New Focus Announces Financial Results for its Fourth Quarter and Fiscal Year 2001
SAN JOSE, Calif., Feb. 5 /PRNewswire-FirstCall/ -- New Focus, Inc., (Nasdaq: NUFO - news), a leading supplier of innovative products serving the telecommunications, test and measurement, and photonics tools markets, today announced financial results for its fourth quarter and fiscal year 2001 ended December 30, 2001. Fourth quarter revenue fell below the low end of the company's revenue guidance range provided in October 2001 due in part to the deferral of certain revenue into fiscal year 2002. In spite of the lower-than-expected fourth quarter revenue level, the pro forma net loss for the fourth quarter was within guidance due to more rapid progress against the company's cost reduction goals. As a result of this rapid progress, the company significantly reduced in its quarterly cash burn rate.
Fourth Quarter Review:
Net revenue for the fourth quarter of 2001 was $9.4 million, down from $15.8 million in the third quarter of 2001 and $33.9 million in the fourth quarter of 2000. The company's guidance for fourth quarter net revenue was $12-15 million. At December 30, 2001 the company deferred the recognition of $2.0 million in net revenue and such revenue will be recognized upon satisfaction of the company's revenue recognition criteria.
Net revenue from the company's fiber-optic products in the fourth quarter of 2001 totaled $4.4 million, down from $9.7 million in the third quarter of 2001 and $25.3 million in the fourth quarter of 2000. Net revenue from the company's photonics tool products in the fourth quarter of 2001 totaled $5.0 million, down from $6.1 million in the third quarter of 2001 and $8.6 million in the fourth quarter of 2000.
GAAP Results:
Based on results prepared in accordance with generally accepted accounting principles, the company recorded a net loss for the fourth quarter of 2001 of $79.5 million, or $1.07 per share based on 74.0 million shares outstanding. The net loss for the third quarter of 2001 was $32.0 million, or $0.43 per share based on 74.2 million shares outstanding. For the fourth quarter of 2000 the net loss was $2.3 million, or $0.04 per share based on 60.5 million shares outstanding.
The company's fourth quarter 2001 results, prepared in accordance with generally accepted accounting principles, included charges of $59.7 million associated with the impairment of intangible assets and restructuring and other activities. Additionally, these results include charges of $5.3 million for amortization of acquired intangibles and $5.0 million for deferred compensation. The restructuring and other charge for this period was $12.0 million, which reflected the estimated costs associated with the company's twelve-month restructuring plan announced in October 2001. The impairment charge for this period was $47.7 million, which reflected additional write- downs of remaining intangibles, including goodwill, related to the company's acquisitions of JCA Technology, Inc. and Globe Y. Technology, Inc. in early 2001. After consideration of this impairment charge, the company had $12.3 million of intangibles related to these two acquisitions on its year-end balance sheet.
Pro Forma Results:
The pro forma net loss in the fourth quarter of 2001 was $14.7 million, or $0.20 per share based on 74.0 million shares outstanding. This pro forma net loss included a charge of $0.2 million for order cancellation fees and a favorable one-time reduction of $1.5 million in company expenses. Excluding these effects, the net loss for the fourth quarter was $16.0 million, or $0.22 per share. The company's guidance for pro forma net loss, excluding inventory write-downs, order cancellation fees and one-time adjustments, in the fourth quarter was $14-17 million, or $0.19-0.23 per share.
In the third quarter of 2001 the company reported a pro forma net loss of $18.0 million, or $0.24 per share based on 74.2 million shares outstanding. This pro forma net loss included a charge of $1.3 million for the write-down of inventories and related charges. Excluding this charge, the net loss for the third quarter was $16.7 million, or $0.22 per share. In the fourth quarter of 2000 the company was profitable and reported a pro forma net income of $2.6 million, or $0.04 per share based on 64.1 million shares outstanding.
