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Calix Reports Fourth Quarter and 2012 Fiscal Year Results

February 05, 2013

PETALUMA, CA -- (MARKETWIRE) -- 02/05/13 -- Calix, Inc. (NYSE: CALX) today announced financial results for the fourth quarter and fiscal year ended December 31, 2012. Revenue for the fourth quarter of 2012 was $91.4 million, an increase of 12.5% compared to $81.3 million for the third quarter of 2012, and flat compared to $91.6 million for the fourth quarter of 2011.

"Strong fourth quarter results ended 2012 on a positive note," said Carl Russo, Calix president and CEO. "We are carrying this momentum into 2013, with a strengthened organization, an expanded Unified Access portfolio of software, systems and services, and our preferred global reseller agreement with Ericsson providing a solid foundation for growth."

Non-GAAP net income for the fourth quarter of 2012 was $2.9 million, or $0.06 per fully diluted share, an increase of 61.3% compared to non-GAAP net income of $1.8 million, or $0.04 per fully diluted share for the third quarter of 2012, and a decrease of 22.2% compared to non-GAAP net income of $3.7 million, or $0.08 per fully diluted share, in the fourth quarter of 2011.

GAAP net loss for the fourth quarter of 2012 was $6.6 million, or $(0.14) 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, and compared to a GAAP net loss of $5.2 million, or $(0.11) per basic and diluted share reported for the fourth quarter of 2011. A reconciliation of our fourth quarter 2012 operating results from non-GAAP to GAAP is provided below (in thousands, except per share data):







Three Months Ended December 31, 2012


Non-GAAP
Acquisition Related Expenses

Gain on Bargain Purchase
Stock-Based Compensation

Amortization of Intangible Assets

GAAP
Revenue
$ 91,424
$ -

$ -
$ -

$ -

$ 91,424
Cost of revenue

51,962

-


-

344


2,088


54,394
Gross profit

39,462

-


-

(344)


(2,088)


37,030
Gross margin

43.2%

-


-

-0.4%


-2.3%


40.5%
Operating expenses

36,693

1,401


-

4,132


2,552


44,778
Operating income (loss)

2,769

(1,401)


-

(4,476)


(4,640)


(7,748)
Interest and other income (expense), net

23

-


1,029

-


-


1,052
Income (loss) before taxes

2,792

(1,401)


1,029

(4,476)


(4,640)


(6,696)
Benefit from income taxes

(122)

-


-

-


-


(122)
Net income (loss)
$ 2,914
$ (1,401)

$ 1,029
$ (4,476)

$ (4,640)

$ (6,574)























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




















48,538

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


48,836



48,836




48,836



48,836




48,836





GAAP net loss per common share


















$ (0.14)























Non-GAAP net income (loss) per share
$ 0.06
$ (0.03)

$ 0.02
$ (0.09)

$ (0.10)


















































Conference Call
Calix will host a conference call to discuss its fourth quarter and fiscal year 2012 results at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) today. Interested parties can listen to a live webcast of the conference call by visiting the Calix Investor Relations website at http://investor-relations.calix.com/ or dialing 877-407-4019 within the U.S. or 201-689-8337 outside the U.S. A replay of the conference call will also be available at http://investor-relations.calix.com/ approximately one hour following the completion of the call. 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.

All statements other than statements of historical facts contained in this press release, including statements regarding our future operations and growth opportunities, are forward-looking statements and are based upon management's current expectations and are inherently uncertain. Forward-looking statements are based upon information available to us as of the date of this release, and we assume no obligation to revise or update any such forward-looking statement to reflect any event or circumstance after the date of this release, except as required by law. Actual results and the timing of events could differ materially from current expectations based on risks and uncertainties affecting the Company's business. The reader is cautioned not to unduly rely on the forward-looking statements contained in this press release. Additional information on potential factors that could affect Calix's results and other risks and uncertainties are detailed in its reports filed with the SEC, including the Company's 2011 Annual Report on Form 10-K and its report on Form 10-Q for the fiscal quarter ended September 29, 2012, available at http://www.sec.gov.

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, amortization of acquisition-related intangible assets, gain from bargain purchase of Ericsson's fiber access assets, and non-recurring acquisition-related expenses, which the Company believes are not indicative of its core operating results. Acquisition-related expenses largely include legal and professional expenses, severance and integration-related expenses associated with our merger with Occam in 2011 and our acquisition of Ericsson's fiber access assets in 2012. In addition, acquisition-related expenses for 2011 include the charge resulting from the required revaluation of Occam inventory to its estimated fair value and inventory-related charges upon the completion of the acquisition. 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

Twelve Months Ended


December 31,

December 31,

December 31,

December 31,


2012

2011

2012

2011
Revenue
$ 91,424

$ 91,585

$ 330,218

$ 344,669
Cost of revenue:
















Products and services(1)

52,306


52,489


185,103


195,698

Acquisition-related expenses

-


-


-


19,966

Amortization of intangible assets

2,088


2,042


7,539


9,552


Total cost of revenue

54,394


54,531


192,642


225,216
Gross profit

37,030


37,054


137,576


119,453
Operating expenses:
















Research and development(1)

17,144


17,385


66,748


67,725

Sales and marketing(1)

17,249


16,720


62,129


55,551

General and administrative(1)

6,432


5,552


26,114


27,002

Acquisition-related expenses(1)

