Advanced Photonix, Inc. Reports Second Quarter Fiscal 2010 Results

Strong first half gross profit margins despite recession's impact


ANN ARBOR, Mich., Nov. 9  /PRNewswire-FirstCall/ -- Advanced Photonix, Inc.® (NYSE Amex: API) (the "Company") today reported its second quarter fiscal 2010 results ending September 25, 2009.

  Financial Highlights for the Second Quarter Ended September 25, 2009

  --  Net sales for the quarter were $5.4 million, a decrease of $.5
      million, or 8%, compared to revenues for the first quarter ended June
      26, 2009. The decrease was broad based across four of its five
      markets.
  --  Gross profit margin for the first six months was 45% compared to 46%
      for the prior year six month period, despite a 29% drop in revenue
      compared to the record revenues in the first half of last year. Strong
      gross margins reflect the results of company-wide cost reduction
      initiatives and prior years' facilities consolidation activities.
  --  GAAP net loss for the quarter was $1,192,000, or $.05 per diluted
      share, as compared to a GAAP net loss of $326,000, or $.01 per diluted
      share for the quarter ended September 26, 2008. GAAP net loss year to
      date was $1,488,000 or $.06 per diluted share, as compared to a net
      loss of $179,000, or $.01 per diluted share, for the prior year
      period.
  --  The Non-GAAP net loss for the second quarter of fiscal 2010 was
      $452,000, or $0.02 per diluted share, as compared to a Non-GAAP net
      income of $306,000, or $.01 per diluted share, for the comparable
      quarter ended September 26, 2008. The Company reported year to date
      Non-GAAP net loss of $137,000, or $0.01 per diluted share, as compared
      to a Non-GAAP income of $1,173,000, or $0.05 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
      a negative $220,000 for the second quarter of fiscal 2010 as compared
      to positive EBITDA of $557,000 for the quarter ended September 26,
      2008. For the year to date, the Company reported positive EBITDA of
      $334,000 as compared to positive EBITDA of $1,592,000 for the
      comparable prior year period.




Richard Kurtz, Chairman and Chief Executive Officer, commented, "As we previously stated, the first half of the year was negatively impacted by the recessionary environment and this quarter was in line with our expectations.  We have taken the necessary cost reduction steps to minimize the impact of the revenue shortfall in the first half of the year and anticipate second half revenue to show a return to growth driven mainly by our HSOR and Terahertz product platforms.  While we do not anticipate top line revenue to meet 2009 numbers, predominantly due to the industrial product market being closely tied to the overall economy, we do expect the second half of the year to show growth over the first six months and with the reduced cost structure, a return to GAAP profitability.  We continue to invest in our product platforms that position us for additional future growth as the overall economy improves."

The Company will hold a conference call to discuss the results for the second quarter ended September 25, 2009 on Monday, November 9, 2009, at 4:30 PM EST. Participants can dial into the conference call at 888-713-4217 (617-213-4869 for international) using the pass code 82275901. 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 37880498.

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.

                       CONSOLIDATED BALANCE SHEETS



                     Assets               September 25, 2009  March 31, 2009
  Current Assets
    Cash and cash equivalents                  $1,642,000       $2,072,000
    Restricted cash                               500,000          500,000
    Accounts receivable, net                    3,199,000        3,284,000
    Inventories, net                            3,782,000        3,669,000
    Prepaid expenses and other
     current assets                               348,000          252,000
                                                  -------          -------
              Total current assets              9,471,000        9,777,000
    Equipment & Leasehold
     Improvements, at cost                     11,297,000       11,470,000
    Accumulated depreciation                   (7,455,000)      (7,148,000)
                                               -----------      -----------
    Net Equipment and Leasehold
     Improvements                               3,842,000        4,322,000
    Goodwill                                    4,579,000        4,579,000
    Patents, net                                  779,000          705,000
    Intangible assets, net                      7,253,000        8,270,000
    Other assets                                  388,000          388,000
                                                  -------          -------
      Total assets                            $26,312,000      $28,041,000
                                              ===========      ===========

              Liabilities and shareholders' equity
  Current liabilities
    Accounts payable and accrued
     expenses                                   2,308,000        2,484,000
    Compensation and related
     withholdings                                 911,000        1,037,000
    Current portion of long-term
     debt - fair value of warrant
     liability                                     22,000                -
    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      789,000          353,000
                                                  -------          -------
        Total current liabilities               5,865,000        5,709,000
  Long term debt, less current portion - MEDC   1,435,000        1,871,000
  Long-term fair value warrant
   liability less current portion                 325,000                -
  Long term debt, less current
   portion - line of credit                     1,394,000        1,394,000
  Long term debt, less current
   portion - bank term loan                       904,000        1,121,000
                                                  -------        ---------
        Total liabilities                       9,923,000       10,095,000

