Harris Stratex Networks Reports Q1 Fiscal 2008 Financial Results
Thursday November 1, 4:05 pm ET
Orders increase for third consecutive quarter
RESEARCH TRIANGLE PARK, N.C., Nov. 1 /PRNewswire-FirstCall/ -- Harris Stratex Networks, Inc. (Nasdaq: HSTX - News), the leading independent supplier of turnkey wireless transmission solutions, today reported financial results for the first quarter of fiscal 2008, which ended September 28, 2007.
Revenue for the first quarter of fiscal 2008 was $172.3 million. GAAP net loss was $800,000 or $0.01 per share, which includes $14.3 million in pre-tax charges associated with the merger transaction, integration, and stock compensation expense.
Non-GAAP Financial Results
On January 26, 2007, the Harris Microwave Communications Division was combined with Stratex Networks, Inc. to create a new company - Harris Stratex Networks, Inc.
For comparative purposes, Harris Stratex Networks has provided pro forma, non-GAAP financial information related to revenue and income as if the former Stratex Networks and the former Harris Microwave Communications Division had been combined since the beginning of fiscal 2007. On this basis, revenue for the first quarter of fiscal 2008 was $172.3 million, an increase of 7 percent compared with $160.9 million in the prior year quarter. Non-GAAP net income for the first fiscal quarter of 2008 was $9.9 million or $0.17 per share.
A reconciliation of GAAP to non-GAAP financial measures is provided on Table 4 along with the accompanying notes.
By segment, North America microwave revenue of $56.6 million increased 8 percent compared with the year ago quarter. North America's performance in Q1 reflects market strength in both the U.S. and Canada, driven by mobile network footprint expansion, funding for homeland security initiatives, right-of-way users responding to an increased demand for bandwidth, and continued microwave relocation spending as a result of the Advanced Wireless Services (AWS) auction. International microwave segment revenue of $109.2 million increased 5 percent compared with the year-ago quarter. Fourteen percent year-over-year growth was achieved in Europe, Middle East and Russia, and 6 percent year- over-year growth was achieved in Latin America and Asia Pacific. Africa revenue was flat compared to the year-ago quarter. Strong demand for wireless infrastructure systems continues to be driven by mobile network footprint expansion, basic service delivery in many emerging market countries, and increased bandwidth requests for new services such as 3G and new WiMAX network builds. The Network Operations segment of the business had strong first quarter revenue of $6.5 million, a year-over-year increase of 48 percent. Increased demand for this segment's service assurance solutions with Next Generation Network (NGN) customers is fueling revenue growth.
Non-GAAP gross margin was 30.1 percent in the first quarter of fiscal 2008 compared with 32.2 percent in the year ago quarter. A higher mix of lower capacity product shipments dampened operating results in the quarter. Non- GAAP operating income was $13.3 million in the first quarter of fiscal 2008, compared with $13.3 million in the year-ago quarter.
"At $172 million, revenue was strong for the first quarter, seasonally one of our weaker quarters. Our ability to offer the best combination of technology innovation, product breadth and turnkey services for wireless transmission is driving our revenue expansion," said Guy Campbell, president and chief executive officer of Harris Stratex Networks. "Product mix in the quarter resulted in lower gross margin as many of the quarter's shipments were for new system projects requiring lower capacity products. However, we expect these new network wins to position us well for the future through capacity upgrades and system expansions."
Outlook and Guidance
"We continue to expect revenue to range between $670 million and $702 million and non-GAAP earnings per diluted share of $1.05 to $1.22," said Campbell. "The leadership team is completely focused on delivering the financial performance we have set forth for the company in fiscal year 2008."
Conference Call
Harris Stratex Networks will host a conference call today to discuss the company's financial results at 5:30 p.m. Eastern Time. Those wishing to join the call should dial 303-262-2125, (no pass code required) at approximately 5:20 p.m. A replay of the call will be available starting one hour after the call's completion until November 8. To access the replay, dial 303-590-3000 (pass code: 11098811 #). A live and archived webcast of the conference call will also be available via the company's Web site at www.HarrisStratex.com/investors/conference-call.
