GAAP GAAP Non-GAAP(a) Non-GAAP(a)
Fourth Fourth Fourth Fourth
Quarter Quarter Quarter Quarter
April 30, April 30, April 30, April 30,
2009 2008 2009 2008
---------- ---------- ----------- -----------
(in thousands, except per share data)
Optical products
revenues $ 107,457 $ 111,378 $ 107,457 $ 111,378
Network test products
revenues $ 9,207 $ 9,627 $ 9,207 $ 9,627
Total revenues $ 116,664 $ 121,005 $ 116,664 $ 121,005
Gross margin 25.4 % 32.9 % 30.8% 37.4%
Before impairment
charges:
Operating expenses $ 39,278 $ 40,112 $ 35,636 $ 36,325
Income (loss) from
operations $ (9,625) $ (303) $ 279 $ 8,922
Operating margin (8.3)% (0.3)% 0.2% 7.4%
Goodwill impairment
charge $ 13,390 $ 40,106 $ - $ -
Net income (loss) $ (24,201) $ (44,108) $ (958) $ 7,150
Net income (loss) per
share - basic $ (0.05) $ (0.14) $ 0.00 $ 0.02
Net income (loss) per
share - diluted $ (0.05) $ (0.14) $ 0.00 $ 0.02
Shares - basic 476,972 308,786 476,972 308,786
Shares - diluted 476,972 308,786 476,972 310,129
(a) In evaluating the operating performance of Finisar's business, Finisar
management utilizes financial measures that exclude certain charges and
credits required by 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 included:
-- Total revenues decreased to $116.7 million, down $19.7 million, or
14.4%, from $136.4 million in the preceding quarter and down $4.3 million,
or 3.6%, from $121.0 million in the fourth quarter of the prior year;
-- Optics revenues decreased to $107.5 million, down $18.6 million, or
14.8%, from $126.1 million in the preceding quarter and down $3.9 million,
or 3.5%, from $111.4 million in the fourth quarter of the prior year.
Excluding approximately $25.1 million of additional revenues in the quarter
as a result of the Optium merger completed on August 29, 2008, optics
revenues of $82.4 were down $29.0 million, or 26.1% from $111.4 million in
the fourth quarter of the prior year;
-- Revenues from the sale of products for 10/40 Gbps applications
decreased to $40.6 million, down $8.5 million, or 17.3%, from $49.1 million
in the preceding quarter but increased $9.4 million, or 30.1%, from $31.2
million in the fourth quarter of the prior year primarily due to the Optium
merger;
-- Network Test revenues decreased to $9.2 million, down $1.1 million, or
10.4%, from $10.3 million in the preceding quarter, and decreased $0.4
million, or 4.4%, from $9.6 million in the fourth quarter of the prior
year;
-- Gross margin was 25.4%, a decrease from 30.2% in the preceding quarter
and from 32.9% in the fourth quarter of the prior year, due in part to a
charge for the impairment of current technology associated with a previous
acquisition and higher per unit manufacturing costs as a result of lower
unit shipment levels;
-- Operating loss before a charge for goodwill impairment and the
impairment of current technology was $8.4 million, or (7.2)% of revenues,
compared to an operating loss of $3.2 million, or (2.4)% of revenues, in
the preceding quarter and $0.3 million, or (0.3)% of revenues, in the
fourth quarter of the prior year;
-- A charge of $13.4 million for the impairment of the remaining balance
of goodwill was recognized following the completion of an analysis of all
goodwill, which was in addition to an estimated charge of $225.3 million
recorded in previous quarters;
-- A net loss of $24.2 million, or $(0.05) per share, compared to a net
loss of $47.4 million, or $(0.10) per share, in the preceding quarter and a
net loss of $44.1 million, or $(0.14) per share, in the fourth quarter of
the prior year; and
-- Cash and short-term investments, plus other long-term investments that
can be readily converted into cash, totaled $37.2 million at the end of the
fourth quarter compared to $35.3 million at the end of the prior quarter.
