##### 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 October 1, 2006
 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
  o þ o
 o þ




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##### Table of Contents



OPLINK COMMUNICATIONS, INC.
   PagePART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited):
    
    
    3Condensed Consolidated Balance Sheets  September 30, 2006 and June 30, 2006
    
    
    3Condensed Consolidated Statements of Operations  Three months ended September 30, 2006 and 2005
    
    
    4Condensed Consolidated Statements of Cash Flows  Three months ended September 30, 2006 and 2005
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4.
    
    Controls and Procedures
    
    
    33PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    33Item 1A.
    
    Risk Factors
    
    
    35Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    53Item 3.
    
    Defaults Upon Senior Securities
    
    
    53Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    53Item 5.
    
    Other Information
    
    
    53Item 6.
    
    Exhibits
    
    
    53SIGNATURES
    
    
    54EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
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PART I. FINANCIAL INFORMATION
 
 ITEM 1- FINANCIAL STATEMENTS
 OPLINK COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share and per share data)
(Unaudited)
 September 30,
    
    
    June 30,2006
    
    
    2006(1)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,798
    
    
    $
    7,856Short-term investments
    
    
    115,724
    
    
    
    117,395Accounts receivable, net
    
    
    16,295
    
    
    
    13,369Inventories, net
    
    
    10,504
    
    
    
    7,953Prepaid expenses and other current assets
    
    
    4,283
    
    
    
    2,435Total current assets
    
    
    160,604
    
    
    
    149,008Long-term investments
    
    
    61,991
    
    
    
    63,029Property, plant and equipment, net
    
    
    22,707
    
    
    
    23,443Goodwill and intangible assets, net
    
    
    1,601
    
    
    
    1,694Other assets
    
    
    455
    
    
    
    781Total assets
    
    $
    247,358
    
    
    $
    237,955LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    8,153
    
    
    $
    4,516Accrued liabilities
    
    
    6,329
    
    
    
    6,216Total current liabilities
    
    
    14,482
    
    
    
    10,732Non-current liabilities
    
    
    88
    
    
    
    83Total liabilities
    
    
    14,570
    
    
    
    10,815Contingencies (Note 14)Stockholders equity:Common stock, $0.001 par value, 400,000,000 shares authorized;
21,672,335 and 21,521,989 shares issued and outstanding as of
September 30, 2006 and June 30, 2006, respectively
    
    
    22
    
    
    
    22Additional paid-in capital
    
    
    453,710
    
    
    
    451,030Treasury stock, at cost (1,248 shares as of September 30, 2006
and June 30, 2006)
    
    
    (11
    )
    
    
    (11
    )Accumulated other comprehensive income
    
    
    1,461
    
    
    
    1,248Accumulated deficit
    
    
    (222,394
    )
    
    
    (225,149
    )Total stockholders equity
    
    
    232,788
    
    
    
    227,140Total liabilities and stockholders equity
    
    $
    247,358
    
    
    $
    237,955
 
 (1)
    
    The condensed consolidated balance sheet at June 30, 2006 has been derived from the audited 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 EndedSeptember 30,2006
    
    
    2005Revenues
    
    $
    19,714
    
    
    $
    10,683Cost of revenues:Cost of revenues
    
    
    13,491
    
    
    
    8,058Stock compensation expense
    
    
    65
    
    
    
    55Total cost of revenues
    
    
    13,556
    
    
    
    8,113Gross profit
    
    
    6,158
    
    
    
    2,570Operating expenses:Research and development:Research and development
    
    
    1,571
    
    
    
    1,488Stock compensation expense
    
    
    129
    
    
    
    153Total research and development
    
    
    1,700
    
    
    
    1,641Sales and marketing:Sales and marketing
    
    
    1,382
    
    
    
    885Stock compensation expense
    
    
    158
    
    
    
    142Total sales and marketing
    
    
    1,540
    
    
    
    1,027General and administrative:General and administrative
    
    
    1,499
    
    
    
    1,636Stock compensation expense
    
    
    722
    
    
    
    247Total general and administrative
    
    
    2,221
    
    
    
    1,883Amortization of intangible and other assets
    
    
    35
    
    
    
    Total operating expenses
    
    
    5,496
    
    
    
    4,551Income (loss) from operations
    
    
    662
    
    
    
    (1,981
    )Interest and other income, net
    
    
    2,173
    
    
    
    1,560Gain (loss) on sale of assets
    
    
    2
    
    
    
