-- GAAP revenues for the third quarter of 2008 were $120.5 million
compared to $62.2 million in the third quarter of 2007.
-- GAAP gross margins were 45% in the third quarter of 2008 compared to
34% in the third quarter of 2007.
-- Including non-cash stock-based compensation, GAAP net income was $14.9
million, or $0.15 per diluted share, in the third quarter of 2008 compared
to a GAAP net loss of $5.5 million, or $0.07 per share, in the third
quarter of 2007.
Adjusted GAAP / Invoiced Shipment Results:
-- Adjusted GAAP revenue for the third quarter of 2008 was $80.9 million
compared to $80.3 million of invoiced shipments in the third quarter of
2007.
-- Gross margins on an adjusted GAAP basis, excluding non-cash stock-
based compensation, were 42% in the third quarter of 2008 compared to 43%
in the third quarter of 2007.
-- Excluding non-cash stock-based compensation, net income on an adjusted
GAAP basis was $0.0 million, or $0.00 per diluted share, for the third
quarter of 2008 compared to $10.9 million, or $0.12 per diluted share on an
invoiced shipment basis, in the third quarter of 2007.
Footnote: For an explanation of our use of Adjusted GAAP and Invoiced
Shipments 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 Invoiced Shipment and Adjusted
GAAP Reconciliation."
Management Commentary
"Our third quarter results came in ahead of guidance we provided in July,
showing solid revenue performance and good cash generation," said Jagdeep
Singh, president and chief executive officer. "Both existing and new
customers continue to turn to Infinera's PIC-based solution to build out
their networks as they address their bandwidth growth needs. We added five
new customers in the quarter -- including our fifth of the top five major
cable MSOs in North America and two additional European customers. We saw
strong reception from the installed base and new customers to the new
Infinera Line System 2 (ILS2), which began shipping in August. We are
pleased with the resumption in new customer-win momentum and we believe
that this will continue into Q4 with the addition of at least another four
new customers."
"During the quarter, we also completed the migration of the Deutsche
Telekom (DT) Western European network to Infinera equipment in a five-week
timeline, highlighting the speed of service advantage that our architecture
provides," said Singh. "DT is now running live traffic on the new network.
This represents a significant achievement for the Infinera and DT teams and
it is serving as a strong reference account for our new business efforts."
During the quarter, the Company also achieved these two key milestones:
-- Infinera's photonic integrated circuits (PICs) surpassed a cumulative
total of 100 million hours of operation in live networks worldwide without
any PIC failures, evidence of the high reliability of the company's
photonic integration technology.
-- More than 10,000 Infinera DLM line cards shipped since the company
began commercial shipments in late 2004. This equates to a total DWDM
network capacity of 1Petabit per second.
Conference Call Information: Infinera will host a conference call for analysts and investors to discuss its third quarter results 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 1-866-395-1648. International parties can access the replay at +1-203-369-0468. 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 relating to the strong reception for our installed base and new customers to our products, including our ILS2, our belief that we will continue to add at least another four new customers in Q4, our belief that our PIC's performance is evidence of the high reliability of our photonic integrated circuit technology, our belief in the economic benefits of our system, and our belief that DT serves as a strong reference account for us. 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 19, 2008, 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 invoiced shipments, adjusted GAAP revenue and exclude non-GAAP non-cash stock-based compensation. 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 Invoiced Shipment and Adjusted GAAP Reconciliation" 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 third quarter of 2008 results, including an estimate of adjusted GAAP earnings for the fourth quarter of 2008 that excludes revenues and costs previously recognized on an invoiced shipments basis and non-GAAP non-cash stock-based compensation expenses related to our equity awards and the right to purchase common stock under our Employee Stock Purchase Plan in the period. 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 Nine Months Ended
