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<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 1 - us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-->
<!-- xbrl,ns -->
<!-- xbrl,nx -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left">
</div>
<div align="center" style="font-size: 10pt"><b></b></div>
<div align="center" style="font-size: 10pt"><b></b></div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 1. BASIS OF PREPARATION</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Oclaro, Inc., a Delaware corporation, is sometimes referred to in this Quarterly Report on
Form 10-Q as “Oclaro,” “we,” “us” or “our.” The accompanying unaudited condensed consolidated
financial statements of Oclaro as of October 1, 2011 and for the three months ended October 1, 2011
and October 2, 2010 have been prepared in accordance with accounting principles generally accepted
in the United States of America (U.S. GAAP) for interim financial information and with the
instructions to Article 10 of Securities and Exchange Commission (SEC) Regulation S-X, and include
the accounts of Oclaro and all of our subsidiaries. Accordingly, they do not include all of the
information and footnotes required by such accounting principles for annual financial statements.
In the opinion of management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation of our consolidated financial position and results of
operations have been included. The condensed consolidated results of operations for the three
months ended October 1, 2011 are not necessarily indicative of results that may be expected for any
other interim period or for the full fiscal year ending June 30, 2012.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The condensed consolidated balance sheet as of July 2, 2011 has been derived from our audited
financial statements as of such date, but does not include all disclosures required by U.S. GAAP.
These unaudited condensed consolidated financial statements should be read in conjunction with our
audited financial statements included in our Annual Report on Form 10-K for the year ended July 2,
2011 (2011 Form 10-K).
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The preparation of financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial statements, as well as
the reported amounts of revenue and expenses during the reported periods. These judgments can be
subjective and complex, and consequently, actual results could differ materially from those
estimates and assumptions. Descriptions of some of the key estimates and assumptions are included
in our 2011 Form 10-K.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 2 - us-gaap:AccountingChangesAndErrorCorrectionsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 2. RECENT ACCOUNTING STANDARDS</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Update (ASU) No. 2011-09, which updates Accounting Standards Codification (ASC) Subtopic 715-80,
<i>Compensation — Retirement Benefits — Multiemployer Plans, </i>enhancing disclosures by requiring
transparency about the nature of the commitments and risks involved in participating in
multiemployer pension plans. We intend to adopt ASU No. 2011-09 on January 1, 2012, the first day
of our third fiscal quarter. The adoption of this update is not expected to have a material effect
on our condensed consolidated financial statements, but will require certain additional
disclosures.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In September 2011, the FASB issued ASU No. 2011-08, which amends current guidance by allowing
an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment
in order to determine whether it should perform the two-step goodwill impairment test to calculate
the fair value of a reporting unit. The update also provides additional examples of events and
circumstances that an entity should consider between annual impairment tests in determining whether
it is more likely than not that the fair value of a reporting unit is less than its carrying
amount. We intend to adopt ASU No. 2011-08 on January 1, 2012, the first day of our third fiscal
quarter. The adoption of this update is not expected to have a material effect on our condensed
consolidated financial statements, but may impact amounts we record, if any, as goodwill impairment
in the future.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In June 2011, the FASB issued ASU No. 2011-05, which amends current comprehensive income
guidance. This update eliminates the option to present the components of other comprehensive income
as part of our statement of stockholders’ equity. Instead, we must report comprehensive income in
either a single continuous statement of comprehensive income that contains two sections, net income
and other comprehensive income, or in two separate but consecutive statements. ASU No. 2011-05 will
be effective for our fiscal year beginning July 1, 2013. The adoption of this update will not have
an impact on our condensed consolidated financial statements as it only requires a change in the
format of our current presentation.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In May 2011, the FASB issued ASU No. 2011-04, an amendment to ASC Topic 820, <i>Fair Value
Measurements</i>, providing a consistent definition and measurement of fair value, as well as similar
disclosure requirements between U.S. GAAP and International Financial Reporting Standards. ASU No.
