EXHIBIT 99.1
www.avanex.com
For immediate release
Avanex announces Q1 revenues of $18.1 million
FREMONT, Calif. – (November 3, 2003) – Avanex Corporation (Nasdaq: AVNX), pioneer of photonic processors that enable next-generation optical networks, today reported results for its first fiscal quarter ended September 30, 2003. The results for the most recent quarter include two months of operating results from the business activities and assets acquired from Alcatel and Corning on July 31, 2003 and one month of operating results from the business activities and assets acquired from Vitesse on August 28, 2003.
First quarter net revenues were $18.1 million, an increase of $12.6 million over the company’s revenues of $5.5 million in the prior quarter ended June 30, 2003. Net revenues for the quarter ended September 30, 2003 increased $12.9 million from $5.2 million in the same quarter of the prior year ended September 30, 2002.
The company reported a net loss of $27.9 million, or $0.26 per share, for the quarter ended September 30, 2003, compared to a net loss of $6.6 million, or $0.10 per share, for the quarter ended June 30, 2003 and a net loss of $70.0 million, or $1.04 per share, for the quarter ended September 30, 2002.
During the quarter ended September 30, 2003, Avanex concluded the purchase of the optical components division of Alcatel (PARIS: CGEP.PA) (NYSE: ALA), and certain assets of the photonics business of Corning (NYSE: GLW) and the purchase of certain assets of the Optical Systems Division of Vitesse Semiconductor Corp. (Nasdaq: VTSS).
Walter Alessandrini, chairman, president and chief executive officer of Avanex, commented, “Avanex is focusing on quickly and effectively integrating these businesses to improve our operating performance. We see significant opportunities for enhancing our business as we increase our penetration with key customers and realize operating savings throughout the organization. We are seeing the initial signs of our success in the integration of these businesses. For example, we successfully implemented a worldwide sales and marketing structure that is aligned with the needs of our customers, and customer response from this initiative has been very positive.
“Over the past few months, Avanex has aggressively moved to build a stronger company through both strategic and tactical acquisitions. We now possess one of the broadest customer bases and product sets in our industry. Considering our solid financial position and leading-edge technology, we believe that Avanex is well positioned to benefit from an upswing in our industry when it occurs. We continue to execute on our strategy to be the leading provider of optical solutions,” said Alessandrini.
Outlook
The Company reconfirmed that it expects second fiscal quarter revenues to be in the $25 million range.
Conference Call
Avanex will host a conference call today, November 3, 2003, at 4:30 p.m. ET. The number for the conference call is 888-658-7305. The password is “Photonics.” A replay of the conference call will be available through November 10, 2003, at 402-998-1792.
About Avanex
Avanex Corporation is a leading global provider of Intelligent Photonic Solutions™ to meet the needs of fiber optic communications networks for greater capacity, longer distance transmissions, improved connectivity, higher speeds and lower costs. These solutions enable or enhance optical wavelength multiplexing, dispersion management, switching and routing, transmission, amplification and monitoring and include network-managed subsystems. Avanex was incorporated in 1997 and is headquartered in Fremont, Calif. Avanex also maintains facilities in Erwin Park, N.Y.; Livingston, U.K.; Nozay, France; and San Donato, Italy. The facilities also are home to Avanex’s Centers of Excellence for specialized research and manufacturing. To learn more about Avanex, visit our Web site at: www.avanex.com.
Forward-looking Statements
This press release contains forward-looking statements including forward-looking statements regarding cost reduction and integration measures, expected second fiscal quarter revenues, operating performance results, our competitive position, and anticipated improvements in market conditions. Actual results could differ materially from those projected in or contemplated by the forward-looking statements. Factors that could cause actual results to differ include general economic conditions, the pace of spending and timing of economic recovery in the telecommunications industry and in particular the optical networks industry, the Company’s inability to sufficiently anticipate market needs and develop products and product enhancements that achieve market acceptance, problems or delays in integrating the businesses acquired from Alcatel, Corning and Vitesse Semiconductor, or in reducing the cost structure of the combined Company, the Company’s inability to achieve the anticipated benefits of the acquired businesses, any slowdown or deferral of new orders for our products, higher than anticipated expenses the Company may incur in future quarters or the inability to identify expenses which can be eliminated. In addition, please refer to the risk factors contained in the Company’s SEC filings including the Company’s Annual Report on Form 10-K filed with the SEC on September 26, 2003.
