Financial Tables
Table 1
HARRIS STRATEX NETWORKS, INC.
FY'07 Year End Summary
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Quarter Ended Year Ended
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
(In millions, except net loss per share)
Revenue from product
sales and services $174.1 $110.5 $507.9 $357.5
Cost of product sales
and services (121.4) (71.3) (352.2) (272.5)
Amortization of purchased
technology (1.8) -- (3.0) --
Gross margin 50.9 39.2 152.7 85.0
Research and development expenses (12.6) (7.7) (39.4) (28.8)
Selling and administrative expenses (36.6) (22.1) (98.9) (68.5)
Acquired in-process research
and development -- -- (15.3) --
Amortization of intangible assets (4.5) -- (7.5) --
Restructuring charges (7.3) (3.8) (9.3) (3.8)
Corporate allocations expense -- (2.3) (3.7) (12.4)
Operating (loss) income (10.1) 3.3 (21.4) (28.5)
Interest income 0.6 -- 1.8 0.5
Interest expense (0.8) (0.2) (2.3) (1.0)
(Loss) income before income taxes (10.3) 3.1 (21.9) (29.0)
Income tax benefit (expense) 5.0 (0.3) 4.0 (6.8)
Net (loss) income $(5.3) $2.8 $(17.9) $(35.8)
Net loss per common share
Basic and diluted $(0.09) * $(0.72) *
Basic and diluted weighted
average shares outstanding 58.2 * 24.7 *
*Prior to January 26, 2007, the Company was not a public reporting entity
and there were no shares outstanding for purposes of earnings (loss) per
share calculations.
Table 2
HARRIS STRATEX NETWORKS, INC.
FY'07 Year End Summary
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
June 29, June 30,
2007 2006 (1)
(In millions)
Assets
Cash and cash equivalents $69.2 $13.8
Short-term investments 20.4 -
Receivables 185.3 123.9
Inventories and unbilled costs 169.8 97.4
Current deferred taxes 1.0 -
Other current assets 21.7 6.7
Property, plant and equipment 80.0 52.2
Goodwill 323.6 28.3
Identifiable intangible assets 144.5 6.4
Non-current deferred taxes - 9.6
Other assets 16.2 14.3
$1,031.7 $352.6
Liabilities and Shareholders' Equity
Short-term debt $1.2 $0.2
Current portion of long-term debt 10.7 -
Accounts payable 88.9 42.1
Accrued expenses and other current liabilities 93.0 45.7
Current deferred taxes 7.0 -
Due to Harris Corporation 16.1 12.6
Long-term debt 8.8 -
Restructuring and other long-term liabilities 11.8 -
Warrants outstanding 3.9 -
Redeemable preference shares 8.3 -
Non-current deferred taxes 24.0 -
Shareholders' equity 758.0 252.0
$1,031.7 $352.6
(1) Derived from audited financial statements.
Table 3
HARRIS STRATEX NETWORKS, INC.
FY'07 Year End Summary
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Quarter Ended
June 29,
2007
Cash flow used in Operations $ (1.6)
Cash flows from Investing Activities:
Sales of short-term investments, net 20.4
Purchases of capital assets (4.0)
Net cash provided by Investing Activities 16.4
Cash flows from Financing Activities:
Proceeds from issuance of short-term
debt, net of repayments 1.1
Proceeds from exercise of former Stratex
stock options 1.7
Payments on long-term debt (2.7)
Net cash provided by Financing Activities 0.1
Effect of exchange rate changes on cash and
cash equivalents (0.1)
Net increase in cash and cash equivalents 14.8
Cash and cash equivalents, beginning of quarter 54.4
Cash and cash equivalents, end of year $ 69.2
HARRIS STRATEX NETWORKS, INC.
