AFOP Reports 1st Quarter 2007 Results

  
    
  
  
    
      Alliance Fiber Optic Products, Inc. (NASDAQ:AFOP), an innovative 
      supplier of fiber optic components, subsystems and integrated modules 
      for the optical network equipment market, today reported its financial 
      results for the first quarter ended March 31, 2007.
    
    
      Revenues for the first quarter of 2007 totaled $6,701,000, a 28% 
      increase from revenues of $5,221,000 recorded in the first quarter of 
      2006. This compares with revenues of $7,746,000 for the fourth quarter 
      of 2006. The Company recorded net income for the first quarter of 2007 
      of $389,000, or $0.01 per share, and improved over a net loss for the 
      first quarter of 2006 of ($373,000), or ($0.01) per share. This compares 
      with net income for the fourth quarter of 2006 of $653,000, or $0.02 per 
      share.
    
    
      Included in net income for the quarter ended March 31, 2007 was $ 
      124,000 of stock-based compensation charges under FAS 123(R). Included 
      in expenses for the quarters ended March 31, 2006 and December 31, 2006 
      were $77,000 and $106,000 of stock-based compensation charges under SFAS 
      123(R) respectively.
    
    
      Peter Chang, President and Chief Executive Officer, commented, “Despite 
      a challenging first quarter due to customer inventory consolidation, I 
      am satisfied with our financial results. When compared to the year ago 
      period, revenues increased by 28% and our gross margin percentage 
      continued improving to above 31%. In addition, in spite of our sales 
      decline sequentially, operating profits declined by only $120,000. Our 
      new product sales and operating efficiency contributed to such 
      improvements. Our operating cash flow was again positive and our balance 
      sheet remains strong with cash and cash equivalents over $31M.”
    
    
      “I am particularly pleased with the progress 
      we made in strategic markets like FTTX and Broadband. In the first 
      quarter, we began to receive new volume orders for our outdoor SCOUTTM 
      products for FTTX deployment. Based on current order activities, we 
      expect that revenues will grow 15% sequentially in the second quarter of 
      2007. Additionally, as we continue our focus on operational 
      efficiencies, we are targeting higher net profits in the coming quarters,” 
      concluded Mr. Chang.
    
    
      Conference Call
    
    
      Management will host a conference call at 1:30 p.m. Pacific Time on 
      April 24, 2007 to discuss AFOP’s first quarter 
      2007 financial results. To participate in AFOP’s 
      conference call, please call 877-407-9210 at least ten minutes prior to 
      the call in order for the operator to connect you. The confirmation 
      number for the call is 236629. AFOP will also provide a live webcast of 
      its first quarter 2007 conference call at AFOP’s 
      website www.afop.com. An audio replay 
      will be available until May 1. The dial in for the replay is 
      877-660-6853. The replay pass codes (account # 286; conference ID#: 
      236629) are both required for the replay.
    
    
      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 systems to the long-haul, enterprise, metropolitan and last 
      mile access segments of the communications network. AFOP offers a broad 
      product line of passive optical components including interconnect 
      systems, couplers and splitters, thin film DWDM components and modules, 
      fixed and variable optical attenuators, and depolarizers. AFOP is 
      headquartered in Sunnyvale, California, with manufacturing and product 
      development capabilities in the United States, 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 our future 
      prospects, our beliefs regarding factors contributing to quarterly 
      results, our ability to control expenses, our ability to improve 
      operational efficiencies, our order trends and customer activity, and 
      expected revenue growth and increased net profits, are forward looking 
      statements within the meaning of the "safe harbor" provisions of the 
      Private Securities Litigation Reform Act of 1995. These forward-looking 
      statements 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, customer demand, the timing of customer 
      orders, 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, failure of cost control 
      initiatives, financial stability in foreign markets, and other risks 
      detailed from time to time in our SEC reports, including AFOP's Form 
      10-K for the year ended December 31, 2006. These 
      forward-looking statements speak only as of the date hereof. 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)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Mar. 31
        
        
        
        
          Dec. 31,
        
      
      
        
        
        
        
        
          2007 
        
        
        
        
          2006 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
      
      
        
        
        
          Cash and short-term investments
        
        
          $ 31,221 
        
        
        
        
          $ 31,178 
        
      
      
        
        
        
          Accounts receivable
        
        
          4,406 
        
        
        
        
          4,009 
        
      
      
        
        
        
          Inventories
        
        
          4,943 
        
        
        
        
          4,465 
        
      
      
        
        
        
          Other current assets
        
        
          597 
        
        
        
        
          601 
        
      
      