The Company continues to maintain a secured credit facility totaling $45.0
million under which no borrowings were outstanding at the end of the
quarter. Approximately $25 million was available to borrow under this
secured credit facility pursuant to covenants that were modified as of the
end of the quarter. Additional lines of credit covering the sale of
accounts receivable and standby letters of credit were fully utilized as of
the end of 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.
In addition to reporting financial results in accordance with 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 fourth quarter of fiscal 2009, these
excluded items included, among other items described in Finisar Non-GAAP
Financial Measures below, a non-cash charge of $13.4 million for the
impairment of goodwill; $4.0 million in non-cash stock-based compensation
expense; $2.4 million in amortization charges related to acquired developed
technology and purchased intangibles arising from previous acquisitions; a
$2.5 million non-cash charge for slow moving and obsolete inventory; and
$0.9 million associated with the cost of reductions in force.
Excluding these items:
-- Non-GAAP gross margins decreased to 30.8%, compared to 31.4% in the
preceding quarter and 37.4% in the fourth quarter of the prior year.
The sequential decrease in non-GAAP gross margin reflects the impact
of lower shipment levels and higher per unit manufacturing costs, and
the decrease compared to the prior year also reflects the impact of
the Optium merger ahead of additional manufacturing cost synergies
expected to be realized over the next three quarters;
-- Non-GAAP operating expenses were $35.6 million in the fourth quarter,
a decrease of $4.1 million, or 10.4%, on a sequential basis and a
decrease of $8.4 million, or 19.1%, compared to the second quarter
during which the Optium merger was completed. The reduction in
operating expenses reflects the full impact of operating cost
synergies associated with the merger in addition to other actions
undertaken to reduce costs including:
-- Reduction in salaries totaling 10% for officers, directors and
most employees starting in February 2009; and
-- Suspension of 401(k) matching Company contributions.
-- Non-GAAP operating income was $0.3 million, or 0.2% of revenues, down
from $3.1 million, or 2.3% of revenues, in the preceding quarter, from
$8.9 million, or 7.4% of revenues, in the fourth quarter of the prior
year. The decrease in operating income from the previous quarter was
due primarily to lower gross profit levels which declined by $6.9
million, or 16.1%, from the preceding quarter, while operating expenses
declined $4.1 million, or 10.4%. Similarly, gross profit declined by
$9.3 million compared to the fourth quarter of the prior year while
operating expenses declined by $0.7 million despite the impact of
additional operating expenses associated with the Optium merger;
-- Non-GAAP net loss was $1.0 million, or $(0.00) per diluted share,
compared to net income of $2.3 million, or $0.00 per diluted share,
in the preceding quarter and net income of $7.2 million, or $0.02 per
diluted share, in the fourth quarter of the prior year; and
-- Non-GAAP EBITDA was $8.2 million, down only $3.0 million from the
prior quarter despite a decrease of $19.7 million in total revenues,
reflecting the impact of operating cost synergies arising from the
Optium merger and additional cost reductions as noted above.
"We previously indicated that we believed that fourth quarter revenues
would represent the low point for us in this economic downturn," said Jerry
Rawls, Finisar's executive Chairman of the Board. "Based on order trends
that have seen a marked improvement during the last several weeks, it
appears that assessment was correct and that revenues for the upcoming
first quarter should increase over the fourth quarter just ended."
"We have seen combined revenues decline by approximately $58 million, or
33%, since the record high for both companies just prior to the merger in
the July quarter," said Eitan Gertel, Finisar's Chief Executive Officer.
"And yet, despite this decline in revenues, we continue to generate EBITDA
in excess of our capital expenditure requirements as a result of synergies
from the merger and the additional cost reductions that have been
implemented."
