JDS Uniphase Announces 2005 Fiscal Third Quarter Results Expects
Manufacturing Consolidation to Realize Annualized Savings of $80
Million SAN JOSE, Calif., April 27 /PRNewswire-FirstCall/ -- JDS
Uniphase Corporation (Nasdaq: JDSU; TSX: JDU) today reported
results for the third quarter ended March 31, 2005. Net revenue for
the third quarter was $166.3 million, and net loss was $38.6
million, or $0.03 per share. This compares to net revenue of $180.5
million, and a net loss of $41.0 million, or $0.03 per share,
reported for the second quarter of fiscal 2005, and to net revenue
of $161.4 million, and a net loss of $7.3 million, or $0.01 per
share, for the third quarter of fiscal 2004. On a non-GAAP basis,
net loss in the third quarter was $23.5 million, or $0.02 per
share, as compared to a non-GAAP net loss of $28.6 million, or
$0.02 per share, for the second quarter of fiscal 2005, and to a
non-GAAP net loss of $6.7 million, or $0.00 per share, for the
third quarter of fiscal 2004. On a non-GAAP EBITDA basis (non-GAAP
earnings before interest, taxes, depreciation and amortization),
net loss was $19.8 million for the quarter ended March 31, 2005, as
compared to a net loss of $25.7 million for the second quarter of
fiscal 2005, and to a net loss of $9.7 million for the third
quarter of fiscal 2004. "Quarterly revenue results were at the high
end of expectations, while initiatives to streamline our cost
structure picked up momentum," said Kevin Kennedy, President and
Chief Executive Officer of JDS Uniphase. "The divestiture of our
Fuzhou operation in China, announced today, and the North American
manufacturing consolidation, announced last week, are two elements
of our broader profitability strategy." Financial Overview - Third
Quarter Ended March 31, 2005 * Communications Products Group net
revenue of $101.7 million was down by $5.0 million from last
quarter, and represented 61.2% of net revenue. Commercial and
Consumer Products Group net revenue declined 12.5% sequentially,
and represented $64.6 million, or 38.8% of net revenue. * On a
geographic basis, net revenue from North American customers
represented 64.2% of net revenue. European and Asia-Pacific
customers represented 19.7% and 16.1% of net revenue, respectively.
* GAAP gross margin was 14.9% of net revenue, and non-GAAP gross
margin was 16.1% of net revenue. * GAAP operating expenses were
$69.4 million, representing 41.7% of net revenue. Non-GAAP
operating expenses were $57.5 million, or 34.6% of net revenue. *
The Company held $1,380.2 million in cash, cash equivalents and
short-term investments at the end of the third quarter, of which
approximately $1,327.8 million was cash, money market and other
highly liquid fixed income securities. The Company used
approximately $21.6 million in cash from operations. Business
Outlook The Company provided the following financial guidance. For
the fourth fiscal quarter ending June 30, 2005, the Company expects
net revenue in the range of $160 to $170 million. When fully
implemented in the fourth quarter of fiscal 2006, the announced
manufacturing consolidations and related actions are expected to
save at least $20 million a quarter. Conference Call The Company
will discuss these results and other related matters at 2:00 p.m.
Pacific Time on April 27, 2005 in a live webcast, which will also
be archived for replay on the Company's website at
http://www.jdsu.com/investors. This press release is being
furnished as a Current Report on Form 8-K with the Securities and
Exchange Commission, and will be available at http://www.sec.gov/.
About JDS Uniphase JDS Uniphase Corporation designs and
manufactures products for markets where its core optics
technologies provide innovative solutions for industrial,
commercial and consumer applications. The Company offers
components, modules and subsystems for data communications,
telecommunications and cable television, display, product and
document authentication, medical/environmental instrumentation,
decorative, aerospace and defense applications. More information is
available at http://www.jdsu.com/. Forward-Looking Statements 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: (i) any anticipation or guidance as to the amount of
future revenue performance or the timing or amount of expected cost
savings; and (ii) the Company's beliefs regarding the purpose,
usefulness and efficacy of non-GAAP results and the measures and
items the Company includes in the same, as well as any benefits to
investors the Company believes its non-GAAP measures provide. These
forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from those
projected, including, without limitation, the following: (i) the
Company's ability to predict future financial performance continues
to be difficult, as among other things, visibility remains limited,
we are experiencing significant quarter over quarter fluctuations
in product mix, average selling prices continue to decline across
our product portfolio, we continue to experience execution
challenges which limit our revenue and impair our profitability,
and we are experiencing declining, but variable, benefits from
certain transient items, such as the release of previously accrued
reserves and the use of previously written-off inventory; (ii) the
Company's cost improvement efforts may not be successful in
achieving their expected benefits (including, among other things,
cost structure, gross margin and other profitability improvements),
due to, among other things, shifts in product mix, selling price
pressures, costs and delays related to product transfers to lower
cost manufacturing locations and associated facility closures,
costs and delays associated with facility and asset divestitures,
and execution concerns; and (iii) ongoing efforts to design and
introduce products that meet customers' future needs and to
manufacture such products at competitive costs, and with acceptable
quality and profitability, may not be successful. For more
information on these and other risks affecting the Company's
business, please refer to the "Risk Factors" section included in
the Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 2004 filed with the Securities and Exchange
Commission, as well as in subsequent filings on Forms 10-Q and
10-K. The forward-looking statements contained in this news release
are made as of the date hereof and the Company does not assume any
obligation to update the reasons why actual results could differ
materially from those projected in the forward-looking statements.
