Agere Systems Reports Results for the Fourth Quarter and Fiscal Year 2004
October 26 2004 - 8:00AM
PR Newswire (US)
Agere Systems Reports Results for the Fourth Quarter and Fiscal
Year 2004 Company reports year-over-year improvement in revenues,
gross margin, earnings per share and cash ALLENTOWN, Pa., Oct. 26
/PRNewswire-FirstCall/ -- Agere Systems (NYSE:AGR.ANYSE:AGR.B)
today reported that revenues for the fourth quarter of fiscal 2004,
ended September 30, were $439 million, at the high end of the
guidance range provided by the company in July. The company's
revenues were $495 million in the June quarter and $504 million in
the year-ago quarter. (Logo:
http://www.newscom.com/cgi-bin/prnh/20040618/AGERELOGO ) For the
full fiscal year 2004, the company reported revenues of $1.91
billion, an increase of 4 percent over revenues of $1.84 billion
for fiscal year 2003. For the September quarter, the company
reported a GAAP net loss of $127 million or $0.07 per share,
including $132 million in net restructuring and other charges. The
company reported a GAAP net income of $2 million or breakeven per
share in the June quarter, and a GAAP net income of $11 million or
$0.01 per share in the year-ago quarter. Pro forma net income was
$6 million or breakeven per share in the September quarter,
compared to pro forma net income of $10 million, or $0.01 per share
in the June quarter, and pro forma net income of $64 million or
$0.04 per share in the year-ago quarter. For the full fiscal year
2004, the company reported a GAAP net loss of $90 million, or $0.05
per share, compared to a GAAP net loss of $338 million, or $0.20
per share in fiscal 2003. The company reported pro forma net income
of $49 million, or $0.03 per share, compared to pro forma net loss
of $148 million, or $0.09 per share in fiscal 2003. 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
reported gross margin of 45 percent for the fiscal year 2004, an
improvement of 14 percentage points over fiscal year 2003 gross
margin of 31 percent. The company posted its fifth consecutive
quarter of positive cash flow from operations, less capital
expenditures, generating $13 million in cash in the September
quarter. The company also improved its cash and cash in trust by
$12 million to $797 million. "We are encouraged by the progress we
have made over the last year: we increased revenues and gross
margin, improved our bottom-line performance, and strengthened our
cash position," said John Dickson, president and CEO, Agere
Systems. "While the market remains somewhat uncertain, we are
confident that we have the growth strategy in place to take
advantage of the opportunities ahead. We expect to continue to
build on our success in storage; expand our footprint in mobility
from 2.5G/EDGE to 3G and multimedia solutions; leverage our traffic
management and network processor expertise to deliver multiservice
and voice-over-IP solutions; and aggressively pursue such growth
areas as Gigabit Ethernet and home and enterprise storage networks.
"We believe that the actions we have taken to reduce costs and
sharpen product focus will allow us to increase our revenues and
improve profitability as we move through fiscal 2005." Revenue by
End-User Application Quarter Ended Year Ended Sep 30, Jun 30, Sep
30, Sep 30, 2004 2004 2004 2003 Storage $155 $133 $635 $623
Mobility 100 154 496 417 Enterprise & Networking 120 127 513
560 Telecommunication 64 81 268 239 $439 $495 $1,912 $1,839 The
table above shows Agere's revenue by end user application. Each
application includes revenue from the licensing of intellectual
property. Additional historical revenue data is available at
http://www.agere.com/webcast. Product and Customer Highlights
Recent company highlights include: * Introduction of a new
integrated reference platform for feature-rich EDGE mobile phones
that supports MPEG-4 video playback and MP3 music without requiring
an additional multimedia co-processor. * Introduction of a new
low-power preamplifier integrated circuit specifically designed for
use in 2.5-inch mobile hard disk drives. This storage chip delivers
the industry's fastest operating speeds in a low-power design,
equipping notebook PCs with increased storage capacity, extended
battery life, and the performance needed to serve as desktop PC
replacements. * Shipment of the TrueStore(TM) low-power
read-channel chips to leading hard disk drive manufacturer GS
Magicstor for use in new 1.8-inch drives. Agere is also providing
chips for Magicstor's 1.0-inch drive, which is among the smallest
form factors currently shipping in the industry. * Announcement
that Agere's proposal for creating per-service and multi-tier
service guarantees in converged multimedia networks was accepted by
U.S. and international standards bodies, which include companies
such as Lucent Technologies, Nortel Networks and Sprint. The new
Application Service Resiliency mechanism proposed by Agere is
utilized in the company's Unbreakable Access(TM) technology,
announced in June. * Agreement with ARM to license the latest
ARM11(TM) core to develop next-generation solutions for mobile
phones and enterprise networking that deliver higher performance
while consuming lower power. Outlook In the December quarter, the
company expects to report revenues in the range of $390 million to
$410 million, consistent with the company's outlook in September.
