Avanex Announces Revenues of $30.3 Million; $19.8 Million Year-to-Year Revenue Growth

Apr 24, 2001, 01:00 ET from Avanex Corporation

    FREMONT, Calif., April 24 /PRNewswire Interactive News Release/ --
     Avanex Corporation (Nasdaq: AVNX), pioneer of photonic processors that
 accelerate the deployment of the next generation optical networks, today
 reported third quarter results for its fiscal year 2001, which ended
 March 31, 2001.
     Avanex Chairman and Chief Executive Officer Walter Alessandrini said,
 "It's clear that the telecommunications retrenchment has affected everyone in
 this industry.  We have addressed this by restructuring our operations.  Our
 strategy has been to maximize our flexibility while increasing our technology
 advantage and lowering our imbedded costs.  We therefore continue to invest
 strongly in research and development, application engineering and product
 marketing so that we can take full advantage of the upswing in the industry
 when it takes place."
     The Avanex Chairman pointed out that March quarter revenues increased
 $19.8 million compared to the same quarter of last year.  "We successfully
 added several new customers and increased our product offerings during this
 past quarter.  Our March quarter revenue from next generation products, which
 include PowerMux(TM) and PowerExchanger(TM), grew significantly, and we expect
 further success this year for these products," said Alessandrini.
     Alessandrini added that the company reduced its workforce by 350 in the
 March quarter, mostly in manufacturing, "to assure that our production
 capacity is aligned with our current market expectations."
 
     Financial Results
 
     Avanex's net revenues for the quarter ending March 31, 2001 were
 $30.3 million, an increase of $19.8 million over the Company's revenues of
 $10.5 million for the third quarter of fiscal 2000 ended March 31, 2000.  The
 Company reported revenues of $47.9 million in the second fiscal quarter ended
 December 31, 2000.
     Pro forma net loss for the quarter was $1.6 million, or $0.03 per share
 excluding charges for amortization of deferred stock compensation, excess
 inventory, amortization of intangibles, and stock accretion.  This compared
 with a pro forma net income of $4.1 million, or $0.06 per share in the second
 quarter of fiscal 2001 ended December 31, 2000.  Pro forma net loss for the
 prior year's third quarter was $2.9 million, or $0.08 per share.
     Net loss for the quarter including charges for amortization of deferred
 stock compensation, excess inventory, amortization of intangibles, and stock
 accretion was $36.4 million, or $0.62 per share compared to a net loss of
 $29.2 million or $0.85 per share for the same period in the prior year.  A
 provision for excess inventory of $21.6 million was recorded due to the
 substantial and unexpected drop in customer demand the Company experienced.
 This provision consists of a $11.4 million reserve against current inventory
 and a $10.2 million accrual for non-cancelable purchase commitments.  Net loss
 was $11.3 million or $0.20 per share loss in the second fiscal quarter ended
 December 31, 2000.
     Net revenues for the nine months ended March 31, 2001 were $113.0 million,
 compared with $21.4 million for the same period of fiscal 2000.  Pro forma net
 income for the nine months ended March 31, 2001, excluding charges for
 amortization of deferred stock compensation, excess inventory, amortization of
 intangibles, in-process research and development charge and stock accretion,
 was $4.8 million, or $0.07 per share, compared with pro forma net loss of
 $7.0 million, or $0.45 per share, in the same period of fiscal 2000.  Net loss
 for the nine months ended March 31, 2001, including the above-mentioned
 charges, was $73.0 million, or $1.28 per share, compared with $69.0 million,
 or $4.45 per share, in the same period of fiscal 2000.
     As the Company announced earlier this month, management is implementing a
 cost containment plan in the fourth fiscal quarter and expects to take a
 restructuring charge of approximately $18 million to $24 million during the
 fourth quarter.  The restructuring charge will include costs related to a
 reduction in workforce and a provision for excess facilities and assets.
 
     Outlook
 
     The Company updated its revenue and EPS outlook for the fourth fiscal
 quarter and calendar year 2001.  Avanex expects fourth fiscal quarter revenues
 to be approximately $25 million, and calendar year 2001 revenues to range
 between $110 million and $115 million.  The Company expects EPS for the fourth
 fiscal quarter to range between a loss per share of two cents and a loss per
 share of three cents.  For the calendar year 2001, Avanex expects EPS to range
 between a loss per share of eight cents and a loss per share of ten cents,
 excluding charges for amortization of deferred stock compensation, excess
 inventory, amortization of intangibles, and the Company's expected fourth
 quarter restructuring charge.
 
