Document


 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
____________________

FORM 8-K
____________________

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

____________________

Date of Report (Date of earliest event reported): November 8, 2018
____________________
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12539622&doc=4
OCLARO, INC.
(Exact name of Registrant as specified in its charter)
____________________


Delaware
(State or other jurisdiction of incorporation or organization)

000-30684
(Commission file number)

20-1303994
(I.R.S. Employer Identification Number)

 
225 Charcot Avenue, San Jose, California 95131
(Address of principal executive offices, zip code)
 
 
(408) 383-1400
(Registrant’s telephone number, including area code)
 
____________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company o






If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 
 
 





Item 2.02 Results of Operations and Financial Condition

On November 8, 2018, Oclaro, Inc. (“Oclaro” or the “Company”) issued a press release announcing its operating and financial results for the quarter ended September 29, 2018. The press release contains forward-looking statements regarding the Company and includes cautionary statements identifying factors that could cause actual results to differ materially from those anticipated. The full text of the Company’s press release is attached hereto as Exhibit 99.1.
The information in Item 2.02 of this Current Report on Form 8-K, including Exhibits 99.1, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, the information in this Current Report on Form 8-K, including the exhibit, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.
         
Exhibit No.    Description

99.1          Press release issued by the Company on November 8, 2018.

    





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
OCLARO, INC. 
 
 
Date: November 8, 2018
By:
/s/ David L. Teichmann
 
 
 
David L. Teichmann
 
 
 
Executive Vice President, General Counsel and Corporate Secretary
 




EXHIBIT LIST

Exhibit No.    Description                                        
99.1          Press release issued by the Company on November 8, 2018.

    




Exhibit
 http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12539622&doc=3
Oclaro Announces First Quarter Fiscal Year 2019 Financial Results

SAN JOSE, Calif., – November 8, 2018 – Oclaro, Inc. (Nasdaq: OCLR), a leading provider and innovator of optical communications solutions, today announced its financial results for the first quarter of fiscal year 2019, which ended September 29, 2018. Oclaro will not hold an earnings call, nor provide forward guidance for the second quarter of fiscal year 2019, due to the previously announced proposed acquisition of Oclaro by Lumentum Holdings Inc.

“I am once again pleased with the results that the Oclaro team delivered for our first quarter of fiscal year 2019.  Revenue grew nine percent sequentially over the prior quarter to $132 million, primarily driven by the recovery of shipments to ZTE.  Despite this revenue growth, our gross margin declined in the quarter, primarily due to a weaker product mix driven by increased sales of certain 100G Datacom modules that we are winding down.  Even so, we delivered strong operating results and generated $19 million in cash,” said Greg Dougherty, CEO of Oclaro.  “While we wait for the Lumentum merger to close, which we believe remains on track to occur in calendar year 2018, we remain a leading innovator of new products.  We recently announced several new products for next generation deployments, including 600G components, DCO modules at 100G and 200G, and 400G PAM4 data center transceivers,” said Mr. Dougherty.

Results for the First Quarter of Fiscal 2019
Revenues were $131.7 million for the first quarter of fiscal 2019. This compares with revenues of $120.9 million in the fourth quarter of fiscal 2018, and revenues of $155.6 million in the first quarter of fiscal 2018.
GAAP gross margin was 34.6% for the first quarter of fiscal 2019. This compares with GAAP gross margin of 37.0% in the fourth quarter of fiscal 2018, and GAAP gross margin of 40.3% in the first quarter of fiscal 2018.
Non-GAAP gross margin was 34.9% for the first quarter of fiscal 2019. This compares with non-GAAP gross margin of 37.7% in the fourth quarter of fiscal 2018, and non-GAAP gross margin of 40.6% in the first quarter of fiscal 2018.
GAAP operating income was $11.4 million for the first quarter of fiscal 2019. This compares with GAAP operating income of $8.9 million in the fourth quarter of fiscal 2018, and GAAP operating income of $31.2 million in the first quarter of fiscal 2018.
Non-GAAP operating income was $16.8 million for the first quarter of fiscal 2019. This compares with non-GAAP operating income of $15.7 million in the fourth quarter of fiscal 2018, and non-GAAP operating income of $34.6 million in the first quarter of fiscal 2018.
GAAP net income for the first quarter of fiscal 2019 was $10.2 million. This compares with GAAP net income of $6.4 million in the fourth quarter of fiscal 2018, and GAAP net income of $26.5 million in the first quarter of fiscal 2018.
Non-GAAP net income for the first quarter of fiscal 2019 was $14.4 million. This compares with non-GAAP net income of $14.6 million in the fourth quarter of fiscal 2018, and non-GAAP net income of $34.5 million in the first quarter of fiscal 2018.
GAAP earnings per diluted share for the first quarter of fiscal 2019 were $0.06. This compares with GAAP earnings per diluted share of $0.04 in the fourth quarter of fiscal 2018, and GAAP earnings per diluted share of $0.16 in the first quarter of fiscal 2018.
Non-GAAP earnings per diluted share for the first quarter of fiscal 2019 were $0.08. This compares with non-GAAP earnings per diluted share of $0.08 in the fourth quarter of fiscal 2018, and non-GAAP earnings per diluted share of $0.20 in the first quarter of fiscal 2018.
Cash, cash equivalents, and short-term investments were $341.9 million at September 29, 2018.






