1 BUSINESS UPDATE
**For Immediate Release**
MULTILINK TECHNOLOGY CORPORATION REPORTS
THIRD QUARTER 2001 RESULTS
o Revenues for the quarter of $37.6 million
o Third quarter gross margins improve to 64.7%
o $8.7 million cash flow from operations drives cash and short term investments
to $95.9 million
Somerset, New Jersey U.S.A. - October 23, 2001 - Multilink Technology
Corporation (Nasdaq: MLTC), a leading provider of advanced semiconductor-based
solutions that accelerate the deployment of high-speed optical networks, today
reported results for the third quarter ended September 30, 2001.
Total revenues for the third quarter of 2001 were $37.6 million, compared with
$35.1 million for the second quarter of 2001 and $18.7 million in the third
quarter of 2000. Pro forma gross margins for the third quarter of 2001 were
64.7%, compared with 63.8% in the second quarter of 2001 and gross margins of
63.1% in the third quarter of 2000. Pro forma net income for the third quarter
of 2001 was $1.6 million, or diluted EPS $0.02, compared with net income of $0.8
million, or diluted EPS $0.01, in the second quarter of 2001 and net income of
$1.3 million, or diluted EPS $0.02, in the third quarter of 2000.
Total revenues for the nine-month period ended September 30, 2001 were $103.8
million, compared with $47.3 million for the nine-month period ended September
30, 2000. Pro forma gross margins for the nine-month period ended September 30,
2001 were 64.0%, compared with gross margins of 62.5% for the nine-month period
ended September 30, 2000. Pro forma net income for the nine-month period ended
September 30, 2001 was $2.9 million, or diluted EPS $0.03, compared with net
income of $5.3 million, or diluted EPS $0.07, for the same period in 2000.
Dr. Richard Nottenburg, Multilink's Co-Chairman, President and Chief Executive
Officer commented on the quarter, "We are pleased with our performance this
quarter in light of a challenging operating environment. Nevertheless, the
impact of reductions in carrier spending has caused us to experience a net
decline in backlog and has reduced visibility. As a consequence, we expect
revenues for the fourth quarter to be between $26 and $32 million."
"At the same time, we are extremely satisfied with our design win activity and
the acceptance of our new products. In fact, we had more design wins during the
third quarter than during all of 2000. We are also pleased to see our design win
momentum extend to established system OEMs outside of North America and Europe.
Multilink remains committed to research and development activities and the rapid
introduction of new innovative products, expanding our total addressable market
and increasing our market share. We will also use this opportunity to increase
our competitive position by working closely with those system OEMs who we
believe will emerge as the market leaders in 2002 and beyond." concluded Dr.
Nottenburg.
GAAP Basis Results
Pro forma operating results exclude certain items reported under generally
accepted accounting principles (GAAP), including deferred stock compensation in
each period and a write down to inventories which occurred in the first quarter
of 2001. Pro forma operating results include cancellation payments received by
the company. Gross margins under GAAP for the third quarter of 2001 were 63.0%,
compared with 62.5% in the second quarter of 2001 and gross margins of 61.4% in
the third quarter of 2000. Net income attributable to common shareholders under
GAAP for the third quarter of 2001 was $1.4 million, or EPS $0.01, compared with
a net loss attributable to common shareholders of $0.9 million, or EPS ($0.03),
in the second quarter of 2001 and a net loss attributable to common shareholders
of $0.9 million, or EPS ($0.03), in the third quarter of 2000.
Gross margins under GAAP were 57.8% for the nine-month period ended September
30, 2001, compared with gross margins of 61.5% for the same period in 2000. The
net loss attributable to common shareholders under GAAP for the nine-month
period ended September 30, 2001 was $4.0 million, or EPS ($0.09), compared with
a net loss attributable to common shareholders of $12.0 million, or EPS ($0.40),
for the same period in 2000.
Additional Highlights
o James M. Schneider joined the Board of Directors. Mr. Schneider, 48, is
Senior Vice President and Chief Financial Officer at Dell Computer
Corporation and brings more than 27 years of business experience to our
Board of Directors.
Recent Product Introductions
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Date Product Function / Description
----- -------- -----------------------
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The MTC6131 is a next generation, 10 Gb/s,
October 9, SuperFECTM Super Forward Error Correction (SuperFEC
2001 MTC6131 (TM)), SuperFECTM digital wrapper device.
This integrated device features full
SONET/SDH section overhead processing,
G.709 Digital Wrapper including Reed
Solomon RS(255,239) FEC and SuperFEC(TM)
or additional code gain. This results in
additional system reach, additional DWDM
bandwidth and lower costs for customers.
