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Avanex Corporation Announces Fiscal 2008 Second Quarter Financial Results
FREMONT, Calif.-(Business Wire)-January 31, 2008 - Avanex Corporation (NASDAQ: AVNX), a leader in telecommunication components that enable next-generation optical networks, today reported its fiscal 2008 second quarter financial results for the quarter ended Dec. 31, 2008.
Net revenue in the second quarter of fiscal year 2008 was $52.0 million, a decrease of 5% from $54.7 million in the first quarter of fiscal year 2008, and a decrease of 7% from $55.6 million in the same period last year.
Gross margin in the second quarter of fiscal year 2008 was 31%, an increase of 3 percentage points from 28% in the first quarter of fiscal year 2008, and an increase of 12 percentage points from 19% in the same period last year.
Net income in the second quarter of fiscal year 2008 was $86,000, or breakeven per diluted share, compared with net income of $45,000, or breakeven per diluted share in the first quarter of fiscal year 2008. This compares to a net loss of $8.6 million, or a net loss of $0.04 per diluted share, in the same period last year.
Non-GAAP net income in the second quarter of fiscal 2008 was $2.4 million, or a net profit of $0.01 per diluted share, compared with a non-GAAP net income of $2.1 or a net profit of $0.01 per diluted share for the first quarter of fiscal year 2008. This compares to a non-GAAP net loss of $3.5 million, or a net loss of $0.02 per diluted share, for the same period last year.(1)
"During the second quarter we demonstrated strength in our core business, achieved solid gross margins and generated over $6 million in cash from operations," said Jo Major, chairman, president and chief executive officer of Avanex. "With our healthy operating structure, we are well positioned for future growth from our new products as we take advantage of growing bandwidth demand," said Major.
Q3 FY 2008 Outlook
The company expects revenue to be between $46.0 million and $50.0 million, and gross margin to be approximately 25 percent in the third quarter of fiscal 2008, ending March 31, 2008.
Conference Call
Avanex will host a conference call to discuss its fiscal year 2008 second quarter results at 1:30 p.m. Pacific Time today. Investors are invited to listen to a live broadcast of the conference call via webcast, which can be accessed by visiting Avanex's Investor Relations website at http://investor.avanex.com/events.cfm. Investors can also listen to the conference call by dialing 706-634-8772 and entering access ID number 31835231.
An archived audio webcast of the conference call will be available on the company's website at http://investor.avanex.com/events.cfm. A telephone replay of the conference call will be available for one week and can be accessed by dialing 706-645-9291 and entering access ID number 31835231.
About Avanex
Avanex Corporation meets the needs of fiber optic communications networks for greater capacity, longer distance transmissions, improved connectivity, higher speeds and lower costs. Our solutions enable optical wavelength multiplexing, dispersion compensation, switching and routing, transmission, and amplification, and include network-managed subsystems. Avanex Corporation, incorporated in 1997, is headquartered in Fremont, California, and maintains facilities in New York, Florida, China, France, Italy, and Thailand. To learn more about Avanex Corporation, visit our web site at: www.avanex.com.
Forward-looking Statements
This press release contains forward-looking statements including statements regarding expected third quarter of fiscal 2008 outlook and future operating results, market demand and growth trends for our products and our strategies. 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 in the telecommunications industry and in particular the optical networks industry, market demand and price of our products, the company's ability to sufficiently anticipate market needs and develop products and enhancements that achieve market acceptance, problems related to realizing the benefits of the divestiture in France, the company's ability to effect its restructuring goals, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, any slowdown or deferral of orders for products or the application of accounting or tax principles in an unanticipated manner.
Finally, 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 Sept. 7, 2007, Quarterly Report on Form 10-Q filed with the SEC on Nov. 2, 2007 and subsequent filings with the SEC.
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.
