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OPLINK REPORTS FINANCIAL RESULTS FOR THIRD QUARTER OF FISCAL 2007

Revenues Increase 20% Sequentially and 89% Over the Prior Year; Net Income Continues to Improve

FREMONT, Calif., Apr 26, 2007 (BUSINESS WIRE) -- Oplink Communications, Inc. (Nasdaq:OPLK), a leading photonic components, intelligent modules, and subsystems solution provider, today reported financial results for the third quarter of fiscal 2007, ended April 1, 2007.

For the third quarter of fiscal 2007, Oplink reported revenues of $27.6 million, an increase of 20% over the prior quarter and 89% over the prior year. Net income for the third quarter increased to $4.3 million, or $0.19 per diluted share, calculated in accordance with accounting principles generally accepted in the United States (GAAP). This compares to GAAP net income of $1.0 million, or $0.05 per diluted share, reported in the prior year and GAAP net income of $3.1 million, or $0.14 per diluted share, reported in the prior quarter.

Non-GAAP net income for the third quarter of fiscal 2007 was $5.3 million, or $0.23 per diluted share, which excludes $1.0 million in stock compensation expense. This compares to non-GAAP net income of $2.1 million, or $0.09 per diluted share, which excludes $460,000 for loss on disposal of assets and $595,000 in stock compensation expense, reported for the prior year. This also compares to non-GAAP net income of $4.5 million, or $0.20 per diluted share reported in the prior quarter, which excludes $1.1 million in stock compensation expense and a one-time charge of $268,000 for compensation related to the modification of a stock option exercise price.

"We are again pleased with our revenue and net income performance in the quarter," commented Joe Liu, president and CEO of Oplink. "We had good activity with Tellabs, Huawei, and Ericsson in the quarter and increased our revenue contribution from Nortel. We continue to experience demand for our ROADM solutions as well as strong interest in metro, core and edge products for global projects. We have also focused on expanding our revenue sources to broader systems level solutions."

As previously announced, Oplink has entered into an agreement with The Furukawa Electric Co., Ltd. ("Furukawa") to acquire Furukawa's 58% majority interest in Optical Communication Products, Inc. ("OCP") in exchange for $84,150,000 in cash and 857,258 shares of Oplink common stock. The closing of the transaction is subject to customary closing conditions, including antitrust review. The closing is expected to occur during the quarter ending June 30, 2007, the fourth quarter of the Company's fiscal year.

"With our anticipated acquisition of a majority interest in OCP, we expect to broaden our portfolio of offerings for customers and expand our addressable market opportunity," commented Liu. "We believe that OCP is one of the leaders in supplying active components and subsystems for metro applications and, combined with Oplink's leadership in passive and subsystems, we expect to increase our market share and competitive position in the industry.

"As we look ahead, we are committed to further enhancing our product portfolio, quality, efficiency and competitive position in order to better serve our customers and shareholders. Although we see only modest spending increases in the coming quarter, we remain optimistic about our business outlook and are poised to benefit from next wave of major carrier spending," concluded Liu.

Business Outlook

The Company anticipates revenue for the fourth quarter to increase approximately 10% sequentially. In addition, Oplink expects to generate earnings per diluted share of approximately $0.20 to $0.21 on a GAAP basis in the fourth quarter. Excluding stock compensation expense and non-recurring charges, if any, the Company expects non-GAAP earnings per diluted share of approximately $0.24 to $0.25 in the fourth quarter.

The closing of the Company's acquisition of a 58% interest in OCP is expected to occur during the Company's fourth quarter. The guidance provided above excludes any effect that may result from the Company being required to consolidate OCP's results for a portion of the quarter with the Company's results.

Conference Call Information

The Company will host a conference call and live webcast at 2:00 p.m. Pacific Time on April 26, 2007. To access the conference call, dial (800) 366-3908 for the US or Canada and (303) 262-2066 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 4:00 p.m. Pacific Time on April 26, 2007 until 11:59 p.m. Pacific Time on May 1, 2007, by dialing (800) 405-2236 ((303) 590-3000 for callers outside the U.S. and Canada) and entering pass code 11088206.

