Microtune Reports Third Quarter 2002 Results
PLANO, Texas--Oct. 28, 2002--Microtune(R), Inc. , a leader in integrated radio frequency (RF)-based silicon and systems solutions for the global broadband communications, automotive electronics and wireless connectivity markets, today reported financial results for the third quarter ended September 30, 2002.FINANCIAL RESULTS SUMMARY:
| -- | Microtune reported record revenues for the third quarter of $24.0 million, which is a 3.6% increase over the second quarter of this year and a 59.9% increase over the third quarter of 2001. |
| -- | Gross margins were 37.1%, which is a 100 basis point increase over the second quarter of this year and an increase of 360 basis points over the third quarter of 2001. |
| -- | Pro forma net loss was $7.4 million, or $0.14 per share, compared to $7.3 million or $0.14 per share for the second quarter of 2002, and compared to $2.9 million or $0.07 per share for the third quarter of 2001. |
| -- | Days sales outstanding (DS0) as measured on September 30, 2002 were 93 days. |
| -- | Cash balance on September 30, 2002 was $134.8 million as compared to $148.7 million on June 30, 2002. More than half of the cash decrease was related to an increase in accounts receivable. |
The pro forma results of operations exclude a charge for restructuring and for non-cash charges for stock option compensation and amortization of intangible assets and goodwill.
"Even though we did not meet guidance projections, we reported record revenue in a difficult economic environment. We believe that our business fundamentals, backed by our RF silicon technology leadership, remain strong. Given the current slowdown and lack of market visibility and predictability, we are focused on strengthening our ability to withstand a further downturn in the economy by reducing our cost structure and refocusing on our core strategic competencies," commented Douglas J. Bartek, Chairman and CEO of Microtune.
RESTRUCTURING INITIATIVE
Microtune began a restructuring initiative late in the third quarter and will continue it through the fourth quarter of 2002. These efforts include the closure and consolidation of some design and sales centers, the termination of some research and development projects, and a reduction in headcount. When fully realized by the first quarter of 2003, the reduction in operating expenses will be 18% to 20% from third quarter 2002 levels. The restructuring charge for the third quarter was $4.5 million.
HIGHLIGHTS OF THE QUARTER
Microtune continued to strengthen its leading position in cable modems. Eight of the ten newly qualified cable modems that achieved DOCSIS 1.1 certification during Cable Labs Certification Wave 23 deployed Microtune's RF technology. (The 1.1 version of the DOCSIS standard permits an enhanced range of services, including high-speed Internet access, telephony and home networking.) The qualifications in this round included the cable modems of three new Microtune customers: Belkin, Fujitsu, and Intel. Intel was awarded certification for the industry's first computer controlled cable modem (CCCM), a cable modem integrated onto the PC motherboard.
Additionally, ARRIS, which deployed Microtune's RF transceiver technology, achieved EuroDOCSIS 1.1 qualification in September, the first voice over Internet Protocol (VoIP) cable modem qualified to the 1.1 version of the European standard. This DOCSIS momentum is the result of Microtune's ability to provide customers cost-effective, market proven, high-value enabling technology that accelerates time-to-market and time-to-certification.
Microtune's customer Skypower Wireless, Ltd. recently unveiled plans to aggressively drive consumer adoption of Bluetooth(TM) technology by pricing its Bluetooth wireless headsets 50% lower than competitive offerings. The Skypower headsets, recently voted the Price/Performance Winner by Computer Bild, Germany's premier computer publication, are characterized by their small size and user-friendly ergonomic design. By offering a highly integrated Bluetooth system solution, differentiated from competitive silicon by excellent voice quality, Microtune provides customers cost-effective, feature rich products that speed time-to-market.
During the quarter, Microtune launched three new automotive products that enable worldwide car manufacturers to deliver digital video and multimedia, mobile Internet access, or hands free communications to drivers and passengers. The new products included the MT7402 MicroModule, a complete DVB-T tuner subsystem, and the company's first silicon products for the automotive market, the MT1110 broadband amplifier and the MT0755A vehicular Bluetooth solution for wireless voice and data communications.