     Conference Call
 
     Avanex will discuss its revised guidance on a conference call scheduled
 today, April 23, at 4:30 p.m. EDT.  The number for the conference call is
 888-316-9406.  The password is "Photonics."  A replay of the conference call
 will be available through March 1, 2001, at 800-435-3142.
 
     About Avanex
 
     Avanex designs, manufactures and markets photonic processors for the
 communications industry.  Avanex's photonic processors offer communications
 service providers and optical systems manufacturers greater levels of
 performance and miniaturization, reduced complexity and increased cost-
 effectiveness as compared to current alternatives.
     Avanex was incorporated in 1997 and is headquartered in Fremont, Calif.
 In addition to a development and manufacturing facility in Fremont, the
 Company also maintains The Photonics Center(TM) in Richardson, Texas.
     To learn more about Avanex, visit its web site at:  www.avanex.com.
 
     Forward-looking Statements
 
     This press release contains forward-looking statements including forward-
 looking statements regarding revenues and earnings the Company expects to
 report for the fourth quarter of fiscal year 2001 and for calendar year 2001,
 a charge for restructuring costs in the fourth quarter of 2001, demand for the
 Company's products, including the Company's newest products and next-
 generation products, and the Company's ability to achieve anticipated cost
 reductions.  Actual results could differ materially from those projected in
 the forward-looking statements.  Factors that could cause actual results to
 differ include any accounting adjustments made during the close of the
 Company's quarter, 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, 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 its most recently 10-Q filed
 with the SEC on February 15, 2001.
     Avanex undertakes no obligation to publicly release the result of any
 revisions to these forward-looking statements, which may be made to reflect
 events or circumstances after the date hereof or to reflect the occurrence of
 unanticipated events.
 
 
     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
            Proforma Condensed Consolidated Statements of Operations
                     (In thousands, except per share data)
                                  (Unaudited)
 
 
 
                              Three Months Ended         Nine Months Ended
                                   March 31,                  March 31,
                              2001          2000         2001          2000
     Net revenue            $30,311       $10,505     $113,026       $21,421
     Cost of revenue         18,184         6,781       62,744        14,975
 
     Gross profit            12,127         3,724       50,282         6,446
 
     Operating expenses:
      Research and
       development           11,064         5,018       29,932         8,006
      Sales and marketing     4,083         2,054       12,806         3,730
      General and
       administrative         3,275         1,482        9,990         3,611
 
         Total operating
          expenses           18,422         8,554       52,728        15,347
 
     Loss from operations    (6,295)       (4,830)      (2,446)       (8,901)
     Other income, net        3,553         1,950       10,477         1,924
 
     Net income (loss)
      before tax             (2,742)       (2,880)       8,031        (6,977)
     Income tax expense
     (recovery)              (1,101)           --        3,209            --
 
     Net income (loss)      ($1,641)      ($2,880)      $4,822       ($6,977)
 
     Basic and diluted net
      income (loss) per
      common share           ($0.03)       ($0.08)       $0.07        ($0.45)
 
     Weighted-average shares
      used in computing basic
      and diluted net income
      loss) per common
      share                  58,607        34,129       68,132        15,503
 
     Note: The Proforma Condensed Consolidated Statements of Operations exclude
 the impact of the in-process research and development write-off, inventory
 provision, amortization of deferred stock compensation, amortization of
 intangibles and stock accretion.
 
 
                               AVANEX CORPORATION
                     Condensed Consolidated Balance Sheets
                                 (In thousands)
                                  (Unaudited)
 
 
                                                     March 31,      June 30,
                                                        2001          2000
                            ASSETS
     Current assets:
      Cash, cash equivalents and short-term
       investments                                   $213,798       $184,321
      Accounts receivable, net                         28,559          9,942
      Inventories                                      22,474          8,266
      Other current assets                              2,269          1,922
 
        Total current assets                          267,100        204,451
 
     Property and equipment, net                       41,417         14,990
     Intangible assets                                 45,343             --
     Long-term investments                             13,227         56,943
     Other assets                                         520          1,757
 
        Total assets                                 $367,607       $278,141
 
 
              LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
      Short-term borrowings                            10,201         $1,525
      Accounts payable                                 18,793          7,668
      Accrued compensation and related expenses         6,355          2,999
      Noncancelable purchase commitments               10,215             --
      Other accrued expenses                           18,143          5,939
      Current portion of capital lease obligations      2,808            786
 
        Total current liabilities                      66,515         18,917
 
     Capital lease obligations                         15,497          2,067
 
     Stockholders' equity                             285,595        257,157
 
       Total liabilities and stockholders'
        equity                                       $367,607       $278,141
 
     NOTE: The Company maintains its financial records on the basis of a fiscal
 year ending June 30, with fiscal quarters ending on the Friday closest to the
 end of the period (thirteen-week periods).  For ease of reference, all
 references to period end dates have been presented as though the period ended
 on the last day of the calendar month.  The third quarter of fiscal 2001 and
 2000 ended on March 30, 2001 and March 31, 2000, respectively.
 
