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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

              (Mark One)
              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended June 30, 2001

                                       or

              [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                        Commission File Number 000-31581

                               ------------------

                           OPLINK COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)

Delaware                                              No. 77-0411346
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                        Identification No.)

                   3469 North First Street, San Jose, CA 95134
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (408) 433-0606

           Securities registered pursuant to Section 12(b) of the Act:
                                 Not Applicable

           Securities registered pursuant to Section 12(g) of the Act:
                     Common Stock, $.001 Par Value Per Share

          Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X   No __
                                             ----
          Indicate by a check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ___

     The aggregate market value of the voting stock held by non-affiliates of
the Registrant, as of September 10, 2001, was approximately $89,041,831 based
upon the closing price for shares of the registrant's common stock as reported
by the Nasdaq National Market for the last trading date prior to that date.
Excludes an aggregate of 73,259,698 shares of common stock held by officers and
directors and by each person known by the Registrant to own 5% or more of the
outstanding common stock. Exclusion of shares held by any of these persons
should not be construed to indicate that such person possesses the power, direct
or indirect, to direct or cause the direction of the management or policies of
the Registrant, or that such person is controlled by or under common control
with the Registrant.

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          As of September 10, 2001, approximately 161,419,927 shares of the
Registrant's common stock, $0.001 par value, were outstanding.

          Documents Incorporated by Reference:

          The information called for by Part III is incorporated by reference to
specified portions of the Registrant's definitive Proxy Statement to be issued
in conjunction with the Registrant's 2001 Annual Meeting of Stockholders, which
is expected to be filed not later than 120 days after the Registrant's fiscal
year ended June 30, 2001.

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                           OPLINK COMMUNICATIONS, INC.
                                    Form 10-K
                                  June 30, 2001
<TABLE>
<CAPTION>

TABLE OF CONTENTS
PART I

<S>                                                                                    <C>
 Item 1   Business                                                                       4
 Item 2   Properties                                                                    27
 Item 3   Legal Proceedings                                                             28
 Item 4   Submission Of Matters To A Vote Of Security Holders                           28

PART II

 Item 5   Market For Registrant's Common Stock And Related Stockholder Matters          29
 Item 6   Selected Consolidated Financial Data                                          29
 Item 7   Management's Discussion and Analysis of Financial Condition and Results
          of Operations                                                                 32
 Item 7A  Quantitative and Qualitative Disclosures About Market Risk                    41
 Item 8   Financial Statements and Supplementary Data                                   42
 Item 9   Changes In and Disagreements With Accountants On Accounting
          and Financial Disclosure                                                      42

PART III

 Item 10  Directors and Executive Officers of the Registrant                            42
 Item 11  Executive Compensation                                                        42
 Item 12  Security Ownership of Certain Beneficial Owners and Management                42
 Item 13  Certain Relationships and Related Transactions                                42

PART IV

 Item 14  Exhibits, Financial Statement, Schedules and Reports on Form 8-K              43
</TABLE>

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                                     Part I

     This report on Form 10-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, including, without limitation,
statements regarding our expectations, beliefs, intentions or future strategies
that are signified by the words "expect", "anticipate", "intend", "believe",
"estimate" or "assume" or similar language. All forward-looking statements
included in this document are based on information available to us on the date
hereof, and we assume no obligation to update any such forward-looking
statements. Actual results could differ materially from those projected in the
forward-looking statements. In evaluating our business, you should carefully
consider the information set forth below and in "Risk Factors" contained in Item
1 and "Management's Discussion and Analysis of Financial Condition and Results
of Operations" contained in Item 7. We caution you that our businesses and
financial performance are subject to substantial risks and uncertainties.

Item 1.  Business

Overview

     We design and manufacture a broad line of high performance fiber optic
networking components and integrated optical subsystems and market them
worldwide to communications equipment suppliers. Our bandwidth creation products
increase the performance and capacity of fiber optic networks. Our bandwidth
management products provide communications service providers with the ability to
monitor and manage optical signals to enhance network performance. We produce
components for next-generation, all-optical dense wavelength division
multiplexing (DWDM), optical amplification, switching and routing, and
ultra-high reliability undersea use.

     Through internal research and development we have developed over 100
standard products that are sold or integrated into custom solutions. We provide
customers with high quality components and integrated optical subsystems that
are used for bandwidth creation and management applied to all segments of the
optical network infrastructure.

     We build these elements to the exacting requirements of the world's leading
optical networking equipment companies, and we work closely with customers
during the product development cycle. This provides us with the ability to
capture the volume production requirements of our customers when their systems
are ready for commercial deployment. We support customers' volume and
time-to-market requirements.

     By combining in-house technical expertise with extensive micro-optic
manufacturing and packaging capabilities, we are able to produce large volumes
of components as well as customized, integrated products and subsystems to meet
the specific design needs of customers. Our U.S. headquarters are third party
certified to the ISO 9001 standard in research and manufacturing and our
products meet the Telcordia (Bellcore) compliance standards. Our manufacturing
operations at Zhuhai, China are third party certified to the ISO 9000:2001
standard.

     We were incorporated in California in September 1995 and reincorporated in
Delaware in September 2000. We began delivering optical networking products to
our customers in 1996.

     Our top customers by revenue for the year ended June 30, 2001 were: Agere,
Lucent, Nortel and Sycamore. Our top customers by revenue for the year ended
June 30, 2000 were: Lucent, Sycamore, JDS Uniphase and Agere.

                                       4

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The Oplink Solutions

     We provide a broad line of high performance fiber optic components and
integrated optical subsystems worldwide to communications equipment suppliers.
Through internal research and development we have developed over 100 standard
products that are sold or integrated into custom solutions for our customers.
For all segments of the network we provide our customers with high quality
passive components and integrated optical subsystems that are used for bandwidth
creation and management. In situations where a customer requires a combination
of multiple components within a module or subsystem, our highly trained
engineering and marketing staff works closely with them to design a reliable
integrated solution. We work with our customers early in their development cycle
and design our products to meet their particular requirements. This provides us
with the ability to capture the volume production requirements of our customers
when their systems are ready for commercial deployment. We support our
customers' volume and time-to-market requirements with advanced micro-optic
manufacturing and packaging facilities in both the United States and China.

Products and Technologies

     We provide a broad line of fiber optic components and integrated optical
subsystems designed to satisfy the needs of communications equipment suppliers.
We categorize our products by the functionalities provided within a network,
from bandwidth creation to bandwidth management. Some of our products have
attributes that combine both of these functions. While all of our bandwidth
creation components can be categorized as passive optical components, some of
our bandwidth management components utilize electronic interfaces to provide
intelligence and to enhance their function in a network.

Bandwidth Creation Products

     Communications equipment suppliers use our bandwidth creation products to
expand the capacity of their customers' networks and enable optical signals to
travel over greater distances.

     Wavelength Expansion Products. In fiber optic communications, different
signals are transmitted over multiple wavelengths. With increases in the number
of wavelengths and data rates, spacing between the wavelengths narrows and it
becomes increasingly difficult to separate and direct them. We offer wavelength
expansion products that function as highly sensitive filters that enable the
combination and separation of a particular wavelength. Wavelength expansion
products include wavelength multiplexing (combining), de-multiplexing
(separating), wavelength interleaving, which combines light signals from two or
more simultaneous sources over a single fiber, and locking, which prevents
wavelengths traveling simultaneously over the same fiber from interfering with
one another. We offer the following products to handle these tasks.

     .   Dense Wavelength Division Multiplexers. A dense wavelength division
         multiplexer, or DWDM, is an integrated optical module that combines two
         or more wavelengths for transmission over a single fiber (multiplexing)
         or separates these wavelengths (demultiplexing) at the receiving end.
         Our DWDM technology uses thin film filter technology to separate
         optical signals.

     .   DWDM Interleavers. A DWDM interleaver is an optical component that
         combines light signals from two or more simultaneous sources over a
         single fiber, which effectively doubles the capacity of the optical
         network system, or separates a single light source into multiple
         signals.

     .   Wavelength Lockers. A wavelength locker is an opto-electrical component
         that is used to stabilize the wavelengths of lasers used in DWDM
         transmission systems. Wavelength lockers ensure that the wavelength of
         a source laser does not interfere with an adjacent wavelength signal.

     .   Noise Reduction Filters. A noise reduction filter is a filter array
         module used in conjunction with a particular DWDM module to reduce
         undesired signals in a communications transmission.

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     .    Chromatic Dispersion Compensators. A chromatic dispersion compensator
          is a device that reduces the difference in travel time for signals
          carried by different wavelengths.

     .    Dispersion Slope Compensators. A dispersion slope compensator is a
          device that reduces the difference in chromatic dispersion of
          different wavelengths. Chromatic dispersion is caused when signals
          carried by different wavelengths travel at different speeds.

     Optical Amplification Products. Optical fiber amplifiers are widely
deployed in optical communications networks to enhance the optical signal power.
Optical signals typically lose power and eventually are lost after traveling a
long distance along an optical fiber. This power loss is referred to as
attenuation. Through recent advances in technology, the optical signal can be
amplified with EDFAs or with Raman amplifiers, neither of which require
opto-electrical conversion. The amplifiers are arranged along fiber cable lines
at regular intervals to enable the optical signal to reach its destination as a
clear and readable message. While amplifiers range in complexity, a typical
amplifier consists of a fiber and several of the components listed below.

     .    Isolators. Isolators are fiber optic devices that transmit light in
          only one direction, thus preventing a reflected light signal from
          returning to its laser source. Reflected light can interfere with a
          laser's process and create noise, which can impair system performance
          in optical networks.

     .    Tap Couplers. Tap couplers transfer optical signals between fibers.
          They are widely used for system monitoring purposes and have very low
          insertion loss, or the power loss incurred when adding additional
          components to a fiber cable.

     .    WDM Pump/Signal Combiners. Micro-optic WDM pump/signal combiners are
          components that provide power for the optical amplifier. They are used
          to efficiently combine light signals with pump laser sources. Pump
          lasers are active optical components used in optical amplifiers such
          as EDFAs, or erbium-doped fiber amplifiers, to amplify or regenerate
          light signals that naturally suffer loss while traveling over distance
          within an optical network.

     .    Integrated Hybrid Components. Optical amplifier systems can combine
          optical components, including isolators, tap couplers and WDM
          pump/signal combiners. The main advantage of hybrid components is that
          they minimize the amplifier package size and reduce manufacturing
          cost.

     .    Gain Flattening Filters. Gain flattening filters are used to ensure
          signals are amplified by equal amounts. Our thin film filter
          technology, or the technology in which layers of thin film separate
          optical signals, employs multiple layers of optical materials on glass
          to adjust optical output at different wavelengths to meet the needs of
          next-generation high power amplifiers.

     .    WDM Pump Combiners. WDM pump combiners are used to increase the power
          of an optical amplifier by combining multiple pump lasers into one
          common pump source for amplification.

     .    Polarization Beam Combiners. Polarization beam combiners are optical
          components that combine two of the same or different wavelengths with
          opposing polarization to increase the power output of the optical
          amplifier.

     .    Variable Optical Attenuators. Variable optical attenuators, or VOAs,
          are optical devices that reduce the power of the optical signal in
          DWDM networks to ensure that all optical signals within a network have
          equal power. The amount of power reduction of a particular optical
          signal can be adjusted to match the power of other optical signals in
          the network.

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Bandwidth Management Products

     Communications equipment suppliers use our bandwidth management products to
add intelligence to their systems, which allows communications service providers
to monitor the performance, and control the direction, of light signals
throughout the optical network.

     Wavelength Performance Monitoring and Protection Products. The ability to
monitor wavelengths within an optical network enables service providers to
maintain quality of service even in the event of an interruption in the signal
path, such as a cut in the fiber. It is significantly more difficult to monitor
signal flow in optical systems as compared to electrical systems. Monitoring
requires that optical signals be extracted from the fiber without interfering
with the optical signal traveling through the same fiber.

     We offer products that enable service providers to monitor network
performance and make necessary decisions for traffic flow and network
efficiency.

     .    Supervisory Channel Monitors. Our supervisory channel monitors are
          integrated solutions that combine multiple network performance
          monitoring functions in a single package and integrate our WDMs and
          couplers. These subsystems enable communications service providers to
          identify line connectivity.

     .    Wavelength Performance Monitors. Our multi-channel wavelength
          performance monitors are integrated solutions that convert light
          signals into electrical signals through a combination of: tap
          couplers; splitters, a passive device that separates light signals;
          and third-party photodetectors, a device supplied by another optical
          component manufacturer that receives a light signal in an optical
          network and converts it into an electrical signal. These subsystems
          allow communications service providers to monitor whether or not
          wavelengths are being transmitted properly through the network.

     .    Wavelength Protection Subsystems. Our multi-channel wavelength
          protection subsystems are integrated solutions that combine tap
          couplers, splitters, switches and third-party photodetectors. These
          subsystems integrate network protection functions and monitor optical
          signal quality, such as optical power, wavelength and signal-to-noise
          ratio. In addition, these subsystems can provide fast routing and
          switching capabilities in response to unexpected errors in the optical
          network. They also enable communications service providers to
          instantly monitor the network performance at each individual optical
          wavelength, allowing increased management of traffic flow and network
          efficiency.

     Optical Switching Products. As optical networks become more complex, there
is an increasing demand to provide switching capability to direct optical
signals across multiple points in the network. We supply optical fiber switching
products that provide all-optical signal switching between fibers with up to
eight different end destinations.

     .    Switches. Optical switches are devices that can direct optical signals
          to different end destinations.

     .    Optical Add/Drop Multiplexers. Optical add/drop multiplexers, or
          OADMs, are used when part of the information from an optical signal
          carried on the network is demultiplexed, or dropped, at an
          intermediate point and different information is multiplexed, or added,
          for subsequent transmission. The remaining traffic passes through the
          multiplexer without additional processing. The OADM is typically used
          for rerouting a number of specific optical wavelengths with different
          end destinations.

     .    Reconfigurable OADMs. Reconfigurable OADMs combine OADM functionality
          with optical switches and add flexibility to the network by allowing
          the dynamic add/drop of variable optical wavelengths with different
          end destinations.

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     .    Circulators. Circulators consist of sophisticated micro-optic
          components that are used to direct optical signals between different
          fibers. Circulators are also used in optical amplifying applications.

Customers

     We sell our products worldwide to communications equipment suppliers. In
certain cases, we sell our products to other component manufacturers for resale.
During the fiscal year ended June 30, 2001, we sold our products to over 150
companies worldwide.

     During the fiscal year ended June 30, 2001, sales to our top seven
customers accounted for 77% of our revenues. We expect that the majority of our
revenues will continue to depend on sales to a core set of customers, although
potentially not the same customers. In addition, some of our customers are
companies with which we presently compete or in the future may compete.

Backlog

We define backlog to include orders for which we expect to recognize revenues
within the succeeding twelve months. Historically, a substantial portion of our
net revenues in any fiscal period has been derived from orders in backlog.
However, due to the downturn in the fiber optics industry, we are substantially
dependent upon orders we receive and fill on a short-term basis. Backlog has
significantly declined and as of June 30, 2001, we do not believe that backlog
is a reliable indicator of our future revenues for the next year. Sales are made
pursuant to purchase orders, which are frequently subject to revision or
cancellation. Because of the possibility of changes in delivery or acceptance
schedules, cancellations of orders, distributor returns or price reductions, our
backlog, as of any particular date, may not be representative of actual sales
for any succeeding period.

Marketing, Sales and Customer Support

     We market and sell our products through both direct sales and distribution
channels, including two domestic and eight international sales representatives
and distributors. Our sales representatives and distributors are independent
organizations that generally have exclusive geographic territories within North
America, Europe and Asia. As of June 30, 2001, we employed 43 people in sales,
marketing and customer service and support in the U.S. who manage key customer
accounts and support our direct sales force, sales representatives and
distributors. We employ two people in sales and marketing in our Zhuhai, China
facility.

     Our marketing team promotes our products within the communications industry
as well as gathers and analyzes market research. Our marketing professionals
help us to identify and define next-generation products by working closely with
our customers and our research and development engineers. They also coordinate
our participation in trade shows and design and implement our advertising
effort.

Product Development

     As of June 30, 2001, we had 63 engineers, 42 of whom hold Ph.D. degrees,
involved in research and development of our products. Our engineering team has
extensive design, package, processing and software experience in the fields of
fiber optic components, integrated optic interfaces and systems. To date, we
have been granted 23 patents by, and have 30 patent applications pending with,
the U.S. Patent and Trademark Office for various technologies and products,
including DWDM interleavers, DWDM subsystems, multi-channel optic filter arrays,
high reliability fused couplers, circulators, compact optical switches and
polarization beam combiners.

     Our primary product development center is located in San Jose, California.
Our research and development expense, excluding non-cash compensation expense,
was $17.7 million, $3.7 million and $626,000 for the fiscal years ended June 30,
2001, 2000 and 1999. We have increased our research and

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development budget and staff to enhance our current fiber optic components and
subsystems and to develop new technologies and products to serve the
next-generation communication markets.

Manufacturing

     We currently manufacture our components and subsystems at our headquarters
in San Jose, California and in China. We are accelerating the transfer of
manufacturing processes, assembly operations, and supply chain management to our
Pearl River Delta site in Zhuhai, China. Originally intended to occur over the
next two years, we anticipate completion of this transfer by December 2001.
Additionally, we have manufacturing facilities in Beijing, Chengdu, Fuzhou and
Shanghai, China.

     Our facilities in San Jose and Zhuhai maintain complete in-house
manufacturing capabilities including component and module design, integration,
production and testing. We plan on having substantially all of our manufacturing
performed in China by December 2001. We plan to continue to invest resources in
manufacturing management, engineering and quality control. We also plan to
continue to develop automated manufacturing systems to provide higher
throughput, improve yields and reduce our manufacturing costs.

     In China, we lease a total of approximately 245,000 square feet in five
facilities located in Beijing, Chengdu, Fuzhou, Shanghai and Zhuhai. Our Beijing
facility totals approximately 31,000 square feet and is used for administration
and manufacturing. The lease for this facility expires in May 2003. Our Chengdu
facility totals approximately 42,000 square feet and is used for administration
and manufacturing. The lease for this facility expires in December 2002. In
Fuzhou, we maintain an approximately 10,000 square foot research and development
and manufacturing facility pursuant to a lease expiring on August 2007. Our
Shanghai facility totals approximately 45,000 square feet and is used for
administration, manufacturing and research and development. The lease for this
facility expires in July 2005. Our Zhuhai facility totals approximately 137,000
square feet, with the manufacturing space totaling approximately 117,000 square
feet and 20,000 square feet of dormitory space. The lease for this facility
expires in March 2005. Additionally, we own facilities in the Zhuhai Free Trade
Zone totaling 576,921 square feet. In accordance with our restructuring plans
announced on July 2, 2001, the Beijing, Chengdu and Fuzhou facilities will be
closed or sold to third parties. We anticipate that we will be able to lease
facilities in the Zhuhai Free Trade Zone facility to third parties.

     A number of critical raw materials used in manufacturing our products are
acquired from single or limited source suppliers. The inability to obtain
sufficient quantities of those materials may result in delays, increased costs
and reductions in our product shipments. Between January 1997 and August 1999,
we entered into several development agreements with Barr Associates, Inc.
pursuant to which we paid Barr to design, develop and build multiple vacuum
deposition systems for us. These systems are used to produce bandpass filters,
an integral component of our DWDMs. Under the terms of these agreements, we are
entitled to purchase 100% of the bandpass filters produced by Barr on these
systems at a discount. Our discount will continue until our accumulated total
discount on filters produced in all systems equals the total amount of our
payment for the design, development and cost to build the systems.

Quality

     We have established a quality management system to assure that the products
we provide to our customers meet or exceed industry standards. This system is
based on the international standard ISO 9001. Our U.S. headquarters have been
third party certified to the ISO 9001 standard in research and manufacturing
since July 1998. Our manufacturing operations at Zhuhai, China is third party
certified to the ISO 9000:2001 standard.

Competition

     The markets in which we sell our products are highly competitive. Our
overall competitive position depends upon a number of factors, including:

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     .  price;

     .  availability, performance and reliability of our products;

     .  the breadth of our product line;

     .  the ability to win designs through prototyping;

     .  manufacturing capacity;

     .  the quality of our manufacturing processes;

     .  the compatibility of our products with existing communications
        networks; and

     .  our ability to participate in the growth of emerging technologies.

     We believe that our principal competitors are the major manufacturers of
optical components and subsystems, including both vendors selling to third
parties and business divisions within communications equipment suppliers. Our
principal competitors in the components market include Avanex Corporation,
Corning, DiCon Fiberoptics, Furukawa Electrical, New Focus, Nortel, Sumitomo,
Tyco Electronics and JDS Uniphase, which recently acquired E-TEK Dynamics and
SDL. We believe that we primarily compete with diversified suppliers, such as
Corning, JDS Uniphase and Nortel, for the majority of our product line and to a
lesser extent with niche players that offer a more limited product line.

     Many of these companies have substantially greater financial, engineering
and manufacturing resources as well as greater name recognition and stronger
customer relationships. Some of our customers are companies with which we
currently compete or in the future may compete. In addition, some of our
customers have been or could be acquired by, or enter into strategic relations
with, our competitors. We anticipate that further consolidation will occur in
our industry, thereby possibly increasing competition in our target markets.

Intellectual Property

     To date, we have been granted 23 patents by, and have 30 patent
applications pending with, the U.S. Patent and Trademark Office covering various
technologies and products. While we rely on patent, copyright, trade secret and
trademark law and restrictions on disclosure to protect our technology, we
believe that factors such as the technological and creative skills of our
personnel, new product developments, frequent product enhancements and reliable
product maintenance are essential to establishing and maintaining a technology
leadership position. We cannot assure you that others will not develop
technologies that are similar or superior to our technology.

     Protecting our intellectual property is critical to the success of our
business. Despite our efforts to protect our proprietary rights, various
unauthorized parties may attempt to copy or otherwise obtain and use our
products or technology. Policing unauthorized use of our products is difficult,
and there can be no assurance that the steps taken by us will prevent
misappropriation of our technology. Moreover, the laws of some foreign
countries, including China, do not protect our proprietary rights as fully as in
the United States.

     Substantial litigation regarding intellectual property rights exists in the
optical communications industry. We expect that fiber optic components and
subsystems may be increasingly subject to third-party infringement claims as the
number of competitors in our industry segments grows and the functionality of
products in different industry segments overlaps. In addition, we believe that
many of our competitors in the optical communications industry have filed or
intend to file patent applications covering aspects of their technology on which
they may claim our technology infringes. We are currently involved in a patent
infringement action with Chorum Technologies. We recently settled a patent
infringement action with E-

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TEK Dynamics. For a description of these actions, see Item 3, "Legal
Proceedings." We cannot make any assurances that other third parties will not
claim infringement by us with respect to our technology. Any such claims, with
or without merit, could be time-consuming to defend, result in costly
litigation, divert management's attention and resources, cause product shipment
delays or require us to enter into royalty or licensing agreements. Such royalty
or licensing agreements, if required, may not be available on terms acceptable
to us, if at all. A successful claim of product infringement against us and our
failure or inability to license the infringed or similar technology could
seriously harm our financial condition.

Employees

     As of June 30, 2001, we had 605 full-time employees located in the United
States and 2,277 full-time employees located in China. None of our employees are
represented by a labor union. We have not experienced any work stoppages and we
consider our relations with our employees to be good. As of August 31, 2001, we
had 291 and 1,328 full-time employees located in the United States and China,
respectively, as we are downsizing in accordance with our restructuring plan.

