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Aviat Networks Announces Fiscal First Quarter 2014 Financial Results

     Aviat Networks Announces Fiscal First Quarter 2014 Financial Results

PR Newswire

SANTA CLARA, Calif., Oct. 30, 2013

SANTA CLARA, Calif., Oct. 30, 2013 /PRNewswire/ --Aviat Networks, Inc.
(NASDAQ: AVNW), the leading expert in microwave networking solutions, today
reported financial results for the first quarter of fiscal year 2014, which
ended September27, 2013.

Financial Highlights for Q1FY14

  oRevenue at $93.4 million
  oBook to bill was slightly more than 1
  oGAAP Gross Margin at 24.7%; Non-GAAP Gross Margin at 25.1%
  oGAAP Operating Expense at $36.5 million; Non-GAAP Operating Expense at
    $30.5 million
  oGAAP Net Loss including discontinued operations at $(13.6) million, or
    $(0.22) per share
  oNon-GAAP Net Loss from continuing operations at $(7.8) million, or $(0.13)
    per share

A reconciliation of GAAP to non-GAAP financial measures for the fiscal first
quarter along with the accompanying notes is provided on Table 4.

"We are disappointed with Aviat's performance in the fiscal first quarter of
2014. While we see an improving pipeline of new business, we are formulating
plans to lower the Company's costs with the goal of reducing the Company's
revenue breakeven level," says Michael Pangia, president and CEO, Aviat
Networks. "We expect that both our mobile and non-mobile business will build
over the next several quarters as our new products ramp, and we remain
confident in our ability to grow the Company over the medium and long term."

GAAP Financial Results

For the first quarter of fiscal year 2014, revenue was $93.4 million, compared
with $115.0 million in the year-ago quarter. The Company reported net loss,
including discontinued operations, of $(13.6) million or $(0.22) per share,
compared with a net loss of $(2.2) million or $(0.04) per share in the
year-ago quarter. Loss from continuing operations for the quarter was $(13.7)
million, or $(0.22) per share, compared with the loss from continuing
operations of $(0.8) million, or $(0.01) per share, in the year-ago quarter.
Revenue and results of operations from the Company's WiMAX business are
classified as discontinued operations for all periods presented.

Cash and cash equivalents were $79.3 million as of September27, 2013 compared
with $90.0 million as of the end of the prior quarter. The decrease in cash is
primarily due to cash used from operating activities, capital spending for
product introduction, and the payback of $2.8 million in debt.

Non-GAAP Financial Results

Non-GAAP loss from continuing operations for the quarter was $(7.8) million,
or $(0.13) per share, compared with a non-GAAP income from continuing
operations of $2.8 million, or $0.05 per diluted share, in the year-ago
quarter.

The first quarter of fiscal year 2014 non-GAAP loss from continuing operations
excluded $6.3 million of pre-tax charges composed primarily of the following:

  o$1.5 million for share-based compensation expense
  o$4.5 million of restructuring charges
  o$0.1 million for amortization of purchased intangibles
  o$0.2 million of warehouse consolidation costs

Fiscal first quarter 2014 Adjusted EBITDA was $(5.7) million, compared with
$5.3 million in the year-ago quarter. In addition to the $6.3 million of
pre-tax charges excluded from non-GAAP loss from continuing operations noted
above, fiscal first quarter 2014 Adjusted EBITDA also excludes $1.5 million of
pre-tax charges comprised of the following:

  o$1.4 million of depreciation and amortization on property, plant and
    equipment
  o$0.1 million of interest expense

A reconciliation of GAAP to non-GAAP financial measures for the fiscal first
quarter along with accompanying notes is provided on Table 4.

First Quarter Revenue by Region

Revenue in the North America region was $33.7 million in the first quarter of
fiscal 2014, compared with $38.7 million in the year-ago quarter.
International revenue was $59.7 million, compared with $76.3 million in the
year-ago quarter.

Outlook

Based on current trends, fiscal second quarter of 2014 revenue outlook range
is expected to be between $100 million and $107 million. Fiscal second quarter
of 2014 Non-GAAP loss from continuing operations is expected to be in the
range of $(0.08) to $(0.03) per share. Due to the high variability and
difficulty in predicting certain items that affect GAAP net income (loss),
such as tax rates and stock price, Aviat Networks is unable to provide a
complete reconciliation of GAAP net income (loss) per diluted share to
non-GAAP income (loss) per diluted share on a forward-looking basis without
unreasonable efforts.

