Anaren forms committee to study purchase offer, reports earnings

DeWITT — It’s been a busy last week or so for Anaren, Inc. (NASDAQ: ANEN) as it decides on its future direction and provides a snapshot of its current financial condition.

On April 18, the DeWitt–based high-tech manufacturer announced it had formed a committee of independent directors to review and evaluate the recent purchase offer it received from one of its investors — Orlando, Fla.–based Vintage Capital Management, LLC. But when it came time to discuss the company’s earnings with investors and analysts, Anaren officials didn’t want to say more about the possible sale of the company.

“… please understand that we will not be discussing and will not take any questions regarding the unsolicited offer from Vintage Capital Management on April 15, 2013 to acquire Anaren,” Lawrence Sala, president and CEO, said during Anaren’s fiscal third-quarter earnings conference call on April 24.

On April 15, Vintage Capital, which already owns just over one-eighth of Anaren’s shares, sent the DeWitt–based high-tech manufacturer a letter offering to buy all its shares for $23 in cash per share. The unsolicited, non-binding offer values Anaren at more than $300 million.

Anaren said its independent committee will have “full authority to consider all strategic alternatives available” to the company, in addition to considering Vintage Capital’s offer.

Anaren has hired several firms to provide the committee with financial and legal advice as it determines what moves the company should make.

New York City–based Moelis & Company LLC and Los Angeles–headquartered Houlihan Lokey Capital, Inc. will serve as the independent committee’s financial advisors in the process. Minneapolis–based Dorsey & Whitney, LLP and Syracuse–based Bond, Schoeneck & King, PLLC will be the committee’s legal advisors, according to Anaren.

Vintage Capital owns about 13 percent of Anaren’s common stock, according to a letter submitted with a filing to the U.S. Securities and Exchange Commission (SEC) on Monday.

The Vintage Capital offer was filed a week after another investor, Discovery Group I, LLC of Chicago, Ill., suggested that Anaren pursue “multiple parties interested in acquiring the company,” according to a letter included in an April 8 SEC filing.

In its letter, Discovery also said it believes “the Anaren directors have failed to fulfill their duty to shareholders by translating that high degree of strategic interest into an improvement in shareholder value through the vigorous pursuit of a sale of the company at a substantial premium.”

Discovery manages a fund that owns about six percent of Anaren’s shares, according to the filing.

Anaren employs about 800 people. The company develops and manufactures components and subsystems for markets including satellite communications, defense, and wireless communications.

Fiscal 3rd quarter earnings

Anaren released its fiscal third-quarter financial results following the market close on April 23.

The company earned $5.3 million, or 41 cents per share, during the quarter ending March 31. That was up 167 percent from the $2 million, or 14 cents a share, it earned in the year-ago period.

A one-time favorable adjustment of about $1.6 million, or 12 cents per diluted share, boosted the firm’s net income during the latest quarter. The adjustment followed the reinstatement of the federal Research & Experimentation Tax Credit in January, which was retroactive to January 2012, the company said in its earnings news release.

Anaren reported net sales of $39 million in the fiscal third quarter, up 12.3 percent from $34.7 million in net sales for the year-earlier quarter.

“The growth in net sales and improved profitability for the quarter was driven by both the Space & Defense and Wireless Groups. The Space & Defense Group business is benefiting from improved-operational execution and a growing percentage of Space related business,” Sala said in the news release.

Anaren generated revenue of $12 million in its Wireless Group during the latest quarter, up nearly 17 percent from the third quarter of fiscal 2012. However, the sales figure was sequentially down nearly seven percent compared to the company’s fiscal second quarter ending Dec. 31, due primarily to price reductions that went into effect Jan. 1.

Demand from wireless infrastructure customers has remained stable in recent quarters and current forecasts indicate comparable demand for the fourth quarter, the company said.

Anaren generated revenue of $27 million in its Space & Defense group in the latest quarter, up 10 percent from the third quarter of fiscal 2012. The firm cited continued improved operational execution and a more favorable product mix during the current quarter for the  group’s higher profitability compared to the year-earlier period.

Numerous space, radar and electronic warfare applications drove new orders for the fiscal third quarter totaling more than $18 million. Orders for the quarter were lower than sales levels largely due to timing, the firm said. The Space & Defense Group order backlog at March 31 was about $95.9 million.

Both Lockheed Martin (NYSE: LMN) and Raytheon Co. (NYSE: RTN) generated more than 10 percent of the Space & Defense group’s net sales for the latest quarter, Anaren said.

Contact Reinhardt at ereinhardt@cnybj.com