8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 26, 2008

AXT, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-24085	94-3031310
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4281 Technology Drive

Fremont, California  94538

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:  (510) 683-5900

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On February 26, 2008, AXT, Inc. issued a press release announcing its financial results for the quarter and fiscal year ended December 31, 2007.  A copy of the Company’s press release, announcing the results, is attached hereto as Exhibit 99.1 and incorporated herein by reference.

The information in Exhibit 99.1 hereto discussing the Company’s results of operations and financial condition for the quarter and fiscal year ended December 31, 2007, is being “furnished” in accordance with General Instruction B.2 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.  The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing.

Item 9.01 Financial Statements and Exhibits

(d)Exhibits

99.1Press release dated February 26, 2008, regarding the financial results of AXT, Inc. for the quarter and fiscal year ended December 31, 2007.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AXT, INC.
Date: February 26, 2008	By:	/s/ WILSON W. CHEUNG
		Wilson W. Cheung
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release dated February 26, 2008, regarding the financial results of AXT, Inc. for the quarter and fiscal year ended December 31, 2007.

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE
Contacts:
Wilson W. Cheung
Chief Financial Officer
(510) 683-5900
Leslie Green
Green Communications Consulting, LLC
(650) 312-9060

AXT, Inc. Announces Fourth Quarter and Fiscal 2007 Results

Revenues Increase 31 Percent From Fiscal 2006

FREMONT, Calif., Feb. 26, 2008 — AXT, Inc. (NasdaqGM: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the fourth quarter and fiscal year ended December 31, 2007.

Fourth Quarter 2007 Results

Revenue for the fourth quarter of 2007 was $17.6 million, compared with $14.5 million in the third quarter of 2007, and $13.1 million in the fourth quarter of 2006.  Total gallium arsenide (GaAs) substrate revenue was $12.2 million for the fourth quarter of 2007, compared with $9.9 million in the third quarter of 2007, and $11.1 million in the fourth quarter of 2006.

Indium phosphide (InP) substrate revenue was $330,000 for the fourth quarter of 2007, compared with $408,000 in the third quarter of 2007, and compared with $456,000 in the fourth quarter of 2006.  Germanium (Ge) substrate revenue was $747,000, compared with $536,000 in the third quarter of 2007, and $318,000 in the fourth quarter of 2006.  Raw materials sales were $4.3 million for the fourth quarter of 2007, compared with $3.6 million in the third quarter of 2007, and $1.2 million in the fourth quarter of 2006.

Gross margin was 30.1 percent of revenue for the fourth quarter of 2007.  This included a benefit from the sale of approximately $466,000 in fully reserved wafers, which positively affected the quarterly gross margin by 2.7 percentage points.  By comparison, gross margin in the third quarter of 2007 was 31.3 percent.  This included a benefit from the sales of approximately $556,000 in fully reserved wafers, which positively affected third quarter gross margin by 3.8 percentage points.  Gross margin in the fourth quarter of 2006 was 38.2 percent, including a benefit from the sale of approximately $730,000 in fully reserved wafers, which positively affected the quarterly gross margins by 5.6 percentage points.

Operating expenses were $3.7 million in the fourth quarter of 2007, compared with $3.5 million in the third quarter of 2007, and $3.8 million in the fourth quarter of 2006.

Income from operations for the fourth quarter of 2007 was $1.6 million compared with income from operations of $1.1 million in the third quarter of 2007, and income from operations of $1.2 million in the fourth quarter of 2006.

AXT, Inc.4281
Technology DriveFremont, CA 94538Tel: 510.683.5900Fax: 510.353.0668www.axt.com.

Net interest and other income for the fourth quarter of 2007 was $608,000, which included a gain on sale of investment of $1.1 million, compared with net interest and other expense of $54,000 for the third quarter of 2007, and net interest and other income of $1.1 million in the fourth quarter of 2006, which included a gain on sale of Finisar stock of $1.3 million.

Net income in the fourth quarter of 2007 was $1.9 million or $0.06 per diluted share, compared with a net income of $858,000 or $0.03 per diluted share in the third quarter of 2007, and a net income of $3.4 million, or $0.13 per diluted share in the fourth quarter of 2006, which included approximately $0.05 per diluted share from the gain on sale of Finisar stock, and $0.04 per diluted share from our net income tax benefit.

Fiscal Year 2007 Results

Revenue for fiscal year 2007 was $58.2 million, compared with $44.4 million in fiscal year 2006.  Gross margin for fiscal year 2007 was 34.8 percent of revenue compared with 28.7 percent of revenue for fiscal year 2006.

Net income for fiscal year 2007 was $5.3 million or $0.16 per diluted share compared with net income of $944,000 or $0.03 per diluted share for fiscal year 2006.

Management Qualitative Comments

“Our strong fourth quarter results concluded what was another solid year for AXT,” said Phil Yin, chairman and CEO.  “In addition to posting very meaningful gains in revenue, gross profit, operating income, net income and positive cash flow from operations, we have continued to grow our customer base, significantly increase our market share and make strategic investments into the technologies and products that will expand our addressable market.  We are excited by the long-term trends in all of the markets that we serve, including the growth of the handset market, the increasing prevalence of LED’s in a wide variety of lighting applications and the worldwide adoption of solar energy.  We believe that our unique business model is allowing us to convert these exciting opportunities into tangible results.”

