Aeroflex Announces Third Quarter Fiscal 2014 Results
PLAINVIEW, N.Y.--(BUSINESS WIRE)--Aeroflex Holding Corp. ("Aeroflex") (NYSE:ARX), a leading global provider of high performance microelectronic components, and test and measurement equipment, today announced its financial results for the third quarter of fiscal 2014, which ended March 31, 2014.
As announced on September 5, 2013, Aeroflex sold the net assets of Aeroflex Test Equipment Services (“ATES”), a division of its U.K. subsidiary, Aeroflex Limited, for $19.2 million in cash. The results of operations of ATES are reported as income from discontinued operations. Aeroflex’s prior period results have been adjusted to reflect this transaction. The results for the quarter include Shenick Network Systems Limited which was acquired for cash of $27.1 million on February 5, 2014. Shenick’s sales and result of operations were not significant in the quarter.
Aeroflex’s results from continuing operations for the third quarter of fiscal 2014 are discussed below:
- Net sales were $155.5 million compared to $157.0 million in the third quarter of fiscal 2013.
- Operating income was $15.1 million and income from continuing operations was $5.3 million, or $0.06 per share, compared to operating loss of $(3.1) million and loss from continuing operations of $(9.8) million, or $(0.12) per share, in the third quarter of fiscal 2013.
- On a Non-GAAP basis, Adjusted EBITDA was $33.1 million compared to Adjusted EBITDA of $29.3 million in the third quarter of fiscal 2013. For the quarter, Non-GAAP operating income was $27.7 million compared to $24.0 million, and Non-GAAP net income was $14.4 million, or $0.17 per share, compared to $9.9 million, or $0.12 per share, last year.
“We continued to execute well and deliver solid financial results this quarter,” stated Len Borow, Chief Executive Officer of Aeroflex. “We had strength across many of our core markets, especially the ATS wireless business and, the AMS HiRel business which performed well in light of macro government-related headwinds. Our book to bill was solid again at approximately 1-to-1 which is positioning us well to deliver a strong fourth quarter.”
The following tables present selected financial information for the three and nine months ended March 31, 2014 and 2013 prepared in accordance with generally accepted accounting principles (“GAAP”) and on a basis other than GAAP (“Non-GAAP”). Prior fiscal year comparative information has been restated to present the operating results of ATES as a discontinued operation. A reconciliation between GAAP and Non-GAAP amounts is presented at the end of this press release. The 32% Non-GAAP effective tax rate in the fiscal 2014 period and 33% in the fiscal 2013 period result from Aeroflex’s geographic mix of Non-GAAP pre-tax income. These rates were applied to Aeroflex’s Non-GAAP pre-tax income for the three and nine months periods ended March 31, 2014 and 2013, respectively.
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Selected GAAP Results (In thousands, except percentages and per share data) |
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| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
| Net sales | $ | 155,463 | $ | 157,042 | $ | 439,300 | $ | 446,549 | ||||||||||||
| Gross profit | 82,912 | 79,793 | 223,710 | 226,073 | ||||||||||||||||
| Gross margin | 53.3 | % | 50.8 | % | 50.9 | % | 50.6 | % | ||||||||||||
| Operating income (loss) | 15,138 | (3,080 | ) | 24,624 | (4,029 | ) | ||||||||||||||
| Income (loss) from continuing operations | 5,326 | (9,813 | ) | 2,498 | (24,156 | ) | ||||||||||||||
| Income from discontinued operations | - | 424 | 14,462 | 1,373 | ||||||||||||||||
| Net income (loss) | $ | 5,326 | $ | (9,389 | ) | $ | 16,960 | $ | (22,783 | ) | ||||||||||
| Income (loss) per common share - basic: | ||||||||||||||||||||
| Continuing operations | $ | 0.06 | $ | (0.12 | ) | $ | 0.03 | $ | (0.28 | ) | ||||||||||
| Discontinued operations | - | 0.01 | 0.17 | 0.01 | ||||||||||||||||
| Net income (loss) | $ | 0.06 | $ | (0.11 | ) | $ | 0.20 | $ | (0.27 | ) | ||||||||||
| Income (loss) per common share - diluted: | ||||||||||||||||||||
