New Focus Announces First Quarter Financial Results and Outlines Restructuring Plan

Apr 25, 2001, 01:00 ET from New Focus, Inc.

    SAN JOSE, Calif., April 25 /PRNewswire/ --
 New Focus, Inc., (Nasdaq:   NUFO), a leading supplier of innovative fiber optic
 products for next-generation optical networks under the Smart Optics for
 Networks(TM) brand, today announced financial results for its first quarter
 ended April 1, 2001. The company indicated that first quarter results included
 net revenue that met the revised guidance issued by the company on
 March 5, 2001 and a substantial charge for inventory write-downs and related
 charges that widened the company's operating loss. The company further stated
 that second quarter results would include a restructuring charge associated
 with actions related to additional work force reductions and the consolidation
 of facilities.
 
     First Quarter Review:
     Net revenue for the first quarter of 2001 was $40.8 million, up from
 $33.9 million in the fourth quarter of 2000 and $9.8 million in the first
 quarter of 2000. During the first quarter of 2001 the company acquired JCA
 Technology, Inc. and Globe Y. Technology, Inc. Net revenue from these two
 acquisitions in the first quarter of 2001 totaled $10.9 million.
     Net revenue from the company's fiber optic products in the first quarter
 of 2001 totaled $32.3 million, up 28% from $25.3 million in the fourth quarter
 of 2000. In the first quarter of 2000 fiber optic products accounted for
 $4.9 million of the company's net revenue. Net revenue from the company's
 photonics tool products in the first quarter of 2001 totaled $8.5 million,
 down slightly from $8.6 million in the fourth quarter of 2000. In the first
 quarter of 2000 photonics tool products accounted for $4.9 million of the
 company's net revenue.
     The pro forma net loss in the first quarter of 2001, excluding
 amortization of acquired intangibles, deferred compensation and related income
 tax effects, was $31.3 million, or $0.44 per share based on 70.5 million basic
 shares outstanding. This pro forma net loss included a charge of $28.5 million
 for the write-down of excess inventories and related charges. Excluding this
 charge, the net loss for the first quarter was $2.8 million, or $0.04 per
 share based on 70.5 million basic shares outstanding. In the fourth quarter of
 2000 the company reported pro forma net income of $2.6 million, or $0.04 per
 share based on 64.1 million diluted shares outstanding. The pro forma net loss
 for the first quarter of 2000 was $6.9 million, or $0.14 per share based on
 47.8 million basic shares outstanding.
     The pro forma calculation for the first quarter of 2001 excluded non-cash
 charges of $25.3 million for the amortization of deferred stock compensation,
 $21.4 million for the amortization of goodwill and other intangibles, and
 $13.4 million for the write-off of acquired in-process R&D. The deferred stock
 compensation charges in the fourth and first quarters of 2000 were $4.8
 million and $5.5 million, respectively. The number of shares used in the
 calculation of the pro forma net loss per share for the first quarter of 2000
 assumed the conversion of the company's convertible preferred stock into
 common stock. This conversion was completed in conjunction with the company's
 initial public offering in May 2000.
     Without the pro forma adjustments to eliminate the goodwill and other
 intangibles, in-process R&D, deferred stock compensation charges and related
 income tax effects, the company recorded a net loss for the first quarter of
 2001 of $86.3 million, or $1.22 per share based on 70.5 million basic shares
 outstanding. The net loss for the fourth quarter of 2000 of $2.3 million, or
 $0.04 per share based on 60.5 million basic shares outstanding. For the first
 quarter of 2000 the net loss was $12.5 million, or $2.12 per share based on
 5.9 million shares outstanding. Shares outstanding for this period excluded
 the conversion of preferred stock into common stock.
     "Like many other companies in our industry, we have experienced a downturn
 in our near-term business prospects due to conditions within the
 telecommunications industry and the U.S. economy. Our industry is currently
 going through a difficult inventory correction cycle created by the sudden and
 sharp decline in capital equipment expenditures by telecommunications
 carriers. As a result of lower customer demand for our products and a current
 lack of visibility into future order flow, we recorded a $28.5 million charge
 for the write-down of excess inventories and related charges in the first
 quarter. Excluding this charge, our gross margin percentage in the first
 quarter was 34.0%," said Ken Westrick, president and chief executive officer
 of New Focus, Inc.
     The company's cash balance at the end of the first quarter was
 $370 million, down $116 million from the end of December. The cash
 consideration for the JCA acquisition and expenses associated with both the
 JCA and Globe Y acquisitions consumed approximately $82 million during the
 first quarter. The company also spent $27 million on capital expenditures
 primarily for facility construction projects previously initiated at its
 larger production facility in Shenzhen, China and its new facility in San
 Jose, California. The company plans to complete these leasehold improvements
 but will not equip these facilities until additional capacity is needed.
 
