##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 27, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 000-31581
 OPLINK COMMUNICATIONS, INC.
  Delaware
    
    No. 77-0411346(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 (Address of principal executive offices) (Zip Code)
  þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ
 o o




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##### 



OPLINK COMMUNICATIONS, INC.
 
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited):Condensed Consolidated Balance Sheets  September 30, 2009 and June
30, 2009
    
    3Condensed Consolidated Statements of Operations  Three months ended
September 30, 2009 and 2008
    
    4Condensed Consolidated Statements of Cash Flows  Three months ended
September 30, 2009 and 2008
    
    5Notes to Condensed Consolidated Financial Statements
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    31Item 4. Controls and Procedures
    
    32PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    32Item 1A. Risk Factors
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    34Item 3. Defaults Upon Senior Securities
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    34Item 5. Other Information
    
    34Item 6. Exhibits
    
    34SIGNATURES
    
    36EX-10.1EX-10.2EX-10.3EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART I. FINANCIAL INFORMATION
 
 ITEM 1 
    
    FINANCIAL STATEMENTS
 OPLINK COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 September 30,
    
    
    June 30,2009
    
    
    2009(In thousands, except shareand per share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    53,266
    
    
    $
    49,702Short-term investments
    
    
    125,390
    
    
    
    115,774Accounts receivable, net
    
    
    27,222
    
    
    
    29,023Inventories
    
    
    7,907
    
    
    
    10,031Prepaid expenses and other current assets
    
    
    3,092
    
    
    
    2,648Total current assets
    
    
    216,877
    
    
    
    207,178Long-term investments
    
    
    
    
    
    
    3,180Property, plant and equipment, net
    
    
    29,145
    
    
    
    30,318Intangible assets, net
    
    
    7,902
    
    
    
    8,848Other assets
    
    
    424
    
    
    
    423Total assets
    
    $
    254,348
    
    
    $
    249,947LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    6,908
    
    
    $
    7,580Accrued liabilities
    
    
    10,750
    
    
    
    10,044Income taxes payable
    
    
    229
    
    
    
    644Accrued transitional costs for contract manufacturing
    
    
    160
    
    
    
    160Total current liabilities
    
    
    18,047
    
    
    
    18,428Income taxes payable, non-current
    
    
    2,923
    
    
    
    2,816Other non-current liabilities
    
    
    678
    
    
    
    676Total liabilities
    
    
    21,648
    
    
    
    21,920Commitments and contingencies (Note 14)Stockholders equity:Common stock, $0.001 par value, 34,000,000 shares
authorized; 20,654,233 and 20,497,592 shares issued and outstanding
as of September 30, 2009 and June 30, 2009, respectively
    
    
    21
    
    
    
    20Additional paid-in capital
    
    
    455,838
    
    
    
    453,083Accumulated other comprehensive income
    
    
    8,354
    
    
    
    8,246Accumulated deficit
    
    
    (231,513
    )
    
    
    (233,322
    )Total stockholders equity
    
    
    232,700
    
    
    
    228,027Total liabilities and stockholders equity
    
    $
    254,348
    
    
    $
    249,947
 
 (1)
    
    The condensed consolidated balance sheet at June 30, 2009 has been derived from the
audited consolidated financial statements at that date. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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OPLINK COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months EndedSeptember 30,2009
    
    
    2008(in thousands, except per share data)Revenues
    
    $
    33,565
    
    
    $
    42,952Cost of revenues:Cost of revenues
    
    
    23,634
    
    
    
    36,645Stock compensation expense
    
    
    99
    
    
    
    118Total cost of revenues
    
    
    23,733
    
    
    
    36,763Gross profit
    
    
    9,832
    
    
    
    6,189Operating expenses:Research and development:Research and development
    
    
    2,225
    
    
    
    3,282Stock compensation expense
    
    
    269
    
    
    
    223Total research and development
    
    
    2,494
    
    
    
    3,505Sales and marketing:Sales and marketing
    
    
    2,086
    
    
    
    2,257Stock compensation expense
    
    
    328
    
    
    
    315Total sales and marketing
    
    
    2,414
    
    
    
    2,572General and administrative:General and administrative
    
    
    1,721
    
    
    
    2,666Stock compensation expense
    
    
    950
    
    
    
    911Total general and administrative
    
    
    2,671
    
    
    
    3,577Amortization of intangible assets
    
    
    404
    
    
    
    412Total operating expenses
    
    
    7,983
    
    
    
    10,066Income (loss) from operations
    
    
    1,849
    
    
    
    (3,877
    )Interest and other income, net
    
    
    274
    
    
    
