-- GAAP revenues for the second quarter of 2009 were $68.9 million
compared to $66.6 million for the first quarter of 2009 and $90.8 million
on an adjusted GAAP basis in the second quarter of 2008.
-- GAAP gross margins for the quarter were 29%. Excluding non-cash stock-
based compensation expense, non-GAAP gross margins were 31% in the second
quarter of 2009 compared to 31% in the first quarter of 2009 and 47% on an
adjusted GAAP basis in the second quarter of 2008.
-- GAAP net loss for the quarter was $27.1 million, or $0.28 per share.
Excluding non-cash stock-based compensation expense, net loss on a non-GAAP
basis was $18.2 million, or $0.19 per share, in the second quarter of 2009
compared to a net loss of $17.6 million, or $0.19 per share, on a non-GAAP
basis in the first quarter of 2009 and net income of $10.7 million, or
$0.11 per diluted share, on an adjusted GAAP basis, for the second quarter
of 2008.
Management Commentary
"We saw a number of positive developments in the second quarter, with both
existing and new customers," said Jagdeep Singh, president and chief
executive officer at Infinera. "There was a significant
quarter-over-quarter increase in orders, including over 2,000 TAMs booked,
and we continued our new customer win momentum adding four new customers to
our roster. We also announced today a new tier one service provider, NTT,
the world's second largest service provider.
"These developments indicate that our strategy of winning new footprint
during the economic downturn to generate growth once the economy recovers
is a sound one," said Singh. "We believe that over time, as the economy
improves and as our customers add capacity to existing footprint, our gross
margins will continue to rebound."
The company noted the following Q2 highlights:
-- Infinera added four new customers this quarter bringing total customer
count to 62. This included a win at COLT for a Pan European network.
-- The new business at NTT is for its new IP backbone network in the
Tokyo area. This win adds to Infinera's string of successes over the last
12 months with tier one service providers, which also include business with
Deutsche Telekom, OTE, TeliaSonera and two additional tier one service
providers.
-- 36 percent of Q2 revenue came from Europe and Asia with three of the
top five customers for the quarter coming from these regions, one from
Europe and two from Asia.
-- The company won a new sizeable submarine network build, its second in
six months.
Footnote: For an explanation of our use of Non-GAAP and Adjusted GAAP 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 and Adjusted GAAP Reconciliations." We have not shown comparisons to our second quarter 2008 GAAP results in the body of this press release because those results were significantly affected by the recognition of ratable product and related support and services revenue from shipments made prior to the second quarter of 2008, which we believe makes those comparisons less useful for investors. See our GAAP Condensed Consolidated Statements of Operations attached to this release for these GAAP to GAAP comparisons. Conference Call Information: Infinera will host a conference call for analysts and investors to discuss its second quarter results and third quarter outlook today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference call will also be accessible from the "Investor Relations" section of the company's website at www.infinera.com. Following the webcast, an archived version will be available on the website for 30 days. To hear the replay, parties in the United States and Canada should call 1-800-430-5981. International parties can access the replay at 1-402-220-2055. 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 our products and business and statements about our future gross margins as the macroeconomic environment improves. 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 17, 2009, 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 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 and Adjusted GAAP Reconciliations" as well as the accompanying notes on the use of certain non-GAAP measures. We anticipate disclosing forward-looking non-GAAP and other financial information in our conference call to discuss our second quarter of 2009 results, including an estimate of non-GAAP earnings for the third 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 Six Months Ended
-------------------- --------------------
June 27, June 28, June 27, June 28,
2009 2008 2009 2008
