confidential aus q2 fy 2013 quarterly meeting october 11, 2013

CONFIDENTIAL

AUS Q2 FY 2013 QUARTERLY MEETING

October 11, 2013

CONFIDENTIAL

In Q2 orders for ACUS came in slightly above budget whereas MMD’s were somewhat below budget. The same was true for Operating Income.

AUS Q2 FY 2013 Financial Summary:

• $74,720,000 in Orders (down 15% from Q2 FY12)• $80,097,000 in Revenues (same as Q2 FY12)• $6,757,000 in Operating Income (8% of Sales, down

37% from Q2 FY12)

CONFIDENTIAL

AUS R&S AGILENT T&M

DANAHER AEROFLEX

JDSU EXFO IXIA

-20%

-10%

0%

10%

20%

30%

40%

50%

12 MONTH SALES GROWTH %

Year Ending 6/30/12

CONFIDENTIAL

AUS R&S AGILENT T&M

DANAHER AEROFLEX

JDSU EXFO IXIA

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

OPERATING INCOME % OF 12 MONTH SALES

CONFIDENTIAL

ANRITSU T&M

R&S T&M AGILENT T&M

DANAHER T&M

AEROFLEX JDSU Inst. EXFO IXIA$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

12 MONTH T&M SALES $M

CONFIDENTIAL

Global Items:

The MT8870 is a Universal Wireless Test set incorporating technology from Japan and the UK (Stevenage) and support teams around the world (including the US). It is Anritsu’s latest offering in world of smartphone and device testing. It is a very competitive market but we are seeing early signs of acceptance with key market leaders around the world.

CONFIDENTIAL

Q2 Summary:

Q2 orders were down somewhat from a year ago however that was an unusually strong quarter. Our 12 month growth at the AUS level of 4.5% is better than most other competitors. Other factors:– The US economy continues its gradual recovery however

dysfunction in Washington is not helping.– Both MMD and the JSBU’s are making significant investments

for future growth in both R&D and business development and recently launched products are being well received.

– ASR continues to be a bright spot for both JSBU’s and MMD.

We have a solid plan for H2 so let’s focus on meeting it!

AUS

Q2 FY13 Meeting

Financial Results and Trends

8

AUS Orders – Q213

9

MMD ACUS AUSActual 45,039 57,559 74,720Budget 48,262 56,379 82,235Over/Under% -7% 2% -9%

010,00020,00030,00040,00050,00060,00070,00080,00090,000

$000

s

AUS Q2 FY13 Orders By Division

10

MMD-US Dom MMD-US EXP SBU1-10Actual 26,538 15,995 29,310Budget 21,396 24,366 32,357Over/Under % 24% -34% -9%

-

10,000

20,000

30,000

40,000

$000

s

AUS Revenue – Q213

11

MMD ACUS AUSActual 41,884 63,200 80,097Budget 47,737 51,132 77,173Over/Under -12% 24% 4%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

$000

s

AUS Order & Revenue 5 Year Trend By Quarter

12

Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213Orders 57.9 62 49.1 43.3 41.2 55.7 48.3 51 53.8 61.7 69.2 72.6 72.8 70.9 60.3 72.7 80.8 88.8 70.1 68.3 82.7 74.7Revenue 58.5 63.4 52.5 49.7 41.3 42.6 51.8 54.2 52.6 57.7 70.3 66.7 72.1 70.3 66.3 72.7 70.5 80.4 82.1 67.3 73.6 80.1

40

50

60

70

80

90

100

$M

Q213 Orders vs.:

Q1FY13 Orders = -8.0M / -10%

Q2FY12 Orders = -14.1M/ -16%

AUS Op. Income – Q213

13

MMD ACUS EBO AUSActual 5,882 1,836 (1236) 6,757Budget 7,936 (313) (2097) 5,170Over/Under % -26% 31%

(2,500)

0

2,500

5,000

7,500

10,000$0

00s

AUS Operating Income 5 Year Trend

14

Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213Op. Income 8,794 3,607 4,796 2,772 4,546 5,658 5,535 5,754 7,583 11,317 7,572 11,648 6,740 7,169 8,336 6,952 5,958 10,524 4,155 4,089 6,757

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000$0

00s

15

AUS Q2 FY13 Performance

Orders Revenue Gross Profit OperatingExpense

OperatingIncome

Actual 74,720 80,097 30,245 23,487 6,757Budget 82,235 77,173 31,943 26,773 5,170Over/Under % -9% 4% -5% -12% 31%

0

20,000

40,000

60,000

80,000

100,000

$000

s

Gross Margin % Op Inc % 38% Actual 8% Actual

41% Budget 7% Budget

MMD Q2 FY13 Performance

16


OperatingIncome

Actual 45,039 41,884 21,483 15,601 5,882Budget 48,262 47,737 24,727 16,790 7,936Over/Under % -7% -12% -13% -7% -26%

