Advanced Photonix, Inc. Reports Fourth Quarter and Fiscal 2010 Results

Fourth Quarter Gross margins improved by 21%

Fourth Quarter EBITDA improved by 98%

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Jun 29, 2010, 04:01 ET

ANN ARBOR, Mich., June 29 /PRNewswire-FirstCall/ -- Advanced Photonix, Inc.® (NYSE Amex: API) (the "Company") today reported its fourth quarter and year end fiscal 2010 results ending March 31, 2010.

Financial Highlights for the Fourth Quarter and Fiscal Year Ended March 31, 2010

Net Sales for the quarter were $5.1 million, a decline of $1 million or 16% from the fourth quarter ended March 31, 2009. Sequentially, revenues improved 12% compared to the $4.6 million for the third fiscal quarter.
Net sales for the fiscal year were $21.1 million, a decrease of 29% over the prior year. The decrease was broad based across the Company's markets, led by the industrial, military and medical markets.
Gross profit margin for Q4 2010 was 46% of sales compared to 38% for the quarter ended March 31, 2009. The increase in gross profit margin percentage was due primarily to product mix, facilities consolidation efforts completed in prior years, and cost saving efforts implemented during the year.
Gross profit margin for the fiscal year 2010 was 43% compared to 44% for the prior year.
Operating loss for the quarter was $891,000 as compared to an operating loss of $1.4 million for the quarter ended March 31, 2009.
Operating loss for the fiscal year 2010 was $3.7 million compared to an operating loss of $1.7 million for the prior year.
Quarterly net loss was $846,000 or $0.03 per diluted share, as compared to a quarterly net loss of $1.5 million, or $0.06 per diluted share for the quarter ended March 31, 2009.
Net loss for the fiscal year 2010 was $3.7 million or $0.15 per diluted share, as compared to $2.0 million, or $0.08 per diluted share, for the prior year period.
The Non-GAAP net loss for the fourth quarter of fiscal 2010 was $310,000 or $0.01 per diluted share, as compared to a Non-GAAP net loss of $884,000, or $.04 per diluted share, for the fourth quarter last year. The Company reported full-year Non-GAAP net loss of $1.4 million, or $0.06 per diluted share, as compared to a Non-GAAP profit of $550,000, or $0.02 per diluted share, for the comparable prior year period.
EBITDA (which is defined as GAAP earnings before interest, taxes, depreciation, and amortization), was a negative $12,000 for the fourth quarter of fiscal 2010 as compared to a negative EBITDA of $603,000 for the quarter ended March 31, 2009. For the year to date, the Company reported negative EBITDA of $325,000 as compared to a positive EBITDA of $1.6 million for the comparable prior-year period.

Operating Expenses

The Company's total operating expenses for the quarter were $3.3 million, down 13% compared to the $3.8 million reported for the fourth quarter last year. As a percent of revenue, total operating expenses were 63.7% compared to 61.4% for the fourth quarter last year. For the year, total operating expenses were $12.7 million, or 60.1% of revenue, compared to $14.6 million, or 49.2% of revenue last year.

Balance Sheet

The Company completed the year with $1.8 million in cash compared to $2.1 million as of March 31, 2009. Working capital as of March 31, 2010 was $2.9 million and the Company reported a current ratio of 1.5 to 1.

Richard Kurtz, Chairman and Chief Executive Officer, commented, "We have successfully navigated the worst recessionary environment in our life time. While the speed and the amount of the recovery may still be in question, the fact is, business is getting better. We have continued to make the necessary investment in our product platforms to position us for growth as the economy recovers. The sequential revenue growth of 12% in the fourth quarter compared to the third quarter is an indication that we have turned the corner and are beginning to grow again. Gross margins in the fourth quarter improved to 46% compared to 38% in the prior year fourth quarter, despite a 16% drop in revenue on a comparative basis. This is a validation of the improved operating leverage of the business as a result of our operational improvements gained through facilities consolidation during the past several years as well as our long term strategic plan. Our growth platforms of High Speed Optical Receivers (HSOR) and Terahertz systems are starting to show signs of recovery. We recently added a second shift in response to the growing demand and backlog for our HSOR products and our terahertz application development pipeline has never been stronger. Our Optosolutions business has stabilized and has begun to gradually recover. We are looking forward to restoring growth to our business in the coming year, lead by our high growth HSOR products."

