Micrel Reports 2014 Fourth Quarter and Full Year Financial Results

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release includes statements that qualify as forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about the following topics: future financial results, including revenues, customer demand and inventories, order lead times, backlog, turns-fill requirements, net income, earnings per share, gross margin, average selling prices, the effect of cost-control efforts, use of free cash flow, stock buyback and dividend programs, supply chain constraints, channel inventory levels and trends, capacity utilization, development of new products, design wins and customer order patterns, and the nature and extent of macro-economic and industry trends. Forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially. Those risks and uncertainties include, but are not limited to, such factors as: softness in demand for Micrel products; customer decisions to cancel, reschedule, or delay orders for Micrel's products; the effect that lead times and channel inventories have on the demand for Micrel's products; distributor acceptance of changing contract terms; economic or financial difficulties experienced by Micrel customers; the effect of business conditions in the computing, wireless, telecommunications and industrial markets; the impact of any previous or future acquisitions; challenges involving integration of acquired businesses and utilization of acquired technology, market adoption, revenue growth and margins of acquired products; changes in demand for the Company's products; the impact of competitive products and pricing and alternative technological advances; the accuracy of estimates used to prepare the Company's financial statements and forecasts; the global economic situation; the ability of the Company's vendors and subcontractors to supply or manufacture the Company's products in a timely manner; the timely and successful development and market acceptance of new products and upgrades to existing products; softness in the economy and the U.S. stock markets as a whole; fluctuations in the market price of Micrel's common stock and other market conditions; the difficulty of predicting Micrel's future cash needs; the nature of other investment opportunities available to the Company from time to time; Micrel's operating cash flow, and economic and industry projections. For further discussion of these risks and uncertainties, please refer to the documents the Company files with the SEC from time to time, including the Company's Annual Report on Form 10-K for the year ended December 31, 2013. All forward-looking statements are made as of today, and the Company disclaims any duty to update such statements.

Non-GAAP Reporting

The Company presents non-GAAP financial measures because the Company believes it is helpful information for investors and financial analysts in their analysis of historical results and projections of the Company's future operating results. Non-GAAP net income and non-GAAP earnings per diluted share exclude the impact of revenues and the related cost of revenues from the conversion of certain distributors to a sell-in revenue recognition model, share-based compensation, restructuring charges and amortization of acquisition-related intangible assets with the related income tax effects and R&D tax credit. Non-GAAP results without the one-time adjustment exclude the impact of revenues and the related cost of revenues from the conversion of distributors to a sell-in revenue recognition model with the related income tax effects. The Company believes this provides a better comparison of results in the current period to those in prior periods as well as provides information regarding the Company's on-going operating performance after exclusion of these items. The Company has reconciled such non-GAAP financial measures to the most directly comparable GAAP financial measures in the financial tables at the end of this press release.

References to these non-GAAP financial measures should be considered in addition to results that are prepared under current accounting standards, but should not be considered a substitute for results that are presented in accordance with GAAP. The Company's non-GAAP financial measures may differ from non-GAAP financial measures provided by other companies.

About Micrel

Micrel, Inc. is a leading global manufacturer of IC solutions for the worldwide high-performance linear and power, LAN and timing and communications markets. The Company's products include advanced mixed-signal, analog and power semiconductors; high performance communication, clock management, MEMs-based clock oscillators and crystal-less clock generators, Ethernet switch and physical layer transceiver ICs. Company customers include leading manufacturers of enterprise, consumer, industrial, mobile, telecommunications, automotive, and computer products. Corporation headquarters and state-of-the-art wafer fabrication facilities are located in San Jose, CA, with regional sales and support offices and advanced technology design centers situated throughout the Americas, Europe and Asia. In addition, the Company maintains an extensive network of distributors and reps worldwide. Web: www.micrel.com.

-Financial Tables to Follow-

                                                                            
                            MICREL, INCORPORATED                            
            GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS            
                    (In thousands, except share amounts)                    
                                 (Unaudited)                                
                                                                            
                              Three Months Ended        Twelve Months Ended 
                        -----------------------------  -------------------- 
                        December  September  December   December   December 
                        31, 2014   30, 2014  31, 2013   31, 2014   31, 2013 
                        --------  ---------  --------  ---------  --------- 
Net revenues            $ 57,918  $  67,480  $ 60,007  $ 247,594  $ 237,080 
Cost of revenues *        28,308     33,072    29,594    119,566    115,034 
                        --------  ---------  --------  ---------  --------- 
Gross profit              29,610     34,408    30,413    128,028    122,046 
Gross profit %              51.1%      51.0%     50.7%      51.7%      51.5%
                                                                                                                                        
