Who did FNSR buy? Comments on the Quarter or cc. Thanks in advance...
Finisar Corporation Announces Financial Results for Second Quarter Ended October 31, 2000 And Agreements to Acquire: Demeter Technologies, Transwave Fiber and Shomiti Systems
SUNNYVALE, Calif.--(BUSINESS WIRE)--Nov. 21, 2000--Finisar Corporation (NASDAQ:FNSR - news), a leading provider of gigabit fiber optic solutions for high-speed data networks, today reported financial results for its second fiscal quarter ended October 31, 2000. At the same time, the Company announced that it had entered into definitive agreements to acquire Demeter Technologies, Transwave Fiber and Shomiti Systems. In the case of Demeter Technologies, the Company announced that it had also completed the acquisition.
Management will host an earnings conference call on its web site at www.finisar.com at 5:00 p.m. EDT (2:00pm PDT) to discuss the results for the quarter, the outlook for the Company going forward, and the announcement to acquire three companies.
CURRENT QUARTER RESULTS
The financial results for the Company's current quarter include the results of Sensors Unlimited for one month. The acquisition of Sensors was recorded as a purchase with an initial value of approximately $356 million based on the initial issuance of approximately 9.5 million shares of Finisar common stock, the assumption of outstanding stock options, and cash used in completing the transaction. An additional 9.5 million shares of Finisar common stock may be issued to former Sensors shareholders over the next three years pursuant to the merger agreement. Any such additional consideration will be recorded at the time of issuance. With the initial shares issued to acquire Sensors Unlimited, the Company had approximately 170 million shares outstanding at the end of the quarter.
Total revenues for the second quarter of fiscal 2001 were a record $44.5 million, up 177% from the second quarter of fiscal 2000 and up 64% sequentially from the immediately preceding quarter. Total revenues include sales of optical subsystems of $37.3 million and sales of network performance test systems of $7.2 million. Sales of optical subsystems were up 245% from the second quarter of fiscal 2000 and up 69% sequentially. Sales of network test systems were up 37% from the second quarter of fiscal 2000 and up 39% sequentially.
Pro forma gross margin excluding non-cash charges for the amortization of acquisition-related costs rose sequentially to 41.5% in the second quarter compared to 39.5% in the previous quarter. Pro forma operating margins also improved sequentially to 15.2% in the second quarter compared to 9.3% in the previous quarter.
Pro forma net income excluding non-cash charges for deferred compensation and acquisition-related costs and cash charges for other acquisition-related compensation was a record $7.5 million, or $.04 per diluted share, in the second quarter, an increase of 461% from $1.3 million, or $.01 per diluted share, from the second quarter of fiscal 2000 and up 53% sequentially from $4.9 million, or $.03 per diluted share, in the previous quarter.
Including the non-cash charges for deferred compensation and acquisition-related costs and cash charges for other acquisition-related compensation in accordance with generally accepted accounting principles, the Company recorded a loss of $22.5 million, or $.15 per diluted share, in the second quarter compared to a loss of $387,000, or $.00 per diluted share, in the second quarter of the prior year. The non-cash charges related to the Sensors Unlimited acquisition include $23.0 million related to the purchase of in-process research and development, $5.9 million in amortization of acquired intangible assets, $0.2 million in amortization of deferred compensation and $388,000 for other acquisition-related compensation charges, net of estimated tax savings.
The Company's cash and short-term investments balance was $269 million at the end of October, 2000 compared to $315 million at the end of July, 2000. Of the $46 million decrease, approximately $25 million is related to the use of cash in the acquisition of Sensors Unlimited, $11 million was used in strategic investments in other businesses and approximately $10 million was related to working capital requirements associated with the Company's growth during the last quarter.
``The revenue growth that we saw during this most recent quarter is further evidence that the demand for storage and gigabit connectivity continues to grow at an unprecedented rate,'' said Jerry Rawls, Finisar's President and CEO. ``Excluding Sensors Unlimited which accounted for less than $3 million in revenues, our growth in the most recent quarter came primarily from the same group of customers who build Fibre Channel and Gigabit Ethernet systems. Furthermore, we believe the sequential increase in our sale of 2 Gb/s network performance test systems is a positive leading indicator for the rollout of 2 Gb/s Fibre Channel SAN's next year,'' added Rawls.
``We were pleased to see our gross margins improve during the quarter and begin to reflect our efforts to reduce product costs,'' said Rawls. ``Even without the results of Sensors Unlimited, our gross margins were up sequentially from the previous quarter.''