    (19
    )Income (loss) before provision for income taxes
    
    
    2,837
    
    
    
    (440
    )Provision for income taxes
    
    
    82
    
    
    
    Net income (loss)
    
    $
    2,755
    
    
    $
    (440
    )Net income (loss) per share:Basic
    
    $
    0.13
    
    
    $
    (0.02
    )Diluted
    
    $
    0.12
    
    
    $
    (0.02
    )Shares used in per share calculation:Basic
    
    
    21,557
    
    
    
    21,274Diluted
    
    
    22,552
    
    
    
    21,274
 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)
 Three Months EndedSeptember 30,2006
    
    
    2005Cash flows from operating activities:Net income (loss)
    
    $
    2,755
    
    
    $
    (440
    )Adjustments to reconcile net income (loss) to
net cash provided by operating activities:Depreciation and amortization of property and equipment
    
    
    1,173
    
    
    
    1,937Amortization of intangible and other assets
    
    
    93
    
    
    
    Stock compensation expense
    
    
    1,074
    
    
    
    597Amortization of premium on investments
    
    
    82
    
    
    
    56Gain (loss) on sale or disposal of assets
    
    
    (2
    )
    
    
    19Other
    
    
    (13
    )
    
    
    (1
    )Change in assets and liabilities:Accounts receivable
    
    
    (2,899
    )
    
    
    (293
    )Inventories
    
    
    (2,494
    )
    
    
    (455
    )Prepaid expenses and other current assets
    
    
    (1,846
    )
    
    
    18Other assets
    
    
    313
    
    
    
    5Accounts payable
    
    
    3,637
    
    
    
    795Accrued liabilities
    
    
    130
    
    
    
    (453
    )Net cash provided by operating activities
    
    
    2,003
    
    
    
    1,785Cash flows from investing activities:Purchases of available-for-sale investments
    
    
    (15,112
    )
    
    
    (9,966
    )Sales and maturities of available-for-sale investments
    
    
    12,198
    
    
    
    6,600Purchases of held-to-maturity investments
    
    
    (16,990
    )
    
    
    (15,000
    )Maturities of held-to-maturity investments
    
    
    22,540
    
    
    
    20,000Proceeds from sales of property and equipment
    
    
    9
    
    
    
    5Purchases of property and equipment
    
    
    (312
    )
    
    
    (472
    )Net cash provided by investing activities
    
    
    2,333
    
    
    
    1,167Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    1,606
    
    
    
    199Net cash provided by financing activities
    
    
    1,606
    
    
    
    199Effect of exchange rate changes on cash
    
    
    
    
    
    
    36Net increase in cash and cash equivalents
    
    
    5,942
    
    
    
    3,187Cash and cash equivalents, beginning of period
    
    
    7,856
    
    
    
    29,710Cash and cash equivalents, end of period
    
    $
    13,798
    
    
    $
    32,897
 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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Net Income (Loss) Per Share
 Three Months EndedSeptember 30,2006
    
    
    2005Numerator:Net income (loss)
    
    $
    2,755
    
    
    $
    (440
    )Denominator:Weighted average shares outstanding  basic
    
    
    21,557
    
    
    
    21,274Effect of dilutive potential common shares
    
    
    995
    
    
    
    Weighted average shares outstanding  diluted
    
    
    22,552
    
    
    
    21,274Net income (loss) per share  basic
    
    $
    0.13
    
    
    $
    (0.02
    )Net income (loss) per share  diluted
    
    $
    0.12
    
    
    $
    (0.02
    )Antidilutive stock options not included in net
income (loss) per share calculation
    
    
    1,595
    
    
    
    3,014
 Comprehensive Income.
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Three Months EndedSeptember 30,2006
    
    
    2005Net income (loss)
    
    $
    2,755
    
    
    $
    (440
    )Unrealized gain (loss) on investments
    
    
    37
    
    
    
    (28
    )Change in cumulative translation adjustments
    
    
    176
    
    
    
    824Total comprehensive income
    
    $
    2,968
    
    
    $
    356
 Short-Term and Long-Term Investments.
  8




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September 30, 2006Gross
    
    
    GrossCarrying
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-term investments:Certificates of deposit
    
    $
    440
    
    
    $
    440
    
    
    $
    
    
    
    $
    
    
    
    $
    440Obligations of states and political subdivisions
    
    
    12,200
    
    
    
    12,200
    
    
    
    
    
    
    
    
    
    
    
    12,200Corporate securities
    
    
    50,085
    
    
    
