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OPLINK REPORTS FOURTH QUARTER AND FISCAL YEAR 2007 FINANCIAL RESULTS

Company Posts Solid Growth; Consolidates Majority Interest in OCP

FREMONT, Calif., Aug 20, 2007 (BUSINESS WIRE) --

Oplink Communications, Inc. (Nasdaq:OPLK), a leading photonic components, intelligent modules, and subsystems solution provider, today reported financial results for its fourth quarter and fiscal year ended July 1, 2007.

During the fourth quarter, Oplink completed the purchase of an approximately 58% interest in Optical Communication Products, Inc. ("OCP") from The Furukawa Electric Co., Ltd. As a result, Oplink's financial results for the quarter and fiscal year include the results of OCP, net of the 42% minority interest, for the period from the closing of the transaction on June 5, 2007 through the end of the quarter.

Oplink has entered into a merger agreement with OCP to acquire the remaining 42% of OCP's outstanding common stock. The closing of the merger is subject to the approval by OCP shareholders holding at least two-thirds of the outstanding shares of OCP common stock not held by Oplink. OCP's shareholder meeting is expected to be held by early October.

Fourth Quarter 2007 Results

Consolidated revenues for the fourth quarter were $37.2 million, $30.6 million of which are attributable to Oplink's business and $6.6 million of which are due to the consolidation of OCP's results with Oplink's results for a portion of the quarter. Total revenue of $37.2 million represents an increase of 35% over the third quarter of fiscal 2007 and an increase of 120% over the fourth quarter of fiscal 2006. The $30.6 million in revenue attributable to Oplink's business represents an increase of 11% over the third quarter of fiscal 2007 and an increase of 81% over the fourth quarter of fiscal 2006.

Consolidated net income for the fourth quarter, calculated in accordance with accounting principles generally accepted in the United States ("GAAP"), was $3.0 million, or $0.13 per diluted share. Consolidated non-GAAP net income, which excludes approximately $1.5 million in stock-based compensation expense, $1.5 million in expenses incurred by OCP relating to Oplink's acquisition of OCP and $216,000 in transitional costs for contract manufacturing, net of an $807,000 adjustment to reflect the 42% minority interest related to OCP's portion of these items, was $5.4 million, or $0.23 per diluted share.

Fiscal Year 2007 Results

Consolidated revenues for fiscal 2007 were $107.5 million, $100.9 million of which are attributable to Oplink's business. The total revenue amount of $107.5 million represents an increase of 96% over Oplink's revenue for fiscal 2006. The $100.9 million in revenue attributable to Oplink's business represents an increase of 84% over Oplink's fiscal 2006 revenue.

Consolidated GAAP net income for fiscal 2007 was $13.2 million, or $0.57 per diluted share. Consolidated non-GAAP net income for fiscal 2007, which excludes approximately $4.7 million in stock-based compensation expense, $1.5 million in expenses incurred by OCP relating to Oplink's acquisition of OCP, $216,000 in transitional costs for contract manufacturing and $268,000 in compensation related to stock option modifications, net of the $807,000 minority interest adjustment, was $19.0 million, or $0.83 per diluted share.

"We closed the acquisition of our majority interest in OCP, taking the first steps to substantially broaden our portfolio of offerings," commented Joe Liu, president and CEO of Oplink. "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.

"We are looking ahead with a great deal of optimism. We believe that our customers are interested in our broadening product portfolio and that we are competitively positioned with our product offerings. We intend to continue to improve the efficiency of our operations with the acquisition of the majority interest in OCP and thus realize substantial cost savings over time. There are many opportunities ahead of us as a combined company and we expect to further enhance our product portfolio, cost efficiency, quality and competitive market position in order to better serve our customers and shareholders," concluded Liu.

Business Outlook

For the quarter ending September 30, 2007, the Company expects to report consolidated revenues of between $46.0 and $50.0 million and consolidated net income per diluted share of approximately $0.00 to $0.01 on a GAAP basis. On a non-GAAP basis, excluding stock-based compensation expense, merger fees incurred by OCP related to Oplink's acquisition of OCP, other non-recurring charges, if any, and minority interest adjustments for these items, the Company expects consolidated earnings per diluted share for the quarter ending September 30, 2007 of approximately $0.10 to $0.12. The foregoing expected results include the consolidation of Oplink's ownership interest in OCP of approximately 58%. As indicated above, Oplink expects that OCP will hold a shareholders meeting early in the quarter ending December 30, 2007 to vote on Oplink's acquisition of the remaining 42% of OCP's outstanding common stock. If the acquisition is approved by OCP's shareholders, Oplink would own 100% of OCP for most of the quarter ending December 30, 2007 and, as a result, would expect to report a consolidated net loss for the quarter ending December 30, 2007.

