Oclaro Announces Fourth Quarter and Fiscal Year 2013 Financial Results

    Oclaro Announces Fourth Quarter and Fiscal Year 2013 Financial Results

PR Newswire

SAN JOSE, Calif., Sept. 16, 2013

SAN JOSE, Calif., Sept. 16, 2013 /PRNewswire/ -- Oclaro, Inc. (NASDAQ: OCLR),
a leading provider and innovator of optical communications solutions, today
announced the financial results for its fourth quarter and fiscal year 2013,
which ended June 29, 2013.

(Logo: http://photos.prnewswire.com/prnh/20130129/SF49903LOGO)

"While our fiscal fourth quarter results were in line with our expectations,
the continued losses underscore the urgency of our turnaround plans. We remain
focused on transforming Oclaro into a sustainable company that will deliver
shareholder value over the long-term," said Greg Dougherty, CEO, Oclaro. "Our
successful sale of the Zurich Business demonstrates to our employees,
customers and suppliersthat we are taking deliberate action to create a
stable future. With the resulting infusion of cash, we can now begin to take
the necessary steps to begin to restructure the company. Our goal will be to
focus Oclaro primarily on the optical communications market, and leverage our
photonics innovation, vertical integration, and long-term customer
relationships to return Oclaro to profitability."

Results for the Fourth Quarter of Fiscal 2013:

  oRevenues were $136.1 million for the fourth quarter of fiscal 2013,
    compared with revenues of $141.6 million in the third quarter of fiscal
    2013.
  oGAAP gross margin was 9% for the fourth quarter of fiscal 2013, compared
    with a GAAP gross margin of 9% in the third quarter of fiscal 2013.
  oNon-GAAP gross margin was 11% for the fourth quarter of fiscal 2013,
    compared with a non-GAAP gross margin of 10% in the third quarter of
    fiscal 2013.
  oGAAP operating loss was $44.1 million for the fourth quarter of fiscal
    2013, which included $18.9 million of flood-related income, net of
    expenses, due to the flooding in Thailand, and an impairment of goodwill
    and intangible assets of $26.7 million. This compares with a GAAP
    operating loss of $27.4 million in the third quarter of fiscal 2013, which
    included $11.5 million of flood-related income, net of expenses, due to
    the flooding in Thailand.
  oNon-GAAP operating loss was $29.5 million for the fourth quarter of fiscal
    2013, compared with a non-GAAP operating loss of $31.9 million in the
    third quarter of fiscal 2013.
  oGAAP net loss for the fourth quarter of fiscal 2013 was $47.4 million,
    which included $18.9 million of flood-related income, net of expenses, due
    to the flooding in Thailand, and $26.7 million for impairment of goodwill
    and intangible assets. This compares with a GAAP net loss of $40.0 million
    in the third quarter of fiscal 2013, which included $11.5 million of
    flood-related income, net of expenses, due to the flooding in Thailand,
    and $3.8 million for the impairment of an investment.
  oNon-GAAP net loss for the fourth quarter of fiscal 2013 was $30.3 million.
    This compares with a non-GAAP net loss of $33.4 million in the third
    quarter of fiscal 2013.
  oAdjusted EBITDA was negative $21.1 million for the fourth quarter of
    fiscal 2013, compared with negative $23.7 million in the third quarter of
    fiscal 2013.
  oCash, cash equivalents, restricted cash, and short-term investments were
    $87.6 million at June 29, 2013.
  oOclaro closed its merger with Opnext, Inc. on July 23, 2012. During the
    fourth quarter of fiscal 2013, in connection with the finalization of the
    fair value assessment of assets acquired and liabilities assumed in the
    merger, the Company made certain measurement period adjustments impacting
    the first, second and third quarters of fiscal 2013. These retrospective
    adjustments are reflected in the attached tables.

