Finisar Corp. (FNSR, Financial) filed Quarterly Report for the period ended 2009-08-02.
FINISAR CORP. is a provider of fiber optic subsystems and network test and monitoring systems which enable high-speed data communications over local area networks or LANs storage area networks or SANs and metropolitan access networks or MANs. They are focused on the application of digital fiber optics to provide aline of high-performance reliable value-added optical subsystems for data networking and storage equipment manufacturers. Finisar Corp. has a market cap of $495 million; its shares were traded at around $1.02 with a P/E ratio of 20.4 and P/S ratio of 0.9.
Gross Profit. Gross profit from continuing operations decreased $11.4 million, or 27.9%, to $29.4 million in the quarter ended August 2, 2009 compared to $40.8 million in the quarter ended August 3, 2008. Gross profit as a percentage of revenue was 22.8% in the quarter ended August 2, 2009 compared to 35.2% in the quarter ended August 3, 2008. We recorded charges of $9.2 million for obsolete and excess inventory in the quarter ended August 2, 2009 compared to $2.6 million in the quarter ended August 3, 2008. We sold inventory that was written-off in previous periods resulting in a benefit of $2.7 million in the quarter ended August 2, 2009 and $1.8 million in the quarter ended August 3, 2008. As a result, we recognized a net charge of $6.5 million in the quarter ended August 2, 2009 compared to $800,000 in the quarter ended August 3, 2008. Manufacturing overhead includes stock-based compensation charges of $1.0 million in the quarter ended August 2, 2009 and $821,000 in the quarter ended August 3, 2008. Excluding
Interest Expense. Interest expense decreased $2.8 million, or 53.6%, to $2.4 million in the quarter ended August 2, 2009 compared to $5.2 million in the quarter ended August 3, 2008. The decrease was primarily related to the purchase and repayment of $100.3 million of our convertible subordinated notes in the second half of fiscal 2009. Interest expense for the quarter ended August 2, 2009 included $927,000 related to our convertible subordinated notes due in 2010, $262,000 related to other various debt instruments and a non-cash charge of $1.2 million due to the adoption of FSP APB 14-1 which requires us to separately account for the liability (debt) and equity (conversion option) components of our 2.5% senior subordinated convertible notes that may be settled in cash (or other assets) on conversion in a manner that reflects our non-convertible debt borrowing rate. The separation of conversion option creates an original issue discount in the bond component which is to be accreted as interest expense over the term of the instrument using the interest method, resulting in an increase in interest expense. Interest expense for the quarter ended August 3, 2008 included $2.2 million related to our convertible subordinated notes due in 2008 and 2010, $626,000 related to other various debt instruments, a non-cash charge of $1.2 million related to the adoption of FSP APB 14-1 and a non-cash charge of $1.1 million to amortize the beneficial conversion feature of the notes due in 2008.
Net cash used by operating activities was $16.5 million in the quarter ended August 2, 2009, compared to net cash provided by operating activities of $3.3 million in the quarter ended August 3, 2008. Cash used by operating activities in the quarter ended August 2, 2009 was due to our net loss as adjusted to exclude depreciation, amortization and other non-cash related items in the income statement totaling to $15.7 million and changes in working capital requirements which were primarily related to a increase in accounts receivable and a decrease in other accrued liabilities. Accounts receivable increased by $17.6 million primarily due to no sales of accounts receivable under our non-recourse accounts receivable purchase agreement with Silicon Valley Bank during the first quarter of fiscal 2010 compared to $5.2 million sold in the first quarter of fiscal 2009. Other accrued liabilities decreased by $5.7 million mainly due to repayment of $5.7 million to Silicon Valley Bank which was borrowed against the line of credit available under the non-recourse accounts receivable purchase agreement . Net cash provided by operating activities in the quarter ended August 3, 2008 was due to our net income as adjusted to exclude depreciation, amortization and other non-cash related items in the income statement totaling $14.5 million and changes in working capital requirements which were primarily related to increases in accounts receivable, inventories and accounts payable.
Net cash provided by financing activities totaled to $875,000 in the quarter ended August 2,2009 compared to $10.6 million in the quarter ended August 3, 2008. Cash provided by financing activities for the quarter ended August 2, 2009 primarily reflected proceeds from the exercise of stock options and purchases under our stock purchase plan totaling $2.4 million, partially offset by repayments of borrowings totaling $1.5 million. Cash provided by financing activities for the quarter ended August 3, 2008 primarily reflected proceeds of $20 million from bank borrowings and proceeds from the exercise of stock options and purchases under our stock purchase plan totaling $3.1 million, partially offset by repayments of borrowings of $12.5 million.
