Infinera Corporation (NASDAQ: INFN), a leading provider of digital
optical communications systems, today released financial results
for the fourth quarter and fiscal year ended December 27, 2008.
GAAP Results for Q4 2008:
-- GAAP revenues for the fourth quarter of 2008 were $99.3 million
compared to $120.5 million in the third quarter of 2008 and $76.1 million
in the fourth quarter of 2007.
-- GAAP gross margins were 38% in the fourth quarter of 2008 compared to
45% in the third quarter of 2008 and 36% in the fourth quarter of 2007.
-- Including non-cash stock-based compensation, the GAAP net loss was
$6.7 million, or $0.07 per share, in the fourth quarter of 2008 compared to
GAAP net income of $14.9 million, or $0.15 per diluted share, in the third
quarter of 2008 and a GAAP net loss of $3.9 million or $0.04 per share in
the fourth quarter of 2007.
Adjusted GAAP / Invoiced Shipment Results for Q4 2008:
-- Adjusted GAAP revenue for the fourth quarter of 2008 was $86.2 million
compared to $80.9 million in the third quarter of 2008 and $93.4 million of
invoiced shipments in the fourth quarter of 2007.
-- Gross margins on an adjusted GAAP basis, excluding non-cash stock-
based compensation, were 36% in the fourth quarter of 2008 compared to 42%
in the third quarter of 2008 and 47% on an invoiced shipment basis in the
fourth quarter of 2007.
-- Excluding non-cash stock-based compensation, the net loss on an
adjusted GAAP basis was $9.0 million, or $0.10 per basic share, for the
fourth quarter of 2008 compared to net income of $0.0 million, or $0.0 per
diluted share in the third quarter of 2008 and net income on an invoiced
shipment basis of $15.9 million or $0.17 per diluted share in the fourth
quarter of 2007.
GAAP Results for Fiscal 2008:
-- GAAP revenues for the year ended December 27, 2008 were $519.2 million
compared to $245.9 million in 2007.
-- GAAP gross margins were 45% in 2008 compared to 31% in 2007.
-- Including non-cash stock-based compensation, GAAP net income was $78.7
million, or $0.81 per diluted share in 2008 compared to a GAAP net loss of
$55.3 million, or $1.09 per share, in 2007.
Adjusted GAAP / Invoiced Shipment Results for Fiscal 2008:
-- Adjusted GAAP revenue for 2008 was $353.4 million compared to $309.3
million of invoiced shipments in 2007.
-- Gross margins on an adjusted GAAP basis, excluding non-cash stock-
based compensation, were 43% in 2008 compared to 41% on an invoiced
shipment basis in 2007.
-- Excluding non-cash stock-based compensation and warrant revaluation
expenses, net income on an adjusted GAAP basis was $14.3 million or $0.15
per diluted share in 2008, compared to $24.1 million, or $0.37 per diluted
share on an invoiced shipment basis in 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."
New Incumbent Carrier win at OTE
In a separate release, the company announced that OTEGLOBE, the
international division of Greek incumbent national carrier OTE, has
selected Infinera as its DWDM supplier for its Pan-European
Network. The win at OTE represents Infinera's fourth win with Tier
1 incumbent carriers, joining Deutsche Telecom and two other
incumbents.
Management Commentary
"In the fourth quarter we saw continued customer win momentum,
with seven new customers added in the quarter, including OTE," said
Jagdeep Singh, president and chief executive officer of Infinera.
"This resulted in strong top-line performance; however the common
equipment associated with these deployments and additional expected
new customer shipments in Q1 put downward pressure on our gross
margins in the quarter.
"We believe our ongoing success at winning new customers
reflects our increasingly strong position as a strategic supplier
of optical transport equipment to a diverse set of customers," said
Singh. "While calendar year 2009 is shaping up as a challenging one
for the optical industry, we believe it will also be a year of
significant long-term business opportunities for Infinera as
carriers grapple with the strategic challenge of scaling their
optical networks. With a strong balance sheet and established
technology lead, we intend to continue our R&D investments to
advance our DWDM leadership position for years to come."