     Business Outlook:
     The company experienced additional order cancellations and push-outs
 during the month of April. As a result of these recent changes, the company
 believes that net revenue for the second quarter of 2001 will fall in the
 range of $28-32 million. The company previously indicated that net revenue
 would decline sequentially between the first and second quarters but did not
 specify a targeted revenue range for the second quarter.
     "In addition to the steps that we took in early March, we are initiating a
 series of actions that will resize our operations and result in a
 restructuring charge that will be reflected in our second quarter financial
 results. These actions will include closure and consolidation of two smaller
 facilities and additional work force reductions in our U.S. and China
 operations. We will also accelerate our efforts to move more production, in
 particular subassemblies for our active products, offshore to Asia. We already
 produce nearly 100% of our passive products at our China facilities. In
 addition to these longer-range actions, we will cut our capital expenditures
 and continue to reduce discretionary spending. We will also significantly
 reduce the manufacturing build schedule at our China operations for the next
 two quarters to properly balance inventories with near-term demand," said
 Westrick.
     In California the company will close its older Santa Clara facility and
 transfer passive product development activities to the company's newer and
 larger facility in San Jose. The company anticipates work force reductions at
 its U.S. operations of approximately 90 people, mostly manufacturing
 personnel. In China the company will idle its smaller production facility and
 consolidate activities into its larger factory. Work force reductions at the
 company's China operations will total approximately 450 people, mostly direct
 labor employees. These actions will result in work force reductions of
 approximately 10% and 50% at the company's U.S. and China operations,
 respectively. After this latest work force reduction the company's worldwide
 operations will employ approximately 1,200 people, down from a peak employment
 level of approximately 2,100 people in early March.
     "Excluding the effect of the anticipated second quarter restructuring
 charge, we believe that our second quarter gross margin will fall into a range
 of 30-33% as fixed manufacturing costs are spread over lower production
 volumes. At the $28-32 million revenue level our pro forma net loss for the
 second quarter will likely fall into a range of $8-12 million. Due to the
 current economic climate and associated uncertainty within the
 telecommunications industry, we are reassessing our prior financial guidance
 but are currently unable to provide meaningful forecasts beyond the second
 quarter. In spite of this lack of visibility, we remain hopeful that we will
 see a gradual recovery in our business starting in the second half of this
 year supported by an end to the inventory correction cycle and the
 introduction of several new products in upcoming quarters," said Westrick.
     The company is currently shipping customer qualification samples of two
 passive products, L-band circulators and thin film muxes. Volume revenue from
 these two new products is expected to begin early in the third quarter.
 Development activities are progressing on two additional passive products that
 are expected to ship in the second half of this year, a hybrid
 micro-optic device for next-generation optical amplifiers and an interleaver.
 In the third quarter the company is planning to commence shipments of a new
 active product line of 12.5 gigabit per second data drivers that will deliver
 higher drive voltages at lower power. Additionally, during the past two months
 the company has conducted multiple customer demonstrations of its tunable
 laser subsystem for network applications. Customer feedback on these
 demonstrations has been very positive. The company is delivering samples to
 customers this quarter and still expects to begin initial volume shipments of
 this new product in the fourth quarter of this year.
     "Consistent with our strategy to expand our product portfolio of both
 active and passive products, we will continue to fund key product development
 programs that are critical to the long-term success of New Focus. With sizable
 cash resources, pending new product introductions and flexible upside
 manufacturing capacity in China, we believe that New Focus remains well
 positioned to exploit the long-term secular growth potential of the fiber
 optics industry after the current industry correction cycle runs its course,"
 said Westrick.
 