Contact Information Investors: Investor Relations, 408-546-4445,
The following financial tables are presented in accordance with
GAAP, unless otherwise specified. JDS UNIPHASE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions,
except per-share data) (unaudited) Three Months Ended Nine Months
Ended March 31 March 31 March 31 March 31 2005 2004 2005 2004 Net
revenue $166.3 $161.4 $541.3 $461.4 Cost of goods sold 141.5 121.0
443.8 357.1 Gross profit 24.8 40.4 97.5 104.3 Operating expenses:
Research and development 22.5 25.6 71.4 74.4 Selling, general and
administrative 38.0 35.6 118.7 111.1 Amortization of other
intangibles 4.8 3.9 14.3 11.7 Reduction of other long-lived assets
2.6 10.5 7.1 53.8 Restructuring charges 1.5 1.7 10.6 7.5 Total
operating expenses 69.4 77.3 222.1 258.5 Loss from operations
(44.6) (36.9) (124.6) (154.2) Interest and other income, net 5.4
5.1 13.4 16.4 Gain on sale of investments 2.0 19.2 4.3 39.6
Reduction in fair value of investments (3.4) (1.5) (8.4) (3.9)
Gain/(loss) on equity method investments 0.2 (0.5) (3.5) (6.5) Loss
before income taxes (40.4) (14.6) (118.8) (108.6) Income tax
benefit (1.8) (7.3) (3.2) (17.7) Loss before cumulative effect of
an accounting change (38.6) (7.3) (115.6) (90.9) Cumulative effect
of an accounting change -- -- -- (2.9) Net loss $(38.6) $(7.3)
$(115.6) $(93.8) Net loss per share - basic and diluted $(0.03)
$(0.01) $(0.08) $(0.07) Shares used in per-share calculation -
basic and diluted 1,446.7 1,438.3 1,444.4 1,436.5 JDS UNIPHASE
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in millions)
March 31 June 30, 2005 2004 (unaudited) ASSETS Current assets: Cash
and cash equivalents $301.3 $327.5 Short-term investments 1,078.9
1,221.2 Accounts receivable, net of allowance for doubtful accounts
of $7.5 at March 31, 2005 and $11.8 at June 30, 2004 112.3 112.7
Inventories, net 118.6 125.0 Refundable income taxes 6.4 5.8 Other
current assets 69.4 59.5 Total current assets 1,686.9 1,851.7
Property, plant and equipment, net 164.3 195.6 Deferred income
taxes 2.0 12.0 Goodwill, net 213.7 204.8 Other intangibles, net
73.5 81.4 Long-term investments 40.4 42.4 Other assets 3.8 4.3
Total assets $2,184.6 $2,392.2 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $69.7 $74.1 Accrued payroll
and related expenses 35.8 38.4 Income taxes payable 28.2 33.5
Deferred income taxes 2.0 12.0 Restructuring accrual 50.8 84.2
Warranty accrual 12.6 25.1 Other current liabilities 70.3 80.7
Total current liabilities 269.4 348.0 Long-term debt 466.5 464.7
Other non-current liabilities 8.2 8.4 Commitments and contingencies
Stockholders' equity: Preferred stock -- -- Common stock 1.4 1.4
Additional paid-in capital 68,590.7 68,577.1 Accumulated deficit
(67,127.6) (67,012.0) Accumulated other comprehensive income (24.0)
4.6 Total stockholders' equity 1,440.5 1,571.1 Total liabilities
and stockholders' equity $2,184.6 $2,392.2 JDS UNIPHASE CORPORATION
REPORTABLE SEGMENT INFORMATION (in millions) (unaudited) Three
Months Nine Months Ended Ended March 31 March 31March 31 March 31
2005 2004 2005 2004 Net revenue: Communications Products Group
$101.7 $79.5 $314.5 $231.6 Commercial and Consumer Products Group
64.6 81.9 226.8 229.8 Net external revenue 166.3 161.4 541.3 461.4
Operating loss: Communications Products Group (15.8) (11.5) (40.6)
(29.1) Commercial and Consumer Products Group (0.2) 15.1 18.2 35.6
All other (14.7) (22.7) (60.4) (80.3) Total operating loss (30.7)
(19.1) (82.8) (73.8) Unallocated amounts: Acquisition-related
charges and amortization of intangibles (4.8) (4.1) (14.1) (13.7)
Reduction of other long-lived assets (2.6) (10.5) (7.1) (53.8)
Restructuring charges (1.5) (1.7) (10.6) (7.5) Other realignment
charges (5.0) (1.5) (10.0) (5.4) Interest and other income, net 5.4
5.1 13.4 16.4 Gain on sale of investments 2.0 19.2 4.3 39.6
Reduction in fair value of investments (3.4) (1.5) (8.4) (3.9) Gain
/ (loss) on equity method investments 0.2 (0.5) (3.5) (6.5) Loss
before income taxes $(40.4) $(14.6) $(118.8) $(108.6) Use of
Non-GAAP Financial Measures The Company provides non-GAAP gross
