Oplink Communications, Inc.

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Oplink Reports Fourth Quarter Fiscal Year 2013 Financial Results

FREMONT, Calif., Aug. 8, 2013 (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 fourth quarter of fiscal year 2013, ended June 30, 2013.

Revenue for the quarter was $49.3 million, an increase of 12% over prior quarter revenue of $44.1 million and fourth quarter fiscal 2012 revenue of $44.2 million. GAAP net income was $4.5 million, or $0.23 per diluted share, up from $2.1 million, or $0.11 per diluted share, in the prior quarter and a net loss of $5.2 million, or $(0.27) per diluted share, reported for the fourth quarter of fiscal 2012.

Non-GAAP net income for the fourth quarter was $4.7 million, or $0.24 per diluted share, compared to $3.4 million, or $0.18 per diluted share, reported in the prior quarter, and $3.8 million, or $0.19 per diluted share, reported for the fourth quarter of fiscal 2012. A reconciliation of the non-GAAP financial measures to their GAAP equivalents is included in the financial tables accompanying this press release.

For fiscal year 2013, revenue was $183.4 million, compared to $174.9 million for fiscal 2012. GAAP net income for fiscal 2013 was $13.4 million, or $0.69 per diluted share, compared to a GAAP net loss of $2.6 million, or $(0.13) per share, for fiscal 2012. Non-GAAP net income for fiscal 2013 was $17.6 million, or $0.91 per diluted share, compared to non-GAAP net income of $11.4 million, or $0.57 per diluted share, for fiscal 2012.

"The fourth quarter closed a solid year of financial performance for Oplink," said Joe Liu, Chairman and CEO of Oplink. "As we enter fiscal 2014, we are seeing some signs of increased demand, and we are optimistic that these trends will continue. We see growth opportunities for our products in both the telecom and datacom markets and we will continue to work closely with our customers to bring cost-effective, next generation optical solutions to market to meet the increasing demand for bandwidth."

Business Outlook for the Quarter Ending September 29, 2013

For the quarter ending September 29, 2013, the Company expects to report revenue of $51 to $55 million and GAAP net income of $0.11 to $0.17 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 $0.18 to $0.24. GAAP and non-GAAP net income per diluted share for the quarter ending September 29, 2013 assume an effective tax rate of 20%.

Conference Call Information

Oplink will host a corresponding conference call and live webcast at 2:00 p.m. Pacific Time on August 8, 2013. The conference call can be accessed by dialing 1-877-941-6010, or 1-480-629-9644 (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 August 8, 2013 until 11:59 p.m. Pacific Time on August 15, 2013, by dialing 1-800-406-7325 or 1-303-590-3030 (outside the U.S. and Canada) and entering pass code 4633564#.

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."

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, 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 September 29, 2013." 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 Mobile Interactive 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) changes in our effective tax rate, which could reduce our net income; and (8) 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)
     
  June 30,
2013
(Unaudited)
July 1,
2012
(1)
ASSETS    
Current assets:    
Cash and cash equivalents  $ 65,014 $ 81,233
Short-term investments 105,829 85,382
Accounts receivable, net 40,735 33,165
Inventories 30,028 19,091
Prepaid expenses and other current assets 7,029 8,633
Deferred tax assets 809 1,609
Total current assets 249,444 229,113
Property, plant and equipment, net 47,687 45,392
Long-term investments 3,307 9,606
Goodwill and intangible assets, net 1,146 1,648
Deferred tax assets 7,083 7,151
Other assets 16,504 12,279
Total assets $ 325,171 $ 305,189
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $ 18,166 $ 11,739
Accrued liabilities and other current liabilities 13,579 12,460
Total current liabilities 31,745 24,199
Non-current liabilities 10,225 8,858
Total liabilities 41,970 33,057
Stockholders' equity 283,201 272,132
Total liabilities and stockholders' equity $ 325,171 $ 305,189
     
(1) The July 1, 2012 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  Years Ended 
  June 30,
2013
March 31,
2013
July 1,
2012
June 30,
2013
July 1,
2012
  (Unaudited) (Unaudited) (1)
           
Revenues $ 49,293 $ 44,124 $ 44,245 $ 183,400 $ 174,928
Cost of revenues 31,774 28,474 29,062 117,072 118,766
Gross profit 17,519 15,650 15,183 66,328 56,162
Operating expenses:          
Research and development 6,794 6,281 5,348 24,336 21,037
Sales and marketing 3,750 3,590 3,084 13,900 10,993
General and administrative 2,273 2,174 2,033 8,710 12,876
Stock compensation expense  1,323 1,252 1,275 5,483 5,438
Amortization of intangible assets 86 91 91 359 664
Net (gain) loss on sale/disposal of assets (1,377) (258) 13 (1,647) (353)
Total operating expenses 12,849 13,130 11,844 51,141 50,655
Income from operations 4,670 2,520 3,339 15,187 5,507
Interest and other income, net  1,809 201 130 2,688 539
Income before provision for income taxes  6,479  2,721  3,469  17,875  6,046
Provision for income taxes  1,978  670  8,639 4,504  8,628
Net income (loss)  $ 4,501  $ 2,051  $ (5,170)  $ 13,371  $ (2,582)
           
