Science & Technology
SANTA CLARA, CA--(Marketwire - July 19, 2010) - Atheros Communications, Inc. (
Revenue in the second quarter of 2010 was a record $238.2 million, up 11 percent compared to $214.7 million reported in the first quarter of 2010. Second quarter 2010 revenue increased 112 percent compared to $112.2 million reported in the second quarter of 2009.
In accordance with U.S. generally accepted accounting principles (GAAP), the company recorded net income in the second quarter of 2010 of $29.7 million or $0.41 per diluted share. This compares to GAAP net income of $19.7 million or $0.27 per diluted share in the first quarter of 2010. Net loss in the second quarter of 2009 was $0.3 million or $0.00 per diluted share. Cash, cash equivalents and marketable securities were $508.4 million at June 30, 2010, up $64.8 million from the balance at March 31, 2010.
Atheros reports gross margin, operating expenses, operating income, net income (loss) and basic and diluted net income (loss) 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, amortization of acquired intangible assets and acquisition-related charges, the realized gain on sale or the impairment of long-term investments and the tax impact of these excluded items. A reconciliation of preliminary GAAP net income (loss) to non-GAAP net income, as well as a description of items excluded in the calculation of non-GAAP net income, is presented in the financial statements portion of this release.
Non-GAAP gross margin in the second quarter of 2010 was 49.8 percent of revenue, compared to 49.5 percent reported in the first quarter of 2010 and 47.4 percent in the second quarter of 2009. Non-GAAP operating income in the second quarter of 2010 was 22.6 percent of revenue, compared to 21.4 percent in the first quarter of 2010 and 10.8 percent in the second quarter of 2009.
Non-GAAP net income in the second quarter of 2010 was $49.2 million or $0.67 per diluted share, compared to $40.7 million or $0.57 per diluted share in the first quarter of 2010 and $12.3 million or $0.20 per diluted share in the second quarter of 2009.
"Strong demand from our networking and consumer channels enabled us to post record revenue, operating profit and cash flow generation in the second quarter. Connectivity solutions for our consumer channel are being widely adopted by a variety of customers reflecting new market opportunities for our portfolio of communications products," said Craig Barratt, president and chief executive officer of Atheros Communications. "Our networking channel was also strong in the second quarter, and with the anticipated acquisition of Opulan Technologies, Atheros is further broadening its platform solutions for these customers. We believe our vision of driving widespread connectivity into an expanding number of hybrid networking, PC and consumer solutions, positions us well for the future."
Recent Atheros Highlights
July 19, 2010 -- Atheros Adds PON Technology with the Acquisition of Opulan Technologies
July 19, 2010 -- Atheros Ships 500 Millionth Wi-Fi® Chipset
July 14, 2010 -- Atheros and Wilocity Partner to Build Tri-Band Wireless Solutions that Combine Wi-Fi and WiGig™ Technologies
June 15, 2010 -- Atheros Awarded U.S. Department of Energy Grant to Develop Low-Power, Smart Grid Solutions with Its AMP™ Powerline Technology
June 1, 2010 -- Atheros Wi-Fi and Bluetooth® Solutions Help Acer Enhance the Mobile Connectivity Experience
June 1, 2010 -- Atheros 3-Stream 802.11n Router Solutions Deliver Exceptional Performance to Support Demanding Multimedia Applications in the Home and Enterprise
May 6, 2010 -- Atheros Powerline Technology Delivers Unprecedented Performance for Ethernet-over-Coax Broadband Deployments
Conference Call
Atheros will broadcast its second quarter financial results conference call today, Monday, July 19, 2010, at 2 p.m. Pacific time (5 p.m. Eastern time). To listen to the call from within the United States, please dial 877-835-9268 approximately 10 minutes prior to the start of the call. To listen to the call from outside the United States, please dial 706-634-9690 approximately 10 minutes prior to the start of the call. The pass code is Atheros.
Prior to this conference call, Atheros will post supplemental financial data on its web site at [ http://investors.atheros.com ]. Atheros is making this information available prior to the conference call in order to provide the investment community with additional time to analyze Atheros' results and prepare for the call with management.
Atheros' financial results conference call will also be available via a webcast at [ http://investors.atheros.com ]. To access the live webcast, please log in 15 minutes prior to the start of the call to download and install any necessary audio software. The webcast will be recorded and available approximately one hour after the live call concludes at [ http://investors.atheros.com ] for six months.
About Atheros Communications, Inc.
Atheros Communications is a global leader in innovative technologies for wireless and wired communications. Atheros combines its wireless and networking systems expertise with high-performance radio frequency (RF), mixed signal and digital semiconductor design skills to provide highly integrated chipsets that are manufactured on low-cost, standard complementary metal-oxide semiconductor (CMOS) processes. Atheros technology is used by a broad base of leading customers, including personal computer, networking equipment and consumer device manufacturers. For more information, please visit [ www.atheros.com ] or send an email to [ info@atheros.com ].
