Anaren Reports 4th Quarter Results

SYRACUSE, N.Y., Aug. 28  /PRNewswire-FirstCall/ -- Anaren, Inc. (NASDAQ:ANEN) today reported record net sales for the fourth quarter ended June 30, 2007 of $35.9 million, up 23% from the fourth quarter of fiscal year 2006.

(Logo:  http://www.newscom.com/cgi-bin/prnh/20021022/NYTU197LOGO )

Net income for the fourth quarter of fiscal 2007 was $4.3 million, or $0.25 per diluted share, up 20% from $3.6 million, or $0.20 per diluted share for the fourth quarter of last year.  Net income for the quarter included $0.04 per diluted share in stock based compensation expense.  Excluding stock based compensation expense, net income for the fourth quarter of fiscal 2007 was $5.1 million, or $0.29 per diluted share compared to $4.3 million, or $0.24 per share for the fourth quarter of fiscal 2006.

The effective tax rate for the fourth quarter of fiscal 2007 was 24.6%, compared to 18.8% for the fourth quarter of fiscal 2006 as a result of the on- going phase out of the federal extraterritorial tax credit and the current increasing level of income.

Operating income for the fourth quarter of fiscal 2007 was $4.9 million, or 13.5% of net sales, up 30% from the fourth quarter of last year.  Operating income for the quarter included $881,000 of stock based compensation expense. Excluding stock based compensation expense, operating income for the fourth quarter of fiscal 2007 was $5.7 million, or 16.0% of net sales compared to $4.5 million, or 15.6% of net sales for the fourth quarter of fiscal 2006.

The Company incurred a lease charge in the fourth quarter in the amount of $542,000 related to the future lease cost in excess of the expected rental income generated from the Company's Frimley, U.K. facility.

Lawrence A. Sala, Anaren's President and CEO said, "The growth in net sales for the quarter was driven by the Wireless Group due to very strong demand for custom assembly products from a wireless infrastructure customer as well as continued relatively strong demand across our wireless infrastructure customer base.  Our Suzhou, China operation responded well to the significant surge in demand for custom wireless products that was not forecasted."  Mr. Sala added, "The Space & Defense Group also contributed to the growth in net sales for the quarter, ending the year with record net sales and new orders."

For the 2007 fiscal year ended June 30, 2007, net sales were a record $129.0 million, up 22% from fiscal 2006.  Operating income for fiscal 2007 was $17.0 million, or 13.2% of net sales, up 44% from last year.  Operating income for fiscal 2007 included $3.4 million in stock based compensation expense. Operating income before stock based compensation expense for fiscal 2007 was 15.8% of net sales compared to operating income before stock based compensation expense of 14.4% of net sales for fiscal 2006.  Net income for fiscal 2007 was $15.3 million, or $0.87 per diluted share, including $0.15 per diluted share in stock based compensation expense.  This compares to net income for fiscal 2006 of $11.1 million, or $0.63 per diluted share, which included $3.4 million, or $0.17 per diluted share in stock based compensation expense.

Balance Sheet

During the fourth quarter, the Company generated $13.9 million in cash from operations and used $13.6 million to repurchase 786,000 shares of its common stock.  Expenditures for capital additions in the fourth quarter were $5.4 million driven primarily by the building expansion of the Company's East Syracuse, New York manufacturing facility.  Funds required for stock repurchases and capital expenditures in excess of funds generated by operations came from maturities of the Company's investments.   Cash, cash equivalents and marketable debt securities at June 30, 2007 were $74.6 million.

Wireless Group

Wireless Group net sales for the quarter were $23.2 million, up 23.2% from the fourth quarter of fiscal 2006.  Demand for custom assembly products from a wireless infrastructure customer rose significantly and overall wireless demand remained relatively strong throughout the quarter.  Sales of consumer component products were $0.5 million for the quarter, down 58% from the fourth quarter of last year due to a significant decline in demand from our largest consumer component customer.  Our customer has previously announced that a product performance issue, unrelated to our components, has significantly reduced demand for their products that utilize our components.

