##### 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 March 29, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the transition period fromto
 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
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



OPLINK COMMUNICATIONS, INC.
 
 PART I. FINANCIAL INFORMATION
    
    
    PageItem 1. Financial Statements (unaudited):Condensed Consolidated Balance Sheets  March 31, 2009 and June 30, 2008
    
    
    3Condensed Consolidated Statements of Operations  Three and nine months ended
March 31, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Cash Flows  Nine months ended
March 31, 2009 and 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    36PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    37Item 1A. Risk Factors
    
    
    38Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    52Item 3. Defaults Upon Senior Securities
    
    
    52Item 4. Submission of Matters to a Vote of Security Holders
    
    
    52Item 5. Other Information
    
    
    52Item 6. Exhibits
    
    
    52SIGNATURES
    
    
    54EX-31.1EX-31.2EX-32.1EX-32.2
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1- FINANCIAL STATEMENTS
 OPLINK COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
 March 31,
    
    
    June 30,2009
    
    
    2008(1)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    82,559
    
    
    $
    72,001Short-term investments
    
    
    64,552
    
    
    
    50,077Accounts receivable, net
    
    
    24,278
    
    
    
    34,200Inventories
    
    
    13,966
    
    
    
    27,950Prepaid expenses and other current assets
    
    
    5,726
    
    
    
    4,949Total current assets
    
    
    191,081
    
    
    
    189,177Long-term investments
    
    
    10,000
    
    
    
    20,003Property, plant and equipment, net
    
    
    31,406
    
    
    
    34,206Goodwill and intangible assets, net
    
    
    9,800
    
    
    
    23,487Other assets
    
    
    1,780
    
    
    
    1,867Total assets
    
    $
    244,067
    
    
    $
    268,740LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    4,902
    
    
    $
    16,014Accrued liabilities
    
    
    10,439
    
    
    
    11,756Income tax payable
    
    
    1,673
    
    
    
    1,000Accrued transitional costs for contract manufacturing
    
    
    160
    
    
    
    341Restructuring accrual
    
    
    
    
    
    
    370Total current liabilities
    
    
    17,174
    
    
    
    29,481Non-current liabilities
    
    
    966
    
    
    
    989Total liabilities
    
    
    18,140
    
    
    
    30,470Commitments and contingencies (Note 17)Stockholders equity:Common stock, $0.001 par value, 34,000,000 shares
authorized; 20,386,982 and 20,729,935 shares issued and outstanding
as of March 31, 2009 and June 30, 2008, respectively
    
    
    20
    
    
    
    21Additional paid-in capital
    
    
    451,168
    
    
    
    449,492Accumulated other comprehensive income
    
    
    8,310
    
    
    
    8,256Accumulated deficit
    
    
    (233,571
    )
    
    
    (219,499
    )Total stockholders equity
    
    
    225,927
    
    
    
    238,270Total liabilities and
stockholders equity
    
    $
    244,067
    
    
    $
    268,740
 
 (1)
    
    The condensed consolidated balance sheet at June 30, 2008 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
(In thousands, except per share data)
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    30,805
    
    
    $
    40,836
    
    
    $
    111,368
    
    
    $
    138,930Cost of revenues:Cost of revenues
    
    
    22,018
    
    
    
    37,464
    
    
    
    87,602
    
    
    
    112,499Stock compensation expense
    
    
    108
    
    
    
    103
    
    
    
    352
    
    
    
    346Total cost of revenues
    
    
    22,126
    
    
    
    37,567
    
    
    
    87,954
    
    
    
    112,845Gross profit
    
    
    8,679
    
    
    
    3,269
    
    
    
    23,414
    
    
    
    26,085Operating expenses:Research and development:Research and development
    
    
    2,477
    
    
    
    3,325
    
    
    
    8,544
    
    
    
    11,367Stock compensation expense
    
    
    266
    
    
    
    245
    
    
    
    741
    
    
    
    767Total research and development
    
    
    2,743
    
    
    
    3,570
    
    
    
    9,285
    
    
    
    12,134Sales and marketing:Sales and marketing
    
    
    1,817
    
    
    
    2,461
    
    
    
    6,019
    
    
    
    8,104Stock compensation expense
    
    
    252
    
    
    
    247
    
    
    
    834
    
    
    
    735Total sales and marketing
    
    
    2,069
    
    
    
    2,708
    
    
    
    6,853
    
    
    
    8,839General and administrative:General and administrative
    
    
    2,331
    
    
    
    3,141
    
    
    
    7,699
    
    
    
    11,159Stock compensation expense
    
    
    624
    
    
    
    693
    
    
    
    2,258
    
    
    
    4,714Total general and administrative
    
    
    2,955
    
    
    
    3,834
    
    
    
    9,957
    
    
    
    15,873Transitional costs for contract manufacturing
    
    
    
    
    
    
    547
    
    
    
    
    
    
    
    1,834Merger fees
    
    
    
    
    
    
    (371
    )
    
    
    
    
    
    
    5,618Impairment charges and other costs
    
    
    
    
    
    
    69
    
    
    
    10,829
    
    
    
    695Amortization of intangible assets
    
    
    412
    
    
    
    433
    
    
    
    1,236
    
    
    
    1,100Total operating expenses
    
    
    8,179
    
    
    
    10,790
    
    
    
    38,160
    
    
    
    46,093Income (loss) from operations
    
    
    500
    
    
    
    (7,521
    )
    
    
    (14,746
    )
    
    
    (20,008
    )Interest and other income, net
    
    
    327
    
    
    
    1,513
    
    
    
    2,511
    
    
    
    6,702(Loss) gain on sale or disposal of assets
    
    
    (212
    )
    
    
    2,433
    
    
    
    (667
    )
    
    
    2,356Income (loss) before minority interest and income tax provision
    
    
    615
    
    
    
    (3,575
    )
    
    
    (12,902
    )
    
    
    (10,950
    )Minority interest in loss of consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,891Income tax provision
    
    
    (729
    )
    
    
    (365
    )
    
    
    (1,170
    )
    
    
    (908
    )Net loss
    
    $
    (114
    )
    
    $
    (3,940
    )
    
    $
    (14,072
    )
    
    $
    (5,967
    )Net loss per share:Basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.19
    )
    
    $
    (0.68
    )
    
    $
    (0.27
    )Shares used in per share calculation:Basic and diluted
    
    
    20,468
    
    
    
