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): September 6, 2018  

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

Delaware	000-27999	94-3038428
(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. [   ]

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Item 2.02. Results of Operations and Financial Condition.

On September 6, 2018, Finisar Corporation issued a press release announcing its financial results for the first fiscal quarter of 2019 ended July 29, 2018. 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.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1. Press release dated September 6, 2018

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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: September 6, 2018	By:	/s/ Kurt Adzema
		Kurt Adzema
		Chief Financial Officer

EXHIBIT 99.1

Finisar Announces First Quarter of Fiscal 2019 Financial Results

SUNNYVALE, Calif., Sept. 06, 2018 (GLOBE NEWSWIRE) -- 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 2019, ended July 29, 2018. 

COMMENTARY

“Revenues grew over the prior quarter and exceeded the mid-point of our guidance range, primarily driven by strength in demand for our wavelength selective switches. Gross margin also improved over the prior quarter and exceeded our guidance range due to favorable product mix,” said Michael Hurlston, Finisar’s Chief Executive Officer. “In addition, we were able to accelerate the process of bringing more focus to our product development efforts, which allowed the company to reduce relative expense levels faster than expected. In combination, this led to better earnings per share, exceeding the high end of our guidance range.”

FINANCIAL HIGHLIGHTS – First Quarter Ended July 29, 2018
Summary GAAP Results	First		Fourth
	Quarter		Quarter
	Ended		Ended
	July 29, 2018		April 29, 2018
	(in thousands, except per share amounts)
Revenues (a)	$317,336		$310,069
Gross margin	25.4%		20.2%
Operating expenses	$96,376		$89,330
Operating loss	$(15,691)		$(26,737)
Operating margin	(4.9)%		(8.6)%
Net loss	$(18,489)		$(18,344)
Loss per share-basic	$(0.16)		$(0.16)
Loss per share-diluted	$(0.16)		$(0.16)
Basic shares	115,867		114,742
Diluted shares	115,867		114,742
Summary Non-GAAP Results (b)	First		Fourth
	Quarter		Quarter
	Ended		Ended
	July 29, 2018		April 29, 2018
	(in thousands, except per share amounts)
Revenues (a)	$317,336		$310,069
Non-GAAP Gross margin	27.5%		24.7%
Non-GAAP Operating expenses	$68,311		$72,029
Non-GAAP Operating income	$18,841		$4,573
Non-GAAP Operating margin	5.9%		1.5%
Non-GAAP Net income	21,297		5,780
Non-GAAP Income per share-basic	$0.18		$0.05
Non-GAAP Income per share-diluted	$0.18		$0.05
Basic shares	115,867		114,742
Diluted shares	117,191		115,991

_____________

(a) During the first quarter of fiscal 2019, Finisar recognized revenue based on the ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” but revenue for the three months ended April 29, 2018 was recognized based on Topic 605. Therefore, the periods are not directly comparable. For additional information on the impact of the new revenue recognition accounting standard, see refer to Note 2 in the notes to condensed consolidated financial statements in Finisar’s Form 10-Q for the first quarter of fiscal 2019.

(b) 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.

OUTLOOK

Finisar indicated that for the second quarter of fiscal 2019 it currently expects revenues in the range of $315 to $335 million, non-GAAP gross margin of approximately 28%, non-GAAP operating margin of approximately 7-8%, and non-GAAP earnings per fully diluted share in the range of approximately $0.19 to $0.25.

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 fiscal quarter of 2019 and current business outlook during its regular quarterly conference call scheduled for September 6, 2018, 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 9594409.

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 9594409 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 16, 2017) and quarterly SEC filings.

ABOUT FINISAR

Finisar Corporation (NASDAQ: FNSR) is a global technology leader in optical communications, providing components and subsystems to networking equipment manufacturers, data center operators, telecom service providers, consumer electronics and automotive companies. Founded in 1988, Finisar designs products that meet the increasing demands for network bandwidth, data storage and 3D sensing subsystems. The company is headquartered in Sunnyvale, California, USA with R&D, manufacturing sites, and sales offices worldwide. Visit our website at www.finisar.com.

