Form 8-K FINISAR CORP For: Dec 07

December 7, 2017 4:02 PM
 

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): December 7, 2017  

Finisar Corpation
(Exact Name of Registrant as Specified in Charter)

Delaware000-2799994-3038428
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

1389 Moffett Park Drive, Sunnyvale, CA 94089
(Address of Principal Executive Offices) (Zip Code)

408-548-1000
(Registrant's telephone number, including area code)


(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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [    ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [    ]

 
 

Item 9.01. Financial Statements and Exhibits.

On December 7, 2017, Finisar Corporation issued a press release announcing its financial results for the second quarter of fiscal 2018, ended October 29, 2017. A copy of the press release is attached hereto as Exhibit 99.1.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.


SIGNATURE

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.

 Finisar Corpation
   
  
Date: December 7, 2017By: /s/ Kurt Adzema        
  Kurt Adzema
  Chief Financial Officer
  

EXHIBIT 99.1

Finisar Announces Second Quarter Fiscal 2018 Financial Results

SUNNYVALE, Calif., Dec. 07, 2017 (GLOBE NEWSWIRE) -- Finisar Corporation (NASDAQ:FNSR), a global technology leader for subsystems and components for fiber optic communications, today announced financial results for its second fiscal quarter, ended October 29, 2017. 

COMMENTARY

“We experienced strong demand in our second fiscal quarter for our 100G QSFP28 transceivers for datacenters,” said Jerry Rawls, Finisar’s Chief Executive Officer.  “However, our overall revenues for the second fiscal quarter were $332.2 million, a decrease of $9.6 million, or 2.8%, compared to the first quarter of fiscal 2018.  This decline was primarily due to lower revenues from our Chinese OEM customers. Also, during the second quarter, we began shipping production quantities of our VCSEL arrays for 3D sensing. In addition, after the end of the quarter, we acquired an approximately 700,000 square foot facility in Sherman, Texas.  In the second half of calendar year 2018, we expect this facility will allow us to produce VCSEL arrays using 6” wafers for both consumer and automotive applications.”

FINANCIAL HIGHLIGHTS – Second Quarter Ended October 29, 2017
 
Summary GAAP ResultsSecond
 First
 Quarter
 Quarter
 Ended
 Ended
 October 29, 2017
 July 30, 2017
 (in thousands, except per share amounts)
    
Revenues$332,205 $341,806
Gross margin29.0% 33.7%
Operating expenses$86,738 $85,387
Operating income$9,467 $29,912
Operating margin2.8% 8.8%
Net income$5,857 $19,859
Income per share-basic$0.05 $0.18
Income per share-diluted$0.05 $0.17
    
Basic shares113,960 112,544
Diluted shares115,443 115,698
    
Summary Non-GAAP Results (a)Second
 First
 Quarter
 Quarter
 Ended
 Ended
 October 29, 2017
 July 30, 2017
 (in thousands, except per share amounts)
    
Revenues$332,205 $341,806
Non-GAAP Gross margin30.3% 34.9%
Non-GAAP Operating expenses$74,643 $73,150
Non-GAAP Operating income $25,914 $46,005
Non-GAAP Operating margin7.8% 13.5%
Non-GAAP Net income   26,089 45,750
Non-GAAP Income per share-basic$0.23 $0.41
Non-GAAP Income per share-diluted$0.23 $0.40
    
Basic shares113,960 112,544
Diluted shares115,443 115,698

_____________

(a) In evaluating the operating performance of Finisar’s business, Finisar management utilizes financial measures that exclude certain charges and credits required by U.S. generally accepted accounting principles, or GAAP, that are considered by management to be outside of Finisar’s core ongoing operating resultsA 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.

Financial Statement Highlights for the Second Quarter of Fiscal 2018: 

OUTLOOK

Finisar indicated that for the third quarter of fiscal 2018 it currently expects revenues in the range of $325 to $345 million, non-GAAP gross margin of approximately 30%-31%, non-GAAP operating margin of approximately 7.5% -8.5%, and non-GAAP earnings per fully diluted share in the range of approximately $0.21 to $0.27.