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.

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 the guidance given for anticipated revenue and earnings per share for the fourth quarter of fiscal 2007, statements regarding the expected timing of the closing of acquisition of the majority interest in OCP, the statement that the OCP acquisition is expected to broaden our portfolio of offerings for customers and expand our addressable market opportunity, and that as a result we expect to increase our market share and competitive position in the industry, and statements regarding our expectations of improving our competitive position and continuing to gain momentum as telecom spending increases, 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, 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 risk that the purchase of shares from Furukawa will not be consummated, the risk that even if the purchase is consummated, Oplink will not be able to realize the expected benefits of the transaction because it does not own all of the shares of OCP, and will not be able to integrate the businesses of Oplink and OCP or realize any synergies, the risk that the transaction will not be well received by customers, employee, investors or other constituents, 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,
                                               ----------- -----------
                                                  2007        2006
                                               (Unaudited)     (1)
                                               ----------- -----------
ASSETS
Current assets:
 Cash and cash equivalents                     $   30,114  $    7,856
 Short-term investments                           131,472     117,395
 Accounts receivable, net                          21,440      13,369
 Inventories, net                                  11,938       7,953
 Prepaid expenses and other current assets          5,013       2,435
                                               ----------- -----------

   Total current assets                           199,977     149,008

Long-term investments                              40,000      63,029
Property, plant and equipment, net                 22,319      23,443
Goodwill and intangible assets, net                 1,417       1,694
Other assets                                           95         781
                                               ----------- -----------

   Total assets                                $  263,808  $  237,955
                                               ----------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                              $    8,274  $    4,516
 Accrued liabilities and other current
  liabilities                                       6,122       6,216
                                               ----------- -----------

   Total current liabilities                       14,396      10,732

Non-current liabilities                                71          83
                                               ----------- -----------

   Total liabilities                               14,467      10,815
                                               ----------- -----------

Stockholders' equity                              249,341     227,140
                                               ----------- -----------

   Total liabilities and stockholders' equity  $  263,808  $  237,955
                                               ----------- -----------


(1) The June 30, 2006 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          Nine Months Ended
               -------------------------------- ----------------------
               March 31,   Dec. 31,  March 31,  March 31,   March 31,
                 2007       2006       2006       2007        2006
               -------------------------------- ----------------------
               (Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)

Revenues       $  27,620  $  22,953  $  14,597  $  70,287  $   37,931
               ---------- ---------- ---------- ---------- -----------

Cost of
 revenues:

 Cost of
  revenues        20,515     16,497     10,223     50,503      27,445

 Stock
  compensation
  expense             69         75         55        209         176
               ---------- ---------- ---------- ---------- -----------

   Total cost
    of revenues   20,584     16,572     10,278     50,712      27,621
               ---------- ---------- ---------- ---------- -----------

Gross profit       7,036      6,381      4,319     19,575      10,310
               ---------- ---------- ---------- ---------- -----------

Operating
 expenses:

 Research and
  development      1,364      1,429      1,547      4,364       4,373

 Sales and
  marketing        1,461      1,280      1,083      4,123       2,854

 General and
  admin-
 istrative         1,464      1,772      1,451      4,735       4,788

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

 Stock
  compensation
  expense            926      1,031        540      2,966       1,659

 Amortization
  of intangible
  and other
  assets              35         35         27        105          45
               ---------- ---------- ---------- ---------- -----------

   Total
    operating
    expenses       5,250      5,547      4,648     16,293      14,839
               ---------- ---------- ---------- ---------- -----------

Income (loss)
 from
 operations        1,786        834       (329)     3,282      (4,529)

Interest and
 other income,
 net               2,503      2,330      1,398      7,008       4,564
               ---------- ---------- ---------- ---------- -----------

Income before
 provision for
 income taxes      4,289      3,164      1,069     10,290          35

