SUNNYVALE, CA --(Marketwired - October 26, 2016) - Infinera Corporation (
GAAP revenue for the quarter was $185.5 million compared to $258.8 million in the second quarter of 2016 and $232.5 million in the third quarter of 2015.
GAAP gross margin for the quarter was 45.6% compared to 47.8% in the second quarter of 2016 and 44.2% in the third quarter of 2015. GAAP operating margin for the quarter was (5.9)% compared to 6.2% in the second quarter of 2016 and 6.1% in the third quarter of 2015.
GAAP net loss for the quarter was $(11.2) million, or $(0.08) per share, compared to net income of $11.5 million, or $0.08 per diluted share, in the second quarter of 2016, and net income of $8.5 million, or $0.06 per diluted share, in the third quarter of 2015.
Non-GAAP revenue for the quarter was $185.5 million compared to $259.0 million in the second quarter of 2016 and $233.2 million in the third quarter of 2015.
Non-GAAP gross margin for the quarter was 49.2% compared to 50.4% in the second quarter of 2016 and 47.5% in the third quarter of 2015. Non-GAAP operating margin for the quarter was 3.6% compared to 13.2% in the second quarter of 2016 and 14.4% in the third quarter of 2015.
Non-GAAP net income for the quarter was $7.4 million, or $0.05 per diluted share, compared to $30.9 million, or $0.21 per diluted share, in the second quarter of 2016, and $32.2 million, or $0.22 per diluted share, in the third quarter of 2015.
A further explanation of the use of non-GAAP financial information and a reconciliation of the non-GAAP financial measures to the GAAP equivalents can be found at the end of this release.
"As expected, weak demand across much of our business in the third quarter led to financial results that were below our standards," said Tom Fallon, Infinera's Chief Executive Officer. "While the revenue environment is likely to remain challenging in the near term, we are making continued progress towards delivering our next generation of products and increasing the cadence in which we will introduce step function technology improvements. I firmly believe that we have the team and the core technologies that will enable us to recover from our current challenges and ultimately return to delivering differentiated financial results."
Conference Call Information
Infinera will host a conference call for analysts and investors to discuss its third quarter 2016 results and its outlook for the fourth quarter of 2016 today at 5:30 p.m. Eastern Time (2:30 p.m. Pacific Time). Interested parties may join the conference call by dialing 1-866-373-6878 (toll free) or 1-412-317-5101 (international). A live webcast of the conference call will also be accessible from the Events & Webcasts section of Infinera's website at investors.infinera.com. Replay of the audio webcast will be available at investors.infinera.com approximately two hours after the end of the live call.
About Infinera
Infinera provides Intelligent Transport Networks, enabling carriers, cloud operators, governments and enterprises to scale network bandwidth, accelerate service innovation and simplify optical network operations. Infinera's end-to-end packet-optical portfolio is designed for long-haul, subsea, data center interconnect and metro applications. Infinera's unique large scale photonic integrated circuits enable innovative optical networking solutions for the most demanding networks. To learn more about Infinera visit www.infinera.com , follow us on Twitter @Infinera and read our latest blog posts at blog.infinera.com.
Forward-Looking Statements
This press release contains certain forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties. Such forward-looking statements include, without limitation, Infinera's expectations regarding its next generation of products and step function technology improvements; and Infinera's ability to recover from its current challenges and ultimately return to delivering differentiated financial results. Forward-looking statements can also be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. These statements are based on information available to Infinera as of the date hereof and actual results could differ materially from those stated or implied due to risks and uncertainties. The risks and uncertainties that could cause Infinera's results to differ materially from those expressed or implied by such forward-looking statements include delays in the development and introduction of new products or updates to existing products and market acceptance of these products; the effect that changes in product pricing or mix, and/or increases in component costs could have on Infinera's gross margin; Infinera's ability to respond to rapid technological changes; aggressive business tactics by Infinera's competitors; Infinera's reliance on single-source suppliers; Infinera's ability to protect Infinera's intellectual property; Infinera's ability to successfully integrate the Infinera and Transmode businesses; claims by others that Infinera infringes their intellectual property; the effect of global macroeconomic conditions on Infinera's business; war, terrorism, public health issues, natural disasters and other circumstances that could disrupt the supply, delivery or demand of Infinera's products; and other risks and uncertainties detailed in Infinera's SEC filings from time to time. More information on potential factors that may impact Infinera's business are set forth in its Quarterly Report on Form 10-Q for the quarter ended on June 25, 2016 as filed with the SEC on August 2, 2016, as well as subsequent reports filed with or furnished to the SEC from time to time. These reports are available on Infinera's website at www.infinera.com and the SEC's website at www.sec.gov . Infinera assumes no obligation to, and does not currently intend to, update any such forward-looking statements.
