Symmetricom, Inc. (NASDAQ:SYMM), a worldwide leader in precise
time and frequency technologies that accelerate the deployment and
enable the management of next generation networks, today reported
financial results for its first quarter ended September 27,
2009.
Net revenue for the first quarter of fiscal 2010 was $52.5
million compared to $55.9 million in the first quarter of fiscal
2009. Symmetricom reported net income of $0.2 million, or $0.00 per
share, for the first quarter of fiscal 2010, compared to a net loss
of $1.2 million, or $0.03 per share, in the first quarter of fiscal
2009.
Non-GAAP net income in the first quarter of fiscal 2010 was $2.2
million, or $0.05 per share, compared with $4.4 million, or $0.10
per share, in the same period of the prior year.
Cash, cash equivalents and short-term investments totaled $119.1
million as of September 27, 2009, an increase of $6.3 million from
the $112.8 million reported as of June 28, 2009. Net cash provided
by operating activities in the first quarter was $8.1 million and
property, plant and equipment purchases were approximately $1.7
million, resulting in free cash flow of $6.3 million.
“First quarter revenue was in line with our guidance and we saw
strength in many areas, most notably in our Timing Test and
Measurement business and in the continuing market traction of our
PackeTime solutions for Ethernet backhaul, which have now been sold
for deployment in three service provider networks,” said Dave Côté,
Chief Executive Officer of Symmetricom.
“While we are still cautious with respect to the economic
environment, we are encouraged by signs that the capital spending
environment is improving and by a strong bookings quarter. Over the
longer term, we believe our participation in the growing wireless
and government markets, which require specialized timing and
frequency technologies, positions us for growth through an extended
product and market reach,” continued Côté.
Division Results
Telecom Solutions Division revenue in the first quarter was
$32.6 million compared to $39.0 million reported in the same period
of last year. The year-over-year revenue comparison was impacted by
approximately $8 million of cable products backlog that had built
up in fiscal 2008 but was not able to ship until the first quarter
of fiscal 2009.
Timing, Test & Measurement Division revenue in the first
quarter was $19.9 million compared to $16.9 million reported in the
same period of last year. Revenues in the TT&M Division
improved based upon growth in sales from international markets and
an increase in sales of secure communications products for
government applications.
Second Quarter and Fiscal 2010 Guidance
Symmetricom’s guidance for fiscal 2010 is as follows:
- Net revenue is expected to be in
the range of $210 million to $230 million
- GAAP Earnings per share is
expected to be in the range of $0.11 to $0.22
- Non-GAAP Earnings per share is
expected to be in the range of $0.35 to $0.44
For the second quarter of fiscal 2010, Symmetricom guidance is
as follows:
- Net revenue is expected to be in
the range of $50 million to $57 million
- GAAP Earnings / (Loss) per share
is expected to be in the range of $(0.03) to $0.04
- Non-GAAP Earnings per share is
expected to be in the range of $0.05 to $0.10
In the first quarter of fiscal 2010, we adopted Financial
Accounting Standards Board (FASB) authoritative guidance on
accounting for our contingent convertible subordinated notes, which
requires retrospective adoption to previously disclosed
consolidated financial statements. Under this authoritative
guidance, issuers of convertible debt instruments separately
account for the liability and equity components of convertible
instruments. As such, certain prior period amounts have been
revised in the accompanying financial statement reports to reflect
adoption. Our GAAP EPS Guidance includes the impact of the adoption
of the FASB authoritative guidance. The adoption resulted in a
material amount of additional non-cash interest expense.
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
+1-203-369-1710.
About Symmetricom,
Inc.
As a worldwide leader in 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’s QoE video quality management solutions provide the
tools necessary to accurately monitor and analyze video quality and
bring higher satisfaction levels to the end user. 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, integration and
restructuring charges, impairment of goodwill and other
intangibles, gains and losses on asset sales, 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 the Company’s
estimate of its annual Non-GAAP effective tax rate excluding these
Non-GAAP adjustments. Symmetricom believes that excluding such
items provides investors and management with a representation of
the Company’s core operating performance and with information
useful in assessing our prospects for the future and underlying
trends in Symmetricom’s 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. We
believe 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, 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, 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 September 27, June 28, September
28, 2009 2009 (1) 2008 (1) Net revenue
$
52,474
$
60,356
$
55,898
Cost of sales: Cost of products and services 29,597 31,057 26,609
Amortization of purchased technology 368 369 368 Integration and
restructuring charges 862 1,591
- Total cost of sales 30,827 33,017
26,977 Gross profit 21,647 27,339 28,921 Gross
margin 41.3 % 45.3 % 51.7 % Operating expenses: Research and
development 6,334 7,421 7,304 Selling, general and administrative
13,660 16,708 15,679 Amortization of intangible assets 95 103 103
