(PR NEWSWIRE) New Focus Announces Strong Third Quarter Financial Results And Raises Revenue
Expectations
SANTA CLARA, Calif., Oct. 25 /PRNewswire/ --
New Focus, Inc., (Nasdaq: NUFO), a leading supplier of innovative fiber optic
products for next-generation optical networks under the Smart Optics for
Networks(TM) brand, today announced financial results for its third fiscal
quarter ended October 1, 2000. The company reported strong sequential revenue
growth in both its fiber optic and photonics tool businesses for the third
quarter. The company also announced higher revenue guidance for fiscal years
2000 and 2001 based on the revenue momentum established over the past two
quarters.
Third Quarter Review:
Net revenue for the third quarter of 2000 was $22.2 million, a sequential
increase of 54% over the $14.5 million in revenue for the company's second
fiscal quarter ended July 2, 2000. Third quarter revenue from the company's
fiber optic products totaled $14.9 million, up 76% from $8.5 million in the
second quarter of 2000. Third quarter revenue from the company's photonics
tool products totaled $7.3 million, up 22% from $6.0 million in the second
quarter of 2000. Net revenue for the third quarter of 1999 was $6.7 million
composed of $2.0 million from fiber optic products and $4.7 million from
photonics tool products.
On a pro forma basis, the net loss for the third quarter of 2000,
excluding a non-cash charge for the amortization of deferred stock
compensation, was $1.3 million, or $0.02 per share based on 58.1 million
shares outstanding. This net loss was less than the pro forma net loss of $6.6
million, or $0.13 per share based on 52.4 million shares outstanding in the
second quarter of 2000. The pro forma net loss for the third quarter of 1999
was $1.8 million, or $0.05 per share based on 34.1 million shares outstanding.
The number of shares used for the pro forma net loss per share calculation for
each reporting period assumes the conversion of the company's convertible
preferred stock into common stock, if applicable. Such conversion was
completed in conjunction with the company's initial public offering in May
2000. The deferred stock compensation charges excluded from the third and
second quarters of 2000 were $5.9 million and $7.5 million, respectively. The
deferred stock compensation charge in the third quarter of 1999 was
negligible.
Without the pro forma adjustments to eliminate the deferred stock
compensation charges and to convert the company's preferred stock into common
stock, the net loss for the third quarter of 2000 was $7.1 million, or $0.12
per share based on 58.1 million shares outstanding. The net loss for the
second quarter of 2000 was $14.1 million, or $0.45 per share based on 31.7
million shares outstanding. For the third quarter of 1999 the net loss was
$1.8 million, or $0.74 per share based on 2.5 million shares outstanding.
"Our third quarter financial results reflected solid internal execution
against our capacity expansion plan and continuing strong customer demand for
our fiber optic and photonics tool products. Our first offshore manufacturing
facility in Shenzhen, China ramped successfully into volume production of
passive devices during the third quarter and achieved manufacturing yields
comparable to our U.S. manufacturing operations. Increased unit volumes,
coupled with improved manufacturing efficiencies, raised our gross margin to
22.5% in the third quarter from 9.7% in the second quarter. Additionally, we
strengthened our balance sheet by raising nearly $440 million through a
follow-on public offering in August. This additional funding will support the
acceleration of manufacturing capacity at our second larger manufacturing
facility in Shenzhen. During the recently completed quarter we began shipments
to Ciena Corporation and expect to develop further momentum through the
addition of another new customer in the upcoming quarter," said Ken Westrick,
president and chief executive officer of New Focus, Inc.
On August 10, 2000 the company completed an offering of 4,025,000 common
shares, including the exercise of an over-allotment option of 525,000 shares.
Net proceeds from this offering are being used for general corporate purposes,
including capital expenditures for product development, increases in
manufacturing capacity, and potential acquisitions.
Nine-Month Results:
Net revenue for the nine months ended October 1, 2000 was $46.5 million,
an increase of 191% over $16.0 million in revenue for the first nine months of
1999. The nine-month revenue from fiber optic products totaled $28.3 million
in 2000 and $2.5 million in 1999. The nine-month revenue from photonics tool
products totaled $18.2 million in 2000 and $13.5 million in 1999.
