Ottawa, Ontario, and San Jose, California – January 23, 2003 - JDS Uniphase Corporation (NASDAQ: JDSU and TSX: JDU) today reported results for its second quarter ended December 31, 2002. Net sales for the quarter were $157 million, as compared to net sales of $193 million for the quarter ended September 30, 2002 and $286 million for the quarter ended December 31, 2001.
For the quarter ended December 31, 2002, the Company reported a GAAP loss of $215 million, or $0.15 per share, as compared to a GAAP loss of $521 million, or $0.37 per share, for the quarter ended September 30, 2002. On a pro forma basis, excluding reductions of goodwill, amortization of purchased intangibles, stock-based compensation charges, loss on sale of subsidiaries, and gains and losses on investments, the Company reported a net loss of $185 million, or $0.13 per share. Both the GAAP and pro forma results included approximately $92 million in restructuring charges and other costs associated with the Global Realignment Program.
The detailed adjustments reconciling the GAAP results to the pro forma results for the quarter ended December 31, 2002 are provided in the Company's pro forma financial tables at the end of this release.
"The Company continues to progress in its Global Realignment Program and is pursuing an accelerated path towards break-even and onto profitability. At the same time, we are seeing signs of stability in our communications markets," said Jozef Straus, Co-chairman and CEO. "In addition, we continue to invest in the most promising growth opportunities across all of our optical technology markets, as demonstrated by the acquisition announced today, that we believe will enable us to expand our capabilities and market reach in security and product authentication markets."
Editors' Note
Please note that analyst estimates typically exclude the restructuring and other costs associated with the Company's Global Realignment Program. The pro forma amounts shown in the financial tables of this release do not exclude such costs. This information should be noted in any comparison between the Company's pro forma results and First Call and I/B/E/S consensus analyst estimates of pro forma results for the quarter ended December 31, 2002.
Global Realignment Program
The Company reported that it is continuing its restructuring activities under the Global Realignment Program in response to the business downturn. The Company reported the following progress and expectations in connection with the Global Realignment Program:
- To date, the Global Realignment Program has reduced the Company's annual costs by approximately $1.1 billion. Because of the challenging environment in communications markets, the Company is continuing to undertake expense reductions that, when completed, are currently anticipated to generate total annual cost reductions of approximately $1.3 billion, as compared to cost levels at the commencement of the Global Realignment Program.
- The Company is undertaking further reductions of employment, centralization of functions and additional site closures. The Company's global employment is now approximately 7,000 employees.
- The Company now estimates that the total cost of the Global Realignment Program will be approximately $1.2 billion, of which approximately $1.1 billion was recorded through December 31, 2002.
Goodwill and Other Long-Lived Assets
During the second quarter of fiscal 2003, the Company completed its impairment review of goodwill for the quarter ended September 30, 2002 under SFAS No. 142 ("Goodwill and Other Intangible Assets") and recorded an additional impairment charge of approximately $1 million. (As the procedures required by SFAS No. 142 are complex and time consuming, the rules permit the recording of estimates of the impairment charge and readjustment of this charge by increasing or decreasing it in the following quarter, if necessary. The Company previously recorded an estimated goodwill impairment charge of $225 million under SFAS No. 142 during the quarter ended September 30, 2002).
In addition, the Company completed a review to determine if impairment indicators existed relating to its goodwill and other long-lived assets for the quarter ended December 31, 2002. The Company determined that there were no impairment indicators; therefore, no impairment review was required under SFAS No. 142 or SFAS No. 144 ("Accounting for the Impairment or Disposal of Long-Lived Assets").
Financial Condition
The Company's financial condition remained strong at December 31, 2002 with over $1.3 billion in cash, money market and other highly liquid securities.
Guidance
The Company anticipates net sales for the third quarter of fiscal 2003 will be in the range of $155 to $165 million. At the net sales level projected for the quarter, the Company expects pro forma gross margin will be in the range of 10% to 12% of net sales with a pro forma net loss of $0.03 to $0.05 per share, including restructuring charges and other costs associated with the Global Realignment Program.
Conference Call
The Company will discuss these results and other related matters at 1:30 p.m. PST on January 23, 2003 in a live webcast, which will also be archived for replay, on the Company's website at www.jdsu.com under Investor Relations / Investor Presentations and on the Investor Relations Welcome Page. The conference call script is being filed as a Current Report on Form 8-K with the Securities and Exchange Commission and will be available at www.sec.gov shortly after this press release becomes public.
