Exhibit 99.1
[LOGO OF STRATEX NETWORKS]
STRATEX NETWORKS ANNOUNCES Q3 FISCAL 2006 FINANCIAL RESULTS
Company Returns to Profitability; New Orders Grow Substantially
SAN JOSE, Calif., Feb. 2, 2006 - Stratex Networks, Inc. (Nasdaq: STXN), a
leading provider of wireless transmission solutions, today reported financial
results for the third quarter of fiscal year 2006, ended December 31, 2005.
Revenues in the third quarter of fiscal 2006 were $55.5 million,
compared with $56.6 million in the prior quarter and $49.5 million in the year
ago period. Net income in the third quarter of fiscal 2006 was $813,000, or
earnings per share of $0.01. This compares with a net loss of $2.3 million, or a
loss per share of $0.02 in the prior quarter, and a loss of $17.9 million, or a
loss per share of $0.19, in the year ago period.
On a non-GAAP basis, Stratex Networks reported net income of $1.1
million in the third fiscal quarter, or earnings per share of $0.01. The
non-GAAP net income for the third fiscal quarter excludes total non-cash
compensation of $303,000 related to the vesting of restricted stock. A full
reconciliation of GAAP net income (loss) to non-GAAP net income (loss) is
provided in the accompanying financial tables.
Reflecting a significant increase in demand, Stratex Networks received
$85 million in new orders during the third quarter of fiscal 2006. This includes
approximately $65 million of orders for the Eclipse(TM) product line. The
backlog for all product lines totaled $85 million as of December 31, 2005. The
company includes orders expected to ship within 12 months in its backlog.
"Our return to profitability represents a major milestone in the
program initiated several years ago to reposition Stratex Networks as a
long-term provider of wireless transmission solutions to a global customer base.
The growing family of products based on the Eclipse platform has proven to be
extremely popular with many operators worldwide," said Chuck Kissner, chairman
and chief executive officer of Stratex Networks, Inc. "During the quarter, we
began initial shipments of next-generation Eclipse products. These new products,
combined with the continuing momentum on all Eclipse products, created a
significant upsurge in new orders to levels not seen in a number of years. In
addition to further driving down hardware costs, we plan to use next-generation
Eclipse technology to further expand market coverage of both our hardware and
software offerings. As a result, we expect continued expansion of profit
margins."
PAGE 2
STRATEX NETWORKS, INC. REPORTS THIRD QUARTER
FISCAL YEAR 2006 FINANCIAL RESULTS
OUTLOOK AND GUIDANCE
The following forecasts are based on current expectations. These
statements are forward-looking, and actual results may differ materially. Please
see the Safe Harbor Statement in this release for a description of certain
important risk factors that could cause actual results to differ, and refer to
the company's reports on file with the Securities and Exchange Commission (SEC)
for a more complete description of the risks.
"Demand for products based on our Eclipse wireless platform has
substantially increased and is expected to drive subsequent strong growth in
revenue in the fourth quarter," said Kissner.
Fourth Quarter Fiscal Year 2006 (ending March 31, 2006)
o Revenue is expected to range between $61 million and $64 million;
o Earnings per share is expected to be in the range of $0.02 to $0.03.
CONFERENCE CALL
Stratex Networks' management will hold a conference call to discuss the
company's financial results today, at 5:00 p.m. Eastern Time. Those wishing to
join should dial 303-262-2211 (password: Stratex) at approximately 4:50 p.m. A
replay of the call will be available starting one hour after the completion of
the call until February 9, 2006. To access the replay, dial 303-590-3000 (pass
code: 11050687 #). A live and an archived webcast of the conference call will
also be available via the company's Web site at www.stratexnet.com
UPCOMING CONFERENCES
Stratex Networks' management will be presenting at the CIBC "Best Ideas"
Conference in San Francisco March 9, 2006.
ABOUT STRATEX NETWORKS
With headquarters in San Jose, California, Stratex Networks, Inc. is one of the
world's leading providers of high-speed wireless transmission solutions. Since
it was founded in 1984, Stratex Networks has achieved international recognition
for quality, innovation, and technical superiority in delivering data, voice,
and video communication systems, including comprehensive service and support.
