ANEN Anaren, Inc. (MM)

SYRACUSE, N.Y., Oct. 27 /PRNewswire-FirstCall/ -- Anaren, Inc. (NASDAQ:ANEN) today reported net sales for the first quarter ended September 30, 2005 were $24.6 million, down 1% from the first quarter of fiscal year 2005, and up 2% sequentially from the fourth quarter of fiscal 2005. (Logo: http://www.newscom.com/cgi-bin/prnh/20021022/NYTU197LOGO ) Net income for the first quarter was $2.3 million, or $0.13 per diluted share including $834,000 or $0.04 per diluted share in equity based compensation expense as required by Statement of Accounting Standard 123R (SFAS 123R). This compares to net income of $2.0 million, or $0.10 per diluted share for the first quarter of fiscal 2005 and $2.6 million, or $0.14 per diluted share, for the fourth quarter of fiscal 2005. Net income for the first and fourth quarters of fiscal 2005 included no equity based compensation expense. Net income for the first quarter of fiscal 2006 before equity based compensation expenses was $3.0 million, or $0.17 per diluted share. The effective tax rate for the first quarter of fiscal 2006 was 23.3%, compared to 27.0% for the first quarter of fiscal 2005 and 15.2% for the fourth quarter of fiscal 2005. Operating income for the first quarter was $2.4 million, or 9.6% of net sales, including $834,000, or 3.4% of net sales, in equity based compensation expense, unchanged from the first quarter of last year, and down $194,000, or 7.6% from the fourth quarter of fiscal 2005. Operating income for both the first and fourth quarters of fiscal 2005 included no equity based compensation expense. Operating income for the first quarter of fiscal 2006 before equity based compensation expenses was 13% of net sales. Lawrence A. Sala, Anaren's President and CEO said, "Continued growth in the Space and Defense Group as well as sequential growth in wireless consumer component demand resulted in improved net sales for the quarter. The increase in net sales, operating efficiency improvements completed in fiscal 2005, and a favorable product mix all had a positive impact on our profitability for the quarter." Balance Sheet Cash, cash equivalents and marketable debt securities at September 30, 2005 were $79.6 million. During the quarter, the Company generated $3.1 million in cash from operations, repurchased 352,274 shares of its common stock for $4.9 million and expended $848,000 on capital additions. Wireless Group Wireless Group net sales for the quarter were $16.4 million, down 8% from the first quarter of last year, and up 1% sequentially from the fourth quarter of fiscal 2005. The increase in wireless net sales from the fourth quarter was the result of increased sales of consumer component and custom assembly products. Sales of consumer component products increased 140% sequentially from the fourth quarter to $1.3 million. This growth was driven by increased demand from satellite television low noise block amplifier applications. In addition, as in the fourth quarter, a substantial percentage of resistive product sales came as the result of fulfilling shipments that had been delayed due to the consolidation of our RF Power and Amitron subsidiaries. Resistive product deliveries were relatively current at the end of the first quarter. Customers that exceeded 10% of Wireless Group net sales for the quarter were Nokia Corp. and Motorola, Inc. Wireless Group research and development spending increased during the first quarter as a result of increased consumer and ferrite component development activity. Space and Defense Group Space and Defense Group net sales for the quarter were $8.2 million, up 15% from the first quarter of fiscal 2005, and up 4% sequentially from the fourth quarter. New orders for the quarter totaled $11.1 million resulting in a book to bill ratio of 1.35 to 1.0. Orders for the quarter included contracts for shipborne jammer, missile receiver, and airborne passive ranging applications. Space and Defense backlog at September 30, 2005 was $50.4 million, up 6% from $47.5 million at June 30, 2005. Outlook Given the current volatile wireless market demand and our Space and Defense order backlog, we expect net sales to be in the range of $23.5 - $25.0 million for the second quarter of fiscal 2006. With an anticipated tax rate of approximately 23% and an expected equity based compensation expense of approximately $0.04 per diluted share, we expect net earnings per diluted share to be in the range of $0.09 - $0.12 for the second 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 subject to business and economic risks and uncertainties that could cause actual results to differ materially from those discussed. The risks and uncertainties described below are not the only risks and uncertainties facing our Company. Additional risks and uncertainties not presently known to us or that are currently deemed immaterial may also impair our business operations. If any of the following risks actually occur, our