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EXHIBIT 99.1
Jozef Straus: Good afternoon everyone. Thank you for joining us on this happy
occasion. I cannot tell you how excited I am with the closing of
the merger today. By adding SDL and its industry leading
technology into the JDS Uniphase family, I believe the combined
company will immediately accrue benefit of greater technological
depth and increased ability to serve our customers better.
Before we go any further, Tony will now review the safe-harbor
language...
Tony Muller: We would like to advise you that the discussions we will have
today will include "forward looking statements," as that term is
defined under the Private Securities Litigation Reform Act of
1995. What we and the Act mean by forward looking statements are
all statements we make, other than those dealing specifically
with historical matters (that is any statements we make about the
conduct of our business, operations and finances up to this
moment). All other statements we make are forward looking
statements. Our forward looking statements include any
information we provide on future business operations including,
without limitations, our integration plans, the expected benefits
of our supply agreement with Nortel, and guidance regarding the
future financial performance of the Company. All forward looking
statements mentioned are subject to risks and uncertainties that
could cause the actual results to differ, possibly materially,
from those projected in the forward looking statements. Some, but
not all, of these risks and uncertainties are discussed from time
to time in the press releases and securities filings of the
company with the SEC, particularly in our Form 10-Q filed today.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise.
Now I will turn it back to Jozef...
Jozef Straus: Our merger came about largely because of opportunities arising
from increased demand for more advanced fiber optic solutions. As
one company, we will have a very strong technological team
covering optics, electronics, and material science. The company
will have an increased capacity to focus on important new
technologies emerging in fiber optics while maintaining ongoing
product excellence.
Through this merger, we believe we are well positioned to
maintain our leadership position in the industry. We believe the
new JDS Uniphase is now stronger and broader in:
o Technology
o Manufacturing
o Product breadth
o Sales & marketing
o Engineering
o Market Leadership, and,
o World-wide presence
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Let me now talk about the business environment.
We are all aware of the concerns relating to the slowdown in the
economy.
In the near term, our business continues to be affected by
uncertainties in capital spending by carriers, inventory
adjustments at some customers and decreasing levels of sales
visibility combined with changing supply management practices by
some of our customers as they respond to these near-term
circumstances.
As a result, the guidance to be provided by Tony later in this
call will reflect these factors.
Beyond these immediate concerns, we are optimistic about the
growth of the industry and future demand for fiber optic
products.
Let me now describe how the combined company will lay the
groundwork for ongoing growth from an organization perspective.
We are organizing ourselves into two business groups. In order to
strengthen opportunities in module level products, Don Scifres
will take on the role of the president of the Amplification and
Transmissions business group. In addition, Don will be
responsible for corporate Human Resources. Jay Abbe becomes the
president of the WDM, Switching and Thin Film Products business
group as well as being responsible for corporate Sales and
Marketing and Strategic Manufacturing and Automation. Tony Muller
continues in his role as CFO and Zita Cobb will continue to head
up our Strategy and Business Development.
Both Don and Jay have joined the JDS Uniphase Board of Directors
with Don becoming Co-chairman.
Before I turn it over to Don, I want to welcome all the SDL
employees whose leadership, imagination, passion and vision are
great additions to our team. I also want to acknowledge the
ongoing commitment and hard work of all JDS Uniphase employees
who have made us what we are today.
With that, let me turn the call over to Don and Jay to tell you
more about their business groups.
Don...
Don Scifres: Thank you Jozef. I want to say I am very delighted to be a part
of JDS Uniphase. We've known each other for over 20 years and I
am looking forward to working closely with you. I truly believe
this merger is a good fit for both companies because we both are
agile, customer oriented, passionate about technology, and
focused on product innovation.
There is no lack of opportunities for the Amplification and
Transmission group, which will have three operating units:
Amplification Solutions, Transmission
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Solutions, and Active Components. The large demand for transmit
and receive equipment resulted in a 70% sequential growth in
SDL's Veritech division, which makes transmit and receive
modules. JDS Uniphase is experiencing strong growth in 10Gb
transmission modules as well. In this quarter, the merger is
expected to allow the amplification and transmission businesses
of both companies to pool their resources and deliver advanced
modules more rapidly at increasing volumes to our customers. SDL
expects to introduce approximately 20 new amplification &
transmission products while JDS Uniphase expects to be
introducing a number of new amplification & transmission products
at OFC as well. Finally, we believe the new supply agreement with
Nortel will generate even more new opportunities for module level
products made by the Amplification & Transmission group over the
next 3 years.
