Delaware | 001-33278 | 20-5961564 | ||
(State or other jurisdiction | (Commission File | (I.R.S. Employer | ||
of incorporation) | Number) | Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition |
Item 7.01 Regulation FD Disclosure |
Item 9.01 Financial Statements and Exhibits |
SIGNATURE |
EX-99.1 |
AVIAT NETWORKS, INC. | ||||||
February 1, 2012 | By: | /s/ Edward J Hayes, Jr. | ||||
Name: | Edward J. Hayes, Jr. | |||||
Title: | Senior Vice President and Chief Financial Officer |
Exhibit No. Under Regulation S-K, Item 601 | Description | |
99.1 | Press Release, issued by Aviat Networks, Inc. on February 1, 2012 |
• | Book to Bill above 1 |
• | Revenue for the quarter was within guidance at $105M |
• | GAAP Gross Margin of 30.4%; Non-GAAP Gross Margin of 31.4% |
• | GAAP Net Loss including discontinued operations of $(12.8M) or $(0.22) per share; Breakeven Non-GAAP Earnings per share |
• | Generated positive cash flow in core business |
• | $5.6 million of goodwill impairment charges |
• | $0.9 million write-off of deferred inventory costs associated with a legacy product line |
• | $1.3 million for share-based compensation expense |
• | $0.8 million for the amortization of purchased intangibles |
• | $0.3 million for transactional tax assessments |
• | $0.1 million of restructuring charges |
• | continued price erosion as a result of increased competition in the microwave transmission industry; |
• | the impact of the volume, timing and customer, product and geographic mix of our product orders; |
• | our suppliers' inability to perform and deliver on time as a result of their financial condition, component shortages or other supply chain constraints; |
• | our ability to meet projected new product development dates or anticipated cost reductions of new products; |
• | customer acceptance of new products; |
• | the ability of our subcontractors to timely perform; |
• | continued weakness in the global economy affecting customer spending; |
• | retention of our key personnel; |
• | our ability to manage and maintain key customer relationships; |
• | uncertain economic conditions in the telecommunications sector combined with operator and supplier consolidation; |
• | the timing of our receipt of payment for products or services from our customers; |
• | our failure to protect our intellectual property rights or defend against intellectual property infringement claims by others; |
• | the effects of currency and interest rate risks; and |
• | the impact of political turmoil in countries where we have significant business. |
Quarter Ended | Two Quarters Ended | |||||||||||||||
December 30, 2011 | December 31, 2010 (1) | December 30, 2011 | December 31, 2010 (1) | |||||||||||||
(In millions, except per share amounts) | ||||||||||||||||
Revenue from product sales and services | $ | 105.0 | $ | 115.3 | $ | 216.4 | $ | 215.7 | ||||||||
Cost of product sales and services | 73.0 | 77.8 | 151.5 | 151.7 | ||||||||||||
Amortization of purchased technology | 0.1 | 0.1 | 0.3 | 0.3 | ||||||||||||
Gross margin | 31.9 | 37.4 | 64.6 | 63.7 | ||||||||||||
Research and development expenses | 8.8 | 11.2 | 17.8 | 20.9 | ||||||||||||
Selling and administrative expenses | 25.3 | 25.1 | 49.9 | 53.5 | ||||||||||||
Amortization of intangible assets | 0.7 | 0.7 | 1.4 | 1.4 | ||||||||||||
Goodwill impairment charges | 5.6 | — | 5.6 | — | ||||||||||||
Restructuring charges | 0.1 | 3.4 | 1.0 | 9.0 | ||||||||||||
Operating loss | (8.6 | ) | (3.0 | ) | (11.1 | ) | (21.1 | ) | ||||||||
Loss on sale of NetBoss assets | — | (0.5 | ) | — | (4.4 | ) | ||||||||||
Other expenses | (0.3 | ) | (0.5 | ) | (0.3 | ) | (0.5 | ) | ||||||||
Interest income | 0.1 | — | 0.3 | 0.1 | ||||||||||||
Interest expense | (0.4 | ) | (0.7 | ) | (0.8 | ) | (1.3 | ) | ||||||||
