Micrel Reports 2012 Fourth Quarter and Full Year Financial Results

Micrel Reports 2012 Fourth Quarter and Full Year Financial Results 
SAN JOSE, CA -- (Marketwire) -- 01/31/13 --  Micrel, Incorporated
(NASDAQ: MCRL) 


 
--  Fourth quarter revenues of $62.3 million, slightly down from $62.9
    million in the third quarter
--  Full year revenues of $250.1 million, compared to $259.0 million in
    2011
--  One-time non-cash write-off for California deferred tax asset of $7.6
    million ($0.13 per diluted share) due to the passage of California
    Proposition 39
--  Fourth quarter GAAP net loss of $5.7 million, or a loss of $0.10 per
    diluted share
--  Fourth quarter Non-GAAP earnings per diluted share of $0.06 compared
    to $0.10 in the prior quarter
--  Full year GAAP net income of $10.4 million, or $0.17 per diluted share
--  Full year Non-GAAP earnings per diluted share of $0.38 compared to
    $0.60 in 2011
--  Gross margin of 50.3% and 53.1% for the fourth quarter and full year
    2012, respectively, compared to 50.5% and 55.3% in the fourth quarter
    and full year 2011
--  During 2012, the Company repurchased 3.4 million shares of Micrel
    common stock for a total of $34.6 million
--  During the fourth quarter, Micrel's Board of Directors authorized an
    accelerated cash dividend of $0.0425 per share of common stock made
    payable on December 27, 2012 to shareholders of record on December 18,
    2012

