MICREL, INCORPORATED 
By SAN JOSE, Calif., Jan. 28 /PRNewswire-FirstCall/ -- Micrel, Incorporated (Nasdaq: MCRL), an industry leader in analog, high bandwidth communications and Ethernet IC solutions, today announced financial results for the fourth quarter and full year ended December 31, 2009.
Fourth quarter revenues of $61.2 million increased by $2.4 million, or 4.0%, from $58.9 million in the third quarter of 2009 and were at the high-end of the Company's fourth quarter revenue guidance range, which anticipated a 1% to 5% sequential increase. Compared to the same period last year, revenues were higher by $6.1 million, or 11.0%. The sequential increase in revenue was due to strength in several end markets of the Company's business, with primary growth coming from stronger demand in the industrial and communications end markets. The year-over-year increase in revenues was due to higher overall demand from customers in nearly all geographies except Europe as part of a recovery from the recent worldwide economic crisis that significantly impacted most consumer-related markets.
Fourth quarter 2009 GAAP net income of $4.1 million, or $0.07 per diluted share compares to third quarter 2009 GAAP net income of $6.8 million, or $0.11 per diluted share, and GAAP net income of $4.9 million or $0.07 per diluted share in the same period in 2008. Included in the fourth quarter 2009 GAAP net income is a non-cash pre-tax charge of $6.5 million related to the impairment of certain manufacturing equipment at the Company's San Jose fabrication facility. Fourth quarter 2009 non-GAAP net income of $8.7 million, or $0.14 per diluted share compares to third quarter 2009 non-GAAP net income of $7.6 million, or $0.12 per diluted share, and non-GAAP net income of $6.3 million, or $0.09 per diluted share in the same period in 2008. A reconciliation of the GAAP net income to non-GAAP net income is provided in the financial tables of this press release. Non-GAAP results exclude the impact of stock-based compensation expense, proxy contest expense/credits, equipment impairment and their related tax effects.
For the year ended December 31, 2009, revenue was $218.9 million, compared to revenue of $259.4 million in 2008. GAAP net income for 2009 was $16.3 million, or $0.26 per diluted share, compared with GAAP net income of $28.3 million, or $0.40 per diluted share in 2008. Non-GAAP net income in 2009 was $22.9 million, or $0.36 per diluted share, compared with non-GAAP net income of $34.4 million, or $0.49 per diluted share in 2008. Gross margins for 2009 were 52% compared to 55% in 2008.
"With the recovery of the semiconductor industry underway, I continue to be encouraged by Micrel's solid operating performance and improved customer demand," stated Ray Zinn, president and CEO of Micrel. "Driven by the strength of the industrial and communications end markets, fourth quarter revenues grew to $61.2 million -- a 4% increase when compared to the prior quarter and 11% higher than last year's fourth quarter. Gross margins also improved in the fourth quarter to 53.3% from 52.5% in the last quarter. In addition, bookings were very strong, with a fourth quarter book-to-bill ratio significantly above one. In fact, our book-to-bill ratio remained above one during each quarter of 2009."
Mr. Zinn continued, "To bolster our results as the industry recovers, we continue to be keenly focused on reducing costs and improving operating efficiencies. During the quarter, the Company recorded one-time $6.5 million non-cash, pre-tax charge related to the impairment of certain manufacturing equipment located at our San Jose fabrication facility. This impairment charge had the effect of reducing GAAP earnings by $0.06 per diluted share. While this charge impacted fourth quarter net income, we expect to realize an improvement in Micrel's gross margins in future quarters due to improved capacity utilization and a reduction in operating expenses. We do not believe the removal of this equipment will have any negative impact on the company's ability to meet its revenue outlook for the foreseeable future."
Outlook
Commenting on Micrel's business outlook, Mr. Zinn said, "Looking ahead to the first quarter and beyond, we are excited about Micrel's growth opportunities. While we anticipate overall demand to increase significantly during 2010, we expect customer inventory levels to remain unchanged in the near term. We are continuing to manage our costs very closely and we believe that operating margins will expand faster than revenue, reflecting the operating leverage in our business model. Design win momentum is strong and we remain confident in our ability to continue delivering world-class products that generate traction with our customers."
For the first quarter of 2010, the Company estimates that revenues will increase in the range of 4% to 8% on a sequential basis. Gross profit margin is expected to be in excess of 54%. In addition, the Company estimates that GAAP net income will be approximately $0.13 to $0.15 per diluted share.
Dividend
The Company announced today that Micrel's Board of Directors has authorized a quarterly cash dividend of $0.035 per share of common stock. The payment of this dividend will be made on February 24, 2010, to shareholders of record as of February 10, 2010.
Conference Call
The Company will host a conference call at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) on January 28, 2010. Chief Executive Officer Raymond Zinn and Chief Financial Officer Ray Wallin will present an overview of fourth quarter 2009 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 877-941-2928. For international callers, please dial 480-629-9725. 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.investorcalendar.com. An audio replay of the conference call will be available through February 4, 2010, by dialing 800-406-7325 or 303-590-3030, and entering access code number 4202597. The webcast replay will also be available on the Company's website at: http://www.micrel.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
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, customer demand and inventories, order lead times, turns-fill requirements, earnings per share, gross margin, average selling prices, the effect of cost-reduction efforts, development of new products, design wins and customer order patterns; 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, wireless, 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, please refer 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, 2008. 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 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, proxy contest expenses, restructuring and impairment charges or credits, other income related to litigation settlements and their respective 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 reps worldwide. Web: www.micrel.com. For further information, contact Ray Wallin at: Micrel, Incorporated, 2180 Fortune Drive, San Jose, California 95131, (408) 944-0800; or visit the Micrel website at: www.micrel.com.
