New Focus Announces First Quarter Financial Results
Restructuring/Impairment Charges Recorded and Cost Reduction Target Raised
SAN JOSE, Calif., April 24 /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 first quarter of fiscal year 2002. Net revenue, net loss and net cash outflow for the first quarter fell within the company's pro forma financial guidance provided in February 2002. The company's first quarter results included restructuring and impairment charges of $24.0 million related to the divestiture of its passives product line, the closure of its China manufacturing plant, and work force reductions associated with these decisions. The company expects to record an additional restructuring charge of $4-6 million in its second quarter to complete these actions. The company previously indicated that the total charge for these actions would be $25-40 million and would be recorded in either the first or second quarter of 2002, or possibly spread over both quarters, in compliance with current accounting rules. The company also announced a higher cost reduction target for fiscal 2002 that lowers the quarterly net revenue required for profitability.
First Quarter Review:
Net revenue for the first quarter of 2002 was $10.1 million, up from $9.4 million in the fourth quarter of 2001 and down from $40.8 million in the first quarter of 2001. The company's guidance for first quarter net revenue was $9-12 million. In the first quarter the company recognized $2.0 million in net revenue that was deferred in the fourth quarter of 2001.
Net revenue from the company's telecom products in the first quarter of 2002 totaled $4.9 million, up from $4.4 million in the fourth quarter of 2001 and down from $32.3 million in the first quarter of 2001. Net revenue from the company's photonics tool products in the first quarter of 2002 totaled $5.2 million, up from $5.0 million in the fourth quarter of 2001 and down from $8.5 million in the first quarter of 2001.
GAAP Results:
Based on results prepared in accordance with generally accepted accounting principles, the company recorded a net loss for the first quarter of 2002 of $46.4 million, or $0.62 per share based on 75.3 million shares outstanding. The net loss for the fourth quarter of 2001 was $79.5 million, or $1.07 per share based on 74.0 million shares outstanding. For the first quarter of 2001 the net loss was $86.3 million, or $1.22 per share based on 70.5 million shares outstanding.
The company's first quarter 2002 results, prepared in accordance with generally accepted accounting principles, included charges of $24.0 million for the impairment of tangible assets and restructuring activities. The impairment charge for this period was $23.4 million, which reflected write-downs that reduced the net book value of the company's China facility and equipment associated with the manufacture and development of passive products to their estimated realizable value. The restructuring charge for this period was $0.6 million, which reflected a portion of the estimated costs for work force reductions associated with the passive product line divestiture and the China plant closure. Additionally, the GAAP results included charges of $1.3 million for amortization of acquired intangibles and $5.9 million for deferred compensation.
Pro Forma Results:
The pro forma net loss in the first quarter of 2002 was $15.2 million, or $0.20 per share based on 75.3 million shares outstanding. This pro forma net loss included a charge of $1.3 million for the write-down of passive product inventories. Excluding this charge, the net loss for the first quarter was $13.9 million, or $0.19 per share. The company's guidance for its first quarter pro forma net loss, excluding inventory write-downs, order cancellation fees and one-time adjustments, was $14-16 million, or $0.19-0.22 per share.
In the fourth quarter of 2001 the company reported a pro forma net loss of $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. In the first quarter of 2001 the company recorded a pro forma net loss of $31.3 million, or $0.44 per share based on 70.5 million basic shares outstanding. This pro forma net loss included a charge of $28.5 million for the write-down of excess inventories and related charges. Excluding this charge, the net loss for the first quarter was $2.8 million, or $0.04 per share based on 70.5 million basic shares outstanding.
``Our net revenue remained relatively flat on a sequential basis as business conditions in all product areas remained difficult. As anticipated, we experienced a slight reduction in our quarterly expense structure, defined as operating expenses plus manufacturing overhead, in the first quarter. The divestiture of our passive optical components product line and closure of our China plant that we announced in mid-March, however, will accelerate the realization of significant cost savings during the second half of this year. Our net free cash outflow, defined as operating cash flow less capital expenditures, for the first quarter was $12.3 million. Excluding a cash outflow of $0.9 million related to restructuring activities, our net free cash outflow was $11.4 million, which fell within our $10-13 million guidance range. Our overall cash outflow for the first quarter, including net financing activities, was $10.5 million,'' said Clark Harris, chairman, president and chief executive officer of New Focus, Inc.
The company's cash and short-term investments stood at $284.2 million at the end of the first quarter of 2002, down from $294.7 million at the end of 2001. Capital expenditures were $0.3 million in the first quarter of 2002.
Business Outlook:
``As previously indicated, we see limited opportunity for revenue growth in our business during 2002 due to continuing difficult market conditions within the telecommunications industry. We currently expect that net revenue for the second quarter of fiscal 2002 will fall within a range of $8-11 million. At these projected revenue levels the pro forma net loss for the second quarter will likely be $13-15 million, or $0.17-0.20 per share. This projected pro forma net loss for the second quarter does not include any estimated provisions for restructuring charges and additional inventory write-downs. Due to the current economic climate and associated uncertainty within the telecommunications industry, the company is providing financial guidance for the second quarter of 2002 only,'' said Harris.
Based on the revenue and net loss outlooks for the second quarter of 2002, the company is targeting a net cash outflow for the second quarter of approximately $11-13 million. Cash outflows associated with restructuring activities are not included in this estimate. 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.