| Continuing operations | $ | 0.06 | $ | (0.12 | ) | $ | 0.03 | $ | (0.28 | ) | ||||||||||
| Discontinued operations | - | 0.01 | 0.17 | 0.01 | ||||||||||||||||
| Net income (loss) | $ | 0.06 | $ | (0.11 | ) | $ | 0.20 | $ | (0.27 | ) | ||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||||||
| Basic | 85,186 | 84,904 | 85,039 | 84,870 | ||||||||||||||||
| Diluted | 85,411 | 84,904 | 85,290 | 84,870 | ||||||||||||||||
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Selected Non-GAAP Results (In thousands, except percentages and per share data) |
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| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
| Net sales | $ | 155,771 | $ | 157,042 | $ | 439,608 | $ | 446,549 | ||||||||||||
| Gross profit | 83,655 | 80,036 | 225,347 | 226,697 | ||||||||||||||||
| Gross margin | 53.7 | % | 51.0 | % | 51.3 | % | 50.8 | % | ||||||||||||
| Operating income | 27,731 | 23,998 | 62,468 | 61,454 | ||||||||||||||||
| Net income | $ | 14,360 | $ | 9,854 | $ | 28,404 | $ | 22,055 | ||||||||||||
| Net income per common share: | ||||||||||||||||||||
| Basic | $ | 0.17 | $ | 0.12 | $ | 0.33 | $ | 0.26 | ||||||||||||
| Diluted | $ | 0.17 | $ | 0.12 | $ | 0.33 | $ | 0.26 | ||||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||||||
| Basic | 85,186 | 84,904 | 85,039 | 84,870 | ||||||||||||||||
| Diluted | 85,411 | 85,055 | 85,290 | 84,932 | ||||||||||||||||
| Adjusted EBITDA | $ | 33,063 | $ | 29,252 | $ | 78,470 | $ | 76,549 | ||||||||||||
Business Outlook
For the fourth quarter ending June 30, 2014, Aeroflex expects net sales to be between $186 million and $196 million, GAAP income from continuing operations to be between $18 million and $21 million, Adjusted EBITDA to be between $48 million and $52 million, GAAP income from continuing operations per share to be between $0.21 and $0.25 and Non-GAAP net income per share to be between $0.28 and $0.31.
The range of expected GAAP and Non-GAAP earnings per share for the fiscal fourth quarter was calculated using GAAP and Non-GAAP effective tax rates of 28% and 32%, respectively.
Non-GAAP Presentation
This press release contains Non-GAAP financial measures that are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from Non-GAAP measures used by other companies. In addition, these Non-GAAP measures: (i) are not based on any comprehensive set of accounting rules or principles; and (ii) have limitations in that they do not reflect all of the amounts associated with Aeroflex's results of operations as determined in accordance with GAAP. As such, these measures should only be used to evaluate Aeroflex's results of operations in conjunction with the corresponding GAAP measures.
Aeroflex believes that the presentation of Non-GAAP financial measures, when shown in conjunction with the corresponding GAAP measures, provides useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations because they exclude certain non-cash charges or items that management does not believe are reflective of its ongoing operating results when assessing the performance of its business.
Aeroflex believes that these Non-GAAP financial measures also facilitate the comparison by management and investors of results between periods and among its peer companies. However, its peer companies may calculate similar Non-GAAP financial measures differently than Aeroflex, limiting the information’s usefulness as comparative measures.
Webcast and Conference Call Information
Aeroflex will host a live webcast and conference call at 8:15 a.m. (eastern standard time) today, May 7th during which management will discuss the financial results. To participate in the live webcast, please visit the events page of the website located at http://ir.aeroflex.com. Please plan to join five to ten minutes before the start of the webcast to facilitate a timely connection. If you are unable to participate and would like to hear a replay of the call, an audio replay of the webcast will be available on the Aeroflex website or can be accessed telephonically for domestic callers at (888) 286-8010 or internationally at (617) 801-6888 with pass code 63576965.
