Aeroflex (NASDAQ:ARXX)
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Aeroflex Incorporated (Nasdaq Symbol: ARXX), today announced operating
results for its fiscal 2007 first quarter which ended September 30, 2006.
Quarter Ended September 30,
2006
2005
% Increase
Sales (in millions)
$
136.8
$
125.6
9%
Diluted earnings per share
GAAP
$
0.09
$
0.06
50%
Pro forma
$
0.13
$
0.11
18%
Pro forma gross profit margins were 46.6%, compared to 47.8% last year
and pro forma operating income of $15.6 million increased 13% compared
to last year. The pro forma gross margin comparison is negatively
affected by a “tough comp”
due to a highly profitable satellite related shipment in last year’s
first quarter. The first quarter pro forma results exclude the following
items from net income per diluted share:
Quarter Ended September 30,
2006
2005
Acquisition-related items:
Amortization of intangibles
$
0.03
$
0.03
Adjustments to inventory
-
0.01
Share based compensation
0.01
0.01
Total EPS impact
$
0.04
$
0.05
On a GAAP basis, gross profit margins for the fiscal 2007 first quarter
were 46.6% compared to 46.9% last year. Operating income for the fiscal
2007 first quarter increased 57% compared to last year. Net income for
the fiscal 2007 first quarter amounted to $7.2 million, or $0.09 per
diluted share, compared with $4.5 million, or $0.06 per diluted share,
last year representing a per share increase of 50%. The quarterly
results were impacted by:
a $940,000 ($601,000 after tax or $0.01 per share) charge for share
based compensation in fiscal 2007, compared to $2.0 million ($1.3
million after tax or $0.01 per share) in fiscal 2006;
a $3.2 million ($2.1 million after tax or $0.03 per share) charge for
amortization of acquired intangibles in fiscal 2007, compared to $3.5
million ($2.2 million after tax or $0.03 per share) in fiscal 2006;
a $100,000 ($64,000 after tax or $0.00 per share) charge in fiscal
2007 for restructuring costs (for which there was no comparable
expense in the prior year); and
a fiscal 2006 charge of $1.1 million ($685,000 after tax or $0.01 per
share) for acquisition related inventory adjustments (for which there
was no comparable item in the current fiscal year).
Operating cash flow for the current quarter was approximately $13
million. During the first quarter, approximately 1.8 million shares of
our common stock were repurchased for $17.2 million, leaving
approximately 1.2 million shares to be repurchased under the Board’s
most recent authorization. In October 2006, $9.2 million was paid in a
final determination of the Racal acquisition earn-out. This amount has
been added to goodwill as of September 30, 2006.
“Our first quarter performance positions us
well for another solid year,” said Len Borow,
President and Chief Operating Officer. “Organic
sales growth was 9% and the $0.13 pro forma EPS represented an 18%
increase over last year. Both segments of our business performed well as
the quarterly book-to-bill ratio was 1.10 to 1.0. We head into the
remainder of the fiscal year with a record backlog of $254 million.”
Our estimate of operating results for the December 2006 quarter is as
follows:
net sales are expected to be approximately $145 to $146 million; and
pro forma earnings per diluted share are anticipated to be $0.16. Pro
forma earnings exclude estimated amortization of acquired intangibles
and share based compensation of a combined $.04 per diluted share.
GAAP net income per diluted share is anticipated to be $.012.
Our conference call discussing first quarter results is scheduled for
8:30 a.m. (New York time) on November 3, 2006 and can be accessed by
dialing 866-800-8651 in the United States and by dialing 617-614-2704
outside of the United States. The participant passcode is 40742023.
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 97719311. 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 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 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-K. 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 non-GAAP financial measures used in this press release are not
prepared in accordance with generally accepted accounting principles and
may be different from non-GAAP financial measures used by other
companies. The Company’s management
refers to these non-GAAP financial measures in making operating
decisions because they provide meaningful supplemental information
regarding the Company’s operating performance.
In addition, these non-GAAP financial measures facilitate management’s
internal comparisons to the Company’s
historical operating results and comparisons to competitors’
operating results. We include these non-GAAP financial measures
(which should be viewed as a supplement to, and not a substitute for,
their comparable GAAP measures) in this press release because we believe
they are useful to investors in allowing for greater transparency to
supplemental information used by management in its financial and
operational decision-making. For a reconciliation of our GAAP and
non-GAAP financial results, please refer to our Reconciliation of
Reported GAAP Results to Pro Forma Net Income, presented in this
release.
