SANTA CLARA, Calif.,
Nov. 2, 2011 /PRNewswire/ -- Aviat
Networks, Inc. (NASDAQ: AVNW), a leading expert in wireless
transmission solutions, today reported financial results for the
first quarter of fiscal year 2012, which ended September 30, 2011.
Financial Highlights for Q1FY12
- Revenue above the high end of guidance
- Book to Bill approximately 1
- Achieved operating expense targets
- Significant improvement in GAAP net loss and non-GAAP net
income in Q1FY12 compared to Q1FY11
GAAP Financial Results
For the first quarter of fiscal year 2012, revenue was
$111.4 million, compared with
$100.4 million in the year-ago
quarter. Revenue and results of operations from our WiMAX business
are classified as discontinued operations for all periods
presented. The Company reported a net loss, including discontinued
operations, of $(6.8) million or
$(0.12) per share, compared with a
net loss of $(21.3) million or
$(0.36) per share in the year-ago
quarter. Loss from continuing operations was $(3.7) million or $(0.06) per share compared with the loss from
continuing operations of $(17.0)
million or $(0.29) per share
in the year-ago quarter.
Cash and cash equivalents were $87.6
million as of September 30,
2011 compared with $98.2
million as of the end of the prior quarter.
Non-GAAP Financial Results
Non-GAAP income from continuing operations for the quarter was
$0.1 million or $0.00 per share, compared with a non-GAAP loss
from continuing operations of $(11.1)
million, or $(0.19) per share,
in the year ago quarter.
The first quarter of fiscal year 2012 non-GAAP results exclude
$2.8 million of pre-tax charges
composed primarily of the following:
- $0.9 million of restructuring
charges
- $0.1 million excess and obsolete
inventory associated with exiting the North American legacy product
market
- $0.9 million for share-based
compensation expense
- $0.9 million for the amortization
of purchased intangibles
The first quarter of fiscal year 2012 non-GAAP results also
exclude an income tax provision of $1.0
million. Loss from discontinued operations, net of taxes was
$3.1 million for the quarter.
A reconciliation of GAAP to non-GAAP financial measures for the
quarter comparison with the year ago period is provided on Table 4
along with the accompanying notes.
First Quarter Revenue by Segment (excluding discontinued
operations)
Revenue in the North America
segment was $37.1 million in the
first quarter of fiscal 2012, compared with $35.3 million in the year ago quarter and
$42.2 million in the prior quarter.
International revenue was $74.3
million, compared with $65.1
million in the year ago quarter and $78.7 million in the prior quarter.
"We are off to a solid start in the new fiscal year. The efforts
of our restructuring yielded improvements in our business model
compared to last year," said Michael
Pangia, President and CEO of Aviat Networks. "Beyond our
financial performance in Q1, we made further strides in moving
towards focusing on our core microwave transmission business with
the sale of the WiMAX business. With the appointment of our new
CFO, Ned Hayes, we are better
positioned to successfully execute our long term strategy and
improve shareholder value."
Outlook
Based on current trends our revenue outlook range is
$100 to $110 million. However,
one of our contract manufacturers in Thailand was affected by the flooding in that
country. We are still assessing the impact on our business
from that event and cannot state if, or how it will affect our
second quarter. We will update our guidance should we learn
of any tangible effect on the quarter.
Conference Call Details
Aviat Networks, Inc. will host a conference call today at
4:30 p.m. Eastern Time to discuss the
Company's financial results. Those wishing to join the call should
dial 480-629-9819 or toll free at 877-941-2332 access code 4483681
at approximately 4:20 p.m. A
replay also will be available starting approximately one hour after
the completion of the call until November 9,
2011. To access the replay, dial 303-590-3030 or toll free
at 800-406-7325 access code 4483681. A live and archived webcast of
the conference call will also be available via the Company's Web
site at http://investors.aviatnetworks.com/events.cfm.
Non-GAAP Measures and Comparative Financial
Information
Aviat Networks, Inc. reports information in accordance with U.S.
