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Mindspeed(R) Reports Fiscal 2008 Third Quarter Results
[July 21, 2008]

Mindspeed(R) Reports Fiscal 2008 Third Quarter Results


(Marketwire Via Acquire Media NewsEdge) NEWPORT BEACH, CA, July 21 / MARKET WIRE/ --

Mindspeed Technologies, Inc. (NASDAQ: MSPD), a leading supplier of semiconductor solutions for network

infrastructure applications, today announced revenues of $38.0 million for
the third quarter of fiscal 2008, which ended June 27, 2008, an increase of
5 percent compared to $36.2 million for the second quarter of fiscal 2008
and up 15 percent from the $33.2 million reported for the third quarter of
fiscal 2007.

The company's non-GAAP gross margin was $25.8 million, or 68 percent of
revenues, for the third fiscal quarter of 2008 compared to $24.6 million,
or 68 percent of revenues, for the second fiscal quarter of 2008.
Presented on a GAAP basis, gross margin was $25.5 million, or 67 percent of
revenues, for the third fiscal quarter of 2008 compared to $24.4 million,
or 67 percent of revenues, for the second fiscal quarter of 2008.

The company's operating income on a non-GAAP basis was $1.6 million for the
third fiscal quarter of 2008 compared to non-GAAP operating income of $0.6
million for the second fiscal quarter of 2008. Presented on a GAAP basis,
operating loss for the third fiscal quarter of 2008 was $0.5 million
compared to a loss of $1.0 million for the second fiscal quarter of 2008.

The company's net income for the third quarter of fiscal 2008 on a non-GAAP
basis was $1.1 million, or $0.05 per share, compared to a non-GAAP net loss
of $0.3 million, or $0.01 per share, for the second fiscal quarter of 2008.
Presented on a GAAP basis, the company reported a net loss of $1.1 million,
or $0.05 per share, for the third quarter of fiscal 2008 compared to a net
loss of $1.8 million, or $0.08 per share, for the second fiscal quarter of
2008. On June 30, 2008, the company effected a 1-for-5 reverse stock
split. All per share numbers are presented on a post-split basis.
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 16 percent sequentially, contributing 36 percent of total third
fiscal quarter 2008 revenues. Revenues from high-performance analog
products increased 8 percent sequentially, representing 29 percent of the
total. Wide area networking communication product revenues decreased 6
percent sequentially, contributing the remaining 35 percent of third fiscal
quarter 2008 revenues.

"Mindspeed delivered another quarter of solid financial performance with
record revenues towards the high-end of our guidance range," said Raouf
Halim, Mindspeed's chief executive officer. "Our VoIP business delivered
its third consecutive quarter of double-digit sequential growth and was the
largest revenue contributor of our three product segments for the first
time in our history. We also generated continued positive cash flow,
ending our third fiscal quarter with almost $30 million of cash."

Outlook

Mindspeed expects fiscal 2008 fourth quarter revenues to be up 2 to 5
percent sequentially. The company expects fourth quarter non-GAAP gross
margin to be approximately 67 percent and non-GAAP operating expenses to be
approximately flat sequentially, with continued positive non-GAAP operating
income and positive non-GAAP cash flow. The company's fourth quarter
outlook is net the benefit of the $10 million patent sale the company
announced today.

Third Quarter Fiscal 2008 Conference Call

Mindspeed will conduct a conference call to discuss its third quarter
fiscal 2008 results this afternoon, Monday, July 21, 2008, at 2:00 p.m.
Pacific Time /5:00 p.m. Eastern Time. To listen to the conference call via
telephone, call 800-593-9968 (domestic) or 210-795-2680 (international);
password: Mindspeed. To listen via the Internet, please visit the
Investors section of Mindspeed's web site at www.mindspeed.com. Replay of
the conference will be available via telephone two hours after it concludes
for 30 days by calling 800-688-3991 (domestic) or 203-369-3131
(international). 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 expected levels of
revenues, gross margin, operating expense, operating income and cash flow
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
further generate cash; availability and terms of capital needed for the
company's business; downturns in the semiconductor industry; political and
economic uncertainties affecting our foreign operations; the company's
ability to maintain operating expenses within anticipated levels;
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; 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" 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 March 28, 2008, 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 Nine months ended
---------------------------- --------------------
June 27, Mar. 28, June 29, June 27, June 29,
2008 2008 2007 2008 2007
-------- -------- -------- --------- ---------

