Gross Margins Improve SAN JOSE, Calif., Feb. 1
/PRNewswire-FirstCall/ -- JDSU (Nasdaq: JDSU; TSX: JDU) today
reported fiscal 2006 second quarter results, for the quarter ended
December 31, 2005. Net revenue for the second quarter was $312.9
million, and GAAP net loss was $(42.1) million, or $(0.03) per
share. This compares to net revenue of $258.3 million and a GAAP
net loss of $(67.0) million, or $(0.04) per share, reported for the
first quarter of fiscal 2006, and to net revenue of $180.5 million
and a GAAP net loss of $(41.0) million, or $(0.03) per share, for
the second quarter of fiscal 2005. On a non-GAAP basis, net loss
for the second quarter was $(3.7) million, or $(0.00) per share, as
compared to a non-GAAP net loss of $(15.4) million, or $(0.01) per
share, for the first quarter of fiscal 2006, and to a non-GAAP net
loss of $(28.6) million, or $(0.02) per share, for the second
quarter of fiscal 2005. On a non-GAAP EBITDA basis (non-GAAP
earnings before interest, taxes, depreciation and amortization),
the Company earned $7.9 million for the quarter ended December 31,
2005, as compared to a loss of $(4.3) million for the first quarter
of fiscal 2006, and a loss of $(25.7) million for the second
quarter of fiscal 2005. "JDSU's second quarter results represent
our strongest revenue and earnings performance in more than four
years, highlighting our continued commitment to innovation and
expansion in concert with an aggressive cost reduction program,"
said Kevin Kennedy, Chief Executive Officer of JDSU. "With our
achievement of non-GAAP EBITDA positive results, JDSU has reached
an important milestone on the path to desirable profitability
metrics." Financial Overview - Fiscal 2006 Second Quarter Ended
December 31, 2005 -- On a non-GAAP basis, net revenue of $315.0
million increased 22% from the previous quarter and 75% from the
fiscal 2005 second quarter. Fiscal 2006 second quarter results
included the first full quarter contribution from the
Communications Test and Measurement business, acquired in August
2005. -- Optical Communications net revenue was $109.6 million, and
represented 35% of total non-GAAP net revenue. -- Communications
Test and Measurement net revenue was $146.0 million, or 46% of
total non-GAAP net revenue. -- Commercial and Consumer net revenue
was $59.4 million, or 19% of total non-GAAP net revenue. -- North
American customers represented 62% of net revenue. European and
Asia-Pacific customers represented 24% and 14% of net revenue,
respectively. -- GAAP gross margin improved from 20.0% last quarter
to 33.3% of net revenue. On a non-GAAP basis, gross margin improved
from 31.6% last quarter to 36.3% of net revenue. -- GAAP operating
expenses were $156.0 million, and non-GAAP operating expenses were
$120.1 million. -- The Company held $843.9 million in cash, cash
equivalents, short-term investments and restricted cash at the end
of the second quarter. -- Non-GAAP results exclude all stock-based
compensation expense including expense associated with restricted
stock. Year-to-date non-GAAP results have been adjusted to exclude
restricted stock grants which amounted to $0.8 million in the
fiscal 2006 first quarter. Business Outlook For the quarter ending
March 31, 2006, the Company expects revenue to be in the range of
$304 to $321 million. Conference Call The Company will discuss
these results and other related matters at 2:00 p.m. PST on
February 1, 2006 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 JDSU JDSU is committed to
enabling broadband & optical innovation in the communications,
commercial and consumer markets. JDSU is a leading provider of
communications test and measurement solutions and optical products
for telecommunications service providers, cable operators, and
network equipment manufacturers. Furthermore, JDSU is a leading
provider of innovative optical solutions for medical/environmental
instrumentation, semiconductor processing, display, brand
authentication, aerospace and defense applications, and decorative.