Operating  expenses:                                                                                                                  
  Research  and                                                                                                                              
    development  *                      15,103          16,013        14,526          62,033          55,853  
  Selling,  general  and                                                                                                              
    administrative  *                11,721          12,218        11,325          48,351          45,803  
  Restructuring  charges              508                484          1,376                992            1,376  
                                                --------    ---------    --------    ---------    ---------  
    Total  Operating                                                                                                                      
      Expenses                              27,332          28,715        27,227        111,376        103,032  
Income  from  operations          2,278            5,693          3,186          16,652          19,014  
  Interest  and  other                                                                                                                  
    (expense)  income:                                                                                                                  
  Interest  income                            84                  80              109                359                482  
  Other  expense                              (97)            (120)            (34)            (297)            (264)
                                                --------    ---------    --------    ---------    ---------  
    Interest  and  other                                                                                                                
      (expense)  income,                                                                                                                
      net                                              (13)              (40)              75                  62                218  
Income  before  (benefit                                                                                                            
  from)  provision  for                                                                                                                
  income  taxes                            2,265            5,653          3,261          16,714          19,232  
(Benefit  from)                                                                                                                            
  provision  for  income                                                                                                              
  taxes                                            (789)              978            (103)          3,167            1,584  
                                                --------    ---------    --------    ---------    ---------  
Net  income                            $    3,054    $      4,675    $    3,364    $    13,547    $    17,648  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
Net  income  per  share:                                                                                                              
  Basic                                    $      0.05    $        0.08    $      0.06    $        0.24    $        0.31  
                                                ========    =========    ========    =========    =========  
  Diluted                                $      0.05    $        0.08    $      0.06    $        0.24    $        0.30  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
Shares  used  in                                                                                                                            
  computing  per  share                                                                                                                
  amounts:                                                                                                                                      
  Basic                                        56,490          56,642        56,908          56,508          57,803  
                                                ========    =========    ========    =========    =========  
  Diluted                                    57,710          57,708        57,546          57,538          58,506  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
*  Share-based                                                                                                                              
  compensation  expense                                                                                                              
  included  in:                                                                                                                              
  Cost  of  revenues              $        249    $          271    $        276    $          997    $      1,060  
  Research  and                                                                                                                              
    development                                800                874              867            3,197            2,875  
  Selling,  general  and                                                                                                              
    administrative                          895                864              878            3,430            3,162  
                                                --------    ---------    --------    ---------    ---------  
                                                $    1,944    $      2,009    $    2,021    $      7,624    $      7,097  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
                                                                                                                                                        
                                                        MICREL,  INCORPORATED                                                        
                    SUPPLEMENTAL  RECONCILIATIONS  OF  GAAP  TO  NON-GAAP  RESULTS                    
                                        (In  thousands,  except  share  amounts)                                        
                                                                  (Unaudited)                                                                
                                                                                                                                                        
                                                            Three  Months  Ended                Twelve  Months  Ended  
                                                -----------------------------    --------------------  
                                                December    September    December      December      December  
                                                31,  2014      30,  2014    31,  2013      31,  2014      31,  2013  
                                                --------    ---------    --------    ---------    ---------  
Net  revenues                        $  57,918    $    67,480    $  60,007    $  247,594    $  237,080  
Revenue  from  conversion                                                                                                          
  of  distributors  to                                                                                                                  
  sell-in  revenue                                                                                                                        
  recognition  model                          -          (5,064)                -          (5,064)                  -  
                                                --------    ---------    --------    ---------    ---------  
Net  revenues  without                                                                                                                
  one-time  adjustment        $  57,918    $    62,416    $  60,007    $  242,530    $  237,080  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
Cost  of  revenues                $  28,308    $    33,072    $  29,594    $  119,566    $  115,034  
Cost  of  revenues  from                                                                                                              
  conversion  of                                                                                                                            
  distributors  to  sell-                                                                                                            
  in  revenue  recognition                                                                                                          
  model                                                  -          (1,566)                -          (1,566)                  -  
                                                --------    ---------    --------    ---------    ---------  
Cost  of  revenues                                                                                                                        
  without  one-time                                                                                                                      
  adjustment                          $  28,308    $    31,506    $  29,594    $  118,000    $  115,034  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
Gross  profit                        $  29,610    $    34,408    $  30,413    $  128,028    $  122,046  
Revenues  from                                                                                                                              
  conversion  of                                                                                                                            
  distributors  to  sell-                                                                                                            
  in  revenue  recognition                                                                                                          
  model                                                  -          (5,064)                -          (5,064)                  -  
Cost  of  revenues  from                                                                                                              
  conversion  of                                                                                                                            
  distributors  to  sell-                                                                                                            
  in  revenue  recognition                                                                                                          
  model                                                  -            1,566                  -            1,566                    -  
                                                --------    ---------    --------    ---------    ---------  
Gross  profit  without                                                                                                                
  one-time  adjustment        $  29,610    $    30,910    $  30,413    $  124,530    $  122,046  
                                                ========    =========    ========    =========    =========  
Gross  profit  %  without                                                                                                            
  one-time  adjustment                51.1%            49.5%          50.7%            51.3%            51.5%
                                                                                                                                                        
