Oplink Reports Third Quarter Fiscal Year 2014 Financial Results

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| Source: Oplink Communications, Inc.

FREMONT, Calif., April 30, 2014 (GLOBE NEWSWIRE) -- Oplink Communications, Inc. (Nasdaq:OPLK), a leading provider of optical communication components, intelligent modules and subsystems, today reported its financial results for its third quarter of fiscal year 2014, ended March 30, 2014.

Revenue for the quarter was $48.1 million, down from $50.4 million in the prior quarter, and up from third quarter fiscal 2013 revenue of $44.1 million. GAAP net loss was $0.5 million, or $(0.03) per diluted share, down from GAAP net income of $1.3 million, or $0.07 per diluted share, in the prior quarter and GAAP net income of $2.1 million, or $0.11 per diluted share, reported for the third quarter of fiscal 2013.

Non-GAAP net income for the third quarter was $0.3 million, or $0.01 per diluted share, compared to $2.4 million, or $0.12 per diluted share, reported in the prior quarter, and $3.4 million, or $0.18 per diluted share, reported for the third quarter of fiscal 2013. A reconciliation of the non-GAAP financial measures to their GAAP equivalents is included in the financial tables accompanying this press release.

"Although we are currently seeing a bit of softness in our optical business," said Joe Liu, Chairman and CEO of Oplink, "we continue to have a healthy level of design-in activities with key customers, and we believe we are well positioned for future growth. On the Oplink Connectedtm side of our business, we continue to make excellent progress. Our non-pairing, group parallel push platform-in-a-box will soon cover five domains: security, safety, care, video and home automation, and we expect these systems to be ready to ship in July. Our existing solutions are currently available through distributors like Ingram Micro and D&H, at retail stores like Fry's Electronics and ClickAway, and on-line at Amazon.com, Microsoft.com, Smarthome.com and other sites. We look forward to sharing more news on this business in the future."

Business Outlook for the Quarter Ending June 29, 2014

For the quarter ending June 29, 2014, the Company expects to report revenue of $48 to $52 million and GAAP net income of $0.00 to $0.06 per diluted share. On a non-GAAP basis, excluding stock compensation, amortization of intangible assets and any other non-cash or non-recurring charges, the Company expects earnings per diluted share of $0.05 to $0.11.

Conference Call Information

Oplink will host a corresponding conference call and live webcast at 1:30 p.m. Pacific Time on April 30, 2014. The conference call can be accessed by dialing 1-800-762-8779, or 1-480-629-9645 (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 April 30, 2014 until 11:59 p.m. Pacific Time on May 7, 2014, by dialing 1-800-406-7325 or 1-303-590-3030 (outside the U.S. and Canada) and entering pass code 4680703#.

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 or charges, 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."

Cautionary Statement

This press release contains forward-looking statements, including without limitation the statements under the heading "Business Outlook for the Quarter Ending June 29, 2014." 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: (1) possible reductions in customer orders or delays in shipments of products to customers; (2) potential delays in introduction of new Oplink products; (3) Oplink's reliance on a small number of customers for a substantial portion of its revenues; (4) Oplink's reliance on third parties to supply critical components and materials for its products; (5) intense competition in Oplink's target markets and potential pricing pressure that may arise from changing supply or demand conditions in the industry; (6) risks relating to the new Oplink Connected business, including the risk that the products and services, being new and unproven, may not achieve market acceptance, the risk that Oplink may not be successful in developing adequate sales channels for these products and services, and the risk of write-downs for slow-moving or obsolete inventory; (7) increasing reliance on sales to datacom customers, which can fluctuate more than sales to our traditional telecom customers; (8) changes in our effective tax rate, which could reduce our net income; and (9) 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.

About Oplink

Oplink is a leading provider of optical communication components, intelligent modules and subsystems. We offer advanced solutions in DWDM and CWDM bandwidth creation, optical amplification, switching & routing, wavelength conditioning, monitoring & protection, connectivity and system-level integration, as well as a broad portfolio of optical transceivers for metro WDM, aggregation and access applications. We supply to global leading and emerging telecommunications, data communications and cable TV equipment makers. We are headquartered in Fremont, California and own multiple research and manufacturing facilities in Asia. To learn more about Oplink, visit our web site at www.oplink.com.

 
OPLINK COMMUNICATIONS, INC.    
CONDENSED CONSOLIDATED BALANCE SHEETS    
(In thousands)
     
  March 30, June 30,
  2014 2013
  (Unaudited) (1)
ASSETS    
Current assets:    
Cash and cash equivalents $ 54,472 $ 65,014
Short-term investments 97,134 105,829
Accounts receivable, net 37,215 40,735
Inventories 40,269 30,028
Prepaid expenses and other current assets 6,294 7,029
Deferred tax assets 804 809
Total current assets 236,188 249,444
Property, plant and equipment, net 54,048 47,687
Long-term investments 9,274 3,307
Goodwill and intangible assets, net 965 1,146
Deferred tax assets 7,555 7,083
Other assets 13,414 16,504
Total assets $ 321,444 $ 325,171
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $ 12,385 $ 18,166
Accrued liabilities and other current liabilities 16,153 13,579
Total current liabilities 28,538 31,745
Non-current liabilities 11,528 10,225
Total liabilities 40,066 41,970
Stockholders' equity 281,378 283,201
Total liabilities and stockholders' equity $ 321,444 $ 325,171
     
