Alliance Fiber Optic Products, Inc. Reports Fourth Quarter and Full Year 2001 Financial Results; Business Stabilizing Despite Challenging Environment.Business Editors 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)--Jan. 29, 2002 Alliance Fiber Optic Products, Inc. (Nasdaq: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 and integrated modules for the optical network equipment market, today reported its fourth quarter and year end financial results for the period ended December December: see month. 31, 2001. Revenues for the fourth quarter totaled $4,170,000 as compared to $4,280,000 in the previous quarter. 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 2001 was $1,832,000, or $0.05 per share based on 34.1 million basic shares outstanding. These financial results are in line with the guidance provided by the Company during its last quarterly conference call. In comparison, pro forma net loss for the third quarter of 2001 was $1,744,000, or $0.05 per share based on 33.4 million basic shares outstanding, and pro forma net income for the fourth quarter of 2000 was $442,000, or $0.01 per share based on 34.3 million diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares outstanding. Revenues for the year 2001 were $20,388,000, an 8% decline from the $22,223,000 in revenues reported for 2000. Pro forma net loss for 2001 was $5,333,000, or $0.16 per share, based on 33.3 basic shares outstanding, compared to pro forma net income of $1,020,000, or $0.04 per share, based on 25.5 million diluted shares outstanding, for 2000. The pro forma calculations exclude the amortization of deferred stock-based compensation, as well as 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. of $6,543,000 inventory reserve provision and the $5,200,000 fixed asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge taken in the second quarter of 2001. The number of shares used in the calculation of the pro forma net income/loss per share figure assumes the conversion of the Company's convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". into common stock, if applicable, and the dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of stock options. The conversion of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. was completed in conjunction with the Company's initial public offering in November November: see month. 2000. Without the pro forma adjustments and conversion of the Company's preferred stock into common stock, the Company recorded 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. This compares to a net loss for the third quarter of 2001 of $2,268,000, or $0.07 per share based on 33.4 million shares outstanding, and a net loss for the fourth quarter of 2000 of $3,449,000, or $0.20 per share based on 17.6 million shares outstanding. For the year 2001, excluding the above-mentioned A`bove´-men`tioned a. 1. Mentioned or named before; aforesaid; mentioned or named earlier in the same text (in written documents). Adj. 1. pro forma adjustments to eliminate the deferred stock compensation charges, inventory provision, impairment charge, the Company recorded a net loss of $24,133,000, or $0.73 per share on 33.3 million shares outstanding. 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, "Despite the challenging economic environment, I am pleased to report solid fourth quarter financial results including revenues that were approximately flat with third quarter levels, and pro forma net loss of $0.05 per share. Also, 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. remained in control and our cash burn rate is approximately $3 million per quarter. We ended the year with a continued focus on strengthening key product families, controlling operating expenses, and streamlining capital expenditures." "With all of its challenges, 2001 was also a year of many accomplishments," continued Mr. Chang. "We were granted four new patents during the year for product technologies such as our V-Groove Collimator collimator (kol´imātur), n a diaphragm or system of diaphragms made of an absorbent material and designed to define the dimensions and direction of a beam of radiation. , Depolarizers, OPIS OPIS Oil Price Information Service OPIS Ocean Planning Information System (US NOAA) OPIS Online Procurement Information System OPIS Online Planning Information Service OPIS Optical Path Integration Solutions , and Optical Circulators An optical circulator is a special fiber-optic component that can be used to separate optical powers that travel in opposite directions in one single optical fiber, analogous to the operation of an electronic circulator. . Additionally, we have 16 patents filed and pending approval. In terms of product milestones, we are in the Telcordia (Telcordia Technologies, Piscataway, NJ, www.telcordia.com) A telecommunications software, engineering and consulting organization. Telcordia was originally founded as Bellcore in 1984 by the regional Bell telephone companies (RBOCs) after they were split apart from AT&T due to court qualification phase for both our Polarization polarization Property of certain types of electromagnetic radiation in which the direction and magnitude of the vibrating electric field are related in a specified way. Maintaining Coupler Refers to a myriad of different types of sockets for plugging in electric or electronic cables or devices. See network coupler. , and Circulator cir·cu·late v. cir·cu·lat·ed, cir·cu·lat·ing, cir·cu·lates v.intr. 1. To move in or flow through a circle or circuit: blood circulating through the body. 2. product lines, have begun pilot production of our SODA (switchable optical drop/add), and have begun revenue shipments of our VOA (Variable Optical Attenuator) A device that can incrementally adjust the power of the optical signal passing through it. product." Mr. Chang concluded, "While we begin 2002 with limited visibility, we are determined and confident in our ability to grow revenues, control expenses, and maintain operational excellence. We believe there is tremendous opportunity in the enterprise sector, as well as the broadband/CATV area, and the majority of AFOP's revenues today come from these markets. We plan to continue to manage expenses conservatively while continuing to invest strategically in key research and development programs, which we believe positions AFOP to achieve further success as the market recovers." Conference Call Management will host a conference call at 2:00 p.m. Pacific Time on January January: see month. 