JDS Uniphase Announces Fourth Quarter Results
globeinvestor.com
15:57 GMT-04:00 Thursday, July 26, 2001
OTTAWA, Ontario and SAN JOSE, Calif., July 26 /PRNewswire/ --
JDS Uniphase Corporation (Nasdaq: JDSU; Toronto: JDU) today reported sales of
$3.2 billion for its fiscal year ended June 30, 2001 and sales of $601 million
for its fourth quarter.
Sales for the fourth quarter ended June 30, 2001 were 35% below sales of
$920 million for the quarter ended March 31, 2001 and 6% lower than pro forma
combined sales of $641 million for the quarter ended June 30, 2000. Sales for
the fiscal year ended June 30, 2001 of $3.2 billion were 83% above pro forma
combined sales of $1.8 billion for the prior fiscal year. Pro forma combined
sales for the prior fiscal year periods include the separately reported
results of E-TEK Dynamics, Inc., which was acquired on June 30, 2000 in a
transaction accounted for as a purchase, but exclude sales of SDL, Inc. which
was acquired on February 13, 2001 in a transaction accounted for as a
purchase.
"Fiscal year 2001 began as a period of rapid expansion for JDS Uniphase
but concluded with a severe industry downturn. Our response to this downturn
in the market was immediate and determined. Through our Global Realignment
Program, we are taking decisive steps to modify our cost structure and reduce
our expenditures to respond to the current industry environment while
strengthening our financial position," said Jozef Straus, Co-Chairman,
President and CEO. "We continue to work aggressively to support our customers'
current product needs and will continue to dedicate engineering talent and
capital to research and development activities for their future product needs.
While this downturn is very difficult, we believe that our focus on customer
engagement, new products, a lower cost structure and greater financial
strength will allow JDS Uniphase to emerge even stronger when industry growth
resumes."
Global Realignment Program
JDS Uniphase has been implementing a Global Realignment Program in
response to the severe industry downturn. This program reflects the Company's
commitment to remaining the industry leader in optical components and modules
for telecommunications during the current business downturn and to position
the Company for long term growth.
-- The total cost of this program is now estimated to be $900-950 million
of which $500 million was incurred through the end of the fourth quarter and
the majority of the remaining amounts is expected to be charged in the first
quarter of fiscal 2002. The charges recorded in the fourth quarter included
$264 million in restructuring charges, $220 million in charges to cost of
goods sold, and $16 million in charges to operating expenses. Included in the
total costs of the Global Realignment Program are charges for obsolete
inventory write-downs and accelerated depreciation, moving and employee costs
related to the phasing out of certain facilities and equipment.
-- The program is expected to reduce annual expenses by $700 million from
the levels experienced at the commencement of the Global Realignment Program
through reductions in manufacturing capacity, employment reductions, product
rationalization, and decreased discretionary spending. The Company is in the
process of vacating approximately two million square feet of space, or about
30% of the Company's total space before the downturn. The Company expects a
global employment reduction of 16,000, of which approximately 9,000 was
completed by June 30. Most of the remaining reductions are expected to take
place in the first quarter.
In addition to charges associated with the Global Realignment Program, the
Company incurred charges of approximately $270 million for the write-down of
excess inventory in the fourth quarter related to its lowered sales forecasts.
All of the foregoing amounts are greater than estimates previously announced
because of further reductions in sales forecasts.
The full impact of the Global Realignment Program will phase into the
Company's income statement over the first three quarters of fiscal 2002. The
goal of the program is to create a cost structure that results in breakeven
financial performance at $350 million in quarterly sales.
Financial Results
As announced in April, the Company has evaluated the carrying value of
certain long-lived assets and acquired equity investments, consisting
primarily of goodwill and the Company's investment in ADVA. Pursuant to
Generally Accepted Accounting Principles (GAAP), the majority of the goodwill
was recorded based on stock prices at the time merger agreements were executed
and announced. The Company's policy is to assess enterprise level goodwill if
the market capitalization of the Company is less than its net assets with
goodwill being reduced to the extent net assets are greater than market
capitalization.
