Release Details
Aviat Networks Announces Fiscal Fourth Quarter 2011 Financial Results
Financial Highlights for Q4FY11
- Revenue at the high end of guidance
- Increased cash
- Strong orders - book to bill above 1
- Achieved operating expense spending targets
Financial Highlights for FY11
- 27% reduction in operating expense in Q4FY11 as compared to Q4FY10
- Refocused product development and released new Eclipse products
- Announced next generation of products
- Completed manufacturing outsourcing
- Consolidated and streamlined operational processes
- Improved lead times & on-time performance on product delivery
- Divested NetBoss assets and started sale process of WiMAX business
GAAP Financial Results
Q4FY11 revenue was
Cash and cash equivalents were
Non-GAAP Financial Results
Non-GAAP income from continuing operations for the quarter was
Q4FY11 non-GAAP results exclude
$2.0 million of restructuring charges$3.3 million excess and obsolete inventory associated with exiting the North American legacy product market$1.4 million for share-based compensation expense$0.9 million for the amortization of purchased intangibles$2.3 million for transactional tax assessments
Q4FY11 non-GAAP results also exclude an income tax benefit of
A reconciliation of GAAP to non-GAAP financial measures for the quarter and year-to-date comparison with the year ago periods is provided on Table 4 along with the accompanying notes.
Fourth Quarter Revenue by Segment (excluding discontinued operations)
Revenue in the
"In FY11 we focused on restructuring the company to achieve profitability and returned to our core competency of microwave transmission. We have created a more competitive cost base, improved operational processes, reinvigorated product development and realigned our company to execute on the next phase of our business strategy. Our customers are enthusiastic about our progress as demonstrated by renewed orders strength in
Operational Objectives for 2012
The Company has established four key objectives for fiscal 2012. They are to:
- Acquire new customers
- Focus on improving costs and operational efficiencies
- Continue to accelerate innovation in wireless transmission
- Invest in our service capabilities to strengthen our competitive position
Outlook
Based on current backlog, business trends and operational changes, we believe revenue, excluding discontinued operations, will be in the range of
Conference Call Details
Non-GAAP Measures and Comparative Financial Information
About
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
- 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 disasters in
Japan ; - 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
Financial Tables to Follow:
Table 1 AVIAT NETWORKS, INC. Fiscal Year 2011 Fourth Quarter and Year-to-Date Summary CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||
Quarter Ended | Fiscal Year Ended | |||||
July 1, | July 2, | July 1, | July 2, | |||
(In millions, except per share amounts) | ||||||
Revenue from product sales and services | $ 120.9 | $ 107.6 | $ 452.1 | $ 465.5 | ||
Cost of product sales and services | 87.9 | 72.6 | 323.3 | 308.6 | ||
Charges for product transition | — | — | — | 16.9 | ||
Amortization of purchased technology | 0.2 | 1.7 | 0.7 | 7.2 | ||
Gross margin | 32.8 | 33.3 | 128.1 | 132.8 | ||
Research and development expenses | 9.7 | 7.5 | 40.5 | 31.1 | ||
