FINISAR FINANCIAL HIGHLIGHTS - FIRST QUARTER ENDED AUGUST 3, 2008
GAAP GAAP Non-GAAP(a) Non-GAAP(a)
Aug 3, July 29, Aug 3, July 29,
2008 2007 2008 2007
---------- --------- ---------- ----------
(in thousands, except per share data)
Optical products revenues $ 115,774 $ 96,360 $ 115,774 $ 96,360
Network test products
revenues $ 12,938 $ 9,375 $ 12,938 $ 9,375
Total revenues $ 128,712 $ 105,735 $ 128,712 $ 105,735
Gross margin 38.4% 30.6 % 40.0% 35.9%
Income (loss) from
operations $ 8,445 $ (3,736) $ 14,102 $ 5,690
Operating margin 6.6% (3.5)% 11.0% 5.4%
Net income (loss) $ 4,716 $ (7,321) $ 11,583 $ 3,741
Net income (loss) per share
- basic $ 0.02 $ (0.02) $ 0.04 $ 0.01
Net income (loss) per share
- diluted $ 0.02 $ (0.02) $ 0.04 $ 0.01
(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 increased to a record $128.7 million, up $7.7 million,
or 6.4%, from the preceding quarter and $23.0 million, or 21.7%, from the
first quarter of the prior year;
-- Optics revenues increased to a record $115.8 million, up $4.4 million,
or 3.9% from the preceding quarter and $19.4 million, or 20.1%, from the
first quarter of the prior year. Revenues from the sale of products for
10/40 Gbps applications totaled $32.2 million in the first quarter, up $1.0
million, or 3.2%, from the preceding quarter and $14.0 million, or 76.6%,
from the first quarter of the prior year;
-- Network Test revenues increased to a record $12.9 million, up $3.3
million, or 34.4%, from the preceding quarter and $3.6 million, or 38.0%,
from the first quarter of the prior year as revenue from new products
contributed to the growth in the quarter, including products for 3-6 Gbps
SAS/SATA and 8 Gbps Fibre Channel storage applications;
-- Gross margin increased to 38.4%, compared to 32.9% in the preceding
quarter and 30.6% in the first quarter of the prior year driven by a
favorable product mix of optical subsystems and revenues for Network Test;
-- Operating income improved to $8.4 million from an operating loss of
$45.0 million in the preceding quarter (which included a non-cash
impairment charge of $45.4 million) and an operating loss of $3.7 million
in the first quarter of the prior year;
-- Net income of $4.7 million, or $0.02 per diluted share compared to a
net loss of $48.7 million (which included a non-cash impairment charge of
$45.4 million), or $0.16 per share in the preceding quarter and a net loss
of $7.3 million, or $0.02 per share in the first quarter of the prior year.
Included in these results was a non-recurring loss of $0.9 million related
to the sale of the Netwisdom product line during the first quarter; and
-- Cash and short-term investments, plus other long-term investments that
can be readily converted into cash, increased $8.1 million, from $116.5
million at April 30, 2008 to $124.6 million at August 3, 2008, reflecting
an infusion of $20 million in cash from a new term loan partially offset by
$12 million in payments to retire a convertible note. 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 first quarter of fiscal 2009, these
excluded items resulted in net charges of $6.9 million and included, among
other items described in Finisar Non-GAAP Financial Measures below, $3.1
million in non-cash stock compensation expense; $1.5 million in
amortization charges related to acquired developed technology and purchased
intangibles arising from previous acquisitions; $1.1 million related to the
amortization of discount on convertible notes issued in 2001; and $919,000
related to sale of a product line.
Excluding these items:
-- Non-GAAP gross margin increased sequentially to 40.0%, compared to
37.4% in the preceding quarter and 35.9% in the first quarter of the prior
year. The increase in non-GAAP gross margin was driven by a favorable
product mix of optical subsystems applications and revenues for Network
Test; and
-- Non-GAAP operating income increased to a record $14.1 million, or
11.0% of revenues, compared to $9.6 million, or 8.0% of revenues in the
preceding quarter and $5.7 million, or 5.4% of revenues, in the first
quarter of the prior year. The increase was principally due to higher
gross profit levels partially offset by higher operating expenses,
particularly for research and development and general administrative; and
-- Non-GAAP net income increased to $11.6 million, or $0.04 per diluted
share, compared to $7.9 million, or $0.03 per diluted share, in the
preceding quarter and $3.7 million, or $0.01 per diluted share, in the
first quarter of the prior year.