    1,040Gain (loss) on sale or disposal of assets
    
    
    124
    
    
    
    (119
    )Income (loss) before provision for income taxes
    
    
    2,247
    
    
    
    (2,956
    )Provision for income taxes
    
    
    (438
    )
    
    
    (456
    )Net income (loss)
    
    $
    1,809
    
    
    $
    (3,412
    )Net income (loss) per share:Basic
    
    $
    0.09
    
    
    $
    (0.16
    )Diluted
    
    $
    0.09
    
    
    $
    (0.16
    )Shares used in per share calculation:Basic
    
    
    20,566
    
    
    
    20,757Diluted
    
    
    21,173
    
    
    
    20,757
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 4




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OPLINK COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Three Months EndedSeptember 30,2009
    
    
    2008(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    1,809
    
    
    $
    (3,412
    )Adjustments to reconcile net income (loss) to
net cash provided by operating activities:Depreciation and amortization of property and equipment
    
    
    1,666
    
    
    
    1,835Amortization of intangible and other assets
    
    
    946
    
    
    
    954Stock compensation expense
    
    
    1,646
    
    
    
    1,567Provision for doubtful accounts
    
    
    
    
    
    
    148Inventory charges
    
    
    
    
    
    
    4,065Amortization of premium (discount) on investments
    
    
    9
    
    
    
    (146
    )(Gain) loss on sale or disposal of assets
    
    
    (124
    )
    
    
    119Other
    
    
    (6
    )
    
    
    (341
    )Change in assets and liabilities:Accounts receivable
    
    
    1,795
    
    
    
    1,356Inventories
    
    
    2,105
    
    
    
    401Prepaid expenses and other current assets
    
    
    (445
    )
    
    
    (382
    )Other assets
    
    
    18
    
    
    
    (7
    )Accounts payable
    
    
    (672
    )
    
    
    (1,579
    )Accrued liabilities and other liabilities
    
    
    386
    
    
    
    (137
    )Net cash provided by operating activities
    
    
    9,133
    
    
    
    4,441Cash flows from investing activities:Purchases of available-for-sale investments
    
    
    (43,974
    )
    
    
    (5,033
    )Sales and maturities of available-for-sale investments
    
    
    37,685
    
    
    
    28,019Proceeds from sales of property and equipment
    
    
    147
    
    
    
    355Purchases of property and equipment
    
    
    (541
    )
    
    
    (462
    )Net cash (used in ) provided by investing activities
    
    
    (6,683
    )
    
    
    22,879Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    1,109
    
    
    
    353Net cash provided by financing activities
    
    
    1,109
    
    
    
    353Effect of exchange rate changes on cash and cash
equivalents
    
    
    5
    
    
    
    (224
    )Net increase in cash and cash equivalents
    
    
    3,564
    
    
    
    27,449Cash and cash equivalents, beginning of period
    
    
    49,702
    
    
    
    72,001Cash and cash equivalents, end of period
    
    $
    53,266
    
    
    $
    99,450
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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OPLINK COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months EndedSeptember 30,2009
    
    
    2008(In thousands)Supplemental disclosures of cash flow information:Cash paid during the period for income taxes
    
    $
    749,000
    
    
    $
    186,000Cash paid during the period for interest
    
    $
    
    
    
    $
    
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 6




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OPLINK COMMUNICATIONS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Description of Business.
   Basis of Presentation
   7




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Risks and Uncertainties.
 Net Income (Loss) Per Share
 8




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Three Months EndedSeptember 30,2009
    
    
    2008Numerator:Net income (loss)
    
    $
    1,809
    
    
    $
    (3,412
    )Denominator:Weighted average shares outstanding  basic
    
    
    20,566
    
    
    
    20,757Effect of dilutive potential common shares
    
    
    607
    
    
    
    Weighted average shares outstanding  diluted
    
    
    21,173
    
    
    
    20,757Net income (loss) per share  basic
    
    $
    0.09
    
    
    $
    (0.16
    )Net income (loss) per share  diluted
    
    $
    0.09
    
    
    $
    (0.16
    )Antidilutive stock options and restricted stock units
not included in income per share calculation
    
    
    2,644
    
    
    
    4,185
 Comprehensive Income (Loss).
 September 30,
    
    
    June 30,2009
    
    
    2009Accumulated other comprehensive income:Cumulative translation adjustment
    
    $
    8,291
    
    
    $
    8,329Unrealized gain (loss) on investments, net
    
    
    63
    
    
    
    (83
    )$
    8,354
    
    
    $
    8,246
  Three Months EndedSeptember 30,2009
    
    
    2008Net income (loss)
    