     Forward-Looking Statements:
     This press release, and in particular the material in the section labeled
 "Business Outlook," contains predictions, estimates and other forward-looking
 statements regarding the revenue outlook for the second quarter of 2001, the
 anticipated gross margin performance for the second quarter of 2001, the
 projected pro-forma net loss for the second quarter of 2001, planned
 restructuring actions, expected improvements in the company's business during
 the second half of 2001, progress on the development of new products and
 anticipated shipment dates for products, and the positioning of the company
 for future success. These statements are subject to risks and uncertainties
 and actual results may differ materially from any future performance
 suggested. The risks and uncertainties include the difficulty of forecasting
 anticipated revenues due to weakness and uncertainties related to overall
 demand within the telecommunications industry, inventory levels within the
 industry, sudden and unexpected order reductions and cancellations by
 customers, lower backlog of customer orders, and potential pricing pressures
 that may arise from supply-demand conditions within the industry; the
 difficulty of minimizing the negative effect of lower unit volumes on gross
 margin performance due to the level of fixed manufacturing expenses; the
 challenge of managing inventory levels during periods of weakening demand; the
 difficulty of achieving anticipated cost reductions due to unforeseen expenses
 the company may incur in future quarters, an inability to reduce expenses
 without jeopardizing product development schedules and an inability to move
 sufficient volume of production offshore; any unforeseen delays in completing
 the development of the company's new products on a timely basis and achieving
 sufficient production to generate volume revenues; the company's ability to
 gain customer acceptance of its new products; and the company's ability to
 generate future revenue from new products commensurate with prior investments
 in research and development activities. Other risk factors that may affect the
 company's financial performance are listed in the company's fiscal year 2000
 10-K annual report on file with the SEC. New Focus undertakes no obligation to
 publicly release 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.
 
     About New Focus:
     New Focus designs, manufactures and markets innovative fiber optic
 products for next-generation optical networks. The company's Smart Optics for
 Networks(TM) products enhance the performance of next-generation optical
 networks by enabling higher channel counts, faster data rates, longer reach
 lengths, new service capabilities, and lower costs of ownership. Founded in
 1990, the company remains a leader in the creation of advanced optical
 products for the commercial and research marketplaces. The company is
 headquartered in San Jose, California and has operations in Santa Clara and
 Camarillo, California, Madison, Wisconsin, and Shenzhen, People's Republic of
 China.
     For more information about New Focus visit the company's Internet home
 page at http://www.newfocus.com, call our Investors Relations Department at
 408-284-NUFO, or e-mail us at investor@newfocus.com.
 
 
                                  NEW FOCUS, INC.
                       Condensed Consolidated Balance Sheets
                             (Unaudited, in thousands)
 
                                                 Apr 1, 2001       Dec 31, 2000
     ASSETS
     Current Assets:
         Cash, cash equivalents and short-
          term investments                         $369,578          $485,493
         Trade accounts receivable, net              14,852            13,835
         Inventories                                 22,222            30,385
         Other current assets                        11,214             4,805
            Total current assets                    417,866           534,518
     Property and equipment, net                     82,995            54,744
     Intangibles, net                               334,752               577
     Other assets                                     4,225            11,105
            Total assets                           $839,838          $600,944
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current Liabilities:
         Accounts payable                           $18,887           $21,556
         Accrued Expenses                            18,178            10,355
         Deferred research and development
          funding                                       343               343
         Current portion of long-term debt              238               281
            Total current liabilities                37,646            32,535
     Long-term debt, less current portion                92               111
     Deferred rent                                    1,302             1,188
     Long-term deferred tax liability                20,886                --
     Stockholders' equity                           779,912           567,110
            Total liabilities and
             stockholders' equity                  $839,838          $600,944
 
 
                                  NEW FOCUS, INC.
                  Condensed Consolidated Statements of Operations
                       (In thousands, except per share data)
                                    (Unaudited)
 
                                                     Three Months Ended
                                               Apr 1,     Dec 31,      Apr 2,
                                                2001       2000         2000
 
     Net revenues                              $40,762    $33,875      $9,782
     Cost of net revenues                       55,442     23,256      10,786
     Gross profit                              (14,680)    10,619      (1,004)
                                               (36.0)%      31.3%     (10.3)%
     Operating expenses:
        Research and development, net           12,795     10,620       3,609
        Sales and marketing                      2,447      1,789       1,100
        General and administrative               6,204      3,483       1,424
        Amortization of acquired
         intangibles                            34,837         --          --
        Deferred stock compensation             25,324      4,812       5,548
           Total operating expenses             81,607     20,704      11,681
 
     Loss from operations                      (96,287)   (10,085)    (12,685)
                                              (236.2)%    (29.8)%    (129.7)%
     Interest and other income (expense),
      net                                        4,994      7,834         224
 