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JDS Uniphase Corporation, a worldwide leader in optical technology, designs and manufactures products for fiberoptic communications, as well as for markets where its core optics technologies provide innovative solutions for industrial, commercial and consumer applications. The Company's fiberoptic components and modules are deployed by system manufacturers for the data communications, telecommunications and cable television industries. The Company also offers products for display, security, medical/environmental instrumentation, decorative, aerospace and defense applications. More information on the Company is available at 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) statements or implications regarding the Company's ability to remain competitive and a leader in its industry, and the future prospects and expectations for growth of the Company, the market, the industry and the economy in general; (ii) statements regarding the current industry downturn, the extent and duration thereof and the extent and sufficiency of the Company's response thereto; (iii) statements regarding the expected level and timing of cost savings and other benefits to the Company from its Global Realignment Program and the expected costs thereof; (iv) any anticipation or guidance as to future financial performance, including expected sales levels, pro forma gross margin, and pro forma loss per share for the third quarter of fiscal year 2003; and (v) statements or implications regarding the benefits of the acquisition announced today. 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 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 its industry, or may be more costly or extensive than currently anticipated; (ii) due to the current economic slowdown, in general, and setbacks in customers' businesses, in particular, the Company's ability to predict financial performance for future periods is far more difficult than in previous periods; and (iii) ongoing efforts to design products that meet customers' future needs and to manufacture such products at competitive costs 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, 2002 filed with the Securities and Exchange Commission. 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.
SELECTED FINANCIAL DATA FOLLOWS
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,
2002 2001 2002 2001
Net sales $156.6 $286.1 $349.6 $614.7
Cost of sales 162.7 335.6 347.7 678.9
Gross profit (loss) (6.1) (49.5) 1.9 (64.2)
Operating expenses:
Research and development 40.1 64.1 84.8 133.3
Selling, general and
administrative 81.5 98.4 147.3 204.7
Amortization of goodwill -- 331.6 -- 664.3
Amortization of other purchased
intangibles 3.8 109.7 12.2 220.3
Acquired in-process research and
development -- 22.1 0.4 22.1
Reduction of goodwill 1.3 1,265.1 225.7 1,296.3
Reduction of other long-lived
assets -- 2.5 154.6 13.3
Restructuring charges 75.8 -- 98.8 243.0
Total operating expenses 202.5 1,893.5 723.8 2,797.3
Loss from operations (208.6) (1,943.0) (721.9) (2,861.5)
Interest and other income, net 6.6 9.7 19.5 24.8
Loss on sale of subsidiaries (0.5) -- (0.5) --
Gain on sale of investments 1.3 6.4 2.8 6.4
Reduction in fair value of
investments (8.8) -- (27.9) (106.5)
Loss on equity method investments (4.0) (25.8) (6.5) (45.1)
Loss before income taxes (214.0) (1,952.7) (734.5) (2,981.9)
Income tax expense 0.9 177.8 0.9 373.0
Net loss $(214.9) $(2,130.5) $(735.4) $(3,354.9)
Net loss per share
-- basic and diluted $(0.15) $(1.60) $(0.52) $(2.53)
Shares used in per-share
calculation
-- basic and diluted 1,414.7 1,330.1 1,413.7 1,326.8
JDS UNIPHASE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
December 31, June 30,
2002 2002
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $217.0 $412.4
Short-term investments 1,114.0 1,038.0
Accounts receivable, less allowance
for doubtful accounts of
$36.4 at December 31, 2002 and
$42.9 at June 30, 2002 92.8 134.4
Inventories 95.7 110.0
Deferred income taxes 67.0 68.0
Refundable income taxes 48.1 60.4
Other current assets 26.3 34.1
Total current assets 1,660.9 1,857.3