----------------------- ----------------------
September September September September
27, 29, 27, 29,
2008 2007 2008 2007
----------- ---------- ---------- ----------
Revenue:
Product $ 76,130 $ 25 $ 226,763 $ 7,275
Ratable product and
related support and
services 39,495 62,130 181,462 162,488
Services 4,881 - 11,643 -
----------- ---------- ---------- ----------
Total revenue 120,506 62,155 419,868 169,763
Cost of revenue (1):
Cost of product 45,139 18 131,928 3,869
Cost of ratable product
and related support and
services 18,537 40,804 86,537 116,462
Cost of services 2,592 - 5,814 -
----------- ---------- ---------- ----------
Total cost of revenue 66,268 40,822 224,279 120,331
Gross profit 54,238 21,333 195,589 49,432
Operating expenses (1):
Sales and marketing 11,171 7,995 32,277 22,032
Research and development 21,092 14,621 57,172 44,758
General and administrative 8,713 7,069 25,632 17,984
Amortization of intangible
assets 37 37 111 111
----------- ---------- ---------- ----------
Total operating expenses 41,013 29,722 115,192 84,885
Income (loss) from operations 13,225 (8,389) 80,397 (35,453)
Other income (expense), net:
Interest income 1,675 2,459 7,236 3,373
Interest expense - (67) (3) (2,249)
Other gain (loss), net(2): 37 533 1,213 (16,982)
----------- ---------- ---------- ----------
Total other income
(expense), net 1,712 2,925 8,446 (15,858)
Income (loss) before
provision for income taxes 14,937 (5,464) 88,843 (51,311)
Provision for income taxes - 62 3,427 124
----------- ---------- ---------- ----------
Net income (loss) $ 14,937 $ (5,526) $ 85,416 $ (51,435)
=========== ========== ========== ==========
Net income (loss) per
common share:
Basic $ 0.16 $ (0.07) $ 0.93 $ (1.34)
=========== ========== ========== ==========
Diluted $ 0.15 $ (0.07) $ 0.88 $ (1.34)
=========== ========== ========== ==========
Weighted average shares used
in computing net income
(loss) per common share:
Basic 92,888 84,017 92,087 38,419
=========== ========== ========== ==========
Diluted 97,208 84,017 97,061 38,419
=========== ========== ========== ==========
(1) The following table summarizes the effects of stock-based compensation
related to employees, non-recourse notes and non-employees for the
three and nine months ended September 27, 2008 and September 29, 2007:
Three Months Ended Nine Months Ended
----------------------- ----------------------
September September September September
27, 29, 27, 29,
2008 2007 2008 2007
----------- ---------- ---------- ----------
Cost of revenue $ 299 $ 143 $ 778 $ 254
Research and development 1,870 1,113 4,722 2,436
Sales and marketing 1,250 689 3,264 1,122
General and administration 1,956 1,129 5,530 2,032
----------- ---------- ---------- ----------
5,375 3,074 14,294 5,844
Cost of revenue -
amortization from balance
sheet* 1,180 89 3,549 129
----------- ---------- ---------- ----------
Total stock-based
compensation expense $ 6,555 $ 3,163 $ 17,843 $ 5,973
=========== ========== ========== ==========
* 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 remeasurement of our freestanding
preferred stock warrants under FAS 150:
Three Months Ended Nine Months Ended
----------------------- ----------------------
September September September September
27, 29, 27, 29,
2008 2007 2008 2007
----------- ---------- ---------- ----------
Other loss $ - $ - $ - $ (19,761)
Infinera Corporation
GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 27, 2008
===================================================
Adjusted
Adjusted GAAP
Adjusted GAAP Excluding
Deferral GAAP Stock Stock
GAAP Adjustments Results Comp Comp
-------- -------- ------- ------ --------
Revenue
Product and ratable
revenue $115,625 $(39,588)(a) $76,037 $ - $ 76,037
Services revenue 4,881 - 4,881 - 4,881
-------- -------- ------- ------ --------
Total revenue 120,506 (39,588) 80,918 - 80,918
Cost of revenue 66,268 (18,338)(c) 47,930 (1,270)(e) 46,660
-------- -------- ------- ------ --------
Gross profit 54,238 (21,250) 32,988 1,270 34,258
Gross margin 45% 42%
Operating expenses 41,013 - 41,013 (5,076)(e) 35,937
-------- -------- ------- ------ --------
Income (loss) from
operations 13,225 (21,250) (8,025) 6,346 (1,679)
Other income (expense),
net 1,712 - 1,712 - 1,712
-------- -------- ------- ------ --------
Income (loss) before
provision for income
taxes 14,937 (21,250) (6,313) 6,346 33
Provision for income
taxes - - - - -
-------- -------- ------- ------ --------
Net income (loss) $ 14,937 $(21,250) $(6,313) $6,346 $ 33
======== ======== ======= ====== ========
