Filed by New Focus, Inc. Pursuant to Rule 425
Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-6
Under the Securities Exchange Act of 1934
Subject Company: New Focus, Inc.
Commission File No.: 000-29811
This filing relates to a proposed merger (the “Merger”) between Bookham Technology plc (“Bookham”) and New Focus, Inc. (“New Focus”) pursuant to the terms of an Agreement and Plan of Merger, dated as of September 21, 2003, by and among Bookham, Budapest Acquisition Corp. and New Focus. On October 29, 2003, New Focus posted the following slide presentation regarding the Merger on its website.
US Presentation
October 2003
Disclaimer
Information regarding Bookham in this presentation has been provided by Bookham. Any
remarks in this presentation about future expectations, plans and prospects for Bookham
constitute forward-looking statements for purposes of the safe harbor provisions under The
Private Securities Litigation Reform Act of 1995. Actual results may differ materially from
those indicated by these forward-looking statements as a result of various important
factors, including those discussed in the proxy statement / prospectus on Form F-4 filed by
Bookham, Bookham’s Annual Report on Form 20-F for the year ended December 31,
2002, as amended, and New Focus’s Annual Report on Form 10-K, as amended, each of
which is on file with the Securities and Exchange Commission. Forward-looking
statements represent Bookham’s or New Focus’s, as the case may be, estimates as of the
date made, and should not be relied upon as representing Bookham’s or New Focus’s, as
the case may be, estimates as of any subsequent date. While Bookham or New Focus
may elect to update forward-looking statements in the future, each disclaims any obligation
to do so. Certain information contained herein includes non-GAAP financial measures.
For information regarding the Bookham’s results on a US and UK GAAP basis and a
reconciliation of the non-GAAP measures included herein with such results, see the tables
included at the end of this presentation.
Agenda
Recent highlights
Bookham overview
New Focus overview
Financials
Summary
All US dollar numbers have been translated at £1 = $1.61 for the convenience of the reader
Recent highlights
Revenues $37.1 million, up 10% from Q2
Strong quarter-on-quarter improvement in performance
14% improvement in gross margin, near breakeven
11% reduction in operating expenses (excluding exceptionals)
25% reduction in operating loss
Cost reduction initiatives completed
Ottawa fab closed ahead of schedule and products transferred to Caswell
ASOC silicon wafer fab facility in Milton, UK, closed
Reallocation of R&D spending and restructuring to reduce manufacturing
overheads
Additional G&A overhead reductions completed
Two strategic acquisitions announced
New Focus
Ignis Optics…..closed October 7 2003
Stage set for:
Lower cost structure
Expanding revenue opportunities
Bookham overview
Key facts
Founded in 1988
1998: First commercial products (transceivers)
1998: Intel and Cisco invest in Bookham
April 2000: Traded on NASDAQ and London Stock Exchange (LSE)
Feb 2002: Acquired Marconi’s optical component business
Fab and actives; Became a player in tunable lasers and modulators
November 2002: Acquired Nortel Networks Optical Components
Acquired one of largest product lines in the industry
December 2002: Gained number 2 position worldwide in telecom optical
components
July 2003: Acquired Cierra Photonics (thin film filters)
August 2003: Completed consolidation of former Nortel facilities
September 2003: proposed acquisition of New Focus and acquired Ignis
Optics (TxRx)
Current Bookham positioning
No. 2 in telecom optical components
Most comprehensive, end-to-end product portfolio of active
components and amplifiers
Strong, Blue Chip customer base
Strategic relationship (supply and R&D agreements) with
Nortel, the No. 1 optical systems vendor
Emerging, non-telecom optical business leveraging existing
Bookham technologies
Efficient, integrated manufacturing capability
Proven ability to acquire and consolidate (Nortel, Marconi,
Cierra) – additional value enhancing opportunities available
Strong competitive positioning vs. its competitors
Number 2 in telecom optical components
Optical networking market
shares (sales Q2 2003)
Strong Blue Chip customer base
Source: Dell’Oro Sept 2003 & company estimate
Key customer penetration
Nortel
Marconi
Supply agreements – guaranteed
revenues
Expanding position with other Tier 1
customers (e.g. Huawei)
12% Q-on-Q revenue growth of other
customers
