Reports Q1 revenue of $120 million and continued strong cash
management RESEARCH TRIANGLE PARK, N.C., Nov. 5
/PRNewswire-FirstCall/ -- Harris Stratex Networks, Inc.
(NASDAQ:HSTX), a leading provider of wireless solutions that enable
the evolution of next-generation fixed and mobile broadband
networks, today reported financial results for the first quarter of
fiscal year 2010, which ended October 2, 2009. Revenue for the
first quarter of fiscal 2010 was $120.0 million, compared with
$195.8 million in the year ago period. GAAP net loss was $7.8
million or $0.13 per share, compared with a GAAP net income of $6.5
million or $0.10 per diluted share in the year ago quarter.
Non-GAAP Financial Results Non-GAAP net loss for the quarter was
$800,000, or $0.01 per share, compared with non-GAAP net income of
$11.9 million, or $0.20 per share, in the year ago quarter. The
non-GAAP gross margin of 33 percent was partially driven by lower
logistics expenses and improved supplier pricing on select
projects. Non-GAAP results exclude $6.1 million of pre-tax charges
comprised primarily of $3.8 million for amortization of purchased
intangibles, and $2.2 million of restructuring and stock
compensation expense. A reconciliation of GAAP to non-GAAP
financial measures is provided on Table 4 along with the
accompanying notes. As of the quarter end on October 2, 2009 cash,
cash equivalents and short-term investments were $133.0 million,
compared with $137.1 million as of the quarter ended July 3, 2009.
While the overall cash balance was down, due partly to a $4.2
million investment payment, our operating cash flow for the quarter
was a positive $4.4 million. First Quarter Revenue by Business
Segment Revenue in the North America segment was $48.0 million in
the first quarter of fiscal 2010, compared with $63.0 million in
the year ago period. International revenue was $72.0 million,
compared with $132.8 million in the year ago period. Network
Operations revenue, which represented 2 percent of revenue in
FY2009, is now reported within the North America and International
segments. "The macroeconomic environment remains challenging and
continues to constrain our revenue growth potential. However, we
are seeing stabilization in North America, continued strength in
Asia Pacific and even early indications of potential growth in
countries hardest hit by this downturn," said Harald Braun,
president and chief executive officer of Harris Stratex Networks.
"Our strategy remains one of driving innovation and functionality
at cost-effective prices for our global customer base, offering
high-speed IP wireless backhaul and 4G-ready solutions. As a
testament to our innovation leadership, Harris Stratex was awarded
the 2009 Wireless Backhaul Distinction Award for our Eclipse IP
wireless backhaul platform. This award recognized the Eclipse
platform's global reputation as the most comprehensive wireless
backhaul solution currently available. "Our continued focus on cash
management has strengthened our balance sheet and enabled us to
post our ninth consecutive quarter of positive operating cash flow.
In these challenging times, we believe these accomplishments
position us well to fund our R&D and improve our top line
growth as the economy recovers," added Braun. Outlook and Guidance
Due to the current macro-economic situation, it is difficult to
provide financial guidance, and it is likely that Harris Stratex
Networks' actual results could differ materially from current
expectations. The Company's current revenue expectations for the
second quarter of fiscal year 2010 are in the range of $120 million
to $130 million. Conference Call Harris Stratex Networks will host
a conference call today at 4:30 p.m. Eastern Time to discuss the
company's financial results. Those wishing to join the call should
dial 480-629-9820 (Conference ID: 4167871) at approximately 4:20
p.m. A replay of the call will be available starting approximately
one hour after the call's completion until November 12. To access
the replay, dial 303-590-3030 (Conference ID: 4167871). A live and
archived webcast of the conference call will also be available via
the company's Web site at
http://www.harrisstratex.com/investors/conference-call. Non-GAAP
Measures and Comparative Financial Information Harris Stratex
Networks, Inc. reports information in accordance with U.S.
