Ortel Reports Third Fiscal Quarter Results; Company Reports Second Consecutive Quarter of Profitability.Business Editors ALHAMBRA, Calif.--(BUSINESS WIRE)--Feb. 22, 2000 Ortel Corp. (Nasdaq:ORTL ORTL Oregon Right to Life, Inc. (Salem, Oregon) ) today reported financial results for its third fiscal quarter ended Jan. 30, 2000. For the current third quarter, revenues totaled $21.4 million, up 41 percent from $15.1 million, as restated, in the third quarter of fiscal year 1999, and up 10 percent from the second quarter of fiscal 2000. Income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the third quarter totaled $735,000, or 5 cents 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 loss from continuing operations a year ago of $492,000, or 4 cents loss per share. In the second quarter of fiscal 1999, the company recorded a charge for estimated expenses related to the discontinuance Cessation; ending; giving up. The discontinuance of a lawsuit, also known as a dismissal or a non-suit, is the voluntary or involuntary termination of an action. DISCONTINUANCE, pleading. A chasm or interruption in the pleading. 2. of its 980nm pump laser A laser used as the pump for an optical amplifier or other laser. See EDFA and laser. business. By the third quarter of fiscal 2000, the company determined that, after tax, $769,000 of the charge would not be required. As a result, total net income for the third quarter of fiscal 2000 was $1.5 million, or 10 cents per diluted share, compared with a total net loss of $1.1 million, or 9 cents loss per share, in the same period last year. Gross margin in the third quarter of fiscal 2000 increased to 43 percent from 33 percent in the same period last year, primarily due to greater operating efficiencies and product mix. In the current third quarter, investment in research and development rose 43 percent to $3.7 million compared with the same period last year, primarily due to Ortel's ongoing commitment to maintain its leadership position in broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). CATV (Community Antenna TV) The original name for cable TV. It used a single antenna at the highest location in the community in order to deliver a quality signal to homes in areas with hilly terrain or other interference. and the aggressive pursuit of emerging opportunities in telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. . Research and development expense for the third quarter remained unchanged as a percentage of revenues. Selling, general and administrative expenses, which increased by 39 percent as the company built sales and marketing efforts, remained unchanged as a percentage of revenues. For the nine months ended Jan. 30, 2000, revenues of $58.5 million were 19 percent higher than restated revenues of $49.3 million in the same period last fiscal year. The company recorded a net loss for the first nine months of fiscal 2000 of $6.3 million, or 53 cents loss per share, which included after-tax charges of $3.8 million related to discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: wireless operations and other special first-quarter charges totaling $4.0 million after tax. For the nine months ended Jan. 31, 1999, as restated, Ortel recorded a net loss of $5.5 million, or 47 cents loss per share, which included $7.0 million (59 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. ) in after-tax charges and operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. related to the discontinuance of the wireless and pump laser businesses. "Results for the quarter demonstrate the benefits of our continued efforts to reposition Ortel as a fiberoptics fiberoptics /fi·ber·op·tics/ (fi?ber-op´tiks) the transmission of an image along flexible bundles of glass or plastic fibers, each of which carries an element of the image. company focused on two core markets -- broadband CATV and telecommunications," said Stephen R. Rizzone, president, chief executive officer and chairman of the board. "Over the past three months we have continued to execute on the strategic initiatives we implemented last summer -- to the benefit of our customers, employees and stockholders." The company attributed strong revenue growth in the quarter primarily to increased sales of photo diodes, 1310nm transmitters, AWDM AWDM Analog Wavelength Division Multiplexing AWDM All Wheel Drive Mafia modules and transmitters and analog DWDM (Dense WDM) The term given to wavelength division multiplexing (WDM) when significantly more channels were being added. Since WDM is increasingly more "dense" all the time, both terms are used synonymously. See WDM. DWDM - wavelength division multiplexing 1550nm laser transmitters. Additionally, Ortel registered several design wins and saw increased sampling activity for its new line of telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. products. Prior-period financial statements reflect the restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of the wireless operations discontinued in the first quarter of fiscal 2000 and the 980nm pump laser operations discontinued in the second quarter of fiscal 1999. On Feb. 7, Lucent Technologies' Microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. Group (NYSE NYSE See: New York Stock Exchange :LU) announced a definitive agreement to acquire Ortel. Under terms of the agreement, which must be approved by Ortel stockholders and is subject to customary regulatory review, each share of Ortel common stock would be converted into 3.135 shares of Lucent common Stock. The acquisition is expected to be completed during the calendar quarter ending June 30, 2000. "The signing of the definitive agreement with Lucent further validates our belief in Ortel's leadership in the development of optoelectronic Refers to devices that function due to the interaction of light and electronics. For example, an electronic signal is the input to a laser diode, which generates light pulses that are transmitted through an optical fiber. product