--------- ---------- --------- ---------
Revenue:
Product $ 61,074 $ 86,505 $ 120,222 $ 150,633
Ratable product and related
support and services 845 69,581 2,314 141,967
Services 7,013 5,023 12,976 6,762
--------- ---------- --------- ---------
Total revenue 68,932 161,109 135,512 299,362
Cost of revenue (1):
Cost of product 45,699 47,124 89,564 86,789
Cost of ratable product and
related support and services 358 32,169 1,088 68,000
Cost of services 2,617 2,032 4,632 3,222
--------- ---------- --------- ---------
Total cost of revenue 48,674 81,325 95,284 158,011
Gross profit 20,258 79,784 40,228 141,351
Operating expenses (1):
Sales and marketing 11,458 10,860 22,581 21,106
Research and development 24,763 17,787 46,760 36,080
General and administrative 11,478 8,502 21,605 16,919
Amortization of intangible
assets 37 37 74 74
--------- ---------- --------- ---------
Total operating expenses 47,736 37,186 91,020 74,179
Income (loss) from operations (27,478) 42,598 (50,792) 67,172
Other income (expense), net:
Interest income 597 2,258 1,515 5,561
Interest expense - - - (3)
Total other-than-temporary
impairment losses (2,747) - (2,747) -
Portion of loss recognized
in other comprehensive
loss 1,814 - 1,814 -
--------- ---------- --------- ---------
Net impairment losses
recognized in earnings (933) - (933) -
Other gain (loss), net 806 296 (1,008) 1,176
--------- ---------- --------- ---------
Total other income
(expense), net 470 2,554 (426) 6,734
Income (loss) before income
taxes (27,008) 45,152 (51,218) 73,906
Provision for income taxes 103 2,267 221 3,427
--------- ---------- --------- ---------
Net income (loss) $ (27,111) $ 42,885 $ (51,439) $ 70,479
========= ========== ========= =========
Net income (loss) per common
share:
Basic $ (0.28) $ 0.47 $ (0.54) $ 0.77
========= ========== ========= =========
Diluted $ (0.28) $ 0.44 $ (0.54) $ 0.73
========= ========== ========= =========
Weighted average shares used in
computing net income (loss) per
common share:
Basic 95,161 92,124 94,718 91,687
========= ========== ========= =========
Diluted 95,161 97,284 94,718 96,988
========= ========== ========= =========
(1) The following table summarizes the effects of stock-based compensation
related to employees and non-employees for the three and six months ended
June 27, 2009 and June 28, 2008:
Three Months Ended Six Months Ended
-------------------- --------------------
June 27, June 28, June 27, June 28,
2009 2008 2009 2008
--------- ---------- --------- ---------
Cost of revenue $ 477 $ 271 $ 856 $ 479
Research and development 2,419 1,629 4,151 2,852
Sales and marketing 1,599 1,164 3,013 2,014
General and administration 3,513 2,072 6,158 3,574
--------- ---------- --------- ---------
8,008 5,136 14,178 8,919
Cost of revenue -
amortization from balance
sheet* 904 1,219 1,470 2,369
--------- ---------- --------- ---------
Total stock-based
compensation expense $ 8,912 $ 6,355 $ 15,648 $ 11,288
========= ========== ========= =========
* Stock-based compensation expense deferred to inventory and to deferred
inventory costs in prior periods and recognized in the current period.
Infinera Corporation
GAAP to Non-GAAP and Adjusted GAAP Reconciliations
Infinera Corporation
GAAP to Non-GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended June 27, 2009
-------------------------------------
Stock
GAAP Comp(1) Non-GAAP
---------- ---------- ----------
Revenue
Product and ratable revenue $ 61,919 $ - $ 61,919
Services revenue 7,013 - (a) 7,013
---------- ---------- ----------
Total revenue 68,932 - 68,932
Cost of revenue 48,674 (1,381)(d) 47,293
---------- ---------- ----------
Gross profit 20,258 1,381 21,639
Gross margin 29% 31%
Operating expenses 47,736 (7,531) 40,205
---------- ---------- ----------
Loss from operations (27,478) 8,912 (18,566)
Other income (expense), net 470 - 470
---------- ---------- ----------
Loss before provision
for income taxes (27,008) 8,912 (18,096)
Provision for income taxes 103 - 103
---------- ---------- ----------
Net loss $ (27,111) $ 8,912 $ (18,199)
========== ========== ==========
Net loss per common share:
Basic $ (0.28) $ (0.19)
========== ==========
Diluted $ (0.28) $ (0.18)*
========== ==========
Weighted average shares used in
computing net loss per common
share:
Basic 95,161 95,161
========== ==========
Diluted 95,161 98,960*
========== ==========
(1) See footnote to the Condensed Consolidated Statements of Operations
for a summary of the effects of stock-based compensation related to
employees and non-employees for the three months ended June 27, 2009.
