AFOP Reports 2nd Quarter 2006 Results; 20% Sequential Revenue Growth and Turning Profitable.SUNNYVALE Sunnyvale, city (1990 pop. 117,229), Santa Clara co., W Calif., near San Francisco; settled 1849, inc. 1912. A city in Silicon Valley, its many manufactures include semiconductors; machinery and instruments; electrical, electronic, and aerospace products; , Calif. -- Alliance Fiber Optic Products, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :AFOP AFOP Alliance Fiber Optic Products, Inc. AFOP Association of Farmworker Opportunity Programs AFOP Association Française des industries de l'Optique et de la Photonique AFOP and for other purposes AFOP acute fibrinous and organizing pneumonia ), an innovative supplier of fiber optic components, subsystems and integrated modules for the optical network equipment market, today reported its financial results for the second quarter ended June June: see month. 30, 2006. The Company's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). results reflect the adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R regarding the expensing of stock-based compensation. Revenues for the second quarter of 2006 totaled $6,252,000, a 20% increase from revenues of $5,221,000 recorded in the first quarter of 2006 and 21% increase compared with $5,178,000 for the year ago quarter. The Company recorded a net profit for the second quarter of 2006 of $19,000, or $0.00 per share, and improved over a net loss for the first quarter of 2006 of $(373,000), or $(0.01) per share. This compares to a net loss for the second quarter of 2005 of $(720,000), or $(0.02) per share. Included in the expense for the quarter ended June 30, 2006 was $32,000 of stock-based compensation charges under SFAS 123R. Included in the expense for the quarter ended March 31, 2006 was $77,000 of stock-based compensation charges under SFAS 123R. There were no deferred stock-based compensation charges for the quarter ended June 30, and March 31, 2005, respectively. Peter Chang Chang (chăng) or Yangtze (yăng`sē`, yäng`dzŭ`), Mandarin Chang Jiang, longest river of China and of Asia, c.3,880 mi (6,245 km) long, rising in the Tibetan highlands, SW Qinghai prov. , President and Chief Executive Officer, commented, "The second quarter of 2006 marked an important milestone in AFOP's quarterly financial results -- AFOP returned to profitability. In the second quarter, not only did sales grow by 20% but gross margin also continued improving by 5% better than the year ago quarter." "Our performance reflects increasing demand from key customers, solid progress in product development, and continuous improvement of our operations in Asia. Our balance sheet remains strong with cash and cash equivalents slightly increased from previous quarter at over $29 million." "Based on input from our customers and current backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. , we expect that revenues will improve sequentially by 10 percent in the third quarter of 2006. Additionally, with continuous focus on operational efficiencies, we believe we will remain profitable in the coming quarter," concluded Mr. Chang. Conference Call Management will host a conference call at 1:30 p.m. Pacific Time on July July: see month. 25, 2006 to discuss AFOP's second quarter 2006 financial results. To participate in AFOP's conference call, please call 877-407-9210 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 207081. AFOP will also provide a live webcast of its second quarter 2006 conference call at AFOP's website www.afop.com. An audio replay will be available until August 1, 2006. The dial in number for the replay is 877-660-6853 or 201-612-7415. The replay passcodes (account # 286; conference ID#: 207081) are both required for the replay. About AFOP Founded in 1995, Alliance Fiber Optic Products, Inc. designs, manufactures and markets a broad range of high performance fiber optic components and integrated modules. AFOP's products are used by leading and emerging communications equipment manufacturers to deliver optical networking Communications between computers, telephones and other electronic devices using light. An optical network is far more reliable and has far greater potential transmission capacity than networking in the electrical domain. See optical fiber. systems to the long-haul, enterprise, metropolitan and last mile access segments of the communications network The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. . AFOP offers a broad product line of passive optical components including interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. systems, couplers and splitters, thin film CWDM (Course WDM) An optical transmission method that is used for shorter distances than dense WDM (DWDM). Also known as "wide WDM," CWDM transmits fewer channels and uses wider spacing between the channels for distances up to 60 km. Wider spacing up to 25 nm, compared to 1. & DWDM (Dense WDM) The