-- GAAP revenues for the third quarter of 2009 were $83.4 million
compared to $68.9 million for the second quarter of 2009 and $80.9 million
on an adjusted GAAP basis in the third quarter of 2008.
-- GAAP gross margins for the quarter were 33%. Excluding restructuring
and other related costs and non-cash stock-based compensation expense, non-
GAAP gross margins were 38% in the third quarter of 2009 compared to 31% in
the second quarter of 2009 and 42% on an adjusted GAAP basis in the third
quarter of 2008.
-- GAAP net loss for the quarter was $16.5 million, or $0.17 per share.
Excluding restructuring and other related costs and non-cash stock-based
compensation expense, net loss on a non-GAAP basis was $3.1 million, or
$0.03 per share, in the third quarter of 2009 compared to a net loss of
$18.2 million, or $0.19 per share, on a non-GAAP basis in the second
quarter of 2009 and net income of $0.0 million, or $0.00 per diluted share,
on an adjusted GAAP basis, for the third quarter of 2008.
Management Commentary
"In the third quarter, we continued our positive revenue growth trajectory
and our new customer win momentum with the addition of four customers to
our roster, while diversifying our customer base and reducing our reliance
on any single account," said Jagdeep Singh, president and chief executive
officer at Infinera. "Our ability to grow our revenue and expand our
customer base in the current environment validates that customers are
investing in the optical network again and that Infinera is winning its
fair share of this spending.
"We have expanded our total addressable market with the addition of
submarine and metro edge products, and believe that our differentiated,
PIC-based disruptive technology continues to resonate with customers and
prospects alike as the industry's best, most cost-effective solution to
solve their business challenges," said Singh.
The company noted the following Q3 highlights:
-- The addition of four new customers this quarter brings the company's
total customer count to 66. With the addition of incumbent service
providers Telefonica and Teliasonera, Infinera's Tier-1 carrier customer
count is now six, of which three -- NTT Communications, Deutsche Telecom
and Telefonica -- are among the top five players in the world.
-- The company achieved greater customer diversification as three
customers accounted for 10% or more of revenue this quarter and the largest
customer for the quarter was an existing, but unannounced, cable MSO
customer. Level 3 was slightly less than 10 percent of revenue.
-- International revenue grew for the fourth quarter in a row, reaching
37 percent of revenue in Q3.
-- The company won a new eight-figure opportunity with another major
internet content provider.
-- With the introduction of its recently announced ATN metro edge
product, the company now addresses all major categories within the $8
billion dollar DWDM space including submarine, ultra-long haul, long-haul,
regional, metro core and metro access. To date the company has six wins for
its new ATN platform, including the recently announced ATN deployment at
Deltacomm.
-- The company significantly strengthened its technology resources with
the addition of an experienced engineering team in its new Ottawa
development center. This team has deep expertise in signal processing and
complex modulation schemes, important building blocks for the next
generation of optical transport products.
Note: For an explanation of our use of Non-GAAP and Adjusted GAAP measures
and a full reconciliation of these measures to our GAAP results, please see
the section of the accompanying tables titled "GAAP to Non-GAAP and
Adjusted GAAP Reconciliations." We have not shown comparisons to our third
quarter 2008 GAAP results in the body of this press release because those
results were significantly affected by the recognition of ratable product
and related support and services revenue from shipments made prior to the
third quarter of 2008, which we believe makes those comparisons less useful
for investors. See our GAAP Condensed Consolidated Statements of
Operations attached to this release for these GAAP to GAAP comparisons.
Conference Call Information:
Infinera will host a conference call for analysts and investors to discuss
its third quarter results and fourth quarter outlook today at 5:00 p.m.
Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference
call will also be accessible from the "Investor Relations" section of the
company's website at www.infinera.com. Following the webcast, an archived
version will be available on the website for 30 days. To hear the replay,
parties in the United States and Canada should call 1-800-685-9501.
International parties can access the replay at 1-203-369-3318.
