BOOKHAM 
By Second Quarter Fiscal 2009 GAAP Results
Revenue for the second quarter of fiscal 2009 was
Gross margin for the second quarter of fiscal 2009 was 17 percent,
compared to gross margin of 25 percent in the first quarter of fiscal 2009,
and gross margin of 23 percent in the second quarter of fiscal 2008. Gross
margin for the second quarter of fiscal 2009 would have been 25 percent, if an
aggregate of
Net loss in the second quarter of fiscal 2009 was
Cash, cash equivalents, short term investments and restricted cash at
Second Quarter Fiscal 2009 Non-GAAP Results
Adjusted EBITDA for the second quarter of fiscal 2009 was negative
Non-GAAP gross margin was 19 percent for the second quarter of fiscal
2009, and excludes
Non-GAAP net income for the second quarter of fiscal 2009 was
A reconciliation table of non-GAAP measures to the most comparable GAAP measures is included in the financial tables section of this release and further discussion of these measures is also included later in this release.
Non-cash stock and option-based compensation expense for the second
quarter of fiscal 2009, first quarter of fiscal 2009 and second quarter of
fiscal 2008 were
"We improved our cash balances from the prior quarter during these
challenging economic conditions. We will continue to actively manage our cost
structure while maintaining our focus on product innovation and improved
operational performance," said
Third Quarter Fiscal 2009 Outlook
For the third quarter of fiscal 2009, ending
-- Revenue in the range of $43 million to $50 million
-- Non-GAAP gross margin between 15 percent and 22 percent, which excludes
stock-based compensation
-- Adjusted EBITDA of negative $6.5 million to negative $1.5 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 release for a description of certain important risk factors that could cause actual results to differ, and refer to Bookham's most recent annual and quarterly reports on file with the Securities and Exchange Commission (SEC) for a more complete description of the 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, expenses or income from certain legal actions, settlements and related costs outside our normal course of business, impairments of goodwill and other long-lived assets, extraordinary items, as well as the expensing of stock options and restricted stock grants under SFAS 123R.
Conference Call
Bookham will report financial results for the second quarter of fiscal
2009 today at
About Bookham
Bookham, Inc. is a leading provider of high performance optical products,
spanning from components to advanced subsystems. The Company designs and
manufactures a broad range of solutions tailored for the telecommunications
optical infrastructure and other selected markets, including industrial, life
sciences, semiconductor, and scientific. The Company utilizes proprietary
core technologies and a vertically integrated manufacturing organization to
provide its customers with cost-effective and innovative devices, as well as
flexible, scalable product delivery. Bookham is a global company,
headquartered in
Bookham and all other Bookham, Inc. product names and slogans are
trademarks or registered trademarks of Bookham, Inc. in the
Safe Harbor Statement
Any statements in this announcement about the future expectations, plans
or prospects of Bookham, including statements containing the words "believe,"
"plan," "anticipate," "expect," "estimate," "will," "should," "ongoing" and
similar expressions; and references to future operating income (loss), future
cash flow from operations, future revenues and the ability collect revenues in
the future that were deferred in the second quarter of FY 2009, improved
financial performance as a result of the merger with Avanex and information
set forth under the caption "Third Quarter Fiscal 2009 Outlook," constitute
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. 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 the impact of continued
uncertainty in world financial markets and the resulting reduction in demand
for our products, the impact of the filing for bankruptcy on Nortel's ability
to pay for existing products and its demand for products in the future, the
lack of availability of credit, continued demand for optical components,
changes in inventory and product mix, degradation in the exchange rate of
Non-GAAP Financial Measures
To provide investors with the opportunity to use the same financial
metrics as management to evaluate the Company's performance, the Company
provides certain supplemental non-GAAP financial measures, including: 1)
non-GAAP net income/loss excluding non-cash stock and option-based
compensation, charges such as impairment and restructuring, income taxes, and
expenses or income from certain legal actions, settlements and related costs
outside the ordinary course of business; 2) a measure of Adjusted EBITDA, that
also excludes these charges, plus, among others, the impact of net interest
income/expense, depreciation and amortization, impairment of short-term
investments and net foreign currency translation gain/loss; and 3) non-GAAP
operating loss that excludes amortization of intangible assets, non-cash stock
and option-based compensation, charges such as impairment and restructuring,
and expenses or income from certain legal actions, settlements and related
costs outside the normal course of business. These are made available to
investors to allow them the opportunity to use the same financial metrics as
management to evaluate the Company's performance. Bookham also believes these
non-GAAP measures enhance the comparability and transparency of results for
the periods reported. These measures should be considered in addition to
results prepared in accordance with accounting principles generally accepted
in
Non-GAAP Net Income/Loss
Non-GAAP net income/loss is calculated as net income/loss excluding the impact of restructuring and severance costs, non-cash compensation related to stock and options granted to employees and directors, income taxes, impairment charges and certain other one-time charges and credits specifically identified in the non-GAAP reconciliation schedules set forth below. The Company evaluates its performance using, among other things, non-GAAP net income/loss in evaluating the Company's historical and prospective operating financial performance, as well as its operating performance relative to its competitors. Specifically, management uses this non-GAAP measure to further understand the Company's "core operating performance." The Company believes its "core operating performance" represents the Company's on-going performance in the ordinary course of its operations. Accordingly, management excludes from "core operating performance" those items, such as impairment charges, income taxes, restructuring and severance programs and costs relating to specific major projects which are non-recurring, expenses or income from certain legal actions, settlements and related costs, as well as non-cash compensation related to stock and options. Management does not believe these items are reflective of the Company's ongoing operations and accordingly excludes those items from non-GAAP net income/loss.