On a pro forma basis, the net loss for the first nine months of 2000 was
$14.8 million, or $0.28 per share based on 52.8 million shares outstanding.
The pro forma net loss for the first nine months of 1999 was $4.8 million, or
$0.18 per share based on 27.6 million shares outstanding. The deferred stock
compensation charge excluded from the first nine months of 2000 was $18.9
million. The deferred stock compensation charge in the first nine months of
1999 was negligible.
Without the pro forma adjustments to eliminate the deferred stock
compensation charges and to convert the company's preferred stock into common
stock, the net loss for the first nine months of 2000 was $33.7 million, or
$0.64 per share based on 52.8 million shares outstanding. The net loss for the
first nine months of 1999 was $4.9 million, or $0.18 per share based on 27.6
million shares outstanding.
Business Outlook:
"Based upon our accelerated capacity expansion plan and the current market
demand for our products, we believe that the company will again experience
solid sequential growth in the fourth quarter, and we expect the company will
post revenue of approximately $73 million for fiscal year 2000. Based on our
sales momentum we believe that revenue for fiscal year 2001 could double to
$150 million. The capacity expansion to support this higher anticipated
revenue level in 2001 is well underway. We expect that output from our smaller
first facility in Shenzhen which houses 15,000 square feet of manufacturing
space will increase in the fourth quarter due to full utilization of this
facility for the entire quarter. We will augment this output with production
from the first phase of our second Shenzhen plant which should begin to ramp
in the fourth quarter. The construction of the first phase of our second plant
encompassing approximately 75,000 square feet of manufacturing space was
completed in September. To accommodate the growth in our business, we are also
expanding into a 130,000 square-foot building in San Jose, California in late
2000 or early 2001. This new building will house R&D and manufacturing
activities for fiber optic products and our corporate administration
functions," said Westrick.
"We saw significant improvement in our gross margin percentage in the
recently completed quarter and expect to see further improvement in the fourth
quarter. In the first quarter of 2001 the rate of improvement, however, will
most likely slow because the anticipated increase in unit volumes during this
particular quarter may not fully absorb the additional charges associated with
our second manufacturing facility in China and new facility in California. As
we utilize our second China facility more fully in the second quarter of 2001,
we should again experience an improving trend in our gross margin percentage.
We are still targeting our gross margin performance at 40-45% in the fourth
quarter of 2001. Based on our targeted levels of gross margin performance and
revenue for fiscal 2001, we now expect to achieve a breakeven at the pro forma
operating margin line during the second half of 2001 as opposed to our earlier
guidance of the first half of 2002," said Westrick.
To support its expansion plan, the company expects to spend approximately
$50-55 million in capital expenditures in fiscal 2000. Capital spending is
currently forecasted at $70-80 million in fiscal 2001.
Forward-Looking Statements:
This press release, and in particular the material in the section labeled
"Business Outlook", contains predictions, estimates and other forward-looking
statements regarding anticipated manufacturing capacity and output, new
customers, revenue growth, gross margins, capital spending and financial
performance. These statements are subject to risks and uncertainties and
actual results may differ materially from any future performance suggested.
The risks and uncertainties include the supply-demand conditions in the
company's markets, the company's ability to deliver products with price-
performance characteristics comparable or better than the competition, the
company's ability to capture new customers, and the company's ability to
successfully execute on aggressive manufacturing ramps, particularly in its
new facilities in the People's Republic of China, which in turn depends on the
company's ability to timely fit up manufacturing facilities, rapidly hire and
train large numbers of people, and successfully complete customer
qualifications of new production sites. The company's ability to achieve
better gross margin and financial performance is subject to the company's
ability to achieve improved manufacturing efficiencies, particularly in the
manufacture of its fiber optic products, which in turn depends on the
company's ability to obtain higher manufacturing yields, improved labor
productivity and better material utilization. As the company's fiber optic
products account for a larger proportionate share of the company's total
revenue due to the high customer demand for such products, the company's
overall gross margin performance will become increasingly dependent on the
rate of improvement in the manufacturing efficiencies for these products.
