SYRACUSE, N.Y., Jan. 25, 2012 (GLOBE NEWSWIRE) -- Anaren, Inc. (Nasdaq:ANEN) today reported net sales for the fiscal 2012 second quarter ended December 31, 2011 of $35.7 million, down 17.7% from $43.4 million for the second quarter of last year.
GAAP (U.S. generally accepted accounting principles) net income for the second quarter of fiscal 2012 was $1.2 million, or $0.08 per diluted share, down 74.8% from $4.7 million, or $0.32 per diluted share for the second quarter of last year.
Non-GAAP diluted earnings per share, excluding non-cash equity based compensation and intangible amortization, was $0.13 for the second quarter of fiscal 2012, down 65.8% compared to non-GAAP earnings per share of $0.38 for the second quarter of fiscal 2011.
GAAP operating income for the second quarter of fiscal 2012 was $1.4 million, or 3.9% of net sales, down 74.5% from $5.5 million, or 12.7% of net sales for the second quarter of last year. Non-GAAP operating income for the second quarter of fiscal 2012, which excludes non-cash equity based compensation and acquisition related intangible amortization was $2.7 million, or 7.5% of net sales, down 60.9% from $6.9 million, or 15.9% of net sales for the second quarter of fiscal 2011.
Income taxes for the second quarter of fiscal 2012 were $0.3 million, representing an effective tax rate of 21.4%. This compares to income tax expense of $1.0 million for the second quarter of fiscal 2011, representing an effective tax rate of 17.0%. The low effective rate in the second quarter of fiscal 2011, primarily resulted from the reinstatement of the Federal Research and Experimentation credit retroactive to January 1, 2010. The projected effective tax rate for fiscal 2012 is now expected to be approximately 28.5%.
Lawrence A. Sala, Anaren's Chairman, President and CEO said, "The reduction in revenue and profitability compared to the second quarter of last year resulted primarily from a substantial decline in demand for Wireless infrastructure products, as well as an unfavorable mix of business within the Space & Defense Group. In response to the current business conditions, we have taken numerous actions to reduce costs and improve our operating performance at these lower business levels. We will continue to monitor the Wireless infrastructure market conditions and adjust our business model accordingly. We believe this decline in demand for Wireless infrastructure products is temporary as customer forecasts for calendar 2012 remain strong and we expect demand to improve in the fourth quarter of this fiscal year."
Net sales for the six months ended December 31, 2011 were $74.5 million, down 15.4% from net sales of $88.0 million for the first six months of last year. GAAP net income for the first half of fiscal 2012 was $3.7 million, or $0.25 per diluted share, compared to $8.8 million, or $0.60 per diluted share for the first half of last year.
Non-GAAP diluted earnings per share, excluding non-cash equity based compensation and intangible amortization, was $0.36 for the first six months of fiscal 2012 compared to non-GAAP diluted earnings per share of $0.72 for the first six months of fiscal 2011.
During the second quarter of fiscal 2012, the Company generated $2.5 million in operating cash flow compared to $2.9 million in the second quarter of fiscal 2011. Additionally, during the current quarter the Company repurchased approximately 256,000 shares of its common stock for a total of $4.3 million, used $20.0 million to pay-off its line of credit, expended $2.4 million for capital additions and received $1.7 million from employees exercising stock options. Cash, cash equivalents and marketable debt securities at December 31, 2011 were $52.8 million, down $28.3 million from $81.1 million at June 30, 2011.
Wireless Group
Wireless Group net sales for the second quarter of fiscal 2012 were $10.8 million, down 30.8% from the second quarter of fiscal 2011 levels driven by the continuing decline in demand from wireless infrastructure customers in the first half of the current fiscal year.
Demand for our Wireless infrastructure products, which declined significantly in the fiscal 2012 first quarter, continued at these lower levels throughout the second quarter. Though current order rates remain weak, customer forecasts for calendar 2012 remain strong and should result in an increase in demand in the fourth quarter of this fiscal year.
New product investments for the quarter continued to be focused on the expansion of the Xinger III, consumer component and high power resistor product lines. In addition, development of the low power wireless Anaren Integrated Radio (AIR) module product line continued with both new module product introductions as well as the launch of the new "Booster Pack" development kit. This kit, which is promoted and sold through Texas Instruments, enables potential AIR customers to efficiently and cost effectively evaluate the AIR module performance in their specific application.
Customers that generated greater than 10% of Wireless Group net sales for the quarter were E.G. Components, Huawei and Nokia.