        
        
        
          Total current assets
        
        
          41,167 
        
        
        
        
          40,253 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Property and equipment, net
        
        
          4,166 
        
        
        
        
          4,264 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Other assets
        
        
          170 
        
        
        
        
          176 
        
      
      
        
        
        
        
        
           
        
        
        
        
           
        
      
      
        
        
        
          Total assets
        
        
          $ 45,503 
        
        
        
        
          $44,693 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND STOCKHOLDERS' EQUITY
        
        
        
        
        
        
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
      
      
        
        
        
          Accounts payable
        
        
          $ 3,637 
        
        
        
        
          $ 2,950 
        
      
      
        
        
        
          Accrued expenses and other liabilities
        
        
          2,469 
        
        
        
        
          2,909 
        
      
      
        
        
        
          Total current liabilities
        
        
          6,106 
        
        
        
        
          5,859 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Long-term liability
        
        
          908 
        
        
        
        
          930 
        
      
      
        
        
        
          Total liabilities
        
        
          7,014 
        
        
        
        
          6,789 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Stockholders' equity
        
        
          38,489 
        
        
        
        
          37,904 
        
      
      
        
        
        
        
        
           
        
        
        
        
           
        
      
      
        
        
        
          Total liabilities and stockholders' equity
        
        
          $ 45,503 
        
        
        
        
          $44,693 
        
      
    
    
      
        
          ALLIANCE FIBER OPTIC PRODUCTS, INC.
        
      
      
        
          Condensed Consolidated Statements of Operations
        
      
      
        
          (In thousands, except per share amounts)
        
      
      
        
          (Unaudited)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
             
          
        
        
          
            Three Months Ended
          
        
      
      
        
        
        
        
        
          Mar. 31,
        
        
        
        
          Dec. 31,
        
        
        
        
          Mar. 31,
        
      
      
        
        
        
        
        
          2007 
        
        
        
        
          2006 
        
        
        
        
          2006 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Revenues
        
        
          $ 6,701 
        
        
        
        
          $ 7,746 
        
        
        
        
          $ 5,221 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cost of revenues
        
        
          4,602 
        
        
        
        
          5,473 
        
        
        
        
          3,884 
        
      
      
        
        
        
          Gross profit
        
        
          2,099 
        
        
        
        
          2,273 
        
        
        
        
          1,337 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating expenses:
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Research and development
        
        
          689 
        
        
        
        
          798 
        
        
        
        
          759 
        
      
      
        
        
        
          Sales and marketing
        
        
          569 
        
        
        
        
          571 
        
        
        
        
          586 
        
      
      
        
        
        
          General and administrative
        
        
          861 
        
        
        
        
          805 
        
        
        
        
          763 
        
      
      
        
        
        
          Total operating expenses
        
        
          2,119 
        
        
        
        
          2,174 
        
        
        
        
          2,108 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income (loss) from operations
        
        
          (20)
        
        
        
        
          99 
        
        
        
        
          (771)
        
      
      
        
          Interest and other income, net
        
        
          409 
        
        
        
        
          554 
        
        
        
        
          398 
        
      
      
        
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
      
      
        
          Net income (loss)
        
        
          $ 389 
        
        
        
        
          $ 653 
        
        
        
        
          $ (373)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net income (loss) per share:
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Basic
        
        
          $ 0.01 
        
        
        
        
          $ 0.02 
        
        
        
        
          $ (0.01)
        
      
      
        
        
        
          Diluted
        
        
          $ 0.01 
        
        
        
        
          $ 0.01 
        
        
        
        
          $ (0.01)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Shares used in per share calculation:
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Basic
        
        
          40,539 
        
        
        
        
          40,400 
        
        
        
        
          39,771 
        
      
      
        
        
        
          Diluted
        
        
          44,664 
        
        
        
        
          45,196 
        
        
        
        
          39,771 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Included in costs and expenses above:
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Stock based compensation charges
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Cost of revenue
        
        
          $ 51 
        
        
        
        
          $ 44 
        
        
        
        
          $ 23 
        
      
      
        
        
        
          Research and development
        
        
          20 
        
        
        
        
          19 
        
        
        
        
          14 
        
      
      
        
        
        
          Sales and marketing
        
        
          12 
        
        
        
        
          10 
        
        
        
        
          12 
        
      
      
        
        
        
          General and administrative
        
        
          41 
        
        
        
        
          33 
        
        
        
        
          28 
        
      
      
        
        
        
          Total
        
        
          $ 124 
        
        
        
        
          $ 106 
        
        
        
        
          $ 77