Continued Strength in Revenue, Profitability, and Customer Demand
SAN JOSE, Calif., Aug. 2 /PRNewswire-FirstCall/ -- Stratex
Networks, Inc. (NASDAQ:STXN), a leading provider of wireless
transmission solutions, today reported financial results for the
first quarter of fiscal 2007, ended June 30, 2006. Revenues in the
first quarter of fiscal 2007 were $66.2 million, compared with
$64.0 million in the prior quarter and $54.9 million in the year
ago period. Net income in the first quarter of fiscal 2007 was $1.8
million, resulting in earnings of $0.02 per diluted share. This
compares with earnings of $3.3 million or earnings of $0.03 per
diluted share in the prior quarter, and a loss of $(4.2) million,
or a loss of $(0.04) per share in the year ago period. The first
quarter of fiscal 2007 includes the impact of Financial Accounting
Standard 123 ( R ). On a non-GAAP basis, Stratex Networks reported
net income of $4.8 million in the first fiscal quarter, or earnings
of $0.05 per diluted share. This compares with non-GAAP net income
of $3.4 million in the fourth fiscal quarter, or earnings of $0.03
per diluted share and a loss of $(3.9) million, or a loss of
$(0.04) per share in the year ago period. Non-GAAP net income for
the first fiscal quarter of 2007 excludes total non-cash stock
compensation expense of $3.0 million related to the adoption of
Financial Accounting Standard 123 ( R ) and the company's
restricted stock plan. In the prior and year ago quarter non-cash
compensation expense was $60,000 and $228,000, respectively, and
was related to the Company's restricted stock plan. A full
reconciliation of GAAP net income (loss) to non-GAAP net income
(loss) is provided in the accompanying financial tables. "We are
pleased with our financial results for the first quarter of the new
fiscal year, as we exceeded both our revenue and earnings guidance
originally issued in May, and posted our third consecutive quarter
of profitability. The Eclipse product platform continues to benefit
from broad acceptance worldwide due to its highly competitive,
cost-effective solution for voice- and data-centric applications,"
said Tom Waechter, president and chief executive officer of Stratex
Networks, Inc. "We are also pleased to report that we are already
realizing improvements in our supply chain that position us to
better serve our customers and partners, and to maintain our
revenue growth. We are seeing strong demand in our key markets for
a wide variety of Eclipse products, as we experienced a positive
book to bill in the first fiscal quarter of 2007." Guidance The
following forecasts are based on current expectations. These
statements are forward-looking, and actual results may differ
materially. Please see the Safe Harbor Statement in this release
for a description of certain important risk factors that could
cause actual results to differ, and refer to the company's reports
on file with the Securities and Exchange Commission (SEC) for a
more complete description of the risks. Second Quarter Fiscal Year
2007 (ending September 30, 2006) -- Revenue is expected to range
between $63 million and $66 million, -- Earnings per share are
expected to be in the range of $0.04 to $0.06, excluding non-cash
stock-based expense of approximately $2.9 million. Use of Non-GAAP
Financial Information To supplement the company's consolidated
financial statements presented in accordance with generally
accepted accounting principles "GAAP," Stratex Networks, Inc. uses
non-GAAP measures of certain components of financial performance,
including operating income (loss), net income (loss) and per share
data, which are adjusted from results based on GAAP to exclude
certain expenses, gains and losses. These non-GAAP measures are
provided to enhance investors' overall understanding of the
company's current financial performance and the company's prospects
for the future. Specifically, the company believes the non-GAAP
results provide useful information to both management and investors
by excluding certain expenses that may not be indicative of its
core operating results. These measures should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP results.
These non-GAAP measures included in this press release have been
reconciled to the nearest GAAP measure. Conference Call Stratex
Networks' management will hold a conference call to provide greater
detail on the company's financial results for the quarter and its
outlook today, at 5:00 p.m. Eastern Time. Those wishing to join
should dial 303-205-0066 at approximately 4:50 p.m. A replay of the
call will be available starting one hour after the completion of
the call until Aug. 9, 2006. To access the replay, dial
303-590-3000 (pass code: 11065837 #). A live and an archived
webcast of the conference call will also be available via the
company's Web site at http://www.stratexnet.com/. Upcoming
Conferences Stratex Networks' management will be presenting at the
CIBC Wireless Technology One-on-One Conference in New York on
August 3 and at the Merriman Curhan Ford & Co. 3rd Annual
Investor Summit 2006 in San Francisco on Sept. 20. Those wishing to
listen to live and/or archived webcasts of available management
presentations may do so at http://www.stratexnet.com/. About
Stratex Networks With headquarters in San Jose, California, Stratex
Networks, Inc. is one of the world's leading providers of
high-speed wireless transmission solutions. Since it was founded in
1984, Stratex Networks has achieved international recognition for
quality, innovation, and technical superiority in delivering data,
voice, and video communication systems, including comprehensive
service and support. Stratex Networks, with its broad product
offering and worldwide sales and support organization, is
strategically positioned to serve its customers' needs in wireless
high-capacity transmission technology. Additional information is
available at http://www.stratexnet.com/ . Safe Harbor Statement
This press release contains statements that qualify as
