##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 27, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 000-30684
 BOOKHAM, INC.
  Delaware
    
    20-1303994(State or Other Jurisdiction
    
    (I.R.S. Employerof Incorporation or Organization)
    
    Identification Number)
 2584 Junction Avenue,San Jose, California
    
    95134(Address of Principal Executive Offices)
    
    (Zip Code)
 (408) 383-1400
 
  þ o
  o Large accelerated filer
    

þ Accelerated filer
    
    o Non-accelerated filer   
(Do not check if a smaller reporting company)
    

o Smaller reporting company
  o þ




---



##### 



BOOKHAM, INC.
TABLE OF CONTENTS
 PagePART I. Financial InformationItem 1. Financial Statements (Unaudited):Condensed Consolidated Balance Sheets as of September 27, 2008 and June 28, 2008
    
    3Condensed Consolidated Statements of Operations for the three months ended September 27, 2008 and September 29, 2007
    
    4Condensed Consolidated Statements of Cash Flows for the three months ended September 27, 2008 and September 29, 2007
    
    5Notes to Condensed Consolidated Financial Statements
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    18Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    25Item 4. Controls and Procedures
    
    25PART II. Other InformationItem 1. Legal Proceedings
    
    26Item 1A. Risk Factors
    
    27Item 4. Submission of Matters to a Vote of Security Holders
    
    41Item 6. Exhibits
    
    41Signatures
    
    42EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 BOOKHAM, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (unaudited, in thousands, except par value amounts)
 September 27, 2008
    
    
    June 28, 2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    29,678
    
    
    $
    32,863Short-term investments
    
    
    12,910
    
    
    
    17,845Restricted cash
    
    
    611
    
    
    
    1,154Accounts receivable, net
    
    
    51,169
    
    
    
    45,665Inventories
    
    
    58,497
    
    
    
    59,612Prepaid expenses and other current assets
    
    
    5,199
    
    
    
    6,007Total current assets
    
    
    158,064
    
    
    
    163,146Goodwill
    
    
    7,881
    
    
    
    7,881Other intangible assets, net
    
    
    7,115
    
    
    
    7,829Property and equipment, net
    
    
    32,740
    
    
    
    32,962Other non-current assets
    
    
    233
    
    
    
    272Total assets
    
    $
    206,033
    
    
    $
    212,090LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    20,983
    
    
    $
    21,501Accrued expenses and other liabilities
    
    
    20,142
    
    
    
    20,789Total current liabilities
    
    
    41,125
    
    
    
    42,290Other long-term liabilities
    
    
    2,141
    
    
    
    1,336Deferred gain on sale-leaseback
    
    
    17,875
    
    
    
    19,402Total liabilities
    
    
    61,141
    
    
    
    63,028Commitments and contingencies (Note 9)Stockholders equity:Preferred stock: 5,000 shares authorized; none issued and outstanding
    
    
    
    
    
    
    Common stock:$0.01 par value per share; 175,000 shares authorized;
101,448 shares issued and outstanding at September
27, 2008
100,740 shares issued and outstanding at June 28, 2008
    
    
    1,014
    
    
    
    1,007Additional paid-in capital
    
    
    1,164,698
    
    
    
    1,163,598Accumulated other comprehensive income
    
    
    36,566
    
    
    
    44,036Accumulated deficit
    
    
    (1,057,386
    )
    
    
    (1,059,579
    )Total stockholders equity
    
    
    144,892
    
    
    
    149,062Total liabilities and stockholders equity
    
    $
    206,033
    
    
    $
    212,090
  3




---



##### Table of Contents



BOOKHAM, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited, in thousands, except per share amounts)
 Three Months EndedSeptember 27, 2008
    
    
    September 29, 2007Revenues
    
    $
    66,531
    
    
    $
    54,282Cost of revenues
    
    
    49,902
    
    
    
    41,945Gross profit
    
    
    16,629
    
    
    
    12,337Operating expenses:Research and development
    
    
    7,935
    
    
    
    8,692Selling, general and administrative
    
    
    10,684
    
    
    
    11,326Amortization of intangible assets
    
    
    463
    
    
    
    1,997Restructuring and severance charges
    
    
    1,486
    
    
    