Downturns in telecommunications equipment and financial markets have
created unique circumstances with regard to the assessment of long-lived
assets, and the Company sought the counsel of the Staff of the Securities and
Exchange Commission on the interpretation of GAAP with regard to this matter.
The Company has had communications with the Staff of the SEC, and will amend
its Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 to
reduce the carrying value of goodwill by $38.7 billion for that quarter. In
addition, the Company has recorded a $6.1 billion reduction of goodwill for
the quarter ended June 30, 2001 following further declines in its market
capitalization. Finally, approximately $300 million in certain amounts paid to
SDL executives in connection with the acquisition which were previously
recorded as acquisition costs in the quarter ended March 31, 2001 have been
reclassified as a one-time charge for that period and the Company also
recorded a $715 million charge for that period to write down the value of its
equity investment in ADVA. Because of the significant industry downturn the
Company is in the process of performing a review of its long-lived assets in
accordance with GAAP, and this review may result in further charges being
recorded for the fourth quarter of fiscal 2001 based on the value of such
assets.
The largest portion of the Company's goodwill arose from the merger of
JDS FITEL and Uniphase and the subsequent acquisition of SDL, E-TEK, and OCLI.
The businesses associated with these business combinations remain significant
operations within JDS Uniphase notwithstanding the current business downturn
and change in market valuations.
Including reduction of goodwill and purchased intangibles, merger-related
charges, realized and unrealized losses on equity investments, gain on the
sale of a subsidiary, purchased intangibles amortization, payroll taxes on
stock option exercises, stock compensation charges, and activity related to
equity method investments, the Company reported a loss of $7.9 billion or
$5.99 per share for the quarter and $50.6 billion or $46.30 per share for the
fiscal year ended June 30, 2001.
On a pro forma basis, excluding reduction of goodwill and purchased
intangibles, merger-related charges, realized and unrealized losses on equity
investments, gain on the sale of a subsidiary, purchased intangibles
amortization, payroll taxes on stock option exercises, stock compensation
charges, and activity related to equity method investments, the Company
reported a loss of $477 million or $0.36 per share for the fourth quarter and
net income of $67 million or $0.06 per share for the year ended June 30, 2001.
These results reflect the costs of the Global Realignment Program and charges
for the write-down of excess inventory. The impact of pro forma adjustments
listed above are summarized in the Company's pro forma financial tables that
follow in this release.
The Company's financial condition remained strong with $1.6 billion in
cash, money market and other highly liquid fixed income securities at
June 30, 2001. The Company reported $65 million in cash flow from operations
for the quarter and $354 million for the fiscal year and increased its cash
balances through the sale of equity securities previously held as investments.
Guidance
On June 14, 2001, the Company projected revenue for the first quarter of
fiscal 2002 would be $450 million. The Company provides guidance based on its
sales forecasts. These forecasts have been declining during the severe
industry downturn and guidance was revised accordingly. The Company does not
yet see any positive signs of a reversal in the downward trend in the industry
and now expects first quarter revenue to be below such earlier guidance and is
not currently providing guidance for the first quarter or for future periods.
The following table summarizes JDS Uniphase pro forma results for the
quarter:
(in millions, except per share amounts) Three months ended June 30,
2001 2000
Net sales $601 $641
Gross profit $(234) $324
Income (loss) from operations $(734) $200
Income (loss) before income taxes $(723) $210
Net income (loss) $(477) $137
Net income (loss) per diluted share $(0.36) $0.14
Diluted weighted average shares outstanding 1,316.4 1,002.7
Pro forma results for the quarter ended June 30, 2001 exclude the
$6,087.7 million reduction of goodwill and purchased intangibles,
$11.4 million effect on gross profit related to purchase accounting
adjustments of the value of inventory; $1,143.3 million of purchased
intangibles amortization and in-process R&D (IPR&D) charges; $12.5 million
refund of payroll taxes on stock option exercises; $562.0 million of realized
and unrealized losses on equity investments; $30.4 million of non-cash stock
compensation; and $30.6 million in activity related to investments accounted
for under the equity method of accounting. Pro forma results for the quarter
ended June 30, 2001 reflect costs of the Global Realignment Program and
charges for the write-down of excess inventory. June 30, 2000 pro forma
results include the separately reported results of E-TEK Dynamics Inc., which
was acquired on June 30, 2000 in a transaction accounted for as a purchase.