2011-04 changes certain fair value measurement
principles, clarifies the application of existing fair value measurement and expands the ASC
Topic 820 disclosure requirements, particularly for Level 3 fair value measurements. This update
will be effective for our fiscal quarter beginning January 1, 2012. The adoption of this update is
not expected to have a material effect on our consolidated financial statements, but may require
certain additional disclosures.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 3 - us-gaap:FairValueDisclosuresTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 3. FAIR VALUE</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We define fair value as the estimated price that would be received from selling an asset or
paid to transfer a liability in an orderly transaction between market participants at the
measurement date. When determining fair value measurements for assets and liabilities which are
required to be recorded at fair value, we consider the principal or most advantageous market in
which we would transact and the market-based risk measurements or assumptions that market
participants would use in pricing the asset or liability, such as inherent risk, transfer
restrictions and credit risk. We apply the following fair value hierarchy, which ranks the quality
and reliability of the information used to determine fair values:
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="8%" nowrap="nowrap" align="left"><i>Level 1 — </i></td>
<td width="1%"><i> </i></td>
<td>Quoted prices in active markets for identical assets or liabilities.</td>
</tr>
</table>
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="8%" nowrap="nowrap" align="left"><i>Level 2 — </i></td>
<td width="1%"><i> </i></td>
<td>Inputs other than Level 1 prices, such as quoted prices for similar assets or
liabilities, quoted prices of identical assets or liabilities in markets with insufficient
volume or infrequent transactions (less active markets), or other inputs that are
observable or can be corroborated by observable market data for substantially the full term
of the assets or liabilities.</td>
</tr>
</table>
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="8%" nowrap="nowrap" align="left"><i>Level 3 — </i></td>
<td width="1%"><i> </i></td>
<td>Unobservable inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or liabilities.</td>
</tr>
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our cash equivalents and non-current marketable securities are generally classified within
Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices,
broker or dealer quotations, or alternative pricing sources with reasonable levels of price
transparency. The types of instruments valued based on quoted market prices in active markets
include most marketable securities and money market securities. Such instruments are generally
classified within Level 1 of the fair value hierarchy. The types of instruments valued based on
other observable inputs are foreign currency forward exchange contracts. Such instruments are
generally classified within Level 2 of the fair value hierarchy.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During the three months ended October 1, 2011, we have classified the earnout obligations
arising from our acquisition of Mintera Corporation (Mintera) within Level 3 of the fair value
hierarchy because their values were primarily derived from management estimates of future operating
results. See Note 4, <i>Business Combination</i>, for additional details regarding these earnout
obligations.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have a defined benefit pension plan in Switzerland whose assets are classified within Level
1 of the fair value hierarchy for plan assets of cash, equity investments and fixed income
investments, and Level 3 of the fair value hierarchy for plan assets of real estate and alternative
investments. These pension plan assets are not reflected in the accompanying condensed consolidated
balance sheets, and are thus not included in the following table.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Assets and Liabilities Measured at Fair Value on a Recurring Basis</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Assets and liabilities measured at fair value on a recurring basis are shown in the table
below by their corresponding balance sheet caption and consisted of the following types of
instruments at October 1, 2011:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>Fair Value Measurement at Reporting Date Using</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Quoted Prices</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Significant</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>in Active</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Other</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Significant</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Markets for</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Observable</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Unobservable</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Identical Assets</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Inputs</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Inputs</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Level 1)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Level 2)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Level 3)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Assets: </b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Cash and cash equivalents:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Money market funds
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">19,734</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">19,734</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Prepaid expenses and other current assets:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Unrealized loss on currency instruments
designated as cash flow hedges
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(25</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(25</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other non-current assets:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Marketable securities
</div></td>
<td> </td>
<td> </td>
<td align="right">158</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">158</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total assets measured at fair value
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">19,892</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(25</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">19,867</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Liabilities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Accrued expenses and other liabilities:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Earnout obligations for Mintera acquisition
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12,351</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12,351</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total liabilities measured at fair value
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12,351</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12,351</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides details regarding the changes in assets and liabilities
classified within Level 3 from July 2, 2011 to October 1, 2011:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="86%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Accrued Expenses</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>and Other Liabilities</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td align="center" colspan="2">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Balance at July 2, 2011</b>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">16,140</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Fair value adjustment to Mintera earnout obligations
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,789</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Balance at October 1, 2011</b>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">12,351</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Derivative Financial Instruments</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">At the end of each accounting period, we mark-to-market all foreign currency forward exchange
contracts that have been designated as cash flow hedges and changes in fair value are recorded in
accumulated other comprehensive income until the underlying cash flow is settled and the contract
is recognized in other income (expense) in our condensed consolidated statements of operations. As
of October 1, 2011, we held 14 outstanding foreign currency forward exchange contracts to sell U.S.