The Company believes that providing non-GAAP net income/loss to its investors, in addition to corresponding income statement measures, provides investors the benefit of viewing the Company's performance using the same financial metrics that the management team uses in making many key decisions and understanding how the core business and its results of operations may look in the future. The Company further believes that providing this information allows the Company's investors greater transparency and a better understanding of the Company's core financial performance. Additionally, non-GAAP net income/loss has historically been presented by the Company as a complement to net loss, thus increasing the consistency and comparability of the Company's earnings releases. The non-GAAP adjustments, and the basis for excluding them, are discussed further below.
Non-GAAP financial measures are not in accordance with, or an alternative
for, generally accepted accounting principles in
Adjusted EBITDA
Adjusted EBITDA is calculated as net income/loss excluding the impact of taxes, net interest income/expense, depreciation and amortization, net foreign currency translation gains/losses, as well as restructuring and severance, impairment, non-cash compensation related to stock and options, expenses or income from certain legal actions, settlements and related costs outside our normal course of business, and certain other one-time charges and credits specifically identified in the non-GAAP reconciliation schedules set forth below. The Company uses Adjusted EBITDA in evaluating the Company'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 the Company's core operations. The Company believes that by excluding these non-cash and non-recurring charges, more accurate expectations of our 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.
Management does not believe the excluded items are reflective of the Company's ongoing operations and accordingly excludes those items from Adjusted EBITDA. The Company believes that providing Adjusted EBITDA to its investors, in addition to corresponding GAAP cash flow measures, provides investors the benefit of viewing the Company's performance using the same financial metrics that the management team uses in making many key decisions that impact the Company's cash position and understanding how the cash position may look in the future. The Company further believes that providing this information allows the Company's investors greater transparency and a better understanding of the Company's core cash position.
Non-GAAP financial measures are not in accordance with, or an alternative
for, generally accepted accounting principles (GAAP) in
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 certain other significant non-recurring one-time charges and credits specifically identified in the non-GAAP reconciliation schedules set forth below.
The Company evaluates its performance using non-GAAP gross margin rate to assess the Company's historical and prospective operating financial performance, as well as its operating performance relative to its competitors. Specifically, management uses this non-GAAP measure to further understand the Company's "core operating performance." The Company believes its "core operating performance" represents the Company's on-going performance in the ordinary course of its operations. Accordingly, management excludes from "core operating performance" those items such as non-cash compensation related to stock and options; and certain other significant non-recurring one-time charges and credits specifically identified. Management does not believe these items are reflective of the Company's ongoing operations and accordingly excludes those items from non-GAAP gross margin rate.
The Company believes that providing non-GAAP gross margin rate to its investors, in addition to corresponding income statement measures, provides investors the benefit of viewing the Company's performance using the same financial metrics that the management team uses in making many key decisions and understanding how the core business and its results of operations may look in the future. The Company further believes that providing this information allows the Company's investors greater transparency and a better understanding of the Company's core financial performance. The non-GAAP adjustments, and the basis for excluding them, are discussed further below.
Non-GAAP financial measures are not in accordance with, or an alternative
for, generally accepted accounting principles in
Non-GAAP Operating Loss
Non-GAAP operating loss is calculated as operating loss excluding the
impact of amortization of intangible assets in connection with the purchase
accounting for its acquisition of numerous companies and businesses prior
to its fiscal year ended
The Company believes that providing non-GAAP operating loss to its investors, in addition to corresponding income statement measures, provides investors the benefit of viewing the Company's performance using the same financial metrics that the management team uses in making many key decisions and understanding how the core business and its results of operations may look in the future. The Company further believes that providing this information allows the Company's investors greater transparency and a better understanding of the Company's core financial performance. The non-GAAP adjustments, and the basis for excluding them, are discussed further below.
Non-GAAP financial measures are not in accordance with, or an alternative
for, generally accepted accounting principles in
Furthermore, similar non-GAAP measures to those referenced above have historically been presented by the Company as a complement to its GAAP presentation. The non-GAAP adjustments, and the basis for excluding them, are discussed further below.
