Symmetricom, Inc. (NASDAQ:SYMM):
- Net revenue of $56.5
million
- Income from continuing
operations of $3.7 million, or $0.08 per share
- Non-GAAP Income from continuing
operations of $6.4 million, or $0.15 per share
- Free cash flow of $9.9
million
Symmetricom, Inc. (NASDAQ:SYMM), a major supplier of precise
time and frequency technologies, today reported financial results
for its third quarter of fiscal 2010 ended March 28, 2010.
Net revenue for the third quarter of fiscal 2010 was $56.5
million, compared to the $56.2 million reported for the third
quarter of fiscal 2009. Symmetricom reported income from continuing
operations of $3.7 million, or $0.08 per share, for the third
quarter of fiscal 2010, compared to a loss from continuing
operations of $46.8 million, or $(1.08) per share, in the third
quarter of fiscal 2009. The loss from continuing operations in the
third quarter of fiscal 2009 was principally driven by a $48.1
million charge for impairment of goodwill and $5.9 million of
restructuring charges.
In the third quarter of fiscal 2010, Symmetricom completed the
sale of its video Quality of Experience business and recorded
income from discontinued operations of $0.8 million, or $0.02 per
share.
Non-GAAP Income from continuing operations in the third quarter
of fiscal 2010 were $6.4 million, or $0.15 per share, compared with
$6.6 million, or $0.15 per share, in the same period of the prior
year.
Cash, cash equivalents and short-term investments totaled $133.5
million as of March 28, 2010, an increase of $12.7 million from the
$120.8 million reported as of December 27, 2009. Net cash provided
by operating activities in the third quarter was approximately
$11.7 million and property, plant and equipment purchases were $1.8
million, resulting in free cash flow of $9.9 million.
“Our revenues were up slightly over the prior year quarter and
improved gross margins drove strong earnings and cash flows,” said
Dave Côté, Chief Executive Officer of Symmetricom. “In our
Communications Business, we saw continued growth in our IEEE1588
packet timing products, driven by the continuing conversion to
Ethernet backhaul by carriers worldwide. We also won a three-year,
$5 million service contract with a major carrier, our largest ever.
In addition, we made key organizational progress by hiring a new
Executive VP of Sales, completing the sale of our QoE business, and
initiating the outsourcing of activities from our Puerto Rico
facility.”
Business Highlights
Revenue in our Communications business in the third quarter was
$35.2 million compared to $33.4 million reported in the same period
of last year. The 5% year-over-year growth was driven primarily by
increased sales of our WiMAX GPS modules and growth in installation
services revenues.
Revenue in our Government business in the third quarter was
$21.3 million compared to $22.7 million reported in the same period
of last year. The 6% year-over-year decline in revenues was due
primarily to lower sales of government communications and signal
intelligence systems.
Fourth Quarter and Fiscal 2010 Guidance
Symmetricom’s updated guidance for fiscal 2010 is as
follows:
- Net revenue is expected to be in
the range of $216 million to $223 million
- GAAP earnings per share is
expected to be in the range of $0.11 to $0.17
- Non-GAAP earnings per share is
expected to be in the range of $0.37 to $0.42
For the fourth quarter of fiscal 2010, Symmetricom updated
guidance is as follows:
- Net revenue is expected to be in
the range of $50 million to $57 million
- GAAP earnings (loss) per share
is expected to be in the range of $(0.03) to $0.03
- Non-GAAP earnings per share is
expected to be in the range of $0.07 to $0.12
A reconciliation of GAAP and non-GAAP guidance is provided at
the end of this press release.
Investor Conference
Call
As previously announced, management will hold a conference call
to discuss these results today, at 1:30 p.m. Pacific Time.
Investors are invited to join the conference call by dialing
+1-415-228-5002 and referencing “Symmetricom.” A live webcast will
also be available on the investor relations section of the
company’s website at www.symmetricom.com. An audio replay will be
available for one week and can be accessed by dialing
+1-402-220-9789 and referencing the passcode 5220.
About Symmetricom, Inc.
Symmetricom (NASDAQ: SYMM), a world leader in precise time
solutions, sets the world’s standard for time. The company
generates, distributes and applies precise time for the
communications, aerospace/defense, IT infrastructure and metrology
industries. Symmetricom’s customers, from communications service
providers and network equipment
manufacturers to governments and
their suppliers worldwide, are able to build more
reliable networks and systems by using the company’s advanced
timing technologies, atomic clocks, services and solutions.
