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Form 8-K CALIX, INC For: Jul 28

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July 28, 2015 4:06 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 28, 2015
 
CALIX, INC.
(Exact name of Registrant as specified in its charter)
 
 
 
 
 
Delaware
 
001-34674
68-0438710
(State or other jurisdiction
of incorporation)
 
(Commission
File No.)
(I.R.S. Employer
Identification No.)
 
 
1035 N. McDowell Boulevard, Petaluma, California
94954
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (707) 766-3000
Not Applicable
(Former name or former address if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 2.02 Results of Operations and Financial Condition.
On July 28, 2015, Calix, Inc. (the “Company”) publicly disseminated a press release announcing financial results for the second quarter ended June 27, 2015. The foregoing description is qualified in its entirety by reference to the Company’s press release, dated July 28, 2015, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
 
Exhibit No.
  
Description
 
 
99.1
  
Press Release dated July 28, 2015 announcing financial results of the Company.




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date:
July 28, 2015
 
 
 
 
CALIX, INC.
 
 
 
 
 
 
 
 
 
 
 
By:
 
/s/ William J. Atkins
 
 
 
 
 
 
 
 
William J. Atkins
 
 
 
 
 
 
 
 
Chief Financial Officer




INDEX TO EXHIBITS
 
Exhibit No.
  
Description
 
 
99.1
  
Press Release dated July 28, 2015 announcing financial results of the Company.






Exhibit 99.1
Calix Reports Second Quarter 2015 Financial Results

PETALUMA, CA – July 28, 2015 – Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the second quarter ended June 27, 2015. Revenue for the second quarter of 2015 was $99.1 million, an increase of 1.1% compared to $98.0 million for the second quarter of 2014.
“Our second quarter results were above our guidance, reflecting better than expected overall operating performance,” said Carl Russo, Calix President and CEO. “Led by the GigaCenter, which at quarter-end surpassed the 300 service provider customer mark, this performance contributed to revenues in the first half of 2015 increasing 3.5% compared to the first half of 2014. In addition, first half non-GAAP gross margins improved to 50.1% compared to 46.9% in the same period last year,” added Russo.
“During the second quarter, Calix announced a number of innovative new product offerings, including our G.fast solutions for multiple dwelling unit and high density single family unit applications, and our new NG-PON2 cards. These introduce the next generation of standards-based fiber access technology into our E-Series portfolio and give our customers the ability to deliver a multi-gigabit experience to their subscribers. These new solutions demonstrate our continued drive towards our Unified Access vision and strengthened our leadership in the broadband access market,” added Russo.
The company’s non-GAAP net income for the second quarter of 2015 was $3.3 million, or $0.06 per fully diluted share, compared to a non-GAAP net income of $5.1 million, or $0.10 per fully diluted share, for the second quarter of 2014. A reconciliation of GAAP and non-GAAP results is included as part of this release.
“During the quarter, we returned $3.4 million to shareholders via our previously announced $40 million stock buyback authorization,” said William Atkins, Executive Vice President and CFO. “We remain committed to returning capital to shareholders, while at the same time investing in the company to build a strong foundation for future growth,” added Atkins.
The GAAP net loss for the second quarter of 2015 was $5.8 million, or $(0.11) per basic and diluted share, compared to a GAAP net loss of $4.0 million, or $(0.08) per basic and diluted share, for the second quarter of 2014. A reconciliation of our second quarter 2015 operating results from non-GAAP to GAAP is provided below:


1
                                       
Calix Press Release
 
Page 2 


Calix, Inc.
(Unaudited, in thousands, except per share data)
Three Months Ended June 27, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP
 
Stock-Based Compensation
 
Amortization of Intangible Assets
 
Acquisition-Related Costs
 
GAAP
Revenue
 
$
99,129

 
$
—

 
$
—

 
$
—

 
$
99,129

Cost of revenue
 
48,541

 
211

 
2,088

 
—

 
50,840

Gross profit
 
50,588

 
(211
)

(2,088
)
 
—


48,289

Gross margin
 
51.0
%
 
(0.2
)%
 
(2.1
)%
 
—
%
 
48.7
%
Operating expenses
 
47,320

 
4,130

 
2,552

 
52

 
54,054

Operating income (loss)
 
