Corvis Corporation Reports Financial Results for the First Quarter
Recognizes Initial Revenues from the United States Government
Ends the Quarter with $448.6 million in Cash and Investments
COLUMBIA, Md., April 29 -- Corvis Corporation , a leading provider of intelligent optical networking solutions, today reported revenues of $1.5 million for its fiscal first quarter ended March 29, 2003. Revenues for the first quarter were primarily generated under the company's contracts with the United States Government, Telefonica of Spain and Broadwing Communications.
"We're pleased that this quarter we recognized our first revenues from our newest customer, the U.S. Government. We formed our government solutions group within the last year, specifically to address this market and are pleased with the speed at which we were able to deliver our solutions," said Dr. David Huber, chairman and CEO. "Corvis continues to pursue opportunities to expand the market for our leading-edge products and enhance our financial position for the long-term."
Reported net loss was $47.0 million, or $0.12 loss per share, for the current quarter as compared with a reported net loss of $71.0 million, or $0.20 loss per share, for the first quarter of 2002.
Pro forma net loss for the current quarter was $36.1 million, or $0.09 loss per share, excluding intangible assets amortization expense, equity-based expense, and restructuring and other charges compared with a pro forma net loss of $41.3 million, or $0.11 loss per share, for the first quarter of 2002.
Financial Position
Consistent with the company's prior guidance, cash, cash equivalents and investments were $448.6 million at March 29, 2003 compared to $504.4 million at December 29, 2002. This represents a net change of $55.8 million for the quarter which included payments associated with restructuring plans, other one-time payments as well as cash used to repurchase Corvis common stock under the share repurchase program.
Outlook
The company indicated that it expects revenue for its second fiscal quarter ending June 28, 2003, to be down as compared to the first quarter of 2003.
Quarterly and Recent Events
-- On January 29, 2003, the company announced a business restructuring
initiative that consolidates its Research and Development
organization and a reduction in its United States workforce of
approximately 180 employees. The company stated that while every
area in the company had been affected by this restructuring, most of
the reductions occurred in the company's Research and Development
organization.
-- On March 25, 2003, the company provided additional details on its
recent commitment to invest in C III Communications, LLC, the
Delaware limited liability company who agreed to acquire most of the
assets and certain of the liabilities of Broadwing Communications
Services, Inc. for $129.3 million in cash. Corvis has agreed to
invest approximately $128.0 million in C III Communications at the
time of closing and an additional $50.0 million to C III
Communications by December 31, 2003 to fund ongoing operating
expenses. Corvis also said it would initially retain a 96% ownership
interest in C III Communications, but is evaluating the possibility
of raising a portion of these funds from other investors, which could
reduce its committed investment amount and percentage of ownership.
-- On April 22, 2003 the company continued its restructuring efforts as
it put plans in place to further reduce its staff across the entire
organization. The company stated that it expects its total headcount
to be reduced below 350 people over the next few months upon
completion of certain initiatives related to its latest generation of
products and services. The company said these reductions would help
reduce operating expenses, reduce quarterly cash burn and better
position the company for long-term profitability. In addition, as
part of its on-going restructuring efforts, Corvis is considering
further reductions in Europe, including options for sale, disposition
or shut down of Corvis France R&D. A final decision has not been
made but is expected in the near future. In such an event, the
disposition would be implemented in compliance with local laws.
-- The company announced that interim verdicts were reached by juries in
the U.S. Federal District Court of Delaware in its patent litigation
with Ciena Corporation. Certain Corvis products were found not to
infringe on two of Ciena's patents, but were found to infringe two
other Ciena patents. The company indicated these jury verdicts are
interim and that the Court must still determine additional issues of
infringement before a judgment in the litigation is entered. If the
Court finds in Corvis' favor on these additional issues, the Court
could overturn the jury verdict of infringement. The company intends
to continue to present its case to the courts because the company
believes its products have always been, and will continue to be,
designed to respect the intellectual property rights of others.
Webcast Information
In conjunction with this announcement, Corvis will host a conference call of its first quarter financial results today at 5:30 p.m. EDT. The live broadcast of the conference will be available via Corvis' website, www.corvis.com. An archived audio of the conference call will also be available for replay purposes through the Corvis website.
About Corvis
From point-to-point links to all-optical networks to transoceanic systems, Corvis Corporation delivers innovative optical network solutions that drive carrier profitability faster than any other vendor. Headquartered in Columbia, MD, Corvis provides carriers with scalable optical networking solutions and services that dramatically reduce the overall expenses associated with building and operating networks. Carriers deploying Corvis' optical network solutions can provision new wavelength-based services and tailor dynamic service-level agreements for rapid revenue generation. For more information about Corvis, please visit its Web site www.corvis.com.
Corvis and the Corvis logo are trademarks and/or service marks of the Corvis Corporation. All other trademarks are the property of their respective owners.
Investor Note Regarding Forward Looking Statements
This announcement and the quarterly earnings conference call may contain certain forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially from those currently anticipated as a result of a number of factors, including, but not limited to, the risks and uncertainties discussed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's filings with the Securities and Exchange Commission.
