e424b5
The
information in this preliminary prospectus supplement and the
accompanying prospectus is not complete and may be changed. This
preliminary prospectus supplement and the accompanying
prospectus are not an offer to sell these securities and are not
soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
|
Filed
Pursuant to Rule 424(b)(5)
Registration No. 333-165479
SUBJECT
TO COMPLETION, DATED DECEMBER 20, 2010
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 15, 2010)
3,600,000 Shares
FINISAR CORPORATION
COMMON STOCK
Finisar Corporation is offering 3,600,000 shares of its
common stock.
Our common stock is listed on the Nasdaq Global Select Market
under the symbol FNSR. On December 17, 2010,
the closing sale price of our common stock as reported on the
Nasdaq Global Select Market was $29.02 per share.
Investing in our common stock
involves risks. See Risk Factors beginning on
page S-7.
We have granted the underwriter the right to purchase up to
540,000 additional shares of our common stock to cover
over-allotments.
We are selling to the underwriter the shares of common stock at
a price of $ per share, resulting
in net proceeds to us, before deducting expenses related to the
offering, of approximately $ , or
approximately $ assuming full
exercise of the underwriters option to purchase additional
shares.
The underwriter proposes to offer the shares of common stock
from time to time for sale in negotiated transactions or
otherwise, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated
prices. The shares of common stock will not be sold on or
through the facilities of a national securities exchange or to
or through a market maker other than on an exchange.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these
securities or determined if this prospectus supplement is
truthful or complete. Any representation to the contrary is a
criminal offense.
The underwriter expects to deliver the shares to purchasers
on ,
2010.
Credit
Suisse
December , 2010
TABLE OF
CONTENTS
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Page
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Prospectus Supplement
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S-1
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S-7
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S-21
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S-21
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S-21
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S-22
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S-23
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S-26
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S-30
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S-31
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S-31
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Prospectus
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ii
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1
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2
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11
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This prospectus supplement updates information in the prospectus
dated March 15, 2010. You should read this prospectus
supplement in conjunction with the prospectus. This prospectus
supplement is not complete without, and may not be delivered or
used except in conjunction with, the prospectus, including any
amendments or supplements to it. This prospectus supplement is
qualified by reference to the prospectus, except to the extent
that the information provided by this prospectus supplement
supersedes information contained in the prospectus.
This prospectus supplement incorporates by reference important
information. You should read the information incorporated by
reference before deciding to invest in shares of our common
stock and you may obtain this information incorporated by
reference without charge by following the instructions under
Where You Can Find More Information appearing below.
All references in this prospectus supplement to
Finisar, the Company, we,
us and our refer to Finisar Corporation
and its consolidated subsidiaries.
You should rely only on the information contained or
incorporated by reference in this prospectus supplement. We have
not authorized anyone to provide you with information different
from that contained or incorporated by reference in this
prospectus supplement. We are offering to sell, and seeking
offers to buy, shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained
or incorporated by reference in this prospectus supplement is
accurate only as of its date. Our business, financial condition,
results of operations and prospects may have changed since that
date.
Finisar is a registered trademark of Finisar Corporation. All
other trademarks, trade names and service marks included in this
prospectus supplement are the property of their respective
owners.
SUMMARY
This summary highlights information contained or incorporated
by reference in this prospectus supplement, and the accompanying
prospectus. This summary does not contain all of the information
that you should consider before deciding to invest in our common
stock. This summary is qualified in its entirety by the more
detailed information and financial information appearing
elsewhere in or incorporated by reference in this prospectus
supplement and the accompanying prospectus. You should read this
entire prospectus supplement and the accompanying prospectus
carefully, including the information incorporated by reference
in this prospectus supplement and the accompanying prospectus,
especially the risks of investing in our common stock discussed
under Risk Factors beginning on
page S-7.
FINISAR
CORPORATION
Overview
We are a leading provider of optical subsystems and components
that are used to interconnect equipment in short-distance local
area networks, or LANs, and storage area networks, or SANs, and
longer distance metropolitan area networks, or MANs, fiber to
the home, or FTTx, networks, cable television, or CATV, networks
and wide area networks, or WANs. Our optical subsystems consist
primarily of transmitters, receivers, transceivers and
transponders which provide the fundamental optical-electrical
interface for connecting the equipment used in building these
networks. These products rely on the use of semiconductor lasers
and photodetectors in conjunction with integrated circuit design
and novel packaging technology to provide a cost-effective means
for transmitting and receiving digital signals over fiber optic
cable at speeds ranging from less than 1 gigabits per second, or
Gbps, to 100 Gbps, using a wide range of network protocols
and physical configurations over distances of 70 meters to
200 kilometers. We supply optical transceivers and
transponders that allow point-to-point communications on a fiber
using a single specified wavelength or, bundled with
multiplexing technologies, can be used to supply multi-gigabit
bandwidth over several wavelengths on the same fiber. We also
provide products known as wavelength selective switches, or WSS,
that are used for dynamically switching network traffic from one
optical wavelength to another across multiple wavelengths
without first converting to an electrical signal. These products
are sometimes combined with other components and sold as
linecards, also known as reconfigurable optical add/drop
multiplexers, or ROADMs. Our line of optical components consists
primarily of packaged lasers and photodetectors used in
transceivers, primarily for LAN and SAN applications, and
passive optical components used in building MANs. Demand for our
products is largely driven by the continually growing need for
additional bandwidth created by the ongoing proliferation of
data and video traffic that must be handled by both wireline and
wireless networks.
Our manufacturing operations are vertically integrated, and we
utilize internal sources for many of the key components used in
making our products including lasers, photodetectors and
integrated circuits, or ICs, designed by our internal IC
engineering teams. We also have internal assembly and test
capabilities that make use of internally designed equipment for
the automated testing of our optical subsystems and components.
We sell our optical products to manufacturers of storage
systems, networking equipment and telecommunication equipment,
such as Alcatel-Lucent, Brocade, Cisco Systems, EMC, Emulex,
Ericsson, Hewlett-Packard Company, Huawei, IBM, Juniper, Qlogic,
Siemens and Tellabs, and to their contract manufacturers. These
customers, in turn, sell their systems to businesses and to
wireline and wireless telecommunications service providers and
cable TV operators, collectively referred to as carriers.
Business
Strategy
In order to maintain our position as a leading supplier of fiber
optic subsystems and components, we are continuing to pursue the
following business strategies:
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Continue to Invest in or Acquire Critical
Technologies. We intend to maintain our
technological leadership through continual enhancement of our
existing products and the development or acquisition of new
products, especially those capable of higher speed transmission
of data, with greater capacity, over longer distances.
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S-1
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Expand Our Broad Product Line of Optical
Subsystems. The breadth of our optical subsystems
product line is important to many of our customers who are
seeking to consolidate their supply sources for a wide range of
networking products for diverse applications, and we are focused
on the ongoing expansion of our product line to add key products
to meet our customers needs, particularly for 10 Gigabit
Ethernet and SONET applications.
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Leverage Core Competencies Across Multiple, High-Growth
Markets. We intend to target opportunities where
our core competencies in high-speed data transmission protocols
can be leveraged into leadership positions as these technologies
are extended across multiple data communications applications
and into other markets and industries such as automotive and
consumer electronics products.
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Strengthen and Expand Customer
Relationships. We intend to leverage our
relationships with our existing customers as they enter new,
high-speed data communications markets.
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Continue to Strengthen Our Low-Cost Manufacturing
Capabilities. We continue to seek ways to lower
our production costs through improved product design, improved
manufacturing and testing processes and increased vertical
integration.
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Competitive
Strengths
We believe that the following competitive strengths enable us to
compete effectively:
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Vertically Integrated Business Model Including Internal
Optical Component Manufacturing Capabilities. The
ability to manufacture our own optical components can provide
significant cost savings while the ability to create unique
component designs enhances our competitive position in terms of
performance, time-to-market and intellectual property.
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Expertise in High Frequency Analog and Digital Integrated
Circuit Design for Fiber Optic Subsystems. Our
fiber optic subsystems development efforts are supported by an
engineering team that specializes in analog/digital integrated
circuit design. This group works in silicon CMOS and silicon
germanium BiCMOS semiconductor technologies where circuit
element frequencies are very fast and can be as high as 40 Gbps.
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Optical Subassembly and Mechanical Designs Enable High-Volume
Internal Manufacturing Processes. We develop our
own component and packaging designs and integrate these designs
with proprietary manufacturing processes that allow our products
to be manufactured in high volume.
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System-level Expertise. Our combination
of optical engineering, high-speed electrical design, digital
and analog ASIC design, and firmware and software engineering
technical competencies enables us to produce products that meet
the needs of our customers.
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Broad Product Line. Our broad product
portfolio allows us to address many different aspects of our
customers product needs, both currently and in terms of
new product development.
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Recent
Developments
Litigation
Settlement
On September 10, 2010, we entered into a settlement and
cross license agreement with Source Photonics, Inc., resolving a
lawsuit that we had filed on January 5, 2010, alleging that
certain optoelectronic transceivers from Source Photonics, Inc.
infringed eleven of our patents. Under the terms of the
settlement agreement, Source Photonics paid a license fee to us
in the amount of $14.5 million for a fully
paid-up
license to our digital diagnostics and transceiver module
patents through December 31, 2015. Payment in full was made
by September 30, 2010.
Minority
Investment
In October 2010, we invested $5.9 million in a publicly
held foreign company for strategic reasons. This investment was
classified as an available for sale minority investment and
accounted for as a minority investment on our balance sheet as
of October 31, 2010.
S-2
Repurchase
and Retirement of Convertible Notes
In fiscal 2010, we purchased $51.9 million aggregate
principal amount of our
21/2% Convertible
Senior Subordinated Notes due 2010 and $13.0 million
aggregate principal amount of our
21/2% Convertible
Subordinated Notes due 2010 in privately negotiated
transactions. In October 2010, we paid $29.6 million in
cash to retire the remaining principal amount of both series of
these notes.
Corporate
Information
We were incorporated in California in April 1987 and
reincorporated in Delaware in November 1999. Our principal
executive offices are located at 1389 Moffett Park Drive,
Sunnyvale, California 94089, and our telephone number at that
location is
(408) 548-1000.
S-3
THE
OFFERING
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Common stock offered |
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3,600,000 shares |
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Over-allotment option
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540,000 shares |
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Common stock outstanding before this offering |
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77,184,585 shares |
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Common stock to be outstanding after this offering |
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80,784,585 shares (81,324,585 shares if the
underwriter exercises its over-allotment option in full) |
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Use of proceeds |
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We estimate that the net proceeds from this offering will be
approximately
$ million
(or approximately
$ million
if the underwriters over-allotment option is exercised in
full), after deducting underwriting discounts and commissions
and estimated offering expenses payable by us. We intend to use
the net proceeds from this offering for general corporate
purposes, including working capital. We may use a portion of the
net proceeds for the repurchase and/or repayment of certain of
our outstanding indebtedness, which may include a portion of our
outstanding convertible notes. We may also use a portion of the
net proceeds to acquire or invest in complementary businesses,
products or technologies, although we have no present agreements
or commitments with respect to any such acquisitions or
investments. |
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Dividend policy |
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We do not intend to pay dividends on our common stock. See
Dividend Policy. |
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Risk factors |
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You should read the information incorporated by reference under
the heading Risk Factors in this prospectus
supplement for a discussion of factors that you should consider
carefully before deciding to invest in shares of our common
stock. |
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Nasdaq Global Select Market symbol
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FNSR |
Unless otherwise indicated, all information in this prospectus
supplement relating to the number of outstanding shares of our
common stock is based on 77,184,585 shares outstanding at
October 31, 2010 and excludes:
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7,338,362 shares of common stock issuable upon exercise of
options outstanding at October 31, 2010 under our employee
stock plans, with a weighted average exercise price of $13.59
per share, 2,638,249 shares of common stock issuable upon
vesting of outstanding restricted stock units, and an additional
8,412,181 shares reserved for issuance under our employee
stock plans as of October 31, 2010;
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2,138,711 shares of common stock reserved for issuance
under our 2009 Employee Stock Purchase Plan as of
October 31, 2010; and
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9,363,296 shares of common stock reserved for issuance upon
conversion of our 5.0% Convertible Senior Notes due 2029.
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Unless otherwise indicated, all information in this prospectus
supplement assumes the underwriters over-allotment option
is not exercised.
S-4
SUMMARY
CONSOLIDATED FINANCIAL DATA
You should read the following summary financial data in
conjunction with our annual consolidated financial statements
and the notes thereto and Managements Discussion and
Analysis of Financial Condition and Results of Operations
included in our report on
Form 10-K
for the fiscal year ended April 30, 2010 (the
10-K
Report), which are incorporated herein by reference, and
our interim condensed consolidated financial statements and the
notes thereto and Managements Discussion and
Analysis of Financial Condition and Results of Operations
included in our report on
Form 10-Q
for the quarter ended October 31, 2010 (the Form
10-Q
Report), which are incorporated herein by reference. The
statement of operations data set forth below for the fiscal
years ended April 30, 2010, 2009 and 2008 and the balance
sheet data as of April 30, 2010 are derived from, and are
qualified by reference to, our audited annual consolidated
financial statements included in the
10-K Report.
The statement of operations data for the six month periods ended
October 31, 2010 and November 1, 2009 and the balance
sheet data as of October 31, 2010 are derived from, and are
qualified by reference to, our unaudited interim condensed
consolidated financial statements included in the
10-Q Report.
The results of operations for the six months ended
October 31, 2010 are not necessarily indicative of the
results that may be expected for the full fiscal year ending
April 30, 2011, or any other future period.
