SOURCE:
Infinera
2008-07-22 15:10:00
Infinera Corporation Reports Second Quarter Financial Results
Infinera Corporation Reports Second Quarter Financial Results
Adjusted GAAP Revenue of $90.8 Million Compared With $69.0 Million in the Year Ago Quarter; Adjusted GAAP Net Income of $10.7 Million, or $0.11 per Diluted Share, Compared With $2.7 Million and $0.04 per Share in the Year Ago Quarter
SUNNYVALE, CA–(EMWNews – July 22, 2008) – Infinera Corporation (
leading provider of digital optical communications systems, today released
financial results for the second quarter ended June 28, 2008.
GAAP Results:
-- GAAP revenues for the second quarter of 2008 were $161.1 million
compared to $138.3 million in the first quarter of 2008 and $58.4
million in the second quarter of 2007.
-- GAAP gross margins were 50% in the second quarter of 2008 compared to
45% in the first quarter of 2008 and 28% in the second quarter of 2007.
-- Including non-cash stock-based compensation and warrant valuation
expenses, GAAP net income was $42.9 million, or $0.44 per diluted
share, in the second quarter of 2008 compared to $27.6 million, or
$0.29 per share, in the first quarter of 2008 and a GAAP net loss of
$26.1 million, or $1.10 per share, in the second quarter of 2007.
Adjusted GAAP / Invoiced Shipment Results:
-- Adjusted GAAP revenue for the second quarter of 2008 was $90.8 million
compared to $95.5 million of invoiced shipments in the first quarter of
2008 and $69.0 million of invoiced shipments in the second quarter
of 2007.
-- Gross margins on an adjusted GAAP basis, excluding non-cash stock-based
compensation, were 47% in the second quarter of 2008 compared to 45%
in the first quarter of 2008 and 37% in the second quarter of 2007.
-- Excluding non-cash stock-based compensation and warrant valuation
expenses, the net income on an adjusted GAAP basis was $10.7 million,
or $0.11 per diluted share, for the second quarter of 2008 compared to
net income on an invoiced shipments basis of $12.6 million, or $0.13
per diluted share, in the first quarter of 2008 and $2.7 million, or
$0.04 per share, in the second quarter of 2007.
Footnote: For an explanation of our use of Adjusted GAAP and Invoiced
Shipments 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 Invoiced Shipment and Adjusted GAAP
Reconciliation"
Management Commentary
“Our second quarter results reflect strong shipments of both our chassis
and tributary adapter modules,” said Jagdeep Singh, president and chief
executive officer of Infinera. “We grew revenues from international
customers to 22 percent and added two new customers in the quarter to bring
our total roster to 44. We generated operating profits and cash from
operations while maintaining our investments to expand our technology lead
as the world’s leading optical network based on photonic integration.
“We are committed to growing our business within markets where we have
established a beach-head and to continue expanding our customer base in
both existing and new markets. We have identified our highest growth
opportunities — international markets, global tier 1 carriers, new
adjacent markets including metro access and ultra long haul, and
under-penetrated North American markets. We are implementing strategic
initiatives to expand share in each of these market segments.”
Singh noted several second quarter performance highlights:
-- Deutsche Telekom selected Infinera for its long haul DWDM Pan
European network, representing a major Tier one incumbent win
for Infinera.
-- Three customers -- Level 3, Cox Communications and Global
Crossing -- were each 10 percent or greater of revenue, versus
four such customers in Q1.
-- Infinera announced several important technology advances, including:
-- The new next-generation Infinera ILS2 line system with up to 160
DWDM channels in the C-band and future scalability of
8 Terabits/second of total capacity.
-- Two new passive photonic integrated circuits (PICs) that integrate
passive devices such as multiplexers, interleavers, variable
optical attenuators and waveguides, and play key roles in routing
and filtering DWDM wavelengths in the ILS2 system.
-- A 100 Gigabit Ethernet (100 GbE) demonstration, in collaboration
with XO Communications, Avago Technologies and Ixia, that sent
100 GbE traffic over a long-haul network and demonstrated progress
towards making 100 GbE products and services a commercial
reality in the future.
Conference Call Information:
Infinera will host a conference call for analysts and investors to discuss
its second quarter results 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 1-866-503-3213. International parties
can access the replay at +1-203-369-1862.
