Companies news of 2009-10-22 (page 1)

  • The Wellness Community of the East Bay Receives a $10,000 Grant From Verizon to Continue...
  • 'Blackberry Diaries' Coming to Los AngelesNational book tour by Author Kathy Buckworth...
  • Stereotaxis Announces Third Quarter 2009 Earnings Release Date and Conference Call
  • SonicWALL Reports Third Quarter 2009 Financial ResultsCompany Reports Over $13 Million in...
  • Brandywine Realty Trust Recognized Among Best Places to Work by the Philadelphia Business...
  • Dominion Schedules Third-Quarter Earnings Conference Call
  • Idenix to Host Conference Call Discussing Third Quarter 2009 Financial Results
  • Capital One Reports Third Quarter Net Income of $425.6 million, or $0.94 per shareIncome...
  • Anadys Pharmaceuticals to Report Third Quarter 2009 Financial Results
  • Broadcom Reports Third Quarter 2009 ResultsConference Call to be Webcast Today at 1:45...
  • Lender Processing Services, Inc. Reports Record Third Quarter EarningsYear-over-year...
  • First Financial Bankshares Announces Third Quarter Earnings
  • SunPower Reports Third-Quarter 2009 Results- Record Q3 2009 revenue of $466 million,...
  • BancorpSouth Announces Earnings of $0.26 per Diluted Share for Third Quarter 2009
  • NETGEAR(R) Reports Third Quarter 2009 ResultsHighlights: - Net revenue of $171.1 million,...
  • CA Reports Second Quarter Fiscal Year 2010 Results
  • Chubb Reports Third Quarter Net Income per Share of $1.69; Operating Income per Share Is...
  • Federated Investors, Inc. Reports Third Quarter 2009 Earnings- Equity and fixed-income...
  • Gen-Probe Completes Acquisition of Prodesse, Leader in Molecular Testing for Respiratory...
  • Micrel Reports 2009 Third Quarter Financial Results- Revenues and earnings continue to...
  • comScore Announces Date for Third Quarter 2009 Financial Results
  • Isilon Systems Announces 2009 Third Quarter Results
  • Celestica announces third quarter financial results(All amounts in U.S. dollars. Per share...
  • CyberSource Announces Third Quarter 2009 Financial ResultsReports record revenue of $65.7...
  • Oclaro Achieves Non-GAAP Operating Profit in First Quarter Fiscal 2010Revenues Up; Gross...
  • Monolithic Power Systems Announces Results for the Quarter and Nine Months Ended September...
  • Repligen Licenses Potential Treatment for Spinal Muscular AtrophyConference Call Scheduled...
  • Liberty Media Corporation Announces Third Quarter Earnings Release and Conference Call
  • Tecumseh Products Company Announces Third Quarter 2009 Earnings Call



    The Wellness Community of the East Bay Receives a $10,000 Grant From Verizon to Continue to Enhance Comprehensive Cancer-Support ServicesVerizon's Support of the Organization Now Totals $50,000 Over the Past Three Years

    WALNUT CREEK, Calif., Oct. 22 /PRNewswire/ -- The Wellness Community of the East Bay has been awarded a $10,000 grant from the Verizon Foundation, the philanthropic arm of Verizon, to fund the use of technology to identify the best community-based psychological and social support and education strategies for cancer patients and their families.

    With this grant, Verizon's support for The Wellness Community over the past three years totals $50,000.

    The grant will pay for implementation of ResultsPlus, a data management system designed to record patient activity within The Wellness Community's system of services and determine the most successful practices based on patients' specific circumstances.

    James Bouquin, The Wellness Community executive director, said: "This partnership with Verizon has helped The Wellness Community make a positive impact in cancer patients' lives. Without the ResultPlus database management system, it was very difficult to determine what services are the most effective for specific cancers and at different stages."

    Since Verizon's initial grant of $20,000 to The Wellness Community in 2007, the organization has helped more than 800 patients learn more about treatment options, how to manage their treatment and recovery, and how to become more effective partners with their medical treatment team.

    Elva Lima, Verizon vice president of strategic programs, said: "Matching cancer patients to the most effective services by using the ResultsPlus database is part of Verizon's commitment to improve the delivery of health care through technology. We are proud to partner with The Wellness Community on this endeavor."

    The Verizon Foundation supports the advancement of literacy and K-12 education through its free educational Web site, Thinkfinity.org, and fosters awareness and prevention of domestic violence. In 2008, the Verizon Foundation awarded more than $68 million in grants to nonprofit agencies in the U.S. and abroad. It also matched the charitable donations of Verizon employees and retirees, resulting in an additional $26 million in combined contributions to nonprofits. Through Verizon Volunteers, one of the nation's largest employee volunteer programs, Verizon employees and retirees have volunteered more than 3 million hours of community service since 2000. For more information on the foundation, visit http://www.verizonfoundation.org/.

    About the Wellness Community

    Since 1990, The Wellness Community has offered San Francisco and the East Bay a unique menu of services under one umbrella: professionally facilitated support and networking groups, mind/body/exercise classes, educational programs, and a variety of social activities. In addition, special programs bring this same high level of service to Spanish speakers and children/teenagers whose parents have cancer.

    About Verizon

    Verizon Communications Inc. , headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to mass market, business, government and wholesale customers. Verizon Wireless operates America's most reliable wireless network, serving more than 87 million customers nationwide. Verizon's Wireline operations provide converged communications, information and entertainment services over the nation's most advanced fiber-optic network. Wireline also includes Verizon Business, which delivers innovative and seamless business solutions to customers around the world. A Dow 30 company, Verizon employs a diverse workforce of more than 235,000 and last year generated consolidated operating revenues of more than $97 billion. For more information, visit http://www.verizon.com/.

    VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive speeches and biographies, media contacts, high-quality video and images, and other information are available at Verizon's News Center on the World Wide Web at http://www.verizon.com/news. To receive news releases by e-mail, visit the News Center and register for customized automatic delivery of Verizon news releases.

    Verizon

    CONTACT: Jon Davies, +1-805-372-6969, jon.davies@verizon.com

    Web Site: http://www.verizon.com/

    Company News On-Call: http://www.prnewswire.com/comp/094251.html




    'Blackberry Diaries' Coming to Los AngelesNational book tour by Author Kathy Buckworth makes a stop in Los Angeles thanks to Verizon Wireless

    LOS ANGELES, Oct. 22 /PRNewswire/ -- Verizon Wireless today announced Los Angeles as the next stop for its nationwide book tour for "The BlackBerry Diaries: Adventures in Modern Motherhood," a book by Kathy Buckworth. The story takes readers through a year-long account of the author's life with her BlackBerry® smartphone, providing a humorous view into how her two worlds -- technology and children -- collide. A special event promoting the book will be held at the Glendale Galleria in Glendale, CA on October 24-25, 2009 from 1 p.m. - 3p.m.

    At the event, Buckworth will read excerpts from her book, encourage moms in attendance to share their own tales of motherhood, and offer tips on how technology helps parents juggle demanding family schedules. Event attendees can enter to win BlackBerry smartphones from Verizon Wireless, which include:

    -- BlackBerry® Tour(TM): Go places with the BlackBerry Tour smartphone. Chat with friends, email colleagues, share pictures, and listen to your favorite tunes. Featuring global 3G connectivity, a full-QWERTY keyboard, BlackBerry push email, 3.2 MP camera, VZ Navigator(TM) Global, Visual Voice Mail, V CAST Music w/Rhapsody, Mobile Broadband Connect and integrated access to popular social networking sites like Facebook®, MySpace, and Flickr®, this smartphone gives you the power to do more of the things that matter in your life. -- BlackBerry® Storm(TM): Bring your BlackBerry Storm smartphone to life with the power of your touch. Browse, play, share, communicate and organize your world - all from your fingertips. It features a 3.25" "clickable" touch-screen -- BlackBerry® Pearl(TM) Flip 8230: Open up a world of possibilities with one quick flip. The BlackBerry Pearl Flip 8230 smartphone from Verizon Wireless keeps you connected to your friends and family with Text, Picture, Video and Instant Messaging, and delivers on-the-go entertainment with access to the Internet and streaming media. With a discreet preview screen, it also puts you in control of how, when and where you communicate. -- Pink BlackBerry® Curve(TM) 8330: The BlackBerry Curve 8330 smartphone features a full-QWERTY keyboard and BlackBerry push email, the industry's leading mobile email and messaging solution. It supports multitasking so you can send and receive instant messages while browsing the web and listen to music. The BlackBerry Curve 8330 smartphone also offers VZ Navigator, Mobile Broadband and a 2 MP camera with flash.

    "My BlackBerry, whom I affectionately call my fifth child, 'Seamus', has been my saving grace for not only managing my family's increasingly complex schedule but also giving me a moment or two of peace and connection to the outside world," said Buckworth. "As families try to maintain sanity while juggling their kids' lives with carpool schedules, soccer practice, and ballet rehearsals, I'm excited to share tips on how technology can help keep mom organized and somewhat stress-free."

    For more information on The BlackBerry Diaries Book Tour, please visit the website here.

    You can also join us on Twitter and Facebook. About Verizon Wireless

    Verizon Wireless operates the nation's most reliable and largest wireless voice and data network, serving 87.7 million customers. Headquartered in Basking Ridge, N.J., with more than 87,000 employees nationwide, Verizon Wireless is a joint venture of Verizon Communications and Vodafone (NYSE and LSE: VOD). For more information, visit http://www.verizonwireless.com/. To preview and request broadcast-quality video footage and high-resolution stills of Verizon Wireless operations, log on to the Verizon Wireless Multimedia Library at http://www.verizonwireless.com/multimedia.

    The BlackBerry and RIM families of related marks, images and symbols are the exclusive properties and trademarks of Research In Motion Limited.

    Verizon Wireless

    CONTACT: Rose Tucker of Weber Shandwick, +1-425-452-5463,
    rtucker@webershandwick.com, for Verizon Wireless

    Web Site: http://www.verizonwireless.com/




    Stereotaxis Announces Third Quarter 2009 Earnings Release Date and Conference Call

    ST. LOUIS, Oct. 22 /PRNewswire-FirstCall/ -- Stereotaxis, Inc. announced today that it will release its financial results for the third quarter ended September 30, 2009, on Thursday, November 5, 2009 before the market opens. The Company will host a conference call and webcast on Thursday, November 5, 2009 at 8:30 a.m. Eastern Time to discuss the Company's third quarter results and current corporate developments. The dial-in number for the conference call is 1-877-941-8631 for domestic participants and 1-480-629-9822 for international participants.

    A taped replay of the conference call will also be available beginning approximately one hour after the call's conclusion and will be available for seven days. This replay can be accessed by dialing 1-800-406-7325 for domestic callers and 303-590-3030 for international callers, both using passcode 4171622#. The call will also be available on the Internet live and 90 days thereafter at the following URL:

    http://www.videonewswire.com/event.asp?id=63211 About Stereotaxis

    Stereotaxis designs, manufactures and markets an advanced cardiology instrument control system for use in a hospital's interventional surgical suite to enhance the treatment of arrhythmias and coronary artery disease. The Stereotaxis system is designed to enable physicians to complete more complex interventional procedures by providing image guided delivery of catheters and guidewires through the blood vessels and chambers of the heart to treatment sites. This is achieved using computer-controlled, externally applied magnetic fields that govern the motion of the working tip of the catheter or guidewire, resulting in improved navigation, shorter procedure time and reduced x-ray exposure. The core components of the Stereotaxis system have received regulatory clearance in the U.S., Europe, Canada and elsewhere.

    Stereotaxis, Inc.

    CONTACT: Jim Stolze, Chief Financial Officer of Stereotaxis, Inc.,
    +1-314-678-6105, or Investors, Doug Sherk or Jenifer Kirtland,
    +1-415-896-6820, or Media, Steve DiMattia, +1-646-201-5445, all of EVC Group,
    Inc., for Stereotaxis, Inc.

    Web Site: http://www.stereotaxis.com/




    SonicWALL Reports Third Quarter 2009 Financial ResultsCompany Reports Over $13 Million in Cash from Operations, and Non-GAAP Operating Margin of 16%

    SAN JOSE, Calif., Oct. 22 /PRNewswire-FirstCall/ -- SonicWALL, Inc. , today reported performance in the quarter ended September 30, 2009, with revenue of $50.7 million. The Company shipped 45,000 revenue units in the quarter. Cash flow from operations was $13.4 million. The company ended the quarter with cash, cash equivalents and total investments of $203 million, and deferred revenue of $117 million.

    Net income for the third quarter of 2009 calculated in accordance with U.S. generally accepted accounting principles (GAAP) was $3.0 million, or $0.05 per diluted share. In comparison, GAAP net income for the third quarter of 2008 was $569,000, or $0.01 per diluted share.

    The company reported third quarter operating margin of 9.6%, calculated on a GAAP basis. In comparison, GAAP operating margin in the third quarter of 2008 was 3.2%. GAAP gross margin in the third quarter was 71.6%, compared to 69% in the same period of 2008.

    Non-GAAP net income for the third quarter of 2009 was $5.4 million or $0.10 per diluted share. In comparison, non-GAAP net income for the third quarter of 2008 was $4.1 million, or $0.08 per diluted share. Non-GAAP net income excludes amortization of purchased intangible assets, restructuring charges, and share-based compensation expense primarily associated with the expensing of stock options. An explanation of our use of non-GAAP measures is included in the section in this press release entitled "Use of Non-GAAP Financial Measures."

    The Company reported third quarter non-GAAP operating margin of 16%. In comparison, non-GAAP operating margin for the third quarter of 2008 was 10%. Non-GAAP gross margin in the third quarter was 73%, compared to 71% in the third quarter of 2008.

    "It was a solid third quarter for SonicWALL," said Matt Medeiros, CEO. "We were pleased by the traction we are achieving in mid-tier and enterprise accounts, demonstrating that customers are recognizing our technology differentiation and leadership, as well as our ability to deliver higher-performance solutions at a lower total cost of ownership."

    Guidance for Q4 2009

    SonicWALL expects fourth quarter 2009 revenue to be in the range of $50 million to $53 million. The Company expects GAAP gross margin to be in the range of 70%-71%, and non-GAAP gross margin to be in the range of 71.5%-72.5% of revenue. Inclusive of a total of approximately $3.0 million, before taxes, in combined amortization of purchased intangible assets, and share-based compensation expense, the Company expects GAAP earnings per share to be in the range of $0.05 to $0.06. Share-based compensation expense associated with the expensing of stock options is estimated to be approximately $2.0 million for the fourth quarter of 2009.

    SonicWALL expects non-GAAP earnings per share in the fourth quarter of 2009 to be in the range of $0.09-$0.10 per diluted share.

    This is the only statement SonicWALL will be giving during the quarter with respect to guidance, unless a decision is made to provide an update.

    Conference Call

    A conference call to discuss third quarter 2009 results will take place today, October 22, 2009, at 1:15 p.m. PT (4:15 p.m. ET). SonicWALL President and CEO Matt Medeiros and SonicWALL CFO Rob Selvi will host the call. A web cast of the live call can be found at http://www.sonicwall.com/us/company/2518.html. A replay of the call will be available beginning at approximately 5:00 p.m. PT (8:00 p.m. ET) today at the Company's website or by telephone until 5:00 p.m. PT on October 27 at 888-203-1112 (toll-free) or 719-457-0820 (International), passcode 1074484.

    About SonicWALL, Inc.

    Founded in 1991, SonicWALL is committed to improving the performance and productivity of businesses of all sizes by engineering the cost and complexity out of running a secure network. Over one million SonicWALL appliances have been shipped through its global network of ten thousand channel partners to keep tens of millions of worldwide business computer users safe and in control of their data. SonicWALL's award-winning solutions include network security, secure remote access, content security, backup and recovery, and policy and management technology. For more information, visit the company web site at http://www.sonicwall.com/.

    Use of Non-GAAP Financial Measures

    To supplement our consolidated financial statements presented in accordance with GAAP, SonicWALL presents certain non-GAAP financial measures. Management regularly uses these non-GAAP financial measures to evaluate aspects of the company's operating performance with respect to business objectives and planning targets. These non-GAAP financial measures also facilitate comparisons of our operating performance to other companies in our industry, which may also disclose similar non-GAAP financial measures to supplement their GAAP results. We also believe that investors benefit from this additional disclosure as it provides transparency into financial information used by management in our assessment of operating performance.

    A reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure is presented in tables immediately following the Condensed Consolidated Statements of Cash Flows. These non-GAAP measures should not be viewed as a substitute for the company's GAAP results.

    Cautionary Note Regarding Forward-looking Statements

    Certain statements in this press release are "forward-looking statements." The forward-looking statements include without limitation statements regarding our expected revenue for the fourth quarter of 2009, gross margin on a GAAP and non-GAAP basis for the fourth quarter of 2009, earnings per share on a GAAP and non-GAAP basis for the fourth quarter of 2009, and share based compensation expense for the fourth quarter of 2009. These forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect SonicWALL's actual results include, but are not limited to, increased competition in each of the geographic areas in which we do business; exchange rate fluctuations; global macroeconomic and geopolitical conditions; increased competition across all of the market segments in which SonicWALL participates; new product and service introductions by our competitors; significant turnover of our key employees; and unpredictability in the rate of growth of spending of our customers for products and services that SonicWALL provides. In addition, for a more detailed description of the risks and uncertainties that could cause our actual results to differ materially from those anticipated in the forward- looking statements, please see the "Risk Factors" described in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2008 and our interim reports on Form 10-Q for quarterly periods thereafter. All forward-looking statements included in this release are based upon information available to SonicWALL as of the date of the release, and we assume no obligation to update any such forward-looking statement.

    NOTE: SonicWALL is a registered trademark of SonicWALL, Inc. Other product and company names mentioned herein may be trademarks and/or registered trademarks of their respective companies.

    SonicWALL, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Nine Months Ended Ended September 30, September 30, ------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenues: Product $19,248 $21,439 $51,219 $68,989 License and service 31,471 31,839 95,209 95,398 ------ ------ ------ ------ Total revenues 50,719 53,278 146,428 164,387 ------ ------ ------- ------- Cost of revenues: Product 9,916 10,627 27,121 32,478 License and service 3,733 5,150 11,778 15,414 Amortization of purchased technology 754 754 2,262 2,262 --- --- ----- ----- Total cost of revenues 14,403 16,531 41,161 50,154 ------ ------ ------ ------ Gross profit 36,316 36,747 105,267 114,233 ------ ------ ------- ------- Operating expenses: Research and development 9,416 11,411 28,153 34,368 Sales and marketing 17,357 19,472 51,998 63,954 General and administrative 4,406 3,957 12,588 14,135 Amortization of purchased intangible assets 274 274 822 840 Restructuring charges (reversals) - (87) - 1,683 -- --- -- ----- Total operating expenses 31,453 35,027 93,561 114,980 ------ ------ ------ ------- Income (loss) from operations 4,863 1,720 11,706 (747) ----- ----- ------ ---- Interest income and other expense, net 573 1,122 2,377 5,328 --- ----- ----- ----- Income before income taxes 5,436 2,842 14,083 4,581 Provision for income taxes (2,396) (2,273) (5,888) (3,153) ------ ------ ------ ------ Net income $3,040 $569 $8,195 $1,428 ------ ---- ------ ------ Net income per share: Basic $0.06 $0.01 $0.15 $0.03 ----- ----- ----- ----- Diluted $0.05 $0.01 $0.15 $0.02 ----- ----- ----- ----- Shares used in computing net income per share: Basic 53,946 53,412 53,806 56,906 Diluted 56,012 54,928 55,180 59,050 SonicWALL, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2009 2008 (1) ---- -------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $99,080 $45,127 Short-term investments 88,579 60,327 Accounts receivable, net 21,174 20,945 Inventories 6,554 8,956 Deferred tax assets 9,423 9,423 Prepaid expenses and other current assets 8,530 11,861 ----- ------ Total current assets 233,340 156,639 Property and equipment, net 9,906 9,543 Goodwill 138,470 138,470 Long-term investments 15,384 61,450 Deferred tax assets, non-current 18,406 18,406 Purchased intangibles and other assets, net 14,419 17,328 ------ ------ Total assets $429,925 $401,836 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $7,277 $10,717 Accrued payroll and related benefits 13,333 11,554 Other accrued liabilities 8,232 10,307 Deferred revenue 93,213 88,415 ------ ------ Total current liabilities 122,055 120,993 Deferred revenue, non current 23,501 15,072 ------ ------ Total liabilities 145,556 136,065 ------- ------- Shareholders' Equity: Common stock, no par value 404,858 396,223 Accumulated other comprehensive loss, net (7,441) (9,209) Accumulated deficit (113,048) (121,243) -------- -------- Total shareholders' equity 284,369 265,771 ------- ------- Total liabilities and shareholders' equity $429,925 $401,836 ======== ======== (1) December 31, 2008 balances have been derived from the audited financial statements as of the same date. SonicWALL, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Nine Months Ended Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Cash flows from operating activities: Net cash provided by operating activities $13,434 $5,520 $30,832 $13,871 ------- ------ ------- ------- Cash flows from investing activities: Purchase of property and equipment (1,681) (1,009) (4,040) (3,827) Change in restricted cash in escrow - (6) 5,104 1,376 Maturity and sale of investments, net of purchases 2,867 (7,333) 19,754 66,054 ----- ------ ------ ------ Net cash provided by (used in) investing activities 1,186 (8,348) 20,818 63,603 ----- ------ ------ ------ Cash flows from financing activities: Issuance of common stock under employee stock option and purchase plans 1,338 1,473 2,303 5,306 Repurchase of common stock - (762) - (79,408) Excess tax benefits from share-based compensation - 1,198 - 1,987 -- ----- -- ----- Net cash provided by (used in) financing activities 1,338 1,909 2,303 (72,115) ----- ----- ----- ------- Net increase (decrease) in cash and cash equivalents 15,958 (919) 53,953 5,359 Cash and cash equivalents at beginning of period 83,122 39,602 45,127 33,324 ------ ------ ------ ------ Cash and cash equivalents at end of period $99,080 $38,683 $99,080 $38,683 ======= ======= ======= ======= SonicWALL, Inc. RECONCILIATION of GAAP to NON-GAAP NET INCOME (In thousands, except per share amounts) (Unaudited) Three Months Nine Months Ended Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- GAAP net income $3,040 $569 $8,195 $1,428 ------ ---- ------ ------ Share-based compensation 2,139 2,800 6,332 8,082 Amortization of purchased intangible assets 1,028 1,028 3,084 3,102 Restructuring (charges) reversals - (87) - 1,683 Tax effect of adjustments (787) (163) (2,806) (3,303) ---- ---- ------ ------ Net effect of pro forma adjustments 2,380 3,578 6,610 9,564 ----- ----- ----- ----- Non-GAAP net income $5,420 $4,147 $14,805 $10,992 ====== ====== ======= ======= Diluted GAAP net income per share $0.05 $0.01 $0.15 $0.02 ----- ----- ----- ----- Diluted Non-GAAP net income per share $0.10 $0.08 $0.27 $0.19 ----- ----- ----- ----- SonicWALL, Inc. RECONCILIATION of GAAP to NON-GAAP GROSS MARGIN (In thousands) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- GAAP gross margin $36,316 $36,747 $105,267 $114,233 Share-based compensation 123 145 358 396 Amortization of purchased technology 754 754 2,262 2,262 --- --- ----- ----- Non-GAAP gross margin $37,193 $37,646 $107,887 $116,891 ======= ======= ======== ======== Non-GAAP gross margin percentage of revenue 73.3% 70.7% 73.7% 71.1% SonicWALL, Inc. RECONCILIATION of GAAP to NON-GAAP INCOME FROM OPERATIONS (In thousands) (Unaudited) Three Months Nine Months Ended Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- GAAP income (loss) from operations $4,863 $1,720 $11,706 $(747) Cost of revenue - share-based compensation 123 145 358 396 Cost of revenue - amortization of purchased technology 754 754 2,262 2,262 Research and development - share- based compensation 666 849 1,941 2,562 Sales and marketing - share- based compensation 779 1,024 2,295 2,870 General and administrative - shared- based compensation 571 782 1,738 2,254 Amortization of purchased intangible assets 274 274 821 840 Restructuring charges (reversals) - (87) - 1,683 -- --- -- ----- Non-GAAP income from operations $8,030 $5,461 $21,121 $12,120 ====== ====== ======= ======= Non-GAAP operating margin percentage of revenue 15.8% 10.3% 14.4% 7.4%

    SonicWALL, Inc.

    CONTACT: Kelly Blough, Investor Relations, +1-408-962-6329,
    kblough@sonicwall.com, or Colleen Nichols, Media Relations, +1-408-962-6131,
    cnichols@sonicwall.com, both of SonicWALL, Inc.

    Web Site: http://www.sonicwall.com/




    Brandywine Realty Trust Recognized Among Best Places to Work by the Philadelphia Business Journal

    RADNOR, Pa., Oct. 22 /PRNewswire-FirstCall/ -- Brandywine Realty Trust announced today that it has been recognized by the Philadelphia Business Journal as the Bronze Winner Large Company category in its Best Places to Work competition.

    This year the Philadelphia Business Journal received 277 nominations, about a third more than the year before. During July, employees of the nominated companies were asked to rate their employers on trust, job satisfaction, benefits, communication and engagement.

    The award was accepted at a ceremony hosted by the Philadelphia Business Journal at the Pyramid Club on October 15th in Philadelphia. According to Gerard H. Sweeney, President and Chief Executive Officer, the company earned high marks in the program because, "through our benefits, performance incentive programs and family friendly culture, we have created an environment in which our employees know we are committed to them and their families. As a result, our entire company-wide team is committed to our mission of providing extraordinary work environments and enhancing shareholder value through our individual daily activities."

    About Brandywine Realty Trust

    Brandywine Realty Trust is one of the largest, publicly traded, full-service, integrated real estate companies in the United States. Organized as a real estate investment trust and operating in select markets, Brandywine owns, develops and manages a primarily Class A, suburban and urban office portfolio aggregating approximately 36.1 million square feet, including 25.6 million square feet which it owns on a consolidated basis. For more information, visit our website at http://www.brandywinerealty.com/.

    Forward-Looking Statements

    Certain statements in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or transactions of the Company and its affiliates or industry results to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors relate to, among others, the Company's ability to lease vacant space and to renew or relet space under expiring leases at expected levels, the potential loss of major tenants, interest rate levels, the availability and terms of debt and equity financing, competition with other real estate companies for tenants and acquisitions, risks of real estate acquisitions, dispositions and developments, including cost overruns and construction delays, unanticipated operating costs and the effects of general and local economic and real estate conditions. Additional information or factors which could impact the Company and the forward-looking statements contained herein are included in the Company's filings with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

    Brandywine Realty Trust

    CONTACT: Investor/Press Contact, Marge Boccuti, Manager, Investor
    Relations, +1-610-832-7702, marge.boccuti@bdnreit.com, or Company Contact,
    Howard M. Sipzner, EVP & CFO, +1-610-832-4907, howard.sipzner@bdnreit.com,
    both of Brandywine Realty Trust

    Web Site: http://www.brandywinerealty.com/




    Dominion Schedules Third-Quarter Earnings Conference Call

    RICHMOND, Va., Oct. 22 /PRNewswire-FirstCall/ -- Dominion will host its third-quarter earnings conference call at 10 a.m. EDT on Friday, October 30. Dominion management will discuss its third quarter financial results and other matters of interest to the financial community.

    Domestic callers should dial (866) 710-0179. The passcode for the conference call is "Dominion." International callers should dial (334) 323-9872. Participants should dial in 10 to 15 minutes prior to the scheduled start time. Members of the media also are invited to listen.

    A live webcast of the conference call, including accompanying slides, and the Earnings Release Kit will be available on the company's investor information page at http://www.dom.com/investors.

    A replay of the conference call will be available beginning about 1 p.m. EDT October 30 and lasting until 11 p.m. EST November 6. Domestic callers may access the recording by dialing (877) 919-4059. International callers should dial (334) 323-7226. The PIN for the replay is 22433775. Additionally, a replay of the webcast will be available on the company's investor information page by the end of the day October 30.

    Dominion is one of the nation's largest producers and transporters of energy, with a portfolio of more than 27,500 megawatts of generation, 1.1 trillion cubic feet equivalent of proved natural gas and oil reserves, 14,000 miles of natural gas transmission, gathering and storage pipeline and 6,000 miles of electric transmission lines. Dominion operates the nation's largest natural gas storage systems with 975 billion cubic feet of storage capacity and serves retail energy customers in 12 states. For more information about Dominion, visit the company's Web site at http://www.dom.com/.

