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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.
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
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. 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 CONTACT: George Blanton, CFO
315-362-0436
Joseph E. Porcello, VP-Accounting
315-362-0514
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