Net income (loss) per share:          
Basic  $ 0.24  $ 0.11  $ (0.27)  $ 0.70  $ (0.13)
Diluted  $ 0.23  $ 0.11  $ (0.27)  $ 0.69  $ (0.13)
           
Shares used in per share calculation:          
Basic 19,105 19,029 19,117 19,080 19,302
Diluted 19,390 19,252 19,117 19,388 19,302
           
           
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except per share amounts)
  Three Months Ended  Years Ended 
  June 30,
2013
March 31,
2013
July 1,
2012
June 30,
2013
July 1,
2012
Reconciliation of GAAP net income (loss) to non-GAAP net income: (Unaudited) (Unaudited)
Net income (loss), GAAP  $ 4,501  $ 2,051  $ (5,170)  $ 13,371  $ (2,582)
Adjustments to measure non-GAAP:          
Related to cost of revenues:          
Stock compensation expense  91 81 76 344 366
Amortization of intangible assets 35 36 36 143 644
Total related to cost of revenues 126 117 112 487 1,010
           
Related to operating expenses:          
Legal settlement  -- -- -- -- 3,317
Stock compensation expense  1,323 1,252 1,275 5,483 5,438
Amortization of intangible assets 86 91 91 359 664
Total related to operating expenses 1,409 1,343 1,366 5,842 9,419
           
Gain on sale of equity investments (1,761) -- -- (1,761) --
Tax adjustments (2) -- -- 8,143 -- 8,143
Tax effects on non-GAAP adjustments 430 (130) (686) (329) (4,635)
           
Non-GAAP net income   $ 4,705  $ 3,381  $ 3,765  $ 17,610  $ 11,355
           
Net income per share, non-GAAP:          
Basic  $ 0.25  $ 0.18  $ 0.20  $ 0.92  $ 0.59
Diluted  $ 0.24  $ 0.18  $ 0.19  $ 0.91  $ 0.57
           
Shares used in per share calculation:          
Basic 19,105 19,029 19,117 19,080 19,302
Diluted 19,390 19,252 19,587 19,388 19,897
           
Reconciliation of GAAP gross profit to non-GAAP gross profit:          
GAAP gross profit  $ 17,519  $ 15,650  $ 15,183  $ 66,328  $ 56,162
Stock compensation expense included in cost of revenues 91 81 76 344 366
Amortization of intangible assets included in cost of revenues 35 36 36 143 644
Non-GAAP gross profit  $ 17,645  $ 15,767  $ 15,295  $ 66,815  $ 57,172
           
GAAP gross margin rate  35.5% 35.5% 34.3% 36.2% 32.1%
Non-GAAP gross margin rate  35.8% 35.7% 34.6% 36.4% 32.7%
           
(1) The condensed consolidated statement of operations for the year ended July 1, 2012 has been derived from audited financial statements at that date.
           
(2) The adjustment recorded in the fourth quarter of fiscal 2012 was related to the deferred tax implications of the transfer of certain intercompany liabilities.  As a result of the transfer, certain deferred tax assets will not be realized by the US entity.
 
OPLINK COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(In thousands)
  Years Ended
  June 30,
2013
July 1,
2012
  (Unaudited) (1)
Cash flows from operating activities:    
Net income (loss) $ 13,371 $ (2,582)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:  
Depreciation and amortization 7,233 6,359
Amortization of intangible assets 502 1,308
Stock compensation expense  5,827 5,804
Deferred income taxes 1,084 9,168
Net gain on sale/disposal of assets and equity investments (3,481) (353)
Other 810 (99)
Change in assets and liabilities (5,604) 4,015
Net cash provided by operating activities  19,742  23,620
     
Cash flows from investing activities:    
Net (purchases) maturities of investments (25,208) 40,088
Net purchases of property, plant and equipment (7,564) (11,664)
Net sales (purchases) of cost or equity investments 3,782 (200)
Business acquisition (1,090) --
Net cash (used in) provided by investing activities  (30,080) 28,224
     
Cash flows from financing activities:    
Proceeds from issuance of common stock  3,487 4,166
Repurchase of common stock (8,320) (26,402)
Other (1,205) (1,002)
Net cash used in financing activities (6,038) (23,238)
     
Effect of exchange rate changes on cash and cash equivalents 157 (17)
Net (decrease) increase in cash and cash equivalents (16,219) 28,589
Cash and cash equivalents, beginning of period 81,233 52,644
Cash and cash equivalents, end of period $ 65,014 $ 81,233
     
(1) The condensed consolidated statement of cash flows for the year ended July 1, 2012 has been derived from audited financial statements at that date.
CONTACT: Investor Relations:
         Shirley Yin
         510-933-7233
         ir@oplink.com
Source: Oplink Communications, Inc.
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