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OPLINK REPORTS SOLID THIRD QUARTER FISCAL YEAR 2012 FINANCIAL RESULTS

FREMONT, Calif., May 3, 2012 (GLOBE NEWSWIRE) -- Oplink Communications, Inc. (Nasdaq:OPLK), a leading provider of design, integration and optical manufacturing solutions (OMS) for optical networking components, modules and subsystems, today reported its financial results for its third quarter of fiscal 2012 ended April 1, 2012.

Revenues for the third quarter were $44.0 million and GAAP net income was $2.9 million, or $0.14 per diluted share. This compares to revenues of $43.3 million and GAAP net loss of $1.5 million, or ($0.08) per share, reported in the prior quarter, and $53.5 million and GAAP net income of $8.2 million, or $0.38 per diluted share, reported in the same period of the prior year.

Non-GAAP net income for the third quarter was $2.5 million, or $0.13 per diluted share, as compared to $2.0 million, or $0.10 per diluted share, reported in the prior quarter, and $10.6 million, or $0.49 per diluted share, reported in the same period of the prior year. Non-GAAP results exclude the items described in the Reconciliation of GAAP Financial Measures to non-GAAP Financial Measures attached to this press release.

Oplink generated $4.9 million in cash from operations, used $1.4 million for stock repurchases, and closed the quarter with cash, cash equivalents and short-term and long-term investments of $176.1 million.

"We are pleased to report solid third quarter results with revenue above the outlook we provided last quarter," commented Joe Liu, Chairman and CEO of Oplink. "The overall spending environment for our components and subsystems has stabilized, although order visibility remains limited. We remain optimistic about our opportunities, as we continue to broaden our R&D capabilities to provide next generation network solutions. We are confident these capabilities will help improve our margins and market position over time."

Business Outlook for the Quarter Ending July 1, 2012

For the quarter ending July 1, 2012, the Company expects to report revenues between $42 million and $46 million and GAAP net income per diluted share of approximately $0.02 to $0.08. On a non-GAAP basis, excluding stock compensation, amortization of intangible assets and other non-cash or non-recurring charges, if any, the Company expects earnings per diluted share of approximately $0.09 to $0.15. GAAP and non-GAAP net income per diluted share for the quarter ending July 1, 2012 assume an effective tax rate of 26%.

Conference Call Information

Oplink will host a corresponding conference call and live webcast at 2:00 p.m. Pacific Time on May 3, 2012. The conference call can be accessed by dialing 1-877-941-8416, or 1-480-629-9808 (outside the U.S. and Canada). A live webcast will be available on the Investors section of Oplink's corporate website at www.oplink.com and via replay beginning approximately two hours after the completion of the call until Oplink'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 May 3, 2012 until 11:59 p.m. Pacific Time on May 10, 2012, by dialing 1-800-406-7325 or 1-303-590-3030 (outside the U.S. and Canada) and entering pass code 4532642#.

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 providing these non-GAAP measures to its investors provides investors the benefit of viewing Oplink's performance using the same financial metrics that the management team uses in making many key decisions and evaluating how Oplink's "core operating performance" and its results of operations may look in the future. Oplink defines "core operating performance" as its on-going performance in the ordinary course of its operations. Items that are non-recurring or do not involve cash expenditures, such as one-time tax benefits, impairment charges, restructuring charges, amortization of intangible assets and non-cash compensation related to stock and options, are not included in Oplink's view of "core operating performance."

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. Oplink 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 Woodland Hills, California and has research facilities in Zhuhai and Wuhan, China and Hsinchu Science-Based Industrial Park in Taiwan. Oplink'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 press release contains forward-looking statements, including without limitation the statements under the heading "Business Outlook for the Quarter Ending July 1, 2012." These forward-looking statements involve risks and uncertainties that could cause Oplink's results to differ materially from those expressed or implied by such forward-looking statements, including the following risks and uncertainties: possible reductions in customer orders or delays in shipments of products to customers; potential delays in introduction of new Oplink products; Oplink's reliance on a small number of customers for a substantial portion of its revenues; Oplink's reliance on third parties to supply critical 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; the potential for a further downturn in the telecommunications industry or the overall economy in the United States or other parts of the world; changes in our effective tax rate, which reduce our net income; 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)
     
  April 1, July 3,
  2012 2011
  (Unaudited) (1)
ASSETS    
Current assets:    
Cash and cash equivalents  $ 46,243 $ 52,644
Short-term investments 122,574 134,089
Accounts receivable, net 36,152 34,880
Inventories 20,187 24,719
Prepaid expenses and other current assets 8,265 10,706
Deferred tax assets 14,542 15,171
Total current assets 247,963 272,209
Property, plant and equipment, net 45,998 36,863
Long-term investments 7,274 --
Goodwill and intangible assets, net 1,775 2,948
Deferred tax assets 8,288 8,291
Other assets 4,166 493
Total assets $ 315,464 $ 320,804
     
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:    
Accounts payable $ 12,353 $ 11,549
Accrued liabilities and other current liabilities 14,039 12,041
Total current liabilities 26,392 23,590
Non-current liabilities 6,396 6,852
Total liabilities 32,788 30,442
Stockholders' equity 282,676 290,362
Total liabilities and stockholders' equity $ 315,464 $ 320,804
     