dollars and buy U.K. pounds sterling. All of these contracts have been designated as cash flow
hedges. These contracts had an aggregate notional value of approximately $11.5 million of put and
call options which expire, or expired, at various dates ranging from October 2011 through September
2012. To date, we have not entered into any such contracts for longer than 12 months and,
accordingly, all amounts included in accumulated other comprehensive income as of October 1, 2011
will generally be reclassified into other income (expense) within the next 12 months. As of October
1, 2011, each of the 14 designated cash flow hedges was determined to be fully effective;
therefore, we recorded an unrealized loss of $25,000 to accumulated other comprehensive income
related to recording the fair value of these foreign currency forward exchange contracts for
accounting purposes.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 4 - us-gaap:BusinessCombinationDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 4. BUSINESS COMBINATION</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Acquisition of Mintera</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On July 21, 2010, we acquired Mintera, a privately-held company providing high-performance
optical transport sub-systems solutions. For accounting purposes, the total fair value of
consideration given in connection with the acquisition of Mintera was $25.6 million, which we
allocated to the assets acquired and liabilities assumed as of the acquisition date based on their
estimated fair values. This acquisition is more fully discussed in Note 3, <i>Business Combinations</i>,
to our consolidated financial statements included in our 2011 Form 10-K.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Under the terms of this agreement, we agreed to pay certain revenue-based consideration,
whereby former security holders of Mintera are entitled to receive up to $20.0 million, determined
based on a set of sliding scale formulas, to the extent revenue from Mintera products was more than
$29.0 million in the 12 months following the acquisition and/or is more than $40.0 million in the
18 months following the acquisition. The earnout consideration is payable in cash or, at our
option, newly issued shares of our common stock, or a combination of cash and stock. During the
three months ended October 1, 2011, we reviewed the fair value of these obligations and determined
that their fair value decreased by $3.8 million based on revised estimates of revenues from Mintera
products. This $3.8 million decrease in fair value was recorded as a decrease in restructuring,
acquisition and related expenses in the condensed consolidated statement of operations for the
three months ended October 1, 2011. During the three months ended October 2, 2010, we recorded
$0.2 million in interest expense related to these obligations.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Based on sales in the 12 month period following the acquisition, earnout consideration of $3.3
million became payable for the 12 month obligation during the three months ended October 1, 2011.
This amount has been recorded in accrued expenses and other liabilities in our condensed
consolidated balance sheet at October 1, 2011. On October 21, 2011, we paid $0.5 million in cash
and issued 0.8 million shares of our common stock valued at $2.8 million to settle the 12 month
obligation. See Note 15, <i>Subsequent Events</i>.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">At October 1, 2011, the estimated fair value of the 18 month obligation of $9.0 million was
determined using management estimates of the total amounts expected to be paid based on estimated
future operating results, discounted to present value using our incremental borrowing cost. This
amount has been recorded, along with accrued interest, in accrued expenses and other liabilities in
our condensed consolidated balance sheet at October 1, 2011. The 18 month obligation is payable in
April 2012.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 5 - oclr:BalanceSheetDetailsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 5. BALANCE SHEET DETAILS</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides details regarding our cash and cash equivalents at the dates
indicated:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>October 1, 2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 2, 2011</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Cash and cash equivalents:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Cash-in-bank
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">31,317</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">42,585</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Money market funds
</div></td>
<td> </td>
<td> </td>
<td align="right">19,734</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">20,198</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">51,051</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">62,783</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides details regarding our inventories at the dates indicated:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>October 1, 2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 2, 2011</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Inventories:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Raw materials
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">39,093</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">38,863</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Work-in-process
</div></td>
<td> </td>
<td> </td>
<td align="right">38,884</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">37,084</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Finished goods
</div></td>
<td> </td>
<td> </td>
<td align="right">22,558</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">26,254</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">100,535</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">102,201</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides details regarding our property and equipment, net at the
dates indicated:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>October 1, 2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 2, 2011</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Property and equipment, net:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Buildings
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">17,513</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">17,640</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Plant and machinery
</div></td>
<td> </td>
<td> </td>
<td align="right">154,647</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">149,120</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Fixtures, fittings and equipment
</div></td>
<td> </td>
<td> </td>
<td align="right">1,779</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,802</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Computer equipment
</div></td>
<td> </td>
<td> </td>
<td align="right">15,467</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,235</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">189,406</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">182,797</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Less: Accumulated depreciation
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(119,936</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(113,423</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">69,470</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">69,374</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table presents details regarding our accrued expenses and other liabilities
