SAN JOSE, Calif. — Jan. 31, 2008 — Symmetricom, Inc. (NASDAQ:SYMM), a worldwide leader in precise time and frequency technologies that accelerate the deployment and enable the management of next generation networks, today reported financial results for its second quarter ended Dec. 30, 2007.
Fiscal second quarter revenue was $48.8 million, a 5.6 percent decrease from $51.8 million in the same period in the prior year. For the six-month period ended Dec. 30, 2007, revenue was $99.6 million, a 0.6 percent increase over the same prior year period revenue of $99.0 million.
Net earnings from continuing operations in the second quarter were $0.1 million, or $0.00 per share on a fully diluted basis, compared with $2.5 million, or $0.05 per share on a fully diluted basis, in the same prior year period. For the six-month period ended Dec. 30, 2007, the net loss from continuing operations was $0.2 million, or $0.00 per share on a fully diluted basis, compared with net earnings of $5.8 million, or $0.12 per share on a fully diluted basis, in the same period of the prior year.
Non-GAAP net earnings in the second quarter were $1.8 million, or $0.04 per share on a fully diluted basis, compared with $4.7 million, or $0.10 per share on a fully diluted basis, in the same prior year period. For the six-month period ended Dec. 30, 2007, non-GAAP net earnings were $3.6 million, or $0.08 per share on a fully diluted basis, compared with $9.3 million or $0.20 per share for the prior year period. Non-GAAP net earnings exclude certain items related to non-cash compensation, amortization of acquired intangibles, integration and restructuring charges, discontinued operations, and unusual and non-recurring items.
Telecom Solutions Division revenue in the quarter was $30.2 million, a decrease of $2.6 million, or 7.9 percent, compared with revenue of $32.8 million in the same period in the prior year. Revenue for the six-month period ended Dec. 30, 2007, was $60.5 million, a decrease of $4.4 million, or 6.7 percent, over the prior year revenue of $64.9 million.
Timing, Test & Measurement Division revenue in the quarter was $18.3 million, a decrease of $0.6 million, or 3.3 percent, compared with revenue of $19.0 million in the same period in the prior year. Revenue for the six-month period ended Dec. 30, 2007, was $38.6 million, an increase of $4.5 million or 13.1 percent over the prior year revenue of $34.1 million.
Quality of Experience Assurance Division revenue was $0.3 million for the second fiscal quarter and $0.5 million for the six-month period ended Dec. 30, 2007.
“We finished the first half of the year on track with our expectations of weaker first half revenue,” said Thomas Steipp, president and CEO of Symmetricom. “We remain optimistic that increased purchasing levels by our largest customers will resume in the second half once telecom cap ex budgets are finalized. In our emerging cable business, we gained significant traction, with bookings for our DOCSIS Timing product topping one million dollars in the quarter.
“We are very pleased with the progress made in our Quality of Experience Assurance business,” said Steipp. “In the quarter, we entered into two new trials of V-Factor® with international service providers and received an order for initial deployment of our solution in Western Europe. We also successfully completed an important proof-of-concept with IPTV set top box manufacturer Sagem, which has agreed to trial our software in its set top boxes. Additionally, interest in measuring perceptual video quality is generating opportunities outside of our strategic account focus, as demonstrated by an order valued at approximately one million dollars for initial deployment of V-Factor in Eastern Europe.”
“Our strategic efforts to improve efficiencies in order to reduce manufacturing and R&D costs in future years are moving ahead,” said Bill Slater, CFO of Symmetricom. “We opened our new R&D facility in Beijing and have selected Sanmina as our contract manufacturing partner, which we believe will lower manufacturing costs and allow us to take advantage of best-in-class production processes. As we outsource additional manufacturing during fiscal 2008, we anticipate taking a charge of approximately two cents per share for a reduction in force at our Puerto Rico plant. We have also added safety stock to our inventory to minimize any disruption to our customers. Additionally, this quarter we repurchased approximately 1,000,000 shares of stock for $4.3 million bringing the fiscal year-to date repurchase to approximately 1,944,000 shares for $9.1 million,” continued Slater.
Investor Conference Call
As previously announced, management will hold a conference call to discuss these results today, Jan. 31, at 1:30 p.m. Pacific time. Those wishing to join should dial 1-517-308-9318 and reference the passcode “Symmetricom.” A live webcast of the conference call will also be available via the company’s website at www.symmetricom.com. A replay of the call will be available until Feb. 8 at 11:59 p.m. Pacific Time. To access the replay, please dial 1-203-369-0164.
Non-GAAP Information
Certain non-GAAP financial information is included in this press release. In the Reconciliation of GAAP to Non-GAAP Results, Symmetricom excludes certain items related to non-cash compensation, amortization of acquired intangibles, impairment of goodwill and other intangibles, integration and restructuring charges and unusual and non-recurring items. Symmetricom believes that excluding such items provides investors and management with a representation of the company’s core operating performance and with information useful in assessing our prospects for the future and underlying trends in Symmetricom’s operating performance. Management uses such non-GAAP information to evaluate financial results and to establish operational goals. Non-GAAP information is not determined using GAAP and should not be considered superior to or as a substitute for data prepared in accordance with GAAP. A reconciliation of the non-GAAP results to the GAAP results is provided in the financial schedules portion of this press release.
Safe Harbor
This press release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created by those sections. These forward-looking statements include statements concerning our expectation of increased purchase levels from our customers in the fiscal second half, progress for our new QOE Assurance Division business, progress made in developing product for the cable industry, expectations of lower raw material costs from outsourcing some manufacturing, as well as the information regarding the usefulness of the non-GAAP financial information. Symmetricom's actual results could differ materially from those projected or suggested in these forward-looking statements. Factors that could cause future actual results to differ materially from the results projected in or suggested by such forward-looking statements include: reduced rates of demand for telecommunication products, cable products or test and measurement products, our customers’ ability and need to upgrade existing equipment, our ability to attract cable service providers as new customers for our products, our ability to successfully move some manufacturing to a third party provider, our ability to successfully move some R&D work to lower cost areas, our ability to develop, market and sell products into the QOE area for the emerging IPTV market, our ability to negotiate contracts with our customers, our ability to maintain gross margins, timing of orders, cancellation or delay of customer orders, loss of customers, difficulties in manufacturing products to specification or customer volume requirements, challenges in integrating acquired businesses, customer acceptance of new products, geopolitical risks such as terrorist acts and the risk factors listed from time to time in Symmetricom's reports filed with the Securities and Exchange Commission, including the annual report on Form 10-K for the fiscal year ended July1, 2007 Form 10-Q for the quarter ended September 30, 2007, and subsequent current reports on Form 8-K.
Note: Financial schedules attached.