Generally Accepted Accounting Principles ("GAAP"). Management of
Aviat Networks monitors gross margin, research and development
expenses, selling and administrative expenses, operating income or
loss, income tax provision or benefit, income or loss from
continuing operations and basic and diluted income or loss per
share from continuing operations on a non-GAAP basis for planning
and forecasting results in future periods, and may use these
measures for some management compensation purposes. These measures
exclude certain costs, expenses, gains and losses as shown on the
attached Reconciliation of Non-GAAP Financial Measures table. As a
result, management is presenting these non-GAAP measures in
addition to results reported in accordance with GAAP to better
communicate underlying operational and financial performance in
each period. Management believes these non-GAAP measures provide
information that is useful to investors in understanding
period-over-period operating results separate and apart from items
that may, or could, have a disproportionate positive or negative
impact on results in any given period. Management also believes
that these non-GAAP measures enhance the ability of an investor to
analyze trends in Aviat Networks' business and to better understand
our performance.
Aviat Networks' management does not, nor does it suggest that
investors should, consider such non-GAAP financial measures in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. Aviat Networks presents such
non-GAAP financial measures in reporting its financial results to
provide investors with an additional tool to evaluate the Company's
financial performance. Reconciliations of these non-GAAP financial
measures with the most directly comparable financial measures
calculated in accordance with GAAP are included in the tables
below.
About Aviat Networks
Aviat Networks, Inc. is a leader in wireless transmission
solutions. We apply innovation and IP networking expertise toward
building a carrier class foundation for future mobile and fixed
broadband networks. With more than 750,000 systems installed around
the world, Aviat Networks has built a reputation as a leader in
offering best-of-breed solutions including LTE-ready microwave
backhaul and a complete portfolio of service and support options to
public and private telecommunications operators worldwide.
With a global reach and local presence in more than 46
countries, Aviat Networks works by the side of its customers
allowing them to quickly and cost effectively seize new market and
service opportunities. Aviat Networks is headquartered in
Santa Clara, California and is
listed on NASDAQ (AVNW). For more information, please visit
www.aviatnetworks.com or join the dialogue at
www.twitter.com/aviatnetworks.
Forward-Looking Statements
The information contained in this document includes
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 21E of the
Securities Exchange Act and Section 27A of the Securities Act. All
statements, trend analyses and other information contained herein
about the markets for the services and products of Aviat Networks,
Inc. and trends in revenue, as well as other statements identified
by the use of forward-looking terminology, including "anticipates",
"believe", "plan", "estimate", "expect", "goal", "will", "see",
"continues", "delivering", "view", and "intend", or the negative of
these terms or other similar expressions, constitute
forward-looking statements. These forward-looking statements are
based on estimates reflecting the current beliefs of the senior
management of Aviat Networks. These forward-looking statements
involve a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by the
forward-looking statements. Forward-looking statements should
therefore be considered in light of various important factors,
including those set forth in this document. Important factors that
could cause actual results to differ materially from estimates or
projections contained in the forward-looking statements include the
following:
- continued price erosion as a result of increased competition in
the microwave transmission industry;
- the impact of the volume, timing and customer, product and
geographic mix of our product orders;
- our suppliers' inability to perform and deliver on time as a
result of their financial condition, component shortages or other
supply chain constraints, such as the recent natural disaster in
Thailand;
- our ability to meet projected new product development dates or
anticipated cost reductions of new products;
- customer acceptance of new products;
- the ability of our subcontractors to timely perform;
- continued weakness in the global economy affecting customer
spending;
- retention of our key personnel;
- our ability to manage and maintain key customer
relationships;
- uncertain economic conditions in the telecommunications sector
combined with operator and supplier consolidation;
- the timing of our receipt of payment for products or services
from our customers;
- our failure to protect our intellectual property rights or
defend against intellectual property infringement claims by
others;
- the effects of currency and interest rate risks; and
- the impact of political turmoil in countries where we have
significant business.