Use of Non-GAAP Financial Information
In addition to disclosing financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP measures that exclude non-cash stock-based compensation expenses, acquisition-related costs, certain purchase accounting adjustments related to Infinera's acquisition of Transmode AB, which closed during the third quarter of 2015, and amortization of debt discount on Infinera's convertible senior notes. Infinera believes these adjustments are appropriate to enhance an overall understanding of its underlying financial performance and also its 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 its 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, basic and diluted net income per share, gross margin or operating margin 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. For a description of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures, please see the section titled, "GAAP to Non-GAAP Reconciliations." Infinera anticipates disclosing forward-looking non-GAAP information in its conference call to discuss its third quarter 2016 results, including an estimate of certain non-GAAP financial measures for the fourth quarter of 2016 that excludes non-cash stock-based compensation expenses, acquisition-related costs, certain purchase accounting adjustments related to Infinera's acquisition of Transmode AB and amortization of debt discount on Infinera's convertible senior notes.
A copy of this press release can be found on the Investor Relations page of Infinera's website at www.infinera.com .
Infinera 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 per share data) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | |||||||||||||||
| Revenue: | ||||||||||||||||||
| Product | $ | 156,188 | $ | 202,365 | $ | 599,802 | $ | 542,190 | ||||||||||
| Services | 29,264 | 30,107 | 89,290 | 84,490 | ||||||||||||||
| Total revenue | 185,452 | 232,472 | 689,092 | 626,680 | ||||||||||||||
| Cost of revenue: | ||||||||||||||||||
| Cost of product | 91,064 | 117,154 | 331,564 | 306,151 | ||||||||||||||
| Cost of services | 9,786 | 12,513 | 32,842 | 32,816 | ||||||||||||||
| Total cost of revenue | 100,850 | 129,667 | 364,406 | 338,967 | ||||||||||||||
| Gross profit | 84,602 | 102,805 | 324,686 | 287,713 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development | 50,855 | 45,466 | 164,541 | 128,144 | ||||||||||||||
| Sales and marketing | 27,960 | 24,721 | 88,434 | 67,298 | ||||||||||||||
| General and administrative | 16,646 | 18,358 | 51,617 | 46,324 | ||||||||||||||
| Total operating expenses | 95,461 | 88,545 | 304,592 | 241,766 | ||||||||||||||
| Income (loss) from operations | (10,859 | ) | 14,260 | 20,094 | 45,947 | |||||||||||||
| Other income (expense), net: | ||||||||||||||||||
| Interest income | 647 | 406 | 1,764 | 1,371 | ||||||||||||||
| Interest expense | (3,313 | ) | (3,014 | ) | (9,644 | ) | (8,851 | ) | ||||||||||
| Other gain (loss), net: | (188 | ) | (3,293 | ) | (1,116 | ) | 1,788 | |||||||||||
| Total other income (expense), net | (2,854 | ) | (5,901 | ) | (8,996 | ) | (5,692 | ) | ||||||||||
| Income (loss) before income taxes | (13,713 | ) | 8,359 | 11,098 | 40,255 | |||||||||||||
| Provision for (benefit from) income taxes | (2,416 | ) | (151 | ) | (725 | ) | 1,473 | |||||||||||
| Net income (loss) | (11,297 | ) | 8,510 | 11,823 | 38,782 | |||||||||||||
| Less: Net loss attributable to noncontrolling interest | (125 | ) | - | (503 | ) | - | ||||||||||||
| Net income (loss) attributable to Infinera Corporation | $ | (11,172 | ) | $ | 8,510 | $ | 12,326 | $ | 38,782 | |||||||||
| Net income (loss) per common share attributable to Infinera Corporation: | ||||||||||||||||||
| Basic | $ | (0.08 | ) | $ | 0.06 | $ | 0.09 | $ | 0.30 | |||||||||
| Diluted | $ | (0.08 | ) | $ | 0.06 | $ | 0.08 | $ | 0.27 | |||||||||