ACQUISITIONS
The Company announced that it had entered into definitive agreements to acquire three companies: Demeter Technologies, Inc., Transwave Fiber, Inc., and Shomiti Systems, Inc.
``With respect to our acquisition activity, I think it's important for investors to understand that we are laying a broader foundation on which to build our future by acquiring these fundamental technologies,'' said Jerry Rawls, Finisar's President and CEO. ``We are not looking to buy market share. We are focused on acquiring the technologies that will empower us to continue to provide the timely gigabit solutions that our customers need.'' added Rawls. ``We expect these companies to continue to supply their existing customers while we draw on a deeper pool of talent for developing new, innovative, and cost effective products for the LAN, SAN, and MAN marketplace.''
ACQUISITION OF DEMETER TECHNOLOGIES, INC.
Demeter Technologies was founded in August 2000. The founders of Demeter have extensive experience in manufacturing laser diodes in large volumes. With its early access to semiconductor processing equipment for epitaxial growth and ability to employ world class manufacturing techniques, Demeter has already demonstrated state-of-the-art laser diodes that can be directly modulated at speeds up to 10 gigabits per second. With the acquisition of Demeter, Finisar gains access to this fundamental technology in its quest to extend its capabilities as a provider of next generation fiber optic network equipment for Gigabit Ethernet, Fibre Channel and SONET.
Under the terms of the agreement, Demeter Technologies merged with a wholly-owned subsidiary of Finisar, and Demeter's stockholders received approximately 6.6 million shares of Finisar Common Stock, including shares issuable upon exercise of options assumed in the merger. The transaction will be accounted for as a purchase and is intended to qualify as a tax-free reorganization. The closing price of Finisar's Common Stock on November 20, 2000 was $22.13 per share, giving the transaction an approximate value of $146 million. The acquisition was completed on November 21, 2000 and will be included in the financial results of Finisar for the third fiscal quarter ending January 31, 2001.
ACQUISITION OF TRANSWAVE FIBER, INC.
Established in February 2000 in Fremont, California, Transwave Fiber has focused on the development of passive optical components for fiber optic networks. These products build on the Company's core competencies in fusion couplers, crystal processing and instrumentation technologies. With access to a considerable pool of engineering talent plus manufacturing operations at its subsidiary in Shanghai, China, Transwave has quickly exercised its technical prowess by developing a broad line of passive optical products for datacom and telecom applications.
Under the terms of the agreement, Transwave Fiber will merge with Finisar, and Transwave stockholders will be entitled to receive up to approximately 3.6 million shares of Finisar Common Stock including shares issuable upon exercise of options assumed in the merger. One-third of the shares issued in the merger will be deposited in an escrow and will be released to the former shareholders of Transwave Fiber upon the achievement of certain financial and technical milestones during a three year period following the completion of the merger. The transaction will be accounted for as a purchase and is intended to qualify as a tax-free reorganization. The closing price of Finisar's Common Stock on November 20, 2000 was $22.13 per share, giving the transaction an approximate value of $80 million. The transaction is expected to close during the first calendar quarter of 2001 and is subject to approval by Transwave's stockholders and other customary conditions.
ACQUISITION OF SHOMITI SYSTEMS, INC.
Established in 1995, Shomiti Systems is a technology leader in designing products which measure the performance of Ethernet networks in order to enhance their quality of service (QoS). Shomiti's award winning ``Surveyor'' and ``Explorer'' line of products are currently being deployed for measuring and monitoring 10-100 megabit and Gigabit Ethernet local area networks (LANs) and e-commerce storage server farms. With the acquisition of Shomiti Systems, Finisar will gain access to this fundamental technology in its quest to extend its capabilities as a provider of next generation test equipment for Fibre Channel, Gigabit Ethernet and Infiniband networks.
Under the terms of the agreement, Shomiti Systems will merge with a wholly-owned subsidiary of Finisar, and Shomiti stockholders will be entitled to receive up to approximately 4.3 million shares of Finisar Common Stock including shares issuable upon exercise of options assumed in the merger. The transaction will be accounted for as a purchase and is intended to qualify as a tax-free reorganization. The closing price of Finisar's Common Stock on November 20, 2000 was $22.13 per share, giving the transaction an approximate value of $95 million. The transaction is expected to close during the first calendar quarter of 2001 and is subject to approval by Shomiti's stockholders, the notification requirements of the Hart-Scott-Rodino Antitrust Act and other customary conditions.
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