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Calix Reports Fourth Quarter 2014 Financial Results

February 03, 2015

PETALUMA, CA -- (Marketwired) -- 02/03/15 -- Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the fourth quarter ended December 31, 2014. Revenue for the fourth quarter of 2014 was $111.6 million, an increase of 18.8% compared to $94.0 million for the fourth quarter of 2013 and an increase of 5.5% on a sequential basis, compared to $105.8 million for the third quarter of 2014.

"In addition to achieving new, higher revenue levels for the quarter and for the year, we continued to execute on our Unified Access vision," said Carl Russo, Calix president and CEO. "Our new fiber-enabled GigaCenters are off to a great start with orders from more than 100 service provider customers since the product launch, strengthening our leadership position in the accelerating gigabit broadband access market," added Russo.

The company's non-GAAP net income for the fourth quarter of 2014 was $6.8 million, or $0.13 per fully diluted share, compared to a non-GAAP net income of $1.5 million, or $0.03 per fully diluted share, for the fourth quarter of 2013. A reconciliation of GAAP and non-GAAP results is included as part of this release.

The GAAP net loss for the fourth quarter of 2014 was $1.7 million, or $(0.03) per basic and diluted share, compared to a GAAP net loss of $6.5 million, or $(0.13) per basic and diluted share, for the fourth quarter of 2013. A reconciliation of our fourth quarter 2014 operating results from non-GAAP to GAAP is provided below:





Calix, Inc.
(Unaudited, in thousands, except per share data)
Three Months Ended December 31, 2014















Non-GAAP

Stock-Based Compensation

Amortization
of
Intangible Assets


GAAP
Revenue
$ 111,633

$ --

$ --

$ 111,633
Cost of revenue

57,898


206


2,088


60,192
Gross profit

53,735


(206)


(2,088)


51,441
Gross margin

48.1%


(0.2)%


(1.9)%


46.1%
Operating expenses

46,797


3,692


2,552


53,041
Operating income (loss)

6,938


(3,898)


(4,640)


(1,600)
Interest and other income (expense), net

118


--


--


118
Income (loss) before taxes

7,056


(3,898)


(4,640)


(1,482)
Provision for income taxes

253


--


--


253
Net income (loss)
$ 6,803

$ (3,898)

$ (4,640)

$ (1,735)
Weighted average diluted shares used to compute non-GAAP net income (loss) per common share


52,047




52,047




52,047





Non-GAAP net income (loss) per diluted share
$ 0.13

$ (0.07)

$ (0.09)




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














51,300

GAAP net loss per share












$ (0.03)


































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 fourth quarter 2014 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. For more information about gigabit networks, visit www.calix.com/gigabit/.

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 (loss) and non-GAAP basic and diluted income (loss) 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

Twelve Months Ended


December 31, 2014

December 31, 2013

December 31, 2014

December 31, 2013

















Revenue
$ 111,633

$ 94,003

$ 401,227

$ 382,618
Cost of revenue:
















Products and services (1)

58,104


51,868


215,085


203,191

Amortization of intangible assets

2,088


2,088


8,353


8,353


Total cost of revenue

60,192


53,956


223,438


211,544
Gross profit

51,441


40,047


177,789


171,074
Operating expenses:
















Research and development (1)

21,207


19,316


80,311


79,299

Sales and marketing (1)

21,721


18,583


76,283


68,075

General and administrative (1)

7,561


7,652


30,118


31,945

Amortization of intangible assets

2,552


2,552


10,208


10,208


Total operating expenses

53,041


48,103


196,920


189,527
Loss from operations

(1,600)


(8,056)


(19,131)


(18,453)
Interest and other income (expense), net:
















Interest income

643


3


729


7

Interest expense

(632)


(73)


(806)


(167)

Utilization of inventory credit

--


1,651


--


1,651

Other income (expense), net

107


1


228


(317)


Total interest and other income (expense), net

118


1,582


151


1,174
Loss before provision for income taxes

(1,482)


(6,474)


(18,980)


(17,279)
Provision for (benefit from) income taxes

253


(21) )

581


(14)
Net loss
$ (1,735)

$ (6,453)

$ (19,561)

$ (17,265)
Net loss per common share:

















Basic and diluted
$ (0.03)

$ (0.13)

$ (0.38)

$ (0.35)
Weighted average number of shares used to compute net loss per common share:

















Basic and diluted

51,300


49,892


50,808


49,419

















(1) Includes stock-based compensation as follows:
