3,268

 
(4,341
)
 
(4,640
)
 
(52
)
 
(5,765
)
Interest and other income (expense), net
 
88

 
—

 
—

 
—

 
88

Income (loss) before taxes
 
3,356

 
(4,341
)
 
(4,640
)
 
(52
)
 
(5,677
)
Provision for income taxes
 
102

 
—

 
—

 
—

 
102

Net income (loss)
 
$
3,254

 
$
(4,341
)

$
(4,640
)
 
$
(52
)

$
(5,779
)
Weighted average diluted shares used to
 
 
 
 
 
 
 
 
 
 
compute non-GAAP net income (loss)
 
 
 
 
 
 
 
 
 
 
per common share
 
52,455

 
52,455

 
52,455

 
52,455

 
 
Non-GAAP net income (loss) per diluted share
 
$
0.06

 
$
(0.08
)
 
$
(0.09
)
 
$
—

 
 
Weighted average basic and diluted shares used to
 
 
 
 
 
 
 
 
 
 
compute GAAP net loss per common share:
 
 
 
 
 
 
 
 
 
51,950

GAAP net loss per share
 
 
 
 
 
 
 
 
 
$
(0.11
)

                                       
Calix Press Release
 
Page 3 


Conference Call
In conjunction with this announcement, Calix will host a conference call at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) today to discuss its second quarter 2015 financial results. A live audio webcast and replay of the call will be available in the Investor Relations section of the Calix web site at http://investor-relations.calix.com.
Live call access information: Dial-in number: (877) 407-4019 (U.S.) or (201) 689-8337 (outside the U.S.)
The conference call and webcast will include forward-looking information.
About Calix
Calix (NYSE: CALX) is a global leader in access innovation. Its Unified Access portfolio of broadband communications access systems and software enables communications service providers worldwide to transform their copper- and fiber-based networks and become the broadband provider of choice to their subscribers. For more information, visit the Calix website at www.calix.com. For more information about gigabit networks, visit www.calix.com/gigabit/.
Use of Non-GAAP Financial Information
The Company uses certain non-GAAP financial measures in this press release to supplement its consolidated financial statements, which are presented in accordance with GAAP. These non-GAAP measures include non-GAAP net income (loss) and non-GAAP basic and diluted income (loss) per share. These non-GAAP measures are provided to enhance the reader's understanding of the Company's operating performance as they primarily exclude certain non-cash charges for stock-based compensation and amortization of acquisition-related intangible assets, and non-recurring acquisition-related costs, which the Company believes are not indicative of its core operating results. Acquisition-related costs include legal fees and associated expenses incurred under a pre-existing contract between Occam and its retained advisor in connection with the Occam acquisition. Management believes that the non-GAAP measures used in this press release provide investors with important perspectives into the Company's ongoing business performance and management uses these non-GAAP measures to evaluate financial results and to establish operational goals. The presentation of these non-GAAP measures is not meant to be a substitute for results presented in accordance with GAAP, but rather should be evaluated in conjunction with those GAAP results. A reconciliation of the non-GAAP results to the most directly comparable GAAP results is provided in this press release. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
Forward-Looking Statements
Statements made in this press release and the earnings call referencing the press release that are not statements of historical fact are forward-looking statements. Forward-looking statements are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to, but are not limited to, the execution of a stock repurchase program. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to the risks described in our 2014 Form 10-K and our quarterly reports on Form 10-Q, each as filed with the SEC and available at www.sec.gov, particularly in the sections titled "Risk Factors." Forward-looking statements speak only as of the date the statements are made and are based on information available to us at the time those statements are made and/or management's good faith belief as of that time with respect to future events. We assume no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. Accordingly, investors should not place undue reliance on any forward-looking statements.

