Science & Technology
Science and Technology
Science and Technology
Wed, July 22, 2009
Tue, July 21, 2009 Infinera: Infinera Corporation Reports Second Quarter 2009 Financial Results
SUNNYVALE, CA--(Marketwire - July 21, 2009) - Infinera Corporation (
-- 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.
