Infinera Corporation (NASDAQ:INFN), provider of Intelligent
Transport Networks, today released financial results for its third
quarter ended September 30, 2017. The company also today announced
a plan to restructure its worldwide operations to reduce its
expenses and establish a more cost-efficient operating structure.
Third Quarter 2017 Financial Review
GAAP revenue for the quarter was $192.6 million compared to
$176.8 million in the second quarter of 2017 and $185.5 million in
the third quarter of 2016.
GAAP gross margin for the quarter was 35.2% compared to 36.7% in
the second quarter of 2017 and 45.6% in the third quarter of 2016.
GAAP operating margin for the quarter was (17.8)% compared to
(22.9)% in the second quarter of 2017 and (5.9)% in the third
quarter of 2016.
GAAP net loss for the quarter was $(37.2) million, or $(0.25)
per share, compared to a net loss of $(42.8) million, or $(0.29)
per share, in the second quarter of 2017, and net loss of $(11.2)
million, or $(0.08) per share, in the third quarter of 2016.
Non-GAAP gross margin for the quarter was 39.1% compared to
40.7% in the second quarter of 2017 and 49.2% in the third quarter
of 2016. Non-GAAP operating margin for the quarter was (7.8)%
compared to (12.2)% in the second quarter of 2017 and 3.6% in the
third quarter of 2016.
Non-GAAP net loss for the quarter was $(17.0) million, or
$(0.11) per share, compared to a net loss of $(22.8) million, or
$(0.15) per share, in the second quarter of 2017, and net income of
$7.4 million, or $0.05 per diluted share, in the third quarter of
2016.
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.
“In the third quarter we continued to bring new products to
market and delivered financial results that exceeded our guidance,”
said Tom Fallon, Infinera’s Chief Executive Officer. “Our ICE4
products are delivering the technology differentiation we expected
and are gaining traction across multiple customer verticals.
Despite a softening near-term market outlook, over time I am
confident we will return to outgrowing the market and delivering
strong financial results.”
Restructuring Initiative
Infinera also announced it is implementing a plan to restructure
its worldwide operations in order to reduce its expenses and
establish a more cost-efficient structure that better aligns its
operations with its long-term strategies. As part of this
restructuring plan, Infinera will reduce headcount, rationalize
certain products and programs, and close a remote R&D
facility.
Infinera anticipates annual savings from the restructuring to be
approximately $40.0 million, compared to what the projected
run-rate of expenses for fiscal 2018 would have been prior to the
restructuring. Infinera estimates total costs related to the
restructuring will be in the range of $21.0 million to $27.0
million. The company anticipates a majority of the restructuring
will be completed during the fourth quarter of 2017.
“In recent years we have made significant investments to become
a multi-market company, deliver a fully refreshed product portfolio
and establish a faster technology cadence. Reflecting on the
internal expansion associated with these investments, we have
identified areas where we can be more efficient going forward,”
stated Mr. Fallon. “While difficult, my expectation is taking
action at this time will result in a more cost-efficient structure
that enables us to focus on our strengths and return to
profitability as we grow. I believe these are the right steps for
our shareholders, our company and our customers.”
Conference Call Information
Infinera will host a conference call for analysts and investors
to discuss its third quarter 2017 results and its outlook for the
fourth quarter of 2017 today at 4:30 p.m. Eastern Time (1:30 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.
Contacts:
Media:Anna VueTel. +1 (916) 595-8157avue@infinera.com
Investors:Jeff HustisTel. +1 (408)
213-7150jhustis@infinera.com
About Infinera
Infinera provides Intelligent Transport Networks, enabling
carriers, cloud operators, governments and enterprises to scale
network bandwidth, accelerate service innovation and automate
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 www.infinera.com/blog.