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

Finisar Corporation
Consolidated Balance Sheets
(in thousands)
	Jul 29, 2018				Apr 29, 2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	326,189			$	312,257
Short-term held-to-maturity investments		832,681				884,838
Accounts receivable, net		248,138				233,529
Inventories		325,846				348,527
Other current assets		54,863				56,001
Total current assets		1,787,717				1,835,152
Property, equipment and improvements, net		587,203				520,849
Purchased intangible assets, net		6,742				7,878
Goodwill		106,735				106,735
Other assets		25,179				31,721
Deferred tax assets		85,873				80,850
Total assets	$	2,599,449			$	2,583,185
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	149,876			$	132,161
Accrued compensation		35,349				32,525
Other accrued liabilities		50,944				32,824
Deferred revenue		-				9,535
Current portion of convertible notes		254,150				251,278
Total current liabilities		490,319				458,323
Long-term liabilities:
Convertible notes		494,316				488,877
Other non-current liabilities		11,366				12,368
Total liabilities		996,001				959,568
Stockholders' equity:
Common stock		117				115
Additional paid-in capital		2,869,657				2,850,195
Accumulated other comprehensive income (loss)		(44,356	)			(14,659	)
Accumulated deficit		(1,221,970	)			(1,212,034	)
Total stockholders' equity		1,603,448				1,623,617
Total liabilities and stockholders' equity	$	2,599,449			$	2,583,185
Note - Balance sheet amounts as of April 29, 2018 are derived from the audited consolidated financial statements as of that date.

Finisar Corporation
Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
	Three Months Ended								Three Months Ended
	Jul 29, 2018				Jul 30, 2017				Apr 29, 2018
Revenues	$	317,336			$	341,806			$	310,069
Cost of revenues		236,155				225,896				246,501
Amortization of acquired developed technology		496				611				604
Impairment of long-lived assets		-				-				371
Gross profit		80,685				115,299				62,593
Gross margin		25.4	%			33.7	%			20.2	%
Operating expenses:
Research and development		62,874				58,040				60,520
Sales and marketing		12,480				12,351				12,530
General and administrative		12,643				14,289				12,207
Startup costs		7,553				-				2,897
Amortization of purchased intangibles		640				707				666
Impairment of long-lived assets		186				-				510
Total operating expenses		96,376				85,387				89,330
Income (loss) from operations		(15,691	)			29,912				(26,737	)
Interest income		5,155				3,440				4,904
Interest expense		(9,386	)			(9,013	)			(9,322	)
Other income (expenses), net		(1,789	)			(2,694	)			1,097
Income (loss) before income taxes		(21,711	)			21,645				(30,058	)
Provision (benefit) for income taxes		(3,222	)			1,786				(11,714	)
Net income (loss)	$	(18,489	)		$	19,859			$	(18,344	)
Net income (loss) per share:
Basic	$	(0.16	)		$	0.18			$	(0.16	)
Diluted	$	(0.16	)		$	0.17			$	(0.16	)
Shares used in computing net income (loss) per share - basic		115,867				112,544				114,742
Shares used in computing net income (loss) per share - diluted		115,867				115,698				114,742

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:

• Amortization of acquired technology (non-cash charges related to technology obtained in acquisitions);
• Stock-based compensation expense (non-cash charges);
• Impairment of long-lived/intangible assets (non-cash charges);
• Reduction in force costs and other restructuring charges (non-core cash charges);
• Acquisition related retention payments (non-core cash charges); and
• Inventory write-off related to discontinued products (non-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:

• Discontinued product services fee (non-core cash charges);
• Duplicate facilities cost during facility move (non-core cash charges);
• Acquisition related costs (non-core cash charges);
• Litigation settlements and resolutions and related costs (non-core cash charges);
• Amortization of purchased intangibles (non-cash charges); and
• Start-up cash costs related to our Sherman VCSEL fab until we begin commercial production.

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 miscellaneous 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);
• Loss related to impairment of minority investment (non-core charges);
• 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.