About Aeroflex
Aeroflex Holding Corp. is a leading global provider of high performance microelectronic components, and test and measurement equipment used by companies in the space, avionics, defense, commercial wireless communications, medical and other markets.
Forward-looking Statements
All statements other than statements of historical fact included in this press release regarding Aeroflex’s business strategy, financial results 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, adverse developments in the global economy; changes in government spending; dependence on growth in customers’ businesses; the ability to remain competitive in the markets Aeroflex serves; the inability to continue to develop, manufacture and market innovative, customized products and services that meet customer requirements for performance and reliability; the failure of suppliers to provide raw materials and/or properly functioning component parts; the inability to meet covenants contained in debt agreements; the termination of key contracts, including technology license agreements, or loss of key customers; the inability to protect intellectual property; the failure to comply with regulations such as International Traffic in Arms Regulations, the Foreign Corrupt Practices Act and Conflict Minerals regulations, and any changes in regulations; the failure to realize anticipated benefits from completed acquisitions, divestitures or restructurings, or the possibility that such acquisitions, divestitures or restructurings could adversely affect Aeroflex; the loss of key employees; exposure to foreign currency exchange rate risks; and embargoes, terrorist acts or acts of war. Such statements reflect the current views of management with respect to the future and are subject to these and other risks, uncertainties and assumptions. Aeroflex does not undertake any obligation to update such forward-looking statements. Any projections in this release are based on limited information currently available to Aeroflex, which is subject to change. Although any such projections and the factors influencing them will likely change, Aeroflex will not necessarily update the information, since Aeroflex will only provide guidance at certain points during the year.
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Aeroflex Holding Corp. and Subsidiaries Unaudited Condensed Consolidated Statements of Operations (In thousands, except per share data) |
||||||||||
| Three Months Ended March 31, | ||||||||||
| 2014 | 2013 | |||||||||
| Net sales | $ | 155,463 | $ | 157,042 | ||||||
| Cost of sales | 72,551 | 77,249 | ||||||||
| Gross profit | 82,912 | 79,793 | ||||||||
| Operating expenses: | ||||||||||
| Selling, general and administrative costs | 36,534 | 37,239 | ||||||||
| Research and development costs | 22,676 | 23,247 | ||||||||
| Amortization of acquired intangibles | 7,234 | 13,991 | ||||||||
| Restructuring charges | 1,330 | 396 | ||||||||
| ITAR settlement expense | - | 8,000 | ||||||||
| Total operating expenses | 67,774 | 82,873 | ||||||||
| Operating income (loss) | 15,138 | (3,080 | ) | |||||||
| Other income (expense): | ||||||||||
| Interest expense | (7,116 | ) | (9,448 | ) | ||||||
| Other income (expense), net | (214 | ) | (389 | ) | ||||||
| Total other income (expense), net | (7,330 | ) | (9,837 | ) | ||||||
| Income (loss) from continuing operations before income taxes | 7,808 | (12,917 | ) | |||||||
| Provision (benefit) for income taxes | 2,482 | (3,104 | ) | |||||||
| Income (loss) from continuing operations | 5,326 | (9,813 | ) | |||||||
| Discontinued operations: | ||||||||||
| Income from discontinued operations, | ||||||||||
| net of tax provision of $133 | - | 424 | ||||||||