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 ability to continue to gain
traction across multiple customer verticals; Infinera's ability to
outgrow the market and deliver strong financial results; Infinera's
ability to become a multi-market company, deliver a fully refreshed
product portfolio and establish a faster technology cadence;
Infinera’s expectations regarding its restructuring and the
expected cost and annual savings associated with the restructuring
plan. 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 effects of
increased customer consolidation; fluctuations in demand, sales
cycles and prices for products and services, including discounts
given in response to competitive pricing pressures, as well as the
timing of purchases by our key customers; 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 ability to adequately respond
to demand as a result of the restructuring plan; Infinera's
reliance on single and limited source suppliers; Infinera’s ability
to protect Infinera’s intellectual property; 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 July
1, 2017 as filed with the SEC on August 8, 2017, 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, amortization of debt discount on Infinera’s
convertible senior notes, amortization and impairment of acquired
intangible assets, acquisition-related costs, and certain purchase
accounting adjustments related to Infinera's acquisition of
Transmode AB, which closed during the third quarter of 2015, along
with related tax effects. 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 (loss), basic and diluted net income (loss) 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 2017 results, including an estimate of certain non-GAAP
financial measures for the fourth quarter of 2017 that excludes
non-cash stock-based compensation expenses, amortization of
acquired intangible assets and related tax effects, 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 CorporationCondensed
Consolidated Statements of Operations(In
thousands, except per share
data)(Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30,2017 |
|
September 24,2016 |
|
September 30,2017 |
|
September 24,2016 |
Revenue: |
|
|
|
|
|
|
|
|
Product |
|
$ |
159,579 |
|
|
$ |
156,188 |
|
|
$ |
449,992 |
|
|
$ |
599,802 |
|
Services |
|
33,001 |
|
|
29,264 |
|
|
94,931 |
|
|
89,290 |
|
Total revenue |
|
192,580 |
|
|
185,452 |
|
|
544,923 |
|
|
689,092 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Cost of
product |
|
111,803 |
|
|
91,064 |
|
|
311,437 |
|
|
331,564 |
|
Cost of
services |
|
12,951 |
|
|
9,786 |
|
|
36,772 |
|
|
32,842 |
|
Total cost of revenue |
|
124,754 |
|
|
100,850 |
|
|
348,209 |
|
|
364,406 |
|
Gross profit |
|
67,826 |
|
|
84,602 |
|
|
196,714 |
|
|
324,686 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Research
and development |
|
56,616 |
|
|
50,855 |
|
|
