Agere Systems Reports Results for the Fourth Quarter and Fiscal Year 2005; Appoints New CEO

Agere Systems is a global leader in semiconductors for storage, wireless data, and public and enterprise networks. The company's chips and software power a broad range of computing and communications applications, from cell phones, PCs, PDAs, hard disk drives and gaming devices to the world's most sophisticated wireless and wireline networks. Agere's customers include top manufacturers of consumer electronics, communications and computing equipment. Agere's products connect people to information and entertainment at home, at work and on the road -- enabling the connected lifestyle.

Agere, Agere Systems, the Agere Systems logo and PayloadPlus are registered trademarks, and TruePHY and Vision are trademarks of Agere Systems Inc.

TigerSwitch is a trademark of SMC Networks, 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, 2004, and our quarterly report on Form 10-Q for the quarter ended June 30, 2005. 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)

                                                                Twelve Months
                                          Quarter Ended             Ended
                                      Sep 30  Jun 30  Sep 30   Sep 30  Sep 30
                                        2005   2005    2004     2005    2004

    Revenue                             $416   $433    $439    $1,676  $1,912
    Costs                                227    248     240     1,012   1,046
    Gross profit - $                     189    185     199       664     866
    Gross profit - %                    45.4%  42.7%   45.3%     39.6%   45.3%

    Operating Expenses
    Selling, general and administrative   54     65      62       234     272
    Research and development             111    119     118       462     496
    Amortization of acquired intangible
     assets                                1      1       2         6       7
    Purchased in-process research and
     development                           -      -       -        55      13
    Restructuring and other charges -
     net                                   5      1     132        24     197
    (Gain) Loss on sale of operating
     assets - net                         (1)    (4)     (1)       (9)     (4)
    Total operating expenses             170    182     313       772     981

    Operating Income (Loss)               19      3    (114)     (108)   (115)
    Other income (expense) - net           2      4       4         7       8
    Interest expense                       7      6      10        29      43
    Income (Loss) before income taxes     14      1    (120)     (130)   (150)
    (Benefit) Provision  for income
     taxes                                 7   (119)      7      (122)    (60)
    Net Income (Loss)                     $7   $120   $(127)      $(8)   $(90)

    Basic income (loss) per share      $0.04  $0.66  $(0.74)   $(0.04) $(0.52)
    Weighted average shares
     outstanding--basic (in millions)    182       181          172              178          171

        Diluted  income  (loss)  per  share        $0.04    $0.65    $(0.74)      $(0.04)  $(0.52)
        Weighted  average  shares
          outstanding--diluted
        (in  millions)                                                182        193          172              178          171


                                        Unaudited  Pro  Forma  Results  of  Operations
                                    (Dollars  in  millions  except  per  share  amounts)

                                                                                                                              Twelve  Months
                                                                                Quarter  Ended                          Ended
                                                                      Sep  30      Jun  30    Sep  30      Sep  30      Sep  30
                                                                        2005          2005        2004          2005          2004

        Revenue:
          Consumer  Enterprise:
            Storage                                                $158          $146        $155          $620        $635
            Mobility                                                  92            100          100            364          496
            Enterprise  and  Networking              101            118          120            436          513
          Consumer  Enterprise                            351            364          375        1,420      1,644
          Telecommunications                                65              69            64            256          268
                Total  Revenue                                  416            433          439        1,676      1,912

        Pro  Forma  Gross  Profit  -  $
          Consumer  Enterprise                            165            172          154            614          680
          Telecommunications                                50              51            45            189          193
        Pro  Forma  Gross  Profit  -  $                215            223          199            803          873

        Pro  Forma  Gross  Profit  -  %
          Consumer  Enterprise                          47.0%        47.3%      41.1%        43.2%      41.4%
          Telecommunications                            76.9%        73.9%      70.3%        73.8%      72.0%
        Pro  Forma  Gross  Profit  -  %              51.7%        51.5%      45.3%        47.9%      45.7%

        Operating  Expenses  Included  in  Pro
        Forma  Results
        Pro  forma  Selling,  general  and
          administrative                                        54              58            62            227          272
        Research  and  development                    111            119          118            462          496
        Total  Pro  Forma  Operating  Income
          (Loss)                                                        50              46            19            114          105
        Other  income  (expense)  -  net                2                4              4                7              8
        Interest  expense                                        7                6            10              29            43
        Pro  Forma  provision  for  income
          taxes                                                            7                1              7              20            21
        Pro  Forma  Net  Income  (Loss)              $38            $43            $6            $72          $49
        Pro  Forma  Net  Income  (Loss)  per
          share                                                    $0.21        $0.24      $0.04        $0.41      $0.28
        Weighted  average  shares
          outstanding--basic  (in  millions)  182            181          172            178          171
        Weighted  average  shares
          outstanding--diluted
          (in  millions)                                        182            193          172            178          171

        Reconciliation  of  Pro  Forma  Gross
          Profit-$  to  Gross  Profit-$
        Pro  Forma  Gross  Profit-$                  $215          $223        $199          $803        $873
        Restructuring  related  charges,
          including  increased
          depreciation                                            26              38              -            139              7
        Gross  Profit-$                                      $189          $185        $199          $664        $866