    1,217Legal settlement
    
    
    (184
    )
    
    
    (Gain) loss on sale of property and equipment
    
    
    16
    
    
    
    (235
    )Total operating expenses
    
    
    20,400
    
    
    
    22,997Operating loss
    
    
    (3,771
    )
    
    
    (10,660
    )Other income (expense):Other expense
    
    
    (600
    )
    
    
    Interest income
    
    
    248
    
    
    
    252Interest expense
    
    
    (192
    )
    
    
    (134
    )Gain (loss) on foreign exchange
    
    
    6,496
    
    
    
    (412
    )Total other income (expense)
    
    
    5,952
    
    
    
    (294
    )Income (loss) before income taxes
    
    
    2,181
    
    
    
    (10,954
    )Income tax benefit
    
    
    (12
    )
    
    
    Net income (loss)
    
    $
    2,193
    
    
    $
    (10,954
    )Net income (loss) per share:Basic
    
    $
    0.02
    
    
    $
    (0.13
    )Diluted
    
    $
    0.02
    
    
    $
    (0.13
    )Shares used in computing net income (loss) per share:Basic
    
    
    100,080
    
    
    
    82,586Diluted
    
    
    100,728
    
    
    
    82,586
  4




---



##### Table of Contents



BOOKHAM, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 Three Months EndedSeptember 27, 2008
    
    
    September 29, 2007Cash flows from operating activities:Net income (loss)
    
    $
    2,193
    
    
    $
    (10,954
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    3,445
    
    
    
    5,241Stock-based compensation
    
    
    1,217
    
    
    
    1,726Amortization of deferred gain on sale-leaseback
    
    
    (271
    )
    
    
    (93
    )Impairment of short-term investments
    
    
    600
    
    
    
    Accretion on short-term investments
    
    
    (70
    )
    
    
    Gain (loss) on sale of property and equipment
    
    
    16
    
    
    
    (235
    )Changes in assets and liabilities:Accounts receivable, net
    
    
    (7,960
    )
    
    
    (4,602
    )Inventories
    
    
    159
    
    
    
    (383
    )Prepaid expenses and other current assets
    
    
    619
    
    
    
    2,963Accounts payable
    
    
    (192
    )
    
    
    1,195Accrued expenses and other liabilities
    
    
    2,143
    
    
    
    (1,627
    )Net cash provided by (used in) operating activities
    
    
    1,899
    
    
    
    (6,769
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (3,206
    )
    
    
    (2,850
    )Proceeds from sale of property and equipment
    
    
    9
    
    
    
    287Purchases of available-for-sale investments
    
    
    (6,945
    )
    
    
    Sales and maturities of available-for-sale investments
    
    
    11,350
    
    
    
    Transfer from restricted cash
    
    
    502
    
    
    
    4,321Net cash provided by investing activities
    
    
    1,710
    
    
    
    1,758Cash flows from financing activities:Repayment of other loans
    
    
    (16
    )
    
    
    (2
    )Proceeds from bank loan payable
    
    
    
    
    
    
    501Amount paid to repurchase shares from former officer
    
    
    
    
    
    
    (2
    )Net cash provided by (used in) financing activities
    
    
    (16
    )
    
    
    497Effect of exchange rate on cash and cash equivalents
    
    
    (6,778
    )
    
    
    426Net decrease in cash and cash equivalents
    
    
    (3,185
    )
    
    
    (4,088
    )Cash and cash equivalents at beginning of period
    
    
    32,863
    
    
    
    36,631Cash and cash equivalents at end of period
    
    $
    29,678
    
    
    $
    32,543
  5




---



##### Table of Contents



BOOKHAM, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 Note 1. Nature of Business
  Note 2. Basis of Preparation
     Note 3. Fair Value
 Fair Value Measurements
 6




---



##### Table of Contents



Assets Measured at Fair Value on a Recurring Basis
  Fair Value Measurement at Reporting Date UsingQuoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Total(thousands)Cash and cash equivalents (1):Money market funds
    
    $
    10,434
    
    
    $
    
    
    
    $
    
    
    
    $
    10,434Commercial paper
    
    
    
    
    
    
    3,054
    
    
    
    
    
    
    
    3,054Short-term investments:United States agency securities
    
    
    6,104
    
    
    