    50,110
    
    
    
    10
    
    
    
    (37
    )
    
    
    50,083United States government agencies
    
    
    52,999
    
    
    
    53,000
    
    
    
    
    
    
    
    (306
    )
    
    
    52,694Total short-term investments
    
    
    115,724
    
    
    
    115,750
    
    
    
    10
    
    
    
    (343
    )
    
    
    115,417Long-term investments:Corporate securities
    
    
    1,991
    
    
    
    1,991
    
    
    
    1
    
    
    
    
    
    
    
    1,992United States government agencies
    
    
    60,000
    
    
    
    60,000
    
    
    
    3
    
    
    
    (105
    )
    
    
    59,898Total long-term investments
    
    
    61,991
    
    
    
    61,991
    
    
    
    4
    
    
    
    (105
    )
    
    
    61,890Total investments
    
    $
    177,715
    
    
    $
    177,741
    
    
    $
    14
    
    
    $
    (448
    )
    
    $
    177,307
 June 30, 2006Gross
    
    
    GrossCarrying
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-term investments:Certificates of deposit
    
    $
    390
    
    
    $
    390
    
    
    $
    
    
    
    $
    
    
    
    $
    390Obligations of states and political subdivisions
    
    
    18,400
    
    
    
    18,400
    
    
    
    
    
    
    
    
    
    
    
    18,400Corporate securities
    
    
    43,618
    
    
    
    43,677
    
    
    
    1
    
    
    
    (180
    )
    
    
    43,498United States government agencies
    
    
    54,987
    
    
    
    55,001
    
    
    
    
    
    
    
    (440
    )
    
    
    54,561Total short-term investments
    
    
    117,395
    
    
    
    117,468
    
    
    
    1
    
    
    
    (620
    )
    
    
    116,849Long-term investments:Corporate securities
    
    
    3,029
    
    
    
    3,029
    
    
    
    
    
    
    
    (7
    )
    
    
    3,022United States government agencies
    
    
    60,000
    
    
    
    60,000
    
    
    
    
    
    
    
    (525
    )
    
    
    59,475Total long-term investments
    
    
    63,029
    
    
    
    63,029
    
    
    
    
    
    
    
    (532
    )
    
    
    62,497Total investments
    
    $
    180,424
    
    
    $
    180,497
    
    
    $
    1
    
    
    $
    (1,152
    )
    
    $
    179,346
  September 30, 2006Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAvailable-for-sale investments:Certificates of deposit
    
    $
    440
    
    
    $
    
    
    
    $
    
    
    
    $
    440Obligations of states and political subdivisions
    
    
    12,200
    
    
    
    
    
    
    
    
    
    
    
    12,200Corporate securities
    
    
    32,921
    
    
    
    1
    
    
    
    (26
    )
    
    
    32,896United States government agencies
    
    
    5,000
    
    
    
    
    
    
    
    (1
    )
    
    
    4,999Total available-for-sale investments
    
    
    50,561
    
    
    
    1
    
    
    
    (27
    )
    
    
    50,535Held-to-maturity investments:Corporate securities
    
    
    19,180
    
    
    
    10
    
    
    
    (11
    )
    
    
    19,179United States government agencies
    
    
    108,000
    
    
    
    3
    
    
    
    (410
    )
    
    
    107,593Total held-to-maturity investments
    
    
    127,180
    
    
    
    13
    
    
    
    (421
    )
    
    
    126,772Total investments
    
    $
    177,741
    
    
    $
    14
    
    
    $
    (448
    )
    
    $
    177,307
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June 30, 2006Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAvailable-for-sale investments:Certificates of deposit
    
    $
    390
    
    
    $
    
    
    
    $
    
    
    
    $
    390Obligations of states and political subdivisions
    
    
    18,400
    
    
    
    
    
    
    
    
    
    
    
    18,400Corporate securities
    
    
    23,867
    
    
    
    1
    
    
    
    (60
    )
    
    
    23,808United States government agencies
    
    
    5,000
    
    
    
    
    
    
    
    (14
    )
    
    
    4,986Total available-for-sale investments
    
    
    47,657
    
    
    
    1
    
    
    
    (74
    )
    
    
    47,584Held-to-maturity investments:Corporate securities
    
    
    22,839
    
    
    
    
    
    
    
    (127
    )
    
    
    22,712United States government agencies
    
    
    110,001
    
    
    
    
    
    
    
    (951
    )
    
    
    109,050Total held-to-maturity investments
    
    
    132,840
    
    
    
