TriQuint Semiconductor, Inc. Announces Results for the Quarter and Year Ended December 31, 2005.HILLSBORO Hillsboro, city (1990 pop. 37,520), seat of Washington co., NW Oreg., in the Tualatin valley; inc. 1876. Integrated circuits, other high-tech products, furniture, plastics, and medical equipment are manufactured in this growing city in Oregon's "Sunset Corridor. , Ore. -- TriQuint Semiconductor, Inc. (Nasdaq:TQNT) today reported its financial results for the quarter and year ended December December: see month. 31, 2005. Summary Financial Results and Highlights for the Quarter Ended December 31, 2005: --Revenues from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the fourth quarter ended December 31, 2005, totaled $84.7 million, a 26.3% increase over the fourth quarter of 2004. The fourth quarter revenues were in line with the financial guidance provided on October October: see month. 20, 2005. Revenue growth primarily came from increased sales of GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. handset The part of the telephone that contains the speaker and the microphone. On a desktop phone, the part you hold in your hand is the handset. On a cellphone, the entire phone is the handset. See multihandset cordless and headset. products. The fourth quarter revenues for 2005 increased 12.5% sequentially from the third quarter of 2005 also due to increased sales of GSM handset and products. --Gross margin declined in the fourth quarter of 2005 to 28.7%, as compared to 31.4% in the third quarter of 2005. The decrease in the gross margin was primarily due to yield loss associated with new product ramps. As compared to the fourth quarter of 2004, gross margin was slightly down, also due to yield issues. --Operating expenses for the fourth quarter of 2005 decreased to 25.6% of revenue from 30.9% of revenue in the third quarter of 2005 and 32.8% of revenue in the fourth quarter of 2004. The decrease in the current quarter was primarily due to a $0.3 million gain on the disposal of equipment and reductions in engineering spending. The expenses in the third and fourth quarters of 2005 include a charge of $0.4 million related to the TFR TFR Total fertility rate, see there acquisition, which closed in January January: see month. of 2005. --For the fourth quarter ended December 31, 2005, TriQuint had net income, including discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , of $2.9 million, or $0.02 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, in line with our guidance provided on October 20th. In the fourth quarter of 2004, we reported a net loss of $25.3 million, which included a loss of $21.7 million from discontinued operations. In the third quarter of 2005, we reported net income of $2.6 million, which included a gain from discontinued operations of $0.5 million. --As compared to the fourth quarter of 2004, net income from continuing operations for the fourth quarter of 2005 increased by $6.5 million. The increase was primarily due to increased operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. in 2005 combined with an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge taken in 2004 that negatively impacted net income. Net income from continuing operations for the fourth quarter of 2005 increased $0.8 million from the third quarter of 2005 to $2.9 million. The increase was primarily due to improved operating income in the fourth quarter resulting from increased revenue and reduced operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. , partially offset by a negative tax impact in the fourth quarter of $0.6 million. --Cash, cash equivalents and short and long term marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has decreased to $406.7 million as of December 31, 2005, compared to $407.8 million as of September September: see month. 30, 2005. In the fourth quarter of 2005 the Company reported a plan to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. up to $25 million of the Company's common stock beginning after this earnings release. Repurchases will be made under a Rule 10b5-1 plan and the timing of purchases and the exact number of shares to be purchased will depend on market conditions. As of December 31, 2005, and September 30, 2005, our outstanding convertible notes were $218.8 million. As of December 31, 2004, our balance of outstanding convertible notes was $223.8 million. --Fourth quarter 2005 bookings were seasonally strong with a book-to-bill ratio Book-to-Bill Ratio The technology industry's demand-to-supply ratio for orders on a "firm's book" to number of orders filled. Notes: This ratio tells whether the company has more orders than it can deliver (if greater than 1), has the same amount of orders that it can of 1.05 to 1.00. Excluding military, the book-to-bill ratio for the quarter was 1.03 to 1.00. Summary Financial Results and Highlights for the Year Ended December 31, 2005: --For 2005, the Company reported revenues from continuing operations of $294.8 million, a decrease of 5.8% from 2004 revenues of $313.0 million. The decline was primarily due to decreases in CDMA (Code Division Multiple Access) A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM that operates in the 800 MHz band and 1.9 GHz PCS band. revenues from handset and broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). products. --Net