Bookham Achieves Record Results in First Quarter Fiscal 2009

SAN JOSE, Calif., Oct. 23 /PRNewswire-FirstCall/ -- Bookham, Inc.
(Nasdaq: BKHM), a leading provider of optical components, modules and
subsystems, today announced the financial results for its first quarter fiscal
year 2009, ended September 27, 2008, achieving historical highs for both
revenue and Adjusted EBITDA.
First Quarter Fiscal 2009 GAAP Results
Revenue for the first quarter of fiscal 2009 was $66.5 million, an
increase of 6 percent when compared with $62.6 million in the fourth quarter
of fiscal 2008, and up 23 percent from $54.3 million in the first quarter of
fiscal 2008.
First quarter gross margin was 25 percent, an increase of 3 percentage
points from 22 percent last quarter and an increase of 2 percentage points
from 23 percent in the same quarter last year. Net income in the first
quarter was $2.2 million, or net income of $0.02 per share. Included in first
quarter net income is a non-cash gain of $6.5 million from the foreign
currency translation of intercompany balances between the Company's
subsidiaries. In the fourth quarter of fiscal 2008, the Company recorded a
net loss of $1.9 million, which included a $3.8 million one-time gain on a
legal settlement, or a net loss of $0.02 per share last quarter, and a net
loss of $11.0 million, or a net loss of $0.13 per share, in the first quarter
of fiscal 2008.
Cash, cash equivalents, short term investments and restricted cash at
September 27, 2008 were $43.2 million, compared with $51.9 million at June 28,
2008. Approximately $6 million of this decrease was the result of receivables
scheduled for collection in the last week of the quarter that certain
customers shifted payments into the first week of October.
First Quarter Fiscal 2009 Non-GAAP Results
Adjusted EBITDA of $2.2 million for the first quarter of fiscal 2009 was a
historic high for the Company and represented an improvement of approximately
$2.9 million versus Adjusted EBITDA of negative $0.7 million last quarter, and
an increase of $4.7 million when compared with Adjusted EBITDA of negative
$2.5 million in the first quarter of fiscal 2008.
Non-GAAP gross margin of 26 percent, which excludes stock compensation
expense of $0.4 million and $0.5 million of one-time costs related to the
transfer of San Jose photonics operations to Shenzhen, China represents an
increase from 23 percent last quarter and 24 percent in the first quarter of
fiscal 2008.
First quarter non-GAAP net income was $4.7 million, or non-GAAP net income
of $0.05 per share. This compares with a non-GAAP net loss of $1.5 million,
or a non-GAAP net loss of $0.01 per share, in the prior quarter and a non-GAAP
net loss of $8.0 million, or a non-GAAP net loss of $0.10 per share, in the
first quarter of fiscal 2008.
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 first quarter
of fiscal 2009, fourth quarter of fiscal 2008 and first quarter of fiscal 2008
were $1.2 million, $3.2 million and $1.7 million, respectively.
"We executed another quarter of financial improvement, including record
revenue and Adjusted EBITDA. Our progress with product innovation and
operational execution drove these results," said Alain Couder, president and
CEO of Bookham, Inc. "The economic environment is reducing demand from some
of our customers. Our priority remains unchanged: to achieve sustained
operating profitability."
Second Quarter Fiscal 2009 Outlook
For the second quarter of fiscal 2009, ending December 27, 2008, the
Company expects:
-- Revenue in the range of $57 million to $62 million
-- Non-GAAP gross margin between 21 percent and 26 percent, which
excludes stock compensation and one-time costs related to the transfer
of San Jose photonics operations to Shenzhen, China
-- Adjusted EBITDA of negative $2 million to positive $2 million

