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Infinera Corporation
GAAP to Non-GAAP Reconciliations
(In thousands, except percentages and per share data)
(Unaudited)
Three Months Ended
-----------------------------------------
March 29, December 28, March 30,
2014 2013 2013
------------ ------------ ------------
Reconciliation of Gross Profit:
U.S. GAAP as reported $ 58,406 $ 55,912 $ 42,702
Stock-based compensation(1) 1,284 1,695 2,088
------------ ------------ ------------
Non-GAAP as adjusted $ 59,690 $ 57,607 $ 44,790
============ ============ ============
Reconciliation of Gross Margin:
U.S. GAAP as reported 40.9% 40.2% 34.2%
Stock-based compensation(1) 0.9% 1.2% 1.7%
------------ ------------ ------------
Non-GAAP as adjusted 41.8% 41.4% 35.9%
============ ============ ============
Reconciliation of Income (Loss)
from Operations:
U.S. GAAP as reported $ (1,056) $ (7,081) $ (14,942)
Stock-based compensation(1) 6,672 8,174 7,975
------------ ------------ ------------
Non-GAAP as adjusted $ 5,616 $ 1,093 $ (6,967)
============ ============ ============
Reconciliation of Net Income
(Loss):
U.S. GAAP as reported $ (4,374) $ (10,178) $ (15,279)
Stock-based compensation(1) 6,672 8,174 7,975
Amortization of debt discount(2) 1,860 1,814 -
------------ ------------ ------------
Non-GAAP as adjusted $ 4,158 $ (190) $ (7,304)
============ ============ ============
Net Income (Loss) per Common Share
- Basic:
U.S. GAAP as reported $ (0.04) $ (0.08) $ (0.13)
============ ============ ============
Non-GAAP as adjusted $ 0.03 $ - $ (0.06)
============ ============ ============
Net Income (Loss) per Common Share
- Diluted:
U.S. GAAP as reported $ (0.04) $ (0.08) $ (0.13)
============ ============ ============
Non-GAAP as adjusted(3) $ 0.03 $ - $ (0.06)
============ ============ ============
Weighted average shares used in
computing net income (loss) per
common share - U.S. GAAP:
Basic 121,352 119,743 114,308
============ ============ ============
Diluted 121,352 119,743 114,308
============ ============ ============
Weighted average shares used in
computing net income (loss) per
common share - Non-GAAP:
Basic 121,352 119,743 114,308
============ ============ ============
Diluted(3) 125,435 125,134 117,602
============ ============ ============
------------------------------
(1) Stock-based compensation expense is calculated in accordance with the
fair value recognition provisions of Financial Accounting Standards
Board Accounting Standards Codification (ASC) Topic 718, Compensation-
Stock Compensation effective January 1, 2006. The following table
summarizes the effects of stock-based compensation related to
employees and non-employees (in thousands):
Three Months Ended
--------------------------------------
March 29, December 28, March 30,
2014 2013 2013
------------ ------------ ------------
Cost of revenue $ 452 $ 489 $ 486
Research and development 2,138 2,725 3,119
Sales and marketing 1,720 1,965 1,999
General and administration 1,530 1,789 769
------------ ------------ ------------
5,840 6,968 6,373
Cost of revenue - amortization
from balance sheet* 832 1,206 1,602
------------ ------------ ------------
Total stock-based compensation
expense $ 6,672 $ 8,174 $ 7,975
============ ============ ============
---------------------------------
* Stock-based compensation expense deferred to inventory and deferred
inventory costs in prior periods and recognized in the current period.
(2) Under GAAP, certain convertible debt instruments that may be settled in
cash on conversion are required to be separately accounted for as
liability (debt) and equity (conversion option) components of the
instrument in a manner that reflects the issuer's non-convertible debt
borrowing rate. Accordingly, for GAAP purposes, Infinera is required to
amortize as a debt discount an amount equal to the fair value of the
conversion option that was recorded in equity as interest expense on
its $150 million 1.75% convertible debt issuance in May 2013 over the
term of the notes. These amounts have been adjusted in arriving at
Infinera's non-GAAP results because management believes that this non-
cash expense is not indicative of ongoing operating performance and
provides a better indication of Infinera's underlying business
performance.
(3) Diluted shares used to calculate net loss per share on a non-GAAP basis
provided for informational purposes only.