Executive Officers And Directors

     The following table sets forth certain information regarding our executive
officers as of September 10, 2001:

<TABLE>
<CAPTION>
Name                                      Age    Position
----                                      ---    --------
<S>                                       <C>    <C>
Joseph Y. Liu(1).........................  50    Chief Executive Officer and Director
Frederick R. Fromm(2)....................  52    President
Bruce D. Horn............................  50    Chief Financial Officer and Treasurer
Wei-Zhong Li.............................  41    Chief Technology Officer
Kenneth W. Brizel........................  43    Senior Vice President, Strategy and Business Development
Yanfeng Yang.............................  38    Vice President Global Manufacturing/Operations
Jeffrey D. Friedman......................  32    General Counsel
Ian Jenks(3)(4)..........................  47    Chairman of the Board of Directors
Terence P. Brown(5)......................  38    Director
Chieh Chang..............................  49    Director
Herbert Chang(4)(5)......................  39    Director
Leonard J. LeBlanc(5)....................  60    Director
David Spreng(4)..........................  40    Director
</TABLE>
_________________________

(1)  Following the Company's 2001 Annual Meeting of Stockholders, Joseph Liu
     will resign as Chief Executive Officer and, subject to stockholder approval
     at the 2001 Annual Meeting of Stockholders, will become the Company's
     Chairman of the Board.
(2)  Following the Company's 2001 Annual Meeting of Stockholders, Frederick
     Fromm will become the Company's Chief Executive Officer and, subject to
     stockholder approval at the 2001 Annual Meeting of Stockholders, will
     become a member of the Company's Board of Directors.
(3)  Ian Jenks is not seeking reelection to the Board of Directors at the 2001
     Annual Meeting of Stockholders.
(4)  Member of the Compensation Committee.
(5)  Member of the Audit Committee.

     Joseph Y. Liu is one of our founders and has served as our Chief Executive
Officer since September 1999. Mr. Liu was our Chairman of the Board from our
inception in 1995 through May 2000 and currently serves as a member of our Board
of Directors. From 1994 to 1995, Mr. Liu was the General Partner of Techlink
Technology Ventures. Prior to 1994, Mr. Liu spent ten years as Chairman and
Chief Executive Officer of Techlink Semiconductor and Equipment Corp., a
semiconductor equipment and technology company. Mr. Liu also serves as a
director of several privately held companies involved in semiconductor

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integrated circuit design and manufacturing. Mr. Liu received his B.S. from
Chinese Cultural University, Taiwan and his M.S. from California State
University, Chico.

     Frederick R. Fromm has served as our President since July 2000. From 1998
to 2000, Mr. Fromm was President and Chief Executive Officer of Siemens
Information and Communications Networks, Inc., a telecommunications company.
From 1996 to 1998, Mr. Fromm was President and Chief Executive Officer of
Siemens Telecom Networks, Inc., a telecommunications company. From 1995 to 1996,
Mr. Fromm was President and Chief Executive Officer of Siemens
Stromberg-Carlson, Inc., a telecommunications company. Prior to joining Siemens,
Mr. Fromm worked as a system designer for AT&T Bell Laboratories (now Lucent
Technologies), a communications company. Mr. Fromm is a director of P-Com
Corporation, a telecommunications equipment company. Mr. Fromm also serves on
the board of a privately-held company. Mr. Fromm received his B.S. in Applied
Science and Engineering and his M.S. in Electrical Engineering from the
University of Wisconsin and his M.B.A. from Florida Atlantic University.

     Bruce D. Horn has served as our Chief Financial Officer and Treasurer since
April 2000. Prior to joining Oplink, Mr. Horn was a consultant at The Brenner
Group, a consulting firm, from February 2000 to April 2000. From January 1993 to
February 2000, Mr. Horn was the Vice President of Finance and Chief Financial
Officer and from March 1991 to January 1993 he was Director of Finance and Chief
Financial Officer of Larscom Incorporated, a telecommunications company. Mr.
Horn received his B.A. in Accounting from the University of Northern Iowa, and
his M.B.A. in Finance from California State University at Hayward.

     Wei-Zhong Li has served as our Chief Technology Officer since December
1997. Prior to joining Oplink, from May 1995 to December 1997, Mr. Li held
technical positions with various companies in the fiber optical field, including
Synchronous Communication, Inc., a communications equipment manufacturing
company, Kaifa Technology, Inc., a fiber optics company, MP Inc., a fiber optics
company, and E-TEK Dynamics, Inc, a fiber optics company. Mr. Li received his
B.S. and M.S. degrees in Electrical Engineering from Beijing Institute of
Technology, China. Mr. Li was the inventor for eight approved patents and has
filed eight patents that are pending in the U.S. Patent and Trademark Office. He
is also the author of nine technical papers in the fiber optic and microwave
communications fields.

     Kenneth W. Brizel has served as our Senior Vice President of Strategy and
Business Development since October 2000. From April 1997 to September 2000, Mr.
Brizel was with Lucent Microelectronics as Director of Strategic Marketing
supporting Optoelectronics and Network Communications Integrated Circuits. Prior
to April 1997, he managed product lines at AT&T, Harris Semiconductor, GE and
RCA Microelectronics and was Director of world-wide applications/Asia Pacific
sales for Star Semiconductor, a NJ based startup. Mr. Brizel has over 20 years
of experience in the microelectronics industry covering a broad range of
products and technologies in integrated circuits and optics, with
responsibilities including P&L management, strategy and business development,
marketing, design, production, and sales. Mr. Brizel received his B.S. and M.S.
in Electrical Engineering from Rensselaer Polytechnic Institute in Troy, NY.

     Yanfeng Yang has served as our Vice President of Global
Manufacturing/Operations since September 2001 and from January 1999 to September
2001, he served in various positions, including R&D Manager and Senior Director
of United States Operations. From March 1993 to December 1998, Mr. Yang was the
Director of the Research Institute of Optoelectronics at China Daheng
Corporation, a photonics high technology company of the Chinese Academy of
Sciences. Mr. Yang received his B.S., M.S. and Ph.D. in Optical Engineering from
Beijing Institute of Technology, China.

     Jeffrey D. Friedman has served as our General Counsel since August 2000.
Prior to joining Oplink, Mr. Friedman was an Assistant United States Attorney
from January 1997 to August 2000. From August 1995 to October 1996, Mr. Friedman
served as a law clerk to the Honorable Manuel L. Real, United States District
Court, Central District of California. From September 1994 to August 1995, Mr.
Friedman was an associate with Wilson, Sonsini, Goodrich & Rosati. Mr. Friedman
received his B.A. in Political Science from the University of Washington and his
J.D. from Santa Clara University School of Law.

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     Ian Jenks has been a member of our board of directors since April 2000 and
the Chairman of the Board since May 2000. From 1995 to 1998, Mr. Jenks was the
President of the Lasers and Fiber Optics groups of Uniphase Corporation, a fiber
optics company. Mr. Jenks also serves on the board of directors of several
privately-held companies. Mr. Jenks received his B.S. in Aeronautical
Engineering from Bristol University in the United Kingdom.

     Terence P. Brown has been a member of our board of directors since August
2000. Mr. Brown is currently retired. From May 2000 to May 2001, Mr. Brown was
Vice President and General Manager of the Optical Transport Business Unit at
Cisco Systems, a networking solutions company. From November 1999 to May 2000,
Mr. Brown was Vice President of Optical Networking Sales at Cisco Systems. From
July 1997 to November 1999, Mr. Brown was the Vice President of Field Operations
at Cerent Corporation, an optical products company. From July 1993 to July 1997,
Mr. Brown was the Regional Vice President and Regional Sales Director of
Advanced Fibre Communications, a telecommunications company. Mr. Brown received
his B.S. in Electrical Engineering from the University of Notre Dame and a
masters degree in Marketing and Economics from Northwestern University.

     Chieh Chang has been a member of our board of directors since September
1995. Mr. Chang currently serves as Chief Executive Officer of Programmable
Microelectronics Company, Inc., a fabless semiconductor design company. From
April 1992 to August 1996, Mr. Chang was the Director of Technology at Cirrus
Logic, Inc., a semiconductor company. Mr. Chang received his B.S. in Electrical
Engineering from the National Taiwan University and his M.S. in Electrical
Engineering from UCLA.

     Herbert Chang has been a member of our board of directors since August
1996. Since April 1996, Mr. Chang has been President of InveStar Capital, Inc.,
a technology venture capital management firm based in Taiwan. From 1994 to 1996,
Mr. Chang was Senior Vice President at WK Technology Fund, a venture capital
fund. Mr. Chang serves on the board of directors of Marvell Technology Group
Ltd., a manufacturer of integrated circuits for communications-related markets.
Mr. Chang received his B.S. from National Taiwan University and his M.B.A. from
National Chiao-Tung University in Taiwan.

     Leonard J. LeBlanc has been a member of our board of directors since July
2000. Since February 2001 Mr. LeBlanc has been Vice President, Corporate
Development of eBest Inc., a private software company providing collaborative
business management solutions. Mr. LeBlanc was the Executive Vice President and
Chief Financial Officer of Vantive Corporation, a customer relationship
management software and solution company, from August 1998 to January 2000. From
March 1996 to July 1997, Mr. LeBlanc was the Executive Vice President of Finance
and Administration and Chief Financial Officer at Infoseek Corporation, an
Internet search and navigation company. From September 1993 to December 1994,
Mr. LeBlanc served as Senior Vice President, Finance and Administration of GTECH
Corporation, a manufacturer of lottery equipment and systems. From May 1987 to
December 1992, Mr. LeBlanc served as Executive Vice President, Finance and
Administration and Chief Financial Officer of Cadence Design Systems, Inc., an
electronic design automation software company. Mr. LeBlanc received his B.S. and
M.S. from the College of Holy Cross, and his masters degree in finance from
George Washington University.

     David Spreng has been a member of our board of directors since February
2000. Since September 1998, Mr. Spreng has served as a managing partner of
Crescendo Venture Management, LLC. Mr. Spreng was President of IAI Ventures,
Inc., a venture capital company, from March 1996 until September 1998. He has
also served in various capacities at Investment Advisers, Inc. from 1989 to
1998. Mr. Spreng is also a director of CoSine Communications, a
telecommunications equipment company, and Allied Riser Communications, a fiber
optics-based telecommunications company. Mr. Spreng also serves on the board of
several privately-held companies. Mr. Spreng received his B.S. in Finance and
Accounting from the University of Minnesota.

     On August 29, 2001, we announced that Frederick Fromm would assume the
position of Chief Executive Officer and that he was also nominated to stand for
election as a director of the Company at our 2001 Annual Meeting of
Stockholders. Our current Chief Executive Officer, Joseph Liu, will become
Chairman of the Board. The changes were in accordance with our planned
succession strategy and will become effective following our 2001 Annual Meeting
of Stockholders, which is scheduled for November 7,

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2001. The director changes are subject to stockholder approval at our 2001
Annual Meeting of Stockholders.

Risk Factors

WE HAVE INCURRED SIGNIFICANT LOSSES, AND OUR FAILURE TO INCREASE OUR REVENUES
COULD PREVENT US FROM ACHIEVING PROFITABILITY.

     We have incurred significant losses since our inception in 1995 and expect
to incur losses in the future. We incurred net losses of $80.4 million, $24.9
million and $3.5 million for the fiscal years ended June 30, 2001, 2000 and
1999, respectively. We have not achieved profitability on a quarterly basis. As
of June 30, 2001, we had an accumulated deficit of $112.8 million. We will need
to generate significantly greater revenues while containing costs and operating
expenses to achieve profitability. Our revenues may not grow in future quarters,
and we may never generate sufficient revenues to achieve 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.

     We depend upon a small number of customers for a substantial portion of our
revenues. Our top seven customers together, although not the same seven
customers, accounted for 77% and 82% of our revenues in the fiscal years ended
June 30, 2001 and 2000, respectively. We account for Agere Systems Inc.
("Agere") as a separate customer from Lucent Technologies ("Lucent"). Agere was
a subsidiary of Lucent until early March 2001 when Agere completed its initial
public offering. Agere, Lucent, Nortel Networks Corporation and Sycamore
Networks each accounted for revenues greater than 10% for the fiscal year ended
June 30, 2001, and Lucent, Sycamore Networks, JDS Uniphase and Agere each
accounted for revenues greater than 10% for the fiscal year ended June 30, 2000.
We expect that we will continue to depend upon a small number of customers,
although potentially not the same customers, for a substantial portion of our
revenues.

     Our revenues generated from these customers, individually or in the
aggregate, may not reach or exceed historic levels in any future period. For
example, we may not be the sole source of supply to our customers, and they may
choose to purchase products from other vendors. Furthermore, the businesses of
our existing customers are experiencing a downturn, which is resulting, in some
instances, in significantly decreased sales to these customers and harming our
results of operations. Loss or cancellations of orders from, or any further
downturn in the business of, any of our customers could harm our business. Our
dependence on a small number of customers may increase if the optical components
industry and our target markets continue to consolidate.

BECAUSE WE DID NOT COMMENCE SALES OF OUR PRODUCTS UNTIL LATE 1996 AND ONLY
RECENTLY BEGAN SELLING OUR PRODUCTS IN LARGE VOLUME, WE MAY BE UNABLE TO
ACCURATELY FORECAST OUR REVENUES, AND OUR QUARTERLY REVENUES AND OPERATING
RESULTS MAY CONTINUE TO FLUCTUATE SIGNIFICANTLY FROM QUARTER TO QUARTER.

     We did not commence sales of our products until late 1996 and only recently
began selling our products in large volume. As a result, it is difficult to
forecast our revenues accurately. Moreover, our revenues, expenses and operating
results have varied significantly from quarter to quarter in the past and may
continue to fluctuate significantly in the future. The factors, many of which
are more fully discussed in other risk factors, that are likely to cause these
variations include, among others:

     - economic downturn of the fiber optic industry;

     - economic conditions specific to the communications and related industries
       and the development and size of the markets for our products;

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     - fluctuations in demand for, and sales of, our products;

     - cancellations of orders and shipment rescheduling;

     - our ability to successfully move our manufacturing capacity to our
       facilities in China;

     - the availability of raw materials used in our products and increases in
       the price of these raw materials;

     - the ability of our manufacturing operations in China to timely produce
       and deliver products and components in the quantity and of the quality we
       require;

     - our ability to achieve acceptable production yields;

     - the practice of communication equipment suppliers to sporadically place
       large orders with short lead times;

     - the mix of products and the average selling prices of the products we
       sell;

     - competitive factors, including introductions of new products and product
       enhancements by competitors, entry of new competitors into the optical
       networking components market and pricing pressures;

     - our ability to develop, introduce, manufacture and ship new and enhanced
       optical networking products in a timely manner without defects; and

     - costs associated with and the outcomes of any intellectual property or
       other litigation to which we are, or may become, a party.

     Due to the factors noted above and other risks discussed in this section,
we believe that quarter-to-quarter comparisons of our operating results will not
be meaningful. You should not rely on our results for one quarter as any
indication of our future performance. Quarterly variations in our operations has
resulted in significant volatility in our stock price and the market price for
our common stock might continue to fall. It is likely that, in future quarters,
our operating results may be below the expectations of securities analysts or
investors. If this occurs, the price of our common stock is likely to continue
to decrease.

BECAUSE A HIGH PERCENTAGE OF OUR EXPENSES IS FIXED IN THE SHORT TERM, OUR
OPERATING RESULTS ARE LIKELY TO BE HARMED IF WE EXPERIENCE FURTHER DELAYS IN
GENERATING AND RECOGNIZING REVENUES.

     A high percentage of our expenses, including those related to
manufacturing, engineering, research and development, sales and marketing and
general and administrative functions, are fixed in the short term. As a result,
if we experience further delays in generating and recognizing revenues, our
quarterly operating results are likely to be harmed. For example, we experienced
such delays in the third and fourth quarter of fiscal 2001, and our loss from
operations increased 45.8% and 12.7%, respectively, from the immediately
preceding quarters. As we move our manufacturing capacity to China, we will
incur expenses in one quarter relating to the move that may not result in
off-setting revenues until a subsequent quarter. New product introductions can
also result in a mismatching of research and development expenses and sales and
marketing expenses that are incurred in one quarter with revenues that are not
recognized until a subsequent quarter when the new product is introduced. If
growth in our revenues does not exceed the increase in our expenses, our results
of operations will be harmed.

IF WE FAIL TO EFFECTIVELY MONITOR OUR MANUFACTURING CAPACITY, WE MAY NOT BE ABLE
TO DELIVER SUFFICIENT QUANTITIES OF PRODUCTS TO OUR CUSTOMERS IN A TIMELY
MANNER, WHICH WOULD HARM OUR OPERATING RESULTS.

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     We manufacture all of our products in our facilities in San Jose,
California and Beijing, Chengdu, Fuzhou, Shanghai and Zhuhai, China and
currently are moving substantially all of our manufacturing capacity to our
Zhuhai facility. We must devote significant resources to move our manufacturing
capacity to China, and our planned move will be expensive, will require
management's time and may disrupt our operations. Additionally, in accordance
with our restructuring plans, the Beijing, Chengdu and Fuzhou facilities will be
closed. Additional risks associated with moving our manufacturing capacity
include:

     - a lack of availability of qualified management and manufacturing
       personnel;

     - difficulties in achieving adequate yields from new manufacturing lines;

     - inability to quickly implement an adequate set of financial controls to
       track levels of inventory; and

     - our inability to procure the necessary raw materials and equipment.

     Communications equipment suppliers typically require that their vendors
commit to provide specified quantities of products over a given period of time.
We could be unable to pursue many large orders if we do not have sufficient
manufacturing capacity to enable us to commit to provide customers with
specified quantities of products. If we are unable to commit to deliver
sufficient quantities of our products to satisfy a customer's anticipated needs,
we will lose the order and the opportunity for significant sales to that
customer for a lengthy period of time. Furthermore, if we fail to fulfill orders
to which we have committed, we will lose revenue opportunities and our customer
relationships may be harmed.

IF WE FAIL TO EFFECTIVELY MANAGE OUR OPERATIONS, INCLUDING ANY REDUCTIONS OR
INCREASES IN THE NUMBER OF OUR EMPLOYEES, OUR OPERATING RESULTS COULD BE HARMED.

     Primarily as a result of the recent economic downturn and slowdown in
capital spending, particularly in the communications industry, we recently
implemented a number of cost-cutting measures, including reductions in our
workforce. The impact of these cost-cutting measures, combined with the
challenges of managing our geographically-dispersed operations, has placed, and
will continue to place, a significant strain on our management systems and
resources. In addition, our ability to effectively manage our operations will be
challenged to the extent that we begin expanding our workforce. We expect that
we will need to continue to improve our financial and managerial controls,
reporting systems and procedures, and will need to continue to train and manage
our workforce worldwide. Any failure to effectively manage our operations could
harm our operating results.

IF WE FAIL TO EFFECTIVELY MANAGE OUR INVENTORY LEVELS, OUR OPERATING RESULTS
COULD BE HARMED.

     Because we experience long lead times for raw materials and are often
required to purchase significant amounts of raw materials far in advance of
product shipments, we may not effectively manage our inventory levels, which
could harm our operating results. For example, in the fiscal year ended June 30,
2001, we recorded a $30.6 million provision for excess and obsolete inventory
due to the downturn in the fiber optics industry and our gross margin, excluding
non-cash compensation expense, decreased to 8.3% for the fiscal year ended June
30, 2001 from 14.6% for the fiscal year ended June 30, 2000. If we underestimate
our requirements, we may have inadequate inventory, which could result in delays
in shipments and loss of customers. If we purchase raw materials in anticipation
of orders that do not materialize, we will have to carry or write off excess
inventory and our gross margins will decline. Even if we receive these orders,
the additional manufacturing capacity that we add to meet customer requirements
may be underutilized in a subsequent quarter. We are implementing a new
automated manufacturing management system to replace our current system that
tracks most of our data, including some inventory levels, manually. The
conversion from the current systems used in San Jose occurred in the fourth
quarter of fiscal 2001, and the conversion in China is anticipated to take place
in the second quarter of fiscal 2002. Failure to effectively transition to this
new system in China could harm our results. The current limitations of our
manufacturing management systems increase the risk that we may fail to
effectively manage our

                                       16

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inventory. In this regard, we experienced significant increases in provisions
for excess and obsolete inventory, which harmed our gross margins, through
fiscal 2001. The risks associated with managing our inventory are increased by
the fact that we ship some products to two of our largest customers, Lucent and
Agere, on a consignment basis, such that we carry the shipped products as
inventory until Lucent or Agere accepts the products for use.

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, WHICH COULD LIMIT OUR ABILITY TO FILL CUSTOMER ORDERS AND HARM
OUR OPERATING RESULTS.

     We depend on third parties to supply the raw materials and equipment we use
to manufacture our products. To be competitive, we must obtain from our
suppliers, on a timely basis, sufficient quantities of raw materials at
acceptable prices. We obtain most of our critical raw materials from a single or
limited number of suppliers and generally do not have long-term supply contracts
with them. As a result, our suppliers could terminate the supply of a particular
material at any time without penalty. Difficulties in obtaining raw materials in
the future may limit our product shipments.

     Some of our raw material suppliers are single sources, and finding
alternative sources may involve significant expense and delay, if these sources
can be found at all. For example, all of our GRIN lenses, which are incorporated
into substantially all of our products, are obtained from Nippon Sheet Glass,
the sole supplier worldwide of GRIN lenses. Our failure to obtain these
materials or other single or limited-source raw materials could delay or reduce
our product shipments, which could result in lost orders, increase our costs,
reduce our control over quality and delivery schedules and require us to
redesign our products. If a significant supplier became unable or unwilling to
continue to manufacture or ship materials in required volumes, we would have to
identify and qualify an acceptable replacement. A material delay or reduction in
shipments, any need to identify and qualify replacement suppliers or any
significant increase in our need for raw materials that cannot be met on
acceptable terms could harm our business.

     We also depend on a limited number of manufacturers and vendors that make
and sell the complex equipment we use in our manufacturing process. In periods
of high market demand, the lead times from order to delivery of this equipment
could be as long as six months. Delays in the delivery of this equipment or
increases in the cost of this equipment could harm our operating results.

OUR MARKETS ARE HIGHLY COMPETITIVE, AND IF WE ARE UNABLE TO COMPETE SUCCESSFULLY
OUR REVENUES COULD DECLINE, WHICH WOULD HARM OUR OPERATING RESULTS.

     The market for fiber optic components is intensely competitive. We believe
that our principal competitors are the major manufacturers of optical components
and subsystems, including vendors selling to third parties and business
divisions within communications equipment suppliers. Our principal competitors
in the components market include Avanex Corporation, Corning, DiCon Fiberoptics,
Furukawa Electrical, New Focus, Nortel, Sumitomo, Tyco Electronics and JDS
Uniphase, which recently acquired E-TEK Dynamics and SDL. We believe that we
primarily compete with diversified suppliers, such as Corning, JDS Uniphase and
Nortel, for the majority of our product line and to a lesser extent with niche
players that offer more limited product lines. Competitors in any portion of our
business may also rapidly become competitors in other portions of our business.
In addition, our industry has recently experienced significant consolidation,
and we anticipate that further consolidation will occur. This consolidation has
further increased competition.

     Many of our current and potential competitors have significantly greater
financial, technical, marketing, purchasing, manufacturing and other resources
than we do. As a result, these competitors may be able to respond more quickly
to new or emerging technologies and to changes in customer requirements, to
devote greater resources to the development, promotion and sale of products, or
to deliver competitive products at lower prices.

                                       17

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     Several of our existing and potential customers are also current and
potential competitors of ours. These companies may develop or acquire additional
competitive products or technologies in the future and thereby reduce or cease
their purchases from us. In light of the consolidation in the optical networking
industry, we also believe that the size of the optical component and module
suppliers will become increasingly important to our current and potential
customers in the future. We may not be able to compete successfully with
existing or new competitors, and the competitive pressures we face may result in
lower prices for our products, loss of market share, or reduced gross margins,
any of which could harm our business.

     New technologies are emerging due to increased competition and customer
demand. The introduction of new products incorporating new technologies or the
emergence of new industry standards could make our existing products
noncompetitive. For example, new technologies are being developed in the design
of wavelength division multiplexers that compete with the thin film filters that
we incorporate in our products. These technologies include arrayed waveguide
grating, or AWG, and fiber bragg grating, or FBG. If our competitors adopt new
technologies before we do, we could lose market share and our business would
suffer.

A MAJORITY OF OUR MANUFACTURING OPERATIONS ARE LOCATED IN CHINA, WHICH EXPOSES
US TO THE RISK THAT OUR FAILURE TO COMPLY WITH THE LAWS AND REGULATIONS OF
CHINA, OR EVENTS IN THAT COUNTRY, WILL DISRUPT OUR OPERATIONS.

