Release Details

Calix Reports Second Quarter 2012 Financial Results

July 31, 2012
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Jul 31, 2012 (Marketwire via COMTEX) --Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the second quarter ended June 30, 2012. Revenue for the second quarter of 2012 was $78.9 million, a decrease of 19.4% compared to $98.0 million for the second quarter of 2011.

"As we noted on July 11th when we announced preliminary Q2 results, softness in demand across multiple customer markets led to an unexpected slowdown in capital expenditures by service providers increasingly concerned about macro-economic conditions and uncertainties associated with the implementation of regulatory reforms," said Carl Russo, president and CEO of Calix. "In spite of these challenges, Calix maintained gross margins at expected levels while reducing inventories and producing another quarter of positive cash flow."

Non-GAAP net income for the second quarter of 2012 was $1.9 million, or $0.04 per fully diluted share. Non-GAAP net income was $7.8 million, or $0.16 per fully diluted share, for the second quarter of 2011. A reconciliation of GAAP and non-GAAP results is included as part of this release.

GAAP net loss for the second quarter of 2012 was $7.1 million, or $(0.15) per basic and diluted share, compared to a GAAP net loss of $17.6 million, or $(0.38) per basic and diluted share for the second quarter of 2011. A reconciliation of our second quarter 2012 operating results from non-GAAP to GAAP is provided below:

   
Calix, Inc.  
(Unaudited, in thousands, except per share data)  
Three Months Ended June 30, 2012  
   
    Non-GAAP     Stock-Based Compensation     Amortization of Intangible Assets     GAAP  
Revenue   $ 78,928     $ -     $ -     $ 78,928  
Cost of revenue     43,238       381       2,088       45,707  
Gross profit     35,690       (381)       (2,088)       33,221  
Gross margin     45.2%       -0.5%       -2.6%       42.1%  
Operating expenses     33,541       3,958       2,552       40,051  
Operating income (loss)     2,149       (4,339)       (4,640)       (6,830)  
Interest and other income (expense), net     (120)       -       -       (120)  
Income (loss) before taxes     2,029       (4,339)       (4,640)       (6,950)  
Provision for income taxes     141       -       -       141  
Net income (loss)   $ 1,888     $ (4,339)     $ (4,640)     $ (7,091)  
                                 
Weighted average basic and diluted shares used to compute GAAP net loss per common share                             47,972  
                                 
Weighted average diluted shares used to compute non-GAAP net income per common share     48,113       48,113       48,113          
                                 
GAAP net loss per common share                           $ (0.15)  
                                 
Non-GAAP net income (loss) per share   $ 0.04     $ (0.09)     $ (0.10)          
                                 
                                 
                                 

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 2012 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 be the broadband provider of choice to their subscribers. For more information, visit the Calix website at http://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 merger-related and other expenses, which the Company believes are not indicative of its core operating results. Merger-related and other expenses largely include the charge resulting from the required revaluation of Occam inventory to its estimated fair value, legal and professional expenses, severance and integration-related expenses and inventory-related charges associated with our merger with Occam. 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 30,     June 25,     June 30,     June 25,  
      2012     2011     2012     2011  
Revenue   $ 78,928     $ 97,959     $ 157,493     $ 169,429  
Cost of revenue:                                
  Products and services(1)     43,619       54,899       87,090       94,207  
  Merger-related expenses     -       9,709       -       19,966  
  Amortization of intangible assets     2,088       3,188       3,363       4,704  
    Total cost of revenue     45,707       67,796       90,453       118,877  
Gross profit     33,221       30,163       67,040       50,552  
Operating expenses:                                
  Research and development(1)     16,473       18,584       33,439       33,623  
  Sales and marketing(1)     14,897       14,172       29,787       26,238  
  General and administrative(1)     6,129       6,667       12,909       15,975  
  Merger-related and other expenses(1)     -       5,482       -       11,523  
  Amortization of intangible assets     2,552       2,795       5,104       3,464  
    Total operating expenses     40,051       47,700       81,239       90,823  
Loss from operations     (6,830)       (17,537)       (14,199)       (40,271)  
Interest and other income (expense), net:                                
  Interest income     4       26       11       69  
  Interest expense     (57)       (45)       (99)       (91)  
  Other income (expense), net     (67)       24       (89)       29  
Loss before provision for income taxes     (6,950)       (17,532)       (14,376)       (40,264)  
Provision for income taxes     141       114       236       138  
Net loss   $ (7,091)     $ (17,646)     $ (14,612)     $ (40,402)  
Net loss per common share:                                
  Basic and diluted   $ (0.15)     $ (0.38)     $ (0.30)     $ (0.92)  
Weighted average number of shares used to compute net loss per common share:                                
  Basic and diluted     47,972       46,050       47,911       43,697  
                                 
(1) Includes stock-based compensation as follows:                                
                                   
