FNSR ( $16 up +1) Fourth Quarter and Year Ended April 30, 2001
SUNNYVALE, Calif., May 31, 2001 (BUSINESS WIRE) -- Finisar Corporation (Nasdaq: FNSR chart, msgs), a technology leader in gigabit fiber optic solutions for high-speed data networks, today reported financial results for its fourth quarter and fiscal year ended April 30, 2001.
Finisar plans to review its fourth quarter results and discuss its current outlook for the coming year during a conference call for investors at 5:00 p.m. EDT (2:00 p.m PDT) today, Thursday, May 31. The call will be broadcast live over the Internet on the Investor Relations section of Finisar's web site, located at www.finisar.com. To listen to the Webcast, interested investors are encouraged to log onto the broadcast at least 15 minutes prior to the call. Participating in the call will be Jerry Rawls, Finisar's President and CEO, and Steve Workman, Finisar's CFO.
Current Quarter Pro Forma Results
The financial statements for the Company's current quarter include the results of Medusa Technologies, Inc., for two months and Shomiti Systems, Inc., for one month, following the completion of acquisitions during the quarter. Financial results associated with the acquisition of Transwave Fiber, Inc., are not included as this acquisition was completed on May 3, 2001, after the end of the fiscal year.
Total revenues for the fourth quarter of fiscal 2001 of $52.2 million were in line with management's previous expectations as announced on April 16, 2001, up 153% from the fourth quarter of fiscal 2000 and down sequentially by 19% from the immediately preceding quarter. Total revenues include sales of optical subsystems of $41.9 million and sales of network performance test systems of $10.3 million. Sales of optical subsystems were up 170% from the fourth quarter of fiscal 2000 and down 27% sequentially. Sales of network test systems were up 101% from the fourth quarter of fiscal 2000 and up 33% sequentially and included $2.6 million in revenues recorded by Shomiti Systems and Medusa Technologies subsequent to their acquisitions which were completed during the quarter.
Acquisitions accounted for approximately 30% of the growth in revenues compared to the prior year period. Excluding the effect of all acquisitions completed during fiscal 2001, total revenues were $42.6 million, up 106% from the prior year and down 24% on a sequential basis. Sales of optical subsystems were $35.0 million, up 125% from the prior year period and down 28% on a sequential basis, while sales of network test systems of $7.7 million were up 49% from the prior year period and were approximately the same on a sequential basis.
During the quarter, the Company recognized a number of non-cash or non-recurring charges related to deferred compensation, acquisitions, inventory valuation and a portion of a one-time gain on the sale of it's Opticity(TM)product line to ONI Systems, Inc. (Nasdaq: ONIS chart, msgs). Pro forma results exclude these items for comparison purposes.
A pro forma operating loss of $2.0 million was more than offset by interest and other non-operating income totaling $3.3 million during the quarter resulting in pretax income of $1.3 million. Pro forma net income was $0.9 million, or $0.00 per diluted share, in the fourth quarter compared to $3.4 million, or $.02 per diluted share, in the fourth quarter of fiscal 2000 and $8.9 million, or $0.05 per diluted share, in the previous quarter.
"We have seen an extraordinary period of growth during the past year," said Jerry Rawls, Finisar's President and CEO. "We acquired four companies during the fiscal year and completed a fifth acquisition just after the end of the year. We introduced a number of new breakthrough products like our 10 gigabit serial transceiver. We also end the year in the midst of a challenging business environment, complicated by an reduced capital spending in the IT world and excess inventory for some of our products. At the same time, we are engaged in an aggressive campaign to develop new products and expand our customer base. We intend to continue an aggressive research and development effort in order to position our company to take advantage of the numerous opportunities which lie ahead of us as the demand for data storage and bandwidth continue to grow at record rates."
Current Year Pro Forma Results
Total revenues for the fiscal year ended April 30, 2001, were $188.8 million, up 181% from the prior year. Total revenues include sales of optical subsystems of $158.3 million and sales of network test systems of $30.5. Sales of optical subsystems increased 239% from the prior year while sales of network test systems increased 50%.
Acquisitions accounted for approximately 17% of the growth in revenues compared to the prior year. Excluding the effect of all acquisitions completed during the year, total revenues were $167.9 million with sales of optical subsystems of $140.1 million, up 200% from the prior year and sales of network test systems of $27.8 million, up 37% from the prior year.
On a pro forma basis, net income totaled $22.2 million for the year, or $0.13 per diluted share, up 164% from $8.4 million, or $0.06 per diluted share in the prior year.
Current Quarter Actual Results
On an actual basis, including merger-related costs and non-cash or non-recurring items, the Company recorded a loss of $42.3 million, or $.25 per share, in the fourth quarter compared to net income of $1.7 million, or $.01 per diluted share, in the fourth quarter of the prior year. Merger-related costs primarily reflect the acquisitions of Sensors Unlimited in the second fiscal quarter ended October 31, 2000, Demeter Technologies in the third fiscal quarter ended January 31, 2001, and Medusa Technologies and Shomiti Systems during the fourth fiscal quarter ended April 30, 2001. Merger-related costs include $25.6 million in amortization of acquired intangible assets, $7.3 million in amortization of deferred compensation, $6.4 million related to the purchase of in-process research and development and $5.7 million in amortization of acquired developed technology.
