- Board of Directors authorizes repurchase of up to $200 million of common stock
(Logo: http://www.newscom.com/cgi-bin/prnh/20040618/AGERELOGO )
For the quarter ended on September 30, Agere posted net income of $7 million or $0.04 per share on a GAAP basis, compared to the year-ago net loss of $127 million or $0.74 per share, and net income of $120 million or $0.66 per share in the June quarter.
GAAP net income for the fourth quarter includes $31 million in net restructuring charges and related costs, and for the June quarter, included a $120 million benefit resulting from the reversal of a tax contingency. The fourth quarter GAAP gross margin as a percent of sales was 45 percent.
For the full fiscal year 2005, the company posted a GAAP net loss of $8 million or $0.04 per share, compared to a net loss of $90 million or $0.52 per share for fiscal year 2004.
On a pro forma basis, the company reported net income of $38 million or $0.21 per share in the September quarter, compared to net income of $43 million, or $0.24 per share in the June quarter, and net income of $6 million or $0.04 per share in the year-ago quarter. The company's pro forma gross margin was 52 percent in the September quarter, exceeding the company's long- term operating model.
For the fiscal year, the company posted pro forma net income of $72 million, or $0.41 per share, compared to pro forma net income of $49 million, or $0.28 per share in fiscal 2004.
Pro forma financial measures, which are non-GAAP 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.
The company's revenues for the fourth quarter were $416 million, compared to $433 million in the June quarter and $439 million in the year-ago quarter. For the full fiscal year 2005, the company reported revenues of $1.68 billion, compared to $1.91 billion for fiscal year 2004.
"The company made great strides in fiscal 2005 by improving earnings per share, pro forma gross margin and the balance sheet," said Clemmer, president and CEO, Agere Systems. "The key challenge for 2006 is driving revenue growth. We are absolutely committed to doing what it takes over the coming months to achieve growth and enhance shareholder value."
Authorization of Share Repurchase
In addition, the company announced that its board of directors has authorized the repurchase of up to $200 million of its outstanding common stock. Based on Agere's closing stock price on October 25, 2005, $200 million represents approximately 12 percent of the company's total outstanding shares. As of September 30, Agere had cash and cash equivalents of approximately $698 million.
Outlook
In the December quarter, the company expects to report revenues in the range of $390 million to $410 million. The company expects a GAAP net loss of $0.13 to $0.19 per share. Pro forma net income is expected to be in the range of $0.03 to $0.09 per share.
Revenue by Operating Segment
Quarter Ended Year Ended
Sep 30, Jun 30, Sep 30, Sep 30,
2005 2005 2005 2004
Storage $158 $146 $620 $635
Mobility 92 100 364 496
Enterprise & Networking 101 118 436 513
Consumer Enterprise
Segment 351 364 1,420 1,644
Telecommunications
Segment 65 69 256 268
$416 $433 $1,676 $1,912
Each operating segment includes revenue from the licensing of intellectual property.
Product and Customer Highlights
Recent company highlights include:
-- Selection of the Advanced PayloadPlus(R) APP300 series of network
processors for ZTE Corporation's DSL access platforms and for Zhone
Technologies' Multi-Access Line Concentrator product.
-- Announcement of the Vision(TM) X115 chipset solution providing cinema-
quality video and CD-quality audio capabilities for mainstream EDGE
feature phones and Smartphones. The multi-processor solution, which is
expected to be in production before the end of the fourth calendar
quarter of 2005, is the first product based on the Vision mobile
handset architecture.
-- Introduction of the company's first standard-product storage system-on-
a-chip for portable consumer disk drives. Agere's SC1200 will enable
12 gigabytes of storage in 1.0-inch disk drives, which are expected to
hit the market in 2006.
-- Agreement with QLogic Corp. to supply ASICs and storage area networking
chips for QLogic's SANblade 2400 series of 4 gigabit-per-second Fibre
Channel products.
-- Shipment of SMC Networks' first TigerSwitch(TM) 1000 product based on
Agere's ET4K and Octal TruePHY(TM) 1081 chips. The TigerSwitch 1000
solution is SMC's newest line of gigabit workgroup switches.
Earnings Webcast
Agere Systems will host a conference call today at 8:30 a.m. EDT 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. Supplemental financial information is also available on the company's website at http://www.agere.com/webcast.
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)
CONTACT: Media: JoAnna Schooler, +1-610-712-1746, cell: +1-908-283-4060,
Email Contact, or Investors: Sujal Shah, +1-610-712-5471,
Email Contact
Web site: http://www.agere.com//