The company also provided the following Q4 highlights regarding
its customer base:
-- The top 10 customers accounted for 72% of total revenue, the lowest
concentration in the history of the company.
-- The largest customer for the fourth quarter was an internet content
provider at 23%.
-- With the seven new customer additions, total customer count for the
company is now at 56.
-- Geographically, new customer wins for the quarter included three
European-based customers including OTE, three from the Americas and one
from Asia Pacific.
-- 24 percent of Q4 revenue came from customers based in the EMEA region.
-- For the first time in a single quarter, the company had an internet
content provider, a wholesale carrier, a cable MSO and a tier one incumbent
all ranked among its top 5 customers.
Conference Call Information:
Infinera will host a conference call for analysts and investors
to discuss its fourth quarter and fiscal year 2008 results today at
6:00 p.m. Eastern Time (3:00 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 1-866-424-7870. International parties
can access the replay at +1-203-369-0862.
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 about the strong reception by our installed
base and new customers for our products, our belief that we have
continued customer win momentum, our belief regarding our
increasingly strong position as a strategic supplier, our belief
that our value proposition is resonating with customers and
prospects, our belief that 2009 will be a year of significant
long-term business opportunities for Infinera, and our belief that
we may advance our DWDM leadership role for years to come. 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. 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
fourth quarter of 2008 results, including an estimate of non-GAAP
earnings for the first quarter of 2009 that excludes 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 per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
December 27, December 29, December 27, December 29,
2008 2007 2008 2007
------------ ------------ ------------ ------------
Revenue:
Product $ 80,045 $ 832 $ 306,808 $ 8,107
Ratable product
and related
support and
services 12,243 75,257 193,705 237,745
Services 7,056 - 18,699 -
------------ ------------ ------------ ------------
Total revenue 99,344 76,089 519,212 245,852
Cost of revenue(1):
Cost of product 52,306 222 184,234 4,091
Cost of ratable
product and
related support
and services 5,088 48,710 91,625 165,172
Cost of services 3,984 - 9,798 -
------------ ------------ ------------ ------------
Total cost
of revenue 61,378 48,932 285,657 169,263
Gross profit 37,966 27,157 233,555 76,589
Operating expenses(1):
Sales and
marketing 10,985 10,689 43,262 32,721
Research and
development 23,256 16,093 80,428 60,851
General and
administrative 10,650 7,981 36,282 25,965
Amortization of
intangible
assets 39 37 150 148
------------ ------------ ------------ ------------
Total
operating
expenses 44,930 34,800 160,122 119,685
------------ ------------ ------------ ------------
Income (loss) from
operations (6,964) (7,643) 73,433 (43,096)
Other income
(expense), net:
Interest income 1,313 3,149 8,549 6,522
Interest expense - (2) (3) (2,251)
Other gain
(loss), net(2) (1,741) 733 (528) (16,249)
------------ ------------ ------------ ------------
Total other
income
(expense), net (428) 3,880 8,018 (11,978)
Income (loss) before
income taxes (7,392) (3,763) 81,451 (55,074)
Provision for
(benefit from)
income taxes (704) 144 2,723 268
