ONI Systems Reports Fourth Quarter and Fiscal 2001 Financial Results; Expands Total Customers from 27 to 30.Business Editors SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif.--(BUSINESS WIRE)--Feb. 7, 2002 ONI ONI abbr. Office of Naval Intelligence Noun 1. ONI - the military intelligence agency that provides for the intelligence and counterintelligence and investigative and security requirements of the United States Navy Systems Corp. (Nasdaq:ONIS), a leading provider of optical telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. systems for metropolitan and regional markets, today reported financial results for the fourth quarter and the year ended December December: see month. 31, 2001. The results for the quarter were in line with previously announced expectations. Net revenues for the fourth quarter ended December 31, 2001 were $42.2 million compared with revenues of $30.2 million in the fourth quarter of 2000 and revenues of $40.2 million in the third quarter of 2001. ONI added 3 new customers in the fourth quarter--expanding its total customer count to 30. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss for the fourth quarter, which excludes restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and special charges and non-cash items related to the amortization of deferred stock compensation and goodwill, was $(23.6) million, or $(0.17) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with a pro forma net loss of $(11.0) million, or $(0.09) per diluted share, for the same quarter in the prior year. As planned, ONI recorded approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $9.7 million in restructuring and special charges in the fourth quarter. These charges include expenses associated with a reduction in force and the write down of excess inventory and manufacturing capacity. "We are very pleased with our overall performance for the quarter," stated Hugh Hugh (pronunced hyuu) is a male given name. It is Germanic and means "Bright in Mind and Spirit" or "Thoughtful". It is related to the name Hugin( one of Odin's ravens, who represented Thought.) The following medieval rulers were named Hugh. Martin, chairman, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of ONI Systems. "We have continued to expand our customer base with three new wins for the quarter, met all of our financial expectations and completed our restructuring activity. We also saw a continued flow of orders from our existing customers, which provided meaningful revenue in this challenging market for telecommunications equipment suppliers." Martin continued, "I am also very pleased with our progress on several other fronts. We passed our first hurdle HURDLE, Eng. law. A species of sledge, used to draw traitors to execution. in the OSMINE (Operations Systems Modification of Intelligent Network Elements) A system from Telcordia for verifying compatibility with Telcordia-designed operating systems. process and have deployed our systems in an RBOC (Regional Bell Operating Company) The Bell telephone companies that were spun off of AT&T by court order in 1984 (the Divestiture). Also known as the "Baby Bells," the initial seven RBOCs were Nynex, Bell Atlantic, BellSouth, Southwestern Bell, US West, network. Our customer interest continues to grow, with more trials underway today than any previous quarter. We currently have four new RBOC/PTT trials or RFPs underway. We are continuing the development of our switching and next generation Ethernet Ethernet Telecommunications networking protocol introduced by Xerox Corp. in 1979. It was developed as an inexpensive way of sending information quickly between office machines connected together in a single room or building, but it rapidly became a standard computer products, which we plan to introduce this year." For the fiscal year ended December 31, 2001, revenues increased more than 3 times, to $195.7 million, from $59.7 million for the prior year. Pro forma net loss, excluding the restructuring and special charges and non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to in-process research and development, amortization of deferred stock compensation and goodwill, for the period was $(65.6) million, or $(0.49) per diluted share, compared with a loss of $(62.3) million, or $(0.54) per diluted share, for the prior year. On a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis, net loss for the fourth quarter was $(34.7) million, or $(0.25) per diluted share, compared with a net loss of $(28.3) million, or $(0.23) per diluted share, for the same period in the prior year. For the fiscal year ended December 31, 2001, on a GAAP basis, net loss was $(188.3) million, or $(1.40) per diluted share, compared with $(136.9) million, or $(1.22) per diluted share, for the fiscal year ended December 31, 2000. The company's cash, cash equivalents, and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has balance at December 31, 2001 was $678.8 million. Cash usage for the quarter was $5.9 million, primarily reflecting better receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed collections and reductions in inventory and capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. . Business Outlook ONI remains optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about it is long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. opportunities for the metro market. For Q1 of 2002, the company expects the majority of its revenue to be generated by its existing customer base. Because of the relative uncertainty in the telecom equipment market, ONI predicts that its Q1 revenues will be flat to down modestly. For the fiscal year 2002, ONI believes that it will gain 12-15 new customers and that it may see improvement in the market conditions in the second half of 2002. At this time, ONI is unable to predict the specific timing of large new incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. business, making it difficult to provide a forecast for 2002. The company believes, however, that the carrier equipment spending will return first and most strongly to the metropolitan market. Pro Forma Results ONI provides pro forma results solely as supplemental financial information to help investors make meaningful comparisons of ONI's operating results from one period to another. This pro forma information is not prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP") and should not be considered a substitute for historical information presented in accordance with GAAP. ONI's pro forma net loss for the fourth quarter and fiscal year ended 2001 and 2000 differ from reported results in accordance with GAAP because charges for the following items are excluded: restructuring and special charges, in-process research and development, charitable contributions charitable contribution n. in taxation, a contribution to an organization which is officially created for charitable, religious, educational, scientific, artistic, literary, or other good works. , amortization of deferred stock compensation, amortization of goodwill and intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. , common stock warrant expense, and beneficial conversion of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . The size of these charges is detailed in the footnotes to the Pro Forma Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Operations attached to this press release. 