Space & Defense Group
Space & Defense Group net sales for the second quarter of fiscal 2012 were $24.9 million, down 10.4% from the second quarter of fiscal 2011 due to the decline in sales of counter-IED related products which was partially offset by an increase in sales of space related products.
New orders for the quarter totaled $26.4 million and were driven largely by radar and space applications. Space & Defense Group order backlog at December 31, 2011 was approximately $95.8 million.
Customers that generated greater than 10% of Space & Defense Group net sales for the quarter were Lockheed Martin, Northrop Grumman and Raytheon.
Non-GAAP Financial Measures
In addition to presenting financial results calculated in accordance with GAAP, Anaren's earnings release contains non-GAAP financial measures including: non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share. These non-GAAP measures are each adjusted from GAAP results to exclude certain non-cash items including equity based compensation and intangible asset amortization.
The Company believes these non-GAAP financial measures provide useful information to both management and investors to help understand and compare business trends among reporting periods on a consistent basis. Additionally, these non-GAAP financial measurements are one of the primary indicators management uses for planning and forecasting in future periods. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP.
Outlook
For the third quarter of fiscal 2012, we anticipate comparable sales for both the Wireless group and the Space & Defense Group compared to the second quarter levels. As a result, we expect net sales to be in the range of $34 to $39 million. We expect GAAP net earnings per diluted share to be in the range of $0.06 - $0.10, using an anticipated tax rate of approximately 28.5% and inclusive of approximately $0.05 per share related to expected equity based compensation expense and amortization of intangibles. Non-GAAP net earnings per diluted share are expected to be in the range of $0.11 - $0.15 for the third quarter.
Forward-Looking Statements
The statements contained in this news release which are not historical information are "forward-looking statements." These and other forward-looking statements are based on management's current expectations and are subject to business, market and economic risks and uncertainties that could cause actual results to differ materially from those discussed. You are encouraged to review Anaren's filings with the Securities and Exchange Commission to learn more about the various risks and uncertainties facing Anaren's business and their potential impact on Anaren's revenue, earnings and stock price. Unless required by law, Anaren disclaims any obligation to update or revise any forward-looking statement.
Conference Call
Anaren will host a live teleconference, open to the public on the Anaren Investor Info, Live Webcast Web Site (www.anaren.com) on January 26, 2012 at 8:30 a.m. (ET). A replay of the conference call will be available at 9:30 a.m. (ET) beginning January 26, 2012 through 11:30 p.m. on February 2, 2012. To listen to the replay, interested parties may dial in the U.S. at 1-855-859-2056 and International at 1-404-537-3406. The passcode is 35487636. If you are unable to access the Live Webcast, the dial in number for the U.S. is 1-877-734-4580 and International is 1-678-905-9378.
Company Background
Anaren designs, manufactures and sells complex microwave components and subsystems for the wireless communications, satellite communications and defense electronics markets. For more information on Anaren's products, visit our Web site at www.anaren.com.
The Anaren, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5360
| ANAREN, INC. | ||||
| Condensed Consolidated Income Statements | ||||
| (in thousands except per share data) | ||||
| (unaudited) | ||||
| Three Months Ended | Six Months Ended | |||
| December 31, 2011 | December 31, 2010 | December 31, 2011 | December 31, 2010 | |
| Sales | $ 35,737 | $ 43,443 | $ 74,457 | $ 87,982 |
