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Aeroflex Announces Fiscal Third Quarter Results

Dépèche transmise le 10 mai 2011 par Business Wire

Aeroflex Announces Fiscal Third Quarter Results

Aeroflex Announces Fiscal Third Quarter Results

PLAINVIEW, N.Y.--(BUSINESS WIRE)--Aeroflex Holding Corp. ("Aeroflex") (NYSE: ARX), a leading global provider of microelectronic components and test and measurement equipment, today announced its financial results for the fiscal third quarter and nine months ended March 31, 2011.

“I am very pleased with our record third quarter results”

Net sales increased 14.7% from the third quarter of fiscal 2010 to a new third quarter record of $193.2 million. Both segments contributed to the growth this quarter, as did sales from acquired businesses, which accounted for approximately 5% of revenue. Non-GAAP operating income increased 15.1% from the third quarter of fiscal 2010 to $46.0 million, also a new third quarter record. Adjusted EBITDA also reached a new third quarter record of $50.7 million which is a 13.6% increase from the third quarter of fiscal 2010.

“I am very pleased with our record third quarter results,” said Len Borow, Chief Executive Officer. “Our strong gross margins this quarter were derived from a favorable product mix, primarily related to Hi-Rel Radhard integrated circuits and wireless products, and demonstrate the value proposition of our products in the market. Our partnership with our customers and our ability to commercialize our intellectual property continues to drive our strong financial performance.”

The following tables present selected financial information for the three and nine months ended March 31, 2011 and 2010 prepared in accordance with generally accepted accounting principles (“GAAP”) and on a basis other than GAAP (“Non-GAAP”). The full fiscal year 2011 non-GAAP effective tax rate expected from Aeroflex’s current geographic mix of non-GAAP pre-tax income is 31%. This rate was applied to its non-GAAP pre-tax income for the three and nine month periods ended March 31, 2011 and 2010. A reconciliation between GAAP and Non-GAAP amounts is presented at the end of this press release.

  Selected GAAP Results
(in thousands, except per share data)
Three Months   Nine Months
Ended March 31, Ended March 31,
2011   2010 2011   2010
Net sales $ 193,219 $ 168,435 $ 530,729 $ 465,290
 
Gross profit 106,358 90,300 281,024 242,031
Gross margin 55.0 % 53.6 % 53.0 % 52.0 %
 
Operating income 24,832 22,658 22,684 39,178
 
Net income (loss) $ 4,127 $ 2,856 $ (13,093 ) $ (28,301 )
 
Net income (loss) per common share - basic $ 0.05   $ 0.04   $ (0.18 ) $ (0.44 )
 

Weighted average number of common shares outstanding - basic

84,789 65,000 74,608 65,000
 
Selected Non-GAAP Results
(in thousands, except per share data)
Three Months Nine Months
Ended March 31, Ended March 31,
2011 2010 2011 2010
Net sales $ 193,240 $ 168,466 $ 530,798 $ 465,385
 
Gross profit 106,369 90,618 282,212 243,465
Gross margin 55.0 % 53.8 % 53.2 % 52.3 %
 
Operating income 45,952 39,915 109,628 99,466
 
Net income $ 22,851 $ 14,153 $ 39,994 $ 27,982
 
Net income per common share - basic $ 0.27   $ 0.22   $ 0.54   $ 0.43  
 

Weighted average number of common shares outstanding - basic

84,789 65,000 74,608 65,000
 
Adjusted EBITDA $ 50,661   $ 44,581   $ 123,827   $ 113,779  
 

Business Outlook

For the fiscal fourth quarter ending June 30, 2011, Aeroflex expects net sales to be between $220 million and $228 million, Adjusted EBITDA to be between $64 million and $69 million, and non-GAAP net income per share to be between $.40 and $.44. The range of expected non-GAAP net income per share reflects interest expense savings from the debt refinancing completed on May 9, 2011 and was calculated using a non-GAAP effective tax rate of 31%.