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Six Months Ended
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October 31,
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November 1,
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Fiscal Years Ended April 30,
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2010
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2009
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2010
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2009(1)
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2008
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(In thousands, except per share data)
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Statement of Operations Data:
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|
|
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|
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|
|
|
|
|
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Revenues
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$
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448,825
|
|
|
$
|
274,455
|
|
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$
|
629,880
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|
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$
|
497,058
|
|
|
$
|
401,625
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Cost of revenues
|
|
|
293,135
|
|
|
|
202,875
|
|
|
|
445,370
|
|
|
|
352,096
|
|
|
|
281,770
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Amortization of acquired developed technology
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|
|
2,392
|
|
|
|
2,385
|
|
|
|
4,769
|
|
|
|
4,907
|
|
|
|
4,667
|
|
Impairment of acquired developed technology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
153,298
|
|
|
|
69,195
|
|
|
|
179,741
|
|
|
|
138,807
|
|
|
|
115,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
54,765
|
|
|
|
42,622
|
|
|
|
94,770
|
|
|
|
80,136
|
|
|
|
63,067
|
|
Sales and marketing
|
|
|
18,322
|
|
|
|
14,132
|
|
|
|
30,702
|
|
|
|
27,730
|
|
|
|
27,013
|
|
General and administrative
|
|
|
19,593
|
|
|
|
17,798
|
|
|
|
36,772
|
|
|
|
35,818
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|
|
|
38,343
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Acquired in-process research and development
|
|
|
|
|
|
|
|
|
|
|
|
|
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10,500
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|
|
|
|
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Restructuring charges
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|
|
|
|
|
|
4,173
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|
|
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4,173
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|
|
|
|
|
|
|
|
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Amortization of purchased intangibles
|
|
|
766
|
|
|
|
1,219
|
|
|
|
2,028
|
|
|
|
2,145
|
|
|
|
1,192
|
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Impairment of goodwill and intangible assets
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|
|
|
|
|
|
|
|
|
|
|
|
|
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238,507
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total operating expenses
|
|
|
93,446
|
|
|
|
79,944
|
|
|
|
168,445
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|
|
|
394,836
|
|
|
|
129,615
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Income (loss) from operations
|
|
|
59,852
|
|
|
|
(10,749
|
)
|
|
|
11,296
|
|
|
|
(256,029
|
)
|
|
|
(14,427
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
235
|
|
|
|
19
|
|
|
|
144
|
|
|
|
1,762
|
|
|
|
5,805
|
|
Interest expense
|
|
|
(4,232
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)
|
|
|
(4,601
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)
|
|
|
(8,957
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)
|
|
|
(14,597
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)
|
|
|
(21,876
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)
|
Gain (loss) on convertible debt exchange
|
|
|
|
|
|
|
(25,067
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)
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|
|
(25,039
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)
|
|
|
3,064
|
|
|
|
|
|
Other income (expense), net
|
|
|
|
|
|
|
(1,938
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)
|
|
|
(1,890
|
)
|
|
|
(3,654
|
)
|
|
|
(113
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
55,855
|
|
|
|
(42,336
|
)
|
|
|
(24,446
|
)
|
|
|
(269,454
|
)
|
|
|
(30,611
|
)
|
Provision for (benefit from) income taxes
|
|
|
2,649
|
|
|
|
197
|
|
|
|
(1,640
|
)
|
|
|
(6,962
|
)
|
|
|
2,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
53,206
|
|
|
|
(42,533
|
)
|
|
|
(22,806
|
)
|
|
|
(262,492
|
)
|
|
|
(32,844
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net of income
taxes(2)
|
|
|
(284
|
)
|
|
|
37,012
|
|
|
|
36,937
|
|
|
|
2,149
|
|
|
|
(46,169
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
52,922
|
|
|
$
|
(5,521
|
)
|
|
$
|
(14,131
|
)
|
|
$
|
(260,343
|
)
|
|
$
|
(79,013
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.70
|
|
|
$
|
(0.68
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(4.99
|
)
|
|
$
|
(0.85
|
)
|
Discontinued operations
|
|
$
|
0.00
|
|
|
$
|
0.60
|
|
|
$
|
0.57
|
|
|
$
|
0.04
|
|
|
$
|
(1.20
|
)
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.63
|
|
|
$
|
(0.68
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(4.99
|
)
|
|
$
|
(0.85
|
)
|
Discontinued operations
|
|
$
|
0.00
|
|
|
$
|
0.60
|
|
|
$
|
0.57
|
|
|
$
|
0.04
|
|
|
$
|
(1.20
|
)
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
76,433
|
|
|
|
62,157
|
|
|
|
64,952
|
|
|
|
52,557
|
|
|
|
38,585
|
|
Diluted
|
|
|
89,013
|
|
|
|
62,157
|
|
|
|
64,952
|
|
|
|
52,557
|
|
|
|
38,585
|
|
S-5
|
|
|
|
|
|
|
|
|
|
|
October 31, 2010
|
|
April 30, 2010
|
|
|
(In thousands)
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
184,928
|
|
|
$
|
207,024
|
|
Working capital
|
|
|
406,475
|
|
|
|
339,880
|
|
Total assets
|
|
|
692,758
|
|
|
|
626,730
|
|
Long-term liabilities
|
|
|
126,340
|
|
|
|
121,749
|
|
Total stockholders equity
|
|
|
424,745
|
|
|
|
348,646
|
|
|
|
|
(1) |
|
Includes eight months of operations of Optium Corporation
subsequent to the consummation of our merger on August 28,
2008. |
|
(2) |
|
Represents the operations of our Network Tools Division,
substantially all of the assets of which were sold in July 2009.
A net gain on the sale of the business of $36.1 million,
net of income taxes, is included in income from discontinued
operations for the fiscal year ended April 30, 2010. |
S-6
RISK
FACTORS
Investing in our common stock involves a high degree of risk.
You should carefully consider the following risk factors in
addition to the other information contained in this prospectus
supplement and the accompanying prospectus, and the information
incorporated by reference herein and therein, before deciding to
invest in shares of our common stock. Each of the risk factors
could adversely affect our business, operating results and
financial condition, as well as the value of an investment in
our common stock, and the occurrence of any of these risks might
cause you to lose all or part of your investment. In addition,
we urge you to consider carefully the cautionary language set
forth under the heading Special Note Regarding
Forward-Looking Statements in the accompanying
prospectus.
Risks
Related to Our Company and Our Industry
Our
quarterly revenues and operating results fluctuate due to a
variety of factors, which may result in volatility or a decline
in the price of our stock.
Our quarterly operating results have varied significantly due to
a number of factors, including:
|
|
|
|
|
fluctuation in demand for our products;
|
|
|
|
the timing of new product introductions or enhancements by us
and our competitors;
|
|
|
|
the level of market acceptance of new and enhanced versions of
our products;
|
|
|
|
the timing or cancellation of large customer orders;
|
|
|
|
the length and variability of the sales cycle for our products;
|
|
|
|
pricing policy changes by us and our competitors and suppliers;
|
|
|
|
the availability of development funding and the timing of
development revenue;
|
|
|
|
changes in the mix of products sold;
|
|
|
|
increased competition in product lines, and competitive pricing
pressures; and
|
|
|
|
the evolving and unpredictable nature of the markets for
products incorporating our optical components and subsystems.
|
We expect that our operating results will continue to fluctuate
in the future as a result of these factors and a variety of
other factors, including:
|
|
|
|
|
fluctuations in manufacturing yields;
|
|
|
|
the emergence of new industry standards;
|
|
|
|
failure to anticipate changing customer product requirements;
|
|
|
|
the loss or gain of important customers;
|
|
|
|
product obsolescence; and
|
|
|
|
the amount of research and development expenses associated with
new product introductions.
|
Our operating results could also be harmed by:
|
|
|
|
|
the continuation or worsening of the current global economic
slowdown or economic conditions in various geographic areas
where we or our customers do business;
|
|
|
|
acts of terrorism and international conflicts or domestic crises;
|
|
|
|
other conditions affecting the timing of customer orders; or
|
|
|
|
a downturn in the markets for our customers products,
particularly the data storage and networking and
telecommunications components markets.
|
S-7
We may experience a delay in generating or recognizing revenues
for a number of reasons. Orders at the beginning of each quarter
are typically lower than expected revenues for that quarter and
are generally cancelable with minimal notice. Accordingly, we
depend on obtaining orders during each quarter for shipment in
that quarter to achieve our revenue objectives. Failure to ship
these products by the end of a quarter may adversely affect our
operating results. Furthermore, our customer agreements
typically provide that the customer may delay scheduled delivery
dates and cancel orders within specified timeframes without
significant penalty. Because we base our operating expenses on
anticipated revenue trends and a high percentage of our expenses
are fixed in the short term, any delay in generating or
recognizing forecasted revenues could significantly harm our
business. It is likely that in some future quarters our
operating results will again decrease from the previous quarter
or fall below the expectations of securities analysts and
investors. In this event, it is likely that the trading price of
our common stock would significantly decline.
As a result of these factors, our operating results may vary
significantly from quarter to quarter. Accordingly, we believe
that period-to-period comparisons of our results of operations
are not meaningful and should not be relied upon as indications
of future performance. Any shortfall in revenues or net income
from levels expected by the investment community could cause a
decline in the trading price of our stock.
We may
lose sales if our suppliers or independent contract
manufacturers fail to meet our needs or go out of
business.
We currently purchase a number of key components used in the
manufacture of our products from single or limited sources, and
we rely on several independent contract manufacturers to supply
us with certain key components and subassemblies, including
lasers, modulators, and printed circuit boards. We depend on
these sources to meet our production needs. Moreover, we depend
on the quality of the components and subassemblies that they
supply to us, over which we have limited control. Several of our
suppliers are or may become financially unstable as the result
of current global market conditions. In addition, from time to
time we have encountered shortages and delays in obtaining
components. We are currently encountering such shortages and
expect to encounter additional shortages and delays in the
future. Recently, many of our suppliers have extended lead times
for many of their products as the result of significantly
reducing capacity in light of the global slowdown in demand.
This reduction in capacity has reduced the ability of many
suppliers to respond to increases in demand. If we cannot supply
products due to a lack of components, or are unable to redesign
products with other components in a timely manner, our business
will be significantly harmed. We generally have no long-term
contracts with any of our component suppliers or contract
manufacturers. As a result, a supplier or contract manufacturer
can discontinue supplying components or subassemblies to us
without penalty. If a supplier were to discontinue supplying a
key component or cease operations, the resulting product
manufacturing and delivery delays could be lengthy, and our
business could be substantially harmed. We are also subject to
potential delays in the development by our suppliers of key
components which may affect our ability to introduce new
products. Similarly, disruptions in the services provided by our
contract manufacturers or the transition to other suppliers of
these services could lead to supply chain problems or delays in
the delivery of our products. These problems or delays could
damage our relationships with our customers and adversely affect
our business.
We use rolling forecasts based on anticipated product orders to
determine our component and subassembly requirements. Lead times
for materials and components that we order vary significantly
and depend on factors such as specific supplier requirements,
contract terms and current market demand for particular
components. If we overestimate our component requirements, we
may have excess inventory, which would increase our costs. If we
underestimate our component requirements, we may have inadequate
inventory, which could interrupt our manufacturing and delay
delivery of our products to our customers. Any of these
occurrences could significantly harm our business.
If we
are unable to realize anticipated cost savings from the transfer
of certain manufacturing operations to our overseas locations
and increased use of internally-manufactured components our
results of operations could be harmed.
As part of our initiatives to reduce the cost of revenues
planned for the next several quarters, we expect to realize
significant cost savings through (i) the transfer of
certain product manufacturing operations to lower cost off-
S-8
shore locations and (ii) product engineering changes to
enable the broader use of internally-manufactured components.
The transfer of production to overseas locations may be more
difficult and costly than we currently anticipate which could
result in increased transfer costs and time delays. Further,
following transfer, we may experience lower manufacturing yields
than those historically achieved in our U.S. manufacturing
locations. In addition, the engineering changes required for the
use of internally-manufactured components may be more
technically-challenging than we anticipate and customer
acceptance of such changes could be delayed. If we fail to
achieve the planned product manufacturing transfer and increase
in internally-manufactured component use within our currently
anticipated timeframe, or if our manufacturing yields decrease
as a result, we may be unsuccessful in achieving cost savings or
such savings will be less than anticipated, and our results of
operations could be harmed.
We may
not be able to obtain additional capital in the future, and
failure to do so may harm our business.
We believe that our existing balances of cash and cash
equivalents, together with the cash expected to be generated
from future operations and borrowings under our bank credit
facility, will be sufficient to meet our cash needs for working
capital and capital expenditures for at least the next
12 months. We may, however, require additional financing to
fund our operations in the future, to finance future
acquisitions that we may propose to undertake or to repay or
otherwise retire our outstanding convertible debt in the
aggregate principal amount of $100 million which is subject
to redemption by the holders in October 2014, 2016, 2019 and
2024. Due to the unpredictable nature of the capital markets,
particularly in the technology sector, we cannot assure you that
we will be able to raise additional capital if and when it is
required, especially if we experience disappointing operating
results. If adequate capital is not available to us as required,
or is not available on favorable terms, we could be required to
significantly reduce or restructure our business operations. If
we do raise additional funds through the issuance of equity or
convertible debt securities, the percentage ownership of our
existing stockholders could be significantly diluted, and these
newly-issued securities may have rights, preferences or
privileges senior to those of existing stockholders.
Failure
to accurately forecast our revenues could result in additional
charges for obsolete or excess inventories or non-cancellable
purchase commitments.
We base many of our operating decisions, and enter into purchase
commitments, on the basis of anticipated revenue trends which
are highly unpredictable. Some of our purchase commitments are
not cancelable, and in some cases we are required to recognize a
charge representing the amount of material or capital equipment
purchased or ordered which exceeds our actual requirements. In
the past, we have sometimes experienced significant growth
followed by a significant decrease in customer demand such as
occurred in fiscal 2001, when revenues increased by 181%
followed by a decrease of 22% in fiscal 2002. Based on projected
revenue trends during these periods, we acquired inventories and
entered into purchase commitments in order to meet anticipated
increases in demand for our products which did not materialize.
As a result, we recorded significant charges for obsolete and
excess inventories and non-cancelable purchase commitments which
contributed to substantial operating losses in fiscal 2002.
Should revenues in future periods again fall substantially below
our expectations, or should we fail again to accurately forecast
changes in demand mix, we could be required to record additional
charges for obsolete or excess inventories or non-cancelable
purchase commitments.
If we
encounter sustained yield problems or other delays in the
production or delivery of our internally-manufactured components
or in the final assembly and test of our products, we may lose
sales and damage our customer relationships.
Our manufacturing operations are highly vertically integrated.
In order to reduce our manufacturing costs, we have acquired a
number of companies, and business units of other companies, that
manufacture optical components incorporated in our optical
subsystem products and have developed our own facilities for the
final assembly and testing of our products. For example, we
design and manufacture many critical components including all of
the short wavelength VCSEL lasers incorporated in transceivers
used for LAN/SAN applications at our wafer fabrication facility
in Allen, Texas and manufacture a portion of our internal
requirements for longer wavelength lasers at our wafer
fabrication facility in Fremont, California. We assemble and
test most of our transceiver products
S-9
at our facility in Ipoh, Malaysia. As a result of this vertical
integration, we have become increasingly dependent on our
internal production capabilities. The manufacture of critical
components, including the fabrication of wafers, and the
assembly and testing of our products, involve highly complex
processes. For example, minute levels of contaminants in the
manufacturing environment, difficulties in the fabrication
process or other factors can cause a substantial portion of the
components on a wafer to be nonfunctional. These problems may be
difficult to detect at an early stage of the manufacturing
process and often are time-consuming and expensive to correct.
From time to time, we have experienced problems achieving
acceptable yields at our wafer fabrication facilities, resulting
in delays in the availability of components. Moreover, an
increase in the rejection rate of products during the quality
control process before, during or after manufacture, results in
lower yields and margins. In addition, changes in manufacturing
processes required as a result of changes in product
specifications, changing customer needs and the introduction of
new product lines have historically significantly reduced our
manufacturing yields, resulting in low or negative margins on
those products. Poor manufacturing yields over a prolonged
period of time could adversely affect our ability to deliver our
subsystem products to our customers and could also affect our
sale of components to customers in the merchant market. Our
inability to supply components to meet our internal needs could
harm our relationships with customers and have an adverse effect
on our business.
We are
dependent on widespread market acceptance of our optical
subsystems and components, and our revenues will decline if the
markets for these products do not expand as
expected.
We derive all of our revenue from sales of our optical
subsystems and components. Accordingly, widespread acceptance of
these products is critical to our future success. If the market
does not continue to accept our optical subsystems and
components, our revenues will decline significantly. Our future
success also ultimately depends on the continued growth of the
communications industry and, in particular, the continued
expansion of global information networks, particularly those
directly or indirectly dependent upon a fiber optics
infrastructure. As part of that growth, we are relying on
increasing demand for voice, video and other data delivered over
high-bandwidth network systems as well as commitments by network
systems vendors to invest in the expansion of the global
information network. As network usage and bandwidth demand
increase, so does the need for advanced optical networks to
provide the required bandwidth. Without network and bandwidth
growth, the need for optical subsystems and components, and
hence our future growth as a manufacturer of these products,
will be jeopardized, and our business would be significantly
harmed.
Many of these factors are beyond our control. In addition, in
order to achieve widespread market acceptance, we must
differentiate ourselves from our competition through product
offerings and brand name recognition. We cannot assure you that
we will be successful in making this differentiation or
achieving widespread acceptance of our products. Failure of our
existing or future products to maintain and achieve widespread
levels of market acceptance will significantly impair our
revenue growth.
We
depend on large purchases from a few significant customers, and
any loss, cancellation, reduction or delay in purchases by these
customers could harm our business.
A small number of customers have consistently accounted for a
significant portion of our revenues. For example, sales to our
top five customers represented 47% of our revenues in the first
six months of fiscal 2011, 43% of our revenues in fiscal 2010
and 42% of our revenues in fiscal 2009. Our success will depend
on our continued ability to develop and manage relationships
with our major customers. Although we are attempting to expand
our customer base, we expect that significant customer
concentration will continue for the foreseeable future. We may
not be able to offset any decline in revenues from our existing
major customers with revenues from new customers, and our
quarterly results may be volatile because we are dependent on
large orders from these customers that may be reduced or delayed.
