TriQuint (TQNT) Announces Second Quarter 2012 Results

TriQuint Semiconductor, Inc. (NASDAQ:TQNT), a leading RF solutions supplier and technology innovator, announces its financial results for the quarter ended June 30, 2012, including the following highlights:

• Revenue for the quarter was $178.0 million
• GAAP net loss for the quarter was $16.5 million, or $(0.10) per share
• Non-GAAP net loss for the quarter was $15.0 million, or $(0.09) per share
• Booked $13 million in orders for F-35 Lightning II Joint Strike Fighter and TPQ-53 Army radar
• Announced $12.3 million GaN DARPA contract to develop Ultra-Fast Power Switch technology
• Shipping MMPA & BAW content on new Galaxy* phone for Verizon
• Introduced industry’s first 802.11ac Wi-Fi RF module for next-generation smartphones and tablets
• Closed major design wins in Fiber-to-the-Home and optical networks

Commenting on the results for the quarter ended June 30, 2012, Ralph Quinsey, President and Chief Executive Officer, stated, “TriQuint’s second quarter performance was in line with expectations. Mobile devices demand was soft in the second quarter as the smartphone industry prepares for a seasonally strong second half, and our Defense and Networks revenue was slightly up year-to-date with a healthy outlook for the remainder of the year. We believe TriQuint is well positioned for revenue growth and improved financial performance in the second half of 2012.”

Summary Financial Results for the Three and Six Months Ended June 30, 2012:

Revenues for the second quarter of 2012 were $178.0 million, down 22% from the second quarter of 2011 and down 18% sequentially. Mobile Devices market revenue declined 24%, Networks declined 5% and Defense was consistent sequentially. Revenue for the six months ended June 30, 2012 was $394.7 million, down 13% from the six months ended July 2, 2011.

GAAP

Gross margin for the second quarter of 2012 was 25.2%, down sequentially from 28.9%. Gross margin for the six months ended June 30, 2012 was 27.2%, down from 39.6% for the same period in 2011 due to low factory utilization.

Operating expenses for the second quarter of 2012 were $69.4 million, or 39% of revenue, up from $66.2 million in the previous quarter due primarily to higher medical and engineering expenses. Operating expenses for the six months ended June 30, 2012 were $135.5 million compared to $138.0 million for the same period in 2011.

Net loss for the second quarter of 2012 was $16.5 million or $(0.10) per share, down from net income of $1.9 million, or $0.01 per diluted share, in the previous quarter. Net loss for the six months ended June 30, 2012 was $14.6 million or $(0.09) per share compared to a net income of $29.0 million or $0.17 per share for the six months ended July 2, 2011.

Cash and investments decreased by $32.5 million to $162.4 million in the quarter due primarily to the stock repurchase of nearly 4.9 million shares for approximately $25 million.

Non-GAAP

Gross margin for the second quarter was 27.9%, down sequentially from 30.4%. Gross margin for the six months ended June 30, 2012 was 29.2% down from 40.7% for the same period in 2011.

Operating expenses for the quarter were $64.3 million, or 36% of revenue, up from $61.4 million in the prior quarter. Operating expenses for the six months ended June 30, 2012 was $125.7 million or 32% of revenue.

Net loss for the second quarter of 2012 was $15.0 million, or $(0.09) per share, down sequentially from net income of $4.1 million or $0.02 per diluted share. Net loss for the six months ended June 30, 2012 was $10.9 million or $(0.07) per share compared to a net income of $55.0 million or $0.32 per diluted share for the six months ended July 2, 2011.

Please see the discussion of non-GAAP financial measures below and the attached supplemental schedule for a reconciliation of GAAP to non-GAAP financial measures.

Outlook:

The Company believes third quarter 2012 revenues will be between $195 million and $205 million and non-GAAP gross margin is expected to be between 30% and 32%. Third quarter non-GAAP net income per share is expected to be about breakeven. The Company is 90% booked to the midpoint of revenue guidance.

Additional Information Regarding June 30, 2012 Results:

GAAP and non-GAAP financial measures are presented in the tables below (in millions, except for percentage and per share information). Non-GAAP financial measures are reconciled to the corresponding GAAP financial measures in the financial statement portion of this press release.

