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Earnings reports

New Focus Concludes Q1

SAN JOSE, Calif. -- New Focus, Inc., (Nasdaq: NUFO), a leading supplier of innovative fiber optic products for next-generation optical networks under the Smart Optics for Networks(TM) brand, today announced financial results for its first quarter ended April 1, 2001. The company indicated that first quarter results included net revenue that met the revised guidance issued by the company on March 5, 2001 and a substantial charge for inventory write-downs and related charges that widened the company's operating loss. The company further stated that second quarter results would include a restructuring charge associated with actions related to additional work force reductions and the consolidation of facilities.

Net revenue for the first quarter of 2001 was $40.8 million, up from $33.9 million in the fourth quarter of 2000 and $9.8 million in the first quarter of 2000. During the first quarter of 2001 the company acquired JCA Technology, Inc. and Globe Y. Technology, Inc. Net revenue from these two acquisitions in the first quarter of 2001 totaled $10.9 million.

Net revenue from the company's fiber optic products in the first quarter of 2001 totaled $32.3 million, up 28% from $25.3 million in the fourth quarter of 2000. In the first quarter of 2000 fiber optic products accounted for $4.9 million of the company's net revenue. Net revenue from the company's photonics tool products in the first quarter of 2001 totaled $8.5 million, down slightly from $8.6 million in the fourth quarter of 2000. In the first quarter of 2000 photonics tool products accounted for $4.9 million of the company's net revenue.

The pro forma net loss in the first quarter of 2001, excluding amortization of acquired intangibles, deferred compensation and related income tax effects, was $31.3 million, or $0.44 per share based on 70.5 million basic shares outstanding. This pro forma net loss included a charge of $28.5 million for the write-down of excess inventories and related charges. Excluding this charge, the net loss for the first quarter was $2.8 million, or $0.04 per share based on 70.5 million basic shares outstanding. In the fourth quarter of 2000 the company reported pro forma net income of $2.6 million, or $0.04 per share based on 64.1 million diluted shares outstanding. The pro forma net loss for the first quarter of 2000 was $6.9 million, or $0.14 per share based on 47.8 million basic shares outstanding.

The pro forma calculation for the first quarter of 2001 excluded non-cash charges of $25.3 million for the amortization of deferred stock compensation, $21.4 million for the amortization of goodwill and other intangibles, and $13.4 million for the write-off of acquired in-process R&D. The deferred stock compensation charges in the fourth and first quarters of 2000 were $4.8 million and $5.5 million, respectively. The number of shares used in the calculation of the pro forma net loss per share for the first quarter of 2000 assumed the conversion of the company's convertible preferred stock into common stock. This conversion was completed in conjunction with the company's initial public offering in May 2000.

Without the pro forma adjustments to eliminate the goodwill and other intangibles, in-process R&D, deferred stock compensation charges and related income tax effects, the company recorded a net loss for the first quarter of 2001 of $86.3 million, or $1.22 per share based on 70.5 million basic shares outstanding. The net loss for the fourth quarter of 2000 of $2.3 million, or $0.04 per share based on 60.5 million basic shares outstanding. For the first quarter of 2000 the net loss was $12.5 million, or $2.12 per share based on 5.9 million shares outstanding. Shares outstanding for this period excluded the conversion of preferred stock into common stock.

"Like many other companies in our industry, we have experienced a downturn in our near-term business prospects due to conditions within the telecommunications industry and the U.S. economy. Our industry is currently going through a difficult inventory correction cycle created by the sudden and sharp decline in capital equipment expenditures by telecommunications carriers. As a result of lower customer demand for our products and a current lack of visibility into future order flow, we recorded a $28.5 million charge for the write-down of excess inventories and related charges in the first quarter. Excluding this charge, our gross margin percentage in the first quarter was 34.0%," said Ken Westrick, president and chief executive officer of New Focus, Inc.

New Focus Inc.
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