"forward-looking statements" under the Private Securities
Litigation Reform Act of 1995, including statements relating to the
Company's expectations regarding the continued acceptance of, and
demand for, the Eclipse wireless transmission platform, continued
supply chain improvements and resulting effect on revenue growth;
forecasted future revenue and future earnings. These
forward-looking statements are based on current expectations and
the Company assumes no obligation to update this information. The
Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of
significant risks and uncertainties including: -- Suppliers
inability to perform and timely deliver as a result of their
financial condition, component shortages or other supply chain
constraints; -- Continued market expansion through strategic
alliances; -- Continued timely rollout of Eclipse functionality and
features; -- Unexpected delays in the schedule for shipments of
Eclipse and new generations of the Eclipse platform; -- Failure to
realize expected cost improvement throughout the Company's supply
chain; and -- Order cancellations or postponements in product
deliveries resulting in delayed revenue recognition. --
Intellectual property litigation could be costly to defend and
resolve, and could prevent us from using or selling the challenged
technology In addition, orders and backlog are not necessarily
indicative of revenue in any future period. Because the Company's
business is heavily concentrated in foreign markets, there is a
significant risk of adverse currency fluctuations and unforeseen
governmental action including but not limited to the denial of
export and/or import licenses. For a further discussion of these
and other factors that impact the Company's business in general,
see the information provided under the heading "Factors That May
Affect Future Financial Results" in the Company's Annual Report on
Form 10-K for the period ended March 31, 2006 and subsequent
quarterly filings, on file with the Securities and Exchange
Commission. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
(unaudited) June 30, March 31, 2006 2006 Assets Cash and short-term
investments $61,274 $57,686 Accounts receivable, net 40,152 42,003
Inventories 46,496 43,867 Other current assets 12,327 12,620 Total
current assets 160,249 156,176 Property & equipment, net 23,299
24,049 Other assets 804 605 Total assets $184,352 $180,830
Liabilities and Stockholders' Equity Accounts payable $41,218
$38,725 Short-term debt 11,250 11,250 Other current 30,393 31,136
liabilities Total current liabilities 82,861 81,111 Long-term debt
19,479 22,291 Other long-term 13,919 15,085 liabilities Total
liabilities 116,259 118,487 Stockholders' equity 68,093 62,343
Total liabilities and stockholders' equity $184,352 $180,830
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands,
except per share amounts) (unaudited) Three Months Ended June 30,
2006 2005 Net sales $66,237 $54,872 Cost of sales 46,365 42,271
Gross profit 19,872 12,601 Operating expenses: Research and
development 4,584 3,701 Selling, general and administrative 12,975
11,994 Total operating expenses 17,559 15,695 Operating income
(loss) 2,313 (3,094) Other income (expense) (256) (795) Income
(loss) before income taxes 2,057 (3,889) Provision for income taxes
235 277 Net income (loss) $1,822 $(4,166) Net income (loss) per
common share: Basic $0.02 $(0.04) Diluted $0.02 $(0.04) Weighted
average shares outstanding Basic 97,168 94,942 Diluted 100,953
94,942 UNAUDITED NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share amounts) Three Months
Ended Three Months Ended June 30, 2006 June 30, 2005 GAAP GAAP (As
Adjust- Non- (As Adjust- Non- Reported) ments GAAP Reported) ments
GAAP Net sales $66,237 $66,237 $54,872 $54,872 Cost of sales 46,365
$(288) 46,077 42,271 $(54) 42,217 Gross profit 19,872 288 20,160
12,601 54 12,655 Operating expenses: Research and development 4,584
(694) 3,890 3,701 (21) 3,680 Selling, general and administrative
12,975 (1,978) 10,997 11,994 (153) 11,841 Total operating expenses
17,559 (2,672) 14,887 15,695 (174) 15,521 Operating income (loss)
2,313 2,960 5,273 (3,094) 228 (2,866) Other income (expense) (256)
(256) (795) (795) Income (loss) before income taxes 2,057 2,960
5,017 (3,889) 228 (3,661) Provision (benefit) for income taxes 235
235 277 277 Net income (loss) $1,822 $2,960 $4,782 $(4,166) $228
$(3,938) Net income (loss) per common share: Basic $0.02 $0.03
$0.05 $(0.04) $(0.04) Diluted $0.02 $0.03 $0.05 $(0.04) $(0.04)
Weighted average shares outstanding Basic 97,168 97,168 94,942
94,942 Diluted 100,953 100,953 94,942 94,942 The above non-GAAP
adjustments totaling $3.0 and $0.2 million for the three months
ended June 30, 2006 and June 30, 2005, respectively, reflect the
non-cash charges related to the company's stock-based compensation
plans. To supplement the company's consolidated financial
statements presented in accordance with generally accepted
accounting principles "GAAP," Stratex Networks, Inc. uses non-GAAP
measures of certain components of financial performance, including
operating income (loss), net income (loss) and per share data,
which are adjusted from results based on GAAP to exclude certain
expenses, gains and losses. These non-GAAP measures are provided to
enhance investors' overall understanding of the company's current
financial performance and the company's prospects for the future.
Specifically, the company believes the non-GAAP results provide
useful information to both management and investors by excluding
certain expenses, gains and losses that may not be indicative of
its core operating results. These measures should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP results.
These non- GAAP measures included in this press release have been
reconciled to the nearest GAAP measure. DATASOURCE: Stratex
Networks, Inc. CONTACT: Mary McGowan of Summit IR Group Inc.,
+1-408-404-5401, or , for Stratex Networks Web site:
http://www.stratexnet.com/
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