    20,633
    
    
    
    20,637
    
    
    
    21,811
 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
(In thousands)
(Unaudited)
 Nine Months EndedMarch 31,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (14,072
    )
    
    $
    (5,967
    )Adjustments to reconcile net loss to
net cash provided by operating activities:Depreciation and amortization of property and equipment
    
    
    5,469
    
    
    
    5,466Amortization of intangible and other assets
    
    
    2,858
    
    
    
    2,381Impairment charges and other costs
    
    
    10,829
    
    
    
    695Stock compensation expense
    
    
    4,185
    
    
    
    6,562Provision for excess and obsolete inventory
    
    
    4,065
    
    
    
    6,383Amortization of discount on investments
    
    
    (338
    )
    
    
    (513
    )Loss (gain) on sale or disposal of assets
    
    
    667
    
    
    
    (2,393
    )Minority interest in loss of consolidated subsidiaries
    
    
    
    
    
    
    (5,891
    )Other
    
    
    (365
    )
    
    
    2Change in assets and liabilities:Accounts receivable, net
    
    
    9,932
    
    
    
    2,405Inventories
    
    
    10,486
    
    
    
    (331
    )Prepaid expenses and other current assets
    
    
    (726
    )
    
    
    2,470Other assets
    
    
    81
    
    
    
    41Accounts payable
    
    
    (11,177
    )
    
    
    (4,081
    )Accrued liabilities and other liabilities
    
    
    (1,115
    )
    
    
    (3,656
    )Net cash provided by operating activities
    
    
    20,779
    
    
    
    3,573Cash flows from investing activities:Purchases of available-for-sale investments
    
    
    (74,913
    )
    
    
    (123,618
    )Sales and maturities of available-for-sale investments
    
    
    62,717
    
    
    
    107,392Purchases of held-to-maturity investments
    
    
    
    
    
    
    (5,000
    )Maturities of held-to-maturity investments
    
    
    8,031
    
    
    
    86,400Proceeds from sales of property and equipment
    
    
    475
    
    
    
    27,338Purchases of property and equipment
    
    
    (3,427
    )
    
    
    (6,934
    )Purchases of cost investments
    
    
    
    
    
    
    (400
    )Sales of cost investments
    
    
    
    
    
    
    5,000Acquisition of businesses, net of cash acquired
    
    
    
    
    
    
    (81,445
    )Net cash (used in) provided by investing activities
    
    
    (7,117
    )
    
    
    8,733Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    846
    
    
    
    2,514Repurchase of common stock
    
    
    (3,356
    )
    
    
    (40,000
    )Net cash used in financing activities
    
    
    (2,510
    )
    
    
    (37,486
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (594
    )
    
    
    14Net increase (decrease) in cash and cash equivalents
    
    
    10,558
    
    
    
    (25,166
    )Cash and cash equivalents, beginning of period
    
    
    72,001
    
    
    
    111,600Cash and cash equivalents, end of period
    
    $
    82,559
    
    
    $
    86,434
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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OPLINK COMMUNICATIONS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Description of Business.
 .
   Basis of Presentation
  6




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Risks and uncertainties.
 Net Loss Per Share
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator:Net loss
    
    $
    (114
    )
    
    $
    (3,940
    )
    
    $
    (14,072
    )
    
    $
    (5,967
    )Denominator:Weighted average shares
outstanding  basic and
diluted
    
    
    20,468
    
    
    
    20,633
    
    
    
    20,637
    
    
    
    21,811Net loss per share  basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.19
    )
    
    $
    (0.68
    )
    
    $
    (0.27
    )Antidilutive stock options not included in net
loss per share calculation
    
    
    3,904
    
    
    
    3,875
    
    
    
    3,904
    
    
    
    3,875
 Comprehensive Income (Loss).
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March 31,
    
    
    June 30,2009
    
    
    2008Accumulated other comprehensive income:Cumulative translation adjustment
    
    $
    8,326
    
    
    $
    8,244Unrealized (loss) gain on investments, net
    
    
    (16
    )
    
    
    12$
    8,310
    
    
    $
    8,256
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Net loss
    
    $
    (114
    )
    
    $
    (3,940
    )
    
    $
    (14,072
    )
    
    $
    (5,967
    )Change in cumulative translation adjustment
    
    
    (194
    )
    
    
    1,643
    
    
    
    82
    
    
    
    3,214Change in unrealized (loss) gain on investments, net
    
    
    (31
    )
    
    
    275
    
    
    
    (28
    )
    
    
    99Total comprehensive loss
    
    $
    (339
    )
    
    $
    (2,022
    )
    
    $
    (14,018
    )
    
    $
    (2,654
    )
 Short-Term and Long-Term Investments.
  March 31, 2009Gross
    
    
    GrossCarrying
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-term investments:United States Treasury
    
    $
    34,951
    
    
    $
    34,927
    
    
    $
    23
    
    
    $
    
    
    
    $
    34,950Corporate securities
    
    
    24,600
    
    
    
    24,640
    
    
    
    
    
    
    
    (49
    )
    
    
    24,591United States government agencies
    
    
    5,001
    
    
    
    5,001
    
    
    
    
    
    
    
    (7
    )
    
    
    4,994Total short-term investments
    
    
    64,552
    
    
    
    64,568
    
    
    
    23
    
    
    
    (56
    )
    
    
    64,535Long-term investments:United States government agencies
    
    
    10,000
    
    
    
    10,000
    
    
    
    18
    
    
    
    
    
    
    
    10,018Total long-term investments
    
    
    10,000
    
    
    
    10,000
    
    
    
    18
    
    
    
    
    
    
    
    10,018Total investments
    
    $
    74,552
    
    
    $
    74,568
    
    
    $
    41
    
    
    $
    (56
    )
    
    $
    74,553
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June 30, 2008Gross
    
    
    GrossCarrying
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-term investments:Corporate securities
    
    $
    30,171
    
    
    $
    30,159
    
    
    $
    43
    
    
    $
    (18
    )
    
    $
    30,184United States government agencies
    
    
    19,906
    
    
    
    19,906
    
    
    
    2
    
    
    
    (2
    )
    
    
    19,906Total short-term investments
    
    
    50,077
    
    
    
    50,065
    
    
    
    45
    
    
    
    (20
    )
    
    
    50,090Long-term investments:United States government agencies
    
    
    20,003
    
    
    
    20,003
    
    
    
    11
    
    
    