169,076 |
|
|
164,541 |
|
Sales and
marketing |
|
27,824 |
|
|
27,960 |
|
|
86,662 |
|
|
88,434 |
|
General
and administrative |
|
17,634 |
|
|
16,646 |
|
|
53,556 |
|
|
51,617 |
|
Total operating expenses |
|
102,074 |
|
|
95,461 |
|
|
309,294 |
|
|
304,592 |
|
Income (loss) from
operations |
|
(34,248 |
) |
|
(10,859 |
) |
|
(112,580 |
) |
|
20,094 |
|
Other income (expense),
net: |
|
|
|
|
|
|
|
|
Interest
income |
|
857 |
|
|
647 |
|
|
2,470 |
|
|
1,764 |
|
Interest
expense |
|
(3,549 |
) |
|
(3,313 |
) |
|
(10,408 |
) |
|
(9,644 |
) |
Other
gain (loss), net: |
|
(80 |
) |
|
(188 |
) |
|
(462 |
) |
|
(1,116 |
) |
Total other income (expense), net |
|
(2,772 |
) |
|
(2,854 |
) |
|
(8,400 |
) |
|
(8,996 |
) |
Income (loss) before
income taxes |
|
(37,020 |
) |
|
(13,713 |
) |
|
(120,980 |
) |
|
11,098 |
|
Provision for (benefit
from) income taxes |
|
211 |
|
|
(2,416 |
) |
|
(459 |
) |
|
(725 |
) |
Net income (loss) |
|
(37,231 |
) |
|
(11,297 |
) |
|
(120,521 |
) |
|
11,823 |
|
Less: Net
loss attributable to noncontrolling interest |
|
— |
|
|
(125 |
) |
|
— |
|
|
(503 |
) |
Net income (loss)
attributable to Infinera Corporation |
|
$ |
(37,231 |
) |
|
$ |
(11,172 |
) |
|
$ |
(120,521 |
) |
|
$ |
12,326 |
|
Net income (loss) per
common share attributable to Infinera Corporation: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.25 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.82 |
) |
|
$ |
0.09 |
|
Diluted |
|
$ |
(0.25 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.82 |
) |
|
$ |
0.08 |
|
Weighted average shares
used in computing net income (loss) per common share: |
|
|
|
|
|
|
|
|
Basic |
|
148,777 |
|
|
143,850 |
|
|
147,367 |
|
|
142,350 |
|
Diluted |
|
148,777 |
|
|
143,850 |
|
|
147,367 |
|
|
145,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infinera CorporationGAAP to Non-GAAP
Reconciliations(In thousands, except percentages
and per share data)(Unaudited)
|
Three Months Ended |
|
Nine Months Ended |
|
September 30,2017 |
|
|
|
July 1,2017 |
|
|
|
September 24,2016 |
|
|
|
September 30,2017 |
|
|
|
September 24,2016 |
|
|
Reconciliation
ofRevenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP as
reported |
$ |
192,580 |
|
|
|
|
$ |
176,821 |
|
|
|
|
$ |
185,452 |
|
|
|
|
$ |
544,923 |
|
|
|
|
$ |
689,092 |
|
|
|
Acquisition-relateddeferred revenueadjustment(1) |
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
400 |
|
|
|
Non-GAAP as
adjusted |
$ |
192,580 |
|
|
|
|
$ |
176,821 |
|
|
|
|
$ |
185,452 |
|
|
|
|
$ |
544,923 |
|
|
|
|
$ |
689,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Gross Profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP as
reported |
$ |
67,826 |
|
|
35.2 |
% |
|
$ |
64,832 |
|
|
36.7 |
% |
|
$ |
84,602 |
|
|
45.6 |
% |
|
$ |
196,714 |
|
|
36.1 |
% |
|
$ |
324,686 |
|
|
47.1 |
% |
Acquisition-relateddeferred revenueadjustment(1) |