"We are very proud of our performance this quarter. It underscores the
power of vertical integration when combined with a leading market share
position," said Jerry Rawls, Finisar's executive Chairman of the Board.
"Operating income on a non-GAAP basis reached record levels, both in
absolute terms and as a percentage of revenue. In addition, our recent
merger with Optium will add additional momentum to the progress we are
making."
"Finisar's recent combination with Optium creates exciting opportunities to
further enhance Finisar's market position as a technology leader," said
Eitan Gertel, Finisar's new Chief Executive Officer. "The addition of
Optium's strong product lines directed toward high-growth markets such as
ROADMs and 10/40G products for telecom applications, as well as a
significant position in the cable TV market will provide additional fuel to
power the Finisar model."
OPTIUM PRELIMINARY FINANCIAL HIGHLIGHTS - FOURTH QUARTER ENDED AUGUST 2,
2008
The following preliminary financial results for Optium's fourth fiscal
quarter ended August 2, 2008 are presented for informational purposes only
and are not included in Finisar's financial results for its first fiscal
quarter ended August 3, 2008. Optium's financial results will be included
in Finisar's consolidated financial statements beginning on August 30,
2008. The Optium non-GAAP financial measures presented below have been
calculated on a basis consistent with non-GAAP financial measures as
reported by Optium in previous quarters. Investors should note that (i)
Optium non-GAAP financial measures are calculated differently than and,
therefore, are not necessarily comparable to similarly-titled Finisar
non-GAAP financial measures and (ii) following the Finisar-Optium merger,
certain historical accounting policies for both companies, including the
presentation of non-GAAP financial measures, will be changed in order to
achieve consistency.
GAAP GAAP Non-GAAP(a) Non-GAAP(a)
Aug 2, July 28, Aug 2, July 28,
2008 2007 2008 2007
--------- --------- ---------- ---------
(In thousands, except per share data)
Revenue $ 47,218 $ 26,782 $ 47,218 $ 26,782
Gross margin 25.7% 23.5% 26.0% 23.6%
Income (loss) from
operations $ (2,538) $ (12,881) $ 784 $ (1,374)
Operating margin (5.4)% (4.8)% 1.7% (5.1)%
Net income (loss) $ (2,110) $ 1,215 $ 1,081 $ (359)
Net income (loss) per share
- basic $ (0.10) $ 0.05 $ 0.04 $ (0.01)
Net income (loss) per share
- diluted $ (0.10) $ 0.05 $ 0.04 $ (0.01)
(a) In evaluating the operating performance of Optium's business, Optium
management historically utilized non-GAAP financial measures that
excluded certain charges and credits required by GAAP that were
considered by Optium management to be outside Optium's core operating
results. A reconciliation of Optium non-GAAP financial measures to
the most directly comparable GAAP measures as well as additional
related information can be found in "Optium Non-GAAP Financial
Measures" below.
Highlights for the quarter included:
-- Fourth quarter revenues of $47.2 million, also a new record for
Optium, increased 4.9% from $45.0 million in the preceding quarter and
76.3% from $26.8 million in the fourth quarter of the prior year;
-- Gross margin of 25.7% in the fourth quarter compares to 26.5% in the
third quarter and 23.5% in the fourth quarter of the prior year;
-- Operating expenses of $14.7 million in the fourth quarter increased
from $13.2 million in the third quarter and decreased from $19.2 million in
the fourth quarter of the prior year. Operating expenses in the prior year
period included $10 million of acquired in process research and development
expense resulting from the acquisition of Kailight Photonics;
-- Net loss of $2.6 million, or $(0.10) per share, in the fourth quarter
compares to a net loss of $0.7 million, or $(0.03) per share, in the
preceding quarter and net income of $1.2 million, or $0.05 per diluted
share, in the fourth quarter of the prior year (which included the
recognition of $13.0 million income tax benefit resulting from recording a
deferred tax asset offset by $10.0 million of acquired in process research
and development expense resulting from the acquisition of Kailight
Photonics); and
-- Cash and short-term investments of $40.9 million decreased $5.3
million from $46.2 million at May 3, 2008 primarily as a result of
increased investments in working capital.