| Weighted average shares used in computing net income (loss) per common share: | ||||||||||||||||||
| Basic | 143,850 | 134,834 | 142,350 | 131,007 | ||||||||||||||
| Diluted | 143,850 | 145,300 | 145,921 | 141,082 | ||||||||||||||
| Infinera Corporation | |||||||||||||||||||||||||||||||||||
| GAAP to Non-GAAP Reconciliations | |||||||||||||||||||||||||||||||||||
| (In thousands, except percentages and per share data) | |||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 24, 2016 | June 25, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | |||||||||||||||||||||||||||||||
| Reconciliation of Revenue: | |||||||||||||||||||||||||||||||||||
| U.S. GAAP as reported | $ | 185,452 | $ | 258,822 | $ | 232,472 | $ | 689,092 | $ | 626,680 | |||||||||||||||||||||||||
| Acquisition-related deferred revenue adjustment (1) | - | 174 | 721 | 400 | 721 | ||||||||||||||||||||||||||||||
| Non-GAAP as adjusted | $ | 185,452 | $ | 258,996 | $ | 233,193 | $ | 689,492 | $ | 627,401 | |||||||||||||||||||||||||
| Reconciliation of Gross Profit: | |||||||||||||||||||||||||||||||||||
| U.S. GAAP as reported | $ | 84,602 | 45.6 | % | $ | 123,746 | 47.8 | % | $ | 102,805 | 44.2 | % | $ | 324,686 | 47.1 | % | $ | 287,713 | 45.9 | % | |||||||||||||||
| Stock-based compensation (2) | 1,424 | 1,658 | 1,621 | 4,614 | 4,357 | ||||||||||||||||||||||||||||||
| Acquisition-related deferred revenue adjustment (1) | - | 174 | 721 | 400 | 721 | ||||||||||||||||||||||||||||||
| Amortization of acquired intangible assets (3) | 5,102 | 4,998 | 1,922 | 14,970 | 1,922 | ||||||||||||||||||||||||||||||
| Acquisition-related inventory step-up expense (4) | - | - | 3,620 | - | 3,620 | ||||||||||||||||||||||||||||||
| Acquisition-related costs (4) | 38 | 40 | - | 117 | - | ||||||||||||||||||||||||||||||
| Non-GAAP as adjusted | $ | 91,166 | 49.2 | % | $ | 130,616 | 50.4 | % | $ | 110,689 | 47.5 | % | $ | 344,787 | 50.0 | % | $ | 298,333 | 47.6 | % | |||||||||||||||
| Reconciliation of Operating Expenses: | |||||||||||||||||||||||||||||||||||
| U.S. GAAP as reported | $ | 95,461 | $ | 107,664 | $ | 88,545 | $ | 304,592 | $ | 241,766 | |||||||||||||||||||||||||
| Stock-based compensation (2) | 8,787 | 9,335 | 6,830 | 24,577 | 19,511 | ||||||||||||||||||||||||||||||
| Amortization of acquired intangible assets (3) | 1,537 | 1,584 | 686 | 4,753 | 686 | ||||||||||||||||||||||||||||||
| Acquisition-related costs (4) | 563 | 402 | 3,950 | 1,453 | 6,676 | ||||||||||||||||||||||||||||||
| Non-GAAP as adjusted | $ | 84,574 | $ | 96,343 | $ | 77,079 | $ | 273,809 | $ | 214,893 | |||||||||||||||||||||||||
| Reconciliation of Income (Loss) from Operations: | |||||||||||||||||||||||||||||||||||
| U.S. GAAP as reported | $ | (10,859 | ) | (5.9 | )% | $ | 16,082 | 6.2 | % | $ | 14,260 | 6.1 | % | $ | 20,094 | 2.9 | % | $ | 45,947 | 7.3 | % | ||||||||||||||
| Stock-based compensation (2) | 10,211 | 10,993 | 8,451 | 29,191 | 23,868 | ||||||||||||||||||||||||||||||
| Acquisition-related deferred revenue adjustment (1) | - | 174 | 721 | 400 | 721 | ||||||||||||||||||||||||||||||
| Amortization of acquired intangible assets (3) | 6,639 | 6,582 | 2,608 | 19,723 | 2,608 | ||||||||||||||||||||||||||||||
| Acquisition-related inventory step-up expense (4) | - | - | 3,620 | - | 3,620 | ||||||||||||||||||||||||||||||
| Acquisition-related costs (4) | 601 | 442 | 3,950 | 1,570 | 6,676 | ||||||||||||||||||||||||||||||
| Non-GAAP as adjusted | $ | 6,592 | 3.6 | % | $ | 34,273 | 13.2 | % | $ | 33,610 | 14.4 | % | $ | 70,978 | 10.3 | % | $ | 83,440 | 13.3 | % | |||||||||||||||
| Reconciliation of Net Income (Loss) Attributable to Infinera Corporation: | |||||||||||||||||||||||||||||||||||
| U.S. GAAP as reported | $ | (11,172 | ) | $ | 11,483 | $ | 8,510 | $ | 12,326 | $ | 38,782 | ||||||||||||||||||||||||
