SOURCE: JDSU

JDSU

November 05, 2009 16:05 ET

JDSU Announces Fiscal 2010 First Quarter Results

MILPITAS, CA--(Marketwire - November 5, 2009) - JDSU (NASDAQ: JDSU) (TSX: JDU) today reported results for its first fiscal quarter ended October 3, 2009.

Net revenue for the first fiscal quarter was $297.8 million and the net loss was $(31.9) million, or $(0.15) per share. This compares to net revenue of $273.1 million and a net loss of $(63.6) million or $(0.29) per share for the prior quarter, and net revenue of $377.2 million and a net loss of $(21.3) million or $(0.10) per share for the first fiscal quarter of 2009.

On a non-GAAP basis, net revenue for the first quarter was $298.6 million and net income for the quarter was $9.0 million or $0.04 per share. This compares to non-GAAP net revenue of $274.0 million and net loss of $(1.6) million or $(0.01) per share for the prior quarter, and non-GAAP net revenue of $377.3 million and net income of $23.9 million or $0.11 per share for the first fiscal quarter of 2009.

"Our fiscal Q1 results represent growth across all of our business segments providing clear evidence of improving demand from our customers," said Tom Waechter, JDSU's President and Chief Executive Officer. "The leverage in our operating model and balance sheet will become increasingly evident as our top line grows."

Financial Overview -- First Fiscal Quarter Ended October 3, 2009

   --  Non-GAAP net revenue of $298.6 million, which includes $7.5 million
       from the acquisition of the Storage Network Tools business,
       increased 9% when compared to the previous quarter and decreased 21%
       when compared to the first quarter of fiscal 2009.
   --  Non-GAAP gross margin was 44% compared to 42% for the prior quarter
       and 43% for first quarter of fiscal 2009.
   --  Non-GAAP operating margin was 3% compared to an operating loss of 1%
       in the prior quarter and operating margin of 6% in first quarter of
       fiscal 2009.
   --  Communications Test and Measurement revenue of $143.4 million
       increased 8% from the previous quarter and decreased 11% compared to
       the first quarter of fiscal 2009. Revenue from this segment
       represented 48% of total non-GAAP net revenue.
   --  Communications and Commercial Optical Products revenue of $101.1
       million increased 12% when compared with the previous quarter and
       decreased 38% when compared to the first quarter of fiscal 2009.
       Revenue from this segment represented 34% of total non-GAAP net
       revenue.
         - Optical Communications revenue of $86.0 million increased 9%
           compared with the previous quarter and decreased 39% compared
           to the first quarter of fiscal 2009.
­         - Our Commercial Lasers business reported revenue of $15.1
           million increased 32% from the previous quarter and down 30%
           from the first quarter of fiscal 2009.
   --  Revenue from the Advanced Optical Technologies segment was $54.1
       million increased 7% from the previous quarter and 1% compared to
       the first quarter of fiscal 2009.  Revenue from this segment
       represented 18% of total non-GAAP net revenue.
   --  Americas' customers represented 51% of total non-GAAP net revenue
       for the quarter. European and Asia-Pacific customers represented 27%
       and 22% of total non-GAAP net revenue, respectively.
   --  The Company held $673.1 million in total cash and investments and
       was free cash flow positive $11.2 million for the quarter.
   --  The Company adopted new authoritative accounting guidance which
       requires the issuers of certain debt instrument(s) to separately
       account for the liability and equity components in a manner that
       reflects the entity's nonconvertible debt borrowing rate, resulting
       in a non-cash $4.2 million charge to interest expense in the quarter
       relating to the 1% Senior Convertible Notes.  In addition, the
       Company retrospectively adjusted its financial statements through
       the fourth quarter of fiscal 2009 to reflect a reduction in the
       long-term debt balance and an increase in stockholders' equity and
       interest expense.
   --  The Company has retrospectively adjusted its Consolidated Statements
       of Operations and the Communications Test and Measurement segment
       financials to reflect the sale of certain non-core assets. These
       adjusted results are reflected as discontinued operations for the
       periods reported.

Business Outlook

For the second quarter of fiscal 2010, ending January 2, 2010, the Company expects non-GAAP net revenue to be in the range of $320 to $345 million.

Conference Call

The Company will discuss these results and other related matters at 2:00 p.m. Pacific Time on November 5, 2009 in a live webcast, which will also be archived for replay on the Company's website at www.jdsu.com/investors. This press release is being furnished as a Current Report on Form 8-K with the Securities and Exchange Commission, and will be available at www.sec.gov.