The markets in which we have historically sold our optical
subsystems and components products are dominated by a relatively
small number of systems manufacturers, thereby limiting the
number of our potential customers. Recent consolidation of
portions of our customer base, including telecommunications
systems manufacturers, and potential future consolidation, may
have a material adverse impact on our business. Our dependence
on large orders from a relatively small number of customers
makes our relationship with each customer critically important
to our business. We cannot assure you that we will be able to
retain our largest customers, that we will be
S-10
able to attract additional customers or that our customers will
be successful in selling their products that incorporate our
products. We have in the past experienced delays and reductions
in orders from some of our major customers. In addition, our
customers have in the past sought price concessions from us, and
we expect that they will continue to do so in the future.
Expense reduction measures that we have implemented over the
past several years, and additional action we are taking to
reduce costs, may adversely affect our ability to introduce new
and improved products which may, in turn, adversely affect our
relationships with some of our key customers. Further, some of
our customers may in the future shift their purchases of
products from us to our competitors or to joint ventures between
these customers and our competitors. The loss of one or more of
our largest customers, any reduction or delay in sales to these
customers, our inability to successfully develop relationships
with additional customers or future price concessions that we
may make could significantly harm our business.
Because
we do not have long-term contracts with our customers, our
customers may cease purchasing our products at any time if we
fail to meet our customers needs.
Typically, we do not have long-term contracts with our
customers. As a result, our agreements with our customers do not
provide any assurance of future sales. Accordingly:
|
|
|
|
|
our customers can stop purchasing our products at any time
without penalty;
|
|
|
|
our customers are free to purchase products from our
competitors; and
|
|
|
|
our customers are not required to make minimum purchases.
|
Sales are typically made pursuant to inventory hub arrangements
under which customers may draw down inventory to satisfy their
demand as needed or pursuant to individual purchase orders,
often with extremely short lead times. If we are unable to
fulfill these orders in a timely manner, it is likely that we
will lose sales and customers. If our major customers stop
purchasing our products for any reason, our business and results
of operations would be harmed.
The
markets for our products are subject to rapid technological
change, and to compete effectively we must continually introduce
new products that achieve market acceptance.
The markets for our products are characterized by rapid
technological change, frequent new product introductions,
substantial capital investment, changes in customer requirements
and evolving industry standards with respect to the protocols
used in data communications, telecommunications and CATV
networks. Our future performance will depend on the successful
development, introduction and market acceptance of new and
enhanced products that address these changes as well as current
and potential customer requirements. For example, the market for
optical subsystems is currently characterized by a trend toward
the adoption of pluggable modules and subsystems
that do not require customized interconnections and by the
development of more complex and integrated optical subsystems.
We expect that new technologies will emerge as competition and
the need for higher and more cost-effective bandwidth increases.
The introduction of new and enhanced products may cause our
customers to defer or cancel orders for existing products. In
addition, a slowdown in demand for existing products ahead of a
new product introduction could result in a write-down in the
value of inventory on hand related to existing products. We have
in the past experienced a slowdown in demand for existing
products and delays in new product development and such delays
may occur in the future. To the extent customers defer or cancel
orders for existing products due to a slowdown in demand or in
the expectation of a new product release or if there is any
delay in development or introduction of our new products or
enhancements of our products, our operating results would
suffer. We also may not be able to develop the underlying core
technologies necessary to create new products and enhancements,
or to license these technologies from third parties. Product
development delays may result from numerous factors, including:
|
|
|
|
|
changing product specifications and customer requirements;
|
|
|
|
unanticipated engineering complexities;
|
|
|
|
expense reduction measures we have implemented, and others we
may implement, to conserve our cash and attempt to sustain
profitability;
|
S-11
|
|
|
|
|
difficulties in hiring and retaining necessary technical
personnel;
|
|
|
|
difficulties in reallocating engineering resources and
overcoming resource limitations; and
|
|
|
|
changing market or competitive product requirements.
|
The development of new, technologically advanced products is a
complex and uncertain process requiring high levels of
innovation and highly skilled engineering and development
personnel, as well as the accurate anticipation of technological
and market trends. The introduction of new products also
requires significant investment to ramp up production capacity,
for which benefit will not be realized if customer demand does
not develop as expected. Ramping of production capacity also
entails risks of delays which can limit our ability to realize
the full benefit of the new product introduction. We cannot
assure you that we will be able to identify, develop,
manufacture, market or support new or enhanced products
successfully, if at all, or on a timely basis. Further, we
cannot assure you that our new products will gain market
acceptance or that we will be able to respond effectively to
product announcements by competitors, technological changes or
emerging industry standards. Any failure to respond to
technological change would significantly harm our business.
Continued
competition in our markets may lead to an accelerated reduction
in our prices, revenues and market share.
The end markets for optical products have experienced
significant industry consolidation during the past few years
while the industry that supplies these customers has experienced
less consolidation. As a result, the markets for optical
subsystems and components are highly competitive. Our current
competitors include a number of domestic and international
companies, many of which have substantially greater financial,
technical, marketing and distribution resources and brand name
recognition than we have. Increased consolidation in our
industry, should it occur, will reduce the number of our
competitors but would be likely to further strengthen surviving
industry participants. We may not be able to compete
successfully against either current or future competitors.
Companies competing with us may introduce products that are
competitively priced, have increased performance or
functionality, or incorporate technological advances and may be
able to react quicker to changing customer requirements and
expectations. There is also the risk that network systems
vendors may re-enter the subsystem market and begin to
manufacture the optical subsystems incorporated in their network
systems. Increased competition could result in significant price
erosion, reduced revenue, lower margins or loss of market share,
any of which would significantly harm our business. Our
principal competitors for optical transceivers sold for
applications based on the Fibre Channel and Ethernet protocols
include Avago Technologies (formerly part of Agilent
Technologies) and JDSU. Our principal competitors for optical
transceivers sold for MAN, WAN and telecom applications based on
the SONET/SDH protocols include Oclaro (formed with the merger
of Bookham and Avanex), Opnext and Sumitomo. Our principal
competitors for WSS ROADM products include CoAdna, JDSU, Oclaro
and Oplink. Our principal competitors for CATV products include
AOI and Emcore. Our competitors continue to introduce improved
products and we will have to do the same to remain competitive.
Decreases
in average selling prices of our products may reduce our gross
margins.
The market for optical subsystems is characterized by declining
average selling prices resulting from factors such as increased
competition, overcapacity, the introduction of new products and
increased unit volumes as manufacturers continue to deploy
network and storage systems. We have in the past experienced,
and in the future may experience, substantial period-to-period
fluctuations in operating results due to declining average
selling prices. We anticipate that average selling prices will
decrease in the future in response to product introductions by
competitors or us, or by other factors, including pricing
pressures from significant customers. Therefore, in order to
sustain profitable operations, we must continue to develop and
introduce on a timely basis new products that incorporate
features that can be sold at higher average selling prices.
Failure to do so could cause our revenues and gross margins to
decline, which would result in additional operating losses and
significantly harm our business.
We may be unable to reduce the cost of our products sufficiently
to enable us to compete with others. Our cost reduction efforts
may not allow us to keep pace with competitive pricing pressures
and could adversely affect our margins. In order to remain
competitive, we must continually reduce the cost of
manufacturing our products through design and engineering
changes. We may not be successful in redesigning our products or
delivering our products to
S-12
market in a timely manner. We cannot assure you that any
redesign will result in sufficient cost reductions to allow us
to reduce the price of our products to remain competitive or
improve our gross margins.
Shifts
in our product mix may result in declines in gross
margins.
Our optical products sold for longer distance MAN and telecom
applications typically have higher gross margins than our
products for shorter distance LAN or SAN applications. Gross
margins on individual products fluctuate over the products
life cycle. Our overall gross margins have fluctuated from
period to period as a result of shifts in product mix, the
introduction of new products, decreases in average selling
prices for older products and our ability to reduce product
costs, and these fluctuations are expected to continue in the
future.
Our
customers often evaluate our products for long and variable
periods, which causes the timing of our revenues and results of
operations to be unpredictable.
The period of time between our initial contact with a customer
and the receipt of an actual purchase order may span a year or
more. During this time, customers may perform, or require us to
perform, extensive and lengthy evaluation and testing of our
products before purchasing and using the products in their
equipment. These products often take substantial time to develop
because of their complexity and because customer specifications
sometimes change during the development cycle. Our customers do
not typically share information on the duration or magnitude of
these qualification procedures. The length of these
qualification processes also may vary substantially by product
and customer, and, thus, cause our results of operations to be
unpredictable. While our potential customers are qualifying our
products and before they place an order with us, we may incur
substantial research and development and sales and marketing
expenses and expend significant management effort. Even after
incurring such costs we ultimately may not sell any products to
such potential customers. In addition, these qualification
processes often make it difficult to obtain new customers, as
customers are reluctant to expend the resources necessary to
qualify a new supplier if they have one or more existing
qualified sources. Once our products have been qualified, the
agreements that we enter into with our customers typically
contain no minimum purchase commitments. Failure of our
customers to incorporate our products into their systems would
significantly harm our business.
We
will lose sales if we are unable to obtain government
authorization to export certain of our products, and we would be
subject to legal and regulatory consequences if we do not comply
with applicable export control laws and
regulations.
Exports of certain of our products are subject to export
controls imposed by the U.S. Government and administered by
the United States Departments of State and Commerce. In certain
instances, these regulations may require pre-shipment
authorization from the administering department. For products
subject to the Export Administration Regulations, or EAR,
administered by the Department of Commerces Bureau of
Industry and Security, the requirement for a license is
dependent on the type and end use of the product, the final
destination, the identity of the end user and whether a license
exception might apply. Virtually all exports of products subject
to the International Traffic in Arms Regulations, or ITAR,
administered by the Department of States Directorate of
Defense Trade Controls, require a license. Certain of our fiber
optics products are subject to EAR and certain of our RF over
fiber products, as well as certain products developed with
government funding, are currently subject to ITAR. Products
developed and manufactured in our foreign locations are subject
to export controls of the applicable foreign nation.
Given the current global political climate, obtaining export
licenses can be difficult and time-consuming. Failure to obtain
export licenses for these shipments could significantly reduce
our revenue and materially adversely affect our business,
financial condition and results of operations. Compliance with
U.S. Government regulations may also subject us to
additional fees and costs. The absence of comparable
restrictions on competitors in other countries may adversely
affect our competitive position.
During mid-2007, Optium became aware that certain of its analog
RF over fiber products may, depending on end use and
customization, be subject to ITAR. Accordingly, Optium filed a
detailed voluntary disclosure with the United States Department
of State describing the details of possible inadvertent ITAR
violations with respect to the
S-13
export of a limited number of certain prototype products, as
well as related technical data and defense services. Optium may
have also made unauthorized transfers of ITAR-restricted
technical data and defense services to foreign persons in the
workplace. Additional information has been provided upon request
to the Department of State with respect to this matter. In late
2008, a grand jury subpoena from the office of the
U.S. Attorney for the Eastern District of Pennsylvania was
received requesting documents from 2005 through the present
referring to, relating to or involving the subject matter of the
above referenced voluntary disclosure and export activities.
While the Department of State encourages voluntary disclosures
and generally affords parties mitigating credit under such
circumstances, we nevertheless could be subject to continued
investigation and potential regulatory consequences ranging from
a no-action letter, government oversight of facilities and
export transactions, monetary penalties, and in extreme cases,
debarment from government contracting, denial of export
privileges and criminal sanctions, any of which would adversely
affect our results of operations and cash flow. The Department
of State and U.S. Attorney inquiries may require us to
expend significant management time and incur significant legal
and other expenses. We cannot predict how long it will take or
how much more time and resources we will have to expend to
resolve these government inquiries, nor can we predict the
outcome of these inquiries.
We
depend on facilities located outside of the United States to
manufacture a substantial portion of our products, which
subjects us to additional risks.
In addition to our principal manufacturing facility in Malaysia,
we operate smaller facilities in Australia, China, Israel and
Singapore. We also rely on several contract manufacturers
located in Asia for our supply of key subassemblies. Each of
these facilities and manufacturers subjects us to additional
risks associated with international manufacturing, including:
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unexpected changes in regulatory requirements;
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legal uncertainties regarding liability, tariffs and other trade
barriers;
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inadequate protection of intellectual property in some countries;
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greater incidence of shipping delays;
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greater difficulty in overseeing manufacturing operations;
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greater difficulty in hiring and retaining direct labor;
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greater difficulty in hiring talent needed to oversee
manufacturing operations;
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potential political and economic instability; and
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the outbreak of infectious diseases such as the H1N1 influenza
virus and/or
severe acute respiratory syndrome, or SARS, which could result
in travel restrictions or the closure of our facilities or the
facilities of our customers and suppliers.
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Any of these factors could significantly impair our ability to
source our contract manufacturing requirements internationally.
Our
future operating results may be subject to volatility as a
result of exposure to foreign exchange risks.
We are exposed to foreign exchange risks. Foreign currency
fluctuations may affect both our revenues and our costs and
expenses and significantly affect our operating results. Prices
for our products are currently denominated in U.S. dollars
for sales to our customers throughout the world. If there is a
significant devaluation of the currency in a specific country
relative to the dollar, the prices of our products will increase
relative to that countrys currency, our products may be
less competitive in that country and our revenues may be
adversely affected.
Although we price our products in U.S. dollars, portions of
both our cost of revenues and operating expenses are incurred in
foreign currencies, principally the Malaysian ringgit, the
Chinese yuan, the Australian dollar and the Israeli shekel. As a
result, we bear the risk that the rate of inflation in one or
more countries will exceed the rate of the devaluation of that
countrys currency in relation to the U.S. dollar,
which would increase our costs as expressed
S-14
in U.S. dollars. To date, we have not engaged in currency
hedging transactions to decrease the risk of financial exposure
from fluctuations in foreign exchange rates.
Our
business and future operating results are subject to a wide
range of uncertainties arising out of the continuing threat of
terrorist attacks and ongoing military actions in the Middle
East.
Like other U.S. companies, our business and operating
results are subject to uncertainties arising out of the
continuing threat of terrorist attacks on the United States and
ongoing military actions in the Middle East, including the
economic consequences of the war in Afghanistan and Iraq or
additional terrorist activities and associated political
instability, and the impact of heightened security concerns on
domestic and international travel and commerce. In particular,
due to these uncertainties we are subject to:
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increased risks related to the operations of our manufacturing
facilities in Malaysia;
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greater risks of disruption in the operations of our China,
Singapore and Israeli facilities and our Asian contract
manufacturers, including contract manufacturers located in
Thailand, and more frequent instances of shipping
delays; and
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the risk that future tightening of immigration controls may
adversely affect the residence status of
non-U.S. engineers
and other key technical employees in our U.S. facilities or
our ability to hire new
non-U.S. employees
in such facilities.
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Past
and future acquisitions could be difficult to integrate, disrupt
our business, dilute stockholder value and harm our operating
results.
In addition to our combination with Optium in August 2008, we
have completed the acquisition of eleven privately-held
companies and certain businesses and assets from six other
companies since October 2000. We continue to review
opportunities to acquire other businesses, product lines or
technologies that would complement our current products, expand
the breadth of our markets or enhance our technical
capabilities, or that may otherwise offer growth opportunities,
and we from time to time make proposals and offers, and take
other steps, to acquire businesses, products and technologies.
The Optium merger and several of our other past acquisitions
have been material, and acquisitions that we may complete in the
future may be material. In 13 of our 17 acquisitions, we issued
common stock or notes convertible into common stock as all or a
portion of the consideration. The issuance of common stock or
other equity securities by us in connection with any future
acquisition would dilute our stockholders percentage
ownership.
