Exhibit 99.1
Tellium Reports First Quarter 2003 Results
First Quarter Results
o Cash position of $157.2 million at March 31, 2003; net cash burn was $13.8
million
o Revenues of $10.1 million
o Loss per basic and diluted share on a U.S. GAAP basis was $0.38
o Loss per basic and diluted share on a pro forma cash basis was $0.09
o Gross margins on a U.S. GAAP basis were 10%, and 48% on a pro forma basis
OCEANPORT, N.J., April 30, 2003 - Tellium, Inc. (Nasdaq: TELM), today reported
its results for the first quarter ended March 31, 2003. On a U.S. GAAP basis,
the company's net loss for the first quarter was approximately $37.4 million, or
a loss of $0.38 per basic and diluted share. For the fourth quarter 2002, on a
U.S. GAAP basis, the company's net loss was approximately $56.5 million, or a
loss of $0.57 per basic and diluted share.
Excluding non-cash charges related to equity issuances, stock-based compensation
expense, amortization, restructuring charges and impairment of long-lived
assets, Tellium's pro forma net loss for the first quarter ended March 31, 2003
was approximately $8.6 million, or a loss of $0.09 per basic and diluted share,
compared to a pro forma net loss of approximately $17.2 million, or $0.17 per
basic and diluted share, during the fourth quarter of 2002. As of January 1,
2003, Tellium's pro forma results now include depreciation expense. For
consistency, Tellium adjusted its pro forma net loss for the fourth quarter of
2002 to include depreciation expense. A reconciliation of net loss on a U.S.
GAAP basis and on a pro forma basis is provided in a table immediately following
the Pro Forma Consolidated Statement of Operations.
Revenues were approximately $10.1 million during the first quarter of 2003,
compared with approximately $2.9 million in the fourth quarter of 2002. For the
quarter ended March 31, 2003, gross profit on a U.S. GAAP basis was
approximately $1.1 million, resulting in a gross margin of 10%. On a pro forma
basis, gross profit was approximately $4.9 million, resulting in a gross margin
of 48%. A reconciliation of gross profits and gross margins on a U.S. GAAP basis
and on a pro forma basis is provided in a table immediately following the Pro
Forma Consolidated Statement of Operations.
Tellium ended the first quarter of 2003 with approximately $157.2 million of
cash on hand, which reflects a reduction in cash of approximately $13.8 million
during the quarter. Tellium's reduction in cash was approximately $1.2 million
less than the $15.0 million cash-burn that the company had projected in its
earnings call on January 29, 2003.
Effective January 1, 2003, Tellium adopted SFAS No. 123, Accounting for
Stock-Based Compensation. Tellium selected the prospective method of adoption
described in SFAS No. 148, Accounting for Stock-Based Compensation Transition
Disclosure. The application of SFAS No. 123 resulted in a non-cash charge of
$18.4 million, which is included in stock-based compensation expense for the
quarter ended March 31, 2003.
As a result of its business restructuring announced in January 2003, Tellium
recorded a restructuring charge of approximately $6.7 million in the quarter
ended March 31, 2003 associated with a workforce reduction and the consolidation
of corporate facilities. This restructuring charge is included in the $7.4
million in charges related to restructuring and the impairment of long-lived
assets.
"Through our aggressive actions to reduce operating costs, I believe we have
achieved the first phase of our strategy - stability. Now, we are squarely
focused on attaining growth and ultimately profitability," said Harry Carr,
chairman of the board and chief executive officer of Tellium. "We are starting
2003 on the right note. We met or exceeded the guidance we provided in January,
and our Aurora switches are in the process of
being deployed in Cable & Wireless' global network. I am very proud of what the
Tellium team has done to meet the challenges in this very difficult environment.
I believe that we are well positioned for success."
Live Webcast Discussing First Quarter 2003 Results
Tellium management will discuss the company's first quarter results with
investors and analysts on Wednesday, April 30, 2003, at 5:00 p.m. EDT. A live
audio webcast of this discussion will be available via Tellium's home page at
www.tellium.com. A replay of the webcast will be available for approximately two
weeks on the Investor Relations page of Tellium's web site at
investor.tellium.com.
