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: future financial results, including revenues, customer demand and inventories, order lead times, backlog, turns-fill requirements, net income, earnings per share, gross margin, average selling prices, the effect of cost-control efforts, use of free cash flow, stock buyback and dividend programs, supply chain constraints, channel inventory levels and trends, capacity utilization, development of new products, design wins and customer order patterns, and the nature and extent of macro-economic and industry trends. Forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially. Those risks and uncertainties include, but are not limited to, such factors as: softness in demand for Micrel products; customer decisions to cancel, reschedule, or delay orders for Micrel's products; the effect that lead times and channel inventories have on the demand for Micrel's products; distributor acceptance of changing contract terms; economic or financial difficulties experienced by Micrel customers; the effect of business conditions in the computing, wireless, telecommunications and industrial markets; the impact of any previous or future acquisitions; challenges involving integration of acquired businesses and utilization of acquired technology, market adoption, revenue growth and margins of acquired products; changes in demand for the Company's products; the impact of competitive products and pricing and alternative technological advances; the accuracy of estimates used to prepare the Company's financial statements and forecasts; 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 Micrel's future cash needs; the nature of other investment opportunities available to the Company from time to time; Micrel's operating cash flow, and economic and industry projections. 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, 2013. 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 because the Company believes it is helpful information for investors and financial analysts in their analysis of historical results and projections of the Company's future operating results. Non-GAAP net income and non-GAAP earnings per diluted share exclude the impact of revenues and the related cost of revenues from the conversion of certain distributors to a sell-in revenue recognition model, share-based compensation, restructuring charges and amortization of acquisition-related intangible assets with the related income tax effects and R&D tax credit. Non-GAAP results without the one-time adjustment exclude the impact of revenues and the related cost of revenues from the conversion of distributors to a sell-in revenue recognition model with the related income tax effects. The Company believes this provides a better comparison of results in the current period to those in prior periods as well as provides information regarding the Company's on-going operating performance after exclusion of these items. The Company has reconciled such non-GAAP financial measures to the most directly comparable GAAP financial measures in the financial tables at the end of this press release.
References to these non-GAAP financial measures 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. The Company's non-GAAP financial measures may differ from non-GAAP financial measures provided by other companies.
About Micrel
Micrel, Inc. is a leading global manufacturer of IC solutions for the worldwide high-performance linear and power, LAN and timing and communications markets. The Company's products include advanced mixed-signal, analog and power semiconductors; high performance communication, clock management, MEMs-based clock oscillators and crystal-less clock generators, 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.
-Financial Tables to Follow-
MICREL, INCORPORATED
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
----------------------------- --------------------
December September December December December
31, 2014 30, 2014 31, 2013 31, 2014 31, 2013
-------- --------- -------- --------- ---------
Net revenues $ 57,918 $ 67,480 $ 60,007 $ 247,594 $ 237,080
Cost of revenues * 28,308 33,072 29,594 119,566 115,034
-------- --------- -------- --------- ---------
Gross profit 29,610 34,408 30,413 128,028 122,046
Gross profit % 51.1% 51.0% 50.7% 51.7% 51.5%
Operating expenses:
Research and
development * 15,103 16,013 14,526 62,033 55,853
Selling, general and
administrative * 11,721 12,218 11,325 48,351 45,803
Restructuring charges 508 484 1,376 992 1,376
-------- --------- -------- --------- ---------
Total Operating
Expenses 27,332 28,715 27,227 111,376 103,032
Income from operations 2,278 5,693 3,186 16,652 19,014
Interest and other
(expense) income:
Interest income 84 80 109 359 482
Other expense (97) (120) (34) (297) (264)
-------- --------- -------- --------- ---------
Interest and other
(expense) income,
net (13) (40) 75 62 218
Income before (benefit
from) provision for
income taxes 2,265 5,653 3,261 16,714 19,232
(Benefit from)
provision for income
taxes (789) 978 (103) 3,167 1,584
-------- --------- -------- --------- ---------
Net income $ 3,054 $ 4,675 $ 3,364 $ 13,547 $ 17,648
======== ========= ======== ========= =========
Net income per share:
Basic $ 0.05 $ 0.08 $ 0.06 $ 0.24 $ 0.31
======== ========= ======== ========= =========
Diluted $ 0.05 $ 0.08 $ 0.06 $ 0.24 $ 0.30
======== ========= ======== ========= =========
Shares used in
computing per share
amounts:
Basic 56,490 56,642 56,908 56,508 57,803
======== ========= ======== ========= =========
Diluted 57,710 57,708 57,546 57,538 58,506
======== ========= ======== ========= =========
* Share-based
compensation expense
included in:
Cost of revenues $ 249 $ 271 $ 276 $ 997 $ 1,060
Research and
development 800 874 867 3,197 2,875
Selling, general and
administrative 895 864 878 3,430 3,162
-------- --------- -------- --------- ---------
$ 1,944 $ 2,009 $ 2,021 $ 7,624 $ 7,097