    (64
    )
    
    
    19,950Total long-term investments
    
    
    20,003
    
    
    
    20,003
    
    
    
    11
    
    
    
    (64
    )
    
    
    19,950Total investments
    
    $
    70,080
    
    
    $
    70,068
    
    
    $
    56
    
    
    $
    (84
    )
    
    $
    70,040
  March 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAvailable-for-sale investments:Corporate securities
    
    $
    20,024
    
    
    $
    
    
    
    $
    (40
    )
    
    $
    19,984United States Treasury
    
    
    34,927
    
    
    
    24
    
    
    
    
    
    
    
    34,951Total available-for-sale investments
    
    
    54,951
    
    
    
    24
    
    
    
    (40
    )
    
    
    54,935Held-to-maturity investments:Corporate securities
    
    
    4,616
    
    
    
    
    
    
    
    (9
    )
    
    
    4,607United States government agencies
    
    
    15,001
    
    
    
    17
    
    
    
    (7
    )
    
    
    15,011Total held-to-maturity investments
    
    
    19,617
    
    
    
    17
    
    
    
    (16
    )
    
    
    19,618Total investments
    
    $
    74,568
    
    
    $
    41
    
    
    $
    (56
    )
    
    $
    74,553
 June 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAvailable-for-sale investments:Corporate securities
    
    $
    22,493
    
    
    $
    27
    
    
    $
    (15
    )
    
    $
    22,505United States government agencies
    
    
    19,906
    
    
    
    2
    
    
    
    (2
    )
    
    
    19,906Total available-for-sale investments
    
    
    42,399
    
    
    
    29
    
    
    
    (17
    )
    
    
    42,411Held-to-maturity investments:Corporate securities
    
    
    7,666
    
    
    
    16
    
    
    
    (3
    )
    
    
    7,679United States government agencies
    
    
    20,003
    
    
    
    11
    
    
    
    (64
    )
    
    
    19,950Total held-to-maturity investments
    
    
    27,669
    
    
    
    27
    
    
    
    (67
    )
    
    
    27,629Total investments
    
    $
    70,068
    
    
    $
    56
    
    
    $
    (84
    )
    
    $
    70,040
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March 31, 2009In Loss Position
    
    
    In Loss Position< 12 months
    
    
    12 months and longer
    
    
    Total In Loss PositionGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesAvailable-for-sale investments:Corporate securities
    
    $
    4,944
    
    
    $
    (40
    )
    
    $
    
    
    
    $
    
    
    
    $
    4,944
    
    
    $
    (40
    )Total available-for-sale investments
    
    
    4,944
    
    
    
    (40
    )
    
    
    
    
    
    
    
    
    
    
    4,944
    
    
    
    (40
    )Held-to-maturity investments:Corporate securities
    
    
    4,607
    
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    4,607
    
    
    
    (9
    )United States government agencies
    
    
    4,994
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    4,994
    
    
    
    (7
    )Total held-to-maturity investments
    
    
    9,601
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    9,601
    
    
    
    (16
    )Total investments in loss position
    
    $
    14,545
    
    
    $
    (56
    )
    
    $
    
    
    
    $
    
    
    
    $
    14,545
    
    
    $
    (56
    )
  March 31, 2009
    
    
    June 30, 2008Amortized
    
    
    Estimated
    
    
    Amortized
    
    
    EstimatedCost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair ValueAvailable-for-sale investments:Due in one year or less
    
    $
    54,951
    
    
    $
    54,935
    
    
    $
    42,399
    
    
    $
    42,411Due in one year to five years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due in five years to ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due after ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total available-for-sale investments
    
    
    54,951
    
    
    
    54,935
    
    
    
    42,399
    
    
    
    42,411Held-to-maturity investments:Due in one year or less
    
    
    9,617
    
    
    
    9,600
    
    
    
    7,666
    
    
    
    7,679Due in one year to five years
    
    
    10,000
    
    
    
    10,018
    
    
    
    20,003
    
    
    
    19,950Total held-to-maturity investments
    
    
    19,617
    
    
    
    19,618
    
    
    
    27,669
    
    
    
    27,629Total investments
    
    $
    74,568
    
    
    $
    74,553
    
    
    $
    70,068
    
    
    $
    70,040
 Fair Value Accounting
 10




---



##### Table of Contents



Items Measured at Fair Value on a Recurring Basis
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalFinancial assets:Money market funds
    
    $
    43,016
    
    
    $
    5,000
    
    
    $
    
    
    
    $
    48,016U.S. treasury and agency securities
    
    
    
    
    
    
    49,952
    
    
    
    
    
    
    
    49,952Commercial paper
    
    
    
    
    
    
    14,969
    
    
    
    
    
    
    
    14,969Corporate securities
    
    
    
    
    
    
    9,631
    
    
    
    
    
    
    
    9,631Total financial assets
    
    $
    43,016
    
    
    $
    79,552
    
    
    $
    
    
    
    $
    122,568Financial liabilities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  11




---



##### Table of Contents



Items Measured at Fair Value on a Nonrecurring Basis
  Accrued Transitional Costs for Contract Manufacturing.
 Consolidation ofWorkforce
    
    
    Excess FacilitiesReduction
    
    
    and Other Charges
    
    
    TotalBalance at June 30, 2007
    
    $
    1,234
    
    
    $
    
    
    
    $
    1,234Additional charge
    
    
    553
    
    
    
    1,732
    
    
    
    2,285Other adjustment
    
    
    (100
    )
    
    
    
    
    
    
    (100
    )Cash payments
    
    
    (1,346
    )
    
    
    (1,732
    )
    
    
    (3,078
    )Balance at June 30, 2008
    
    
    341
    
    
    
    
    
    
    
    341Cash payments
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Balance at September 30, 2008
    
    
    282
    
    
    
    
    
    
    
    282Other adjustment
    
    
    (199
    )
    
    
    160
    
    
    
    (39
    )Cash payments
    
    
    (83
    )
    
    
    
    
    
    
    (83
    )Balance at December 31, 2008
    
    
    
    
    
    
    160
    
    
    
    160Other adjustment and cash payments
    
    
    
    
    
    
    
    
    
    
    Balance at March 31, 2009
    
    $
    
    
    
    $
    160
    
    
    $
    160
 Accrued Restructuring Costs.
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2009Accrued restructuring beginning balance
    
    $
    
    
    
    $
    370Additions
    
    
    
    
    
