Good new for LUMN IPO.
Wednesday October 25, 4:26 pm Eastern Time
Press Release
SOURCE: New Focus, Inc.
New Focus Announces Strong Third Quarter Financial Results And Raises
Revenue Expectations
SANTA CLARA, Calif., Oct. 25 /PRNewswire/ -- New Focus, Inc., (Nasdaq: NUFO - news), 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. |