Selling and administrative expenses | 23.7 | 38.3 | 104.0 | 134.7 | ||
Amortization of intangible assets | 0.7 | 0.9 | 2.8 | 5.0 | ||
Property, plant and equipment impairment charges | — | 8.7 | — | 8.7 | ||
Intangible assets and trade name impairment charges | — | 57.7 | — | 57.7 | ||
Restructuring charges | 2.0 | 3.8 | 15.4 | 7.1 | ||
Operating loss | (3.3) | (83.6) | (34.6) | (111.5) | ||
Loss on sale of NetBoss assets | (0.2) | — | (4.6) | — | ||
Other income (expense), net | (3.1) | 1.2 | (3.6) | 1.2 | ||
Interest income | — | 0.2 | 0.3 | 0.3 | ||
Interest expense | (0.5) | (0.7) | (2.2) | (2.2) | ||
Loss from continuing operations before income taxes | (7.1) | (82.9) | (44.7) | (112.2) | ||
Provision for (benefit from) income taxes | (0.9) | (2.2) | 14.1 | (3.8) | ||
Loss from continuing operations | (6.2) | (80.7) | (58.8) | $ (108.4) | ||
Loss from discontinued operations, net of tax | (13.6) | (8.1) | (31.7) | $ (21.8) | ||
Net loss | $ (19.8) | $ (88.8) | $ (90.5) | $ (130.2) | ||
Basic and diluted net loss per common share: | ||||||
Continuing operations | $ (0.11) | $ (1.35) | $ (1.00) | $ (1.82) | ||
Discontinued operations | (0.23) | (0.14) | (0.54) | $ (0.37) | ||
Net loss per common share | $ (0.34) | $ (1.49) | $ (1.54) | $ (2.19) | ||
Basic and diluted weighted average shares outstanding | 58.8 | 59.7 | 58.6 | 59.4 | ||
(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 2011 Fourth Quarter Summary CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||
July 1, 2011 | July 2, 2010 (1) | ||
(In millions) | |||
Assets | |||
Cash and cash equivalents | $ 98.2 | $ 141.7 | |
Receivables, net | 133.0 | 104.8 | |
Unbilled costs | 24.8 | 30.2 | |
Inventories | 71.8 | 76.7 | |
Other current assets (2) | 22.5 | 33.1 | |
Property, plant and equipment, net | 21.6 | 23.7 | |
Goodwill | 5.6 | 6.2 | |
Identifiable intangible assets | 4.1 | 7.5 | |
Non-current deferred taxes | 0.7 | 13.1 | |
Other assets | 1.6 | 10.0 | |
$ 383.9 | $ 447.0 | ||
Liabilities and Stockholders' Equity | |||
Short-term debt | $ 6.0 | $ 5.0 | |
Accounts payable | 70.3 | 58.6 | |
Redeemable preference shares, current | 8.3 | — | |
Accrued expenses and other current liabilities (3) | 112.5 | 103.0 | |
Restructuring and other long-term liabilities | 9.1 | 8.9 | |
Redeemable preference shares, long-term | — | 8.3 | |
Stockholders' equity | 177.7 | 263.2 | |
$ 383.9 | $ 447.0 | ||
(1) Fiscal 2010 amounts are reclassified to conform to current period presentation related to WiMAX discontinued operations and customer services inventories reclassification from property, plant and equipment to inventories. (2) Other current assets included $0 and $10.8 million of WiMAX held for sale assets at July 1, 2011 and July 2, 2010, respectively. (3) Other current liabilities included $0.3 million and $0 of liabilities related to WiMAX at July 1, 2011 and July 2, 2010, respectively. | |||
Table 3 AVIAT NETWORKS, INC. Fiscal Year 2011 Fourth Quarter Summary CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||
Fiscal Year Ended | |||
July 1, | July 2, | ||
2011 | 2010 (1) | ||
Operating Activities | |||
Net loss | $ (90.5) | $ (130.2) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Amortization of identifiable intangible assets | 3.5 | 13.8 | |
Depreciation and amortization of property, plant and equipment and | 8.6 | 20.0 | |
