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OPLINK REPORTS FINANCIAL RESULTS FOR FOURTH QUARTER AND FISCAL YEAR 2006

Company Improves Profitability and Posts Revenue Growth of 90% and 60% Over the Fourth Quarter and Fiscal Year 2005, Respectively

FREMONT, Calif.--(BUSINESS WIRE)--Aug. 3, 2006--Oplink Communications, Inc. (Nasdaq:OPLK - News), a leading photonic components, intelligent modules, and subsystems solution provider, today reported financial results for the fourth quarter and fiscal year 2006 ended July 2, 2006.

For the fourth quarter of fiscal year 2006, Oplink reported revenues of $16.9 million, an increase of 90% over the prior year and 16% sequentially. Net income for the fourth quarter of fiscal 2006 was $1.9 million, or $0.09 per diluted share, in accordance with accounting principles generally accepted in the United States (GAAP). This compares to GAAP net income of $868,000, or $0.04 per diluted share, reported in the fourth quarter of fiscal 2005 and GAAP net income of $1.0 million, or $0.05 per diluted share, reported in the third quarter of fiscal 2006.

Non-GAAP net income for the fourth quarter of fiscal 2006 was $2.7 million, or $0.12 per diluted share, which excludes $829,000 in stock compensation expense and a benefit of $72,000 for restructuring costs and other charges. This compares to non-GAAP net income of $1.2 million, or $0.06 per diluted share, reported in the fourth quarter of fiscal 2005, which excludes $322,000 for restructuring costs and other charges and $17,000 in stock compensation expense and non-GAAP net income of $2.1 million, or $0.09 per diluted share, reported in the third quarter of fiscal 2006, which excludes $595,000 in stock compensation expense and $460,000 for the write down of assets held for sale.

Oplink closed fiscal 2006 with $188.3 million in cash, cash equivalents and short and long-term investments.

"We are pleased to report strong revenue growth and improved profitability for the fourth quarter and for the first time in our corporate history a profitable fiscal year," commented Joe Liu, president and CEO of Oplink. "The strength in our business is a function of solid market conditions, where our customers like Huawei, Siemens, Tellabs, Marconi and others are winning new opportunities with global carriers. Along with revenue growth, we continued to improve gross margins as well as our operating model.

"We are encouraged by the level of activity in the market overall as we enter fiscal 2007. Overall visibility and bookings have improved over prior quarters and we are, therefore, optimistic about our ability to continue to post sequential double digit revenue growth and increase profitability in the coming quarter," concluded Liu.

For fiscal year 2006, Oplink reported revenues of $54.8 million, an increase of 60% over the prior year. GAAP net income for fiscal year 2006 was $1.9 million, or $0.09 per diluted share, which compares to a GAAP net loss of $2.6 million, or ($0.13) per diluted share, reported in fiscal year 2005.

Non-GAAP net income for fiscal year 2006 was $6.1 million, or $0.28 per diluted share, which excludes $2.7 million in stock compensation expense, $1.1 million of in-process research and development costs, $460,000 for the write down of assets held for sale and a benefit of $72,000 for restructuring costs and other charges. This compares to a non-GAAP net loss of $2.8 million, or ($0.13) per diluted share reported in fiscal year 2005, which exclude $322,000 for restructuring costs and other charges, $223,000 in stock compensation expense, $163,000 for the write down of assets held for sale and a benefit of $904,000 in merger fees.

Business Outlook

The Company is planning for revenue in the first quarter of fiscal 2007 to be approximately 10% to 12% higher than the fourth quarter of fiscal 2006. In addition, Oplink expects to generate earnings per diluted share in the range of $0.10 to $0.11 on a GAAP basis. On a non-GAAP basis, excluding stock compensation expense and non-recurring charges, if any, the Company expects earnings per diluted share in the range of $0.13 to $0.14.

Oplink presents each of the fiscal quarters and fiscal year end as if it ended on the last day of each calendar quarter or twelve-month period, respectively. Oplink operates and reports using interim fiscal quarters and twelve-month periods, which end on the Sunday closest to the end of each calendar quarter and twelve-month period. July 2 was the Sunday closest to the period ended June 30, 2006. Historical per share data appearing above has been appropriately adjusted to reflect the one-for-seven (1-for-7) reverse stock split effected on November 9, 2005.

Conference Call Information

The Company will host a corresponding conference call and live webcast at 2:00 p.m. Pacific Time on August 3, 2006. To access the conference call, dial (800) 218-8862 for the U.S. or Canada and (303) 262-2131 for international callers. The webcast will be available live on the Investor Relations section of the Company's corporate website at http://investor.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 August 3, 2006 until 11:59 p.m. Pacific Time on August 5, 2006, by dialing (800) 405-2236 ((303) 590-3000 for callers outside the U.S. and Canada) and entering pass code 11065224.

