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)) |
¨ | Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2) |
¨ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
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. | ||||||
May 10, 2017 | By: | /s/ Ralph S. Marimon | ||||
Name: | Ralph S. Marimon | |||||
Title: | Senior Vice President and Chief Financial Officer, Principal Financial Officer |
News Release | ||
www.aviatnetworks.com |
• | GAAP operating income of $0.1 million represents a $7.7 million improvement year-over-year, Non-GAAP operating income of $0.7 million represents a $7.0 million improvement year-over-year |
• | GAAP net loss of $0.4 million represents a $7.5 million improvement year-over-year |
• | Adjusted EBITDA of $2.0 million represents a $6.8 million improvement year-over-year |
• | Revenue of $58.7 million declined year-over-year by 2.9% as some projects were pushed into fiscal 2018 |
• | Balance sheet continues to strengthen; cash and cash equivalents grew by $4.9 million in the quarter and $9.4 million since the end of fiscal year 2016 |
• | Aviat Networks anticipates positive Adjusted EBITDA in its fiscal 2017 fourth quarter, expects a slight loss on a GAAP basis and positive non-GAAP operating income for the full fiscal year |
• | continued price and margin 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 ability to meet financial covenant requirements which could impact, among other things, our liquidity; |
• | the timing of our receipt of payment for products or services from our customers; |
• | our ability to meet projected new product development dates or anticipated cost reductions of new products; |
• | our suppliers' inability to perform and deliver on time as a result of their financial condition, component shortages, or other supply chain constraints; |
• | 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; |
• | our failure to protect our intellectual property rights or defend against intellectual property infringement claims by others; |
• | the results of restructuring efforts; |
• | the ability to preserve and use our net operating loss carryforwards; |
• | the effects of currency and interest rate risks; |
• | the conduct of unethical business practices in developing countries; and |
• | the impact of political turmoil in countries where we have significant business. |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands, except per share amounts) | March 31, 2017 | April 1, 2016 | March 31, 2017 | April 1, 2016 | |||||||||||
Revenues: | |||||||||||||||
Revenue from product sales | $ | 39,099 | $ | 36,241 | $ | 119,781 | $ | 134,602 | |||||||
Revenue from services | 19,601 | 24,226 | 65,662 | 75,836 | |||||||||||
Total revenues | 58,700 | 60,467 | 185,443 | 210,438 | |||||||||||
Cost of revenues: | |||||||||||||||
Cost of product sales | 26,911 | 28,454 | 82,774 | 98,962 | |||||||||||
Cost of services | 14,057 | 17,600 | 46,456 | 59,628 | |||||||||||
Total cost of revenues | 40,968 | 46,054 | 129,230 | 158,590 | |||||||||||
Gross margin | 17,732 | 14,413 | 56,213 | 51,848 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development expenses | 4,264 | 5,063 | 13,682 | 15,749 | |||||||||||
Selling and administrative expenses | 13,284 | 16,140 | 42,527 | 49,430 | |||||||||||
Restructuring charges | 111 | 804 | 343 | 859 | |||||||||||
Total operating expenses | 17,659 | 22,007 | 56,552 | 66,038 | |||||||||||
Operating income (loss) | 73 | (7,594 | ) | (339 | ) | (14,190 | ) | ||||||||
Interest income | 42 | 58 | 168 | 195 | |||||||||||
