Please wait
 
 
 
Oplink Reports First Quarter of Fiscal Year 2015 Financial Results
Sequential Quarterly Revenue Growth of 12%; $0.05 Quarterly Dividend Declared
 
Fremont, Calif., -- October 30, 2014 -- Oplink Communications, Inc. (Nasdaq: OPLK), a leading provider of optical communication components, intelligent modules and subsystems, today reported its financial results for its quarter ended September 28, 2014, the first quarter of its 2015 fiscal year.

Revenue for the quarter was $57.1 million, an increase of 12% from prior quarter revenue of $51.1 million, and a 4% increase from first quarter fiscal 2014 revenue of $54.8 million.

GAAP income from continuing operations was $4.2 million, or $0.24 per diluted share, compared to income from continuing operations of $3.2 million, or $0.18 per diluted share, in the prior quarter and income from continuing operations of $4.2 million, or $0.22 per diluted share, in the first quarter of fiscal 2014.  GAAP income from continuing operations excludes the results of the Oplink Connected division, which has been classified as discontinued operations.  Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.  All income from continuing operations amounts provided in this press release are net of income taxes.

Non-GAAP income from continuing operations for the first quarter was $6.0 million, or $0.34 per diluted share, compared to non-GAAP income from continuing operations of $4.2 million, or $0.23 per diluted share, in the prior quarter, and non-GAAP income from continuing operations of $6.0 million, or $0.31 per diluted share, in the first quarter of fiscal 2014.  A reconciliation of the non-GAAP financial measures to their GAAP equivalents is included in the financial tables accompanying this press release.

GAAP net income for the first quarter, which includes the results of Oplink Connected, was $0.6 million, or $0.04 per diluted share, compared to a net loss of $4.2 million, or ($0.23) per diluted share, in the prior quarter and net income of $2.2 million, or $0.11 per diluted share, reported for the first quarter of fiscal 2014.

Oplink repurchased $12.1 million of its stock during the first quarter and closed the quarter with cash and marketable securities of $130 million.

Oplink also announced that, as in the prior quarter, it will pay a quarterly dividend of $0.05 per share of common stock.  The dividend will be paid to stockholders of record as of November 10, 2014 and will be paid on November 17, 2014.

"We are pleased to announce our highest ever quarterly revenue, driven primarily by demand in the North American datacom markets and the continued wireless network build-out in China," said Joe Liu, Chairman and CEO of Oplink.  "These results highlight the fundamental strength of our core optical business, and we are intently focused on capitalizing on the growth opportunities ahead."

Business Outlook for the Quarter Ending December 28, 2014

For the quarter ending December 28, 2014, the Company expects to report revenue of $58 to $62 million and GAAP net income from continuing operations of $0.32 to $0.38 per diluted share.  The Company expects to report non-GAAP net income from continuing operations of $0.38 to $0.44, which will exclude stock compensation, amortization of intangible assets, expenses relating to the divestment of the Oplink Connected business and other non-cash or non-recurring charges.  Expenses for the Oplink Connected business, including expenses relating to the divestment of the business, are expected to be approximately $2.7 million.

Conference Call Information

Oplink will host a conference call and live webcast to discuss its financial results and the other matters referred to above at 2:00 p.m. Pacific Time on October 30, 2014.  The conference call can be accessed by dialing 1-888-481-2844, or 1-719-457-2664 (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 October 30, 2014 until 5:00 p.m. Pacific Time on November 5, 2014, by dialing 1-888-203-1112 or 1-719-457-0820 (outside the U.S. and Canada) and entering pass code 8309017#.

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, expenses related to acquisitions, divestments or restructurings, 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 relating to (a) the possible sale of the Oplink Connected business and (b) expected financial results for the quarter ending December 28, 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) the risk that the process being undertaken to seek the sale of the Oplink Connected business fails to identify any parties willing to acquire or invest in that business; (2) possible reductions in customer orders or delays in shipments of products to customers; (3) Oplink's reliance on third parties to supply critical components and materials for its products; (4) intense competition in Oplink's target markets and potential pricing pressure that may arise from changing supply or demand conditions in the industry; (5) increasing reliance on sales to datacom customers, which can fluctuate more than sales to our traditional telecom customers; (6) changes in our effective tax rate, which could reduce our net income; and (7) 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.

Additional Information

The Company plans to file a proxy statement with the Securities and Exchange Commission (the "SEC") in connection with the solicitation of proxies by the Company.  Promptly after filing any definitive proxy statement with the SEC, the Company will mail the definitive proxy statement and a WHITE proxy card to each stockholder of the Company entitled to execute, withhold or revoke proxies relating to the proxy solicitation.  STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.  Stockholders will be able to obtain free copies of these documents (when available) and other documents filed with the SEC by the Company through the website maintained by the SEC at www.sec.gov, and at the Company's website at www.oplink.com.

