Form 8-K FINISAR CORP For: Sep 08
Securities Exchange Act of 1934
| DE | 000-27999 | 94-3038428 | ||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
| 1389 Moffett Park Drive, Sunnyvale, CA | 94089 | |
| (Address of principal executive offices) | (Zip Code) |
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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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.
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.
| Dated: September 8, 2016 |
Finisar Corporation By: /s/ Kurt Adzema Kurt Adzema Chief Financial Officer |
| Exhibit No. | Description | |
| 99.1 | Press Release of Finisar Corporation dated September 8, 2016 |
Finisar Announces Record First Fiscal Quarter RevenuesSUNNYVALE, CA -- (Marketwired - September 08, 2016) - Finisar Corporation (NASDAQ: FNSR), a global technology leader for subsystems and components for fiber optic communications, today announced financial results for its first quarter of fiscal year 2017, ended July 31, 2016.
COMMENTARY
"I am pleased to announce that Finisar achieved record revenues for our first quarter of $341.3 million, an increase of $22.5 million, or 7.1% compared to the prior quarter. This growth was primarily driven by strong demand for 100Gb/s transceivers in CFP, CFP2, CFP4, and QSFP28 form factors. In addition, demand for wavelength selective switches was strong. Our gross margins improved significantly due to favorable product mix and leverage of our vertically integrated manufacturing infrastructure over the larger volume. The combination of revenues being at the higher end of our guidance range and better than expected gross margins resulted in earnings per fully diluted share exceeding the upper end of our guidance range," said Jerry Rawls, Finisar's Chief Executive Officer.
FINANCIAL HIGHLIGHTS - First Quarter Ended July 31, 2016 Summary GAAP Results First Fourth Quarter Quarter Ended Ended July 31, 2016 May 1, 2016 --------------- --------------- (in thousands, except per share amounts) Revenues $341,325 $318,794 Gross margin 31.7% 28.4% Operating expenses $79,854 $76,306 Operating income $28,311 $14,135 Operating margin 8.3% 4.4% Net income $23,949 $13,072 Income per share-basic $0.22 $0.12 Income per share-diluted $0.22 $0.12 Basic shares 108,820 107,612 Diluted shares 110,821 109,386 Summary Non-GAAP Results (a) First Fourth Quarter Quarter Ended Ended July 31, 2016 May 1, 2016 --------------- --------------- (in thousands, except per share amounts) Revenues $341,325 $318,794 Non-GAAP Gross margin 33.1% 30.6% Non-GAAP Operating expenses $69,344 $66,186 Non-GAAP Operating income $43,520 $31,239 Non-GAAP Operating margin 12.8% 9.8% Non-GAAP Net income $41,825 $31,824 Non-GAAP Income per share-basic $0.38 $0.30 Non-GAAP Income per share-diluted $0.38 $0.29 Basic shares 108,820 107,612 Diluted shares 110,821 109,386(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 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.