Other risks associated with acquiring the operations of other
companies include:
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problems assimilating the purchased operations, technologies or
products;
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unanticipated costs associated with the acquisition;
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diversion of managements attention from our core business;
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adverse effects on existing business relationships with
suppliers and customers;
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risks associated with entering markets in which we have no or
limited prior experience; and
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potential loss of key employees of purchased organizations.
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Not all of our past acquisitions have been successful. In the
past, we have subsequently sold some of the assets acquired in
prior acquisitions, discontinued product lines and closed
acquired facilities. As a result of these activities, we
incurred significant restructuring charges and charges for the
write-down of assets associated with those acquisitions. Through
fiscal 2010, we have written off all of the goodwill associated
with our past acquisitions. We cannot assure you that we will be
successful in overcoming problems encountered in connection with
potential future acquisitions, and our inability to do so could
significantly harm our business. In addition, to the extent that
the economic benefits associated with any of our future
acquisitions diminish in the future, we may be required to
record additional write downs of goodwill, intangible assets or
other assets associated with such acquisitions, which would
adversely affect our operating results.
S-15
We
have made and may continue to make strategic investments which
may not be successful, may result in the loss of all or part of
our invested capital and may adversely affect our operating
results.
Since inception we have made minority equity investments in a
number of early-stage technology companies, totaling
approximately $61.9 million. Our investments in these early
stage companies were primarily motivated by our desire to gain
early access to new technology. We intend to review additional
opportunities to make strategic equity investments in pre-public
companies where we believe such investments will provide us with
opportunities to gain access to important technologies or
otherwise enhance important commercial relationships. We have
little or no influence over the early-stage companies in which
we have made or may make these strategic, minority equity
investments. Each of these investments in pre-public companies
involves a high degree of risk. We may not be successful in
achieving the financial, technological or commercial advantage
upon which any given investment is premised, and failure by the
early-stage company to achieve its own business objectives or to
raise capital needed on acceptable economic terms could result
in a loss of all or part of our invested capital. Between fiscal
2003 and 2010, we wrote off an aggregate of $26.8 million
in six investments which became impaired and reclassified
$4.2 million of another investment to goodwill as the
investment was deemed to have no value. We may be required to
write off all or a portion of the $18.2 million in such
investments remaining on our balance sheet as of
October 31, 2010 in future periods.
Our
ability to utilize certain net operating loss carryforwards and
tax credit carryforwards may be limited under Sections 382
and 383 of the Internal Revenue Code.
As of October 31, 2010, we had net operating loss, or NOL,
carryforward amounts of approximately $485 million for
U.S. federal income tax purposes and $160.5 million
for state income tax purposes, and tax credit carryforward
amounts of approximately $14.7 million for
U.S. federal income tax purposes and $10.1 million for
state income tax purposes. The federal and state tax credit
carryforwards will expire at various dates beginning in 2010
through 2029, and $2.2 million of such carryforwards will
expire in the next five years. The federal and state NOL
carryforwards will expire at various dates beginning in 2011
through 2029, and $94.6 million of such carryforwards will
expire in the next five years. Utilization of these NOL and tax
credit carryforward amounts may be subject to a substantial
annual limitation if the ownership change limitations under
Sections 382 and 383 of the Internal Revenue Code and
similar state provisions are triggered by changes in the
ownership of our capital stock. Such an annual limitation could
result in the expiration of the NOL and tax credit carryforward
amounts before utilization.
Because
of competition for technical personnel, we may not be able to
recruit or retain necessary personnel.
We believe our future success will depend in large part upon our
ability to attract and retain highly skilled managerial,
technical, sales and marketing, finance and manufacturing
personnel. In particular, we will need to increase the number of
technical staff members with experience in high-speed networking
applications as we further develop our product lines.
Competition for these highly skilled employees in our industry
is intense. In making employment decisions, particularly in the
high-technology industries, job candidates often consider the
value of the equity they are to receive in connection with their
employment. Therefore, significant volatility in the price of
our common stock may adversely affect our ability to attract or
retain technical personnel. Our failure to attract and retain
these qualified employees could significantly harm our business.
The loss of the services of any of our qualified employees, the
inability to attract or retain qualified personnel in the future
or delays in hiring required personnel could hinder the
development and introduction of and negatively impact our
ability to sell our products. In addition, employees may leave
our company and subsequently compete against us. Moreover,
companies in our industry whose employees accept positions with
competitors frequently claim that their competitors have engaged
in unfair hiring practices. We have been subject to claims of
this type and may be subject to such claims in the future as we
seek to hire qualified personnel. Some of these claims may
result in material litigation. We could incur substantial costs
in defending ourselves against these claims, regardless of their
merits.
S-16
Our
failure to protect our intellectual property may significantly
harm our business.
Our success and ability to compete is dependent in part on our
proprietary technology. We rely on a combination of patent,
copyright, trademark and trade secret laws, as well as
confidentiality agreements to establish and protect our
proprietary rights. We license certain of our proprietary
technology, including our digital diagnostics technology, to
customers who include current and potential competitors, and we
rely largely on provisions of our licensing agreements to
protect our intellectual property rights in this technology.
Although a number of patents have been issued to us, we have
obtained a number of other patents as a result of our
acquisitions, and we have filed applications for additional
patents, we cannot assure you that any patents will issue as a
result of pending patent applications or that our issued patents
will be upheld. Additionally, significant technology used in our
product lines is not the subject of any patent protection, and
we may be unable to obtain patent protection on such technology
in the future. Any infringement of our proprietary rights could
result in significant litigation costs, and any failure to
adequately protect our proprietary rights could result in our
competitors offering similar products, potentially resulting in
loss of a competitive advantage and decreased revenues.
Despite our efforts to protect our proprietary rights, existing
patent, copyright, trademark and trade secret laws afford only
limited protection. In addition, the laws of some foreign
countries do not protect our proprietary rights to the same
extent as do the laws of the United States. Attempts may be made
to copy or reverse engineer aspects of our products or to obtain
and use information that we regard as proprietary. Accordingly,
we may not be able to prevent misappropriation of our technology
or deter others from developing similar technology. Furthermore,
policing the unauthorized use of our products is difficult and
expensive. We are currently engaged in pending litigation to
enforce certain of our patents, and additional litigation may be
necessary in the future to enforce our intellectual property
rights or to determine the validity and scope of the proprietary
rights of others. In connection with the pending litigation,
substantial management time has been, and will continue to be,
expended. In addition, we have incurred, and we expect to
continue to incur, substantial legal expenses in connection with
these pending lawsuits. These costs and this diversion of
resources could significantly harm our business.
Claims
that we infringe third-party intellectual property rights could
result in significant expenses or restrictions on our ability to
sell our products.
The networking industry is characterized by the existence of a
large number of patents and frequent litigation based on
allegations of patent infringement. We have been involved in the
past as a defendant in patent infringement lawsuits, and we were
recently found liable in a patent infringement lawsuit filed
against Optium by JDSU and Emcore Corporation. This suit
involved two of our cable television products, each of which has
been redesigned. In addition, in connection with a patent
infringement lawsuit that we initiated in January 2010 against
Source Photonics, MRV Communications, NeoPhotonics and Oplink,
each of Source Photonics and NeoPhotonics raised counterclaims
alleging patent infringement by us. The Source Photonics
counterclaims were raised against certain of our transceiver
products and the NeoPhotonics counterclaims were raised against
certain of our WSS products. In connection with our settlement
with Source Photonics, we received a royalty free license to the
Source Photonics patents through December 31, 2015. While,
as a result of various procedural events in that lawsuit, the
NeoPhotonics patent counterclaims are not currently being
asserted against us, such claims may be re-asserted against us
in the future. From time to time, other parties may assert
patent, copyright, trademark and other intellectual property
rights to technologies and in various jurisdictions that are
important to our business. Any claims asserting that our
products infringe or may infringe proprietary rights of third
parties, if determined adversely to us, could significantly harm
our business. Any claims, with or without merit, could be
time-consuming, result in costly litigation, divert the efforts
of our technical and management personnel, cause product
shipment delays or require us to enter into royalty or licensing
agreements, any of which could significantly harm our business.
In addition, our agreements with our customers typically require
us to indemnify our customers from any expense or liability
resulting from claimed infringement of third party intellectual
property rights. In the event a claim against us was successful
and we could not obtain a license to the relevant technology on
acceptable terms or license a substitute technology or redesign
our products to avoid infringement, our business would be
significantly harmed.
Numerous patents in our industry are held by others, including
academic institutions and competitors. Optical subsystem
suppliers may seek to gain a competitive advantage or other
third parties may seek an economic return on
S-17
their intellectual property portfolios by making infringement
claims against us. In the future, we may need to obtain license
rights to patents or other intellectual property held by others
to the extent necessary for our business. Unless we are able to
obtain those licenses on commercially reasonable terms, patents
or other intellectual property held by others could inhibit our
development of new products. Licenses granting us the right to
use third party technology may not be available on commercially
reasonable terms, if at all. Generally, a license, if granted,
would include payments of up-front fees, ongoing royalties or
both. These payments or other terms could have a significant
adverse impact on our operating results.
Our
products may contain defects that may cause us to incur
significant costs, divert our attention from product development
efforts and result in a loss of customers.
Our products are complex and defects may be found from time to
time. Networking products frequently contain undetected software
or hardware defects when first introduced or as new versions are
released. In addition, our products are often embedded in or
deployed in conjunction with our customers products which
incorporate a variety of components produced by third parties.
As a result, when problems occur, it may be difficult to
identify the source of the problem. These problems may cause us
to incur significant damages or warranty and repair costs,
divert the attention of our engineering personnel from our
product development efforts and cause significant customer
relation problems or loss of customers, all of which would harm
our business.
We are
subject to pending shareholder derivative legal
proceedings.
We have been named as a nominal defendant in several purported
shareholder derivative lawsuits concerning the granting of stock
options. These cases have been consolidated into two proceedings
pending in federal and state courts in California. The
plaintiffs in all of these cases have alleged that certain
current or former officers and directors of Finisar caused it to
grant stock options at less than fair market value, contrary to
our public statements (including statements in our financial
statements), and that, as a result, those officers and directors
are liable to Finisar. No specific amount of damages has been
alleged and, by the nature of the lawsuits no damages will be
alleged, against Finisar. On May 22, 2007, the state court
granted our motion to stay the state court action pending
resolution of the consolidated federal court action. On
August 28, 2007, we and the individual defendants filed
motions to dismiss the complaint which were granted on
January 11, 2008. On May 12, 2008, the plaintiffs
filed a further amended complaint in the federal court action.
On July 1, 2008, we and the individual defendants filed
motions to dismiss the amended complaint. On September 22,
2009, the Court granted the motions to dismiss. The plaintiffs
are appealing this order. We will continue to incur legal fees
in this case, including expenses for the reimbursement of legal
fees of present and former officers and directors under
indemnification obligations. The expense of continuing to defend
such litigation may be significant. The amount of time to
resolve these lawsuits is unpredictable and these actions may
divert managements attention from the day-to-day
operations of our business, which could adversely affect our
business, results of operations and cash flows.
Our
business and future operating results may be adversely affected
by events outside our control.
Our business and operating results are vulnerable to events
outside of our control, such as earthquakes, fire, power loss,
telecommunications failures and uncertainties arising out of
terrorist attacks in the United States and overseas. Our
corporate headquarters and a portion of our manufacturing
operations are located in California. California in particular
has been vulnerable to natural disasters, such as earthquakes,
fires and floods, and other risks which at times have disrupted
the local economy and posed physical risks to our property. We
are also dependent on communications links with our overseas
manufacturing locations and would be significantly harmed if
these links were interrupted for any significant length of time.
We presently do not have adequate redundant, multiple site
capacity if any of these events were to occur, nor can we be
certain that the insurance we maintain against these events
would be adequate.
S-18
Risks
Related to the Offering and the Ownership of our Common
Stock
The
conversion of our outstanding convertible subordinated notes
would result in substantial dilution to our current
stockholders.
As of October 31, 2010 , we had outstanding
5.0% Convertible Senior Notes due 2029 in the principal
amount of $100.0 million. These notes are convertible, at
the option of the holder, at any time on or prior to maturity
into shares of our common stock at a conversion price of $10.68
per share. An aggregate of approximately 9,363,296 shares
of common stock would be issued upon the conversion of all
outstanding convertible notes at these exchange rates, which
would dilute the voting power and ownership percentage of our
existing stockholders. We have previously entered into privately
negotiated transactions with certain holders of our convertible
notes for the repurchase of notes in exchange for a greater
number of shares of our common stock than would have been issued
had the principal amount of the notes been converted at the
original conversion rate specified in the notes, thus resulting
in more dilution. We may enter into similar transactions in the
future and, if we do so, there will be additional dilution to
the voting power and percentage ownership of our existing
stockholders.
Delaware
law, our charter documents and our stockholder rights plan
contain provisions that could discourage or prevent a potential
takeover, even if such a transaction would be beneficial to our
stockholders.
Some provisions of our certificate of incorporation and bylaws,
as well as provisions of Delaware law, may discourage, delay or
prevent a merger or acquisition that a stockholder may consider
favorable. These include provisions:
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authorizing the board of directors to issue additional preferred
stock;
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prohibiting cumulative voting in the election of directors;
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limiting the persons who may call special meetings of
stockholders;
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prohibiting stockholder actions by written consent;
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creating a classified board of directors pursuant to which our
directors are elected for staggered three-year terms;
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permitting the board of directors to increase the size of the
board and to fill vacancies;
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requiring a super-majority vote of our stockholders to amend our
bylaws and certain provisions of our certificate of
incorporation; and
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establishing advance notice requirements for nominations for
election to the board of directors or for proposing matters that
can be acted on by stockholders at stockholder meetings.
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We are subject to the provisions of Section 203 of the
Delaware General Corporation Law which limit the right of a
corporation to engage in a business combination with a holder of
15% or more of the corporations outstanding voting
securities, or certain affiliated persons.
In addition, in September 2002, our board of directors adopted a
stockholder rights plan under which our stockholders received
one share purchase right for each share of our common stock held
by them. Subject to certain exceptions, the rights become
exercisable when a person or group (other than certain exempt
persons) acquires, or announces its intention to commence a
tender or exchange offer upon completion of which such person or
group would acquire, 20% or more of our common stock without
prior board approval. Should such an event occur, then, unless
the rights are redeemed or have expired, our stockholders, other
than the acquirer, will be entitled to purchase shares of our
common stock at a 50% discount from its then-Current Market
Price (as defined) or, in the case of certain business
combinations, purchase the common stock of the acquirer at a 50%
discount.
Although we believe that these charter and bylaw provisions,
provisions of Delaware law and our stockholder rights plan
provide an opportunity for the board to assure that our
stockholders realize full value for their investment, they could
have the effect of delaying or preventing a change of control,
even under circumstances that some stockholders may consider
beneficial.
S-19
We do
not currently intend to pay dividends on Finisar common stock
and, consequently, a stockholders ability to achieve a
return on such stockholders investment will depend on
appreciation in the price of the common stock.
We have never declared or paid any cash dividends on Finisar
common stock and we do not currently intend to do so for the
foreseeable future. We currently intend to invest our future
earnings, if any, to fund our growth. Therefore, a stockholder
is not likely to receive any dividends on such
stockholders common stock for the foreseeable future. In
addition, our credit facility with Wells Fargo LLC contains
restrictions on our ability to pay dividends.
Our
stock price has been and is likely to continue to be
volatile.
The trading price of our common stock has been and is likely to
continue to be subject to large fluctuations. Our stock price
may increase or decrease in response to a number of events and
factors, including:
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trends in our industry and the markets in which we operate;
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changes in the market price of the products we sell;
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changes in financial estimates and recommendations by securities
analysts;
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acquisitions and financings;
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quarterly variations in our operating results;
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the operating and stock price performance of other companies
that investors in our common stock may deem comparable; and
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purchases or sales of blocks of our common stock.
