Symmetricom, Inc. (NASDAQ:SYMM), a world leader in precise time
solutions, today reported financial results for its first quarter
of fiscal 2011, ended September 26, 2010.
Net revenue for the first quarter of fiscal 2011 was $54.4
million, up $2.1 million or 4%, compared to the $52.3 million
reported for the first quarter of fiscal 2010. Symmetricom reported
income from continuing operations of $3.1 million, or $0.07 per
share, for the first quarter of fiscal 2011, compared to $0.5
million, or $0.01 per share, in the first quarter of fiscal 2010.
The income from continuing operations for the first quarter of
fiscal 2011 included $2.9 million of restructuring charges, as
compared to $1.3 million of restructuring charges for the first
quarter of fiscal 2010.
In the first quarter of fiscal 2011, the Company continued its
project to transfer its product fabrication processes from its
Aguadilla, Puerto Rico facility to Sanmina-SCI facilities. In
conjunction with these activities, the Company recorded
approximately $3.7 million of restructuring charges for severance
benefits, transition support services and additional
depreciation.
Non-GAAP income from continuing operations in the first quarter
of fiscal 2011 was $5.6 million, or $0.13 per share, an increase
from the $2.6 million, or $0.06 per share, reported in the same
period of the prior year.
Cash, cash equivalents and short-term investments totaled $72.8
million as of September 26, 2010, a decrease of $2.8 million from
the $75.6 million reported as of June 27, 2010. This decrease
included $2.0 million for the repurchase of approximately 397,000
shares of common stock and roughly $5 million of expenditures for
buffer inventories and other manufacturing transfer support
payments.
“We are pleased with our first quarter financial results as well
as progress on our key strategic initiatives,” said Dave Côté,
president and chief executive officer of Symmetricom. “In our
communications business, we made progress in next generation
deployments as our new PTP PackeTime products continued to ramp. In
our government business, we received more than $9 million in
research contracts related to the development of next-generation
atomic clock technology.
“We are also encouraged about activities in several new markets
that we believe hold the potential for growth, including oil and
gas exploration and the power utility market,” continued Côté. “We
are actively engaged in product and market development in each of
these markets.”
Business Results
Revenue in the Communications Business in the first quarter of
fiscal 2011 was $33.1 million, compared to $32.4 million reported
in the same period of the prior fiscal year. This revenue increase
reflected continuing momentum within the portfolio of
next-generation communications products.
Revenue in the Government Business in the first quarter of
fiscal 2011 was $21.2 million, compared to $19.9 million reported
in the same period of the prior fiscal year. The 7% year-over-year
increase was due primarily to higher sales of instrument and
enterprise products.
Second Quarter 2011
Guidance
Symmetricom’s guidance for the second quarter of fiscal 2011 is
as follows:
- Net revenue is expected to be in the
range of $52 million to $57 million
- GAAP earnings (loss) per share from
continuing operations is expected to be in the range of $(0.05) to
$0.04
- Non-GAAP earnings per share from
continuing operations 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
+1-402-998-0923 and referencing the passcode 5220.
About Symmetricom, Inc.
Symmetricom, 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(R) timing. Symmetricom is
based in San Jose, California, with offices worldwide. For more
information, visit: http://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, losses on repayment of convertible notes, non-cash
interest expense charges that the Company does not consider
indicative of its ongoing performance. The income tax effect after
these non-GAAP adjustments was 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 its
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 second quarter fiscal 2011 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, customers' ability and
need to upgrade existing equipment, the Company’s 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 27, 2010 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 September 26,
June 27, September 27, 2010 2010
2009 Net revenue $ 54,379 $ 55,660 $ 52,268 Cost of
sales: Cost of products and services 26,606 28,101 29,537
Amortization of purchased technology 287 268 368 Restructuring
charges 3,747 3,384 862
Total cost of sales 30,640 31,753
30,767 Gross profit 23,739 23,907 21,501 Gross margin
43.7 % 43.0 % 41.1 % Operating expenses: Research and development
6,606 6,190 5,714 Selling, general and administrative 12,799 14,560
13,539 Amortization of intangible assets 62 62 95 Restructuring
charges (881 ) 2,657 476 Total
operating expenses 18,586 23,469
19,824 Operating income 5,153 438 1,677 Loss on repayment of
convertible notes, net - (7,026 ) - Interest income, net of
amortization (accretion) of premium (discount) on investments (108
) 278 461 Interest expense (55 ) (792 ) (1,274