Certain Information Regarding Participants

The Company and certain of its directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company's stockholders in connection with the proxy solicitation by the Company. Stockholders may obtain information regarding the names, affiliations and interests of the Company's directors and executive officers in the Company's Annual Report on Form 10-K for the year ended June 29, 2014 and Form 10-K/A amendment to Annual Report, filed with the SEC on September 12, 2014, and October 29, 2014, respectively.  Additional information regarding the interests of these participants in any solicitation of proxies and a description of their direct and indirect interests, by security holdings or otherwise, will also be included in any proxy statement and other relevant materials to be filed with the SEC if and when they become available. These documents can be obtained free of charge through the website maintained by the SEC at www.sec.gov, and at the Company's website at www.oplink.com.

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.

Contacts

Steven Goldberg / Megan Bouchier / Reze Wong
Sard Verbinnen & Co
415-618-8750

Dan Burch / Larry Dennedy
MacKenzie Partners, Inc
(212) 929-5500

(TABLES TO FOLLOW)
###
OPLINK COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(In thousands, except par value)
  
September 28,
    
June 29,
  
   
2014
    
2014
  
   
(Unaudited)
      
(1)
 
ASSETS
            
Current assets:
            
Cash and cash equivalents
  
$
48,558
    
$
41,819
  
Short-term investments
    
74,270
      
87,656
  
Accounts receivable, net
    
46,669
      
43,619
  
Inventories
    
37,039
      
38,771
  
Deferred tax assets
    
815
      
815
  
Prepaid expenses and other current assets
    
9,518
      
5,345
  
   Total current assets
    
216,869
      
218,025
  
                 
Property, plant and equipment, net
    
50,841
      
52,113
  
Long-term investments
    
7,149
      
10,442
  
Goodwill and acquired intangible assets, net
    
746
      
919
  
Deferred tax assets, non-current
    
7,759
      
7,792
  
Other assets
    
13,082
      
13,402
  
      Total assets
  
$
296,446
    
$
302,693
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
Current liabilities:
                
Accounts payable
  
$
16,177
    
$
15,816
  
Accrued liabilities and other current liabilities
    
18,053
      
15,089
  
   Total current liabilities
    
34,230
      
30,905
  
                 
Non-current liabilities
    
11,783
      
11,539
  
      Total liabilities
    
46,013
      
42,444
  
                 
Stockholders' equity:
    
250,433
      
260,249
  
      Total liabilities and stockholders' equity
  
$
296,446
    
$
302,693
  

(1) The June 29, 2014 condensed consolidated balance sheet has been derived from audited consolidated financial statements at that date
 
OPLINK COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 (Unaudited in thousands, except per share data)
  
Three Months Ended
 
 
  
September 28,
2014
    
June 29,
2014
    
September 29,
2013
  
             
Revenues
  
$
57,138
    
$
51,117
    
$
54,773
  
Cost of revenues
    
38,935
      
35,819
      
36,807
  
   Gross profit
    
18,203
      
15,298
      
17,966
  
                         
Operating expenses:
                        
Research and development
    
6,189
      
6,059
      
5,699
  
Selling and marketing
    
3,149
      
3,205
      
2,970
  
General and administrative
    
2,814
      
1,941
      
1,970
  
Stock-based compensation expense
    
1,381
      
1,072
      
1,861
  
Amortization of acquired intangible assets
    
10
      
10
      
40
  
Net loss on sale and disposal of assets
    
--
      
13
      
77
  
Total operating expenses
    
13,543
      
12,300
      
12,617
  
                         
Income from operations
    
4,660
      
2,998
      
5,349
  
Interest income and other, net
    
173
      
898
      
32
  
Income from continuing operations before provision for income taxes
    
4,833
      
3,896
      
5,381
  
Provision for income taxes
    
642
      
663
      
1,170
  
Income from continuing operations, net of tax
    
4,191
      
3,233
      
4,211
  
Loss from discontinued operations, net of tax
    
(3,579
)
    
(7,431
)
    
(1,989
)
Net income (loss)
  
$
612
    
$
(4,198
)
  
$
2,222
  
                         
Basic net income (loss) per share from:
                        
    Continuing operations
  
$
0.24
    
$
0.18
    
$
0.22
  
    Discontinued operations
    
(0.20
)
    
(0.41
)
    
(0.10
)
    Net income (loss)
  