    $
    1,809
    
    
    $
    (3,412
    )Change in cumulative translation adjustment
    
    
    (38
    )
    
    
    501Change in unrealized gain on investments, net
    
    
    146
    
    
    
    15Total comprehensive income (loss)
    
    $
    1,917
    
    
    $
    (2,896
    )
 Short-Term and Long-Term Investments.
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September 30, 2009Gross
    
    
    GrossCarrying
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-term investments:Certificates of deposit
    
    $
    6,960
    
    
    $
    6,960
    
    
    $
    
    
    
    $
    
    
    
    $
    6,960United States government agencies
    
    
    10,006
    
    
    
    10,000
    
    
    
    6
    
    
    
    
    
    
    
    10,006United States Treasury
    
    
    53,957
    
    
    
    53,944
    
    
    
    18
    
    
    
    (5
    )
    
    
    53,957Corporate securities
    
    
    54,467
    
    
    
    54,423
    
    
    
    72
    
    
    
    (8
    )
    
    
    54,487Total short-term investments
    
    
    125,390
    
    
    
    125,327
    
    
    
    96
    
    
    
    (13
    )
    
    
    125,410Total investments
    
    $
    125,390
    
    
    $
    125,327
    
    
    $
    96
    
    
    $
    (13
    )
    
    $
    125,410
 June 30, 2009Gross
    
    
    GrossCarrying
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-term investments:Certificates of deposit
    
    $
    3,140
    
    
    $
    3,140
    
    
    $
    
    
    
    $
    
    
    
    $
    3,140United States government agencies
    
    
    10,004
    
    
    
    10,001
    
    
    
    3
    
    
    
    (2
    )
    
    
    10,002United States Treasury
    
    
    48,971
    
    
    
    48,944
    
    
    
    27
    
    
    
    
    
    
    
    48,971Corporate securities
    
    
    53,659
    
    
    
    53,772
    
    
    
    13
    
    
    
    (126
    )
    
    
    53,659Total short-term investments
    
    
    115,774
    
    
    
    115,857
    
    
    
    43
    
    
    
    (128
    )
    
    
    115,772Long-term investments:Corporate securities
    
    
    3,180
    
    
    
    3,180
    
    
    
    
    
    
    
    
    
    
    
    3,180Total long-term investments
    
    
    3,180
    
    
    
    3,180
    
    
    
    
    
    
    
    
    
    
    
    3,180Total investments
    
    $
    118,954
    
    
    $
    119,037
    
    
    $
    43
    
    
    $
    (128
    )
    
    $
    118,952
  September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAvailable-for-sale investments:Certificates of deposit
    
    $
    6,960
    
    
    $
    
    
    
    $
    
    
    
    $
    6,960United States government agencies
    
    
    5,000
    
    
    
    6
    
    
    
    
    
    
    
    5,006United States Treasury
    
    
    53,944
    
    
    
    18
    
    
    
    (5
    )
    
    
    53,957Corporate securities
    
    
    51,263
    
    
    
    52
    
    
    
    (8
    )
    
    
    51,307Total available-for-sale investments
    
    
    117,167
    
    
    
    76
    
    
    
    (13
    )
    
    
    117,230Held-to-maturity investments:Corporate securities
    
    
    3,160
    
    
    
    20
    
    
    
    
    
    
    
    3,180United States government agencies
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    5,000Total held-to-maturity investments
    
    
    8,160
    
    
    
    20
    
    
    
    
    
    
    
    8,180Total investments
    
    $
    125,327
    
    
    $
    96
    
    
    $
    (13
    )
    
    $
    125,410
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June 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAvailable-for-sale investments:Certificates of deposit
    
    $
    3,140
    
    
    $
    
    
    
    $
    
    
    
    $
    3,140United States government agencies
    
    
    5,000
    
    
    
    3
    
    
    
    
    
    
    
    5,003United States Treasury
    
    
    48,944
    
    
    
    27
    
    
    
    
    
    
    
    48,971Corporate securities
    
    
    53,772
    
    
    
    13
    
    
    
    (126
    )
    
    
    53,659Total available-for-sale investments
    
    
    110,856
    
    
    
    43
    
    
    
    (126
    )
    
    
    110,773Held-to-maturity investments:Corporate securities
    
    
    3,180
    
    
    
    
    
    
    
    
    
    
    
    3,180United States government agencies
    
    
    5,001
    
    
    
    
    
    
    
    (2
    )
    
    
    4,999Total held-to-maturity investments
    
    
    8,181
    
    
    
    
    
    
    
    (2
    )
    