Like Finisar, Optium historically provided supplemental information
regarding its operating performance that excluded certain charges and
credits required by GAAP but that Optium management believed provided
useful information regarding Optium's baseline operating performance before
gains, losses or other charges that were considered to be outside of
Optium's core operating results. For the fourth quarter of fiscal 2008,
these excluded items resulted in net charges of $3.7 million and included,
among other items described in Optium Non-GAAP Financial Measures below,
$1.7 million in stock based compensation; $0.9 million in merger related
costs resulting from the merger with Finisar; $0.6 million in patent
litigation costs; and $0.1 million in amortization expenses related to
acquired developed technologies.
Excluding these items:
-- Non-GAAP gross margin decreased sequentially to 26.0%, compared to
26.6% in the preceding quarter and 23.6% in the fourth quarter of the prior
year. The decrease sequentially was primarily related to selling a higher
mix of lower margin 10G products than in the prior quarter;
-- Non-GAAP operating expenses increased to $11.5 million, compared to
$10.6 million in the preceding quarter and $7.7 million in the fourth
quarter of the prior year. The increase was principally due to expenses
incurred in connection with ramping product introductions and production
capacity for the ROADM and 40G product lines; and
-- Non-GAAP net income decreased to $1.1 million, or $0.04 per diluted
share, compared to $1.7 million, or $0.07 per diluted share, in the
preceding quarter, and improved from a net loss of $(0.4) million, or
$(0.01) per diluted share, in the fourth quarter of the prior year.
CONFERENCE CALL Finisar will discuss these financial statements and its current business outlook during its regular quarterly conference call scheduled for today, September 8, 2008, at 2:00 p.m. Pacific Time. To listen to the call you may connect to the investor page of Finisar at www.finisar.com or dial 866-393-6455 (domestic) or 706-634-9717 (international) and enter passcode 59772319. A replay will be available approximately two hours after the call for two weeks. To access the replay, dial 800-642-1687 (domestic) or 706-645-9291 (international) follow the prompts and enter in conference ID #59772319. A Web archive will also be made available following the call at www.finisar.com until the next conference call to be held approximately 90 days from today. 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 integration of the operations of Optium and the realization of synergies expected to result from Finisar's combination with Optium; 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. The preliminary fourth quarter financial information regarding Optium is subject to completing the audit of Optium's financial statements for the full fiscal year, which could result in adjustments to the preliminary results reported. Further information regarding these and other risks relating to Finisar's business, including the recently acquired operations of Optium, is set forth in Finisar's Registration Statement on Form S-4 (filed July 10, 2008) and other reports as filed with the Securities and Exchange Commission. ABOUT FINISAR Finisar Corporation (
Finisar Corporation
Consolidated Statements of Operations
Three Months Ended
----------------------------------
August 3, July 29, April 30,
2008 2007 2008
---------- ---------- ----------
(Unaudited)
(in thousands, except share and
per share data)
Revenues
Optical subsystems and components $ 115,774 $ 96,360 $ 111,378
Network performance test systems 12,938 9,375 9,627
---------- ---------- ----------
Total revenues 128,712 105,735 121,005
Cost of revenues 78,044 71,703 79,882
Amortization of acquired developed
technology 1,246 1,729 1,314
---------- ---------- ----------
Gross profit 49,422 32,303 39,809
Gross margin 38.4% 30.6% 32.9%
Operating expenses:
Research and development 20,773 17,502 20,194
Sales and marketing 10,149 10,056 10,280
General and administrative 9,787 7,991 8,629
Amortization of purchased
intangibles 268 490 280
Impairment of goodwill and
intangible assets - - 45,433
---------- ---------- ----------
Total operating expenses 40,977 36,039 84,816
---------- ---------- ----------
Income (loss) from operations 8,445 (3,736) (45,007)
Interest income 968 1,415 1,352
Interest expense (4,008) (4,246) (4,341)