  Cost of revenue   $ 381     $ 331     $ 744     $ 835  
  Research and development     1,091       1,233       2,112       2,875  
  Sales and marketing     1,338       831       2,577       2,129  
  General and administrative     1,529       1,855       3,221       6,438  
  Merger-related and other expenses     -       1,074       -       1,164  
      $ 4,339     $ 5,324     $ 8,654     $ 13,441  
                                 
                                   
                                   
Calix, Inc.  
Reconciliation of GAAP to Non-GAAP Results  
(Unaudited, in thousands except per share data)  
   
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 25,     June 30,     June 25,  
    2012     2011     2012     2011  
                                 
GAAP net loss   $ (7,091)     $ (17,646)     $ (14,612)     $ (40,402)  
Adjustments to reconcile GAAP net loss to non-GAAP net income:                                
Stock-based compensation     4,339       5,324       8,654       13,441  
Amortization of intangible assets     4,640       5,983       8,467       8,168  
Merger-related and other expenses     -       14,117       -       30,325  
Non-GAAP net income   $ 1,888     $ 7,778     $ 2,509     $ 11,532  
                                 
Non-GAAP net income per common share                                
  Basic   $ 0.04     $ 0.17     $ 0.05     $ 0.26  
  Diluted   $ 0.04     $ 0.16     $ 0.05     $ 0.25  
                                 
Weighted average shares used to compute non-GAAP net income per common share - Basic     47,972       46,050       47,911       43,697  
                                 
Weighted average shares used to compute non-GAAP net income per common share - Diluted (1)     48,113       48,139       48,076       46,008  
                                 
(1) Includes the dilutive effect of outstanding stock options and restricted stock units.  
   
   
   
Calix, Inc.  
Condensed Consolidated Balance Sheets  
(In thousands)  
             
    June 30,     December 31,  
    2012     2011  
    (Unaudited)        
ASSETS                
Current Assets:                
  Cash and cash equivalents   $ 53,085     $ 38,938  
  Restricted cash     -       754  
  Accounts receivable, net     56,391       47,943  
  Inventory     33,243       44,604  
  Deferred cost of goods sold     12,673       8,324  
  Prepaid and other current assets     4,597       4,429  
    Total current assets     159,989       144,992  
                 
Property and equipment, net     18,195       16,130  
Goodwill     116,175       116,175  
Intangible assets, net     71,581       80,048  
Other assets     1,892       2,194  
    Total assets   $ 367,832     $ 359,539  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 20,247     $ 14,250  
  Accrued liabilities     33,706       36,214  
  Deferred revenue     24,152       16,783  
    Total current liabilities     78,105       67,247  
Long-term portion of deferred revenue     14,936       13,347  
Other long term liabilities     1,014       1,528  
    Total liabilities     94,055       82,122  
                 
Stockholders' equity:                
  Common stock     1,205       1,195  
  Additional paid-in capital     751,260       740,309  
  Accumulated other comprehensive income     109       98  
  Accumulated deficit     (478,797)       (464,185)  
    Total stockholders' equity     273,777       277,417  
    Total liabilities and stockholders' equity   $ 367,832     $ 359,539  
                 
                 
                 
Calix, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited, in thousands)  
             
    Six Months Ended  
    June 30,     June 25,  
    2012     2011  
Operating activities:                
  Net loss   $ (14,612)     $ (40,402)  
  Adjustments to reconcile net loss to net cash provided by operating activities:                
    Amortization of premiums relating to available-for-sale securities     -       184  
    Depreciation and amortization     4,129       3,859  
    Loss on retirement of property and equipment     84       1,621  
    Amortization of intangible assets     8,467       8,168  
    Stock-based compensation     8,654       13,441  
    Changes in operating assets and liabilities:                
      Restricted cash     754       -  
      Accounts receivable, net     (8,448)       2,290  
      Inventory     11,361       15,297  
      Deferred cost of revenue     (4,349)       (3,064)  
      Prepaids and other assets     134       (1,246)  
      Accounts payable     5,997       (11,136)  
      Accrued liabilities     (2,508)       3,029  
      Deferred revenue     8,958       9,138  
      Other long-term liabilities     (514)       (253)  
        Net cash provided by operating activities     18,107       926  
                 
Investing activities:                
  Purchase of property and equipment     (6,296)       (4,508)  
  Maturities of marketable securities     -       22,905  
  Acquisition of Occam Networks, net of cash acquired     -       (60,809)  
        Net cash used in investing activities     (6,296)       (42,412)  
                 
Financing activities:                
  Proceeds from exercise of stock options and other     139       667  
  Proceeds from employee stock purchase plan     2,222       2,062  
  Taxes withheld upon vesting of restricted stock units     (54)       (8,921)  
        Net cash provided by (used in) financing activities     2,307       (6,192)  
                 
Effect of exchange rate changes on cash and cash equivalents     29       34  
Net increase (decrease) in cash and cash equivalents     14,147       (47,644) )
Cash and cash equivalents at beginning of period     38,938       66,304  
Cash and cash equivalents at end of period   $ 53,085     $ 18,660