Agere Acquires Modem-Art

ALLENTOWN, Pa. -- Agere Systems (NYSE:AGR.A) (NYSE:AGR.B) today announced that it has acquired Modem-Art Ltd., a privately held developer of advanced processor technology for 3G/UMTS mobile devices. With this acquisition, which complements Agere's existing products, Agere is further enhancing its ability to address rapidly evolving cellular technologies with integrated chips and software for today's 3G market and widely anticipated future demand for HSDPA (High Speed Downlink Packet Access) technology. To date, Agere and Modem-Art have already secured multiple 3G/UMTS designs with leading wireless device manufacturers for phones and PC card applications.

Agere acquired the Israel-based company for $145.1 million, consisting of cash and stock. Agere will pay $30.5 million in cash and will issue approximately 70.3 million shares of its Class A common stock in the acquisition, valued at about $114.6 million based on the closing price of $1.63 for Agere Class A common stock on March 7, 2005. The company expects that it will record a one-time charge for purchased in-process research and development expenses related to the acquisition in the quarter ending March 31, 2005. The amount has not yet been determined. Excluding the in-process research and development charges and amortization of acquired intangibles, the impact of the acquisition on fiscal 2005 earnings per share is expected to be minimal.

Enabling mobile data at up to 384 kilobits per second (kbps), 3G technology delivers the increased bandwidth needed to support such feature- rich applications as real-time audio and video streaming. Service providers will rely on phone makers and solutions suppliers that are able to provide this technology as they look to maintain and increase average revenue per user.

"Modem-Art adds best-in-class UMTS physical layer technology to our portfolio with the evolutionary flexibility that will help us to continue delivering reliable products as network technologies advance for many years to come," said Luc Seraphin, vice president of Agere's Mobility Division. "This acquisition is a milestone in an 18-month relationship from which we have already successfully launched a proven silicon and software solution that is receiving widespread market acceptance."

Agere Systems Inc.