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Oclaro Announces Fourth Quarter Fiscal Year 2014 Financial Results

Companies mentioned in this article: Oclaro, Inc.

SAN JOSE, Calif., Aug. 13, 2014 /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 2014, which ended June 28, 2014.

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"Our fourth quarter results were in-line with our expectations as our overall financial performance continued to strengthen," said Greg Dougherty, Chief Executive Officer, Oclaro. "For the full fiscal year, we made substantial progress in our financial performance when compared with the prior year. The significant year-on-year improvement demonstrates the effective execution of our turn-around plan and validates our focus on being the market leader at 100G."

"As we announced last week, the divestiture of our industrial and consumer business is another positive step in our ongoing plan to streamline our global operations, strengthen our balance sheet, and focus our product portfolio on the communications markets. Despite a projected slower start to the fiscal year, due primarily to the decline in 40G and lower-speed legacy products, we expect to continue improving our bottom line in fiscal 2015 through our lower cost structure and strong demand for new 100G products."

Results for the Fourth Quarter of Fiscal 2014


    --            Revenues were $95.9 million
                 for the fourth quarter of
                 fiscal 2014, compared with
                 revenues of $95.4 million in
                 the third quarter of fiscal
                 2014.


    --            GAAP gross margin was 14% for
                 the fourth quarter of fiscal
                 2014, compared with a GAAP
                 gross margin of 12% in the
                 third quarter of fiscal 2014.


    --            Non-GAAP gross margin was 14%
                 for the fourth quarter of
                 fiscal 2014, compared with a
                 non-GAAP gross margin of 12%
                 in the third quarter of
                 fiscal 2014.


    --            GAAP operating loss was $23.0
                 million for the fourth
                 quarter of fiscal 2014. This
                 compares with a GAAP
                 operating loss of $22.5
                 million for the third quarter
                 of fiscal 2014.


    --            Non-GAAP operating loss was
                 $14.3 million for the fourth
                 quarter of fiscal 2014,
                 compared with a non-GAAP
                 operating loss of $17.5
                 million in the third quarter
                 of fiscal 2014.


    --            GAAP net loss for the fourth
                 quarter of fiscal 2014 was
                 $24.0 million. This compares
                 with a GAAP net loss of $22.9
                 million in the third quarter
                 of fiscal 2014.


    --            Adjusted EBITDA was negative
                 $9.4 million for the fourth
                 quarter of fiscal 2014,
                 compared with negative $12.3
                 million in the third quarter
                 of fiscal 2014.


    --            Cash, cash equivalents,
                 restricted cash, and short-
                 term investments were $104.1
                 million at June 28, 2014.

Results for Fiscal Year 2014



    --            Revenues were $390.9 million for
                 fiscal 2014, compared with $404.6
                 million in fiscal 2013.


    --            GAAP gross margin was 13% for
                 fiscal 2014, compared with 7% in
                 fiscal 2013.


    --            Non-GAAP gross margin was 14% for
                 fiscal 2014, compared with 9% in
                 fiscal 2013.


    --            GAAP operating loss was $102.3
                 million for fiscal 2014. This
                 compares with a GAAP operating
                 loss of $124.8 million in fiscal
                 2013.


    --            Non-GAAP operating loss was $74.7
                 million for fiscal 2014. This
                 compares with a non-GAAP
                 operating loss of $119.9 million
                 in fiscal 2013.


    --            GAAP net income for fiscal 2014
                 was $17.8 million, which includes
                 approximately $120 million
                 primarily related to the sale of
                 discontinued operations. This
                 compares with a GAAP net loss of
                 $122.7 million in fiscal 2013.


    --            Adjusted EBITDA was negative $51.5
                 million for fiscal 2014, compared
                 with a negative $89.9 million in
                 fiscal 2013.

Sale of the Industrial and Consumer Business
On August 5, 2014 Oclaro announced the pending acquisition of its industrial and consumer business in Komoro, Japan by Ushio Opto Semiconductors, Inc. ("Ushio Opto"). Consideration for the transaction will consist of 1.85 billion Japanese yen (approximately $18.5 million) in cash, of which 1.6 billion Japanese yen (approximately $16 million) will be paid at the closing and 250 million Japanese yen (approximately $2.5 million) will be paid into escrow and released to Oclaro Japan, Inc. ("Oclaro Japan") upon the earlier of six months after the closing or the completion by Oclaro Japan of certain transition services, subject to a net asset valuation adjustment post-closing and after deduction for any indemnification amounts determined to be owed to Ushio Opto prior to release of the funds from escrow. Consummation of the transaction is subject to customary closing conditions. The closing of the transaction is expected to occur during the Company's second fiscal quarter of 2015, ending December 27, 2014.

