Corvis Corporation Reports Financial Results for the Fourth Quarter
Thursday February 6, 4:32 pm ET
Recognizes $7.1 Million in Revenue from Qwest, Broadwing and France Telecom; Ends the Year With $504.4 Million in Cash and Investments; Repurchases 5.9 Million Shares of Common Stock; Continues Initiatives to Reach Quarterly Cash Burn Target by Third Quarter 2003
COLUMBIA, Md., Feb. 6 /PRNewswire-FirstCall/ -- Corvis Corporation (Nasdaq: CORV - News), a leading provider of intelligent optical networking solutions, today reported revenues of $7.1 million for its fiscal fourth quarter ended December 28, 2002. Revenues for the fourth quarter were generated under the company's contracts with Qwest Communications, Broadwing Communications and France Telecom. The company also announced that it had repurchased 5.9 million shares of its common stock, took additional steps to lower its cash burn and ended fiscal 2002 with $504.4 million in cash and investments.
"We made significant progress in 2002, realigning the business during one of the most difficult telecommunications markets most of us have ever seen. We believe that we are taking the necessary steps to help position Corvis for the long term and to be first in line when service providers resume spending," said Dr. David Huber, chairman and CEO.
Reported net loss was $190.2 million, or $0.47 loss per share, for the current quarter as compared with a reported net loss of $374.8 million, or $1.05 loss per share, for the fourth quarter of 2001.
Pro forma net loss for the current quarter was $46.0 million, or $0.11 loss per share, excluding goodwill and intangible assets amortization expense, equity-based expense, and restructuring and other charges compared with a pro forma net loss of $39.9 million, or $0.11 loss per share, for the fourth quarter of 2001.
For fiscal year 2002, Corvis recorded revenue of $20.2 million as compared to $188.5 million for the prior year. Reported net loss for fiscal year 2002 was $507.8 million, or $1.30 per share, as compared to $1,378.1 million, or $3.94 per share for fiscal year 2001. Pro forma net loss for fiscal year 2002 was $190.6 million, or $0.49 per share as compared to $135.3 million, or $0.39 per share, for fiscal year 2001. For fiscal year 2002, pro forma results also exclude purchased research and development expense.
Financial Position
Consistent with the company's prior guidance, cash, cash equivalents and investments were $504.4 million at December 28, 2002 compared to $548.7 million at September 28, 2002. This represents a change of $44.3 million for the quarter, which included $4.4 million used to repurchase Corvis common stock under the share repurchase program.
"Corvis ended fiscal 2002 with over $500 million in cash and virtually no long-term debt. We do not have the serious debt issues currently facing some of our larger competitors and we believe we have substantial resources unlike some of the smaller competitors," said Lynn Anderson, senior vice president, chief financial officer and treasurer.
Streamlining Business to Meet Current Market Conditions
During the quarter, Corvis recorded restructuring and other charges totaling $127.9 million. These charges were comprised of a $38.5 million charge associated with a write-down of inventory and an $89.2 million charge related to the write-down of impaired assets, the write-down of goodwill and other intangible assets as well as charges associated with workforce reductions and $0.2 million for the write-down of certain equity investments.
On January 29, 2003, the company announced a business restructuring initiative that included a reduction in its U.S. workforce of approximately 180 employees. The company stated that while every area in the company had been affected by this restructuring, most of the reductions occurred in the company's Research and Development organization. Continuing research and development will focus on further product development, product expansion and feature set improvements for the company's leading optical networking portfolio.
The company is continuing to better align its ongoing operating costs with current market conditions and to position the company for a quarterly cash burn rate of approximately $25 million or below, which the company believes it will achieve by the third quarter 2003.
"Corvis is committed to making the necessary decisions to reduce the cost structure of the business as we did in 2002. We intend to maintain our focus and financial discipline. We will continue to make the strategic decisions required to position the company for long-term success and profitability without jeopardizing our ability to bring new next-generations optical networking solutions to the market," Mr. Anderson said.