Microtune also disclosed plans to supply the Chrysler Group with RF tuners for factory-installed radio cassette players in vehicles, beginning in model year 2003. This commitment extends the successful strategic supplier relationship the company has enjoyed with DaimlerChrysler.
Microtune also announced a Joint Technology and Marketing Development Agreement with iBiquity Digital Corporation, the sole developer and licenser of HD Radio(TM) technology (formerly known as in-band on-channel (IBOC). Microtune's HD-radio capable tuners, expected to be sampling to select customers in November 2002, will permit drivers and passengers to incorporate digital reception technology into car receivers, supporting clear reception, on demand interactive audio and new wireless data services.
"While market conditions grew challenging at the end of Q3 and appear they will remain so for the immediate future, Microtune will continue to invest in innovation, customer relationships and new product development. These actions, combined with our relentless focus on performance execution and cost controls, will permit us to move forward prudently while balancing our long- and short-term goals until the market fully recovers," said Mr. Bartek.
ABOUT MICROTUNE
Microtune, Inc. is a leading silicon and systems company that designs, manufactures and markets radio frequency (RF)-based solutions for the global broadband communications, automotive electronics and wireless connectivity markets. Inventors of the MicroTuner(TM) single-chip broadband tuner, the Company offers a portfolio of advanced tuner, amplifier, transceiver and wireless products that enable the delivery of information and entertainment across new classes of consumer electronics devices. The Company currently holds 22 U.S. patents for its technology, with more than 50 applications pending approval that span its RF and wireless products, containing more than 2000 supporting claims. Founded in 1996, Microtune is headquartered in Plano, Texas, with key design, manufacturing and sales centers located around the world. The web site is www.microtune.com.
Microtune is traded on the NASDAQ Stock Exchange under the symbol TUNE.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements, including those discussing the development of new products and the results of those efforts, that are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results. Such forward-looking statements are generally accompanied by words such as "plan," "estimate," "expect," "believe," "could," "would," "anticipate," "may," or other words that convey uncertainty of future events or outcomes. These forward-looking statements and other statements made elsewhere in this release are made in reliance on the Private Securities Litigation Reform Act of 1995. Factors which could cause actual results to differ include the Company's ability to develop new products that comply with industry standards and the ability to migrate customers to silicon-based products, ability to develop new products within anticipated cost range, ability to successfully develop products to meet our customers' requirements, ability to develop products in a timely manner, ability to sustain revenue growth and general economic conditions, any of which may cause the Company's financial results to fluctuate. Readers are referred to the reports and documents filed by Microtune with the Securities and Exchange Commission from time to time, including its Form 10-K for the year ended December 31, 2001, Form 10Q for each quarter and Form S-3 originally filed on August 17, 2001, as amended.
EDITORS NOTE: Microtune is a registered trademark and MicroTuner, VideoCaster and MicroStreamer are trademarks of Microtune, Inc.
Microtune, Inc.
Consolidated Balance Sheets
(in thousands, except per share data)
(unaudited)
Assets September 30, 2002 December 31, 2001
------------------- -------------------
Current assets:
Cash and cash equivalents $134,775 $173,149
Accounts receivable, net 24,701 14,580
Inventories 14,572 9,401
Deferred income taxes 219 389
Other current assets 3,091 3,206
---------------- -----------------
Total current assets 177,358 200,725
Property and equipment, net 18,462 19,269
Intangible assets, net 53,140 64,136
Goodwill, net 51,040 51,040
Deferred income taxes 1,767 1,419
Other assets and deferred
charges 1,024 1,113
---------------- -----------------
Total assets $302,791 $337,702
================ =================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $9,462 $7,856
Accrued expenses 12,814 15,099
Accrued compensation 2,419 2,355
---------------- -----------------
Total current liabilities 24,695 25,310
Deferred income taxes 320 320
Other noncurrent liabilities 2,357 2,286
Commitments and contingencies
Stockholders' equity 275,419 309,786
---------------- -----------------
Total liabilities and
stockholders' equity $302,791 $337,702
================ =================
Microtune, Inc.