| Stock-based compensation (2) | 10,211 | 10,993 | 8,451 | 29,191 | 23,868 | ||||||||||||||||||||||||||||||
| Acquisition-related deferred revenue adjustment (1) | - | 174 | 721 | 400 | 721 | ||||||||||||||||||||||||||||||
| Amortization of acquired intangible assets (3) | 6,639 | 6,582 | 2,608 | 19,723 | 2,608 | ||||||||||||||||||||||||||||||
| Acquisition-related inventory step-up expense (4) | - | - | 3,620 | - | 3,620 | ||||||||||||||||||||||||||||||
| Acquisition-related costs (4) | 874 | 862 | 3,950 | 2,263 | 6,676 | ||||||||||||||||||||||||||||||
| Acquisition-related forward contract (gain) loss (5) | - | - | 3,728 | - | (1,054 | ) | |||||||||||||||||||||||||||||
| Amortization of debt discount (6) | 2,391 | 2,331 | 2,162 | 6,996 | 6,328 | ||||||||||||||||||||||||||||||
| Income tax effects (7) | (1,519 | ) | (1,510 | ) | (1,529 | ) | (4,531 | ) | (1,529 | ) | |||||||||||||||||||||||||
| Non-GAAP as adjusted | $ | 7,424 | $ | 30,915 | $ | 32,221 | $ | 66,368 | $ | 80,020 | |||||||||||||||||||||||||
| Net Income (Loss) per Common Share Attributable to Infinera Corporation - Basic: | |||||||||||||||||||||||||||||||||||
| U.S. GAAP as reported | $ | (0.08 | ) | $ | 0.08 | $ | 0.06 | $ | 0.09 | $ | 0.30 | ||||||||||||||||||||||||
| Non-GAAP as adjusted | $ | 0.05 | $ | 0.22 | $ | 0.24 | $ | 0.47 | $ | 0.61 | |||||||||||||||||||||||||
| Net Income (Loss) per Common Share Attributable to Infinera Corporation - Diluted: | |||||||||||||||||||||||||||||||||||
| U.S. GAAP as reported | $ | (0.08 | ) | $ | 0.08 | $ | 0.06 | $ | 0.08 | $ | 0.27 | ||||||||||||||||||||||||
| Non-GAAP as adjusted | $ | 0.05 | $ | 0.21 | $ | 0.22 | $ | 0.45 | $ | 0.57 | |||||||||||||||||||||||||
| Weighted Average Shares Used in Computing Net Income (Loss) per Common Share: | |||||||||||||||||||||||||||||||||||
| Basic | 143,850 | 142,396 | 134,834 | 142,350 | 131,007 | ||||||||||||||||||||||||||||||
| Diluted | 144,993 | 145,851 | 145,300 | 145,921 | 141,082 | ||||||||||||||||||||||||||||||
| (1) | Business combination accounting principles require Infinera to write down to fair value its maintenance support contracts assumed in the Transmode acquisition. The revenue for these support contracts is deferred and typically recognized over a one year period, so Infinera's GAAP revenue for the one year period after the acquisition will not reflect the full amount of revenue that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP adjustment eliminates the effect of the deferred revenue write-down. Management believes these adjustments to the revenue from these support contracts are useful to investors as an additional means to reflect revenue trends of Infinera's business. | |
| (2) | Stock-based compensation expense is calculated in accordance with the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation effective January 1, 2006. The following table summarizes the effects of stock-based compensation related to employees and non-employees (in thousands): | |
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 24, 2016 | June 25, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | |||||||||||
| Cost of revenue | $ | 756 | $ | 746 | $ | 645 | $ | 2,175 | $ | 1,740 | |||||
| Research and development | 3,496 | 3,904 | 2,788 | 9,721 | 8,183 | ||||||||||
| Sales and marketing | 2,826 | 2,945 | 2,131 | 8,006 | 5,922 | ||||||||||
| General and administration | 2,465 | 2,486 | 1,911 | 6,850 | 5,406 | ||||||||||
| 9,543 | 10,081 | 7,475 | 26,752 | 21,251 | |||||||||||
| Cost of revenue - amortization from balance sheet* | 668 | 912 | 976 | 2,439 | 2,617 | ||||||||||
| Total stock-based compensation expense | $ | 10,211 | $ | 10,993 | $ | 8,451 | $ | 29,191 | $ | 23,868 | |||||
| * | Stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods and recognized in the current period. | |
