Alliance Fiber Optic Products, Inc. Reports Third Quarter 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)--Oct. 25, 2001 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 ), a supplier of fiber optic components and integrated modules for the optical network equipment market, today reported its financial results for the third quarter ended September 30, 2001. Revenues for the third quarter totaled $4,280,000, a 6% decline from the second quarter of 2001, and a 28% decline from the year ago 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 third quarter of 2001 was $1,744,000, or $0.05 per share based on 33.4 million basic shares outstanding. This compares to pro forma net loss of $1,988,000, or $0.06 per share based on 33.0 million basic shares outstanding for the second quarter of 2001, and pro forma net income of $728,000, or $0.02 per share based on 30.6 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 for the third quarter of 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. for the $6,543,000 inventory reserve provision and the $5.2 million 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 figures 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, if any. 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 2000. Without the pro forma adjustments to eliminate the deferred stock compensation charges, inventory provision, impairment charge, and conversion of the Company's preferred stock into common stock, the Company recorded 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. This compares to a net loss for the second quarter of 2001 of $16,480,000, or $0.50 per share based on 33.0 million shares outstanding, and a net loss for the third quarter of 2000 of $2,928,000, or $0.57 per share based on 5.2 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 very difficult market conditions, we were able to achieve relatively flat quarterly revenues, compared to last quarter. During the third quarter we focused on strengthening strategic product portfolios, reducing 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. , streamlining capital expenditures, and realigning manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. as we continue through this difficult period." "While visibility remains poor, based upon data available to us today, and input from key customers, the current outlook for AFOP's fourth quarter 2001 is for revenues to remain relatively flat on a sequential basis," added Mr. Chang. "Given our strong balance sheet, financial controls, focused research and development programs, and broad and diversified diversified (di·verˑ·s customer base, we believe that AFOP is well-positioned for success in the long term," concluded Mr. Chang. Conference Call Management will host a conference call at 2:30 p.m. Pacific Time on October 25, 2001 to discuss AFOP's third quarter 2001 financial results. To participate in AFOP's conference call, please call 303/262-2127 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 401337. AFOP will also provide a live webcast of its third quarter 2001 conference call at AFOP's website www.afop.com. A replay will be available beginning at approximately 5:00 p.m. Pacific Time on October 25, 2001 through 5:00 p.m. Pacific Time on November 8th on both the AFOP website, and by dialing 303/590-3000; confirmation number 401337. 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 demand for AFOP's products, the existence of future opportunities and growth, the success of AFOP's cost reduction measures, AFOP's anticipated revenue levels, financial performance, and 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. need for advanced fiber optic solutions 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 orders and 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 domestic and 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 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
(Unaudited, in thousands)
Sept. 30, Dec. 31,
2001 2000
--------- ---------
ASSETS
Current assets:
Cash and short-term investments $ 53,163 $ 66,677
Accounts receivable, net 2,779 5,302
Inventories 6,946 6,792
Other current assets 946 835
------- -------
Total current assets 63,834 79,606
Property and equipment, net 7,223 8,590
Other assets 689 329
------- -------
Total assets $ 71,746 $ 88,525
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 1,734 $ 3,234
Accrued expenses 2,141 2,611
------- -------
Total current liabilities 3,875 5,845
Long-term liabilities 169 181
Stockholders' equity 67,702 82,499
------- -------
Total liabilities and stockholders' equity $ 71,746 $ 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
------------------
Sept. 30, June 30, Sept. 30,
2001 2001 2000
--------- -------- ---------
Revenues $ 4,280 $ 4,568 $ 5,961
Cost of revenues 2,919 3,556 3,613
-------- -------- --------
Gross profit 1,361 1,012 2,348
Operating expenses:
Research and development 1,744 1,784 823
Sales and marketing 612 733 520
General and administrative 999 1,116 527
-------- -------- --------
Total operating expenses 3,355 3,633 1,870
-------- -------- --------
Loss from operations (1,994) (2,621) 478
Interest and other income, net 347 636 337
-------- -------- --------
Loss before income taxes (1,647) (1,985) 815
Income tax provision 97 3 87
-------- -------- --------
Net income/(loss) $ (1,744) $ (1,988) $ 728
======== ======== ========
Net income/(loss) per share $ (0.05) $ (0.06) $ 0.02
Shares used in computing net loss
per share 33,439 32,987 30,600
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,
2001 2001 2000
--------- -------- ---------
Revenues $ 4,280 $ 4,568 $ 5,961
Cost of revenues 2,919 15,267 3,613
Stock-based compensation charge 318 427 269
-------- -------- --------
Total cost of revenues 3,237 15,694 3,882
-------- -------- --------
Gross profit (loss) 1,043 (11,126) 2,079
Operating expenses:
Research and development 1,744 1,784 823
Sales and marketing 612 733 520
General and administrative 999 1,148 527
Stock-based compensation charge 206 2,322 3,387
-------- -------- --------
Total operating expenses 3,561 5,987 5,257
-------- -------- --------
Loss from operations (2,518) (17,113) (3,178)
Interest and other income, net 347 636 337
-------- -------- --------
Loss before income taxes (2,171) (16,477) (2,841)
Income tax provision 97 3 87
-------- -------- --------
Net loss $ (2,268) $(16,480) $ (2,928)
======== ======== ========
Net loss per share $ (0.07) $ (0.50) $ (0.57)
Shares used in computing net loss
per share 33,439 32,987 5,152
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