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Finisar Announces Fiscal 2019 Financial Results

Finisar Announces Fiscal 2019 Financial Results

SUNNYVALE, Calif., June 13, 2019 (GLOBE NEWSWIRE) -- Finisar Corporation (FNSR), a global technology leader for subsystems and components for fiber optic communications, today announced financial results for its fourth quarter and full fiscal year, ended April 28, 2019. Finisar will not hold an earnings call, nor provide forward guidance for the first quarter of fiscal 2020 due to the previously announced proposed acquisition by II-VI Incorporated (IIVI).

FINANCIAL HIGHLIGHTS – Fourth Quarter Ended April 28, 2019
Summary GAAP Results Fourth
  Third
  Quarter
  Quarter
  Ended
  Ended
    April 28, 2019
    January 27, 2019
  (in thousands, except per share amounts)
               
Revenues $ 310,085     $ 327,636  
Gross margin   28.2 %     28.8 %
Operating expenses $ 98,579     $ 93,890  
Operating income (loss) $ (11,278 )   $ 533  
Operating margin   (3.6 )%     0.2 %
Net loss $ (14,151 )   $ (15,301 )
Loss per share-basic $ (0.12 )   $ (0.13 )
Loss per share-diluted $ (0.12 )   $ (0.13 )
           
Basic shares   117,953       117,608  
Diluted shares   117,953       117,608  
           


Summary Non-GAAP Results (a) Fourth
  Third
  Quarter
  Quarter
  Ended
  Ended
  April 28, 2019   January 27, 2019
  (in thousands, except per share amounts)
       
Revenues $ 310,085     $ 327,636  
Non-GAAP Gross margin   30.8 %     30.2 %
Non-GAAP Operating expenses $ 64,642     $ 63,645  
Non-GAAP Operating income  $ 30,895     $ 35,229  
Non-GAAP Operating margin    10.0 %     10.8 %
Non-GAAP Net income  $ 32,960     $ 34,192  
Non-GAAP Income per share-basic $ 0.28     $ 0.29  
Non-GAAP Income per share-diluted $ 0.27     $ 0.29  
       
Basic shares    117,953       117,608  
Diluted shares    120,795       119,570  

_____________
(a) In evaluating the operating performance of Finisar’s business, Finisar management utilizes financial measures that exclude certain charges and credits required by U.S. generally accepted accounting principles, or GAAP, that are considered by management to be outside of Finisar’s core ongoing operating resultsA 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.

Revenue Details for the Fourth Quarter of Fiscal 2019: 

  • Revenues for datacom applications decreased by $12.8 million, or (5.5)%, compared to the third quarter of fiscal 2019, primarily as the result of a decline in sales of 40G and lower transceivers as well as VCSELs arrays for 3D applications.
     
  • Revenues for telecom applications decreased by $4.8 million, or (5.0)%, compared to the third quarter of fiscal 2019, primarily as a result of a decline in sales of 10G tunable transceivers. 
FINANCIAL HIGHLIGHTS – Fiscal Year Ended April 28, 2019
Summary GAAP Results            
  Fiscal Year
  Fiscal Year
  Ended
  Ended
  April 28, 2019   April 29, 2018
  (in thousands, except per share amounts)
       
Revenues $ 1,280,480     $ 1,316,483  
Gross margin   27.2 %     27.5 %
Operating expenses $ 378,633     $ 355,652  
Operating income (loss) $ (30,541 )   $ 6,513  
Operating margin    (2.4 )%     0.5 %
Net loss $ (53,216 )   $ (48,287 )
Loss per share-basic $ (0.45 )   $ (0.42 )
Loss per share-diluted $ (0.45 )   $ (0.42 )
       
Basic shares   117,178       113,864  
Diluted shares   117,178       113,864  
               
               
               
Summary Non-GAAP Results (b)              
               
  Fiscal Year   Fiscal Year
  Ended   Ended
  April 28, 2019   April 29, 2018
  (in thousands, except per share amounts)
               
