HORSHAM, Pa., Sept. 20, 2007 (PRIME NEWSWIRE) -- Optium Corporation (Nasdaq:OPTM), a leading supplier of high-performance optical subsystems, today reported financial results for the fourth quarter and fiscal year 2007 ended July 28, 2007.
Revenues for the fourth quarter of fiscal 2007 were $26.8 million, an increase of 16.5% from $23.0 million for the same period in the prior year. Compared to the prior quarter, fourth quarter revenues declined 22.5% from $34.5 million which Optium believes was due primarily to the timing of certain shipments at Optium's two largest end customers for telecommunications products and delayed shipments to its new cable TV customer.
Revenues for the fiscal year 2007 were $125.5 million, an increase of 80.6% from $69.5 million for fiscal year 2006. Contributing to the substantial increase in revenues were sales in Optium's existing telecommunications and cable TV product lines, as well as its new ROADM product line, which was first introduced in the second quarter of fiscal year 2007.
Net income for the fourth quarter of fiscal 2007 was $1.2 million, or $0.05 per diluted share, in accordance with U.S. generally accepted accounting principles (GAAP). This compares to net income of $1.7 million or $0.08 per diluted share for the same period in the prior year. For the prior quarter, net income was $3.4 million or $0.13 per diluted share.
Net income for the fiscal year 2007 in accordance with GAAP was $11.3 million, or $0.45 per diluted share, compared to a net loss of $(8.1) million, or $(3.68) per diluted share, for fiscal year 2006.
Non-GAAP Measures:
Non-GAAP net income or loss, as further defined below, excludes charges associated with stock-based compensation, acquired in-process research and development expenses, amortization of purchased intangibles, duplicate facility costs related to the relocation of Optium's U.S. operations in February 2007 and a tax benefit related to the reversal of Optium's valuation allowance on certain deferred tax assets.
Non-GAAP net loss for the fourth quarter of fiscal 2007 was $(1.2) million, or $(0.04) per diluted share. This compares to non-GAAP net income of $1.8 million, or $0.09 per diluted share for the same period in the prior year. For the prior quarter, non-GAAP net income was $4.0 million, or $0.15 per diluted share. The sequential decline in non-GAAP net income reflects the sequential decline in revenue, further impacted by an unfavorable product mix and underabsorption of fixed manufacturing overhead, expenditures to support the capacity ramp in ROADM and 40Gb/s product lines, as well as increased legal expenses. In addition, fourth quarter 2007 results reflect the absorption of Kailight Photonics, Inc., acquired May 15, 2007, which accelerated Optium's entry into the 40Gb/s technology market.
Non-GAAP net income for the fiscal year 2007 was $10.3 million, or $0.41 per diluted share, compared to $3.2 million or $0.16 per diluted share for fiscal 2006. Key drivers of profitability for the year included revenue growth and product mix, which were partially offset by operational investments Optium has underway to penetrate new markets such as ROADMs, circuit packs and 40Gb/s products.
Eitan Gertel, Chairman and CEO of Optium Corporation, stated: "We faced some tough timing issues in our fourth fiscal quarter, especially with our top two telecommunication end customers. However, our outlook for the first quarter reflects a noticeable change in current booking trends, primarily in our higher-end 300 pin products, which is reflected in our outlook for sequential growth next quarter. We previously commented that we expected this pause in spending on higher-end 300 pin products would turn in the second half of calendar 2007. While we remain cautiously optimistic, it appears that this recovery is underway.
"Given our outlook that the optical communications market will continue to benefit from strong growth trends over the coming years, during the fourth quarter we continued to make the necessary operational investments to capitalize on those opportunities in the years ahead," continued Gertel. "We have grown the company by delivering high-performing 10Gb/s and cable TV solutions to our customers. Now, we are expanding on those successes by making strategic investments that position us extremely well in two additional high-growth markets, ROADM and 40Gb/s products. In fiscal 2008, we will continue to invest in product development and manufacturing capacity in these areas and expect customer demand for each of these product lines to continue to build throughout the year.