For more information regarding the risks and uncertainties for
our business, see "Risk Factors" in our Form 10-K filed with the
U.S. Securities and Exchange Commission ("SEC") on September 12, 2011 as well as other reports filed
by Aviat Networks, Inc. with the SEC from time to time. Aviat
Networks undertakes no obligation to update publicly any
forward-looking statement for any reason, except as required by
law, even as new information becomes available or other events
occur in the future.
Financial Tables to Follow:
Table
1
AVIAT
NETWORKS, INC.
Fiscal Year
2012 First Quarter Summary
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
September
30,
2011
|
October
1,
2010 (1)
|
|
|
(In
millions, except per share amounts)
|
|
Revenue from product sales and
services
|
$ 111.4
|
$ 100.4
|
|
Cost of product sales and
services
|
78.5
|
73.9
|
|
Amortization of purchased
technology
|
0.2
|
0.2
|
|
|
|
|
|
Gross margin
|
32.7
|
26.3
|
|
Research and development
expenses
|
9.0
|
9.7
|
|
Selling and administrative
expenses
|
24.6
|
28.4
|
|
Amortization of identifiable
intangible assets
|
0.7
|
0.7
|
|
Restructuring charges
|
0.9
|
5.6
|
|
|
|
|
|
Operating loss
|
(2.5)
|
(18.1)
|
|
Loss on sale of NetBoss
assets
|
-
|
(3.9)
|
|
Interest income
|
0.2
|
0.1
|
|
Interest expense
|
(0.4)
|
(0.6)
|
|
|
|
|
|
Loss from continuing operations
before income taxes
|
(2.7)
|
(22.5)
|
|
Provision for (benefit from)
income taxes
|
1.0
|
(5.5)
|
|
|
|
|
|
Loss from continuing
operations
|
(3.7)
|
(17.0)
|
|
Loss from discontinued
operations, net of tax
|
(3.1)
|
(4.3)
|
|
|
|
|
|
Net loss
|
$ (6.8)
|
$ (21.3)
|
|
|
|
|
|
Basic and diluted net loss per
common share:
|
|
|
|
Continuing
operations
|
$ (0.06)
|
$ (0.29)
|
|
Discontinued
operations
|
$ (0.05)
|
$ (0.07)
|
|
Net loss per common
share
|
$ (0.12)
|
$ (0.36)
|
|
|
|
|
|
Basic and diluted weighted
average shares outstanding
|
58.8
|
59.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Beginning in the third
quarter of fiscal 2011, the results of the WiMAX business are
presented as discontinued operations in our consolidated financial
statements. Historical amounts prior to the third quarter of fiscal
2011 are reclassified to conform to current period
presentation.
|
|
|
|
Table
2
AVIAT
NETWORKS, INC.
Fiscal Year
2012 First Quarter Summary
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
September
30, 2011
|
July
1,2011
|
|
|
(In
millions)
|
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$ 87.6
|
$ 98.2
|
|
Receivables,
net
|
124.7
|
133.0
|
|
Unbilled costs
|
28.2
|
24.8
|
|
Inventories
|
50.0
|
50.6
|
|
Customer service
inventories
|
20.3
|
21.2
|
|
Other current
assets
|
21.1
|
22.5
|
|
Property, plant and
equipment, net
|
22.2
|
21.6
|
|
Goodwill
|
5.6
|
5.6
|
|
Identifiable intangible
assets
|
3.2
|
4.1
|
|
Other assets
|
2.2
|
2.3
|
|
|
|
|
|
|
$ 365.1
|
$ 383.9
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
Short-term debt
|
$ 6.0
|
$ 6.0
|
|
Accounts
payable
|
61.7
|
70.3
|
|
Redeemable preference
shares
|
8.3
|
8.3
|
|
Accrued expenses and other
current liabilities
|
107.4
|
112.5
|
|
Restructuring and other
long-term liabilities
|
8.9
|
9.1
|
|
Stockholders'
equity
|
172.8
|
177.7
|
|
|
|
|
|
|
$ 365.1
|
$ 383.9
|
|
|
|
|
|
|
|
|
|
|
Table
3
AVIAT
NETWORKS, INC.
