Agere Reports Loss

Posts net loss of $68M, or $0.04 per share, including purchased in-process R&D charges related to the acquisition of Modem-Art

April 27, 2005

3 Min Read

ASCOT, U.K. -- Agere Systems (NYSE: AGR.A, AGR.B) today reported that revenues for the second quarter of fiscal 2005, ended 31 March 2005, were $417 million, at the high end of the guidance range provided by the company in January. The company’s revenues were $410 million in the December quarter and $462 million in the year-ago quarter.

The company reported a GAAP net loss of $68 million, or $0.04 per share, including purchased in-process R&D charges of $55 million related to the acquisition of Modem-Art, Ltd., $33 million in net restructuring charges and related costs, and a $22 million benefit resulting from the reversal of a tax contingency. For the December quarter, Agere reported a GAAP net loss of $67 million, or $0.04 per share, including $60 million in net restructuring charges and related costs. In the year-ago quarter, the company reported GAAP net income of $74 million, or $0.04 per share, which included $8 million in net restructuring charges and related costs as well as a tax benefit of $79 million.

Pro forma net loss was $1 million, or breakeven per share, in the March quarter, at the high end of guidance, compared to a pro forma net loss of $8 million, or breakeven per share, in the December quarter, and pro forma net income of $5 million, or breakeven per share, in the year-ago quarter.

Pro forma net income excludes gain or loss from the sale of, and income or loss from, discontinued operations; restructuring-related charges included in costs, primarily increased depreciation; certain other non-cash charges; net restructuring and other charges; purchased in-process research and development charges; amortisation of acquired intangible assets; net gain or loss from the sale of operating assets; certain tax adjustments; cumulative effect of accounting changes and certain non-recurring charges.

The company’s cash flow from operations, less capital expenditures, was $15 million. This is the seventh consecutive quarter the company has achieved a positive result. Cash in excess of total debt was $244 million, which is a decrease of $6 million from the December quarter. In the March quarter, the company used $26 million of cash as part of the Modem-Art acquisition.

Also today, Agere announced plans to consolidate its two classes of common stock – Class A and Class B – into a new, single class trading under the ticker symbol “AGR” and to execute a 1-for-10 reverse stock split. The company is taking these actions, which are expected to be effective on 27 May 2005, to alleviate investor confusion and to reduce costs.

“As we move forward with our reclassification and reverse stock split, our financial footing is solid and we are well positioned for future growth,” said John Dickson, president and CEO, Agere Systems. “Our performance during this quarter is a reflection of our focus and strong execution across our core businesses. Overall, we expect to see revenue and profitability growth as we move through the second half of fiscal 2005.”

Outlook

In the June quarter, the company expects to report revenues in the range of $415 million to $435 million. The company expects GAAP net income on a pre-reverse stock split basis to be in the range of breakeven to a loss of $0.02 per share. Pro forma net income on a pre-reverse stock split basis is expected to be in the range of breakeven to $0.02 per share.

Agere Systems Inc.

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