SOURCE: Calix, Inc.

Calix, Inc.

October 25, 2012 16:02 ET

Calix Reports Third Quarter 2012 Financial Results

PETALUMA, CA--(Marketwire - Oct 25, 2012) - Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the third quarter ended September 29, 2012. Revenue for the third quarter of 2012 was $81.3 million, an increase of 3.0% compared to $78.9 million in the prior quarter and a decrease of 2.8% compared to $83.7 million for the third quarter of 2011.

"The modest year-over-year decrease in revenue confirms the challenging macro-economic environment that the entire communications equipment segment has seen," said Carl Russo, president and CEO of Calix. "Our three percent sequential growth and improving balance sheet, however, point to our strengthening competitive position moving forward."

Non-GAAP net income for the third quarter of 2012 was $1.8 million, or $0.04 per fully diluted share. Non-GAAP net income was $3.6 million, or $0.07 per fully diluted share, for the third quarter of 2011. A reconciliation of GAAP and non-GAAP results is included as part of this release.

GAAP net loss for the third quarter of 2012 was $7.1 million, or $(0.15) per basic and diluted share, compared to a GAAP net loss of $6.9 million, or $(0.15) per basic and diluted share for the third quarter of 2011. A reconciliation of our third quarter 2012 operating results from non-GAAP to GAAP is provided below:

   
   
Calix, Inc.  
(Unaudited, in thousands except per share data)  
Three Months Ended September 29, 2012  
   
    Non-GAAP     Stock-Based Compensation     Amortization of Intangible Assets     GAAP  
Revenue   $ 81,301     $ -     $ -     $ 81,301  
Cost of revenue     45,362       345       2,088       47,795  
Gross profit     35,939       (345 )     (2,088 )     33,506  
Gross margin     44.2 %     -0.4 %     -2.6 %     41.2 %
Operating expenses     34,069       3,962       2,552       40,583  
Operating income (loss)     1,870       (4,307 )     (4,640 )     (7,077 )
Interest and other income (expense), net     (19 )     -       -       (19 )
Income (loss) before taxes     1,851       (4,307 )     (4,640 )     (7,096 )
Provision for income taxes     44       -       -       44  
Net income (loss)   $ 1,807     $ (4,307 )   $ (4,640 )   $ (7,140 )
                                 
Weighted average basic and diluted shares used to compute GAAP net loss per common share                            
48,353
 
                                 
Weighted average diluted shares used to compute non-GAAP net income per common share    
48,472
     
48,472
     
48,472
         
                                 
GAAP net loss per common share                           $ (0.15 )
                                 
Non-GAAP net income (loss) per share   $ 0.04     $ (0.09 )   $ (0.10 )        
                                 
                                 

Conference Call
In conjunction with this announcement, Calix will host a conference call at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) today to discuss its third quarter 2012 financial results. A live audio webcast and replay of the call will be available in the Investor Relations section of the Calix web site at http://investor-relations.calix.com/.

Live call access information: Dial-in number: (877) 407-4019 (U.S.) or (201) 689-8337 (outside the U.S.)

The conference call and webcast will include forward-looking information.

About Calix
Calix (NYSE: CALX) is a global leader in access innovation. Its Unified Access portfolio of broadband communications access systems and software enables communications service providers worldwide to transform their copper- and fiber-based networks and become the broadband provider of choice to their subscribers. For more information, visit the Calix website at www.calix.com.

