NEWS RELEASE
AEROFLEX
FOR IMMEDIATE RELEASE
---------------------
FOR FURTHER INFORMATION CONTACT:
INVESTOR INQUIRIES:
- -------------------
Leonard Borow
Vice Chairman and Chief Operating Officer
(516) 694-6700
AEROFLEX INCORPORATED
REPORTS RECORD FOURTH QUARTER FISCAL 2005 SALES
SALES INCREASED 12% SEQUENTIALLY
TO A RECORD $128 MILLION
PRO FORMA INCOME FROM CONTINUING OPERATIONS
OF $8.1 MILLION OR $.11 PER DILUTED SHARE
GAAP INCOME FROM CONTINUING OPERATIONS OF
$2.2 MILLION OR $.03 PER DILUTED SHARE
PLAINVIEW, NEW YORK, AUGUST 16, 2005 -- 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 fourth quarter
and year ended June 30, 2005.
Net sales from continuing operations for the fourth quarter ended June 30, 2005
were a record $128.0 million, compared with $125.3 million for the same period
of last year. The Company reported GAAP income from continuing operations for
the fourth quarter ended June 30, 2005 of $2.2 million, or $.03 per diluted
share, versus GAAP income from continuing operations of $9.0 million, or $.12
per diluted share, in the same period of last year.
On a pro forma basis, for the quarter ended June 30, 2005, after tax income from
continuing operations was $8.1 million, or $.11 per diluted share, excluding
pre-tax charges of
o $3.0 million for a write-off of acquired in-process research and
development related to the Company's acquisitions,
o $2.7 million for amortization of acquired intangibles,
o $1.4 million for restructuring costs, and
o $0.8 million for the current period impact of an acquisition related
adjustment to inventory.
On a pro forma basis, for the quarter ended June 30, 2004, after tax income from
continuing operations was $10.3 million, or $.13 per diluted share, excluding a
pre-tax charge of $2.3 million for amortization of acquired intangibles.
Net sales from continuing operations for the year ended June 30, 2005 were
$463.4 million, compared with $414.1 million last year, representing an increase
of 12%. The Company reported GAAP income from continuing operations for the year
ended June 30, 2005 of $18.6 million, or $.25 per diluted share, versus GAAP
income from continuing operations of $20.5 million, or $.29 per diluted share,
last year.
On a pro forma basis, for the year ended June 30, 2005, after tax income from
continuing operations was $29.3 million, or $.39 per diluted share, excluding
pre-tax charges of
o $3.0 million for a write-off of in-process research and development
related to the Company's acquisitions.
o $8.9 million for amortization of acquired intangibles,
o $3.1 million for restructuring costs, and
o $0.8 million for the current period impact of an acquisition related
adjustment to inventory.
On a pro forma basis, for the year ended June 30, 2004, after tax income from
continuing operations was $29.4 million, or $.42 per diluted share, excluding
pre-tax charges of $7.7 million for amortization of acquired intangibles and
$4.2 million for a write-off of acquired in-process research and development.
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.
"Fourth quarter results exceeded our guidance and reflects a new record for net
sales and backlog" said Len Borow, Vice Chairman and Chief Operating Officer.
"Sales reached a record $128.0 million, a third to fourth quarter sequential
increase of 12%. Pro forma operating income expanded to 11.2% of sales, an
improvement of more than 200 basis points over the third quarter. We have made
excellent progress in integrating our JcAIR and UbiNetics acquisitions."
FIRST QUARTER FISCAL 2006 BUSINESS OUTLOOK
- ------------------------------------------
Our estimate of operating results for the September 2005 quarter is as follows:
o Net sales are expected to be between $121 and $123 million.
o Gross profit margins are expected to be approximately 47.5% of sales, plus
or minus a few tenths of a percent.
o S,G&A costs are expected to be approximately 23.0% to 23.5% of sales.
o R&D costs are anticipated to be approximately 15.0% to 15.5% of sales.
o Amortization of acquired intangibles is expected to be approximately $.03
per diluted share, net of taxes.
o Acquisition related adjustment to inventory is expected to be approximately
$.01 per diluted share, net of taxes.
o SFAS 123R stock option compensation is expected to be approximately $.02
per diluted share, after tax.
o Using a share count of 76.2 million shares and an expected income tax rate
of 38%, we anticipate pro forma earnings from continuing operations per
diluted share of $.08 or $.09. Pro forma earnings exclude amortization of
acquired intangibles, the acquisition related adjustment to inventory and
the stock option compensation. GAAP earnings per diluted share are
anticipated to be $.03 or $.04.