--------------------------------------------------------------------------------
The MTC5531 is Multilink's full-rate clock
October 2, Full-rate Clock driver module for Lithium Niobate (LiNbO3)
2001 Driver Return-to-Zero (RZ) optical modulators. The
MTC5531 MTC5531 provides customers with several
advantages over other industry clock drivers
including; a considerably smaller package,
lower power requirements and a built-in
Automated Gain Control (AGC).
--------------------------------------------------------------------------------
The MTC5527 Limiting Modulator Driver for high
October 1, Limiting speed applications up to 13 Gb/s is designed to
2001 Modulator play an important role in Return-to-Zero (RZ)
Driver applications. The MTC5527 is a precision multi-
MTC5527 chip module for driving Lithium Niobate
(LiNbO3) MTC5527 modulators. The MTC5527
provides lower power dissipation, lower output
jitter, higher input sensitivity, lower rail
ripple and faster edge speeds, making it an
ideal solution for RZ transmission.
--------------------------------------------------------------------------------
The MTC5530, a half-rate clock driver module
July 18, Half-rate Clock for Lithium Niobate (LiNbO3)Return to Zero (RZ)
2001 Driver optical modulators, is produced in a
MTC5530 significantly smaller package than the current
market standard. The MTC5530 generates an
extremely high quality signal for 10 to 13 Gb/s
bit rate SONET/SDH transmission systems.
--------------------------------------------------------------------------------
Multilink will hold a conference call to discuss quarterly results and revised
financial guidance today, October 23, 2001, at 5:00 pm EDT. The conference call
will be broadcast over the Internet. To listen to the call, please visit
Multilink's web-site at http://www.mltc.com and then select Investor Relations
and the link to `3rd Quarter Results Announcement' approximately ten minutes
before the start of the call. Please note that it will be necessary to have
Windows Media Player installed on your computer to listen to the call and that
this will be available for downloading from the Multilink site. A replay of the
call, in it's entirety, will be available on the website for approximately seven
days following the live call.
About Multilink:
Multilink Technology Corporation designs, develops and markets advanced mixed
signal integrated circuits, modules, VLSI products and higher-level assemblies
designed to enable the next generation of high-speed optical networking systems.
By providing our customers with sophisticated products developed by utilizing
systems level expertise and a high level of component integration, we facilitate
our customers' ability to meet their time-to-market requirements. Our products
span the markets from Metro to Ultra Long Haul optical transport equipment with
a focus on the fastest commercially available speeds of 10 Gb/s and higher.
Multilink is headquartered in Somerset, New Jersey with additional offices
located throughout North America and Europe.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995:
This release and our comments during the conference call may contain
forward-looking statements that are based on our current expectations, estimates
and projections about our industry, and reflect management's beliefs and certain
assumptions made by us based upon information available to us at this time.
Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates," "may," "will" and variations of these words or similar expressions
are intended to identify forward-looking statements. In addition, any statements
that refer to expectations, projections or other characterizations of future
events or circumstances, including any underlying assumptions, are
forward-looking statements. These statements speak only as of the date hereof.
Such information is subject to change, and we will not necessarily inform you of
such changes. These statements are not guarantees of future performance and are
subject to risks, uncertainties and assumptions that are difficult to predict.
Therefore, our actual results could differ materially and adversely from those
expressed in any forward-looking statements as a result of various factors.
Important factors that may cause such a difference for Multilink include, but
are not limited to, general economic conditions and specific conditions in the
markets we address, including the recent significant economic slowdown in the
technology sector and semiconductor industry; the timing, rescheduling or
cancellation of significant customer orders; the loss of a key customer; our
ability to specify, develop or acquire, complete, introduce, market and
transition to volume production new products and technologies in a timely
manner; the timing of customer-industry qualification and certification of our
products and the risks of non-qualification or non-certification; the rate at
which our present and future customers and end-users adopt Multilink's
technologies and products in our target markets; delays in the adoption and
acceptance of industry standards in those markets; the qualification,
availability and pricing of competing products and technologies and the
resulting effects on revenues and pricing of our products; our ability to retain
and hire key executives, technical personnel and other employees in the numbers,
with the capabilities, and at the compensation levels needed to implement our
business and product plans; our ability to protect our intellectual property;
the availability and pricing of foundry and assembly capacity and raw materials;
fluctuations in the manufacturing yields of our third party semiconductor
foundries and other problems or delays in the fabrication, assembly, testing or
delivery of our products; the risks of producing products with new suppliers and
at new fabrication and assembly facilities; the effects of new and emerging
technologies; the risks and uncertainties associated with our international
operations; changes in our product or customer mix; the quality of our products
and any remediation costs; the level of orders received that can be shipped in a
fiscal quarter; and other factors.
Our forthcoming Quarterly Report on Form 10-Q, our Registration Statement on
Form S-1 and our other SEC filings discuss some of the important risk factors
that may affect our business, results of operations and financial condition. We
undertake no obligation to revise or update publicly any forward-looking
statements for any reason.