Financial Statement Highlights for the First Quarter of Fiscal 2017:
-- Revenues were $341.3 million, an increase of $22.5 million, or 7.1%, from $318.8 million in the preceding quarter.-- Sales of telecom products increased by $22.0 million, or 29.0%, compared to the preceding quarter. This increase was due to higher sales of wavelength selective switches, coherent receivers, and 100G transceivers, as well as a rebound in demand for other telecom products including amplifiers and 10G transceivers, both tunable and fixed wavelength.-- Sales of datacom products increased by $0.5 million, or 0.2%, compared to the preceding quarter, primarily driven by growth in demand for 100G transceivers including CFP, CFP2, CFP4, and QSFP28 form factors, partially offset by a decline in sales of transceivers for wireless applications and 40G transceivers. Datacom revenue, excluding transceivers for wireless applications, increased 3.1% over the preceding quarter. Sales of 100G transceivers for datacom applications increased 21.8% over the preceeding quarter, and 115.8% over the first quarter of the prior fiscal year.-- GAAP gross margin improved to 31.7%, compared to 28.4% in the preceding quarter, primarily due to favorable product mix and the benefit of vertical integration over the larger volume.-- Non-GAAP gross margin improved to 33.1% compared to 30.6% in the preceding quarter.-- GAAP operating expenses were $79.9 million compared to $76.3 million in the preceding quarter. The increase was due to higher payroll taxes from the annual vesting of employee restricted stock unit grants, higher legal expenses from two patent trials completed in the quarter, and higher employee compensation levels. GAAP operating expenses as a percentage of revenue decreased to approximately 23.4% of revenue compared to 23.9% in the preceding quarter.-- Non-GAAP operating expenses increased to $69.3 million compared to $66.2 million in the preceding quarter. Non-GAAP operating expenses as a percentage of revenue decreased to approximately 20.3% of revenue compared to 20.8% in the preceding quarter.-- GAAP operating margin improved to 8.3% from 4.4% in the preceding quarter.-- Non-GAAP operating margin improved to 12.8% from 9.8% in the preceding quarter.-- GAAP earnings per fully diluted share was $0.22 compared to $0.12 in the preceding quarter, primarily due to higher revenues levels and improved gross margins.-- Non-GAAP earnings per fully diluted share was $0.38 compared to $0.29 in the preceding quarter.-- Cash, cash equivalents and short term investments increased $31.3 million to $593.8 million at the end of the first quarter, compared to $562.5 million at the end of the preceding quarter.OUTLOOK
Finisar indicated that for the second quarter of fiscal 2017 it currently expects revenues in the range of $355 to $375 million, non-GAAP gross margin of approximately 34%, non-GAAP operating margin of approximately 14.3% to 15.3%, and non-GAAP earnings per fully diluted share in the range of approximately $0.44 to $0.50.
Finisar has not provided a reconciliation of its second 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 first quarter and current business outlook during its regular quarterly conference call scheduled for Thursday, September 8, 2016, 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 888-208-1815 (domestic) or 719-325-2291 (international) and enter conference ID 1833924.
An audio replay will be available for two weeks following the call by dialing 1-888-203-1112 (domestic) or +1-719-457-0820 and then following the prompts: enter conference ID 1833924 and 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 17, 2016) 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 Balance Sheets (in thousands) July 31, 2016 May 1, 2016 --------------- --------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 280,414 $ 299,221 Short-term held-to-maturity investments 313,389 263,255 Accounts receivable, net 255,036 249,257 Accounts receivable, other 43,678 44,576 Inventories 272,592 273,291 Prepaid expenses and other assets 18,646 18,483 --------------- --------------- Total current assets 1,183,755 1,148,083 Property, equipment and improvements, net 338,918 348,613 Purchased intangible assets, net 16,197 18,388 Goodwill 106,735 106,735 Minority investments 3,974 4,051 Other assets 18,928 19,501 --------------- --------------- Total assets $ 1,668,507 $ 1,645,371 =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 136,317 $ 141,591 Accrued compensation 