Intangible assets impairment charges | — | 63.2 | |
Property, plant and equipment impairment charges | — | 7.9 | |
Non-cash share-based compensation expense | 4.8 | 3.2 | |
Deferred income tax (benefit) expense | 11.0 | 4.2 | |
Charges for product transition and inventory mark-downs | — | 13.5 | |
Loss on held for sale assets, net | 9.5 | — | |
Loss on sale of NetBoss assets | 4.6 | — | |
Non-cash other income | — | (1.2) | |
Changes in operating assets and liabilities: | |||
Receivables | (25.8) | 38.5 | |
Unbilled costs | 5.5 | (25.1) | |
Inventories | 2.8 | 36.6 | |
Accounts payable | 11.5 | (11.0) | |
Accrued expenses | 3.6 | (9.1) | |
Advance payments and unearned income | 8.5 | (0.1) | |
Income taxes payable or receivable | (1.7) | — | |
Restructuring liabilities and other assets and liabilities | 2.6 | (0.9) | |
Net cash provided by (used in) operating activities | (41.5) | 23.3 | |
Investing Activities | |||
Cash received from sale of NetBoss assets | 3.8 | — | |
Cash paid related to acquisition of Telsima | — | (4.2) | |
Proceeds from sale of property, plant and equipment | — | 5.4 | |
Sales and maturities of short-term investments | — | 0.3 | |
Additions of property, plant and equipment | (7.2) | (12.9) | |
Additions of capitalized software | (0.8) | (2.9) | |
Net cash used in investing activities | (4.2) | (14.3) | |
Financing Activities | |||
Proceeds from short-term debt arrangement | 6.0 | 6.3 | |
Payments on short-term debt arrangement | (5.0) | (11.3) | |
Issuance of common shares related to employee share-based awards | 0.2 | 0.1 | |
Payments on capital lease obligations | — | (0.4) | |
Net cash provided by (used in) financing activities | 1.2 | (5.3) | |
Effect of exchange rate changes on cash and cash equivalents | 1.0 | 1.2 | |
Net increase (decrease) in cash and cash equivalents | (43.5) | 4.9 | |
Cash and cash equivalents, beginning of year | 141.7 | 136.8 | |
Cash and cash equivalents, end of year | $ 98.2 | $ 141.7 | |
(1) Fiscal 2010 amounts are reclassified to conform to current period presentation related to customer services inventories reclassification from property, plant and equipment to inventories. | |||
Quarter and Fiscal Year Ended July 1, 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
Table 4 AVIAT NETWORKS, INC. Fiscal Year 2011 Fourth Quarter and Year-to-Date Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||
Quarter Ended | Fiscal Year Ended | |||||||||
July 1, | % of | July 2, | % of | July 1, | % of | July 2, | % of | |||
(In millions, except per share amounts) | ||||||||||
GAAP gross margin | $ 32.8 | 27.1 % | $ 33.3 | 30.9 % | $ 128.1 | 28.3 % | $ 132.8 | 28.5 % | ||
Share-based compensation | 0.1 | 0.1 | 0.4 | 0.2 | ||||||
Excess and obsolete inventory associated with legacy products | 3.3 | — | 6.6 | — | ||||||
Amortization of PPE step-up value | — | — | 0.1 | 0.3 | ||||||
Charges for product transition | — | — | — | 16.9 | ||||||
Gain from sale of manufacturing facilities | — | (1.0) | — | (1.0) | ||||||
Amortization of purchased technology | 0.2 | 1.7 | 0.7 | 7.2 | ||||||
Non-GAAP gross margin | 36.4 | 30.1 % | 34.1 | 31.7 % | 135.9 | 30.1 % | 156.4 | 33.6 % | ||
GAAP research and development expenses | $ 9.7 | 8.0 % | $ 7.5 | 7.0 % | $ 40.5 | 9.0 % | $ 31.1 | 6.7 % | ||
Share-based compensation | (0.5) | (0.1) | (1.9) | (0.5) | ||||||
