UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 001-16397
AGERE SYSTEMS INC.
| A Delaware Corporation |
I.R.S. Employer No. 22-3746606 |
1110 American Parkway NE, Allentown, PA 18109
Telephone - 610-712-1000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o
At April 30, 2004, 806,545,529 shares of Class A common stock and 907,994,888 shares of Class B common stock were outstanding.
AGERE SYSTEMS INC.
FORM 10-Q
For the quarterly period ended March 31, 2004
TABLE OF CONTENTS
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| Part I—Financial Information |
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| Item 1. |
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Financial Statements (Unaudited) |
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Condensed Consolidated Balance Sheets as of March 31, 2004 and September 30, 2003 |
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Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2004 and 2003 |
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5 | |
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| Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
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| Item 3. |
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29 | |
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| Item 4. |
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30 | |
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| Part II—Other Information |
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| Item 1. |
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31 | |
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| Item 4. |
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31 | |
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| Item 6. |
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31 | |
1
PART I – Financial Information
Item 1. Financial Statements
AGERE SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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2004 |
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2003 |
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2004 |
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2003 |
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Revenue |
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$ |
462 |
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$ |
443 |
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$ |
978 |
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$ |
879 |
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Costs |
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254 |
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326 |
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539 |
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649 |
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Gross profit |
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208 |
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117 |
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439 |
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230 |
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Operating expenses: |
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Selling, general and administrative |
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70 |
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78 |
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146 |
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151 |
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Research and development |
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128 |
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116 |
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247 |
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243 |
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Amortization of acquired intangible assets |
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1 |
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3 |
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3 |
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5 |
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Purchased in-process research and development |
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— |
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— |
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13 |
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— |
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Restructuring and other charges—net |
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7 |
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68 |
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54 |
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93 |
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Loss on sale of operating assets—net |
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1 |
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2 |
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— |
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2 |
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Total operating expenses |
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207 |
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267 |
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463 |
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494 |
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Operating income (loss) |
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1 |
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(150 |
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(24 |
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(264 |
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Other income—net |
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4 |
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13 |
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5 |
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16 |
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Interest expense |
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10 |
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11 |
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22 |
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24 |
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Loss from continuing operations before income taxes |
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(5 |
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(148 |
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(41 |
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(272 |
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(Benefit) provision for income taxes |
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(79 |
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30 |
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(76 |
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54 |
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Income (loss) from continuing operations |
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74 |
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(178 |
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35 |
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(326 |
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Discontinued operations: |
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Income from operations of discontinued business (net of taxes) |
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— |
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12 |
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— |
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19 |
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Gain on disposal of discontinued business (net of taxes) |
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— |
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41 |
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— |
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41 |
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Income from discontinued operations |
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— |
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53 |
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— |
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60 |
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Income (loss) before cumulative effect of accounting change |
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74 |
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(125 |
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35 |
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(266 |
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Cumulative effect of accounting change (net of taxes) |
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— |
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— |
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— |
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(5 |
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Net income (loss) |
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$ |
74 |
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$ |
(125 |
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$ |
35 |
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$ |
(271 |
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Basic and diluted income (loss) per share information: |
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Income (loss) from continuing operations |
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$ |
0.04 |
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$ |
(0.11 |
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$ |
0.02 |
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$ |
(0.20 |
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Income from discontinued operations |
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— |
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0.03 |
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— |
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0.04 |
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Income (loss) before cumulative effect of accounting change |
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0.04 |
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(0.08 |
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0.02 |
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(0.16 |
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Cumulative effect of accounting change |
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— |
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— |
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— |
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— |
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Net income (loss) |
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$ |
0.04 |
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$ |
(0.08 |
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$ |
0.02 |
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$ |
(0.16 |
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Weighted average shares outstanding—basic (in millions) |
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1,711 |
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1,656 |
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1,704 |
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1,652 |
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Weighted average shares outstanding—diluted (in millions) |
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1,734 |
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1,656 |
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1,727 |
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1,652 |
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See Notes to Condensed Consolidated Financial Statements.
2
AGERE SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
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March
31, |
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September
30, |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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$ |
763 |
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$ |
744 |
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Cash held in trust |
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16 |
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21 |
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Trade receivables, less allowances of $3 and $6 as of March 31, 2004 and September 30, 2003, respectively |
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223 |
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265 |
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Inventories |
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146 |
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122 |
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Other current assets |
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70 |
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52 |
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Total current assets |
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1,218 |
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1,204 |
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Property, plant and equipment—net of accumulated depreciation and amortization of $1,418 and $1,347 as of March 31, 2004 and September 30, 2003, respectively |
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710 |
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778 |
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Goodwill |
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119 |
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109 |
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Acquired intangible assets—net of accumulated amortization |
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10 |
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13 |
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Other assets |
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215 |
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284 |
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Total assets |
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$ |
2,272 |
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$ |
2,388 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts payable |
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$ |
191 |
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$ |
245 |
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Payroll and related benefits |
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108 |
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109 |
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Short-term debt |
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153 |
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195 |
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Income taxes payable |
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245 |
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328 |
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Restructuring reserve |
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38 |
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47 |
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Other current liabilities |
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101 |
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98 |
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Total current liabilities |
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836 |
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1,022 |
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Pension and postretirement benefits |
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305 |
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288 |
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Long-term debt |
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427 |
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451 |
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Other liabilities |
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102 |
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116 |
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Total liabilities |
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1,670 |
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1,877 |
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Commitments and contingencies |
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