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								Three Months Ended
	Jul 29, 2018				Jul 30, 2017				Apr 29, 2018
GAAP to non-GAAP reconciliation of gross profit:
Gross profit - GAAP	$	80,685			$	115,299			$	62,593
Gross margin - GAAP		25.4	%			33.7	%			20.2	%
Adjustments:
Cost of revenues
Amortization of acquired technology		496				611				604
Stock compensation		3,806				2,570				3,453
Impairment of long-lived/intangible assets		-				-				371
Reduction in force costs		482				634				556
Acquisition related retention payment		12				41				30
Write off of discontinued product inventory		1,671				-				8,995
Total cost of revenues adjustments		6,467				3,856				14,009
Gross profit - non-GAAP		87,152				119,155				76,602
Gross margin - non-GAAP		27.5	%			34.9	%			24.7	%
		-
GAAP to non-GAAP reconciliation of operating income (loss):
Operating income (loss) - GAAP		(15,691	)			29,912				(26,737	)
Operating margin - GAAP		-4.9	%			8.8	%			-8.6	%
Adjustments:
Total cost of revenues adjustments		6,467				3,856				14,009
Total operating expense adjustments
Operating expenses - GAAP		96,376				85,387				89,330
Research and development
Reduction in force costs and other restructuring		7,024				93				1,505
Acquisition related retention payment		29				32				32
Stock compensation		6,175				6,082				6,034
Discontinued product service fees		313				-				185
Sales and marketing
Reduction in force costs		402				(12	)			335
Acquisition related retention payment		-				(2	)			-
Stock compensation		2,146				2,044				1,956
General and administrative
Reduction in force costs		493				37				145
Duplicate facility costs during facility move		26				183				129
Stock compensation		3,017				3,069				2,233
Acquisition related costs		(2	)			4				127
Litigation settlements and resolutions and related costs		63				-				551
Amortization of purchased intangibles		640				707				666
Startup costs		7,553				-				2,897
Impairment of long-lived assets/intangible assets		186				-				506
Total operating expense adjustments		28,065				12,237				17,301
Operating expenses - non-GAAP		68,311				73,150				72,029
Operating income - non-GAAP		18,841				46,005				4,573
Operating margin - non-GAAP		5.9	%			13.5	%			1.5	%
GAAP to non-GAAP reconciliation of income (loss) before income taxes:
Income (loss) before income taxes - GAAP		(21,711	)			21,645				(30,058	)
Adjustments:
Total cost of revenues adjustments		6,467				3,856				14,009
Total operating expense adjustments		28,065				12,237				17,301
Non-cash imputed interest expenses on convertible debt		7,927				7,555				7,863
Imputed interest related to restructuring		20				30				23
Other (income) expense, net
Gain on sale of assets		(57	)			(113	)			(157	)
Loss related to impairment of minority investments		-				2,347				-
Other miscellaneous income		(20	)			(4	)			-
Foreign exchange transaction (gain) or loss		1,921				463				(936	)
Amortization of debt issuance cost		385				385				385
Total interest and other adjustments		10,176				10,663				7,178
Income before income taxes - non-GAAP		22,997				48,401				8,430
GAAP to non-GAAP reconciliation of net income (loss):
Net income (loss) - GAAP		(18,489	)			19,859				(18,344	)
Total cost of revenues adjustments		6,467				3,856				14,009
Total operating expense adjustments		28,065				12,237				17,301
Total interest and other adjustments		10,176				10,663				7,178
Income tax provision adjustments		(4,922	)			(865	)			(14,364	)
Total adjustments		39,786				25,891				24,124
Net income - non-GAAP	$	21,297			$	45,750			$	5,780
Non-GAAP net income for diluted earnings per share calculation
Non-GAAP net income	$	21,297			$	45,750			$	5,780
Add: interest expense for dilutive convertible notes		-				-				-
Adjusted non-GAAP income	$	21,297			$	45,750			$	5,780
Basic non-GAAP income per share
GAAP earnings per share	$	(0.16	)		$	0.18			$	(0.16	)
Impact of all non-GAAP adjustments	$	0.34			$	0.23			$	0.21
Non-GAAP earnings per share	$	0.18			$	0.41			$	0.05
Diluted non-GAAP income per share
GAAP earnings per share	$	(0.16	)		$	0.17			$	(0.16	)
Impact of all non-GAAP adjustments	$	0.34			$	0.23			$	0.21
Non-GAAP earnings per share	$	0.18			$	0.40			$	0.05
Shares used in computing non-GAAP income per share
Basic		115,867				112,544				114,742
Diluted		117,191				115,698				115,991

Finisar-F

Investor Contact: Kurt Adzema Chief Financial Officer 408-542-5050 or [email protected]

Press contact: Victoria McDonald Director, Corporate Communications408-542-4261

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