at the dates indicated:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>October 1, 2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 2, 2011</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Accrued expenses and other liabilities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Trade payables
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">3,386</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6,241</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Compensation and benefits related accruals
</div></td>
<td> </td>
<td> </td>
<td align="right">8,958</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,097</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Earnout obligations for Mintera acquisition
</div></td>
<td> </td>
<td> </td>
<td align="right">12,351</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">16,140</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Escrow liability for Xtellus acquisition
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,000</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Warranty accrual
</div></td>
<td> </td>
<td> </td>
<td align="right">2,312</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,175</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Other accruals
</div></td>
<td> </td>
<td> </td>
<td align="right">20,104</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18,050</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">47,111</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">60,703</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table presents the components of accumulated other comprehensive income at
the dates indicated:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>October 1, 2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 2, 2011</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Accumulated other comprehensive income:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Currency translation adjustments
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">39,050</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">43,536</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrealized gain (loss) on currency instruments designated as
cash flow hedges
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(25</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">54</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrealized loss on marketable securities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(147</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(139</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Adjustment for Swiss defined benefit plan
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,721</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,721</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">36,157</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">40,730</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 6 - us-gaap:DebtDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 6. CREDIT AGREEMENT</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On July 26, 2011, Oclaro Technology Ltd., as “Borrower,” and Oclaro, Inc., as “Parent,”
entered into an amendment and restatement to our existing senior secured credit facility (the
Credit Agreement) with Wells Fargo Capital Finance, Inc. and other lenders, increasing the facility
size from $25 million to $45 million and extending the term thereof to August 1, 2014. This Credit
Agreement is more fully discussed in Note 6, <i>Credit Agreement</i>, and Note 16, <i>Subsequent Event</i>, to
our consolidated financial statements included in our 2011 Form 10-K.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of October 1, 2011 there was $19.5 million outstanding under the Credit Agreement at an
average interest rate of 3.24% and we were in compliance with all covenants. As of July 2, 2011,
there were no amounts outstanding under the Credit Agreement. At October 1, 2011 and July 2, 2011,
there were $0.1 million and $1.1 million, respectively, in outstanding standby letters of credit
secured under the Credit Agreement. These letters of credit expire at various intervals through
April 2014.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 7 - us-gaap:PensionAndOtherPostretirementBenefitsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 7. POST-RETIREMENT BENEFITS</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have a pension plan covering employees of our Swiss subsidiary (the Swiss Plan). Net
periodic pension costs associated with our Swiss Plan for the three months ended October 1, 2011
and October 2, 2010 included the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 1,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 2,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Service cost
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">628</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">419</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest cost
</div></td>
<td> </td>
<td> </td>
<td align="right">215</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">176</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected return on plan assets
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(281</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(232</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Net periodic pension costs
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">562</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">363</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During the three months ended October 1, 2011 and October 2, 2010, we contributed $0.3
million and $0.4 million, respectively, to our Swiss Plan. We currently anticipate contributing an
additional $0.9 million to this pension plan during the remainder of fiscal year 2012.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 8 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 8. COMMITMENTS AND CONTINGENCIES</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Guarantees</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We indemnify our directors and certain employees as permitted by law, and have entered into
indemnification agreements with our directors and executive officers. We have not recorded a
liability associated with these indemnification arrangements, as we historically have not incurred
any material costs associated with such indemnification obligations. Costs associated with such
indemnification obligations may be mitigated by insurance coverage that we maintain, however, such
insurance may not cover any, or may cover only a portion of, the amounts we may be required to pay.
In addition, we may not be able to maintain such insurance coverage in the future.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We also have indemnification clauses in various contracts that we enter into in the normal
course of business, such as indemnifications in favor of customers in respect of liabilities they
may incur as a result of purchasing our products should such products infringe the intellectual
property rights of a third party. We have not historically paid out any material amounts related to
these indemnifications, therefore, no accrual has been made for these indemnifications.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Warranty accrual</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We accrue for the estimated costs to provide warranty services at the time revenue is