All products support today’s precise timing
standards, including GPS-based timing, IEEE 1588 (PTP),
Network Time Protocol (NTP), Synchronous Ethernet and
DOCSIS® timing. Symmetricom is based in San Jose, Calif.,
with offices worldwide. For more information, visit:
www.symmetricom.com.
Non-GAAP
Information
Certain non-GAAP financial information is included in this press
release. In the reconciliation of GAAP to Non-GAAP results,
Symmetricom excludes certain items related to non-cash equity-based
compensation, amortization of acquired intangibles, restructuring
charges, impairment of goodwill and other intangibles, gains and
losses on investments and repayment of convertible notes, non-cash
interest expense charges, and other items that we do not consider
indicative of our ongoing performance. The income tax effect after
these Non-GAAP adjustments is determined based upon Symmetricom’s
estimate of its annual Non-GAAP effective tax rate excluding these
Non-GAAP adjustments. Symmetricom believes that excluding such
items provides investors, analysts and management with a
representation of the Company’s core operating performance and with
information useful in assessing, in conjunction with GAAP results,
underlying trends in operating performance. Management uses such
Non-GAAP information to evaluate financial results and to establish
operational goals. Non-GAAP information should not be considered
superior to or as a substitute for data prepared in accordance with
GAAP. A reconciliation of the non-GAAP results to the GAAP results
is provided in the financial schedules portion of this press
release.
Free cash flow is defined as net cash provided by operating
activities minus purchases of property, plant and equipment.
Symmetricom believes this metric provides useful information to our
investors, analysts, and management about the level of cash
generated by normal business operations, including the use of cash
for the purchase of property, plant and equipment. Management also
views it as a measure of cash available to pay debt and return cash
to stockholders. Free cash flow is not a GAAP financial measure and
should not be considered superior to or a substitute for operating
cash flow or other cash flow data prepared in accordance with
GAAP.
Safe Harbor
This press release contains forward-looking information within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and is subject to the safe harbor created by those
sections. These forward-looking statements include statements
concerning fourth quarter and fiscal 2010 guidance, as well as the
information regarding the usefulness of the Non-GAAP financial
information. The statements in this press release are made as of
the date of this press release, even if subsequently made available
by Symmetricom on its website or otherwise. Symmetricom's actual
results could differ materially from those projected or suggested
in these forward-looking statements. Factors that could cause
future actual results to differ materially from the results
projected in or suggested by such forward-looking statements
include: reduced rates of demand for telecommunication products,
cable products or test and measurement products, reduced rates or
changes in government spending patterns, our customers' ability and
need to upgrade existing equipment, our ability to maintain or
reduce manufacturing and operating costs, timing of orders,
cancellation or delay of customer orders, loss of customers,
customer acceptance of new products, recessionary pressures,
geopolitical risks such as terrorist acts and the risk factors
listed from time to time in Symmetricom's reports filed with the
Securities and Exchange Commission, including the annual report on
Form 10-K for the fiscal year ended June 28, 2009 and subsequent
Form 10-Q’s and 8-K's.
SYMM-F
SYMMETRICOM, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) (unaudited)
Three months ended Nine months ended March 28,
December 27, March 29, March 28, March 29, 2010 2009 2009 (1) 2010
2009 (1) Net revenue $ 56,526 $ 56,862 $ 56,168 $ 165,656 $
