New Company Was Formed January 26, 2007 and Now Trades on the
Nasdaq RESEARCH TRIANGLE PARK, N.C., Jan. 30 /PRNewswire-FirstCall/
-- Harris Stratex Networks, Inc. (NASDAQ:HSTX), the leading
independent supplier of turnkey wireless network solutions, today
reported financial results for Stratex Networks, Inc. and for the
Microwave Communications Division of Harris Corporation ("MCD") for
the December 2006 quarter. The merger between MCD and Stratex
Networks closed January 26, 2007. The company has also provided
pro-forma results for the first half of fiscal 2007 on a combined
basis. The fiscal year for Harris Stratex Networks will end in
June. Total revenues for the quarter for Stratex Networks increased
27 percent to $70.7 million compared with $55.5 million for the
same period a year ago. For MCD total revenues for the quarter
increased 14 percent to $101.2 million compared with $88.7 million
for the same period last year. Net income in the December quarter
of 2006 for Stratex, as reported in accordance with U.S. generally
accepted accounting principles (GAAP), was $3.8 million or earnings
of $0.04 per diluted share. This compares with net income of
$813,000 or earnings per share of $0.01 in the year ago period.
GAAP net income for MCD in the December quarter was $5.8 million,
compared with a net loss of $37.4 million in the year ago period.
Non-GAAP Financial Results On a non-GAAP basis, Stratex Networks
reported net income of $7.8 million in the December quarter, or
earnings of $0.08 per diluted share. This compares with non-GAAP
net income of $1.1 million or earnings of $0.01 per diluted share
in the year ago period. Non-GAAP net income for the December 2006
quarter excludes the impact of non-cash stock-based compensation
expense of $2.3 million related to Financial Accounting Standard
No. 123 (R) and the company's restricted stock plan, and $1.7
million in merger-related expense. On a non-GAAP basis, MCD
reported net income of $9.6 million in the December quarter. This
compares with non-GAAP net income of $5.9 million in the year ago
period. Non-GAAP net income for the December 2006 quarter excludes
the impact of non-cash stock compensation expense of $321,000
related to Financial Accounting Standard No. 123 (R) and the
company's restricted stock plan, $1.7 million in merger-related
expense, and $1.8 million of corporate allocation expenses from
Harris Corporation. A full reconciliation of GAAP net income (loss)
to non-GAAP net income (loss) is provided in the accompanying
financial tables. "MCD turned in a strong quarter driven by
year-over-year revenue gains in North America," said Guy Campbell,
president and chief executive officer of Harris Stratex Networks.
"This was the eighth consecutive quarter of orders greater than
sales for MCD, which provides us with strong momentum going into
the merger." "Stratex Networks continued to make strong revenue
gains in December, exceeding the guidance previously provided,"
said Tom Waechter, chief operating officer of Harris Stratex
Networks. "This is the fifth consecutive quarter of profitability
reflecting the significant progress we are making in many areas of
the company to increase sales, manage costs and improve
efficiencies." Outlook and Guidance for Harris Stratex Networks The
following forecasts are based on current expectations. These
statements are forward-looking, and actual results may differ
materially. Please see the Safe Harbor Statement in this release
for a description of certain important risk factors that could
cause actual results to differ, and refer to the company's reports
on file with the Securities and Exchange Commission (SEC) for a
more complete description of the risks. For ease of comparison, pro
forma combined revenue for the first six months of fiscal year 2007
was $332.8 million, increasing 17 percent over the prior-year first
half. North America revenue grew 9 percent, while international
revenue grew 21 percent, compared to the prior year first half.
Non-GAAP pro-forma net income for the first six months of fiscal
2007 was $29.9 million, or 9.0 percent return on sales, compared to
$13.4 million, or 4.7 percent return on sales in the prior-year.