Stratex Networks, with its broad product offering and worldwide sales and
support organization, is strategically positioned to serve its customers' needs
in wireless high-capacity transmission technology. Additional information is
available at www.stratexnet.com .
PAGE 3
STRATEX NETWORKS, INC. REPORTS THIRD QUARTER
FISCAL YEAR 2006 FINANCIAL RESULTS
USE OF NON-GAAP FINANCIAL INFORMATION
To supplement the company's consolidated financial statements presented in
accordance with GAAP, Stratex Networks, Inc. uses non-GAAP measures of certain
components of financial performance, including operating income (loss), net
income (loss) and per share data, which are adjusted from results based on GAAP
to exclude certain expenses, gains and losses. These non-GAAP measures are
provided to enhance investors' overall understanding of the company's current
financial performance and the company's prospects for the future. Specifically,
the company believes the non-GAAP results provide useful information to both
management and investors by excluding certain expenses that may not be
indicative of its core operating results. These measures should be considered in
addition to results prepared in accordance with generally accepted accounting
principles, but should not be considered a substitute for, or superior to, GAAP
results. These non-GAAP measures included in this press release have been
reconciled to the nearest GAAP measure.
SAFE HARBOR STATEMENT
This press release contains statements that qualify as "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995,
including statements relating to the Company's expectations regarding the
continued rollout and use of the Eclipse technology to further expand market
coverage, continued expansion of profit margins and the Company's revenue and
earnings per share expectations for the Fourth Fiscal Quarter ending March 31,
2006. These forward-looking statements are based on current expectations and the
Company assumes no obligation to update this information. The Company's actual
results could differ materially from those anticipated in these forward-looking
statements as a result of significant risks and uncertainties including:
o Timely rollout of the new generation of the Eclipse digital microwave
platform;
o Increased competition resulting in downward pressures on the price of
the Company's products and services;
o Suppliers inability to perform and timely deliver as a result of their
financial condition or natural disaster such as earthquakes or
epidemic outbreaks such as SARS or aviary flu;
o Unexpected delays in the schedule for shipments of Eclipse and new
generations of the Eclipse platform;
o Failure to realize expected cost improvement throughout the Company's
supply chain; and
o Order cancellations or postponements in product deliveries resulting
in delayed revenue recognition.
In addition, orders and backlog are not necessarily indicative of revenue in any
future period. Because the Company's business is heavily concentrated in foreign
markets, there is a significant risk of adverse currency fluctuations and
unforeseen governmental action including but not limited to the denial of export
and/or import licenses. For a further discussion of these and other factors that
impact the Company's business in general, see the information provided under the
heading "Factors That May Affect Future Financial Results" in the Company's
Annual Report on Form 10-K for the period ended March 31, 2005 and subsequent
quarterly filings, on file with the Securities and Exchange Commission.
CONTACT:
Mary McGowan
Summit IR Group Inc.