------------ ------------ ------------ ------------
Net income (loss) $ (6,688) $ (3,907) $ 78,728 $ (55,342)
============ ============ ============ ============
Net income (loss)
per common share:
Basic $ (0.07) $ (0.04) $ 0.85 $ (1.09)
============ ============ ============ ============
Diluted $ (0.07) $ (0.04) $ 0.81 $ (1.09)
============ ============ ============ ============
Weighted average
shares used in
computing net
income (loss)
per share:
Basic 93,449 87,672 92,427 50,732
============ ============ ============ ============
Diluted 93,449 87,672 97,088 50,732
============ ============ ============ ============
(1) The following table summarizes the effects of stock-based compensation
related to employees, non-recourse notes and non-employees for the
three and twelve months ended December 27, 2008 and December 29, 2007,
respectively:
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
December 27, December 29, December 27, December 29,
2008 2007 2008 2007
------------ ------------ ------------ ------------
Cost of revenue $ 308 $ 156 $ 1,086 $ 410
Research and
development 1,821 1,315 6,543 3,751
Sales and
marketing 1,176 732 4,440 1,854
General and
administration 1,933 1,282 7,463 3,314
------------ ------------ ------------ ------------
5,238 3,485 19,532 9,329
Cost of revenue
- amortization
from balance
sheet* 738 198 4,287 327
------------ ------------ ------------ ------------
Total
stock-based
compensation
expense $ 5,976 $ 3,683 $ 23,819 $ 9,656
============ ============ ============ ============
* Stock-based compensation expense deferred to inventory and 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 Twelve Months Ended
-------------------------- --------------------------
December 27, December 29, December 27, December 29,
2008 2007 2008 2007
------------ ------------ ------------ ------------
Other gain (loss) $ - $ - $ - $ (19,761)
Infinera Corporation
GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 27, 2008
-------------------------------------------------------------
Adjusted
Adjusted GAAP
Adjusted GAAP Excluding
Deferral GAAP Stock Stock
GAAP Adjustments Results Comp Comp
--------- --------- --------- --------- ---------
Revenue
Product
and
ratable
revenue $ 92,288 $ (13,102) (a) $ 79,186 $ - $ 79,186
Services
revenue 7,056 - 7,056 - 7,056
--------- --------- --------- --------- ---------
Total revenue 99,344 (13,102) 86,242 - 86,242
Cost of
revenue 61,378 (4,951) (d) 56,427 (904) (g) 55,523
--------- --------- --------- --------- ---------
Gross profit 37,966 (8,151) 29,815 904 30,719
Gross margin 38% 36%
Operating
expenses 44,930 - 44,930 (4,930) (g) 40,000
--------- --------- --------- --------- ---------
Income (loss)
from
operations (6,964) (8,151) (15,115) 5,834 (9,281)
Other income
(expense),
net (428) - (428) - (428)
--------- --------- --------- --------- ---------
Income (loss)
before
income taxes (7,392) (8,151) (15,543) 5,834 (9,709)
Provision
for (benefit
from) income
taxes (704) - (704) - (704)
--------- --------- --------- --------- ---------
Net income
(loss) $ (6,688) $ (8,151) $ (14,839) $ 5,834 $ (9,005)
========= ========= ========= ========= =========
Net income
(loss) per
common share:
Basic $ (0.07) $ (0.10)
========= =========
Diluted $ (0.07) $ (0.09)*
========= =========
Weighted
average
shares used
in computing
net income
(loss) per
common share:
Basic 93,449 93,449
========= =========
Diluted 93,449 97,167*
========= =========
* Diluted shares used to calculate net loss per share on an Adjusted GAAP
basis provided for informational purposes only.
