Exhibit 99
Contact: Richard Crowley
Micrel, Incorporated
2180 Fortune Drive
San Jose, CA 95131
Phone: (408) 944-0800
[Micrel Logo]
Press Release
MICREL REPORTS THIRD QUARTER 2007 FINANCIAL RESULTS
* Third quarter revenues of $65.2 million; Gross margin 57.5%
* Third quarter GAAP net income of $0.12 per diluted share; Non-GAAP net
income of $0.14 per diluted share, each in-line with expectations
San Jose, CA, October 25, 2007 - Micrel, Incorporated (Nasdaq NM: MCRL), an
industry leader in analog, high bandwidth communications and Ethernet IC
solutions, today announced financial results for the third quarter ending
September 30, 2007.
Micrel's third quarter revenues were $65.2 million, up slightly from $65.1
million in the second quarter, and 11% lower than the $73.5 million posted in
the year-ago period. Third quarter GAAP net income was $9.4 million, or $0.12
per diluted share. This compares with second quarter 2007 GAAP net income of
$8.6 million, or $0.11 per diluted share, and GAAP net income of $11.8 million,
or $0.15 per diluted share, in the year ago period. Included in the third
quarter 2006 financial results were $2.9 million of revenue and $714,000 in
cost of revenues related to settlement of intellectual property matters, which
increased third quarter 2006 GAAP net income by $0.02 per diluted share.
Third quarter 2007 non-GAAP net income was $10.5 million or $0.14 per
diluted share. This compares to non-GAAP net income of $10.1 million, or $0.13
per diluted share in the previous quarter and $12.3 million, or $0.15 per
diluted share in the third quarter of 2006. Non-GAAP results exclude the
impact of revenues and cost of revenues related to intellectual property
settlements, stock-based compensation expense, other operating income and
expense items, restructuring expenses, other income related to litigation
<Page>
MICREL REPORTS THIRD QUARTER 2007 RESULTS
October 25, 2007
Page 2 of 8
settlements and their related tax effects. A reconciliation of the GAAP net
income to non-GAAP net income is provided in the financial tables of this press
release.
"Driven by strong gross margins and cost control, Micrel's third quarter
financial results improved on a sequential quarter basis," stated Ray Zinn,
president and CEO of Micrel. "While revenues were up slightly on a sequential
basis, third quarter revenues were less than we forecasted at the beginning of
the quarter. During the third quarter, revenues from customers serving the
wireless handset and consumer end markets increased but were offset by weaker
than expected demand from customers in the wireline communications end market.
However, I was pleased with our operating execution during the quarter,
including the sequential improvement in gross margin and lower inventory
levels. As a result, GAAP income from operations, net income and earnings per
share each increased over second quarter levels. The Company continues to
generate solid cash flows from operations, which enabled the repurchase of
approximately 1.9 million shares of Micrel common stock during the quarter."
Outlook
-------
Order lead times for the Company's products decreased throughout the third
quarter, further limiting visibility into end demand and making it difficult to
predict future revenues. A relatively high proportion of quarterly revenue
must still be booked and shipped within the quarter to OEM customers, or resold
through the Company's distributors. For the fourth quarter of 2007, the
Company estimates revenues will increase sequentially by 2% to 4%, and GAAP
earnings per diluted share will be approximately $0.13.
Zinn concluded, "The strength of global economic growth is less apparent now
than in the first half of this year. Faced with this higher level of
uncertainty, semiconductor customers are placing orders cautiously, relying on
semiconductor suppliers to carry sufficient inventory to supply product on
short notice. This is the fifth straight year that the quarterly turns-fill
requirement is twice the level experienced during the 1990's. We anticipate
this environment will continue through at least 2008."
"These macro-economic factors aside, at Micrel, we are encouraged by the
resumption in growth for our wireless handset business in the third quarter.
The turn-around in this market - together with design win momentum in the
MICREL REPORTS THIRD QUARTER 2007 RESULTS
October 25, 2007
Page 3 of 8
industrial, communications and consumer end markets - gives us confidence that
Micrel will experience better than average growth over the next twelve months."
Dividend
--------
The Company announced today that Micrel's Board of Directors has authorized
a quarterly dividend payment of $0.03 per share of common stock. The payment
will be made on November 20, 2007 to shareholders of record as of November 5,
2007.
