LeCroy Reports 44% Year-on-Year Oscilloscope Order Growth and 35% Sales Increase In Fourth Quarter of Fiscal 2010

High-End Scope Orders Drive Growth;

(PRNewswire) — LeCroy Corporation (Nasdaq: LCRY), a leading supplier of oscilloscopes and serial data test solutions, today announced financial results for its fiscal fourth quarter and year ended July 3, 2010.

LeCroy reported fourth-quarter fiscal 2010 revenue of $36.8 million, compared with $33.6 million in the sequential third quarter of fiscal 2010 and $27.2 million in the fourth quarter of fiscal 2009.  The Company also reported GAAP gross margin of 59.7%, GAAP operating income of $2.8 million, and GAAP net income of $176,000, or $0.01 per diluted share, for the fourth quarter of fiscal 2010.  This compares with GAAP gross margin of 46.9%, a GAAP operating loss of $3.5 million and a GAAP net loss of $3.8 million, or $0.31 per share, in the year-ago period.

LeCroy reported fourth-quarter fiscal 2010 non-GAAP gross margin of 59.8%, which excludes $46,000 in share-based compensation expense, compared with a 58.5% fourth-quarter fiscal 2009 non-GAAP gross margin, which excluded a $3.1 million non-cash charge for the write-down of inventory, $44,000 in share-based compensation and $34,000 of business realignment charges.  Non-GAAP operating income for the quarter was $3.6 million, which excludes $637,000 in share-based compensation expense and a $93,000 business realignment charge, compared with $1.6 million in the fourth quarter of fiscal 2009, which excluded a $3.1 million non-cash charge for the write-down of inventory, $1.0 million in share-based compensation and $971,000 in business realignment charges.  

Non-GAAP net income for the fourth quarter of fiscal 2010 was $1.4 million, or $0.11 per diluted share, which excludes $737,000 in share-based compensation, $372,000 for the non-cash amortization of debt discount on convertible notes, and an $88,000 business realignment charge.  This compares with $161,000 of non-GAAP net income, or $0.01 per diluted share, in the fourth quarter of the previous year, which excludes a $2.0 million non-cash charge for the write-down of inventory, $870,000 in share-based compensation, $646,000 in business realignment charges and $408,000 in non-cash amortization of debt discount on convertible notes.  

Comments on the Quarter

"This was an excellent quarter for LeCroy," said President and Chief Executive Officer Tom Reslewic.  "Total orders grew 39% year-over-year and 6% sequentially, driven by robust orders for oscilloscopes which grew 44% year-on-year.  Sales volume increased 35% year-over-year and by more than 9% on a sequential basis.  Our non-GAAP gross margins were 59.8%, reflecting the growth in sales volume and shift in product mix towards high-end oscilloscopes."

"The strong demand we are seeing at the high-end of the oscilloscope market is being driven by research for next-generation, high-speed data communications, to serve the worldwide proliferation of mobile devices," Reslewic said.  "The high-end oscilloscopes we have launched during the past two years – led by the highly successful 30 GHz WaveMaster 8 Zi – have cemented LeCroy's reputation with customers at the leading edge of high-speed data communications test solutions."

"We are managing our operations toward further improving the leverage in our operating model, while at the same time capitalizing on opportunities to drive continued growth," said Reslewic.  "We are successfully managing this balance, as we improved our non-GAAP operating margin both year-over-year and sequentially to 9.7% in the fourth quarter of fiscal 2010.   We also generated $2.3 million in cash from operations in the quarter, which we used to further pay down LeCroy's bank debt by $3.0 million, resulting in a net debt balance of $48.8 million."    

Outlook and Guidance

"Oscilloscope orders thus far in the first quarter of fiscal 2011 are very strong and foretell a promising start to the new fiscal year," Reslewic said.  "We expect to continue capitalizing on the growth in applications for faster data communication rates with the most well-received suite of new products in LeCroy's history."

"For the first quarter of fiscal 2011, we expect to report sequential and year-over-year growth over the fiscal fourth quarter of 2010, despite normal seasonal headwinds, with revenues in the range of $37 million to $38 million and non-GAAP operating margins in the 9% to 10% range.  For full-year fiscal 2011, we expect to report revenues in the range of $155 million to $160 million, and non-GAAP operating margins in the 10% to 11% range," said Reslewic.

"We are excited about our prospects for continued growth as we prepare for another comprehensive round of product introductions," Reslewic said.  "Beginning in the current first fiscal quarter and continuing through the spring, this series of launches will span LeCroy's full product range, adding capabilities and models.  We also plan to introduce products in completely new categories."

Conference Call Information

LeCroy will broadcast its quarterly conference call for investors live over the Internet today, Wednesday, August 18, 2010 at 10:00 a.m. ET.  To access the webcast, visit the " Events Calendar" in the " Investors" section of LeCroy's website at www.lecroy.com.  The call also may be accessed by dialing (877) 709-8155 or (201) 689-8881.  For interested individuals unable to join the live conference call, a webcast replay will be available on the Company's website for approximately one year.

About LeCroy Corporation

LeCroy Corporation is a worldwide leader in serial data test solutions, creating advanced instruments that drive product innovation by quickly measuring, analyzing and verifying complex electronic signals.  The Company offers high-performance oscilloscopes, serial data analyzers and global communications protocol test solutions used by design engineers in the computer, semiconductor and consumer electronics, data storage, automotive and industrial, and military and aerospace markets.  LeCroy's 45-year heritage of technical innovation is the foundation for its recognized leadership in "WaveShape Analysis" - capturing, viewing and measuring the high-speed signals that drive today's information and communications technologies.  LeCroy is headquartered in Chestnut Ridge, New York.  Company information is available at http://www.lecroy.com.

Basis of Presentation

The Company's fiscal years end on the Saturday closest to June 30, resulting in an additional week of results every five or six years. The fiscal year ending July 3, 2010 represents a 53-week period, while the fiscal year ended June 27, 2009 represented a 52-week period.

Effective at the beginning of fiscal 2010, the Company adopted new accounting guidance for convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement (formerly "FSP APB No. 14-1"), which requires that issuers of convertible debt instruments separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. A portion of the carrying value of the $72 million 4% convertible notes (approximately $17.9 million) was retroactively reclassified to equity as of its October 2006 issuance date, representing the equity component of the proceeds from the notes.  The discount is being accreted to interest expense over the contractual term of the notes or five years. The new accounting pronouncement required retroactive application; consequently, the prior-year amounts have been revised.

Safe Harbor

The Company is undergoing an audit of its fiscal 2010 financial results. These audit procedures are not yet complete as of the date of this press release. There can be no assurance that our financial results as disclosed in this press release will not change following the completion of the audit. Further, this release contains forward-looking statements, including those pertaining, but not limited to expectations regarding: the anticipated worldwide proliferation of an increasing number of mobile devices; LeCroy's ability to manage its operations toward further improving the leverage in its operating model, while at the same time capitalizing on opportunities to drive continued growth; the Company's ability to continue capitalizing on the growth in applications for faster data communication rates with the most well-received suite of new products in its history; the Company's expectations to report sequential growth over the fiscal fourth quarter of 2010 with revenues in the range of $37 million to $38 million and non-GAAP operating margins in the 9% to 10% range; the Company's expectations to report full-year fiscal 2011 revenues in the range of $155 million to $160 million and non-GAAP operating margins in the 10% to 11% range; LeCroy's prospects for continued growth as it prepares for another comprehensive round of product introductions; and the expected new product launches beginning in the current first fiscal quarter and continuing through the spring.

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