Other risk factors that may affect the company's financial performance are
listed in the company's S-1 registration statement for its follow-on public
offering on file with the SEC. New Focus undertakes no obligation to publicly
release any revisions to these forward-looking statements, which may be made
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
About New Focus:
New Focus, Inc. designs, manufactures and markets innovative fiber optic
products for next-generation optical networks. The company's Smart Optics for
Networks(TM) products enhance the performance of next-generation optical
networks by enabling higher channel counts, faster data rates, longer reach
lengths, new service capabilities, and lower costs of ownership. Founded in
1990, the company remains a leader in the creation of advanced optical
products for the commercial and research marketplaces. With over 1,100
worldwide employees, the company is headquartered in Santa Clara, California
and has operations in San Jose, California, Madison, Wisconsin, and Shenzhen,
People's Republic of China.
For more information about New Focus visit the company's Internet home
page at newfocus.com, call our Investors Relations Department at
408-919-2700, or e-mail us at investor@newfocus.com.
NEW FOCUS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
Oct 1, Jul 2, Sep 30, Oct 1, Sep 30,
2000 2000 1999 2000 1999
Net revenues $22,250 $14,451 $6,675 $46,483 $15,997
Cost of net
revenues 17,248 13,056 4,367 41,090 9,788
Gross profit 5,002 1,395 2,308 5,393 6,209
22.5% 9.7% 34.6% 11.6% 38.8%
Operating
expenses:
Research and
development,
net 7,270 4,892 2,259 15,771 5,980
Sales and
marketing 1,526 1,465 930 4,091 2,730
General and
admini-
strative 2,538 2,368 940 6,330 2,181
Deferred
stock
compensation 5,879 7,508 29 18,935 38
Total
operating
expenses 17,213 16,233 4,158 45,127 10,929
Loss from
operations (12,211) (14,838) (1,850) (39,734) (4,720)
(54.9)% (102.7)% (27.7)% (85.5)% (29.5)%
Interest and
other income
(expense),
net 5,082 711 33 6,017 (158)
Loss before
provision for
income taxes (7,129) (14,127) (1,817) (33,717) (4,878)
Provision
for income
taxes 2 -- -- 2 2
Net loss $(7,131) $(14,127) $(1,817) $(33,719) $(4,880)
(32.0)% (97.8)% (27.2)% (72.5)% (30.5)%
Basic and
diluted net
loss per
share $(0.12) $(0.45) $(0.74) $(1.06) $(2.02)
Shares used
to compute
basic and
diluted net
loss per
share 58,140 31,691 2,455 31,783 2,413
Pro forma
basic and
diluted net
loss per
share
excluding
amortization
of deferred
stock
compensation $(0.02) $(0.13) $(0.05) $(0.28) $(0.18)
Shares used
to compute
pro forma
basic and
diluted net
loss per
share (1) 58,140 52,430 34,129 52,829 27,552
(1) Number of shares used for the pro forma net loss per share
calculation for each reporting period assumes the conversion of
convertible preferred stock into common stock. Such conversion was
completed in conjunction with the May 2000 initial public offering.
NEW FOCUS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
Jul 2, 2000 Dec 31, 1999
(unaudited) (see note)
ASSETS
Current Assets:
Cash and cash equivalents $504,453 $28,067
Trade accounts receivable, net 11,082 3,102
Inventories 20,928 6,217
Other current assets 5,383 364
Total current assets 541,846 37,750
Property and equipment, net 30,858 6,895
Other assets, net 10,335 207
Total assets $583,039 $44,852
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable
Stockholders' equity
564,036 35,013
Total liabilities and stockholders' equity $583,039 $44,852
Note) The Condensed Consolidated Balance Sheet at December 31, 1999 has
been derived from the audited financial statements.
SOURCE New Focus, Inc.
-0- 10/25/2000
/CONTACT: William L. Potts, Jr., Chief Financial Officer of New Focus,
Inc., 408-919-5384/
/Web site: newfocus.com
(NUFO)
CO: New Focus, Inc.
ST: California
IN: CPR
SU: ERN
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