Outlook for First Quarter, Ending March 31, 2008

AXT estimates revenue for the first quarter will increase to between $17.6 million and $18.0 million. The company estimates that net income per diluted share will be between $0.03 and $0.05, which takes into account our diluted weighted average share count of approximately 31.6 million shares.

Conference Call

The company will also host a conference call today to discuss these results at 1:30 p.m. PT. The conference call can be accessed at (416) 641-6106 (conference ID 3248721). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (416) 695-5800 until March 4, 2008. Financial and statistical information to be discussed in the call will be available on the company’s website immediately prior to commencement of the call. Additional investor information can be accessed at http://www.axt.com or by calling the company’s Investor Relations Department at (510) 683-5900.

About AXT, Inc.

AXT designs, develops, manufactures and distributes high-performance compound and single element semiconductor substrates comprising gallium arsenide (GaAs), indium phosphide (InP) and germanium

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(Ge) through its manufacturing facilities in Beijing, China.  In addition, AXT maintains its sales, administration and customer service functions at its headquarters in Fremont, California.  The company’s substrate products are used primarily in lighting display applications, wireless communications, and fiber optic communications. Its vertical gradient freeze (VGF) technique for manufacturing semiconductor substrates provides significant benefits over other methods and enabled AXT to become a leading manufacturer of such substrates, particularly in optoelectronics applications. AXT has manufacturing facilities in China and invests in five joint ventures producing raw materials. For more information, see AXT’s website at http://www.axt.com.

Safe Harbor Statement

The foregoing paragraphs contain forward-looking statements within the meaning of the Federal Securities laws, including statements regarding our outlook for the first quarter of 2008, growth in our customer base and expansion of our addressable markets, increasing market share, industry trends that are driving increasing demand for our products, the growth in the handset market, increasing prevalence of LED’s in a wide variety of lighting applications, the worldwide adoption of solar energy, and opportunities for growth in the coming years.  These forward-looking statements are based upon specific assumptions that are subject to uncertainties and factors relating to the company’s operations and business environment, which could cause actual results of the company to differ materially from those expressed or implied in the forward-looking statements contained in the foregoing discussion. These uncertainties and factors include but are not limited to overall conditions in the markets in which the company competes; market acceptance and demand for the company’s products; and other factors as set forth in the company’s annual report on Form 10-K and other filings made with the Securities and Exchange Commission.  Each of these factors is difficult to predict and many are beyond the company’s control. The company does not undertake any obligation to update publicly any forward-looking statement, as a result of new information, future events or otherwise.

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FINANCIAL TABLES TO FOLLOW

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AXT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

	Three Months Ended					Twelve Months Ended
	December 31,					December 31,
	2007		2006			2007			2006
Revenue	$	17,564	$	13,072		$	58,203		$	44,445
Cost of revenue	12,270		8,084			37,942			31,709
Gross profit	5,294		4,988			20,261			12,736
Operating expenses:
Selling, general and administrative	3,217		2,926			13,746			12,650
Research and development	509		854			1,699			2,351
Impairment (recovery) on assets held for sale	—		—			(481		)	1,417
Restructuring benefit	—		—			—			(2		)
Total operating expenses	3,726		3,780			14,964			16,416
Income (loss) from continuing operations	1,568		1,208			5,297			(3,680		)
Interest income, net	153		101			704			443
Other income, net	455		1,016			16			2,709
Income (loss) from continuing operations before provision for income taxes	2,176		2,325			6,017			(528		)
Provision (benefit) for income taxes	302		(1,048		)	728			(1,454		)
Income from continuing operations	1,874		3,373			5,289			926
Discontinued operations:
Gain from discontinued operations, net of tax	—		11			—			18
Net income	$	1,874	$	3,384		$	5,289		$	944
Basic income per share:
Income from continuing operations	$	0.06	$	0.14		$	0.17		$	0.03
Gain from discontinued operations, net of tax	—		—			—			—
Net income per share — basic	$	0.06	$	0.14		$	0.17		$	0.03
Shares used in computing basic income per share	30,337		24,009			30,035			23,303
Diluted income per share:
Income from continuing operations	$	0.06	$	0.13		$	0.16		$	0.03
Gain from discontinued operations, net of tax	—		—			—			—
Net income per share — diluted	$	0.06	$	0.13		$	0.16		$	0.03
Shares used in computing diluted income per share	31,550		25,543			31,348			24,600

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AXT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

	December 31,			December 31,
	2007			2006
Assets:
Current assets
Cash and cash equivalents	$	18,380		$	16,116
Short-term investments	20,825			19,428
Accounts receivable, net	12,149			9,658
Inventories, net	24,781			20,263
Prepaid expenses and other current assets	3,569			3,985
Assets held for sale	5,140			4,659
Total current assets	84,844			74,109
Property, plant and equipment, net	15,986			12,775
Other assets	5,242			4,298
Restricted deposits	6,700			7,150
Total assets	$	112,772		$	98,332
Liabilities and stockholders’ equity:
Current liabilities
Accounts payable	$	4,328		$	3,764
Accrued liabilities	4,716			3,536
Current portion of long-term debt	450			450
Total current liabilities	9,494			7,750
Long-term debt, net of current portion	6,273			6,839
Other long-term liabilities	3,755			2,543
Total liabilities	19,522			17,132
Stockholders’ equity:
Preferred stock	3,532			3,532
Common stock	185,979			180,965
Accumulated deficit	(98,543		)	(103,832		)
Other comprehensive income	2,282			535
Total stockholders’ equity	93,250			81,200
Total liabilities and stockholders’ equity	$	112,772		$	98,332