business could be adversely affected, and the trading price of our common stock could decline, and you may lose all or part of your investment. Such known factors include, but are not limited to: the Company's ability to timely ramp up to meet some of our customers' increased demands; unanticipated delays and/or difficulties associated with effectively operating the Company's recently consolidated Anaren Ceramics subsidiary; unanticipated delays in successfully completing customer orders within contractually required timeframes; increased pricing pressure from our customers; decreased capital expenditures by wireless service providers; the possibility that the Company may be unable to successfully execute its business strategies or achieve its operating objectives, generate revenue growth or achieve profitability expectations; successfully securing new design wins from our OEM customers, reliance on a limited number of key component suppliers, unpredictable difficulties or delays in the development of new products; order cancellations or extended postponements; the risks associated with any technological shifts away from the Company's technologies and core competencies; unanticipated impairments of assets including investment values and goodwill; diversion of defense spending away from the Company's products and or technologies due to on-going military operations; and litigation involving antitrust, intellectual property, environmental, product warranty, product liability, and other issues. You are encouraged to review Anaren's 2005 Annual Report, Anaren's Form 10-K for the fiscal year ended June 30, 2005 and Anaren's Form 10-Q for the three months ended September 30, 2005 and exhibits to those Reports filed 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 (http://www.anaren.com/) and ccbn.com at http://www.streetevents.com/ on Thursday, October 27, 2005 at 5:00 p.m. EDT. A replay of the conference call will be available at 8:00 p.m. (EDT) beginning October 27, 2005 through midnight October 31, 2005. To listen to the replay, interested parties may dial in the U.S. at 1-888-203-1112 and international at 1-719-457-0820. The access code is 6415703. If you are unable to access the Live Webcast, the dial in number for the U.S. is 1-800-262-1292 and International is 1-719-457-2680. Company Background Anaren designs, manufactures and sells complex microwave signal distribution networks and components for the wireless communications, satellite communications and defense electronics markets. For more information on Anaren's products, visit our Web site at http://www.anaren.com/. Anaren, Inc. Consolidated Condensed Statements of Income (Unaudited) Three Months Ended Sept. 30, 2005 Sept. 30, 2004 Sales $24,614,358 $24,907,357 Cost of sales 15,959,912 17,016,539 Gross profit 8,654,446 7,890,818 Costs and expenses Marketing 1,768,079 1,776,645 Research and development 2,034,641 1,645,077 General and administrative 2,492,310 2,102,185 Total operating expenses 6,295,030 5,523,907 Operating income 2,359,416 2,366,911 Other Income (expense) Other income, primarily interest 587,744 353,058 Interest expense (6,143) (5,805) Total other income (expense) 581,601 347,253 Income before income tax 2,941,017 2,714,164 Income taxes 687,000 733,000 Net income $2,254,017 $1,981,164 Basic earnings per share $0.13 $0.10 Diluted earnings per share $0.13 $0.10 Shares used in computing net income per share: Basic 17,402,270 20,144,447 Diluted 17,936,051 20,678,163 Anaren, Inc. and Subsidiaries Consolidated Condensed Statements of Income (Unaudited) Three Months Ended Sept. 30, 2005 Sept. 30, 2004 Net sales 100.0% 100.0% Cost of sales 64.8% 68.3% Gross profit 35.2% 31.7% Operating expenses: Marketing 7.2% 7.1% Research and development 8.3% 6.6% General and administrative 10.1% 8.5% Total operating expenses 25.6% 22.2% Operating income 9.6% 9.5% Other income (expense): Other, primarily interest income 2.4% 1.4% Interest expense 0.0% 0.0% Total other income, net 2.4% 1.4% Income before income taxes 12.0% 10.9% Income taxes 2.8% 2.9% Net income 9.2% 8.0% Anaren, Inc. and Subsidiaries Consolidated Condensed Statements of Income (Unaudited) Three Months Ended Sept. 30, 2005 Sept. 30, 2004 June 30, 2005 Net sales $24,614,358 $24,907,357 $24,120,268 Cost of sales 15,959,912 17,016,539 16,054,707 Gross profit 8,654,446 7,890,818 8,065,561 Operating expenses: Marketing 1,768,079 1,776,645 1,707,082 Research and development 2,034,641 1,645,077 1,620,284 General and administrative 2,492,310 2,102,185 2,184,577 Total operating expenses 6,295,030 5,523,907 5,511,943 Operating income 2,359,416 2,366,911 2,553,618 Other income (expense): Other, primarily interest income 587,744 353,058 507,977 Interest expense (6,143) (5,805) (7,637) Total other income, net 581,601 347,253 500,340 Income before income taxes 2,941,017 2,714,164 3,053,958 Income taxes 687,000 733,000 464,000 Net Income $2,254,017 $1,981,164 $2,589,958 Basic