EX-99.1 2 financials.txt FINANCIALS NEWS RELEASE AEROFLEX FOR IMMEDIATE RELEASE --------------------- FOR FURTHER INFORMATION CONTACT: Investor Inquiries: ------------------ Leonard Borow President and Chief Operating Officer (516) 694-6700 AEROFLEX INCORPORATED REPORTS RECORD SECOND QUARTER SALES AND 44% INCREASE IN PRO FORMA EARNINGS PLAINVIEW, NEW YORK, February 7, 2006 -- Aeroflex Incorporated (Nasdaq Symbol: ARXX), a leading designer, developer and manufacturer of automated testing solutions and microelectronics for the aerospace, defense and broadband communications markets, today announced operating results for its fiscal 2006 second quarter, which ended December 31, 2005. The highlights of the Company's quarterly financial performance from continuing operations for the second quarter of fiscal 2006 are as follows: o net sales increased 20% to a quarterly record $135.2 million (including contributions from our fourth quarter 2005 acquisitions) from $112.5 million last year and $125.6 million in the first quarter of this fiscal year, representing 8% sequential growth; o pro forma gross profit margins were 47.8% compared to 47.6% last year; and o pro forma operating income increased 48% compared to last year. On a pro forma basis, for the fiscal 2006 second quarter, income from continuing operations increased 44% to $10.7 million, or $.14 per diluted share, compared to $7.4 million, or $.10 per diluted share, last year. The fiscal 2006 second quarter pro forma results exclude pre-tax charges of: o $3.4 million ($2.1 million, after tax) for amortization of acquired intangibles; and o $1.4 million ($0.8 million, after tax) for stock based compensation. The prior year's second quarter pro forma results excluded a pre-tax charge of $2.0 million ($1.3 million, after tax) for amortization of acquired intangibles. On a GAAP basis, income from continuing operations for the fiscal 2006 second quarter amounted to $7.8 million, or $.10 per diluted share, compared with $6.1 million, or $.08 per diluted share, last year representing an increase of 27%. The fiscal 2006 second quarter included a $0.8 million after tax charge for stock based compensation (for which there was no comparable amount in the prior year), and a $2.1 million after tax charge for amortization of acquired intangibles, (an increase of $0.8 million) related to our acquisitions in fiscal 2005. The Company's financial performance from continuing operations for the six months of fiscal 2006 are as follows: o net sales increased 18% to $260.8 million from $221.7 million last year, including contributions from our fourth quarter 2005 acquisitions; o pro forma gross profit margins were 47.8% compared to 47.3% last year; and o pro forma operating income increased 31% compared to last year. On a pro forma basis, for the fiscal 2006 six months, income from continuing operations increased 28% to $19.4 million, or $.26 per diluted share, compared to $15.1 million, or $.20 per diluted share, last year. The fiscal 2006 six months pro forma results exclude pre-tax charges of: o $6.9 million ($4.3 million, after tax) for amortization of acquired intangibles; o $3.5 million ($2.1 million, after tax) for stock based compensation; and o $1.1 million ($0.7 million, after tax) for an acquisition related inventory adjustment. The prior year's six months pro forma results excluded a pre-tax charge of $4.1 million ($2.6 million, after tax) for amortization of acquired intangibles. On a GAAP basis, income from continuing operations for the fiscal 2006 six months amounted to $12.3 million, or $.16 per diluted share, compared with $12.5 million, or $.16 per diluted share last year. The fiscal 2006 six months included a $2.1 million after tax charge for stock compensation (for which there was no comparable amount in the prior year), a $4.3 million after tax charge for amortization of acquired intangibles (an increase of $1.7 million from last year's six months) and a $0.7 million after tax charge for an acquisition related inventory adjustment. "We are pleased with the second quarter record sales which reflect 8% sequential growth," said Len Borow, President and Chief Operating Officer. "Our cost containment measures are showing results, as SG&A as a percentage of sales decreased by almost a full percent. We also achieved 24% sequential growth in pro forma earnings. Backlog reached $226.3 million, another record high, with a strong book-to-bill ratio of 1.08 to 1.0." Our estimate of operating results for the March 2006 quarter is as follows: o net sales are expected to be approximately $140 million; and o pro forma earnings from continuing operations per diluted share are anticipated to be $.15. Pro forma earnings exclude estimated amortization of acquired intangibles of $.03 per diluted share and stock-based compensation of $.01 per diluted share. GAAP earnings from continuing operations per diluted share are anticipated to be $.11. Our conference call discussing second quarter results is scheduled for 9:00 a.m. (New York time) on February 8, 2006 and can be accessed by dialing 1-866-362-4829 in the United States and by dialing 617-597-5346 outside of the United States. The participant passcode is 58564177. There will be a replay of the conference call starting at approximately 11:00 a.m. (New York time) on February 8, 2006 and will be available for one week. The replay can be accessed by dialing 1-888-286-8010 within the United States and by dialing 617-801-6888 outside of the United States. The access code for both telephone numbers is 52906762. 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 second 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-Q. 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 pro forma results are a supplement to financial statements based on GAAP. The Company uses pro forma information to evaluate its operating performance and believes this presentation provides investors with additional insight into its underlying operating results. A full reconciliation between the pro forma and GAAP results from continuing operations is included in the accompanying financial data.
