Calix Reports Second Quarter 2014 Financial Results

Calix Reports Second Quarter 2014 Financial Results 
PETALUMA, CA -- (Marketwired) -- 07/29/14 --  Calix, Inc. (NYSE:
CALX) today announced unaudited financial results for the second
quarter ended June 28, 2014. Revenue for the second quarter of 2014
was $98.0 million, an increase of 3.8% compared to $94.4 million for
the second quarter of 2013.  
"We continue to make solid progress expanding our domestic and
international customer footprint and achieved our highest level of
sales for a second fiscal quarter," said Carl Russo, Calix president
and CEO. "Service providers of all types are pursuing device-enabled
subscribers who are increasingly accessing cloud-based content and
applications. Calix Unified Access solutions are architected to be
flexible, feature-rich and cost-effective in order to meet the
demanding requirements of our service provider customers and their
subscribers." 
The company's non-GAAP net income for the second quarter of 2014 was
$5.1 million, or $0.10 per fully diluted share, compared to a
non-GAAP net income of $4.8 million, or $0.10 per fully diluted
share, for the second quarter of 2013. A reconciliation of GAAP and
non-GAAP results is included as part of this release.  
The GAAP net loss for the second quarter of 2014 was $4.0 million, or
$(0.08) per basic and diluted share, compared to a GAAP net loss of
$5.2 million, or $(0.10) per basic and diluted share, for the second
quarter of 2013. A reconciliation of our second quarter 2014
operating results from non-GAAP to GAAP is provided below:  


 
                                                                            
                                Calix, Inc.                                 
              (Unaudited, in thousands, except per share data)              
                      Three Months Ended June 28, 2014                      
                                                                            
                                                 Amortization               
                                                      of                    
                                    Stock-Based   Intangible                
                       Non-GAAP    Compensation     Assets         GAAP     
                     ------------  ------------  ------------  ------------ 
Revenue              $     98,005  $         --  $         --  $     98,005 
Cost of revenue            51,221           354         2,088        53,663 
                     ------------  ------------  ------------  ------------ 
Gross profit               46,784          (354)       (2,088)       44,342 
Gross margin                 47.7%           --            --          45.2%
Operating expenses         41,630         4,050         2,552        48,232 
                     ------------  ------------  ------------  ------------ 
Operating income                                                            
 (loss)                     5,154        (4,404)       (4,640)       (3,890)
Interest and other                                                          
 income (expense),                                                          
 net                           42            --            --            42 
                     ------------  ------------  ------------  ------------ 
Income (loss) before                                                        
 taxes                      5,196        (4,404)       (4,640)       (3,848)
Provision for income                                                        
 taxes                        103            --            --           103 
                     ------------  ------------  ------------  ------------ 
Net income (loss)    $      5,093  $     (4,404) $     (4,640) $     (3,951)
                     ============  ============  ============  ============ 
Weighted average                                                            
 diluted shares used                                                        
 to compute non-GAAP                                                        
 net income (loss)                                                          
 per common share          50,961        50,961        50,961               
                     ============  ============  ============               
Non-GAAP net income                                                         
 (loss) per diluted                                                         
 share               $       0.10  $      (0.09) $      (0.09)              
                     ============  ============  ============               
Weighted average                                                            
 basic and diluted                                                          
 shares used to                                                             
 compute GAAP net                                                           
 loss per common                                                            
 share                                                               50,573 
                                                               ============ 
GAAP net loss per                                                           
 share                                                         $      (0.08)
                                                               ============ 

