Contact:
Robert Van Buskirk
President and Chief Executive Officer
Sirenza Microdevices, Inc.
(303) 327-3030
ir@sirenza.com
FOR IMMEDIATE RELEASE
Sirenza Microdevices Reports First Quarter 2005 Results
BROOMFIELD, Colo.--April 19, 2005--Sirenza Microdevices, Inc. (Nasdaq:SMDI), a leading designer and an ISO 9001:2000 Quality Management System and ISO 14001:2004 Environmental Management System certified supplier of high performance radio frequency (RF) components for the commercial communications and aerospace and defense (A&D) markets, today reported its financial results for the first fiscal quarter ended March 31, 2005. Results are consistent with the revised revenue expectations announced by the company on March 28, 2005.
Sirenza's first quarter net revenues were $12.2 million, compared with $15.1 million for the fourth quarter of 2004 and with $13.8 million for the first quarter of 2004. Factory direct sales were 89% of net revenues, compared with 89% sequentially and 87% a year ago.
"As we stated in our previous first quarter announcement regarding our sales expectations, we are disappointed that our sales did not track the forecasts of our major OEM customers. We experienced substantial order deferrals and shipment delays resulting from revised OEM forecasts provided to us late in the first quarter. In response to these order deferrals and shipment delays, we have taken action to reduce our full year expenses to better align with our current 2005 outlook. Our current expectation for the second quarter is that we can return to sequential revenue growth and positive earnings on a management-adjusted basisas well as continue our positive quarterly cash flow. For our full 2005 fiscal year, adjusting our revenue expectations to reflect our lower first quarter sales in addition to our projected expense reductions, we continue to anticipate year-over-year revenue growth, positive net income on a management-adjusted basis1 and positive cash flow from operatio ns. We remain confident in our long-term business model and the long-term prospects for our RF components in the commercial communications and A&D markets."
First Quarter Strategic Highlights
- Start of production shipments of our high-performance, ultra low-profile active antenna for satellite digital audio radio (SDAR) applications; this production milestone demonstrates Sirenza's ability to leverage its RF design and manufacturing expertise into diversified end market applications.
- Start of production shipments for recently acquired ISG Broadband out-of-band (OOB) tuner IC products with leading Asian high definition television (HDTV) suppliers as well as a major European supplier of broadband set-top boxes.
- Production release of medium-power discrete LDMOS products in low cost, "green" configured or environmentally responsible SOIC2 packaging for wireless infrastructure and RFID applications; these products use Sirenza's patented tungsten plug semiconductor technology to provide outstanding gain and linearity performance, along with internal ESD protection.
- Successful completion of the registration audit, performed by Quality Management Institute (QMI), signifying that Sirenza's environmental management system (EMS) meets the requirements of the new, updated worldwide ISO 14001-2004 standard for EMS.
The company's first quarter net loss was $1.8 million, or a loss of $(0.05) per basic share. This compared year-over-year with net income of $162,000, or $0.00 per basic and diluted share and sequentially with a net loss of $2.6 million, or $(0.08) per basic share.
Excluding the effects of the charges detailed in the reconciliation of management-adjusted to GAAP results included with this press release, Sirenza's management-adjusted net loss for the first quarter was $1.1 million, or $(0.03) per basic share. This compared year-over-year with management-adjusted net income of $663,000, or $0.02 per diluted share and sequentially with management-adjusted net income of $1.6 million, or $0.04 per diluted share.
Sirenza's first quarter 2005 gross margin was 44%, compared with 46% a year ago and 48% sequentially. In the aggregate, the company's research and development, sales and marketing, and general and administrative expenses for the first quarter of 2005 were $6.8 million, compared with $5.8 million a year ago and $5.9 million sequentially.
At March 31, 2005, Sirenza's total assets were $53.9 million, including cash and cash equivalents, restricted cash and short-term investments of $12.0 million. Unrestricted cash and investments totaled $11.0 million.
Use of Non-GAAP Financial Measures
In keeping with its historical financial reporting practices, Sirenza believes that the supplemental presentation of management-adjusted net income (loss) and earnings (loss) per share calculations provide meaningful non-GAAP financial measures to help investors understand and compare business trends among different reporting periods on a consistent basis, independently of regularly reported non-cash charges and infrequent or unusual events. Readers are cautioned not to view management-adjusted results as an alternative to GAAP results or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with management-adjusted results for the first quarters of 2005 and 2004, respectively, and the fourth quarter of 2004 contained below.