FINISAR FINANCIAL HIGHLIGHTS -- FISCAL YEAR ENDED APRIL 30, 2009
GAAP GAAP Non-GAAP(a) Non-GAAP(a)
Fiscal Year Fiscal Year Fiscal Year Fiscal Year
April 30, April 30, April 30, April 30,
2009 2008 2009 2008
---------- ---------- ----------- -----------
(in thousands, except per share data)
Optical products
revenues $ 497,058 $ 401,625 $ 497,058 $ 401,625
Network test products
revenues $ 44,179 $ 38,555 $ 44,179 $ 38,555
Total revenues $ 541,237 $ 440,180 $ 541,237 $ 440,180
Gross margin 31.1 % 32.2 % 34.6% 37.2%
Before impairment
charges:
Operating expenses $ 183,751 $ 162,008 $ 157,480 $ 138,678
Income (loss) from
operations $ (15,373) $ (20,490) $ 29,546 $ 24,906
Operating margin (2.8)% (4.7)% 5.5% 5.7%
Goodwill impairment
charge $ 238,692 $ 40,106 $ - $ -
Net income (loss) $ (254,383) $ (74,558) $ 22,529 $ 17,368
Net income (loss) per
share - basic $ (0.61) $ (0.24) $ 0.05 $ 0.06
Net income (loss) per
share - diluted $ (0. 61) $ (0.24) $ 0.05 $ 0.05
Shares - basic 420,456 308,680 420,456 308,680
Shares - diluted 420,456 308,680 425,996 318,949
(a) In evaluating the operating performance of Finisar's business, Finisar
management utilizes financial measures that exclude certain charges and
credits required by 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 fiscal year included:
-- Total revenues increased to $541.2 million, up $101.1 million, or
23.0%, from $440.2 million in the prior year;
-- Optics revenues increased to $497.1 million, up $95.4 million, or
23.8% from $401.6 million in the prior year. Approximately $91.3 million of
the increase in revenues was related to the Optium merger;
-- Network Test revenues increased to $44.2 million, up $5.6 million, or
14.6%, from $38.6 million in the prior year;
-- Gross margin of 31.1% decreased from 32.2% in the prior year due
primarily to a charge for the impairment of current technology associated
with a previous acquisition, an unfavorable product mix between Optics and
Network Tools and the impact of the Optium merger;
-- Operating loss before a charge for goodwill impairment was $15.4
million, or (2.8)% of revenues, compared to an operating loss of $20.5
million, or (4.7)% of revenues, in the prior year;
-- Total goodwill impairment charges of $238.7 million were recognized
during the year as a result of a deterioration in the macroeonomic
environment just as the Optium merger was being completed; and
-- Net loss of $254.4 million compared to a net loss of $74.6 million in
the prior year primarily due to charges for the impairment of goodwill.
Items excluded under Finisar's Non-GAAP financial measures include, among
other items, a non-cash charge of $238.7 million for the impairment of
goodwill; $15.0 million in non-cash stock compensation expense; $8.7
million in amortization charges related to acquired developed technology
and purchased intangibles arising from previous acquisitions; a $6.0
million non-cash charge for slow moving and obsolete inventory; a $2.0
million non-cash charge associated with a loss on foreign currency
movements; a $1.8 million non-cash charge for the amortization of
convertible debt discount associated with the issuance of one series of the
Company's convertible notes; and $1.7 million associated with the cost of
reductions in force. These charges were partially offset by a $7.8 million
non-cash credit related to the timing of tax payments; a nonrecurring gain
of $3.8 million associated with the repurchase of outstanding convertible
notes prior to their maturity.
Excluding these items:
-- Non-GAAP gross margin decreased to 34.6%, compared to 37.2% in the
prior year;
-- Non-GAAP operating expenses were $157.5 million, an increase of $18.8
million, or 13.6%, over the prior year;
-- Non-GAAP operating income was $29.5 million, or 5.5% of revenues, an
increase of $4.6 million from $24.9 million, or 5.7% of revenues, in the
prior year;
-- Non-GAAP net income was $22.5 million, or $0.05 per diluted share,
compared to net income of $17.4 million, or $0.05 per diluted share, in the
prior year; and
-- Non-GAAP EBITDA was $59.4 million, an increase of $9.7 million from
the prior year, and exceeded total capital expenditures of $23.9 million
for the year.
CONFERENCE CALL
Finisar will discuss these financial statements and its current business
outlook during its regular quarterly conference call scheduled for today,
June 11, 2009, at 2:00 p.m. PDT/5:00 EDT. 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 706-634-9717 (international) and enter
conference ID 13765097.