    Dominion

    CONTACT: Media: Mark Lazenby, +1-804-819-2042, mark.lazenby@dom.com; or
    Analysts: Sharonda Shepard, +1-804-819-2314, sharonda.r.shepard@dom.com

    Web Site: http://www.dom.com/




    Idenix to Host Conference Call Discussing Third Quarter 2009 Financial Results

    CAMBRIDGE, Mass., Oct. 22 /PRNewswire-FirstCall/ -- Idenix Pharmaceuticals, Inc., announced today that it will report its financial results for the third quarter of 2009 on Thursday, October 29, 2009 after U.S. financial markets close.

    In conjunction with the issuance of the press release, Idenix management will host a conference call at 4:30 p.m. ET on Thursday, October 29, 2009 to discuss the company's financial results for the third quarter of 2009 and provide an update on the company's discovery and development programs.

    To access the call please dial 800-471-3635 U.S./Canada or 706-758-9475 International and enter passcode 37050246 or to listen to a live webcast and view accompanying slides, go to "Calendar of Events" in the Idenix Investor Center at http://www.idenix.com/. A replay of the call will also be available from October 29, 2009, 6:30 p.m. ET until November 11, 2009, 11:59 p.m. ET. To access the replay, please dial 800-642-1687 U.S./Canada or 706-645-9291 International and enter passcode 37050246. An archived webcast will also be available for two weeks after the call on the Idenix website.

    About Idenix

    Idenix Pharmaceuticals, Inc., headquartered in Cambridge, Massachusetts, is a biopharmaceutical company engaged in the discovery and development of drugs for the treatment of human viral diseases. Idenix's current focus is on the treatment of infections caused by the hepatitis C virus. For further information about Idenix, please refer to http://www.idenix.com/.

    Teri Dahlman (617) 995-9905 (media)

    Idenix Pharmaceuticals, Inc.

    CONTACT: Teri Dahlman of Idenix Pharmaceuticals, Inc., +1-617-995-9905

    Web Site: http://www.idenix.com/




    Capital One Reports Third Quarter Net Income of $425.6 million, or $0.94 per shareIncome from continuing operations of $1.03 per share

    MCLEAN, Va., Oct. 22 /PRNewswire-FirstCall/ --

    Third Quarter Highlights -- Managed revenue increased $482.0 million, or 11.6 percent, relative to the second quarter. -- Provision expense increased $296.4 million, due to an anticipated increase in charge-offs as well as a modest allowance build of $31.7 million in the third quarter. -- Allowance as a percentage of reported loans rose to 5.08 percent in the third quarter of 2009 from 4.84 percent in the second quarter of 2009. -- Tangible common equity to tangible managed assets, or "TCE ratio," increased to 6.2 percent, up 52 basis points from the June 30, 2009 ratio of 5.7 percent, and Tier 1 capital rose to 11.8 percent.

    Capital One Financial Corporation today announced net income for the third quarter of 2009 of $425.6 million, or $0.94 per common share (diluted), versus second quarter 2009 net income of $224.2 million, or $0.53 per common share (diluted), before taking into account the impact from the repayment of the government's TARP preferred share investment. In the third quarter of 2008, the company reported $374.1 million, or $1.00 per common share (diluted).

    "We've worked for years to position our company to be resilient, and our third quarter results demonstrate that resiliency in the midst of the most challenging economic cycle we've seen in generations," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "We are successfully weathering the storm, but the storm is not over. Therefore, we will continue to take the decisive actions necessary to place our company in the best position to navigate the downturn and drive shareholder value over the cycle."

    Total Company Results -- Total managed revenue in the third quarter of 2009 was $4.6 billion, an increase of $482.0 million, or 11.6 percent, relative to the second quarter. Net interest income increased $298.3 million in the third quarter, or 10.1 percent, while non-interest income increased $183.7 million, or 15.4 percent. The increase in revenue was driven primarily by higher yields in Domestic Card, lower funding costs, a sequential improvement in valuation adjustments to retained securitization interests, and opportunistic moves in the investment portfolio that resulted in gains from securities sales. -- Provision expense increased $296.4 million quarter over quarter, due to an anticipated increase in charge-offs as well as a $31.7 million allowance build in the third quarter compared to a second quarter release of $166.2 million. The total company allowance build was a result of a significant increase in the Commercial Banking allowance partially offset by releases in both the Credit Card and Consumer Banking allowances. -- Credit Card total allowance release of $78 million -- Domestic credit card release of $89 million -- International credit card build of $11 million -- Consumer Banking total allowance release of $124 million -- Auto release of $190 million -- Other Consumer Banking build of $66 million -- Commercial Banking total allowance build of $256 million -- Allowance as a percentage of reported loans rose to 5.08 percent in the third quarter of 2009 from 4.84 percent in the second quarter of 2009 and from 3.59 percent from the third quarter of 2008, excluding the effect of Chevy Chase Bank. -- Average deposits decreased by $3.7 billion in the quarter to $115.9 billion, or 3.1 percent, over the prior quarter. -- The cost of managed interest-bearing liabilities decreased from 2.40 percent in the second quarter to 2.28 percent in the third quarter as the company benefited from lower interest rates and continued to replace the run off of higher cost funding with lower cost Consumer Banking and Commercial Banking deposits. The total cost of funds declined 12 basis points to 2.28 percent in the third quarter. -- Average assets held for investment decreased $4.9 billion in the quarter, driven primarily by reductions in loans outstanding. -- Non-interest expenses declined $119.3 million in the third quarter of 2009, driven primarily by the absence of the FDIC special assessment that impacted the second quarter as well as modestly lower marketing and restructuring expenses. The managed efficiency ratio decreased to 38.36 percent in the third quarter of 2009 from 45.28 percent in the second quarter of 2009, driven largely by increasing revenue. -- The company's TCE ratio increased to 6.2 percent on September 30, 2009, an improvement of 52 basis points from the second quarter level of 5.7 percent. The Tier 1 risk-based capital ratio of an estimated 11.8 percent, increased 2.1 percentage points, and continues to be well above the regulatory well-capitalized minimum.

    "Despite continued credit pressures, Capital One posted solid growth in both revenues and bottom-line profits in the third quarter," said Gary L. Perlin, Capital One's Chief Financial Officer. "Our strong balance sheet is supported by healthy reserve levels and a tangible common equity ratio that grew to 6.2 percent, which positions the company against downside risk while enabling future growth."

    Segment Results

    During the third quarter of 2009, the company realigned its business segment reporting structure to better reflect the manner in which the performance of the company's operations is evaluated. The company now reports the results of its business through three operating segments: Credit Card, Commercial Banking, and Consumer Banking.

    Credit Card Highlights

    For details on the sub-segments' results, please refer to the Financial Supplement.

    The Credit Card segment reported net income in the third quarter of $291.7 million, an increase of $119.1 million, or 69.0 percent, from second quarter net income $172.6 million. Improving revenue margin in the Domestic Credit Card sub-segment drove the improved profitability despite higher provision expense.

    -- Revenues improved $296.4 million, or 11.0 percent, to $3.0 billion in the third quarter of 2009. -- Domestic Card - revenues up $271.6 million, or 11.4 percent from the second quarter -- International Card - revenues up $24.7 million, or 7.9 percent from the second quarter -- Revenue margin in the Domestic Card sub-segment improved to approximately 16.8 percent in the third quarter, up from 14.5 percent in the second quarter. The company expects Domestic Card revenue margin to remain above 16 percent in the fourth quarter. In 2010, the company expects Domestic Card quarterly revenue margin to moderate modestly, but remain close to its fourth quarter 2009 level. -- Period-end loans in the Credit Card segment were $70.4 billion, a decline of $3.0 billion, or 4.1 percent, from the second quarter of 2009. -- Domestic Card - loans declined $2.9 billion, or 4.4 percent from the second quarter. The continuing run-off of nationally-originated Installment Loans drove approximately 40 percent of the decline, although they comprise only 13 percent of the Domestic Card loan balances. -- International Card - loans declined $0.2 billion or 1.9 percent from the second quarter -- The managed net charge-off rate for the Credit Card segment increased 35 basis points to 9.59 percent in the third quarter of 2009 from 9.24 percent in the second quarter of 2009, primarily as a result of the continuing difficult credit environment. -- Domestic Card - net charge-offs increased to 9.64 percent in the third quarter from 9.23 percent in the second quarter. The increase was driven by declining balances, the implementation of the OCC minimum payment policies, and the absence of the one-time second quarter benefit from a change in bankruptcy processing partially offset by favorable seasonal trends and a modest improvement in the underlying charge-off rate. -- International Card - net charge-offs decreased to 9.19 percent in the third quarter from 9.32 percent in the second quarter. -- The delinquency rate for the Credit Card segment increased 54 basis points to 5.53 percent in the third quarter of 2009 from 4.99 percent in the second quarter of 2009. -- Domestic Card - delinquencies increased to 5.38 percent in the third quarter from 4.77 percent in the second quarter, reflecting seasonal patterns as well as revenue enhancements taken earlier in 2009. -- International Card - delinquencies remained basically flat, decreasing to 6.63 percent in the third quarter from 6.69 percent in the second quarter. Commercial Banking highlights

    For more lending information and statistics on the segment results, please refer to the Financial Supplement.

    The Commercial Banking segment consists of commercial and multi-family real-estate, middle market lending, and specialty lending, which are summarized under Commercial Lending, and small ticket commercial real estate. The total segment reported a net loss of $130.2 million in the third quarter, down from a profit of $29.8 million in the prior quarter, driven by a $252.6 million increase in the loss provision relative to the second quarter. The provision expense increased primarily as a result of a large allowance build in anticipation of future credit losses. The two most important drivers of the allowance build were the significant decline in collateral values, particularly in the company's construction portfolio, and recognizing the effects of higher charge-offs.

    -- Commercial Banking revenue increased $16.8 million, or 5.2 percent, to $340.8 million in the third quarter of 2009, while non-interest expenses increased $10.5 million, or 6.7 percent, to $166.0 million. -- Average loans declined $391.6 million, or 1.3 percent, to $30.1 billion during the third quarter from $30.5 billion during the second quarter of 2009. -- Commercial Lending - declined $320.5 million, or 1.1 percent, to $27.6 billion -- Small ticket commercial real estate - declined $71.1 million, or 2.8 percent, to $2.5 billion -- Average deposits increased $739.9 million, or 4.3 percent, to $17.8 billion during the third quarter from $17.0 billion during the second quarter of 2009, while the deposit interest expense was effectively stable at 75 basis points. -- The managed net charge-off rate for Commercial Banking increased 53 basis points in the third quarter of 2009 to 1.42 percent from 0.89 percent in the second quarter of 2009. -- Commercial Lending - 1.08 percent, an increase of 28 basis points over the second quarter of 2009 -- Small ticket commercial real estate - 5.19 percent, an increase of 333 basis points over the second quarter of 2009 -- Non-performing loans as a percentage of loans held for investment for Commercial Banking was 2.64 percent, an increase of 32 basis points from 2.32 percent at the end of the second quarter of 2009. Consumer Banking highlights

    For more lending information and statistics on the segment's results, please refer to the Financial Supplement.

    Consumer Banking reported net income for the third quarter of $184.6 million. Revenue increased $56.5 million in the quarter, with improvements across the Consumer Banking segment. Provision expense declined $46.0 million, driven by an allowance release in the auto finance business. Non-interest expense declined $43.4 million.

    -- Average loans declined $1.7 billion, or 4.0 percent, to $41.3 billion during the third quarter. Auto finance loans declined as a result of the company's earlier efforts to retrench and reposition the auto finance business. Mortgage loans fell as the company continued to experience expected run off in the portfolio. -- Auto - declined $667.3 million, or 3.3 percent, to $19.6 billion -- Mortgages - declined $857.3 million, or 5.0 percent, to $16.2 billion -- Retail banking - declined $211.4 million, or 3.7 percent, to $5.5 billion -- Average deposits in the Consumer Banking segment declined $1.0 billion, or 1.4 percent, to $73.3 billion during the third quarter from $74.3 billion during the second quarter of 2009. Improved deposit mix and favorable interest rates drove an 18 basis point improvement in the deposit interest expense rate in the third quarter. -- The managed net charge-off rate for Consumer Banking increased 46 basis points in the third quarter of 2009 to 2.67 percent from 2.21 percent in the second quarter of 2009. -- Auto - 4.38 percent, an increase of 73 basis points over the second quarter -- Mortgages - 0.68 percent, an increase of 26 basis points from the second quarter -- Retail Banking - 2.44 percent, an increase of 3 basis points from the second quarter

    The company generates earnings from its managed loan portfolio, which includes both on-balance sheet loans and securitized (off-balance sheet) loans. For this reason, the company believes managed financial measures to be useful to stakeholders. In compliance with Regulation G of the Securities and Exchange Commission, the company is providing a numerical reconciliation of managed financial measures to comparable measures calculated on a reported basis using generally accepted accounting principles (GAAP). Please see the schedule titled "Reconciliation to GAAP Financial Measures" attached to this release for more information.

    Forward looking statements

    The company cautions that its current expectations in this release, in the presentation slides available on the company's website and in its Form 8-K dated October 22, 2009, including those regarding Domestic Card revenue margin in the fourth quarter of 2009 and in 2010; and the company's plans, objectives, expectations, and intentions, are forward-looking statements. Actual results could differ materially from current expectations due to a number of factors, including: general economic conditions in the U.S., the UK, or the company's local markets, including conditions affecting consumer income, confidence, spending, and savings which may affect consumer bankruptcies, defaults, charge-offs, deposit activity, and interest rates; changes in the labor and employment market; changes in the credit environment; the company's ability to execute on its strategic and operational plans; competition from providers of products and services that compete with the company's businesses; increases or decreases in the company's aggregate accounts and balances, or the growth rate and/or composition thereof; changes in the reputation of or expectations regarding the financial services industry or the company with respect to practices, products or financial condition; financial, legal, regulatory, tax or accounting changes or actions, including with respect to any litigation matter involving the company; and the success of the company's marketing efforts in attracting or retaining customers. A discussion of these and other factors can be found in the company's annual report and other reports filed with the Securities and Exchange Commission, including, but not limited to, the company's reports on Form 10-K for the fiscal year ended December 31, 2008 and reports on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009.

    About Capital One

    Capital One Financial Corporation (http://www.capitalone.com/) is a financial holding company whose subsidiaries, which include Capital One, N.A. and Capital One Bank (USA), N. A., had $114.5 billion in deposits and $209.7 billion in total managed assets outstanding as of September 30, 2009. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One, N.A. has approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia, and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

    NOTE: Third quarter 2009 financial results, SEC Filings, and earnings conference call slides are accessible on Capital One's home page (http://www.capitalone.com/). Choose "Investors" on the bottom of the home page to view and download the earnings press release, slides, and other financial information. Additionally, a podcast and webcast of today's 5:00 pm (ET) earnings conference call is accessible through the same link.

    CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY REPORTED BASIS (in millions, except per 2009 2009 2008 share data and as noted) Q3 Q2 Q3 ------------------------- -- -- -- Earnings (Reported Basis) Net Interest Income $2,050.7 $1,946.6 $1,806.6 Non-Interest Income (2) 1,552.4 1,231.7(5) 1,696.9 ------- ------- ------- Total Revenue (1) 3,603.1 3,178.3 3,503.5 Provision for Loan Losses 1,173.2 934.0 1,093.9 Marketing Expenses 103.7 134.0 267.4 Restructuring Expenses 26.4 43.4 15.3 Operating Expenses (3) 1,672.4 1,744.4(8) 1,527.5 ------- ------- ------- Income (Loss) Before Taxes 627.4 322.5 599.4 Tax Rate 25.2% 28.6% 35.6% Income (Loss) From Continuing Operations, Net of Tax $469.2 $230.2 $385.8 Loss From Discontinued Operations, Net of Tax (43.6) (6.0) (11.7) ----- ---- ----- Net Income (Loss) $425.6 $224.2 $374.1 ------ ------ ------ Net Income (Loss) Available to Common Shareholders (F) $425.6 $(275.5)(10) $374.1 -------------------- ------ ------- ------ Common Share Statistics Basic EPS: (G) Income (Loss) From Continuing Operations $1.04 $(0.64) $1.03 Loss From Discontinued Operations $(0.09) $(0.01) $(0.03) ------ ------ ------ Net Income (Loss) $0.95 $(0.65) $1.00 Diluted EPS: (G) Income (Loss) From Continuing Operations $1.03 $(0.64) $1.03 Loss From Discontinued Operations $(0.09) $(0.01) $(0.03) ------ ------ ------ Net Income (Loss) $0.94 $(0.65) $1.00 Dividends Per Common Share $0.05 $0.05 $0.375 Tangible Book Value Per Common Share (period end) $27.02 $25.34 $31.63 Stock Price Per Common Share (period end) $35.73 $21.88 $51.00 Total Market Capitalization (period end) $16,064.2 $9,826.3 $19,833.9 Common Shares Outstanding (period end) 449.6 449.1 388.9 Shares Used to Compute Basic EPS 449.4 421.9 372.9 Shares Used to Compute Diluted EPS 453.7 421.9 374.3 ---------------------- ----- ----- ----- Reported Balance Sheet Statistics (period average) (A) Average Loans Held for Investment $99,485 $105,278 $98,778 Average Earning Assets $145,410 $151,400 $133,277 Average Assets $173,348 $177,589 $156,958 Average Interest Bearing Deposits $103,105 $107,040 $84,655 Total Average Deposits $115,883 $119,611 $95,328 Average Equity $25,999 $27,658(7),(9) $25,046 Return on Average Assets (ROA) 1.08% 0.52% 0.98% Return on Average Equity (ROE) 7.22% 3.33% 6.16% ------------------------ ---- ---- ---- Reported Balance Sheet Statistics (period end) (A) Loans Held for Investment $96,783 $101,074 $97,965 Total Assets $168,472 $171,865 $154,783 Interest Bearing Deposits $101,769 $104,121 $88,248 Total Deposits $114,503 $116,724 $98,913 -------------- -------- -------- ------- Performance Statistics (Reported) (A) Net Interest Income Growth (annualized) 21% 36% 18% Non Interest Income Growth (annualized) 104% 52% 18% Revenue Growth (annualized) 53% 42% 18% Net Interest Margin 5.64% 5.14% 5.42% Revenue Margin 9.91% 8.40% 10.51% Risk Adjusted Margin (B) 6.81% 5.44% 7.90% Non Interest Expense as a % of Average Loans Held for Investment (annualized) 7.25% 7.30% 7.33% Efficiency Ratio (C) 49.29% 59.10% 51.23% -------------------- ----- ----- ----- Asset Quality Statistics (Reported) (A) Allowance $4,513 $4,482 $3,520 Allowance as a % of Reported Loans Held for Investment 4.66%(4) 4.43%(4) 3.59% Net Charge-Offs $1,127(4) $1,119(4) $872 Net Charge-Off Rate 4.53%(4) 4.25%(4) 3.53% 30+ day performing delinquency rate 4.11%(4) 3.71%(4) 3.85% --------------------------- ---- ---- ---- Full-time equivalent employees (in thousands) 26.0 26.6 23.5 ------------------------- ---- ---- ---- CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY MANAGED BASIS (*) 2009 2009 2008 (in millions) Q3 Q2 Q3 ------------- -- -- -- Earnings (Managed Basis) Net Interest Income $3,257.5 $2,959.2 $2,889.3 Non-Interest Income (2) 1,372.7 1,189.0(5) 1,325.6 ------- ------- ------- Total Revenue (1) 4,630.2 4,148.2 4,214.9 Provision for Loan Losses 2,200.3 1,903.9 1,805.3 Marketing Expenses 103.7 134.0 267.4 Restructuring Expenses 26.4 43.4 15.3 Operating Expenses (3) 1,672.4 1,744.4(8) 1,527.5 ------- ------- ------- Income (Loss) Before Taxes 627.4 322.5 599.4 Tax Rate 25.2% 28.6% 35.6% Income (Loss) From Continuing Operations, Net of Tax $469.2 $230.2 $385.8 Loss From Discontinued Operations, Net of Tax (43.6) (6.0) (11.7) ----- ---- ----- Net Income (Loss) $425.6 $224.2 $374.1 ------ ------ ------ Net Income (Loss) Available to Common Shareholders (F) $425.6 $(275.5)(10) $374.1 ------------------------------ ------ ------- ------ Managed Balance Sheet Statistics (period average) (A) Average Loans Held for Investment $143,671 $148,609 $147,247 Average Earning Assets $186,005 $191,804 $179,753 Average Assets $214,575 $218,325 $204,694 Return on Average Assets (ROA) 0.87% 0.42% 0.75% ------------------------------ ---- ---- ---- Managed Balance Sheet Statistics (period end) (A) Loans Held for Investment $141,059 $146,251 $147,346 Total Assets $209,723 $214,095 $203,452 Tangible Assets(D) $195,647 $200,110 $190,141 Tangible Common Equity (E) $12,146 $11,379 $12,301 Tangible Common Equity to Tangible Assets Ratio (H) 6.21% 5.69%(6) 6.47%(6) % Off-Balance Sheet Securitizations 31% 31% 34% -------------------- -- -- -- Performance Statistics (Managed) (A) Net Interest Income Growth (annualized) 40% 31% 15% Non Interest Income Growth (annualized) 62% 82% 7% Revenue Growth (annualized) 46% 45% 12% Net Interest Margin 7.01% 6.17% 6.43% Revenue Margin 9.96% 8.65% 9.38% Risk Adjusted Margin (B) 5.32% 4.30% 5.86% Non Interest Expense as a % of Average Loans Held for Investment (annualized) 5.02% 5.17% 4.92% Efficiency Ratio (C) 38.36% 45.28% 42.58% -------------------- ----- ----- ----- Asset Quality Statistics (Managed) (A) Net Charge-Offs $2,155(4) $2,087(4) $1,583 Net Charge-Off Rate 6.00%(4) 5.62%(4) 4.30% 30+ day performing delinquency rate 4.55%(4) 4.09%(4) 3.99% ---------------------------- ---- ---- ---- (*) The information in this statistical summary reflects the adjustment to add back the effect of securitization transactions qualifying as sales under generally accepted accounting principles. See accompanying schedule - "Reconciliation to GAAP Financial Measures". CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY NOTES (1) In accordance with the Company's finance charge and fee revenue recognition policy, the amounts billed to customers but not recognized as revenue were as follows: Q3 2009 - $517.0 million, Q2 2009 - $571.9 million and Q3 2008 - $445.7 million. (2) Includes the impact from the change in fair value of retained interests, including the interest-only strips, of an increase of $37.3 million in Q3 2009, and a decrease of $114.5 million in Q2 2009 and $73.5 million in Q3 2008. (3) Includes core deposit intangible amortization expense of $55.5 million in Q3 2009, $57.4 million in Q2 2009 and $47.3 million in Q3 2008 and integration costs of $10.7 million in Q3 2009, $8.8 million in Q2 2009 and $10.3 million in Q3 2008. (4) Allowance as a % of Reported Loans Held for Investment, Net Charge-off Rate and 30+ Days Performing Delinquency Rate on both a Reported and Managed basis include period end loans held for investment and average loans held for investment acquired as part of the Chevy Chase Bank, FSB (CCB) acquisition. The period end and average loans held for investment and metrics excluding such loans are as follows. The net charge-off dollars were unchanged. Q3 2009 Q2 2009 ------- ------- CCB period end acquired loan portfolio (in millions) $8,002.3 $8,552.9 CCB average acquired loan portfolio (in millions) $8,525.2 $8,931.9 Allowance as a % of reported loans held for investment 5.08% 4.84% Net charge-off rate (Reported) 4.96% 4.65% Net charge-off rate (Managed) 6.38% 5.98% 30+ day performing delinquency rate(Reported) 4.48% 4.05% 30+ day performing delinquency rate(Managed) 4.82% 4.35% (5) In Q2 2009 the Company elected to convert and sell 404,508 shares of MasterCard class B common stock and recognized a gain of $65.5 Million in non-interest income from the transaction. (6) The Q2 2009 TCE ratio reflects the issuance of 56,000,000 common shares on May 14, 2009 at $27.75 per share. The Q3 2008 TCE ratio reflects the issuance of 15,527,000 shares on September 30, 2008 at $49 per share. (7) Average equity includes the impact of the Company's participation in the U.S. Treasury's Capital Purchase Program. On June 17, 2009, the Company repurchased all 3,555,199 preferred shares issued in Q4 2008 for approximately $3.57 billion, including accrued dividends. The warrants to purchase common shares of $491.5 million remain outstanding and are included in paid-in capital on the balance sheet. (8) Includes the FDIC Special Assessment of $80.5 million. (9) Average equity includes the impact of the issuance of 56,000,000 common shares on May 14, 2009 at $27.75 per share. (10) The calculation of net income (loss) available to common shareholders includes the impact from dividends on preferred shares of $38.0 million and from the accretion of the discount on preferred shares of $461.7 million. With the repayment of the preferred shares to the U.S. Treasury, the remaining accretion was accelerated to Q2 2009 and treated as a dividend. STATISTICS / METRIC DEFINITIONS ------------------------------- (A) Based on continuing operations. Average equity and return on equity are based on the Company's stockholders' equity. (B) Risk adjusted margin equals total revenue less net charge-offs as a percentage of average earning assets. (C) Efficiency ratio equals non-interest expense less restructuring expense divided by total revenue. (D) Tangible assets include managed assets less intangible assets and is considered a non-GAAP measure. See accompanying schedule Reconciliation to GAAP Financial Measures for a reconciliation of tangible assets. (E) Includes stockholders' equity less preferred shares less intangible assets and related deferred tax liabilities. Tangible Common Equity on a reported and managed basis is the same and is considered a non- GAAP measure. See accompanying schedule Reconciliation To GAAP Financial Measures for a reconciliation of tangible common equity. (F) Net income (loss) available to common shareholders equals net income (loss) less dividends on preferred shares. (G) Earnings per share is based on net income (loss) available to common shareholders. (H) Tangible Common Equity to Tangible Assets Ratio ("TCE Ratio") is considered a non-GAAP measure. See accompanying schedule Reconciliation To GAAP Financial Measures for a reconciliation of the TCE Ratio. CAPITAL ONE FINANCIAL CORPORATION Reconciliation to GAAP Financial Measures For the Three Months Ended September 30, 2009 (dollars in thousands)(unaudited) The Company's consolidated financial statements prepared in accordance with generally accepted accounting principles ("GAAP") are referred to as its "reported" financial statements. Loans included in securitization transactions which qualified as sales under GAAP have been removed from the Company's "reported" balance sheet. However, servicing fees, finance charges, and other fees, net of charge-offs, and interest paid to investors of securitizations are recognized as servicing and securitizations income on the "reported" income statement. The Company's "managed" consolidated financial statements reflect adjustments made related to effects of securitization transactions qualifying as sales under GAAP. The Company generates earnings from its "managed" loan portfolio which includes both the on-balance sheet loans and off-balance sheet loans. The Company's "managed" income statement takes the components of the servicing and securitizations income generated from the securitized portfolio and distributes the revenue and expense to appropriate income statement line items from which they originated. For this reason the Company believes the "managed" consolidated financial statements and related managed metrics to be useful to stakeholders. Total Reported Adjustments(1) Total Managed(2) ---------------------- -------------- -------------- ---------------- Income Statement Measures(3) Net interest income $2,050,680 $1,206,867 $3,257,547 Non-interest income 1,552,380 (179,700) 1,372,680 --------- -------- --------- Total revenue 3,603,060 1,027,167 4,630,227 Provision for loan and lease losses 1,173,165 1,027,167 2,200,332 Net charge-offs $1,127,465 $1,027,167 $2,154,632 --------------- ---------- ---------- ---------- Balance Sheet Measures Loans held for investment $96,783,165 $44,275,350 $141,058,515 Total assets $168,503,921 $41,250,924 $209,754,845 Total liabilities $142,281,769 $41,250,924 $183,532,693 Average loans held for investment $99,484,847 $44,185,873 $143,670,720 Average earning assets $145,425,656 $40,594,656 $186,020,312 Average total assets $173,389,149 $41,226,895 $214,616,044 Average total liabilities $147,390,307 $41,226,895 $188,617,202 Delinquencies $3,982,504 $2,434,461 $6,416,965 ------------- ---------- ---------- ---------- The table below presents a reconciliation of tangible common equity and tangible assets, which are the components used to calculate the tangible common equity "TCE" ratio. The Company believes the TCE ratio is an important financial measure of capital strength to our investors and readers even though it is considered to be a non-GAAP measure. (dollars in 2009 2009 2008 millions)(unaudited) Q3 Q2 Q3 -- -- -- Equity $26,222 $25,326 $25,612 Less: preferred stock - 38 - Less: intangible assets (4) (14,076) (13,985) (13,311) ------- ------- ------- Tangible common equity $12,146 $11,379 $12,301 ======= ======= ======= Total assets 209,754 214,141 203,472 Less: discontinued ops assets (31) (46) (20) --- --- --- Total assets-continuing ops 209,723 214,095 203,452 Less: intangible assets (4) (14,076) (13,985) (13,311) ------- ------- ------- Tangible assets $195,647 $200,110 $190,141 ======== ======== ======== TCE ratio 6.21 5.69 6.47 (1) Income statement adjustments reclassify the net of finance charges of $1,317.2 million, past-due fees of $198.3 million, other interest income of $(51.0) million and interest expense of $257.6 million; and net charge-offs of $1,027.2 million from non-interest income to net interest income and provision for loan and lease losses, respectively. (2) The managed loan portfolio does not include auto loans or mortgage loans which have been sold in whole loan sale transactions or securitizations where the Company has retained servicing rights. (3) Based on continuing operations. (4) Includes impact from related deferred taxes. CAPITAL ONE FINANCIAL CORPORATION Consolidated Balance Sheets (in thousands)(unaudited) As of As of As of September 30 June 30 September 30 2009 2009 2008 ---- ---- ---- Assets: Cash and due from banks $2,719,100 $3,001,944 $3,511,558 Federal funds sold and resale agreements 544,793 603,564 1,435,521 Interest-bearing deposits at other banks 863,310 1,166,419 673,662 ------- --------- ------- Cash and cash equivalents 4,127,203 4,771,927 5,620,741 Securities available for sale 37,693,001 37,667,165 26,969,471 Securities held to maturity 83,608 87,545 - Mortgage loans held for sale 141,158 319,975 98,900 Loans held for investment 96,783,165 101,073,629 97,965,351 Less: Allowance for loan and lease losses (4,513,493) (4,481,827) (3,519,610) ---------- ---------- ---------- Net loans held for investment(1) 92,269,672 96,591,802 94,445,741 Accounts receivable from securitizations 6,985,200 5,219,968 4,980,823 Premises and equipment, net 2,773,173 2,824,785 2,305,286 Interest receivable 947,738 951,201 750,717 Goodwill(1) 13,524,978 13,381,056 12,815,642 Other(1) 9,958,190 10,095,883 6,815,792 --------- ---------- --------- Total assets $168,503,921 $171,911,307 $154,803,113 ============ ============ ============ Liabilities: Non-interest-bearing deposits $12,734,589 $12,603,548 $10,665,286 Interest-bearing deposits 101,768,522 104,120,642 88,247,688 Senior and subordinated notes 9,208,769 10,092,619 8,278,856 Other borrowings 12,126,181 13,260,589 15,962,072 Interest payable 582,969 659,784 508,091 Other(1) 5,860,739 5,848,464 5,529,580 --------- --------- --------- Total liabilities 142,281,769 146,585,646 129,191,573 Stockholders' Equity: Preferred stock - - - Common stock 5,021 5,019 4,383 Paid-in capital, net 18,928,719 18,891,333 16,752,078 Retained earnings and cumulative other comprehensive income 10,460,779 9,598,606 12,020,490 Less: Treasury stock, at cost (3,172,367) (3,169,297) (3,165,411) ---------- ---------- ---------- Total stockholders' equity 26,222,152 25,325,661 25,611,540 ---------- ---------- ---------- Total liabilities and stockholders' equity $168,503,921 $171,911,307 $154,803,113 ============ ============ ============ (1) Balances at September 30, 2009 reflect adjustments made to the allocation of purchase price of the Chevy Chase Bank acquisition. The balances at June 30, 2009 have not been adjusted, however, if the adjustments had been made at June 30, 2009, net loans held for investment would have been $96,518.7 million (a decrease of $73.1 million), goodwill would have been $13,527.9 million (an increase of $146.9 million), other assets would have been $10,045.2 million (an decrease of $50.7 million) and other liabilities would have been $5,822.8 million (a decrease of $25.7 million). The allocation of purchase price is still preliminary and will be finalized upon completion of the analysis of the fair values of Chevy Chase Bank's assets and liabilities. CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income (in thousands, except per share data)(unaudited) Three Months Ended Nine Months Ended September June September September September 30 30 30 30 30 2009 2009 2008 2009 2008 Interest Income: Loans held for investment, including past-due fees $2,265,720 $2,233,808 $2,347,480 $6,689,859 $7,153,582 Investment securities 398,835 412,845 317,268 1,206,460 856,093 Other 83,195 67,982 107,048 214,294 333,503 ------ ------ ------- ------- ------- Total interest income 2,747,750 2,714,635 2,771,796 8,110,613 8,343,178 Interest Expense: Deposits 479,178 555,579 624,319 1,666,605 1,827,284 Senior and subordinated notes 74,032 57,113 96,568 189,189 352,335 Other borrowings 143,860 155,357 244,264 470,802 817,241 ------- ------- ------- ------- ------- Total interest expense 697,070 768,049 965,151 2,326,596 2,996,860 ------- ------- ------- --------- --------- Net interest income 2,050,680 1,946,586 1,806,645 5,784,017 5,346,318 Provision for loan and lease losses 1,173,165 934,038 1,093,917 3,386,340 3,002,119 --------- ------- --------- --------- --------- Net interest income after provision for loan and lease losses 877,515 1,012,548 712,728 2,397,677 2,344,199 Non-Interest Income: Servicing and securitizations 720,698 362,416 875,718 1,536,751 2,793,520 Service charges and other customer- related fees 496,404 491,763 576,762 1,494,292 1,675,032 Mortgage servicing and other 8,656 13,163 39,183 45,199 90,990 Interchange 122,585 126,702 148,076 389,378 432,708 Net impairment losses recognized in earnings(1) (11,173) (10,031) - (21,567) - Other 215,210 247,674 57,152 430,348 383,435 ------- ------- ------ ------- ------- Total non-interest income 1,552,380 1,231,687 1,696,891 3,874,401 5,375,685 Non-Interest Expense: Salaries and associate benefits 648,180 633,819 571,686 1,836,430 1,761,538 Marketing 103,698 133,970 267,372 400,380 853,265 Communications and data processing 175,575 194,578 176,720 569,257 559,065 Supplies and equipment 122,777 128,483 126,781 370,160 389,649 Occupancy 113,913 114,885 96,483 329,049 264,700 Restructuring expense 26,357 43,374 15,306 87,358 81,625 Other 611,978 672,647 555,858 1,876,692 1,542,242 ------- ------- ------- --------- --------- Total non-interest expense 1,802,478 1,921,756 1,810,206 5,469,326 5,452,084 --------- --------- --------- --------- --------- Income from continuing operations before income taxes 627,417 322,479 599,413 802,752 2,267,800 Income taxes 158,191 92,278 213,624 190,246 786,958 ------- ------ ------- ------- ------- Income from continuing operations, net of tax 469,226 230,201 385,789 612,506 1,480,842 Loss from discontinued operations, net of tax (43,587) (5,998) (11,650) (74,543) (105,294) ------- ------ ------- ------- -------- Net income $425,639 $224,203 $374,139 $537,963 $1,375,548 ======== ======== ======== ======== ========== Net income (loss) available to common shareholders $425,639 $(275,515) $374,139 $(25,945) $1,375,548 ======== ========= ======== ======== ========== Basic earnings per common share Income (loss) from continuing operations $1.04 $(0.64) $1.03 $0.12 $3.98 Loss from discontinued operations (0.09) (0.01) (0.03) (0.18) (0.28) ----- ----- ----- ----- ----- Net Income (loss) per common share $0.95 $(0.65) $1.00 $(0.06) $3.70 ===== ====== ===== ====== ===== Diluted earnings per common share Income (loss) from continuing operations $1.03 $(0.64) $1.03 $0.12 $3.96 Loss from discontinued operations (0.09) (0.01) (0.03) (0.18) (0.28) ----- ----- ----- ----- ----- Net Income (loss) per common share $0.94 $(0.65) $1.00 $(0.06) $3.68 ===== ====== ===== ====== ===== Dividends paid per common share $0.05 $0.05 $0.375 $0.475 $1.125 ===== ===== ====== ====== ===== (1) Total other-than-temporary impairment losses for the three and nine months ended September 30, 2009 are $131.0 million and $290.6 million, respectively. The portion of loss recognized in other comprehensive income (before taxes) for the three and nine months ended September 30, 2009 are $119.9 million and $269.0 million, respectively. Total other-than- temporary impairment losses for the three months ended June 30, 2009 is $159.2 million. The portion of loss recognized in other comprehensive income (before taxes) for the three months ended June 30, 2009 is $149.2 million. CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (1) (dollars in thousands)(unaudited) Reported Quarter Ended 09/30/09 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $99,484,847 $2,265,720 9.11% Investment Securities (2) 37,376,895 398,835 4.27% Other 8,548,610 83,195 3.89% --------- ------ ---- Total earning assets $145,410,352 $2,747,750 7.56% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts 10,418,557 12,745 0.49% Money market deposit accounts 36,036,826 96,477 1.07% Savings accounts 12,266,254 22,772 0.74% Other consumer time deposits 32,075,905 248,272 3.10% Public fund CD's of $100,000 or more 1,061,134 2,789 1.05% CD's of $100,000 or more 9,764,172 92,681 3.80% Foreign time deposits 1,482,519 3,442 0.93% --------- ----- ---- Total interest-bearing deposits $103,105,367 $479,178 1.86% Senior and subordinated notes 9,553,950 74,032 3.10% Other borrowings 13,480,527 143,860 4.27% ---------- ------- ---- Total interest-bearing liabilities $126,139,844 $697,070 2.21% ============ ======== ---- Net interest spread 5.35% ==== Interest income to average earning assets 7.56% Interest expense to average earning assets 1.92% ---- Net interest margin 5.64% ==== Reported Quarter Ended 06/30/09 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $105,278,045 $2,233,808 8.49% Investment Securities (2) 37,499,187 412,845 4.40% Other 8,623,100 67,982 3.15% --------- ------ ---- Total earning assets $151,400,332 $2,714,635 7.17% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts $10,914,679 $14,602 0.54% Money market deposit accounts 35,751,007 103,855 1.16% Savings accounts 9,931,058 13,399 0.54% Other consumer time deposits 35,841,099 300,572 3.35% Public fund CD's of $100,000 or more 1,117,460 3,450 1.23% CD's of $100,000 or more 11,097,722 108,228 3.90% Foreign time deposits 2,387,093 11,473 1.92% --------- ------ ---- Total interest-bearing deposits $107,040,118 $555,579 2.08% Senior and subordinated notes 8,322,746 57,113 2.74% Other borrowings 16,274,845 155,357 3.82% ---------- ------- ---- Total interest-bearing liabilities $131,637,709 $768,049 2.33% ============ ======== ---- Net interest spread 4.84% ==== Interest income to average earning assets 7.17% Interest expense to average earning assets 2.03% ---- Net interest margin 5.14% ==== Reported Quarter Ended 09/30/08 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $98,778,393 $2,347,480 9.51% Investment Securities (2) 25,780,198 317,268 4.92% Other 8,718,392 107,048 4.91% --------- ------- ---- Total earning assets $133,276,983 $2,771,796 8.32% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts $9,292,819 $30,263 1.30% Money market deposit accounts 26,914,607 187,740 2.79% Savings accounts 7,759,024 16,243 0.84% Other consumer time deposits 26,733,531 262,101 3.92% Public fund CD's of $100,000 or more 1,305,438 8,233 2.52% CD's of $100,000 or more 9,084,740 89,192 3.93% Foreign time deposits 3,564,449 30,547 3.43% --------- ------ ---- Total interest-bearing deposits $84,654,608 $624,319 2.95% Senior and subordinated notes 8,282,536 96,568 4.66% Other borrowings 22,368,976 244,264 4.37% ---------- ------- ---- Total interest-bearing liabilities $115,306,120 $965,151 3.35% ============ ======== ---- Net interest spread 4.97% ==== Interest income to average earning assets 8.32% Interest expense to average earning assets 2.90% ---- Net interest margin 5.42% ==== (1) Average balances, income and expenses, yields and rates are based on continuing operations. (2) Includes securities available for sale and securities held to maturity. CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (2) (dollars in thousands)(unaudited) Managed (1) Quarter Ended 09/30/09 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $143,670,720 $3,795,387 10.57% Investment Securities (3) 37,376,895 398,835 4.27% Other 4,957,393 18,038 1.46% --------- ------ ---- Total earning assets $186,005,008 $4,212,260 9.06% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts $10,418,557 $12,745 0.49% Money market deposit accounts 36,036,826 96,477 1.07% Savings accounts 12,266,254 22,772 0.74% Other consumer time deposits 32,075,905 248,272 3.10% Public fund CD's of $100,000 or more 1,061,134 2,789 1.05% CD's of $100,000 or more 9,764,172 92,681 3.80% Foreign time deposits 1,482,519 3,442 0.93% --------- ----- ---- Total interest-bearing deposits $103,105,367 $479,178 1.86% Senior and subordinated notes 9,553,950 74,032 3.10% Other borrowings 13,480,527 143,860 4.27% Securitization liability 41,251,788 257,643 2.50% ---------- ------- ---- Total interest-bearing liabilities $167,391,632 $954,713 2.28% ============ ======== ---- Net interest spread 6.78% ==== Interest income to average earning assets 9.06% Interest expense to average earning assets 2.05% ---- Net interest margin 7.01% ==== Managed (1) Quarter Ended 06/30/09 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $148,609,132 $3,564,773 9.60% Investment Securities (3) 37,499,187 412,845 4.40% Other 5,695,941 17,074 1.20% --------- ------ ---- Total earning assets $191,804,260 $3,994,692 8.33% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts $10,914,679 $14,602 0.54% Money market deposit accounts 35,751,007 103,855 1.16% Savings accounts 9,931,058 13,399 0.54% Other consumer time deposits 35,841,099 300,572 3.35% Public fund CD's of $100,000 or more 1,117,460 3,450 1.23% CD's of $100,000 or more 11,097,722 108,228 3.90% Foreign time deposits 2,387,093 11,473 1.92% --------- ------ ---- Total interest-bearing deposits $107,040,118 $555,579 2.08% Senior and subordinated notes 8,322,746 57,113 2.74% Other borrowings 16,274,845 155,357 3.82% Securitization liability 40,806,188 267,450 2.62% ---------- ------- ---- Total interest-bearing liabilities $172,443,897 $1,035,499 2.40% ============ ========== ---- Net interest spread 5.93% ==== Interest income to average earning assets 8.33% Interest expense to average earning assets 2.16% ---- Net interest margin 6.17% ==== Managed (1) Quarter Ended 09/30/08 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $147,247,398 $3,974,375 10.80% Investment Securities (3) 25,780,198 317,268 4.92% Other 6,725,201 54,618 3.25% --------- ------ ---- Total earning assets $179,752,797 $4,346,261 9.67% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts $9,292,819 $30,263 1.30% Money market deposit accounts 26,914,607 187,740 2.79% Savings accounts 7,759,024 16,243 0.84% Other consumer time deposits 26,733,531 262,101 3.92% Public fund CD's of $100,000 or more 1,305,438 8,233 2.52% CD's of $100,000 or more 9,084,740 89,192 3.93% Foreign time deposits 3,564,449 30,547 3.43% --------- ------ ---- Total interest-bearing deposits $84,654,608 $624,319 2.95% Senior and subordinated notes 8,282,536 96,568 4.66% Other borrowings 22,368,976 244,264 4.37% Securitization liability 48,069,177 491,780 4.09% ---------- ------- ---- Total interest-bearing liabilities $163,375,297 $1,456,931 3.57% ============ ========== ---- Net interest spread 6.10% ==== Interest income to average earning assets 9.67% Interest expense to average earning assets 3.24% ---- Net interest margin 6.43% ==== (1) The information in this table reflects the adjustment to add back the effect of securitized loans. (2) Average balances, income and expenses, yields and rates are based on continuing operations. (3) Includes securities available for sale and securities held to maturity. CAPITAL ONE FINANCIAL CORPORATION (COF) LENDING INFORMATION AND STATISTICS MANAGED BASIS (1) (8) 2009 2009 2008 Q3 Q2 Q3 -- -- -- Period end loans held for investment (in thousands) Domestic credit card $61,891,573 $64,760,128 $69,361,743 International credit card 8,477,236 8,638,441 10,254,713 --------- --------- ---------- Total Credit Card $70,368,809 $73,398,569 $79,616,456 ----------- ----------- ----------- Commercial and multi-family real estate $13,920,431 $14,153,752 $12,997,111 Middle market 9,987,237 10,190,701 9,768,420 Specialty lending 3,542,350 3,469,699 3,634,212 --------- --------- --------- Total Commercial Lending $27,450,018 $27,814,152 $26,399,743 Small ticket commercial real estate 2,412,400 2,503,035 2,695,570 --------- --------- --------- Total Commercial Banking $29,862,418 $30,317,187 $29,095,313 ----------- ----------- ----------- Automobile $19,295,218 $19,916,167 $22,318,970 Mortgages 15,838,327 16,674,368 10,355,853 Retail banking 5,346,260 5,593,040 5,402,783 --------- --------- --------- Total Consumer Banking $40,479,805 $42,183,575 $38,077,606 ----------- ----------- ----------- Other loans (7) $347,483 $351,393 $556,371 -------- -------- -------- Total $141,058,515 $146,250,724 $147,345,746 ============ ============ ============ Average loans held for investment (in thousands) Domestic credit card $63,298,525 $65,862,569 $68,581,983 International credit card 8,609,235 8,327,859 10,703,229 --------- --------- ---------- Total Credit Card $71,907,760 $74,190,428 $79,285,212 ----------- ----------- ----------- Commercial and multi-family real estate $13,956,465 $14,056,005 $12,937,927 Middle market 9,924,849 10,426,572 9,303,068 Specialty lending 3,753,054 3,472,258 3,657,406 --------- --------- --------- Total Commercial Lending $27,634,368 $27,954,835 $25,898,401 Small ticket commercial real estate 2,470,961 2,542,082 2,709,568 --------- --------- --------- Total Commercial Banking $30,105,329 $30,496,917 $28,607,969 ----------- ----------- ----------- Automobile $19,635,979 $20,303,296 $22,870,070 Mortgages 16,156,009 17,013,312 10,562,385 Retail banking 5,515,647 5,727,032 5,391,590 --------- --------- --------- Total Consumer Banking $41,307,635 $43,043,640 $38,824,045 ----------- ----------- ----------- Other loans (7) $349,996 $878,147 $530,172 -------- -------- -------- Total $143,670,720 $148,609,132 $147,247,398 ============ ============ ============ Net Charge-off Rates Domestic credit card 9.64% 9.23% 6.13% International credit card 9.19% 9.32% 5.90% ---- ---- ---- Total Credit Card 9.59% 9.24% 6.10% ---- ---- ---- Commercial and multi-family real estate (4) 1.37% 0.92% 0.14% Middle market (4) 0.56% 0.58% 0.15% Specialty lending 1.39% 0.99% 0.27% ---- ---- ---- Total Commercial Lending (4) 1.08% 0.80% 0.16% Small ticket commercial real estate 5.19% 1.86% 0.10% ---- ---- ---- Total Commercial Banking (4) 1.42% 0.89% 0.16% ---- ---- ---- Automobile 4.38% 3.65% 4.99% Mortgages (4) 0.68% 0.42% 0.43% Retail banking (4) 2.44% 2.41% 2.08% ---- ---- ---- Total Consumer Banking (4) 2.67% 2.21% 3.35% ---- ---- ---- Other loans 28.53% 37.00% 18.98% ----- ----- ----- Total 6.00% 5.62% 4.30% ==== ==== ==== 30+ day performing delinquency rate Domestic credit card 5.38% 4.77% 4.20% International credit card 6.63% 6.69% 5.24% ---- ---- ---- Total Credit Card 5.53% 4.99% 4.34% ---- ---- ---- Automobile (6) 9.52% 8.89% 9.31% Mortgages (4) 1.15% 0.97% 0.82% Retail banking (4) 1.23% 0.88% 0.89% ---- ---- ---- Total Consumer Banking (4) 5.15% 4.69% 5.81% ==== ==== ==== Non Performing Asset Rates (2) (5) Commercial and multi-family real estate (4) 2.68% 2.16% 1.07% Middle market (4) 1.26% 1.16% 0.26% Specialty lending 2.04% 1.96% 0.38% ---- ---- ---- Total Commercial Lending (4) 2.08% 1.77% 0.67% Small ticket commercial real estate 11.39% 10.08% 4.49% ----- ----- ---- Total Commercial Banking (4) 2.83% 2.46% 1.03% ---- ---- ---- Automobile (6) 0.87% 0.78% 0.99% Mortgages (4) 1.81% 1.50% 1.16% Retail banking (4) 1.93% 1.80% 0.97% ---- ---- ---- Total Consumer Banking (4) 1.38% 1.20% 1.03% ==== ==== ==== CAPITAL ONE FINANCIAL CORPORATION (COF) CREDIT CARD SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS MANAGED BASIS (1) (8) 2009 2009 2008 (in thousands) Q3 Q2 Q3 -------------- -- -- -- Credit Card: ------------ Earnings Net interest income $2,024,250 $1,797,303 $1,862,034 Non-interest income 966,862 897,440 1,181,015 ------- ------- --------- Total revenue $2,991,112 $2,694,743 $3,043,049 Provision for loan and lease losses 1,643,721 1,520,292 1,434,435 Non-interest expenses 897,578 909,572 1,059,641 ------- ------- --------- Income (loss) before taxes 449,813 264,879 548,973 Income taxes (benefit) 158,074 92,251 192,461 ------- ------ ------- Net income (loss) $291,739 $172,628 $356,512 ======== ======== ======== Selected Metrics Period end loans held for investment $70,368,809 $73,398,569 $79,616,456 Average loans held for investment $71,907,760 $74,190,428 $79,285,212 Loans held for investment yield 13.75% 12.31% 13.20% Revenue margin 16.64% 14.53% 15.35% Net charge-off rate 9.59% 9.24% 6.10% 30+ day performing delinquency rate 5.53% 4.99% 4.34% Purchase Volume (3) $25,982,259 $25,746,799 $29,394,045 Domestic Card Sub-segment Earnings Net interest income $1,797,173 $1,586,686 $1,616,038 Non-interest income 855,571 794,440 1,027,918 ------- ------- --------- Total revenue $2,652,744 $2,381,126 $2,643,956 Provision for loan and lease losses 1,436,959 1,336,736 1,240,580 Non-interest expenses 769,995 787,624 873,866 ------- ------- ------- Income (loss) before taxes 445,790 256,766 529,510 Income taxes (benefit) 156,027 89,868 185,328 ------- ------ ------- Net income (loss) $289,763 $166,898 $344,182 ======== ======== ======== Selected Metrics Period end loans held for investment $61,891,573 $64,760,128 $69,361,743 Average loans held for investment $63,298,525 $65,862,569 $68,581,983 Loans held for investment yield 13.74% 12.17% 13.07% Revenue margin 16.76% 14.46% 15.42% Net charge-off rate 9.64% 9.23% 6.13% 30+ day performing delinquency rate 5.38% 4.77% 4.20% Purchase Volume (3) $23,760,963 $23,610,760 $26,536,070 International Card Sub-segment Earnings Net interest income $227,077 $210,617 $245,996 Non-interest income 111,291 103,000 153,097 ------- ------- ------- Total revenue $338,368 $313,617 $399,093 Provision for loan and lease losses 206,762 183,556 193,855 Non-interest expenses 127,583 121,948 185,775 ------- ------- ------- Income (loss) before taxes 4,023 8,113 19,463 Income taxes (benefit) 2,047 2,383 7,133 ----- ----- ----- Net income (loss) $1,976 $5,730 $12,330 ====== ====== ======= Selected Metrics Period end loans held for investment $8,477,236 $8,638,441 $10,254,713 Average loans held for investment $8,609,235 $8,327,859 $10,703,229 Loans held for investment yield 13.81% 13.42% 14.02% Revenue margin 15.72% 15.06% 14.91% Net charge-off rate 9.19% 9.32% 5.90% 30+ day performing delinquency rate 6.63% 6.69% 5.24% Purchase Volume (3) $2,221,296 $2,136,039 $2,857,975 CAPITAL ONE FINANCIAL CORPORATION (COF) COMMERCIAL BANKING SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS MANAGED BASIS (1) (8) 2009 2009 2008 (in thousands) Q3 Q2 Q3 -------------- -- -- -- Commercial Banking: ------------------- Earnings Net interest income $297,484 $274,927 $238,641 Non-interest income 43,299 49,043 35,608 ------ ------ ------ Total revenue $340,783 $323,970 $274,249 Provision for loan and lease losses 375,095 122,497 41,706 Non-interest expenses 166,043 155,591 121,558 ------- ------- ------- Income (loss) before taxes (200,355) 45,882 110,985 Income taxes (benefit) (70,125) 16,059 38,845 ------- ------ ------ Net income (loss) $(130,230) $29,823 $72,140 ========= ======= ======= Selected Metrics Period end loans held for investment $29,862,418 $30,317,187 $29,095,313 Average loans held for investment $30,105,329 $30,496,917 $28,607,969 Loans held for investment yield 5.01% 4.97% 5.82% Period end deposits $18,617,112 $16,897,441 $16,764,330 Average deposits $17,760,860 $17,020,998 $17,152,610 Deposit interest expense rate 0.75% 0.77% 1.75% Core deposit intangible amortization $9,664 $9,975 $9,614 Net charge-off rate (4) 1.42% 0.89% 0.16% Non-performing loans as a percentage of loans held for investment (4) 2.64% 2.32% 1.00% Non-performing asset rate (4) 2.83% 2.46% 1.03% CAPITAL ONE FINANCIAL CORPORATION (COF) CONSUMER BANKING SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS MANAGED BASIS (1) (8) 2009 2009 2008 (in thousands) Q3 Q2 Q3 -------------- -- -- -- Consumer Banking: ----------------- Earnings Net interest income $908,744 $839,304 $754,439 Non-interest income 212,716 225,627 194,741 ------- ------- ------- Total revenue $1,121,460 $1,064,931 $949,180 Provision for loan and lease losses 156,052 202,055 283,424 Non-interest expenses 681,391 724,760 614,740 ------- ------- ------- Income (loss) before taxes 284,017 138,116 51,016 Income taxes (benefit) 99,406 48,340 17,856 ------ ------ ------ Net income (loss) $184,611 $89,776 $33,160 ======== ======= ======= Selected Metrics Period end loans held for investment $40,479,805 $42,183,575 $38,077,606 Average loans held for investment $41,307,635 $43,043,640 $38,824,045 Loans held for investment yield 9.50% 8.52% 9.19% Auto loan originations 1,512,707 1,341,583 1,444,291 Period end deposits $72,252,596 $73,882,639 $57,492,140 Average deposits $73,284,397 $74,320,889 $57,034,702 Deposit interest expense rate 1.58% 1.76% 2.39% Core deposit intangible amortization $45,856 $47,447 $37,637 Net charge-off rate (4) 2.67% 2.21% 3.35% Non-performing loans as a percentage of loans held for investment (4)(6) 1.25% 1.07% 0.81% Non-performing asset rate (4)(6) 1.38% 1.20% 1.03% 30+ day performing delinquency rate(4)(6) 5.15% 4.69% 5.81% Period end loans serviced for others $30,659,074 $31,491,554 $25,384,945 CAPITAL ONE FINANCIAL CORPORATION (COF) OTHER AND TOTAL SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS MANAGED BASIS (1) (8) 2009 2009 2008 (in thousands) Q3 Q2 Q3 -------------- -- -- -- Other: ------ Earnings Net interest income $27,070 $47,659 $34,216 Non-interest income 149,802 16,905 (85,805) ------- ------ ------- Total revenue $176,872 $64,564 $(51,589) Provision for loan and lease losses 25,464 59,129 45,705 Restructuring expenses 26,357 43,374 15,306 Non-interest expenses 31,109 88,459 (1,039) ------ ------ ------ Income (loss) before taxes 93,942 (126,398) (111,561) Income taxes (benefit) (29,164) (64,372) (35,538) ------- ------- ------- Net income (loss) $123,106 $(62,026) $(76,023) ======== ======== ======== Selected Metrics Period end loans held for investment (7) $347,483 $351,393 $556,371 Average loans held for investment (7) $349,996 $878,147 $530,172 Period end deposits $23,633,403 $25,944,110 $24,656,504 Average deposits $24,837,483 $28,268,755 $21,140,718 Total: ------ Earnings Interest income $4,212,260 $3,994,692 $4,346,261 Interest expense 954,712 1,035,499 1,456,931 ------- --------- --------- Net interest income $3,257,548 $2,959,193 $2,889,330 Non-interest income 1,372,679 1,189,015 1,325,559 --------- --------- --------- Total revenue $4,630,227 $4,148,208 $4,214,889 Provision for loan and lease losses 2,200,332 1,903,973 1,805,270 Restructuring expenses 26,357 43,374 15,306 Non-interest expenses 1,776,121 1,878,382 1,794,900 --------- --------- --------- Income (loss) before taxes 627,417 322,479 599,413 Income taxes (benefit) 158,191 92,278 213,624 ------- ------ ------- Net income (loss) $469,226 $230,201 $385,789 ======== ======== ======== Selected Metrics Period end loans held for investment $141,058,515 $146,250,724 $147,345,746 Average loans held for investment $143,670,720 $148,609,132 $147,247,398 Period end deposits $114,503,111 $116,724,190 $98,912,974 Average deposits $115,882,740 $119,610,642 $95,328,030 CAPITAL ONE FINANCIAL CORPORATION (COF) LOAN DISCLOSURES AND SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS NOTES (1) The information in this report reflects the adjustment to add back the effect of securitization transactions qualifying as sales under generally accepted accounting principles. See accompanying schedule - "Reconciliation to GAAP Financial Measures". (2) Non performing assets is comprised of non performing loans and other real estate owned (OREO). The non performing asset rate equals non performing assets divided by the sum of loans held for investment and OREO. (3) Includes all purchase transactions net of returns and excludes cash advance transactions. (4) Net charge-off rates and 30+ day performing delinquency rates include period end loans held for investment and average loans held for investment acquired as part of the Chevy Chase Bank, FSB (CCB) acquisition. The period end and average loans held for investment and metrics excluding such loans are as follows. Net charge-off dollars were unchanged. Q3 2009 Q2 2009 ------- ------- CCB period end acquired loan portfolio (in millions) $8,002.3 $8,552.9 CCB average acquired loan portfolio (in millions) $8,525.2 $8,931.9 Net charge-off rate Commercial and Multi-Family Real Estate 1.42% 0.95% Middle Market 0.59% 0.61% ---- ---- Total Commercial Lending 1.12% 0.83% ---- ---- Total Commercial Banking 1.46% 0.92% Mortgage 1.24% 0.77% Retail Banking 2.57% 2.56% ---- ---- Total Consumer Banking 3.28% 2.72% 3(TM)0+ day performing delinquency rate Mortgage 2.06% 1.74% Retail Banking 1.29% 0.92% ---- ---- Total Consumer Banking 6.27% 5.74% Non performing asset rate Commercial and Multi-Family Real Estate 2.76% 2.25% Middle Market 1.30% 1.20% ---- ---- Total Commercial Lending 2.16% 1.83% ---- ---- Total Commercial Banking 2.91% 2.53% Mortgage 3.23% 2.78% Retail Banking 2.03% 1.90% ---- ---- Total Consumer Banking 1.68% 1.47% Non performing loans as a percentage of loans held for investment Commercial Banking 2.71% 2.39% Consumer Banking 1.52% 1.31% (5) The Company's policy is not to reclassify credit card loans as nonperforming loans. Credit card loans continue to accrue finance charges and fees until charged off. The amount of finance charges and fees considered uncollectible are suppressed and are not recognized in income. (6) Includes non accrual consumer auto loans 90+ days past due. (7) Other loans held for investment includes unamortized premiums and discounts and certain other purchase accounting adjustments on loans acquired in the Chevy Chase Bank, North Fork and Hibernia acquisitions. (8) During the third quarter of 2009, the Company realigned its business segment reporting structure to better reflect the manner in which the performance of the Company's operations are evaluated. The Company now reports the results of its business through three operating segments: Credit Card, Commercial Banking, and Consumer Banking. Segment and certain sub-segment results have been recasted for all periods presented. The three segments consist of the following: -- Credit Card includes the Company's domestic consumer and small business card lending, domestic national small business lending, national closed end installment lending and the international card lending businesses in Canada and the United Kingdom. -- Commercial Banking includes the Company's lending, deposit gathering and treasury management services to commercial real estate and middle market customers. The Commercial segment also includes the financial results of a national portfolio of small ticket commercial real estate loans that are in run-off mode. -- Consumer Banking includes the Company's branch based lending and deposit gathering activities for small business customers as well as its branch-based consumer deposit gathering and lending activities, national deposit gathering, consumer mortgage lending and servicing activities and national automobile lending. The segment reorganization includes the allocation of Chevy Chase Bank to the appropriate segments. Chevy Chase Bank's operations are included in the Commercial Banking and Consumer Banking segments beginning in the second quarter 2009. Chevy Chase Bank's operations for the first quarter of 2009 remain in the Other category. Chevy Chase Bank's operations are impacted by the Company's analysis of the fair values and purchase price allocation of Chevy Chase Bank's assets and liabilities. As of September 30, 2009, the Company has not finalized the analysis. Changes to the purchase price allocation could result in the Company recasting results of Chevy Chase Bank's operations.