Interest expense | (7 | ) | (5 | ) | (28 | ) | (98 | ) | |||||||
Other income | 341 | — | 164 | — | |||||||||||
Income (loss) from continuing operations before income taxes | 449 | (7,541 | ) | (35 | ) | (14,093 | ) | ||||||||
Provision for (benefit from) income taxes | 779 | 361 | (826 | ) | 856 | ||||||||||
(Loss) income from continuing operations | (330 | ) | (7,902 | ) | 791 | (14,949 | ) | ||||||||
Income from discontinued operations, net of tax | — | 94 | — | 453 | |||||||||||
Net (loss) income | (330 | ) | (7,808 | ) | 791 | (14,496 | ) | ||||||||
Net income attributable to noncontrolling interests, net of tax | 69 | 66 | 141 | 260 | |||||||||||
Net (loss) income attributable to Aviat Networks | $ | (399 | ) | $ | (7,874 | ) | $ | 650 | $ | (14,756 | ) | ||||
Amount attributable to Aviat Networks: | |||||||||||||||
Net (loss) income from continuing operations, net of tax | $ | (399 | ) | $ | (7,968 | ) | $ | 650 | $ | (15,209 | ) | ||||
Net income from discontinued operations, net of tax | $ | — | $ | 94 | $ | — | $ | 453 | |||||||
Basic (loss) income per share attributable to Aviat Networks’ common stockholders: | |||||||||||||||
Continuing operations | $ | (0.08 | ) | $ | (1.52 | ) | $ | 0.12 | $ | (2.91 | ) | ||||
Discontinued operations | $ | — | $ | 0.02 | $ | — | $ | 0.09 | |||||||
Net (loss) income | $ | (0.08 | ) | $ | (1.50 | ) | $ | 0.12 | $ | (2.82 | ) | ||||
Weighted average shares outstanding, basic | 5,310 | 5,255 | 5,286 | 5,230 | |||||||||||
Diluted (loss) income per share attributable to Aviat Networks’ common stockholders: | |||||||||||||||
Continuing operations | $ | (0.08 | ) | $ | (1.52 | ) | $ | 0.12 | $ | (2.91 | ) | ||||
Discontinued operations | $ | — | $ | 0.02 | $ | — | $ | 0.09 | |||||||
Net (loss) income | $ | (0.08 | ) | $ | (1.50 | ) | $ | 0.12 | $ | (2.82 | ) | ||||
Weighted average shares outstanding, diluted | 5,310 | 5,255 | 5,392 | 5,230 |
(In thousands) | March 31, 2017 | July 1, 2016 | |||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 39,910 | $ | 30,479 | |||
Short-term investments | 240 | 222 | |||||
Accounts receivable, net | 45,177 | 63,449 | |||||
Unbilled costs | 9,777 | 5,117 | |||||
Inventories | 20,338 | 27,293 | |||||
Customer service inventories | 2,178 | 3,064 | |||||
Other current assets | 11,147 | 10,790 | |||||
Total current assets | 128,767 | 140,414 | |||||
Property, plant and equipment, net | 15,713 | 18,162 | |||||
Deferred income taxes | 5,748 | 6,068 | |||||
Other assets | 1,296 | 1,467 | |||||
Total long-term assets | 22,757 | 25,697 | |||||
TOTAL ASSETS | $ | 151,524 | $ | 166,111 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities: | |||||||
Short-term debt | $ | 8,000 | $ | 9,000 | |||
Accounts payable | 29,816 | 33,217 | |||||
Accrued expenses | 22,435 | 23,205 | |||||
Advance payments and unearned income | 23,218 | 30,615 | |||||
Restructuring liabilities | 1,691 | 3,910 | |||||
Total current liabilities | 85,160 | 99,947 | |||||
Unearned income | 7,561 | 8,387 | |||||
Other long-term liabilities | 1,047 | 1,409 | |||||
Reserve for uncertain tax positions | 1,411 | 1,414 | |||||
Deferred income taxes | 1,497 | 1,497 | |||||
Total liabilities | 96,676 | 112,654 | |||||
Equity: | |||||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock, $0.01 par value, 300,000,000 shares authorized, 5,314,860 shares issued and outstanding at March 31, 2017; 5,261,041 shares issued and outstanding at July 1, 2016 | 53 | 53 | |||||
Additional paid-in-capital | 813,120 | 811,601 | |||||
Accumulated deficit | (746,731 | ) | (747,381 | ) | |||
