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OPLINK REPORTS FIRST QUARTER FISCAL 2009 FINANCIAL RESULTS

FREMONT, Calif., Oct 30, 2008 (BUSINESS WIRE) -- Oplink Communications, Inc. (Nasdaq:OPLK), a leading provider of photonic components, intelligent modules and subsystem solutions, today reported its financial results for its fiscal 2009 first quarter, ended September 30, 2008.

Revenues for the quarter were $43.0 million, compared to $37.3 million reported for the fourth quarter of fiscal 2008. GAAP net loss for the first quarter of fiscal 2009 was $3.4 million, or $0.16 per share. This compares to a GAAP net loss of $791,000, or $0.04 per share, reported for the fourth quarter of fiscal 2008.

Non-GAAP net income for the first quarter of fiscal 2009 was $3.2 million, or $0.15 per diluted share, which excludes a $4.1 million provision for excess and obsolete inventory, $1.6 million in stock-based compensation and $954,000 in amortization of intangible assets. This compares to non-GAAP net income of $2.8 million, or $0.13 per diluted share, reported for the fourth quarter of fiscal 2008, which excluded $1.4 million in stock-based compensation, $961,000 in amortization of intangible assets, $891,000 of inventory adjustments and $451,000 in transitional costs for contract manufacturing, partially offset by a $69,000 adjustment to a previously booked asset impairment charge.

Oplink generated $4.3 million in cash from operations during the first quarter and closed the quarter with cash, cash equivalents and short and long-term investments of $146.7 million.

"We reported revenue slightly above the outlook we provided last quarter and continued to generate cash from operations," commented Tom Keegan, President of Oplink. "While we remain optimistic about long-term demand for our products, we are cautious about the near-term impact of economic conditions on telecom capital expenditures and our revenue. We have begun closely controlling expenses to ensure that our costs align with near-term revenue as we enter this challenging period. During this period, we will continue to work towards future design wins with our traditional passive customers and releasing new, more competitive transceiver designs. Despite the near-term challenges, we remain confident in the long-term prospects for our business."

Business Outlook

For the quarter ending December 31, 2008, the Company expects to report revenues of between $34 million and $38 million and GAAP net loss per share of approximately $0.03 to $0.07. On a non-GAAP basis, excluding stock-based compensation, amortization of intangible assets, and other non-cash or non-recurring charges, if any, the Company expects earnings per diluted share for the quarter ending December 31, 2008 of approximately $0.03 to $0.07.

Conference Call Information

The Company will host a conference call and live webcast at 2:00 p.m. Pacific Time today, October 30, 2008. To access the conference call, dial 877-801-6172 or 303-262-2056 (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 5:00 p.m. Pacific Time on October 30, 2008 until 11:59 p.m. Pacific Time on November 6, 2008, by dialing 800-405-2236 or 303-590-3000 (outside the U.S. and Canada) and entering pass code 11121687#.