AEROFLEX INCORPORATED
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
September 30,
June 30,
2006
2006
ASSETS
Current assets:
Cash and cash equivalents
$
14,741
$
10,387
Marketable securities
16,271
28,332
Accounts receivable, less allowance for
doubtful accounts
117,127
120,296
Inventories
137,366
133,420
Deferred income taxes
24,770
24,732
Prepaid expenses and other current assets
10,008
11,187
Total current assets
320,283
328,354
Property, plant and equipment, net
77,733
77,940
Other assets
15,968
14,276
Intangible assets with definite lives, net
51,330
54,215
Goodwill
173,300
163,237
Total assets
$
638,614
$
638,022
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
$
607
$
607
Accounts payable
34,621
37,832
Advance payments by customers
21,472
21,128
Income taxes payable
9,281
9,162
Accrued payroll expenses
19,268
17,440
Accrued expenses and other current liabilities
42,826
33,046
Total current liabilities
128,075
119,215
Long-term debt
3,488
3,558
Deferred income taxes
3,340
4,631
Other long-term liabilities
22,991
22,948
Total liabilities
157,894
150,352
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
73,523 and 75,270 shares
7,352
7,527
Additional paid-in capital
368,756
384,870
Accumulated other comprehensive income
15,648
13,468
Retained earnings
88,964
81,805
Total stockholders' equity
480,720
487,670
Total liabilities and stockholders' equity
$
638,614
$
638,022
AEROFLEX INCORPORATED
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share data)
For the Quarter Ended
9/30/06
9/30/06
9/30/05
9/30/05
(GAAP)
(Pro forma)
(GAAP)
(Pro forma)
Net sales
$
136,835
$
136,835
$
125,648
$
125,648
Cost of sales
73,081
73,018
66,722
65,555
Gross profit
63,754
63,817
58,926
60,093
Selling, general and administrative
expenses
31,400
30,493
30,251
28,424
Research and development costs
17,748
17,678
17,964
17,856
Amortization of acquired intangibles
3,237
-
3,457
-
Operating income
11,369
15,646
7,254
13,813
Interest and other income
(expense), net
(182)
(182)
(69)
(69)
Income before income taxes
11,187
15,464
7,185
13,744
Provision for income taxes
4,028
5,568
2,658
5,084
Net income
$
7,159
$
9,896
$
4,527
$
8,660
Net income per common share:
Basic
$
0.10
$
0.13
$
0.06
$
0.12
Diluted
$
0.09
$
0.13
$
0.06
$
0.11
Weighted average number of shares
Outstanding - Basic
74,736
74,736
74,758
74,758
- Diluted
75,984
75,984
75,699
75,699
AEROFLEX INCORPORATED
AND SUBSIDIARIES
RECONCILIATION OF REPORTED GAAP RESULTS TO PRO FORMA
NET INCOME (Unaudited)
(In thousands, except per share data)
For the Quarter Ended
9/30/06
9/30/05
GAAP net income
$
7,159
$
4,527
Pro forma adjustments:
Share based compensation
940
2,014
Amortization of acquired
intangible assets
3,237
3,457
Restructuring costs
100
-
Acquisition related inventory adjustment
-
1,088
Income tax benefit
(1,540)
(2,426)
Pro forma net income
$
9,896
$
8,660
Net income per common share:
Basic
GAAP net income, after tax
$
0.10
$
0.06
Pro forma adjustments, net of tax
0.03
0.06
Pro forma net income, after tax
$
0.13
$
0.12
Diluted
GAAP net income, after tax
$
0.09
$
0.06
Pro forma adjustments, net of tax
0.04
0.05
Pro forma net income, after tax
$
0.13
$
0.11
Weighted average number of shares
outstanding - Basic
74,736
74,758
- Diluted
75,984
75,699
Aeroflex Incorporated (Nasdaq Symbol: ARXX), today announced
operating results for its fiscal 2007 first quarter which ended
September 30, 2006.