recognized. Our estimate of costs to service our warranty obligations is based on historical
experience and expectation of future conditions. To the extent we experience increased warranty
claim activity or increased costs associated with servicing those claims, our warranty costs would
increase, resulting in a decrease in gross profit.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table summarizes movements in the warranty accrual for the periods indicated:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 1,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 2,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Warranty provision — beginning of period
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2,175</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,437</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Warranties assumed in acquisitions
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">357</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Warranties issued
</div></td>
<td> </td>
<td> </td>
<td align="right">677</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">432</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Warranties utilized or expired
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(490</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(564</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Currency translation adjustment
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(50</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">74</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Warranty provision — end of period
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2,312</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,736</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Litigation</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On June 26, 2001, the first of a number of securities class actions was filed in the United
States District Court for the Southern District of New York against New Focus, Inc., now known as
Oclaro Photonics, Inc. (New Focus), certain of our officers and directors, and certain underwriters
for New Focus’ initial and secondary public offerings. A consolidated amended class action
complaint, captioned <i>In re New Focus, Inc. Initial Public Offering Securities Litigation</i>, No. 01
Civ. 5822, was filed on April 20, 2002. The complaint generally alleges that various underwriters
engaged in improper and undisclosed activities related to the allocation of shares in New Focus’
initial public offering and seeks unspecified damages for claims under the Exchange Act on behalf
of a purported class of purchasers of common stock from May 17, 2000 to December 6, 2000.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The lawsuit against New Focus is coordinated for pretrial proceedings with a number of other
pending litigations challenging underwriter practices in over 300 cases, as <i>In re Initial Public
Offering Securities Litigation</i>, 21 MC 92 (SAS), including actions against Bookham Technology plc,
now known as Oclaro Technology Ltd (Bookham Technology) and Avanex Corporation, now known as Oclaro
(North America), Inc. (Avanex), and certain of each entity’s respective officers and directors, and
certain of the underwriters of their public offerings. In October 2002, the claims against the
directors and officers of New Focus, Bookham Technology and Avanex were dismissed, without
prejudice, subject to the directors’ and officers’ execution of tolling agreements.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The parties have reached a global settlement of the litigation. On October 5, 2009, the Court
entered an order certifying a settlement class and granting final approval of the settlement. Under
the settlement, the insurers will pay the full amount of the settlement share allocated to New
Focus, Bookham Technology and Avanex, and New Focus, Bookham Technology and Avanex will bear no
financial liability. New Focus, Bookham Technology and Avanex, as well as the officer and director
defendants who were previously dismissed from the action pursuant to tolling agreements, will
receive complete dismissals from the case. Certain objectors have appealed the Court’s October 5,
2009 order to the Second Circuit Court of Appeals. If for any reason the settlement does not become
effective, we believe that Bookham Technology, New Focus and Avanex have meritorious defenses to
the claims and therefore believe that such claims will not have a material effect on our financial
position, results of operations or cash flows.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December 6, 2010, a bankruptcy preferential transfer avoidance action was filed by Nortel
Networks Inc. (Nortel) <i>et al. </i>against Oclaro Technology Ltd. (formerly Bookham Technology Plc.) and
Oclaro (North America), Inc. (formerly Avanex Corporation) in the United States Bankruptcy Court
for the District of Delaware, Adversary Proceeding No. 10-55919-KG. The complaint alleges, among
other things, that Nortel Networks Inc., and/or its affiliated debtors in the Chapter 11 bankruptcy
cases also pending before the Delaware Bankruptcy Court (Jointly Administered Case No.
09-10138-KG), made at least $4,593,152 in preferential transfers to the defendants’ predecessors,
Bookham Technology Plc. and Avanex Corporation, in the 90 days prior to the commencement of the
Nortel Chapter 11 bankruptcy cases on January 14, 2009. Pursuant to a settlement agreement dated
October 6, 2011, Oclaro Technology Ltd. and Oclaro (North America), Inc. settled the
preference-related claims with Nortel Networks Inc. without any cash payment by Oclaro Technology
Ltd. or Oclaro (North America), Inc.. The settlement agreement is subject to approval by the
Delaware Bankruptcy Court, and the hearing to approve the settlement agreement is currently
scheduled for November 29, 2011.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On May 19, 2011, Curtis and Charlotte Westley filed a purported class action complaint in the
United States District Court for the Northern District of California, against us and certain of our
officers and directors. The Court subsequently appointed the Connecticut Laborers’ Pension Fund
(Pension Fund) as lead plaintiff for the putative class. On October 27, 2011, the Pension Fund
filed an Amended Complaint, captioned as Westley v. Oclaro, Inc., No. 11 Civ. 2448 EMC, allegedly
on behalf of persons who purchased our common stock between May 6 and October 28, 2010, alleging
that defendants issued materially false and misleading statements during this time period regarding
our current business and financial condition, including projections for demand for our products, as
well as our revenues, earnings, and gross margins, for the first quarter of fiscal year 2011 as
well as the full fiscal year. The complaint alleges violations of section 10(b) of the Securities
Exchange Act and Securities and Exchange Commission Rule 10b-5, as well as section 20(a) of the
Securities Exchange Act. The complaint seeks damages and costs of an unspecified amount. Discovery
has not commenced, and no trial has been scheduled in this action. We intend to defend this
litigation vigorously.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On June 10, 2011, a purported shareholder, Stanley Moskal, filed a purported derivative action
in the Superior Court for the State of California, County of Santa Clara, against us, as nominal
defendant, and certain of our current and former officers and directors, as defendants. The case is
styled Moskal v. Couder, No. 1:11 CV 202880 (Santa Clara County Super.