     A majority of our manufacturing operations are located in China and are
subject to the laws and regulations of China. We anticipate that substantially
all of our manufacturing operations will be located in China in the near future.
Our operations in China may be adversely affected by changes in the laws and
regulations of China, such as those relating to taxation, import and export
tariffs, environmental regulations, land use rights, property and other matters.
China's central or local government may impose new, stricter regulations or
interpretations of existing regulations, which would require additional
expenditures. China's economy differs from the economies of many countries in
terms of structure, government involvement, level of development, growth rate,
capital reinvestment, allocation of resources, self-sufficiency and rate of
inflation, among others. Our results of operations and financial condition may
be harmed by changes in the political, economic or social conditions in China.

     In addition, events out of our control in China, such as political unrest,
terrorism, war, labor strikes and work stoppages, could disrupt our operations.
There currently is political tension between the United States and China, which
could lead to a breakdown in trade relations. There is also significant tension
between China and Taiwan, which could result in hostilities. Additionally, China
has stepped up its condemnation of the United States' pledge of military support
to Taiwan, which could lead to hostilities. If hostilities or other events cause
a disruption in our operations, it would be difficult for us to establish
manufacturing operations at an alternative location on comparable terms.

DISRUPTION TO COMMERCIAL ACTIVITIES IN THE UNITED STATES OR IN OTHER COUNTRIES
MAY ADVERSELY IMPACT OUR RESULTS OF OPERATIONS, OUR ABILITY TO RAISE CAPITAL OR
OUR FUTURE GROWTH.

     Our operations in the United States and China also expose us to the
following general risks associated with international operations:

     - disruptions to commercial activities or damage to our facilities as a
       result of 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;

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<PAGE>

     - disruptions in the transportation of our products and other risks related
       to the infrastructure of foreign countries;

     - fluctuations in the value of currencies; and

     - economic instability.

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.

     Although we currently offer a broad spectrum of products, sales of our
wavelength expansion products accounted for a majority of our revenues in the
fiscal years ended June 30, 2001 and 2000. These products include, among others,
dense wavelength division multiplexers, or DWDMs and multiplexers, used
primarily in optical amplification. These products accounted for 57% and 81% of
our revenues in the fiscal years ended June 30, 2001 and 2000, respectively. We
believe that our future growth and a significant portion of our future revenues
will depend on the commercial success of our wavelength expansion products.
Customers that have purchased wavelength expansion products may not continue to
purchase these products from us. Any decline in the price of, or demand for, our
wavelength expansion products, or their failure to achieve broader market
acceptance, could harm our revenues.

THE OPTICAL NETWORKING COMPONENT INDUSTRY IS EXPERIENCING DECLINING AVERAGE
SELLING PRICES, WHICH COULD CAUSE OUR GROSS MARGINS TO DECLINE AND HARM OUR
OPERATING RESULTS.

     The optical networking component industry is experiencing declining average
selling prices, or ASPs, as a result of increasing competition and declining
market demand. We anticipate that ASPs will continue to decrease in the future
in response to product introductions by competitors, price pressures from
significant customers and greater manufacturing efficiencies achieved through
increased automation in the manufacturing process. These ASP declines have
contributed and may continue to contribute to a decline in our gross margins,
which could harm our results of operations.

OUR FAILURE TO ACHIEVE ACCEPTABLE MANUFACTURING YIELDS IN A COST-EFFECTIVE
MANNER COULD DELAY PRODUCT SHIPMENTS TO OUR CUSTOMERS AND HARM OUR OPERATING
RESULTS.

     Because manufacturing our products involves complex and precise processes
and the majority of our manufacturing costs are relatively fixed, manufacturing
yields are critical to our results of operations. Lower than expected
manufacturing yields could delay product shipments and harm our operating
results. Factors that affect our manufacturing yields include the quality of raw
materials used to make our products, quality of workmanship and our
manufacturing processes. Our or our suppliers' inadvertent use of defective
materials could significantly reduce our manufacturing yields. Furthermore,
because of the large labor component in and complexity of the manufacturing
process, quality of workmanship is critical to achieving acceptable yields. We
cannot assure you that we will be able to hire and train a sufficient number of
qualified personnel to cost-effectively produce our products with the quality
and in the quantities required by our customers. Changes in our manufacturing
processes or those of our suppliers could also impact our yields. In some cases,
existing manufacturing techniques, which involve substantial manual labor, may
not allow us to cost-effectively meet our manufacturing yield goals so that we
maintain acceptable gross margins while meeting the cost targets of our
customers. We will need to develop new manufacturing processes and techniques
that will involve higher levels of automation in order to increase our gross
margins and help achieve the targeted cost levels of our customers. We may not
achieve manufacturing cost levels that will allow us to achieve acceptable gross
margins or fully satisfy customer demands.

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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.

     Our products are deployed in large and complex optical networks and must be
compatible with other system components. Our products can only be fully tested
for reliability when deployed in networks for long periods of time. Our
customers may discover errors, defects or incompatibilities in our products
after they have been fully deployed and operated under peak stress conditions.
Our products may also have errors, defects or incompatibilities that are not
found until after a system upgrade is installed. Errors, defects,
incompatibilities or other problems with our products could result in:

     - 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.

     If any of these occur, our operating results could be harmed.

IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY, OUR ABILITY TO SUCCEED
WILL BE HARMED.

     Our ability to compete successfully and achieve future growth will depend,
in part, on our ability to protect our proprietary technology. We rely on a
combination of patent, copyright, trademark, and trade secret laws and
restrictions on disclosure to protect our intellectual property rights. However,
the steps we have taken may not prevent the misappropriation of our intellectual
property, particularly in foreign countries, such as China, where the laws may
not protect our proprietary rights as fully as in the United States. We
currently hold 23 patents and have 30 pending patent applications in the United
States. We cannot assure you that patents will be issued from pending or future
applications or that, if patents are issued, they will not be challenged,
invalidated or circumvented. Rights granted under these patents may not provide
us with meaningful protection or any commercial advantage. If we are unable to
protect our proprietary technology, our ability to succeed will be harmed. We
may in the future initiate claims or litigation against third parties for
infringement of our proprietary rights. These claims could result in costly
litigation and the diversion of our technical and management personnel.

WE ARE CURRENTLY A DEFENDANT IN A PATENT DISPUTE AND MAY BE INVOLVED IN OTHER
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.

     Participants in the communications and optical components markets in which
we sell our products have experienced frequent litigation regarding patent and
other intellectual property rights. Numerous patents in these industries are
held by others, including our competitors and academic institutions. We have no
means of knowing that a patent application has been filed in the United States
until the patent is issued.

                                       20

<PAGE>

Optical component suppliers may seek to gain a competitive advantage or other
third parties may seek an economic return on their intellectual property
portfolios by making infringement claims against us.

     In June 2000, Chorum Technologies, Inc. filed a lawsuit against us and our
wholly-owned subsidiary, Telelight Communication Inc., in the United States
District Court for the Northern District of Texas alleging, among other things,
infringement of two U.S. patents allegedly owned by Chorum relating to fiber
optical interleaving, based on our manufacture of and offer to sell various
fiber optic interleaver products. Chorum seeks an award for damages and
injunctive relief. On May 7, 2001, the Company filed a lawsuit in the United
States District Court for the District of Delaware, alleging, among other
matters, that Chorum infringes one of our patents relating to fiber optic
couplers based on Chorum's manufacture of and offer to sell various DWDM
products. We are seeking monetary damages and injunctive relief.

     Both prosecuting and defending these lawsuits, and any additional
litigation to which we may become a party in the future as a result of alleged
infringement of others' intellectual property, will likely be costly and time
consuming and will divert the efforts and attention of our management and
technical personnel. Patent litigation is highly complex and can extend for a
protracted period of time, which can substantially increase the cost of
litigation. Accordingly, the expenses and diversion of resources associated with
either of these matters, or any other intellectual property litigation to which
we may become a party, could seriously harm our business and financial
condition. Any intellectual property litigation also could invalidate our
proprietary rights and force us to do one or more of the following:

     - 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.

     Any of these actions could result in a substantial reduction in our revenue
and could result in losses over an extended period of time.

IF WE ARE UNABLE TO DEVELOP NEW PRODUCTS AND PRODUCT ENHANCEMENTS THAT ACHIEVE
MARKET ACCEPTANCE, SALES OF OUR PRODUCTS COULD DECLINE, WHICH WOULD HARM OUR
OPERATING RESULTS.

     The communications industry is characterized by rapid technological
changes, frequent new product introductions, changes in customer requirements
and evolving industry standards. As a result, our products could quickly become
obsolete as new technologies are introduced and incorporated into new and
improved products. Our future success depends on our ability to anticipate
market needs and to develop products that address those needs. Our failure to
predict market needs accurately or to develop new products or product
enhancements in a timely manner will harm market acceptance and sales of our
products. In this regard, we are currently developing bandwidth creation
products as well as bandwidth management products. If the development of these
products or any other future products takes longer than we anticipate, or if we
are unable to develop and introduce these products to market, our revenues could
suffer and we may not gain market share. Even if we are able to develop and
commercially introduce these new products, the new products may not achieve
widespread market acceptance.

WE DEPEND ON THE CONTINUED GROWTH AND SUCCESS OF THE COMMUNICATIONS INDUSTRY,
WHICH IS EXPERIENCING AN ECONOMIC DOWNTURN, AS WELL AS RAPID CONSOLIDATION AND
REALIGNMENT AND MAY NOT CONTINUE TO DEMAND FIBER OPTIC PRODUCTS AT HISTORICAL
RATES, THEREBY REDUCING DEMAND FOR OUR PRODUCTS AND HARMING OUR OPERATING
RESULTS.

                                       21

<PAGE>

     We depend on the continued growth and success of the communications
industry, including the continued growth of the Internet as a widely-used medium
for commerce and communication and the continuing demand for increased bandwidth
over communications networks. As a result of recent unfavorable economic
conditions and reduced capital spending in the communications industry, our
growth rate may be significantly lower than our historical quarterly growth
rate. For example, during the third and fourth quarter of fiscal 2001, revenues
decreased 16.7% and 43.8%, respectively, from the immediately preceding quarters
primarily due to the economic downturn in the communications industry.
Furthermore, the rate at which communications service providers and other fiber
optic network users have built new fiber optic networks or installed new systems
in their existing fiber optic networks has fluctuated in the past and these
fluctuations may continue in the future. These fluctuations may result in
reduced demand from historical rates for new or upgraded fiber optic systems
that utilize our products and, therefore, may result in reduced demand for our
products.

     The communications industry is also experiencing rapid consolidation and
realignment, as industry participants seek to capitalize on the rapidly changing
competitive landscape developing around the Internet and new communications
technologies such as fiber optic and wireless communications networks. As the
communications industry consolidates and realigns to accommodate technological
and other developments, our customers may consolidate or align with other
entities in a manner that harms our business.

BECAUSE NONE OF OUR CUSTOMERS ARE OBLIGATED TO PURCHASE OUR PRODUCTS, THEY MAY
AND DO CANCEL OR DEFER THEIR PURCHASES ON SHORT NOTICE AND AT ANY TIME, WHICH
COULD HARM OUR OPERATING RESULTS.

     We do not have contracts with our customers that provide any assurance of
future sales, and sales are typically made pursuant to individual purchase
orders, often with extremely short lead times. Accordingly, our customers:

     - may and do stop purchasing our products at any time without penalty;

     - are free to purchase products from our competitors;

     - are not required to make minimum purchases; and

     - may and do cancel orders that they place with us.

     Sales to any single customer may and do vary significantly from quarter to
quarter. Our customers generally do not place purchase orders far in advance. In
addition, our customer purchase orders have varied significantly from quarter to
quarter. This means that customers who account for a significant portion of our
revenues in one quarter may not and do not place any orders in the succeeding
quarter, which makes it difficult to forecast revenue in future periods.
Moreover, our expense levels are based in part on our expectations of future
revenue, and we may be unable to adjust costs in a timely manner in response to
further revenue shortfalls. This can result in significant quarterly
fluctuations in our operating results.

OUR REVENUES AND RESULTS OF OPERATIONS MAY BE HARMED IF WE FAIL TO INCREASE THE
VOLUME OF ORDERS, WHICH WE RECEIVE AND FILL ON A SHORT-TERM BASIS.

     Historically, a substantial portion of our net revenues in any fiscal
period has been derived from orders in backlog. Currently, due to the downturn
in the fiber optics industry, we are substantially dependent upon orders we
receive and fill on a short-term basis. Our customers can generally cancel,
reschedule or delay orders in backlog without obligation to us. As a result, we
cannot rely on orders in backlog as a reliable and consistent source of future
revenue. If any of our customers did in fact cancel or delay these orders, and
we were not able to replace them with new orders for product to be supplied on a
short-term basis, our results of operations could be harmed. For example, during
the third and fourth quarter of fiscal 2001, our

                                       22

<PAGE>

customers both delayed and cancelled some orders in backlog resulting in a 16.7%
and 43.8% decrease in revenues, respectively, from the immediately preceding
quarter.

OUR LENGTHY AND VARIABLE QUALIFICATION AND SALES CYCLE MAKES IT DIFFICULT TO
PREDICT THE TIMING OF A SALE OR WHETHER A SALE WILL BE MADE, WHICH MAY HARM OUR
OPERATING RESULTS.

     Our customers typically expend significant efforts in evaluating and
qualifying our products and manufacturing process prior to placing an order.
This evaluation and qualification process frequently results in a lengthy sales
cycle, typically ranging from nine to twelve months and sometimes longer. While
our customers are evaluating our products and before they place an order with
us, we may incur substantial sales, marketing, research and development
expenses, expend significant management efforts, increase manufacturing capacity
and order long lead-time supplies. Even after this evaluation process, it is
possible a potential customer will not purchase our products. In addition,
product purchases are frequently subject to unplanned processing and other
delays, particularly with respect to larger customers for which our products
represent a very small percentage of their overall purchase activity. Long sales
cycles may cause our revenues and operating results to vary significantly and
unexpectedly from quarter to quarter, which could cause volatility in our stock
price.

WE DEPEND ON KEY PERSONNEL TO MANAGE OUR BUSINESS EFFECTIVELY IN A RAPIDLY
CHANGING MARKET, AND IF WE ARE UNABLE TO HIRE ADDITIONAL PERSONNEL, OUR ABILITY
TO SELL OUR PRODUCTS COULD BE HARMED.

     Our future success depends upon the continued services of our executive
officers and other key engineering, finance, sales, marketing, manufacturing and
support personnel. In addition, we depend substantially upon the continued
services of key management personnel at our Chinese subsidiaries. None of our
officers or key employees is bound by an employment agreement for any specific
term, and these personnel may terminate their employment at any time. In
addition, we do not have "key person" life insurance policies covering any of
our employees.

     Our ability to continue to attract and retain highly-skilled personnel will
be a critical factor in determining whether we will be successful in the future.
Competition for highly-skilled personnel is intense, especially in the San
Francisco Bay area. We may not be successful in attracting, assimilating or
retaining qualified personnel to fulfill our current or future needs. In
addition, many of the members of our management team have recently joined our
company or have assumed new positions within the Company. Mr. Bruce D. Horn, our
Chief Financial Officer, joined us in April 2000, Mr. Frederick R. Fromm, our
President, joined us in July 2000, Messr. Jeffrey D. Friedman, our General
Counsel, joined us in August 2000, and Mr. Kenneth W. Brizel, our Senior Vice
President of Strategy and Business Development, joined us in October 2000. On
August 29, 2001, we announced that Frederick R. Fromm would assume the position
of Chief Executive Officer. Our current Chief Executive Officer, Joseph Y. Liu,
will become Chairman of the Board. The changes were in accordance with our
planned succession strategy and will become effective following our 2001 Annual
Meeting of Stockholders, which is scheduled for November 7, 2001. If our
management team does not work effectively together, it could seriously harm our
business.

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.

     A majority of our revenues are derived from sales through our domestic and
international sales representatives and distributors. Our sales representatives
and distributors are independent organizations that generally have exclusive
geographic territories and generally are compensated on a commission basis. We
are currently migrating some of our larger customers to direct sales and are
increasing our direct sales and marketing staff. We expect that we will continue
to rely on our independent sales representatives and distributors to market,
sell and support many of our products for a substantial portion of our revenues.
Some of our third-party sales representatives and distributors carry products of
one or more of our

                                       23

<PAGE>

competitors. As a result, these sales representatives and distributors may not
recommend our products over competitors' products.

BECAUSE SOME OF OUR OPERATIONS ARE LOCATED IN AN AREA EXPERIENCING POWER
SHORTAGES, WE FACE THE RISK OF POWER LOSS, WHICH COULD HARM OUR OPERATIONS.

     Substantial portions of our operations are located in San Jose, California.
California is in the midst of a power crisis and has experienced power
shortages. Sustained or frequent power failures could disrupt our operations,
which would limit our ability to supply our products to our customers in
sufficient quantities on a timely basis, harming our customer relationships.

BECAUSE SOME OF OUR OPERATIONS ARE LOCATED IN ACTIVE EARTHQUAKE FAULT ZONES, WE
FACE THE RISK THAT A LARGE EARTHQUAKE COULD HARM OUR OPERATIONS.

     Substantial portions of our operations are located in San Jose, California,
an active earthquake fault zone. This region has experienced large earthquakes
in the past and may likely experience them in the future. A large earthquake in
the San Jose area could disrupt our operations for an extended period of time,
which would limit our ability to supply our products to our customers in
sufficient quantities on a timely basis, harming our customer relationships.

OUR FAILURE TO COMPLY WITH GOVERNMENTAL REGULATIONS COULD SUBJECT US TO
LIABILITY.

     Our failure to comply with a variety of federal, state and local laws and
regulations in the United States and China could subject us to criminal, civil
and administrative penalties. Our products are subject to U.S. export control
laws and regulations that regulate the export of products and disclosure of
technical information to foreign countries and citizens. In some instances,
these laws and regulations may require licenses for the export of products to,
and disclosure of technology in, some countries, including China, and disclosure
of technology to foreign citizens. In July 2000, we filed two applications to
obtain commodity classifications confirming that we may export our products and
disclose our technologies to foreign countries, including China, and citizens,
including Chinese nationals, without export licenses. We recently received
commodity classifications from the United States Department of Commerce that
allow us to export our current products and disclose our current technologies
without export licenses. Additionally, as a result of these commodity
classifications, we have been notified that we will not be required to obtain a
license to disclose our technology to a specified employee with respect to whom
the Department of Commerce had initiated an inquiry. As we develop and
commercialize new products and technologies, and as the list of products and
technologies subject to U.S. export controls changes, we may be required to
obtain export licenses or other approvals with respect to those products and
technologies. We cannot predict whether these licenses and approvals will be
required and, if so, whether they will be granted. The failure to obtain any
required license or approval could harm our business.

     We employ a number of foreign nationals in our U.S. operations and as a
result we are subject to various laws related to the status of those employees
with the Immigration and Naturalization Service. Our failure to comply with the
forgoing laws or any other laws and regulations could subject us to liability.

     In addition, we are subject to laws relating to the storage, use, discharge
and disposal of toxic or otherwise hazardous or regulated chemicals or materials
used in our manufacturing processes. While we believe that we are currently in
compliance in all material respects with these laws and regulations, if we fail
to store, use, discharge or dispose of hazardous materials appropriately, we
could be subject to substantial liability or could be required to suspend or
adversely modify our manufacturing operations. In addition, we could be required
to pay for the cleanup of our properties if they are found to be contaminated,
even if we are not responsible for the contamination.

                                       24

<PAGE>

BECAUSE THE OPTICAL COMPONENTS INDUSTRY IS CAPITAL INTENSIVE, OUR BUSINESS MAY
BE HARMED IF WE ARE UNABLE TO RAISE ANY NEEDED ADDITIONAL CAPITAL.

     The optical components industry is capital intensive, and expansion of our
manufacturing facilities, the development and marketing of new products and the
hiring and retention of personnel will require a significant commitment of
resources. Furthermore, we may continue to incur significant operating losses if
the market for optical networking components develops at a slower pace than we
anticipate, or if we fail to establish significant market share and achieve a
significantly increased level of revenue. If cash from available sources is
insufficient for these purposes, or if additional cash is used for acquisitions
or other unanticipated uses, we may need to raise additional capital. Additional
capital may not be available on terms favorable to us, or at all. If we are
unable to raise additional capital when we require it, our business could be
harmed. In addition, any additional issuance of equity or equity-related
securities to raise capital will be dilutive to our stockholders.

BECAUSE THE OPTICAL COMPONENTS INDUSTRY IS EVOLVING RAPIDLY AND HIGHLY
COMPETITIVE, OUR STRATEGY INVOLVES ACQUIRING OTHER BUSINESSES AND TECHNOLOGIES
TO GROW OUR BUSINESS. IF WE ARE UNABLE TO SUCCESSFULLY INTEGRATE ACQUIRED
BUSINESSES OR TECHNOLOGIES, OUR OPERATING RESULTS MAY BE HARMED.

     The optical components industry is evolving rapidly and is highly
competitive. Accordingly, we have pursued and expect to continue to pursue
acquisitions of businesses and technologies, or the establishment of joint
venture arrangements, that could expand our business. The negotiation of
potential acquisitions or joint ventures, as well as the integration of an
acquired or jointly developed business or technology, could cause diversion of
management's time and other resources or disrupt our operations. Future
acquisitions could result in:

     - additional operating expenses without additional revenues;

     - potential dilutive issuances of equity securities;

     - the incurrence of debt and contingent liabilities;

     - amortization of goodwill and other intangibles;

     - research and development write-offs; and

     - other acquisition-related expenses.

     Furthermore, we may not be able to successfully integrate acquired
businesses or joint ventures with our operations, and we may not receive the
intended benefits of any future acquisition or joint venture.

RISKS RELATED TO OUR COMMON STOCK

IF WE WERE UNABLE TO MAINTAIN OUR NASDAQ NATIONAL MARKET LISTING, THE LIQUIDITY
OF OUR COMMON STOCK WOULD BE SERIOUSLY IMPAIRED.

     If our stock price falls below one dollar for thirty consecutive business
days and we are unable to cure such deficiency, we may be subject to delisting
from the Nasdaq National Market. Delisting from the Nasdaq National Market would
seriously impair the liquidity of our common stock and limit our potential to
raise future capital through the sale of our common stock, which could
materially harm our business. The current trading price of our common stock on
the Nasdaq National Market is approximately one dollar. Many companies that face
delisting as a result of bid prices below the Nasdaq's maintenance standards
seek to maintain their listings by effecting reverse stock splits. However,
reverse stock splits do not always

                                       25

<PAGE>

     result in a sustained share price increase. At present, we have made no
     decision with respect to this course of action, but will continue to
     evaluate this alternative in light of all other options.

     THERE MAY BE SALES OF A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK BY OUR
     STOCKHOLDERS AND THESE SALES COULD CAUSE OUR STOCK PRICE TO DECLINE.

         At June 30, 2001, our current stockholders held 188,019,084 shares of
     our common stock and potentially dilutive common stock equivalents.
     Potentially dilutive common stock equivalents are options to purchase an
     aggregate of 26,820,972 shares.

         Sales of a substantial number of shares of our common stock could cause
     our stock price to fall. In addition, the sale of these shares could impair
     our ability to raise capital through the sale of additional stock or debt
     in the future at a price that we deem appropriate.

     INSIDERS CONTINUE TO HAVE SUBSTANTIAL CONTROL OVER US, WHICH MAY NEGATIVELY
     AFFECT YOUR INVESTMENT.

         Our current executive officers, directors and their affiliates own, in
     the aggregate, as of June 30, 2001, approximately 25.5% of our outstanding
     shares. As a result, these persons and/or entities acting together will be
     able to substantially influence the outcome of all matters requiring
     approval by our stockholders, including the election of directors and
     approval of significant corporate transactions. This ability may have the
     effect of delaying a change in control, which may be favored by our other
     stockholders.

     BECAUSE OF THE EARLY STAGE OF OUR BUSINESS AND 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.

