Achieves Continued Growth in Revenue, Gross Margins and
Profitability SAN JOSE, Calif., May 18 /PRNewswire-FirstCall/ --
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. DATASOURCE: Stratex Networks, Inc. CONTACT: Mary McGowan
of Summit IR Group Inc., +1-408-404-5401, or , for Stratex Networks
Web site: http://www.stratexnet.com/
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