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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
Exhibit 99.1 shall not be deemed "filed" for purposes of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
By: /s/ Steve Workman Provides Preliminary Financial Results for Optium's Fourth Quarter SUNNYVALE, CA -- 09/08/2008 -- Finisar Corporation (NASDAQ: FNSR), a global
technology leader for fiber optic subsystems and network test systems,
today announced financial results for its first fiscal quarter ended August
3, 2008. Revenues of $128.7 million were a new record for the company
driven by record revenues for both optical subsystems and network test
systems.
In addition, Finisar provided preliminary financial results for Optium
Corporation's fourth fiscal quarter ended August 2, 2008. Finisar's
combination with Optium was completed on August 29, 2008, following the end
of Finisar's first quarter. Therefore, Optium's financial results are not
included in Finisar's first quarter financial statements. Optium's
preliminary fourth quarter results are subject to completion of an audit of
Optium's annual financial results.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Securities Exchange Act of 1934.
Date of Report: September 08, 2008
(Date of earliest event reported)
Finisar Corporation
(Exact name of registrant as specified in its charter)
CA
(State or other jurisdiction
of incorporation)
000-27999
(Commission File Number)
94-3038428
(IRS Employer
Identification Number)
1389 Moffett Park Drive
(Address of principal executive offices)
94089
(Zip Code)
408-548-1000
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Item 2.02. Results of Operations and Financial Condition
On September 8, 2008, Finisar Corporation ("Finisar") issued a press release announcing its financial results for the first fiscal quarter ended August 3, 2008. A copy of the press release relating to the financial results is attached hereto as Exhibit 99.1.
(a) Financial statements:
None
(b) Pro forma financial information:
None
(c) Shell company transactions:
None
(d) Exhibits
99.1 Press Release of Finisar Corporation dated September 08, 2008
Dated: September 08, 2008
FINISAR CORPORATION
Steve Workman
Sr. VP Finance and CFO
Exhibit No.
Description
99.1
Press Release of Finisar Corporation dated September 08, 2008
FINISAR FINANCIAL HIGHLIGHTS - FIRST QUARTER ENDED AUGUST 3, 2008
GAAP GAAP Non-GAAP(a) Non-GAAP(a)
Aug 3, July 29, Aug 3, July 29,
2008 2007 2008 2007
---------- --------- ---------- ----------
(in thousands, except per share data)
Optical products revenues $ 115,774 $ 96,360 $ 115,774 $ 96,360
Network test products
revenues $ 12,938 $ 9,375 $ 12,938 $ 9,375
Total revenues $ 128,712 $ 105,735 $ 128,712 $ 105,735
Gross margin 38.4% 30.6 % 40.0% 35.9%
Income (loss) from
operations $ 8,445 $ (3,736) $ 14,102 $ 5,690
Operating margin 6.6% (3.5)% 11.0% 5.4%
Net income (loss) $ 4,716 $ (7,321) $ 11,583 $ 3,741
Net income (loss) per share
- basic $ 0.02 $ (0.02) $ 0.04 $ 0.01
Net income (loss) per share
- diluted $ 0.02 $ (0.02) $ 0.04 $ 0.01
(a) In evaluating the operating performance of Finisar's business, Finisar
management utilizes financial measures that exclude certain charges and
credits required by generally accepted accounting principles, or GAAP,
that are considered by management to be outside Finisar's core
operating results. A reconciliation of Finisar's non-GAAP financial
measures to the most directly comparable GAAP measures as well as
additional related information can be found under the heading "Finisar
Non-GAAP Financial Measures" below.