Non-GAAP research and development expenses | 9.2 | 7.6 % | 7.4 | 6.9 % | 38.6 | 8.5 % | 30.6 | 6.6 % | ||
GAAP selling and administrative expenses | $ 23.7 | 19.6 % | $ 38.3 | 35.6 % | $ 104.0 | 23.0 % | $ 134.7 | 28.9 % | ||
Share-based compensation | (0.8) | (1.0) | (2.4) | (2.4) | ||||||
Rebranding and transitional costs | — | (5.5) | (0.9) | (8.5) | ||||||
Amortization of PPE step-up value | — | — | (0.1) | (0.3) | ||||||
Other | 0.9 | — | 0.9 | — | ||||||
Non-GAAP selling and administrative expenses | 23.8 | 19.7 % | 31.8 | 29.6 % | 101.5 | 22.5 % | 123.5 | 26.5 % | ||
GAAP operating loss | $ (3.3) | -2.7 % | $ (83.6) | -77.7 % | $ (34.6) | -7.7 % | $ (111.5) | -24.0 % | ||
Share-based compensation | 1.4 | 1.2 | 4.7 | 3.1 | ||||||
Excess and obsolete inventory associated with legacy products | 3.3 | — | 6.6 | — | ||||||
Amortization of PPE step-up value | — | — | 0.2 | 0.6 | ||||||
Charges for product transition | — | — | — | 16.9 | ||||||
Gain from sale of manufacturing facilities | — | (1.0) | — | (1.0) | ||||||
Amortization of purchased technology | 0.2 | 1.7 | 0.7 | 7.2 | ||||||
Rebranding and transitional costs | — | 5.5 | 0.9 | 8.5 | ||||||
Other | (0.9) | — | (0.9) | — | ||||||
Amortization of intangible assets | 0.7 | 0.9 | 2.8 | 5.0 | ||||||
Property, plant, and equipment impairment charges | — | 8.7 | — | 8.7 | ||||||
Intangible assets and trade name impairment charges | — | 57.7 | — | 57.7 | ||||||
Restructuring charges | 2.0 | 3.8 | 15.4 | 7.1 | ||||||
Non-GAAP operating income (loss) | 3.4 | 2.8 % | (5.1) | -4.7 % | (4.2) | -0.9 % | 2.3 | 0.5 % | ||
GAAP other income (expense), net | $ (3.8) | -3.1 % | $ 0.7 | 0.7 % | $ (10.1) | -2.2 % | $ (0.7) | -0.2 % | ||
Loss on sale of NetBoss assets | 0.2 | — | 4.6 | — | ||||||
Gain on settlement of Telsima purchase price | — | (1.2) | — | (1.2) | ||||||
Transactional taxes assessments | 2.3 | — | 2.8 | — | ||||||
Costs related to liquidation of foreign subsidiaries | 0.8 | — | 0.8 | — | ||||||
Non-GAAP other expense, net | (0.5) | -0.4 % | (0.5) | -0.5 % | (1.9) | -0.4 % | (1.9) | -0.4 % | ||
GAAP income tax provision (benefit) | $ (0.9) | -0.7 % | $ (2.2) | -2.0 % | $ 14.1 | 3.1 % | $ (3.8) | -0.8 % | ||
Adjustment to reflect zero percent pro forma tax rate | 0.9 | 2.2 | (14.1) | 3.8 | ||||||
Non-GAAP income tax provision | — | 0.0 % | — | 0.0 % | — | 0.0 % | — | 0.0 % | ||
GAAP loss from continuing operations | $ (6.2) | -5.1 % | $ (80.7) | -75.0 % | $ (58.8) | -13.0 % | $ (108.4) | -23.3 % | ||
Share-based compensation | 1.4 | 1.2 % | 1.2 | 1.1 % | 4.7 | 1.0 % | 3.1 | 0.7 % | ||
Excess and obsolete inventory associated with legacy products | 3.3 | 2.7 % | — | 0.0 % | 6.6 | 1.5 % | — | 0.0 % | ||
Amortization of PPE step-up value | — | 0.0 % | — | 0.0 % | 0.2 | 0.0 % | 0.6 | 0.1 % | ||
Charges for product transition | — | 0.0 % | — | 0.0 % | — | 0.0 % | 16.9 | 3.6 % | ||
Gain from sale of manufacturing facilities | — | 0.0 % | (1.0) | -0.9 % | — | 0.0 % | (1.0) | -0.2 % | ||
Amortization of purchased technology | 0.2 | 0.2 % | 1.7 | 1.6 % | 0.7 | 0.2 % | 7.2 | 1.5 % | ||
Rebranding and transitional costs | — | 0.0 % | 5.5 | 5.1 % | 0.9 | 0.2 % | 8.5 | 1.8 % | ||
Other | (0.9) | -0.7 % | — | 0.0 % | (0.9) | -0.2 % | — | 0.0 % | ||
Amortization of intangible assets | 0.7 | 0.6 % | 0.9 | 0.8 % | 2.8 | 0.6 % | 5.0 | 1.1 % | ||
