APA Optics posts a loss for first-quarter 2002

Aug. 16, 2001
Higher revenues compared to the same period last year tempered the loss somewhat, but the firm must deal with cancellation of a major DWDM order.

APA Optics Inc. (Minneapolis) just reported higher revenues and a lower loss for the first quarter of its 2002 fiscal year. Revenues for the quarter ending June 30, 2001 totalled $434,335, compared to the $51,517 posted for the same period of fiscal 2001. Net loss was $645,062, or five cents a share, compared to the net loss of $909,675, or ten cents a share, experienced in the first quarter of fiscal 2001. Within days, though, this financial report was followed by reports that the company would have to deal with the cancellation of a major order for DWDM components.

Anil K. Jain, APA Optics president and CEO, said he was pleased by the company's ability to maintain higher quarterly revenue levels in recent quarters despite current difficulties in the economy. “The soft economy is hurting many businesses now, but it has been particularly hard on companies in the communications sector,” he said. “We are seeing the effects of the slowdown in somewhat fewer requests for quotes from our customers and in more aggressive pricing by our competitors. We may see the financial impact of these developments in the second half of the fiscal year.”

Order Cancellation

According to Jain, the firm has received notice from a customer canceling a fairly substantial order for its 16-channel 50-GHz-spacing dense-wavelength division-multiplexer/demultiplexer (DWDM) components. The customer cited concern over the time required to deliver qualified components and a potential conflict with its production schedule requirements as reasons for withdrawing the order, valued in excess of $500,000.

“We are very disappointed by this development,” said Jain. “While we continue to make progress toward Telcordia GR1209 qualification, the customer determined that, based on our current status, the time required to achieve qualification didn't fit with its production schedule.”

APA has a smaller order from this customer that was scheduled for delivery in July and delivery and acceptance of these DWDMs were the basis for the follow-on order. The July delivery date has now been moved to October, allowing APA more time to produce DWDMs that meet customer specifications. “We continue to work with the customer and see no reason why APA will not be competitive on bids for future production orders from this customer,” added Jain.

Financial Snapshot

Jain reports that the company will make good use of the slower sales period. “We intend to take advantage of this temporary downturn by increasing our efforts to qualify our DWDM components under industry standards, such as Telcordia, to automate facets of our production process and to improve our internal quality control systems,”' he said. “Fortunately, we have adequate financial resources to pursue these activities and fund operations.”

As of June 30th, APA Optics has cash and short-term investments of $35,469,255, a slight dip from the $36,984,492 available on March 31, 2001. The weighted average shares outstanding for the first quarter of fiscal 2002 totaled 11,917,291, as compared to the 9,193,663 weighted average shares outstanding during the three months ending June 30, 2000.

Paula Noaker Powell, senior editor, Laser Focus World

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