Property, plant and equipment, net 359.7 491.5
Deferred income taxes 26.1 43.9
Goodwill 119.7 332.2
Other purchased intangibles, net 86.9 177.5
Long-term investments 63.3 95.6
Other assets 8.5 6.5
Total assets $2,325.1 $3,004.5
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $63.9 $66.2
Accrued payroll and related expenses 70.1 70.2
Income taxes payable 31.2 31.3
Deferred income taxes -- 2.2
Restructuring accrual 160.3 95.8
Warranty accrual 66.8 73.6
Other current liabilities 110.8 143.2
Total current liabilities 503.1 482.5
Deferred income taxes 26.4 41.7
Other non-current liabilities 16.3 8.9
Stockholders' equity:
Preferred stock -- --
Common stock and additional paid-in
capital 68,495.5 68,457.9
Accumulated deficit (66,698.1) (65,962.7)
Accumulated other comprehensive loss (18.1) (23.8)
Total stockholders' equity 1,779.3 2,471.4
Total liabilities and
stockholders' equity $2,325.1 $3,004.5
JDS UNIPHASE CORPORATION
OPERATING SEGMENT INFORMATION
(in millions)
(unaudited)
Three Months Ended Six Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
Communications Products Group:
Shipments $74.7 $221.6 $183.7 $477.1
Intersegment sales -- -- -- --
Net sales to external customers 74.7 221.6 183.7 477.1
Operating loss (96.6) (210.4) (181.7) (524.6)
Thin Film Products Group:
Shipments 83.3 65.2 168.8 142.0
Intersegment sales (1.4) (3.5) (2.9) (9.2)
Net sales to external customers 81.9 61.7 165.9 132.8
Operating income (loss) 1.6 (9.4) 10.7 (36.9)
Net sales by reportable segment 156.6 283.3 349.6 609.9
All other net sales -- 2.8 -- 4.8
Total net sales 156.6 286.1 349.6 614.7
Operating loss by reportable
segments (95.0) (219.8) (171.0) (561.5)
All other operating income (loss) (95.6) 37.7 (130.2) (29.5)
Unallocated amounts:
Acquisition-related charges and
payroll taxes on stock option
exercises (16.7) (493.3) (40.4) (960.9)
Reduction of goodwill and other
long-lived assets (1.3) (1,267.6) (380.3) (1,309.6)
Interest and other income, net 6.6 9.7 19.5 24.8
Loss on sale of subsidiaries (0.5) -- (0.5) --
Gain on sale of investments 1.3 6.4 2.8 6.4
Reduction in fair value of
investments (8.8) -- (27.9) (106.5)
Loss on equity method investments (4.0) (25.8) (6.5) (45.1)
Loss before income taxes $(214.0) $(1,952.7) $(734.5) $(2,981.9)
JDS UNIPHASE CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per-share data)
(unaudited)
Three Months Ended December 31, 2002
Pro Forma
As Reported Adjustments Pro Forma*
Net sales $156.6 $-- $156.6
Cost of sales 162.7 (4.5) 158.2
Gross loss (6.1) 4.5 (1.6)
Operating expenses:
Research and development 40.1 (2.4) 37.7
Selling, general
and administrative 81.5 (5.9) 75.6
Amortization of
purchased intangibles 3.8 (3.8) --
Reduction of goodwill 1.3 (1.3) --
Restructuring charges 75.8 -- 75.8
Total operating expenses 202.5 (13.4) 189.1
Loss from operations (208.6) 17.9 (190.7)
Interest and
other income, net 6.6 -- 6.6
Loss on sale of subsidiaries (0.5) 0.5 --
Gain on sale of investments 1.3 (1.3) --
Reduction in
fair value of investments (8.8) 8.8 --
Loss on equity
method investments (4.0) 4.0 --
Loss before income taxes (214.0) 29.9 (184.1)
Income tax expense 0.9 -- 0.9
Net loss $(214.9) $29.9 $(185.0)
Net loss per share
-- basic and diluted $(0.15) $(0.13)
Shares used in
per-share calculation
-- basic and diluted 1,414.7 1,414.7
Three Months Ended December 31, 2001
Pro Forma
As Reported Adjustments Pro Forma*
Net sales $286.1 $-- $286.1
Cost of sales 335.6 (10.0) 325.6
Gross loss (49.5) 10.0 (39.5)
Total operating expenses 1,893.5 (1,750.9) 142.6
Loss from operations (1,943.0) 1,760.9 (182.1)
Interest and
other income, net 9.7 -- 9.7
Gain on sale of investments 6.4 (6.4) --
Loss on equity
method investments (25.8) 25.8 --
Loss before income taxes (1,952.7) 1,780.3 (172.4)
Income tax expense 177.8 (94.9) 82.9
Net loss $(2,130.5) $1,875.2 $(255.3)
Net loss per share
-- basic and diluted $(1.60) $(0.19)
Shares used in
per-share calculation
-- basic and diluted 1,330.1 1,330.1