Non-GAAP Presentation

This press release contains non-GAAP financial measures that are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures: (i) are not based on any comprehensive set of accounting rules or principles; and (ii) have limitations in that they do not reflect all of the amounts associated with Aeroflex's results of operations as determined in accordance with GAAP. As such, these measures should only be used to evaluate Aeroflex's results of operations in conjunction with the corresponding GAAP measures.

Aeroflex believes that the presentation of non-GAAP financial measures, when shown in conjunction with the corresponding GAAP measures, provides useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations because they exclude certain non-cash charges or items that management does not believe are reflective of its ongoing operating results when assessing the performance of its business.

Aeroflex believes that these non-GAAP financial measures also facilitate the comparison by management and investors of results between periods and among its peer companies. However, its peer companies may calculate similar non-GAAP financial measures differently than Aeroflex, limiting the information’s usefulness as comparative measures.

Webcast and Conference Call Information

Aeroflex will host a live webcast and conference call at 8:15 a.m. eastern standard time on Tuesday, May 10th during which management will discuss the financial results. To participate in the live webcast, please visit the events page of the website located at http://ir.aeroflex.com. Please plan to join five to ten minutes before the start of the webcast to facilitate a timely connection. If you are unable to participate and would like to hear a replay of the call, an audio replay of the webcast will be available on the Aeroflex website for approximately 90 days or can be accessed telephonically for domestic callers at (888) 286-8010 or internationally at (617) 801-6888 with pass code 55414775.

About Aeroflex

Aeroflex Holding Corp. is a leading global provider of microelectronic components and test and measurement equipment used by companies in the space, avionics, defense, commercial wireless communications, medical and other markets.

Forward-looking Statements

All statements other than statements of historical fact included in this press release regarding Aeroflex’s business strategy and plans and objectives of its management for future operations are forward-looking statements. When used in this press release, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to Aeroflex or its management, identify forward-looking statements. Such forward-looking statements are based on the current beliefs of Aeroflex’s management, as well as assumptions made by and information currently available to its management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, adverse developments in the global economy; dependence on growth in customers’ businesses; the ability to remain competitive in the markets Aeroflex serves; the inability to continue to develop, manufacture and market innovative, customized products and services that meet customer requirements for performance and reliability; any failure of suppliers to provide raw materials and/or properly functioning component parts; the termination of key contracts, including technology license agreements, or loss of key customers; the inability to protect intellectual property; the failure to comply with regulations such as International Traffic in Arms Regulations and any changes in regulations; the failure to realize anticipated benefits from completed acquisitions, divestitures or restructurings, or the possibility that such acquisitions, divestitures or restructurings could adversely affect Aeroflex; the loss of key employees; exposure to foreign currency exchange rate risks; and terrorist acts or acts of war. Such statements reflect the current views of management with respect to the future and are subject to these and other risks, uncertainties and assumptions. Aeroflex does not undertake any obligation to update such forward-looking statements. Any projections in this release are based on limited information currently available to Aeroflex, which is subject to change. Although any such projections and the factors influencing them will likely change, Aeroflex will not necessarily update the information, since Aeroflex will only provide guidance at certain points during the year.

Aeroflex Holding Corp. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

   
March 31, June 30,

Assets

2011 2010
Current assets:
Cash and cash equivalents $ 67,152 $ 100,663
Accounts receivable, less allowance for doubtful
accounts of $1,213 and $1,821 158,382 141,595
Inventories 171,212 126,568
Deferred income taxes 25,903 28,018
Prepaid expenses and other current assets 13,212   10,983  
Total current assets 435,861 407,827
 
Property, plant and equipment, net of accumulated
depreciation of $71,672 and $60,755 101,776 101,662
Non-current marketable securities, net - 9,769
Deferred financing costs, net 16,298 20,983
Other assets 28,516 21,818
Intangible assets with definite lives, net 199,449 238,313
Intangible assets with indefinite lives 114,689 109,894
Goodwill 460,664   445,874  
 