Conference Call Information

The Company will host a conference call and live webcast at 2:00 p.m. Pacific Time on August 20, 2007. To access the conference call, dial 800.218.9073 or 303.262.2131 (outside the U.S. and Canada). 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 August 20, 2007 until 11:59 p.m. Pacific Time on August 24, 2007, by dialing 800.405.2236 or 303.590.3000 (outside the U.S. and Canada) and entering pass code 11093318.

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 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. Oplink also owns approximately 58% of Optical Communication Products, Inc., a company located in Woodland Hills, California, that designs and manufactures fiber-optic communication components and subsystems. To learn more about Oplink, visit its web site at 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 first quarter of fiscal 2008, the statement that the OCP acquisition is expected to broaden the Company's portfolio of offerings for customers and expand the addressable market opportunity, and that as a result, Oplink expects to increase its market share and competitive position in the industry, that involve risks and uncertainties, which may cause results to differ substantially from expectations. These risks include, but are not limited to, the risk that Oplink will not be successful in acquiring the remaining 42% interest in OCP that it does not already own and therefore will be unable to realize the expected benefits of the transaction because it will not be able to integrate the businesses of Oplink and OCP or realize any synergies or cost reductions, the risk that the OCP acquisition will not be well received by customers, employee, investors or other constituents, the potential for a 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)
======================================================================

                                                      June 30,
                                               -----------------------
                                                  2007        2006
                                               (Unaudited)     (1)
                                               ----------- -----------
ASSETS
Current assets:
   Cash and cash equivalents                   $   111,600 $     7,856
   Short-term investments                           73,300     117,395
   Accounts receivable, net                         34,473      13,369
   Inventories                                      35,427       7,953
   Net assets held for sale                         22,200           -
   Prepaid expenses and other current assets         6,412       2,435
                                               ----------- -----------

     Total current assets                          283,412     149,008

Long-term investments                               42,978      63,029
Property, plant and equipment, net                  28,907      23,443
Goodwill and intangible assets, net                  7,421       1,694
Other assets                                         5,349         781
                                               ----------- -----------

     Total assets                              $   368,067 $   237,955
                                               ----------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                            $    14,604 $     4,516
   Accrued liabilities and other current
    liabilities                                     13,498       6,216
   Accrued transitional costs for contract
    manufacturing                                    1,234           -
                                               ----------- -----------

     Total current liabilities                      29,336      10,732

Non-current liabilities                                207          83
                                               ----------- -----------

     Total liabilities                              29,543      10,815
                                               ----------- -----------

Minority interest                                   68,749           -

Stockholders' equity                               269,775     227,140
                                               ----------- -----------

     Total liabilities and stockholders' equity$   368,067 $   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              Years Ended
               ----------------------------------- -------------------
                June 30,    March 31,   June 30,        June 30,
                  2007        2007        2006        2007      2006
               ----------------------------------- -------------------
               (Unaudited) (Unaudited) (Unaudited) (Unaudited)   (1)

Revenues           $37,212     $27,620     $16,915    $107,499 $54,846
               ----------- ----------- ----------- ----------- -------

Cost of
 revenues:

 Cost of
  revenues          28,085      20,515      11,676      78,588  39,121

 Stock
  compensation
  expense              106          69          72         315     248
               ----------- ----------- ----------- ----------- -------

   Total cost
    of revenues     28,191      20,584      11,748      78,903  39,369
               ----------- ----------- ----------- ----------- -------

Gross profit         9,021       7,036       5,167      28,596  15,477
               ----------- ----------- ----------- ----------- -------

Operating
 expenses:

 Research and
  development        2,432       1,364       1,767       6,796   6,140

 Sales and
  marketing          1,941       1,461       1,238       6,064   4,092

 General and
  admin.             2,367       1,464       1,512       7,102   6,300

 Transitional
  costs for
  contract
  manufacturing
  and other
  costs                216           -        (72)         216    (72)

 Merger fees         1,451           -           -       1,451       -

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

 Stock
  compensation
  expense            1,430         926         757       4,396   2,416

 Amortization
  of intangible
  and other
  assets               117          35          27         222      72
               ----------- ----------- ----------- ----------- -------

   Total
    operating
    expenses         9,954       5,250       5,229      26,247  20,068
               ----------- ----------- ----------- ----------- -------

(Loss) income
 from
 operations          (933)       1,786        (62)       2,349 (4,591)

Interest and
 other income,
 net                 2,678       2,504       2,010       9,666   7,030