 
                               AVANEX CORPORATION
                Condensed Consolidated Statements of Operations
                     (In thousands, except per share data)
                                  (Unaudited)
 
                                Three Months Ended       Nine Months Ended
                                    March 31,                 March 31,
                                2001        2000        2001           2000
     Net revenue              $30,311     $10,505     $113,026       $21,421
     Cost of revenue           39,775       6,781       84,335        14,975
 
     Gross profit (loss)       (9,464)      3,724       28,691         6,446
 
     Operating expenses:
      Research and development 11,064       5,018       29,932         8,006
      Sales and marketing       4,083       2,054       12,806         3,730
      General and
       administrative           3,275       1,482        9,990         3,611
      Stock compensation       10,563       8,585       44,495        24,282
      In-process research and
       development                 --          --        4,700            --
      Amortization of
       intangibles              2,619          --        7,036            --
 
        Total operating
         expenses              31,604      17,139      108,959        39,629
 
     Loss from operations     (41,068)    (13,415)     (80,268)      (33,183)
     Other income, net          3,553       1,950       10,477         1,924
 
     Net loss before tax      (37,515)    (11,465)     (69,791)      (31,259)
     Income tax expense
     (recovery)                (1,101)         --        3,209            --
 
     Net loss                 (36,414)    (11,465)     (73,000)      (31,259)
     Stock accretion               --     (17,692)          --       (37,743)
 
 
     Net loss attributable to
      common stockholders    ($36,414)   ($29,157)    ($73,000)     ($69,002)
 
     Basic and diluted net loss
      per common share         ($0.62)     ($0.85)      ($1.28)       ($4.45)
 
     Weighted-average shares
      used in computing basic
      and diluted net loss per
      common share             58,607      34,129       56,849        15,503
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X44198184
 
 

SOURCE Avanex Corporation
    FREMONT, Calif., April 24 /PRNewswire Interactive News Release/ --
     Avanex Corporation (Nasdaq: AVNX), pioneer of photonic processors that
 accelerate the deployment of the next generation optical networks, today
 reported third quarter results for its fiscal year 2001, which ended
 March 31, 2001.
     Avanex Chairman and Chief Executive Officer Walter Alessandrini said,
 "It's clear that the telecommunications retrenchment has affected everyone in
 this industry.  We have addressed this by restructuring our operations.  Our
 strategy has been to maximize our flexibility while increasing our technology
 advantage and lowering our imbedded costs.  We therefore continue to invest
 strongly in research and development, application engineering and product
 marketing so that we can take full advantage of the upswing in the industry
 when it takes place."
     The Avanex Chairman pointed out that March quarter revenues increased
 $19.8 million compared to the same quarter of last year.  "We successfully
 added several new customers and increased our product offerings during this
 past quarter.  Our March quarter revenue from next generation products, which
 include PowerMux(TM) and PowerExchanger(TM), grew significantly, and we expect
 further success this year for these products," said Alessandrini.
     Alessandrini added that the company reduced its workforce by 350 in the
 March quarter, mostly in manufacturing, "to assure that our production
 capacity is aligned with our current market expectations."
 