Provision for
 income taxes         10         33         41        125          41
               ---------- ---------- ---------- ---------- -----------

Net income
 (loss)        $   4,279  $   3,131  $   1,028  $  10,165  $       (6)
               ---------- ---------- ---------- ---------- -----------

Net income
 (loss) per
 share:

 Basic         $    0.19  $    0.14  $    0.05  $    0.46  $    (0.00)
               ---------- ---------- ---------- ---------- -----------

 Diluted       $    0.19  $    0.14  $    0.05  $    0.44  $    (0.00)
               ---------- ---------- ---------- ---------- -----------

Shares used in
 per share
 calculation:

 Basic            22,202     22,000     21,355     21,920      21,316
               ---------- ---------- ---------- ---------- -----------

 Diluted          23,011     23,022     22,234     22,886      21,316
               ---------- ---------- ---------- ---------- -----------


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

                      Three Months Ended          Nine Months Ended
               -------------------------------- ----------------------
               March 31,   Dec. 31,  March 31,  March 31,   March 31,
                  2007      2006       2006       2007        2006
               -------------------------------- ----------------------

Net income
 (loss), GAAP  $   4,279  $   3,131  $   1,028  $  10,165  $       (6)

Adjustments to
 measure non-
 GAAP:

 Compensation
  related to
  stock option
  modification         -        268          -        268           -

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

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

 Stock
  compensation
  expense            995      1,106        595      3,175       1,835

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

Non-GAAP net
 income        $   5,274  $   4,505  $   2,083  $  13,608  $    3,409
               ---------- ---------- ---------- ---------- -----------

Net income per
 share, non-
 GAAP:

 Basic         $    0.24  $    0.20  $    0.10  $    0.62  $     0.16
               ---------- ---------- ---------- ---------- -----------

 Diluted       $    0.23  $    0.20  $    0.09  $    0.59  $     0.15
               ---------- ---------- ---------- ---------- -----------

Shares used in
 per share
 calculation:

 Basic            22,202     22,000     21,355     21,920      21,316
               ---------- ---------- ---------- ---------- -----------

 Diluted          23,011     23,022     22,234     22,886      22,008
               ---------- ---------- ---------- ---------- -----------


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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
======================================================================
                                                   Nine Months Ended
                                                 ---------------------
                                                       March 31,
                                                   2007       2006
                                                 ---------------------
                                                      (Unaudited)
Cash flows from operating activities:
  Net income (loss)                              $  10,165  $      (6)
  Adjustments to reconcile net income (loss) to
   net cash provided by operating activities:
    Depreciation and amortization                    3,859      5,108
    Stock compensation expense                       3,175      1,835
    In-process research and development                  -      1,120
    Loss on sale/disposal of assets                      8        472
    Other                                               85        156
    Change in assets and liabilities                (9,270)    (7,146)
                                                 ---------- ----------
      Net cash provided by operating activities      8,022      1,539
                                                 ---------- ----------

Cash flows from investing activities:
  Net maturities of investments                      8,816     11,765
  Net purchases of property and equipment           (1,626)    (1,212)
  Acquisition of business, net of cash acquired       (500)    (4,365)
                                                 ---------- ----------
      Net cash provided by investing activities      6,690      6,188
                                                 ---------- ----------

Cash flows from financing activities:
  Proceeds from issuance of common stock             7,516      1,253
  Repurchase of common stock                             -        (11)
                                                 ---------- ----------
      Net cash provided by financing activities      7,516      1,242
                                                 ---------- ----------

Effect of exchange rate changes on cash and cash
 equivalents                                            30         58

Net increase in cash and cash equivalents           22,258      9,027

Cash and cash equivalents, beginning of period       7,856     29,710
                                                 ---------- ----------

Cash and cash equivalents, end of period         $  30,114  $  38,737
                                                 ---------- ----------

SOURCE: Oplink Communications, Inc.

The Blueshirt Group for Oplink
Erica Abrams, 415-217-5864 (Investor Relations)
erica@blueshirtgroup.com

Copyright Business Wire 2007

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