    
    
    
    
    
    
    
    
    6,104United States corporate bonds
    
    
    
    
    
    
    6,607
    
    
    
    199
    
    
    
    6,806Total assets measured at fair value
    
    $
    16,538
    
    
    $
    9,661
    
    
    $
    199
    
    
    $
    26,398
 
 (1)
    
    Excludes $16.2 million in cash held in Company bank accounts. Derivative Financial Instruments
 Accounting for Derivative Instruments and Hedging Activities
  7




---



##### Table of Contents



Note 4. Balance Sheet Details
  September 27, 2008
    
    
    June 28, 2008(in thousands)Cash and cash equivalents:Cash-in-bank
    
    $
    16,190
    
    
    $
    16,361Money market funds
    
    
    10,434
    
    
    
    10,022Commercial paper
    
    
    3,054
    
    
    
    6,480$
    29,678
    
    
    $
    32,863Short-term investments:United States agency securities
    
    $
    6,104
    
    
    $
    2,977United States corporate bonds
    
    
    6,806
    
    
    
    14,868$
    12,910
    
    
    $
    17,845
   September 27, 2008
    
    
    June 28, 2008(in thousands)Inventories:Raw materials
    
    $
    21,066
    
    
    $
    21,140Work-in-process
    
    
    28,239
    
    
    
    24,786Finished goods
    
    
    9,192
    
    
    
    13,686$
    58,497
    
    
    $
    59,612
  September 27, 2008
    
    
    June 28, 2008(in thousands)Property and equipment, net:Buildings
    
    $
    17,809
    
    
    $
    18,411Plant and machinery
    
    
    79,407
    
    
    
    78,652Fixtures, fittings and equipment
    
    
    1,175
    
    
    
    1,098Computer equipment
    
    
    13,396
    
    
    
    13,846111,787
    
    
    
    112,007Less: accumulated depreciation
    
    
    (79,047
    )
    
    
    (79,045
    )$
    32,740
    
    
    $
    32,962
 8




---



##### Table of Contents



September 27, 2008
    
    
    June 28, 2008(in thousands)Accrued expenses and other liabilities:Trade creditor accruals
    
    $
    3,632
    
    
    $
    4,090Compensation and benefits related accruals
    
    
    6,171
    
    
    
    6,724Warranty accrual
    
    
    2,594
    
    
    
    2,598Other accruals
    
    
    5,987
    
    
    
    5,657Current portion of restructuring accrual
    
    
    1,758
    
    
    
    1,720$
    20,142
    
    
    $
    20,789
 Note 5. Goodwill and Other Intangible Assets
 Goodwill and Other Intangibles
  Note 6. Restructuring Liabilities
  Accruedrestructuring
    
    
    Amounts charged
    
    
    
    
    
    
    
    
    
    
    Accruedcosts at June 28,
    
    
    to restructuring
    
    
    Amounts paid
    
    
    Adjustments
    
    
    restructuring costs2008
    
    
    costs and other
    
    
    or written-off
    
    
    and reversals
    
    
    at September 27, 2008(thousands)Lease cancellations and commitments
    
    $
    2,074
    
    
    $
    1,509
    
    
    $
    (308
    )
    
    $
    
    
    
    $
    3,275Termination payments to employees and
related costs
    
    
    754
    
    
    
    25
    
    
    
    (306
    )
    
    
    (48
    )
    
    
    425Total accrued restructuring
    
    
    2,828
    
    
    $
    1,534
    
    
    $
    (614
    )
    
    $
    (48
    )
    
    
    3,700Less noncurrent accrued restructuring charges
    
    
    (1,108
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,942
    )Accrued restructuring charges included within
accrued expenses and other liabilities
    
    $
    1,720
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,758
  9




---



##### Table of Contents



Note 7. Accounting for Uncertainty in Income Taxes
 Accounting for
Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109 Accounting for Income Taxes
    Note 8. Credit Agreement
    10




---



##### Table of Contents



Note 9. Commitments and Contingencies
 Guarantees
 Guarantors Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB
Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34
 
    
    In connection with the sale by New Focus of its passive component line to Finisar, Inc.,
New Focus agreed to indemnify Finisar for claims related to the intellectual property sold
to Finisar. This obligation expires in May 2009 and has no limitation on maximum liability.
The Company has not historically paid out any amounts related to this indemnification and
does not expect to in the future, therefore no accrual has been made for this
indemnification.
    