    
    Cash payments
    
    
    
    
    
    
    (370
    )Accrued restructuring ending balance
    
    $
    
    
    
    $
    
 12




---



##### Table of Contents



Inventories
 March 31,
    
    
    June 30,2009
    
    
    2008Inventories:Raw materials
    
    $
    8,167
    
    
    $
    19,720Work-in-process
    
    
    5,691
    
    
    
    8,230Finished goods
    
    
    108
    
    
    
    Total
    
    $
    13,966
    
    
    $
    27,950
 Goodwill and Intangible Assets, Net.
 EstimatedUseful Life
    
    
    Gross
    
    
    AccumulatedMarch 31, 2009
    
    (in Years)
    
    
    Amount
    
    
    Amortization
    
    
    NetTechnology
    
    
    4
    
    
    $
    8,673
    
    
    $
    3,361
    
    
    $
    5,312Trade name
    
    
    6
    
    
    
    1,595
    
    
    
    408
    
    
    
    1,187Customer relationships
    
    
    3-4
    
    
    
    5,481
    
    
    
    2,180
    
    
    
    3,301Backlog
    
    
    1
    
    
    
    97
    
    
    
    97
    
    
    
    Total
    
    
    
    
    
    $
    15,846
    
    
    $
    6,046
    
    
    $
    9,800
 EstimatedUseful Life
    
    
    Gross
    
    
    AccumulatedJune 30, 2008
    
    (in Years)
    
    
    Amount
    
    
    Amortization
    
    
    NetTechnology
    
    
    4
    
    
    $
    8,673
    
    
    $
    1,735
    
    
    $
    6,938Trade name
    
    
    6
    
    
    
    1,595
    
    
    
    209
    
    
    
    1,386Customer relationships
    
    
    3-4
    
    
    
    5,481
    
    
    
    1,147
    
    
    
    4,334Backlog
    
    
    1
    
    
    
    97
    
    
    
    97
    
    
    
    Total
    
    
    
    
    
    $
    15,846
    
    
    $
    3,188
    
    
    $
    12,658
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,Reported as:
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Cost of revenues
    
    $
    538
    
    
    $
    543
    
    
    $
    1,622
    
    
    $
    1,281Operating expenses
    
    
    412
    
    
    
    433
    
    
    
    1,236
    
    
    
    1,100Total
    
    $
    950
    
    
    $
    976
    
    
    $
    2,858
    
    
    $
    2,381
  Fiscal years ending June 30,
    
    Amount2009
    
    $
    9522010
    
    
    3,7822011
    
    
    3,6772012
    
    
    1,0662013
    
    
    260After 2013
    
    
    63$
    9,800
 13




---



##### Table of Contents



Accrued Liabilities.
 March 31,
    
    
    June 30,2009
    
    
    2008Accrued liabilities:Payroll and related expenses
    
    $
    2,209
    
    
    $
    3,388Employee withholdings and related expenses
    
    
    916
    
    
    
    470Accrued sales commission
    
    
    441
    
    
    
    465Accrued warranty
    
    
    346
    
    
    
    286Accrued professional fees
    
    
    1,695
    
    
    
    1,473Accrued sales return
    
    
    541
    
    
    
    594Deferred revenue
    
    
    525
    
    
    
    525Advance deposits from customers
    
    
    69
    
    
    
    239Other
    
    
    3,697
    
    
    
    4,316$
    10,439
    
    
    $
    11,756
 Product Warranties.
 14




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Balance at the beginning of the period
    
    $
    346
    
    
    $
    412
    
    
    $
    286
    
    
    $
    445Accruals for warranties issued during the period
    
    
    65
    
    
    
    17
    
    
    
    221
    
    
    
    117Accruals related to pre-existing warranties
including expirations and changes in
estimates
    
    
    (7
    )
    
    
    23
    
    
    
    102
    
    
    
    (44
    )Cost of warranty repair
    
    
    (58
    )
    
    
    (42
    )
    
    
    (263
    )
    
    
    (108
    )Balance at the end of the period
    
    $
    346
    
    
    $
    410
    
    
    $
    346
    
    
    $
    410
 Stock Compensation.
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Stock compensation expense by type of award:Employee stock options
    
    $
    950
    
    
    $
    1,116
    
    
    $
    3,248
    
    
    $
    5,862Restricted stock awards
    
    
    
    
    
    
    
    
    
    
    223
    
    
    
    266Employee stock purchase plan
    
    
    300
    
    
    
    172
    
    
    
    714
    
    
    
    434Total stock compensation expense
    
    
    1,250
    
    
    
    1,288
    
    
    
    4,185
    
    
    
    6,562Tax effect on stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net effect on net loss
    
    $
    1,250
    
    
    $
    1,288
    
    
    $
    4,185
    
    
    $
    6,562Effect on net loss per share:Basic and diluted
    
    $
    (0.06
    )
    
    $
    (0.06
    )
    
    $
    (0.20
    )
    
    $
    (0.30
    )
     15




---



##### Table of Contents



Valuation Assumptions
  Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2009
    
    2008
    
    2009
    
    2008Risk-free interest rate
    
    
    1.80
    %
    
    
    2.54
    %
    
    
    2.85
    %
    
    
    3.57
    %Expected term
    
    4.6 years
    
    
    4.6 years
    
    
    4.6 years
    
    
    4.5 yearsExpected dividends
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    66
    %
    
    
    48
    %
    
    
    52
    %
    
    
    45
    %
  Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2009
    
    2008
    
    2009
    
    2008Risk-free interest rate
    
    
    N/A
    (1)
    
    
    NA(1)
    
    
    1.26
    %
    
    
    3.86
    %Expected term
    
    
    N/A
    
    
    NA
    
    1.3 years
    
    
    1.1 yearsExpected dividends
    
    
    N/A
    
    
    NA
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    N/A
    
    
    NA
    
    
    65
    %
    
    
    46
    %
 
 (1)
    
    No purchase rights were granted under the Companys employee stock purchase plan during three
months ended March 31, 2009 and 2008.   Equity Incentive Program
  16




---



##### Table of Contents



WeightedNumber of
    
    AverageShares Available
    
    Options
    
    Exercisefor Grant
    
    Outstanding
    
    PriceBalance, June 30, 2008
    
    
    3,561,060
    
    
    
    4,088,567
    
    
    $
    14.60Options and awards granted
    
    
    (349,040)
    (1)
    
