TriQuint Announces Third Quarter 2014 Results

Conference Call:

TriQuint will host a conference call this afternoon at 1:30 p.m. PDT to discuss the results for the quarter and our future expectations for the company. To access the conference call, please dial (888) 813-6582 domestically, or (706) 643-7082 internationally, approximately ten minutes prior to the beginning of the call, using passcode 98159203. The call can also be heard via webcast accessed through the “Investors” section of TriQuint's web site at: http://invest.triquint.com. A replay of the conference call will be available until November 10, 2014.

Non-GAAP Financial Measures:

This press release provides financial measures for non-GAAP net income (loss), diluted earnings (loss) per share, gross profit, gross margin, operating expenses and operating income (loss) that exclude equity compensation expense, non-cash tax expense (benefit), certain entries associated with mergers and acquisitions including expenses associated with the planned merger with RFMD and other specifically identified non-routine items, and are therefore not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”). The charges associated with mergers and acquisitions reflect the amortization of intangible and tangible assets, transaction costs and changes to the earnout liability estimates recorded in connection with acquisition accounting and charged to the income statement. The charges associated with the planned merger with RFMD include professional fees and other costs. The non-cash tax expense (benefit) excludes certain deferred tax charges and benefits that do not currently result in a tax payment or tax refund. Management believes that these non-GAAP financial measures provide meaningful supplemental information that enhances management's and investors' ability to evaluate TriQuint's operating results.

These non-GAAP financial measures are not intended to be used in isolation and should not be considered a substitute for any other performance measure determined in accordance with GAAP. Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool, including that other companies may calculate similar non-GAAP financial measures differently than we do, limiting their usefulness as a comparative tool. The company compensates for these limitations by providing specific information regarding the GAAP amount excluded from the non-GAAP financial measures. The company further compensates for the limitations of our use of non-GAAP financial measures by presenting comparable GAAP measures more prominently. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with our GAAP net income and net income per share.

Forward-Looking Statements:

This press release contains forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding expectations for discrete premium filter revenue for 2014; expected timing and completion of TriQuint’s merger with RFMD; and statements under "Outlook" regarding anticipated fourth quarter revenues, fourth quarter non-GAAP gross margin, operating expenses and net income per diluted share. These forward-looking statements are statements of management's opinion and are subject to various assumptions, risks, uncertainties and changes in circumstances. Actual results may vary materially from those expressed or implied in the statements herein or from historical results, due to changes in economic, business, competitive, technological and/or regulatory factors. More detailed information about risk factors that may affect actual results are set forth in TriQuint's reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission. These reports can be accessed at the SEC web site, www.sec.gov. Except as required by law, TriQuint undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.

A reader of this release should understand that it is not possible to predict or identify all risk factors and should not consider the risk factors described in TriQuint's filings with the Securities and Exchange Commission to be a complete statement of all potential risks and uncertainties.

Facts About TriQuint

Founded in 1985, TriQuint Semiconductor (NASDAQ: TQNT) is a leading RF solutions supplier and technology innovator for the world's top communications, defense and aerospace companies. People and organizations around the world need real-time, all-the-time connections; TriQuint products help reduce the cost and increase the performance of connected mobile devices and the networks that deliver critical voice, data and video communications. With the industry's broadest technology portfolio, recognized R&D leadership, and expertise in high-volume manufacturing, TriQuint creates standard and custom products using gallium arsenide (GaAs), gallium nitride (GaN), surface acoustic wave (SAW) and bulk acoustic wave (BAW) technologies. The company has ISO 9001-certified manufacturing facilities in the U.S., production in Costa Rica, and design centers in North America and Germany. For more information, visit www.triquint.com.