Cost of revenue
$ 206

$ 378

$ 1,120

$ 1,468

Research and development

1,363


1,231


5,056


4,896

Sales and marketing

1,455


1,439


5,601


5,577

General and administrative

874


1,908


4,240


7,980


$ 3,898

$ 4,956

$ 16,017

$ 19,921



















































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















Three Months Ended

Twelve Months Ended


December 31, 2014

December 31, 2013

December 31, 2014

December 31, 2013
GAAP net loss income
$ (1,735)

$ (6,453)

$ (19,561)

$ (17,265)
Adjustments to reconcile GAAP net loss to non-GAAP net income:
















Stock-based compensation

3,898


4,956


16,017


19,921

Amortization of intangible assets

4,640


4,640


18,561


18,561

Utilization of inventory credit

--


(1,651)


--


(1,651)
Non-GAAP net income
$ 6,803

$ 1,492

$ 15,017

$ 19,566
Non-GAAP net income per common share:
















Basic
$ 0.13

$ 0.03

$ 0.30

$ 0.40

Diluted
$ 0.13

$ 0.03

$ 0.29

$ 0.39
Weighted average shares used to compute non-GAAP net income per common share - basic


51,300




49,892




50,808




49,419

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


52,047




51,068




51,450




50,437


















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






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









December 31,

December 31,


2014

2013
ASSETS







Current assets:








Cash and cash equivalents
$ 48,829

$ 82,747

Marketable securities

62,850


--

Restricted cash

295


295

Accounts receivable, net

30,744


43,520

Inventory

46,753


51,071

Deferred cost of revenue

5,080


21,076

Prepaid expenses and other current assets

12,910


5,757


Total current assets

207,461


204,466

Property and equipment, net

20,144


17,473

Goodwill

116,175


116,175

Intangible assets, net

25,179


43,740

Other assets

1,236


1,745


Total assets
$ 370,195

$ 383,599
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:








Accounts payable
$ 23,629

$ 23,163

Accrued liabilities

38,164


32,075

Deferred revenue

12,722


34,862


Total current liabilities

74,515


90,100

Long-term portion of deferred revenue

19,393


18,431

Other long-term liabilities

2,443


1,145


Total liabilities

96,351


109,676
Stockholders' equity:








Common stock

1,291


1,256

Additional paid-in capital

801,810


782,253

Accumulated other comprehensive income

80


190

Accumulated deficit

(529,337)


(509,776)


Total stockholders' equity

273,844


273,923


Total liabilities and stockholders' equity
$ 370,195

$ 383,599

































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









Twelve Months Ended


December 31,

December 31,


2014

2013
Operating activities:







Net loss
$ (19,561)

$ (17,265)
Adjustments to reconcile net loss to net cash provided by operating activities:








Depreciation and amortization

9,263


10,181

Loss on retirement of property and equipment

50


569

Amortization of intangible assets

18,561


18,561

Amortization of premiums related to available-for-sale securities

574


--

Gain on sale of available-for-sale securities

(1)


--

Stock-based compensation

16,017


19,921

Utilization of inventory credit

--


(1,651)

Changes in operating assets and liabilities:









Restricted cash

--


(295)


Accounts receivable, net

12,776


15,999


Inventory

4,319


(6,138)


Deferred cost of revenue

15,996


1


Prepaid expenses and other assets

(5,881)


535


Accounts payable

467


6,359


Accrued liabilities

6,160


(4,217)


Deferred revenue

(21,178)


(1,804)


Other long-term liabilities

513


62



Net cash provided by operating activities

38,075


40,818
Investing activities:








Purchase of property and equipment

(11,961)


(6,987)

Purchase of marketable securities

(67,698


--

Proceeds from sale of marketable securities

4,215


--



Net cash used in investing activities

(75,444)


(6,987)
Financing activities:








Proceeds from exercise of stock options

1,668


747

Proceeds from employee stock purchase plan

4,627


4,828

Taxes paid for awards vested under equity incentive plans

(2,720)


(3,441)

Payments for debt issuance costs

--


(316)



Net cash provided by financing activities

3,575


1,818
Effect of exchange rate changes on cash and cash equivalents

(124)


103
Net (decrease) increase in cash and cash equivalents

(33,918)


35,752
Cash and cash equivalents at beginning of period

82,747


46,995
Cash and cash equivalents at end of period
$ 48,829

$ 82,747













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