margin, non-GAAP operating expense, non-GAAP net loss, non-GAAP net
loss per share and non-GAAP EBITDA financial measures as
supplemental information regarding the Company's operational
performance. The Company evaluates Company-wide segment performance
using, among other things, the measures disclosed in this release
for the purposes of evaluating the Company's historical and
prospective financial performance, as well as its performance
relative to its competitors. Specifically, management uses these
items to further its own understanding of the Company's core
operating performance. The Company believes its "core operating
performance" represents the Company's performance in the ordinary,
ongoing and customary course of its operations. Accordingly,
management excludes from "core operating performance" those items,
such as those relating to restructuring, investing and non-cash
activities, that management does not believe are reflective of such
ordinary, ongoing and customary course activities. The Company
believes that providing this information to its investors, in
addition to the GAAP presentation, allows investors to see Company
results "through the eyes" of management. The Company further
believes that providing this information allows Company investors
to both better understand the Company's financial performance and,
importantly, to evaluate the efficacy of the methodology and
information used by management to evaluate and measure such
performance. The non-GAAP adjustments described in this release
have historically been excluded by the Company from its non-GAAP
measures. The non-GAAP adjustments, and the basis for excluding
them, are outlined below: Restructuring Activities Cost of goods
sold, costs of research and development and costs of selling,
general and administrative related to restructuring events: The
Company has incurred periodic expenses, included in its GAAP
presentation of gross margin and operating expenses primarily due
to additional depreciation from changes in estimated useful life
and the write-down of certain property and equipment that has been
identified for disposal but remained in use until the date of
disposal, workforce related charges such as retention bonuses and
employee relocation costs related to a formal restructuring plan,
building costs for facilities not required for ongoing operations,
and costs related to the relocation of certain facilities and
equipment from buildings which the Company has disposed of or plans
to dispose. The Company excludes these items, for the purposes of
calculating non-GAAP gross margin, non-GAAP operating expenses,
non-GAAP net loss, non-GAAP net loss per share and non-GAAP EBITDA,
when it evaluates the continuing operational performance of the
Company. The Company believes that these items do not reflect
expected future gross profits or operating expenses nor does the
Company believe that they provide a meaningful evaluation of
current versus past core operational performance. Restructuring
expense primarily due to severance and lease costs: The Company has
incurred restructuring expenses, included in its GAAP presentation
of operating expense, primarily due to workforce related charges
such as payments for severance and benefits and estimated costs of
exiting and terminating facility lease commitments related to a
formal restructuring plan. The Company excludes these items, for
the purposes of calculating non-GAAP operating expense, non-GAAP
net loss, non-GAAP net loss per share and non-GAAP EBITDA, when it
evaluates the continuing operational performance of the Company.
The Company believes that these items do not reflect expected
future operating expenses nor does the Company believe that they
provide a meaningful evaluation of current versus past core
operational performance. Investment Activities Gain or loss on sale
of available for-sale investments and reduction in the fair value
of investments: The Company has sold investments or adjusted the
value of investments from time to time based on market conditions.