Three Months Ended September 27, 2008
-------------------------------------------------------------
Adjusted
Adjusted GAAP
Adjusted GAAP Excluding
Deferral GAAP Stock Stock
GAAP Adjustments Results Comp Comp
--------- --------- --------- --------- ---------
Revenue
Product
and
ratable
revenue $ 115,625 $ (39,588) (b) $ 76,037 $ - $ 76,037
Services
revenue 4,881 - 4,881 - 4,881
--------- --------- --------- --------- ---------
Total revenue 120,506 (39,588) 80,918 - 80,918
Cost of
revenue 66,268 (18,338) (e) 47,930 (1,270) (g) 46,660
--------- --------- --------- --------- ---------
Gross profit 54,238 (21,250) 32,988 1,270 34,258
Gross margin 45% 42%
Operating
expenses 41,013 - 41,013 (5,076) (g) 35,937
--------- --------- --------- --------- ---------
Income (loss)
from
operations 13,225 (21,250) (8,025) 6,346 (1,679)
Other income
(expense),
net 1,712 - 1,712 - 1,712
--------- --------- --------- --------- ---------
Income (loss)
before
provision
for income
taxes 14,937 (21,250) (6,313) 6,346 33
Provision
for income
taxes - - - - -
--------- --------- --------- --------- ---------
Net income
(loss) $ 14,937 $ (21,250) $ (6,313) $ 6,346 $ 33
========= ========= ========= ========= =========
Net income
(loss) per
common share:
Basic $ 0.16 $ 0.00
========= =========
Diluted $ 0.15 $ 0.00
========= =========
Weighted
average
shares used
in computing
net income
(loss) per
common share:
Basic 92,888 92,888
========= =========
Diluted 97,208 97,208
========= =========
Infinera Corporation
GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 29, 2007
-------------------------------------------------------------
Non-GAAP
Invoiced
Shipments
Non-GAAP Excluding
Deferral Invoiced Stock Stock
GAAP Adjustments Shipments Comp Comp
--------- --------- --------- --------- ---------
Revenue $ 76,089 $ 17,287 (a) $ 93,376 $ - $ 93,376
Cost of
revenue 48,932 1,735 (d) 50,667 (965) (g) 49,702
--------- --------- --------- --------- ---------
Gross profit 27,157 15,552 42,709 965 43,674
Gross margin 36% 47%
Operating
expenses 34,800 - 34,800 (3,329) (g) 31,471
--------- --------- --------- --------- ---------
Income
(Loss) from
operations (7,643) 15,552 7,909 4,294 12,203
Other income
(expense),
net 3,880 - 3,880 - 3,880
--------- --------- --------- --------- ---------
Income (Loss)
before
provision
for income
taxes (3,763) 15,552 11,789 4,294 16,083
Provision
for income
taxes 144 - 144 - 144
--------- --------- --------- --------- ---------
Net income
(loss) $ (3,907) $ 15,552 $ 11,645 $ 4,294 $ 15,939
========= ========= ========= ========= =========
Net income
(loss) per
common share:
Basic $ (0.04) $ 0.18
========= =========
Diluted $ (0.04) $ 0.17
========= =========
Weighted
average
shares used
in computing
net income
(loss) per
common share:
Basic 87,672 87,672
========= =========
Diluted 87,672 95,317
========= =========
Twelve Months Ended December 27, 2008
-------------------------------------------------------------
Adjusted
Adjusted GAAP
Adjusted GAAP Excluding
Deferral GAAP Stock Stock
GAAP Adjustments Results Comp Comp
--------- --------- --------- --------- ---------
Revenue
Product
and
ratable
revenue $ 500,513 $(165,787) (c) $ 334,726 $ - $ 334,726
Services
revenue 18,699 - 18,699 - 18,699
--------- --------- --------- --------- ---------
Total revenue 519,212 (165,787) 353,425 - 353,425
Cost of
revenue 285,657 (78,401) (f) 207,256 (4,491) (g) 202,765
--------- --------- --------- --------- ---------
Gross profit 233,555 (87,386) 146,169 4,491 150,660
Gross margin 45% 43%
Operating
expenses 160,122 - 160,122 (18,446) (g) 141,676
--------- --------- --------- --------- ---------
Income (loss)
from