(408) 404-5401
mary@summitirgroup.com
- Financial Tables Follow -
PAGE 4
STRATEX NETWORKS, INC. REPORTS THIRD QUARTER
FISCAL YEAR 2006 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
DECEMBER 31, MARCH 31,
2005 2005
------------ ------------
ASSETS
- ------
Cash and short-term investments $ 40,080 $ 48,691
Accounts receivable, net 50,991 35,084
Inventories 40,340 36,780
Other current assets 11,313 10,572
------------ ------------
Total current assets 142,724 131,127
Property & equipment, net 25,328 28,228
Other assets 656 1,276
------------ ------------
Total assets $ 168,708 $ 160,631
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Accounts payable $ 34,081 $ 34,472
Short-term debt 19,250 6,250
Other current liabilities 33,553 27,701
------------ ------------
Total current liabilities 86,884 68,423
Long-term debt 8,854 13,542
Other long-term liabilities 16,066 18,643
------------ ------------
Total liabilities 111,804 100,608
------------ ------------
Stockholders' equity 56,904 60,023
------------ ------------
Total liabilities and stockholders' equity $ 168,708 $ 160,631
============ ============
PAGE 5
STRATEX NETWORKS, INC. REPORTS THIRD QUARTER
FISCAL YEAR 2006 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net sales $ 55,514 $ 49,519 $ 166,941 $ 139,175
Cost of sales 39,308 39,434 122,966 113,736
Inventory valuation charges - 2,581 - 2,581
---------- ---------- ---------- ----------
Gross profit 16,206 7,504 43,975 22,858
---------- ---------- ---------- ----------
Operating expenses:
Research and development 3,388 4,363 10,792 12,915
Selling, general and administrative 10,729 12,219 34,904 32,105
Amortization of intangible assets - 791 - 1,581
Restructuring and other charges - 7,423 - 7,147
---------- ---------- ---------- ----------
Total operating expenses 14,117 24,796 45,696 53,748
---------- ---------- ---------- ----------
Operating income (loss) 2,089 (17,292) (1,721) (30,890)
Other income (expense) (657) (523) (2,501) (1,333)
---------- ---------- ---------- ----------
Income (loss) before income taxes 1,432 (17,815) (4,222) (32,223)
Provision for income taxes 619 119 1,392 473
---------- ---------- ---------- ----------
Net income (loss) $ 813 $ (17,934) $ (5,614) $ (32,696)
========== ========== ========== ==========
NET INCOME (LOSS) PER COMMON SHARE:
Basic $ 0.01 $ (0.19) $ (0.06) $ (0.37)
Diluted $ 0.01 $ (0.19) $ (0.06) $ (0.37)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 95,852 94,706 95,325 87,933
Diluted 97,892 94,706 95,325 87,933
PAGE 6
STRATEX NETWORKS, INC. REPORTS THIRD QUARTER
FISCAL YEAR 2006 FINANCIAL RESULTS
UNAUDITED NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
THREE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
------------------------------------------ ------------------------------------------
GAAP GAAP
(As (As
Reported) Adjustments Non-GAAP Reported) Adjustments Non-GAAP
------------------------------------------ ------------------------------------------
Net sales $ 55,514 - $ 55,514 $ 49,519 - $ 49,519
Cost of sales 39,308 $ (39) 39,269 39,434 - 39,434
Inventory valuation charges - - - 2,581 $ (2,581) -
------------------------------------------ ------------------------------------------
Gross profit 16,206 39 16,245 7,504 2,581 10,085
------------------------------------------ ------------------------------------------
Operating expenses:
Research and development 3,388 (40) 3,348 4,363 - 4,363
Selling, general and administrative 10,729 (224) 10,505 12,219 - 12,219
Amortization of intangible assets - - - 791 - 791
Restructuring charges - - - 7,423 (7,423) -
------------------------------------------ ------------------------------------------
Total operating expenses 14,117 (264) 13,853 24,796 (7,423) 17,373
------------------------------------------ ------------------------------------------
Operating income (loss) 2,089 303 2,392 (17,292) 10,004 (7,288)
Other income (expense) (657) - (657) (523) (523)
------------------------------------------ ------------------------------------------
Income (loss) before income taxes 1,432 303 1,735 (17,815) 10,004 (7,811)
Provision for income taxes 619 - 619 119 - 119
------------------------------------------ ------------------------------------------
Net income (loss) $ 813 $ 303 $ 1,116 $ (17,934) $ 10,004 $ (7,930)
========================================== ==========================================
NET INCOME (LOSS) PER COMMON SHARE:
Basic $ 0.01 $ 0.01 $ (0.19) $ (0.08)
Diluted $ 0.01 $ 0.01 $ (0.19) $ (0.08)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 95,852 95,852 94,706 94,706
Diluted 97,892 97,892 94,706 94,706
The above non-GAAP adjustment totaling $303,000 for the three months
ended December 31, 2005 reflects the non-cash charge related to the
company's restricted stock plan. The above non-GAAP amounts for the
three months ended at December 31, 2004 have been adjusted to eliminate
restructuring charges for severance, write-off of certain inventory and
fixed assets, accruals related to vacated facilities and related
charges.
