Stratex Networks Announces Q4 and FY 2006 Financial Results21 May 2006
Stratex Networks, Inc. (Nasdaq: STXN), a leading provider of wireless transmission solutions, today reported financial results for the fourth quarter and full-year of fiscal 2006, ended March 31, 2006.
Revenues in the fourth quarter of fiscal 2006 were $64.0 million, compared with $55.5 million in the prior quarter and $41.1 million in the year ago period. Net income in the fourth quarter of fiscal 2006 was $3.3 million, resulting in earnings of $0.03 per diluted share. This compares with earnings of $813,000 or earnings of $0.01 per diluted share in the prior quarter, and a loss of $13.3 million, or a loss of $0.14 per share in the year ago period.
On a non-GAAP basis, Stratex Networks reported net income of $3.4 million in the fourth fiscal quarter, or earnings of $0.03 per diluted share. This compares with non-GAAP net income of $1.1 million in the third fiscal quarter, or earnings of $0.01 per diluted share. Non-GAAP net income excludes total non-cash compensation related to the vesting of restricted stock of $60,000 and $303,000 for the fourth quarter and third quarter respectively. A full reconciliation of GAAP net income (loss) to non-GAAP net income (loss) is provided in the accompanying financial tables.
Stratex Networks received $65 million in new orders during the fourth quarter of fiscal 2006. This includes approximately $51 million of orders for the Eclipse(TM) product line. The backlog for all product lines totaled $86 million as of March 31, 2006. The company includes orders expected to ship within 12 months in its backlog.
"We're delighted with the progress that Stratex made in both the fourth fiscal quarter and the full year. In addition to significant improvements in financial results, we believe that Stratex Networks is now better positioned to serve our customers and investors with continuing innovations in our products, services, and our business model," said Chuck Kissner, chairman and chief executive officer of Stratex Networks, Inc. "We announced yesterday our latest significant innovation, the E300sp, a radio product that again dramatically raises the value of Eclipse for lower capacity systems. In February, we announced a similar innovation for high capacity systems."
Fiscal 2006 Results
For fiscal year 2006, Stratex Networks reported net sales of $230.9 million compared with $180.3 million reported for the previous year, an increase of 28 percent. Net loss for fiscal year 2006 was $2.3 million, or a loss per share of $0.02, compared with a loss of $45.9 million, or a loss per share of $0.51 in 2005.
On a non-GAAP basis, net loss for fiscal year 2006 was $0.8 million, or a loss per share of $0.01. Non-GAAP results exclude non-cash charges totaling $1.5 million relating to the company's restricted stock plan. This compares to a non-GAAP net loss of $36.2 million, or a loss per share of $0.40 in fiscal 2005, which excludes charges totaling $9.7 million associated with severance, the write off of certain inventories and fixed assets, accruals related to vacated facilities and restructuring charges.
Fiscal 2006 Highlights
"Our major tasks in fiscal 2006 were to expand the influence of the innovative Eclipse product platform, expand our channels to market and, most significantly, achieve profitability. Given our improving financial metrics and the broad customer acceptance of our Eclipse platform, we believe that we have largely accomplished these strategic goals," said Kissner.
Eclipse Technology Expansion:
-- Introduced next-generation Eclipse technology utilizing a simplified
radio design that enables reduced costs, high-volume production,
wider commercial distribution and more rapid time to market.
-- Introduced new Eclipse products every quarter, as promised.
-- Continued to expand the software content of our offerings.
-- Successfully transitioned the majority of customers to Eclipse
products.
Market Expansion:
-- Achieved approximately 50% growth in the Ethernet transmission
market, as more customers recognized the growing need for wireless
data transmission and the ease of using Eclipse to achieve a
competitive edge.
-- Introduced an innovative licensing model and signed a four-year
agreement with Alcatel, enabling a broad range of Eclipse wireless
transmission solutions to be sold under the Alcatel brand, with the
goal of achieving wider distribution of Eclipse technology.
Corporate Achievements:
-- Increased gross margins from 23% at the beginning of FY06 to 30.7% by
end of FY06.
-- Improved the supply chain, increasing unit counts by approximately
80%.
-- Amended an agreement with Silicon Valley Bank to expand the credit
limit to $50 million and to extend the company's credit facility
until the end of fiscal 2008.
Outlook and Guidance
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.
"Continued strong demand for a wide variety of Eclipse products, as well as continued improvements in gross margins as we ramp up new-generation Eclipse products that were introduced in January are contributing to our revenue strength and continued margin improvement," said Kissner.