         Because of the early stage of our business and the rapid changes taking
     place in the fiber optics industry, we expect the market price of our
     common stock to fluctuate significantly. For example, the market price of
     our common stock has fluctuated from a high of $37.00 to a low of $1.875
     during the period from October 3, 2000, the date of our initial public
     offering to June 30, 2001. These fluctuations may occur in response to a
     number of factors, some of which are beyond our control, including:

         -   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 any estimates;

         -   changes in market values of comparable companies;

         -   announcements by us or our competitors 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.


                                       26

<PAGE>

    The price of our securities may also be affected by general economic and
market conditions, and the cost of operations in our product markets. While we
cannot predict the individual effect that these factors may have on the price or
our securities, these factors, either individually or in the aggregate, could
result in significant variations in price during any given period of time. There
can be no assurance that these factors will not have an adverse effect on the
trading prices of our common stock.

PROVISIONS OF OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY HAVE ANTI-TAKEOVER
EFFECTS THAT COULD PREVENT ANY CHANGE IN CONTROL, WHICH COULD NEGATIVELY AFFECT
YOUR INVESTMENT.

        Provisions of Delaware law and of our certificate of incorporation and
bylaws could make it more difficult for a third party to acquire us, even if
doing so would be beneficial to our stockholders. These provisions permit us to:

    -   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.

    Any of the foregoing provisions could limit the price that certain investors
might be willing to pay in the future for shares of our common stock.

Item 2.  Properties

     In the United States, we lease a total of approximately 209,000 square feet
in five buildings located in San Jose, California. Of the 209,000 square feet:

         .    we lease a 62,000 square foot manufacturing facility and 43,000
              square feet of administrative, sales and marketing space pursuant
              to a lease that expires in February 2005;

         .    we lease a 38,000 square foot research and development facility
              pursuant to a lease that expires in October 2002, which is
              recorded as an excess facility and is part of our restructuring
              costs and other special charges;

         .    we lease a 53,000 square foot facility pursuant to a lease that
              expires in January 2008, which is recorded as an excess facility
              and is part of our restructuring costs and other special charges;
              and

         .    we lease a 13,000 square foot filter coating facility pursuant to
              a lease that expires in July 2005.

     In China, we lease a total of approximately 245,000 square feet in five
facilities located in Beijing, Chengdu, Fuzhou, Shanghai and Zhuhai. Our Beijing
facility totals approximately 31,000 square feet and is used for administration
and manufacturing. The lease for these facilities expires in May 2003. Our
Chengdu facility totals approximately 42,000 square feet and is used for
administration and manufacturing. The lease for this facility expires in
December 2002. In Fuzhou, we maintain an approximately 10,000 square foot
research and development and manufacturing facility pursuant to a lease expiring
on August 2007. Our Shanghai facility totals approximately 45,000 square feet
and is used for administration, manufacturing and

                                       27

<PAGE>

research and development. The lease for this facility expires in July 2005. Our
Zhuhai facilities total approximately 137,000 square feet, with the
manufacturing facility totaling approximately 117,000 square feet and 20,000
square feet of dormitory space. The lease for these facilities expires in March
2005. Additionally, we own facilities in the Zhuhai Free Trade Zone totaling
576,921 square feet. In accordance with our restructuring plans announced on
July 2, 2001, the Beijing, Chengdu and Fuzhou facilities will be closed. We
anticipate that we will be able to lease facilities in the Zhuhai Free Trade
Zone to third parties.

     Item 3.  Legal Proceedings

     In November 1999, a lawsuit was filed by E-TEK Dynamics, Inc. against the
Company alleging patent infringement related to the manufacture and sale of
fiber optic products which generated a significant amount of the Company's
revenues for the quarter ended March 31, 2001 and a majority of the Company's
revenues for each of the quarters ended June 30, September 30 and December 31,
2000, and the year ended June 30, 2000. On February 9, 2001, we amended our
answer to include, among other matters, a counter-claim against E-TEK Dynamics.
The counter-claim alleged that E-TEK Dynamics infringed one of our patents
relating to fiber optic couplers based on E-TEK's manufacture and sale of DWDM
products.

     In May 2001, we reached an agreement with E-TEK Dynamics, a wholly owned
subsidiary of JDS Uniphase Corporation, to dismiss the patent infringement
litigation between the companies. Terms of the settlement included the parties
entering into a cross-licensing agreement on certain wavelength division
multiplexing (WDM) patents. Neither company admitted any liability, and the
parties filed a joint motion to dismiss all claims between the companies, which
the Court granted on May 30, 2001.

     In June 2000, Chorum Technologies, Inc. filed a lawsuit in the United
States District Court for the Northern District of Texas against the Company and
Telelight Communication Inc., our wholly owned subsidiary, alleging patent
infringement and trademark claims relating to the manufacture of and offer to
sell fiber optic interleaver products. On May 7, 2001, the Company filed a
lawsuit against Chorum in the United States District Court for the District of
Delaware, alleging, among other matters, that Chorum infringes one of our
patents relating to fiber optic couplers based on Chorum's manufacture and sale
of DWDM products.

     In actions involving Chorum, Chorum and the Company are seeking unspecified
damages and injunctive relief. An unfavorable ruling in these matters could have
a material adverse effect on the Company's financial condition and results of
operations. The Company, with the assistance of its legal counsel, intends to
vigorously prosecute and defend its position. However, because of the
considerable uncertainties that exist, the impact, if any, on the Company cannot
now be reasonably estimated based on facts currently available to management.

Item 4.  Submission of Matters to a Vote of Security Holders.

     No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.

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<PAGE>

                                     Part II

Item 5.  Market for Registrant's Common Stock and Related Stockholder Matters

Market for Registrant's Common Equity

     (a) Our common stock has been quoted on the Nasdaq National Market under
the symbol "OPLK" since our initial public offering in October 2000. Prior to
that time, there was no public market for our common stock. The following table
sets forth the range of high and low prices for our common stock for each period
indicated:

                                                      High      Low
                                                      ----      ---

     Fiscal 2001:
     Second Quarter (from October 4, 2000)           $37.000   $7.875
     Third Quarter                                   $24.563   $3.625
     Fourth Quarter                                  $ 5.480   $1.875

     As of September 17, 2001 there were approximately 446 stockholders of
record and the price per share of our common stock was $1.00. We have never
declared or paid any dividends on our capital stock. We currently expect to
retain future earnings, if any, for use in the operation and expansion of our
business and do not anticipate paying any cash dividends in the foreseeable
future.

     (b) Use of Proceeds From Sales of Registered Securities

     On October 3, 2000, the Securities and Exchange Commission (the "SEC")
declared effective the Company's Registration Statement on Form S-1 (No.
333-41506). Pursuant to this Registration Statement, the Company completed an
initial public offering of 15,755,000 shares of common stock, including the
over-allotment shares, at an initial public offering price of $18.00 per share.
The Company incurred expenses of approximately $22.6 million, of which $19.9
million represented underwriting discounts and commissions and $2.7 million
represented other related expenses. The net offering proceeds to the Company
after total expenses were $261.0 million.

     As of June 30, 2001, we had $246.5 million in cash and cash equivalents.
All remaining proceeds are invested in cash, cash equivalents, or short-term
investments consisting of highly liquid money market funds, commercial paper,
government/federal notes and bonds and certificates of deposit. Consistent with
the use of proceeds as discussed in our Registration Statement on Form S-1, the
Company has approved a program to repurchase up to an aggregate of $21.2 million
of its Common Stock. Such repurchases may be made from time to time on the open
market at prevailing market prices or in negotiated transactions off the market.
The use of these proceeds does not represent a material change in the use of
proceeds described in the prospectus.

Item 6.  Selected Consolidated Financial Data

     The following selected consolidated financial data should be read in
conjunction with, and are qualified by reference to, our consolidated financial
statements and related notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The selected consolidated
statement of operations data for the three fiscal years ended June 30, 2001,
2000 and 1999 and the selected consolidated balance sheet data as of June 30,
2001 and 2000 are derived from, and qualified by reference to, the audited
consolidated financial statements included elsewhere in this Form 10-K. The
selected consolidated statement of operations data for the fiscal year ended
June 30, 1998 and the selected consolidated balance sheet data as of June 30,
1999 are derived from audited financial statements not included in this Form
10-K. The selected consolidated statement of operations data for the fiscal year
ended June 30, 1997 and the selected consolidated balance sheet data as of June
30, 1998 and 1997 are derived from unaudited financial statements not included
in this Form 10-K. Net loss per share is not presented for the year ended June
30, 1997, as there was no common shares outstanding during this period and
common stock equivalents would be anti-dilutive to our net loss per share.

                                       29

<PAGE>

      The unaudited consolidated financial statements have been prepared by us
on a basis consistent with our audited consolidated financial statements and, in
the opinion of management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of our results of
operations and financial position as of and for those periods. Historical
results are not necessarily indicative of results that may be expected for any
future period.

                                       30

<PAGE>

<TABLE>
<CAPTION>
                                                                        Years Ended June 30,
                                                       -----------------------------------------------------
                                                          2001       2000       1999       1998       1997
                                                       ---------  ---------  ---------  ---------  ---------
<S>                                                    <C>        <C>        <C>        <C>        <C>
Consolidated Statement of Operations Data:
Revenues                                               $ 131,815  $  39,048  $   9,094  $   2,493  $     426
Cost of revenues:
   Cost of revenues                                      120,835     33,344      7,225      2,964        877
   Non-cash compensation expense                           4,765      2,269        705         --         --
                                                       ---------  ---------  ---------  ---------  ---------
      Total cost of revenues                             125,600     35,613      7,930      2,964        877
                                                       ---------  ---------  ---------  ---------  ---------

Gross profit (loss)                                        6,215      3,435      1,164       (471)      (451)
                                                       ---------  ---------  ---------  ---------  ---------

Operating expenses:
   Research and development:
      Research and development                            17,706      3,686        626        455        524
      Non-cash compensation expense                        4,390      1,801        646         --         --
                                                       ---------  ---------  ---------  ---------  ---------
        Total research and development                    22,096      5,487      1,272        455        524
                                                       ---------  ---------  ---------  ---------  ---------

   Sales and marketing:
      Sales and marketing                                 19,923      2,695        802        527        238
      Non-cash compensation expense                        2,363      1,312        526         --         --
                                                       ---------  ---------  ---------  ---------  ---------
        Total sales and marketing                         22,286      4,007      1,328        527        238
                                                       ---------  ---------  ---------  ---------  ---------

   General and administrative:
      General and administrative                          13,736      4,173        826        683        193
      Non-cash compensation expense                       15,120      7,358      1,155         --         --
                                                       ---------  ---------  ---------  ---------  ---------
        Total general and administrative                  28,856     11,531      1,981        683        193
                                                       ---------  ---------  ---------  ---------  ---------

   Restructuring costs and other special charges          18,177         --         --         --         --
   In-process research and development                       793      7,020         --         --         --
   Amortization of goodwill                                3,606        981         --         --         --
                                                       ---------  ---------  ---------  ---------  ---------
           Total operating expenses                       95,814     29,026      4,581      1,665        955
                                                       ---------  ---------  ---------  ---------  ---------

Loss from operations                                     (89,599)   (25,591)    (3,417)    (2,136)    (1,406)
Interest and other income (expense), net                   9,227        689        (57)       (12)         9
                                                       ---------  ---------  ---------  ---------  ---------

Net loss                                               $ (80,372) $ (24,902) $  (3,474) $  (2,148) $  (1,397)
                                                       ---------  ---------  ---------  ---------  ---------


Basic and diluted net loss per share                   $   (0.65) $   (3.18) $   (2.37) $   (4.67) $      --
                                                       ---------  ---------  ---------  ---------  ---------

Basic and diluted weighted average
   shares outstanding                                    124,362      7,840      1,463        460         --
                                                       ---------  ---------  ---------  ---------  ---------

Consolidated Balance Sheet Data:
Cash and cash equivalents                              $ 246,473  $  26,665  $   4,757  $     933  $     106
Working capital                                          248,959     30,618      5,637      1,512        182
Total assets                                             387,902     95,932     11,711      3,061      1,361
Long-term liabilities                                      4,988      4,225         --         --         --
Total convertible preferred stock                             --     58,373     12,083      6,373      2,646
Total stockholders' (deficit) equity                     337,982     10,825     (4,525)    (4,089)    (1,924)
</TABLE>

                                       31

<PAGE>

     Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations

     The following discussion of our financial condition and results of
operations should be read in conjunction with "Item 6. Selected Consolidated
Financial Data" and our consolidated financial statements and related notes
thereto.

     The following discussion and certain other sections of this report on Form
10-K contain statements reflecting our views about our future performance and
constitute "forward-looking statements" under the Private Securities Litigation
Reform Act of 1995. These views may involve risks and uncertainties that are
difficult to predict and may cause actual results to differ materially from the
results discussed in such forward-looking statements. Readers should consider
that various factors, including changes in general economic conditions, nature
of competition, dependence on and relationships with key customers and suppliers
and other factors discussed in the "Risk Factors" section in Item 1 may effect
our ability to attain the projected performance. All forward-looking statements
included in this document are based on information available to us on the date
hereof, and we assume no obligation to update any such forward-looking
statements.

Overview

     We design and manufacture a broad line of high performance fiber optic
networking components and integrated optical subsystems and market them
worldwide to communications equipment suppliers. Our bandwidth creation products
increase the performance and capacity of fiber optic networks. Our bandwidth
management products provide communications service providers with the ability to
monitor and manage optical signals to enhance network performance. We produce
components for next-generation, all-optical dense wavelength division
multiplexing (DWDM), optical amplification, switching and routing, and
ultra-high reliability undersea use. We were incorporated in September 1995 and
reincorporated in Delaware in September 2000. We began shipping product for sale
in the second half of 1996. In April 1999, we established manufacturing
operations in China.

     We generate revenues from the sale of fiber optic components and integrated
optical subsystems. To date, we have developed over 100 standard products that
are sold or integrated into custom solutions for our customers. Our products are
generally categorized into the following four major groups: wavelength
expansion; optical amplification; wavelength performance monitoring and
protection; and optical switching. A majority of our revenues are derived from
our wavelength expansion products, in particular, dense wavelength division
multiplexers, or DWDMs, multiplexers used primarily in optical amplification and
amplification components. However, revenues derived from our optical
amplification and optical switching products have increased as a percentage of
total revenues for the fiscal year ended June 30, 2001 compared to the fiscal
year ended June 30, 2000, and we currently anticipate that such revenues will
continue to increase as a percentage of total revenues.

     We depend upon a small number of customers for a substantial portion of our
revenues. Our top seven customers together, although not the same seven
customers, accounted for 77% and 82% of our revenues for the fiscal years ended
June 30, 2001 and June 30, 2000, respectively. We account for Agere Systems Inc.
("Agere") as a separate customer from Lucent Technologies ("Lucent"). Agere was
a subsidiary of Lucent until early March 2001 when Agere completed its initial
public offering. Agere, Lucent, Nortel Networks Corporation and Sycamore
Networks each accounted for revenues greater than 10% for the fiscal year ended
June 30, 2001, and Lucent, Sycamore Networks, JDS Uniphase and Agere each
accounted for revenues greater than 10% for the fiscal year ended June 30, 2000.
We expect that we will continue to depend upon a small number of customers,
although potentially not the same customers, for a substantial portion of our
revenues.

     Except for some sales to Lucent and Agere, we recognize revenues from
product sales at the time the product is shipped to our customers, including our
distributors, provided there are no significant

                                       32

<PAGE>

uncertainties with respect to customer acceptance or collection. Our
distributors do not have the right to return or exchange products. Some
shipments to Lucent and Agere are on a consignment basis, and we do not
recognize revenues until Lucent or Agere accept the products for use. In most
cases, Lucent and Agere will accept products and we will recognize revenues
within one to four months of shipment. We continue to report products shipped to
Lucent and Agere as our inventory until they are accepted.

     Our consolidated statement of operations data reflects a reclassification
to allocate the non-cash compensation expense related to the issuance of stock
options from a single-line presentation within operating expenses to the
individual amounts related to cost of revenues, research and development, sales
and marketing, and general and administrative expenses.

     In October 2000, we sold 15,755,000 shares of common stock in an
underwritten initial public offering, including 2,055,000 shares of common stock
issued pursuant to the exercise of the underwriter's over-allotment option,
resulting in net proceeds of approximately $263.7 million, before offering
expenses of approximately $2.7 million. Simultaneously with the closing of the
public offering, 110,103,344 shares of convertible preferred stock were
converted to shares of common stock on a one-for-one-basis. In addition, the
note payable to Cisco Systems was converted into 3,298,773 shares of common
stock at a conversion price of $15.30 per share, or 85% of the public offering
price of $18.00 per share. The discount feature of this convertible note payable
resulted in a charge of $8.8 million, recorded as sales and marketing expense in
the quarter ended December 31, 2000.

     COST OF REVENUES. Our cost of revenues consists of raw material, salaries
and related personnel expense, manufacturing overhead, and provisions for excess
and obsolete inventories and warranties. We expect cost of revenues, as a
percentage of revenues, to fluctuate from period to period. Our gross margins
will primarily be affected by production yield, mix of products manufactured in
China or the United States, provisions for excess and obsolete inventories, our
pricing policies, mix of products sold, costs incurred in establishing
additional manufacturing lines and facilities, and manufacturing volume. The
fiber optic component industry is characterized by rapidly declining average
selling prices, increasing unit volumes and declining margins.

     RESEARCH AND DEVELOPMENT EXPENSES. Our research and development expenses
consist primarily of salaries and related personnel costs, fees paid to
consultants and outside service providers, patent filing costs, non-recurring
engineering charges and prototype costs, all of which relate to the design,
development, testing, pre-manufacturing and significant improvement of our
products. We expense our research and development costs as they are incurred. We
believe that developing customer solutions at the prototype stage is critical to
our strategic product development objectives. We further believe that, in order
to meet the changing requirements of our customers, we will need to fund
investments in several concurrent product development projects. We expect our
research and development expenses to decrease in dollar amount and increase as a
percentage of revenues for the next fiscal quarter as we continue to cut costs,
develop new products and improve existing products.

     SALES AND MARKETING EXPENSES. Our sales and marketing expenses consist
primarily of salaries and related expenses for marketing, sales, customer
service and application engineering support personnel, commissions paid to the
internal sales personnel and representatives, as well as costs associated with
promotional and other marketing expenses. We expect our sales and marketing
expenses to decrease in dollar amount and increase as a percentage of revenues
for the next fiscal quarter.

     GENERAL AND ADMINISTRATIVE EXPENSES. Our general and administrative
expenses consist primarily of salaries and related expenses for executive,
finance, accounting, and human resources personnel, professional fees and other
corporate expenses. We expect our general and administrative expenses to
decrease in dollar amount and increase as a percentage of revenues for the next
fiscal quarter as we continue to cut costs.

     NON-CASH COMPENSATION EXPENSE. We have granted stock options and issued
warrants to employees and consultants at prices below the fair value of the
underlying stock on the date of grant or issuance. During the period from July
1, 1998 through June 30, 2001, we recorded aggregate deferred stock

                                       33

<PAGE>

compensation, net of cancellations, of approximately $59.9 million, of which
$26.6 million, $12.7 million and $3.0 million was expensed during the fiscal
years ended June 30, 2001, 2000 and 1999, respectively. While this expense has
increased our net loss, it has had no impact on our cash flows. With respect to
employee stock-based compensation, we are amortizing the deferred compensation
expense over the vesting period, as set forth in FASB Interpretation No. 28, or
FIN 28. Under the FIN 28 method, each vested tranche of options is accounted for
as a separate option grant awarded for services. The compensation expenses are
recognized over the period during which the services are provided. Accordingly,
this method results in higher compensation expenses being recognized in the
earlier vesting periods of an option. Non-employee grants are accounted for in
accordance with Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123") and Emerging Issues Task Force 96-18,
"Accounting for Equity Instruments That are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services" ("EITF 96-18") and
valued using the Black-Scholes model. The deferred compensation expense related
to non-employees' stock option grants are amortized over the vesting period as
set forth in FIN 28. The remaining $17.6 million will be expensed in future
periods generally over a four-year vesting period. We estimate that our deferred
stock compensation expense from options and shares granted or issued from July
1998 through June 30, 2001 will be $10.9 million, $5.1 million and $1.6 million
for the years ending June 30, 2002, 2003 and 2004, assuming no cancellations or
additional stock option grants with exercise prices below fair value of our
common stock.

     ACQUISITION OF AURORA. In June 2001, the Company acquired Aurora Associates
and Aurora Photonics, Inc. ("Aurora"). Aurora is a developer of acoustic-optic
("AO") devices and systems. These advanced AO devices and systems are classified
as spatial (AO deflectors and Bragg cells), temporal (AO modulators and
frequency shifters) and spectral (AO tunable filter) modulations. The
transaction was accounted for as a purchase and accordingly, the accompanying
financial statements include the results of operations of Aurora subsequent to
the acquisition date. The purchase price comprised $1,000,000 cash, 150,000
shares of common stock valued at $448,000, $60,000 of transaction costs and
$20,000 in assumed liabilities. The total purchase price aggregated $1,528,000
and was allocated to tangible assets acquired of $68,000, identifiable
intangible assets acquired of $499,000, goodwill of $168,000 and in-process
research and development ("IP R&D") of $793,000.

     ACQUISITION OF TELELIGHT. In April 2000, the Company acquired Telelight
Communication Inc. ("Telelight") in a merger transaction accounted for as a
purchase business combination. The purchase price comprised 13,440,000 shares of
common stock valued at $26,880,000 and $200,000 of acquisition costs. The total
purchase price aggregated $27,080,000 and was allocated to tangible assets
acquired of $1,043,000, identifiable intangible assets acquired of $7,395,000,
goodwill of $14,580,000, deferred tax liability of $(2,958,000) and in-process
research and development ("IP R&D") of $7,020,000. In June 2001 the Company
restructured and abandoned the Telelight technology. As a result, the Company
recorded a charge of $12.4 million related to the impairment of goodwill and
purchased intangible assets representing 100% of the remaining value of the
Telelight acquisition.

Results of Operations

     REVENUES. Revenues increased $92.8 million, or 238%, to $131.8 million for
the fiscal year ended June 30, 2001 from $39.0 million for the fiscal year ended
June 30, 2000. This increase was primarily due to increased shipments of our
existing wavelength expansion products, optical amplification products and
optical switching products to existing and new customers, and shipments of new
products to existing and new customers. This increase was offset by decreases in
the average selling price of many of our products. Revenues increased $30.0
million, or 329%, to $39.0 million for the fiscal year ended June 30, 2000 from
$9.1 million for the fiscal year ended June 30, 1999. This increase was
primarily due to increased shipments of our existing wavelength expansion
products to existing customers and to a lesser extent shipments of existing
products to new customers and shipments of new products to new and existing
customers. This increase was offset by a decrease in the price of a product sold
to Lucent and a decrease in the average selling price of some of our other
products.

     GROSS PROFIT. Gross profit, excluding non-cash compensation expense,
increased $5.3 million, or 92%, to $11.0 million for the fiscal year ended June
30, 2001 from $5.7 million for the fiscal year ended

                                       34

<PAGE>

June 30, 2000. This resulted in a decrease in gross margin from 14.6% to 8.3%.
The decrease in our gross margin was primarily due to a $30.6 million provision
for excess and obsolete inventory recorded in the fiscal year ended June 30,
2001, compared to a provision of $4.7 million in the fiscal year ended June 30,
2000, higher manufacturing costs relative to our production volume,
manufacturing inefficiencies associated with the transfer of our manufacturing
capacity and lower yields in our manufacturing facilities in China. These
decreases were partially offset by yield improvements in our domestic
manufacturing facilities and the cost benefits of manufacturing in China.
Manufacturing overhead costs, excluding non-cash compensation expense,
associated with the expansion of our manufacturing operations both domestically
and internationally increased $19.6 million for the fiscal year ended June 30,
2001, compared to the prior fiscal year. The provision for excess inventory
reflects the recent significant downturn in customer demand. In response to this
downturn, we are focusing on transitioning substantially all of our
manufacturing to China by the fourth quarter of calendar 2001. We cannot assure
you that this transition will result in improved gross margins due to the cost
benefits of manufacturing in China. We are continuing to implement programs both
domestically and internationally to further improve production yields of our
products. We cannot assure you that these programs will be successful in
increasing our gross margin. Gross profit, excluding non-cash compensation
expense, increased $3.8 million, or 205%, to $5.7 million for the fiscal year
ended June 30, 2000 from $1.9 million for the fiscal year ended June 30, 1999.
This resulted in a decrease in gross margin from 20.6% to 14.6%. The decrease in
our gross margin was primarily due to a $4.7 million provision for excess and
obsolete inventory for the fiscal year ended June 30, 2000, compared to a
provision of $555,000 for the fiscal year ended June 30, 1999. This decrease was
partially offset by increased unit shipments of our products and economies of
scale resulting from higher production volumes. Gross profit, including non-cash
compensation expense, increased $2.8 million, or 81%, to $6.2 million for the
fiscal year ended June 30, 2001 from $3.4 million for the fiscal year ended June
30, 2000. This resulted in a decrease in gross margin from 8.8% to 4.7%. Gross
profit, including non-cash compensation expense, increased $2.3 million, or
195%, to $3.4 million for the fiscal year ended June 30, 2000 from $1.2 million
for the fiscal year ended June 30, 1999. This resulted in a decrease in gross
margin from 12.8% to 8.8%.