Strategic relationship with Nortel
and Marconi (supply contracts)
No. 1 market share in optical
systems
3 year supply agreement
Minimum commitment
85% to 65% TxRx
65% to 50% amplifiers
Other product areas: preferred
customer status
$20 million per quarter first 6
quarters
Part of acquisition Nov 02
Significant progress with new
design-wins
Leading market share within
European countries
$45 million take or pay supply
contract as part of Feb 02
acquisition
$12 million commitment remaining
at 28 September 03
Strategy: going forward
Leverage position of market leadership to gain share in
telecom
Secure revenue base (supply agreements)
Sell ex-NNOC products to all other customers
Forward-integrate into subsystems (create barriers to entry)
Use technology depth to deliver differentiation in cost, space and power
consumption
Exploit consolidation opportunities to gain added scale
Develop non-telecom business
Continue growth of MMICs
Expand into related opportunities in industrial, military and aerospace
Expand into datacom
New Focus would add non-telco revenues
Implement competitive cost structure
Deliver on restructuring targets
Realize scale benefits (R&D, manufacturing)
Continuing cost-reduction
Non-Telco markets & products
Strategy is to deliver existing technology customised to alternative
markets that value it – spreading fixed manufacturing costs and R&D
know-how
Leverages increased revenue and cash from existing facilities with
minimal incremental investment
Key targets:
MMICs > military and aerospace – a current business (25 year heritage)
High power GaAs lasers > industrial – Q1 2004 start
Datacom where crossover with Telecom
TX/RX > military customers
High profit-margin business
Transaction with New Focus would accelerate development of non
telecom optical business and reduce dependency on major telecom
customers
Non-telecom revenues in 2004 expected to be over 30% of total Bookham revenues
Kanata, Canada
R&D
Milton, UK
HQ
Paignton, UK
Main A&T
facility
240k sq ft
92k sq ft clean
room
Established
1970s
Zurich, Switzerland
980 Pump Laser Chip
Caswell, UK
Main GaAs
and InP fab
180k sq ft
37k sq ft clean
room
Established
1940s
Bookham facilities
Santa Rosa, US
TFF
San Jose, US
XFP/SFP
New Focus overview
Proposed acquisition of New Focus
by Bookham - transaction highlights
All-share acquisition of New Focus by Bookham
Bookham would acquire New Focus for $191 million (£118 million) in stock
84 million shares, including assumed exercise of options (fixed 1.2015 exchange ratio)
Cash distribution of approximately $140 million (£86 million) million to New Focus
stockholders
27.4% pro forma ownership for current stockholders of New Focus
Acquisition would give Bookham:
$25 million per year non-telecom optical components/RF business
New Focus business which is progressing towards breakeven with improving margins
and revenue growth prospects
$105 million (£65 million) of cash on closing balance sheet
Low-cost China manufacturing facility
Transaction expected to accelerate development of non-telecom optical
business and reduce dependency on major telecom customers
Non-telecom revenues in 2004 expected to be approximately 30% of total Bookham
revenues
Estimated closing date late 2003 or early 2004
Expands customer base
Nortel
57%
Marconi
14%
Others
including Huawei
29%
Bookham
Bookham Pro forma
Nortel
47%
Marconi
11%
Others
25%
New Focus
Customers
17%
Q3 2003
including Huawei
Diversified Blue Chip customers
Several
Tier-1 defense
contractors
Other major semiconductor
capital equipment OEMs
New Focus facilities
Location: San Jose, CA
Size: 60k sq ft
Location: Shenzhen, China
Size: 247k sq ft
San Jose
Technical/business presence – important
asset for Bookham’s planned expansion
strategy
Two facilities: room for either expansion
or cost-reduction
China
State-of-the-art facility in Shenzhen Free
Trade Zone, close to Huawei and with
prime location overlooking Hong-Kong
(currently empty)
Financials
Management believes that the presentation of the information in the following slides
is useful to investors because such information excludes exceptional items associated
with the company’s past acquisitions and restructuring activity and gives investors
insight into the profitability of the company’s operating business. Management
believes that presenting financial measures exclusive of exceptional items helps
identify trends in the company’s business and the company uses these measures to
establish budgets and operational goals, to manage the business and evaluate the
performance of the company.
