PETALUMA, Calif. -- Advanced Fibre Communications®, Inc.(AFC®)(Nasdaq: AFCI), an industry-leading designer and manufacturer ofnext-generation edge access equipment and multiservice broadbandsolutions for the telecommunications industry, today reported its firstquarter financial results for the period ended March 31, 2003. Thefollowing results were prepared in accordance with accounting principlesgenerally accepted in the U.S.A., or GAAP. Revenues for the first quarter of 2003 were $80,452,000, compared with$80,264,000 in the first quarter of 2002. Net income for the firstquarter of 2003 was $8,320,000, or $0.10 earnings per share (diluted),compared with $6,970,000, or $0.08 earnings per share (diluted) in thefirst quarter of 2002. In the first quarter of 2003, earnings for our core business were$7,898,000, or $0.09 per share (diluted). This excludes amortizationofacquisition-related intangible assets and deferred compensation of$793,000 and non-operating gains on our investment in Cisco securitiesand related hedge contracts of $1,356,000. By comparison, for the firstquarter of 2002, earnings for our core business were $5,297,000, or$0.06 per share(diluted) after excluding non-operating gains on our investment in Ciscosecurities and related hedge contracts of $2,460,000. On a prospectivebasis, we expect to incur amortization of both our current acquiredintangible assets with finite lives and deferred compensation overapproximately the next three years. Additionally, as the remaininghedge contract on our Cisco investment matures during the second quarterof 2003, we expect to recognize a small amount of non-operating gain orloss during the quarter, and none thereafter. "Even though we were able to achieve our goals for the quarter, it was adifficult period," said John Schofield, chairman, president and chiefexecutive officer for AFC. "We saw a slower ramp in orders in the firstquarter of 2003, compared with 2002. While our first quarter isseasonally our slowest, we believe additional factors impacted ourbusiness in the beginning of this year. These include:

"Our management team is very focused on the Company's financialoperating performance," continued Schofield. "With that in mind we areannouncing actions that will better position us to improve ouroperational and organizational efficiencies, and to bring even greaterfocus on our key customers and key product development strategies.Today we carried out a reduction in workforce of approximately 11% ofAFC's total workforce, and a consolidation of some of our developmentfacilities. We expect to incur at least $5 million of costs in thesecond quarter as a result of these actions. While these decisions arealways difficult, we believe this will position us to effectively meetthe needs of our customers and shareholders. Restructuring chargesassociated with these actions will be excluded from our core-businessearnings in the second quarter of 2003."While there are near term challenges in our industry, I am confidentthat we will manage through the short-term difficulties successfully andcontinue our strategy of positioning our product portfolio so that wewill profit from the eventual build out of the network of the future,"concluded Schofield. Advanced Fibre Communications Inc. (AFC)