Acterna Corporation reports fourth quarter earnings

May 31, 2001
May 31, 2001--Acterna Corporation, a provider of test and management solutions for optical transport, access and cable networks, reported record sales and orders for its fiscal 2001 fourth quarter and full fiscal year ended March 31, 2001.

Acterna Corporation (Nasdaq: ACTR), a provider of test and management solutions for optical transport, access and cable networks, reported record sales and orders for its fiscal 2001 fourth quarter and full fiscal year ended March 31, 2001.

Net sales from continuing operations for the fourth quarter of fiscal 2001 of $330 million rose 24 percent from pro forma sales of $267 million for the same period last year. Acterna's profit from operations (earnings before interest, taxes, amortization, and special charges) before acquisition-related integration expense was $54 million for the fourth quarter. This exceeded the company's previous guidance of $50 million, and increased 67 percent from a year ago. After $8 million of acquisition-related integration expense, profit from operations was $46 million.

Fiscal 2001 net sales from continuing operations on a pro forma basis were $1.27 billion, an increase of 27 percent from the prior year. Pro forma profit from operations before acquisition-related integration expense was $192 million, up 42 percent from a year ago. After $25 million of acquisition-related integration expense, pro forma profit from operations was $167 million.

Cash earnings per share in the fourth quarter were $.08, after $.02 per share of acquisition-related integration expense. For fiscal 2001, pro forma cash earnings per share were $.31, after $.08 per share of acquisition-related integration expense.

In the fourth quarter, the company received its largest order to date from Tycom, Ltd. for fiber optic test equipment to support the construction an undersea fiber optic network. In addition, the company signed new agreements with Global Crossing, British Telecom, and Microlease, and received a contract from Cable & Wireless for Acterna's ANT 10-gigabit portable optical network test instruments and systems.

Key new product introductions include:

* A portable optical network tester, the ONT-50, combining optical and digital test in a single unit for installation of DWDM networks. The new product can reduce field technician network testing time by as much as 80 percent and can speed up the installation of DWDM networks.

* A 10-gigabit portable instrument, the Testpad 2510, for testing high-speed SONET and SDH networks. The Testpad 2510 is the latest complement to Acterna's 2310 battery-operated SONET field tester, which accounted for over $100 million in orders in fiscal 2001.

* The company expanded its Cyclone family of data/IP products to enable testing and management of ATM, VOIP, and Packet over SONET.

In April, 2001, the company initiated a plan to consolidate certain U.S. manufacturing and customer service operations. This will impact manufacturing and service centers in three cities. In May, 2001, as part of its merger integration process and in order to consolidate multiple legacy IT systems, Acterna began the implementation of a global ERP system. The system is intended to integrate financial, supply chain management and customer relationship management systems across the entire company. The implementation process is expected to run through fiscal 2003. The company expects to incur the majority of the costs associated with this project, approximately $40 million, in fiscal 2002.

For fiscal 2002, the company reaffirmed its previously announced guidance of 25 percent growth of pro forma profit from operations before integration expense, which is expected to be in the range of $235 to $240 million. After integration expense of approximately $40 million, pro forma profit from operations is expected to be in the range of $195 to $200 million. The company anticipates sales growth of 10 to 15 percent for fiscal 2002, reflecting continued strength in optical transport offset by softness in its cable and access products, as well as the divestiture of certain small product lines. Cash earnings per share are expected to be in the range of $.43 to $.45 per share, after approximately $.10 to $.12 per share of integration expense.

For the first quarter, Acterna anticipates pro forma profit from operations before integration expense of $40 to $42 million, compared to $36 million in the prior year. After integration expense of approximately $8 million, pro forma profit from operations is expected to be $32 to $34 million. Cash earnings per share are expected to be approximately $.07 per share, before restructuring charges and after approximately $.02 per share of integration expense. The company plans to take a one-time charge in the first quarter of approximately $6 million related principally to the consolidation of certain manufacturing operations and the write-off of legacy IT systems.

The company's pro forma results for fiscal 2001 referred to above have been restated to reflect all acquisitions and divestitures, including the acquisition of Wavetek Wandel Goltermann, Inc. in the first quarter ended June 30, 2000, and the acquisition of Cheetah Technologies in the second quarter ended September 30, 2000. Pro forma profit from operations referred to above excludes special charges comprising recapitalization and other related costs, purchased incomplete technology, amortization of unearned compensation, amortization of inventory step-up, and the writeoff of capitalized charges related to the amendment of the company's Form S-1.

On an as-reported basis, fourth quarter net sales from continuing operations were $330 million versus $136 million a year earlier. The reported net loss for the fourth quarter of $21 million, or a loss of $.11 per share on a fully diluted basis, includes acquisition-related integration expenses, as well as amortization of intangibles. This compared to net loss of $11 million, or a loss of $.07 per share on a fully diluted basis, for the fourth quarter a year ago. On an as-reported basis, net sales for fiscal 2001 were $1,168 million versus $453 million a year earlier. The reported net loss for fiscal 2001 of $172 million, or a loss of $.93 per share on a fully diluted basis, includes the previously mentioned special charges and acquisition-related integration expenses, as well as amortization of intangibles. This compared to net income of $6 million, or $.04 per share on a fully diluted basis, for the same period a year ago.

About Acterna Corporation:

Acterna is a provider of test and management solutions for optical transport, access and cable networks and a communications test company. For more information, visit www.acterna.com.

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