  
Micrel, Incorporated (NASDAQ: MCRL), a leading global manufacturer of
IC solutions for the worldwide high performance linear and power, LAN
and timing and communications markets, today announced financial
results for the fourth quarter and full year ended December 31, 2012. 
Fourth quarter revenues totaled $62.3 million, a decrease of $0.6
million, or 1.0%, from $62.9 million in the third quarter of 2012,
and an increase of 6.1% from $58.8 million in the prior year's
period.  
Fourth quarter 2012 GAAP net loss of $5.7 million, or a loss of $0.10
per diluted share, compares to third quarter 2012 GAAP net income of
$4.7 million, or $0.08 per diluted share, and GAAP net income of $5.0
million, or $0.08 per diluted share in the fourth quarter of 2011.
During the fourth quarter of 2012, the Company recorded a one-time
non-cash charge of $7.6 million related to the write-off of a
de
ferred tax asset as a result of certain provisions of the
California State Tax Code that were revised during the fourth quarter
with the passage of Proposition 39. The Company currently expects
that in 2013 and beyond, Micrel's income subject to tax in California
will be lower than under the prior tax law and that Micrel's
California deferred tax assets are, therefore, less likely to be
realized.  
The fourth quarter 2012 non-GAAP net income of $3.4 million, or $0.06
per diluted share, compares to third quarter 2012 non-GAAP net income
of $5.8 million, or $0.10 per diluted share, and non-GAAP net income
of $6.1 million, or $0.10 per diluted share in the same period of
2011. A reconciliation of the GAAP net income to non-GAAP net income
is provided in the financial tables at the end of this press release.
Non-GAAP results exclude the impact of stock-based compensation
expense with the related tax effects and deferred tax asset
adjustment.  
For the full year ended December 31, 2012, revenues totaled $250.1
million, down $8.9 million, from $259.0 for the full year ended
December 31, 2011. GAAP net income for 2012 was $10.4 million, or
$0.17 per diluted share, compared with GAAP net income of $34.0
million or $0.55 per diluted share in 2011. Non-GAAP net income in
2012 was $23.0 million or $0.38 per diluted share, compared with
non-GAAP net income of $37.8 million or $0.60 per diluted share, in
2011. Gross margin for 2012 was 53.1% compared to 55.3% in 2011. 
Commenting on the 2012 fourth quarter and full year results, Micrel's
President and CEO Ray Zinn said, "In light of the difficult
macroeconomic and industry environment, we are pleased with our
financial and operational results for 2012. Bookings during 2012 were
solid and yielded a book-to-bill ratio of approximately one for the
full year. In addition, we continue to maintain a strong balance
sheet and ended 2012 with cash, cash equivalents and short term
investments of $103.6 million, or $1.72 per share. We remain focused
on increasing shareholder value through our quarterly dividend
payments and stock repurchase program. During 2012, we raised our
quarterly cash dividend per share and also invested $34.6 million in
the repurchase of 3.4 million shares of Micrel common
stock." 
Outlook
 Mr. Zinn continued, "As a result of the sluggish
macroeconomic environment, 2012 was one of the most difficult years
of the past decade for the entire semiconductor industry.
Consequently, we believe semiconductor customers significantly
reduced inventory levels during the year which resulted in relatively
short lead times and caused the industry as a whole to ship below
actual demand. We believe that we are seeing a bottom to the industry
decline and we expect growth in the industry to resume. We expect
lead times to increase and inventory levels to normalize towards the
second half of the year resulting in modest full-year growth in 2013
for the industry. 
"Based upon current inventory levels and demand estimates, the
Company projects first quarter 2013 revenue growth will be in a range
of minus 6% to plus 3% on a sequential basis. Gross profit margin is
expected to be in the range of 51.0% to 52.0%. In addition, the
Company estimates that first quarter 2013 GAAP net income will be
approximately $0.05 to $0.10 per diluted share," Mr. Zinn
concluded. 
Dividend
 During the fourth quarter, Micrel's Board of
Directors authorized an accelerated quarterly cash dividend of
$0.0425 per share of common stock. The payment of this dividend was
made on December 27, 2012 to shareholders of record as of December
18, 2012. 
Share Repurchase Plan
 In the fourth quarter of 2012, the Company
repurchased 0.6 million shares for a total of $6.1 million. For the
full year, the Company repurchased 3.4 million shares for a total of
$34.6 million. As of December 31, 2012, up to approximately $19.1
million of additional repurchases of the Company's stock remained
under the stock repurchase plan authorized by the Board of Directors.
The authorization will stay in effect until the aggregate authorized
amount is expended or the authorization is modified by the Board of
Directors. Going forward, the timing and amount of any repurchase of
shares will continue to be determined by the Company's management
based upon its evaluation of market conditions, cash on hand and
various other factors. These repurchases may occur from time to time
in the open market or in privately negotiated transactions provided
that the repurchases are made in accordance with the terms of Rule
10b-18 under the Securities Exchange Act of 1934, as amended.
Enhancing shareholder value continues through Micrel's stock
repurchase program and quarterly dividend payments.  
Conference Call
 The Company will host a conference call today,