Generally Accepted Accounting Principles ("GAAP"). Management of
Harris Stratex Networks monitors revenues, cost of product sales
and services, research and development expenses, selling and
administrative expenses, operating income or loss, tax expense or
benefit, net income or loss, and net income or loss per share on a
non-GAAP basis for planning and forecasting results in future
periods, and may use these measures for some management
compensation purposes. These measures exclude certain costs and
expenses as shown on the attached GAAP reconciliation table. 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. About Harris Stratex
Networks, Inc. Harris Stratex Networks, Inc. is a leading provider
of wireless solutions that enable the evolution of next-generation
fixed and mobile broadband networks. 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, wireless networking solutions and services.
For more information, visit http://www.harrisstratex.com/.
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 Harris
Stratex Networks and trends in revenue, as well as other statements
identified by the use of forward-looking terminology, including
"anticipated", "believe", "plan", "estimate", "expect", "goal",
"will", "see", "continues", "delivering", "view", 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: -- continued
weakness in the global economy affecting customer spending; --
continued price erosion as a result of increased competition in the
microwave transmission industry; -- the volume, timing and
customer, product and geographic mix of our product orders may have
an impact on our operating results; -- the ability to achieve
business plans for Harris Stratex Networks; -- the ability to
manage and maintain key customer relationships; -- the ability to
maintain projected product rollouts, product functionality,
anticipated cost reductions or market acceptance of planned
products; -- future costs or expenses related to litigation; -- the
ability of our subcontractors to perform or our key suppliers to
manufacture or deliver material; -- customers may not pay for
products or services in a timely manner, or at all; -- the failure
of Harris Stratex Networks to protect its intellectual property
rights and its ability to defend itself against intellectual
property infringement claims by others; -- currency and interest
rate risks; -- the impact of political, economic and geographic
risks on international sales; -- uncertain economic conditions in
the telecommunications sector combined with operator and supplier
consolidation which makes it difficult to estimate growth. For more
information regarding the risks and uncertainties for our business,
see "Risk Factors" in our form 10-K filed with the U.S. Securities
and Exchange Commission ("SEC") on September 4, 2009 as well as
other reports filed by Harris Stratex Networks with the SEC 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. Fiscal Year 2010 First Quarter Summary
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Quarter
Ended ------------- October 2, September 26, 2009 2008 ----------
------------- (In millions, except per share amounts) Revenue from
product sales and services $120.0 $195.8 Cost of product sales and
services (80.2) (134.9) Amortization of purchased technology (2.1)
(1.8) ----- ----- Gross margin 37.7 59.1 Research and development
expenses (10.7) (10.2) Selling and administrative expenses (30.8)
(36.5) Amortization of intangible assets (1.5) (1.4) Restructuring
charges (1.1) (3.3) ----- ----- Operating (loss) income (6.4) 7.7
Interest income - 0.4 Interest expense (0.5) (0.7) ----- -----
(Loss) income before income taxes (6.9) 7.4 Provision for income