Net income (loss) per
common share:
Basic $ 0.16 $ 0.00
======== ========
Diluted $ 0.15 $ 0.00
======== ========
Weighted average shares
used in computing net
income (loss) per
common share:
Basic 92,888 92,888
======== ========
Diluted 97,208 97,208
======== ========
Three Months Ended June 28, 2008
===================================================
Adjusted
Adjusted GAAP
Adjusted GAAP Excluding
Deferral GAAP Stock Stock
GAAP Adjustments Results Comp Comp
-------- -------- ------- ------ --------
Revenue
Product and ratable
revenue $156,086 $(70,349)(b) $85,737 $ - $ 85,737
Services revenue 5,023 - 5,023 - 5,023
-------- -------- ------- ------ --------
Total revenue 161,109 (70,349) 90,760 - 90,760
Cost of revenue 81,325 (32,090)(d) 49,235 (1,176)(e) 48,059
-------- -------- ------- ------ --------
Gross profit 79,784 (38,259) 41,525 1,176 42,701
Gross margin 50% 47%
Operating expenses 37,186 - 37,186 (4,865)(e) 32,321
-------- -------- ------- ------ --------
Income (loss) from
operations 42,598 (38,259) 4,339 6,041 10,380
Other income (expense),
net 2,554 - 2,554 - 2,554
-------- -------- ------- ------ --------
Income (loss) before
provision for income
taxes 45,152 (38,259) 6,893 6,041 12,934
Provision for income
taxes 2,267 - 2,267 - 2,267
-------- -------- ------- ------ --------
Net income (loss) $ 42,885 $(38,259) $ 4,626 $6,041 $ 10,667
======== ======== ======= ====== ========
Net income (loss) per
common share:
Basic $ 0.47 $ 0.12
======== ========
Diluted $ 0.44 $ 0.11
======== ========
Weighted average shares
used in computing net
income (loss) per
common share:
Basic 92,124 92,124
======== ========
Diluted 97,284 97,284
======== ========
Infinera Corporation
GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 29, 2007
===================================================
Non-GAAP
Invoiced
Shipments
Non-GAAP Excluding
Deferral Invoiced Stock Stock
GAAP Adjustments Shipments Comp Comp
-------- -------- ------- ------ --------
Revenue $ 62,155 $ 18,195 (b) $80,350 $ - $ 80,350
Cost of revenue 40,822 5,181 (d) 46,003 (470)(e) 45,533
-------- -------- ------- ------ --------
Gross profit 21,333 13,014 34,347 470 34,817
Gross margin 34% 43%
Operating expenses 29,722 - 29,722 (2,931)(e) 26,791
-------- -------- ------- ------ --------
Income (Loss) from
operations (8,389) 13,014 4,625 3,401 8,026
Other income (expense),
net 2,925 - 2,925 - 2,925
-------- -------- ------- ------ --------
Income (Loss) before
provision for income
taxes (5,464) 13,014 7,550 3,401 10,951
Provision for income
taxes 62 - 62 - 62
-------- -------- ------- ------ --------
Net income (loss) $ (5,526) $ 13,014 $ 7,488 $3,401 $ 10,889
======== ======== ======= ====== ========
Net income (loss) per
common share:
Basic $ (0.07) $ 0.13
======== ========
Diluted $ (0.07) $ 0.12
======== ========
Shares used in computing
net income (loss) per
common share:
Basic 84,017 84,017
======== ========
Diluted 84,017 92,007
======== ========
Use of Non-GAAP Invoiced Shipments / Adjusted GAAP Information: Prior to the second quarter of 2008, in order to supplement our condensed consolidated financial statements presented on a GAAP basis, Infinera used invoiced shipment measures of operating results and net income. Invoiced shipment measures reflected GAAP results adjusted for changes in our deferred revenue and deferred cost of inventory balances from the prior period. We further presented non-GAAP measures of operating results, net income and net income per share, which included invoiced shipments and excluded non-GAAP stock-based compensation expense. These adjustments to our GAAP results were made to provide both management and investors with an understanding of Infinera's underlying operating results and trends as they would have been reflected had we established vendor specific objective evidence ("VSOE") of fair value for our service offerings and not been required to recognize revenue ratably. Effective April 2008, we had established VSOE of fair value for most of our service offerings. Therefore, beginning in the second quarter of 2008, we have used adjusted GAAP measures of operating results and net income. Adjusted GAAP results reflect 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 have not been adjusted and are recognized on a GAAP basis in arriving at the adjusted GAAP results. We have continued to present non-GAAP measures of operating results, net income and net income per share, which include adjusted GAAP results and exclude non-GAAP stock-based compensation expense. 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.