Non-GAAP Financial Measures

In this earnings release and during our earnings conference call and webcast as described above, we use or plan to 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. We believe 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. We compute non-GAAP net income (loss) by adjusting GAAP net income (loss) for merger fees, stock compensation expense, write down of assets held for sale, in-process research and development and restructuring costs and other charges.

About Oplink

Incorporated in 1995, Oplink is a leading provider of design, integration and optical manufacturing solutions (OMS) for optical networking components and subsystems. The Company offers advanced and cost-effective optical-electrical components and subsystem manufacturing through its facilities in Zhuhai and Shanghai, China. In addition, Oplink maintains a full complement of optical-centric front-end design, application, and customer service functions at its headquarters in Fremont, California. The Company'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 statements regarding Oplink's ability to continue to post sequential double digit revenue growth and increase its profitability through the first quarter of fiscal 2007, the guidance given for anticipated revenue and earnings per share for the first quarter of fiscal 2007 and the success of Oplink's customers in winning new opportunities with global carriers, that involve risks and uncertainties, which may cause results to differ substantially from expectations. These risks include, but are not limited to, the potential widespread downturn in the overall economy in the United States and other parts of the world and the telecommunications industry, including reductions in telecommunication spending activity, possible reductions in customer orders, challenges to successfully integrate and realize anticipated benefits of acquisitions of businesses or technologies, 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-demand conditions in the industry, the need to retain and motivate key personnel, 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)
======================================================================

                                                       June 30,
                                                 ---------------------
                                                    2006       2005
                                                 (Unaudited)    (1)
                                                 ----------- ---------

ASSETS

Current assets:

   Cash and cash equivalents                     $    7,856  $ 29,710
   Short-term investments                           117,395    95,696
   Accounts receivable, net                          13,369     7,127
   Inventories                                        7,953     6,999
   Prepaid expenses and other current assets          2,435     2,430
                                                 ----------- ---------

      Total current assets                          149,008   141,962

Long-term investments                                63,029    60,727
Property, plant and equipment, net                   23,443    25,297
Goodwill and intangible assets, net                   1,694         -
Other assets                                            752       260
                                                 ----------- ---------

      Total assets                               $  237,926  $228,246
                                                 ----------- ---------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                              $    4,516  $  3,658
   Accrued liabilities and other current
    liabilities                                       6,216     6,044
                                                 ----------- ---------

      Total current liabilities                      10,732     9,702

Non-current liabilities                                  83         -
                                                 ----------- ---------

      Total liabilities                              10,815     9,702
                                                 ----------- ---------

Stockholders' equity                                227,111   218,544
                                                 ----------- ---------

      Total liabilities and stockholders' equity $  237,926  $228,246
                                                 ----------- ---------

(1) The June 30, 2005 condensed consolidated balance sheet has been
    derived from audited financial statements at that date.


======================================================================
OPLINK COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

======================================================================

                             Three Months Ended         Years Ended
                         --------------------------- -----------------
                         June 30, March 31, June 30,      June 30,
                           2006     2006      2005     2006     2005
                         -------- --------- -------- -------- --------
                           (Un-     (Un-      (Un-     (Un-
                         audited) audited)  audited) audited)    (1)

Revenues                 $16,915  $ 14,597  $ 8,882  $54,846  $34,355
                         -------- --------- -------- -------- --------

Cost of revenues:

  Cost of revenues        11,676    10,223    5,557   39,121   24,709

  Stock compensation
   expense                    72        55        -      248       27
                         -------- --------- -------- -------- --------

    Total cost of
     revenues             11,748    10,278    5,557   39,369   24,736
                         -------- --------- -------- -------- --------

Gross profit               5,167     4,319    3,325   15,477    9,619
                         -------- --------- -------- -------- --------

Operating expenses:

  Research and
   development             1,767     1,547    1,544    6,140    7,173

  Sales and marketing      1,238     1,083      819    4,092    3,629

  General and
   administrative          1,512     1,451    1,336    6,300    6,160

  Restructuring costs
   and other charges         (72)        -      322      (72)     322

  Merger fees                  -         -        -        -     (904)

  In-process research
   and development             -         -        -    1,120        -

  Stock compensation
   expense                   757       540       17    2,416      196

  Amortization of
   intangible and other
   assets                     27        27       47       72      185
                         -------- --------- -------- -------- --------

    Total operating
     expenses              5,229     4,648    4,085   20,068   16,761
                         -------- --------- -------- -------- --------

Loss from operations         (62)     (329)    (760)  (4,591)  (7,142)

Interest and other
 income, net               2,024     1,843    1,547    7,060    4,591

