GLW Corning Inc

Avanex Announces Q1 Revenues of $18.1 Million FREMONT, Calif., Nov. 3 /PRNewswire-FirstCall/ -- Avanex Corporation , pioneer of photonic processors that enable next-generation optical networks, today reported results for its first fiscal quarter ended September 30, 2003. The results for the most recent quarter include two months of operating results from the business activities and assets acquired from Alcatel and Corning on July 31, 2003 and one month of operating results from the business activities and assets acquired from Vitesse on August 28, 2003. First quarter net revenues were $18.1 million, an increase of $12.6 million over the company's revenues of $5.5 million in the prior quarter ended June 30, 2003. Net revenues for the quarter ended September 30, 2003 increased $12.9 million from $5.2 million in the same quarter of the prior year ended September 30, 2002. The company reported a net loss of $27.9 million, or $0.26 per share, for the quarter ended September 30, 2003, compared to a net loss of $6.6 million, or $0.10 per share, for the quarter ended June 30, 2003 and a net loss of $70.0 million, or $1.04 per share, for the quarter ended September 30, 2002. During the quarter ended September 30, 2003, Avanex concluded the purchase of the optical components division of Alcatel (Paris: CGEP.PA) (NYSE:ALA), and certain assets of the photonics business of Corning (NYSE:GLW) and the purchase of certain assets of the Optical Systems Division of Vitesse Semiconductor Corp. (NASDAQ:VTSS). Walter Alessandrini, chairman, president and chief executive officer of Avanex, commented, "Avanex is focusing on quickly and effectively integrating these businesses to improve our operating performance. We see significant opportunities for enhancing our business as we increase our penetration with key customers and realize operating savings throughout the organization. We are seeing the initial signs of our success in the integration of these businesses. For example, we successfully implemented a worldwide sales and marketing structure that is aligned with the needs of our customers, and customer response from this initiative has been very positive. "Over the past few months, Avanex has aggressively moved to build a stronger company through both strategic and tactical acquisitions. We now possess one of the broadest customer bases and product sets in our industry. Considering our solid financial position and leading-edge technology, we believe that Avanex is well positioned to benefit from an upswing in our industry when it occurs. We continue to execute on our strategy to be the leading provider of optical solutions," said Alessandrini. Outlook The Company reconfirmed that it expects second fiscal quarter revenues to be in the $25 million range. Conference Call Avanex will host a conference call today, November 3, 2003, at 4:30 p.m. ET. The number for the conference call is 888-658-7305. The password is "Photonics." A replay of the conference call will be available through November 10, 2003, at 402-998-1792. About Avanex Avanex Corporation is a leading global provider of Intelligent Photonic Solutions(TM) to meet the needs of fiber optic communications networks for greater capacity, longer distance transmissions, improved connectivity, higher speeds and lower costs. These solutions enable or enhance optical wavelength multiplexing, dispersion management, switching and routing, transmission, amplification and monitoring and include network-managed subsystems. Avanex was incorporated in 1997 and is headquartered in Fremont, Calif. Avanex also maintains facilities in Erwin Park, N.Y.; Livingston, U.K.; Nozay, France; and San Donato, Italy. The facilities also are home to Avanex's Centers of Excellence for specialized research and manufacturing. To learn more about Avanex, visit our Web site at: http://www.avanex.com/. Forward-looking Statements This press release contains forward-looking statements including forward- looking statements regarding cost reduction and integration measures, expected second fiscal quarter revenues, operating performance results, our competitive position, and anticipated improvements in market conditions. Actual results could differ materially from those projected in or contemplated by the forward-looking statements. Factors that could cause actual results to differ include 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, problems or delays in integrating the businesses acquired from Alcatel, Corning and Vitesse Semiconductor, or in reducing the cost structure of the combined Company, the Company's inability to achieve the anticipated benefits of the acquired businesses, any slowdown or deferral of