Finisar has not provided a reconciliation of its third quarter outlook for non-GAAP gross margin, non-GAAP operating margin and non-GAAP earnings per fully diluted share because estimates of all of the reconciling items cannot be provided without unreasonable efforts.  It is difficult to reasonably provide a forward-looking estimate of certain reconciling items between such non-GAAP forward-looking measures and the comparable forward-looking GAAP measures. Certain factors that are materially significant to Finisar’s ability to estimate these items are out of its control and/or cannot be reasonably predicted, including with respect to restructuring charges, litigation settlements and resolutions and related costs, and the timing of tax related adjustments. Accordingly, a reconciliation of such non-GAAP forward-looking measures to the comparable forward-looking GAAP measures are not available within a reasonable range of predictability. 

CONFERENCE CALL

Finisar will discuss its financial results for the second quarter and current business outlook during its regular quarterly conference call scheduled for Thursday, December 7, 2017, at 2:00 pm PT (5:00 pm ET).  To listen to the call you may connect through the Finisar investor relations page at http://investor.finisar.com/ or dial 1-(855) 473-9088 (domestic) or 1- (720) 405-0995 (international) and enter conference ID 61569772.

An audio replay will be available for two weeks following the call by dialing 1- (855) 859-2056 (domestic) or 1-404-537-3406 (international) and then following the prompts: enter conference ID 61569772and provide your name, affiliation, and contact number.  A replay of the webcast will be available shortly after the conclusion of the call on Finisar’s website until the next regularly scheduled earnings conference call.

SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release contains forward-looking statement concerning Finisar’s expected financial performance. These statements are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements are based on our current expectations, estimates, assumptions and projections about our business and industry, and the markets and customers we serve, and they are subject to numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. 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.  Further information regarding these and other risks relating to Finisar’s business is set forth in Finisar’s annual report on Form 10-K (filed June 16, 2017) and quarterly SEC filings.

ABOUT FINISAR

Finisar Corporation (NASDAQ:FNSR) is a global technology leader for fiber optic subsystems and components  that enable high-speed voice, video and data communications for telecommunications, networking, storage, wireless, and cable TV applications. For over 25 years, Finisar has provided critical optics technologies to system manufacturers to meet the increasing demands for network bandwidth and storage.  Finisar is headquartered in Sunnyvale, California, USA with R&D, manufacturing sites, and sales offices worldwide. For additional information, visit www.finisar.com.

FINISAR FINANCIAL STATEMENTS The following financial tables are presented in accordance with GAAP.

Finisar Corporation
Consolidated Statements of Operations
 (Unaudited, in thousands, except per share data)
          
 Three Months Ended Six Months Ended Three Months Ended
 Oct 29, 2017 Oct 30, 2016 Oct 29, 2017 Oct 30, 2016 Jul 30, 2017
Revenues$332,205  $369,863  $674,011  $711,188  $341,806 
Cost of revenues 235,389   235,192   461,285   466,829   225,896 
Amortization of acquired developed technology 611   990   1,222   2,513   611 
Gross profit 96,205   133,681   211,504   241,846   115,299 
Gross margin 29.0%   36.1%   31.4%   34.0%   33.7% 
Operating expenses:         
Research and development 60,560   53,242   118,600   104,250   58,040 
Sales and marketing 12,230   13,367   24,581   25,230   12,351 
General and administrative 13,282   13,576   27,571   29,891   14,289 
Amortization of purchased intangibles 666   668   1,373   1,336   707 
Total operating expenses 86,738   80,853   172,125   160,707   85,387 
Income from operations 9,467   52,828   39,379   81,139   29,912 
Interest income 3,746   1,021   7,186   1,747   3,440 
Interest expense (9,131)  (3,025)  (18,144)  (6,011)  (9,013)
Other expenses 1,111   795   (1,583)  736   (2,694)
Income before income taxes 5,193   51,619   26,838   77,611   21,645 
Provision (benefit) for income taxes (664)  2,854   1,122   4,897   1,786 
Net income$5,857  $48,765  $25,716  $72,714  $19,859 
          
Net income per share attributable to Finisar Corporation common stockholders:         
          
Basic$0.05  $0.44  $0.23  $0.66  $0.18 
Diluted$0.05  $0.43  $0.22  $0.65  $0.17 
          
Shares used in computing net income per share - basic 113,960   110,407   113,252   109,614   112,544 
Shares used in computing net income per share - diluted 115,443   113,192   115,973   112,450   115,698 
          