     Loss before provision (benefit) for
      income taxes                             (91,293)    (2,251)    (12,461)
 
     Provision (benefit) for income taxes       (5,000)         4          --
 
     Net loss                                 $(86,293)   $(2,255)   $(12,461)
                                              (211.7)%     (6.7)%    (127.4)%
     Basic and diluted net loss per share       $(1.22)    $(0.04)     $(2.12)
     Shares used to compute basic and
      diluted net loss per share                70,460     60,463       5,891
 
 
                                  NEW FOCUS, INC.
             Pro Forma Condensed Consolidated Statements of Operations
                       (In thousands, except per share data)
                                    (Unaudited)
 
                                                   Three Months Ended
                                                Apr 1,      Dec 31,     Apr 2,
                                                2001         2000       2000(A)
 
     Net revenues                              $40,762     $33,875      $9,782
     Cost of net revenues                       55,442      23,256      10,786
     Gross profit                              (14,680)     10,619      (1,004)
                                               (36.0)%       31.3%     (10.3)%
     Operating expenses:
        Research and development, net           12,795      10,620       3,609
        Sales and marketing                      2,447       1,789       1,100
        General and administrative               6,204       3,483       1,424
           Total operating expenses             21,446      15,892       6,133
 
     Loss from operations                      (36,126)     (5,273)     (7,137)
                                               (88.6)%     (15.6)%     (73.0)%
     Interest and other income (expense),
      net                                        4,994       7,834         224
 
     Loss before provision (benefit) for
      income taxes                             (31,132)      2,561      (6,913)
 
     Provision (benefit) for income taxes          175           4          --
 
     Net loss                                 $(31,307)     $2,557     $(6,913)
                                               (76.8)%        7.5%     (70.7)%
 
     Pro forma basic and diluted net
      income (loss) per share excluding
      amortization of deferred stock
      compensation and acquired intangibles     $(0.44)      $0.04      $(0.14)
     Pro forma shares used to compute pro
      forma basic and
        diluted net income (loss) per
         share                                  70,460      64,124      47,830
 
     (A)  Number of shares used for the pro forma net loss per share
          calculation assumes the conversion of convertible preferred stock
          into common stock.  Such conversion was completed in conjunction
          with the May 2000 initial public offering.
 
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SOURCE New Focus, Inc.
    SAN JOSE, Calif., April 25 /PRNewswire/ --
 New Focus, Inc., (Nasdaq:   NUFO), a leading supplier of innovative fiber optic
 products for next-generation optical networks under the Smart Optics for
 Networks(TM) brand, today announced financial results for its first quarter
 ended April 1, 2001. The company indicated that first quarter results included
 net revenue that met the revised guidance issued by the company on
 March 5, 2001 and a substantial charge for inventory write-downs and related
 charges that widened the company's operating loss. The company further stated
 that second quarter results would include a restructuring charge associated
 with actions related to additional work force reductions and the consolidation
 of facilities.
 