Both consumer component and wireless infrastructure product development and design in activity remained robust.  During the quarter, design in activity continued on several ferrite component and custom assembly opportunities for wireless infrastructure applications and on WLAN and satellite television opportunities for consumer wireless applications.

Customers that generated greater than 10% of Wireless Group net sales for the quarter were Nokia, Richardson, and Huawei.

Space & Defense Group

Space & Defense Group net sales for the quarter were $12.7 million, up 23.4% from the fourth quarter of fiscal 2006.  For the 2007 fiscal year, Space & Defense Group net sales were a record $51.2 million, up 32% from fiscal 2006.  New orders for the quarter totaled $27.4 million and included the previously announced order for ferrite based shipborne radar subassemblies. This is the first large ferrite based assembly contract win for the Space & Defense Group, and the group is currently pursuing several new programs requiring ferrite based microwave assemblies.

Additional orders for the quarter included contracts for passive ranging and airborne jamming subsystems.  For the year, the Space & Defense book to bill ratio was 1.16 to 1.0 resulting in a record Space & Defense backlog at June 30, 2007 of $56.0 million.

Non-GAAP Measurements

Non-GAAP results reported in this release, which are a supplement to financial results based on GAAP, exclude charges for stock based compensation. The Company believes these non-GAAP financial measures provide useful information to both management and investors to help understand and compare business trends among reporting periods on a consistent basis.  Additionally, these non-GAAP financial measurements are one of the primary indicators management uses for planning and forecasting in future periods.  The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States.

Outlook

For the first quarter of fiscal 2008, we expect a decline in demand for wireless infrastructure products, an increase in demand for consumer component products and a decrease in sales for the Space & Defense segment as a result of the anticipated decline in sales of counter-Improvised Explosive Device related components.  As a result, we expect net sales to be in the range of $30.0 - $32.0 million for the first quarter of fiscal 2008.  With an anticipated tax rate of approximately 28-30%, an expected stock based compensation expense of approximately $0.04 per diluted share, and a less favorable overall product mix, we expect net earnings per diluted share to be in the range of $0.13-$0.16 for the first quarter.

Forward-Looking Statements

The statements contained in this news release which are not historical information are "forward-looking statements".   These, and other forward- looking statements, are subject to business and economic risks and uncertainties that could cause actual results to differ materially from those discussed.  The risks and uncertainties described below are not the only risks and uncertainties facing our Company.  Additional risks and uncertainties not presently known to us or that are currently deemed immaterial may also impair our business operations.  If any of the following risks actually occur, our business could be adversely affected, and the trading price of our common stock could decline, and you may lose all or part of your investment.

In September, 2007, the Company expects to file amended Quarterly Reports on Form 10-Q/A restating the Company's consolidated condensed financial statements for the periods ending December 31, 2006 and March 31, 2007, modifying related disclosures, and disclosing a material weakness in the Company's disclosure controls and procedures.  The Company cannot predict the reaction to the filing of these Amended Reports and if adverse, the market price of the Company's stock could decline.

Other known factors include, but are not limited to: the Company's ability to timely ramp up to meet some of our customers' increased demands; unanticipated delays in successfully completing customer orders within contractually required timeframes; unanticipated penalties resulting from failure to meet contractually imposed delivery schedules; increased pricing pressure from our customers; decreased capital expenditures by wireless service providers; the possibility that the Company may be unable to successfully execute its business strategies or achieve its operating objectives, generate revenue growth or achieve profitability expectations; successfully securing new design wins from our OEM customers, reliance on a limited number of key component suppliers, unpredictable difficulties or delays in the development of new products; order cancellations or extended postponements; the risks associated with any technological shifts away from the Company's technologies and core competencies; unanticipated impairments of assets including investment values and goodwill; diversion of defense spending away from the Company's products and or technologies due to on-going military operations; and litigation involving antitrust, intellectual property, environmental, product warranty, product liability, and other issues.  You are encouraged to review Anaren's 2006 Annual Report, Anaren's Form 10-K/A for the fiscal year ended June 30, 2006 and exhibits to those Reports filed with the Securities and Exchange Commission to learn more about the various risks and uncertainties facing Anaren's business and their potential impact on Anaren's revenue, earnings and stock price.  Unless required by law, Anaren disclaims any obligation to update or revise any forward-looking statement.