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 13765097 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. Additional risks include the potential impact of
pending civil litigation arising from the investigation of Finisar's
historical option granting practices. Further information regarding these
and other risks relating to Finisar's business is set forth in Finisar's
quarterly report on Form 10-Q (filed March 12, 2009).
ABOUT FINISAR
Finisar Corporation (
Finisar Corporation
Consolidated Statements of Operations
Three
Months
Three Months Ended Twelve Months Ended Ended
April 30, April 30, April 30, April 30, February
2009 2008* 2009 2008* 1, 2009
---------- ----------- ----------- ---------- ----------
(Unaudited) (Unaudited) (Unaudited)
(in thousands, except (in thousands, except
share and per share share and per share
data) data)
Revenues
Optical
subsystems
and
components $ 107,457 $ 111,378 $ 497,058 $ 401,625 $ 126,081
Network
test
systems 9,207 9,627 44,179 38,555 10,274
---------- ----------- ----------- ---------- ----------
Total
revenues 116,664 121,005 541,237 440,180 136,355
Cost of
revenues 84,178 79,882 365,572 292,161 93,491
Impairment of
acquired
developed
technology 1,248 - 1,248 - -
Amortization
of acquired
developed
technology 1,585 1,314 6,039 6,501 1,705
---------- ----------- ----------- ---------- ----------
Gross profit 29,653 39,809 168,378 141,518 41,159
Gross margin 25.4% 32.9% 31.1% 32.2% 30.2%
Operating
expenses:
Research
and
development 22,318 20,194 92,057 76,544 24,098
Sales and
marketing 7,650 10,280 37,747 40,006 9,396
General and
administra-
tive 8,486 9,358 40,761 43,710 10,050
Acquired
in-process
research and
development - - 10,500 - -
Amortization
of purchased
intangibles 824 280 2,686 1,748 841
Impairment of
goodwill and
intangible
assets 13,390 40,106 238,692 40,106 46,534
---------- ----------- ----------- ---------- ----------
Total
operating
expenses 52,668 80,218 422,443 202,114 90,919
---------- ----------- ----------- ---------- ----------
Loss from
operations (23,015) (40,409) (254,065) (60,596) (49,760)
Interest
income 18 1,352 1,762 5,805 119
Interest
expense (1,332) (4,341) (9,687) (17,236) (1,469)
Gain on debt
extinguish-
ment - - 3,838 - 4,070
Other income
(expense),
net (15) (560) (3,803) (298) (749)
---------- ----------- ----------- ---------- ----------
Loss before
income taxes (24,344) (43,958) (261,955) (72,325) (47,789)
Provision
(benefit)
for income
taxes (143) 150 (7,572) 2,233 (432)
---------- ----------- ----------- ---------- ----------
Net loss $ (24,201) $ (44,108) $ (254,383) $ (74,558) $ (47,357)
========== =========== =========== ========== ==========
Net loss per
share -
basic and
diluted $ (0.05) $ (0.14) $ (0.61) $ (0.24) $ (0.10)
========== =========== =========== ========== ==========
Shares used
in computing
net loss per
share -
basic and
diluted 476,972 308,786 420,456 308,680 474,797
*Adjusted to reflect adoption of new accounting principle.