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Part of this volatility is attributable to the current state of
the stock market, in which wide price swings are common. This
volatility may adversely affect the prices of our common stock
regardless of our operating performance. If any of the foregoing
occurs, our stock price could fall and we may be exposed to
class action lawsuits that, even if unsuccessful, could be
costly to defend and a distraction to management.
S-20
USE OF
PROCEEDS
We estimate that the net proceeds from the sale of the
3,600,000 shares of our common stock we are offering will
be approximately $ million
(approximately $ million if
the underwriters over-allotment option is exercised in
full), after deducting underwriting discounts and commissions
and estimated offering expenses payable by us.
We intend to use the net proceeds for general corporate
purposes, including working capital. We may use a portion of the
net proceeds for the repurchase
and/or
repayment of certain of our outstanding indebtedness, which may
include a portion of our outstanding convertible notes. We may
also use a portion of the net proceeds to acquire or invest in
complementary businesses, products or technologies, although we
have no present agreements or commitments with respect to any
such acquisitions or investments. Our management will have
significant discretion in applying the net proceeds of this
offering. Pending such uses, we will invest the net proceeds in
short-term interest bearing securities or bank deposits.
PRICE
RANGE OF COMMON STOCK
Our common stock is quoted on The Nasdaq Global Select Market
under the symbol FNSR. The following table sets
forth, for the fiscal quarters indicated, the high and low
closing sale prices of our common stock (adjusted for the
one-for-eight reverse stock effected on September 25,
2009) as reported on The Nasdaq Global Select Market.
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High
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Low
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Fiscal 2009 Quarter Ended:
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August 3, 2008
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15.04
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9.52
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November 2, 2008
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13.12
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4.48
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February 1, 2009
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5.68
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2.32
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April 30, 2009
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5.76
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1.68
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Fiscal 2010 Quarter Ended:
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August 2, 2009
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6.88
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3.60
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November 1, 2009
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10.64
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4.88
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January 31, 2010
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11.47
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7.19
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April 30, 2010
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16.92
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10.04
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Fiscal 2011 Quarter Ended:
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August 1, 2010
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17.67
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13.00
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October 31, 2010
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21.28
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12.24
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November 1, 2010 (through December 17, 2010)
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29.02
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17.01
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On December 17, 2010, the last sale price of our common
stock as reported on The Nasdaq Global Select Market was
$29.02 per share.
As of November 30, 2010, there were approximately
386 shareholders of record of our common stock. A
substantially greater number of holders of our common stock are
street name or beneficial holders, whose shares are
held of record by banks, brokers and other financial
institutions.
DIVIDEND
POLICY
We have never paid cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance
the growth and development of our business and, therefore, we do
not anticipate paying any cash dividends in the future. In
addition, our credit facility with Wells Fargo Foothill, LLC
contains restrictions on our ability to pay dividends.
S-21
CAPITALIZATION
The following table sets forth our cash and capitalization as of
October 31, 2010:
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on an actual basis; and
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on an as adjusted basis to reflect our sale of the
3,600,000 shares of common stock offered in this offering,
at an offering price of
$
per share, after deducting estimated underwriter discounts and
offering expenses, and our receipt and application of the net
proceeds.
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Actual
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As Adjusted
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(In thousands,
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except share data)
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Cash and cash equivalents
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$
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184,928
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$
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Long-term debt, including short-term portion(1)
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$
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117,250
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$
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Stockholders equity:
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Preferred stock, $0.001 par value; 5,000,000 shares
authorized, no shares issued or outstanding
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Common stock, $0.001 par value; 750,000,000 shares
authorized, 77,184,585 shares issued and outstanding;
80,784,585 shares issued and outstanding, as adjusted(2)
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77
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Additional paid-in capital
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2,048,708
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Accumulated other comprehensive income
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20,632
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Accumulated deficit
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(1,644,672
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)
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Total stockholders equity
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424,745
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Total capitalization
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$
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541,995
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$
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(1) |
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We may use a portion of the net proceeds from this offering for
repurchase of certain of our outstanding indebtedness, which may
include a portion of our outstanding convertible notes. The
effect of these potential transactions is not reflected in the
As Adjusted column. |
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(2) |
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The number of shares outstanding as of October 31, 2010
does not include the following: |
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7,338,362 shares of common stock issuable upon exercise of
options outstanding under our employee stock plans, with a
weighted average exercise price of $13.59 per share,
2,638,249 shares of common stock issuable upon vesting of
outstanding restricted stock units, and an additional
8,412,181 shares reserved for issuance under our employee
stock plans;
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2,138,711 shares of common stock reserved for issuance
under our 2009 Employee Stock Purchase Plan; and
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9,363,296 shares of common stock reserved for issuance upon
conversion of our 5.0% Convertible Senior Notes due 2029.
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S-22
MATERIAL
U.S. FEDERAL INCOME TAX
CONSIDERATIONS FOR
NON-U.S.
HOLDERS
The following is a summary of the material U.S. federal
income tax consequences of the ownership and disposition of
shares of our common stock to a
non-U.S. holder
who purchases our common stock in this offering. For purposes of
this discussion, a
non-U.S. holder
is any beneficial owner of our common stock that for
U.S. federal income tax purposes is not a U.S. person
(other than a partnership, as discussed below). The term
U.S. person means:
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an individual citizen or resident of the United States;
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a corporation or other entity taxable as a corporation created
or organized in the United States or under the laws of the
United States or any state thereof or the District of Columbia;
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an estate whose income is subject to U.S. federal income
tax regardless of its source; or
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a trust (x) whose administration is subject to the primary
supervision of a U.S. court and which has one or more
U.S. persons who have the authority to control all
substantial decisions of the trust or (y) which has made a
valid election to be treated as a U.S. person.
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If a partnership or other pass-through entity holds common
stock, the tax treatment of a partner or member in the
partnership or other entity will generally depend on the status
of the partner or member and upon the activities of the
partnership or other entity. Accordingly, we urge partnerships
or other pass-through entities which hold shares of our common
stock and partners or members in these partnerships or other
entities to consult their tax advisors.
This discussion assumes that
non-U.S. holders
will hold shares of our common stock issued pursuant to the
offering as a capital asset (generally, property held for
investment). This discussion does not address all aspects of
U.S. federal income taxation that may be relevant in light
of a
non-U.S. holders
special tax status or special tax situations.
U.S. expatriates, life insurance companies, tax-exempt
organizations, dealers in securities or currency, banks or other
financial institutions, pension funds, controlled foreign
corporations within the meaning of Section 957 of the
Internal Revenue Code of 1986, as amended (the
Code), passive foreign investment companies within
the meaning of Section 1297 of the Code, corporations that
accumulate earnings to avoid U.S. federal income tax, and
investors that hold shares of common stock as part of a hedge,
straddle or conversion transaction are among those categories of
potential investors that are subject to special rules not
covered in this discussion. This discussion does not address any
non-income tax consequences or any income tax consequences
arising under the laws of any state, local or
non-U.S. taxing
jurisdiction. Furthermore, the following discussion is based on
current provisions of the Code, Treasury Regulations and
administrative and judicial interpretations thereof, all as in
effect on the date hereof, and all of which are subject to
change, possibly with retroactive effect. Additionally, we have
not sought any ruling from the Internal Revenue Service, or IRS,
with respect to statements made and conclusions reached in this
discussion, and there can be no assurance that the IRS will
agree with these statements and conclusions. We urge each
prospective purchaser to consult a tax advisor regarding the
U.S. federal, state, local and
non-U.S. income
and other tax consequences of acquiring, holding and disposing
of shares of our common stock.
Distributions
If we make distributions on our common stock, those payments
will constitute dividends for U.S. tax purposes to the
extent paid from our current or accumulated earnings and
profits, as determined under U.S. federal income tax
principles. To the extent those distributions exceed our current
and accumulated earnings and profits, the distributions will
first constitute a return of capital and will reduce a
holders basis, but not below zero, and then will be
treated as gain from the sale of shares and may be subject to
U.S. federal income tax as described below.
Any distribution that is a dividend, as described above, paid to
a
non-U.S. holder
of common stock generally will be subject to
U.S. withholding tax either at a rate of 30% of the gross
amount of the dividend or such lower rate as may be specified by
an applicable tax treaty. In order to receive a reduced treaty
rate, a
non-U.S. holder
must timely provide us with an IRS
Form W-8BEN
or other appropriate version of IRS
Form W-8
certifying qualification for the reduced rate.
S-23
Dividends received by a
non-U.S. holder
that are effectively connected with a U.S. trade or
business conducted by the
non-U.S. holder
(and dividends attributable to a
non-U.S. holders
permanent establishment in the United States if a tax treaty
applies) are exempt from this withholding tax. In order to
obtain this exemption, a
non-U.S. holder
must provide us with an IRS
Form W-8ECI
properly certifying this exemption. Dividends that are so
effectively connected (and, if required by an applicable tax
treaty, attributable to a permanent establishment), although not
subject to withholding tax, are taxed at the same graduated
rates applicable to U.S. persons, net of specified
deductions and credits. In addition, such dividends received by
a corporate
non-U.S. holder
may also be subject to a branch profits tax at a rate of 30% (or
such lower rate as may be specified in a tax treaty).
A
non-U.S. holder
of common stock that is eligible for a reduced rate of
withholding tax pursuant to a tax treaty may obtain a refund of
any excess amounts withheld if an appropriate claim for refund
is filed with the IRS.
Gain on
Disposition of Shares of Common Stock
A
non-U.S. holder
generally will not be subject to United States federal income
tax on gain realized upon the sale or other disposition of
shares of our common stock unless:
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the gain is effectively connected with a U.S. trade or
business of the
non-U.S. holder
(and attributable to a permanent establishment in the United
States if a tax treaty applies);
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the
non-U.S. holder
is an individual who is present in the United States for a
period or periods aggregating 183 days or more during the
taxable year in which the sale or disposition occurs and certain
other conditions are met; or
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our common stock constitutes a U.S. real property interest
by reason of our status as a United States real property
holding corporation for U.S. federal income tax
purposes at any time within the shorter of the five-year period
preceding the date of disposition or the holders holding
period for shares of our common stock. We believe that we are
not currently, and we believe that we will not become, a
United States real property holding corporation for
U.S. federal income tax purposes. If we are or become a
United States real property holding corporation, so
long as our common stock is regularly traded on an established
securities market, only a
non-U.S. holder
who, actually or constructively, holds or held (at any time
during the shorter of the five year period preceding the date of
disposition or the holders holding period) more than 5% of
shares of our common stock will be subject to U.S. federal
income tax on the disposition of shares of our common stock.
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If the recipient is a
non-U.S. holder
described in the first bullet above, the recipient will be
required to pay tax on the net gain derived from the sale under
regular graduated U.S. federal income tax rates, and
corporate
non-U.S. holders
described in the first bullet above may be subject to the branch
profits tax at a 30% rate or such lower rate as may be specified
by an applicable income tax treaty.
Non-U.S. holders
should consult their tax advisors regarding any applicable
income tax treaties that may provide for different rules.
If the recipient is an individual
non-U.S. holder
described in the second bullet above, the recipient will be
required to pay a flat 30% tax on the gain derived from the
sale, which tax may be offset by U.S. source capital
losses, provided that the
non-U.S. holder
has timely filed U.S. federal income tax returns with
respect to such losses.
Backup
Withholding and Information Reporting
Generally, we must report annually to the IRS the amount of
dividends paid, the name and address of the recipient, and the
amount, if any, of tax withheld. A similar report is sent to the
holder. Pursuant to tax treaties or other agreements, the IRS
may make its reports available to tax authorities in the
recipients country of residence.
Payments of dividends or of proceeds on the disposition of
shares made to a
non-U.S. holder
may be subject to information reporting and backup withholding
at the then effective rate unless the
non-U.S. holder
establishes an exemption, for example, by properly certifying
its
non-U.S. status
on a
Form W-8BEN
or another appropriate version of
Form W-8.
Notwithstanding the foregoing, information reporting and backup
withholding may apply if either we or our paying agent has
actual knowledge, or reason to know, that the holder is a
U.S. person.
S-24
Backup withholding is not an additional tax. Rather, the
U.S. income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund or
credit may be obtained, so long as the required information is
furnished to the IRS in a timely manner.
Withholding
With Respect to Certain Foreign Accounts
Recently enacted legislation may impose withholding taxes on
certain types of payments made to foreign financial
institutions (as defined in the legislation) and certain
other
non-U.S. entities
(including financial intermediaries). Under this legislation,
failure to comply with additional certification, information
reporting and other requirements could result in withholding tax
being imposed on payments of dividends and sales proceeds to
foreign intermediaries and certain
non-U.S. holders.
The legislation imposes a 30% withholding tax on dividends on,
or gross proceeds from the sale or other disposition of, our
common stock paid to a foreign financial institution or to a
foreign non-financial entity, unless (i) the foreign
financial institution undertakes certain diligence and reporting
obligations or (ii) the foreign non-financial entity either
certifies it does not have any substantial U.S. owners or
furnishes identifying information regarding each substantial
U.S. owner. If the payee is a foreign financial
institution, it must enter into an agreement with the
U.S. Treasury requiring, among other things, that it
undertake to identify accounts held by certain U.S. persons
or
U.S.-owned
foreign entities, annually report certain information about such
accounts and withhold 30% on payments to account holders whose
actions prevent it from complying with these reporting and other
requirements. The legislation applies to payments made after
December 31, 2012. Prospective investors should consult
their tax advisors regarding this legislation.
S-25
UNDERWRITER
Under the terms and subject to the conditions contained in an
underwriting agreement dated December , 2010,
we have agreed to sell to Credit Suisse Securities (USA) LLC
3,600,000 shares of common stock at a price of
$ per share.
We have granted to the underwriter a
30-day
option to purchase up to 540,000 additional shares of common
stock at a price of $ per share.
The underwriter will offer the shares of common stock for sale
from time to time in one or more transactions (which may include
block transactions), in negotiated transactions or otherwise, or
a combination of those methods of sale, at market prices
prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The shares of common
stock will not be sold on or through the facilities of a
national securities exchange or to or through a market maker
otherwise than on an exchange. The underwriter may do so by
selling the shares of common stock to or through broker/dealers,
who may receive compensation in the form of underwriting
discounts, concessions or commissions from the underwriter
and/or the
purchasers of the shares of common stock for whom they may act
as agents. In connection with the sale of the shares of common
stock, the underwriter may be deemed to have received
compensation from us in the form of underwriting discounts, and
the underwriter may also receive commissions from the purchasers
of the shares of common stock for whom they may act as agents.
The underwriter and any broker/dealers that participate with the
underwriter in the distribution of the shares of common stock
may be deemed to be underwriters, and any discounts or
commissions received by them and any profit on the resale of the
shares of common stock by them may be deemed to be underwriting
discounts or commissions.
The underwriter is purchasing the shares of common stock from us
at $ per share (resulting in net
proceeds to us, before deducting offering expenses, of
approximately $ million (or
approximately $ million if
the underwriters option to purchase additional shares is
exercised in full)). The underwriting agreement provides that
the underwriter is obligated to purchase all the shares of
common stock if any are purchased, other than those covered by
the option to purchase additional shares described above.
We estimate that the expenses of this offering to be paid by us
will be approximately $ .
We have agreed that, without the prior written consent of the
underwriter, subject to certain exceptions, we will not, during
the period ending 45 days after the date of this prospectus
supplement:
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offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of directly or indirectly, any
shares of common stock or any securities convertible into
exercisable or exchangeable for common stock; or
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enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences
of ownership of the common stock;
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whether any such transaction described above is to be settled by
delivery of common stock or such other securities, in cash or
otherwise, or file any registration statement with the
Securities and Exchange Commission relating to the offering of
any shares of common stock or any securities convertible into or
exercisable or exchangeable for common stock.