I'm very much looking forward to my new role as president of the
Amplification & Transmission business group. Both companies'
amplification and transmission product lines are among the
world's leaders in innovative designs. I plan to take this group
in several directions.
Our joint team will accelerate the integrated module strategy
with the combination of electronics, different forms of
modulation, enhanced active technologies, broad passive product
portfolio, and availability of a silicon platform for eventual
optical circuit integration on a chip. This latter technology is
expected to reduce manufacturing costs dramatically while
enhancing performance.
We also plan to expand our amplifier product lines to address
every application including ultra long haul, Raman, high power
high channel count EDFAs, and low power low cost amplets. We
intend to take amplifiers to the next level by incorporating
additional functionalities into amplifiers as they become an even
more critical part of the network.
In addition to pursuing module level integration and optical
system on a chip, we will also focus on enabling 40Gb or higher
data rates and developing related new technologies.
Let me now give you some more details about the new Amplification
and Transmission business group. Greg Dougherty will be the
group's COO. He will oversee three operating units: Amplification
Solutions, Transmission Solutions, and Active Components. The
Amplification Solutions unit is responsible for design,
development, marketing and manufacturing of amplifiers. Here, we
will leverage SDL's strong pump business with JDS Uniphase'
strength in passives with the goal of becoming the number one
amplifier manufacturer worldwide. The Transmission Solutions unit
will leverage the modulator driver, laser, electronics, and
detector capabilities of both companies with the goal to create
leading edge module level products at high volume and low cost in
what we believe will be a rapidly expanding market. Finally, we
believe the Components unit will provide the industry leading
hardware to allow the amplification and transmission module
businesses to achieve their expected levels of rapid growth.
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In summary, I'm very excited and honored to be a part of this
world-class team, and I look forward to helping increase the
level of success, which both companies have enjoyed so far.
Let me now turn the call over to Jay Abbe to describe his
organization.
Jay ...
Jay Abbe: Don, Thank you. First, let me add my welcome to you and your
management team to the greater JDSU family. As Jozef has pointed
out, we believe this merger is another powerful step along the
way to further enhance our technical ability and production
capacity to serve our world-wide telecommunications systems
customers with leading edge fiber optics products. I am
particularly excited about the additional leadership capability
you and your team bring to the Company, and certainly look
forward to working closely with you in our re-aligned
organizational responsibilities as we combine companies right now
in order to move forward rapidly.
Jozef has already outlined the basic structure of our new
world-wide organization. I'd like to expand a bit on the
priorities that have influenced the go-forward plan we are
announcing today:
First, we are organizing more strongly around customer oriented
"solutions." Historically, we have talked about active and
passive components and modules. And, of course, within these
categories, product lines such as source lasers, DWDM components,
and the like. This organization has been very effective for us as
we have worked hard to develop the specific technologies that
underpin the various product families. Now, we believe, it is
time to increasingly move toward "solution" defined organizations
- and of course I mean "solutions' as defined by and needed by
our customers. So this is why our two business groups are now
identified as WDM, Switching, and Thin Film Products Business
Group, which I now head up, and Amplification and Transmission
Business Group, which Don heads. At its simplest, we believe
grouping our operating locations, and, for the most part,
required technologies, into these two major business groups will
help us increase further our time-to market objectives with next
generation products. As we have discussed many times, we believe
an increasing proportion of our functionality will be delivered
to market as integrated modules rather than individual
components. We believe this new organization will facilitate this
trend.
Within our WDM, switching, and Thin Film Products Business Group,
we are organizing at the applications level around the WDM and
Switching headquartered in Ottawa, and Thin Film Products
headquartered in Santa Rosa, California. Within both of these
units are multiple P&L operations or divisions including our
combined capabilities in channel monitoring and arrayed
waveguides!
Secondly, our organization is designed to retain - and further
strengthen - integration across ALL the operating units in the
Corporation where there is either internal synergy or, of course,
product/technology value for our customers. This will start at
the top of
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the Company - Don will be one of my biggest customers, and I will
work hard to keep it that way! To further enhance integration, we
are certainly going to retain a number of common functional
"corporate-wide" groups that serve the entire organization. First
and foremost, of course, is Sales. One of our most important
principles over the past year and a half has been to build a
single face to the customer through an integrated sales force.
This has been quite effective - and will continue. In fact, our
combined sales force integration plan will be implemented this
week. And you will see the same high level of integration at OFC
in March as we integrate our corporate marketing plans. Likewise,
we will continue our company-wide programs around manufacturing
automation, global supply chain management, outsourcing, and
information technology. We will have more to say about these
programs in coming months as we further assess how to integrate
the best of SDL and JDSU in these functional areas.