Loss from continuing operations before income taxes | (9.2 | ) | (4.7 | ) | (11.9 | ) | (27.2 | ) | ||||||||
Provision for (benefit from) income taxes | 0.8 | 5.3 | 1.8 | (0.2 | ) | |||||||||||
Loss from continuing operations | (10.0 | ) | (10.0 | ) | (13.7 | ) | (27.0 | ) | ||||||||
Loss from discontinued operations, net of tax | (2.8 | ) | (2.5 | ) | (5.9 | ) | (6.8 | ) | ||||||||
Net loss | $ | (12.8 | ) | $ | (12.5 | ) | $ | (19.6 | ) | $ | (33.8 | ) | ||||
Basic and diluted net loss per common share: | ||||||||||||||||
Continuing operations | $ | (0.17 | ) | $ | (0.17 | ) | $ | (0.23 | ) | $ | (0.46 | ) | ||||
Discontinued operations | $ | (0.05 | ) | $ | (0.04 | ) | $ | (0.10 | ) | $ | (0.12 | ) | ||||
Net loss per common share | $ | (0.22 | ) | $ | (0.21 | ) | $ | (0.33 | ) | $ | (0.58 | ) | ||||
Basic and diluted weighted average shares outstanding | 59.0 | 58.4 | 58.9 | 58.4 | ||||||||||||
(1) | Beginning in the third quarter of fiscal 2011, the results of the WiMAX business are presented as discontinued operations in our consolidated financial statements. Prior year period results are reclassified to conform to current period presentation. |
December 30, 2011 | July 1,2011 | |||||||
(In millions) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 84.3 | $ | 98.2 | ||||
Receivables, net | 113.7 | 133.0 | ||||||
Unbilled costs | 25.8 | 24.8 | ||||||
Inventories | 42.3 | 50.6 | ||||||
Customer service inventories | 19.5 | 21.2 | ||||||
Other current assets | 18.0 | 22.5 | ||||||
Property, plant and equipment, net | 22.0 | 21.6 | ||||||
Goodwill | — | 5.6 | ||||||
Identifiable intangible assets, net | 2.3 | 4.1 | ||||||
Other assets | 1.9 | 2.3 | ||||||
$ | 329.8 | $ | 383.9 | |||||
Liabilities and Stockholders' Equity | ||||||||
Short-term debt | $ | 6.0 | $ | 6.0 | ||||
Accounts payable | 42.3 | 70.3 | ||||||
Redeemable preference shares | 8.3 | 8.3 | ||||||
Accrued expenses and other current liabilities | 105.0 | 112.5 | ||||||
Reserve for uncertain tax positions and other long-term liabilities | 8.7 | 9.1 | ||||||
Stockholders' equity | 159.5 | 177.7 | ||||||
$ | 329.8 | $ | 383.9 |
Two Quarters Ended | ||||||||
December 30, 2011 | December 31, 2010 (1) | |||||||
(In millions) | ||||||||
Net loss | $ | (19.6 | ) | $ | (33.8 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Amortization of identifiable intangible assets | 1.7 | 1.7 | ||||||
Goodwill impairment charges | 5.6 | — | ||||||
Depreciation and amortization of property, plant and equipment and capitalized software | 2.1 | 4.2 | ||||||
Bad debt expenses | 1.9 | 0.9 | ||||||
Share-based compensation expense | 2.3 | 2.1 | ||||||
Deferred income tax (benefit) expense | — | (7.5 | ) | |||||
Inventory write-downs | 2.6 | 10.4 | ||||||
Loss on held for sale assets, net | 2.0 | — | ||||||
Loss on sale of NetBoss assets | — | 4.4 | ||||||
Changes in operating assets and liabilities: | ||||||||
Receivables | 17.4 | (39.8 | ) | |||||
Unbilled costs | (1.0 | ) | (0.6 | ) | ||||
Inventories | 7.2 | (10.3 | ) | |||||
Customer service inventories | 0.3 | (2.2 | ) | |||||
Accounts payable | (28.0 | ) | 23.7 | |||||
Accrued expenses | 1.8 | (1.4 | ) | |||||
Advance payments and unearned income | (8.7 | ) | 3.7 | |||||
Income taxes payable or receivable | 1.1 | 7.0 | ||||||
Restructuring liabilities and other assets and liabilities | 3.8 | (3.0 | ) | |||||
Net cash used in operating activities | (7.5 | ) | (40.5 | ) | ||||
Investing Activities | ||||||||
Cash received from sale of NetBoss assets | — | 3.8 | ||||||
Cash disbursed related to sale of WiMAX business | (1.2 | ) | — | |||||
Additions of property, plant and equipment | (3.4 | ) | (3.4 | ) | ||||
Additions of capitalized software | — | (0.7 | ) | |||||
Net cash used in investing activities | (4.6 | ) | (0.3 | ) | ||||