The company expects GAAP net loss to be in the range of $0.04 to
$0.06 per share, including restructuring-related items. Pro forma
net loss is expected to be in the range of $0.01 to $0.03 per
share. 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. Financial
supplemental 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 the 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 -- making personal broadband a reality. This press 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 these forward-looking
statements due to a number of risks and uncertainties. These risks
and uncertainties include, but are not limited to, 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, general industry and market conditions, and reliance on
major customers and suppliers. 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, 2003, and our
quarterly report on Form 10-Q for the period ended June 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 Year Ended Sep 30 Jun 30 Sep 30
Sep 30 Sep 30 2004 2004 2003 2004 2003 Revenue $439 $495 $504
$1,912 $1,839 Costs 240 267 290 1,046 1,260 Gross profit - $ 199
228 214 866 579 Gross profit - % 45.3% 46.1% 42.5% 45.3% 31.5%
Operating Expenses Selling, general and administrative 62 64 67 272
294 Research and development 118 131 107 496 467 Amortization of
acquired intangible assets 2 2 1 7 8 Purchased in-process research
and development -- -- -- 13 -- Restructuring and other charges -
net 132 11 32 197 131 Gain on sale of operating assets - net (1)
(3) (8) (4) (21) Total operating expenses 313 205 199 981 879
Operating Income (Loss) (114) 23 15 (115) (300) Other income
(expense) - net 4 (1) 3 8 22 Interest expense 10 11 12 43 47 Income
(loss) from continuing operations before income taxes (120) 11 6
(150) (325) Provision (benefit) for income taxes 7 9 (16) (60) 46
Income (loss) from continuing operations (127) 2 22 (90) (371)
Discontinued Operations: Income (loss) from operations of
discontinued business - net of taxes -- -- (11) -- 8 Gain on
disposal of discontinued business - net of taxes -- -- -- -- 30
Income (loss) from discontinued operations -- -- (11) -- 38 Income
(loss) before cumulative effect of accounting change (127) 2 11
(90) (333) Cumulative effect of accounting change - net of taxes --
-- -- -- (5) Net Income (Loss) $(127) $2 $11 $(90) $(338) Basic and
diluted income (loss) per share information: Income (loss) from
continuing operations $(0.07) $0.00 $0.01 $(0.05) $(0.22) Income
(loss) from discontinued operations -- -- -- -- 0.02 Income (loss)
before cumulative effect of accounting change (0.07) 0.00 0.01
(0.05) (0.20) Cumulative effect of accounting change -- -- -- -- --
Net Income (loss) $(0.07) $0.00 $0.01 $(0.05) $(0.20) Weighted
average shares outstanding- -basic (in millions) 1,723 1,718 1,686
1,712 1,667 Weighted average shares outstanding- -diluted (in
millions) 1,723 1,734 1,707 1,712 1,667 Agere Systems Inc.