Second Half Fiscal Year 2007 on a Non-GAAP Consolidated Basis
(ending June 29, 2007) - Revenue is expected to range between $340
million and $350 million - On a non-GAAP basis, the company expects
to report net income of $25 million to $28 million, or $0.43 to
$0.47 per share. To reconcile second half GAAP net income to
non-GAAP net income, the company expects to exclude (net of tax): -
$15 million to $16 million of charges related principally to
separation and restructuring activities undertaken in connection
with the merger - $2 million to $3 million of stock based
compensation expense - $26 million of purchase accounting
adjustments in connection with the merger "The combination of these
two businesses is being built on the recent successes and financial
momentum of both companies, and will be further driven by the
greater scale and industry leadership that this combination
creates," said Campbell. "With the completion of the merger, we
have begun implementing our integration plans to capture the
estimated $35 million in expected annual savings from supply chain
and operating expense reductions by June 2008. The creation of
Harris Stratex Networks is a game-changing strategy, and I think
this new company has the potential to reshape the industry for
wireless transmission network solutions." Non-GAAP Measures and
Comparative Financial Information Harris Stratex Networks, Inc. and
the Microwave Communications Division of Harris Corporation report
information in accordance with U.S. Generally Accepted Accounting
Principles ("GAAP"). The GAAP information presented in this press
release consists of the results of operations and financial
position of the Microwave Communications Division of Harris
Corporation and Stratex Networks, Inc. as stand-alone entities for
the quarter and two quarters ended December 2006 and as of the
close of their respective quarterly periods. On January 26, 2007,
the Microwave Communications Division of Harris Corporation and
Stratex Networks, Inc. merged into Harris Stratex Networks, Inc.
and became one reporting entity. Accordingly, management of Harris
Stratex Networks will monitor revenues, cost of product sales and
services, engineering, general and administrative expenses,
operating income or loss, income or loss from operations, tax
expense or benefit, net income or loss, and net income per diluted
share for the new combined entity for planning and forecasting
results in future periods, and may use these measures for some
management compensation purposes. As such, historical non-GAAP
combined information has been included in this press release for
comparative purposes. These measures exclude certain costs and
expenses as discussed herein. 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 Harris Stratex
Networks' business and to better understand our performance. Harris
Stratex 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. Harris Stratex 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. Conference Call Harris Stratex Networks will host a
conference call to discuss the company's financial results at 5:30
p.m. Eastern Time on Tuesday, January 30, 2007. Those wishing to
join the call should dial 303-262-2138, (no pass code required) at
approximately 5:20 p.m. A replay of the call will be available
starting one hour after the call's completion until February 6,
2007. To access the replay, dial 303-590-3000 (pass code: 11082112
#). An archived webcast of the conference call will also be
available via the company's Web site at
http://www.harrisstratex.com/investors/conference-call. About
Harris Stratex Networks Harris Stratex Networks is the world's
leading independent supplier of turnkey wireless network solutions.
The company offers reliable, flexible and scalable wireless network
solutions, backed by comprehensive professional services and
support. Harris Stratex Networks serves all global markets,
including mobile network operators, public safety agencies, private
network operators, utility and transportation companies, government
agencies and broadcasters. Customers in more than 135 countries
depend on Harris Stratex Networks to build, expand and upgrade
their voice, data and video solutions. Harris Stratex Networks is
recognized around the world for innovative, best- in-class wireless
networking solutions and services. For more information, visit
http://www.harrisstratex.com/. Safe Harbor Statement 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 Harris Stratex Networks and trends in
revenue, as well as other statements identified by the use of
forward-looking terminology, including "anticipate", "believe",
"plan", "estimate", "expect", "goal" 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 Harris Stratex 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: the failure to obtain and retain expected synergies from
the transactions contemplated by the combination agreement; rates
of success in executing, managing and integrating key acquisitions
and transactions, including the integration of the operations,
personnel and businesses of the Stratex Networks, Inc. with those
of the former Microwave Communications Division of Harris
Corporation; the ability to achieve business plans for Harris
Stratex Networks; the ability to manage and maintain key customer
relationships; the ability to fund debt service obligations through
operating cash flow; the ability to obtain additional financing in
the future and react to competitive and technological changes; the
ability to comply with restrictive covenants in Harris Stratex
Networks' indebtedness; the ability to compete with a range of
other providers of microwave communications products and services;
the effect of technological changes on Harris Stratex Networks'
businesses; the functionality or market acceptance of new products
that Harris Stratex Networks may introduce; the extent to which
Harris Stratex Networks' future earnings will be sufficient to
cover its fixed charges; Harris Stratex Networks will be subject to
intense competition; the failure of Harris Stratex Networks to
protect its intellectual property rights; currency and interest
rate risks; the impact of political, economic and geographic risks
on international sales; the ability to retain the principal sources
of revenue of Stratex Networks, Inc. and Harris Corporation's
Microwave Communications Division; and future changes in prices for
Harris Stratex Networks' products and services. For more
information regarding the risks and uncertainties of the microwave
communications business as well as risks relating to the
combination of Harris Corporation's Microwave Communications
Division and Stratex, see "Risk Factors" in the proxy statement/
prospectus included in the Company's registration statement on Form
S-4, as amended, as well as other reports filed by Harris Stratex
Networks with the U.S. Securities and Exchange Commission from time
to time. Harris Stratex 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. Table 1 HARRIS STRATEX NETWORKS, INC.