- Tables Follow -
Multilink Technology Corporation
Consolidated Statement of Operations
(in thousands, except for per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------------------------------
2001 2000 2001 2000
---- ---- ---- ----
Total revenues $ 37,603 $ 18,680 $ 103,774 $ 47,347
Cost of revenues, excluding deferred stock 13,267 6,897 37,337 17,756
compensation
Inventory write down - - 4,895 -
Deferred stock compensation 646 315 1,568 475
------------ ------------ ------------ ----------
Total cost of revenues 13,913 7,212 43,800 18,231
------------ ------------ ------------ ----------
Gross profit 23,690 11,468 59,974 29,116
Operating expenses:
Research and development, excluding deferred
stock compensation 14,386 6,682 40,181 15,617
Sales and marketing, excluding deferred stock
compensation 5,051 1,893 13,085 4,407
General and administrative, excluding deferred
stock compensation 2,892 2,199 9,148 4,308
Deferred stock compensation 2,334 1,861 7,218 3,940
Research & development - warrant issuance - - - 6,375
------------ ------------ ------------ ----------
Total operating expenses 24,663 12,635 69,632 34,647
Operating loss (973) (1,167) (9,658) (5,531)
Other income and expenses 521 708 680 835
------------ ------------- ------------ ----------
Loss before provision (benefit) for income taxes (452) (459) (8,978) (4,696)
Provision (benefit) for income taxes (1,827) 400 (5,048) 847
------------ ------------- ------------ ----------
Net income (loss) $ 1,375 $ (859) $ (3,930) $ (5,543)
============ ============= ============ ==========
Accretion of preferred stock to redemption value - 24 24 71
Dividend related to warrant issuance - - - 6,375
Net income (loss) per common share
Basic $ 0.02 $ (0.03) $ (0.09) $ (0.40)
============ ============ =========== ==========
iluted $ 0.01 $ (0.03) $ (0.09) $ (0.40)
============ ============ =========== ==========
Weighted average shares-basic 67,433 30,000 43,727 30,000
------------ ----------- ----------- ----------
Weighted average shares-diluted 92,275 30,000 43,727 30,000
============ =========== =========== ===========
Multilink Technology Corporation
Reconciliation of Pro forma Net Income and Earnings Per Share
(in thousands, except for per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- -----------------------
2001 2000 2001 2000
---- ---- ---- ----
Net income (loss) attributable to common
shareholders $ 1,375 $ (883) $ (3,954) $(11,989)
=========== ============ ============ ==========
Deferred stock compensation 2,980 2,176 8,786 4,415
Warrant issuances 0 0 0 6,456
Accretion of preferred stock to redemption value 0 24 24 71
Dividend related to warrant issuances 0 0 0 6,375
Write down to inventories 0 0 4,895 0
Aggregate pro forma tax adjustment (2,788) 0 (6,854) 0
----------- ------------ ------------ ----------
Pro forma net income $ 1,567 $ 1,317 2,897 5,328
Net income (loss) per common share
Basic $ 0.02 $ (0.03) $ (0.09) $ (0.40)
============ ============ =========== ==========
Diluted $ 0.01 $ (0.03) $ (0.09) $ (0.40)
============ ============ =========== ==========
Pro forma net income per common share:
Basic $ 0.02 $ 0.04 $ 0.07 $ 0.18
=========== =========== ============ ==========
Diluted $ 0.02 $ 0.02 $ 0.03 $ 0.07
=========== =========== ============ ==========
Weighted average shares:
Basic 67,433 30,000 43,727 30,000
=========== ============ ============ ==========
Diluted 92,275 82,283 83,819 76,442
=========== ============ ============ ==========
Multilink Technology Corporation
Select Balance Sheet Data
September 30, 2001 and December 31, 2000
(in thousands)
2001 2000
Sept 30 Dec 31
--------- ------
(unaudited)
Cash and short term investments $ 95,939 $ 29,159
Accounts receivable 15,453 13,771
Inventories 15,816 17,264
Total current assets $ 137,154 $ 66,731
Property and equipment, net 26,823 17,765
Total assets $ 185,486 $ 90,266
Accounts payable $ 8,278 $ 10,987
Total current liabilities $ 29,778 $ 25,083
Long term obligations, net of current 2,524 1,018
Redeemable convertible preferred stock 0 55,073
Total shareholders' equity $ 153,184 $ 9,092
Total liabilities and shareholders' equity $ 185,486 $ 90,266
A/R days (DSO) 37 49
Inventory days (DOS) 108 169
For more information, please contact:
Richard Sawchak, Director-Investor Relations
Multilink Technology Corporation
300 Atrium Drive, Second Floor
Somerset, New Jersey 08873-4105
Tel: (732) 537-3776
Fax: (732) 537-3781
Email: rsawchak@mltc.com
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