operations 73,433 (87,386) (13,953) 22,937 8,984
Other income
(expense),
net 8,018 - 8,018 - 8,018
--------- --------- --------- --------- ---------
Income (loss)
before
provision
for income
taxes 81,451 (87,386) (5,935) 22,937 17,002
Provision
for income
taxes 2,723 - 2,723 - 2,723
--------- --------- --------- --------- ---------
Net income
(loss) $ 78,728 $ (87,386) $ (8,658) $ 22,937 $ 14,279
========= ========= ========= ========= =========
Net income
(loss) per
common share:
Basic $ 0.85 $ 0.15
========= =========
Diluted $ 0.81 $ 0.15
========= =========
Weighted
average
shares used
in computing
net income
(loss) per
common share:
Basic 92,427 92,427
========= =========
Diluted 97,088 97,088
========= =========
Infinera Corporation
GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Twelve Months Ended December 29, 2007
-------------------------------------------------------------
Non-GAAP
Invoiced
Shipments
Non-GAAP Excluding
Deferral Invoiced Stock Stock
GAAP Adjustments Shipments Comp Comp
--------- --------- --------- --------- ---------
Revenue $ 245,852 $ 63,484 (c) $ 309,336 $ - $ 309,336
Cost of
revenue 169,263 14,369 (f) 183,632 (1,661) (g) 181,971
--------- --------- --------- --------- ---------
Gross profit 76,589 49,115 125,704 1,661 127,365
Gross margin 31% 41%
Operating
expenses 119,685 - 119,685 (8,919) (g) 110,766
--------- --------- --------- --------- ---------
Income (Loss)
from
operations (43,096) 49,115 6,019 10,580 16,599
Other income
(expense),
net (11,978) - (11,978) 19,761 (h) 7,783
--------- --------- --------- --------- ---------
Income (Loss)
before
provision
for income
taxes (55,074) 49,115 (5,959) 30,341 24,382
Provision
for income
taxes 268 - 268 - 268
--------- --------- --------- --------- ---------
Net income
(loss) $ (55,342) $ 49,115 $ (6,227) $ 30,341 $ 24,114
========= ========= ========= ========= =========
Net income
(loss) per
common share:
Basic $ (1.09) $ 0.48
========= =========
Diluted $ (1.09) $ 0.37
========= =========
Weighted
average
shares used
in computing
net income
(loss) per
common share:
Basic 50,732 50,732
========= =========
Diluted 50,732 64,785
========= =========
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, net income and net income per share, which are adjusted to
reflect invoiced shipments and exclude non-GAAP stock-based
compensation and warrant revaluation expenses. 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. 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.
(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
December
Three Months Ended December 27, 2008 29, 2007
---------------------------------------------- ---------
Pre Mar 29, Post Mar 29,
2008 2008
Ratable and Ratable and
Deferred Product Product
Revenue Revenue Revenue Services Total Total
----------- ----------- --------- ---------- ---------
(In thousands)
Beginning
balance $ 21,752 $ 4,296 $ 6,408 $ 32,456 $ 157,150
Additions to
deferred
revenue - 1,086 7,577 8,663 92,544
Amortization
to revenue (13,102) (1,205) (4,405) (18,712) (75,257)
----------- ----------- --------- ---------- ---------
Ending balance $ 8,650 $ 4,177 $ 9,580 $ 22,407 $ 174,437
=========== =========== ========= ========== =========
Change in
deferred
revenue
balance $ (13,102) $ (119) $ 3,172 $ (10,049) $ 17,287
=========== =========== ========= ========== =========
(b) 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 September 27, 2008
----------------------------------------------
Pre Mar 29, Post Mar 29,
2008 2008
Ratable and Ratable and
Deferred Product Product
Revenue Revenue Revenue Services Total
----------- ----------- --------- ----------
(In thousands)
Beginning
