##### 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 April 1, 2007
 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 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 (Address of principal executive offices) (Zip Code)
  þ o
  o þ o
 o þ




---



##### 



OPLINK COMMUNICATIONS, INC.
   PagePART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited):Condensed Consolidated Balance Sheets 
March 31, 2007 and June 30, 2006
    
    
    3Condensed Consolidated Statements of Operations 
Three and nine months ended March 31, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Cash Flows 
Nine months ended March 31, 2007 and 2006
    
    
    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
    
    
    36Item 4.
    
    Controls and Procedures
    
    
    38PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    38Item 1A.
    
    Risk Factors
    
    
    39Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    59Item 3.
    
    Defaults Upon Senior Securities
    
    
    59Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    59Item 5.
    
    Other Information
    
    
    59Item 6.
    
    Exhibits
    
    
    59SIGNATURES
    
    
    60EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




---



##### 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 30,2007
    
    
    2006(1)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    30,114
    
    
    $
    7,856Short-term investments
    
    
    131,472
    
    
    
    117,395Accounts receivable, net
    
    
    21,440
    
    
    
    13,369Inventories, net
    
    
    11,938
    
    
    
    7,953Prepaid expenses and other current assets
    
    
    5,013
    
    
    
    2,435Total current assets
    
    
    199,977
    
    
    
    149,008Long-term investments
    
    
    40,000
    
    
    
    63,029Property, plant and equipment, net
    
    
    22,319
    
    
    
    23,443Goodwill and intangible assets, net
    
    
    1,417
    
    
    
    1,694Other assets
    
    
    95
    
    
    
    781Total assets
    
    $
    263,808
    
    
    $
    237,955LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    8,274
    
    
    $
    4,516Accrued liabilities
    
    
    6,122
    
    
    
    6,216Total current liabilities
    
    
    14,396
    
    
    
    10,732Non-current liabilities
    
    
    71
    
    
    
    83Total liabilities
    
    
    14,467
    
    
    
    10,815Contingencies (Note 14)Stockholders equity:Common stock, $0.001 par value, 34,000,000 shares authorized;
22,209,900 and 21,521,989 shares issued and outstanding as of
March 31, 2007 and June 30, 2006, respectively
    
    
    22
    
    
    
    22Additional paid-in capital
    
    
    461,690
    
    
    
    451,030Treasury stock, at cost (1,248 shares as of June 30, 2006)
    
    
    
    
    
    
    (11
    )Accumulated other comprehensive income
    
    
    2,613
    
    
    
    1,248Accumulated deficit
    
    
    (214,984
    )
    
    
    (225,149
    )Total stockholders equity
    
    
    249,341
    
    
    
    227,140Total liabilities and stockholders equity
    
    $
    263,808
    
    
    $
    237,955
 
 (1)
    
    The condensed consolidated balance sheet at June 30, 2006 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.
 3




---



##### Table of Contents



OPLINK COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    27,620
    
    
    $
    14,597
    
    
    $
    70,287
    
    
    $
    37,931Cost of revenues:Cost of revenues
    
    
    20,515
    
    
    
    10,223
    
    
    
    50,503
    
    
    
    27,445Stock compensation expense
    
    
    69
    
    
    
    55
    
    
    
    209
    
    
    
    176Total cost of revenues
    
    
    20,584
    
    
    
    10,278
    
    
    
    50,712
    
    
    
    27,621Gross profit
    
    
    7,036
    
    
    
    4,319
    
    
    
    19,575
    
    
    
    10,310Operating expenses:Research and development:Research and development
    
    
    1,364
    
    
    
    1,547
    
    
    
    4,364
    
    
    
    4,373Stock compensation expense
    
    
    123
    
    
    
    141
    
    
    
    396
    
    
    
    448Total research and development
    
    
    1,487
    
    
    
    1,688
    
    
    
    4,760
    
    
    
    4,821Sales and marketing:Sales and marketing
    
    
    1,461
    
    
    
    1,083
    
    
    
    4,123
    
    
    
    2,854Stock compensation expense
    
    
    162
    
    
    
    121
    
    
    
    490
    
    
    
    404Total sales and marketing
    
    
    1,623
    
    
    
    1,204
    
    
    
    4,613
    
    
    
    3,258General and administrative:General and administrative
    
    
    1,464
    
    
    
    1,451
    
    
    
    4,735
    
    
    
    4,788Stock compensation expense
    
    
    641
    
    
    
    278
    
    
    
    2,080
    
    
    