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
400 |
|
|
|
Stock-basedcompensation(2) |
2,063 |
|
|
|
|
2,071 |
|
|
|
|
1,424 |
|
|
|
|
5,965 |
|
|
|
|
4,614 |
|
|
|
Amortization of
acquiredintangible assets(3) |
5,390 |
|
|
|
|
5,035 |
|
|
|
|
5,102 |
|
|
|
|
15,305 |
|
|
|
|
14,970 |
|
|
|
Acquisition-related
costs(4) |
— |
|
|
|
|
6 |
|
|
|
|
38 |
|
|
|
|
46 |
|
|
|
|
117 |
|
|
|
Non-GAAP as
adjusted |
$ |
75,279 |
|
|
39.1 |
% |
|
$ |
71,944 |
|
|
40.7 |
% |
|
$ |
91,166 |
|
|
49.2 |
% |
|
$ |
218,030 |
|
|
40.0 |
% |
|
$ |
344,787 |
|
|
50.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP as
reported |
$ |
102,074 |
|
|
|
|
$ |
105,337 |
|
|
|
|
$ |
95,461 |
|
|
|
|
$ |
309,294 |
|
|
|
|
$ |
304,592 |
|
|
|
Stock-basedcompensation(2) |
10,103 |
|
|
|
|
10,309 |
|
|
|
|
8,787 |
|
|
|
|
29,458 |
|
|
|
|
24,577 |
|
|
|
Amortization of
acquiredintangible assets(3) |
1,622 |
|
|
|
|
1,515 |
|
|
|
|
1,537 |
|
|
|
|
4,605 |
|
|
|
|
4,753 |
|
|
|
Acquisition-related
costs(4) |
— |
|
|
|
|
16 |
|
|
|
|
563 |
|
|
|
|
322 |
|
|
|
|
1,453 |
|
|
|
Intangible
assetimpairment(5) |
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
252 |
|
|
|
|
— |
|
|
|
Non-GAAP as
adjusted |
$ |
90,349 |
|
|
|
|
$ |
93,497 |
|
|
|
|
$ |
84,574 |
|
|
|
|
$ |
274,657 |
|
|
|
|
$ |
273,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Income(Loss) from Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP as
reported |
$ |
(34,248 |
) |
|
(17.8 |
)% |
|
$ |
(40,505 |
) |
|
(22.9 |
)% |
|
$ |
(10,859 |
) |
|
(5.9 |
)% |
|
$ |
(112,580 |
) |
|
(20.7 |
)% |
|
$ |
20,094 |
|
|
2.9 |
% |
Acquisition-relateddeferred revenueadjustment(1) |
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
400 |
|
|
|
Stock-based
compensation(2) |
12,166 |
|
|
|
|
12,380 |
|
|
|
|
10,211 |
|
|
|
|
35,423 |
|
|
|
|
29,191 |
|
|
|
Amortization of
acquiredintangible assets(3) |
7,012 |
|
|
|
|
6,550 |
|
|
|
|
6,639 |
|
|
|
|
19,910 |
|
|
|
|
19,723 |
|
|
|
Acquisition-related
costs(4) |
— |
|
|
|
|
22 |
|
|
|
|
601 |
|
|
|
|
368 |
|
|
|
|
1,570 |
|
|
|
Intangible
assetimpairment(5) |
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
252 |
|
|
|
|
— |
|
|
|
Non-GAAP as
adjusted |
$ |
(15,070 |
) |
|
(7.8 |
)% |
|
$ |
(21,553 |
) |
|
(12.2 |
)% |
|
$ |
6,592 |
|
|
3.6 |
% |
|
$ |
(56,627 |
) |
|
(10.4 |
)% |
|
$ |
70,978 |
|
|
10.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of NetIncome (Loss)Attributable to
InfineraCorporation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP as
reported |
$ |
(37,231 |
) |
|
|
|
$ |
(42,839 |
) |
|
|
|
$ |
(11,172 |
) |
|
|
|
$ |
(120,521 |
) |
|
|
|
$ |
12,326 |
|
|
|
Acquisition-relateddeferred revenueadjustment(1) |
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
400 |
|
|
|
Stock-basedcompensation(2) |
12,166 |
|
|
|
|
12,380 |
|
|
|
|
10,211 |
|
|
|
|
35,423 |
|
|
|
|
29,191 |
|
|
|
Amortization of
acquiredintangible assets(3) |