     
(1) The July 3, 2011 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  Nine Months Ended
  April 1, January 1,  April 3, April 1, April 3,
  2012 2012 2011 2012 2011
  (Unaudited) (Unaudited) (Unaudited)  (Unaudited)
           
Revenues $ 43,978 $ 43,328 $ 53,471 $ 130,683 $ 155,136
Cost of revenues 30,470 29,977 34,188 89,704 100,623
Gross profit 13,508 13,351 19,283 40,979 54,513
Operating expenses:          
Research and development 5,665 5,049 4,322 15,689 11,713
Sales and marketing 2,813 2,508 2,625 7,909 7,565
General and administrative 1,890 6,344 2,052 10,843 5,815
Stock compensation expense  1,242 1,169 1,229 4,163 3,897
Amortization of intangible assets 91 166 451 573 1,353
Loss (gain) on sale/disposal of assets 19 (8) (24) (366) (107)
Total operating expenses 11,720 15,228 10,655 38,811 30,236
Income (loss) from operations 1,788 (1,877) 8,628 2,168 24,277
Interest and other income, net  92 203 180 408 291
Income (loss) before provision for income taxes  1,880  (1,674)  8,808  2,576  24,568
Benefit (provision) for income taxes  977  181  (620)  11 (2,312)
Net income (loss)  $ 2,857  $ (1,493)  $ 8,188  $ 2,587  $ 22,256
           
Net income (loss) per share:          
Basic  $ 0.15  $ (0.08)  $ 0.40  $ 0.13  $ 1.13
Diluted  $ 0.14  $ (0.08)  $ 0.38  $ 0.13  $ 1.07
           
Shares used in per share calculation:          
Basic 19,200 19,185 20,308 19,364 19,723
Diluted 19,795 19,185 21,595 19,982 20,792
           
           
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except per share amounts)
  Three Months Ended  Nine Months Ended
  April 1, January 1,  April 3, April 1, April 3,
Reconciliation of GAAP net income (loss) to  2012 2012 2011 2012 2011
non-GAAP net income:          
Net income (loss), GAAP  $ 2,857  $ (1,493)  $ 8,188  $ 2,587  $ 22,256
Adjustments to measure non-GAAP:          
Related to cost of revenues:          
Stock compensation expense  92 89 123 290 342
Amortization of intangible assets 36 161 575 608 1,725
Total related to cost of revenues 128 250 698 898 2,067
           
Related to operating expenses:          
Legal settlement  -- 3,317 -- 3,317 --
Stock compensation expense  1,242 1,169 1,229 4,163 3,897
Amortization of intangible assets 91 166 451 573 1,353
Total related to operating expenses 1,333 4,652 1,680 8,053 5,250
           
Tax effects on non-GAAP adjustments (1,830) (1,424) -- (3,949) --
           
Non-GAAP net income   $ 2,488  $ 1,985  $ 10,566  $ 7,589  $ 29,573
           
Net income per share, non-GAAP:          
Basic  $ 0.13  $ 0.10  $ 0.52  $ 0.39  $ 1.50
Diluted  $ 0.13  $ 0.10  $ 0.49  $ 0.38  $ 1.42
           
Shares used in per share calculation:          
Basic 19,200 19,185 20,308 19,364 19,723
Diluted 19,795 19,716 21,595 19,982 20,792
           
Reconciliation of GAAP gross profit           
to non-GAAP gross profit:          
GAAP gross profit  $ 13,508  $ 13,351  $ 19,283  $ 40,979  $ 54,513
Stock compensation expense included in cost of revenues 92 89 123 290 342
Amortization of intangible assets included in cost of revenues 36 161 575 608 1,725
Non-GAAP gross profit  $ 13,636  $ 13,601  $ 19,981  $ 41,877  $ 56,580
           
GAAP gross margin rate  30.7% 30.8% 36.1% 31.4% 35.1%
Non-GAAP gross margin rate  31.0% 31.4% 37.4% 32.0% 36.5%
 
OPLINK COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(In thousands)
  Nine Months Ended
  April 1, April 3,
  2012 2011
  (Unaudited)
Cash flows from operating activities:    
Net income  $ 2,587 $ 22,256
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 4,632 3,979
Amortization of intangible assets 1,173 3,078
Stock compensation expense  4,452 4,239
Deferred income taxes 623 --
Gain on sale/disposal of assets (366) (107)
Other 173 614
Change in assets and liabilities 3,462 (4,773)
Net cash provided by operating activities  16,736  29,286
     
Cash flows from investing activities:    
Net maturity (purchase) of investments 7,254 (1,629)
Net purchases of property, plant and equipment (10,352) (5,305)
Purchase of cost investment (200) --
Net cash used in investing activities  (3,298) (6,934)
     
Cash flows from financing activities:    
Proceeds from issuance of common stock  1,296 17,849
Repurchase of common stock (21,145) (6,534)
Net cash (used in) provided by financing activities (19,849) 11,315
     
Effect of exchange rate changes on cash and cash equivalents 10 309
Net (decrease) increase in cash and cash equivalents (6,401) 33,976
Cash and cash equivalents, beginning of period 52,644 40,711
Cash and cash equivalents, end of period $ 46,243 $ 74,687
CONTACT: Investor Relations:

         Erica Abrams

         415-217-5864

         erica@blueshirtgroup.com



         Matthew Hunt

         415-489-2194

         matt@blueshirtgroup.com
Source: Oplink Communications, Inc.

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