Highlights for the quarter included:
- -- Total revenues increased to a record $128.7 million, up $7.7 million, or 6.4%, from the preceding quarter and $23.0 million, or 21.7%, from the first quarter of the prior year; - -- Optics revenues increased to a record $115.8 million, up $4.4 million, or 3.9% from the preceding quarter and $19.4 million, or 20.1%, from the first quarter of the prior year. Revenues from the sale of products for 10/40 Gbps applications totaled $32.2 million in the first quarter, up $1.0 million, or 3.2%, from the preceding quarter and $14.0 million, or 76.6%, from the first quarter of the prior year; - -- Network Test revenues increased to a record $12.9 million, up $3.3 million, or 34.4%, from the preceding quarter and $3.6 million, or 38.0%, from the first quarter of the prior year as revenue from new products contributed to the growth in the quarter, including products for 3-6 Gbps SAS/SATA and 8 Gbps Fibre Channel storage applications; - -- Gross margin increased to 38.4%, compared to 32.9% in the preceding quarter and 30.6% in the first quarter of the prior year driven by a favorable product mix of optical subsystems and revenues for Network Test; - -- Operating income improved to $8.4 million from an operating loss of $45.0 million in the preceding quarter (which included a non-cash impairment charge of $45.4 million) and an operating loss of $3.7 million in the first quarter of the prior year; - -- Net income of $4.7 million, or $0.02 per diluted share compared to a net loss of $48.7 million (which included a non-cash impairment charge of $45.4 million), or $0.16 per share in the preceding quarter and a net loss of $7.3 million, or $0.02 per share in the first quarter of the prior year. Included in these results was a non-recurring loss of $0.9 million related to the sale of the Netwisdom product line during the first quarter; and - -- Cash and short-term investments, plus other long-term investments that can be readily converted into cash, increased $8.1 million, from $116.5 million at April 30, 2008 to $124.6 million at August 3, 2008, reflecting an infusion of $20 million in cash from a new term loan partially offset by $12 million in payments to retire a convertible note. Finisar has classified certain of its investments as long-term based on its intent to hold these securities until maturity, although they can be readily sold if required.
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Finisar provides supplemental information regarding its operating performance on a non-GAAP basis. Finisar believes this additional information provides investors and management with additional insight into its underlying core operating performance by excluding a number of non-cash and cash charges as well as gains or losses principally related to acquisitions, the sale of minority investments, restructuring or other transition activities, impairments and financing transactions. For the first quarter of fiscal 2009, these excluded items resulted in net charges of $6.9 million and included, among other items described in Finisar Non-GAAP Financial Measures below, $3.1 million in non-cash stock compensation expense; $1.5 million in amortization charges related to acquired developed technology and purchased intangibles arising from previous acquisitions; $1.1 million related to the amortization of discount on convertible notes issued in 2001; and $919,000 related to sale of a product line.
Excluding these items:
- -- Non-GAAP gross margin increased sequentially to 40.0%, compared to 37.4% in the preceding quarter and 35.9% in the first quarter of the prior year. The increase in non-GAAP gross margin was driven by a favorable product mix of optical subsystems applications and revenues for Network Test; and - -- Non-GAAP operating income increased to a record $14.1 million, or 11.0% of revenues, compared to $9.6 million, or 8.0% of revenues in the preceding quarter and $5.7 million, or 5.4% of revenues, in the first quarter of the prior year. The increase was principally due to higher gross profit levels partially offset by higher operating expenses, particularly for research and development and general administrative; and - -- Non-GAAP net income increased to $11.6 million, or $0.04 per diluted share, compared to $7.9 million, or $0.03 per diluted share, in the preceding quarter and $3.7 million, or $0.01 per diluted share, in the first quarter of the prior year.
"We are very proud of our performance this quarter. It underscores the power of vertical integration when combined with a leading market share position," said Jerry Rawls, Finisar's executive Chairman of the Board. "Operating income on a non-GAAP basis reached record levels, both in absolute terms and as a percentage of revenue. In addition, our recent merger with Optium will add additional momentum to the progress we are making."
"Finisar's recent combination with Optium creates exciting opportunities to further enhance Finisar's market position as a technology leader," said Eitan Gertel, Finisar's new Chief Executive Officer. "The addition of Optium's strong product lines directed toward high-growth markets such as ROADMs and 10/40G products for telecom applications, as well as a significant position in the cable TV market will provide additional fuel to power the Finisar model."
OPTIUM PRELIMINARY FINANCIAL HIGHLIGHTS - FOURTH QUARTER ENDED AUGUST 2, 2008
The following preliminary financial results for Optium's fourth fiscal quarter ended August 2, 2008 are presented for informational purposes only and are not included in Finisar's financial results for its first fiscal quarter ended August 3, 2008. Optium's financial results will be included in Finisar's consolidated financial statements beginning on August 30, 2008. The Optium non-GAAP financial measures presented below have been calculated on a basis consistent with non-GAAP financial measures as reported by Optium in previous quarters. Investors should note that (i) Optium non-GAAP financial measures are calculated differently than and, therefore, are not necessarily comparable to similarly-titled Finisar non-GAAP financial measures and (ii) following the Finisar-Optium merger, certain historical accounting policies for both companies, including the presentation of non-GAAP financial measures, will be changed in order to achieve consistency.