7,012 |
|
|
|
|
6,550 |
|
|
|
|
6,639 |
|
|
|
|
19,910 |
|
|
|
|
19,723 |
|
|
|
Acquisition-related
costs(4) |
— |
|
|
|
|
(4 |
) |
|
|
|
874 |
|
|
|
|
257 |
|
|
|
|
2,263 |
|
|
|
Intangible
assetimpairment(5) |
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
252 |
|
|
|
|
— |
|
|
|
Amortization of
debtdiscount(6) |
2,643 |
|
|
|
|
2,577 |
|
|
|
|
2,391 |
|
|
|
|
7,734 |
|
|
|
|
6,996 |
|
|
|
Income tax
effects(7) |
(1,543 |
) |
|
|
|
(1,450 |
) |
|
|
|
(1,519 |
) |
|
|
|
(4,467 |
) |
|
|
|
(4,531 |
) |
|
|
Non-GAAP as
adjusted |
$ |
(16,953 |
) |
|
|
|
$ |
(22,786 |
) |
|
|
|
$ |
7,424 |
|
|
|
|
$ |
(61,412 |
) |
|
|
|
$ |
66,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss) perCommon ShareAttributable to InfineraCorporation -
Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP as
reported |
$ |
(0.25 |
) |
|
|
|
$ |
(0.29 |
) |
|
|
|
$ |
(0.08 |
) |
|
|
|
$ |
(0.82 |
) |
|
|
|
$ |
0.09 |
|
|
|
Non-GAAP as
adjusted |
$ |
(0.11 |
) |
|
|
|
$ |
(0.15 |
) |
|
|
|
$ |
0.05 |
|
|
|
|
$ |
(0.42 |
) |
|
|
|
$ |
0.47 |
|
|
|
Net Income
(Loss) perCommon ShareAttributable to InfineraCorporation -
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP as
reported |
$ |
(0.25 |
) |
|
|
|
$ |
(0.29 |
) |
|
|
|
$ |
(0.08 |
) |
|
|
|
$ |
(0.82 |
) |
|
|
|
$ |
0.08 |
|
|
|
Non-GAAP as
adjusted |
$ |
(0.11 |
) |
|
|
|
$ |
(0.15 |
) |
|
|
|
$ |
0.05 |
|
|
|
|
$ |
(0.42 |
) |
|
|
|
$ |
0.45 |
|
|
|
Weighted
AverageShares Used inComputing Net Income(Loss) per
CommonShare: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
148,777 |
|
|
|
|
147,538 |
|
|
|
|
143,850 |
|
|
|
|
147,367 |
|
|
|
|
142,350 |
|
|
|
Diluted |
148,777 |
|
|
|
|
147,538 |
|
|
|
|
144,993 |
|
|
|
|
147,367 |
|
|
|
|
145,921 |
|
|
|
____________________________
(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 non-cash stock-based compensation
related to employees and non-employees (in thousands): |
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30,2017 |
|
July 1,2017 |
|
September 24,2016 |
|
September 30,2017 |
|
September 24,2016 |
Cost of revenue |
|
$ |
779 |
|
|
$ |
834 |
|
|
$ |
756 |
|
|
$ |
2,337 |
|
|
$ |
2,175 |
|
Research and
development |
|
4,040 |
|
|
4,184 |
|
|
3,496 |
|
|
12,004 |
|
|
9,721 |
|
Sales and
marketing |
|
3,025 |
|
|
3,273 |
|
|
2,826 |
|
|
9,024 |
|
|
8,006 |
|
General and
administration |
|
3,039 |
|
|
2,852 |
|
|
2,465 |
|
|
8,431 |
|
|
6,850 |
|
|
|
10,883 |
|
|
11,143 |
|
|
9,543 |
|
|
31,796 |
|
|
26,752 |
|
Cost of revenue -
amortization from balance sheet* |
|
1,284 |
|
|
1,237 |
|
|
668 |
|
|
3,628 |
|
|
2,439 |
|
Total stock-based
compensation expense |
|
$ |
12,167 |
|
|
$ |
12,380 |
|
|
$ |
10,211 |
|
|
$ |
35,424 |
|
|
$ |
29,191 |
|
_____________________________
* |
|
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) |
|
Intangible
asset impairment is associated with previously acquired