The restrictions described in the above paragraph do not apply
to:
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the shares of common stock to be sold pursuant to the
underwriting agreement;
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S-26
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the issuance of shares of common stock upon the exercise of an
option or warrant or the conversion of a security outstanding on
the date of this prospectus supplement of which the underwriter
has been advised in writing;
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grants of employee or director stock options, restricted stock
or restricted stock units in accordance with the terms of any
employee benefit plan in effect on the date of and described in
this prospectus supplement or the issuance of shares of common
stock upon the exercise of such options or pursuant to the terms
of such restricted stock units;
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the filing of any registration statement of
Form S-8
in respect of any employee benefit plan in effect on the date of
and described in this prospectus supplement; and
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the issuance of up to 7,500,000 shares of common stock (or
options, warrants or convertible securities relating to shares
of common stock) in connection with bona fide mergers or
acquisitions, joint ventures, commercial relationships or other
strategic transactions, provided that the recipient of any such
shares of common stock (or options, warrants or convertible
securities relating to shares of common stock) agrees to be
subject to the restrictions described above for the remainder of
the 45-day
period.
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Each of our executive officers and directors has agreed that,
without the prior written consent of the underwriter, subject to
certain exceptions, they will not, during the period ending
45 days after the date of this prospectus supplement:
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offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of directly or indirectly, any
shares of common stock beneficially owned (as such term is
defined in
Rule 13d-3
of the Securities Exchange Act of 1934, as amended, or the
Exchange Act) by them or any securities convertible into or
exercisable or exchangeable for common stock; or
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enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences
of ownership of the common stock;
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whether any such transaction described above is to be settled by
delivery of common stock or such other securities, in cash or
otherwise.
The restrictions described in the above paragraph do not apply
to:
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the sale of the shares of common stock pursuant to the
underwriting agreement;
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sales of the shares of common stock purchased pursuant to the
terms of the underwriting agreement or transactions involving or
relating to shares of common stock or other securities acquired
in open market transactions after the completion of the
offering; provided that no filing under Section 16(a) of
the Exchange Act is required or voluntarily made in connection
with subsequent sales of common stock or other securities
acquired in open market transactions;
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the disposal or withholding of shares of common stock by us on
behalf of the stockholder otherwise issuable upon a vesting
event of restricted stock units issued to the stockholder prior
to the date of this prospectus supplement under our stock
incentive plans solely to satisfy withholding tax obligations;
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the sale of shares of common stock made pursuant to a trading
plan in conformity with Rule 10b5-1 under the Exchange Act
established prior to the date hereof;
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transfers of shares of common stock or any security convertible
into common stock as a bona fide gift, or upon the death of a
stockholder, by will or intestate succession to the
stockholders immediate family; and
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transfers of shares of common stock or any security convertible
into common stock to a trust, the beneficiaries of which are
exclusively the stockholder or members of the stockholders
immediate family;
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provided that the recipient of any such shares of common stock
(or options, warrants or convertible securities relating to
shares of common stock) agrees to be subject to the restrictions
described above and no filing under Section 16(a) of the
Exchange Act is required or voluntarily made for the remainder
of the 45-day period.
S-27
Additionally, the restrictions described in the above paragraph
do not apply to the establishment of a trading plan pursuant to
Rule 10b5-1
under the Exchange Act for the transfer of shares of common
stock, provided that such plan does not provide for the
transfer of common stock during the restricted period described
above and no public announcement or filing under the Exchange
Act regarding the establishment of such plan shall be required
of or voluntarily made by or on behalf of us.
In connection with the offering, the underwriter may engage in
over-allotment transactions in accordance with Regulation M
under the Exchange Act. Over-allotment involves sales by the
underwriter of shares in excess of the number of shares the
underwriter is obligated to purchase, which creates a syndicate
short position. The short position may be either a covered short
position or a naked short position. In a covered short position,
the number of shares over-allotted by the underwriter is not
greater than the number of shares that it may purchase in the
over-allotment option. In a naked short position, the number of
shares involved is greater than the number of shares in the
over-allotment option. The underwriter may close out any covered
short position by exercising its over-allotment option
and/or
purchasing shares in the open market. These activities may raise
or maintain the market price of the common stock above
independent market levels or prevent or retard a decline in the
market price of the common stock. The underwriter is not
required to engage in these activities and may end any of these
activities at any time.
Our common stock is listed on the Nasdaq Global Select Market
under the symbol FNSR. We and the underwriter have
agreed to indemnify each other against certain liabilities,
including liabilities under the Securities Act.
In the ordinary course of business, the underwriter and its
affiliates have provided and may in the future provide financial
advisory, investment banking and general financing and banking
services for us and our affiliates for customary fees.
Selling
Restrictions
European
Economic Area
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State), the underwriter has
represented and agreed that with effect from and including the
date on which the Prospectus Directive is implemented in that
Relevant Member State (the Relevant Implementation
Date) it has not made and will not make an offer of shares
of common stock to the public in that Member State prior to the
publication of a prospectus in relation to the shares of common
stock which has been approved by the competent authority in that
Relevant Member State or, where appropriate, approved in another
Relevant Member State and notified to the competent authority in
that Relevant Member State, all in accordance with the
Prospectus Directive, except that an offer to the public in that
Relevant Member State of any shares of common stock may be made
at any time with effect from and including the Relevant
Implementation Date under the following exemptions under the
Prospectus Directive, if they have been implemented in that
Relevant Member State:
(a) at any time to legal entities which are authorized or
regulated to operate in the financial markets or, if not so
authorized or regulated, whose corporate purpose is solely to
invest in securities;
(b) at any time to any legal entity which has two or more
of (1) an average of at least 250 employees during the
last financial year; (2) a total balance sheet of more than
43,000,000 and (3) an annual net turnover of more
than 50,000,000, as shown in its last annual or
consolidated accounts;
(c) by the underwriter to fewer than 100 natural or legal
persons (other than qualified investors as defined in the
Prospectus Directive); or
(d) at any time in any other circumstances which do not
require the publication by us of a prospectus pursuant to
Article 3 of the Prospectus Directive.
For the purposes of the above, the expression an offer of
shares of common stock to the public in relation to an
shares of common stock in any Relevant Member State means the
communication in any form and by any means
S-28
of sufficient information on the terms of the offer and the
shares of common stock to be offered so as to enable an investor
to decide to purchase or subscribe the shares of common stock,
as the same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State and
the expression Prospectus Directive means Directive 2003/71/EC
and includes any relevant implementing measure in each Relevant
Member State.
This European Economic Area selling restriction is in addition
to any other selling restrictions set out in this prospectus
supplement.
United
Kingdom
The underwriter has represented and agreed that it has only
communicated or caused to be communicated and will only
communicate or cause to be communicated an invitation or
inducement to engage in investment activity (within the meaning
of Section 21 of the Financial Services and Markets Act
2000) received by it in connection with the issue or sale
of the shares of common stock in circumstances in which
Section 21(1) of such Act does not apply to the issuer and
it has complied and will comply with all applicable provisions
of such Act with respect to anything done by it in relation to
any shares of common stock in, from or otherwise involving the
United Kingdom.
S-29
NOTICE TO
CANADIAN RESIDENTS
Resale
Restrictions
The distribution of the common stock in Canada is being made
only on a private placement basis exempt from the requirement
that we prepare and file a prospectus with the securities
regulatory authorities in each province where trades of common
stock are made. Any resale of the common stock in Canada must be
made under applicable securities laws which may vary depending
on the relevant jurisdiction, and which may require resales to
be made under available statutory exemptions or under a
discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek
legal advice prior to any resale of the common stock.
Representations
of Purchasers
By purchasing common stock in Canada and accepting delivery of a
purchase confirmation, a purchaser is representing to us and the
dealer from whom the purchase confirmation is received that:
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the purchaser is entitled under applicable provincial securities
laws to purchase the common stock without the benefit of a
prospectus qualified under those securities laws as it is an
accredited investor as defined under National
Instrument
45-106
Prospectus and Registration Exemptions,
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the purchaser is a permitted client as defined in
National Instrument
31-103 -
Registration Requirements and Exemptions,
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where required by law, the purchaser is purchasing as principal
and not as agent,
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the purchaser has reviewed the text above under Resale
Restrictions, and
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the purchaser acknowledges and consents to the provision of
specified information concerning the purchase of the common
stock to the regulatory authority that by law is entitled to
collect the information, including certain personal information.
For purchasers in Ontario, questions about such indirect
collection of personal information should be directed to
Administrative Support Clerk, Suite 1903, Box 55, 20 Queen
Street West, Toronto, Ontario M5H 3S8 or on
(416) 593-3684.
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Rights of
Action Ontario Purchasers Only
Under Ontario securities legislation, certain purchasers who
purchase a security offered by this prospectus supplement during
the period of distribution will have a statutory right of action
for damages, or while still the owner of the common stock, for
rescission against us in the event that this prospectus
supplement contains a misrepresentation without regard to
whether the purchaser relied on the misrepresentation. The right
of action for damages is exercisable not later than the earlier
of 180 days from the date the purchaser first had knowledge
of the facts giving rise to the cause of action and three years
from the date on which payment is made for the common stock. The
right of action for rescission is exercisable not later than
180 days from the date on which payment is made for the
common stock. If a purchaser elects to exercise the right of
action for rescission, the purchaser will have no right of
action for damages against us. In no case will the amount
recoverable in any action exceed the price at which the common
stock was offered to the purchaser and if the purchaser is shown
to have purchased the securities with knowledge of the
misrepresentation, we will have no liability. In the case of an
action for damages, we will not be liable for all or any portion
of the damages that are proven to not represent the depreciation
in value of the common stock as a result of the
misrepresentation relied upon. These rights are in addition to,
and without derogation from, any other rights or remedies
available at law to an Ontario purchaser. The foregoing is a
summary of the rights available to an Ontario purchaser. Ontario
purchasers should refer to the complete text of the relevant
statutory provisions.
Enforcement
of Legal Rights
All of our directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may
not be possible for Canadian purchasers to effect service of
process within Canada upon us or those persons. All or a
substantial portion of our assets and the assets of those
persons may be located outside of Canada
S-30
and, as a result, it may not be possible to satisfy a judgment
against us or those persons in Canada or to enforce a judgment
obtained in Canadian courts against us or those persons outside
of Canada.
Taxation
and Eligibility for Investment
Canadian purchasers of common stock should consult their own
legal and tax advisors with respect to the tax consequences of
an investment in the common stock in their particular
circumstances and about the eligibility of the common stock for
investment by the purchaser under relevant Canadian legislation.
LEGAL
MATTERS
The validity of the common stock offered hereby will be passed
upon for us by DLA Piper LLP (US) of East Palo Alto, California.
Certain legal matters in connection with this offering will be
passed upon for the underwriter by Wilson Sonsini
Goodrich & Rosati, Professional Corporation of Palo
Alto, California and Austin, Texas.
EXPERTS
Ernst & Young LLP, independent registered public
accounting firm, has audited our consolidated financial
statements and schedule at April 30, 2010 and 2009, and for
each of the three years in the period ended April 30, 2010.
Our consolidated financial statements and schedule are
incorporated by reference in reliance on Ernst & Young
LLPs report, given on their authority as experts in
accounting and auditing.
S-31
PROSPECTUS
Finisar Corporation
COMMON STOCK, PREFERRED
STOCK,
DEBT SECURITIES,
WARRANTS AND UNITS
From time to time, in one or more offerings, we may offer and
sell any combination of the securities described in this
prospectus, either individually or in units comprised of one or
more of the other securities. In addition, certain selling
securityholders to be identified in a prospectus supplement may
offer and sell these securities from time to time, in amounts,
at prices and on terms that will be determined at the time the
securities are offered.
This prospectus provides a general description of the securities
we may offer and sell. Each time we offer and sell securities,
we will provide specific terms of the securities offered in a
supplement to this prospectus. We may also authorize one or more
free writing prospectuses to be provided to you in connection
with these offerings. The prospectus supplement and any related
free writing prospectus may also add, update or change
information contained in this prospectus. You should carefully
read this prospectus, the applicable prospectus supplement and
any related free writing prospectus, as well as any documents
incorporated by reference before you invest. This prospectus may
not be used to consummate a sale of securities unless
accompanied by the applicable prospectus supplement.
Our common stock is listed on The Nasdaq Global Select Market
under the symbol FNSR. On March 12, 2010, the
last reported sale price for our common stock was $13.98 per
share. The applicable prospectus supplement will contain
information, where applicable, as to any other listing of the
securities covered by the prospectus supplement on The Nasdaq
Global Select Market or any other securities market or exchange.
INVESTING IN OUR SECURITIES
INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD REVIEW CAREFULLY THE
RISKS AND UNCERTAINTIES DESCRIBED UNDER THE HEADING RISK
FACTORS ON PAGE 2 OF THIS PROSPECTUS AND CONTAINED IN
THE APPLICABLE PROSPECTUS SUPPLEMENT AND ANY RELATED FREE
WRITING PROSPECTUS AND UNDER SIMILAR HEADINGS IN THE OTHER
DOCUMENTS THAT ARE INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS.
We may sell these securities directly to investors, through
agents designated from time to time or to or through
underwriters or dealers. For additional information on the
methods of sale, you should refer to the section entitled
Plan of Distribution in this prospectus. If any
underwriters are involved in the sale of any securities with
respect to which this prospectus is being delivered, the names
of such underwriters and any applicable commissions or discounts
will be set forth in the applicable prospectus supplement. The
price to the public of such securities and the net proceeds we
expect to receive from such sale will also be set forth in the
prospectus supplement.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is March 15, 2010
TABLE OF
CONTENTS
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ABOUT
THIS PROSPECTUS
This prospectus is a part of a registration statement that we
filed with the Securities and Exchange Commission, or the SEC,
utilizing a shelf registration process. Under this
shelf registration process, we may sell any combination of the
securities described in this prospectus in one or more
offerings. This prospectus provides you with a general
description of the securities we may offer. Each time we sell
securities under this shelf registration, we will provide a
prospectus supplement that will contain specific information
about the terms of that offering. We may also authorize one or
more free writing prospectuses to be provided to you that may
contain material information relating to these offerings. The
prospectus supplement or any related free writing prospectus
that we may authorize to be provided to you may also add, update
or change information contained in this prospectus or in any
documents that we have incorporated by reference into this
prospectus. You should read this prospectus, any applicable
prospectus supplement and any related free writing prospectus,
together with the information incorporated herein by reference
as described under the heading Incorporation by
Reference. To the extent there is a conflict between the
information contained in this prospectus and the prospectus
supplement or any related free writing prospectus, you should
rely on the information in the prospectus supplement or the
related free writing prospectus, provided that if any statement
in one of these documents is inconsistent with a statement in
another document having a later date for example, a
document incorporated by reference in this prospectus or any
prospectus supplement or any related free writing prospectus
the statement in the document having the later date
modifies or supersedes the earlier statement.
You should rely only on the information that we have provided or
incorporated by reference in this prospectus, any applicable
prospectus supplement and any related free writing prospectus
that we may authorize to be provided to you. We have not
authorized any dealer, salesman or other person to give any
information or to make any representation other than those
contained or incorporated by reference in this prospectus, any
applicable prospectus supplement or any related free writing
prospectus that we may authorize to be provided to you. You must
not rely upon any information or representation not contained or
incorporated by reference in this prospectus or the accompanying
prospectus supplement. This prospectus and the accompanying
supplement to this prospectus do not constitute an offer to sell
or the solicitation of an offer to buy any securities other than
the registered securities to which they relate, nor do this
prospectus and the accompanying supplement to this prospectus
constitute an offer to sell or the solicitation of an offer to
buy securities in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such
jurisdiction. You should not assume that the information
contained in this prospectus, any applicable prospectus
supplement or any related free writing prospectus is accurate on
any date subsequent to the date set forth on the front of the
document or that any information we have incorporated by
reference is correct on any date subsequent to the date of the
document incorporated by reference, even though this prospectus,
any applicable prospectus supplement or any related free writing
prospectus is delivered or securities are sold on a later date.
