Hittite Microwave Corporation Reports Financial Results for the Third Quarter of 2005

CHELMSFORD, Mass., Oct. 27 /PRNewswire-FirstCall/ -- Hittite Microwave Corporation (NASDAQ: HITT) today reported revenue for the third quarter ended September 30, 2005 of $21.2 million, representing an increase of 32.5% over $16.0 million for the third quarter of 2004 and an increase of 12% over $18.9 million for the second quarter of 2005. Net income attributable to common stockholders for the quarter was $5.0 million, or $0.17 per diluted share, an increase of 51.9% over net income attributable to common stockholders of $3.3 million, or $0.12 per diluted share, for the corresponding period of 2004, and an increase of 18.5% over $4.2 million, or $0.16 per diluted share, for the second quarter of 2005.

"We had a strong third quarter with growth in both revenue and earnings, compared with a year ago," said Stephen Daly, President and CEO. "During the quarter we added 26 new products across six of our 10 product lines, increasing our portfolio to 376 standard products. In July, we achieved a strategic milestone in successfully completing our initial public offering. On August 30, we acquired Q-Dot, an analog and mixed-signal research and development company with high speed data acquisition integrated circuit and system design expertise, which we will integrate into our long term product strategy."

Revenue from customers in the United States was $12.0 million, or 57% of the company's total revenue, and revenue from customers outside the United States was $9.2 million, or 43% of total revenue, compared with 49% and 51%, respectively, for the third quarter of 2004. Gross margin for the third quarter of 2005 was 69.5%, compared with 64.4% for the third quarter of 2004 and 66.4% for the second quarter of 2005. The year-over-year gross margin improvement was primarily the result of lower manufacturing costs. Operating expenses for the third quarter of 2005 were $7.0 million, including a charge of $1.8 million, or $0.04 per diluted share, for in-process research and development related to the acquisition of Q-Dot. Cash and cash equivalents at the end of the third quarter were $52.9 million, an increase of $21.6 million from the second quarter of 2005, after giving effect to the cash dividend paid during the third quarter to shareholders of record on June 24, 2005 and receipt of the net proceeds from the company's initial public offering in July 2005.

Business Outlook

The company currently expects revenue for the fourth quarter ending December 31, 2005 to be in the range of $21.5 million to $22.5 million and net income to be in the range of $5.4 million to $5.7 million, or $0.18 to $0.19 per diluted share.

Webcast and Taped Replay

The company will host a conference call to discuss its financial results at 5:00 p.m. EDT on Thursday, October 27, 2005. A live webcast of the call will be available online on the Hittite Microwave website. To listen to the live webcast, go to the Investor Relations page of the Hittite Microwave web site at www.hittite.com and click on the webcast icon located under the Events Calendar. A telephonic replay of the call also will be available for one week after the live call by dialing 719-457-0820, access code 4461022. Following the call, a webcast replay will also be available by visiting the Investor Relations page at www.hittite.com.

About Hittite Microwave Corporation

Hittite Microwave is an innovative designer and developer of high performance integrated circuits, or ICs, modules and subsystems for technically demanding radio frequency, or RF, microwave and millimeterwave applications. Products include amplifiers, attenuators, frequency dividers and detectors, frequency multipliers, mixers and converters, modulators, oscillators, sensors and switches. Hittite's products are used in a variety of applications and end markets including automotive, broadband, cellular infrastructure, fiber optic, microwave and millimeterwave communications, military, space, and test and measurement. The company utilizes radio frequency integrated circuits (RFIC), monolithic microwave integrated circuits (MMIC), multi-chip modules (MCM) and microwave integrated circuit (MIC) technologies. The company is headquartered in Chelmsford, MA.

"Safe Harbor Statement" under the Private Securities Litigation Reform Act of 1995

Statements in this press release regarding Hittite Microwave Corporation that do not relate to historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward- looking statements include, but are not limited to, any statements regarding our expectations as to future levels of revenue and earnings per share. Readers are cautioned that these forward-looking statements are subject to risks and uncertainties and are only predictions and actual future events and results may differ materially from these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: market acceptance of our new products; our ability to assess market requirements accurately; our success in maintaining the business of our significant customers; our ability to keep pace with new semiconductor processes; regulatory, operational, financial and political risks inherent in operating internationally; competition within the semiconductor industry; product returns and warranty claims; our ability to manage our growth and costs effectively; protection of our intellectual property; the growth and fiscal strength of our end markets; and other risks and uncertainties that are iscussed under "Risk Factors" in our Registration Statement on Form S-1, File Number 333-124664, and in our Quarterly Report on Form 10-Q, each as filed with the Securities and Exchange Commission.