income, including discontinued operations, increased to $4.0 million for 2005, resulting in a profit of $0.03 per diluted share, compared to a net loss of $29.1 million, $0.21 per diluted share, in 2004. The net income in 2005 includes a net gain from discontinued operations of $8.2 million, as compared to a net loss of $36.9 million for the year ended December 31, 2004. --Cash, cash equivalents, and short and long term marketable securities, net of the convertible notes, increased by $23.7 million in 2005 to $188.0 million as of December 31, 2005, as compared to $164.3 million as of December 31, 2004. --The Company completed the acquisition of TFR Technologies, Inc., on January 5, 2005. This acquisition added bulk acoustic acoustic /acous·tic/ (ah-kldbomacs´tik) relating to sound or hearing. a·cous·tic or a·cous·ti·cal adj. Of or relating to sound, the sense of hearing, or the perception of sound. wave (BAW BAW Black America Web BAW Brain Awareness Week BAW Bulk Acoustic Wave BAW Bells And Whistles BAW Bicycle Alliance of Washington (Washington state, USA) BAW Bis Auf Weiteres (German: see you later) ) filtering technology to the Company's product portfolio, critical to developing higher frequency filters for next generation wireless communication products. Commenting on the results for the quarter and year ended December 31, 2005, Ralph Quinsey, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , stated, "During the course of 2005 we absorbed the anticipated negative impact of reduced handset IF filter revenue and aggressive filter pricing pressure while successfully executing our strategy to grow our overall module revenue. Our continuing operations returned to profitability in the second half and, including the benefit of the optoelectronics See optoelectronic. asset sale, we significantly improved net income to $0.03 per diluted share from a loss $0.21 per diluted share in 2004. We are now in a position to build on the momentum we established in the second half of 2005." Other Highlights in 2005: --Won a gallium nitride An alloy of gallium and nitrogen (GaN) that is used in semiconductor devices for lasers and LEDs, including blue lasers. Gallium nitride has the thermal and chemical stability required in laser applications. See gallium arsenide. development contract from DARPA DARPA: see Defense Advanced Research Projects Agency. (Defense Advanced Research Projects Agency) The name given to the U.S. Advanced Research Projects Agency during the 1980s. It was later renamed back to ARPA. with revenue potential in excess of $30 million. --Launched the world's first E/D E/D Enhancement/Depletion E/D End-Of-Descent (aviation) mode pHEMT technology enabling higher levels of GaAs integration. --Shipped over 40 million modules to the handset market -- 15.6 million power amplifier Power amplifier The final stage in multistage amplifiers, such as audio amplifiers and radio transmitters, designed to deliver appreciable power to the load. modules and 25.2 million filter based modules. --Shipped over 31 million duplexers. --Achieved size and integration leadership in the GSM power amplifier module market with our innovative transmit To send data over a communications line. See transfer. module and our 5 x 5 mm GSM power amplifier module. --Grew our GSM handset revenue 69% year over year. Outlook for 2006: The Company's focus for 2006 is on increased revenue and improved profitability. We believe TriQuint's ability to internally supply filter, switch and power functionality for highly integrated RF modules provides us a strategic cost advantage by avoiding stacked Stacked is an American television sitcom that premiered on Fox on April 13, 2005. On May 18, 2006, Stacked was cancelled, leaving five episodes unaired in the United States. The last episode aired on January 11, 2006. margins for critical components. In addition, we plan to build on our highly integrated "zero discretes" transmit module platform. We expect year over year revenue growth to be approximately 20% in 2006 and expect to begin the year with low single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. net income as a percent of revenue and end the year with mid to high single digit net income as a percent of revenue. Revenues for the first quarter of 2006 are expected to be flat to slightly up as compared to the fourth quarter of 2005 due to new product ramps offsetting a normally down first quarter. The Company expects earnings per share to be approximately $0.00 to $0.01. This includes approximately $2 million in stock option and ESPP See Employee Stock Purchase Plan. expense as required by the implementation of FAS 123(R). A summary table of TriQuint's financial guidance is available on the "Investors" section of TriQuint's web site. Conference Call: TriQuint will host a conference call this afternoon at 2:00 PM PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT to discuss the results for the quarter and year ended December 31, 2005, and as well as future expectations of the Company. The call can be heard via webcast accessed through the "Investors" section of TriQuint's web site: www.triquint.com, or through www.Vcall.com. A replay will be available for 7 days by dialing 303-590-3000, passcode 11050951#. Forward Looking Statements: This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made