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Alliance Fiber Optic Products, Inc. Reports Third Quarter 2004 Financial Results; Revenues Up 13% From Previous Quarter; Results Driven By Initial FTTH Shipments

Posted on: Wednesday, 27 October 2004, 18:00 CDT

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 third quarter ended September 30, 2004.

Revenues for the third quarter of 2004 totaled $3,665,000 as compared to $3,252,000 in the previous quarter, and $3,009,000 in the third quarter of 2003. The Company recorded a net loss for the third quarter of 2004 of $2,390,000 or $0.06 per share based on 38,970,000 weighted average shares outstanding. This compares to a net loss for the second quarter of 2004 of $2,557,000, or $0.07 per share based on 38,702,000 weighted average shares outstanding, and a net loss for the third quarter of 2003 of $1,925,000, or $0.05 per share based on 35,362,000 weighted average shares outstanding.

Included in the net loss for the quarter ended September 30, 2004 are deferred stock compensation charges of $69,000. 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 September 30, 2003 are deferred stock compensation charges of $295,000.

"As reported earlier in the quarter, AFOP was selected for contracts with our TriWave(TM) Fiber-to-the Home (FTTX) filter products for U.S. deployment of FTTH Broadband by a major telecommunications service provider. Initial shipments of these products along with increased sales of Compact CWDM modules contributed to the 13 percent quarterly increase in total revenues," commented Peter Chang, President and Chief Executive Officer. "We are pleased that momentum in these product areas has been established and with the improvement in revenues, we were also successful in controlling our expenses. Our cost of revenues remained virtually unchanged as compared to the previous quarter, and our operating expenses were held to a four percent quarterly increase. Our balance sheet remains strong with cash and short-term investments totaling $31.3 million at September 30, 2004."

"Based upon input from our customers and currently available information, we anticipate that fourth quarter 2004 revenues will continue moderate growth sequentially. We are pleased with our performance this past quarter and are confident in the long-term growth opportunities of the fiber optics market. As telecommunications companies continue to increase their spending, we believe we are well-positioned to benefit as a key supplier to this growing market," concluded Mr. Chang.

Conference Call

Management will host a conference call at 1:30 p.m. Pacific Time on October 27, 2004 to discuss AFOP's third quarter financial results. To participate in AFOP's conference call, please call (800) 374-0514 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 74246. AFOP will also provide a live webcast of its third 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 (800) 642-1687; confirmation number 74246.

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, 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 the Company's future operating results, including revenues, the Company's long-term growth prospects and the position of the Company and its products in the market, 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, 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 SEC reports, including AFOP's most recent Form 10-QSB for the quarter ended June 30, 2004. 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. -0- *T ALLIANCE FIBER OPTIC PRODUCTS, INC. Condensed Consolidated Balance Sheets (in thousands) (Unaudited) Sep. 30, Dec. 31, 2004 2003 ---------- ---------- ASSETS Current assets: Cash and short-term investments $31,262 $35,898 Accounts receivable 2,116 2,008 Inventories 3,679 3,408 Other current assets 865 948 ---------- ---------- Total current assets 37,922 42,262 Property and equipment, net 5,724 4,459 Other assets 120 362 ---------- ---------- Total assets $43,766 $47,083 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $1,395 $1,501 Accrued expenses and other liabilities 2,216 2,963 ---------- ---------- Total current liabilities 3,611 4,464 Long-term liabilities 320 294 ---------- ---------- Total liabilities 3,931 4,758 Stockholders' equity 39,835 42,325 ---------- ---------- Total liabilities and stockholders' equity $43,766 $47,083 ========== ========== ALLIANCE FIBER OPTIC PRODUCTS, INC. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended -------------------------- ----------------- Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30, 2004 2004 2003 2004 2003 -------- -------- -------- -------- -------- Revenues $3,665 $3,252 $3,009 $9,905 $7,994 Cost of revenues 3,159 3,185 2,466 9,458 6,913 -------- -------- -------- -------- -------- Gross profit 506 67 543 447 1,081 -------- -------- -------- -------- -------- Operating expenses: Research and development 1,474 1,472 1,547 4,477 4,342 Sales and marketing 469 525 426 1,484 1,519 General and administrative 927 770 731 2,599 2,560 -------- -------- -------- -------- -------- Total operating expenses 2,870 2,767 2,704 8,560 8,421 Loss from operations (2,364) (2,700) (2,161) (8,113) (7,340) Interest and other income/(expense), net (26) 143 236 358 610 -------- -------- -------- -------- -------- Net loss $(2,390) $(2,557) $(1,925) $(7,755) $(6,730) ======== ======== ======== ======== ======== Net loss per share - basic and diluted $(0.06) $(0.07) $(0.05) $(0.20) $(0.19) Weighted average shares outstanding 38,970 38,702 35,362 38,492 35,181 *T

Source: Business Wire

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