Outlook
The company indicated that it expects revenue for its first fiscal quarter ending March 29, 2003, to decrease sequentially from the fourth quarter 2002.
Quarterly Events
-- On October 1, 2002, the company announced that it would transfer the
listing of its common stock to the Nasdaq SmallCap Market from the
Nasdaq National Market. The company's common stock was transferred to
the Nasdaq SmallCap Market at the opening of business on October 14,
2002, and continues to trade under the symbol "CORV."
-- On October 7, 2002, the company announced that it had established a
subsidiary, Corvis Government Solutions, Inc. (CGSI), to provide
optical networking solutions and services to the Federal marketplace.
The company also announced that CGSI secured its first contract with
the U.S. Government for Corvis' next-generation optical networking
products.
Webcast Information
In conjunction with this announcement, Corvis will host a conference call of its fourth quarter financial results today at 5:30 p.m. EST. The live broadcast of the conference will be available via Corvis' website, www.corvis.com. An archived audio of the conference call will also be available for replay purposes through the Corvis website.
About Corvis
From point-to-point links to all-optical networks to transoceanic systems, Corvis Corporation delivers innovative optical network solutions that drive carrier profitability faster than any other vendor. Headquartered in Columbia, MD, Corvis provides carriers with scalable optical networking solutions and services that dramatically reduce the overall expenses associated with building and operating networks. Carriers deploying Corvis' optical network solutions can provision new wavelength-based services and tailor dynamic service-level agreements for rapid revenue generation. For more information about Corvis, please visit its Web site www.corvis.com.
Corvis and the Corvis logo are trademarks and/or service marks of the Corvis Corporation. All other trademarks are the property of their respective owners.
Investor Note Regarding Forward-Looking Statements
This announcement and the quarterly earnings conference call may contain certain forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially from those currently anticipated as a result of a number of factors, including, but not limited to, the risks and uncertainties discussed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's filings with the Securities and Exchange Commission.
Corvis Contact:
Andrew G. Backman
Vice President
Investor and Public Relations
(301) 310-3080
Fax: (301) 310-3134
investorinformation@corvis.com
CORVIS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Quarter Ended Year Ended
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
2002 2001 2002 2001
Revenues $7,116 $15,247 $20,208 $188,450
Cost of sales 45,082 125,321 84,884 333,487
Gross profit (37,966) (110,074) (64,676) (145,037)
Operating expenses:
Research and development 32,650 32,132 127,773 149,882
Sales and marketing 7,629 12,817 43,776 56,002
General and administrative 8,024 7,181 32,432 34,344
Goodwill and other
intangible assets
amortization expense 5,658 12,050 18,491 125,940
Equity-based expense 10,715 19,534 65,399 98,807
Purchased research and
development expense - - 34,580 -
Restructuring and
other charges 89,161 182,376 124,825 789,242
Operating loss (191,803) (376,164) (511,952) (1,399,254)
Interest and other
income, net 1,588 1,358 4,192 21,161
Net loss $(190,215) $(374,806) $(507,760) $(1,378,093)
Weighted average number of
common shares outstanding
(in thousands) 408,517 355,928 392,012 349,652
Basic and diluted net loss
per common share $(0.47) $(1.05) $(1.30) $(3.94)
CORVIS CORPORATION
PRO FORMA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)
(Dollars in thousands, except per share data)
For Discussion Purposes Only
Quarter Ended Year Ended
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
2002 2001 2002 2001
Revenues $7,116 $15,247 $20,208 $188,450
Cost of sales 6,621 7,952 16,099 116,951
Gross profit 495 7,295 4,109 71,499
Operating expenses:
Research and development 32,650 32,132 127,773 149,882
Sales and marketing 7,629 12,817 43,776 56,002
General and administrative 8,024 7,181 32,432 34,344
Pro forma operating loss (47,808) (44,835) (199,872) (168,729)
Interest and other
income, net 1,795 4,977 9,256 33,461
Pro forma net loss $(46,013) $(39,858) $(190,616) $(135,268)
Weighted average number
of common shares
outstanding
(in thousands) 408,517 355,928 392,012 349,652
Pro forma net loss per
common share $(0.11) $(0.11) $(0.49) $(0.39)
(a) Pro forma results exclude restructuring and other charges, goodwill
and other intangible assets amortization expense, equity-based expense
and purchased research and development associated with the acquisition of
Dorsal Networks.
