Bookham Announces First Quarter of Fiscal Year 2006 Financial Results
Share:
SAN JOSE, Calif., - November 2, 2005 - Bookham, Inc. (Nasdaq: BKHM), a
leading provider of optical components, modules and subsystems, today
announced financial results for its first quarter of fiscal year 2006,
ended October 1, 2005.
Net revenue in the first quarter of fiscal year 2006 was $62.6 million.
This does not include approximately $1.5 million of product that was
billed and collected in the September quarter and revenue recognition
deferred to future quarters. First quarter net revenue was up 3 percent
from net revenue of $61.0 million in the fourth quarter of fiscal year
2005, and up 44 percent from net revenue of $43.6 million in the same
period a year ago.
Under generally accepted accounting principles (GAAP), gross margin in
the first quarter of fiscal 2006 was 23 percent. Excluding stock
compensation under SFAS 123R, which the Company adopted in the first
quarter of fiscal 2006, gross margin was 24 percent. This compares with
gross margin of 19 percent in the prior quarter and negative 5 percent
in the first quarter of fiscal 2005.
GAAP operating expenses in the first quarter were $25.8 million,
compared with $47.6 million in the prior quarter and $36.2 million in
the same period a year ago.
GAAP net loss in the first quarter was $0.5 million, or a net loss per
share of $0.02. First quarter GAAP net loss includes a one-time tax gain
of $11.8 million from recognizing tax assets related to the likely
future realization of capital loss carryforwards in connection with the
Company's acquisition of Creekside in the first quarter.
First quarter GAAP net loss compares with a GAAP net loss of $39.0
million, or a net loss of $1.16 per share, in the fourth quarter, and a
GAAP net loss of $38.3 million, or a net loss of $1.16 per share, in the
first quarter of fiscal 2005.
Total stock compensation under SFAS 123R for the first quarter was $2.9
million, which includes a $1.7 million charge for certain
performance-based options for which targets were achieved within the
first quarter.
Operating expenses under GAAP in the first quarter include restructuring
charges of $1.8 million, which were primarily associated with the
ongoing headcount reductions in the Company's UK operations, and a
credit for impairment recovery of $1.3 million related to the sale of
land that was previously written down. Fourth quarter GAAP operating
expenses included $16.1 million for impairment of intangibles (goodwill
and intellectual property) related to the New Focus acquisition in March
2004, and $4.9 million for restructuring.
The Company provides certain supplemental non-GAAP financial measures,
including pro-forma net loss excluding non-cash stock and option
compensation, a non-GAAP measure of income that excludes charges such as
impairment and restructuring, and the one-time tax gain, and a measure
of Adjusted EBITDA that also excludes these charges to provide readers
with the opportunity to use the same financial metrics as management to
evaluate the Company's performance. The Company also believes these
non-GAAP measures enhance the comparability and transparency of results
for the period. A reconciliation table of GAAP to non-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.
Excluding restructuring, impairment, non-cash stock and option
compensation, and a one-time tax gain, the Company's first quarter
non-GAAP net loss was $8.9 million, or a non-GAAP net loss of $0.26 per
share. This compares with a non-GAAP net loss of $17.8 million, or a
non-GAAP net loss of $0.53 per share in the previous quarter. Please
see additional information in the section "Non-GAAP Financial Measures"
below
Adjusted EBITDA was a profit of $0.7 million in the first quarter, the
first time the Company has attained this position. This compares with
an Adjusted EBITDA loss of $8.0 million in the previous quarter. The
Company calculates Adjusted EBITDA as net income/loss before net
interest expense, income taxes, depreciation and amortization, and
excludes restructuring costs, impairment charges, non-cash compensation
costs related to stock options and restricted stock grants, and the
one-time tax gain. Please see additional information in the section
"Non-GAAP Financial Measures" below.
Cash, cash equivalents and restricted cash at the end of the first
quarter was $43.0 million compared with $32.3 million at the end of the
prior quarter. The first quarter balance reflects the proceeds from the
sale of vacant land in the UK and the initial cash balances assumed from
the acquisition of Creekside from Deutsche Bank, under a share purchase
agreement announced by Bookham on August 16, 2005.
"We are pleased to have met or exceeded all of our financial guidance
targets in the first quarter, especially attaining positive Adjusted
EBITDA," said Dr. Giorgio Anania, president and chief executive officer
of Bookham, Inc. "We remain on track to have most of our assembly and
test operations in China by the end of the March quarter, and expect to
achieve continued cost savings as a result of this move. Revenue
attributable to our Chinese manufacturing operations increased in the
first quarter to $19.7 million, up from $12.4 million in the fourth
quarter, and is expected to grow again in the second quarter."
"Since the end of the first quarter, we have further improved our
balance sheet by raising $50 million in a public offering of our common
stock," said Steve Abely, chief financial officer of Bookham, Inc. "In
addition, during the first quarter we raised approximately $27 million
through the sale of vacant land in the UK and the acquisition of
Creekside from Deutsche Bank. By executing these financing events we
have strengthened our balance sheet and generated the working capital
needed to complete our announced restructuring plans."
Outlook and Guidance
"Revenue over the last year has increased approximately 44 percent,
driven by the agreement we signed with Nortel in March and growth in our
non-Nortel business," said Dr. Anania. "As we discussed last quarter,
we expect revenue from Nortel will decline over the next three quarters
as we reach the end of our last-time buys in the current agreement.