First Quarter Fiscal Year 2007 (ending June 30, 2006)
-- Revenue is expected to range between $62 million and $66 million,
-- Earnings per share are expected to be in the range of $0.02 to $0.04.
Conference Call
Stratex Networks' management will hold a conference call to discuss the company's financial results today, at 5:00 p.m. Eastern Time. Those wishing to join should dial 303-262-2211 (pass code: Stratex Networks) at approximately 4:50 p.m. A replay of the call will be available starting one hour after the completion of the call until May 25, 2006. To access the replay, dial 303-590-3000 (pass code: 11059270 #). A live and an archived webcast of the conference call will also be available via the company's Web site at http://www.stratexnet.com.
Upcoming Conferences
Stratex Networks' management will be presenting at the CIBC Wireless Technology One-on-One Conference in New York August 3, 2006.
About Stratex Networks
With headquarters in San Jose, California, Stratex Networks, Inc. is one of the world's leading providers of high-speed wireless transmission solutions. Since it was founded in 1984, Stratex Networks has achieved international recognition for quality, innovation, and technical superiority in delivering data, voice, and video communication systems, including comprehensive service and support. Stratex Networks, with its broad product offering and worldwide sales and support organization, is strategically positioned to serve its customers' needs in wireless high-capacity transmission technology. Additional information is available at http://www.stratexnet.com.
Use of Non-GAAP Financial Information
To supplement the company's consolidated financial statements presented in accordance with generally accepted accounting principles "GAAP," Stratex Networks, Inc. uses non-GAAP measures of certain components of financial performance, including operating income (loss), net income (loss) and per share data, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance and the company's prospects for the future. Specifically, the company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure.
Safe Harbor Statement
This press release contains statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including statements relating to the Company's expectations regarding the continued rollout and use of the Eclipse technology to further expand market coverage, continued expansion of profit margins and the Company's revenue and earnings per share expectations for the First Fiscal Quarter ending June 30, 2006. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of significant risks and uncertainties including:
-- Suppliers inability to perform and timely deliver as a result of
their financial condition, component shortages or other supply chain
constraints;
-- Continued market expansion through strategic alliances;
-- Continued timely rollout of Eclipse functionality and features;
-- Increased competition resulting in downward pressures on the price
of the Company's products and services;
-- Unexpected delays in the schedule for shipments of Eclipse and new
generations of the Eclipse platform;
-- Failure to realize expected cost improvement throughout the Company's
supply chain; and
-- Order cancellations or postponements in product deliveries resulting
in delayed revenue recognition.
In addition, orders and backlog are not necessarily indicative of revenue in any future period. Because the Company's business is heavily concentrated in foreign markets, there is a significant risk of adverse currency fluctuations and unforeseen governmental action including but not limited to the denial of export and/or import licenses. For a further discussion of these and other factors that impact the Company's business in general, see the information provided under the heading "Factors That May Affect Future Financial Results" in the Company's Annual Report on Form 10-K for the period ended March 31, 2005 and subsequent quarterly filings, on file with the Securities and Exchange Commission.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 31, March 31,
2006 2005
Assets
Cash and short-term investments $57,686 $48,691
Accounts receivable, net 42,003 35,084
Inventories 43,867 36,780
Other current assets 12,620 10,572
Total current assets 156,176 131,127
Property & equipment, net 24,049 28,228
Other assets 605 1,276
Total assets $180,830 $160,631
Liabilities and Stockholders' Equity
Accounts payable 38,725 $34,472
Short-term debt 11,250 6,250
Other current liabilities 31,136 27,701
Total current liabilities 81,111 68,423
Long-term debt 22,291 13,542
Other long-term liabilities 15,085 18,643
Total liabilities 118,487 100,608
Stockholders' equity 62,343 60,023
Total liabilities and stockholders' equity $180,830 $160,631
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
March 31, March 31,
2006 2005 2006 2005
Net sales $63,951 $41,128 $230,892 $180,302
Cost of sales 44,337 37,663 167,303 151,398