    
    
    
    
    (1,078
    )
    
    
    131,762Total investments
    
    $
    180,497
    
    
    $
    1
    
    
    $
    (1,152
    )
    
    $
    179,346
  September 30, 2006In 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
    
    $
    14,356
    
    
    $
    (26
    )
    
    $
    
    
    
    $
    
    
    
    $
    14,356
    
    
    $
    (26
    )United States government agencies
    
    
    4,999
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    4,999
    
    
    
    (1
    )Total available-for-sale investments:
    
    
    19,355
    
    
    
    (27
    )
    
    
    
    
    
    
    
    
    
    
    19,355
    
    
    
    (27
    )Held-to-maturity investments:Corporate securities
    
    
    5,051
    
    
    
    (11
    )
    
    
    
    
    
    
    
    
    
    
    5,051
    
    
    
    (11
    )United States government agencies
    
    
    39,920
    
    
    
    (80
    )
    
    
    52,670
    
    
    
    (330
    )
    
    
    92,590
    
    
    
    (410
    )Total held-to-maturity investments
    
    
    44,971
    
    
    
    (91
    )
    
    
    52,670
    
    
    
    (330
    )
    
    
    97,641
    
    
    
    (421
    )Total investments in loss position
    
    $
    64,326
    
    
    $
    (118
    )
    
    $
    52,670
    
    
    $
    (330
    )
    
    $
    116,996
    
    
    $
    (448
    )
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September 30, 2006
    
    
    June 30, 2006Amortized
    
    
    Estimated
    
    
    Amortized
    
    
    EstimatedCost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair ValueAvailable-for-sale investments:Due in one year or less
    
    $
    28,461
    
    
    $
    28,435
    
    
    $
    28,357
    
    
    $
    28,284Due in one year to five years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due in five years to ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due after ten years
    
    
    22,100
    
    
    
    22,100
    
    
    
    19,300
    
    
    
    19,300Total available-for-sale investments
    
    
    50,561
    
    
    
    50,535
    
    
    
    47,657
    
    
    
    47,584Held-to-maturity investments:Due in one year or less
    
    
    65,189
    
    
    
    64,882
    
    
    
    69,811
    
    
    
    69,265Due in one year to five years
    
    
    61,991
    
    
    
    61,890
    
    
    
    63,029
    
    
    
    62,497Total held-to-maturity investments
    
    
    127,180
    
    
    
    126,772
    
    
    
    132,840
    
    
    
    131,762Total investments
    
    $
    177,741
    
    
    $
    177,307
    
    
    $
    180,497
    
    
    $
    179,346
  Inventories
 September 30,
    
    
    June 30,2006
    
    
    2006Inventories, net:Raw materials
    
    $
    6,960
    
    
    $
    5,588Work-in-process
    
    
    3,478
    
    
    
    2,365Finished goods
    
    
    66
    
    
    
    Total
    
    $
    10,504
    
    
    $
    7,953
 Property, Plant and Equipment.
 September 30,
    
    
    June 30,2006
    
    
    2006Property, plant and equipment:Production and engineering equipment
    
    $
    31,894
    
    
    $
    32,277Computer equipment and software
    
    
    6,491
    
    
    
    6,464Building and building improvements
    
    
    15,220
    
    
    
    15,151Land
    
    
    1,949
    
    
    
    1,949Sub-total
    
    
    55,554
    
    
    
    55,841Less: Accumulated depreciation and
amortization
    
    
    (32,847
    )
    
    
    (32,398
    )Total
    
    $
    22,707
    
    
    $
    23,443
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Goodwill and Intangible Assets, Net.
 EstimatedUseful Life
    
    
    Gross
    
    
    AccumulatedSeptember 30, 2006
    
    (in Years)
    
    
    Amount
    
    
    Amortization
    
    
    NetTechnology
    
    
    4
    
    
    $
    921
    
    
    $
    203
    
    
    $
    718Trade name
    
    
    3
    
    
    
    163
    
    
    
    50
    
    
    
    113Customer relationships
    
    
    3
    
    
    
    253
    
    
    
    57
    
    
    
    196Total
    
    
    
    
    
    $
    1,337
    
    
    $
    310
    
    
    $
    1,027
 EstimatedUseful Life
    
    
    Gross
    
    
    AccumulatedJune 30, 2006
    
    (in Years)
    
    
    Amount
    
    
    Amortization
    
    
    NetTechnology
    
    
    4
    
    
    $
    921
    
    
    $
    145
    
    
    $
    776Trade name
    
    
    3
    
    
    