Avanex assumes no obligation and does not intend to update any forward-looking statements, whether as a result of new information, future events or otherwise.
| Contact Information: | ||
| Investor Relations | Media | |
| Mark Weinswig | Tony Florence | |
| Phone: 510-897-4344 | Phone: 510-897-4162 | |
| Fax: 510-897-4345 | Fax: 510-979-0198 | |
| e-mail: mark_weinswig@avanex.com | e-mail: tony_florence@avanex.com |
AVANEX CORPORATION
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended | ||||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||
| 2003 | 2003 | 2002 | ||||||||||||
| Net revenue | $ | 18,112 | $ | 5,463 | 5,215 | |||||||||
| Cost of revenue | 27,195 | 6,029 | 10,602 | |||||||||||
| Stock compensation expense | 16 | 5 | 17 | |||||||||||
| Gross profit (loss) | (9,099 | ) | (571 | ) | (5,404 | ) | ||||||||
| Operating expenses: | ||||||||||||||
| Research and development | 8,520 | 3,066 | 5,820 | |||||||||||
| Sales and marketing | 5,033 | 1,448 | 1,314 | |||||||||||
| General and administrative | 5,297 | 1,837 | 1,716 | |||||||||||
| Stock compensation expense | 327 | 336 | 1,908 | |||||||||||
| Amortization of intangibles | 726 | — | 120 | |||||||||||
| Restructuring charges (recovery) | (155 | ) | (44 | ) | 12,745 | |||||||||
| Merger costs | — | — | 4,126 | |||||||||||
| Total operating expenses | 19,748 | 6,643 | 27,749 | |||||||||||
| Loss from operations | (28,847 | ) | (7,214 | ) | (33,153 | ) | ||||||||
| Other income, net | 935 | 608 | 634 | |||||||||||
| Loss before cumulative effect of an accounting change | (27,912 | ) | (6,606 | ) | (32,519 | ) | ||||||||
| Cumulative effect of an accounting change to adopt SFAS 142 | — | — | (37,500 | ) | ||||||||||
| Net loss | $ | (27,912 | ) | $ | (6,606 | ) | $ | (70,019 | ) | |||||
| Loss per share before cumulative effect of an accounting change | $ | (0.26 | ) | $ | (0.10 | ) | $ | (0.48 | ) | |||||
| Cumulative per share effect of an accounting change to adopt SFAS 142 | — | — | (0.56 | ) | ||||||||||
| Basic and diluted net loss per common share | $ | (0.26 | ) | $ | (0.10 | ) | $ | (1.04 | ) | |||||
| Weighted average shares used in computing basic and diluted net loss per common share | 107,716 | 69,105 | 67,629 | |||||||||||
Calculation excluding certain items: | ||||||||||||||
| GAAP cost of revenue per above, including stock compensation expense | $ | 27,211 | $ | 6,034 | $ | 10,619 | ||||||||
| Cost of revenue items: | ||||||||||||||
| Provision for excess inventory | — | (185 | ) | (3,672 | ) | |||||||||
| Utilization of excess inventory previously written off | 590 | 1,267 | 928 | |||||||||||
| Stock compensation recovery | (16 | ) | (5 | ) | (17 | ) | ||||||||
| 574 | 1,077 | (2,761 | ) | |||||||||||
| Cost of revenue excluding certain items | 27,785 | 7,111 | 7,858 | |||||||||||
| GAAP operating expenses per above | 19,748 | 6,643 | 27,749 | |||||||||||
| Operating expense items: | ||||||||||||||
| Stock compensation expense | (327 | ) | (336 | ) | (1,908 | ) | ||||||||
| Amortization of intangibles | (726 | ) | — | (120 | ) | |||||||||
| Merger costs | — | — | (4,126 | ) | ||||||||||
| Utilization in R&D of excess inventory previously written off | 54 | 62 | 72 | |||||||||||