balance $ 61,340 $ 3,113 $ 5,456 $ 69,909
Additions to
deferred
revenue - 2,075 3,567 5,642
Amortization
to revenue (39,588) (891) (2,616) (43,095)
----------- ----------- --------- ----------
Ending balance $ 21,752 $ 4,297 $ 6,407 $ 32,456
=========== =========== ========= ==========
Change in
deferred
revenue
balance $ (39,588) $ 1,184 $ 951 $ (37,453)
=========== =========== ========= ==========
(c) 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:
Twelve
Months
Ended
December
Twelve Months Ended December 27, 2008 29, 2007
----------------------------------------------- ---------
Pre Mar 29, Post Mar 29,
2008 2008
Ratable and Ratable and
Deferred Product Product
Revenue Revenue Revenue Services Total Total
----------- ----------- --------- ---------- ---------
(In thousands)
Beginning
balance $ 174,437 $ - $ - $ 174,437 $ 110,953
Additions to
deferred
revenue 29,639 8,140 19,356 57,135 301,229
Amortization
to revenue (195,426) (3,963) (9,776) (209,165) (237,745)
----------- ----------- --------- ---------- ---------
Ending balance $ 8,650 $ 4,177 $ 9,580 $ 22,407 $ 174,437
=========== =========== ========= ========== =========
Change in
deferred
revenue
balance $ (165,787) $ 4,177 $ 9,580 $ (152,030) $ 63,484
=========== =========== ========= ========== =========
(d) 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 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
Three Months Ended December 27, December
2008 29, 2007
----------------------------------- ----------
Pre Mar 29, Post Mar 29,
2008 2008
Ratable and Ratable and
Deferred Product Product
Inventory Cost Cost Cost Total Total
----------- ----------- --------- ----------
(In thousands)
Beginning
balance $ 8,172 $ 1,120 $ 9,292 $ 79,887
Additions to
deferred cost
of revenue - 32 32 39,580
Amortized to
cost of
revenue (4,951) (136) (5,087) (37,845)
----------- ----------- --------- ----------
Ending balance $ 3,221 $ 1,016 $ 4,237 $ 81,622
=========== =========== ========= ==========
Change in
deferred
inventory cost
balance $ (4,951) $ (104) $ (5,055) $ 1,735
=========== =========== ========= ==========
(e) 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 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 September 27,
2008
-----------------------------------
Pre Mar 29, Post Mar 29,
2008 2008
Ratable and Ratable and
Deferred Product Product
Inventory Cost Cost Cost Total
----------- ----------- ---------
(In thousands)
Beginning
balance $ 26,510 $ 450 $ 26,960
Additions to
deferred cost
of revenue - 710 710
Amortized to
cost of
revenue (18,338) (40) (18,378)
----------- ----------- ---------
Ending balance $ 8,172 $ 1,120 $ 9,292
=========== =========== =========
Change in
deferred
inventory cost
balance $ (18,338) $ 670 $ (17,668)
=========== =========== =========
(f) 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 cost of inventory adjustments recorded above are
reconciled to the deferred cost of inventory balance on our balance
sheet in the table below:
Twelve
Months
Ended
Twelve Months Ended December 27, December
2008 29, 2007
----------------------------------- ----------
Pre Mar 29, Post Mar 29,
2008 2008
Ratable and Ratable and
Deferred Product Product
Inventory Cost Cost Cost Total Total
----------- ----------- --------- ----------
(In thousands)
Beginning
balance $ 81,622 $ - $ 81,622 $ 67,253
Additions to
deferred cost
of revenue 11,162 1,202 12,364 144,374
Amortized to
cost of
revenue (89,563) (186) (89,749) (130,005)
----------- ----------- --------- ----------
Ending balance $ 3,221 $ 1,016 $ 4,237 $ 81,622
=========== =========== ========= ==========
Change in
deferred
inventory cost
balance $ (78,401) $ 1,016 $ (77,385) $ 14,369