Other income (expense), net 57 (133) (560)
---------- ---------- ----------
Income (loss) before income taxes 5,462 (6,700) (48,556)
Provision for income taxes 746 621 150
---------- ---------- ----------
Net income (loss) $ 4,716 $ (7,321) $ (48,706)
========== ========== ==========
Net income (loss) per share - basic $ 0.02 $ (0.02) $ (0.16)
Net income (loss) per share - diluted $ 0.02 $ (0.02) $ (0.16)
Shares used in computing net loss per
share - basic 310,133 308,634 308,786
Shares used in computing net loss per
share - diluted 311,614 308,634 308,786
Finisar Corporation
Consolidated Balance Sheets
(In thousands)
August 3, April 30,
2008 2008
---------- ----------
(unaudited)
Current assets:
Cash and cash equivalents $ 96,499 $ 79,442
Short-term available-for-sale investments 20,636 27,776
Short-term available-for-sale investments -
equity 1,287 2,801
Accounts receivable, net 57,186 48,005
Accounts receivable, other 10,936 12,408
Inventories 88,823 82,554
Prepaid expenses 8,291 7,652
---------- ----------
Total current assets 283,658 260,638
Long-term available-for-sale investments - debt 7,452 9,236
Property, plant and improvements, net 75,624 89,847
Purchased technology, net 10,604 11,850
Other intangible assets, net 17,626 17,183
Goodwill 88,242 88,242
Minority investments 14,289 13,250
Other assets 4,955 3,241
---------- ----------
Total assets $ 502,450 $ 493,487
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 49,342 $ 43,040
Accrued compensation 13,521 14,397
Other accrued liabilities 22,460 23,397
Deferred revenue 5,692 5,312
Current portion of other long-term liabilities 5,286 2,436
Convertible notes 91,146 101,918
Non-cancelable purchase obligations 1,995 3,206
---------- ----------
Total current liabilities 189,442 193,706
Long-term liabilities:
Convertible notes 150,000 150,000
Other long-term liabilities 23,569 18,911
Deferred income taxes 9,454 8,903
---------- ----------
Total long-term liabilities 183,023 177,814
Stockholders' equity:
Common stock 311 309
Additional paid-in capital 1,546,344 1,540,241
Accumulated other comprehensive income 10,170 12,973
Accumulated deficit (1,426,840) (1,431,556)
---------- ----------
Total stockholders' equity 129,985 121,967
---------- ----------
Total liabilities and stockholders' equity $ 502,450 $ 493,487
========== ==========
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);
-- Duplicative facility costs during facility move (non-recurring
charges);
-- Stock-based compensation expense (non-cash charges);
-- Acquisition related compensation costs (non-recurring cash charges
related to employee retention);
-- 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 income from operations, non-GAAP net income and
non-GAAP net income per share, 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;
-- Amortization of purchased intangibles (non-cash charges related to
prior acquisitions);
-- Impairment charges associated with intangible assets (non-cash and non-
recurring);
-- Amortization of discount on convertible debt (non-cash charges);
-- Loss on debt extinguishment (non-recurring and non-cash charge);
-- 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);
-- 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 Ended
----------------------------
August 3, July 29, April 30,
2008 2007 2008
-------- -------- --------
(Unaudited)
(in thousands, except per
share data)
Reconciliation of GAAP Gross Profit to
non-GAAP Gross Profit:
Gross profit per GAAP 49,422 32,303 39,809
Gross margin, GAAP 38.4% 30.6% 32.9%
Adjustments:
Cost of revenues
Change in excess and obsolete inventory
reserve (285) 2,280 3,021
Amortization of acquired technology 1,246 1,729 1,314
Duplicate facility costs during facility
move 170 - 296
Stock compensation 856 722 771
Acquisition related compensation - - 27
Purchase accounting adjustment for sale
of acquired inventory - 865 -
Reduction in force costs 36 100 9
-------- -------- --------
Total cost of revenue adjustments 2,023 5,696 5,438
Gross profit, non-GAAP 51,445 37,999 45,247
Gross margin, non-GAAP 40.0% 35.9% 37.4%
Reconciliation of GAAP operating income
(loss) to non-GAAP operating income (loss):
Operating income (loss) per GAAP 8,445 (3,736) (45,007)
Operating margin, GAAP 6.6% -3.5% -37.2%
Adjustments:
Total cost of revenue adjustments 2,023 5,696 5,438
Research and development
Reduction in force costs - 28 12
Stock compensation 1,108 955 1,139
Acquisition related compensation - - 499
