AFOP Reports Record Annual Sales and Profits in 2012 With Growth Guidance for Q1, 2013

AFOP Reports Record Annual Sales and Profits in 2012 With Growth Guidance for
Q1, 2013

SUNNYVALE, Calif., Jan. 30, 2013 (GLOBE NEWSWIRE) -- 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 fourth quarter
and year ended December 31, 2012.

Revenues for the fourth quarter of 2012 totaled $12,159,000, a 20% increase
from revenues of $10,137,000 reported in the fourth quarter of 2011, and a 2%
decrease from revenues of $12,390,000 reported in the previous quarter. The
Company recorded net income for the fourth quarter of 2012 of $5,597,000, or
$0.64 per share based on 8.7 million shares outstanding, compared to $707,000,
or $0.08 per share based on 8.9 million shares outstanding for the fourth
quarter of 2011. This compares to net income for the third quarter of 2012 of
$1,892,000, or $0.22 per share based on 8.8 million shares outstanding.
Included in net income for the fourth quarter was a one-time tax benefit of
$3.7 million. Excluding this tax benefit, earnings were $0.22 per share.

Revenues for fiscal year 2012 were $46,611,000, an 11% increase from revenues
of $42,020,000 reported in the previous fiscal year. Operating income for the
year ended December 31, 2012 was $5,729,000, compared with $3,814,000 for the
year ended December 31, 2011. The Company recorded a net profit for fiscal
year 2012 of $9,641,000, or $1.10 per share based on 8.8 million shares
outstanding. This compares with a net profit of $4,431,000, or $0.50 per share
for the year ended December 31, 2011. Included in net income for fiscal year
2012 was the one-time tax benefit of $3.7 million. Excluding this tax benefit,
earnings were $0.68 per share.

Included in expenses were stock-based compensation amounts of $280,000 for the
quarter ended December 31, 2012, $268,000 for the quarter ended September 30,
2012 and $249,000 for the quarter ended December 31, 2011. Included in
expenses for the year ended December 31, 2012 was $1,066,000 of stock-based
compensation charges, compared with $762,000 of stock-based compensation
charges for the year ended December 31, 2011.

"Fiscal year 2012 represented another growth milestone for AFOP," commented
Peter Chang, President and Chief Executive Officer. "With sequential growth in
most of quarters, 2012 overall revenues grew 11% to new record annual sales
for the Company. With our operational efficiency improvements, gross margin
remained around 35% in the last two quarters and our annual gross margin
improved from 32% in 2011 to over 34% as a result. Operating profits and net
profits also improved from the comparable quarter of 2011 and fiscal year 2011
levels. In addition, with the declaration of the special and annual dividends,
and the stock buy-back program, AFOP shareholder value has improved, while our
cash and short-term and long-term investments remained strong."

"With the progress we made serving our customers, extending our product
technology and improving our operations in 2012, and the customer demand to
grow our company in the fiber optic industry, we expect revenues in the first
quarter of 2013 to increase on a year over year basis. With this strong
beginning, we are excited with the prospects for record revenues and higher
profits in this coming year," concluded Mr. Chang.

Conference Call

Management will host a conference call at 1:30 p.m. (Pacific) on January 30,
2013 to discuss AFOP's fourth quarter and fiscal year 2012 financial results.
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 86926429.
AFOP will also provide a live webcast of its fourth quarter and fiscal year
2012 conference call at AFOP's website: www.afop.com. The webcast replay will
be available on AFOP's website 90 minutes after the live conference call.

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.

The Alliance Fiber Optic Products, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5578

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 and the time periods thereof 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, trends in demand for bandwith, 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, our ability to ramp new products into
volume production, the mix of products sold and product pricing, the costs
associated with running our operations, industry-wide shifts in supply and
demand for optical components and modules, industry overcapacity and demand
for bandwith, the success 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 September 30, 2012.
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,
                                              2012      2011
ASSETS                                                  
Current assets:                                         
Cash and short-term investments                $33,275 $39,588
Accounts receivable, net                       8,046    6,630
Inventories                                    6,933    6,763
Deferred tax asset                             1,234    --
Other current assets                           1,166    714
Total current assets                           50,654   53,695
                                                       
Long-term investments                          10,274   10,098
Property and equipment, net                    7,708    7,718
Deferred tax asset                             2,468    --
Other assets                                   249      162
Total assets                                   $71,353 $71,673
                                                       
                                                       
LIABILITIES AND STOCKHOLDERS' EQUITY                    
Current liabilities:                                    
Accounts payable                               $6,591  $3,647
Accrued expenses and other current liabilities 4,115    3,721
Total current liabilities                      10,706   7,368
                                                       
Long-term liabilities                          616      691
Total liabilities                              11,322   8,059
                                                       
Stockholders' equity                           60,031   63,614
Total liabilities and stockholders' equity     $71,353 $71,673




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,
                            2012      2012      2011      2012      2011
                                                                
Revenues                     $12,159 $12,390 $10,137 $46,611 $42,020
                                                                
Cost of revenues             7,929    7,979    6,998    30,617   28,578
Gross profit                 4,230    4,411    3,139    15,994   13,442
                                                                
Operating expenses:                                              
Research and development     831      819      825      3,298    3,181
Sales and marketing          652      614      595      2,606    2,306
General and administrative   1,085    1,079    1,046    4,361    4,141
Total operating expenses     2,568    2,512    2,466    10,265   9,628
                                                                
Income from operations       1,662    1,899    673      5,729    3,814
Interest and other income,   223      194      101      727      553
net
Income before benefit        $1,885  $2,093  $774    $6,456  $4,367
(provision) for income taxes
Benefit (provision) for      3,712    (201)    (67)     3,185    64
income taxes
Net income                   $5,597  $1,892  $707    $9,641  $4,431
                                                                
Net income per share                                             
Basic                      $0.64   $0.22   $0.08   $1.10   $0.50
Diluted                    $0.63   $0.21   $0.08   $1.08   $0.49
                                                                
Weighted average shares                                          
outstanding
Basic                      8,736    8,790    8,910    8,798    8,867
Diluted                    8,935    8,988    9,081    8,931    9,109
                                                                
Included in costs and                                            
expenses above:
Stock based compensation                                         
charges
Cost of revenue              $33     $28     $25     $119    $99
Research and development     33       32       27       125      75
Sales and marketing          67       65       60       255      177
General and administrative   147      143      137      567      411
Total                        $280    $268    $249    $1,066  $762

CONTACT: Anita Ho
         Acting Chief Financial Officer
         Alliance Fiber Optic Products, Inc.
         Phone: 408-736-6900 x168

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