Net  income                                  3,054            4,675          3,364          13,547          17,648  
Revenues  from                                                                                                                              
  conversion  of                                                                                                                            
  distributors  to  sell-                                                                                                            
  in  revenue  recognition                                                                                                          
  model                                                  -          (5,064)                -          (5,064)                  -  
Cost  of  revenues  from                                                                                                              
  conversion  of                                                                                                                            
  distributors  to  sell-                                                                                                            
  in  revenue  recognition                                                                                                          
  model                                                  -            1,566                  -            1,566                    -  
Tax  effect  of  one-time                                                                                                            
  adjustments                                      -            1,088                  -            1,088                    -  
                                                --------    ---------    --------    ---------    ---------  
Net  income  without  one-                                                                                                          
  time  adjustment                      3,054            2,265          3,364          11,137          17,648  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
Net  income  per  share  -                                                                                                            
  diluted                                $      0.05    $        0.08    $      0.06    $        0.24    $        0.30  
Total  adjustments  to                                                                                                                
  net  income                          $            -    $      (0.04)  $            -    $      (0.05)  $              -  
                                                --------    ---------    --------    ---------    ---------  
Net  income  per  share                                                                                                                
  without  one-time                                                                                                                      
  adjustment  -  diluted      $      0.05    $        0.04    $      0.06    $        0.19    $        0.30  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
Shares  used  in                                                                                                                            
  computing  net  income                                                                                                              
  per  share:                                                                                                                                  
  Basic                                        56,490          56,642        56,908          56,508          57,803  
                                                ========    =========    ========    =========    =========  
  Diluted                                    57,710          57,708        57,546          57,538          58,506  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
                                                                                                                                                        
Reconciliation  to  Full  Non-GAAP  Results:                                                                        
                                                                                                                                                        
                                                            Three  Months  Ended                Twelve  Months  Ended  
                                                -----------------------------    --------------------  
                                                December    September    December      December      December  
                                                31,  2014      30,  2014    31,  2013      31,  2014      31,  2013  
                                                --------    ---------    --------    ---------    ---------  
                                                                                                                                                        
                                                                                                                                                        
GAAP  net  income                  $    3,054    $      4,675    $    3,364    $    13,547    $    17,648  
Revenues  from                                                                                                                              
  conversion  of                                                                                                                            
  distributors  to  sell-                                                                                                            
  in  revenue  recognition                                                                                                          
  model                                                  -          (5,064)                -          (5,064)                  -  
Cost  of  revenues  from                                                                                                              
  conversion  of                                                                                                                            
  distributors  to  sell-                                                                                                            
  in  revenue  recognition                                                                                                          
  model                                                  -            1,566                  -            1,566                    -  
Share-based                                                                                                                                  
  compensation  included                                                                                                            
  in:                                                                                                                                                
  Cost  of  revenue                          249                271              276                997            1,060  
  Research  and                                                                                                                              
    development                                800                874              867            3,197            2,875  
  Selling,  general  and                                                                                                              
    administrative                          895                864              878            3,430            3,162  
Restructuring  charges                508                484          1,376                992            1,376  
Amortization  of                                                                                                                          
  acquisition-related                                                                                                                
  intangible  assets                      295                301              330            1,327            1,186  
Tax  effect  of                                                                                                                              
  adjustments  to  GAAP                                                                                                                
  net  income                                  (961)              219        (1,229)        (2,233)        (3,218)
R&D  tax  credit                                  -                    -        (1,062)                  -          (1,062)
                                                --------    ---------    --------    ---------    ---------  
Non-GAAP  net  income*        $    4,840    $      4,190    $    4,800    $    17,759    $    23,027  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
GAAP  net  income  per                                                                                                                  
  share  -  diluted                $      0.05    $        0.08    $      0.06    $        0.24    $        0.30  
Total  adjustments  to                                                                                                                
  GAAP  net  income                $      0.03    $      (0.01)  $      0.02    $        0.07    $        0.09  
                                                --------    ---------    --------    ---------    ---------  
Non-GAAP  net  income  per                                                                                                          
  share  -  diluted                $      0.08    $        0.07    $      0.08    $        0.31    $        0.39  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
Shares  used  in  computing  non-GAAP  net  income  per  share:                                          
  Basic                                        56,490          56,642        56,908          56,508          57,803  
                                                ========    =========    ========    =========    =========  
  Diluted                                    57,710          57,708        57,546          57,538          58,506  
                                                ========    =========    ========    =========    =========  
                                                                                                                                                        