    807Total general and administrative
    
    
    2,105
    
    
    
    1,729
    
    
    
    6,815
    
    
    
    5,595Amortization of intangible and other assets
    
    
    35
    
    
    
    27
    
    
    
    105
    
    
    
    45In-process research and development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,120Total operating expenses
    
    
    5,250
    
    
    
    4,648
    
    
    
    16,293
    
    
    
    14,839Income (loss) from operations
    
    
    1,786
    
    
    
    (329
    )
    
    
    3,282
    
    
    
    (4,529
    )Interest and other income, net
    
    
    2,511
    
    
    
    1,843
    
    
    
    7,016
    
    
    
    5,036Loss on sale of assets
    
    
    (8
    )
    
    
    (445
    )
    
    
    (8
    )
    
    
    (472
    )Income before provision for income taxes
    
    
    4,289
    
    
    
    1,069
    
    
    
    10,290
    
    
    
    35Provision for income taxes
    
    
    10
    
    
    
    41
    
    
    
    125
    
    
    
    41Net income (loss)
    
    $
    4,279
    
    
    $
    1,028
    
    
    $
    10,165
    
    
    $
    (6
    )Net income (loss) per share:Basic
    
    $
    0.19
    
    
    $
    0.05
    
    
    $
    0.46
    
    
    $
    (0.00
    )Diluted
    
    $
    0.19
    
    
    $
    0.05
    
    
    $
    0.44
    
    
    $
    (0.00
    )Shares used in per share calculation:Basic
    
    
    22,202
    
    
    
    21,355
    
    
    
    21,920
    
    
    
    21,316Diluted
    
    
    23,011
    
    
    
    22,234
    
    
    
    22,886
    
    
    
    21,316
 The accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.
 4




---



##### Table of Contents



OPLINK COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months EndedMarch 31,2007
    
    
    2006Cash flows from operating activities:Net income (loss)
    
    $
    10,165
    
    
    $
    (6
    )Adjustments to reconcile net income (loss) to
net cash provided by operating activities:Depreciation and amortization of property and equipment
    
    
    3,582
    
    
    
    4,972Amortization of intangible and other assets
    
    
    277
    
    
    
    136Stock compensation expense
    
    
    3,175
    
    
    
    1,835Amortization of premium on investments
    
    
    163
    
    
    
    179Loss on sale or disposal of assets
    
    
    8
    
    
    
    472In-process research and development
    
    
    
    
    
    
    1,120Other
    
    
    (78
    )
    
    
    (23
    )Change in assets and liabilities:Accounts receivable
    
    
    (7,860
    )
    
    
    (4,071
    )Inventories
    
    
    (3,583
    )
    
    
    (1,362
    )Prepaid expenses and other current assets
    
    
    (2,535
    )
    
    
    (2,475
    )Other assets
    
    
    669
    
    
    
    151Accounts payable
    
    
    3,661
    
    
    
    1,689Accrued liabilities
    
    
    378
    
    
    
    (1,078
    )Net cash provided by operating activities
    
    
    8,022
    
    
    
    1,539Cash flows from investing activities:Purchases of available-for-sale investments
    
    
    (39,802
    )
    
    
    (23,106
    )Sales and maturities of available-for-sale investments
    
    
    30,068
    
    
    
    52,871Purchases of held-to-maturity investments
    
    
    (46,990
    )
    
    
    (45,000
    )Maturities of held-to-maturity investments
    
    
    65,540
    
    
    
    27,000Proceeds from sales of property and equipment
    
    
    9
    
    
    
    90Purchases of property and equipment
    
    
    (1,635
    )
    
    
    (1,302
    )Acquisition of businesses, net of cash acquired
    
    
    (500
    )
    
    
    (4,365
    )Net cash provided by investing activities
    
    
    6,690
    
    
    
    6,188Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    7,516
    
    
    
    1,253Repurchase of common stock
    
    
    
    
    
    
    (11
    )Net cash provided by financing activities
    
    
    7,516
    
    
    
    1,242Effect of exchange rate changes on cash and cash equivalents
    
    
    30
    
    
    
    58Net increase in cash and cash equivalents
    
    
    22,258
    
    
    
    9,027Cash and cash equivalents, beginning of period
    
    
    7,856
    
    
    
    29,710Cash and cash equivalents, end of period
    
    $
    30,114
    
    
    $
    38,737Supplemental disclosures of cash flow information:Cash paid during the period for income taxes
    