Financing Activities | ||||||||
Proceeds from short-term debt arrangement | — | 6.0 | ||||||
Payments on short-term debt arrangement | — | (5.0 | ) | |||||
Net cash provided by financing activities | — | 1.0 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (1.8 | ) | 0.5 | |||||
Net decrease in cash and cash equivalents | (13.9 | ) | (39.3 | ) | ||||
Cash and cash equivalents, beginning of period | 98.2 | 141.7 | ||||||
Cash and cash equivalents, end of period | $ | 84.3 | $ | 102.4 | ||||
Quarter Ended | Two Quarters Ended | |||||||||||||||||||||||||||
December 30, 2011 | % of Revenue | December 31, 2010 (1) | % of Revenue | December 30, 2011 | % of Revenue | December 31, 2010 (1) | % of Revenue | |||||||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||||||||||
GAAP gross margin | $ | 31.9 | 30.4 | % | $ | 37.4 | 32.4 | % | $ | 64.6 | 29.9 | % | $ | 63.7 | 29.5 | % | ||||||||||||
Share-based compensation | 0.1 | 0.1 | 0.2 | 0.2 | ||||||||||||||||||||||||
Write-off of deferred inventory and E&O costs | 0.9 | — | 1.0 | — | ||||||||||||||||||||||||
Amortization of purchased technology | 0.1 | 0.1 | 0.3 | 0.3 | ||||||||||||||||||||||||
Non-GAAP gross margin | 33.0 | 31.4 | % | 37.6 | 32.6 | % | 66.1 | 30.5 | % | 64.2 | 29.8 | % | ||||||||||||||||
GAAP research and development expenses | $ | 8.8 | 8.4 | % | $ | 11.2 | 9.7 | % | $ | 17.8 | 8.2 | % | $ | 20.9 | 9.7 | % | ||||||||||||
Share-based compensation | (0.3 | ) | (0.7 | ) | (0.5 | ) | (0.9 | ) | ||||||||||||||||||||
Non-GAAP research and development expenses | 8.5 | 8.1 | % | 10.5 | 9.1 | % | 17.3 | 8.0 | % | 20.0 | 9.3 | % | ||||||||||||||||
GAAP selling and administrative expenses | $ | 25.3 | 24.1 | % | $ | 25.1 | 21.8 | % | $ | 49.9 | 23.1 | % | $ | 53.5 | 24.8 | % | ||||||||||||
Share-based compensation | (0.9 | ) | (0.4 | ) | (1.5 | ) | (0.9 | ) | ||||||||||||||||||||
Rebranding and transitional services | — | (0.7 | ) | — | (0.9 | ) | ||||||||||||||||||||||
Other nonrecurring charges | (0.5 | ) | — | (0.5 | ) | — | ||||||||||||||||||||||
Non-GAAP selling and administrative expenses | 23.9 | 22.8 | % | 24.0 | 20.8 | % | 47.9 | 22.1 | % | 51.7 | 24.0 | % | ||||||||||||||||
GAAP operating loss | $ | (8.6 | ) | (8.2 | )% | $ | (3.0 | ) | (2.6 | )% | $ | (11.1 | ) | (5.1 | )% | $ | (21.1 | ) | (9.8 | )% | ||||||||
Share-based compensation | 1.3 | 1.2 | 2.2 | 2.0 | ||||||||||||||||||||||||
Write-off of deferred inventory and E&O costs | 0.9 | — | 1.0 | — | ||||||||||||||||||||||||
Amortization of purchased technology | 0.1 | 0.1 | 0.3 | 0.3 | ||||||||||||||||||||||||
Rebranding and transitional services | — | 0.7 | — | 0.9 | ||||||||||||||||||||||||
Other nonrecurring charges | 0.5 | — | 0.5 | — | ||||||||||||||||||||||||
Amortization of intangible assets | 0.7 | 0.7 | 1.4 | 1.4 | ||||||||||||||||||||||||
Goodwill impairment charges | 5.6 | — | 5.6 | — | ||||||||||||||||||||||||
Restructuring charges | 0.1 | 3.4 | 1.0 | 9.0 | ||||||||||||||||||||||||
Non-GAAP operating income (loss) | 0.6 | 0.6 | % | 3.1 | 2.7 | % | 0.9 | 0.4 | % | (7.5 | ) | (3.5 | )% | |||||||||||||||
GAAP other expense, net | $ | (0.6 | ) | (0.6 | )% | $ | (1.7 | ) | (1.5 | )% | $ | (0.8 | ) | (0.4 | )% | $ | (6.1 | ) | (2.8 | )% | ||||||||
Loss on sale of NetBoss assets | — | 0.5 | — | 4.4 | ||||||||||||||||||||||||
Transactional taxes assessments | 0.3 | 0.5 | 0.3 | 0.5 | ||||||||||||||||||||||||
Non-GAAP other expense, net | (0.3 | ) | (0.3 | )% | (0.7 | ) | (0.6 | )% | (0.5 | ) | (0.2 | )% | (1.2 | ) | (0.6 | )% | ||||||||||||
GAAP income tax provision (benefit) | $ | 0.8 | 0.8 | % | $ | 5.3 | 4.6 | % | $ | 1.8 | 0.8 | % | $ | (0.2 | ) | (0.1 | )% | |||||||||||
Adjustment to reflect zero percent pro forma tax rate | (0.8 | ) | (5.3 | ) | (1.8 | ) | 0.2 | |||||||||||||||||||||
