EX-99 3 ex99-1_072303.txt EXHIBIT 99.1, PRESS RELEASE DATED 7-23-2003 Exhibit 99.1 Contact: Richard Crowley Micrel, Incorporated 1849 Fortune Drive San Jose, CA 95131 Phone: (408) 944-0800 [Micrel Logo] Press Release MICREL REPORTS SECOND QUARTER 2003 RESULTS SAN JOSE, CALIFORNIA (July 23, 2003) - Micrel, Incorporated (Nasdaq NM: MCRL) today reported financial results for the second quarter ended June 30, 2003 that were in line with preliminary estimates released on July 2, 2003. Second quarter revenues were $49.1 million compared with $51.0 million in the first quarter, and $55.4 million in the second quarter of 2002. The Company recorded a net loss in the second quarter of $0.9 million, or $0.01 per share, compared with net income of $0.2 million, or $0.00 per share in the first quarter, and net income of $0.3 million, or $0.00 per share in the second quarter of 2002. Second quarter 2003 results included $1.2 million of pre-tax, non-cash, deferred stock compensation expense, compared with $1.1 million in the first quarter and $3.2 million in the year ago period. "Although weakness in the wireless handset market caused a decline in second quarter revenues, we are encouraged by the growth in revenues to customers serving the Ethernet and wireline infrastructure end markets," stated Ray Zinn, President and Chief Executive Officer of Micrel. "Internally, we maintained our focus on operating efficiencies and controlling costs, which resulted in lower operating expenses in the second quarter. Our wafer fabrication consolidation is proceeding on schedule and we feel confident that we will meet the cost objectives associated with the project by the end of September. The Company continued to generate positive cash flow from operations and net inventory decreased for the third consecutive quarter." Outlook ------- "While we believe the semiconductor industry is continuing to show a modest recovery, visibility continues to be limited because of the perception that semiconductor components continue to be readily available which keeps -more- Micrel Reports Second Quarter 2003 Results July 23, 2003 Page 2 pressure on pricing and lead times. Channel inventories continue to be reduced and are roughly at the same level as they were in 1998, which might be viewed as a positive indicator for the industry since it is unlikely these continued reductions can be sustained," continued Zinn. "For Micrel, the backlog level entering the third quarter is roughly flat with the backlog at the beginning of the second quarter, and to date July order rates from our primary wireless handset customers are above the comparable period in the second quarter. However, limited visibility still requires a high level of turns fill to achieve our projected revenue levels in the third quarter." Based on current backlog levels and demand estimates, the Company believes that third quarter 2003 revenues will increase sequentially by approximately three to eight percent. Product Update -------------- During the quarter the Company introduced 20 new products, the majority of which were proprietary. These products included the KS8695P Ethernet "router on a chip" targeting the growing wireless access point market and supporting the latest 802.11a and g Wi-Fi standards through a mini PCI interface. With its XceleRouter TM technology and 166MHz processor, the KS8695P is capable of providing near wire-speed (100Mbps) for WAN to LAN routing performance, nearly six times the routing performance of a typical residential gateway product. Furthermore, the integrated PCI bridge enables connectivity to any vendor's radio and supports the integration of new media applications to the gateway platform. The Company also expanded its RF product line with the introduction of a new receiver, targeting low data rate applications in the consumer, industrial and automotive markets. The device offers the industry's highest level of integration and Micrel's patent pending sweep-mode technology to reduce component count and minimize total system cost. Micrel also introduced three new precision fanout buffers and five precision multiplexers to address the low jitter, low skew timing and distribution requirements in networking systems. These new products feature a 400% improvement in speed compared to the industry standard alternatives, and all of these products include Micrel's patent pending internal termination that improves signal integrity and reduces external components. The new -more- Micrel Reports Second Quarter 2003 Results July 23, 2003 Page 3 multiplexers provide the lowest jitter in the industry as a result of a proprietary design technique that provides superior crosstalk isolation. Conference Call --------------- The Company will host a conference call at 2:00 p.m. PDT (5:00 p.m. EDT) today. Chief Executive Officer Raymond Zinn and Chief Financial Officer Richard Crowley will present an overview of second quarter financial results, discuss current business conditions and then respond to questions. The call is available live to any interested party on a listen only basis by dialing (303) 262-2130 or (800) 366-3964 at least five minutes before the scheduled start time, and asking to be connected to the Micrel, Incorporated Conference Call. A live webcast will also be available through www.vcall.com. A replay of the conference call will be available through July 30, 2003, by dialing (303) 590-3000 or (800) 405-2236 and entering passcode number 544968. A link to the webcast replay will be available on the Company's website at www.micrel.com. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This release includes statements that qualify as forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements include statements about the following topics: our expectations regarding future financial results, including revenues, net income, and earnings per share; and our expectations regarding future customer demand and new order rates. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. Those risks and uncertainties include, but are not limited to, such factors as: the effect of the Company's restatement of previous financial statements; continued softness in demand for our products; customer decisions to cancel, reschedule, or delay orders for our products; economic or financial difficulties experienced by our customers; the effect of business conditions in the computer, telecommunications and industrial markets; the impact of any previous or future acquisitions; changes in demand for networking or high -more- Micrel Reports Second Quarter 2003 Results July 23, 2003 Page 4 bandwidth communications products; the impact of competitive products and pricing and alternative technological advances; the accuracy of estimates used to prepare the Company's financial statements; the worldwide financial situation; the timely and successful development and market acceptance of new products and upgrades to existing products; continued softness in the economy and the U.S. stock markets as a whole; fluctuations in the market price of Micrel's common stock and other market conditions; the difficulty of predicting our future cash needs; the nature of other investment opportunities available to the Company from time to time; and Micrel's operating cash flow. For further discussion of these risks and uncertainties, we refer you to the documents the Company files with the SEC from time to time, including the Company's Annual Report on Form 10-K for the year ended December 31, 2002 and the Company's Form 10-Q for the quarter ended March 31, 2003. All forward- looking statements are made as of today, and the Company disclaims any duty to update such statements. About Micrel ------------ Micrel is a leading manufacturer of advanced high-performance analog, mixed-signal and digital ICs. These products include low drop-out and switching voltage regulators, PCMCIA and USB power controllers, high speed communications interfaces, operational amplifiers, comparators, voltage references, power drivers, RF devices, high speed logic and clock management ICs. Applications for these products include palmtop, notebook and desktop computers, computer peripherals, cellular phones, high speed communications systems, fiber optic communications modules, automatic test equipment, consumer electronics, industrial and process control products and avionics systems. Micrel also designs, develops and markets PHYs, repeaters and switches for Ethernet, Fast Ethernet and Gigabit Ethernet applications. For further information, contact Richard Crowley at Micrel, Incorporated, 1849 Fortune Drive, San Jose, California 95131, (408) 944-0800 or visit our website at http://www.micrel.com. -more- MICREL ANNOUNCES SECOND QUARTER 2003 RESULTS July 23, 2003 Page 5
MICREL, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2003 2002 2003 2002 --------- --------- --------- --------- Net revenues $ 49,109 $ 55,363 $ 100,064 $ 103,688 Cost of revenues* 30,880 34,139 61,291 64,816 --------- --------- --------- --------- Gross profit 18,229 21,224 38,773 38,872 Operating expenses: Research and development 12,136 13,009 24,825 26,371 Selling, general and administrative 6,582 8,874 13,574 16,869 Amortization of deferred stock compensation* 915 2,459 1,681 5,052 --------- --------- --------- --------- Total operating expenses 19,633 24,342 40,080 48,292 --------- --------- --------- --------- Loss from operations (1,404) (3,118) (1,307) (9,420) Other income (expense), net 181 (476) 347 588 --------- --------- --------- --------- Loss before income taxes (1,223) (3,594) (960) (8,832) Benefit for income taxes (310) (3,864) (221) (5,121) --------- --------- --------- --------- Net income (loss) $ (913) $ 270 $ (739) $ (3,711) ========= ========= ========= ========= Net income (loss) per share: Basic $ (0.01) $ 0.00 $ (0.01) $ (0.04) ========= ========= ========= ========= Diluted $ (0.01) $ 0.00 $ (0.01) $ (0.04) ========= ========= ========= ========= Shares used in computing per share amounts: Basic 92,171 92,984 92,105 93,045 ========= ========= ========= ========= Diluted 92,171 96,287 92,105 93,045 ========= ========= ========= ========= * Amortization of deferred stock compensation included in: Cost of revenues $ 290 $ 784 $ 591 $ 1,552 ========= ========= ========= ========= Research and development $ 500 $ 1,367 $ 1,009 $ 2,727 Selling, general and administrative 415 1,092 672 2,325 --------- --------- --------- --------- Total Operating expenses $ 915 $ 2,459 $ 1,681 $ 5,052 ========= ========= ========= =========
MICREL ANNOUNCES SECOND QUARTER 2003 RESULTS July 23, 2003 Page 6
MICREL, INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) June 30, December 31, 2003 2002 ----------- ----------- ASSETS CURRENT ASSETS: Cash, cash equivalents and short-term investments $ 123,466 $ 117,363 Accounts receivable, net 28,656 29,577 Inventories 37,584 39,531 Deferred income taxes 30,748 30,828 Other current assets 2,595 2,675 --------- --------- Total current assets 223,049 219,974 PROPERTY, PLANT AND EQUIPMENT, NET 90,223 92,318 INTANGIBLE ASSETS, NET 6,942 8,387 DEFERRED INCOME TAXES 8,775 9,606 OTHER ASSETS 439 390 --------- --------- TOTAL $ 329,428 $ 330,675 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 10,329 $ 13,026 Taxes payable 2,510 3,405 Deferred income on shipments to distributors 10,965 9,832 Other current liabilities 11,763 10,645 Current portion of long-term debt 856 911 --------- --------- Total current liabilities 36,423 37,819 LONG-TERM DEBT 10,478 10,983 OTHER LONG-TERM OBLIGATIONS 5,725 8,254 SHAREHOLDERS' EQUITY: Common stock 161,221 160,889 Deferred stock compensation (6,380) (9,971) Accumulated other comprehensive loss (26) (25) Retained earnings 121,987 122,726 --------- --------- TOTAL SHAREHOLDERS' EQUITY 276,802 273,619 --------- --------- TOTAL $ 329,428 $ 330,675 ========= =========