Alliance Fiber Optic Products, Inc. Reports Third Quarter 2002 Financial Results.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)--Oct. 24, 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, subsystems and integrated modules for the optical network equipment market, today reported its financial results for the third quarter ended September September: see month. 30, 2002. Revenues for the third quarter of 2002 totaled $3,105,000 as compared to $3,665,000 in the previous quarter, and $4,280,000 in the third 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 third quarter of 2002 of $5,324,000, or $0.15 per share based on 34.8 million shares outstanding. This compares to a net loss for the second quarter of 2002 of $4,496,000, or $0.13 per share based on 34.5 million shares outstanding, and 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. 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 provision, excess facility charge 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 third quarter of 2002 was $2,410,000, or $0.07 per share based on 34.8 million shares outstanding. Pro forma net loss for the second quarter of 2002 was $2,439,000, or $0.07 per share based on 34.5 million shares outstanding, and 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. These pro forma calculations exclude a third quarter 2002 non-cash charge for a $1,245,000 inventory provision and a $1,680,000 excess facility charge. These calculations also exclude the second quarter 2002 non-cash charge for a $949,000 inventory provision and $972,000 fixed asset write down charge, as well as the amortization of deferred stock-based compensation for both 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, "While business conditions continue to be challenging for AFOP and our industry, we feel confident that our continuing focus on operational efficiency and careful control of expenses will enable us to achieve improved financial results. During the quarter we took a non-cash excess facility charge of $1.68 million for the consolidation of one of our buildings 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. . Additionally, we maintained our financial position by reducing sales, marketing, general and administrative expenses, by 8% from last quarter, and by maintaining our cash burn rate at $1.6 million, the same level as last quarter. Our balance sheet remained strong at quarter end with total cash and investments of $44.7 million, 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. ." Conference Call Management will host a conference call at 2:30 p.m. Pacific Time on October October: see month. 24, 2002 to discuss AFOP's third quarter 2002 financial results. To participate in AFOP's conference call, please call 212/699-6800 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 502156. AFOP will also provide a live webcast of its third quarter 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 502156. 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, 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 financial results, focus on cost control and operational efficiency, rationalize ra·tion·al·ize v. 1. To make rational. 2. To devise self-satisfying but false or inconsistent reasons for one's behavior, especially as an unconscious defense mechanism through which irrational acts or feelings are made to appear its operations, develop products and technologies customers desire and make prudent R&D investments, the features and benefits of the Company's products, market opportunities, 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, the need for and magnitude of future inventory write downs or 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. 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 June June: 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)
Sept. 30 Dec. 31,
2002 2001
---------- ---------
ASSETS
Current assets:
Cash and short-term investments $44,716 $50,065
Accounts receivable, net 1,036 2,645
Inventories, net 3,125 7,419
Other current assets 1,071 1,291
---------- ---------
Total current assets 49,948 61,420
Property and equipment, net 5,501 7,381
Other assets 389 575
---------- ---------
Total assets $55,838 $69,376
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 944 $ 1,425
Accrued expenses and other liabilities 2,640 1,819
---------- ---------
Total current liabilities 3,584 3,244
Long-term liabilities 966 182
Stockholders' equity 51,288 65,950
---------- ---------
Total liabilities and
stockholders' equity $55,838 $69,376
========== =========
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Pro Forma Condensed Consolidated Statements of Operations
Excluding Stock-Based Compensation and Non-Recurring Items
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
--------------------------------
Sept. 30, June 30, Sept. 30
2002 2002 2001
---------- --------- ---------
Revenues $3,105 $3,665 $4,280
Cost of revenues 2,669 2,939 2,919
---------- --------- ---------
Gross profit 436 726 1,361
Operating expenses:
Research and development 1,388 1,965 1,744
Sales and marketing 682 746 612
General and administrative 862 930 999
---------- --------- ---------
Total operating expenses 2,932 3,641 3,355
---------- --------- ---------
Loss from operations (2,496) (2,915) (1,994)
Interest and other income, net 72 486 347
---------- --------- ---------
Income/(loss) before income taxes (2,424) (2,429) (1,647)
Income tax provision (14) 10 97
---------- --------- ---------
Net income/(loss) $(2,410) $(2,439) $(1,744)
========== ========== =========
Net income/(loss) per share
- diluted $(0.07) $(0.07) $(0.05)
Shares used in computing net
loss per share - diluted 34,846 34,546 33,439
Reconciliation from GAAP results
to pro forma results:
GAAP net loss $(5,324) $(4,496) $(2,268)
Stock-based compensation charge
Cost of revenues (110) (70) 318
Operating expenses 99 206 206
Provision for excess and obsolete
inventory 1,245 949 --
Write down/impairment of fixed
assets -- 972 --
Excess Facility Charges 1,680 -- --
---------- --------- ---------
Pro forma net income/(loss) $(2,410) $(2,439) $(1,744)
========== ========== =========
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
----------------------------------
Sept. 30, June 30, Sept. 30,
2002 2002 2001
-------- -------- --------
Revenues $ 3,105 $ 3,665 $ 4,280
Cost of revenues 3,914 4,859 2,919
Stock-based
compensation charge (110) (70) 318
-------- -------- --------
Total cost of revenues 3,804 4,789 3,237
-------- -------- --------
Gross profit/(loss) (699) (1,124) 1,043
Operating expenses:
Research and development 1,388 1,966 1,744
Sales and marketing 682 746 612
General and administrative 862 930 999
Excess Facility Charges 1,680 -- --
Stock-based
compensation charge 99 206 206
-------- -------- --------
Total operating
expenses 4,711 3,848 3,561
-------- -------- --------
Loss from operations (5,410) (4,972) (2,518)
Interest and
other income, net 72 486 347
-------- -------- --------
Loss before income taxes (5,338) (4,486) (2,171)
Income tax provision (14) 10 97
-------- -------- --------
Net loss $ (5,324) $ (4,496) $ (2,268)
======== ======== ========
Net loss per share
- basic and diluted $ (0.15) $ (0.13) $ (0.07)
Shares used in computing
net loss per share
- basic and diluted 34,846 34,546 33,439
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