Total assets $ 1,357,253   $ 1,356,140  
 

Liabilities and Stockholders' Equity

Current liabilities:
Current portion of long-term debt $ 360 $ 21,817
Accounts payable 47,240 28,803
Advance payments by customers and deferred revenue 31,519 30,741
Income taxes payable 1,323 4,615
Accrued payroll expenses 22,717 23,082
Accrued expenses and other current liabilities 43,616   58,817  

Total current liabilities

146,775 167,875
 
Long-term debt 695,908 880,030
Deferred income taxes 92,511 138,849
Defined benefit plan obligations 5,526 5,763
Other long-term liabilities 12,830   12,639  
Total liabilities 953,550   1,205,156  
 
Stockholders' equity:
Preferred stock $.01 par value; 50,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, par value $.01 per share; 300,000,000 shares
authorized; 84,789,180 and 65,000,000 shares issued
and outstanding 848 650
Additional paid-in capital 643,600 398,291
Accumulated other comprehensive income (loss) (33,270 ) (53,575 )
Accumulated deficit (207,475 ) (194,382 )
Total stockholders' equity 403,703   150,984  
 
Total liabilities and stockholders' equity $ 1,357,253   $ 1,356,140  
 
Aeroflex Holding Corp. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
   
Three Months Ended March 31,
2011 2010
 
 
Net sales $ 193,219 $ 168,435
Cost of sales 86,861   78,135  
Gross profit 106,358   90,300  
 
 
Selling, general and administrative costs 38,265 31,285
Research and development costs 24,663 20,844
Amortization of acquired intangibles 15,900 15,408
Restructuring charges 2,698   105  
81,526   67,642  
Operating income 24,832   22,658  
 
Other income (expense):
Interest expense (13,852 ) (20,815 )
Other income (expense), net (119 ) 222  
Total other income (expense) (13,971 ) (20,593 )
 
Income before income taxes 10,861 2,065
Provision (benefit) for income taxes 6,734   (791 )
 
Net income $ 4,127   $ 2,856  
 
 
Net income per common share - Basic $ 0.05   $ 0.04  
 
 
Weighted average number of common shares outstanding - Basic 84,789   65,000  
 
Aeroflex Holding Corp. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
   
Nine Months Ended March 31,
 
2011 2010
 
 
Net sales $ 530,729 $ 465,290
Cost of sales 249,705   223,259  
Gross profit 281,024   242,031  
 
 
Selling, general and administrative costs 113,234 92,988
Research and development costs 68,477 55,286
Amortization of acquired intangibles 47,706 46,527
Termination of Sponsor Advisory Agreement 18,133 -
Restructuring charges 10,790 356
Loss on liquidation of foreign subsidiary -   7,696  
258,340   202,853  
Operating income 22,684   39,178  
 
Other income (expense):
Interest expense (55,803 ) (63,272 )
Loss on extinguishment of debt (25,178 ) -
Gain from a bargain purchase of a business 173 -
Other income (expense), net (526 ) 701  
Total other income (expense) (81,334 ) (62,571 )
 
Income (loss) before income taxes (58,650 ) (23,393 )
Provision (benefit) for income taxes (45,557 ) 4,908  
 
Net income (loss) $ (13,093 ) $ (28,301 )
 
 
Net income (loss) per common share - Basic $ (0.18 ) $ (0.44 )
 
 
Weighted average number of common shares outstanding - Basic 74,608   65,000  
 
Aeroflex Holding Corp. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
 
  Nine Months Ended March 31,
2011   2010
Cash flows from operating activities:
Net income (loss) $ (13,093 ) $ (28,301 )
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization 62,426 62,178
Gain from a bargain purchase of a business (173 ) -
Acquisition related adjustment to cost of sales 998 246
Loss on liquidation of foreign subsidiary - 7,696
Loss on extinguishment of debt 25,178 -
Deferred income taxes

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