Oclaro Business Overview June 3 2009 Final

Business Overview June 3, 2009 Safe Harbor Statement This presentation and the statements made by management contain statements about management’s future expectations, plans or prospects of Oclaro, Inc. and its business that constitute forward-looking statements for the forward looking purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995, including all financial projections and financial guidance contained on the slide captioned “Oclaro Target Operating Model” and including statements concerning (i) the existence of multiple growth catalysts and the sources of potential growth, (ii) the ability to gain market share through vertical integration, innovation and/or the exploitation of tierone positioning with customers, (iii) the ability to execute on the Oclaro business plan and achieve profitable growth, (iv) ability to be a leader in high growth markets, (v) the ability to rapidly integrate acquisitions, (vi) the development, evolution, timing and success of product introductions and ability to maintain leadership position in certain product categories, (vii) the increase in addressable markets from components to chips to subsystems, (viii) technological efforts and innovation to lead the transmission space, (ix) the success of investments in next generation pump technology to extend leadership in terrestrial and submarine pump markets, (x) ability of vertical integration and Oasis controls to deliver market share gains in Europe and Asia, (xi) increase investment Asia in certain types of components and modules, (xii) timing and successful implementation of planned synergies from acquisitions, (xiii) future revenue growth, (xiv) the impact of the acquisition of Newport’s laser diode business, including on certain of Oclaro’s financial metrics, such as adjusted EBITDA and gross margin, (xv) the growth opportunities as a result of Oclaro’s ability be a viable supplier relying on underutilized captive wafer fabs, (xvi) p p prospects of Oclaro ( (on a consolidated basis), including opportunities to g ), g pp grow in adjacent markets and to j capitalize on growth in the telecommunications market and (xvii) statements containing the words “target,” "believe," "plan," "anticipate," "expect," "estimate," "will," "should," "ongoing,“ “opportunity,” “growth” and similar expressions. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including the impact of continued uncertainty in world financial markets and the resulting reduction in demand for our products, the future performance of Oclaro, Inc. following the closing of the merger with Avanex Corporation and the acquisition of Newport’s laser diode business assets, the inability to realize the expected benefits and synergies as a result of the of the merger with Avanex Corporation and the acquisition of Newport’s laser diode business assets, including as a result of the inability to manage successfully the geographically more diverse and substantially larger combined organization, increased costs related to down sizing and compliance with regulatory compliance in connection with such down sizing, sizing the lack of availability of credit or opportunity for equity based financing as well as the factors described financing, in Oclaro's most recent annual report on Form 10-K, most recent quarterly reports on Form 10-Q and other documents we periodically file with the SEC. 2 Safe Harbor Statement These factors include our history of operating losses, continued demand for optical components, the inability of y p g p p y Oclaro (on a consolidated basis) to achieve strategic objectives, expected synergies and other benefits, changes in inventory and product mix, inability to maintain gross margins, no further degradation in the exchange rate of the United States dollar relative to U.K., China and Switzerland currencies, as well as the Euro, and the continued ability of the Company to maintain requisite financial resources. The forward-looking statements included in this announcement represent Oclaro's view as of the date of this presentation. Oclaro anticipates that subsequent events and developments may cause Oclaro’s views and expectations to change. H t dd l t O l ’ i d t ti t h However, O l Oclaro specifically ifi ll disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this release. Those forward-looking statements should not be relied upon as representing Oclaro's views as of any date subsequent to the date of this presentation. 3 Oclaro Investment Thesis Multiple growth catalysts    Elevated to tier one player Market leader in high growth long haul and metro markets The power of vertical integration to gain mkt. share Win with Oclaro Leverage and scale driving margins to longterm model Opportunity to grow in adjacent markets with core technology Financially robust, debt free g g Strong management team Large diversified customer base 4 Objectives for Today’s Call  Integration smooth, allows focus on business  Newport-Spectra Physics transaction with Oclaro Objectives j Today  Reinforce commitment to Oclaro strategies and financial targets  Update progress on a Divisional basis, with tangible examples of benefits from Bookham/Avanex merger 5 Focused Beyond Integration Experiencing no customer disruption from Oclaro (BKHM/AVNX) integration Synergies on track S i t k  Product in-feeds to be 85% ramping in July 2009  Other mfg synergies roll in through FY 2010  Operating expenses (p p g p (primarily SG&A) majority of actions made, most y ) j y synergies to be realized in Sept quarter  Costs on track to match range of original estimates Divisions back to focus on business and execution of growth APS Division positioned for smooth integration of Newport high power laser diodes business.  