Anaren Reports 2nd Quarter Fiscal 2013 Results

Anaren Reports 2nd Quarter Fiscal 2013 Results

SYRACUSE, N.Y., Jan. 22, 2013 (GLOBE NEWSWIRE) -- Anaren, Inc. (Nasdaq:ANEN)
today reported net sales for the fiscal 2013 second quarter ended December 31,
2012 of $38.0 million, up 6.3% from $35.7 million for the second quarter of
last year.

GAAP (U.S. generally accepted accounting principles) net income for the second
quarter of fiscal 2013 was $3.5 million, or $0.27 per diluted share, up 199%
from $1.2 million, or $0.08 per diluted share for the second quarter of last
year.

Non-GAAP diluted earnings per share, excluding non-cash equity based
compensation and intangible asset amortization, was $0.33 for the second
quarter of fiscal 2013 compared to non-GAAP diluted earnings per share of
$0.13 for the second quarter of fiscal 2012.

GAAP operating income for the second quarter of fiscal 2013 was $5.1 million,
or 13.4% of net sales, up 261% from $1.4 million, or 3.9% of net sales for the
second quarter of last year. Non-GAAP operating income for the second quarter
of fiscal 2013, which excludes non-cash equity based compensation and
intangible asset amortization, was $6.3 million, or 16.6% of net sales, up
134% from $2.7 million, or 7.5% of net sales for the second quarter of fiscal
2012. Both net income and operating income for the second quarter were
enhanced by a one-time favorable adjustment of approximately $0.5 million to
healthcare costs.

Income taxes for the second quarter of fiscal 2013 were $1.7 million,
representing an effective tax rate of 32.0% compared to income tax expense of
$0.3 million for the second quarter of fiscal 2012, representing an effective
tax rate of 21.4%. The projected effective tax rate for fiscal 2013, absent
one-time events and adjusted for the reinstatement of the Federal Research and
Experimentation credit in January 2013, is expected to be approximately 28%.

Lawrence A. Sala, Anaren's Chairman, President and CEO said, "We are very
pleased with the significant improvement in operating profitability resulting
from a favorable product mix, operational efficiencies, and cost reductions as
we exceeded our 15% Non-GAAP operating profit target. While sales levels were
down 2.7% sequentially, profitability improved in both of our business
segments and we continue to focus on operating efficiency given the
uncertainty in both defense and wireless infrastructure spending."

Net sales for the six months ended December 31, 2012 were $77.1 million, up
3.5% from net sales of $74.5 million for the first six months of last year.
GAAP net income for the first half of fiscal 2013 was $6.4 million, or $0.47
per diluted share, up 72% from $3.7 million, or $0.25 per diluted share for
the first half of last year.

Non-GAAP diluted earnings per share, excluding non-cash equity based
compensation and intangible amortization, was $0.59 for the first six months
of fiscal 2013 compared to non-GAAP diluted earnings per share of $0.36 for
the first six months of fiscal 2012.

During the second quarter of fiscal 2013, the Company generated $4.9 million
in operating cash flow compared to $2.5 million in the second quarter of
fiscal 2012. Additionally, during the current quarter the Company repurchased
approximately 610,000 shares of its common stock for a total of $11.2 million
and expended $0.9 million for capital additions. Non-operating cash receipts
for the quarter included $0.1 million from the exercise of stock options and
approximately $5.0 million from the sale of its manufacturing facility in
Salem, New Hampshire. Cash, cash equivalents and marketable debt securities
were $43.6 million at December 31, 2012, down $2.0 million from September 30,
2012. The Company had $8.0 million outstanding on its revolving credit
facility at December 31, 2012, unchanged from September 30, 2012.

Wireless Group

Wireless Group net sales for the quarter were $12.8 million, up 19.0% from the
second quarter of fiscal 2012, but sequentially down 2.7% compared to the
first quarter, as uncertainty and softness continued in the wireless
infrastructure market. Demand from wireless infrastructure customers declined
throughout the second quarter and current forecasts indicate comparable demand
for the third quarter.