About Infinera
Infinera provides Digital Optical Networking systems to telecommunications
carriers worldwide. Infinera's systems are unique in their use of a
breakthrough semiconductor technology: the Photonic Integrated Circuit
(PIC). Infinera's systems and PIC technology are designed to provide
optical networks with simpler and more flexible engineering and operations,
faster time-to-service, and the ability to rapidly deliver differentiated
services without reengineering their optical infrastructure. For more
information, please visit www.infinera.com.
Forward-Looking Statements
This press release contains forward-looking statements, including
statements about our products, business, customer reaction to our products
and our view on customer spending. These forward-looking statements involve
risks and uncertainties, as well as assumptions that if they do not fully
materialize or prove incorrect, could cause our results to differ
materially from those expressed or implied by such forward-looking
statements. The risks and uncertainties that could cause our results to
differ materially from those expressed or implied by such forward-looking
statements include our ability to react to trends and challenges in our
business and the markets in which we operate; our ability to anticipate
market needs and develop new or enhanced products to meet those needs; the
adoption rate of our products; our ability to establish and maintain
successful relationships with our customers; our ability to reduce customer
concentration; our ability to compete in our industry; fluctuations in
demand, sales cycles and prices for our products and services; shortages or
price fluctuations in our supply chain; our ability to protect our
intellectual property rights; general political, economic and market
conditions and events; and other risks and uncertainties described more
fully in our documents filed with or furnished to the Securities and
Exchange Commission (SEC). More information about these and other risks
that may impact Infinera's business are set forth in our annual report on
Form 10-K, which was filed with the SEC on February 17, 2009, as well as
subsequent reports filed with the SEC. All forward-looking statements in
this press release are based on information available to us as of the date
hereof, and we assume no obligation to update these forward-looking
statements.
Non-GAAP and other Financial Measures
In addition to disclosing financial measures prepared in accordance with
United States Generally Accepted Accounting Principles (GAAP), this press
release and the accompanying tables contain certain non-GAAP and other
financial measures that reflect adjusted GAAP revenue and exclude non-cash
stock-based compensation expenses and non-recurring restructuring and other
related costs. For a description of these non-GAAP financial measures,
including the reasons why management uses each measure, and reconciliations
of these non-GAAP financial measures to the most directly comparable GAAP
financial measures, please see the section of the accompanying tables
titled "GAAP to Non-GAAP and Adjusted GAAP Reconciliations" as well as the
accompanying notes on the use of certain non-GAAP measures. We anticipate
disclosing forward-looking non-GAAP and other financial information in our
conference call to discuss our third quarter of 2009 results, including an
estimate of non-GAAP earnings for the fourth quarter of 2009 that excludes
non-cash stock-based compensation expenses and non-recurring restructuring
and other related costs.
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
26, 27, 26, 27,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenue:
Product $ 73,690 $ 76,130 $ 193,912 $ 226,763
Ratable product and
related support and
services 892 39,495 3,206 181,462
Services 8,826 4,881 21,802 11,643
---------- ---------- ---------- ----------
Total revenue 83,408 120,506 218,920 419,868
Cost of revenue (1):
Cost of product 47,473 45,139 137,037 131,928
Cost of ratable product
and related support
and services 444 18,537 1,532 86,537
Cost of services 5,049 2,592 9,681 5,814
Restructuring and other
costs related to
cost of revenue 2,736 - 2,736 -
---------- ---------- ---------- ----------
Total cost of
revenue 55,702 66,268 150,986 224,279
Gross profit 27,706 54,238 67,934 195,589
Operating expenses (1):
Sales and marketing 12,364 11,171 34,945 32,277
Research and development 23,589 21,092 70,349 57,172
General and
administrative 10,373 8,713 31,978 25,632
Restructuring and other
costs 601 - 601 -
Amortization of
intangible assets 22 37 96 111
---------- ---------- ---------- ----------