January 31, 2013, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time).
President and Chief Executive Officer, Raymond Zinn, and Chief
Financial Officer, Ray Wallin, will present an overview of the 2012
fourth quarter and full year 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 (866) 200-6965 and entering the
participant code 23427583 fol
lowed by the # key. For international
callers, please dial (646) 216-7221 and enter the participant code
23427583 followed by the # key. A live webcast will also be available
at the 'Investors' section of Micrel's website at: www.micrel.com. An
audio replay of the conference call will be available for all
interested parties through February 7, 2013, by dialing (866)
206-0173 or (646) 216-7204 and entering the participant code 278766
followed by the # key. The webcast replay will also be available on
the Company's website. 
Safe Harbor Statement Under the Private Securities Litigation Reform
Act of 1995
 This press release includes statements that qualify as
forward-looking statements under the Private Securities Litigation
Reform Act of 1995. These forward-looking statements include
statements about the following topics: our expectations regarding
future financial results, including revenues, customer demand and
inventories, order lead times, backlog, turns-fill requirements, net
income, earnings per share, gross margin, average selling prices, the
effect of cost-control efforts, supply chain constraints, channel
inventory levels and trends, capacity utilization, development of new
products, design wins and customer order patterns, and the nature and
extent of macro-economic and industry trends. Forward-looking
statements are subject to certain risks and uncertainties that could
cause the actual results to differ materially. Those risks and
uncertainties include, but are not limited to, such factors as:
softness in demand for our products; customer decisions to cancel,
rescheduling, or delayed orders for our products; the effect that
lead times and channel inventories have on the demand for our
products; economic or financial difficulties experienced by our
customers; the effect of business conditions in the computer,
wireless, telecommunications and industrial markets; the impact of
any previous or future acquisitions; changes in demand for the
Company's products; the impact of competitive products and pricing
and alternative technological advances; the accuracy of estimates
used to prepare the Company's financial statements and forecasts; the
global economic situation; the ability of the Company's vendors and
subcontractors to supply or manufacture the Company's products in a
timely manner; the timely and successful development and market
acceptance of new products and upgrades to existing products;
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; Micrel's operating cash flow, and economic
and industry projections. For further discussion of these risks and
uncertainties, please refer 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, 2011. All forward-looking
statements are made as of today, and the Company disclaims any duty
to update such statements. 
Non-GAAP Reporting 
 The Company presents non-GAAP financial measures
only because investors and financial analysts use non-GAAP results in
their analysis of historical results and projections of the Company's
future operating results. The Company's management uses non-GAAP
measures on a limited basis, primarily for employee performance-based
compensation. In order to facilitate the computation of non-GAAP
results for the financial analyst community and investors, the
Company makes reference to non-GAAP net income and earnings per
share. These non-GAAP results exclude the impact of stock-based
compensation expense with related taxes and, write-off of California
deferred tax asset. Micrel references those results to allow a better
comparison of results in the current period to those in prior periods
and to provide insight to the Company's on-going operating
performance after exclusion of these items. The Company has
reconciled such non-GAAP results to the most directly comparable GAAP
financial measures in the financial tables at the end of this press
release. 
Reference to these non-GAAP results should be considered in addition
to results that are prepared under current accounting standards, but
should not be considered a substitute for results that are presented
in accordance with GAAP. It should also be noted that Micrel's
non-GAAP information may be different from the non-GAAP information
provided by other companies.  
About Micrel
 Micrel, Inc. is a leading global manufacturer of IC
solutions for the worldwide high performance linear and power, LAN
and timing and communications markets. The Company's products include
advanced mixed-signal, analog and power semiconductors; high
performance communication, clock management, Ethernet switch and
physical layer transceiver ICs. Company customers include leading
manufacturers of enterprise, consumer, industrial, mobile,
telecommunications, automotive, and computer products. Corporation
headquarters and state-of-the-art wafer fabrication facilities are
located in San Jose, CA, with regional sales and support offices and
advanced technology design centers situated throughout the Americas,
Europe and Asia. In addition, the Company maintains an extensive
network of distributors and reps worldwide. Web: www.micrel.com. 
For further information, contact Ray Wallin at: Micrel, Incorporated,
2180 Fortune Drive, San Jose, California 95131, (408) 944-0800; or
visit the Micrel website at: www.micrel.com. 
-Financial Tables to Follow- 


