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Anaren Inc. Reports Operating Results (10-Q)

October 29, 2010 | About:

Anaren Inc. (ANEN) filed Quarterly Report for the period ended 2010-09-30.

Anaren Inc. has a market cap of $245 million; its shares were traded at around $16.87 with a P/E ratio of 17 and P/S ratio of 1.5. Anaren Inc. had an annual average earning growth of 18.4% over the past 5 years.ANEN is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Three Months Ended

Sept. 30, 2010 Sept. 30, 2009

- -

Net Sales 100.0% 100.0%

Cost of sales 60.4% 63.6%

- -

Gross profit 39.6% 36.4%

- -

Operating expenses:

Marketing 5.4% 5.9%

Research and development 8.6% 9.0%

General and administrative 11.7% 11.1%

- -

Total operating expenses 25.7% 26.0%

- -

Operating income 13.9% 10.4%

- -

Other income (expense):

Other, primarily interest income 0.2% 0.3%

Interest expense (0.4%) (0.4%)

- -

Total other income (expense), net (0.2%) (0.1%)

- -

Income before income taxes 13.7% 10.3%

Income taxes 4.5% 3.2%

- -

Net income 9.2% 7.1%

= =

Net sales. Net sales were $44.5 million for the first quarter ended September

30, 2010, up 10.4% compared to $40.3 million for the first quarter of fiscal

2010. Sales of Wireless Group products rose $1.1 million, or 7.7%, and sales of

Space & Defense Group products rose $3.1 million, or 11.9%, in the current first

quarter compared to the first quarter of fiscal 2010.

General and Administrative. General and administrative expenses consist of

employee related expenses, incentive compensation, professional services,

intangible amortization, travel related expenses and other corporate costs.

General and administrative expenses increased 16.8% to $5.2 million (11.7% of

net sales) for the first quarter of fiscal 2011, from $4.5 million (11.1% of net

sales) for the first quarter of fiscal 2010. The increase in general and

administrative expense in the first quarter resulted from a lease charge of $0.5

million in the current first quarter of fiscal 2011 to recognize additional rent

expense related to the Company's vacant facility in Frimley, U.K. Additionally,

G&A expense rose in the current quarter as a result of a $0.3 million increase

in equity based compensation expense related to the Company returning to its

normal pattern of granting restricted stock in August this year compared to

November in fiscal 2010.

Operating Income. Operating income increased 46.4% in the first quarter of

fiscal 2011 to $6.2 million, (13.9% of net sales), compared to $4.2 million

(10.4% of net sales) for the first quarter of fiscal 2010. This increase in

operating income was a result of the $4.2 million increase in sales volume, the

favorable product mix caused by the rise in sales of Wireless standard

components coupled with the decline in sales of Wireless custom assemblies.

Income Taxes. Income taxes for the first quarter of fiscal 2011 were $2.0

million (4.5% of net sales), representing an effective tax rate of 32.8%. This

compares to income tax expense of $1.3 million (3.2% of net sales) for the first

quarter of fiscal 2010, representing an effective tax rate of 31.3%. The

increase in the effective rate for the quarter is a result of the increase in

taxable income and the mix of foreign and domestic taxable income year over

year. The projected effective tax rate for fiscal 2011 is expected to be

approximately 33.0%.

As of September 30, 2010, the Company had $30.0 million in outstanding debt

under its revolving line of credit with Key Bank National Association. The line

consists of a $50,000,000 revolving credit note for which principal amounts are

due on August 1, 2011, and on each anniversary date thereafter through July 31,

2013. Borrowings under this Note bear interest at LIBOR, plus 100 to 425 basis

points or at the Lender's prime rate, minus (100) to plus 225 basis points,

depending upon the Company's EBITDA performance at the end of each quarter as

measured by the formula: EBITDA divided by the current portion of long-term debt

plus interest expense. For the three months ended September 30, 2010, the

weighted average interest rate on the outstanding borrowings was 1.56%. Interest

expense for these borrowings is exposed to interest rate risk and will increase

if market interest rates rise. A hypothetical increase in market interest rate

of 10.0% from September 30, 2010 rates, or 0.13%, would have reduced net income

and cash flow by approximately $10,000, or $.0007 per diluted share for the

quarter. Due to the Company's significant cash reserves and historical positive

operating cash flow, the Company does not believe that an immediate increase in

interest rates would have a significant effect on its financial condition or

results of operations. Over time, however, increases in market interest rates

will increase the Company's interest expense.

Read the The complete Report

About the author:

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Rating: 3.8/5 (4 votes)


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