New Focus and JCA Technology amend merger agreement

New Focus, Inc. (Nasdaq: NUFO), a supplier of innovative fiber optic products for next-generation optical networks under the Smart Optics for Networks brand, announced that the company has amended its previously announced merger agreement with JCA Technology, Inc. in light of recent stock market conditions.

New Focus, Inc. (Nasdaq: NUFO), a supplier of innovative fiber optic products for next-generation optical networks under the Smart Optics for Networks brand, announced that the company has amended its previously announced merger agreement with JCA Technology, Inc. in light of recent stock market conditions. The parties now expect to close the transaction in January 2001, subject to the satisfaction of customary closing conditions. The merger is structured as a tax-free exchange for JCA's shareholders and a purchase transaction for accounting purposes.

New Focus and JCA have agreed on two principal revisions to the original merger agreement. The first revision modifies the transaction consideration to a fixed 10,033,556 shares of New Focus common stock and $75 million in cash. Based on the $26.375 closing price of New Focus shares today, the total implied value of the transaction is approximately $340 million. The original transaction consideration was composed of $575 million of New Focus common stock and $25 million in cash with the number of New Focus common shares determined by the average price of the company's common stock for a ten-trading day period prior to the closing of the transaction. The number of shares was subject to a collar that restricted the number of shares to no fewer than 5,016,778 shares and no more than 10,033,556 shares. The second revision eliminates JCA's right to terminate the original merger agreement under certain conditions if such ten-trading day average price of New Focus shares dropped below $53.21 per share.

After completion of the transaction, JCA shareholders will own approximately 13.5% of the combined company based on this newly fixed merger consideration. Excluding shares to be issued in pending acquisitions, New Focus had 64.4 million shares outstanding as of December 20, 2000.

New Focus reported a pro forma net loss of $14.8 million on $46.5Imillion in revenue for the first nine months of 2000. Based on unaudited results, JCA operated profitably during the first nine months of 2000 on revenues of approximately $13.9 million. JCA's gross and operating margin percentages are already higher than New Focus' actual third quarter margins and targeted margins for 2001.IAs a result, the JCA transaction will be immediately accretive to the revenue and margin lines, measured on a pro forma per share basis excluding acquisition-related charges such as goodwill and compensation expenses, in the first full quarter of combined operations.

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