* Diluted shares used to calculate net loss per share on a non-GAAP
basis provided for informational purposes only.
Infinera Corporation
GAAP to Non-GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 28, 2009
--------------------------------------
Stock
GAAP Comp Non-GAAP
---------- ---------- ----------
Revenue
Product and ratable revenue $ 60,617 $ - $ 60,617
Services revenue 5,963 - (b) 5,963
---------- ---------- ----------
Total revenue 66,580 - 66,580
Cost of revenue 46,610 (945)(e)(g) 45,665
---------- ---------- ----------
Gross profit 19,970 945 20,915
Gross margin 30% 31%
Operating expenses 43,284 (5,791)(g) 37,493
---------- ---------- ----------
Loss from operations (23,314) 6,736 (16,578)
Other income (expense), net (896) - (896)
---------- ---------- ----------
Loss before provision
for income taxes (24,210) 6,736 (17,474)
Provision for income taxes 118 - 118
---------- ---------- ----------
Net loss $ (24,328) $ 6,736 $ (17,592)
========== ========== ==========
Net loss per common share:
Basic $ (0.26) $ (0.19)
========== ==========
Diluted $ (0.26) $ (0.18)*
========== ==========
Weighted average shares used in
computing net loss per common
share:
Basic 94,275 94,275
========== ==========
Diluted 94,275 97,592*
========== ==========
* Diluted shares used to calculate net loss per share on a non-GAAP
basis provided for informational purposes only.
Infinera Corporation
GAAP to Non-GAAP and Adjusted GAAP Reconciliations (Continued):
Infinera Corporation
GAAP to Adjusted GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended June 28, 2008
------------------------------------------------------------
Adjusted
Adjusted GAAP
Adjusted GAAP Excluding
Deferral GAAP Stock Stock
GAAP Adjustments Results Comp Comp
--------- ---------- ---------- --------- ---------
Revenue
Product and
ratable
revenue $ 156,086 $ (70,349)(c) $ 85,737 $ - $ 85,737
Services
revenue 5,023 - 5,023 - 5,023
--------- ---------- ---------- --------- ---------
Total revenue 161,109 (70,349) 90,760 - 90,760
Cost of
revenue 81,325 (32,090)(f) 49,235 (1,176)(h) 48,059
--------- ---------- ---------- --------- ---------
Gross profit 79,784 (38,259) 41,525 1,176 42,701
Gross margin 50% 47%
Operating
expenses 37,186 - 37,186 (4,865)(h) 32,321
--------- ---------- ---------- --------- ---------
Income from
operations 42,598 (38,259) 4,339 6,041 10,380
Other income
(expense),
net 2,554 - 2,554 - 2,554
--------- ---------- ---------- --------- ---------
Income before
provision
for income
taxes 45,152 (38,259) 6,893 6,041 12,934
Provision for
income taxes 2,267 - 2,267 - 2,267
--------- ---------- ---------- --------- ---------
Net income $ 42,885 $ (38,259) $ 4,626 $ 6,041 $ 10,667
========= ========== ========== ========= =========
Net income
per common
share:
Basic $ 0.47 $ 0.12
========= =========
Diluted $ 0.44 $ 0.11
========= =========
Weighted
average
shares used
in computing
net income
per common
share:
Basic 92,124 92,124
========= =========
Diluted 97,284 97,284
========= =========
Use of Non-GAAP and Adjusted GAAP Information:
As described below, Infinera uses various non-GAAP and adjusted GAAP
financial measures to supplement our condensed consolidated financial
statements presented on a GAAP basis. 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.