Pro forma results for the three months ended December 31, 2002 exclude $3.8 million of amortization of purchased intangibles other than goodwill; $1.3 million of reduction of goodwill; $12.8 million of stock-based compensation charges; $0.5 million of loss on sale of subsidiaries; $1.3 million of gain on sale of investments; $8.8 million of reduction in fair value of investments; and $4.0 million of loss on equity method investments. Pro forma results for the three months ended December 31, 2001 exclude $331.6 million of amortization of goodwill; $109.7 million of amortization of other purchased intangibles; $22.1 million of acquired in-process research and development; $1,265.1 million of reduction of goodwill; $2.5 million of reduction of other long-lived assets; $29.6 million of stock-based compensation charges; $0.3 million of payroll taxes on stock option exercises; $6.4 million of gain on sale of investments; and $25.8 million of loss on equity method investments
JDS UNIPHASE CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per-share data)
(unaudited)
Six Months Ended December 31, 2002
Pro Forma
As Reported Adjustments Pro Forma*
Net sales $349.6 $-- $349.6
Cost of sales 347.7 (9.8) 337.9
Gross profit 1.9 9.8 11.7
Operating expenses:
Research and development 84.8 (5.2) 79.6
Selling, general
and administrative 147.3 (12.8) 134.5
Amortization of
purchased intangibles 12.2 (12.2) --
Acquired in-process
research and development 0.4 (0.4) --
Reduction of goodwill 225.7 (225.7) --
Reduction of other
long-lived assets 154.6 (154.6) --
Restructuring charges 98.8 -- 98.8
Total operating expenses 723.8 (410.9) 312.9
Loss from operations (721.9) 420.7 (301.2)
Interest and
other income, net 19.5 -- 19.5
Loss on sale of subsidiaries (0.5) 0.5 --
Gain on sale of investments 2.8 (2.8) --
Reduction in fair value
of investments (27.9) 27.9 --
Loss on equity
method investments (6.5) 6.5 --
Loss before income taxes (734.5) 452.8 (281.7)
Income tax expense 0.9 -- 0.9
Net loss $(735.4) $452.8 $(282.6)
Net loss per share
-- basic and diluted $(0.52) $(0.20)
Shares used
in per-share calculation
-- basic and diluted 1,413.7 1,413.7
Six Months Ended December 31, 2001
Pro Forma
As Reported Adjustments Pro Forma*
Net sales $614.7 $-- $614.7
Cost of sales 678.9 (18.7) 660.2
Gross loss (64.2) 18.7 (45.5)
Total operating expenses 2,797.3 (2,251.8) 545.5
Loss from operations (2,861.5) 2,270.5 (591.0)
Interest and
other income, net 24.8 -- 24.8
Gain on sale
of investments 6.4 (6.4) --
Reduction in fair value
of investments (106.5) 106.5 --
Loss on equity
method investments (45.1) 45.1 --
Loss before
income taxes (2,981.9) 2,415.7 (566.2)
Income tax
expense (benefit) 373.0 (423.9) (50.9)
Net loss $(3,354.9) $2,839.6 $(515.3)
Net loss per share
-- basic and diluted $(2.53) $(0.39)
Shares used in
per-share calculation
-- basic and diluted 1,326.8 1,326.8
Pro forma results for the six months ended December 31, 2002 exclude $12.2 million of amortization of purchased intangibles other than goodwill; $0.4 million of acquired in-process research and development; $225.7 million of reduction of goodwill; $154.6 million of reduction of other long-lived assets; $27.8 million of stock-based compensation charges; $0.5 million of loss on sale of subsidiaries; $2.8 million of gain on sale of investments; $27.9 million of reduction in fair value of investments; and $6.5 million of loss on equity method investments. Pro forma results for the six months ended December 31, 2001 exclude $664.3 million of amortization of goodwill; $220.3 million of amortization of other purchased intangibles; $22.1 million of acquired in-process research and development; $1,296.3 million of reduction in goodwill; $13.3 million of reduction in other long-lived assets; $53.4 million of stock-based compensation charges; $0.8 million of payroll taxes on stock option exercises; $6.4 million of gain on sale of investments; $106.5 million of reduction in fair value of investments; and $45.1 million of loss on equity method investments.
SOURCE:
JDS Uniphase Corporation
CONTACT:
investors, Anthony R. Muller, Executive Vice President and Chief Financial Officer, +1-408-546-4546, or press, Gerald Gottheil, Director of Corporate Marketing and Communications, +1-408-546-4400, both of JDS Uniphase Corporation/