Use of Non-GAAP Financial Information

The Company uses certain non-GAAP financial measures in this press release to supplement its consolidated financial statements, which are presented in accordance with GAAP. These non-GAAP measures include non-GAAP net income and non-GAAP basic and diluted income per share. These non-GAAP measures are provided to enhance the reader's understanding of the Company's operating performance as they primarily exclude certain non-cash charges for stock-based compensation and amortization of acquisition-related intangible assets, and non-recurring merger-related and other expenses, which the Company believes are not indicative of its core operating results. Merger-related and other expenses largely include the charge resulting from the required revaluation of Occam inventory to its estimated fair value, legal and professional expenses, severance and integration-related expenses and inventory-related charges associated with our merger with Occam. Management believes that the non-GAAP measures used in this press release provide investors with important perspectives into the Company's ongoing business performance and management uses these non-GAAP measures to evaluate financial results and to establish operational goals. The presentation of these non-GAAP measures is not meant to be a substitute for results presented in accordance with GAAP, but rather should be evaluated in conjunction with those GAAP results. A reconciliation of the non-GAAP results to the most directly comparable GAAP results is provided in this press release. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

   
   
Calix, Inc.  
Condensed Consolidated Statements of Operations  
(Unaudited, in thousands, except per share data)  
                         
    Three Months Ended     Nine Months Ended  
    September 29,     September 24,     September 29,     September 24,  
    2012     2011     2012     2011  
Revenue   $ 81,301     $ 83,655     $ 238,794     $ 253,084  
Cost of revenue:                                
  Products and services(1)     45,707       49,002       132,797       143,209  
  Merger-related expenses     -       -       -       19,966  
  Amortization of intangible assets     2,088       2,806       5,451       7,510  
    Total cost of revenue     47,795       51,808       138,248       170,685  
Gross profit     33,506       31,847       100,546       82,399  
Operating expenses:                                
  Research and development(1)     16,165       16,717       49,604       50,340  
  Sales and marketing(1)     15,093       12,593       44,880       38,831  
  General and administrative(1)     6,773       5,475       19,682       21,450  
  Merger-related and other expenses(1)     -       1,404       -       12,927  
  Amortization of intangible assets     2,552       2,552       7,656       6,016  
    Total operating expenses     40,583       38,741       121,822       129,564  
Loss from operations     (7,077 )     (6,894 )     (21,276 )     (47,165 )
Interest and other income (expense), net:                                
  Interest income     3       11       14       80  
  Interest expense     (41 )     (48 )     (140 )     (139 )
  Other income (expense), net     19       35       (70 )     64  
Loss before provision for income taxes     (7,096 )     (6,896 )     (21,472 )     (47,160 )
Provision for income taxes     44       38       280       176  
Net loss   $ (7,140 )   $ (6,934 )   $ (21,752 )   $ (47,336 )
Net loss per common share:                                
  Basic and diluted   $ (0.15 )   $ (0.15 )   $ (0.45 )   $ (1.06 )
Weighted average number of shares used to compute net loss per common share:                                
  Basic and diluted     48,353       47,128       48,059       44,866  
                                 
(1) Includes stock-based compensation as follows:                                
                                 
  Cost of revenue   $ 345     $ 306     $ 1,089     $ 1,141  
  Research and development     1,017       886       3,129       3,761  
  Sales and marketing     1,263       1,127       3,840       3,256  
  General and administrative     1,682       1,407       4,903       7,845  
  Merger-related and other expenses     -       70       -       1,234  
    $ 4,307     $ 3,796     $ 12,961     $ 17,237  
                                 
                                 
   
   
Calix, Inc.  
Reconciliation of GAAP to Non-GAAP Results  
(Unaudited, in thousands except per share data)  
                         
    Three Months Ended     Nine Months Ended  
    September 29,     September 24,     September 29,     September 24,  
    2012     2011     2012     2011  
                         
GAAP net loss   $ (7,140 )   $ (6,934 )   $ (21,752 )   $ (47,336 )
Adjustments to reconcile GAAP net loss to non-GAAP net income:                                
Stock-based compensation     4,307       3,796       12,961       17,237  
Amortization of intangible assets     4,640       5,358       13,107       13,526  
Merger-related and other expenses     -       1,334       -       31,659  
Non-GAAP net income   $ 1,807     $ 3,554     $ 4,316     $ 15,086  
                                 
Non-GAAP net income per common share                                
  Basic   $ 0.04     $ 0.08     $ 0.09     $ 0.34  
  Diluted   $ 0.04     $ 0.07     $ 0.09     $ 0.32  
                                 
Weighted average shares used to compute non-GAAP net income per common share - Basic    
48,353
     
47,128
     
48,059
     
44,866
 
                                 
Weighted average shares used to compute non-GAAP net income per common share - Diluted (1)    
48,472
     
48,092
     
48,208
     
46,718
 
                                 
(1) Includes the dilutive effect of outstanding stock options and restricted stock units.  
   
