Alliance Fiber Optic Products, Inc. Reports Fourth Quarter and Fiscal Year 2002 Financial Results.Business Editors/High-Tech Writers 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.--(BUSINESS WIRE)--Feb. 4, 2003 Alliance Fiber Optic optic /op·tic/ (op´tik) ocular (1). op·tic or op·ti·cal adj. 1. Of or relating to the eye or vision. 2. Products, Inc. (Nasdaq SmallCap: 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 fourth quarter and year ended December December: see month. 31, 2002. Revenues for the fourth quarter of 2002 totaled $2,810,000 as compared to $3,105,000 in the previous quarter and $4,170,000 in the fourth quarter of 2001. The Company recorded a net loss under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) for the fourth quarter of 2002 of $2,767,000, or $0.08 per share based on 35.0 million shares outstanding. This compares to a net loss for the third quarter of 2002 of $5,324,000, or $0.15 per share based on 34.8 million shares outstanding, and a net loss for the fourth quarter of 2001 of $2,610,000, or $0.08 per share based on 34.1 million shares outstanding. Revenues for fiscal year 2002 totaled $13,113,000 as compared to $20,388,000 in the previous year. The Company recorded a net loss under GAAP for fiscal year 2002 of $18,278,000 or $0.53 per share based on 34.7 million shares outstanding. This compares to a net loss for the previous year of $24,133,000 or $0.73 per share based on 33.3 million shares outstanding. Excluding the effects of non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for inventory provisions, excess facility charges and deferred stock compensation, pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss for the fourth quarter of 2002 was $2,080,000, or $0.06 per share based on 35.0 million shares outstanding. Pro forma net loss for the third quarter of 2002 was $2,410,000, or $0.07 per share based on 34.8 million shares outstanding, and pro forma net loss for the fourth quarter of 2001 was $1,832,000, or $0.05 per share based on 34.1 million shares outstanding. For fiscal year 2002, excluding all pro forma adjustments, the Company reported pro forma net loss of $9,910,000 or $0.29 per share based on 34.7 million shares outstanding. This compares to a pro forma net loss for the previous year of $5,333,000 or $0.16 per share based on 33.3 million shares outstanding. The fiscal year 2002 pro forma calculations exclude: a fourth quarter 2002 non-cash charge for a $84,000 inventory provision and a $160,000 excess facility charge; a third quarter 2002 a non-cash charge for a $1,245,000 inventory provision and a $1,680,000 excess facility charge; a second quarter 2002 non-cash charge for a $949,000 inventory provision and $972,000 fixed asset write down charge; a first quarter 2002 non-cash charge for a $2,208,000 inventory provision; and the amortization of deferred stock-based compensation for all four quarters. 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, "In 2002 we continued to improve our operating efficiency and enhance our technical capabilities while weathering another difficult economic year. Additionally, our balance sheet has remained strong with approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $43.0 million in cash and investments at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. , and no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . Throughout the year we made progress in streamlining operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. while continuing to achieve new milestones in product and technology development for a growing list of customers." "Business conditions continue to be challenging for AFOP and our industry. However, we remain positive about the progress we have made during the fourth quarter and all of last year. We believe our cost control efforts are working, that we are continuing to develop key new products and technologies, and that our cash burn rate continues to be under control. We expect that once the market recovers, we will be well-positioned to succeed," concluded Mr. Chang. Conference Call Management will host a conference call at 1:30 p.m. Pacific Time on February February: see month. 4, 2003 to discuss AFOP's fourth quarter and full year 2002 financial results. To participate in AFOP's conference call, please call 212/329-1452 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 519533. AFOP will also provide a live webcast of its fourth quarter and fiscal year 2002 conference call at AFOP's website www.afop.com. A replay will be available for two weeks following the call. The dial in for the instant replay is 303/590-3000; confirmation number 519533. 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 long haul n. 1. A long distance: It is a long haul from New York to Los Angeles. 2. A long period of time: Over the long haul the candidates performed well. , 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 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, fixed and variable 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 depolarizers. 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 Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) 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 the Company's ability to improve its financial results, focus on cost control and operational efficiency, product and technology development, and the Company's future prospects, 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 design acceptance by our customers, the level of order cancellations, timely introduction of new technologies, ability to ramp new products into volume production, 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 SEC reports, including AFOP's most recent Form 10-Q Form 10-Q See 10-Q. for the quarter ended September September: see month. 30, 2002. 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)