GAAP GAAP Non-GAAP(a) Non-GAAP(a) Aug 2, July 28, Aug 2, July 28, 2008 2007 2008 2007 --------- --------- ---------- --------- (In thousands, except per share data) Revenue $ 47,218 $ 26,782 $ 47,218 $ 26,782 Gross margin 25.7% 23.5% 26.0% 23.6% Income (loss) from operations $ (2,538) $ (12,881) $ 784 $ (1,374) Operating margin (5.4)% (4.8)% 1.7% (5.1)% Net income (loss) $ (2,110) $ 1,215 $ 1,081 $ (359) Net income (loss) per share - basic $ (0.10) $ 0.05 $ 0.04 $ (0.01) Net income (loss) per share - diluted $ (0.10) $ 0.05 $ 0.04 $ (0.01) (a) In evaluating the operating performance of Optium's business, Optium management historically utilized non-GAAP financial measures that excluded certain charges and credits required by GAAP that were considered by Optium management to be outside Optium's core operating results. A reconciliation of Optium non-GAAP financial measures to the most directly comparable GAAP measures as well as additional related information can be found in "Optium Non-GAAP Financial Measures" below.
Highlights for the quarter included:
- -- Fourth quarter revenues of $47.2 million, also a new record for Optium, increased 4.9% from $45.0 million in the preceding quarter and 76.3% from $26.8 million in the fourth quarter of the prior year; - -- Gross margin of 25.7% in the fourth quarter compares to 26.5% in the third quarter and 23.5% in the fourth quarter of the prior year; - -- Operating expenses of $14.7 million in the fourth quarter increased from $13.2 million in the third quarter and decreased from $19.2 million in the fourth quarter of the prior year. Operating expenses in the prior year period included $10 million of acquired in process research and development expense resulting from the acquisition of Kailight Photonics; - -- Net loss of $2.6 million, or $(0.10) per share, in the fourth quarter compares to a net loss of $0.7 million, or $(0.03) per share, in the preceding quarter and net income of $1.2 million, or $0.05 per diluted share, in the fourth quarter of the prior year (which included the recognition of $13.0 million income tax benefit resulting from recording a deferred tax asset offset by $10.0 million of acquired in process research and development expense resulting from the acquisition of Kailight Photonics); and - -- Cash and short-term investments of $40.9 million decreased $5.3 million from $46.2 million at May 3, 2008 primarily as a result of increased investments in working capital.
Like Finisar, Optium historically provided supplemental information regarding its operating performance that excluded certain charges and credits required by GAAP but that Optium management believed provided useful information regarding Optium's baseline operating performance before gains, losses or other charges that were considered to be outside of Optium's core operating results. For the fourth quarter of fiscal 2008, these excluded items resulted in net charges of $3.7 million and included, among other items described in Optium Non-GAAP Financial Measures below, $1.7 million in stock based compensation; $0.9 million in merger related costs resulting from the merger with Finisar; $0.6 million in patent litigation costs; and $0.1 million in amortization expenses related to acquired developed technologies.
Excluding these items:
- -- Non-GAAP gross margin decreased sequentially to 26.0%, compared to 26.6% in the preceding quarter and 23.6% in the fourth quarter of the prior year. The decrease sequentially was primarily related to selling a higher mix of lower margin 10G products than in the prior quarter; - -- Non-GAAP operating expenses increased to $11.5 million, compared to $10.6 million in the preceding quarter and $7.7 million in the fourth quarter of the prior year. The increase was principally due to expenses incurred in connection with ramping product introductions and production capacity for the ROADM and 40G product lines; and - -- Non-GAAP net income decreased to $1.1 million, or $0.04 per diluted share, compared to $1.7 million, or $0.07 per diluted share, in the preceding quarter, and improved from a net loss of $(0.4) million, or $(0.01) per diluted share, in the fourth quarter of the prior year.
CONFERENCE CALL
Finisar will discuss these financial statements and its current business outlook during its regular quarterly conference call scheduled for today, September 8, 2008, at 2:00 p.m. Pacific Time. To listen to the call you may connect to the investor page of Finisar at www.finisar.com or dial 866-393-6455 (domestic) or 706-634-9717 (international) and enter passcode 59772319.