| Cost of sales | 24,395 | 27,149 | 48,591 | 54,055 |
| Gross profit | 11,342 | 16,294 | 25,866 | 33,927 |
| 31.7% | 37.5% | 34.7% | 38.6% | |
| Operating expenses: | ||||
| Marketing | 2,438 | 2,596 | 5,033 | 4,995 |
| Research and development | 3,124 | 3,538 | 7,049 | 7,369 |
| General and administration | 4,372 | 4,628 | 8,787 | 9,862 |
| Total operating expenses | 9,934 | 10,762 | 20,869 | 22,226 |
| Operating income | 1,408 | 5,532 | 4,997 | 11,701 |
| 3.9% | 12.7% | 6.7% | 13.3% | |
| Other income (expense): | ||||
| Other income | 139 | 177 | 279 | 298 |
| Interest expense | (53) | (105) | (133) | (289) |
| Total other income, net | 86 | 72 | 146 | 9 |
| Income before income tax expense | 1,494 | 5,604 | 5,143 | 11,710 |
| Income tax expense | 320 | 950 | 1,440 | 2,950 |
| Net income | $ 1,174 | $ 4,654 | $ 3,703 | $ 8,760 |
| 3.3% | 10.7% | 5.0% | 10.0% | |
| Earnings per share: | ||||
| Basic | $ 0.08 | $ 0.33 | $ 0.26 | $ 0.63 |
| Diluted | $ 0.08 | $ 0.32 | $ 0.25 | $ 0.60 |
| Weighted average common shares outstanding: | ||||
| Basic | 14,244 | 13,961 | 14,180 | 13,900 |
| Diluted | 14,861 | 14,720 | 14,825 | 14,573 |
| ANAREN, INC. | ||
| Condensed Consolidated Balance Sheets | ||
| (in thousands) | ||
| (unaudited) | ||
| December 31, 2011 | June 30, 2011 | |
| Assets: | ||
| Cash, cash equivalents and short-term investments | $ 44,414 | $ 67,702 |
| Receivables, less allowances | 27,489 | 30,931 |
| Inventories | 36,991 | 33,733 |
| Prepaid expenses and other current assets | 6,965 | 6,120 |
| Total current assets | 115,859 | 138,486 |
| Securities held to maturity | 8,380 | 13,441 |
| Property, plant, and equipment, net | 47,831 | 47,627 |
| Other assets | 48 | 1,741 |
| Goodwill | 42,389 | 42,389 |
| Other intangibles, net | 8,365 | 8,961 |
| Total assets | $ 222,872 | $ 252,645 |
| Liabilities and Stockholders' Equity | ||
| Liabilities: | ||
| Current installments of long-term debt obligation | $ -- | $ 10,000 |
| Accounts payable | 9,025 | 9,535 |
| Accrued expenses | 3,052 | 6,340 |
| Customer advance payments | 536 | 222 |
| Other liabilities | 1,969 | 2,290 |
| Total current liabilities | 14,582 | 28,387 |
| Long-term debt obligation | -- | 20,000 |
| Other non-current liabilities | 8,990 | 9,154 |
| Total liabilities | 23,572 | 57,541 |
| Stockholders' Equity: | ||
| Common stock and additional paid-in capital | 221,326 | 214,467 |
| Retained earnings | 138,215 | 134,512 |
| Accumulated other comprehensive loss | (396) | (603) |
| Less: cost of treasury shares | (159,845) | (153,272) |
| Total stockholders' equity | 199,300 | 195,104 |
| Total liabilities and stockholders' equity | $ 222,872 | $ 252,645 |
| ANAREN, INC. | ||||||
| Reconciliation of GAAP and Non-GAAP Gross Profit, Operating Income, Net Income and Diluted Earnings Per Share | ||||||
| (in thousands except per share data) | ||||||
| (unaudited) | ||||||
| Three Months Ended | Six Months Ended | |||||
| December 31, 2011 | December 31, 2010 | December 31, 2011 | December 31, 2010 | |||
| Sales | $ 35,737 | $ 43,443 | $ 74,457 | $ 87,982 | ||
| GAAP gross profit | $ 11,342 | $ 16,294 | $ 25,866 | $ 33,927 | ||
| Equity-based compensation expense (1) | 210 | 164 | 404 | 330 | ||
| Acquisition related amortization of intangibles (2) | 39 | 39 | 78 | 78 | ||
| Non-GAAP gross profit | $ 11,591 | $ 16,497 | $ 26,348 | $ 34,335 | ||
| % of sales | 32.4% | 38.0% | 35.4% | 39.0% | ||
| GAAP operating income | $ 1,408 | $ 5,532 | $ 4,997 | $ 11,701 | ||
| Equity-based compensation expense (1) | 991 | 1,071 | 1,946 | 2,164 | ||
| Acquisition related amortization of intangibles (2) | 298 | 298 | 596 | 596 | ||
| Non-GAAP operating income | $ 2,697 | $ 6,901 | $ 7,539 | $ 14,461 | ||
| % of sales | 7.5% | 15.9% | 10.1% | 16.4% | ||
| GAAP net income | $ 1,174 | $ 4,654 | $ 3,703 | $ 8,760 | ||
| Equity-based compensation expense (1) | 991 | 1,071 | 1,946 | 2,164 | ||
| Acquisition related amortization of intangibles (2) | 298 | 298 | 596 | 596 | ||
| Tax effect | (464) | (493) | (915) | (993) | ||