About Oclaro
Oclaro, Inc. (NASDAQ: OCLR), is a leader in optical components and modules for the long-haul, metro and data center markets. Leveraging more than three decades of laser technology innovation and photonics integration, Oclaro provides differentiated solutions for optical networks and high-speed interconnects driving the next wave of streaming video, cloud computing, application virtualization and other bandwidth-intensive and high-speed applications. For more information, visit www.oclaro.com or follow on Twitter at @OclaroInc.

Copyright 2018. 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. All other trademarks are the property of their respective owners. Information in this release is subject to change without notice.

Safe Harbor Statement
This press release contains statements about management’s future expectations regarding the 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. Investors should not unduly rely on such forward-looking statements. These forward-looking statements include statements concerning (i) the timing of the closing of our pending merger with Lumentum, (ii) Oclaro’s future financial performance and operating prospects and (iii) the statements in our CEO’s quote. 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,” “forecast,” “project,” “intend,” “plan,” “believe,” “will,” “should,” “outlook,” “could,” “target,” “model,” "objective," 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 our actual results or events to differ materially from those indicated by such forward-looking statements, including (i) the risk that our pending merger with Lumentum Holdings Inc. does not close, due to the failure of one or more conditions to closing, (ii) disruption from the merger making it more difficult to maintain our customer, supplier, key personnel and other strategic relationships, (iii) uncertainty as to the market value of the Lumentum merger consideration to be paid in the merger, (iv) the risk that required governmental approvals of the merger (including China antitrust approval) will not be obtained or that such approvals will be delayed beyond current expectations, (v) the risk of litigation in respect of either Oclaro or Lumentum or the merger, (vi) our dependence on a limited number of customers for a significant percentage of our revenues, (vii) competition and pricing pressure, (viii) our ability to effectively manage our inventory, (ix) the absence of long-term purchase commitments from many of our long-term customers, (x) our ability to meet or exceed our gross margin expectations, (xi) our ability to grow our revenues in the future by increasing the percentage of sales associated with new products, (xii) the effects of fluctuations in foreign currency exchange rates, (xiii) our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses, (xiv) our ability to timely develop, commercialize and ramp the production of new products to customer required volumes, (xv) the effect of tariffs or other restrictions on trade between the U.S. and China, (xvi) our ability to respond to evolving technologies, customer requirements and demands, and product design challenges, (xvii) our dependence on a limited number of suppliers and key contract manufacturers, (xviii) the impact of additional restructuring charges we may take in the future, (xix) the risks associated with delays, disruptions or quality control problems in manufacturing, (xx) our manufacturing yields, (xxi) our ability to conclude agreements with our customers on favorable terms, (xxii) our ability to maintain effective internal controls over financial reporting, (xxiii) fluctuations in our revenues, growth rates and operating results, (xxiv) changes in our effective tax rates or outcomes of tax audits or similar proceedings, (xxv) the impact of financial market and general economic conditions in the industries in which we operate and any resulting reduction in demand for our products, (xxvi) potential operating or reporting disruptions that could result from the implementation of our new enterprise resource planning system, and (xxvii) other factors described under the caption "Risk Factors" and elsewhere in the documents we periodically file with the SEC.