Consisting of The Microwave Communications Division of Harris
Corporation FY'07 Second Quarter Summary Condensed combined
Statement of operations (Unaudited) Quarter Ended Two Quarters
Ended December 29, December 30, December 29, December 30, 2006 2005
2006 2005 (In millions) Revenue from product sales and services
$101.2 $88.7 $194.8 $173.4 Cost of product sales and services
(66.4) (94.9) (129.2) (152.8) Gross margin (deficit) 34.8 (6.2)
65.6 20.6 Engineering, selling and administrative expenses (26.8)
(23.8) (50.7) (43.0) Corporate allocations expense (1.8) (1.7)
(3.4) (3.2) Operating income (loss) 6.2 (31.7) 11.5 (25.6) Interest
income 0.2 0.5 0.3 0.6 Interest expense (0.3) (0.2) (0.5) (0.4)
Income (loss) before income taxes 6.1 (31.4) 11.3 (25.4) Income
taxes (0.3) (6.0) (0.7) (6.3) Net income (loss) $5.8 $(37.4) $10.6
$(31.7) Table 2 STRATEX NETWORKS, INC. FY'07 Second Quarter Summary
condensed Consolidated Statement of operations (Unaudited) Quarter
Ended Two Quarters Ended December 31, December 31, December 31,
December 31, 2006 2005 2006 2005 (In millions, except for per share
data) Revenue from product sales and services $70.7 $55.5 $138.0
$112.1 Cost of product sales and services (47.5) (39.3) (94.0)
(80.7) Gross margin 23.2 16.2 44.0 31.4 Engineering, selling and
administrative expenses (19.0) (14.1) (37.9) (30.0) Operating
income 4.2 2.1 6.1 1.4 Interest income 1.0 0.3 1.7 0.5 Interest
expense (0.6) (0.5) (1.2) (1.2) Other expense, net (0.5) (0.5)
(0.9) (1.0) Income (loss)before income taxes 4.1 1.4 5.7 (0.3)
Income taxes (0.3) (0.6) (0.3) (1.1) Net income (loss) $3.8 $0.8
$5.4 $(1.4 Net income (loss) per common share Basic $.04 $.01 $0.06
$(0.01) Diluted $.04 $.01 $0.05 $(0.01) Basic weighted average
shares outstanding 98.1 95.9 97.9 95.5 Diluted weighted average
shares outstanding 101.3 97.9 100.7 95.5 Table 3 HARRIS STRATEX
NETWORKS, INC. Consisting of The Microwave Communications Division
of Harris Corporation FY'07 Second Quarter Summary CONDENSED
COMBINED BALANCE SHEET (Unaudited) December 29, June 30, 2006 2006
(1) (In millions) Assets Cash and cash equivalents $12.2 $13.8
Receivables 105.7 123.9 Inventories and unbilled costs 121.1 97.4
Plant and equipment 48.9 51.8 Goodwill 29.2 28.3 Identifiable
intangible assets 5.5 6.4 Non-current deferred taxes 9.6 9.6 Other
assets 25.6 21.4 $357.8 $352.6 Liabilities and Shareholder's Equity
Short-term debt $0.1 $0.2 Accounts payable 46.5 42.1 Other accrued
liabilities 43.2 45.7 Due to Harris Corporation 0.3 12.6
Shareholder's equity 267.7 252.0 $357.8 $352.6 (1) Derived from
audited financial statements. Table 4 STRATEX NETWORKS, INC. FY'07
Second Quarter Summary CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited) December 31, June 30, 2006 2006 (In millions) Assets
Cash and cash equivalents and short-term investments $57.1 $61.3
Receivables 52.7 40.2 Inventories and unbilled costs 33.8 46.5
Other current assets 15.0 12.3 Plant and equipment 24.0 23.3 Other
assets 0.6 0.8 $183.2 $184.4 Liabilities and Stockholders' Equity
Short-term debt $11.3 $11.3 Accounts payable 37.0 41.2 Other
accrued liabilities 28.2 30.4 Long-term debt 13.9 19.5
Restructuring and other long-term liabilities 12.3 13.9
Stockholders' equity 80.5 68.1 $183.2 $184.4 HARRIS STRATEX
NETWORKS, INC. Consisting of The Microwave Communications Division
of Harris Corporation and Stratex Networks, Inc. FY'07 Second
Quarter Summary 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 revenue, gross margin, operating income
(loss), non-operating income (loss); cost of product sales and
services; engineering, selling and administrative expenses; income
before income taxes; income taxes; net income, and net income per
diluted share adjusted to exclude certain costs, expenses, gains
and losses. Management of Harris Stratex Networks, Inc. (the
"Company" or "Harris Stratex") believes that these non-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.