Accumulated other comprehensive loss | (12,076 | ) | (11,157 | ) | |||
Total Aviat Networks stockholders’ equity | 54,366 | 53,116 | |||||
Noncontrolling interests | 482 | 341 | |||||
Total equity | 54,848 | 53,457 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 151,524 | $ | 166,111 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
March 31, 2017 | % of Revenue | April 1, 2016 | % of Revenue | March 31, 2017 | % of Revenue | April 1, 2016 | % of Revenue | ||||||||||||||||||||
(In thousands, except percentages and per share amounts) | |||||||||||||||||||||||||||
GAAP gross margin | $ | 17,732 | 30.2 | % | $ | 14,413 | 23.8 | % | $ | 56,213 | 30.3 | % | $ | 51,848 | 24.6 | % | |||||||||||
WTM inventory write-down recovery | (48 | ) | — | (131 | ) | — | |||||||||||||||||||||
Performance bond expense | — | — | 365 | — | |||||||||||||||||||||||
Share-based compensation | 48 | 44 | 151 | 125 | |||||||||||||||||||||||
Non-GAAP gross margin | 17,732 | 30.2 | % | 14,457 | 23.9 | % | 56,598 | 30.5 | % | 51,973 | 24.7 | % | |||||||||||||||
GAAP research and development expenses | $ | 4,264 | 7.3 | % | $ | 5,063 | 8.4 | % | $ | 13,682 | 7.4 | % | $ | 15,749 | 7.5 | % | |||||||||||
Share-based compensation | (38 | ) | (28 | ) | (100 | ) | (92 | ) | |||||||||||||||||||
Non-GAAP research and development expenses | 4,226 | 7.2 | % | 5,035 | 8.3 | % | 13,582 | 7.3 | % | 15,657 | 7.4 | % | |||||||||||||||
GAAP selling and administrative expenses | $ | 13,284 | 22.6 | % | $ | 16,140 | 26.7 | % | $ | 42,527 | 22.9 | % | $ | 49,430 | 23.5 | % | |||||||||||
Share-based compensation | (479 | ) | (388 | ) | (1,260 | ) | (1,165 | ) | |||||||||||||||||||
Non-GAAP selling and administrative expenses | 12,805 | 21.8 | % | 15,752 | 26.1 | % | 41,267 | 22.3 | % | 48,265 | 22.9 | % | |||||||||||||||
GAAP operating income (loss) | $ | 73 | 0.1 | % | $ | (7,594 | ) | (12.6 | )% | $ | (339 | ) | (0.2 | )% | $ | (14,190 | ) | (6.7 | )% | ||||||||
WTM inventory write-down recovery | (48 | ) | — | (131 | ) | — | |||||||||||||||||||||
Performance bond expense | — | — | 365 | — | |||||||||||||||||||||||
Share-based compensation | 565 | 460 | 1,511 | 1,382 | |||||||||||||||||||||||
Restructuring charges | 111 | 804 | 343 | 859 | |||||||||||||||||||||||
Non-GAAP operating income (loss) | 701 | 1.2 | % | (6,330 | ) | (10.5 | )% | 1,749 | 0.9 | % | (11,949 | ) | (5.7 | )% | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
March 31, 2017 | % of Revenue | April 1, 2016 | % of Revenue | March 31, 2017 | % of Revenue | April 1, 2016 | % of Revenue | ||||||||||||||||||||
(In thousands, except percentages and per share amounts) | |||||||||||||||||||||||||||
GAAP income tax provision | $ | 779 | 1.3 | % | $ | 361 | 0.6 | % | $ | (826 | ) | (0.4 | )% | $ | 856 | 0.4 | % | ||||||||||
Tax refund from Inland Revenue Authority of Singapore | — | — | 3,741 | — | |||||||||||||||||||||||
Adjustment to reflect pro forma tax rate | (479 | ) | (61 | ) | (2,015 | ) | 44 | ||||||||||||||||||||
Non-GAAP income tax provision | 300 | 0.5 | % | 300 | 0.5 | % | 900 | 0.5 | % | 900 | 0.4 | % | |||||||||||||||
GAAP (loss) income from continuing operations attributable to Aviat Networks | $ | (399 | ) | (0.7 | )% | $ | (7,968 | ) | (13.2 | )% | $ | 650 | 0.4 | % | $ | (15,209 | ) | (7.2 | )% | ||||||||
Share-based compensation | 565 | 460 | 1,511 | 1,382 | |||||||||||||||||||||||
Restructuring charges | 111 | 804 | 343 | 859 | |||||||||||||||||||||||
Nigeria FX (income) loss on dividend receivable | 10 | — | 218 | — | |||||||||||||||||||||||
