MILPITAS, Calif., May 2 /PRNewswire/ -- JDSU today reported results for its fiscal 2007 third quarter ended March 31, 2007. Net revenue for the third quarter was $361.7 million and net loss was $(14.2) million, or $(0.07) per share. This compares to net revenue of $366.3 million and net income of $23.2 million, or $0.10 per diluted share, reported for the second quarter of fiscal 2007, which included a $28 million gain on sale of investments. Net revenue for the third quarter of fiscal 2006 was $314.9 million with net income of $3.7 million, or $0.02 per diluted share. On a non-GAAP basis, revenue for the third quarter was $361.8 million and non-GAAP net income was $12.3 million, or $0.06 per diluted share. This compares to non-GAAP net revenue of $366.4 million and non-GAAP net income of $30.0 million, or $0.13 per diluted share, for the second quarter of fiscal 2007, and to non-GAAP net revenue of $315.5 million and a non-GAAP net loss of $(2.8) million, or $(0.01) per share, for the third quarter of fiscal 2006. On an adjusted EBITDA basis (adjusted Earnings Before Interest, Taxes, Depreciation and Amortization), the Company earned $17.7 million for the quarter ended March 31, 2007, which compares to $33.9 million for the second quarter of fiscal 2007, and to $7.9 million for the third quarter of fiscal 2006. "In terms of revenue, JDSU's third quarter was stronger than expected, with a much smaller than anticipated seasonal decline, and year-over-year growth of 15%," said Kevin Kennedy, JDSU's Chief Executive Officer. "For the first time in more than five years, we achieved positive free cash flow, and we remain committed to focused execution of our profitability improvement programs." Financial Overview -- Fiscal 2007 Third Quarter Ended March 31, 2007 -- Communications Test and Measurement non-GAAP net revenue of $162.9 million was down 3% from last quarter, and up 28% from the same quarter a year ago. This segment represented 45% of total revenue. -- Optical Communications non-GAAP net revenue of $128.7 million was down 3% from last quarter, and up 1% from the same quarter a year ago, representing 36% of total net revenue. -- Advanced Optical Technologies non-GAAP net revenue of $45.6 million was up 13% from last quarter, and up 12% from the same quarter a year ago. This segment represented 12% of total net revenue. -- Reported under the heading of 'All Other,' the Commercial Lasers business reported non-GAAP net revenue of $24.6 million, down 2% sequentially and up 19% from the same quarter a year ago, representing 7% of total net revenue. -- Americas' customers represented 54% of net revenue. European and Asia- Pacific customers represented 27% and 19% of net revenue, respectively. -- The Company held $1,223.8 million in cash, cash equivalents, short-term investments and restricted cash at the end of the third quarter. Business Outlook The Company expects non-GAAP net revenue for the fourth quarter of fiscal 2007, ending June 30, 2007, to be in the range of $325 to $345 million. Conference Call The Company will discuss these results and other related matters at 2:00 p.m. Pacific Time on May 2, 2007 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 (Nasdaq: JDSU; and TSX: JDU) 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, and decorative applications. More information is available at http://www.jdsu.com/. Forward-Looking Statements This press release contains, and the discussions in our subsequent conference call will contain, 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 future financial performance, including future revenue, gross margin, operating expense, operating margin, EBITDA and other financial metrics; 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. In particular, the Company's ability to predict future financial performance continues to be difficult due to, among other things: (a) continuing general limited visibility across many of our product lines; (b) the ongoing potential for significant