Oclaro Announces First Quarter Fiscal Year 2013 Financial Results

      Oclaro Announces First Quarter Fiscal Year 2013 Financial Results

PR Newswire

SAN JOSE, Calif., Nov. 5, 2012

SAN JOSE, Calif., Nov. 5, 2012 /PRNewswire/ -- Oclaro, Inc. (NASDAQ: OCLR), a
provider of optical components, modules and subsystems, today announced the
financial results for its first quarter of fiscal year 2013, which ended
September 29, 2012.

"While our financial results for the fiscal first quarter 2013
weredisappointing, our integration is on track and we are executing on our
synergies,"said Alain Couder, chairman and CEO. "As the new Oclaro, we were
immersed in integration activities, and therefore did not fully contemplate
all potential execution risks in our forecast. With the difficult market
conditions facing the industry, we focused on short-term synergies and expense
reduction, which will reduce our combined expenses by $9 million per quarter
in the December 2012 quarter compared to pre-merger levels. In the meantime,
our new organization is firmly in place and we are fully operating as the new
Oclaro. With the continuing soft telecom market, our focus is to execute on
synergies that are expected to improve margins over the next few quarters. In
addition, we are also focused on ramping new products, including 100G, that we
expect will position Oclaro wellfor a positive turn of the telecom market."

Results for the First Quarter of Fiscal 2013:

The financial results for the first quarter of fiscal 2013 include
approximately ten weeks of operating results of Opnext since the closing of
the merger, which occurred on July 23, 2012. Results for the fourth quarter
of fiscal 2012 were pre-merger Oclaro and do not include the operating results
of Opnext.

  oRevenues were $148.8 million for the first quarter of fiscal 2013,
    compared with revenues of $104.4 million in the fourth quarter of fiscal
    2012. Pro forma combined revenues for the full first fiscal quarter,
    including Opnext for the full quarter, were $160.2 million.
  oGAAP gross margin was 12% for the first quarter of fiscal 2013, compared
    with a GAAP gross margin of 21% in the fourth quarter of fiscal 2012.

       oNon-GAAP gross margin was 13% for the first quarter of fiscal 2013,
         compared with a non-GAAP gross margin of 21% in the fourth quarter of
         fiscal 2012.

  oGAAP operating loss was $47.4 million for the first quarter of fiscal
    2013. This compares with a GAAP operating loss of $4.0 million in the
    fourth quarter of fiscal 2012, which included an $11.7 million gain on the
    sale of assets previously held for sale and $3.4 million of net
    flood-related income from insurance advances, net of additional write-offs
    and expenses, due to the flooding in Thailand.

       oNon-GAAP operating loss was $29.4 million for the first quarter of
         fiscal 2013, compared with a non-GAAP operating loss of $9.9 million
         in the fourth quarter of fiscal 2012.

  oAdjusted EBITDA was negative $20.6 million for the first quarter of fiscal
    2013, compared with negative $5.0 million in the fourth quarter of fiscal
    2012.
  oGAAP net loss for the first quarter of fiscal 2013 was $9.4 million, and
    included a gain on bargain purchase of $39.5 million related to the
    acquisition of Opnext. This compares with a GAAP net loss of $17.2 million
    in the fourth quarter of fiscal 2012, which included an $11.7 million gain
    on the sale of assets previously held for sale and $3.4 million of net
    flood-related income from insurance advances, net of additional write-offs
    and expenses, due to the flooding in Thailand.

       oNon-GAAP net loss for the first quarter of fiscal 2013 was $31.1
         million, and excluded a gain on bargain purchase of $39.5 million
         related to the acquisition of Opnext. This compares with a non-GAAP
         net loss of $10.5 million in the fourth quarter of fiscal 2012, which
         excluded an $11.7 million gain on the sale of assets previously held
         for sale and $3.4 million of net flood-related income from insurance
         advances, net of additional write-offs and expenses, due to the
         flooding in Thailand.

  oCash, cash equivalents and restricted cash were $94.4 million at September
    29, 2012, compared with $62.4 million at June 30, 2012. On November 2,
    2012 the Company closed an extension of its line of credit with Wells
    Fargo Capital Finance, which also increased the line to $50 million with
    an uncommitted incremental $50 million accordion provision structured to
    allow the potential for additional banks to participate as syndication
    partners in the future. The line has a five year term and the Company
    expects in excess of $10 million of additional short-term availability on
    top of the $37 million which was outstanding as of September 29, 2012.