AEROFLEX INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (Unaudited) -------------------------------------------------------- (In thousands, except per share data) For the Quarter Ended --------------------- 12/31/05 12/31/05 12/31/04 12/31/04 ---------- ----------- --------- ----------- (GAAP) (Pro forma) (GAAP) (Pro forma) Net sales $ 135,156 $ 135,156 $ 112,469 $ 112,469 Cost of sales 70,602 70,529 58,988 58,988 ---------- ---------- ---------- ---------- Gross profit 64,554 64,627 53,481 53,481 Selling, general and administrative costs 30,556 29,297 26,719 26,719 Research and development costs 18,290 18,180 15,199 15,199 Amortization of acquired intangibles 3,433 - 2,042 - ---------- ---------- ---------- ---------- Operating income 12,275 17,150 9,521 11,563 Interest and other income (expense), net 514 514 379 379 ---------- ---------- ---------- ---------- Income from continuing operations before income taxes 12,789 17,664 9,900 11,942 Provision for income taxes 5,015 6,965 3,758 4,510 ---------- ---------- ---------- ---------- Income from continuing operations 7,774 10,699 6,142 7,432 Income (loss) from discontinued operations, net of tax - - (819) (819) ---------- ---------- ---------- ---------- Net income $ 7,774 $ 10,699 $ 5,323 $ 6,613 ========== ========== ========== ========== Income (loss) per common share: Basic: Continuing operations $ 0.10 $ 0.14 $ 0.08 $ 0.10 Discontinued operations - - (0.01) (0.01) ---------- ---------- ---------- ---------- Net income $ 0.10 $ 0.14 $ 0.07 $ 0.09 ========== ========== ========== ========== Diluted: Continuing operations $ 0.10 $ 0.14 $ 0.08 $ 0.10 Discontinued operations - - (0.01) (0.01) ---------- ---------- ---------- ---------- Net income $ 0.10 $ 0.14 $ 0.07 $ 0.09 ========== ========== ========== ========== Weighted average number of shares Outstanding - Basic 74,875 74,875 74,625 74,625 ========== ========== ========== ========== - Diluted 75,990 75,990 76,310 76,310 ========== ========== ========== ==========
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AEROFLEX INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) --------------------------------------------------------- (In thousands, except per share data) For the Six Months Ended ------------------------------------------------------ 12/31/05 12/31/05 12/31/04 12/31/04 ------------ ---------- ---------- ---------- (GAAP) (Pro forma) (GAAP) (Pro forma) Net sales $ 260,804 $ 260,804 $ 221,651 $ 221,651 Cost of sales 137,324 136,084 116,839 116,839 ---------- ---------- ---------- ---------- Gross profit 123,480 124,720 104,812 104,812 Selling, general and administrative costs 60,808 57,721 51,486 51,486 Research and development costs 36,254 36,035 29,743 29,743 Amortization of acquired intangibles 6,889 - 4,101 - ---------- ---------- ---------- ---------- Operating income 19,529 30,964 19,482 23,583 Interest and other income (expense), net 445 445 543 543 ---------- ---------- ---------- ---------- Income from continuing operations before income taxes 19,974 31,409 20,025 24,126 Provision for income taxes 7,672 12,049 7,484 8,992 ---------- ---------- ---------- ---------- Income from continuing operations 12,302 19,360 12,541 15,134 Income (loss) from discontinued operations, net of tax - - (1,602) (1,602) ---------- ---------- ---------- ---------- Net income $ 12,302 $ 19,360 $ 10,939 $ 13,532 ========== ========== ========== ========== Income (loss) per common share: Basic: Continuing operations $ 0.16 $ 0.26 $ 0.17 $ 0.20 Discontinued operations - - (0.02) (0.02) ---------- ---------- ---------- ---------- Net income $ 0.16 $ 0.26 $ 0.15 $ 0.18 ========== ========== ========== ========== Diluted: Continuing operations $ 0.16 $ 0.26 $ 0.16 $ 0.20 Discontinued operations - - (0.02) (0.02) ---------- ---------- ---------- ---------- Net income $ 0.16 $ 0.26 $ 0.14 $ 0.18 ========== ========== ========== ========== Weighted average number of shares Outstanding - Basic 74,816 74,816 74,536 74,536 ========== ========== ========== ========== - Diluted 75,845 75,845 76,149 76,149 ========== ========== ========== ==========