About JDSU

JDSU (NASDAQ: JDSU) (TSX: JDU) enables broadband and optical innovation in the communications, commercial and consumer markets. JDSU is a leading provider of communications test and measurement solutions and optical products for telecommunications service providers, cable operators, and network equipment manufacturers. JDSU is also a leading provider of innovative optical solutions for medial/environmental instrumentation, semiconductor processing, display, brand authentication, aerospace and defense, and decorative applications. More information is available at www.jdsu.com.

Forward-Looking Statements

This press release contains, and the discussions in our subsequent conference call will contain, 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 statements include: (i) any anticipation or guidance as to future financial performance, including future revenue, gross margin, operating expense, operating margin, EBITDA, cash flow and other financial metrics; and (ii) the Company's beliefs regarding the purpose, usefulness and efficacy of non-GAAP results and the measures and items the Company includes in the same, as well as any benefits to investors the Company believes its non-GAAP measures provide. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. In particular, the Company's ability to predict future financial performance continues to be difficult due to, among other things: (a) continuing general limited visibility across many of our product lines exacerbated by the current credit and financial market uncertainty, as well as the migration to vendor managed inventory programs; (b) quarter-over-quarter product mix fluctuations, which can materially impact profitability measures due to the broad gross margin range across our portfolio; (c) consolidation of our customer base, which, in the shorter term limits demand visibility, and, in the longer term, could reduce our business potential; (d) average selling prices continue to decline across our businesses; (e) our Communications Test and Measurement business is notable for seasonality and a significant level of in-quarter book-and-ship business, further limiting our forecasting abilities; (f) we are currently engaged in various product and manufacturing transfers, site consolidations and product discontinuances, which has caused and may cause short term disruptions; and (g) the ability of our suppliers and contract manufacturers to meet additional production and delivery requirements beyond our forecasted demand.

For more information on these and other risks affecting the Company's business, please refer to the "Risk Factors" section included in the Company's Annual Report on Form 10-K for the fiscal year ended June 27, 2009 filed with the Securities and Exchange Commission. The forward-looking statements contained in this news release are made as of the date hereof and the Company does not assume any obligation to update the reasons why actual results could differ materially from those projected in the forward-looking statements.

The following financial tables are presented in accordance with GAAP, unless otherwise specified.

-SELECTED FINANCIAL DATA FOLLOWS-

                         JDS UNIPHASE CORPORATION
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                   (in millions, except per share data)
                                (unaudited)


                                                   Three Months Ended
                                              ----------------------------
                                               October 3,    September 27,
                                                  2009           2008
                                              -------------  -------------
Net revenue                                   $       297.8  $       377.2
Cost of sales                                         168.4          216.1
Amortization of acquired developed
 technologies                                          12.3           12.5
                                              -------------  -------------
Gross profit                                          117.1          148.6
                                              -------------  -------------
Operating expenses:
  Research and development                             39.8           44.3
  Selling, general and administrative                  92.2          110.6
  Amortization of other intangibles                     7.0            7.1
  Loss and impairment of long-lived assets              0.5            0.2
  Restructuring and related charges                     5.1            2.6
                                              -------------  -------------
Total operating expenses                              144.6          164.8
                                              -------------  -------------
Loss from operations                                  (27.5)         (16.2)
Interest and other income                               3.2            5.4
Interest expense                                       (5.9)          (6.9)
Gain on sale of investments                             0.2            1.0
Impairment of investments                                 -           (3.2)
                                              -------------  -------------
Loss before income taxes                              (30.0)         (19.9)
Provision for income taxes                              0.7            1.0
                                              -------------  -------------
(Loss) before discontinued operations                 (30.7)         (20.9)
Discontinued operations, net of tax                    (1.2)          (0.4)
                                              -------------  -------------
Net loss                                      $       (31.9) $       (21.3)
                                              =============  =============

Net loss per share from:
    Continuing operations                     $       (0.14) $       (0.10)
    Discontinued operations                   $       (0.01) $       (0.00)
                                              -------------  -------------
    Net loss                                  $       (0.15) $       (0.10)
                                              =============  =============

Shares used in per share calculation                  217.5          215.4
                                              =============  =============





                         JDS UNIPHASE CORPORATION
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (in millions)


