Alliance Fiber Optic Products, Inc. Reports Second Quarter 2004 Financial Results.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: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 30, 2004. Revenues for the second quarter of 2004 totaled $3,252,000 as compared to $2,989,000 in the previous quarter, and $2,609,000 in the second quarter of 2003. The Company recorded a net loss for the second quarter of 2004 of $2,557,000, or $0.07 per share based on 38.7 million weighted average shares outstanding. This compares to a net loss for the first quarter of 2004 of $2,806,000, or $0.07 per share based on 37.8 million weighted average shares outstanding, and a net loss for the second quarter of 2003 of $2,140,000, or $0.06 per share based on 35.0 million weighted average shares outstanding. Included in the net loss for the quarter ended June 30, 2004 are deferred stock compensation charges of $87,000. Included in the net loss for the quarter ended March 31, 2004 are deferred stock compensation charges of $129,000. Included in the net loss for the quarter ended June 30, 2003 are deferred stock compensation charges of $106,000. 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, "We are pleased not only with our financial results for the quarter, but with the progress we have made with new products, particularly our FTTX (Fiber To The X) Refers to all the "fiber-to-the-wherever" technologies. See FTTC and FTTP. See also FTX. filters. During the quarter AFOP was awarded a significant contract, for a major U.S. FTTP (Fiber To The Premises) The installation of optical fiber from the carrier directly into the home or office. Also called "fiber to the home" (FTTH). See PON and FTTC. See also FTP. deployment, utilizing our Fiber-to-the-Home TriWave(TM) filters." "Total revenues increased 9 percent sequentially, and 25 percent from the year ago quarter. In conjunction with the improvement in sales, we carefully controlled our 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. , which we reduced by 5% in the quarter. Our balance sheet remains healthy with cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments totaling $32.7 million at quarter end," added Mr. Chang. "Based on currently available information and input from our customers we anticipate that third quarter 2004 revenues will continue moderate growth sequentially. We are pleased with our execution in this past quarter and our confidence in the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth prospects of the fiber optics fiber optics, transmission of digitized messages or information by light pulses along hair-thin glass fibers. Each fiber is surrounded by a cladding having a high index of refractance so that the light is internally reflected and travels the length of the fiber market continues to be high," concluded Mr. Chang. Conference Call Management will host a conference call at 1:30 p.m. Pacific Time on July 28, 2004 to discuss AFOP's second quarter financial results. To participate in AFOP's conference call, please call (303) 262-2075 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 11002713. AFOP will also provide a live webcast of its second quarter 2004 conference call at AFOP's website www.afop.com., and a replay of the webcast will be available on the website following the call. A telephone replay will be available for two weeks following the call. The dial in for the instant replay is (303) 590-3000; confirmation number 11002713. 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, 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 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 future operating results, including revenues, and the Company's long-term growth 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 introduction of new technologies, timely design acceptance by our customers, the acceptance of new products and technologies by our customers, loss of key customers, 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-QSB for the quarter ended March 31, 2004. 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,
2004 2003
-------- --------
ASSETS
Current assets:
Cash and short-term investments $32,719 $35,898
Accounts receivable 1,723 2,008
Inventories 3,820 3,408
Other current assets 1,300 948
-------- --------
Total current assets 39,562 42,262
Property and equipment, net 6,012 4,459
Other assets 165 362
-------- --------
Total assets $45,739 $47,083
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,447 $ 1,501
Accrued expenses and other liabilities 2,093 2,963
-------- --------
Total current liabilities 3,540 4,464
Long-term liabilities 323 294
-------- --------
Total liabilities 3,863 4,758
Stockholders' equity 41,876 42,325
-------- --------
Total liabilities and stockholders' equity $45,739 $47,083
======== ========
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,
2004 2004 2003 2004 2003
-------- -------- -------- -------- --------
Revenues $ 3,252 $ 2,989 $ 2,609 $ 6,241 $ 4,985
Cost of revenues 3,185 3,114 2,155 6,299 4,447
-------- -------- -------- -------- --------
Gross profit/(loss) 67 (125) 454 (58) 538
-------- -------- -------- -------- --------
Operating expenses:
Research and development 1,472 1,531 1,399 3,003 2,795
Sales and marketing 525 490 522 1,015 1,093
General and
administrative 770 901 880 1,671 1,829
-------- -------- -------- -------- --------
Total operating
expenses 2,767 2,922 2,801 5,689 5,717
Loss from operations (2,700) (3,047) (2,347) (5,747) (5,179)
Interest and other income,
net 143 241 207 384 374
-------- -------- -------- -------- --------
Net loss $(2,557) $(2,806) $(2,140) $(5,363) $(4,805)
======== ======== ======== ======== ========
Net loss per share - basic
and diluted $ (0.07) $ (0.07) $ (0.06) $ (0.14) $ (0.14)
Weighted average shares
outstanding 38,702 37,801 35,069 38,251 35,057
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