Results for Fiscal Year 2013:

The financial results for fiscal year 2013 include the results of Oclaro for
the full year and the contribution from the former Opnext, Inc after the
merger closed on July 23, 2012. The results for fiscal year 2012 reflect
Oclaro as a standalone company.

  oRevenues were $586.0 million for fiscal 2013, compared with $385.5 million
    in fiscal 2012.
  oGAAP gross margin was 11% for fiscal 2013, compared with 18% in fiscal
    2012.

       oNon-GAAP gross margin was 12% for fiscal 2013, compared with 19% in
         fiscal 2012.

  oGAAP operating loss was $124.8 million for fiscal 2013. This compares
    with a GAAP operating loss of $63.8 million in fiscal 2012.

       oNon-GAAP operating loss was $114.8 million for fiscal 2013, and
         excluded approximately $29.5 million in flood related income and
         goodwill and intangible asset impairment charges of $27.6 million.
         This compares with a non-GAAP operating loss of $53.0 million in
         fiscal 2012, and excluded gain of approximately $11.7 million on the
         sale of assets previously held for sale.

  oAdjusted EBITDA was negative $77.9 million for fiscal 2013, compared with
    a negative $33.7 million in fiscal 2012.
  oGAAP net loss for fiscal 2013 was $122.7 million, compared with a GAAP net
    loss of $66.5 in fiscal 2012.

       oNon-GAAP net loss for fiscal 2013 was $120.8 million, compared with a
         non-GAAP net loss of $61.1 million in fiscal 2012.

First Quarter Fiscal Year 2014 Outlook

The results of Oclaro for the first quarter of fiscal 2014, which ends
September 28, 2013, are expected to be:

  oRevenues in the range of $134 million to $138 million.
  oNon-GAAP gross margin in the range of 9% to 11%.
  oAdjusted EBITDA in the range of negative $24 million to negative $19
    million.

Guidance includes the expected results of the Zurich Business, which was sold
on September 12, 2013, from June 30, 2013 through the closing date of
September 12, 2013.