Infinera Corporation
GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation
(In thousands)
Use of Non-GAAP Financial Measures (Continued)
(a) 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 services deferred 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 September 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 $ 61,340 $ 3,113 $ 5,456 $ 69,909
Additions to deferred revenue - 2,075 3,567 5,642
Amortization to revenue (39,588) (891) (2,616) (43,095)
---------- ---------- --------- ---------
Ending balance $ 21,752 $ 4,297 $ 6,407 $ 32,456
========== ========== ========= =========
Change in deferred revenue
balance $ (39,588) $ 1,184 $ 951 $ (37,453)
========== ========== ========= =========
(b) 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 services deferred 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
September
Three Months Ended June 28, 2008 29, 2007
------------------------------------------ ---------
Pre Mar Post Mar
29, 2008 29, 2008
Ratable Ratable
and and
Product Product
Deferred Revenue Revenue Revenue Services Total Total
--------- --------- --------- --------- ---------
(In thousands)
Beginning balance $ 131,689 $ - $ 3,805 $ 135,494 $ 138,955
Additions to
deferred revenue - 4,979 3,651 8,630 80,325
Amortization to
revenue (70,349) (1,866) (2,000) (74,215) (62,130)
--------- --------- --------- --------- ---------
Ending balance $ 61,340 $ 3,113 $ 5,456 $ 69,909 $ 157,150
========= ========= ========= ========= =========
Change in deferred
revenue balance $ (70,349) $ 3,113 $ 1,651 $ (65,585) $ 18,195
========= ========= ========= ========= =========
(c) Adjustment amount represents the release of ratable and product
deferred 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:
Three Months Ended September 27, 2008
-------------------------------------
Pre Mar 29, Post Mar 29,
2008 Ratable 2008 Ratable
and Product and Product
Deferred Inventory Cost Cost Cost Total
------------ ------------ ---------
(In thousands)
Beginning balance $ 26,510 $ 450 $ 26,960
Additions to deferred cost of
revenue - 710 710
Amortized to cost of revenue (18,338) (40) (18,378)
------------ ------------ ---------
Ending balance $ 8,172 $ 1,120 $ 9,292
============ ============ =========
Change in deferred inventory cost
balance $ (18,338) $ 670 $ (17,668)
============ ============ =========
(d) Adjustment amount represents the release of ratable and product
deferred 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:
Three Months
Ended
Three Months Ended June 28, September
2008 29, 2007
------------------------------- ---------
Pre Mar Post Mar
29, 2008 29, 2008
Ratable Ratable
and and
Product Product
Deferred Inventory Cost Cost Cost Total Total
--------- --------- --------- ---------
(In thousands)
Beginning balance $ 58,600 $ - $ 58,600 $ 74,706
Additions to deferred cost of
revenue - 459 459 38,830
Amortized to cost of revenue (32,090) (9) (32,099) (33,649)
--------- --------- --------- ---------
Ending balance $ 26,510 $ 450 $ 26,960 $ 79,887
========= ========= ========= =========
Change in deferred inventory
cost balance $ (32,090) $ 450 $ (31,640) $ 5,181
========= ========= ========= =========
(e) 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 Statement of Financial Accounting Standards No. 123(R). 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 Months Ended
----------------------------------------
September 27, June 28, September 29,
2008 2008 2007
------------ ------------ ------------
(In thousands)
GAAP stock-based compensation in
cost of revenue $ 299 $ 271 $ 143
GAAP stock-based compensation in
cost of revenue - amortization
from balance sheet 1,180 1,219 89
Stock-based compensation not
deferred to deferred inventory
cost - - 308
Stock-based compensation
previously recognized on
invoiced shipment basis (209) (314) (70)
------------ ------------ ------------
Non-GAAP stock-based compensation
in cost of revenue $ 1,270 $ 1,176 $ 470
============ ============ ============
Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 27, December 29,
2008 2007
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 169,439 $ 91,209
Short-term investments 78,551 181,168
Short-term restricted cash 840 743
Accounts receivable 48,571 39,216
Other receivables 250 1,127
Inventory 58,620 58,579
Deferred inventory costs 6,505 78,362
Prepaid expenses and other current assets 7,016 3,941
------------ ------------
Total current assets 369,792 454,345
Property, plant and equipment, net 42,860 36,973
Intangible assets 1,342 1,541
Deferred inventory costs, non-current 2,787 3,260
Long-term investments 73,803 30,116
Long-term restricted cash 1,959 2,594
Other non-current assets 2,297 359
------------ ------------
Total assets $ 494,840 $ 529,188