    
    333,040
    
    
    
    12.83Options exercised
    
    
    
    
    
    
    (43,600
    )
    
    
    8.14Options canceled
    
    
    474,137
    
    
    
    (474,137
    )
    
    
    17.83Options expired
    
    
    (1,801,955)
    (2)
    
    
    
    
    
    
    Options expired
    
    
    (74,176)
    (3)
    
    
    
    
    
    
    Balance, March 31, 2009
    
    
    1,810,026
    
    
    
    3,903,870
    
    
    $
    14.13
 
 (1)
    
    The number of options and awards granted in the nine months ended March 31, 2009
include 16,000 stock awards.(2)
    
    The Companys 1998 Stock Option Plan terminated ten years after its adoption by the
Companys board of directors and the shares not granted at the time of termination have
expired.(3)
    
    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 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.  17




---



##### Table of Contents



Options Outstanding
    
    
    Options Vested and Exercisableat March 31, 2009
    
    
    at March 31, 2009Weighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Aggregate
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AggregateRemaining
    
    
    Weighted
    
    
    Intrinsic
    
    
    
    
    
    
    Remaining
    
    
    Weighted
    
    
    IntrinsicContractual
    
    
    Average
    
    
    Value
    
    
    
    
    
    
    Contractual
    
    
    Average
    
    
    ValueRange of Exercise
    
    Number
    
    
    Life
    
    
    Exercise
    
    
    (in
    
    
    Number
    
    
    Life
    
    
    Exercise
    
    
    (inPrice
    
    Outstanding
    
    
    (in Years)
    
    
    Price
    
    
    thousands)
    
    
    Outstanding
    
    
    (in Years)
    
    
    Price
    
    
    thousands)$1.0000 - $2.00
    
    
    4,723
    
    
    
    0.4
    
    
    $
    1.05
    
    
    $
    32
    
    
    
    4,723
    
    
    
    0.4
    
    
    $
    1.05
    
    
    $
    32$3.0001 - $5.00
    
    
    478,834
    
    
    
    3.4
    
    
    
    4.60
    
    
    
    1,592
    
    
    
    478,834
    
    
    
    3.4
    
    
    
    4.60
    
    
    
    1,592$5.0001 - $8.00
    
    
    399,368
    
    
    
    4.4
    
    
    
    5.78
    
    
    
    860
    
    
    
    344,808
    
    
    
    3.6
    
    
    
    5.49
    
    
    
    842$8.0001 - $10.00
    
    
    61,916
    
    
    
    2.8
    
    
    
    8.70
    
    
    
    
    
    
    
    61,916
    
    
    
    2.8
    
    
    
    8.70
    
    
    
    $11.0001 - $13.00
    
    
    552,051
    
    
    
    8.4
    
    
    
    10.10
    
    
    
    
    
    
    
    117,728
    
    
    
    6.1
    
    
    
    10.12
    
    
    
    $13.0001 - $15.00
    
    
    293,012
    
    
    
    7.6
    
    
    
    12.25
    
    
    
    
    
    
    
    145,393
    
    
    
    6.4
    
    
    
    12.38
    
    
    
    $15.0001 - $18.00
    
    
    751,254
    
    
    
    7.6
    
    
    
    13.63
    
    
    
    
    
    
    
    306,666
    
    
    
    5.7
    
    
    
    13.54
    
    
    
    $18.0001 - $20.00
    
    
    273,619
    
    
    
    7.1
    
    
    
    17.45
    
    
    
    
    
    
    
    172,593
    
    
    
    6.6
    
    
    
    17.43
    
    
    
    $19.0001 - $20.00
    
    
    207,031
    
    
    
    4.7
    
    
    
    18.85
    
    
    
    
    
    
    
    164,612
    
    
    
    4.2
    
    
    
    18.77
    
    
    
    $20.0001 - $25.00
    
    
    756,229
    
    
    
    7.2
    
    
    
    20.24
    
    
    
    
    
    
    
    519,454
    
    
    
    7.2
    
    
    
    20.24
    
    
    
    $25.0001 - $35.00
    
    
    72,701
    
    
    
    1.4
    
    
    
    31.29
    
    
    
    
    
    
    
    72,619
    
    
    
    1.4
    
    
    
    31.29
    
    
    
    $42.0001 - $158.00
    
    
    53,132
    
    
    
    1.4
    
    
    
    83.50
    
    
    
    
    
    
    
    53,132
    
    
    
    1.4
    
    
    
    83.50
    
    
    
    3,903,870
    
    
    
    6.3
    
    
    $
    14.13
    
    
    $
    2,484
    
    
    
    2,442,478
    
    
    
    5.0
    
    
    $
    14.37
    
    
    $
    2,466Vested and expected
to vest
    
    
    3,770,852
    
    
    
    6.2
    
    
    $
    14.17
    
    
    $
    2,483
     Employee Stock Purchase Plan
  18




---



##### Table of Contents



Repurchase of Common Stock.
   Recent Accounting Pronouncements
    19




---



##### Table of Contents



20




---



##### Table of Contents



Commitments and Contingencies.
 Contractual Obligations
  Contractual Obligations Due by PeriodContractual Obligations
    
    Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    After 5 yearsPurchase obligations
    
    $
    11,090
    
    
    $
    11,090
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating leases
    
    
    822
    
    
    
    527
    
    
    
    272
    
    
    
    23
    
    
    
    Capital expenditure
    
    
    1,132
    
    
    
    1,024
    
    
    
    86
    
    
    
    22
    
    
    
    Total
    
    $
    13,044
    
    
    $
    12,641
    
    
    $
    358
    
    
    $
    45
    
    
    $
    
 21




---



##### Table of Contents



Litigation
 IPO Securities Litigation
   IPO 16(b) Claim
  22




---



##### Table of Contents



Oplink vs. O-Net Communications, et al.
   Segment Reporting.
  Three Months
    
    
    Nine MonthsEnded March 31,
    
    
    Ended March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:United States
    
    $
    10,819
    
    
    $
    17,213
    
    
    $
    38,740
    
    
    $
    60,104Europe
    
    
    4,314
    
    
    
    5,030
    
    
    
    16,918
    
    
    
    18,589Asia
    
    
    14,185
    
    
    
    14,777
    
    
    
    49,591
    
    
    
    47,034Canada
    
    
    1,487
    
    
    
    3,816
    
    
    
    6,119
    
    
    
