Published:
JDSU Announces Fiscal 2010 First Quarter Results
JDSU (NASDAQ: JDSU) (TSX: JDU) today reported
results for its first fiscal quarter ended October 3, 2009.
Net revenue for the first fiscal quarter was $297.8 million and the net
loss was $(31.9) million, or $(0.15) per share. This compares to net
revenue of $273.1 million and a net loss of $(63.6) million or $(0.29) per
share for the prior quarter, and net revenue of $377.2 million and a net
loss of $(21.3) million or $(0.10) per share for the first fiscal quarter
of 2009.
On a non-GAAP basis, net revenue for the first quarter was $298.6 million
and net income for the quarter was $9.0 million or $0.04 per share. This
compares to non-GAAP net revenue of $274.0 million and net loss of $(1.6)
million or $(0.01) per share for the prior quarter, and non-GAAP net
revenue of $377.3 million and net income of $23.9 million or $0.11 per
share for the first fiscal quarter of 2009.
"Our fiscal Q1 results represent growth across all of our business segments
providing clear evidence of improving demand from our customers," said Tom
Waechter, JDSU's President and Chief Executive Officer. "The leverage in
our operating model and balance sheet will become increasingly evident as
our top line grows."
Financial Overview -- First Fiscal Quarter Ended October 3, 2009
-- Non-GAAP net revenue of $298.6 million, which includes $7.5 million
from the acquisition of the Storage Network Tools business,
increased 9% when compared to the previous quarter and decreased 21%
when compared to the first quarter of fiscal 2009.
-- Non-GAAP gross margin was 44% compared to 42% for the prior quarter
and 43% for first quarter of fiscal 2009.
-- Non-GAAP operating margin was 3% compared to an operating loss of 1%
in the prior quarter and operating margin of 6% in first quarter of
fiscal 2009.
-- Communications Test and Measurement revenue of $143.4 million
increased 8% from the previous quarter and decreased 11% compared to
the first quarter of fiscal 2009. Revenue from this segment
represented 48% of total non-GAAP net revenue.
-- Communications and Commercial Optical Products revenue of $101.1
million increased 12% when compared with the previous quarter and
decreased 38% when compared to the first quarter of fiscal 2009.
Revenue from this segment represented 34% of total non-GAAP net
revenue.
- Optical Communications revenue of $86.0 million increased 9%
compared with the previous quarter and decreased 39% compared
to the first quarter of fiscal 2009.
- Our Commercial Lasers business reported revenue of $15.1
million increased 32% from the previous quarter and down 30%
from the first quarter of fiscal 2009.
-- Revenue from the Advanced Optical Technologies segment was $54.1
million increased 7% from the previous quarter and 1% compared to
the first quarter of fiscal 2009. Revenue from this segment
represented 18% of total non-GAAP net revenue.
-- Americas' customers represented 51% of total non-GAAP net revenue
for the quarter. European and Asia-Pacific customers represented 27%
and 22% of total non-GAAP net revenue, respectively.
-- The Company held $673.1 million in total cash and investments and
was free cash flow positive $11.2 million for the quarter.
-- The Company adopted new authoritative accounting guidance which
requires the issuers of certain debt instrument(s) to separately
account for the liability and equity components in a manner that
reflects the entity's nonconvertible debt borrowing rate, resulting
in a non-cash $4.2 million charge to interest expense in the quarter
relating to the 1% Senior Convertible Notes. In addition, the
Company retrospectively adjusted its financial statements through
the fourth quarter of fiscal 2009 to reflect a reduction in the
long-term debt balance and an increase in stockholders' equity and
interest expense.
-- The Company has retrospectively adjusted its Consolidated Statements
of Operations and the Communications Test and Measurement segment
financials to reflect the sale of certain non-core assets. These
adjusted results are reflected as discontinued operations for the
periods reported.
Business Outlook
For the second quarter of fiscal 2010, ending January 2, 2010, the Company
expects non-GAAP net revenue to be in the range of $320 to $345 million.
Conference Call
The Company will discuss these results and other related matters at 2:00
p.m. Pacific Time on November 5, 2009 in a live webcast, which will also be
archived for replay on the Company's website at 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
www.sec.gov.