Unaudited Pro Forma Results of Operations (Dollars in millions
except per share amounts) Quarter Ended Year Ended Sep 30 Jun 30
Sep 30 Sep 30 Sep 30 2004 2004 2003 2004 2003 Revenue: Mobility
$100 $154 $127 $496 $417 Storage 155 133 174 635 623 Enterprise and
Networking 120 127 144 513 560 Telecom 64 81 59 268 239 Total
Revenue 439 495 504 1,912 1,839 Pro Forma Gross Profit - $ 199 228
230 873 682 Pro Forma Gross Profit - % 45.3% 46.1% 45.6% 45.7%
37.1% Operating Expenses Included in Pro Forma Results Pro Forma
Selling, general and administrative 62 64 66 272 292 Research and
development 118 131 107 496 467 Total Pro Forma Operating Income
(Loss) 19 33 57 105 (77) Other income (expense) - net 4 (1) 3 8 22
Interest expense 10 11 12 43 47 Pro Forma Provision for income
taxes 7 11 (16) 21 46 Pro Forma Net Income (Loss) $6 $10 $64 $49
$(148) Pro Forma Net Income (Loss) per share $0.00 $0.01 $0.04
$0.03 $(0.09) Weighted average shares outstanding--basic (in
millions) 1,723 1,718 1,686 1,712 1,667 Weighted average shares
outstanding--diluted (in millions) 1,723 1,734 1,707 1,712 1,667
Reconciliation of Pro Forma Gross Profit-$ to Gross Profit-$ Pro
Forma Gross Profit-$ $199 $228 $230 $873 $682 Restructuring related
charges, including increased depreciation -- -- 16 7 103 Gross
Profit-$ $199 $228 $214 $866 $579 Reconciliation of Pro Forma Gross
Profit-% to Gross Profit-% Pro Forma Gross Profit-% 45.3% 46.1%
45.6% 45.7% 37.1% Restructuring related charges, including
increased depreciation (0.0)% 0.0% (3.1)% (0.4)% (5.6)% Gross
Profit-% 45.3% 46.1% 42.5% 45.3% 31.5% Reconciliation of Pro Forma
Selling, general & administrative to Selling, general &
administrative Pro Forma Selling, general & administrative $62
$64 $66 $272 $292 Stock compensation expenses -- -- 1 -- 2 Selling,
general & administrative $62 $64 $67 $272 $294 Reconciliation
of Pro Forma Operating Income (Loss) to Operating Income (Loss) Pro
Forma Operating Income (Loss) $19 $33 $57 $105 $(77) Restructuring
related charges, including increased depreciation -- -- 16 7 103
Amortization of acquired intangible assets 2 2 1 7 8 Purchased
in-process research and development -- -- -- 13 -- Restructuring
and other charges - net 132 11 32 197 131 Stock compensation
expenses -- -- 1 -- 2 (Gain) loss on sale of operating assets - net
(1) (3) (8) (4) (21) Operating Income (Loss) $(114) $23 $15 $(115)
$(300) Reconciliation of Pro Forma Provision for income taxes to
Provision (benefit) for income taxes Pro Forma Provision (benefit)
for income taxes $7 $11 $(16) $21 $46 Reversal of tax contingencies
-- 2 -- 81 -- Provision (benefit) for income taxes $7 $9 $(16)
$(60) $46 Reconciliation of Pro Forma Net Income (Loss) to Net
Income (Loss) Pro Forma Net Income (Loss) $6 $10 $64 $49 $(148)
Restructuring related charges, including increased depreciation --
-- 16 7 103 Amortization of acquired intangible assets 2 2 1 7 8
Purchased in-process research and development -- -- -- 13 --
Restructuring and other charges - net 132 11 32 197 131 Stock
compensation expenses -- -- 1 -- 2 (Gain) loss on sale of operating
assets - net (1) (3) (8) (4) (21) Income from operations of
discontinued business - net of taxes -- -- (11) -- 8 Gain (loss) on
disposal of discontinued business - net of taxes -- -- -- -- 30
