Acterna Corporation Reports Fourth Quarter Results.Business Editors/Hi-Tech Writers 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)--May 29, 2002 Acterna (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) ) -- Improves liquidity to $138 million -- Earnings results in line with analyst consensus estimates -- Expands cost-cutting program Acterna Corporation (Nasdaq:ACTR), the world's second largest provider of communications test and management solutions, and the parent company of 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, 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. 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 fourth quarter of fiscal 2002, ended March 31, 2002. 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 fourth quarter of fiscal 2002 were $212 million, down 46 percent from the same period last year and 15 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . Net sales were down 43 percent from $371 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 down 13 percent sequentially on a pro forma basis. Net sales of communications test products were $147 million, which compared to $299 million a year earlier and $187 million in the third quarter of fiscal year 2002. Orders were $175 million in the fourth quarter, which, on a pro forma basis, were down 22 percent sequentially and down 59 percent from the prior year. Communications test product orders were $122 million, down 28 percent from the previous quarter, and down 66 percent from the prior year. As indicated on the last earnings call, the communications test orders include $28 million of de-bookings primarily related to orders originally booked in the fourth quarter of fiscal 2001. Adjusting for the de-bookings, communications test product orders were down 11 percent sequentially and 58 percent year over year. For the fourth quarter of fiscal 2002, the company reported a net loss of $147 million, or a loss of $0.77 per share, which includes charges of $174 million and a recorded tax benefit of $80 million. The charges include: a $151 million impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge associated with intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. in the communications test segment, 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 $17 million primarily related to severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when , and a charge for purchase commitments related to suppliers of $6 million. The income statement also reflects a tax benefit of $80 million, the majority of which resulted from the U.S. tax law change in March. For the same period a year ago, the company reported a net loss of $21 million, or $0.10 per share. Pro forma loss from operations (earnings (loss) before interest, taxes, amortization and special charges) after integration expenses was a loss of $24 million for the fourth quarter. Cash loss per share in the fourth quarter excluding the benefit of the tax adjustment was $0.24, which compared to cash earnings per share of $0.11 in the prior year on a comparable basis. Gross margin for the fourth quarter was 49 percent, versus 60 percent for the year ago quarter on a pro forma basis. The gross margin was impacted by the $6 million purchase commitment charge described above. Excluding that charge, the gross margin would have been approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 51 percent for the quarter. As of March 31, 2002, the company had total debt of $1.1 billion and liquidity of $138 million, comprised of $43 million of cash and unused borrowing capacity of $95 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. In addition to the $138 million of liquidity, as a result of the previously mentioned new U.S. tax legislation that allows a company to carry losses back five years instead of two years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time company received a $61 million tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. in May. Expanded Cost-Cutting Initiative and Other Actions The company also announced it would expand its cost-cutting efforts to include a workforce reduction of about 8 percent or approximately 400 jobs worldwide. Acterna will also further consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. some of its locations and reduce its spending on its ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. integration project. The company expects to realize approximately $75 million in savings as a result of these cost-cutting programs and will take a restructuring charge of approximately $17 million related to these actions. In addition, Acterna has announced the sale of its product line for testing cellular phones to Willtek Communications Holding GmbH GmbH Gesellschaft mit Beschränkter Haftung (German: limited liability company; business entity) , for an undisclosed amount. Acterna will continue to be a distributor of these products under the terms of the new agreement. The company's focus in wireless remains on providing manufacturers and operators with systems for load testing Load testing is the process of creating demand on a system or device and measuring its response. In mechanical systems it refers to the testing of a system to certify it under the appropriate regulations (LOLER in the UK - Lifting Operations and Lifting Equipment of 2.5 and 3G network elements, wireless monitoring and quality of service testing, and portable units for wireless coverage area