The Company was incorporated in New York in 1967. The Company's executive offices are located at 6635 Kirkville Road, East Syracuse, New York 13057. The telephone number of the Company at that location is (315) 432-8909. The Company's website is located at www.anaren.com. The Company makes its periodic and current reports available, free of charge, on its website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission. The information contained on the Company's website is not included as part of, or incorporated by reference into, this Report. The Company's common stock is listed on the NASDAQ Global Market under the symbol "ANEN." Unless the context otherwise provides,the "Company" or "Anaren" refers to Anaren, Inc. and its subsidiaries.
The Company is a leading provider of microelectronics, and microwave components and assemblies for the wireless and space and defense electronic markets. The Company's distinctive engineering, manufacturing and packaging techniques enable it to cost-effectively produce compact, lightweight microwave products for use in wireless communication and space and defense systems covering a broad range of frequencies (from 100 MHz to more than 30 GHz) and power levels (small signal to more than 500 watts).
Through its focused research and development efforts, Anaren continues to design components and subsystems for wireless communication systems including wireless infrastructure, wireless consumer and medical applications, as well as advanced
radar, beamforming, jamming, motion control and receiver applications for the space and defense markets.
The Company conducts business in two business segments. See segment and related
information in Item 8 of this report.
The Company's Wireless products are used primarily in communication systems,either in user equipment, such as Wireless Local Area Network (WLAN), Cellular Handsets, or Satellite Television Reception applications, or on the network infrastructure side such as Cellular Telephone Base Stations or Television Broadcast equipment applications.
A typical wireless communications network is comprised of a geographic region containing a number of cells, each of which contains one or more base stations, which are linked in a network to form a service provider's coverage area. Each
base station is comprised of the equipment that receives incoming telephone calls and broadcasts calls to the wireless users within the cell. A base station can process a fixed number of radio channels through the use of multiple transceivers, power amplifiers, filters, and combiners - along with an antenna to transmit and receive signals to and from the wireless user.
Global System for Mobile communications (GSM) and the higher data rate overlay Enhanced Data Rates for GSM Evolution (EDGE) is the industry leading technology in terms of equipment shipped, users served, and countries covered. In support of major equipment roll-outs primarily in India and China, demand for GSM/EDGE equipment was at all time highs during fiscal 2007 and remained at those levels in fiscal 2008. This resulted in increased demand for both the Company's components and higher level custom assemblies. During fiscal 2009, demand declined for GSM/EDGE equipment as a result of the overall worldwide economic
GSM is referred to as a second generation (2G) wireless network. For higher data rates, third generation networks (3G) are utilized. In the years to come, the number of persons requiring high data rates to support using internet and email
from mobile terminals is also expected to continue to grow. Fueled by this demand, deployment of new high data rate networks should continue. Demand for 3G related products is estimated to be similar to 2G equipment in the near future.
The Company's products are utilized in both 2G and 3G equipment.
The Company's strategy for the Wireless segment is to continue to use its microwave expertise, proprietary technologies, extensive microwave design libraries and low cost manufacturing capabilities to further expand its
penetration in the wireless industry. Key components of the Company's strategy include the following:
Pursue Large Addressable Markets. The Company has successfully penetrated the mobile wireless infrastructure market and is using its market position to pursue other wireless markets such as WLAN, Mobile Handsets, Bluetooth, Satellite Television, medical and other consumer electronics markets. This is enabled by advances made in the Company's design and manufacturing of sub miniature Multi-Layer Stripline components.
Focus on value added products. The Company intends to expand its component offerings to enable the Company to increase the number of products addressing each wireless application. In addition, with its Multi-Layer Stripline, ferrite devices, and Thick Film Ceramic manufacturing technologies, the Company intends to continue to increase thefunctionality of its products, thereby enabling its wireless customers to continue to reduce the size and cost of their platforms, while the Company increases its content value.
Strengthen and Expand Customer Relationships. Today, a limited number of large OEMs drive the wireless market. The Company has developed, and plans to continue to expand, customer relationships with many of these manufacturers including Alcatel Lucent, Ericsson, Huawei, Motorola, Nokia Siemens Networks, ZTE and Samsung. The Company intends to furtherstrengthen its customer relationships by offering complete outsourcing solutions, from research and development to product design and production,thereby increasing the customers' reliance on the Company.
Pursue Price Leadership Position. The Company aspires to use its technological leadership, low cost manufacturing, and sourcing capabilities to be one of, if not the lowest cost provider of components and higher level assemblies for the wireless markets.
Pursue Strategic Acquisitions. The Company intends to continue to pursue opportunistic acquisitions of companies, product lines and technologies. The Company will focus on acquisitions that compliment its technical expertise and business development resources and provide a competitive advantage for its targeted markets.
