Agere Systems Reports Results for the First Quarter of Fiscal Year 2005
January 25 2005 - 7:00AM
PR Newswire (US)
Agere Systems Reports Results for the First Quarter of Fiscal Year
2005 -- Revenues increase sequentially in Storage, with strong
shipments of read channels for small-form-factor drives and
system-on-a-chip solutions for PC and consumer electronics
applications -- Company reports sixth consecutive quarter of
positive cash flow from operations ALLENTOWN, Pa., Jan. 25
/PRNewswire-FirstCall/ -- Agere Systems (NYSE:AGR.ANYSE:AGR.B)
today reported that revenues for the first quarter of fiscal 2005,
ended December 31, 2004, were $410 million, at the high end of the
guidance range provided by the company in October. The company's
revenues were $439 million in the September quarter and $516
million in the year-ago quarter. (Logo:
http://www.newscom.com/cgi-bin/prnh/20040618/AGERELOGO ) The
company reported a GAAP net loss of $67 million, or $0.04 per
share, including $60 million in net restructuring charges and
related costs. For the September quarter, Agere reported a GAAP net
loss of $127 million, or $0.07 per share, including $132 million in
net restructuring and other charges. In the year-ago quarter, the
company reported a GAAP net loss of $39 million, or $0.02 per
share. Pro forma net loss was $8 million, or breakeven per share,
in the December quarter, better than guidance, compared to pro
forma net income of $6 million, or breakeven per share, in the
September quarter, and pro forma net income of $28 million, or
$0.02 per share, in the year-ago quarter. Pro forma net income
excludes 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; 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 an accounting
change and certain non-recurring charges. The company posted cash
flow from operations, less capital expenditures, of $10 million,
its sixth consecutive positive quarterly result. During the
quarter, the company repaid an accounts receivable securitization
facility that matured in October. Cash and cash in trust, less
total debt, improved by $26 million to a total of $256 million from
the September quarter, reflecting positive cash flow. "We achieved
strong design win momentum in all areas of the business and we are
pleased by our continued strength in storage where we increased
shipments of read channels and system-on-a-chip solutions to key
customers targeting PC and consumer electronics applications," said
John Dickson, president and CEO, Agere Systems. "Overall, we have
positioned ourselves for future growth and we expect to increase
revenues and improve profitability as we move beyond the March
quarter into the second half of fiscal 2005." Revenue by Segment
Quarter Ended Dec 31 Sep 30 Dec 31 2004 2004 2003 Consumer
Enterprise segment: Storage $166 $155 $176 Mobility 83 100 146
Enterprise and Networking 104 120 134 Consumer Enterprise segment
353 375 456 Telecommunications segment 57 64 60 $410 $439 $516 Each
segment includes revenue from the licensing of intellectual
property. Product and Customer Highlights Recent company highlights
include: -- Introduction of the industry's first complete storage
chip set for portable consumer electronics disk drives. The
TrueStore(R) CE family includes a read channel, preamplifier, motor
controller and hard disk controller optimized for the development
of small, ultra- low-power, high-capacity drives used in media
players, mobile phones, digital cameras and other handheld devices.