(1)Non-GAAP net income (loss) and non-GAAP net income (loss) per share excludes share-based compensation expense, amortization of intangibles, restructuring charges (recovery), gains (loss) on disposal of property and equipment, due diligence expenses related to abandoned acquisition activity and arbitration expenses. Details on the items excluded from non-GAAP net income (loss) and non-GAAP net income (loss) per share are available in the table entitled, "Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)," following the accompanying financial statements. -0- *T Avanex Corporation CONSOLIDATED BALANCE SHEET In thousands (Unaudited) December 31, September 30, June 30, 2007 2007 2007 ——————————————————- Assets Current assets: Cash and cash equivalents $ 9,284 $ 12,999 $ 14,837 Restricted cash 6,484 6,445 3,620 Short-term investments 36,849 27,010 28,942 Accounts receivable, net 39,677 33,424 33,764 Inventories 16,915 15,504 15,188 Due from related party 31 15,657 14,381 Other current assets 6,372 6,952 5,716 ——————————————————- Total current assets 115,612 117,991 116,448 Property and equipment, net 7,233 7,224 5,900 Intangibles, net 425 597 559 Goodwill 9,408 9,408 9,408 Other assets 2,856 2,932 2,685 ——————————————————- Total assets $ 135,534 $ 138,152 $ 135,000 ——————————————————- Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 30,716 $ 35,374 $ 32,549 Accrued compensation 5,796 4,175 6,091 Accrued warranty 771 842 873 Other accrued expenses and deferred revenue 9,261 10,272 10,940 Current portion of long-term obligations 10 7 9 Current portion of accrued restructuring 2,821 2,769 2,837 ——————————————————- Total current liabilities 49,375 53,439 53,299 Long-term liabilities: Accrued restructuring 6,557 7,284 8,269 Other long-term obligations 1,499 1,413 1,350 ——————————————————- Total liabilities 57,431 62,136 62,918 ——————————————————- Stockholders' equity: Common stock 229 227 226 Additional paid-in capital 781,638 779,700 775,901 Accumulated other comprehensive income 1,214 1,153 1,064 Accumulated deficit (704,978) (705,064) (705,109) ——————————————————- Total stockholders' equity 78,103 76,016 72,082 ——————————————————- Total liabilities and stockholders' equity $ 135,534 $ 138,152 $ 135,000 ——————————————————- *T -0- *T Avanex Corporation CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP In thousands, except for per share data (Unaudited) Three Months Ended ———————————————————- December 31, September 30, December 31, 2007 2007 2006 ———————————————————- Net revenue: Third parties $ 47,155 $ 41,395 $ 40,325 Related parties 4,852 13,314 15,298 ———————————————————- Total net revenue 52,007 54,709 55,623 Cost of revenue: Cost of revenue except for purchases from related parties 35,567 39,516 44,968 Purchases from related parties 321 1 159 ———————————————————- Total cost of revenue 35,888 39,517 45,127 ———————————————————- Gross profit 16,119 15,192 10,496 Operating expenses: Research and development 7,604 6,774 5,832 Sales and marketing 4,202 3,915 3,891 General and administrative: Third parties 4,980 4,475 9,148 Related parties - - (73) Amortization of intangibles 101 559 656 Restructuring 2 (335) 436 Gain on disposal of property and equipment - - (28) ———————————————————- Total operating expenses 16,889 15,388 19,862 ———————————————————- Loss from operations (770) (196) (9,366) Interest and other income 1,086 526 1,121 Interest and other expense (3) (11) (308) ———————————————————- Income (loss) before income taxes 313 319 (8,553) Provision for income taxes (227) (274) - ———————————————————- Net income (loss) $ 86 $ 45 $ (8,553) ———————————————————- Basic net income (loss) per common share $ 0.00 $ 0.00 $ (0.04) ———————————————————- Diluted net income (loss) per common share $ 0.00 $ 0.00 $ (0.04) ———————————————————- Weighted-average number of shares used in computing: Basic net income (loss) per common share 228,538 226,749 206,873 ———————————————————- Diluted net income (loss) per common share 231,899 230,827 206,873 ———————————————————- *T -0- *T Avanex Corporation RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) In thousands, except for per share data (Unaudited) Three Months Ended ———————————————————- December 31, September 30, December 31, 2007 2007 2006 ———————————————————- Net income (loss), GAAP $ 86 $ 45 $ (8,553) Items reconciling GAAP net income (loss) to non-GAAP net income (loss): Related to cost of revenue: Share-based payments 319 322 234 ———————————————————- Total related to cost of sales 319 322 234 ———————————————————- Related to operating expenses: Research and development - share-based payments 698 725 597 Sales and marketing - share-based payments 208 128 191 General and administrative - share-based payments 561 676 788 Amortization of intangibles 101 559 656 Restructuring: Share-based payments - - 3 All other 2 (335) 433 Gain on disposal of property and equipment - - (28) Due diligence expenses related to abandoned acquisition activity 199 - 2,146 Arbitration expenses 185 - - ———————————————————- Total related to operating expenses 1,954 1,753 4,786 ———————————————————- Total related to net income (loss) 2,273 2,075 5,020 ———————————————————- Non-GAAP net income (loss) $ 2,359 $ 2,120 $ (3,533) ———————————————————- Basic non-GAAP net income (loss) per common share $ 0.01 $ 0.01 $ (0.02) ======================================= Diluted non-GAAP net income (loss) per common share $ 0.01 $ 0.01 $ (0.02) ======================================= Weighted-average number of shares used in computing: Basic non-GAAP net income (loss) per common share 228,538 226,749 206,873 ———————————————————- Diluted non-GAAP net income (loss) per common share 231,899 230,827 206,873 ———————————————————- *T