About Tellium
Tellium delivers high-speed, high-capacity, intelligent core optical solutions
that empower service providers around the world to create, run, control and
optimize their networks. First in the world to provide in-service, intelligent
optical switches, Tellium's Aurora(TM) Optical Switch(TM) family and the StarNet
Software Suite together offer service providers a simple and cost-effective
migration path to next-generation public networks.
For more information, visit Tellium's web site at www.tellium.com, or contact:
Investors
Jenniffer Collins
Tel: +1 732-483-3112
Email: JCollins@tellium.com
Media
Mike Deshaies
Tel: +1 732-923-4160
Email: mdeshaies@tellium.com
Certain matters discussed in this press release are "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 forward-looking statements are
based on current expectations, forecasts and assumptions of the company that
involve risks and uncertainties. Forward-looking statements in this release
include, but are not limited to, our ability to grow our business and become
profitable, our expectation that Cable & Wireless will deploy our Aurora
switches in its global network and purchase additional Aurora switches from us,
our belief that we are well positioned for success, our ability to deliver
better, faster and more cost-effective products to the marketplace, and all
other statements that are not purely historical. These forward-looking
statements involve risks and uncertainties which could cause actual results to
differ materially including, without limitation, the risk that (1) we continue
to incur significant losses in the future; (2) our limited operating history
makes forecasting our future revenues and operating results difficult, which
impairs our ability to manage our business; (3) we generate substantially all of
our revenue from a limited number of customers; (4) we will not attract new
customers; (5) customers fail to place orders for our products; (6) we are
unable to reach commercially-acceptable contract terms with new customers; (7)
our revenues and operating results vary significantly from quarter to quarter,
causing the price of our common stock to decline; (8) the selling prices of our
products declines; (9) significant non-cash charges will affect our future
operating results, causing the price of our common stock to decline; (10)
general economic conditions or conditions within our industry continue to worsen
or improve more slowly than we expect; (11) we experience volatility in our
stock price; (12) errors or defects in our products are found only after full
deployment in a customer's network; (13) our products are unable to operate
within customer networks; (14) our products fail to meet contract specifications
or industry standards that may emerge; (15) the optical switching market fails
to develop as we expect; (16) we fail to develop new and enhanced products; (17)
we are unable to increase market awareness and sales of our products; (18) we
are unable to comply with government regulation; (19) any disruption in our
manufacturing relationships causes us to fail to meet customers' demands; and
(20) industry conditions and our workforce reductions impact product development
and existing customer contracts.
These and other factors and other risks and uncertainties are discussed in the
company's filings with the Securities and Exchange Commission, particularly the
"Risk Factors" section of our annual and quarterly reports. The forward-looking
statements in this press release are only made as of this date, and the company
assumes no obligation to update the information included in this press release,
whether as a result of new information, future events or otherwise.
Tellium, the Tellium logo, "Smarter, Faster Optical Networks", Aurora Optical
Switch, StarNet Software Suite, and others are trademarks or registered
trademarks of Tellium, Inc. in the United States and/or other countries. Other
marks are the properties of their respective owners.