2001 Highlights -- Expanded customer base from 16 to 30. -- Introduced the ONLINE2500 for flexible delivery of wavelength services directly to the network and enterprise edge. -- Provided service convergence on the optical layer with full STS-1 switching and grooming functionality through the ONWAVE(TM) OC-48 SONET/SDH Add/Drop Multiplexer (ADM). -- Enabled carriers to provide self-service management of leased virtual private optical network through the introduction of the OPTX(TM) Management Portal software. -- Jointly developed solutions with Brocade to enable internetworking of storage area networks over high-speed optical networking infrastructure. -- First to enable carriers to add high speed (OC-192, 10 Gbps) services to their metro networks. -- Enabled service providers to increase network capacity and wavelength utilization, while reducing costs through the introduction of the ONWAVE ESCON Multiplexer and ONWAVE OC-192/STM-64 Multiplexer. -- Introduced advanced software to automate provisioning of services that traverse multiple sub-networks, enabling provisioning of optical services across multiple rings and through the long-haul core in a single step. -- Added efficiency to carrier's networks through the introduction of variable gain amplifiers, and a rate tunable interface card providing a universal interface from 100 Mbps to 2.5 Gbps into the ONLINE(TM) network. -- Announced a seamless interface with long-haul networks through the introduction of the ONLINE Multi-service Gateway Grooming Node. -- Announced the ONWAVE OC-192/STM-64 ADM card, providing distributed switching solutions for metro and regional markets. -- Won the NCF 2001 InfoVision award for technical advancements. -- Provided the critical linkage to extend the distance of distributed supercomputer applications and drive the testing of a prototype TeraGrid distributed facility. -- Completed our first phase release of OSMINE to enable deployment of our systems in RBOC accounts. About ONI Systems ONI Systems (NASDAQ: ONIS) develops, markets and sells optical networking Communications between computers, telephones and other electronic devices using light. An optical network is far more reliable and has far greater potential transmission capacity than networking in the electrical domain. See optical fiber. equipment specifically designed to address bandwidth bandwidth Measurement of the capacity of a communications signal. For digital signals, the bandwidth is the data speed or rate, measured in bits per second (bps). For analog signals, it is the difference between the highest and lowest frequency components, measured in hertz and service limitations of regional and metropolitan networks. Our products allow communication service providers to rapidly build high-capacity metro networks Metro Networks is a broadcasting outsourcing company based in Houston, Texas. It is a subsidiary of Westwood One, which is managed by CBS Radio. The company operates a number of local and regional news and traffic facilities that provide regular reports to affiliates, together with that are flexible, scalable and able to support multiple services on a single platform. For additional information about ONI and its products, visit the company Web site at www.oni.com. Web Cast of Financial Results Conference Call Our financial results conference call will be held on today, February February: see month. 7, 2002 at 1:30 p.m. Pacific/4:30 p.m. Eastern time. Interested parties can access a live Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the Web Cast of the call through ONI Systems' Web site at www.oni.com. Please access the Web site at least 15 minutes prior to the start of the call to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. An archived audio of the call will be available for approximately one week after the call through ONI Systems' Web site at www.oni.com. ONI Systems, ONI, the ONI logo, ONLINE, OPTX, OLMP OLMP Optical Link Management Protocol (Optical Networks) OLMP Office of Labor Management Partnership and ONWAVE are trademarks or registered trademarks of ONI Systems Corp. All other trademarks are the property of their respective owners. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. created by this section. These forward-looking statements include, but are not limited to, statements by Hugh Martin, statements regarding expected revenue, number of customers, financial performance, spending by telecommunications carriers, research and development efforts, product innovations, and other statements regarding our future business contained in the business outlook section of this press release. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to, our limited operating history which makes forecasting our future revenue and operating results difficult, unfavorable economic and market conditions which could cause our existing and potential customers to delay or forgo purchases of our products, our ability to develop and to achieve market acceptance of new products, our dependence on a small number of customers, our ability to add additional customers, and our dependence on sole or limited source suppliers for several key components. These and other risks and uncertainties are described from time-to-time in ONI Systems' filings with the Securities and Exchange Commission, including ONI Systems' report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended September September: see month. 30, 2001, ONI Systems' annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2000, and other documents on file with the SEC. All forward-looking statements are based on information we have available today and we assume no obligation to update such statements.
