Symmetricom, Inc. (NASDAQ:SYMM), a major supplier of precise
time and frequency technologies, today reported financial results
for its second quarter of fiscal 2010 ended December 27, 2009.
Net revenue from continuing operations for the second quarter of
fiscal 2010 was $56.9 million, up 19% compared to the $47.6 million
reported for the second quarter of fiscal 2009. Symmetricom
reported net earnings from continuing operations of $1.9 million,
or $0.04 per share, for the second quarter of fiscal 2010, compared
to net earnings of $1.2 million, or $0.02 per share, in the second
quarter of fiscal 2009.
Non-GAAP net earnings from continuing operations in the second
quarter of fiscal 2010 was $4.3 million, or $0.10 per share,
compared with $2.8 million, or $0.06 per share, in the same period
of the prior year.
In the second quarter of fiscal 2010, Symmetricom committed to a
plan to sell its video Quality of Experience business, and is
currently engaged in negotiations toward an expected sale
transaction. Accordingly, the assets and related liabilities for
this business have been classified as held for sale and the results
of operations have been reflected as a discontinued operation.
Cash, cash equivalents and short-term investments totaled $120.8
million as of December 27, 2009, an increase of $1.7 million from
the $119.1 million reported as of September 27, 2009. Net cash
provided by operating activities in the second quarter was $5.7
million and property, plant and equipment purchases were
approximately $3.1 million, resulting in free cash flow of $2.6
million.
“I am pleased with our results for the second quarter as our
revenues, earnings and cash flow were all up from the prior year
period,” said Dave Côté, Chief Executive Officer of Symmetricom.
“We benefited from business strength across a wide spectrum of
products, markets, and geographies led by improved carrier spending
on next-generation networks. We continue to see acceleration of
Ethernet backhaul deployments using our new IEEE 1588 precise
packet timing products and our government business remained robust.
Based on solid first half results and the strength we’ve seen in
our services and OEM businesses, we are raising our full year
revenue guidance to a range of $220 million to $235 million from
the former range of $210 million to $230 million.”
Business Highlights
Revenue in our Communications business in the second quarter was
$35.2 million compared to $26.7 million reported in the same period
of last year. The 32% year-over-year growth was driven by increases
in sales of sync equipment, continuing deployment of our WiMAX
solutions, and growth in installation services revenues.
Revenue in our Timing, Test & Measurement business in the
second quarter was $21.6 million compared to $21.0 million reported
in the same period of last year. Revenues in TT&M improved due
to strong sales of cesium atomic clocks for government
applications.
Third Quarter and Fiscal 2010 Guidance
Symmetricom’s guidance for fiscal 2010 is as follows:
- Net revenue is expected to be in
the range of $220 million to $235 million
- GAAP earnings per share is
expected to be in the range of $0.13 to $0.22
- Non-GAAP earnings per share is
expected to be in the range of $0.38 to $0.45
For the third quarter of fiscal 2010, Symmetricom guidance is as
follows:
- Net revenue is expected to be in
the range of $55 million to $62 million
- GAAP earnings per share is
expected to be in the range of $0.02 to $0.08
- Non-GAAP earnings per share is
expected to be in the range of $0.09 to $0.14
A reconciliation of GAAP and non-GAAP guidance is provided at
the end of this press release.
Investor Conference
Call
As previously announced, management will hold a conference call
to discuss these results today, at 1:30 p.m. Pacific Time.
Investors are invited to join the conference call by dialing
+1-415-228-5002 and referencing “Symmetricom.” A live webcast will
also be available on the investor relations section of the
company’s website at www.symmetricom.com. An audio replay will be
available for one week and can be accessed by dialing
+1-203-369-2014 and referencing the passcode 5220.
About Symmetricom,
Inc.
As a major supplier of precise time and frequency products and
services, Symmetricom provides “Perfect Timing” to customers around
the world. Since 1985, the Company’s solutions have helped define
the world’s time and frequency standards, delivering precision,
reliability and efficiency to wireline and wireless networks,
instrumentation and testing applications and network time
management. Deployed in more than 90 countries, the Company’s
synchronization solutions include primary reference sources,
building integrated timing supplies (BITS), GPS timing receivers,
time and frequency distribution systems, network time servers and
ruggedized oscillators. Symmetricom also incorporates technologies
including Universal Timing Interface (UTI), Network Time Protocol
(NTP), IEEE 1588 (Precision Time Protocol), and others supporting
the world’s migration to Next Generation Networks (NGN).
