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Calix Reports Second Quarter 2013 Financial Results

July 30, 2013
20% Growth in Year-Over-Year Revenues

PETALUMA, CA -- (Marketwired) -- 07/30/13 -- Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the second quarter ended June 29, 2013. Revenue for the second quarter of 2013 was $94.4 million, an increase of 20% compared to $78.9 million for the second quarter of 2012.

"Our year-over-year revenue growth in Q2 and better-than-anticipated bottom line results reflect our solid execution and progress in expanding our reach into both our domestic and international markets," said Carl Russo, president and CEO of Calix. "Our Unified Access portfolio continues to resonate with communication service providers as they map out their network strategies."

Non-GAAP net income for the second quarter of 2013 was $4.8 million, or $0.10 per fully diluted share. Non-GAAP net income was $1.9 million, or $0.04 per fully diluted share, for the second quarter of 2012. A reconciliation of GAAP and non-GAAP results is included as part of this release.

GAAP net loss for the second quarter of 2013 was $5.2 million, or $(0.10) 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 second quarter of 2012. A reconciliation of our second quarter 2013 operating results from non-GAAP to GAAP is provided below:
















Three Months Ended June 29, 2013


Non-GAAP

Stock-Based Compensation

Amortization of Intangible Assets

GAAP
Revenue
$ 94,439

$ -

$ -

$ 94,439
Cost of revenue

49,469


377


2,088


51,934
Gross profit

44,970


(377)


(2,088)


42,505
Gross margin

47.6%


-0.4%


-2.2%


45.0%
Operating expenses

39,900


4,898


2,552


47,350
Operating income (loss)

5,070


(5,275)


(4,640)


(4,845)
Interest and other income (expense), net

(84)


-


-


(84)
Income (loss) before provision for income taxes

4,986


(5,275)


(4,640)


(4,929)
Provision for income taxes

224


-


-


224
Net income (loss)
$ 4,762

$ (5,275)

$ (4,640)

$ (5,153)

















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













49,153

















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

50,073


50,073


50,073





















GAAP net loss per common share












$ (0.10)

















Non-GAAP net income (loss) per diluted share
$ 0.10

$ (0.11)

$ (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 second 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 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

Six Months Ended


June 29,

June 30,

June 29,

June 30,


2013

2012

2013

2012
Revenue
$ 94,439

$ 78,928

$ 184,987

$ 157,493
Cost of revenue:
















Products and services(1)

49,846


43,619


97,191


87,090

Amortization of intangible assets

2,088


2,088


4,176


3,363


Total cost of revenue

51,934


45,707


101,367


90,453
Gross profit

42,505


33,221


83,620


67,040
Operating expenses:
















Research and development(1)

20,035


16,473


40,206


33,439

Sales and marketing(1)

17,079


14,897


32,880


29,787

General and administrative(1)

7,684


6,129


15,815


12,909

Amortization of intangible assets

2,552


2,552


5,104


5,104


Total operating expenses

47,350


40,051


94,005


81,239
Loss from operations

(4,845)


(6,830)


(10,385)


(14,199)
Interest and other income (expense), net:
















Interest income

1


4


2


11

Interest expense

(42)


(57)


(70)


(99)

Other income (expense), net

(43)


(67)


(322)


(89)
Loss before provision for income taxes

(4,929)


(6,950)


(10,775)


(14,376)
Provision for income taxes

224


141


581


236
Net loss
$ (5,153)

$ (7,091)

$ (11,356)

$ (14,612)
Net loss per common share:
















Basic and diluted
$ (0.10)

$ (0.15)

$ (0.23)

$ (0.30)
Weighted average number of shares used to compute net loss per common share:
















Basic and diluted

49,153


47,972


49,034


47,911

















(1) Includes stock-based compensation as follows:

































Cost of revenue
$ 377

$ 381

$ 728

$ 744

Research and development

1,300


1,091


2,486


2,112

Sales and marketing

1,464


1,338


2,743


2,577

General and administrative

2,134


1,529


4,037


3,221


$ 5,275

$ 4,339

$ 9,994

$ 8,654



















































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















Three Months Ended

Six Months Ended


June 29,

June 30,

June 29,

June 30,


2013

2012

2013

2012

















GAAP net loss
$ (5,153)

$ (7,091)

$ (11,356)

$ (14,612)
Adjustments to reconcile GAAP net loss to non-GAAP net income:















Stock-based compensation

5,275


4,339


9,994


8,654
Amortization of intangible assets

4,640


4,640


9,280


8,467
Non-GAAP net income
$ 4,762

$ 1,888

$ 7,918

$ 2,509

















Non-GAAP net income per common share
















Basic
$ 0.10

$ 0.04

$ 0.16

$ 0.05

Diluted
$ 0.10

$ 0.04

$ 0.16

$ 0.05

















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

49,153


47,972


49,034


47,911

















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

50,073


48,113


49,751


48,076

















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



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









June 29,

December 31,


2013

2012







ASSETS





Current assets:








Cash and cash equivalents
$ 69,379

$ 46,995

Accounts receivable, net

62,726


59,519

Inventory

37,402


43,282

Deferred cost of revenue

29,068


21,077

Prepaid expenses and other current assets

8,126


5,677


Total current assets

206,701


176,550









Property and equipment, net

18,547


21,083
Goodwill

116,175


116,175
Intangible assets, net

53,021


62,301
Other assets

1,591


1,788


Total assets
$ 396,035

$ 377,897









LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:








Accounts payable
$ 16,714

$ 16,804

Accrued liabilities

36,664


36,176

Deferred revenue

53,763


39,315


Total current liabilities

107,141


92,295
Long-term portion of deferred revenue

17,335


15,782
Other long-term liabilities

1,394


745


Total liabilities

125,870


108,822









Stockholders' equity:








Common stock

1,238


1,222

Additional paid-in capital

772,650


760,232

Accumulated other comprehensive income

144


132

Accumulated deficit

(503,867)


(492,511)


Total stockholders' equity

270,165


269,075


Total liabilities and stockholders' equity
$ 396,035

$ 377,897

































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









Six Months Ended


June 29,

June 30,


2013

2012
Operating activities:








Net loss
$ (11,356)

$ (14,612)

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









Depreciation and amortization

5,363


4,129


Loss on retirement of property and equipment

560


84


Amortization of intangible assets

9,280


8,467


Stock-based compensation

9,994


8,654


Changes in operating assets and liabilities:










Restricted cash

-


754



Accounts receivable, net

(3,207)


(8,656)



Inventory

5,880


11,409



Deferred cost of revenue

(7,991)


(4,398)



Prepaid expenses and other assets

(2,009)


134



Accounts payable

(90)


5,997



Accrued liabilities

464


(2,508)



Deferred revenue

16,001


9,167



Other long-term liabilities

311


(514)




Net cash provided by operating activities

23,200


18,107









Investing activities:








Purchase of property and equipment

(3,265)


(6,296)




Net cash used in investing activities

(3,265)


(6,296)









Financing activities:








Proceeds from exercise of stock options

288


139

Proceeds from employee stock purchase plan

2,464


2,222

Taxes withheld upon vesting of restricted stock units

(312)


(54)




Net cash provided by financing activities

2,440


2,307









Effect of exchange rate changes on cash and cash equivalents

9


29
Net increase in cash and cash equivalents

22,384


14,147
Cash and cash equivalents at beginning of period

46,995


38,938
Cash and cash equivalents at end of period
$ 69,379

$ 53,085










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