"Our goal for fiscal 2008 is to build on our strong fiscal 2007 performance. We expect our addressable markets to grow at a combined rate of 30% over the next twelve months. For fiscal 2008, we believe we have the right strategies in place to meet or exceed this growth rate," stated Gertel. "For the first fiscal quarter of 2008 ending November 3, 2007, we expect revenues to be in the range of $34 to $35 million, indicating sequential growth of 27% to 31%.
"We believe we are well positioned to capitalize on our market opportunities in 2008. Our ability to provide intelligent subsystems centered around 10Gb/s, 40Gb/s, ROADM, cable TV and fiber to the home gives us a unique market position and added competitive advantage. With the explosive growth in video and the accelerating convergence of voice, video and data expected in the IP network, we believe all of our product lines will play an important role in the evolution of network architecture and changes in carriers' service delivery models over the coming years," concluded Gertel.
Conference Call Information
The Company will host a conference call to discuss its financial performance and further information regarding its projected results for fiscal 2008 following this release on Thursday, September 20, 2007 at 4:30 p.m. eastern. The dial-in number is (800) 289-0572. A webcast of the call, both live and archived, will also be available through the investor relations section of Optium's website at http://ir.optium.com A replay of the call will be available this evening through midnight on September 27, 2007 and can be accessed by dialing (719) 457-0820 or (888) 203-1112, access code 9401463.
Optium is a leading designer and manufacturer of high-performance optical subsystems supporting core to the edge applications for use in telecommunications and cable TV network systems. Optium's broad suite of optical transport solutions feature fixed and wavelength agile 10Gb/s and 40Gb/s transceivers and subsystems, 10Gb/s pluggable transceivers, cable TV trunking and distribution subsystems and Optium's next generation WSS ROADM product line. Quoted on the NASDAQ Global Market under the symbol "OPTM," Optium is headquartered in Horsham, Pennsylvania and has offices in Sydney, Australia and Nes Ziona, Israel. For more information, visit http://www.optium.com.
Certain statements made in this press release that are not based on historical information are forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This press release contains express or implied forward-looking statements relating to, among other things, business outlook of Optium Corporation (the "Company"). These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond the Company's control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things: risks associated with our revenue and other financial forecasts, which may differ materially from our actual results; risks associated with the Company's dependence on a limited number of customers for a significant percentage of its revenues; risks associated with the Company's ability to sell a sufficient number of ROADMs to realize the operational benefits expected from the Company's acquisition of LCoS IP assets; risks associated with integrating a newly-acquired business; risks associated with changes in the demand for the Company's products and/or aggressive competition, which may force the Company to reduce prices; risks associated with the development and acceptance of new products and product features; risks associated with dependence on a limited number of component suppliers and/or increased demand for components, which could lead to shortages that could disrupt or delay company shipments; risks associated with making significant investments in the expansion of the business and with increased expenditures ahead of anticipated revenues; risks associated with the Company's products being dependent upon the ability to anticipate and quickly respond to evolving technologies and customer requirements; risks associated with becoming subject to defending and resolving allegations or claims of infringement of intellectual property rights; risks associated with others infringing on the Company's intellectual property rights; risks associated with the Company's ability to retain existing personnel and recruit and retain qualified personnel; risks associated with rapidly changing technology and the ability of the Company to introduce new products on a timely and cost-effective basis; risks associated with changes in the competitive or regulatory environment in which the Company operates; and other risks. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Optium Corporation undertakes no obligation to update or revise its forward looking statements contained in this press release, whether as a result of new information, future events or circumstances or otherwise. For additional disclosure regarding these and other risks faced by Optium Corporation, see the disclosure contained in Optium Corporation's public filings with the Securities and Exchange Commission, including the risk factors included in Optium Corporation's Quarterly Report on Form 10-Q, filed June 11, 2007. All filings are available through the SEC's website at www.sec.gov or from Optium Corporation's web site at www.optium.com.