 
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 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. 
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       Six Months Ended    
                             ----------------------  ---------------------- 
                              June 28,    June 29,    June 28,    June 29,  
                                2014        2013        2014        2013    
                             ----------  ----------  ----------  ---------- 
Revenue                      $   98,005  $   94,439  $  183,825  $  184,987 
Cost of revenue:                                                            
  Products and services (1)      51,575      49,846      98,381      97,191 
  Amortization of intangible                                                
   assets                         2,088       2,088       4,176       4,176 
                             ----------  ----------  ----------  ---------- 
    Total cost of revenue        53,663      51,934     102,557     101,367 
                             ----------  ----------  ----------  ---------- 
Gross profit                     44,342      42,505      81,268      83,620 
Operating expenses:                                                         
  Research and development                                                  
   (1)                           19,544      20,035      39,174      40,206 
  Sales and marketing (1)        18,455      17,079      35,845      32,880 
  General and administrative                                                
   (1)                            7,681       7,684      14,932      15,815 
  Amortization of intangible                                                
   assets                         2,552       2,552       5,104       5,104 
                             ----------  ----------  ----------  ---------- 
    Total operating expenses     48,232      47,350      95,055      94,005 
                             ----------  ----------  ----------  ---------- 
Loss from operations             (3,890)     (4,845)    (13,787)    (10,385)
  Interest and other income                                                 
   (expense), net:                                                          
  Interest income                    30           1          34           2 
  Interest expense                  (58)        (42)       (115)        (70)
Other income (expense), net          70         (43)        103        (322)
                             ----------  ----------  ----------  ---------- 
Loss before provision for                                                   
 income taxes                    (3,848)     (4,929)    (13,765)    (10,775)
                             ----------  ----------  ----------  ---------- 
Provision for income taxes          103         224         213         581 
                             ----------              ----------             
Net loss                     $   (3,951) $   (5,153) $  (13,978) $  (11,356)
                             ==========  ==========  ==========  ========== 
Net loss per common share:                                                  
    Basic and diluted        $    (0.08) $    (0.10) $    (0.28) $    (0.23)
                             ==========  ==========  ==========  ========== 
Weighted average number of                                                  
 shares used to compute net                                                 
 loss per common share:                                                     
    Basic and diluted            50,573      49,153      50,425      49,034 
                             ==========  ==========  ==========  ========== 
                                                                            
-----------------------------                                               
                                                                            
(1) Includes stock-based                                                    
 compensation as follows:                                                   
    Cost of revenue          $      354  $      377  $      708  $      728 
    Research and development      1,306       1,300       2,486       2,486 
    Sales and marketing           1,462       1,464       2,830       2,743 
    General and                                                             
     administrative               1,282       2,134       2,282       4,037 
                             ----------  ----------  ----------  ---------- 
                             $    4,404  $    5,275  $    8,306  $    9,994 
                             ==========  ==========  ==========  ========== 
                                                                            
                                                                            
                                                                            
                                Calix, Inc.                                 
                 Reconciliation of GAAP to Non-GAAP Results                 
              (Unaudited, in thousands, except per share data)              
                                                                            
                               Three Months Ended       Six Months Ended    
                             ----------------------  ---------------------- 
                              June 28,    June 29,    June 28,    June 29,  
                                2014        2013        2014        2013    
                             ----------  ----------  ----------  ---------- 
GAAP net loss                $   (3,951) $   (5,153) $  (13,978) $  (11,356)
Adjustments to reconcile GAAP                                               
 net loss to non-GAAP net                                                   
 income:                                                                    
Stock-based compensation          4,404       5,275       8,306       9,994 
Amortization of intangible                                                  
 assets                           4,640       4,640       9,280       9,280 
                             ----------  ----------  ----------  ---------- 
Non-GAAP net income               5,093       4,762       3,608       7,918 
                             ==========  ==========  ==========  ========== 
Non-GAAP net income per                                                     
 common share:                                                              
  Basic                      $     0.10  $     0.10  $     0.07  $     0.16 
                             ==========  ==========  ==========  ========== 
  Diluted                    $     0.10  $     0.10  $     0.07  $     0.16 
                             ==========  ==========  ==========  ========== 
Weighted average shares used                                                
 to compute non-GAAP net                                                    
 income per common share -                                                  
 Basic                           50,573      49,153      50,425      49,034 
                             ==========  ==========  ==========  ========== 
Weighted average shares used                                                
 to compute non-GAAP net                                                    
 income per common share -                                                  
 Diluted (1)                     50,961      50,073      50,904      49,751 
                             ==========  ==========  ==========  ========== 
                                                                            
(1) Includes the dilutive effect of outstanding                             
 stock options, restricted stock units and ESPP.                            
                                                                            
                                                                            
                                                                            
                                Calix, Inc.                                 
                   Condensed Consolidated Balance Sheets                    
                         (Unaudited, in thousands)                          
                                                                            