   
   
   
Calix, Inc.  
Condensed Consolidated Balance Sheets  
(In thousands)  
             
    September 29,     December 31,  
    2012     2011  
    (Unaudited)        
ASSETS                
Current Assets:                
  Cash and cash equivalents   $ 57,422     $ 38,938  
  Restricted cash     -       754  
  Accounts receivable, net     56,392       47,943  
  Inventory     30,175       44,604  
  Deferred cost of goods sold     16,960       8,324  
  Prepaid and other current assets     4,383       4,429  
    Total current assets     165,332       144,992  
                 
Property and equipment, net     17,381       16,130  
Goodwill     116,175       116,175  
Intangible assets, net     66,941       80,048  
Other assets     1,774       2,194  
    Total assets   $ 367,603     $ 359,539  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 16,436     $ 14,250  
  Accrued liabilities     34,137       36,214  
  Deferred revenue     30,674       16,783  
    Total current liabilities     81,247       67,247  
Long-term portion of deferred revenue     15,299       13,347  
Other long term liabilities     896       1,528  
    Total liabilities     97,442       82,122  
                 
Stockholders' equity:                
  Common stock     1,210       1,195  
  Additional paid-in capital     754,755       740,309  
  Accumulated other comprehensive income     133       98  
  Accumulated deficit     (485,937 )     (464,185 )
    Total stockholders' equity     270,161       277,417  
    Total liabilities and stockholders' equity   $ 367,603     $ 359,539  
                     
                     
   
   
Calix, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited, in thousands)  
             
    Nine Months Ended  
    September 29,     September 24,  
    2012     2011  
Operating activities:                
  Net loss   $ (21,752 )   $ (47,336 )
  Adjustments to reconcile net loss to net cash provided by operating activities:                
    Amortization of premiums relating to available-for-sale securities     -       229  
    Depreciation and amortization     6,351       5,949  
    Loss on retirement of property and equipment     262       2,278  
    Amortization of intangible assets     13,107       13,526  
    Stock-based compensation     12,961       17,237  
    Changes in operating assets and liabilities:                
      Restricted cash     754       -  
      Accounts receivable, net     (8,449 )     12,329  
      Inventory     14,429       9,634  
      Deferred cost of revenue     (8,636 )     (1,161 )
      Prepaids and other assets     491       (2,291 )
      Accounts payable     2,186       (10,126 )
      Accrued liabilities     (2,098 )     2,850  
      Deferred revenue     15,844       5,800  
      Other long-term liabilities     (633 )     (179 )
        Net cash provided by operating activities     24,817       8,739  
                 
  Investing activities:                
    Purchase of property and equipment     (7,879 )     (6,271 )
    Sales and maturities of marketable securities     -       29,755  
    Acquisition of Occam Networks, net of cash acquired     -       (60,809 )
        Net cash used in investing activities     (7,879 )     (37,325 )
                 
  Financing activities:                
    Proceeds from exercise of stock options and other     158       766  
    Proceeds from employee stock purchase plan     2,222       2,062  
    Taxes withheld upon vesting of restricted stock units and restricted stock awards     (880 )     (10,373 )
        Net cash provided by (used in) financing activities     1,500       (7,545 )
                 
Effect of exchange rate changes on cash and cash equivalents     46       76  
Net increase (decrease) in cash and cash equivalents     18,484       (36,055 )
Cash and cash equivalents at beginning of period     38,938       66,304  
Cash and cash equivalents at end of period   $ 57,422     $ 30,249  
                 
                 

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