Tellium, Inc. Consolidated Balance Sheet
(amounts in thousands)
As of: 12/31/2002 03/31/2003
------------ -------------
ASSETS (audited) (unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 171,019 $ 157,178
Accounts receivable, less allowance for doubtful accounts 13 10,070
Inventories 13,745 13,653
Prepaid expenses and other current assets 2,290 1,512
------------ -------------
Total current assets 187,067 182,413
Property and equipment - net 40,533 33,843
Other assets 754 760
------------ -------------
TOTAL ASSETS $ 228,354 $ 217,016
============ =============
LIABILITIES, PREFERRED STOCK, AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 2,978 $ 3,971
Accrued expenses and other current liabilities 21,923 25,519
Current portion of notes payable - 540
Current portion of capital lease obligations 73 74
Bank line of credit 8,000 8,000
------------ -------------
Total current liabilities 32,974 38,104
Long-term portion of notes payable 540 -
Long-term portion of capital lease obligations 52 33
Other long-term liabilities 376 277
------------ -------------
TOTAL LIABILITIES 33,942 38,414
------------ -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 900,000 shares authorized,
116,494 issued and 114,044 legally outstanding as of
12/31/02 116,828 issued and 114,378 legally outstanding
as of 3/31/03 116 117
Additional paid-in capital 1,008,592 1,022,667
Accumulated deficit (779,932) (817,376)
Deferred employee compensation (20,424) (12,866)
Common stock in treasury, at cost (13,940) (13,940)
------------ -------------
Total stockholders' equity 194,412 178,602
------------ -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 228,354 $ 217,016
============ =============
Tellium, Inc. Reported Consolidated Statement of Operations
(amounts in thousands except per share data)
Three months ended
03/31/2002 12/31/2002 03/31/2003
(unaudited) (unaudited) (unaudited)
REVENUE $ 54,060 $ 2,892 $ 10,118
Non-cash charges relating to equity issuances 7,356 29,053 -
---------- ------------ -------------
REVENUE, net of non-cash charges relating to equity issuances 46,704 (26,161) 10,118
COST OF REVENUE 31,246 5,573 9,063
---------- ------------ -------------
Gross profit 15,458 (31,734) 1,055
---------- ------------ -------------
OPERATING EXPENSES:
Research and devlopment, excluding stock based compensation 13,966 6,523 5,709
Sales and marketing, excluding stock based compensation 7,155 1,802 2,199
General and administrative, excluding stock based compensation 7,619 7,669 6,045
Amortization of intangible assets 4,050 136 -
Stock-based compensation expense 11,987 2,421 17,632
Restructuring and impairment of long-lived assets - 7,096 7,392
---------- ------------ -------------
Total operating expenses 44,777 25,647 38,977
---------- ------------ -------------
OPERATING LOSS (29,319) (57,381) (37,922)
---------- ------------ -------------
OTHER (EXPENSE) INCOME:
Other (expense) income (56) 232 10
Interest income - net 858 616 468
---------- ------------ -------------
Total other income 802 848 478
---------- ------------ -------------
NET LOSS $ (28,517) $ (56,533) $ (37,444)
========== ============ =============
BASIC AND DILUTED LOSS PER SHARE1 $ (0.27) $ (0.57) $ (0.38)
========== ============ =============
$
BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING1 106,911 98,667 98,738
========== ============ =============
STOCK-BASED COMPENSATION EXPENSE
Cost of revenue $ 1,453 $ 678 $ 3,851
Research and development 7,520 571 3,113
Sales and marketing 2,935 1,065 7,046
General and administrative 1,532 785 7,473
------------ ------------ -------------
Total stock-based compensation expense $ 13,440 $ 3,099 $ 21,483
============ ============ =============
DEPRECIATION
Cost of revenue $ 1,881 $ 2,327 $ 2,279
Research and development 1,206 1,479 1,252
Sales and marketing 304 43 44
General and administrative 2,131 1,779 1,461
------------ ------------ -------------
Total depreciation $ 5,522 $ 5,628 $ 5,036
============ ============ =============
Notes
1 Reflects number of shares calculated pursuant to generally accepted
accounting principles, which excludes approximately 10,680,995 vested
shares of restricted stock transferred to treasury stock on July 26, 2002
pursuant to EITF Issue No. 00-23.