                                               October 3,      June 27,
                                                  2009           2009
                                              (unaudited)      (audited)
                                              -------------  -------------
ASSETS
Current assets:
  Cash and cash equivalents                   $       248.8  $       286.9
  Short-term investments                              399.8          398.3
  Restricted cash                                      24.5           10.3
  Accounts receivable, net                            192.0          187.3
  Inventories, net                                    133.4          144.8
  Refundable income taxes                              13.6           14.4
  Other current assets                                 57.9           65.8
                                              -------------  -------------
      Total current assets                          1,070.0        1,107.8
                                              -------------  -------------
Property, plant and equipment, net                    184.5          191.1
Deferred income taxes                                   7.8            5.7
Goodwill                                               18.2            8.3
Other intangibles, net                                335.7          322.6
Long-term investments                                  13.6           15.1
Other non-current assets                               17.5           17.5
                                              -------------  -------------
      Total assets                            $     1,647.3  $     1,668.1
                                              =============  =============
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
  Accounts payable                            $       105.9  $       106.6
  Current portion of long-term debt                     0.2            0.2
  Accrued payroll and related expenses                 38.4           45.7
  Income taxes payable                                 21.6           20.3
  Deferred income taxes                                 6.5            5.6
  Restructuring accrual                                15.7           16.6
  Warranty accrual                                      6.9            7.3
  Other current liabilities                           106.4          107.6
                                              -------------  -------------
      Total current liabilities                       301.6          309.9
                                              -------------  -------------
Long-term debt                                        254.1          249.9
Other non-current liabilities                         177.1          173.8
Stockholders’ equity                                  914.5          934.5
                                              -------------  -------------
      Total liabilities and stockholders’
       equity                                 $     1,647.3  $     1,668.1
                                              =============  =============





                         JDS UNIPHASE CORPORATION
                      REPORTABLE SEGMENT INFORMATION
                         (in millions, unaudited)


                                                   Three Months Ended
                                              ----------------------------
                                                October 3,   September 27,
                                                  2009           2008
                                              -------------  -------------
Net revenue:
  Communications Test and Measurement         $       143.4  $       161.8
  Communications and Commercial Optical
   Products                                           101.1          162.0
  Advanced Optical Technologies                        54.1           53.5
  Deferred revenue related to purchase
   accounting adjustment                               (0.8)          (0.1)
                                              -------------  -------------
      Net revenue                             $       297.8  $       377.2
                                              =============  =============

Operating income (loss):
  Communications Test and Measurement         $        18.0  $        26.4
  Communications and Commercial Optical
   Products                                            (1.5)           9.1
  Advanced Optical Technologies                        20.6           21.7
  Corporate                                           (26.9)         (36.4)
                                              -------------  -------------
      Total segment operating income                   10.2           20.8
                                              -------------  -------------
  Unallocated amounts:
    Stock based compensation                          (11.1)         (13.1)
    Acquisition-related charges and
     amortization of intangibles                      (20.1)         (19.7)
    Loss and impairment of long-lived assets           (0.5)          (0.2)
    Restructuring and related charges                  (5.1)          (2.6)
    Realignment and other charges                      (0.9)          (1.4)
    Interest and other income                           3.2            5.4
    Interest expense                                   (5.9)          (6.9)
    Gain on sale of investments                         0.2            1.0
    Impairment of investments                             -           (3.2)
                                              -------------  -------------
  Loss before income taxes and discontinued
   operations                                 $       (30.0) $       (19.9)
                                              =============  =============

Use of Non-GAAP (Adjusted) Financial Measures

The Company provides non-GAAP net revenue, non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted EBITDA financial measures as supplemental information regarding the Company's operational performance. The Company evaluates Company-wide segment performance using, among other things, the measures disclosed in this release for the purposes of evaluating the Company's historical and prospective financial performance, as well as its performance relative to its competitors. Specifically, management uses these items to further its own understanding of the Company's core operating performance. The Company believes its "core operating performance" represents the Company's performance in the ordinary, ongoing and customary course of its operations. Accordingly, management excludes from "core operating performance" those items, such as those relating to restructuring, investing, stock-based compensation expense and non-cash activities that management does not believe are reflective of such ordinary, ongoing and customary course activities.

The Company believes that providing this information to its investors, in addition to the GAAP presentation, allows investors to see Company results "through the eyes" of management. The Company further believes that providing this information allows Company investors to both better understand the Company's financial performance and, importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance.

The non-GAAP adjustments described in this release have historically been excluded by the Company from its non-GAAP measures. The non-GAAP adjustments, and the basis for excluding them, are outlined below.