Atheros, the Atheros logo and AMP are trademarks of Atheros Communications, Inc. All other trademarks mentioned in this document are the sole property of their respective owners.
NOTE ON FORWARD-LOOKING STATEMENTS
Except for the historical information contained herein, the matters set forth in this press release, including our statements regarding our market opportunities from the consumer channel, the anticipated acquisition of Opulan Technologies Corp. and the expected benefits from the acquisition, our future prospects, and the benefits of using non-GAAP financial measures 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, difficulties in the development of new and enhanced products, general economic conditions, the effects of competition and technological change, the risk that the acquisition of Opulan Technologies will not be consummated or that we will not realize the benefits we expect from the acquisition, and the risks detailed in Atheros' Annual Report on Form 10-K for the year ended December 31, 2009 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, 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 disclaims any obligation to update these forward-looking statements.
ATHEROS COMMUNICATIONS, INC. PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) Three Months Ended ------------------------------- June 30, March 31, June 30, 2010 2010 2009 --------- --------- --------- Net revenue $ 238,219 $ 214,705 $ 112,224 Cost of goods sold 119,792 111,315 59,181 --------- --------- --------- Gross profit 118,427 103,390 53,043 Operating expenses: Research and development 46,459 42,970 30,480 Sales and marketing 22,055 20,653 14,305 General and administrative 10,686 9,508 6,872 Amortization of acquired intangible assets 8,266 9,115 2,885 Acquisition-related charges 317 466 - --------- --------- --------- Total operating expenses 87,783 82,712 54,542 Income (loss) from operations 30,644 20,678 (1,499) Interest income, net 1,140 1,145 1,563 Realized gain (impairment) of long-term investments, net 62 196 (30) Income tax provision (2,111) (2,280) (284) --------- --------- --------- Net income (loss) $ 29,735 $ 19,739 $ (250) ========= ========= ========= Basic earnings (loss) per share $ 0.42 $ 0.29 $ 0.00 ========= ========= ========= Diluted earnings (loss) per share $ 0.41 $ 0.27 $ 0.00 ========= ========= ========= Shares used in computing basic earnings (loss) per share 70,403 68,791 61,427 ========= ========= ========= Shares used in computing diluted earnings (loss) per share 72,950 71,813 61,427 ========= ========= ========= ATHEROS COMMUNICATIONS, INC. PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) Six Months Ended June 30, ------------------------ 2010 2009 ----------- ----------- Net revenue $ 452,924 $ 200,149 Cost of goods sold 231,107 105,025 ----------- ----------- Gross profit 221,817 95,124 Operating expenses: Research and development 89,429 59,525 Sales and marketing 42,708 27,721 General and administrative 20,194 12,802 Amortization of acquired intangible assets 17,381 5,770 Acquisition-related charges 783 - ----------- ----------- Total operating expenses 170,495 105,818 Income (loss) from operations 51,322 (10,694) Interest income, net 2,285 3,234 Realized gain (impairment) of long-term investments, net 258 (1,137) Income tax benefit (provision) (4,391) 795 ----------- ----------- Net income (loss) $ 49,474 $ (7,802) =========== =========== Basic earnings (loss) per share $ 0.71 $ (0.13) =========== =========== Diluted earnings (loss) per share $ 0.68 $ (0.13) =========== =========== Shares used in computing basic earnings (loss) per share 69,597 61,173 =========== =========== Shares used in computing diluted earnings (loss) per share 72,382 61,173 =========== =========== ATHEROS COMMUNICATIONS, INC. PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands) June 30, December 31, 2010 2009 ------------ ------------ ASSETS Current assets: Cash, cash equivalents and marketable securities $ 508,375 $ 402,235 Accounts receivable, net 92,466 58,012 Inventory 87,322 70,396 Deferred income taxes and other current assets 28,647 26,985 ------------ ------------ Total current assets 716,810 557,628 Property and equipment, net 16,170 14,955 Long-term investments 7,000 15,523 Goodwill and net acquired intangible assets 306,848 324,229 Deferred income taxes and other assets 5,534 3,014 ------------ ------------ $ 1,052,362 $ 915,349 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 159,125 $ 141,068 Deferred income taxes and other long-term liabilities 46,122 42,421 Stockholders' equity 847,115 731,860 ------------ ------------ $ 1,052,362 $ 915,349 ============ ============ ATHEROS COMMUNICATIONS, INC. RECONCILIATION OF PRELIMINARY NON-GAAP ADJUSTMENTS (Unaudited) (In thousands, except per share data) Three Months Ended ------------------------------- June 30, March 31, June 30, 2010 2010 2009 --------- --------- --------- GAAP net income (loss) $ 29,735 $ 19,739 $ (250) Stock-based compensation: Cost of goods sold 315 216 186 Research and development 7,286 6,599 5,148 Sales and marketing 4,618 4,067 3,392 General