| Non-GAAP net income | $ 1,999 | $ 5,530 | $ 5,330 | $ 10,527 | ||
| % of sales | 5.6% | 12.7% | 7.2% | 12.0% | ||
| Diluted earnings per share | ||||||
| GAAP diluted earnings per share | $ 0.08 | $ 0.32 | $ 0.25 | $ 0.60 | ||
| Equity-based compensation expense (1) | 0.07 | 0.07 | 0.13 | 0.15 | ||
| Acquisition related amortization of intangibles (2) | 0.02 | 0.02 | 0.04 | 0.04 | ||
| Tax adjustments | (0.04) | (0.03) | (0.06) | (0.07) | ||
| Non-GAAP diluted earnings per share | $ 0.13 | $ 0.38 | $ 0.36 | $ 0.72 | ||
| Weighted average common shares outstanding | ||||||
| Diluted | 14,861 | 14,720 | 14,825 | 14,573 | ||
| 1) These costs represent expense recognized in accordance with the share-based payment accounting rules. | ||||||
| 2) These costs represent amortization of intangible assets for the three and six months ended December 31, 2011 and 2010. | ||||||
| ANAREN, INC. | |||
| Reconciliation of GAAP and Non-GAAP Gross Profit, Operating Income, and Earnings Per Share | |||
| (in thousands) | |||
| (unaudited) | |||
| The following table details the Non-GAAP, Non-Cash expenses related to equity-based compensation and intangible asset amortization by expense category. | |||
| Three Months Ended December 31, 2011 | |||
| (in thousands) | |||
| (unaudited) | |||
|
Equity Based Compensation |
Amortization of Intangibles |
Total | |
| Cost of sales | $ 210 | $ 39 | $ 249 |
| Marketing | 74 | -- | 74 |
| Research and development | 107 | -- | 107 |
| General and administrative | 600 | 259 | 859 |
| $ 991 | $ 298 | $ 1,289 | |
| Six Months Ended December 31, 2011 | |||
| (in thousands) | |||
| (unaudited) | |||
|
Equity Based Compensation |
Amortization of Intangibles |
Total | |
| Cost of sales | $ 404 | $ 78 | $ 482 |
| Marketing | 139 | -- | 139 |
| Research and development | 221 | -- | 221 |
| General and administrative | 1,182 | 518 | 1,700 |
| $ 1,946 | $ 596 | $ 2,542 | |
| Three Months Ended December 31, 2010 | |||
| (in thousands) | |||
| (unaudited) | |||
|
Equity Based Compensation |
Amortization of Intangibles |
Total | |
| Cost of sales | $ 164 | $ 39 | $ 203 |
| Marketing | 70 | -- | 70 |
| Research and development | 155 | -- | 155 |
| General and administrative | 682 | 259 | 941 |
| $ 1,071 | $ 298 | $ 1,369 | |
| Six Months Ended December 31, 2010 | |||
| (in thousands) | |||
| (unaudited) | |||
|
Equity Based Compensation |
Amortization of Intangibles |
Total | |
| Cost of sales | $ 330 | $ 78 | $ 408 |
| Marketing | 123 | -- | 123 |
| Research and development | 305 | -- | 305 |
| General and administrative | 1,406 | 518 | 1,924 |
| $ 2,164 | $ 596 | $ 2,760 | |
| ANAREN, INC. | ||
| Condensed Consolidated Statements of Cash Flows | ||
| (in thousands) | ||
| (unaudited) | ||
|
Three months ended December 31, 2011 |
Six months ended December 31, 2011 |
|
| Cash flows from operating activities: | ||
| Net income | $ 1,174 | $ 3,703 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation | 1,958 | 4,166 |
| Amortization | 485 | 972 |
| Deferred income taxes | 214 | 511 |
| Equity-based compensation | 991 | 1,946 |
| Receivables | (1,257) | 3,444 |
| Inventories | (638) | (3,258) |
| Accounts payable | 956 | (510) |
| Other assets and liabilities | (1,339) | (3,122) |
| Net cash provided by operating activities | 2,544 | 7,852 |
| Cash flows from investing activities: | ||
| Capital expenditures | (2,392) | (4,371) |
| Net sales and maturities of marketable debt securities | 202 | 97 |
| Net cash used in investing activities | (2,190) | (4,274) |
| Cash flows from financing activities: | ||
| Payments on long-term debt | (20,000) | (30,000) |
| Proceeds from stock options exercised | 1,687 | 4,229 |
| Excess tax benefit | (23) | 684 |
| Purchase of treasury shares | (4,328) | (6,573) |
| Net cash used in financing activities | (22,664) | (31,660) |
| Effect of exchange rates on cash | 69 | 207 |
| Net decrease in cash and cash equivalents | $ (22,241) | $ (27,875) |
| Cash and cash equivalents at beginning of period | $ 52,754 | $ 58,388 |
| Cash and cash equivalents at end of period | $ 30,513 | $ 30,513 |