-- Announcement of the general availability of a dual-mode, W-EDGE
baseband chip set and software combining 3G/UMTS and EDGE
technologies for mass-market multimedia mobile phones. The
Sceptre(R) HPU solution, which was sampled to lead customers last
July, enables the continuous delivery of 3G services to consumers
even when outside of UMTS network coverage. -- Introduction of a
Unified Media Framework that supports the rapid development across
all platforms of mass-market, multimedia mobile phones capable of
digital photo imaging, MPEG-4 video playback, and MP3 music without
requiring an additional multimedia co-processor. Complete solutions
are now available for customer samples. -- Shipments to several
original design manufacturers of the industry's first single-chip,
48-port Gigabit Ethernet switching solution and the lowest power
physical layer (PHY) device for enterprise networks. --
Announcement of a new multi-standard platform for high-speed serial
interfaces in storage and enterprise network products. This new
serializer-deserializer (SerDes) platform, which supports 90
nanometer designs operating at 6.25 gigabits per second, enables
manufacturers to create interface solutions across any serial
standard, including Serial ATA, Serial-Attached SCSI (SAS), Fibre
Channel and PCI Express. -- Agreement with Digital 5, a leading
provider of software for streaming multimedia, to deliver
next-generation digital media server and network-attached storage
solutions for the emerging digital home. These solutions will be
available for customer samples this quarter. -- Selection by
Samsung for its Most Valued Partner Award during its Telecom
Partner Day held in December. This is the third consecutive year
that Samsung has named Agere as a top supplier. Outlook In the
March quarter, the company expects to report revenues in the range
of $400 million to $420 million. The company expects GAAP net loss
to be in the range of $0.03 to $0.05 per share, including
restructuring-related items. Pro forma net loss is expected to be
in the range of breakeven to a loss of $0.02 per share. Earnings
Webcast Agere Systems will host a conference call today at 8:30
a.m. EST 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. 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. 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) Quarter Ended Dec 31 Sep 30 Dec 31 2004 2004
2003 Revenue $410 $439 $516 Costs 274 240 285 Gross profit - $ 136
199 231 Gross profit - % 33.2% 45.3% 44.8% Operating Expenses
Selling, general and administrative 55 62 76 Research and
development 119 118 119 Amortization of acquired intangible assets
1 2 2 Purchased in-process research and development - - 13
Restructuring and other charges - net 14 132 47 Gain on sale of
operating assets - net (2) (1) (1) Total operating expenses 187 313
256 Operating Income (Loss) (51) (114) (25) Other income (expense)
- net (2) 4 1 Interest expense 8 10 12 Income (loss) before
provision for income taxes (61) (120) (36) Provision (benefit) for
income taxes 6 7 3 Net Income (Loss) $(67) $(127) $(39) Basic and
diluted income (loss) per share $(0.04) $(0.07) $(0.02) Weighted
average shares outstanding-- basic (in millions) 1,731 1,723 1,697
Weighted average shares outstanding-- diluted (in millions) 1,731
1,723 1,697 Agere Systems Inc. Unaudited Pro Forma Results of
Operations (Dollars in millions except per share amounts) Quarter
Ended Dec 31 Sep 30 Dec 31 2004 2004 2003 Revenue: Consumer
Enterprise: Storage $166 $155 $176 Mobility 83 100 146 Enterprise
and Networking 104 120 134 Consumer Enterprise 353 375 456
Telecommunications 57 64 60 Total Revenue 410 439 516 Pro Forma
Gross Profit - $ Consumer Enterprise 140 154 194 Telecommunications
42 45 43 Pro Forma Gross Profit - $ 182 199 237 Pro Forma Gross
Profit - % Consumer Enterprise 39.7% 41.1% 42.5% Telecommunications
73.7% 70.3% 71.7% Pro Forma Gross Profit - % 44.4% 45.3% 45.9%
Operating Expenses Included in Pro Forma Results Selling, general
and administrative 55 62 76 Research and development 119 118 119
Total Pro Forma Operating Income (Loss) 8 19 42 Other income
(expense) - net (2) 4 1 Interest expense 8 10 12 Provision for
income taxes 6 7 3 Pro Forma Net Income (Loss) $(8) $6 $28 Pro
Forma Net Income (Loss) per share $0.00 $0.00 $0.02 Weighted
average shares outstanding-- basic (in millions) 1,731 1,723 1,697