Ct. filed June 10, 2011). Four other purported shareholders, Matteo Guindani, Jermaine Coney,
Jefferson Braman and Toby Aguilar, separately filed substantially similar lawsuits in the United
States District Court for the Northern District of California on June 27, June 28, July 7 and July
26, 2011, respectively. By Order dated September 14, 2011, the Guindani, Coney, and Braman actions
were consolidated under <i>In re Oclaro, Inc. Derivative Litigation</i>, Lead Case No. 11 Civ. 3176 EMC.
On October 5, 2011, the Aguilar action was voluntarily dismissed. Each remaining purported
derivative complaint alleges that Oclaro has been, or will be, damaged by the actions alleged in
the Westley complaint, and the litigation of the Westley action, and any damages or settlement paid
in the Westley action. Each purported derivative complaint alleges counts for breaches of fiduciary
duty, waste, and unjust enrichment. Each purported derivative complaint seeks damages and costs of
an unspecified amount, as well as injunctive relief. Discovery has not commenced, and no trial has
been scheduled in any of these actions.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 9 - us-gaap:StockholdersEquityNoteDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 9. STOCKHOLDERS’ EQUITY</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Comprehensive Income</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For the three months ended October 1, 2011 and October 2, 2010, comprehensive income is
primarily comprised of our net income, changes in the unrealized gain (loss) on currency
instruments designated as cash flow hedges, unrealized loss on short-term investments and currency
translation adjustments. The components of comprehensive income were as follows for the periods
indicated:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 1,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 2,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income (loss)
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(10,176</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">356</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other comprehensive income (loss):
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Currency translation adjustments
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,486</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">5,613</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Unrealized gain (loss) on currency instruments
designated as cash flow hedges
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(79</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">323</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Unrealized loss on marketable securities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Comprehensive income (loss)
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(14,749</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">6,292</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Warrants</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table summarizes activity relating to warrants to purchase our common stock:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Warrants</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Outstanding</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Exercise Price</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td align="center" colspan="2">(Thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Balance at July 2, 2011</b>
</div></td>
<td> </td>
<td> </td>
<td align="right">1,398</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">16.18</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Expired on September 1, 2011
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(580</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">20.00</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Balance at October 1, 2011</b>
</div></td>
<td> </td>
<td> </td>
<td align="right">818</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">13.48</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Common Stock</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December 17, 2009, we acquired Xtellus, Inc. (Xtellus). As part of the consideration, we
were obligated to pay $7.0 million in consideration to the former Xtellus stockholders after an 18
month escrow period. In the fiscal quarter ended January 2, 2010, we issued approximately 1.0
million shares of our common stock into a third-party escrow account to secure this obligation.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During the quarter ended October 1, 2011, we settled the $7.0 million liability with the
former Xtellus stockholders by transferring approximately 0.9 million shares of common stock held
in escrow, valued at $7.0 million, to the former Xtellus stockholders. The transfer of the shares
resulted in a $7.0 million increase to our additional paid-in capital and a $7.0 million decrease
in our accrued expenses and other liabilities within our condensed consolidated balance sheet at
October 1, 2011. The balance of 0.1 million shares of common stock held in escrow was returned to
us, retired and returned to the status of authorized but unissued common stock in September 2011.
</div>
</div>
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<!-- Begin Block Tagged Note 10 - us-gaap:CompensationAndEmployeeBenefitPlansTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 10. EMPLOYEE STOCK PLANS</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We currently maintain the Amended and Restated 2004 Stock Incentive Plan (“Plan”). Under the
Plan, there are a total of 7.8 million shares of common stock authorized for issuance, with full
value awards being counted as 1.25 shares of common stock for purposes of the share limit. The Plan
expires in October 2020.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of October 1, 2011, there were approximately 2.7 million shares of our common stock
available for grant under the Plan. We generally grant stock options that vest over a four year
service period, and restricted stock awards and units that vest over a one to four year service
period, and in certain cases each may vest earlier based upon the achievement of specific
performance-based objectives as set by our board of directors.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In July 2011, our board of directors approved the grant of 0.2 million performance stock units
(PSUs) to certain executive officers with an aggregate estimated grant date fair value of $0.9
million. These PSUs vest upon the achievement of certain revenue growth targets through June 30,
2013, relative to certain comparable companies. Vesting is also contingent upon service conditions
being met through August 2015. If the performance conditions are not achieved, then the
corresponding PSUs will be forfeited in the first quarter of fiscal year 2014.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table summarizes the combined activity under all of our equity incentive plans
for the three months ended October 1, 2011:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="30%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Stock</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Restricted Stock</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Available</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Options</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Awards / Units</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average Grant</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>For Grant</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Outstanding</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Exercise Price</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Outstanding</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Date Fair Value</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">(Thousands)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">(Thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">(Thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Balances at July 2, 2011</b>
</div></td>
<td> </td>
<td> </td>