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 relating to Infinera’s ability to change the economics of
optical communications networks and design products that are flexible and
economical for our customers, our belief that we will be able to expand our
technology lead as the world’s leading optical network based on photonic
integration, our belief we will be able to grow our business within
existing markets and to continue expanding our customer base in both
existing and new markets, future benefits and scalability of our products,
including the future scalability of 8 Terabits/second of total capacity for
our ILS2 system, and our belief that our recent demonstration shows
progress towards making 100 GbE products and services a commercial reality
in the future. 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 19, 2008, 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 invoiced shipments, adjusted GAAP revenue
and exclude non-GAAP non-cash stock-based compensation and warrant
valuation expenses. 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 Invoiced Shipment and Adjusted
GAAP Reconciliation” 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 second quarter of 2008 results, including an estimate
of adjusted GAAP earnings for the third quarter of 2008 that excludes
revenues and costs previously recognized on an invoiced shipments basis and
non-GAAP non-cash stock-based compensation expenses related to our equity
awards and the right to purchase common stock under our Employee Stock
Purchase Plan in the period.
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 share data)
(Unaudited)
Three Months Ended Six Months Ended
--------------------- --------------------
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
---------- --------- --------- ---------
Revenue:
Ratable product and related
support and services $ 69,581 $ 54,411 $ 141,967 $ 100,358
Product 86,505 4,005 150,633 7,250
Services 5,023 - 6,762 -
---------- --------- --------- ---------
Total revenue 161,109 58,416 299,362 107,608
Cost of revenue (1):
Cost of ratable product and
related support and services 32,169 39,748 68,000 75,658
Cost of product 47,124 2,488 86,789 3,851
Cost of services 2,032 - 3,222 -
---------- --------- --------- ---------
Total cost of revenue 81,325 42,236 158,011 79,509
Gross profit 79,784 16,180 141,351 28,099
Operating expenses (1):
Sales and marketing 10,860 6,401 21,106 14,037
Research and development 17,787 14,079 36,080 30,137
General and administrative 8,502 5,358 16,919 10,915
Amortization of intangible
assets 37 37 74 74
---------- --------- --------- ---------
Total operating expenses 37,186 25,875 74,179 55,163
Income (loss) from operations 42,598 (9,695) 67,172 (27,064)
Other income (expense), net:
Interest income 2,258 729 5,561 914
Interest expense 0 (1,119) (3) (2,182)
Other gain (loss), net (2): 296 (15,978) 1,176 (17,515)
---------- --------- --------- ---------
Total other income
(expense), net 2,554 (16,368) 6,734 (18,783)
Income (loss) before provision
for income taxes 45,152 (26,063) 73,906 (45,847)
Provision for income taxes 2,267 33 3,427 62
---------- --------- --------- ---------
Net income (loss) $ 42,885 $ (26,096) $ 70,479 $ (45,909)
========== ========= ========= =========
Net income (loss) per common
share
Basic $ 0.47 $ (1.10) $ 0.77 $ (2.94)
========== ========= ========= =========
Diluted $ 0.44 $ (1.10) $ 0.73 $ (2.94)
========== ========= ========= =========
Weighted average shares used in
computing net income (loss) per
common share
Basic 92,124 23,678 91,687 15,620
========== ========= ========= =========
Diluted 97,284 23,678 96,988 15,620
========== ========= ========= =========
(1) The following table summarizes the effects of stock-based compensation
related to employees, non-recourse notes and non-employees for the
three months ended June 28, 2008 and June 30, 2007:
Three Months Ended Six Months Ended
--------------------- --------------------
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
---------- --------- --------- ---------
Cost of revenue $ 271 $ 94 $ 479 $ 111
