Oplink Communications, Inc. (Nasdaq:OPLK), a leading provider of design, integration and optical manufacturing solutions (OMS) for optical networking components, modules and subsystems, today reported its financial results for its fiscal 2010 third quarter, ended March 31, 2010.

Revenues for the quarter were $33.6 million, as compared to $32.7 million reported for the second quarter of fiscal 2010. Net income for the third quarter of fiscal 2010 was $2.6 million, or $0.12 per diluted share, compared to $3.1 million, or $0.14 per diluted share, reported for the second quarter of fiscal 2010.

Non-GAAP net income for the third quarter of fiscal 2010 was $4.8 million, or $0.22 per diluted share, compared to non-GAAP net income of $5.7 million, or $0.26 per diluted share, reported for the second quarter of fiscal 2010. Third quarter of fiscal 2010 non-GAAP results exclude $1.3 million in stock compensation and $958,000 in amortization of intangible assets. Second quarter of fiscal 2010 non-GAAP results exclude $1.6 million in stock compensation and $945,000 in amortization of intangibles.

Oplink closed the quarter with cash, cash equivalents and investments of $184.8 million.

“Despite a shorter quarter, we reported solid revenue and earnings for the period,” commented Joe Liu, CEO of Oplink. “We continue to invest in expanding capacity and improving lead times to meet a stronger demand environment, but production ramp-up remains challenging due to labor and materials shortages. We expect improved capabilities in the coming quarters.”

Business Outlook for the Quarter Ending June 30, 2010

The Company expects to report revenues in the range of $35 million and $38 million and GAAP net income per diluted share in the range of $0.05 to $0.11. On a non-GAAP basis, excluding stock compensation, amortization of intangible assets and other non-cash or non-recurring charges, Oplink expects earnings per diluted share for the period to be in the range of $0.16 to $0.22.

Conference Call Information

The Company will host a conference call and live webcast at 2:00 p.m. Pacific Time today, April 22, 2010. To access the conference call, dial 877-941-2068 or 480-629-9712 (outside the U.S. and Canada). A live webcast will be available on the Investors section of Oplink’s corporate website at www.oplink.com and via replay beginning approximately two hours after the completion of the call until the Company’s announcement of its financial results for the next quarter. An audio replay of the call will also be available to investors beginning at approximately 5:00 p.m. Pacific Time on April 22, 2010 until 11:59 p.m. Pacific Time on April 29, 2010, by dialing 800-406-7325 or 303-590-3030 (outside the U.S. and Canada) and entering pass code 4285174#.

Non-GAAP Financial Measures

In this earnings release and during the earnings conference call and webcast as described above, Oplink will discuss certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A reconciliation between non-GAAP and GAAP measures can be found in the accompanying tables. Oplink believes that, while these non-GAAP measures are not a substitute for GAAP results, they provide a basis for evaluating the Company’s cash requirements for ongoing operating activities. These non-GAAP measures have been reconciled to the nearest GAAP measure as required under Securities and Exchange Commission rules.

About Oplink

Incorporated in 1995, Oplink is a leading provider of design, integration and optical manufacturing solutions (OMS) for optical networking components, modules and subsystems. Oplink offers advanced and cost-effective optical-electrical components and subsystem manufacturing through its facilities in Zhuhai and Shanghai, China. In addition, Oplink maintains optical-centric front-end design, application, and customer service functions at its offices in Fremont and Woodland Hills, California and has research facilities in Zhuhai and Wuhan, China and Hsinchu Science-Based Industrial Park in Taiwan. Oplink's customers include telecommunications, data communications and cable TV equipment manufacturers around the globe. Oplink is committed to providing fully customized, photonic foundry services incorporating its subsystems manufacturing capabilities. To learn more about Oplink, visit its web site at: http://www.oplink.com/.