``Continuation of sluggish demand throughout the telecommunications industry damped our revenue performance in the fourth quarter. The revenue deferral of $2 million into 2002 further reduced our top line performance in the quarter. Outstanding progress in our cost reduction program, however, offset the lost contribution margin from the lower-than-expected revenue, thus allowing us to fall within our net loss guidance for the fourth quarter. We initiated our cost reduction program in July 2001 and set a goal to cut our expense structure, defined as operating expenses plus manufacturing overhead, from $32 million in second quarter of 2001 to $16 million in the fourth quarter of 2002. We lowered the company's expense structure by $5.7 million in the fourth quarter, raising the total savings over the past two quarters to $9.3 million. With our results to date, we are well on our way to achieving our total cost reduction goal of $16 million,'' said Clark Harris, chairman, president and chief executive officer of New Focus, Inc.
``Our most important objective in the fourth quarter was to reduce our quarterly cash burn rate. Through our cost reduction activities and tight control over our working capital accounts, we lowered our fourth quarter cash outflow, defined as operating cash outflow less capital expenditures, to $6 million, a substantial improvement relative to our previous quarterly cash burn rate of $30-32 million per quarter during the second and third quarters,'' said Harris.
The company's cash and short-term investments stood at $295 million at the end of the fourth quarter, down from $301 million at the end of September. Capital expenditures totaled approximately $1 million in the fourth quarter. The company's capital spending was $10 million for the second half of 2001, down sharply from $43 million in the first half of 2001.
Fiscal Year Results:
Net revenue for the twelve months ended December 30, 2001 was $92.6 million, an increase of 15% over $80.4 million in net revenue for the twelve months ended December 31, 2000. While net revenues increased year-over-year, the company's quarterly net revenues weakened significantly between the first and fourth quarters of 2001. Net revenue from fiber optic products totaled $65.3 million and $53.6 million in the twelve months of 2001 and 2000, respectively. Net revenue from photonics tool products totaled $27.3 million and $26.8 million in the twelve months of 2001 and 2000, respectively.
GAAP Results:
Based on results prepared in accordance with generally accepted accounting principles, the net loss for fiscal 2001 was $495.4 million, or $6.78 per share based on 73.0 million basic shares outstanding. The net loss for the twelve months of 2000 was $36.0 million, or $0.92 per share based on 38.9 million shares outstanding. The deferred stock compensation charges included in these results were $58.1 million and $23.7 million for the twelve months of 2001 and 2000, respectively. The results for 2001 also included restructuring and impairment charges of $307.1 million and amortization of acquired intangibles of $67.9 million.
Pro Forma Results:
On a pro forma basis, the net loss for fiscal 2001 was $83.1 million, or $1.14 per share based on 73.0 million shares outstanding. This pro forma net loss included charges of $36.6 million for inventory write-downs and related charges. Excluding these charges, the net loss for fiscal 2001 was $46.5 million, or $0.64 per share. The pro forma net loss for the twelve months of 2000 was $12.2 million, or $0.22 per share based on 54.7 million shares outstanding. This pro forma net loss did not include any charges for inventory write-downs and related charges.
Business Outlook:
``We see limited improvement in our business during the first half of 2002 due to continuing difficult times for the telecommunications industry. In light of these conditions, we will push forward aggressively with our previously announced cost reduction program and will remain highly focused on our cash burn rate. In line with our cost reduction objectives, we plan to close our manufacturing site in Camarillo, California in the early part of the third quarter of 2002 and will transfer production from this operation to other facilities. We will continue to review our various lines of business and will adjust our cost reduction plans and business strategies to fit market realities. Preservation of a strong balance sheet is critical during these uncertain times in our industry and we will make our decisions with this objective in mind,'' said Harris.
``Looking at the current quarter, we expect that net revenue for the first quarter of fiscal 2002 will fall within a range of $9-12 million. We expect to recognize in the first quarter at least one-third, and possibly all, of the $2 million in deferred revenue from the fourth quarter. At the projected revenue levels the pro forma net loss for the first quarter will likely be within a range of $14-16 million, or $0.19-0.22 per share. This projected pro forma net loss for the first quarter does not include any estimated provisions for additional inventory write-downs and cancellation charges. Due to the current economic climate and associated uncertainty within the telecommunications industry, the company is providing financial guidance for the first quarter of 2002 only,'' said Harris.