GAAP RESULTS
		Three Months Ended																				Six Months Ended
		Q2 2012				Q1 2012				Change vs. Q1 2012				Q2 2011				Change vs. Q2 2011				Q2 2012				Q2 2011				Change vs. Q2 2011
Revenue		$	178.0			$	216.7			(18		)%		$	228.8			(22		)%		$	394.7			$	453.1			(13		)%
Gross Profit		$	44.9			$	62.6			(28		)%		$	92.1			(51		)%		$	107.5			$	179.5			(40		)%
Gross Margin %		25.2		%		28.9		%		(3.7		)%		40.3		%		(15.1		)%		27.2		%		39.6		%		(12.4		)%
Op (Loss) Income		$	(24.4	)		$	(3.6	)		578		%		$	21.3			(215		)%		$	(28.0	)		$	41.6			(167		)%
Net (Loss) Income		$	(16.5	)		$	1.9			(968		)%		$	16.6			(199		)%		$	(14.6	)		$	29.0			(150		)%
Diluted per share		$	(0.10	)		$	0.01			$	(0.11	)		$	0.10			$	(0.20	)		$	(0.09	)		$	0.17			$	(0.26	)
NON-GAAP RESULTS A
		Three Months Ended																				Six Months Ended
		Q2 2012				Q1 2012				Change vs. Q1 2012				Q2 2011				Change vs. Q2 2011				Q2 2012				Q2 2011				Change vs. Q2 2011
Revenue		$	178.0			$	216.7			(18		)%		$	228.8			(22		)%		$	394.7			$	453.1			(13		)%
Gross Profit		$	49.7			$	65.8			(24		)%		$	94.8			(48		)%		$	115.4			$	184.5			(37		)%
Gross Margin %		27.9		%		30.4		%		(2.5		)%		41.4		%		(13.5		)%		29.2		%		40.7		%		(11.5		)%
Op (Loss) Income		$	(14.7	)		$	4.4			(434		)%		$	29.2			(150		)%		$	(10.3	)		$	55.7			(118		)%
Net (Loss) Income		$	(15.0	)		$	4.1			(466		)%		$	28.9			(152		)%		$	(10.9	)		$	55.0			(120		)%
Diluted per share		$	(0.09	)		$	0.02			$	(0.11	)		$	0.17			$	(0.26	)		$	(0.07	)		$	0.32			$	(0.39	)
A		Excludes stock based compensation charges, non-cash tax expense, certain entries associated with acquisitions, restructuring and other specifically identified non-routine transactions.

Conference Call:

TriQuint will host a conference call this afternoon at 2:00 p.m. PDT to discuss the results for the quarter and our future expectations for the company. To access the conference call, please dial (888) 813-6582 domestically, or (706) 643-7082 internationally, approximately ten minutes prior to the beginning of the call, using passcode 91818717. The call can also be heard via webcast accessed through the “Investors” section of TriQuint’s web site at: http://invest.triquint.com. A replay of the conference call will be available until August 1, 2012.

Non-GAAP Financial Measures:

This press release provides financial measures for non-GAAP net income (loss), diluted earnings (loss) per share, gross profit, gross margin, operating expenses and operating income (loss) that exclude equity compensation expense, non-cash tax expense, certain entries associated with acquisitions, restructuring charges and other specifically identified non-routine items, and are therefore not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”). The charges associated with acquisitions reflect the amortization of intangible and tangible assets recorded in connection with acquisition accounting and charged to the income statement. The non-cash tax expense excludes certain deferred tax charges and benefits that do not result in a tax payment or tax refund. Management believes that these non-GAAP financial measures provide meaningful supplemental information that enhances management’s and investors’ ability to evaluate TriQuint’s operating results.

These non-GAAP financial measures are not intended to be used in isolation and should not be considered a substitute for any other performance measure determined in accordance with GAAP. Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool, including that other companies may calculate similar non-GAAP financial measures differently than we do, limiting their usefulness as a comparative tool. The company compensates for these limitations by providing specific information regarding the GAAP amount excluded from the non-GAAP financial measures. The company further compensates for the limitations of our use of non-GAAP financial measures by presenting comparable GAAP measures more prominently. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with our GAAP net income and net income per share.