Our usage of these non-GAAP and adjusted GAAP measures are further
explained below:
-- Effective April 2008, we had established VSOE of fair value for most
of our service offerings. From the second quarter of 2008 to the fourth
quarter of 2008, we used adjusted GAAP measures of operating results, net
income and net income per share. Adjusted GAAP results reflected 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 were not adjusted and were recognized on a GAAP basis in
arriving at the adjusted GAAP results. We presented these non-GAAP measures
of operating results, net income and net income per share, which included
adjusted GAAP results and excluded non-GAAP stock-based compensation
expense for these periods.
-- In the first quarter of 2009, we began using more traditional non-GAAP
financial measures, which reflect our GAAP results and exclude stock-based
compensation related expenses. All material deferred revenue and deferred
cost of inventory balances recorded prior to the second quarter of 2008 and
previously reported in our invoiced shipment results had been recognized in
our GAAP results prior to December 27, 2008. Therefore, no further
adjustments, other than the exclusion of stock-based compensation expense
as described above, will be made to our GAAP revenue and cost of revenue on
a go-forward basis.
(a) As described above, no adjustments have been made to our GAAP revenue
as recorded in our condensed consolidated statements of operations for the
period ended June 27, 2009.
The table below provides a breakdown of our deferred revenue balance as
recorded on our balance sheet as of June 27, 2009 for informational
purposes only:
Three Months Ended June 27, 2009
----------------------------------------------------
Pre Mar 29, Post Mar 29,
2008 Ratable 2008 Ratable
and Product and Product
Deferred Revenue Revenue Revenue Services Total
------------ ------------ ----------- -----------
(In thousands)
Beginning balance $ 6,706 $ 3,441 $ 10,447 $ 20,594
Additions to deferred
revenue - 3,087 6,470 9,557
Amortization to
revenue (707) (1,162) (5,238) (7,107)
------------ ------------ ----------- -----------
Ending balance $ 5,999 $ 5,366 $ 11,679 $ 23,044
============ ============ =========== ===========
------------ ------------ ----------- -----------
Change in deferred
revenue balance $ (707) $ 1,925 $ 1,232 $ 2,450
============ ============ =========== ===========
(b) As described above, no adjustments have been made to our GAAP revenue
as recorded in our condensed consolidated statements of operations for the
period ended March 28, 2009.
The table below provides a breakdown of our deferred revenue balance as
recorded on our balance sheet as of March 28, 2009 for informational
purposes only:
Three Months Ended March 28, 2009
----------------------------------------------------
Pre Mar 29, Post Mar 29,
2008 Ratable 2008 Ratable
and Product and Product
Deferred Revenue Revenue Revenue Services Total
------------ ------------ ----------- -----------
(In thousands)
Beginning balance $ 8,650 $ 4,177 $ 9,580 $ 22,407
Additions to deferred
revenue - 209 5,453 5,662
Amortization to
revenue (1,944) (945) (4,586) (7,475)
------------ ------------ ----------- -----------
Ending balance $ 6,706 $ 3,441 $ 10,447 $ 20,594
============ ============ =========== ===========
------------ ------------ ----------- -----------
Change in deferred
revenue balance $ (1,944) $ (736) $ 867 $ (1,813)
============ ============ =========== ===========
(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 deferred services revenue as these
amounts relate to future service deliverables and are appropriately
deferred. Deferred ratable and product amounts recorded after March 29,
2008 have not been adjusted as these amounts are recognized on a GAAP basis
in arriving at the adjusted GAAP results.