New product investments for the quarter continued to be focused on expansion
of the wireless infrastructure components and low power wireless Anaren
Integrated Radio (AIR) module product lines.

Customers that generated greater than 10% of Wireless Group net sales for the
quarter were Arrow Electronics, Richardson and Huawei.

Space & Defense Group

Space & Defense Group net sales for the quarter were $25.2 million, up 0.8%
from the second quarter of fiscal 2012.Improved operational execution and a
more favorable product mix during the current quarter resulted in higher
profitability for the Group compared to the second quarter last year. Space &
Defense Group sales are expected to be higher in the second half of fiscal
2013 as production rates increase on the TPQ-53 Radar Program.

New orders for the quarter totaled $25.6 million and were driven by numerous
space, radar and electronic warfare applications.Space & Defense Group order
backlog at December 31, 2012 was approximately $105 million. 

Customers that generated greater than 10% of Space & Defense Group net sales
for the quarter were Lockheed Martin, Northrop Grumman and Raytheon.

Non-GAAP Financial Measures

In addition to presenting financial results calculated in accordance with
GAAP, Anaren's earnings release contains non-GAAP financial measures
including: non-GAAP gross profit, non-GAAP operating income, non-GAAP net
income and non-GAAP net income per diluted share. These non-GAAP measures are
each adjusted from GAAP results to exclude certain non-cash items including
equity based compensation and intangible asset amortization.

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 GAAP.

Outlook

For the third quarter of fiscal 2013, we anticipate comparable sales for the
Wireless Group and an increase in sales for the Space & Defense Group compared
to the second quarter levels.As a result, we expect net sales to be in the
range of $37 to $41 million.We expect GAAP net earnings, inclusive of a tax
benefit of approximately $0.09 per share related to of the impact of the
reinstatement of the Federal Research and Experimentation credit retroactive
to January 1, 2012, to be in the range of $0.29 - $0.37 per diluted share for
the third quarter.

Non-GAAP net earnings, which are inclusive of approximately $0.05 -$0.06 per
diluted share related to expected equity based compensation expense and
amortization of intangibles assets,are expected to be in the range of $0.34 -
$0.42 per diluted share for the third 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 based on management's current expectations and
are subject to business, market and economic risks and uncertainties that
could cause actual results to differ materially from those discussed.You are
encouraged to review Anaren's filings 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 (www.anaren.com) on January 23 at 8:30
a.m. (ET).A replay of the conference call will be available at 11:30 a.m.
(ET) beginning January 23, 2013 through 11:30 p.m. on January 30, 2013.To
listen to the replay, interested parties may dial in the U.S. at
1-855-859-2056 and International at 1-404-537-3406.The passcode is
76556541.If you are unable to access the Live Webcast, the dial in number for
the U.S. is 1-877-734-4580 and International is 1-678-905-9378.

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 www.anaren.com. 

The Anaren, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5360

ANAREN, INC.
Condensed Consolidated Statements of Income
(in thousands except per share data)
(unaudited)
                                                              
                          Three Months Ended      Six Months Ended
                          December 31, December 31, December 31, December 31,
                           2012         2011         2012         2011
                                                              
Sales                    $38,002    $35,737    $77,064    $74,457
                                                              
Cost of sales            22,987      24,395      47,634      48,591
Gross profit             15,015      11,342      29,430      25,866
                          39.5%        31.7%        38.2%        34.7%
Operating expenses:                                          
Marketing                2,376       2,438       4,915       5,033
Research and development 3,243       3,124       6,577       7,049
General and               4,317       4,372       8,867       8,787
administration
Total operating expenses 9,936       9,934       20,359      20,869
                                                              
Operating income         5,079       1,408       9,071       4,997
                          13.4%        3.9%         11.8%        6.7%
Other income (expense):                                      
Other income             138         139         360         279
Interest expense         (47)        (53)        (65)        (133)
Total other income, net  91          86          295         146
                                                              