Research and development 1,629 1,014 2,852 1,323
Sales and marketing 1,164 346 2,014 433
General and administration 2,072 685 3,574 903
---------- --------- --------- ---------
5,136 2,139 8,919 2,770
Cost of revenue -
amortization from balance
sheet* 1,219 27 2,369 40
---------- --------- --------- ---------
Total stock-based
compensation expense $ 6,355 $ 2,166 $ 11,288 $ 2,810
========== ========= ========= =========
* 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 remeasurement of our freestanding
preferred stock warrants under FAS 150:
Three Months Ended Six Months Ended
--------------------- --------------------
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
---------- --------- --------- ---------
Other gain (loss) $ - $ (17,261) $ - $ (19,761)
Infinera Corporation
GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended June 28, 2008
------------------------------------------------------
Adjusted
Adjusted GAAP
Adjusted GAAP Excluding
Deferral GAAP Stock Stock
GAAP Adjustments Results Comp Comp
-------- -------- -------- -------- --------
Revenue
Product and
ratable revenue $156,086 $(70,349)(a) $ 85,737 $ - $ 85,737
Services
revenue 5,023 - 5,023 - 5,023
-------- -------- -------- -------- --------
Total revenue 161,109 (70,349) 90,760 - 90,760
Cost of revenue 81,325 (32,090)(c) 49,235 (1,176)(e) 48,059
-------- -------- -------- -------- --------
Gross profit 79,784 (38,259) 41,525 1,176 42,701
Gross margin 50% 47%
Operating expenses 37,186 - 37,186 (4,865)(e) 32,321
-------- -------- -------- -------- --------
Income (loss) from
operations 42,598 (38,259) 4,339 6,041 10,380
Other income
(expense), net 2,554 - 2,554 - 2,554
-------- -------- -------- -------- --------
Income (loss)
before provision
for income taxes 45,152 (38,259) 6,893 6,041 12,934
Provision for
income taxes 2,267 - 2,267 - 2,267
-------- -------- -------- -------- --------
Net income (loss) $ 42,885 $(38,259) $ 4,626 $ 6,041 $ 10,667
======== ======== ======== ======== ========
Net income (loss)
per common share:
Basic $ 0.47 $ 0.12
======== ========
Diluted $ 0.44 $ 0.11
======== ========
Weighted average
shares used in
computing net
income (loss) per
common share:
Basic 92,124 92,124
======== ========
Diluted 97,284 97,284
======== ========
Three Months Ended March 29, 2008
------------------------------------------------------
Non-GAAP
Invoiced
Shipments
Non-GAAP Excluding
Deferral Invoiced Stock Stock
GAAP Adjustments Shipments Comp Comp
-------- -------- -------- -------- --------
Revenue
Product and
ratable revenue $136,514 $(42,747)(b) $ 93,767 $ - $ 93,767
Services
revenue 1,739 1,739 - 1,739
-------- -------- -------- -------- --------
Total revenue 138,253 (42,747) 95,506 - 95,506
Cost of revenue 76,686 (23,022)(d) 53,664 (1,141)(e) 52,523
-------- -------- -------- -------- --------
Gross profit 61,567 (19,725) 41,842 1,141 42,983
Gross margin 45% 45%
Operating expenses 36,993 - 36,993 (3,575)(e) 33,418
-------- -------- -------- -------- --------
Income (loss) from
operations 24,574 (19,725) 4,849 4,716 9,565
Other income
(expense), net 4,180 - 4,180 - 4,180
-------- -------- -------- -------- --------
Income (loss)
before provision
for income taxes 28,754 (19,725) 9,029 4,716 13,745
Provision for
income taxes 1,160 - 1,160 - 1,160
-------- -------- -------- -------- --------
Net income (loss) $ 27,594 $(19,725) $ 7,869 $ 4,716 $ 12,585
======== ======== ======== ======== ========
Net income (loss)
per common share:
Basic $ 0.30 $ 0.14
======== ========
Diluted $ 0.29 $ 0.13
======== ========
Weighted average
shares used in
computing net
income (loss) per
common share:
Basic 91,250 91,250
======== ========
Diluted 96,692 96,692
-------- --------
Infinera Corporation
GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended June 30, 2007
------------------------------------------------------
Non-GAAP
Invoiced
Shipments
Excluding
Stock Stock
Comp/ Comp/
Deferral Invoiced Warrant Warrant
GAAP Adjustments Shipments Valuation Valuation
-------- -------- -------- -------- --------
Revenue $ 58,416 $ 10,535 (b) $ 68,951 $ - $ 68,951
Cost of revenue 42,236 1,248 (d) 43,484 (169)(e) 43,315