Conference Call Details

Aviat Networks, Inc. will host a conference call today at 4:30 p.m. Eastern
Time to discuss the Company's financial results. Those wishing to join the
call should dial 480-629-9760 or toll free at 877-941-4774 access code 4644146
at approximately 4:20 p.m. Eastern Time. A replay also will be available
starting approximately one hour after the completion of the call until
November 6, 2013. To access the replay, dial 303-590-3030 or toll free at
800-406-7325 access code 4644146. A live and archived webcast of the
conference call will also be available via the Company's Web site at
http://investors.aviatnetworks.com/events.cfm.

Non-GAAP Measures and Comparative Financial Information

Aviat Networks, Inc. reports information in accordance with U.S. Generally
Accepted Accounting Principles ("GAAP"). Management of Aviat Networks monitors
gross margin, research and development expenses, selling and administrative
expenses, operating income or loss, income tax provision or benefit, income or
loss from continuing operations, basic and diluted income or loss per share
from continuing operations and adjusted earnings (losses) before interest,
tax, depreciation and amortization ("Adjusted EBITDA") adjusted to exclude
certain costs, charges, gains and losses, on a non-GAAP basis for planning and
forecasting results in future periods, and may use these measures for some
management compensation purposes. These measures exclude certain costs,
expenses, gains and losses as shown on the attached Reconciliation of Non-GAAP
Financial Measures table. As a result, management is presenting these non-GAAP
measures in addition to results reported in accordance with GAAP to better
communicate underlying operational and financial performance in each period.
Management believes these non-GAAP measures provide information that is useful
to investors in understanding period-over-period operating results separate
and apart from items that may, or could, have a disproportionate positive or
negative impact on results in any given period. Management also believes that
these non-GAAP measures enhance the ability of an investor to analyze trends
in Aviat Networks' business and to better understand our performance.

Aviat Networks' management does not, nor does it suggest that investors
should, consider such non-GAAP financial measures in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP. Aviat
Networks presents these non-GAAP financial measures in reporting its financial
results to provide investors with an additional tool to evaluate its financial
performance. Reconciliations of these non-GAAP financial measures with the
most directly comparable financial measures calculated in accordance with GAAP
are included in the tables below.

About Aviat Networks

Aviat Networks, Inc. (NASDAQ: AVNW) is a leading global provider of microwave
networking solutions transforming communications networks to handle the
exploding growth of IP-centric, multi-Gigabit data services. With more than
750,000 systems installed around the world, Aviat Networks provides LTE-proven
microwave networking solutions to mobile operators, including some of the
largest and most advanced 4G/LTE networks in the world. Public safety,
utility, government and defense organizations also trust Aviat Networks'
solutions for their mission-critical applications where reliability is
paramount. In conjunction with its networking solutions, Aviat Networks
provides a comprehensive suite of localized professional and support services
enabling customers to effectively and seamlessly migrate to next generation
Carrier Ethernet/IP networks. For more than 50 years, customers have relied on
Aviat Networks' high performance and scalable solutions to help them maximize
their investments and solve their most challenging network problems.
Headquartered in Santa Clara, California, Aviat Networks operates in more than
100 countries around the world. For more information, visit
www.aviatnetworks.com or connect with Aviat Networks on Twitter, Facebook and
LinkedIn.

Forward-Looking Statements

The information contained in this document includes forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995,
Section 21E of the Securities Exchange Act and Section 27A of the Securities
Act, including plans related to lowering the Company's costs, the Company's
pipeline of mobile and non-mobile business, the positive impact of new
products, the Company's ability to grow and the Company's expected results for
the second quarter of fiscal 2014. All statements, trend analyses and other
information contained herein about the markets for the services and products
of Aviat Networks, Inc. and trends in revenue, as well as other statements
identified by the use of forward-looking terminology, including "anticipate,"
"believe," "plan," "estimate," "expect," "goal," "will," "see," "continue,"
"delivering," "view," and "intend," or the negative of these terms or other
similar expressions, constitute forward-looking statements. These
forward-looking statements are based on estimates reflecting the current
beliefs of the senior management of Aviat Networks. These forward-looking
statements involve a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by the forward-looking
statements. Forward-looking statements should therefore be considered in light
of various important factors, including those set forth in this document.
Important factors that could cause actual results to differ materially from
estimates or projections contained in the forward-looking statements include
the following:

  ocontinued price and margin erosion as a result of increased competition in
    the microwave transmission industry;
  othe impact of the volume, timing and customer, product and geographic mix
    of our product orders;
  oour ability to meet projected new product development dates or anticipated
    cost reductions of new products;
  oour suppliers' inability to perform and deliver on time as a result of
    their financial condition, component shortages or other supply chain
    constraints;
  ocustomer acceptance of new products;
  othe ability of our subcontractors to timely perform;
  ocontinued weakness in the global economy affecting customer spending;
  oretention of our key personnel;
  oour ability to manage and maintain key customer relationships;
  ouncertain economic conditions in the telecommunications sector combined
    with operator and supplier consolidation;
  othe timing of our receipt of payment for products or services from our
    customers;
  oour failure to protect our intellectual property rights or defend against
    intellectual property infringement claims by others;
  othe effects of currency and interest rate risks; and
  othe impact of political turmoil in countries where we have significant
    business.

For more information regarding the risks and uncertainties for our business,
see "Risk Factors" in our Form 10-K filed with the U.S. Securities and
Exchange Commission ("SEC") on September 23, 2013 as well as other reports
filed by Aviat Networks, Inc. with the SEC from time to time. Aviat Networks
undertakes no obligation to update publicly any forward-looking statement for
any reason, except as required by law, even as new information becomes
available or other events occur in the future.

Financial Tables to Follow:



Table 1
AVIAT NETWORKS, INC.
Fiscal Year 2014 First Quarter Summary
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                                       Quarter Ended
                                                               September 28,
                                       September27, 2013
                                                               2012 ^(1)
                                       (In millions, except per share amounts)
Revenue from product sales and         $     93.4              $    115.0
services
Cost of product sales and services     70.3                    81.3
Gross margin                           23.1                    33.7
Research and development expenses      9.7                     9.3
Selling and administrative expenses    22.2                    23.3
Amortization of intangible assets      0.1                     0.1
Restructuring charges                  4.5                     0.3
Operating income (loss)                (13.4)                  0.7
Interest income                        —                       0.3
Interest expense                       (0.1)                   (0.3)
Income (loss) from continuing          (13.5)                  0.7
operations before income taxes
Provision for income taxes             0.2                     1.5
Loss from continuing operations        (13.7)                  (0.8)
Income (loss) from discontinued        0.1                     (1.4)
operations, net of tax
Net loss                               $     (13.6)            $    (2.2)
Income (loss) per common share, basic
and diluted:
Continuing operations                  $     (0.22)            $    (0.01)
Discontinued operations                $     0.00              $    (0.02)
Net loss                               $     (0.22)            $    (0.04)
Weighted average shares outstanding,   60.9                    59.3
basic and diluted
(1) Certain prior year period amounts are reclassified to conform to current
period presentation.



Table 2
AVIAT NETWORKS, INC.
Fiscal Year 2014 First Quarter Summary
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                   September27, 2013      June 28, 2013^(1)
                                   (In millions)
Assets
Cash and cash equivalents          $      79.3             $     90.0
Receivables, net                   86.9                    86.3
Unbilled costs                     29.9                    28.9
Inventories                        33.5                    35.0
Customer service inventories       15.3                    16.2
Other current assets               18.9                    20.6
Property, plant and equipment,     31.3                    28.8
net
Identifiable intangible assets,    0.7                     0.8
net
Other assets                       2.0                     1.9
                                   $      297.8            $     308.5
Liabilities and Stockholders'
Equity
Short-term debt                    $      6.0              $     8.8
Accounts payable                   50.0                    50.6
Advanced payments and unearned     20.8                    18.6
income, current
Accrued expenses and other         55.5                    55.8
current liabilities
Other long-term liabilities        27.6                    24.8
Stockholders' equity               137.9                   149.9
                                   $      297.8            $     308.5
(1) Certain prior year period amounts are reclassified to conform to current
period presentation.