taxes (0.9) (0.9) ----- ----- Net (loss) income $(7.8) $6.5 =====
==== Net (loss) income per common share of Class A and Class B
common stock (Notes 1 and 2): Basic $(0.13) $0.11 ====== =====
Diluted $(0.13) $0.10 ====== ===== Basic weighted average shares
outstanding 58.9 58.5 ==== ==== Diluted weighted average shares
outstanding 58.9 58.5 ==== ==== (1) The net (loss) income per
common share amounts are the same for Class A and Class B because
the holders of each class are legally entitled to equal per share
distributions whether through dividends or in liquidation. There
was no Class B common stock outstanding during the quarter ended
October 2, 2009. (2) For the quarter ended September 26, 2008, the
calculation of diluted earnings per share includes a potential
deduction to net income of $0.2 million for the assumed after-tax
effect of the change in fair value of warrants using the "treasury
stock" method. Table 2 HARRIS STRATEX NETWORKS, INC. Fiscal Year
2010 First Quarter Summary CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) October 2, July 3, 2009 2009(1) ---------- ------- (In
millions) Assets Cash and cash equivalents $133.0 $136.8 Short-term
investments - 0.3 Receivables 114.3 142.9 Inventories and unbilled
costs 128.2 126.4 Other current assets 32.2 29.7 Property, plant
and equipment 57.1 57.4 Goodwill 3.2 3.2 Identifiable intangible
assets 80.8 84.1 Non-current deferred taxes 8.0 8.0 Other assets
12.1 11.4 ---- ---- $568.9 $600.2 ====== ====== Liabilities and
Shareholders' Equity Short-term debt $10.0 $10.0 Accounts payable
63.6 69.6 Accrued expenses and other current liabilities 96.1 114.8
Restructuring and other long-term liabilities 3.1 4.3 Redeemable
preference shares 8.3 8.3 Non-current deferred taxes and reserve
for uncertain tax positions 5.7 5.3 Shareholders' equity 382.1
387.9 ----- ----- $568.9 $600.2 ====== ====== (1) Derived from
audited financial statements. Table 3 HARRIS STRATEX NETWORKS, INC.
Fiscal Year 2010 First Quarter Summary CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) Quarter Ended -------------
October 2, September 26, 2009 2008 ---- ---- (In millions)
Operating Activities Net (loss) income $(7.8) $6.5 Adjustments to
reconcile net (loss) income to net cash provided by operating
activities: Amortization of identifiable intangible assets 3.7 3.4
Depreciation and amortization of property, plant and equipment and
capitalized software 6.0 5.6 Non-cash share-based compensation
expense 1.0 1.0 Decrease in fair value of warrants - (0.3) Deferred
income tax expense (benefit) 0.4 (0.7) Changes in operating assets
and liabilities: Receivables 28.8 5.5 Unbilled costs and
inventories (1.9) (13.6) Accounts payable and accrued expenses
(13.4) 4.3 Advance payments and unearned income (7.2) 1.0
Restructuring liabilities and other (5.2) (8.8) ----- ----- Net
cash provided by operating activities 4.4 3.9 Investing Activities
Cash paid related to acquisition of Telsima in prior fiscal year
(4.2) - Purchases of short-term investments and available for sale
securities - (1.2) Sales and maturities of short-term investments
and available for sale securities 0.3 1.8 Additions of property,
plant and equipment (3.9) (4.4) Additions of capitalized software
(0.9) (1.0) ----- ----- Net cash used in investing activities (8.7)
(4.8) Financing Activities Increase in short-term debt - 10.0
Payments on long-term debt - (8.8) --- ----- Net cash provided by
financing activities - 1.2 Effect of exchange rate changes on cash
and cash equivalents 0.5 (0.9) --- ----- Net decrease in cash and
cash equivalents (3.8) (0.6) Cash and cash equivalents, beginning
of year 136.8 95.0 ----- ---- Cash and cash equivalents, end of
quarter $133.0 $94.4 ====== ===== HARRIS STRATEX NETWORKS, INC.