ONI SYSTEMS CORP.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS(a)
(In thousands, except per share data)
(unaudited)
Three months ended Year ended
December 31, December 31,
2001 2000 2001 2000
------ ------ ------ ------
Revenue $42,163 $30,163 $195,680 $59,662
Cost of goods sold(1) 26,513 19,135 121,281 39,980
------- ------- -------- -------
Gross profit 15,650 11,028 74,399 19,682
Operating expenses
Research and
development 19,830 15,840 78,355 53,654
Sales and marketing 13,620 9,212 51,322 25,304
General and
administrative(2) 6,957 4,491 26,767 16,385
------- ------- -------- -------
Total operating
expense(3) 40,407 29,543 156,444 95,343
------- ------- -------- -------
Operating loss (24,757) (18,515) (82,045) (75,661)
Other income (expense),
net(4) 1,369 7,472 16,813 13,333
------- ------- -------- -------
Loss before income
taxes (23,388) (11,043) (65,232) (62,328)
Income taxes 255 5 412 7
------- ------- -------- -------
Net loss (23,643) (11,048) (65,644) (62,335)
Pro forma basic and
diluted net loss per
share ($0.17) ($0.09) ($0.49) ($0.54)
======= ======= ======= ========
Weighted-average shares
outstanding used in
computing basic and
diluted net loss per
share 136,970 124,344 134,756 115,587
======= ======= ======= ========
(a) These Proforma Consolidated Statements of Operations exclude
the impact of restructuring and special charges (as detailed
below), in-process research and development, amortization of
deferred stock compensation, amortization of goodwill and
intangibles, common stock warrant expense, and the beneficial
conversion of preferred stock.
(1) Excludes impact of inventory write-downs of $8,465 and $45,335
for the three and twelve months ended December 31, 2001.
(2) Excludes impact of accounts receivable provisions of $0 and
$10,621 for the three and twelve months ended December 31,
2001.
(3) Excludes impact of reduction in workforce expenses of $1,258
for the three months ended December 31, 2001, and facility
consolidations of $0 and $16,092 for the three and twelve
months ended December 31, 2001, respectively.
(4) Excludes impact of charitable contributions of $1,000 for the
three months ended December 31, 2001, and investment
write-downs of $0 and $4,000 for the three and twelve months
ended December 31, 2001, respectively.
ONI SYSTEMS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three months ended Year ended
December 31, December 31,
2001 2000 2001 2000
------ ------ ------ ------
Revenue $42,163 $30,163 $195,680 $59,662
Cost of goods sold:
Product sales 26,513 19,135 121,281 39,980
Write-down of inventory 8,465 - 45,335 -
------- ------- -------- -------
Gross profit 7,185 11,028 29,064 19,682
Operating expenses
Research and development 19,830 15,840 78,355 53,654
Sales and marketing 13,620 9,212 51,322 25,304
General and
administrative 6,957 4,491 37,388 16,385
Restructuring and special
charges 1,258 - 17,350 -
Amortization of deferred
stock compensation(b) (2,334) 16,348 27,009 66,413
Amortization of goodwill
and intangibles 2,706 860 9,067 3,594
Common stock warrant
expense - - - 4,545
In-process research
and development - - 8,240 -
------- ------- -------- -------
Total operating expense 42,037 46,751 228,731 169,895
------- ------- -------- -------
Operating loss (34,852) (35,723) (199,667) (150,213)
Other income (expense),
net 369 7,472 11,813 13,333
------- ------- -------- -------
Loss before income
taxes (34,483) (28,251) (187,854) (136,880)
Income taxes 255 5 412 7
------- ------- -------- -------
Net loss (34,738) (28,256) (188,266) (136,887)
Beneficial conversion
of preferred stock - - - 4,242
------- ------- -------- -------
Net loss attributable
to common
stockholders ($34,738) ($28,256) ($188,266) $141,129)
======= ======= ======= ========
Basic and diluted net
loss per share ($0.25) ($0.23) ($1.40) ($1.22)
======= ======= ======= ========
Weighted-average shares
outstanding used in
computing basic and
diluted net loss per
share 136,970 124,344 134,756 115,587
======= ======= ======= ========
(b) Amortization of deferred stock compensation
Cost of goods sold (275) 2,080 4,141 8,133
Research and
development (981) 6,867 11,205 32,623
Sales and marketing (786) 5,985 7,937 15,468
General and
administrative (292) 1,416 3,726 10,189
------- ------- -------- -------
(2,334) 16,348 27,009 66,413
------- ------- -------- -------
ONI SYSTEMS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
Dec. 31, 2001 Dec. 31, 2000
------------- -------------
Assets
Cash, cash equivalents &
marketable securities $ 678,801 $ 852,360
Accounts receivable 43,945 24,309
Inventory 53,836 70,626
Property and equipment 97,286 41,581
Prepaid expenses and other assets 42,487 26,592
----------- -----------
Total assets $ 916,355 $ 1,015,468
=========== ===========
Liabilities and Stockholders' Equity
Accounts payable and accrued
liabilities $ 53,029 $ 36,010
Deferred revenue 5,281 1,466
Capital lease obligations 265 348
Convertible subordinated notes 300,000 300,000
----------- -----------
Total liabilities 358,575 337,824
----------- -----------
Stockholders' equity 938,556 870,154
Accumulated deficit (380,776) (192,510)
----------- -----------
Total stockholders' equity 557,780 677,644
----------- -----------
Total liabilities and
stockholders' equity $ 916,355 $ 1,015,468
=========== ===========
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