When used in this prospectus, references to Finisar,
the Company, we, us and
our refer to Finisar Corporation and its
consolidated subsidiaries, unless otherwise indicated or the
context otherwise requires.
ii
SUMMARY
This summary highlights selected information from this
prospectus and the documents incorporated herein by reference
and does not contain all of the information that you need to
consider in making your investment decision. You should
carefully read the entire prospectus and the information
incorporated by reference, including our financial statements,
and the exhibits to the registration statement of which this
prospectus is a part.
Finisar
Corporation
Finisar Corporation is a leading provider of optical subsystems
and components that are used to interconnect equipment in
short-distance local area networks, or LANs, and storage area
networks, or SANs, and longer distance metropolitan area
networks, or MANs, fiber to the home, or FTTx, networks, cable
television, or CATV, networks and wide area networks, or WANs.
Our optical subsystems consist primarily of transmitters,
receivers, transceivers and transponders which provide the
fundamental optical-electrical interface for connecting various
types of equipment used in building these networks, including
switches, routers and file servers used in wireline networks as
well as antennas and base stations for wireless networks. These
products rely on the use of semiconductor lasers and
photodetectors in conjunction with integrated circuit design and
novel packaging technology to provide a cost-effective means for
transmitting and receiving digital signals over fiber optic
cable at speeds ranging from less than 1 gigabits per second, or
Gbps, to 40Gbps, using a wide range of network protocols and
physical configurations over distances of 70 meters to 200
kilometers. We supply optical transceivers and transponders that
allow point-to-point communications on a fiber using a single
specified wavelength or, bundled with multiplexing technologies,
can be used to supply multi-gigabit bandwidth over several
wavelengths on the same fiber. We also provide products for
dynamically switching network traffic from one optical
wavelength to another across multiple wavelengths known as
reconfigurable optical add/drop multiplexers, or ROADMs. Our
line of optical components consists primarily of packaged lasers
and photodetectors used in transceivers, primarily for LAN and
SAN applications, and passive optical components used in
building MANs. Demand for our products is largely driven by the
continually growing need for additional bandwidth created by the
ongoing proliferation of data and video traffic that must be
handled by both wireline and wireless networks. Our
manufacturing operations are vertically integrated, and we
utilize internal sources for many of the key components used in
making our products, including lasers, photodetectors and
integrated circuits, or ICs, designed by our own internal IC
engineering teams. We also have internal assembly and test
capabilities that make use of internally designed equipment for
the automated testing of our optical subsystems and components.
We sell our optical products to manufacturers of storage
systems, networking equipment and telecommunication equipment or
their contract manufacturers, such as Alcatel-Lucent, Brocade,
Cisco Systems, EMC, Emulex, Ericsson, Hewlett-Packard Company,
Huawei, IBM, Juniper, Qlogic, Siemens and Tellabs. These
customers, in turn, sell their systems to businesses and to
wireline and wireless telecommunications service providers and
cable TV operators, collectively referred to as carriers.
We were incorporated in California in April 1987 and
reincorporated in Delaware in November 1999. Our principal
executive offices are located at 1389 Moffett Park Drive,
Sunnyvale, California 94089, and our telephone number at that
location is
(408) 548-1000.
Our website is located at www.finisar.com. Information on
our website is not a part of this prospectus.
The
Securities We May Offer
From time to time, in one or more offerings, we may offer shares
of our common stock, shares of our preferred stock, various
series of debt securities, and warrants to purchase any of such
securities, or any combination of the foregoing, either
individually or in units, at prices and on terms to be
determined by market conditions at the time of each offering.
This prospectus provides you with a general description of the
securities we may offer. Each time we offer a type or series of
securities, we will provide a prospectus supplement that will
describe the specific amounts, prices and other important terms
of the securities.
THIS PROSPECTUS MAY NOT BE USED TO OFFER OR SELL ANY
SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
1
RISK
FACTORS
We operate in a highly competitive environment in which there
are numerous factors which can influence our business, financial
position or results of operations and which can also cause the
market value of our securities to decline. Many of these factors
are beyond our control and, therefore, are difficult to predict.
You should read the section entitled Risk Factors in
the applicable prospectus supplement and in our most recent
Annual Report on
Form 10-K
and our most recent Quarterly Reports on
Form 10-Q,
which are incorporated herein by reference. Each of these risk
factors could affect us, our business or our industry, and which
could have a material adverse impact on our financial results or
cause the market price of our common stock to fluctuate or
decline. However, there may be additional risks and
uncertainties not currently known to us or that we presently
deem immaterial that could also affect our business operations
and the market value of our securities.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference
contain forward-looking statements. These statements are based
on our managements current beliefs, expectations and
assumptions about future events, conditions and results and on
information currently available to us. Discussions containing
these forward-looking statements may be found, among other
places, in the Sections entitled Business,
Risk Factors and Managements Discussion
and Analysis of Financial Condition and Results of
Operations incorporated by reference from our most recent
Annual Report on
Form 10-K
and in Quarterly Reports on
Form 10-Q,
as well as any amendments thereto, filed with the SEC.
All statements, other than statements of historical fact,
included or incorporated herein regarding our strategy, future
operations, financial position, future revenues, projected
costs, plans, prospects and objectives are forward-looking
statements. In some cases, you can identify forward-looking
statements by terms such as anticipates,
believes, could, estimates,
expects, intends, may, and
similar expressions. These statements involve risks,
uncertainties and other factors that may cause our actual
results, performance, time frames or achievements to be
materially different from any future results, performance, time
frames or achievements expressed or implied by the
forward-looking statements. Risks, uncertainties and other
factors that might cause or contribute to such differences
include, but are not limited to, those discussed under
Risk Factors and elsewhere in this prospectus as
well as in our most recent Annual Report on
Form 10-K
and in our Quarterly Reports on
Form 10-Q
and any amendments thereto filed with the SEC. Given these
risks, uncertainties and other factors, many of which are beyond
our control, you should not place undue reliance on these
forward-looking statements.
Except as required by law, we assume no obligation to update
these forward-looking statements publicly, or to revise any
forward-looking statements to reflect events or developments
occurring after the date of this prospectus, even if new
information becomes available in the future.
2
USE OF
PROCEEDS
Except as described in any applicable prospectus supplement or
in any free writing prospectuses in connection with a specific
offering, we currently intend to use the net proceeds from the
sale of the securities offered hereby for general corporate
purposes, including working capital. We may use a portion of the
net proceeds for the repurchase
and/or
repayment of certain of our outstanding indebtedness, which may
include a portion of our outstanding convertible notes. We may
also use a portion of the net proceeds to acquire or invest in
complementary businesses, products or technologies, although we
have no present agreements or commitments with respect to any
such acquisitions or investments. Our management will have
significant discretion in applying the net proceeds from the
sale of the securities offered hereby. Pending such uses, we
will invest the net proceeds in short-term interest bearing
securities or bank deposits. In the case of a sale by a selling
securityholder, we will not receive any of the proceeds from
such sale.
RATIO OF
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS
The following table sets forth information regarding our ratio
of earnings to combined fixed charges for each of the periods
presented. We had no preferred stock outstanding and were not
required to pay, nor did we pay, dividends on any preferred
stock during any of these periods and, therefore, the ratio of
earnings to combined fixed charges and preferred stock dividends
did not differ from the ratios below during any of these
periods. Earnings available to cover fixed charges consist of
income (loss) from continuing operations before provision for
(benefit from) income taxes and cumulative effect of change in
accounting principle plus fixed charges. Fixed charges consist
of interest expense and that portion of rental payments under
operating leases that is representative of the interest factor.
Our earnings, as so defined, were insufficient to cover fixed
charges in the nine months ended January 31, 2010 and in
each of the fiscal years ended April 30, 2009, 2008, 2007,
2006 and 2005. Because of these deficiencies, the ratio
information is not applicable for any of those periods. The
extent to which earnings were insufficient to cover fixed
charges for each of those periods is shown below. Amounts shown
are in thousands.
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Nine
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Months
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Ended
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January 31,
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Fiscal Year Ended April 30,
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2010
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2009
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2008
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2007
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2006
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2005
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Ratio of earnings to fixed charges
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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Deficiency of earnings available to cover fixed charges
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$
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(36,299
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$
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(269,454
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$
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(30,611
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$
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(39,763
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$
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(28,382
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$
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(110,161
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3
DESCRIPTION
OF CAPITAL STOCK
Our authorized capital stock consists of 750,000,000 shares
of common stock, $0.001 par value per share, and
5,000,000 shares of preferred stock, $0.001 par value
per share.
The following is a summary of the material terms of our common
stock and preferred stock and certain provisions of our
certificate of incorporation, bylaws and stockholder rights plan
and applicable Delaware law. The following summary does not
purport to be complete and is qualified in its entirety by
reference to the terms of our certificate of incorporation,
bylaws, stockholder rights plan and Delaware law.
Common
Stock
As of February 28, 2010, there were 65,536,100 shares
of our common stock outstanding. The holders of our common stock
are entitled to one vote for each share held of record on all
matters submitted to a vote of stockholders. Holders of common
stock are not entitled to cumulate their votes in the election
of directors. Accordingly, holders of a majority of the shares
of common stock entitled to vote in any election of directors
may elect all of the directors standing for election. Subject to
preferences that may be applicable to any outstanding shares of
preferred stock, holders of common stock are entitled to receive
ratably any dividends declared by the board of directors out of
funds legally available therefor. In the event of a liquidation,
dissolution or winding up of Finisar, holders of common stock
are entitled to share ratably in the assets remaining after
payment of liabilities and the liquidation preferences of any
outstanding shares of preferred stock. Holders of our common
stock have no preemptive, conversion or redemption rights. Each
outstanding share of common stock is, and all shares of common
stock to be outstanding following the closing of any offering
made hereunder will be, fully paid and nonassessable.
Additional shares of authorized common stock may be issued, as
authorized by our board of directors from time to time, without
stockholder approval, except as may be required by applicable
stock exchange requirements.
Preferred
Stock
Our board of directors has the authority, without further action
by our stockholders, to issue preferred stock in one or more
series. In addition, the board of directors may fix the rights,
preferences, privileges and restrictions of any preferred stock
it determines to issue. Any or all of these rights may be
superior to the rights of the common stock. Preferred stock
could thus be issued quickly with terms calculated to delay or
prevent a change in control of Finisar or to make removal of
management more difficult. Additionally, the issuance of
preferred stock may decrease the market price of our common
stock or adversely affect the voting power or other rights of
holders of our common stock.
The rights, preferences, privileges and restrictions of the
preferred stock of each series will be fixed by an amendment to
our certificate of incorporation or a certificate of designation
of preferences which will be filed with the Secretary of State
of Delaware. A prospectus supplement relating to each series of
preferred stock will specify the terms of such series,
including, but not limited to:
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the designation and the maximum number of shares in the series;
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the terms on which dividends, if any, will be paid;
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the voting rights, if any, of the shares of the series;
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the terms and conditions, if any, on which the shares of the
series shall be convertible into, or exchangeable for, shares of
any other class or classes of capital stock;
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the terms on which the shares may be redeemed, if at all;
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the liquidation preference, if any; and
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any or all other rights, preferences, privileges, restrictions,
including restrictions on transferability, and qualifications of
shares of the series.
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The prospectus supplement will also contain a description of any
material or special U.S. federal income tax consequences
relating to the preferred stock.
4
Any shares of preferred stock to be outstanding following the
closing of any offering made hereunder will be fully paid and
nonassessable.
Potential
Anti-takeover Effects of Provisions of Delaware Law and Charter
Documents
Delaware
Law
Finisar is subject to Section 203 of the Delaware General
Corporation Law regulating corporate takeovers, which prohibits
a Delaware corporation from engaging in any business combination
with an interested stockholder for a period of three
years, unless:
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prior to the time that a stockholder became an interested
stockholder, the board of directors of the corporation approved
either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder;
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the interested stockholder owned at least 85% of the voting
stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the voting
stock outstanding (a) shares owned by persons who are
directors and also officers, and (b) shares owned by
employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange
offer; or
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at or subsequent to the time that a stockholder became an
interested stockholder, the business combination is approved by
the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the
affirmative vote of at least
662/3%
of the outstanding voting stock which is not owned by the
interested stockholder.
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Except as otherwise specified in Section 203, an
interested stockholder is defined to include
(a) any person that is the owner of 15% or more of the
outstanding voting stock of the corporation, or is an affiliate
or associate of the corporation and was the owner of 15% or more
of the outstanding voting stock of the corporation at any time
within three years immediately prior to the date of
determination and (b) the affiliates and associates of any
such person.
Certificate
of Incorporation and Bylaw Provisions
Provisions of our certificate of incorporation and bylaws may
have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to
acquire, control of Finisar. These provisions could cause the
price of our common stock and the value of other securities we
may issue to decrease. Some of these provisions allow us to
issue preferred stock without any vote or further action by the
stockholders, eliminate the right of stockholders to act by
written consent without a meeting and eliminate cumulative
voting in the election of directors. These provisions may make
it more difficult for stockholders to take specific corporate
actions and could have the effect of delaying or preventing a
change in control of Finisar.
Our certificate of incorporation provides that the board of
directors will be divided into three classes of directors, with
each class serving a staggered three-year term. The
classification system of electing directors may discourage a
third party from making a tender offer or otherwise attempting
to obtain control of us and may maintain the incumbency of the
board of directors, because the classification of the board of
directors generally increases the difficulty of replacing a
majority of the directors.
Stockholder
Rights Plan
In September 2002, our board of directors adopted a stockholder
rights plan under which our stockholders received one share
purchase right for each share of our common stock held by them.
The rights are not currently exercisable or tradable separately
from our common stock and are currently evidenced by the common
stock certificates. The rights expire on September 24, 2012
unless earlier redeemed or exchanged by us. Subject to certain
exceptions, the rights will become exercisable when a person or
group (other than certain exempt persons) acquires, or announces
its intention to commence a tender or exchange offer upon
completion of which such person or group would acquire, 20% or
more of our common stock without prior board approval. Should
such an event occur, then,
5
unless the rights have been redeemed or have expired prior to or
are exchanged as a result of such event, Finisar stockholders,
other than the acquirer, will be entitled to purchase shares of
our common stock at a 50% discount from its then-Current Market
Price (as defined) or, in the case of certain business
combinations, purchase the common stock of the acquirer at a 50%
discount.
Registration
Rights
Pursuant to a registration rights agreement dated as of
October 15, 2009 between Finisar and the initial purchaser
of our 5.0% Convertible Senior Notes due 2029, we filed
with the SEC a registration statement covering resales by
holders of all notes and the common stock issuable upon
conversion of the notes. The notes and any common stock issuable
upon conversion of the notes are referred to collectively as
registrable securities. We agreed to keep the
registration statement effective until the earliest of:
(1) one year from the latest date of original issuance of
the notes;
(2) the date when all registrable securities shall have
been registered under the Securities Act and disposed of;
(3) the date on which all registrable securities held by
non-affiliates are eligible to be sold pursuant to Rule 144
under the Securities Act; and
(4) the date on which the registrable securities cease to
be outstanding.
If we notify the holders in accordance with the registration
rights agreement to suspend the use of the prospectus upon the
occurrence of certain events, then the holders will be obligated
to suspend the use of the prospectus until the requisite changes
have been made.
In the event of certain defaults of our obligations under the
registration rights agreement, additional interest will accrue
on the notes, commencing on and including the date on which the
default occurs to but excluding the date on which all such
defaults have been cured, at the rate of (a) .25% per annum of
the principal amount of the notes to and including the
90th day following the occurrence of such resale
registration default and (b) .50% per annum of the principal
amount of the notes from and after the 91st day following
the occurrence of such resale registration default. If a holder
has converted some or all of its notes into common stock, the
holder will not be entitled to receive any additional interest
with respect to such common stock or the principal amount of the
notes converted.