Sales and marketing
Reduction in force costs 100 13 87
Stock compensation 517 451 482
Acquisition related compensation - - 85
General and administrative
Reduction in force costs - 6 -
Stock compensation 576 631 586
Acquistion related compensation - - 110
Costs related to options investigation 146 1,156 507
Disposal of a product line 919 - -
Amortization of purchased intangibles 268 490 280
Impairment of intangible assets - - 45,433
-------- -------- --------
Total cost of revenue and operating
expense adjustments 5,657 9,426 54,658
Operating income, non-GAAP 14,102 5,690 9,651
Operating margin, non-GAAP 11.0% 5.4% 8.0%
Reconciliation of GAAP net income (loss) to
non-GAAP net income (loss):
Net income (loss) per GAAP 4,716 (7,321) (48,706)
Total cost of revenue and operating expense
adjustments 5,657 9,426 54,658
Amortization of discount on convertible debt 1,146 1,196 1,236
Loss on debt extinguishment - - 74
Other expense, net
Loss (gain) on sale of assets 413 13 (61)
Loss (gain) on minority investments (400) (117) 1,355
Other misc income (500) - (650)
Provision for income tax
Timing difference related to asset
purchases 551 544 (27)
-------- -------- --------
Total adjustments 6,867 11,062 56,585
-------- -------- --------
Net income, non-GAAP $ 11,583 $ 3,741 $ 7,879
======== ======== ========
Net income, non-GAAP per share - basic $ 0.04 $ 0.01 $ 0.03
Net income, non-GAAP per share - diluted $ 0.04 $ 0.01 $ 0.03
Shares used in computing non-GAAP net income
per share - basic 310,133 308,634 308,786
Shares used in computing non-GAAP net income
per share - diluted 311,614 325,964 310,129
Non-GAAP EBITDA
Net income, non-GAAP $ 11,583 $ 3,741 $ 7,879
Depreciation expense 6,391 5,968 6,257
Amortization expense 450 532 640
Interest expense 1,894 1,635 1,752
Income tax expense 195 77 177
-------- -------- --------
Non-GAAP EBITDA $ 20,513 $ 11,953 $ 16,705
======== ======== ========
OPTIUM FINANCIAL STATEMENTS
The following financial tables are presented in accordance with GAAP.
Optium Corporation
Preliminary Consolidated Statements of Operations
Three Months Ended
-------------------------------------
August 2, July 28, May 3,
2008 2007 2008
----------- ----------- -----------
(Unaudited, in thousands, except per
share data)
Revenues $ 47,218 $ 26,782 $ 45,004
Cost of revenues 35,069 20,492 33,077
----------- ----------- -----------
Gross profit 12,149 6,290 11,927
Gross margin 25.7% 23.5% 26.5%
Operating expenses:
Research and development 6,769 4,862 6,149
Sales and marketing 1,694 808 1,685
General and administrative 6,224 3,501 5,374
Acquired in-process research and
development - 10,000 -
----------- ----------- -----------
Total operating expenses 14,687 19,171 13,208
----------- ----------- -----------
Income (loss) from operations (2,538) (12,881) (1,281)
Interest and other income (expense),
net 428 1,096 402
----------- ----------- -----------
Income (loss) before income tax (2,110) (11,785) (879)
Income tax (benefit) provision 529 (13,000) (217)
----------- ----------- -----------
Net income (loss) $ (2,639) $ 1,215 $ (662)
=========== =========== ===========
Net income (loss) per share - basic $ (0.10) $ 0.05 $ (0.03)
Net income (loss) per share -
diluted $ (0.10) $ 0.05 $ (0.03)
Shares used in computing net income
(loss) per share - basic 25,593 25,395 25,499
Shares used in computing net income
(loss) per share - diluted 25,593 26,119 25,499
Optium Corporation
Preliminary Consolidated Balance Sheets
(In thousands)
August 2, July 28,
2008 May 3, 2008 2007
----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
Current assets:
Cash and cash equivalents $ 39,301 $ 42,614 $ 25,359
Short-term investments 1,600 3,600 36,018
Accounts receivable, net 36,583 32,758 21,853
Inventories, net 29,664 27,699 20,684
Restricted cash 125 415
Deferred tax asset, current
portion 2,890 6,219 4,976
Prepaid expenses and other
current assets 1,480 1,941 1,107
----------- ----------- -----------
Total current assets 111,643 115,246 109,997
Property and equipment, net 17,811 16,164 9,124
Goodwill 38,947 38,993 37,923
Deferred tax asset, non-current
portion 10,464 7,776 8,881
Restricted cash 284
Intangible assets, net 1,525 1,705 2,006
Other assets 537 612 170
----------- ----------- -----------
Total assets $ 181,211 $ 180,496 $ 168,101
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,442 $ 28,768 $ 20,222
Accrued expenses 5,422 5,155 4,389
Accrued warranty 429 385 359
Deferred revenue