Finisar Corporation
Consolidated Balance Sheets
 (in thousands)
        
  Oct 29, 2017 Jul 30, 2017 Apr 30, 2017 
  (Unaudited) (Unaudited)   
ASSETS       
Current assets:       
Cash and cash equivalents $274,547  $278,826  $260,228  
Short-term held-to-maturity investments  958,216   954,026   976,595  
Accounts receivable, net  260,870   273,180   272,377  
Inventories  369,078   356,845   331,388  
Other current assets  61,517   63,629   68,269  
Total current assets  1,924,228   1,926,506   1,908,857  
Property, equipment and improvements, net  443,733   420,298   383,919  
Purchased intangible assets, net  10,424   11,700   13,019  
Goodwill  106,735   106,735   106,735  
Minority investments  606   605   3,161  
Other assets  20,818   21,651   16,964  
Deferred tax assets  116,055   108,567   107,225  
Total assets $2,622,599  $2,596,062  $2,539,880  
        
LIABILITIES AND STOCKHOLDERS' EQUITY       
Current liabilities:       
Accounts payable $152,047  $148,605  $140,568  
Accrued compensation  36,614   42,030   54,520  
Other accrued liabilities  40,130   46,648   43,697  
Deferred revenue  17,716   14,348   13,015  
Total current liabilities  246,507   251,631   251,800  
Long-term liabilities:       
Convertible notes  723,784   715,722   707,782  
Other non-current liabilities  17,176   17,546   17,594  
Total liabilities  987,467   984,899   977,176  
Stockholders' equity:       
Common stock  114   114   112  
Additional paid-in capital  2,814,713   2,799,118   2,784,204  
Accumulated other comprehensive income (loss)  (41,664)  (44,181)  (57,865) 
Accumulated deficit  (1,138,031)  (1,143,888)  (1,163,747) 
Total stockholders' equity  1,635,132   1,611,163   1,562,704  
Total liabilities and stockholders' equity $2,622,599  $2,596,062  $2,539,880  
        
Note - Balance sheet amounts as of April 30, 2017 are derived from the audited consolidated financial statements as of the date.
 
        

FINISAR NON-GAAP FINANCIAL MEASURES

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, or GAAP, Finisar provides the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission: non-GAAP gross profit, non-GAAP operating income, non-GAAP income and non-GAAP net income per share. These non-GAAP financial measures are supplemental information regarding Finisar’s operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be outside of our ongoing core operating results.   Management believes that tracking non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share provides management and the investment community with valuable insight into our ongoing core current operations, our ability to generate cash and the underlying business trends that 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 certain 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 in this release, we have excluded the following items from cost of revenues in applicable periods in this release:

In calculating non-GAAP operating income in this release, 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 in this release:

In calculating non-GAAP income and non-GAAP income per share in this release, we have also excluded the following items in applicable periods in this release:

In addition, in this release we have adjusted non-GAAP income and non-GAAP income per share for the difference between GAAP income taxes and non-GAAP 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
 (Unaudited, in thousands, except per share data)
          
 Three Months Ended Six Months Ended Three Months Ended
 Oct 29, 2017 Oct 30, 2016 Oct 29, 2017 Oct 30, 2016 Jul 30, 2017
GAAP to non-GAAP reconciliation of gross profit:         
Gross profit - GAAP$96,205  $133,681  $211,504  $241,846  $115,299 
Gross margin - GAAP 29.0%   36.1%   31.4%   34.0%   33.7% 
Adjustments:         
Cost of revenues         
Amortization of acquired technology 611   990   1,222   2,513   611 
Duplicate facility costs during facility move -   8   -   16   - 
Stock compensation 3,724   2,949   6,294   5,996   2,570 
Reduction in force costs (9)  14   625   116   634 
Acquisition related retention payment 26   26   67   45   41 
Total cost of revenue adjustments 4,352   3,987   8,208   8,686   3,856 
Gross profit - non-GAAP 100,557   137,668   219,712   250,532   119,155 
Gross margin - non-GAAP 30.3%   37.2%   32.6%   35.2%   34.9% 
          