For the three months ended December 28, 2002, restructuring and other
charges of $127.9 million recorded as $38.5 million to Cost of Sales,
$89.2 million to Operating Expenses and $0.2 million to Interest and
Other Income, Net.
For the twelve months ended December 28, 2002, restructuring and other
charges of $198.7 million recorded as $68.8 million to Cost of Sales,
$124.8 million to Operating Expenses and $5.1 million to Interest and
Other Income, Net.
For the quarter ended December 29, 2001, restructuring and other charges
of $303.4 million were recorded as $117.4 million to Cost of Sales,
$182.4 million to Operating Expenses and $3.6 million to Interest and
Other Income, Net.
For the year ended December 29, 2001, restructuring and other charges of
$1,018.0 million were recorded as $216.5 million to Cost of Sales,
$789.2 million to Operating Expenses and $12.3 million to Interest and
Other Income, Net.
The following table represents a reconciliation from the reported net
loss to the pro forma net loss:
Quarter Ended Year Ended
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
2002 2001 2002 2001
Reported Net Loss $(190,215) $(374,806) $(507,760) $(1,378,093)
Write-down of inventory
& other 38,461 117,369 68,785 216,536
Restructuring &
other charges 89,161 182,376 124,825 789,242
Equity-based expense 10,715 19,534 65,399 98,807
Goodwill & other intangible
asset amortization expense 5,658 12,050 18,491 125,940
Purchased research &
development expense - - 34,580 -
Write-down of equity
investments & other 207 3,619 5,064 12,300
Pro forma net loss $(46,013) $(39,858) $(190,616) $(135,268)
CORVIS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
December 28, December 29,
2002 2001
Assets
Current assets:
Cash and cash equivalents $457,833 $638,872
Short-term investments 24,133 21,907
Trade accounts receivable 1,781 33,676
Inventory, net 26,491 96,426
Other current assets 14,406 17,486
Total current assets 524,644 808,367
Restricted cash, non-current 2,329 2,417
Property and equipment, net 45,760 134,393
Goodwill and intangible assets, net 13,965 21,429
Long-term investments 22,450 -
Other non-current assets 1,170 12,219
Total assets $610,318 $978,825
Liabilities and stockholders' equity
Current liabilities:
Notes payable, current portion $107 $126
Capital lease obligations, current portion 1,982 6,796
Accounts payable 14,973 14,488
Accrued expenses and other liabilities 31,609 36,402
Provision for restructuring and
other charges 16,130 24,050
Total current liabilities $64,801 $81,862
Notes payable, net of current portion 2,672 2,959
Capital lease obligations,
net of current portion 74 1,743
Deferred lease liability and other 2,693 3,408
Total liabilities 70,240 89,972
Commitments and contingencies
Common stock* 4,126 3,621
Additional paid-in capital 2,809,267 2,648,955
Shareholder notes receivable (32) -
Treasury stock, 5,914,300 shares at cost of
$0.74 per share (4,405) -
Accumulated other comprehensive loss:
Foreign currency translation adjustment (8,191) (10,796)
Accumulated deficit (2,260,687) (1,752,927)
Total stockholders' equity 540,078 888,853
Total liabilities and
stockholders' equity $610,318 $978,825
* $0.01 per share par value; 1,900,000,000 authorized shares;
407,199,303 shares issued and outstanding as of 12/28/02; 362,687,909
shares issued and outstanding shares as of 12/29/01.
CORVIS CORPORATION
OTHER FINANCIAL INFORMATION
(Dollars in thousands)
Quarter Ended Year Ended
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
2002 2001 2002 2001
Capital expenditures $3,590 $4,068 $18,740 $97,702
Depreciation expense 10,056 8,658 37,012 29,162
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Source: Corvis Corporation |