APS minimally impacted by BKHM/AVNX integration  Feed into established integration team and processes 6 APS Strategic Alignment • Oclaro s Oclaro’s APS division swaps New Focus photonics business assets for similar sized Newport-Spectra Physics laser diode business – combines with Oclaro existing high power laser diode business to create a market leader – Potential to drive 40%+ laser diode gross margins – Potential to load existing Oclaro fabs by about 30% more • ea Supply g ee e : Oclaro guaranteed sole sou ce supplier of diodes 4 Year Supp y Agreement: Oc a o gua a eed so e source supp e o d odes to Newport Spectra Physics for a fixed period followed by majority allotment for the remainder of the term. Oclaro receives $3M cash expected to fund substantial portion of related g , g p transition and integration costs, including cap ex Currently estimated to be adjusted EBITDA (excluding transition costs) neutral to Oclaro in fiscal year ended June 2010, and $6M to $8M adjusted EBITDA accretive in FY 2011 • • More details available in press release issued earlier today 7 Why This Transaction? Oclaro APS Division Prior to Today s Transaction Today’s Existing High Power Laser Business Leverages Core Oclaro Design Expertise and Infrastructure into E ti dI f t t i t Photonics Market • High Power Laser Diodes for g Industrial, Printing and Defense applications • Low power / polarized VCSEL for consumer and datacom • Thin-film filters for biomedical New Focus Portfolio of Photonic Tools and Solutions Less Aligned with Oclaro • Breadth of portfolio more important than depth of technology • Industry leading New Focus™ brand and catalogue requiring larger investment in sales channel and marketing k ti • Targeting Research and Government customers, stable market but less growth potential Swap Enables Oclaro to be #1 or #2 in Select Markets 8 Improves APS Business Model • Leverages existing wafer fab capacity and process technologies of world class Oclaro optical facilities – potentially 30% improved Caswell/Zurich fab utilization, 40%+ g p y p gross margin potential for laser diode business • Concentrates APS Divisional focus where it can be a market leader • Expands laser diode product line and customer base • Creates viable supplier for other customers currently relying on underutilized captive wafer fabs  significant growth opportunity • Legacy of Spectra Physics provides valued expertise in systems and packaging • Laser diode business more efficiently leverages Oclaro’s S,G&A and g pp previously y manufacturing support infrastructure than did New Focus p – $6M to $8M adjusted EBITDA accretive in FY 2011 9 Creates APS leadership in select markets High Power Laser Diode Segments (Bars, Stacks, Single Emitters and Fiber Coupled Modules) Segment Industrials/ Material Processing Printing and Display Medical and Analytical TAM ($M) Diode-Pumped Solid State 230 Direct Diode Fiber Laser 60 70 Computer-to-Plate Dermatology and Ophthalmology Legend: Limited presence A Market Leader 10 Oclaro’s Tier One Positioning Telecom Components and Modules High Power Laser Diodes TIER 1 TIER 2 High Power Laser Diode Business Oclaro Vision to be Predominant Supplier of Optical Components 11 Transmission – Differentiated to Win • Ownership of core technology driving differentiation – – Innovation focused on increased data rates, density and tunability Lowest cost point through chip integration  migrating functionality to the photonic level • Vertical Integration at the product level and in manufacturing – – – Driving cost & technology disruption Increased addressable market from components to modules to subsystems Proven offshore manufacturing providing flexibility of supply, delivery and quality • Broad product set aimed at metro and long haul market – – Deployed 10G ports CAGR 2008-13  metro 29%; long haul 9% (volume)** Deployed 40G ports CAGR 2008-13  60% overall telecom (volume) ** Chips Components Modules and Subsystems ** forecasted per Dell’Oro 12 Transmission – Innovate to Lead Added Value Modules & Subsystems 10G & 40G Optical Components • For Line Card & Transponder integrators • Exploit tunable laser / modulator synergies 10G Transponders 40G TTA XFP-E Tunable T-SFF Transponders • Drive leadership in T-SFF footprint • Introduce EDC for impairment mitigation • Add new features, in-service upgrade 40G DRA OSAs XFP Tunable Tunable Transceivers • Target highest performance with XFP-E • Evolve to T-XFP via monolithic integration 40G Transponders iTLA Modulators T-CMZ • Maintain current leadership position • Increase internal content & reduce cost • Introduce EDC for PMD resilience DS-DBR III-V Devices TXs & RXs Photonic Integration Investment • Reduce product complexity & cost • Scale to higher speeds • Positioned for 100G 13 World Class Optical Components Transmission - Proof Points Increased penetration with vertically integrated products into Tier 1 customer base • Driving increased market share and addressable market in tunable transponders with the 10G TSFF – shipping to 3 Tier 1s and design activity with others • Releasing various high performance (300 pin transponder) tunable pluggable form factors including XFP-e and X2 variants XFP e 40G supplier of choice for components and modules • Oclaro’s differentiated next generation 40G DPQSK transponders  Customers: 1 shipping; 2 with orders in p g pp g progress; 6 others engaged g g  Cost effective enabler of 40G • 40G component supplier to other solutions  iTLA and DQPSK modulators now sold together into Tier 1 system houses and transponder manufacturers  Complements Tunable Dispersion Compensator from RoR Division  DQPSK modulators and Tunable transmitters (TTA) driving vertical integration Transmission vision • Drive chip technology and photonic innovation to lead the transmission space  “Innovate to differentiate”  Chip technology pervasive throughout the industry  Leadership in cost effective products and solutions • Combine photonic innovation with vertical integration to drive market penetration  Work closely with key customers to understand the changing market dynamics and their plans for added differentiation  Architectural Clairvoyance 14 ROR – Innovate to Lead R&OR Amplification (Components Gain Blocks, (Components, Blocks Controlled Amplifier Modules, Subsystems) • Investment in next generation pump technology to extend leadership in Terrestrial and Submarine p pump markets p • Leverage vertical integration and OasisTM controls architecture to deliver market share gains in Europe and Asia High Power Pump Lasers Dispersion (Fixed DC T Di i (Fi d DC, Tunable DC) bl • Drive tunable dispersion platform into integrated solutions and in-line applications Tunable Dispersion Compensators Wavelength Routing (WSS, Passives, Interleavers, Subsystems) • Complete development of low cost 1x2 100GHz and 1x2 50GHz WSS platforms • Establish partnerships to support high port count linecard opportunities (1x4 and above) • Increase investment in micro-optic component and modules outside of WSS d d l t id f ROADM Linecard 15 ROR Growth Opportunities – 40G • Oclaro ROR focused on winning in ramping 40G market – 60% annual CAGR in 40G wavelengths from 2008 to 2013 (Dell’Oro) – The Oclaro Tunable Dispersion Compensator being designed in at 10 top network equipment manufacturers • High volume shipments have already begun to one of the market leaders – Many 40G transponders require an EDFA pre-amplifier • Oclaro has the smallest high performance pump in the industry enabling the g p p p y g smallest, most thermally efficient amplifiers • Multiple EDFA design wins complete and ready to ramp Mini-DIL pump p p laser Ultra-compact PureGainTM 300 EDFA PowershaperTM 3300 TDC Hybrid Passives 16 RoR Growth Opportunities - ROADM • Oclaro focus on capturing growth in emerging edge ROADM market – 1x2 100GHz WSS now in pilot production • Design in activity underway at four major customers – Initial shipments 1x2 100GHZ single slot ROADM will occur this quarter • Significant performance and cost benefits due to internal infeed of pumps, passive components and WSS – Significant RFI activity for low port count WSS and linecards • Oclaro liquid crystal-based technology is well suited to these applications and is scalable to 50GH l bl t 50GHz Oclaro pump lasers Oclaro GFFs and passives Oclaro WSS High Performance Single Slot Single-Slot ROADM linecard OasisTM Software 17 Oclaro Target Operating Model Target – June Qtr 2010 (1) Gross Margin R&D SG&A Non-GAAP Operating Margin 30% 12% 12% 6% Long-Term g Target 35% 13% 12% 10% Guidance for June FY09 Q (2): revenues $67M to $75M; non-GAAP GM 17% to 23%; adjusted EBITDA $(5.0)M to $0M Adding Spectra Physics Laser Diode business helps align APS Division to Oclaro target business models: • about 30% improvement in UK/Zurich wafer fab utilization; • 40%+ gross margin potential from laser diodes • better R&D critical mass, plus SG&A alignment • Neutral impact expected on non-GAAP operating margin in first year, expect to contribute $6M to $8M in second year in progress towards long-term model (1) (2) Assumes revenues of $110 to $115M, similar to combined for quarter ended September calendar 2008 As per Bookham, Inc. April 27, 2009 earnings press release. Fiscal quarter ending June 27, 2009 (includes full quarter Bookham plus April 28 to June 27 Avanex) 18 Oclaro Investment Thesis Multiple growth catalysts    Elevated to tier one player Market leader in high growth long haul and metro markets The power of vertical integration to gain mkt. share Win with Oclaro Leverage and scale driving margins to longterm model Opportunity to grow in adjacent markets with core technology Financially robust, debt free g g Strong management team Large diversified customer base 19