Achieves Record Quarterly Net Sales of $80.5 million; up 8.2% sequentially and 49.4% From Year Ago Quarter Delivers Quarterly GAAP EPS of $0.10; Pro Forma Diluted EPS of $0.18 Pro Forma Gross Margin hits 38.4% Announces Increased Investments and Acceleration of Wafer Capacity Plans in Kunshan, China
Net income was $6.0 million, or $0.10 per share, compared with $3.9 million, or $0.07 per share, in the prior quarter and net income of $1.9 million, or $0.03 per share, in the year ago quarter. Pro forma income for the second quarter 2008, which excludes non-cash stock compensation expense, discontinued operations and an impairment charge of $0.6 million on the company's investment in auction rate securities, was $11.6 million, or $0.18 per diluted share, compared with $9.2 million, or $0.15 per diluted share, in the prior quarter and $5.7 million, or $0.10 per diluted share, in the year ago quarter.
"Our second quarter 2008 results were driven by strong sequential revenue growth in Broadband for both WiFi and CATV including initial production shipments of our new digital tuner, FiOS and DOCSIS 3.0 products," said Dr. Bami Bastani, President and Chief Executive Officer. "As we enter the third quarter 2008, Broadband will continue to have strong momentum, which will partially offset an expected decline in Wireless as certain of our customers have lowered their demand expectations and are reducing inventory levels. However, we believe this to be temporary as design-in activity has increased and therefore, are aggressively pursuing our capacity expansion plans in China to meet future demand."
As of June 28, 2008 cash and short and long-term marketable securities totaled $161.4 million compared with $166.5 million at March 29, 2008.
"Our reported second quarter 2008 financial results highlight the Company's capability in achieving operating leverage in our business," said Tom Shields, Executive Vice President and Chief Financial Officer. "The Company's balance sheet remains strong as we continue to invest in sustaining business growth for the long-term."
The Company further reported that it will accelerate previous plans announced on April 11, 2007 to expand wafer capacity in China. Such accelerated plans include increasing the total investment in the build-out of the 6" gallium arsenide integrated circuit wafer fabrication facility in Kunshan, China from $49.88 million to approximately $100.0 million. Such investments are expected to provide the completion of building construction by October 2008 and expanded wafer capacity commencing with the third quarter 2009. Additionally, the Company has initiated the immediate recruiting of required resources and will incur certain operating costs relative to the wafer fabrication facility in the third quarter 2008, which are estimated at $1.0 million. The company expects to have the ability to fund the China investments from internally generated operating cash flows and cash on-hand. However, if advantageous, the Company will explore other available and alternative means of financing.
Outlook for the Third Quarter 2008
Net sales for the third quarter 2008 are estimated to be in the range of $75.0 million to $81.0 million. Net sales at this level would represent an approximate 26% to 36% increase on a comparable basis with third quarter 2007. The low end of the net sales guidance reflects softness in industry demand and inventory re-balancing that may occur in the third quarter 2008 from our Wireless customers. Net income per share on a GAAP basis for the third quarter 2008 is expected to approximate $0.01 to $0.05. Pro forma diluted earnings per share, excluding non-cash stock compensation expense, are expected to be in the range of approximately $0.10 - $0.14. The net income and pro forma diluted earnings per share are based on an estimated diluted weighted average outstanding common share count of 62.7 million.
The statements regarding outlook are forward looking and actual results may differ materially. Please see safe harbor statement at the end of the press release.
This press release includes financial measures that are not in accordance with GAAP, consisting of non-GAAP, or pro forma, net income or loss and non-GAAP, or pro forma, income or loss per share. Management uses non-GAAP net income or loss and non-GAAP income or loss per share to evaluate the company's operating and financial performance in light of business objectives, for planning purposes, when publicly providing our business outlook and to facilitate period-to-period comparisons. ANADIGICS believes that these measures are useful to investors because they enhance investors' ability to review the company's business from the same perspective as the company's management and facilitate comparisons of this period's results with prior periods. These non-GAAP measures exclude charges related to stock-based compensation, an impairment of auction rate securities and discontinued operations. Non-GAAP measures are used by some investors when assessing the performance of our Company. These financial measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Management acknowledges that stock-based compensation is a recurring cost and is an important part of our employee's compensation and impacts their performance. However the expense is non-cash in nature and there are various valuation methodologies and assumptions used in determining stock-based compensation that may be unrelated to operations, such as volatility and current interest rates. The presentation of the additional information should not be considered a substitute for net income or loss or income or loss per share prepared in accordance with GAAP.
Limitations of non-GAAP financial measures. The primary material limitations associated with the use of non-GAAP measures as compared to the most directly comparable GAAP financial measures are (i) they may not be comparable to similarly titled measures used by other companies in ANADIGICS industry, and (ii) they exclude financial information that some may consider important in evaluating our performance. We compensate for these limitations by providing reconciliations of reported net income or loss and income or loss per share to non-GAAP net income or net loss and non-GAAP income or loss per share, respectively, within this press release.
Conference Call
ANADIGICS' senior management will conduct a conference call today at 5:00 PM Eastern time. A live audio Webcast will be available at www.anadigics.com/investors. A recording of the call will be available approximately two hours after the end of the call on the ANADIGICS Web site or by dialing 800-642-1687 (available until July 29, 2008).
Recent Highlights
June 25, 2008 - ANADIGICS Announces First Programmable Gain Amplifier Optimized for DOCSIS 3.0
June 24, 2008 - ANADIGICS Launches Family of Active Splitters Designed for Set-top Boxes with Multiple Tuners
June 23, 2008 - ANADIGICS Launches Fully Integrated 1GHz Tuner for Set-top Boxes
June 17, 2008 - ANADIGICS Expands Broadband and Wireless Sales Support in Israel
May 28, 2008 - ANADIGICS Supports LG Electronics' New Professional Level Camera Phone
May 27, 2008 - ANADIGICS' New High-Power CATV Amplifier Facilitates Migration towards deep Fiber Architecture
May 20, 2008 - ANADIGICS Continues to Stand Behind LG Electronics, Powering Phone Giant's Latest Multimedia Mobile Handset
May 15, 2008 - ANADIGICS' New Linear Amplifiers Raise Standards for Power and Performance in CATV Set-top Boxes and Distribution Systems
April 30, 2008 - ANADIGICS Announces 3G Power Amplifier Designed to Deliver Power Performance required by EGSM Platforms throughout Europe
April 23, 2008 - Engineered for UMTS900 Handsets, ANADIGICS New Power Amplifier is Powering EGSM WCDMA Networks.