    Capital One Financial Corporation

    CONTACT: Media: Julie Rakes, +1-804-284-5800 (office),
    julie.rakes@capitalone.com or Investors: Jeff Norris, 703-720-2455, both of
    Capital One

    Web Site: http://www.capitalone.com/




    Anadys Pharmaceuticals to Report Third Quarter 2009 Financial Results

    SAN DIEGO, Oct. 22 /PRNewswire-FirstCall/ -- Anadys Pharmaceuticals, Inc. announced today that it will report third quarter 2009 financial results on Thursday, October 29, 2009, after the U.S. financial markets close.

    Anadys will hold a conference call and webcast on Thursday, October 29, 2009 at 5:00 p.m. Eastern Daylight Time to discuss its third quarter 2009 financial results and highlights and to provide an update on the ANA598 program. A live webcast of the call will be available online at http://www.anadyspharma.com/. A telephone replay will also be available approximately one hour after completion of the call. To access the telephone replay, dial 888-286-8010 (domestic) or 617-801-6888 (international), passcode 81828355. The webcast and telephone replay will be available through November 12, 2009.

    About Anadys

    Anadys Pharmaceuticals, Inc. is a biopharmaceutical company dedicated to improving patient care by developing novel medicines for the treatment of hepatitis C. The Company believes hepatitis C represents a large unmet medical need in which meaningful improvements in treatment outcomes may be attainable with the introduction of new medicines. The Company is developing ANA598, a non-nucleoside polymerase inhibitor for the treatment of hepatitis C. The Company has also investigated the potential of ANA773, an oral, small-molecule inducer of endogenous interferons that acts via the Toll-like receptor 7, or TLR7, pathway in hepatitis C.

    Safe Harbor Statement

    Statements in this press release that are not strictly historical in nature constitute "forward-looking statements." Such statements include, but are not limited to, references to Anadys' strategy, development programs, and ability to develop novel medicines for the treatment of hepatitis C. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause Anadys' actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. For example, the results of preclinical and early clinical studies may not be predictive of future results, and Anadys cannot provide any assurances that ANA598 or ANA773 will not have unforeseen safety issues, will have favorable results in ongoing or future clinical trials or will receive regulatory approval. Risk factors that may cause actual results to differ are discussed in Anadys' SEC filings, including Anadys' Form 10-K for the year ended December 31, 2008 and Anadys' Form 10-Q for the quarter ended June 30, 2009. All forward-looking statements are qualified in their entirety by this cautionary statement. Anadys is providing this information as of this date and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

    Anadys Pharmaceuticals, Inc.

    CONTACT: Investor, Amy Conrad of Anadys Pharmaceuticals, Inc.,
    +1-858-530-3607, aconrad@anadyspharma.com; or Media, Ian Stone,
    ian.stone@russopartnersllc.com, or David Schull,
    david.schull@russopartnersllc.com, both of Russo Partners, LLC,
    +1-619-528-2220, for Anadys Pharmaceuticals, Inc.

    Web Site: http://www.anadyspharma.com/




    Broadcom Reports Third Quarter 2009 ResultsConference Call to be Webcast Today at 1:45 p.m. Pacific Time

    IRVINE, Calif., Oct. 22 /PRNewswire-FirstCall/ -- Broadcom Corporation today reported unaudited financial results for its third quarter ended September 30, 2009.

    Net revenue for the third quarter of 2009 was $1.254 billion. This represents an increase in net revenue of 20.6% compared with the $1.040 billion reported for the second quarter of 2009 and a decrease of 3.4% compared with the $1.298 billion reported for the third quarter of 2008. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the third quarter of 2009 was $84.6 million, or $.16 per share (diluted), compared with GAAP net income of $13.4 million, or $.03 per share (diluted), for the second quarter of 2009, and GAAP net income of $164.9 million, or $.31 per share (diluted), for the third quarter of 2008.

    Net revenue for the nine months ended September 30, 2009 was $3.148 billion. This represents a decrease in net revenue of 10.9% from the $3.532 billion reported for the nine months ended September 30, 2008. Net income computed in accordance with GAAP for the nine months ended September 30, 2009 was $6.1 million, or $.01 per share (diluted), compared with GAAP net income of $374.0 million, or $.70 per share (diluted), for the nine months ended September 30, 2008.

    For a discussion of non-recurring transactions and their related accounting impact for all periods presented, see the "Unaudited Supplementary Financial Data" schedule below.

    "Broadcom executed well in the third quarter, generating revenue growth of over 20% sequentially for the second quarter in row," said Scott A. McGregor, Broadcom's President and Chief Executive Officer. "This strong revenue growth is well above the semiconductor industry growth rate, and was driven by a combination of our target markets continuing to recover, new product ramps and the breadth of Broadcom's product line."

    "In addition, Broadcom was successful in generating strong sequential gross and operating margin leverage and cash flow from operations in the quarter. The third quarter spending included an unforecasted increase in performance-based compensation, which grew significantly due to Broadcom's strong operating performance, showing our continued focus on generating positive financial leverage."

    Conference Call Information

    As previously announced, Broadcom will conduct a conference call with analysts and investors to discuss its third quarter 2009 financial results and current financial prospects today at 1:45 p.m. Pacific Time (4:45 p.m. Eastern Time). The company will broadcast the conference call via webcast over the Internet. To listen to the webcast, or to view the financial or other statistical information required by Securities and Exchange Commission (SEC) Regulation G, please visit the Investors section of the Broadcom website at http://www.broadcom.com/investors. The webcast will be recorded and available for replay until 5:00 p.m. Pacific Time, December 2, 2009.

    About Broadcom

    Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications. Broadcom® products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment. We provide the industry's broadest portfolio of state-of-the-art system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices. These solutions support our core mission: Connecting everything®.

    Broadcom, one of the world's largest fabless semiconductor companies, with 2008 revenue of $4.66 billion, holds more than 3,650 U.S. and 1,450 foreign patents, and has more than 7,750 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video, data and multimedia.

    A FORTUNE 500® company, Broadcom is headquartered in Irvine, Calif., and has offices and research facilities in North America, Asia and Europe. Broadcom may be contacted at +1.949.926.5000 or at http://www.broadcom.com/.

    Cautions regarding Forward Looking Statements:

    All statements included or incorporated by reference in this release and the related conference call for analysts and investors, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our business and industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. Examples of such forward-looking statements include, but are not limited to, guidance provided on future revenue, gross product margin and operating expense targets for the fourth quarter of 2009. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

    These risks and uncertainties include, but are not limited to: -- general economic and political conditions and specific conditions in the markets we address, including the continuing volatility in the technology sector and semiconductor industry, the recent global economic recession, trends in the broadband communications markets in various geographic regions, including seasonality in sales of consumer electronic products into which our products are incorporated, and possible disruption in commercial activities related to terrorist activity or armed conflict; -- the timing, rescheduling or cancellation of significant customer orders and our ability, as well as the ability of our customers, to manage inventory; -- our ability to adjust our operations in response to changes in demand for our existing products and services or demand for new products requested by our customers; -- the effectiveness of our expense and product cost control and reduction efforts; -- our ability to specify, develop or acquire, complete, introduce, market and transition to volume production new products and technologies in a cost-effective and timely manner; -- risks and uncertainties resulting from Broadcom's equity award review, including pending and potential new claims and proceedings related to such matters, such as shareholder litigation and any action by the SEC, U.S. Attorney's Office or other governmental agency that has resulted in, and could result in further, civil or criminal sanctions against the company and/or certain of our current or former officers, directors or employees, or other actions taken or required as a result of the review, and the extent to which we are able to receive reimbursement of our expenses related to such litigation and actions through our directors' and officers' liability insurance carriers. In the event that the company's coverage under these policies is reduced or denied or if the proposed partial settlement of the federal derivative litigation does not receive final court approval, our financial exposure would be increased; -- the risks inherent in acquisitions of technologies and businesses, including the timing and successful completion of technology and product development through volume production, integration issues, potential contractual, intellectual property or employment issues, the risk that anticipated benefits of an acquisition may not be realized, and accounting treatment and charges; -- changes in current or future laws or the imposition of new laws or regulations, including new or changed tax regulations, or changes in the interpretation or enforcement of those laws or regulations; -- our dependence on a few significant customers for a substantial portion of our revenue; -- intellectual property disputes and customer indemnification claims and other types of litigation risk; -- the quality of our products and any potential remediation costs; -- our ability to retain, recruit and hire key executives, technical personnel and other employees in the positions and numbers, with the experience and capabilities, and at the compensation levels needed to implement our business and product plans; -- the availability and pricing of third party semiconductor foundry, assembly and test capacity and raw materials; -- fluctuations in the manufacturing yields of our third party semiconductor foundries and other problems or delays in the fabrication, assembly, testing or delivery of our products -- the rate at which our present and future customers and end-users adopt Broadcom's technologies and products in our target markets; -- competitive pressures and other factors such as the qualification, availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products; -- changes in our product or customer mix; -- the risks and uncertainties associated with our international operations; -- our ability to timely and accurately predict market requirements and evolving industry standards and to identify opportunities in new markets; -- the volume of our product sales and pricing concessions on volume sales; -- problems, costs or delays that we may face in shifting our products to smaller geometry process technologies and in achieving higher levels of design integration; -- the risks of producing products with new suppliers and at new fabrication and assembly and test facilities; -- delays in the adoption and acceptance of industry standards in our target markets; -- the timing of customer-industry qualification and certification of our products and the risks of non-qualification or non-certification; and -- the level of orders received that can be shipped in a fiscal quarter.

    Our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss the foregoing risks as well as other important risk factors that could contribute to such differences or otherwise affect our business, results of operations and financial condition. The forward-looking statements in this release and the related conference call for analysts and investors speak only as of the date they are made. We undertake no obligation to revise or update publicly any forward-looking statement, except as required by law.

    Broadcom, the pulse logo, Connecting everything, and the Connecting everything logo are among the trademarks of Broadcom Corporation and/or its affiliates in the United States, certain other countries and/or the EU. Any other trademarks or trade names mentioned are the property of their respective owners.

    Broadcom Trade Press Contact Broadcom Investor Relations Contact Bill Blanning T. Peter Andrew Vice President, Global Media Vice President, Corporate Relations Communications 949-926-5555 949-926-5663 blanning@broadcom.com andrewtp@broadcom.com BROADCOM CORPORATION Unaudited Condensed Consolidated Statements of Income (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2009 2008 2009 2008 ---- ---- ---- ---- Product revenue $1,194,745 $1,254,083 $2,989,292 $3,409,051 Licensing revenue 59,452 44,392 158,285 122,565 ------ ------ ------- ------- Total net revenue 1,254,197 1,298,475 3,147,577 3,531,616 Operating costs and expenses: Cost of product revenue 615,349 619,459 1,580,300 1,655,218 Research and development 391,170 379,279 1,138,664 1,115,002 Selling, general and administrative 142,480 141,941 394,938 395,904 Amortization of purchased intangible assets 4,159 183 12,457 550 In-process research and development - - - 10,900 Impairment of long-lived assets 7,634 250 18,895 2,150 Restructuring costs (reversals) 4,772 - 12,330 (1,000) Settlement costs (gains) - - (57,256) 15,810 Charitable contribution - - 50,000 - --- --- ------ --- Total operating costs and expenses 1,165,564 1,141,112 3,150,328 3,194,534 --------- --------- --------- --------- Income (loss) from operations 88,633 157,363 (2,751) 337,082 Interest income, net 2,978 12,451 11,362 44,983 Other income (expense), net (178) (3,720) 2,487 (2,987) ----- ------- ----- ------- Income before income taxes 91,433 166,094 11,098 379,078 Provision for income taxes 6,837 1,188 5,041 5,069 ----- ----- ----- ----- Net income $84,596 $164,906 $6,057 $374,009 ======= ======== ====== ======== Net income per share (basic) $.17 $.32 $.01 $.72 ==== ==== ==== ==== Net income per share (diluted) $.16 $.31 $.01 $.70 ==== ==== ==== ==== Weighted average shares (basic) 495,491 509,041 493,599 517,418 ======= ======= ======= ======= Weighted average shares (diluted) 521,443 523,759 508,559 531,187 ======= ======= ======= ======= The following table presents details of total stock-based compensation expense included in each functional line item in the unaudited condensed consolidated statements of income above: Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2009 2008 2009 2008 ---- ---- ---- ---- Cost of product revenue $6,579 $6,652 $18,584 $18,354 Research and development 90,829 93,334 266,698 262,043 Selling, general and administrative 31,290 33,328 89,817 93,661 Certain prior period amounts in the unaudited condensed consolidated statements of income have been reclassified to conform with the current period presentation of product and licensing revenue. BROADCOM CORPORATION Unaudited Condensed Consolidated Statements of Cash Flows (In thousands) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2009 2008 2009 2008 ---- ---- ---- ---- Operating activities Net income $84,596 $164,906 $6,057 $374,009 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,273 19,351 47,314 55,770 Stock-based compensation expense: Stock options and other awards 40,904 53,684 126,461 168,891 Restricted stock units 87,794 79,630 248,638 205,167 Acquisition-related items: Amortization of purchased intangible assets 8,035 4,118 24,558 12,354 In-process research and development - - - 10,900 Impairment of long-lived assets 7,634 250 18,895 2,150 Loss on strategic investment, net - 2,506 - 4,266 Non-cash restructuring costs 808 - 3,471 - Loss (gain) on sale of marketable securities - 1,781 (1,046) 1,781 Changes in operating assets and liabilities: Accounts receivable (97,541) (21,183) (169,276) (131,998) Inventory (27,918) (66,259) 58,890 (91,292) Prepaid expenses and other assets 27,758 (20,387) 19,972 (1,629) Accounts payable 32,764 23,503 112,525 147,332 Deferred revenue (19,944) 1,618 80,822 (8,962) Other accrued and long-term liabilities 80,301 42,712 77,684 24,719 ------ ------ ------ ------ Net cash provided by operating activities 236,464 286,230 654,965 773,458 ------- ------- ------- ------- Investing activities Net purchases of property and equipment (22,480) (16,084) (48,774) (65,151) Net cash received from (paid for) acquired companies (1,297) (57) 842 (29,795) Purchases of strategic investments (2,000) - (2,000) (355) Purchases of marketable securities (546,922) (771,993) (1,057,972) (1,110,514) Proceeds from sales and maturities of marketable securities 315,532 291,424 737,377 512,022 ------- ------- ------- ------- Net cash used in Investing activities (257,167) (496,710) (370,527) (693,793) --------- --------- --------- --------- Financing activities Repurchases of Class A Common stock (168,083) (23,912) (206,517) (859,775) Proceeds from issuance of common stock 53,535 23,968 137,229 114,582 Minimum tax withholding paid on behalf of employees for restricted stock units (26,046) (19,433) (60,574) (45,186) -------- -------- -------- -------- Net cash used in financing activities (140,594) (19,377) (129,862) (790,379) --------- -------- --------- --------- Increase (decrease) in cash and cash equivalents (161,297) (229,857) 154,576 (710,714) Cash and cash equivalents at beginning of period 1,506,518 1,705,715 1,190,645 2,186,572 --------- --------- --------- --------- Cash and cash equivalents at end of period $1,345,221 $1,475,858 $1,345,221 $1,475,858 ========== ========== ========== ========== UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION September 30, June 30, December 31, 2009 2009 2008 ------------ ------- ----------- (In thousands) Cash and cash equivalents $1,345,221 $1,506,518 $1,190,645 Short-term marketable securities 561,287 700,585 707,477 Long-term marketable securities 470,643 92,699 - ------- ------ --- Total cash, cash equivalents and marketable securities $2,377,151 $2,299,802 $1,898,122 ========== ========== ========== Increase from prior period end $77,349 ======= Increase from prior year end $479,029 ======== BROADCOM CORPORATION Unaudited Condensed Consolidated Balance Sheets (In thousands) September 30, December 31, 2009 2008 ---- ---- ASSETS Current assets: Cash and cash equivalents $1,345,221 $1,190,645 Short-term marketable securities 561,287 707,477 Accounts receivable, net 541,587 372,311 Inventory 307,216 366,106 Prepaid expenses and other current assets 95,296 114,674 ------ ------- Total current assets 2,850,607 2,751,213 Property and equipment, net 228,621 234,691 Long-term marketable securities 470,643 - Goodwill 1,277,951 1,279,243 Purchased intangible assets, net 21,324 61,958 Other assets 67,019 66,160 ------ ------ Total assets $4,916,165 $4,393,265 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $423,199 $310,487 Wages and related benefits 182,394 157,758 Deferred revenue 96,421 12,338 Accrued liabilities 301,371 236,520 ------- ------- Total current liabilities 1,003,385 717,103 Long-term deferred revenue 637 3,898 Other long-term liabilities 62,688 65,197 Commitments and contingencies Shareholders' equity 3,849,455 3,607,067 --------- --------- Total liabilities and shareholders' equity $4,916,165 $4,393,265 ========== ========== BROADCOM CORPORATION Unaudited Supplementary Financial Data (In thousands) The following table presents details of supplementary financial data included in each functional line item in the unaudited condensed consolidated statements of income: Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2009 2008 2009 2008 ---- ---- ---- ---- Cost of product revenue: Stock-based compensation $6,579 $6,652 $18,584 $18,354 Amortization of purchased intangible assets 3,876 3,935 12,101 11,804 Research and development: Stock-based compensation 90,829 93,334 266,698 262,043 Selling, general and administrative: Stock-based compensation 31,290 33,328 89,817 93,661 Other operating expense: Amortization of purchased intangible assets 4,159 183 12,457 550 In-process research and development(1) - - - 10,900 Impairment of long-lived assets(2) 7,634 250 18,895 2,150 Restructuring costs (reversals)(3) 4,772 - 12,330 (1,000) Settlement costs (gains)(4) - - (57,256) 15,810 Charitable contribution(5) - - 50,000 - Other: Employer payroll tax expense on certain stock option exercises 1,625 1,532 3,566 3,631 Loss on strategic investments, net - 2,506 - 4,266 Non-operating gains 27 (193) 13 (193) (1) Recorded in connection with the company's acquisition of Sunext Design, Inc. in the nine months ended September 30, 2008. (2) Long-lived asset impairment charges of $11.3 million and $7.6 million related to the company's acquisition of the digital television business of AMD, Inc. were recorded in the three months ended June 30, 2009 and September 30, 2009, respectively. (3) Recorded in connection with the company's restructuring plans announced or implemented in the nine months ended September 30, 2009, as well as a restructuring cost reversal of a prior restructuring plan in the nine months ended September 30, 2008. (4) Recorded a $65.3 million gain on settlement in connection with the QUALCOMM litigation, offset in part by estimated additional settlement costs of $6.9 million related to certain employment tax items and an additional $1.2 million related to patent infringement claims in the nine months ended September 30, 2009. Recorded settlement costs of $15.8 million, of which $12.0 million related to Broadcom's settlement with the Securities and Exchange Commission and $3.8 million related to a patent infringement claims settled in the nine months ended September 30, 2008. (5) Recorded in connection with an accrued $50.0 million charitable contribution to the recently established Broadcom Foundation in the nine months ended September 30, 2009. BROADCOM CORPORATION Unaudited Supplementary Financial Data (In thousands) Three Months Ended ------------------ September 30, September 30, June 30, 2009 2008 2009 ------------- ------------- -------- Product revenue $1,194,745 $1,254,083 $966,317 Licensing revenue 59,452 44,392 73,627 ------ ------ ------ Total net revenue $1,254,197 $1,298,475 $1,039,944 ========== ========== ========== Cost of product revenue $615,349 $619,459 $518,674 ======== ======== ======== Product gross margin(1) 48.5% 50.6% 46.3% ===== ===== ===== Total gross margin 50.9% 52.3% 50.1% ===== ===== ===== (1) Product gross margin in the three months ended September 30, 2008 has been adjusted from 50.9% to 50.6% to conform with the current period presentation of product and licensing revenue. BROADCOM CORPORATION Guidance for the Three Months Ending December 31, 2009 Three Months Ending December 31, 2009 ------------------------ Total net revenue Flat from Q3 Product gross margin Increase by around 20 - 50 basis points from Q3 Research and development and selling, general and administrative expenses (including stock-based compensation) Up ~$20 million from Q3

    Broadcom has based the preceding guidance for the three months ending December 31, 2009 on expectations, assumptions and estimates that we believe are reasonable given our assessment of historical trends and other information reasonably available as of October 22, 2009. Our guidance consists of predictions only, however, and is subject to a wide range of known and unknown business risks and uncertainties, many of which are beyond our control. The forecasts and projections contained in the table above should not be regarded as representations by Broadcom that the estimated results will be achieved. Projections and estimates are necessarily speculative in nature and actual results may vary materially from the guidance we provide today.

    The guidance set forth in the table above should be read together with the information under the caption, "Cautions regarding Forward Looking Statements" above, our Annual Report on Form 10-K for the year ended December 31, 2008, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and our other Securities and Exchange Commission filings. We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein.

    Photo: http://www.newscom.com/cgi-bin/prnh/20060609/BROADCOMLOGO
    http://photoarchive.ap.org/
    PRN Photo Desk, photodesk@prnewswire.com Broadcom Corporation; BRCM Corporate

    CONTACT: Trade Press, Bill Blanning, Vice President, Global Media
    Relations, +1-949-926-5555, blanning@broadcom.com, or Investor Relations, T.
    Peter Andrew, Vice President, Corporate Communications, +1-949-926-5663,
    andrewtp@broadcom.com, both of Broadcom Corporation

    Web Site: http://www.broadcom.com/




    Lender Processing Services, Inc. Reports Record Third Quarter EarningsYear-over-year revenues increase 32.7% Adjusted EPS of 83 cents per diluted share

    JACKSONVILLE, Fla., Oct. 22 /PRNewswire-FirstCall/ -- Lender Processing Services, Inc. , a leading provider of integrated technology and services to the mortgage and real estate industries, today reported consolidated revenues of $619.4 million for the third quarter of 2009, an increase of 32.7% compared to the third quarter of 2008, and net earnings of $75.5 million or 78 cents per diluted share.

    Adjusted net earnings for the third quarter of 2009 were $80.2 million, or 83 cents per diluted share, compared to $57.8 million, or 61 cents per diluted share, in the third quarter of 2008. Adjusted net earnings in the current quarter include an adjustment for purchase amortization of 5 cents per diluted share while the prior year quarter included a similar adjustment of 7 cents per diluted share.

    "LPS delivered strong results in the third quarter despite an ongoing difficult business environment. LPS with its broad-based, technology-driven end-to-end solutions for the mortgage and real estate industries, remains well positioned for the fourth quarter and to continue to grow profitably in the years ahead," said Lee A. Kennedy, Executive Chairman of LPS. "All our business segments continued to gain market share in the third quarter. Our Mortgage Processing and other technology businesses posted solid earnings while our Default Services business continued to deliver very strong results. Also, our Loan Facilitation business benefited from a stronger year-over-year origination market," added Jeff Carbiener, President and CEO of LPS.

    Operating income of $143.6 million in the quarter improved 32.6% compared to the third quarter of 2008.