    13,203Totals
    
    $
    30,805
    
    
    $
    40,836
    
    
    $
    111,368
    
    
    $
    138,930
  March 31,
    
    
    June 30,2009
    
    
    2008United States
    
    $
    8,390
    
    
    $
    10,423Asia
    
    
    23,016
    
    
    
    23,783Totals
    
    $
    31,406
    
    
    $
    34,206
  Income Taxes. Accounting for Uncertainty
in Income Taxes  an interpretation of FASB Statement No. 109
 23




---



##### Table of Contents



Recognition Measurement
    
 ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-looking statements
   Overview
   24




---



##### Table of Contents



Use of Estimates and Critical Accounting Policies
   
    
    revenue recognition and product returns;
    
    depreciation and amortization;
    
    warranty obligations;
    
    allowance for doubtful accounts;
    
    excess and obsolete inventory;
 25




---



##### Table of Contents




    
    impairment of investments;
    
    long-lived asset valuation;
    
    business combination;
    
    income taxes;
    
    stock compensation; and
    
    loss contingencies.
   Results of Operations
 Revenues
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2009
    
    2008
    
    Change
    
    Change
    
    2009
    
    2008
    
    Change
    
    Change(In thousands, except percentages)Revenues
    
    $
    30,805
    
    
    $
    40,836
    
    
    $
    (10,031
    )
    
    
    -24.6
    %
    
    $
    111,368
    
    
    $
    138,930
    
    
    $
    (27,562
    )
    
    
    -19.8
    %
   26




---



##### Table of Contents



Gross Profit
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2009
    
    2008
    
    Change
    
    Change
    
    2009
    
    2008
    
    Change
    
    Change(In thousands, except percentages)Gross profit
    
    $
    8,679
    
    
    $
    3,269
    
    
    $
    5,410
    
    
    
    165.5
    %
    
    $
    23,414
    
    
    $
    26,085
    
    
    $
    (2,671
    )
    
    
    -10.2
    %Gross profit margin
    
    
    28.2
    %
    
    
    8.0
    %
    
    
    
    
    
    
    
    
    
    
    21.0
    %
    
    
    18.8
    %
      27




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##### Table of Contents



Research and Development
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2009
    
    2008
    
    Change
    
    Change
    
    2009
    
    2008
    
    Change
    
    Change(In thousands, except percentages)Research and
development
    
    $
    2,743
    
    
    $
    3,570
    
    
    $
    (827
    )
    
    
    -23.2
    %
    
    $
    9,285
    
    
    $
    12,134
    
    
    $
    (2,849
    )
    
    
    -23.5
    %
   Sales and Marketing
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2009
    
    2008
    
    Change
    
    Change
    
    2009
    
    2008
    
    Change
    
    Change(In thousands, except percentages)Sales and marketing
    
    $
    2,069
    
    
    $
    2,708
    
    
    $
    (639
    )
    
    
    -23.6
    %
    
    $
    6,853
    
    
    $
    8,839
    
    
    $
    (1,986
    )
    
    
    -22.5
    %
  General and Administrative
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2009
    
    2008
    
    Change
    
    Change
    
    2009
    
    2008
    
    Change
    
    Change(In thousands, except percentages)General and and administrative
    
    $
    2,955
    
    
    $
    3,834
    
    
    $
    (879
    )
    
    
    -22.9
    %
    
    $
    9,957
    
    
    $
    15,873
    
    
    $
    (5,916
    )
    
    
    -37.3
    %
  28




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Stock Compensation Expense
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2009
    
    2008
    
    Change
    
    Change
    
    2009
    
    2008
    
    Change
    
    Change(In thousands, except percentages)Stock compensation
expense
    
    $
    1,250
    
    
    $
    1,288
    
    
    $
    (38
    )
    
    
    -3.0
    %
    
    $
    4,185
    
    
    $
    6,562
    
    
    $
    (2,377
    )
    
    
    -36.2
    %
    Transitional Costs for Contract Manufacturing
  Consolidation ofWorkforce
    
    
    Excess FacilitiesReduction
    
    
    and Other Charges
    
    
    TotalBalance at June 30, 2007
    
    $
    1,234
    
    
    $
    
    
    
    $
    1,234Additional charge
    
    
    553
    
    
    
    1,732
    
    
    
    2,285Other adjustment
    
    
    (100
    )
    
    
    
    
    
    
    (100
    )Cash payments
    
    
    (1,346
    )
    
    
    (1,732
    )
    
    
    (3,078
    )Balance at June 30, 2008
    
    
    341
    
    
    
    
    
    
    
    341Cash payments
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Balance at September 30, 2008
    
    
    282
    
    
    
    
    
    
    
    282Other adjustment
    
    
    (199
    )
    
    
    160
    
    
    
    (39
    )Cash payments
    
    
    (83
    )
    
    
    
    
    
    
    (83
    )Balance at December 31, 2008
    
    
    
    
    
    
    160
    
    
    
    160Other adjustment and cash payments
    
    
    
    
    
    
    
    
    
    
    Balance at March 31, 2009
    
    $
    
    
    
    $
    160
    
    
    $
    160
  29




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Merger Fees
  Impairment Charges and Other Costs
     Amortization of Intangible and Other Assets
  30




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Interest and Other Income, Net
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2009
    
    2008
    
    Change
    
    Change
    
    2009
    
    2008
    
    Change
    
    Change(In thousands, except percentages)Interest and other
income, net
    
    $
    327
    
    
    $
    1,513
    
    
    $
    (1,186
    )
    
    
    -78.4
    %
    
    $
    2,511
    
    
    $
    6,702
    
    
    $
    (4,191
    )
    
    
    -62.5
    %
   Gain (Loss) on Sale or Disposal of Assets
  Minority Interest
  Provision for Income Taxes
   31




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Liquidity and Capital Resources
  Nine Months Ended March 31, 2009
        32




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Nine Months Ended March 31, 2008
        33




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.
 Off-Balance Sheet Arrangements
  Contractual Obligations
  Contractual Obligations Due by PeriodContractual Obligations
    
    Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    After 5 yearsPurchase obligations
    
    $
    11,090
    
    
    $
    11,090
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating leases
    
    
    822
    
    
    
    527
    
    
    
    272
    
    
    
    23
    
    
    
    Capital expenditure
    
    
    1,132
    
    
    
    1,024
    
    
    
    86
    
    
    
    22
    
    
    
