EX-99.1 2 ex99_1.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1
APA ENTERPRISES, INC. REPORTS RECORD REVENUES, DECREASED LOSSES FOR 2006 FISCAL YEAR


MINNEAPOLIS, MN, June 28, 2006 -- APA Enterprises, Inc. (NASDAQ: APAT) today reported that consolidated revenues for the fiscal year ended March 31, 2006 increased 13% to $15,717,837 from $13,886,486 reported for fiscal year 2005. The change was due to higher revenues at APA’s wholly owned subsidiary, APA Cables & Network, Inc. (Cables & Networks).

APA reported a net loss of $3,348,848, or $.28 cents per share, for the year ended March 31, 2006 representing a decrease of 2% from the net loss of $3,420,038, or $.29 cents per share in fiscal year 2005. The losses in fiscal 2006 were impacted by significantly increased legal expenses and non-cash deferred tax liability related to goodwill on acquisitions. Increased expenses were offset by a gain on the sale of Metal Organic Chemical Vapor Deposition (MOCVD) operations.

For the fourth quarter of fiscal 2006, revenues were $3,756,715, an increase of $531,314 from $3,225,401 posted in the fourth quarter of fiscal year 2005. The increase is due mainly to increased sales at Cables & Networks. The net loss in the fourth quarter of fiscal 2006 decreased 87% to $118,428, or $.01 cents per share compared to a loss of $905,645, or $.08 cents per share, reported for the fourth quarter of fiscal year 2005. The net decrease in loss is principally due to the sale of the MOCVD operations during the fourth quarter.

The overall cash used during fiscal 2006 was $1,865,715, a significant reduction of 32% as compared to $2,731,418 during fiscal 2005. The decrease in cash consumption was mostly due to the sale of MOCVD operations during the fiscal year 2006.

Anil K. Jain, APA’s president and chief executive officer, commented, "We are pleased with the increased revenues and various consolidation steps taken during the fiscal year 2006 to potentially reduce losses in fiscal year 2007 and beyond. In particular, as announced previously, the discontinuation of Aberdeen operations and termination of MOCVD related activities have the potentials of reducing cash consumption during the fiscal year 2007 and beyond”, added Jain.

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APA Enterprises/page two
 
The Company finished the year with $8,947,777 in cash. Cash increase during the fourth quarter of fiscal 2006 by $1,019,018 as compared to a decrease of $959,357 during the comparable period of fiscal 2005.

Cable & Networks

Sales for the year ended March 31, 2006 were $15,640,943, an increase of $1,840,354, or 13% from fiscal 2005. Net loss was $588,459 for fiscal 2006 versus a net income of $36,085 for the same period in fiscal 2005. The decrease in income over the prior year is due mainly to approximately $272,000 deferred tax liability related to goodwill on acquisitions and increased marketing, sales and product development activities.

Sales for the fourth quarter of fiscal year 2006 were $3,732,400, compared to sales of $3,205,077 reported in the same quarter a year ago, an increase of 16%. The increase is primarily attributable to an increased acceptance of the Company’s products within the FTTH market resulting from increased sales and marketing activities during the fiscal year 2006. Cables & Networks reported net loss of $270,912 for the fourth quarter of the fiscal year ended March 31, 2006 as compared to a net income of $30,859 in the comparable period last year. The increased losses were mostly due to the approximately $272,000 non-cash deferred tax liability related to goodwill during the fourth quarter of fiscal year 2006.

Optronics Division

Gross sales for the year ended March 31, 2006 were $399,568, a decrease of $90,169, or 18%, compared to the $489,737 in fiscal 2005. Revenues for fiscal 2006 reflect $322,674 of sales to Cables & Networks for fiber optics products and subcontracted labor versus $403,840 in the fiscal 2005. These sales are eliminated as inter-company sales in the consolidated financial statements, and represent the primary difference from last year’s sales. The net loss for year ended March 31, 2006 was $2,760,389 versus a loss of $3,456,123 in fiscal 2005. The decrease in loss of approximately $696,000 is mainly due to an approximate $1.1 million gain realized from the sale of MOCVD operation and sale of two patents which was off-set by increased legal costs of approximately $465,000 associated with the law suit brought in by EIT, a Virginia corporation.