FY'07 Year End Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND REGULATION G DISCLOSURE
To supplement our consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (GAAP), we provide additional measures of revenue, gross margin, operating income (loss), non-operating income (loss); cost of product sales and services; research and development expenses, selling and administrative expenses; income before income taxes; income taxes; net income, and net income per diluted share adjusted to exclude certain costs, expenses, gains and losses. Management of Harris Stratex Networks, Inc. (the "Company" or "Harris Stratex") believes that these non-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. Management also believes that these non-GAAP measures enhance the ability of an investor to analyze trends in Harris Stratex' business and to better understand our performance. In addition, the Company may utilize non- GAAP financial measures as a guide in its 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. A reconciliation of these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP follows:
Table 4
HARRIS STRATEX NETWORKS, INC.
FY'07 Year End Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Condensed Consolidated Statement Of Operations
(Unaudited)
Quarter Ended Quarter Ended
June 29, 2007 June 30, 2006
MCD and
Stratex
Non-GAAP Combined Non-GAAP
As Adjust- as Adjust-
Reported ments Non-GAAP Reported ments Non-GAAP
(In millions, except for net loss per share)
Revenue from product
sales and services $174.1 $-- $174.1 $176.8 $-- $176.8
Cost of product sales
and services (B) (121.4) 2.9 (118.5) (117.7) 0.3 (117.4)
Amortization of purchased
technology © (1.8) 1.8 -- -- -- --
Gross margin 50.9 4.7 55.6 59.1 0.3 59.4
Research and development
expenses (D) (12.6) 0.4 (12.2) (11.6) 0.7 (10.9)
Selling and
administrative
expenses (E) (36.6) 7.0 (29.6) (35.8) 2.5 (33.3)
Acquired in-process
research and
development (F) -- -- -- -- -- --
Amortization of
intangible assets (G) (4.5) 4.5 -- -- -- --
Restructuring charges (H) (7.3) 7.3 -- (3.8) 3.8 --
Corporate allocations
expense(I) -- -- -- (2.3) 2.3 --
Operating (loss) income (10.1) 23.9 13.8 5.6 9.6 15.2
Interest income 0.6 -- 0.6 0.5 -- 0.5
Interest expense (0.8) -- (0.8) (0.6) -- (0.6)
Other expense, net -- -- -- (0.4) -- (0.4)
(Loss) income before
income taxes (10.3) 23.9 13.6 5.1 9.6 14.7
Income taxes (J) 5.0 (8.3) (3.3) (0.5) (3.9) (4.4)
Net (loss) income $(5.3) $15.6 $10.3 $4.6 $5.7 $10.3
Net (loss) income per
common share:
Basic and diluted $(0.09) $0.18 * *
Basic and diluted
weighted average
shares outstanding:
Basic and diluted 58.2 58.2 * *
*Prior to January 26, 2007, the Company was not a public reporting entity
and there were no shares outstanding for purposes of earnings (loss) per
share calculations.
Table 4 (Continued)
HARRIS STRATEX NETWORKS, INC.