Management also believes that these non-GAAP measures enhance the
ability of an investor to analyze trends in Harris Stratex'
business and to better understand our performance. In addition, the
Company may utilize non-GAAP financial measures as a guide in its
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 5 HARRIS STRATEX NETWORKS, INC. Consisting of The Microwave
Communications Division of Harris Corporation FY'07 Second Quarter
Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Condensed
Combined Statement Of Operations (Unaudited) Quarter Ended December
29, 2006 As Reported Adjustment Non-GAAP (In millions) Revenue from
product sales and services $101.2 $- $101.2 Cost of product sales
and services (A)(66.4) - (66.4) Gross margin (deficit) 34.8 - 34.8
Engineering, selling and administrative expenses (B) (26.8) 2.0
(24.8) Corporate allocations expense (C) (1.8) 1.8 - Operating
income (loss) 6.2 3.8 10.0 Interest income 0.2 - 0.2 Interest
expense (0.3) - (0.3) Income (loss) before income taxes 6.1 3.8 9.9
Income taxes (0.3) - (0.3) Net income (loss) $5.8 $ 3.8 $9.6
Quarter Ended December 30, 2005 As Reported Adjustment Non-GAAP (In
millions) Revenue from product sales and services $88.7 $- $88.7
Cost of product sales and services (A) (94.9) 34.9 (60.0) Gross
margin (deficit) (6.2) 34.9 28.7 Engineering, selling and
administrative expenses (B) (23.8) 1.0 (22.8) Corporate allocations
expense (C) (1.7) 1.7 - Operating income (loss) (31.7) 37.6 5.9
Interest income 0.5 - 0.5 Interest expense (0.2) - (0.2) Income
(loss) before income taxes(31.4) 37.6 6.2 Income taxes (6.0) 5.7
(0.3) Net income (loss) $(37.4) $43.3 $5.9 Two Quarters Ended
December 29, 2006 As Reported Adjustment Non-GAAP (In millions)
Revenue from product sales and services $194.8 $- $194.8 Cost of
product sales and services (A) (129.2) - (129.2) Gross margin 65.6
- 65.6 Engineering, selling and administrative expenses (B) (50.7)
2.4 (48.3) Corporate allocations expense (C) (3.4) 3.4 - Operating
income (loss) 11.5 5.8 17.3 Interest income 0.3 - 0.3 Interest
expense (0.5) - (0.5) Income (loss) before income taxes 11.3 5.8
17.1 Income taxes (0.7) - (0.7) Net income (loss) $10.6 $5.8 $16.4
Two Quarters Ended December 30, 2005 As Reported Adjustment
Non-GAAP (In millions) Revenue from product sales and services
$173.4 $- $173.4 Cost of product sales and services (A) (152.8)
34.9 (117.9) Gross margin 20.6 34.9 55.5 Engineering, selling and
administrative expenses (B) (43.0) 1.5 (41.5) Corporate allocations
expense (C) (3.2) 3.2 - Operating income (loss) (25.6) 39.6 14.0
Interest income 0.6 - 0.6 Interest expense (0.4) - (0.4) Income
(loss) before income taxes (25.4) 39.6 14.2 Income taxes (6.3) 5.7
(0.6) Net income (loss) $(31.7) $45.3 $13.6 Table 6 STRATEX
NETWORKS, INC. FY'07 Second Quarter Summary RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES Condensed Consolidated Statement Of
Operations (Unaudited) Quarter Ended December 31, 2006 As Reported
Adjustment Non-GAAP (In millions, except for per share data)