Inventory valuation
charges -- -- -- 2,581
Gross profit 19,614 3,465 63,589 26,323
Operating expenses:
Research and
development 3,683 3,746 14,475 16,661
Selling, general and
administrative 11,888 12,551 46,792 44,379
Amortization of
intangible assets -- -- -- 1,581
Restructuring charges -- -- -- 7,423
Total operating expenses 15,571 16,297 61,267 70,044
Operating income (loss) 4,043 (12,832) 2,322 (43,721)
Other income (expense) (541) (436) (3,043) (1,770)
Income (loss) before
income taxes 3,502 (13,268) (721) (45,491)
Provision (benefit)
for income taxes 185 (17) 1,576 455
Net income (loss) $3,317 $(13,251) $(2,297) $(45,946)
Net income (loss)
per common share:
Basic $0.03 $(0.14) $(0.02) $(0.51)
Diluted $0.03 $(0.14) $(0.02) $(0.51)
Weighted average shares
outstanding
Basic 96,441 94,823 95,600 89,634
Diluted 100,407 94,823 95,600 89,634
UNAUDITED NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Three Months Ended
March 31, 2006 March 31, 2005
GAAP GAAP
(As Adjust- (As Adjust-
Reported) ments Non-GAAP Reported) ments Non-GAAP
Net sales $63,951 -- $63,951 $41,128 -- $41,128
Cost of sales 44,337 $(8) 44,329 37,663 -- 37,663
Gross profit 19,614 8 19,622 3,465 -- 3,465
Operating expenses:
Research and
development 3,683 (8) 3,675 3,746 -- 3,746
Selling, general
and administrative 11,888 (44) 11,844 12,551 -- 12,551
Total operating
expenses 15,571 (52) 15,519 16,297 -- 16,297
Operating income
(loss) 4,043 60 4,103 (12,832) -- (12,832)
Other income
(expense) (541) -- (541) (436) -- (436)
Income (loss)
before income taxes 3,502 60 3,562 (13,268) -- (13,268)
Provision (benefit)
for income taxes 185 -- 185 (17) -- (17)
Net income (loss) $3,317 $60 $3,377 $(13,251) -- $(13,251)
Net income (loss)
per common share:
Basic $0.03 $0.04 $(0.14) $(0.14)
Diluted $0.03 $0.03 $(0.14) $(0.14)
Weighted average
shares outstanding
Basic 96,441 96,441 94,823 94,823
Diluted 100,407 100,407 94,823 94,823
The above non-GAAP adjustment totaling $60,000 for the three months ended
March 31, 2006 reflects the non-cash charge related to the company's
restricted stock plan.
To supplement the company's consolidated financial statements presented in accordance with generally accepted accounting principles "GAAP," Stratex Networks, Inc. uses non-GAAP measures of certain components of financial performance, including operating income (loss), net income (loss) and per share data, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance and the company's prospects for the future. Specifically, the company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These non- GAAP measures included in this press release have been reconciled to the nearest GAAP measure.
UNAUDITED NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Twelve Months Ended Twelve Months Ended
March 31, 2006 March 31, 2005
GAAP GAAP
(As Adjust- (As Adjust-
Reported) ments Non-GAAP Reported) ments Non-GAAP
Net sales $230,892 $230,892 $180,302 -- $180,302
Cost of sales 167,303 $(264) 167,039 151,398 -- 151,398
Inventory valuation
charges -- -- 2,581 $(2,581) --
Gross profit 63,589 264 63,853 26,323 2,581 28,904
Operating expenses:
Research and
development 14,475 (131) 14,344 16,661 16,661
Selling, general and
administrative 46,792 (1,121) 45,671 44,379 276 44,655
Amortization of
intangible assets -- -- 1,581 -- 1,581
Restructuring
charges -- -- 7,423 (7,423) --
Total operating
expenses 61,267 (1,252) 60,015 70,044 (7,147) 62,897
Operating income
(loss) 2,322 1,516 3,838 (43,721) 9,728 (33,993)
Other income
(expense) (3,043) -- (3,043) (1,770) (1,770)
Income (loss)
before income
taxes (721) 1,516 795 (45,491) 9,728 (35,763)
Provision for
income taxes 1,576 -- 1,576 455 -- 455
Net loss $(2,297) $1,516 $(781) (45,946) $9,728 $(36,218)
Net income (loss)
per common share:
Basic $(0.02) $(0.01) $(0.51) $(0.40)
Diluted $(0.02) $(0.01) $(0.51) $(0.40)
Weighted average
shares outstanding
Basic 95,600 95,600 89,634 89,634
Diluted 95,600 95,600 89,634 89,634
The above non-GAAP adjustment totaling $1.5 million for the twelve months
ended March 31, 2006 reflects the non-cash charge related to the
company's restricted stock plan. The above non-GAAP amounts for the
twelve months ended March 31, 2005 have been adjusted to eliminate
restructuring charges for severance, write-off of certain inventory and
fixed assets, accruals related to vacated facilities and related charges.
To supplement the company's consolidated financial statements presented in accordance with generally accepted accounting principles "GAAP," Stratex Networks, Inc. uses non-GAAP measures of certain components of financial performance, including operating income (loss), net income (loss) and per share data, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance and the company's prospects for the future. Specifically, the company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure.
Source: prnewswire
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