                                       
Calix Press Release
 
Page 4 


Calix, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
 
June 27,
 
June 28,
 
June 27,
 
June 28,
 
 
 
 
2015
 
2014
 
2015
 
2014
Revenue
 
$
99,129

 
$
98,005

 
$
190,167

 
$
183,825

Cost of revenue:
 
 
 
 
 
 
 
 
 
Products and services (1)
 
48,752

 
51,575

 
95,212

 
98,381

 
Amortization of intangible assets
 
2,088

 
2,088

 
4,176

 
4,176

 
 
Total cost of revenue
 
50,840

 
53,663

 
99,388

 
102,557

Gross profit
 
48,289

 
44,342

 
90,779

 
81,268

Operating expenses:
 
 
 
 
 
 
 
 
 
Research and development (1)
 
22,851

 
19,544

 
44,765

 
39,174

 
Sales and marketing (1)
 
19,215

 
18,455

 
38,974

 
35,845

 
General and administrative (1)
 
9,436

 
7,681

 
19,588

 
14,932

 
Amortization of intangible assets
 
2,552

 
2,552

 
5,104

 
5,104

 
 
Total operating expenses
 
54,054

 
48,232

 
108,431

 
95,055

Loss from operations
 
(5,765
)
 
(3,890
)
 
(17,652
)
 
(13,787
)
Interest and other income (expense), net:
 
 
 
 
 
 
 
 
 
Interest income
 
338

 
30

 
717

 
34

 
Interest expense
 
(279
)
 
(58
)
 
(658
)
 
(115
)
 
Other income (expense), net
 
29

 
70

 
77

 
103

 
 
Total interest and other income (expense), net
 
88

 
42

 
136

 
22

Loss before provision for income taxes
 
(5,677
)
 
(3,848
)
 
(17,516
)
 
(13,765
)
Provision for income taxes
 
102

 
103

 
193

 
213

Net loss
 
$
(5,779
)
 
$
(3,951
)
 
$
(17,709
)
 
$
(13,978
)
Net loss per common share:
 
 
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(0.11
)

$
(0.08
)
 
$
(0.34
)
 
$
(0.28
)
Weighted average number of shares used to compute
 
 
 
 
 
 
 
 
 
net loss per common share:
 
 
 
 
 
 
 
 
 
 
Basic and diluted
 
51,950

 
50,573

 
51,843

 
50,425

 
 
 
 
 
 
 
 
 
 
 
(1) 
Includes stock-based compensation as follows:
 
 
 
 
 
Cost of revenue
 
$
211

 
$
354

 
$
386

 
$
708

 
Research and development
 
1,483

 
1,306

 
2,695

 
2,486

 
Sales and marketing
 
1,656

 
1,462

 
3,081

 
2,830

 
General and administrative
 
991

 
1,282

 
1,841

 
2,282

 
 
 
 
$
4,341

 
$
4,404

 
$
8,003

 
$
8,306



                                       
Calix Press Release
 
Page 5 


Calix, Inc.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands, except per share data)
 
 
 
 
 
 
 
 
 

 
Three Months Ended
 
Six Months Ended

 
June 27,
 
June 28,
 
June 27,
 
June 28,

 
2015
 
2014
 
2015
 
2014
GAAP net loss
 
$
(5,779
)
 
$
(3,951
)
 
$
(17,709
)
 
$
(13,978
)
Adjustments to reconcile GAAP net loss to
 
 
 
 
 
 
 
 
non-GAAP net income (loss):
 
 
 
 
 
 
 
 
Stock-based compensation
 
4,341

 
4,404

 
8,003

 
8,306

Amortization of intangible assets
 
4,640

 
4,640

 
9,280

 
9,280

Acquisition-related costs
 
52

 
—

 
242

 
—

Non-GAAP net income (loss)
 
$
3,254

 
$
5,093

 
$
(184
)
 
$
3,608

Non-GAAP net income (loss) per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.06

 
$
0.10

 
$
—

 
$
0.07

Diluted
 
$
0.06

 
$
0.10

 
$
—

 
$
0.07

Weighted average shares used to compute non-GAAP
 

 


 
 
 
 
net income (loss) per common share:
 
 
 
 
 
 
 
 
Basic
 
51,950

 
50,573

 
51,843

 
50,425

Diluted (1)
 
52,455

 
50,961

 
51,843

 
50,904

(1) Includes the dilutive effect of outstanding stock options, restricted stock units and ESPP.