2008 Share Repurchase Authorization
-----------------------------------
The Company reported today that its Board of Directors has approved a $50
million share repurchase program for calendar year 2008. The new share
repurchase plan will take effect after the Company's previously authorized 2007
share repurchase program terminates on December 31, 2007. Repurchases may
occur from time to time in the open market or in privately negotiated
transactions through December 31, 2008. The timing and amount of any
repurchase of shares will be determined by the Company's management, based on
its evaluation of market conditions and other factors.
Conference Call
---------------
The Company will host a conference call at 5:00 p.m. Eastern time (2:00 p.m.
Pacific time) on October 25, 2007. Chief Executive Officer Raymond Zinn and
Chief Financial Officer Richard Crowley will present an overview of third
quarter financial results, discuss current business conditions and then respond
to questions.
The call is available, live, to any interested party on a listen only basis
by dialing (866) 550-6338. For international callers, please dial
(347) 284-6930. Interested callers should dial in at least five minutes before
the scheduled start time and ask to be connected to the Micrel, Incorporated
Conference Call. A live webcast will also be available through www.vcall.com.
An audio replay of the conference call will be available through November 1,
2007, by dialing (719) 457-0820 or (888) 203-1112 and entering access code
number 6240160. The webcast replay will also be available on the Company's
website at: www.micrel.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
MICREL REPORTS THIRD QUARTER 2007 RESULTS
October 25, 2007
Page 4 of 8
This press release includes statements that qualify as forward-looking
statements under the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include statements about the following topics: our
expectations regarding future financial results, including revenues, earnings
per share, order lead times, customer demand, customer and supply chain
inventory levels, order backlog, turns-fill requirements, and design wins;
expectations regarding repurchase of the Company's common stock and payment of
future dividends, and the nature of macro-economic and industry trends.
Forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially. Those risks and uncertainties
include, but are not limited to, such factors as: softness in demand for our
products; customer decisions to cancel, reschedule, or delay orders for our
products; the effect that lead times and channel inventories have on the demand
for our products; economic or financial difficulties experienced by our
customers; the effect of business conditions in the computer,
telecommunications and industrial markets; the impact of any previous or future
acquisitions; changes in demand for networking or high bandwidth communications
products; the impact of competitive products and pricing and alternative
technological advances; the accuracy of estimates used to prepare the Company's
financial statements; the global economic situation; the ability of the
Company's vendors and subcontractors to supply or manufacture the Company's
products in a timely manner; the timely and successful development and market
acceptance of new products and upgrades to existing products; softness in the
economy and the U.S. stock markets as a whole; fluctuations in the market price
of Micrel's common stock and other market conditions; the difficulty of
predicting our future cash needs; the nature of other investment opportunities
available to the Company from time to time; and Micrel's operating cash flow.
For further discussion of these risks and uncertainties, we refer you to the
documents the Company files with the SEC from time to time, including the
Company's Annual Report on Form 10-K for the year ended December 31, 2006 and
the Company's Form 10-Q for the quarters ended March 31, 2007 and June 30,
2007. All forward-looking statements are made as of today, and the Company
disclaims any duty to update such statements.
Non-GAAP Reporting
------------------
The Company presents non-GAAP financial measures only because investors and
financial analysts use non-GAAP results in their analysis of historical results
and projections of the Company's future operating results. The Company's
MICREL REPORTS THIRD QUARTER 2007 RESULTS
October 25, 2007
Page 5 of 8
management uses non-GAAP measures on a limited basis, primarily for employee
performance-based compensation. In order to facilitate the computation of
non-GAAP results for the financial analyst community and investors, the Company
makes reference to non-GAAP net income and earnings per share. These non-GAAP
results exclude the impact of revenues and cost of revenues related to
intellectual property settlements, stock-based compensation expense, other
operating income and expense items, restructuring expenses, other income
related to litigation settlements and their related tax effects. Micrel
references those results to allow a better comparison of results in the current
period to those in prior periods and to provide insight to the Company's
on-going operating performance after exclusion of these items. The Company has
reconciled such non-GAAP results to the most directly comparable GAAP financial
measures in the financial tables at the end of this press release.
Reference to these non-GAAP results should be considered in addition to
results that are prepared under current accounting standards but should not be
considered a substitute for results that are presented in accordance with GAAP.
