Acterna Corporation Reports Second-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)--Oct. 30, 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 Acterna, 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 second quarter of fiscal 2003, ended September September: see month. 30, 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 second quarter of fiscal 2003 were $164 million, down 45 percent from the same period last year and down 4 percent from last quarter, on an as reported basis. Net sales were down 43 percent from $285 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 the ICS (1) (Internet Connection Sharing) A Windows feature that enables two or more computers to share one Internet connection. First introduced in Windows 98 Second Edition, sharing is accomplished with network address translation (NAT), which is the common method. Advent disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of in October October: see month. 2001) from the same period last year. Net sales of communications test products were $125 million, which compared to $244 million for same period last year and $136 million in the first quarter of fiscal year 2003. Orders were $189 million in the second quarter, which, on a pro forma basis, were up 10 percent from the same period last year and up 20 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . Communications test orders were $112 million, down 6 percent from the previous quarter, and down 27 percent from the same period last year. Itronix orders were significant in the quarter at $73 million, compared to $33 million last quarter and $14 million in the same period last year, primarily as a result of a large order from Sears, Roebuck and Co. For the second quarter of fiscal 2003, the company reported a net loss of $284 million, or a loss of $1.48 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 $19 million and several one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. gains and charges. The restructuring charge resulted from 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 outplacement out·place·ment n. The process of facilitating a terminated employee's search for a new job by provision of professional services, such as counseling, paid for by the former employer. costs associated with Acterna's previously announced cost-cutting initiatives and charges for facilities the company has previously said it will close. The one-time gains and charges also include the following items: -- a gain of $75 million, net of tax of $50 million, on the sale of Airshow to Rockwell Collins on August 9, 2002; -- a gain of $50 million, net of tax of $28 million and net of a small loss on the retirement of senior debt, on the company's successful tender of $106 million of its 9.75 percent bonds; -- a loss of $2.6 million, net of tax benefit of $2.2 million, from discontinued operations; -- a charge of $388 million for goodwill and other asset impairment in the communications test unit; and -- an excess inventory charge of $14.5 million, which is comprised of $9.5 million of inventory reserves and $5 million of purchase commitments related to suppliers, and is primarily related to the optical transport business. The company also reported a tax benefit from the loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $49 million. Excluding all special gains and charges, except for the restructuring charge, and excluding the tax benefit from continuing operations, the loss per share is $0.28, within the guidance of negative $0.26-$0.28 the company provided for the quarter on a comparable basis. For the same period a year ago, the company reported a net loss of $148 million or $0.77 per share. Gross margin for the second quarter was 42 percent, versus 50 percent last quarter and 57 percent for the year ago quarter on a pro forma basis. Adjusting for the $14.5 million inventory charge, gross margin for the quarter was 51 percent. In response to the continued industry 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. and new capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. reductions recently reported by several key customers, Acterna said it would further reduce its workforce by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 350 positions, or 10 percent of its employment base. These reductions are designed to size the company to the lower level of revenue resulting from our customers' continued capital spending reductions. The company expects to realize $40 million in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. savings and to take a restructuring charge of approximately $20 million related to these actions and the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). announced on September 4, 2002. Acterna expects to record $15 million of this charge in the third quarter and the remainder in the fourth quarter of this fiscal year. "We continue to navigate (1) "Surfing the Web." To move from page to page on the Web. (2) To move through the menu structure in a software application. through