    The Company indemnifies its directors and certain employees as permitted by law, and has
entered into indemnification agreements with its directors and senior officers. The Company
has not recorded a liability associated with these indemnification arrangements as the
Company historically has not incurred any costs associated with such indemnifications and
does not expect to in the future. Costs associated with such indemnifications may be
mitigated by insurance coverage that the Company maintains.
    
    The Company also has indemnification clauses in various contracts that it enters into in
the normal course of business, such as those issued by its banks in favor of several of its
suppliers or indemnification in favor of customers in respect of liabilities they may incur
as a result of purchasing the Companys products should such products infringe the
intellectual property rights of a third party. The Company has not historically paid out
any amounts related to these indemnifications and does not expect to in the future,
therefore no accrual has been made for these indemnifications.
 Provision for warranties
  Three Months EndedSeptember 27, 2008
    
    
    September 29, 2007(thousands)Warranty provision  beginning of period
    
    $
    2,598
    
    
    $
    2,569Warranties issued
    
    
    928
    
    
    
    622Warranties utilized or expired
    
    
    (761
    )
    
    
    (857
    )Currency translation adjustment
    
    
    (171
    )
    
    
    36Warranty provision  end of period
    
    $
    2,594
    
    
    $
    2,370
 11




---



##### Table of Contents



Litigation
        12




---



##### Table of Contents



Bookham, Inc. v. JDS
Uniphase Corp. and Agility Communications, Inc.
 TM
  Note 10. Stock-based Compensation Expense
 Share-Based Payment
  13




---



##### Table of Contents



Three Months EndedSeptember 27, 2008
    
    September 29, 2007Expected life
    
    4.5 years
    
    4.5 yearsRisk-free interest rate
    
    2.9% - 3.2%
    
    4.2% - 4.9%Volatility
    
    70%
    
    79%Dividend yield
    
    
    
    
  Three Months EndedSeptember 27, 2008
    
    
    September 29, 2007(thousands)Stock-based compensation by category of expense:Costs of revenues
    
    $
    395
    
    
    $
    615Research and development
    
    
    250
    
    
    
    451Selling, general and administrative
    
    
    572
    
    
    
    660$
    1,217
    
    
    $
    1,726Stock-based compensation by type of award:Stock options and restricted stock
awards
    
    $
    1,107
    
    
    $
    1,460Inventory adjustment to cost of revenues
    
    
    110
    
    
    
    266$
    1,217
    
    
    $
    1,726
   Awards
    
    Stock
    
    Weighted-
    
    Restricted Stock
    
    Weighted-Available
    
    Options
    
    Average
    
    Awards / Units
    
    Average GrantFor Grant
    
    Outstanding
    
    Exercise Price
    
    Outstanding
    
    Date Fair Value(thousands)
    
    (thousands)
    
    
    
    
    
    (thousands)Balances at June 28, 2008
    
    
    12,105
    
    
    
    6,822
    
    
    $
    5.87
    
    
    
    1,503
    
    
    $
    2.91Granted
    
    
    (2,624
    )
    
    
    2,624
    
    
    $
    1.78
    
    
    
    Exercised or released
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (715
    )
    
    $
    3.04Cancelled or forfeited
    
    
    635
    
    
    
    (495
    )
    
    $
    4.72
    
    
    
    (140
    )
    
    $
    4.10Balances at September 27, 2008
    
    
    10,116
    
    
    
    8,951
    
    
    $
    4.66
    
    
    
    648
    
    
    $
    2.50
  14




---



##### Table of Contents



Weighted-
    
    Weighted-Average
    
    Average Remaining
    
    AggregateExercise
    
    Contractual
    
    IntrinsicShares
    
    Price
    
    Life
    
    Value(thousands)
    
    
    
    
    
    (years)
    
    (thousands)Options exercisable at September 27, 2008
    
    
    3,624
    
    
    $
    7.97
    
    
    
    6.7
    
    
    $
    Options expected to vest at September
27, 2008
    
    
    8,536
    
    
    $
    4.79
    
    
    