solutions," said Rizzone. "Ortel has been successful as a stand-alone company stand-alone company An independent operating firm. For example, a large diversified firm may consider spinning off a subsidiary because, as a stand-alone company, the subsidiary would command a higher price-earnings ratio than the parent. . However, as part of Lucent we will have the opportunity to rise to a new level. In addition to a rich product portfolio, Lucent provides Ortel with access to its industry-leading automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. packaging processes that will help us more readily meet the increasing demand for our products." Ortel designs, manufactures and supplies advanced optoelectronic technologies that provide the critical bandwidth and two-way interactivity essential for robust telecommunications and cable television applications. Ortel's fiber optics fiber optics, transmission of digitized messages or information by light pulses along hair-thin glass fibers. Each fiber is surrounded by a cladding having a high index of refractance so that the light is internally reflected and travels the length of the fiber increase the capacity and performance of fiberoptic networks enabling them to handle ever-increasing volumes of voice, video and data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. . The company has headquarters in Alhambra, with international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. in Sweden, Germany, France, Singapore and China. For more information visit Ortel's Web site at http://www.ortel.com. This news 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. based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These forward-looking statements include, but are not limited to, Ortel's results of operations or financial condition; future product, market and technology development; future benefits; estimated date to complete the transaction; and the expected impact of the transaction on the company. Factors that could cause actual results to differ materially include obtaining Ortel stockholder approval; obtaining regulatory approvals and clearances; changes in the estimated date for consummating the acquisition; price and product competition; changes in the 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. of CATV operators and changes in customer order patterns; introduction of new products by competitors; reliance on major customers; and other risks identified from time to time in the company's Securities and Exchange Commission filings. Ortel disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
ORTEL CORP. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (unaudited)
Jan. 30, 2000 April 30, 1999
(Reclassified(a))
Assets:
Cash and short-term
investments $ 27,006 $ 24,181
Accounts receivable 12,807 13,404
Inventory 15,272 9,716
Other current assets 13,246 5,970
Current assets -
discontinued operations -- 5,692
Total current assets 68,331 58,963
Equipment and improvements, net 17,627 17,704
Intangible assets and
long-term assets 14,455 11,069
Long-term assets -
discontinued operations -- 1,492
Total assets $ 100,413 $ 89,228
Liabilities and stockholders'
equity:
Total current liabilities $ 17,064 $ 10,606
Other liabilities 497 773
Current and long-term
liabilities - discontinued
operations 1,133 2,661
Total liabilities 18,694 14,040
Total stockholders' equity 81,719 75,188
Total liabilities and
stockholders' equity $ 100,413 $ 89,228
(a) Certain amounts related to discontinued operations (wireless
and 980 pump lasers) have been reclassified to conform to the current
period presentation.
ORTEL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) (unaudited)
Three Months Ended Nine Months Ended
Jan. 30, Jan. 31, Jan 30, Jan. 31,
2000 1999 2000 1999
(Reclass- (Reclass-
ified(a)) ified(a))
Revenue $21,409 $15,149 $58,494 $49,333
Gross profit 9,110 5,006 23,527 19,637
Operating expenses:
Research and
development 3,743 2,617 10,972 7,681
Selling, general
and administrative 4,608 3,312 15,457 11,255
Write-off facility
architectural fees -- -- 745 --
Total operating
expenses 8,351 5,929 27,174 18,936
Operating income (loss)
from continuing
operations 759 (923) (3,647) 701
Interest and other
income, net 222 299 680 1,161
Income (loss) from
continuing operations
before taxes 981 (624) (2,967) 1,862
Provision (credit) for
income taxes 246 (132) (741) 372
Income (loss) from
continuing operations 735 (492) (2,226) 1,490
Cumulative effect of
accounting change -
organization cost
write-off, continuing
operations (34) -- (1,023) --
Gain (loss) from
discontinued operations
and disposal of
discontinued operations,
net of tax 769 (628) (3,069) (7,032)
Net income (loss) $1,470 $(1,120) $(6,318) $(5,542)
Earnings (loss) per
common share(b)
Income (loss) from
continuing
operations $.05 $(.04) $(.19) $.12
Cumulative effect of
accounting change
organizational
costs -- -- $(.08) --
discontinued
operations .05 (.05) (.26) (.59)
Net income (loss)
per share $.10 $(.09) $(.53) $(.47)
Average shares used
to compute EPS(b) 15,204 11,920 11,883 11,844
As percentage of
revenue:
Gross profit 42.6% 33.0% 40.2% 39.8%
Research and
development 17.5% 17.3% 18.8% 15.5%
Selling, general and
administrative 21.5% 21.8% 26.4% 22.8%
(a) Certain amounts related to discontinued operations (wireless
and 980 pump lasers) have been reclassified to conform to the current
period presentation.
(b) Options to purchase 3,428,746 shares at or below the average
price of the common shares were outstanding at Jan. 30, 2000, and were
included in the per-share computation for the third quarter of fiscal
2000. Additionally, options to purchase 718,013 shares were
outstanding at the nine months ended Jan. 31, 1999, but were excluded
from the per-share computation for income from continuing operations.
Common share equivalents were excluded from the per-share computations
for all other periods as the company recorded a loss and the effect
would be anti-dilutive.
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