| (3) | Amortization of acquisition-related intangible assets consists of amortization of developed technology, trade names, and customer relationships acquired in connection with the Transmode acquisition. U.S. GAAP accounting requires that acquired intangible assets are recorded at fair value and amortized over their useful lives. As this amortization is non-cash, Infinera has excluded it from its non-GAAP operating expenses, gross margin and net income measures. Management believes the amortization of acquired intangible assets is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera's underlying business performance. | |
| (4) | Acquisition-related costs associated with the Transmode acquisition include legal, financial, employee retention costs and other professional fees incurred in connection with the transaction, including squeeze-out proceedings. These amounts have been adjusted in arriving at Infinera's non-GAAP results because management believes that these expenses are non-recurring, not indicative of ongoing operating performance and their exclusion provides a better indication of Infinera's underlying business performance. | |
| (5) | In April 2015, Infinera entered into a foreign currency forward contract and in July 2015, Infinera entered into a series of foreign currency exchange option contracts to hedge currency exposures associated with the cash portion of the offer to acquire Transmode. The forward contract and option contracts were subsequently closed during the third quarter of 2015. The net change in the fair value of the forward contract and option contracts impacted Infinera's financial statements for the current interim reporting period. Management has excluded the impact of these gains and losses in arriving at Infinera's non-GAAP results because they are non-recurring and management believes that these gains are not indicative of ongoing operating performance. | |
| (6) | Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. Accordingly, for GAAP purposes, Infinera is required to amortize as debt discount an amount equal to the fair value of the conversion option that was recorded in equity as interest expense on its $150 million 1.75% convertible debt issuance in May 2013 over the term of the notes. Interest expense has been excluded from Infinera's non-GAAP results because management believes that this non-cash expense is not indicative of ongoing operating performance and provides a better indication of Infinera's underlying business performance. | |
| (7) | The difference between the GAAP and non-GAAP tax is due to the net tax effects of the purchase accounting adjustments and acquisition-related costs related to the Transmode acquisition. | |
| Infinera Corporation | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (In thousands, except par values) | ||||||||||
| (Unaudited) | ||||||||||
| September 24, 2016 | December 26, 2015 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 130,996 | $ | 149,101 | ||||||
| Short-term investments | 136,643 | 125,561 | ||||||||
| Short-term restricted cash | 9,700 | - | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of $807 in 2016 and $630 in 2015 | 152,467 | 186,243 | ||||||||
| Inventory | 231,528 | 174,699 | ||||||||
| Prepaid expenses and other current assets | 30,520 | 29,511 | ||||||||
| Total current assets | 691,854 | 665,115 | ||||||||
| Property, plant and equipment, net | 120,137 | 110,861 | ||||||||
| Intangible assets | 133,939 | 156,319 | ||||||||
| Goodwill | 187,927 | 191,560 | ||||||||
| Long-term investments | 72,439 | 76,507 | ||||||||
| Cost-method investment | 19,500 | 14,500 | ||||||||
| Long-term restricted cash | 6,467 | 5,310 | ||||||||
| Other non-current assets | 4,196 | 4,009 | ||||||||