     RESEARCH AND DEVELOPMENT. Research and development expenses, excluding
non-cash compensation expense, increased $14.0 million, or 380%, to $17.7
million for the fiscal year ended June 30, 2001 from $3.7 million for the fiscal
year ended June 30, 2000. Research and development expenses, excluding non-cash
compensation expense, increased $3.1 million, or 489%, to $3.7 million for the
fiscal year ended June 30, 2000 from $626,000 for the fiscal year ended June 30,
1999. The increases in research and development expenses were primarily due to
costs associated with the substantial increase in personnel and
personnel-related costs, an increase in prototype expenses for the design and
development of new products as well as significant improvements to existing
products, depreciation expense and an increase in occupancy costs due to
expansion of facilities. Research and development expenses, including non-cash
compensation expense, increased $16.6 million, or 303%, to $22.1 million for the
fiscal year ended June 30, 2001 from $5.5 million for the fiscal year ended June
30, 2000. Research and development expenses, including non-cash compensation
expense, increased $4.2 million, or 331%, to $5.5 million for the fiscal year
ended June 30, 2000 from $1.3 million for the fiscal year ended June 30, 1999.

     SALES AND MARKETING. Sales and marketing expenses, excluding non-cash
compensation expense, increased $17.2 million, or 639%, to $19.9 million for the
fiscal year ended June 30, 2001 from $2.7 million for the fiscal year ended June
30, 2000. Sales and marketing expenses, excluding a one-time charge of $8.8
million related to the discount feature of the convertible note payable to Cisco
Systems and non-cash compensation expense, increased $8.4 million, or 312%, to
$11.1 million for the fiscal year ended June 30, 2001 from $2.7 million for the
fiscal year ended June 30, 2000. Sales and marketing expenses, excluding
non-cash compensation expense, increased $1.9 million, or 236%, to $2.7 million
for the fiscal year ended June 30, 2000 from $802,000 for the fiscal year ended
June 30, 1999. The increases in sales and marketing expenses were primarily due
to costs associated with the substantial increase in sales and marketing
personnel and personnel-related costs, commissions to our internal and external
sales representatives, and tradeshow, advertising and other customer-related
costs. Sales and marketing expenses, including non-cash compensation expense and
excluding the Cisco Systems conversion charge, increased $9.5 million, or 237%,
to $13.5 million for the fiscal year ended June 30, 2001 from $4.0 million for
the fiscal year ended June 30, 2000. Sales and marketing expenses, including the
Cisco Systems conversion

                                       35

<PAGE>

charge and non-cash compensation expense, increased $18.3 million, or 456%, to
$22.3 million for the fiscal year ended June 30, 2001 from $4.0 million for the
fiscal year ended June 30, 2000. Sales and marketing expenses, including
non-cash compensation expense, increased $2.7 million, or 202%, to $4.0 million
for the fiscal year ended June 30, 2000 from $1.3 million for the fiscal year
ended June 30, 1999.

     GENERAL AND ADMINISTRATIVE. General and administrative expenses, excluding
non-cash compensation expense, increased $9.6 million, or 229%, to $13.7 million
for the fiscal year ended June 30, 2001 from $4.2 million for the fiscal year
ended June 30, 2000. General and administrative expenses, excluding non-cash
compensation expense, increased $3.3 million, or 405%, to $4.2 million for the
fiscal year ended June 30, 2000 from $826,000 for the fiscal year ended June 30,
1999. The increases in general and administrative expenses were primarily due to
costs associated with the substantial increase in personnel and
personnel-related costs, occupancy costs, legal fees and costs associated with
the reporting requirements of a public company. General and administrative
expenses, including non-cash compensation expense, increased $17.3 million, or
150%, to $28.9 million for the fiscal year ended June 30, 2001 from $11.5
million for the fiscal year ended June 30, 2000. General and administrative
expenses, including non-cash compensation expense, increased $9.6 million, or
482%, to $11.5 million for the fiscal year ended June 30, 2000 from $2.0 million
for the fiscal year ended June 30, 1999.

     NON-CASH COMPENSATION EXPENSE. From July 1, 1998 through June 30, 2001, we
had recorded an aggregate of $59.9 million in deferred non-cash compensation,
net of cancellations. Non-cash compensation expense increased $13.9 million, or
109%, to $26.6 million for the fiscal year ended June 30, 2001 from $12.7
million for the fiscal year ended June 30, 2000. Non-cash compensation expense
increased $9.7 million, or 320%, to $12.7 million for the fiscal year ended June
30, 2000 from $3.0 million for the fiscal year ended June 30, 1999.

     RESTRUCTURING COSTS AND OTHER SPECIAL CHARGES. We, like many of our peers
in the communications industry, continue to be affected by the slowdown in
telecommunications equipment spending. Our revenues decreased from $43.2 million
in the fiscal quarter ended December 31, 2000 to $36.0 million in the fiscal
quarter ended March 31, 2001 to $20.3 million in the fiscal quarter ended June
30, 2001. Due to the continued weakness in the general economy, and the telecom
sector in particular, year-over-year revenue growth is expected to be negative
compared to the fiscal year ended June 30, 2001, putting downward pressure on
margins and profits. Due to this decline in current business conditions, we
restructured our business and realigned resources to focus on monitoring costs,
preserving cash, accelerating our planned move of manufacturing operations to
China and focusing on core opportunities. This restructuring plan includes a
charge of $5.7 million for worldwide workforce reduction and consolidation of
excess facilities.

     Additionally, based upon an impairment analysis which indicated that the
carrying amount of the goodwill and purchased intangible assets related to the
Telelight acquisition will not be fully recovered through estimated
non-discounted future operating cash flows, a charge of $12.4 million was
recorded related to the impairment of goodwill and purchased intangible assets.
See Note 3 to the Consolidated Financial Statements.

     IN-PROCESS RESEARCH AND DEVELOPMENT ("IP R&D"). In connection with the
acquisition of Aurora in June 2001, we recorded a $793,000 charge for IP R&D in
the fourth quarter of fiscal 2001 for projects that had not reached
technological feasibility and no alternative future use.

     The IP R&D consisted of an AO variable optical attenuator which will
regulate optical signals; a fiber optic bypass switch which will act as a
temporary switch and can be used in conjunction with existing mechanical
switches; a PIAO tunable filter which will be the first electronically
chargeable filter; a portable optical spectrum analyzer which will view various
wavelengths and indicate events on a real-time basis; a dynamic fiber amplifier
equalizer which will balance the signals inside the fiber before transmission to
the amplifier; and a reconfigurable optical add-drop multiplexer which will
allow the user to electronically change ports, wavelengths and fiber on demand.
As of the date of acquisition, these products had not yet reached technological
feasibility and had no alternative future use.

                                       36

<PAGE>

     The value of the IP R&D products was determined by estimating the net cash
flows from the sale of the products resulting from the completion of this
project, reduced by the portion of the net cash flows from the revenue
attributable to core technology. The resulting cash flows were then discounted
back to their present value using a discount rate of 40%. At the time of the
acquisition, the six products ranged from approximately 14.3% to 33.3% complete.
The fair value assigned to the in-process research and development totaled
$793,000 and was charged to expense at the time of the acquisition.

     AMORTIZATION OF GOODWILL. Amortization of goodwill of $3.6 million and $1.0
million for the fiscal years ended June 30, 2001 and June 30, 2000,
respectively, represents charges incurred as a result of our acquisition of
Telelight in April 2000.

     INTEREST AND OTHER INCOME, NET. Interest and other income, net increased
$8.5 million to $9.2 million for the fiscal year ended June 30, 2001 from
$689,000 million for the fiscal year ended June 30, 2000. The increase in
interest income were due to larger cash balances from the proceeds of our
initial public offering in October 2000, preferred stock financing in February
2000 and convertible note payable to Cisco Systems in August 2000 offset by the
loss on disposal of assets and interest expense on the convertible note payable
to Cisco Systems. Interest and other income, net increased $746,000 to $689,000
for the fiscal year ended June 30, 2000 from $(57,000) for the fiscal year ended
June 30, 1999. The increases in interest income were due to larger cash balances
from the proceeds of the preferred stock financing in February 2000 offset by
the loss on disposal of assets.

     PROVISION FOR INCOME TAXES. At June 30, 2001 we had approximately $4.4
million of Federal and $3.5 million of State net operating loss carryforwards.
Because of certain changes in ownership of the Company in 1999 and 1998, there
is an annual limitation of approximately $600,000 on the use of the net
operating loss carryforwards pursuant to section 382 of the Internal Revenue
Code.

     We have recorded a net deferred tax asset of $18.0 million as of June 30,
2001, which is net of a valuation allowance that reduces the gross deferred tax
asset to zero, an amount that management believes will more likely than not be
realized. In assessing the realizability of deferred tax assets, management
recorded a valuation allowance to the extent the Company does not have a
carryback right. Based on the Company's history of losses and uncertainty of
generating future taxable income, the realizable portion of the deferred tax
assets is equal only to the amount of income tax expense expected to be paid
during fiscal 2001, which is zero, and represents the amount that management
believes will more likely than not be realizable based on current available
objective evidence.


                                       37

<PAGE>

Quarterly Results of Operations

     The following table presents our operating results for the last eight
quarters. The information for each of these quarters is unaudited but has been
prepared on the same basis as the audited consolidated financial statements. In
the opinion of management, all necessary adjustments, consisting only of normal
recurring adjustments, have been included to present fairly the unaudited
quarterly results when read in conjunction with the audited consolidated
financial statements and the related notes. These operating results are not
necessarily indicative of the results of any future period:

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                     -----------------------------------------
                                                     June 30,   Mar. 31,   Dec. 31,   Sept. 30,
                                                       2001       2001       2000       2000
<S>                                                  <C>        <C>        <C>        <C>
      Revenues
                                                     $ 20,255   $ 36,042   $ 43,241   $ 32,277
      Cost of revenues:
         Cost of revenues                              19,854     45,465     30,929     24,587
         Non-cash compensation expense                    703      1,173      1,536      1,353
                                                     --------   --------   --------   --------
           Total cost of revenues                      20,557     46,638     32,465     25,940
                                                     --------   --------   --------   --------

      Gross profit                                       (302)   (10,596)    10,776      6,337
                                                     --------   --------   --------   --------

      Operating expenses:
         Research and development:
           Research and development                     4,183      4,888      5,016      3,619
           Non-cash compensation expense                  606      1,030      1,349      1,405
                                                     --------   --------   --------   --------
              Total research and development            4,789      5,918      6,365      5,024
                                                     --------   --------   --------   --------

         Sales and marketing:
           Sales and marketing                          2,611      2,955     11,989      2,368
           Non-cash compensation expense                  207        893        660        603
                                                     --------   --------   --------   --------
              Total sales and marketing                 2,818      3,848     12,649      2,971
                                                     --------   --------   --------   --------

         General and administrative:
           General and administrative                   2,584      4,777      3,682      2,693
           Non-cash compensation expense                1,491      1,926      6,333      5,370
                                                     --------   --------   --------   --------
              Total general and administrative          4,075      6,703     10,015      8,063
                                                     --------   --------   --------   --------

         Impairment of intangible assets               12,442          -          -          -
         Restructuring charges                          5,735          -          -          -
         In-process research and development              793          -          -          -
         Amortization of goodwill                         656        984        983        983
                                                     --------   --------   --------   --------
                Total operating expenses               31,308     17,453     30,012     17,041
                                                     --------   --------   --------   --------

      Loss from operations                            (31,610)   (28,049)   (19,236)   (10,704)
      Interest and other income (expense), net          2,257      2,820      4,138         12
                                                     --------   --------   --------   --------

      Loss before income taxes                        (29,353)   (25,229)   (15,098)   (10,692)
      Income tax benefit                                    -          -          -          -
                                                     --------   --------   --------   --------

      Net loss                                       $(29,353)  $(25,229)  $(15,098)  $(10,692)
                                                     ========   ========   ========   ========
</TABLE>

                                       38

<PAGE>

<TABLE>
<CAPTION>
                                                    June 30,   Mar. 31,   Dec. 31,   Sept. 30,
                                                      2000       2000       1999       1999
                                                    ---------  --------   --------   --------
<S>                                                 <C>        <C>        <C>        <C>
     Revenues                                       $ 18,387   $  9,412   $  6,817   $  4,432
     Cost of revenues:
        Cost of revenues                              15,924      8,824      5,322      3,274
        Non-cash compensation expense                    642      1,124        347        156
                                                    --------   --------   --------   --------
          Total cost of revenues                      16,566      9,948      5,669      3,430
                                                    --------   --------   --------   --------

     Gross profit                                      1,821       (536)     1,148      1,002
                                                    --------   --------   --------   --------

     Operating expenses:
        Research and development:
          Research and development                     2,324        855        289        218
          Non-cash compensation expense                  952        364        375        110
                                                    --------   --------   --------   --------
             Total research and development            3,276      1,219        664        328
                                                    --------   --------   --------   --------

        Sales and marketing:
          Sales and marketing                          1,303        600        481        311
          Non-cash compensation expense                  554        557        111         90
                                                    --------   --------   --------   --------
             Total sales and marketing                 1,857      1,157        592        401
                                                    --------   --------   --------   --------

        General and administrative:
          General and administrative                   1,914        928        612        719
          Non-cash compensation expense                5,350      1,004        831        173
                                                    --------   --------   --------   --------
             Total general and administrative          7,264      1,932      1,443        892
                                                    --------   --------   --------   --------

        Impairment of intangible assets                    -          -          -          -
        Restructuring charges                              -          -          -          -
        In-process research and development            7,020          -          -          -
        Amortization of goodwill                         981          -          -          -
                                                    --------   --------   --------   --------
               Total operating expenses               20,398      4,308      2,699      1,621
                                                    --------   --------   --------   --------

     Loss from operations                            (18,577)    (4,844)    (1,551)      (619)
     Interest and other income (expense), net            369        262         23         35
                                                    --------   --------   --------   --------

     Loss before income taxes                        (18,208)    (4,582)    (1,528)      (584)
     Income tax benefit                                    -          -          -          -
                                                    --------   --------   --------   --------

     Net loss                                       $(18,208)  $ (4,582)  $ (1,528)  $   (584)
                                                    --------   --------   --------   --------
</TABLE>

     Due to the factors noted above and other factors noted under "Risk
Factors," we believe that quarter-to-quarter comparisons of our operating
results will not be meaningful. You should not rely on our results for any one
quarter as an indication of our future performance.

Liquidity and Capital Resources

     Since our inception, we have financed our operations primarily through
issuances of equity, which totaled approximately $319.4 million in aggregate net
proceeds and proceeds from exercise of stock options, employee stock purchase
plan and warrants which totaled approximately $5.9 million through June 30,
2001. In August 2000, we received $50.0 million in connection with the issuance
to Cisco Systems of a convertible promissory note, which automatically converted
into 3,298,773 shares of common stock upon the closing of our initial public
offering in October 2000. Our initial public offering resulted in net proceeds

                                       39

<PAGE>

of approximately $263.7 million, before offering expenses of approximately $2.7
million. As of June 30, 2001, we had cash and cash equivalents of $246.5 million
and working capital of $249.0 million.

     Our operating activities used cash of $18.0 million in fiscal 2001, $7.1
million in fiscal 2000, and $537,000 in fiscal 1999. Cash used in operating
activities was primarily attributable to net losses incurred during each of the
fiscal years ended June 30, 2001, 2000 and 1999 of $80.4 million, $24.9 million
and $3.5 million, respectively, as adjusted for non-cash activity totaling $96.5
million, $25.9 million, and $3.9 million, respectively. In fiscal 2001, cash
used in operating activities was also attributable to increases in accounts
receivable, inventories and prepaid expenses of $7.1 million, $41.0 million and
$4.5 million, respectively, partially offset by increases in accounts payable
and accrued liabilities of $6.4 million and $12.4 million, respectively. In
fiscal 2000, cash used in operating activities was also attributable to
increases in accounts receivable, inventories, prepaid expenses and other assets
of $8.1 million, $13.6 million, $3.1 million and $892,000, respectively,
partially offset by increases in accounts payable and accrued liabilities of
$11.9 million and $5.7 million, respectively. In fiscal 1999, cash used in
operating activities was also attributable to increases in accounts receivable,
inventories and prepaid expenses of $1.2 million, $2.5 million and $480,000,
respectively, partially offset by increases in accounts payable and accrued
liabilities of $2.8 million and $574,000, respectively.

     Our investing activities used cash of $73.2 million in fiscal 2001, $18.0
million in fiscal 2000, and $1.4 million in fiscal 1999. In the fiscal year
ended June 30, 2001, our investing activities reflect the purchase of property
and equipment of $72.2 million, and cash used in connection with our acquisition
of Aurora of $1.0 million. In the fiscal years ended June 30, 2000 and 1999, our
investing activities primarily reflect purchases of property and equipment.
During the remaining 6 months of calendar 2001, we expect to use approximately
$8.0 million for our manufacturing facilities worldwide. We expect to use cash
generated from our initial public offering for these expenditures.

     Our financing activities provided cash of $311.0 million in fiscal 2001,
$46.9 million in fiscal 2000, and $5.7 million in fiscal 1999. In fiscal 2001,
the increase in cash was primarily from net proceeds from our initial public
offering of $263.7 million, proceeds from the convertible promissory note
payable to Cisco Systems of $50.0 million, proceeds from the issuance of common
stock of $1.3 million and borrowings under our line of credit of $1.0 million
partially offset by expenses from our initial public offering of $2.7 million
and our repayment of lease obligations of $2.4 million. In fiscal 2000 and
fiscal 1999, the increase in cash was primarily from the net proceeds from
issuance of our convertible preferred stock. On September 26, 2001, the Board of
Directors authorized a program to repurchase up to an aggregate of $21.2 million
of the Company's Common Stock. Such repurchases may be made from time to time on
the open market at prevailing market prices or in negotiated transactions off
the market.

     Our principal source of liquidity at June 30, 2001 consisted of $246.5
million in cash and cash equivalents. We believe that our current cash and cash
equivalent balances and any cash generated from operations, will be sufficient
to meet our operating and capital requirements for at least the next 12 months.
Our capital expenditures totaled $72.2 million in fiscal 2001. We may use cash
and cash equivalents from time to time to fund our acquisition of businesses and
technologies. We may be required to raise funds through public or private
financings, strategic relationships or other arrangements. We cannot assure you
that such funding, if needed, will be available on terms attractive to us, or at
all. Furthermore, any additional equity financing may be dilutive to
stockholders, and debt financing, if available, may involve restrictive
covenants. Our failure to raise capital when needed could harm our ability to
pursue our business strategy and achieve and maintain profitability.

Recent Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
No. 133 establishes new standards of accounting and reporting for derivative
instruments and hedging activities. SFAS No. 133 requires that all derivatives
be recognized at fair value in the statement of financial position, and that the
corresponding gains or losses be reported either in the statement of operations
or as a component of comprehensive income (loss), depending on the type of
hedging relationship that exists. In July 1999, the FASB issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities--Deferral of the
Effective Date of FASB Statement No. 133." SFAS No. 137 deferred the effective
date of SFAS No. 133 until fiscal years

                                       40

<PAGE>

beginning after June 15, 2000. The adoption of SFAS No. 133 on July 1, 2000 did
not have a material impact on our financial position, results of operations or
cash flows.

     In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") 101,
"Revenue Recognition in Financial Statements," which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements
filed with the SEC. SAB 101 outlines the basic criteria that must be met to
recognize revenue and provides guidance for disclosures related to revenue
recognition policies. The adoption of SAB 101 on April 1, 2001 did not have a
material impact on our financial position, results of operations or cash flows.

     In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation, an
Interpretation of Opinion No. 25" for (a) the definition of employee for
purposes of applying Opinion No. 25, (b) the criteria for determining whether a
plan qualifies as a noncompensatory plan, (c) the accounting consequences of
various modifications to the terms of a previously fixed stock option or award,
and (d) the accounting for an exchange of stock compensation awards in a
business combination. FIN 44 became effective July 1, 2000. The adoption of FIN
44 did not have a material impact on our financial position, results of
operations or cash flows.

     In August 2000, the Emerging Issues Task Force ("EITF") released issue No.
00-10, "Accounting for Shipping and Handling Fees and Costs." EITF 00-10
addresses the income statement classification of amounts billed to a customer
for shipping and handling costs as well as the classification of amounts
incurred for shipping and handling costs. The EITF concluded that amounts billed
to customers in sales transactions related to shipping and handling should be
classified as revenue, and any costs incurred should be classified as cost of
goods sold or, in general, as operating expense. If shipping and handling costs
incurred are not included in cost of goods sold, the amount of such costs and
the line item on the statement of operations which includes these costs should
be disclosed. The guidance outlined in EITF 00-10 did not have a material impact
on our financial position, results of operations or cash flows.

     In July 2001, the FASB issued SFAS No. 141,"Business Combinations." SFAS
No. 141 requires the purchase method of accounting for business combinations
initiated after June 30, 2001and eliminates the pooling-of-interests method.

     In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which is effective for fiscal years beginning after March 15, 2001.
SFAS No. 142 requires, among other things, the discontinuance of goodwill
amortization. In addition, the standard includes provisions upon adoption for
the reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the testing for impairment of existing goodwill and other intangibles. We do not
believe that the adoption of SFAS No. 142 will have a material impact on our
financial position, results of operations or cash flows.

     In various areas, including revenue recognition, accounting standards and
practices continue to evolve. Additionally, the SEC and the FASB's Emerging
Issues Task Force continue to address revenue related accounting issues. The
management of the Company believes it is in compliance with all of the rules and
related guidance as they currently exist. However, any changes to generally
accepted accounting principles in these areas could impact the Company's future
accounting for its operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     We are exposed to market risk related to fluctuations in interest rates and
in foreign currency exchange rates:

Interest Rate Exposure

     The primary objective of our investment activities is to preserve principal
while maximizing the income we receive from our investments without
significantly increasing risk. Some of the securities that

                                       41

<PAGE>

we may invest in may be subject to market risk. To minimize this risk, we
maintain our portfolio of cash equivalents and short-term investments in a
variety of securities, including commercial paper, money market funds,
government and non-government debt securities and certificates of deposit. As of
June 30, 2001, all of our investments were in money market funds, certificates
of deposits or high quality commercial paper.

Foreign Currency Exchange Rate Exposure

     We operate primarily in the United States, and all sales to date have been
made in U.S. dollars. Accordingly, we currently have no material exposure to
foreign currency rate fluctuations.

     We expect our international revenues and expenses to be denominated
predominately in U.S. dollars. Certain expenses from our China operations are
incurred in the Chinese Renminbi. Our China operations will expand in the future
and account for a larger portion of our worldwide manufacturing. We anticipate
that we will experience the risks of fluctuating currencies due to this
expansion and may choose to engage in currency hedging activities to reduce
these risks.

Item 8. Consolidated Financial Statements and Supplementary Data

     The financial statements and related notes thereto required by this item
are listed and set forth herein beginning on page F-1.

Item 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure

     None.

