Symmetricom, Inc. (NASDAQ:SYMM), a worldwide leader in precision
time and frequency technologies, today reported financial results
for its third quarter of fiscal 2011, ended March 27, 2011.
Net revenue for the third quarter of fiscal 2011 was $51.2
million, up $9.4 million, or 22.5%, compared to the second quarter
of fiscal 2011, driven by an increase in the company’s
manufacturing supply. Symmetricom reported income from continuing
operations of $3.0 million, or $0.07 per share, for the third
quarter of fiscal 2011, compared to a loss from continuing
operations of $3.5 million, or $0.08 per share, in the second
quarter of fiscal 2011. The income from continuing operations for
the third quarter of fiscal 2011 included $0.2 million of
restructuring charges, as compared to $3.9 million of restructuring
charges for the second quarter of fiscal 2011.
Non-GAAP income from continuing operations for the third quarter
of fiscal 2011 was $5.3 million, or $0.12 per share, compared to
$1.4 million, or $0.03 per share, reported for the second
quarter.
Net revenue for the third quarter of fiscal 2011 was down $5.3
million or 9.4% compared to the $56.5 million reported for the year
ago third quarter of fiscal 2010. Income from continuing operations
was down $0.7 million, or 19.1% compared to the $3.7 million, or
$0.08 per share, reported for the year ago third quarter of fiscal
2010. The decrease in revenue is due to product supply and
fulfillment delays associated with the company’s transition to an
outsourced manufacturing and logistics model.
Cash, cash equivalents and short-term investments totaled $75.3
million as of March 27, 2011, a decrease of $3.2 million from the
$78.5 million reported as of December 26, 2010. Net cash used in
operating activities in the third quarter was $1.1 million and
property, plant and equipment purchases were approximately $0.9
million, resulting in free cash outflow of approximately $2.0
million.
"We made significant progress on our manufacturing transition,
resulting in higher sequential revenue and earnings,” said Dave
Côté, President and Chief Executive Officer of Symmetricom. "We
expect to continue this momentum in the fourth quarter as we
strengthen customer confidence, further improve our manufacturing
capability and restore our product flow.
“In addition, we moved forward on multiple key growth
initiatives. Our PackeTime products continued to gain traction, and
we introduced our SyncWorldTM Ecosystem program. We also launched
some important new products – the TimeProvider® 1500 primary
reference source, and our groundbreaking QuantumTM Chip Scale
Atomic Clock (CSAC). These products build on our core strengths and
leadership position and support our expansion into new applications
and markets,” said Côté.
Business Results
Revenue in the Communications Business in the third quarter of
fiscal 2011 was $30.4 million, compared to $35.3 million reported
in the same period last year and $20.4 million in the second
quarter of this fiscal year. Revenue in the Government Business in
the third quarter of fiscal 2011 was $20.8 million, compared to
$21.2 million reported in the same period last year and $21.5
million in the second quarter of this fiscal year.
Fourth Quarter 2011
Guidance
Symmetricom’s guidance for the fourth quarter of fiscal 2011 is
as follows:
- Net revenue is expected to be in the
range of $52 million to $62 million
- GAAP earnings per share from continuing
operations is expected to be in the range of $0.01 to $0.08
- Non-GAAP earnings per share from
continuing operations is expected to be in the range of $0.07 to
$0.13
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
+1-312-470-7356 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
+1-203-369-3888.