(Loss) gain on
 sale/disposal
 of assets            (10)         (8)          14        (18)   (458)
               ----------- ----------- ----------- ----------- -------

Income before
 minority
 interest and
 provision for
 income taxes        1,735       4,282       1,962      11,997   1,981

Minority
 interest in
 loss of
 consolidated
 subsidiaries        1,390           7          14       1,418      30

Provision for
 income taxes        (116)        (10)        (32)       (241)    (73)
               ----------- ----------- ----------- ----------- -------

Net income          $3,009      $4,279      $1,944     $13,174  $1,938
               ----------- ----------- ----------- ----------- -------

Net income per
 share:

 Basic               $0.13       $0.19       $0.09       $0.60   $0.09
               ----------- ----------- ----------- ----------- -------

 Diluted             $0.13       $0.19       $0.09       $0.57   $0.09
               ----------- ----------- ----------- ----------- -------

Shares used in per share
 calculation:

 Basic              22,524      22,202      21,466      22,071  21,353
               ----------- ----------- ----------- ----------- -------

 Diluted            23,252      23,011      22,508      22,942  22,184
               ----------- ----------- ----------- ----------- -------


RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

                       Three Months Ended              Years Ended
               -------------------------------------------------------
                June 30,    March 31,   June 30,    June 30,
                  2007        2007        2006        2007      2006
               ----------------------------------- -------------------

Net income,
 GAAP               $3,009      $4,279      $1,944     $13,174  $1,938

Adjustments to measure
 non-GAAP:

 Transitional
  costs for
  contract
  manufacturing
  and other
  costs                216           -        (72)         216    (72)

 Compensation
  related to
  stock option
  modification           -           -           -         268       -

 Stock
  compensation
  expense            1,536         995         829       4,711   2,664

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

 Merger fees         1,451           -           -       1,451       -

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

 Minority
  interest in
  loss of
  consolidated
  subsidiaries       (807)           -           -       (807)       -

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

Non-GAAP net
 income             $5,405      $5,274      $2,701     $19,013  $6,110
               ----------- ----------- ----------- ----------- -------

Net income per
 share, non-
 GAAP:

 Basic               $0.24       $0.24       $0.13       $0.86   $0.29
               ----------- ----------- ----------- ----------- -------

 Diluted             $0.23       $0.23       $0.12       $0.83   $0.28
               ----------- ----------- ----------- ----------- -------

Shares used in per share
 calculation:

 Basic              22,524      22,202      21,466      22,071  21,353
               ----------- ----------- ----------- ----------- -------

 Diluted            23,252      23,011      22,508      22,942  22,184
               ----------- ----------- ----------- ----------- -------

(1) The condensed consolidated statement of operations for the year
 ended June 30, 2006 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,
                                              ------------------------
                                                 2007         2006
                                              (Unaudited)      (1)
Cash flows from operating activities:
  Net income                                  $    13,174  $     1,938
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization                   5,436        6,386
    Stock compensation expense                      4,711        2,664
    Acquired in-process research and
     development                                        -        1,120
    Transitional costs for contract
     manufacturing and other costs                    216         (72)
    Minority interest in loss of consolidated
     subsidiaries                                 (1,418)         (29)
    Other                                             414          718
    Change in assets and liabilities              (9,868)      (6,942)
                                              -----------  -----------
      Net cash provided by operating
       activities                                  12,665        5,783
                                              -----------  -----------

Cash flows from investing activities:
  Net sales (purchases) of investments             89,023     (23,049)
  Net purchases of property and equipment         (2,623)      (1,532)
  Acquisition of businesses, net of cash
   acquired                                       (3,917)      (5,871)
                                              -----------  -----------
      Net cash provided by (used in) investing
       activities                                  82,483     (30,452)
                                              -----------  -----------

Cash flows from financing activities:
  Proceeds from issuance of common stock            8,550        2,763
  Repurchase of common stock                            -         (11)
                                              -----------  -----------
      Net cash provided by financing
       activities                                   8,550        2,752
                                              -----------  -----------

Effect of exchange rate changes on cash and
 cash equivalents                                      46           63

Net increase (decrease) in cash and cash
 equivalents                                      103,744     (21,854)

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

Cash and cash equivalents, end of year        $   111,600  $     7,856
                                              -----------  -----------

Supplemental non-cash investing and financing
 activities:
  Common stock issued upon business
   combination                                $    14,217  $         -
                                              -----------  -----------

(1) The condensed consolidated statement of cash flows for the year
 ended June 30, 2006 has been derived from audited financial
 statements at that date.

SOURCE: Oplink Communications, Inc.

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

Copyright Business Wire 2007

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