First Quarter Teleconference and Webcast
Sirenza management plans to host a teleconference at 2:45 p.m. MDT / 4:45 p.m. EDT today to discuss the company's first quarter 2005 financial results and its current outlook for the second quarter and full year 2005. This teleconference will be webcast live for the general public. For more information, please visit the Investor Relations page of Sirenza's website at www.sirenza.com. The teleconference webcast will be archived on this site until April 19, 2006, and a telephonic replay will be available at (800) 405-2236, conference ID number 11027977#, until April 26, 2005.
Also available on the Investor Relations page of Sirenza's website will be additional information to support the reconciliation of Sirenza's estimates of management-adjusted financial results for the second quarter and full year of 2005, to be presented by the company in today's teleconference.
Sirenza Microdevices, Inc.
Headquartered in Broomfield, Colo., with design centers throughout the U.S., Sirenza Microdevices is a leading designer and an ISO 9001:2000 Quality Management System and ISO 14001:2004 Environmental Management System certified (registered by QMI) supplier of high performance radio frequency (RF) components for the commercial communications and A&D equipment markets. Sirenza's integrated circuit (IC) and multi-chip module (MCM) product lines include amplifiers, power amplifiers, transceivers, tuners, discrete devices, RF signal processing components, signal source components, government and military specified components, and antennae and receivers for satellite radio. Detailed product information may be found on Sirenza's website at www.sirenza.com.
Forward-Looking Statements
This news release contains forward-looking statements regarding future events or results, including statements regarding Sirenza's current expectations regarding its ability to return to sequential revenue growth and positive earnings on a management-adjusted basisand continue its positive quarterly cash flow in the second quarter of 2005, the level of its projected expense reductions in full year 2005, its anticipation of year-over-year revenue growth, positive net income on a management-adjusted basis and positive cash flow from operations in full year 2005, and its confidence in its long-term business model and the long-term prospects for its RF components in the commercial communications and A&D markets. Sirenza cautions readers that such statements are, in fact, predictions that are subject to risks and uncertainties, and that actual events or results may differ materially. Factors that could cause actual events or results to differ materially include, but are not limited to: con tinuing reduced demand for Sirenza's products at major OEMs as the result of industry consolidation or otherwise; reduced demand for RF components or broadband products in general; possible delays by Sirenza's customers in the implementation of next-generation equipment; Sirenza's ability to successfully develop and release new products which meet customer demands and the acceptance and deployment of those products by Sirenza's intended customers; lower than expected OEM demand for increasing levels of integration; exertion of downward pressure on the pricing of Sirenza's components; Sirenza's lack of market knowledge relative to other participants in new markets into which it has or may diversify; Sirenza's ability to coordinate different development and engineering teams; Sirenza's ability to successfully manage the risks associated with and to grow its aerospace and defense business; changes in the expected mix of sales of products between Sirenza's business divisions and within those divisions; Sirenza's ability to successfully differentiate itself from competitors in its markets; Sirenza's reliance on third parties for outsourced manufacturing, packaging and test services and supply; Sirenza's ability to successfully integrate the assets, personnel, operations and engineering teams and processes of any acquisitions with Sirenza; and/or Sirenza's ability to realize expected synergies of any acquisitions and the envisioned benefits to Sirenza. Each and all of these factors could be due to overall general economic or telecommunications market conditions, or conditions in the mobile and fixed wireless and wireline infrastructure markets, or otherwise. Additional factors include the possible underutilization of Sirenza's manufacturing facilities, whether as a result of the factors described above or otherwise. Other factors that could cause actual events or results to differ materially from those in the forward-looking statements are included in Sirenza's Annual Report on Form 10-K filed with the Securities and Exchange Commission in March 2005. Sirenza expressly disclaims any current intention to update its forward-looking statements, and the estimates and assumptions associated with them, at any time or for any reason.
NOTE: Sirenza Microdevices® and the Sirenza logo are trademarks of Sirenza Microdevices, Inc. All other trademarks are property of their respective owners.