-0-
*T
Quarter Ended
September 30,
------------------
2006 2005 % Increase
----------------------------
Sales (in millions) $136.8 $ 125.6 9%
============================
Diluted earnings per share
GAAP $ 0.09 $ 0.06 50%
============================
Pro forma $ 0.13 $ 0.11 18%
============================
*T
Pro forma gross profit margins were 46.6%, compared to 47.8% last
year and pro forma operating income of $15.6 million increased 13%
compared to last year. The pro forma gross margin comparison is
negatively affected by a "tough comp" due to a highly profitable
satellite related shipment in last year's first quarter. The first
quarter pro forma results exclude the following items from net income
per diluted share:
-0-
*T
Quarter Ended September 30,
----------------------------
2006 2005
----------------------------
Acquisition-related items:
Amortization of intangibles $ 0.03 $ 0.03
Adjustments to inventory - 0.01
Share based compensation 0.01 0.01
----------------------------
Total EPS impact $ 0.04 $ 0.05
============================
*T
On a GAAP basis, gross profit margins for the fiscal 2007 first
quarter were 46.6% compared to 46.9% last year. Operating income for
the fiscal 2007 first quarter increased 57% compared to last year. Net
income for the fiscal 2007 first quarter amounted to $7.2 million, or
$0.09 per diluted share, compared with $4.5 million, or $0.06 per
diluted share, last year representing a per share increase of 50%. The
quarterly results were impacted by:
-- a $940,000 ($601,000 after tax or $0.01 per share) charge for
share based compensation in fiscal 2007, compared to $2.0
million ($1.3 million after tax or $0.01 per share) in fiscal
2006;
-- a $3.2 million ($2.1 million after tax or $0.03 per share)
charge for amortization of acquired intangibles in fiscal
2007, compared to $3.5 million ($2.2 million after tax or
$0.03 per share) in fiscal 2006;
-- a $100,000 ($64,000 after tax or $0.00 per share) charge in
fiscal 2007 for restructuring costs (for which there was no
comparable expense in the prior year); and
-- a fiscal 2006 charge of $1.1 million ($685,000 after tax or
$0.01 per share) for acquisition related inventory adjustments
(for which there was no comparable item in the current fiscal
year).
Operating cash flow for the current quarter was approximately $13
million. During the first quarter, approximately 1.8 million shares of
our common stock were repurchased for $17.2 million, leaving
approximately 1.2 million shares to be repurchased under the Board's
most recent authorization. In October 2006, $9.2 million was paid in a
final determination of the Racal acquisition earn-out. This amount has
been added to goodwill as of September 30, 2006.
"Our first quarter performance positions us well for another solid
year," said Len Borow, President and Chief Operating Officer. "Organic
sales growth was 9% and the $0.13 pro forma EPS represented an 18%
increase over last year. Both segments of our business performed well
as the quarterly book-to-bill ratio was 1.10 to 1.0. We head into the
remainder of the fiscal year with a record backlog of $254 million."
Our estimate of operating results for the December 2006 quarter is
as follows:
-- net sales are expected to be approximately $145 to $146
million; and
-- pro forma earnings per diluted share are anticipated to be
$0.16. Pro forma earnings exclude estimated amortization of
acquired intangibles and share based compensation of a
combined $.04 per diluted share. GAAP net income per diluted
share is anticipated to be $.012.
Our conference call discussing first quarter results is scheduled
for 8:30 a.m. (New York time) on November 3, 2006 and can be accessed
by dialing 866-800-8651 in the United States and by dialing
617-614-2704 outside of the United States. The participant passcode is
40742023. 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 97719311. 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 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 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-K.
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 non-GAAP financial measures used in this press release are not
prepared in accordance with generally accepted accounting principles
and may be different from non-GAAP financial measures used by other
companies. The Company's management refers to these non-GAAP financial
measures in making operating decisions because they provide meaningful
supplemental information regarding the Company's operating
performance. In addition, these non-GAAP financial measures facilitate
management's internal comparisons to the Company's historical
operating results and comparisons to competitors' operating results.
We include these non-GAAP financial measures (which should be viewed
as a supplement to, and not a substitute for, their comparable GAAP
measures) in this press release because we believe they are useful to
investors in allowing for greater transparency to supplemental
information used by management in its financial and operational
decision-making. For a reconciliation of our GAAP and non-GAAP
financial results, please refer to our Reconciliation of Reported GAAP
Results to Pro Forma Net Income, presented in this release.