The Company's activities in this respect are included in the
Company's GAAP presentation of net income (loss) and net income
(loss) per share. The Company's core business is not making
financial investments in third parties, and such investments do not
constitute a material portion of the Company's assets. Moreover,
the amount and timing of gains and losses and adjustments to the
value of investments are unpredictable. Consequently, the Company
believes that gains or losses on these sales and adjustments to the
value of investments are not related to the ongoing core business
and operating performance of the Company. The Company excludes
these items, for the purposes of calculating non-GAAP net loss,
non-GAAP net loss per share and non-GAAP EBITDA, when it evaluates
the continuing operational performance of the Company. The Company
believes the GAAP measure is not indicative of the Company's core
operating performance. Gain or loss on equity method investments:
The Company records gains or losses on its equity investments based
on our pro-rata share of gains or the net losses of the investment.
The Company's activities in this respect are included in the
Company's GAAP presentation of net income (loss) and net income
(loss) per share. The Company's core business is not making
financial investments in third parties, and such investments do not
constitute a material portion of the Company's assets. Moreover,
the timing and magnitude of gains or losses are unpredictable, as
they are inherently based on the performance of the third party
subject of a particular investment. Gains and losses in equity
investments are unpredictable, and are primarily dependent on the
financial performance of the company in which we have our
investment. The Company excludes these items, for the purposes of
calculating non-GAAP net loss, non-GAAP net loss per share and
non-GAAP EBITDA, when it evaluates the continuing operational
performance of the Company. The Company believes the GAAP measure
is not indicative of its core operating performance. Non-Cash
Activities Amortization of intangibles from acquisitions: The
Company incurs amortization of intangibles, included in its GAAP
presentation of operating expense, related to the various
acquisitions it has made. Management excludes these items, for the
purposes of calculating non-GAAP operating expense, non- GAAP net
loss, non-GAAP net loss per share and non-GAAP EBITDA, when it
evaluates the continuing operational performance of the Company.
The Company believes that eliminating this expense from operating
income is useful to investors because it believes the GAAP measure,
alone, is not indicative of its core operating expenses and
performance. Reduction of other long-lived assets: The Company
incurs costs, included in its GAAP presentation of operating
expense, related to the reduction of the carrying value of
long-lived assets primarily related to SFAS 144 adjustments. SFAS
144 adjustments typically occur when the financial performance of
the business utilizing the affected assets falls below certain
thresholds or certain assets are designated as held for sale.
Accordingly, SFAS 144 related asset value reductions are
non-recurring and generally unpredictable. The Company believes
that eliminating this item, for the purposes of calculating
non-GAAP operating expense, non-GAAP net loss, non-GAAP net loss
per share and non-GAAP EBITDA, is useful to investors. We believe
this non-GAAP adjustment will assist investors to compare current
versus past performance. The Company's historical adjustments to
the carrying value of certain of its assets under SFAS 144, as well
as the methodology used by the Company in assessing the same, are
more particularly described in its quarterly reports on form 10-Q
and annual reports on Form 10-K. Cumulative effect of an accounting
change: The Company incurred an expense in the first quarter of
fiscal 2004 related to an accounting change. This expense is non
recurring and not indicative of the Company's ongoing core
operating performance. The Company excludes these items in the
period for the nine months ended March 31, 2004, for the purposes
of calculating non-GAAP net loss, non-GAAP net loss per share and
non-GAAP EBITDA, when it evaluates the continuing operational
performance of the Company. The Company believes the comparable
GAAP measures are not indicative of its core operating performance.
Depreciation expense: The Company incurs depreciation expense in
its operating results. The Company's calculation of non-GAAP EBITDA
excludes items as a result of interest, taxes, depreciation and
amortization. Management believes non-GAAP EBITDA is indicative of
the Company's core operational cash flow. Non-GAAP financial
measures are not in accordance with, or an alternative for,
generally accepted accounting principles in the United States. The
GAAP measure most directly comparable to non-GAAP gross margin is
gross margin. The GAAP measure most directly comparable to non-GAAP
operating expense is operating expense. The GAAP measure most
directly comparable to non-GAAP net loss is net loss. The GAAP
measure most directly comparable to non-GAAP net loss per share is
net loss per share. The GAAP measure most directly comparable to
non-GAAP EBITDA is loss from operations. The Company believes that
these GAAP measures alone are not indicative of its core operating
expenses and performance. A reconciliation of each of these
non-GAAP financial measures to GAAP information is set forth below.