Item 10. Directors and Executive Officers of the Registrant

     Incorporated by reference to the section of the Company's 2001 Proxy
Statement anticipated to be filed with the Securities and Exchange Commission
within 120 days of June 30, 2001 entitled "Proposal 1--Election of Directors"
and the section entitled "Section 16(a) Beneficial Ownership Reporting
Compliance." Information regarding the identification of Oplink's executive
officers and directors may be found in the section entitled "Executive Officers
and Directors" in Part I of the Form 10-K.

Item 11. Executive Compensation

     Incorporated by reference to the section of the Company's 2001 Proxy
Statement anticipated to be filed with the Securities and Exchange Commission
within 120 days of June 30, 2001 entitled "Executive Compensation."

Item 12. Security Ownership of Certain Beneficial Owners and Management

     Incorporated by reference to the section of the Company's 2001 Proxy
Statement anticipated to be filed with the Securities and Exchange Commission
within 120 days of June 30, 2001 entitled "Security Ownership of Certain
Beneficial Owners and Management."

Item 13. Certain Relationships and Related Transactions

     Incorporated by reference to the section of the Company's 2001 Proxy
Statement anticipated to be filed with the Securities and Exchange Commission
within 120 days of June 30, 2001 entitled "Certain Transactions."

                                       42

<PAGE>

                                     Part IV

Item 14. Exhibits, Financial Statement, Schedules and Reports on Form 8-K.

(a) 1.   Financial Statements

         See Item 8 of this Annual Report.

(a) 2.   Financial Statement Schedules

         See Item 8 and Schedule II of this Annual Report.

(a) 3.   Exhibits

Exhibit No.       Description
-----------       -----------

3.1(1)            Amended and Restated Certificate of Incorporation of Oplink.
3.2(1)            Bylaws of Oplink.
4.1(1)            Reference is made to Exhibits 3.1 and 3.2.
4.2(1)            Third Amended and Restated Rights Agreement, dated as of
                  February 7, 2000 by and among Oplink and the investors listed
                  on Exhibit A attached thereto.
4.3(2)            Registration statement for 1995 Stock Plan, 1998 Stock Plan,
                  2000 Equity Incentive Plan and 2000 Employee Stock Purchase
                  Plan.
10.1+(1)          Development Contract Agreements, by and among Oplink and Barr
                  Associates, Inc. dated as of January 1997, July 9, 1998, March
                  17, 1999, April 14, 1999 and August 1999.
10.2+(1)          General Purchase Agreement dated June 18, 2000 by and between
                  Oplink and Cierra Photonics Inc.
10.3+(1)          Manufacturers Representative/Distributor Contract dated
                  January 26, 1998, by and between Oplink and DBX Communications
                  Inc.
10.4+(1)          Agreement dated July 2, 1999 by and between Oplink and Corning
                  Incorporated.
10.5(1)           Building Floor Lease dated March 2000 by and between Fuzhou
                  Oplink Communications, Inc. and Fuzhou Kang Shun Guang
                  Telecommunications Co., Ltd.
10.6(1)           Building Use Contract dated March 28, 2000 by and between
                  Zhuhai Oplink Communications, Inc. and Guangdong Zhuhai High
                  Technology Results Industrialization Demonstration Base
                  Company, Ltd.
10.7(1)           Supplementary Contract I dated March 28, 2000 by and between
                  Zhuhai Oplink Communications, Inc. and Guangdong Zhuhai High
                  Technology Results Industrialization Demonstration Base
                  Company, Ltd.
10.8(1)           Supplementary Contract II dated March 28, 2000 by and between
                  Zhuhai Oplink Communications, Inc. and Guangdong Zhuhai High
                  Technology Results Industrialization Demonstration Base
                  Company, Ltd.
10.9(1)           State-owned Land Use Rights Assignment Contract dated May 16,
                  2000 by and between Oplink Communications Inc. and Zhuhai
                  Bonded Area Management Committee.
10.10(1)          Sublease dated March 1, 2000 by and between Oplink and Steag
                  RTP Systems.
10.11(1)          Consent to Sublease Agreement dated March 2000 by and among
                  Oplink, Steag RTP Systems and Carlyle Forhen Trust.
10.12(1)          Lease Agreement dated July 21, 1995 by and between SBC&D Co.,
                  Inc. and AG Associates, Inc., as amended by the First
                  Amendment dated July 21, 1995 and the Second Amendment dated
                  December 3, 1997.
10.13(1)          Representative Agreement dated May 2, 2000, by and among
                  Oplink and Wavetec.
10.14(1)          Sublease Agreement dated February 29, 2000 by and among Wyse
                  Technology Inc. and Oplink and Wyse Technology Investments
                  Inc.
10.15(1)          Amended and Restated Lease Agreement dated March 19, 1993 by
                  and between Wyse Technology Investments, Inc. and Wyse
                  Technology, Inc.

                                       43

<PAGE>

10.16(1)          Amendment No. 1 to Sublease Agreement dated April 14, 2000 and
                  Amendment No. 2 dated September 1, 2000 by and among Oplink,
                  Wyse Technology Inc. and Wyse Technology Investments Inc.
10.17(1)          Employment Letter Agreement by and between Oplink and
                  Frederick R. Fromm dated August 10, 2000.
10.18(1)          Lease dated July 24, 2000 by and between Oplink and San Jose
                  Technology Properties, LLC.
10.19(1)          Stock Option Agreement dated May 10, 2000 by and between
                  Oplink and David Spreng.
10.20(1)          Stock Option Agreement dated May 10, 2000 by and between
                  Oplink and Bruce D. Horn.
10.21(1)          Stock Option Agreements dated May 10, 2000 by and between
                  Oplink and Ian Jenks.
10.22(1)          Oplink's 2000 Equity Incentive Plan.
10.23(1)          Oplink's 2000 Employee Stock Purchase Plan.
10.24(1)          Oplink's 1995 Stock Plan.
10.25(1)          Oplink's 1998 Stock Plan.
10.26(1)          Note Purchase Agreement by and between Oplink and Cisco
                  Systems, Inc. and Convertible Promissory Note each dated
                  August 28, 2000.
10.27(1)          Oplink Form of Indemnity Agreement.
10.28(1)          Employment Letter Agreement by and between Oplink and Daryl J.
                  Eigen dated August 15, 2000.
10.29(1)          Employment Letter Agreement by and between Oplink and Jeffrey
                  D. Friedman dated August 15, 2000.
10.30(1)          Lease Agreements dated August 1, 2000 by and between Beijing
                  Oplink Communications, Inc. and Zhong He Realtor Development
                  Co.
10.31(1)          Lease Agreements dated August 18, 2000 by and between the
                  preparatory office of Shanghai Oplink Communications, Inc. and
                  Shanghai Jia Yi Industrial Development Co., Ltd.
10.32(1)          Change of Control Agreement by and between Oplink and Joseph
                  Y. Liu dated September 17, 2000.
10.33(1)          Change of Control Agreement by and between Oplink and Bruce D.
                  Horn dated September 17, 2000.
10.34(1)          Employment Letter Agreement by and between Oplink and Robert
                  T. Ku dated October 3, 2000.
10.35             Change of Control Agreement by and between Oplink and
                  Frederick R. Fromm dated April 5, 2001.
10.36             Change of Control Agreement by and between Oplink and Bruce D.
                  Horn dated April 5, 2001.
10.37             Change of Control Agreement by and between Oplink and Jeffrey
                  D. Friedman dated April 5, 2001.
10.38             Change of Control Agreement by and between Oplink and Joseph
                  Y. Liu dated June 1, 2001.
10.39             Form of Employee Letter Agreement by and between Oplink and
                  Frederick R. Fromm.
10.40             Promissory Note by and between Oplink and Joseph Y. Liu dated
                  April 3, 2001.
10.41             Form of Amendment of Stock Option Agreements by and between
                  Oplink and Joseph Y. Liu.
10.42             Form of Amendment of Stock Option Agreements by and between
                  Oplink and Ian Jenks.
21.1              Subsidiaries of Oplink.
23.1              Consent of PricewaterhouseCoopers LLP.
24.1              Power of Attorney is contained on the Signatures page.

          (+) Confidential treatment granted with respect to portions of these
              exhibits

          (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) Incorporated by reference to the Registrant's Registration
              Statement on Form S-8 No. 333-47928 as filed on October 13, 2000.

(b)       Reports on Form 8-K.

          On August 3, 2001, the Company filed a report on Form 8-K regarding
          its revision to the insider trading policy to allow directors,
          officers and other employees covered under the policy to establish,
          under limited circumstances contemplated by Rule 10b5-1 under the
          Exchange Act, written programs that permit automatic trading of the
          Company's stock or trading of the Company's stock by an independent
          person who is not aware of material nonpublic information at the time
          of the trade. Members of the Company's management team have recently
          adopted such programs and may do so in the future from time to time.

                                       44

<PAGE>

                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 28th day of
September, 2001.

OPLINK COMMUNICATIONS, INC.

                        By: /s/ BRUCE D. HORN
                            -----------------------------------------
                            Bruce D. Horn
                            Chief Financial Officer

     KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Joseph Y. Liu and Bruce D. Horn, and each of
them, his true and lawful attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
report on Form 10-K, and to file the same, with Exhibits thereto and other
documents in connection there with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or
substitute or substitutes, may do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE                            TITLE                                 DATE
---------                            -----                                 ----
<S>                                  <C>                                   <C>
/s/ Joseph Y. Liu                    Chief Executive Officer               September 28, 2001
---------------------------
Joseph Y. Liu                        (Principal Executive Officer)

/s/ Bruce D. Horn                    Chief Financial Officer               September 28, 2001
------------------------------
Bruce D. Horn                        (Principal Financial and
                                     Accounting  Officer)

/s/ Ian Jenks                        Chairman of the Board                 September 28, 2001
------------------------------
Ian Jenks

/s/ Terence P. Brown                 Director                              September 28, 2001
------------------------
Terence P. Brown

/s/ Chieh Chang                      Director                              September 28, 2001
--------------------------
Chieh Chang

/s/ Herbert Chang                    Director                              September 28, 2001
---------------------------
Herbert Chang

/s/ Leonard J. LeBlanc               Director                              September 28, 2001
------------------------
Leonard J. LeBlanc

/s/ David Spreng                     Director                              September 28, 2001
---------------------------
David Spreng
</TABLE>

                                       45

<PAGE>

Item 8.  Consolidated Financial Statements and Supplementary Data

Oplink Communications, Inc.
Index to Financial Statements

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                          <C>
Report of Independent Accountants...............................................................                F-2

Consolidated Balance Sheet .....................................................................                F-3

Consolidated Statement of Operations ...........................................................                F-4

Consolidated Statement of Convertible Preferred Stock and Stockholders' (Deficit) Equity .......                F-5

Consolidated Statement of Cash Flows ...........................................................                F-6

Notes to Consolidated Financial Statements .....................................................                F-8
</TABLE>


                                       F-1

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
  Oplink Communications, Inc.


         In our opinion, the accompanying consolidated balance sheets and the
     related consolidated statements of operations, stockholders' (deficit)
     equity and of cash flows present fairly, in all material respects, the
     financial position of Oplink Communications, Inc. and its subsidiaries (the
     "Company") at June 30, 2001 and 2000, and the results of their operations
     and their cash flows for each of the three years in the period ended June
     30, 2001, in conformity with accounting principles generally accepted in
     the United States of America. These financial statements are the
     responsibility of the Company's management; our responsibility is to
     express an opinion on these financial statements based on our audits. We
     conducted our audits of these statements in accordance with auditing
     standards generally accepted in the United States of America, which require
     that we plan and perform the audit to obtain reasonable assurance about
     whether the financial statements are free of material misstatement. An
     audit includes examining, on a test basis, evidence supporting the amounts
     and disclosures in the financial statements, assessing the accounting
     principles used and significant estimates made by management, and
     evaluating the overall financial statement presentation. We believe that
     our audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP


San Jose, California
July 31, 2001, except for Note 13,
as to which the date is September 26, 2001


                                       F-2

<PAGE>

                           OPLINK COMMUNICATIONS, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                                       June 30,
                                                                                               ------------------------
                                                                                                  2001          2000
                                                                                               ----------      --------
<S>                                                                                          <C>              <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                                    $ 246,473      $ 26,665
    Accounts receivable, net                                                                       17,178        10,100
    Inventories                                                                                    21,739        11,308
    Prepaid expenses                                                                                8,501         3,974
    Deferred tax assets                                                                                 -         1,080
                                                                                                 --------      --------
        Total current assets                                                                      293,891        53,127

Property and equipment, net                                                                        92,086        21,270
Intangible assets                                                                                     667        20,600
Other assets                                                                                        1,258           935
                                                                                                 --------      --------

        Total assets                                                                             $387,902      $ 95,932
                                                                                                 ========      =========

LIABILITIES, CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                                                             $ 21,596      $ 15,188
    Accrued liabilities                                                                            18,654         6,767
    Current portion of capital lease obligations                                                    3,534           419
    Borrowings under the line of credit                                                             1,148           135
                                                                                                 --------      --------
        Total current liabilities                                                                  44,932        22,509

Capital lease obligations, non current                                                              4,988         1,267
Deferred tax liability                                                                                  -         2,958
                                                                                                 --------      --------
                                                                                                   49,920        26,734
                                                                                                 --------      --------
Convertible Preferred Stock, $0.001 par value; 20,000,000 and
    110,183,344 shares authorized; 0 and 110,103,344 shares issued and
    outstanding Liquidation value $0 and $58,370                                                        -        58,373
                                                                                                 --------      --------

Commitments and contingencies (Note 9)

Stockholders' equity:
    Common Stock, $0.001 par value, 400,000,000 shares
        authorized; 161,198,112 and 24,457,878 shares issued and outstanding                          161            24
    Additional paid-in capital                                                                    472,102        61,253
    Notes receivable from stockholders                                                             (3,889)            -
    Deferred stock compensation                                                                   (17,554)      (17,986)
    Accumulated deficit                                                                          (112,838)      (32,466)
                                                                                                 --------      --------
        Total stockholders' equity                                                                337,982        10,825
                                                                                                 --------      --------

             Total liabilities, convertible preferred stock
                  and stockholders' equity                                                       $387,902      $ 95,932
                                                                                                 ========      ========
</TABLE>




  The accompanying notes are an integral part of these consolidated financial
statements.


                                       F-3

<PAGE>

                           OPLINK COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                          Years Ended June 30,
                                                           --------------------------------------------------
                                                              2001                 2000                1999
                                                           ----------           ---------           ---------
<S>                                                        <C>                 <C>                 <C>
Revenues                                                    $ 131,815           $  39,048           $   9,094
Cost of revenues:
  Cost of revenues                                            120,835              33,344               7,225
  Non-cash compensation expense                                 4,765               2,269                 705
                                                            ---------           ---------           ---------
    Total cost of revenues                                    125,600              35,613               7,930
                                                            ---------           ---------           ---------

Gross profit                                                    6,215               3,435               1,164
                                                            ---------           ---------           ---------

Operating expenses:
  Research and development:
    Research and development                                   17,706               3,686                 626
    Non-cash compensation expense                               4,390               1,801                 646
                                                            ---------           ---------           ---------
      Total research and development                           22,096               5,487               1,272
                                                            ---------           ---------           ---------

  Sales and marketing:
    Sales and marketing                                        19,923               2,695                 802
    Non-cash compensation expense                               2,363               1,312                 526
                                                            ---------           ---------           ---------
      Total sales and marketing                                22,286               4,007               1,328
                                                            ---------           ---------           ---------

  General and administrative:
    General and administrative                                 13,736               4,173                 826
    Non-cash compensation expense                              15,120               7,358               1,155
                                                            ---------           ---------           ---------
      Total general and administrative                         28,856              11,531               1,981
                                                            ---------           ---------           ---------

  Restructuring costs and other special charges                18,177                   -                   -
  In-process research and development                             793               7,020                   -
  Amortization of goodwill                                      3,606                 981                   -
                                                            ---------           ---------           ---------
        Total operating expenses                               95,814              29,026               4,581
                                                            ---------           ---------           ---------

Loss from operations                                          (89,599)            (25,591)             (3,417)
Interest and other income (expense), net                        9,227                 689                 (57)
                                                            ---------           ---------           ---------

Net loss                                                    $ (80,372)          $ (24,902)          $  (3,474)
                                                            =========           =========           =========

Basic and diluted net loss per share                        $   (0.65)          $   (3.18)          $   (2.37)
                                                            =========           =========           =========

Basic and diluted weighted average shares outstanding         124,362               7,840               1,463
                                                            =========           =========           =========
</TABLE>


  The accompanying notes are an integral part of these consolidated financial
statements.


                                       F-4

<PAGE>

                           OPLINK COMMUNICATIONS, INC.
    CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS'
                                (DEFICIT) EQUITY
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                                 Notes
                                 Convertible                           Additional Deferred    Receivable                  Total
                               Preferred Stock         Common Stock      Paid in   Stock         from      Accumulated Stockholders'
                             ---------------------   -----------------
                               Shares      Amount     Shares    Amount  Capital  Compensation Stockholders    Deficit      Deficit
                             ---------    --------   --------   ------ --------- ------------ ------------ ----------- -------------
<S>                          <C>          <C>        <C>        <C>    <C>       <C>          <C>          <C>         <C>
Balance at June 30, 1998       66,770,016 $  6,373    1,120,000 $  1   $       -   $      -    $     -     $  (4,090)  $ (4,089)

Exercise of stock options               -        -    1,160,000    1           5          -          -             -          6
Issuance of Series D
  Preferred Stock at
  $0.375 per share             15,226,632    5,710            -    -           -          -          -             -          -
Deferred stock compensation             -        -            -    -       6,537     (6,537)         -             -          -
Amortization of deferred
  compensation                          -        -            -    -           -      3,032          -             -      3,032
Net loss                                -        -            -    -           -          -          -        (3,474)    (3,474)
                             ------------ --------  ----------- ----   ---------   --------   --------     ---------   ---------

Balance at June 30, 1999       81,996,648   12,083    2,280,000    2       6,542     (3,505)         -        (7,564)    (4,525)

Exercise of stock options               -        -    8,737,878    9         647          -          -             -        656
Issuance of Series D
  Preferred Stock at $0.375
  per share                     6,106,696    2,290            -    -           -          -          -             -          -
Issuance of Series E
  Preferred Stock at $2.00
  per share, net               22,000,000   44,000            -    -         (24)         -          -             -        (24)
Deferred stock compensation             -        -            -    -      27,221    (27,221)         -             -          -
Amortization of deferred
  compensation                          -        -            -    -           -     12,740          -             -     12,740
Issuance of common stock in
  connection with
  acquisition                           -        -   13,440,000   13      26,867          -          -             -     26,880
Net loss                                -        -            -    -           -          -          -       (24,902)   (24,902)
                             ------------ --------  ----------- ----   ---------   --------   --------     ---------   ---------

Balance at June 30, 2000      110,103,344   58,373   24,457,878   24      61,253    (17,986)         -       (32,466)    10,825


Exercise of stock options               -        -    4,717,579    5       1,019          -          -             -      1,024
Issuance of common stock
  upon the initial public
  offering, net of
  issuance costs                        -        -   15,755,000   16     260,981          -          -             -    260,997
Issuance of common stock
  bonus                                 -        -       20,000    -          35          -          -             -         35
Issuance of common stock
  from ESPP                             -        -      130,757    -         500          -          -             -        500
Conversion of convertible
  preferred stock            (110,103,344) (58,373) 110,103,344  110      58,263          -          -             -     58,373
Conversion of convertible
  note payable and related
  interest to Cisco Systems             -        -    3,298,773    3      59,292          -          -             -     59,295
Note receivable from
  stockholder to exercise
  stock options and related
  interest                              -        -    2,216,666    2       3,656          -     (3,889)            -       (231)
Exercise of common stock
  warrants                              -        -      348,904    1          59          -          -             -         60
Repurchase of common stock              -        -      (10,789)  (1)        (59)         -          -             -        (60)
Stock compensation related
  to grant of stock
  options to non-employees              -        -            -    -         350          -          -             -        350
Deferred stock compensation             -        -            -    -      28,009    (28,009)         -             -          -
Amortization of deferred
  compensation                          -        -            -    -      (1,803)    28,441          -             -     26,638
Issuance of common stock
  in connection with
  acquisition                           -        -      150,000    1         447          -          -             -        448
Donation of shares of
  common stock                          -        -       10,000    -         100          -          -             -        100
Net loss                                -        -            -    -           -          -          -       (80,372)   (80,372)
                             ------------ --------  ----------- ----   ---------   --------   --------     ---------   ---------

Balance at June 30, 2001                - $      -  161,198,112 $161   $ 472,102   $(17,554)  $ (3,889)    $(112,838)  $337,982
                             ============ ========  =========== ====   =========   ========   ========     =========   ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       F-5

<PAGE>

                           OPLINK COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                       Years Ended June 30,
                                                                            --------------------------------------------
                                                                                2001           2000            1999
                                                                            -----------  -------------   ---------------
<S>                                                                         <C>          <C>             <C>
Cash flows from operating activities:
   Net loss                                                                 $  (80,372)    $  (24,902)     $   (3,474)
   Adjustments to reconcile net loss to net cash
      used in operating activities:
        Depreciation and amortization of property and equipment                  9,806          1,231             267
        Amortization of goodwill and intangible assets                           5,035          1,375               -
        Amortization of deferred stock compensation                             26,638         12,740           3,032
        Provision for excess and obsolete inventory                             30,565          4,659             555
        Impairment of intangible assets                                         12,442              -               -
        Acquired in-process research and development                               793          7,020               -
        Change in deferred tax assets                                            1,080         (1,080)              -
        Sales and marketing expense related to the convertible
          note payable to Cisco Systems                                          8,824              -               -
        Non-cash interest expense related to the convertible
          note payable to Cisco Systems                                            471              -               -
        Loss on disposal of property and equipment                                 813              -               -
        Other                                                                       29              -               -
        Change in assets and liabilities:
          Accounts receivable                                                   (7,078)        (8,087)         (1,207)
          Inventories                                                          (40,996)       (13,591)         (2,545)
          Prepaid expenses                                                      (4,527)        (3,118)           (480)
          Other assets                                                            (323)          (892)            (61)
          Accounts payable                                                       6,408         11,890           2,802
          Accrued liabilities                                                   12,438          5,679             574
                                                                            ----------   ------------   -------------
            Net cash used in operating activities                              (17,954)        (7,076)           (537)
                                                                            ----------   ------------   -------------
Cash flows from investing activities:
   Purchase of property and equipment                                          (72,220)       (18,388)         (1,355)
   Acquisition of Aurora and Telelight, net of cash acquired                    (1,012)           436               -
                                                                            ----------   ------------   -------------
            Net cash used in investing activities                              (73,232)       (17,952)         (1,355)
                                                                            ----------   ------------   -------------
Cash flows from financing activities:
   Proceeds from issuance of convertible preferred stock                             -         46,266           5,710
   Proceeds from issuance of common stock upon the
      initial public offering, net of issuance costs                           260,997              -               -
   Proceeds from issuance of common stock upon the
      exercise of options, net of repurchases                                    1,363            657               6
   Proceeds from issuance of convertible note payable                           50,000              -               -
   Proceeds from borrowings under line of credit                                 1,013            135               -
   Repayment of capital lease obligations                                       (2,379)          (122)              -
                                                                            ----------   ------------   -------------
            Net cash provided by financing activities                          310,994         46,936           5,716
                                                                            ----------   ------------   -------------

Net increase in cash and cash equivalents                                      219,808         21,908           3,824
Cash and cash equivalents, beginning of year                                    26,665          4,757             933
                                                                            ----------   ------------   -------------
Cash and cash equivalents, end of year                                      $  246,473     $   26,665      $    4,757
                                                                            ==========   ============   =============
</TABLE>

                            (Continued on next page)

The accompanying notes are an integral part of these consolidated financial
statements.