=========== =========== ========= ==========
(g) 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 this is 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 Twelve Months Ended
------------------------------- --------------------
December September December December December
27, 27, 29, 27, 29,
2008 2008 2007 2008 2007
--------- --------- --------- --------- ---------
(In thousands)
GAAP stock-based
compensation in
cost of revenue $ 308 $ 299 $ 156 $ 1,086 $ 410
GAAP stock-based
compensation in
cost of revenue -
amortization from
balance sheet 739 1,180 198 4,288 327
Stock-based
compensation not
deferred to
deferred inventory
cost - - 797 215 1,213
Stock-based
compensation
previously
recognized on
invoiced shipment
basis (143) (209) (186) (1,098) (289)
--------- --------- --------- --------- ---------
Non-GAAP stock-based
compensation in
cost of revenue $ 904 $ 1,270 $ 965 $ 4,491 $ 1,661
========= ========= ========= ========= =========
(h) The following table summarizes the re-measurement of our
freestanding preferred stock warrants under FAS 150:
Twelve Months Ended
---------------------
December December
27, 29,
2008 2007
---------- ---------
Other gain (loss) $ - $ (19,761)
========== =========
Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 27, December 29,
2008 2007
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 166,770 $ 91,209
Short-term investments 68,232 181,168
Short-term restricted cash 720 743
Accounts receivable, net of allowance for
doubtful accounts of $1,700 in 2008 and
$0 in 2007 69,354 39,216
Other receivables 1,085 1,127
Inventory 58,986 58,579
Deferred inventory costs 1,744 78,362
Prepaid expenses and other current assets 6,311 3,941
------------ ------------
Total current assets 373,202 454,345
Property, plant and equipment, net 46,820 36,973
Intangible assets 1,276 1,541
Deferred inventory costs, non-current 2,493 3,260
Long-term investments 74,684 30,116
Long-term restricted cash 2,179 2,594
Other non-current assets 6,413 359
------------ ------------
Total assets $ 507,067 $ 529,188
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,048 $ 17,504
Accrued expenses 16,092 9,497
Accrued compensation and related benefits 13,472 17,749
Accrued warranty 5,205 4,974
Deferred revenue 14,683 167,031
------------ ------------
Total current liabilities 83,500 216,755
Accrued warranty, non-current 4,735 5,018
Deferred revenue, non-current 7,724 7,406
Long-term exercised unvested options 221 825
Other long-term liabilities 5,424 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
December 27, 2008 and December 29, 2007
Issued and outstanding shares - 94,163
as of December 27, 2008 and 91,580 as of
December 29, 2007 94 92
Additional paid-in capital 699,705 663,870
Accumulated other comprehensive income
(loss) (3,598) 78
Accumulated deficit (290,738) (369,466)
------------ ------------
Total stockholders' equity 405,463 294,574
------------ ------------
Total liabilities and stockholders' equity $ 507,067 $ 529,188
============ ============
Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Twelve Months Ended
---------------------------
December 27, December 29,
2008 2007
------------ ------------
Cash Flows from Operating Activities:
Net income (loss) $ 78,728 $ (55,342)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 12,975 9,824
Provision for doubtful accounts 1,700 -
Amortization of debt discount - 282
Accretion of investment discount (893) (572)
Asset impairment charges - 393
Stock-based compensation expense 23,819 9,656
Put Rights gain (15,866) -
Mark-to-market, trading 16,762 -
Excess tax benefit from stock option
transactions (248) -