very difficult market conditions and are taking those steps that we believe best position Acterna for resumed growth when the industry recovery begins," said John Peeler, president of Acterna Corporation. "Cost cutting remains a priority for Acterna as we size our business to reflect declining revenue in our communications test segment" 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 $95 million, down 13 percent sequentially and 36 percent from the same period last year on a comparable basis. As of September 30, 2002, Acterna Corporation's total employment was approximately 3,590 compared to 4,460 at the end of last quarter and 5,900 in the year-ago quarter. The 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. reduction of 870 since the first quarter is comprised of a 460 employee reduction resulting from recently divested businesses and a 410 staff reduction primarily from severance and attrition Attrition The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. Notes: . As of September 30, 2002, the company had liquidity of $94 million, comprised of $32 million of cash and unused borrowing capacity of $62 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 had total debt of $893 million at the end of the quarter. During the quarter the company reduced its term debt by $234 million, which reduces annual interest expense by $17 million. "The company is focused on improving its balance sheet and preserving liquidity to ensure we can continue to provide the highest quality products and service levels to our customers," said Ned 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. . Six Months Results For the first-half of fiscal 2003, net sales were $334 million, compared to net sales of $638 million for the same period last year on an as reported basis. The loss per share for the first six months was $1.69, which compared to a loss per share of $0.80 in the same period the prior year. Third Quarter Fiscal Year 2003 Quarter Management Outlook Management guidance for its third quarter ending December December: see month. 31, 2002 is revenue of $175 - $185 million and a per share loss of $0.21 - $0.23 on an as reported basis, which includes an estimated $15 million restructuring charge. 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, 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. 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, while da Vinci Systems designs and markets video color correction systems to the video postproduction industry. 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. , October 30 at 7:30 AM 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 Six Months Ended
------------------- -------------------
Sept 30, Sept 30, Sept 30, Sept 30,
2002 2001 2002 2001
--------- ------------------- ---------
Net sales $163,941 $298,895 $334,286 $637,814
Cost of sales 95,374 135,460 181,809 283,063
---------------------------------------
Gross margin 68,567 163,435 152,477 354,751
Selling, general &
administrative expense 70,555 113,681 151,672 238,528
Product development expense 27,132 40,033 57,746 81,240
Impairment of goodwill and other
assets 388,396 17,918 388,396 17,918
Restructuring 19,215 7,045 25,372 7,045
Amortization of intangibles 259 10,599 522 22,151
---------------------------------------
Total operating expenses 505,557 189,276 623,708 366,882
---------------------------------------
Operating loss (436,990) (25,841) (471,231) (12,131)
Interest expense (19,257) (24,698) (41,554) (50,976)
Interest income 136 893 208 1,377
Other income (expense), net 89 (3,445) (1,387) (5,273)
---------------------------------------
Loss from continuing operations
before income taxes
and extraordinary items (456,022) (53,091) (513,964) (67,003)
(Benefit) provision for income
taxes (49,342) 84,008 (66,261) 79,119
---------------------------------------
Loss from continuing operations
before extraordinary items (406,680) (137,099) (447,703)(146,122)
Discontinued operations
Loss from discontinued
operations, net of tax (2,625) (10,422) (1,513) (7,550)
Gain on sale of discontinued
operations, net of tax
expense of $50,405 74,902 74,902
---------------------------------------
Loss before extraordinary
item (334,403) (147,521) (374,314)(153,672)
Extraordinary item, gain on
early extinguishment of debt,
net of tax expense of $27,852 50,082 50,082
---------------------------------------
Net income (loss) (284,321) (147,521) (324,232)(153,672)
=======================================
Income (loss) per common
share - basic and diluted
Continuing operations (2.12) (0.71) (2.33) (0.76)
Discontinued operations 0.38 (0.06) 0.38 (0.04)
Extraordinary item 0.26 - 0.26 -
---------------------------------------
Net loss per common share -
basic and diluted ($1.48) ($0.77) ($1.69) ($0.80)
=======================================
Weighted average number of
common shares -
Basic and diluted 192,248 191,889 192,248 191,538
=======================================
Acterna Corporation
Consolidated Balance Sheets
(Unaudited)