Total operating
expenses 46,949 41,013 137,969 115,192
Income (loss) from
operations (19,243) 13,225 (70,035) 80,397
Other income (expense),
net:
Interest income 441 1,675 1,956 7,236
Interest expense - - - (3)
Net impairment
losses recognized
in earnings (2) (161) - (1,094) -
Other gain (loss), net 870 37 (138) 1,213
---------- ---------- ---------- ----------
Total other income
(expense), net 1,150 1,712 724 8,446
Income (loss) before
income taxes (18,093) 14,937 (69,311) 88,843
Provision for (benefit
from) income taxes (1,561) - (1,340) 3,427
---------- ---------- ---------- ----------
Net income (loss) $ (16,532) $ 14,937 $ (67,971) $ 85,416
========== ========== ========== ==========
Net income (loss)
per common share:
Basic $ (0.17) $ 0.16 $ (0.71) $ 0.93
========== ========== ========== ==========
Diluted $ (0.17) $ 0.15 $ (0.71) $ 0.88
========== ========== ========== ==========
Weighted average shares
used in computing net
income (loss) per common
share:
Basic 95,864 92,888 95,100 92,087
========== ========== ========== ==========
Diluted 95,864 97,208 95,100 97,061
========== ========== ========== ==========
(1) The following table summarizes the effects of stock-based compensation
related to employees and non-employees for the three and nine months
ended September 26, 2009 and September 27, 2008:
Three Months Ended Nine Months Ended
---------------------- ----------------------
September September September September
26, 27, 26, 27,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Cost of revenue $ 490 $ 299 $ 1,346 $ 778
Sales and marketing 1,710 1,250 4,723 3,264
Research and development 2,915 1,870 7,066 4,722
General and
administration 3,984 1,956 10,142 5,530
---------- ---------- ---------- ----------
9,099 5,375 23,277 14,294
Cost of revenue -
amortization from
balance sheet* 987 1,180 2,457 3,549
---------- ---------- ---------- ----------
Total stock-based
compensation expense $ 10,086 $ 6,555 $ 25,734 $ 17,843
========== ========== ========== ==========
* Stock-based compensation expense deferred to inventory and to deferred
inventory costs in prior periods and recognized in the current period.
(2) The following table summarizes the components of net impairment losses
recognized in earnings:
Three Months Ended Nine Months Ended
---------------------- ----------------------
September September September September
26, 27, 26, 27,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Total
other-than-temporary
impairment loss $ - $ - $ (2,747) $ -
Portion of gain (loss)
recognized in other
comprehensive loss (161) - 1,653 -
---------- ---------- ---------- ----------
Net impairment losses
recognized in earnings $ (161) $ - $ (1,094) $ -
========== ========== ========== ==========
Infinera Corporation
GAAP to Non-GAAP and Adjusted GAAP Reconciliations:
Infinera Corporation
GAAP to Non-GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 26, 2009
----------------------------------------------------------
Non-GAAP
Restruc- excluding
turing Restruc- Stock
GAAP Charges(1) turing Comp(2) Non-GAAP
--------- --------- --------- --------- ---------
Revenue
Product
and ratable
revenue $ 74,582 $ - $ 74,582 $ - $ 74,582
Services
revenue 8,826 - 8,826 - 8,826
--------- --------- --------- --------- ---------
Total revenue 83,408 - 83,408 - 83,408
Cost of revenue 55,702 (2,736) (a) 52,966 (1,477) 51,489
--------- --------- --------- --------- ---------
Gross profit 27,706 2,736 30,442 1,477 31,919
Gross margin 33% 38%
Operating
expenses 46,949 (601) (a) 46,348 (8,609) 37,739
--------- --------- --------- --------- ---------
Loss from
operations (19,243) 3,337 (15,906) 10,086 (5,820)
Other income
(expense),
net 1,150 - 1,150 - 1,150
--------- --------- --------- --------- ---------
Loss before
provision
for income
taxes (18,093) 3,337 (14,756) 10,086 (4,670)
Benefit from
income taxes (1,561) - (1,561) - (1,561)
--------- --------- --------- --------- ---------
Net loss $ (16,532) $ 3,337 $ (13,195) $ 10,086 $ (3,109)
========= ========= ========= ========= =========
Net loss per
common share:
Basic $ (0.17) $ (0.03)
========= =========
Diluted $ (0.17) $ (0.03)*
========= =========
Weighted
average shares
used in
computing net
loss per
common share:
Basic 95,864 95,864
========= =========
Diluted 95,864 99,293*
========= =========
(1) In the third quarter of 2009, we recorded restructuring and other
related costs of $3.3 million pursuant to our plan announced on
July 21, 2009, involving the closure of our Maryland based
semi-conductor fabrication plant ("FAB") and the consolidation of
these activities into our primary FAB location in Sunnyvale,
California.