| Net income (loss) | $ | 5,326 | $ | (9,389 | ) | |||||
| Income (loss) per common share - basic: | ||||||||||
| Continuing operations | $ | 0.06 | $ | (0.12 | ) | |||||
| Discontinued operations | - | 0.01 | ||||||||
| Net income (loss) | $ | 0.06 | $ | (0.11 | ) | |||||
| Income (loss) per common share - diluted: | ||||||||||
| Continuing operations | $ | 0.06 | $ | (0.12 | ) | |||||
| Discontinued operations | - | 0.01 | ||||||||
| Net income (loss) | $ | 0.06 | $ | (0.11 | ) | |||||
| Weighted average number of common shares outstanding: | ||||||||||
| Basic | 85,186 | 84,904 | ||||||||
| Diluted | 85,411 | 84,904 | ||||||||
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Aeroflex Holding Corp. and Subsidiaries Unaudited Condensed Consolidated Statements of Operations (In thousands, except per share data) |
||||||||||
| Nine Months Ended March 31, | ||||||||||
| 2014 | 2013 | |||||||||
| Net sales | $ | 439,300 | $ | 446,549 | ||||||
| Cost of sales | 215,590 | 220,476 | ||||||||
| Gross profit | 223,710 | 226,073 | ||||||||
| Operating expenses: | ||||||||||
| Selling, general and administrative costs | 103,714 | 109,186 | ||||||||
| Research and development costs | 66,855 | 65,213 | ||||||||
| Amortization of acquired intangibles | 24,964 | 42,634 | ||||||||
| Restructuring charges | 3,553 | 3,729 | ||||||||
| Impairment of other long-lived assets | - | 1,340 | ||||||||
| ITAR settlement expense | - | 8,000 | ||||||||
| Total operating expenses | 199,086 | 230,102 | ||||||||
| Operating income (loss) | 24,624 | (4,029 | ) | |||||||
| Other income (expense): | ||||||||||
| Interest expense | (21,608 | ) | (29,294 | ) | ||||||
| Write-off of deferred financing costs | - | (824 | ) | |||||||
| Other income (expense), net | (561 | ) | (890 | ) | ||||||
| Total other income (expense), net | (22,169 | ) | (31,008 | ) | ||||||
| Income (loss) from continuing operations before income taxes | 2,455 | (35,037 | ) | |||||||
| Provision (benefit) for income taxes | (43 | ) | (10,881 | ) | ||||||
| Income (loss) from continuing operations | 2,498 | (24,156 | ) | |||||||
| Discontinued operations: | ||||||||||
| Income from discontinued operations, | ||||||||||
| net of tax provision of $105 and $428 | 360 | 1,373 | ||||||||
| Gain on disposal of operations, net of tax of $0 | 14,102 | - | ||||||||
| Income from discontinued operations | 14,462 | 1,373 | ||||||||
| Net income (loss) | $ | 16,960 | $ | (22,783 | ) | |||||
| Income (loss) per common share - basic: | ||||||||||
| Continuing operations | $ | 0.03 | $ | (0.28 | ) | |||||
| Discontinued operations | 0.17 | 0.01 | ||||||||
| Net income (loss) | $ | 0.20 | $ | (0.27 | ) | |||||
| Income (loss) per common share - diluted: | ||||||||||
| Continuing operations | $ | 0.03 | $ | (0.28 | ) | |||||
| Discontinued operations | 0.17 | 0.01 | ||||||||
| Net income (loss) | $ | 0.20 | $ | (0.27 | ) | |||||
| Weighted average number of common shares outstanding: | ||||||||||
| Basic | 85,039 | 84,870 | ||||||||
| Diluted | 85,290 | 84,870 | ||||||||
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Unaudited Selected Segment Data (In thousands, except percentages) |
||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
| Net sales: | ||||||||||||||||||||
| Microelectronic solutions ("AMS") | $ | 88,317 | $ | 89,864 | $ | 246,080 | $ | 251,237 | ||||||||||||
| Test solutions ("ATS") | 67,146 | 67,178 | 193,220 | 195,312 | ||||||||||||||||
| Total net sales | $ | 155,463 | $ | 157,042 | $ | 439,300 | $ | 446,549 | ||||||||||||
| Gross profit: | ||||||||||||||||||||
| - AMS | $ | 43,043 | $ | 43,349 | $ | 114,869 | $ | 122,060 | ||||||||||||