Reversal of tax contingencies -- 2 -- 81 -- Cumulative effect of
accounting change - net of taxes -- -- -- -- (5) Net Income (Loss)
$(127) $2 $11 $(90) $(338) Agere Systems Inc. Unaudited Condensed
Consolidated Balance Sheets (Millions) Sep 30 Jun 30 Sep 30 2004
2004 2003 ASSETS CURRENT ASSETS Cash and cash equivalents $778 $771
$744 Cash held in trust 19 14 21 Trade receivables 285 278 265
Inventories 150 147 122 Other current assets 41 57 52 TOTAL CURRENT
ASSETS 1,273 1,267 1,204 Property, plant and equipment - net 682
685 778 Goodwill 120 119 109 Acquired intangible assets - net 6 8
13 Other assets 191 205 284 TOTAL ASSETS $2,272 $2,284 $2,388
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts
payable $195 $215 $245 Short-term debt 147 142 195 Other current
liabilities 524 494 582 TOTAL CURRENT LIABILITIES 866 851 1,022
Long-term debt 420 423 451 Other liabilities 565 390 404 TOTAL
LIABILITIES 1,851 1,664 1,877 STOCKHOLDERS' EQUITY 421 620 511
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,272 $2,284 $2,388
Agere Systems Inc. Unaudited Cash Flow Measures Three Months Ended
September 30, 2004 (Millions) Restructuring Ongoing and Related
Operations Activities TOTAL OPERATING ACTIVITIES Gross profit $199
$ -- $199 Total operating expenses 181 132 313 Other income - net 4
-- 4 Interest expense and provision for income taxes 17 -- 17 Net
income (loss) 5 (132) (127) Adjustments to reconcile net income
(loss) to net cash provided (used) by operating activities:
Restructuring expense - net of cash payments -- 108 108
Depreciation and amortization 49 -- 49 Other operating activities
24 -- 24 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 78 (24)
54 INVESTING ACTIVITIES Capital expenditures (41) -- (41) Other
investing activities (4) -- (4) NET CASH USED BY INVESTING
ACTIVITIES (45) -- (45) FINANCING ACTIVITIES Other financing
activities (2) -- (2) NET CASH USED BY FINANCING ACTIVITIES (2) --
(2) Net increase (decrease) in cash and cash equivalents 31 (24) 7
Cash and cash equivalents at beginning of period 771 Cash and cash
equivalents at end of period $778 Net Cash provided (used) by
Operating Activities $78 $(24) $54 Capital Expenditures (41) --
(41) Net Cash provided (used) by Operating Activities and Capital
Expenditures $37 $(24) $13 Agere Systems Inc. Unaudited Net Income
(Loss) Per Share Guidance Quarter Ending Dec 31 2004 Reconciliation
of Pro Forma Net Income (Loss) Per Share to Net Income (Loss) Per
Share Pro Forma Net Loss (High End of Range) ($0.01) Pro Forma Net
Loss (Low End of Range) ($0.03) Restructuring related charges
included in costs, primarily increased depreciation 0.02
Restructuring and other charges - net 0.01 Amortization of acquired
intangible assets -- (Gain) loss on sale of operating assets - net
-- 0.03 Net Income (Loss) (High End of Range) ($0.04) Net Income
(Loss) (Low End of the Range) ($0.06)
http://www.newscom.com/cgi-bin/prnh/20040618/AGERELOGO
http://photoarchive.ap.org/ DATASOURCE: Agere Systems CONTACT:
Media Contact: Vibha Agrawal, +1-610-712-1737, or cell,
+1-908-256-6234, , or Investor Contact: Sujal Shah,
+1-610-712-5471, Web site: http://www.agere.com/
http://www.agere.com/webcast
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