| Total assets | $ | 1,236,459 | $ | 1,224,181 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 76,789 | $ | 92,554 | ||||||
| Accrued expenses | 37,857 | 33,736 | ||||||||
| Accrued compensation and related benefits | 37,942 | 49,887 | ||||||||
| Accrued warranty | 15,875 | 17,889 | ||||||||
| Deferred revenue | 38,063 | 42,977 | ||||||||
| Total current liabilities | 206,526 | 237,043 | ||||||||
| Long-term debt, net | 130,924 | 123,327 | ||||||||
| Accrued warranty, non-current | 22,746 | 20,955 | ||||||||
| Deferred revenue, non-current | 18,369 | 13,881 | ||||||||
| Deferred tax liability | 31,419 | 35,731 | ||||||||
| Other long-term liabilities | 18,161 | 16,183 | ||||||||
| 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 September 24, 2016 and December 26, 2015 | ||||||||||
| Issued and outstanding shares - 144,536 as of September 24, 2016 and 140,197 as of December 26, 2015 | 145 | 140 | ||||||||
| Additional paid-in capital | 1,341,501 | 1,300,301 | ||||||||
| Accumulated other comprehensive income (loss) | (6,010 | ) | 1,123 | |||||||
| Accumulated deficit | (527,322 | ) | (539,413 | ) | ||||||
| Total Infinera Corporation stockholders' equity | 808,314 | 762,151 | ||||||||
| Noncontrolling interest | - | 14,910 | ||||||||
| Total stockholders' equity | 808,314 | 777,061 | ||||||||
| Total liabilities and stockholders' equity | $ | 1,236,459 | $ | 1,224,181 | ||||||
| Infinera Corporation | |||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||
| (In thousands)(Unaudited) | |||||||||||
| Nine Months Ended | |||||||||||
| September 24, 2016 | September 26, 2015 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net income | $ | 11,823 | $ | 38,782 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 45,764 | 22,094 | |||||||||
| Amortization of debt discount and issuance costs | 7,598 | 6,873 | |||||||||
| Amortization of premium on investments | 925 | 2,405 | |||||||||
| Stock-based compensation expense | 29,191 | 23,868 | |||||||||
| Other loss (gain) | 261 | (448 | ) | ||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | 33,044 | 28,838 | |||||||||
| Inventory | (61,078 | ) | (8,901 | ) | |||||||
| Prepaid expenses and other assets | (1,625 | ) | (6,058 | ) | |||||||
| Accounts payable | (13,935 | ) | (2,339 | ) | |||||||
| Accrued liabilities and other expenses | (7,580 | ) | (7,196 | ) | |||||||
| Deferred revenue | (805 | ) | 700 | ||||||||
| Accrued warranty | (179 | ) | 8,742 | ||||||||
| Net cash provided by operating activities | 43,404 | 107,360 | |||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Purchase of available-for-sale investments | (118,017 | ) | (126,940 | ) | |||||||
| Acquisition of business, net of cash acquired | - | (144,445 | ) | ||||||||
| Realized gain from forward contract for business acquisition | - | 1,053 | |||||||||
| Purchase of cost-method investment | (5,000 | ) | - | ||||||||
| Proceeds from sales of available-for-sale investments | - | 67,303 | |||||||||
| Proceeds from maturities and calls of investments | 110,554 | 178,717 | |||||||||
| Purchase of property and equipment | (32,878 | ) | (26,710 | ) | |||||||
| Change in restricted cash | (4,950 | ) | 127 | ||||||||
| Net cash used in investing activities | (50,291 | ) | (50,895 | ) | |||||||
| Cash Flows from Financing Activities: | |||||||||||
| Security pledge related to Squeeze-out Proceedings | (5,921 | ) | - | ||||||||
| Acquisition of noncontrolling interest | (16,771 | ) | - | ||||||||
| Proceeds from issuance of common stock | 16,486 | 23,433 | |||||||||
| Minimum tax withholding paid on behalf of employees for net share settlement | (3,592 | ) | (5,043 | ) | |||||||
| Net cash provided by (used in) financing activities | (9,798 | ) | 18,390 | ||||||||
| Effect of exchange rate changes on cash | (1,420 | ) | (247 | ) | |||||||