intangibles, which Infinera has determined that the carrying value
will not be recoverable. Management has excluded the impact of this
charge in arriving at Infinera's non-GAAP results because it is
non-recurring and management believes that these expenses 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 in aggregate principal amount
of 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, acquisition-related
costs and amortization of acquired intangible assets. |
|
|
|
Infinera CorporationCondensed
Consolidated Balance Sheets(In thousands, except
par values)(Unaudited)
|
|
September 30,2017 |
|
December 31,2016 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
122,042 |
|
|
$ |
162,641 |
|
Short-term investments |
|
134,319 |
|
|
141,697 |
|
Short-term restricted cash |
|
740 |
|
|
8,490 |
|
Accounts
receivable, net of allowance for doubtful accounts of $885 in 2017
and $772 in 2016 |
|
137,133 |
|
|
150,370 |
|
Inventory |
|
242,848 |
|
|
232,955 |
|
Prepaid
expenses and other current assets |
|
50,320 |
|
|
34,270 |
|
Total current assets |
|
687,402 |
|
|
730,423 |
|
Property, plant and
equipment, net |
|
143,217 |
|
|
124,800 |
|
Intangible assets |
|
99,953 |
|
|
108,475 |
|
Goodwill |
|
197,325 |
|
|
176,760 |
|
Long-term
investments |
|
47,575 |
|
|
40,779 |
|
Cost-method
investment |
|
7,000 |
|
|
7,000 |
|
Long-term restricted
cash |
|
4,299 |
|
|
6,449 |
|
Other non-current
assets |
|
4,328 |
|
|
3,897 |
|
Total assets |
|
$ |
1,191,099 |
|
|
$ |
1,198,583 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
89,310 |
|
|
$ |
62,486 |
|
Accrued
expenses |
|
30,080 |
|
|
31,580 |
|
Accrued
compensation and related benefits |
|
40,571 |
|
|
46,637 |
|
Short-term debt, net |
|
141,985 |
|
|
— |
|
Accrued
warranty |
|
14,245 |
|
|
16,930 |
|
Deferred
revenue |
|
65,328 |
|
|
58,900 |
|
Total current liabilities |
|
381,519 |
|
|
216,533 |
|
Long-term
debt, net |
|
— |
|
|
133,586 |
|
Accrued
warranty, non-current |
|
17,917 |
|
|
23,412 |
|
Deferred
revenue, non-current |
|
21,794 |
|
|
19,362 |
|
Deferred
tax liability |
|
23,384 |
|
|
25,327 |
|
Other
long-term liabilities |
|
14,547 |
|
|
18,035 |
|
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 30, 2017
and December 31, 2016 |
|
|
|
|
Issued and outstanding shares - 149,305 as of
September 30, 2017 and 145,021 as of December 31, 2016 |
|
149 |
|
|
145 |
|
Additional paid-in capital |
|
1,406,936 |
|
|
1,354,082 |
|
Accumulated other comprehensive income (loss) |
|
8,949 |
|
|
(28,324 |
) |
Accumulated deficit |
|
(684,096 |
) |
|
(563,575 |
) |
Total
stockholders’ equity |
|
731,938 |
|
|
762,328 |
|
Total liabilities and
stockholders’ equity |
|
$ |
1,191,099 |
|
|
$ |
1,198,583 |
|
|
|
|
|
|
|
|
|
|
Infinera CorporationCondensed
Consolidated Statements of Cash Flows(In
thousands)(Unaudited)
|
|
Nine Months Ended |
|
|
September 30,2017 |
|
September 24,2016 |
Cash Flows from