Conference Call

The Company will hold a conference call to discuss the results for the fourth quarter and fiscal year ended March 31, 2010 on Tuesday, June 29, 2010, at 4:30 PM EDT. Participants can dial into the conference call at 888-713-4215 (617-213-4867 for international) using the passcode 89519228. A question and answer period will take place at the end of the discussion.

Participants may pre-register for the call at: https://www.theconferencingservice.com/prereg/key.process?key=PNHUJHALB.

Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection.

The call will be webcast live and can be accessed at Advanced Photonix's web site at: http://investor.advancedphotonix.com.

An audio replay of the call will be available shortly thereafter the same day and will remain on-line for two weeks. The replay number is 888-286-8010 (617-801-6888 for international) using passcode 50851248.

Forward-looking Statements:

The information contained herein includes forward looking statements that are based on assumptions that management believes to be reasonable but are subject to inherent uncertainties and risks including, but not limited to, unforeseen technological obstacles which may prevent or slow the development and/or manufacture of new products; potential problems with the integration of the acquired company and its technology and possible inability to achieve expected synergies; obstacles to successfully combining product offerings and lack of customer acceptance of such offerings; limited (or slower than anticipated) customer acceptance of new products which have been and are being developed by the Company; and a decline in the general demand for optoelectronic products. API-G


Condensed Consolidated Balance Sheets

Assets	March 31, 2010	March 31, 2009
Current Assets
Cash and cash equivalents	$ 1,762,000	$ 2,072,000
Accounts receivable, net	2,679,000	3,284,000
Inventories, net	3,656,000	3,669,000
Prepaid expenses and other current assets	200,000	252,000
Total current assets	8,297,000	9,277,000
Equipment & Leasehold Improvements, at cost	11,200,000	11,470,000
Accumulated depreciation	(7,916,000)	(7,148,000)
Net Equipment and Leasehold Improvements	3,284,000	4,322,000
Goodwill	4,579,000	4,579,000
Patents, net	860,000	705,000
Intangible assets, net	6,236,000	8,270,000
Restricted cash	500,000	500,000
Other assets	99,000	388,000
Total assets	$ 23,855,000	$ 27,541,000

Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued expenses	$ 2,828,000	$ 2,484,000
Compensation and related withholdings	530,000	1,037,000
Current portion of long-term debt - related parties	1,401,000	1,401,000
Current portion of long-term debt - bank term loan	434,000	434,000
Current portion of long-term debt - MEDC	254,000	353,000
Total current liabilities	5,447,000	5,709,000
Long term debt, less current portion - MEDC	1,970,000	1,871,000
Long term debt, less current portion - bank line of credit	1,394,000	1,394,000
Long term debt, less current portion-related parties	687,000	1,121,000
Total liabilities	9,498,000	10,095,000

Shareholders' equity
Class A common stock, $.001 par value, 50,000,000 shares authorized; March 31, 2010 - 24,463,978 shares issued and outstanding; March 31, 2009 - 24,089,726 shares issued and outstanding	24,000	24,000
Additional paid-in capital	50,164,000	52,400,000
Accumulated deficit	(35,831,000)	(34,478,000)
Total shareholders' equity	14,357,000	17,946,000

Total liabilities and shareholders' equity	$ 23,855,000	$ 28,041,000


Consolidated Statement of Operations (unaudited)
	Three months ended		Twelve months ended
	March 31, 2010	March 31, 2009	March 31, 2010	March 31, 2009
Net Sales	$ 5,129,000	$ 6,111,000	$ 21,075,000	$ 29,675,000
Cost of Sales	2,753,000	3,777,000	12,059,000	16,744,000
Gross Margin	2,376,000	2,334,000	9,016,000	12,931,000