Weighted average shares outstanding-- diluted (in millions) 1,731
1,723 1,697 Reconciliation of Pro Forma Gross Profit-$ to Gross
Profit-$ Pro Forma Gross Profit-$ $182 $199 $237 Restructuring
related charges, including increased depreciation 46 - 6 Gross
Profit-$ $136 $199 $231 Reconciliation of Pro Forma Gross Profit-%
to Gross Profit-% Pro Forma Gross Profit-% 44.4% 45.3% 45.9%
Restructuring related charges, including increased depreciation
(11.2)% (0.0)% (1.1)% Gross Profit-% 33.2% 45.3% 44.8%
Reconciliation of Pro Forma Operating Income (Loss) to Operating
Income (Loss) Pro Forma Operating Income (Loss) $8 $19 $42
Restructuring related charges, including increased depreciation 46
- 6 Amortization of acquired intangible assets 1 2 2 Purchased
in-process research and development - - 13 Restructuring and other
charges - net 14 132 47 (Gain) loss on sale of operating assets -
net (2) (1) (1) Operating Income (Loss) $(51) $(114) $(25)
Reconciliation of Pro Forma Net Income (Loss) to Net Income (Loss)
Pro Forma Net Income (Loss) $(8) $6 $28 Restructuring related
charges, including increased depreciation 46 - 6 Amortization of
acquired intangible assets 1 2 2 Purchased in-process research and
development - - 13 Restructuring and other charges - net 14 132 47
(Gain) loss on sale of operating assets - net (2) (1) (1) Net
Income (Loss) $(67) $(127) $(39) Agere Systems Inc. Unaudited
Condensed Consolidated Balance Sheets (Millions) Dec 31 Sep 30 2004
2004 ASSETS CURRENT ASSETS Cash and cash equivalents $686 $778 Cash
held in trust 6 19 Trade receivables 205 285 Inventories 147 150
Other current assets 50 41 TOTAL CURRENT ASSETS 1,094 1,273
Property, plant and equipment - net 621 682 Goodwill 119 119
Acquired intangible assets - net 5 6 Other assets 153 192 TOTAL
ASSETS $1,992 $2,272 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES Accounts payable $167 $195 Short-term debt 19 147 Other
current liabilities 472 524 TOTAL CURRENT LIABILITIES 658 866
Long-term debt 417 420 Other liabilities 552 565 TOTAL LIABILITIES
1,627 1,851 STOCKHOLDERS' EQUITY 365 421 TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,992 $2,272 Agere Systems Inc. Unaudited
Cash Flow Measures Three Months Ended December 31, 2004 (Millions)
Ongoing Restructuring Operations and Related Activities TOTAL
OPERATING ACTIVITIES Gross profit (loss) $182 $(46) $136 Total
operating expenses 173 14 187 Other income (expense) - net (2) -
(2) Interest expense and income tax provision 14 - 14 Net loss (7)
(60) (67) Adjustments to reconcile net loss to net cash provided
(used) by operating activities: Restructuring expense - net of cash
payments - (15) (15) Depreciation and amortization 48 35 83 Other
operating activities 29 10 39 NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES 70 (30) 40 INVESTING ACTIVITIES Capital expenditures
(28) (2) (30) Other investing activities 15 - 15 NET CASH USED BY
INVESTING ACTIVITIES (13) (2) (15) FINANCING ACTIVITIES Other
financing activities (118) - (118) NET CASH USED BY FINANCING
ACTIVITIES (118) - (118) Effect of exchange rate changes on cash
and cash equivalents 1 - 1 Net decrease in cash and cash
equivalents (60) (32) (92) Cash and cash equivalents at beginning
of period 778 Cash and cash equivalents at end of period $686 Net
Cash provided (used) by Operating Activities $70 $(30) $40 Capital
Expenditures (28) (2) (30) Net Cash provided (used) by Operating
Activities and Capital Expenditures $42 $(32) $10 Agere Systems
Inc. Unaudited Net Income (Loss) Per Share Guidance Quarter Ending
Mar 31 2005 Reconciliation of Pro Forma Net Income (Loss) Per Share
to Net Income (Loss) Per Share Pro Forma Net Income (Loss) (High
End of Range) $0.00 Pro Forma Net Income (Loss) (Low End of Range)
($0.02) Less: Restructuring related charges included in costs,
primarily increased depreciation 0.02 Restructuring and other
charges - net 0.01 Amortization of acquired intangible assets 0.00
(Gain) loss on sale of operating assets - net 0.00 0.03 Net Income
(Loss) (High End of Range) ($0.03) Net Income (Loss) (Low End of
the Range) ($0.05)
http://www.newscom.com/cgi-bin/prnh/20040618/AGERELOGO
http://photoarchive.ap.org/ DATASOURCE: Agere Systems CONTACT:
JoAnna Schooler, +1-610-712-1746, or +1-908-283-4060 (cellular), ,
or Investor: Sujal Shah, +1-610-712-5471, , both of Agere Systems
Web site: http://www.agere.com/
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