     First Quarter Review:
     Net revenue for the first quarter of 2001 was $40.8 million, up from
 $33.9 million in the fourth quarter of 2000 and $9.8 million in the first
 quarter of 2000. During the first quarter of 2001 the company acquired JCA
 Technology, Inc. and Globe Y. Technology, Inc. Net revenue from these two
 acquisitions in the first quarter of 2001 totaled $10.9 million.
     Net revenue from the company's fiber optic products in the first quarter
 of 2001 totaled $32.3 million, up 28% from $25.3 million in the fourth quarter
 of 2000. In the first quarter of 2000 fiber optic products accounted for
 $4.9 million of the company's net revenue. Net revenue from the company's
 photonics tool products in the first quarter of 2001 totaled $8.5 million,
 down slightly from $8.6 million in the fourth quarter of 2000. In the first
 quarter of 2000 photonics tool products accounted for $4.9 million of the
 company's net revenue.
     The pro forma net loss in the first quarter of 2001, excluding
 amortization of acquired intangibles, deferred compensation and related income
 tax effects, was $31.3 million, or $0.44 per share based on 70.5 million basic
 shares outstanding. This pro forma net loss included a charge of $28.5 million
 for the write-down of excess inventories and related charges. Excluding this
 charge, the net loss for the first quarter was $2.8 million, or $0.04 per
 share based on 70.5 million basic shares outstanding. In the fourth quarter of
 2000 the company reported pro forma net income of $2.6 million, or $0.04 per
 share based on 64.1 million diluted shares outstanding. The pro forma net loss
 for the first quarter of 2000 was $6.9 million, or $0.14 per share based on
 47.8 million basic shares outstanding.
     The pro forma calculation for the first quarter of 2001 excluded non-cash
 charges of $25.3 million for the amortization of deferred stock compensation,
 $21.4 million for the amortization of goodwill and other intangibles, and
 $13.4 million for the write-off of acquired in-process R&D. The deferred stock
 compensation charges in the fourth and first quarters of 2000 were $4.8
 million and $5.5 million, respectively. The number of shares used in the
 calculation of the pro forma net loss per share for the first quarter of 2000
 assumed the conversion of the company's convertible preferred stock into
 common stock. This conversion was completed in conjunction with the company's
 initial public offering in May 2000.
     Without the pro forma adjustments to eliminate the goodwill and other
 intangibles, in-process R&D, deferred stock compensation charges and related
 income tax effects, the company recorded a net loss for the first quarter of
 2001 of $86.3 million, or $1.22 per share based on 70.5 million basic shares
 outstanding. The net loss for the fourth quarter of 2000 of $2.3 million, or
 $0.04 per share based on 60.5 million basic shares outstanding. For the first
 quarter of 2000 the net loss was $12.5 million, or $2.12 per share based on
 5.9 million shares outstanding. Shares outstanding for this period excluded
 the conversion of preferred stock into common stock.
     "Like many other companies in our industry, we have experienced a downturn
 in our near-term business prospects due to conditions within the
 telecommunications industry and the U.S. economy. Our industry is currently
 going through a difficult inventory correction cycle created by the sudden and
 sharp decline in capital equipment expenditures by telecommunications
 carriers. As a result of lower customer demand for our products and a current
 lack of visibility into future order flow, we recorded a $28.5 million charge
 for the write-down of excess inventories and related charges in the first
 quarter. Excluding this charge, our gross margin percentage in the first
 quarter was 34.0%," said Ken Westrick, president and chief executive officer
 of New Focus, Inc.
     The company's cash balance at the end of the first quarter was
 $370 million, down $116 million from the end of December. The cash
 consideration for the JCA acquisition and expenses associated with both the
 JCA and Globe Y acquisitions consumed approximately $82 million during the
 first quarter. The company also spent $27 million on capital expenditures
 primarily for facility construction projects previously initiated at its
 larger production facility in Shenzhen, China and its new facility in San
 Jose, California. The company plans to complete these leasehold improvements
 but will not equip these facilities until additional capacity is needed.
 
     Business Outlook:
     The company experienced additional order cancellations and push-outs
 during the month of April. As a result of these recent changes, the company
 believes that net revenue for the second quarter of 2001 will fall in the
 range of $28-32 million. The company previously indicated that net revenue
 would decline sequentially between the first and second quarters but did not
 specify a targeted revenue range for the second quarter.
     "In addition to the steps that we took in early March, we are initiating a
 series of actions that will resize our operations and result in a
 restructuring charge that will be reflected in our second quarter financial
 results. These actions will include closure and consolidation of two smaller
 facilities and additional work force reductions in our U.S. and China
 operations. We will also accelerate our efforts to move more production, in
 particular subassemblies for our active products, offshore to Asia. We already
 produce nearly 100% of our passive products at our China facilities. In
 addition to these longer-range actions, we will cut our capital expenditures
 and continue to reduce discretionary spending. We will also significantly
 reduce the manufacturing build schedule at our China operations for the next
 two quarters to properly balance inventories with near-term demand," said
 Westrick.
     In California the company will close its older Santa Clara facility and
 transfer passive product development activities to the company's newer and
 larger facility in San Jose. The company anticipates work force reductions at
 its U.S. operations of approximately 90 people, mostly manufacturing
 personnel. In China the company will idle its smaller production facility and
 consolidate activities into its larger factory. Work force reductions at the
 company's China operations will total approximately 450 people, mostly direct
 labor employees. These actions will result in work force reductions of
 approximately 10% and 50% at the company's U.S. and China operations,
 respectively. After this latest work force reduction the company's worldwide
 operations will employ approximately 1,200 people, down from a peak employment
 level of approximately 2,100 people in early March.
     "Excluding the effect of the anticipated second quarter restructuring
 charge, we believe that our second quarter gross margin will fall into a range
 of 30-33% as fixed manufacturing costs are spread over lower production
 volumes. At the $28-32 million revenue level our pro forma net loss for the
 second quarter will likely fall into a range of $8-12 million. Due to the
 current economic climate and associated uncertainty within the
 telecommunications industry, we are reassessing our prior financial guidance
 but are currently unable to provide meaningful forecasts beyond the second
 quarter. In spite of this lack of visibility, we remain hopeful that we will
 see a gradual recovery in our business starting in the second half of this
 year supported by an end to the inventory correction cycle and the
 introduction of several new products in upcoming quarters," said Westrick.
     The company is currently shipping customer qualification samples of two
 passive products, L-band circulators and thin film muxes. Volume revenue from
 these two new products is expected to begin early in the third quarter.
 Development activities are progressing on two additional passive products that
 are expected to ship in the second half of this year, a hybrid
 micro-optic device for next-generation optical amplifiers and an interleaver.
 In the third quarter the company is planning to commence shipments of a new
 active product line of 12.5 gigabit per second data drivers that will deliver
 higher drive voltages at lower power. Additionally, during the past two months
 the company has conducted multiple customer demonstrations of its tunable
 laser subsystem for network applications. Customer feedback on these
 demonstrations has been very positive. The company is delivering samples to
 customers this quarter and still expects to begin initial volume shipments of
 this new product in the fourth quarter of this year.
     "Consistent with our strategy to expand our product portfolio of both
 active and passive products, we will continue to fund key product development
 programs that are critical to the long-term success of New Focus. With sizable
 cash resources, pending new product introductions and flexible upside
 manufacturing capacity in China, we believe that New Focus remains well
 positioned to exploit the long-term secular growth potential of the fiber
 optics industry after the current industry correction cycle runs its course,"
 said Westrick.
 