| Litigation and contract settlements | (950 | ) | — | — | ||||||||||
| Restructuring (charges) recovery | 155 | 44 | (12,745 | ) | ||||||||||
| (1,794 | ) | (230 | ) | (18,827 | ) | |||||||||
| Total operating expenses excluding certain items | $ | 17,954 | $ | 6,413 | $ | 8,922 | ||||||||
| Cumulative effect of an accounting change to adopt SFAS 142 | $ | — | $ | — | $ | (37,500 | ) | |||||||
| GAAP net loss per above | $ | (27,912 | ) | $ | (6,606 | ) | $ | (70,019 | ) | |||||
| Items excluded from cost of revenues, operating expenses and SFAS 142 accounting change | 1,220 | (847 | ) | 59,088 | ||||||||||
| Net loss excluding certain items | $ | (26,692 | ) | $ | (7,453 | ) | $ | (10,931 | ) | |||||
| Basic and diluted net loss per common share | $ | (0.25 | ) | $ | (0.11 | ) | $ | (0.16 | ) | |||||
AVANEX CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
| September 30, | June 30, | September 30, | ||||||||||||
| 2003 | 2003 | 2002 | ||||||||||||
Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 38,214 | $ | 10,639 | $ | 21,004 | ||||||||
| Short-term investments | 123,120 | 76,952 | 98,892 | |||||||||||
| Accounts receivable, net | 15,988 | 2,614 | 2,986 | |||||||||||
| Inventories | 31,079 | 3,613 | 2,757 | |||||||||||
| Other current assets | 21,520 | 1,070 | 615 | |||||||||||
| Total current assets | 229,921 | 94,888 | 126,254 | |||||||||||
| Long-term investments | 58,434 | 47,063 | 42,287 | |||||||||||
| Property and equipment, net | 30,359 | 5,455 | 13,168 | |||||||||||
| Intangibles, net | 17,217 | — | 1,357 | |||||||||||
| Goodwill | 7,664 | — | — | |||||||||||
| Other assets | 10,178 | 7,209 | 660 | |||||||||||
| Total assets | $ | 353,773 | $ | 154,615 | $ | 183,726 | ||||||||
Liabilities and stockholders’ equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Short-term borrowings | $ | 1,848 | $ | 3,141 | $ | — | ||||||||
| Accounts payable | 22,727 | 5,647 | 4,702 | |||||||||||
| Current portion of restructuring costs | 61,496 | 6,400 | 5,718 | |||||||||||
| Other accrued liabilities | 22,843 | 5,816 | 3,368 | |||||||||||
| Warranty | 8,270 | 2,707 | 3,366 | |||||||||||
| Current portion of long-term obligations | 6,854 | 4,190 | 4,837 | |||||||||||
| Accrued compensation and related expenses | 11,748 | 2,279 | 2,444 | |||||||||||
| Total current liabilities | 135,786 | 30,180 | 24,435 | |||||||||||
| Restructuring costs | 23,624 | 26,055 | 23,757 | |||||||||||
| Long-term obligations | 13,561 | 2,118 | 5,357 | |||||||||||
| Total liabilities | 172,971 | 58,353 | 53,549 | |||||||||||
| Stockholders’ equity: | ||||||||||||||
| Common stock | 128 | 69 | 69 | |||||||||||
| Additional paid-in capital | 592,998 | 484,028 | 493,922 | |||||||||||
| Notes receivable from stockholders | — | — | (1,107 | ) | ||||||||||
| Deferred compensation | (1,128 | ) | (828 | ) | (8,593 | ) | ||||||||
| Accumulated deficit | (414,919 | ) | (387,007 | ) | (354,114 | ) | ||||||||
| Cumulative translation adjustment | 3,723 | — | — | |||||||||||
| Total stockholders’ equity | 180,802 | 96,262 | 130,177 | |||||||||||
| Total liabilities and stockholders’ equity | $ | 353,773 | $ | 154,615 | $ | 183,726 | ||||||||