36,332 36,084 Other accrued liabilities 39,201 42,206 Deferred revenue 16,468 13,529 --------------- --------------- Total current liabilities 228,318 233,410 Long-term liabilities: Convertible notes, net of current portion 232,016 229,393 Other non-current liabilities 14,056 14,882 --------------- --------------- Total liabilities 474,390 477,685 Stockholders' equity: Common stock 110 108 Additional paid-in capital 2,621,260 2,605,859 Accumulated other comprehensive income (loss) (38,109) (25,188) Accumulated deficit (1,389,144) (1,413,093) --------------- --------------- Total stockholders' equity 1,194,117 1,167,686 --------------- --------------- Total liabilities and stockholders' equity $ 1,668,507 $ 1,645,371 =============== ===============Note - Balance sheet amounts as of May 1, 2016 are derived from the audited consolidated financial statements as of the date.Finisar Corporation Consolidated Statements of Operations (Unaudited, in thousands, except per share data) Three Months Ended ------------------------------------------ Aug 02, July 31, 2016 2015 May 1, 2016 -------------- ------------ -------------- Revenues $ 341,325 $ 314,030 $ 318,794 Cost of revenues 231,637 224,147 226,723 Impairment of long-lived assets - 1,071 - Amortization of acquired developed technology 1,523 1,435 1,630 -------------- ------------ -------------- Gross profit 108,165 87,377 90,441 Gross margin 31.7% 27.8% 28.4% Operating expenses: Research and development 51,008 52,408 50,169 Sales and marketing 11,863 11,202 11,621 General and administrative 16,315 15,208 13,848 Impairment of long-lived assets - 830 - Amortization of purchased intangibles 668 668 668 -------------- ------------ -------------- Total operating expenses 79,854 80,316 76,306 -------------- ------------ -------------- Income from operations 28,311 7,061 14,135 Interest income 726 365 802 Interest expense (2,986) (2,883) (3,017) Other income (expenses), net (59) 881 (80) -------------- ------------ -------------- Income before income taxes 25,992 5,424 11,840 Provision (benefit) for income taxes 2,043 2,031 (1,232) -------------- ------------ -------------- Net income $ 23,949 $ 3,393 $ 13,072 ============== ============ ============== Net income per share attributable to Finisar Corporation common stockholders: Basic $ 0.22 $ 0.03 $ 0.12 Diluted $ 0.22 $ 0.03 $ 0.12 Shares used in computing net income per share - basic 108,820 105,286 107,612 Shares used in computing net income per share - diluted 110,821 108,107 109,386FINISAR 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 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 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:
-- Changes in excess and obsolete inventory reserve (predominantly non-cash charges); -- Amortization of acquired technology (non-cash charges related to technology obtained in acquisitions); -- Duplicate facility costs during facility move (non-core cash charges); -- Stock-based compensation expense (non-cash charges); -- Impairment of long-lived assets (non-cash charges); -- Reduction in force costs (non-core cash charges); and -- Acquisition related retention payments (non-core cash charges).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:
-- Gain or loss on litigation settlements and resolutions and related costs (non-core cash charges or benefits); -- Shareholder class action and derivative litigation costs (non-core cash charges associated with the derivative litigation related to our historical stock option granting practices and related to the class action and derivative litigation related to our March 8, 2011 earnings announcement); -- Acquisition related costs (non-core cash charges); -- Unclaimed property tax audit accrual (non-core charges); and -- Amortization of purchased intangibles (non-cash charges).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:
-- Imputed interest expenses on convertible debt (non-cash charges); -- Imputed interest related to restructuring (non-cash charges); -- Other interest income (non-core benefits); -- Gains and losses on sales of assets (non-cash losses and cash gains related to the periodic disposal of assets no longer required for current activities); -- Other miscellaneous expenses (income) (non-core charges or benefits); -- Dollar denominated foreign exchange transaction losses (gains) (non-cash charges or benefits); and -- Amortization of debt issuance costs (non-cash charges).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 taxes.
