Advanced Photonix, Inc. Reports Second Quarter Fiscal 2009 Results

Record Quarterly Revenues of $8.2 million, up 25% 


ANN ARBOR, Mich., Nov. 10  /PRNewswire-FirstCall/ -- Advanced Photonix, Inc.(R) (NYSE:API) (the "Company") today reported its second quarter fiscal 2009 results ending September 26, 2008.

Financial Highlights for the Second Quarter Ended September 26, 2008

-- Net sales for the quarter were $8.2 million, an increase of $1.7 million, or 25%, compared to revenues for the quarter ended September 28, 2007. The increase was driven by military and Industrial/NDT markets. Net sales for the year to date were $16.0 million, an increase of $3.3 million, or 26%, compared to the prior year to date period. The increase was broad based across four of its five markets off-set by a reduction in medical revenues.

-- Gross profit margin for Q2 2009 was 44% of sales compared to 42% for the quarter ended September 28, 2007. This improvement in gross profit margin was due primarily to favorable product mix attributable to increased revenues from military and homeland security markets. Gross profit margin for the year to date was 46% compared to 41% for the prior year to date period, driven by favorable product mix attributable to increased revenues from military, telecommunications and homeland security markets.

-- Operating loss for the quarter was $225,000 as compared to an operating loss of $768,000 for the quarter ended September 28, 2007. Operating income year to date was $14,000 compared to an operating loss of $1.8 million for the prior year to date period.

-- GAAP net loss for the quarter was $326,000, or $.01 per diluted share, as compared to a GAAP net loss of $1.9 million, or $.09 per diluted share, for the quarter ended September 28, 2007. GAAP net loss year to date was $179,000 or $.01 per diluted share, as compared to $3.8 million, or $.19 per diluted share, for the prior year period.

-- The Non-GAAP net income for the second quarter of fiscal 2009 was $307,000, or $0.01 per diluted share, as compared to a Non-GAAP net loss of $86,000, or $.00 per diluted share, for the comparable quarter ended September 28, 2007. The Company reported year to date Non-GAAP net income of $1.2 million, or $0.05 per diluted share, as compared to a Non-GAAP loss of $350,000, or $0.02 per diluted share, for the comparable prior year period.

-- On an EBITDA basis (which is defined as GAAP earnings before interest, taxes, depreciation, and amortization), the Company reported EBITDA of $559,000 for the second quarter of fiscal 2009 as compared to EBITDA of $15,000 for the quarter ended September 28, 2007. For the year to date, the Company reported EBITDA of $1.6 million as compared to a negative EBITDA of $324,000 for the comparable prior year period.

Richard Kurtz, Chairman and Chief Executive Officer, commented, "We are pleased with the results of the second quarter. The balance and strength of our three product platforms continues to give us the ability to meet our growth targets in this challenging economic environment. As we've stated previously, our market opportunities and product platforms compliment each another, and each product platform gives us a solid foundation to grow. In the second quarter, the strongest growth came from our military, industrial and homeland security markets. We continue to believe we are in a strong multi-year growth period, but can still experience uneven quarterly revenue growth in our product platforms as our customers continue to test, qualify and deploy next-generation 40G HSOR and terahertz systems. We expect to continue to see fluctuations in our customers' spending in any given quarter due primarily to slower new product introductions and reduced capital expenditures due to current macro economic conditions. Looking ahead we continue to be cautiously optimistic and are taking a prudently cautious view of guidance for the balance of the year. As a result we are continuing to hold to our revenue growth target of 30% year over year."

The Company will hold a conference call to discuss the results for the second quarter ended September 26, 2008 on Monday, November 10, 2008, at 5:00 PM EST. Participants can dial into the conference call at 888-713-4217 (617-213-4869 for international) using the pass code 81504349. The call will be webcast live by CCBN and can be accessed at Advanced Photonix's web site at http://investor.advancedphotonix.com/or at http://www.earnings.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 pass code 13151357.

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, risks associated with the move of our wafer fabrication facilities, technological obsolescence of existing product lines and technological obstacles which may prevent or slow the development and/or manufacture of new products, 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.

                    Condensed Consolidated Balance Sheets

                    Assets                September 26, 2008  March 31, 2008
  Current Assets                               (unaudited)
    Cash and cash equivalents                     $389,000         $82,000
    Restricted cash                                500,000       1,500,000
    Accounts receivable, net of allowance        5,188,000       3,202,000
    Inventories, net of  allowances              4,309,000       4,131,000
    Prepaid expenses and other current assets      478,000         195,000
             Total current assets               10,864,000       9,110,000
    Equipment & Leasehold Improvements, at
     cost                                       11,226,000      10,847,000
    Accumulated depreciation                    (6,627,000)     (6,090,000)
    Net Equipment and Leasehold Improvements     4,599,000       4,757,000
    Goodwill                                     4,579,000       4,579,000
    Patents, net                                   621,000         538,000
    Intangible assets, net                       9,295,000      10,333,000
    Other assets                                   385,000         386,000
      Total assets                             $30,343,000     $29,703,000

         Liabilities and shareholders' equity
  Current liabilities
    Line of credit                              $1,363,000      $1,300,000
    Accounts payable                             1,420,000       1,339,000
    Accrued expenses                             1,962,000       1,254,000
    Current portion of long-term debt-related
     parties                                     1,851,000         900,000
    Current portion of long-term debt-capital
     lease obligations                                   -         460,000
    Current portion of long-term debt-bank
     term loan                                     398,000               -
    Current portion of long-term debt - MEDC       322,000          62,000
      Total current liabilities                  7,316,000       5,315,000
  Long term debt, less current portion           3,327,000       2,249,000
  Long term debt, less current portion -
   capital lease obligations                             -       1,457,000
  Long term debt, less current
   portion-related parties                               -         951,000
      Total liabilities                         10,643,000       9,972,000

