Agere, Agere Systems and the Agere Systems logo are registered trademarks and TrueONE is a trademark of Agere Systems Inc.
This release contains forward-looking statements based on information currently available to Agere. Agere's actual results could differ materially from the results stated or implied by those forward-looking statements due to a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, our reliance on major customers and suppliers, our ability to keep pace with technological change, our dependence on new product development, price and product competition, availability of manufacturing capacity, customer demand for our products and services, and general industry and market conditions. For a further discussion of these and other risks and uncertainties, see our annual report on Form 10-K for the fiscal year ended September 30, 2005, and our quarterly report on Form 10-Q for the quarter ended March 31, 2006. Agere disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Agere Systems Inc.
Unaudited Condensed Consolidated Statements of Operations
(Dollars in millions except per share amounts)
Quarter Ended
Jun 30 Mar 31 Jun 30
2006 2006 2005
Revenue $382 $397 $433
Costs 188 208 248
Gross profit - $ 194 189 185
Gross profit - % 50.8% 47.6% 42.7%
Operating Expenses
Selling, general and administrative 56 60 65
Research and development 107 118 119
Amortization of acquired intangible assets 2 1 1
Restructuring and other charges - net 6 28 1
Gain on sale of operating assets - net (2) (3) (4)
Total operating expenses 169 204 182
Operating Income (Loss) 25 (15) 3
Other income - net 5 6 4
Interest expense 6 6 6
Income (Loss) before income taxes 24 (15) 1
Provision (benefit) for income taxes (23) 6 (119)
Net Income (Loss) $47 $(21) $120
Basic income (loss) per share information
Net income (loss) $0.28 $(0.11) $0.66
Weighted average shares outstanding --
(in millions) 171 178 181
Diluted income (loss) per share
information
Net income (loss) $0.27 $(0.11) $0.65
Weighted average shares outstanding --
(in millions) 172 178 193
Agere Systems Inc.
Reconciliation of Non-GAAP to Unaudited GAAP Measures
(Dollars in millions except per share amounts)
Quarter Ended
Jun 30 Mar 31 Jun 30
2006 2006 2005
Reconciliation of Non-GAAP Net Income
(Loss) to Net Income (Loss)
Non-GAAP Net Income (Loss) $37 $17 $43
Restructuring related charges,
including increased depreciation (2) (2) (38)
Stock-based compensation expenses
(excludes $2 included in
restructuring and other
charges - net in 1QFY2006) (10) (10) -
Amortization of acquired intangible assets (2) (1) (1)
Restructuring and other charges - net (6) (28) (1)
Expenses related to reverse split and
loss on guarantee 1 - (7)
Gain on sale of operating assets - net 2 3 4
Taxes excluded from Non-GAAP 27 - 120
Net Income (Loss) $47 $(21) $120
Reconciliation of Non-GAAP Net Income
(Loss) Per Share to Net Income
(Loss) Per Share
Non-GAAP Net Income (Loss)
per share-diluted $0.22 $0.10 $0.23
Restructuring related charges,
including increased depreciation (0.01) (0.01) (0.21)
Stock-based compensation expenses
(excludes $0.01 included in
restructuring and other
charges - net in 1QFY2006) (0.06) (0.06) -
Amortization of acquired intangible assets (0.01) - -
Restructuring and other charges - net (0.04) (0.16) (0.01)
Expenses related to reverse split and
loss on guarantee - - (0.04)
Gain on sale of operating assets - net 0.01 0.02 0.02
Taxes excluded from Non-GAAP 0.16 - 0.66
Net Income (Loss) per share- diluted $0.27 $(0.11) $0.65
Agere Systems Inc.
Unaudited Condensed Consolidated Balance Sheets
(Dollars in Millions)
Jun 30 Mar 31
2006 2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents $490 $620
Trade receivables 215 227
Inventories 135 132
Other current assets 24 38
TOTAL CURRENT ASSETS 864 1,017
Property, plant and equipment - net 421 423
Goodwill 196 196
Acquired intangible assets - net 11 13
Other assets 91 93
TOTAL ASSETS $1,583 $1,742
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $171 $188
Other current liabilities 235 268
TOTAL CURRENT LIABILITIES 406 456
Long-term debt 362 372
Other liabilities 471 594
TOTAL LIABILITIES 1,239 1,422
STOCKHOLDERS' EQUITY 344 320
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,583 $1,742
Agere Systems Inc.
Unaudited Condensed Consolidated Statements Of Cash Flows
(Dollars in Millions)
Three Months Ended
Jun 30 Mar 31
2006 2006
OPERATING ACTIVITIES
Net income (loss) $47 $(21)
Adjustments to reconcile net income
(loss) to net cash provided (used)
by operating activities:
Restructuring and other charges -
net of cash payments (22) 8
Depreciation and amortization 28 29
Pension plan contributions (35) -
Decrease in receivables 12 26
Increase in inventories (6) (11)
Decrease in accounts payable (17) (8)
Other operating activities - net (19) 17
NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES (12) 40
INVESTING ACTIVITIES
Capital expenditures (22) (18)
Other investing activities 6 6
NET CASH USED BY INVESTING ACTIVITIES (16) (12)
FINANCING ACTIVITIES
Purchase of treasury stock (100) (59)
Principal repayments of long-term debt (10) -
Other financing - net 8 2
NET CASH USED BY FINANCING ACTIVITIES (102) (57)
Net decrease in cash and cash equivalents (130) (29)
Cash and cash equivalents at beginning period 620 649
Cash and cash equivalents at end of period $490 $620
Agere Systems Inc.
Unaudited Net Income (Loss) Per Share Guidance
Quarter Ending
Sep 30
2006
Non-GAAP Net Income (High End of Range) $0.26
Non-GAAP Net Income (Low End of Range) $0.21
Less: Restructuring and related costs 0.06
Stock-based compensation expenses 0.06
Amortization of acquired intangible assets 0.01
0.13
Net Income (High End of Range) $0.13
Net Income (Low End of the Range) $0.08
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