Symmetricom is based in San Jose, California, with offices
worldwide. For more information, visit
http://www.symmetricom.com.
Non-GAAP
Information
Certain non-GAAP financial information is included in this press
release. In the reconciliation of GAAP to Non-GAAP results,
Symmetricom excludes certain items related to non-cash equity-based
compensation, amortization of acquired intangibles, restructuring
charges, impairment of goodwill and other intangibles, gains and
losses on investments and repayment of convertible notes, non-cash
interest expense charges, and other unusual or infrequent items.
The income tax effect after these Non-GAAP adjustments is
determined based upon Symmetricom’s estimate of its annual Non-GAAP
effective tax rate excluding these Non-GAAP adjustments.
Symmetricom believes that excluding such items provides investors,
analysts and management with a representation of the Company’s core
operating performance and with information useful in assessing
Symmetricom’s prospects for the future and underlying trends in
operating performance. Management uses such Non-GAAP information to
evaluate financial results and to establish operational goals.
Non-GAAP information should not be considered superior to or as a
substitute for data prepared in accordance with GAAP. A
reconciliation of the non-GAAP results to the GAAP results is
provided in the financial schedules portion of this press
release.
Free cash flow is defined as net cash provided by operating
activities minus purchases of property, plant and equipment.
Symmetricom believes this metric provides useful information to our
investors, analysts, and management about the level of cash
generated by normal business operations, including the use of cash
for the purchase of property, plant and equipment. Management also
views it as a measure of cash available to pay debt and return cash
to stockholders. Free cash flow is not a GAAP financial measure and
should not be considered superior to or a substitute for operating
cash flow or other cash flow data prepared in accordance with
GAAP.
Safe Harbor
This press release contains forward-looking information within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and is subject to the safe harbor created by those
sections. These forward-looking statements include statements
concerning second quarter and fiscal 2010 guidance and our
prospects for longer term growth expectations of operating
performance in fiscal 2010, the expected sale of the QoE business,
as well as the information regarding the usefulness of the non-GAAP
financial information. The statements in this press release are
made as of the date of this press release, even if subsequently
made available by Symmetricom on its website or otherwise.
Symmetricom's actual results could differ materially from those
projected or suggested in these forward-looking statements. Factors
that could cause future actual results to differ materially from
the results projected in or suggested by such forward-looking
statements include: reduced rates of demand for telecommunication
products, cable products or test and measurement products, our
customers' ability and need to upgrade existing equipment, our
ability to maintain or reduce manufacturing and operating costs,
timing of orders, cancellation or delay of customer orders, loss of
customers, customer acceptance of new products, recessionary
pressures, risks associated with negotiating and consummating a
divestiture, geopolitical risks such as terrorist acts and the risk
factors listed from time to time in Symmetricom's reports filed
with the Securities and Exchange Commission, including the annual
report on Form 10-K for the fiscal year ended June 28, 2009 and
subsequent Form 10-Q’s and 8-K's.