Non-GAAP Measures and Comparative Financial Information
Tables reconciling financial results for the Microwave Communications Division of Harris Corporation and Stratex Networks for each quarter of fiscal 2006 and the first two quarters of fiscal 2007 are posted on the investor relations page of the company Web site at www.HarrisStratex.com.
Harris Stratex Networks, Inc. and the Microwave Communications Division of Harris Corporation report information in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). The GAAP information presented in this press release consists of the results of operations, cash flows and financial position of Harris Stratex Networks, Inc. for the quarter ended September 28, 2007 and the quarter ended September 29, 2006. On January 26, 2007, the Microwave Communications Division of Harris Corporation and Stratex Networks, Inc. merged into Harris Stratex Networks, Inc. and became one reporting entity. Accordingly, management of Harris Stratex Networks will monitor revenues, cost of product sales and services, research and development expenses, selling and administrative expenses, operating income or loss, tax expense or benefit, net income or loss, and net income or loss per share for the new combined entity for planning and forecasting results in future periods, and may use these measures for some management compensation purposes. As such, historical non-GAAP combined information has been included in this press release for comparative purposes. These measures exclude certain costs and expenses as discussed herein. 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 Harris Stratex Networks' business and to better understand our performance.
Harris Stratex 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. Harris Stratex Networks presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate the Company's 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 Harris Stratex Networks
Harris Stratex Networks, Inc. (Nasdaq: HSTX - News) is the world's leading independent supplier of turnkey wireless transmission solutions. The company offers reliable, flexible and scalable wireless network solutions, backed by comprehensive professional services and support. Harris Stratex Networks serves all global markets, including mobile network operators, public safety agencies, private network operators, utility and transportation companies, government agencies and broadcasters. Customers in more than 135 countries depend on Harris Stratex Networks to build, expand and upgrade their voice, data and video solutions. Harris Stratex Networks is recognized around the world for innovative, best-in-class wireless networking solutions and services. For more information, visit www.HarrisStratex.com.
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. All statements, trend analyses and other information contained herein about the markets for the services and products of Harris Stratex Networks 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", "seeing", "continues", "delivering", 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 Harris Stratex 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:
-- the failure to obtain and retain expected cost synergies from the
merger;
-- the volume, timing and mix of our product orders may have an impact on
our operating results;
-- continued price erosion as a result of increased competition in the
microwave transmission industry;
-- the ability to achieve business plans for Harris Stratex Networks;
-- the ability to manage and maintain key customer relationships;
-- the effect of technological changes on Harris Stratex Networks'
businesses;
-- the ability to maintain projected product rollouts, product
functionality or market acceptance of planned products;
-- the ability to successfully integrate the operations, personnel and
businesses of the former Stratex Networks, Inc. with those of the
former Microwave Communications Division of Harris Corporation;
-- the ability to minimize the disruption of the merger and related
integration on direct and indirect sales channels;
-- the ability of our subcontractors to perform or our key suppliers to
manufacture or deliver material;
-- customers may not pay for products or services in a timely manner, or
at all;
-- the failure of Harris Stratex Networks to protect its intellectual
property rights and its ability to defend itself against intellectual
property infringement claims by others;
-- currency and interest rate risks;
-- the impact of political, economic and geographic risks on
international sales;
-- the impact of slowing growth in the wireless telecommunications market
combined with supplier and operator consolidations; and
-- pricing pressure on Harris Stratex Networks products and services.
For more information regarding the risks and uncertainties for our business as well as risks relating to the combination of the former Harris Corporation Microwave Communications Division and the former Stratex Networks, see "Risk Factors" in our form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") on August 27,2007, as well as other reports filed by Harris Stratex Networks with the SEC from time to time. Harris Stratex 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. |