     Financial Results
 
     Avanex's net revenues for the quarter ending March 31, 2001 were
 $30.3 million, an increase of $19.8 million over the Company's revenues of
 $10.5 million for the third quarter of fiscal 2000 ended March 31, 2000.  The
 Company reported revenues of $47.9 million in the second fiscal quarter ended
 December 31, 2000.
     Pro forma net loss for the quarter was $1.6 million, or $0.03 per share
 excluding charges for amortization of deferred stock compensation, excess
 inventory, amortization of intangibles, and stock accretion.  This compared
 with a pro forma net income of $4.1 million, or $0.06 per share in the second
 quarter of fiscal 2001 ended December 31, 2000.  Pro forma net loss for the
 prior year's third quarter was $2.9 million, or $0.08 per share.
     Net loss for the quarter including charges for amortization of deferred
 stock compensation, excess inventory, amortization of intangibles, and stock
 accretion was $36.4 million, or $0.62 per share compared to a net loss of
 $29.2 million or $0.85 per share for the same period in the prior year.  A
 provision for excess inventory of $21.6 million was recorded due to the
 substantial and unexpected drop in customer demand the Company experienced.
 This provision consists of a $11.4 million reserve against current inventory
 and a $10.2 million accrual for non-cancelable purchase commitments.  Net loss
 was $11.3 million or $0.20 per share loss in the second fiscal quarter ended
 December 31, 2000.
     Net revenues for the nine months ended March 31, 2001 were $113.0 million,
 compared with $21.4 million for the same period of fiscal 2000.  Pro forma net
 income for the nine months ended March 31, 2001, excluding charges for
 amortization of deferred stock compensation, excess inventory, amortization of
 intangibles, in-process research and development charge and stock accretion,
 was $4.8 million, or $0.07 per share, compared with pro forma net loss of
 $7.0 million, or $0.45 per share, in the same period of fiscal 2000.  Net loss
 for the nine months ended March 31, 2001, including the above-mentioned
 charges, was $73.0 million, or $1.28 per share, compared with $69.0 million,
 or $4.45 per share, in the same period of fiscal 2000.
     As the Company announced earlier this month, management is implementing a
 cost containment plan in the fourth fiscal quarter and expects to take a
 restructuring charge of approximately $18 million to $24 million during the
 fourth quarter.  The restructuring charge will include costs related to a
 reduction in workforce and a provision for excess facilities and assets.
 
     Outlook
 
     The Company updated its revenue and EPS outlook for the fourth fiscal
 quarter and calendar year 2001.  Avanex expects fourth fiscal quarter revenues
 to be approximately $25 million, and calendar year 2001 revenues to range
 between $110 million and $115 million.  The Company expects EPS for the fourth
 fiscal quarter to range between a loss per share of two cents and a loss per
 share of three cents.  For the calendar year 2001, Avanex expects EPS to range
 between a loss per share of eight cents and a loss per share of ten cents,
 excluding charges for amortization of deferred stock compensation, excess
 inventory, amortization of intangibles, and the Company's expected fourth
 quarter restructuring charge.
 
     Conference Call
 
     Avanex will discuss its revised guidance on a conference call scheduled
 today, April 23, at 4:30 p.m. EDT.  The number for the conference call is
 888-316-9406.  The password is "Photonics."  A replay of the conference call
 will be available through March 1, 2001, at 800-435-3142.
 
     About Avanex
 
     Avanex designs, manufactures and markets photonic processors for the
 communications industry.  Avanex's photonic processors offer communications
 service providers and optical systems manufacturers greater levels of
 performance and miniaturization, reduced complexity and increased cost-
 effectiveness as compared to current alternatives.
     Avanex was incorporated in 1997 and is headquartered in Fremont, Calif.
 In addition to a development and manufacturing facility in Fremont, the
 Company also maintains The Photonics Center(TM) in Richardson, Texas.
     To learn more about Avanex, visit its web site at:  www.avanex.com.
 
     Forward-looking Statements
 
     This press release contains forward-looking statements including forward-
 looking statements regarding revenues and earnings the Company expects to
 report for the fourth quarter of fiscal year 2001 and for calendar year 2001,
 a charge for restructuring costs in the fourth quarter of 2001, demand for the
 Company's products, including the Company's newest products and next-
 generation products, and the Company's ability to achieve anticipated cost
 reductions.  Actual results could differ materially from those projected in
 the forward-looking statements.  Factors that could cause actual results to
 differ include any accounting adjustments made during the close of the
 Company's quarter, 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, 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 its most recently 10-Q filed
 with the SEC on February 15, 2001.
     Avanex undertakes no obligation to publicly release the result of any
 revisions to these forward-looking statements, which may be made to reflect
 events or circumstances after the date hereof or to reflect the occurrence of
 unanticipated events.
 
