Bookham Technology - Interim Results
RNS Number:2669ZBookham Technology PLC30 July 2002PRESS RELEASEEMBARGOED - NOT FOR PUBLICATION BEFORE 07:00HRS ON TUESDAY 30 JULY 2002 INTERIM RESULTS FOR SECOND QUARTER AND SIX MONTHS ENDED 30 JUNE 2002Oxfordshire, UK - 30 July 2002: Bookham Technology plc (LSE: BHM, Nasdaq: BKHM),a leading provider of integrated optical components and modules for fiber opticcommunication networks, today announced results for the second quarter and thesix 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 ExecutiveOfficer, said:'We believe we have just completed another good quarter, with revenues up, cashburn down and further design-ins announced. The market continues to bechallenging, 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 havebeen able to reduce expenses while still maintaining a strong investment inproduct development. As an example, we are getting strong pull from customersfor our integrated tunable transmitters, which we are beginning to samplewidely.'We believe our three semiconductor technologies are capable of deliveringsignificant cost reductions for our customers, which is clearly their principaldriver 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 themarket remains depressed, we plan to continue our ongoing cost reduction effortsto move the company towards profitability.'Operating ReviewDespite the challenging market environment, the company continues to seesignificant pull from customers to start design-in activities with its extendedrange of products offering end-to-end solutions across the whole opticalnetwork.A recently announced example is the Telcordia qualified 4-channel EVOA, theindustry's first silicon-based optical attenuator which was manufactured usingthe company's ASOC(R) technology. The EVOA uses silicon's semiconductorproperties to attenuate light at speeds that are orders of magnitude faster thancompetitive approaches, which adds genuine functionality to the product. Italso boasts a very high dynamic range, with attenuation up to 45 dB, withoutdynamic polarization dependent loss (PDL).This quarter saw some significant sales of optics lasers and modulators intonon-telecom accounts (BAE Systems), building upon the same product buildingblocks used in the company's telecom integrated transmitters.Cost reduction effortsThe company has announced that it will concentrate its worldwide production intwo of its current four facilities, manufacturing ASOC components at its Milton,Abingdon facility and active components at its Caswell site, which it obtainedas part of the acquisition of its optical components business from Marconi atthe beginning of the year. Through an ongoing process efficiency programme, thecompany believes that it can handle component production rates of approximately#200 million ($306 million) at Milton and similar levels at Caswell, permittingit to close its other two facilities in Maryland, US and Swindon, UK. This willreduce costs without adverse impact on manufacturing capacity or on future salesramp-up.At the end of the second quarter, the company employed 901 people in total. Thecompletion of the current cost reduction programme will result in the companyhaving approximately 750 employees.Financial CommentaryAll US dollar numbers have been translated at #1 = $1.53 for the convenience ofthe reader.Second quarter ended 30 June 2002Revenue: 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 ofMOC, coupled with demand for active products accounted for the strong sequentialincrease in revenue. Excluding sales to Marconi, revenue for the quarter was up41% over the previous quarter.Marconi, BAE Systems and Nortel Networks were over 10% customers for the quarterand 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 thequarter.Operating loss (before exceptional items) under UK GAAP: Increased revenuesaccounted 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 #4.9million ($7.5 million) in the first quarter 2002. The gross loss (loss at thegross margin level) was higher than the #1.7 million ($2.6 million) reported inthe second quarter 2001 due to a higher fixed cost manufacturing base, primarilyas a result of the MOC acquisition.The company continued to make progress on its cost reduction efforts followingthe integration of the MOC business.As a result of the addition of MOC for the full quarter, compared with only twomonths in the first quarter 2002, there was a quarterly increase in operatingexpenses of 5%. Compared with the second quarter of 2001, operating expensesexcluding 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 #16.2million ($24.8 million) and loss per share was #0.11 ($0.17), which included aone-time charge of #1.0 million ($1.5 million) attributable to the immediateimpairment of fixed asset equipment relating to the previously announcedclosures of the Swindon, UK and Maryland, US facilities. The net loss includingexceptional 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) at31 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 ($3.5million) and capital expenditure of #2.7 million ($4.1 million).The company estimates that its ongoing broader cost reduction efforts willreduce its quarterly cash burn rate in the fourth quarter 2002 to between #10million and #12 million ($15 million and $18 million), excluding restructuringcosts. Following the completion of the cost reduction programme announced on 3July 2002, the company expects to incur exceptional charges of #8 million to #12million ($12 million to $18 million).Six months ended 30 June 2002Revenue: Revenue for the six months ended 30 June 2002 was #12.7 million ($19.4million), a 27% decrease compared with #17.5 million ($26.8 million) in thefirst half 2001. Excluding sales to Marconi, revenue for the half year was down59% over the first half 2001.Marconi, BAE Systems and Nortel Networks were over 10% customers for the firsthalf and represented 54%, 12% and 12% of sales respectively. On the productside, DWDM products accounted for 57% and active products for 43% of revenue forthe first half 2002.Operating loss (before exceptional items) under UK GAAP: The gross loss (loss atthe gross margin level) was #8.8 million ($13.5 million) for the first half2002, up from #2.4 million ($3.7 million) for the first half 2001.Operating expenses excluding National Insurance provision on stock optionsdeclined 9% compared with the first half 2001, mainly as a result of lowerresearch 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 ($50.8million) and loss per share was #0.24 ($0.37). Under US GAAP, the net loss forthe 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) at31 December 2001. The cash burn for the first half 2002 was #35.9 million($54.9 million).OutlookThe company notes that the market and demand continues to be unclear butanticipates modest revenue growth for the third quarter. The company continuesto actively monitor its costs and expects to continue the trend of past quartersof reducing overhead costs and cash burn. As a result of these actions, losses,excluding exceptionals are expected to decline in the third and fourth quarter2002. The company is also reiterating its guidance of reducing the cash burn to#10-#12 million in the fourth quarter excluding restructuring expenses. |