TriQuint: Reach Further, Reach Faster™

TQNT-F

 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
       

September 27,
2014

December 31, 2013

Assets

Current assets:
Cash and cash equivalents $ 223,612 $ 79,026
Investments in marketable securities 24,330
Accounts receivable, net 164,397 177,114
Inventories 158,130 159,488
Prepaid expenses 8,791 13,617
Deferred tax assets, net 17,956 12,787
Other current assets 38,366   39,960
Total current assets 635,582 481,992
Property, plant and equipment, net 428,459 420,363
Goodwill 13,519 13,519
Intangible assets, net 19,199 23,510
Deferred tax assets – noncurrent, net 51,019 61,554
Other noncurrent assets, net 59,257   32,319
Total assets $ 1,207,035   $ 1,033,257
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 77,702 $ 52,472
Accrued payroll 45,766 39,743
Other accrued liabilities 14,834   15,893
Total current liabilities 138,302 108,108
Long-term liabilities:
Long-term income tax liability 2,311 2,062
Cross-licensing liability 11,309 11,752
Other long-term liabilities 16,312   16,782
Total liabilities 168,234 138,704
Stockholders' equity:
Common stock 177 162
Additional paid-in capital 831,833 699,903
Accumulated other comprehensive income 73 95
Retained earnings 206,718   194,393
Total stockholders' equity 1,038,801   894,553
Total liabilities and stockholders' equity $ 1,207,035   $ 1,033,257
 
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
             
Three Months Ended Nine Months Ended
September June 28, September September

September

27, 2014 2014 28, 2013 27, 2014

28, 2013

 
Revenues $ 272,147 $ 230,771 $ 250,836 $ 680,524 625,148
Cost of goods sold 148,427   138,057   158,619   405,040   437,440  
Gross profit 123,720 92,714 92,217 275,484 187,708
 
Operating expenses:
Research, development and engineering 49,810 48,001 47,023 147,681 140,201
Selling, general and administrative 38,035   37,316   26,420   104,514   79,650  
Total operating expenses 87,845 85,317 73,443 252,195 219,851
                   
Operating income (loss) 35,875 7,397 18,774 23,289 (32,143 )
 
Other (expense) income:
Interest income 92 42 7 161 83
Interest expense (892 ) (844 ) (1,153 ) (2,591 ) (3,429 )
Other, net 297   (624 ) 70   (282 ) 97  
Other (expense) income, net (503 ) (1,426 ) (1,076 ) (2,712 ) (3,249 )
                   
Income (loss) before income tax 35,372 5,971 17,698 20,577 (35,392 )
 
Income tax expense (benefit) 9,188   761   4,137   8,252   (6,119 )
Net income (loss) $ 26,184   $ 5,210   $ 13,561   $ 12,325   $ (29,273 )
 
Per Share Data:
Basic per share net earnings (loss) $ 0.15 $ 0.03 $ 0.09 $ 0.07 $ (0.18 )
Diluted per share net earnings (loss) $ 0.14 $ 0.03 $ 0.08 0.07 $ (0.18 )
 
Weighted-average shares outstanding:
Basic 175,764 171,770 157,105 170,709 159,057
Diluted 185,701 181,319 163,917 180,302 159,057
 
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(% of revenue)
           
Three Months Ended Nine Months Ended
September June 28, September September September
27, 2014 2014 28, 2013 27, 2014 28, 2013
 
Revenues 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 54.5 % 59.8 % 63.2 % 59.5 % 70.0 %
Gross profit 45.5 % 40.2 % 36.8 % 40.5 % 30.0 %
 
Operating expenses:
Research, development and engineering 18.3 % 20.8 % 18.7 % 21.7 % 22.4 %
Selling, general and administrative 14.0 % 16.2 % 10.6 % 15.4 % 12.7 %
Total operating expenses 32.3 % 37.0 % 29.3 % 37.1 % 35.1 %
                   
Operating income (loss) 13.2 % 3.2 % 7.5 % 3.4 % (5.1 )%
 
Other (expense) income:
Interest income 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Interest expense (0.3 )% (0.3 )% (0.5 )% (0.4 )% (0.6 )%
Other, net 0.1 % (0.3 )% 0.0 % 0.0 % 0.0 %
Other (expense) income, net (0.2 )% (0.6 )% (0.5 )% (0.4 )% (0.6 )%
                   
Income (loss) before income tax 13.0 % 2.6 % 7.0 % 3.0 % (5.7 )%
 
Income tax expense (benefit) 3.4 % 0.3 % 1.6 % 1.2 % (1.0 )%
Net income (loss) 9.6 % 2.3 % 5.4 % 1.8 % (4.7 )%
 