     Forward-Looking Statements:
     This press release, and in particular the material in the section labeled
 "Business Outlook," contains predictions, estimates and other forward-looking
 statements regarding the revenue outlook for the second quarter of 2001, the
 anticipated gross margin performance for the second quarter of 2001, the
 projected pro-forma net loss for the second quarter of 2001, planned
 restructuring actions, expected improvements in the company's business during
 the second half of 2001, progress on the development of new products and
 anticipated shipment dates for products, and the positioning of the company
 for future success. These statements are subject to risks and uncertainties
 and actual results may differ materially from any future performance
 suggested. The risks and uncertainties include the difficulty of forecasting
 anticipated revenues due to weakness and uncertainties related to overall
 demand within the telecommunications industry, inventory levels within the
 industry, sudden and unexpected order reductions and cancellations by
 customers, lower backlog of customer orders, and potential pricing pressures
 that may arise from supply-demand conditions within the industry; the
 difficulty of minimizing the negative effect of lower unit volumes on gross
 margin performance due to the level of fixed manufacturing expenses; the
 challenge of managing inventory levels during periods of weakening demand; the
 difficulty of achieving anticipated cost reductions due to unforeseen expenses
 the company may incur in future quarters, an inability to reduce expenses
 without jeopardizing product development schedules and an inability to move
 sufficient volume of production offshore; any unforeseen delays in completing
 the development of the company's new products on a timely basis and achieving
 sufficient production to generate volume revenues; the company's ability to
 gain customer acceptance of its new products; and the company's ability to
 generate future revenue from new products commensurate with prior investments
 in research and development activities. Other risk factors that may affect the
 company's financial performance are listed in the company's fiscal year 2000
 10-K annual report on file with the SEC. New Focus undertakes no obligation to
 publicly release 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.
 
     About New Focus:
     New Focus designs, manufactures and markets innovative fiber optic
 products for next-generation optical networks. The company's Smart Optics for
 Networks(TM) products enhance the performance of next-generation optical
 networks by enabling higher channel counts, faster data rates, longer reach
 lengths, new service capabilities, and lower costs of ownership. Founded in
 1990, the company remains a leader in the creation of advanced optical
 products for the commercial and research marketplaces. The company is
 headquartered in San Jose, California and has operations in Santa Clara and
 Camarillo, California, Madison, Wisconsin, and Shenzhen, People's Republic of
 China.
     For more information about New Focus visit the company's Internet home
 page at http://www.newfocus.com, call our Investors Relations Department at
 408-284-NUFO, or e-mail us at investor@newfocus.com.
 
