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Finisar Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: March 8, 2012 04:50PM

Finisar Corp. (FNSR) filed Quarterly Report for the period ended 2012-01-29. Finisar Corp has a market cap of $1.79 billion; its shares were traded at around $18.59 with a P/E ratio of 25.6 and P/S ratio of 1.9.



Highlight of Business Operations:

Gross Profit. Gross profit decreased $13.0 million, or 15.4%, to $71.1 million in the quarter ended January 29, 2012 compared to $84.1 million in the quarter ended January 30, 2011. Gross profit as a percentage of revenues decreased by 2.8%, from 32.0% in the quarter ended January 30, 2011 to 29.2% in the quarter ended January 29, 2012. We recorded charges of $5.5 million for obsolete and excess inventory in the quarter ended January 29, 2012 compared to $6.9 million in the quarter ended January 30, 2011. We sold inventory that was written-off in previous periods resulting in a benefit of $3.2 million in the quarter ended January 29, 2012 and $3.1 million in the quarter ended January 30, 2011. As a result, we recognized a net charge of $2.3 million in the quarter ended January 29, 2012 compared to $3.8 million net charge in the quarter ended January 30, 2011. Cost of revenues included stock-based compensation charges of $1.5 million in the quarter ended January 29, 2012 and $1.3 million in the quarter ended January 30, 2011. Excluding amortization of acquired developed technology, the net impact of excess and obsolete inventory charges and stock-based compensation charges, gross profit would have been $76.5 million, or 31.5% of revenues, in the quarter ended January 29, 2012 compared to $90.4 million, or 34.4% of revenues, in the quarter ended January 30, 2011. The decrease in gross margin primarily reflects a decline in average selling prices, partially offset by reduced material costs, as well as under-utilization of certain manufacturing facilities, higher amortization of acquired developed technology, higher net charges for excess and obsolete inventory and consolidation of the financial results of Ignis, whose products have an average gross margin that is lower than the overall corporate average gross margin.

Gross profit decreased $29.2 million, or 12.3%, to $207.9 million in the nine months ended January 29, 2012 compared to $237.1 million in the nine months ended January 30, 2011. Gross profit as a percentage of revenues decreased by 4.1%, from 33.3% in the nine months ended January 30, 2011 to 29.2% in the nine months ended January 29, 2012. We recorded charges of $16.9 million for obsolete and excess inventory in the nine months ended January 29, 2012 compared to $13.5 million in the nine months ended January 30, 2011. We sold inventory that was written-off in previous periods resulting in a benefit of $10.2 million in the nine months ended January 29, 2012 and $9.5 million in the nine months ended January 30, 2011. As a result, we recognized a net charge of $6.7 million in the nine months ended January 29, 2012 compared to a net charge of $4.0 million in the nine months ended January 30, 2011. Cost of revenues included stock-based compensation charges of $4.8 million in the nine months ended January 29, 2012 and $3.4 million in the nine months ended January 30, 2011. Excluding amortization of acquired developed technology, the net impact of excess and obsolete inventory charges and stock-based compensation charges, gross profit would have been $224.1 million, or 31.4% of revenues, in the nine months ended January 29, 2012 compared to $248.1 million, or 34.8% of revenues, in the nine months ended January 30, 2011. The decrease in gross margin primarily reflects a decline in average selling prices, partially offset by reduced material costs, as well as under-utilization of certain manufacturing facilities, higher amortization of acquired developed technology, higher net charges for excess and obsolete inventory and consolidation of the financial results of Ignis, whose products have an average gross margin that is lower than the overall corporate average gross margin.

General and Administrative Expenses. General and administrative expenses decreased $2.9 million, or 19.7%, to $11.8 million in the quarter ended January 29, 2012 compared to $14.7 million in the quarter ended January 30, 2011. The decrease was primarily due to a $3.5 million accrual in the prior year quarter for damages payable as a result of an appellate court's ruling affirming an unfavorable judgment in a patent infringement lawsuit and lower legal costs in the quarter ended January 29, 2012. The decrease was partially offset by consolidation of financial results of Ignis for the quarter ended January 29, 2012. Included in general and administrative expenses were stock-based compensation charges of $1.7 million in the quarter ended January 29, 2012 and $1.2 million in the quarter ended January 30, 2011. General and administrative expenses as a percent of revenues decreased to 4.8% in the quarter ended January 29, 2012 compared to 5.6% in the quarter ended January 30, 2011.

General and administrative expenses increased $5.2 million, or 15.3%, to $39.5 million in the nine months ended January 29, 2012 compared to $34.3 million in the nine months ended January 30, 2011. The increase was primarily due to $1.6 million of transaction costs incurred in connection with our acquisition of Ignis, the consolidation of the financial results of Ignis and a non-recurring net gain of $2.4 million related to the settlement of Source Photonics legal proceeding in the prior year, partially offset by a $3.5 million accrual in the prior year for damages payable as a result of the appellate court's ruling affirming an unfavorable judgment in a patent infringement lawsuit. Included in general and administrative expenses were stock-based compensation charges of $5.5 million in the nine months ended January 29, 2012 and $3.6 million in the nine months ended January 30, 2011. General and administrative expenses as a percent of revenues increased to 5.6% in the nine months ended January 29, 2012 compared to 4.8% in the nine months ended January 30, 2011.

Net cash provided by operating activities was $32.2 million in the nine months ended January 29, 2012, compared to net cash used in operating activities of $54.9 million in the nine months ended January 30, 2011. Cash provided by operating activities in the nine months ended January 29, 2012 consisted of our net income, as adjusted to exclude depreciation, amortization and other non-cash items totaling $56.9 million, less cash used for working capital requirements primarily related to increases in accounts receivable, inventory and accounts payable. Accounts receivable decreased by $1.4 million primarily due to strong collections near the end of the third quarter. Inventory increased by $27.9 million and accounts payable increased by $1.9 million due to increased purchases to support projected increased levels of sales. Cash used in operating activities in the nine months ended January 30, 2011 consisted of our net income, as adjusted to exclude depreciation, amortization and other non-cash items totaling to $51.4 million and cash used for working capital, primarily related to increases in accounts receivable and inventories, offset by an increase in accounts payable. Accounts receivable increased by $47.6 million primarily due to the increase in revenues. Inventory and accounts payable increased by $35.6 million and $6.4 million, respectively, primarily due to increase in purchases to support higher levels of sales.

Read the The complete Report



Stocks Discussed: FNSR,
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