(Logo: http://www.newscom.com/cgi-bin/prnh/20040618/AGERELOGO )
Richard Clemmer, President and CEO of Agere, said, "Our results for fiscal 2006 mark Agere's first full-year profit as a public company. This milestone in financial performance demonstrates that we are executing on our turnaround strategy. With our first profitable year behind us, we have established a firm foundation for Agere's future growth."
For the fourth quarter ended September 30, 2006, Agere reported GAAP net income of $13 million, or $0.08 per share, nearly double the net income of $7 million, or $0.04 per share, in the same period of 2005.
For the full fiscal year of 2006, Agere's non-GAAP* net income was $121 million, or $0.69 per share, compared to $72 million, or $0.41 per share, for fiscal 2005. On a non-GAAP basis, Agere's fourth quarter of fiscal 2006 net income was $51 million, or $0.30 per share, versus $38 million, or $0.21 per share, in the year ago period.
The following chart shows quarterly and annual revenue, including revenue from the licensing of intellectual property, by business segment:
($ in millions) Quarter Ended
Sep 30 Jun 30 Sep 30 Fiscal Year
2006 2006 2005 2006 2005
Storage $146 $135 $158 $ 625 $ 620
Mobility 104 105 106 394 430
Consumer segment 250 240 264 1,019 1,050
Networking segment 138 142 152 551 626
Total $388 $382 $416 $1,570 $1,676
Product and Customer Highlights
Recent company highlights include:
* Agere launched TrueNTRY(TM) X125 EDGE platform enabling entry-level
cell phones to deliver CD-quality music.
* Amoi Electronics announced shipments of six next-generation feature
phones using Agere's X115 EDGE platform.
* Preamplifier revenue for the year increased 140 percent from fiscal
2005.
* Samsung announced a new flash-HDD hybrid disk drive based on Agere's
read channel technology. This combination drive will reduce overall
boot time, increase reliability and reduce power consumption, improving
the end user experience.
* Agere continues to make progress with TrueONE(TM) networking solutions,
as a number of designs are ramping into production.
Outlook
In the December quarter, the company expects to report revenues in the range of $365 million to $390 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 $0.18 to $0.23 per share.
Earnings Webcast
Agere Systems will host a conference call today at 8:30 a.m. EST 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 and 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 TrueNTRY and TrueONE are trademarks 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 June 30, 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 Year Ended
Sep 30 Jun 30 Sep 30 Sep 30 Sep 30
2006 2006 2005 2006 2005
Revenue $388 $382 $416 $1,570 $1,676
Costs 202 188 227 808 1,012
Gross profit - $ 186 194 189 762 664
Gross profit - % 47.9% 50.8% 45.4% 48.5% 39.6%
Operating Expenses
Selling, general and administrative 48 56 54 225 234
Research and development 101 107 111 445 462
Amortization of acquired intangible
assets 1 2 1 5 6
Purchased in-process research and
development - - - - 55
Restructuring and other charges - net 22 6 5 87 24
Gain on sale of operating assets -
net - (2) (1) (6) (9)
Total operating expenses 172 169 170 756 772
Operating Income (Loss) 14 25 19 6 (108)
Other income - net 7 5 2 24 7
Interest expense 6 6 7 25 29
Income (Loss) before income taxes 15 24 14 5 (130)
Provision (benefit) for income taxes 1 (23) 7 (12) (122)
Income (Loss) from continuing
operations 14 47 7 17 (8)
Income from operations of
discontinued business - - - 4 -
Cumulative effect of accounting
change (net of tax) (1) - - (1) -
Net Income (Loss) $13 $47 $7 $20 $(8)
Basic income (loss) per share
information
Income (loss) from continuing
operations $0.08 $0.28 $0.04 $0.10 $(0.04)
Income from discontinued operations - - - 0.02 -
Net income (loss) $0.08 $0.28 $0.04 $0.12 $(0.04)
Weighted average shares outstanding
-- (in millions) 169 171 182 175 178
Diluted income (loss) per share
information
Income (loss) from continuing
operations $0.08 $0.27 $0.04 $0.10 $(0.04)
Income from discontinued operations - - - 0.02 -
Net income (loss) $0.08 $0.27 $0.04 $0.12 $(0.04)
Weighted average shares outstanding
-- (in millions) 170 172 182 175 178
Agere Systems Inc.