0

10,000

20,000

30,000

40,000

50,000

$000

s

Gross Margin % Op Inc % 51% Actual 14% Actual 52% Budget 17% Budget

ACUS Q2 FY13 Performance

17


Operating Inc(Loss)

Actual 57,559 63,200 12,877 11,041 1,836Budget 56,379 51,132 11,330 11,643 (313)Over/Under % 2% 24% 14% -5%

(5,000)

10,000

25,000

40,000

55,000

70,000

$000

s

Gross Margin %20% Actual22% Budget

CPOD$20.0 Actual$21.7 Budget

H1 FY13 Results

18

19

AUS H1 FY13 Summary

Orders Revenue Gross Profit Op. Expense Op. Income0

30,000

60,000

90,000

120,000

150,000

180,000

$00

0's

Gross Margin Op. Inc. %Actual 38% 7%Budget 41% 6%

AUS Profit Sharing• Q2, FY13 QPP:

5.6%• Payout Date – Friday, 10/25/2013

Anritsu Proprietary

Anritsu Microwave Measurements Division (MMD) Q2 FY13 Highlights

11 October 2013

Anritsu Proprietary

MMD STMG Overall FY13 Goals and YTD Progress

• Orders > $192.9 million; Revenue > $194.4 million; Operating Income > $31.4 million– Orders 4.5% below budget– Net Revenue 9.6% below budget– Operating Income 22.8% below budget

• Continue to penetrate the Tier 1 Wireless Network Operators to a deeper level– Continuing progress on 13 of 15 worldwide (Sprint Nextel via

Ericsson Global Services, AT&T Mobility, T-Mobile, Verizon Wireless, China Telecom, China Unicom, China Mobile, the top (5) EMEA WSP’s, and Softbank)

• Support the Emerging Business Operation (EBO)– Modular VNA prototypes completed and being shown to VIP

customers for feedback.

Anritsu Proprietary

MMD STMG Overall FY13 Goals and YTD Progress• Improve product reliability and first pass yields for specific products

– Met 72 of 78 monthly WRR product line targets (92%) – Handheld platform products FPY at 90.70% for the year.

(Target is > 80%.)– Handheld SRR at 3.99%. (Target is < 3.0% by end of Q4)– Handheld SQR at 2.60%. (Target is < 2.0% by end of Q4)

• Better understand our customers and use this knowledge to devise effective strategies that help them achieve their objectives– Continuing focus on Wireless Network Providers,

Defense/Aerospace, and Public Safety • Simplify product lines by at least 10%.

– Through Q2, went from 1,170 to 1,165 forecasted line items.– Target by end of FY13 is < 1,053 forecasted line items.

Anritsu Proprietary

MMD Highlights – Q2FY13

• Achieve budgeted Orders ($48.3M) and Shipments ($47.7M)

(Achieved 6.7% and 12.3% below the budget) – NOT DONE! • Continue to hit the Cadence Calendar milestones on all our product and

enhancement development projects

– Vector Star “B” Series (Dual Source and Pulse) – DONE! – “Kittyhawk” E-series uW Site Master – NOT DONE! – “Mini-Me II” PIM Master 800/2100/2600 MHz bands – ALMOST DONE! – S412E Tetra capability – NOT DONE! – “Peregrine” New Platform BTS Master – DONE!

• Complete Annual PSSE Seminar (19 - 23 August 2013) – DONE! • Manage operating expenses to < budget (Total operating expenses 7.1% under budget) – DONE!

Anritsu Proprietary

Toughest Site Contest Finalists

Wayne Bradley –Grand Prize WinnerIntellecom, Las Vegas, NV“The Site Master S332D was invaluable in this case. With FlexCal, and the built-in bias tee, we were easily able to prove without any doubt that the coax system was in fact perfect, and there were no problems with the installation. The problem was the GPS antenna as we had originally concluded.”

Mike Sonier – FinalistWavcomm, Eastvale, CA“With the carriers concerns on down time, the very user-friendly Anritsu (D model), it’s no problem to get the required measurements with limited site down time. Using the Anritsu for trouble shooting, I am able to locate and fix multiple site performance issues on a daily basis.”

Anritsu Proprietary

Toughest Site Contest Finalists

Ken Rivers – FinalistDobson Cellular one, Kansas City, MO“I could not perform my every day job duties without these test sets and I would not have a job without these products (Cell Master MT8212B and his older black and white screen test analyzer). These products reliability and simplicity of use make my life easier in the field. Thank you Anritsu!”

James Lapham – FinalistQE Inc., Valley Springs, CA “Storm blew in and was supposed to be north of us. Crew was trapped on the Steel as ice formed while they descended, having to beat the ice to grip the steel. Anritsu Sweep and PIM gear are godsends to our work, giving us quick, accurate information without being massive, complicated pieces we have seen from other vendors.”