    Year-to-date pro forma adjusted free cash flow (net cash provided by operating activities including pro forma interest expense for the first six months of 2008, minus additions to property and equipment and capitalized software) for 2009 of $231.6 million compared to $184.1 million for the first nine months of 2008.

    Technology, Data and Analytics (TD&A)

    Revenues for the segment were $186.3 million compared to $139.0 million in the third quarter of 2008 while operating income of $62.4 million compared to $49.2 million in the prior year quarter. Mortgage Processing revenues of $103.0 million were 23.2% above the third quarter of 2008, primarily due to the conversion of the JPMorgan Chase portfolio on to our mortgage servicing platform. Other TD&A revenues increased by 50.5% to $83.3 million compared to the prior year quarter, mainly due to strong growth in Data and Analytics services, our Desktop application, and the impact of the FNRES acquisition completed in the first quarter of 2009. Excluding the impact of FNRES, Other TD&A revenues were up a strong 32.4%. Overall operating income for TD&A was higher primarily due to higher contributions from Mortgage Processing and Data & Analytics.

    Loan Transaction Services (LTS)

    Revenues for the segment increased by 33.7% to $440.5 million compared to the third quarter of 2008 while operating income of $101.6 million compared to $74.7 million in the prior year period. Loan Facilitation Services revenues of $136.7 million were up 55.9% compared to the same period last year, mainly due to higher settlement services and increased appraisal volumes. Default Services revenues of $303.8 million increased 25.6% over the third quarter of 2008, primarily due to ongoing strength in the default market and our ability to continue to gain market share. Overall operating income for LTS grew due to higher income in loan origination related offerings, such as settlement services and appraisal, as well as in Default Services.

    Corporate and Other

    Net corporate expenses were $20.3 million compared to $15.6 million in the third quarter of 2008 and were higher primarily due to higher incentive compensation expenses in the current quarter driven by the strong operating results.

    Outlook

    "Third quarter and year-to-date 2009 results were very strong and while the broader macro-economic environment and some of our markets continue to present challenges, LPS with its solid market presence remains well positioned for a strong finish in 2009 and to continue to grow revenue and earnings in 2010," said Jeff Carbiener. "Building on the robust year-to-date results, we expect fourth quarter adjusted earnings to be in the range of 77-79 cents per diluted share. For full year 2009, we now expect revenues to grow 26%-28% compared to 2008 and adjusted earnings to be in the $3.07-$3.09 per diluted share range."

    Use of Non-GAAP Financial Information

    Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, LPS reports several non-GAAP measures, including pro forma adjusted net earnings, pro forma adjusted net earnings per share and pro forma adjusted free cash flow. LPS provides these measures because it believes that they are helpful to investors in comparing year-over-year performance in light of our 2008 spin-off from Fidelity National Information Services, Inc., and to better understand our financial performance, competitive position and future prospects. The adjusted results exclude acquisition related amortization costs and include pro forma debt related interest expenses. Non-GAAP measures should be considered in conjunction with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings. A reconciliation of these non-GAAP measures to related GAAP measures is included in the attachments to this release.

    Conference Call and Webcast

    LPS will host a conference call to discuss these results on Friday, October 23, 2009, at 8:00 a.m. Eastern time. Interested parties are invited to listen to the live webcast by logging on to the Investor Relations section at http://www.lpsvcs.com/. Supplemental materials will be available on the website. Those wishing to participate via the conference call may do so by calling 866-823-5035. A replay of the webcast will be available on the website shortly after the call where it will be archived for one month. A replay of the conference call will be available through October 30, 2009 by dialing 888-203-1112 (access code: 6402161).

    To access a printer friendly version of this release and accompanying exhibits, go to http://www.lpsvcs.com/investor.

    About Lender Processing Services

    Lender Processing Services, Inc. (LPS) is a leading provider of integrated technology and services to the mortgage and real estate industries. LPS offers solutions that span the mortgage continuum, including lead generation, origination, workflow automation (Desktop), servicing, portfolio retention and default, augmented by the company's award-winning customer support and professional services. Approximately 50 percent of all U.S. mortgages by dollar volume are serviced using LPS' Mortgage Servicing Package (MSP). In fact, many of the nation's top servicers rely on MSP, including eight of the top 10 and 14 of the top 20. LPS also offers proprietary mortgage and real estate data and analytics for the mortgage and capital markets industries. For more information about LPS, visit http://www.lpsvcs.com/.

    Forward-Looking Statements

    This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical facts, including statements about our beliefs and expectations. Forward-looking statements are based on management's beliefs, as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to: our ability to adapt our services to changes in technology or the marketplace; the elimination of existing and potential customers as a result of failures and consolidations in the banking and financial services industries; the impact of adverse changes in the level of real estate activity on demand for certain of our services; the effects of our substantial leverage on our ability to make acquisitions and invest in our business; changes to the laws, rules and regulations that regulate our businesses as a result of the current economic and financial environment; changes in general economic, business and political conditions, including changes in the financial markets; the impact of any potential defects, development delays, installation difficulties or system failures on our business and reputation; risks associated with protecting information security and privacy; risks associated with our spin-off from Fidelity National Information Services, Inc., including those relating to our new stand-alone public company status and limitations on our strategic and operating flexibility as a result of the tax-free nature of the spin-off; and other risks and uncertainties detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of the Company's Form 10-K, the Company's subsequent reports on Form 10-Q and other filings with the Securities and Exchange Commission.

    Exhibit A LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES Consolidated Statements of Earnings (Unaudited) Three Months Nine Months Ended Ended September 30, September 30, ---------------- ----------------- 2009 2008 2009 2008 ---- ---- ---- ---- (In thousands, except per share data) Processing and services revenues $619,427 $466,762 $1,762,415 $1,363,669 Cost of revenues 409,113 300,560 1,167,829 882,410 ------- ------- --------- ------- Gross profit 210,314 166,202 594,586 481,259 Selling, general and administrative expenses 66,671 57,909 203,280 171,577 ------ ------ ------- ------- Operating income 143,643 108,293 391,306 309,682 Other income (expense): Interest income 283 476 1,249 1,039 Interest expense (21,195) (24,565) (64,734) (24,621) Other expense, net (203) (5) (217) 277 ---- -- ---- --- Total other income (expense) (21,115) (24,094) (63,702) (23,305) ------- ------- ------- ------- Earnings from continuing operations before income taxes and equity in losses of unconsolidated entity 122,528 84,199 327,604 286,377 Provision for income taxes 46,867 32,669 125,308 111,114 ------ ------ ------- ------- Earnings from continuing operations before equity in losses of unconsolidated entity 75,661 51,530 202,296 175,263 Equity in losses of unconsolidated entity -- (1,484) (37) (3,854) ----- ------ --- ------ Earnings from continuing operations 75,661 50,046 202,259 171,409 Discontinued operation, net of tax -- 1,565 (504) 6,203 ----- ----- ---- ----- Net earnings 75,661 51,611 201,755 177,612 Noncontrolling minority interest (119) (330) (927) (1,053) ---- ---- ---- ------ Net earnings attributable to Lender Processing Services, Inc. $75,542 $51,281 $200,828 $176,559 ======= ======= ======== ======== Exhibit B LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) September 30, December 31, 2009 2008 ------------- ------------ (In thousands) Assets Current assets: Cash and cash equivalents $64,847 $125,966 Trade receivables, net of allowance for doubtful accounts 428,373 344,848 Other receivables 4,086 17,393 Due from affiliates -- 2,713 Prepaid expenses and other current assets 24,939 22,030 Deferred income taxes 40,757 40,757 ------- ------- Total current assets 563,002 553,707 ------- ------- Property and equipment, net of accumulated depreciation 103,711 95,542 Computer software, net of accumulated amortization 180,064 157,539 Other intangible assets, net of accumulated amortization 78,656 83,489 Goodwill 1,135,153 1,091,056 Other non-current assets 109,105 122,300 ------- ------- Total assets $2,169,691 $2,103,633 ========== ========== Liabilities and Equity Current liabilities: Current portion of long- term debt $77,362 $145,101 Trade accounts payable 40,857 31,720 Accrued salaries and benefits 51,593 36,492 Recording and transfer tax liabilities 17,446 14,639 Due to affiliates 1,492 1,573 Other accrued liabilities 154,878 101,612 Deferred revenues 49,572 51,628 ------ ------ Total current liabilities 393,200 382,765 ------- ------- Deferred revenues 40,474 40,343 Deferred income taxes, net 30,504 36,557 Long-term debt, net of current portion 1,286,030 1,402,350 Other non-current liabilities 27,926 39,217 --------- --------- Total liabilities 1,778,134 1,901,232 --------- --------- Equity: Lender Processing Services, Inc. stockholders' equity: Preferred stock $0.0001 par value; 50 million shares authorized, none -- -- issued at September 30, 2009 or December 31, 2008 Common stock $0.0001 par value; 500 million shares authorized, 96.8 million 10 9 and 95.3 million shares issued at September 30, 2009 and December 31, 2008 Additional paid-in capital 157,103 111,849 Retained earnings 265,645 93,540 Accumulated other comprehensive loss (9,617) (13,667) Treasury stock $0.0001 par value; 884,734 and 19,870 shares at September 30, 2009 and December 31, 2008 (27,712) (582) ------- ---- Total Lender Processing Services, Inc. stockholders' equity 385,429 191,149 Noncontrolling minority interest 6,128 11,252 ----- ------ Total equity 391,557 202,401 ------- ------- Total liabilities and equity $2,169,691 $2,103,633 ========== ========== Exhibit C LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, ----------------- 2009 2008 ---- ---- (In thousands) Cash flows from operating activities: Net earnings attributable to Lender Processing Services, Inc. $200,828 $176,559 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 72,623 68,395 Amortization of debt issuance costs 3,968 1,509 Gain on sale of discontinued operation (2,574) -- Deferred income taxes, net (651) 3,968 Stock-based compensation cost 20,364 14,910 Tax benefit associated with equity compensation (2,625) (512) Equity in losses of unconsolidated entity 37 3,854 Noncontrolling minority interest 927 1,053 Changes in assets and liabilities, net of effects of acquisitions: Trade receivables (76,642) (84,167) Other receivables 13,321 (7,612) Prepaid expenses and other assets (7,798) 4,676 Deferred revenues (2,922) 5,342 Accounts payable and other liabilities 76,281 59,317 ------ ------ Net cash provided by operating activities 295,137 247,292 ------- ------- Cash flows from investing activities: Additions to property and equipment (24,896) (14,657) Additions to capitalized software (42,966) (23,685) Acquisition of title plants (14,319) -- Acquisitions, net of cash acquired (16,403) (15,488) Proceeds from sale of discontinued operation, net of cash distributed (32,638) -- ------- ------ Net cash used in investing activities (131,222) (53,830) -------- ------- Cash flows from financing activities: Borrowings -- 25,700 Debt service payments (180,455) (61,993) Stock options exercised 2,002 1,433 Tax benefit associated with equity compensation 2,625 512 Cash dividends paid (28,723) (9,526) Capitalized debt issuance costs -- (24,882) Acquisition of noncontrolling minority interest (2,600) -- Net distributions to FIS -- (114,855) Treasury stock purchases (9,883) -- Bond repurchases (8,000) -- ------ ------ Net cash used in financing activities (225,034) (183,611) Net (decrease) increase in cash and cash equivalents (61,119) 9,851 Cash and cash equivalents, beginning of period 125,966 39,566 ------- ------ Cash and cash equivalents, end of period $64,847 $49,417 ======= ======= Supplemental disclosures of cash flow information: Cash paid for interest $69,882 $15,543 ======= ======= Cash paid for taxes $107,709 $720 ======== ==== Non-cash contribution of stock compensation by FIS $-- $9,120 == ====== Non-cash redistribution of assets to FIS $434 $(4,537) ==== ======= Non-cash consideration received from sale of discontinued operation $40,310 $-- ======= == Non-cash consideration issued in acquisition of business $(5,162) $-- ======= == Non-cash exchange of FIS note $-- $(1,585,000) == =========== LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES Exhibit D SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED (In thousands) Nine Months Ended September 30, ----------------- 2009 2008 ---- ---- 1. Revenues - Continuing Operations Technology, Data and Analytics (TD&A): Mortgage Processing $283,690 $245,820 Other TD&A 234,364 170,712 ------- ------- Total 518,054 416,532 ------- ------- Loan Transaction Services: Loan Facilitation Services 404,381 347,759 Default Services 858,666 608,092 ------- ------- Total 1,263,047 955,851 --------- ------- Corporate and Other (18,686) (8,714) ------- ------ Total Revenue $1,762,415 $1,363,669 ========== ========== Revenue Growth from Prior Year Period Technology, Data and Analytics: Mortgage Processing 15.4% -0.4% Other TD&A 37.3% -3.8% ---- ---- Total 24.4% -1.8% ---- ---- Loan Transaction Services: Loan Facilitation Services 16.3% -24.7% Default Services 41.2% 85.3% ---- ---- Total 32.1% 21.0% ---- ---- Corporate and Other n/m n/m --- --- Total Revenue 29.2% 12.5% ==== ==== 2. Depreciation and Amortization - Continuing Operations Depreciation and Amortization $45,399 $37,378 Purchase Price Amortization 23,095 29,307 Other Amortization 4,124 1,648 ----- ----- Total Depreciation and Amortization $72,618 $68,333 ======= ======= 3. Stock Compensation Expense (1) Stock Compensation Expense, Excluding Acceleration Charges $19,565 $14,772 Stock Acceleration Expense 799 138 --- --- Total Stock Compensation Expense $20,364 $14,910 ======= ======= 4. EBIT - Discontinued Operations (2) Revenue $296 $22,115 Cost of Sales 503 $4,808 Selling, General and Administrative Expenses 499 7,168 --- ----- Operating Income (706) 10,139 Less Non-recurring Charges: Restructuring Costs -- -- LPS Spin Related Costs -- -- Acceleration of Performance-Based Shares -- -- ----- ------- EBIT, as adjusted $(706) $10,139 ----- ------- Depreciation and Amortization $5 $62 == === Quarter Ended ------------- 9/30/2009 6/30/2009 3/31/2009 12/31/2008 --------- --------- --------- ---------- 1. Revenues - Continuing Operations Technology, Data and Analytics (TD&A): Mortgage Processing $102,973 $89,567 $91,150 $88,364 Other TD&A 83,313 82,322 68,729 60,754 ------ ------ ------ ------ Total 186,286 171,889 159,879 149,118 ------- ------- ------- ------- Loan Transaction Services: Loan Facilitation Services 136,657 148,510 119,214 83,914 Default Services 303,823 299,534 255,309 243,736 ------- ------- ------- ------- Total 440,480 448,044 374,523 327,650 ------- ------- ------- ------- Corporate and Other (7,339) (6,762) (4,585) (2,847) ------ ------ ------ ------ Total Revenue $619,427 $613,171 $529,817 $473,921 ======== ======== ======== ======== Revenue Growth from Prior Year Period Technology, Data and Analytics: Mortgage Processing 23.2% 9.1% 13.7% -4.9% Other TD&A 50.5% 37.9% 23.5% 14.6% ---- ---- ---- ---- Total 34.1% 21.3% 17.7% 2.2% ---- ---- ---- --- Loan Transaction Services: Loan Facilitation Services 55.9% 25.8% -16.1% -39.6% Default Services 25.6% 51.9% 51.0% 68.3% ---- ---- ---- ---- Total 33.7% 42.1% 20.4% 15.4% ---- ---- ---- ---- Corporate and Other 338.1% n/m n/m n/m ----- --- --- --- Total Revenue 32.7% 35.3% 19.4% 11.0% ==== ==== ==== ==== 2. Depreciation and Amortization - Continuing Operations Depreciation and Amortization $15,894 $15,431 $14,074 $13,697 Purchase Price Amortization 7,608 7,404 8,083 10,711 Other Amortization 1,542 753 1,829 596 ----- --- ----- --- Total Depreciation and Amortization $25,044 $23,588 $23,986 $25,004 ======= ======= ======= ======= 3. Stock Compensation Expense (1) Stock Compensation Expense, Excluding Acceleration Charges $7,062 $6,459 $6,044 $6,603 Stock Acceleration Expense -- -- 799 -- -- -- --- --- Total Stock Compensation Expense $7,062 $6,459 $6,843 $6,603 ====== ====== ====== ====== 4. EBIT - Discontinued Operations (2) Revenue $-- $-- $296 $2,204 Cost of Sales -- -- 503 1,571 Selling, General and Administrative Expenses -- -- 499 1,814 ---- ---- --- ----- Operating Income -- -- (706) (1,181) Less Non-recurring Charges: Restructuring Costs -- -- -- -- LPS Spin Related Costs -- -- -- -- Acceleration of Performance-Based Shares -- -- -- -- ---- ---- ---- ---- EBIT, as adjusted $-- $-- $(706) $(1,181) --- --- --- --- Depreciation and Amortization $-- $-- $5 $17 == == == === Quarter Ended ------------- 9/30/2008 6/30/2008 3/31/2008 --------- --------- --------- 1. Revenues - Continuing Operations Technology, Data and Analytics (TD&A): Mortgage Processing $83,592 $82,062 $80,166 Other TD&A 55,372 59,682 55,658 ------ ------ ------ Total 138,964 141,744 135,824 ------- ------- ------- Loan Transaction Services: Loan Facilitation Services 87,629 118,091 142,039 Default Services 241,844 197,223 169,025 ------- ------- ------- Total 329,473 315,314 311,064 ------- ------- ------- Corporate and Other (1,675) (3,711) (3,328) ------ ------ ------ Total Revenue $466,762 $453,347 $443,560 ======== ======== ======== Revenue Growth from Prior Year Period Technology, Data and Analytics: Mortgage Processing 2.9% -1.4% -2.6% Other TD&A -5.5% 1.5% -7.4% ---- --- ---- Total -0.6% -0.2% -4.6% ---- ---- ---- Loan Transaction Services: Loan Facilitation Services -42.8% -28.3% -1.3% Default Services 97.1% 89.7% 66.5% ---- ---- ---- Total 19.4% 17.3% 26.7% ---- ---- ---- Corporate and Other n/m n/m n/m --- --- --- Total Revenue 13.3% 10.0% 14.4% ==== ==== ==== 2. Depreciation and Amortization - Continuing Operations Depreciation and Amortization $12,594 $11,286 $13,498 Purchase Price Amortization 10,627 8,980 9,700 Other Amortization 579 594 475 --- --- --- Total Depreciation and Amortization $23,800 $20,860 $23,673 ======= ======= ======= 3. Stock Compensation Expense (1) Stock Compensation Expense, Excluding Acceleration Charges $5,790 $4,295 $4,687 Stock Acceleration Expense -- 138 -- ---- --- ---- Total Stock Compensation Expense $5,790 $4,433 $4,687 ====== ====== ====== 4. EBIT - Discontinued Operations (2) Revenue $5,916 $7,033 $9,166 Cost of Sales 1,521 1,499 1,788 Selling, General and Administrative Expenses 1,837 2,212 3,119 ----- ----- ----- Operating Income 2,558 3,322 4,259 Less Non-recurring Charges: Restructuring Costs -- -- -- LPS Spin Related Costs -- -- -- Acceleration of Performance-Based Shares -- -- -- ------ ------ ------ EBIT, as adjusted $2,558 $3,322 $4,259 ------ ------ ------ Depreciation and Amortization $19 $20 $23 === === === (1) As the Company does not allocate stock compensation expense to the individual business units, there is no related expense associated with the discontinued operation. (2) The business unit included in discontinued operations has historically been reported as a component of Loan Facilitation Services in the Loan Transaction Services reporting segment. LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES Exhibit E NON-GAAP FINANCIAL INFORMATION - UNAUDITED (In thousands, except per share data) Nine Months Ended September 30, ------------------------------ 2009 2008 ---- ---- 1. EBIT - Continuing Operations Consolidated Revenue $1,762,415 $1,363,669 Cost of Sales 1,167,829 882,410 Selling, General and Administrative Expenses 203,280 171,577 ------- ------- Operating Income 391,306 309,682 Less Non-recurring Charges (1): Restructuring Costs 8,186 2,353 LPS Spin Related Costs -- 2,963 Acceleration of Performance-Based Shares 799 138 ------- ------- EBIT, as adjusted $400,291 $315,136 EBIT Margin, as adjusted 22.7% 23.1% ======= ======= Depreciation and Amortization $72,618 $68,333 ======= ======= Technology, Data and Analytics Revenue $518,054 $416,532 Cost of Sales 295,043 229,487 Selling, General and Administrative Expenses 52,146 49,519 ------- ------- Operating Income 170,865 137,526 Less Non-recurring Charges: Restructuring Costs -- 2,178 LPS Spin Related Costs -- -- Acceleration of Performance-Based Shares -- -- EBIT, as adjusted $170,865 $139,704 ------- ------- EBIT Margin, as adjusted 33.0% 33.5% ======= ======= Depreciation and Amortization $51,411 $45,215 ======= ======= Loan Transaction Services Revenue $1,263,047 $955,851 Cost of Sales 891,515 661,789 Selling, General and Administrative Expenses 82,088 78,985 ------- ------- Operating Income 289,444 215,077 Less Non-recurring Charges: Restructuring Costs -- 163 LPS Spin Related Costs -- -- Acceleration of Performance-Based Shares -- -- ------- ------- EBIT, as adjusted $289,444 $215,240 ------- ------- EBIT Margin, as adjusted 22.9% 22.5% ======= ======= Depreciation and Amortization $15,029 $18,104 ======= ======= Corporate and Other Revenue $(18,686) $(8,714) Cost of Sales (18,729) (8,866) Selling, General and Administrative Expenses 69,046 43,073 ------- ------- Operating Income (69,003) (42,921) Less Non-recurring Charges: Restructuring Costs 8,186 12 LPS Spin Related Costs -- 2,963 Acceleration of Performance-Based Shares 799 138 ------- ------- EBIT, as adjusted $(60,018) $(39,808) ------- ------- Depreciation and Amortization $6,178 $5,014 ======= ======= Quarter Ended ------------- 9/30/2009 6/30/2009 3/31/2009 12/31/2008 --------- --------- --------- ---------- 1. EBIT - Continuing Operations Consolidated Revenue $619,427 $613,171 $529,817 $473,921 Cost of Sales 409,113 404,014 354,702 294,069 Selling, General and Administrative Expenses 66,671 65,431 71,178 58,298 ------- ------ ------ ------ Operating Income 143,643 143,726 103,937 121,554 -- -- -- -- Less Non-recurring Charges (1): Restructuring Costs -- -- 8,186 -- LPS Spin Related Costs -- -- -- -- Acceleration of Performance-Based Shares -- -- 799 -- EBIT, as adjusted $143,643 $143,726 $112,922 $121,554 ------- ------ ------ ------ EBIT Margin, as adjusted 23.2% 23.4% 21.3% 25.6% ====== ====== ====== ====== Depreciation and Amortization $25,044 $23,588 $23,986 $25,004 ====== ====== ====== ====== Technology, Data and Analytics Revenue $186,286 $171,889 $159,879 $149,118 Cost of Sales 105,651 98,929 90,463 80,482 Selling, General and Administrative Expenses 18,256 17,824 16,066 15,121 ------- ------ ------ ------ Operating Income 62,379 55,136 53,350 53,515 ------- ------ ------ ------ Less Non-recurring Charges: Restructuring Costs -- -- -- -- LPS Spin Related Costs -- -- -- -- Acceleration of Performance-Based Shares -- -- -- -- ------- ------ ------ ------ EBIT, as adjusted $62,379 $55,136 $53,350 $53,515 ------- ------ ------ ------ EBIT Margin, as adjusted 33.5% 32.1% 33.4% 35.9% Depreciation and Amortization $17,595 $16,441 $17,375 $15,990 ====== ====== ====== ====== Loan Transaction Services Revenue $440,480 $448,044 $374,523 $327,650 Cost of Sales 311,230 311,349 268,936 217,242 Selling, General and Administrative Expenses 27,665 27,064 27,359 26,314 ------- ------ ------ ------ Operating Income 101,585 109,631 78,228 84,094 Less Non-recurring Charges: Restructuring Costs -- -- -- -- LPS Spin Related Costs -- -- -- -- Acceleration of Performance-Based Shares -- -- -- -- ------- ------ ------ ------ EBIT, as adjusted $101,585 $109,631 $78,228 $84,094 ------- ------ ------ ------ EBIT Margin, as adjusted 23.1% 24.5% 20.9% 25.7% ====== ====== ====== ====== Depreciation and Amortization $5,295 $5,126 $4,608 $7,028 ====== ====== ====== ====== Corporate and Other Revenue $(7,339) $(6,762) $(4,585) $(2,847) Cost of Sales (7,768) (6,264) (4,697) (3,655) Selling, General and Administrative Expenses 20,750 20,543 27,753 16,863 ------- ------ ------ ------ Operating Income (20,321) (21,041) (27,641) (16,055) Less Non-recurring Charges: Restructuring Costs -- -- 8,186 -- LPS Spin Related Costs -- -- -- -- Acceleration of Performance-Based Shares -- -- 799 -- ------- ------ ------ ------ EBIT, as adjusted $(20,321) $(21,041) $(18,656)$(16,055) Depreciation and Amortization $2,154 $2,021 $2,003 $1,986 ====== ====== ====== ====== Quarter Ended ------------- 9/30/2008 6/30/2008 3/31/2008 --------- --------- --------- 1. EBIT - Continuing Operations Consolidated Revenue $466,762 $453,347 $443,560 Cost of Sales 300,560 293,464 288,386 Selling, General and Administrative Expenses 57,909 58,570 55,098 ------- ------ ------ Operating Income 108,293 101,313 100,076 -- -- -- Less Non-recurring Charges (1): Restructuring Costs -- 2,353 -- LPS Spin Related Costs -- 1,960 1,003 Acceleration of Performance- Based Shares -- 138 -- ------- ------ ------ EBIT, as adjusted $108,293 $105,764 $101,079 ------- ------ ------ EBIT Margin, as adjusted 23.2% 23.3% 22.8% ====== ====== ====== Depreciation and Amortization $23,800 $20,860 $23,673 ====== ====== ====== Technology, Data and Analytics Revenue $138,964 $141,744 $135,824 Cost of Sales 73,980 81,397 74,110 Selling, General and Administrative Expenses 15,790 17,471 16,258 ------- ------ ------ Operating Income 49,194 42,876 45,456 Less Non-recurring Charges: Restructuring Costs -- 2,178 -- LPS Spin Related Costs -- -- -- Acceleration of Performance- Based Shares -- -- -- ------- ------ ------ EBIT, as adjusted $49,194 $45,054 $45,456 EBIT Margin, as adjusted 35.4% 31.8% 33.5% ====== ====== ====== Depreciation and Amortization $15,229 $13,971 $16,015 ====== ====== ====== Loan Transaction Services Revenue $329,473 $315,314 $311,064 Cost of Sales 228,283 215,838 217,668 Selling, General and Administrative Expenses 26,487 27,154 25,344 ------- ------ ------ Operating Income 74,703 72,322 68,052 Less Non-recurring Charges: Restructuring Costs -- 163 -- LPS Spin Related Costs -- -- -- Acceleration of Performance- Based Shares -- -- -- ------- ------ ------ EBIT, as adjusted $74,703 $72,485 $68,052 EBIT Margin, as adjusted 22.7% 23.0% 21.9% ====== ====== ====== Depreciation and Amortization $6,651 $5,290 $6,163 ====== ====== ====== Corporate and Other Revenue $(1,675) $(3,711) $(3,328) Cost of Sales (1,703) (3,771) (3,392) Selling, General and Administrative Expenses 15,632 13,945 13,496 ------- ------ ------ Operating Income (15,604) (13,885) (13,432) Less Non-recurring Charges: Restructuring Costs -- 12 -- LPS Spin Related Costs -- 1,960 1,003 Acceleration of Performance- Based Shares -- 138 -- ------- ------ ------ EBIT, as adjusted $(15,604) $(11,775) $(12,429) ====== ====== ====== Depreciation and Amortization $1,920 $1,599 $1,495 ====== ====== ====== Notes: (1) Non-recurring charges reflect the impact of certain expenses incurred including a charge taken in Q1-2009 ($9.0 million) primarily relating to the retirement of three members of LPS's Board of Directors, as well as the impact of various spin and restructuring related charges taken in Q1 and Q2 of 2008. Nine Months Ended September 30, ------------------------------- 2009 2008 ---- ---- 2. Net Earnings - Reconciliation Net Earnings $200,828 176,559 Less Non-recurring Charges: Restructuring Costs, net of tax 5,055 1,440 LPS Spin Related Costs, net of tax -- 1,814 Acceleration of Performance-Based Shares, net of tax 493 84 Impact of change in tax rate on non-recurring items -- -- ------- ------- Net Earnings, excluding non-recurring items 206,376 179,897 Pro Forma Interest Expense, net of tax (2) -- 28,131 ------- ------- Pro Forma Net Earnings 206,376 151,766 Purchase Price Amortization, net of tax (3) 14,261 17,936 ------- ------- Pro Forma Adjusted Net Earnings $220,637 $169,702 ====== ====== Pro Forma Net Earnings Per Share $2.15 $1.58 ====== ====== Pro Forma Adjusted Net Earnings Per Share (4) $2.30 $1.77 ====== ====== Pro Forma Diluted Weighted Average Shares (4) 95,941 95,963 ====== ====== 3. Cashflow - Reconciliation Cash Flows from Operating Activities: Net Earnings $200,828 $176,559 Less Non-recurring Charges: Restructuring Costs, net of tax 4,304 1,440 LPS Spin Related Costs, net of tax -- 1,814 Impact of change in tax rate on non-recurring items -- -- ------- ------- Net Earnings, excluding non- recurring items 205,132 179,813 ------- ------- Pro Forma Interest Expense, net of tax -- 28,131 Pro Forma Adjusted Net Earnings 205,132 151,682 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash adjustments 92,069 93,177 Working capital adjustments 2,240 (22,444) ------- ------- Net cash provided by (used in) operating activities 299,441 222,415 ------- ------- Capital expenditures included in investing activities (67,862) (38,342) ------- ------- Pro Forma Adjusted Net Free Cash Flow $231,579 $184,073 ======= ======= Quarter Ended ------------- 9/30/2009 6/30/2009 3/31/2009 12/31/2008 --------- --------- --------- ---------- 2. Net Earnings - Reconciliation Net Earnings $75,542 $75,240 $50,046 $54,329 Less Non-recurring Charges: Restructuring Costs, net of tax -- -- 5,055 -- LPS Spin Related Costs, net of tax -- -- -- -- Acceleration of Performance- Based Shares, net of tax -- -- 493 -- Impact of change in tax rate on non-recurring items -- -- -- (223) ------ ------ ------ ------ Net Earnings, excluding non-recurring items 75,542 75,240 55,594 54,106 Pro Forma Interest Expense, net of tax (2) -- -- -- -- ------ ------ ------ ------ Pro Forma Net Earnings 75,542 75,240 55,594 54,106 Purchase Price Amortization, net of tax (3) 4,698 4,572 4,991 6,815 ------ ------ ------ ------ Pro Forma Adjusted Net Earnings $80,240 $79,812 $60,585 $60,921 ====== ====== ====== ====== Pro Forma Net Earnings Per Share $0.78 $0.78 $0.58 $0.57 ====== ====== ====== ====== Pro Forma Adjusted Net Earnings Per Share (4) $0.83 $0.83 $0.64 $0.64 ====== ====== ====== ====== Pro Forma Diluted Weighted Average Shares (4) 96,399 96,133 95,284 95,126 ====== ====== ====== ====== 3. Cashflow - Reconciliation Cash Flows from Operating Activities: Net Earnings $75,542 $75,240 $50,046 $54,329 Less Non-recurring Charges: Restructuring Costs, net of tax -- -- 4,304 -- LPS Spin Related Costs, net of tax -- -- -- -- Impact of change in tax rate on non-recurring items -- -- -- (223) ------ ------ ------ ------ Net Earnings, excluding non-recurring items 75,542 75,240 54,350 54,106 Pro Forma Interest Expense, net of tax -- -- -- -- ------ ------ ------ ------ Pro Forma Adjusted Net Earnings 75,542 75,240 54,350 54,106 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash adjustments 32,279 31,700 28,090 30,081 Working capital adjustments (16,954) 21,957 (2,763) 32,158 ------ ------ ------ ------ Net cash provided by (used in) operating activities 90,867 128,897 79,677 116,345 ------ ------ ------ ------ Capital expenditures included in investing activities (19,455) (25,836) (22,571)(23,946) ------ ------ ------ ------ Pro Forma Adjusted Net Free Cash Flow $71,412 $103,061 $57,106 $92,399 ====== ====== ====== ====== Quarter Ended ------------- 9/30/2008 6/30/2008 3/31/2008 --------- --------- --------- 2. Net Earnings - Reconciliation Net Earnings $51,281 $63,546 $61,732 Less Non-recurring Charges: Restructuring Costs, net of tax -- 1,440 -- LPS Spin Related Costs, net of tax -- 1,200 614 Acceleration of Performance- Based Shares, net of tax -- 84 -- Impact of change in tax rate on non-recurring items -- -- -- ------ ------ ------ Net Earnings, excluding non-recurring items 51,281 66,270 62,346 Pro Forma Interest Expense, net of tax (2) -- 13,951 14,180 ------ ------ ------ Pro Forma Net Earnings 51,281 52,319 48,166 Purchase Price Amortization, net of tax (3) 6,504 5,496 5,936 ------ ------ ------ Pro Forma Adjusted Net Earnings $57,785 $57,815 $54,102 ====== ====== ====== Pro Forma Net Earnings Per Share $0.54 $0.55 $0.49 ====== ====== ====== Pro Forma Adjusted Net Earnings Per Share (4) $0.61 $0.61 $0.55 ====== ====== ====== Pro Forma Diluted Weighted Average Shares (4) 95,223 95,070 97,597 ====== ====== ====== 3. Cashflow - Reconciliation Cash Flows from Operating Activities: Net Earnings $51,281 $63,546 $61,732 Less Non-recurring Charges: Restructuring Costs, net of tax -- 1,440 -- LPS Spin Related Costs, net of tax -- 1,200 614 Impact of change in tax rate on non-recurring items -- -- -- ------ ------ ------ Net Earnings, excluding non-recurring items 51,281 66,186 62,346 Pro Forma Interest Expense, net of tax -- 13,951 14,180 ------ ------ ------ Pro Forma Adjusted Net Earnings 51,281 52,235 48,166 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash adjustments 32,420 18,262 42,495 Working capital adjustments 26,908 (91,474) 42,122 ------ ------ ------ Net cash provided by (used in) operating activities 110,609 (20,977) 132,783 ------ ------ ------ Capital expenditures included in investing activities (13,205) (14,344) (10,793) ------ ------ ------ Pro Forma Adjusted Net Free Cash Flow $97,404 $(35,321) $121,990 ====== ======= ====== Notes: (2) Pro forma interest expense for each of the two quarters in the period ended June 30, 2008 represents the interest expense associated with the $1,610.7 million in debt incurred by us in connection with the spin-off assuming the spin-off occurred on January 1, 2007. Our new bank debt bears interest at a floating rate which we estimate would have been 4.96% on the revolving credit agreement, Term Loan A and Term Loan B based on the one month LIBOR rate on June 30, 2008 (2.46%) plus a spread of 2.5%. Our new senior notes bear interest at a fixed rate of 8.125%. Amortization of capitalized debt issuance costs in connection with the borrowings included in pro forma interest expense total approximately $2.7 million for the six months ended June 30, 2008. These projections also reflect principal paydowns of approximately $36.3 million ($35 million of Term Loan A, $1.3 million of Term Loan B) per quarter under the credit agreement (other than in the first quarter after closing, in which only $1.3 million is payable) and the paydown of the revolver of $25.7 million during the first quarter of 2007. (3) Purchase price amortization, net of tax represents the periodic amortization of intangible assets acquired through business acquisitions primarily relating to customer lists, trademarks and non-compete agreements. (4) Pro forma earnings per share and pro forma diluted weighted average shares for the quarter ended June 30, 2008 are provided based on the 94,611 shares of Lender Processing Services, Inc. common stock issued to FIS shareholders on the July 2, 2008 spin date along with dilutive common stock equivalents calculated under the treasury stock method using the $33 per share closing price of LPS on July 2, 2008 as the average market price and the number of LPS options and awards issued to our employees per the terms of the spin-off. Pro forma earnings per share and pro forma diluted weighted average shares for all other periods presented above are based on the pro forma diluted shares as included in the Company's Form 10 filed on June 20, 2008.