Convertible debt consists of a series of convertible subordinated notes in the aggregate principal amount of $50.0 million due October 15, 2010 and a series of convertible senior subordinated notes in the aggregate principal amount of $92.0 million due October 15, 2010. The notes are convertible by the holders at any time prior to maturity into shares of Finisar common stock at specified conversion prices. The notes are redeemable by us, in whole or in part. Aggregate annual interest payments on both series of notes are approximately $3.6 million. On August 11, 2009, we exchanged $47,504,000 aggregate principal amount of the notes under exchange offers which commenced on July 9, 2009. We settled $33,100,000, or 66.2%, of the $50,000,000 aggregate outstanding principal amount of 21/2% Convertible Subordinated Notes due 2010; and $14,404,000, or approximately 15.7%, of the $92,000,000 aggregate outstanding principal amount of 21/2% Convertible Senior Subordinated Notes due 2010. On September 8, 2009, we repurchased $15.2 million principal amount of our Senior Subordinated Notes in a privately negotiated transaction. For each $1,000 principal amount of the Notes, we paid $952 in cash, for a total purchase price of $14.5 million plus accrued interest of $154,000.After the repurchase and the settlement of the Exchange Offers discussed above, approximately $79.3 million aggregate principal amount of notes remained outstanding.
Read the The complete ReportFNSR is in the portfolios of Charles Brandes of Brandes Investment.
FINISAR CORP. is a provider of fiber optic subsystems and network test and monitoring systems which enable high-speed data communications over local area networks or LANs storage area networks or SANs and metropolitan access networks or MANs. They are focused on the application of digital fiber optics to provide aline of high-performance reliable value-added optical subsystems for data networking and storage equipment manufacturers. Finisar Corp. has a market cap of $495 million; its shares were traded at around $1.02 with a P/E ratio of 20.4 and P/S ratio of 0.9.
Highlight of Business Operations:
Revenues. Revenues from continuing operations increased $13.0 million, or 11.2%, to $128.7 million in the quarter ended August 2, 2009 compared to $115.8 million in the quarter ended August 3, 2008. The increase was due to the inclusion of $28.8 million revenues from Optiums operations, consisting of $14.1 million in sales of Metro/Telecom products with speeds of 10 Gbs and higher, $11.0 million in sales of ROADM products and $3.7 million in sales of CATV products. Revenue from pre-merger Finisar products decreased $15.9 million, or 13.7%, to $99.9 million compared to $115.8 million in the quarter ended August 3, 2008. While this decrease was primarily due to the global recession, sales of products with speeds of 10 Gbs and higher increased while sales of products with speeds of less than 10 Gbs declined. Sales of LAN and SAN products with speeds of less than 10 Gbs decreased $12.0 million, or 26.1%, to $34.0 million while sales of LAN and SAN products with speeds of 10 Gbs and higher increased $3.1 million, or 30.8%, to $13.1 million. Sales of Metro/Telecom products with speeds of less than 10 Gbs decreased $7.0 million, or 23.1%, to 23.4 million while sales of Metro/Telecom products with speeds of 10 Gbs and higher increased $2.1 million, or 9.4%, to $24.3 million. Sales of components decreased $2.3 million, or 32.9%, to $4.8 million. Combined sales of Metro/Telecom products with speeds of 10 Gbs and higher increased $16.2 million, or 73.1%, to $38.4 million.Gross Profit. Gross profit from continuing operations decreased $11.4 million, or 27.9%, to $29.4 million in the quarter ended August 2, 2009 compared to $40.8 million in the quarter ended August 3, 2008. Gross profit as a percentage of revenue was 22.8% in the quarter ended August 2, 2009 compared to 35.2% in the quarter ended August 3, 2008. We recorded charges of $9.2 million for obsolete and excess inventory in the quarter ended August 2, 2009 compared to $2.6 million in the quarter ended August 3, 2008. We sold inventory that was written-off in previous periods resulting in a benefit of $2.7 million in the quarter ended August 2, 2009 and $1.8 million in the quarter ended August 3, 2008. As a result, we recognized a net charge of $6.5 million in the quarter ended August 2, 2009 compared to $800,000 in the quarter ended August 3, 2008. Manufacturing overhead includes stock-based compensation charges of $1.0 million in the quarter ended August 2, 2009 and $821,000 in the quarter ended August 3, 2008. Excluding
Interest Expense. Interest expense decreased $2.8 million, or 53.6%, to $2.4 million in the quarter ended August 2, 2009 compared to $5.2 million in the quarter ended August 3, 2008. The decrease was primarily related to the purchase and repayment of $100.3 million of our convertible subordinated notes in the second half of fiscal 2009. Interest expense for the quarter ended August 2, 2009 included $927,000 related to our convertible subordinated notes due in 2010, $262,000 related to other various debt instruments and a non-cash charge of $1.2 million due to the adoption of FSP APB 14-1 which requires us to separately account for the liability (debt) and equity (conversion option) components of our 2.5% senior subordinated convertible notes that may be settled in cash (or other assets) on conversion in a manner that reflects our non-convertible debt borrowing rate. The separation of conversion option creates an original issue discount in the bond component which is to be accreted as interest expense over the term of the instrument using the interest method, resulting in an increase in interest expense. Interest expense for the quarter ended August 3, 2008 included $2.2 million related to our convertible subordinated notes due in 2008 and 2010, $626,000 related to other various debt instruments, a non-cash charge of $1.2 million related to the adoption of FSP APB 14-1 and a non-cash charge of $1.1 million to amortize the beneficial conversion feature of the notes due in 2008.