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. 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 optical-centric front-end design, application, and customer service functions at its offices in Fremont and Calabasas, California and has research facilities in Zhuhai and Wuhan, China and Hsinchu Science-Based Industrial Park in Taiwan. 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 results for the second quarter of fiscal year 2009, 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 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)
                                                                               September 30,           June 30,
                                                                               2008                    2008
                                                                               (Unaudited)             (1)
ASSETS
Current assets:
       Cash and cash equivalents                                               $       99,450          $      72,001
       Short-term investments                                                          32,253                 50,077
       Accounts receivable, net                                                        32,743                 34,200
       Inventories                                                                     24,065                 27,950
       Prepaid expenses and other current assets                                       5,387                  4,949
                           Total current assets                                        193,898                189,177
Long-term investments                                                                  15,003                 20,003
Property, plant and equipment, net                                                     32,780                 34,206
Goodwill and intangible assets, net                                                    22,533                 23,487
Other assets                                                                           1,877                  1,867
                           Total assets                                        $       266,091         $      268,740
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
       Accounts payable                                                        $       14,515          $      16,014
       Accrued liabilities and other current liabilities                               13,021                 12,756
       Accrued transitional costs for contract manufacturing                           282                    341
       Restructuring accrual                                                           -                      370
                           Total current liabilities                                   27,818                 29,481
Non-current liabilities                                                                979                    989
                           Total liabilities                                           28,797                 30,470
Stockholders' equity                                                                   237,294                238,270
                           Total liabilities and stockholders' equity          $       266,091         $      268,740
(1)    The June 30, 2008 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
                                                                        September 30,
                                                                        2008                      2007
                                                                        (Unaudited)               (Unaudited)
Revenues                                                                $     42,952              $     49,151
Cost of revenues:
Cost of revenues                                                              36,645                    37,194
Stock compensation expense                                                    118                       129
                        Total cost of revenues                                36,763                    37,323
Gross profit                                                                  6,189                     11,828
Operating expenses:
Research and development                                                      3,282                     4,432
Sales and marketing                                                           2,257                     2,880
General and administrative                                                    2,666                     4,404
Transitional costs for contract manufacturing                                 -                         755
Merger fees                                                                   -                         1,421
Stock compensation expense                                                    1,449                     1,617
Amortization of intangible and other assets                                   412                       266
                        Total operating expenses                              10,066                    15,775
Loss from operations                                                          (3,877  )                 (3,947  )
Interest and other income, net                                                927                       3,059
(Loss) gain on sale/disposal of assets                                        (6      )                 (37     )
Loss before minority interest and provision for income taxes                  (2,956  )                 (925    )
Minority interest in loss of consolidated subsidiaries                        -                         2,484
Provision for income taxes                                                    (456    )                 (234    )
Net (loss) income                                                       $     (3,412  )           $     1,325
Net (loss) income per share:
Basic                                                                   $     (0.16   )           $     0.06
Diluted                                                                 $     (0.16   )           $     0.06
Shares used in per share calculation:
Basic                                                                         20,757                    23,182
Diluted                                                                       20,757                    23,792
RECONCILIATION OF GAAP NET (LOSS) INCOME TO NON-GAAP NET INCOME
                                                                        Three Months Ended
                                                                        September 30,
                                                                        2008                      2007
Net (loss) income, GAAP                                                 $     (3,412  )           $     1,325
Adjustments to measure non-GAAP:
Provision for excess and obsolete inventory included in cost of               4,065                     -
revenues
Transitional costs for contract manufacturing                                 -                         755
Merger fees                                                                   -                         1,546
Stock compensation expense                                                    1,567                     1,746
Amortization of intangible and other assets                                   954                       540
Minority interest in loss of consolidated subsidiaries                        -                         (1,287  )
Non-GAAP net income                                                     $     3,174               $     4,625
Net income per share, non-GAAP:
Basic                                                                   $     0.15                $     0.20
Diluted                                                                 $     0.15                $     0.19
Shares used in per share calculation:
Basic                                                                         20,757                    23,182
Diluted                                                                       21,268                    23,792
OPLINK COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
                                                                                                                    Three Months Ended
                                                                                                                    September 30,
                                                                                                                    2008                2007
                                                                                                                    (Unaudited)
Cash flows from operating activities:
          Net (loss) income                                                                                         $   (3,412  )       $   1,325
          Adjustments to reconcile net (loss) income to net cash provided by
          operating activities:
                                    Depreciation and amortization                                                       2,789               2,435
                                    Stock compensation expense                                                          1,567               1,746
                                    Provision for excess and obsolete inventory                                         4,065               -
                                    Transitional costs for contract manufacturing and other costs                       -                   755
                                    Minority interest in loss of consolidated subsidiaries                              -                   (2,484   )
                                    Other                                                                               (481    )           75
                                    Change in assets and liabilities                                                    (200    )           1,965
                                                                      Net cash provided by operating activities         4,328               5,817
Cash flows from investing activities:
          Net sales (purchases) of investments                                                                          22,986              (982     )
          Net sales (purchases) of property and equipment                                                               6                   (1,071   )
          Net sales of cost investments                                                                                 -                   4,600
          Acquisition of businesses, net of cash acquired                                                               -                   (699     )
                                                                      Net cash provided by investing activities         22,992              1,848
Cash flows from financing activities:
          Proceeds from issuance of common stock                                                                        353                 218
                                                                      Net cash provided by financing activities         353                 218
Effect of exchange rate changes on cash and cash equivalents                                                            (224    )           (30      )
Net increase in cash and cash equivalents                                                                               27,449              7,853
Cash and cash equivalents, beginning of period                                                                          72,001              111,600
Cash and cash equivalents, end of period                                                                            $   99,450          $   119,453

SOURCE: Oplink Communications, Inc.

For Oplink Communications, Inc. 
Investor Relations: 
Erica Abrams, 415-217-5864 
erica@blueshirtgroup.com 
Matthew Hunt, 415-489-2194 
matt@blueshirtgroup.com

Copyright Business Wire 2008

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