Based on the current revenue outlook for the first quarter of 2002, the company is now targeting a net cash outflow for the first quarter of approximately $10-13 million. This expected cash outflow would exceed the actual outflow of $6 million in the fourth quarter of 2001. Reductions in accounts receivable, reimbursements for non-recurring engineering expenses, and cash receipts on deferred revenue reduced the fourth quarter's cash outflow by approximately $6 million in the fourth quarter of 2001. Such positive effects are not expected in the first quarter of 2002. Achievement of this goal remains highly dependent on the realization of planned expense reductions, the minimization of capital expenditures, and the attainment of planned revenue. Cash outflows associated with restructuring activities are not included in the first quarter estimate.
Composition of Pro Forma Results:
The company's pro forma net losses exclude charges for restructuring activities, the impairment of goodwill, the amortization of acquired intangibles and deferred compensation, the write-off of acquired in-process R&D, and the income tax effects related to these charges. Pro forma losses, however, include charges related to inventory write-downs, order cancellation charges, and other charges that may not be repetitive in nature. The company separately identifies the magnitude of such charges. Pro forma net losses include amounts for net interest income and tax provisions.
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 the revenue outlook for the first quarter of 2002 including an ability to recognize revenue deferred from the fourth quarter of 2001, the projected pro forma net loss for the first quarter of 2002, the projected cash outflow for the first quarter of 2002, planned reductions in the company's expense structure by the end of 2002, and the company's commitment to a cost reduction that involves further work force reductions and plant closures. 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 difficulty of forecasting anticipated revenues due to weakness and uncertainties related to general economic conditions and overall demand within the telecommunications industry, excess inventory levels within the industry, sudden and unexpected order reductions and cancellations by customers, lower backlog of customer orders, and potential pricing pressures that may arise from supply-demand conditions within the industry; the high sensitivity of the size of the company's net loss to its level of revenue due to the fixed and/or project oriented nature of its expenses; the challenge of managing inventory levels during periods of weakening demand; the difficulty of achieving anticipated cost reductions due to unforeseen expenses, including costs arising from the consolidation of the company's manufacturing operations, that may arise in future quarters; the difficulty of achieving anticipated cost reductions due to an inability to reduce expenses without jeopardizing product development schedules; any unforeseen delays in completing the development of the company's new products on a timely basis and achieving sufficient production to generate volume revenues; the company's ability to gain customer acceptance of its new products; and the company's ability to generate future revenue from new products commensurate with prior investments in research and development activities. Other risk factors that may affect the company's financial performance are listed in the company's fiscal year 2000 10-K annual report and most recent 10-Q quarterly report 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 manufactures differentiated optical and radio-frequency (RF) products for the next-generation communication networks and other photonics markets. New Focus' product portfolio includes tunable lasers for both test and measurement and network applications, high speed opto-electronic devices, wavelength management products, and advanced photonics tools. Founded in 1990, the company remains a leader in the creation of advanced optical products for the commercial and research marketplaces. The company is headquartered in San Jose, California and has operations in Camarillo, California, Madison, Wisconsin, and Shenzhen, China.
