61 72 61 71
----- ----- ----- ----- ----- ----- ----- -----
Inventory
Metrics:
Raw Materials $ 7.9 $ 9.2 $10.0 $ 9.1 $ 7.7 $10.1 $ 7.4 $ 6.9
Work in Process $40.6 $34.6 $35.8 $37.9 $43.2 $40.1 $36.2 $32.1
Finished Goods $10.7 $13.8 $12.8 $12.0 $13.6 $22.3 $29.3 $29.9
----- ----- ----- ----- ----- ----- ----- -----
Total Inventory $59.2 $57.6 $58.6 $59.0 $64.5 $72.5 $72.9 $68.9
Inventory Turns 3.5 3.3 3.2 3.8 2.8 2.6 3.0 3.2
----- ----- ----- ----- ----- ----- ----- -----
Worldwide
Headcount 799 853 889 937 962 973 970 974
----- ----- ----- ----- ----- ----- ----- -----
Periods prior to Q2'08 reflect invoiced shipments results; periods from
Q2'08 through Q4'08 reflect adjusted GAAP results; and Q1'09 going forward
reflects non-GAAP results.
Non-GAAP results exclude restructuring and other related costs and non-cash
stock-based compensation.
Contact Information: Contacts: Press: Jeff Ferry jferry@infinera.com Infinera Corporation 408-572-5213 Investors/Analysts: Bob Blair bblair@infinera.com Infinera Corporation 408-716-4879