The following table reconciles the non-GAAP gross margin, operating
expense, net loss, net loss per share, and EBITDA financial
measures to GAAP (in millions, except per share amounts): Three
Months Ended March 31, 2005 Oper- Gross ating Net EBITDA Margin
Expense Loss * Non-GAAP $26.8 $57.5 $(23.5) $(19.8) Cost of goods
sold related to restructuring events (2.0) (2.0) (2.0) Costs of
research and development related to restructuring events (0.1) 0.1
0.1 Costs of selling, general and administrative related to
restructuring events 3.1 (3.1) (3.1) Amortization of intangibles
from acquisitions 4.8 (4.8) Reduction of other long-lived assets
2.6 (2.6) (2.6) Restructuring expense primarily due to severance
and lease costs 1.5 (1.5) (1.5) Gain or loss on sale of available
for sale investments 2.0 Reduction in the fair value of investments
(3.4) Gain or loss on equity method investments 0.2 GAAP $24.8
$69.4 $(38.6) $(28.9) Non-GAAP loss per share $(0.02) GAAP loss per
share $(0.03) Shares used in per-share calculation - basic and
diluted 1446.7 Three Months Ended March 31, 2004 Oper- Gross ating
Net EBITDA Margin Expense Loss * Non-GAAP $41.0 $60.1 $(6.7) $(9.7)
Cost of goods sold related to restructuring events (0.6) (0.6)
(0.6) Costs of research and development related to restructuring
events 0.2 (0.2) (0.2) Costs of selling, general and administrative
related to restructuring events 0.9 (0.9) (0.9) Amortization of
intangibles from acquisitions 3.9 (3.9) Reduction of other
long-lived assets 10.5 (10.5) (10.5) Restructuring expense
primarily due to severance and lease costs 1.7 (1.7) (1.7) Gain or
loss on sale of available for sale investments 19.2 Reduction in
the fair value of investments (1.5) Gain or loss on equity method
investments (0.5) GAAP $40.4 $77.3 $(7.3) $(23.6) Non-GAAP loss per
share $(0.00) GAAP loss per share $(0.01) Shares used in per-share
calculation - basic and diluted 1438.3 Nine Months Ended March 31,
2005 Oper- Gross ating Net EBITDA Margin Expense Loss * Non-GAAP
$101.3 $184.1 $(66.2) $(51.4) Cost of goods sold related to
restructuring events (3.8) (3.8) (3.8) Costs of research and
development related to restructuring events 0.3 (0.3) (0.3) Costs
of selling, general and administrative related to restructuring
events 5.7 (5.7) (5.7) Amortization of intangibles from
acquisitions 14.3 (14.3) Reduction of other long-lived assets 7.1
(7.1) (7.1) Restructuring expense primarily due to severance and
lease costs 10.6 (10.6) (10.6) Gain or loss on sale of available
for sale investments 4.3 Reduction in the fair value of investments
(8.4) Gain or loss on equity method investments (3.5) GAAP $97.5
$222.1 $(115.6) $(78.9) Non-GAAP loss per share $(0.05) GAAP loss
per share $(0.08) Shares used in per-share calculation - basic and
diluted 1444.4 Nine Months Ended March 31, 2004 Oper- Gross ating
Net EBITDA Margin Expense Loss * Non-GAAP $107.4 $182.3 $(40.8)
$(44.4) Cost of goods sold related to restructuring events (3.1)
(3.1) (3.1) Costs of research and development related to
restructuring events 1.0 (1.0) (1.0) Costs of selling, general and
administrative related to restructuring events 2.2 (2.2) (2.2)
Amortization of intangibles from acquisitions 11.7 (11.7) Reduction
of other long-lived assets 53.8 (53.8) (53.8) Restructuring expense
primarily due to severance and lease costs 7.5 (7.5) (7.5) Gain or
loss on sale of available for sale investments 39.6 Reduction in
the fair value of investments (3.9) Gain or loss on equity method
investments (6.5) Cumulative effect of an accounting change (2.9)
GAAP $104.3 $258.5 $(93.8) $(112.0) Non-GAAP loss per share $(0.03)
GAAP loss per share $(0.07) Shares used in per-share calculation -
basic and diluted 1436.5 * EBITDA (earnings before interest, taxes,
depreciation and amoritization) reconciles to Loss from operations
DATASOURCE: JDS Uniphase Corporation CONTACT: investors, Investor
Relations, +1-408-546-4445, or , or media, Randall Sutherland,
+1-408-546-7028, or , both of JDS Uniphase Corporation Web site:
http://www.jdsu.com/
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