earnings per share $0.13 $0.10 $0.14 Diluted earnings per share $0.13 $0.10 $0.14 Shares used in computing net income per share: Basic 17,402,270 20,144,447 18,315,130 Diluted 17,936,051 20,678,163 18,669,847 Anaren, Inc. and Subsidiaries Consolidated Condensed Statements of Income (Unaudited) Three Months Ended Sept. 30, 2005 Sept. 30, 2004 June 30, 2005 Net sales 100.0% 100.0% 100.0% Cost of sales 64.8% 68.3% 66.6% Gross profit 35.2% 31.7% 33.4% Operating expenses: Marketing 7.2% 7.1% 7.1% Research and development 8.3% 6.6% 6.7% General and administrative 10.1% 8.5% 9.0% Total operating expenses 25.6% 22.2% 22.8% Operating income 9.6% 9.5% 10.6% Other income (expense): Other, primarily interest income 2.4% 1.4% 2.1% Interest expense 0.0% 0.0% 0.0% Total other income, net 2.4% 1.4% 2.1% Income before income taxes 12.0% 10.9% 12.7% Income taxes 2.8% 2.9% 2.0% Net income 9.2% 8.0% 10.7% Anaren, Inc. and Subsidiaries Consolidated Condensed Statements of Income (Unaudited) Three Months Ended Equity Based Without Equity Based Compensation Compensation GAAP Results Expense Expense Sept. 30, 2005 Sept. 30, 2005 Sept. 30, 2005 Net sales $24,614,358 $ - $24,614,358 Cost of sales 15,959,912 324,609 15,635,303 Gross profit 8,654,446 324,609 8,979,055 35.2% 1.3% 36.5% Operating expenses: Marketing 1,768,079 68,733 1,699,346 Research and development 2,034,641 - 2,034,641 General and administrative 2,492,310 440,946 2,051,364 Total operating expenses 6,295,030 509,679 5,785,351 Operating income 2,359,416 834,288 3,193,704 9.6% 3.4% 13.0% Other income (expense): Other, primarily interest income 587,744 - 587,744 Interest expense (6,143) - (6,143) Total other income, net 581,601 - 581,601 Income before income taxes 2,941,017 834,288 3,775,305 Income taxes 687,000 (57,000) 744,000 Net Income $2,254,017 $777,288 $3,031,305 9.2% 3.1% 12.3% Basic earnings per share $0.13 $0.04 $0.17 Diluted earnings per share $0.13 $0.04 $0.17 Shares used in computing net income per share: Basic 17,402,270 17,402,270 17,402,270 Diluted 17,936,051 17,936,051 17,936,051 Anaren, Inc. Consolidated Condensed Balance Sheets (Unaudited) Sept. 30, 2005 June 30, 2005 Assets: Cash, cash equivalents and short-term investments $59,364,868 $58,408,721 Accounts receivable, net 14,766,106 14,780,146 Other receivables 1,251,142 1,144,680 Inventories 20,788,603 19,403,348 Other current assets 1,998,216 1,771,658 Total current assets 98,168,935 95,508,553 Net property, plant and equipment 24,629,636 24,983,653 Securities available for sale - 3,500,000 Securities held to maturity 20,256,725 20,100,547 Goodwill 30,715,861 30,751,861 Other intangibles 590,023 673,241 Total assets $174,361,180 $175,481,855 Liabilities and stockholders' equity Liabilities: Accounts payable $6,548,257 $6,077,313 Accrued expenses 1,766,330 2,331,885 Other liabilities 2,825,004 2,545,847 Total current liabilities 11,139,591 10,955,045 Other non-current liabilities 5,709,714 5,448,247 Total liabilities 16,849,305 16,403,292 Stockholders' equity: Retained earnings 60,913,824 58,659,807 Common stock and additional paid-in capital 172,355,862 171,346,105 Accumulated comprehensive loss (683,850) (747,539) Less cost of treasury stock (75,073,961) (70,179,810) Total stockholders' equity 157,511,875 159,078,563 Total liabilities and stockholders' equity $174,361,180 $175,481,855 ANAREN, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (Unaudited) Three Months Ended Sept. 30, 2005 Sept. 30, 2004 Cash flows from operating activities: Net income $2,254,017 $ 1,981,164 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization of plant and equipment 1,201,919 1,252,667 Amortization of intangibles 83,218 320,992 Provision for doubtful accounts - (5,741) Deferred income taxes 72,000 73,300 Stock based compensation 861,921 71,550 Receivables 14,040 (2,061,338) Inventories (1,385,255) (1,623,546) Accounts payable 470,944 (1,002,388) Other assets and liabilities (429,951) (518,775) Net cash provided by (used in) operating activities 3,142,853 (1,512,115) Cash flows from investing activities: Capital expenditures (847,902) (5,606,303) Proceeds from sale of stock - 293,930 Net maturities of marketable debt and equity securities 3,532,408 2,503,921 Net cash provided by (used in) investing activities 2,684,506 (2,808,452) Cash flows from financing activities: Stock options exercised 147,836 28,642 Purchase of treasury stock (4,894,151) (11,623,399) Net cash used in financing activities (4,746,315) (11,594,757) Effect of exchange rates 63,689 962 Net increase (decrease) in cash and cash equivalents 1,144,733 (15,914,362) Cash and cash equivalents at beginning of period 5,900,841 23,303,263 Cash and cash equivalents at end of period $7,045,574 $ 7,388,901 http://www.newscom.com/cgi-bin/prnh/20021022/NYTU197LOGODATASOURCE: Anaren, Inc. CONTACT: Joseph E. Porcello, VP of Finance, +1-315-432-8909 Web site: http://www.anaren.com/

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