``Based on restructuring actions previously announced, we had to reach $20 million in quarterly net revenue to achieve profitability. Given the continuing weak market conditions, we are now planning to make further reductions in our infrastructure costs that will lower the company's expense structure by an additional $2-3 million per quarter. These additional expense reductions should reduce our breakeven quarterly revenue to $15-16 million. If our quarterly net revenue remains at the $10 million level and the additional expense savings are realized, our quarterly net loss would drop to $3-4 million in the fourth quarter of 2002, yielding a quarterly net cash outflow of less than $2 million in this time period. To augment revenue from our current product lines and to improve our bottom line performance, we are continuing to pursue our acquisition and partnering strategies. Our commitment to return to profitability remains unchanged,'' said Harris.
Composition of Pro Forma Results:
The company's pro forma net losses exclude charges for restructuring activities, the impairment of goodwill, the impairment of tangible assets, 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 second quarter of 2002, the projected pro forma net loss for the second quarter of 2002, the projected cash outflow for the second quarter of 2002, potential impairment and restructuring charges, planned reductions in the company's expense structure by the end of 2002, the company's projected quarterly revenue level to achieve profitability, estimates of net loss and net cash outflow at the company's current revenue level assuming realization of projected expense reductions, and the company's commitment to its acquisition and partnering strategies. 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 company's markets, especially the telecommunications 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; and the difficulty of achieving anticipated cost reductions due to unforeseen expenses, including costs arising from the consolidation of the company's manufacturing operations and the divestiture of certain product lines, that may arise in future quarters. Additionally, if we cannot effectively execute on our acquisition and partnering strategies and our expansion into potential new markets, we will be unable to achieve our profitability goal in a timely manner. We may experience difficulty in achieving anticipated cost reductions due to an inability to reduce expenses without jeopardizing product development schedules for product areas that will be an ongoing focus of our business. Furthermore, any unforeseen delays in completing the development of the company's new products may limit our ability to generate volume revenues. We also may experience difficulty in gaining customer acceptance of our new products and in generating 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 2001 10-K annual 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, 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
Mar 31, 2002 Dec 30, 2001 Apr 1, 2001
Net revenues $10,096 $9,390 $40,762
Cost of net revenues 13,921 13,331 55,442
Gross profit (loss) (3,825) (3,941) (14,680)
(37.9)% (42.0)% (36.0)%
Operating expenses:
Research and development, net 7,362 8,172 12,795
Sales and marketing 2,578 2,210 2,447
General and administrative 3,902 3,212 6,204
Impairment, restructuring
and other charges 24,022 59,719 --
Amortization of
acquired intangibles 1,346 5,305 34,837
Deferred stock compensation 5,898 4,985 25,324
Total operating expenses 45,108 83,603 81,607
Loss from operations (48,933) (87,544) (96,287)
(484.7)% (932.3)% (236.2)%
Interest and other income, net 2,497 3,040 4,994
Loss before provision
(benefit) for income taxes (46,436) (84,504) (91,293)
Provision (benefit)
for income taxes -- (5,000) (5,000)
Net loss $(46,436) $(79,504) $(86,293)
(459.9)% (846.7)% (211.7)%
Basic and diluted
net loss per share $(0.62) $(1.07) $(1.22)
Shares used to compute
basic and diluted net
loss per share 75,259 74,018 70,460
NEW FOCUS, INC.
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended
Mar 31, 2002 Dec 30, 2001 Apr 1, 2001
Net revenues $10,096 $9,390 $40,762
Cost of net revenues 13,921 13,331 55,442
Gross profit (loss) (3,825) (3,941) (14,680)
(37.9)% (42.0)% (36.0)%
Operating expenses:
Research and development, net 7,362 8,172 12,795
Sales and marketing 2,578 2,210 2,447
General and administrative 3,902 3,212 6,204
Total operating expenses 13,842 13,594 21,446
Loss from operations (17,667) (17,535) (36,126)
(175.0)% (186.7)% (88.6)%
Interest and other income, net 2,497 3,040 4,994
Loss before provision
for income taxes (15,170) (14,495) (31,132)
Provision for income taxes -- 175 175
Net loss $(15,170) $(14,670) $(31,307)
(150.3)% (156.2)% (76.8)%
Basic and diluted
net loss per share $(0.20) $(0.20) $(0.44)
Shares used to compute
basic and diluted net
loss per share 75,259 74,018 70,460
Pro Forma Reconciliation to GAAP:
Pro Forma loss $(15,170) $(14,670) $(31,307)
Impairment, restructuring
and other charges (24,022) (59,719) --
Amortization of
acquired intangibles (1,346) (5,305) (34,837)
Deferred stock compensation (5,898) (4,985) (25,324)
Benefit for income taxes -- 5,175 5,175
Net loss $(46,436) $(79,504) $(86,293)
NEW FOCUS, INC.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
Mar 31, 2002 Dec 30, 2001
ASSETS
Current Assets:
Cash, cash equivalents and
short-term investments $284,198 $294,655
Trade accounts receivable, net 5,370 5,025
Inventories 7,708 9,240
Other current assets 7,136 8,857
Total current assets 304,412 317,777
Property and equipment, net 60,678 88,066
Intangibles, net 10,948 12,294
Other assets 11,472 11,587
Total assets $387,510 $429,724
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $2,706 $2,438
Accrued expenses 13,206 15,777
Deferred revenue and R&D funding 979 1,775
Current portion of long-term debt 8 109
Total current liabilities 16,899 20,099
Long-term debt, less current portion 5 7
Deferred rent 1,557 1,508
Stockholders' equity 369,049 408,110
Total liabilities and
stockholders' equity $387,510 $429,724
SOURCE: New Focus, Inc |