    Lender Processing Services, Inc.

    CONTACT: Investors: Parag Bhansali, +1-904-854-8640; or Media: Michelle
    Kersch, +1-904-854-5043

    Web Site: http://www.lpsvcs.com/




    First Financial Bankshares Announces Third Quarter Earnings

    ABILENE, Texas, Oct. 22 /PRNewswire-FirstCall/ -- First Financial Bankshares, Inc. today reported earnings for the third quarter of 2009 of $13.99 million, up 4.7 percent compared with earnings of $13.36 million in the same quarter last year. Basic earnings per share were $0.67 for the third quarter of 2009, up 4.7 percent from $0.64 a year ago.

    Net interest income for the third quarter of 2009 increased 3.8 percent to $32.58 million compared with $31.40 million in the same quarter last year. The net interest margin, on a taxable equivalent basis, rose to 4.92 percent for the third quarter of 2009 compared with 4.73 percent in the same period a year ago and 4.88 percent for the quarter ended June 30, 2009. The provision for loan losses was $3.71 million in the third quarter of 2009, up from $1.77 million in the same quarter last year. Nonperforming assets as a percentage of loans and foreclosed assets totaled 1.30 percent at September 30, 2009, compared with 95 basis points at June 30, 2009, and 69 basis points at September 30, 2008.

    Noninterest income in the third quarter of 2009 was $12.88 million compared with $12.29 million in the same quarter a year earlier. Noninterest income for the third quarter of 2009 included $897,000 from gains on securities transactions compared with $146,000 in gains during the same quarter a year ago. Noninterest income for the third quarter of 2009 also included $273,000 in pre-tax gain on the sale of student loans, which resulted from the Company's sale of substantially all of the remainder of its student loan portfolio to the U.S. Department of Education.

    Noninterest expense declined 1.6 percent in the third quarter of 2009 to $23.02 million from $23.38 million in the same quarter last year, although the Company's FDIC insurance cost increased $656,000. The Company's efficiency ratio in the third quarter of 2009 improved to 47.92 percent compared with 51.42 percent in the same quarter a year ago.

    "We are pleased to report another quarter of earnings growth and improved net interest margin, especially in light of the national recession and low interest rate environment," said F. Scott Dueser, President and Chief Executive Officer. "Our bank presidents continue to do an exceptional job of managing our net interest margin and their banks. Nonperforming assets increased from previous quarters as the national recession becomes more prevalent in Texas; however, our percentage is favorable compared to our peers."

    For the first nine months of 2009, net income increased 2.8 percent to $41.26 million from $40.13 million a year ago. Basic earnings per share rose to $1.98 for the first nine months of 2009 from $1.93 in the same period last year. Net interest income increased 5.9 percent in the first nine months of 2009 to $96.63 million from $91.25 million a year ago. The provision for loan losses increased $2.8 million to $7.05 million as the Company continued to aggressively address problem loans and the slowing economy. Noninterest income was $36.54 million for the first nine months of 2009 compared with $38.06 million in the same period a year earlier. Noninterest expense was $70.33 million in the first nine months of 2009 compared with $69.06 million for the comparable period a year ago.

    As of September 30, 2009, consolidated assets for the Company totaled $3.08 billion compared with $3.15 billion a year ago. Loans totaled $1.45 billion at quarter end, compared with loans of $1.57 billion a year ago. Total deposits were $2.46 billion as of September 30, 2009, compared with $2.56 billion a year earlier. Shareholders' equity rose to $415.53 million as of September 30, 2009, compared with $350.42 million the prior year.

    About First Financial Bankshares

    Headquartered in Abilene, Texas, First Financial Bankshares is a financial holding company that operates ten separately chartered banks with 48 locations in Texas. The bank subsidiaries are First Financial Bank, N.A., Abilene, Albany, Clyde and Moran; First Financial Bank, N.A., Eastland, Ranger and Rising Star; First Financial Bank, N.A., Cleburne, Burleson, Alvarado and Midlothian; First Financial Bank, Hereford; First Financial Bank, N.A., Mineral Wells; First Financial Bank, N.A., San Angelo; First Financial Bank, N.A., Southlake, Bridgeport, Boyd, Decatur, Keller and Trophy Club; First Financial Bank, N.A., Stephenville, Granbury, Glen Rose and Acton; First Financial Bank, N.A., Sweetwater, Roby, Trent and Merkel; and First Financial Bank, N.A., Weatherford, Willow Park, Aledo and Brock. The Company also operates First Financial Trust & Asset Management Company, N.A., with six locations and First Technology Services, Inc., a technology operating company.

    The Company is listed on The NASDAQ Global Select Market under the trading symbol FFIN. For more information about First Financial Bankshares, please visit our Web site at http://www.ffin.com/.

    Certain statements contained herein may be considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon the belief of the Company's management, as well as assumptions made beyond information currently available to the Company's management, and may be, but not necessarily are, identified by such words as "expect", "plan", "anticipate", "target", "forecast" and "goal". Because such "forward-looking statements" are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations include competition from other financial institutions and financial holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses, and similar variables. Other key risks are described in the Company's reports filed with the Securities and Exchange Commission, which may be obtained under "Investor Relations-Documents/Filings" on the Company's Web site or by writing or calling the Company at 325.627.7155. Except as otherwise stated in this news announcement, the Company does not undertake any obligation to update publicly or revise any forward-looking statements because of new information, future events or otherwise.

    FIRST FINANCIAL BANKSHARES, INC. CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) (In thousands, except share and per share data) September 30, ------------- 2009 2008 ---- ---- ASSETS: Cash and due from banks $113,210 $116,989 Fed funds sold 38,045 55,675 Investment securities 1,323,451 1,253,945 Loans 1,454,397 1,567,727 Allowance for loan losses (25,532) (20,048) ------- ------- Net loans 1,428,865 1,547,679 Premises and equipment 63,659 65,531 Goodwill 62,112 62,112 Other intangible assets 1,239 2,178 Other assets 45,612 44,479 ------ ------ Total assets $3,076,193 $3,148,588 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY: Noninterest-bearing deposits $719,266 $769,115 Interest-bearing deposits 1,739,637 1,794,437 --------- --------- Total deposits 2,458,903 2,563,552 Short-term borrowings 160,401 196,839 Other liabilities 41,355 37,780 Shareholders' equity 415,534 350,417 ------- ------- Total liabilities and shareholders' equity $3,076,193 $3,148,588 ========== ========== Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- INCOME STATEMENTS 2009 2008 2009 2008 ---- ---- ---- ---- Interest income $36,598 $39,218 $110,028 $119,915 Interest expense 4,015 7,819 13,401 28,666 ----- ----- ------ ------ Net interest income 32,583 31,399 96,627 91,249 Provision for loan losses 3,706 1,765 7,054 4,274 ----- ----- ----- ----- Net interest income after provision for loan losses 28,877 29,634 89,573 86,975 Noninterest income 12,879 12,291 36,536 38,058 Noninterest expense 23,018 23,385 70,325 69,055 ------ ------ ------ ------ Net income before income taxes 18,738 18,540 55,784 55,978 Income tax expense 4,752 5,179 14,528 15,853 ----- ----- ------ ------ Net income $13,986 $13,361 $41,256 $40,125 ======= ======= ======= ======= PER COMMON SHARE DATA Net income - basic $0.67 $0.64 $1.98 $1.93 Net income - diluted 0.67 0.64 1.98 1.93 Cash dividends 0.34 0.34 1.02 1.00 Book value 19.96 16.85 Market value 49.46 51.88 Shares outstanding - end of period 20,822,396 20,793,647 20,822,396 20,793,647 Average outstanding shares - basic 20,819,398 20,793,197 20,810,112 20,784,711 Average outstanding shares - diluted 20,844,567 20,853,539 20,830,932 20,831,128 PERFORMANCE RATIOS Return on average assets 1.81% 1.74% 1.78% 1.77% Return on average equity 13.99 15.31 14.18 15.42 Net interest margin (tax equivalent) 4.92 4.73 4.85 4.64 Efficiency ratio 47.92 51.42 50.08 51.41 FIRST FINANCIAL BANKSHARES, INC. SELECTED FINANCIAL DATA (UNAUDITED) (In thousands) Quarter Ended ------------- 2009 2008 ---- ---- Sept. 30, June 30, March 31, Dec. 31, Sept. 30, --------- -------- --------- -------- --------- ALLOWANCE FOR LOAN LOSSES Balance at beginning of period $23,247 $22,652 $21,529 $20,048 $18,677 Loans charged off (1,662) (1,225) (893) (2,406) (647) Loan recoveries 241 232 255 204 253 --- --- --- --- --- Net charge-offs (1,421) (993) (638) (2,202) (394) Provision for loan losses 3,706 1,588 1,761 3,683 1,765 ----- ----- ----- ----- ----- Balance at end of period $25,532 $23,247 $22,652 $21,529 $20,048 ======= ======= ======= ======= ======= Allowance for loan losses / period-end loans 1.76% 1.57% 1.53% 1.37% 1.28% Allowance for loan losses / nonperforming loans 174.4 225.4 233.5 216.8 245.7 Net charge-offs / average loans (annualized) 0.38 0.27 0.17 0.56 0.10 NONPERFORMING ASSETS Nonaccrual loans $14,585 $10,242 $9,606 $9,893 $7,947 Accruing loans 90 days past due 56 72 94 36 213 --- --- --- --- --- Total nonperforming loans 14,641 10,314 9,700 9,929 8,160 Foreclosed assets 4,367 3,755 4,415 2,602 2,613 ----- ----- ----- ----- ----- Total nonperforming assets $19,008 $14,069 $14,115 $12,531 $10,773 ======= ======= ======= ======= ======= As a % of loans and foreclosed assets 1.30% 0.95% 0.95% 0.80% 0.69% As a % of end of period total assets 0.62 0.46 0.45 0.39 0.34 CAPITAL RATIOS Tier 1 Risk-based 18.12% 17.36% 16.80% 15.89% 15.41% Total Risk-based 19.37 18.61 18.05 17.04 16.49 Tier 1 Leverage 10.83 10.53 10.01 9.68 9.63 Equity to assets 13.51 12.64 12.22 11.48 11.13 Three Months Ended Nine Months Ended September 30, September 30, NONINTEREST INCOME 2009 2008 2009 2008 ---- ---- ---- ---- Gain on sale of student loans, net $273 $3 $889 $1,717 Gain on securities transactions, net 897 146 1,645 705 Trust fees 2,328 2,501 6,570 7,230 Service charges on deposits 5,732 5,809 16,294 17,005 Real estate mortgage fees 731 649 2,177 2,018 Net gain (loss) on sale of foreclosed assets (128) 27 (187) 116 ATM and credit card fees 2,427 2,327 7,063 6,623 Other noninterest income 619 829 2,085 2,644 --- --- ----- ----- Total Noninterest Income $12,879 $12,291 $36,536 $38,058 ======= ======= ======= ======= NONINTEREST EXPENSE Salaries and employee benefits, excluding profit sharing $11,512 $11,529 $34,695 $34,588 Profit sharing expense 689 923 1,739 2,957 Net occupancy expense 1,599 1,826 4,785 5,069 Equipment expense 1,920 1,891 5,828 5,603 Printing, stationery and supplies 508 482 1,406 1,433 ATM and credit card expenses 810 1,155 2,462 3,271 Audit fees 292 288 840 884 Legal, tax and professional fees 778 734 2,470 2,209 FDIC Insurance premiums 818 162 4,074 438 Correspondent bank service charges 204 303 839 868 Advertising and public relations 661 638 1,783 1,935 Amortization of intangible assets 214 302 652 917 Other noninterest expense 3,013 3,152 8,752 8,883 ----- ----- ----- ----- Total Noninterest Expense $23,018 $23,385 $70,325 $69,055 ======= ======= ======= ======= TAX EQUIVALENT YIELD ADJUSTMENT $2,570 $1,786 $7,256 $5,028 ====== ====== ====== ====== FIRST FINANCIAL BANKSHARES, INC. SELECTED FINANCIAL DATA (UNAUDITED) (In thousands) Three Months Ended September 30, 2009 ------------------ Average Tax Equivalent Yield / Balance Interest Rate ------- -------- ---- Interest-earning assets: Fed funds sold $46,649 $23 0.20% Interest-bearing deposits in nonaffiliated banks 18,189 73 1.59% Taxable securities 855,409 9,155 4.28% Tax exempt securities 450,508 7,060 6.27% Loans 1,465,423 22,857 6.19% --------- ------ ---- Total interest-earning assets 2,836,178 39,168 5.48% Noninterest-earning assets 235,596 ------- Total assets $3,071,774 ========== Interest-bearing liabilities: Deposits $1,730,708 $3,836 0.88% Fed funds purchased and other short term borrowings 171,621 179 0.41% ------- --- ---- Total interest-bearing liabilities 1,902,329 4,015 0.84% ----- Noninterest-bearing liabilities 772,768 Shareholders' equity 396,677 ------- Total liabilities and shareholders' equity $3,071,774 ========== Net interest income and margin (tax equivalent) $35,153 4.92% ======= ==== Nine Months Ended September 30, 2009 ------------------ Average Tax Equivalent Yield / Balance Interest Rate ------- -------- ---- Interest-earning assets: Fed funds sold $37,578 $66 0.24% Interest-bearing deposits in nonaffiliated banks 11,531 143 1.65% Taxable securities 881,726 28,102 4.25% Tax exempt securities 426,621 19,958 6.24% Loans 1,504,400 69,015 6.13% --------- ------ ---- Total interest-earning assets 2,861,856 117,284 5.48% Noninterest-earning assets 244,961 ------- Total assets $3,106,817 ========== Interest-bearing liabilities: Deposits $1,744,336 $12,768 0.98% Fed funds purchased and other short term borrowings 191,376 633 0.44% ------- --- ---- Total interest-bearing liabilities 1,935,712 13,401 0.93% ------ Noninterest-bearing liabilities 782,184 Shareholders' equity 388,921 ------- Total liabilities and shareholders' equity $3,106,817 ========== Net interest income and margin (tax equivalent) $103,883 4.85% ======== ====

    First Financial Bankshares, Inc.

    CONTACT: J. Bruce Hildebrand, Executive Vice President of First
    Financial Bankshares, Inc., +1-325-627-7155

    Web Site: http://www.ffin.com/




    SunPower Reports Third-Quarter 2009 Results- Record Q3 2009 revenue of $466 million, record production of 110 megawatts - GAAP EPS of $0.13 and non-GAAP EPS of $0.42 - 24 megawatt Montalto power plant in Italy financed - expected completion Q4 2009 - Grew global dealer network to approximately 900 partners - Signed a 14-megawatt supply agreement with Casino Group in France - Commissioned 25-megawatt project for Florida Power & Light and began construction of an additional 10-megawatt power plant - Fab 3 construction in Malaysia on plan; production scheduled for the second half of 2010 - Further strengthened balance sheet - more than $800 million in cash and investments

    SAN JOSE, Calif., Oct. 22 /PRNewswire-FirstCall/ -- SunPower Corp. today announced financial results for its 2009 third quarter which ended September 27, 2009. Revenue for the 2009 third quarter was $466 million which compares to $298 million in the second quarter of 2009 and $378 million in the third quarter of 2008. The company's Components and Systems segments accounted for 64% and 36% of third-quarter 2009 revenue, respectively.

    "Our third-quarter results demonstrate the value of our diversified market and vertical integration strategy as we benefitted from our growing dealer channel and successfully executed on our large scale project commitments," said Tom Werner, SunPower's CEO. "We further expanded our dealer partner network into countries such as France, Korea and Canada, and added new partners to our existing markets. As we build our utility and power plant business around the world, our superior technology performance and rapid deployment capability continues to make SunPower a preferred partner with customers and financiers.

    "Operationally, our global Engineering, Procurement and Construction team achieved a new record in the third quarter with more than 60 megawatts (MW) of SunPower power plants under construction. The 25-MW DeSoto power plant, commissioned for Florida Power & Light, has now surpassed Nellis Air Force Base as the largest operating solar photovoltaic power plant in North America. In Europe, the financing of our Montalto project, the largest power plant in Italy, demonstrates SunPower's bankability as a fully integrated supplier. With strong market demand continuing, all of our manufacturing facilities are now fully operational, resulting in unit cost reductions in line with our plan," concluded Werner.

    On a Generally Accepted Accounting Principles (GAAP) basis for the 2009 third quarter, SunPower reported gross margin of 19.1%, operating income of $34.6 million and net income per diluted share of $0.13. GAAP net income per share for the third quarter of 2009 includes $5.3 million, or $0.03 per share, of non-cash interest charges associated with the adoption of the new accounting guidance, which impacts how companies account for interest expense on convertible bonds.

    On a non-GAAP basis, adjusted to exclude non-cash charges for amortization of intangible assets of $4.1 million, stock-based compensation of $13.1 million and non-cash interest expense of $5.3 million, SunPower reported total gross margin of 20.7%. Operating income for the quarter was $52.1 million and net income per share was $0.42. This compares with second-quarter 2009 non-GAAP gross margin of 22.6%, operating income of $26.8 million and $0.24 net income per share. For the 2009 third quarter, the Components segment non-GAAP gross margin was 23.4% and Systems segment gross margin was 16.0%.

    2009 Guidance

    The company updated its fiscal year 2009 total company non-GAAP guidance as follows: total revenue of $1.425 billion to $1.50 billion, net income per diluted share of $1.15 to $1.25, capital expenditures of $200 million to $225 million, and production of approximately 400 MW.

    "The company's continued focus on working capital management is showing positive results as we successfully managed inventory levels and ended the quarter with a stronger balance sheet and more than $800 million in cash and investments," said Dennis Arriola, SunPower's CFO. "Although the financing markets remain challenging, we're starting to see some improvement in the availability of financing for our projects. By starting the fourth quarter with a solid backlog of business and a growing pipeline of opportunities, we are confident that SunPower will finish the year strongly and is well positioned for growth in 2010."

    For fiscal year 2009, the company expects the following total company GAAP results: revenue of $1.425 billion to $1.50 billion and net income per diluted share of $0.50 to $0.60. GAAP earnings per share guidance for 2009 includes a $0.21 per share one-time, non-taxable gain related to the company's second-quarter 2009 capital raise and approximately $0.13 per share for non-cash charges related to the company's adoption of new accounting guidance.

    This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release. Please note that the company has posted supplemental information and slides related to its third quarter 2009 performance on the Events and Presentations section of the SunPower Investor Relations page at http://investors.sunpowercorp.com/events.cfm. The capacity of power plants in this release is described in approximate MW on an alternating current (ac) basis.

    About SunPower

    Founded in 1985, SunPower Corp. designs, manufactures and delivers the planet's most powerful solar technology broadly available today. Residential, business, government and utility customers rely on the company's experience and proven results to maximize return on investment. With headquarters in San Jose, Calif., SunPower has offices in North America, Europe, Australia and Asia. For more information, visit http://www.sunpowercorp.com/.

    Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not represent historical facts and may be based on underlying assumptions. The company uses words and phrases such as "expected," "plan," "scheduled," "growing," "build," "continues," "will," "continuing," "guidance," "improvement," "backlog," "pipeline," "growth," "improvement," and "expects" to identify forward-looking statements in this press release, including forward-looking statements regarding: (a) completion of the Montalto project; (b) construction schedule for Fab 3; (c) the company's dealer channel; (d) the company's utility and power plant business; (e) the company's status as a preferred partner with customers and financiers; (f) market demand; (g) the company's cost reduction plan; (h) GAAP and non-GAAP fiscal year 2009 total revenue and net income per diluted share; (i) availability of financing for projects; (j) backlog of business and pipeline of opportunities; (k) 2009 expected production; and (l) non-cash interest charges associated with the adoption of the new accounting guidance. Such forward-looking statements are based on information available to the company as of the date of this release and involve a number of risks and uncertainties, some beyond the company's control, that could cause actual results to differ materially from those anticipated by these forward-looking statements, including risks and uncertainties such as: (i) the company's ability to obtain and maintain an adequate supply of raw materials and components, as well as the price it pays for such items; (ii) general business and economic conditions, including seasonality of the industry; (iii) growth trends in the solar power industry; (iv) the continuation of governmental and related economic incentives promoting the use of solar power; (v) the improved availability of third-party financing arrangements for the company's customers; (vi) construction difficulties or potential delays, including permitting and transmission access and upgrades; (vii) the company's ability to ramp new production lines and realize expected manufacturing efficiencies; (viii) manufacturing difficulties that could arise; (ix) the success of the company's ongoing research and development efforts to compete with other companies and competing technologies; (x) unanticipated changes in the GAAP expense for non-cash charges related to the adoption of new accounting guidance; and (xi) other risks described in the company's Annual Report on Form 10-K for the year ended December 28, 2008, its Quarterly Report on Form 10-Q for the quarter ended June 29, 2009, and other filings with the Securities and Exchange Commission. These forward-looking statements should not be relied upon as representing the company's views as of any subsequent date, and the company is under no obligation to, and expressly disclaims any responsibility to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

    Segment Reporting Information

    For third quarter 2009 reporting purposes, the Systems segment generally represents products and services sold directly to the system owner. Additionally, both SunPower and third-party solar panels sold through the Systems segment channels are recorded as Systems segment revenue. The Components segment primarily represents products sold to installers and resellers.