    163
    
    
    
    36
    
    
    
    127Customer relationships
    
    
    3
    
    
    
    253
    
    
    
    36
    
    
    
    217Total
    
    
    
    
    
    $
    1,337
    
    
    $
    217
    
    
    $
    1,120
  Three Months EndedSeptember 30,Reported as:
    
    2006
    
    
    2005Cost of revenues
    
    $
    58
    
    
    $
    Operating expenses
    
    
    35
    
    
    
    Total
    
    $
    93
    
    
    $
    
  Fiscal years ending June 30,
    
    Amount2007
    
    $
    2772008
    
    
    3682009
    
    
    2972010
    
    
    85$
    1,027
  12




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##### Table of Contents



Accrued Liabilities.
 September 30,
    
    
    June 30,2006
    
    
    2006Accrued liabilities:Payroll and related expenses
    
    $
    1,517
    
    
    $
    1,489Accrued sales commission
    
    
    516
    
    
    
    469Accrued warranty
    
    
    422
    
    
    
    405Accrued professional fees
    
    
    702
    
    
    
    975Remaining amounts payable for acquisitions
    
    
    504
    
    
    
    510Other
    
    
    2,668
    
    
    
    2,368Total
    
    $
    6,329
    
    
    $
    6,216
 Product Warranties.
  Three Months EndedSeptember 30,2006
    
    
    2005Balance at the beginning of the period
    
    $
    405
    
    
    $
    560Accruals for warranties issued during the period
    
    
    34
    
    
    
    100Accruals related to pre-existing warranties
including expirations and changes in estimates
    
    
    36
    
    
    
    Cost of warranty repair
    
    
    (53
    )
    
    
    (53
    )Balance at the end of the period
    
    $
    422
    
    
    $
    607
 Stock Compensation.
 13




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Three Months EndedSeptember 30,2006
    
    
    2005Stock-based compensation expense by type of award:Employee stock options
    
    $
    1,002
    
    
    $
    481Employee stock purchase plan
    
    
    72
    
    
    
    130Net change of amounts capitalized as inventory
    
    
    
    
    
    
    (14
    )Total stock-based compensation
    
    
    1,074
    
    
    
    597Tax effect on stock-based compensation
    
    
    
    
    
    
    Net effect on net loss
    
    $
    1,074
    
    
    $
    597Effect on net income (loss) per share:Basic
    
    $
    (0.05
    )
    
    $
    (0.03
    )Diluted
    
    $
    (0.05
    )
    
    $
    (0.03
    )
   Valuation Assumptions
  Three Months EndedSeptember 30,2006
    
    2005Risk-free interest rate
    
    
    4.83
    %
    
    
    4.07
    %Expected term
    
    4.8 years
    
    4.5 yearsExpected dividends
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    48
    %
    
    
    48
    %
  14




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Equity Incentive Program
   15




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##### Table of Contents



WeightedNumber of
    
    
    AverageShares Available
    
    
    Options
    
    
    Exercisefor Grant
    
    
    Outstanding
    
    
    PriceBalance, June 30, 2004
    
    
    5,065,272
    
    
    
    2,827,761
    
    
    $
    15.8655Options granted
    
    
    (674,929
    )
    
    
    674,929
    
    
    
    11.1804Options exercised
    
    
    
    
    
    
    (39,267
    )
    
    
    6.6619Options canceled
    
    
    399,934
    
    
    
    (399,934
    )
    
    
    18.7215Balance, June 30, 2005
    
    
    4,790,277
    
    
    
    3,063,489
    
    
    
    14.5481Options granted
    
    
    (1,075,567
    )
    
    
    1,075,567
    
    
    
    17.7316Options exercised
    
    
    
    
    
    
    (180,433
    )
    
    
    10.8641Options canceled
    
    
    317,294
    
    
    
    (317,294
    )
    
    
    19.5404Expired (1)
    
    
    (5,837
    )
    
    
    
    
    
    
    Balance, June 30, 2006
    
    
    4,026,167
    
    
    
    3,641,329
    
    
    
    15.2351Options granted
    
    
    (252,815
    )
    
    
    252,815
    
    
    
    15.9636Options exercised
    
    
    
    
    
    
    (150,346
    )
    
    
    10.6805Options canceled
    
    
    33,377
    
    
    
    (33,377
    )
    
    
    14.4972Balance, September 30, 2006
    
    
    3,806,729
    
    
    
