OCLR

Oclaro, Inc. (OCLR)

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Oclaro, Inc. (OCLR)

F2Q12 Earnings Call

January 26, 2012 4:30 p.m. ET

Executives

Alain Couder – President and Chief Executive Officer

Jerry Turin – Chief Financial Officer

Jim Fanucchi, Summit IR Group – Investor Relations

Analysts

Kevin Dennean – Citi Investment Research

Patrick Newton – Stifel Nicolaus

Stan Kovler – Morgan Stanley

Dave Kang – B. Riley & Company

Presentation

Good afternoon, and welcome to the Oclaro second quarter fiscal year 2012 financial results conference call. As a reminder, this conference call is being recorded for replay purposes through February 2nd, 2012. At this time, I would like to turn the call over to Jim Fanucchi of the Summit IR Group. Please go ahead, sir.

Jim Fanucchi

Thank you, Operator, and thanks to all of you for joining us today. Our speakers are Alain Couder, chairman and CEO, and Jerry Turin, chief financial officer of Oclaro.

Statements of management's future expectations, plans or prospects for Oclaro and its business, including statements about future financial targets and financial guidance and Oclaro's plans for future operations, and any assumptions underlying these statements are forward-looking statements under 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 the risk factors described in Oclaro's most recent annual report on Form 10-K, most recent quarterly reports on Form 10-Q and other documents we periodically file with the SEC.

The forward-looking statements discussed today represent Oclaro's views as of the date of this conference call and subsequent events and developments may cause Oclaro's views to change. Oclaro does not intend and is not required to update any forward-looking statements as a result of future developments.

In addition, we will be discussing non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for or superior to

measures of financial performance prepared in accordance with GAAP. A table that outlines the reconciliation between the non-GAAP financial measures to GAAP financial measures is included in our earnings release, which we have filed with the SEC, and I refer investors to this release.

I would now like to turn the call over to Alain.

Alain Couder

Good afternoon. As you know, there are a set of slides on our website that you can use to follow this call.

For the second quarter of fiscal year 2012, our revenue came at the high end of the previous guidance at $86.5 million, compared to a guidance of $75 million to $85 million. Jerry will provide you with the details of our financial results later in this call.

I would like to address four topics: first, the recovery in Thailand; second how we will make progress with our strategic initiative; third, how, as a result of all this recovery, we think we will be better positioned than before; and fourth, our cash and financial resources in relation to this flood recovery. Jerry will give you more detail on cash and financial position.

Let me start with the Thailand recovery. Obviously, this has been a major focus for us and we are quite pleased with our progress. As we announced in our press release on January 4th, we have started commercial production in four of the five affected product lines at the Fabrinet Pinehurst facility, which is a new factory for us.

In terms of the commercial shipment of the high-power lasers will resume production in November, and we are currently at pre-flood level production capacity. These were already in the Pinehurst facility.

In terms of commercial shipment of amplifiers, we resumed commercial production during the last week in December. We expect to be at the pre-flood level in March.

In terms of the commercial shipment of tunable dispersion compensators, we expect to resume production at the end of this month, and our capacity will be back by February.

In terms of the commercial shipment of lithium niobate modulators, we have begun production and will be at full capacity by the June quarter. As you know, on this product line, we have also had some limited shipments coming out of (inaudible) sites in Italy.

In terms of the commercial shipment of WSS, we are able to ship a significant part of it out of our existing Western sites and Korea. We will resume production in April and will be at full capacity in Fabrinet in the June quarter.

We're pleased with this execution. I think the team has done a fantastic job of recovering from this flood.

In terms of our strategic initiatives and our ability to secure the company, the Thailand flooded was focused with a set of people that did not detract from the efforts that we initiated last year to ensure the long-term credibility of the company and maximize the long-term return on invested capital. So last year, as we previously discussed, we focused on the implementation of processes and management across all major operations of the company. In fact, one immediate result was that the improvements that we got to recover from the Thailand flooding benefited directly from strengthening the company over the last year.

We have taken action to reduce to reduce costs and improve margins, and we believe we will improve our bottom line in the June 2012 quarter in the range of $5 million per quarter versus the June of 2011 quarter, assuming similar revenue levels.

Read the rest of this transcript for free on seekingalpha.com