A replay will be available approximately two hours after the call for two weeks. To access the replay, dial 800-642-1687 (domestic) or 706-645-9291 (international) follow the prompts and enter in conference ID #59772319. A Web archive will also be made available following the call at www.finisar.com until the next conference call to be held approximately 90 days from today.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements included in this press release are based upon information available to Finisar as of the date hereof, and Finisar assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those projected. Examples of such risks include those associated with: the integration of the operations of Optium and the realization of synergies expected to result from Finisar's combination with Optium; the rapidly evolving markets for Finisar's products and uncertainty regarding the development of these markets; Finisar's historical dependence on sales to a limited number of customers and fluctuations in the mix of products and customers in any period; ongoing new product development and introduction of new and enhanced products; the challenges of rapid growth followed by periods of contraction; and intensive competition. Additional risks include the potential impact of pending civil litigation arising from the investigation of Finisar's historical option granting practices. The preliminary fourth quarter financial information regarding Optium is subject to completing the audit of Optium's financial statements for the full fiscal year, which could result in adjustments to the preliminary results reported. Further information regarding these and other risks relating to Finisar's business, including the recently acquired operations of Optium, is set forth in Finisar's Registration Statement on Form S-4 (filed July 10, 2008) and other reports as filed with the Securities and Exchange Commission.
ABOUT FINISAR
Finisar Corporation (NASDAQ: FNSR) is a global technology leader for fiber optic subsystems and network test systems that enable high-speed voice, video and data communications for networking, storage, wireless, and cable TV applications. For more than 20 years, Finisar has provided critical optics technologies to system manufacturers to meet the increasing demands for network bandwidth and storage. Finisar is headquartered in Sunnyvale, California, USA with R&D, manufacturing sites, and sales offices worldwide. For additional information, visit www.finisar.com.
FINISAR FINANCIAL STATEMENTS
The following financial tables are presented in accordance with GAAP.
Finisar Corporation Consolidated Statements of Operations Three Months Ended ---------------------------------- August 3, July 29, April 30, 2008 2007 2008 ---------- ---------- ---------- (Unaudited) (in thousands, except share and per share data) Revenues Optical subsystems and components $ 115,774 $ 96,360 $ 111,378 Network performance test systems 12,938 9,375 9,627 ---------- ---------- ---------- Total revenues 128,712 105,735 121,005 Cost of revenues 78,044 71,703 79,882 Amortization of acquired developed technology 1,246 1,729 1,314 ---------- ---------- ---------- Gross profit 49,422 32,303 39,809 Gross margin 38.4% 30.6% 32.9% Operating expenses: Research and development 20,773 17,502 20,194 Sales and marketing 10,149 10,056 10,280 General and administrative 9,787 7,991 8,629 Amortization of purchased intangibles 268 490 280 Impairment of goodwill and intangible assets - - 45,433 ---------- ---------- ---------- Total operating expenses 40,977 36,039 84,816 ---------- ---------- ---------- Income (loss) from operations 8,445 (3,736) (45,007) Interest income 968 1,415 1,352 Interest expense (4,008) (4,246) (4,341) Other income (expense), net 57 (133) (560) ---------- ---------- ---------- Income (loss) before income taxes 5,462 (6,700) (48,556) Provision for income taxes 746 621 150 ---------- ---------- ---------- Net income (loss) $ 4,716 $ (7,321) $ (48,706) ========== ========== ========== Net income (loss) per share - basic $ 0.02 $ (0.02) $ (0.16) Net income (loss) per share - diluted $ 0.02 $ (0.02) $ (0.16) Shares used in computing net loss per share - basic 310,133 308,634 308,786 Shares used in computing net loss per share - diluted 311,614 308,634 308,786 Finisar Corporation Consolidated Balance Sheets (In thousands) August 3, April 30, 2008 2008 ---------- ---------- (unaudited) Current assets: Cash and cash equivalents $ 96,499 $ 79,442 Short-term available-for-sale investments 20,636 27,776 Short-term available-for-sale investments - equity 1,287 2,801 Accounts receivable, net 57,186 48,005 Accounts receivable, other 10,936 12,408 Inventories 88,823 82,554 Prepaid expenses 8,291 7,652 ---------- ---------- Total current assets 283,658 260,638 Long-term available-for-sale investments - debt 7,452 9,236 Property, plant and improvements, net 75,624 89,847 Purchased technology, net 10,604 11,850 Other intangible assets, net 