    $
    110
    
    
    $
    Supplemental non-cash investing and financing activities:Accrued liabilities recorded for the receipt of fixed assets
and inventories from Fibercom
    
    $
    
    
    
    $
    321
 The accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.
 5




---



##### Table of Contents



OPLINK COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Description of Business.
  Basis of Presentation
 6




---



##### Table of Contents



Net Income (Loss) Per Share
 7




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Net income (loss)
    
    $
    4,279
    
    
    $
    1,028
    
    
    $
    10,165
    
    
    $
    (6
    )Denominator:Weighted average shares outstanding  basic
    
    
    22,202
    
    
    
    21,355
    
    
    
    21,920
    
    
    
    21,316Effect of dilutive potential common shares
    
    
    809
    
    
    
    879
    
    
    
    966
    
    
    
    Weighted average shares outstanding  diluted
    
    
    23,011
    
    
    
    22,234
    
    
    
    22,886
    
    
    
    21,316Net income (loss) per share  basic
    
    $
    0.19
    
    
    $
    0.05
    
    
    $
    0.46
    
    
    $
    (0.00
    )Net income (loss) per share  diluted
    
    $
    0.19
    
    
    $
    0.05
    
    
    $
    0.44
    
    
    $
    (0.00
    )Antidilutive stock options not included in net
income (loss) per share calculation
    
    
    1,719
    
    
    
    1,069
    
    
    
    1,712
    
    
    
    2,952
 Comprehensive Income.
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    4,279
    
    
    $
    1,028
    
    
    $
    10,165
    
    
    $
    (6
    )Unrealized gain (loss) on investments
    
    
    25
    
    
    
    5
    
    
    
    55
    
    
    
    (31
    )Change in cumulative translation adjustments
    
    
    528
    
    
    
    290
    
    
    
    1,310
    
    
    
    1,183Total comprehensive income
    
    $
    4,832
    
    
    $
    1,323
    
    
    $
    11,530
    
    
    $
    1,146
 Short-Term and Long-Term Investments.
  8




---



##### Table of Contents



March 31, 2007Gross
    
    
    GrossCarrying
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-term investments:Certificates of deposit
    
    $
    136
    
    
    $
    136
    
    
    $
    
    
    
    $
    
    
    
    $
    136Obligations of states and political subdivisions
    
    
    23,900
    
    
    
    23,900
    
    
    
    
    
    
    
    
    
    
    
    23,900Corporate securities
    
    
    50,436
    
    
    
    50,444
    
    
    
    1
    
    
    
    (14
    )
    
    
    50,431United States government agencies
    
    
    57,000
    
    
    
    57,000
    
    
    
    
    
    
    
    (130
    )
    
    
    56,870Total short-term investments
    
    
    131,472
    
    
    
    131,480
    
    
    
    1
    
    
    
    (144
    )
    
    
    131,337Long-term investments:United States government agencies
    
    
    40,000
    
    
    
    40,000
    
    
    
    3
    
    
    
    (8
    )
    
    
    39,995Total long-term investments
    
    
    40,000
    
    
    
    40,000
    
    
    
    3
    
    
    
    (8
    )
    
    
    39,995Total investments
    
    $
    171,472
    
    
    $
    171,480
    
    
    $
    4
    
    
    $
    (152
    )
    
    $
    171,332
 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
  9




---



##### Table of Contents



March 31, 2007Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAvailable-for-sale investments:Certificates of deposit
    
    $
    136
    
    
    $
    
    
    
    $
    
    
    
    $
    136Obligations of states and political subdivisions
    
    
    23,900
    
    
    
    
    
    
    
    
    
    
    
    23,900Corporate securities
    
    
    31,395
    
    
    
    
    
    
    
    (8
    )
    
    
    31,387United States government agencies
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    2,000Total available-for-sale investments
    
    
    57,431
    
    
    
    
    
    
    
    (8
    )
    
    
    57,423Held-to-maturity investments:Corporate securities
    
    
    19,049
    
    
    
    1
    
    
    
    (6
    )
    
    
    19,044United States government agencies
    
    
    95,000
    
    
    
    3
    
    
    
    (138
    )
    
    
    94,865Total held-to-maturity investments
    
    
    114,049
    
    
    
    4
    
    
    
    (144
    )
    
    
    113,909Total investments
    
    $
    171,480
    
    
    $
    4
    
    
    $
    (152
    )
    
    $
    171,332
 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
  10




---



##### Table of Contents



March 31, 2007In 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
    
    $
    14,949
    
    
    $
    (8
    )
    
