(Logo: http://www.newscom.com/cgi-bin/prnh/20040618/AGERELOGO )
On a non-GAAP basis*, Agere reported net income of $37 million, or $0.22 per share, in the third quarter of fiscal 2006, compared to $43 million, or $0.23 per share, in the same period for fiscal 2005.
Richard Clemmer, President and CEO, said, "Agere Systems turned in a solid third quarter, demonstrating the leverage we have created in our business model and the clear progress we are making in our turnaround plan. Moreover, we expanded our customer base during the quarter, giving us a firm foundation for driving revenue growth.
"During the quarter," Clemmer added, "we completed a strategic plan that will drive success in our three businesses. Our vision for the company is captured in our new tagline, 'Perfecting the Connected Lifestyle.' By this, we mean that we will work to transform the performance of networks and consumer electronics to enable people to stay connected -- more reliably, in more places, and more often than ever before. We are confident in our plans and believe that Agere shares remain undervalued. Consequently, we have authorized a new $200 million share repurchase program."
The following chart shows quarterly revenue, including revenue from the licensing of intellectual property, by business segment:
Jun 30 Mar 31 Jun 30
2006 2006 2005
($ in millions)
Consumer segment:
Storage $135 $171 $146
Mobility 105 95 125
Consumer segment 240 266 271
Networking segment 142 131 162
Total $382 $397 $433
Product and Customer Highlights
Recent company highlights include:
Networking:
- TrueONE portfolio launched. These scaleable, turn-key solutions are
based on Agere's packet processing, switching, digital processing and
systems software capabilities. These solutions enable the delivery of
carrier-class voice, data, IPTV and HDTV services over a single
converged, broadband network and allow Agere to provide solutions for
the market.
- Ericsson selected Agere's packet processing technology for DSLAM
equipment.
- NEC chose Agere for its third-generation wireless infrastructure Node B
equipment.
- 3Com and Lenovo chose Agere's Ethernet solutions for their enterprise
switching applications.
Mobility:
- Agere delivered platform solutions for Samsung's ultra-thin X820 model,
marketed as the world's slimmest mobile phone, offering a 2-megapixel
digital video camera, document viewer and TV-output function, and
Bluetooth capability.
- The company finalized an agreement with u-Nav Microelectronics, a best-
in-class provider of Global Positioning System (GPS) solutions. This
agreement gives Agere the capability to offer proven GPS solutions along
with Agere's baseband solutions to enable value-added functionality like
Location Based Services and satisfy future regulatory requirements for
E-911 emergency services.
Storage:
- Agere expanded its customer base by providing technology for a new
2.5-inch HDD-Flash combo drive to a leading disk drive manufacturer,
beating a major competitor.
- The company sampled an ARM-based SoC for use in a production platform to
a lead customer, further building on Agere's significant experience in
developing ARM-based cores across the company's three businesses and
strengthening the customer relationship.
Outlook
In the September quarter, the company expects to report revenues in the range of $375 million to $400 million. The company expects GAAP net income to be in the range of $0.08 to $0.13 per share. Non-GAAP net income* is expected to be in the range of $0.21 to $0.26 per share.
Earnings Webcast
Agere Systems will host a conference call today at 8:30 a.m. EDT to discuss its financial results and outlook. To listen to the conference call via the Internet, visit http://www.agere.com/webcast. Subsequent to the conference call, a replay will be available at the same web address.
About Agere Systems
Agere Systems is a global leader in semiconductors and software solutions for storage, mobility and networking markets. The company's products enable a broad range of services and capabilities, from cell phones, PCs and hard disk drives to the world's most sophisticated wireless and wireline networks. Agere's customers include top manufacturers of consumer electronics, communications and computing equipment. Agere works to transform the performance of networks and consumer electronics by integrating systems knowledge and leading technology that enable people to stay connected -- perfecting the connected lifestyle.
About non-GAAP Financial Measures
* Non-GAAP financial measures exclude gain or loss from the sale of, and income or loss from, discontinued operations; restructuring-related charges included in costs; primarily increased depreciation; certain other non-cash charges including equity compensation; net restructuring and other charges; purchased in-process research and development charges, amortization of acquired intangible assets, net gain or loss from the sale of operating assets, certain tax adjustments, cumulative effect of accounting changes, and certain nonrecurring charges. Reconciliations of non-GAAP financial measures used in this press release to corresponding GAAP amounts are attached.
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
Web site: http://www.agere.com/webcast/