Net revenues $ 38,049 $ 36,248 $ 33,207 $ 109,598 $ 94,122
Cost of goods sold
(a)(b) 12,510 11,799 10,522 34,651 32,016
-------- -------- -------- --------- ---------
Gross margin 25,539 24,449 22,685 74,947 62,106

Operating expenses:
Research and
development (a) 14,771 13,704 13,871 42,193 44,181
Selling, general and
administrative (a) 11,196 11,674 10,835 34,376 32,907
Special charges (a)(c) 110 93 (104) 284 4,728
-------- -------- -------- --------- ---------
Total operating
expenses 26,077 25,471 24,602 76,853 81,816
-------- -------- -------- --------- ---------

Operating loss (538) (1,022) (1,917) (1,906) (19,710)

Other income (expense),
net (413) (750) (439) (1,564) (1,290)
-------- -------- -------- --------- ---------

Loss before income taxes (951) (1,772) (2,356) (3,470) (21,000)

Provision for income
taxes 132 65 163 279 455
-------- -------- -------- --------- ---------

Net loss $ (1,083) $ (1,837) $ (2,519) $ (3,749) $ (21,455)
======== ======== ======== ========= =========

Net loss per share,
basic (d) $ (0.05) $ (0.08) $ (0.11) $ (0.16) $ (0.97)
======== ======== ======== ========= =========

Weighted-average number
of shares used in basic
per share computation
(d) 23,144 23,045 22,365 22,981 22,042
======== ======== ======== ========= =========

(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 (June 2008), $0.4 million (March 2008), and $1.1 million (June
2007). For the nine months ended June 27, 2008 and June 29, 2007 the
favorable effect of such sales was $1.1 million and $3.1 million.

(c) Special charges consists of asset impairments and restructuring
charges.

(d) Per share information has been adjusted to reflect the 1-for-5
reverse stock split, which the company effected on June 30, 2008.

MINDSPEED TECHNOLOGIES, INC.

Reconciliation of Non-GAAP Measures to GAAP Measures
(unaudited, in thousands, except per share amounts)

Three Months Ended Nine Months Ended
June 27, Mar. 28, June 29, June 27, June 29,
2008 2008 2007 2008 2007
-------- -------- -------- -------- ---------

Reconciliation of
Non-GAAP Gross Margin to
GAAP Gross Margin
Non-GAAP gross margin $ 25,780 $ 24,597 $ 22,804 $ 75,575 $ 62,434
Items excluded from
non-GAAP gross margin:
Stock-based
compensation 43 (2) 118 121 307
Employer taxes on
stock-based
compensation 1 -- 1 5 21
Amortization of
intangible assets (e) 160 150 -- 465 --
Employee separation
cost (f) 37 -- -- 37 --
-------- -------- -------- -------- ---------
Gross margin $ 25,539 $ 24,449 $ 22,685 $ 74,947 $ 62,106
======== ======== ======== ======== =========

Reconciliation of
Non-GAAP Research and
Development Expenses to
GAAP Research and
Development Expenses
Non-GAAP research and
development expenses $ 13,578 $ 13,162 $ 13,044 $ 39,597 $ 42,159
Items excluded from
non-GAAP research and
development expenses:
Stock-based
compensation 450 511 816 1,762 1,910
Employer taxes on
stock-based
compensation 5 31 11 96 112
Employee separation
cost (f) 738 -- -- 738 --
-------- -------- -------- -------- ---------
Research and development
expenses $ 14,771 $ 13,704 $ 13,871 $ 42,193 $ 44,181
======== ======== ======== ======== =========

Reconciliation of
Non-GAAP Selling,
General and Administrative
Expenses to GAAP Selling,
General and Administrative
Expenses
Non-GAAP selling, general
and administrative
expenses $ 10,557 $ 10,875 $ 9,474 $ 31,816 $ 29,361
Items excluded from
non-GAAP selling,
general and
administrative expenses:
Stock-based
compensation 603 738 1,351 2,114 3,396
Employer taxes on
stock-based
compensation 5 19 10 57 150
Amortization of
intangible assets (e) -- -- -- 100 --
Employee separation
cost (f) 31 42 -- 289 --
-------- -------- -------- -------- ---------
Selling, general and
administrative expenses $ 11,196 $ 11,674 $ 10,835 $ 34,376 $ 32,907
======== ======== ======== ======== =========