 
                                                                            
                                                                            
                            MICREL, INCORPORATED                            
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                  (In thousands, except per share amounts)                  
                                (Unaudited)                                 
                                                                            
                             Three Months Ended         Twelve Months Ended 
                      -------------------------------  -------------------- 
                       December  September   December                       
                         31,        30,        31,         December 31,     
                      ---------  ---------  ---------  -------------------- 
                         2012       2012       2011       2012       2011   
                      ---------  ---------  ---------  ---------  --------- 
Net revenues          $  62,334  $  62,928  $  58,777  $ 250,112  $ 259,025 
Cost of revenues*        30,984     29,661     29,084    117,185    115,881 
                      ---------  ---------  ---------  ---------  --------- 
Gross profit             31,350     33,267     29,693    132,927    143,144 
                      ---------  ---------  ---------  ---------  --------- 
Operating expenses:                                                         
  Research and                                                              
   development*          14,597     15,341     12,563     57,182     49,952 
  Selling, general                  
                                        
   and                                                                      
   administrative*       12,824     11,847     11,667     48,010     46,415 
                      ---------  ---------  ---------  ---------  --------- 
    Total operating                                                         
     expenses            27,421     27,188     24,230    105,192     96,367 
                      ---------  ---------  ---------  ---------  --------- 
Income from                                                                 
 operations               3,929      6,079      5,463     27,735     46,777 
Interest and other                                                          
 income (expense):                                                          
  Interest income           158        166        150        712        703 
  Interest expense            -         47         (1)         -        (19)
  Other income                                                              
   (expense)                (32)         2          -       (153)       141 
                      ---------  ---------  ---------  ---------  --------- 
    Interest and                                                            
     other income                                                           
     (expense), net         126        215        149        559        825 
                      ---------  ---------  ---------  ---------  --------- 
Income before income                                                        
 taxes and                                                                  
 noncontrolling                                                             
 interest                 4,055      6,294      5,612     28,294     47,602 
Provision for income                                                        
 taxes**                  9,779      1,600        594     17,877     13,586 
                      ---------  ---------  ---------  ---------  --------- 
Net income (loss)        (5,724)     4,694      5,018     10,417     34,016 
Less: Net income                                                            
 (loss) attributable                                                        
 to noncontrolling                                                          
 interest                     3         (9)         -        (10)         - 
                      ---------  ---------  ---------  ---------  --------- 
Net income (loss)                                                           
 attributable to                                                            
 Micrel, Incorporated $  (5,721) $   4,685  $   5,018  $  10,407  $  34,016 
                      =========  =========  =========  =========  ========= 
                                                                            
                                                                            
Net income (loss) per                                                       
 share attributable                                                         
 to Micrel,                                                                 
 Incorporated:                                                              
  Basic               $   (0.10) $    0.08  $    0.08  $    0.17  $    0.55 
                      =========  =========  =========  =========  ========= 
  Diluted             $   (0.10) $    0.08  $    0.08  $    0.17  $    0.55 
                      =========  =========  =========  =========  ========= 
                                                                            
Shares used in                                                              
 computing per share                                                        
 amounts:                                                                   
  Basic                  58,172     59,242     61,379     59,623     61,609 
                      =========  =========  =========  =========  ========= 
  Diluted                58,172     59,889     61,938     60,288     62,371 
                      =========  =========  =========  =========  ========= 
                                                                            
                                                                            
* Includes                                                                  
 amortization of                                                            
 stock-based                                                                
 compensation as                                                            
 follows:                                                                   
  Cost of revenues    $     338  $     274  $     237  $   1,178  $   1,009 
  Research and                                                              
   development              929        646        735      3,132      2,401 
  Selling, general                                                          
   and administrative       995        719        707      3,282      2,444 
                                                                            
**Includes $7.6 million reserve established against the Company's deferred  
 tax assets in the fourth quarter of 2012 due to a change in California tax 
 laws.                                                                      
                                                                            
                                                                            
                            MICREL, INCORPORATED                            
        SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS            
                (In thousands, except per share amounts)                    
                               (Unaudited)                                  
                                                                            
                             Three Months Ended         Twelve Months Ended 
                      -------------------------------  -------------------- 
                       December  September   December                       
                         31,        30,        31,         December 31,     
                      ---------  ---------  ---------  -------------------- 
                         2012       2012       2011       2012       2011   
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
GAAP net income                                                             
 (loss) attributable                                                        
 to Micrel,                                                                 
 Incorporated         $  (5,721) $   4,685  $   5,018  $  10,407  $  34,016 
  Adjustments :                                                             
    Stock-based                                                             
     compensation           
                                                
     included in:                                                           
      Cost of                                                               
       revenues             338        274        237      1,178      1,009 
      Research and                                                          
       development          929        646        735      3,132      2,401 
      Selling,                                                              
       general and                                                          
       administrative       995        719        707      3,282      2,444 
    Tax effect of                                                           
     adjustments           (720)      (558)      (600)    (2,583)    (2,104)
                      ---------  ---------  ---------  ---------  --------- 
    Stock-based                                                             
     compensation                                                           
     adjustments          1,542      1,081      1,079      5,009      3,750 
    Write-off of                                                            
     California                                                             
     deferred tax                                                           
     asset                7,627          -          -      7,627          - 
                      ---------  ---------  ---------  ---------  --------- 
Non-GAAP net income                                                         
 attributable to                                                            
 Micrel,                                                                    
 Incorporated*        $   3,448  $   5,766  $   6,097  $  23,043  $  37,766 
                      =========  =========  =========  =========  ========= 
                                                                            