 
     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
            Proforma Condensed Consolidated Statements of Operations
                     (In thousands, except per share data)
                                  (Unaudited)
 
 
 
                              Three Months Ended         Nine Months Ended
                                   March 31,                  March 31,
                              2001          2000         2001          2000
     Net revenue            $30,311       $10,505     $113,026       $21,421
     Cost of revenue         18,184         6,781       62,744        14,975
 
     Gross profit            12,127         3,724       50,282         6,446
 
     Operating expenses:
      Research and
       development           11,064         5,018       29,932         8,006
      Sales and marketing     4,083         2,054       12,806         3,730
      General and
       administrative         3,275         1,482        9,990         3,611
 
         Total operating
          expenses           18,422         8,554       52,728        15,347
 
     Loss from operations    (6,295)       (4,830)      (2,446)       (8,901)
     Other income, net        3,553         1,950       10,477         1,924
 
     Net income (loss)
      before tax             (2,742)       (2,880)       8,031        (6,977)
     Income tax expense
     (recovery)              (1,101)           --        3,209            --
 
     Net income (loss)      ($1,641)      ($2,880)      $4,822       ($6,977)
 
     Basic and diluted net
      income (loss) per
      common share           ($0.03)       ($0.08)       $0.07        ($0.45)
 
     Weighted-average shares
      used in computing basic
      and diluted net income
      loss) per common
      share                  58,607        34,129       68,132        15,503
 
     Note: The Proforma Condensed Consolidated Statements of Operations exclude
 the impact of the in-process research and development write-off, inventory
 provision, amortization of deferred stock compensation, amortization of
 intangibles and stock accretion.
 
 
                               AVANEX CORPORATION
                     Condensed Consolidated Balance Sheets
                                 (In thousands)
                                  (Unaudited)
 
 
                                                     March 31,      June 30,
                                                        2001          2000
                            ASSETS
     Current assets:
      Cash, cash equivalents and short-term
       investments                                   $213,798       $184,321
      Accounts receivable, net                         28,559          9,942
      Inventories                                      22,474          8,266
      Other current assets                              2,269          1,922
 
        Total current assets                          267,100        204,451
 
     Property and equipment, net                       41,417         14,990
     Intangible assets                                 45,343             --
     Long-term investments                             13,227         56,943
     Other assets                                         520          1,757
 
        Total assets                                 $367,607       $278,141
 
 
              LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
      Short-term borrowings                            10,201         $1,525
      Accounts payable                                 18,793          7,668
      Accrued compensation and related expenses         6,355          2,999
      Noncancelable purchase commitments               10,215             --
      Other accrued expenses                           18,143          5,939
      Current portion of capital lease obligations      2,808            786
 
        Total current liabilities                      66,515         18,917
 
     Capital lease obligations                         15,497          2,067
 
     Stockholders' equity                             285,595        257,157
 
       Total liabilities and stockholders'
        equity                                       $367,607       $278,141
 
     NOTE: The Company maintains its financial records on the basis of a fiscal
 year ending June 30, with fiscal quarters ending on the Friday closest to the
 end of the period (thirteen-week periods).  For ease of reference, all
 references to period end dates have been presented as though the period ended
 on the last day of the calendar month.  The third quarter of fiscal 2001 and
 2000 ended on March 30, 2001 and March 31, 2000, respectively.
 
 
                               AVANEX CORPORATION
                Condensed Consolidated Statements of Operations
                     (In thousands, except per share data)
                                  (Unaudited)
 
                                Three Months Ended       Nine Months Ended
                                    March 31,                 March 31,
                                2001        2000        2001           2000
     Net revenue              $30,311     $10,505     $113,026       $21,421
     Cost of revenue           39,775       6,781       84,335        14,975
 
     Gross profit (loss)       (9,464)      3,724       28,691         6,446
 
     Operating expenses:
      Research and development 11,064       5,018       29,932         8,006
      Sales and marketing       4,083       2,054       12,806         3,730
      General and
       administrative           3,275       1,482        9,990         3,611
      Stock compensation       10,563       8,585       44,495        24,282
      In-process research and
       development                 --          --        4,700            --
      Amortization of
       intangibles              2,619          --        7,036            --
 
        Total operating
         expenses              31,604      17,139      108,959        39,629
 
     Loss from operations     (41,068)    (13,415)     (80,268)      (33,183)
     Other income, net          3,553       1,950       10,477         1,924
 
     Net loss before tax      (37,515)    (11,465)     (69,791)      (31,259)
     Income tax expense
     (recovery)                (1,101)         --        3,209            --
 
     Net loss                 (36,414)    (11,465)     (73,000)      (31,259)
     Stock accretion               --     (17,692)          --       (37,743)
 
 
     Net loss attributable to
      common stockholders    ($36,414)   ($29,157)    ($73,000)     ($69,002)
 
     Basic and diluted net loss
      per common share         ($0.62)     ($0.85)      ($1.28)       ($4.45)
 
     Weighted-average shares
      used in computing basic
      and diluted net loss per
      common share             58,607      34,129       56,849        15,503
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X44198184
 
 SOURCE  Avanex Corporation