Reconciliation of
Non-GAAP Operating
Income/(Loss) to GAAP
Operating Loss
Non-GAAP operating
income/(loss) $ 1,645 $ 560 $ 286 $ 4,162 $ (9,086)
Items excluded from
non-GAAP operating
income/(loss):
Stock-based
compensation 1,096 1,247 2,285 3,997 5,613
Employer taxes on
stock-based
compensation 11 50 22 158 283
Amortization of
intangible assets (e) 160 150 -- 565 --
Employee separation
cost (f) 806 42 -- 1,064 --
Special charges (g) 110 93 (104) 284 4,728
-------- -------- -------- -------- ---------
Operating loss $ (538) $ (1,022) $ (1,917) $ (1,906) $ (19,710)
======== ======== ======== ======== =========

Reconciliation of
Non-GAAP Net Income/
(Loss) to GAAP Net Loss
Non-GAAP net
income/(loss) $ 1,100 $ (255) $ (316) $ 2,319 $ (10,831)
Items excluded from
non-GAAP net income/
(loss):
Stock-based
compensation 1,096 1,247 2,285 3,997 5,613
Employer taxes on
stock-based
compensation 11 50 22 158 283
Amortization of
intangible assets (e) 160 150 -- 565 --
Employee separation
cost (f) 806 42 -- 1,064 --
Special charges (g) 110 93 (104) 284 4,728
-------- -------- -------- -------- ---------
Net loss $ (1,083) $ (1,837) $ (2,519) $ (3,749) $ (21,455)
======== ======== ======== ======== =========

Reconciliation of
Non-GAAP Net
Income/(Loss) Per
Share to GAAP Net Loss
Per Share
Income/(loss) per share,
basic:
Non-GAAP net
income/(loss) (d) $ 0.05 $ (0.01) $ (0.01) $ 0.10 $ (0.49)
Adjustments (d) (0.10) (0.07) (0.10) (0.26) (0.48)
-------- -------- -------- -------- ---------
Net loss (d) $ (0.05) $ (0.08) $ (0.11) $ (0.16) $ (0.97)
======== ======== ======== ======== =========



Reconciliation of
Non-GAAP Cash Generation
(Consumption) to Net
Increase (Decrease) in
Cash and Cash
Equivalents
Non-GAAP cash
generation
(consumption) $ 1,208 $ 1,176 $ (2,741) $ 4,102 $ (9,551)
Net sales (purchases)
of marketable
securities -- -- 4,500 -- 5,031
-------- -------- -------- -------- ---------
Net increase (decrease)
in cash and cash
equivalents $ 1,208 $ 1,176 $ 1,759 $ 4,102 $ (4,520)
======== ======== ======== ======== =========

(d) Per share information has been adjusted to reflect the 1-for-5
reverse stock split, which the company effected on June 30, 2008.


(e) 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.

(f) Employee separation costs consist of severance benefits payable
to certain former employees of the company as a result of
organizational changes.

(g) Special charges consists of asset impairments and restructuring
charges.

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, employer taxes on stock-based compensation,
employee separation costs, amortization of intangible assets, and/or the
effects of special charges such as asset impairments and restructuring
charges. 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, research and development expenses, selling,
general and administrative expenses, operating income/(loss), net loss, net
loss per share and cash generation/(consumption) 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 and
employee separation cost. Non-GAAP research and development expenses,
selling, general and administrative expenses, operating income/(loss), net
loss and net loss per share exclude stock-based compensation expense,
employer taxes on
stock-based compensation, amortization of intangible assets, employee
separation costs and special charges. Non-GAAP cash
generation/(consumption) is the net increase (decrease) in cash and cash
equivalents excluding the sales and purchases of marketable securities.

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 from non-GAAP measures
facilitates a comparison of our results with prior periods and can enhance
the understanding of our performance. We exclude employer taxes on
stock-based compensation from non-GAAP measures because we believe it
provides a helpful perspective on our operating performance. We exclude
the amortization of intangible assets from non-GAAP measures because we
believe it provides a helpful perspective on our operating performance. We
exclude employee separation costs because it includes 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 provide non-GAAP cash generation/(consumption)
because we believe it is important for investors to understand changes in
our total liquidity period to period.