Cautionary Statement

This news release contains forward-looking statements, including without limitation the guidance given for anticipated results for the fourth quarter of fiscal year 2010 that involve risks and uncertainties that may cause results to differ substantially from expectations. These risks include, but are not limited to, the potential for a worsening of the downturn in the telecommunications industry or the overall economy in the United States and other parts of the world, possible reductions in customer orders, Oplink’s reliance upon third parties to supply components and materials for its products, intense competition in Oplink’s target markets and potential pricing pressure that may arise from changing supply or demand conditions in the industry, and other risks detailed from time to time in Oplink’s periodic reports filed with the Securities and Exchange Commission, including the Company’s latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

The foregoing information represents Oplink’s outlook only as of the date of this press release, and Oplink undertakes no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

                   
OPLINK COMMUNICATIONS, INC.  
         
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(In thousands)      
 
March 31, June 30,
2010 2009
(Unaudited)  

(1)

 
ASSETS
Current assets:
Cash and cash equivalents $ 44,057 $ 49,702
Short-term investments 125,704 115,774
Accounts receivable, net 28,866 29,023
Inventories 15,723 10,031
Prepaid expenses and other current assets   6,547   2,648  
 

Total current assets
220,897 207,178
 
Long-term investments 15,000 3,180
Property, plant and equipment, net 31,821 30,318
Goodwill and intangible assets, net 7,201 8,848
Other assets   605   423  
 
Total assets $ 275,524 $ 249,947  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,806 $ 7,580
Accrued liabilities and other current liabilities 14,220 10,688
Accrued transitional costs for contract manufacturing   160   160  
 
Total current liabilities 26,186 18,428
 
Non-current liabilities   4,971   3,492  
 
Total liabilities   31,157   21,920  
 
Stockholders' equity   244,367   228,027  
 
Total liabilities and stockholders’ equity $ 275,524 $ 249,947  
 
 

(1) The June 30, 2009 condensed consolidated balance sheet has been derived from audited consolidated financial statements at that date.
                                 
OPLINK COMMUNICATIONS, INC.
               
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
March 31, December 31, March 31, March 31, March 31,
  2010       2009       2009     2010       2009  
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
Revenues $ 33,623   $ 32,743   $ 30,805   $ 99,931   $ 111,368  
 
Cost of revenues:
 
Cost of revenues 22,562 21,643 22,018 67,839 87,602
 
Stock compensation expense   81     88     108     268     352  
 
Total cost of revenues   22,643     21,731     22,126     68,107     87,954  
 
Gross profit   10,980     11,012     8,679     31,824     23,414  
 
Operating expenses:
 
Research and development 2,574 2,268 2,477 7,067 8,544
 
Sales and marketing 2,077 1,923 1,817 6,086 6,019
 
General and administrative 1,924 1,810 2,331 5,455 7,699
 
Stock compensation expense 1,221 1,520 1,142 4,288 3,833
 
Impairment charges and other costs - - - - 10,829
 
Amortization of intangible and other assets   410     403     412     1,217     1,236  
 
Total operating expenses   8,206     7,924     8,179     24,113     38,160  
 
Income (loss) from operations 2,774 3,088 500 7,711 (14,746 )
 
Interest and other income, net 292 193 297 759 2,637
 
Gain (loss) on sale/disposal of assets   4     214     (182 )   342     (793 )
 
Income (loss) before provision for income taxes 3,070 3,495 615 8,812 (12,902 )
 
Provision for income taxes   (516 )   (358 )   (729 )   (1,312 )   (1,170 )
 
Net income (loss) $ 2,554   $ 3,137   $ (114 ) $ 7,500   $ (14,072 )
 
Net income (loss) per share:
 
Basic $ 0.12   $ 0.15   $ (0.01 ) $ 0.36   $ (0.68 )
 
Diluted $ 0.12   $ 0.14   $ (0.01 ) $ 0.35   $ (0.68 )
 
Shares used in per share calculation:
 