                                       F-6

<PAGE>

                           OPLINK COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

                         (CONTINUED FROM PREVIOUS PAGE)


<TABLE>
<CAPTION>
                                                                                    Years Ended June 30,
                                                                         ------------------------------------------
                                                                           2001          2000            1999
                                                                         --------   --------------  ---------------
<S>                                                                      <C>        <C>             <C>
Supplemental disclosures of cash flow information:
   Cash paid during the period for interest expense                      $    628      $        22    $          29
                                                                         ========   ==============  ===============
   Cash paid during the period for income taxes                          $  4,990      $         -    $           -
                                                                         ========   ==============  ===============
Supplemental non-cash investing and financing activities:

   Property and equipment acquired under capital lease                   $  9,215      $     1,808    $           -
                                                                         ========   ==============  ===============
   Deferred compensation related to common stock
      option grants to employees                                         $ 28,009      $    27,221    $       6,537
                                                                         ========   ==============  ===============

   Repurchase of common stock                                            $     60      $         -    $           -
                                                                         ========   ==============  ===============
   Common stock bonus                                                    $     35      $         -    $           -
                                                                         ========   ==============  ===============
   Conversion of convertible preferred stock                             $ 58,373      $         -    $           -
                                                                         ========   ==============  ===============
   Conversion of convertible note payable and related
      interest to Cisco Systems                                          $ 50,471      $         -    $           -
                                                                         ========   ==============  ===============
   Issuance of common stock in connection with acquisitions              $    448      $    26,880    $           -
                                                                         ========   ==============  ===============
   Issuance of common stock in connection with notes                     $  3,658      $         -    $           -
                                                                         ========   ==============  ===============
</TABLE>



The accompanying notes are an integral part of these consolidated financial
statements.

                                       F-7

<PAGE>

NOTE 1 - THE COMPANY:

The Company

       Oplink Communications, Inc. (the "Company") designs, manufactures and
supplies fiber optic networking components and integrated optical subsystems
that increase the performance and capacity of optical networks. The Company
provides a broad line of products to communication equipment suppliers to enable
bandwidth creation and management within an optical network. The Company was
incorporated in September 1995 and began shipping its product for sale in 1996.
In April 1999, the Company established manufacturing operations in China. The
Company conducts its business within one business segment and has no
organizational structure dictated by product, service lines, geography or
customer type.

Initial Public Offering

       In October 2000, the Company sold 15,755,000 shares of common stock in an
underwritten initial public offering, including 2,055,000 shares of common stock
issued pursuant to the exercise of the underwriter's over-allotment option,
resulting in net proceeds to the Company of approximately $263.7 million, before
offering expenses of approximately $2.7 million. Simultaneously with the closing
of the public offering, 110,103,344 shares of convertible preferred stock were
converted to shares of common stock on a one-for-one-basis. In addition, the
note payable to Cisco Systems, Inc. was converted into 3,298,773 shares of
common stock at a conversion price of $15.30 per share, or 85% of the public
offering price of $18.00 per share. The discount feature of this convertible
note payable resulted in a charge of $8.8 million, recorded as sales and
marketing expense in the quarter ended December 31, 2000.

Stock split

       On August 18, 2000, the Board of Directors approved and the stockholders
subsequently approved in September 2000, a two-for-one stock split. The
consolidated financial statements and all references to common stock and
preferred stock contained in these consolidated financial statements and notes
thereto give retroactive effect to the stock split.

Reincorporation

       On July 12, 2000, the Company's Board of Directors authorized the
reincorporation of the Company in the State of Delaware. In September 2000 the
stockholders approved the reincorporation and the Company reincorporated in
Delaware. The Company is authorized to issue 400,000,000 shares of $0.001 par
value common stock and 20,000,000 shares of $0.001 par value convertible
preferred stock. The Board of Directors has the authority to issue the
undesignated convertible preferred stock in one or more series and to fix the
rights, preferences, privileges and restrictions thereof. The par value and
shares of common stock and convertible preferred stock authorized, issued and
outstanding at each balance sheet date presented, and for each period presented
in the consolidated statement of stockholders' deficit have been retroactively
adjusted to reflect the reincorporation.

Fiscal Year

       On January 1, 2001, the Company adopted a fiscal year, which ends on the
Sunday closest to June 30. Interim fiscal quarters will end on the Sunday
closest to each calendar quarter end. For presentation purposes, the Company
will present each fiscal year as if it ended on June 30. Fiscal years 2001, 2000
and 1999 consist of 52, 53 and 52 weeks, respectively.

Reclassification

       Certain items previously reported in prior years' financial statements
have been reclassified to conform with the current year presentation. Such
reclassifications had no effect on previously reported results of operations or
accumulated deficit.

                                       F-8

<PAGE>

Note 2 - Summary of Significant Accounting Policies:

Basis of presentation

       The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries Beijing Oplink Communications, Inc.
("Beijing"), Chengdu Oplink Communications, Inc. ("Chengdu"), Fuzhou Oplink
Communications, Inc. ("Fuzhou"), Shanghai Oplink Communications, Inc.
("Shanghai"), Zhuhai Free Trade Zone ("Zhuhai FTZ") and Zhuhai Oplink
Communications, Inc. ("Zhuhai"). All significant intercompany accounts and
transactions have been eliminated in consolidation.

Use of estimates

       The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Cash and cash equivalents

       The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. The Company's cash
equivalents consist of money market funds, debt, commercial paper and short-term
deposits.

Revenue recognition

       The Company derives its revenue from the sale of fiber optic networking
components. Revenue from product sales is recognized upon shipment of the
product or customer acceptance, which ever is later, provided that persuasive
evidence of an arrangement exists, delivery has occurred and no significant
obligations remain, the fee is fixed or determinable and collectibility is
probable. Sales to distributors do not include the right to return or exchange
products or price protection. Revenue from sales to certain customers for which
the terms of the sale includes an acceptance period is not recognized until
after formal customer acceptance. Provisions for returns and allowances are
recorded at the time revenue is recognized based on the Company's historical
experience.

Foreign currency translations

       The functional currency of the Company's foreign subsidiaries is the
local currency. In consolidation, assets and liabilities are translated at
year-end currency exchange rates and revenue and expense items are translated at
average currency exchange rates prevailing during the period. Gains and losses
from foreign currency translation are accumulated as a separate component of
stockholders' equity. At June 30, 2001, 2000 and 1999, such amounts were not
material. Realized gains and losses resulting from foreign currency transactions
are included in the consolidated statement of operations.

Fair value

       The Company's financial instruments, which include cash and cash
equivalents, accounts receivable, accounts payable, accrued liabilities,
borrowings under lines of credit and capital lease obligations are reported at
cost, which approximates their fair values due to their relatively short
maturity.

                                       F-9

<PAGE>

Concentration of credit risk

       Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash, cash equivalents and accounts
receivable. Substantially all of the Company's cash and cash equivalents are
managed or held by three financial institutions. At times, such deposits may be
in excess of the amount of the insurance provided on such deposits. To date, the
Company has not experienced any losses on such deposits. The Company's accounts
receivable are derived from revenue earned from customers located in the United
States, Europe and Asia. The Company performs ongoing credit evaluations of its
customers' financial condition and generally requires no collateral from its
customers. The Company maintains an allowance for doubtful accounts based upon
the expected collection of its outstanding receivable balance.

       The following table summarizes the revenues from customers in excess of
10% of total revenues:

                                         Years Ended June 30,
                           -------------------------------------------------
                                2001             2000            1999
                           ---------------- --------------------------------

Customer A                       18%              11%              *
Customer B                       16%              32%             39%
Customer C                       12%               *               *
Customer D                       10%              16%              *
Customer E                        *               11%              *
Customer F                        *                *              14%


       * Less than 10%.

       At June 30, 2001, three customers accounted for 55%, 13% and 11% of total
accounts receivable, respectively. At June 30, 2000, two customers accounted for
41% and 15% of total accounts receivable, respectively.

Inventories

       Inventories are stated at the lower of cost or market. Cost is determined
using standard cost, which approximates actual cost on a first-in, first-out
basis. The inventory of the Company is subject to rapid technological changes
that could have an adverse affect on its realization in future periods. Due to
rapid technological changes, the Company provides reserves for excess and
obsolete inventory based on the Company's estimates of inventory to be sold or
consumed over the next twelve months.

Property and equipment

       Property and equipment are stated at cost. Depreciation is computed using
the straight-line method based upon the useful lives of the assets ranging from
three to five years. Leasehold improvements are amortized using the
straight-line method based upon the shorter of the estimated useful lives or the
lease term of the respective assets.

Long-lived assets

       Periodically, the Company evaluates the recoverability of the net
carrying value of its property, plant and equipment and its intangible assets by
comparing the carrying values to the estimated future undiscounted cash flows. A
deficiency in these cash flows relative to the carrying amounts is an indication
of the need for a write-down due to impairment. The impairment write-down would
be the difference between the carrying amounts and the fair value of these
assets. A loss on impairment would be recognized by a charge to earnings. If an
asset being tested for recoverability was acquired in a business combination,
the goodwill that arose in that business combination is included as part of the
asset in determining recoverability. Goodwill is allocated to the asset being
tested for recoverability on a pro rata basis using the relative fair values of
the long-lived assets and identifiable intangible assets acquired. In instances
where

                                       F-10

<PAGE>

goodwill is identified with assets that are subject to an impairment loss, the
carrying amount of the identified goodwill shall be eliminated before making any
reduction in the carrying amount of impaired long-lived assets and identifiable
intangible assets. As discussed in NOTE 3, Oplink recorded a charge of $12.4
million for the impairment of goodwill and purchased intangible assets related
to the acquisition of Telelight Communication Inc. ("Telelight"). This charge is
reflected in "Restructuring costs and other special charges" in the Consolidated
Statement of Operations.

Income taxes

       The Company accounts for income taxes under the liability method, which
recognizes deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the tax bases of assets and
liabilities and their financial statement reported amounts, and for net
operating loss and tax credit carryforwards. The Company records a valuation
allowance against deferred tax assets when it is more likely than not that such
assets will not be realized.

Advertising costs

       Advertising costs are expensed as incurred in accordance with SOP 97-3,
"Reporting of Advertising Costs." Advertising costs for the years ended June 30,
2001, 2000 and 1999 were $184,000, $142,000, and $47,000, respectively.

Stock-based compensation

       The Company accounts for stock-based compensation issued to employees
using the intrinsic value method of Accounting Principles Board Opinion No. 25,
"Accounting for Stock issued to Employees," and, accordingly, presents
disclosure of pro forma information required under Statement of Financial
Accounting Standard ("SFAS") No. 123, "Accounting for Stock-Based Compensation."
Stock and other equity instruments issued to non-employees are accounted for in
accordance with SFAS No. 123 and Emerging Issues Task Force Issue No. 96-18 and
valued using the Black-Scholes option-pricing model.

Comprehensive income

       The Company's comprehensive loss approximated net losses for all periods
presented.

Net loss per common share

       The Company computes net loss per share in accordance with SFAS No. 128,
"Earnings Per Share," and Securities Exchange Commission Staff Accounting
Bulletin ("SAB") No. 98. Under the provisions of SFAS No. 128 and SAB No. 98,
basic net loss per share is computed by dividing the net loss by the weighted
average number of shares of common stock outstanding during the period.

       Following is a reconciliation of the numerators and denominators of the
basic and diluted net loss per share computations for the periods presented (in
thousands, except share and per share data):

                                       F-11

<PAGE>

<TABLE>
<CAPTION>
                                                          Years Ended June 30,
                                               --------------------------------------------
                                                    2001          2000             1999
                                               -------------  ------------   --------------
<S>                                            <C>            <C>            <C>
Numerator:

   Net loss                                    $     (80,372) $    (24,902)  $       (3,474)
                                               -------------  ------------   --------------
Denominator:

   Weighted average shares outstanding           124,361,560     7,839,650        1,463,342
                                               -------------  ------------   --------------

   Denominator for basic and diluted
     calculations                                124,361,560     7,839,650        1,463,342
                                               -------------  ------------   --------------
Net loss per share:
   Basic and diluted                           $        (.65) $      (3.18)  $        (2.37)
                                               -------------  ------------   --------------
</TABLE>

       The following tables sets forth potential shares of common stock that are
not included in the diluted net loss per share calculation above because to do
so would be anti-dilutive for the periods indicated:

<TABLE>
<CAPTION>
                                                   Years Ended June 30,
                                       ----------------------------------------------
                                          2001             2000              1999
                                       ------------ ----------------- ---------------

<S>                                    <C>           <C>              <C>
Series A Preferred Stock                        -       24,000,000       24,000,000
Series B Preferred Stock                        -       30,770,016       30,770,016
Series C Preferred Stock                        -       12,000,000       12,000,000
Series D Preferred Stock                        -       21,333,328       15,226,632
Series E Preferred Stock                        -       22,000,000                -
Warrants to purchase Common Stock               -          268,904          268,904
Warrants to purchase Series C                   -           80,000           80,000
Options to purchase Common Stock       26,820,972       24,962,888       23,111,832
                                       ---------- ---------------- ----------------
                                       26,820,972      135,415,136      105,457,384
                                       ---------- ---------------- ----------------
</TABLE>

Recently issued accounting standards

       In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."
SFAS No. 133 establishes new standards of accounting and reporting for
derivative instruments and hedging activities. SFAS No. 133 requires that all
derivatives be recognized at fair value in the statement of financial position,
and that the corresponding gains or losses be reported either in the statement
of operations or as a component of comprehensive income (loss), depending on the
type of hedging relationship that exists. In July 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities--Deferral of
the Effective Date of FASB Statement No. 133." SFAS No. 137 deferred the
effective date of SFAS No. 133 until fiscal years beginning after June 15, 2000.
The adoption of SFAS No. 133 on July 1, 2000 did not have a material impact on
the Company's financial position, results of operations or cash flows.

       In December 1999, the SEC issued SAB 101, "Revenue Recognition in
Financial Statements," which provides guidance on the recognition, presentation
and disclosure of revenue in financial statements filed with the SEC. SAB 101
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosures related to revenue recognition policies. The adoption
of SAB 101 on April 1, 2001 did not have a material impact on the Company's
financial position, results of operations or cash flows.

       In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation, an
Interpretation of Opinion No. 25" for (a) the definition of employee for
purposes of applying Opinion No. 25, (b) the criteria for determining whether a
plan qualifies as a noncompensatory plan, (c) the accounting consequences of
various modifications to the terms of a

                                      F-12

<PAGE>

previously fixed stock option or award, and (d) the accounting for an exchange
of stock compensation awards in a business combination. FIN 44 became effective
July 1, 2000. The adoption of FIN 44 did not have a material impact on the
Company's financial position, results of operations or cash flows.

       In August 2000, the Emerging Issues Task Force ("EITF") released issue
No. 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF 00-10
addresses the income statement classification of amounts billed to a customer
for shipping and handling costs as well as the classification of amounts
incurred for shipping and handling costs. The EITF concluded that amounts billed
to customers in sales transactions related to shipping and handling should be
classified as revenue, and any costs incurred should be classified as cost of
goods sold or, in general, as operating expense. If shipping and handling costs
incurred are not included in cost of goods sold, the amount of such costs and
the line item on the statement of operations which includes these costs should
be disclosed. The guidance outlined in EITF 00-10 did not have a material impact
on the Company's financial position, results of operations or cash flows.

       In July 2001, the FASB issued SFAS No. 141,"Business Combinations." SFAS
No. 141 requires the purchase method of accounting for business combinations
initiated after June 30, 2001and eliminates the pooling-of-interests method.

       In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets," which is effective for fiscal years beginning after March
15, 2001. SFAS No. 142 requires, among other things, the discontinuance of
goodwill amortization. In addition, the standard includes provisions upon
adoption for the reclassification of certain existing recognized intangibles as
goodwill, reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the testing for impairment of existing goodwill and other intangibles. The
Company does not believe that the adoption of SFAS No. 142 will have a material
impact on its financial position, results of operations and cash flows.

       In various areas, including revenue recognition, accounting standards and
practices continue to evolve. Additionally, the SEC and the FASB's Emerging
Issues Task Force continue to address revenue related accounting issues. The
management of the Company believes it is in compliance with all of the rules and
related guidance as they currently exist. However, any changes to generally
accepted accounting principles in these areas could impact the Company's future
accounting for its operations.

NOTE 3 - RESTRUCTURING COSTS AND OTHER SPECIAL CHARGES

       During June 2001, the Company committed to a plan to restructure its
businesses and realign its resources to focus on reducing expenses, preserving
cash, accelerating its planned move of manufacturing operations to China and
focusing on core opportunities due to the decline in current business
conditions. This restructuring plan includes a workforce reduction and
consolidation of excess facilities. As a result of the restructuring plan and
decline in forecasted revenue, the Company recorded restructuring costs and
other special charges of $18.2 million classified as operating expenses. In
addition to the costs related to the restructuring, an excess inventory charge
of $30.6 million classified as cost of sales was recorded in fiscal 2001. The
following paragraphs provide detailed information relating to the restructuring
costs and other special charges, and the excess inventory charge, which were
recorded during fiscal 2001.

Worldwide workforce reduction

       The restructuring plan will result in the reduction of approximately 310
regular employees both domestically and international. The worldwide workforce
reductions started in the fourth quarter of fiscal 2001 and will be
substantially completed in the first quarter of fiscal 2002. The Company
recorded a workforce reduction charge of approximately $250,000 relating
primarily to severance and fringe benefits. In addition, the number of temporary
and contract workers employed by the Company will also be reduced.

Excess facilities and other special charges

                                       F-13

<PAGE>

       The Company recorded a restructuring charge of $3.9 million relating to
consolidation of excess facilities. The consolidation of excess facilities
includes the closure of certain manufacturing, and research and development
facilities. The charge relates primarily to lease terminations and
non-cancelable lease costs. The Company also recorded other restructuring costs
and special charges of $1.6 million relating primarily to payments to suppliers
and vendors to terminate agreements for the purchase of capital equipment.

Impairment of goodwill and purchased intangible assets

       Due to the decline in current business conditions, the Company abandoned
one of its technologies. As a result, the Company recorded a charge of $12.4
million related to the impairment of goodwill and purchased intangible assets
related to the acquisition of Telelight Communication Inc., measured as the
amount by which the carrying amount exceeded the present value of the estimated
future cash flows for goodwill and purchased intangible assets.

Summary

       A summary of the restructuring costs and other special charges is
outlined as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                        Restructuring
                                        Total          Non-cash          Cash            Liabilities
                                       Charge           Charge         Payments       at June 30, 2001
                                       --------     -----------        --------       ----------------
<S>                                    <C>          <c>                <C>            <C>
       Workforce reduction             $    250                        $      -       $            250
       Consolidation of excess
         facilities and other charges     5,485                           1,191                  4,294
       Impairment of goodwill and
         purchased intangible assets     12,442          12,442               -                      -
                                       --------     -----------        --------       ----------------
                                       $ 18,177     $    12,442        $  1,191       $          4,544
                                       --------     -----------        --------       ----------------

</TABLE>


Provision for inventory

       The Company recorded a provision for excess inventory totaling $30.6
million, which was charged to cost of sales during fiscal 2001. This excess
inventory charge was due to a sudden and material decline in backlog and
forecasted revenue and was calculated as the inventory levels in excess of
twelve-month demand.

NOTE 4 - ACQUISITIONS:

Aurora acquisition

       In June 2001, the Company acquired Aurora Associates and Aurora
Photonics, Inc. ("Aurora"). Aurora is a developer of acoustic-optic ("AO")
devices and systems. The transaction was accounted for as a purchase and
accordingly, the accompanying financial statements include the results of
operations of Aurora subsequent to the acquisition date. The purchase price
comprised $1,000,000 cash, 150,000 shares of common stock valued at $448,000,
$60,000 of costs and $20,000 assumed liabilities. The total purchase price
aggregated $1,528,000 and was allocated to tangible assets acquired of $68,000,
identifiable intangible assets acquired of $499,000, goodwill of $168,000 and
in-process research and development ("IP R&D") of $793,000. Results of
operations for fiscal 2001 would not have differed materially had the
acquisition of Aurora occurred at the beginning of the period.

       The IP R&D consisted of an AO variable optical attenuator ("VOA") which
will regulate optical signals; a fiber optic bypass switch ("FOS") which will
act as a temporary switch and can be used in conjunction with existing
mechanical switches; a PIAO tunable filter ("PIAOTF") which will be the first
electronically chargeable filter; a portable optical spectrum analyzer ("POSA")
which will view various wavelengths and indicate events on a real-time basis; a
dynamic fiber amplifier equalizer ("DFAE") which


                                      F-14

<PAGE>

will balance the signals inside the fiber before transmission to the amplifier;
and a reconfigurable optical add-drop multiplexer ("OADM") which will allow the
user to electronically change ports, wavelengths and fiber on demand. As of the
date of acquisition, these products had not yet reached technological
feasibility and had no alternative future use.

       The value of the IP R&D products was determined by estimating the net
cash flows from the sale of the products resulting from the completion of this
project, reduced by the portion of the net cash flows from the revenue
attributable to core technology. The resulting cash flows were then discounted
back to their present value using a discount rate of 40%. At the time of the
acquisition, the six products ranged from approximately 14.3% to 33.3% complete.
The fair value assigned to the in-process research and development totaled
$793,000 and was charged to expense at the time of the acquisition.

       The value of certain patents being assigned to Oplink was determined
using the relief from royalty methodology, which assumes that the value of the
asset equals the amount a third party would pay to use the asset and capitalize
on the related benefits of the assets. The fair value assigned to patents of
$395,000 is being amortized over their expected useful life of four years.

       Goodwill is being amortized on a straight-line basis of the estimated
period of benefit of four years.

Telelight acquisition

       In April 2000, the Company acquired Telelight Communication Inc.
("Telelight") in a merger transaction accounted for as a purchase business
combination. The purchase price comprised 13,440,000 shares of common stock
valued at $26,880,000 and $200,000 of acquisition costs. The total purchase
price aggregated $27,080,000 and was allocated to tangible assets acquired of
$1,043,000, identifiable intangible assets acquired of $7,395,000, goodwill of
$14,580,000, deferred tax liability of $(2,958,000) and in-process research and
development ("IP R&D") of $7,020,000. As part of the Company's restructuring
plan, the Company elected to abandon the technology associated with Telelight.
As a result, the Company recorded a charge of $12.4 million related to the
impairment of goodwill and purchased intangible assets representing 100% of the
remaining value of the Telelight acquisition.


                                      F-15

<PAGE>

NOTE 5 - BALANCE SHEET COMPONENTS (IN THOUSANDS):

                                                             June 30,
                                                      ----------------------
                                                         2001         2000
                                                      ---------    ---------

       Accounts receivable
         Accounts receivable                          $  18,054    $  10,662
         Less:  Allowance for doubtful accounts            (876)        (562)
                                                      ---------    ---------

                                                      $  17,178    $  10,100
                                                      =========    =========


       Inventories:
         Raw materials                                $  24,963    $  11,454
         Work-in-process                                 16,723        3,038
         Finished goods                                   7,187        1,275
                                                      ---------    ---------
                                                         48,873       15,767

         Less: Reserves                                 (27,134)      (4,459)
                                                      ---------    ---------
                                                      $  21,739    $  11,308
                                                      =========    =========

       Property and equipment:
         Computer equipment and software              $  88,002    $  21,455
         Leasehold improvements                           4,866        1,550
         Construction in progress                        10,457            -
                                                      ---------    ---------
                                                        103,325       23,005
         Less: Accumulated depreciation and
               amortization                             (11,239)      (1,735)
                                                      ---------    ---------

                                                      $  92,086    $  21,270
                                                      =========    =========


       Property and equipment includes $10,976,000 of computer equipment and
internal-use software under capital leases at June 30, 2001. Accumulated
depreciation of assets under capital leases totaled $2,022,000 at June 30, 2001.

                                                             June 30,
                                                      ----------------------
                                                         2001        2000
                                                      ---------    ---------

       Accrued liabilities:
         Payroll and related expenses                 $   2,286    $   2,066
         Income taxes payable                                 -        1,080
         Accrued sales commission                         2,746          897
         Accrued warranty                                 2,045          382
         Accrued restructuring costs                      4,544            -
         Other                                            7,033        2,342
                                                      ---------    ---------
                                                      $  18,654    $   6,767
                                                      ---------    ---------

                                      F-16

<PAGE>

NOTE 6 - INCOME TAXES:

       Consolidated loss before income taxes includes non-U.S. loss of
approximately $1,224,000 and $68,000 for the years ended June 30, 2001 and June
30, 2000 respectively.