Forward-Looking Statements:

This press release contains forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding TriQuint’s anticipated third quarter revenues, non-GAAP gross margin, net income and our bookings to revenue; expected seasonality in the smartphone market; and revenue growth and improved financial performance. These forward-looking statements are statements of management’s opinion and are subject to various assumptions, risks, uncertainties and changes in circumstances. Actual results may vary materially from those expressed or implied in the statements herein or from historical results, due to changes in economic, business, competitive, technological and/or regulatory factors. More detailed information about risk factors that may affect actual results are set forth in TriQuint’s reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission. These reports can be accessed at the SEC web site, www.sec.gov. Except as required by law, TriQuint undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.

A reader of this release should understand that it is not possible to predict or identify all risk factors and should not consider the risk factors described in TriQuint’s filings with the Securities and Exchange Commission to be a complete statement of all potential risks and uncertainties.

Facts About TriQuint

Founded in 1985, TriQuint Semiconductor (NASDAQ: TQNT) is a leading RF solutions supplier and technology innovator for the world’s top communications, defense and aerospace companies. People and organizations around the world need real-time, all-the-time connections; TriQuint products help reduce the cost and increase the performance of connected mobile devices and the networks that deliver critical voice, data and video communications. With the industry’s broadest technology portfolio, recognized R&D leadership, and expertise in high-volume manufacturing, TriQuint creates standard and custom products using gallium arsenide (GaAs), gallium nitride (GaN), surface acoustic wave (SAW) and bulk acoustic wave (BAW) technologies. The company has ISO9001-certified manufacturing facilities in the U.S., production in Costa Rica, and design centers in North America and Germany. For more information, visit www.triquint.com.

TriQuint: Connecting the Digital World to the Global Network^®

*Other names and brands may be claimed as the property of others

TQNT – F

TriQuint Semiconductor, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)
		June 30, 2012				December 31, 2011
Assets
Current assets:
Cash and cash equivalents		$	127,296			$	116,305
Investments in marketable securities		35,102				46,006
Accounts receivable, net		98,367				129,103
Inventories		154,760				151,577
Prepaid expenses		9,599				7,051
Deferred tax assets, net		11,526				11,857
Other current assets		47,527				35,756
Total current assets		484,177				497,655
Property, plant and equipment, net		456,303				469,943
Goodwill		3,376				3,376
Intangible assets, net		19,576				22,732
Deferred tax assets – noncurrent, net		58,451				48,957
Other noncurrent assets, net		32,264				12,605
Total assets		$	1,054,147			$	1,055,268
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	62,537			$	67,812
Accrued payroll		31,255				28,519
Other accrued liabilities		11,620				9,901
Total current liabilities		105,412				106,232
Long-term liabilities:
Long-term income tax liability		2,619				735
Cross-licensing liability		13,316				—
Other long-term liabilities		10,976				11,013
Total liabilities		132,323				117,980
Stockholders’ equity:
Common stock		164				166
Additional paid-in capital		677,584				678,412
Accumulated other comprehensive income		138				140
Retained earnings		243,938				258,570
Total stockholders’ equity		921,824				937,288
Total liabilities and stockholders’ equity		$	1,054,147			$	1,055,268

TriQuint Semiconductor, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
		Three Months Ended												Six Months Ended
		June 30, 2012				March 31, 2012				July 2, 2011				June 30, 2012				July 2, 2011
Revenues		$	178,002			$	216,730			$	228,785			$	394,732			$	453,108
Cost of goods sold		133,064				154,141				136,643				287,205				273,572
Gross profit		44,938				62,589				92,142				107,527				179,536
Operating expenses:
Research, development and engineering		38,084				37,074				37,955				75,158				74,431
Selling, general and administrative		27,588				25,222				25,386				52,810				50,615
Litigation expense		3,682				3,864				7,512				7,546				12,911
Total operating expenses		69,354				66,160				70,853				135,514				137,957
Operating (loss) income		(24,416		)		(3,571		)		21,289				(27,987		)		41,579
Other (expense) income:
Interest income		89				49				106				138				210
Interest expense		(313		)		(350		)		(354		)		(663		)		(741		)
Foreign currency (loss) gain		(154		)		36				87				(118		)		31
Gain/recovery of investment		4				6,953				356				6,957				507
Other, net		189				74				71				263				94
Other (expense) income, net		(185		)		6,762				266				6,577				101
(Loss) income before income tax		(24,601		)		3,191				21,555				(21,410		)		41,680
Income tax (benefit) expense		(8,086		)		1,308				4,990				(6,778		)		12,676
Net (loss) income		$	(16,515	)		$	1,883			$	16,565			$	(14,632	)		$	29,004
Per Share Data:
Basic per share net (loss) income		$	(0.10	)		$	0.01			$	0.10			$	(0.09	)		$	0.18
Diluted per share net (loss) income		$	(0.10	)		$	0.01			$	0.10			$	(0.09	)		$	0.17
Weighted-average shares outstanding:
Basic		165,355				166,237				164,110				165,796				163,257
Diluted		165,355				170,566				173,518				165,796				173,222

