Oclaro Announces Second Quarter Fiscal Year 2013 Financial Results

      Oclaro Announces Second Quarter Fiscal Year 2013 Financial Results

PR Newswire

SAN JOSE, Calif., Jan. 31, 2013

SAN JOSE, Calif., Jan. 31, 2013 /PRNewswire/ -- Oclaro, Inc. (NASDAQ: OCLR), a
provider of optical components, modules and subsystems, today announced the
financial results for its second quarter of fiscal year 2013, which ended
December 29, 2012.

"Our financial results for the second quarter of fiscal 2013 demonstrate the
progress we are making after the merger," said Alain Couder, chairman and CEO.
"Our revenues were at the top-end of guidance and we have successfully
executed to the planned synergies on schedule. We also took action to
strengthen our balance sheet.  Looking ahead, market and economic conditions
remain uncertain in a typically softer March quarter. As a result, our efforts
will remain focused on reducing operating expenses and improving margin, as
well as capitalizing on our new product introductions and strong customer
relationships to maximize revenues."

Results for the Second Quarter of Fiscal 2013:

Oclaro closed its merger with Opnext, Inc. on July 23, 2012. The financial
results for the second quarter of fiscal 2013 include a full quarter of
operating results of Opnext. 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. Results for the second quarter of fiscal 2012
were pre-merger Oclaro and do not include the operating results of Opnext.

  o Revenues were $159.5 million for the second quarter of fiscal 2013,
    compared with revenues of $148.8 million in the first quarter of fiscal
    2013. Pro forma combined revenues for the first quarter of fiscal 2013,
    including Opnext for the full quarter, were $160.2 million.
  o GAAP gross margin was 13% for the second quarter of fiscal 2013, compared
    with a GAAP gross margin of 12% in the first quarter of fiscal 2013.
  o Non-GAAP gross margin was 15% for the second quarter of fiscal 2013,
    compared with a non-GAAP gross margin of 13% in the first quarter of
    fiscal 2013.
  o GAAP operating loss was $6.7 million for the second quarter of fiscal
    2013, which included a $25.0 million gain on the sale of assets related to
    our interleaver product line and our thin film filter business. This
    compares with a GAAP operating loss of $47.4 million in the first quarter
    of fiscal 2013.
  o Non-GAAP operating loss was $23.1 million for the second quarter of fiscal
    2013, compared with a non-GAAP operating loss of $29.4 million in the
    first quarter of fiscal 2013.
  o GAAP net loss for the second quarter of fiscal 2013 was $12.2 million, and
    included a $25.0 million gain on the sale of assets related to our
    interleaver product line and our thin film filter business. This compares
    with a GAAP net loss of $9.4 million in the first quarter of fiscal 2013,
    which included a gain on bargain purchase of $39.5 million related to the
    acquisition of Opnext.
  o Non-GAAP net loss for the second quarter of fiscal 2013 was $25.2 million,
    and excluded a $25.0 million gain on the sale of assets related to our
    interleaver product line and our thin film filter business. This compares
    with a non-GAAP net loss of $31.1 million in the first quarter of fiscal
    2013, which excluded a gain on bargain purchase of $39.5 million related
    to the acquisition of Opnext.
  o Adjusted EBITDA was negative $13.2 million for the second quarter of
    fiscal 2013, compared with negative $20.6 million in the first quarter of
    fiscal 2013.
  o Cash, cash equivalents and restricted cash were $96.0 million at December
    29, 2012. On January 23, 2013, Silicon Valley Bank (SVB) and Wells Fargo
    entered into a Joinder Agreement pursuant to the Second Amended and
    Restated Credit Agreement, dated as of November 2, 2012. Pursuant to the
    Joinder Agreement, SVB agreed to become an additional Lender under the
    Credit Agreement, and the Lenders agreed to increase the revolving credit
    facility under the Credit Agreement from $50 million to $80 million.