Revenue from product sales and services $70.7 $- $70.7 Cost of
product sales and services (D) (47.5) 0.2 (47.3) Gross margin 23.2
0.2 23.4 Engineering, selling and administrative expenses (E)
(19.0) 3.8 (15.2) Operating income 4.2 4.0 8.2 Interest income 1.0
- 1.0 Interest expense (0.6) - (0.6) Other expense, net (0.5) -
(0.5) Income before income taxes 4.1 4.0 8.1 Income taxes (0.3) -
(0.3) Net Income $3.8 $4.0 $7.8 Net income per common share Basic
$.04 $.04 $.08 Diluted $.04 $.04 $.08 Basic weighted average shares
outstanding 98.1 98.1 98.1 Diluted weighted average shares
outstanding 101.3 101.3 101.3 Quarter Ended December 31, 2005 As
Reported Adjustment Non-GAAP (In millions, except for per share
data) Revenue from product sales and services $55.5 $- $55.5 Cost
of product sales and services (D) (39.3) - (39.3) Gross margin 16.2
- 16.2 Engineering, selling and administrative expenses (E) (14.1)
0.3 (13.8) Operating income 2.1 0.3 2.4 Interest income 0.3 - 0.3
Interest expense (0.5) - (0.5) Other expense, net (0.5) - (0.5)
Income before income taxes 1.4 0.3 1.7 Income taxes (0.6) - (0.6)
Net Income $0.8 $0.3 $1.1 Net income per common share Basic $.01
$.00 $.01 Diluted $.01 $.00 $.01 Basic weighted average shares
outstanding 95.9 95.9 95.9 Diluted weighted average shares
outstanding 97.9 97.9 97.9 Table 6 (Continued) STRATEX NETWORKS,
INC. FY'07 Second Quarter Summary RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES Condensed Consolidated Statement Of Operations
(Unaudited) Two Quarters Ended December 31, 2006 As Reported
Adjustment Non-GAAP (In millions, except for per share data)
Revenue from product sales and services $ 138.0 $- $ 138.0 Cost of
product sales and services (D) (94.0) 0.4 (93.6) Gross margin 44.0
0.4 44.4 Engineering, selling and administrative expenses (E)
(37.9) 7.7 (30.2) Operating income 6.1 8.1 14.2 Interest income 1.7
- 1.7 Interest expense (1.2) - (1.2) Other expense, net (0.9) -
(0.9) Income (loss) before income taxes 5.7 8.1 13.8 Income taxes
(0.3) - (0.3) Net income (loss) $5.4 $ 8.1 $13.5 Net income (loss)
per common share Basic $.06 $ .08 $.14 Diluted $.05 $ .08 $.13
Basic weighted average shares outstanding 97.9 97.9 97.9 Diluted
weighted average shares outstanding 100.7 100.7 100.7 Two Quarters
Ended December 31, 2005 As Reported Adjustment Non-GAAP (In
millions, except for per share data) Revenue from product sales and
services $ 112.1 $- $112.1 Cost of product sales and services (D)
(80.7) 0.2 (80.5) Gross margin 31.4 0.2 31.6 Engineering, selling
and administrative expenses (E) (30.0) 1.0 (29.0) Operating income
1.4 1.2 2.6 Interest income 0.5 - 0.5 Interest expense (1.2) -
(1.2) Other expense, net (1.0) - (1.0) Income (loss) before income
taxes (0.3) 1.2 0.9 Income taxes (1.1) - (1.1) Net income (loss)
$(1.4) $ 1.2 $(0.2) Net income (loss) per common share Basic $(.01)
$ .01 $.00 Diluted $(.01) $ .01 $.00 Basic weighted average shares
outstanding 95.5 95.5 95.5 Diluted weighted average shares
outstanding 95.5 95.5 95.5 Table 7 HARRIS STRATEX NETWORKS, INC.