The forecasts provided are 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, such as 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 for which the likelihood and amounts are not determinable at
this time, 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 first quarter fiscal 2009
today at 1:30 p.m. PT/4:30 p.m. ET. To listen to the live conference call,
please dial (480) 248-5081. A replay of the conference call will be available
through October 30, 2008. To access the replay, dial 1-303-590-3030. The
conference code for the replay is 3928193. A webcast of this call will be
available in the investors section of Bookham's website at
http://www.bookham.com.
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 San Jose, Calif., with leading edge chip fabrication
facilities in the UK and Switzerland, and manufacturing sites in the USA and
China.
Bookham and all other Bookham, Inc. product names and slogans are
trademarks or registered trademarks of Bookham, Inc. in the USA or other
countries.
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 operating income/loss, cash flow from
operations, achieving profitability and information set forth under the
caption "Second 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 lack of availability of credit as well as the factors described
in Bookham's most recent annual report on Form 10-K and most recent quarterly
reports on Form 10-Q. These include continued demand for optical components,
changes in inventory and product mix, no further degradation in the exchange
rate of the United States dollar relative to U.K., China and Switzerland
currencies, and the continued ability of the Company to maintain requisite
financial resources. The forward-looking statements included in this
announcement represent Bookham's view as of the date of this release. Bookham
anticipates that subsequent events and developments may cause Bookham's views
to change. However, Bookham disclaims any intention or obligation to update
any forward-looking statements as a result of developments occurring after the
date of this release. Those forward-looking statements should not be relied
upon as representing Bookham's views as of any date subsequent to the date of
this announcement.
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 the impact of net interest income/expense,
depreciation and amortization, 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;
to provide investors with 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 GAAP, but should not be considered a
substitute for, or superior to, GAAP results.
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, impairment charges and
certain other one-time charges and credits specifically identified where
applicable. 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.
A pro-forma subtotal within the Company's determination of non-GAAP net
income/loss specifically excludes from the Company's net income/loss the
non-cash compensation related to stock and options granted to employees and
directors under SFAS 123R - Share-Based Payment. Management uses this
non-GAAP information to compare this specific non-cash expense with similar
expenses of competitors and other companies.
Non-GAAP financial measures are not in accordance with, or an alternative
for, generally accepted accounting principles in the United States. Non-GAAP
net income/loss 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 net income/loss used
by other companies. The GAAP measure most directly comparable to non-GAAP net
income/loss is net income/loss. A reconciliation of non-GAAP net income/loss
to net income/loss is set forth in the schedules below.
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 where applicable. 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 the United States.
Adjusted EBITDA 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. The GAAP measure most directly comparable to Adjusted EBITDA
is net income/loss. A reconciliation of Adjusted EBITDA to GAAP net
income/loss is set forth in the financial schedules section below.
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 July 3, 2004, restructuring and severance costs,
non-cash compensation related to stock and options granted to employees and
directors, impairment charges, and certain other one-time charges and credits
specifically identified where applicable. The Company evaluates its
performance using, among other things, non-GAAP operating 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 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 outside our normal course of business, impairment charges, 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 operating loss.
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.
A pro-forma subtotal within the Company's determination of non-GAAP
operating loss specifically excludes from the Company's operating loss the
non-cash compensation related to stock and options granted to employees and
directors under SFAS 123R - Share-Based Payment. Management uses this non-
GAAP information to compare this specific non-cash expense with similar
expenses of competitors and other companies.
Non-GAAP financial measures are not in accordance with, or an alternative
for, generally accepted accounting principles in the United States. Non-GAAP
operating loss 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 operating loss used
by other companies. The GAAP measure most directly comparable to non-GAAP
operating loss is operating loss. A reconciliation of non-GAAP net loss to
operating loss is set forth in the schedules below.
Furthermore, similar non-GAAP measures 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.
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 retention bonuses, 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 current and prior quarter, the Company has 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 July 3, 2004 fiscal year end, the
Company recorded intangible assets which are being amortized to operating
expenses over their useful lives. The Company excludes the amortization of
intangible assets for the purposes of calculating non-GAAP operating loss and
Adjusted EBITDA 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.
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
function 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.
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. The GAAP measure most directly comparable to non-GAAP
net income/loss is net income/loss. The GAAP measure most directly comparable
to Adjusted EBITDA is net income/loss. The GAAP measure most directly
comparable to non-GAAP operating loss is operating loss. A reconciliation of
each of these non-GAAP financial measures to GAAP information is set forth
below.

BOOKHAM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

September 27, June 28,
2008 2008
ASSETS
Current assets:
Cash and cash equivalents $29,678 $32,863
Short-term investments 12,910 17,845
Restricted cash 611 1,154
Accounts receivable, net 51,169 45,665
Inventories 58,497 59,612
Prepaid expenses and other
current assets 5,199 6,007
Total current assets 158,064 163,146
Goodwill 7,881 7,881
Other intangible assets, net 7,115 7,829
Property and equipment, net 32,740 32,962
Other assets 233 272
Total assets $206,033 $212,090

