SOURCE: APA Enterprises Inc.

December 17, 2007 13:26 ET

APA Enterprises, Inc. Reports Significant Improvements in Continuing Operations; Quarterly Net Profit

MINNEAPOLIS, MN--(Marketwire - December 17, 2007) - As reported earlier, APA Enterprises Inc. (NASDAQ: APAT) changed its fiscal year, resulting in a transition period that ended September 30, 2007. Consolidated revenues for the transition period increased 3% to $10,297,000 from $9,963,000 reported for the comparable six month period in 2006. Gross profit increased 11% over the previous period. Net loss was $1,290,000 in comparison to a loss of $512,000 for the comparable period in 2006. The increase in net loss was primarily due to the costs associated with the discontinuation of the Optronics business unit announced in June, 2007. Minus one-time charges associated primarily with severance costs, net income from continuing operations was $21,000 for the 2007 period.

Quarterly Performance

Revenue for the quarter ended September 30, 2007 was $5,389,000 in comparison to $4,891,000 for the similar period in 2006, an increase of 9.5%. Gross profit was $1,768,000 in comparison to $1,477,000 for the earlier period, an increase of 20%. Net income was $119,500 in comparison to a loss of $400,000.

Comments on Operations

"The opportunity to focus APA Enterprises on the operation of our APA Cables & Networks business unit has allowed the company to significantly improve the financial results of our organization," commented Cheri Beranek Podzimek, president and CEO of APA Enterprises. "The Company continues to experience success in expanding the reach of our sales and marketing efforts and remains committed to delivering superior connectivity solutions to broadband service providers and the original equipment manufacturing marketplace."

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.

FINANCIAL RESULTS


                          APA Enterprises, Inc.
                Condensed Consolidated Balance Sheets
                             (Unaudited)



                                                September 30,   March 31,
                                                    2007          2007
                                                ------------  ------------
Assets:
   Cash and cash equivalents                    $  3,304,645  $  1,266,176
   Available for sale securities                   2,825,000     5,450,000
   Accounts receivable, net                        2,418,651     1,697,811
   Inventories                                     1,595,282     1,312,681
   Property, plant and equipment, net              1,773,739     1,656,011
   Other assets                                    3,424,251     3,015,832
   Assets of discontinued operations                       -     1,324,047
                                                ------------  ------------

      Total assets                              $ 15,341,568  $ 15,722,558
                                                ============  ============

Liabilities:
   Current liabilities                          $  2,309,727  $  2,010,726
   Long-term liabilities                             408,437       235,348
   Liabilities of discontinued operations            410,717             -

Shareholders’ equity:
   Common stock                                      118,723       118,723
   Additional-paid-in-capital                     52,037,207    52,018,729
   Accumulated deficit                           (39,943,243)  (38,660,968)
                                                ------------  ------------
     Total shareholders’ equity                   12,212,687    13,476,484
                                                ------------  ------------

       Total liabilities and shareholders’
        equity                                  $ 15,341,568  $ 15,722,558
                                                ============  ============




                               APA Enterprises, Inc.
                  Condensed Consolidated Statements of Operations
                                     (Unaudited)



                          Three Months Ended         Six Months Ended
                             September 30              September 30
                       ------------------------  -------------------------
                           2007         2006         2007          2006
                       -----------  -----------  ------------  -----------

REVENUES               $ 5,389,634  $ 4,891,085  $ 10,296,680  $ 9,963,271

COST OF REVENUES         3,622,122    3,414,021     7,079,023    7,053,745
                       -----------  -----------  ------------  -----------

 GROSS PROFIT            1,767,512    1,477,064     3,217,657    2,909,526

OPERATING EXPENSES
 Selling, general and
  administrative         1,707,111    1,468,112     3,684,694    2,954,363
 Gain on disposal of
  assets (net)             (13,079)      (1,129)      (13,079)       2,162
                       -----------  -----------  ------------  -----------
                         1,694,032    1,466,983     3,671,615    2,956,525

                       -----------  -----------  ------------  -----------
INCOME (LOSS) FROM
 OPERATIONS                 73,480       10,081      (453,958)     (46,999)

OTHER INCOME, net           77,863       89,054       129,979      187,811
                       -----------  -----------  ------------  -----------

EARNINGS(LOSS) BEFORE
 INCOME TAXES              151,343       99,135      (323,979)     140,812

INCOME TAXES                27,270       24,270        51,640       43,250
                       -----------  -----------  ------------  -----------

NET INCOME (LOSS) FROM
 CONTINUING OPERATIONS $   124,073  $    74,865  $   (375,619) $    97,562
                       -----------  ===========  ============  ===========

LOSS FROM DISCONTINUED
 OPERATIONS                 (4,573)    (475,298)     (914,820)    (610,013)
                       -----------  -----------  ------------  -----------

NET INCOME (LOSS)      $   119,500  $  (400,433) $ (1,290,439) $  (512,451)
                       ===========  ===========  ============  ===========

NET INCOME (LOSS) PER
 SHARE:
   Continuing
    operations         $      0.01  $     (0.01) $      (0.03) $      0.01
                       ===========  ===========  ============  ===========
   Discontinued
    operations         $     (0.00) $     (0.04) $      (0.08) $     (0.05)
                       ===========  ===========  ============  ===========
   Basic and diluted   $      0.01  $     (0.03) $      (0.11) $     (0.04)
                       ===========  ===========  ============  ===========

WEIGHTED AVERAGE
 SHARES OUTSTANDING:
   Basic and diluted    11,872,331   11,872,331    11,872,331   11,872,331
                       ===========  ===========  ============  ===========

APA Enterprises, Inc., designs, manufactures and markets a variety of fiber optic and copper components to the data communication and telecommunication industries. Additional information about APA Enterprises is available at http://www.apaenterprises.com.

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