-------- -------- -------- -------- --------
Gross profit 16,180 9,287 25,467 169 25,636
Gross margin 28% 37%
Operating expenses 25,875 - 25,875 (2,045)(e) 23,830
-------- -------- -------- -------- --------
Income (Loss) from
operations (9,695) 9,287 (408) 2,214 1,806
Other income
(expense), net (16,368) - (16,368) 17,261 (f) 893
-------- -------- -------- -------- --------
Income (Loss)
before provision
for income taxes (26,063) 9,287 (16,776) 19,475 2,699
Provision for
income taxes 33 - 33 - 33
-------- -------- -------- -------- --------
Net income (loss) $(26,096) $ 9,287 $(16,809) $ 19,475 $ 2,666
======== ======== ======== ======== ========
Net income (loss)
per common share:
Basic $ (1.10) $ 0.11
======== ========
Diluted $ (1.10) $ 0.04
======== ========
Shares used in
computing net
income (loss) per
common share:
Basic 23,678 23,678
======== ========
Diluted 23,678 59,284
======== ========
Use of Non-GAAP Invoiced Shipments / Adjusted GAAP Information:
Prior to the second quarter of 2008, in order to supplement our condensed
consolidated financial statements presented on a GAAP basis, Infinera used
invoiced shipment measures of operating results and net income. Invoiced
shipment measures reflected GAAP results adjusted for changes in our
deferred revenue and deferred cost of inventory balances from the prior
period. We further presented non-GAAP measures of operating results, net
income and net income per share, which included invoiced shipments and
excluded non-GAAP stock-based compensation expense and warrant valuation
expense. These adjustments to our GAAP results were made to provide both
management and investors with an understanding of Infinera’s underlying
operating results and trends as they would have been reflected had we
established vendor specific objective evidence (“VSOE”) of fair value for
our service offerings and not been required to recognize revenue ratably.
Effective April 2008, we had established VSOE of fair value for most of our
service offerings. Therefore beginning in the second quarter of 2008, we
have used adjusted GAAP measures of operating results and net income.
Adjusted GAAP results reflect 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 have not been
adjusted and are recognized on a GAAP basis in arriving at the adjusted
GAAP results. We have continued to present non-GAAP measures of operating
results, net income and net income per share, which include adjusted GAAP
results and exclude non-GAAP stock-based compensation expense.
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.
Infinera Corporation
GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation
(In thousands)
Use of Non-GAAP Financial Measures (Continued):
(a) 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 services deferred 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 June 28, 2008
----------------------------------- ---------
Pre Mar 29, Post Mar
2008 29, 2008
Ratable and Ratable and
Product Product
Deferred Revenue Revenue Revenue Services Total
----------- ----------- --------- ---------
(In thousands)
Beginning balance $ 131,689 $ - $ 3,805 $ 135,494
Additions to deferred
revenue - 4,979 3,651 $ 8,630
Amortization to revenue (70,349) (1,866) (2,000) $ (74,215)
----------- ----------- --------- ---------
Ending balance $ 61,340 $ 3,113 $ 5,456 $ 69,909
=========== =========== ========= =========
----------- ----------- --------- ---------
Change in deferred revenue
balance $ (70,349) $ 3,113 $ 1,651 $ (65,585)
=========== =========== ========= =========
(b) Adjustment amount represents the change in the ratable and product
deferred revenue balance for the period as reported on our balance
sheet. No adjustment has been made for changes in services deferred
revenue as these amounts relate to future service deliverables and are
appropriately deferred on an invoiced shipment basis. We believe
investors want to see the statement of operations data with the
change in the ratable and product deferred revenue balances included
in order to understand the gross margin profile of the underlying
invoiced shipments.