    $
    
    
    
    $
    
    
    
    $
    14,949
    
    
    $
    (8
    )Total available-for-sale investments:
    
    
    14,949
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    14,949
    
    
    
    (8
    )Held-to-maturity investments:Corporate securities
    
    
    10,025
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    10,025
    
    
    
    (6
    )United States government agencies
    
    
    9,992
    
    
    
    (8
    )
    
    
    49,869
    
    
    
    (130
    )
    
    
    59,861
    
    
    
    (138
    )Total held-to-maturity investments
    
    
    20,017
    
    
    
    (14
    )
    
    
    49,869
    
    
    
    (130
    )
    
    
    69,886
    
    
    
    (144
    )Total investments in loss position
    
    $
    34,966
    
    
    $
    (22
    )
    
    $
    49,869
    
    
    $
    (130
    )
    
    $
    84,835
    
    
    $
    (152
    )
  March 31, 2007
    
    
    June 30, 2006Amortized
    
    
    Estimated
    
    
    Amortized
    
    
    EstimatedCost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair ValueAvailable-for-sale investments:Due in one year or less
    
    $
    27,131
    
    
    $
    27,123
    
    
    $
    28,357
    
    
    $
    28,284Due in one year to five years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due in five years to ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due after ten years
    
    
    30,300
    
    
    
    30,300
    
    
    
    19,300
    
    
    
    19,300Total available-for-sale investments
    
    
    57,431
    
    
    
    57,423
    
    
    
    47,657
    
    
    
    47,584Held-to-maturity investments:Due in one year or less
    
    
    74,049
    
    
    
    73,914
    
    
    
    69,811
    
    
    
    69,265Due in one year to five years
    
    
    40,000
    
    
    
    39,995
    
    
    
    63,029
    
    
    
    62,497Total held-to-maturity investments
    
    
    114,049
    
    
    
    113,909
    
    
    
    132,840
    
    
    
    131,762Total investments
    
    $
    171,480
    
    
    $
    171,332
    
    
    $
    180,497
    
    
    $
    179,346
  Inventories
 11




---



##### Table of Contents



March 31,
    
    
    June 30,2007
    
    
    2006Inventories, net:Raw materials
    
    $
    6,683
    
    
    $
    5,588Work-in-process
    
    
    4,895
    
    
    
    2,365Finished goods
    
    
    360
    
    
    
    Total
    
    $
    11,938
    
    
    $
    7,953
 Property, Plant and Equipment.
 March 31,
    
    
    June 30,2007
    
    
    2006Property, plant and equipment:Production and engineering equipment
    
    $
    35,294
    
    
    $
    32,277Computer equipment and software
    
    
    6,621
    
    
    
    6,464Building and building improvements
    
    
    15,580
    
    
    
    15,151Land
    
    
    1,949
    
    
    
    1,949Sub-total
    
    
    59,444
    
    
    
    55,841Less: Accumulated depreciation and
amortization
    
    
    (37,125
    )
    
    
    (32,398
    )Total
    
    $
    22,319
    
    
    $
    23,443
 Goodwill and Intangible Assets, Net.
 EstimatedUseful Life
    
    
    Gross
    
    
    AccumulatedMarch 31, 2007
    
    (in Years)
    
    
    Amount
    
    
    Amortization
    
    
    NetTechnology
    
    
    4
    
    
    $
    921
    
    
    $
    318
    
    
    $
    603Trade name
    
    
    3
    
    
    
    163
    
    
    
    77
    
    
    
    86Customer relationships
    
    
    3
    
    
    
    253
    
    
    
    99
    
    
    
    154Total
    
    
    
    
    
    $
    1,337
    
    
    $
    494
    
    
    $
    843
 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
  12




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Reported as:Cost of revenues
    
    $
    57
    
    
    $
    55
    
    
    $
    172
    
    
    $
    91Operating expenses
    
    
    35
    
    
    
    27
    
    
    
    105
    
    
    
    45Total
    
    $
    92
    
    
    $
    82
    
    
    $
    277
    
    
    $
    136
  Fiscal years ending June 30,
    
    Amount2007
    
    $
    932008
    
    
    3682009
    
    
    2972010
    
    
    85$
    843
  Accrued Liabilities.
 March 31,
    
    
    June 30,2007
    
    
    2006Accrued liabilities:Payroll and related expenses
    
    $
    1,428
    
    
    $
    1,489Accrued sales commission
    
    
    553
    
    
    