 
SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
        Three Months Ended   Nine Months Ended
September 27, 2014   June 28, 2014   September 28, 2013 September 27, 2014   September 28, 2013
(% of revenues) (% of revenues) (% of revenues) (% of revenues) (% of revenues)
GAAP GROSS PROFIT $ 123,720   45.5 % $ 92,714   40.2 % $ 92,217   36.8 % $ 275,484   40.5 % $ 187,708   30.0 %
Adjustment for stock based compensation charges 1,610 0.6 % 2,218 1.0 % 1,720 0.7 % 5,613 0.8 % 5,327 0.9 %
Adjustment for restructuring and impairment charges 42 0.0 % (20 ) % % 736 0.0 % %
Adjustment for charges associated with acquisitions 1,397     0.5 % 1,301     0.5 % 1,272     0.5 % 3,781     0.6 % 3,682     0.6 %
NON-GAAP GROSS PROFIT $ 126,769 46.6 % $ 96,213 41.7 % $ 95,209 38.0 % 285,614 42.0 % 196,717 31.5 %
 
GAAP OPERATING EXPENSES $ 87,845 32.3 % $ 85,317 37.0 % $ 73,443 29.3 % $ 252,195 37.1 % $ 219,851 35.1 %
Adjustment for stock based compensation charges (4,748 ) (1.7 )% (5,287 ) (2.3 )% (5,193 ) (2.1 )% (14,840 ) (2.2 )% (15,802 ) (2.5 )%
Adjustment for restructuring and impairment charges (114 ) 0.0 % 52 % % (1,143 ) (0.2 )% %
Adjustment for charges associated with acquisitions (8,310 )   (3.1 )% (8,124 )   (3.5 )% 308     0.1 % (18,631 )   (2.7 )% 2,103     0.4 %
NON-GAAP OPERATING EXPENSES $ 74,673 27.5 % $ 71,958 31.2 % $ 68,558 27.3 % $ 217,581 32.0 % $ 206,152 33.0 %
 
GAAP OPERATING INCOME (LOSS) $ 35,875 13.2 % $ 7,397 3.2 % $ 18,774 7.5 % $ 23,289 3.4 % $ (32,143 ) (5.1 )%
Adjustment for stock based compensation charges 6,358 2.3 % 7,505 3.3 % 6,913 2.8 % 20,453 3.0 % 21,129 3.4 %
Adjustment for restructuring and impairment charges 156 % (72 ) (0.1 )% % 1,879 0.3 % %
Adjustment for charges associated with acquisitions 9,707     3.6 % 9,425     4.1 % 964     0.3 % 22,412     3.3 % 1,579     0.2 %
NON-GAAP OPERATING INCOME (LOSS) $ 52,096 19.1 % $ 24,255 10.5 % $ 26,651 10.6 % $ 68,033 10.0 % $ (9,435 ) (1.5 )%
 
GAAP NET INCOME (LOSS) $ 26,184 9.6 % $ 5,210 2.3 % $ 13,561 5.4 % $ 12,325 1.8 % $ (29,273 ) (4.7 )%
Adjustment for stock based compensation charges 6,358 2.3 % 7,505 3.3 % 6,913 2.8 % 20,453 3.0 % 21,129 3.4 %
Adjustment for restructuring and impairment charges 156 0.1 % (72 ) % % 1,879 0.3 % %
Adjustment for impairment (recovery) of investment % 515 0.2 % % 515 0.1 % (421 ) (0.1 )%
Adjustment for non-cash tax expense (benefit) 9,338 3.4 % 803 0.3 % 4,482 1.8 % 7,950 1.2 % (6,243 ) (1.0 )%
Adjustment for charges associated with acquisitions 9,374     3.5 % 9,643     4.1 % 1,351     0.5 % 22,526     3.2 % 2,941     0.5 %
NON-GAAP NET INCOME (LOSS) $ 51,410 18.9 % $ 23,604 10.2 % $ 26,307 10.5 % $ 65,648 9.6 % $ (11,867 ) (1.9 )%
 
GAAP DILUTED EARNINGS (LOSS) PER SHARE 0.14 $ 0.03 $ 0.08 $ 0.07 (0.18 )
Adjustment for stock based compensation charges 0.03 0.04 0.04 0.11 0.13
Adjustment for restructuring and impairment charges 0.01 (0.00 ) 0.01
Adjustment for impairment (recovery) of investment 0.00 0.00 0.00 0.00
Adjustment for non-cash tax expense (benefit) 0.05 0.01 0.03 0.04 (0.04 )
Adjustment for charges associated with acquisitions 0.05   0.05   0.01   0.13   0.02  
NON-GAAP DILUTED EARNINGS (LOSS) PER SHARE $ 0.28 $ 0.13 $ 0.16 $ 0.36 $ (0.07 )
 

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