Aeroflex Incorporated Reports First Quarter Fiscal 2005 Operating Results; Sales Increased 43% from Prior Year to $109.2 Million; Pro Forma Income from Continuing Operations of $7.7 Million or $.10 Per Diluted Share.PLAINVIEW Plainview. 1 Uninc. city (1990 pop. 26,207), Nassau co., SE N.Y., on Long Island. It is chiefly residential. 2 City (1990 pop. 21,700), seat of Hale co., NW Tex., on the Llano Estacado; inc. 1907. , N.Y. -- GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Income 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 $6.4 Million or $.08 Per Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. Share Aeroflex Incorporated (Nasdaq:ARXX), a leading designer, developer and manufacturer of automated testing (testing) automated testing - Software testing assisted with software tools that require no operator input, analysis, or evaluation. solutions and microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. for the aerospace, defense and broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). communications markets, today announced operating results for its first quarter ended September September: see month. 30, 2004. 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 from continuing operations for the first quarter ended September 30, 2004 were $109.2 million, compared with $76.1 million for the same period of last year, representing an increase of 43%. The Company reported income from continuing operations for the first quarter ended September 30, 2004 of $6.4 million, or $.08 per diluted share, versus income from continuing operations of $962,000, or $.02 per diluted share, in the same period of last year. 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, for the quarter ended September 30, 2004, after tax income from continuing operations was $7.7 million, or $.10 per diluted share, excluding a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge of $2.1 million for amortization of acquired intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. . On a pro forma basis, for the quarter ended September 30, 2003, after tax income from continuing operations was $3.8 million, or $.06 per diluted share, excluding pre-tax charges of: --$3.1 million for a write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of in-process research and development related to the Company's acquisitions and --$1.3 million for amortization of acquired intangibles. The pro forma results are a supplement to financial statements based on GAAP. The Company uses pro forma information to evaluate its operating performance and believes this presentation provides investors with additional insight into its underlying operating results. A full reconciliation between the pro forma and GAAP results from continuing operations is included in the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. financial data. The highlights of the company's year-over-year financial performance from continuing operations for the first quarter of fiscal 2005 are as follows: --Net sales increased 43% to a first quarter record $109.2 million from $76.1 million. If our acquisitions of RIWS RIWS Racal Instruments Wireless Solutions (now Aeroflex; UK) , MCE See Media Center Edition. and Celerity ce·ler·i·ty n. Swiftness of action or motion; speed. See Synonyms at haste. [French célérité, from Old French, from Latin celerit were completed as of the beginning of last year's first quarter, the year-over-year sales increase would have been 23%. --Gross profit margins were a first quarter record 47.0% compared to 44.4% last year. --Pro forma forma, adj/n minor elements between the members of a botanical species. operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: reached 11.0%, compared to 7.9% last year. --The Company completed the sale of its thin film manufacturing subsidiary in September, 2004 for $8.8 million and utilized most of the proceeds to pay off certain equipment lease obligations. "As has been widely reported, the economic recovery, which started last year, has hit a soft patch A quick fix to machine language currently in memory that only lasts for the current session. which has affected our first quarter sales growth and is expected to impact our second quarter," said Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. Gorin Gorin is an air base in Amur Oblast, Russia located 75 km northwest of Komsomolsk-na-Amure. It contains a 1 km long remote tarmac on the north side. A noteworthy major, but remote airfield. It may have been intended for dispersion of intermediate-range bombers during a Sino-Soviet conflict. , Vice Chairman and CFO See Chief Financial Officer. . "First quarter sales fell $4 to $5 million short of our expectations principally due to the shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. attributed to shipments of our FS1000 frequency synthesizer A frequency synthesizer is an electronic system for generating any of a range of frequencies from a single fixed timebase or oscillator. They are found in many modern devices, including radio receivers, mobile telephones, radiotelephones, walkie-talkies, CB radios, satellite to our semiconductor test customer. However, unlike 2001, when it took our customer several years to work through its inventory of our product, we believe that their current inventory levels are closely aligned with their expected shipments and, therefore, the sales impact will be short term. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the sales shortfall, we were able to exceed our targeted gross and operating margins. "Based upon inputs from certain key customers, we expect to see a stronger second half of our fiscal year." Second Quarter Fiscal 2005 Business Outlook Our estimate of operating results for the December December: see month. 2004 quarter is as follows: --Net sales are expected to be in the range of $109 to $110 million. --Gross profit margins are expected to be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 47% of sales. --S,G&A costs are expected to be approximately 22% to 23% of sales. --R&D costs are anticipated to be approximately 13% to 14% of sales. --Amortization of acquired intangibles is expected to be approximately $.02 per diluted share. --Using a share count of 76.5 million shares and an expected income tax rate of 37%, we anticipate pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. from continuing operations per diluted share of $.10. Pro forma earnings exclude amortization of acquired intangibles. GAAP earnings per diluted share are anticipated to be $.08. Our conference call discussing first quarter results is scheduled for 9:00 a.m. (New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of time) on November November: see month. 9, 2004 and can be accessed by dialing 1-800-299-0148 in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and by dialing 617-801-9711 outside of the United States. The participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. passcode is 94884141. There will be a replay of the conference call starting one hour after the meeting's conclusion. This replay will be available for seven days. The replay can be accessed by dialing 1-888-286-8010 within the United States and by dialing 617-801-6888 outside of the United States. The access code for both telephone numbers is 42647326. This call is being webcast by CCBN CCBN Central Coast Bancorp CCBN Charles County Business Network and can be accessed at Aeroflex's website at www.aeroflex.com. This webcast will be archived on that site for one year. In conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with this conference call, the Company has also posted on its website certain financial information on its first quarter results. About Aeroflex Aeroflex Incorporated is a global provider of high technology solutions to the aerospace, defense and broadband communications markets. The Company's diverse technologies allow it to design, develop, manufacture and market a broad range of test, measurement and microelectronic The miniaturization of electronic circuits. See chip. products. The Company's common stock trades on the Nasdaq National Market System under the symbol ARXX and is included in the S&P SmallCap 600 index. Additional information concerning Aeroflex Incorporated can be found on the Company's Web site: www.aeroflex.com. All statements other than statements of historical fact included in this press release regarding Aeroflex's financial position, business outlook, business strategy and plans and objectives of its management for future operations are 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. . 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, competitive factors and pricing pressures, the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of the shock and vibration control device manufacturing business, changes in legal and regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. , technological change or difficulties, product development risks, commercialization difficulties and general economic conditions. Such statements reflect our current views with respect to the future and are subject to these and other risks, uncertainties and assumptions relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Aeroflex's financial condition, results of operations, growth strategy and liquidity. Aeroflex does not undertake any obligation to update such forward-looking statements.
AEROFLEX INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
For the Quarter Ended (Unaudited)
----------------------------------------
9/30/04 9/30/04 9/30/03 9/30/03
--------- --------- --------- ----------
(GAAP) (Pro (GAAP) (Pro
forma) forma)
Net sales $109,183 $109,183 $ 76,093 $ 76,093
Cost of sales 57,851 57,851 42,301 42,301
--------- --------- --------- ----------
Gross profit 51,332 51,332 33,792 33,792
--------- --------- --------- ----------
Selling, general and
administrative
costs 24,767 24,767 17,912 17,912
Research and development
costs 14,544 14,544 9,865 9,865
Amortization of acquired
intangibles 2,060 - 1,340 -
Acquired in-process
research and
development costs - - 3,120 -
