AFOP Reports 2nd Quarter 2007 Results with 39% Revenue Growth and Record Profits

  
    
  
  
    
      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 second quarter ended June 30, 2007.
    
    
      Revenues for the second quarter of 2007 totaled $8,701,000, a 39% 
      increase from revenues of $6,252,000 recorded in the second quarter of 
      2006 and 30% increase compared with revenue of $6,701,000 for the first 
      quarter of 2007. The Company recorded a net profit for the second 
      quarter of 2007 of $864,000, or $0.02 per share, significantly improved 
      over $0.00 per share of the second quarter of 2006. This compares to a 
      net profit for the first quarter of 2007 of $389,000, or $0.01 per share.
    
    
      Included in the net profit for the quarter ended June 30, 2007 was 
      $103,000 of stock-based compensation charges under FAS 123(R). Included 
      in expenses for the quarter ended June 30, 2006 and the first quarter of 
      2007 were $32,000 and $124,000 of stock-based compensation charges under 
      SFAS 123(R), respectively.
    
    
      Peter Chang, President and Chief Executive Officer, commented, “We 
      are very pleased with the financial progress made in the quarter ended 
      June 30, 2007. In addition to 39% revenue growth compared with the year 
      ago quarter, the second quarter of 2007 marked an important milestone in 
      AFOP quarterly financial history – AFOP 
      generated record operating profits of $375,000 and record net profits of 
      $864,000 in the quarter ended June 30, 2007. Both are improved 
      considerably compared with either the first quarter of 2007 or the year 
      ago quarter.”
    
    
      “We believe our performance in revenue growth 
      and profitability improvement reflects increasing demand from key 
      customers, solid progress in product development, and continued 
      improvement of our operations. Our balance sheet remains strong, with 
      cash and cash equivalents increasing by almost $1 million in the second 
      quarter of 2007 to over $32 million.”
    
    
      “Based on input from our customers and current 
      backlog, we expect that revenues in the quarter ended September 30, 
      2007, will be above $9 million. Additionally, with our continuing focus 
      on operational efficiencies, we believe profitability in the second half 
      of 2007 will continue to improve,” concluded 
      Mr. Chang.
    
    
      Conference Call
    
    
      Management will host a conference call at 1:30 p.m. Pacific Time on 
      July 25, 2007 to discuss AFOP’s second 
      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 249079. AFOP will also provide a live webcast of 
      its second quarter 2007 conference call at AFOP’s 
      website: www.afop.com. An audio 
      replay will be available until August 1, 2007. The dial in for the 
      replay is 877-660-6853. The replay pass-codes (account # 286; conference 
      ID#: 249079) 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 ability to control expenses, our ability to improve 
      operational efficiencies, our order trends and customer demand, our 
      product development progress, and future revenue growth and 
      profitability, 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-Q for the quarter ended March 31, 
      2007. 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)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Jun. 30,
        
        
        
        
          Dec. 31,
        
      
      
        
        
        
        
        
          2007
        
        
        
        
          2006
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
      
      
        
        
        
          Cash and short-term investments
        
        
          $
        
        
          32,186
        
        
        
        
          $
        
        
          31,178
        
      
      
        
        
        
          Accounts receivable
        
        
        
        
          5,184
        
        
        
        
        
        
          4,009
        
      
      
        
        
        
          Inventories
        
        
        
        
          5,226
        
        
        
        
        
        
          4,465
        
      
      
        
        
        
          Other current assets
        
        
           
        
        
          614
        
        
        
        
           
        
        
          601
        
      
      
        
        
        
          Total current assets
        
        
        
        
          43,210
        
        
        
        
        
        
          40,253
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Property and equipment, net
        
        
        
        
          4,217
        
        
        
        
        
        
          4,264
        
      
      
        
          Other assets
        
        
        
        
          178
        
        
        
        
        
        
          176
        
      
      
        
        
        
        
        
           
        
        
        
        
           
        
      
      
        
        
        
          Total assets
        
        
          $
        
        
          47,605
        
        
        
        
          $
        
        
          44,693
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND STOCKHOLDERS' EQUITY
        
        
        
        
        
        
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
      
      
        
        
        
          Accounts payable
        
        
          $
        
        
          3,873
        
        
        
        
          $
        
        
          2,950
        
      
      
        
        
        
          Accrued expenses and other liabilities
        
        
           
        
        
          2,999
        
        
        
        
           
        
        
          2,909
        
      
      
        
        
        
          Total current liabilities
        
        
        
        
          6,872
        
        
        
        
        
        
          5,859
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Long-term liabilities
        
        
           
        
        
          904
        
        
        
        
           
        
        
          930
        
      
      
        
        
        
          Total liabilities
        
        
        
        
          7,776
        
        
        
        
        
        
          6,789
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Stockholders' equity
        
        
        
        
          39,829
        
        
        
        
        
        
          37,904
        
      
      
        
        
        
        
        
           
        
        
        
        
           
        
      
      
        
        
        
          Total liabilities and stockholders' equity
        
        
          $
        
        
          47,605
        
        
        
        
          $
        
        
          44,693
        
      
    
    
      
        
          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,
        
      
      
        
        
        
        
        
          2007
        
        
        
        
          2007
        
        
        
        
          2006
        
        
        
        
          2007
        
        
        
        
          2006
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Revenues
        
        
          $
        
        
          8,701
        
        
        