                                       
Calix Press Release
 
Page 6 


Calix, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
 
 
 
 
 
 
 
June 27,
 
December 31,
 
 
2015
 
2014
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
39,672

 
$
48,829

Marketable securities
 
59,785

 
62,850

Restricted cash
 
—

 
295

Accounts receivable, net
 
41,985

 
30,744

Inventory
 
40,710

 
46,753

Deferred cost of revenue
 
1,284

 
5,080

Prepaid expenses and other current assets
 
11,457

 
12,936

 Total current assets
 
194,893

 
207,487

Property and equipment, net
 
18,790

 
20,144

Goodwill
 
116,175

 
116,175

Intangible assets, net
 
15,899

 
25,179

Other assets
 
1,241

 
1,236

 Total assets
 
$
346,998

 
$
370,221

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 
 
 
 
Accounts payable
 
$
18,538

 
$
23,629

Accrued liabilities
 
36,545

 
39,443

Deferred revenue
 
9,132

 
12,722

Total current liabilities
 
64,215

 
75,794

Long-term portion of deferred revenue
 
19,371

 
19,393

Other long-term liabilities
 
1,903

 
2,443

Total liabilities
 
85,489

 
97,630

Stockholders' equity:
 
 
 
 
Common stock
 
1,313

 
1,291

Additional paid-in capital
 
811,737

 
801,810

Accumulated other comprehensive income
 
135

 
80

Accumulated deficit
 
(548,299
)
 
(530,590
)
Treasury stock
 
(3,377
)
 
—

Total stockholders' equity
 
261,509

 
272,591

Total liabilities and stockholders' equity
 
$
346,998

 
$
370,221



                                       
Calix Press Release
 
Page 7 


Calix, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
 
 
 
 
 
 
 
Six Months Ended
 
 
June 27,
 
June 28,
 
 
2015
 
2014
Operating activities:
 
 
 
 
Net loss
 
$
(17,709
)
 
$
(13,978
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
4,978

 
4,522

Loss on retirement of property and equipment
 
5

 
—

Amortization of intangible assets
 
9,280

 
9,280

Amortization of premiums related to available-for-sale securities
 
541

 
108

Stock-based compensation
 
8,003

 
8,306

Changes in operating assets and liabilities:
 
 
 
 
Restricted cash
 
295

 
—

Accounts receivable, net
 
(11,240
)
 
(3,809
)
Inventory
 
6,042

 
5,183

Deferred cost of revenue
 
3,796

 
5,119

Prepaid expenses and other assets
 
1,065

 
960

Accounts payable
 
(5,091
)
 
(10,313
)
Accrued liabilities
 
(2,889
)
 
2,601

Deferred revenue
 
(3,612
)
 
(8,307
)
Other long-term liabilities
 
(135
)
 
(188
)
Net cash used in operating activities
 
(6,671
)
 
(516
)
Investing activities:
 
 
 
 
Purchases of property and equipment
 
(3,618
)
 
(4,328
)
Purchases of marketable securities
 
(25,271
)
 
(46,572
)
Maturities of marketable securities
 
27,832

 
—

Net cash used in investing activities
 
(1,057
)
 
(50,900
)
Financing activities:
 
 
 
 
Proceeds from exercise of stock options
 
590

 
139

Proceeds from employee stock purchase plan
 
2,865

 
2,453

Purchases of treasury stock
 
(3,377
)
 
—

Taxes paid for awards vested under equity incentive plans
 
(1,510
)
 
(1,377
)
Net cash provided by (used in) financing activities
 
(1,432
)
 
1,215

Effect of exchange rate changes on cash and cash equivalents
 
3

 
(3
)
Net decrease in cash and cash equivalents
 
(9,157
)
 
(50,204
)
Cash and cash equivalents at beginning of period
 
48,829

 
82,747

Cash and cash equivalents at end of period
 
$
39,672

 
$
32,543



                                       
Calix Press Release
 
Page 8 


Investor Inquiries:

William J. Atkins
408-474-0052

Thomas J. Dinges, CFA
408-474-0080


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