About JDSU
JDSU (NASDAQ: JDSU) (TSX: JDU) enables broadband and 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. JDSU is also a leading provider of
innovative optical solutions for medial/environmental instrumentation,
semiconductor processing, display, brand authentication, aerospace and
defense, and decorative applications. More information is available at
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,
cash flow 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 exacerbated by
the current credit and financial market uncertainty, as well as the
migration to vendor managed inventory programs; (b) quarter-over-quarter
product mix fluctuations, which can materially impact profitability
measures due to the broad gross margin range across our portfolio; (c)
consolidation of 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
businesses; (e) 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; (f) we are currently
engaged in various product and manufacturing transfers, site consolidations
and product discontinuances, which has caused and may cause short term
disruptions; and (g) the ability of our suppliers and contract
manufacturers to meet additional production and delivery requirements
beyond our forecasted demand.
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 Annual Report on Form 10-K for the fiscal year ended June 27,
2009 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.
The following financial tables are presented in accordance with GAAP,
unless otherwise specified.
-SELECTED FINANCIAL DATA FOLLOWS-
JDS UNIPHASE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three Months Ended
----------------------------
October 3, September 27,
2009 2008
------------- -------------
Net revenue $ 297.8 $ 377.2
Cost of sales 168.4 216.1
Amortization of acquired developed
technologies 12.3 12.5
------------- -------------
Gross profit 117.1 148.6
------------- -------------
Operating expenses:
Research and development 39.8 44.3
Selling, general and administrative 92.2 110.6
Amortization of other intangibles 7.0 7.1
Loss and impairment of long-lived assets 0.5 0.2
Restructuring and related charges 5.1 2.6
------------- -------------
Total operating expenses 144.6 164.8
------------- -------------
Loss from operations (27.5) (16.2)
Interest and other income 3.2 5.4
Interest expense (5.9) (6.9)
Gain on sale of investments 0.2 1.0
Impairment of investments - (3.2)
------------- -------------
Loss before income taxes (30.0) (19.9)
Provision for income taxes 0.7 1.0
------------- -------------
(Loss) before discontinued operations (30.7) (20.9)
Discontinued operations, net of tax (1.2) (0.4)
------------- -------------
Net loss $ (31.9) $ (21.3)
============= =============
Net loss per share from:
Continuing operations $ (0.14) $ (0.10)
Discontinued operations $ (0.01) $ (0.00)
------------- -------------
Net loss $ (0.15) $ (0.10)
============= =============
Shares used in per share calculation 217.5 215.4
============= =============
JDS UNIPHASE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
October 3, June 27,
2009 2009
(unaudited) (audited)
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 248.8 $ 286.9
Short-term investments 399.8 398.3
Restricted cash 24.5 10.3
Accounts receivable, net 192.0 187.3
Inventories, net 133.4 144.8
Refundable income taxes 13.6 14.4
Other current assets 57.9 65.8
------------- -------------
Total current assets 1,070.0 1,107.8
------------- -------------
Property, plant and equipment, net 184.5 191.1
Deferred income taxes 7.8 5.7
Goodwill 18.2 8.3
Other intangibles, net 335.7 322.6
Long-term investments 13.6 15.1
Other non-current assets 17.5 17.5
------------- -------------
Total assets $ 1,647.3 $ 1,668.1
============= =============
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 105.9 $ 106.6
Current portion of long-term debt 0.2 0.2
Accrued payroll and related expenses 38.4 45.7
Income taxes payable 21.6 20.3
Deferred income taxes 6.5 5.6
Restructuring accrual 15.7 16.6
Warranty accrual 6.9 7.3
Other current liabilities 106.4 107.6
------------- -------------
Total current liabilities 301.6 309.9
------------- -------------
Long-term debt 254.1 249.9
Other non-current liabilities 177.1 173.8
Stockholders’ equity 914.5 934.5
------------- -------------
Total liabilities and stockholders’
equity $ 1,647.3 $ 1,668.1
============= =============
JDS UNIPHASE CORPORATION
REPORTABLE SEGMENT INFORMATION
(in millions, unaudited)
Three Months Ended
----------------------------
October 3, September 27,
2009 2008
------------- -------------
Net revenue:
Communications Test and Measurement $ 143.4 $ 161.8
Communications and Commercial Optical
Products 101.1 162.0
Advanced Optical Technologies 54.1 53.5
Deferred revenue related to purchase
accounting adjustment (0.8) (0.1)
------------- -------------
Net revenue $ 297.8 $ 377.2
============= =============
Operating income (loss):
Communications Test and Measurement $ 18.0 $ 26.4
Communications and Commercial Optical
Products (1.5) 9.1
Advanced Optical Technologies 20.6 21.7
Corporate (26.9) (36.4)
------------- -------------
Total segment operating income 10.2 20.8
------------- -------------
Unallocated amounts:
Stock based compensation (11.1) (13.1)
Acquisition-related charges and
amortization of intangibles (20.1) (19.7)
Loss and impairment of long-lived assets (0.5) (0.2)
Restructuring and related charges (5.1) (2.6)
Realignment and other charges (0.9) (1.4)
Interest and other income 3.2 5.4
Interest expense (5.9) (6.9)
Gain on sale of investments 0.2 1.0
Impairment of investments - (3.2)
------------- -------------
Loss before income taxes and discontinued
operations $ (30.0) $ (19.9)
============= =============
Use of Non-GAAP (Adjusted) Financial Measures
The Company provides non-GAAP net 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 impairment 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
authoritative guidance. 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.