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 or the likelihood,
timing or amount of expected cost savings or profitability
improvements; 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 traditional Communications and Commercial and Consumer 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 September 30, 2005 filed
with the Securities and Exchange Commission, as well as in other
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:
Jacquie Ross, 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 Six Months Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004 Net revenue $312.9 $180.5 $571.2 $375.0 Cost of
sales 208.7 150.7 415.4 302.3 Gross profit 104.2 29.8 155.8 72.7
Operating expenses: Research and development 40.9 24.4 74.6 48.9
Selling, general and administrative 83.3 43.5 153.7 80.7
Amortization of other intangibles 15.6 4.8 27.9 9.5 Acquired
in-process research and development 0.1 -- 19.7 -- Reduction of
other long-lived assets 1.2 -- 2.2 4.5 Restructuring charges 14.9
3.8 19.7 9.1 Total operating expenses 156.0 76.5 297.8 152.7 Income
(loss) from operations (51.8) (46.7) (142.0) (80.0) Interest and
other, net 7.8 5.3 6.3 8.0 Gain on sale of assets 0.5 -- 0.1 --
Gain (loss) on investments 1.9 (1.5) 32.5 (6.4) Net loss before
income taxes (41.6) (42.9) (103.1) (78.4) Income tax expense
(benefit) 0.5 (1.9) 6.0 (1.4) Net loss $(42.1) $(41.0) $(109.1)
$(77.0) Earnings (loss) per share - basic and diluted $(0.03)
$(0.03) $(0.07) $(0.05) Shares used in per-share calculation-basic
and diluted 1,655.7 1,444.1 1,618.3 1,443.9 JDS UNIPHASE
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in millions)
December 31, June 30, 2005 2005 ASSETS Current assets: Cash and
cash equivalents $227.1 $506.7 Short-term investments 599.3 793.3
Restricted cash 17.5 7.9 Accounts receivable, net 223.4 102.3
Inventories, net 181.2 97.4 Refundable income taxes 11.3 7.7 Other
current assets 68.6 77.3 Total current assets 1,328.4 1,592.6
Property, plant and equipment, net 198.3 162.1 Deferred income
taxes 4.1 4.0 Intangible assets, net 1,050.0 285.1 Long-term
investments 17.6 29.2 Other assets 13.0 8.4 Total assets $2,611.4
$2,081.4 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $124.9 $75.1 Accrued payroll and related expenses
55.1 30.5 Income taxes payable 46.7 27.9 Deferred income taxes 4.9
4.3 Restructuring accrual 31.5 23.0 Warranty accrual 13.9 7.3 Other
current liabilities 129.1 72.7 Total current liabilities 406.1
240.8 Long-term debt 467.8 466.9 Other non-current liabilities
146.6 44.0 Commitments and contingencies Stockholders' equity
1,590.9 1,329.7 Total liabilities and stockholders' equity $
2,611.4 $ 2,081.4 JDS UNIPHASE CORPORATION REPORTABLE SEGMENT
INFORMATION (in millions) (unaudited) Three Months Ended Six Months
Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2005 2004 2005 2004 Net
revenue: Optical Communications Products Group: $109.6 $107.5
$210.1 $214.2 Communications Test and Measurement: 146.0 -- 241.4
-- Commercial and Consumer Products Group: 59.4 73.0 122.7 160.8
Deferred revenue related to purchase accounting adjustment (a)
(2.1) -- (3.0) -- Net revenue 312.9 180.5 571.2 375.0 Operating
income / (loss): Optical Communications Products Group: (10.0)
(12.8) (28.0) (28.4) Communications Test and Measurement: 26.4 --
45.7 -- Commercial and Consumer Products Group: 7.7 2.3 16.1 13.7
All other (29.8) (25.3) (56.4) (37.4) Total segment operating loss
(5.7) (35.8) (22.6) (52.1) Unallocated amounts: Stock based
compensation (3.4) -- (6.7) -- Acquisition-related charges and
amortization of intangibles (27.8) (4.8) (89.7) (9.5) Reduction of
other long-lived assets -- -- (1.0) (4.5) Restructuring charges
(14.9) (3.8) (19.7) (9.1) Other realignment charges -- (2.3) (2.3)
(4.8) Interest and other income, net 7.8 5.3 6.3 8.0 Gain (loss) on
sale of subsidiaries' assets 0.5 -- 0.1 -- Gain (loss) on sale of
investments 1.8 2.0 35.1 2.3 Reduction in fair value of investments
(0.2) (2.7) (2.5) (5.0) Gain (loss) on equity method investments
0.3 (0.8) (0.1) (3.7) Loss before income taxes $(41.6) $(42.9)
$(103.1) $(78.4) (a) Communications Test and Measurement revenue
includes $2.1 million and $3.0 million of deferred revenue that is
eliminated from consolidated revenue as a result of purchase
accounting for the three and six months ended December 31, 2005,
respectively. 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,
stock-based compensation expense 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 sGAAP EBIgains 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. Stock-Based
Compensation Expense Non-GAAP net income (loss) and net income
(loss) per share excludes stock-based compensation expense under
SFAS 123R for fiscal 2006, and under APB 25 for earlier comparative
