[October 26, 2009] Mindspeed® Reports Fiscal Fourth Quarter 2009 Results Tweet NEWPORT BEACH, Calif. --(Business Wire)-- Mindspeed Technologies (News - Alert), Inc. (NASDAQ: MSPD), a leading supplier of semiconductor solutions for network infrastructure applications, today reported results for its fiscal fourth quarter of 2009, which ended on October 2, 2009. Fiscal Fourth Quarter 2009 Financial Highlights: Total Revenue: $34.7 million, up 7 percent sequentially All three business units grew sequentially Non-GAAP Gross Margin: 62.4 percent, up from 61.3 percent in the fiscal third quarter 2009; GAAP Gross Margin: 62.3 percent, up from 61.2 percent in the fiscal third quarter 2009 Non-GAAP net loss per share of $(0.00); GAAP net loss per share of $(0.04) Generated approximately $9 million of cash, including $8.9 million in net proceeds from the company's common stock offering, which closed on August 19, 2009; company ended the fiscal fourth quarter 2009 with cash and cash equivalents totaling $20.9 million dollars Revenues for the fiscal fourth quarter of 2009 were $34.7 million and increased sequentially by 7 percent from revenues of $32.5 million in the fiscal third quarter of 2009. The company's non-GAAP gross margin was $21.7 million, or 62.4 percent of revenues, for the fiscal fourth quarter of 2009. This is compared to the company's non-GAAP gross margin of $19.9 million, or 61.3 percent of revenues, for the fiscal third quarter of 2009. Presented on a GAAP basis, gross margin for the fiscal fourth quarter of 2009 was $21.7 million, or 62.3 percent of revenues, compared to $19.9 million, or 61.2 percent of revenues, for the fiscal third quarter of 2009. Total non-GAAP operating expenses for the fiscal fourth quarter of 2009 were $21.1 million, down $92,000, or 0.4 percent, sequentially from the fiscal third quarter of 2009 level of $21.2 million. Total GAAP operating expenses for the fiscal fourth quarter of 2009 were $22.0 million, flat when compared to total GAAP operating expenses for the fiscal third quarter of 2009. Non-GAAP operating income for the fiscal fourth quarter of 2009 was $575,000, compared to a non-GAAP operating loss of $1.3 million for the fiscal third quarter of 2009. On a GAAP basis, the operating loss for the fiscal fourth quarter of 2009 was $327,000, compared to an operating loss of $2.1 million for the fiscal third quarter of 2009. The company's non-GAAP net loss for the fiscal fourth quarter of 2009 was $77,000, or $(0.00) per share. This compares to a non-GAAP net loss for the fiscal third quarter of 2009 of $2.1 million, or $(0.09) per share. Presented on a GAAP basis, the company reported a net loss of $979,000, or $(0.04) per share, for the fiscal fourth quarter of 2009, which includes employee separation costs and stock-based compensation expense, among other items. This compares to a GAAP net loss of $2.9 million, or $(0.12) per share, for the fiscal third quarter of 2009, which includes stock-based compensation expense, among other items. 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 contributed 41 percent of fiscal fourth quarter of 2009 product revenues and increased 4 percent sequentially, while revenues from high-performance analog products increased 4 percent sequentially from the prior quarter and represented 30 percent of product revenues. Wide area networking communication revenues contributed the remaining 29 percent of fiscal fourth quarter of 2009 product revenues and increased 13 percent sequentially. Commentary "The fiscal fourth quarter of 2009 was a great close to the year continuing our trajectory of improving financial performance with continued revenue growth and non-GAAP gross margin improvement. We achieved both non-GAAP operating profitability, as well as positive cash generation, and exceeded our expectations by delivering a non-GAAP net loss per share of approximately break-even, or $(0.00), for the first time in a year. We believe we have emerged from one of the worst down cycles as a stronger, leaner and more competitive company," said Raouf Y. Halim, Mindspeed's chief executive officer. Outlook Mindspeed expects fiscal first quarter of 2010 revenues to grow between 4 and 8 percent, or to approximately $36.1 million to $37.5 million, from the fiscal fourth quarter of 2009, excluding any potential patent sales. The company expects fiscal first quarter of 2010 non-GAAP gross margin to be in the range of 62.5 to 63 percent, excluding any potential patent sales. The company expects non-GAAP operating expenses to be approximately $21.3 million in the fiscal first quarter of 2010. Fiscal Fourth Quarter 2009 Conference Call Mindspeed will conduct a conference call announcing its fiscal fourth quarter of 2009 results on Monday, October 26, 2009, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time. To listen to the conference call via telephone please dial 800-593-9968 (domestic) or 210-795-2680 (international); with the following password, Mindspeed. To listen via the Internet, please visit the Investors section of Mindspeed's website at www.mindspeed.com. Replay of the conference will be available via telephone one hour after it concludes for 30 days by calling 888-566-0613 (domestic) or 203-369-3075 (international). Replay will also be available on Mindspeed's website 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 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include statements regarding the company's expectations, goals or intentions, including but not limited to, statements under the headings "Commentary" and "Outlook" regarding improving financial performance, revenue growth, gross margin improvement, business trends and economic cycles, competitive position, patent sales and expected levels of revenues, gross margin and operating expenses. 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: cash requirements and terms and availability of financing; future operating losses; worldwide political and economic uncertainties, and specific conditions in the markets we address; fluctuations in the price of our common stock and our operating results; loss of or diminished demand from one or more key customers or distributors; our ability to utilize our net operating loss carry forwards and certain other tax attributes; our ability to attract and retain qualified personnel; constraints in the supply of wafers and other product components from our third-party manufacturers; doing business internationally; pricing pressures and other competitive factors; successful development and introduction of new products; our ability to successfully and cost effectively establish and manage operations in foreign jurisdictions; industry consolidation; order and shipment uncertainty; our ability to obtain design wins and develop revenues from them; lengthy sales cycles; the expense of and our ability to defend our intellectual property against infringement claims by others; product defects and bugs; and business acquisitions and investments. 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" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's Quarterly Report on Form 10-Q for the quarter ended July 3, 2009, as well as similar disclosures in the company's subsequent SEC (News - Alert) 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   Year ended October 2,   July 3,   October 3, October 2,   October 3,   2009     2009     2008     2009     2008     Net revenues: Product $ 34,743 $ 32,545 $ 39,101 $ 121,552 $ 144,349 Intellectual property           12,000     5,000     16,350   Total net revenues   34,743     32,545     51,101     126,552     160,699   Cost of goods sold: Cost of goods sold, excluding asset impairments (a)(b) 13,084 12,618 12,974 46,314 47,625 Asset impairments (c)               3,667       Total cost of goods sold (a)(b)(c)   13,084     12,618     12,974     49,981     47,625     Gross margin 21,659 19,927 38,127 76,571 113,074   Operating expenses: Research and development (a) 12,109 12,097 14,024 50,650 56,217 Selling, general and administrative (a) 9,877 9,880 12,608 41,582 46,984 Special charges (d)       9     (73 )   6,896     211   Total operating expenses   21,986     21,986     26,559     99,128     103,412     Operating income (loss) (327 ) (2,059 ) 11,568 (22,557 ) 9,662   Other (expense) income, net   (559 )   (747 )   (252 )   1,008     (1,816 )   Income (loss) before income taxes (886 ) (2,806 ) 11,316 (21,549 ) 7,846   Provision for income taxes   93     127     332     482     611     Net income (loss) $ (979 ) $ (2,933 ) $ 10,984   $ (22,031 ) $ 7,235     Net income (loss) per share, basic $ (0.04 ) $ (0.12 ) $ 0.47   $ (0.91 ) $ 0.31     Weighted-average number of shares used in basic per share computation   26,024     23,619     23,227     24,156     23,046   (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 $0.2 million (October 2009), $0.3 million (July 2009), and $0.5 million (October 2008). For the twelve months ended October 2, 2009 and October 3, 2008, the favorable effect of such sales was $1.5 million and $1.6 million.   (c) Asset impairments include the write-down of the carrying value of technology developed by Ample Communications, Inc., which was previously acquired by the company ($2.3 million), certain Ample related inventory ($1.0 million) and certain manufacturing related fixed assets ($0.3 million).   (d) Special charges consists of tangible and intangible 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   Year ended October 2,   July 3,   October 3, October 2,   October 3,   2009     2009     2008     2009     2008     Reconciliation of Non-GAAP Gross Margin to GAAP Gross Margin Non-GAAP gross margin $ 21,687 $ 19,945 $ 38,334 $ 80,489 $ 113,909 Items excluded from non-GAAP gross margin: Stock-based compensation 18 18 52 85 173 Employer taxes on stock-based compensation 1 5 Amortization of intangible assets (e) 155 155 620 Asset impairments (f) 3,667 Employee separation costs (g)   10             10     37   Gross margin $ 21,659   $ 19,927   $ 38,127   $ 76,571   $ 113,074     Reconciliation of Non-GAAP Operating Expenses to GAAP Operating Expenses Non-GAAP operating expenses $ 21,112 $ 21,204 $ 24,136 $ 89,114 $ 95,549 Items excluded from non-GAAP operating expenses: Stock-based compensation 461 684 1,333 2,590 5,209 Employer taxes on stock-based compensation 13 6 166 Amortization of intangible assets (e) 100 Employee separation costs (g) 397 721 313 1,748 Special charges (h) 9 (73 ) 6,896 211 Employee option exchange costs (i) 16 89 209 Reverse stock split costs (j)           429         429   Operating expenses $ 21,986   $ 21,986   $ 26,559   $ 99,128   $ 103,412     Reconciliation of Non-GAAP Operating Income/(Loss) to GAAP Operating Loss Non-GAAP operating income/(loss) $ 575 $ (1,259 ) $ 14,198 $ (8,625 ) $ 18,360 Items excluded from non-GAAP operating income/(loss): Stock-based compensation 479 702 1,385 2,675 5,382 Employer taxes on stock-based compensation 13 7 171 Amortization of intangible assets (e) 155 155 720 Asset impairments (f) 3,667 Employee separation costs (g) 407 721 323 1,785 Special charges (h) 9 (73 ) 6,896 211 Employee option exchange costs (i) 16 89 209 Reverse stock split costs (j)           429         429   Operating loss $ (327 ) $ (2,059 ) $ 11,568   $ (22,557 ) $ 9,662     Reconciliation of Non-GAAP Net Income/(Loss) to GAAP Net Loss Non-GAAP net income/(loss) $ (77 ) $ (2,133 ) $ 13,614 $ (10,979 ) $ 15,933 Items excluded from non-GAAP net income/(loss): Stock-based compensation 479 702 1,385 2,675 5,382 Employer taxes on stock-based compensation 13 7 171 Amortization of intangible assets (e) 155 155 720 Asset impairments (f) 3,667 Employee separation costs (g) 407 721 323 1,785 Special charges (h) 9 (73 ) 6,896 211 Employee option exchange costs (i) 16 89 209 Reverse stock split costs (j) 429 429 Gain on debt extinguishment (k)               (2,880 )     Net loss $ (979 ) $ (2,933 ) $ 10,984   $ (22,031 ) $ 7,235       Reconciliation of Non-GAAP Net Income/(Loss) Per Share to GAAP Net Loss Per Share Loss per share, basic: Non-GAAP net income/(loss) $ (0.00 ) $ (0.09 ) $ 0.59 $ (0.45 ) $ 0.69 Adjustments   (0.04 )   (0.03 )   (0.12 )   (0.46 )   (0.38 ) Net loss $ (0.04 ) $ (0.12 ) $ 0.47   $ (0.91 ) $ 0.31   (e)   Amortization of intangible assets reflects amortization expense on purchased intangibles from the acquisition of certain of the assets of Ample in the fourth quarter of fiscal 2007.   (f) Asset impairments include the write-down of the carrying value of technology developed by Ample ($2.3 million), certain Ample related inventory ($1.0 million) and certain manufacturing related fixed assets ($0.3 million).   (g) Employee separation costs consist of severance benefits payable to certain former employees of the company as a result of organizational changes.   (h) Special charges consists of asset impairments and restructuring charges.   (i) Employee option exchange costs consist of the costs incurred to implement and account for the employee option exchange program.   (j) Reverse stock split costs consist of the costs incurred to effect and account for the reverse stock split.   (k) Gain on debt extinguishment represents the gain we recorded in connection with extinguishing portions of our convertible debt instrument. Non-GAAP Measures We provide non-GAAP measures as a supplement to financial results based on GAAP. A detailed reconciliation of the non-GAAP results to the most directly comparable GAAP measures is set forth above under the heading "Reconciliation of Non-GAAP Measures to GAAP Measures." Investors are encouraged to review this reconciliation. We believe the presentation of non-GAAP measures provides investors with additional insight into underlying operating results and prospects for the future by excluding stock-based compensation and related employer taxes, asset impairments, amortization of intangible assets, employee separation costs, costs related to our reverse split and employee option exchange program, the effects of special charges such as asset impairments and restructuring charges and/or gain on extinguishment of debt. We have historically reported similar financial measures and believe that the inclusion of comparative numbers provides consistency in our financial reporting. We use non-GAAP gross margin, operating expenses, operating income/(loss), net income/(loss) and net income/(loss) per share internally to evaluate our operating performance and to determine certain components of management compensation. In addition, we use these non-GAAP measures for internal budgets and forecasts. We believe that these non-GAAP measures can be useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. Non-GAAP gross margin excludes stock-based compensation expense, employer taxes on stock-based compensation, amortization of intangible assets, asset impairments and employee separation costs. Non-GAAP operating expenses exclude stock-based compensation expense, employer taxes on stock-based compensation, amortization of intangible assets, employee separation costs, special charges, reverse stock split costs and employee option exchange costs. Non-GAAP operating income/(loss) excludes stock-based compensation expense, employer taxes on stock-based compensation, amortization of intangible assets, asset impairments, employee separation costs, special charges, reverse stock split costs and employee option exchange costs. Non-GAAP net income/(loss) and non-GAAP net income/(loss) per share exclude stock-based compensation expense, employer taxes on stock-based compensation, amortization of intangible assets, asset impairments, employee separation costs, special charges, reverse stock split costs, employee option exchange costs and gain on extinguishment of debt. As a result of our adoption of SFAS 123R, "Share-Based Payment" in the first quarter of fiscal 2006, our GAAP statements of operations for periods beginning in fiscal year 2006 include stock-based compensation expense. We believe that excluding stock-based compensation and employer taxes on stock based compensation from non-GAAP measures facilitates a comparison of our results with prior periods and can enhance the understanding of our performance. We exclude the amortization of intangible assets and asset impairments from non-GAAP measures because we believe it provides a helpful perspective on our operating performance. We exclude employee separation costs, reverse stock split costs and costs related to our employee option exchange program because they include significant discrete items that may not be indicative of our ongoing operations or economic performance. We exclude special charges from non-GAAP measures because it includes restructuring charges, asset impairments and other significant discrete items that may not be indicative of our ongoing operations and economic performance. We exclude gain on debt extinguishment because it is considered by management to be outside our core operating activities. We do not provide forward-looking GAAP measures or a reconciliation of the forward-looking non-GAAP measures to GAAP measures because of our inability to project special charges, asset impairments, employee separation costs and stock-based compensation related expenses. The non-GAAP financial measures we provide have certain limitations because they do not reflect all of the costs associated with the operation of our business as determined in accordance with GAAP. The non-GAAP measures are in addition to, and not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. We endeavor to compensate for the limitations of these non-GAAP measures by providing GAAP financial statements, descriptions of the reconciling items and a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures so that investors can appropriately incorporate the non-GAAP measures and their limitations into their analyses. For complete information on stock-based compensation and related employer taxes, amortization of intangible assets, asset impairments, our reverse stock split, our employee option exchange program, employee separation costs, special charges and gain on extinguishment of debt, please see our financial statements and "Management's Discussion and Analysis of Results of Operations and Financial Condition" that will be included in the periodic report we expect to file with the SEC with respect to the financial periods discussed herein. MINDSPEED TECHNOLOGIES, INC.   