ANEN Anaren, Inc. (MM)

SYRACUSE, N.Y., Nov. 1 /PRNewswire-FirstCall/ -- Anaren, Inc. (NASDAQ:ANEN) today reported net sales for the fiscal 2008 first quarter ended September 30, 2007 of $32.1 million, up 6.2% from the first quarter of last year. (Logo: http://www.newscom.com/cgi-bin/prnh/20021022/NYTU197LOGO ) Net income for the first quarter of fiscal 2008 was $2.7 million, or $0.17 per diluted share, down from $3.8 million, or $0.21 per diluted share for the first 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 first quarter of fiscal 2008 was $3.4 million, or $0.21 per diluted share compared to $4.4 million, or $0.25 per share for the first quarter of fiscal 2007. The effective tax rate for the first quarter of fiscal 2008 was 22.9%, compared to 24.9% for the first quarter of fiscal 2007. Operating income for the first quarter of fiscal 2008 was $2.8 million, or 8.7% of net sales, down from $4.1 million, or 13.6% of net sales for the first quarter of last year. Operating income for the first quarter of fiscal 2008 included $896,000 of stock based compensation expense compared to $830,000 of stock based compensation expense for the first quarter of fiscal 2007. Excluding stock based compensation expense, operating income for the first quarter of fiscal 2008 was $3.7 million, or 11.5% of net sales compared to $4.9 million, or 16.4% of net sales for the first quarter of fiscal 2007. Lawrence A. Sala, Anaren's President and CEO said, "Despite the growth in net sales from the same quarter of last year, profit margins declined as projected, largely due to the change in product mix." Mr. Sala added, "We continue to pursue numerous new wireless infrastructure custom assembly opportunities. In addition, strong Space & Defense Group new orders for the quarter resulted in record order backlog for the group." Balance Sheet During the first quarter, the Company generated $1.5 million in operating cash flow and used $12.3 million to repurchase 864,000 shares of its common stock. Expenditures for capital additions in the first quarter were $4.3 million driven primarily by the expansion and renovation of the Company's East Syracuse, New York manufacturing facility and included $1.5 million in payments for fourth quarter 2007 fixed asset additions included in accounts payable at June 30, 2007. Funds needed 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 September 30, 2007 were $59.8 million. Wireless Group Wireless Group net sales for the quarter were $21.1 million, up 6.4% from the first quarter of fiscal 2007. Overall wireless infrastructure demand remained relatively stable throughout the quarter. However, the Company experienced an increase in the number of new custom assembly and standard component opportunities for wireless infrastructure applications. Sales of consumer component products were $1.0 million for the quarter, down 50% from the first quarter of last year due to a significant decline in demand from our largest consumer component customer. The Group continued to capture new consumer component design wins for WLAN and satellite television applications during the quarter. Customers that generated greater than 10% of Wireless Group net sales for the quarter were Nokia and Richardson. Space & Defense Group Space & Defense Group net sales for the quarter were $11.0 million, up 5.9% from the first quarter of fiscal 2007. New orders for the quarter totaled $19.2 million and included contracts for Radar Subassemblies and Passive Ranging Subsystems (PRSS) as well as the finalization of the previously announced Globalstar II contract. New product and technology development activities are focused on high performance microwave substrates for airborne and ground based radar applications. Space & Defense backlog at September 30, 2007 was a record $64.2 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 second quarter of fiscal 2008, we expect an increase in sales for the Space & Defense segment, a decline in demand for wireless infrastructure products, and comparable demand for consumer component products. As a result, we expect net sales to be in the range of $29.0 - $32.0 million for the second quarter of fiscal 2008. With an anticipated tax rate of approximately 25%, an expected stock based compensation expense of approximately $0.04 per diluted share, and a more favorable overall product mix, we expect net earnings per diluted share to be in the range of $0.14-$0.17 for the second 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. On October 31, 2007, the Company filed 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. 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; unanticipated costs and damages resulting from replacement of products found to include latent defects; 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 2007 Annual Report, Anaren's Form 10-K for the fiscal year ended June 30, 2007 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 Thursday, November 1 at 5:00 p.m. EDT. A replay of the conference call will be available at 8:00 p.m. (EDT) beginning November 1, 2007 through midnight November 6, 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 9415886. If you are unable to access the Live Webcast, the dial in number for the U.S. is 1-877-795-3613 and International is 1-719-325-4804. 