new orders for our products, 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 the Company's Annual Report on Form 10-K filed with the SEC on September 26 , 2003. Avanex assumes no obligation and does not intend to update any forward- looking statements, whether as a result of new information, future events or otherwise. AVANEX CORPORATION Condensed Consolidated Statements of Operations (In thousands, except per share data) Three Months Ended September June September 30, 30, 30, 2003 2003 2002 Net revenue $18,112 $5,463 5,215 Cost of revenue 27,195 6,029 10,602 Stock compensation expense 16 5 17 Gross profit (loss) (9,099) (571) (5,404) Operating expenses: Research and development 8,520 3,066 5,820 Sales and marketing 5,033 1,448 1,314 General and administrative 5,297 1,837 1,716 Stock compensation expense 327 336 1,908 Amortization of intangibles 726 -- 120 Restructuring charges (recovery) (155) (44) 12,745 Merger costs -- -- 4,126 Total operating expenses 19,748 6,643 27,749 Loss from operations (28,847) (7,214) (33,153) Other income, net 935 608 634 Loss before cumulative effect of an accounting change (27,912) (6,606) (32,519) Cumulative effect of an accounting change to adopt SFAS 142 -- -- (37,500) Net loss $(27,912) $(6,606) $(70,019) Loss per share before cumulative effect of an accounting change $(0.26) $(0.10) $(0.48) Cumulative per share effect of an accounting change to adopt SFAS 142 -- -- (0.56) Basic and diluted net loss per common share $(0.26) $(0.10) $(1.04) Weighted average shares used in computing basic and diluted net loss per common share 107,716 69,105 67,629 Calculation excluding certain items: GAAP cost of revenue per above, including stock compensation expense $27,211 $6,034 $10,619 Cost of revenue items: Provision for excess inventory -- (185) (3,672) Utilization of excess inventory previously written off 590 1,267 928 Stock compensation expense (16) (5) (17) 574 1,077 (2,761) Cost of revenue excluding certain items 27,785 7,111 7,858 GAAP operating expenses per above 19,748 6,643 27,749 Operating expense items: Stock compensation expense (327) (336) (1,908) Amortization of intangibles (726) -- (120) Merger costs -- -- (4,126) Utilization in R&D of excess inventory previously written off 54 62 72 Litigation and contract settlements (950) -- -- Restructuring (charges) recovery 155 44 (12,745) (1,794) (230) (18,827) Total operating expenses excluding certain items $17,954 $6,413 $8,922 Cumulative effect of an accounting change to adopt SFAS 142 $-- $-- $(37,500) GAAP net loss per above $(27,912) $(6,606) $(70,019) Items excluded from cost of revenues, operating expenses and SFAS 142 accounting change 1,220 (847) 59,088 Net loss excluding certain items $(26,692) $(7,453) $(10,931) Basic and diluted net loss per common share $(0.25) $(0.11) $(0.16) AVANEX CORPORATION Condensed Consolidated Balance Sheets (In thousands) September June September 30, 30, 30, 2003 2003 2002 Assets Current assets: Cash and cash equivalents $38,214 $10,639 $21,004 Short-term investments 123,120 76,952 98,892 Accounts receivable, net 15,988 2,614 2,986 Inventories 31,079 3,613 2,757 Other current assets 21,520 1,070 615 Total current assets 229,921 94,888 126,254 Long-term investments 58,434 47,063 42,287 Property and equipment, net 30,359 5,455 13,168 Intangibles, net 17,217 -- 1,357 Goodwill 7,664 -- -- Other assets 10,178 7,209 660 Total assets $353,773 $154,615 $183,726 Liabilities and stockholders' equity Current liabilities: Short-term borrowings $1,848 $3,141 $-- Accounts payable 22,727 5,647 4,702 Current portion of restructuring costs 61,496 6,400 5,718 Other accrued liabilities 22,843 5,816 3,368 Warranty 8,270 2,707 3,366 Current portion of long-term obligations 6,854 4,190 4,837 Accrued compensation and related expenses 11,748 2,279 2,444 Total current liabilities 135,786 30,180 24,435 Restructuring costs 23,624 26,055 23,757 Long-term obligations 13,561 2,118 5,357 Total liabilities 172,971 58,353 53,549 Stockholders' equity: Common stock 128 69 69 Additional paid-in capital 592,998 484,028 493,922 Notes receivable from stockholders -- -- (1,107) Deferred compensation (1,128) (828) (8,593) Accumulated deficit (414,919) (387,007) (354,114) Cumulative translation adjustment 3,723 -- -- Total stockholders' equity 180,802 96,262 130,177 Total liabilities and stockholders' equity $353,773 $154,615 $183,726 DATASOURCE: Avanex Corporation CONTACT: Investor Relations, Mark Weinswig, +1-510-897-4344, or fax, +1-510-897-4345, or e-mail, , or Media, Tony Florence, +1-510-897-4162, or fax, +1-510-979-0198, or e-mail, , both of Avanex Corporation Web site: http://www.avanex.com/

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