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ACME ELECTRIC POSTS GAINS IN SALES, EARNINGS

Acme Electric Corp. ended four consecutive quarters of declining sales and reported Monday a slight increase in both quarterly revenue and profits.

The East Aurora-based manufacturer of power supply units reported second-quarter net income of $417,000, less than 1 percent higher than $402,000 earned during the same quarter last year.

While the per-share profit of 8 cents a share was flat compared with the second quarter a year ago, the company finally reported higher sales after a year-long slide.

Acme's revenue grew 2 percent during the quarter, from $18.8 million to $19.2 million, primarily from new sales to the computer industry. The company has increased revenue from a contract with Powerware to make magnetic devices for an uninterruptible power supply unit for mainframe computers.

Acme, which also has a plant in Cuba, N.Y., has been trying to replace a major revenue void from the loss of a contract with Cisco Systems in 1998.

"The most important thing to me, was their sales are uptrending. When they lost Cisco, revenue began declining on a quarterly basis," said Herbert A. Denton, an investment manager with Provident Capital in New York City which owns a 1.5 percent stake in Acme.

But the company still has some operational challenges to overcome. Acme executives warned Monday that sales and profits for the next two quarters could be lower than expected. "Delays in the timing of some major programs will reduce sales and earnings in the near term. We expect these orders, first contemplated for the second half of this fiscal year, to materialize in the first half of the next fiscal year, beginning July 1," said Acme Chairman and CEO Robert J. McKenna.

A major new contract with Picker Corp. to supply a power tray for a new magnetic resonance imaging device has been delayed by six months. Picker still needs approval of the MRI from the U.S. Food and Drug Administration, McKenna said.

Also delayed is production of a new uninterruptible power supply unit for the cable industry. Initial marketing of the product has been slower than anticipated.

"Although we'll be profitable in the second half, it just won't be to the extent that I had hoped for," McKenna said.

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