Aeroflex Announces Second Quarter Fiscal 2013 Results

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 second quarter of fiscal 2013, which ended December 31, 2012.

For the second quarter of fiscal 2013:

• Net sales were $156.2 million compared to $171.1 million in the second quarter of fiscal 2012.
• Operating income was $5.8 million and net income was $745,000, or $0.01 per share, compared to operating income of $8.2 million and a net loss of $(535,000), or $(0.01) per share, in the second quarter of fiscal 2012.
• On a Non-GAAP basis, operating income was $22.5 million, net income was $8.7 million, or $0.10 per share, and Adjusted EBITDA was $27.6 million compared to operating income of $29.8 million, net income of $13.9 million, or $0.16 per share, and Adjusted EBITDA of $34.4 million, in the second quarter of fiscal 2012.

“Despite the difficult environment, we again exceeded expectations this quarter. We saw continued improvement in both AMS and ATS and had strong bookings led by our high performance, high reliability products in AMS. Our overall book-to-bill was well over one-to-one this quarter,” stated Len Borow, Chief Executive Officer of Aeroflex. “The benefits of our operational changes have begun to take effect and we will continue to make improvements throughout the year. We continued to generate sufficient cash that allowed us to repay another $10 million of debt this quarter. Although we are encouraged by the strong bookings, we are still cautious as the political and economic issues affecting our end markets still exist.”

The following tables present selected financial information for the three and six months ended December 31, 2012 and 2011 prepared in accordance with generally accepted accounting principles (“GAAP”) and on a basis other than GAAP (“Non-GAAP”). A reconciliation between GAAP and Non-GAAP amounts is presented at the end of this press release. The 33% Non-GAAP effective tax rate in the fiscal 2013 period and 35% in the fiscal 2012 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 six month periods ended December 31, 2012 and 2011, respectively.

Selected GAAP Results
(In thousands, except percentages and per share data)
		Three Months Ended								Six Months Ended
		December 31,								December 31,
		2012				2011				2012				2011
Net sales		$	156,230			$	171,138			$	297,383			$	326,022
Gross profit			78,998				85,691				147,897				164,210
Gross margin			50.6	%			50.1	%			49.7	%			50.4	%
Operating income (loss)			5,824				8,246				295				8,784
Net income (loss)		$	745			$	(535	)		$	(13,394	)		$	(5,577	)
Net loss per common share:
Basic		$	0.01			$	(0.01	)		$	(0.16	)		$	(0.07	)
Diluted		$	0.01			$	(0.01	)		$	(0.16	)		$	(0.07	)
Weighted average number of common shares outstanding:
Basic and diluted			84,870				84,804				84,853				84,797
Diluted			84,880				84,804				84,853				84,797

Selected Non-GAAP Results
(In thousands, except percentages and per share data)
		Three Months Ended								Six Months Ended
		December 31,								December 31,
		2012				2011				2012				2011
Net sales		$	156,230			$	171,138			$	297,383			$	326,022
Gross profit			79,184				85,693				148,278				164,202
Gross margin			50.7	%			50.1	%			49.9	%			50.4	%
Operating income			22,502				29,768				37,049				50,709
Net income		$	8,714			$	13,866			$	11,928			$	22,165
Net income per common share:
Basic		$	0.10			$	0.16			$	0.14			$	0.26
Diluted		$	0.10			$	0.16			$	0.14			$	0.26
Weighted average number of common shares outstanding:
Basic			84,870				84,804				84,853				84,797
Diluted			84,880				84,814				87,870				84,802
Adjusted EBITDA		$	27,566			$	34,352			$	47,006			$	60,063

Business Outlook

For the fiscal third quarter ending March 31, 2013, Aeroflex expects net sales to be between $154 million and $162 million, GAAP net loss to be between $(2) million and $(1) million, Adjusted EBITDA to be between $26 million and $29 million, GAAP net loss per share to be between $(0.02) and $(0.01) and Non-GAAP net income per share to be between $0.09 and $0.12.

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