quarter-over-quarter product mix fluctuations, which can materially impact profitability measures due to the broad gross margin range across our portfolio; (c) continuing consolidation affecting our customer base, which, in the shorter term limits demand visibility, and, in the longer term, could reduce our business potential; (d) average selling prices continue to decline across our traditional Optical Communications and our Advanced Optical Technologies and Commercial Lasers businesses; (e) we and many of our Optical Communications suppliers continue to experience execution and delivery challenges which limit our revenue and impair our profitability; (f) our Communications Test and Measurement business is notable for seasonality and a significant level of in-quarter book-and-ship business, further limiting our forecasting abilities; (g) we are currently engaged in various product and manufacturing transfers, site consolidations and product discontinuances; and (h) Optical Communications customer supply chain and inventory rationalization initiatives are further limiting our demand visibility. 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, 2006 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 or 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 Nine Months Ended Ended March 31, April 1, March 31, April 1, 2007 2006 2007 2006 Net revenue $361.7 $314.9 $1,046.1 $886.1 Cost of sales 226.9 199.4 656.3 614.8 Amortization of acquired developed technologies 9.8 9.6 29.7 26.5 Gross profit 125.0 105.9 360.1 244.8 Operating expenses: Research and development 43.4 41.3 126.2 115.7 Selling, general and administrative 95.7 88.2 273.1 241.9 Amortization of other intangibles 6.6 6.7 19.9 17.7 Acquired in-process research and development -- 0.1 -- 20.0 Reduction of intangibles and loss on long-lived assets 3.8 (0.2) 6.9 4.4 Restructuring charges (0.1) 8.8 10.6 28.5 Total operating expenses 149.4 144.9 436.7 428.2 Loss from operations (24.4) (39.0) (76.6) (183.4) Interest and other income 16.4 8.7 51.5 16.4 Interest expense (2.1) (0.8) (5.1) (2.3) Gain (loss) on sale of investments (0.1) 37.7 28.4 72.8 Income (loss) before income taxes (10.2) 6.6 (1.8) (96.5) Provision for income taxes 4.0 2.9 6.6 8.9 Net income (loss) $(14.2) $3.7 $(8.4) $(105.4) Net income (loss) per share Basic $(0.07) $0.02 $(0.04) $(0.51) Diluted $(0.07) $0.02 $(0.04) $(0.51) Shares used in per share calculation Basic 211.3 209.9 211.1 204.8 Diluted 211.3 224.3 211.1 204.8 JDS UNIPHASE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, unaudited) March 31, July 1, 2007 2006 ASSETS Current assets: Cash and cash equivalents $452.6 $364.9 Short-term investments 756.4 857.3 Restricted cash 14.8 16.4 Accounts receivable, net 255.2 232.3 Inventories, net 220.9 202.2 Refundable income taxes 5.0 23.9 Other current assets 95.6 108.0 Total current assets 1,800.5 1,805.0 Property, plant and equipment, net 208.8 201.2 Deferred income taxes 3.5 2.3 Goodwill 679.8 656.7 Other intangibles, net 342.5 362.0 Long-term investments 4.3 10.8 Other non-current assets 24.8 27.1 Total assets $3,064.2 $3,065.1 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $107.0 $126.6 Accrued payroll and related expenses 58.3 60.6 Income taxes payable 104.4 81.2 Deferred income taxes 1.3 -- Restructuring accrual 5.1 19.8 Warranty accrual 9.6 11.5 Other current liabilities 111.2 122.7 Total current liabilities 396.9 422.4 Long-term debt 881.0 900.0 Other non-current liabilities 157.1 159.1 Stockholders' equity 1,629.2 1,583.6 Total liabilities and stockholders' equity $3,064.2 $3,065.1 JDS UNIPHASE CORPORATION REPORTABLE SEGMENT INFORMATION (in millions, unaudited) Three Months Nine Months Ended Ended March 31, April 1, March 31, April 1, 2007 2006 2007 2006 Net revenue: Optical Communications $128.7 $127.4 $399.4 $337.5 Communications Test & Measurement 162.9 126.8 447.9 368.2 Advanced Optical Technologies 45.6 40.7 125.3 126.1 All Other, Commercial Lasers 24.6 20.6 73.8 57.9 Deferred revenue