Financial highlights – Q3 2003
Revenues $37.1 million, up 10% on Q2 2003
Nortel Networks and Marconi Communications represented 57%
and 14% of revenues respectively, with Huawei as third largest
customer
Charges of $23.6 million, fab closure Ottawa and Milton
Net loss of $22.7 million (excluding charges) compared with $25.5
million in Q2 2003 (11% improvement)
Cash burn of $36.9 million (operating basis improved Q2 – Q3)
Summary P&L account
US GAAP ($ million)
Revenue growth was
across products and
customers
Gross loss improved by
reductions in
manufacturing overhead
Gross margin improved
(14 points on Q2)
Opex down 11%
from Q2
Net loss excluding
charges down 11%
* Excluding charges
Q4 02
Q1 03
Q2 03
Q3 03
Net revenues
$23.0
$33.9
$33.9
$37.1
Gross (loss) profit*
(9.1)
(8.0)
(5.0)
(0.5)
Gross margin %
(40%)
(24%)
(15%)
(1.5%)
OPEX*
(23.4)
(26.2)
(23.7)
(21.2)
Operating Loss*
(32.5)
(34.2)
(28.7)
(21.7)
Other income
(expense)
0.6
(0.5)
3.2
(1.0)
Charges
(49.7)
(4.9)
(3.0)
(23.6)
Net Loss
(excluding charges)
(31.9)
(34.7)
(25.5)
(22.7)
Net Loss
(with charges)
$(81.6)
$(39.6)
$(28.5)
$(46.3)
Balance sheet: solid financial position
US GAAP ($ million)
Debtors (A/R)
improving: 113 Dec;
65 September
Inventory generates
$4.6 million cash in
Q3
Capital spending
$3.8 million in Q3
($7.1 million in Q2)
Note: Year end reclassification on NNOC purchase price to inventory
from intangibles and fixed assets
Jun 03
Sept 03
Cash
$114.1
$77.2
Accounts receivables
23.8
26.6
Inventory
26.8
22.2
Net current assets
$122.2
$80.0
Long term liabilities
(54.4)
(54.9)
Net assets
$180.7
$138.2
Continue to drive operating efficiencies $ million
Underlying operating cashburn
Operating cashburn defined as EDITDA, excluding exceptional charges + inventory benefit
Operating Cashburn
Q1/03
$25.5
Q2/03
$16.1
Q3/03
$13.3
-
16%
Ohd Red'n (Q1/03 Vs Q2/03)
-
24%
Ohd Red'n (Q1/03 Vs Q3/03)
- Continued Inventory sales
Financial impact
Pro-forma income statement (in $US million)
1.
Excludes charges which generally have included restructuring costs
2.
Represents earnings before interest, taxes, depreciation and amortisation and excluding charges
N.B Translated solely for the convenience of the reader at the rate of $1.61 = £1
Anticipated next steps
Announced restructurings
Bookham
- Ottawa fab closure
- Other Bookham cost
reductions
New Focus
- Q3 staff reductions
Anticipated synergies of
G&A consolidation of New
Focus
Anticipated growth
through market share
gains and expansion of
non-telecom revenues
Q3 2003
Bookham
New Focus
Combined
Revenue
$37.1
$7.7
$44.8
Cost of Sales
(1)
37.6
5.0
42.6
Gross Profit (Loss)
(1)
(0.5)
2.7
2.2
R&D
(1)
11.5
1.9
13.4
SG&A
(1)
9.7
4.1
13.8
Operating Income (Loss)
(1)
($21.7)
($3.3)
($25.0)
Operating Cash Flow
(2)
(17.9)
(2.5)
(20.4)
Financial impact
Summary balance sheet (in $US million)
(1) New Focus cash figure is post distribution of $140m (and potential proceeds from New Focus option
exercises) but excludes deal costs estimated at $12.1 m.