Dollars in thousands
September 30, March 31,
2002 2002
------------ ---------
ASSETS
Cash and cash equivalents $32,041 $42,739
Accounts receivable, net 98,910 119,246
Inventories, net 92,430 108,739
Deferred income taxes 21,650 18,878
Other current assets 35,429 107,733
Current assets of discontinued
operations held for sale 15,430
------------------------
Total current assets 280,460 412,765
Property, plant, and equipment, net 110,670 118,213
Goodwill and other intangible assets, net 34,638 410,750
Other assets 35,583 46,561
Long-term assets of discontinued operations
held for sale 26,267
------------------------
Total assets $461,351 $1,014,556
========================
LIABILITIES & STOCKHOLDERS' DEFICIT
Notes payable $1,886 $2,523
Current portion of long-term debt 18,768 28,937
Accounts payable 51,127 68,262
Other current liabilities 181,868 198,773
Current liabilities of discontinued
operations held for sale 10,644
------------------------
Total current liabilities 253,649 309,139
Long-term debt 792,034 979,187
Long-term notes payable 80,319 76,875
Deferred income taxes 19,565 17,581
Other long-term liabilities 69,584 68,549
Total stockholders' deficit (753,800) (436,775)
------------------------
Total liabilities and stockholders'
deficit $461,351 $1,014,556
========================
Acterna Corporation
Pro Forma Statement of Operations
(Unaudited)
Earnings Before Interest, Taxes, and Amortization Excluding
Special Charges (EBITA)
Dollars in thousands
Three Months Ended Six Months Ended
------------------- --------------------
Sept 30, Sept 30, Sept 30, Sept 30,
2002 2001 2002 2001
--------- --------- --------- ---------
Net sales $163,941 $284,972 $334,286 $606,102
Cost of sales 95,123 123,456 181,162 255,156
----------------------------------------
Gross margin 68,818 161,516 153,124 350,946
Selling, general &
administrative expense 68,351 106,175 145,834 217,879
Product development expense 26,455 37,741 55,996 76,154
Other (income)expense (89) 3,445 1,387 5,273
----------------------------------------
94,717 147,361 203,217 299,306
----------------------------------------
EBITA (25,899) 14,155 (50,093) 51,640
========================================
Reconciliation to Operating
Loss:
EBITA (25,899) 14,155 (50,093) 51,640
Charges excluded From EBITA
EBITA ICS 0 (2,149) 0 (4,943)
Amortization of unearned
compensation (2,984) (5,245) (7,707) (11,787)
Amortization of intangibles (259) (10,599) (522) (22,151)
Impairment of goodwill and
other assets (388,396) (17,918)(388,396) (17,918)
WWG Restructuring and other
Charges 0 (485) 0 (485)
One-Time and other Special
Charges 0 0 0 (4,715)
Restructuring (19,215) (7,045) (25,372) (7,045)
Other charges (148) 0 (528) 0
Plus Other (income)expenses (89) 3,445 1,387 5,273
-----------------------------------------
Total excluded from EBITA (411,091) (39,996)(421,138) (63,771)
-----------------------------------------
Operating Loss (436,990) (25,841)(471,231) (12,131)
=========================================
Note: This proforma statement of operations excludes the results
of Airshow, Inc. which was divested on August 9, 2002, and ICS Advent
which was divested on October 31, 2001
Acterna Corporation
1Q Fiscal 2003 EPS Calculation
(Unaudited)
Dollars in thousands, except per share amounts
Net Loss as reported $(284,321)
Special gains and charges:
Gain on Sale of Airshow, net of tax of $50,405 (74,902)
Gain on extinguishment of debt, net of tax
of $27,852 (50,082)
Loss on discontinued ops, net of tax of $2,187 2,625
Impairment of goodwill and other assets 388,396
Inventory Charge 14,500
--------
280,537
Tax benefit from continuing operations (49,342)
Net loss excluding special gains and charges and
excluding tax benefit on loss from continuing
operations (53,126)
Weighted Average Number of Common Shares 192,248
Net loss per common share $ (1.48)
Net loss per common share excluding special gains
and charges and excluding tax benefit on loss
from continuing operations $ (0.28)
Acterna
Corporation
Pro Forma Sales for Continuing Operations by
Product Area
(Unaudited)
Dollars in
Millions
Three Months Ended Six Months Ended
September September September September
30 30 % 30 30 %
2002 2001 Change 2002 2001 Change
--------------------------------------------------
Optical Transport $37.5 $126.2 -70.3% $86.3 $257.8 -66.5%
Cable Networks 19.5 19.8 -1.2% 39.9 44.7 -10.7%
Access Networks 21.2 26.8 -21.0% 38.3 68.9 -44.4%
Data/IP, Wireless, and
Other 47.2 71.1 -33.5% 97.1 149.1 -34.9%
Communications
Networks
---------------------------------------------------
Total Communications
Test 125.4 243.9 -48.6% 261.6 520.5 -49.7%
da Vinci 5.8 7.2 -19.2% 11.8 15.2 -22.3%
Itronix 32.7 33.9 -3.5% 60.9 70.4 -13.6%
---------------------------------------------------
Total Acterna
Corporation $163.9 $285.0 -42.5% $334.3 $606.1 -44.8%
===================================================
Note: Excludes the results of ICS Advent which was sold in October
2001, and Airshow which was sold in August 2002.
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