159,486 Cost of sales: Cost of products and services 28,367 30,884
28,945 88,788 80,266 Amortization of purchased technology 278 368
368 1,014 1,105 Restructuring charges 448 931
2,275 2,241 2,275
Total cost of sales 29,093 32,183
31,588 92,043 83,646
Gross profit 27,433 24,679 24,580 73,613 75,840 Gross margin 48.5 %
43.4 % 43.8 % 44.4 % 47.6 % Operating expenses: Research and
development 5,684 6,113 4,705 17,511 16,602 Selling, general and
administrative 14,385 14,259 13,531 42,183 41,625 Amortization of
intangible assets 62 62 102 219 308 Restructuring charges 998 535
3,635 2,009 4,472 Impairment of goodwill - -
48,144 - 48,144
Total operating expenses 21,129 20,969
70,117 61,922 111,151
Operating income (loss) 6,304 3,710 (45,537 ) 11,691 (35,311 ) Loss
on repayment of convertible notes, net - - - - (5,623 ) Loss on
short-term investments, net - - - - (1,368 ) Interest income 350
505 322 1,316 1,581 Interest expense (1,318 ) (1,270
) (1,243 ) (3,862 ) (4,102 ) Income (loss)
from continuing operations before income taxes 5,336 2,945 (46,458
) 9,145 (44,823 ) Income tax provision 1,648
1,055 292 3,018 991
Income (loss) from continuing operations 3,688 1,890 (46,750
) 6,127 (45,814 ) Income (loss) from discontinued operations, net
of tax 804 (391 ) (358 ) 38
(1,428 ) Net income (loss) $ 4,492 $ 1,499
$ (47,108 ) $ 6,165 $ (47,242 ) Earnings
(loss) per share - basic: Income (loss) from continuing operations
$ 0.08 $ 0.04 $ (1.08 ) $ 0.14 $ (1.05 ) Income (loss) from
discontinued operations 0.02 (0.01 )
(0.01 ) - (0.03 ) Net earnings (loss) $ 0.10
$ 0.03 $ (1.09 ) $ 0.14 $ (1.08 )
Weighted average shares outstanding - basic 43,438
43,313 43,326 43,309
43,658 Earnings (loss) per share - diluted:
Income (loss) from continuing operations $ 0.08 $ 0.04 $ (1.08 ) $
0.14 $ (1.05 ) Income (loss) from discontinued operations
0.02 (0.01 ) (0.01 ) -
(0.03 ) Net earnings (loss) $ 0.10 $ 0.03 $ (1.09 ) $
0.14 $ (1.08 ) Weighted average shares outstanding -
diluted 43,934 43,708 43,326
43,828 43,658
(1) Adjusted for the retrospective
adoption of recently issued authoritative guidance on accounting
for our contingent convertible subordinated notes
SYMMETRICOM, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands) (unaudited) March 28, June 28, 2010
2009 (1) ASSETS Current assets: Cash and cash equivalents $
49,072 $ 72,064 Short-term investments 84,391 40,737 Accounts
receivable, net 36,685 42,389 Inventories, net 36,889 38,566
Prepaids and other current assets 14,699
16,143 Total current assets 221,736 209,899 Property, plant
and equipment, net 23,095 20,749 Intangible assets, net 4,075 5,308
Deferred taxes and other assets 33,627 36,431
Total assets $ 282,533 $ 272,387
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $ 6,048 $ 8,116 Accrued compensation 15,806 19,093 Accrued
warranty 3,440 3,737 Other accrued liabilities 13,575
9,810 Total current liabilities 38,869 40,756
Long-term obligations 54,814 51,769 Deferred income taxes
334 334 Total liabilities 94,017 92,859
Stockholders' equity: Common stock 203,307 200,152 Accumulated
other comprehensive income (loss) (188 ) 144 Accumulated deficit
(14,603 ) (20,768 ) Total stockholders' equity
188,516 179,528 Total liabilities and
stockholders' equity $ 282,533 $ 272,387 (1)
Adjusted for the retrospective adoption of recently issued
authoritative guidance on accounting for our contingent convertible
subordinated notes SYMMETRICOM, INC. RECONCILIATION
OF GAAP TO NON-GAAP RESULTS (In thousands, except per share
amounts) (unaudited) Three
months ended Nine months ended March 28, December 27, March 29,
March 28, March 29, 2010 2009 2009 (1) 2010 2009 (1) Reconciliation
from GAAP to Non-GAAP GAAP Income (loss) from continuing operations
$ 3,688 $ 1,890 $ (46,750 ) $ 6,127 $ (45,814 ) Add Non-GAAP
adjustments: Equity-based compensation expense: Cost of products
and services 176 262 153 648 448 Research and development 228 228
(20 ) 656 434 Selling, general and administrative 776
700 723 1,670