The deferred revenue adjustments recorded above are reconciled to the
deferred revenue balance on our balance sheet in the table below:
Three Months
Three Months Ended March 29, Ended June
2008 30, 2007
------------------------------- ------------
Ratable
and
Product Services
Deferred Revenue Revenue Revenue Total Total
--------- --------- --------- ------------
(In thousands)
Beginning balance $ 174,437 $ - $ 174,437 $ 128,420
Additions to deferred
revenue 29,639 4,561 34,200 64,946
Amortization to revenue (72,386) (756) (73,142) (54,411)
--------- --------- --------- ------------
Ending balance $ 131,690 $ 3,805 $ 135,495 $ 138,955
========= ========= ========= ============
--------- --------- --------- ------------
Change in deferred revenue
balance $ (42,747) $ 3,805 $ (38,942) $ 10,535
--------- --------- --------- ------------
(c) Adjustment amount represents the release of ratable and product
deferred 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 revenue adjustments recorded above are reconciled to the
deferred revenue balance on our balance sheet in the table below:
Three Months Ended June 28, 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 $ 58,600 $ - $ 58,600
Additions to deferred cost of
revenue - 459 459
Amortized to cost of revenue (32,090) (9) (32,099)
------------ ------------ ---------
Ending balance $ 26,510 $ 450 $ 26,960
============ ============ =========
------------ ------------ ---------
Change in deferred inventory cost
balance $ (32,090) $ 450 $ (31,640)
------------ ------------ ---------
(d) Adjustment amount represents the change in the deferred cost of
inventory balance for the period as reported on our balance sheet.
We believe investors want to see the statement of operations data with
the change in the deferral balance included in order to understand the
gross margin profile of the underlying invoiced shipments and in order
to compare our financial performance with that of other companies and
between periods.
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
--------------------
Mar. 29 June 30
Deferred Inventory Cost 2008 2007
--------- ---------
(In thousands)
Beginning balance $ 81,622 $ 73,458
Additions to deferred cost of revenue 11,162 32,800
Amortized to cost of revenue (34,184) (31,552)
--------- ---------
Ending balance $ 58,600 $ 74,706
========= =========
--------- ---------
Change in deferred inventory cost balance $ (23,022) $ 1,248
--------- ---------
(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 Statement of Financial Accounting Standards No. 123(R). While 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
-------------------------
June March June
28, 29, 30,
2008 2008 2007
------- ------- -------
GAAP stock-based compensation in cost of revenue $ 271 $ 208 $ 94
GAAP stock-based compensation in cost of revenue
- amortization from balance sheet 1,219 1,150 26
Stock-based compensation not deferred to
deferred inventory cost 0 215 71
Stock-based compensation previously recognized
on invoiced shipment basis (314) (432) (22)
------- ------- -------
Non-GAAP stock-based compensation in cost of
revenue $ 1,176 $ 1,141 $ 169
------- ------- -------
(f) Excluded amount represents the adjustment to revalue our convertible
preferred warrants to fair value as required by FAS 150. Subsequent
to our IPO, we are no longer required to revalue these warrants and,
therefore, we believe investors want to evaluate our financial results
both including and excluding the effect of this revaluation expense
in order to compare our financial performance with that of other
companies and between periods.
Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands)
June 28, December 29,
2008 2007
----------- -----------
ASSETS (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 135,963 $ 91,209
Short-term investments 74,203 181,168
Short-term restricted cash 873 743
Accounts receivable 56,804 39,216
Other receivables 487 1,127
Inventory 57,643 58,579
Deferred inventory costs 24,114 78,362
Prepaid expenses and other current assets 5,704 3,941
----------- -----------
Total current assets 355,791 454,345
Property, plant and equipment, net 40,651 36,973
Intangible assets 1,408 1,541
Deferred inventory costs, non-current 2,846 3,260
Long-term investments 105,132 30,116
Long-term restricted cash 2,046 2,594
Other non-current assets 665 359
----------- -----------
Total assets $ 508,539 $ 529,188
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,154 $ 17,504
Accrued expenses 9,829 9,497
Accrued compensation and related benefits 11,431 17,749
Accrued warranty 5,529 4,974
Deferred revenue 63,028 167,031
----------- -----------
Total current liabilities 113,971 216,755
Accrued warranty, non-current 5,031 5,018
Deferred revenue, non-current 6,881 7,406
Long-term exercised unvested options 453 825
Other long-term liabilities 3,537 4,610
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 June 28,
2008 and December 29, 2007 Issued and
outstanding shares - 93,077 as of June 28,
2008 and 91,580 as of December 29, 2007 93 92
Additional paid-in capital 682,695 663,870
Accumulated other comprehensive income (loss) (5,135) 78
Accumulated deficit (298,987) (369,466)
----------- -----------
Total stockholders' equity 378,666 294,574
----------- -----------
Total liabilities and stockholders' equity $ 508,539 $ 529,188
=========== ===========
The accompanying notes are an integral part of these
financial statements.
Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
--------------------
June 28, June 30,
2008 2007
--------- ---------
Cash Flows from Operating Activities:
Net income (loss) $ 70,479 $ (45,909)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 5,469 4,423
Amortization of debt discount 282
Accretion of investment discount (725) -
Asset impairment charges 393
Stock-based compensation expense 11,288 2,810
Excess tax benefit from stock option transactions (559) -
Tax benefit from stock option transactions 623 -
Revaluation of warrant liablities 19,761
Gain on disposal of assets (770) (2,021)
Other gain (15) (25)
Changes in assets and liabilities:
Accounts receivable (16,949) 14,732
Inventory 479 1,661
Prepaid expenses and other current assets (1,782) 39
Deferred inventory costs 54,143 (7,493)
Other non-current assets (314) 599
Accounts payable 4,901 (12,761)
Accrued liabilities and other expenses (6,902) (5,603)
Deferred revenue (104,528) 28,002
Accrued warranty 568 7,318
--------- ---------
Net cash provided by operating activities 15,406 6,208
Cash Flows from Investing Activities:
Purchase of available-for-sale investments (123,624) -
Proceeds from sale of investments 69,543 -
Proceeds from maturities of investments and
restricted cash 82,304 -
Proceeds from disposal of assets 771 2,537
Purchase of property and equipment (7,283) (8,723)
--------- ---------
Net cash (used in) investing activities 21,711 (6,186)
Cash Flows from Financing Activities:
Principal payments on loan obligation (30,901)
Proceeds from loans 7,119
Proceeds from initial public offering, net of
issuance costs 190,245
Proceeds from issuance of common stock 7,164 2,050
Excess tax benefit from stock option transactions 559 -
Repurchase of common stock (30) (50)
--------- ---------
Net cash provided by financing activities 7,693 168,463
--------- ---------
Effect of exchange rate changes (56) 49
Net change in cash and cash equivalents 44,754 168,534
Cash and cash equivalents at beginning of period 91,209 28,884
--------- ---------
Cash and cash equivalents at end of period $ 135,963 $ 197,418
========= =========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 3 $ 2,203
Cash paid for income taxes $ 593 $ 81
The accompanying notes are an integral part of these financial statements.
Infinera Corporation
Supplemental Financial Information
Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08
------- ------- ------- ------- ------- -------
Invoiced Shipments/
Adjusted GAAP $ 66.7 $ 69.0 $ 80.4 $ 93.4 $ 95.5 $ 90.8
Gross Margin % 35% 37% 43% 47% 45% 47%
------- ------- ------- ------- ------- -------
Invoiced Shipment
Composition:
Domestic % 89% 84% 81% 81% 82% 78%
International % 11% 16% 19% 19% 18% 22%
Largest Customer % 57% 48% 28% 18% 31% 21%
------- ------- ------- ------- ------- -------
Cash Related
Information:
Cash from Operations $ 6.9 ($ 0.8)($ 2.0) $ 18.9 $ 9.8 $ 5.6
Capital Expenditures $ 5.2 $ 3.6 $ 3.0 $ 8.5 $ 2.5 $ 4.8
Depreciation &
Amortization $ 2.1 $ 2.0 $ 2.7 $ 2.7 $ 2.6 $ 2.9
DSO's 27 36 47 39 42 57
------- ------- ------- ------- ------- -------
Inventory Metrics:
Raw Materials $ 7.4 $ 8.8 $ 7.5 $ 10.5 $ 7.9 $ 9.2
Work in Process $ 31.6 $ 36.0 $ 34.8 $ 35.1 $ 40.6 $ 34.6
Finished Goods $ 18.4 $ 13.7 $ 14.8 $ 13.0 $ 10.7 $ 13.8
------- ------- ------- ------- ------- -------
Total Inventory $ 57.3 $ 58.5 $ 57.1 $ 58.6 $ 59.2 $ 57.6
Inventory Turns 3.0 3.0 3.2 3.4 3.5 3.3
------- ------- ------- ------- ------- -------
Worldwide Headcount 617 646 668 711 799 853
------- ------- ------- ------- ------- -------
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