and administrative 2,507 2,148 2,012 --------- --------- --------- Total stock-based compensation 14,726 13,030 10,738 Acquisition-related charges: Amortization of acquired intangible assets 8,266 9,115 2,885 Other acquisition-related charges 317 466 - Amortization of acquisition-related step-up value of inventory - 2,634 - Realized (gain) impairment of long-term investments, net (62) (196) 30 Net tax effect of non-GAAP adjustments (3,809) (4,067) (1,065) --------- --------- --------- Non-GAAP net income $ 49,173 $ 40,721 $ 12,338 ========= ========= ========= Shares used in computing non-GAAP basic earnings per share 70,403 68,791 61,427 ========= ========= ========= Shares used in computing non-GAAP diluted earnings per share 72,950 71,813 63,021 ========= ========= ========= Non-GAAP basic earnings per share $ 0.70 $ 0.59 $ 0.20 ========= ========= ========= Non-GAAP diluted earnings per share $ 0.67 $ 0.57 $ 0.20 ========= ========= ========= ATHEROS COMMUNICATIONS, INC. RECONCILIATION OF PRELIMINARY NON-GAAP ADJUSTMENTS (Unaudited) (In thousands, except per share data) Six Months Ended June 30, ------------------------ 2010 2009 ----------- ----------- GAAP net income (loss) $ 49,474 $ (7,802) Stock-based compensation: Cost of goods sold 531 359 Research and development 13,885 9,764 Sales and marketing 8,685 6,234 General and administrative 4,655 3,534 ----------- ----------- Total stock-based compensation 27,756 19,891 Acquisition-related charges: Amortization of acquired intangible assets 17,381 5,770 Amortization of acquisition-related step-up value of inventory 2,634 - Other acquisition-related charges 783 - Realized (gain) impairment of long-term investments, net (258) 1,137 Net tax effect of non-GAAP adjustments (7,876) (2,774) ----------- ----------- Non-GAAP net income $ 89,894 $ 16,222 =========== =========== Shares used in computing non-GAAP basic earnings per share 69,597 61,173 =========== =========== Shares used in computing non-GAAP diluted earnings per share 72,382 62,636 =========== =========== Non-GAAP basic earnings per share $ 1.29 $ 0.27 =========== =========== Non-GAAP diluted earnings per share $ 1.24 $ 0.26 =========== =========== ATHEROS COMMUNICATIONS, INC. RECONCILIATION OF PRELIMINARY GAAP TO NON-GAAP FINANCIAL MEASURES
To supplement our unaudited selected financial data presented on a basis consistent with Generally Accepted Accounting Principles, or GAAP, we disclose certain non-GAAP financial measures, including non-GAAP gross profit, operating expenses, operating income, net income and earnings per share. These supplemental measures exclude stock-based compensation, acquisition-related charges, other-than-temporary impairments of long-term investments net of subsequent realized gains and any tax detriment or benefit between the income tax expense with and without the non-GAAP measures. These non-GAAP measures are not in accordance with, nor serve as an alternative for GAAP. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our GAAP results of operations. These non-GAAP measures should only be viewed in conjunction with corresponding GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.
In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our core operating performance on a period-to-period basis. The excluded items represent stock-based compensation and charges and gains that are primarily driven by discrete events that we do not consider to be directly related to core operating performance. We use non-GAAP measures to evaluate the core operating performance of our business, for comparison with forecasts and strategic plans, for calculating return on investment and for benchmarking performance externally against competitors. In addition, management's incentive compensation is determined using these non-GAAP measures. Also, when evaluating potential acquisitions, we primarily consider the impact of the target's performance and valuation on our non-GAAP measures. Since we find these measures to be useful, we believe that investors benefit from seeing results reviewed by management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by offering:
-- more meaningful comparability of our on-going operating results; -- the ability to better identify trends in our underlying business; and -- a way to compare our operating results against analyst financial models and operating results of competitors that supplement their GAAP results with non-GAAP financial measures.
The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:
Stock-based compensation expense relates to equity awards granted to our workforce. Our stock incentive plans are important components of our employee incentive compensation arrangements and are reflected as expenses in our GAAP results. While we include the dilutive impact of such equity awards in weighted average shares outstanding, the expense associated with stock-based awards is excluded from non-GAAP net income. These non-cash charges are not factored into our internal evaluation of net income as we believe their inclusion would hinder our ability to assess core operational performance.