Operating Activities: |
|
|
|
|
Net income (loss) |
|
$ |
(120,521 |
) |
|
$ |
11,823 |
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities: |
|
|
|
|
Depreciation and amortization |
|
49,391 |
|
|
45,764 |
|
Amortization of debt discount and issuance costs |
|
8,399 |
|
|
7,598 |
|
Amortization of premium on investments |
|
359 |
|
|
925 |
|
Impairment of intangible assets |
|
252 |
|
|
— |
|
Stock-based compensation expense |
|
35,424 |
|
|
29,191 |
|
Other
loss |
|
11 |
|
|
261 |
|
Changes
in assets and liabilities: |
|
|
|
|
Accounts receivable |
|
15,078 |
|
|
33,044 |
|
Inventory |
|
(9,601 |
) |
|
(61,078 |
) |
Prepaid expenses and other assets |
|
(15,366 |
) |
|
(1,625 |
) |
Accounts payable |
|
25,840 |
|
|
(13,935 |
) |
Accrued liabilities and other expenses |
|
(10,310 |
) |
|
(7,580 |
) |
Deferred revenue |
|
8,575 |
|
|
(805 |
) |
Accrued warranty |
|
(8,447 |
) |
|
(179 |
) |
Net cash provided by (used in) operating
activities |
|
(20,916 |
) |
|
43,404 |
|
Cash Flows from
Investing Activities: |
|
|
|
|
Purchase
of available-for-sale investments |
|
(122,249 |
) |
|
(118,017 |
) |
Proceeds
from sales of available-for-sale investments |
|
10,531 |
|
|
— |
|
Proceeds
from maturities of investments |
|
111,970 |
|
|
110,554 |
|
Purchase
of cost-method investment |
|
— |
|
|
(5,000 |
) |
Purchase
of property and equipment |
|
(50,247 |
) |
|
(32,878 |
) |
Change in
restricted cash |
|
4,389 |
|
|
(4,950 |
) |
Net cash used in investing
activities |
|
(45,606 |
) |
|
(50,291 |
) |
Cash Flows from
Financing Activities: |
|
|
|
|
Security
pledge to acquire noncontrolling interest |
|
5,596 |
|
|
(5,921 |
) |
Acquisition of noncontrolling interest |
|
(471 |
) |
|
(16,771 |
) |
Proceeds
from issuance of common stock |
|
17,991 |
|
|
16,486 |
|
Minimum
tax withholding paid on behalf of employees for net share
settlement |
|
(963 |
) |
|
(3,592 |
) |
Net cash provided by (used in) financing
activities |
|
22,153 |
|
|
(9,798 |
) |
Effect of exchange rate
changes on cash |
|
3,770 |
|
|
(1,420 |
) |
Net change in cash and
cash equivalents |
|
(40,599 |
) |
|
(18,105 |
) |
Cash and cash
equivalents at beginning of period |
|
162,641 |
|
|
149,101 |
|
Cash and cash
equivalents at end of period |
|
$ |
122,042 |
|
|
$ |
130,996 |
|
Supplemental
disclosures of cash flow information: |
|
|
|
|
Cash paid
for income taxes, net of refunds |
|
$ |
4,159 |
|
|
$ |
5,557 |
|
Cash paid
for interest |
|
$ |
1,317 |
|
|
$ |
1,445 |
|
Supplemental
schedule of non-cash investing activities: |
|
|
|
|
Transfer
of inventory to fixed assets |
|
$ |
3,110 |
|
|
$ |
5,211 |
|
|
|
|
|
|
|
|
|
|
Infinera CorporationSupplemental
Financial Information(Unaudited)
|
|
Q4'15 |
|
Q1'16 |
|
Q2'16 |
|
Q3'16 |
|
Q4'16 |
|
Q1'17 |
|
Q2'17 |
|
Q3'17 |
GAAP Revenue ($
Mil) |
|
$ |
260.0 |
|
|
$ |
244.8 |
|
|
$ |
258.8 |
|
|
$ |
185.5 |
|
|
$ |
181.0 |