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. Consolidated Condensed Statements of Income (Unaudited) Three Months Ended Sept. 30, 2007 Sept. 30, 2006 Sales $32,090,192 $30,203,110 Cost of sales 21,571,206 19,363,778 Gross profit 10,518,986 10,839,332 32.8% 35.9% Operating expenses: Marketing 1,757,367 1,812,706 Research and development 2,603,318 2,138,185 General and administrative 3,362,244 2,768,226 Total operating expenses 7,722,929 6,719,117 Operating income 2,796,057 4,120,215 8.7% 13.6% Other income (expense) Other income, primarily interest 750,043 896,606 Interest expense (36,636) (6,143) Total other income (expense) 713,407 890,463 Income before income taxes 3,509,464 5,010,678 Income taxes 804,000 1,250,000 Net income $2,705,464 $3,760,678 8.4% 12.5% Basic earnings per share $0.17 $0.21 Diluted earnings per share $0.17 $0.21 Weighted average common shares outstanding Basic 16,042,333 17,492,157 Diluted 16,365,305 17,975,795 Anaren, Inc. Consolidated Condensed Balance Sheets (Unaudited) Sept. 30, 2007 June 30, 2007 Assets: Cash, cash equivalents and short-term investments $35,634,067 $43,014,064 Accounts receivable, net 20,487,741 19,768,701 Other receivables 2,146,543 1,606,093 Inventories 25,575,943 24,331,597 Other current assets 2,757,445 3,067,019 Total current assets 86,601,739 91,787,474 Net property, plant and equipment 38,740,683 37,091,786 Securities held to maturity 24,122,451 31,540,247 Goodwill 30,715,861 30,715,861 Other assets 28,890 68,947 Total assets $180,209,624 $191,204,315 Liabilities and stockholders' equity Liabilities: Accounts payable $9,528,343 $11,717,120 Accrued expenses 1,381,149 3,907,652 Customer advance payments 2,160,266 1,318,812 Other liabilities 1,687,917 1,985,856 Total current liabilities 14,757,675 18,929,440 Other non-current liabilities 6,935,332 5,480,727 Total liabilities 21,693,007 24,410,167 Stockholders' equity: Retained earnings 88,012,277 85,306,813 Common stock and additional paid-in capital 189,340,431 188,149,232 Accumulated comprehensive loss (871,478) (984,640) Less cost of treasury stock (117,964,613) (105,677,257) Total stockholders' equity 158,516,617 166,794,148 Total liabilities and stockholders' equity $180,209,624 $191,204,315 Anaren, Inc. Reconciliation of GAAP and Proforma Gross Profit, Operating Income, and Earnings Per Share (Unaudited) Three Months Ended Sept. 30, 2007 Sept. 30, 2006 Sales $32,090,192 $30,203,110 GAAP gross profit 10,518,986 10,839,332 % of sales 32.8% 35.9% Stock based compensation expense 214,906 277,043 Proforma gross profit $10,733,892 $11,116,375 % of sales 33.4% 36.8% GAAP operating income $2,796,057 $4,120,215 % of sales 8.7% 13.6% Stock based compensation expense 896,138 829,666 Proforma operating income $3,692,195 $4,949,881 % of sales 11.5% 16.4% GAAP net income 2,705,464 3,760,678 % of sales 8.4% 12.5% Stock based compensation expense, net of tax 673,138 680,666 Proforma net income $3,378,602 $4,441,344 % of sales 10.5% 14.7% Diluted earnings per share: GAAP net income $0.17 $0.21 Stock based compensation expense, net of tax 0.04 0.04 Proforma net income per share $0.21 $0.25 Shares used in computing earnings per share: Diluted 16,365,305 17,975,795 ANAREN, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (Unaudited) Three Months Ended Sept. 30, 2007 Cash flows from operating activities: Net income $2,705,464 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization of plant and equipment 1,562,685 Amortization 189,208 Provision for receivables allowances 2,911 Deferred income taxes 70,000 Stock based compensation 881,081 Receivables (721,951) Inventories (1,244,346) Accounts payable (1,126,520) Other assets and liabilities (826,702) Net cash used in operating activities 1,491,830 Cash flows from investing activities: Capital expenditures (4,273,839) Net maturities of marketable debt and equity securities 14,113,302 Net cash provided by investing activities 9,839,463 Cash flows from financing activities: Stock options exercised 286,467 Tax benefit from exercise of stock options 23,651 Purchase of treasury stock (12,287,356) Net cash used in financing activities (11,977,238) Effect of exchange rates 113,162 Net decrease in cash and cash equivalents (532,783) Cash and cash equivalents at beginning of period 7,912,276 Cash and cash equivalents at end of period $7,379,493 http://www.newscom.com/cgi-bin/prnh/20021022/NYTU197LOGO http://photoarchive.ap.org/ DATASOURCE: Anaren, Inc. CONTACT: Joseph E. Porcello, VP of Finance, Anaren, Inc., +1-315-362-0514 Web site: http://www.anaren.com/

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