Stock-Based Compensation
The Company incurs certain non-cash expenses, which are included in its GAAP statement of operations, for stock-based compensation in accordance with the requirements of SFAS No. 123R, Share-Based Payment. The Company excludes this item, for the purposes of calculating non-GAAP net income (loss), Adjusted EBITDA, non-GAAP gross margin rate and non-GAAP operating loss when it evaluates the continuing core operational performance of the Company. The Company believes that these items do not reflect expected future operating expenses nor does the Company believe that they provide a meaningful evaluation of current versus past core operational performance.
Restructuring and Severance Activities
The Company has incurred expenses, which are included in its GAAP statement of operations, primarily due to the write-down of certain property and equipment that has been identified for disposal, workforce related charges such as severance, benefits and employee relocation costs related to formal restructuring plans, termination costs and building costs for facilities not required for ongoing operations, and costs related to the relocation of certain facilities and equipment from buildings which the Company has disposed of or plans to dispose of. The Company excludes these items, for the purposes of calculating non-GAAP net income/loss, Adjusted EBITDA and non-GAAP operating loss, when it evaluates the continuing operational performance of the Company. The Company does not believe that these items reflect expected future operating expenses nor does it believe that they provide a meaningful evaluation of current versus past core operational performance.
Certain Legal Actions, Settlement and Related Costs
In the first quarter of fiscal 2009, the Company recorded a gain, net of costs incurred, related to the settlement of a legal action against a third party in connection with land sold by the Company in 2006, net of insurance recoveries, both of which are included in its GAAP statement of operations. The Company excludes these items for the purposes of calculating non-GAAP net income/loss, Adjusted EBITDA and non-GAAP operating loss when it evaluates the continuing performance of the Company. The Company does not believe that these items reflect expected future expenses nor does it believe they provide a meaningful evaluation of current versus past core operational performance.
Amortization of Intangible Assets
In connection with the purchase accounting for its acquisition of numerous
companies and businesses prior to its
Foreign Currency Translation Gains/Losses
The Company records gains and losses related to the translation of intercompany balances denominated in currencies other than the functional currencies of the Company's local legal entities, the translation of certain other ending balance sheet accounts denominated in currencies other than the functional currencies of the Company's local legal entities, and contracts entered into to mitigate the exposure to these translation gains and losses. The Company excludes this item, for the purposes of calculating Adjusted EBITDA, when it evaluates the cash usage and prospective cash usage of the Company. Management does not believe this excluded item is reflective of its ongoing operations.
Goodwill Impairment
As part of the Company's preparation of its financial statements for the
second fiscal quarter of 2009, the Company has preliminarily determined that
the value of its goodwill is impaired. Based on the results of that
preliminary evaluation, the Company recorded a non-cash impairment charge of
Non-GAAP financial measures are not in accordance with, or an alternative
for, generally accepted accounting principles in
Additional Information and Where to Find It
In connection with the proposed business combination involving Bookham and
Avanex, the companies plan to file documents with the SEC, including the
filing by Bookham of a Registration Statement on Form S-4 containing a Joint
Proxy Statement/Prospectus and each of Bookham and Avanex plan to file with
the SEC other documents regarding the proposed transaction. Investors and
security holders of Bookham and Avanex are urged to carefully read the Joint
Proxy Statement/Prospectus (when available) and other documents filed with the
SEC by Bookham and Avanex because they will contain important information
about the proposed transaction. Investors and security holders may obtain free
copies of these documents (when they are available) and other documents filed
with the SEC at the SEC's web site at www.sec.gov and by contacting Bookham
Investor Relations at (408) 404-5400 or Avanex Investor Relations at (510)
897-4188. Investors and security holders may obtain free copies of the
documents filed with the SEC on Bookham's website at www.bookham.com or
Avanex's website at www.avanex.com or the SEC's website at www.sec.gov.