pursuant to the Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Readers are cautioned that forward-looking statements such as statements of TriQuint's projected revenues, growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. , gross margins, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , operating results, and earnings per share for the first quarter of 2006, the revenues, profitability and focus for 2006 and its product strategies are statements that involve risks and uncertainties. The cautionary statements made in this release should be read as being applicable to all related statements wherever they appear. Statements containing such words as "anticipates," "believes," "estimates," "expects," "hopeful," "intends," "plans," "projects," or similar terms are considered to contain uncertainty and are forward-looking statements. A number of factors affect TriQuint's operating results and could cause its actual future results to differ materially from any results indicated in this press release or in any other forward-looking statements made by, or on behalf of TriQuint, including those related to TriQuint's projections for 2006. TriQuint cannot provide any assurance that future results will meet expectations. Results could differ materially based on various factors, including TriQuint's performance; demand for its products; ability to develop new products; improve yields, maintain product pricing, reduce costs, and win customers; internal operating results; and market conditions. In addition, historical information should not be considered an indicator of future performance. Additional considerations and important risk factors are described in TriQuint's reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and 10-Q and other filings with the Securities and Exchange Commission. These reports can be accessed at the SEC web site, www.sec.gov. A reader of this release should understand that it is not possible to predict or identify all risk factors and should not consider the list to be a complete statement of all potential risks and uncertainties. TriQuint does not assume the obligation to update any forward-looking statements. About TriQuint: TriQuint Semiconductor, Inc. (Nasdaq:TQNT) is a leading supplier of high performance products for communications applications. The company enjoys diversity in its markets, applications, products, technology and customer base. Markets include wireless handsets, base stations, military, broadband and other. TriQuint provides customers with standard and custom product solutions as well as foundry A semiconductor manufacturer that makes chips for third parties. It may be a large chip maker that sells its excess manufacturing capacity or one that makes chips exclusively for other companies. services. Products are based on advanced process technologies including gallium arsenide An alloy of gallium and arsenic compound (GaAs) that is used as the base material for chips. Several times faster than silicon, it is used in high frequency applications such as cellphones, DVD players and fiber optics. (GaAs), surface acoustic wave A surface acoustic wave (SAW) is an acoustic wave traveling along the surface of a material having some elasticity, with an amplitude that typically decays exponentially with the depth of the substrate. (SAW), and bulk acoustic wave (BAW). TriQuint customers include major communications companies Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. worldwide. TriQuint has manufacturing facilities in Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. , Texas, and Florida, as well as an assembly plant in Costa Rica Costa Rica (kŏs`tə rē`kə), officially Republic of Costa Rica, republic (2005 est. pop. 4,016,000), 19,575 sq mi (50,700 sq km), Central America. , plus sales/application support offices in Asia and design centers in New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. and Germany. All manufacturing and production facilities are registered to the ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 9001:2000 international quality standard. TriQuint is headquartered at 2300 NE Brookwood Parkway, Hillsboro, OR 97124 and can be reached at 503/615-9000 (fax 503/615-8900). Visit the TriQuint web site at http://www.triquint.com.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
Dec. 31, Sept. 30, Dec. 31,
2005 2005 2004
-------- -------- --------
Assets
Current assets:
Cash, cash equivalents and investments $301,107 $247,401 $198,497
Accounts receivable, net 51,286 43,619 35,654
Inventories, net 49,384 45,845 49,619
Other current assets 14,689 12,108 10,345
Assets held for sale - - 33,890
-------- -------- --------
Total current assets 416,466 348,973 328,005
Investments in marketable securities 105,615 160,407 189,555
Property, plant and equipment, net 190,789 189,481 199,518
Other,
net 15,871 15,745 5,322
-------- -------- --------
Total assets $728,741 $714,606 $722,400
======== ======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 51,255 $ 43,000 $ 34,075
Income tax liability 7,201 7,727 7,607
Capital leases, current portion - 69 275
Liabilities held for sale - - 15,057
-------- -------- --------
Total current liabilities 58,456 50,796 57,014
Convertible subordinated notes 218,755 218,755 223,755
Other long-term liabilities 920 845 244
-------- -------- --------