17,626 17,183 Goodwill 88,242 88,242 Minority investments 14,289 13,250 Other assets 4,955 3,241 ---------- ---------- Total assets $ 502,450 $ 493,487 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 49,342 $ 43,040 Accrued compensation 13,521 14,397 Other accrued liabilities 22,460 23,397 Deferred revenue 5,692 5,312 Current portion of other long-term liabilities 5,286 2,436 Convertible notes 91,146 101,918 Non-cancelable purchase obligations 1,995 3,206 ---------- ---------- Total current liabilities 189,442 193,706 Long-term liabilities: Convertible notes 150,000 150,000 Other long-term liabilities 23,569 18,911 Deferred income taxes 9,454 8,903 ---------- ---------- Total long-term liabilities 183,023 177,814 Stockholders' equity: Common stock 311 309 Additional paid-in capital 1,546,344 1,540,241 Accumulated other comprehensive income 10,170 12,973 Accumulated deficit (1,426,840) (1,431,556) ---------- ---------- Total stockholders' equity 129,985 121,967 ---------- ---------- Total liabilities and stockholders' equity $ 502,450 $ 493,487 ========== ==========
FINISAR NON-GAAP FINANCIAL MEASURES
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Finisar provides supplemental information regarding the Company's operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or which occur relatively infrequently and which management considers to be outside our core operating results. Some of these non-GAAP measures also exclude the ongoing impact of historical business decisions made in different business and economic environments. Management believes that tracking non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income and non-GAAP net income per share provides management and the investment community with valuable insight into our current operations, our ability to generate cash and the underlying business trends which are affecting our performance. These non-GAAP measures are used by both management and our Board of Directors, along with the comparable GAAP information, in evaluating our current performance and planning our future business activities. In particular, management finds it useful to exclude non-cash charges in order to better correlate our operating activities with our ability to generate cash from operations and to exclude non-recurring and infrequently incurred cash charges as a means of more accurately predicting our liquidity requirements. We believe that these non-GAAP measures, when used in conjunction with our GAAP financial information, also allow investors to better evaluate our financial performance in comparison to other periods and to other companies in our industry.
In calculating non-GAAP gross profit, we have excluded the following items from cost of revenues in applicable periods:
- -- Changes in excess and obsolete inventory reserve (predominantly non- cash charges or non-cash benefits); - -- Amortization of acquired technology (non-cash charges related to technology obtained in acquisitions); - -- Duplicative facility costs during facility move (non-recurring charges); - -- Stock-based compensation expense (non-cash charges); - -- Acquisition related compensation costs (non-recurring cash charges related to employee retention); - -- Purchase accounting adjustment for sale of acquired inventory (non- cash and non-recurring charges); and - -- Reduction in force costs (non-recurring charges).
In calculating non-GAAP income from operations, non-GAAP net income and non-GAAP net income per share, we have excluded the same items to the extent they are classified as operating expenses, and have also excluded the following items in applicable periods:
- -- Options investigation costs included in general and administrative expense (non-recurring cash charges related to the special investigation into our historical stock option granting practices) and the cost of covering employee and employer tax liabilities (non-recurring cash charges) arising from that investigation recorded in each line of the income statement; - -- Amortization of purchased intangibles (non-cash charges related to prior acquisitions); - -- Impairment charges associated with intangible assets (non-cash and non- recurring); - -- Amortization of discount on convertible debt (non-cash charges); - -- Loss on debt extinguishment (non-recurring and non-cash charge); - -- Gains and losses on sales of assets (non-recurring or non-cash losses and cash gains related to the periodic disposal of assets no longer required for current activities); - -- Gains and losses on minority investments (infrequently occurring and principally non-cash gains and losses related to the disposal of investments in other companies and non-cash income or loss from these investments accounted for under the equity method); - -- Tax charges arising from timing difference related to asset purchases (non-cash provision); and - -- Cumulative effect of change in accounting principle (non-recurring and non-cash charges or income).