TriQuint Semiconductor, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (% of revenue)
		Three Months Ended									Six Months Ended
		June 30, 2012			March 31, 2012			July 2, 2011			June 30, 2012			July 2, 2011
Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of goods sold		74.8	%		71.1	%		59.7	%		72.8	%		60.4	%
Gross profit		25.2	%		28.9	%		40.3	%		27.2	%		39.6	%
Operating expenses:
Research, development and engineering		21.4	%		17.1	%		16.6	%		19.0	%		16.4	%
Selling, general and administrative		15.4	%		11.6	%		11.1	%		13.4	%		11.2	%
Litigation expense		2.1	%		1.7	%		3.3	%		1.9	%		2.8	%
Total operating expenses		38.9	%		30.4	%		31.0	%		34.3	%		30.4	%
Operating (loss) income		(13.7	)%		(1.5	)%		9.3	%		(7.1	)%		9.2	%
Other (expense) income:
Interest income		0.0	%		0.0	%		0.1	%		0.0	%		0.1	%
Interest expense		(0.2	)%		(0.2	)%		(0.2	)%		(0.2	)%		(0.2	)%
Foreign currency (loss) gain		(0.1	)%		0.0	%		0.0	%		(0.0	)%		0.0	%
Gain/recovery of investment		0.0	%		3.2	%		0.2	%		1.8	%		0.1	%
Other, net		0.2	%		0.0	%		0.0	%		0.1	%		0.0	%
Other (expense) income, net		(0.1	)%		3.0	%		0.1	%		1.7	%		0.0	%
(Loss) income before income tax		(13.8	)%		1.5	%		9.4	%		(5.4	)%		9.2	%
Income tax (benefit) expense		(4.5	)%		0.6	%		2.2	%		(1.7	)%		2.8	%
Net (loss) income		(9.3	)%		0.9	%		7.2	%		(3.7	)%		6.4	%