Table 3
AVIAT NETWORKS, INC.
Fiscal Year 2014 First Quarter Summary
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                             Quarter Ended
                                                                 September 28,
                                             September27, 2013
                                                                 2012 ^(1)
                                             (In millions)
Operating Activities
Net loss                                     $    (13.6)         $   (2.2)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization of identifiable intangible      0.1                 0.3
assets
Depreciation and amortization of property,   1.4                 1.6
plant and equipment
Bad debt expense                             0.1                 1.1
Share-based compensation expense             1.5                 1.5
Charges for inventory write-downs            0.6                 2.5
Changes in operating assets and liabilities:
Receivables                                  (0.6)               (19.7)
Unbilled costs                               (1.0)               4.9
Inventories                                  1.2                 1.5
Customer service inventories                 0.6                 —
Accounts payable                             (0.7)               4.2
Accrued expenses                             (1.3)               (5.6)
Advance payments and unearned income         2.4                 (0.8)
Income taxes payable or receivable           1.2                 0.8
Reserve for uncertain tax positions and      —                   0.2
deferred taxes
Other assets and liabilities                 3.5                 0.5
Net cash used in operating activities        (4.6)               (9.2)
Investing Activities
Cash disbursed related to sale of WiMAX      —                   (0.1)
business, net
Additions of property, plant and equipment   (3.8)               (1.3)
Net cash used in investing activities        (3.8)               (1.4)
Financing Activities
Payments on short-term debt                  (2.8)               —
Payments on long-term debt                   —                   (1.0)
Payments on capital lease obligations (0.1)               —
Net cash used in financing activities        (2.9)               (1.0)
Effect of exchange rate changes on cash and  0.6                 0.7
cash equivalents
Net Decrease in Cash and Cash Equivalents    (10.7)              (10.9)
Cash and Cash Equivalents, Beginning of      90.0                96.0
Period
Cash and Cash Equivalents, End of Period     $    79.3           $   85.1
(1) Certain prior year period amounts are reclassified to conform to current
period presentation.



AVIAT NETWORKS, INC.
Quarter Ended September27, 2013 Summaries
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND REGULATION G DISCLOSURE

To supplement the consolidated financial statements presented in accordance
with accounting principles generally accepted in the United States ("GAAP"),
we provide additional measures of gross margin, research and development
expenses, selling and administrative expenses, operating income or loss,
income tax provision or benefit, income or loss from continuing operations,
basic and diluted income or loss per share from continuing operations, and
adjusted earnings before interest, tax, depreciation and amortization
("Adjusted EBITDA"), adjusted to exclude certain costs, charges, gains and
losses, as set forth below. We believe that these non-GAAP financial measures,
when considered together with the GAAP financial measures provide information
that is useful to investors in understanding period-over-period operating
results separate and apart from items that may, or could, have a
disproportionate positive or negative impact on results in any particular
period. We also believe these non-GAAP measures enhance the ability of
investors to analyze trends in our business and to understand our performance.
In addition, we may utilize non-GAAP financial measures as a guide in our
forecasting, budgeting and long-term planning process and to measure operating
performance for some management compensation purposes. Any analysis of
non-GAAP financial measures should be used only in conjunction with results
presented in accordance with GAAP. Reconciliations of these non-GAAP
financial measures with the most directly comparable financial measures
calculated in accordance with GAAP follow.



