Aeroflex (NASDAQ:ARXX)
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Aeroflex Incorporated (Nasdaq Symbol: ARXX), a leading
designer, developer and manufacturer of automated testing solutions
and microelectronics for the aerospace, defense and broadband
communications markets, today announced operating results for its
fiscal 2006 third quarter, which ended March 31, 2006.
The highlights of the Company's quarterly financial performance
from continuing operations for the third quarter of fiscal 2006 are as
follows:
-- net sales increased 24% to a quarterly record $140.5 million
(including contributions from our fourth quarter 2005
acquisitions) from $113.8 million last year and $135.2 million
in the second quarter of this fiscal year;
-- pro forma gross profit margins were 48.0% compared to 47.3%
last year and 47.8% last quarter; and
-- pro forma operating income increased 85% compared to last year
and 8% compared to last quarter.
On a pro forma basis, for the fiscal 2006 third quarter, income
from continuing operations increased 87% to $11.5 million, or $.15 per
diluted share, compared to $6.2 million, or $.08 per diluted share,
last year. The fiscal 2006 third quarter pro forma results exclude
charges of:
-- $3.4 million ($2.1 million, after tax) for amortization of
acquired intangibles;
-- $1.6 million ($0.9 million, after tax) for share based
compensation; and
-- $1.2 million ($0.7 million, after tax) for restructuring
charges related to the consolidation of the Company's
subsidiaries in the United Kingdom.
The prior year's third quarter pro forma results excluded a
pre-tax charge of $2.1 million ($1.2 million, after tax) for
amortization of acquired intangibles and $1.7 million ($1.0 million,
after tax) for restructuring charges.
On a GAAP basis, gross profit margins for the fiscal 2006 third
quarter were 47.7% compared to 47.3% last year and 47.8% last quarter.
Operating income for the fiscal 2006 third quarter increased 97%
compared to last year and is the same as the last quarter. Income from
continuing operations for the fiscal 2006 third quarter amounted to
$7.7 million, or $.10 per diluted share, compared with $3.9 million,
or $.05 per diluted share, last year representing a per share increase
of 100 %. The fiscal 2006 third quarter included a $0.9 million after
tax charge for share based compensation (for which there was no
comparable expense in the prior year), a $2.1 million after tax charge
for amortization of acquired intangibles, (an increase of $0.9 million
related to our acquisitions in the fourth quarter of fiscal 2005); and
a $0.7 million after tax charge for restructuring costs (compared to a
$1.0 million after tax charge in fiscal 2005).
The Company's financial performance from continuing operations for
the nine months of fiscal 2006 is as follows:
-- net sales increased 20% to $401.3 million from $335.4 million
last year, including contributions from our fourth quarter
2005 acquisitions;
-- pro forma gross profit margins were 47.9% compared to 47.3%
last year; and
-- pro forma operating income increased 47% compared to last
year.
On a pro forma basis, for the fiscal 2006 nine months, income from
continuing operations increased 45% to $30.9 million, or $.40 per
diluted share, compared to $21.3 million, or $.28 per diluted share,
last year. The fiscal 2006 nine month pro forma results exclude
charges of:
-- $10.3 million ($6.3 million, after tax) for amortization of
acquired intangibles;
-- $5.0 million ($3.1 million, after tax) for share based
compensation;
-- $1.1 million ($0.7 million, after tax) for an acquisition
related inventory adjustment: and
-- $1.2 million ($0.7 million, after tax) for restructuring
charges.
The prior year's nine months pro forma results excluded a pre-tax
charges of $6.2 million ($3.8 million, after tax) for amortization of
acquired intangibles and $1.7 million ($1.0 million, after tax) for
restructuring charges.
On a GAAP basis, gross profit margins for the fiscal 2006 nine
months were 47.5% compared to 47.3% last year. Operating income for
the fiscal 2006 nine months increased 24% compared to last year.
Income from continuing operations for the fiscal 2006 nine months
increased 22% to $20.0 million, or $.26 per diluted share, compared
with $16.4 million, or $.22 per diluted share last year. The fiscal
2006 nine months included: $3.1 million after tax charge for share
based compensation (for which there was no comparable expense in the
prior year); a $6.3 million after tax charge for amortization of
acquired intangibles (an increase of $2.5 million from last year's
nine months); a $0.7 million after tax charge for an acquisition
related inventory adjustment; and a $0.7 million after tax charge for
restructuring costs (compared to a $1.0 million after tax charge in
fiscal year 2005).
"We are pleased with our operating results for the third quarter,"
said Len Borow, President and Chief Operating Officer. "Our sales,
excluding acquisitions, grew 11% from last year's third quarter and we
also achieved 8% sequential growth in net pro forma earnings. Our
backlog is $223.6 million, with a book-to-bill ratio of .98 to 1. The
book-to-bill was negatively impacted by a $15 million test set order
slipping into early April."