Finisar Corporation
Consolidated Balance Sheets
(In thousands)
Memo
Optium
balance
sheet upon
merger
April 30, February 1, April 30, (August 29,
2009 2009 2008 2008)
---------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited)
Current assets:
Cash and cash
equivalents $ 37,129 $ 34,645 $ 79,442 $ 31,825
Short-term
available-for-sale
investments 92 301 27,776 -
Short-term
available-for-sale
investments - equity - - 2,801 -
Accounts receivable, net 81,820 84,344 48,005 29,094
Accounts receivable,
other 10,033 8,780 12,408 -
Inventories 112,300 116,057 82,554 34,283
Prepaid expenses 7,959 8,191 7,652 856
---------- ---------- ---------- ----------
Total current assets 249,333 252,318 260,638 96,058
Long-term available-for-sale
investments - debt - 313 9,236 -
Property, plant and
improvements, net 84,040 88,543 89,847 19,129
Purchased technology, net 16,663 19,495 11,850 12,192
Other intangible assets, net 14,316 15,141 3,899 13,000
Goodwill - 13,892 88,242 150,115
Minority investments 14,289 14,289 13,250 -
Other assets 2,897 3,204 3,241 796
---------- ---------- ---------- ----------
Total assets $ 381,538 $ 407,195 $ 480,203 $ 291,290
========== ========== ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 48,421 $ 49,786 $ 43,040 $ 29,663
Accrued compensation 11,428 12,774 14,397 1,483
Other accrued
liabilities 30,713 28,070 23,397 15,859
Deferred revenue 4,663 4,977 5,312 -
Current portion of
Convertible notes - - 101,918 -
Current portion of
long-term debt 6,107 6,060 2,012 -
Current portion of
other long-term
liabilities - - 424 -
Non-cancelable purchase
obligations 2,965 3,420 3,206 -
---------- ---------- ---------- ----------
Total current
liabilities 104,297 105,087 193,706 47,005
Long-term liabilities:
Convertible notes 142,000 142,000 150,000 -
Long-term debt 15,305 16,857 3,626 -
Other long-term
liabilities 3,161 8,447 15,285 973
Deferred income taxes 1,986 1,190 8,903 -
---------- ---------- ---------- ----------
Total long-term
liabilities 162,452 168,494 177,814 973
Stockholders' equity:
Common stock 477 477 309 161
Additional paid-in
capital 1,810,873 1,806,732 1,540,241 253,651
Accumulated other
comprehensive income 2,662 1,427 12,973 -
Accumulated deficit (1,699,223) (1,675,022) (1,444,840) (10,500)
---------- ---------- ---------- ----------
Total stockholders'
equity 114,789 133,614 108,683 243,312
---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity $ 381,538 $ 407,195 $ 480,203 $ 291,290
========== ========== ========== ==========
FINISAR NON-GAAP FINANCIAL MEASURES
In addition to reporting financial results in accordance with 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);
-- Acquired in-process research and development expense (non-recurring
and non-cash charges);
-- Amortization of purchased intangibles (non-cash charges related to
prior acquisitions); and
-- Impairment charges associated with intangible assets (non-cash and non-
recurring).
In calculating non-GAAP net income and non-GAAP net income per share, we
have also excluded the following items in applicable periods:
-- Amortization of discount on convertible debt (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 loss (non-recurring and non-cash
charges);
-- Tax charges arising from timing difference related to asset purchases
(non-cash provision); and
-- Cumulative effect of change in accounting principle (non-recurring and
non-cash charges or income).
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 Twelve Months Three Months
Ended Ended Ended
April April January
30, 30, April 27, February 1,
2009 2008* 30, 2009 2008* 2009
------ ------- -------- ------- --------------
(Unaudited) (Unaudited) (Unaudited)
(in thousands, (in thousands,
except per except per share
share data) data)
Reconciliation of GAAP
Gross Profit to
non-GAAP Gross Profit:
Gross profit per GAAP 29,653 39,809 168,378 141,518 41,159
Gross margin, GAAP 25.4% 32.9% 31.1% 32.2% 30.2%
Adjustments:
Cost of revenues
Change in excess
and obsolete
inventory reserve 2,495 3,021 6,038 9,375 (957)
Amortization of