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Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands, except par values)
(Unaudited)
March 29, December 28,
2014 2013
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 85,249 $ 124,330
Short-term investments 226,705 172,660
Accounts receivable, net of allowance for
doubtful accounts
of $41 in 2014 and $43 in 2013 107,405 100,643
Inventory 126,465 123,685
Prepaid expenses and other current assets 20,537 17,752
------------- -------------
Total current assets 566,361 539,070
Property, plant and equipment, net 78,801 79,668
Long-term investments 32,756 64,419
Cost-method investment 9,000 9,000
Long-term restricted cash 4,392 3,904
Other non-current assets 5,776 4,865
------------- -------------
Total assets $ 697,086 $ 700,926
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 37,843 $ 39,843
Accrued expenses 20,244 22,431
Accrued compensation and related benefits 21,377 33,899
Accrued warranty 14,351 12,374
Deferred revenue 31,496 32,402
------------- -------------
Total current liabilities 125,311 140,949
Long-term debt, net 111,024 109,164
Accrued warranty, non-current 12,034 10,534
Deferred revenue, non-current 4,886 4,888
Other long-term liabilities 17,563 17,581
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 March 29,
2014 and December 28, 2013
Issued and outstanding shares - 122,485 as
of March 29, 2014 and 119,887
as of December 28, 2013 123 120
Additional paid-in capital 1,038,216 1,025,661
Accumulated other comprehensive loss (3,212) (3,486)
Accumulated deficit (608,859) (604,485)
------------- -------------
Total stockholders' equity 426,268 417,810
------------- -------------
Total liabilities and stockholders' equity $ 697,086 $ 700,926
============= =============
Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
----------------------------
March 29, March 30,
2014 2013
------------- -------------
Cash Flows from Operating Activities:
Net loss $ (4,374) $ (15,279)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 6,314 6,334
(Recovery of) provision for other
receivables - (88)
Amotization of debt discount and issuance
costs 2,020 -
Amortization of premium on investments 828 314
Stock-based compensation expense 6,672 7,975
Other gain (20) (243)
Changes in assets and liabilities:
Accounts receivable (6,762) (5,094)
Inventory (3,354) (5,041)
Prepaid expenses and other assets (3,797) (361)
Accounts payable (2,080) (8,045)
Accrued liabilities and other expenses (13,448) (6,301)
Deferred revenue (909) 4,340
Accrued warranty 3,477 190
------------- -------------
Net cash used in operating activities (15,433) (21,299)
Cash Flows from Investing Activities:
Purchase of available-for-sale investments (80,223) (20,023)
Proceeds from sale of available-for-sale
investments - 2,850
Proceeds from maturities and calls of
investments 57,063 33,835
Purchase of property and equipment (5,608) (4,936)
Change in restricted cash (479) 44
------------- -------------
Net cash provided by (used in) investing
activities (29,247) 11,770
Cash Flows from Financing Activities:
Proceeds from issuance of common stock 7,054 5,560
Minimum tax withholding paid on behalf of
employees for net share settlement (1,619) (1,493)
------------- -------------
Net cash provided by financing activities 5,435 4,067
Effect of exchange rate changes on cash 164 (206)
Net change in cash and cash equivalents (39,081) (5,668)
Cash and cash equivalents at beginning of
period 124,330 104,666
------------- -------------
Cash and cash equivalents at end of period $ 85,249 $ 98,998
============= =============
Supplemental disclosures of cash flow
information:
Cash paid for income taxes, net of refunds $ 303 $ 210
Supplemental schedule of non-cash financing
activities:
Transfer of inventory to fixed assets $ 603 $ 1,522
Infinera Corporation
Supplemental Financial Information
(Unaudited)
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Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14
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Revenue ($ Mil) $93.5 $112.2 $128.1 $124.6 $138.4 $142.0 $139.1 $142.8
Gross Margin % (1) 36.6% 39.1% 35.9% 35.9% 38.9% 49.2% 41.4% 41.8%
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Invoiced Shipment
Composition:
Domestic % 70% 70% 63% 63% 64% 73% 54% 78%
International % 30% 30% 37% 37% 36% 27% 46% 22%
Largest Customer % 15% 13% 13% 14% < 10% 17% 11% 21%
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Cash Related
Information:
Cash from (used in)
Operations ($ Mil) $(22.7)$(29.3) $8.3$(21.3) $17.9 $12.8 $25.8$(15.4)
Capital Expenditures
($ Mil) $6.1 $2.5 $3.2 $4.9 $4.5 $4.2 $7.5 $5.6
Depreciation &
Amortization ($
Mil) $5.7 $6.1 $6.4 $6.3 $6.3 $5.9 $6.0 $6.3
DSO's 55 74 76 82 64 56 66 68
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Inventory Metrics:
Raw Materials ($
Mil) $14.8 $12.4 $13.0 $12.2 $9.8 $12.1 $14.3 $13.2
Work in Process ($
Mil) $49.4 $59.8 $57.3 $53.1 $41.0 $45.7 $49.2 $47.8
Finished Goods ($
Mil) $50.9 $46.3 $57.5 $65.7 $70.5 $65.7 $60.2 $65.5
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Total Inventory ($
Mil) $115.1 $118.5 $127.8 $131.0 $121.3 $123.5 $123.7 $126.5
Inventory Turns (2) 2.1 2.3 2.6 2.4 2.8 2.3 2.6 2.6
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Worldwide Headcount 1,228 1,235 1,242 1,219 1,238 1,296 1,318 1,346
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(1) Amounts reflect non-GAAP results. Non-GAAP adjustments include non-cash
stock-based compensation expense.
(2) Infinera calculates non-GAAP inventory turns as annualized non-GAAP
cost of revenue before adjustments for non-cash stock-based
compensation expense divided by the average inventory for the quarter.
Infinera Corporation Reports First Quarter 2014 Financial Results
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