    3,710,421
    
    
    $
    15.4720
 
 (1)
    
    These shares were originally available for grant under the Companys 1995 Stock Option Plan, which expired in 2005, ten years after its adoption. 16




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##### Table of Contents



Options Outstanding
    
    
    Options Vested and Exercisableat September 30, 2006
    
    
    at September 30, 2006Weighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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 thousand)
    
    
    Outstanding
    
    
    (in Years)
    
    
    Price
    
    
    (in thousand)$0.0001 - $2.0000
    
    
    69,159
    
    
    
    0.9
    
    
    $
    0.2305
    
    
    $
    1,366
    
    
    
    69,159
    
    
    
    0.9
    
    
    $
    0.2305
    
    
    $
    1,366$4.0001 - $5.0000
    
    
    865,208
    
    
    
    5.9
    
    
    
    4.6276
    
    
    
    13,283
    
    
    
    850,327
    
    
    
    5.9
    
    
    
    4.6274
    
    
    
    13,055$5.0001 - $10.0000
    
    
    101,306
    
    
    
    5.2
    
    
    
    8.0512
    
    
    
    1,208
    
    
    
    99,449
    
    
    
    5.2
    
    
    
    8.0459
    
    
    
    1,187$10.0001 - $11.0000
    
    
    380,347
    
    
    
    8.6
    
    
    
    10.2437
    
    
    
    3,703
    
    
    
    111,931
    
    
    
    8.4
    
    
    
    10.2398
    
    
    
    1,090$12.0001 - $13.0000
    
    
    338,396
    
    
    
    8.4
    
    
    
    12.3091
    
    
    
    2,596
    
    
    
    74,487
    
    
    
    7.2
    
    
    
    12.6123
    
    
    
    549$13.0001 - $15.0000
    
    
    325,690
    
    
    
    8.3
    
    
    
    14.0383
    
    
    
    1,935
    
    
    
    120,070
    
    
    
    6.7
    
    
    
    13.5892
    
    
    
    767$15.0001 - $17.0000
    
    
    84,428
    
    
    
    5.1
    
    
    
    15.7319
    
    
    
    359
    
    
    
    76,999
    
    
    
    4.6
    
    
    
    15.6491
    
    
    
    333$17.0001 - $19.0000
    
    
    371,468
    
    
    
    5.9
    
    
    
    17.9886
    
    
    
    740
    
    
    
    279,637
    
    
    
    5.0
    
    
    
    17.8421
    
    
    
    598$19.0001 - $20.0000
    
    
    92,715
    
    
    
    10.0
    
    
    
    19.7000
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $20.0001 - $21.0000
    
    
    700,000
    
    
    
    9.7
    
    
    
    20.2500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $28.0001 - $37.0000
    
    
    299,650
    
    
    
    3.8
    
    
    
    35.5272
    
    
    
    
    
    
    
    299,650
    
    
    
    3.8
    
    
    
    35.5272
    
    
    
    $42.0001 - $140.0000
    
    
    82,054
    
    
    
    4.0
    
    
    
    65.9050
    
    
    
    
    
    
    
    82,054
    
    
    
    4.0
    
    
    
    65.9050
    
    
    
    3,710,421
    
    
    
    7.1
    
    
    $
    15.4720
    
    
    $
    25,208
    
    
    
    2,063,763
    
    
    
    5.4
    
    
    $
    14.8834
    
    
    $
    18,945Vested and expected to vest
    
    
    3,397,109
    
    
    
    7.1
    
    
    $
    15.3526
    
    
    $
    24,298
    Employee Stock Purchase Plan
  17




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Repurchase of Common Stock
 Recent Accounting Pronouncements
  
 18




---



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
 .
    19




---



##### Table of Contents



Contingencies
  In re Oplink Communications, Inc. Initial Public
Offering Securities Litigation
   20




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ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-looking statements
  21




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Overview
   22




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Use of Estimates and Critical Accounting Policies
   
    
    revenue recognition and product returns;
    
    warranty obligations;
    
    risk evaluation;
    
    allowance for doubtful accounts;
    
    excess and obsolete inventory;
    
    long-lived asset valuation;
    
    business combination;
 23




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##### Table of Contents




    
    deferred taxes; and
    
    stock compensation.
  Results of Operations
 Revenues
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    PercentageSeptember 30,
    
    Change
    
    Change2006
    
    2005Revenues
    
    $
    19,714
    
    
    $
    10,683
    
    
    $
    9,031
    
    
    