    Non-GAAP Measures

    To supplement the consolidated financial results prepared under GAAP, SunPower uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude non-cash charges related to amortization of intangible assets, stock-based compensation, impairment of long-lived assets and interest expense, non-cash gain on purchased options related to the company's convertible debt offering, and its related tax effects. Management does not consider these charges in evaluating the core operational activities of SunPower. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate SunPower's current performance. Most analysts covering SunPower use the non-GAAP measures as well. Given management's use of these non-GAAP measures, SunPower believes these measures are important to investors in understanding SunPower's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in SunPower's core business across different time periods. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data and may be different from non-GAAP measures used by other companies.

    Fiscal Periods

    The Company reports on a fiscal-year basis and ends its quarters on the Sunday closest to the end of the applicable calendar quarter, except in a 53-week fiscal year, in which case the additional week falls into the fourth quarter of that fiscal year. Fiscal year 2009 consists of 53 weeks while fiscal year 2008 consists of 52 weeks. The third quarter of fiscal 2009 ended on September 27, 2009 and the third quarter of fiscal 2008 ended on September 29, 2008.

    SunPower is a registered trademark of SunPower Corp. All other trademarks are the property of their respective owners.

    SUNPOWER CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) Sep. 27, Dec. 28, 2009 2008 ---- ---- ASSETS Cash and cash equivalents $472,126 $202,331 Restricted cash 320,788 175,277 Investments 9,222 40,756 Accounts receivable, net 243,528 194,222 Costs and estimated earnings in excess of billings 73,519 30,326 Inventories 239,211 251,542 Prepaid expenses and other assets 197,131 175,005 Advances to suppliers 137,853 162,610 Property, plant and equipment, net 695,409 629,247 Goodwill and other intangible assets, net 227,444 236,210 --------- --------- Total assets $2,616,231 $2,097,526 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $232,547 $263,241 Accrued and other liabilities 195,561 191,140 Long-term debt 188,915 54,598 Convertible debt 530,956 357,173 Billings in excess of costs and estimated earnings 17,484 11,806 Customer advances 97,142 110,394 --------- --------- Total liabilities 1,262,605 988,352 Stockholders' equity 1,353,626 1,109,174 --------- --------- Total liabilities and stockholders' equity $2,616,231 $2,097,526 ========= ========= SUNPOWER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) THREE MONTHS ENDED NINE MONTHS ENDED --------------------------- ------------------ Sep. 27, Jun. 28, Sep. 28, Sep. 27, Sep. 28, 2009 2009 2008 2009 2008 ---- ---- ---- ---- ---- Revenue: Systems $168,412 $108,724 $193,330 $383,233 $642,774 Components 297,895 188,920 184,170 594,505 391,178 ------- ------- ------- ------- ------- 466,307 297,644 377,500 977,738 1,033,952 Cost of revenue: Cost of systems revenue 144,859 91,793 158,829 325,003 511,316 Cost of components revenue 232,164 147,388 113,358 457,240 271,288 ------- ------- ------- ------- ------- 377,023 239,181 272,187 782,243 782,604 Gross margin 89,284 58,463 105,313 195,495 251,348 Operating expenses: Research and Development 8,250 6,853 6,049 23,067 15,504 Selling, general and administrative 46,473 41,755 46,075 130,511 123,141 ------- ------- ------- ------- ------- Total operating expenses 54,723 48,608 52,124 153,578 138,645 ------- ------- ------- ------- ------- Operating income 34,561 9,855 53,189 41,917 112,703 Other income (expense): Gain on purchased options - 21,193 - 21,193 - Interest and other income (expense), net (9,269) (5,956) (8,784) (27,319) (17,597) ------- ------- ------- ------- ------- Other income (expense), net (9,269) 15,237 (8,784) (6,126) (17,597) ------- ------- ------- ------- ------- Income before income taxes and equity in earnings of unconsolidated investees 25,292 25,092 44,405 35,791 95,106 Income tax provision 15,088 4,054 21,856 10,580 31,275 ------- ------- ------- ------- ------- Income before equity in earnings of unconsolidated investees 10,204 21,038 22,549 25,211 63,831 Equity in earnings of unconsolidated investees, net of taxes 2,627 3,133 2,132 7,005 4,006 ------- ------- ------- ------- ------- Net income $12,831 $24,171 $24,681 $32,216 $67,837 ======= ======= ======= ======= ======= Net income per share of class A and class B common stock: - Basic $0.14 $0.27 $0.30 $0.36 $0.84 - Diluted $0.13 $0.26 $0.29 $0.35 $0.80 Weighted-average shares: - Basic 94,668 90,873 80,465 89,764 79,614 - Diluted 96,319 98,412 84,064 91,513 83,477 SUNPOWER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) THREE MONTHS ENDED NINE MONTHS ENDED --------------------------- ----------------- Sep. 27, Jun. 28, Sep. 28, Sep. 27, Sep. 28, 2009 2009 2008 2009 2008 ---- ---- ---- ---- ---- Cash flows from operating activities: Net income $12,831 $24,171 $24,681 $32,216 $67,837 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation 13,074 11,647 18,911 34,204 52,026 Depreciation 21,414 20,569 13,688 60,348 35,741 Amortization of other intangible assets 4,146 4,098 4,201 12,296 12,552 Impairment of long-lived assets 190 489 (2,353) 1,997 3,136 Non-cash interest expense 5,250 5,915 4,038 16,186 12,717 Amortization of debt issuance costs 733 1,184 537 2,454 1,611 Gain on purchased options - (21,193) - (21,193) - Equity in earnings of unconsolidated investees (2,627) (3,133) (2,132) (7,005) (4,006) Excess tax benefits from stock-based award activity (12,134) (2,610) (19,260) (14,744) (33,899) Deferred income taxes and other tax liabilities 10,151 (3,505) 19,658 277 29,738 Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable (18,794) (65,422) 47,808 (43,285) (55,324) Costs and estimated earnings in excess of billings (60,787) 23,168 (7,556) (41,416) (17,700) Inventories 28,977 87,807 19,498 20,914 (48,301) Prepaid expenses and other assets 13,938 (35,291) (4,604) (9,440) (29,636) Advances to suppliers 3,435 13,449 15,461 24,877 19,102 Accounts payable and other accrued liabilities 98,997 (101,114) (5,853) (31,345) 76,513 Billings in excess of costs and estimated earnings (33,479) 42,968 (21,178) 4,877 (60,064) Customer advances (5,553) 774 41,754 (13,639) 45,884 ------- ------- ------- ------- ------- Net cash provided by operating activities 79,762 3,971 147,299 28,579 107,927 Cash flows from investing activities: Increase in restricted cash and cash equivalents (103,247) (33,151) (26,202) (145,583) (42,153) Purchases of property, plant and equipment (38,426) (59,566) (55,224) (150,093)(150,302) Proceeds from sale of equipment to third-party 1,976 7,902 - 9,878 - Purchases of available-for-sale securities - - (14,778) - (65,748) Proceeds from sales or maturities of available-for-sale securities 9,867 1,501 12,027 29,545 133,948 Cash paid for acquisitions, net of cash acquired - - (4,827) - (18,311) Cash paid for investments in joint ventures and other non-public companies - - (2,000) - (24,625) ------- ------- ------- ------- ------- Net cash used in investing activities (129,830) (83,314) (91,004) (256,253)(167,191) Cash flows from financing activities: Proceeds from issuance of long-term debt, net of issuance costs 54,701 29,773 - 137,735 - Proceeds from issuance of convertible debt, net of issuance costs - 225,018 - 225,018 - Proceeds from offering of class A common stock, net of offering expenses (114) 218,895 - 218,781 - Cash paid for repurchased convertible debt (7,687) (67,949) - (75,636) - Cash paid for purchased options - (97,336) - (97,336) - Proceeds from warrant transactions - 71,001 - 71,001 - Proceeds from exercise of stock options 570 442 1,451 1,408 3,786 Excess tax benefits from stock-based award activity 12,134 2,610 19,260 14,744 33,899 Purchases of stock for tax withholding obligations on vested restricted stock (586) (763) (1,659) (3,708) (5,853) ------- ------- ------- ------- ------- Net cash provided by financing activities 59,018 381,691 19,052 492,007 31,832 Effects of exchange rate changes on cash and equivalents 6,341 5,377 (8,273) 5,462 (1,166) ------- ------- ------- ------- ------- Net increase (decrease) in cash and cash equivalents 15,291 307,725 67,074 269,795 (28,598) Cash and cash equivalents at beginning of period 456,835 149,110 189,542 202,331 285,214 ------- ------- ------- ------- ------- Cash and cash equivalents at end of period $472,126 $456,835 $256,616 $472,126 $256,616 ======= ======= ======= ======= ======= Non-cash transactions: Additions to property, plant and equipment included in accounts payable and other accrued liabilities $- $- $42,942 $- $46,780 Non-cash interest expense capitalized and added to the cost of qualified assets 873 1,510 2,547 4,456 6,367 Issuance of common stock for purchase acquisition - 1,471 3,054 1,471 3,054 Change in goodwill relating to adjustments to acquired net assets - - - - 231 (In thousands, except per share data) THREE MONTHS NINE MONTHS ENDED ENDED --------------------------- ----------------- Sep. 27, Jun. 28, Sep. 28, Sep. 27, Sep. 28, 2009 2009 2008 2009 2008 ---- ---- ---- ---- ---- (Presented on a GAAP Basis) Gross margin $89,284 $58,463 $105,313 $195,495 $251,348 Operating income $34,561 $9,855 $53,189 $41,917 $112,703 Net income per share of class A and class B common stock: -Basic $0.14 $0.27 $0.30 $0.36 $0.84 -Diluted $0.13 $0.26 $0.29 $0.35 $0.80 THREE MONTHS NINE MONTHS ENDED ENDED --------------------------- ----------------- Sep. 27, Jun. 28, Sep. 28, Sep. 27, Sep. 28, 2009 2009 2008 2009 2008 ---- ---- ---- ---- ---- (Presented on a non-GAAP Basis) Gross margin $96,753 $67,128 $110,093 $215,745 $276,812 Operating income $52,146 $26,840 $73,259 $90,522 $179,961 Net income per share of class A and class B common stock: -Basic $0.42 $0.25 $0.59 $0.75 $1.62 -Diluted $0.42 $0.24 $0.57 $0.73 $1.55 About SunPower's Non-GAAP Financial Measures

    To supplement its consolidated financial results presented in accordance with GAAP, SunPower uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude non-cash charges related to amortization of intangible assets, stock-based compensation, impairment of long-lived assets and interest expense, non-cash gain on purchased options related to its convertible debt offering, and the related tax effects of these non-GAAP adjustments. The specific non-GAAP measures listed below are gross margin, operating income and net income per share. Management believes that each of these non-GAAP measures (gross margin, operating income and net income per share) are useful to investors by enabling them to better assess changes in each of these key elements of SunPower's results of operations across different reporting periods on a consistent basis, independent of these non-cash items. Thus, each of these non-GAAP financial measures provides investors with another method for assessing SunPower's operating results in a manner that is focused on its ongoing core operating performance, absent the effects of amortization of intangible assets, stock-based compensation, impairment of long-lived assets, interest expense and a gain on purchased options related to its convertible debt offering. Management also uses these non-GAAP measures internally to assess the business and financial performance of current and historical results, for strategic decision making, forecasting future results and evaluating the company's current performance. Many of the analysts covering SunPower also use these non-GAAP measures in their analyses. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data, the non-GAAP results should be reviewed together with the GAAP results and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

    o Non-GAAP gross margin. The use of this non-GAAP financial measure allows management to evaluate the gross margin of the company's core businesses and trends across different reporting periods on a consistent basis, independent of non-cash items including amortization of intangible assets, stock-based compensation, impairment of long-lived assets and interest expense. In addition, it is an important component of management's internal performance measurement process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents this non-GAAP financial measure to enable investors and analysts to evaluate SunPower's revenue generation performance relative to the direct costs of revenue of its core businesses.

    o Non-GAAP operating income. The use of this non-GAAP financial measure allows management to evaluate the operating results of the company's core businesses and trends across different reporting periods on a consistent basis, independent of non-cash items including amortization of intangible assets, stock-based compensation, impairment of long-lived assets and interest expense. In addition, it is an important component of management's internal performance measurement process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents this non-GAAP financial measure to enable investors and analysts to understand the results of operations of the company's core businesses and to compare results of operations on a more consistent basis against that of other companies in the industry.

    o Non-GAAP net income per share. Management presents this non-GAAP financial measure to enable investors and analysts to assess the company's operating results and trends across different reporting periods on a consistent basis, independent of non-cash items including amortization of intangible assets, stock-based compensation, impairment of long-lived assets, interest expense, a gain on purchased options related to its convertible debt offering and the tax effects of these non-GAAP adjustments. In addition, investors and analysts can compare SunPower's operating results on a more consistent basis against that of other companies in the industry. It should be noted that diluted weighted-average shares are determined on a GAAP basis and the resulting share count is used for computing both GAAP and Non-GAAP diluted net income per share.

    Non-Cash Items

    o Amortization of intangible assets. SunPower incurs amortization of intangible assets as a result of acquisitions, which includes in-process research and development, purchased technology, patents and tradenames. SunPower excludes these items because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from prior acquisitions and have no direct correlation to the operation of SunPower's core businesses.

    o Stock-based compensation. Stock-based compensation relates primarily to SunPower stock awards such as stock options and restricted stock. Stock-based compensation is a non-cash expense that varies in amount from period to period and is dependent on market forces that are difficult to predict. As a result of this unpredictability, management excludes this item from its internal operating forecasts and models. Management believes that non-GAAP measures adjusted for stock-based compensation provide investors with a basis to measure the company's core performance against the performance of other companies without the variability created by stock-based compensation.

    o Impairment of long-lived assets. SunPower incurred an impairment of long-lived assets in the first quarter of fiscal 2008 totaling $5.5 million, which relates to the discontinuation of its imaging detector product line and for the write-off of certain solar manufacturing equipment which became obsolete due to new processes. The costs associated with a $3.3 million write-off of certain solar product manufacturing equipment were recovered from the vendor in the third quarter of fiscal 2008. SunPower excluded this item because the expense is not reflective of its ongoing operating results in the period incurred. Excluding this data provides investors with a basis to compare the company's performance against the performance of other companies without non-cash expenses such as impairment of long-lived assets.

    o Non-cash interest expense. Under new accounting guidance, SunPower separately accounts for the liability and equity components of its convertible debt in a manner that reflects interest expense equal to its non-convertible debt borrowing rate. As a result, SunPower incurs interest expense that is substantially higher than interest payable on its 1.25% senior convertible debentures and 0.75% senior convertible debentures. SunPower excludes non-cash interest expense because the expense is not reflective of its ongoing financial results in the period incurred. Excluding this data provides investors with a basis to compare the company's performance against the performance of other companies without non-cash interest expense.

    o Gain on purchased options related to SunPower's convertible debt offering. In connection with the issuance of its 4.75% senior convertible debentures in May 2009, SunPower entered into certain convertible debenture hedge transactions with respect to its class A common stock intended to reduce the potential dilution that would occur upon conversion of the debentures. The convertible debenture hedge transactions consisting of call option instruments are deemed to be a mark-to-market derivative during the period in which the over-allotment option in favor of the debenture underwriters is unexercised. SunPower entered into the underwriting agreement on April 28, 2009 and the debenture underwriters exercised the over-allotment option on April 29, 2009. During the one-day period that the underwriters' over-allotment option was outstanding, SunPower's class A common stock price increased substantially. SunPower excluded the $21.2 million gain relating to the purchased options from its non-GAAP results because it was not realized in cash and it is not reflective of the company's ongoing financial results. Excluding this data provides investors with a basis to compare the company's performance against the performance of other companies without non-cash income from a gain on purchased options.

    o Tax effect. This amount is used to present each of the amounts described above on an after-tax basis with the presentation of non-GAAP net income per share.

    For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of GAAP results of operations measures to non-GAAP measures" set forth at the end of this release and which should be read together with the preceding financial statements prepared in accordance with GAAP.

    SUNPOWER CORPORATION RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (Unaudited) (In thousands, except per share data) STATEMENT OF OPERATIONS DATA: THREE MONTHS ENDED NINE MONTHS ENDED -------------------------- ----------------- Sep. 27, Jun. 28, Sep. 28, Sep. 27, Sep. 28, 2009 2009 2008 2009 2008 ---- ---- ---- ---- ---- GAAP gross margin $89,284 $58,463 $105,313 $195,495 $251,348 Amortization of intangible assets 2,802 2,795 2,947 8,390 9,066 Stock-based compensation expense 4,302 4,630 4,875 9,755 13,718 Impairment of long-lived assets - - (3,286) - 2,203 Non-cash interest expense 365 1,240 244 2,105 477 ------ ------ ------- ------- ------- Non-GAAP gross margin $96,753 $67,128 $110,093 $215,745 $276,812 ====== ====== ======= ======= ======= GAAP operating income $34,561 $9,855 $53,189 $41,917 $112,703 Amortization of intangible assets 4,146 4,098 4,201 12,296 12,552 Stock-based compensation expense 13,074 11,647 18,911 34,204 52,026 Impairment of long-lived assets - - (3,286) - 2,203 Non-cash interest expense 365 1,240 244 2,105 477 ------ ------ ------- ------- ------- Non-GAAP operating income $52,146 $26,840 $73,259 $90,522 $179,961 ====== ====== ======= ======= ======= NET INCOME PER SHARE: THREE MONTHS ENDED NINE MONTHS ENDED -------------------------- ---------------- Sep. 27, Jun. 28, Sep. 28, Sep. 27, Sep. 28, 2009 2009 2008 2009 2008 ---- ---- ---- ---- ---- Basic: GAAP net income per share $0.14 $0.27 $0.30 $0.36 $0.84 Reconciling items: Amortization of intangible assets 0.04 0.04 0.05 0.14 0.16 Stock-based compensation expense 0.13 0.13 0.23 0.38 0.64 Impairment of long-lived assets - - (0.04) - 0.03 Non-cash interest expense 0.06 0.06 0.05 0.18 0.16 Gain on purchased options - (0.23) - (0.24) - Tax effect 0.05 (0.02) - (0.07) (0.21) ------ ------ ------- ------- ------- Non-GAAP net income per share $0.42 $0.25 $0.59 $0.75 $1.62 ====== ====== ======= ======= ======= Diluted: GAAP net income per share $0.13 $0.26 $0.29 $0.35 $0.80 Reconciling items: Amortization of intangible assets 0.04 0.04 0.05 0.13 0.15 Stock-based compensation expense 0.14 0.11 0.22 0.37 0.62 Impairment of long-lived assets - - (0.04) - 0.03 Non-cash interest expense 0.06 0.06 0.05 0.18 0.15 Gain on purchased options - (0.21) - (0.23) - Tax effect 0.05 (0.02) - (0.07) (0.20) ------ ------ ------- ------- ------- Non-GAAP net income per share $0.42 $0.24 $0.57 $0.73 $1.55 ====== ====== ======= ======= ======= Weighted-average shares: GAAP net income per share: - Basic 94,668 90,873 80,465 89,764 79,614 - Diluted 96,319 98,412 84,064 91,513 83,477 Non-GAAP net income per share: - Basic 94,668 90,873 80,465 89,764 79,614 - Diluted 96,319 98,412 84,064 91,513 83,477

    The following supplemental data represents the individual charges and credits that are excluded from SunPower's non-GAAP financial measures for each period presented in the Condensed Consolidated Statements of Operations contained herein.

    SUPPLEMENTAL DATA (In thousands) THREE MONTHS ENDED September 27, 2009 ------------------ Gross Margin Selling, Interest Research general and other and and income Compo- develop- admini- (expense), Income tax Systems nents ment strative net provision ------- ----- ------ -------- ------ --------- Amortization of intangible assets $1,841 $961 $- $1,344 $- $- Stock-based compensation expense 1,494 2,808 1,736 7,036 - - Non-cash interest expense 87 278 - - 4,885 - Tax effect - - - - - 4,969 ----- ----- ----- ----- ----- ----- $3,422 $4,047 $1,736 $8,380 $4,885 $4,969 ===== ===== ===== ===== ===== ===== June 28, 2009 ------------- Gross Margin Selling, Interest Research general and other and and income Compo- develop- admini- (expense), Income tax Systems nents ment strative net provision ------- ----- ------ -------- ------ --------- Amortization of intangible assets $1,841 $954 $- $1,303 $- $- Stock-based compensation expense 1,474 3,156 1,482 5,535 - - Non-cash interest expense 347 893 - - 4,675 - Gain on purchased options - - - - (21,193) - Tax effect - - - - - (1,873) ----- ----- ----- ----- ----- ----- $3,662 $5,003 $1,482 $6,838 $(16,518) $(1,873) ===== ===== ===== ===== ===== ===== September 28, 2008 ------------------ Gross Margin Selling, Interest Research general and other and and income Compo- develop- admini- (expense), Income tax Systems nents ment strative net provision ------- ----- ------ -------- ------ --------- Amortization of intangible assets $1,841 $1,106 $- $1,254 $- $- Stock-based compensation expense 2,911 1,964 987 13,049 - - Impairment of long-lived assets (1,343) (1,943) - - - - Non-cash interest expense 100 144 - - 3,794 - Tax effect - - - - - (337) ----- ----- ----- ----- ----- ----- $3,509 $1,271 $987 $14,303 $3,794 $(337) ===== ===== ===== ===== ===== ===== NINE MONTHS ENDED September 27, 2009 ------------------ Gross Margin Selling, Interest Research general and other and and income Compo- develop- admini- (expense), Income tax Systems nents ment strative net provision ------- ----- ------ -------- ------ --------- Amortization of intangible assets $5,523 $2,867 $- $3,906 $- $- Stock-based compensation expense 3,266 6,489 4,649 19,800 - - Non-cash interest expense 664 1,441 - - 14,081 - Gain on purchased options - - - - (21,193) - Tax effect - - - - - (6,451) ----- ----- ----- ----- ----- ----- $9,453 $10,797 $4,649 $23,706 $(7,112) $(6,451) ===== ===== ===== ===== ===== ===== September 28, 2008 ------------------ Gross Margin Selling, Interest Research general and other and and income Compo- develop- admini- (expense), Income tax Systems nents ment strative net provision ------- ----- ------ -------- ------ --------- Amortization of intangible assets $5,850 $3,216 $- $3,486 $- $- Stock-based compensation expense 7,661 6,057 2,770 35,538 - - Impairment of long-lived assets - 2,203 - - - - Non-cash interest expense 201 276 - - 12,240 - Tax effect - - - - - (16,591) ----- ----- ----- ----- ----- ----- $13,712 $11,752 $2,770 $39,024 $12,240 $(16,591) ===== ===== ===== ===== ===== =====

    SunPower Corp.

    CONTACT: Investors, Bob Okunski, +1-408-240-5447,
    Bob.Okunski@sunpowercorp.com, or Media, Helen Kendrick, +1-408-240-5585,
    Helen.Kendrick@sunpowercorp.com, both of SunPower Corp.

    Web Site: http://www.sunpowercorp.com/




    BancorpSouth Announces Earnings of $0.26 per Diluted Share for Third Quarter 2009

    TUPELO, Miss., Oct. 22 /PRNewswire-FirstCall/ -- BancorpSouth, Inc. today announced financial results for the quarter ended September 30, 2009.

    Highlights of the third quarter include: -- Solid profits with net income of $21.5 million, or $0.26 per diluted share. -- Incremental growth in net interest revenue on a comparable and sequential quarter basis to a record level. -- Continued net interest margin stability with an increase to 3.77 percent from 3.67 percent for the third quarter of 2008 and 3.75 percent for the second quarter of 2009. -- Annualized net charge-offs of 0.68 percent of average loans and leases and non-performing loans and leases of 1.14 percent of total loans and leases. -- Continued emphasis on noninterest expense management programs provides positive results. -- Continued growth in capital levels with common equity to assets of 9.69 percent at September 30, 2009. Summary Results

    BancorpSouth's net income for the third quarter of 2009 was $21.5 million, or $0.26 per diluted share, compared with $28.3 million, or $0.34 per diluted share, for the third quarter of 2008.

    Aubrey Patterson, Chairman and Chief Executive Officer of BancorpSouth, remarked, "BancorpSouth's third quarter results reflect a strong and stable net interest margin, well controlled expenses and solid operating performance in an otherwise difficult operating environment. The sustained profitable performance of our Company throughout this recent economic downturn continues to validate our deliberate and conservative long-term approach in managing through this business cycle. With a strong capital base, high quality assets and solid banking franchise, we remain confident that we are well positioned to manage through this period and continue operating a business plan that will result in achieving our long-term objectives.

    "The prolonged economic downturn has put pressure on the financial services industry and BancorpSouth has experienced some of that pressure. During the third quarter, non-performing loans and leases increased $14.0 million to $111.6 million. This increase was primarily attributable to one loan totaling $10.7 million that was placed on non-accrual during the third quarter. This loan, which is classified as a Shared National Credit, is part of our portfolio of $140 million in loans outstanding where BancorpSouth acts as a participant with other banks.

    "Our provision for credit losses was $22.5 million for the third quarter, while net charge-offs in the period were $16.5 million. At quarter end, our allowance for credit losses was 1.48 percent of net loans and leases. We continue to focus on early identification and decisive resolution of any credit issues.

    "For the third quarter of 2009, the Company's financial results also included the impact of a $4.1 million decrease in the value of our mortgage servicing rights compared with a $1.0 million decrease in value for the third quarter of 2008 and a $2.9 million increase in value for the second quarter of 2009. In addition, comparable quarter results continued to be affected by the major increase in the FDIC insurance premiums initiated in the first quarter of 2009, which totaled $2.7 million more for the third quarter of 2009 than the third quarter last year."

    Net Interest Revenue

    Net interest revenue increased to $111.7 million for the third quarter of 2009, up 1.9 percent from $109.6 million for the third quarter of 2008 and 0.7 percent from $110.9 million for the second quarter of 2009. The fully taxable equivalent net interest margin was 3.77 percent for the third quarter of 2009, compared with 3.67 percent for the third quarter of 2008 and 3.75 percent for the second quarter of 2009.

    Patterson said, "For the third quarter of 2009, we again achieved incremental growth in net interest revenue. By producing a comparable quarter and sequential quarter increase in our net interest margin, we have sustained a consistent and relatively high net interest margin thus far through the economic downturn. Over the last year, our net interest margin has ranged from 3.74 percent to 3.77 percent.

    "While asset growth opportunities have been limited by the weak economy, we have benefitted from good growth in deposits, particularly demand deposits. We have also lengthened the average maturity of our time deposits from 10 to 13 months over the last year. In addition, over the last year, average short-term borrowings have declined from $1.8 billion to $1.1 billion. These funding strategies are intended to limit the negative impact to our net interest margin should interest rates rise."

    Asset, Deposit and Loan Activity

    Total assets at September 30, 2009 were $13.3 billion, virtually unchanged from the end of the third quarter last year. Total deposits of $10.3 billion at September 30, 2009 increased 6.3 percent from $9.7 billion at September 30, 2008. Loans and leases, net of unearned income, increased 1.7 percent to $9.8 billion at September 30, 2009 from $9.6 billion at September 30, 2008.

    "While growth opportunities have been very limited, we continue to concentrate on positioning the balance sheet to take advantage of opportunities that become available," commented Patterson. "We are confident that our diversified geographic footprint positions us for stronger loan growth in an improving economic environment, but we will not relax our lending policies for the sake of growth in the current environment. We will continue our efforts to grow lower-cost deposits by expanding our core customer base and will evaluate strategic opportunities to expand and strengthen our franchise."

