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Bookham Technology Announces Interim Results For Second Quarter And Six Months Ended 30 June 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 second quarter and the six months ended 30 June 2002.
Oxfordshire, UK - 30 July 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 second quarter and the six months ended 30 June 2002.
Highlights for the second quarter ended 30 June 2002
· Revenue in the second quarter 2002 was 7.1 million ($10.9 million), up 27% sequentially from the first quarter 2002 (5.6 million; $8.6 million) and up 20% on the second quarter 2001 (5.9 million; $9.0 million), in line with average analyst expectations.
· The cash burn for the quarter was 13.7 million ($21.0 million) down 38% from 22.2 million ($34.0 million) in the first quarter 2002, and down 43% on the second quarter 2001 (24.3 million; $37.2 million), as a result of the company's cost reduction measures. The reduction in cash burn was achieved not withstanding that the second quarter number includes a full quarter of costs from Marconi's optical components business (MOC) acquired in February 2002. The company's cash position remains strong, with 148.9 million ($227.8 million) in cash.
· Net loss for the quarter including one-time charges of 0.9 million ($1.4 million) was reduced to 16.2 million ($24.8 million) from 17.0 million ($26.0 million) in the first quarter 2002 and 44.6 million ($68.2 million) in the second quarter 2001.
· As part of its ongoing broader cost reduction efforts, the company recently announced that it is concentrating its worldwide production in two of its current four facilities, manufacturing ASOC components at its Milton, Abingdon facility and active components at its Caswell site. This will reduce costs without adverse impact on manufacturing capacity or on future sales ramp-up.
· The company's Telcordia-qualified 4-channel Electronic Variable Optical Attenuator (EVOA) has been approved for use by a major network system manufacturer and is being shipped in production volumes.
Commenting on the results, Giorgio Anania, President and Chief Executive Officer, said:
"We believe we have just completed another good quarter, with revenues up, cash burn down and further design-ins announced. The market continues to be challenging, and there is a lot of uncertainty in our customers' product plans, but not withstanding this our revenues are still continuing to grow and we have been able to reduce expenses while still maintaining a strong investment in product development. As an example, we are getting strong pull from customers for our integrated tunable transmitters, which we are beginning to sample widely.
"We believe our three semiconductor technologies are capable of delivering significant cost reductions for our customers, which is clearly their principal driver at the present time.
"We have sustained progress on cost reduction over the past several quarters. Further reductions have been announced this quarter. Going forward, while the market remains depressed, we plan to continue our ongoing cost reduction efforts to move the company towards profitability."
Operating Review
Despite the challenging market environment, the company continues to see significant pull from customers to start design-in activities with its extended range of products offering end-to-end solutions across the whole optical network.
A recently announced example is the Telcordia qualified 4-channel EVOA, the industry's first silicon-based optical attenuator which was manufactured using the company's ASOCā technology. The EVOA uses silicon's semiconductor properties to attenuate light at speeds that are orders of magnitude faster than competitive approaches, which adds genuine functionality to the product. It also boasts a very high dynamic range, with attenuation up to 45 dB, without dynamic polarization dependent loss (PDL).
This quarter saw some significant sales of optics lasers and modulators into non-telecom accounts (BAE Systems), building upon the same product building blocks used in the company's telecom integrated transmitters.
Cost reduction efforts
The company has announced that it will concentrate its worldwide production in two of its current four facilities, manufacturing ASOC components at its Milton, Abingdon facility and active components at its Caswell site, which it obtained as part of the acquisition of its optical components business from Marconi at the beginning of the year. Through an ongoing process efficiency programme, the company believes that it can handle component production rates of approximately 200 million ($306 million) at Milton and similar levels at Caswell, permitting it to close its other two facilities in Maryland, US and Swindon, UK. This will reduce costs without adverse impact on manufacturing capacity or on future sales ramp-up.
At the end of the second quarter, the company employed 901 people in total. The completion of the current cost reduction programme will result in the company having approximately 750 employees.
Financial Commentary
All US dollar numbers have been translated at 1 = $1.53 for the convenience of the reader.
Second quarter ended 30 June 2002
Revenue: Revenue for the quarter ended 30 June was 7.1 million ($10.9 million), a 27% increase from the 5.6 million ($8.6 million) in the first quarter 2002, and a 20% increase compared with second quarter 2001.
The supply agreement with Marconi, entered into as part of the acquisition of MOC, coupled with demand for active products accounted for the strong sequential increase in revenue. Excluding sales to Marconi, revenue for the quarter was up 41% over the previous quarter.
Marconi, BAE Systems and Nortel Networks were over 10% customers for the quarter and represented 52%, 18% and 10% of sales respectively. On the product side, DWDM products accounted for 59% and active products for 41% 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 3.9 million ($6.0 million) in the second quarter 2002, compared to 4.9 million ($7.5 million) in the first quarter 2002. The gross loss (loss at the gross margin level) was higher than the 1.7 million ($2.6 million) reported in the second quarter 2001 due to a higher fixed cost manufacturing base, primarily as a result of the MOC acquisition.