Non-GAAP income tax provision | — | — | % | — | — | % | — | — | % | — | — | % | ||||||||||||||||
GAAP loss from continuing operations | $ | (10.0 | ) | (9.5 | )% | $ | (10.0 | ) | (8.7 | )% | $ | (13.7 | ) | (6.3 | )% | $ | (27.0 | ) | (12.5 | )% | ||||||||
Share-based compensation | 1.3 | 1.2 | 2.2 | 2.0 | ||||||||||||||||||||||||
Write-off of deferred inventory and E&O costs | 0.9 | — | 1.0 | — | ||||||||||||||||||||||||
Amortization of purchased technology | 0.1 | 0.1 | 0.3 | 0.3 | ||||||||||||||||||||||||
Rebranding and transitional services | — | 0.7 | — | 0.9 | ||||||||||||||||||||||||
Other nonrecurring charges | 0.5 | — | 0.5 | — | ||||||||||||||||||||||||
Amortization of intangible assets | 0.7 | 0.7 | 1.4 | 1.4 | ||||||||||||||||||||||||
Goodwill impairment charges | 5.6 | — | 5.6 | — | ||||||||||||||||||||||||
Restructuring charges | 0.1 | 3.4 | 1.0 | 9.0 | ||||||||||||||||||||||||
Loss on sale of NetBoss assets | — | 0.5 | — | 4.4 | ||||||||||||||||||||||||
Transactional taxes assessments | 0.3 | 0.5 | 0.3 | 0.5 | ||||||||||||||||||||||||
Adjustment to reflect zero percent pro forma tax rate | 0.8 | 5.3 | 1.8 | (0.2 | ) | |||||||||||||||||||||||
Non-GAAP income (loss) from continuing operations | $ | 0.3 | 0.3 | % | $ | 2.4 | 2.1 | % | $ | 0.4 | 0.2 | % | $ | (8.7 | ) | (4.0 | )% | |||||||||||
Basic and diluted income (loss) per share from continuing operations | ||||||||||||||||||||||||||||
GAAP | $ | (0.17 | ) | $ | (0.17 | ) | $ | (0.23 | ) | $ | (0.46 | ) | ||||||||||||||||
Non-GAAP | $ | — | $ | 0.04 | $ | 0.01 | $ | (0.15 | ) | |||||||||||||||||||
Shares used in computing income (loss) per share from continuing operations, basic and diluted | ||||||||||||||||||||||||||||
GAAP | 59.0 | 58.4 | 58.9 | 58.4 | ||||||||||||||||||||||||
Non-GAAP | 61.1 | 59.0 | 60.7 | 59.0 |
(1) | In the third quarter of fiscal 2011, the WiMAX business met the criteria to be considered held for sale. Beginning in the third quarter of fiscal 2011, the results of the WiMAX business are presented as a discontinued operation in our consolidated financial statements. Prior year period results have been reclassified to conform to current period presentation. |
(2) | The adjustments above reconcile our GAAP financial results to the non-GAAP financial measures used by us. Our non-GAAP financial measures exclude share-based compensation, write-off of deferred inventory and excess and obsolete inventory, amortization of purchased technology, amortization of intangible assets, goodwill impairment charges, restructuring charges, loss on sale of NetBoss assets, transactional tax assessments and adjustment to reflect zero percent pro forma tax rate. We believe that the presentation of these non-GAAP items provides meaningful supplemental information to investors, when viewed in conjunction with, and not in lieu of, our GAAP results. However, the non-GAAP financial measures have not been prepared under a comprehensive set of accounting rules or principles. Non-GAAP information should not be considered in isolation from, or as a substitute for, information prepared in accordance with GAAP. Moreover, there are material limitations associated with the use of non-GAAP financial measures. |
Quarter Ended | Two Quarters Ended | |||||||||||||||
December 30, 2011 | December 31, 2010 | December 30, 2011 | December 31, 2010 | |||||||||||||
(In millions) | ||||||||||||||||
North America | $ | 44.2 | $ | 40.3 | $ | 81.2 | $ | 75.6 | ||||||||
International: | ||||||||||||||||
Africa and Middle East | 24.0 | 28.6 | 66.7 | 59.1 | ||||||||||||
Europe and Russia | 15.8 | 28.4 | 28.2 | 46.1 | ||||||||||||
Latin America and AsiaPac | 21.0 | 18.0 | 40.3 | 34.9 | ||||||||||||
Total International | 60.8 | 75.0 | 135.2 | 140.1 | ||||||||||||
$ | 105.0 | $ | 115.3 | $ | 216.4 | $ | 215.7 |