Third Quarter Fiscal Year 2013 Outlook

The results of Oclaro for the third quarter of fiscal 2013, which ends March
30, 2013, are expected to be:

  o Revenues in the range of $140 million to $155 million.
  o Non-GAAP gross margin in the range of 10% to 14%.
  o Adjusted EBITDA in the range of negative $25 million to negative $13.5
    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 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 second
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) 629-9665. A replay of the conference
call will be available through February 7, 2013. To access the replay, dial
(858) 384-5517. The passcode for the replay is 4593179. 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 2013. 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 March 30, 2013 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, and
(iii) our market position, economic conditions 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 and ongoing
benefits and synergies of acquisitions and mergers, (iii) the impact to our
operations, revenues 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
meet or exceed our gross margin expectations, (vi) the effects of fluctuating
product mix on our results, (vii) our ability to timely develop and
commercialize new products, (viii) our ability to reduce costs and operating
expenses, (ix) our ability to respond to evolving technologies and customer
requirements and demands, (x) our dependence on a limited number of customers
for a significant percentage of our revenues, (xi) our ability to maintain
strong relationships with certain customers, (xii) 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, (xiii) our ability to effectively and efficiently
transition to an outsourced back-end assembly and test model, (xiv) our
ability to timely capitalize on any increases in market demand, (xv) increased
costs related to downsizing and compliance with regulatory compliance in
connection with such downsizing, (xvi) competition and pricing pressure,
(xvii) the potential lack of availability of credit or opportunity for equity
based financing, (xviii) the risks associated with our international
operations, (xix) the outcome of tax audits or similar proceedings, (xx) the
outcome of pending litigation against the company, (xxi) our ability to
maintain or increase our cash reserves and obtain financing on terms
acceptable to us, and (xxii) other factors described in Oclaro's most recent
annual report on Form 10-K, quarterly report on Form 10-Q 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, costs to outsource our back-end manufacturing activities,
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, purchase accounting
adjustments related to the fair market value of acquired inventories and costs
to outsource our back-end manufacturing activities. 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 
                               December 29,     September 29,    December 31,
                               2012             2012             2011
Revenues                       $                $                $          
                               159,465          148,813          86,488
Cost of revenues               137,966          130,976          75,613
Gross profit                   21,499           17,837           10,875
Operating expenses:
   Research and development    25,750           25,765           17,024
   Selling, general and        23,092           24,566           14,425
   administrative
   Amortization of intangible  2,402            2,026            723
   assets
   Restructuring, acquisition  (23,665)         12,636           3,219
   and related costs
   Flood-related expense       641              264              9,088
   (Gain) loss on sale of      6                (18)             37
   property and equipment
Total operating expenses       28,226           65,239           44,516
Operating loss                 (6,727)          (47,402)         (33,641)
Other income (expense):
   Interest income (expense),  (649)            (478)            (245)
   net
   Gain (loss) on foreign      (3,423)          196              1,298
   currency translation
   Other Income                -                -                2,238
   Gain on bargain purchase    -                39,460           -
Total other income (expense)   (4,072)          39,178           3,291
Loss before income taxes       (10,799)         (8,224)          (30,350)
Income tax provision           1,424            1,183            478
Net loss                       $                $                $        
                               (12,223)         (9,407)          (30,828)
Net loss per share: 
   Basic                       $                $                $            
                               (0.14)           (0.12)           (0.61)
   Diluted                     $                $                $            
                               (0.14)           (0.12)           (0.61)
Shares used in computing net
loss per share: 
   Basic                       89,827           80,219           50,492
   Diluted                     89,827           80,219           50,492
Stock-based compensation
included in the following:
   Cost of revenues            $                $                $            
                               524              338                388
   Research and development    531              376              374
   Selling, general and        999              886              913
administrative 
   Total                       $                $                $          
                                2,054            1,600            1,675

 

 

 