Pro forma results for the quarter ended June 30, 2000 exclude the
$23.9 million effect on gross profit related to purchase accounting
adjustments to the value of inventory, $546.2 million of purchased intangibles
amortization and IPR&D charges, and $4.6 million of payroll taxes on stock
option exercises.
Company management will be discussing these results at 4:30 p.m. Eastern
Time on July 26, 2001, and the session will be webcast, and archived for
replay, on the JDS Uniphase website at www.jdsuniphase.com under Corporate
Information / Investor Relations / Webcasts & Presentations.
JDS Uniphase is a high technology company that designs, develops,
manufactures and distributes a comprehensive range of products for the growing
fiberoptic communications market. These products are deployed by system
manufacturers worldwide to develop advanced optical networks for the
telecommunications and cable television industries. JDS Uniphase Corporation
is traded on the Nasdaq National Market under the symbol JDSU and the
exchangeable shares of JDS Uniphase Canada Ltd. are traded on The Toronto
Stock Exchange under the symbol JDU. More information on JDS Uniphase is
available at www.jdsuniphase.com.
This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements include (a) any statements or
implications regarding the Company's ability to remain competitive and the
leader in its industry, and the future prospects and growth of the Company,
the industry and the economy in general; (b) statements regarding the current
industry downturn, the extent and duration thereof and the Company's response
thereto; (c) statements regarding the expected level and timing of benefits to
the Company from its Global Realignment Program and the expected cost thereof,
including (i) the extent and timing of expected cost reductions and their
impact on the Company's financial performance, and (ii) expected reductions in
manufacturing capacity and employees; (d) statements regarding our ability to
engage customers, create a lower cost structure and improve our financial
strength, (e) statements regarding possible additional charges to be recorded
by the Company to reduce the carrying value of unamortized goodwill and other
long-lived assets; (f) any statement or implication regarding our products,
the demand therefore and any benefits expected therefrom; and (g) any
implication or suggestion that the statement regarding breakeven financial
performance at $350 million in quarterly sales represents or constitutes a
revenue projection or guidance for any current or future period. These
forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those projected, including, without
limitation, the following: (1) the Company's ongoing integration and
restructuring efforts, including, among other things, the Global Realignment
Program, may not be successful in achieving their expected benefits, may be
insufficient to align the Company's operations with customer demand and the
changes affecting our industry, or may be more costly or extensive than
currently anticipated; (2) due to the current economic slowdown, in general,
and setbacks in our customers' businesses, in particular, our ability to
predict the Company's financial performance for future periods is far more
difficult than in previous periods; and (3) our ongoing efforts to reduce
product costs to our customers, through, among other things, automation,
improved manufacturing processes and product rationalization may be
unsuccessful.
For more information on these and other risks affecting our business,
please refer to the "Risk Factors" Section included in the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2001. The forward-looking
statements contained in this news release are made as of the date hereof and
we do not assume any obligation to update the reasons why actual results could
differ materially from those projected in the forward-looking statements.