29, 2002 to discuss AFOP's fourth quarter 2001 financial results. To participate in AFOP's conference call, please call (212) 699-6810 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 434839. AFOP will also provide a live webcast of its fourth quarter 2001 conference call at AFOP's website www.afop.com. A replay will be available beginning at approximately 4:00 p.m. Pacific Time on January 29, 2001 through 4:00 p.m. Pacific Time on February February: see month. 12th on both the AFOP website, and by dialing (303) 590-3000; confirmation number 434839. 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 existence of future opportunities and growth, including in the enterprise sector and broadband/CATV area, AFOP's anticipated revenue levels, AFOP's ability to control expenses and to maintain operational excellence, financial performance, strategic investments in research and development programs, and AFOP's strategic position when the market for its products recovers 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, the effects of the terrorist attacks in The United States and any related conflicts or similar events worldwide on demand for our products; the economy remaining the same or worsening wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. Noun 1. worsening - process of changing to an inferior state decline in quality, deterioration, declension , the impact of competitive products and pricing, timely design acceptance by our customers, the level of order cancellations, the need for and magnitude of future inventory write downs or impairment charges, 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 30, 2001. 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)
Dec. 31, Dec. 31,
2001 2000
------- -------
ASSETS
Current assets:
Cash and short-term investments $50,065 $66,677
Accounts receivable, net 2,645 5,302
Inventories, net 7,419 6,792
Other current assets 1,291 835
------- -------
Total current assets 61,420 79,606
Property and equipment, net 7,381 8,590
Other assets 576 329
------- -------
Total assets $69,376 $88,525
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 1,425 $ 3,234
Accrued expenses and other
liabilities 1,819 2,611
------- -------
Total current liabilities 3,244 5,845
Long-term liabilities 182 181
Stockholders' equity 65,950 82,499
------- -------
Total liabilities and
stockholders' equity $69,376 $88,525
======= =======
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Pro Forma Condensed Consolidated Statements of Operations
Excluding Stock-Based Compensation and One-Time Charges
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
------------------
Dec. 31, Sept. 30, Dec. 31,
2001 2001 2000
-------- -------- --------
Revenues $ 4,170 $ 4,280 $ 8,848
Cost of revenues 2,873 2,919 5,624
-------- -------- --------
Gross profit 1,297 1,361 3,224
Operating expenses:
Research and development 1,977 1,744 1,549
Sales and marketing 567 612 647
General and administrative 916 999 936
-------- -------- --------
Total operating expenses 3,460 3,355 3,132
-------- -------- --------
Income/(loss) from operations (2,163) (1,994) 92
Interest and other income, net 331 347 588
-------- -------- --------
Income/(loss) before income taxes (1,832) (1,647) 680
Income tax provision -- 97 238
-------- -------- --------
Net income/(loss) $ (1,832) $ (1,744) $ 442
======== ======== ========
Net income/(loss) per share $ (0.05) $ (0.05) $ 0.01
Shares used in computing net
loss per share 34,113 33,439 34,284
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,
2001 2001 2000
-------- -------- --------
Revenues $ 4,170 $ 4,280 $ 8,848
Cost of revenues 2,873 2,919 5,624
Stock-based compensation charge 404 318 573
-------- -------- --------
Total cost of revenues 3,277 3,237 6,197
-------- -------- --------
Gross profit 893 1,043 2,651
Operating expenses:
Research and development 1,977 1,744 1,549
Sales and marketing 567 612 647
General and administrative 916 999 936
Stock-based compensation
charge 374 206 3,318
-------- -------- --------
Total operating expenses 3,834 3,561 6,450
-------- -------- --------
Loss from operations (2,941) (2,518) (3,799)
Interest and other income, net 331 347 588
-------- -------- --------
Loss before income taxes (2,610) (2,171) (3,211)
Income tax provision -- 97 238
-------- -------- --------
Net loss $ (2,610) $ (2,268) $ (3,449)
======== ======== ========
Net loss per share $ (0.08) $ (0.07) $ (0.20)
Shares used in computing net
loss per share 34,113 33,439 17,636
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Pro Forma Condensed Consolidated Statements of Operations
Excluding Stock-Based Compensation and One-Time Charges
(In thousands, except per share amounts)
(Unaudited)
Twelve Months Ended
-------------------
Dec. 31, Dec. 31,
2001 2000
-------- --------
Revenues $ 20,388 $ 22,223
Cost of revenues 13,904 13,374
-------- --------
Gross profit 6,484 8,849
Operating expenses:
Research and development 7,180 4,280
Sales and marketing 2,721 1,982
General and administrative 3,990 2,285
-------- --------
Total operating expenses 13,891 8,547
-------- --------
Loss from operations (7,407) 302
Interest and other income, net 2,297 1,114
-------- --------
Income/(loss) before income taxes (5,110) 1,416
Income tax expense 223 396
-------- --------
Net income/(loss) $ (5,333) $ 1,020
======== ========
Net income/(loss) per share $ (0.16) $ 0.04
Shares used in computing net
loss per share 33,286 25,502
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Twelve Months Ended
-------------------
Dec. 31, Dec. 31,
2001 2000
-------- --------
Revenues $ 20,388 $ 22,223
Cost of revenues 25,615 13,374
Stock-based compensation charge 1,635 950
-------- --------
Gross profit (loss) (6,862) 7,899
Operating expenses:
Research and development 7,180 4,280
Sales and marketing 2,721 1,982
General and administrative 4,022 2,285
Stock-based compensation charge 5,422 8,181
-------- --------
Total operating expenses 19,345 16,728
-------- --------
Loss from operations (26,207) (8,829)
Interest and other income, net 2,297 1,114
-------- --------
Loss before income taxes (23,910) (7,715)
Income tax expense 223 396
-------- --------
Net loss (24,133) (8,111)
Deemed preferred stock dividend -- (14,758)
-------- --------
Net loss attributable to
common stockholders $(24,133) $(22,869)
======== ========
Net loss per share $ (0.73) $ (2.71)
Shares used in computing net
loss per share 33,286 8,452
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