WTM inventory write-down recovery | (48 | ) | — | (131 | ) | — | |||||||||||||||||||||
Performance bond expense | — | — | 365 | — | |||||||||||||||||||||||
Gain on liquidation of subsidiary | (349 | ) | — | (349 | ) | — | |||||||||||||||||||||
Tax refund from Inland Revenue Authority of Singapore | — | — | (3,741 | ) | — | ||||||||||||||||||||||
Adjustment to reflect pro forma tax rate | 479 | 61 | 2,015 | (44 | ) | ||||||||||||||||||||||
Non-GAAP income (loss) from continuing operations attributable to Aviat Networks | $ | 369 | 0.6 | % | $ | (6,643 | ) | (11.0 | )% | $ | 881 | 0.5 | % | $ | (13,012 | ) | (6.2 | )% | |||||||||
Diluted (loss) income per share from continuing operations attributable to Aviat Networks stockholders | |||||||||||||||||||||||||||
GAAP | $ | (0.08 | ) | $ | (1.52 | ) | $ | 0.12 | $ | (2.91 | ) | ||||||||||||||||
Non-GAAP | $ | 0.07 | $ | (1.26 | ) | $ | 0.16 | $ | (2.49 | ) | |||||||||||||||||
Shares used in computing diluted (loss) income per share from continuing operations | |||||||||||||||||||||||||||
GAAP | 5,310 | 5,255 | 5,392 | 5,230 | |||||||||||||||||||||||
Non-GAAP | 5,511 | 5,255 | 5,392 | 5,230 | |||||||||||||||||||||||
ADJUSTED EBITDA: | |||||||||||||||||||||||||||
GAAP (loss) income from continuing operations attributable to Aviat Networks | $ | (399 | ) | (0.7 | )% | $ | (7,968 | ) | (13.2 | )% | $ | 650 | 0.4 | % | $ | (15,209 | ) | (7.2 | )% | ||||||||
Depreciation and amortization of property, plant and equipment | 1,404 | 1,668 | 4,540 | 5,044 | |||||||||||||||||||||||
Interest | (35 | ) | (53 | ) | (140 | ) | (97 | ) | |||||||||||||||||||
Share-based compensation | 565 | 460 | 1,511 | 1,382 | |||||||||||||||||||||||
Restructuring charges | 111 | 804 | 343 | 859 | |||||||||||||||||||||||
Nigeria FX (income) loss on dividend receivable | 10 | — | 218 | — | |||||||||||||||||||||||
WTM inventory write-down recovery | (48 | ) | — | (131 | ) | — | |||||||||||||||||||||
Performance bond expense | — | — | 365 | — | |||||||||||||||||||||||
Gain on liquidation of subsidiary | (349 | ) | — | (349 | ) | — | |||||||||||||||||||||
Provision for income taxes | 779 | 361 | (826 | ) | 856 | ||||||||||||||||||||||
Adjusted EBITDA attributable to Aviat Networks | $ | 2,038 | 3.5 | % | $ | (4,728 | ) | (7.8 | )% | $ | 6,181 | 3.3 | % | $ | (7,165 | ) | (3.4 | )% |
(1) | The adjustments above reconcile our GAAP financial results to the non-GAAP financial measures used by us. Our non-GAAP income (loss) from continuing operations attributable to Aviat Networks excluded share-based compensation, and other non-recurring charges (recovery). Adjusted EBITDA was determined by excluding depreciation and amortization on property, plant and equipment, interest, provision for or benefit from income taxes, and non-GAAP pre-tax adjustments, as set forth above, from the GAAP (loss) income from continuing operations attributable to Aviat Networks. 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. |
Three Months Ended | Nine Months Ended | ||||||||||||||
March 31, 2017 | April 1, 2016 | March 31, 2017 | April 1, 2016 | ||||||||||||
(In thousands) | |||||||||||||||
North America | $ | 29,188 | $ | 27,151 | $ | 97,125 | $ | 94,215 | |||||||
International: | |||||||||||||||
Africa and Middle East | 17,335 | 18,178 | 48,454 | 69,169 | |||||||||||
Europe and Russia | 4,012 | 4,383 | 11,329 | 16,442 | |||||||||||
Latin America and Asia Pacific | 8,165 | 10,755 | 28,535 | 30,612 | |||||||||||
29,512 | 33,316 | $ | 88,318 | $ | 116,223 | ||||||||||
Total Revenue | $ | 58,700 | $ | 60,467 | $ | 185,443 | $ | 210,438 |