Bookham Technology Announces Third Quarter Results 2002

Bookham Technology plc (LSE: BHM, Nasdaq: BKHM), a leading provider of integrated optical components and modules for fiber optic communication networks, today announced results for the third quarter ended 29 September 2002.

Oxfordshire, UK -- 29 October 2002: Bookham Technology plc (LSE: BHM, Nasdaq: BKHM), a leading provider of integrated optical components and modules for fiber optic communication networks, today announced results for the third quarter ended 29 September 2002.

Highlights for the third quarter ended 29 September 2002

· Revenue in the third quarter 2002 was 7.6 million ($11.8 million), up 6% sequentially from the second quarter (7.1 million; $11.0 million) and up 217% on the third quarter 2001 (2.4 million; $3.7 million) in line with the companys announcement on 7 October 2002.

· The cash burn for the quarter was 11.8 million ($18.3 million), down 14% on the second quarter 2002 (13.7 million; $21.2 million) and down 23% on the third quarter 2001 (15.4 million; $23.9 million), as a result of the companys continued cost reduction measures. The lower than expected cash burn was achieved with a focused management of working capital and capital spending. The companys cash position remains strong with 137.1 million ($212.5 million) in cash.

· Net loss for the quarter, excluding restructuring charges, was reduced to 13.5 million ($20.9 million) from 15.3 million ($23.7 million) in the second quarter 2002 and compares to 12.8 million ($19.8 million) in the third quarter 2001.

· On 7 October, the company announced it had entered into an agreement to purchase the optical transmitter and receiver business and the optical amplifier business of Nortel Networks. As part of the acquisition, Nortel Networks Limited has also agreed to enter into a $120 million (76.5 million) supply agreement with the company. The acquisition is subject to shareholder approval at an Extraordinary General Meeting to be held on 5 November 2002.

Commenting on the results, Giorgio Anania, President and Chief Executive Officer, said:

The third quarter was a good quarter, with revenues up and cash burn down, notwithstanding the difficult market environment. More importantly, the proposed acquisition of Nortel Networks optical components business, if approved, will put us in a key leadership position as an independent, broad-line supplier of optical components to the leading optical systems companies. We are moving fast with the two key planning priorities: a rapid integration of the two companies, which is critical for the employees and to manage down our costs, and a strong customer push, which is critical to achieve our objective of continued sales growth. To date, both initiatives appear to be progressing very well."

Financial Commentary

All US dollar numbers have been translated at 1 = $1.55 for the convenience of the reader.

Third quarter ended 29 September 2002

Revenue: Revenue for the quarter ended 29 September was 7.6 million ($11.8 million), a 6% increase from the 7.1 million ($11.0 million) in the second quarter 2002, and a 217% increase compared with the third quarter 2001. Sales to Marconi were up 17% and sales to customers excluding Marconi were down 6% over the previous quarter.

Marconi and Nortel Networks represented 58% and 10% of sales respectively for the quarter. On the product side, DWDM products accounted for 60% and active products for 40% of revenue for the quarter.

Operating loss (before exceptional items) under UK GAAP: Increased revenues accounted for the reduction in the gross loss (loss at the gross margin level) to 3.8 million ($5.9 million) in the third quarter 2002, compared to 3.9 million ($6.0 million) in the second quarter 2002. The gross loss (loss at the gross margin level) was higher than the 1.9 million ($2.9 million) reported in the third quarter 2001 due to a higher fixed cost manufacturing base, primarily as a result of the MOC acquisition in the first quarter of 2001.

As part of its ongoing cost reduction programme, the company announced last quarter that it would be closing its two facilities in Maryland, US and Swindon, UK and focus its concentration of production at its Milton, Abingdon and Caswell sites. The actions taken during the quarter will result in annual savings of 13.0 million ($20.0 million). The related restructuring charges recorded during the quarter were 8.6 million ($13.3 million).

The continued progress on cost reduction efforts following the integration of the MOC business and the previously announced closures of two facilities, has contributed to the 15% quarterly reduction in operating expenses to 11.2 million ($17.4 million) in the third quarter 2002 from 13.2 million ($20.5 million) in the second quarter 2002. Compared with the third quarter of 2001, operating expenses excluding National Insurance provisions on stock options declined 18%.

Net loss (including exceptionals for UK GAAP and one-time charges for US GAAP): The net loss, under both UK and US GAAP in the third quarter 2002, was 22.0 million ($34.1 million) and loss per share was 0.15 ($0.24). The net loss including exceptional items, in the second quarter was 16.2 million ($25.1 million) under both UK and US GAAP.

Cash and cash equivalents: Cash and cash equivalents as of 29 September 2002 were 137.1 million ($212.5 million) compared to 148.9 million ($230.8 million) at 30 June 2002. The cash burn for the third quarter 2002 was 11.8 million ($18.3 million) compared with 13.7 million ($21.2 million) in the second quarter 2002.