testing. Upon completion of the actions announced today, Acterna will have reduced its headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. to approximately 4,100, a 36 percent reduction since the beginning of fiscal 2002. Headcount for the company at the end of fiscal 2002 was approximately 5000, down from approximately 6400 at the beginning of the year. "Given the continued weakness in the technology sector and recent announcements of additional capital expenditure reductions by many of our communications test customers, we are taking further steps to reduce our cost structure and improve our operating results," said Ned C. Lautenbach, 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. . Fiscal Year Results For the full fiscal year 2002, Acterna Corporation reported net sales of $1,133 million, down 17 percent compared to the prior year. Fiscal year 2002 pro forma net sales of $1,097 million are down 21 percent from a year ago on a comparable basis. For fiscal year 2002, the reported net loss was $375 million, as compared to a net loss of $172 million for fiscal year 2001. Fiscal year 2002 pro forma profit from operations was $12 million, compared to a profit of $167 million last year on a comparable basis. Pro forma cash loss per share for fiscal year 2002 was $0.12, which compared to pro forma cash profit of $0.34 per share for the prior year. First Quarter Fiscal Year 2003 Quarter Management Outlook Management guidance for revenue for its fiscal year 2003 first quarter ending June June: see month. 30 is $185 - $190 million. The company expects pro forma cash EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. for its first quarter of $(0.20)-$(0.22). With the implementation of the latest cost reductions, the company expects to achieve a cost structure after the restructurings are complete that would result in breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations EBITA EBITA Earnings Before Interest Taxes Amortization performance at approximately $190 million of quarterly sales. "We continue to have limited visibility in our communications test business as a result of the industry's prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. ," said John Peeler, president of Acterna Corporation and head of the company's Acterna unit. "However, we remain well positioned to resume growth when the industry rebounds. We have an excellent product and services portfolio, a strong penetration The successful unauthorized breach of a security perimeter. See penetration test. among the world's largest communications companies Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. , an enviable en·vi·a·ble adj. So desirable as to arouse envy: "the enviable English quality of being able to be mute without unrest" Henry James. R&D track record, and a very productive global sales force." 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. , May 29 at 8 a.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 Twelve Months Ended
----------------------- -----------------------
March 31, March 31, March 31, March 31,
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net sales $ 212,465 $ 393,302 $1,132,661 $1,366,257
Cost of sales 109,561 163,627 540,048 606,860
----------------------- -----------------------
Gross margin 102,904 229,675 592,613 759,397
Selling, general
& administrative
expense 92,107 134,662 444,387 486,598
Product development
expense 35,802 49,303 160,219 168,117
Impairment of
intangible assets 151,322 - 155,269 -
Impairment of
assets held for
sale - - 17,918 -
Recapitalization
and other related
costs - - - 9,194
Restructuring 16,745 - 33,989 -
Purchased
incomplete
technology - - - 56,000
Amortization of
intangibles 10,185 35,989 42,271 120,151
----------------------- -----------------------
Total operating
expense 306,161 219,954 854,053 840,060
----------------------- -----------------------
Operating income
(loss) (203,257) 9,721 (261,440) (80,663)
Interest expense (22,957) (28,355) (96,625) (102,158)
Interest income 105 718 1,625 3,322
Other income
(expense), net (1,346) (2,113) (7,615) (4,491)
----------------------- -----------------------
Loss from
continuing
operations before
income taxes and
extraordinary item (227,455) (20,029) (364,055) (183,990)
Provision (benefit)
for income taxes (80,239) 875 799 (12,793)
----------------------- -----------------------
Net loss from
continuing
operations before
extraordinary item (147,216) (20,904) (364,854) (171,197)
Income (loss) from
discontinued
operations (a) - 176 (10,039) 10,039
----------------------- -----------------------
Net Loss before
extraordinary item (147,216) (20,728) (374,893) (161,158)
Extraordinary item - - - (10,659)
----------------------- -----------------------
Net loss $ (147,216) $ (20,728) $ (374,893) $ (171,817)
======================= =======================
Income (loss) per
common share -
basic and diluted
Continuing
operations ($0.77) ($0.10) ($1.90) ($0.85)
Discontinued
operations (a) - 0.00 (0.05) 0.05
Extraordinary
loss - - - (0.05)
----------------------- -----------------------
Net loss per common
share - basic and
diluted ($0.77) ($0.10) ($1.95) ($0.85)
======================= =======================
Weighted average
number of common
shares - Basic and
diluted shares 192,242 201,432 191,868 202,731
======================= =======================
a) Reflects cummulative effect of the loss from discontinued
operations from the measurement date (May 2000) to the current period.