Total liabilities 278,131 270,396 281,013
Stockholders' equity 450,610 444,210 441,387
-------- -------- --------
Total liabilities and
stockholders' equity $728,741 $714,606 $722,400
======== ======== ========
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Quarter Ended
----------------------------- Year Ended Dec. 31,
Dec. 31, Sept. 30, Dec. 31, -------------------
2005 2005 2004(a) 2005 2004(a)
-------- -------- -------- -------- --------
Revenues $ 84,660 $ 75,235 $ 67,040 $294,787 $312,971
Cost of sales 60,368 51,646 47,068 210,446 213,416
-------- -------- -------- -------- --------
Gross profit 24,292 23,589 19,972 84,341 99,555
Operating expenses:
Research,
development and
engineering 10,371 11,570 11,703 46,706 47,746
Selling, general
and
administrative 11,219 11,234 9,876 46,565 40,523
Reduction in
workforce (21) - 1 341 429
Impairment of
long-lived
assets - - 321 31 710
(Gain) loss on
disposal of
equipment (305) 22 71 (505) (13)
Acquisition
related charges 413 414 - 1,654 -
-------- -------- -------- -------- --------
Total operating
expenses 21,677 23,240 21,972 94,792 89,395
-------- -------- -------- -------- --------
Income (loss) from
operations 2,615 349 (2,000) (10,451) 10,160
Other income
(expense):
Interest income 3,291 3,052 1,985 11,441 7,126
Interest expense (2,440) (2,441) (2,495) (9,846) (10,730)
Foreign currency
gain (loss) (31) 32 62 4 2,125
Impairment charge
- investments in
other companies - (55) (785) (155) (1,189)
Gain on
retirement of
debt - - - 114 539
Gain on sale of
intellectual
property - 954 - 954 -
Other, net 49 72 36 163 187
-------- -------- -------- -------- --------
Other income
(expense), net 869 1,614 (1,197) 2,675 (1,942)
-------- -------- -------- -------- --------
Income (loss) from
continuing
operations,
before income tax 3,484 1,963 (3,197) (7,776) 8,218
Income tax expense
(benefit) 600 (90) 378 (3,573) 397
-------- -------- -------- -------- --------
Income (loss) from
continuing
operations 2,884 2,053 (3,575) (4,203) 7,821
Discontinued
operations:
Income (loss) from
discontinued
operations, net
of income tax
57 522 (21,680) 8,183 (36,875)
-------- -------- -------- -------- --------
Net income (loss) $ 2,941 $ 2,575 $(25,255) $ 3,980 $(29,054)
======== ======== ======== ======== ========
Basic per share net
income (loss):
Income (loss) from
continuing
operations $ 0.02 $ 0.02 $ (0.02) $ (0.03) $ 0.06
Income (loss) from
discontinued
operations 0.00 0.00 (0.16) 0.06 (0.27)
-------- -------- -------- -------- --------
Basic per share
net income
(loss) $ 0.02 $ 0.02 $ (0.18) $ 0.03 $ (0.21)
======== ======== ======== ======== ========
Diluted per share
net income (loss):
Income (loss) from
continuing
operations $ 0.02 $ 0.02 $ (0.02) $ (0.03) $ 0.06
Income (loss) from
discontinued
operations 0.00 0.00 (0.16) 0.06 (0.27)
-------- -------- -------- -------- --------
Diluted per
share net
income (loss) $ 0.02 $ 0.02 $ (0.18) $ 0.03 $ (0.21)
======== ======== ======== ======== ========
Weighted-average
shares outstanding:
Basic 140,377 139,917 137,978 139,566 136,936
Diluted 142,719 141,210 137,978 139,566 138,960
(a) Certain amounts in the prior quarters statements of operations
have been reclassified to conform to the current quarter
presentation.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended Year Ended
--------------------------- Dec. 31,
Dec. 31, Sept. 30, Dec. 31, --------------
2005 2005 2004(a) 2005 2004(a)
-------- --------- -------- ------ -------
Revenues 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales 71.3% 68.6% 70.2% 71.4% 68.2%
-------- --------- -------- ------ -------
Gross profit 28.7% 31.4% 29.8% 28.6% 31.8%
Operating expenses:
Research, development
and engineering 12.2% 15.4% 17.5% 15.8% 15.3%
Selling, general and
administrative 13.3% 14.9% 14.7% 15.8% 13.0%
Reduction in workforce 0.0% - 0.0% 0.1% 0.1%
Impairment of long-lived
assets - - 0.5% 0.0% 0.2%
(Gain) loss on disposal
of equipment -0.4% 0.0% 0.1% -0.2% 0.0%
Acquisition related
charges 0.5% 0.6% - 0.6% -
-------- --------- -------- ------ -------
Total operating
expenses 25.6% 30.9% 32.8% 32.1% 28.6%
-------- --------- -------- ------ -------
Income (loss) from
operations 3.1% 0.5% -3.0% -3.5% 3.2%
Other income (expense):
Interest income 3.9% 4.1% 3.0% 3.9% 2.3%
Interest expense -2.9% -3.3% -3.7% -3.3% -3.4%
Foreign currency gain
(loss) -0.1% 0.0% 0.1% 0.0% 0.7%
Impairment charge -
investments in other
companies - -0.1% -1.2% -0.1% -0.4%
Gain on retirement of
debt - - - 0.0% 0.2%
Gain on sale of
intellectual property - 1.3% - 0.3% -
Other, net 0.1% 0.1% 0.0% 0.1% 0.0%
-------- --------- -------- ------ -------
Other income
(expense), net 1.0% 2.1% -1.8% 0.9% -0.6%
Income (loss) from
continuing operations,
before income tax 4.1% 2.6% -4.8% -2.6% 2.6%
Income tax expense
(benefit) 0.7% -0.1% 0.6% -1.2% 0.1%
-------- --------- -------- ------ -------
Income (loss) from
continuing operations 3.4% 2.7% -5.4% -1.4% 2.5%
Discontinued operations:
Income (loss) from
discontinued
operations, net of
income tax 0.1% 0.7% -32.3% 2.8% -11.8%
-------- --------- -------- ------ -------
Net income (loss) 3.5% 3.4% -37.7% 1.4% -9.3%
======== ========= ======== ====== =======
(a) Certain amounts in the prior quarters statements of operations
have been reclassified to conform to the current quarter
presentation.
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