GAAP to non-GAAP reconciliation of operating income:         
Operating income - GAAP 9,467   52,828   39,379   81,139   29,912 
Operating margin - GAAP 2.8%   14.3%   5.8%   11.4%   8.8% 
Adjustments:         
Total cost of revenue adjustments 4,352   3,987   8,208   8,686   3,856 
Total operating expense adjustments         
Operating expenses - GAAP 86,738   80,853   172,125   160,707   85,387 
Research and development         
Reduction in force costs 22   88   115   262   93 
Duplicate facility costs during facility move -   7   -   14   - 
Acquisition related retention payment 32   32   64   64   32 
Stock compensation 6,147   5,552   12,229   10,663   6,082 
Sales and marketing         
Reduction in force costs -   -   (12)  29   (12)
Acquisition related retention payment -   -   (2)  -   (2)
Stock compensation 2,039   1,877   4,083   3,628   2,044 
General and administrative         
Reduction in force costs 13   20   50   33   37 
Duplicate facility costs during facility move 137   154   320   297   183 
Acquisition related retention payment -   -   -   (2)  - 
Stock compensation 2,999   2,989   6,068   5,542   3,069 
Acquisition related costs 40   2   44   33   4 
Litigation settlements and resolutions and related costs -   46   -   46   - 
Amortization of purchased intangibles 666   668   1,373   1,336   707 
Total operating expense adjustments 12,095   11,435   24,332   21,945   12,237 
Operating expenses - non-GAAP 74,643   69,418   147,793   138,762   73,150 
Operating income - non-GAAP 25,914   68,250   71,919   111,770   46,005 
Operating margin - non-GAAP 7.8%   18.5%   10.7%   15.7%   13.5% 
          
GAAP to non-GAAP reconciliation of income before income taxes:         
Income before income taxes - GAAP 5,193   51,619   26,838   77,611   21,645 
Adjustments:         
Total cost of revenue adjustments 4,352   3,987   8,208   8,686   3,856 
Total operating expense adjustments 12,095   11,435   24,332   21,945   12,237 
Non-cash imputed interest expenses on convertible debt 7,676   2,509   15,231   4,978   7,555 
Imputed interest related to restructuring 28   37   58   75   30 
Other (income) expense, net         
Loss (gain) on assets 38   (17)  (79)  (25)  (117)
Loss related to impairment of minority investments -   -   2,347   -   2,347 
Foreign exchange transaction (gain) or loss (1,478)  (970)  (1,016)  (999)  463 
Amortization of  debt issuance cost 385   154   770   308   385 
Total Interest and other adjustments 6,649   1,713   17,311   4,337   10,663 
Income before income taxes - non-GAAP 28,289   68,754   76,689   112,579   48,401 
          
GAAP to non-GAAP reconciliation of net income:         
Net income - GAAP 5,857   48,765   25,716   72,714   19,859 
Total cost of revenue adjustments 4,352   3,987   8,208   8,686   3,856 
Total operating expense adjustments 12,095   11,435   24,332   21,945   12,237 
Total Interest and other adjustments 6,649   1,713   17,311   4,337   10,663 
Income tax provision adjustments (2,864)  (746)  (3,728)  (703)  (865)
Total adjustments 20,232   16,389   46,123   34,265   25,891 
Net income - non-GAAP$26,089  $65,154  $71,839  $106,979  $45,750 
          
Basic non-GAAP income per share          
GAAP earnings per share$0.05  $0.44  $0.23  $0.66  $0.18 
Impact of all non-GAAP adjustments$0.18  $0.15  $0.40  $0.32  $0.23 
Non-GAAP earnings per share$0.23  $0.59  $0.63  $0.98  $0.41 
          
Diluted non-GAAP income per share          
GAAP earnings per share$0.05  $0.43  $0.22  $0.65  $0.17 
Impact of all non-GAAP adjustments$0.18  $0.15  $0.40  $0.30  $0.23 
Non-GAAP earnings per share$0.23  $0.58  $0.62  $0.95  $0.40 
          
Shares used in computing non-GAAP income per share         
Basic 113,960   110,407   113,252   109,614   112,544 
Diluted 115,443   113,192   115,973   112,450   115,698 

Finisar-F

Investor Contact:                                                                             
Kurt Adzema
Chief Financial Officer
408-542-5050 or Investor.relations@finisar.com 

Press contact:
Victoria McDonald
Director, Corporate Communications 
408-542-4261

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