periods, and restricted stock grants. 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 this 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 goodwill and 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 goodwill and other long-lived assets primarily
related to SFAS 142 and SFAS 144 adjustments, respectively. SFAS
142 and 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 142 and 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 142 and 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. Acquired In-Process Research and Development: The
Company recorded charges for acquired in-process research and
development, included in its GAAP presentation of operating
expense, in connection with its acquisitions. These amounts were
expensed on the acquisition dates as the acquired technology had
not yet reached technological feasibility and had no future
alternative uses. There can be no assurance that acquisition of
businesses, products or technologies in the future will not result
in substantial charges for acquired IPR&D. Accordingly,
acquired IPR&D expenses are non-recurring and generally
unpredictable. The Company believes that eliminating this expense,
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. Interest, taxes, and 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 Three Months Ended December 31, 2005 December 31, 2004
Gross Operating Net Gross Operating Net Margin Expense Loss EBITDA
Margin Expense Loss EBITDA Non-GAAP $114.4 $120.1 $(3.7) $7.9 $30.3
$66.1 $(28.6) $(25.7) Cost of goods sold related to restructuring
events (0.5) (0.5) (0.5) (0.5) (0.5) (0.5) Cost of goods sold
related to acquisition activities (8.5) (8.5) (8.5) Cost of goods
sold related to stock based compensation expense (1.2) (1.2) (1.2)
Costs of research and development related to restructuring events
0.3 (0.3) (0.3) 0.4 (0.4) (0.4) Costs of research and development
related to stock based compensation expense 0.7 (0.7) (0.7) Costs
of selling, general and administrative related to restructuring
events 1.6 (1.6) (1.6) 1.4 (1.4) (1.4) Costs of selling, general
and administrative related to stock based compensation expense 1.5
(1.5) (1.5) Amortization of intangibles from acquisitions 15.6
(15.6) 4.8 (4.8) Reduction of goodwill and other long-lived assets
1.2 (1.2) (1.2) -- Acquired In-process R&D 0.1 (0.1) (0.1) --
Restructuring expense primarily due to severance and lease costs
14.9 (14.9) (14.9) 3.8 (3.8) (3.8) Interest and other income 3.2
Gain on sale of subsidiaries 0.5 Gain or loss on sale of available
for sale investments 1.8 2.0 Reduction in the fair value of
investments 0.3 (2.7) Gain or loss on equity method investments
(0.2) (0.8) Income tax expense 2.1 GAAP $104.2 $156.0 $(42.1)
$(22.6) $29.8 $76.5 $(41.0) $(31.8) Non-GAAP loss per share $(0.00)
$(0.02) GAAP loss per share $(0.03) $(0.03) Shares used in
per-share calculation - basic and diluted 1655.7 1444.1 Six Months
Ended Six Months Ended December 31, 2005 December 31, 2004 Gross
Operating Net Gross Operating Net Margin Expense Loss EBITDA Margin
Expense Loss EBITDA Non-GAAP $196.4 $219.0 $(19.1) $3.6 $ 74.5
$126.6 $(42.7) $(31.6) Cost of goods sold related to restructuring
events (0.5) (0.5) (0.5) (1.8) (1.8) (1.8) Cost of goods sold
related to acquisition activities (38.5) (38.5) (38.5) Cost of
goods sold related to stock based compensation expense (1.6) (1.6)
(1.6) Costs of research and development related to restructuring
events 0.3 (0.3) (0.3) 0.4 (0.4) (0.4) Costs of research and
development related to stock based compensation expense 1.8 (1.8)
(1.8) Costs of selling, general and administrative related to
restructuring events 3.9 (3.9) (3.9) 2.6 (2.6) (2.6) Costs of
selling, general and administrative related to stock based
compensation expense 3.3 (3.3) (3.3) Amortization of intangibles
from acquisitions 27.9 (27.9) 9.5 (9.5) Reduction of goodwill and
other long lived assets 2.2 (2.2) (2.2) 4.5 (4.5) (4.5) Acquired
In-process R&D 19.7 (19.7) (19.7) -- -- Restructuring expense
primarily due to severance and lease costs 19.7 (19.7) (19.7) 9.1
(9.1) (9.1) Interest and other income (1.7) Gain on sale of
subsidiaries 0.1 Gain or loss on sale of available for sale
investments 35.1 2.3 Reduction in the fair value of investments
(2.5) (5.0) Gain or loss on equity method investments (0.1) (3.7)
Income tax expense (1.5) GAAP $155.8 $297.8 $(109.1) $(87.9) $72.7
$152.7 $(77.0) $(50.0) Non-GAAP loss per share $(0.01) $(0.03) GAAP
loss per share $(0.07) $(0.05) Shares used in per-share calculation
- basic and diluted 1618.3 1443.9 DATASOURCE: JDS Uniphase
Corporation CONTACT: investors, Jacquie Ross, +1-408-546-4445, or ,
or press, Kathleen Greene, +1-408-546-5852, or , both of JDS
Uniphase Corporation Web site: http://www.jdsu.com/
Copyright