Reconciliation of Non-GAAP to Unaudited GAAP Measures
(Dollars in millions except per share amounts)
Quarter Ended Year Ended
Sep 30 Jun 30 Sep 30 Sep 30 Sep 30
2006 2006 2005 2006 2005
Reconciliation of Non-GAAP
Net Income to Net Income (Loss)
Non-GAAP Net Income $ 51 $ 37 $ 38 $121 $ 72
Restructuring related charges,
including increased depreciation (1) (2) (26) (5) (139)
Stock-based compensation expenses
(excludes $2 included in
restructuring and other charges -
net in Q1 2006) (10) (10) - (38) -
Amortization of acquired
intangible assets (1) (2) (1) (5) (6)
Purchased in-process research
and development - - - - (55)
Restructuring and other charges - net (22) (6) (5) (87) (24)
Expenses related to reverse split
and loss on guarantee - 1 - 1 (7)
Gain on sale of operating assets - net - 2 1 6 9
Taxes excluded from Non-GAAP (3) 27 - 24 142
Income from operations of
discontinued business - - - 4 -
Cumulative effect of accounting change
(net of taxes) (1) - - (1) -
Net Income (Loss) $ 13 $ 47 $7 $ 20 $(8)
Reconciliation of Non-GAAP Net
Income Per Share to Net Income
(Loss) Per Share
Non-GAAP Net Income per share
- diluted $0.30 $0.22 $0.21 $0.69 $0.41
Restructuring related charges,
including increased depreciation (0.01) (0.01) (0.14) (0.03) (0.78)
Stock-based compensation expenses
(excludes $0.01 included in
restructuring and other charges
- net in Q1 2006) (0.06) (0.06) - (0.22) -
Amortization of acquired
intangible assets (0.00) (0.01) (0.00) (0.03) (0.03)
Purchased in-process research
and development - - - - (0.31)
Restructuring and other charges
- net (0.13) (0.04) (0.03) (0.50) (0.14)
Expenses related to reverse split
and loss on guarantee - - - 0.01 (0.04)
Gain on sale of operating assets
- net - 0.01 0.00 0.04 0.05
Taxes excluded from Non-GAAP (0.02) 0.16 - 0.14 0.80
Income from operations of
discontinued business - - - 0.02 -
Cumulative effect of accounting
change (net of taxes) (0.00) - - (0.00) -
Net Income (Loss) per share
- diluted $0.08 $0.27 $0.04 $0.12 $(0.04)
Agere Systems Inc.
Unaudited Condensed Consolidated Balance Sheets
(Dollars in Millions)
Sep 30 Jun 30
2006 2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents $406 $490
Accounts receivable 243 215
Inventories 116 135
Other current assets 33 24
TOTAL CURRENT ASSETS 798 864
Property, plant and equipment - net 402 421
Goodwill 196 196
Acquired intangible assets - net 10 11
Other assets 91 91
TOTAL ASSETS $1,497 $1,583
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $152 $171
Other current liabilities 223 235
TOTAL CURRENT LIABILITIES 375 406
Long-term debt 362 362
Other liabilities 458 471
TOTAL LIABILITIES 1,195 1,239
STOCKHOLDERS' EQUITY 302 344
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,497 $1,583
Agere Systems Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Dollars in Millions)
Three Months Ended
Sep 30 Jun 30
2006 2006
OPERATING ACTIVITIES
Net income $13 $47
Less: Cumulative effect of
accounting change (1) -
Income (Loss) from Continuing
Operations 14 47
Adjustments to reconcile net income
to net cash used by operating
activities:
Restructuring and other charges -
net of cash payments 5 (22)
Depreciation and amortization 29 28
Pension plan contributions (31) (35)
(Increase) decrease in receivables (28) 12
Decrease (increase) in inventories 17 (6)
Decrease in accounts payable (18) (17)
Other operating activities - net (14) (19)
NET CASH USED BY OPERATING
ACTIVITIES (26) (12)
INVESTING ACTIVITIES
Capital expenditures (7) (22)
Other investing activities - 6
NET CASH USED BY INVESTING
ACTIVITIES (7) (16)
FINANCING ACTIVITIES
Purchase of treasury stock (55) (100)
Principal repayments of long-term
debt - (10)
Other financing - net 4 8
NET CASH USED BY FINANCING
ACTIVITIES (51) (102)
Net decrease in cash and cash
equivalents (84) (130)
Cash and cash equivalents at
beginning of period 490 620
Cash and cash equivalents at end of
period $406 $490
Agere Systems Inc.
Unaudited Net Income (Loss) Per Share Guidance
Quarter Ending
Dec 31
2006
Non-GAAP Net Income (High End of Range) $0.23
Non-GAAP Net Income (Low End of Range) $0.18
Less: Restructuring and related costs 0.03
Stock-based compensation expenses 0.07
Amortization of acquired intangible assets -
0.10
Net Income (High End of Range) $0.13
Net Income (Low End of Range) $0.08