Gain (loss) on
 sale/disposal of assets      14      (445)      81     (458)     (96)
                         -------- --------- -------- -------- --------

Income (loss) before
 provision for income
 taxes                     1,976     1,069      868    2,011   (2,647)

Provision for income
 taxes                        32        41        -       73        -
                         -------- --------- -------- -------- --------

Net income (loss)        $ 1,944  $  1,028  $   868  $ 1,938  $(2,647)
                         -------- --------- -------- -------- --------

Net income (loss) per
 share:

  Basic                  $  0.09  $   0.05  $  0.04  $  0.09  $ (0.13)
                         -------- --------- -------- -------- --------

  Diluted                $  0.09  $   0.05  $  0.04  $  0.09  $ (0.13)
                         -------- --------- -------- -------- --------

Shares used in per share
 calculation:

  Basic                   21,466    21,355   21,229   21,353   21,152
                         -------- --------- -------- -------- --------

  Diluted                 22,508    22,234   21,869   22,184   21,152
                         -------- --------- -------- -------- --------


RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)

                             Three Months Ended         Years Ended
                         --------------------------- -----------------
                         June 30, March 31, June 30,      June 30,
                           2006     2006      2005     2006     2005
                         -------- --------- -------- -------- --------

Net income (loss), GAAP  $ 1,944  $  1,028  $   868  $ 1,938  $(2,647)

Adjustments to measure
 non-GAAP:

  Restructuring costs
   and other charges         (72)        -      322      (72)     322

  Merger fees                  -         -        -        -     (904)

  Stock compensation
   expense                   829       595       17    2,664      223

  In-process research
   and development             -         -        -    1,120        -

  Loss on sale/disposal
   of assets                   -       460        -      460      163

                         -------- --------- -------- -------- --------

Non-GAAP net income
 (loss)                  $ 2,701  $  2,083  $ 1,207  $ 6,110  $(2,843)
                         -------- --------- -------- -------- --------

Net income (loss) per
 share, non-GAAP:

  Basic                  $  0.13  $   0.10  $  0.06  $  0.29  $ (0.13)
                         -------- --------- -------- -------- --------

  Diluted                $  0.12  $   0.09  $  0.06  $  0.28  $ (0.13)
                         -------- --------- -------- -------- --------

Shares used in per share
 calculation:

  Basic                   21,466    21,355   21,229   21,353   21,152
                         -------- --------- -------- -------- --------

  Diluted                 22,508    22,234   21,869   22,184   21,152
                         -------- --------- -------- -------- --------

(1) The condensed consolidated statement of operations for the year
    ended June 30, 2005 has been derived from audited financial
    statements at that date.


======================================================================
OPLINK COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
======================================================================

                                                      Years Ended
                                                        June 30,
                                                    2006       2005
----------------------------------------------------------------------
                                                 (Unaudited)    (1)
Cash flows from operating activities:
  Net income (loss)                              $    1,938  $ (2,647)
  Adjustments to reconcile net income (loss) to
   net cash provided by operating activities:
    Depreciation and amortization                     6,386     7,882
    Stock compensation expense                        2,664       223
    Acquired in-process research and development      1,120         -
    Restructuring costs and other charges               (72)      322
    Other                                               689     1,043
    Change in assets and liabilities                 (6,942)   (4,452)
                                                 ----------- ---------
      Net cash provided by operating activities       5,783     2,371
                                                 ----------- ---------

Cash flows from investing activities:
  Net purchases of investments                      (23,049)  (23,622)
  Net purchases of property and equipment            (1,532)   (6,202)
  Acquisition of businesses, net of cash and
   cash acquired                                     (5,871)     (717)
                                                 ----------- ---------
      Net cash used in investing activities         (30,452)  (30,541)
                                                 ----------- ---------

Cash flows from financing activities:
  Proceeds from issuance of common stock              2,763     1,259
  Repurchase of common stock                            (11)        -
  Payments received on notes receivable from
   stockholders                                           -        12
  Repayment of capital lease obligations                  -       (81)
                                                 ----------- ---------
      Net cash provided by financing activities       2,752     1,190
                                                 ----------- ---------

Effect of exchange rate changes on cash                  63         -

Net decrease in cash and cash equivalents           (21,854)  (26,980)

Cash and cash equivalents, beginning of year         29,710    56,690
                                                 ----------- ---------

Cash and cash equivalents, end of year           $    7,856  $ 29,710
                                                 ----------- ---------

(1) The condensed consolidated statement of cash flows for the year
    ended June 30, 2005 has been derived from audited financial
    statements at that date.



Contact:
The Blueshirt Group for Oplink
Erica Abrams, 415-217-7722 (Investor Relations)
erica@blueshirtgroup.com

--------------------------------------------------------------------------------
Source: Oplink Communications, Inc.

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