A reconciliation of this non-GAAP financial information to the corresponding GAAP information is set forth below:
Finisar Corporation Reconciliation of Results of Operations under GAAP and non-GAAP Three Months Ended ---------------------------- August 3, July 29, April 30, 2008 2007 2008 -------- -------- -------- (Unaudited) (in thousands, except per share data) Reconciliation of GAAP Gross Profit to non-GAAP Gross Profit: Gross profit per GAAP 49,422 32,303 39,809 Gross margin, GAAP 38.4% 30.6% 32.9% Adjustments: Cost of revenues Change in excess and obsolete inventory reserve (285) 2,280 3,021 Amortization of acquired technology 1,246 1,729 1,314 Duplicate facility costs during facility move 170 - 296 Stock compensation 856 722 771 Acquisition related compensation - - 27 Purchase accounting adjustment for sale of acquired inventory - 865 - Reduction in force costs 36 100 9 -------- -------- -------- Total cost of revenue adjustments 2,023 5,696 5,438 Gross profit, non-GAAP 51,445 37,999 45,247 Gross margin, non-GAAP 40.0% 35.9% 37.4% Reconciliation of GAAP operating income (loss) to non-GAAP operating income (loss): Operating income (loss) per GAAP 8,445 (3,736) (45,007) Operating margin, GAAP 6.6% -3.5% -37.2% Adjustments: Total cost of revenue adjustments 2,023 5,696 5,438 Research and development Reduction in force costs - 28 12 Stock compensation 1,108 955 1,139 Acquisition related compensation - - 499 Sales and marketing Reduction in force costs 100 13 87 Stock compensation 517 451 482 Acquisition related compensation - - 85 General and administrative Reduction in force costs - 6 - Stock compensation 576 631 586 Acquistion related compensation - - 110 Costs related to options investigation 146 1,156 507 Disposal of a product line 919 - - Amortization of purchased intangibles 268 490 280 Impairment of intangible assets - - 45,433 -------- -------- -------- Total cost of revenue and operating expense adjustments 5,657 9,426 54,658 Operating income, non-GAAP 14,102 5,690 9,651 Operating margin, non-GAAP 11.0% 5.4% 8.0% Reconciliation of GAAP net income (loss) to non-GAAP net income (loss): Net income (loss) per GAAP 4,716 (7,321) (48,706) Total cost of revenue and operating expense adjustments 5,657 9,426 54,658 Amortization of discount on convertible debt 1,146 1,196 1,236 Loss on debt extinguishment - - 74 Other expense, net Loss (gain) on sale of assets 413 13 (61) Loss (gain) on minority investments (400) (117) 1,355 Other misc income (500) - (650) Provision for income tax Timing difference related to asset purchases 551 544 (27) -------- -------- -------- Total adjustments 6,867 11,062 56,585 -------- -------- -------- Net income, non-GAAP $ 11,583 $ 3,741 $ 7,879 ======== ======== ======== Net income, non-GAAP per share - basic $ 0.04 $ 0.01 $ 0.03 Net income, non-GAAP per share - diluted $ 0.04 $ 0.01 $ 0.03 Shares used in computing non-GAAP net income per share - basic 310,133 308,634 308,786 Shares used in computing non-GAAP net income per share - diluted 311,614 325,964 310,129 Non-GAAP EBITDA Net income, non-GAAP $ 11,583 $ 3,741 $ 7,879 Depreciation expense 6,391 5,968 6,257 Amortization expense 450 532 640 Interest expense 1,894 1,635 1,752 Income tax expense 195 77 177 -------- -------- -------- Non-GAAP EBITDA $ 20,513 $ 11,953 $ 16,705 ======== ======== ========
OPTIUM FINANCIAL STATEMENTS
The following financial tables are presented in accordance with GAAP.
Optium Corporation Preliminary Consolidated Statements of Operations Three Months Ended ------------------------------------- August 2, July 28, May 3, 2008 2007 2008 ----------- ----------- ----------- (Unaudited, in thousands, except per share data) Revenues $ 47,218 $ 26,782 $ 45,004 Cost of revenues 35,069 20,492 33,077 ----------- ----------- ----------- Gross profit 12,149 6,290 11,927 Gross margin 25.7% 23.5% 26.5% Operating expenses: Research and development 6,769 4,862 6,149 Sales and marketing 1,694 808 1,685 General and administrative 6,224 3,501 5,374 Acquired in-process research and development - 10,000 - ----------- ----------- ----------- Total operating expenses 14,687 19,171 13,208 ----------- ----------- ----------- Income (loss) from operations (2,538) (12,881) (1,281) Interest and other income (expense), net 428 1,096 402 ----------- ----------- ----------- Income (loss) before income tax (2,110) (11,785) (879) Income tax (benefit) provision 529 (13,000) (217) ----------- ----------- ----------- Net income (loss) $ (2,639) $ 1,215 $ (662) =========== =========== =========== Net income (loss) per share - basic $ (0.10) $ 0.05 $ (0.03) Net income (loss) per share - diluted $ (0.10) $ 0.05 $ (0.03) Shares used in computing net income (loss) per share - basic 25,593 25,395 25,499 Shares used in computing net income (loss) per share - diluted 25,593 26,119 25,499 Optium Corporation Preliminary Consolidated Balance Sheets (In thousands) August 2, July 28, 2008 May 3, 2008 2007 ----------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) Current assets: Cash and cash equivalents $ 39,301 $ 42,614 $ 25,359 Short-term investments 1,600 3,600 36,018 Accounts receivable, net 36,583 32,758 21,853 Inventories, net 