Atheros Announces Financial Results for Q3 200624 October 2006
Atheros Communications, Inc. (Nasdaq: ATHR), a leading developer of advanced wireless solutions, today announced record financial results for the third quarter of 2006, ended Sept. 30, 2006.
Revenue in the third quarter was $79.6 million, up nine percent from the $73.2 million reported in the second quarter of 2006 and up 74 percent from the $45.8 million reported in the third quarter of 2005.
In accordance with U.S. generally accepted accounting principles (GAAP), the company recorded third quarter net income of $6.3 million or $0.11 per diluted share. This compares with a GAAP net income of $6.8 million or $0.12 per diluted share in the second quarter of 2006 and $2.2 million or $.04 per share in the third quarter of 2005. Total cash and investments were $191 million at Sept. 30, 2006.
Atheros reports operating income, net income and basic and diluted net income per share in accordance with GAAP and additionally on a non-GAAP basis. Non-GAAP net income excludes, where applicable, the effect of stock-based compensation, the tax benefit due to the partial release of deferred tax asset valuation allowance, amortization of acquired intangible assets and acquisition related charges. A reconciliation of GAAP to non-GAAP condensed consolidated statements of operations is presented in the financial statements portion of this release.
Non-GAAP gross margins in the third quarter were 48 percent, above the company's target range of 43 to 45 percent, compared with 49.1 percent in the second quarter of 2006 and 43.5 percent in the third quarter of 2005. Non-GAAP operating income increased to 14.5 percent from the 14.4 percent reported in the second quarter of 2006.
Non-GAAP net income in the third quarter was $10.5 million or $0.19 per diluted share, compared with non-GAAP net income of $9.5 million or $0.17 per diluted share in the second quarter of 2006 and $2.6 million or $.05 per share in the third quarter of 2005.
"This is our sixth consecutive quarter of revenue growth and the fifth consecutive quarter that Atheros achieved record non-GAAP operating income and earnings," said Craig Barratt, president and CEO. "Once again, we saw strong sales of our XSPAN(TM) 802.11n products and our core WLAN solutions, especially 802.11a/g products for the PC OEM market.
"Even as our core wireless businesses are gaining strength, we are continuing our expansion into new, complementary markets. With the acquisition of Attansic announced today, Atheros will drive the adoption of gigabit Ethernet-based 802.11n solutions by delivering complete, highly integrated, wired and wireless solutions for video, voice and data," Dr. Barratt said.
"With the close of this acquisition later this year, we will offer a broader platform of communication technologies to key markets we serve. In particular, we will immediately achieve a leading position in the PC LAN-on-motherboard (LOM) market, as Attansic currently supplies ASUSTek with its Ethernet products. Atheros' PC OEM customer base will gain access to the world's most cost-optimized, performance-leading PCI Express WLAN and Gigabit solutions from a single vendor.
"This acquisition propels us further along our diversification path, enabling us to offer a comprehensive platform of products as we pursue our long-term goal of building several best-in-class businesses that benefit from our technology leadership, strong customer relationships and low-cost integration capabilities," he said.
Recent Atheros Press Release Highlights:
* Oct. 23 - Atheros Announces Acquisition of Attansic Technology Company
* Oct. 23 - Atheros Ships 75 Millionth Wireless LAN Chipset
* Oct. 19 - Atheros Communications Named One of the Fastest Growing
Companies in North America on Deloitte's 2006 Technology Fast 500
* Oct. 16 - Atheros Communications and FON Collaboration Supports
Expanding Worldwide Wi-Fi Community
* Oct. 2 - D-Link RangeBooster N 650 Wireless Router Featuring Atheros
XSPAN Technology Receives LAPTOP Magazine's Editors' Choice Award
* Sept. 27 - Atheros Appoints Dr. Sam Endy as Vice President and General
Manager to Lead Mobile Wireless Business Unit
* Sept. 18 - Atheros WLAN Technology Featured in Award-Winning Sonos(R)
Digital Music System
* Aug. 28 - Atheros Launches XSPAN(TM) Value Solutions Featuring the
Company's First Advanced Network Processor
* Aug. 9 - Atheros Communications Completes Acquisition of ZyDAS
Technology Corporation
* Aug. 7 - Atheros XSPAN Draft 802.11n Mini Card Reference Designs Achieve
Industry's First PCI Express Compatibility Certification
* July 26 - Atheros and UT Starcom Collaborate in Feature-Rich, Ultra-Thin
PAS Handset in China
Conference Call
Atheros will broadcast its third quarter 2006 financial results conference call today, Monday, Oct. 23, 2006, at 1:30 p.m. Pacific time (4:30 p.m. Eastern time).
To listen to the call, please dial (630) 395-0122 approximately 10 minutes prior to the start time. The pass code is Atheros. A taped replay will be available approximately one hour after the conclusion of the call and will remain available for one week. To access the replay, dial (203) 369-3544.