Dec. 31 Dec. 31,
2002 2001
------- -------
ASSETS
Current assets:
Cash and short-term investments $42,975 $50,065
Accounts receivable, net 1,133 2,645
Inventories, net 2,930 7,419
Other current assets 967 1,291
------- -------
Total current assets 48,005 61,420
Property and equipment, net 5,313 7,381
Other assets 362 575
-------- --------
Total assets $53,680 $69,376
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 706 $ 1,425
Accrued expenses and other liabilities 3,188 1,819
------- -------
Total current liabilities 3,894 3,244
Long-term liabilities 823 182
------- -------
Total liabilities 4,717 3,426
Stockholders' equity 48,963 65,950
-------- --------
Total liabilities and stockholders' equity $53,680 $69,376
======= =======
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
----------------------------
Dec. 31, Sept. 30, Dec. 31,
2002 2002 2001
------- ------- -------
Revenues $ 2,810 $ 3,105 $ 4,170
------- ------- -------
Cost of revenues 2,618 3,914 2,873
Stock-based compensation charge 19 (110) 404
------- ------- -------
Total cost of revenues 2,637 3,804 3,277
-------- -------- --------
Gross profit/(loss) 173 (699) 893
Operating expenses:
Research and development 1,155 1,388 1,977
Sales and marketing 586 682 567
General and administrative 1,049 862 916
Excess facility charges 160 1,680 -
Stock-based compensation charge 424 99 374
------- ------- -------
Total operating expenses 3,374 4,711 3,834
-------- -------- --------
Loss from operations (3,201) (5,410) (2,941)
Interest and other income, net 259 72 331
-------- -------- --------
Loss before income taxes (2,942) (5,338) (2,610)
Income tax provision (175) (14) -
-------- -------- --------
Net loss $(2,767) $(5,324) $(2,610)
======= ======= =======
Net loss per share - basic and diluted $ (0.08) $ (0.15) $ (0.08)
Shares used in computing net loss
per share - basic and diluted 34,954 34,846 34,113
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
----------------------------
Dec. 31, Sept. 30, Dec. 31
2002 2002 2001
------- ------- -------
Revenues $ 2,810 $ 3,105 $ 4,170
Cost of revenues 2,534 2,669 2,873
-------- -------- --------
Gross profit 276 436 1,297
Operating expenses:
Research and development 1,155 1,388 1,977
Sales and marketing 586 682 567
General and administrative 1,049 862 916
------- ------- -------
Total operating expenses 2,790 2,932 3,460
-------- -------- --------
Loss from operations (2,514) (2,496) (2,163)
Interest and other income, net 259 72 331
-------- -------- --------
Income/(loss) before income taxes (2,255) (2,424) (1,832)
Income tax provision (175) (14)
-------- -------- --------
Net income/(loss) $(2,080) $(2,410) $(1,832)
======= ======= =======
Net income/(loss) per share -
basic and diluted $ (0.06) $ (0.07) $ (0.05)
Shares used in computing net loss
per share - basic and diluted 34,954 34,846 34,113
Reconciliation from GAAP results to
pro forma results:
GAAP net loss $(2,767) $(5,324) $(2,610)
Stock-based compensation charge
Cost of revenues 19 (110) 404
Operating expenses 424 99 374
Provision for excess and obsolete
inventory 84 1,245 -
-
Excess facility charges 160 1,680 -
-------- -------- --------
Pro forma net income/(loss) $(2,080) $(2,410) $(1,832)
======= ======= =======
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Twelve Months Ended
--------------------
Dec. 31, Dec. 31,
2002 2001
-------- --------
Revenues $ 13,113 $ 20,388
-------- --------
Cost of revenues 16,561 25,615
Stock-based compensation charge (376) 1,635
-------- --------
Total cost of revenues 16,185 27,250
--------- ---------
Gross profit/(loss) (3,072) (6,862)
Operating expenses:
Research and development 6,618 7,180
Sales and marketing 2,934 2,721
General and administrative 3,665 4,022
Excess facility charges 1,840 -
Stock-based compensation charge 1,446 5,422
-------- --------
Total operating expenses 16,503 19,345
--------- ---------
Loss from operations (19,575) (26,207)
Interest and other income, net 1,130 2,297
--------- ---------
Loss before income taxes (18,445) (23,910)
Income tax provision (167) 223
--------- ---------
Net loss $(18,278) $(24,133)
======== ========
Net loss per share - basic and diluted $ (0.53) $ (0.73)
Shares used in computing net loss
per share - basic and diluted 34,679 33,286
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Twelve Months Ended
--------------------
Dec. 31, Dec. 31
2002 2001
-------- --------
Revenues $ 13,113 $ 20,388
Cost of revenues 11,103 13,904
--------- ---------
Gross profit 2,010 6,484
Operating expenses:
Research and development 6,618 7,180
Sales and marketing 2,934 2,721
General and administrative 3,665 3,990
-------- --------
Total operating expenses 13,217 13,891
--------- ---------
Loss from operations (11,207) (7,407)
Interest and other income, net 1,130 2,297
--------- ---------
Income/(loss) before income taxes (10,077) (5,110)
Income tax provision (167) 223
--------- ---------
Net income/(loss) $ (9,910) $ (5,333)
======== ========
Net income/(loss) per share - basic and diluted $ (0.29) $ (0.16)
Shares used in computing net loss
per share - basic and diluted 34,679 33,286
Reconciliation from GAAP results to
pro forma results:
GAAP net loss $(18,278) $(24,133)
Stock-based compensation charge
Cost of revenues (376) 1,635
Operating expenses 1,446 5,422
Provision for excess and obsolete
inventory 4,486 6,543
-
Write down/impairment of fixed assets 972 5,200
Excess facility charges 1,840 -
--------- ---------
Pro forma net income/(loss) $ (9,910) $ (5,333)
======== ========
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