    8.2
    
    
    $
    Options outstanding at September 27, 2008
    
    
    8,951
    
    
    $
    4.66
    
    
    
    8.2
    
    
    $
    
 Note 11. Earnings (Loss) Per Share
 Earnings Per Share
   Note 12. Comprehensive Loss
  Three Months EndedSeptember 27, 2008
    
    

September 29, 2007(thousands)Net income (loss)
    
    $
    2,193
    
    
    $
    (10,954
    )Other comprehensive income (loss):Unrealized gain (loss) on currency
instruments designated as hedges
    
    
    (1,041
    )
    
    
    162Unrealized loss on short-term investments
    
    
    (17
    )
    
    
    Currency translation adjustments
    
    
    (6,412
    )
    
    
    1,737Comprehensive loss
    
    $
    (5,277
    )
    
    $
    (9,055
    )
 15




---



##### Table of Contents



Note 13. Segments of an Enterprise and Related Information
 Disclosures about Segments of an Enterprise and Related Information
  Three months endedSeptember 27, 2008
    
    

September 29, 2007(thousands)RevenuesTelecom
    
    $
    52,255
    
    
    $
    40,733Non-telecom
    
    
    14,276
    
    
    
    13,549Consolidated revenues
    
    $
    66,531
    
    
    $
    54,282
 Three months endedSeptember 27, 2008
    
    

September 29, 2007(thousands)Operating lossTelecom
    
    $
    (1,340
    )
    
    $
    (8,886
    )Non-telecom
    
    
    (1,382
    )
    
    
    (283
    )Total segment operating loss
    
    
    (2,722
    )
    
    
    (9,169
    )Stock compensation
    
    
    1,217
    
    
    
    1,726Legal Settlement
    
    
    (184
    )
    
    
    (Gain) loss on sale of property and equipment
    
    
    16
    
    
    
    (235
    )Consolidated operating loss
    
    $
    (3,771
    )
    
    $
    (10,660
    )
  Three Months EndedSeptember 27, 2008
    
    

September 29, 2007(thousands)
    
    
    (thousands)United States
    
    $
    19,201
    
    
    $
    14,753Canada
    
    
    4,655
    
    
    
    10,624Europe:United Kingdom
    
    
    3,536
    
    
    
    1,683Other
    
    
    10,778
    
    
    
    8,694Asia:China
    
    
    14,865
    
    
    
    10,604Other
    
    
    6,412
    
    
    
    5,781Rest of world
    
    
    7,084
    
    
    
    2,143$
    66,531
    
    
    $
    54,282
 16




---



##### Table of Contents



September 27, 2008
    
    

June 28, 2008(thousands)United States
    
    $
    1,716
    
    
    $
    1,824China
    
    
    21,464
    
    
    
    20,443United Kingdom
    
    
    5,157
    
    
    
    6,296Other
    
    
    4,403
    
    
    
    4,399$
    32,740
    
    
    $
    32,962
 Significant Customers and Concentration of Credit Risk
  Note 14. Recent Accounting Pronouncements
  Business Combinations
 Effective Date of FASB
Statement No. 157
 Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
 17




---



##### Table of Contents



The Hierarchy of Generally Accepted Accounting
Principles
 Determining the Fair Value of a Financial Asset in
a Market That Is Not Active
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
    18




---



##### Table of Contents



Critical Accounting Policies
   Recent Accounting Pronouncements
  Business Combinations
 Effective Date of FASB
Statement No. 157 Fair Value Measurements
 Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
 The Hierarchy of Generally Accepted Accounting
Principles
 19




---



##### Table of Contents



Determining the Fair Value of a Financial Asset in
a Market That Is Not Active
 Results of Operations
  Three Months EndedSeptember 27, 2008
    
    
    September 29, 2007
    
    
    Increase (Decrease)(thousands)
    
    
    %
    
    
    (thousands)
    
    
    %
    
    
    (thousands)
    
    
    %Revenues
    
    $
    66,531
    
    
    
    100.0
    
    
    $
    54,282
    
    
    
    100.0
    
    
    $
    12,249
    
    
    
    22.6Cost of revenues
    
    
    49,902
    
    
    
    75.0
    
    
    