Conference Call

Anaren will host a live teleconference, open to the public, on the Anaren Investor Info, Live Webcast Web Site (http://www.anaren.com/) and ccbn.com at http://www.streetevents.com/ on Tuesday, August 28 at 5:00 p.m. EDT.  A replay of the conference call will be available at 8:00 p.m. (EDT) beginning August 28, 2007 through midnight September 1, 2007.  To listen to the replay, interested parties may dial in the U.S. at 1-888-203-1112 and international at 1-719-457-0820.  The access code is 8645500.  If you are unable to access the Live Webcast, the dial in number for the U.S. is 1-800-946-0741 and International is 1-719-457-2649.

Company Background

Anaren designs, manufactures and sells complex microwave components and subsystems for the wireless communications, satellite communications and defense electronics markets.  For more information on Anaren's products, visit our Web site at http://www.anaren.com/.

                      Anaren, Inc. and Subsidiaries
               Consolidated Condensed Statements of Income
                               (Unaudited)

                    Three Months Ended            Twelve Months Ended
                    June 30,    June 30,        June 30,    June 30,
                      2007       2006             2007        2006

  Sales            $35,860,574   $29,129,782    $128,987,104  $105,464,236
  Cost of sales     23,094,111    18,809,002      83,125,048    67,493,977
  Gross profit      12,766,463    10,320,780      45,862,056    37,970,259
                          35.6%         35.4%           35.6%         36.0%
  Operating expenses:
    Marketing        1,844,594     1,745,913       7,416,140     7,036,240
    Research and
     development     2,458,105     2,256,418       9,134,147     8,747,463
    General and
     administrative  3,070,673     2,573,686      11,755,535    10,345,398
    Lease charge       542,056         -             542,056         -
      Total
       operating
        expenses     7,915,428     6,576,017      28,847,878    26,129,101

  Operating income   4,851,035     3,744,763      17,014,178    11,841,158
                          13.5%         12.9%           13.2%         11.2%
  Other income (expense):
    Other income,
     primarily
      interest         883,371       708,177       3,571,354     2,452,914
    Interest expense    (6,143)       (6,774)        (24,572)      (25,203)
      Total other
       income
        (expense)      877,228       701,403       3,546,782     2,427,711

  Income before
   income taxes      5,728,263     4,446,166      20,560,960    14,268,869
  Income expense     1,411,000       836,000       5,211,000     3,252,000

  Net income from
   continuing
    operations     $ 4,317,263   $ 3,610,166    $ 15,349,960   $11,016,869
                          12.0%         12.4%           11.9%         10.4%

  Discontinued operations:
  Income from discontinued
   operations of
    Anaren Europe        -             -               -            81,713
  Income tax benefit     -             -               -             -

  Net income (loss)
   from discontinued
    operations     $     -       $     -        $      -       $    81,713
 Net income        $ 4,317,263   $ 3,610,166    $ 15,349,960   $11,098,582
                          12.0%         12.4%           11.9%         10.5%
  Basic earnings per share:
  Income from
   continuing
    operations          $ 0.26         $0.21           $0.89         $0.64
  Income from
   discontinued
    operations            0.00          0.00            0.00          0.01
  Net income             $0.26         $0.21           $0.89         $0.65

  Diluted earnings per share:
    Income from
     continuing
      operations         $0.25         $0.20           $0.87         $0.62
    Income from
     discontinued
      operations          0.00          0.00            0.00          0.01
    Net income           $0.25         $0.20           $0.87         $0.63

  Shares used in computing net income
    Per share:
      Basic         16,757,148    17,253,753      17,318,508    17,156,720
      Diluted       17,114,850    17,859,192      17,720,723    17,682,231



                      Anaren, Inc. and Subsidiaries
                  Consolidated Condensed Balance Sheets

