Acterna Corporation Reports First-Quarter Results.Business Editors GERMANTOWN Germantown, residential section of NW Philadelphia, Pa. Settled by Dutch and Germans in 1683, Germantown became one of the earliest printing and publishing centers in the country. , Md.--(BUSINESS WIRE)--July 31, 2002 Acterna Corporation (Nasdaq:ACTR ACTR American Council of Teachers of Russian ACTR Actuator ACTR Association for Canadian Theatre Research ACTR A Christmas To Remember ACTR Assistant Contract Technical Representative (NMCI liaison) ), the parent company of Airshow For the navigational aid displayed to airline passengers, see . An airshow is an event at which aviators display their flying skills and the capabilities of their flying machines to the crowd. , Itronix General Dynamics - Itronix is a rugged computer manufacturer based in Spokane, Washington. They market products for Telecommunications, Aerospace, Military, Field Service and other commercial industries. Formerly part of the Itron company, they split in the mid 90s. Corporation and da Vinci da Vinci Surgery A surgical robot for performing certain surgeries–eg, mitral valve repair and laparoscopic procedures–eg, cholecystectomy and gastric ulcer repair. See Laparoscopic surgery, Robotics, Surgical robot. Systems, reported its results for the first quarter of fiscal 2003, ended June June: see month. 30, 2002. On June 14, 2002, Acterna announced a definitive agreement to sell Airshow to Rockwell Collins Rockwell Collins, Inc. (NYSE: COL) is a large United States-based international company headquartered in Cedar Rapids, Iowa, primarily providing aviation and information technology systems, solutions, and services to governmental agencies and aircraft manufacturers. for $160 million in cash. The financial results for Airshow for the fiscal 2003 first quarter are shown on one line as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. on the profit and loss statement, and as discontinued operations held for sale on the balance sheet. The results of Airshow are excluded from all other lines in the profit and loss statement and balance sheet. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the first quarter of fiscal 2003 were $170 million, down 50 percent from the same period last year. Net sales were down 47 percent from $321 million on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis (which adjusts for acquisitions and dispositions) for the same period last year and 13 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . Including Airshow revenue for the quarter, the total company sales were $186 million, within the range of guidance provided in May. Net sales of communications test products were $136 million, which compared to $277 million for the same period last year and $147 million in the fourth quarter of fiscal year 2002. Orders were $158 million in the first quarter, which, on a pro forma basis, were down 1 percent sequentially and 37 percent from the prior year. Including Airshow, orders were $170 million. Communications test product orders were $119 million, down 2 percent from the previous quarter, and down 44 percent from the prior year. For the first quarter of fiscal 2003, the company reported a net loss of $40 million, or a loss of $0.21 per share, which includes a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $6 million and a tax benefit of $17 million. For the same period a year ago, the company reported a net loss of $6 million, or $0.03 per share. Pro forma loss from operations (earnings/loss before interest, taxes, amortization and special charges) was a loss of $24 million for the first quarter. Cash loss per share, excluding the $17 million tax benefit recorded in the quarter, was $0.23, which compared to cash earnings per share of $0.10 in the prior year on a comparable basis. The cash loss was $0.01 below the guidance provided for the quarter. Gross margin for the first quarter was 50 percent, versus 48 percent last quarter and 59 percent for the year ago quarter on a pro forma basis. Including Airshow, the gross margin was 51 percent. The company reported that it is on track with its previously announced cost-cutting efforts. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the quarter were $109 million, down 10 percent sequentially and 28 percent from the same period last year on a comparable basis. Including Airshow, operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. for the quarter was $116 million. As of June 30, 2002, Acterna Corporation's total employment was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 4460, including 320 employees in the Airshow unit, and 140 employees associated with the Wireless Instruments Division that the company agreed to sell in May, 2002. "Acterna continues to be impacted by the difficult market conditions in the global telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry," said John Peeler, president of Acterna Corporation. "In this challenging environment, we are working to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. all revenue opportunities while aggressively executing on our cost reduction program and efforts to improve our liquidity. We believe that our successful execution in these three areas will position Acterna for growth as market conditions improve." As of June 30, 2002, the company had total debt of $1.1 billion and liquidity of $129 million, comprised of $49 million of cash and unused borrowing capacity of $80 million under its $175 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. The company expects to use approximately $128 million to pay down term loans upon the closing of the Airshow transaction, which is expected to occur in August, 2002. On July July: see month. 