    Total
    
    $
    13,044
    
    
    $
    12,641
    
    
    $
    358
    
    
    $
    45
    
    
    $
    
 Recent Accounting Pronouncements
    34




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d
 
 ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Exposure
  35




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Carrying
    
    
    Average Rate
    
    
    Carrying
    
    
    Average RateValue at
    
    
    of Return at
    
    
    Value at
    
    
    of Return atMarch 31,
    
    
    March 31,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2009
    
    
    2008
    
    
    2008(Annualized)
    
    
    (Annualized)Investment Securities:Cash equivalents  variable rate
    
    $
    42,512
    
    
    
    0.6
    %
    
    $
    35,798
    
    
    
    1.1
    %Cash equivalents  fixed rate
    
    
    5,504
    
    
    
    0.4
    %
    
    
    19,933
    
    
    
    0.0
    %Short-term investments  variable rate
    
    
    14,561
    
    
    
    1.3
    %
    
    
    8,615
    
    
    
    2.9
    %Short-term investments  fixed rate
    
    
    49,991
    
    
    
    0.7
    %
    
    
    41,462
    
    
    
    2.0
    %Long-term investments  variable rate
    
    
    
    
    
    
    0.0
    %
    
    
    5,003
    
    
    
    2.4
    %Long-term investments  fixed rate
    
    
    10,000
    
    
    
    2.9
    %
    
    
    15,000
    
    
    
    3.0
    %Total
    
    $
    122,568
    
    
    
    
    
    
    $
    125,811
 Expected Fiscal Year Maturity Date2009
    
    
    2010
    
    
    Total
    
    
    Fair ValueLong-term investments  fixed rate
    
    $
    
    
    
    $
    10,000
    
    
    $
    10,000
    
    
    $
    10,018Average interest rate
    
    
    
    
    
    
    2.9
    %
    
    
    2.9
    %
 Foreign Currency Exchange Rate Exposure
    
 ITEM 4  CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures.
 36




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Changes in Internal Control over Financial Reporting.
 
 PART II. OTHER INFORMATION
 
 ITEM 1  LEGAL PROCEEDINGS
 IPO Securities Litigation
   IPO 16(b) Claim
  37




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Oplink vs. O-Net Communications, et al.
   
 Item 1A Risk Factors
   We have incurred significant losses in the past, and if we are unable to continue to increase our
revenues while controlling our costs and operating expenses, we may be unable to sustain our
profitability.
   38




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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.
   Our quarterly revenues and operating results may fluctuate significantly from quarter to quarter,
which may cause our stock price to drop.
  
    
    current uncertain macro-economic climate, including but not limit to the effects of
weakness in credit markets, could lead to reduced demand from our customers, increased price
competition for our products, and increased risk of excess and obsolete inventories;
    
    fluctuations in demand for, and sales of, our products;
    
    declines in the average selling prices of our products;
    
    fluctuations in the mix of products sold during a quarter (for example, the percentage of
total sales represented by lower margin products such as our ROADM products and line
transmission applications products);
    
    competitive factors in the fiber optic components and subsystems market, including
introductions of new products, new technologies and product enhancements by competitors,
consolidation of competitors, customers and service provider end users and pricing
pressures;
    
    the ability of our manufacturing operations in China to timely produce and deliver
products in the quantity and of the quality our customers require;
    
    our inability to cut costs quickly in the event of market or demand downturns, due to the
fact that a high percentage of our expenses, including those related to manufacturing,
engineering, research and development, sales and marketing and general and administrative
functions, are fixed in the short term;
 39




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
    
    the availability of materials and components used in our products or increases in the
prices of these materials;
    
    our ability to develop, introduce, manufacture and ship new and enhanced optical
networking products in a timely manner and in production quantities without defects or other
quality issues; and
    
    costs associated with, and the outcomes of, any intellectual property or other litigation
to which we may be a party.
 Our recent acquisition of OCP may prove unfavorable to us and our stockholders, because we may not
realize expected benefits or synergies.
  We depend on the growth and success of the communications industry, which is subject to severe
fluctuations in economic activity.
    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 our failure to meet estimates;
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
    
    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;
    
    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.
 The optical networking component industry is experiencing declining average selling prices, which
could cause our gross margins to decline and harm our operating results.
  Our ROADM Optical Switching and Routing product has accounted for a significant portion of our
revenues for recent periods. We have recently experienced declines in both unit shipments and ASPs
of our ROADM products as a result of increased competition, and we expect this trend to continue.
    41




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If our customers do not approve our manufacturing processes and qualify our products, we will lose
significant customer sales and opportunities.
   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.
    Our markets are highly competitive, some of our customers are also our competitors, and our other
customers may choose to purchase our competitors products rather than our products or develop
internal capabilities to produce their own fiber optic modules.
   42




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Because we depend on third parties to supply some of our raw materials and components, we may not
be able to obtain sufficient quantities of these materials, which could limit our ability to fill
customer orders and harm our operating results.
    If we are unable develop new products and product enhancements that achieve market acceptance, our
revenues could decline, which would harm our operating results.
   43




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If we are unable to successfully integrate acquired businesses or technologies, our operating
results may be harmed.
  
    
    additional operating expenses without additional revenues;
    
    potential dilutive issuances of equity securities;
    
    the incurrence of debt and contingent liabilities;
    
    intangible asset write-offs;
    
    research and development write-offs;
    
    other acquisition-related expenses; and
    
    cannibalization of product lines leading to revenue attrition.
  
    
    problems assimilating the purchased operations, technologies or products;
    
    unanticipated costs associated with the acquisition;
 44




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##### Table of Contents




    
    diversion of managements attention from our core business;
    
    adverse effects on existing business relationships with suppliers and customers;
    
    risks associated with entering markets in which we have no or limited prior experience; and
    
    potential loss of key employees of purchased organizations.
 If we fail to effectively manage our manufacturing capability, produce products that meet our
customers quality requirements and achieve acceptable production yields in China, we may not be
able to deliver sufficient quantities of products that meet all of our customers order
requirements in a timely manner, which would harm our operating results.
     