Current portion of debt 24 31 46
----------- ----------- -----------
Total current liabilities 36,317 34,339 25,016
Long-term liabilities:
Long-term debt, net of current
portion 980 404 206
Other long-term liabilities
----------- ----------- -----------
Total liabilities 37,297 34,743 25,222
Stockholders' equity:
Common stock 3 3 3
Additional paid-in
capital-common stock 195,799 194,634 191,118
Deferred compensation (424) (549) (924)
Treasury stock (2,762) (2,762) (2,762)
Accumulated other comprehensive
income 2,969 3,459 1,839
Accumulated deficit (51,671) (49,032) (46,395)
----------- ----------- -----------
Total stockholders' equity 143,914 145,753 142,879
----------- ----------- -----------
Total liabilities and stockholders'
equity $ 181,211 $ 180,496 $ 168,101
=========== =========== ===========
OPTIUM NON-GAAP FINANCIAL MEASURES In evaluating the operating performance of Optium's business, Optium's management historically utilized non-GAAP financial measures that excluded certain charges and credits required by GAAP. These items, which are identified in more detail below, share one or more of the following characteristics: they were unusual and Optium management did not expect them to recur in the ordinary course of its business; they did not involve the expenditure of cash; or they were unrelated to the ongoing operation of Optium's business in the ordinary course. Optium historically provided these non-GAAP financial measures because it believed they represent useful indications of Optium's baseline operating performance before gains, losses or other charges that were considered by Optium management to be outside of Optium's core operating results. However, non-GAAP financial measures:
-- are not measures of financial performance calculated in accordance
with GAAP;
-- do not represent financial measures as defined by GAAP; and,
-- should not be considered as an alternative to financial measures
prepared in conformity with GAAP.
Further, non-GAAP financial measures as calculated by one company are not
necessarily comparable to similarly titled measures reported by other
companies, including when comparing Optium non-GAAP financial measures to
Finisar non-GAAP financial measures.
In calculating the Optium non-GAAP financial measures contained elsewhere
in this release, Optium's GAAP results have been adjusted to exclude
certain charges and credits that are required by GAAP as follows:
-- Stock-based compensation expense - Optium incurred stock-based
compensation expense with respect to equity incentive awards made to
employees, directors and other service providers, including (a) long-term
equity incentive awards made to new hires and existing employees and (b)
equity incentive awards made in satisfaction of certain bonus payments as
earned under Optium's executive and employee bonus plans, which can be
satisfied with equity incentive awards or cash at the option of the
Company.
-- Amortization of purchased intangibles - Optium purchased intangible
technology assets from Microdisplay Corporation in July 2007 and the
purchase price of these purchased intangibles is being amortized over a
five year useful life.
-- Duplicate facility costs during facility move - Optium has incurred
duplicate facility costs during a facility move as a result of (a) the
execution of a lease for its current U.S. operating facility and the early
termination of the lease for its prior U.S. operating facility and (b) the
execution of a lease for its future Australian operating facility. Optium
completed the U.S. facility relocation during the third quarter of fiscal
2007, and the Australian facility relocation was completed during the
fourth quarter of fiscal 2008.
-- Merger transaction expenses - Optium incurred expenses in connection
with its merger transaction with Finisar completed on August 29, 2008.
These expenses included legal fees and expenses, accounting due diligence
fees and expenses, and travel and related expenses.
-- Patent litigation expenses - Since the first quarter of fiscal 2007,
Optium has incurred expenses in connection with the defense of patent
infringement lawsuits brought against it with respect to certain of its
cable TV products.
-- Deferred tax adjustment - Optium recognized a tax benefit in July 2007
as the result of removal of valuation allowances associated with NOLs and
other credits in the United States and, as a result, will incur non-cash
tax expense in future taxable periods.