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 fourth
quarter and fiscal year 2013 today at 2:00 p.m. PT/5:00 p.m. ET. To listen to
the live conference call, please dial (480) 629-9760. A replay of the
conference call will be available through September 23, 2013. To access the
replay, dial (858) 384-5517. The passcode for the replay is 4639762. 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 optical
components, modules and subsystems for the optical communications market. 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, 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, in association with Oclaro's fourth quarter and fiscal
year 2013 financial results conference call, 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 Oclaro's target business model, including
financial guidance for the fiscal quarter ending September 28, 2013 regarding
revenue, non-GAAP gross margin and Adjusted EBITDA, (ii) expectation regarding
the sale of its Zurich business, (iii) expectation regarding exercising of the
option and closing the sale of the Amplifier business, (iv) restructuring
Oclaro for the future, (v) simplifying Oclaro's operating footprint, and (vi)
Oclaro's 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," "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 exercise of the option to purchase the optical
amplifier and micro optics business ("Amplifier business") and Oclaro's
ability to close the sale of the Amplifier business, (ii) 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, and to effectively restructure its
operations and business following the sale of its Zurich and future option
exercise and sale of its Amplifier business in accordance with its business
plan, (iii) the potential inability to realize the expected and ongoing
benefits and synergies of acquisitions and mergers and benefits of asset
dispositions, (iv) the impact to our operations, revenues and financial
condition attributable to the flooding in Thailand, (v) the impact of
continued uncertainty in world financial markets and any resulting reduction
in demand for our products, (vi) our ability to meet or exceed our gross
margin expectations, (vii) the effects of fluctuating product mix on our
results, (viii) our ability to timely develop and commercialize new products,
(ix) our ability to reduce costs and operating expenses, (x) our ability to
respond to evolving technologies and customer requirements and demands, (xi)
our dependence on a limited number of customers for a significant percentage
of our revenues, (xii) our ability to maintain strong relationships with
certain customers, (xiii) 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,
(xiv) our ability to effectively and efficiently transition to an outsourced
back-end assembly and test model, (xv) our ability to timely capitalize on any
increase in market demand, (xvi) increased costs related to downsizing and
compliance with regulatory and legal requirements in connection with such
downsizing, (xvii) competition and pricing pressure, (xviii) the potential
lack of availability of credit or opportunity for equity based financing,
(xix) the risks associated with our international operations, (xx) Oclaro's
ability to service and repay its remaining outstanding indebtedness pursuant
to the terms of the applicable agreements, (xxi) the outcome of tax audits or
similar proceedings, (xxii) the outcome of pending litigation against the
company, (xxiii) Oclaro's ability to maintain or increase its cash reserves
and obtain financing on terms acceptable to it or at all, and (xxiv) other
factors described in Oclaro's most recent annual report on Form 10-K,
quarterly report on Form 10-Q and other documents it periodically files 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,
impairment of intangible assets and goodwill, 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,
impairment of intangible assets and goodwill 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, impairment of intangible assets
and goodwill 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     Twelve Months Ended
                                June 29,    March 30,   June 29,     June 30,
                                2013        2013        2013         2012
Revenues                        $ 136,108  $ 141,642  $ 586,028   $
                                                                     385,458
Cost of revenues                123,220     128,475     521,626      315,413
Gross profit                    12,888      13,167      64,402       70,045
Operating expenses:
           Research and         23,917      25,207      100,820      67,003
           development
           Selling, general and 21,585      22,465      91,363       62,541
           administrative
           Amortization of      1,275       1,288       5,305        3,000
           intangible assets
           Restructuring,
           acquisition and      2,507       3,085       (6,301)      10,361
           related costs
           Flood-related        (18,867)    (11,548)    (29,510)     2,458
           (income)expense
           Impairment of
           goodwill, other
           intangible assets    26,697      -           27,561       -
            and property and
           equipment
           (Gain) loss on sale
           of property and      (142)       74          (80)         (11,566)
           equipment
Total operating expenses        56,972      40,571      189,158      133,797
Operating loss                  (44,084)    (27,404)    (124,756)    (63,752)
Other income (expense):
           Interest income      (2,269)     (1,103)     (4,499)      (1,121)
           (expense), net
           Gain (loss) on
           foreign currency     (3,730)     (7,353)     (14,310)     3,116
           translation
           Other income         1,233       (3,760)     22,339       2,238
           (expense)
Total other income (expense)    (4,766)     (12,216)    3,530        4,233
Loss before income taxes        (48,850)    (39,620)    (121,226)    (59,519)
Income tax provision (benefit)  (1,474)     386         1,519        6,984
Net loss                        $           $           $(122,745)   $
                                (47,376)   (40,006)                (66,503)
Net loss per share:
           Basic                $         $         $          $  
                                (0.52)     (0.44)     (1.40)      (1.32)
           Diluted              $         $         $          $  
                                (0.52)     (0.44)     (1.40)      (1.32)
Shares used in computing net
loss per share:
           Basic                90,771      90,263      87,770       50,396
           Diluted              90,771      90,263      87,770       50,396
Stock-based compensation
included in the following:
 Cost of revenues            $        $        $   1,862  $  
                                455        545                     1,584
 Research and development    361         431         1,699        1,447
 Selling, general and         679         810         3,374        3,561
administrative
 Restructuring, acquisition   277         -           277          -
and related costs
           Total                $         $         $   7,212  $  
                                1,772       1,786                    6,592
OCLARO, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except per share amounts)
                                Three Months Ended     Twelve Months Ended
                                June 29,    March 30,   June 29,     June 30,
                                2013        2013        2013         2012
Reconciliation of GAAP net loss
to
 non-GAAP net loss and
adjusted EBITDA:
GAAP net loss                   $          $          $ (122,745)  $ 
                                (47,376)   (40,006)                (66,503)
           Stock-based
           compensation         1,772       1,786       7,212        6,592
           included in:
           Amortization expense 1,275       1,288       5,305        3,000
           Restructuring,
           acquisition and      2,230       3,085       (6,578)      10,361
           related costs
           Flood-related        (18,867)    (11,548)    (29,510)     2,458
           (income) expense
           Impairment charges   26,697      -           27,561       -
           Opnext FMV inventory -           -           2,281        -
           adjustment
           Other (income)       (1,233)     3,760       (22,339)     (2,238)
           expense items, net
           Gain on sale of
           assets previously    -           -           -            (11,672)
           held for sale
           Outsource transition 1,462       871         3,690        -
           costs
           (Gain) loss on
           foreign currency     3,730       7,353       14,310       (3,116)
           translation
Non-GAAP net loss               (30,310)    (33,411)    (120,813)    (61,118)
           Income tax           (1,474)     386         1,519        6,984
           provision(benefit)
           Depreciation expense 8,462       8,216       36,871       19,291
           Interest (income)    2,269       1,103       4,499        1,121
           expense, net
Adjusted EBITDA                 $          $          $           $ 
                                (21,053)   (23,706)   (77,924)    (33,722)
Non-GAAP net loss per share:
           Basic                $        $        $         $   
                                (0.33)     (0.37)     (1.38)      (1.21)
           Diluted              $        $        $         $   
                                (0.33)     (0.37)     (1.38)      (1.21)
Shares used in computing
Non-GAAP net loss per share:
           Basic                90,771      90,263      87,770       50,396
           Diluted              90,771      90,263      87,770       50,396
Reconciliation of GAAP gross
margin rate
tonon-GAAP gross margin
rate:
GAAP gross profit               $         $         $          $  
                                12,888     13,167     64,402      70,045
Opnext FMV inventory adjustment -           -           2,281        -
Outsource transition costs      1,293       871         3,521        -
Stock-based compensation in     455         545         1,862        1,584
cost of revenues
           Non-GAAP gross       $         $         $          $  
           profit               14,636     14,583     72,066      71,629
GAAP gross margin rate          9.5%        9.3%        11.0%        18.2%
Non-GAAP gross margin rate      10.8%       10.3%       12.3%        18.6%
Reconciliation of GAAP
operating loss to
 non-GAAP operating loss:
GAAP                            $          $                       $ 
operating                       (44,084)   (27,404)   $ (124,756)  (63,752)
loss
Stock-based compensation       1,772       1,786       7,212        6,592
Amortization of intangible      1,275       1,288       5,305        3,000
assets
Restructuring, acquisition and  2,230       3,085       (6,578)      10,361
related costs
Flood-related (income) expense, (18,867)    (11,548)    (29,510)     2,458
net
Impairment charges              26,697      -           27,561       -
Opnext FMV inventory adjustment -           -           2,281        -
Gain on sale of assets          -           -           -            (11,672)
previously held for sale
Outsource transition costs      1,462       871         3,690        -
           Non-GAAP operating   $          $          $ (114,795)  $ 
           loss                 (29,515)   (31,922)                (53,013)