  Shareholders' equity
    Class A common stock, $.001 par value,
     100,000,000 shares authorized;
     September 26, 2008 - 24,076,216 shares
     issued and outstanding; March 31, 2008 -
     23,977,678 shares issued and outstanding       24,000          24,000
    Additional paid-in capital                  52,298,000      52,150,000
    Accumulated deficit                        (32,622,000)    (32,443,000)
      Total shareholders' equity                19,700,000      19,731,000

    Total liabilities and shareholders'
     equity                                    $30,343,000     $29,703,000



              Consolidated Statements of Operations (unaudited)

                           Three months ended         Six months ended
                     September 26, September 28, September 26, September 28,
                           2008         2007         2008         2007

  Net Sales             $8,188,000   $6,529,000  $15,958,000  $12,674,000
  Cost of Sales          4,624,000    3,784,000    8,638,000    7,459,000
  Gross Margin           3,564,000    2,745,000    7,320,000    5,215,000

  Other Operating Expenses
    Research &
     Development         1,081,000    1,016,000    2,209,000    1,910,000
    General &
     Administrative      1,432,000    1,180,000    2,515,000    2,353,000
    Amortization           518,000      490,000    1,044,000      980,000
    Wafer Fab
     Consolidation          48,000      268,000      208,000      611,000
    Sales & Marketing      710,000      559,000    1,330,000    1,205,000
       Total Other
        Operating
        Expenses         3,789,000    3,513,000    7,306,000    7,059,000

  Net Operating Income
   (Loss)                 (225,000)    (768,000)      14,000   (1,844,000)

  Other (Income) &
   Expense
    Other (Income)
     /Expense                2,000      (12,000)       2,000      (18,000)
    Interest Income        (12,000)     (26,000)     (28,000)     (47,000)
    Interest
     Expense-Related
     Parties                28,000       42,000       55,000       99,000
    Interest Expense -
     Warrant discount            -      805,000            -    1,373,000
    Interest Expense        83,000      280,000      164,000      512,000
    Other (Income) &
     Expense               101,000    1,089,000      193,000    1,919,000

  Net Income (Loss)      $(326,000) $(1,857,000)   $(179,000) $(3,763,000)
  Basic and diluted
   earnings per share       $(0.01)      $(0.09)      $(0.01)      $(0.19)

  Weighted number of
   shares outstanding
   - Basic and
   diluted              24,060,000   19,906,000   24,035,000   19,584,000


  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          Six months ended
                     September 26, September 28, September 26, September 28,
                           2008         2007          2008          2007

  Net Income (Loss)       $(326,000) $(1,857,000)   $(179,000) $(3,763,000)

  Add Back:
    Interest Expense -
     Convertible notes            -      129,000            -      256,000
    Interest expense -
     Warrant (fair value)         -      805,000            -    1,373,000
    Amortization -
     intangibles/patents    518,000      490,000    1,044,000      980,000
    Stock Option
     Compensation Expense    67,000       49,000      100,000      133,000
    Private Placement             -       30,000            -       60,000
    Other Expense -
     Wafer
    Fabrication              48,000      268,000      208,000      611,000
      Subtotal - Add
       backs                633,000    1,771,000    1,352,000    3,413,000
      Non-GAAP Income
       (Loss)              $307,000     $(86,000)  $1,173,000    $(350,000)

  Net earnings loss per
   share                      $0.01       $(0.00)       $0.05       $(0.02)
  Weighted Average
   Number of shares
   outstanding           24,060,000   19,906,000   24,035,000   19,584,000



               Reconciliation of EBITDA to GAAP income/(loss)

                           Three months ended         Six months ended
                     September 26, September 28, September 26, September 28,
                            2008         2007         2008         2007

  Net Income (Loss)      $(326,000) $(1,857,000)   $(179,000) $(3,763,000)
  Add Back:
    Net Interest
     expense (income)       99,000      296,000      191,000      564,000
    Interest expense -
     Warrant (fair value)        -      805,000            -    1,373,000
    Depreciation Expense   268,000      281,000      536,000      522,000
    Amortization           518,000      490,000    1,044,000      980,000
       Subtotal - Add
        backs              885,000    1,872,000    1,771,000    3,439,000
           EBITDA         $559,000      $15,000   $1,592,000    $(324,000)




Advanced Photonix, Inc.(R) (NYSE:API) is a leading vertically integrated optoelectronic semiconductor manufacturer of optoelectronic solutions, high-speed optical receivers and terahertz instrumentation to a global OEM customer base. Products include patented silicon (Si), indium phosphide (InP) and gallium arsinide (GaAs) based APD, PIN, and FILTRODE(R) photodetectors; high-speed optical receivers; and the T-Ray(TM) 2000 and QA1000 THz product platforms. More information on Advanced Photonix can be found at http://www.advancedphotonix.com/.

   Contact:
   Richard Kurtz, Advanced Photonix, Inc. [phone]
   Richard Moyer, Cameron Associates [phone]


DATASOURCE: Advanced Photonix, Inc.(R)



CONTACT:  Richard Kurtz, Advanced Photonix, Inc., [phone], or

Richard Moyer, Cameron Associates, [phone]



Web site:  http://www.advancedphotonix.com/ 

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