In addition, non-GAAP diluted shares outstanding for the three months ended
July 28, 2007 as set forth in the non-GAAP reconciliation below are not in
accordance with GAAP since there was a loss in the period. Under GAAP,
when there is a loss for the period, basic and diluted shares outstanding
are the same. In the non-GAAP reconciliation below, the non-GAAP diluted
share count is the same as the share count as if there was a non-GAAP
profit for the three months ended July 28, 2007 because Optium management
believed that such a presentation is more useful to investors when
comparing GAAP and non-GAAP results for the quarter.
A reconciliation of each of the Optium non-GAAP financial measures to the
nearest GAAP financial measure is set forth in the table below.
Optium Corporation
Reconciliation of Results of Operations under GAAP and non-GAAP
Three Months Ended
----------------------------
August 2, July 28, May 3,
2008 2007 2008
-------- -------- --------
(Unaudited)
(in thousands, except per
share data)
Reconciliation of GAAP Gross Profit to
non-GAAP Gross Profit:
Gross profit per GAAP 12,149 6,290 11,927
Gross margin, GAAP 25.7% 23.5% 26.5%
Adjustments:
Cost of revenues
Stock compensation (a) 118 33 52
-------- -------- --------
Total cost of revenue adjustments 118 33 52
-------- -------- --------
Gross profit, non-GAAP 12,267 6,323 11,979
Gross margin, non-GAAP 26.0% 23.6% 26.6%
Reconciliation of GAAP net income (loss) to
non-GAAP net income (loss):
Net loss per GAAP (2,639) 1,215 (662)
Total cost of revenue adjustments 118 33 52
Research and development
Stock compensation (a) 506 164 343
Sales and marketing
Stock compensation (a) 137 47 106
General and administrative
Stock compensation (a) 906 412 735
Merger transaction expenses 903 614
Patent litigation expenses 581 834 614
Duplicate facility costs during facility
move 69 103
Amortization of purchased intangibles 102 17 101
Acquired in-process R&D 10,000
Deferred tax adjustment 560 (13,005) (227)
Income tax provision on non-GAAP adjustments (162) (76) (81)
-------- -------- --------
Total adjustments 3,720 (1,574) 2,360
-------- -------- --------
Net income, non-GAAP $ 1,081 $ (359) $ 1,698
======== ======== ========
Net income, non-GAAP per share - basic $ 0.04 $ (0.01) $ 0.07
Net income, non-GAAP per share - diluted $ 0.04 $ (0.01) $ 0.07
Shares used in computing non-GAAP net income
per share - basic 25,593 25,395 25,499
Shares used in computing non-GAAP net income
per share - diluted 26,378 26,119 26,108
Reconciliation of GAAP operating income
(loss) to non-GAAP operating income (loss):
Operating income (loss) per GAAP (2,538) (12,881) (1,281)
Operating margin, GAAP -5.4% -48.1% -2.8%
Adjustments:
Total cost of revenue adjustments 118 33 52
Research and development
Stock-based compensation 506 164 343
Acquired in-process research and
development 10,000
Selling, general and administrative
Amortization of purchased intangibles 102 17 101
Duplicate facility costs during facility
move 69 103
Merger transaction expenses 903 614
Patent litigation expense 581 834 614
Stock-based compensation 1,043 459 841
-------- -------- --------
Total cost of revenue and operating
expense adjustments 3,322 11,507 2,668
-------- -------- --------
Operating income, non-GAAP 784 (1,374) 1,387
-------- -------- --------
Operating margin, non-GAAP 1.7% -5.1% 3.1%
Non-GAAP EBITDA
Net income, non-GAAP $ 1,081 $ (359) $ 1,698
Depreciation & amortization expense 1,242 723 1,277
Interest and other income (expense), net (428) (1,096) (402)
Income tax expense 131 81 91
-------- -------- --------
Non-GAAP EBITDA $ 2,026 $ (651) $ 2,664
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Footnote (a)
Of the aggregate $1,667, $1,236 and $656 in stock-based compensation
expense for the three months ended August 2, 2008, May 3, 2008 and July 31,
2007, respectively, $218, $105 and $0, respectively, relates to stock-based
compensation expense resulting from six-month and one-year restricted stock
unit grants made in satisfaction of certain bonus payments under Optium's
employee and executive bonus plans.
Contact Information: Contact: Steve Workman Chief Financial Officer 408-548-1000 Veronica Rosa Director Investor Relations 408-542-5050 investor.relations@Finisar.com