        
          $
        
        
          6,701
        
        
        
        
        
        
          $
        
        
          6,252
        
        
        
        
        
        
          $
        
        
          15,402
        
        
        
        
          $
        
        
          11,473
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cost of revenues
        
        
           
        
        
          5,929
        
        
        
        
           
        
        
          4,602
        
        
           
        
        
        
        
           
        
        
          4,621
        
        
           
        
        
        
        
           
        
        
          10,531
        
        
        
        
           
        
        
          8,505
        
        
           
        
      
      
        
        
        
          Gross profit
        
        
           
        
        
          2,772
        
        
        
        
           
        
        
          2,099
        
        
           
        
        
        
        
           
        
        
          1,631
        
        
           
        
        
        
        
           
        
        
          4,871
        
        
        
        
           
        
        
          2,968
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating expenses:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Research and development
        
        
        
        
          848
        
        
        
        
        
        
          689
        
        
        
        
        
        
        
        
          708
        
        
        
        
        
        
        
        
          1,537
        
        
        
        
        
        
          1,467
        
        
        
      
      
        
        
        
          Sales and marketing
        
        
        
        
          634
        
        
        
        
        
        
          569
        
        
        
        
        
        
        
        
          555
        
        
        
        
        
        
        
        
          1,203
        
        
        
        
        
        
          1,141
        
        
        
      
      
        
        
        
          General and administrative
        
        
           
        
        
          915
        
        
        
        
           
        
        
          861
        
        
           
        
        
        
        
           
        
        
          720
        
        
           
        
        
        
        
           
        
        
          1,776
        
        
        
        
           
        
        
          1,483
        
        
           
        
      
      
        
        
        
          Total operating expenses
        
        
        
        
          2,397
        
        
        
        
        
        
          2,119
        
        
        
        
        
        
        
        
          1,983
        
        
        
        
        
        
        
        
          4,516
        
        
        
        
        
        
          4,091
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income (loss) from operations
        
        
        
        
          375
        
        
        
        
        
        
          (20
        
        
          )
        
        
        
        
        
        
          (352
        
        
          )
        
        
        
        
        
        
          355
        
        
        
        
        
        
          (1,123
        
        
          )
        
      
      
        
          Interest and other income, net
        
        
        
        
          489
        
        
        
        
        
        
          409
        
        
        
        
        
        
        
        
          371
        
        
        
        
        
        
        
        
          898
        
        
        
        
        
        
          769
        
        
        
      
      
        
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
      
      
        
          Net income (loss)
        
        
          $
        
        
          864
        
        
        
        
          $
        
        
          389
        
        
           
        
        
        
        
          $
        
        
          19
        
        
           
        
        
        
        
          $
        
        
          1,253
        
        
        
        
          $
        
        
          (354
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net income (loss) per share:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Basic
        
        
          $
        
        
          0.02
        
        
        
        
          $
        
        
          0.01
        
        
        
        
        
        
          $
        
        
          0.00
        
        
        
        
        
        
          $
        
        
          0.03
        
        
        
        
          $
        
        
          (0.01
        
        
          )
        
      
      
        
        
        
          Diluted
        
        
          $
        
        
          0.02
        
        
        
        
          $
        
        
          0.01
        
        
        
        
        
        
          $
        
        
          0.00
        
        
        
        
        
        
          $
        
        
          0.03
        
        
        
        
          $
        
        
          (0.01
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Shares used in per share calculation:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Basic
        
        
        
        
          40,825
        
        
        
        
        
        
          40,539
        
        
        
        
        
        
        
        
          40,086
        
        
        
        
        
        
        
        
          40,706
        
        
        
        
        
        
          39,930
        
        
        
      
      
        
        
        
          Diluted
        
        
        
        
          45,608
        
        
        
        
        
        
          44,664
        
        
        
        
        
        
        
        
          40,086
        
        
        
        
        
        
        
        
          45,489
        
        
        
        
        
        
          39,930
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Included in costs and expenses above:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Stock based compensation charges
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Cost of revenue
        
        
          $
        
        
          41
        
        
        
        
          $
        
        
          51
        
        
        
        
        
        
          $
        
        
          9
        
        
        
        
        
        
          $
        
        
          92
        
        
        
        
          $
        
        
          32
        
        
        
      
      
        
        
        
          Research and development
        
        
        
        
          17
        
        
        
        
        
        
          20
        
        
        
        
        
        
        
        
          6
        
        
        
        
        
        
        
        
          37
        
        
        
        
        
        
          20
        
        
        
      
      
        
        
        
          Sales and marketing
        
        
        
        
          12
        
        
        
        
        
        
          12
        
        
        
        
        
        
        
        
          4
        
        
        
        
        
        
        
        
          24
        
        
        
        
        
        
          16
        
        
        
      
      
        
        
        
          General and administrative
        
        
           
        
        
          33
        
        
        
        
           
        
        
          41
        
        
           
        
        
        
        
           
        
        
          13
        
        
           
        
        
        
        
           
        
        
          74
        
        
        
        
           
        
        
          41
        
        
           
        
      
      
        
        
        
          Total
        
        
          $
        
        
          103
        
        
        
        
          $
        
        
          124
        
        
           
        
        
        
        
          $
        
        
          32
        
        
           
        
        
        
        
          $
        
        
          227
        
        
        
        
          $
        
        
          109