                                     June 30, 2007         June 30, 2006
                                       (Unaudited)           (Unaudited)
  Assets:
  Cash, cash equivalents and
   short-term investments            $ 43,014,064          $ 82,492,947
  Accounts receivable, net             19,768,701            16,362,011
  Other receivables                     1,606,093             1,176,009
  Inventories                          24,331,597            21,827,271
  Other current assets                  2,637,401             2,312,471
    Total current assets               91,357,856           124,170,709

  Net property, plant and equipment    37,091,786            27,635,161
  Securities held to maturity          31,540,247             6,131,425
  Goodwill                             30,715,861            30,715,861
  Other assets                             68,947               373,273
  Total assets                       $190,774,697          $189,026,429

  Liabilities and stockholders' equity
  Liabilities:
  Accounts payable                   $ 12,259,176          $  6,798,793
  Accrued expenses                      3,365,596             3,254,816
  Customer advance payments             1,318,812               483,722
  Other liabilities                     1,985,856             1,473,011
    Total current liabilities          18,929,440            12,010,342
  Other non-current liabilities         5,051,109             4,897,687
    Total liabilities                  23,980,549            16,908,029

  Stockholders' equity:
  Retained earnings                    85,306,813            70,493,853
  Common stock and additional
   paid-in capital                    188,149,232           182,049,235
  Accumulated comprehensive loss         (984,640)             (441,397)
    Less cost of treasury stock      (105,677,257)          (79,983,291)
    Total stockholders' equity        166,794,148           172,118,400
  Total liabilities and stockholders'
   equity                            $190,774,697          $189,026,429


                      Anaren, Inc. and Subsidiaries
 Reconciliation of GAAP and Proforma Gross Profit, Operating Income, and
                            Earnings Per Share
                               (Unaudited)

                    Three Months Ended          Twelve Months Ended
                   June 30,     June 30,         June 30,      June 30,
                     2007        2006             2007           2006

  Sales          $35,860,574   $29,129,782   $128,987,104    $105,464,236
  GAAP gross
   profit         12,766,463    10,320,780     45,862,056      37,970,259
     % of sales         35.6%         35.4%          35.6%           36.0%
    Stock based
     compensation
     expense         131,182       164,260        876,939         981,791

      Gross profit
       excluding
       stock based
       compensation
       expense   $12,897,645   $10,485,040    $46,738,995     $38,952,050
      % of sales        36.0%         36.0%          36.2%           36.9%

  GAAP operating
   income         $4,851,035    $3,744,763    $17,014,178     $11,841,158
      % of sales        13.5%         12.9%          13.2%           11.2%

    Stock based
     compensation
      expense        880,915       793,320      3,415,905       3,383,811

      Operating income
       excluding stock
       based
       compensation
       expense    $5,731,950    $4,538,083    $20,430,083     $15,224,969
       % of sales       16.0%         15.6%          15.8%           14.4%

  GAAP net income  4,317,263     3,610,166     15,349,960      11,098,582
       % of sales       12.0%         12.4%          11.9%           10.5%
    Stock based
     compensation
     expense,
     net of tax      769,915       723,920      2,781,905       3,087,811

      Net income
       excluding stock
       based
       compensation
       expense    $5,087,178    $4,334,086    $18,131,865     $14,186,393
        % of sales      14.2%         14.9%          14.1%           13.5%

  Diluted earnings
   per share:
    GAAP net income    $0.25         $0.20          $0.87           $0.63
    Stock based
     compensation
     expense,
     net of tax         0.04          0.04           0.15            0.17

  Net income per share
   excluding stock
   based
   compensation
   expense             $0.29         $0.24          $1.02           $0.80

  Shares used in
   computing net
   income per
   share:
     Diluted      17,114,850    17,859,192     17,720,723      17,682,231


http://www.newscom.com/cgi-bin/prnh/20021022/NYTU197LOGO

http://photoarchive.ap.org/

DATASOURCE: Anaren, Inc.



CONTACT:  Joseph E. Porcello, VP of Finance of Anaren, Inc.,

[phone] 



Web site:  http://www.anaren.com/

http://www.streetevents.com/ 

Copyright