It should also be noted that Micrel's non-GAAP information may be different
from the non-GAAP information provided by other companies.
About Micrel
------------
Micrel Inc., is a leading global manufacturer of IC solutions for the
worldwide analog, Ethernet and high bandwidth markets. The Company's products
include advanced mixed-signal, analog and power semiconductors; high
performance communication, clock management, Ethernet switch and physical layer
transceiver ICs. Company customers include leading manufacturers of
enterprise, consumer, industrial, mobile, telecommunications, automotive, and
computer products. Corporation headquarters and state-of-the-art wafer
fabrication facilities are located in San Jose, CA, with regional sales and
support offices and advanced technology design centers situated throughout the
Americas, Europe and Asia. In addition, the Company maintains an extensive
network of distributors and sales representatives worldwide.
For further information, contact Richard Crowley at: Micrel, Incorporated,
2180 Fortune Drive, San Jose, California, 95131, (408) 944-0800; or visit the
Company's website at: http://www.micrel.com.
-Financial Tables to Follow-
MICREL REPORTS THIRD QUARTER 2007 RESULTS
October 25, 2007
Page 6 of 8
MICREL, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
------------------------------------ -----------------------
September 30, June 30, September 30, September 30,
---------------------------------- ---------------------
2007 2007 2006 2007 2006
--------- --------- --------- --------- ---------
Net revenues $ 65,191 $ 65,101 $ 73,482 $ 193,405 $ 211,825
Cost of revenues(1) 27,698 27,994 30,449 82,118 88,646
--------- --------- --------- --------- ---------
Gross profit 37,493 37,107 43,033 111,287 123,179
--------- --------- --------- --------- ---------
Operating expenses:
Research and development(1) 13,680 14,191 13,071 41,123 39,261
Selling, general and administrative(1) 10,871 11,115 11,867 34,123 37,531
Other operating expense (income) -- 86 (22) 86 913
Restructuring expense 28 28 35 100 101
--------- --------- --------- --------- ---------
Total operating expenses 24,579 25,420 24,951 75,432 77,806
--------- --------- --------- --------- ---------
Income from operations 12,914 11,687 18,082 35,855 45,373
Other income (expense):
Interest Income 1,605 1,661 1,538 4,767 4,552
Interest Expense (11) 80 (28) (83) (488)
Other income 10 9 39 15,533 51
--------- --------- --------- --------- ---------
Total other income (expense) 1,604 1,750 1,549 20,217 4,115
Income before income taxes 14,518 13,437 19,631 56,072 49,488
Provision for income taxes 5,095 4,796 7,828 20,140 19,993
--------- --------- --------- --------- ---------
Net income $ 9,423 $ 8,641 $ 11,803 $ 35,932 $ 29,495
========= ========= ========= ========= =========
Net income per share:
Basic $ 0.12 $ 0.11 $ 0.15 $ 0.46 $ 0.36
========= ========= ========= ========= =========
Diluted $ 0.12 $ 0.11 $ 0.15 $ 0.46 $ 0.35
========= ========= ========= ========= =========
Shares used in computing per share amounts:
Basic 76,964 77,740 80,671 77,466 82,620
========= ========= ========= ========= =========
Diluted 77,971 79,018 81,324 78,625 83,971
========= ========= ========= ========= =========
(1) Includes amortization of stock-based
compensation as follows:
Cost of revenues $ 260 $ 286 $ 485 $ 848 $ 1,187
Research and development 543 656 733 1,678 2,844
Selling, general and administrative 564 738 792 1,791 2,943
MICREL REPORTS THIRD QUARTER 2007 RESULTS
October 25, 2007
Page 7 of 8
MICREL, INCORPORATED
SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
------------------------------------ -----------------------
September 30, June 30, September 30, September 30,
---------------------------------- ---------------------
2007 2007 2006 2007 2006
--------- --------- --------- --------- ---------
GAAP Net income $ 9,423 $ 8,641 $ 11,803 $ 35,932 $ 29,495
Adjustments to GAAP Net Income:
Patent settlement income included in net revenues -- -- (2,890) -- (2,890)