1,394 Total equity-based compensation expense 1,180 1,190
856 2,974 2,276 Amortization of intangible assets: Cost of
products and services 278 368 368 1,014 1,105 Operating expenses
62 62 102 219
308 Total amortization of intangible assets
340 430 470 1,233 1,413 Restructuring charges 1,446 1,466
5,910 4,250 6,747 Impairment of goodwill - - 48,144 48,144 CEO
post-employment compensation - - 1,007 - 1,007 Loss on repayment of
convertible notes, net - - - - 5,623 Loss on short-term
investments, net - - - - 1,368 Non-cash interest expense on
convertible notes 812 765 731 2,345 2,339 Income tax effect of
Non-GAAP adjustments (1,035 ) (1,413 ) (3,718
) (3,565 ) (8,270 ) Non-GAAP Income from continuing
operations $ 6,431 $ 4,328 $ 6,650 $ 13,364
$ 14,833 Earnings from continuing operations
per share-diluted: GAAP income (loss) from continuing operations $
0.08 $ 0.04 $ (1.08 ) $ 0.14 $ (1.05 )
Non-GAAP income from continuing operations $ 0.15 $ 0.10
$ 0.15 $ 0.30 $ 0.34 Shares used
in diluted shares calculation 43,934 43,708
43,790 43,828 44,199
(1) Adjusted for the retrospective
adoption of recently issued authoritative guidance on accounting
for our contingent convertible subordinated notes
SYMMETRICOM, INC. RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In
thousands, except per share amounts) (unaudited)
Three months ended Nine months ended
March 28, December 27, March 29, March 28, March 29, 2010 2009 2009
(1) 2010 2009 (1) Reconciliation from GAAP to Non-GAAP Gross
Margin: GAAP Revenue $ 56,526 $ 56,862 $ 56,168 $ 165,656 $ 159,486
GAAP Gross profit $ 27,433 $ 24,679 $ 24,580 $ 73,613 $
75,840 GAAP Gross margin 48.5 % 43.4 % 43.8 % 44.4 % 47.6 %
Add Non-GAAP adjustments: Equity-based compensation expense 176 262
153 648 448 Amortization of intangible assets 278 368 368 1,014
1,105 Restructuring charges 448 931
2,275 2,241 2,275
Non-GAAP Gross profit $ 28,335 $ 26,240 $ 27,376
$ 77,516 $ 79,668 Non-GAAP Gross margin 50.1 %
46.1 % 48.7 % 46.8 % 50.0 % Reconciliation from GAAP
to Non-GAAP Operating Expense: GAAP Revenue $ 56,526 $ 56,862 $
56,168 $ 165,656 $ 159,486 GAAP Operating expenses $ 21,129
$ 20,969 $ 70,117 $ 61,922 $ 111,151 Operating expense % to revenue
37.4 % 36.9 % 124.8 % 37.4 % 69.7 % Add Non-GAAP
adjustments: Equity-based compensation expense 1,004 928 703 2,326
1,828 Amortization of intangible assets 62 62 102 219 308
Restructuring charges 998 535 3,635 2,009 4,472 Impairment of
goodwill - - 48,144 - 48,144 CEO post-employment compensation
- - 1,007 -
1,007 Non-GAAP operating expenses $ 19,065
$ 19,444 $ 16,526 $ 57,368 $ 55,392
Non-GAAP operating expenses % to revenue 33.7 % 34.2 % 29.4
% 34.6 % 34.7 % (1) Adjusted for the retrospective adoption
of recently issued authoritative guidance on accounting for our
contingent convertible subordinated notes SYMMETRICOM, INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE FOR NON-GAAP FINANCIAL
MEASURES TO PROJECTED GAAP REVENUE AND EPS (In thousands, except
per share amounts) (Unaudited)
Three Months Ending June 27, 2010 Earnings Per
Share Revenue from Continuing Operations From To From To
GAAP Guidance $ 50,000 $ 57,000 $ (0.03 ) $ 0.03
Estimated Non-GAAP Adjustments Equity-based compensation
expense 0.03 0.02 Amortization of intangible assets 0.01 0.01
Restructuring charges 0.09 0.08 Non-cash interest expense on
convertible notes 0.02 0.02 Income tax effect of non-GAAP
adjustments (0.05 ) (0.04
) Total Non-GAAP Adjustments 0.10 0.09
Non-GAAP Guidance $ 50,000 $ 57,000 $
0.07 $ 0.12
Twelve Months Ending June 27, 2010 Earnings Per Share
Revenue from Continuing Operations From To From To
GAAP
Guidance $ 216,000 $ 223,000 $ 0.11 $ 0.17
Estimated
Non-GAAP Adjustments Equity-based compensation expense 0.10
0.09 Amortization of intangible assets 0.04 0.04 Restructuring
charges 0.18 0.17 Non-cash interest expense on convertible notes
0.07 0.07 Income tax effect of non-GAAP adjustments
(0.13 ) (0.12 ) Total Non-GAAP
Adjustments 0.26 0.25
Non-GAAP Guidance $ 216,000 $ 223,000 $ 0.37
$ 0.42
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