$
0.04
      
(0.23
)
    
0.12
  
                         
Diluted net income (loss) per share from:
                        
    Continuing operations
  
$
0.24
    
$
0.18
    
$
0.22
  
    Discontinued operations
    
(0.20
)
    
(0.41
)
    
(0.11
)
    Net income (loss)
  
$
0.04
    
$
(0.23
)
    
0.11
  
                         
Shares used in per share calculation:
                        
Basic
    
17,167
      
18,157
      
19,239
  
Diluted
    
17,447
      
18,363
      
19,543
  
 
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
 

(Unaudited in thousands, except per share data)
  
Three Months Ended
 
 
Reconciliation of GAAP income from continuing operations, net of tax, to non-GAAP income from continuing operations, net of tax
  
September 28,
2014
    
June 29,
2014
    
September 29,
2013
  
GAAP Income from continuing operations, net of tax
  
$
4,191
    
$
3,233
    
$
4,211
  
Adjustments to measure non-GAAP:
                        
Related to cost of revenues:
                        
Stock-based compensation expense
    
89
      
88
      
108
  
Amortization of acquired intangible assets
    
36
      
36
      
35
  
Total related to cost of revenues
    
125
      
124
      
143
  
                         
Related to operating expenses:
                        
Legal, advisory and other charges related to certain corporate governance matters
    
799
      
--
      
--
  
Stock-based compensation expense
    
1,381
      
1,072
      
1,861
  
Amortization of acquired intangible assets
    
10
      
10
      
40
  
Total related to operating expenses
    
2,190
      
1,082
      
1,901
  
                         
Gain on sale of equity investments
    
--
      
(578
)
    
--
  
Tax effects on non-GAAP adjustments
    
(500
)
    
385
      
(275
)
                         
Non-GAAP income from continuing operations, net of tax
  
$
6,006
    
$
4,246
    
$
5,980
  
                         
Non-GAAP income per share – continuing operations, net of tax
                        
    Basic
  
$
0.35
    
$
0.23
    
$
0.31
  
    Diluted
    
0.34
      
0.23
      
0.31
  
                         
Shares used in computing non-GAAP income per share – continuing operations, net of tax
                        
Basic
    
17,167
      
18,157
      
19,239
  
Diluted
    
17,447
      
18,363
      
19,543
  
                         
Reconciliation of GAAP gross profit to non-GAAP gross profit
                        
GAAP gross profit
  
$
18,203
    
$
15,298
    
$
17,966
  
Stock-based compensation expense included in cost of revenues
    
89
      
88
      
108
  
Amortization of acquired intangible assets included in cost of revenues
    
36
      
36
      
35
  
Non-GAAP gross profit
  
$
18,328
    
$
15,422
    
$
18,109
  
                         
GAAP gross margin
    
31.9
%
    
29.9
%
    
32.8
%
Non-GAAP gross margin
    
32.1
%
    
30.2
%
    
33.1
%


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Unaudited in thousands)
  
Three Months Ended
  
 
  
September 28,
2014
    
September 29,
2013
  
Cash flows from operating activities:
  
   
 
Net income
  
$
612
    
$
2,222
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation expense
    
2,428
      
2,001
  
Amortization of acquired intangible assets
    
46
      
75
  
Stock-based compensation expense
    
1,576
      
2,077
  
Deferred income taxes
    
36
      
(74
)
Net loss on sale and disposal of assets
    
--
      
77
  
Other
    
223
      
189
 
Changes in assets and liabilities
    
(597
)
    
(2,128
)
Net cash provided by operating activities
    
4,324
      
4,439
  
 
                
Cash flows from investing activities:
                
Net maturities (purchases) of investments
    
16,482
      
(8,336
)
Net purchases of property and equipment
    
(1,383
)
    
(5,451
)
Net purchases of cost or equity investments
    
(74
)
    
--
  
Net cash provided by (used in) investing activities
    
15,025
      
(13,787
)
 
                
Cash flows from financing activities:
                
Proceeds from issuance of common stock
    
1,263
      
620
  
Repurchases of common stock
    
(12,569
)
    
--
  
Dividend payments to stockholders
    
(858
)
    
--
  
Other
    
(445
)
    
(1,147
)
Net cash used in financing activities
    
(12,609
)
    
(527
)
                 
Effect of exchange rates on cash and cash equivalents 
    
(1
)
    
38
  
Net decrease in cash and cash equivalents
    
6,739
      
(9,837
)
Cash and cash equivalents at beginning of period
    
41,819
      
65,014
  
Cash and cash equivalents at end of period
  
$
48,558
    
$
55,177