Restructuring Activities

Cost of goods sold, costs of research and development and costs of selling, general and administrative related to restructuring events: The Company has incurred periodic expenses, included in its GAAP presentation of gross margin and operating expenses primarily due to additional depreciation from changes in estimated useful life and the write-down of certain property and equipment that has been identified for disposal but remained in use until the date of disposal, workforce related charges such as retention bonuses and employee relocation costs related to a formal restructuring plan, building costs for facilities not required for ongoing operations, and costs related to the relocation of certain facilities and equipment from buildings which the Company has disposed of or plans to dispose. The Company excludes these items, for the purposes of calculating non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted EBITDA, when it evaluates the continuing operational performance of the Company. The Company believes that these items do not reflect expected future gross profits or operating expenses nor does the Company believe that they provide a meaningful evaluation of current versus past core operational performance.

Investment Activities

Gain or loss on sale of available for-sale investments and impairment of investments: The Company has sold investments or adjusted the value of investments from time to time based on market conditions. The Company's activities in this respect are included in the Company's GAAP presentation of net income (loss) and net income (loss) per share. The Company's core business does not include making financial investments in third parties, and such investments do not constitute a material portion of the Company's assets. Moreover, the amount and timing of gains and losses and adjustments to the value of investments are unpredictable. Consequently, the Company believes that gains or losses on these sales and adjustments to the value of investments are not related to the ongoing core business and operating performance of the Company. The Company excludes these items, for the purposes of calculating non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted EBITDA, when it evaluates the continuing operational performance of the Company. The Company believes the GAAP measure is not indicative of the Company's core operating performance.

Gain or loss on equity method investments: The Company records gains or losses on its equity investments based on our pro-rata share of gains or the net losses of the investment. The Company's activities in this respect are included in the Company's GAAP presentation of net income (loss) and net income (loss) per share. The Company's core business is not making financial investments in third parties, and such investments do not constitute a material portion of the Company's assets. Moreover, the timing and magnitude of gains or losses are unpredictable, as they are inherently based on the performance of the third party subject of a particular investment. The Company excludes these items, for the purposes of calculating non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted EBITDA, when it evaluates the continuing operational performance of the Company. The Company believes the GAAP measure is not indicative of its core operating performance.

Stock-based compensation expense: Non-GAAP net income (loss) and net income (loss) per share excludes stock-based compensation expense under authoritative guidance. The Company excludes this item, for the purposes of calculating non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted EBITDA, when it evaluates the continuing operational performance of the Company. The Company believes this GAAP measure is not indicative of its core operating performance.

Non-Cash Activities

Amortization of intangibles from acquisitions: The Company incurs amortization of intangibles, included in its GAAP presentation of cost of goods sold and operating expense, related to the various acquisitions it has made. Management excludes these items, for the purposes of calculating non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted EBITDA, when it evaluates the continuing operational performance of the Company. The Company believes that eliminating this expense from operating income is useful to investors because it believes the GAAP measure, alone, is not indicative of its core cost of goods sold and operating expenses and performance.

Impairment of goodwill and other long-lived assets: The Company incurs costs, included in its GAAP presentation of operating expense, related to the impairment of goodwill and other long-lived assets in accordance with authoritative guidance. These adjustments typically occur when the financial performance of the business utilizing the affected assets falls below certain thresholds or certain assets are designated as held for sale. Accordingly, the related asset value impairments are non-recurring and generally unpredictable. The Company believes that eliminating this item, for the purposes of calculating non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted EBITDA, is useful to investors. We believe this non-GAAP adjustment will assist investors to compare current versus past performance. The Company's historical adjustments to the carrying value of certain of its assets under authoritative guidance, as well as the methodology used by the Company in assessing the same, are more particularly described in its quarterly reports on form 10-Q and annual reports on Form 10-K.

Interest, taxes, and depreciation expense: The Company incurs depreciation expense in its operating results. The Company's calculation of adjusted EBITDA excludes items as a result of interest, taxes, depreciation and amortization. Management believes adjusted EBITDA is indicative of the Company's core operational cash flow.

Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The GAAP measure most directly comparable to non-GAAP net income (loss) is net income (loss). The GAAP measure most directly comparable to non-GAAP net income (loss) per share is net income (loss) per share. The GAAP measure most directly comparable to adjusted EBITDA is income (loss) from operations. The Company believes that these GAAP measures alone are not indicative of its core operating expenses and performance.