SYMM-F
SYMMETRICOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share amounts) (unaudited) Three months ended Six
months ended December 27, September 27, December 28, December 27,
December 28, 2009 2009 2008 (1) 2009 2008 (1) Net revenue $
56,862 $ 52,268 $ 47,646 $ 109,130 $ 103,318 Cost of sales: Cost of
products and services 30,884 29,537 24,835 60,421 51,321
Amortization of purchased technology 368 368 369 736 737
Restructuring charges 931 862 -
1,793 - Total cost of sales
32,183 30,767 25,204
62,950 52,058 Gross profit 24,679
21,501 22,442 46,180 51,260 Gross margin 43.4 % 41.1 % 47.1 % 42.3
% 49.6 % Operating expenses: Research and development 6,113 5,714
5,830 11,827 11,897 Selling, general and administrative 14,259
13,539 12,836 27,798 28,094 Amortization of intangible assets 62 95
103 157 206 Restructuring charges 535 476
252 1,011 837
Total operating expenses 20,969 19,824
19,021 40,793 41,034
Operating income 3,710 1,677 3,421 5,387 10,226 Loss on repayment
of convertible notes, net - - - - (5,623 ) Loss on short-term
investments, net - - (895 ) - (1,368 ) Interest income 505 461 491
966 1,259 Interest expense (1,270 ) (1,274 )
(1,205 ) (2,544 ) (2,859 )
Earnings from continuing
operations before income taxes
2,945 864 1,812 3,809 1,635 Income tax provision 1,055
315 658 1,370
699 Net earnings from continuing operations 1,890 549
1,154 2,439 936 Loss from discontinued operations, net of tax
(391 ) (375 ) (112 ) (766 )
(1,070 ) Net income (loss) $ 1,499 $ 174 $ 1,042
$ 1,673 $ (134 ) Earnings (loss) per share -
basic: Income from continuing operations $ 0.04 $ 0.01 $ 0.02 $
0.06 $ 0.02 Loss from discontinued operations (0.01 )
(0.01 ) - (0.02 ) (0.02 ) Net earnings
$ 0.03 $ - $ 0.02 $ 0.04 $ -
Weighted average shares outstanding - basic
43,313
43,177
43,684
43,245
43,824
Earnings (loss) per share - diluted: Income from
continuing operations $ 0.04 $ 0.01 $ 0.02 $ 0.06 $ 0.02 Loss from
discontinued operations (0.01 ) (0.01 ) -
(0.02 ) (0.02 ) Net earnings $ 0.03 $ -
$ 0.02 $ 0.04 $ - Weighted
average shares outstanding - diluted
43,708
43,815 44,139
43,771
43,824
(1) Adjusted for the retrospective
adoption of recently issued authoritative guidance on accounting
forour contingent convertible subordinated notes
SYMMETRICOM, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands) (unaudited)
December 27, June 28, 2009 2009 (1) ASSETS Current assets: Cash and
cash equivalents $ 42,076 $ 72,064 Short-term investments 78,718
40,737 Accounts receivable, net 37,305 42,389 Inventories, net
38,242 38,566 Prepaids and other current assets 15,731 16,143
Assets held for sale 613 - Total
current assets 212,685 209,899 Property, plant and equipment, net
22,707 20,749 Intangible assets, net 4,414 5,308 Deferred taxes and
other assets 35,988 36,431 Total assets
$ 275,794 $ 272,387 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 7,521
$ 8,116 Accrued compensation 15,927 19,093 Accrued warranty 3,648
3,737 Other accrued liabilities 12,482 9,810 Liabilities held for
sale 439 - Total current liabilities
40,017 40,756 Long-term obligations 53,169 51,769 Deferred income
taxes 334 334 Total liabilities 93,520
92,859 Stockholders' equity: Common stock 201,479 200,152
Accumulated other comprehensive income (loss) (110 ) 144
Accumulated deficit (19,095 ) (20,768 ) Total
stockholders' equity 182,274 179,528
Total liabilities and stockholders' equity $ 275,794 $
272,387
(1) Adjusted for the retrospective
adoption of recently issued authoritative guidance on accounting
forour contingent convertible subordinated notes
SYMMETRICOM, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In thousands, except
per share amounts) (unaudited) Three months ended Six months
ended December 27, September 27, December 28, December 27, December
28, 2009 2009 2008 (1) 2009 2008 (1) Reconciliation from GAAP to
Non-GAAP GAAP net earnings from continuing operations $ 1,890 $ 549
$ 1,154 $ 2,439 $ 936 Add Non-GAAP adjustments: Equity-based