(2) See footnote to the Condensed Consolidated Statements of Operations for
a summary of the effects of stock-based compensation related to
employees and non-employees for the three months ended September 26,
2009.
* Diluted shares used to calculate net loss per share on a non-GAAP basis
provided for informational purposes only.
Infinera Corporation
GAAP to Non-GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended June 27, 2009
---------------------------------------
GAAP Stock Comp Non-GAAP
---------- ---------- ----------
Revenue
Product
and ratable
revenue $ 61,919 $ - $ 61,919
Services
revenue 7,013 - 7,013
---------- ---------- ----------
Total revenue 68,932 - 68,932
Cost of revenue 48,674 (1,381) (b) 47,293
---------- ---------- ----------
Gross profit 20,258 1,381 21,639
Gross margin 29% 31%
Operating
expenses 47,736 (7,531) (b) 40,205
---------- ---------- ----------
Loss from
operations (27,478) 8,912 (18,566)
Other income
(expense), net 470 - 470
---------- ---------- ----------
Loss before
provision
for income
taxes (27,008) 8,912 (18,096)
Provision for
income taxes 103 - 103
---------- ---------- ----------
Net loss $ (27,111) $ 8,912 $ (18,199)
========== ========== ==========
Net loss per
common share:
Basic $ (0.28) $ (0.19)
========== ==========
Diluted $ (0.28) $ (0.18)*
========== ==========
Weighted
average shares
used in
computing net
loss per
common share:
Basic 95,161 95,161
========== ==========
Diluted 95,161 98,960*
========== ==========
* Diluted shares used to calculate net loss per share on a non-GAAP basis
provided for informational purposes only.
Infinera Corporation
GAAP to Adjusted GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 27, 2008
-------------------------------------------------------------
Adjusted
Adjusted GAAP
Deferral Adjusted GAAP Excluding
Adjust- GAAP Stock Stock
GAAP ments Results Comp Comp
--------- --------- --------- --------- ---------
Revenue
Product
and
ratable
revenue $ 115,625 $ (39,588) (c) $ 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) (d) 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 from
operations 13,225 (21,250) (8,025) 6,346 (1,679)
Other income
(expense),
net 1,712 - 1,712 - 1,712
--------- --------- --------- --------- ---------
Income
before
provision
for
income
taxes 14,937 (21,250) (6,313) 6,346 33
Provision
for income
taxes - - - - -
--------- --------- --------- --------- ---------
Net income $ 14,937 $ (21,250) $ (6,313) $ 6,346 $ 33
========= ========= ========= ========= =========
Net income
per common
share:
Basic $ 0.16 $ 0.00
========= =========
Diluted $ 0.15 $ 0.00
========= =========
Weighted
average
shares used
in computing
net income
per common
share:
Basic 92,888 92,888
========= =========
Diluted 97,208 97,208
========= =========
Use of Non-GAAP and Adjusted GAAP Information:
As described below, Infinera uses various non-GAAP and adjusted GAAP
financial measures to supplement our condensed consolidated financial
statements presented on a GAAP basis. We believe these adjustments are
appropriate to enhance an overall understanding of our underlying financial
performance and also our prospects for the future and are considered by
management for the purpose of making operational decisions. In addition,
these results are the primary indicators management uses as a basis for our
planning and forecasting of future periods. The presentation of this
additional information is not meant to be considered in isolation or as a
substitute for net income or basic and diluted net income per share
prepared in accordance with GAAP. Non-GAAP financial measures are not based
on a comprehensive set of accounting rules or principles and are subject to
limitations.