29,664 27,699 20,684 Restricted cash 125 415 Deferred tax asset, current portion 2,890 6,219 4,976 Prepaid expenses and other current assets 1,480 1,941 1,107 ----------- ----------- ----------- Total current assets 111,643 115,246 109,997 Property and equipment, net 17,811 16,164 9,124 Goodwill 38,947 38,993 37,923 Deferred tax asset, non-current portion 10,464 7,776 8,881 Restricted cash 284 Intangible assets, net 1,525 1,705 2,006 Other assets 537 612 170 ----------- ----------- ----------- Total assets $ 181,211 $ 180,496 $ 168,101 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 30,442 $ 28,768 $ 20,222 Accrued expenses 5,422 5,155 4,389 Accrued warranty 429 385 359 Deferred revenue Current portion of debt 24 31 46 ----------- ----------- ----------- Total current liabilities 36,317 34,339 25,016 Long-term liabilities: Long-term debt, net of current portion 980 404 206 Other long-term liabilities ----------- ----------- ----------- Total liabilities 37,297 34,743 25,222 Stockholders' equity: Common stock 3 3 3 Additional paid-in capital-common stock 195,799 194,634 191,118 Deferred compensation (424) (549) (924) Treasury stock (2,762) (2,762) (2,762) Accumulated other comprehensive income 2,969 3,459 1,839 Accumulated deficit (51,671) (49,032) (46,395) ----------- ----------- ----------- Total stockholders' equity 143,914 145,753 142,879 ----------- ----------- ----------- Total liabilities and stockholders' equity $ 181,211 $ 180,496 $ 168,101 =========== =========== ===========
OPTIUM NON-GAAP FINANCIAL MEASURES
In evaluating the operating performance of Optium's business, Optium's management historically utilized non-GAAP financial measures that excluded certain charges and credits required by GAAP. These items, which are identified in more detail below, share one or more of the following characteristics: they were unusual and Optium management did not expect them to recur in the ordinary course of its business; they did not involve the expenditure of cash; or they were unrelated to the ongoing operation of Optium's business in the ordinary course. Optium historically provided these non-GAAP financial measures because it believed they represent useful indications of Optium's baseline operating performance before gains, losses or other charges that were considered by Optium management to be outside of Optium's core operating results. However, non-GAAP financial measures:
- -- are not measures of financial performance calculated in accordance with GAAP; - -- do not represent financial measures as defined by GAAP; and, - -- should not be considered as an alternative to financial measures prepared in conformity with GAAP.
Further, non-GAAP financial measures as calculated by one company are not necessarily comparable to similarly titled measures reported by other companies, including when comparing Optium non-GAAP financial measures to Finisar non-GAAP financial measures.
In calculating the Optium non-GAAP financial measures contained elsewhere in this release, Optium's GAAP results have been adjusted to exclude certain charges and credits that are required by GAAP as follows:
- -- Stock-based compensation expense - Optium incurred stock-based compensation expense with respect to equity incentive awards made to employees, directors and other service providers, including (a) long-term equity incentive awards made to new hires and existing employees and (b) equity incentive awards made in satisfaction of certain bonus payments as earned under Optium's executive and employee bonus plans, which can be satisfied with equity incentive awards or cash at the option of the Company. - -- Amortization of purchased intangibles - Optium purchased intangible technology assets from Microdisplay Corporation in July 2007 and the purchase price of these purchased intangibles is being amortized over a five year useful life. - -- Duplicate facility costs during facility move - Optium has incurred duplicate facility costs during a facility move as a result of (a) the execution of a lease for its current U.S. operating facility and the early termination of the lease for its prior U.S. operating facility and (b) the execution of a lease for its future Australian operating facility. Optium completed the U.S. facility relocation during the third quarter of fiscal 2007, and the Australian facility relocation was completed during the fourth quarter of fiscal 2008. - -- Merger transaction expenses - Optium incurred expenses in connection with its merger transaction with Finisar completed on August 29, 2008. These expenses included legal fees and expenses, accounting due diligence fees and expenses, and travel and related expenses. - -- Patent litigation expenses - Since the first quarter of fiscal 2007, Optium has incurred expenses in connection with the defense of patent infringement lawsuits brought against it with respect to certain of its cable TV products. - -- Deferred tax adjustment - Optium recognized a tax benefit in July 2007 as the result of removal of valuation allowances associated with NOLs and other credits in the United States and, as a result, will incur non-cash tax expense in future taxable periods.