    469Accrued warranty
    
    
    430
    
    
    
    405Accrued professional fees
    
    
    912
    
    
    
    975Remaining amounts payable for acquisitions
    
    
    
    
    
    
    510Other
    
    
    2,799
    
    
    
    2,368Total
    
    $
    6,122
    
    
    $
    6,216
 Product Warranties.
  13




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Balance at the beginning of the period
    
    $
    400
    
    
    $
    581
    
    
    $
    405
    
    
    $
    560Accruals for warranties issued during the period
    
    
    68
    
    
    
    44
    
    
    
    157
    
    
    
    200Accruals related to pre-existing warranties
including expirations and changes in estimates
    
    
    (18
    )
    
    
    (80
    )
    
    
    25
    
    
    
    (130
    )Cost of warranty repair
    
    
    (20
    )
    
    
    (119
    )
    
    
    (157
    )
    
    
    (204
    )Balance at the end of the period
    
    $
    430
    
    
    $
    426
    
    
    $
    430
    
    
    $
    426
 Stock Compensation.
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Stock compensation expense by type of award:Employee stock options
    
    $
    952
    
    
    $
    508
    
    
    $
    2,976
    
    
    $
    1,519Employee stock purchase plan
    
    
    43
    
    
    
    84
    
    
    
    199
    
    
    
    324Net change of amounts capitalized as inventory
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    (8
    )Total stock compensation expense
    
    
    995
    
    
    
    595
    
    
    
    3,175
    
    
    
    1,835Tax effect on stock compensation expense
    
    
    (348
    )
    
    
    (208
    )
    
    
    (1,111
    )
    
    
    (642
    )Net effect on net income (loss)
    
    $
    647
    
    
    $
    387
    
    
    $
    2,064
    
    
    $
    1,193Effect on net income (loss) per share:Basic
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.09
    )
    
    $
    (0.06
    )Diluted
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.09
    )
    
    $
    (0.06
    )
   14




---



##### Table of Contents



Valuation Assumptions
  Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2007
    
    2006
    
    2007
    
    2006Risk-free interest rate
    
    
    4.77
    %
    
    
    4.59
    %
    
    
    4.77
    %
    
    
    4.30
    %Expected term
    
    4.6 years
    
    4.9 years
    
    4.7 years
    
    4.8 yearsExpected dividends
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    47
    %
    
    
    45
    %
    
    
    48
    %
    
    
    46
    %
  Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2007
    
    2006
    
    2007
    
    2006Risk-free interest rate
    
    NA(1)
    
    NA(1)
    
    
    4.95
    %
    
    
    4.34
    %Expected term
    
    NA
    
    NA
    
    1.3 years
    
    1.3 yearsExpected dividends
    
    NA
    
    NA
    
    
    0.00
    %
    
    
    0
    %Volatility
    
    NA
    
    NA
    
    
    48
    %
    
    
    45
    %
 
    Equity Incentive Program
 15




---



##### Table of Contents



16




---



##### 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
    
    
    (446,812
    )
    
    
    446,812
    
    
    
    17.3086Options exercised
    
    
    
    
    
    
    (637,513
    )
    
    
    11.0763Options canceled
    
    
    67,181
    
    
    
    (67,181
    )
    
    
    15.8753Balance, March 31, 2007
    
    
    3,646,536
    
    
    
    3,383,447
    
    
    $
    16.2144
 
   17




---



##### Table of Contents



Options Outstanding
    
    
    Options Vested and Exercisableat March 31, 2007
    
    
    at March 31, 2007Weighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AverageRemaining
    
    
    Weighted
    
    
    Aggregate
    
    
    
    
    
    
    Remaining
    
    
    Weighted
    
    
    AggregateContractual
    
    
    Average
    
    
    Intrinsic
    
    
    
    
    
    
    Contractual
    
    
    Average
    
    
    IntrinsicNumber
    
    
    Life
    
    
    Exercise
    
    
    Value
    
    
    Number
    
    
    Life
    
    
    Exercise
    
    
    ValueRange of Exercise Price
    
    Outstanding
    
    
    (in Years)
    
    
    Price
    
    
    (in thousand)
    
    
    Outstanding
    
    
    (in Years)
    
    
    Price
    
    
    (in thousand)$0.0001 - $2.0000
    
    
    12,293
    
    
    
    2.0
    
    
    $
    0.6386
    
    
    $
    213
    
    
    
    12,293
    
    
    