Non-GAAP Financial Measures
Oclaro provides certain supplemental non-GAAP financial measures to its investors as a complement to the most comparable GAAP measures. The GAAP measure most directly comparable to non-GAAP gross margin rate is gross margin rate. The GAAP measure most directly comparable to non-GAAP operating income/loss is operating income/loss. The GAAP measure most directly comparable to Adjusted EBITDA is net 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.




Management excludes certain items from its view of Oclaro’s core operating performance, such as impairment charges, deferred income taxes, restructuring and severance programs, costs relating to specific major projects (such as acquisitions), non-cash compensation related to stock and options, impairment of fixed assets and inventory and related expenses, certain other income and expense items, and the tax effects thereof. Management does not believe these items are reflective of Oclaro’s ongoing core operating performance 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 net income/loss excluding the impact of income taxes, net interest income/expense, depreciation and amortization, net gains/losses on foreign currency transactions, as well as restructuring, acquisition and related costs, non-cash compensation related to stock and options, and other unusual one-time charges, 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. Contact 
 
Investor Contact 
 
Pete Mangan
 
Jim Fanucchi
 
Chief Financial Officer
 
Darrow Associates, Inc.
 
(408) 383-1400
 
(408) 404-5400
 
ir@oclaro.com
 
ir@oclaro.com
 




OCLARO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
September 29, 2018
 
June 30, 2018
 
(Thousands)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
337,920

 
$
245,688

Short-term investments
3,997

 
77,440

Accounts receivable, net
108,720

 
100,482

Inventories
89,779

 
106,678

Prepaid expenses and other current assets
36,178

 
35,175

Total current assets
576,594

 
565,463

Property and equipment, net
131,721

 
137,438

Other intangible assets, net
19

 
61

Deferred tax assets, non-current
17,192

 
16,625

Other non-current assets
1,514

 
1,212

Total assets
$
727,040

 
$
720,799

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
69,281

 
$
68,221

Accrued expenses and other liabilities
36,321

 
41,686

Capital lease obligations, current
530

 
2,386

Total current liabilities
106,132

 
112,293

Deferred gain on sale-leaseback
4,962

 
5,193

Capital lease obligations, non-current
702

 
857

Other non-current liabilities
10,373

 
10,440

Total liabilities
122,169

 
128,783

Stockholders’ equity:
 
 
 
Preferred stock

 

Common stock
1,715

 
1,706

Additional paid-in capital
1,705,945

 
1,703,331

Accumulated other comprehensive income
42,550

 
42,547

Accumulated deficit
(1,145,339
)
 
(1,155,568
)
Total stockholders’ equity
604,871

 
592,016

Total liabilities and stockholders’ equity
$
727,040

 
$
720,799

 
 
 
 








OCLARO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
Three Months Ended
 
September 29, 2018
 
June 30, 2018
 
September 30, 2017
 
(Thousands, except per share amounts)
Revenues
$
131,658

 
$
120,944

 
$
155,598

Cost of revenues
86,064

 
76,136

 
92,894

Gross profit
45,594

 
44,808

 
62,704

Operating expenses:
 
 
 
 
 
Research and development
16,162

 
16,293

 
16,435

Selling, general and administrative
16,389

 
16,729

 
14,866

Amortization of other intangible assets
42

 
193

 
152

Restructuring and acquisition-related expenses
800

 
1,274

 

Loss on disposal of property and equipment
777

 
1,409

 
22

Total operating expenses
34,170

 
35,898

 
31,475

Operating income
11,424

 
8,910

 
31,229

Other income (expense):
 
 
 
 
 
Interest income (expense), net
200

 
102

 
434

(Loss) gain on foreign currency transactions, net
(193
)
 
(928
)
 
489

Other income (expense), net
1,357

 
923

 
574

Total other income (expense)
1,364

 
97

 
1,497

Income before income taxes
12,788

 
9,007

 
32,726

Income tax provision (1)
2,559

 
2,587

 
6,237

Net income
$
10,229

 
$
6,420

 
$
26,489

Net income per share:
 
 
 
 
Basic
$
0.06

 
$
0.04

 
$
0.16

Diluted
$
0.06

 
$
0.04

 
$
0.16

Shares used in computing net income per share:
 
Basic
171,046

 
170,325

 
168,137

Diluted
173,127

 
172,316

 
170,849


(1) The Company has not completed its estimate of the impact of Public Law 115-97 (formerly known as the Tax Cuts and Jobs Act) on the realizability of its U.S. deferred tax assets and has, therefore, elected to utilize the reporting provisions of Staff Accounting Bulletin No. 118 issued by the U.S. Securities and Exchange Commission.