--------- --------- --------- ----------
Total operating costs 41,371 39,311 32,237 27,777
--------- --------- --------- ----------
Operating income 9,961 12,021 1,555 6,015
--------- --------- --------- ----------
Other expense (income)
Interest expense 260 260 320 320
Other expense (income) (424) (424) (245) (245)
--------- --------- --------- ----------
Total other expense
(income) (164) (164) 75 75
--------- --------- --------- ----------
Income from continuing
operations
before income taxes 10,125 12,185 1,480 5,940
Provision for income taxes 3,725 4,483 518 2,124
--------- --------- --------- ----------
Income from continuing
operations 6,400 7,702 962 3,816
--------- --------- --------- ----------
Discontinued operations
Income (loss) from
discontinued
operations, net of tax
provision (benefit) of
$204 and $(298) 350 350 (568) (568)
Loss on disposal of
operations, net of
tax benefit of $0 and $0 (1,133) (1,133) - -
--------- --------- --------- ----------
Loss from discontinued
operations,
net of tax (783) (783) (568) (568)
--------- --------- --------- ----------
Net income $ 5,617 $ 6,919 $ 394 $ 3,248
========= ========= ========= ==========
Income per common share:
Basic
Continuing operations $ .09 $ .10 $ .02 $ .06
Discontinued operations (.01) (.01) (.01) (.01)
--------- --------- --------- ----------
Net income $ .08 $ .09 $ .01 $ .05
========= ========= ========= ==========
Diluted
Continuing operations $ .08 $ .10 $ .02 $ .06
Discontinued operations (.01) (.01) (.01) (.01)
--------- --------- --------- ----------
Net income $ .07 $ .09 $ .01 $ .05
========= ========= ========= ==========
Weighted average number of
shares
outstanding - Basic 74,446 74,446 61,959 61,959
========= ========= ========= ==========
- Diluted 75,988 75,988 63,197 63,197
========= ========= ========= ==========
AEROFLEX INCORPORATED
AND SUBSIDIARIES
RECONCILIATION OF REPORTED GAAP RESULTS TO PRO FORMA
INCOME FROM CONTINUING OPERATIONS (Unaudited)
(In thousands, except per share data)
For the Quarter Ended
---------------------
9/30/04 9/30/03
--------- ---------
GAAP income from
continuing operations $ 6,400 $ 962
Pro forma adjustments:
Amortization of acquired
intangible assets 2,060 1,340
Acquired in-process R&D - 3,120
Income tax benefit (758) (1,606)
--------- ---------
Pro forma income from
continuing operations $ 7,702 $ 3,816
========= =========
Income per common share:
Basic
GAAP income from
continuing operations after tax $ .09 $ .02
Pro forma adjustments, net of tax .01 .04
--------- ---------
Pro forma income from
continuing operations after tax $ .10 $ .06
========= =========
Diluted
GAAP income from
continuing operations after tax $ .08 $ .02
Pro forma adjustments, net of tax .02 .04
--------- ---------
Pro forma income from
continuing operations after tax $ .10 $ .06
========= =========
Weighted average number of shares
outstanding - Basic 74,446 61,959
========= =========
- Diluted 75,988 63,197
========= =========
AEROFLEX INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, June 30,
2004 2004
------------- ---------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $108,890 $ 98,502
Accounts receivable, less allowance for
doubtful accounts 91,741 97,031
Inventories 97,884 94,617
Deferred income taxes 16,638 16,774
Assets of discontinued operations 6,065 11,910
Prepaid expenses and other current assets 10,976 8,646
--------- ---------
Total current assets 332,194 327,480
Property, plant and equipment, net 75,080 74,372
Assets of discontinued operations 3,196 9,717
Other assets 14,202 10,932
Intangible assets with definite lives, net 39,666 40,602
Goodwill 84,666 88,288
--------- ---------
Total assets $549,004 $551,391
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 3,396 $ 4,770
Accounts payable 25,380 25,293
Advance payments by customers 11,202 11,725
Income taxes payable 4,677 1,088
Liabilities of discontinued operations 1,837 4,573
Accrued payroll expenses 13,858 13,966
Accrued expenses and other current
liabilities 23,108 28,200
--------- ---------
Total current liabilities 83,458 89,615
Long-term debt 4,783 5,505
Deferred income taxes 8,799 9,445
Liabilities of discontinued operations - 3,613
Other long-term liabilities 16,637 16,116
--------- ---------
Total liabilities 113,677 124,294
--------- ---------
Stockholders' equity:
Preferred Stock, par value $.10 per share;
authorized 1,000,000 shares:
Series A Junior Participating Preferred
Stock, par value $.10 per share,
authorized 110,000; none issued - -
Common Stock, par value $.10 per share;
authorized 110,000,000 shares; issued
74,456,000 and 74,282,000 shares 7,446 7,428
Additional paid-in capital 371,635 370,491
Accumulated other comprehensive income 12,838 11,387
Retained earnings 43,422 37,805
--------- ---------
435,341 427,111
Less: Treasury stock, at cost (4,000
shares) 14 14
--------- ---------
Total stockholders' equity 435,327 427,097
--------- ---------
Total liabilities and stockholders'
equity $549,004 $551,391
========= =========
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