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Calix Reports First Quarter 2013 Financial Results

April 25, 2013
Strong Demand Bucks Seasonal Trend Resulting in Record First Quarter Revenue

PETALUMA, CA -- (Marketwired) -- 04/25/13 -- Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the first quarter ended March 30, 2013. Revenue for the first quarter of 2013 was $90.5 million, an increase of 15.3% compared to $78.6 million for the first quarter of 2012.

"Our strong year-over-year first quarter revenue growth resulted in record revenue for a first quarter and improved gross margin," said Carl Russo, president and CEO of Calix. "These results reflect our success in penetrating new customer accounts and expanding our addressable market."

Non-GAAP net income for the first quarter of 2013 was $3.2 million, or $0.06 per fully diluted share. Non-GAAP net income was $0.6 million, or $0.01 per fully diluted share, for the first quarter of 2012. A reconciliation of GAAP and non-GAAP results is included as part of this release.

GAAP net loss for the first quarter of 2013 was $6.2 million, or $(0.13) per basic and diluted share, compared to a GAAP net loss of $7.5 million, or $(0.16) per basic and diluted share for the first quarter of 2012. A reconciliation of our first quarter 2013 operating results from non-GAAP to GAAP is provided below:
















Three Months Ended March 30, 2013


Non-GAAP

Stock-Based Compensation

Amortization of Intangible Assets

GAAP
Revenue
$ 90,548

$ -

$ -

$ 90,548
Cost of revenue

46,994


351


2,088


49,433
Gross profit

43,554


(351)


(2,088)


41,115
Gross margin

48.1%


-0.4%


-2.3%


45.4%
Operating expenses

39,735


4,368


2,552


46,655
Operating income (loss)

3,819


(4,719)


(4,640)


(5,540)
Interest and other income (expense), net

(306)


-


-


(306)
Income (loss) before taxes

3,513


(4,719)


(4,640)


(5,846)
Provision for income taxes

357


-


-


357
Net income (loss)
$ 3,156

$ (4,719)

$ (4,640)

$ (6,203)

















Weighted average basic and diluted shares used to compute GAAP net loss per common share













48,911

















Weighted average diluted shares used to compute non-GAAP net income per common share

49,422


49,422


49,422





















GAAP net loss per common share












$ (0.13)

















Non-GAAP net income (loss) per share
$ 0.06

$ (0.10)

$ (0.09)





















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 first 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, and non-recurring acquisition-related and other expenses, 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 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

March 30,

March 31,

2013

2012
Revenue $ 90,548

$ 78,565
Cost of revenue:







Products and services(1)
47,345


43,471

Amortization of intangible assets
2,088


1,275


Total cost of revenue
49,433


44,746
Gross profit
41,115


33,819
Operating expenses:







Research and development(1)
20,171


16,966

Sales and marketing(1)
15,801


14,890

General and administrative(1)
8,131


6,780

Amortization of intangible assets
2,552


2,552


Total operating expenses
46,655


41,188
Loss from operations
(5,540) )

(7,369) )
Interest and other income (expense), net:







Interest income
1


7

Interest expense
(28)


(42)

Other income (expense), net
(279)


(22)
Loss before provision for income taxes
(5,846)


(7,426)
Provision for income taxes
357


95
Net loss $ (6,203)

$ (7,521)
Net loss per common share:







Basic and diluted $ (0.13)

$ (0.16)
Weighted average number of shares used to compute net loss per common share:







Basic and diluted
48,911


47,850








(1) Includes stock-based compensation as follows:















Cost of revenue $ 351

$ 363

Research and development
1,186


1,021

Sales and marketing
1,279


1,239

General and administrative
1,903


1,692

$ 4,719

$ 4,315

























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









Three Months Ended


March 30,

March 31,


2013

2012









GAAP net loss
$ (6,203)

$ (7,521)
Adjustments to reconcile GAAP net loss to non-GAAP net income:







Stock-based compensation

4,719


4,315
Amortization of intangible assets

4,640


3,827
Non-GAAP net income
$ 3,156

$ 621









Non-GAAP net income per common share








Basic
$ 0.06

$ 0.01

Diluted
$ 0.06

$ 0.01









Weighted average shares used to compute non-GAAP net income per common share - Basic

48,911


47,850









Weighted average shares used to compute non-GAAP net income per common share - Diluted (1)

49,422


48,039









(1) Includes the dilutive effect of outstanding stock options, restricted stock units, and ESPP.






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









March 30,

December 31,


2013

2012









ASSETS







Current assets:








Cash and cash equivalents
$ 48,059

$ 46,995

Accounts receivable, net

70,717


59,519

Inventory

39,232


43,282

Deferred cost of revenue

26,417


21,077

Prepaid expenses and other current assets

6,063


5,677


Total current assets

190,488


176,550









Property and equipment, net

19,013


21,083
Goodwill

116,175


116,175
Intangible assets, net

57,661


62,301
Other assets

1,694


1,788


Total assets
$ 385,031

$ 377,897









LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:








Accounts payable
$ 13,673

$ 16,804

Accrued liabilities

36,673


36,176

Deferred revenue

48,629


39,315


Total current liabilities

98,975


92,295
Long-term portion of deferred revenue

16,917


15,782
Other long-term liabilities

1,525


745


Total liabilities

117,417


108,822









Stockholders' equity:








Common stock

1,222


1,222

Additional paid-in capital

764,992


760,232

Accumulated other comprehensive income

114


132

Accumulated deficit

(498,714)


(492,511)


Total stockholders' equity

267,614


269,075


Total liabilities and stockholders' equity
$ 385,031

$ 377,897

































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









Three Months Ended


March 30,

March 31,


2013

2012
Operating activities:








Net loss
$ (6,203)

$ (7,521)

Adjustments to reconcile net loss to net cash provided by operating activities:









Depreciation and amortization

2,854


1,960


Loss on retirement of property and equipment

542


-


Amortization of intangible assets

4,640


3,827


Stock-based compensation

4,719


4,315


Changes in operating assets and liabilities:










Restricted cash

-


754



Accounts receivable, net

(11,198)


(836)



Inventory

4,050


7,651



Deferred cost of revenue

(5,340)


(1,281)



Prepaid expenses and other assets

74


623



Accounts payable

(3,131)


(117)



Accrued liabilities

482


(293



Deferred revenue

10,449


4,765



Other long-term liabilities

442


(330)




Net cash provided by operating activities

2,380


13,517









Investing activities:








Purchase of property and equipment

(1,326)


(3,012)




Net cash used in investing activities

(1,326)


(3,012)









Financing activities:








Proceeds from exercise of stock options

42


72




Net cash provided by financing activities

42


72









Effect of exchange rate changes on cash and cash equivalents

(32)


47
Net increase in cash and cash equivalents

1,064


10,624
Cash and cash equivalents at beginning of period

46,995


38,938
Cash and cash equivalents at end of period
$ 48,059

$ 49,562

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