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 -------------------------------------------- July 31, 2016 Aug 02, 2015 May 1, 2016 -------------- -------------- -------------- GAAP to non-GAAP reconciliation of gross profit: Gross profit - GAAP $ 108,165 $ 87,377 $ 90,441 Gross margin - GAAP 31.7% 27.8% 28.4% Adjustments: Cost of revenues Change in excess and obsolete inventory valuation adjustments (1) 1,430 2,102 Amortization of acquired technology 1,523 1,435 1,630 Duplicate facility costs during facility move 8 82 8 Stock compensation 3,047 2,692 2,847 Impairment of long-lived assets - 1,282 - Reduction in force costs 102 554 369 Acquisition related retention payment 19 65 28 -------------- -------------- -------------- Total cost of revenue adjustments 4,699 7,540 6,984 -------------- -------------- -------------- Gross profit - non-GAAP 112,864 94,917 97,425 -------------- -------------- -------------- Gross margin - non-GAAP 33.1% 30.2% 30.6% GAAP to non-GAAP reconciliation of operating income: Operating income - GAAP 28,311 7,061 14,135 Operating margin - GAAP 8.3% 2.2% 4.4% Adjustments: Total cost of revenue adjustments 4,699 7,540 6,984 Total operating expense adjustments Operating expenses - GAAP 79,854 80,316 76,306 Research and development Reduction in force costs 174 288 386 Duplicate facility costs during facility move 7 221 7 Acquisition related retention payment 32 91 32 Stock compensation 5,111 4,838 4,855 Impairment of long-lived assets - 287 - Sales and marketing Reduction in force costs 29 63 1 Acquisition related retention payment - 10 - Stock compensation 1,751 1,707 1,747 General and administrative Reduction in force costs 13 352 49 Duplicate facility costs 143 9 24 Acquisition related retention payment (2) (5) 4 Stock compensation 2,553 2,760 2,381 Acquisition related costs 31 18 (1) Litigation settlements and resolutions and related costs - 16 1 Shareholder class action and derivative litigation costs - - (184) Unclaimed property tax audit accrual - - 150 Amortization of purchased intangibles 668 668 668 Impairment of long-lived assets - 587 - -------------- -------------- -------------- Total operating expense adjustments 10,510 11,910 10,120 -------------- -------------- -------------- Operating expenses - non-GAAP 69,344 68,406 66,186 -------------- -------------- -------------- Operating income - non-GAAP 43,520 26,511 31,239 -------------- -------------- -------------- Operating margin - non-GAAP 12.8% 8.4% 9.8% GAAP to non-GAAP reconciliation of income before income taxes: Income before income taxes - GAAP 25,992 5,424 11,840 Adjustments: Total cost of revenue adjustments 4,699 7,540 6,984 Total operating expense adjustments 10,510 11,910 10,120 Total Interest and other adjustments Other interest income - - (6) Non-cash imputed interest expenses on convertible debt 2,469 2,354 2,449 Imputed interest related to restructuring 38 45 40 Other (income) expense, net Loss (gain) on sale of assets (8) (185) 165 Other miscellaneous income - (17) (184) Foreign exchange transaction (gain) or loss (29) (693) 362 Amortization of debt issuance cost 154 154 154 -------------- -------------- -------------- Total Interest and other adjustments 2,624 1,658 2,980 -------------- -------------- -------------- Income before income taxes - non-GAAP 43,825 26,532 31,924 -------------- -------------- -------------- GAAP to non-GAAP reconciliation of net income: Net income - GAAP 23,949 3,393 13,072 Total cost of revenue adjustments 4,699 7,540 6,984 Total operating expense adjustments 10,510 11,910 10,120 Total Interest and other adjustments 2,624 1,658 2,980 Income tax provision adjustments 43 31 (1,332) -------------- -------------- -------------- Total adjustments 17,876 21,139 18,752 -------------- -------------- -------------- Net income - non-GAAP $ 41,825 $ 24,532 $ 31,824 ============== ============== ============== Non-GAAP net income for diluted earnings per share calcuation Non-GAAP net income $ 41,825 $ 24,532 $ 31,824 Add: interest expense for dilutive convertible notes - - - -------------- -------------- -------------- Adjusted non-GAAP income $ 41,825 $ 24,532 $ 31,824 ============== ============== ============== Basic non-GAAP income per share GAAP earnings per share $ 0.22 $ 0.03 $ 0.12 Impact of all non-GAAP adjustments $ 0.16 $ 0.20 $ 0.18 Non-GAAP earnings per share $ 0.38 $ 0.23 $ 0.30 Diluted non-GAAP income per share GAAP earnings per share $ 0.22 $ 0.03 $ 0.12 Impact of all non-GAAP adjustments $ 0.16 $ 0.20 $ 0.17 Non-GAAP earnings per share $ 0.38 $ 0.23 $ 0.29 Shares used in computing non- GAAP income per share Basic 108,820 105,286 107,612 Diluted 110,821 108,107 109,386(1) Non-GAAP adjustment no longer made effective fiscal 2017.Finisar-F
Investor Contact: Kurt Adzema Chief Financial Officer 408-542-5050 [email protected] Press contact: Victoria McDonald Director, Corporate Communications 408-542-4261