======== ========= ======== ========= =========
MICREL, INCORPORATED
SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
(In thousands, except share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
----------------------------- --------------------
December September December December December
31, 2014 30, 2014 31, 2013 31, 2014 31, 2013
-------- --------- -------- --------- ---------
Net revenues $ 57,918 $ 67,480 $ 60,007 $ 247,594 $ 237,080
Revenue from conversion
of distributors to
sell-in revenue
recognition model - (5,064) - (5,064) -
-------- --------- -------- --------- ---------
Net revenues without
one-time adjustment $ 57,918 $ 62,416 $ 60,007 $ 242,530 $ 237,080
======== ========= ======== ========= =========
Cost of revenues $ 28,308 $ 33,072 $ 29,594 $ 119,566 $ 115,034
Cost of revenues from
conversion of
distributors to sell-
in revenue recognition
model - (1,566) - (1,566) -
-------- --------- -------- --------- ---------
Cost of revenues
without one-time
adjustment $ 28,308 $ 31,506 $ 29,594 $ 118,000 $ 115,034
======== ========= ======== ========= =========
Gross profit $ 29,610 $ 34,408 $ 30,413 $ 128,028 $ 122,046
Revenues from
conversion of
distributors to sell-
in revenue recognition
model - (5,064) - (5,064) -
Cost of revenues from
conversion of
distributors to sell-
in revenue recognition
model - 1,566 - 1,566 -
-------- --------- -------- --------- ---------
Gross profit without
one-time adjustment $ 29,610 $ 30,910 $ 30,413 $ 124,530 $ 122,046
======== ========= ======== ========= =========
Gross profit % without
one-time adjustment 51.1% 49.5% 50.7% 51.3% 51.5%
Net income 3,054 4,675 3,364 13,547 17,648
Revenues from
conversion of
distributors to sell-
in revenue recognition
model - (5,064) - (5,064) -
Cost of revenues from
conversion of
distributors to sell-
in revenue recognition
model - 1,566 - 1,566 -
Tax effect of one-time
adjustments - 1,088 - 1,088 -
-------- --------- -------- --------- ---------
Net income without one-
time adjustment 3,054 2,265 3,364 11,137 17,648
======== ========= ======== ========= =========
Net income per share -
diluted $ 0.05 $ 0.08 $ 0.06 $ 0.24 $ 0.30
Total adjustments to
net income $ - $ (0.04) $ - $ (0.05) $ -
-------- --------- -------- --------- ---------
Net income per share
without one-time
adjustment - diluted $ 0.05 $ 0.04 $ 0.06 $ 0.19 $ 0.30
======== ========= ======== ========= =========
Shares used in
computing net income
per share:
Basic 56,490 56,642 56,908 56,508 57,803
======== ========= ======== ========= =========
Diluted 57,710 57,708 57,546 57,538 58,506
======== ========= ======== ========= =========
Reconciliation to Full Non-GAAP Results:
Three Months Ended Twelve Months Ended
----------------------------- --------------------
December September December December December
31, 2014 30, 2014 31, 2013 31, 2014 31, 2013
-------- --------- -------- --------- ---------
GAAP net income $ 3,054 $ 4,675 $ 3,364 $ 13,547 $ 17,648
Revenues from
conversion of
distributors to sell-
in revenue recognition
model - (5,064) - (5,064) -
Cost of revenues from
conversion of
distributors to sell-
in revenue recognition
model - 1,566 - 1,566 -
Share-based
compensation included
in:
Cost of revenue 249 271 276 997 1,060
Research and
development 800 874 867 3,197 2,875
Selling, general and
administrative 895 864 878 3,430 3,162
Restructuring charges 508 484 1,376 992 1,376
Amortization of
acquisition-related
intangible assets 295 301 330 1,327 1,186
Tax effect of
adjustments to GAAP
net income (961) 219 (1,229) (2,233) (3,218)
R&D tax credit - - (1,062) - (1,062)
-------- --------- -------- --------- ---------
Non-GAAP net income* $ 4,840 $ 4,190 $ 4,800 $ 17,759 $ 23,027
======== ========= ======== ========= =========
GAAP net income per
share - diluted $ 0.05 $ 0.08 $ 0.06 $ 0.24 $ 0.30
Total adjustments to
GAAP net income $ 0.03 $ (0.01) $ 0.02 $ 0.07 $ 0.09
-------- --------- -------- --------- ---------
Non-GAAP net income per
share - diluted $ 0.08 $ 0.07 $ 0.08 $ 0.31 $ 0.39
======== ========= ======== ========= =========
Shares used in computing non-GAAP net income per share:
Basic 56,490 56,642 56,908 56,508 57,803
======== ========= ======== ========= =========
Diluted 57,710 57,708 57,546 57,538 58,506
======== ========= ======== ========= =========
* Non-GAAP net income was reached by excluding revenues and the related cost
of revenues from the conversion of distributors to sell-in revenue
recognition model, share-based compensation expense, restructuring charges
and amortization of acquisition-related intangible assets with related
income tax effects and R&D tax credit. Non-GAAP results were 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, except share amounts)
(Unaudited)
December December
31, 2014 31, 2013
---------- ----------
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and short-term investments $ 86,611 $ 88,593
Restricted cash 44 1,116
Accounts receivable, net 30,523 29,437
Inventories 44,136 43,201
Prepaid taxes 5,633 4,513
Prepaid expenses and other 1,612 2,698
Deferred income taxes 22,356 21,662
---------- ----------
Total current assets 190,915 191,220
LONG-TERM INVESTMENTS 1,436 4,195
PROPERTY, PLANT AND EQUIPMENT, NET 60,453 57,779
LONG-TERM PREPAID TAXES 1,711 -
DEFERRED INCOME TAXES 2,707 1,581
GOODWILL 8,655 8,554
INTANGIBLE ASSETS, NET 9,792 11,749
OTHER ASSETS 1,511 1,046
---------- ----------
TOTAL $ 277,180 $ 276,124
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 17,376 $ 13,502
Deferred income on shipments to distributors 22,947 27,026
Accrued liabilities 12,869 12,874
---------- ----------
Total current liabilities 53,192 53,402
LONG-TERM INCOME TAXES PAYABLE 3,511 3,575
LONG-TERM DEFERRED INCOME TAXES 807 973
OTHER LONG-TERM LIABILITIES 162 201
SHAREHOLDERS' EQUITY
TOTAL SHAREHOLDERS' EQUITY 219,508 217,973
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 277,180 $ 276,124
========== ==========