Patent settlement costs included in cost of revenues -- -- 714 -- 714
Stock-based compensation included in:
Cost of revenues 260 286 485 848 1,187
Research and development 543 656 733 1,678 2,844
Selling, general and administrative 564 738 792 1,791 2,943
Other operating expense (income) -- 86 (22) 86 913
Restructuring expense 28 28 35 100 101
Other non-operating income - Litigation Settlement -- -- -- (15,514) --
Tax effect of adjustments to GAAP income (288) (349) 649 5,163 (158)
--------- --------- --------- --------- ---------
Total Adjustments to GAAP Net Income 1,107 1,445 496 (5,848) 5,654
--------- --------- --------- --------- ---------
Non-GAAP income(2) $ 10,530 $ 10,086 $ 12,299 $ 30,084 $ 35,149
========= ========= ========= ========= =========
Non-GAAP shares used in computing non-GAAP
income per share (in thousands):
Basic 76,964 77,740 80,671 77,466 82,620
========= ========= ========= ========= =========
Diluted (1) 77,788 78,979 81,104 78,418 83,832
========= ========= ========= ========= =========
GAAP income per share - Basic $ 0.12 $ 0.11 $ 0.15 $ 0.46 $ 0.36
Total Adjustments to GAAP Net Income $ 0.02 $ 0.02 $ 0.00 $ (0.07) $ 0.07
--------- --------- --------- --------- ---------
Non-GAAP income per share - Basic $ 0.14 $ 0.13 $ 0.15 $ 0.39 $ 0.43
========= ========= ========= ========= =========
GAAP income per share - Diluted $ 0.12 $ 0.11 $ 0.15 $ 0.46 $ 0.35
Total Adjustments to GAAP Net Income $ 0.02 $ 0.02 $ 0.00 $ (0.08) $ 0.07
--------- --------- --------- --------- ---------
Non-GAAP income per share - Diluted(2) $ 0.14 $ 0.13 $ 0.15 $ 0.38 $ 0.42
========= ========= ========= ========= =========
(1) Non-GAAP shares have been adjusted from diluted outstanding shares
calculated under FAS123R.
(2) Non-GAAP results were reached by excluding revenues and cost of revenues
related to intellectual property settlements, stock-based compensation
expense, other operating income or expense items, restructuring expenses,
other income related to litigation settlements and their related
tax-effects. Non-GAAP results are presented to supplement our GAAP
consolidated financial statements to allow a better comparison of results
in the current period to those in prior periods and to provide meaningful
insight to the Company's on-going operating performance after exclusion of
these items.
MICREL REPORTS THIRD QUARTER 2007 RESULTS
October 25, 2007
Page 8 of 8
MICREL, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
2007 2006
------------- -------------
ASSETS
CURRENT ASSETS:
Cash, cash equivalents, restricted cash
and short-term investments $ 115,575 $ 109,938
Accounts receivable, net 34,534 31,092
Inventories 33,540 37,183
Deferred income taxes 20,092 23,096
Other current assets 4,863 3,084
---------- ----------
Total current assets 208,604 204,393
PROPERTY, PLANT AND EQUIPMENT, NET 80,363 78,665
INTANGIBLE ASSETS, NET 3,448 4,714
DEFERRED INCOME TAXES(1) 9,460 11,158
OTHER ASSETS 1,356 1,343
---------- ----------
TOTAL $ 303,231 $ 300,273
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 15,569 $ 17,429
Deferred income on shipments to distributors 21,691 21,705
Other current liabilities 11,647 22,564
Current portion of long-term debt -- 80
---------- ----------
Total current liabilities 48,907 61,778
LONG-TERM TAXES PAYABLE(1) 2,567 --
OTHER LONG-TERM OBLIGATIONS 346 453
SHAREHOLDERS' EQUITY:
Common stock -- 15,585
Accumulated other comprehensive loss (33) (35)
Retained earnings 251,444 222,492
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 251,411 238,042
---------- ----------
TOTAL $ 303,231 $ 300,273
========== ==========
(1) On January 1, 2007, Micrel adopted FASB Interpretation No. 48, Accounting
for Uncertainty in Income Taxes ("FIN 48"). Implementation of FIN 48
resulted in a $2.1 million reclassification from current taxes payable to
long-term taxes payable and an additional $2.5 million was reclassified
from current taxes payable to reduce long term deferred tax assets.