Fiscal Year
2012 First Quarter Summary
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Quarter Ended
|
|
|
September
30,
|
October
1
|
|
|
2011
|
2010 (1)
|
|
|
|
|
|
Operating
Activities
|
|
|
|
Net loss
|
$ (6.8)
|
$ (21.3)
|
|
Adjustments to reconcile
net loss to net cash used in operating activities:
|
|
|
|
Amortization of
identifiable intangible assets
|
0.9
|
0.9
|
|
Depreciation and
amortization of property, plant and equipment and
capitalized software
|
0.8
|
2.7
|
|
Share-based
compensation expense
|
1.0
|
0.8
|
|
Deferred income tax
(benefit) expense
|
-
|
(1.7)
|
|
Inventory
write-downs
|
1.4
|
7.7
|
|
Loss on held for sale
assets, net
|
2.0
|
-
|
|
Loss on sale of NetBoss
assets
|
-
|
3.9
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Receivables
|
8.3
|
(12.5)
|
|
Unbilled costs
|
(3.4)
|
2.7
|
|
Inventories
|
0.2
|
(5.2)
|
|
Customer service
inventories
|
(0.1)
|
(0.8)
|
|
Accounts
payable
|
(8.6)
|
(5.4)
|
|
Accrued
expenses
|
(0.7)
|
0.2
|
|
Advance payments and
unearned income
|
(5.5)
|
(5.7)
|
|
Income taxes payable or
receivable
|
0.5
|
(1.4)
|
|
Restructuring liabilities
and other assets and liabilities
|
3.4
|
(2.4)
|
|
|
|
|
|
Net cash used in operating
activities
|
(6.6)
|
(37.5)
|
|
Investing
Activities
|
|
|
|
Cash received from sale of
NetBoss assets
|
-
|
3.8
|
|
Cash disbursed related to
sale of WiMAX business
|
(0.2)
|
-
|
|
Additions of property,
plant and equipment
|
(2.8)
|
(1.3)
|
|
Additions of capitalized
software
|
-
|
(0.3)
|
|
|
|
|
|
Net cash used in investing
activities
|
(3.0)
|
2.2
|
|
Financing
Activities
|
|
|
|
Proceeds from short-term
debt arrangement
|
-
|
6.0
|
|
Payments on short-term
debt arrangement
|
-
|
(5.0)
|
|
|
|
|
|
Net cash provided by financing
activities
|
-
|
1.0
|
|
Effect of exchange rate changes
on cash and cash equivalents
|
(1.0)
|
0.4
|
|
|
|
|
|
Net decrease in cash and cash
equivalents
|
(10.6)
|
(33.9)
|
|
Cash and cash equivalents,
beginning of period
|
98.2
|
141.7
|
|
|
|
|
|
Cash and cash equivalents, end
of period
|
$ 87.6
|
$ 107.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) First quarter of fiscal 2011
amounts are reclassified to conform to current period presentation
related to customer service inventories reclassification from
property, plant and equipment.
|
|
|
|
AVIAT
NETWORKS, INC.