| - ATS | 39,869 | 36,444 | 108,841 | 104,013 | ||||||||||||||||
| Total gross profit | $ | 82,912 | $ | 79,793 | $ | 223,710 | $ | 226,073 | ||||||||||||
| Gross margin: | ||||||||||||||||||||
| - AMS | 48.7 | % | 48.2 | % | 46.7 | % | 48.6 | % | ||||||||||||
| - ATS | 59.4 | % | 54.2 | % | 56.3 | % | 53.3 | % | ||||||||||||
| Total gross margin | 53.3 | % | 50.8 | % | 50.9 | % | 50.6 | % | ||||||||||||
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Aeroflex Holding Corp. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets (In thousands, except share and per share data) |
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| March 31, | June 30, | |||||||||
| 2014 | 2013 | |||||||||
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Assets |
||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 47,248 | $ | 39,424 | ||||||
| Accounts receivable, less allowance for doubtful accounts of | ||||||||||
| $3,438 and $3,422 | 133,141 | 151,163 | ||||||||
| Inventories | 171,341 | 156,516 | ||||||||
| Deferred income taxes | 34,499 | 35,491 | ||||||||
| Prepaid expenses and other current assets | 11,645 | 9,374 | ||||||||
| Total current assets | 397,874 | 391,968 | ||||||||
| Property, plant and equipment, net of accumulated depreciation of | ||||||||||
| $125,344 and $122,479 | 103,591 | 101,546 | ||||||||
| Deferred financing costs, net | 10,288 | 11,580 | ||||||||
| Other assets | 31,002 | 31,886 | ||||||||
| Intangible assets with definite lives, net | 55,530 | 65,552 | ||||||||
| Intangible assets with indefinite lives | 113,156 | 110,779 | ||||||||
| Goodwill | 326,402 | 315,643 | ||||||||
| Total assets | $ | 1,037,843 | $ | 1,028,954 | ||||||
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Liabilities and Stockholders' Equity |
||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 26,680 | $ | 34,768 | ||||||
| Advance payments by customers and deferred revenue | 29,213 | 23,490 | ||||||||
| Income taxes payable | 5,486 | 12,003 | ||||||||
| Accrued payroll expenses | 20,949 | 21,694 | ||||||||
| Accrued expenses and other current liabilities | 34,761 | 37,184 | ||||||||
| Total current liabilities | 117,089 | 129,139 | ||||||||
| Long-term debt | 587,000 | 587,000 | ||||||||
| Deferred income taxes | 58,447 | 67,296 | ||||||||
| Other long-term liabilities | 19,046 | 23,061 | ||||||||
| Total liabilities | 781,582 | 806,496 | ||||||||
| Stockholders' equity: | ||||||||||
| Preferred stock, par value $.01 per share; 50,000,000 shares authorized, | ||||||||||
| no shares issued and outstanding | - | - | ||||||||
| Common stock, par value $.01 per share; 300,000,000 shares authorized, | ||||||||||
| 85,208,703 and 84,936,582 shares issued and outstanding | 852 | 849 | ||||||||
| Additional paid-in capital | 653,870 | 651,950 | ||||||||
| Accumulated other comprehensive income (loss) | (28,486 | ) | (43,406 | ) | ||||||
| Accumulated deficit | (369,975 | ) | (386,935 | ) | ||||||
| Total stockholders' equity | 256,261 | 222,458 | ||||||||
| Total liabilities and stockholders' equity | $ | 1,037,843 | $ | 1,028,954 | ||||||
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Aeroflex Holding Corp. and Subsidiaries Unaudited Condensed Consolidated Statements of Cash Flows (In thousands) |
||||||||||
| Nine Months Ended March 31, | ||||||||||
| 2014 | 2013 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net income (loss) | $ | 16,960 | $ | (22,783 | ) | |||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) | ||||||||||
| operating activities: | ||||||||||
| Depreciation and amortization | 43,119 | 59,880 | ||||||||
| Gain on disposal of operations | (14,102 | ) | - | |||||||
| Impairment of other long-lived assets | - | 1,340 | ||||||||
