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OPLINK REPORTS SECOND QUARTER FISCAL 2009 FINANCIAL RESULTS

FREMONT, Calif., Jan 29, 2009 (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 second quarter, ended December 31, 2008.

Revenue for the quarter was $37.6 million, compared to revenue of $43.0 million reported for the first quarter of fiscal 2009. Revenue for the second quarter of fiscal 2009 excluded $805,000 related to shipments of products for Nortel Networks, which filed for bankruptcy protection on January 14, 2009. Revenue for the second quarter would have been $38.4 million if this revenue had not been deferred.

GAAP net loss for the second quarter was $10.5 million, or $0.51 per share, which includes $10.8 million for the impairment of goodwill and other costs primarily associated with the OCP acquisition. This compares to a GAAP net loss of $3.4 million, or $0.16 per share, reported for the first quarter of fiscal 2009.

Non-GAAP net income for the quarter was $2.6 million, or $0.12 per diluted share, which excludes $10.8 million in goodwill impairment and other costs, $1.4 million in stock-based compensation and $954,000 in amortization of intangibles. This compares to non-GAAP net income of $3.2 million, or $0.15 per diluted share, reported for the first quarter of fiscal 2009, which excluded 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.

During the second quarter, Oplink repurchased $2.3 million in common stock pursuant to its previously announced repurchase program. Oplink generated $3.4 million in cash from operations during the second quarter and closed the quarter with cash, cash equivalents and short and long-term investments of $146.8 million.

"With continued integration efforts and cost control measures, we are closely aligning our operating expenses with lower near-term revenue expectations," commented Joe Liu, President and CEO of Oplink. "While we are cautious about near-term carrier spending and the overall economy, we remain optimistic about long-term demand for our products and services as well as maintaining our leadership in passive optics."

March Quarter Business Outlook

For the quarter ending March 31, 2009, the Company expects to report revenues of between $28 million and $32 million and GAAP net loss per share of approximately $0.06 to $0.11. 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 March 31, 2009 of approximately $0.00 to $0.05.

Conference Call Information

The Company will host a conference call and live webcast at 2:00 p.m. Pacific Time today, January 29, 2009. To access the conference call, dial 800-834-1527 or 303-262-2006 (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 January 29, 2009 until 11:59 p.m. Pacific Time on February 5, 2009, by dialing 800-405-2236 or 303-590-3000 (outside the U.S. and Canada) and entering pass code 11125610#.

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 third 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 further and sustained downturn in the telecommunications industry or the overall economy in the United States and other parts of the world, possible further 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)
 
December 31,June 30,
20082008
(Unaudited)(1)
ASSETS
Current assets:
Cash and cash equivalents $ 84,298 $ 72,001
Short-term investments 52,537 50,077
Accounts receivable, net 27,864 34,200
Inventories 21,769 27,950
Prepaid expenses and other current assets   6,718   4,949  
 
Total current assets 193,186 189,177
 
Long-term investments 10,000 20,003
Property, plant and equipment, net 31,709 34,206
Intangible assets, net 10,750 23,487
Other assets   1,872   1,867  
 
Total assets $ 247,517 $ 268,740  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,753 $ 16,014
Accrued liabilities and other current liabilities 11,553 12,756
Accrued transitional costs for contract manufacturing 160 341
Restructuring accrual   -   370  
 
Total current liabilities 20,466 29,481
 
Non-current liabilities   972   989  
 
Total liabilities   21,438   30,470  
 
Stockholders' equity   226,079   238,270  
 
Total liabilities and stockholders' equity $ 247,517 $ 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 EndedSix Months Ended
December 31,December 31,
2008   20072008   2007
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
 
Revenues $ 37,611   $ 48,943   $ 80,563   $ 98,094  
 
Cost of revenues:
 
Cost of revenues 28,939 37,841 65,584 75,035
 
Stock compensation expense   126     114     244     243  
 
Total cost of revenues   29,065     37,955     65,828     75,278  
 
Gross profit   8,546     10,988     14,735     22,816  
 
Operating expenses:
 