FY'07 Year End Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Condensed Consolidated Statement Of Operations
(Unaudited)
Year Ended Year Ended
June 29, 2007 June 30, 2006
MCD and
Stratex
Non-GAAP Combined Non-GAAP
As Adjust- as Adjust-
Reported ments Non-GAAP Reported ments Non-GAAP
(In millions, except for net loss per share)
Revenue from
product sales
and services (A) $507.9 $145.8 $653.7 $599.9 $- $599.9
Cost of product sales
and services (B) (352.2) (91.2) (443.4) (444.0) 35.4 (408.6)
Amortization of
purchased
technology © (3.0) 3.0 -- -- -- --
Gross margin 152.7 57.6 210.3 155.9 35.4 191.3
Research and
development
expenses (D) (39.4) 2.0 (37.4) (43.3) 0.7 (42.6)
Selling and
administrative
expenses (E) (98.9) (22.0) (120.9) (117.2) 5.9 (111.3)
Acquired in-process
research and
development (F) (15.3) 15.3 -- -- -- --
Amortization of
intangible
assets (G) (7.5) 7.5 -- -- -- --
Restructuring
charges (H) (9.3) 8.6 (0.7) (3.8) 3.8 -
Corporate allocations
expense(G) (3.7) 3.4 (0.3) (12.4) 12.4 -
Operating (loss)
income (21.4) 72.4 51.0 (20.8) 58.2 37
Interest income 1.8 1.8 3.6 2.0 -- 2.0
Interest expense (2.3) (1.4) (3.7) (3.1) -- (3.1)
Other expense, net -- (0.9) (0.9) (1.9) -- (1.9)
(Loss) income before
income taxes (21.9) 71.9 50.0 (23.8) 58.2 34.4
Income taxes (H) 4.0 (18.2) (14.2) (8.3) (2.0) (10.3)
Net (loss) income $ (17.9) $53.7 $35.8 $(32.1) $56.2 $24.1
Net (loss)income
per common share:
Basic and diluted $(0.72) $0.62 * *
Basic and diluted
weighted average
shares outstanding:
Basic and diluted 24.7 57.9 * *
*Prior to January 26, 2007, the Company was not a public reporting entity
and there were no shares outstanding for purposes of earnings (loss) per
share calculations.
Notes to tables 4 and 6:
Note A - Revenue - Adjustment to revenue for the fiscal year ended June 29, 2007 of $145.8 million to add Stratex Networks, Inc. revenue for the 7 months ended January 26, 2007, prior to the merger.
Note B - Cost of sales and services - Adjustments to cost of product sales and services for the fiscal year ended June 29, 2007 to add $100.3 million to add Stratex Networks cost of product sales and services for the 7 months ended January 26, 2007, prior to the merger, and to remove merger related charges including amortization of the step-up in inventory and fixed assets ($2.7 million for the quarter ended June 29, 2007 and $8.3 million for fiscal year 2007) and write-off of deferred costs ($0.1 million for the fiscal year ended June 29, 2007). Adjustments to cost of product sales and services to remove FAS 123R expense ($0.2 million for the quarter ended June 29, 2007 and $0.7 million for fiscal year ended June 29, 2007). Adjustments to the Microwave Communications Division of Harris Corporation's cost of product sales and services for the year ended June 30, 2006 to remove $34.9 million for inventory write-downs related to product discontinuances. Adjustment to Stratex Networks, Inc. cost of product sales and services to remove $0.2 million of APB No. 25 stock-based compensation expense prior to the adoption of FAS 123R and $0.3 million for the quarter ended June 29, 2006 for a total of $0.5 million for fiscal year 2006.
Note C - Amortization of purchased technology - Adjustment for the quarter and fiscal year ended June 29, 2007 to remove amortization of purchased intangibles incurred in connection with the merger.
Note D - Research and development expenses - Adjustment for the quarter and fiscal year ended June 29, 2007 to remove FAS 123R expenses of $0.4 million and $2.0 million. Upon the adoption of FAS 123R by Stratex Networks in the June 2006 quarter, adjustment for the quarter and fiscal year ended June 30, 2006 to remove FAS 123R expenses of $0.7 million.
Note E - Selling and administrative expenses - Adjustment to selling and administrative expenses for the year ended June 29, 2007 of $41.5 million to add Stratex Networks selling and administrative expenses for the 7 months ended January 26, 2007, prior to the merger. Adjustments for the quarter and year ended June 29, 2007 to remove merger related charges including amortization of the step-up fixed assets ($0.4 million for the quarter and $0.8 million for the year ended June 29, 2007), integration and severance costs ($4.7 million for the quarter and $11.8 million for the year ended June 29, 2007), and FAS 123R expense ($1.9 million for the quarter and $6.9 million for the year ended June 29, 2007).