Net cash used by operating activities was $16.5 million in the quarter ended August 2, 2009, compared to net cash provided by operating activities of $3.3 million in the quarter ended August 3, 2008. Cash used by operating activities in the quarter ended August 2, 2009 was due to our net loss as adjusted to exclude depreciation, amortization and other non-cash related items in the income statement totaling to $15.7 million and changes in working capital requirements which were primarily related to a increase in accounts receivable and a decrease in other accrued liabilities. Accounts receivable increased by $17.6 million primarily due to no sales of accounts receivable under our non-recourse accounts receivable purchase agreement with Silicon Valley Bank during the first quarter of fiscal 2010 compared to $5.2 million sold in the first quarter of fiscal 2009. Other accrued liabilities decreased by $5.7 million mainly due to repayment of $5.7 million to Silicon Valley Bank which was borrowed against the line of credit available under the non-recourse accounts receivable purchase agreement . Net cash provided by operating activities in the quarter ended August 3, 2008 was due to our net income as adjusted to exclude depreciation, amortization and other non-cash related items in the income statement totaling $14.5 million and changes in working capital requirements which were primarily related to increases in accounts receivable, inventories and accounts payable.
Net cash provided by financing activities totaled to $875,000 in the quarter ended August 2,2009 compared to $10.6 million in the quarter ended August 3, 2008. Cash provided by financing activities for the quarter ended August 2, 2009 primarily reflected proceeds from the exercise of stock options and purchases under our stock purchase plan totaling $2.4 million, partially offset by repayments of borrowings totaling $1.5 million. Cash provided by financing activities for the quarter ended August 3, 2008 primarily reflected proceeds of $20 million from bank borrowings and proceeds from the exercise of stock options and purchases under our stock purchase plan totaling $3.1 million, partially offset by repayments of borrowings of $12.5 million.
Convertible debt consists of a series of convertible subordinated notes in the aggregate principal amount of $50.0 million due October 15, 2010 and a series of convertible senior subordinated notes in the aggregate principal amount of $92.0 million due October 15, 2010. The notes are convertible by the holders at any time prior to maturity into shares of Finisar common stock at specified conversion prices. The notes are redeemable by us, in whole or in part. Aggregate annual interest payments on both series of notes are approximately $3.6 million. On August 11, 2009, we exchanged $47,504,000 aggregate principal amount of the notes under exchange offers which commenced on July 9, 2009. We settled $33,100,000, or 66.2%, of the $50,000,000 aggregate outstanding principal amount of 21/2% Convertible Subordinated Notes due 2010; and $14,404,000, or approximately 15.7%, of the $92,000,000 aggregate outstanding principal amount of 21/2% Convertible Senior Subordinated Notes due 2010. On September 8, 2009, we repurchased $15.2 million principal amount of our Senior Subordinated Notes in a privately negotiated transaction. For each $1,000 principal amount of the Notes, we paid $952 in cash, for a total purchase price of $14.5 million plus accrued interest of $154,000.After the repurchase and the settlement of the Exchange Offers discussed above, approximately $79.3 million aggregate principal amount of notes remained outstanding.
Read the The complete ReportFNSR is in the portfolios of Charles Brandes of Brandes Investment.