<td align="right">3,727</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,350</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">9.38</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">799</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">10.15</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(906</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">359</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4.37</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">438</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4.35</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Granted — performance stock units
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(250</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">200</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4.33</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Exercised or released
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(23</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">2.65</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(125</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">11.88</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Cancelled or forfeited
</div></td>
<td> </td>
<td> </td>
<td align="right">82</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(150</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">17.09</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(37</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">10.01</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Balances at October 1, 2011</b>
</div></td>
<td> </td>
<td> </td>
<td align="right">2,653</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,536</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8.93</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,275</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7.13</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Supplemental disclosure information about our stock options outstanding as of October 1,
2011 is as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Aggregate</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Remaining</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Intrinsic</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Exercise Price</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Contractual Life</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Value</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">(Thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">(Years)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Options exercisable at October 1, 2011
</div></td>
<td> </td>
<td> </td>
<td align="right">1,738</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">9.97</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6.4</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">640</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Options outstanding at October 1, 2011
</div></td>
<td> </td>
<td> </td>
<td align="right">3,536</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">8.93</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">972</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The aggregate intrinsic value in the table above represents the total pre-tax intrinsic
value, based on the closing price of our common stock of $3.64 on September 30, 2011, which would
have been received by the option holders had all option holders exercised their options as of that
date (our closing stock price was $4.37 on November 4, 2011). There were approximately 0.6 million
shares of common stock subject to in-the-money options which were exercisable as of October 1,
2011. We settle employee stock option exercises with newly issued shares of common stock.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 11 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 11. STOCK-BASED COMPENSATION</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We recognize compensation expense in our statement of operations related to all share-based
awards, including grants of stock options, based on the grant date fair value of such share-based
awards. Estimating the grant date fair value of such share-based awards requires us to make
judgments in the determination of inputs into the Black-Scholes stock option pricing model which we
use to arrive at an estimate of the grant date fair value for such awards. The assumptions used in
this model to value stock option grants for the three months ended October 1, 2011 and October 2,
2010 were as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 1,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 2,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected life
</div></td>
<td> </td>
<td colspan="2" align="right">4.8 years</td>
<td> </td>
<td> </td>
<td colspan="2" align="right">4.5 years</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Risk-free interest rate
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">1.0</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">1.3</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Volatility
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">92.8</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">96.6</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Dividend yield
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The amounts included in cost of revenues and operating expenses for stock-based
compensation for the three months ended October 1, 2011 and October 2, 2010 were as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 1,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 2,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Stock-based compensation by category of expense:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Cost of revenues
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">309</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">310</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Research and development
</div></td>
<td> </td>
<td> </td>
<td align="right">367</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">318</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Selling, general and administrative
</div></td>
<td> </td>
<td> </td>
<td align="right">907</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">730</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,583</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,358</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Stock-based compensation by type of award:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Stock options
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">884</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">763</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Restricted stock awards
</div></td>
<td> </td>
<td> </td>
<td align="right">788</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">642</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Inventory adjustment to cost of revenues
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(89</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(47</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,583</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,358</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of October 1, 2011 and July 2, 2011, we had capitalized approximately $0.5 million and
$0.4 million, respectively, of stock-based compensation as inventory.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Included in stock-based compensation for the three months ended October 1, 2011, is
approximately $27,000 in compensation cost related to the issuance of PSUs. As of October 1, 2011,
we have determined that the achievement of the performance conditions associated with the PSUs is
probable at the 100 percent target level. The amount of stock-based compensation expense
recognized in any one period can vary based on the achievement or anticipated achievement of the
performance conditions. If the performance conditions are not met or not expected to be met, no
compensation cost would be recognized on the underlying PSUs, and any previously recognized
compensation expense related to those PSUs would be reversed.