       The components of the provision for income taxes are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                             Years Ended June 30,
                                                ----------------------------------------------
                                                      2001              2000            1999
                                                ----------------     ----------      ---------
<S>                                             <C>                  <C>             <C>
       Current tax expense:
         Federal                                $           (850)    $      850      $       -
         State                                              (230)           230              -
         Foreign                                               -              -              -
                                                ----------------     ----------      ---------
                                                          (1,080)         1,080              -
                                                -----------------    ----------      ---------

       Deferred tax benefit:
         Federal                                $            850     $     (850)     $       -
         State                                               230           (230)             -
         Foreign                                               -              -              -
                                                ----------------     ----------      ---------
                                                           1,080         (1,080)


                                                $              -     $        -      $       -
                                                ================     ==========      =========
</TABLE>

       Deferred tax assets (liabilities) consist of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                              June 30,
                                                                     -------------------------
                                                                        2001            2000
                                                                     ----------      ---------
<S>                                                                <C>             <C>
       Deferred tax assets:
         Accruals and reserves                                       $   13,933      $   3,226
         Net operating loss carryforwards                                 1,716            924
         Research and development credit carryforwards                    2,326            318
                                                                     ----------      ---------
         Gross deferred tax assets                                       17,975          4,468
         Valuation allowance                                            (17,975)        (3,388)
                                                                     ----------      ---------
       Net deferred tax assets                                       $        -      $   1,080
                                                                     ==========      =========

       Deferred tax liability:
         Deferred tax liability arising from the acquisition         $        -      $  (2,958)
                                                                     ----------      ---------
</TABLE>

                                      F-17

<PAGE>

        Reconciliation of the statutory federal income tax to the Company's
effective tax:

                                                            June 30,
                                                --------------------------------
                                                   2001        2000      1999
                                                ----------   --------  ---------


        Tax at federal statutory rate               (34)%      (34)%    (34)%
        State, net of federal benefit                (4)        (1)      (1)
        Research credit carryforward                 (1)        (1)      (1)
        Stock compensation                           13          17      30
        In-process research and development           -          10       -
        Impairement of intangible assets              6          -        -
        Nondeductible goodwill                        2          1        -
        Increase in valuation allowance              19          8        6
        Other                                        (1)         -        -
                                                --------------------------------

        Provision for taxes                           - %        - %      - %
                                                --------------------------------


        Based on available objective evidence at June 30, 2001, management
believes that, based on a number of factors, the available objective evidence
created sufficient uncertainty regarding the realizability of the deferred tax
assets such that a full valuation allowance was recorded.

        At June 30, 2001, the Company had approximately $4.4 million of federal
and $3.5 million of state net operating loss carryforwards. Because of certain
changes in ownership of the Company in 1999 and 1998, there is an annual
limitation of approximately $600,000 on the use of the net operating loss
carryforwards pursuant to section 382 of the Internal Revenue Code.

        The Company's China subsidiaries have been granted tax holidays
beginning in 1999. Benefits under the holiday begin on the first year of
profitability by a subsidiary and continues for two additional years, which
thereafter the subsidiary is taxed at a reduced rate for the next three years.
At June 30, 2001, Zhuhai Oplink is in the second year of the tax holiday, which
expires on December 31, 2002. No other subsidiary has utilized the tax holidays.

NOTE 7 - STOCKHOLDER'S EQUITY

Authorized shares

        The Company's certificate of incorporation, as amended, authorizes the
Company to issue 400,000,000 shares of common stock.

        The Company is authorized to issue 20,000,000 shares of undesignated
preferred stock, $0.001 par value per share, of which no shares were issued and
outstanding as of June 30, 2001. Preferred stock may be issued from time to time
in one or more series. The Board of Directors is authorized to determine the
rights, preferences, privileges and restrictions granted to and imposed upon any
wholly unissued series of preferred stock and to fix the number of shares of any
series of preferred stock and the designation of any such series without any
vote or action by the Company's stockholders.

                                      F-18

<PAGE>

Warrants

       In January 1997, the Company obtained a line of credit of $500,000 to
fund the Company's operations. In connection with obtaining this line of credit
and in exchange for the waiver of bank fees, the Company issued to the bank a
warrant to purchase 268,904 shares of common stock. Under the terms of the
agreement, the warrant was immediately exercisable with a five year term at an
exercise price of $0.1488 per share. The most reliably determinable value
assigned to this warrant by the Company was the value of the waived bank fee,
which amounted to $7,000 and was charged to operations during 1997. In March
1998, this line of credit was increased to $1,000,000. In connection with
obtaining this increase, the Company issued an additional warrant to purchase
80,000 shares of series C convertible preferred stock. Under the terms of this
agreement, the warrant was immediately exercisable with a five year term at an
exercise price of $0.25 per share. The most reliably determinable value assigned
to this warrant by the Company was the value of the waived bank fee, which
amounted to $3,000 and was charged to operations during 1998. The line of credit
expired in January of 1999. There were no borrowings under the line of credit as
of June 30, 2001 or 2000.

       During March 2001, the holders of warrants to purchase shares of common
stock and series C convertible preferred stock exercised their right to purchase
such shares at $0.1488 and $0.25 per share, respectively.

Stock Option Plans

       In September 1995, the Board of Directors adopted the 1995 Stock Option
Plan (the "1995 Plan"). In January 1998, the Board of Directors adopted the 1998
Stock Option Plan (the "1998 Plan"). The 1995 Plan and 1998 Plan provide for the
issuance of incentive and nonqualified stock options to employees, directors and
consultants of the Company. Under the 1995 Plan and 1998 Plan, options to
purchase 6,000,000 and 33,800,000 shares of common stock, respectively, were
authorized for grant. These plans were terminated in October 2000 with the
adoption of the 2000 Equity Incentive Plan (the "2000 Plan") in July 2000. The
2000 Plan provides for grant of 20,000,000 stock awards to employees, directors
and consultants. These stock awards include incentive stock options to
employees, including officers and employee directors, and nonstatutory stock
options, stock bonuses and stock purchase rights to employees, directors and
consultants. Options granted under the 2000 Plan must be granted with exercise
prices not less than 100% and 85% for incentive and nonqualified stock options,
respectively, of the fair value of the Company's common stock on the date of
grant. Options granted to stockholders who own greater than 10% of the Company's
outstanding stock must be issued with exercise prices not less than 110% of the
fair value of the Company's common stock on the date of grant. Options under the
2000 Plan generally become exercisable at a rate of 25% during the first year of
the vesting period and then at a rate of 1/48 per month thereafter. Options will
expire, if not exercised, upon the earlier of 10 years from the date of grant or
generally 90 days after termination as an employee of the Company. The number of
shares of common stock reserved for issuance will automatically be increased on
each January 1 beginning on January 1, 2001 by the greater of the total number
of shares of common stock for which stock options, stock bonuses and stock
purchase rights were granted in the preceding calendar year, or 5.0% of the
total outstanding common stock on that date on a fully diluted basis; provided,
that the Board may designate a smaller number of shares by which the reserve
will increase on a particular date. Shares of common stock, which are covered by
a stock option grant under the 1995 and 1998 Plan without having been exercised
will be added to the reserve of the 2000 Plan. Over the ten-year term of the
2000 Plan, no more than 50,000,000 shares may be reserved for issuance pursuant
to the exercise of incentive stock options.

       The 2000 Equity Incentive Plan provides for the automatic grant of
nonstatutory stock options to purchase shares of common stock to its
non-employee directors. Beginning in 2001, on the day after the Company's annual
stockholders' meeting, any person who is then a non-employee director and who is
elected at such annual meeting will automatically be granted an option to
purchase 72,000 shares of common stock. These grants will vest on a monthly
basis over a three-year period. Any non-employee director who is elected or
appointed to the board during a three-year term will automatically be granted an
option to purchase a pro rata portion of shares based on the number of months
remaining in the term.

                                      F-19

<PAGE>

       During the years ended June 30, 2001, 2000 and 1999, in connection with
the granting of stock options to employees and members of the Board of Directors
with exercise prices subsequently determined to be below fair value, the Company
recorded deferred stock compensation aggregating $28,009,000, $27,221,000 and
$6,537,000, respectively. These amounts are being amortized into expense over
the vesting period of the related options, generally four years using the method
set out in FASB Interpretation No.28 ("FIN 28"). Under the FIN 28 method, each
vested tranche of options is accounted for as a separate option grant awarded
for past services. Accordingly, the compensation expense is recognized over the
period during which the services have been provided. This results in higher
compensation expense in the earlier vesting periods of the related options.
Amortization expense associated with deferred stock compensation totaled
$26,638,000 for the year ended June 30, 2001, $12,740,000 for the year ended
June 30, 2000 and $3,032,000 for the year ended June 30, 1999.

       Information with respect to 1995, 1998 and 2000 stock option plan
activity for the three years ended June 30, 2001 is set forth below:

<TABLE>
<CAPTION>
                                                                                   Weighted
                                                                                   Average
                                                Shares Available    Number of      Exercise
                                                   for Grant         Options        Price
                                                ----------------  -------------   ----------
       <S>                                      <C>               <C>             <C>
       Balance, June 30, 1998                        33,800,000      3,920,000     $  0.0104

       Options granted                              (20,524,000)    20,524,000        0.0500
       Options exercised                                            (1,160,000)       0.0050
       Options canceled                                 172,168       (172,168)       0.0500
                                                  -------------   ------------     ---------

       Balance, June 30, 1999                        13,448,168     23,111,832     $  0.0454

       Options granted                              (16,828,800)    16,828,800        1.3187
       Options exercised                                            (8,737,878)       0.1335
       Options canceled                               6,239,866     (6,239,866)       0.2266
                                                  -------------   ------------     ---------

       Balance, June 30, 2000                         2,859,234     24,962,888     $  0.8278

       Options authorized during fiscal 2001         32,169,921
       Options granted                              (15,174,309)    15,174,309        6.9889
       Options exercised                                            (6,954,245)       0.6777
       Options canceled                               6,361,980     (6,361,980)       4.5113
                                                  -------------   ------------     ---------

       Balance, June 30, 2001                        26,216,826     26,820,972     $  3.4787
                                                  -------------   ------------     ---------
</TABLE>

                                      F-20

<PAGE>

       As of June 30, 2001, the options outstanding and exercisable under the
1995, 1998 and 2000 Plans are presented below:

<TABLE>
<CAPTION>
                                          Options Outstanding             Options Vested and Exercisable
                                           at June 30, 2001                       at June 30, 2001
                            --------------------------------------------  ------------------------------
                                                Weighted
                                                 Average       Weighted                       Weighted
                                                Remaining      Average                        Average
       Range of Exercise       Number          Contractual     Exercise      Number           Exercise
              Price          Outstanding     Life (in Years)    Price      Outstanding         Price
       ------------------   -------------    ---------------  ----------  -------------     ------------
       <S>                  <C>              <C>              <C>         <C>               <C>
       $ 0.0000 - $ 2.4500   13,106,460            7.6        $ 0.8455      3,387,940        $  0.4177
       $ 2.4501 - $ 4.9000    6,357,463            8.8          2.6955        899,536           2.9357
       $ 4.9001 - $ 7.3500    4,871,251            8.3          5.6338        686,983           5.4449
       $ 7.3501 - $ 9.8000      847,406            6.3          8.4681         28,420           8.3817
       $ 9.8001 - $12.2500            -            0.0               -              -                -
       $12.2501 - $14.7000       17,124            8.2         12.5625            790          12.5625
       $14.7001 - $17.1500      730,208            6.4         15.0674        178,961          15.1096
       $17.1501 - $19.6000      171,500            8.8         18.1870          1,331          18.1758
       $19.6001 - $22.0500      186,749            8.0         19.9375         12,811          19.9375
       $22.0501 - $24.5000      532,811            9.1         23.2801          2,477          24.5000
                            -----------                                    ----------

                             26,820,972            8.0        $ 3.4787      5,199,249        $  2.1328
                            ===========                                    ==========
</TABLE>

Notes Receivable

       In March 2001 and April 2001, the Company granted two full recourse
promissory notes to executive officers in the amount of $160,000 and $3,657,500,
respectively, secured each by an escrow comprising all of the shares of the
Company's common stock covered by the stock options granted to each executive
officer. The notes bear interest at 8.5% and 8.0%, respectively, per annum.
Interest income related to these notes of $71,000 was recorded in fiscal 2001.
The promissory note in the amount of $160,000 is due in March 2002. The
promissory note in the amount of $3,657,500 is due in April 2006 or upon demand
by a majority of the Board of Directors of the Company, whichever is earlier.
The notes are recorded as a component of stockholders' equity.

Pro forma stock-based compensation

       Had compensation cost for the Company's stock-based compensation plan
been determined based on the fair value at the grant dates for the awards under
a method prescribed by SFAS No. 123, the Company's net loss for the years ended
June 30, 2001, 2000 and 1999 would have been increased to the pro forma amounts
indicated in the following table (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                     Years Ended June 30,
                                                            -------------------------------------
                                                               2001         2000          1999
                                                            ------------ -----------   ----------
       <S>                                                  <C>          <C>           <C>
       Net loss:
         As reported                                        $ (80,372)   $  (24,902)    $ (3,474)
                                                            =========    ==========     ========
         Pro forma                                          $ (93,522)   $  (28,329)    $ (3,592)
                                                            =========    ==========     ========
       Net loss per common share - basic and diluted:
         As reported                                        $   (0.65)   $    (3.18)    $  (2.37)
                                                            =========    ==========     ========
         Pro forma                                          $   (0.75)   $    (3.61)    $  (2.45)
                                                            =========    ==========     ========
</TABLE>

                                      F-21

<PAGE>

       The Company calculated the fair value of each option grant on the date of
grant in accordance with SFAS No. 123 using the following weighted average
assumptions:

                                                    Years Ended June 30,
                                           -------------------------------------
                                            2001           2000           1999
                                           ------         ------         -------
       Risk-free interest rate              5.50%          6.47%          5.01%
       Expected life of option                 4              5              5
       Expected dividends                      0%             0%             0%
       Volatility                             70%            60%            60%


       Such pro forma disclosures may not be representative of future
compensation cost because options vest over several years and additional grants
are made each year.

2000 Employee Stock Purchase Plan

       In July 2000, the Board of Directors adopted the 2000 Employee Stock
Purchase Plan (the "Purchase Plan"), which authorizes the issuance of 4,000,000
shares of its common stock pursuant to purchase rights granted to employees or
to employees of any of its affiliates. The number of shares reserved for
issuance under the Purchase Plan will be increased each January, beginning
January 1, 2001, and ending January 1, 2010, by the greater of the total number
of shares issued under the plan during the preceding calendar year or 1.5% of
the number of shares of common stock outstanding on that date. The Board of
Directors has the authority to designate a smaller number of shares by which the
authorized number of shares of common stock will be increased on that date. A
maximum of 20,000,000 shares may be issued during the term of the Purchase Plan.
The Purchase Plan authorizes the granting of stock purchase rights to eligible
employees during an offering period not more than 27 months with exercise dates
approximately every six months. Shares are purchased through employee payroll
deductions at purchase prices equal to 85% of the lesser of the fair market
value of the Company's common stock at either the first day of each offering
period or the date of purchase. As of June 30, 2001, 130,757 shares had been
issued under the Purchase Plan at an average price of $3.825 per share.

NOTE 8 - RELATED PARTY TRANSACTIONS:

Investor Rights Agreement

       The Company has an agreement with the former holders of its preferred
stock, including entities with which its directors are affiliated, that provides
these stockholders certain rights relating to the registration of their shares
of common stock issued upon conversion of the preferred stock. These rights
survived the Company's initial public offering and will terminate no later than
eight years after the closing date.

Indemnification Agreements

       The Company has entered into indemnification agreements with each of its
directors and officers. These indemnification agreements and its certificate of
incorporation and bylaws require the Company to indemnify its directors and
officers to the fullest extent permitted by Delaware law.

Sales to Investors

       Beginning from July 1, 1998, the Company sold products to a customer who
was also one of the shareholders of the Company's Series D preferred stock,
which converted to common stock simultaneously with the close of the Company's
initial public offering. Total revenues from sales to this customer were
$8,280,000, $524,000 and $47,000 for the years ended June 30, 2001, 2000 and
1999, respectively.


                                      F-22

<PAGE>

       The Company sold products to Cisco Systems, Inc. who, in August 2000,
provided the Company $50,000,000 cash in exchange for a note payable. Upon the
closing of the Company's initial public offering, the note payable was converted
into 3,298,773 shares of common stock. Total revenues from sales to Cisco
Systems, Inc. were $11,485,000, $1,391,000 and $118,000 for the years ended June
30, 2001, 2000 and 1999, respectively.

Purchases from vendors

       The Company purchased $293,000 of software and related support in the
year ended June 30, 2001, from a vendor whose board of directors shares with the
Company's board of directors two common board members.

NOTE 9 - COMMITMENTS AND CONTINGENCIES:

Operating Leases

       The Company leases its facilities under non-cancelable operating leases.
The leases require the Company to pay taxes, maintenance and repair costs.
Future minimum lease payments under the Company's non-cancelable operating
leases, including operating leases entered into subsequent to June 30, 2001, are
as follows (in thousands):

       Year Ending June 30,

       2002                                                             $ 4,869
       2003                                                               4,764
       2004                                                               4,581
       2005                                                               3,735
       2006                                                               1,275
       Thereafter                                                         3,114
                                                                        -------
                                                                        $22,338
                                                                        =======


       Rent expense for all operating leases was approximately $4,079,000,
$569,000 and $172,000 in 2001, 2000 and 1999, respectively.

Capital Leases

       During fiscal 2001, the Company entered into fourteen additional capital
leases for equipment in the amount of $9,168,000 with interest accruing at the
rate of 8.30% per annum.

       Future minimum lease payments for all capital leases are as follows (in
thousands):

       Year Ending June 30,

       2002                                                             $ 4,121
       2003                                                               4,135
       2004                                                               1,095
       2005                                                                   8
                                                                        -------
       Total minimum lease payments                                       9,359
       Less: Amount representing interest                                  (837)
                                                                        -------
       Present value of capital lease obligations                         8,522
       Current portion of capital lease obligations                       3,534
                                                                        -------
       Capital lease obligations, non current                           $ 4,988
                                                                        =======


                                      F-23

<PAGE>

Litigation

       In November 1999, a lawsuit was filed by E-TEK Dynamics, Inc. against the
Company alleging patent infringement related to the manufacture and sale of
fiber optic products which generated a significant amount of the Company's
revenues for the quarter ended March 31, 2001 and a majority of the Company's
revenues for each of the quarters ended June 30, September 30 and December 31,
2000, and the year ended June 30, 2000. On February 9, 2001, we amended our
answer to include, among other matters, a counter-claim against E-TEK Dynamics.
The counter-claim alleged that E-TEK Dynamics infringed one of our patents
relating to fiber optic couplers based on E-TEK's manufacture and sale of DWDM
products.

       In May 2001, we reached an agreement with E-TEK Dynamics, a wholly owned
subsidiary of JDS Uniphase Corporation, to dismiss the patent infringement
litigation between the companies. Terms of the settlement included the parties
entering into a cross-licensing agreement on certain wavelength division
multiplexing (WDM) patents. Neither company admitted any liability, and the
parties filed a joint motion to dismiss all claims between the companies, which
the Court granted on May 30, 2001.

       In June 2000, Chorum Technologies, Inc. filed a lawsuit in the United
States District Court for the Northern District of Texas against the Company and
Telelight Communication Inc., a wholly owned subsidiary, alleging patent
infringement and trademark claims relating to the manufacture of and offer to
sell fiber optic interleaver products. On May 7, 2001, the Company filed a
lawsuit against Chorum in the United States District Court for the District of
Delaware, alleging, among other matters, that Chorum infringes one of our
patents relating to fiber optic couplers based on Chorum's manufacture and sale
of DWDM products.

       In actions involving Chorum, Chorum and the Company are seeking
unspecified damages and injunctive relief. An unfavorable ruling in these
matters could have a material adverse effect on the Company's financial
condition and results of operations. The Company, with the assistance of its
legal counsel, intends to vigorously prosecute and defend its position. However,
because of the considerable uncertainties that exist, the impact, if any, on the
Company cannot now be reasonably estimated based on facts currently available to
management.

NOTE 10 - SEGMENT REPORTING

       The Company has determined that it has one reportable segment: fiber
optic component and subsystem product sales. This segment consists of
organizations located in the United States and China, which develop,
manufacture, and/or market fiber optic networking components.

       The breakdown of sales by geographic customer destination and property
plant and equipment, net are as follows (in thousands):

                                         Years Ended June 30,
                              -------------------------------------------
                                 2001             2000             1999
                              -----------      ----------         -------

       Sales:
        United States         $   101,761      $   30,974         $ 6,986
        Europe                     17,626           4,046               -
        Asia                        5,714           2,312           1,314
        Other                       6,714           1,716             794
                              -----------      ----------         -------

            Totals            $   131,815      $   39,048         $ 9,094
                              -----------      ----------         -------

                                      F-24

<PAGE>

                                                           June 30,
                                                  ---------------------------
                                                      2001            2000
                                                  ------------     ----------

       Property, plant, and equipment, net:
         United States                            $     45,877     $   16,142
         People's Republic of China                     46,209          5,128
                                                  ------------     ----------

            Totals                                $     92,086     $   21,270
                                                  ============     ==========



NOTE 11 - 401(K) PLAN:

       In 1997, the Company adopted a defined contribution retirement savings
plan under Section 401(k) of the Internal Revenue Code. This plan covers
substantially all employees who meet minimum age and service requirements and
allows participants to defer a portion of their annual compensation on a pretax
basis. All employees are eligible to participate three months after employment.
Matching contributions are at the discretion of the Company. The Company made no
matching contribution to the plan during the three years ended June 30, 2001.

NOTE 13 - SUBSEQUENT EVENTS:

Line of Credit

       In July 2001, the Company entered into a credit agreement, which provides
for borrowings of up to $3,624,000 for working capital purposes. The borrowings
bear interest at 5.85% per annum and are secured by certain assets of the
Company. At July 2001, outstanding borrowings under this agreement were
$2,416,000 and were due July 2002.

Repurchase of Common Stock

       On September 26, 2001, the Board of Directors authorized a program to
repurchase up to an aggregate of $21,200,000 of the Company's Common Stock. Such
repurchases may be made from time to time on the open market at prevailing
market prices or in negotiated transactions off the market.

                                      F-25

<PAGE>

                      REPORT OF INDEPENDENT ACCOUNTANTS ON
                          FINANCIAL STATEMENT SCHEDULES

 To the Board of Directors and Stockholders of
  Oplink Communications, Inc.


     Our audits of the consolidated financial statements referred to in our
report dated July 31, 2001, except for Note 13, as to which the date is
September 26, 2001 appearing in this Form 10-K also included an audit of the
financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our
opinion, this financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.



PricewaterhouseCoopers LLP
San Jose, California
July 31, 2001

                                      F-26

<PAGE>

Schedule II

Oplink Communications, Inc.
Valuation and Qualifying Accounts
For the years ended June 30, 2001, 2000 and 1999


(In thousands)

<TABLE>
<CAPTION>
                                                    Balance at       Charged to
                                                     Beginning       Costs and                         Balance at
                                                      of Year         Expenses     Deductions (1)     End of Year
                                                   -----------     ------------    --------------     -----------
<S>                                               <C>             <C>            <C>                <C>
Allowance for doubtful accounts:
   Year Ended June 30, 2001                        $       562     $        330    $           16     $       876
   Year Ended June 30, 2000                        $       184     $        378    $            -     $       562
   Year Ended June 30, 1999                        $         -     $        184    $            -     $       184


Reserve for excess and obsolete inventory:
   Year Ended June 30, 2001                        $     4,459     $     30,565    $        7,890     $    27,134
   Year Ended June 30, 2000                        $       401     $      4,659    $          601     $     4,459
   Year Ended June 30, 1999                        $       177     $        224    $            -     $       401

Accrued restructuring costs:
   Year Ended June 30, 2001                        $         -     $      5,735    $        1,191     $     4,544
   Year Ended June 30, 2000                        $         -     $          -    $            -     $         -
   Year Ended June 30, 1999                        $         -     $          -    $            -     $         -
</TABLE>


(1)Deductions represent costs charged or amounts written off against the
reserve or allowance.

                                      F-27