    84.5
    %
   24




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##### Table of Contents



Gross Profit
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    PercentageSeptember 30,
    
    Change
    
    Change2006
    
    2005Gross profit
    
    $
    6,158
    
    
    $
    2,570
    
    
    $
    3,588
    
    
    
    139.6
    %Gross profit margin
    
    
    31.2
    %
    
    
    24.1
    %
    Research and Development
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    PercentageSeptember 30,
    
    Change
    
    Change2006
    
    2005Research and development
    
    $
    1,700
    
    
    $
    1,641
    
    
    $
    59
    
    
    
    3.6
    %
  25




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##### Table of Contents



Sales and Marketing
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    PercentageSeptember 30,
    
    Change
    
    Change2006
    
    2005Sales and marketing
    
    $
    1,540
    
    
    $
    1,027
    
    
    $
    513
    
    
    
    50.0
    %
  General and Administrative
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    PercentageSeptember 30,
    
    Change
    
    Change2006
    
    2005General and administrative
    
    $
    2,221
    
    
    $
    1,883
    
    
    $
    338
    
    
    
    18.0
    %
  Stock Compensation Expense
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    PercentageSeptember 30,
    
    Change
    
    Change2006
    
    2005Stock compensation
expense
    
    $
    1,074
    
    
    $
    597
    
    
    $
    477
    
    
    
    79.9
    %
  26




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##### Table of Contents



Interest and Other Income, Net
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    PercentageSeptember 30,
    
    Change
    
    Change2006
    
    2005Interest and other
income, net
    
    $
    2,173
    
    
    $
    1,560
    
    
    $
    613
    
    
    
    39.3
    %
  Provision for Income Taxes
  27




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Liquidity and Capital Resources
  Three Months Ended September 30, 2006
       28




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.
 Three Months Ended September 30, 2005
        29




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Contractual Obligations
  Contractual Obligations Due by PeriodContractual Obligations
    
    Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    After 5 yearsOperating leases
    
    $
    561
    
    
    $
    309
    
    
    $
    252
    
    
    $
    
    
    
    $
    Purchase obligations
    
    
    14,820
    
    
    
    14,808
    
    
    
    12
    
    
    
    
    
    
    
    Total
    
    $
    15,381
    
    
    $
    15,117
    
    
    $
    264
    
    
    $
    
    
    
    $
    
 Recent Accounting Pronouncements
   
 
 30




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.
    31




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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 30,2006
    
    
    2006
    
    
    2006
    
    
    2006(Annualized)
    
    
    
    
    
    
    (Annualized)Investment Securities:Cash equivalents  variable rate
    
    $
    2,480
    
    
    
    5.2
    %
    
    $
    1,195
    
    
    
    5.0
    %Cash equivalents  fixed rate
    
    
    2,989
    
    
    
    5.3
    %
    
    
    
    
    
    
    Short-term investments  variable rate
    
    
    22,625
    
    
    
    3.7
    %
    
    
    24,669
    
    
    
    4.0
    %Short-term investments  fixed rate
    
    
    93,099
    
    
    
    4.6
    %
    
    
    92,726
    
    
    
    4.2
    %Long-term investments  fixed rate
    
    
    61,991
    
    
    
    5.2
    %
    
    
    63,029
    
    
    
    4.9
    %Total
    
    $
    183,184
    
    
    
    
    
    
    $
    181,619
 Expected Fiscal Year Maturity Date2007
    
    2008
    
    2009
    
    Total
    
    Fair ValueLong-term
investments  fixed
rate
    
    $
    
    
    
    $
    46,991
    
    
    $
    15,000
    
    
    $
    61,991
    
    
    $
    61,890Average interest rate
    
    
    
    
    
    
    5.1
    %
    
    
    5.5
    %
    
    
    5.2
    %
 32




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##### Table of Contents



Foreign Currency Exchange Rate Exposure
    
 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
 In re Oplink Communications, Inc. Initial Public Offering
Securities Litigation
 33




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34




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##### Table of Contents



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.
  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.
 35




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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 wavelength expansion products have accounted for a majority of our revenues, and our revenues
could be harmed if the price of, or demand for, these products further declines or if these
products fail to achieve broader market acceptance.
  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 at any time without penalty;
 36