Revenues $ 1,280,480     $ 1,316,483  
Non-GAAP Gross margin   29.2 %     29.7 %
Non-GAAP Operating expenses $ 260,157     $ 292,197  
Non-GAAP Operating income  $ 113,591     $ 99,195  
Non-GAAP Operating margin    8.9 %     7.5 %
Non-GAAP Net income  $ 119,049     $ 100,420  
Non-GAAP Income per share-basic $ 1.02     $ 0.88  
Non-GAAP Income per share-diluted $ 1.00     $ 0.86  
           
Basic shares    117,178       113,864  
Diluted shares    119,389       116,274  

_____________
(a) In evaluating the operating performance of Finisar’s business, Finisar management utilizes financial measures that exclude certain charges and credits required by U.S. generally accepted accounting principles, or GAAP, that are considered by management to be outside of Finisar’s core ongoing operating resultsA 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.

Revenue Details for Fiscal 2019: 

  • Revenues for datacom applications decreased by $102.3 million, or (9.9)%, compared to fiscal 2018, primarily as the result of a decline in sales of 40G transceivers due to our customers switching their technology infrastructure to higher speed transceivers as well as lower 100G datacom transceiver revenue due to a decrease in the average selling prices for our products.
     
  • Revenues for telecom applications increased by $66.2 million, or 23.0%, compared to the fiscal 2018, primarily as the result of an increase in sales of WSS products. 

SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release contains forward-looking statement concerning Finisar’s expected financial performance. These statements are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements are based on our current expectations, estimates, assumptions and projections about our business and industry, and the markets and customers we serve, and they are subject to numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. 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 uncertainty of customer demand for Finisar’s products; 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; intensive competition; the risk that our pending merger with II-VI does not close, due to the failure of one or more conditions to closing; uncertainty as to the market value of the II-VI merger consideration to be paid in the merger; the risk that required governmental or stockholder approvals of the merger (including China antitrust approval) will not be obtained or that such approvals will be delayed beyond current expectations; the risk of litigation in respect of either Finisar or II-VI or the merger; disruption from the merger making it more difficult to maintain our customer, supplier, key personnel and other strategic relationships.  Further information regarding these and other risks relating to Finisar’s business is set forth in Finisar’s annual report on Form 10-K (filed June 15, 2018) and quarterly SEC filings.

ABOUT FINISAR

Finisar Corporation (FNSR) is a global technology leader in optical communications, providing components and subsystems to networking equipment manufacturers, data center operators, telecom service providers, consumer electronics and automotive companies.  Founded in 1988, Finisar designs products that meet the increasing demands for network bandwidth, data storage and 3D sensing subsystems. The company is headquartered in Sunnyvale, California, USA with R&D, manufacturing sites, and sales offices worldwide. Visit our website at www.finisar.com.

FINISAR FINANCIAL STATEMENTS The following financial tables are presented in accordance with GAAP.

Finisar Corporation
Consolidated Statements of Operations
 (Unaudited, in thousands, except per share data) 
                   