  Shareholders' equity
    Class A common stock, $.001 par
     value, 50,000,000 shares
     authorized; September 25, 2009 -
     24,433,978, shares issued and
     outstanding; March 31, 2009 -
     24,089,726 shares issued and
     outstanding                                   24,000           24,000
       Additional paid-in capital              50,006,000       52,400,000
       Accumulated deficit                    (33,641,000)     (34,478,000)
                                              ------------     ------------
        Total shareholders' equity             16,389,000       17,946,000

    Total liabilities and
     shareholders' equity                     $26,312,000      $28,041,000
                                              ===========      ===========



                            Condensed Consolidated Statement of Operations
                            ----------------------------------------------
                             Three months ended         Six months ended
                             ------------------         ----------------
                            September   September    September    September
                                25,         26,          25,          26,
                               2009        2008         2009         2008
  Net Sales                $5,424,000  $8,188,000  $11,358,000  $15,958,000
  Cost of Sales             3,360,000   4,624,000    6,297,000    8,638,000
                            ---------   ---------    ---------    ---------
  Gross Margin              2,064,000   3,564,000    5,061,000    7,320,000

  Other Operating
   Expenses
    Research
     & Development          1,167,000   1,081,000    2,230,000    2,209,000
    General &
     Administrative           981,000   1,432,000    2,154,000    2,515,000
    Amortization              518,000     518,000    1,033,000    1,044,000
    Wafer Fab
     Consolidation                 --      48,000       40,000      208,000
    Sales & Marketing         418,000     710,000      869,000    1,330,000
                              -------     -------      -------    ---------
  Total Other Operating
   Expenses                 3,084,000   3,789,000    6,326,000    7,306,000

  Net Operating Income
   (Loss)                  (1,020,000)   (225,000)  (1,265,000)      14,000

  Other (Income) & Expense
    Other (Income)
     /Expense                  (2,000)      2,000        8,000        2,000
    Change in fair value
     of warrant liability      92,000          --       53,000           --
    Interest Income            (2,000)    (12,000)      (3,000)     (28,000)
    Interest Expense
     -Related Parties          15,000      28,000       29,000       55,000
    Interest Expense           69,000      83,000      136,000      164,000
                               ------      ------      -------      -------
  Other (Income) & Expense    172,000     101,000      223,000      193,000

  Net Income (Loss)       $(1,192,000)  $(326,000) $(1,488,000)   $(179,000)
  Net income (loss)
   per share                   $(0.05)     $(0.01)      $(0.06)      $(0.01)
  Diluted income (loss)
   per share                   $(0.05)     $(0.01)      $(0.06)      $(0.01)

  Weighted number of
   shares outstanding      24,343,000  24,060,000   24,241,000   24,035,000
  Anti-diluted weighted
   number of shares        24,343,000  24,060,000   24,241,000   24,035,000



  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    September      September    September
                            25,          26,            25,          26,
                           2009         2008           2009         2008
  Net Income (Loss)    $(1,192,000)   $(326,000)   $(1,488,000)   $(179,000)

  Add Back:

    Change in warrant
     fair value
     liability              92,000           --         53,000           --
    Amortization -
     intangibles/patents   518,000      518,000      1,033,000    1,044,000
    Stock Option
     Compensation
     Expense               130,000       66,000        225,000      100,000
    Other Expense -
     Wafer Fabrication          --       48,000         40,000      208,000
      Subtotal -
       Add backs           740,000      632,000      1,351,000    1,352,000
  Non-GAAP Income (Loss) $(452,000)    $306,000      $(137,000)  $1,173,000

        Net earnings
         per share          $(0.02)       $0.01         $(0.01)       $0.05
  Diluted earnings
   per share                $(0.02)       $0.01         $(0.01)       $0.05

  Weighted Number of
   shares outstanding   24,343,000   24,060,000     24,241,000   24,035,000
  Diluted shares
   outstanding          24,343,000   24,060,000     24,241,000   24,035,000



                             Reconciliation of EBITDA to GAAP income/(loss)
                           Three months ended            Six months ended
                           ------------------            ----------------
                            September   September     September   September
                               25,         26,           25,         26,
                              2009        2008          2009        2008
  Net Income (Loss)       $(1,192,000)  $(326,000)  $(1,488,000)  $(179,000)

  Add Back:
    Net Interest
     expense (income)          83,000      99,000       163,000     191,000
    Change in warrant
     fair value liability      92,000           -        53,000           -
    Depreciation Expense      279,000     267,000       573,000     536,000
    Amortization              518,000     517,000     1,033,000   1,044,000
      Subtotal - Add backs    972,000     883,000     1,822,000   1,771,000
  EBITDA                    $(220,000)   $557,000      $334,000  $1,592,000


  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 http://www.advancedphotonix.com/.

  Contact:
  Richard Kurtz, Advanced Photonix, Inc. [phone]
  Cameron Donahue, Hayden IR [phone]; 

DATASOURCE: Advanced Photonix, Inc.



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

Cameron Donahue of Hayden IR, [phone]; , for

Advanced Photonix, Inc.



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

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