Tellium, Inc. Pro Forma Consolidated Statement of Operations1
(amounts in thousands, except per share data)
Three months ended
03/31/2002 12/31/2002 03/31/2003
(unaudited) (unaudited) (unaudited)
REVENUE $ 54,060 $ 2,892 $ 10,118
COST OF REVENUE 29,793 4,895 5,212
-------------- ---------------- --------------
Gross profit 24,267 (2,003) 4,906
-------------- ---------------- --------------
OPERATING EXPENSES:
Research and development 13,966 6,523 5,709
Sales and marketing 7,155 1,802 2,199
General and administrative 7,619 7,669 6,045
-------------- ---------------- --------------
Total operating expenses 28,740 15,994 13,953
-------------- ---------------- --------------
OPERATING LOSS (4,473) (17,997) (9,047)
-------------- ---------------- --------------
OTHER INCOME:
Other (expense ) income (56) 232 10
Interest income -net 858 616 468
-------------- ---------------- --------------
Total other income 802 848 478
-------------- ---------------- --------------
NET LOSS $ (3,671) $ (17,149) $ (8,569)
============== ================ ==============
BASIC AND DILUTED EARNINGS/(LOSS)
PER SHARE2 $ (0.03) $ (0.17) $ (0.09)
BASIC AND DILUTED WEIGHTED
AVERAGE SHARES OUTSTANDING2 106,911 98,667 98,738
Notes
- -----
1 All financial results reported in the Consolidated Statement of Operations
excludes non-cash items including charges relating to equity issuances,
stock-based compensation expense, and amortization, restructuring charges,
and impairment of long-lived assets. A reconciliation of the non-GAAP
measures to the most directly comparable GAAP measures is contained on the
following page.
2 Reflects number of shares calculated pursuant to generally accepted
accounting principles, which excludes approximately 10,680,995 vested
shares of restricted stock transferred to treasury stock on July 26, 2002
pursuant to EITF Issue No. 00-23.
Tellium, Inc. Reconciliation U.S. GAAP Financial Measures to
Non-GAAP Financial Measures
(amounts in thousands)
Three months ended
03/31/2002 12/31/2002 03/31/2003
(unaudited) (unaudited) (unaudited)
NET LOSS - AS REPORTED $ (28,517) $ (56,533) $ (37,444)
============== ============= ===============
NON CASH CHARGES
Non-cash charges relating to equity issuances 7,356 29,053
-
Amortization of intangible assets 4,050 136
-
Stock-based compensation expense 13,440 3,099 21,483
Restructuring and impairment of long-lived 7,096
assets - 7,392
-------------- ------------- ---------------
Total non cash charges 24,846 39,384 28,875
-------------- ------------- ---------------
NET LOSS - PRO FORMA1 $ (3,671) $ (17,149) $ (8,569)
============== ============= ===============
GROSS PROFIT - AS REPORTED $ 15,458 $ (31,734) $ 1,055
Gross margins as a percentage of revenue- as 29% -1097% 10%
reported
============== ============= ===============
NON CASH CHARGES
Non-cash charges relating to equity issuances 7,356 29,053
-
Stock-based compensation expense 1,453 678 3,851
-------------- ------------- ---------------
Total non cash charges 8,809 29,731 3,851
-------------- ------------- ---------------
GROSS PROFIT - PRO FORMA $ 24,267 $ (2,003) $ 4,906
Pro forma gross margins as a percentage of revenue 45% -69% 48%
============== ============= ===============
* * * * *
The pro forma financial statements report non-GAAP financial measures that
exclude the impact of non-cash charges related to equity issuance and
stock-based compensation, amortization of intangible assets and the charges
associated with the restructuring and impairment of long-lived assets. Tellium's
management believes that non-GAAP measures, presented with the U.S. GAAP
financial measures, provide useful information to investors because they assist
investors in better understanding the company's liquidity and cash position
which enables them to better assess the company's quarterly operations. In
addition, since we have historically reported non-GAAP results to the investment
community, we believe the inclusion of non-GAAP numbers provides consistency in
our financial reporting. Tellium's management recognizes that non-GAAP results
are not a substitute for U.S. GAAP measures. However, the non-GAAP results are a
helpful tool in assisting Tellium's management to better understand and manage
its business. Tellium's management uses the non-GAAP financial measures as an
alternative means for assessing quarterly operations results and projecting the
ongoing costs of operations.
Notes
- -----
1 As discussed above, pro forma net loss of approximately $11.5 million was
originally reported for the three months ended December 31, 2002. These pro
forma results excluded depreciation charges of approximately $5.6 million.
As of January 1, 2003, we no longer exclude depreciation expense from our
pro forma results. The pro forma loss of approximately $17.2 million in the
presentation above has been revised to provide a comparison on a consistent
basis.
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