The company continued to make progress on its cost reduction efforts following the integration of the MOC business.
As a result of the addition of MOC for the full quarter, compared with only two months in the first quarter 2002, there was a quarterly increase in operating expenses of 5%. Compared with the second quarter of 2001, operating expenses excluding National Insurance provision on stock options declined 10%.
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 second quarter 2002, was 16.2 million ($24.8 million) and loss per share was 0.11 ($0.17), which included a one-time charge of 1.0 million ($1.5 million) attributable to the immediate impairment of fixed asset equipment relating to the previously announced closures of the Swindon, UK and Maryland, US facilities. The net loss including exceptional items, in the first quarter 2002 was 17.0 million ($26.0 million) under UK GAAP, and 21.2 million ($32.4 million) under US GAAP.
Cash and cash equivalents: Cash and cash equivalents as of 30 June 2002 were 148.9 million ($227.8 million) compared to 162.6 million ($248.8 million) at 31 March 2002. The cash burn for the second quarter 2002 was 13.7 million ($21.0 million), including a working capital decrease of 2.3 million ($3.5 million) and capital expenditure of 2.7 million ($4.1 million).
The company estimates that its ongoing broader cost reduction efforts will reduce its quarterly cash burn rate in the fourth quarter 2002 to between 10 million and 12 million ($15 million and $18 million), excluding restructuring costs. Following the completion of the cost reduction programme announced on 3 July 2002, the company expects to incur exceptional charges of 8 million to 12 million ($12 million to $18 million).
Six months ended 30 June 2002
Revenue: Revenue for the six months ended 30 June 2002 was 12.7 million ($19.4 million), a 27% decrease compared with 17.5 million ($26.8 million) in the first half 2001. Excluding sales to Marconi, revenue for the half year was down 59% over the first half 2001.
Marconi, BAE Systems and Nortel Networks were over 10% customers for the first half and represented 54%, 12% and 12% of sales respectively. On the product side, DWDM products accounted for 57% and active products for 43% of revenue for the first half 2002.
Operating loss (before exceptional items) under UK GAAP: The gross loss (loss at the gross margin level) was 8.8 million ($13.5 million) for the first half 2002, up from 2.4 million ($3.7 million) for the first half 2001.
Operating expenses excluding National Insurance provision on stock options declined 9% compared with the first half 2001, mainly as a result of lower research and development expenditures.
Net loss (including exceptionals for UK GAAP and one-time charges for US GAAP): The net loss under UK GAAP for the first half 2002 was 33.2 million ($50.8 million) and loss per share was 0.24 ($0.37). Under US GAAP, the net loss for the first half 2002 was 37.4 million ($57.2 million) and loss per share was 0.26 ($0.40).
Cash and cash equivalents: Cash and cash equivalents as of 30 June 2002 were 148.9 million ($227.8 million) compared with 184.8 million ($282.7 million) at 31 December 2001. The cash burn for the first half 2002 was 35.9 million ($54.9 million).
Outlook
The company notes that the market and demand continues to be unclear but anticipates modest revenue growth for the third quarter. The company continues to actively monitor its costs and expects to continue the trend of past quarters of reducing overhead costs and cash burn. As a result of these actions, losses, excluding exceptionals are expected to decline in the third and fourth quarter 2002. The company is also reiterating its guidance of reducing the cash burn to 10-12 million in the fourth quarter excluding restructuring expenses.
The company will be hosting a conference call to discuss this release on Tuesday 30 July 2002 at 1.30pm (BST), 2.30pm (CET), 8.30am (EST). Dial in numbers are as follows:
UK/European participants +44 (0) 20 8240 8245
US participants +1 800 297 9150
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: 553622)
US participants +1 703 736 7336
(access code: 553622)
The recording will also be audio webcast on the company's website: www.bookham.com
For further information, please contact:
Bookham Technology: Financial Dynamics: Financial Dynamics:
Tel: +44 (0) 1235 837000 Tel: +44 (0) 20 7831 3113 Tel: +1 (212) 497 9202
Giorgio Anania - President & CEOSteve Abely - Chief Financial OfficerSharon Ostaszewska - Director Communications Sarah MarslandSarah MannersJuliet Clarke Deborah Ardern-JonesMatt Dallas
Bookham Technology (LSE: BHM; Nasdaq: BKHM) designs, manufactures and markets integrated multi-functional active and passive optical components using high volume production methods. Using patented silicon-based ASOC, Gallium Arsenide and Indium Phosphide technologies, 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 financial commentary and elsewhere in this report 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 group's products, demand for optical components generally and overall future growth in the market for optical components, uncertainties relating to the group's investment in, and reorganization 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, issues surrounding integration of the optical components business acquired from Marconi and other uncertainties that are discussed in the "Risk Factors" section of the group's annual report on Form 20-F for the fiscal year ended 31 December 2001, dated 21 May 2002, which is on file with the Securities and Exchange Commission. Forward-looking statements represent the group's estimates as of the date made, and should not be relied upon as representing the group's 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.
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