Anritsu Proprietary

MMD Key “To Do’s” in Q3FY13• Achieve budgeted Orders ($49.4M) and Shipments ($49.5M)

• Continue to hit the Cadence Calendar milestones on all our

product and enhancement development projects

– “Kittyhawk” E-series uW Site Master

– “Mini-Me II” PIM Master 800/2100/2600 MHz bands

– S412E Tetra capability

– “Rover” Mobile Direction-finding (DF) System

– 145 GHz VectorStar Frequency Extension Module

• Display at European Microwave Show (EuMW) in Germany

• Manage operating expenses to < budget

Anritsu Proprietary

Anritsu Microwave Measurements Division (MMD) Q2 FY13 Highlights

11 October 2013

Thanks!

ACUS / ASRWade Hulon, ASR General Manager

Q2 FY13 ASR Update

Global H1 Orders

ASR Order Intake: FY13 vs. FY12

ASR FY09 – FY13 Orders by Quarter

FY13 STMG

• YTD OIT $135.5M• Ahead of ORB by $10M, on plan for MYR• PIM Sales Exceeded Annual Quota

Prepared by:Wade Hulon

Overall Vision, Mission & Long Term (3 yr.) Goals:Vision: Global Test and Measurement market leadership.Mission: To provide our customers with an un-paralleled value combination of product (H/W and S/W), support and service.Longer term goals: -ASR to exceed $295M in orders by FY15-ASR to average less than 23% cost of sales.

FY13 Goals:-ASR Orders of at least $258M (product and service) MYR ~$270M-ASR cost of sales 22.4%. YTD 20%

A. Be market drivenb. Expand sales with industry leaders.

Specific targets for ASR for key Wireless Accounts and Top 15 Tier Service Providers for MMD

Sum of key wireless accounts for ASR

Qualcomm $48M($26)Broadcom $8.5M($3.6)RIM $13.1M($4.3)VZW $12.1M($8.8)AT&T $10M($7.0)Intel $3.6M($1.3)

Total Annual Quota $95.3M, OIT $51M YTD (107%YTD)

FY13 STMGA. Be market drivend. Strengthen our position as a premier supplier of general purpose microwave test equipment

Special GP2 Project ASR Revenues for SPA (2690 and 2830), SG (uW, 3710, and 3700), PM and VNA

$16.3M (KPF)$18M (Stretch Goal)

•YTD OIT $6.2M– 75% YTD (60% last month)– Vectorstar (KPF = 288% of FY12 OIT)

• MS2692A demos scheduled for Qualcomm

• New 16 port VNA requirement being qualified at Intel-OR • September was an exceptional GP month for D32 with over $1.24M in bookings. Won a tightly

contested VNA bid at Boeing against R&S for three MS4642B units and a four-port 110 GHz ME7838B. • Verizon Wireless purchased 1 ea. MS2692A and 2 ea. MG3710A for a total of $139k.

FY13 STMGA. Be market drivenc. Expand sales with industry leaders.

ASR Special Project (TAP) Grow target accounts to at least $25M in OIT.

Intel $4.6M($1.3M)Google $5.5M($2.4M)Microsoft $2.6M($3.4M)Amazon $3.8M($1.2M)Broadcom $8.5M($3.6M)

OIT YTD $11.9M (95% YTD)

Google/Motorola Follow-up work from e-Auction resulted in additional 8820 sales. Google continues to expand its use of the 8475 in their Android CTS suite.

Microsoft Installation and commission of the new RF CT systems took place week of 9/23 Delivered 2x MT8870A for test engineering pre-production evaluations $7.2 billion purchase of Nokia’s smartphone business.

Amazon

Very close to buying TRX system Released two new Kindle Fire HDX models on 25-Sep. Link to story

Broadcom

Due to Renesas acquisition all orders for LTE have been placed on hold. Intel

Device R&D manger still expects 2014 budget for ME7873L and ME7834L by CYQ1 2014.

ASR Top Customers FY13 YTD

H2 ExpectationsWe Will Face a Challenging Business Environment But We Expect to Continue to Take Market Share From Our Competitors

• General Purpose (GP2)– Accelerate Growth With Vectorstar B Launch

• Target Account Program (TAP)– Intel Will Join Top Account List

• MT8870 Into Manufacturing• Conformance Test Systems• 16 Port VNA

– Microsoft Buys Nokia Cell Phone Business– Broadcom Buys Renesas Chip Set Business

• I & M– Continued Strong PIM Sales

Product Awareness

VectorStar MS4640B Series

AUS Quarterly Meeting - October 2013

Which include:• Configurable w/options to address a wide range of apps & industries• Upgradeable in frequency range, port count & options• Excellent at low and high frequency alike

Pulse generation and measurement capability:– Option 035 IF Digitizer– Option 042 PulseViewTM