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APA Enterprises/page three
 
Gross sales for the fourth quarter of 2006 were $63,148, versus $101,018 reported in the same quarter in 2005. Revenues for the fourth quarter ended March 31, 2006 reflect $38,833 of sales to Cables & Networks for fiber optics products and subcontracted labor versus $79,945 in the year ago period. These sales are eliminated as inter-company sales in the consolidated financial statements, and represent the primary difference from last year’s sales. Net income was $152,484 for the quarter versus a net loss of $936,504 posted for the same quarter of 2005. The decrease from the prior year is due mainly to the sale of the MOCVD operations.


Forward-looking statements contained herein are made pursuant to the safe harbor provisions of the Private Litigation Reform Act of 1995. These statements are based upon the Company's current expectations and judgments about future developments in the Company's business. Certain important factors could have a material impact on the Company's performance, including, without limitation, delays in or increased costs of production, delays in or lower than anticipated sales of the Company's new products, the Company's ability to sell such products at a profitable price, the Company's ability to fund operations, and other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements. The Company undertakes no obligation to update such statements to reflect actual events.
 

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APA Enterprises/page four
 
FINANCIAL RESULTS
 
   
 
 
Optronics
  
 
Cables & Networks
  
 
 
Eliminations
  
 
 
Consolidated
  
                   
Three months ended March 31, 2006
                  
External sales
  
$
63
  
$
3,732
  
$
(38
)
$
3,757
  
Gross profit (loss)
    
(143
)
  
1,007
    
-
    
864
  
Operating loss
    
(27
)
  
(10
)
  
-
    
(37
)
Depreciation and amortization
    
186
    
69
    
-
    
255
  
Capital expenditures, net
    
99
    
22
    
-
    
121
  
Total assets
    
19,333
    
7,879
    
(7,618
)
  
19,594
  
                           
Three months ended March 31, 2005
                          
External sales
  
$
101
  
$
3,205
  
$
(81
)
$
3,225
  
Gross profit (loss)
    
(222
)
  
926
    
-
    
704
  
Operating income (loss)
    
(1,071
)
  
112
    
-
    
(959
)
Depreciation and amortization
    
211
    
58
    
-
    
269
  
Capital expenditures, net
    
155
    
21
    
-
    
176
  
Total assets
    
22,253
    
7,188
    
(7,367
)
  
22,074
  
                           
Twelve months ended March 31, 2006
                          
External sales
  
$
400
  
$
15,641
  
$
(323
)
$
15,718
  
Gross profit (loss)
    
(674
)
  
4,195
    
(4
)
  
3,517
  
Operating loss
    
(3,407
)
  
(49
)
  
-
    
(3,456
)
Depreciation and amortization
    
798
    
263
    
-
    
1,061
  
Capital expenditures, net
    
289
    
138
    
-
    
427
  
Total assets
    
19,333
    
7,879
    
(7,618
)
  
19,594
  
                           
Twelve months ended March 31, 2005
                          
External sales
  
$
489
  
$
13,801
  
$
(404
)
$
13,886
  
Gross profit (loss)
    
(1,133
)
  
3,821
    
-
    
2,688
  
Operating loss
    
(3,920
)
  
334
    
-
    
(3,586
)
Depreciation and amortization
    
774
    
230
    
-
    
1,004
  
Capital expenditures, net
    
397
    
79
    
-
    
476
  
Total assets
    
22,253
    
7,188
    
(7,367
)
  
22,074
  

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APA Enterprises/page five
 
FINANCIAL RESULTS (Continued)