Second Quarter Fiscal Year 2013 Outlook

The results of Oclaro for the second quarter of fiscal 2013, which ends
December 29, 2012, are expected to be:

  oRevenues in the range of $145 million to $162 million.
  oNon-GAAP gross margin in the range of 12% to 18%.
  oAdjusted EBITDA in the range of negative $20 million to negative $9
    million.

The foregoing guidance is based on current expectations. These statements are
forward looking, and actual results may differ materially. Please see the Safe
Harbor Statement in this earnings release for a description of certain
important risk factors that could cause actual results to differ, and refer to
Oclaro's, most recent annual and quarterly reports on file with the Securities
and Exchange Commission (SEC) for a more complete description of these risks.
Furthermore, our outlook excludes items that may be required by GAAP,
including, but not limited to, restructuring and related costs, acquisition or
disposal related costs, any additional flood-related write-offs and expenses,
expenses or income from certain legal actions, settlements and related costs
outside our normal course of business, impairments of other long-lived assets,
depreciation and amortization, extraordinary items, as well as the expensing
of stock options and restricted stock grants. We do not intend to update this
guidance as a result of developments occurring after the date of this release.

Conference Call

Oclaro will hold a conference call to discuss financial results for the first
quarter of fiscal 2013 today at 1:30 p.m. PT/4:30 p.m. ET. To listen to the
live conference call, please dial (480) 629-9856. A replay of the conference
call will be available through November 12, 2012. To access the replay, dial
(858) 384-5517. The passcode for the replay is 4571164. A webcast of this
call and a supplemental presentation will be available in the investor section
of Oclaro's website at www.oclaro.com.

About Oclaro

Oclaro, Inc. (NASDAQ: OCLR) is one of the largest providers of lasers and
optical components, modules and subsystems for the optical communications,
industrial and consumer laser markets. The company is a global leader
dedicated to photonics innovation, with cutting-edge research and development
(R&D) and chip fabrication facilities in the U.S., U.K., Italy, Switzerland,
Israel, Korea and Japan. It has in-house and contract manufacturing sites in
China, Malaysia and Thailand, with design, sales and service organizations in
most of the major regions around the world. For more information, visit
http://www.oclaro.com.

Copyright 2012. All rights reserved. Oclaro, the Oclaro logo, and certain
other Oclaro trademarks and logos are trademarks and/or registered trademarks
of Oclaro, Inc. or its subsidiaries in the U.S. and other countries.
Information in this release is subject to change without notice.

Safe Harbor Statement

This press release contains statements about management's future expectations,
plans or prospects of Oclaro and its business, and together with the
assumptions underlying these statements, constitute forward-looking statements
for the purposes of the safe harbor provisions of The Private Securities
Litigation Reform Act of 1995. These forward-looking statements include
statements concerning (i) financial targets and expectations, and progress
toward our target business model, including financial guidance for the fiscal
quarter ending December 29, 2012 regarding revenue, non-GAAP gross margin and
Adjusted EBITDA, and (ii) expectations related to the integration of Opnext
into Oclaro following the closing of the merger on July 23, 2012, (iii) our
market position and future operating prospects. Such statements can be
identified by the fact that they do not relate strictly to historical or
current facts and may contain words such as "anticipate," "estimate,"
"expect," "project," "intend," "plan," "believe," "will," "should," "outlook,"
"could," "target," and other words and terms of similar meaning in connection
with any discussion of future operations or financial performance. There are
a number of important factors that could cause actual results or events to
differ materially from those indicated by such forward-looking statements,
including (i) the future performance of Oclaro and its ability to effectively
integrate the operations of acquired companies following the closing of
acquisitions and mergers, including its merger with Opnext (ii) the potential
inability to realize the expected benefits and synergies of acquisitions and
mergers, (iii) the impact to our operations and financial condition
attributable to the flooding in Thailand, (iv) the impact of continued
uncertainty in world financial markets and any resulting reduction in demand
for our products, (v) our ability to maintain our gross margin, (vi) the
effects of fluctuating product mix on our results, (vii) our ability to timely
develop and commercialize new products, (viii) our ability to respond to
evolving technologies and customer requirements, (ix) our dependence on a
limited number of customers for a significant percentage of our revenues, (x)
our ability to effectively compete with companies that have greater name
recognition, broader customer relationships and substantially greater
financial, technical and marketing resources than we do, (xi) our ability to
effectively and efficiently transition to an outsourced back-end assembly and
test model, (xii) increased costs related to downsizing and compliance with
regulatory compliance in connection with such downsizing, (xiii) competition
and pricing pressure, (xiv)the potential lack of availability of credit or
opportunity for equity based financing, (xv) the risks associated with our
international operations, (xvi)the outcome of tax audits or similar
proceedings, (xvii) the outcome of pending litigation against the company,
(xviii) our ability to maintain or increase our cash reserves and obtain
financing on terms acceptable to us, and (xix) other factors described in
Oclaro's most recent annual report on Form 10-K and other documents we
periodically file with the SEC. The forward-looking statements included in
this announcement represent Oclaro's view as of the date of this
announcement. Oclaro anticipates that subsequent events and developments may
cause Oclaro's views and expectations to change. Oclaro specifically
disclaims any intention or obligation to update any forward-looking statements
as a result of developments occurring after the date of this announcement.