Our conference call discussing fourth quarter results is scheduled for 9:00 a.m.
(New York time) on August 17, 2005 and can be accessed by dialing 1-866-825-3308
in the United States and by dialing 617-213-8062 outside of the United States.
The participant passcode is 96093266. There will be a replay of the conference
call starting at approximately 11:00 a.m. (New York time) on August 17, 2005 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 93371729. 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 on its fourth 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 THE BUSINESSES OF BOTH JCAIR, INC. AND THE TEST AND MEASUREMENT
DIVISION OF UBINETICS HOLDINGS LTD., CHANGES IN LEGAL AND REGULATORY
REQUIREMENTS, TECHNOLOGICAL CHANGE OR DIFFICULTIES, PRODUCT DEVELOPMENT RISKS,
COMMERCIALIZATION DIFFICULTIES AND GENERAL ECONOMIC CONDITIONS. SUCH STATEMENTS
REFLECT OUR CURRENT VIEWS 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.
AEROFLEX INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE QUARTER ENDED (UNAUDITED)
---------------------------------
6/30/05 6/30/05 6/30/04 6/30/04
-------------- ------------- ------------- ---------------
(GAAP) (Pro forma) (GAAP) (Pro forma)
NET SALES $ 127,965 $ 127,965 $ 125,309 $ 125,309
Cost of sales 67,957 67,117 65,425 65,425
-------------- ------------- ------------- ---------------
GROSS PROFIT 60,008 60,848 59,884 59,884
Selling, general and administrative
costs 31,675 30,230 27,794 27,794
Research and development costs 16,277 16,277 14,984 14,984
Amortization of acquired intangibles 2,732 - 2,282 -
Acquired in-process R&D 2,974 - - -
-------------- ------------- ------------- ---------------
OPERATING INCOME 6,350 14,341 14,824 17,106
Interest and other income
(expense), net 315 315 82 82
-------------- ------------- ------------- ---------------
Income from continuing operations
before income taxes 6,665 14,656 14,906 17,188
Provision for income taxes 4,430 6,606 5,933 6,915
-------------- ------------- ------------- ---------------
Income from continuing operations 2,235 8,050 8,973 10,273
Income (loss) from discontinued
operations, net of tax (106) (106) (695) (695)
-------------- ------------- ------------- ---------------
Net income $ 2,129 $ 7,944 $ 8,278 $ 9,578
============== ============= ============= ===============
Income (loss) per common share:
Basic
Continuing operations $ 0.03 $ 0.11 $ 0.12 $ 0.14
Discontinued operations - - (0.01) (0.01)
-------------- ------------- ------------- ---------------
Net income $ 0.03 $ 0.11 $ 0.11 $ 0.13
============== ============= ============= ===============
Diluted
Continuing operations $ 0.03 $ 0.11 $ 0.12 $ 0.13
Discontinued operations - - (0.01) (0.01)
-------------- ------------- ------------- ---------------
Net income $ 0.03 $ 0.11 $ 0.11 $ 0.12
============== ============= ============= ===============
Weighted average number of shares
Outstanding - Basic 74,749 74,749 74,349 74,349
============== ============= ============= ===============
- Diluted 75,399 75,399 76,658 76,658
============== ============= ============= ===============
AEROFLEX INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
For the Year Ended (Unaudited)
----------------------------------------------------------------------------
6/30/05 6/30/05 6/30/04 6/30/04
-------------- ---------------- -------------- ------------------
(GAAP) (Pro forma) (GAAP) (Pro forma)
NET SALES $ 463,371 $ 463,371 $ 414,101 $ 414,101
Cost of sales 244,759 243,919 221,409 221,409
-------------- ---------------- -------------- ------------------
GROSS PROFIT 218,612 219,452 192,692 192,692
Selling, general and administrative
costs 113,271 110,147 94,735 94,735
Research and development costs 61,399 61,399 49,972 49,972
Amortization of acquired intangibles 8,896 - 7,730 -
Acquired in-process R&D 2,974 - 4,220 -
-------------- ---------------- -------------- ------------------
OPERATING INCOME 32,072 47,906 36,035 47,985
Interest and other income
(expense), net 949 949 (3,114) (3,114)
-------------- ---------------- -------------- ------------------
Income from continuing operations
before income taxes 33,021 48,855 32,921 44,871
Provision for income taxes 14,377 19,513 12,457 15,460
-------------- ---------------- -------------- ------------------
Income from continuing operations 18,644 29,342 20,464 29,411
Income (loss) from discontinued
operations, net of tax (1,603) (1,603) (8,317) (8,317)
-------------- ---------------- -------------- ------------------