First Quarter Fiscal Year 2015 Outlook
The guidance for the quarter ending September 27, 2014, which will include a full quarter of the Company's industrial and consumer business, is:



    --            Revenues in the range of
                 $83 million to $91
                 million.


    --            Non-GAAP gross margin in
                 the range of 12% to 16%.


    --            Adjusted EBITDA in the
                 range of negative $13
                 million to negative $9
                 million.

The foregoing guidance is based on current expectations. These statements are forward looking, and actual results may differ materially. Please see the Safe Harbor Statement in this earnings release for a description of certain important risk factors that could cause actual results to differ, and refer to Oclaro's most recent annual and quarterly reports on file with the Securities and Exchange Commission (SEC) for a more complete description of these risks. Furthermore, our outlook excludes items that may be required by GAAP, including, but not limited to, restructuring and related costs, acquisition or disposal related costs, 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 2014 today at 3:00 p.m. PT/6:00 p.m. ET. To listen to the live conference call, please dial (913) 312-0416. A replay of the conference call will be available through August 27, 2014. To access the replay, dial (858) 384-5517. The passcode for the replay is 1853638. 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 a leader in optical components, modules and subsystems for the core optical, enterprise and data center markets. Leveraging more than three decades of laser technology innovation, photonics integration, and subsystem design, Oclaro's solutions are at the heart of the fast optical networks and high-speed interconnects driving the next wave of streaming video, cloud computing, voice over IP and other bandwidth-intensive and high-speed applications. For more information, visit http://www.oclaro.com.

Copyright 2014. 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 2014 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 27, 2014 regarding revenue, non-GAAP gross margin and Adjusted EBITDA, (ii) the status of Oclaro's restructuring plan, (iii) market interest in Oclaro's 100G products, (iv) the pending acquisition by Ushio Opto of Oclaro's industrial and consumer business and (v) Oclaro's future financial performance and 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 effect of having received a "going concern" statement in our auditors report on our 2013 consolidated financial statements, (ii) our dependence on a limited number of customers for a significant percentage of our revenues, (iii) our ability to maintain strong relationships with certain customers, (iv) the effects of fluctuating product mix on our results, (v) our ability to timely develop and commercialize new products, (vi) competition and pricing pressure, (vii) our ability to meet or exceed our gross margin expectations, (viii) Oclaro's ability to maintain or increase its cash reserves and obtain debt or equity-based financing on terms acceptable to it or at all, (ix) the future performance of Oclaro and its ability to effectively restructure its operations and business following the sale of its Zurich and Amplifier businesses in accordance with its business plan, (x) our ability to respond to evolving technologies and customer requirements and demands, (xi) 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, (xii) our ability to effectively and efficiently transition to an outsourced back-end assembly and test model, (xiii) our ability to timely capitalize on any increase in market demand, (xiv) the potential inability to realize the expected benefits of asset dispositions, (xv) the sale of businesses which may or may not arise in connection with executing our restructuring plans, including without limitation the pending divestiture of Oclaro's industrial and consumer business to Ushio Opto, (xvi) our ability to reduce costs and operating expenses, (xvii) increased costs related to downsizing and compliance with regulatory and legal requirements in connection with such downsizing, (xviii) the risks associated with our international operations, (xix) the impact of continued uncertainty in world financial markets and any resulting reduction in demand for our products, (xx) the outcome of tax audits or similar proceedings, (xxi) the outcome of pending litigation against the company, 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 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 press release.

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 and Adjusted EBITDA is operating income/loss. The GAAP measure most directly comparable to non-GAAP net income/loss 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.