    
    8,179Total investments
    
    $
    119,037
    
    
    $
    43
    
    
    $
    (128
    )
    
    $
    118,952
  September 30, 2009In Loss Position< 12 monthsGrossFair
    
    
    UnrealizedValue
    
    
    LossesAvailable-for-sale investments:United States Treasury
    
    $
    9,975
    
    
    $
    (5
    )Corporate securities
    
    
    16,107
    
    
    
    (8
    )Total available-for-sale investments in loss position
    
    $
    26,082
    
    
    $
    (13
    )
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September 30, 2009
    
    
    June 30, 2009Amortized
    
    
    Estimated
    
    
    Amortized
    
    
    EstimatedCost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair ValueAvailable-for-sale investments:Due in one year or less
    
    $
    117,167
    
    
    $
    117,230
    
    
    $
    110,856
    
    
    $
    110,773Total available-for-sale investments
    
    
    117,167
    
    
    
    117,230
    
    
    
    110,856
    
    
    
    110,773Held-to-maturity investments:Due in one year or less
    
    
    8,160
    
    
    
    8,180
    
    
    
    5,001
    
    
    
    4,999Due in one year to five years
    
    
    
    
    
    
    
    
    
    
    3,180
    
    
    
    3,180Total held-to-maturity investments
    
    
    8,160
    
    
    
    8,180
    
    
    
    8,181
    
    
    
    8,179Total investments
    
    $
    125,327
    
    
    $
    125,410
    
    
    $
    119,037
    
    
    $
    118,952
 Fair Value Accounting
 
    
    Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities that the reporting entity has the ability to access at the measurement
date;
    
    Level 2 inputs are inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly; and
    
    Level 3 inputs are unobservable inputs for the asset or liability.
   Items Measured at Fair Value on a Recurring Basis
  12




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September 30, 2009Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalFinancial assets:Money market funds
    
    $
    29,818
    
    
    $
    
    
    
    $
    
    
    
    $
    29,818Certificates of deposit
    
    
    
    
    
    
    6,960
    
    
    
    
    
    
    
    6,960United States government agencies
    
    
    
    
    
    
    5,006
    
    
    
    
    
    
    
    5,006United States Treasury
    
    
    
    
    
    
    63,957
    
    
    
    
    
    
    
    63,957Corporate securities
    
    
    
    
    
    
    51,307
    
    
    
    
    
    
    
    51,307Total financial assets
    
    $
    29,818
    
    
    $
    127,230
    
    
    $
    
    
    
    $
    157,048Financial liabilities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  Items Measured at Fair Value on a Nonrecurring Basis
  Inventories
 September 30,
    
    
    June 30,2009
    
    
    2009Inventories:Raw materials
    
    $
    6,727
    
    
    $
    7,809Work-in-process
    
    
    1,180
    
    
    
    2,222Total
    
    $
    7,907
    
    
    $
    10,031
 Intangible Assets, Net.
 EstimatedUseful Life
    
    
    Gross
    
    
    AccumulatedSeptember 30, 2009
    
    (in Years)
    
    
    Amount
    
    
    Amortization
    
    
    NetTechnology
    
    
    4
    
    
    $
    8,673
    
    
    $
    4,445
    
    
    $
    4,228Trade name
    
    
    6
    
    
    
    1,595
    
    
    
    541
    
    
    
    1,054Customer relationships
    
    
    3-4
    
    
    
    5,481
    
    
    
    2,861
    
    
    
    2,620Backlog
    
    
    1
    
    
    
    97
    
    
    
    97
    
    
    
    Total
    
    
    
    
    
    $
    15,846
    
    
    $
    7,944
    
    
    $
    7,902
 EstimatedUseful Life
    
    
    Gross
    
    
    AccumulatedJune 30, 2009
    
    (in Years)
    
    
    Amount
    
    
    Amortization
    
    
    NetTechnology
    
    
    4
    
    
    $
    8,673
    
    
    $
    3,903
    
    
    $
    4,770Trade name
    
    
    6
    
    
    
    1,595
    
    
    
    474
    
    
    
    1,121Customer relationships
    
    
    3-4
    
    
    
    5,481
    
    
    
    2,524
    
    
    
    2,957Backlog
    
    
    1
    
    
    
    97
    
    
    
    97
    
    
    
    Total
    
    
    
    
    
    $
    15,846
    
    
    $
    6,998
    
    
    $
    8,848
 13




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##### Table of Contents



Three Months EndedSeptember 30,2009
    
    
    2008Reported as:Cost of revenues
    
    $
    542
    
    
    $
    542Operating expenses
    
    
    404
    
    
    