The deferred revenue adjustments recorded above are reconciled to the
deferred revenue balance on our balance sheet in the table below:
Three Months Ended June 28, 2008
----------------------------------------------------
Pre Mar 29, Post Mar 29,
2008 Ratable 2008 Ratable
and Product and Product
Deferred Revenue Revenue Revenue Services Total
------------ ------------ ----------- -----------
(In thousands)
Beginning balance $ 131,689 $ - $ 3,805 $ 135,494
Additions to deferred
revenue - 4,979 3,651 8,630
Amortization to
revenue (70,349) (1,866) (2,000) (74,215)
------------ ------------ ----------- -----------
Ending balance $ 61,340 $ 3,113 $ 5,456 $ 69,909
============ ============ =========== ===========
------------ ------------ ----------- -----------
Change in deferred
revenue balance $ (70,349) $ 3,113 $ 1,651 $ (65,585)
============ ============ =========== ===========
(d) No adjustments, other than the exclusion of stock-based compensation
expense, as described above, have been made to our GAAP cost of revenue as
recorded in our condensed consolidated statements of operations for the
period ended June 27, 2009.
The table below provides a breakdown of our deferred inventory cost balance
as recorded on our balance sheet as of June 27, 2009 for informational
purposes only:
Three Months Ended June 27, 2009
---------------------------------------
Pre Mar 29, Post Mar 29,
2008 Ratable 2008 Ratable
and Product and Product
Deferred Inventory Cost Cost Cost Total
------------ ------------ -----------
(In thousands)
Beginning balance $ 2,802 $ 700 $ 3,502
Additions to deferred cost of
revenue - 2,188 2,188
Amortized to cost of revenue (304) (47) (351)
------------ ------------ -----------
Ending balance $ 2,498 $ 2,841 $ 5,339
============ ============ ===========
------------ ------------ -----------
Change in deferred inventory cost
balance $ (304) $ 2,141 $ 1,837
============ ============ ===========
(e) No adjustments, other than the exclusion of stock-based compensation
expense, as described above, have been made to our GAAP cost of revenue as
recorded in our condensed consolidated statements of operations for the
period ended March 28, 2009.
The table below provides a breakdown of our deferred inventory cost balance
as recorded on our balance sheet as of March 28, 2009 for informational
purposes only:
Three Months Ended March 28, 2009
---------------------------------------
Pre Mar 29, Post Mar 29,
2008 Ratable 2008 Ratable
and Product and Product
Deferred Inventory Cost Cost Cost Total
------------ ------------ -----------
(In thousands)
Beginning balance $ 3,221 $ 1,016 $ 4,237
Additions to deferred cost of
revenue - 1 1
Amortized to cost of revenue (419) (317) (736)
------------ ------------ -----------
Ending balance $ 2,802 $ 700 $ 3,502
============ ============ ===========
------------ ------------ -----------
Change in deferred inventory cost
balance $ (419) $ (316) $ (735)
============ ============ ===========
(f) Adjustment amount represents the release of ratable and deferred
product 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 June 28, 2008
---------------------------------------
Pre Mar 29, Post Mar 29,
2008 Ratable 2008 Ratable
and Product and Product
Deferred Inventory Cost Cost Cost Total
------------ ------------ -----------
(In thousands)
Beginning balance $ 58,600 $ - $ 58,600
Additions to deferred cost of
revenue - 459 459
Amortized to cost of revenue (32,090) (9) (32,099)
------------ ------------ -----------
Ending balance $ 26,510 $ 450 $ 26,960
============ ============ ===========
------------ ------------ -----------
Change in deferred inventory cost
balance $ (32,090) $ 450 $ (31,640)
============ ============ ===========
(g) The following table summarizes the effects of stock-based compensation
related to employees and non-employees for the three months ended March 29,
2009:
Three Months Ended
------------------
March 28,
(In thousands) 2009
------------------
Cost of revenue $ 379
Research and development 1,732
Sales and marketing 1,414
General and administration 2,645
------------------
6,170
Cost of revenue - amortization from balance sheet* 566
------------------
Total stock-based compensation expense $ 6,736
==================
* Stock-based compensation expense deferred to inventory and deferred
inventory costs in prior periods and recognized in the current period.