Transfer
Agent and Registrar
The transfer agent and registrar for our common stock is
American Stock Transfer and Trust Company.
Listing
on The Nasdaq Global Select Market
Our common stock is listed on the Nasdaq Global Select Market
and trades under the symbol FNSR.
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DESCRIPTION
OF DEBT SECURITIES
The debt securities will be our direct unsecured general
obligations. The debt securities will be either senior debt
securities or subordinated debt securities. The debt securities
that are sold may be exchangeable for
and/or
convertible into our common stock, preferred stock or any of the
other securities that may be sold under this prospectus. The
debt securities will be issued under one or more separate
indentures between us and a designated trustee. Senior debt
securities will be issued under a senior indenture. Subordinated
debt securities will be issued under a subordinated indenture.
Each of the senior indenture and the subordinated indenture is
referred to as an indenture. The material terms of any indenture
will be set forth in the applicable prospectus supplement.
DESCRIPTION
OF WARRANTS
We may issue warrants to purchase our common stock, preferred
stock or debt securities, or any combination of the foregoing.
Warrants may be issued in one or more series and may be issued
independently or together with any other securities and may be
attached to, or separate from, such securities. Each series of
warrants will be issued under a separate warrant agreement to be
entered into between us and a warrant agent. The terms of any
warrants to be issued and a description of the material
provisions of the applicable warrant agreement will be set forth
in the applicable prospectus supplement.
DESCRIPTION
OF UNITS
As specified in the applicable prospectus supplement, we may
issue units consisting of one or more shares of common stock,
preferred stock, debt securities, warrants or any combination of
such securities.
FORMS OF
SECURITIES
Each debt security, warrant and unit will be represented either
by a certificate issued in definitive form to a particular
investor or by one or more global securities representing the
entire issuance of securities. Certificated securities in
definitive form and global securities will be issued in
registered form. Definitive securities name you or your nominee
as the owner of the security, and in order to transfer or
exchange these securities or to receive payments other than
interest or other interim payments, you or your nominee must
physically deliver the securities to the trustee, registrar,
paying agent or other agent, as applicable. Global securities
name a depositary or its nominee as the owner of the debt
securities, warrants or units represented by these global
securities. The depositary maintains a computerized system that
will reflect each investors beneficial ownership of the
securities through an account maintained by the investor with
its broker/dealer, bank, trust company or other representative,
as we explain more fully below.
Registered
global securities
We may issue the registered debt securities, warrants and units
in the form of one or more fully registered global securities
that will be deposited with a depositary or its nominee
identified in the applicable prospectus supplement and
registered in the name of that depositary or nominee. In those
cases, one or more registered global securities will be issued
in a denomination or aggregate denominations equal to the
portion of the aggregate principal or face amount of the
securities to be represented by registered global securities.
Unless and until it is exchanged in whole for securities in
definitive registered form, a registered global security may not
be transferred except as a whole by and among the depositary for
the registered global security, the nominees of the depositary
or any successors of the depositary or those nominees.
If not described below, any specific terms of the depositary
arrangement with respect to any securities to be represented by
a registered global security will be described in the prospectus
supplement relating to those securities. We anticipate that the
following provisions will apply to all depositary arrangements.
Ownership of beneficial interests in a registered global
security will be limited to persons, called participants, that
have accounts with the depositary or persons that may hold
interests through participants. Upon the issuance of a
registered global security, the depositary will credit, on its
book-entry registration and transfer system, the
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participants accounts with the respective principal or
face amounts of the securities beneficially owned by the
participants. Any dealers, underwriters or agents participating
in the distribution of the securities will designate the
accounts to be credited. Ownership of beneficial interests in a
registered global security will be shown on, and the transfer of
ownership interests will be effected only through, records
maintained by the depositary, with respect to interests of
participants, and on the records of participants, with respect
to interests of persons holding through participants. The laws
of some states may require that some purchasers of securities
take physical delivery of these securities in definitive form.
These laws may impair your ability to own, transfer or pledge
beneficial interests in registered global securities.
So long as the depositary, or its nominee, is the registered
owner of a registered global security, that depositary or its
nominee, as the case may be, will be considered the sole owner
or holder of the securities represented by the registered global
security for all purposes under the applicable indenture,
warrant agreement or unit agreement. Except as described below,
owners of beneficial interests in a registered global security
will not be entitled to have the securities represented by the
registered global security registered in their names, will not
receive or be entitled to receive physical delivery of the
securities in definitive form and will not be considered the
owners or holders of the securities under the applicable
indenture, warrant agreement or unit agreement. Accordingly,
each person owning a beneficial interest in a registered global
security must rely on the procedures of the depositary for that
registered global security and, if that person is not a
participant, on the procedures of the participant through which
the person owns its interest, to exercise any rights of a holder
under the applicable indenture, warrant agreement or unit
agreement. We understand that under existing industry practices,
if we request any action of holders or if an owner of a
beneficial interest in a registered global security desires to
give or take any action that a holder is entitled to give or
take under the applicable indenture, warrant agreement or unit
agreement, the depositary for the registered global security
would authorize the participants holding the relevant beneficial
interests to give or take that action, and the participants
would authorize beneficial owners owning through them to give or
take that action or would otherwise act upon the instructions of
beneficial owners holding through them.
Principal, premium, if any, and interest payments on debt
securities, and any payments to holders with respect to warrants
or units, represented by a registered global security registered
in the name of a depositary or its nominee will be made to the
depositary or its nominee, as the case may be, as the registered
owner of the registered global security. Neither we, nor the
trustees, the warrant agents, the unit agents or any other agent
of ours, agent of the trustees or agent of the warrant agents or
unit agents will have any responsibility or liability for any
aspect of the records relating to payments made on account of
beneficial ownership interests in the registered global security
or for maintaining, supervising or reviewing any records
relating to those beneficial ownership interests.
We expect that the depositary for any of the securities
represented by a registered global security, upon receipt of any
payment of principal, premium, interest or other distribution of
underlying securities or other property to holders on that
registered global security, will immediately credit
participants accounts in amounts proportionate to their
respective beneficial interests in that registered global
security as shown on the records of the depositary. We also
expect that payments by participants to owners of beneficial
interests in a registered global security held through
participants will be governed by standing customer instructions
and customary practices, as is now the case with the securities
held for the accounts of customers or registered in street
name, and will be the responsibility of those participants.
If the depositary for any of these securities represented by a
registered global security is at any time unwilling or unable to
continue as depositary or ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, and a
successor depositary registered as a clearing agency under the
Securities Exchange Act of 1934 is not appointed by us within
90 days, we will issue securities in definitive form in
exchange for the registered global security that had been held
by the depositary. Any securities issued in definitive form in
exchange for a registered global security will be registered in
the name or names that the depositary gives to the relevant
trustee, warrant agent, unit agent or other relevant agent of
ours or theirs. It is expected that the depositarys
instructions will be based upon directions received by the
depositary from participants with respect to ownership of
beneficial interests in the registered global security that had
been held by the depositary.
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PLAN OF
DISTRIBUTION
We and/or
the selling securityholders, if applicable, may sell the
securities to or through underwriters or dealers, through
agents, or directly to one or more purchasers. A prospectus
supplement or supplements (and any related free writing
prospectus that we may authorize to be provided to you) will
describe the terms of the offering of the securities, including,
to the extent applicable:
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the name or names of any underwriters, dealers or agents;
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the purchase price of the securities and the proceeds we will
receive from the sale;
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any over-allotment options under which underwriters may purchase
additional securities from us;
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any agency fees or underwriting discounts and other items
constituting agents or underwriters compensation;
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any public offering price;
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any discounts or concessions allowed or reallowed or paid to
dealers; and
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any securities exchange or market on which the securities may be
listed.
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Only underwriters named in the prospectus supplement are
underwriters of the securities offered by the prospectus
supplement.
If underwriters are used in the sale, they will acquire the
securities for their own account and may resell the securities
from time to time in one or more transactions at a fixed public
offering price or at varying prices determined at the time of
sale. The obligations of the underwriters to purchase the
securities will be subject to the conditions set forth in the
applicable underwriting agreement. We may offer the securities
to the public through underwriting syndicates represented by
managing underwriters or by underwriters without a syndicate.
Unless otherwise stated in a prospectus supplement, the
underwriters will be obligated to purchase all of the securities
offered by the prospectus supplement. Any public offering price
and any discounts or concessions allowed or reallowed or paid to
dealers may change from time to time. We may use underwriters
with whom we have a material relationship. We will describe in
the prospectus supplement, naming the underwriter, the nature of
any such relationship.
We and/or
the selling securityholders, if applicable, may sell securities
directly or through agents we designate from time to time. The
prospectus supplement will name any agent involved in the
offering and sale of securities and will describe any
commissions we pay to them. Unless the prospectus supplement
states otherwise, any agent will act on a best-efforts basis for
the period of its appointment.
We and/or
the selling securityholders, if applicable, may authorize agents
or underwriters to solicit offers by certain types of
institutional investors to purchase securities at the public
offering price set forth in the prospectus supplement pursuant
to delayed delivery contracts providing for payment and delivery
on a specified date in the future. The prospectus supplement
will describe the conditions to these contracts and the
commissions we pay for solicitation of these contracts.
We and/or
the selling securityholders, if applicable, may provide agents
and underwriters with indemnification against certain civil
liabilities related to the offering of the securities, including
liabilities under the Securities Act, or contribution with
respect to payments that the agents or underwriters may make
with respect to these liabilities. Agents and underwriters may
engage in transactions with, or perform services for, us in the
ordinary course of business.
Other than common stock, any securities we offer will be a new
issue of securities with no established trading market. Any
underwriters may make a market in these securities, but will not
be obligated to do so and may discontinue any market making at
any time without notice. We cannot guarantee the liquidity of
the trading markets for any securities.
Any underwriter may engage in overallotment, stabilizing
transactions, short covering transactions and penalty bids in
accordance with Regulation M under the Exchange Act.
Overallotment involves sales in excess of
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the offering size, which create a short position. Stabilizing
transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified maximum.
Short covering transactions involve purchases of the securities
in the open market after the distribution is completed to cover
short positions. Penalty bids permit the underwriters to reclaim
a selling concession from a dealer when the securities
originally sold by the dealer are purchased in a covering
transaction to cover short positions. Those activities may cause
the price of the securities to be higher than they would
otherwise be. If commenced, the underwriters may discontinue any
of the activities at any time.
Any underwriters who are qualified market makers on The Nasdaq
Global Select Market may engage in passive market making
transactions in the securities on The Nasdaq Global Select
Market in accordance with Rule 103 of Regulation M,
during the business day prior to the pricing of the offering,
before the commencement of offers or sales of the securities.
Passive market makers must comply with applicable volume and
price limitations and must be identified as passive market
makers. In general, a passive market maker must display its bid
at a price not in excess of the highest independent bid for such
security; if all independent bids are lowered below the passive
market makers bid, however, the passive market
makers bid must then be lowered when certain purchase
limits are exceeded.
In compliance with guidelines of the Financial Industry
Regulatory Authority, Inc., or FINRA, the maximum consideration
or discount to be received by any FINRA member or independent
broker dealer may not exceed 8% of the aggregate amount of the
securities offered pursuant to this prospectus and any
applicable prospectus supplement.
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LEGAL
MATTERS
DLA Piper LLP (US), East Palo Alto, California will pass for us
upon the validity of the securities being offered by this
prospectus and any applicable prospectus supplement, and counsel
named in the applicable prospectus supplement will pass upon
legal matters for any underwriters, dealers or agents.
EXPERTS
Ernst & Young LLP, independent registered public
accounting firm, has audited our consolidated financial
statements and schedule at April 30, 2009 and 2008, and for
each of the three years in the period ended April 30, 2009,
and has audited the consolidated financial statements of Optium
Corporation at August 2, 2008 and July 28, 2007, and
for each of the three years in the period ended August 2,
2008, as set forth in their reports included in our Current
Report on
Form 8-K
filed on October 7, 2009, which is incorporated by
reference in this prospectus and elsewhere in the registration
statement. Our consolidated financial statements and schedule
and Optium Corporations consolidated financial statements
are incorporated by reference in reliance on Ernst &
Young LLPs reports, given on their authority as experts in
accounting and auditing.
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
We are a reporting company and file annual, quarterly and
current reports, proxy statements and other information with the
SEC. We have filed with the SEC a registration statement on
Form S-3
under the Securities Act with respect to the securities we are
offering under this prospectus. This prospectus does not contain
all of the information set forth in the registration statement
and the exhibits to the registration statement. For further
information with respect to us and the securities we are
offering under this prospectus, we refer you to the registration
statement and the exhibits and schedules filed as a part of the
registration statement. You may read and copy the registration
statement, as well as our reports, proxy statements and other
information, at the SECs Public Reference Room at
100 F Street, N.E., Washington, D.C. 20549. You
can request copies of these documents by writing to the SEC and
paying a fee for the copying cost. Please call the SEC at
1-800-SEC-0330
for more information about the operation of the Public Reference
Room. The SEC maintains an internet site that contains reports,
proxy and information statements, and other information
regarding issuers that file electronically with the SEC, where
our SEC filings our also available. The address of the
SECs web site is www.sec.gov. We maintain a website at
www.finisar.com. Information contained in or accessible through
our website does not constitute a part of this prospectus.
INCORPORATION
BY REFERENCE
The SEC allows us to incorporate by reference
information that we file with it into this prospectus, which
means that we can disclose important information to you by
referring you to those documents. The information incorporated
by reference is an important part of this prospectus.
Information in this prospectus supersedes information
incorporated by reference that we filed with the SEC prior to
the date of this prospectus, while information that we file
later with the SEC will automatically update and supersede the
information in this prospectus. We incorporate by reference into
this registration statement and prospectus the documents listed
below, and any future filings we will make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of the initial registration statement but prior
to effectiveness of the registration statement and after the
date of this prospectus but prior to the termination of the
offering of the securities covered by this prospectus (other
than current reports or portions thereof furnished under
Item 2.02 or Item 7.01 of
Form 8-K):
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Our Annual Report on
Form 10-K
for the fiscal year ended April 30, 2009, as amended by
Amendment No. 1 thereto on
Form 10-K/A
filed on August 28, 2009 and our report on
Form 8-K
dated October 7, 2009;
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Our Quarterly Report on
Form 10-Q
for the quarter ended August 2, 2009, as amended by
Amendment No. 1 thereto on
Form 10-Q/A
filed on October 7, 2009, our Quarterly Report on
Form 10-Q
for the quarter ended November 1, 2009, and our Quarterly
Report on
Form 10-Q
for the quarter ended January 31, 2010;
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Our Current Reports on
Form 8-K
filed on July 9, 2009 (three filings), July 13, 2009,
July 16, 2009, July 20, 2009, August 7, 2009,
August 12, 2009, September 10, 2009 (items 8.01
and 9.01), September 15, 2009, September 28, 2009,
October 6, 2009, October 7, 2009 (two filings),
October 9, 2009, October 15, 2009, November 23,
2009, January 4, 2010, January 28, 2010, March 8,
2010 and March 15, 2010;
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Our definitive proxy statement filed pursuant to Section 14
of the Exchange Act in connection with our 2009 Annual Meeting
of Stockholders filed with the SEC on October 8,
2009; and
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The description of our common stock set forth in our
registration statement on
Form 8-A,
filed with the SEC on November 8, 1999.
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We will provide to each person, including any beneficial owner,
to whom a prospectus is delivered, without charge upon written
or oral request, a copy of any or all of the information that
has been incorporated by reference into this prospectus but not
delivered with the prospectus, including exhibits that are
specifically incorporated by reference into such documents.
Requests should be directed to: Finisar Corporation, Attention:
Investor Relations, 1389 Moffett Park Drive, Sunnyvale, CA
94089, telephone:
(408) 548-1000.
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