Our estimate of operating results for the June 2006 quarter is as
follows:
-- net sales are expected to be approximately $149 million; and
-- pro forma earnings from continuing operations per diluted
share are anticipated to be $.17. Pro forma earnings exclude
estimated amortization of acquired intangibles, share based
compensation and additional restructuring charges of a
combined $.05 per diluted share. GAAP earnings from continuing
operations per diluted share are anticipated to be $.12.
Our conference call discussing third quarter results is scheduled
for 5:00 p.m. (New York time) on May 10, 2006 and can be accessed by
dialing 800-638-4930 in the United States and by dialing 617-614-3944
outside of the United States. The participant passcode is 29543227.
There will be a replay of the conference call beginning one hour after
the call's conclusion and will be available for one week. The replay
can be accessed by dialing 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 43676806. This call is being webcast by
CCBN 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 with this conference call, the Company has also posted on
its website certain financial information related to third 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 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. 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 integration of acquired
businesses, changes in legal and regulatory requirements,
technological change or difficulties, product development risks,
commercialization difficulties, general economic conditions, and other
risk factors disclosed in Aeroflex's most recently filed Form 10-Q.
Such statements reflect the current views of management with respect
to the future and are subject to these and other risks, uncertainties
and assumptions relating to Aeroflex's financial condition, results of
operations, growth strategy and liquidity. Aeroflex does not undertake
any obligation to update such forward-looking statements.
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 financial
data.
-0-
*T
AEROFLEX INCORPORATED
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
For the Quarter Ended
---------------------
3/31/06 3/31/06 3/31/05 3/31/05
-------- -------- --------- ---------
(GAAP) (Pro forma) (GAAP) (Pro forma)
Net sales $140,527 $140,527 $113,755 $113,755
Cost of sales 73,461 73,130 59,963 59,963
-------- -------- --------- --------
Gross profit 67,066 67,397 53,792 53,792
Selling, general and
administrative costs 30,863 28,550 30,110 28,432
Research and development
costs 20,488 20,401 15,379 15,379
Amortization of acquired
intangibles 3,440 - 2,063 -
-------- -------- --------- --------
Operating income 12,275 18,446 6,240 9,981
Interest and other income
(expense), net 442 442 90 90
-------- -------- --------- --------
Income from continuing
operations before income
taxes 12,717 18,888 6,330 10,071
Provision for income
taxes 4,971 7,384 2,464 3,914
-------- -------- --------- --------
Income from continuing
operations 7,746 11,504 3,866 6,157
Income (loss) from
discontinued operations,
net of tax - - 106 106
-------- -------- --------- --------
Net income $ 7,746 $ 11,504 $ 3,972 $ 6,263
======== ======== ========= ========
Income (loss) per common
share:
Basic
Continuing operations $ 0.10 $ 0.15 $ 0.05 $ 0.08
Discontinued operations - - - -
-------- -------- --------- --------
Net income $ 0.10 $ 0.15 $ 0.05 $ 0.08
======== ======== ========= ========
Diluted
Continuing operations $ 0.10 $ 0.15 $ 0.05 $ 0.08
Discontinued operations - - - -
-------- -------- --------- --------
Net income $ 0.10 $ 0.15 $ 0.05 $ 0.08
======== ======== ========= ========
Weighted average number of
shares
Outstanding - Basic 75,133 75,133 74,714 74,714
======== ======== ========= ========
- Diluted 77,230 77,230 75,842 75,842
======== ======== ========= ========
AEROFLEX INCORPORATED
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
For the Nine Months Ended
----------------------------------------
3/31/06 3/31/06 3/31/05 3/31/05
--------- --------- --------- ---------
(GAAP) (Pro forma) (GAAP) (Pro forma)
Net sales $401,332 $401,332 $335,406 $335,406
Cost of sales 210,785 209,215 176,802 176,802
--------- -------- --------- --------
Gross profit 190,547 192,117 158,604 158,604
Selling, general and
administrative costs 91,672 86,270 81,597 79,919
Research and development
costs 56,742 56,437 45,122 45,122
Amortization of acquired
intangibles 10,329 - 6,164 -
--------- -------- --------- --------
Operating income 31,804 49,410 25,721 33,563
Interest and other income