                                                   June 28,    December 31, 
                                                     2014          2013     
                                                 ------------  ------------ 
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                      $     32,543  $     82,747 
  Marketable securities                                46,439            -- 
  Restricted cash                                         295           295 
  Accounts receivable, net                             47,330        43,520 
  Inventory                                            45,888        51,071 
  Deferred cost of revenue                             15,957        21,076 
  Prepaid expenses and other current assets             5,038         5,757 
                                                 ------------  ------------ 
    Total current assets                              193,490       204,466 
  Property and equipment, net                          17,289        17,473 
  Goodwill                                            116,175       116,175 
  Intangible assets, net                               34,460        43,740 
  Other assets                                          1,503         1,745 
                                                 ------------  ------------ 
    Total assets                                 $    362,917  $    383,599 
                                                 ============  ============ 
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current liabilities:                                                        
  Accounts payable                               $     12,850  $     23,163 
  Accrued liabilities                                  34,689        32,075 
  Deferred revenue                                     26,346        34,862 
                                                 ------------  ------------ 
    Total current liabilities                          73,885        90,100 
  Long-term portion of deferred revenue                18,640        18,431 
  Other long-term liabilities                             958         1,145 
                                                 ------------  ------------ 
    Total liabilities                                  93,483       109,676 
                                                 ------------  ------------ 
Stockholders' equity:                                                       
  Common stock                                          1,273         1,256 
  Additional paid-in capital                          791,756       782,253 
  Accumulated other comprehensive income                  159           190 
  Accumulated deficit                                (523,754)     (509,776)
                                                 ------------  ------------ 
    Total stockholders' equity                        269,434       273,923 
                                                 ------------  ------------ 
    Total liabilities and stockholders' equity   $    362,917  $    383,599 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                                Calix, Inc.                                 
              Condensed Consolidated Statements of Cash Flows               
                         (Unaudited, in thousands)                          
                                                                            
                                                       Six Months Ended     
                                                   ------------------------ 
                                                     June 28,     June 29,  
                                                       2014         2013    
                                                   -----------  ----------- 
Operating activities:                                                       
Net loss                                           $   (13,978) $   (11,356)
Adjustments to reconcile net loss to net cash (used                         
 in) provided by operating activities:                                      
  Depreciation and amortization                          4,522        5,363 
  Loss on retirement of property and equipment              --          560 
  Amortization of intangible assets                      9,280        9,280 
  Amortization of premiums related to available-                            
   for-sale securities                                     108           -- 
  Stock-based compensation                               8,306        9,994 
Changes in operating assets and liabilities:                                
  Accounts receivable, net                              (3,809)      (3,207)
  Inventory                                              5,183        5,880 
  Deferred cost of revenue                               5,119       (7,991)
  Prepaid expenses and other assets                        960       (2,009)
  Accounts payable                                     (10,313)         (90)
  Accrued liabilities                                    2,601          464 
  Deferred revenue                                      (8,307)      16,001 
  Other long-term liabilities                             (188)         311 
                                                   -----------  ----------- 
    Net cash (used in) provided by operating                                
     activities                                           (516)      23,200 
                                                   -----------  ----------- 
Investing activities:                                                       
  Purchase of marketable securities                    (46,572)          -- 
  Purchase of property and equipment                    (4,328)      (3,265)
                                                   -----------  ----------- 
    Net cash used in investing activities              (50,900)      (3,265)
                                                   -----------  ----------- 
Financing activities:                                                       
  Proceeds from exercise of stock options                  139          288 
  Proceeds from employee stock purchase plan             2,453        2,464 
  Taxes paid for awards vested under equity                                 
   incentive plans                                      (1,377)        (312)
                                                   -----------  ----------- 
    Net cash provided by financing activities            1,215        2,440 
                                                   -----------  ----------- 
Effect of exchange rate changes on cash and cash                            
 equivalents                                                (3)           9 
                                                   -----------  ----------- 
Net (decrease) increase in cash and cash                                    
 equivalents                                           (50,204)      22,384 
Cash and cash equivalents at beginning of period        82,747       46,995 
                                                   -----------  ----------- 
Cash and cash equivalents at end of period         $    32,543  $    69,379 
                                                   ===========  =========== 

  
Investor Inquiries: 
David H. Allen
408-474-0080
David.Allen@Calix.com 
 
 
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