| Net change in cash and cash equivalents | (18,105 | ) | 74,608 | ||||||||
| Cash and cash equivalents at beginning of period | 149,101 | 86,495 | |||||||||
| Cash and cash equivalents at end of period | $ | 130,996 | $ | 161,103 | |||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid for income taxes, net of refunds | $ | 5,557 | $ | 2,552 | |||||||
| Cash paid for interest | $ | 1,445 | $ | 1,317 | |||||||
| Supplemental schedule of non-cash investing activities: | |||||||||||
| Transfer of inventory to fixed assets | $ | 5,211 | $ | 5,861 | |||||||
| Common stock issued in connection with acquisition | $ | - | $ | 169,507 | |||||||
| Infinera Corporation | |||||||||||||||||||||||||||||||
| Supplemental Financial Information | |||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||
| Q4'14 | Q1'15 | Q2'15 | Q3'15 | Q4'15 | Q1'16 | Q2'16 | Q3'16 | ||||||||||||||||||||||||
| Revenue ($ Mil) | $ | 186.3 | $ | 186.9 | $ | 207.3 | $ | 232.5 | $ | 260.0 | $ | 244.8 | $ | 258.8 | $ | 185.5 | |||||||||||||||
| GAAP Gross Margin % | 45.3 | % | 47.2 | % | 46.7 | % | 44.2 | % | 44.5 | % | 47.5 | % | 47.8 | % | 45.6 | % | |||||||||||||||
| Non-GAAP Gross Margin % (1) | 46.1 | % | 47.8 | % | 47.4 | % | 47.5 | % | 48.3 | % | 50.2 | % | 50.4 | % | 49.2 | % | |||||||||||||||
| Revenue Composition: | |||||||||||||||||||||||||||||||
| Domestic % | 58 | % | 68 | % | 75 | % | 68 | % | 62 | % | 71 | % | 64 | % | 56 | % | |||||||||||||||
| International % | 42 | % | 32 | % | 25 | % | 32 | % | 38 | % | 29 | % | 36 | % | 44 | % | |||||||||||||||
| Customers > 10% of Revenue | 1 | 2 | 3 | 2 | 2 | 3 | 2 | 2 | |||||||||||||||||||||||
| Cash Related Information: | |||||||||||||||||||||||||||||||
| Cash from Operations ($ Mil) | $ | 18.7 | $ | 19.8 | $ | 55.0 | $ | 32.5 | $ | 25.8 | $ | 10.0 | $ | 28.2 | $ | 5.2 | |||||||||||||||
| Capital Expenditures ($ Mil) | $ | 8.8 | $ | 7.4 | $ | 8.7 | $ | 10.6 | $ | 15.3 | $ | 10.8 | $ | 12.5 | $ | 9.6 | |||||||||||||||
| Depreciation & Amortization ($ Mil) | $ | 6.6 | $ | 6.6 | $ | 6.3 | $ | 9.2 | $ | 13.7 | $ | 14.7 | $ | 15.2 | $ | 15.9 | |||||||||||||||
| DSO's | 76 | 64 | 48 | 55 | 65 | 69 | 68 | 75 | |||||||||||||||||||||||
| Inventory Metrics: | |||||||||||||||||||||||||||||||
| Raw Materials ($ Mil) | $ | 15.2 | $ | 22.4 | $ | 30.2 | $ | 24.2 | $ | 27.9 | $ | 33.1 | $ | 39.1 | $ | 37.2 | |||||||||||||||
| Work in Process ($ Mil) | $ | 50.0 | $ | 45.9 | $ | 43.9 | $ | 48.5 | $ | 52.6 | $ | 59.4 | $ | 61.0 | $ | 65.5 | |||||||||||||||
| Finished Goods ($ Mil) | $ | 81.3 | $ | 88.9 | $ | 83.1 | $ | 97.2 | $ | 94.2 | $ | 97.2 | $ | 102.2 | $ | 128.8 | |||||||||||||||
| Total Inventory ($ Mil) | $ | 146.5 | $ | 157.2 | $ | 157.2 | $ | 169.9 | $ | 174.7 | $ | 189.7 | $ | 202.3 | $ | 231.5 | |||||||||||||||
| Inventory Turns (2) | 2.7 | 2.5 | 2.8 | 2.9 | 3.1 | 2.6 | 2.5 | 1.6 | |||||||||||||||||||||||
| Worldwide Headcount | 1,495 | 1,530 | 1,598 | 1,978 | 2,056 | 2,128 | 2,218 | 2,262 | |||||||||||||||||||||||
| (1) | Non-GAAP adjustments include non-cash stock-based compensation expense, certain purchase accounting adjustments related to Infinera's acquisition of Transmode and amortization of acquired intangible assets. For a description of this non-GAAP financial measure, please see the section titled, "GAAP to Non-GAAP Reconciliations" of this press release for a reconciliation to the most directly comparable GAAP financial measures. | |
| (2) | Infinera calculates non-GAAP inventory turns as annualized non-GAAP cost of revenue before adjustments for non-cash stock-based compensation expense and certain purchase accounting adjustments, divided by the average inventory for the quarter. | |
Contacts: Media: Anna Vue Tel. +1 (916) 595-8157 avue@infinera.com Investors: Jeff Hustis Tel. +1 (408) 213-7150 jhustis@infinera.com