compensation expense: Cost of products and services 262 210 90 472
295 Research and development 228 200 125 428 454 Selling, general
and administrative 700 194 199
894 671 Total equity-based
compensation expense 1,190 604 414 1,794 1,420 Amortization
of intangible assets: Cost of products and services 368 368 369 736
737 Operating expenses 62 95 103
157 206 Total amortization of
intangible assets 430 463 472 893 943 Restructuring charges
1,466 1,338 252 2,804 837 Loss on repayment of convertible notes,
net - - - - 5,623 Loss on short-term investments, net - - 895 -
1,368 Non-cash interest expense on convertible notes 765 768 686
1,533 1,608 Income tax effect of Non-GAAP adjustments (1,413
) (1,117 ) (1,033 ) (2,530 ) (4,552 )
Non-GAAP net earnings from continuing operations $ 4,328 $
2,605 $ 2,840 $ 6,933 $ 8,183
Earnings from continuing operations per share-diluted: GAAP income
from continuing operations $ 0.04 $ 0.01 $ 0.02
$ 0.06 $ 0.02 Non-GAAP income from
continuing operations $ 0.10 $ 0.06 $ 0.06 $
0.16 $ 0.18 Shares used in diluted shares
calculation 43,708 43,815 44,139
43,771
44,379
(1) Adjusted for the retrospective
adoption of recently issued authoritative guidance on accounting
forour contingent convertible subordinated notes
SYMMETRICOM, INC. RECONCILIATION OF GAAP TO NON-GAAP
RESULTS (In thousands, except per share amounts) (unaudited)
Three
months ended Six months ended December 27, September 27, December
28, December 27, December 28, 2009 2009 2008 (1) 2009 2008
Reconciliation from GAAP to Non-GAAP Gross Margin: GAAP Revenue $
56,862 $ 52,268 $ 47,646 $ 109,130 $ 103,318 GAAP Gross
profit $ 24,679 $ 21,501 $ 22,442 $ 46,180 $ 51,260 GAAP Gross
margin 43.4 % 41.1 % 47.1 % 42.3 % 49.6 % Add Non-GAAP
adjustments: Equity-based compensation expense 262 210 90 472 295
Amortization of intangible assets 368 368 369 736 737 Restructuring
charges 931 862 -
1,793 - Non-GAAP Gross profit $ 26,240
$ 22,941 $ 22,901 $ 49,181 $ 52,292
Non-GAAP Gross margin 46.1 % 43.9 % 48.1 % 45.1 % 50.6 %
Reconciliation from GAAP to Non-GAAP Operating
Expense: GAAP Revenue $ 56,862 $ 52,268 $ 47,646 $ 109,130 $
103,318 GAAP Operating expenses $ 20,969 $ 19,824 $ 19,021 $
40,793 $ 41,034 Operating expense % to revenue 36.9 % 37.9 % 39.9 %
37.4 % 39.7 % Add Non-GAAP adjustments: Equity-based
compensation expense 928 394 324 1,322 1,125 Amortization of
intangible assets 62 95 103 157 206 Restructuring charges
535 476 252 1,011
837 Non-GAAP operating expenses $ 19,444
$ 18,859 $ 18,342 $ 38,303 $ 38,866
Non-GAAP operating expenses % to revenue 34.2 % 36.1 % 38.5
% 35.1 % 37.6 %
(1) Adjusted for the retrospective
adoption of recently issued authoritative guidance on accounting
forour contingent convertible subordinated notes
SYMMETRICOM, INC. RECONCILIATION OF FORWARD-LOOKING
GUIDANCE FOR NON-GAAP FINANCIAL MEASURES TO PROJECTED GAAP REVENUE
AND EPS (In thousands, except per share amounts) (Unaudited)
Three Months Ending March 28, 2010 Earnings Per Share
Revenue from Continuing Operations From To From To
GAAP
Guidance $ 55,000 $ 62,000 $ 0.02 $ 0.08
Estimated
Non-GAAP Adjustments Equity-based compensation expense 0.03
0.02 Amortization of intangible assets 0.01 0.01 Restructuring
charges 0.04 0.04 Non-cash interest expense on convertible notes
0.02 0.02 Income tax effect of non-GAAP adjustments
(0.03 ) (0.03 ) Total
Non-GAAP Adjustments 0.07 0.06
Non-GAAP Guidance $ 55,000
$ 62,000 $ 0.09 $ 0.14
Twelve Months Ending June 27, 2010 Earnings
Per Share Revenue from Continuing Operations From To From To
GAAP Guidance $ 220,000 $ 235,000 $ 0.13 $ 0.22
Estimated Non-GAAP Adjustments Equity-based compensation
expense 0.11 0.10 Amortization of intangible assets 0.04 0.04
Restructuring charges 0.16 0.15 Non-cash interest expense on
convertible notes 0.07 0.07 Income tax effect of non-GAAP
adjustments (0.13 )
(0.13 ) Total Non-GAAP Adjustments 0.25 0.23
Non-GAAP Guidance $ 220,000
$ 235,000 $ 0.38 $ 0.45
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