In addition, non-GAAP diluted shares outstanding for the three months ended July 28, 2007 as set forth in the non-GAAP reconciliation below are not in accordance with GAAP since there was a loss in the period. Under GAAP, when there is a loss for the period, basic and diluted shares outstanding are the same. In the non-GAAP reconciliation below, the non-GAAP diluted share count is the same as the share count as if there was a non-GAAP profit for the three months ended July 28, 2007 because Optium management believed that such a presentation is more useful to investors when comparing GAAP and non-GAAP results for the quarter.
A reconciliation of each of the Optium non-GAAP financial measures to the nearest GAAP financial measure is set forth in the table below.
Optium Corporation Reconciliation of Results of Operations under GAAP and non-GAAP Three Months Ended ---------------------------- August 2, July 28, May 3, 2008 2007 2008 -------- -------- -------- (Unaudited) (in thousands, except per share data) Reconciliation of GAAP Gross Profit to non-GAAP Gross Profit: Gross profit per GAAP 12,149 6,290 11,927 Gross margin, GAAP 25.7% 23.5% 26.5% Adjustments: Cost of revenues Stock compensation (a) 118 33 52 -------- -------- -------- Total cost of revenue adjustments 118 33 52 -------- -------- -------- Gross profit, non-GAAP 12,267 6,323 11,979 Gross margin, non-GAAP 26.0% 23.6% 26.6% Reconciliation of GAAP net income (loss) to non-GAAP net income (loss): Net loss per GAAP (2,639) 1,215 (662) Total cost of revenue adjustments 118 33 52 Research and development Stock compensation (a) 506 164 343 Sales and marketing Stock compensation (a) 137 47 106 General and administrative Stock compensation (a) 906 412 735 Merger transaction expenses 903 614 Patent litigation expenses 581 834 614 Duplicate facility costs during facility move 69 103 Amortization of purchased intangibles 102 17 101 Acquired in-process R&D 10,000 Deferred tax adjustment 560 (13,005) (227) Income tax provision on non-GAAP adjustments (162) (76) (81) -------- -------- -------- Total adjustments 3,720 (1,574) 2,360 -------- -------- -------- Net income, non-GAAP $ 1,081 $ (359) $ 1,698 ======== ======== ======== Net income, non-GAAP per share - basic $ 0.04 $ (0.01) $ 0.07 Net income, non-GAAP per share - diluted $ 0.04 $ (0.01) $ 0.07 Shares used in computing non-GAAP net income per share - basic 25,593 25,395 25,499 Shares used in computing non-GAAP net income per share - diluted 26,378 26,119 26,108 Reconciliation of GAAP operating income (loss) to non-GAAP operating income (loss): Operating income (loss) per GAAP (2,538) (12,881) (1,281) Operating margin, GAAP -5.4% -48.1% -2.8% Adjustments: Total cost of revenue adjustments 118 33 52 Research and development Stock-based compensation 506 164 343 Acquired in-process research and development 10,000 Selling, general and administrative Amortization of purchased intangibles 102 17 101 Duplicate facility costs during facility move 69 103 Merger transaction expenses 903 614 Patent litigation expense 581 834 614 Stock-based compensation 1,043 459 841 -------- -------- -------- Total cost of revenue and operating expense adjustments 3,322 11,507 2,668 -------- -------- -------- Operating income, non-GAAP 784 (1,374) 1,387 -------- -------- -------- Operating margin, non-GAAP 1.7% -5.1% 3.1% Non-GAAP EBITDA Net income, non-GAAP $ 1,081 $ (359) $ 1,698 Depreciation & amortization expense 1,242 723 1,277 Interest and other income (expense), net (428) (1,096) (402) Income tax expense 131 81 91 -------- -------- -------- Non-GAAP EBITDA $ 2,026 $ (651) $ 2,664 ======== ======== ======== Footnote (a) Of the aggregate $1,667, $1,236 and $656 in stock-based compensation expense for the three months ended August 2, 2008, May 3, 2008 and July 31, 2007, respectively, $218, $105 and $0, respectively, relates to stock-based compensation expense resulting from six-month and one-year restricted stock unit grants made in satisfaction of certain bonus payments under Optium's employee and executive bonus plans.
Contact: Steve Workman Chief Financial Officer 408-548-1000 Veronica Rosa Director Investor Relations 408-542-5050 investor.relations@Finisar.com-----END PRIVACY-ENHANCED MESSAGE-----