 
                                  NEW FOCUS, INC.
                       Condensed Consolidated Balance Sheets
                             (Unaudited, in thousands)
 
                                                 Apr 1, 2001       Dec 31, 2000
     ASSETS
     Current Assets:
         Cash, cash equivalents and short-
          term investments                         $369,578          $485,493
         Trade accounts receivable, net              14,852            13,835
         Inventories                                 22,222            30,385
         Other current assets                        11,214             4,805
            Total current assets                    417,866           534,518
     Property and equipment, net                     82,995            54,744
     Intangibles, net                               334,752               577
     Other assets                                     4,225            11,105
            Total assets                           $839,838          $600,944
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current Liabilities:
         Accounts payable                           $18,887           $21,556
         Accrued Expenses                            18,178            10,355
         Deferred research and development
          funding                                       343               343
         Current portion of long-term debt              238               281
            Total current liabilities                37,646            32,535
     Long-term debt, less current portion                92               111
     Deferred rent                                    1,302             1,188
     Long-term deferred tax liability                20,886                --
     Stockholders' equity                           779,912           567,110
            Total liabilities and
             stockholders' equity                  $839,838          $600,944
 
 
                                  NEW FOCUS, INC.
                  Condensed Consolidated Statements of Operations
                       (In thousands, except per share data)
                                    (Unaudited)
 
                                                     Three Months Ended
                                               Apr 1,     Dec 31,      Apr 2,
                                                2001       2000         2000
 
     Net revenues                              $40,762    $33,875      $9,782
     Cost of net revenues                       55,442     23,256      10,786
     Gross profit                              (14,680)    10,619      (1,004)
                                               (36.0)%      31.3%     (10.3)%
     Operating expenses:
        Research and development, net           12,795     10,620       3,609
        Sales and marketing                      2,447      1,789       1,100
        General and administrative               6,204      3,483       1,424
        Amortization of acquired
         intangibles                            34,837         --          --
        Deferred stock compensation             25,324      4,812       5,548
           Total operating expenses             81,607     20,704      11,681
 
     Loss from operations                      (96,287)   (10,085)    (12,685)
                                              (236.2)%    (29.8)%    (129.7)%
     Interest and other income (expense),
      net                                        4,994      7,834         224
 
     Loss before provision (benefit) for
      income taxes                             (91,293)    (2,251)    (12,461)
 
     Provision (benefit) for income taxes       (5,000)         4          --
 
     Net loss                                 $(86,293)   $(2,255)   $(12,461)
                                              (211.7)%     (6.7)%    (127.4)%
     Basic and diluted net loss per share       $(1.22)    $(0.04)     $(2.12)
     Shares used to compute basic and
      diluted net loss per share                70,460     60,463       5,891
 
 
                                  NEW FOCUS, INC.
             Pro Forma Condensed Consolidated Statements of Operations
                       (In thousands, except per share data)
                                    (Unaudited)
 
                                                   Three Months Ended
                                                Apr 1,      Dec 31,     Apr 2,
                                                2001         2000       2000(A)
 
     Net revenues                              $40,762     $33,875      $9,782
     Cost of net revenues                       55,442      23,256      10,786
     Gross profit                              (14,680)     10,619      (1,004)
                                               (36.0)%       31.3%     (10.3)%
     Operating expenses:
        Research and development, net           12,795      10,620       3,609
        Sales and marketing                      2,447       1,789       1,100
        General and administrative               6,204       3,483       1,424
           Total operating expenses             21,446      15,892       6,133
 
     Loss from operations                      (36,126)     (5,273)     (7,137)
                                               (88.6)%     (15.6)%     (73.0)%
     Interest and other income (expense),
      net                                        4,994       7,834         224
 
     Loss before provision (benefit) for
      income taxes                             (31,132)      2,561      (6,913)
 
     Provision (benefit) for income taxes          175           4          --
 
     Net loss                                 $(31,307)     $2,557     $(6,913)
                                               (76.8)%        7.5%     (70.7)%
 
     Pro forma basic and diluted net
      income (loss) per share excluding
      amortization of deferred stock
      compensation and acquired intangibles     $(0.44)      $0.04      $(0.14)
     Pro forma shares used to compute pro
      forma basic and
        diluted net income (loss) per
         share                                  70,460      64,124      47,830
 
     (A)  Number of shares used for the pro forma net loss per share
          calculation assumes the conversion of convertible preferred stock
          into common stock.  Such conversion was completed in conjunction
          with the May 2000 initial public offering.
 
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 SOURCE  New Focus, Inc.