-0-
*T
AEROFLEX INCORPORATED
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
September 30, June 30,
2006 2006
------------- ---------
ASSETS
------------------------------------------
Current assets:
Cash and cash equivalents $ 14,741 $ 10,387
Marketable securities 16,271 28,332
Accounts receivable, less allowance for
doubtful accounts 117,127 120,296
Inventories 137,366 133,420
Deferred income taxes 24,770 24,732
Prepaid expenses and other current assets 10,008 11,187
------------- ---------
Total current assets 320,283 328,354
Property, plant and equipment, net 77,733 77,940
Other assets 15,968 14,276
Intangible assets with definite lives, net 51,330 54,215
Goodwill 173,300 163,237
------------- ---------
Total assets $ 638,614 $ 638,022
============= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
---------------------------------------------
Current liabilities:
Current portion of long-term debt $ 607 $ 607
Accounts payable 34,621 37,832
Advance payments by customers 21,472 21,128
Income taxes payable 9,281 9,162
Accrued payroll expenses 19,268 17,440
Accrued expenses and other current
liabilities 42,826 33,046
------------- ---------
Total current liabilities 128,075 119,215
Long-term debt 3,488 3,558
Deferred income taxes 3,340 4,631
Other long-term liabilities 22,991 22,948
------------- ---------
Total liabilities 157,894 150,352
------------- ---------
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
73,523 and 75,270 shares 7,352 7,527
Additional paid-in capital 368,756 384,870
Accumulated other comprehensive income 15,648 13,468
Retained earnings 88,964 81,805
------------- ---------
Total stockholders' equity 480,720 487,670
------------- ---------
Total liabilities and stockholders'
equity $ 638,614 $ 638,022
============= =========
*T
-0-
*T
AEROFLEX INCORPORATED
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
INCOME STATEMENTS
------------------------------------
(In thousands, except per share
data)
For the Quarter
Ended
-------------------
9/30/06 9/30/06 9/30/05 9/30/05
-------- -------- --------- --------
(GAAP) (Pro (GAAP) (Pro
forma) forma)
Net sales $136,835 $136,835 $ 125,648 $125,648
Cost of sales 73,081 73,018 66,722 65,555
-------- -------- --------- --------
Gross profit 63,754 63,817 58,926 60,093
Selling, general and
administrative
expenses 31,400 30,493 30,251 28,424
Research and development costs 17,748 17,678 17,964 17,856
Amortization of acquired
intangibles 3,237 - 3,457 -
-------- -------- --------- --------
Operating income 11,369 15,646 7,254 13,813
Interest and other income
(expense), net (182) (182) (69) (69)
-------- -------- --------- --------
Income before income taxes 11,187 15,464 7,185 13,744
Provision for income taxes 4,028 5,568 2,658 5,084
-------- -------- --------- --------
Net income $ 7,159 $ 9,896 $ 4,527 $ 8,660
======== ======== ========= ========
Net income per common share:
Basic $ 0.10 $ 0.13 $ 0.06 $ 0.12
======== ======== ========= ========
Diluted $ 0.09 $ 0.13 $ 0.06 $ 0.11
======== ======== ========= ========
Weighted average number of shares
Outstanding - Basic 74,736 74,736 74,758 74,758
======== ======== ========= ========
- Diluted 75,984 75,984 75,699 75,699
======== ======== ========= ========
*T
-0-
*T
AEROFLEX INCORPORATED
AND SUBSIDIARIES
RECONCILIATION OF REPORTED GAAP RESULTS TO PRO FORMA
----------------------------------------------------------------------
NET INCOME (Unaudited)
----------------------------------------------------------------------
(In thousands, except per share data)
For the Quarter
Ended
-----------------
9/30/06 9/30/05
-------- --------
GAAP net income $ 7,159 $ 4,527
Pro forma adjustments:
Share based compensation 940 2,014
Amortization of acquired
intangible assets 3,237 3,457
Restructuring costs 100 -
Acquisition related inventory adjustment - 1,088
Income tax benefit (1,540) (2,426)
-------- --------
Pro forma net income $ 9,896 $ 8,660
======== ========
Net income per common share:
Basic
GAAP net income, after tax $ 0.10 $ 0.06
Pro forma adjustments, net of tax 0.03 0.06
-------- --------
Pro forma net income, after tax $ 0.13 $ 0.12
======== ========
Diluted
GAAP net income, after tax $ 0.09 $ 0.06
Pro forma adjustments, net of tax 0.04 0.05
-------- --------
Pro forma net income, after tax $ 0.13 $ 0.11
======== ========
Weighted average number of shares
outstanding - Basic 74,736 74,758
======== ========
- Diluted 75,984 75,699
======== ========
*T