Corvis Contact:
Andrew G. Backman
Vice President
Investor and Public Relations
(443) 259-4259
Fax: (443) 259-4427
investorinformation@corvis.com
CORVIS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Quarter Ended
March 29, 2003 March 30, 2002
(Unaudited) (Unaudited)
Revenues $1,517 $8,717
Cost of sales 1,161 10,796
Gross profit 356 (2,079)
Operating expenses:
Research and development 25,288 29,058
Sales and marketing 4,715 11,205
General and administrative 8,228 6,045
Intangible assets
amortization expense 1,784 2,917
Equity-based expense 5,381 19,956
Restructuring and other charges 3,784 2,559
Operating loss (48,824) (73,819)
Interest and other income, net 1,794 2,783
Net loss $ (47,030) $(71,036)
Weighted average number of
common shares outstanding
(in thousands) 402,463 360,710
Basic and diluted net
loss per common share $(0.12) $(0.20)
CORVIS CORPORATION
PRO FORMA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)
(Dollars in thousands, except per share data)
For Discussion Purposes Only
Quarter Ended
March 29, 2003 March 30, 2002
(Unaudited) (Unaudited)
Revenues $1,517 $8,717
Cost of sales 1,161 6,488
Gross profit 356 2,229
Operating expenses:
Research and development 25,288 29,058
Sales and marketing 4,715 11,205
General and administrative 8,228 6,045
Operating loss (37,875) (44,079)
Interest and other income, net 1,794 2,783
Pro forma net loss $ (36,081) $(41,296)
Weighted average number
of common shares outstanding
(in thousands) 402,463 360,710
Pro forma net loss per
common share $(0.09) $(0.11)
(a) Pro forma results exclude restructuring and other charges,
intangible assets amortization expense, purchased research and
development expense and equity-based expense.
For the quarter ended March 29, 2003 restructuring and other charges
of $3.8 million were recorded as Operating Expenses. These charges
were comprised of a $3.0 million charge associated with workforce
reductions and $0.8 million of other charges.
For the quarter ended March 30, 2002, restructuring and other
charges of $6.9 million were recorded as $4.3 million to Cost of
Sales, $2.6 million to Operating Expenses.
Pro forma net loss excludes intangible asset amortization expense,
equity-based expense and restructuring and other charges. To assess
fully the Company's financial operating results, management believes
that pro forma net loss is an appropriate measure of evaluating
operating performance and liquidity of the Company, because it
reflects more accurately operating performance of the Company for
the reporting period by excluding those charges associated with past
events that are not related to current operations or, in the case of
intangible asset amortization expense and equity-based expense,
amounts that are non-cash in nature. This financial measure,
however, should be considered in addition to, not as a substitute
for or as being superior to, operating losses, cash flows, or other
measures of financial performance prepared in accordance with U.S.
generally accepted accounting principles ("GAAP"). A reconciliation
of these pro forma results to U.S. GAAP is set forth on the
following table:
Quarter Ended
March 29, 2003 March 30, 2002
Reported net loss $ (47,030) $(71,036)
Write-down of inventory & other - 4,308
Restructuring & other charges 3,784 2,559
Equity-based expense 5,381 19,956
Intangible asset amortization
expense 1,784 2,917
Pro forma net loss $ (36,081) $(41,296)
CORVIS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
March 29, 2003 December 28, 2002
Assets
Current assets:
Cash and cash equivalents $403,860 $457,833
Short-term investments 16,247 24,133
Trade accounts receivable 336 1,781
Inventory, net 30,384 26,491
Other current assets 13,635 14,406
Total current assets 464,462 524,644
Restricted cash, non-current 2,329 2,329
Property and equipment, net 38,345 45,760
Goodwill and intangible assets, net 12,181 13,965
Long-term investments 28,504 22,450
Other non-current assets 1,066 1,170
Total assets $546,887 $610,318
Liabilities and stockholders' equity
Current liabilities:
Notes payable, current portion $110 $107
Capital lease obligations, current portion 730 1,982
Accounts payable 11,787 14,973
Accrued expenses and other liabilities 25,458 31,609
Provision for restructuring
and other charges 9,514 16,130
Total current liabilities $47,599 $64,801
Notes payable, net of current portion 2,695 2,672
Capital lease obligations, net
of current portion 17 74
Deferred lease liability and other 2,514 2,693
Total liabilities 52,825 70,240
Commitments and contingencies
Common stock* 4,141 4,126
Additional paid-in capital 2,815,201 2,809,267
Shareholder notes receivable (32) (32)
Treasury stock, 12,281,800 shares
at cost of $0.77 per share (9,512) (4,405)
Accumulated other comprehensive loss (8,019) (8,191)
Accumulated deficit (2,307,717) (2,260,687)
Total stockholders' equity 494,062 540,078
Total liabilities and
stockholders' equity $546,887 $610,318
* $0.01 per share par value; 1,900,000,000 authorized shares;
414,655,681 shares issued and 402,373,881 outstanding as of 3/29/03;
407,199,303 shares issued and outstanding shares as of 12/28/02.
CORVIS CORPORATION
OTHER FINANCIAL INFORMATION
(Dollars in thousands)
Quarter Ended
March 29, 2003 March 30, 2002
Capital expenditures $ 238 $5,705
Depreciation expense 7,135 12,606