Non-GAAP Financial Measures

Oclaro provides certain supplemental non-GAAP financial measures to its
investors as a complement to the most comparable GAAP measures. The GAAP
measure most directly comparable to non-GAAP gross margin rate is gross margin
rate. The GAAP measure most directly comparable to non-GAAP operating
income/loss is operating income/loss. The GAAP measure most directly
comparable to non-GAAP net income/loss and Adjusted EBITDA is net income/loss.
An explanation and reconciliation of each of these non-GAAP financial measures
to GAAP information is set forth below.

Oclaro believes that providing these non-GAAP measures to its investors, in
addition to corresponding income statement measures, provides investors the
benefit of viewing Oclaro's performance using the same financial metrics that
the management team uses in making many key decisions and evaluating how
Oclaro's "core operating performance" and its results of operations may look
in the future. Oclaro defines "core operating performance" as its ongoing
performance in the ordinary course of its operations. Items that are
non-recurring or do not involve cash expenditures, such as impairment charges,
income taxes, restructuring and severance programs, costs relating to specific
major projects (such as acquisitions), gain on bargain purchase, non-cash
compensation related to stock and options and certain income, purchase
accounting adjustments related to the fair market value of acquired
inventories, write-offs and expenses related to flooding in Thailand,
including advance payments received from insurers, impairment of fixed assets
and inventory and related expenses, are not included in Oclaro's view of "core
operating performance." Management does not believe these items are
reflective of Oclaro's ongoing core operations and accordingly excludes those
items from non-GAAP gross margin rate, non-GAAP operating income/loss,
non-GAAP net income/loss and Adjusted EBITDA. Additionally, each non-GAAP
measure has historically been presented by Oclaro as a complement to its most
comparable GAAP measure, and Oclaro believes that the continuation of this
practice increases the consistency and comparability of Oclaro's earnings
releases.

Non-GAAP financial measures are not in accordance with, or an alternative for,
generally accepted accounting principles in the United States of America.
Non-GAAP measures should not be considered in isolation from or as a
substitute for financial information presented in accordance with generally
accepted accounting principles, and may be different from non-GAAP measures
used by other companies.

Non-GAAP Gross Margin Rate
Non-GAAP gross margin rate is calculated as gross margin rate as determined in
accordance with GAAP (gross profit as a percentage of revenues) excluding
non-cash compensation related to stock and options and purchase accounting
adjustments related to the fair market value of acquired inventories. Oclaro
evaluates its performance using non-GAAP gross margin rate to assess Oclaro's
historical and prospective operating financial performance, as well as its
operating performance relative to its competitors.

Non-GAAP Operating Income/Loss
Non-GAAP operating income/loss is calculated as operating income/loss as
determined in accordance with GAAP excluding the impact of amortization of
intangible assets, restructuring, acquisition and related costs, non-cash
compensation related to stock and options granted to employees and directors,
certain other one-time charges and credits and excluding any flood related
advance payments received from insurers, impairment of fixed assets and
inventory and related expenses specifically identified in the non-GAAP
reconciliation schedules set forth below. Oclaro evaluates its performance
using, among other things, non-GAAP operating income/loss in evaluating
Oclaro's historical and prospective operating financial performance, as well
as its operating performance relative to its competitors.