related to purchase accounting adjustment (0.1) (0.6) (0.3) (3.6) Net revenue $361.7 $314.9 $1,046.1 $886.1 Operating income (loss): Optical Communications $(1.3) $2.2 $0.8 $(24.7) Communications Test and Measurement 22.1 15.3 64.7 61.4 Advanced Optical Technologies 15.8 8.2 39.5 27.4 All Other, Commercial Lasers 0.5 -- 4.4 (0.7) Corporate (33.8) (32.8) (93.6) (92.9) Total segment operating income (loss) 3.3 (7.1) 15.8 (29.5) Unallocated amounts: Stock based compensation (7.5) (4.1) (22.8) (10.7) Acquisition-related charges and amortization of intangibles (16.4) (18.9) (50.5) (106.4) Reduction of other long-lived assets (3.8) 0.2 (6.9) (4.4) Restructuring charges 0.1 (8.8) (10.6) (28.5) Other realignment charges (0.1) (0.3) (1.6) (3.9) Interest and other income 16.4 8.7 51.5 16.4 Interest expense (2.1) (0.8) (5.1) (2.3) Gain on sale of investments (0.1) 37.7 28.4 72.8 Income (loss) before income taxes $(10.2) $6.6 $(1.8) $(96.5) Use of Non-GAAP (Adjusted) Financial Measures The Company provides non-GAAP revenue, non-GAAP net income (loss), non- GAAP net income (loss) per share, EBITDA and adjusted 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 net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted 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. 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 does not include 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 income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted 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. The Company excludes these items, for the purposes of calculating non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted 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. The Company excludes this item, for the purposes of calculating non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted 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 cost of goods sold and operating expense, related to the various acquisitions it has made. Management excludes these items, for the purposes of calculating non- GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted 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 cost of goods sold and 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 net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted 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. Interest, taxes, and depreciation expense: The Company incurs depreciation expense in its operating results. The Company's calculation of adjusted EBITDA excludes items as a result of interest, taxes, depreciation and amortization. Management believes adjusted EBITDA is indicative of the Company's core operational cash flow. 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 are non-recurring and generally unpredictable. The Company believes that eliminating this expense, for the purposes of calculating non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted EBITDA, is useful to investors. 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 net income (loss) is net income (loss). The GAAP measure most directly comparable to non-GAAP net income (loss) per share is net income (loss) per share. The GAAP measure most directly comparable to adjusted EBITDA is income (loss) from operations. The Company believes that these GAAP measures alone are not indicative of its core operating expenses and performance. The following tables reconcile the non-GAAP revenue, net income (loss), net income (loss) per share and adjusted EBITDA financial measures to GAAP: JDS UNIPHASE CORPORATION NON-GAAP INFORMATION AND RECONCILIATION TO COMPARABLE GAAP FINANCIAL MEASURES (in millions, except per share data) (unaudited) Three Months Ended March 31, April 1, 2007 2006 Net income Basic Net income Basic (loss) EPS (loss) EPS GAAP measures $(14.2) $(0.07) $3.7 $0.02 Items reconciling GAAP net income (loss) & EPS to Non-GAAP net income (loss) & EPS: Related to net revenues: Deferral of revenues related to acquisition activities 0.1 - 0.6 - Related to cost