Anaren Reports 1st Quarter Fiscal 2014 Results

Anaren Reports 1st Quarter Fiscal 2014 Results

SYRACUSE, N.Y., Oct. 29, 2013 (GLOBE NEWSWIRE) -- Anaren, Inc. (Nasdaq:ANEN)
today reported net sales for the fiscal 2014 first quarter ended September 30,
2013 of $38.5 million, down 1.3% from $39.1 million for the first quarter of
last year.

GAAP (U.S. generally accepted accounting principles) net income for the first
quarter of fiscal 2014 was $3.0 million, or $0.23 per diluted share, up 4.5%,
compared to $2.9 million, or $0.21 per diluted share for the first quarter of
last year.

Non-GAAP diluted earnings per share, excluding non-cash equity based
compensation and intangible asset amortization, was $0.28 for the first
quarter of fiscal 2014 compared to non-GAAP diluted earnings per share of
$0.27 for the first quarter of fiscal 2013.

GAAP operating income for the first quarter of fiscal 2014 was $4.4 million,
or 11.3% of net sales, up 9.2%, compared to $4.0 million, or 10.2% of net
sales for the first quarter of last year. Non-GAAP operating income for the
first quarter of fiscal 2014, which excludes non-cash equity based
compensation and intangible asset amortization, was $5.5 million, or 14.2% of
net sales, up 3.0% from $5.3 million, or 13.6% of net sales for the first
quarter of fiscal 2013.

Income taxes for the first quarter of fiscal 2014 were $1.5 million,
representing an effective tax rate of 32.7% compared to income tax expense of
$1.3 million for the first quarter of fiscal 2013, representing an effective
tax rate of 32.0%. The projected effective tax rate for fiscal 2014, absent
one-time events, is expected to be approximately 29.0%.

Lawrence A. Sala, Anaren's Chairman, President and CEO said, "Despite a slight
decline in first quarter net sales, non-GAAP operating income improved 3.0%
from first quarter fiscal year 2013 levels as a result of improved operating
efficiencies. Although Space & Defense Group net sales declined in the
quarter, the Group continued to experience a strong flow of new orders. In
addition, Wireless Group sales increased in the quarter as a result of
stronger demand for both infrastructure and AIR (Anaren Integrated Radio)
related products. We continue to expect an increase in sales and profitability
for both groups in fiscal 2014."

During the first quarter of fiscal 2014, the Company generated $3.5 million in
operating cash flow compared to $2.1 million in the first quarter of fiscal
2013. Additionally, during the current quarter the Company expended $2.5
million for capital additions. Cash, cash equivalents and marketable debt
securities at September 30, 2013 were $53.5 million, down $0.1 million from
$53.6 million at June 30, 2013.

Wireless Group

Wireless Group net sales for the quarter were $13.6 million, up 2.9% from the
first quarter of fiscal 2013, and up 6.4% sequentially, due to rising
infrastructure component demand and increased sales of AIR related products.
Demand from Wireless infrastructure customers has increased in recent quarters
and current forecasts indicate increased demand levels for fiscal 2014. In
addition, we continue to see an increase in the number of AIR related
customers transitioning to volume production.

New product investments for the quarter continued to be focused on expansion
of the wireless infrastructure components, as well as low power wireless AIR
module and solution 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 $25.0 million, down 3.5%
from the first quarter of fiscal 2013.This decrease resulted from customer
delays in approving shipments of hybrid electronic modules and a shortfall in
shipments of printed wire board products. Despite the decrease in net sales,
continuing operational execution during the quarter resulted in comparable
profitability for the Group compared to the first quarter of last year.

New orders for the quarter totaled $28.5 million and were driven largely by
radar, passive ranging and satellite applications.Space & Defense Group order
backlog at September 30, 2013 was approximately $100.0 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 second quarter of fiscal 2014, we anticipate comparable sales for the
Wireless Group and an increase in sales for the Space & Defense Group compared
to the first quarter levels.As a result, we expect net sales to be in the
range of $39 to $43 million. We expect GAAP net earnings per diluted share to
be in the range of $0.26 - $0.32, using an anticipated tax rate of
approximately 29.0% and inclusive of approximately $0.05 per diluted share
related to expected equity based compensation expense and amortization of
intangible assets.Non-GAAP net earnings per diluted share are expected to be
in the range of $0.31 - $0.37 for the second 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 October 30 at 8:30
a.m. (ET).A replay of the conference call will be available at 11:30 a.m.
(ET) beginning October 30, 2013 through 11:30 p.m. on November 13, 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
71112496.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.

ANAREN, INC.
Condensed Consolidated Income Statements
(in thousands except per share data)
(unaudited)
                                                    
                                  Three Months Ended
                                  September 30, 2013 September 30, 2012
                                                    
Net sales                        $38,543          $39,062
                                                    
Cost of sales                    24,656            24,647
Gross profit                     13,887            14,415
                                  36.0%              36.9%
Operating expenses:                                
Marketing                        2,131             2,539
Research and development         3,223             3,334
General and administration       4,174             4,550
Total operating expenses         9,528             10,423
                                                    
Operating income                 4,359             3,992
                                  11.3%              10.2%
Other income (expense):                            
Other income                     93                223
Interest expense                 (19)              (18)
Total other income, net          74                205
                                                    