| Special accounts receivable reserve | - | 2,529 | ||||||||
| Write-off of deferred financing costs | - | 824 | ||||||||
| Deferred income taxes | (10,266 | ) | (17,291 | ) | ||||||
| Share-based compensation | 3,632 | 2,610 | ||||||||
| Amortization of deferred financing costs | 1,292 | 1,648 | ||||||||
| Other, net | 217 | 606 | ||||||||
| Change in operating assets and liabilities, net of effects of acquisition | ||||||||||
| and sale of businesses: | ||||||||||
| Decrease (increase) in accounts receivable | 18,215 | 8,868 | ||||||||
| Decrease (increase) in inventories | (12,417 | ) | (2,362 | ) | ||||||
| Decrease (increase) in prepaid expenses and other assets | (969 | ) | 1,758 | |||||||
| Increase (decrease) in accounts payable, accrued expenses and other liabilities | (18,841 | ) | 5,473 | |||||||
| Net cash provided by (used in) operating activities | 26,840 | 43,100 | ||||||||
| Cash flows from investing activities: | ||||||||||
| Payments for purchase of business, net of cash acquired | (23,763 | ) | - | |||||||
| Net proceeds from the sale of business | 19,243 | - | ||||||||
| Proceeds from the sale of building held for sale | - | 1,582 | ||||||||
| Capital expenditures | (16,980 | ) | (14,311 | ) | ||||||
| Other, net | 198 | 572 | ||||||||
| Net cash provided by (used in) investing activities | (21,302 | ) | (12,157 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Debt repayments | - | (35,000 | ) | |||||||
| Other, net | (1,758 | ) | (641 | ) | ||||||
| Net cash provided by (used in) financing activities | (1,758 | ) | (35,641 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 4,044 | (1,840 | ) | |||||||
| Net increase (decrease) in cash and cash equivalents | 7,824 | (6,538 | ) | |||||||
| Cash and cash equivalents at beginning of period | 39,424 | 41,324 | ||||||||
| Cash and cash equivalents at end of period | $ | 47,248 | $ | 34,786 | ||||||
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Aeroflex Holding Corp. and Subsidiaries Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Operating Income (In thousands) |
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| Three Months Ended | Nine Months Ended | |||||||||||||||||
| March 31, | March 31, | |||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||
| Operating income (loss) - GAAP | $ | 15,138 | $ | (3,080 | ) | $ | 24,624 | $ | (4,029 | ) | ||||||||
| Amortization of acquired intangibles | 7,234 | 13,991 | 24,964 | 42,634 | ||||||||||||||
| Restructuring related costs, including pro forma savings(a) | 1,622 | 916 | 5,498 | 6,335 | ||||||||||||||
| Impairment of other long-lived assets | - | - | - | 1,340 | ||||||||||||||
| ITAR settlement expense | - | 8,000 | - | 8,000 | ||||||||||||||
| Share-based compensation | 1,620 | 1,243 | 3,632 | 2,610 | ||||||||||||||
| Special accounts receivable reserve | - | 2,529 | - | 2,529 | ||||||||||||||
| Impact of purchase accounting adjustments | 314 | 13 | 330 | 68 | ||||||||||||||
| Other adjustments | 1,803 | 386 | 3,420 | 1,967 | ||||||||||||||
| Operating income - non-GAAP | $ | 27,731 | $ | 23,998 | $ | 62,468 | $ | 61,454 | ||||||||||
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Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (In thousands) |
|||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
| Net income (loss) - GAAP | $ | 5,326 | $ | (9,389 | ) | $ | 16,960 | $ | (22,783 | ) | |||||||||
| Income from discontinued operations | - | (424 | ) | (14,462 | ) | (1,373 | ) | ||||||||||||
| Income (loss) from continuing operations | 5,326 | (9,813 | ) | 2,498 | (24,156 | ) | |||||||||||||
| Amortization of acquired intangibles | 7,234 | 13,991 | 24,964 | 42,634 | |||||||||||||||