        Reconciliation  of  Pro  Forma  Gross
        Profit-%  to  Gross  Profit-%
        Pro  Forma  Gross  Profit-%                  51.7%        51.5%      45.3%        47.9%      45.7%
        Restructuring  related  charges,
          including  increased
          depreciation                                        (6.3)%      (8.8)%    0.00%        (8.3)%    (0.4)%
        Gross  Profit-%                                      45.4%        42.7%      45.3%        39.6%      45.3%

        Reconciliation  of  Pro  Forma
        Selling,  general  &  administrative
        to  Selling,  general  &  administrative
        Pro  Forma  Selling,  general  &
          administrative                                      $54            $58          $62          $227        $272
        Expenses  related  to  reverse  stock
          split  and  loss  from  default  on
          guarantee                                                    -                7              -                7              -
        Selling,  general  &  administrative  $54            $65          $62          $234        $272

        Reconciliation  of  Pro  Forma
        Operating  Income  (Loss)  to
        Operating  Income  (Loss)
        Pro  Forma  Operating  Income
          (Loss)                                                      $50            $46          $19          $114        $105
        Restructuring  related  charges,
          including  increased  depreciation    26              38              -            139              7
        Amortization  of  acquired  intangible
          assets                                                          1                1              2                6              7
        Purchased  in-process  research  and
          development                                                -                -              -              55            13
        Restructuring  and  other  charges  -
          net                                                                5                1          132              24          197
        Expenses  related  to  reverse  stock
          split  and  loss  from  default  on
          guarantee                                                    -                7              -                7              -
        (Gain)  loss  on  sale  of  operating
          assets  -  net                                            (1)            (4)          (1)            (9)          (4)
        Operating  Income  (Loss)                      $19              $3      $(114)      $(108)    $(115)

        Reconciliation  of  Pro  Forma
        provision  for  income  taxes  to
        (Benefit)  provision  for  income
        taxes
        Pro  Forma  provision  for  income
          taxes                                                          $7              $1            $7            $20          $21
        Reversal  of  tax  contingencies              -            120              -            142            81
        (Benefit)  provision  for  income
          taxes                                                          $7        $(119)          $7        $(122)      $(60)

        Reconciliation  of  Pro  Forma  Net
        Income  (Loss)  to  Net  Income  (Loss)
        Pro  Forma  Net  Income  (Loss)              $38            $43            $6            $72          $49
        Restructuring  related  charges,
          including  increased  depreciation    26              38              -            139              7
        Amortization  of  acquired  intangible
          assets                                                          1                1              2                6              7
        Purchased  in-process  research  and
          development                                                -                -              -              55            13
        Restructuring  and  other  charges  -
          net                                                                5                1          132              24          197
        Expenses  related  to  reverse  stock
          split  and  loss  from  default  on
          guarantee                                                    -                7              -                7              -
        (Gain)  loss  on  sale  of  operating
          assets  -  net                                            (1)            (4)          (1)            (9)          (4)
        Reversal  of  tax  contingencies              -            120              -            142            81
        Net  Income  (Loss)                                    $7          $120      $(127)          $(8)      $(90)


                                                                Agere  Systems  Inc.
                                  Unaudited  Condensed  Consolidated  Balance  Sheets
                                                            (Dollars  in  Millions)


                                                                                                Sep  30                        Jun  30
                                                                                                  2005                            2005

        ASSETS
        CURRENT  ASSETS
                  Cash  and  cash  equivalents                              $698                            $626
                  Trade  receivables                                                251                              232
                  Inventories                                                            130                              124
                  Other  current  assets                                            38                                38
                            TOTAL  CURRENT  ASSETS                            1,117                          1,020
        Property,  plant  and  equipment  -  net                      420                              529
        Goodwill                                                                            196                              196
        Acquired  intangible  assets  -  net                                9                                10
        Other  assets                                                                    139                              141
                            TOTAL  ASSETS                                          $1,881                        $1,896

        LIABILITIES  AND  STOCKHOLDERS'  EQUITY
        CURRENT  LIABILITIES
                  Accounts  payable                                                $200                            $179
                  Short-term  debt                                                        0                                  4
                  Other  current  liabilities                                288                              296
                            TOTAL  CURRENT  LIABILITIES                      488                              479
        Long-term  debt                                                                372                              372
        Other  liabilities                                                          594                              503
                            TOTAL  LIABILITIES                                  1,454                          1,354

        STOCKHOLDERS'  EQUITY                                                    427                              542
        TOTAL  LIABILITIES  AND  STOCKHOLDERS'
          EQUITY                                                                        $1,881                        $1,896


                                                                Agere  Systems  Inc.
                                    Unaudited  Net  Income  (Loss)  Per  Share  Guidance


                                                                                                        Quarter  Ending
                                                                                                                Dec  31
                                                                                                                  2005

        Pro  Forma  Net  Income  (Loss)    (High  End  of  Range)          $0.09
        Pro  Forma  Net  Income  (Loss)    (Low  End  of  Range)            $0.03

        Less:    Restructuring  and  other  charges  -  net                    0.17
        Stock  compensation  expenses                                                      0.05
        Amortization  of  acquired  intangible
          assets                                                                                              0.01
        (Gain)  loss  on  sale  of  operating  assets  -  net                (0.01)

                                                                                                                    0.22

        Net  Income  (Loss)    (High  End  of  Range)                            ($0.13)
        Net  Income  (Loss)    (Low  End  of  the  Range)                      ($0.19)
 





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