Fiscal Year 2010 First 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, cost of product
sales and services, gross margin, research and development
expenses, selling and administrative expenses, operating income
(loss), income (loss) before income taxes, income taxes, net income
(loss), and net income (loss) per basic and diluted share adjusted
to exclude certain costs, charges, expenses and losses, including
such amounts related to our merger with Stratex Networks. Harris
Stratex Networks, Inc. ("we" or "our") believes that these nonGAAP
financial measures, when considered together with the 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. We
also believe these non-GAAP measures enhance the ability of
investors to analyze trends in our business and to understand our
performance. In addition, we may utilize nonGAAP financial measures
as a guide in our forecasting, budgeting and long-term planning
process and to measure operating performance for some management
compensation purposes. Any analysis of nonGAAP financial measures
should be used only in conjunction with results presented in
accordance with GAAP. A reconciliation of these nonGAAP financial
measures with the most directly comparable financial measures
calculated in accordance with GAAP follows. Table 4 HARRIS STRATEX
NETWORKS, INC. Fiscal Year 2010 First Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Condensed
Consolidated Statements of Operations (Unaudited) Quarter Ended
October 2, 2009 ---------------------------------------- As
Non-GAAP % of Reported Adjustments Non-GAAP Sales
---------------------------------------- (In millions, except per
share amounts) Revenue from product sales and services $120.0 $-
$120.0 Cost of product sales and services(A) (80.2) 0.2 (80.0)
Amortization of purchased technology(B) (2.1) 2.1 - ----- --- ---
Gross margin 37.7 2.3 40.0 33.3% Research and development expenses
(C) (10.7) 0.1 (10.6) 8.8% Selling and administrative expenses (D)
(30.8) 1.1 (29.7) 24.8% Amortization of intangible assets (E) (1.5)
1.5 - Restructuring charges (F) (1.1) 1.1 - ----- --- --- Operating
(loss) income (6.4) 6.1 (0.3) (0.3)% Interest income - - - Interest
expense (0.5) - (0.5) ----- --- ----- Tax (Loss) income before
income taxes (6.9) 6.1 (0.8) rate Provision for income taxes (G)
(0.9) 0.9 - 0% ----- --- --- Net (loss) income $(7.8) $7.0 $(0.8)
===== ==== ===== Net (loss) income per common share of Class A and
Class B common stock (Notes 1 and 2): Basic $(0.13) $(0.01) ======
====== Diluted $(0.13) $(0.01) ====== ====== Basic weighted average
shares outstanding 58.9 58.9 ==== ==== Diluted weighted average
shares outstanding 58.9 58.9 ==== ==== Quarter Ended September 26,
2008 ---------------------------------------- As Non-GAAP % of
Reported Adjustments Non-GAAP Sales
---------------------------------------- (In millions, except per
share amounts) Revenue from product sales and services $195.8 $-
$195.8 Cost of product sales and services (A) (134.9) 0.4 (134.5)
Amortization of purchased technology (B) (1.8) 1.8 - ----- --- ---
Gross margin 59.1 2.2 61.3 31.3% Research and development expenses
(C) (10.2) 0.2 (10.0) 5.1% Selling and administrative expenses (D)
(36.5) 1.1 (35.4) 18.1% Amortization of intangible assets (E) (1.4)
1.4 - Restructuring charges (F) (3.3) 3.3 - ----- --- --- Operating
(loss) income 7.7 8.2 15.9 8.1% Interest income 0.4 - 0.4 Interest
expense (0.7) - (0.7) ----- --- ----- Tax (Loss) income before
income taxes 7.4 8.2 15.6 rate Provision for income taxes (G) (0.9)
(2.8) (3.7) 24% ----- ----- ----- Net (loss) income $6.5 $5.4 $11.9
==== ==== ===== Net (loss) income per common share of Class A and
Class B common stock (Notes 1 and 2): Basic $0.11 $0.20 ===== =====
Diluted $0.10 $0.20 ===== ===== Basic weighted average shares
outstanding 58.5 58.5 ==== ==== Diluted weighted average shares
outstanding 58.5 58.5 ==== ==== (1) The net (loss) income per
common share amounts are the same for Class A and Class B because
the holders of each class are legally entitled to equal per share
distributions whether through dividends or in liquidation. (2) For
the quarter ended September 26, 2008, the calculation of diluted
earnings per share includes a potential deduction to net income of
$0.2 million for the assumed after-tax effect of the change in fair
value of warrants using the "treasury stock" method. Notes to Table
4: Note A - Cost of sales and services - Includes adjustment to
cost of product sales and services for the first quarter of fiscal
2010 to remove purchase accounting adjustments for the amortization
of the step-up in the value of fixed assets ($0.1 million) and
adjustment to remove FAS 123R expense ($0.1 million). For the first
quarter of fiscal 2009, includes adjustment to cost of product
sales and services to remove purchase accounting adjustments for
the amortization of the step-up in the value of fixed assets ($0.2
million) and adjustment to remove FAS 123R expense ($0.2 million).