Integration and restructuring charges 476
1,368 585 Total operating expenses
20,565 25,600 23,671 Operating
income 1,082 1,739 5,250 Loss on repayment of convertible notes,
net - - (5,623 ) Loss on short-term investments, net - - (473 )
Interest income 461 226 768 Interest expense (1,274 )
(1,219 ) (1,654 ) Earnings (loss) before income taxes 269
746 (1,732 ) Income tax provision (benefit) 95
(740 ) (556 ) Net income (loss) $ 174 $ 1,486
$ (1,176 ) Earnings (loss) per share: Basic $ - $
0.03 $ (0.03 ) Diluted $ - $ 0.03 $ (0.03 )
Weighted average shares outstanding: Basic 43,177
43,028 43,964 Diluted
43,815 43,619 43,964 (1)
Adjusted for the retrospective adoption of recently issued
authoritative guidance on accounting for our contingent convertible
subordinated notes SYMMETRICOM, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands) (unaudited)
September 27,
June 28, 2009 2009 (1) ASSETS Current assets: Cash and cash
equivalents $ 78,134 $ 72,064 Short-term investments 40,936 40,737
Accounts receivable, net 34,337 42,389 Inventories, net 37,691
38,566 Prepaids and other current assets 16,002
16,143 Total current assets 207,100 209,899 Property,
plant and equipment, net 21,136 20,749 Intangible assets, net 4,845
5,308 Deferred taxes and other assets 36,463
36,431 Total assets $ 269,544 $ 272,387
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $ 7,085 $ 8,116 Accrued compensation 15,721 19,093 Accrued
warranty 3,775 3,737 Other accrued liabilities 9,642
9,810 Total current liabilities 36,223 40,756
Long-term obligations 52,655 51,769 Deferred income taxes
334 334 Total liabilities 89,212 92,859
Stockholders' equity: Common stock 200,791 200,152 Accumulated
other comprehensive income 135 144 Accumulated deficit
(20,594 ) (20,768 ) Total stockholders' equity
180,332 179,528 Total liabilities and
stockholders' equity $ 269,544 $ 272,387
(1) Adjusted for the retrospective
adoption of recently issued authoritative guidance on accounting
for our contingent convertible subordinated notes
SYMMETRICOM, INC. RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In
thousands, except per share amounts) (unaudited)
Three months ended September 27, June 28, September 28, 2009 2009
(1) 2008 (1) Reconciliation from GAAP to Non-GAAP GAAP net earnings
(loss) $ 174 $ 1,486 $ (1,176 ) Add Non-GAAP adjustments:
Equity-based compensation expense: Cost of products and services
209 182 205 Research and development 200 193 329 Selling, general
and administrative 195 641 472
Total equity-based compensation expense 604 1,016 1,006
Amortization of intangible assets: Cost of products and
services 368 369 368 Operating expenses 95 103
103 Total amortization of intangible assets
463 472 471 Integration and restructuring charges 1,338
2,959 585 Non-cash interest expense on convertible notes 768 736
922 Loss on repayment of convertible notes, net - - 5,623 Loss on
short-term investments, net - - 473 Income tax effect of Non-GAAP
adjustments (1,117 ) (3,110 ) (3,519 )
Non-GAAP net earnings $ 2,230 $ 3,559 $ 4,385
Earnings from per share-diluted: GAAP income (loss) $ - $
0.03 $ (0.03 ) Non-GAAP income $ 0.05 $ 0.08 $ 0.10 Shares used in
diluted shares calculation 43,815 43,619 44,582
(1) Adjusted for the retrospective
adoption of recently issued authoritative guidance on accounting
for our contingent convertible subordinated notes
SYMMETRICOM, INC. RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In
thousands, except per share amounts) (unaudited)
Three months ended September 27, June 28, September 28, 2009
2009 (1) 2008 (1) Reconciliation from GAAP to Non-GAAP Gross
Margin: GAAP Revenue $ 52,474 $ 60,356
$
55,898 GAAP Gross profit $ 21,647 $ 27,339
$
28,921 GAAP Gross margin 41.3 % 45.3 % 51.7 % Add Non-GAAP
adjustments: Equity-based compensation expense 209 182 205
Amortization of intangible assets 368 369 368 Integration and
restructuring charges 862 1,591
- Non-GAAP Gross profit $ 23,086 $ 29,481 $ 29,494
Non-GAAP Gross margin 44.0 % 48.8 % 52.8 %
Reconciliation from GAAP to Non-GAAP Operating Expense: GAAP
Revenue $ 52,474 $ 60,356 $ 55,898 GAAP Operating expenses $
20,565 $ 25,600
$
23,671 Operating expense % to revenue 39.2 % 42.4 % 42.3 %
Add Non-GAAP adjustments: Equity-based compensation expense 395 834
801 Amortization of intangible assets 95 103 103 Integration and
restructuring charges 476 1,368 585 Non-GAAP
operating expenses $ 19,599 $ 23,295 $ 22,182 Non-GAAP operating
expenses % to revenue 37.3 % 38.6 % 39.7 %
(1) Adjusted for the retrospective
adoption of recently issued authoritative guidance on accounting
for our 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 December 27, 2009 Revenue
Earnings Per Share From To From To
GAAP Guidance $
50,000 $ 57,000 $ (0.03 ) $ 0.04
Estimated Non-GAAP
Adjustments Equity-based compensation expense 0.03 0.02
Amortization of intangible assets 0.01 0.01 Integration and
restructuring charges 0.06 0.04 Non-cash interest expense on
convertible notes 0.02 0.02 Income tax effect of non-GAAP
adjustments (0.04 ) (0.03 ) Total
Non-GAAP Adjustments 0.08 0.06
Non-GAAP Guidance $ 50,000 $ 57,000 $ 0.05 $ 0.10
Twelve Months
Ending June 27, 2010 Revenue Earnings Per Share From To From To
GAAP Guidance $ 210,000 $ 230,000 $ 0.11 $ 0.22
Estimated Non-GAAP Adjustments Equity-based
compensation expense 0.11 0.10 Amortization of intangible assets
0.03 0.03 Integration and restructuring charges 0.16 0.14 Non-cash
interest expense on convertible notes 0.07 0.07 Income tax effect
of non-GAAP adjustments (0.13 ) (0.12 )
Total Non-GAAP Adjustments 0.24 0.22
Non-GAAP Guidance $ 210,000 $ 230,000 $ 0.35 $ 0.44
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