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AEROFLEX INCORPORATED AND SUBSIDIARIES RECONCILIATION OF REPORTED GAAP RESULTS TO PRO FORMA ---------------------------------------------------- INCOME FROM CONTINUING OPERATIONS (Unaudited) --------------------------------------------- (In thousands, except per share data) For the Quarter Ended For the Six Months Ended ------------------------ ------------------------ 12/31/05 12/31/04 12/31/05 12/31/04 ----------- ---------- ---------- ---------- GAAP income from continuing operations $ 7,774 $ 6,142 $ 12,302 $ 12,541 -------- -------- -------- -------- Pro forma adjustments: Add back: Stock-based compensation 1,442 - 3,458 - Amortization of acquired intangible assets 3,433 2,042 6,889 4,101 Acquisition related inventory adjustment - - 1,088 - Income tax benefit (1,950) (752) (4,377) (1,508) -------- -------- -------- -------- Total pro forma adjustments 2,925 1,290 7,058 2,593 -------- -------- -------- -------- Pro forma income from continuing operations $ 10,699 $ 7,432 $ 19,360 $ 15,134 ======== ======== ======== ======== Income per common share: Basic: GAAP income from continuing operations after tax $ 0.10 $ 0.08 $ 0.16 $ 0.17 Pro forma adjustments, net of tax 0.04 0.02 0.10 0.03 -------- -------- -------- -------- Pro forma income from continuing operations after tax $ 0.14 $ 0.10 $ 0.26 $ 0.20 ======== ======== ======== ======== Diluted: GAAP income from continuing operations after tax $ 0.10 $ 0.08 $ 0.16 $ 0.16 Pro forma adjustments, net of tax 0.04 0.02 0.10 0.04 -------- -------- -------- -------- Pro forma income from continuing operations after tax $ 0.14 $ 0.10 $ 0.26 $ 0.20 ======== ======== ======== ======== Weighted average number of shares outstanding - Basic 74,875 74,625 74,816 74,536 ======== ======== ======== ======== - Diluted 75,990 76,310 75,845 76,149 ======== ======== ======== ========
3 AEROFLEX INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) ------------------------------------------------- (In thousands, except per share data) December 31, June 30, 2005 2005 ------------- ----------- ASSETS ------ Current assets: Cash and cash equivalents $ 15,511 $ 12,974 Marketable securities 7,003 - Accounts receivable, less allowance for doubtful accounts 103,031 101,317 Inventories 126,275 118,906 Deferred income taxes 18,339 18,499 Prepaid expenses and other current assets 12,785 11,107 ---------- ---------- Total current assets 282,944 262,803 Property, plant and equipment, net 76,539 78,195 Other assets 13,249 13,537 Intangible assets with definite lives, net 59,257 67,266 Goodwill 165,403 168,048 ---------- ---------- Total assets $ 597,392 $ 589,849 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Current portion of long-term debt $ 628 $ 634 Accounts payable 26,754 35,907 Advance payments by customers 24,793 15,183 Income taxes payable 4,864 3,657 Accrued payroll expenses 15,057 15,222 Accrued expenses and other current liabilities 31,303 30,451 ---------- ---------- Total current liabilities 103,399 101,054 Long-term debt 4,004 4,190 Deferred income taxes 12,734 17,146 Other long-term liabilities 20,459 23,479 ---------- ---------- Total liabilities 140,596 145,869 ---------- ---------- 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 74,875 and 74,618 shares 7,488 7,462 Additional paid-in capital 378,137 372,666 Accumulated other comprehensive income 4,024 9,020 Retained earnings 67,147 54,846 ---------- ---------- 456,796 443,994 Less: Treasury stock, at cost (4 shares) - 14 ---------- ---------- Total stockholders' equity 456,796 443,980 ---------- ---------- Total liabilities and stockholders' equity $ 597,392 $ 589,849 ========== ========== 4