15, 2002, Acterna announced an agreement with its lenders to amend its credit agreement, which will provide the company with greater financial flexibility. When effective, this amendment, among other things, will approve the Airshow sale and modify the financial covenants the company is required to meet through June 2003. In addition, on June 14, 2002, Acterna and an affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. of CD&R announced a combined cash tender offer for up to $155 million of the outstanding $275 million of Acterna LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control 9.75 percent bonds due 2008. Both the changes to the covenants and consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the tender offer are contingent on Adj. 1. contingent on - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent upon, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent the sale of the Airshow unit. "Acterna has taken several significant steps to reduce its debt and improve its capital structure," said Ned C. Lautenbach, Acterna Corporation chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "The Airshow sale permits us to reduce our term debt and to retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. a portion of our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. bond debt through the tender offer." Second-Quarter Fiscal Year 2003 Quarter Management Outlook Management guidance for revenue for its second quarter ending September September: see month. 30, 2002 is $155 - $165 million and an earnings per share loss of $0.26 - $0.28 on an as reported basis, including an estimated $8 million restructuring charge and excluding any gain or loss on the sale of assets. Going forward, Acterna has elected e·lect v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. to provide reported earnings per share guidance rather than a cash earnings per share estimate, which the company has historically used as the basis of its guidance. About Acterna Corporation Based in Germantown, Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). , Acterna Corporation (NASDAQ: ACTR) is the holding company for Acterna, Airshow, da Vinci Systems and Itronix. Acterna is the world's second largest communications test and management company. The company offers instruments, systems, software and services used by service providers, equipment manufacturers and enterprise users to test and optimize optimize - optimisation performance of their optical transport, access, cable, data/IP and wireless networks and services. Airshow supplies in-flight in-flight adj. 1. Occurring, carried out, or present while in flight: in-flight refueling. 2. Provided or offered during a flight: in-flight meals. passenger information systems to the aviation industry while da Vinci Systems designs and markets video color correction Altering the colors in an image in order to print or display it properly or for special effects. Depending on the application, color correction can be a significant problem if the resulting image must be approved or a purchase is made because of color choice. systems to the video postproduction post·pro·duc·tion n. A final stage in the production of a film or a television program, occurring after the action has been filmed or videotaped and typically involving editing and the addition of soundtracks. industry. Itronix sells ruggedized computing computing - computer devices for field service applications to a range of industries. Additional information on Acterna is available at http://www.acterna.com. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended, which statements reflect the company's current judgment on the matters addressed by these statements. However, because such statements apply to future events, they are subject to risks and uncertainties that could cause the actual events and the company's results to differ materially. Important factors that could cause actual events and the company's results to differ materially are described in the company's reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and 10-Q on file with the Securities and Exchange Commission. Note to Investors and Media Acterna Corporation management will discuss its fourth-quarter results on a conference call on Wednesday Wednesday: see week. , July 31 at 5:00 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . A webcast of the conference call will be available to all interested parties on the Acterna website at www.acterna.com under the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " section.
Acterna Corporation
Consolidated Statements of Operations
(Unaudited)
Dollars in thousands, except per share amounts
Three Months Ended
----------------------------
June 30, 2002 June 30, 2001
------------- -------------
Net sales $ 170,345 $ 338,920
Cost of sales 86,436 147,520
----------------------------
Gross margin 83,909 191,400
Selling, general & administrative
expense 81,117 124,819
Product development expense 30,614 41,317
Restructuring 6,156 -
Amortization of intangibles 263 11,552