(expense), net 887 887 633 633
--------- -------- --------- --------
Income from continuing
operations before income
taxes 32,691 50,297 26,354 34,196
Provision for income
taxes 12,642 19,433 9,947 12,907
--------- -------- --------- --------
Income from continuing
operations 20,049 30,864 16,407 21,289
Income (loss) from
discontinued operations,
net of tax - - (1,496) (1,496)
--------- -------- --------- --------
Net income $ 20,049 $ 30,864 $ 14,911 $ 19,793
========= ======== ========= ========
Income (loss) per common
share:
Basic
Continuing operations $ 0.27 $ 0.41 $ 0.22 $ 0.29
Discontinued operations - - (0.02) (0.02)
--------- -------- --------- --------
Net income $ 0.27 $ 0.41 $ 0.20 $ 0.27
========= ======== ========= ========
Diluted
Continuing operations $ 0.26 $ 0.40 $ 0.22 $ 0.28
Discontinued operations - - (0.02) (0.02)
--------- -------- --------- --------
Net income $ 0.26 $ 0.40 $ 0.20 $ 0.26
========= ======== ========= ========
Weighted average number of
shares
Outstanding - Basic 74,922 74,922 74,595 74,595
========= ======== ========= ========
- Diluted 76,306 76,306 76,047 76,047
========= ======== ========= ========
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 For the Nine
Quarter Ended Months Ended
------------------ -----------------
3/31/06 3/31/05 3/31/06 3/31/05
------- ------- ------- -------
GAAP income from
continuing operations $ 7,746 $ 3,866 $ 20,049 $ 16,407
Pro forma adjustments:
Share-based compensation 1,552 - 5,010 -
Amortization of acquired
intangible assets 3,440 2,063 10,329 6,164
Restructuring costs 1,179 1,678 1,179 1,678
Acquisition related
inventory adjustment - - 1,088 -
Income tax benefit (2,413) (1,450) (6,791) (2,960)
-------- -------- -------- --------
Pro forma income from
continuing operations $ 11,504 $ 6,157 $ 30,864 $ 21,289
======== ======== ======== ========
Income per common share:
Basic
GAAP income from continuing
operations after tax $ 0.10 $ 0.05 $ 0.27 $ 0.22
Pro forma adjustments, net
of tax 0.05 0.03 0.14 0.07
-------- -------- -------- --------
Pro forma income from
continuing operations
after tax $ 0.15 $ 0.08 $ 0.41 $ 0.29
======== ======== ======== ========
Diluted
GAAP income from
continuing operations
after tax $ 0.10 $ 0.05 $ 0.26 $ 0.22
Pro forma adjustments, net
of tax 0.05 0.03 0.14 0.06
-------- -------- -------- --------
Pro forma income from
continuing operations
after tax $ 0.15 $ 0.08 $ 0.40 $ 0.28
======== ======== ======== ========
Weighted average number of
shares outstanding
- Basic 75,133 74,714 74,922 74,595
======== ======== ======== ========
- Diluted 77,230 75,842 76,306 76,047
======== ======== ======== ========
AEROFLEX INCORPORATED
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
March 31, 2006 June 30, 2005
-------------- -------------
ASSETS
------
Current assets:
Cash and cash equivalents $ 15,636 $ 12,974
Marketable securities 18,588 -
Accounts receivable, less allowance
for doubtful accounts 103,796 101,317
Inventories 129,594 118,906
Deferred income taxes 20,255 18,499
Prepaid expenses and other current
assets 11,018 11,107
----------- -----------
Total current assets 298,887 262,803
Property, plant and equipment, net 75,387 78,195
Other assets 13,807 13,537
Intangible assets with definite lives,
net 55,882 67,266
Goodwill 164,277 168,048
----------- -----------
Total assets $ 608,240 $ 589,849
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of long-term debt $ 618 $ 634
Accounts payable 29,023 35,907
Advance payments by customers 22,943 15,183
Income taxes payable 1,697 3,657
Accrued payroll expenses 17,536 15,222
Accrued expenses and other current
liabilities 29,638 30,451
----------- -----------
Total current liabilities 101,455 101,054
Long-term debt 3,923 4,190
Deferred income taxes 13,711 17,146
Other long-term liabilities 20,236 23,479
----------- -----------
Total liabilities 139,325 145,869
----------- -----------
Stockholders' equity:
Preferred Stock, par value $.10 per
share; authorized 1,000 shares:
Series A Junior Participating
Preferred Stock, par value $.10 per
share, authorized 110; none issued
Common Stock, par value $.10 per
share; - -
authorized 110,000 shares;
issued 75,159 and 74,618 shares 7,516 7,462
Additional paid-in capital 381,987 372,666
Accumulated other comprehensive
income 4,517 9,020
Retained earnings 74,895 54,846
----------- -----------
468,915 443,994
Less: Treasury stock, at cost
(4 shares) - 14
----------- -----------
Total stockholders' equity 468,915 443,980
----------- -----------
Total liabilities and
stockholders' equity $ 608,240 $ 589,849
=========== ===========
*T