Non-GAAP Net Income/Loss
Non-GAAP net income/loss is calculated as net income/loss excluding the impact
of restructuring, acquisition and related costs, gain on bargain purchase,
Thailand flood-related income and expenses, non-cash compensation related to
stock and options granted to employees and directors, net foreign currency
translation gains/losses, the impact of amortization of intangible assets and
certain other one-time charges and credits specifically identified in the
non-GAAP reconciliation schedules set forth below. Oclaro uses non-GAAP net
income/loss in evaluating Oclaro's historical and prospective operating
financial performance, as well as its operating performance relative to its
competitors.

Adjusted EBITDA
Adjusted EBITDA is calculated as net income/loss excluding the impact of
income taxes, net interest income/expense, depreciation and amortization, net
foreign currency translation gains/losses, as well as restructuring,
acquisition and related costs, non-cash compensation related to stock and
options, gain on bargain purchase, purchase accounting adjustments related to
the fair market value of acquired inventories and certain other one-time
charges and credits, including flood related advance payments received from
insurers, impairment of fixed assets and inventory and related expenses,
specifically identified in the non-GAAP reconciliation schedules set forth
below. Oclaro uses Adjusted EBITDA in evaluating Oclaro's historical and
prospective cash usage, as well as its cash usage relative to its competitors.
Specifically, management uses this non-GAAP measure to further understand and
analyze the cash used in/generated from Oclaro's core operations. Oclaro
believes that by excluding these non-cash and non-recurring charges, more
accurate expectations of its future cash needs can be assessed in addition to
providing a better understanding of the actual cash used in or generated from
core operations for the periods presented. Oclaro further believes that
providing this information allows Oclaro's investors greater transparency and
a better understanding of Oclaro's core cash position.



OCLARO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
                                Three Months Ended
                                September 29,     June 30,
                                2012                           October 1, 2011
                                                  2012
Revenues                        $    148,813  $104,440     $ 105,821
Cost of revenues                130,976           82,991       81,788
Gross profit                    17,837            21,449       24,033
Operating expenses:
  Research and development      25,765            17,267       17,667
  Selling, general and          24,566            15,693       17,534
  administrative
  Amortization of intangible    2,026             776          726
  assets
  Restructuring, acquisition    12,636            6,718        (1,765)
  and related costs
  Flood-related (income)        264               (3,363)      -
  expense, net
  (Gain) loss on sale of        (18)              (11,650)     60
  property and equipment
Total operating expenses        65,239            25,441       34,222
Operating loss                  (47,402)          (3,992)      (10,189)
Other income (expense):
  Interest income (expense),    (478)             (416)        (157)
  net
  Gain (loss) on foreign        196               687          1,392
  currency translation
  Gain on bargain purchase      39,460            -            -
Total other income (expense)    39,178            271          1,235
Loss before income taxes        (8,224)           (3,721)      (8,954)
Income tax provision            1,183             210          5,628
Net loss                        $             $  (3,931)  $ (14,582)
                                (9,407)
Net loss per share:
  Basic                         $            $  (0.08)  $   (0.29)
                                (0.12)
  Diluted                       $            $  (0.08)  $   (0.29)
                                (0.12)
Shares used in computing net
loss per share:
  Basic                         80,219            50,831       49,448
  Diluted                       80,219            50,831       49,448
Stock-based compensation
included in the following:
 Cost of revenues            $           $    427  $    309
                                338
 Research and development    376               357          367
 Selling, general and         886               878          907
administrative
  Total                         $            $  1,662   $   1,583
                                1,600