Thirdly, we do not intend to diminish the de-centralized
entrepreneurial culture of our company. In fact, we are committed
to enhancing our overall agility in order to improve our customer
service and shorten time-to-market. We believe this culture is
distinctive and defining for JDS Uniphase. In fact, we believe
this organization will further strengthen integration - at the
"solutions" level! This will be good for our customers.
I would like to now turn it over to Tony, who will discuss our
numbers going forward...
Tony Muller: I would like to add my own enthusiasm to being a part of this
really powerful management team and having the exciting
opportunities before us.
Now that we have completed the merger with SDL and the sale of
our Zurich operations, let me review our new guidance for
financial results in future periods.
The Company expects sales in the quarter ending March 31 to be at
or slightly above $1 billion with earnings per share of $0.17.
The Company anticipates sales for its fiscal year ending June 30,
2001 to be approximately $3.9 billion with earnings per share of
$0.74.
This guidance incorporates prospects for both JDS Uniphase and
SDL, exclusion of Zurich results, and elimination of intercompany
results (you may recall that JDS Uniphase was a significant SDL
customer). All of these amounts (except for the results of JDS
Uniphase) have been pro rated from the close through the end of
the applicable period. This guidance also incorporates no current
income from our Nortel stock and lower interest income because of
cash expenditures related to the merger.
When we reported our second quarter results on January 25, we
advised you that our near-term business prospects were being
affected by uncertain carrier capital spending, inventory
adjustments by some of our customers, and a generally lower level
of near-term sales visibility. These conditions remain as they
were then or may
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have become somewhat less favorable. The level of order coverage
we have relative to our sales forecasts at this time in the
quarter is lower than the Company has experienced in recent
quarters. This has, of course been taken into account in this
updated guidance.
Let me speak to the prospects of each of JDS Uniphase and SDL. We
believe our separate prospects for the March quarter are somewhat
below the levels we provided in our recent respective earnings
announcements, although we believe both businesses will show
sequential revenue growth above their December quarters after
taking into account the sale of Zurich.
In investment conferences, we are often asked if our guidance
includes estimates of inventory liquidation of this customer or
that one, the effect of new products, or the impact of some other
specific factor. Let me remind the call that our guidance
includes our best estimates for all the factors that affect our
business, both favorable and otherwise, and today's guidance does
include all such factors as well as the effect of the expanded
Nortel supply agreement, new SDL products and many other factors.
Let me speak to the change in our earnings per share guidance for
the March quarter from that provided on January 25 as well as the
effect of SDL on our e.p.s. This reflects our sales prospects as
well as the sale of Zurich. With our joint guidance we are now
taking into account the lower interest income related to
merger-related uses of cash and increased R&D expenses as we near
the new product introductions we expect to make at OFC.
Let me also speak to our current view of FY 2002. It is still
early to provide you with guidance with a high level of
confidence because we have just completed our merger with SDL, we
have not yet commenced our detailed planning for next fiscal
year, and we have changed business conditions. Notwithstanding
these factors, we believe our sales for fiscal 2002 could be in
the range of $ 6.0 billion.
While our near-term business levels are being affected by carrier
capital spending uncertainties and inventory adjustments by some
of our customers, demand (growth in telecommunication services
and the Internet) is projected to grow rapidly. This will lead,
most likely during the second half of this calendar year, to
compelling needs to add to carrier capacity. With this increase
in carrier capacity additions will come increased demand for
optical components and modules and the new technologies that
provide increased performance and added customer value. We
believe that such a return to healthy demand growth will be
reflected by the financial performance of our company, which has
been strengthened so much by our merger with SDL.
I will now turn the call back to Jozef.
Jozef Straus: To conclude, I would like to say that our task going forward is
threefold. We will collaborate, integrate and innovate all with
an increased degree of agility. We will collaborate with our
customers to ensure that the leading edge solutions are created.
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We will integrate our two companies into one--so that the
benefits that we can create will be delivered to our customers as
quickly and seamlessly as possible. Finally, we will continue to
innovate. It is only by providing innovative solutions to our
customers that they will realize the opportunities arising from
our partnership with them for the ongoing growth in all aspects
of the fiber optics industry.
Considering the motivation and commitment of our employees, our
respective management teams, as well as new organization, I am
confident that we are well positioned to execute on each of these
tasks for the benefit of our customers, our shareholders and the
company as a whole.
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