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Calix Achieves Record Revenues in Third Quarter 2013

October 29, 2013

PETALUMA, CA -- (Marketwired) -- 10/29/13 -- Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the third quarter ended September 28, 2013. Revenue for the third quarter of 2013 was a record $103.6 million, an increase of 27% compared to $81.3 million for the third quarter of 2012.

"Our strong Q3 results reflect our solid execution in the quarter," said Carl Russo, president and CEO of Calix. "Our year-to-date progress reflects the increasing value Calix customers place on transforming their access networks."

Non-GAAP net income for the third quarter of 2013 was $10.2 million, or $0.20 per fully diluted share. Non-GAAP net income was $1.8 million, or $0.04 per fully diluted share, for the third quarter of 2012. A reconciliation of GAAP and non-GAAP results is included as part of this release.

GAAP net income for the third quarter of 2013 was $0.5 million, or $0.01 per basic and diluted share, compared to a GAAP net loss of $7.1 million, or $(0.15) per basic and diluted share for the third quarter of 2012. A reconciliation of our third quarter 2013 operating results from non-GAAP to GAAP is provided below:



Calix, Inc.
(Unaudited, in thousands, except per share data)
Three Months Ended September 28, 2013















Non-GAAP

Stock-Based Compensation

Amortization of Intangible Assets

GAAP
Revenue
$ 103,628

$ --

$ --

$ 103,628
Cost of revenue

53,770


362


2,089


56,221
Gross profit

49,858


(362)


(2,089)


47,407
Gross margin

48.1%


-0.3%


-2.0%


45.7%
Operating expenses

40,258


4,609


2,552


47,419
Operating income (loss)

9,600


(4,971)


(4,641)


(12)
Interest and other income (expense), net

(18) )

--


--


(18)
Income (loss) before benefit from income taxes

9,582


(4,971)


(4,641)


(30)
Benefit from income taxes

(574)


--


--


(574)
Net income (loss)
$ 10,156

$ (4,971)

$ (4,641)

$ 544
Weighted average shares used to computenet income (loss) per common share:































Basic

49,694


49,694


49,694


49,694

Diluted

51,142


51,142


51,142


51,142
Net income (loss) per common share:
















Basic
$ 0.20

$ (0.10)

$ (0.09)

$ 0.01

Diluted
$ 0.20

$ (0.10)

$ (0.09)

$ 0.01




































Conference Call
In conjunction with this announcement, Calix will host a conference call at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) today to discuss its third quarter 2013 financial results. A live audio webcast and replay of the call will be available in the Investor Relations section of the Calix web site at http://investor-relations.calix.com/.

Live call access information: Dial-in number: (877) 407-4019 (U.S.) or (201) 689-8337 (outside the U.S.)

The conference call and webcast will include forward-looking information.

About Calix
Calix (NYSE: CALX) is a global leader in access innovation. Its Unified Access portfolio of broadband communications access systems and software enables communications service providers worldwide to transform their copper- and fiber-based networks and become the broadband provider of choice to their subscribers. For more information, visit the Calix website at www.calix.com.

Use of Non-GAAP Financial Information
The Company uses certain non-GAAP financial measures in this press release to supplement its consolidated financial statements, which are presented in accordance with GAAP. These non-GAAP measures include non-GAAP net income and non-GAAP basic and diluted income per share. These non-GAAP measures are provided to enhance the reader's understanding of the Company's operating performance as they primarily exclude certain non-cash charges for stock-based compensation and amortization of acquisition-related intangible assets, which the Company believes are not indicative of its core operating results. Management believes that the non-GAAP measures used in this press release provide investors with important perspectives into the Company's ongoing business performance and management uses these non-GAAP measures to evaluate financial results and to establish operational goals. The presentation of these non-GAAP measures is not meant to be a substitute for results presented in accordance with GAAP, but rather should be evaluated in conjunction with those GAAP results. A reconciliation of the non-GAAP results to the most directly comparable GAAP results is provided in this press release. The diluted weighted average shares used to compute both GAAP and non-GAAP net income per share include the dilutive effect of outstanding stock options, restricted stock units, performance restricted stock units, and ESPP, which have been calculated under the treasury stock method. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.





Calix, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)












Three Months Ended
Nine Months Ended


September 28,
2013

September 29,
2012

September 28,
2013

September 29,
2012

Revenue $ 103,628
$ 81,301
$ 288,615
$ 238,794
Cost of revenue:












Products and services (1)
54,132

45,707

151,323

132,797

Amortization of intangible assets
2,089

2,088

6,265

5,451


Total cost of revenue
56,221

47,795

157,588

138,248
Gross profit
47,407

33,506

131,027

100,546
Operating expenses:












Research and development (1)
19,777

16,165

59,983

49,604

Sales and marketing (1)
16,612

15,093

49,492

44,880

General and administrative (1)
8,478

6,773

24,293

19,682

Amortization of intangible assets
2,552

2,552

7,656

7,656


Total operating expenses
47,419

40,583

141,424

121,822
Loss from operations
(12) )
(7,077) )
(10,397) )
(21,276) )
Interest and other income (expense), net:












Interest income
2

3

4

14

Interest expense
(24)

(41)

(94)

(140) )

Other income (expense), net
4

19

(318)

(70)
Loss before provision for (benefit from) income taxes
(30)

(7,096)

(10,805)

(21,472)
Provision for (benefit from) income taxes
(574)

44

7

280
Net income (loss) $ 544
$ (7,140)
$ (10,812)
$ (21,752)
Net income (loss) per common share:












Basic $ 0.01
$ (0.15)
$ (0.22)
$ (0.45)

Diluted $ 0.01
$ (0.15)
$ (0.22)
$ (0.45)
Weighted average shares used to compute net income (loss) per common share:




Basic
49,694

48,353

49,255

48,059

Diluted
51,142

48,353

49,255

48,059




























(1) Includes stock-based compensation as follows:












Cost of revenue $ 362
$ 345
$ 1,090
$ 1,089

Research and development
1,179

1,017

3,665

3,129

Sales and marketing
1,395

1,263

4,138

3,840

General and administrative
2,035

1,682

6,072

4,903


$ 4,971
$ 4,307
$ 14,965
$ 12,961






Calix, Inc.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands, except per share data)





Three Months Ended

Nine Months Ended


September 28,
2013

September 29,
2012


September 28,
2013


September 29,
2012

GAAP net income (loss)
$ 544
$ (7,140)

$ (10,812)

$ (21,752)
Adjustments to reconcile GAAP net income (loss) to non-GAAP net income:














Stock-based compensation

4,971

4,307


14,965


12,961
Amortization of intangible assets

4,641

4,640


13,921


13,107
Non-GAAP net income
$ 10,156
$ 1,807

$ 18,074

$ 4,316
Non-GAAP net income per common share:















Basic
$ 0.20
$ 0.04

$ 0.37

$ 0.09

Diluted
$ 0.20
$ 0.04

$ 0.36

$ 0.09
Weighted average shares used to compute non-GAAP net income per common share:





























Basic

49,694

48,353


49,255


48,059

Diluted

51,142

48,472


50,218


48,208






Calix, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)









September 28,

December 31,


2013

2012
ASSETS





Current assets:






Cash and cash equivalents
$ 79,124

$ 46,995

Restricted cash

972


--

Accounts receivable, net

54,421


59,519

Inventory

39,376


43,282

Deferred cost of revenue

26,826


21,077

Prepaid expenses and other current assets

6,656


5,677


Total current assets

207,375


176,550
Property and equipment, net

18,379


21,083
Goodwill

116,175


116,175
Intangible assets, net

48,380


62,301
Other assets

1,827


1,788


Total assets
$ 392,136

$ 377,897
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:








Accounts payable
$ 18,073

$ 16,804

Accrued liabilities

35,034


36,176

Deferred revenue

45,202


39,315


Total current liabilities

98,309


92,295
Long-term portion of deferred revenue

18,197


15,782
Other long-term liabilities

1,321


745


Total liabilities

117,827


108,822
Stockholders' equity:








Common stock

1,244


1,222

Additional paid-in capital

776,209


760,232

Accumulated other comprehensive income

179


132

Accumulated deficit

(503,323)


(492,511)


Total stockholders' equity

274,309


269,075


Total liabilities and stockholders' equity
$ 392,136

$ 377,897






Calix, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)









Nine Months Ended


September 28,

September 29,


2013

2012
Operating activities:





Net loss
$ (10,812)

$ (21,752)
Adjustments to reconcile net loss to net cash provided by operating activities:








Depreciation and amortization

7,767


6,351

Loss on retirement of property and equipment

564


262

Amortization of intangible assets

13,921


13,107

Stock-based compensation

14,965


12,961
Changes in operating assets and liabilities:








Restricted cash

(972)


754

Accounts receivable, net

5,098


(9,359)

Inventory

3,906


14,855

Deferred cost of revenue

(5,749)


(9,063)

Prepaid expenses and other assets

(466)


491

Accounts payable

1,269


2,186

Accrued liabilities

(1,224)


(2,098)

Deferred revenue

8,302


16,755

Other long-term liabilities

238


(633)


Net cash provided by operating activities

36,807


24,817
Investing activities:








Purchase of property and equipment

(5,475)


(7,879)


Net cash used in investing activities

(5,475)


(7,879)
Financing activities:








Proceeds from exercise of stock options

671


158

Proceeds from employee stock purchase plan

2,464


2,222

Taxes withheld upon vesting of restricted stock units and restricted stock awards

(2,102)


(880)

Payments for debt issuance costs

(301)


--


Net cash provided by financing activities

732


1,500
Effect of exchange rate changes on cash and cash equivalents

65


46
Net increase in cash and cash equivalents

32,129


18,484
Cash and cash equivalents at beginning of period

46,995


38,938
Cash and cash equivalents at end of period
$ 79,124

$ 57,422
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