Optium Fourth Quarter and Fiscal Year 2007 GAAP Results:
Consolidated statements of operations for the three-month periods and fiscal years set forth below are on a GAAP basis as follows (in thousands, except per share amounts):
--- Three months ended --- --- Year ended ---
July 28, April 28, July 29, July 28, July 29,
2007 2007 2006 2007 2006
(unaudited)(unaudited)(unaudited)(unaudited)
Revenues $ 26,782 $ 34,547 $ 22,985 $125,478 $ 69,477
Cost of
revenues 20,492 25,190 16,315 91,201 51,952
-------- -------- -------- -------- --------
Gross profit 6,290 9,357 6,670 34,277 17,525
Operating
expenses:
Research and
product
development 4,862 3,379 2,511 14,751 8,491
Acquired in-
process
research and
development 10,000 -- -- 10,000 11,187
Selling,
general and
administrative 4,309 3,711 2,491 14,205 6,062
-------- -------- -------- -------- --------
Total operating
expenses 19,171 7,090 5,002 38,956 25,740
-------- -------- -------- -------- --------
Income (loss)
from operations (12,881) 2,267 1,668 (4,679) (8,215)
Interest and
other income
(expense), net 1,096 1,333 103 3,587 211
-------- -------- -------- -------- --------
Income (loss)
before income
tax (11,785) 3,600 1,771 (1,092) (8,004)
Income tax
(benefit)
provision (13,000) 182 76 (12,346) 119
-------- -------- -------- -------- --------
Net income
(loss) $ 1,215 $ 3,418 $ 1,695 $ 11,254 $ (8,123)
======== ======== ======== ======== ========
Net income
(loss) per
share:
Basic $ 0.05 $ 0.13 $ 0.59 $ 0.58 $ (3.68)
====== ====== ====== ====== =======
Diluted $ 0.05 $ 0.13 $ 0.08 $ 0.45 $ (3.68)
====== ====== ====== ====== =======
Weighted average
shares
outstanding:
Basic 25,395 25,350 2,850 19,536 2,206
======== ======== ======== ======== ========
Diluted 26,119 26,647 20,441 24,793 2,206
======== ======== ======== ======== ========
Optium Fourth Quarter and Fiscal 2007 Non-GAAP Results:
Use of Non-GAAP Financial Measures
In this earnings release, the Company uses certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A reconciliation between non-GAAP and GAAP gross profit, net income (loss) and net income (loss) per diluted share can be found below. The Company believes that non-GAAP gross profit, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share, as calculated to exclude certain non-recurring and/or non-cash charges, such as stock-based compensation charges, acquired in-process research and development expense, amortization of purchased intangibles, duplicate facility costs during facility move and tax benefit resulting from deferred tax assets, are indications of the Company's baseline operating performance before gains, losses or other charges that are considered by management to be outside of the Company's core operating results. The Company has incurred acquired in-process research and development expense as a result of its acquisitions of Engana Pty Limited in March 2006 and Kailight Photonics, Inc. in May 2007. In addition, the Company has incurred duplicate facility costs during facility move as a result of the execution of a lease for a new U.S. operating facility and the early termination of the lease for its current operating facility. The Company completed its facility relocation during the third quarter of fiscal 2007. The Company purchased intangible assets from Microdisplay Corporation in July 2007 and will amortize the purchase price of these purchased intangibles over a five year period. Management does not consider stock-based compensation expenses, acquired in-process research and development expense, amortization of purchased intangibles, duplicate facility costs during facility move or the recognition of deferred tax assets to be part of its core operations because (a) stock-based compensation and amortization of purchased intangibles are non-cash charges, (b) acquired in-process research and development expense is a non-recurring item that is fully expensed upon the closing of an acquisition, (c) duplicate facility cost during facility move is a non-recurring charge not expected to be incurred in the future, and (d) the tax benefit resulting from recording the Company's deferred tax assets is a non-cash, nonrecurring item that is recognized upon removal of valuation allowances associated with net operating losses (NOLs) and other credits in the United States. Non-GAAP diluted shares outstanding for the three months ended July 28, 2007 are not in accordance with GAAP since there was a loss in the period. Under GAAP, when there is a loss for the period, basic and diluted shares outstanding are the same. In the non-GAAP reconciliation, the non-GAAP diluted share count is the same as the share count as if there was a non-GAAP profit for the three months ended July 28, 2007 because the Company believes that such a presentation is more useful to investors when comparing GAAP and non-GAAP results for the quarter. In addition, non-GAAP gross profit, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share as calculated are primary financial measures that the Company uses to evaluate its financial performance and forecast future financial results. While non-GAAP gross profit, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share are not measures calculated in accordance with GAAP or alternatives for measures calculated in accordance with GAAP, such as gross profit, net income (loss) and net income (loss) per diluted share, the Company believes that providing this information to investors, in addition to GAAP measures such as gross profit, net income (loss) and net income (loss) per diluted share, allows investors to better evaluate its current core operating performance relative to prior periods and its financial results in comparison to its competitors. However, non-GAAP gross profit, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share:
* are not measures of financial performance calculated in accordance with GAAP; * do not represent gross profit, net income (loss) or net income (loss) per diluted share as defined by GAAP; and, * should not be considered as an alternative to gross profit, net income (loss) or net income (loss) per diluted share prepared in conformity with GAAP.