N.B. Translated solely for the convenience of the reader at the rate of $1.61 = £1
Pro-forma 28 September 2003
Bookham
New Focus (1)
Combined
Cash & short term investments
$77.2
$109.7
$186.9
Accounts Receivable
26.6
3.2
29.8
Inventory
22.2
3.3
25.5
Net Current Assets
80.0
106.1
186.1
Long-Term Liabilities
(54.9)
(11.3)
(66.2)
Net Assets
138.2
117.2
255.4
Outlook
Q4 03 revenue projection: $38 million to $41 million
up 3% to 10%
Gross margin improvement 5 to 10 percentage points
Exceptionals projection: $3 million to $5 million
(credits from asset sales coupled with R&D tax credit recognition)
Q4 03 cash burn projection including exceptionals under
$15 million
New Focus acquisition timing expected late 2003 or early
2004. Cash costs and charges not considered in outlook
for Q4
Summary
Strong market position: #2 in telecom, which would be
balanced outside of telecom
Strong and expanding telecom customer base
(NT/MONI/Huawei), which would be significantly de-risked
Strong revenue base (supply agreements)
Strong product line-up
Strong manufacturing base; proposed transaction would add
low-cost manufacturing site
Operational execution
Deep management expertise
Strong financial position
Record of consolidation and successful integration
Additional Information And Where To Find It
On October 22, 2003, Bookham Technology, Inc. filed a Registration Statement on Form F-4 with the
Securities and Exchange Commission in connection with the merger transaction involving Bookham
Technology and New Focus and this Registration Statement on Form F-4 contains a joint proxy
statement/prospectus that Bookham Technology and New Focus, Inc. filed in connection with the
merger transaction. Investors and security holders are urged to read this filing because it contains
important information about the merger. Investors and security holders may obtain free copies of these
documents and other documents filed with the Securities and Exchange Commission at the Securities
and Exchange Commission’s web site at www.sec.gov. In addition, investors and security holders may
obtain free copies of the documents filed with the Securities and Exchange Commission by Bookham
Technology by contacting Bookham Technology Investor Relations at + 44 (0) 1235 837000. Investors
and security holders may obtain free copies of the documents filed with the Securities and Exchange
Commission by New Focus, Inc. by contacting New Focus Investor Relations at (408) 919 5384.
Bookham Technology and its directors and executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of New Focus in connection with the merger. Information
regarding the special interests of these directors and executive officers in the merger will be included in
the proxy statement/prospectus of Bookham Technology and New Focus described above. Additional
information regarding the directors and executive officers of Bookham Technology is also included in
Bookham Technology’s Annual Report on Form 20-F, which was initially filed with the Securities and
Exchange Commission on March 19, 2003, as amended by the Annual Report on Form 20-F/A filed with
the Securities and Exchange Commission on September 10, 2003 and October 22, 2003. This
document is available free of charge at the Securities and Exchange Commission’s web site at
www.sec.gov and from Bookham Technology by contacting Bookham Technology Investor Relations at
+ 44 (0) 1235 837000.
New Focus and its directors and executive officers also may be deemed to be participants in the
solicitation of proxies from the stockholders of New Focus in connection with the merger. Information
regarding the special interests of these directors and executive officers in the reorganization transaction
described herein is included in the proxy statement/prospectus of Bookham Technology and New Focus
described above. Additional information regarding these directors and executive officers is also included
in New Focus’s proxy statement for its 2003 Annual Meeting of Stockholders, which was filed with the
Securities and Exchange Commission on or about April 11, 2003. This document is available free of
charge at the Securities and Exchange Commission’s web site at www.sec.gov and from New Focus by
contacting New Focus Investor Relations at (408) 919 5384.