</div>
</div>
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<!-- Begin Block Tagged Note 12 - us-gaap:IncomeTaxDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 12. INCOME TAXES</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The total amount of our unrecognized tax benefits as of October 1, 2011 and July 2, 2011 were
approximately $6.9 million. For the three months ended October 1, 2011, we had $1.8 million in
unrecognized tax benefits that, if recognized, would affect our effective tax rate. We are
currently under tax audit in France and the United States. We believe that an adequate provision
has been made for any adjustments that may result from tax audits. However, the outcome of tax
audits cannot be predicted with certainty. If any issues addressed in our tax audits are resolved
in a manner not consistent with our expectations, we could be required to adjust our income tax
provision in the period such resolution occurs. Although timing of the resolution and/or closure of
audits is not certain, we do not believe it is reasonably possible that our unrecognized tax
benefits will materially change in the next 12 months.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
</div>
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<!-- Begin Block Tagged Note 13 - us-gaap:EarningsPerShareTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 13. NET INCOME (LOSS) PER SHARE</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table presents the calculation of basic and diluted net income per share:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 1,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 2,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Thousands,except per share amounts)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income (loss)
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(10,176</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">356</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted-average shares — basic
</div></td>
<td> </td>
<td> </td>
<td align="right">49,448</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">48,115</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Effect of dilutive potential common shares from:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Stock options
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,657</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Restricted stock awards
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">770</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Obligations under escrow agreement
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">442</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted-average shares — diluted
</div></td>
<td> </td>
<td> </td>
<td align="right">49,448</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">50,984</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income (loss) per share — basic
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.21</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">0.01</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income (loss) per share — diluted
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.21</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">0.01</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Basic net income per share is computed using only the weighted-average number of shares
of common stock outstanding for the applicable period, while diluted net income per share is
computed assuming conversion of all potentially dilutive securities, such as stock options,
unvested restricted stock awards, warrants and obligations under escrow agreements during such
period.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For the three months ended October 1, 2011 and October 2, 2010, respectively, we excluded 4.6
million and 1.8 million of outstanding stock options, warrants and unvested restricted stock awards
from the calculation of diluted net income per share because their effect would have been
anti-dilutive.
</div>
</div>
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<!-- Begin Block Tagged Note 14 - oclr:GeographicAndCustomerConcentrationInformationTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 14. GEOGRAPHIC AND CUSTOMER CONCENTRATION INFORMATION</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Geographic Information</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table shows revenues by geographic area based on the delivery locations of our
products:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 1,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>October 2,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">United States
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">16,902</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">19,664</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Canada
</div></td>
<td> </td>
<td> </td>
<td align="right">5,909</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,401</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Europe
</div></td>
<td> </td>
<td> </td>
<td align="right">26,294</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">35,424</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Asia
</div></td>
<td> </td>
<td> </td>
<td align="right">49,306</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">54,329</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Rest of world
</div></td>
<td> </td>
<td> </td>
<td align="right">7,410</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,529</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">105,821</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">121,347</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Significant Customers and Concentration of Credit Risk</i></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For the three months ended October 1, 2011, Huawei Technologies Co., Ltd. (Huawei) accounted
for 13 percent, Cisco Systems, Inc. accounted for 11 percent, Fujitsu Limited accounted for 11
percent and Alcatel-Lucent accounted for 10 percent of our revenues. For the three months ended
October 2, 2010, Huawei accounted for 15 percent and Alcatel-Lucent accounted for 13 percent of our
revenues.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of October 1, 2011, Alcatel-Lucent accounted for 15 percent and Huawei accounted for 13
percent of our accounts receivable. As of July 2, 2011, no customer accounted for 10 percent or
more of our accounts receivable.
</div>
</div>
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<!-- Begin Block Tagged Note 15 - us-gaap:SubsequentEventsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>NOTE 15. SUBSEQUENT EVENTS</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with our July 2010 acquisition of Mintera, on October 21, 2011 we paid $0.5
million in cash and issued 0.8 million shares of our common stock valued at $2.8 million to settle
the 12 month earnout obligation. See Note 4, <i>Business Combination</i>.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On October 22, 2011, Fabrinet, our primary contract manufacturer, announced that, as a result
of the flooding in Thailand, it has suspended operations at two factories located in Chokchai and
Pinehurst. Fabrinet manufactures approximately 30 percent of our total finished goods in these
factories. Subsequently, on October 24, Fabrinet announced its Chokchai factory suffered extensive
flood damage and is now largely inaccessible due to high water levels inside and surrounding the
manufacturing facility. Although our management cannot yet quantify the possible impact of the
flooding in Thailand on our business, it is likely that the supply disruption will materially and
adversely affect our results of operations, including our revenue, for at least the next two fiscal
quarters. Our current evaluation is that revenues for the second quarter of fiscal 2012 could be
$25 million to $30 million less as a result of this disruption than would otherwise be expected.
While we maintain both property and business interruption insurance coverage, there can be no
assurance as to the extent or timing of insurance recoveries.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On October 26, 2011, our 2011 Employee Stock Purchase Plan (ESPP) was approved by our
stockholders. Under the ESPP, we have reserved 1.7 million shares of our common stock for issuance.
The ESPP will be effective on a date determined by our board of directors within 12 months
following stockholder approval.
</div>
</div>