    2.0
    
    
    $
    0.6386
    
    
    $
    213$4.0001 - $5.0000
    
    
    806,615
    
    
    
    5.5
    
    
    
    4.6282
    
    
    
    10,762
    
    
    
    806,615
    
    
    
    5.5
    
    
    
    4.6282
    
    
    
    10,762$5.0001 - $10.0000
    
    
    83,061
    
    
    
    4.8
    
    
    
    8.1084
    
    
    
    819
    
    
    
    82,668
    
    
    
    4.8
    
    
    
    8.1054
    
    
    
    815$10.0001 - $11.0000
    
    
    310,119
    
    
    
    8.0
    
    
    
    10.2324
    
    
    
    2,400
    
    
    
    100,045
    
    
    
    7.8
    
    
    
    10.1870
    
    
    
    779$12.0000 - $13.0000
    
    
    281,840
    
    
    
    8.1
    
    
    
    12.3364
    
    
    
    1,588
    
    
    
    99,709
    
    
    
    7.7
    
    
    
    12.5019
    
    
    
    545$13.0001 - $15.0000
    
    
    297,934
    
    
    
    8.0
    
    
    
    14.0981
    
    
    
    1,154
    
    
    
    116,984
    
    
    
    6.4
    
    
    
    13.6639
    
    
    
    504$15.0001 - $17.0000
    
    
    108,528
    
    
    
    9.0
    
    
    
    16.7665
    
    
    
    131
    
    
    
    18,714
    
    
    
    5.0
    
    
    
    15.8157
    
    
    
    40$17.0001 - $19.0000
    
    
    220,396
    
    
    
    6.1
    
    
    
    18.2328
    
    
    
    31
    
    
    
    160,586
    
    
    
    5.3
    
    
    
    18.0965
    
    
    
    25$19.0001 - $20.0000
    
    
    92,215
    
    
    
    9.5
    
    
    
    19.7000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $20.0001 - $21.0000
    
    
    790,170
    
    
    
    9.2
    
    
    
    20.2317
    
    
    
    
    
    
    
    2,284
    
    
    
    9.6
    
    
    
    20.0900
    
    
    
    $28.0000 - $37.0000
    
    
    299,650
    
    
    
    3.3
    
    
    
    35.5272
    
    
    
    
    
    
    
    299,650
    
    
    
    3.3
    
    
    
    35.5272
    
    
    
    $42.0000 - $140.0000
    
    
    80,626
    
    
    
    3.5
    
    
    
    65.8450
    
    
    
    
    
    
    
    80,626
    
    
    
    3.5
    
    
    
    65.8450
    
    
    
    3,383,447
    
    
    
    7.0
    
    
    $
    16.2144
    
    
    $
    17,098
    
    
    
    1,780,174
    
    
    
    5.3
    
    
    $
    15.4354
    
    
    $
    13,683Vested and expected to vest
    
    
    3,142,411
    
    
    
    6.6
    
    
    $
    16.1750
    
    
    $
    16,515
    Employee Stock Purchase Plan
  18




---



##### Table of Contents



19




---



##### Table of Contents



Repurchase of Common Stock
 Recent Accounting Pronouncements
   20




---



##### Table of Contents



.
   21




---



##### Table of Contents



Contingencies
  In re Oplink Communications, Inc. Initial Public
Offering Securities Litigation
  22




---



##### Table of Contents



Subsequent
Events.
 23




---



##### Table of Contents



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
  25




---



##### Table of Contents




    
    revenue recognition and product returns;
    
    warranty obligations;
    
    risk evaluation;
    
    allowance for doubtful accounts;
    
    excess and obsolete inventory;
    
    long-lived asset valuation;
    
    business combination;
    
    deferred taxes; and
    
    stock compensation.
  26




---



##### Table of Contents



Results of Operations
 Revenues
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2007
    
    2006
    
    Change
    
    Change
    
    2007
    
    2006
    
    Change
    
    ChangeRevenues
    
    $
    27,620
    
    
    $
    14,597
    
    
    $
    13,023
    
    
    
    89.2
    %
    
    $
    70,287
    
    
    $
    37,931
    
    
    $
    32,356
    
    
    
    85.3
    %
    Gross Profit
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2007
    
    2006
    
    Change
    
    Change
    
    2007
    
    2006
    
    Change
    
    ChangeGross profit
    
    $
    7,036
    
    
    $
    4,319
    
    
    $
    2,717
    
    
    
    62.9
    %
    
    $
    19,575
    
    
    $
    10,310
    
    
    $
    9,265
    
    
    