Basic   20,907     20,797     20,468     20,754     20,637  
 
Diluted   21,792     21,694     20,468     21,563     20,637  
 
 
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except per share amounts)
Three Months Ended Nine Months Ended
March 31, December 31, March 31, March 31, March 31,
Reconciliation of GAAP net income (loss)   2010       2009       2009     2010       2009  
to non-GAAP net income:
 
Net income (loss), GAAP $ 2,554   $ 3,137   $ (114 ) $ 7,500   $ (14,072 )
 
Adjustments to measure non-GAAP:
 
Related to cost of revenues:
 
Provision for excess and obsolete inventory - - - - 4,065
 
Stock compensation expense 81 88 108 268 352
 
Amortization of intangible and other assets   548     542     538     1,632     1,622  
 
Total related to cost of revenues   629     630     646     1,900     6,039  
 
Related to operating expenses:
 
Stock compensation expense 1,221 1,520 1,142 4,288 3,833
 
Impairment charges and other costs - - - - 10,829
 
Amortization of intangible and other assets   410     403     412     1,217     1,236  
 
Total related to operating expenses   1,631     1,923     1,554     5,505     15,898  
 
Total related to net income (loss)   2,260     2,553     2,200     7,405     21,937  
 
 
Non-GAAP net income $ 4,814   $ 5,690   $ 2,086   $ 14,905   $ 7,865  
 
Net income per share, non-GAAP:
 
Basic $ 0.23   $ 0.27   $ 0.10   $ 0.72   $ 0.38  
 
Diluted $ 0.22   $ 0.26   $ 0.10   $ 0.69   $ 0.37  
 
Shares used in per share calculation:
 
Basic   20,907     20,797     20,468     20,754     20,637  
 
Diluted   21,792     21,694     20,761     21,563     21,026  
 
Reconciliation of GAAP gross profit
to non-GAAP gross profit:
 
GAAP gross profit $ 10,980 $ 11,012 $ 8,679 $ 31,824 $ 23,414
 

Provision for excess and obsolete inventory included in cost of revenues
- - - - 4,065
 

Stock compensation expense included in cost of revenues
81 88 108 268 352
 

Amortization of intangible and other assets included in cost of revenues
  548     542     538     1,632     1,622  
 
Non-GAAP gross profit $ 11,609   $ 11,642   $ 9,325   $ 33,724   $ 29,453  
 
GAAP gross margin rate 32.7 % 33.6 % 28.2 % 31.8 % 21.0 %
 
Non-GAAP gross margin rate 34.5 % 35.6 % 30.3 % 33.7 % 26.4 %
                     
OPLINK COMMUNICATIONS, INC.    
           
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(In thousands)        
Nine Months Ended
March 31,
  2010       2009  
(Unaudited)
Cash flows from operating activities:
Net income (loss) $ 7,500 $ (14,072 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 4,918 5,469
Inventory adjustments - 4,065
Impairment charge and other costs - 10,829
Amortization of intangible and other assets 2,849 2,858
Stock compensation expense 4,556 4,185
(Gain) loss on sale/disposal of assets (342 ) 793
Other 277 (829 )
Change in assets and liabilities   (2,804 )   7,481  
Net cash provided by operating activities   16,954     20,779  
 
Cash flows from investing activities:
Net purchases of investments (20,718 ) (4,165 )
Net purchases of property and equipment (2,036 ) (2,952 )
Acquisition of business, net of cash acquired   (3,698 )   -  
Net cash used in investing activities   (26,452 )   (7,117 )
 
Cash flows from financing activities:
Proceeds from issuance of common stock 3,827 846
Repurchase of common stock   -     (3,356 )
Net cash provided by (used in) financing activities   3,827     (2,510 )
 
Effect of exchange rate changes on cash and cash equivalents 26 (594 )
 
Net (decrease) increase in cash and cash equivalents (5,645 ) 10,558
 
Cash and cash equivalents, beginning of period   49,702     72,001  
 
Cash and cash equivalents, end of period $ 44,057   $ 82,559  

Copyright Business Wire 2010

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