    41,945
    
    
    
    77.3
    
    
    
    7,957
    
    
    
    19.0Gross profit
    
    
    16,629
    
    
    
    25.0
    
    
    
    12,337
    
    
    
    22.7
    
    
    
    4,292
    
    
    
    34.8Operating expenses:Research and development
    
    
    7,935
    
    
    
    11.9
    
    
    
    8,692
    
    
    
    16.0
    
    
    
    (757
    )
    
    
    (8.7
    )Selling, general and
administrative
    
    
    10,684
    
    
    
    16.1
    
    
    
    11,326
    
    
    
    20.9
    
    
    
    (642
    )
    
    
    (5.7
    )Amortization of
intangible assets
    
    
    463
    
    
    
    0.7
    
    
    
    1,997
    
    
    
    3.7
    
    
    
    (1,534
    )
    
    
    (76.8
    )Restructuring and
severance charges
    
    
    1,486
    
    
    
    2.3
    
    
    
    1,217
    
    
    
    2.2
    
    
    
    269
    
    
    
    22.1Legal settlement
    
    
    (184
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    
    
    
    
    (184
    )
    
    
    n/m
    (1)(Gain) loss on sale of
property and equipment
    
    
    16
    
    
    
    0.0
    
    
    
    (235
    )
    
    
    (0.4
    )
    
    
    251
    
    
    
    n/m
    (1)Total operating expenses
    
    
    20,400
    
    
    
    30.7
    
    
    
    22,997
    
    
    
    42.4
    
    
    
    (2,597
    )
    
    
    (11.3
    )Operating loss
    
    
    (3,771
    )
    
    
    (5.7
    )
    
    
    (10,660
    )
    
    
    (19.7
    )
    
    
    6,889
    
    
    
    (64.6
    )Other income (expense):Other expense
    
    
    (600
    )
    
    
    (0.9
    )
    
    
    
    
    
    
    
    
    
    
    (600
    )
    
    
    n/m
    (1)Interest income
    
    
    248
    
    
    
    0.4
    
    
    
    252
    
    
    
    0.5
    
    
    
    (4
    )
    
    
    (1.6
    )Interest expense
    
    
    (192
    )
    
    
    (0.3
    )
    
    
    (134
    )
    
    
    (0.2
    )
    
    
    (58
    )
    
    
    43.3Gain (loss) on foreign
exchange
    
    
    6,496
    
    
    
    9.7
    
    
    
    (412
    )
    
    
    (0.8
    )
    
    
    6,908
    
    
    
    n/m
    (1)Total other income (expense)
    
    
    5,952
    
    
    
    8.9
    
    
    
    (294
    )
    
    
    (0.5
    )
    
    
    6,246
    
    
    
    n/m
    (1)Income (loss) before income taxes
    
    
    2,181
    
    
    
    3.3
    
    
    
    (10,954
    )
    
    
    (20.2
    )
    
    
    13,135
    
    
    
    n/m
    (1)Income tax benefit
    
    
    (12
    )
    
    
    (0.0
    )
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    n/m
    (1)Net income (loss)
    
    $
    2,193
    
    
    
    3.3
    
    
    $
    (10,954
    )
    
    
    (20.2
    )
    
    $
    13,147
    
    
    
    n/m
    (1)
 
 (1)
    
    Not meaningful Revenues
    20




---



##### Table of Contents



Cost of Revenues
   Gross Margin
    Research and Development Expenses
   Selling,
General and Administrative Expenses
   21




---



##### Table of Contents



Amortization of Intangible Assets
  Restructuring and Severance Charges
  Other Income (Expense)
  Income Tax Benefit
  Liquidity and Capital Resources
 Cash Flows from Operating Activities
 Three Months EndedSeptember 27, 2008
    
    

September 29, 2007(thousands)Net income (loss)
    
    $
    2,193
    
    
    $
    (10,954
    )Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    3,445
    
    
    
    5,241Stock-based compensation
    
    
    1,217
    
    
    
    1,726Impairment of marketable securities
    
    
    600
    
    
    
    (Gain) loss on sale of property and equipment
    
    
    16
    
    
    
    (235
    )Amortization of deferred gain on sale-leaseback
    
    
    (271
    )
    