    412Total
    
    $
    946
    
    
    $
    954
  AmountFiscal years ending June 30,2010
    
    $
    2,8362011
    
    
    3,6772012
    
    
    1,0662013
    
    
    2602014
    
    
    63After 2014
    
    
    $
    7,902
 Accrued Liabilities.
 September 30,
    
    
    June 30,2009
    
    
    2009Accrued liabilities:Payroll and related expenses
    
    $
    3,383
    
    
    $
    3,120Employee withholdings and related expenses
    
    
    958
    
    
    
    586Accrued sales commission
    
    
    671
    
    
    
    535Accrued warranty
    
    
    371
    
    
    
    371Accrued professional fees
    
    
    860
    
    
    
    1,561Accrued sales return
    
    
    598
    
    
    
    595Advance deposits from customers
    
    
    248
    
    
    
    123Other
    
    
    3,661
    
    
    
    3,153$
    10,750
    
    
    $
    10,044
 Product Warranties.
 14




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##### Table of Contents



Three Months EndedSeptember 30,2009
    
    
    2008Balance at the beginning of the period
    
    $
    371
    
    
    $
    286Accruals for warranties issued during the period
    
    
    59
    
    
    
    85Accruals related to pre-existing warranties
including expirations and changes in estimates
    
    
    14
    
    
    
    25Cost of warranty repair
    
    
    (73
    )
    
    
    (50
    )Balance at the end of the period
    
    $
    371
    
    
    $
    346
 Stock Compensation
 Three Months EndedSeptember 30,2009
    
    
    2008Stock-based compensation expense by type of award:Employee stock options
    
    $
    1,015
    
    
    $
    1,116Restricted stock awards and restricted stock units
    
    
    398
    
    
    
    223Employee stock purchase plan
    
    
    233
    
    
    
    228Total stock-based compensation
    
    
    1,646
    
    
    
    1,567Tax effect on stock-based compensation
    
    
    
    
    
    
    Net effect on net income (loss)
    
    $
    1,646
    
    
    $
    1,567Effect on net income (loss) per share:Basic
    
    $
    (0.08
    )
    
    $
    (0.08
    )Diluted
    
    $
    (0.08
    )
    
    $
    (0.08
    )
    15




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##### Table of Contents



Valuation Assumptions
  Three Months EndedSeptember 30,2009
    
    2008Risk-free interest rate
    
    
    2.49%
    
    
    
    2.97%Expected term
    
    4.6 years
    
    
    4.6 yearsExpected dividends
    
    
    0%
    
    
    
    0%Volatility
    
    
    54%
    
    
    
    49%
    Equity Incentive Program
  16




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##### Table of Contents



Weighted
    
    
    Restricted
    
    
    WeightedNumber of
    
    
    Average
    
    
    Stock
    
    
    AverageAwards Available
    
    
    Options
    
    
    Exercise
    
    
    Awards/Units
    
    
    Grant Datefor Grant
    
    
    Outstanding
    
    
    Price
    
    
    Outstanding
    
    
    Fair ValueBalance, June 30, 2009
    
    
    1,876,918
    
    
    
    3,795,130
    
    
    $
    14.0630
    
    
    
    
    
    
    $
    Granted
    
    
    (505,733
    )
    
    
    26,000
    
    
    
    13.9000
    
    
    
    479,733
    
    
    
    13.9000Exercised or vested
    
    
    
    
    
    
    (140,641
    )
    
    
    7.8841
    
    
    
    (16,000
    )
    
    
    13.9000Cancelled or forfeited
    
    
    56,227
    
    
    
    (56,227
    )
    
    
    33.0703
    
    
    
    
    
    
    
    Expired (1)
    
    
    (15,696
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, September 30, 2009
    
    
    1,411,716
    
    
    
    3,624,262
    
    
    $
    14.0067
    
    
    
    463,733
    
    
    $
    13.9000
 
 (1)
    
    In connection with the acquisition of OCP, Oplink assumed outstanding stock options
issued pursuant to OCPs stock option plans and converted them into options to purchase
shares of Oplinks common stock pursuant to conversion terms stated in the merger agreement.
Stock options that were granted and subsequently cancelled are not available for future
grant.  Options Outstanding
    
    
    Options Vested and Exercisableat September 30, 2009
    
    
    at September 30, 2009Weighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AverageRemaining
    
    
    Weighted
    
    
    Aggregate
    
    
    
    
    
    
    Remaining
    
    
    Weighted
    
    
    AggregateContractual
    
    
    Average
    
    
    Intrinsic
    
    
    
    
    
