Harris Stratex Networks to Restate Financials, Trim Expenses

Harris Stratex Networks will need to restate prior period financial statements. The company also announced that the earnings release for the fourth quarter of fiscal 2008, which ended June 27, 2008, will be rescheduled.


The company noted strong revenue of approximately $188 million for the quarter. Total revenue for the year is expected to increase by approximately 10 percent compared to previously reported combined company results for fiscal 2007. All three business segments -- North America Microwave, International Microwave and Network Operations -- generated increased revenues in fiscal 2008 compared with fiscal 2007.


The company also reported record booking levels in the fourth quarter with a 1.6 book-to-bill ratio. Increased orders came from Africa, Europe, Middle East and Russia as well as North America. Demand for the company's Eclipse product line was particularly strong when compared with prior periods.


However, expense levels in the quarter increased by approximately $13 million to $14 million compared with previous estimates, as a result of higher orders-based sales compensation expense, increased allowance for doubtful accounts charges, project charges, and outside professional services. As a result, non-GAAP earnings per share for fiscal 2008 will not meet the company's previously announced target of $0.82 per diluted share.


Harris Stratex Networks also stated that it continues to focus on the acceleration of the transition from higher cost legacy products to lower cost next-generation IP-based technologies. This transition, which is underway at a pace faster than originally contemplated at the time of the merger, resulted in a charge of $11 million in the fourth quarter for integration related inventory impairment of raw materials and finished goods for some of the legacy products.


"The company achieved significant top line growth in all segments in fiscal 2008, and our cash position has remained strong in the second half of the year," said Harald Braun, President and Chief Executive Officer of Harris Stratex Networks. "While the additional expenses incurred in the fourth quarter delayed the expansion of our earnings, the company is well-positioned for achievement of our growth objectives as we enter the new fiscal year. The company has added customers, achieved meaningful top line growth, and developed a significantly enhanced foundation for long-term competitiveness. We must, however, continue to take action to reduce costs and expenses in the business through increased product outsourcing activities and process related restructuring actions at certain global locations. This will have associated costs in order to implement, and we expect additional restructuring and integration charges to be incurred in fiscal 2009."http://www.harrisstratex.com