-Financial Tables to Follow-
MICREL, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
-------------------- -------------------
December September December December
31, 30, 31, 31,
-------- --------- -------- --------
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Net revenues $61,231 $58,872 $55,166 $218,887 $259,360
Cost of revenues* 28,597 27,936 26,478 105,134 116,351
------ ------ ------ ------- -------
Gross profit 32,634 30,936 28,688 113,753 143,009
------ ------ ------ ------- -------
Operating expenses:
Research and
development* 11,144 11,405 12,231 46,522 54,947
Selling, general and
administrative* 10,047 9,507 9,616 37,325 44,405
Proxy contest expense (550) - 1,083 (550) 4,153
Equipment impairment
and restructuring
charges (credits) 6,514 - - 6,514 (842)
----- --- --- ----- ----
Total operating
expenses 27,155 20,912 22,930 89,811 102,663
------ ------ ------ ------ -------
Income from
operations 5,479 10,024 5,758 23,942 40,346
Other income
(expense):
Interest income 151 164 554 828 2,936
Interest expense (96) (116) (55) (272) (57)
Other income 47 5 - 132 57
--- --- --- --- ---
Total other income 102 53 499 688 2,936
--- --- --- --- -----
Income before income
taxes 5,581 10,077 6,257 24,630 43,282
Provision for income
taxes 1,501 3,276 1,363 8,336 15,025
----- ----- ----- ----- ------
Net income $4,080 $6,801 $4,894 $16,294 $28,257
====== ====== ====== ======= =======
Net income per share:
Basic $0.07 $0.11 $0.07 $0.26 $0.40
===== ===== ===== ===== =====
Diluted $0.07 $0.11 $0.07 $0.26 $0.40
===== ===== ===== ===== =====
Shares used in
computing per share
amounts:
Basic 62,338 62,322 68,325 63,576 70,549
====== ====== ====== ====== ======
Diluted 62,409 62,545 68,374 63,644 70,653
====== ====== ====== ====== ======
* Includes
amortization of
stock-based
compensation as
follows:
Cost of revenues $200 $184 $215 $670 $974
Research and
development 486 425 370 1,619 2,086
Selling, general and
administrative 559 427 334 1,675 2,119
MICREL, INCORPORATED
SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December September December December
31, 30, 31, 31,
-------- --------- -------- --------
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
GAAP Net income $4,080 $6,801 $4,894 $16,294 $28,257
Adjustments to GAAP Net
Income:
Stock-based compensation
included in:
Cost of revenues 200 184 215 670 974
Research and development 486 425 370 1,619 2,086
Selling, general and
administrative 559 427 334 1,675 2,119
Proxy contest expense (550) - 1,083 (550) 4,153
Equipment impairment and
restructuring charges
(credits) 6,514 - - 6,514 (842)
Tax effect of adjustments
to GAAP income (2,579) (272) (612) (3,302) (2,378)
------ ---- ---- ------ ------
Total Adjustments to GAAP
Net Income 4,630 764 1,390 6,626 6,112
----- --- ----- ----- -----
Non-GAAP income** $8,710 $7,565 $6,284 $22,920 $34,369
====== ====== ====== ======= =======
Non-GAAP shares used in
computing non-GAAP
income per share (in
thousands):
Basic 62,338 62,322 68,325 63,576 70,549
====== ====== ====== ====== ======
Diluted* 62,538 62,521 68,419 63,729 70,713
====== ====== ====== ====== ======
GAAP income per share -
Basic $0.07 $0.11 $0.07 $0.26 $0.40
Total Adjustments to GAAP
Net Income $0.07 $0.01 $0.02 $0.10 $0.09
----- ----- ----- ----- -----
Non-GAAP income per share
- Basic $0.14 $0.12 $0.09 $0.36 $0.49
===== ===== ===== ===== =====
GAAP income per share -
Diluted $0.07 $0.11 $0.07 $0.26 $0.40
Total Adjustments to GAAP
Net Income $0.07 $0.01 $0.02 $0.10 $0.09
----- ----- ----- ----- -----
Non-GAAP income per share
- Diluted(*) $0.14 $0.12 $0.09 $0.36 $0.49
===== ===== ===== ===== =====
* Non-GAAP shares have been adjusted from diluted outstanding shares
calculated under FAS123R.
** 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, proxy
contest expenses, equipment impairment, restructuring charges
or credits, 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, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
December December
31, 31,
2009 2008
---- ----
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and short-term
investments $70,898 $74,195
Accounts receivable, net 26,330 20,643
Inventories 34,191 37,440
Income taxes receivable 4,011 6,783
Deferred income taxes 18,465 17,752
Other current assets 1,449 1,781
----- -----
Total current assets 155,344 158,594
LONG-TERM INVESTMENTS 12,692 12,628
PROPERTY, PLANT AND EQUIPMENT, NET 67,644 76,200
INTANGIBLE ASSETS, NET 509 1,338
DEFERRED INCOME TAXES 9,381 11,135
OTHER ASSETS 388 448
--- ---
TOTAL $245,958 $260,343
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $15,342 $15,365
Deferred income on shipments to distributors 23,405 21,136
Current portion of Long-term debt 8,571 -
Other current liabilities 5,760 10,696
----- ------
Total current liabilities 53,078 47,197
LONG-TERM DEBT 2,857 -
LONG-TERM TAXES PAYABLE 4,672 4,468
OTHER LONG-TERM OBLIGATIONS - 272
SHAREHOLDERS' EQUITY:
TOTAL SHAREHOLDERS' EQUITY 185,351 208,406
TOTAL $245,958 $260,343
SOURCE Micrel