    
    (93
    )Total non-cash accounting items
    
    
    5,007
    
    
    
    6,639Increase in working capital
    
    
    (5,231
    )
    
    
    (2,454
    )Net cash provided by (used in) operating activities
    
    $
    1,969
    
    
    $
    (6,769
    )
 22




---



##### Table of Contents



Cash Flows from Investing Activities
   Cash Flows from Financing Activities
  Credit Facility
     23




---



##### Table of Contents



Future Cash Requirements
   Contractual Obligations
  Off-Balance Sheet Arrangements
     24




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Foreign currency
   
 Item 4 . Controls and Procedures
   25




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
       26




---



##### Table of Contents



Bookham, Inc. v. JDS
Uniphase Corp. and Agility Communications, Inc.
 TM
 
 Item 1A. Risk Factors
 Investing in our securities involves a high degree of risk. You should carefully consider the risks
and uncertainties described below in addition to the other information included or incorporated by
reference in this Quarterly Report on Form 10-Q. If any of the following risks actually occur, our
business, financial condition or results of operations would likely suffer. In that case, the
trading price of our common stock could fall.
 Risks Related to Our Business
 We have a history of large operating losses and we may not be able to achieve profitability in the
future.
   27




---



##### Table of Contents



We may not be able to maintain current levels of gross margins.
  Our success will depend on our ability to anticipate and respond to evolving technologies and
customer requirements.
  The market for optical components continues to be characterized by excess capacity and intense
price competition which has had, and will continue to have, a material adverse effect on our
results of operations.
  We depend on a limited number of customers for a significant percentage of our revenues.
  We and our telecom customers depend upon a limited number of major telecommunications carriers.
  28




---



##### Table of Contents



We typically do not enter into long-term contracts with our customers and our customers may
decrease, cancel or delay their buying levels at any time with little or no advance notice to us.
  As a result of our global operations, our business is subject to currency fluctuations that have
adversely affected our results of operations in recent quarters and may continue to do so in the
future.
   We are increasing manufacturing operations in China, which exposes us to risks inherent in doing
business in China.
  
    
    qualify our manufacturing lines and the products we produce in Shenzhen, as required by
our customers;
    
    attract qualified personnel to operate our Shenzhen facility; and
    
    retain employees at our Shenzhen facility.
    29




---



##### Table of Contents



Our business and results of operations may be negatively impacted by general economic and financial
market conditions and such conditions may increase the other risks that affect our business.
   Fluctuations in operating results could adversely affect the market price of our common stock.
   The investment of our cash balance and our investments in marketable debt securities are subject to
risks which may cause losses and affect the liquidity of these investments.
  30




---



##### Table of Contents



We may record impairment charges which would adversely impact our results of operations.
 Goodwill and Other Intangibles
   We may incur additional significant restructuring charges that will adversely affect our results of
operations.
    31




---



##### Table of Contents



Our results of operations may suffer if we do not effectively manage our inventory, and we may
incur inventory-related charges.
  Bookham Technology plc may not be able to utilize tax losses and other tax attributes against the
receivables that arise as a result of its transaction with Deutsche Bank.
  Our products are complex and may take longer to develop than anticipated and we may not recognize
revenues from new products until after long field testing and customer acceptance periods.
  32




---



##### Table of Contents



If our customers do not qualify our manufacturing lines or the manufacturing lines of our
subcontractors for volume shipments, our operating results could suffer.
  Delays, disruptions or quality control problems in manufacturing could result in delays in product
shipments to customers and could adversely affect our business.
  We may experience low manufacturing yields.
  We depend on a limited number of suppliers who could disrupt our business if they stopped,
decreased or delayed shipments.
  Our intellectual property rights may not be adequately protected.
  33




---



##### Table of Contents



Our products may infringe the intellectual property rights of others which could result in
expensive litigation or require us to obtain a license to use the technology from third parties, or
we may be prohibited from selling certain products in the future.
  Bookham, Inc. v.
JDS Uniphase Corp. and Agility Communications, Inc.
 TM
  34




---



##### Table of Contents



If we fail to obtain the right to use the intellectual property rights of others necessary to
operate our business, our ability to succeed will be adversely affected.
  The markets in which we operate are highly competitive, which could result in lost sales and lower
revenues.
  