Consisting of the Combination of The Microwave Communications
Division of Harris Corporation and Stratex Networks, Inc. FY'07
Second Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES Condensed Combined Statement Of Operations (Unaudited)
Quarter Ended December 2006 MCD Stratex Combined Non-GAAP Non-GAAP
Non-GAAP (In millions) Revenue from product sales and services
$101.2 $70.7 $171.9 Cost of product sales and services (66.4)
(47.3) (113.7) Gross margin 34.8 23.4 58.2 Engineering, selling and
administrative expenses (24.8) (15.2) (40.0 ) Operating income 10.0
8.2 18.2 Interest income 0.2 1.0 1.2 Interest expense (0.3) (0.6)
(0.9) Other expenses, net - (0.5) (0.5) Income before income taxes
9.9 8.1 18.0 Income taxes (0.3) (0.3) (0.6) Net Income $9.6 $7.8
$17.4 Quarter Ended December 2005 MCD Stratex Combined Non-GAAP
Non-GAAP Non-GAAP (In millions) Revenue from product sales and
services $88.7 $55.5 $144.2 Cost of product sales and services
(60.0) (39.3) (99.3) Gross margin 28.7 16.2 44.9 Engineering,
selling and administrative expenses (22.8) (13.8) (36.6) Operating
income 5.9 2.4 8.3 Interest income 0.5 0.3 0.8 Interest expense
(0.2) (0.5) (0.7) Other expenses, net - (0.5) (0.5) Income before
income taxes 6.2 1.7 7.9 Income taxes (0.3) (0.6) (0.9) Net Income
$5.9 $1.1 $7.0 Two Quarters Ended December 2006 MCD Stratex
Combined Non-GAAP Non-GAAP Non-GAAP (In millions) Revenue from
product sales and services $194.8 $138.0 $332.8 Cost of product
sales and services (129.2) (93.6) (222.8) Gross margin 65.6 44.4
110.0 Engineering, selling and administrative expenses (48.3)
(30.2) (78.5) Operating income 17.3 14.2 31.5 Interest income 0.3
1.7 2.0 Interest expense (0.5) (1.2) (1.7) Other expenses, net -
(0.9) (0.9) Income before income taxes 17.1 13.8 30.9 Income taxes
(0.7) (0.3) (1.0) Net income (loss) $16.4 $13.5 $29.9 Two Quarters
Ended December 2005 MCD Stratex Combined Non-GAAP Non-GAAP Non-GAAP
Revenue from product sales and services $173.4 $ 112.1 $285.5 Cost
of product sales and services (117.9) (80.5) (198.4) Gross margin
55.5 31.6 87.1 Engineering, selling and administrative expenses
(41.5) (29.0) (70.5) Operating income 14.0 2.6 16.6 Interest income
0.6 0.5 1.1 Interest expense (0.4) (1.2) (1.6) Other expenses, net
- (1.0) (1.0) Income before income taxes 14.2 0.9 15.1 Income taxes
(0.6) (1.1) (1.7) Net income (loss) $13.6 $(0.2) $13.4 Notes to
tables 5 through 7: Note A - Adjustments to the Microwave
Communications Division of Harris Corporation's cost of product
sales and services for the quarter and two quarters ended December
30, 2005 consist of inventory write-downs related to product
discontinuances ($34.9 million). Note B - Adjustments to Microwave
Communications Division of Harris Corporation's engineering,
selling and administrative expenses for the quarter ended December
29, 2006 include $1.7 million of costs associated with the
integration of the Microwave Communications Division's previously
announced merger transaction with Stratex Networks, Inc. and FAS
123R expense of $0.3 million and $0.7 million for the quarter and
two quarters ended December 29, 2006, respectively. Adjustments to
engineering, selling and administrative expenses for the quarter
and two quarters ended December 30, 2005 include $0.5 million of
severance costs associated with product discontinuances in the
Microwave Communications Division and FAS 123R expense of $0.5
million and $1.0 million for the quarter and two quarters ended
December 30, 2005, respectively. Note C - Adjustment consists of
the reversal of the Corporate allocations expense from Harris
Corporation which will not continue after the merger. Note D -
Adjustments to Stratex Networks, Inc. cost of product sales and
services for the quarter and two quarters ended December 31, 2006
consist of FAS 123R expense of $0.2 million and $0.4 million,
respectively, and APBO No. 25 stock compensation expense for the
two quarters ended December 31, 2005 of $0.2 million. Note E-
Adjustments to Stratex Networks, Inc. engineering, selling and
administrative expenses for the quarter and two quarters ended
December 31, 2006 include FAS 123R expense of $2.1 million and $4.5
million, respectively. Also included are costs associated with the
integration of Stratex Networks, Inc. previously announced merger
transaction with the Microwave Communications Division of Harris
Corporation totaling $1.7 million and $3.2 million for the quarter
and two quarters ended December 31, 2006. For the quarter and two
quarters ended December 31, 2005, engineering, selling and
administrative expenses included $0.3 million and $1.0 million,
respectively, of APBO No. 25 stock compensation expense prior to
the adoption of FAS 123R. Table 8 HARRIS STRATEX NETWORKS, INC.