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $20,983 $21,501
Accrued expenses and other
liabilities 20,142 20,789
Total current liabilities 41,125 42,290
Other long-term liabilities 2,141 1,336
Deferred gain on sale leaseback 17,875 19,402
Total liabilities 61,141 63,028
Stockholders' equity:
Common stock 1,014 1,007
Additional paid-in capital 1,164,698 1,163,598
Accumulated other
comprehensive income 36,566 44,036
Accumulated deficit (1,057,386) (1,059,579)
Total stockholders' equity 144,892 149,062
Total liabilities and
stockholders' equity $206,033 $212,090

BOOKHAM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)

Three Months Ended
September 27, June 28, September 29,
2008 2008 2007

Net revenues $66,531 $62,550 $54,282
Cost of revenues 49,902 48,731 41,945
Gross profit 16,629 13,819 12,337
Operating expenses:
Research and development 7,935 8,203 8,692
Selling, general and
administrative 10,684 12,742 11,326
Amortization of intangibles 463 622 1,997
Restructuring and severance
charges 1,486 1,020 1,217
Certain legal actions,
settlements and related costs (184) (3,813) -
(Gain) loss on sale of property
and equipment and other assets 16 (250) (235)
Total operating expenses 20,400 18,524 22,997
Operating loss (3,771) (4,705) (10,660)
Other income (expense), net 5,952 2,841 (294)
Income (loss) before income taxes 2,181 (1,864) (10,954)
Income tax (provision) benefit 12 (35) -
Net income (loss) $2,193 $(1,899) $(10,954)

Net income (loss) per share:
Basic $0.02 $(0.02) $(0.13)
Diluted $0.02 $(0.02) $(0.13)
Shares used in computing net
income (loss) per share:
Basic 100,080 99,604 82,586
Diluted 100,728 99,604 82,586

Stock-based compensation
included in the following:
Cost of revenues $395 $560 $615
Research and development 250 712 451
Selling, general and
administrative 572 1,897 660
Total $1,217 $3,169 $1,726

BOOKHAM, INC.
RECONCILIATION OF GAAP NET LOSS TO CERTAIN NON-GAAP MEASURES
(unaudited, in thousands, except per share amounts)

Three Months Ended
September 27, 2008
Adjusted Operating
Net Income EBITDA Loss

GAAP net income (loss) $2,193 $2,193 n/a
GAAP operating loss n/a n/a $(3,771)
Stock compensation 1,217 1,217 1,217
Pro forma 3,410 3,410 (2,554)
Adjustments:
Depreciation expense - 2,982 -
Amortization expense - 463 463
Other expense - 600 -
Income tax (provision) benefit,
net (12) (12) -
Interest income, net - (55) -
Foreign currency gains, net - (6,496) -
Restructuring and severance
charges 1,486 1,486 1,486
Certain legal actions,
settlements and related costs (184) (184) (184)
Non-GAAP measures $4,700 $2,194 $(789)
Non-GAAP measures per share:
Basic $0.05 $0.02 $(0.01)
Diluted $0.05 $0.02 $(0.01)
Shares used in computing non-GAAP
measures per share:
Basic 100,080 100,080 100,080
Diluted 100,728 100,728 100,728

Three Months Ended
June 28, 2008
Net Income Adjusted Operating
(Loss) EBITDA Loss

GAAP net income (loss) $(1,899) $(1,899) n/a
GAAP operating loss n/a n/a $(4,705)
Stock compensation 3,169 3,169 3,169
Pro forma 1,270 1,270 (1,536)
Adjustments:
Depreciation expense - 2,985 -
Amortization expense - 622 622
Other expense - - -
Income tax (provision) benefit,
net 35 35 -
Interest income, net - (114) -
Foreign currency gains, net - (2,723) -
Restructuring and severance
charges 1,020 1,020 1,020
Certain legal actions,
settlements and related costs (3,813) (3,813) (3,813)
Non-GAAP measures $(1,488) $(718) $(3,707)
Non-GAAP measures per share:
Basic $(0.01) $(0.01) $(0.04)
Diluted $(0.01) $(0.01) $(0.04)
Shares used in computing non-GAAP
measures per share:
Basic 99,604 99,604 99,604
Diluted 99,604 99,604 99,604

SOURCE Bookham, Inc.

Jim Fanucchi of Summit IR Group Inc., +1-408-404-5400, ir@bookham.com, for
Bookham, Inc.; or Jerry Turin, Chief Financial Officer of Bookham, Inc.,
+1-408-383-1400, ir@bookham.com