OCLARO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
ASSETS                                    June 29, 2013      June 30, 2012
Current assets:
  Cash, cash equivalents and              $          $        
   short-term investments              84,835            61,760
  Restricted cash                         2,719              614
  Accounts receivable, net                100,853            74,666
  Inventories                             118,099            78,444
  Prepaid expenses and other current      35,095             12,582
  assets
Total current assets                      341,601            228,066
Property and equipment, net               91,332             59,616
Other intangible assets, net              10,233             16,645
Goodwill                                  -                  10,904
Other non-current assets                  6,728              13,075
  Total assets                            $           $       
                                          449,894           328,306
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                        $          $        
                                          96,472            60,098
  Accrued expenses and other liabilities  58,798             49,944
  Capital lease obligations, current      8,281              -
  Note payable                            24,647             -
  Credit line payable                     39,964             25,500
Total current liabilities                 228,162            135,542
Deferred gain on sale-leaseback           10,477             12,722
Convertible notes payable                 22,990             -
Capital lease obligations, non-current    9,914              -
Other long-term liabilities               24,219             12,391
Total liabilities                         295,762            160,655
Stockholders' equity:
  Common stock                           928                515
  Additional paid-in capital             1,429,155          1,330,172
  Accumulated other comprehensive income  39,368             29,538
  Accumulated deficit                     (1,315,319)        (1,192,574)
Total stockholders' equity                154,132            167,651
  Total liabilities and stockholders'     $           $       
  equity                                  449,894           328,306



SOURCE Oclaro, Inc.

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