OCLARO, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except per share amounts)
                                 Three Months Ended 
                                 December 29,   September 29,    December 31,
                                 2012           2012             2011
Reconciliation of GAAP net loss
to non-GAAP net loss and
adjusted EBITDA:
GAAP net loss                    $              $                $            
                                 (12,223)        (9,407)         (30,828)
    Stock-based compensation
    included in:
       Cost of revenues          524            338              388
       Research and development  531            376              374
       Selling, general and      999            886              913
    administrative 
    Amortization expense         2,402          2,026            723
    Restructuring, acquisition   (23,665)       12,636           3,219
    and related costs
    Flood-related expense        641            264              9,088
    Opnext FMV inventory         819            1,462            -
    adjustment
    Other (income) expense       -              (39,460)         (2,238)
    items, net
    Outsource transition costs   1,357          -                -
    (Gain) loss on foreign       3,423          (196)            (1,298)
    currency translation
Non-GAAP net loss                (25,192)       (31,075)         (19,659)
    Income tax provision         1,424          1,183            478
    Depreciation expense         9,874          8,825            4,624
    Interest (income) expense,   649            478              245
    net
Adjusted EBITDA                  $              $                $            
                                 (13,245)       (20,589)         (14,312)
Non-GAAP net loss per share: 
    Basic                        $              $                $            
                                      (0.28)       (0.39)             (0.39)
    Diluted                      $              $                $            
                                      (0.28)       (0.39)             (0.39)
Shares used in computing
Non-GAAP net loss per share: 
    Basic                        89,827         80,219           50,492
    Diluted                      89,827         80,219           50,492
Reconciliation of GAAP gross
margin rate to non-GAAP gross
margin rate:
GAAP gross profit                $              $                $            
                                   21,499       17,837             10,875
Opnext FMV inventory adjustment  819            1,462            -
Outsource transition costs       1,357          -                -
Stock-based compensation in cost 524            338              388
of revenues
    Non-GAAP gross profit        $              $                $            
                                   24,199       19,637             11,263
GAAP gross margin rate           13.5%          12.0%            12.6%
Non-GAAP gross margin rate       15.2%          13.2%            13.0%
Reconciliation of GAAP operating
loss to non-GAAP operating loss:
GAAP operating loss              $              $                $            
                                    (6,727)     (47,402)         (33,641)
Stock-based compensation
included in:
     Cost of revenues            524            338              388
     Research and development    531            376              374
     Selling, general and        999            886              913
    administrative 
Amortization of intangible       2,402          2,026            723
assets
Restructuring, acquisition and   (23,665)       12,636           3,219
related costs
Flood-related (income) expense,  641            264              9,088
net
Opnext FMV inventory adjustment  819            1,462            -
Outsource transition costs       1,357          -                -
    Non-GAAP operating loss      $              $                $            
                                 (23,119)       (29,414)         (18,936)

 

 

 

OCLARO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
ASSETS                               December 29, 2012         June 30, 2012
Current assets:
 Cash, cash equivalents and          $                 78,201  $        61,760
     short-term investments
 Restricted cash                     17,773                    614
 Accounts receivable, net            119,853                   74,666
 Inventories                         151,273                   78,444
 Prepaid expenses and other current  24,979                    12,582
 assets
Total current assets                 392,079                   228,066
Property and equipment, net          111,725                   59,616
Other intangible assets, net         39,406                    16,645
Goodwill                             10,904                    10,904
Other non-current assets             14,823                    13,075
 Total assets                        $                568,937  $      328,306
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                    $                122,558  $        60,098
 Accrued expenses and other          59,248                    49,944
 liabilities
 Capital lease obligations, current  11,650                    -
 Note payable                        17,052                    -
 Credit line payable                 40,756                    25,500
Total current liabilities            251,264                   135,542
Deferred gain on sale-leaseback      12,049                    12,722
Convertible notes payable            23,350                    -
Capital lease obligations,           12,997                    -
non-current
Other long-term liabilities          23,899                    12,391
Total liabilities                    323,559                   160,655
Stockholders' equity:
 Common stock                        918                       515
 Additional paid-in capital          1,424,116                 1,330,172
 Accumulated other comprehensive     34,548                    29,538
 income
 Accumulated deficit                 (1,214,204)               (1,192,574)
Total stockholders' equity           245,378                   167,651
 Total liabilities and stockholders' $                568,937  $      328,306
 equity

 

 

SOURCE Oclaro, Inc.

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