Our usage of these non-GAAP and adjusted GAAP measures are further
explained below:
-- Effective April 2008, we had established VSOE of fair value for
most of our service offerings. From the second quarter of 2008 to
the fourth quarter of 2008, we have used adjusted GAAP measures of
operating results, net income and net income per share. Adjusted
GAAP results reflected our GAAP results reduced for amounts
released from deferred revenue and deferred cost of inventory
balances recorded prior to the second quarter of 2008 and
previously reported in our invoiced shipment results. Deferred
services and deferred ratable and product revenue and cost amounts
recorded after March 29, 2008 were not adjusted and were recognized
on a GAAP basis in arriving at the adjusted GAAP results. We
presented these non-GAAP measures of operating results, net income
and net income per share, which included adjusted GAAP results and
excluded non-GAAP stock-based compensation expense for these
periods.
-- In the first quarter of 2009, we began using more traditional
non-GAAP financial measures, which reflect our GAAP results and
exclude non-recurring restructuring and other related costs and
stock-based compensation related expenses. All material deferred
revenue and deferred cost of inventory balances recorded prior
to the second quarter of 2008 and previously reported in our
invoiced shipment results have been recognized in our GAAP results
prior to December 27, 2008. Therefore, no further adjustments,
other than the exclusion of non-recurring restructuring and other
related costs and stock-based compensation expense will be made
to our GAAP results on a go-forward basis.
(a) Adjustment amount represents restructuring and other related costs
recorded in the third quarter of 2009 related to the closure of our
Maryland FAB announced on July 21, 2009. These amounts have been
adjusted in arriving at our non-GAAP results as they are non-recurring
in nature and the adjusted numbers provide a better indication of our
underlying business performance.
Three Months Ended
September 26, 2009
--------------------------------
Cost of Operating
Revenue Expenses Total
---------- ---------- ----------
(In thousands)
Severance and related expenses $ 804 $ 97 $ 901
Equipment and facility-related costs 1,900 415 2,315
Other 32 89 121
---------- ---------- ----------
Total $ 2,736 $ 601 $ 3,337
========== ========== ==========
Restructuring and other related costs include non-cash charges of
$2.4 million.
(b) The following table summarizes the effects of stock-based compensation
related to employees and non-employees for the three months ended
June 27, 2009:
Three Months
Ended
-------------
June 27,
2009
-------------
(In thousands)
Cost of revenue $ 477
Sales and marketing 1,599
Research and development 2,419
General and administration 3,513
-------------
8,008
Cost of revenue - amortization from balance sheet* 904
-------------
Total stock-based compensation expense $ 8,912
=============
* Stock-based compensation expense deferred to inventory and deferred
inventory costs in prior periods and recognized in the current
period.
(c) Adjustment amount represents the release of ratable and product
deferred revenue amounts related to periods prior to March 29, 2008 as
these amounts have been previously reported as invoiced shipments. No
adjustment has been made for changes in deferred services revenue as
these amounts relate to future service deliverables and are
appropriately deferred. Deferred ratable and product amounts recorded
after March 29, 2008 have not been adjusted as these amounts are
recognized on a GAAP basis in arriving at the adjusted GAAP results.
The deferred revenue adjustments recorded above are reconciled to the
deferred revenue balance on our balance sheet in the table below:
Three Months Ended September 27, 2008
------------------------------------------------------
Pre Mar 29, Post Mar 29,
2008 Ratable 2008 Ratable
Deferred and Product and Product
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)
============ ============ ============ ============
(d) Adjustment amount represents the release of ratable and deferred
product cost amounts related to periods prior to March 29, 2008 as
these amounts have been previously included as invoiced shipments.
Deferred ratable and product amounts recorded after March 29, 2008
have not been adjusted as these amounts are recognized on a GAAP basis
in arriving at the adjusted GAAP results.