Impairment of goodwill and other long-lived assets: The Company incurs
costs, included in its GAAP presentation of operating expense, related to
the impairment of goodwill and other long-lived assets in accordance with
authoritative guidance. These 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, the related asset value impairments 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
authoritative guidance, 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.
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
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(in millions, except per share data)
(unaudited)
Three Months Ended
----------------------------------
October 3, September 27,
2009 2008
---------------- ----------------
Net Net
income Basic income Basic
(loss) EPS (loss) EPS
------- ------- ------- -------
GAAP measures $ (31.9) $ (0.15) $ (21.3) $ (0.10)
Items reconciling GAAP net income &
EPS to Non-GAAP net income & EPS:
Related to net revenues:
Deferral of revenues related
purchase accounting adjustment 0.8 - 0.1 -
Related to cost of sales:
Stock-based compensation expenses 1.2 0.01 1.7 0.01
Amortization of acquired developed
technologies 12.3 0.06 12.5 0.06
------- ------- ------- -------
Total related to gross profit 14.3 0.07 14.3 0.07
------- ------- ------- -------
Related to operating expenses:
Research and development:
Stock-based compensation expenses 2.2 0.01 2.3 0.01
Other non-recurring charges - - 0.2 -
Selling, general and administrative:
Stock-based compensation expenses 7.7 0.04 9.1 0.04
Other non-recurring charges 0.9 - 1.2 0.01
Amortization of intangibles 7.0 0.03 7.1 0.03
Loss and impairment of long-lived
assets 0.5 - 0.2 -
Restructuring and related charges 5.1 0.02 2.6 0.01
------- ------- ------- -------
Total related to operating expenses 23.4 0.10 22.7 0.10
------- ------- ------- -------
Interest and other income (2.0) (0.01) 0.6 -
Non-cash interest expense 4.2 0.02 5.0 0.02
(Gain) on sale of investments (0.2) - (1.0) -
Impairment of investments - - 3.2 0.02
Discontinued operations 1.2 0.01 0.4 -
------- ------- ------- -------
Total related to net income & EPS 40.9 0.19 45.2 0.21
------- ------- ------- -------
Non-GAAP measures $ 9.0 $ 0.04 $ 23.9 $ 0.11
======= ======= ======= =======
Diluted Diluted
EPS EPS
------- -------
Fully diluted Non-GAAP EPS $ 0.04 $ 0.11
======= =======
JDS UNIPHASE CORPORATION
RECONCILIATION OF GAAP NET REVENUE TO NON-GAAP NET REVENUE
(in millions, unaudited)
Three Months Ended
---------------------------
October 3, September 27,
2009 2008
------------- -------------
GAAP net revenue $ 297.8 $ 377.2
Deferral of revenues related to purchase
accounting adjustment 0.8 0.1
------------- -------------
Non-GAAP net revenue $ 298.6 $ 377.3
============= =============
JDS UNIPHASE CORPORATION
RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(in millions, unaudited)
Three Months Ended
----------------------------
October 3, September 27,
2009 2008
------------- -------------
GAAP net loss $ (31.9) $ (21.3)
Interest and other income (3.2) (5.4)
Interest expense 5.9 6.9
(Gain) on sale of investments (0.2) (1.0)
Impairment of investments - 3.2
Provision for income taxes 0.7 1.0
Depreciation 15.4 16.7
Amortization 19.3 19.6
------------- -------------
EBITDA 6.0 19.7
------------- -------------
Costs related to restructuring and
related charges 5.1 2.6
Costs related to stock based
compensation expense 11.1 13.1
Costs related to purchase accounting
adjustment 0.8 0.1
Costs related to other non-recurring
activities 0.9 1.4
Loss and impairment of long-lived assets 0.5 0.2
Discontinued operations 1.2 0.4
------------- -------------
Adjusted EBITDA $ 25.6 $ 37.5
============= =============
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