Sirenza Microdevices Reports Third Quarter 2007 Results

Business Wire, Oct 24, 2007

BROOMFIELD, Colo. -- Sirenza Microdevices, Inc. (NASDAQ: SMDI) today reported its financial results for its third fiscal quarter ended September 30, 2007.

Financial Highlights

Revenue

* Quarterly revenue of $45.9 million, as compared to $39.7 million year-over-year and $46.7 million sequentially

* Year-over-year revenue growth of 16%

Earnings

* Quarterly earnings per share of $0.05 per share, compared to earnings of $0.07 a year ago and earnings of $0.05 per share sequentially

* Quarterly pro forma earnings1 per share of $0.18 per share, compared to earnings of $0.19 a year ago and $0.17 per share sequentially

* Quarterly pro forma income before taxes of $10.1 million, matching the record quarterly level achieved in the second quarter of 2007, resulting in a pro forma income before taxes income margin of 22%

Cash Flow

* Quarterly cash flow from operations of approximately $7.2 million

* Record of consecutive quarters of positive cash flow from operations extended to four years

"We are pleased that we again achieved a record level of pro forma income before taxes, particularly in light of our slight sequential revenue decline," stated Robert Van Buskirk, president and chief executive officer. "We are also pleased that our gross margin remained robust and our pro forma operating expenses were lower than expected, resulting in strong pro forma profitability. Our 2007 financial performance to date has been excellent as our year-to-date revenue has increased 32% over last year and our pro forma income before taxes has increased 36% over last year. As we look forward to completing our acquisition by RFMD in the fourth quarter, we continue to firmly believe that the combination has great potential to accelerate our revenue growth and expand our margins by leveraging the technology base and supply chain leadership position RFMD has achieved, and that there is a tremendous opportunity to apply the highly integrated, systems-level design expertise demanded by RFMD's cellular handset customers to the markets that Sirenza currently serves."

The company's third quarter net income was $2.7 million, or earnings of $0.05 per diluted share. This compared year-over-year with net income of $3.3 million, or earnings of $0.07 per diluted share and sequentially with net income of $2.8 million, or $0.05 per diluted share.

Excluding the effects of the charges detailed in the reconciliation of pro forma to GAAP results included with this press release, Sirenza's pro forma net income for the third quarter was $9.7 million, or $0.18 per diluted share. This compared year-over-year with pro forma net income of $9.1 million, or $0.19 per diluted share and sequentially with pro forma net income of $8.7 million, or $0.17 per diluted share.

Sirenza's third quarter gross margin was 45%, compared with 45% a year ago and 46% sequentially. Excluding the effects of the charges detailed in the reconciliation of pro forma to GAAP results included with this press release, Sirenza's third quarter 2007 gross margin was 47%, compared with 45% a year ago and 49% sequentially.

In the aggregate, the company's research and development, sales and marketing and general and administrative expenses for the third quarter of 2007 were $14.1 million, compared with $10.5 million a year ago and $14.1 million sequentially. In the aggregate, the company's pro forma expenses for research and development, sales and marketing, and general and administrative expenses for the third quarter of 2007 were $11.1 million, compared with $9.3 million a year ago and $12.8 million sequentially.

At September 30, 2007, Sirenza's total assets were $227.3 million, including cash and cash equivalents of $35.5 million.

Use of Non-GAAP Financial Measures

In keeping with its historical financial reporting practices, Sirenza believes that the supplemental presentation of pro forma net income and earnings per share, income before taxes, gross margin, net income margin, income before taxes margin, and total research and development, sales and marketing and general and administrative expenses calculations provide meaningful non-GAAP financial measures to help management and investors understand and compare operating results and business trends among different reporting periods on a consistent basis, independently of regularly reported non-cash charges and infrequent or unusual events. Sirenza management also uses such pro forma measures in its planning and development of target operating models and in setting incentive compensation goals for its employees. Readers are cautioned not to view pro forma results as an alternative to GAAP results or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with pro forma results for the third quarters of 2007 and 2006, respectively, and the second quarter of 2007 contained below.

Third Quarter Teleconference and Webcast

Sirenza management plans to host a teleconference at 2:45 p.m. MT / 4:45 p.m. ET today to discuss the company's third quarter 2007 financial results. This teleconference will be webcast live for the general public. For more information, please visit the Investor Relations page of Sirenza's website at www.sirenza.com. The teleconference webcast will be archived on this site until October 24, 2008, and a telephonic replay for domestic listeners will be available at (800) 405-2236, conference ID number 11099355#, and for international listeners at (303) 590-3000, conference ID number 11099355#, until October 31, 2007.