Tax benefit from stock option transactions 593 -
Revaluation of warrant liabilities - 19,761
Gain on disposal of fixed assets (1,107) (2,776)
Other (gain) loss 7 (73)
Changes in assets and liabilities:
Accounts receivable (31,796) 2,054
Inventory (821) 2,515
Prepaid expenses and other current assets (2,463) (770)
Deferred inventory costs 76,538 (14,696)
Other non-current assets (6,081) 706
Accounts payable 16,767 (24,220)
Accrued liabilities and other expenses 3,387 5,557
Deferred revenue (152,030) 63,484
Accrued warranty (53) 7,275
------------ ------------
Net cash provided by operating
activities 19,918 23,058
Cash Flows from Investing Activities:
Purchases of available-for-sale investments (226,014) (299,159)
Proceeds from sale of investments 108,190 57,200
Proceeds from maturities of investments and
restricted cash 183,778 28,620
Proceeds from disposal of assets 1,192 3,286
Purchase of property and equipment (22,941) (20,215)
------------ ------------
Net cash provided by (used in)
investing activities 44,205 (230,268)
Cash Flows from Financing Activities:
Principal payments on loan obligations - (35,401)
Proceeds from loans - 7,119
Proceeds from initial public offering,
net of issuance costs - 190,078
Proceeds from follow-on offering, net of
issuance costs - 104,016
Proceeds from issuance of common stock 11,482 3,535
Proceeds from exercise of warrants - 45
Proceeds from repayment of non-recourse
notes - 145
Excess tax benefit from stock option
transactions 248 -
Repurchase of common stock (29) (59)
------------ ------------
Net cash provided by financing
activities 11,701 269,478
Effect of exchange rate changes (263) 57
Net change in cash and cash equivalents 75,561 62,325
Cash and cash equivalents at beginning of
period 91,209 28,884
------------ ------------
Cash and cash equivalents at end of period $ 166,770 $ 91,209
============ ============
Supplemental disclosures of cash flow
information:
Cash paid for interest $ 3 $ 2,497
Cash paid for income taxes $ 1,036 $ 121
Infinera Corporation
Supplemental Financial Information
Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08
----- ----- ----- ----- ----- ----- ----- -----
Invoiced Shipments $66.7 $69.0 $80.4 $93.4 $95.5 $90.8 $80.9 $86.2
Gross Margin % 35% 37% 43% 47% 45% 47% 42% 36%
----- ----- ----- ----- ----- ----- ----- -----
Invoiced Shipment
Composition:
Domestic % 89% 84% 81% 81% 82% 78% 81% 73%
International % 11% 16% 19% 19% 18% 22% 19% 27%
Largest Customer % 57% 48% 28% 18% 31% 21% 27% 23%
----- ----- ----- ----- ----- ----- ----- -----
Cash Related
Information:
Cash from
Operations $ 6.9 $(0.8) $(2.0) $18.9 $ 9.8 $ 5.6 $ 9.9 $(5.4)
Capital
Expenditures $ 5.2 $ 3.6 $ 3.0 $ 8.5 $ 4.5 $ 4.8 $ 5.9 $ 7.8
Depreciation &
Amortization $ 2.1 $ 2.0 $ 2.7 $ 2.7 $ 2.6 $ 2.9 $ 3.4 $ 4.1
DSO's 27 36 47 39 42 57 55 74
----- ----- ----- ----- ----- ----- ----- -----
Inventory Metrics:
Raw Materials $ 7.4 $ 8.8 $ 7.5 $10.5 $ 7.9 $ 9.2 $10.0 $ 9.1
Work in Process $31.6 $36.0 $34.8 $35.1 $40.6 $34.6 $35.8 $37.9
Finished Goods $18.4 $13.7 $14.8 $13.0 $10.7 $13.8 $12.8 $12.0
----- ----- ----- ----- ----- ----- ----- -----
Total Inventory $57.3 $58.5 $57.1 $58.6 $59.2 $57.6 $58.6 $59.0
Inventory Turns 3.0 3.0 3.2 3.4 3.5 3.3 3.2 3.8
----- ----- ----- ----- ----- ----- ----- -----
Worldwide Headcount 617 646 668 711 799 853 889 937
----- ----- ----- ----- ----- ----- ----- -----
Contacts: Press: Jeff Ferry jferry@infinera.com Infinera
Corporation 408-572-5213 Investors/Analysts: Bob Blair
bblair@infinera.com Infinera Corporation 408-716-4879
Infinera (NASDAQ:INFN)
Historical Stock Chart
From May 2024 to Jun 2024
Infinera (NASDAQ:INFN)
Historical Stock Chart
From Jun 2023 to Jun 2024