Consolidated Condensed Balance Sheets (unaudited, in thousands)     October 2, October 3, 2009 2008 ASSETS Current Assets Cash and cash equivalents $ 20,891 $ 43,033 Receivables, net 7,662 14,398 Inventories 10,902 16,187 Deferred tax assets - current 1,574 144 Prepaid expenses and other current assets   2,529     2,994   Total current assets 43,558 76,756   Property, plant and equipment, net 11,018 12,600 Intangible assets, net 4,909 License agreements 6,505 3,347 Other assets   1,479     2,992   Total assets $ 62,560   $ 100,604       LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 6,338 $ 11,265 Accrued compensation and benefits 5,788 6,778 Accrued income taxes 525 412 Deferred income on sales to distributors 2,604 4,869 Deferred revenue 1,106 562 Restructuring 448 8 Convertible senior notes - short term 10,486 Other current liabilities   2,177     2,585   Total current liabilities 29,472 26,479   Convertible senior notes - long term 15,000 45,648 Other liabilities   823     519   Total liabilities 45,295 72,646   Stockholders' equity   17,265     27,958   Total liabilities and stockholders' equity $ 62,560   $ 100,604       MINDSPEED TECHNOLOGIES, INC.   Consolidated Condensed Statements of Cash Flows (unaudited, in thousands)   Year ended October 2, October 3, 2009 2008   Cash Flows From Operating Activities Net income (loss) $ (22,031 ) $ 7,235 Adjustments required to reconcile net loss to the net cash provided by (used in)operating activities, net of effects of acquisitions:   Depreciation and amortization 6,106 7,173 Asset impairments 5,498 Restructuring charges 4,031 (140 ) Stock compensation 2,676 5,506 Inventory provisions 657 (900 ) Gain on debt extinguishment (2,880 ) Other non-cash items, net 340 67 Changes in assets and liabilities: Receivables 6,903 (741 ) Inventories 4,628 (264 ) Accounts payable (5,069 ) 5,380 Deferred income on sales to distributors (2,265 ) 646 Restructuring (3,391 ) 1,616 Accrued expenses and other current liabilities (1,379 ) 1,076 Other   791     41     Net cash (used in) provided by operating activities   (5,385 )   26,695     Cash Flows From Investing Activities Capital expenditures (8,058 ) (7,514 ) Acquisition of assets, net of cash acquired       (1,172 )   Net cash used in investing activities   (8,058 )   (8,686 )   Cash Flows From Financing Activities Extinguishment of convertible debt (17,320 ) Proceeds from equity financing, net of offering costs 8,947 Debt issuance costs (256 ) (805 ) Exercise of options and warrants       111     Net cash (used in) provided by financing activities   (8,629 )   (694 )   Effect of foreign currency exchange rates on cash (70 ) (78 )   Net (decrease) increase in cash and cash equivalents (22,142 ) 17,237 Cash and cash equivalents at beginning of period   43,033     25,796     Cash and cash equivalents at end of period $ 20,891   $ 43,033     MINDSPEED TECHNOLOGIES, INC.   Selected Corporate Data (unaudited, in thousands)     Three months ended   Year ended October 2,   July 3,   October 3, October 2,   October 3,   2009     2009     2008     2009     2008     Gross margin % 62 % 61 % 75 % 61 % 70 %   Cash provided by (used in): Operating activities $ 2,267 $ (378 ) $ 15,058 $ (5,385 ) $ 26,695 Investing activities (2,126 ) (2,340 ) (1,088 ) (8,058 ) (8,686 ) Financing activities 8,947 (805 ) (8,629 ) (694 ) Effect of foreign currency on cash   (68 )   21     (30 )   (70 )   (78 ) Net increase (decrease) in cash $ 9,020   $ (2,697 ) $ 13,135   $ (22,142 ) $ 17,237     Depreciation $ 1,256 $ 1,233 $ 1,336 $ 5,063 $ 4,947 Capital expenditures 1,232 308 775 4,510 4,542   Revenues by region: Americas $ 9,059 $ 6,989 $ 23,209 $ 37,102 $ 58,092 Europe 2,807 2,364 6,107 12,185 20,094 Asia-Pacific   22,877     23,192     21,785     77,265     82,513   $ 34,743   $ 32,545   $ 51,101   $ 126,552   $ 160,699     Revenues by product line: Multiservice access DSP products $ 14,240 $ 13,642 $ 15,197 $ 49,452 $ 48,402 High-performance analog products 10,405 9,998 10,251 39,084 41,900 WAN communications products   10,098     8,905     13,653     33,016     54,047   Total net product revenues 34,743 32,545 39,101 121,552 144,349 Intellectual property           12,000     5,000     16,350   Total net revenues $ 34,743   $ 32,545   $ 51,101   $ 126,552   $ 160,699 [ Back To TMCnet.com's Homepage ]