The deferred cost of inventory adjustments recorded above are
reconciled to the deferred cost of inventory balance on our balance
sheet in the table below:
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)
============ ============ ============
(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 the Equity Topic of the Accounting Standards Codification. While
this is a large component of our expense, we believe investors want to
evaluate our financial results both including and excluding the effects
of stock-based compensation expense in order to compare our financial
performance with that of other companies and between time periods.
The stock-based compensation expense excluded from cost of revenue is a
non-GAAP financial measure and is reconciled to the corresponding GAAP
amount in the table below:
Three Months
Ended
-------------
September 27,
2008
-------------
(In thousands)
GAAP stock-based compensation in cost of revenue $ 299
GAAP stock-based compensation in cost of revenue
- amortization from balance sheet 1,180
Stock-based compensation not deferred to deferred
inventory cost -
Stock-based compensation previously recognized on
invoiced shipment basis (209)
-------------
Non-GAAP stock-based compensation in cost of revenue $ 1,270
=============
Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands, except par values)
(Unaudited)
September 26, December 27,
2009 2008
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 90,945 $ 166,770
Short-term investments 178,107 68,232
Short-term restricted cash 1,533 720
Accounts receivable, net of allowance
for doubtful accounts of $606 as of
September 26, 2009 and $1,700 as of
December 27, 2008 54,030 69,354
Other receivables 2,199 1,085
Inventories, net 72,915 58,986
Deferred inventory costs 2,376 1,744
Prepaid expenses and other current
assets 8,417 6,311
------------- -------------
Total current assets 410,522 373,202
Property, plant and equipment, net 44,363 46,820
Intangible assets 1,004 1,276
Deferred inventory costs, non-current 1,768 2,493
Long-term investments 7,423 74,684
Long-term restricted cash 2,514 2,179
Other non-current assets 11,213 6,413
------------- -------------
Total assets $ 478,807 $ 507,067
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,617 $ 34,048
Accrued expenses 23,822 16,092
Accrued compensation and related
benefits 13,050 13,472
Accrued warranty 5,612 5,205
Deferred revenue 11,681 14,683
------------- -------------
Total current liabilities 85,782 83,500
Accrued warranty, non-current 4,526 4,735
Deferred revenue, non-current 6,805 7,724
Other long-term liabilities 7,119 5,645
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value
Authorized shares -- 25,000 and
no shares issued and outstanding - -
Common stock, $0.001 par value
Authorized shares -- 500,000 as of
September 26, 2009 and December 27,
2008
Issued and outstanding shares --
96,436 as of September 26, 2009 and
94,163 as of December 27, 2008 96 94
Additional paid-in capital 735,031 699,705
Accumulated other comprehensive loss (1,843) (3,598)
Accumulated deficit (358,709) (290,738)
------------- -------------
Total stockholders' equity 374,575 405,463
------------- -------------
Total liabilities and stockholders'
equity $ 478,807 $ 507,067
============= =============
Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
-----------------------------
September 26, September 27,
2009 2008
------------- -------------
Cash Flows from Operating Activities:
Net income (loss) $ (67,971) $ 85,416
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 12,064 8,877
Non-cash restructuring and other costs 2,404 -
Net credit impairment losses in earnings 1,094 -
Accretion of investment discount 289 (881)
Stock-based compensation expense 25,733 17,843