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 intangible assets, restructuring
charges, manufacturing transition costs and 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 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 or used in
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 fourth quarter fiscal 2011 guidance and future
performance, expectations regarding strengthening customer
confidence, further improvements to manufacturing capabilities and
restoration of product flows, 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 expressly disclaims any
obligation to update or revise any forward-looking statement
contained herein, whether as a result of a change in its
expectations, a change in any events, conditions or circumstances
on which a forward-looking statement is based, 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 fulfill delayed shipments, complications or difficulties
in its transition to an outsourced manufacturing and logistics
model, 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
Nine months ended March 27, December 26, March 28, March 27, March
28, 2011 2010 2010 2011 2010 Net revenue $ 51,234 $
41,844 $ 56,526 $ 147,457 $ 165,656 Cost of sales: Cost of products
and services 26,778 23,222 28,367 76,606 88,788 Amortization of
intangible assets 260 267 278 814 1,014 Restructuring charges
1,330 3,910 448
8,987 2,241 Total cost of sales 28,368
27,399 29,093 86,407
92,043 Gross profit 22,866 14,445 27,433
61,050 73,613 Gross margin 44.6 % 34.5 % 48.5 % 41.4 % 44.4 %
Operating expenses: Research and development 6,717 6,738 5,684
20,061 17,511 Selling, general and administrative 13,592 13,596
14,385 39,987 42,183 Amortization of intangible assets 60 61 62 183
219 Restructuring charges (1,142 ) 38
998 (1,985 ) 2,009 Total operating
expenses 19,227 20,433 21,129
58,246 61,922 Operating income
(loss) 3,639 (5,988 ) 6,304 2,804 11,691 Interest income, net of
amortization (accretion)
of premium (discount) on investments
441 331 350 664 1,316 Interest expense - -
(1,318 ) (55 ) (3,862 ) Income (loss)
from continuing operations before taxes 4,080 (5,657 ) 5,336 3,413
9,145 Income tax provision (benefit) 1,095
(2,181 ) 1,648 810 3,018
Income (loss) from continuing operations 2,985 (3,476 ) 3,688 2,603
6,127 Income (loss) from discontinued operations, net of tax
19 (49 ) 804 97 38
Net income (loss) $ 3,004 $ (3,525 ) $ 4,492 $
2,700 $ 6,165 Earnings (loss) per share -
basic: Income (loss) from continuing operations $ 0.07 $ (0.08 ) $
0.08 $ 0.06 $ 0.14 Income (loss) from discontinued operations
- - 0.02 -
- Net income (loss) $ 0.07 $ (0.08 ) $ 0.10
$ 0.06 $ 0.14 Weighted average shares
outstanding - basic 43,153 43,272
43,438 43,285 43,309
Earnings (loss) per share - diluted: Income (loss) from
continuing operations $ 0.07 $ (0.08 ) $ 0.08 $ 0.06 $ 0.14 Income
(loss) from discontinued operations - -
0.02 - - Net income
(loss) $ 0.07 $ (0.08 ) $ 0.10 $ 0.06 $ 0.14
Weighted average shares outstanding - diluted
43,859 43,272 43,934
43,853 43,828
SYMMETRICOM, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands) (unaudited) March 27, June 27, 2011
2010 ASSETS Current assets: Cash and cash
equivalents $ 28,383 $ 21,794 Short-term investments 46,959 53,825
Accounts receivable, net 36,778 40,075 Inventories 45,049 37,229
Prepaids and other current assets 14,227
15,108 Total current assets 171,396 168,031 Property, plant
and equipment, net 22,728 23,077 Intangible assets, net 2,749 3,745
Deferred taxes and other assets 37,217 36,534
Total assets $ 234,090 $ 231,387
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $ 15,700 $ 6,768 Accrued compensation 12,607 18,731 Accrued
warranty 1,587 2,900 Other accrued liabilities 14,061
10,506 Total current liabilities 43,955 38,905
Long-term obligations 4,533 8,296 Deferred income taxes 334
334 Total liabilities 48,822 47,535
Stockholders' equity: Common stock 200,793 202,450 Accumulated