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,834 $ 17,504
Accrued expenses 10,160 9,497
Accrued compensation and related benefits 9,078 17,749
Accrued warranty 5,814 4,974
Deferred revenue 25,444 167,031
------------ ------------
Total current liabilities 75,330 216,755
Accrued warranty, non-current 4,862 5,018
Deferred revenue, non-current 7,012 7,406
Long-term exercised unvested options 318 825
Other long-term liabilities 3,747 4,610
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 as of
September 27, 2008 and December 29, 2007
Issued and outstanding shares - 93,773
as of September 27, 2008 and 91,580 as of
December 29, 2007 94 92
Additional paid-in capital 695,158 663,870
Accumulated other comprehensive income
(loss) (7,631) 78
Accumulated deficit (284,050) (369,466)
------------ ------------
Total stockholders' equity 403,571 294,574
------------ ------------
Total liabilities and stockholders' equity $ 494,840 $ 529,188
============ ============
Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
--------------------------
September 27, September 29,
2008 2007
------------ ------------
Cash Flows from Operating Activities:
Net income (loss) $ 85,416 $ (51,435)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 8,877 7,150
Amortization of debt discount - 282
Accretion of investment discount (881) -
Asset impairment charges - 393
Stock-based compensation expense 17,843 5,973
Excess tax benefit from stock option
transactions (2,588) -
Tax benefit from stock option transactions 2,588 -
Revaluation of warrant liabilities - 19,761
Gain on disposal of assets (1,006) (2,409)
Other loss (gain) 7 (73)
Changes in assets and liabilities:
Accounts receivable (8,478) 1,147
Inventory (701) 3,215
Prepaid expenses and other current assets (3,142) (1,234)
Deferred inventory costs 71,626 (12,764)
Other non-current assets (1,964) (1,266)
Accounts payable 7,777 (14,692)
Accrued liabilities and other expenses (8,723) (2,694)
Deferred revenue (141,981) 46,197
Accrued warranty 684 6,653
------------ ------------
Net cash provided by operating
activities 25,354 4,204
Cash Flows from Investing Activities:
Purchase of available-for-sale investments (172,875) (111,294)
Proceeds from sale of investments 103,190 12,000
Proceeds from maturities of investments and
restricted cash 122,899 -
Proceeds from disposal of assets 1,080 2,781
Purchase of property and equipment (15,152) (11,710)
------------ ------------
Net cash (used in) investing activities 39,142 (108,223)
Cash Flows from Financing Activities:
Principal payments on loan obligation - (35,401)
Proceeds from loans - 7,119
Proceeds from initial public offering, net
of issuance costs - 190,078
Proceeds from issuance of common stock 11,242 2,097
Proceeds from exercise of warrants - 45
Excess tax benefit from stock option
transactions 2,588 -
Repurchase of common stock (30) (50)
------------ ------------
Net cash provided by financing
activities 13,800 163,888
------------ ------------
Effect of exchange rate changes (66) 70
Net change in cash and cash equivalents 78,230 59,939
Cash and cash equivalents at beginning of
period 91,209 28,884
------------ ------------
Cash and cash equivalents at end of period $ 169,439 $ 88,823
============ ============
Supplemental disclosures of cash flow information:
Cash paid for interest $ 3 $ 2,473
Cash paid for income taxes $ 858 $ 62
Infinera Corporation
Supplemental Financial Information
Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08
------ ------ ------ ------ ------ ------ ------
Invoiced Shipments $ 66.7 $ 69.0 $ 80.4 $ 93.4 $ 95.5 $ 90.8 $ 80.9
Gross Margin % 35% 37% 43% 47% 45% 47% 42%
------ ------ ------ ------ ------ ------ ------
Invoiced Shipment
Composition:
Domestic % 89% 84% 81% 81% 82% 78% 81%
International % 11% 16% 19% 19% 18% 22% 19%
Largest Customer % 57% 48% 28% 18% 31% 21% 27%
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Cash Related
Information:
Cash from
Operations $ 6.9 ($ 0.8) ($ 2.0) $ 18.9 $ 9.8 $ 5.6 $ 9.9
Capital
Expenditures $ 5.2 $ 3.6 $ 3.0 $ 8.5 $ 4.5 $ 4.8 $ 5.9
Depreciation &
Amortization $ 2.1 $ 2.0 $ 2.7 $ 2.7 $ 2.6 $ 2.9 $ 3.4
DSO's 27 36 47 39 42 57 55
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Inventory Metrics:
Raw Materials $ 7.4 $ 8.8 $ 7.5 $ 10.5 $ 7.9 $ 9.2 $ 10.0
Work in Process $ 31.6 $ 36.0 $ 34.8 $ 35.1 $ 40.6 $ 34.6 $ 35.8
Finished Goods $ 18.4 $ 13.7 $ 14.8 $ 13.0 $ 10.7 $ 13.8 $ 12.8
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Total Inventory $ 57.3 $ 58.5 $ 57.1 $ 58.6 $ 59.2 $ 57.6 $ 58.6
Inventory Turns 3.0 3.0 3.2 3.4 3.5 3.3 3.2
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Worldwide
Headcount 617 646 668 711 799 853 889
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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