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Oclaro Inc Reports Operating Results (10-Q)

November 10, 2010 | About:
Todd Sullivan

10qk

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Oclaro Inc (OCLR) filed Quarterly Report for the period ended 2010-10-02.

Oclaro Inc has a market cap of $459.3 million; its shares were traded at around $9.28 with and P/S ratio of 1.2. OCLR is in the portfolios of RS Investment Management, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Research and development expenses increased to $13.7 million for the three months ended October 2, 2010 from $9.0 million for the three months ended September 26, 2009. The increase was primarily due to increased investment in research and development resources, primarily personnel-related, as we are investing to match the rate of our recent revenue growth. Personnel-related costs increased to $8.2 million for the three months ended October 2, 2010, compared with $5.8 million for the three months ended September 26, 2009. Other costs, including the costs of design tools and facilities-related costs increased to $5.5 million for the three months ended October 2, 2010, compared with $3.2 million for the three months ended September 26, 2009. Research and development expenses were favorably impacted by approximately $0.5 million as a result of the U.K. pound sterling weakening relative to the U.S. dollar.

Net cash used by operating activities for the three months ended October 2, 2010 was $1.0 million, primarily resulting from a $6.3 million decrease in cash due to changes in operating assets and liabilities, partially offset by net income of $0.4 million and non-cash adjustments of $4.9 million. The $6.3 million decrease in cash due to changes in operating assets and liabilities was comprised of a $6.9 million decrease in accrued expenses and other liabilities, a $4.9 million increase in inventory, a $0.6 million increase in accounts receivable and a $0.3 million increase in prepaid expense and other current assets, offset in part by cash generated from a $6.3 million increase in accounts payable and a $0.1 million decrease in other non-current assets. The $4.9 million increase in cash resulting from non-cash adjustments primarily consisted of $3.8 million of expense related to depreciation and amortization and $1.4 million of expense related to stock-based compensation, offset in part by $0.2 million from the amortization of deferred gain from a sales-leaseback transaction.

Net cash used in operating activities for the three months ended September 26, 2009 was $9.1 million, resulting from an increase in our net operating assets and liabilities of $9.4 million and non-cash adjustments of $3.7 million, partially offset by net income of $4.0 million. The $9.4 million decrease in cash due to an increase in net operating assets and liabilities was comprised of a $9.6 million increase in accounts receivable, a $4.1 million decrease in accrued expenses and other liabilities and a $0.5 million increase in prepaid expenses and other current assets, offset by cash generated from a $2.6 million decrease in inventory, a $1.4 million increase in accounts payable and a $0.8 million decrease in other non-current assets. The $3.7 million decrease in cash resulting from non-cash adjustments consisted of $5.3 million in gain from the bargain purchase of Newports high-power laser diodes business, $1.4 million in gain from the sale of the New Focus business, $0.5 million in gain from the sale of property and equipment and $0.2 million from the amortization of deferred gain from a sales-leaseback transaction, offset in part by $2.8 million of expense related to depreciation and amortization and $0.9 million of expense related to stock-based compensation.

Net cash provided by investing activities for the three months ended September 26, 2009 was $11.0 million, primarily consisting of $8.2 million in sales and maturities of available-for-sale investments, $3.0 million in cash proceeds from the exchange of assets with Newport and $0.6 million in proceeds from the sale of certain fixed assets, which were partially offset by $0.7 million used in capital expenditures.

As of October 2, 2010, our U.K. subsidiary had $34.5 million, net, in U.S. dollar denominated operating intercompany payables and $72.1 million in U.S. dollar denominated accounts receivable related to sales to external customers. It is estimated that a 10 percent fluctuation in the U.S. dollar relative to the U.K. pound sterling would lead to a profit of $3.8 million (U.S. dollar strengthening), or loss of $3.8 million (U.S. dollar weakening) on the translation of these receivables, which would be recorded as gain (loss) on foreign exchange in our condensed consolidated statement of operations.

$11.3 million which include put and call options which expire, or expired, at various dates from October 2010 to May 2011 and we have recorded an unrealized gain of $0.4 million to accumulated other comprehensive income in connection with marking these contracts to fair value as of October 2, 2010. It is estimated that a 10 percent fluctuation in the dollar between October 2, 2010 and the maturity dates of the put and call instruments underlying these contracts would lead to a profit of $1.0 million dollars (U.S. dollar weakening) or loss of $0.2 million dollars (U.S. dollar strengthening) on our outstanding foreign currency forward exchange contracts, should they be held to maturity.

Read the The complete Report

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