  Three Months Ended   Twelve Months Ended   Three Months Ended
  Apr 28, 2019   Apr 29, 2018   Apr 28, 2019   Apr 29, 2018   Jan 27, 2019
Revenues $ 310,085     $ 310,069     $ 1,280,480     $ 1,316,483     $ 327,636  
Cost of revenues   218,513       246,501       926,550       951,510       232,655  
Amortization of acquired developed technology   471       604       1,959       2,437       496  
Impairment of long-lived assets   3,800       371       3,879       371       62  
Gross profit   87,301       62,593       348,092       362,165       94,423  
Gross margin   28.2 %     20.2 %     27.2 %     27.5 %     28.8 %
Operating expenses:                                      
Research and development   51,133       60,520       217,878       239,008       51,228  
Sales and marketing   12,000       12,530       49,077       49,024       12,170  
General and administrative   14,396       12,207       54,844       59,517       14,973  
Amortization of purchased intangibles   324       666       1,737       2,705       337  
Impairment of long-lived assets   317       510       580       1,863       46  
Startup costs   20,409       2,897       54,517       3,535       15,136  
Total operating expenses   98,579       89,330       378,633       355,652       93,890  
Income (loss) from operations   (11,278 )     (26,737 )     (30,541 )     6,513       533  
Interest income   4,731       4,904       21,200       16,085       5,333  
Interest expense   (6,447 )     (9,322 )     (33,490 )     (36,658 )     (8,167 )
Other income (expenses), net   325       1,097       (718 )     (945 )     (38 )
Loss before income taxes   (12,669 )     (30,058 )     (43,549 )     (15,005 )     (2,339 )
Provision (benefit) for income taxes   1,482       (11,714 )     9,667       33,282       12,962  
Net loss $ (14,151 )   $ (18,344 )   $ (53,216 )   $ (48,287 )   $ (15,301 )
                   
Net loss per share attributable to Finisar Corporation common stockholders:                                      
                                       
Basic $ (0.12 )   $ (0.16 )   $ (0.45 )   $ (0.42 )   $ (0.13 )
Diluted $ (0.12 )   $ (0.16 )   $ (0.45 )   $ (0.42 )   $ (0.13 )
                                       
Shares used in computing net loss per share - basic   117,953       114,742       117,178       113,864       117,608  
Shares used in computing net loss per share - diluted   117,953       114,742       117,178       113,864       117,608  
                                       
                                       


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Finisar Corporation
Consolidated Balance Sheets 
 (in thousands)
                   
  4/28/2019   1/27/2019   10/28/2018   7/29/2018   Apr 29, 2018
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)    
ASSETS                                      
Current assets:                                      
Cash and cash equivalents $ 814,185     $ 906,854     $ 332,138     $ 326,189     $ 312,257  
Short-term held-to-maturity investments   100,000       3,754       837,658       832,681       884,838  
Accounts receivable, net   263,394       263,737       247,688       248,138       233,529  
Inventories   299,028       306,864       309,500       325,846       348,527  
Other current assets   44,224       44,713       51,232       54,863       56,001  
Total current assets   1,520,831       1,525,922       1,778,216       1,787,717       1,835,152  
Property, equipment and improvements, net   622,979       622,770       600,972       587,203       520,849  
Purchased intangible assets, net   4,183       4,977       5,810       6,742       7,878  
Goodwill   106,735       106,735       106,735       106,735       106,735  
Other assets   15,462       12,185       12,250       25,179       31,721  
Deferred tax assets   81,977       85,372       89,202       85,873       80,850  
Total assets $ 2,352,167     $ 2,357,961     $ 2,593,185     $ 2,599,449     $ 2,583,185  
                                       
LIABILITIES AND STOCKHOLDERS' EQUITY                                      
Current liabilities:                                      
Accounts payable $ 132,440     $ 128,594     $ 133,539     $ 149,876     $ 132,161  
Accrued compensation   31,804       41,216       36,152       35,349       32,525  
Other accrued liabilities   49,495       54,890       54,746       50,944       32,824  
Deferred revenue   -       -       -       -       9,535  
Current portion of convertible notes   -       -       257,067       254,150       251,278  
Total current liabilities   213,739       224,700       481,504       490,319       458,323  
Long-term liabilities:                  
Convertible notes   512,105       506,454       499,838       494,316       488,877  
Other non-current liabilities   12,162       11,864       11,558       11,366       12,368  
Total liabilities   738,006       743,018       992,900       996,001       959,568  
Stockholders' equity:                  
Common stock   118       118       117       117       115  
Additional paid-in capital   2,919,305       2,904,016       2,885,319       2,869,657       2,850,195  
Accumulated other comprehensive income (loss)   (48,565 )     (46,645 )     (57,906 )     (44,356 )     (14,659 )
Accumulated deficit   (1,256,697 )