Net income $ 17,041 $ 27,739 $ 12,147 $ 21,094
============== ================ ============== ==================
Income (loss) per common share:
Basic
Continuing operations $ 0.25 $ 0.39 $ 0.30 $ 0.43
Discontinued operations (0.02) (0.02) (0.12) (0.12)
-------------- ---------------- -------------- ------------------
Net income $ 0.23 $ 0.37 $ 0.18 $ 0.31
============== ================ ============== ==================
Diluted
Continuing operations $ 0.25 $ 0.39 $ 0.29 $ 0.42
Discontinued operations (0.03) (0.02) (0.12) (0.12)
-------------- ---------------- -------------- ------------------
Net income $ 0.22 $ 0.37 $ 0.17 $ 0.30
============== ================ ============== ==================
Weighted average number of shares
Outstanding - Basic 74,634 74,634 67,917 67,917
============== ================ ============== ==================
- Diluted 75,885 75,885 69,931 69,931
============== ================ ============== ==================
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 Year Ended
--------------------------------- ---------------------------------
6/30/05 6/30/04 6/30/05 6/30/04
-------------- -------------- -------------- --------------
GAAP income from
continuing operations $ 2,235 $ 8,973 $ 18,644 $ 20,464
Pro forma adjustments:
Add Back:
Acquired in-process R&D 2,974 - 2,974 4,220
Amortization of acquired
intangible assets 2,732 2,282 8,896 7,730
Restructuring costs 1,445 - 3,124 -
Acquisition related inventory adjustment 840 - 840 -
Income tax benefit (2,176) (982) (5,136) (3,003)
-------------- -------------- -------------- --------------
Pro forma income from
continuing operations $ 8,050 $ 10,273 $ 29,342 $ 29,411
============== ============== ============== ==============
Income per common share:
Basic
GAAP income from
continuing operations after tax $ 0.03 $ 0.12 $ 0.25 $ 0.30
Pro forma adjustments, net of tax 0.08 0.02 0.14 0.13
-------------- -------------- -------------- --------------
Pro forma income from
continuing operations after tax $ 0.11 $ 0.14 $ 0.39 $ 0.43
============== ============== ============== ==============
Diluted
GAAP income from
continuing operations after tax $ 0.03 $ 0.12 $ 0.25 $ 0.29
Pro forma adjustments, net of tax 0.08 0.01 0.14 0.13
-------------- -------------- -------------- --------------
Pro forma income from
continuing operations after tax $ 0.11 $ 0.13 $ 0.39 $ 0.42
============== ============== ============== ==============
Weighted average number of shares
outstanding - Basic 74,749 74,349 74,634 67,917
============== ============== ============== ==============
- Diluted 75,399 76,658 75,885 69,931
============== ============== ============== ==============
AEROFLEX INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30, June 30,
2005 2004
----------- ----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 12,974 $ 98,502
Marketable securities - -
Accounts receivable, less allowance for
doubtful accounts 101,317 97,031
Inventories 118,906 94,617
Deferred income taxes 18,499 16,774
Assets of discontinued operations - 11,910
Prepaid expenses and other current assets 11,107 8,646
--------- ---------
Total current assets 262,803 327,480
Property, plant and equipment, net 78,195 74,372
Assets of discontinued operations - 9,717
Other assets 13,537 10,932
Intangible assets with definite lives, net 67,266 40,602
Goodwill 168,048 88,288
--------- ---------
Total assets $ 589,849 $ 551,391
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 634 $ 4,770
Accounts payable 35,907 25,293
Advance payments by customers 15,183 11,725
Income taxes payable 3,657 1,088
Liabilities of discontinued operations - 4,573
Accrued payroll expenses 15,222 13,966
Accrued expenses and other current liabilities 30,451 28,200
--------- ---------
Total current liabilities 101,054 89,615
Long-term debt 4,190 5,505
Deferred income taxes 17,146 9,445
Liabilities of discontinued operations - 3,613
Other long-term liabilities 23,479 16,116
--------- ---------
Total liabilities 145,869 124,294
--------- ---------
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
74,618 and 74,282 shares 7,462 7,428
Additional paid-in capital 372,666 370,491
Accumulated other comprehensive income 9,020 11,387
Retained earnings 54,846 37,805
--------- ---------
443,994 427,111
Less: Treasury stock, at cost (4 shares) 14 14
--------- ---------
Total stockholders' equity 443,980 427,097
--------- ---------
Total liabilities and stockholders' equity $ 589,849 $ 551,391
========= =========