TriQuint Semiconductor, Inc. SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP RESULTS (Unaudited) (Dollars in thousands, except per share amounts)
		Three Months Ended																					Six Months Ended
		June 30, 2012							March 31, 2012							July 2, 2011							June 30, 2012							July 2, 2011
		(% of revenues)							(% of revenues)							(% of revenues)							(% of revenues)							(% of revenues)
GAAP GROSS PROFIT		$	44,938			25.2	%		$	62,589			28.9	%		$	92,142			40.3	%		$	107,527			27.2	%		$	179,536			39.6	%
Adjustment for stock based compensation charges		1,823				1.0	%		2,106				1.0	%		1,585				0.7	%		3,929				1.0	%		2,804				0.6	%
Adjustment for restructuring charges		1,763				1.0	%		—				—	%		—				—	%		1,763				0.5	%		—				—	%
Adjustment for charges associated with acquisitions		1,126				0.7	%		1,095				0.5	%		1,079				0.4	%		2,221				0.5	%		2,144				0.5	%
NON-GAAP GROSS PROFIT		$	49,650			27.9	%		$	65,790			30.4	%		$	94,806			41.4	%		115,440				29.2	%		184,484				40.7	%
GAAP OPERATING EXPENSES		$	69,354			38.9	%		$	66,160			30.5	%		$	70,853			31.0	%		$	135,514			34.3	%		$	137,957			30.4	%
Adjustment for stock based compensation charges		(5,735		)		(3.2	)%		(4,591		)		(2.1	)%		(5,716		)		(2.5	)%		(10,326		)		(2.6	)%		(9,402		)		(2.1	)%
Adjustment for charges associated with acquisitions		714				0.4	%		(202		)		(0.1	)%		473				0.2	%		512				0.1	%		257				0.2	%
NON-GAAP OPERATING EXPENSES		$	64,333			36.1	%		$	61,367			28.3	%		$	65,610			28.7	%		$	125,700			31.8	%		$	128,812			28.4	%
GAAP OPERATING (LOSS) INCOME		$	(24,416	)		(13.7	)%		$	(3,571	)		(1.6	)%		$	21,289			9.3	%		$	(27,987	)		(7.1	)%		$	41,579			9.2	%
Adjustment for stock based compensation charges		7,558				4.2	%		6,697				3.1	%		7,301				3.2	%		14,255				3.6	%		12,206				2.7	%
Adjustment for restructuring charges		1,763				1.0	%		—				—	%		—				—	%		1,763				0.5	%		—				—	%
Adjustment for charges associated with acquisitions		412				0.3	%		1,297				0.6	%		606				0.3	%		1,709				0.4	%		1,887				0.4	%
NON-GAAP OPERATING (LOSS) INCOME		$	(14,683	)		(8.2	)%		$	4,423			2.1	%		$	29,196			12.8	%		$	(10,260	)		(2.6	)%		$	55,672			12.3	%
GAAP NET (LOSS) INCOME		$	(16,515	)		(9.3	)%		$	1,883			0.9	%		$	16,565			7.2	%		$	(14,632	)		(3.7	)%		$	29,004			6.4	%
Adjustment for stock based compensation charges		7,558				4.2	%		6,697				3.1	%		7,301				3.2	%		14,255				3.6	%		12,206				2.7	%
Adjustment for restructuring charges		1,763				1.0	%		—				—	%		—				—	%		1,763				0.5	%		—				—	%
Adjustment for gain/recovery of investment		(4		)		0.0	%		(6,953		)		(3.2	)%		(356		)		(0.2	)%		(6,957		)		(1.8	)%		(507		)		(0.1	)%
Adjustment for non-cash tax expense		(8,238		)		(4.6	)%		1,143				0.5	%		4,734				2.1	%		(7,095		)		(1.9	)%		12,338				2.7	%
Adjustment for charges associated with acquisitions		412				0.3	%		1,323				0.6	%		628				0.3	%		1,735				0.5	%		1,949				0.4	%
NON-GAAP NET (LOSS) INCOME		$	(15,024	)		(8.4	)%		$	4,093			1.9	%		$	28,872			12.6	%		$	(10,931	)		(2.8	)%		$	54,990			12.1	%
GAAP DILUTED (LOSS) EARNINGS PER SHARE		$	(0.10	)					$	0.01						$	0.10						$	(0.09	)					$	0.17
Adjustment for stock based compensation charges		0.05							0.04							0.04							0.09							0.07
Adjustment for restructuring charges		0.01							0.00							0.00							0.01							0.00
Adjustment for gain/recovery of investment		(0.00		)					(0.04		)					(0.00		)					(0.04		)					(0.00		)
Adjustment for non-cash tax expense		(0.05		)					0.00							0.03							(0.05		)					0.07
Adjustment for charges associated with acquisitions		0.00							0.01							0.00							0.01							0.01
NON-GAAP DILUTED (LOSS) EARNINGS PER SHARE		$	(0.09	)					$	0.02						$	0.17						$	(0.07	)					$	0.32

Our earnings release contains forward looking estimates of non-GAAP gross margin and earnings per share for the third quarter of 2012. We provide these non-GAAP measures on a prospective basis for the same reasons that we provide them to investors on a historical basis. The following table provides a reconciliation of GAAP gross margin and loss per share to non-GAAP gross margin and earnings per share for the third quarter of 2012 based on the mid-point of guidance.

Forward Looking GAAP Gross Margin		29.5		%
Adjustment for stock based compensation charges		1.0		%
Adjustment for charges associated with acquisitions		0.5		%
Forward Looking non-GAAP Gross Margin		31.0		%
Forward Looking GAAP Loss per Share		$	(0.06	)
Adjustment for stock based compensation charges		0.05
Adjustment for non-cash tax expense		—
Adjustment for charges associated with acquisitions		0.01
Forward Looking non-GAAP Earnings per Share		$	—