Further, non-GAAP gross profit, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share as calculated below may not be necessarily comparable to similarly titled measures reported by other companies.
These non-GAAP measures have been reconciled to the nearest GAAP measure as required under Securities and Exchange Commission rules. A reconciliation of each of the non-GAAP financial measures to GAAP financial measures is set forth below (in thousands, except per share amounts):
Reconciliation of GAAP and Non-GAAP Financial Measures
--- Three months ended --- --- Year ended ---
July 28, April 28, July 29, July 28, July 29,
2007 2007 2006 2007 2006
(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
Reconciliation
of GAAP to
non-GAAP gross
profit:
GAAP gross
profit $ 6,290 $ 9,357 $ 6,670 $ 34,277 $ 17,525
GAAP gross
profit margin 23.5% 27.1% 29.0% 27.3% 25.2%
Non-GAAP
adjustments
to gross
profit:
Cost of
revenues:
Stock-based
compensation 33 23 -- 67 --
-------- -------- -------- -------- --------
Total non-GAAP
adjustments to
gross profit 33 23 -- 67 --
-------- -------- -------- -------- --------
Non-GAAP gross
profit $ 6,323 $ 9,380 $ 6,670 $ 34,344 $ 17,525
======== ======== ======== ======== ========
Non-GAAP gross
profit margin 23.6% 27.2% 29.0% 27.4% 25.2%
======== ======== ======== ======== ========
Reconciliation
of GAAP to
non-GAAP net
income (loss)
and non-GAAP net
income (loss)
per share:
GAAP net income
(loss) $ 1,215 $ 3,418 $ 1,695 $ 11,254 $ (8,123)
Cost of
revenues:
Stock-based
compensation 33 23 -- 67 --
Operating
expenses:
Research and
product
development
Stock-based
compensation 164 69 -- 257 --
Acquired
in-process
research and
development 10,000 -- -- 10,000 11,187
Selling,
general and
administrative
Amortization
of purchased
intangibles 17 -- -- 17 --
Duplicate
facility
costs during
facility
move -- 171 -- 610 --
Stock-based
compensation 459 325 106 1,181 122
Income tax
(benefit)
provision, net (13,039) (29) (2) (13,109) (2)
-------- -------- -------- -------- --------
Non-GAAP net
income (loss) $ (1,151) $ 3,977 $ 1,799 $ 10,277 $ 3,184
======== ======== ======== ======== ========
GAAP net income
(loss) per
share:
Basic $ 0.05 $ 0.13 $ 0.59 $ 0.58 $ (3.68)
======== ======== ======== ======== ========
Diluted $ 0.05 $ 0.13 $ 0.08 $ 0.45 $ (3.68)
======== ======== ======== ======== ========
Shares used in
computing GAAP
net income
(loss) per
share:
Basic 25,395 25,350 2,850 19,536 2,206
======== ======== ======== ======== ========
Diluted 26,119 26,647 20,441 24,793 2,206
======== ======== ======== ======== ========
Non-GAAP net
income (loss)
per share:
Basic $ (0.05) $ 0.16 $ 0.63 $ 0.53 $ 1.44
======== ======== ======== ======== ========
Diluted $ (0.04) $ 0.15 $ 0.09 $ 0.41 $ 0.16
======== ======== ======== ======== ========
Shares used in
computing non-
GAAP net income
(loss) per
share:
Basic 25,395 25,350 2,850 19,536 2,206
======== ======== ======== ======== ========
Diluted 26,119 26,647 20,441 24,793 20,103
======== ======== ======== ======== ========
Condensed Consolidated Balance Sheets
(in thousands)
July 28, July 29,
2007 2006
-----------------------
(unaudited)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 25,359 $ 10,377
Short-term investments 36,018 --
Accounts receivable, net 21,853 19,075
Inventories, net 20,684 11,701
Deferred taxes, current portion 4,976 --
Prepaid expenses and other current assets 1,107 407
--------- ---------
TOTAL CURRENT ASSETS 109,997 41,560