| Restructuring related costs, including pro forma savings(a) | 1,622 | 916 | 5,498 | 6,335 | |||||||||||||||
| Impairment of other long-lived assets | - | - | - | 1,340 | |||||||||||||||
| ITAR settlement expense | - | 8,000 | - | 8,000 | |||||||||||||||
| Share-based compensation | 1,620 | 1,243 | 3,632 | 2,610 | |||||||||||||||
| Special accounts receivable reserve | - | 2,529 | - | 2,529 | |||||||||||||||
| Write-off of deferred financing costs | - | - | - | 824 | |||||||||||||||
| Amortization of deferred financing costs | 434 | 547 | 1,292 | 1,648 | |||||||||||||||
| Impact of purchase accounting adjustments | 314 | 13 | 330 | 68 | |||||||||||||||
| Other adjustments | 1,803 | 386 | 3,426 | 1,967 | |||||||||||||||
| Tax impact of adjustments | (3,993 | ) | (7,958 | ) | (13,236 | ) | (21,744 | ) | |||||||||||
| Net income - non-GAAP | $ | 14,360 | $ | 9,854 | $ | 28,404 | $ | 22,055 | |||||||||||
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Aeroflex Holding Corp. and Subsidiaries Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA (In thousands) |
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| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
| Net income (loss) | $ | 5,326 | $ | (9,389 | ) | $ | 16,960 | $ | (22,783 | ) | |||||||||
| Income from discontinued operations | - | (424 | ) | (14,462 | ) | (1,373 | ) | ||||||||||||
| Income (loss) from continuing operations | 5,326 | (9,813 | ) | 2,498 | (24,156 | ) | |||||||||||||
| Interest expense | 7,116 | 9,448 | 21,608 | 29,294 | |||||||||||||||
| Provision (benefit) for income taxes | 2,482 | (3,104 | ) | (43 | ) | (10,881 | ) | ||||||||||||
| Depreciation and amortization | 13,357 | 20,024 | 43,119 | 59,711 | |||||||||||||||
| EBITDA | 28,281 | 16,555 | 67,182 | 53,968 | |||||||||||||||
| Restructuring related costs, including pro forma savings(a) | 1,622 | 916 | 5,498 | 6,335 | |||||||||||||||
| Impairment of other long-lived assets | - | - | - | 1,340 | |||||||||||||||
| ITAR settlement expense | - | 8,000 | - | 8,000 | |||||||||||||||
| Share-based compensation | 1,620 | 1,243 | 3,632 | 2,610 | |||||||||||||||
| Special accounts receivable reserve | - | 2,529 | - | 2,529 | |||||||||||||||
| Write-off of deferred financing costs | - | - | - | 824 | |||||||||||||||
| Non-cash purchase accounting adjustments | 308 | - | 308 | - | |||||||||||||||
| Other defined items(b) | 1,232 | 9 | 1,850 | 943 | |||||||||||||||
| Adjusted EBITDA | $ | 33,063 | $ | 29,252 | $ | 78,470 | $ | 76,549 | |||||||||||
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(a) |
Primarily reflects costs associated with the reorganization of our European operations and consolidation of certain of our U.S. operations. Pro forma savings reflect the costs that we estimate would have been eliminated during the fiscal year in which a restructuring occurred had the restructuring occurred as of the first day of that fiscal year. Pro forma savings were estimated to be $292,000 and $520,000 for the three months ended March 31, 2014 and 2013 and $1.9 million and $2.6 million for the nine months ended March 31, 2014 and 2013, respectively. The pro forma savings for the three months and nine months ended March 31, 2013 includes an additional $417,000 and $1.3 million which was not reflected in our Adjusted EBITDA as reported in our March 31, 2013 report on Form 10-Q as it relates to restructuring activities recorded throughout fiscal 2013. |
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(b) |
Reflects other adjustments required in calculating our debt covenant compliance. These other defined items include legal fees related to certain litigation and business acquisition and divestiture related costs. |