OCLARO, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except per share amounts)
                                 Three Months Ended
                                 September 29,    June 30,      October 1,
                                 2012                           2011
                                                  2012
Reconciliation of GAAP net loss
to non-GAAP net loss and
adjusted EBITDA:
GAAP net loss                    $          $  (3,931)   $  (14,582)
                                 (9,407)
    Stock-based compensation
    included in:
     Cost of revenues         338              427           309
     Research and development 376              357           367
     Selling, general and      886              878           907
    administrative
    Amortization expense         2,026            776           726
    Restructuring, acquisition   12,636           6,718         (1,765)
    and related costs
    Flood-related (income)       264              (3,363)       -
    expense, net
    Opnext FMV inventory         1,462            -             -
    adjustment
    Gain on bargain purchase     (39,460)         -             -
    Gain on sale of assets       -                (11,672)      -
    previously held for sale
    (Gain) loss on foreign       (196)            (687)         (1,392)
    currency translation
Non-GAAP net loss                (31,075)         (10,497)      (15,430)
    Income tax provision        1,183            210           5,628
    Depreciation expense         8,825            4,918         5,116
    Interest (income) expense,   478              416           157
    net
Adjusted EBITDA                  $           $  (4,953)   $   (4,529)
                                 (20,589)
Non-GAAP net loss per share:
    Basic                        $         $   (0.21)  $   
                                 (0.39)                        (0.31)
    Diluted                      $         $   (0.21)  $   
                                 (0.39)                        (0.31)
Shares used in computing
Non-GAAP net loss per share:
    Basic                        80,219           50,831        49,448
    Diluted                      80,219           50,831        49,448
Reconciliation of GAAP gross
margin rate tonon-GAAP gross
margin rate:
GAAP gross profit                $          $  21,449    $   24,033
                                 17,837
Opnext FMV inventory adjustment  $         $        $      
                                 1,462             -           -
Stock-based compensation in cost 338              427           309
of revenues
    Non-GAAP gross profit        $          $  21,876    $   24,342
                                 19,637
GAAP gross margin rate           12.0%            20.5%         22.7%
Non-GAAP gross margin rate       13.2%            20.9%         23.0%
Reconciliation of GAAP operating
loss to non-GAAP operating loss:
GAAP operating loss              $           $  (3,992)   $  (10,189)
                                 (47,402)
Stock-based compensation
included in:
    Cost of revenues           338              427           309
    Research and development   376              357           367
    Selling, general and        886              878           907
    administrative
Amortization of intangible       2,026            776           726
assets
Restructuring, acquisition and   12,636           6,718         (1,765)
related costs
Flood-related (income) expense,  264              (3,363)       -
net
Opnext FMV inventory adjustment  1,462            -             -
Gain on sale of assets           -                (11,672)      -
previously held for sale
    Non-GAAP operating gain      $           $  (9,871)   $   (9,645)
    (loss)                       (29,414)

OCLARO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
ASSETS                                   September 29, 2012    June 30, 2012
Current assets:
 Cash, cash equivalents and short-term   $       73,817  $    61,760
 investments
 Restricted cash                         20,533                614
 Accounts receivable, net                112,230               74,666
 Inventories                             154,978               78,444
 Prepaid expenses and other current      23,414                12,582
 assets
Total current assets                     384,972               228,066
Property and equipment, net              121,957               59,616
Other intangible assets, net             41,817                16,645
Goodwill                                 10,904                10,904
Other non-current assets                 13,229                13,075
 Total assets                            $      572,879   $   328,306
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                        $      132,987   $    60,098
 Accrued expenses and other liabilities  65,371                49,944
 Capital lease obligations, current      13,365                -
 Note payable                            18,919                -
 Credit line payable                     37,000                25,500
Total current liabilities                267,642               135,542
Deferred gain on sale-leaseback          12,635                12,722
 Capital lease obligations, non-current  15,807                -
Other long-term liabilities              25,320                12,391
Total liabilities                        321,404               160,655
Stockholders' equity:
 Common stock                           909                   515
 Additional paid-in capital             1,422,027             1,330,172
 Accumulated other comprehensive income  30,520                29,538
 Accumulated deficit                     (1,201,981)           (1,192,574)
Total stockholders' equity               251,475               167,651
 Total liabilities and stockholders'     $      572,879   $   328,306
 equity







SOURCE Oclaro, Inc.

Website: http://www.oclaro.com
Contact: Jerry Turin, Chief Financial Officer, Oclaro, Inc., +1-408-383-1400,
ir@oclaro.com; or Investors, Jim Fanucchi, Summit IR Group Inc.,
+1-408-404-5400, ir@oclaro.com