However, we expect to expand business with our non-Nortel customers over
the coming quarters and achieve additional improvements in our cost
structure through the ongoing move to China. As a result, we expect our
second quarter Adjusted EBITDA will be approximately breakeven and our
gross margin will be in-line with the first quarter."
The following forecasts 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 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 due
to their uncertain nature, such as restructuring and related costs,
acquisition or disposal related costs, and impairments of goodwill and
other long-lived assets for which the likelihood and amounts are not
determinable at this time, as well as the expensing of stock options and
restricted stock grants under SFAS 123R.
For the second quarter of fiscal 2006, ending December 31, 2005, the
Company expects revenue will be in the range of $58 million to $61
million.
The Company believes second quarter gross margin will be in the range of
23 percent to 27 percent.
Second quarter Adjusted EBITDA will be in the range of negative $2
million to positive $2 million.
Conference Call
Bookham is scheduled to hold a conference call to discuss its first
quarter fiscal 2006 financial results today at 5:00 p.m. ET/2:00 p.m.
PT. To access the call, U.S. participants dial 1-800-231-5571. U.K. and
European participants dial 1-973-582-2741. A live webcast of the call
will also be available via the Investors section of the Company's
website at bookham.com.
A replay of the call will be available until November 9, 2005. To access
the replay, U.S. callers dial 1-877-519-4471. U.K. and European callers
dial 1-973-341-3080. The Passcode is 6579299.
About Bookham
Bookham, Inc. is a global leader in the design, manufacture and
marketing of optical components, modules and subsystems. The company's
optical components, modules and subsystems are used in various
applications and industries, including telecommunications, data
communications, aerospace, industrial and military. The company has
manufacturing facilities in the UK, US, China and Switzerland; and
offices in the US, UK, Canada, China, France and Italy; and employs
approximately 2000 people worldwide.
Bookham is a registered trademark of Bookham Technology plc.
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" and
similar expressions, 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 factors described in Bookham's annual report on
Form 10-K. These include continued demand for optical components,
transfer of test and assembly operations to China, no further
degradation in the $/£ exchange rate 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
document. 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
The Company provides pro forma net loss, a non-GAAP measure of net loss
and Adjusted EBITDA as supplemental financial information regarding the
Company's operational performance.
Non-GAAP Net Loss
Non-GAAP net loss is calculated as net loss excluding the impact of
impairment charges, restructuring costs, non-cash compensation related
to stock and options granted to employees, and certain other one-time
charges and credits specifically identified where applicable. The
Company evaluates its performance using, among other things, non-GAAP
net 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, restructuring
programs and costs relating to specific major projects which are
non-recurring, 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 loss.
The Company believes that providing non-GAAP net 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 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 our determination of non-GAAP net loss
specifically excludes from our net loss the non-cash compensation
related to stock and options granted to employees under SFAS 123R -
Share-Based Payment subsequent to the Company's adoption of this
accounting standard on July 3, 2005, and under APB 25 for earlier
comparative periods. Management uses this non-GAAP information to
compare this specific non-cash expense with similar expenses of
competitors and other companies. Management also believes this provides
useful information to investors, particularly during this transition
period when most companies have not yet adopted the provisions of SFAS
123R.
Non-GAAP financial measures are not in accordance with, or an
alternative for, generally accepted accounting principles in the United
States. Non-GAAP net 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 loss used by other companies. The GAAP measure most
directly comparable to non-GAAP net loss is net loss. A reconciliation
of non-GAAP net loss to net loss is set forth in the schedules below.
Adjusted EBITDA
Adjusted EBITDA is calculated as net loss excluding the impact of taxes,
net interest expense, depreciation and amortization, as well as
restructuring, impairment, non-cash compensation related to stock and
options, 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/generated by 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. 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.
Non-GAAP financial measures are not in accordance with, or an
alternative for, generally accepted accounting principles 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 loss. A reconciliation of
Adjusted EBITDA to GAAP net loss is set forth in the financial schedules
section below.
Impairment of Goodwill, Intangibles and other Long-lived Assets
GAAP requires the Company to compare the fair value of its long-lived
assets to their carrying amount on the Company's financial statements.
If the carrying amount is greater than its fair value, then an
impairment must be recognized in the GAAP presentation, and included as
a charge to earnings in the statement of operations. In particular this
is the case regarding businesses acquired by the Company. If the
carrying amount of the acquired businesses, including recorded goodwill,
is greater than its fair value, then an impairment of the goodwill must
be recognized in the GAAP presentation, included as a charge to earnings
in the Company's statement of operations. The Company excludes the
impairment of long-lived assets for the purposes of calculating non-GAAP
net 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.
Restructuring 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 loss and Adjusted EBITDA, 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.
Change in Domicile
The Company has incurred expenses, which are included in the GAAP
statement of operations, primarily attributable to legal, accounting,
consulting and other general and administrative expenses associated with
the Company's re-domicile from the U.K. to the U.S. in September 2004.
The Company excludes these items for the purposes of calculating
non-GAAP net loss and Adjusted EBITDA when it evaluates the continuing
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.
Non-GAAP financial measures are not in accordance with, or an
alternative for, generally accepted accounting principles in the United
States. 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 loss is net loss. The GAAP measure
most directly comparable to Adjusted EBITDA is net loss. A
reconciliation of each of these non-GAAP financial measures to GAAP
information is set forth below.
Contacts:
Bookham, Inc.
Jim Fanucchi
Summit IR Group Inc.
+1 408 404-5400
ir@bookham.com
Steve Abely
Chief Financial Officer
+1 408 383-1400
Source: Bookham, Inc.