Table 4
AVIAT NETWORKS, INC.
Fiscal Year 2014 First Quarter Summary
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES^(1)
Condensed Consolidated Statements of Operations
(Unaudited)
                      Quarter Ended
                                               % of         September  % of
                      September27, 2013                    28,
                                               Revenue      2012^(1)   Revenue
                      (In millions, except percentages and per share amounts)
GAAP gross margin     $      23.1              24.7    %    $ 33.7     29.3  %
Share-based           0.1                                   0.1
compensation
Warehouse
consolidation         0.2                                   —
costs
Amortization of
purchased             —                                     0.2
technology
Non-GAAP gross        23.4                     25.1    %    34.0       29.6  %
margin
GAAP research and
development           $      9.7               10.4    %    $ 9.3      8.1   %
expenses
Share-based           (0.2)                                 (0.3)
compensation
Non-GAAP research
and development       9.5                      10.2    %    9.0        7.8   %
expenses
GAAP selling and
administrative        $      22.2              23.8    %    $ 23.3     20.3  %
expenses
Share-based           (1.2)                                 (1.1)
compensation
Transactional         —                                     (0.6)
taxes assessments
Non-GAAP selling
and administrative    21.0                     22.5    %    21.6       18.8  %
expenses
GAAP operating        $      (13.4)            (14.3)  %    $ 0.7      0.6   %
income (loss)
Share-based           1.5                                   1.5
compensation
Warehouse
consolidation         0.2                                   —
costs
Amortization of
purchased             —                                     0.2
technology
Transactional         —                                     0.6
taxes assessments
Amortization of       0.1                                   0.1
intangible assets
Restructuring         4.5                                   0.3
charges
Non-GAAP operating    (7.1)                    (7.6)   %    3.4        3.0   %
income (loss)
GAAP income tax       $      0.2               0.2     %    $ 1.5      1.3   %
provision
Adjustment to
reflect pro forma     0.4                                   (0.9)
tax rate
Non-GAAP income       0.6                      0.6     %    0.6        0.5   %
tax provision
GAAP loss from
continuing            $      (13.7)            (14.7)  %    $ (0.8)    (0.7) %
operations
Share-based           1.5                                   1.5
compensation
Warehouse
consolidation         0.2                                   —
costs
Amortization of
purchased             —                                     0.2
technology
Transactional         —                                     0.6
taxes assessments
Amortization of       0.1                                   0.1
intangible assets
Restructuring         4.5                                   0.3
charges
Adjustment to
reflect pro forma     (0.4)                                 0.9
tax rate
Non-GAAP income
(loss) from           $      (7.8)             (8.4)   %    $ 2.8      2.4   %
continuing
operations
Income (loss) per share from continuing operations
Basic:
GAAP                  $      (0.22)                         $ (0.01)
Non-GAAP              $      (0.13)                         $ 0.05
Diluted:
GAAP                  $      (0.22)                         $ (0.01)
Non-GAAP              $      (0.13)                         $ 0.05
Shares used in computing income (loss) per share from continuing operations
Basic:
GAAP                  60.9                                  59.3
Non-GAAP              60.9                                  61.3
Diluted:
GAAP                  60.9                                  59.3
Non-GAAP              60.9                                  61.4
ADJUSTED EBITDA:
GAAP loss from
continuing            $      (13.7)            (14.7)  %    $ (0.8)    (0.7) %
operations
Depreciation and
amortization of       1.4                                   1.6
property, plant
and equipment
Interest expense      0.1                                   0.3
Share-based           1.5                                   1.5
compensation
Warehouse
consolidation         0.2                                   —
costs
Amortization of
purchased             —                                     0.2
technology
Transactional         —                                     0.6
taxes assessments
Amortization of       0.1                                   0.1
intangible assets
Goodwill              —                                     —
impairment charges
Restructuring         4.5                                   0.3
charges
Provision for         0.2                                   1.5
income taxes
Adjusted EBITDA       $      (5.7)             (6.1)   %    $ 5.3      4.6   %
(1) The adjustments above reconcile our GAAP financial results to the non-GAAP
financial measures used by us. Our non-GAAP income or loss from continuing
operations excluded share-based compensation, warehouse consolidation costs,
amortization of purchased technology, transactional taxes assessments,
amortization of intangible assets, restructuring charges, and adjustment to
reflect pro forma tax rate. Adjusted EBITDA was determined by excluding
depreciation and amortization on property, plant and equipment, interest
expense, provision for income taxes, and non-GAAP pre-tax adjustments, as set
forth above, from the GAAP income (loss) from continuing operations. 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.



Table 5
AVIAT NETWORKS, INC.
Fiscal Year 2014 First Quarter Summary
SUPPLEMENTAL SCHEDULE OF REVENUE BY GEOGRAPHICAL AREA
(Unaudited)
                                Quarter Ended
                                September27,  September 28,
                                2013
                                               2012
                                (in millions)
North America                   $   33.7       $   38.7
International:
Africa and Middle East          37.0           49.0
Europe and Russia               8.6            12.4
Latin America and Asia Pacific  14.1           14.9
                                59.7           76.3
Total Revenue                   $   93.4       $   115.0



SOURCE Aviat Networks, Inc.

Website: http://www.aviatnetworks.com
Contact: Media, Ned Hayes, Aviat Networks, Inc., (408) 567-7120,
Ned.Hayes@aviatnet.com; or Investors, Peter Salkowski, Aviat Networks, Inc.,
(408) 567-7117, Investorinfo@aviatnet.com
 
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