    
    respond to new technologies or technical standards;
    
    react to changing customer requirements and expectations;
    
    devote needed resources to the development, production, promotion and sale of products;
and
    
    deliver competitive products at lower prices.
   We generate a significant portion of our revenues internationally and therefore are subject to
additional risks associated with the extent of our international operations.
  
    
    currency fluctuations, which could result in increased operating expenses and reduced
revenues;
    
    greater difficulty in accounts receivable collection and longer collection periods;
    
    difficulty in enforcing or adequately protecting our intellectual property;
    
    foreign taxes;
    
    political, legal and economic instability in foreign markets; and
    
    foreign regulations.
 35




---



##### Table of Contents



Our business will be adversely affected if we cannot manage the significant changes in the number
of our employees and the size of our operations.
  We may be faced with product liability claims.
  If we fail to attract and retain key personnel, our business could suffer.
   Our business and future operating results may be adversely affected by events outside of our
control.
  We may not be able to raise capital when desired on favorable terms, or at all, or without dilution
to our stockholders.
  36




---



##### Table of Contents



Risks Related to Regulatory Compliance and Litigation
 Our business involves the use of hazardous materials, and we are subject to environmental and
import/export laws and regulations that may expose us to liability and increase our costs.
   Litigation regarding Bookham Technology plcs and New Focus initial public offering and follow-on
offering and any other litigation in which we become involved, including as a result of
acquisitions or the arrangements we have with suppliers and customers, may substantially increase
our costs and harm our business.
   37




---



##### Table of Contents



38




---



##### Table of Contents



Some anti-takeover provisions contained in our charter, by-laws and under Delaware laws could
hinder business combinations with third parties.
   Risks Related to Our Common Stock
 A variety of factors could cause the trading price of our common stock to be volatile or decline.
  
    
    fluctuations in our results of operations;
    
    changes in our business, operations or prospects;
    
    hiring or departure of key personnel;
    
    new contractual relationships with key suppliers or customers by us or our competitors;
    
    proposed acquisitions by us or our competitors;
    
    financial results that fail to meet public market analysts expectations and changes in
stock market analysts recommendations regarding us, other optical technology companies or
the telecommunication industry in general;
    
    future sales of common stock, or securities convertible into or exercisable for common
stock;
    
    adverse judgments or settlements obligating us to pay damages;
    
    acts of war, terrorism, or natural disasters;
    
    industry, domestic and international market and economic conditions, including the global
macroeconomic downturn we are currently experiencing;
    
    low trading volume in our stock;
    
    developments relating to patents or property rights; and
    
    government regulatory changes.
  39




---



##### Table of Contents



If we do not meet the NASDAQ Global Market continued listing requirements, our common stock may be
delisted.
    We may incur significant costs from class action litigation due to our expected stock volatility.
  Because we do not intend to pay dividends, stockholders will benefit from an investment in our
common stock only if it appreciates in value.
  We can issue shares of preferred stock that may adversely affect your rights as a stockholder of
our common stock.
  
    
    adversely affect the voting power of the holders of our common stock;
    
    make it more difficult for a third party to gain control of us;
    
    discourage bids for our common stock at a premium;
    
    limit or eliminate any payments that the holders of our common stock could expect to
receive upon our liquidation; or
    
    otherwise adversely affect the market price of our common stock.
  40




---



##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
    
 Item 6. Exhibits
  41




---



##### Table of Contents



SIGNATURE
  BOOKHAM, INC.Date: November 4, 2008
    
    By:
    
    /s/ Jerry TurinJerry TurinChief Financial Officer (PrincipalFinancial and Accounting Officer)
 42




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibit3.1(1)
    
    Amended and Restated By-laws of Bookham, Inc., as amended3.1(2)
    
    Restated Certificate of Incorporation of Bookham, Inc.31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.32.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
 
 (1)
    
    Previously filed as Exhibit 3.1 to the Registrants 2007 Annual Report on Form 10-K (File
No. 000-30684) for the year ended June 30, 2007 and incorporated herein by reference.(2)
    
    Previously filed as Exhibit 3.1 to the Registrants Current Report on Form 8-K (File
No. 000-30684) on September 10, 2004. 43