Adjustments to the Microwave Communications Division of Harris Corporation's selling and administrative expenses to remove FAS 123R expense ($0.5 million for the quarter and $1.9 million for the year ended June 30, 2006), and to remove severance costs associated with product discontinuance in the Microwave Communications Division ($0.9 million for the fiscal year ended June 30, 2006). Adjustment to Stratex Networks, Inc. selling and administrative expenses for the year ended June 30, 2006 to remove $1.1 million of APB No. 25 stock compensations expense prior to the adoption of FAS 123R, plus $2.0 million upon adoption of FAS 123R by Stratex in the June 2006 quarter.
Note F - Acquired in-process research and development - Adjustment for the fiscal ended June 29, 2007 to remove write off of in-process research and development incurred in connection with the merger.
Note G - Amortization of intangible assets - Adjustment for the quarter and fiscal year ended June 29, 2007 to remove amortization of purchased intangibles incurred in connection with the merger.
Note H - Charges for restructuring - Adjustment to remove charges for restructuring incurred during the fiscal years ended June 29, 2007 and June 30, 2006 and each of the quarters ended June 29, 2007 and June 30, 2006.
Note I - Corporate allocation expenses - Adjustment for the year ended June 29, 2007 and for the quarter and fiscal year ended June 30, 2006 to remove Corporate allocation expenses from Harris Corporation through December 31, 2006, which did not continue after the merger.
Note J - Income taxes - Adjustment to reflect a pro-forma 26 percent tax rate for the second half of fiscal 2007 which for the fiscal year 2007 makes for an effective tax rate of 28.5 percent and 30 percent tax rate for the fiscal year ended June 30, 2006.
Table 5
HARRIS STRATEX NETWORKS, INC.
FY'07 Year End Summary
GAAP REVENUE BY SEGMENT INFORMATION
(Unaudited)
Quarter Ended Year Ended
June June June June
2007 2006 2007 2006
(In millions)
Revenue
North America microwave $58.8 $41.6 $216.3 $168.1
International microwave 110.6 64.5 272.2 172.3
Network operations 4.7 4.4 19.4 17.1
$174.1 $110.5 $507.9 $357.5
Table 6
HARRIS STRATEX NETWORKS, INC.
FY'07 Year End Summary
SUPPLEMENTAL SCHEDULE OF REVENUE BY GEOGRAPHICAL AREA
(Unaudited)
Quarter Ended Quarter Ended
June 29, 2007 June 30, 2006
As Non-GAAP Non- MCD Stratex Combined
Reported Adjustments GAAP Actual Actual Non-GAAP
(In millions)
North America $58.8 $-- $58.8 $41.6 $3.5 $45.1
International:
Africa 41.3 -- 41.3 47.9 17.1 65.0
Europe, Middle
East and Russia 44.2 -- 44.2 8.5 26.8 35.3
Latin America and
AsiaPac 25.1 -- 25.1 8.1 18.9 27.0
Total International 110.6 -- 110.6 64.5 62.8 127.3
Network Operations 4.7 -- 4.7 4.4 -- 4.4
$ 174.1 $-- $174.1 $110.5 $66.3 $176.8
Table 6 (Continued)
HARRIS STRATEX NETWORKS, INC.
FY'07 Year End Summary
SUPPLEMENTAL SCHEDULE OF REVENUE BY GEOGRAPHICAL AREA
(Unaudited)
Year Ended Year Ended
June 29, 2007 June 30, 2006
As Non-GAAP Non- MCD Stratex Combined
Reported Adjustments GAAP Actual Actual Non-GAAP
(In millions)
North America $216.3 $7.0 $223.3 $168.1 $19.1 $187.2
International:
Africa 126.7 44.1 170.8 98.6 47.9 146.5
Europe, Middle
East and Russia 87.1 59.2 146.3 29.7 102.0 131.7
Latin America
and AsiaPac 58.4 35.5 93.9 44.0 73.4 117.4
Total International 272.2 138.8 411.0 172.3 223.3 395.6
Network Operations 19.4 -- 19.4 17.1 -- 17.1
$507.9 $145.8 $653.7 $357.5 $242.4 $599.9
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