----------------------------
Total operating expenses 118,150 177,688
----------------------------
Operating (loss) income (34,241) 13,712
Interest expense (22,296) (26,277)
Interest income 72 486
Other expense, net (1,475) (1,832)
----------------------------
Loss from continuing operations
before income taxes (57,940) (13,911)
Benefit for income taxes (16,917) (4,721)
----------------------------
Net loss from continuing operations (41,023) (9,190)
Income from discontinued operations,
net of tax effect 1,112 3,040
----------------------------
Net loss $ (39,911) $ (6,150)
============================
Income (loss) per common share -
basic and diluted
Continuing operations ($0.21) ($0.05)
Discontinued operations - 0.02
----------------------------
Net loss per common share - basic
and diluted ($0.21) ($0.03)
============================
Weighted average number of common
shares - Basic and diluted 192,196 191,186
============================
Acterna Corporation
Balance Sheets
Unaudited
Dollars in Thousands
June 30, March 31,
2002 2002
----------- -----------
ASSETS
Cash and cash equivalents $ 49,090 $ 42,887
Accounts receivable, net 113,825 119,246
Inventories, net 110,080 108,739
Deferred income taxes 16,347 18,878
Other current assets 55,810 107,731
Current assets of discontinued
operations held for sale 13,654 15,282
----------- -----------
Total current assets 358,806 412,763
Property, plant, and equipment,
net 125,415 118,213
Goodwill and other intangible
assets, net 411,984 410,750
Other assets 51,332 46,563
Long-term assets of discontinued
operations held for sale 26,078 26,267
----------- -----------
Total assets $ 973,615 $ 1,014,556
=========== ===========
LIABILITIES & STOCKHOLDERS' DEFICIT
Notes payable $ 3,282 $ 2,523
Current portion of long-term debt 33,486 28,937
Accounts payable 53,261 68,262
Other current liabilities 186,997 198,773
Current liabilities of
discontinued operations held for
sale 9,906 10,644
----------- -----------
Total current liabilities 286,932 309,139
Long-term debt 990,608 979,187
Long-term notes payable 76,875 76,875
Deferred income taxes 15,967 17,581
Other long-term liabilities 70,583 68,549
Total stockholders' deficit (467,350) (436,775)
----------- -----------
Total liabilities and stockholders'
deficit $ 973,615 $ 1,014,556
=========== ===========
Acterna Corporation
Pro Forma Profit from Operations
(Unaudited)
Earnings Before Interest, Taxes and Amortization
Excluding Special Charges
Dollars in Thousands Three Months Ended
-------------------------
June 30, June 30,
2002 2001
-------- --------
Net sales $170,345 $321,131
Cost of sales 86,039 131,702
-------------------------
Gross margin 84,306 189,429
Selling, general & administrative expense 75,913 109,299
Product development expense 29,542 38,412
Integration expense 1,570 2,403
Other expense 1,475 1,832
-------------------------
Pro forma profit (loss) from continuing
operations (24,194) 37,483
=========================
Charges excluded from proforma profit
(loss) from continuing
operations:
Pro forma profit (loss) from
continuing operations $(24,194) $ 37,483
EBITA - ICS 0 (2,794)
Amortization of unearned compensation 4,723 6,542
Amortization of Intangibles 263 11,552
Restructuring 6,156 0
Other charges 380 4,715
Plus: other expense (1,475) (1,832)
-------------------------
Total Operating (loss) Income on GAAP P&L $(34,241) $ 13,712
=========================
Note: The proforma financial information excludes the results of
Airshow, Inc. which is expected to be divested in the second quarter
of fiscal 2003. The results of Airshow are shown as discontinued
operations.
Acterna Corporation
1Q Fiscal 2003 Cash EPS Calculation
(Unaudited)
Dollars in thousands, except per share amounts
Pro forma loss from continuing operations $(24,194)
Pro forma profit from Airshow $ 2,064
-----------
Pro forma loss including Airshow $(22,130)
Interest Expense, including Airshow $(22,224)
Tax benefit recorded in the quarter $ 16,917
Remove tax benefit from Cash EPS calculation $(16,917)
-----------
Taxes included in Cash EPS $ -
Cash Earnings including Airshow $(44,354)
Weighted Average Number of Common Shares 192,196
-----------
Cash LossPer Share $ (0.23)
===========
Note: These numbers include the results of Airshow and exclude the tax
benefit recorded on the P&L in order to provide comparable numbers to
the guidance the company provided for the quarter in May.
Acterna Corporation
Pro Forma Sales for Continuing Operations by Product Area
(Unaudited)
Dollars in Millions
Three Months Ended Three Months Ended
June 30, June 30, % March 31, %
2002 2001 Change 2002 Change
Optical
Transport $ 48.9 $ 131.5 -62.8% $ 51.0 -4.1%
Cable
Networks 20.4 24.9 -18.1% 20.0 2.0%
Access
Networks 17.1 42.1 -59.4% 21.6 -20.8%
Data/IP,
Wireless,
and Other 49.8 78.0 -36.2% 54.2 -8.1%
Communications
Networks
Total
Communications ----------------- -------
Test 136.2 276.5 -50.7% 146.8 -7.2%
da vinci 6.0 8.0 -25.0% 4.7 27.7%
Itronix 28.1 36.6 -23.2% 45.1 -37.7%
Total
Acterna ----------------- -------
Corporation $ 170.3 $ 321.1 -47.0% $ 196.6 -13.4%
================= =======
Airshow 15.4 17.7 -13.0% 15.9 -3.1%
Total
Including ----------------- -------
Airshow $ 185.7 $ 338.8 -45.2% $ 212.5 -12.6%
================= =======
Note: Excludes the results of ICS Advent which was sold in October
2001.
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