AFC Reports Q2 Results

PETALUMA, Calif. -- AFC® (Nasdaq: AFCI), The Acronym for AccessSM, today reported financial results for the second quarter ended June 30, 2004. Revenues for the second quarter of 2004 were $118.6 million on a generally accepted accounting principles (GAAP) basis. Revenues in the first quarter of 2004 were $92.8 million. Revenues for the second quarter of 2003 were $83.0 million. Net income for the second quarter of 2004 was $0.9 million, or $0.01 per share. The second quarter of 2004 included amortization of acquired intangibles, costs associated with the proposed merger with Tellabs, Inc. and leased facility write-offs, partially offset by an arbitration award. Net loss for the first quarter of 2004 was $2.7 million, or $.03 loss per share. The first quarter of 2004 included costs associated with acquiring North American Access (NAA), a business unit of Marconi Communications, Inc. Net income for the second quarter of 2003 was $3.3 million, or $0.04 per share.

Revenues for the first half of 2004 were $211.4 million compared with $163.5 million for the first half of 2003. Net loss for the first half of 2004 was $1.8 million, or $0.02 loss per share. The first half of 2004 included costs related to the write-off of in-process research and development costs arising from the NAA acquisition, amortization of acquired intangibles, the proposed merger with Tellabs and leased facility write-offs, partially offset by an arbitration award. Net income for the first half of 2003 was $11.7 million, or $0.14 per share.

Net income for the core business, which excludes certain merger and acquisition-related items, amortization of intangibles, leased facilities write-offs and an arbitration award, was $5.4 million, or $0.06 per share, for the second quarter of 2004, compared with $8.5 million, or $0.09 per share, for the first quarter of 2004. Core business net income for the second quarter of 2003 was $7.9 million, or $0.09 per share. Core business net income for the first half of 2004 was $13.8 million, or $0.15 per share. Core business net income for the first half of 2003 was $15.8 million, or $0.18 per share.

Advanced Fibre Communications Inc. (AFC)