    
    Contractual
    
    
    Average
    
    
    IntrinsicRange of Exercise
    
    Number
    
    
    Life
    
    
    Exercise
    
    
    Value
    
    
    Number
    
    
    Life
    
    
    Exercise
    
    
    ValuePrice
    
    Outstanding
    
    
    (in Years)
    
    
    Price
    
    
    (in thousands)
    
    
    Outstanding
    
    
    (in Years)
    
    
    Price
    
    
    (in thousands)$1.0000 - $5.00
    
    
    414,904
    
    
    
    3.1
    
    
    $
    4.62
    
    
    $
    3,979
    
    
    
    414,904
    
    
    
    3.1
    
    
    $
    4.62
    
    
    $
    3,979$5.0001 - $8.00
    
    
    393,408
    
    
    
    3.9
    
    
    
    5.78
    
    
    
    3,317
    
    
    
    343,558
    
    
    
    3.2
    
    
    
    5.51
    
    
    
    2,988$8.0001 - $10.00
    
    
    47,199
    
    
    
    2.3
    
    
    
    8.70
    
    
    
    260
    
    
    
    47,199
    
    
    
    2.3
    
    
    
    8.70
    
    
    
    260$10.0001 - $11.00
    
    
    485,711
    
    
    
    8.1
    
    
    
    10.09
    
    
    
    2,001
    
    
    
    201,819
    
    
    
    7.4
    
    
    
    10.09
    
    
    
    831$11.0001 - $13.00
    
    
    270,428
    
    
    
    7.6
    
    
    
    12.18
    
    
    
    550
    
    
    
    138,312
    
    
    
    6.6
    
    
    
    12.40
    
    
    
    250$13.0001 - $15.00
    
    
    691,755
    
    
    
    7.5
    
    
    
    13.68
    
    
    
    401
    
    
    
    367,372
    
    
    
    6.6
    
    
    
    13.65
    
    
    
    234$15.0001 - $18.00
    
    
    267,191
    
    
    
    6.7
    
    
    
    17.45
    
    
    
    
    
    
    
    191,658
    
    
    
    6.4
    
    
    
    17.43
    
    
    
    $18.0001 - $20.00
    
    
    193,370
    
    
    
    4.3
    
    
    
    18.87
    
    
    
    
    
    
    
    167,810
    
    
    
    4.0
    
    
    
    18.81
    
    
    
    $20.0001 - $25.00
    
    
    753,170
    
    
    
    6.7
    
    
    
    20.24
    
    
    
    
    
    
    
    611,824
    
    
    
    6.7
    
    
    
    20.24
    
    
    
    $25.0001 - $35.00
    
    
    70,059
    
    
    
    0.9
    
    
    
    31.40
    
    
    
    
    
    
    
    69,977
    
    
    
    0.9
    
    
    
    31.40
    
    
    
    $42.0000 - $158.00
    
    
    37,067
    
    
    
    1.0
    
    
    
    74.21
    
    
    
    
    
    
    
    37,067
    
    
    
    1.0
    
    
    
    74.21
    
    
    
    3,624,262
    
    
    
    6.0
    
    
    $
    14.10
    
    
    $
    10,508
    
    
    
    2,591,500
    
    
    
    5.2
    
    
    $
    14.21
    
    
    $
    8,542Vested and
expected to vest
    
    
    3,547,094
    
    
    
    6.0
    
    
    $
    14.04
    
    
    $
    10,335
   17




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Employee Stock Purchase Plan
  Recent Accounting Pronouncements
   18




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##### Table of Contents



Commitments and Contingencies.
 Contractual Obligations
  Contractual Obligations Due by PeriodContractual Obligations
    
    Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    4-5 yearsPurchase obligations
    
    $
    8,050
    
    
    $
    8,050
    
    
    $
    
    
    
    $
    Operating leases
    
    
    526
    
    
    
    331
    
    
    
    187
    
    
    
    8Capital expenditure
    
    
    446
    
    
    
    220
    
    
    
    205
    
    
    
    21Total
    
    $
    9,022
    
    
    $
    8,601
    
    
    $
    392
    
    
    $
    29
 Litigation
 IPO Securities Litigation
  19




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IPO 16(b) Claim
   Oplink vs. O-Net Communications, et al.
  20




---



##### Table of Contents



Segment Reporting.
  Three MonthsEnded September 30,2009
    
    
    2008Revenues:United States
    
    $
    13,417
    
    
    $
    14,247Canada
    
    
    810
    
    
    
    2,851Europe
    
    
    4,975
    
    
    
    6,899China
    
    
    7,846
    
    
    
    9,248Japan
    
    
    3,661
    
    
    
    4,551Asia-Pacific (excluding China and Japan)
    
