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AFOP Reports Improved Second Quarter, 2011 Financial Results With Sequential Growth And Guidance

Conference Call

Management will host a conference call at 1:30 p.m. Pacific Time on July 25, 2011 to discuss AFOP’s second quarter 2011 financial results. To participate in AFOP’s conference call, please call 877-675-3572 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 82098769. AFOP will also provide a live webcast of its second quarter 2011 conference call at AFOP’s website, An audio replay will be available until August 25, 2011. The dial in number for the replay is 800-642-1687 or 706-645-9291. The replay conference ID is 82098769.

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

Except for the historical information contained herein, the matters set forth in this press release, including statements as to our expectations regarding future revenue levels and profits, our ability to generate profits from operations and the time periods thereof, our beliefs regarding business conditions, our customer base, our product portfolio, and our ability to continue to focus on our operational efficiencies or our successes in doing so, 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 and demand for bandwidth, failure of cost control initiatives, our ability to obtain and maintain operational efficiencies, 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-Q for the quarter ended March 31, 2011. 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.

Condensed Consolidated Balance Sheets
(in thousands)
          Jun. 30,       Dec. 31,
  2011   2010
ASSETS (Unaudited)
Current assets:
Cash and short-term investments $ 35,857 $ 45,360
Accounts receivable 7,179 7,224
Inventories 7,688 7,439
Other current assets   620   733
Total current assets 51,344 60,756
Long-term investments 10,010 -
Property and equipment, net 7,996 7,523
Other assets   181   170
Total assets $ 69,531 $ 68,449
Current liabilities:
Accounts payable $ 4,146 $ 4,931
Accrued expenses and other current liabilities   3,082   4,737
Total current liabilities 7,228 9,668
Long-term liabilities:
Other long-term liabilities   757   777
Total liabilities 7,985 10,445
Stockholders' equity 61,546 58,004
Total liabilities and stockholders' equity $ 69,531 $ 68,449
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
  2011     2011     2010   2011     2010
Revenues $ 10,655 $ 9,450 $ 12,086 $ 20,105 $ 20,492
Cost of revenues   7,202     6,415     8,035   13,617     13,746
Gross profit 3,453 3,035 4,051 6,488 6,746
Operating expenses:
Research and development 804 718 870 1,522 1,579
Sales and marketing 566 550 636 1,116 1,197
General and administrative   1,015     1,028     971   2,043     1,904
Total operating expenses 2,385 2,296 2,477 4,681 4,680
Income from operations 1,068 739 1,574 1,807 2,066
Interest and other income, net   174     129     106   303     256
Net income before tax $ 1,242 $ 868 $ 1,680 $ 2,110 $ 2,322
Income tax   (7 )   (153 )   74   (160 )   75
Net income $ 1,249   $ 1,021   $ 1,606 $ 2,270   $ 2,247
Net income per share:
Basic $ 0.14 $ 0.12 $ 0.19 $ 0.26 $ 0.26
Diluted $ 0.14 $ 0.11 $ 0.18 $ 0.25 $ 0.26
Shares used in per share calculation:
Basic 8,852 8,823 8,541 8,838 8,518
Diluted 9,068 9,258 8,744 9,178 8,697
Included in costs and expenses above:
Stock based compensation charges
Cost of revenue $ 23 $ 23 $ 22 $ 46 $ 45
Research and development 11 8 7 19 15
Sales and marketing 39 15 6 54 21
General and administrative   98     37     16   135     53
Total $ 171   $ 83   $ 51 $ 254   $ 134

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