|
|
$ |
175.5 |
|
|
$ |
176.8 |
|
|
$ |
192.6 |
|
GAAP Gross Margin
% |
|
|
44.5 |
% |
|
|
47.5 |
% |
|
|
47.8 |
% |
|
|
45.6 |
% |
|
|
38.1 |
% |
|
|
36.5 |
% |
|
|
36.7 |
% |
|
|
35.2 |
% |
Non-GAAP Gross Margin
%(1) |
|
|
48.3 |
% |
|
|
50.2 |
% |
|
|
50.4 |
% |
|
|
49.2 |
% |
|
|
41.8 |
% |
|
|
40.3 |
% |
|
|
40.7 |
% |
|
|
39.1 |
% |
Revenue
Composition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic % |
|
|
62 |
% |
|
|
71 |
% |
|
|
64 |
% |
|
|
56 |
% |
|
|
53 |
% |
|
|
57 |
% |
|
|
63 |
% |
|
|
59 |
% |
International % |
|
|
38 |
% |
|
|
29 |
% |
|
|
36 |
% |
|
|
44 |
% |
|
|
47 |
% |
|
|
43 |
% |
|
|
37 |
% |
|
|
41 |
% |
Customers >10% of
Revenue |
|
|
2 |
|
|
|
3 |
|
|
|
2 |
|
|
|
2 |
|
|
|
2 |
|
|
|
1 |
|
|
|
3 |
|
|
|
2 |
|
Cash Related
Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash from Operations ($
Mil) |
|
$ |
25.8 |
|
|
$ |
10.0 |
|
|
$ |
28.2 |
|
|
$ |
5.2 |
|
|
($ |
5.0 |
) |
|
$ |
3.0 |
|
|
($ |
3.0 |
) |
|
($ |
20.9 |
) |
Capital Expenditures ($
Mil) |
|
$ |
15.3 |
|
|
$ |
10.8 |
|
|
$ |
12.5 |
|
|
$ |
9.6 |
|
|
$ |
10.4 |
|
|
$ |
14.7 |
|
|
$ |
24.5 |
|
|
$ |
11.0 |
|
Depreciation &
Amortization ($ Mil) |
|
$ |
13.7 |
|
|
$ |
14.7 |
|
|
$ |
15.2 |
|
|
$ |
15.9 |
|
|
$ |
15.7 |
|
|
$ |
16.0 |
|
|
$ |
16.6 |
|
|
$ |
16.8 |
|
DSOs |
|
|
65 |
|
|
|
69 |
|
|
|
68 |
|
|
|
75 |
|
|
|
81 |
|
|
|
64 |
|
|
|
64 |
|
|
|
65 |
|
Inventory
Metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raw Materials ($
Mil) |
|
$ |
27.9 |
|
|
$ |
33.1 |
|
|
$ |
39.1 |
|
|
$ |
37.2 |
|
|
$ |
33.2 |
|
|
$ |
34.8 |
|
|
$ |
36.7 |
|
|
$ |
35.8 |
|
Work in Process ($
Mil) |
|
$ |
52.6 |
|
|
$ |
59.4 |
|
|
$ |
61.0 |
|
|
$ |
65.5 |
|
|
$ |
74.5 |
|
|
$ |
81.1 |
|
|
$ |
91.6 |
|
|
$ |
84.3 |
|
Finished Goods ($
Mil) |
|
$ |
94.2 |
|
|
$ |
97.2 |
|
|
$ |
102.2 |
|
|
$ |
128.8 |
|
|
$ |
125.3 |
|
|
$ |
118.0 |
|
|
$ |
117.7 |
|
|
$ |
122.7 |
|
Total Inventory
($ Mil) |
|
$ |
174.7 |
|
|
$ |
189.7 |
|
|
$ |
202.3 |
|
|
$ |
231.5 |
|
|
$ |
233.0 |
|
|
$ |
233.9 |
|
|
$ |
246.0 |
|
|
$ |
242.8 |
|
Inventory Turns(2) |
|
|
3.1 |
|
|
|
2.6 |
|
|
|
2.5 |
|
|
|
1.6 |
|
|
|
1.8 |
|
|
|
1.8 |
|
|
|
1.7 |
|
|
|
1.9 |
|
Worldwide
Headcount |
|
|
2,056 |
|
|
|
2,128 |
|
|
|
2,218 |
|
|
|
2,262 |
|
|
|
2,240 |
|
|
|
2,245 |
|
|
|
2,272 |
|
|
|
2,296 |
|
Weighted
Average Shares Outstanding (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
140,015 |
|
|
|
140,805 |
|
|
|
142,396 |
|
|
|
143,850 |
|
|
|
144,770 |
|
|
|
145,786 |
|
|
|
147,538 |
|
|
|
148,777 |
|
Diluted |
|
|
149,439 |
|
|
|
146,880 |
|
|
|
145,891 |
|
|
|
144,993 |
|
|
|
145,497 |
|
|
|
147,017 |
|
|
|
148,662 |
|
|
|
149,714 |
|
_____________________________
(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. |
|
|
|
Infinera (NASDAQ:INFN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Infinera (NASDAQ:INFN)
Historical Stock Chart
From Apr 2023 to Apr 2024