Oclaro, a provider of optical components, modules and subsystems, has announced the financial results for its third quarter of fiscal year 2013, which ended March 30, 2013. Oclaro also announced it has secured $25 million in short-term bridge loans from Providence Equity Capital Markets, who joins Wells Fargo Bank and Silicon Valley Bank as a lender under Oclaro's existing credit agreement.

 "Our financial results were at the lower end of guidance for the third quarter, in the face of continued softness in the telecommunications market.  Our sales declined further than expected, which drove a higher loss compared with the prior quarter," said Alain Couder, president and CEO, Oclaro, Inc.  "The financing we announced today is an initial step in our plan to simplify the company and develop and implement a profitable operating model.  Meanwhile our new product innovations continue. At the recent OFC trade show Oclaro reinforced its position as a leader in the high growth 100G market, both on the telecom line side and the datacom client side."

Results for the Third Quarter of Fiscal 2013:

•              Revenues were $141.6 million for the third quarter of fiscal 2013, compared with revenues of $159.5 million in the second quarter of fiscal 2013.

•              GAAP gross margin was 9% for the third quarter of fiscal 2013, compared with a GAAP gross margin of 14% in the second quarter of fiscal 2013. Second quarter gross margin, operating expenses and net income were impacted by measurement period adjustments to the fair value of assets acquired and liabilities assumed in the merger with Opnext, Inc. as described more fully in the bullet points below.

•              Non-GAAP gross margin was 10% for the third quarter of fiscal 2013, compared with a non-GAAP gross margin of 16% in the second quarter of fiscal 2013.

•              GAAP operating loss was $28.9 million for the third quarter of fiscal 2013, which included $11.5 million of flood-related income, net of expenses, due to the flooding in Thailand. This compares with a GAAP operating loss of $5.7 million in the second quarter of fiscal 2013, which included a $25.0 million gain on the sale of assets related to our interleaver product line and our thin film filter business.

•              Non-GAAP operating loss was $32.3 million for the third quarter of fiscal 2013, compared with a non-GAAP operating loss of $22.1 million in the second quarter of fiscal 2013.

•              GAAP net loss for the third quarter of fiscal 2013 was $41.5 million, which included $11.5 million of flood-related income, net of expenses, due to the flooding in Thailand, and $3.6 million for the impairment of an investment. This compares with a GAAP net loss of $11.2 million in the second quarter of fiscal 2013, which included a $25.0 million gain on the sale of assets related to our interleaver product line and our thin film filter business.

•              Non-GAAP net loss for the third quarter of fiscal 2013 was $33.8 million. This compares with a non-GAAP net loss of $24.2 million in the second quarter of fiscal 2013.

•              Adjusted EBITDA was negative $24.0 million for the third quarter of fiscal 2013, compared with negative $13.2 million in the second quarter of fiscal 2013.

•              Cash, cash equivalents, restricted cash, and short-term investments were $80.5 million at March 30, 2013.

•              Oclaro closed its merger with Opnext, Inc. on July 23, 2012. During the third quarter of fiscal 2013, as part of the fair value assessment of assets acquired and liabilities assumed in the merger, the Company made the following measurement period adjustments impacting the first and second quarters of fiscal 2013:

·         In the first quarter of fiscal 2013, a decrease of $0.6 million in cost of revenues, a decrease of $0.1 million in operating expenses, a decrease in gain on bargain purchase of $11.6 million and an increase in net loss of $10.8 million.

·         In the second quarter of fiscal 2013, a decrease of $0.8 million in cost of revenues, a decrease of $0.2 million in operating expenses and a decrease in net loss of $1.0 million.

·         We expect to finalize our fair value assessment in the fourth quarter of fiscal 2013.

In connection with the bridge financing from Providence, Oclaro amended their credit agreement with our existing lenders. Under the amended credit agreement Oclaro agreed to complete the sale of certain assets, product lines or operating segments of our business expeditiously, and  are actively engaged in a corresponding process.  The revised credit agreement requires Oclaro to apply the proceeds of any such sales to repaying the loans under the credit agreement, although subject to certain conditions a portion of the credit line may become available to Oclaro for re-borrowing after it is repaid.  Oclaro believe that a successful completion of such disposition of assets, product lines or operating segments, is a necessary step to fund their continued operations and  to complete their plans to restructure the company.

Fourth Quarter Fiscal Year 2013 Outlook

The results of Oclaro for the fourth quarter of fiscal 2013, which ends June 29, 2013, are expected to be:

•              Revenues in the range of $132 million to $144 million.

•              Non-GAAP gross margin in the range of 9% to 13%.

•              Adjusted EBITDA in the range of negative $30 million to negative $17 million.

www.oclaro.com.