Alliance Fiber Optic Products, Inc. (Nasdaq CM: 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 fourth quarter ended
December 31, 2007. Revenues for the fourth quarter of 2007 totaled
$9,214,000, which represents a 19% increase over revenues of
$7,746,000 reported in the fourth quarter of 2006, and are slightly
higher than the revenues of $9,170,000 reported in the previous
quarter. The Company recorded net income for the fourth quarter of
2007 of $1,045,000, or $0.03 per share based on 41.2 million shares
outstanding, significantly improved over $653,000, or $0.02 per
share based on 40.4 million shares outstanding for the fourth
quarter of 2006. This compares to net income for the third quarter
of 2007 of $1,065,000. Revenues for fiscal year 2007 totaled
$33,786,000, which represents a 26% increase over revenues of
$26,792,000 reported in the previous year. The Company recorded a
net profit for fiscal year 2007 of $3,363,000 or $0.08 per share
based on 40.9 million shares outstanding. This represents a 412%
improvement compared with a net profit of $657,000 for the previous
year. On an annual operating profit basis, the Company improved
significantly from a loss of $1,000,000 in fiscal year 2006 to a
profit of $1,605,000 in fiscal year 2007. Included in expenses for
the quarter ended December 31, 2007 was $80,000 of stock-based
compensation charges under SFAS 123(R). Included in expenses for
the quarter ended December 31, 2006 was $106,000 of stock-based
compensation charges under SFAS 123(R). Included in expenses for
the year ended December 31, 2007 was $398,000 of stock-based
compensation charges under SFAS 123(R). Included in expenses for
the year ended December 31, 2006 was $298,000 of stock-based
compensation charges under SFAS 123(R). �The fourth quarter capped
a year of consistent improvement and significant milestones for
AFOP,� commented Peter Chang, President and Chief Executive
Officer. �Revenues grew double digits again in the fourth quarter
over the year ago quarter and resulted in a new record for
quarterly and annual sales. This is the seventeenth consecutive
quarter with revenue growth over the year ago quarter. Operating
profits and net profits continued to improve significantly from the
year ago quarter. As a result, we generated both record operating
profits and record net profits in 2007. More importantly, our
balance sheet grew stronger in 2007, with our cash and cash
equivalents and short-term investments at the end of 2007
increasing by $5.3 million to $36.5 million from a year ago.� �In
2007, we made solid progress with customers, product technology and
in operations. As these factors continue to improve, we remain
encouraged about the opportunities we see in the year ahead. We
expect that revenues for the coming quarter will grow sequentially
and be in the range of $9.2 million to $9.7 million, and that 2008
will be another record year for AFOP. Additionally, with continued
focus on operational efficiencies, we expect to generate higher
operating profits in 2008 while continuing to invest in growth
opportunities for our business,� concluded Mr. Chang. Conference
Call Management will host a conference call at 1:30 p.m. Pacific
Time on January 30,�2008 to discuss AFOP�s fourth
quarter�and�fiscal year�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�269807. AFOP will also
provide a live webcast of its�fourth�quarter and fiscal year�2007
conference call at AFOP�s website www.afop.com. An audio replay
will be available until�February 6, 2008. The dial in�number for
the replay is 877-660-6853�or 201-612-7415. The replay passcodes
(account # 286; conference ID#:�269807) 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�CWDM and DWDM components and modules,
optical attenuators, and�micro-optics devices. 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 ability to
continue to maintain positive earnings, our ability to increase
profitability in future periods, our ability to increase revenues
in future periods and the extent of any revenue increase, our
belief that business conditions are improving; our beliefs
regarding our future opportunities, our ability to continue to
focus on our operating efficiency or our successes in doing so, our
expectation regarding our ability to generate higher operating
profits in 2008, and our ability to continue to invest in growth
opportunities, 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 for our products,
the timing of customer orders, loss of key customers, ability to
ramp new products into volume production, the costs associated with
running our operations, 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 September
30, 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) � � Dec. 31, Dec. 31, � 2007 � 2006 ASSETS Current
assets: Cash and short-term investments $ 36,480 $ 31,178 Accounts
receivable, net 5,393 4,009 Inventories 5,003 4,465 Other current
assets � 481 � 601 Total current assets 47,357 40,253 � Property
and equipment, net 4,373 4,264 � Other assets 226 176 � � Total
assets $ 51,956 $ 44,693 � � LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 4,523 $ 2,950 Accrued
expenses and other liabilities � 3,519 � 2,909 Total current
liabilities 8,042 5,859 � Long-term liabilities � 1,007 � 930 Total
liabilities 9,049 6,789 � Stockholders' equity 42,907 37,904 � �
Total liabilities and stockholders' equity $ 51,956 $ 44,693
ALLIANCE FIBER OPTIC PRODUCTS, INC. Condensed Consolidated
Statements of Operations (In thousands, except per share amounts)
(Unaudited) � � � � � Three Months Ended Twelve Months Ended Dec.
31, Sept. 30, Dec. 31, Dec. 31, Dec. 31, � 2007 � 2007 � 2006 �
2007 � 2006 � � Revenues $ 9,214 $ 9,170 $ 7,746 $ 33,786 $ 26,792
� Cost of revenues � 6,336 � 6,291 � 5,473 � 23,158 � 19,380 �
Gross profit � 2,878 � 2,879 � 2,273 � 10,628 � 7,412 � � Operating
expenses: Research and development 804 876 798 3,217 3,080 Sales
and marketing 590 556 571 2,349 2,255 General and administrative �
864 � 817 � 805 � 3,457 � 3,077 � Total operating expenses 2,258
2,249 2,174 9,023 8,412 � Income (loss) from operations 620 630 99
1,605 (1,000 ) Interest and other income, net 425 435 554 1,758
1,657 � � � � � Net income $ 1,045 $ 1,065 $ 653 $ 3,363 $ 657 � �
Net income per share Basic $ 0.03 $ 0.03 $ 0.02 $ 0.08 $ 0.02
Diluted $ 0.02 $ 0.02 $ 0.01 $ 0.08 $ 0.01 � Weighted average
shares outstanding Basic 41,187 40,980 40,400 40,897 40,118 Diluted
45,010 44,929 45,196 44,720 44,914 � Included in costs and expenses
above: Stock based compensation charges Cost of revenue $ 28 $ 29 $
44 $ 149 $ 109 Research and development 13 13 19 63 57 Sales and
marketing 9 9 10 42 32 General and administrative � 30 � 40 � 33 �
144 � 100 � Total $ 80 $ 91 $ 106 $ 398 $ 298 �
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