Mindspeed(R) Reports Fiscal 2008 First Quarter Results
Monday January 28, 4:30 pm ET
Company Achieves Record Non-GAAP Operating Income Driven by Growth in its VoIP Business; Generates $1.7 Million in Cash
NEWPORT BEACH, Calif.--(BUSINESS WIRE)--Mindspeed Technologies, Inc. (NASDAQ:MSPD - News), a leading supplier of semiconductor solutions for network infrastructure applications, today announced revenues of $35.3 million for the first quarter of fiscal 2008, which ended December 31, 2007, an increase of 5 percent compared to $33.7 million for the fourth quarter of fiscal 2007 and up 17 percent from the $30.2 million reported for the first quarter of fiscal 2007.
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The company’s non-GAAP gross margin was $25.2 million, or 71.4 percent of revenues, including a 2.3 percent benefit from the sale of certain patents that are no longer core to its business. Presented on a GAAP basis, gross margin was $25.0 million, or 70.7 percent of revenues.
The company’s operating income on a non-GAAP basis was $2.0 million for the first fiscal quarter of 2008 compared to non-GAAP operating income of $1.1 million for the fourth fiscal quarter of 2007. Presented on a GAAP basis, the operating loss was $300 thousand compared to a loss of $400 thousand for the fourth fiscal quarter of 2007.
The company’s net income for the first quarter of fiscal 2008 on a non-GAAP basis was $1.5 million, or $0.01 per share, compared to non-GAAP net income of $1.0 million, or $0.01 per share, for the fourth fiscal quarter of 2007. Presented on a GAAP basis, the net loss was $800 thousand, or $0.01 per share, compared to a net loss of $500 thousand, or $0.00 per share, for the fourth fiscal quarter of 2007. Reconciliations of the non-GAAP measures to GAAP measures are included in the accompanying financial data.
Revenues from multiservice access voice-over-IP (VoIP) processor solutions increased 13 percent sequentially, contributing 28 percent of total first fiscal quarter 2008 revenues. Revenues from high-performance analog products increased 4 percent sequentially, representing 30 percent of the total. Wide area networking communication product revenues were flat sequentially, contributing the remaining 42 percent of first fiscal quarter 2008 revenues.
“I am quite proud of our business performance in our first fiscal quarter of 2008,” said Raouf Halim, Mindspeed’s chief executive officer. “We achieved results toward the high end of our revenue guidance range of up 1 to 6 percent sequentially, driven by double-digit growth in our VoIP business. We delivered record non-GAAP operating income, marking our third consecutive quarter of improving non-GAAP operating profitability, with positive cash flow generation for the first time.”
Outlook
Mindspeed expects fiscal 2008 second quarter revenues to be in the range of $34.2 million to $36.4 million, flat at the mid-point of the range. The company expects second quarter non-GAAP gross margin to be approximately 70 percent and non-GAAP operating expenses to be approximately $23.7 million, with continued positive non-GAAP operating income and positive non-GAAP cash flow.
First Quarter Fiscal 2008 Conference Call
Mindspeed will conduct a conference call to discuss its first quarter fiscal 2008 results this afternoon, Monday, Jan. 28, 2008, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time. To listen to the conference call via telephone, call 866-246-6203 (domestic) or 706-643-1612 (international), password: Mindspeed. To listen via the internet, visit the Investors section of Mindspeed’s web site at www.mindspeed.com. Replay of the conference call will be available via telephone two hours after it concludes for 30 days by calling 800-642-1687 (domestic) or 706-645-9291 (international), conference ID: 30251122. Replay will also be available on Mindspeed’s web site at www.mindspeed.com.
About Mindspeed Technologies®
Mindspeed Technologies, Inc. designs, develops and sells semiconductor networking solutions for communications applications in enterprise, access, metropolitan and wide-area networks.
The company’s three key product families include high-performance analog transmission and switching solutions, multiservice access voice-over-IP processors designed to support voice and data services across wireline and wireless networks and WAN communication products such as T/E carrier transmission devices and ATM/MPLS network processors.
Mindspeed’s products are used in a wide variety of network infrastructure equipment, including voice and media gateways, high-speed routers, switches, access multiplexers, cross-connect systems, add-drop multiplexers and digital loop carrier equipment.
To learn more, visit us at www.mindspeed.com.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include the information under the heading “Outlook” and other information regarding the company’s expectations, goals or intentions, including, but not limited to, statements regarding trends and future performance of the company’s business units; the company’s ability to maintain or improve non-GAAP operating profitability and non-GAAP cash flow; expected levels of operating expense; expected demand for the company’s products; growth prospects in various markets; and operating results for future periods. These forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about the company and are subject to risks and uncertainties that could cause actual results and events to differ materially from those stated in the forward-looking statements. These risks and uncertainties include, but are not limited to: market demand for the company’s new and existing products and its ability to increase revenues; the company’s ability to maintain operating expenses within anticipated levels; the company’s ability to further generate cash; availability and terms of capital needed for the company’s business; constraints in the supply of wafers and other product components from the company’s third-party manufacturers; the company’s ability to successfully and cost effectively establish and manage operations in foreign jurisdictions; the company’s ability to attract and retain qualified personnel; successful development and introduction of new products; the company’s ability to successfully integrate acquired businesses and realize the anticipated benefits from such acquisitions; the company’s ability to obtain design wins and develop revenues from them; pricing pressures and other competitive factors; industry consolidation; order and shipment uncertainty; changes in customers’ inventory levels and inventory management practices; fluctuations in manufacturing yields; product defects; and intellectual property infringement claims by others and the ability to protect the company’s intellectual property. Risks and uncertainties that could cause the company’s actual results to differ from those set forth in any forward-looking statement are discussed in more detail under “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, as well as similar disclosures in the company’s subsequent SEC filings. Forward-looking statements contained in this press release are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
MINDSPEED TECHNOLOGIES, INC.