*  Non-GAAP  net  income  was  reached  by  excluding  revenues  and  the  related  cost
of  revenues  from  the  conversion  of  distributors  to  sell-in  revenue                    
recognition  model,  share-based  compensation  expense,  restructuring  charges    
and  amortization  of  acquisition-related  intangible  assets  with  related            
income  tax  effects  and  R&D  tax  credit.  Non-GAAP  results  were  presented  to      
supplement  our  GAAP  consolidated  financial  statements  to  allow  a  better          
comparison  of  results  in  the  current  period  to  those  in  prior  periods  and  to
provide  meaningful  insight  to  the  Company's  on-going  operating  performance    
after  exclusion  of  these  items.                                                                                          
                                                                                                                                                        
                                                                                                                                                        
                                                        MICREL,  INCORPORATED                                                        
                                        CONDENSED  CONSOLIDATED  BALANCE  SHEETS                                      
                                        (In  thousands,  except  share  amounts)                                        
                                                                  (Unaudited)                                                                
                                                                                                                                                        
                                                                                                                December      December  
                                                                                                                31,  2014      31,  2013  
                                                                                                              ----------  ----------
ASSETS                                                                                                                                            
                                                                                                                                                        
CURRENT  ASSETS:                                                                                                                          
    Cash,  cash  equivalents  and  short-term  investments        $      86,611  $      88,593
    Restricted  cash                                                                                            44            1,116
    Accounts  receivable,  net                                                                  30,523          29,437
    Inventories                                                                                            44,136          43,201
    Prepaid  taxes                                                                                          5,633            4,513
    Prepaid  expenses  and  other                                                                1,612            2,698
    Deferred  income  taxes                                                                        22,356          21,662
                                                                                                              ----------  ----------
        Total  current  assets                                                                    190,915        191,220
                                                                                                                                                        
LONG-TERM  INVESTMENTS                                                                              1,436            4,195
PROPERTY,  PLANT  AND  EQUIPMENT,  NET                                                  60,453          57,779
LONG-TERM  PREPAID  TAXES                                                                          1,711                    -
DEFERRED  INCOME  TAXES                                                                              2,707            1,581
GOODWILL                                                                                                        8,655            8,554
INTANGIBLE  ASSETS,  NET                                                                            9,792          11,749
OTHER  ASSETS                                                                                                1,511            1,046
                                                                                                              ----------  ----------
TOTAL                                                                                                    $    277,180  $    276,124
                                                                                                              ==========  ==========
                                                                                                                                                        
LIABILITIES  AND  SHAREHOLDERS'  EQUITY                                                                                
                                                                                                                                                        
CURRENT  LIABILITIES:                                                                                                                
    Accounts  payable                                                                          $      17,376  $      13,502
    Deferred  income  on  shipments  to  distributors                          22,947          27,026
    Accrued  liabilities                                                                            12,869          12,874
                                                                                                              ----------  ----------
        Total  current  liabilities                                                            53,192          53,402
                                                                                                                                                        
LONG-TERM  INCOME  TAXES  PAYABLE                                                            3,511            3,575
LONG-TERM  DEFERRED  INCOME  TAXES                                                              807                973
OTHER  LONG-TERM  LIABILITIES                                                                      162                201
                                                                                                                                                        
SHAREHOLDERS'  EQUITY                                                                                                                
TOTAL  SHAREHOLDERS'  EQUITY                                                                219,508        217,973
                                                                                                              ----------  ----------
TOTAL  LIABILITIES  AND  SHAREHOLDERS'  EQUITY                          $    277,180  $    276,124
                                                                                                              ==========  ==========
                                                                                                                                                        
                                                                                                                                                        
 




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