Pro Forma Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2002 2001 2002 2001
------------------ ------------------
Net revenues $24,003 $15,015 $65,424 $47,129
Cost of revenues 15,098 9,981 41,350 34,170
------------------ ------------------
Gross margin 8,905 5,034 24,074 12,959
Operating expenses:
Research and development: 9,729 4,383 29,366 11,916
Selling, general and
administration: 5,906 3,180 16,225 11,298
------------------ ------------------
Total operating expenses 15,635 7,563 45,591 23,214
------------------ ------------------
Loss from operations (6,730) (2,529) (21,517) (10,255)
Other income (expense):
Interest income (expense), net 712 693 2,325 2,565
Foreign currency translation
and transaction gains
(losses), net (1,051) (79) (1,747) (1,245)
Other 20 (972) (49) (910)
------------------ ------------------
Loss before income taxes (7,049) (2,887) (20,988) (9,845)
Income tax expense (benefit) 386 14 784 (478)
------------------ ------------------
Net loss $(7,435) $(2,901) $(21,772) $(9,367)
================== ==================
Basic and diluted loss per common
share $(0.14) $(0.07) $(0.41) $(0.24)
================== ==================
Weighted-average shares used in
computing basic and diluted loss
per common share 53,413 39,711 52,918 39,293
================== ==================
Pro Forma Statements of Operations - The above statements are
based upon our Consolidated Statements of Operations excluding stock
option compensation, restructuring costs and amortization of
intangible assets and goodwill. Goodwill is no longer amortized
effective January 1, 2002 in accordance with SFAS 142. The amounts
excluded are as follows:
Schedule of Expenses Excluded from Pro Forma Statements of Operations
---------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------------------
2002 2001 2002 2001
----------------- ------------------
Excluded Operating expenses:
R&D stock option
compensation $2,575 $335 $7,730 $1,014
SG&A stock option
compensation 706 363 2,165 1,397
Restructuring costs 4,457 - 4,511 -
Amortization of intangible
assets and goodwill 2,691 1,804 8,078 5,410
----------------- ------------------
Total excluded expenses $10,429 $2,502 $22,484 $7,821
================= ==================
Microtune, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2002 2001 2002 2001
------------------- ------------------
Net revenues $24,003 $15,015 $65,424 $47,129
Cost of revenues 15,098 9,981 41,350 34,170
------------------- ------------------
Gross margin 8,905 5,034 24,074 12,959
Operating expenses:
Research and development:
Stock option compensation 2,575 335 7,730 1,014
Other 9,729 4,383 29,366 11,916
------------------- ------------------
12,304 4,718 37,096 12,930
Selling, general and
administration:
Stock option compensation 706 363 2,165 1,397
Other 5,906 3,180 16,225 11,298
------------------- ------------------
6,612 3,543 18,390 12,695
Restructuring 4,457 - 4,511 -
Amortization of intangible
assets and goodwill 2,691 1,804 8,078 5,410
------------------- ------------------
Total operating expenses 26,064 10,065 68,075 31,035
------------------- ------------------
Loss from operations (17,159) (5,031) (44,001) (18,076)
Other income (expense):
Interest income (expense),
net 712 693 2,325 2,565
Foreign currency translation
and transaction gains
(losses), net (1,051) (79) (1,747) (1,245)
Other 20 (972) (49) (910)
------------------- ------------------
Loss before income taxes (17,478) (5,389) (43,472) (17,666)
Income tax expense (benefit) 386 14 784 (478)
------------------- ------------------
Net loss $(17,864) $(5,403) $(44,256)$(17,188)
=================== ==================
Basic and diluted loss per
common share $(0.33) $(0.14) $(0.84) $(0.44)
=================== ==================
Weighted-average shares used in
computing basic and diluted
loss per common share 53,413 39,711 52,918 39,293
=================== ==================