of sales: Acquisition-related expenses 0.3 - 1.3 0.01 Stock-based compensation expenses 1.0 - 0.9 - Amortization of acquired developed technologies 9.8 0.05 9.6 0.05 Total related to gross profit 11.2 0.05 12.4 0.06 Related to operating expenses: Research and development: Stock-based compensation expenses 2.1 0.01 1.0 - Other non-recurring charges (0.1) - 0.9 0.01 Selling, general and administrative: Stock-based compensation expenses 4.4 0.02 2.1 0.01 Other non-recurring charges (0.2) - 0.1 - Amortization of intangibles 6.6 0.03 6.7 0.03 Acquired in-process research and development - - 0.1 - Reduction of goodwill - - - - Reduction of intangibles & other long-lived assets 3.8 0.02 (0.2) - Restructuring charges (0.1) - 8.8 0.04 Total related to operating expenses 16.5 0.08 19.5 0.09 Interest and other income (1.3) - (0.2) - (Gain) loss on sale of investments 0.1 - (37.7) (0.18) Income tax expenses - - (0.5) - Total related to net income (loss) & EPS 26.5 0.13 (6.5) (0.03) Non-GAAP measures $12.3 $0.06 $(2.8) $(0.01) Nine Months Ended March 31, April 1, 2007 2006 Net income Basic Net income Basic (loss) EPS (loss) EPS GAAP measures $(8.4) $(0.04) $(105.4) $(0.51) Items reconciling GAAP net income (loss) & EPS to Non-GAAP net income (loss) & EPS: Related to net revenues: Deferral of revenues related to acquisition activities 0.3 - 3.6 0.02 Related to cost of sales: Acquisition-related expenses 2.2 0.01 37.3 0.18 Stock-based compensation expenses 3.1 0.01 2.5 0.01 Amortization of acquired developed technologies 29.7 0.14 26.5 0.13 Total related to gross profit 35.3 0.16 69.9 0.34 Related to operating expenses: Research and development: Stock-based compensation expenses 5.7 0.03 2.8 0.01 Other non-recurring charges 0.5 - 1.2 0.01 Selling, general and administrative: Stock-based compensation expenses 14.0 0.07 5.4 0.03 Other non-recurring charges (0.5) - 4.0 0.02 Amortization of intangibles 19.9 0.09 17.7 0.08 Acquired in-process research and development - - 20.0 0.10 Reduction of goodwill - - - - Reduction of intangibles & other long-lived assets 6.9 0.03 4.4 0.02 Restructuring charges 10.6 0.05 28.5 0.14 Total related to operating expenses 57.1 0.27 84.0 0.41 Interest and other income (6.5) (0.03) 1.6 0.01 (Gain) loss on sale of investments (28.4) (0.13) (72.8) (0.36) Income tax expenses - - 1.0 - Total related to net income (loss) & EPS 57.5 0.27 83.7 0.40 Non-GAAP measures $49.1 $0.23 $(21.7) $(0.11) JDS UNIPHASE CORPORATION NON-GAAP INFORMATION AND RECONCILIATION TO COMPARABLE GAAP FINANCIAL MEASURES (in millions, except per share data) (unaudited) Three Months Nine Months Ended Ended March 31, April 1, March 31, April 1, 2007 2006 2007 2006 GAAP net revenue $361.7 $314.9 $1,046.1 $886.1 Deferral of revenues related to acquisition activities 0.1 0.6 0.3 3.6 Non-GAAP net revenue $361.8 $315.5 $1,046.4 $889.7 Three Months Nine Months Ended Ended March 31, April 1, March 31, April 1, 2007 2006 2007 2006 GAAP net income (loss) $(14.2) $3.7 $(8.4) $(105.4) Interest and other income (16.4) (8.7) (51.5) (16.4) Interest expense 2.1 0.8 5.1 2.3 (Gain) loss on sale of investments 0.1 (37.7) (28.4) (72.8) Provision for income taxes 4.0 2.9 6.6 8.9 Depreciation 14.4 15.0 45.4 41.2 Amortization 16.4 16.3 49.6 44.2 EBITDA 6.4 (7.7) 18.4 (98.0) Costs related to restructuring events (0.1) 8.8 10.6 28.5 Costs related to stock based compensation expense 7.5 4.0 22.8 10.7 Costs related to acquisition activities 0.4 1.8 2.5 40.3 Costs related to other non- recurring activities (0.3) 1.1 - 5.8 Reduction in intangibles and other long lived assets 3.8 (0.2) 6.9 4.4 Acquired in-process research and development - 0.1 - 20.0 Adjusted EBITDA $17.7 $7.9 $61.2 $11.7 http://www.newscom.com/cgi-bin/prnh/20050913/SFTU125LOGO http://photoarchive.ap.org/ DATASOURCE: JDSU CONTACT: Investors: Jacquie Ross, +1-408-546-4445, or , or Press: Kathleen Greene, +1-408-546-5852, or , both of JDSU Web site: http://www.jdsu.com/

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