acquired
technology 1,584 1,314 6,038 6,501 1,705
Duplicate facility
costs during
facility move - 296 287 296 -
Stock compensation 870 771 3,387 3,091 797
Acquisition related
compensation - 27 - 67 -
Costs related to
options
investigation (282) - (282) 1,084 -
Impairment of
acquired developed
technology 1,248 - 1,248 - -
Purchase accounting
adjustment for sale
of acquired
inventory - - 1,402 1,306 -
Reduction in force
costs 347 9 530 346 128
------ ------- -------- ------- --------------
Total cost of
revenue
adjustments 6,262 5,438 18,648 22,066 1,673
Gross profit, non-GAAP 35,915 45,247 187,026 163,584 42,832
Gross margin, non-GAAP 30.8% 37.4% 34.6% 37.2% 31.4%
Reconciliation of GAAP
operating loss to
non-GAAP operating
income (loss):
Operating loss per
GAAP (23,015) (40,409) (254,065) (60,596) (49,760)
Operating margin, GAAP -19.7% -33.4% -46.9% -13.8% -36.5%
Adjustments:
Total cost of revenue
adjustments 6,262 5,438 18,648 22,066 1,673
Research and
development
Reduction in force
costs 270 12 457 40 111
Stock compensation 1,743 1,139 6,338 4,377 1,816
Acquisition related
compensation - 499 - 1,247 -
Costs related to
options
investigation (347) - (347) 1,648 -
Sales and marketing
Reduction in force
costs 187 87 412 170 125
Stock compensation 547 482 2,141 2,048 561
Acquisition related
compensation - 85 - 213 -
Costs related to
options
investigation (121) - (121) 742 -
General and
administrative
Reduction in force
costs 111 - 328 6 217
Stock compensation 859 586 3,113 2,048 958
Acquistion related
compensation - 110 - 274 -
Costs related to
options
investigation (431) 507 (155) 8,769 -
Disposal of a
product line - - 919 - -
Amortization of
purchased intangibles 825 280 2,687 1,748 841
Acquired in-process R&D - - 10,500 - -
Impairment of
intangible assets 13,390 40,106 238,692 40,106 46,534
------ ------- -------- ------- --------------
Total cost of
revenue and
operating expense
adjustments 23,295 49,331 283,612 85,502 52,836
Operating income,
non-GAAP 280 8,922 29,547 24,906 3,076
Operating margin,
non-GAAP 0.2% 7.4% 5.5% 5.7% 2.3%
Reconciliation of GAAP
net loss to non-GAAP
net income (loss):
Net loss per GAAP (24,201) (44,108) (254,383) (74,558) (47,357)
Total cost of revenue
and operating expense
adjustments 23,295 49,331 283,612 85,502 52,836
Amortization of
discount on
convertible debt - 1,236 1,817 4,942 -
Loss on debt
extinguishment - 74 (3,839) 74 (4,070)
Other expense, net
Loss (gain) on sale
of assets 497 (61) 994 (519) 104
Loss (gain) on
minority
investments - 1,355 797 1,149 -
Other misc income (17) (650) (575) (977) -
Foreign exchange
transaction loss (532) - 1,953 - 756
Provision for income
tax
Timing difference
related to asset
purchases - (27) (7,847) 1,755 -
------ ------- -------- ------- --------------
Total adjustments 23,243 51,258 276,912 91,926 49,626
------ ------- -------- ------- --------------
Net income (loss),
non-GAAP $ (958) $ 7,150 $ 22,529 $17,368 $ 2,269
====== ======= ======== ======= ==============
Net income (loss),
non-GAAP per share -
basic $(0.00) $ 0.02 $ 0.05 $ 0.06 $ 0.00
Net income (loss),
non-GAAP per share -
diluted $(0.00) $ 0.02 $ 0.05 $ 0.05 $ 0.00
Shares used in
computing non-GAAP net
income (loss) per
share - basic 476,972 308,786 420,456 308,680 474,797
Shares used in
computing non-GAAP net
income (loss) per
share - diluted 476,972 310,129 425,996 318,949 478,367
Non-GAAP EBITDA
Net income, non-GAAP $ (958) $ 7,150 $ 22,529 $17,368 $ 2,269
Depreciation expense 7,833 6,257 29,573 24,121 7,904
Amortization expense 179 314 917 1,256 178
Interest expense 1,314 1,753 6,108 6,489 1,350
Income tax expense
(benefit) (142) 177 276 478 (432)
------ ------- -------- ------- --------------
Non-GAAP EBITDA $8,226 $15,651 $ 59,403 $49,712 $ 11,269
====== ======= ======== ======= ==============
*Adjusted to reflect adoption of new accounting principle.
Contact Information: Contact: Steve Workman Chief Financial Officer 408-548-1000 Victoria McDonald Senior Manager, Corporate Communications 408-542-4261 investor.relations@Finisar.com