    89.9
    %Gross profit margin
    
    
    25.5
    %
    
    
    29.6
    %
    
    
    
    
    
    
    
    
    
    
    27.9
    %
    
    
    27.2
    %
 27




---



##### Table of Contents



Research and Development
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2007
    
    2006
    
    Change
    
    Change
    
    2007
    
    2006
    
    Change
    
    ChangeResearch and development
    
    $
    1,487
    
    
    $
    1,688
    
    
    $
    (201
    )
    
    
    (11.9
    )%
    
    $
    4,760
    
    
    $
    4,821
    
    
    $
    (61
    )
    
    
    (1.3
    )%
  28




---



##### Table of Contents



Sales and Marketing
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2007
    
    2006
    
    Change
    
    Change
    
    2007
    
    2006
    
    Change
    
    ChangeSales and marketing
    
    $
    1,623
    
    
    $
    1,204
    
    
    $
    419
    
    
    
    34.8
    %
    
    $
    4,613
    
    
    $
    3,258
    
    
    $
    1,355
    
    
    
    41.6
    %
  General and Administrative
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2007
    
    2006
    
    Change
    
    Change
    
    2007
    
    2006
    
    Change
    
    ChangeGeneral and
administrative
    
    $
    2,105
    
    
    $
    1,729
    
    
    $
    376
    
    
    
    21.7
    %
    
    $
    6,815
    
    
    $
    5,595
    
    
    $
    1,220
    
    
    
    21.8
    %
  Stock Compensation Expense
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2007
    
    2006
    
    Change
    
    Change
    
    2007
    
    2006
    
    Change
    
    ChangeStock compensation expense
    
    $
    995
    
    
    $
    595
    
    
    $
    400
    
    
    
    67.2
    %
    
    $
    3,175
    
    
    $
    1,835
    
    
    $
    1,340
    
    
    
    73.0
    %
 29




---



##### Table of Contents



In-Process Research and Development (IP R&D).
  Interest and Other Income, Net
 (In thousands, except percentages)
 Three Months Ended
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31,
    
    
    
    
    
    Percentage
    
    March 31,
    
    
    
    
    
    Percentage2007
    
    2006
    
    Change
    
    Change
    
    2007
    
    2006
    
    Change
    
    ChangeInterest and other income, net
    
    $
    2,511
    
    
    $
    1,843
    
    
    $
    668
    
    
    
    36.2
    %
    
    $
    7,016
    
    
    $
    5,036
    
    
    $
    1,980
    
    
    
    39.3
    %
  30




---



##### Table of Contents



Provision for Income Taxes
  31




---



##### Table of Contents



Liquidity and Capital Resources
   Nine Months Ended March 31, 2007
     32




---



##### Table of Contents



.
 Nine Months Ended March 31, 2006
       33




---



##### Table of Contents



Contractual Obligations
  Contractual Obligations Due by PeriodContractual Obligations
    
    Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    After 5 yearsPurchase obligations
    
    $
    16,848
    
    
    $
    16,848
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating leases
    
    
    494
    
    
    
    374
    
    
    
    120
    
    
    
    
    
    
    
    Total
    
    $
    17,342
    
    
    $
    17,222
    
    
    $
    120
    
    
    $
    
    
    
    $
    
 Recent Accounting Pronouncements
   34




---



##### Table of Contents



.
 35




---



##### Table of Contents



ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  Interest Rate Exposure
   36




---



##### Table of Contents



Carrying
    
    
    Average Rate
    
    
    Carrying
    
    
    Average RateValue at
    
    
    of Return at
    
    
    Value at
    
    
    of Return atMarch 31,
    
    
    March 31,
    
    
    June 30,
    
    
    June 30,2007
    
    
    2007
    
    
    2006
    
    
    2006(Annualized)
    
    
    
    
    
    
    (Annualized)Investment Securities:Cash equivalents  variable rate
    
    $
    12,949
    
    
    
    5.3
    %
    
    $
    1,195
    
    
    
    5.0
    %Cash equivalents  fixed rate
    
    
    2,891
    
    
    
    5.3
    %
    
    
    
    
    
    
    Short-term investments  variable rate
    
    
    30,480
    
    
    
    4.6
    %
    
    
    24,669
    
    
    
    4.0
    %Short-term investments  fixed rate
    
    
    100,992
    
    
    
    5.1
    %
    
    
    92,726
    
    
    
    4.2
    %Long-term investments  fixed rate
    
    
    40,000
    
    
    