Acterna Corporation
Balance Sheets
Unaudited
Dollars in Thousands
March 31, December 31, March 31,
2002 2001 2001
---------- ---------- ----------
ASSETS
Cash and cash equivalents $ 42,739 $ 50,978 $ 63,054
Accounts receivable, net 126,381 139,996 233,371
Inventories, net 112,601 131,657 157,481
Deferred income taxes 18,878 12,493 37,961
Other current assets 112,166 38,879 39,610
---------- ---------- ----------
Total current assets 412,765 374,003 531,477
Property, plant, and
equipment 122,086 124,443 124,566
Net assets held for sale - - 37,908
Goodwill, net 427,086 432,330 435,478
Other intangible assets,
net 2,453 162,765 195,093
Other assets 50,166 53,112 58,457
---------- ---------- ----------
Total assets $1,014,556 $1,146,653 $1,382,979
========== ========== ==========
LIABILITIES & STOCKHOLDERS'
DEFICIT
Notes payable $ 2,523 $ 2,004 $ 10,919
Current portion of long-term
debt 28,937 26,887 22,248
Accounts payable 73,374 67,239 112,155
Other current liabilities 204,305 186,848 201,498
---------- ---------- ----------
Total current liabilities 309,139 282,978 346,820
Long-term debt 979,187 1,061,505 1,056,383
Long-term notes payable 76,875 - -
Deferred income taxes 17,581 26,630 2,915
Deferred compensation 68,549 66,150 57,838
Total stockholders' deficit (436,775) (290,610) (80,977)
---------- ---------- ----------
Total liabilities and
stockholders' deficit $1,014,556 $1,146,653 $1,382,979
========== ========== ==========
Acterna Corporation
Pro Forma Profit from Operations
(Unaudited)
Earnings Before Interest, Taxes and Amortization
Excluding Special Charges
Dollars in Thousands Three Months Ended Twelve Months Ended
------------------- -----------------------
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
2002 2001 2002 2001
-------- -------- ---------- ----------
Net sales $212,465 $371,247 $1,097,019 $1,379,577
Cost of sales 109,463 149,762 508,660 545,733
-------- -------- ---------- ----------
Gross margin 103,002 221,485 588,359 833,844
Selling, general
& administrative
expense 84,314 115,993 393,704 461,722
Product development
expense 34,905 44,955 152,723 172,036
Integration expense 6,263 8,218 23,061 25,162
Other expense 1,346 2,150 7,271 8,041
-------- -------- ---------- ----------
Pro forma profit
(loss) from
operations (23,826) 50,169 11,600 166,883
Net interest expense 22,852 27,638 95,003 111,597
-------- -------- ---------- ----------
Pretax cash earnings
(loss) (46,678) 22,531 (83,403) 55,286
Provision (benefit)
for taxes (70,005) 1,298 (60,109) (14,189)
-------- -------- ---------- ----------
Cash earnings (loss) $ 23,327 $ 21,233 $ (23,294) $ 69,475
======== ======== ========== ==========
Cash earnings (loss)
per share $ 0.12 $ 0.11 ($ 0.12) $ 0.34
======== ======== ========== ==========
Weighted average
diluted shares 192,242 201,432 191,868 202,731
======== ======== ========== ==========
Special Charges
excluded from profit
from operations:
Amortization of
unearned
compensation $ 2,523 $ 4,368 $ 18,957 $ 18,988
Recapitalization
and other costs -- -- -- 9,194
Purchased
incomplete
technology -- -- -- 56,000
Amortization of
inventory step-up -- -- -- 35,750
WWG Restructuring
and other charges -- (107) -- 1,496
Restructuring and
other special
charges 18,050 -- 40,009 2,829
Impairment of
assets held for
sale and other
assets 150,017 -- 173,187 --
-------- -------- ---------- ----------
Total special charges $170,590 $ 4,261 $ 232,153 $ 124,257
======== ======== ========== ==========
Note: The above pro forma financial information has been restated
to include the results of WWG, which was acquired on May 23, 2000;
Cheetah Technologies, which was acquired on August 23, 2000; and
certain other acquisitions as if these acquisitions had occurred at
the beginning of the respective fiscal periods. Similarly, the pro
forma information excludes the results of ICS Advent which was
divested on October 31, 2001 and Data Views Corporation, which was
divested in June 2000, and certain other divestitures.
Acterna Corporation
Pro Forma Sales for Continuing Operations by Product Area
(Unaudited)
Dollars in Millions
Three Months Ended Twelve Months Ended
March March March March
31, 31, % 31, 31, %
2002 2001 Change 2002 2001 Change
Optical
Transport $ 51.0 $ 129.6 -60.6% $ 378.1 $ 420.3 -10.0%
Cable
Networks 20.0 26.5 -24.5% 84.8 152.2 -44.3%
Access
Networks 21.6 42.0 -48.6% 118.0 186.2 -36.6%
Data/IP,
Wireless, and
Other 54.2 100.6 -46.1% 273.5 393.5 -30.5%
Communications
Networks
---------------- ------------------
Total
Communications
Test 146.8 298.7 -50.9% 854.4 1,152.2 -25.8%
AIRSHOW & da
Vinci 20.6 31.7 -35.0% 89.9 114.2 -21.3%
Itronix 45.1 40.9 10.3% 152.7 113.2 34.9%
---------------- ------------------
Total Acterna
Corporation $ 212.5 $ 371.3 -42.8% $1,097.0 $1,379.6 -20.5%
---------------- ------------------
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