                                                                            
Non-GAAP shares used                                                        
 in computing non-                                                          
 GAAP income per                                                            
 share attributable                                                         
 to Micrel,                                                                 
 Incorporated:                                                              
    Basic                58,172     59,242     61,379     59,623     61,609 
                      =========  =========  =========  =========  ========= 
    Diluted              58,790     60,177     62,266     60,288     62,676 
                      =========  =========  =========  =========  ========= 
                                                                            
                                                                            
GAAP income (loss)                                                          
 per share - Basic    $   (0.10) $    0.08  $    0.08  $    0.17  $    0.55 
Total adjustments to                                                        
 GAAP net income                                                            
 (loss)                    0.16       0.02       0.02       0.22       0.06 
                      ---------  ---------  ---------  ---------  --------- 
Non-GAAP income per                                                         
 share - Basic        $    0.06  $    0.10  $    0.10  $    0.39  $    0.61 
                      =========  =========  =========  =========  ========= 
                                                                            
GAAP income (loss)                                                          
 per share - Diluted  $   (0.10) $    0.08  $    0.08  $    0.17  $    0.55 
Total adjustments to                                                        
 GAAP net income                                                            
 (loss)                    0.16       0.02       0.02       0.21       0.05 
                      ---------  ---------  ---------  ---------  --------- 
Non-GAAP income per                                                         
 share - Diluted      $    0.06  $    0.10  $    0.10  $    0.38  $    0.60 
                      =========  =========  =========  =========  ========= 
                                                                            
                                                                            
* Non-GAAP results were reached by excluding the stock-based compensation   
 expense with related income tax effects and deferred tax asset adjustment. 
Non-GAAP results are presented to supplement our GAAP consolidated          
 financial statements to allow a better comparison of results in the        
 current period to those in prior periods and to provide meaningful insight 
 to the Company's on-going operating performance after exclusion of these   
 items.                                                                     
                                                                            
                                                                            
                                                                            
                            MICREL, INCORPORATED                            
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                                 (Unaudited)                                
                                                                            
                                                  December 31,  December 31,
                                                      2012          2011    
                                                 ------------- -------------
ASSETS                                                                      
                                                                            
CURRENT ASSETS:                                                             
  Cash, cash equivalents and short-term                                     
   investments                                   $     103,630 $     137,875
  Restricted Cash                                          291             -
  Accounts receivable, net                              27,683        25,385
  Inventories                                           42,256        36,286
  Income taxes receivable                                4,090         6,881
  Other current assets                                   2,355         2,883
  Deferred income taxes                                 19,811        22,854
                                                 ------------- -------------
    Total current assets                               200,116       232,164
                                                                            
LONG-TERM INVESTMENTS                                    4,159         6,857
PROPERTY, PLANT AND EQUIPMENT, NET                      60,692        60,884
DEFERRED INCOME TAXES                                       16         8,657
GOODWILL                                                 6,076             -
INTANGIBLE ASSETS, NET                                   7,906             -
OTHER ASSETS                                             2,489         1,413
                                                 ------------- -------------
TOTAL                                            $     281,454 $     309,975
                                                 ============= =============
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY                                        
                                                                            
CURRENT LIABILITIES:                                                        
  Accounts payable                               $      21,936 $      17,096
  Deferred income on shipments to distributors          25,768        30,671
  Other current liabilities                              8,833         9,329
                                                 ------------- -------------
    Total current liabilities                           56,537        57,096
                                                                            
LONG-TERM INCOME TAXES PAYABLE                           2,759         6,450
LONG-TERM DEFFERRED INCOME TAXES                         1,054             -
                                                                            
SHAREHOLDERS' EQUITY:                                                       
TOTAL SHAREHOLDERS' EQUITY                             221,104       246,429
                                                 ------------- -------------
TOTAL                                            $     281,454 $     309,975
                                                 ============= =============

  
Contact: 
Ray Wallin
Micrel,
 Incorporated
2180 Fortune Drive
San Jose, CA 95131
Phone: (408) 944-0800 
 
 
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