    
    2,856
    
    
    
    5,156Totals
    
    $
    33,565
    
    
    $
    42,952
  September 30,
    
    
    June 30,2009
    
    
    2009United States
    
    $
    6,032
    
    
    $
    7,492China
    
    
    23,102
    
    
    
    22,811Asia-Pacific (excluding China)
    
    
    11
    
    
    
    15Totals
    
    $
    29,145
    
    
    $
    30,318
  Income Taxes.
  21




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Subsequent Events.
   22




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ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-looking statements
   Overview
   Use of Estimates and Critical Accounting Policies
   23




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##### Table of Contents




    
    revenue recognition and product returns;
    
    depreciation and amortization;
    
    warranty obligations;
    
    allowance for doubtful accounts;
    
    excess and obsolete inventory;
    
    impairment of investments;
    
    long-lived asset valuation;
    
    impairment of goodwill and other intangible assets;
    
    fair value accounting;
    
    business combination;
    
    income taxes;
    
    stock compensation; and
    
    loss contingencies.
   Results of Operations
 Revenues
 Three Months EndedSeptember 30,
    
    
    
    Percentage2009
    
    2008
    
        Change
    
    Change(In thousands, except percentages)Revenue
    
    $
    33,565
    
    
    $
    42,952
    
    
    $
    (9,387
    )
    
    
    -21.9
    %
 24




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##### Table of Contents



Gross Profit
 Three Months EndedSeptember 30,
    
    
    
    Percentage2009
    
    2008
    
        Change
    
    Change(In thousands, except percentages)Gross profit
    
    $
    9,832
    
    
    $
    6,189
    
    
    $
    3,643
    
    
    
    58.9
    %Gross profit margin
    
    
    29.3
    %
    
    
    14.4
    %
    Research and Development
 Three Months EndedSeptember 30,
    
    
    
    Percentage2009
    
    2008
    
        Change
    
    Change(In thousands, except percentages)Research and development
    
    $
    2,494
    
    
    $
    3,505
    
    
    $
    (1,011
    )
    
    
    -28.8
    %
   25




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Sales and Marketing
 Three Months EndedSeptember 30,
    
    
    
    Percentage2009
    
    2008
    
        Change
    
    Change(In thousands, except percentages)Sales and marketing
    
    $
    2,414
    
    
    $
    2,572
    
    
    $
    (158
    )
    
    
    -6.1
    %
  General and Administrative
 Three Months EndedSeptember 30,
    
    
    
    Percentage2009
    
    2008
    
        Change
    
    Change(In thousands, except percentages)General and administrative
    
    $
    2,671
    
    
    $
    3,577
    
    
    $
    (906
    )
    
    
    -25.3
    %
   Stock Compensation Expense
 Three Months EndedSeptember 30,
    
    
    
    Percentage2009
    
    2008
    
        Change
    
    Change(In thousands, except percentages)Stock compensation
expense
    
    $
    1,646
    
    
    $
    1,567
    
    
    $
    79
    
    
    
    5.0
    %
  26




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##### Table of Contents



Amortization of Intangible and Other Assets
  Interest and Other Income, Net
 Three Months EndedSeptember 30,
    
    
    
    Percentage2009
    
    2008
    
        Change
    
    Change(In thousands, except percentages)Interest and other income, net
    
    $
    274
    
    
    $
    1,040
    
    
    $
    (766
    )
    
    
    -73.7
    %
  Provision for Income Taxes
    Liquidity and Capital Resources
  27




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Three Months Ended September 30, 2009
       .
 28




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##### Table of Contents



Three Months Ended September 30, 2008
       .
 Off-Balance Sheet Arrangements
  Contractual Obligations
  Contractual Obligations Due by PeriodContractual Obligations
    
    Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    4-5 yearsPurchase obligations
    
    $
    8,050
    
    
    $
    8,050
    
    
    $
    
    
    
    $
    Operating leases
    
    
    526
    
    
    
    331
    
    
    
    187
    
    
    
    8Capital expenditure
    
    
    446
    
    
    
    220
    
    
    
    205
    
    
    
    21Total
    
    $
    9,022
    
    
    $
    8,601
    
    
    $
    392
    
    
    $
    29
 Recent Accounting Pronouncements
  29




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30




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##### Table of Contents



ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  Interest Rate Exposure
   Carrying
    
    
    Average Rate
    
    
    Carrying
    
    
    Average RateValue at
    
    
    of Return at
    
    
    Value at
    
    
    of Return atSeptember 30,
    
    
    September 30,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2009
    
    
    2009
    
    
    2009(Annualized)
    
    
    
    
    