Income before income tax expense 4,433             4,197
Income tax expense               1,450             1,343
Net income                       $2,983           $2,854
                                  7.7%               7.3%
                                                    
Earnings per share:                                
Basic                            $0.24            $0.22
Diluted                          $0.23            $0.21
                                                    
Weighted average common shares outstanding:         
Basic                            12,649            12,999
Diluted                          13,193            13,676
                                                    


ANAREN, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                                                           
                                     September 30, 2013     June 30, 2013
                                                           
Assets:                                                     
Cash, cash equivalents and short-term $50,942              $50,996
investments
Receivables, less allowances          31,721                32,059
Inventories                           36,260                34,928
Prepaid expenses and other assets     4,223                 5,108
Total current assets                 123,146               123,091
                                                           
Securities held to maturity           2,577                 2,582
Property, plant, and equipment, net   41,548                40,842
Goodwill                              42,408                42,297
Other intangibles, net                7,021                 6,833
Total assets                         $216,700             $215,645
                                                           
Liabilities and Stockholders' Equity                        
Liabilities:                                                
Accounts payable                      $6,791               $7,319
Accrued expenses                      3,248                 4,806
Customer advance payments             1,615                 1,603
Other liabilities                     4,524                 5,335 *
Total current liabilities            16,178                19,063
                                                           
Other non-current liabilities         11,019                10,279
Total liabilities                    27,197                29,342
                                                           
Stockholders' Equity:                                       
Common stock and additional paid-in   232,315               230,653
capital
Retained earnings                     157,730               154,747 *
Accumulated other comprehensive loss  (773)                 (858)
Less: cost of treasury shares         (199,769)             (198,239)
Total stockholders' equity           189,503               186,303
                                                           
Total liabilities and stockholders'  $216,700             $215,645
equity
                                                           
* - Balance has been adjusted for an out of period error totaling $3.4 million
related to income taxes.
                                                           


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
                                        September 30, 2013 September 30, 2012
                                                          
Net sales                              $38,543          $39,062
                                                          
GAAP gross profit                      $13,887          $14,415
Equity-based compensation expense (1)  216               239
Amortization of intangibles (2)        13                39
Non-GAAP gross profit                  $14,116          $14,693
% of sales                             36.6%              37.6%
                                                          
GAAP operating income                  $4,359           $3,992
Equity-based compensation expense (1)  902               1,050
Amortization of intangibles (2)        201               255
Non-GAAP operating income              $5,462           $5,297
% of sales                             14.2%              13.6%
                                                          
GAAP net income                        $2,983           $2,854
Equity-based compensation expense (1)  902               1,050
Amortization of intangibles (2)        201               255
Tax effect                             (397)             (470)
Non-GAAP net income                    $3,689           $3,689
% of sales                             9.6%               9.4%
                                                          
                                                          
Diluted earnings per share                               
GAAP diluted earnings per share        $0.23            $0.21
Equity-based compensation expense (1)  0.07              0.08
Amortization of intangibles (2)        0.02              0.02
Tax adjustments                        (0.04)            (0.04)
Non-GAAP diluted earnings per share    $0.28            $0.27
                                                          
Weighted average common shares                            
outstanding
Diluted                                13,193            13,676
                                                          

1)These costs represent expense recognized in accordance with the
share-based compensation accounting rules.

2)These costs represent amortization of intangible assets for the three
months ended September 30, 2013 and2012.


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 September 30, 2013      
                        (in thousands)                           
                        (unaudited)                              
                                                                 
                        Equity Based       Amortization        
                        Compensation       of Intangibles      Total
Cost of sales          $216               $13                 $229
Marketing              74                  --                  74
Research and            93                  --                  93
development
General and             519                 188                  707
administrative
                        $902               $201                $1,103
                                                                 
                        Three Months Ended September 30, 2012      
                        (in thousands)                           
                        (unaudited)                              
                                                                 
                        Equity Based       Amortization        
                        Compensation       of Intangibles      Total
Cost of sales          $239               $39                 $278
Marketing              86                  --                  86
Research and            120                 --                  120
development
General and             605                 216                  821
administrative
                        $1,050             $255                $1,305
                                                                 

ANAREN, INC.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
                                                 
                                                 Three Month Ended
                                                 September 30, 2013
Cash flows from operating activities:             
Net income                                        $2,983
                                                 
Adjustments to reconcile net income to net cash   
provided by operating activities:                
Depreciation                                      1,780
Write down of other current asset                 --
Amortization                                      250
Gain on disposal of fixed assets                  --
Deferred income taxes                             598
Equity-based compensation                         902
Receivables                                       338
Inventories                                       (1,332)
Accounts payable                                  (678)
Other assets and liabilities                      (1,331)
Net cash provided by operating activities         3,510
                                                 
Cash flows from investing activities:             
Capital expenditures                             (2,485)
Payment for purchase of Cellular Machines         (350)
Maturities of held to maturity securities         1,940
Net cash used in investing activities             (895)
                                                 
Cash flows from financing activities:             
Stock options exercised                           354
Excess tax benefit from equity-based compensation 406
Purchase of treasury shares                       (1,531)
Net cash used in financing activities             (771)
                                                 
Effect of exchange rates on cash                  85
                                                 
Net increase in cash and cash equivalents         $1,929
                                                 
Cash and cash equivalents at beginning of period  $44,308
                                                 
Cash and cash equivalents at end of period        $46,237
                                                 

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

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