To supplement the company's consolidated financial statements presented in
accordance with GAAP, Stratex Networks, Inc. uses non-GAAP measures of certain
components of financial performance, including operating income (loss), net
income (loss) and per share data, which are adjusted from results based on GAAP
to exclude certain expenses, gains and losses. These non-GAAP measures are
provided to enhance investors' overall understanding of the company's current
financial performance and the company's prospects for the future. Specifically,
the company believes the non-GAAP results provide useful information to both
management and investors by excluding certain expenses, gains and losses that
may not be indicative of its core operating results. These measures should be
considered in addition to results prepared in accordance with generally accepted
accounting principles, but should not be considered a substitute for, or
superior to, GAAP results. These non-GAAP measures included in this press
release have been reconciled to the nearest GAAP measure.
PAGE 7
STRATEX NETWORKS, INC. REPORTS THIRD QUARTER
FISCAL YEAR 2006 FINANCIAL RESULTS
UNAUDITED NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
NINE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
------------------------------------------ ------------------------------------------
GAAP GAAP
(As (As
Reported) Adjustments Non-GAAP Reported) Adjustments Non-GAAP
------------------------------------------ ------------------------------------------
Net sales $ 166,941 - $ 166,941 $ 139,175 - $ 139,175
Cost of sales 122,966 $ (256) 122,710 113,736 - 113,736
Inventory valuation charges - - - 2,581 $ (2,581) -
------------------------------------------ ------------------------------------------
Gross profit 43,975 256 44,231 22,858 2,581 25,439
------------------------------------------ ------------------------------------------
Operating expenses:
Research and development 10,792 (123) 10,669 12,915 - 12,915
Selling, general and administrative 34,904 (1,077) 33,827 32,105 - 32,105
Amortization of intangible assets - - - 1,581 - 1,581
Restructuring charges - - - 7,147 (7,147) -
------------------------------------------ ------------------------------------------
Total operating expenses 45,696 (1,200) 44,496 53,748 (7,147) 46,601
------------------------------------------ ------------------------------------------
Operating loss (1,721) 1,456 (265) (30,890) 9,728 (21,162)
Other income (expense) (2,501) - (2,501) (1,333) (1,333)
------------------------------------------ ------------------------------------------
Loss before income taxes (4,222) 1,456 (2,766) (32,223) 9,728 (22,495)
Provision for income taxes 1,392 - 1,392 473 473
------------------------------------------ ------------------------------------------
Net loss $ (5,614) $ 1,456 $ (4,158) $ (32,696) $ 9,728 $ (22,968)
========================================== ==========================================
NET LOSS PER COMMON SHARE:
Basic $ (0.06) $ (0.04) $ (0.37) $ (0.26)
Diluted $ (0.06) $ (0.04) $ (0.37) $ (0.26)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 95,325 95,325 87,933 87,933
Diluted 95,325 95,325 87,933 87,933
The above non-GAAP adjustment totaling $1.5 million for the nine months
ended December 31, 2005 reflects the non-cash charge related to the
company's restricted stock plan. The above non-GAAP amounts for the nine
months ended December 31, 2004 have been adjusted to eliminate
restructuring charges for severance, write-off of certain inventory and
fixed assets, accruals related to vacated facilities and related
charges.
To supplement the company's consolidated financial statements presented in
accordance with GAAP, Stratex Networks, Inc. uses non-GAAP measures of certain
components of financial performance, including operating income (loss), net
income (loss) and per share data, which are adjusted from results based on GAAP
to exclude certain expenses, gains and losses. These non-GAAP measures are
provided to enhance investors' overall understanding of the company's current
financial performance and the company's prospects for the future. Specifically,
the company believes the non-GAAP results provide useful information to both
management and investors by excluding certain expenses, gains and losses that
may not be indicative of its core operating results. These measures should be
considered in addition to results prepared in accordance with generally accepted
accounting principles, but should not be considered a substitute for, or
superior to, GAAP results. These non-GAAP measures included in this press
release have been reconciled to the nearest GAAP measure.