    
    (Annualized)Investment Securities:Cash equivalents  variable rate
    
    $
    28,363
    
    
    
    0.2
    %
    
    $
    24,813
    
    
    
    0.3
    %Cash equivalents  fixed rate
    
    
    11,633
    
    
    
    0.3
    %
    
    
    4,999
    
    
    
    0.2
    %Short-term investments  variable rate
    
    
    14,774
    
    
    
    0.8
    %
    
    
    14,362
    
    
    
    1.2
    %Short-term investments  fixed rate
    
    
    110,616
    
    
    
    0.7
    %
    
    
    101,412
    
    
    
    1.4
    %Long-term investments  fixed rate
    
    
    
    
    
    
    
    
    
    
    3,180
    
    
    
    1.5
    %Total
    
    $
    165,386
    
    
    
    
    
    
    $
    148,766
 Foreign Currency Exchange Rate Exposure
   31




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##### Table of Contents



ITEM 4  CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control over Financial Reporting.
 
 PART II. OTHER INFORMATION
 
 ITEM 1  LEGAL PROCEEDINGS
  
 ITEM 1A RISK FACTORS
  We expect volatility in our stock price, which could cause you to lose all or part of your
investment.
  
    
    quarterly variations in our operating results;
    
    changes in financial estimates by securities analysts and/or our failure to meet
estimates;
    
    changes in market values of comparable companies;
    
    announcements by our competitors or us of new products or of significant acquisitions,
strategic partnerships or joint ventures;
 32




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##### Table of Contents




    
    any loss by us of a major customer;
    
    economic fluctuations in the market for optical communications products, or in the
telecommunications industry generally;
    
    the outcome of, and costs associated with, any litigation to which we are or may become a
party;
    
    departures of key management or engineering personnel; and
    
    future sales of our common stock.
 Our operating results may be further adversely affected by the downturn in the global economy and
the global telecommunications industry.
  
    
    reduced demand for our products as a result of constraints on IT-related capital
spending, decreasing our revenue;
    
    increased price competition for our products; and
    
    higher overhead costs as a percentage of revenue, producing lower gross margins.
   We depend upon a small number of customers for a substantial portion of our revenues, and any
decrease in revenues from, or loss of, these customers without a corresponding increase in revenues
from other customers would harm our operating results.
    33




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##### Table of Contents



If our current inventory levels prove to be too low for us to be able to respond quickly to an
increase in demand for our products, we may lose sales opportunities.
  
 ITEM 2  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3  DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5  OTHER INFORMATION
  
 ITEM 6   EXHIBITS
 Exhibit Index
 Exhibit No.
    
    
    Description3.1
    (1)
    
    Amended and Restated Certificate of Incorporation of the Registrant.3.2
    (1)
    
    Bylaws of the Registrant.3.3
    (2)
    
    Certificate of Designation of Series A Junior Participating Preferred Stock.3.4
    (3)
    
    Certificate of Amendment to Amended and Restated Certificate of Incorporation of the
Registrant.10.1
    *
    
    2009 Equity Incentive Plan10.2
    *
    
    Amended and Restated 2000 Employee Stock Purchase Plan10.3
    
    
    Consulting Agreement dated November 4, 2009 between the Registrant and Leonard J. LeBlanc31.1
    
    
    Certification of Chief Executive Officer Required under Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended.31.2
    
    
    Certification of Chief Financial Officer Required under Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended.32.1
    **
    
    Certification of Chief Executive Officer Required under Rule 13a-14(b) or Rule 15d-14(b)
of the Securities Exchange Act of 1934, as amended, and
Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. Section 1350).32.2
    **
    
    Certification
of Chief Financial Officer Required under Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.
 
 (1)
    
    Incorporated by reference to the Registrants Registration Statement
on Form S-1/A, No. 333-41506, as filed on October 3, 2000.(2)
    
    Previously filed as an Exhibit to the Registrants Report on Form 8-K
filed on March 22, 2002 and incorporated herein by reference. 34




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##### Table of Contents



(3)
    
    Previously filed as an Exhibit to the Registrants Quarterly Report on
Form 10-Q filed on November 14, 2006 and
incorporated herein by reference.*
    
    Management contract or compensatory plan or arrangement.**
    
    The certifications attached as Exhibits 32.1 and 32.2 accompanies this Quarterly Report on
Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed
filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended. 35




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##### Table of Contents



SIGNATURES
  OPLINK COMMUNICATIONS, INC.(Registrant)DATE: November 6, 2009
    
    By:
    
    /s/ Shirley YinShirley YinChief Financial Officer(Principal Financial and Accounting Officer)
 36