Products and Technologies
The Company provides components and assemblies to leading wireless industry equipment manufacturers. These products range from subminiature components for consumer electronics to custom assemblies for high power wireless infrastructure
The Company has developed its product offerings to enable customers to reduce the size and cost, while enhancing the performance of their equipment. The Company continually invests capital and human resources to enhance existing
products and develop new products to address the latest market demands. The Company has developed and continues to market a full line of standard products, as well as custom products, to wireless original equipment manufacturers. A
brief description of the Company's major product categories is as follows:
Passive Surface Mount Components. The Company's Xinger(R) line of products consists of off-the-shelf surface mount microwave components which provide passive microwave signal distribution functions. These products were developed to provide a low-cost high performance signal distribution component, which could be placed on standard printed circuit boards with automated production equipment.The primary applications of these products are in equipment for cellular base stations and in WLAN, Bluetooth, and Satellite Television.
In cellular base stations, the Company's surface mount products are utilized in radio frequency (RF) power amplifiers, and are also found in low-noise amplifiers and radios. Based on its research, the Company believes it is currently the market leader in this product area, supplying industry leading original equipment manufacturers and leading poweramplifier manufacturers. The Company continues to invest in the expansion of this product line as well as its addressable market. The Company's surface mount product line offers significantly improved RF performance and power handling in a package that supports the latest global environmentally friendly initiatives.
The Company has also recently introduced several products specifically designed to address WLAN, cellular telephone handsets and Bluetooth applications. These innovative products are 1/100th the size of our typical Xinger(R) type of product and offer performance and cost advantages over traditional consumer electronic components.
Ferrite Products. The Company's ferrite components are used in various wireless base station applications. They are a key component in base station amplifiers, and their primary function is to protect the sensitive amplifier electronics from damage by isolating them electronically from potentially harmful high power signals.
Resistive Products. The Company's resistive product line includes resistors, power terminations, and attenuators for use in high power wireless, industrial, and medical applications. These products range from very small components for implantable medical devices to high power products used in power amplifiers. These products are frequently used in conjunction with ferrite products as well as Xinger(R) surface mount
Custom Splitting and Combining Products. In addition to its standard products, the Company offers a wide range of custom signal splitting and solutions. These custom solutions are typically used to distribute signals to and from antennas, radio transceivers and power amplifiers in wireless base station applications. The Company's custom assemblies typically integrate several of the Company's components such as Xinger(R), ferrite, and resistive products. Given this vertical integration, the Company's Custom Splitting and combining products offer very high performance and can be designed in unique configurations,
allowing base station designers an opportunity to greatly reduce space, complexity and cost while enhancing performance.
Custom Radio Frequency Backplane Assemblies. The Company's RF backplanes provide efficient connections of microwave signals between subsystems in wireless base stations. RF backplanes are conceptually similar to the motherboard in a personal computer, which efficiently connects signalsbetween multiple subsystems. These assemblies range from RF-only to fully integrated RF, direct current power, and digital signal routing solutions.
They are typically used in conjunction with radio transceivers and RF power amplifiers. The Company also offers backplane assemblies with fully integrated radio-frequency signal switching capability.
Hybrid Matrix Assemblies. The Company's hybrid matrix assemblies allow customers to effectively reduce the number of amplifiers in a base station. Base station amplifier systems are designed to handle peak usage when maximum calls are being made over a network. Due to the sector coverage of typical base stations, some amplifiers are heavily used while
others are not. The Company's matrices allow the spreading of high usage volume over all base station amplifiers, permitting a reduction in the total number of amplifiers needed. These products are offered in a number of packaging configurations, including backplanes.
The Company believes that the strength of its customer support and depth of its customer relationships provide the Company a competitive advantage. To this end,the Company endeavors to become an integral part of its key customers' operations by working closely with them through the entire development and production process. The Company assigns a dedicated disciplined team including project engineering, design engineering and customer service to each customer to ensure a high level of responsiveness and customer service. This team assists the customer from the conceptual design stages through the development and manufacturing process. By maintaining close contact with the customers' design engineering, manufacturing, purchasing and project management personnel, the Company can better understand their needs, rapidly develop customer-specific solutions, and more effectively design the Company's solutions into the customers' systems and networks.
The Company sells its standard line of Xinger(R) components, custom products, resistive components, and ferrite components to leading original equipment manufacturers and a broad range of other wireless equipment contract manufacturers. In general, customers have purchased the Company's products directly from the Company or through distributors or sales representatives.
During the fiscal year ending June 30, 2009, the Wireless Group accounted for 41% of the Company's total revenues. No Wireless customer accounted for more than 10% of the Company's fiscal 2009 net sales. The following is a list of customers who generated $1 million or more in revenues for the Company in the fiscal year ended June 30, 2009:
Flextronics International, Ltd.
Huawei Technologies Co., Ltd.
Nokia Siemens Networks
Richardson Electronics, Ltd.
St. Jude Medical