Quarter Ended September 30, 2011
Summaries
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES AND REGULATION G DISCLOSURE
|
|
To supplement our consolidated
financial statements presented in accordance with accounting
principles generally accepted in the United States ("GAAP"), we
provide additional measures of gross margin, research and
development expenses, selling and administrative expenses,
operating income or loss, other income or loss, income tax
provision or benefit, income or loss from continuing operations,
and basic and diluted income or loss per share from continuing
operations, adjusted to exclude certain costs, charges, gains and
losses. Aviat Networks, Inc. ("we" or "our") believes that these
non-GAAP financial measures, when considered together with the GAAP
financial measures provide information that is useful to investors
in understanding period-over-period operating results separate and
apart from items that may, or could, have a disproportionate
positive or negative impact on results in any particular period. We
also believe these non-GAAP measures enhance the ability of
investors to analyze trends in our business and to understand our
performance. In addition, we may utilize non-GAAP
financial measures as a guide in our forecasting, budgeting and
long-term planning process and to measure operating performance for
some management compensation purposes. Any analysis of non-GAAP
financial measures should be used only in conjunction with results
presented in accordance with GAAP. A reconciliation of these
non-GAAP financial measures with the most directly comparable
financial measures calculated in accordance with GAAP
follows.
|
|
|
Table
4
AVIAT
NETWORKS, INC.
Fiscal Year
2012 First Quarter Summary
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES (2)
Condensed
Consolidated Statements of Operations
(Unaudited)
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
September
30,
2011
|
%
of
Revenue
|
October
1,
2010(1)
|
%
of
Revenue
|
|
|
(In
millions, except per share amounts)
|
|
GAAP gross margin
|
$ 32.7
|
29.4 %
|
$ 26.3
|
26.2 %
|
|
Share-based
compensation
|
0.1
|
|
0.1
|
|
|
Excess and obsolete inventory
associated with legacy products
|
0.1
|
|
-
|
|
|
Amortization of purchased
technology
|
0.2
|
|
0.2
|
|
|
|
|
|
|
|
|
Non-GAAP gross
margin
|
33.1
|
29.7 %
|
26.6
|
26.5%
|
|
|
|
|
|
|
|
GAAP research and development
expenses
|
$ 9.0
|
8.1 %
|
$ 9.7
|
9.7 %
|
|
Share-based
compensation
|
(0.2)
|
|
(0.2)
|
|
|
|
|
|
|
|
|
Non-GAAP research and
development expenses
|
8.8
|
7.9%
|
9.5
|
9.5 %
|
|
|
|
|
|
|
|
GAAP selling and administrative
expenses
|
$ 24.6
|
22.1 %
|
$ 28.4
|
28.3 %
|
|
Share-based
compensation
|
(0.6)
|
|
(0.5)
|
|
|
Rebranding and transitional
costs
|
-
|
|
(0.2 )
|
|
|
|
|
|
|
|
|
Non-GAAP selling and
administrative expenses
|
24.0
|
21.5 %
|
27.7
|
27.6 %
|
|
|
|
|
|
|
|
GAAP operating
loss
|
$ (2.5)
|
-2.2 %
|
$ (18.1)
|
-18.0%
|
|
Share-based
compensation
|
0.9
|
|
0.8
|
|
|
Excess and obsolete inventory
associated with legacy products
|
0.1
|
|
-
|
|
|
Amortization of purchased
technology
|
0.2
|
|
0.2
|
|
|
Rebranding and transitional
costs
|
-
|
|
0.2
|
|
|
Amortization of intangible
assets
|
0.7
|
|
0.7
|
|
|
Restructuring charges
|
0.9
|
|
5.6
|
|
|
|
|
|
|
|
|
Non-GAAP operating income
(loss)
|
0.3
|
0.3 %
|
(10.6)
|
-10.6 %
|
|
|
|
|
|
|
|
GAAP other income (expense),
net
|
$ (0.2)
|