Income before income tax  5,170       1,494       9,366       5,143
expense
Income tax expense       1,657       320         3,000       1,440
Net income               $3,513     $1,174     $6,366     $3,703
                          9.2%         3.3%         8.3%         5.0%
                                                              
Earnings per share:                                          
Basic                    $0.28      $0.08      $0.50      $0.26
Diluted                  $0.27      $0.08      $0.47      $0.25
                                                              
                                                              
Weighted average common shares                                 
outstanding:
Basic                    12,697      14,244      12,848      14,180
Diluted                  13,191      14,861      13,433      14,825


ANAREN, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                                                               
                                              December 31, 2012 June 30, 2012
                                                               
Assets:                                                         
Cash, cash equivalents and short-term          $35,123         $32,232
investments
Receivables, less allowances                   32,283           29,521
Inventories                                    38,188           36,443
Prepaid expenses and other assets              6,453            6,650
Total current assets                           112,047          104,846
                                                               
Securities held to maturity                    8,470            11,657
Property, plant, and equipment, net            41,167           47,171
Goodwill                                       42,343           42,343
Other intangibles, net                         7,288            7,770
Total assets                                   $211,315        $213,787
                                                               
Liabilities and Stockholders' Equity                            
Liabilities:                                                    
Accounts payable                               $6,563          $8,604
Accrued expenses                               4,150            3,926
Customer advance payments                      1,168            1,307
Other liabilities                              2,438            2,068
Total current liabilities                      14,319           15,905
                                                               
Long-term debt obligation                      8,000            --
Other non-current liabilities                  13,144           12,379
Total liabilities                              35,463           28,284
                                                               
Stockholders' Equity:                                           
Common stock and additional paid-in capital    227,404          223,326
Retained earnings                              149,493          143,126
Accumulated other comprehensive loss           (3,012)          (3,026)
Less: cost of treasury shares                  (198,033)        (177,923)
Total stockholders' equity                     175,852          185,503
                                                               
Total liabilities and stockholders' equity     $211,315        $213,787


ANAREN, INC.

Reconciliation of GAAP and Non-GAAP Gross Profit, Operating Income, Net
Income and Diluted Earnings Per Share
(in thousands except per share data)
(unaudited)
                                                          
                      Three Months Ended      Six Months Ended
                      December 31, December 31, December 31, December 31,
                       2012         2011         2012         2011
                                                          
Sales                $38,002    $35,737    $77,064    $74,457
                                                          
GAAP gross profit    $15,015    $11,342    $29,430    $25,866
Equity-based
compensation expense   238         210         477         404
(1)
Amortization of       39          39          78          78
intangibles (2)
Non-GAAP gross        $15,292    $11,591    $29,985    $26,348
profit
% of sales           40.2%        32.4%        38.9%        35.4%
                                                          
GAAP operating        $5,079     $1,408     $9,071     $4,997
income
Equity-based
compensation expense   997         991         2,047       1,946
(1)
Amortization of       227         298         482         596
intangibles (2)
Non-GAAP operating    $6,303     $2,697     $11,600    $7,539
income
% of sales           16.6%        7.5%         15.1%        10.1%
                                                          
GAAP net income      $3,513     $1,174     $6,366     $3,703
Equity-based
compensation expense   997         991         2,047       1,946
(1)
Amortization of       227         298         482         596
intangibles (2)
Tax effect           (441)       (464)       (910)       (915)
Non-GAAP net income  $4,296     $1,999     $7,985     $5,330
% of sales           11.3%        5.6%         10.4%        7.2%
                                                          
                                                          
Diluted earnings per                                      
share
GAAP diluted earnings $0.27      $0.08      $0.47      $0.25
per share
Equity-based
compensation expense   0.08        0.07        0.15        0.13
(1)
Amortization of       0.02        0.02        0.04        0.04
intangibles (2)
Tax adjustments      (0.04)      (0.04)      (0.07)      (0.06)
Non-GAAP diluted      $0.33      $0.13      $0.59      $0.36
earnings per share
                                                          
Weighted average
common shares                                              
outstanding
Diluted              13,191      14,861      13,433      14,825
                                                          
1)These costs represent expense recognized in accordance with the         
share-based payment accounting rules.
2)These costs represent amortization of intangible assets for the three  
and six months ended December 31, 2012 and 2011.