The Atheros financial results conference call will be available via a live webcast on the investor relations section of the Atheros website at http://www.atheros.com . Please access the website approximately 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay of the call will be available on the web site for one year.
About Atheros Communications, Inc.
Atheros Communications is a leading developer of semiconductor system solutions for wireless communications products. Atheros combines its wireless systems expertise with high-performance radio frequency (RF), mixed signal and digital semiconductor design skills to provide highly integrated chipsets that are manufacturable on low-cost, standard complementary metal-oxide semiconductor (CMOS) processes. Atheros technology is being used by a broad base of leading customers, including personal computer, networking equipment and handset manufacturers. For more information, please visit http://www.atheros.com or send email to info@atheros.com.
NOTE: Atheros, the Atheros logo and XSPAN are trademarks of Atheros Communications, Inc.
Note on Forward-Looking Statements
Except for the historical information contained herein, the matters set forth in this press release, including the anticipated continued success of our products on the market; Atheros' diversification plans and expansion into new markets; and the anticipated benefits of the acquisition of Attansic, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including, but not limited to, the impacts of competition, technological advances and pricing pressures; general economic conditions; difficulties in the development of new products and technologies; manufacturing difficulties; whether Atheros is successful in marketing its products; whether Atheros successfully completes the Attansic acquisition and is able to integrate Attansic and its products with Atheros and its products; whether Atheros is successful in maintaining its relationship with ASUSTek following the Attansic acquisition and whether ASUSTek is successful in marketing and selling its products; and other risks detailed in Atheros' Annual Report on Form 10-K for the year ended December 31, 2005 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, as filed with the Securities and Exchange Commission, and in other reports filed with the SEC by Atheros from time to time. These forward-looking statements speak only as of the date hereof.
ATHEROS COMMUNICATIONS, INC.
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Net revenue $79,608 $45,800 $213,885 $130,407
Cost of goods sold 41,942 25,913 110,981 74,158
Gross profit 37,666 19,887 102,904 56,249
Operating expenses:
Research and development 18,314 11,943 51,745 35,006
Sales and marketing 7,374 4,276 19,732 12,836
General and administrative 4,237 2,748 11,035 7,637
Amortization of acquired
intangible assets 489 -- 489 --
Acquired in-process
research and development 400 -- 400 --
Total operating
expenses 30,814 18,967 83,401 55,479
Income from operations 6,852 920 19,503 770
Interest income, net 2,319 1,262 6,323 3,360
Provision for income taxes (2,850) (30) (5,938) (525)
Net income $6,321 $2,152 $19,888 $3,605
Basic earnings per share $0.12 $0.04 $0.39 $0.07
Diluted earnings per share $0.11 $0.04 $0.36 $0.07
Shares used in computing
basic earnings per share 52,107 48,984 51,331 48,582
Shares used in computing
diluted earnings per share 55,423 53,617 55,114 53,499
Non-GAAP net income (*) $10,539 $2,593 $27,942 $5,117
Shares used in computing
non-GAAP basic earnings
per share (*) 52,107 48,984 51,331 48,582
Shares used in computing
non-GAAP diluted earnings
per share (*) 55,423 53,617 55,114 53,499
Non-GAAP basic earnings
per share (*) $0.20 $0.05 $0.54 $0.11
Non-GAAP diluted earnings
per share (*) $0.19 $0.05 $0.51 $0.10
(*) To supplement our condensed consolidated financial statements in
accordance with GAAP, we have provided above non-GAAP measures of net
income and basic and diluted earnings per share. Our management
believes that these non-GAAP measures provide useful information to
enhance the overall understanding of our ongoing economic
performance, and therefore, uses these non-GAAP measures in our
internal reporting to evaluate and manage our operations. We have
provided the non-GAAP measures above to enable investors to perform
comparisons of our operating results in a similar manner as our
management analyzes those operating results. A reconciliation of the
reported GAAP to non-GAAP condensed consolidated statements of
operations is provided separately.
ATHEROS COMMUNICATIONS, INC.
RECONCILIATION OF REPORTED GAAP TO NON-GAAP
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
Three Months Ended
September 30, 2006
Non-GAAP
Reported Entries Non-GAAP
Net revenue $79,608 $-- $79,608
Cost of goods sold 41,942 (515) (a) 41,427
Gross profit 37,666 515 38,181
Operating expenses:
Research and development 18,314 (1,895) (b) 16,419
Sales and marketing 7,374 (826) (b) 6,548
General and administrative 4,237 (564) (b) 3,673
Amortization of acquired
intangible assets 489 (489) (c) --
Acquired in-process research
and development 400 (400) (c) --
Total operating expenses 30,814 (4,174) 26,640
Income from operations 6,852 4,689 11,541
Interest income, net 2,319 -- 2,319
Provision for income taxes (2,850) (471) (d) (3,321)
Net income $6,321 $4,218 $10,539
Basic earnings per share $0.12 $0.20
Diluted earnings per share $0.11 $0.19
Shares used in computing basic
earnings per share 52,107 52,107
Shares used in computing diluted
earnings per share 55,423 55,423
Notes:
(a) Stock-based compensation expense and acquisition related charges
(b) Stock-based compensation
(c) Amortization of acquired intangible assets and acquired in-process
research and development
(d) Net tax effect of non-GAAP adjustments
ATHEROS COMMUNICATIONS, INC.
