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Finisar Posts Q1, Preps Reverse Split
Finisar retires additional notes following completion of exchange offer
September 10, 2009
4 Min Read
SUNNYVALE, Calif. -- Finisar Corporation (NASDAQ: FNSR), a global technology leader for fiber optic subsystems and components for communication applications, today announced financial results for its first fiscal quarter ended August 2, 2009. In an earlier announcement dated August 4, 2009, Finisar indicated that its preliminary revenues for the quarter, including revenues from the operations of the Network Tools Division prior to its sale, would total approximately $134 million. Final revenues for the quarter totaled $135.5 million including $6.7 million from the operations of the Network Tools Division. In reporting financial results for the first quarter, the Company noted that current quarter results and previously reported periods have been adjusted to reflect the following:
During the three months ended August 2, 2009, the Company completed the sale of substantially all of the assets of its Network Tools Division to JDS Uniphase Corporation. Accordingly, the operating results of this business, through the date of its disposition and for all applicable prior periods are reported as discontinued operations in the condensed consolidated financial statements for the period ended August 2, 2009, and the prior period comparative financial statements have been restated to exclude assets, liabilities and results of operations (including revenues, associated cost of goods sold and operating expenses) related to the discontinued operations; and
Effective at the beginning of the first quarter, the Company adopted FSP APB 14-1 under which the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. The separation of the conversion option creates an original issue discount in the bond component which is to be accreted as interest expense over the term of the instrument using the interest method, resulting in an increase in interest expense and a decrease in net income and earnings per share. Due to the modification of $100 million of the Company's 2.5% convertible notes in October 2006, the Company has accounted for the debt and equity components of the notes to reflect the estimated nonconvertible debt borrowing rate at the date of issuance of 8.59%. Because FSP APB 14-1 requires retrospective application of the financial statement for all periods presented, prior period balances have been restated to effectively record a debt discount equal to the fair value of the equity component and an increase to paid-in capital for the fair value of the equity component as of the date of issuance of the underlying notes. Prior period balances have also been adjusted to provide for the amortization of the debt discount through interest expense (non-cash interest cost).
In a separate release:
SUNNYVALE, Calif. -- Finisar Corporation (NASDAQ: FNSR), a global technology leader for fiber optic subsystems and components for communication applications, today announced that its Board of Directors has approved a 1-for-8 reverse split of its common stock, pursuant to previously obtained stockholder authorization. The reverse stock split will be effective at 4:30 pm, Eastern Time, on Friday, September 25, 2009. Finisar's common stock will begin trading on NASDAQ on a split adjusted basis when the market opens on September 28, 2009, under the temporary trading symbol "FNSRD." The trading symbol will revert to "FNSR" after approximately twenty trading days.
With the recent completion of exchange offers on August 6, 2009 in which the Company exchanged $47.5 million aggregate principal amount of its outstanding convertible notes for a combination of 28.3 million shares of common stock and $24.9 million in cash, Finisar now has approximately 515 million shares outstanding. The number of shares currently outstanding reflects in part a 3 for 1 stock split in March 2000 and the issuance of approximately 230 million shares of common stock in connection with 10 acquisitions which the Company has completed since its initial public offering in 1999. Approximately 195 million of those shares were issued in connection with the acquisitions of the Infineon fiber optics business in January 2005 and the Optium merger in August 2008.
Finisar's reverse stock split is intended to encourage investor interest in its stock by giving more visibility to earnings per share as a measure of company performance. The Company also believes that a higher share price could broaden Finisar's appeal to investors, in addition to reducing per share transaction fees and certain administrative costs.
The reverse split will reduce the number of shares of the Company's common stock outstanding from approximately 515 million to approximately 64 million. Proportional adjustments will be made to Finisar's outstanding stock options and other equity incentive awards, equity compensation plans and convertible notes. The number of authorized shares of common stock will not change.
Finisar Corp. (Nasdaq: FNSR)
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