) Income (loss) from continuing operations before taxes 4,990
(7,102 ) 864 Income tax provision (benefit) 1,896
(3,521 ) 315 Income (loss) from continuing
operations 3,094 (3,581 ) 549 Income (loss) from discontinued
operations, net of tax 127 (58 ) (375 )
Net income (loss) $ 3,221 $ (3,639 ) $ 174
Earnings (loss) per share - basic: Income (loss) from continuing
operations $ 0.07 $ (0.08 ) $ 0.01 Income (loss) from discontinued
operations - - (0.01 ) Net
income (loss) $ 0.07 $ (0.08 ) $ - Weighted
average shares outstanding - basic 43,430
43,593 43,177 Earnings (loss) per share
- diluted: Income (loss) from continuing operations $ 0.07 $ (0.08
) $ 0.01 Income (loss) from discontinued operations -
- (0.01 ) Net income (loss) $ 0.07 $
(0.08 ) $ - Weighted average shares outstanding -
diluted 43,772 43,593 43,815
SYMMETRICOM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (unaudited)
September 26, June 27, 2010 2010
ASSETS Current assets: Cash and cash equivalents $ 21,972 $
21,794 Short-term investments 50,791 53,825 Accounts receivable,
net 41,425 40,075 Inventories 42,946 37,229 Prepaids and other
current assets 15,594 15,108 Total
current assets 172,728 168,031 Property, plant and equipment, net
22,787 23,077 Intangible assets, net 3,396 3,745 Deferred taxes and
other assets 34,394 36,534 Total assets
$ 233,305 $ 231,387 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 9,763
$ 6,768 Accrued compensation 16,613 18,731 Accrued warranty 2,339
2,900 Other accrued liabilities 11,594 10,506
Total current liabilities 40,309 38,905 Long-term
obligations 7,276 8,296 Deferred income taxes 334
334 Total liabilities 47,919 47,535 Stockholders'
equity: Common stock 200,394 202,450 Accumulated other
comprehensive income (loss) 13 (356 ) Accumulated deficit
(15,021 ) (18,242 ) Total stockholders' equity
185,386 183,852 Total liabilities and
stockholders' equity $ 233,305 $ 231,387
SYMMETRICOM, INC. RECONCILIATION OF
GAAP TO NON-GAAP RESULTS (In thousands, except per share amounts)
(unaudited) Three months ended September 26, June 27,
September 27, 2010 2010 2009
Reconciliation from GAAP to Non-GAAP GAAP Income (loss) from
continuing operations $ 3,094 $ (3,581 ) $ 549 Non-GAAP
adjustments: Equity-based compensation expense: Cost of products
and services 23 161 210 Research and development 138 136 200
Selling, general and administrative 291 803
194 Total equity-based compensation expense
452 1,100 604 Amortization of intangible assets: Cost of
products and services 287 268 368 Operating expenses 62
62 95 Total amortization of
intangible assets 349 330 463 Restructuring charges 2,866
6,041 1,338 Non-cash interest expense on convertible notes - 500
768 Loss on repayment of convertible notes, net - 7,026 - Income
tax effect of Non-GAAP adjustments (1,177 ) (6,125 )
(1,117 ) Non-GAAP income from continuing operations $ 5,584
$ 5,291 $ 2,605 Earnings (loss) per
share - diluted: GAAP income (loss) from continuing operations $
0.07 $ (0.08 ) $ 0.01 Non-GAAP income from continuing operations $
0.13 $ 0.12 $ 0.06 Weighted average shares outstanding -
diluted 43,772 44,092 43,815
SYMMETRICOM, INC. RECONCILIATION OF GAAP TO
NON-GAAP RESULTS (In thousands, except per share amounts)
(unaudited) Three months ended September 26, June 27,
September 27, 2010 2010 2009
GAAP Revenue $ 54,379 $ 55,660 $ 52,268
Reconciliation from GAAP to Non-GAAP Gross Profit from continuing
operations: GAAP Gross profit (A) $ 23,739 $ 23,907 $ 21,501 GAAP
Gross margin 43.7 % 43.0 % 41.1 % Non-GAAP adjustments:
Equity-based compensation expense 23 161 210 Amortization of
intangible assets 287 268 368 Restructuring charges 3,747
3,384 862 Non-GAAP Gross
profit (B) $ 27,796 $ 27,720 $ 22,941 Non-GAAP
Gross margin 51.1 % 49.8 % 43.9 % Reconciliation from GAAP
to Non-GAAP Operating Expense from continuing operations: GAAP
Operating expenses (C) $ 18,586 $ 23,469 $ 19,824 Operating expense
% to revenue 34.2 % 42.2 % 37.9 % Non-GAAP adjustments:
Equity-based compensation expense (429 ) (939 ) (394 ) Amortization
of intangible assets (62 ) (62 ) (95 ) Restructuring charges
881 (2,657 ) (476 ) Non-GAAP operating
expenses (D) $ 18,976 $ 19,811 $ 18,859
Non-GAAP operating expenses % to revenue 34.9 % 35.6 % 36.1 %
Reconciliation from GAAP to Non-GAAP Operating Income from
continuing operations: GAAP Operating income (A) - (C) $ 5,153
$ 438 $ 1,677 Operating income % to revenue
9.5 % 0.8 % 3.2 % Non-GAAP Operating income (B) - (D) $
8,820 $ 7,909 $ 4,082 Operating income % to
revenue 16.2 % 14.2 % 7.8 %
SYMMETRICOM, INC. RECONCILIATION OF FORWARD-LOOKING
GUIDANCE FOR GAAP REVENUE AND EPS TO NON-GAAP GUIDANCE FOR REVENUE
AND EPS (In thousands, except per share amounts) (Unaudited)
Three Months Ending December 26, 2010 Revenue
Earnings Per Share From To From To
GAAP Guidance $
52,000 $ 57,000 $ (0.05 ) $ 0.04
Estimated Non-GAAP
Adjustments Equity-based compensation expense 0.03 0.02
Amortization of intangible assets 0.01 0.01 Restructuring charges
0.14 0.09 Income tax effect of non-GAAP adjustments
(0.06 ) (0.04 ) Total Non-GAAP
Adjustments 0.12 0.08
Non-GAAP Guidance $ 52,000 $ 57,000 $ 0.07
$ 0.12
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