On February 28, 2001, Finisar announced the sale of its Opticity(TM) product line to ONI Systems, Inc. At the same time, Finisar announced that it had entered into an agreement to supply certain optical components to ONI for it's new ONLINE2500(TM) product incorporating the technology purchased from Finisar. Finisar recorded a pretax gain of $19.0 million, or $11.4 million after tax, during the fourth fiscal quarter in conjunction with the receipt of $5 million in cash and 488,624 shares of ONI common stock. Additional potential consideration totaling $25 million in cash will be contingent on the achievement of certain post-closing development milestones.
In conjunction with revised revenue guidance issued on April 16, 2001, Finisar has conducted an evaluation of it's inventory position in light of reduced demand for some of its products and the effects of a product transition within the Fibre Channel storage industry from products with data transfer rates of one gigabit per second to products with speeds of two gigabits per second. As a result, Finisar recorded a charge of $19.8 million in the fourth fiscal quarter for obsolete inventory, or $11.9 million after tax, including $9.5 million for non-cancelable or open purchase commitments related to such inventory.
Current Year Actual Results
On an actual basis, including merger-related costs and non-cash or non-recurring items, the Company recorded a loss of $85.4 million, or $.53 per share, in the fiscal year ended April 30, 2001, compared to net income of $2.9 million, or $.02 per diluted share, in the prior year. The loss was primarily the result of merger-related costs associated with four acquisitions during the year including $53.1 million in amortization of acquired intangible assets, $35.2 million for the purchase of in-process research and development, $13.5 million in amortization of deferred compensation, $10.9 million related to the amortization of acquired developed technology and $0.7 million for other acquisition-related charges, net of estimated tax savings. A charge of $19.8 million was recorded in the fourth fiscal quarter for obsolete inventory, or $11.9 million after tax. A gain of $19.0 million, or $11.4 million after tax, was also recognized in the fourth fiscal quarter as a result of the sale of the Opticity(TM) product line to ONI Systems, Inc.
Finisar's Procedures Pursuant to New Regulation FD
In connection with the recent adoption of new SEC rules on corporate disclosure, Finisar will make forward-looking statements in its web conference calls regarding expected financial results for the upcoming quarter and additional future periods. Finisar will keep its latest earnings release and web conference call publicly available on its web site at www.finisar.com but assumes no obligation to update any forward looking statements contained therein although it may choose to do so from time to time in accordance with the provisions of Regulation FD. Following the quarterly earnings release, Finisar will continue its current practice of having corporate representatives meet privately during the quarter with investors, the media, investment analysts and others.
Safe Harbor Under the Private Securities Litigation Reform Acts of 1995
The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding Finisar's expectations, beliefs, intentions, or strategies regarding the future. All forward-looking statements included in this press release are based upon information available to Finisar as of the date hereof, and Finisar assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These risks include those associated with the rapidly evolving markets for Finisar's products and uncertainty regarding the development of these markets; Finisar's historical dependence on sales to a limited number of customers and fluctuations in the mix of customers in any period; ongoing new product development and introduction of new and enhanced products; the challenges of rapid growth; intensive competition; and potential problems related to the assimilation and integration of the operations, technologies and products of recently acquired companies, Sensors Unlimited, Demeter Technologies, Medusa Technologies, Shomiti Systems and Transwave Fiber as well as those of Marlow Industries which Finisar has agreed to acquire. Other risks relating to Finisar's business are set forth in Finisar's Annual Report on Form 10-K and other interim reports as filed with the Securities and Exchange Commission.
About Finisar
Finisar Corporation (Nasdaq: FNSR chart, msgs) is a technology leader of fiber optic subsystems and network performance test systems which enable high-speed data communications over Gigabit Ethernet local area networks (LANs), Fibre Channel storage area networks (SANs), and wide-area and metropolitan data networking applications (WANs and MANs). The Company is focused on the application of digital fiber optics to provide a broad line of high-performance, reliable, value-added optical subsystems for networking and storage equipment manufacturers. The Company's headquarters are located at 1308 Moffett Park Drive, Sunnyvale, CA 94089. For more information, visit the Company's web site at finisar.com.