(h) 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
------------------
June 28,
2008
------------------
(In thousands)
GAAP stock-based compensation in cost of revenue $ 271
GAAP stock-based compensation in cost of revenue -
amortization from balance sheet 1,219
Stock-based compensation not deferred to deferred
inventory cost -
Stock-based compensation previously recognized on
invoiced shipment basis (314)
------------------
Non-GAAP stock-based compensation in cost of revenue $ 1,176
==================
Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands, except par values)
(Unaudited)
June 27, December 27,
2009 2008
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 94,151 $ 166,770
Short-term investments 117,032 68,232
Short-term restricted cash 1,533 720
Accounts receivable, net of allowance for
doubtful accounts of $1,488 as of June 27,
2009 and $1,700 as of December 27, 2008 54,059 69,354
Other receivables 618 1,085
Inventories, net 72,532 58,986
Deferred inventory costs 3,267 1,744
Prepaid expenses and other current assets 7,427 6,311
------------ ------------
Total current assets 350,619 373,202
Property, plant and equipment, net 48,102 46,820
Intangible assets 1,143 1,276
Deferred inventory costs, non-current 2,072 2,493
Long-term investments 71,831 74,684
Long-term restricted cash 2,534 2,179
Other non-current assets 6,177 6,413
------------ ------------
Total assets $ 482,478 $ 507,067
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,112 $ 34,048
Accrued expenses 17,220 16,092
Accrued compensation and related benefits 14,117 13,472
Accrued warranty 5,573 5,205
Deferred revenue 15,682 14,683
------------ ------------
Total current liabilities 86,704 83,500
Accrued warranty, non-current 4,797 4,735
Deferred revenue, non-current 7,362 7,724
Other long-term liabilities 6,712 5,645
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value
Authorized shares - 25,000 and no shares
issued and outstanding - -
Common stock, $0.001 par value
Authorized shares - 500,000 as of June
27, 2009 and December 27, 2008
Issued and outstanding shares - 95,508
as of June 27, 2009 and
94,163 as of December 27, 2008 96 94
Additional paid-in capital 721,402 699,705
Accumulated other comprehensive loss (2,418) (3,598)
Accumulated deficit (342,177) (290,738)
------------ ------------
Total stockholders' equity 376,903 405,463
------------ ------------
Total liabilities and stockholders' equity $ 482,478 $ 507,067
============ ============
Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
--------------------------
June 27, June 28,
2009 2008
------------ ------------
Cash Flows from Operating Activities:
Net income (loss) $ (51,439) $ 70,479
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization 7,898 5,469
Net credit impairment losses in earnings 933 -
Accretion of investment discount 95 (725)
Stock-based compensation expense 15,648 11,288
Put Rights 1,549 -
Unrealized holding gains for trading
securities (1,522) -
Excess tax benefit from stock option
transactions - (559)
Tax benefit from stock option transactions - 623
Gain on disposal of assets (46) (770)
Other gain - (15)
Changes in assets and liabilities:
Accounts receivable 15,770 (16,949)
Inventories, net (12,563) 479
Prepaid expenses and other current
assets (1,088) (1,782)
Deferred inventory costs (1,172) 54,143
Other non-current assets 241 (314)
Accounts payable (81) 4,901
Accrued liabilities and other expenses 2,983 (6,902)
Deferred revenue 636 (104,528)
Accrued warranty 430 568