Note B - Amortization of purchased technology - Adjustment for the
first quarters of fiscal 2010 and 2009 to remove amortization of
purchased intangibles. Note C - Research and development expenses -
Adjustment for the first quarter of fiscal 2010 to remove FAS 123R
expense of $0.1 million. For the first quarter of fiscal 2009,
adjustment is to remove FAS 123R expense of $0.2 million. Note D -
Selling and administrative expenses - Includes adjustment for the
first quarter of fiscal 2010 to remove purchase accounting
adjustments related to the amortization of the step-up in the value
of fixed assets ($0.1 million), to remove FAS 123R expense ($0.9
million) and to remove expenses related to rebranding in connection
with the anticipated change in Company name required by the license
agreement termination notice from Harris Corporation ($0.1
million). For the first quarter of fiscal 2009, includes adjustment
to remove purchase accounting adjustments related to the
amortization of the step-up in the value of fixed assets ($0.4
million) and FAS 123R expense ($0.7 million). Note E - Amortization
of intangible assets - Adjustment for the first quarters of fiscal
2010 and 2009 to remove amortization of purchased intangibles. Note
F - Restructuring charges - Adjustment to remove charges for
restructuring incurred during the first quarters of fiscal 2010 and
2009. Note G - Provision for income taxes - Adjustment to reflect a
zero pro forma percent tax rate for the first quarter of fiscal
2010 and a pro forma 24 percent tax rate for the first quarter of
fiscal 2009. Table 5 HARRIS STRATEX NETWORKS, INC. Fiscal Year 2010
First Quarter Summary SUPPLEMENTAL SCHEDULE OF REVENUE BY
GEOGRAPHICAL AREA (Unaudited) Quarter Ended
--------------------------------------------------------------
October 2, 2009 September 26, 2008 -----------------------------
-------------------------------- (In millions) As Non-GAAP As
Non-GAAP Reported Adjustments Non-GAAP Adjusted(1) Adjustments
Non-GAAP -------- ----------- -------- ----------- -----------
-------- North America (1) $48.0 $- $48.0 $63.0 $- $63.0
International (1): Africa 29.9 - 29.9 65.8 - 65.8 Europe, Middle
East, and Russia 18.6 - 18.6 37.8 - 37.8 Latin America and AsiaPac
23.5 - 23.5 29.2 - 29.2 ---- --- ---- ---- --- ---- Total
International 72.0 - 72.0 132.8 - 132.8 ---- --- ---- ----- ---
----- $120.0 $- $120.0 $195.8 $- $195.8 ====== == ====== ====== ==
====== (1) We previously reported three operating segments in our
public filings: North America Microwave, International Microwave
and Network Operations. During the first quarter of fiscal 2010, we
realigned the management structure of our Network Operations
segment to geographically integrate with our North America
Microwave and International Microwave segments to gain cost
efficiencies. As a result, we eliminated the Network Operations
segment as a separate reporting unit and consolidated this segment
into our remaining two segments that are based on the geographical
location where revenue is recognized. Additionally, we have dropped
the word "Microwave" from the name of our North America and
International segments. Segment information for the first quarter
of fiscal 2009 has been adjusted to reflect this change.
DATASOURCE: Harris Stratex Networks, Inc. CONTACT: Investors: Mary
McGowan, Summit IR Group Inc., +1-408-404-5401, , or Media: Cynthia
Johnson, Harris Stratex Networks, Inc., +1-919-767-3323, Web Site:
http://www.harrisstratex.com/
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