Bookham, Avanex and their respective directors and executive officers may be
deemed participants in the solicitation of proxies with respect to the
proposed transaction. Information regarding the interests of these directors
and executive officers in the proposed transaction will be included in the
Joint Proxy Statement/Prospectus described above. Additional information
regarding the directors and executive officers of Bookham is also included in
Bookham's proxy statement for its 2008 Annual Meeting of Stockholders, which
was filed with the SEC on
BOOKHAM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
ASSETS December 27, 2008 June 28, 2008
Current assets:
Cash and cash
equivalents $35,296 $32,863
Short-term investments 8,894 17,845
Restricted cash 513 1,154
Accounts receivable,
net 33,119 45,665
Inventories 58,448 59,612
Prepaid expenses and
other current assets 4,842 6,007
Total current assets 141,112 163,146
Goodwill - 7,881
Other intangible assets, net 6,191 7,829
Property and equipment, net 32,509 32,962
Other non-current assets 274 272
Total assets $180,086 $212,090
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $15,402 $21,501
Accrued expenses and
other liabilities 21,245 20,789
Total current liabilities 36,647 42,290
Other long-term liabilities 1,821 1,336
Deferred gain on sale-leaseback 14,019 19,402
Total liabilities 52,487 63,028
Stockholders' equity:
Common stock 1,009 1,007
Additional paid-in
capital 1,165,695 1,163,598
Accumulated other
comprehensive income 24,742 44,036
Accumulated deficit (1,063,847) (1,059,579)
Total stockholders' equity 127,599 149,062
Total liabilities and
stockholders' equity $180,086 $212,090
BOOKHAM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three Months Ended
December 27, September 27, December 29,
2008 2008 2007
Revenues $50,204 $66,531 $58,956
Cost of revenues 41,499 49,902 45,522
Gross profit 8,705 16,629 13,434
Operating expenses:
Research and development 6,897 7,935 8,168
Selling, general and
administrative 9,282 10,684 12,162
Amortization of intangible
assets 444 463 1,353
Restructuring and
severance charges 482 1,486 562
Legal settlement - (184) 877
(Gain) loss on sale of
property and equipment (8) 16 (1,481)
Impairment of goodwill 7,881 - -
Total operating expenses 24,978 20,400 21,641
Operating loss (16,273) (3,771) (8,207)
Other income (expense):
Other expense (95) (600) -
Interest income 209 248 494
Interest expense (132) (192) (253)
Foreign currency
translation gain, net 9,866 6,496 2,732
Total other income 9,848 5,952 2,973
Income (loss) before income taxes (6,425) 2,181 (5,234)
Income tax provision (benefit) 36 (12) (47)
Net income (loss) $(6,461) $2,193 $(5,187)
Net income (loss) per share:
Basic $(0.06) $0.02 $(0.06)
Diluted $(0.06) $0.02 $(0.06)
Shares used in computing net
income (loss) per share:
Basic 100,339 100,080 90,963
Diluted 100,339 100,728 90,963
Stock-based compensation included
in the following:
Cost of revenues $284 $395 $708
Research and development 222 250 643
Selling, general and
administrative 518 572 1,332
Total $1,024 $1,217 $2,683
BOOKHAM, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except per share amounts)
Three Months Ended
December 27, September 27, December 29,
2008 2008 2007
Reconciliation of GAAP net income
(loss) to non-GAAP net income
(loss) and adjusted EBITDA:
GAAP net income (loss) $(6,461) $2,193 $(5,187)
Stock-based compensation 1,024 1,217 2,683
Restructuring and
severance charges 482 1,486 562
Certain legal actions,
settlements and related
costs - (184) 877
Income tax provision
(benefit) 36 (12) (47)
Impairment of goodwill 7,881 - -
Non-GAAP net income (loss) (2) 2,962 4,700 (1,112)
Depreciation expense 2,831 2,982 3,034
Amortization expense 444 463 1,353
Impairment of short-term
investments 106 600 -
Interest income, net (77) (56) (241)
Foreign currency
translation gain, net (9,866) (6,496) (2,732)
Adjusted EBITDA (2) $(3,600) $2,193 $302
Non-GAAP net income (loss)
per share:
Basic $0.03 $0.05 $(0.01)
Diluted $0.03 $0.05 $(0.01)
Shares used in computing Non-GAAP
net income (loss) per share:
Basic 100,339 100,080 90,963
Diluted 100,339 100,728 90,963
Reconciliation of GAAP gross
margin rate to non-GAAP gross
margin rate:
GAAP gross profit $8,705 $16,629 $13,434
Stock-based compensation
included in cost of revenues 284 395 708
One-time costs of transferring
photonics operations 377 500 -
Non-GAAP gross profit (2) $9,366 $17,524 $14,142
GAAP gross margin rate (1) 17.3% 25.0% 22.8%
Non-GAAP gross margin rate (1)(2) 18.7% 26.3% 24.0%
Reconciliation of GAAP operating
loss to non-GAAP operating loss:
GAAP operating loss $(16,273) $(3,771) $(8,207)
Stock-based compensation 1,024 1,217 2,683
Restructuring and
severance charges 482 1,486 562
Certain legal actions,
settlements and related
costs - (184) 877
Amortization expense 444 463 1,353
Impairment of goodwill 7,881 - -
Non-GAAP operating loss (2) $(6,442) $(789) $(2,732)
(1) Gross margin rate is gross profit reflected as a percentage of
revenues.
(2) For the three months ended December 27, 2008, non-GAAP net loss,
adjusted EBITDA, non-GAAP gross profit, non-GAAP gross margin rate and
non-GAAP operating loss include the impact of deferring $5.4 million in
revenue related to a major customer filing
SOURCE Bookham, Inc.