Acquisition-related charges include the amortization of acquired intangible assets primarily consisting of acquired technology, customer relationships, covenants not to compete, step-up of inventory to its estimated fair value, backlog and transaction costs related to our acquisitions. These charges are not factored into our evaluation of potential acquisitions, or of our performance after completion of acquisitions, because they are not related to our core operating performance, and the frequency and amount of such charges vary significantly based on the timing and magnitude of our acquisition transactions, the then fair market value of our common stock and the maturities of the businesses being acquired.
Realized gains/impairments of long-term investments relates primarily to the other-than-temporary, non-operating write down of our investments in auction rate securities rated AA and AAA at the date of purchase net of gains realized as the result of sales of these securities. The liquidity and fair value of these securities has been impacted by the failure of these markets. We have determined that certain of these assets have been other-than-temporarily impaired and therefore they were written down to their estimated fair value. These charges are not factored into our internal evaluation of net income as we believe they are non-operating charges that do not impact our core operating performance.
Adjustment for taxes relates to the tax effect of various adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure of non-GAAP net income. We believe that these adjustments provide us with the ability to more clearly view trends in our core operating performance.
Reconciliations of non-GAAP measures disclosed in this press release are set forth below (in thousands, except percentages):
Three Months Ended ------------------------------ June 30, March 31, June 30, 2010 2010 2009 --------- --------- -------- GAAP gross profit $ 118,427 $ 103,390 $ 53,043 Stock-based compensation 315 216 186 Amortization of acquisition-related step-up value of inventory - 2,634 - --------- --------- -------- Non-GAAP gross profit $ 118,742 $ 106,240 $ 53,229 ========= ========= ======== GAAP gross profit as a % of revenue 49.7% 48.2% 47.3% Stock-based compensation 0.1% 0.1% 0.1% Amortization of acquisition-related step-up value of inventory -% 1.2% -% --------- --------- -------- Non-GAAP gross profit as a % of revenue 49.8% 49.5% 47.4% ========= ========= ======== GAAP operating expenses $ 87,783 $ 82,712 $ 54,542 Stock-based compensation (14,411) (12,814) (10,552) Amortization of acquired intangible assets (8,266) (9,115) (2,885) Acquisition-related charges (317) (466) - --------- --------- -------- Non-GAAP operating expenses $ 64,789 $ 60,317 $ 41,105 ========= ========= ======== GAAP income (loss) from operations $ 30,644 $ 20,678 $ (1,499) Stock-based compensation 14,726 13,030 10,738 Amortization of acquired intangible assets 8,266 9,115 2,885 Amortization of acquisition-related step-up value of inventory - 2,634 - Acquisition-related charges 317 466 - --------- --------- -------- Non-GAAP income from operations $ 53,953 $ 45,923 $ 12,124 ========= ========= ======== GAAP income (loss) from operations as a % of revenue 12.9% 9.6% (1.3)% Stock-based compensation 6.2% 6.1% 9.5% Amortization of acquired intangible assets 3.4% 4.3% 2.6% Amortization of acquisition-related step-up value of inventory -% 1.2% -% Acquisition-related charges 0.1% 0.2% -% --------- --------- -------- Non-GAAP income from operations as a % of revenue 22.6% 21.4% 10.8% ========= ========= ========
Reconciliations of non-GAAP measures disclosed in this press release are set forth below (in thousands, except percentages):
Six Months Ended June 30, ----------------------- 2010 2009 ----------- ---------- GAAP gross profit $ 221,817 $ 95,124 Amortization of acquisition-related step-up value of inventory 2,634 - Stock-based compensation 531 359 ----------- ---------- Non-GAAP gross profit $ 224,982 $ 95,483 =========== ========== GAAP gross profit as a % of revenue 49.0% 47.5% Amortization of acquisition-related step-up value of inventory 0.6% -% Stock-based compensation 0.1% 0.2% ----------- ---------- Non-GAAP gross profit as a % of revenue 49.7% 47.7% =========== ========== GAAP operating expenses $ 170,495 $ 105,818 Stock-based compensation (27,225) (19,532) Amortization of acquired intangible assets (17,381) (5,770) Acquisition-related charges (783) - ----------- ---------- Non-GAAP operating expenses $ 125,106 $ 80,516 =========== ========== GAAP income (loss) from operations $ 51,322 $ (10,694) Stock-based compensation 27,756 19,891 Amortization of acquired intangible assets 17,381 5,770 Amortization of acquisition-related step-up value of inventory 2,634 - Acquisition-related charges 783 - ----------- ---------- Non-GAAP income from operations $ 99,876 $ 14,967 =========== ========== GAAP income (loss) from operations as a % of revenue 11.3% (5.3)% Stock-based compensation 6.1% 9.9% Amortization of acquired intangible assets 3.9% 2.9% Amortization of acquisition-related step-up value of inventory 0.6% -% Acquisition-related charges 0.2% -% ----------- ---------- Non-GAAP income from operations as a % of revenue 22.1% 7.5% =========== ==========