   
Three Months Ended
  
Twelve Months Ended
  
   
March 31
  
March 31
  
                   
   
2006
  
2005
  
2006
  
2005
  
                   
REVENUES
  
$
3,756,715
  
$
3,225,401
  
$
15,717,837
  
$
13,886,486
  
                           
COST OF SALES
    
2,893,124
    
2,521,370
    
12,200,733
    
11,198,176
  
                           
GROSS PROFIT (LOSS)
    
863,591
    
704,031
    
3,517,104
    
2,688,310
  
                           
OPERATING EXPENSES
                          
Research and development
    
428,681
    
378,018
    
1,408,778
    
1,103,972
  
Selling, general and administrative
    
1,577,079
    
1,285,410
    
6,763,068
    
5,379,483
  
Gain on disposal of asset (net)
    
(1,105,169
)
  
(523
)
  
(1,198,295
)
  
(208,837
)
     
900,591
    
1,662,905
    
6,973,551
    
6,274,618
  
                                               
LOSS FROM OPERATIONS
    
(37,000
)
  
(958,874
)
  
(3,456,447
)
  
(3,586,308
)
                           
OTHER INCOME (LOSS), net
    
191,693
    
53,786
    
383,170
    
170,408
  
                           
EARNINGS(LOSS) BEFORE INCOME TAXES
    
154,693
    
(905,088
)
  
(3,073,277
)
  
(3,415,900
)
                           
INCOME TAXES
    
273,121
    
557
    
275,571
    
4,138
  
                           
NET LOSS
  
$
(118,428
)
$
(905,645
)
$
(3,348,848
)
$
(3,420,038
)
                           
NET LOSS PER SHARE:
                          
Basic and diluted
  
$
(0.01
)
$
(0.08
)
$
(0.28
)
$
(0.29
)
                           
WEIGHTED AVERAGE SHARES OUTSTANDING:
                          
Basic and diluted
    
11,872,331
    
11,872,331
    
11,872,331
    
11,872,331
  
 
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APA Enterprises/page six
 
FINANCIAL RESULTS (Continued)

   
March 31, 2006
  
March 31, 2005
  
           
Assets:
          
Cash and cash equivalents
  
$
8,947,777
  
$
10,813,492
  
Other current assets
    
4,028,751
    
3,112,821
  
Property, plant and equipment, net
    
2,623,412
    
3,946,998
  
Other assets
    
3,993,631
    
4,200,703
  
               
Total assets
  
$
19,593,571
  
$
22,074,014
  
               
Liabilities:
              
Current liabilities
    
3,723,195
    
3,044,053
  
Long-term liabilities
    
290,934
    
107,800
  
               
Shareholders’ equity:
              
Common stock
    
118,723
    
118,723
  
Additional-paid-in-capital
    
51,966,213
    
51,960,084
  
Accumulated deficit
    
(36,505,494
)
  
(33,156,646
)
Total shareholders’ equity
    
15,579,442
    
18,922,161
  
               
Total liabilities and shareholders’ equity
  
$
19,593,571
  
$
22,074,014
  


APA Enterprises, Inc., consisting of the Optronics division and APA Cables and Networks Inc., a wholly owned subsidiary, (Cables & Networks) develops, designs, manufactures and markets a variety of fiber optics, copper and Gallium Nitride (GaN) based components and devices for industrial, commercial, consumer and scientific applications. Cables & Networks designs, manufactures and markets a variety of fiber optic and copper components to the data communication and telecommunication industries. Optronics is active in the development, design, manufacture and marketing of ultraviolet (UV) detection and measurement devices for consumers and industrial customers, and Gallium Nitride (GaN) based transistors for power amplifiers and other commercial applications. Additional information about APA Enterprises is available at http://www.apaenterprises.com.

APA Enterprises, Inc. Contact Information: 

Anil Jain
Chief Executive Officer
info@apaenterprises.com 
763-784-4995
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