1,401


-


1,401


12,927

Amortization of intangible assets

2,552


2,553


10,208


8,569


Total operating expenses

44,778


42,210


166,600


171,774
Loss from operations

(7,748)


(5,156)


(29,024)


(52,321)
Interest and other income (expense), net:
















Interest income

1


7


15


87

Interest expense

(45)


(45)


(185)


(184)

Gain on bargain purchase

1,029


-


1,029


-

Other income (expense), net

67


28


(3)


92
Loss before provision for (benefit from) income taxes

(6,696)


(5,166)


(28,168)


(52,326)



















Provision for (benefit from) income taxes

(122)


48


158


224
Net loss
$ (6,574)

$ (5,214)

$ (28,326)

$ (52,550)
Net loss per common share:
















Basic and diluted
$ (0.14)

$ (0.11)

$ (0.59)

$ (1.15)
Weighted average number of shares used to compute net loss per common share:
















Basic and diluted

48,538


47,398


48,180


45,546
(1) Includes stock-based compensation as follows:
















Cost of revenue
$ 344

$ 362

$ 1,433

$ 1,503

Research and development

1,098


1,067


4,227


4,828

Sales and marketing

1,320


1,244


5,160


4,500

General and administrative

1,714


1,693


6,617


9,538

Acquisition-related expenses

-


-


-


1,234


$ 4,476

$ 4,366

$ 17,437

$ 21,603



















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















Three Months Ended

Twelve Months Ended


December 31,

December 31,

December 31,

December 31,


2012

2011

2012

2011













GAAP net loss
$ (6,574)

$ (5,214)

$ (28,326)

$ (52,550)
Adjustments to reconcile GAAP net loss to non-GAAP net income:















Stock-based compensation

4,476


4,366


17,437


21,603
Amortization of intangible assets

4,640


4,595


17,747


18,121
Acquisition-related expenses

1,401


-


1,401


31,659
Gain on bargain purchase

(1,029)


-


(1,029)


-
Non-GAAP net income
$ 2,914

$ 3,747

$ 7,230

$ 18,833

















Non-GAAP net income per common share
















Basic
$ 0.06

$ 0.08

$ 0.15

$ 0.41

Diluted
$ 0.06

$ 0.08

$ 0.15

$ 0.40
Weighted average shares used to compute non-GAAP net income per common share - Basic


48,538




47,398




48,180




45,546

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


48,836




47,570




48,367




46,947


















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




















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









December 31,

December 31,


2012

2011







ASSETS







Current Assets:








Cash and cash equivalents
$ 46,995

$ 38,938

Restricted cash

-


754

Accounts receivable, net

59,519


46,508

Inventory

43,282


45,229

Deferred cost of revenue

21,077


7,698

Prepaid and other current assets

5,677


4,429


Total current assets

176,550


143,556









Property and equipment, net

21,083


16,130
Goodwill

116,175


116,175
Intangible assets, net

62,301


80,048
Other assets

1,788


2,194


Total assets
$ 377,897

$ 358,103









LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:








Accounts payable
$ 16,804

$ 14,250

Accrued liabilities

36,176


36,214

Deferred revenue

39,315


15,347


Total current liabilities

92,295


65,811
Long-term portion of deferred revenue

15,782


13,347
Other long term liabilities

745


1,528


Total liabilities

108,822


80,686









Stockholders' equity:








Common stock

1,222


1,195

Additional paid-in capital

760,232


740,309

Accumulated other comprehensive income

132


98

Accumulated deficit

(492,511)


(464,185)


Total stockholders' equity

269,075)


277,417


Total liabilities and stockholders' equity
$ 377,897

$ 358,103













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









Twelve Months Ended


December 31,

December 31,


2012

2011
Operating activities:








Net loss
$ (28,326)

$ (52,550)

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









Amortization of premiums relating to available-for-sale securities

-


244


Depreciation and amortization

8,562


7,954


Loss on retirement of property and equipment

262


2,449


Amortization of intangible assets

17,747


18,121


Stock-based compensation

17,437


21,603


Gain on bargain purchase

(1,029)


-


Changes in operating assets and liabilities:










Restricted cash

754


300



Accounts receivable, net

(13,011)


13,722



Inventory

11,308


8,557



Deferred cost of revenue

(13,378)


73



Prepaids and other assets

47


(148)



Accounts payable

2,553


(7,818)



Accrued liabilities

(870)


(386)



Deferred revenue

26,404


2,781



Other long-term liabilities

(782)


(313)




Net cash provided by operating activities

27,678


14,589









Investing activities:








Purchase of property and equipment

(10,179)


(7,355)

Maturities of marketable securities

-


31,755

Acquisition of Businesses, net of cash acquired

(12,000)


(60,809)




Net cash used in investing activities

(22,179)


(36,409)
Financing activities:








Proceeds from exercise of stock options and other

194


804

Proceeds from employee stock purchase plan

4,063


3,938

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

(1,744)


(10,376)




Net cash provided by (used in) financing activities

2,513


(5,634)
Effect of exchange rate changes on cash and cash equivalents

45


88
Net increase (decrease) in cash and cash equivalents

8,057


(27,366)
Cash and cash equivalents at beginning of period

38,938


66,304
Cash and cash equivalents at end of period
$ 46,995

$ 38,938








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