    5.4
    %
    
    
    63,029
    
    
    
    4.9
    %Total
    
    $
    187,312
    
    
    
    
    
    
    $
    181,619
 Expected Fiscal Year Maturity Date2007
    
    2008
    
    2009
    
    Total
    
    Fair ValueLong-term
investments  fixed
rate
    
    $
    
    
    
    $
    5,000
    
    
    $
    35,000
    
    
    $
    40,000
    
    
    $
    39,995Average interest rate
    
    
    
    
    
    
    5.4
    %
    
    
    5.4
    %
    
    
    5.4
    %
 Foreign Currency Exchange Rate Exposure
   37




---



##### Table of Contents



ITEM 4  CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control over Financial Reporting.
 
 PART II. OTHER INFORMATION
 
 ITEM 1  LEGAL PROCEEDINGS
 In re Oplink Communications, Inc. Initial Public Offering
Securities Litigation
  38




---



##### Table of Contents



ITEM 1A  RISK FACTORS
  39




---



##### Table of Contents



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.
  Our ROADM Optical Switching and Routing product is a new product that has accounted for a
significant proportion of our recent revenue growth. A decline in the price of, or demand for, our
ROADM product, our failure to achieve broader market acceptance, or the introduction of competing
products by competitors, could harm our revenues and operating results. Further, even if
revenue from our ROADM product remains strong, our overall gross margins will continue to be
 40




---



##### Table of Contents



negatively affected by sales of our ROADM product.
   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
 41




---



##### Table of Contents




    
    other acquisition-related expenses.
  Our wavelength expansion products have accounted for a significant proportion 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.
  The optical networking component industry is experiencing declining average selling prices, which
could cause our gross margins to decline and harm our operating results.
  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.
 42




---



##### Table of Contents




    
    may stop purchasing our products or defer their purchases at any time without penalty;
    
    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;
    
    fluctuation in the mix of products sold towards products with lower margins such as ROADMs;
    
    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;
 43




---



##### Table of Contents




    
    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;
    
    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.
  44




---



##### Table of Contents




    
    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
    
    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.
  45




---



##### Table of Contents



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.
  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.
  46




---



##### Table of Contents



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.
  47




---



##### Table of Contents



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.
    48




---



##### Table of Contents



If our liability for U.S. and foreign taxes is greater than we have anticipated and reserved for,
our operating results may suffer.
   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,
 49




---



##### Table of Contents



political unrest, war, terrorism, labor strikes, and work stoppages;
 
    
    disruptions of telecommunications networks due 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;
    
    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.
    50




---



##### Table of Contents



We are exposed to currency rate fluctuations and exchange controls that could adversely impact our
operating results.
     51




---



##### Table of Contents



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
 52




---



##### Table of Contents



attention and could cause us to incur significant costs and prevent us from selling or using the
challenged technology.
    
    
    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.
  53




---



##### Table of Contents



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.
  54




---



##### Table of Contents



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.
   55




---



##### Table of Contents



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
 56




---



##### Table of Contents



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.
  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.
  57




---



##### Table of Contents




    
    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.
 58




---



##### Table of Contents



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.3.5
    (4)
    
    Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant.10.33
    (5)
    
    Stock Purchase Agreement between Oplink Communications, Inc. and The Furukawa Electric Co.,
Ltd. dated April 22, 2007.31.1
    
    
    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.(4)
    
    Previously filed as an Exhibit to the Registrants Quarterly Report on Form 10-Q filed on
February 9, 2007 and incorporated herein by reference.(5)
    
    Previously filed as an Exhibit to the Registrants Report on Form 8-K filed on April 23, 2007
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. 59




---



##### Table of Contents



SIGNATURES
  OPLINK COMMUNICATIONS, INC.
(Registrant)DATE: May 11, 2007
    By:
    /s/ Bruce D. HornBruce D. HornChief Financial Officer
(Principal Financial and Accounting Officer) 60




---



##### Table of Contents



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.3.5
    (4)
    
    Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant.10.33
    (5)
    
    Stock Purchase Agreement between Oplink Communications, Inc. and The Furukawa Electric Co.,
Ltd. dated April 22, 2007.31.1
    
    
    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.(4)
    
    Previously filed as an Exhibit to the Registrants Quarterly Report on Form 10-Q filed on
February 9, 2007 and incorporated herein by reference.(5)
    
    Previously filed as an Exhibit to the Registrants Report on Form 8-K filed on April 23, 2007
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.