AFOP Alliance Fiber Optic Products, Inc.

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, 2008. Revenues for the first quarter of 2008 totaled $9,400,000, a 40% increase from revenues of $6,700,000 recorded in the first quarter of 2007 and 2% increase compared with revenue of $9,200,000 for the fourth quarter of 2007. The Company recorded net income for the first quarter of 2008 of $820,000, significantly improved over $389,000 for the first quarter of 2007. This compares to net income for the fourth quarter of 2007 of $1,045,000. Included in net income for the quarter ended March 31, 2008 was $51,000 of stock-based compensation charges under FAS 123(R). Included in expenses for the quarter ended March 31, 2007 and the fourth quarter of 2007 were $124,000 and $80,000 of stock-based compensation charges under SFAS 123(R), respectively. During the quarter, we reclassified $15,573,000 of auction rate securities from short-term investments into long-term investments. Peter Chang, President and Chief Executive Officer, commented, �We are very pleased with the financial performance and progress AFOP made in the quarter ending March 31, 2008. With continued sequential quarterly revenue growth, we delivered record sales in the quarter. This is the eighteenth consecutive quarter with revenue growth over the year ago quarter.� �In addition to 40% revenue growth over the year ago quarter, we also improved our operating profits significantly from the operating loss of $20,000 in the first quarter of 2007 to an operating profit of $486,000 in the first quarter of 2008.�We believe our performance in revenue growth reflects increasing demand from key customers, solid progress in product development, and continued improvement of our operations.� �Based on input from our customers and current backlog, we expect that revenues in the second quarter of 2008 will continue to increase and will be above $9.5M, which will be another record quarterly sales achievement for AFOP,� concluded Mr. Chang. Conference Call Management will host a conference call at 1:30 p.m. Pacific Time on April 24, 2008 to discuss AFOP�s first quarter 2008 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�280937. AFOP will also provide a live webcast of its first quarter 2008 conference call at AFOP�s website: www.afop.com. An audio replay will be available until May 3, 2008. The dial in for the replay is 877-660-6853. The replay pass-codes (account # 286; conference ID#: 280937) 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 future market demand, the factors that resulted in our revenue growth, and the sustainability of those factors in future periods, future revenue growth, and our expectations regarding second quarter 2008 results, including our expectations regarding our second quarter 2008 revenues, 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, order trends and 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 quarterly report on Form 10-K for the year ended December 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) � � � Mar. 31 Dec. 31, 2008 2007 (Unaudited) ASSETS Current assets: Cash and short-term investments $ 19,747 $ 36,480 Accounts receivable 6,317 5,393 Inventories 5,108 5,003 Other current assets � 560 � 481 Total current assets 31,732 47,357 � Long-term investments 15,573 - Property and equipment, net 4,518 4,373 Other assets � 239 � 226 Total assets $ 52,062 $ 51,956 � � LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,682 $ 4,523 Accrued expenses and other liabilities � 2,872 � 3,520 Total current liabilities 7,554 8,043 � Long-term liability � 1,051 � 1,006 Total liabilities 8,605 9,049 � Stockholders' equity 43,457 42,907 � � Total liabilities and stockholders' equity $ 52,062 $ 51,956 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, 2008 2007 2007 � Revenues $ 9,401 $ 9,214 $ 6,701 � Cost of revenues � 6,455 � 6,336 � 4,602 � Gross profit � 2,946 � 2,878 � 2,099 � � Operating expenses: Research and development 898 804 689 Sales and marketing 668 590 569 General and administrative � 894 � 864 � 861 � Total operating expenses 2,460 2,258 2,119 � Income (loss) from operations 486 620 (20 ) Interest and other income, net � 396 � 425 � 409 � Net income before tax 882 1,045 389 Income tax � 62 � - � - � Net income $ 820 $ 1,045 $ 389 � � Net income per share: Basic $ 0.02 $ 0.03 $ 0.01 Diluted $ 0.02 $ 0.02 $ 0.01 � Shares used in per share calculation: Basic 41,392 41,187 40,539 Diluted 44,423 45,010 44,664 � Included in costs and expenses above: Stock based compensation charges Cost of revenue $ 22 $ 28 $ 51 Research and development 10 13 20 Sales and marketing 7 9 12 General and administrative � 12 � 30 � 41 � Total $ 51 $ 80 $ 124 