    
    our ability to procure the necessary raw materials and equipment on a timely basis;
    
    a potential lack of availability of qualified management and manufacturing personnel;
    
    our ability to maintain quality;
    
    our ability to effectively manage headcount, particularly if we undertake to expand our
manufacturing operations;
    
    vulnerability of telecommunications networks in East Asia to natural disasters, such as
the recent earthquake that damaged several undersea fiber-optic cables responsible for
Internet and telephone connections with parts of China; and
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
    
    our ability to quickly and efficiently implement an adequate set of financial controls to
effectively track and control inventory levels and inventory mix and to accurately predict
inventory requirements.
  If we fail to predict our manufacturing requirements accurately, we could incur additional carrying
costs and have excess and obsolete inventory or we could experience manufacturing delays, which
could cause us to lose orders or customers.
  Our products may have defects that are not detected until full deployment of a customers
equipment, which could result in a loss of customers, damage to our reputation and substantial
costs.
  
    
    loss of customers;
    
    loss of or delay in revenues;
    
    loss of market share;
    
    damage to our brand and reputation;
    
    inability to attract new customers or achieve market acceptance;
    
    diversion of development resources;
    
    increased service and warranty costs;
    
    legal actions by our customers; and
    
    increased insurance costs.
 46




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Because none of our customers are obligated to purchase our products, they may cancel or defer
their purchases at any time and on short notice, which could harm our operating results.
  
    
    may stop purchasing our products or defer their purchases on short notice;
    
    are free to purchase products from our competitors;
    
    are not required to make minimum purchases; and
    
    may cancel orders that they place with us.
  We depend on key personnel to manage our business effectively in a rapidly changing market, and if
we are unable to retain our key employees and hire additional personnel, our ability to sell our
products could be harmed.
 .
  We are exposed to currency rate fluctuations and exchange controls that could adversely impact our
operating results.
   47




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If our liability for U.S. and foreign taxes is greater than we have anticipated and reserved for,
our operating results may suffer.
  If tax benefits available to our subsidiaries located in China are reduced or repealed or our China
subsidiaries fail to meet the requirements for utilizing such tax benefits, our financial condition
and operating results could suffer.
  If we are unable to protect our proprietary technology, our ability to succeed will be harmed.
  We may be involved in intellectual property disputes in the future, which will divert managements
attention and could cause us to incur significant costs and prevent us from selling or using the
challenged technology.
   48




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##### Table of Contents




    
    obtain from the owner of the infringed intellectual property right a license to sell or
use the relevant technology, which license may not be available on reasonable terms, or at
all;
    
    stop selling, incorporating or using our products that use the challenged intellectual
property;
    
    pay substantial monetary damages; or
    
    redesign the products that use the technology.
  Our failure to comply with governmental regulations could subject us to liability. New laws could
be enacted that increase the risks and costs to Oplink. A new labor contract law has been enacted
in China.
      49




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Failure to maintain effective internal controls in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002 could impair the reliability of our financial statements, cause us to
delay filing our periodic reports with the SEC, harm our reputation and adversely affect our stock
price.
   Changes in existing financial accounting standards or practices may adversely affect our results of
operations.
  Disruption to commercial activities in the United States or in other countries, particularly in
China and Taiwan, may adversely impact our results of operations, our ability to raise capital or
our future growth.
  
    
    disruptions to commercial activities or damage to our facilities as a result of natural
disasters, political unrest, war, terrorism, labor strikes, and work stoppages;
    
    disruptions of telecommunications networks due to natural disasters;
 50




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##### Table of Contents




    
    difficulties and costs of staffing and managing foreign operations with personnel who
have expertise in optical network technology;
    
    unexpected changes in regulatory or certification requirements for optical systems or
networks;
    
    disruptions in the transportation of our products and other risks related to the
infrastructure of foreign countries;
    
    economic instability;
    
    any future outbreak of severe acute respiratory syndrome, avian influenza and other
epidemics or illnesses; and
    
    power shortages at our manufacturing facilities in China, which may lead to production
delays.
    Provisions of our charter documents and Delaware law and other arrangements may have anti-takeover
effects that could prevent any change in control, which could negatively affect your investment.
  
    
    issue preferred stock with rights senior to those of the common stock without any further
vote or action by the stockholders;
    
    provide for a classified board of directors;
    
    eliminate the right of the stockholders to call a special meeting of stockholders;
    
    eliminate the right of stockholders to act by written consent; and
    
    impose various procedural and other requirements, which could make it difficult for
stockholders to effect certain corporate actions.
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ITEM 2  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Repurchases of Equity Securities
   Maximum number (orTotal number of shares
    
    
    approximate dollar value)(or units) purchased as
    
    
    of shares (or units) thatTotal number of
    
    
    
    
    
    
    part of publicly
    
    
    may yet be purchasedshares (or units)
    
    
    Average price paid
    
    
    announced plans or
    
    
    under the plans orMonth
    
    purchased
    
    
    per share (or unit)
    
    
    programs
    
    
    programsMonth 1
(December 29, 2008
 February 1,
2009)
    
    
    56,320
    
    
    $
    7.68
    
    
    
    56,320
    
    
    $17.3 millionMonth 2
(February 2, 2009
 March 1, 2009)
    
    
    6,822
    
    
    $
    7.32
    
    
    
    6,822
    
    
    $17.2 millionMonth 3
(March 2, 2009 
March 29, 2009)
    
    
    83,301
    
    
    $
    6.93
    
    
    
    83,301
    
    
    $17.3 millionTotal
    
    
    146,443
    
    
    $
    7.23
    
    
    
    146,443
    
    
    $16.7 million
 
 ITEM 3  DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5  OTHER INFORMATION
  
 ITEM 6   EXHIBITS
 52




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Exhibit Index
 Exhibit No.
    
    Description3.1(1)
    
    Amended and Restated Certificate of Incorporation of the Registrant.3.2(2)
    
    Bylaws of the Registrant.3.3(3)
    
    Certificate of Designation of Series A Junior Participating Preferred Stock.3.4(4)
    
    Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Registrant.31.1
    
    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)
    
    Previously filed as an Exhibit to the Registrants Registration Statement
on Form S-1/A, No. 333-41506, as filed on August 29, 2000.(2)
    
    Previously filed as an Exhibit to the Registrants Registration Statement on
Form S-1/A, No. 333-41506, as filed on August 1, 2000.(3)
    
    Previously filed as an Exhibit to the Registrants Report on Form 8-K
filed on March 22, 2002 and incorporated herein by reference.(4)
    
    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.*        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. 53




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SIGNATURES
    DATE:     May 8, 2009
    By:
    /s/ Shirley YinShirley YinChief Financial Officer
(Principal Financial and Accounting Officer) 54