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, 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, amortization of intangible assets, employee separation costs
and special charges, 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)

June 27, Sept. 28,
2008 2007
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 29,898 $ 25,796
Receivables, net 17,155 13,584
Inventories 10,551 15,023
Prepaid expenses and other current assets 2,375 3,763
------------ ------------
Total current assets 59,979 58,166

Property, plant and equipment, net 13,314 13,147
Intangible assets, net 5,064 5,524
License agreements 3,239 1,798
Other assets 2,763 3,444
------------ ------------
Total assets $ 84,359 $ 82,079
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 8,521 $ 7,117
Deferred income on sales to distributors 3,739 4,226
Accrued compensation and benefits 6,950 5,286
Accrued income tax 92 752
Restructuring 163 1,478
Other current liabilities 2,839 3,493
------------ ------------
Total current liabilities 22,304 22,352

Convertible senior notes 45,365 45,037
Other liabilities 598 444
------------ ------------
Total liabilities 68,267 67,833

Stockholders' equity 16,092 14,246
------------ ------------
Total liabilities and stockholders' equity $ 84,359 $ 82,079
============ ============

MINDSPEED TECHNOLOGIES, INC.

Consolidated Condensed Statements of Cash Flows
(unaudited, in thousands)

Nine months ended
June 27, June 29,
2008 2007
----------- -----------

Cash Flows From Operating Activities
Net loss $ (3,749) $ (21,455)
Adjustments required to reconcile net loss to the
net cash provided by (used in) operating
activities, net of effects of acquisitions:
Depreciation and amortization 4,640 3,893
Stock compensation 4,123 5,870
Inventory provisions (1,188) (384)
Other non-cash items, net 387 444
Changes in assets and liabilities:
Receivables (3,490) (568)
Inventories 5,660 3,139
Accounts payable 2,680 (2,459)
Deferred income on sales to distributors (487) (1,135)
Accrued expenses and other current
liabilities 616 1,662
Other 2,445 1,558
----------- -----------

Net cash provided by (used in) operating
activities 11,637 (9,435)
----------- -----------

Cash Flows From Investing Activities
Capital expenditures (6,426) (3,436)
Acquisition of assets, net of cash acquired (1,172) --
Net sales of marketable securities -- 5,031
----------- -----------

Net cash (used in) provided by investing
activities (7,598) 1,595
----------- -----------

Cash Flows From Financing Activities
Exercise of options and warrants 111 3,320
----------- -----------

Net cash provided by financing activities 111 3,320
----------- -----------

Effect of foreign currency exchange rates on cash (48) --

Net increase (decrease) in cash and cash
equivalents 4,102 (4,520)
Cash and cash equivalents at beginning of period 25,796 29,976
----------- -----------

Cash and cash equivalents at end of period $ 29,898 $ 25,456
=========== ===========

MINDSPEED TECHNOLOGIES, INC.

Selected Corporate Data
(unaudited, in thousands)

Three months ended Nine months ended
----------------------------- --------------------
June 27, Mar. 28, June 29, June 27, June 29,
2008 2008 2007 2008 2007
-------- -------- --------- --------- ---------

Gross margin % 67% 67% 68% 68% 66%

Cash provided by (used
in):
Operating activities $ 3,428 $ 3,421 $ (2,025) $ 11,637 $ (9,435)
Investing activities (2,299) (2,131) 2,886 (7,598) 1,595
Financing activities -- 10 898 111 3,320
Effect of foreign
currency on cash 79 (124) -- (48) --
-------- -------- --------- --------- ---------
Net increase (decrease)
in cash $ 1,208 $ 1,176 $ 1,759 $ 4,102 $ (4,520)
======== ======== ========= ========= =========

Depreciation $ 1,211 $ 1,202 $ 1,304 $ 3,611 $ 3,893
Capital expenditures 1,457 984 1,891 3,767 3,713

Revenues by region:
Americas $ 8,795 $ 12,462 $ 12,538 $ 34,883 $ 33,916
Europe 4,363 5,620 3,940 13,987 10,877
Asia-Pacific 24,891 18,166 16,729 60,728 49,329
-------- -------- --------- --------- ---------
$ 38,049 $ 36,248 $ 33,207 $ 109,598 $ 94,122
======== ======== ========= ========= =========

Revenues by product
line:
Multiservice access
DSP products $ 13,748 $ 11,865 $ 9,241 $ 35,555 $ 27,545
High-performance
analog products 10,921 10,154 9,408 31,649 27,360
WAN communications
products 13,380 14,229 14,558 42,394 39,217
-------- -------- --------- --------- ---------
$ 38,049 $ 36,248 $ 33,207 $ 109,598 $ 94,122
======== ======== ========= ========= =========

Contact:
Thomas Stites
Mindspeed Technologies, Inc.
(949) 579-3650

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