------------ ------------
Net cash provided by (used in)
operating activities (21,728) 15,406
Cash Flows from Investing Activities:
Purchase of available-for-sale investments (83,937) (123,624)
Proceeds from sale of available-for-sale
investments - 69,543
Proceeds from maturities and call of
investments and restricted cash 36,839 82,304
Proceeds from disposal of assets 103 771
Purchase of property and equipment (8,759) (7,283)
------------ ------------
Net cash provided by (used in)
investing activities (55,754) 21,711
Cash Flows from Financing Activities:
Proceeds from issuance of common stock 4,762 7,164
Excess tax benefit from stock option
transactions - 559
Repurchase of common stock (15) (30)
------------ ------------
Net cash provided by financing
activities 4,747 7,693
------------ ------------
Effect of exchange rate changes on cash 116 (56)
Net change in cash and cash equivalents (72,619) 44,754
Cash and cash equivalents at beginning of
period 166,770 91,209
------------ ------------
Cash and cash equivalents at end of period $ 94,151 $ 135,963
============ ============
Supplemental disclosures of cash flow
information:
Cash paid for interest $ - $ 3
Cash paid for income taxes $ 1,113 $ 593
Infinera Corporation
Supplemental Financial Information
Q3'07 Q4'07 Q1'08 Q2'08
--------- --------- --------- ---------
Revenue $ 80.4 $ 93.4 $ 95.5 $ 90.8
Gross Margin % 43% 47% 45% 47%
--------- --------- --------- ---------
Invoiced Shipment Composition:
Domestic % 81% 81% 82% 78%
International % 19% 19% 18% 22%
Largest Customer% 28% 18% 31% 21%
--------- --------- --------- ---------
Cash Related Information:
Cash from Operations $ (2.0) $ 18.9 $ 9.8 $ 5.6
Capital Expenditures $ 3.0 $ 8.5 $ 4.5 $ 4.8
Depreciation & Amortization $ 2.7 $ 2.7 $ 2.6 $ 2.9
DSO's 47 39 42 57
--------- --------- --------- ---------
Inventory Metrics:
Raw Materials $ 7.5 $ 10.5 $ 7.9 $ 9.2
Work in Process $ 34.8 $ 35.1 $ 40.6 $ 34.6
Finished Goods $ 14.8 $ 13.0 $ 10.7 $ 13.8
--------- --------- --------- ---------
Total Inventory $ 57.1 $ 58.6 $ 59.2 $ 57.6
Inventory Turns 3.2 3.4 3.5 3.3
--------- --------- --------- ---------
Worldwide Headcount 668 711 799 853
--------- --------- --------- ---------
Q3'08 Q4'08 Q1'09 Q2'09
--------- --------- --------- ---------
Revenue $ 80.9 $ 86.2 $ 66.6 $ 68.9
Gross Margin % 42% 36% 31% 31%
--------- --------- --------- ---------
Invoiced Shipment Composition:
Domestic % 81% 73% 74% 64%
International % 19% 27% 26% 36%
Largest Customer% 27% 23% 30% 20%
--------- --------- --------- ---------
Cash Related Information:
Cash from Operations $ 9.9 $ (5.4) $ (2.9) $ (18.8)
Capital Expenditures $ 5.9 $ 7.8 $ 6.0 $ 2.8
Depreciation & Amortization $ 3.4 $ 4.1 $ 3.9 $ 4.0
DSO's 55 74 61 72
--------- --------- --------- ---------
Inventory Metrics:
Raw Materials $ 10.0 $ 9.1 $ 7.7 $ 10.1
Work in Process $ 35.8 $ 37.9 $ 43.2 $ 40.1
Finished Goods $ 12.8 $ 12.0 $ 13.6 $ 22.3
--------- --------- --------- ---------
Total Inventory $ 58.6 $ 59.0 $ 64.5 $ 72.5
Inventory Turns 3.2 3.8 2.8 2.6
--------- --------- --------- ---------
Worldwide Headcount 889 937 962 973
--------- --------- --------- ---------
Periods prior to Q2'08 reflect invoiced shipments results; periods from
Q2'08 through Q4'08 reflect adjusted GAAP results; and Q1'09 going forward
reflects non-GAAP results.
Contact Information: Contacts: Press: Jeff Ferry jferry@infinera.com Infinera Corporation 408-572-5213 Investors/Analysts: Bob Blair bblair@infinera.com Infinera Corporation 408-716-4879