Property, plant, and equipment impairment charges | — | 0.0 % | 8.7 | 8.1 % | — | 0.0 % | 8.7 | 1.9 % | ||
Intangible assets and trade name impairment charges | — | 0.0 % | 57.7 | 53.6 % | — | 0.0 % | 57.7 | 12.4 % | ||
Restructuring charges | 2.0 | 1.7 % | 3.8 | 3.5 % | 15.4 | 3.4 % | 7.1 | 1.5 % | ||
Loss on sale of NetBoss assets | 0.2 | 0.2 % | — | 0.0 % | 4.6 | 1.0 % | — | 0.0 % | ||
Gain on settlement of Telsima purchase price | — | 0.0 % | (1.2) | -1.1 % | — | 0.0 % | (1.2) | -0.3 % | ||
Transactional taxes assessments | 2.3 | 1.9 % | — | 0.0 % | 2.8 | 0.6 % | — | 0.0 % | ||
Costs related to liquidation of foreign subsidiaries | 0.8 | 0.7 % | — | 0.0 % | 0.8 | 0.2 % | — | 0.0 % | ||
Adjustment to reflect zero percent pro forma tax rate | (0.9) | -0.7 % | (2.2) | -2.0 % | 14.1 | 3.1 % | (3.8) | -0.8 % | ||
Non-GAAP income (loss) from continuing operations | $ 2.9 | 2.4 % | $ (5.6) | -5.2 % | $ (6.1) | -1.3 % | $ 0.4 | 0.1 % | ||
Basic and diluted income (loss) per share from continuing operations | ||||||||||
GAAP | $ (0.11) | $ (1.35) | $ (1.00) | $ (1.82) | ||||||
Non-GAAP | $ 0.05 | $ (0.09) | $ (0.10) | $ 0.01 | ||||||
Shares used in computing income (loss) per share from continuing operations, basic and diluted | ||||||||||
GAAP | 58.8 | 59.7 | 58.6 | 59.4 | ||||||
Non-GAAP | 60.6 | 59.7 | 58.6 | 59.4 | ||||||
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 period results have been reclassified to conform to current period presentation. (2) The adjustments above reconcile the Company's GAAP financial results to the non-GAAP financial measures used by the Company. The Company's non-GAAP financial measures exclude share-based compensation, excess and obsolete inventory associated with legacy products, amortization of property, plant and equipment step-up value resulting from purchase accounting adjustments, charges for product transition, gain from sale of manufacturing facilities, amortization of purchased technology, rebranding and transitional services in connection with the corporate name change and relocation, amortization of intangible assets, property, plant, and equipment impairment charges, intangible assets and trade name impairment charges, restructuring charges, loss on sale of NetBoss assets, gain on settlement of Telsima purchase price, transactional taxes assessments, costs related to liquidation of foreign subsidiaries, adjustment to reflect zero percent pro forma tax rate, and other non-recurring items. The Company believes that the presentation of these non-GAAP items provides meaningful supplemental information to investors, when viewed in conjunction with, and not in lieu of, the company's 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 2011 Fourth Quarter and Year-to-Date Summary SUPPLEMENTAL SCHEDULE OF REVENUE BY GEOGRAPHICAL AREA (Unaudited) | |||||
Quarter Ended | Fiscal Year Ended | ||||
July 1, | July 2, | July 1, | July 2, | ||
2011 | 2010 | 2011 | 2010 | ||
(In millions) | |||||
North America | $ 42.2 | $ 38.0 | $ 160.4 | $ 174.8 | |
International: | |||||
Africa | 44.9 | 37.6 | 114.9 | 122.3 | |
Europe, Middle East, and Russia | 16.8 | 16.2 | 102.1 | 86.9 | |
Latin America and AsiaPac | 17.0 | 15.8 | 74.7 | 81.5 | |
Total International | 78.7 | 69.6 | 291.7 | 290.7 | |
$ 120.9 | $ 107.6 | $ 452.1 | $ 465.5 | ||
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