JDS UNIPHASE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three months ended Twelve months ended
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
Net sales $601.1 $524.0 $3,232.8 $1,430.4
Cost of sales 857.4 285.2 2,238.0 751.6
Gross profit (256.3) 238.8 994.8 678.8
Operating expenses:
Research and development 94.4 41.2 325.9 113.4
Selling, general and
administrative 148.1 62.1 810.3 172.9
Amortization of purchased
intangibles 1,142.7 289.3 5,474.5 896.9
Acquired in-process R&D 0.6 256.9 393.2 360.7
Reduction of
goodwill/intangibles 6,087.7 -- 44,774.3 --
Restructuring charges 264.3 -- 264.3 --
Total operating expenses 7,737.8 649.5 52,042.5 1,543.9
Loss from operations (7,994.1) (410.7) (51,047.7) (865.1)
Gain on sale of subsidiary -- -- 1,770.2 --
Activity related to equity
method investments (30.6) -- (883.9) --
Interest and other income
(expense), net (551.2) 9.1 (520.8) 35.3
Loss before income taxes (8,575.9) (401.6) (50,682.2) (829.8)
Income tax expense (686.6) 17.2 (124.2) 74.9
Net loss $(7,889.3) $(418.8) $(50,558.0) $(904.7)
Net loss per share $(5.99) $(0.54) $(46.30) $(1.27)
Number of weighted average
shares outstanding 1,316.4 782.0 1,091.9 710.9
JDS UNIPHASE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)
June 30, 2001 June 30, 2000
Current assets:
Cash, cash equivalents and short-term
investments $1,812.3 $1,114.3
Accounts receivable, less allowances
for doubtful accounts 477.6 381.6
Inventories 356.3 375.4
Prepaid assets and other current
assets 458.8 101.6
Total current assets 3,105.0 1,972.9
Property, plant, and equipment, net 1,183.3 670.7
Intangible assets 12,258.4 22,337.8
Other assets 1,025.5 1,407.7
TOTAL ASSETS $17,572.2 $26,389.1
Current liabilities:
Accounts payable $190.6 $195.2
Accrued payroll and related expenses 133.0 98.8
Income taxes payable 30.6 108.6
Other accrued expenses 423.5 244.6
Deferred income taxes 63.0 --
Total current liabilities 840.7 647.2
Deferred tax liabilities 707.4 902.1
Other non-current liabilities 18.0 61.2
Stockholders' equity:
Common stock and additional paid-in
capital 68,001.2 25,898.3
Accumulated deficit and other
stockholders' equity (51,995.1) (1,119.7)
Total stockholders' equity 16,006.1 24,778.6
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $17,572.2 $26,389.1
JDS UNIPHASE CORPORATION
OPERATING SEGMENT INFORMATION
(in millions)
(unaudited)
Three months ended Twelve months ended
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
Amplification and Transmission:
Shipments $259.1 $211.5 $1,219.8 $628.9
Intersegment sales (4.3) (3.3) (27.2) (4.8)
Net sales to external customers 254.8 208.2 1,192.6 624.1
Operating income (128.1) 56.3 139.2 162.2
WDM, Switching and Thin Film
Filters:
Shipments 372.4 342.1 2,147.6 880.0
Intersegment sales (23.3) (26.5) (100.2) (73.7)
Net sales to external customers 349.1 315.6 2,047.4 806.3
Operating income (407.5) 114.8 210.2 298.0
Net sales by reportable segments 603.9 523.8 3,240.0 1,430.3
All other net sales (2.8) 0.2 (7.2) 0.1
601.1 524.0 3,232.8 1,430.4
Operating income by reportable
segment (535.6) 171.1 349.4 460.2
All other operating income (198.2) (7.0) (295.7) (0.5)
Unallocated amounts:
Acquisition related charges and
payroll tax on stock option
exercises (7,260.3) (574.7) (51,101.4) (1,324.8)
Gain on sale of subsidiary and
other related costs -- -- 1,770.2 --
Realized and unrealized losses
on equity investments (562.0) -- (569.4) --
Activity related to equity
method investments (30.6) -- (883.9) --
Interest and other income, net 10.8 9.0 48.6 35.3
Loss before income taxes $(8,575.9) $(401.6) $(50,682.2) $(829.8)
JDS UNIPHASE CORPORATION
PRO FORMA STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three months ended June 30, 2001
Pro Forma
As Reported Adjustments Pro Forma*
Net sales $601.1 $-- $601.1
Cost of sales 857.4 (22.6) 834.8
Gross profit (256.3) 22.6 (233.7)
Operating expenses:
Research and development 94.4 (6.4) 88.0
Selling, general and administrative 148.1 (0.3) 147.8