Other Operating Expenses
Research & Development	1,325,000	1,355,000	4,738,000	4,676,000
General & Administrative	1,009,000	1,120,000	4,160,000	4,871,000
Amortization	519,000	520,000	2,071,000	2,081,000
Wafer Fab Consolidation	-	35,000	40,000	300,000
Sales & Marketing	414,000	724,000	1,663,000	2,659,000
Total Other Operating Expenses	3,267,000	3,754,000	12,672,000	14,587,000

Net Operating Income (Loss)	(891,000)	(1,420,000)	(3,656,000)	(1,656,000)

Other (Income) & Expense
Other (Income)/Expense	48,000	-	(7,000)	2,000
Interest Income	(4,000)	(3,000)	(8,000)	(28,000)
Interest Expense-Related Parties	15,000	17,000	60,000	94,000
Change in fair value of warrant liability	(61,000)	-	(182,000)	-
Interest Expense	42,000	63,000	244,000	311,000
Other (Income) & Expense	40,000	77,000	107,000	379,000

Loss before benefit from income taxes	(931,000)	(1,497,000)	(3,763,000)	(2,035,000)

Benefit for income taxes	(85,000)	-	(85,000)	-

Net (Loss)	$ (846,000)	$ (1,497,000)	$ (3,678,000)	$ (2,035,000)
Basic and diluted earnings per share	$ (0.03)	$ (0.06)	$ (0.15)	$ (0.08)

Weighted number of shares outstanding - Basic and diluted	24,496,000	24,121,000	24,368,000	24,074,000

Non-GAAP Financial Measures

The Company provides Non-GAAP Net Income and EBITDA as supplemental financial information regarding the Company's operational performance. These Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. Non-GAAP Net Income and EBITDA should not be considered in isolation from or as a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from similar measures used by other companies. Reconciliation of Non-GAAP Net Income and EBITDA to GAAP net income and loss are set forth in the financial schedule section below.


Reconciliation of Non-GAAP Income (loss) to GAAP Income (loss)
	Three months ended		Twelve months ended
	March 31, 2010	March 31, 2009	March 31, 2010	March 31, 2009
Net Income (Loss)	$ (846,000)	$ (1,497,000)	$ (3,678,000)	$ (2,035,000)

Add Back:
Change in warrant fair value	(61,000)	-	(182,000)	-
Amortization - intangibles/patents	519,000	520,000	2,071,000	2,081,000
Stock Option Compensation Expense	78,000	58,000	367,000	204,000
Other Expense - Wafer Fabrication	-	35,000	40,000	300,000
Subtotal - Add backs	536,000	613,000	2,296,000	2,585,000
Non-GAAP Income (Loss)	$ (310,000)	$ (884,000)	$ (1,382,000)	$ 550,000

Net earnings loss per share	$ (0.01)	$ (0.04)	$ (0.06)	$ 0.02

Weighted Number of shares outstanding	24,496,000	24,121,000	24,368,000	24,074,000


Reconciliation of EBITDA to GAAP income/(loss)
	Three months ended		Twelve months ended
	March 31, 2010	March 31, 2009	March 31, 2010	March 31, 2009
Net Income (Loss)	$ (846,000)	$ (1,497,000)	$ (3,678,000)	$ (2,035,000)

Add Back:
Net Interest expense (income)	54,000	77,000	296,000	376,000
Interest expense - Warrant (fair value)	(61,000)	-	(182,000)	-
Depreciation Expense	322,000	297,000	1,168,000	1,157,000
Amortization	519,000	520,000	2,071,000	2,081,000
Subtotal - Add backs	834,000	894,000	3,353,000	3,614,000
EBITDA	$ (12,000)	$ (603,000)	$ (325,000)	$ 1,579,000

About Advanced Photonix, Inc.

Advanced Photonix, Inc. (R) (NYSE Amex: API) is a leading supplier with a broad offering of optoelectronic products to a global customer base. We provide optoelectronic solutions, high-speed optical receivers and terahertz instrumentation for telecom, homeland security, military, medical and industrial markets. With our patented technology and state-of-the-art manufacturing we offer industry leading performance, exceptional quality, and high value added products to our OEM customer base. For more information visit us on the web at www.advancedphotonix.com.