Research and development 2,785 3,610 6,067 8,042
 
Sales and marketing 1,945 2,763 4,202 5,643
 
General and administrative 2,702 3,614 5,368 8,018
 
Impairment charge and other costs 10,829 626 10,829 626
 
Transitional costs for contract manufacturing - 532 - 1,287
 
Merger fees - 4,568 - 5,989
 
Stock compensation expense 1,242 3,414 2,691 5,031
 
Amortization of intangible and other assets   412     401     824     667  
 
Total operating expenses   19,915     19,528     29,981     35,303  
 
Loss from operations (11,369 ) (8,540 ) (15,246 ) (12,487 )
 
Interest and other income, net   808     2,090     1,729     5,112  
 
Loss before minority interest and provision for income taxes (10,561 ) (6,450 ) (13,517 ) (7,375 )
 
Minority interest in loss of consolidated subsidiaries - 3,407 - 5,891
 
Provision for income taxes   15     (309 )   (441 )   (543 )
 
Net loss $ (10,546 ) $ (3,352 ) $ (13,958 ) $ (2,027 )
 
Net loss per share:
 
Basic $ (0.51 ) $ (0.16 ) $ (0.67 ) $ (0.09 )
 
Diluted $ (0.51 ) $ (0.16 ) $ (0.67 ) $ (0.09 )
 
Shares used in per share calculation:
 
Basic   20,686     21,617     20,721     22,399  
 
Diluted   20,686     21,617     20,721     22,399  
 
 
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME
           
Three Months EndedSix Months Ended
December 31,December 31,
  2008       2007     2008       2007  
 
Net loss, GAAP $ (10,546 ) $ (3,352 ) $ (13,958 ) $ (2,027 )
 
Adjustments to measure non-GAAP:
 

Provision for excess and obsolete inventory included in cost of revenues

- - 4,065 -
 
Impairment charge and other costs 10,829 626 10,829 626
 
Transitional costs for contract manufacturing - 532 - 1,287
 
Merger fees - 4,682 - 6,228
 
Stock compensation expense 1,368 3,528 2,935 5,274
 
Amortization of intangible and other assets 954 865 1,908 1,405
 
Minority interest in loss of consolidated subsidiaries - (2,930 ) - (4,217 )
       
 
Non-GAAP net income $ 2,605   $ 3,951   $ 5,779   $ 8,576  
 
Net income per share, non-GAAP:
 
Basic $ 0.13   $ 0.18   $ 0.28   $ 0.38  
 
Diluted $ 0.12   $ 0.18   $ 0.27   $ 0.37  
 
Shares used in per share calculation:
 
Basic   20,686     21,617     20,721     22,399  
 
Diluted   21,016     22,258     21,150     23,012  
 
OPLINK COMMUNICATIONS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(In thousands)
        Six Months Ended
December 31,
2008   2007
(Unaudited)
Cash flows from operating activities:  
Net loss $ (13,958 ) $ (2,027 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 5,725 5,081
Stock compensation expense 2,935 5,274
Provision for excess and obsolete inventory 4,065 -
Impairment charge and other costs 10,829 626
Minority interest in loss of consolidated subsidiaries - (5,891 )
Other (181 ) (22 )
Change in assets and liabilities   (1,676 )   6,529  
Net cash provided by operating activities   7,739     9,570  
 
Cash flows from investing activities:
Net sales of investments 7,774 61,689
Net purchases of property and equipment (1,359 ) (6,325 )
Net sales of cost investments - 4,600
Acquisition of businesses, net of cash acquired   -     (81,280 )
Net cash provided by (used in) investing activities   6,415     (21,316 )
 
Cash flows from financing activities:
Proceeds from issuance of common stock 846 2,311
Repurchase of common stock   (2,293 )   (39,577 )
Net cash used in financing activities   (1,447 )   (37,266 )
 
Effect of exchange rate changes on cash and cash equivalents (410 ) (75 )
 
Net increase (decrease) in cash and cash equivalents 12,297 (49,087 )
 
Cash and cash equivalents, beginning of period   72,001     111,600  
 
Cash and cash equivalents, end of period $ 84,298   $ 62,513  

SOURCE: Oplink Communications, Inc.

The Blueshirt Group
Investor Relations:
Erica Abrams, 415-217-5864
erica@blueshirtgroup.com
Matthew Hunt, 415-489-2194
matt@blueshirtgroup.com

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