Adjusted EBITDA
Adjusted EBITDA is calculated as operating income/loss excluding the impact of depreciation and amortization, 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)



                                                                        Three Months Ended                                                           Twelve Months Ended
                                                                        ------------------                                                          -------------------

                                               June 28, 2014             March 29, 2014               June 29, 2013               June 28, 2014               June 29, 2013
                                               -------------             --------------               -------------               -------------               -------------

                                                               (Thousands, except per share amounts)                                       (Thousands, except per share amounts)

    Revenues                                                   $95,911                                                   $95,398                                                  $95,384                 $390,871      $404,629

    Cost of revenues                                  82,694                                  84,298                                       90,084                                  338,424      376,461
                                                      ------                                  ------                                       ------                                  -------      -------

    Gross profit                                      13,217                                  11,100                                        5,300                                   52,447       28,168

    Operating expenses:

    Research and development                          15,083                                  14,624                                       18,808                                   64,218       79,266

    Selling, general and
     administrative                                   13,993                                  17,437                                       18,190                                   70,937       78,618

    Amortization of other
     intangible assets                                   421                                     418                                        1,206                                    1,680        5,029

    Restructuring, acquisition
     and related expense, net                          5,825                                   3,068                                        2,250                                   18,491      (7,631)

    Flood-related (income)
     expense, net                                          -                                (1,657)                                    (18,867)                                 (1,797)    (29,510)

    Impairment of goodwill,
     other intangible assets,
     and long-lived assets                               584                                       -                                      26,157                                      584       27,021

    Loss on sale of property and
     equipment                                           334                                   (326)                                       (117)                                     665          170
                                                         ---                                    ----                                         ----                                      ---          ---

    Total operating expenses                          36,240                                  33,564                                       47,627                                  154,778      152,963
                                                      ------                                  ------                                       ------                                  -------      -------

    Operating loss                                  (23,023)                               (22,464)                                    (42,327)                               (102,331)    (124,795)

    Other income (expense):

    Interest income (expense),
     net                                               (114)                                   (29)                                     (1,041)                                 (9,228)     (3,271)

    Gain (loss) on foreign
     currency transactions, net                        (712)                                    625                                      (3,760)                                 (1,158)    (14,542)

    Other income (expense), net                          733                                    (56)                                       1,233                                    1,227       22,339
                                                         ---                                     ---                                        -----                                    -----       ------

    Total other income (expense)                        (93)                                    540                                      (3,568)                                 (9,159)       4,526
                                                         ---                                     ---                                       ------                                   ------        -----

    Loss from continuing
     operations before income
     taxes                                          (23,116)                               (21,924)                                    (45,895)                               (111,490)    (120,269)

    Income tax provision
     (benefit) (1)                                  (11,836)                                    745                                      (2,274)                                 (9,365)          26
                                                     -------                                     ---                                       ------                                   ------          ---

    Loss from continuing
     operations                                     (11,280)                               (22,669)                                    (43,621)                               (102,125)    (120,295)

    Income (loss) from
     discontinued operations,
     net of tax (2)                                 (12,749)                                  (252)                                     (3,755)                                 119,944      (2,450)
                                                     -------                                    ----                                       ------                                  -------       ------

    Net income (loss)                                        $(24,029)                                                $(22,921)                                               $(47,376)                 $17,819    $(122,745)
                                                              ========                                                  ========                                                 ========                  =======     =========

    Basic and diluted net income (loss) per
     share:

    Loss per share from
     continuing operations                                     $(0.11)                                                  $(0.22)                                                 $(0.48)                 $(1.03)      $(1.37)

    Income per share from
     discontinued operations                          (0.12)                                      -                                      (0.04)                                    1.21       (0.03)
                                                       -----                                     ---                                       -----                                     ----        -----

    Basic and diluted net income
     (loss) per share                                          $(0.23)                                                  $(0.22)                                                 $(0.52)                   $0.18       $(1.40)
                                                                ======                                                    ======                                                   ======                    =====        ======

    Shares used in computing net income (loss)
     per share:

    Basic                                            106,287                                 105,487                                       90,771                                   98,986       87,770

    Diluted                                          106,287                                 105,487                                       90,771                                   98,986       87,770


             (1)    The three and twelve month periods
                     ending June 28, 2014 contain an
                     income tax benefit of
                     approximately $13.1 million
                     relating to discontinued
                     operations. The three and twelve
                     month periods ending June 29, 2013
                     contain an income tax benefit of
                     approximately $0.8 million
                     relating to discontinued
                     operations.

             (2)    Includes the corresponding tax
                      provisions relating to the
                      benefits described in note (1) of
                      $13.1 million for the three and
                      twelve month periods ending June
                      28, 2014 and $0.8 million for the
                      three and twelve month periods
                      ending June 29, 2013.


                                                                                                                           OCLARO, INC.