other comprehensive income (loss) 17 (356 ) Accumulated deficit
(15,542 ) (18,242 ) Total stockholders' equity
185,268 183,852 Total liabilities and
stockholders' equity $ 234,090 $ 231,387
SYMMETRICOM, INC. RECONCILIATION OF
GAAP TO NON-GAAP RESULTS (In thousands, except per share amounts)
(unaudited) Three months ended Nine months ended March 27,
December 26, March 28, March 27, March 28, 2011 2010 2010
2011 2010 Reconciliation from GAAP to Non-GAAP GAAP Income (loss)
from continuing operations $ 2,985 $ (3,476 ) $ 3,688 $ 2,603 $
6,127 Non-GAAP adjustments: Equity-based compensation
expense: Cost of products and services $ 253 230 176 506 648
Research and development 240 184 228 562 656 Selling, general and
administrative 1,055 704 776
2,050 1,670 Total equity-based
compensation expense 1,548 1,118 1,180 3,118 2,974
Amortization of intangible assets: Cost of products and services
260 267 278 814 1,014 Operating expenses 60 61
62 183 219 Total
amortization of intangible assets 320 328 340 997 1,233
Restructuring charges 188 3,948 1,446 7,002 4,250 Manufacturing
Transition costs 798 2,041 - 2,839 - Non-cash interest expense on
convertible notes - - 812 - 2,345 Income tax effect of Non-GAAP
adjustments (586 ) (2,551 ) (1,035 )
(4,314 ) (3,565 ) Non-GAAP income from continuing operations
$ 5,253 $ 1,408 $ 6,431 $ 12,245 $
13,364 Earnings (loss) per share - diluted: GAAP
income (loss) from continuing operations $ 0.07 $ (0.08 ) $ 0.08 $
0.06 $ 0.14 Non-GAAP income from continuing operations $ 0.12 $
0.03 $ 0.15 $ 0.28 $ 0.30 Weighted average shares
outstanding - diluted 43,859 43,972 43,934 43,853 43,828
SYMMETRICOM, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In thousands, except
per share amounts) (unaudited) Three months ended
Nine months ended March 27, December 26, March 28, March 27, March
28, 2011 2010 2010 2011 2010 GAAP Revenue $ 51,234 $
41,844 $ 56,526 $ 147,457 $ 165,656 Reconciliation from GAAP
to Non-GAAP Gross Profit
from continuing operations:
GAAP Gross profit (A) $ 22,866 $ 14,445 $ 27,433 $ 61,050 $ 73,613
GAAP Gross margin 44.6 % 34.5 % 48.5 % 41.4 % 44.4 %
Non-GAAP adjustments: Equity-based compensation expense 253 230 176
506 648 Amortization of intangible assets 260 267 278 814 1,014
Restructuring charges 1,330 3,910 448 8,987 2,241 Manufacturing
transition costs 798 2,041 - 2,839 -
Non-GAAP Gross profit (B) $ 25,507 $ 20,893 $
28,335 $ 74,196 $ 77,516 Non-GAAP Gross margin
49.8 % 49.9 % 50.1 % 50.3 % 46.8 % Reconciliation from GAAP
to Non-GAAP Operating
Expense from continuing operations:
GAAP Operating expenses (C) $ 19,227 $ 20,433 $ 21,129 $ 58,246 $
61,922 Operating expense % to revenue 37.5 % 48.8 % 37.4 % 39.5 %
37.4 % Non-GAAP adjustments: Equity-based compensation
expense (1,295 ) (888 ) (1,004 ) (2,612 ) (2,326 ) Amortization of
intangible assets (60 ) (61 ) (62 ) (183 ) (219 ) Restructuring
charges 1,142 (38 ) (998 ) 1,985
(2,009 ) Non-GAAP operating expenses (D) $
19,014 $ 19,446 $ 19,065 $ 57,436 $
57,368 Non-GAAP operating expenses % to revenue 37.1 % 46.5
% 33.7 % 39.0 % 34.6 % Reconciliation from GAAP to Non-GAAP
Operating
Income (loss) from continuing
operations:
GAAP Operating income (loss) (A) - (C) $ 3,639 $ (5,988 ) $
6,304 $ 2,804 $ 11,691 Operating income
(loss)% to revenue 7.1 % -14.3 % 11.2 % 1.9 % 7.1 % Non-GAAP
Operating income (B) - (D) $ 6,493 $ 1,447 $ 9,270
$ 16,760 $ 20,148 Operating income % to
revenue 12.7 % 3.5 % 16.4 % 11.4 % 12.2 %
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 July 3, 2011 Revenue
Earnings Per Share from
Continuing Operations
From To From To
GAAP Guidance $ 52,000 $ 62,000 $
0.01 $ 0.08
Estimated Non-GAAP Adjustments
Equity-based compensation expense 0.03 0.03 Amortization of
intangible assets 0.01 0.01 Restructuring charges 0.04 0.03 Income
tax effect of non-GAAP adjustments (0.02 )
(0.02 ) Total Non-GAAP Adjustments 0.06 0.05
Non-GAAP Guidance $ 52,000 $ 62,000 $ 0.07
$ 0.13
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