OCLARO, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
 
Three Months Ended
 
September 29, 2018
 
June 30, 2018
 
September 30, 2017
 
(Thousands, except per share amounts)
Reconciliation of GAAP gross margin rate to non-GAAP gross margin rate:
GAAP gross profit
$
45,594

 
$
44,808

 
$
62,704

Stock-based compensation in cost of revenues
562

 
783

 
438

Restructuring and acquisition-related expenses in cost of revenues
229

 

 

Net excess and obsolete recoveries in cost of revenues (2)
(480
)
 

 

Non-GAAP gross profit
$
45,905

 
$
45,591

 
$
63,142

 
 
 
 
 
 
GAAP gross margin rate
34.6
%
 
37.0
%
 
40.3
%
Non-GAAP gross margin rate
34.9
%
 
37.7
%
 
40.6
%
Reconciliation of GAAP operating income to non-GAAP operating income:
GAAP operating income
$
11,424

 
$
8,910

 
$
31,229

Stock-based compensation
4,004

 
3,909

 
3,199

Amortization of other intangible assets
42

 
193

 
152

Restructuring and acquisition-related expenses
1,029

 
1,274

 

Net excess and obsolete recoveries (2)
(480
)
 

 

Loss on disposal of property and equipment
777

 
1,409

 
22

Non-GAAP operating income
$
16,796

 
$
15,695

 
$
34,602

 
 
 
 
 
 
GAAP operating income rate
8.7
%
 
7.4
%
 
20.1
%
Non-GAAP operating income rate
12.8
%
 
13.0
%
 
22.2
%
 
 
 
 
 
 
Reconciliation of GAAP net income to non-GAAP net income and adjusted EBITDA:
GAAP net income
$
10,229

 
$
6,420

 
$
26,489

Stock-based compensation
4,004

 
3,909

 
3,199

Amortization of other intangible assets
42

 
193

 
152

Restructuring and acquisition-related expenses
1,029

 
1,274

 

Other (income) expense items, net
(1,357
)
 
(923
)
 
(574
)
Loss on disposal of property and equipment
777

 
1,409

 
22

Net excess and obsolete recoveries (2)
(480
)
 

 

Loss (gain) on foreign currency translation
193

 
928

 
(489
)
Income tax effect
4

 
1,341

 
5,664

Non-GAAP net income
$
14,441

 
$
14,551

 
$
34,463

Income tax provision
2,555

 
1,246

 
573

Interest (income) expense, net
(200
)
 
(102
)
 
(434
)
Depreciation expense
8,421

 
8,241

 
6,195

Adjusted EBITDA
$
25,217

 
$
23,936

 
$
40,797

 
 
 
 
 
 
Non-GAAP net income per share:
 
 
Basic
$
0.08

 
$
0.09

 
$
0.20

Diluted
$
0.08

 
$
0.08

 
$
0.20

Shares used in computing Non-GAAP net income per share:
 
 
Basic
171,046

 
170,325

 
168,137

Diluted
173,127

 
172,316

 
170,849





 
Three Months Ended
 
September 29, 2018
 
June 30, 2018
 
September 30, 2017
 
(Thousands, except per share amounts)
Stock-based compensation for the above included the following:
 
 
Cost of revenues
$
562

 
$
783

 
$
438

Research and development
1,067

 
875

 
867

Selling, general and administrative
2,375

 
2,251

 
1,894

Total
$
4,004

 
$
3,909

 
$
3,199

 
 
 
 
 
 

(2) Recoveries related to inventory exposure resulting from the U.S. Government’s removal of export sanctions that had been imposed on ZTE in April 2018.