PROPERTY AND EQUIPMENT, net 9,124 5,207
GOODWILL 37,923 10,533
DEFERRED TAX, NONCURRENT PORTION 8,881 --
INTANGIBLES, NET 2,006 --
OTHER ASSETS 170 2,009
--------- ---------
TOTAL ASSETS $ 168,101 $ 59,309
========= =========
LIABILITIES, REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS'
EQUITY (DEFICIT)
-----------------------------------
CURRENT LIABILITIES:
Accounts payable $ 20,222 $ 18,386
Accrued expenses 4,389 2,207
Accrued warranty 359 223
Other current liabilities -- 2,640
Current portion of debt 46 320
--------- ---------
TOTAL CURRENT LIABILITIES 25,016 23,776
Long-term debt, net of current portion 17 351
Long-term liabilities 189 97
--------- ---------
TOTAL LIABILITIES 25,222 24,224
--------- ---------
REDEEMABLE CONVERTIBLE PREFERRED STOCK -- 87,173
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock 3 --
Additional paid-in capital-common stock 191,118 9,173
Deferred compensation (924) (1,170)
Accumulated other compensation income 1,839 320
Treasury stock (2,762) (2,762)
Accumulated deficit (46,395) (57,649)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 142,879 (52,088)
--------- ---------
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 168,101 $ 59,309
========= =========
Consolidated Statements of Cash Flows
(in thousands)
Year ended Year ended
July 28, July 29,
2007 2006
----------------------
Cash flows from operating activities: (unaudited)
Net income (loss) $ 11,254 $ (8,123)
Adjustments to reconcile net income (loss)
to net cash (used in) provided by operating
activities:
Depreciation and amortization 2,709 2,520
Stock-based compensation 1,505 162
Acquired in-process research and development 10,000 11,187
Deferred taxes (benefit) (13,857) --
Provisions for doubtful accounts 22 1
Loss on disposal of property and equipment 9 --
Changes in operating assets and liabilities:
Accounts receivable (2,351) (11,141)
Inventories (8,927) (5,937)
Prepaid expenses and other current assets (709) 99
Other assets (243) 23
Accounts payable 1,207 9,606
Accrued expenses 1,116 1,267
Other current liabilities (2,640) 2,640
Warranty liabilities 135 117
Other long term liabilities 39 (3)
---------------------
Net cash (used in) provided by operating
activities $ (731) $ 2,418
---------------------
Cash flows from investing activities:
Purchase of property and equipment (5,859) (3,030)
Proceeds from sale of property and equipment 30 --
Release of restricted cash -- 292
Purchases of marketable securities (114,452) --
Maturities and sales of marketable securities 78,434 --
Cash acquired from acquisition of Engana, net
of transaction costs -- 4,001
Purchase of Kailight Photonics, LLC, net of
cash acquired (35,222) --
Purchase of Microdisplay intellectual property (2,023) --
---------------------
Net cash provided by (used in) investing
activities $ (79,092) $ 1,263
---------------------
Cash flows from financing activities:
Payments of line of credit (685) (150)
Deferred financing costs -- (1,915)
Proceeds from initial public offering 95,378 --
Proceeds from warrant exercise -- 33
Proceeds from exercise of employee stock
options 153 175
---------------------
Net cash provided by (used in) financing
activities $ 94,846 $ (1,857)
---------------------
Effect of exchange rate changes on cash and
cash equivalent (41) 79
Net increase in cash and cash equivalents 14,982 1,903
Cash and cash equivalents, beginning of period 10,377 8,474
---------------------
Cash and cash equivalents, end of period $ 25,359 $ 10,377
Optm-F