Consisting of the Combination of The Microwave Communications
Division of Harris Corporation and Stratex Networks, Inc. FY'07 Two
Quarters Ending June 29, 2007 RECONCILIATION OF FORECASTED GAAP
REVENUE AND NET INCOME TO FORECASTED NON- GAAP REVENUE AND NET
INCOME (Unaudited) Low End of Range Net Earnings Income (Loss)
Revenue (Loss) Per Share (In millions, except per share amounts)
GAAP $329.0 (20.3) $(0.34) Non-GAAP adjustments: January 2007
results for Stratex not included in GAAP 10.0 (2.4) (0.04)
Write-off of in-process research and development acquired from
Stratex - 14.7 0.25 Separation related costs in operating expenses
- 10.2 0.17 Amortization of intangible assets due to purchase
accounting adjustments - 9.9 0.17 Restructuring charges in
operating expenses - 6.0 0.10 Cost of sales related to inventory
purchase accounting adjustments and deferred revenue not allowed in
purchase accounting 1.0 4.0 0.07 Share-based compensation expense -
2.7 0.04 Integration expenses in operating expenses - 0.6 0.01
Non-GAAP $340.0 $25.4 $0.43 Estimated diluted shares outstanding
59.0 High End of Range Net Earnings Income (Loss) Revenue (Loss)
Per Share (In millions, except per share amounts) GAAP $339.0
(15.3) $(0.26) Non-GAAP adjustments: January 2007 results for 10.0
(2.4) (0.04) Stratex not included in GAAP Write-off of in-process
research and development acquired from Stratex - 14.7 0.25
Separation related costs in operating expenses - 9.6 0.16
Amortization of intangible assets due to purchase accounting
adjustments - 9.4 0.16 Restructuring charges in operating expenses
- 5.2 0.09 Cost of sales related to inventory purchase accounting
adjustments and deferred revenue not allowed in purchase accounting
1.0 4.0 0.07 Share-based compensation expense - 2.1 0.03
Integration expenses in operating expenses - 0.6 0.01 Non-GAAP
$350.0 $27.9 $0.47 Estimated diluted shares outstanding 59.0 Table
9 HARRIS STRATEX NETWORKS, INC. Consisting of The Microwave
Communications Division of Harris Corporation FY'07 Second Quarter
Summary REVENUE BY SEGMENT INFORMATION (Unaudited) Quarter Ended
Two Quarters Ended December 29, December 30, December 29, December
30, 2006 2005 2006 2005 (In millions) Revenue North America
microwave $58.7 $46.7 $108.6 $92.2 International microwave 37.5
37.6 76.7 72.8 Network operations 5.0 4.4 9.5 8.4 $101.2 $88.7
$194.8 $173.4 Table 10 STRATEX NETWORKS, INC. FY'07 Second Quarter
Summary REVENUE BY SEGMENT INFORMATION (Unaudited) Quarter Ended
Two Quarters Ended December 31, December 31, December 31, December
31, 2006 2005 2006 2005 (In millions) Revenue North America
microwave $4.2 $7.3 $6.9 $13.3 International microwave 66.5 48.2
131.1 98.8 Network operations - - - - $70.7 $55.5 $138.0 $112.1
Table 11 HARRIS STRATEX NETWORKS, INC. Consisting of the
Combination of The Microwave Communications Division of Harris
Corporation and Stratex Networks, Inc. FY'07 Second Quarter Summary
REVENUE BY SEGMENT INFORMATION (Unaudited) Quarter Ended Two
Quarters Ended December December December December 2006 2005 2006
2005 (In millions) Revenue North America microwave $62.9 $54.0
$115.5 $105.5 International microwave 104.0 85.8 207.8 171.6
Network operations 5.0 4.4 9.5 8.4 $171.9 $144.2 $332.8 $285.5
DATASOURCE: Harris Stratex Networks, Inc. CONTACT: Investors, Mary
McGowan of Summit IR Group Inc., +1-408-404-5401, or , for Harris
Stratex Networks, Inc.; or media, Kami Spangenberg of Harris
Stratex Networks, Inc., +1-919-767-5238, or Web site:
http://www.harris.com/ http://www.harrisstratex.com/
http://www.harrisstratex.com/investors/conference-call
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