-PRO FORMA FINANCIAL TABLES TO FOLLOW-
Finisar Corporation
Pro Forma Consolidated Statement of Operations
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
April 30, April 30,
---------------------------------------------
2001 2000 2001 2000
---------------------------------------------
Revenues
Optical subsystems $ 41,922 $ 15,550 $158,333 $ 46,774
Test systems 10,312 5,131 30,467 20,373
--------------------- --------------------
Total revenues 52,234 20,681 188,800 67,147
Cost of revenues 32,321 11,938 111,757 34,190
--------------------- --------------------
Gross profit 19,913 8,743 77,043 32,957
38.1% 42.3% 40.8% 49.1%
Operating expenses:
Research and
development 12,806 3,755 33,696 13,806
Sales and marketing 5,369 2,042 16,673 7,122
General and
administrative 3,733 919 10,160 3,516
--------------------- --------------------
Total operating
expenses 21,908 6,716 60,529 24,444
Income (loss) from
operations (1,995) 2,027 16,514 8,513
Interest income, net 2,558 2,083 14,217 3,252
Other non-operating
income (expense), net 708 (27) 1,162 (99)
--------------------- --------------------
Income before
income taxes 1,271 4,083 31,893 11,666
Provision for
income taxes 380 672 9,674 3,255
--------------------- --------------------
Net income $ 891 $ 3,411 $ 22,219 $ 8,411
===================== ====================
Net income per share
- basic $ 0.01 $ 0.02 $ 0.14 $ 0.07
===================== ====================
Net income per share
- diluted $ 0.00 $ 0.02 $ 0.13 $ 0.06
===================== ====================
Shares used in per-share
calculation-basic 168,459 144,306 160,014 113,930
Shares used in per-share
calculation-diluted 185,321 161,058 175,381 144,102
The above pro forma results for the three months and twelve months ended April 30, 2001 have been adjusted to exclude non-cash and cash charges for the amortization of deferred compensation, merger related costs, inventory adjustments and a portion of a one-time gain on the sale of it's Opticity(TM) product line to ONI Systems, Inc. (Nasdaq: ONIS chart, msgs). Results including these items under generally accepted accounting principles are summarized below:
-CONDENSED FINANCIAL TABLES TO FOLLOW-
Finisar Corporation
Consolidated Statement of Operations
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
April 30, April 30,
---------------------------------------------
2001 2000 2001 2000
---------------------------------------------
Revenues
Optical subsystems $ 41,922 $ 15,550 $158,333 $ 46,774
Test systems 10,312 5,131 30,467 20,373
--------------------- --------------------
Total revenues 52,234 20,681 188,800 67,147
Cost of revenues 52,115 11,938 131,551 34,190
Amortization of acquired
developed technology 5,733 - 10,900 -
--------------------- --------------------
Gross profit (5,614) 8,743 46,349 32,957
Operating expenses:
Research and development 12,806 3,755 33,696 13,806
Sales and marketing 5,369 2,042 16,673 7,122
General and
administrative 3,733 919 10,160 3,516
Amortization of deferred
compensation 8,199 1,739 13,542 5,530
In-process research
and development 6,421 - 35,218 -
Amortization of
intangibles 25,640 - 53,122 -
Other acquisition
compensation 3 - 1,130 -
--------------------- --------------------
Total operating
expenses 62,171 8,455 163,541 29,974
Income (loss) from
operations (67,785) 288 (117,192) 2,983
Interest income, net 2,558 2,083 14,217 3,252
Other non-operating
income (expense), net 18,092 (27) 18,546 (99)
--------------------- --------------------
Income (loss) before
income taxes (47,135) 2,344 (84,429) 6,136
Provision for
income taxes (4,877) 672 1,020 3,255
--------------------- --------------------
Net income (loss) $ (42,258) $ 1,672 $ (85,449) $ 2,881
===================== ====================
Net income (loss)
per share - basic $ (0.25) $ 0.01 $ (0.53) $ 0.03
===================== ====================
Net income (loss)
per share - diluted $ (0.25) $ 0.01 $ (0.53) $ 0.02
===================== ====================
Shares used in per-share
calculation-basic 168,459 144,306 160,014 113,930
Shares used in per-share
calculation-diluted 168,459 161,058 160,014 144,102
FINISAR CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
May 31, 2001
April 30 April 30,
ASSETS 2001 2000
--------------- ---------------
Cash and short-term investments $ 146,111 $ 320,735
Accounts receivable, net 36,876 14,348
Inventories 62,618 16,494
Income tax receivable 6,500 148
Other receivables 16,540 151
Deferred tax asset 18,629 2,653
Other current assets 6,221 278
--------------- ---------------
Total current assets 293,495 354,807
Property, plant, equipment and
improvements, net 79,268 9,426
Intangible assets 128,965 -
Goodwill 500,614 -
Other long-term assets 29,358 809
--------------- ---------------
Total assets $ 1,031,700 $ 365,042
=============== ===============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $ 14,484 $ 5,908
Accrued compensation 7,704 3,001
Other accrued liabilities 19,673 3,065
Income taxes payable 1,705 122
Short-term debt 271 -
Capital lease obligations,
current portion 658 -
--------------- ---------------
Total current liabilities 44,495 12,096
Long-term debt 1,357 -
Other long-term liabilities 634 524
Deferred tax liability 43,363 -
Preferred stock 100,989 -
Common stock 963,485 384,686
Deferred stock compensation (17,079) (9,404)
Notes receivable from
stockholders (2,045) (3,248)
Unrealized loss (gain) on
short-term investments 1,380 (182)
Retained earnings (104,879) (19,430)
--------------- ---------------
Total stockholders' equity 941,851 352,422
--------------- ---------------
Total liabilities and
stockholders' equity $ 1,031,700 $ 365,042
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