SIRENZA MICRODEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per-share data)
| | Three Months Ended |
| | March 31, | March 31, |
| | 2005 | 2004 |
| | (Unaudited) | (Unaudited) |
| | | |
Net revenues | | $ 12,167 | $ 13,801 |
Cost of revenues | | 6,841 | 7,391 |
Gross profit | | 5,326 | 6,410 |
Operating expenses: | | | |
Research and development | | 2,811 | 2,113 |
Sales and marketing | | 1,831 | 1,903 |
General and administrative | | 2,200 | 1,825 |
Amortization of deferred stock compensation | | -- | 3 |
Amortization of acquisition-related intangible assets | | 465 | 431 |
Total operating expenses | | 7,307 | 6,275 |
Income (loss) from operations | | (1,981) | 135 |
Interest expense | | 2 | 5 |
Interest and other income, net | | 63 | 32 |
Income (loss) before taxes | | (1,920) | 162 |
Provision for (benefit from) income taxes | | (77) | -- |
Net income (loss) | | $ (1,843) | $ 162 |
Basic and diluted net income (loss) per share | | $ (0.05) | $ 0.00 |
Shares used to compute net income (loss) per share: | | | |
Basic | | 35,463 | 34,197 |
Diluted | | 35,463 | 37,290 |
Sirenza Microdevices, Inc. |
Reconciliation of GAAP Results with Management-Adjusted Results |
(In thousands, except per-share data) |
(Unaudited) |
| | | | | | | | | | | | |
The following table reconciles the company's net income/loss as reported under accounting principles generally accepted in the United States (GAAP) with net income/loss as adjusted by the items detailed below and presented in the news release and associated teleconference. These calculations are not prepared in accordance with GAAP and should not be viewed as alternatives to GAAP. In keeping with its historical financial reporting practices, the company believes that the supplemental presentation of these calculations provides meaningful non-GAAP financial measures to help investors understand and compare business trends among different reporting periods on a consistent basis, independently of regularly reported non-cash charges and infrequent or unusual events. |
| Three Months Ended |
| March 31, | December 31, | | March 31, |
| 2005 | 2004 | | 2004 |
| | | | |
Net income (loss) as reported under GAAP | $ (1,843) | $ (2,641) | | $ 162 |
| | | | |
Amortization of deferred stock compensation | -- | -- | | 3 |
Amortization of acquisition-related intangible assets | 465 | 373 | | 431 |
Acquired in-process research and development | -- | 2,180 | | -- |
Impairment of investment in GCS | -- | 1,535 | | -- |
Expenses related to a deferred capital formation | 215 | -- | | -- |
Compensation expense related to employee equity awards | 19 | 154 | | -- |
Relocation and related expenses | -- | -- | | 67 |
Management-adjusted net income (loss) | $ (1,144) | $ 1,601 | | $ 663 |
| | | | |
Management-adjusted net income (loss) per share | | | | |
Basic | $ (0.03) | $ 0.05 | | $ 0.02 |
Diluted | $ (0.03) | $ 0.04 | | $ 0.02 |
| | | | |
Shares used to compute management-adjusted | | | | |
net income (loss) per share | | | | |
Basic | 35,463 | 35,032 | | 34,197 |
Diluted | 35,463 | 37,980 | | 37,290 |
SIRENZA MICRODEVICES, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands) |
| | | | | |
|
| | | | | |
| | | March 31, | | December 31, |
| | | 2005 | | 2004 |
| | | (unaudited) | | |
Assets | | | | |
Current assets: | | | | |
| Cash and cash equivalents | | $ 3,034 | | $ 2,440 |
| Short-term investments | | 7,942 | | 8,000 |
| Accounts receivable | | 8,922 | | 10,968 |
| Inventories | | 8,679 | | 8,496 |
| Other current assets | | 1,049 | | 674 |
| Total current assets | | 29,626 | | 30,578 |
| Net property, plant and equipment | | 7,672 | | 8,273 |
| Investment in GCS | | 3,065 | | 3,065 |
| Acquisition-related intangibles, net | | 6,456 | | 6,921 |
| Goodwill | | 5,631 | | 5,631 |
| Other assets | | 1,480 | | 1,426 |
| Total assets | | $ 53,930 | | $ 55,894 |
| | | | | |
|
Liabilities and stockholders' equity | | | | |
Current liabilities: | | | | |
| Accounts payable | | $ 3,702 | | $ 3,136 |
| Accrued liabilities | | 3,297 | | 3,040 |
| Deferred margin on distributor inventory | | 879 | | 1,069 |
| Accrued restructuring | | 289 | | 518 |
| Accrued acquisition costs | | 30 | | 779 |
| Capital lease obligations, current portion | | 38 | | 56 |
| Total current liabilities | | 8,235 | | 8,598 |
| Total long-term liabilities | | 18 | | 18 |
| | | | | |
Stockholders' equity | | 45,677 | | 47,278 |
Total liabilities and stockholders' equity | | $ 53,930 | | $ 55,894 |
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