For more information about New Focus visit the company's Internet home page at newfocus.com , call our Investors Relations Department at 408-284-NUFO, 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 Twelve Months Ended
Dec. 30, Sep. 30, Dec. 31, Dec. 30, Dec. 31,
2001 2001 2000 2001 2000
Net revenues $9,390 $15,838 $33,875 $92,639 $80,358
Cost of net revenues 13,331 16,882 23,256 112,004 64,346
Gross profit (loss) (3,941) (1,044) 10,619 (19,365) 16,012
(42.0)% (6.6)% 31.3% (20.9)% 19.9%
Operating expenses:
Research and
development, net 8,172 13,480 10,620 48,824 26,391
Sales and marketing 2,210 2,592 1,789 10,191 5,880
General and
administrative 3,212 5,010 3,483 20,855 9,813
Impairment,
Restructuring and
Other Charges 59,719 2,162 -- 307,078 --
Amortization of
acquired intangibles 5,305 5,255 -- 67,859 --
Deferred stock
compensation 4,985 11,766 4,812 58,132 23,747
Total operating
expenses 83,603 40,265 20,704 512,939 65,831
Loss from operations (87,544) (41,309) (10,085) (532,304) (49,819)
(932.3)% (260.8)% (29.8)% (574.6)% (62.0)%
Interest and other
income, net 3,040 4,341 7,834 16,880 13,851
Loss before provision
(benefit) for income
taxes (84,504) (36,968) (2,251) (515,424) (35,968)
Provision (benefit) for
income taxes (5,000) (5,000) 4 (20,000) 6
Net loss $(79,504) $(31,968) $(2,255) $(495,424) $(35,974)
(846.7)% (201.8)% (6.7)% (534.8)% (44.8)%
Basic and diluted net
loss per share $(1.07) $(0.43) $(0.04) $(6.78) $(0.92)
Shares used to compute
basic and diluted net
loss per share 74,018 74,212 60,463 73,045 38,914
NEW FOCUS, INC.
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
Dec 30, Sep 30, Dec 31, Dec 30, Dec 31,
2001 2001 2000 2001 2000 (A)
Net revenues $9,390 $15,838 $33,875 $92,639 $80,358
Cost of net revenues 13,331 16,882 23,256 112,004 64,346
Gross profit (loss) (3,941) (1,044) 10,619 (19,365) 16,012
(42.0)% (6.6)% 31.3% (20.9)% 19.9%
Operating expenses:
Research and
development, net 8,172 13,480 10,620 48,824 26,391
Sales and marketing 2,210 2,592 1,789 10,191 5,880
General and
administrative 3,212 5,010 3,483 20,855 9,813
Total operating
expenses 13,594 21,082 15,892 79,870 42,084
Loss from operations (17,535) (22,126) (5,273) (99,235) (26,072)
(186.7)% (139.7)% (15.6)% (107.1)% (32.4)%
Interest and other
income, net 3,040 4,341 7,834 16,880 13,851
Income (loss) before
provision for income
taxes (14,495) (17,785) 2,561 (82,355) (12,221)
Provision for income
taxes 175 175 4 700 6
Net income (loss) $(14,670) $(17,960) $2,557 $(83,055) $(12,227)
(156.2)% (113.4)% 7.5% (89.7)% (15.2)%
Basic net income (loss)
per share $(0.20) $(0.24) $0.04 $(1.14) $(0.31)
Shares used to compute
basic net income (loss)
per share 74,018 74,212 60,463 73,045 38,914
Diluted net income (loss)
per share $(0.20) $(0.24) $0.04 $(1.14) $(0.22)
Shares used to compute
diluted net income
(loss) per
share 74,018 74,212 64,124 73,045 54,727
(A) Number of shares used for the pro forma net loss per share
calculation 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
(Unaudited, in thousands)
Dec 30, 2001 Dec 31, 2000
ASSETS
Current Assets:
Cash, cash equivalents and short-
term investments $294,655 $485,493
Trade accounts receivable, net 5,025 13,835
Inventories 9,240 30,385
Other current assets 8,857 4,805
Total current assets 317,777 534,518
Property and equipment, net 88,066 54,744
Intangibles, net 12,294 577
Other assets 11,587 11,105
Total assets $429,724 $600,944
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $2,438 $21,556
Accrued expenses 15,777 10,355
Deferred revenue and R&D funding 1,775 343
Current portion of long-term debt 109 281
Total current liabilities 20,099 32,535
Long-term debt, less current portion 7 111
Deferred rent 1,508 1,188
Stockholders' equity 408,110 567,110
Total liabilities and
stockholders' equity $429,724 $600,944
SOURCE: New Focus, Inc. |