ANAREN, INC.
Reconciliation of GAAP and Non-GAAP Gross Profit, Operating Income, and
Earnings Per Share
(in thousands)
(unaudited)
                                                          
The following table details the Non-GAAP, Non-Cash expenses related to
equity-based compensation and
intangible asset amortization by expense category.
                                                          
Three Months Ended                                                         
(in thousands)                                                             
(unaudited)                                                                
                                                          
                   Equity Based      Amortizationof
                    Compensation       Intangibles         Total
Cost of sales     $238              $39                $277
Marketing         86                 --                 86
Research and       108                --                 108
development
General and        565                188                 753
administrative
                   $997              $227               $1,224
                                                          
                                                          
Six Months Ended                                                           
(in thousands)                                                             
(unaudited)                                                                
                                                          
                   Equity Based      Amortization of
                    Compensation       Intangibles         Total
Cost of sales     $477              $78                $555
Marketing         172                --                 172
Research and       228                --                 228
development
General and        1,170              404                 1,574
administrative
                   $2,047            $482               $2,529
                                                          
                                                          
Three Months Ended                                                         
(in thousands)                                                             
(unaudited)                                                                
                                                          
                   Equity Based      Amortization of
                    Compensation       Intangibles         Total
Cost of sales     $210              $39                $249
Marketing         74                 --                 74
Research and       107                --                 107
development
General and        600                259                 859
administrative
                   $991              $298               $1,289
                                                          
Six Months Ended                                                           
(in thousands)                                                             
(unaudited)                                                                
                                                          
                   Equity Based       Amortization of
                    Compensation       Intangibles         Total
Cost of sales     $404              $78                $482
Marketing         139                --                 139
Research and       221                --                 221
development
General and        1,182              518                 1,700
administrative
                   $1,946            $596               $2,542


ANAREN, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                          
                                                         
                                         Three Months
                                        Ended              Six Months Ended
                                         December 31, 2012 December 31, 2012
Cash flows from operating activities:                      
Net income                               $3,513           $6,366
                                                          
Adjustments to reconcile net income to
net cash provided by operating                             
activities:
Depreciation                             1,920             3,830
Amortization                             317               680
Deferred income taxes                    588               693
Equity-based compensation                997               2,047
Receivables                              1,143             (2,762)
Inventories                              (1,334)           (1,745)
Accounts payable                         (1,052)           (2,041)
Other assets and liabilities             (1,234)           (145)
Net cash provided by operating           4,858             6,923
activities
                                                          
Cash flows from investing activities:                      
Capital expenditures                    (875)             (2,184)
Proceeds from sale of Salem building     5,030             5,230
Net maturities of held to maturity       3,650             9,065
securities
Net cash provided by investing           7,805             12,111
activities
                                                          
Cash flows from financing activities:                      
Proceeds from long-term debt obligation  --               8,000
Stock options exercised                  125               1,476
Excess tax benefit from equity-based     101               554
compensation
Purchase of treasury shares              (11,213)          (20,111)
Net cash used in financing activities    (10,987)          (10,081)
                                                          
Effect of exchange rates on cash         45                14
                                                          
Net increase in cash and cash            $1,721           $8,967
equivalents
                                                          
Cash and cash equivalents at beginning   $28,258          $21,012
of period
                                                          
Cash and cash equivalents at end of      $29,979          $29,979
period

CONTACT: George Blanton, CFO
         315-362-0436
         Joseph E. Porcello, VP-Accounting
         315-362-0514

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