                                                                                                      RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

                                                                                                                      CONTINUING OPERATIONS

                                                                                                                           (Unaudited)



                                                                         Three Months Ended                                                          Twelve Months Ended
                                                                         ------------------                                                          -------------------

                                                June 28, 2014             March 29, 2014              June 29, 2013               June 28, 2014               June 29, 2013
                                                -------------             --------------              -------------               -------------               -------------

                                                                (Thousands, except per share amounts)                                       (Thousands, except per share amounts)

    Reconciliation of GAAP gross margin rate to
     non-GAAP gross margin rate:

    GAAP gross profit                                           $13,217                                                  $11,100                                                   $5,300                   $52,447         $28,168

    Opnext FMV inventory
     adjustment                                             -                                      -                                          -                                       -       2,281

    Outsource transition
     costs                                                 49                                     353                                       1,293                                    1,135        3,402

    Stock-based compensation
     in cost of revenues                                  255                                     244                                         410                                    1,001        1,627
                                                          ---                                     ---                                         ---                                    -----        -----

    Non-GAAP gross profit                                       $13,521                                                  $11,697                                                   $7,003                   $54,583         $35,478
                                                                =======                                                  =======                                                   ======                   =======         =======

    GAAP gross margin rate                              13.8%                                  11.6%                                       5.6%                                   13.4%        7.0%

    Non-GAAP gross margin
     rate                                               14.1%                                  12.3%                                       7.3%                                   14.0%        8.8%

    Reconciliation of GAAP operating loss to
     non-GAAP operating loss and adjusted
     EBITDA:

    GAAP operating loss                                       $(23,023)                                               $(22,464)                                               $(42,327)               $(102,331)     $(124,795)

    Stock-based compensation                            1,229                                   2,985                                       1,334                                    6,023        6,376

    Amortization of
     intangible assets                                    421                                     418                                       1,206                                    1,680        5,029

    Restructuring,
     acquisition and related
     costs                                              5,825                                   3,068                                       2,250                                   18,491      (7,908)

    Flood-related (income)
     expense, net                                           -                                (1,657)                                   (18,867)                                 (1,797)    (29,510)

    Impairment of goodwill,
     other intangible assets,
     and long-lived assets                                584                                       -                                     26,157                                      584       27,021

    Outsource transition
     costs                                                291                                     509                                       1,462                                    1,969        3,690

    Loss on sales of property
     and equipment                                        334                                   (326)                                      (117)                                     665          170
                                                          ---                                    ----                                        ----                                      ---          ---

    Non-GAAP operating loss                                   $(14,339)                                               $(17,467)                                               $(28,902)                $(74,716)     $(119,927)
                                                               ========                                                 ========                                                 ========                  ========       =========

    Depreciation expense                                4,979                                   5,142                                       6,771                                   23,184       30,030
                                                        -----                                   -----                                       -----                                   ------       ------

    Adjusted EBITDA                                            $(9,360)                                               $(12,325)                                               $(22,131)                $(51,532)      $(89,897)
                                                                =======                                                 ========                                                 ========                  ========        ========

    Reconciliation of GAAP loss from continuing
     operations to non-GAAP loss from
     continuing operations:

    GAAP loss from continuing
     operations (3)                                           $(11,280)                                               $(22,669)                                               $(43,621)               $(102,125)     $(120,295)

    Stock-based compensation                            1,229                                   2,985                                       1,611                                    6,023        6,376

    Amortization of
     intangible assets                                    421                                     418                                       1,206                                    1,680        5,029

    Restructuring,
     acquisition and related
     costs                                              5,825                                   3,068                                       2,250                                   18,491      (7,908)

    Flood-related (income)
     expense, net                                           -                                (1,657)                                   (18,867)                                 (1,797)    (29,510)

    Impairment of goodwill,
     other intangible assets,
     and long-lived assets                                584                                       -                                     26,157                                      584       27,021

    Other (income) expense
     items, net                                         (733)                                     56                                     (1,233)                                 (1,227)    (22,339)

    Outsource transition
     costs                                                291                                     509                                       1,462                                    1,969        3,690

    (Gain) loss on foreign
     currency translation                                 712                                   (625)                                      3,760                                    1,158       14,542

    Non-GAAP loss from
     continuing operations
     (3)                                                      $(2,951)                                               $(17,915)                                               $(27,275)                $(75,244)     $(123,394)
                                                                =======                                                 ========                                                 ========                  ========       =========

    Non-GAAP loss per share-continuing
     operations:

    Basic                                                       $(0.03)                                                 $(0.17)                                                 $(0.30)                  $(0.76)        $(1.41)

    Diluted                                                     $(0.03)                                                 $(0.17)                                                 $(0.30)                  $(0.76)        $(1.41)