RECONCILIATION OF REPORTED GAAP TO NON-GAAP
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
Nine Months Ended
September 30, 2006
Non-GAAP
Reported Entries Non-GAAP
Net revenue $213,885 $-- $213,885
Cost of goods sold 110,981 (738) (a) 110,243
Gross profit 102,904 738 103,642
Operating expenses:
Research and development 51,745 (5,349) (b) 46,396
Sales and marketing 19,732 (2,317) (b) 17,415
General and administrative 11,035 (1,627) (b) 9,408
Amortization of acquired
intangible assets 489 (489) (c) --
Acquired in-process research
and development 400 (400) (c) --
Total operating expenses 83,401 (10,182) 73,219
Income from operations 19,503 10,920 30,423
Interest income, net 6,323 -- 6,323
Provision for income taxes (5,938) (2,866) (d) (8,804)
Net income $19,888 $8,054 $27,942
Basic earnings per share $0.39 $0.54
Diluted earnings per share $0.36 $0.51
Shares used in computing basic
earnings per share 51,331 51,331
Shares used in computing diluted
earnings per share 55,114 55,114
Notes:
(a) Stock-based compensation expense and acquisition related charges
(b) Stock-based compensation
(c) Amortization of acquired intangible assets and acquired in-process
research and development
(d) Income tax benefit of $1,392 from the partial release of the deferred
tax asset valuation allowance, and $1,474 from the net tax effect of
non-GAAP adjustments
ATHEROS COMMUNICATIONS, INC.
RECONCILIATION OF REPORTED GAAP TO NON-GAAP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
Three Months Ended
September 30, 2005
Non-GAAP
Reported Entries Non-GAAP
Net revenue $45,800 $-- $45,800
Cost of goods sold 25,913 (20) (a) 25,893
Gross profit 19,887 20 19,907
Operating expenses:
Research and development 11,943 (286) (a) 11,657
Sales and marketing 4,276 (14) (a) 4,262
General and administrative 2,748 (121) (a) 2,627
Total operating expenses 18,967 (421) 18,546
Income from operations 920 441 1,361
Interest income, net 1,262 -- 1,262
Provision for income taxes (30) -- (30)
Net income $2,152 $441 $2,593
Basic earnings per share $0.04 $0.05
Diluted earnings per share $0.04 $0.05
Shares used in computing basic
earnings per share 48,984 48,984
Shares used in computing diluted
earnings per share 53,617 53,617
Notes:
(a) Stock-based compensation expense
ATHEROS COMMUNICATIONS, INC.
RECONCILIATION OF REPORTED GAAP TO NON-GAAP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
Nine Months Ended
September 30, 2005
Non-GAAP
Reported Entries Non-GAAP
Net revenue $130,407 $-- $130,407
Cost of goods sold 74,158 (69) (a) 74,089
Gross profit 56,249 69 56,318
Operating expenses:
Research and development 35,006 (885) (a) 34,121
Sales and marketing 12,836 (121) (a) 12,715
General and administrative 7,637 (437) (a) 7,200
Total operating expenses 55,479 (1,443) 54,036
Income from operations 770 1,512 2,282
Interest income, net 3,360 -- 3,360
Provision for income taxes (525) -- (525)
Net income $3,605 $1,512 $5,117
Basic earnings per share $0.07 $0.11
Diluted earnings per share $0.07 $0.10
Shares used in computing basic
earnings per share 48,582 48,582
Shares used in computing diluted
earnings per share 53,499 53,499
Notes:
(a) Stock-based compensation expense
ATHEROS COMMUNICATIONS, INC.
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
September 30, December 31,
2006 2005
ASSETS
Current assets:
Cash, cash equivalents and marketable
securities $190,818 $173,645
Accounts receivable, net 46,484 28,381
Inventory 32,044 20,475
Deferred income taxes and other current assets 4,961 9,111
Total current assets 274,307 231,612
Property and equipment, net 8,369 5,557
Goodwill and acquired intangible assets 19,691 --
Deferred income taxes and other assets 6,921 2,010
$309,288 $239,179
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $60,255 $41,213
Long-term liabilities 1,471 1,000
Stockholders' equity 247,562 196,966
$309,288 $239,179
Source: prnewswire
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