Consolidated Condensed Statements of Operations
(unaudited, in thousands, except per share amounts)
Three months ended
Dec. 31, Sept. 30, Dec. 31,
2007 2007 2006
Net revenues $ 35,301 $ 33,683 $ 30,157
Cost of goods sold (a)(b) 10,342 10,318 10,677
Gross margin 24,959 23,365 19,480
Operating expenses:
Research and development (a) 13,718 13,266 15,600
Selling, general and administrative (a) 11,506 10,478 10,793
Special charges (a)(c) 81 (4 ) 3,595
Total operating expenses 25,305 23,740 29,988
Operating loss (346 ) (375 ) (10,508 )
Other income (expense), net (401 ) (428 ) (612 )
Loss before income taxes (747 ) (803 ) (11,120 )
Provision for income taxes 82 (344 ) 197
Net loss $ (829 ) $ (459 ) $ (11,317 )
Net loss per share, basic $ (0.01 ) $ (0.00 ) $ (0.10 )
Weighted-average number of shares used in basic per share computation
113,776 112,483 108,380
(a) Includes stock-based compensation expense and employer taxes on stock-based compensation.
(b) Cost of goods sold includes the favorable effect of sales of certain inventories written down to a zero cost basis during fiscal 2001. The favorable effect of such sales, by quarter, was approximately $0.5 million (December 2007), $0.9 million (September 2007) and $1.2 million (December 2006).
(c) Special charges consists of asset impairments and restructuring charges.
MINDSPEED TECHNOLOGIES, INC.
Reconciliation of Non-GAAP Measures to GAAP Measures
(unaudited, in thousands, except per share amounts)
Three months ended
Dec. 31, Sept. 30, Dec. 31,
2007 2007 2006
Reconciliation of Non-GAAP Gross Margin to GAAP Gross Margin
Non-GAAP gross margin $ 25,198 $ 23,444 $ 19,589
Items excluded from non-GAAP gross margin:
Stock-based compensation 80 78 92
Employer taxes on stock-based compensation 4 1 17
Amortization of intangible assets (d) 155 — —
Gross margin $ 24,959 $ 23,365 $ 19,480
Reconciliation of Non-GAAP Research and Development Expenses to GAAP Research and Development Expenses
Non-GAAP research and development expenses $ 12,857 $ 12,572 $ 14,969
Items excluded from non-GAAP research and development expenses:
Stock-based compensation 801 677 579
Employer taxes on stock-based compensation 60 17 52
Research and development expenses $ 13,718 $ 13,266 $ 15,600
Reconciliation of Non-GAAP Selling, General and Administrative Expenses to GAAP Selling, General and Administrative Expenses
Non-GAAP selling, general and administrative expenses $ 10,384 $ 9,799 $ 9,916
Items excluded from non-GAAP selling, general and administrative expenses:
Stock-based compensation 773 676 773
Employer taxes on stock-based compensation 33 3 104
Amortization of intangible assets (d) 100 — —
Employee separation cost (e) 216 — —
Selling, general and administrative expenses $ 11,506 $ 10,478 $ 10,793
Reconciliation of Non-GAAP Operating Income/(Loss) to GAAP Operating Loss
Non-GAAP operating income/(loss) $ 1,957 $ 1,073 $ (5,296 )
Items excluded from non-GAAP operating income/(loss):
Stock-based compensation 1,654 1,431 1,444
Employer taxes on stock-based compensation 97 21 173
Amortization of intangible assets (d) 255 — —
Employee separation cost (e) 216 — —
Special charges (f) 81 (4 ) 3,595
Operating loss $ (346 ) $ (375 ) $ (10,508 )
Reconciliation of Non-GAAP Net Income/(Loss) to GAAP Net Loss
Non-GAAP net income/(loss) $ 1,474 $ 989 $ (6,105 )
Items excluded from non-GAAP net income/(loss):
Stock-based compensation 1,654 1,431 1,444
Employer taxes on stock-based compensation 97 21 173
Amortization of intangible assets (d) 255 — —
Employee separation cost (e) 216 — —
Special charges (f) 81 (4 ) 3,595
Net loss $ (829 ) $ (459 ) $ (11,317 )
Reconciliation of Non-GAAP Net Income/(Loss) Per Share to GAAP Net Loss Per Share
Loss per share, basic:
Non-GAAP net income/(loss) $ 0.01 $ 0.01 $ (0.06 )
Adjustments (0.02 ) (0.01 ) (0.04 )
Net loss $ (0.01 ) $ (0.00 ) $ (0.10 )
Reconciliation of Non-GAAP Cash Generation (Consumption) to Net Increase (Decrease) in Cash and Cash Equivalents
Non-GAAP cash generation (consumption) $ 1,718 $ (5,910 ) $ (3,459 )
Net sales (purchases) of marketable securities — 6,250 (1,387 )
Net increase (decrease) in cash and cash equivalents $ 1,718 $ 340 $ (4,846 )
(d) Amortization of intangible assets reflects amortization expense on purchased intangibles from the acquisition of certain of the assets of Ample Communications, Inc. in the fourth quarter of fiscal 2007.
(e) Employee separation costs consist of severance benefits payable to a former officer of the company as a result of organizational changes.
(f) Special charges consists of asset impairments and restructuring charges.
Non-GAAP Measures
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