    Hittite Microwave Corporation
    Consolidated Balance Sheet
    (In thousands)                              Sept. 30, 2005   Dec. 31, 2004
                                                  (unaudited)        (audited)

         Current assets:
             Cash and cash equivalents              $52,860           $24,548
             Accounts receivable, net                13,077            10,119
             Inventory, net                           4,592             5,437
             Deferred costs                             348               276
             Prepaid expenses and other
              current assets                            646               291
             Deferred taxes                           1,188             1,188

                Total current assets                 72,711            41,859

           Property  and  equipment,  net                                13,122                        13,225
                    Other  assets                                                                    565                              147

                    Total  assets                                                            $86,398                      $55,231

        Liabilities,  Redeemable  Convertible  Preferred
          Stock  and  Stockholders'  Equity

                  Current  Liabilities:
                          Current  portion  of  long-term  debt                  $366                            $366
                          Accounts  payable                                                  1,543                          2,244
                          Accrued  expenses                                                  3,249                          2,689
                          Taxes  payable                                                            120                              630
                          Deferred  revenue  and  customer  advances      3,123                          2,939

                                Total  current  liabilities                          8,401                          8,868

                    Long-term  debt                                                                305                              579
                    Deferred  taxes                                                            1,470                          1,470

                    Total  liabilities                                                    10,176                        10,917

                    Redeemable  convertible  preferred  stock                  --                        20,591

                    Stockholders'  equity:
                          Common  stock                                                              286                              223
                          Additional  paid-in  capital                            74,201                                23
                          Accumulated  other
                            comprehensive  income  (loss)                                (5)                              57
                          Deferred  compensation                                          (416)                                -
                          Retained  earnings                                                2,251                        23,420
                          Treasury  stock                                                          (95)                                -
                                Total  stockholders'  equity                      76,222                        23,723

                    Total  liabilities,  redeemable
                      convertible  preferred  stock  and
                      stockholders'  equity                                          $86,398                      $55,231

        Hittite  Microwave  Corporation
        Consolidated  Statement  of  Operations
        (In  thousands  except
          per-share  data)                                  Three  Months  Ended    Nine  Months  Ended
                                                                                September  30,            September  30,
                                                                            2005              2004          2005                2004

        Revenue                                                    $21,186    $15,986        $57,949          $44,726
        Cost  of  revenue                                        6,466        5,694          18,852            16,575
              Gross  profit                                      14,720      10,292          39,097            28,151
                                                                              69.5%        64.4%            67.5%              62.9%

        Operating  expenses:
              Research  and  development                2,727        1,807            7,649              5,392
              Selling  and  marketing                      1,855        1,825            6,302              5,625
              General  and  administrative                695            959            2,181              2,245
              In-process  research  and
                development                                        1,778              --            1,778                    --
                    Total  operating  expenses          7,055        4,591          17,910            13,262

        Income  from  operations                          7,665        5,701          21,187            14,889
                                                                              36.2%        35.7%            36.6%              33.3%

        Interest  and  other  income,  net              332              33                636                    87
        Income  before  income  taxes                  7,997        5,734          21,823            14,976

        Provision  for  income  taxes                  2,879        2,063            7,858              5,390
        Net  income                                                  5,118        3,671          13,965              9,586

        Accretion  on  redeemable
          convertible  preferred  stock                  120            381                944              1,144
        Net  income  attributable  to
          common  stockholders                            $4,998      $3,290        $13,021            $8,442

        Basic  earnings  per  share
          attributable  to  common
          stockholders                                            $0.18        $0.13            $0.51              $0.34
        Shares  used  in  calculation  of
          basic  earnings  per  share
          (Note  1)                                                  26,908      22,246          23,914            22,239

        Diluted  earnings  per  share
          attributable  to  common
          stockholders                                            $0.17        $0.12            $0.47              $0.32
        Shares  used  in  calculation  of
          diluted  earnings  per  share
          (Note  1)                                                  28,506      23,894          25,599            23,578

        Note  1:    All  share  and  per  share  data  give  effect  to  a  1.874-for-one  stock
                          split  effected  on  June  29,  2005.

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