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Oclaro Announces Third Quarter Fiscal Year 2013 Results; Secures Additional $25 Million Credit

 Oclaro Announces Third Quarter Fiscal Year 2013 Results; Secures Additional
                              $25 Million Credit

PR Newswire

SAN JOSE, Calif., May 7, 2013

SAN JOSE, Calif., May 7, 2013 /PRNewswire/ --Oclaro, Inc. (NASDAQ: OCLR), a
provider of optical components, modules and subsystems, today announced the
financial results for its third quarter of fiscal year 2013, which ended March
30, 2013. Oclaro also announced it has secured $25 million in short-term
bridge loans from Providence Equity Capital Markets, who joins Wells Fargo
Bank and Silicon Valley Bank as a lender under Oclaro's existing credit
agreement.

"Our financial results were at the lower end of guidance for the third
quarter, in the face of continued softness in the telecommunications market.
Our sales declined further than expected, which drove a higher loss compared
with the prior quarter," said Alain Couder, president and CEO, Oclaro, Inc.
"The financing we announced today is an initial stepin our plan tosimplify
the company and develop and implement a profitable operating model. Meanwhile
ournew product innovations continue. At the recent OFC trade show Oclaro
reinforced its position as a leader in the high growth 100G market, both on
the telecom line side and the datacom client side."

Results for the Third Quarter of Fiscal 2013:

  oRevenues were $141.6 million for the third quarter of fiscal 2013,
    compared with revenues of $159.5 million in the second quarter of fiscal
    2013.
  oGAAP gross margin was 9% for the third quarter of fiscal 2013, compared
    with a GAAP gross margin of 14% in the second quarter of fiscal 2013.

       oSecond quarter gross margin, operating expenses and net income were
         impacted by measurement period adjustments to the fair value of
         assets acquired and liabilities assumed in the merger with Opnext,
         Inc. as described more fully in the bullet points below.

  oNon-GAAP gross margin was 10% for the third quarter of fiscal 2013,
    compared with a non-GAAP gross margin of 16% in the second quarter of
    fiscal 2013.
  oGAAP operating loss was $28.9 million for the third quarter of fiscal
    2013, which included $11.5 million of flood-related income, net of
    expenses, due to the flooding in Thailand. This compares with a GAAP
    operating loss of $5.7 million in 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.
  oNon-GAAP operating loss was $32.3 million for the third quarter of fiscal
    2013, compared with a non-GAAP operating loss of $22.1 million in the
    second quarter of fiscal 2013.
  oGAAP net loss for the third quarter of fiscal 2013 was $41.5 million,
    which included $11.5 million of flood-related income, net of expenses, due
    to the flooding in Thailand, and $3.6 million for the impairment of an
    investment. This compares with a GAAP net loss of $11.2 million in 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.
  oNon-GAAP net loss for the third quarter of fiscal 2013 was $33.8 million.
    This compares with a non-GAAP net loss of $24.2 million in the second
    quarter of fiscal 2013.
  oAdjusted EBITDA was negative $24.0 million for the third quarter of fiscal
    2013, compared with negative $13.2 million in the second quarter of fiscal
    2013.
  oCash, cash equivalents, restricted cash, and short-term investments were
    $80.5 million at March 30, 2013.
  oOclaro closed its merger with Opnext, Inc. on July 23, 2012. During the
    third quarter of fiscal 2013, as part of the fair value assessment of
    assets acquired and liabilities assumed in the merger, the Company made
    the following measurement period adjustments impacting the first and
    second quarters of fiscal 2013:

       oIn the first quarter of fiscal 2013, a decrease of $0.6 million in
         cost of revenues, a decrease of $0.1 million in operating expenses, a
         decrease in gain on bargain purchase of $11.6 million and an increase
         in net loss of $10.8 million.
       oIn the second quarter of fiscal 2013, a decrease of $0.8 million in
         cost of revenues, a decrease of $0.2 million in operating expenses
         and a decrease in net loss of $1.0 million.
       oWe expect to finalize our fair value assessment in the fourth quarter
         of fiscal 2013.

In connection with the bridge financing from Providence, we amended our credit
agreement with our existing lenders. Under the amended credit agreement we
agreed to complete the sale of certain assets, product lines or operating
segments of our business expeditiously, and we are actively engaged in a
corresponding process. The revised credit agreement requires us to apply the
proceeds of any such sales to repaying the loans under the credit agreement,
although subject to certain conditions a portion of the credit line may become
available to us for re-borrowing after we repay it. We believe that a
successful completion of such disposition of assets, product lines or
operating segments, is a necessary step to fund our continued operations and
to complete our plans to restructure the company.

Fourth Quarter Fiscal Year 2013 Outlook

The results of Oclaro for the fourth quarter of fiscal 2013, which ends June
29, 2013, are expected to be:

  oRevenues in the range of $132 million to $144 million.
  oNon-GAAP gross margin in the range of 9% to 13%.
  oAdjusted EBITDA in the range of negative $30 million to negative $17
    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 third
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) 629-9808. A replay of the conference
call will be available through May 14, 2013. To access the replay, dial (858)
384-5517. The passcode for the replay is 4615441. 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 June 29, 2013 regarding revenue, non-GAAP gross margin and
Adjusted EBITDA, (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, product development, 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," "model," 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
requirements 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 or at all, 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
                               March 30, 2013  December 29,     March 31, 2012
                                               2012
Revenues                       $ 141,642       $    159,465  $  88,709
Cost of revenues               128,868         137,183          75,021
Gross profit                   12,774          22,282           13,688
Operating expenses:
  Research and development     25,237          25,750           15,045
  Selling, general and         22,465          22,896           14,889
  administrative
  Amortization of intangible   2,400           2,402            775
  assets
  Restructuring,
  acquisitionand related      3,085           (23,665)         2,189
  (gains)costs, net
  Flood-related (income)       (11,548)        641              (3,267)
  expense, net
  (Gain) loss on sale of       74              6                (13)
  property and equipment
Total operating expenses       41,713          28,030           29,618
Operating loss                 (28,939)        (5,748)          (15,930)
Other income (expense):
  Interest income (expense),   (1,103)         (649)            (303)
  net
  Gain (loss) on foreign       (7,353)         (3,423)          (261)
  currency translation
  Other income                 (3,760)         -                -
Total other income (expense)   (12,216)        (4,072)          (564)
Loss before income taxes       (41,155)        (9,820)          (16,494)
Income tax provision           386             1,424            668
Net loss                       $ (41,541)      $             $ (17,162)
                                               (11,244)
Net loss per share:
  Basic                        $   (0.46)    $           $   (0.34)
                                               (0.13)
  Diluted                      $   (0.46)    $           $   (0.34)
                                               (0.13)
Shares used in computing net
loss per share:
  Basic                        90,263          89,827           50,814
  Diluted                      90,263          89,827           50,814
Stock-based compensation
included in the following:
 Cost of revenues           $    545     $          $    460
                                               524
 Research and development   431             531              349
 Selling, general and        810             999              863
administrative
  Total                        $  1,786      $           $  1,672
                                               2,054





OCLARO, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except per share amounts)
                                     Three Months Ended
                                     March         December 29,   March 31,
                                     30,2013      2012           2012
Reconciliation of GAAP net loss to
 non-GAAP net loss and adjusted
EBITDA:
GAAP net loss                        $  (41,541)  $         $  (17,162)
                                                   (11,244)
          Stock-based compensation
          included in:
           Cost of revenues       545           524            460
           Research and            431           531            349
          development
           Selling, general and    810           999            863
          administrative
          Amortization expense       2,400         2,402          775
          Restructuring, acquisition
          and related (gains) costs, 3,085         (23,665)       2,189
          net
          Flood-related (income)     (11,548)      641            (3,267)
          expense, net
          Opnext FMV inventory       -             819            -
          adjustment
          Other (income) expense     3,760         -              -
          items, net
          Outsource transition costs 871           1,357          -
          (Gain) loss on foreign     7,353         3,423          261
          currency translation
Non-GAAP net loss                    (33,834)      (24,213)       (15,532)
          Income tax provision      386           1,424          668
          Depreciation expense       8,308         8,895          4,633
          Interest (income) expense, 1,103         649            303
          net
Adjusted EBITDA                      $  (24,037)  $         $  
                                                   (13,245)       (9,928)
Non-GAAP net loss per share:
          Basic                      $          $        $   
                                     (0.37)         (0.27)      (0.31)
          Diluted                    $          $        $   
                                     (0.37)         (0.27)      (0.31)
Shares used in computing Non-GAAP
net loss per share:
          Basic                      90,263        89,827         50,814
          Diluted                    90,263        89,827         50,814
Reconciliation of GAAP gross margin
rate to
 non-GAAP gross margin rate:
GAAP gross profit                    $   12,774  $        $   13,688
                                                   22,282
Opnext FMV inventory adjustment      -             819            -
Outsource transition costs           871           1,357          -
Stock-based compensation in cost of  545           524            460
revenues
          Non-GAAP gross profit      $   14,190  $        $   14,148
                                                   24,982
GAAP gross margin rate               9.0%          14.0%          15.4%
Non-GAAP gross margin rate           10.0%         15.7%          15.9%
Reconciliation of GAAP operating
loss to
 non-GAAP operating loss:
GAAP operating loss                  $  (28,939)  $        $  (15,930)
                                                   (5,748)
Stock-based compensation included
in:
          Cost of revenues         545           524            460
          Research and development 431           531            349
          Selling, general and      810           999            863
          administrative
Amortization of intangible assets    2,400         2,402          775
Restructuring, acquisition and       3,085         (23,665)       2,189
related (gains)costs, net
Flood-related (income) expense, net  (11,548)      641            (3,267)
Opnext FMV inventory adjustment      -             819            -
Outsource transition costs           871           1,357          -
          Non-GAAP operating loss    $  (32,345)  $         $  (14,561)
                                                   (22,140)





OCLARO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
ASSETS                                     March 30, 2013      June 30, 2012
Current assets:
 Cash, cash equivalents and                $      63,593  $    61,760
  short-term investments
 Restricted cash                           16,919              614
 Accounts receivable, net                  106,616             74,666
 Inventories                               133,645             78,444
 Prepaid expenses and other current assets 28,493              12,582
Total current assets                       349,266             228,066
Property and equipment, net                90,731              59,616
Other intangible assets, net               36,917              16,645
Goodwill                                   10,904              10,904
Other non-current assets                   6,652               13,075
 Total assets                              $     494,470   $   328,306
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                          $     102,415   $    60,098
 Accrued expenses and other liabilities    56,583              49,944
 Capital lease obligations, current        10,218              -
 Note payable                              15,611              -
 Credit line payable                       39,995              25,500
Total current liabilities                  224,822             135,542
Deferred gain on sale-leaseback            10,878              12,722
Convertible notes payable                  23,668              -
Capital lease obligations, non-current     10,677              -
Other long-term liabilities                23,285              12,391
Total liabilities                          293,330             160,655
Stockholders' equity:
 Common stock                             926                 515
 Additional paid-in capital               1,426,834           1,330,172
 Accumulated other comprehensive income    38,990              29,538
 Accumulated deficit                       (1,265,610)         (1,192,574)
Total stockholders' equity                 201,140             167,651
 Total liabilities and stockholders'       $     494,470   $   328,306
 equity







SOURCE Oclaro, Inc.

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