Nine months ended 29 September 2002

Revenue: Revenue for the nine months ended 29 September was 20.3 million ($31.5 million), a 3% increase compared with the 19.8 million ($30.7 million) in the same period in 2001.

Marconi, Nortel Networks and BAE Systems represented 56%, 11% and 11% of sales respectively for the period. On the product side, DWDM products accounted for 58% and active products for 42% of revenue for the period.

Operating loss (before exceptional items) under UK GAAP: The gross loss (loss at the gross margin level) was 12.5 million ($19.4 million) in the nine months, up from a gross loss of 4.3 million ($6.7 million) in the first nine months of 2001.

Operating expenses excluding National Insurance provision on stock options declined 12% compared with the first nine months of 2001, mainly as a result of lower Research and Development expenditure.

Net loss (including exceptionals for UK GAAP and one-time charges for US GAAP): The net loss, under UK GAAP for the first nine months of 2002 was 55.2 million ($85.6 million) and loss per share was 0.39 ($0.60). Under US GAAP, the net loss for the same period was 59.4 million ($92.1 million) and the loss per share was 0.42 ($0.65).

Cash and cash equivalents: Cash and cash equivalents as of 29 September 2002 were 137.1 million ($212.5 million) compared with 184.8 million ($286.4 million) at 31 December 2001. The cash burn for the nine months was 47.8 million ($74.1 million).

Outlook

When Bookham announced the acquisition of Nortel Networks optical components business, which is expected to close before mid November, the company indicated that this transaction significantly changed the companys outlook. On the strength of the customer supply agreements, and assuming shareholder approval of the acquisition, the company expects revenues in the current quarter to increase at least 50% from the third quarter 2002 and to approximately double from the fourth quarter 2002 to the first quarter 2003.

In the near term, cash burn will increase, particularly in the fourth quarter 2002, as a result of the cost and expenses of the acquisition. With quick implementation of cost restructuring and working capital management, the company expects cash burn to decline back to approximately current levels by mid 2003.

The company will be hosting a conference call to discuss this release on Tuesday 29 October 2002 at 1.30pm (BST), 2.30pm (CET), 8.30am (EST). Dial in numbers are as follows:

UK/European participants   +44 (0) 20 8240 8241
US participants         +1 800 530 2462

A taped recording will be available approximately 1 hour after the call ends for 5 days. Dial in numbers are as follows:

UK/European participants   +44 (0) 20 8288 4459
(access code: 820772)

US participants         +1 703 736 7336
(access code: 820772)
The recording will also be audio webcast on the companys website: www.bookham.com

For further information, please contact:

Bookham Technology:
Tel: +44 (0) 1235 837000
Giorgio Anania -- President & CEO
Steve Abely -- Chief Financial Officer
Sharon Ostaszewska -- Director Communications

Financial Dynamics:
Tel: +44 (0) 20 7831 3113
Sarah Marsland
Sarah Manners
Juliet Clarke

Financial Dynamics:
Tel: +1 (212) 497 9202
Deborah Ardern-Jones
Matt Dallas

Bookham Technology (LSE: BHM; Nasdaq: BKHM) designs, manufactures and markets integrated optical components and modules using high volume production methods. With three cost-disruptive technologies that offer intrinsic cost reduction: patented silicon-based ASOC, Gallium Arsenide and Indium Phosphide, the company provides end-to-end networking solutions that offer higher performance and greater systems capability to communications network system providers.

More information on Bookham Technology is available at www.bookham.com
Bookham and ASOC are registered trademarks of Bookham Technology plc

Statements made in this announcement include certain forward-looking statements that involve risks and uncertainties. Important factors that could cause actual results to differ from those indicated by such forward-looking statements include, among others, uncertainties relating to demand for the groups products, demand for optical components generally and overall future growth in the market for optical components, issues surrounding integration of the Optical Transmitter and Receiver and Optical Amplifier Businesses being acquired from Nortel Networks Corporation, uncertainties relating to the groups investment in, and reorganisation of, its manufacturing capacity, production equipment and personnel and related impact on profitability, quarterly variations in financial results, manufacturing capacity yields and inventory, intellectual property issues and other uncertainties that are discussed in the Risk Factors" of the listing particulars of the Company section of Bookhams Listing Particulars dated 7 October 2002, which is on file with Companies House in England and Wales and with the United Kingdom Listing Authority and which has been submitted to Securities and Exchange Commission on 9 October 2002. Forward-looking statements represent the groups estimates as of the date made, and should not be relied upon as representing the groups estimates as of any subsequent date. While the group may elect to update forward-looking statements in the future, it disclaims any obligation to do so.

A full version of this release including financial data is available in PDF format on request. Please contact GBCS PR @ enquiries@gbcspr.com.

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