Purchased intangibles amortization
and in-process R&D 1,143.3 (1,143.3) --
Reduction of goodwill/intangibles 6,087.7 (6,087.7) --
Restructuring charges 264.3 -- 264.3
Total operating expenses 7,737.8 (7,237.7) 500.1
Income (loss) from operations (7,994.1) 7,260.3 (733.8)
Activity related to equity method
investments (30.6) 30.6 --
Interest and other income
(expense), net (551.2) 562.0 10.8
Income (loss) before income taxes (8,575.9) 7,852.9 (723.0)
Income tax expense (686.6) 440.8 (245.8)
Net income (loss) $(7,889.3) $7,412.1 $(477.2)
Net income (loss) per share $(5.99) $(0.36)
Net income (loss) per share,
diluted basis $(5.99) $(0.36)
Number of weighted average shares
outstanding 1,316.4 1,316.4
Number of weighted average shares
and equivalents 1,316.4 1,316.4
Three months ended June 30, 2000
Pro Forma Pro
JDS Uniphase E-TEK Adjustments Forma*
Net sales $524.0 $122.8 $(5.7) $641.1
Cost of sales 285.1 61.8 (30.2) 316.7
Gross profit 238.9 61.0 24.5 324.4
Total operating expenses 649.5 25.3 (550.2) 124.6
Income (loss) from operations (410.6) 35.7 574.7 199.8
Interest and other income, net 9.1 1.2 - 10.3
Income (loss) before income taxes (401.5) 36.9 574.7 210.1
Income tax expense 17.2 14.0 41.8 73.0
Net income (loss) $(418.7) $22.9 $532.9 $137.1
Net income per share $0.15
Net income per share, diluted basis $0.14
Number of weighted average shares
outstanding 929.4
Number of weighted average shares
and equivalents 1,002.7
*Pro forma results for the quarter ended June 30, 2001 exclude the
$6,087.7 million reduction of goodwill and purchased intangibles;
$11.4 million effect on gross profit related to purchase accounting
adjustments of the value of inventory; $1,143.3 million of purchased
intangibles amortization and in-process R&D charges; $12.5 million refund
of payroll taxes on stock option exercises; $562.0 million of realized
and unrealized losses on equity investments; $30.4 million of non-cash
stock compensation; and $30.6 million in activity related to investments
accounted for under the equity method of accounting. Pro forma results
for the quarter ended June 30, 2001 reflect costs of the Global
Realignment Program and charges for the write-down of excess inventory.
June 30, 2000 pro forma results include the separately reported results
of E-TEK Dynamics Inc., which was acquired on June 30, 2000 in a
transaction accounted for as a purchase. Pro forma results for the
quarter ended June 30, 2000 exclude the $23.9 million effect on gross
profit related to purchase accounting adjustments to the value of
inventory, $546.2 million of purchased intangibles amortization and IPR&D
charges, and $4.6 million of payroll taxes on stock option exercises.
JDS UNIPHASE CORPORATION
PRO FORMA STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Twelve months ended June 30, 2001
Pro Forma
As Reported Adjustments Pro Forma*
Net sales $3,232.8 $-- $3,232.8
Cost of sales 2,238.0 (95.8) 2,142.2
Gross profit 994.8 95.8 1,090.6
Operating expenses:
Research and development 325.9 (17.2) 308.7
Selling, general and
administrative 810.3 (346.2) 464.1
Purchased intangibles
amortization and in-process
R&D 5,867.7 (5,867.7) --
Reduction of
goodwill/intangibles 44,774.3 (44,774.3) --
Restructuring charges 264.3 -- 264.3
Total operating expenses 52,042.5 (51,005.4) 1,037.1
Income (loss) from operations (51,047.7) 51,101.2 53.5
Gain on sale of subsidiary 1,770.2 (1,770.2) --
Activity related to equity
method investments (883.9) 883.9 --
Interest and other income
(expense), net (520.8) 569.4 48.6
Income (loss) before income
taxes (50,682.2) 50,784.3 102.1
Income tax expense (124.2) 158.9 34.7
Net income (loss) $(50,558.0) $50,625.4 $67.4
Net income (loss) per share $(46.30) $0.06
Net income (loss) per share,
diluted basis $(46.30) $0.06
Number of weighted average
shares outstanding 1,091.9 1,091.9
Number of weighted average
shares and equivalents 1,091.9 1,130.3
Twelve months ended June 30, 2000 |