Dual source and True Mode Stimulus capability:– Option 031 Dual Source– Option 042 DifferentialViewTM

B Series keeps A Series advantages…

• Three types of measurements: Pulse Profile (PP) Point-in-Pulse (PIP)

Pulse-to-Pulse (P2P)

Sweep time

Sweep time

Sweep freqor power

• Four internal pulse generators for three types of stimulus:

Pulse Capability Overview

* Requires Modulation Test Set

* *

Common Applications and Test ChallengesApplications•Radar

•High power density semiconductor characterization

Test Challenges•Too many test method trade-offs

• Need for better analysis tools

• Monitor pulse behavior over longer times

• Eliminating measurement setup errors

• What have you been missing?• Innovative high-speed digitizer

based architecture

• Industry’s highest resolution measurements

• Longest record lengths

• Intuitive graphical configuration tool

• Instant results on measurement parameter changes

2.5 ns resolution

15 ns resolution

• Make measurement adjustments and see the results instantly• No need to toggle back and forth between configuration windows

PulseViewTM Advantages

Differential Device Measurements

+ +

__

+ +

__

Differential Mode

Applications

• Differential devices gaining popularity due to advantages in suppressing noise and EMI effects

• Preferred driver in SI applications

Test Challenge• VNA needs to accurately modify stimulus conditions for complete

analysis

DifferentialViewTM and Dual Source Capability• Differential, common and mixed mode S-parameters

• True Mode Stimulus capability• Adjust differential phase & amplitude• Measure mismatch and apply source correction during measurement

• Dual source architecture • Up to 7 dB more power at 70 GHz

• Improves noise floor as much as 9 dB

• Dynamic range improved up to 16 dB at 70 GHz!

Dual Source / DifferentialViewTM Advantages

• Dual source architecture • High TMS phase stability


• Dual source architecture • High TMS phase stability• Intuitive configuration tool


DifferentialViewTM True Mode Stimulus Interface

• Easy configuration for differential and mixed mode measurements

• Dual source architecture

• High TMS phase stability

• Intuitive configuration tool



Agilent and R&S bury their configuration entries and hide the measurement dataDifferentialViewTM Advantages

DifferentialViewTM TMS Setup and Editing

• Real time display of measurement parameters

• Immediately observe DUT performance changes with changes in setup

• Dual source architecture

• High TMS phase stability

• Intuitive configuration tool


• Best differential measurement performance for differential components and Signal Integrity analysis


Marcomm ActivitiesIncrease awareness and generate demand• Press Release • Press Meetings• Cover and feature articles

– MW&RF Cover and feature article in October– MWJ MVP feature in October– Various EMEA titles in D, GB, F– RFGlobalNet Radar Guest Column

• VectorStar and PulseView Promotional Videos• Multi-touch demand generation campaigns• New ads • Tradeshow participation: EuMW (this week)

Help with sales collateral

Examples

Demo kit

Video

Sales Channel ActivitiesStrengthen ability to develop business and technically support sales teams

• PSSE (focused exclusively on VectorStar) and regional training• Demo units:

• 19 MMD-supplied units

Results so far ….

• NEC order first day we opened ordering queue• 13 orders in Sep (mix of A and B), but shows the general level of

market excitement• ASR VectorStar sales are up 49% over the first half of last year• EMEA sales are up 25% and they are taking market share

• With PulseView and DifferentialView we can expect even more success as they allow to participate in areas that we previously could not

Thank you!!

Quarterly Meeting Announcements October 11, 2013

FY13 Training Hours

AS OF 10/1/2013

Division

Total Hours

Headcount

Avg Hours

ACUS 3,332 183 18CORP 1,751 104 17EBO 306 16 19MMD 5,393 394 14TAU 700 67 10.5

ALL 11,482 764 15

Employee Development FY13• Several courses are scheduled for FY13

– Check the Employee Development site on the Intranet for scheduled courses

• Need volunteers for Tech Talks!

• PLEASE, Turn in your training rosters!

Focal Review System• Use the system for updating goal status.• FY13 Goals are your “current” goals in the

system. You can access them by clicking on “My Evaluation.” Any goal updates you add are visible to your Manager. Great way to complete mid-year goal status updates.

Wellness and Rec Committee• Craft Fair - November 15• Walking Challenges in all locations will begin

as soon as all locations receive the FitBit trackers . . . . more details to come

• Tennis Tournament begins on October 29 – contact Sardar Ali

• Morgan Hill Marathon aide station on October - contact Michelle Aitken to volunteer

• Wellness workshop being scheduled in Pine Brook

Photos and Badge Update• Photos done in MH and TX• Photos scheduled in NJ – October 15 and 23• Badge reprints for MH will start soon

Thanks!

confidential aus q2 fy 2013 quarterly meeting october 11, 2013

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