JDS Uniphase announces third quarter results and global realignment program

April 24, 2001
Apr. 24, 2001--The Global Realignment Program reflects the Company's commitment to remaining an industry leader in optical components and modules for telecommunications during the current business downturn.

JDS Uniphase Corporation (Nasdaq: JDSU and TSE: JDU) reported sales for its third quarter ended March 31, 2001 of $920 million and pro forma net income of $160 million or $0.14 per diluted share. The Company also announced a Global Realignment Program.

The Global Realignment Program reflects the Company's commitment to remaining an industry leader in optical components and modules for telecommunications during the current business downturn, and to position the Company for substantial growth over the longer term. This program has the following elements:

* The Company is creating global centers for advanced product development.

* JDS Uniphase will consolidate the manufacturing of several of its products from multiple sites into specific locations around the world.

* The Company is aligning its sales organization to offer customers a single point of contact for all of their product requirements, and creating regional and technical centers to streamline customer interactions with product line managers.

The Global Realignment Program is intended to align the Company's resources and operations into a global structure that is competitive now and positions the Company to remain competitive in the future. This program includes a number of actions by the Company to reduce costs and expenses and align manufacturing capacity with customer demand. The Company will close several operations, vacate 25 buildings at operations to be closed, as well as at continuing operations, and reduce employment by approximately 5,000 people or 20% of current levels.

In the fourth quarter of fiscal 2001, the Company will record one time charges for employee severance, consolidation of product lines, closing of some operations, vacating approximately 25 buildings, and inventory write-offs associated with the consolidation of different product designs and manufacturing processes onto single global manufacturing platforms. In addition to these one-time charges, the Company will incur costs for accelerated depreciation, moving and employee costs in the first three quarters of fiscal 2002 during the phasing out of certain facilities and equipment. Generally accepted accounting principles require the recording of accelerated depreciation of such assets over the time remaining until phase-out (three to nine months) and the expensing of such moving and employee costs as incurred. It is anticipated that the costs of the Global Realignment Program will be between $375 and $425 million, and the projected effect of the Global Realignment Program will be to reduce the Company's annual expense levels by over $250 million.

Sales for the third quarter ended March 31, 2001 were 1 percent below sales of $925 million for the quarter ended December 30, 2000 and 90 percent above pro forma combined sales of $485 million for the quarter ended March 31, 2000. Sales for the nine months ended March 31, 2001 of $2.6 billion were 133 percent above pro forma combined sales for the comparable prior year nine-month period. Pro forma combined sales for the prior year periods include the separately reported results of E-TEK Dynamics, Inc., which was acquired on June 30, 2000 in a transaction accounted for as a purchase. Sales for the quarter include SDL, Inc. sales subsequent to the acquisition date of SDL, which was acquired on February 13, 2001 in a transaction accounted for as a purchase, and exclude the sales after that date of the Company's divested Zurich operations.

Including merger-related charges, reduction in the value of marketable equity securities, gain on the sale of a subsidiary, purchased intangibles amortization, payroll taxes on stock option exercises, stock compensation charges, and activity related to equity investments, the Company reported losses of $1.3 billion or $1.13 per share for the quarter and $3.2 billion or $3.15 per share for the fiscal year to date.

On a pro forma basis, excluding merger-related charges, reduction in the value of marketable equity investments, gain on the sale of a subsidiary, purchased intangibles amortization, payroll taxes on stock option exercises, stock compensation charges, and activity related to equity investments, the Company earned $160 million or $0.14 per share for the quarter as compared to the $208 million or $0.21 per share earned in the quarter ended December 30, 2000. Pro forma net income for the nine months ended March 31, 2001 was $545 million or $0.51 per share, an increase of 112 percent from the $257 million or $0.28 per share earned in the comparable prior year period.

At March 31, 2001 the Company had over $1 billion in cash. JDS Uniphase generated $133 million in cash from operations for the quarter and $289 million for the first nine months of the fiscal year.

The Company is evaluating the carrying value of certain long-lived assets, consisting primarily of $56.2 billion of goodwill recorded on its balance sheet at March 31, 2001. Pursuant to accounting rules, the majority of the goodwill was recorded based on stock prices at the time merger agreements were executed and announced. The Company's policy is to assess enterprise level goodwill if the market capitalization of the Company is less than its net assets. Goodwill will be reduced to the extent that net assets are greater than market capitalization. At March 31, 2001, the value of the Company's net assets, including unamortized goodwill exceeded the Company's market capitalization by approximately $40 billion.

Downturns in telecommunications equipment and financial markets have created unique circumstances with regard to the assessment of goodwill, and the Company has sought the counsel of the Staff of the Securities and Exchange Commission on the interpretation of generally accepted accounting principles with regard to this matter. The Company anticipates recording additional charges to reduce the carrying value of the unamortized goodwill and other long-lived assets and such adjustments could represent a substantial portion of their carrying value. Some of these charges may be recorded as an adjustment to the Company's financial statements at March 31, 2001 and the Company would report such adjustments in subsequent SEC filings.

The Company anticipates sales and pro forma earnings per share for its fourth quarter ending June 30, 2001 will be approximately $700 million and $0.05, respectively. Such pro forma earnings per share would exclude the costs of the Global Realignment Program and recognize limited cost reduction benefits, as the program will be implemented for only a portion of the quarter. The Company has limited visibility as to sales in future periods, and is not currently providing sales guidance for fiscal 2002.

Pro forma results for the quarter ended March 31, 2001 exclude the $11.5 million effect on gross profit related to purchase accounting adjustments of the value of inventory; $2,512.7 million of purchased intangibles amortization and in-process R&D (IPR&D) charges; $4.2 million of payroll taxes on stock option exercises; $7.5 million of reduction in the value of marketable equity securities; $1,768.1 million gain on sale of subsidiary and related costs; $23.7 million of non-cash stock compensation; and $45.4 million in activity related to investments accounted for under the equity method of accounting. March 31, 2000 pro forma results include the separately reported results of E-TEK Dynamics Inc., which was acquired on June 30, 2000 in a transaction accounted for as a purchase. Pro forma results for the quarter ended March 31, 2000 exclude the $12.3 million effect on gross profit related to purchase accounting adjustments to the value of inventory, $333.7 million of purchased intangibles amortization and IPR&D charges, and $6.3 million of payroll taxes on stock option exercises.

About JDS Uniphase:

JDS Uniphase is a high technology company that designs, develops, manufactures and distributes products for the growing fiber optic communications market. For more information, visit www.jdsuniphase.com.

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