SYRACUSE, N.Y., Oct. 30, 2008 (GLOBE NEWSWIRE) -- Anaren, Inc. (Nasdaq:ANEN) today reported net sales for the fiscal 2009 first quarter ended September 30, 2008 of $38.1 million, up 18.8% from the first quarter of last year. Sales for the first quarter of fiscal 2009 included two months of sales from M.S. Kennedy Corp. and one month of sales from Unicircuit, Inc., the Company's acquisitions which closed in July and August respectively, and are reported within the Space & Defense Group. Net sales by these two new subsidiaries totaled $4.8 million in the quarter.
GAAP net income for the first quarter of fiscal 2009 was $1.3 million, or $0.09 per diluted share, compared to $2.7 million, or $0.17 per diluted share for the first quarter of last year and $1.2 million, or $0.08 per diluted share for the fourth quarter of fiscal 2008.
Non-GAAP diluted earnings per share, excluding non cash equity based compensation, acquisition related inventory step-up and intangible amortization, was $0.21 for the first quarter of fiscal 2009 compared to non-GAAP earnings per share of $0.21 for the first quarter of fiscal 2008 and $0.13 for the fourth quarter of last year.
The effective tax rate for the first quarter of fiscal 2009 was 35.0%, compared to 22.9% for the first quarter of fiscal 2008. This difference arose from the expiration of the federal research and experimentation credit at December 31, 2007, a significant decline in lower taxed foreign source income and a $350,000 decline in non-taxable investment income in the current quarter compared to the first quarter last year.
The 35.0% effective tax rate differs from the previous fiscal 2009 projected tax rate of 30.0% as a direct result of the proportion of domestic income to foreign generated income. Subsequent to this first quarter of fiscal 2009, the Federal research and experimentation credit was reinstated. Therefore, the projected effective tax rate for all of fiscal 2009 is now anticipated to be approximately 31.0%, which includes an estimated one-time research and experimentation tax benefit of $200,000 in the second quarter of fiscal 2009 resulting in a second quarter tax rate of approximately 25.0%.
GAAP operating income for the first quarter of fiscal 2009 was $1.9 million, or 5.1% of net sales, down from $2.8 million, or 8.7% of net sales for the first quarter of last year. Non-GAAP operating income for the first quarter of fiscal 2009, excluding non-cash equity based compensation and acquisition related inventory step-up and intangible amortization was $4.3 million, or 11.3% of net sales compared to $3.7 million, or 11.5% of net sales for the first quarter of fiscal 2008.
Lawrence A. Sala, Anaren's President and CEO said, "We are pleased with the profitability improvement and the increase in net sales during the first quarter in both the Space & Defense and Wireless Groups from the fourth quarter of fiscal 2008. Improved production yields and execution on development projects positively impacted profitability for the quarter. The Space & Defense Group continued to increase its organic sales levels in addition to the increase in net sales from the acquisitions of M.S. Kennedy Corp. and Unicircuit, Inc. during the quarter. For the Wireless Group, strong demand for standard infrastructure and consumer component products throughout the quarter partially offset continued weakness in custom assembly product demand. We anticipate this relative mix of business to continue in the second quarter."
Balance Sheet
During the first quarter, the Company generated $5.1 million in operating cash flow and used $5.0 million to repurchase 471,000 shares of its common stock. Expenditures for capital additions in the first quarter were $1.8 million. Additionally, during the first quarter the Company completed the acquisitions of M.S. Kennedy Corp. and Unicircuits, Inc. Funds for these transactions were obtained from the Company's $50 million line of credit. Funds needed for stock repurchases and capital expenditures in excess of funds generated by operations came from maturities of the Company's investments. Cash, cash equivalents and marketable debt securities at September 30, 2008 were $45.0 million.
Wireless Group
Wireless Group net sales for the quarter were $19.7 million, down 6.6% from the first quarter of fiscal 2008. Strong wireless infrastructure component demand continued throughout the quarter and partially offset the decline in demand for custom assembly products. The platform transition at a major OEM customer and the continuing challenging pricing environment for custom assembly products negatively impacted net sales for the quarter.
Sales of consumer component products were $1.4 million for the quarter, up 42% from the first quarter of last year and up 8% over the fourth quarter of fiscal 2008. The Group continued to capture new consumer component design wins for WLAN and ultra-low-power consumer wireless applications during the quarter.
Customers that generated greater than 10% of Wireless Group net sales for the quarter were Nokia, E G Components and Richardson. Shipments to E G Components are predominately for Ericsson.
Space & Defense Group
Space & Defense Group net sales for the quarter were $18.4 million, up 67% from the first quarter of fiscal 2008 and included two months of net sales from M.S. Kennedy Corp and one month of net sales from Unicircuit, Inc., totaling $4.8 million. New orders for the quarter totaled $13.9 million and included contracts for passive ranging and radar subsystems as well as assemblies for counter IED applications. New order volume for the quarter was lower due to stronger than expected order volume received in the fourth quarter, and delays in follow-on orders for a ground based radar program. Space & Defense Group order backlog at September 30, 2008 was $77.6 million and included approximately $18.0 million from M.S. Kennedy and Unicircuit.
During the first quarter, in addition to the acquisition of M.S. Kennedy Corp., the Company completed the acquisition of Littleton, CO based Unicircuit, Inc., a manufacturer of advanced high frequency Printed Circuit Boards (PCB) for defense and aerospace applications. Unicircuit's technology will enhance Anaren's ability to capture integrated microwave assembly opportunities in advanced radar, receiver and other defense, aerospace and satellite applications.
Customers that generated greater than 10% of Space & Defense Group net sales for the quarter were Lockheed Martin, Raytheon, ITT and Northrop Grumman.
Non-GAAP Financial Measures
In addition to presenting financial results calculated in accordance with United States generally accepted accounting principles (GAAP), Anaren's earnings release contains non-GAAP financial measures including non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share. These non-GAAP measures are each adjusted from GAAP results to exclude certain non-cash items including equity based compensation and acquisition related inventory step-up and intangible amortization.
The Company believes these non-GAAP financial measures provide useful information to both management and investors to help understand and compare business trends among reporting periods on a consistent basis. Additionally, these non-GAAP financial measurements are one of the primary indicators management uses for planning and forecasting in future periods. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States.
Outlook
For the second quarter of fiscal 2009, which will include three months of net sales and earnings from M.S. Kennedy Corp. and Unicircuit, Inc., we anticipate an increase in sales for the Space & Defense Group and relatively unchanged sales for the Wireless Group. As a result, we expect net sales to be in the range of $40-45 million. We expect GAAP net earnings per diluted share to be in the range of $0.10 - $0.13 using an anticipated tax rate of approximately 31% and accounting for approximately $0.11 per share in charges related to expected stock based compensation expense and amortization of acquired intangibles and inventory step-up related to the two recent acquisitions. Non-GAAP net earnings per diluted share are expected to be in the range of $0.21 - $0.24 for the second quarter.
Forward-Looking Statements
The statements contained in this news release which are not historical information are "forward-looking statements". These, and other forward-looking statements, are subject to business and economic risks and uncertainties that could cause actual results to differ materially from those discussed.