term given to wavelength division multiplexing (WDM) when significantly more channels were being added. Since WDM is increasingly more "dense" all the time, both terms are used synonymously. See WDM. DWDM - wavelength division multiplexing components and modules, optical attenuators An optical attenuator is a device used to reduce the power level of an optical signal, either in free space or in an optical fiber. They are commonly used in fiber optic communications. , and micro-optics devices. AFOP is headquartered in Sunnyvale, California Sunnyvale ([sʌniveil]) is a city in Santa Clara County, California, United States. It is one of the major cities that make up the Silicon Valley. As of the 2000 census, the city population was 131,760. , with manufacturing and product development capabilities in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Taiwan and China. AFOP's website is located at http://www.afop.com. Except for the historical information contained herein, the matters set forth in this press release, including statements as to our ability to remain profitable, our ability to increase revenues and the extent of any revenue increase, the increase in customer demand for our products, our ability to maintain product development, our ability to continue to improve our Asian operations, our ability to continue to improve our gross margins, and our ability to control expenses, are forward looking statements within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. are subject to risks and uncertainties that may cause actual results to differ materially, including, but not limited to general economic conditions and trends, the impact of competitive products and pricing, timely introduction of new technologies, timely design acceptance by our customers, the acceptance of new products and technologies by our customers, customer demand for our products, the timing of customer orders, loss of key customers, ability to ramp new products into volume production, the costs associated with running our operations, industry-wide shifts in supply and demand for optical components and modules, industry overcapacity o·ver·ca·pac·i·ty n. Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. , failure of cost control initiatives, financial stability in foreign markets, and other risks detailed from time to time in our SEC reports, including AFOP's Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2006. These forward-looking statements speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . AFOP disclaims any intention or obligation to update or revise any forward-looking statements.
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
Jun. 30, Dec. 31,
2006 2005
----------- ------------
ASSETS
Current assets:
Cash and short-term investments $ 29,366 $ 29,407
Accounts receivable 3,741 3,570
Inventories 4,239 3,670
Other current assets 590 634
----------- ------------
Total current assets 37,936 37,281
Property and equipment, net 4,172 4,564
Other assets 132 105
----------- ------------
Total assets $ 42,240 $ 41,950
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,646 $ 2,342
Accrued expenses and other liabilities 2,326 2,428
----------- ------------
Total current liabilities 4,972 4,770
Long-term liabilities 834 859
----------- ------------
Total liabilities 5,806 5,629
Stockholders' equity 36,434 36,321
----------- ------------
Total liabilities and stockholders'
equity $ 42,240 $ 41,950
=========== ============
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
-------------------------- -----------------
Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
2006 2006 2005 2006 2005
-------- -------- -------- -------- --------
Revenues $ 6,252 $ 5,221 $ 5,178 $11,473 $10,184
Cost of revenues 4,621 3,884 4,077 8,505 8,152
-------- -------- -------- -------- --------
Gross profit 1,631 1,337 1,101 2,968 2,032
-------- -------- -------- -------- --------
Operating expenses:
Research and
development 708 759 882 1,467 1,834
Sales and marketing 555 586 560 1,141 1,134
General and
administrative 720 763 713 1,483 1,463
-------- -------- -------- -------- --------
Total operating
expenses 1,983 2,108 2,155 4,091 4,431
Loss from operations (352) (771) (1,054) (1,123) (2,399)
Interest and other
income, net 371 398 334 769 867
-------- -------- -------- -------- --------
Net income (loss) $ 19 $ (373) $ (720) $ (354) $(1,532)
======== ======== ======== ======== ========
Net income (loss) per
share - basic and
diluted $ 0.00 $ (0.01) $ (0.02) $ (0.01) $ (0.04)
Weighted average shares
outstanding 40,086 39,771 39,259 39,930 39,138
Included in costs and
expenses above:
Stock based compensation
charges
Cost of revenue $ 9 $ 23 $ - $ 32 $ -
Research and
development 6 14 - 20 -
Sales and marketing 4 12 - 16 -
General and
administrative 13 28 - 41 -
-------- -------- -------- -------- --------
Total $ 32 $ 77 $ - $ 109 $ -
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