    Shares used in computing Non-GAAP loss per
     share-continuing operations:

    Basic                                             106,287                                 105,487                                      90,771                                   98,986       87,770

    Diluted                                           106,287                                 105,487                                      90,771                                   98,986       87,770






                                                Three Months Ended                                      Twelve Months Ended
                                                ------------------                                      -------------------

                             June 28, 2014                        March 29, 2014       June 29, 2013                        June 28, 2014   June 29, 2013
                             -------------                        --------------       -------------                        -------------   -------------

                                      (Thousands, except per share amounts)                         (Thousands, except per share
                                                                                                                    amounts)

    Stock-based
     compensation for the
     above included the
     following:

    Cost of revenues                                       $255                                                       $244                                  $410         $1,001 $1,627

    Research and development           338                                         249                                                  320                 1,039  1,488

    Selling, general and
     administrative                    636                                       2,492                                                  604                 3,983  2,984

    Restructuring                        -                                          -                                                 277                     -   277

    Total                                                $1,229                                                     $2,985                                $1,611         $6,023 $6,376
                                                         ======                                                     ======                                ======         ====== ======


    Outsource transition
     cost for the above
     included the following:

    Cost of revenues                                        $49                                                       $353                                $1,293         $1,135 $3,402

    Research and development           242                                         156                                                  165                   823    263

    Selling, general and
     administrative                      -                                          -                                                   4                    11     25

    Total                                                  $291                                                       $509                                $1,462         $1,969 $3,690
                                                           ====                                                       ====                                ======         ====== ======


    (3)              The three and twelve month periods
                     ending June 28, 2014 contain an
                     income tax benefit of
                     approximately $13.1 million
                     relating to discontinued
                     operations. The three and twelve
                     month periods ending June 29,
                     2013 contain an income tax
                     benefit of approximately $0.8
                     million relating to discontinued
                     operations.




                                                           OCLARO, INC.

                                              CONDENSED CONSOLIDATED BALANCE SHEETS

                                                           (Unaudited)



                                                           June 28, 2014               June 29, 2013
                                                           -------------               -------------

                                                                     (Thousands, except par value)

                                  ASSETS

    Current assets:

    Cash and cash equivalents                                                $98,973                               $84,635

    Restricted cash                                                5,055                                    2,719

    Short-term investments                                            95                                      200

    Accounts receivable                                           82,872                                  100,774

    Inventories                                                   71,099                                   86,029

    Prepaid expenses and other current
     assets                                                       45,275                                   33,498

    Assets of discontinued operations
     held for sale                                                     -                                  55,333
                                                                     ---                                  ------

    Total current assets                                         303,369                                  363,188
                                                                 -------                                  -------

    Property and equipment, net                                   50,768                                   72,028

    Other intangible assets, net                                   8,536                                   10,233

    Other non-current assets                                       3,012                                    4,445
                                                                   -----                                    -----

    Total assets                                                            $365,685                              $449,894
                                                                            ========                              ========

                   LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:

    Accounts payable                                                         $71,283                               $94,157

    Accrued expenses and other
     liabilities                                                  51,492                                   52,010

    Capital lease obligations, current                             5,387                                    8,281

    Term loan payable                                                  -                                  24,647

    Credit line payable                                                -                                  39,964

    Liabilities of discontinued
     operations held for sale                                          -                                  17,470
                                                                     ---                                  ------

    Total current liabilities                                    128,162                                  236,529
                                                                 -------                                  -------

    Deferred gain on sale-leasebacks                              10,711                                   10,477

    Convertible notes payable                                          -                                  22,990

    Capital lease obligations, non-
     current                                                       4,539                                    9,914

    Other non-current liabilities                                 14,345                                   15,852
                                                                  ------                                   ------

    Total liabilities                                            157,757                                  295,762
                                                                 -------                                  -------

    Stockholders' equity:

    Preferred stock

    Common stock                                                   1,077                                      928

    Additional paid-in capital                                 1,458,487                                1,429,155

    Accumulated other comprehensive
     income                                                       45,864                                   39,368

    Accumulated deficit                                      (1,297,500)                             (1,315,319)
                                                              ----------                               ----------

    Total stockholders' equity                                   207,928                                  154,132
                                                                 -------                                  -------

    Total liabilities and stockholders'
     equity                                                                 $365,685                              $449,894
                                                                            ========                              ========

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SOURCE Oclaro, Inc.