Put Rights 2,540 -
Unrealized holding gains for trading
securities (3,141) -
Tax benefit (reversal) from stock option
transactions (593) 2,588
(Excess) reduction of tax benefit from
stock option transactions 248 (2,588)
Gain on disposal of assets (117) (1,006)
Other (gain) loss (113) 7
Changes in assets and liabilities:
Accounts receivable 14,219 (8,478)
Inventories, net (12,728) (701)
Prepaid expenses and other current
assets (2,331) (3,142)
Deferred inventory costs 21 71,626
Other non-current assets (4,795) (1,964)
Accounts payable (1,875) 7,777
Accrued liabilities and other
expenses 8,749 (8,723)
Deferred revenue (3,922) (141,981)
Accrued warranty 197 684
------------- -------------
Net cash provided by (used in)
operating activities (30,028) 25,354
Cash Flows from Investing Activities:
Purchase of available-for-sale
investments (136,338) (172,875)
Proceeds from sale of available-for-sale
investments 1,536 103,190
Proceeds from maturities and call of
investments and restricted cash 92,009 122,899
Proceeds from disposal of assets 206 1,080
Purchase of property and equipment (11,599) (15,152)
------------- -------------
Net cash provided by (used in)
investing activities (54,186) 39,142
Cash Flows from Financing Activities:
Proceeds from issuance of common stock 8,545 11,242
Excess (reduction of) tax benefit from
stock option transactions (248) 2,588
Repurchase of common stock (19) (30)
------------- -------------
Net cash provided by financing
activities 8,278 13,800
------------- -------------
Effect of exchange rate changes on cash 111 (66)
Net change in cash and cash equivalents (75,825) 78,230
Cash and cash equivalents at beginning of
period 166,770 91,209
------------- -------------
Cash and cash equivalents at end of period $ 90,945 $ 169,439
============= =============
Supplemental disclosures of cash flow
information:
Cash paid for interest $ - $ 3
Cash paid for income taxes $ 1,245 $ 858
Infinera Corporation
Supplemental Financial Information
Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09
------ ------ ------ ------ ------ ------ ------
Revenue $ 95.5 $ 90.8 $ 80.9 $ 86.2 $ 66.6 $ 68.9 $ 83.4
Gross Margin % 45% 47% 42% 36% 31% 31% 38%
------ ------ ------ ------ ------ ------ ------
Invoiced Shipment
Composition:
Domestic % 82% 78% 81% 73% 74% 64% 63%
International % 18% 22% 19% 27% 26% 36% 37%
Largest Customer % 31% 21% 27% 23% 30% 20% 15%
------ ------ ------ ------ ------ ------ ------
Cash Related
Information:
Cash from
Operations $ 9.8 $ 5.6 $ 9.9 $ (5.4) $ (2.9) $(18.8) $ (8.3)
Capital
Expenditures $ 4.5 $ 4.8 $ 5.9 $ 7.8 $ 6.0 $ 2.8 $ 2.8
Depreciation &
Amortization $ 2.6 $ 2.9 $ 3.4 $ 4.1 $ 3.9 $ 4.0 $ 4.2
DSO's 42 57 55 74 61 72 61
------ ------ ------ ------ ------ ------ ------
Inventory Metrics:
Raw Materials $ 7.9 $ 9.2 $ 10.0 $ 9.1 $ 7.7 $ 10.1 $ 7.4
Work in Process $ 40.6 $ 34.6 $ 35.8 $ 37.9 $ 43.2 $ 40.1 $ 36.2
Finished Goods $ 10.7 $ 13.8 $ 12.8 $ 12.0 $ 13.6 $ 22.3 $ 29.3
------ ------ ------ ------ ------ ------ ------
Total Inventory $ 59.2 $ 57.6 $ 58.6 $ 59.0 $ 64.5 $ 72.5 $ 72.9
Inventory Turns 3.5 3.3 3.2 3.8 2.8 2.6 3.0
------ ------ ------ ------ ------ ------ ------
Worldwide Headcount 799 853 889 937 962 973 970
------ ------ ------ ------ ------ ------ ------
Periods prior to Q2'08 reflect invoiced shipments results; periods from
Q2'08 through Q4'08 reflect adjusted GAAP results; and Q1'09 going forward
reflects non-GAAP results.
Non-GAAP results exclude restructuring and other related costs and non-cash
stock-based compensation.
Contact Information: Contacts: Press: Jeff Ferry jferry@infinera.com Infinera Corporation 408-572-5213 Investors/Analysts: Bob Blair bblair@infinera.com Infinera Corporation 408-716-4879