The following tables reconcile the non-GAAP revenue, net income (loss), net income (loss) per share and adjusted EBITDA financial measures to GAAP:

                         JDS UNIPHASE CORPORATION
           RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
                   (in millions, except per share data)
                                (unaudited)


                                                Three Months Ended
                                        ----------------------------------
                                           October 3,       September 27,
                                              2009              2008
                                        ----------------  ----------------
                                         Net               Net
                                        income    Basic   income    Basic
                                        (loss)     EPS    (loss)     EPS
                                        -------  -------  -------  -------
GAAP measures                           $ (31.9) $ (0.15) $ (21.3) $ (0.10)
  Items reconciling GAAP net income &
   EPS to Non-GAAP net income & EPS:

  Related to net revenues:
    Deferral of revenues related
     purchase accounting adjustment         0.8        -      0.1        -

  Related to cost of sales:
    Stock-based compensation expenses       1.2     0.01      1.7     0.01
    Amortization of acquired developed
     technologies                          12.3     0.06     12.5     0.06
                                        -------  -------  -------  -------
  Total related to gross profit            14.3     0.07     14.3     0.07
                                        -------  -------  -------  -------

  Related to operating expenses:
    Research and development:
      Stock-based compensation expenses     2.2     0.01      2.3     0.01
      Other non-recurring charges             -        -      0.2        -
    Selling, general and administrative:
      Stock-based compensation expenses     7.7     0.04      9.1     0.04
      Other non-recurring charges           0.9        -      1.2     0.01
    Amortization of intangibles             7.0     0.03      7.1     0.03
    Loss and impairment of long-lived
     assets                                 0.5        -      0.2        -
    Restructuring and related charges       5.1     0.02      2.6     0.01
                                        -------  -------  -------  -------
  Total related to operating expenses      23.4     0.10     22.7     0.10
                                        -------  -------  -------  -------

  Interest and other income                (2.0)   (0.01)     0.6        -
  Non-cash interest expense                 4.2     0.02      5.0     0.02
  (Gain) on sale of investments            (0.2)       -     (1.0)       -
  Impairment of investments                   -        -      3.2     0.02
  Discontinued operations                   1.2     0.01      0.4        -
                                        -------  -------  -------  -------
  Total related to net income & EPS        40.9     0.19     45.2     0.21
                                        -------  -------  -------  -------
Non-GAAP measures                       $   9.0  $  0.04  $  23.9  $  0.11
                                        =======  =======  =======  =======
                                                 Diluted           Diluted
                                                   EPS               EPS
                                                 -------           -------
Fully diluted Non-GAAP EPS                       $  0.04           $  0.11
                                                 =======           =======





                         JDS UNIPHASE CORPORATION
        RECONCILIATION OF GAAP NET REVENUE TO NON-GAAP NET REVENUE
                         (in millions, unaudited)


                                                    Three Months Ended
                                                ---------------------------
                                                 October 3,   September 27,
                                                    2009          2008
                                                ------------- -------------
GAAP net revenue                                $       297.8 $       377.2
  Deferral of revenues related to purchase
   accounting adjustment                                  0.8           0.1
                                                ------------- -------------
Non-GAAP net revenue                            $       298.6 $       377.3
                                                ============= =============





                         JDS UNIPHASE CORPORATION
            RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
                         (in millions, unaudited)


                                                   Three Months Ended
                                              ----------------------------
                                                October 3,   September 27,
                                                  2009           2008
                                              -------------  -------------
GAAP net loss                                 $       (31.9) $       (21.3)
     Interest and other income                         (3.2)          (5.4)
     Interest expense                                   5.9            6.9
     (Gain) on sale of investments                     (0.2)          (1.0)
     Impairment of investments                            -            3.2
     Provision for income taxes                         0.7            1.0
     Depreciation                                      15.4           16.7
     Amortization                                      19.3           19.6
                                              -------------  -------------
EBITDA                                                  6.0           19.7
                                              -------------  -------------
     Costs related to restructuring and
      related charges                                   5.1            2.6
     Costs related to stock based
      compensation expense                             11.1           13.1
     Costs related to purchase accounting
      adjustment                                        0.8            0.1
     Costs related to other non-recurring
      activities                                        0.9            1.4
     Loss and impairment of long-lived assets           0.5            0.2
     Discontinued operations                            1.2            0.4
                                              -------------  -------------
Adjusted EBITDA                               $        25.6  $        37.5
                                              =============  =============

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