-0.2 %
|
$ (4.4)
|
-4.4 %
|
|
Loss on sale of NetBoss
assets
|
-
|
|
3.9
|
|
|
|
|
|
|
|
|
Non-GAAP other expense,
net
|
(0.2)
|
-0.2 %
|
(0.5)
|
-0.5 %
|
|
|
|
|
|
|
|
GAAP income tax provision
(benefit)
|
$ 1.0
|
0.9 %
|
$ (5.5)
|
-5.5 %
|
|
Adjustment to reflect zero
percent pro forma tax rate
|
(1.0)
|
|
5.5
|
|
|
|
|
|
|
|
|
Non-GAAP income tax
provision
|
-
|
0.0 %
|
-
|
0.0 %
|
|
|
|
|
|
|
|
GAAP loss from continuing
operations
|
$ (3.7)
|
-3.3 %
|
$ (17.0)
|
-16.9%
|
|
Share-based
compensation
|
0.9
|
0.8 %
|
0.8
|
0.8 %
|
|
Excess and obsolete inventory
associated with legacy products
|
0.1
|
0.1 %
|
-
|
0.0 %
|
|
Amortization of purchased
technology
|
0.2
|
0.2 %
|
0.2
|
0.2 %
|
|
Rebranding and transitional
costs
|
-
|
0.0 %
|
0.2
|
0.2 %
|
|
Amortization of intangible
assets
|
0.7
|
0.6 %
|
0.7
|
0.7 %
|
|
Restructuring charges
|
0.9
|
0.8 %
|
5.6
|
5.6 %
|
|
Loss on sale of NetBoss
assets
|
-
|
0.0 %
|
3.9
|
3.9 %
|
|
Adjustment to reflect zero
percent pro forma tax rate
|
1.0
|
0.9%
|
(5.5)
|
-5.5 %
|
|
|
|
|
|
|
|
Non-GAAP income (loss) from
continuing operations
|
$ 0.1
|
0.1 %
|
$
(11.1)
|
-11.1 %
|
|
Basic and diluted income (loss)
per share from continuing operations
|
|
|
|
|
|
GAAP
|
$ (0.06)
|
|
$ (0.29)
|
|
|
Non-GAAP
|
$ 0.00
|
|
$ (0.19)
|
|
|
|
|
|
|
|
|
Shares used in computing income
(loss) from continuing operations
|
|
|
|
|
|
GAAP
|
58.8
|
|
59.3
|
|
|
Non-GAAP
|
60.4
|
|
59.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to Table 4:
|
|
(1) In the
third quarter of fiscal 2011, the WiMAX business met the criteria
to be considered held for sale. Beginning in the third quarter of
fiscal 2011, the results of the WiMAX business are presented as a
discontinued operation in our consolidated financial statements.
Prior year period results have been reclassified to conform to
current period presentation.
|
|
(2) The
adjustments above reconcile our GAAP financial results to the
non-GAAP financial measures used by us. Our non-GAAP financial
measures exclude share-based compensation, excess and obsolete
inventory associated with legacy products, amortization of
purchased technology, amortization of intangible assets,
restructuring charges, loss on sale of NetBoss assets, and
adjustment to reflect zero percent pro forma tax rate. We believe
that the presentation of these non-GAAP items provides meaningful
supplemental information to investors, when viewed in conjunction
with, and not in lieu of, our GAAP results. However, the non-GAAP
financial measures have not been prepared under a comprehensive set
of accounting rules or principles. Non-GAAP information should not
be considered in isolation from, or as a substitute for,
information prepared in accordance with GAAP. Moreover, there are
material limitations associated with the use of non-GAAP financial
measures.
|
|
|
Table
5
AVIAT
NETWORKS, INC.
Fiscal Year
2012 First Quarter Summary
SUPPLEMENTAL
SCHEDULE OF REVENUE BY GEOGRAPHICAL AREA
(Unaudited)
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
September
30,
|
October
1,
|
|
|
2011
|
2010
|
|
|
|
|
|
(in millions)
|
|
North America
|
$ 37.1
|
$ 35.3
|
|
International:
|
|
|
|
Africa and Middle
East
|
42.7
|
30.5
|
|
Europe and
Russia
|
12.4
|
17.7
|
|
Latin America and
AsiaPac
|
19.2
|
16.9
|
|
|
|
|
|
Total
International
|
74.3
|
65.1
|
|
|
|
|
|
|
$ 111.4
|
$ 100.4
|
|
|
|
|
|
|
|
|
|
|
SOURCE Aviat Networks, Inc.