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##### Table of Contents



-
    
    are free to purchase products from our competitors;-
    
    are not required to make minimum purchases; and-
    
    may cancel orders that they place with us.
  Our quarterly revenues and operating results are difficult to predict and may continue to fluctuate
significantly from quarter to quarter and, therefore, may vary from public market analysts or
investors expectations, which could cause our stock price to drop.
  -
    
    the availability of raw materials used in our products, increases in the price of these
raw materials or to the extent a greater degree of the raw material content of our product
is from third parties, which most likely would cause our gross profit margin to decline;-
    
    impact on our sales and margins as a result of our customers continued migration to
contract manufacturers and the extent to which we engage in contract manufacturing
activities, which most likely would cause our gross profit margin to decline;-
    
    fluctuations in demand for, and sales of, our products;-
    
    changes in customer, geographic or product mix and the average selling prices of our products;-
    
    economic conditions specific to the communications and related industries and the
development and size of the markets for our products;-
    
    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, is fixed in the short term;-
    
    cancellations or delays of orders or shipment rescheduling by our customers;
 37




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##### Table of Contents



-
    
    the lingering effects of the recent economic downturn and resulting uncertainty of the
fiber optic industry;-
    
    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 ability to successfully improve our manufacturing capabilities and achieve
acceptable production yields in our facilities in China;-
    
    the tendency of communications equipment suppliers to sporadically place large orders
with short lead times;-
    
    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;-
    
    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;-
    
    with respect to new products, a mismatching of research and development expenses and
sales and marketing expenses that are incurred in one quarter with revenues that are not
recognized, if at all, until a subsequent quarter when the new products are introduced and
commercially accepted; and-
    
    costs associated with, and the outcomes of, any intellectual property or other
litigation to which we are, or may become, a party.
  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.
   38




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-
    
    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; and-
    
    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.
  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.
  39




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##### Table of Contents



-
    
    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.
  We depend on the growth and success of the communications industry, which is subject to severe
fluctuations in economic activity and is also experiencing consolidation and realignment, as well
as a trend towards outsourced manufacturing.
    40




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Because we depend on third parties to supply some of our raw materials and equipment, we may not be
able to obtain sufficient quantities of these materials and equipment, or these materials may
become unavailable due to technological changes, which could limit our ability to fill customer
orders and harm our operating results.
  We compete in a highly competitive industry, and if we are unable to compete successfully or
develop new products and product enhancements that achieve market acceptance, our revenues could
decline, which would harm our operating results.
  41




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42




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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 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;-
    
    amortization of other intangibles;-
    
    research and development write-offs; and-
    
    other acquisition-related expenses.
  43




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Disruption to commercial activities in the United States or in other countries, particularly in
China, 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;-
    
    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.
    44




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We are exposed to currency rate fluctuations and exchange controls that could adversely impact our
operating results.
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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.
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-
    
    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 money damages; or-
    
    redesign the products that use the technology.
  We are the target of a securities class action complaint and are at risk of securities class action
litigation, which could result in costs and divert management attention and resources.
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Our lengthy and variable qualification and sales cycle requires us to incur substantial costs to
make a sale, and if the sale does not occur then we will have incurred these expenses without
obtaining increased sales.
   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.
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Because some of our third-party sales representatives and distributors carry products of one or
more of our competitors, they may not recommend our products over competitors products.
  Our failure to comply with governmental regulations could subject us to liability.
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Enacted and proposed changes in securities laws and regulations have increased and are likely to
continue to increase our costs.
  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
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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.
  Because of the rapid changes taking place in the fiber optics industry, we expect to experience
significant volatility in our stock price, which could cause you to lose all or part of your
investment.
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-
    
    economic downturn in the fiber optics industry;-
    
    preannouncement of financial results;-
    
    quarterly variations in our operating results;-
    
    changes in financial estimates by securities analysts and 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;-
    
    any loss by us of a major customer;-
    
    the outcome of, and costs associated with, any litigation to which we are or may become a party;-
    
    additions or departures of key management or engineering personnel; and-
    
    future sales of our common stock.
  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
  
 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 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.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)
    
    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.(3)
    
    Previously filed as an Exhibit to the Registrants Quarterly Report on Form 10-Q filed on November 14, 2005 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
  OPLINK COMMUNICATIONS, INC.(Registrant)DATE: November 13, 2006
    
    By:
    
    /s/ Bruce D. HornBruce D. HornChief Financial Officer(Principal Financial and Accounting Officer)
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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.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)
    
    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.(3)
    
    Previously filed as an Exhibit to the Registrants Quarterly Report on Form 10-Q filed on November 14, 2005 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. 55