(1) The June 30, 2013 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
  March 30, December 29, March 31, March 30, March 31,
  2014 2013 2013 2014 2013
  (Unaudited) (Unaudited)
           
Revenues $ 48,108 $ 50,433 $ 44,124 $ 153,323 $ 134,107
Cost of revenues 34,081 34,487 28,474 105,653 85,298
Gross profit 14,027 15,946 15,650 47,670 48,809
Operating expenses:          
Research and development 7,332 6,813 6,281 20,935 17,542
Sales and marketing 4,107 4,011 3,590 11,891 10,150
General and administrative 2,015 2,203 2,174 6,284 6,437
Stock-based compensation expense 1,238 1,158 1,252 4,365 4,160
Amortization of intangible assets 10 24 91 74 273
Net (gain) loss on sale/disposal of assets 48 96 (258) 221 (270)
Total operating expenses 14,750 14,305 13,130 43,770 38,292
(Loss) income from operations (723) 1,641 2,520 3,900 10,517
Interest and other income, net 819 20 201 871 879
Income before provision for income taxes  96  1,661  2,721  4,771  11,396
Provision for income taxes  620  378  670  1,790  2,526
Net (loss) income  $ (524)  $ 1,283  $ 2,051  $ 2,981  $ 8,870
           
Net (loss) income per share:          
Basic  $ (0.03)  $ 0.07  $ 0.11  $ 0.16  $ 0.47
Diluted  $ (0.03)  $ 0.07  $ 0.11  $ 0.15  $ 0.46
           
Shares used in per share calculation:          
Basic 19,066 19,363 19,029 19,222 19,072
Diluted 19,066 19,534 19,252 19,468 19,370
           
           
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except per share amounts)
  Three Months Ended Nine Months Ended
  March 30, December 29, March 31, March 30, March 31,
  2014 2013 2013 2014 2013
Reconciliation of GAAP net (loss) income to non-GAAP net income: (Unaudited) (Unaudited)
           
Net (loss) income, GAAP  $ (524)  $ 1,283  $ 2,051  $ 2,981  $ 8,870
Adjustments to measure non-GAAP:          
Related to cost of revenues:          
Stock-based compensation expense 79 66 81 253 253
Amortization of intangible assets 36 36 36 107 108
Total related to cost of revenues 115 102 117 360 361
           
Related to operating expenses:          
Stock-based compensation expense 1,238 1,158 1,252 4,365 4,160
Amortization of intangible assets 10 24 91 74 273
Total related to operating expenses 1,248 1,182 1,343 4,439 4,433
           
Gain on sale of equity investments (344) -- -- (344) --
Tax effects on non-GAAP adjustments (225) (154) (130) (731) (759)
           
Non-GAAP net income  $ 270  $ 2,413  $ 3,381  $ 6,705  $ 12,905
           
Net income per share, non-GAAP:          
Basic  $ 0.01  $ 0.12  $ 0.18  $ 0.35  $ 0.68
Diluted  $ 0.01  $ 0.12  $ 0.18  $ 0.34  $ 0.67
           
Shares used in per share calculation:          
Basic 19,066 19,363 19,029 19,222 19,072
Diluted 19,273 19,534 19,252 19,468 19,370
           
Reconciliation of GAAP gross profit to non-GAAP gross profit:          
GAAP gross profit  $ 14,027  $ 15,946  $ 15,650  $ 47,670  $ 48,809
Stock compensation expense included in cost of revenues 79 66 81 253 253
Amortization of intangible assets included in cost of revenues 36 36 36 107 108
Non-GAAP gross profit  $ 14,142  $ 16,048  $ 15,767  $ 48,030  $ 49,170
           
GAAP gross margin rate 29.2% 31.6% 35.5% 31.1% 36.4%
Non-GAAP gross margin rate 29.4% 31.8% 35.7% 31.3% 36.7%
           
 
OPLINK COMMUNICATIONS, INC.    
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS    
(In thousands)
  Nine Months Ended
  March 30, March 31,
  2014 2013
  (Unaudited)
Cash flows from operating activities:    
Net income $ 2,981 $ 8,870
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 6,442 5,436
Amortization of intangible assets 181 381
Stock-based compensation expense 4,618 4,413
Deferred income taxes (512) (221)
Net gain on sale/disposal of assets and equity investments (127) (343)
Other 661 425
Change in assets and liabilities (6,297) (1,800)
Net cash provided by operating activities  7,947  17,161
     
Cash flows from investing activities:    
Net maturities (purchases) of investments 6,516 (19,912)
Net purchases of property, plant and equipment (9,792) (4,206)
Business acquisition -- (1,090)
Net cash used in investing activities (3,276) (25,208)
     
Cash flows from financing activities:    
Proceeds from issuance of common stock 1,850 2,240
Repurchase of common stock (17,088) (9,304)
Net cash used in financing activities (15,238) (7,064)
     
Effect of exchange rate changes on cash and cash equivalents 25 11
Net decrease in cash and cash equivalents (10,542) (15,100)
Cash and cash equivalents, beginning of period 65,014 81,233
Cash and cash equivalents, end of period $ 54,472 $ 66,133
     
Investor Relations:
Shirley Yin
510-933-7233