    Provision for Credit Losses and Allowance for Credit Losses

    For the third quarter of 2009, the provision for credit losses was $22.5 million compared with $16.3 million for the third quarter of 2008 and $17.6 million for the second quarter of 2009. Annualized net charge-offs were 0.68 percent of average loans and leases for the third quarter of 2009 compared with 0.45 percent for the third quarter of 2008 and 0.55 percent for the second quarter of 2009.

    Non-performing loans and leases increased to $111.6 million, or 1.14 percent of net loans and leases, at September 30, 2009 from $65.2 million, or 0.68 percent of net loans and leases, at September 30, 2008 and from $97.7 million, or 1.00 percent of net loans and leases, at June 30, 2009. The allowance for credit losses increased to 1.48 percent of net loans and leases at September 30, 2009 compared with 1.35 percent at September 30, 2008 and 1.42 percent at June 30, 2009.

    Patterson added, "As addressed earlier, the growth in non-performing loans was primarily driven by one larger credit that was placed on non-accrual during the quarter, while our loan portfolio as a whole continued to perform well given the length and severity of the recent recession. While we recognize that, the longer this period of economic weakness persists, troubled borrowers could find it increasingly difficult to comply with repayment terms, we are confident that our process to identify credit problems early will enable us to keep those problems manageable. All our loans were originated within our markets and our conservative lending and credit policies are designed to enhance our ability to work with each borrower to minimize risk of loss."

    Noninterest Revenue

    For the third quarter of 2009, noninterest revenue decreased 6.1 percent to $59.5 million from $63.4 million for the third quarter of 2008. This decrease reflected, in part, a $4.1 million decline in the value of the mortgage servicing rights (MSR) for the third quarter of 2009 compared with a $1.0 million decline for the third quarter of 2008.

    Patterson commented, "We are pleased with the strong growth in our mortgage origination business, with mortgage lending revenue, excluding the MSR valuation adjustment, of $6.1 million, a 43.1 percent increase from the third quarter last year. Comparable quarter noninterest revenue also benefitted from the second consecutive quarterly increase in credit and debit card fee income resulting primarily from higher transaction volume. Although service charges have not recovered to the levels achieved for the third quarter of 2008, they have now increased on a sequential quarter basis for the second consecutive quarter. Because of insurance market conditions that remain soft, our insurance commission revenue declined 7.6 percent compared with record insurance commission revenue for the third quarter of 2008."

    Noninterest Expense

    Noninterest expense was $119.7 million for the third quarter of 2009, an increase of 3.2 percent from $116.1 million for the third quarter of 2008. These results again reflected the substantial increase in BancorpSouth's FDIC premium initiated in the first quarter of 2009. Although the Company continues to be assessed at the FDIC's lowest rate because of its "well capitalized" status under federal regulations, the FDIC premium for the third quarter of 2009 increased $2.7 million over the third quarter of 2008. The growth in noninterest expense from the third quarter of 2008 also related to the opening of 12 full-service branch bank offices during the 12 month period ended September 30, 2009. Noninterest expense for the second quarter of 2009 was $123.3 million, which included the impact of a special FDIC assessment totaling $6.1 million that was in addition to the recurring FDIC premium.

    Capital Management

    BancorpSouth's commitment to a strong capital base is one of its fundamental operating principles. The Company's capital base was further strengthened during the third quarter of 2009, as the ratio of shareholders' equity to assets improved on a comparable quarter basis for the 13th consecutive quarter, increasing to 9.69 percent at the end of the third quarter from 9.34 percent at the end of the third quarter of 2008 and 9.59 percent at the end of the second quarter of 2009. The ratio of tangible equity to assets also increased to 7.64 percent from 7.25 percent at the end of the third quarter of 2008 and 7.53 percent at the end of the second quarter of 2009. BancorpSouth remains a "well capitalized" financial holding company, as defined by federal regulations.

    Summary

    Patterson concluded, "BancorpSouth's third quarter operating performance highlighted many of the challenges we continue to face in an extended recessionary environment, as well as many of the strengths that have enabled us to consistently outperform our peers throughout the economic downturn. The fundamental basis of these strengths is our conservative operating philosophy that we believe best positions BancorpSouth to achieve long-term growth and increased shareholder value in an industry subject to interest rate and economic cycles.

    "Because of our consistent adherence to this philosophy, BancorpSouth is not only well prepared to manage through the challenges presented in today's market, but we are well positioned to generate additional growth in an improving economic environment. We have continued to prepare for organic growth by engaging existing customers with new products and services, winning new customers in existing markets and expanding our geographic footprint into attractive new markets. Through the consistent strengthening of our capital structure, we have also prepared to leverage opportunities for growth through strategic acquisitions.

    "As a result of the Company's strong market position and its performance throughout the economic downturn, we remain confident of BancorpSouth's long-term growth potential. We have neither been, nor will we be, complacent about the impact of the current economic environment on our customers, our credit quality, our ability to produce revenue growth and manage expenses or our shareholder value. However, through the long-term orientation of our conservative business model, we have consistently prepared BancorpSouth to deal with the challenges of the full economic cycle, and we expect to emerge from the current downturn in a stronger competitive position than when the downturn began."

    Conference Call

    BancorpSouth will conduct a conference call to discuss its third quarter 2009 results tomorrow, October 23, 2009, at 10:00 a.m. (Central Time). Investors may listen via the Internet by accessing BancorpSouth's website at http://www.bancorpsouth.com/. A replay of the conference call will be available at BancorpSouth's website for at least two weeks following the call.

    Forward-Looking Statements

    Certain statements contained in this news release may not be based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as "anticipate," "believe," "estimate," "expect," "may," "might," "will," "would," "could" or "intend." These forward-looking statements include, without limitation, statements relating to our ability to achieve our long-term objectives, the impact of rising interest rates on our net interest margin, our lending policies, our efforts to grow lower-cost deposits, strategic opportunities to expand and strengthen our franchise, our process to identify credit problems, our conservative operating philosophy, the impact of the current economic environment on our customers and our competitive position.

    We caution you not to place undue reliance on the forward-looking statements contained in this news release in that actual results could differ materially from those indicated in such forward-looking statements because of a variety of factors. These factors may include, but are not limited to, changes in general business or economic conditions or government fiscal and monetary policies, volatility and disruption in national and international financial markets, fluctuations in prevailing interest rates and the ability of BancorpSouth to manage its assets and liabilities to limit exposure to changing interest rates, the ability of BancorpSouth to increase noninterest revenue and expand noninterest revenue business, the ability of BancorpSouth to maintain credit quality, changes in laws and regulations affecting financial service companies in general, the ability of BancorpSouth to compete with other financial services companies, the ability of BancorpSouth to provide and market competitive services and products, changes in BancorpSouth's operating or expansion strategy, BancorpSouth's business model, geographic concentration of BancorpSouth's assets, the ability of BancorpSouth to manage its growth and effectively serve an expanding customer and market base, the ability of BancorpSouth to achieve profitable growth and increase shareholder value, the ability of BancorpSouth to attract, train and retain qualified personnel, the ability of BancorpSouth to identify, close and effectively integrate potential acquisitions, the ability of BancorpSouth to expand geographically and enter growing markets, changes in consumer preferences, other factors generally understood to affect the financial results of financial services companies, and other factors described from time to time in BancorpSouth's filings with the Securities and Exchange Commission. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

    BancorpSouth, Inc. is a financial holding company headquartered in Tupelo, Mississippi, with $13.3 billion in assets. BancorpSouth Bank, a wholly-owned subsidiary of BancorpSouth, Inc., operates approximately 314 commercial banking, mortgage, insurance, trust and broker/dealer locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas. BancorpSouth Bank also operates an insurance location in Illinois.

    BancorpSouth, Inc. Selected Financial Data ----------------------- Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- (Dollars in thousands, except per share amounts) Earnings Summary: Net interest revenue $111,736 $109,602 $332,552 $329,515 Provision for credit losses 22,514 16,306 55,053 38,354 Noninterest revenue 59,549 63,433 205,581 202,930 Noninterest expense 119,746 116,059 361,466 341,593 ------- ------- ------- ------- Income before income taxes 29,025 40,670 121,614 152,498 Income tax provision 7,494 12,325 36,739 48,883 ----- ------ ------ ------ Net income $21,531 $28,345 $84,875 $103,615 ======= ======= ======= ======== Earning per share: Basic $0.26 $0.34 $1.02 $1.26 ===== ===== ===== ===== Diluted $0.26 $0.34 $1.02 $1.25 ===== ===== ===== ===== Balance sheet data at September 30: Total assets $13,271,873 $13,300,728 Total earning assets 12,094,937 12,073,837 Loans and leases, net of unearned income 9,757,944 9,592,412 Allowance for credit losses 144,791 129,147 Total deposits 10,297,034 9,684,800 Common shareholders' equity 1,286,218 1,242,719 Book value per share 15.41 14.96 Average balance sheet data: Total assets $13,167,057 $13,304,939 $13,250,329 $13,174,345 Total earning assets 12,027,909 12,132,130 12,116,158 12,012,791 Loans and leases, net of unearned interest 9,750,159 9,529,731 9,729,050 9,371,480 Total deposits 10,200,211 9,659,246 10,057,028 9,873,058 Common shareholders' equity 1,265,099 1,231,350 1,251,769 1,219,170 Non-performing assets at September 30: Non-accrual loans and leases $82,732 $30,642 Loans and leases 90+ days past due, still accruing 20,699 31,866 Restructured loans and leases, still accruing 8,205 2,666 Other real estate owned 62,072 32,479 ------ ------ Total non-performing assets 173,708 97,653 Net charge-offs as a percentage of average loans (annualized) 0.68% 0.45% 0.59% 0.35% Performance ratios (annualized): Return on average assets 0.65% 0.85% 0.86% 1.05% Return on common equity 6.75% 9.16% 9.07% 11.35% Net interest margin 3.77% 3.67% 3.75% 3.75% Average shares outstanding - basic 83,368,580 82,560,724 83,260,911 82,420,266 Average shares outstanding - diluted 83,512,826 82,765,428 83,398,142 82,645,153 BancorpSouth, Inc. Consolidated Balance Sheet (Unaudited) September 30, % 2009 2008 Change ---- ---- ------ (Dollars in thousands) Assets ------ Cash and due from banks $189,103 $246,687 (23.34%) Interest bearing deposits with other banks 43,067 15,730 173.79% Held-to-maturity securities, at amortized cost 1,180,716 1,350,396 (12.57%) Available-for-sale securities, at fair value 958,158 919,468 4.21% Federal funds sold and securities purchased under agreement to resell 75,000 - N/A Loans and leases 9,803,235 9,641,497 1.68% Less: Unearned income 45,291 49,085 (7.73%) Allowance for credit losses 144,791 129,147 12.11% ------- ------- Net loans and leases 9,613,153 9,463,265 1.58% Loans held for sale 80,053 195,830 (59.12%) Premises and equipment, net 346,931 345,235 0.49% Accrued interest receivable 74,589 85,968 (13.24%) Goodwill 270,097 271,017 (0.34%) Other assets 441,006 407,132 8.32% ------- ------- Total Assets $13,271,873 13,300,728 (0.22%) =========== ========== Liabilities ----------- Deposits: Demand: Noninterest bearing $1,769,432 1,694,303 4.43% Interest bearing 4,055,395 3,771,265 7.53% Savings 712,446 693,034 2.80% Other time 3,759,761 3,526,198 6.62% --------- --------- Total deposits 10,297,034 9,684,800 6.32% Federal funds purchased and securities sold under agreement to repurchase 816,374 1,079,088 (24.35%) Short-term Federal Home Loan Bank borrowings and other short-term borrowing 200,000 625,000 (68.00%) Accrued interest payable 24,243 24,846 (2.43%) Junior subordinated debt securities 160,312 160,312 0.00% Long-term Federal Home Loan Bank borrowings 286,281 288,861 (0.89%) Other liabilities 201,411 195,102 3.23% ------- ------- Total Liabilities 11,985,655 12,058,009 (0.60%) Shareholders' Equity -------------------- Common stock 208,615 207,714 0.43% Capital surplus 222,135 216,394 2.65% Accumulated other comprehensive income (loss) (18,568) (8,746) 112.30% Retained earnings 874,036 827,357 5.64% ------- ------- Total Shareholders' Equity 1,286,218 1,242,719 3.50% --------- --------- Total Liabilities & Shareholders' Equity $13,271,873 $13,300,728 (0.22%) =========== =========== BancorpSouth, Inc. Consolidated Condensed Statements of Income (Dollars in thousands, except per share data) (Unaudited) Quarter Ended ------------- Sep-09 Jun-09 Mar-09 Dec-08 Sep-08 ------ ------ ------ ------ ------ INTEREST REVENUE: Loans and leases $129,455 $129,263 $129,209 $139,099 $144,393 Deposits with other banks 20 22 70 111 172 Federal funds sold and securities purchased under agreement to resell 27 3 1 3 218 Held-to-maturity securities: Taxable 11,690 12,108 13,031 13,625 14,063 Tax-exempt 2,193 2,155 2,111 2,053 1,959 Available-for-sale securities: Taxable 8,592 8,721 9,038 8,693 9,025 Tax-exempt 812 826 883 867 874 Loans held for sale 698 1,215 1,275 2,117 1,920 --- ----- ----- ----- ----- Total interest revenue 153,487 154,313 155,618 166,568 172,624 ------- ------- ------- ------- ------- INTEREST EXPENSE: Interest bearing demand 9,038 9,738 12,248 15,924 14,214 Savings 937 927 936 1,080 1,366 Other time 25,534 26,496 25,833 28,293 33,660 Federal funds purchased and securities sold under agreement to repurchase 331 421 572 2,175 4,308 FHLB borrowings 2,877 2,885 2,823 4,537 6,277 Junior subordinated debt 2,884 2,928 2,955 3,162 3,064 Other 150 (22) 375 76 133 --- --- --- -- --- Total interest expense 41,751 43,373 45,742 55,247 63,022 ------ ------ ------ ------ ------ Net interest revenue 111,736 110,940 109,876 111,321 109,602 Provision for credit losses 22,514 17,594 14,945 17,822 16,306 ------ ------ ------ ------ ------ Net interest revenue, after provision for credit losses 89,222 93,346 94,931 93,499 93,296 ------ ------ ------ ------ ------ NONINTEREST REVENUE: Mortgage lending 2,012 13,959 7,652 (12,174) 3,270 Credit card, debit card and merchant fees 8,902 9,111 8,348 8,409 8,512 Service charges 16,313 15,642 14,085 16,915 17,687 Trust income 2,435 2,040 2,209 2,328 2,507 Security gains (losses), net - 42 5 (6,226) 100 Insurance commissions 20,134 20,575 22,645 18,752 21,779 Other 9,753 18,370 11,349 11,446 9,578 ----- ------ ------ ------ ----- Total noninterest revenue 59,549 79,739 66,293 39,450 63,433 ------ ------ ------ ------ ------ NONINTEREST EXPENSES: Salaries and employee benefits 70,353 70,092 71,363 64,395 68,865 Occupancy, net of rental income 10,720 10,492 9,999 10,307 10,340 Equipment 5,853 5,855 6,222 6,319 6,214 Deposit insurance assessments 3,402 9,358 3,126 1,444 717 Other 29,418 27,470 27,743 28,628 29,923 ------ ------ ------ ------ ------ Total noninterest expenses 119,746 123,267 118,453 111,093 116,059 ------- ------- ------- ------- ------- Income before income taxes 29,025 49,818 42,771 21,856 40,670 Income tax expense 7,494 15,951 13,294 5,060 12,325 ----- ------ ------ ----- ------ Net income $21,531 $33,867 $29,477 $16,796 $28,345 ======= ======= ======= ======= ======= Net income per share: Basic $0.26 $0.41 $0.35 $0.20 $0.34 ===== ===== ===== ===== ===== Diluted $0.26 $0.41 $0.35 $0.20 $0.34 ===== ===== ===== ===== ===== Year To Date ------------ Sep-09 Sep-08 ------ ------ INTEREST REVENUE: Loans and leases $387,927 $450,866 Deposits with other banks 112 573 Federal funds sold and securities purchased under agreement to resell 31 285 Held-to-maturity securities: Taxable 36,829 45,054 Tax-exempt 6,459 6,059 Available-for-sale securities: Taxable 26,351 27,120 Tax-exempt 2,521 3,338 Loans held for sale 3,188 5,550 ----- ----- Total interest revenue 463,418 538,845 ------- ------- INTEREST EXPENSE: Interest bearing demand 31,024 44,409 Savings 2,800 4,200 Other time 77,863 120,298 Federal funds purchased and securities sold under agreement to repurchase 1,324 12,824 FHLB borrowings 8,585 17,921 Junior subordinated debt 8,767 9,309 Other 503 369 --- --- Total interest expense 130,866 209,330 ------- ------- Net interest revenue 332,552 329,515 Provision for credit losses 55,053 38,354 ------ ------ Net interest revenue, after provision for credit losses 277,499 291,161 ------- ------- NONINTEREST REVENUE: Mortgage lending 23,623 14,320 Credit card, debit card and merchant fees 26,361 25,334 Service charges 46,040 50,619 Trust income 6,684 7,002 Security gains (losses), net 47 377 Insurance commissions 63,354 67,909 Other 39,472 37,369 ------ ------ Total noninterest revenue 205,581 202,930 ------- ------- NONINTEREST EXPENSES: Salaries and employee benefits 211,808 207,161 Occupancy, net of rental income 31,211 29,539 Equipment 17,930 18,892 Deposit insurance assessments 15,886 1,408 Other 84,631 84,593 ------ ------ Total noninterest expenses 361,466 341,593 ------- ------- Income before income taxes 121,614 152,498 Income tax expense 36,739 48,883 ------ ------ Net income $84,875 $103,615 ======= ======== Net income per share: Basic $1.02 $1.26 ===== ===== Diluted $1.02 $1.25 ===== ===== BancorpSouth, Inc. Selected Loan Data (Dollars in thousands) (Unaudited) Quarter Ended ------------- Sep-09 Jun-09 Mar-09 Dec-08 Sep-08 ------ ------ ------ ------ ------ LOAN AND LEASE PORTFOLIO: Commercial and industrial $1,442,344 $1,441,718 $1,390,042 $1,417,499 $1,401,177 Real estate Consumer mortgages 2,046,433 2,054,666 2,037,439 2,096,568 2,108,991 Home equity 540,875 532,337 519,528 511,480 500,489 Agricultural 254,647 242,034 238,466 234,024 236,647 Commercial and industrial-owner occupied 1,432,859 1,394,852 1,455,422 1,465,027 1,489,215 Construction, acquisition and development 1,533,622 1,652,052 1,692,526 1,689,719 1,671,693 Commercial 1,770,066 1,719,044 1,660,211 1,568,956 1,489,548 Credit cards 103,208 101,844 98,450 93,650 90,112 All other 633,890 622,853 620,739 614,354 604,540 ------- ------- ------- ------- ------- Total loans $9,757,944 $9,761,400 $9,712,823 $9,691,277 $9,592,412 ---------- ---------- ---------- ---------- ---------- ALLOWANCE FOR CREDIT LOSSES: Balance, beginning of period $138,747 $134,632 $132,793 $129,147 $123,478 Loans and leases charged off: Commercial and industrial (3,913) (1,070) (1,147) (1,003) (267) Real estate Consumer mortgages (2,669) (4,877) (4,073) (3,582) (1,828) Home equity (1,278) (1,106) (1,153) (596) (361) Agricultural (407) (3) (37) (350) (19) Commercial and industrial-owner occupied (1,795) (649) (836) (511) (67) Construction, acquisition and development (3,160) (4,335) (4,377) (6,208) (6,975) Commercial (2,135) (321) (560) (611) (203) Credit cards (1,204) (1,290) (1,158) (953) (837) All other (939) (815) (810) (953) (807) ---- ---- ---- ---- ---- Total loans charged off (17,500) (14,466) (14,151) (14,767) (11,364) ------- ------- ------- ------ ------- Recoveries: Commercial and industrial 320 68 179 279 134 Real estate Consumer mortgages 132 263 220 174 77 Home equity 28 2 3 1 24 Agricultural - - 2 - - Commercial and industrial-owner occupied 31 248 8 54 3 Construction, acquisition and development 31 4 86 97 64 Commercial 108 - 56 23 - Credit cards 123 140 138 99 92 All other 257 262 353 290 333 --- --- --- --- --- Total recoveries 1,030 987 1,045 1,017 727 ----- --- ----- ----- --- Net charge-offs (16,470) (13,479) (13,106) (13,750) (10,637) Provision charged to operating expense 22,514 17,594 14,945 17,822 16,306 Other, net - - - (426) - ---- ---- ---- ---- ---- Balance, end of period $144,791 $138,747 $134,632 $132,793 $129,147 -------- -------- -------- -------- -------- Average loans for period $9,750,159 $9,740,916 $9,695,475 $9,604,142 $9,529,731 ========== ========== ========== ========== ========== Ratios: Net charge-offs to average loans (annualized) 0.68% 0.55% 0.54% 0.57% 0.45% ==== ==== ==== ==== ==== BancorpSouth, Inc. Selected Loan Data (Dollars in thousands) (Unaudited) Quarter Ended ------------- Sep-09 Jun-09 Mar-09 ----------------- ----------------- ----------------- NPL as a % NPL as a % NPL as a % of of of NPL outstanding NPL outstanding NPL outstanding --- ------------ --- ------------ --- ------------ NON-PERFORMING LOANS Commercial and industrial $7,509 0.52% $9,378 0.65% $7,341 0.53% Real estate Consumer mortgages 27,074 1.32 20,162 0.98 18,113 0.89 Home equity 2,586 0.48 2,247 0.42 1,590 0.31 Agricultural 2,936 1.15 4,455 1.84 1,353 0.57 Commercial and industrial-owner occupied 6,386 0.45 7,083 0.51 7,135 0.49 Construction, acquisition and development 45,757 2.98 44,828 2.71 30,544 1.80 Commercial 12,770 0.72 3,613 0.21 2,387 0.14 Credit cards 4,306 4.17 4,127 4.05 3,934 4.00 All other 2,312 0.36 1,779 0.29 1,419 0.23 ----- ---- ----- ---- ----- ---- Total loans $111,636 1.14% $97,672 1.00% $73,816 0.76% ======== ==== ======= ==== ======= ==== Quarter Ended ------------- Dec-08 Sep-08 ----------------- ----------------- NPL as a % NPL as a % of of NPL outstanding NPL outstanding --- ------------ --- ------------ Commercial and industrial $8,093 0.57% $6,377 0.46% Real estate Consumer mortgages 17,970 0.86 22,136 1.05 Home equity 939 0.18 486 0.10 Agricultural 849 0.36 1,260 0.53 Commercial and industrial-owner occupied 4,529 0.31 3,281 0.22 Construction, acquisition and development 24,874 1.47 25,696 1.54 Commercial 1,445 0.09 628 0.04 Credit cards 3,882 4.15 3,705 4.11 All other 1,432 0.23 1,605 0.27 ----- ---- ----- ---- Total loans $64,013 0.66% $65,174 0.68% ======= ==== ======= ==== BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended September 30, 2009 ------------------ Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------- -------- ---- ASSETS Loans, loans held for sale, and leases net of unearned income $9,808,427 $130,957 5.30% Held-to-maturity securities: Taxable 998,773 11,799 4.69% Tax-exempt 199,360 3,373 6.71% Available-for-sale securities: Taxable 889,278 8,591 3.83% Tax-exempt 69,737 1,251 7.12% Short-term investments 62,334 47 0.30% ------ -- Total interest earning assets and revenue 12,027,909 156,020 5.15% Other assets 1,285,360 Less: allowance for credit losses (146,212) -------- Total $13,167,057 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $4,010,281 $9,038 0.89% Savings 716,155 936 0.52% Other time 3,726,754 25,535 2.72% Short-term borrowings 1,071,144 544 0.20% Junior subordinated debt 160,312 2,884 7.14% Long-term debt 286,285 2,814 3.90% ------- ----- Total interest bearing liabilities and expense 9,970,931 41,751 1.66% Demand deposits - noninterest bearing 1,747,021 Other liabilities 184,006 ------- Total liabilities 11,901,958 Shareholders' equity 1,265,099 --------- Total $13,167,057 =========== -------- Net interest revenue $114,269 ======== Net interest margin 3.77% Net interest rate spread 3.49% Interest bearing liabilities to interest earning assets 82.90% Net interest tax equivalent adjustment $2,533 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended June 30, 2009 ------------- Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------- -------- ---- ASSETS Loans, loans held for sale, and leases net of unearned income $9,896,890 $131,313 5.32% Held-to-maturity securities: Taxable 1,040,896 12,218 4.71% Tax-exempt 186,473 3,316 7.13% Available-for-sale securities: Taxable 919,217 8,721 3.81% Tax-exempt 69,960 1,270 7.28% Short-term investments 21,727 25 0.47% ------ -- Total interest earning assets and revenue 12,135,163 156,863 5.18% Other assets 1,270,193 Less: allowance for credit losses (144,570) -------- Total $13,260,786 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,948,759 $9,738 0.99% Savings 719,281 928 0.52% Other time 3,634,336 26,496 2.92% Short-term borrowings 1,340,244 470 0.14% Junior subordinated debt 160,312 2,928 7.33% Long-term debt 286,294 2,813 3.94% ------- ----- Total interest bearing liabilities and expense 10,089,226 43,373 1.72% Demand deposits - noninterest bearing 1,756,861 Other liabilities 163,749 ------- Total liabilities 12,009,836 Shareholders' equity 1,250,950 --------- Total $13,260,786 =========== -------- Net interest revenue $113,490 ======== Net interest margin 3.75% Net interest rate spread 3.46% Interest bearing liabilities to interest earning assets 83.14% Net interest tax equivalent adjustment $2,550 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended March 31, 2009 -------------- Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------- -------- ---- ASSETS Loans, loans held for sale, and leases net of unearned income $9,873,692 $131,339 5.39% Held-to-maturity securities: Taxable 1,146,772 13,141 4.65% Tax-exempt 182,051 3,247 7.23% Available-for-sale securities: Taxable 891,699 9,038 4.11% Tax-exempt 73,814 1,358 7.46% Short-term investments 19,123 71 1.51% ------ -- Total interest earning assets and revenue 12,187,151 158,194 5.26% Other assets 1,277,538 Less: allowance for credit losses (139,811) -------- Total $13,324,878 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $4,090,821 $12,248 1.21% Savings 697,639 936 0.54% Other time 3,419,180 25,833 3.06% Short-term borrowings 1,588,229 959 0.24% Junior subordinated debt 160,312 2,955 7.48% Long-term debt 286,306 2,811 3.98% ------- ----- Total interest bearing liabilities and expense 10,242,487 45,742 1.81% Demand deposits - noninterest bearing 1,700,792 Other liabilities 142,628 ------- Total liabilities 12,085,907 Shareholders' equity 1,238,971 --------- Total $13,324,878 =========== -------- Net interest revenue $112,452 ======== Net interest margin 3.74% Net interest rate spread 3.45% Interest bearing liabilities to interest earning assets 84.04% Net interest tax equivalent adjustment $2,576 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended December 31, 2008 ----------------- Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------- -------- ---- ASSETS Loans, loans held for sale, and leases net of unearned income $9,773,683 $142,039 5.78% Held-to-maturity securities: Taxable 1,193,555 13,734 4.58% Tax-exempt 180,695 3,159 6.96% Available-for-sale securities: Taxable 868,913 8,693 3.98% Tax-exempt 73,476 1,335 7.23% Short-term investments 19,338 114 2.34% ------ --- Total interest earning assets and revenue 12,109,660 169,074 5.55% Other assets 1,304,386 Less: allowance for credit losses (134,453) -------- Total $13,279,593 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,811,782 $15,924 1.66% Savings 684,068 1,080 0.63% Other time 3,400,071 28,293 3.31% Short-term borrowings 1,828,010 3,951 0.86% Junior subordinated debt 160,312 3,161 7.84% Long-term debt 287,990 2,838 3.92% ------- ----- Total interest bearing liabilities and expense 10,172,233 55,247 2.16% Demand deposits - noninterest bearing 1,702,400 Other liabilities 165,462 ------- Total liabilities 12,040,095 Shareholders' equity 1,239,498 --------- Total $13,279,593 =========== -------- Net interest revenue $113,827 ======== Net interest margin 3.74% Net interest rate spread 3.39% Interest bearing liabilities to interest earning assets 84.00% Net interest tax equivalent adjustment $2,506 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended September 30, 2008 ------------------ Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------- -------- ---- ASSETS Loans, loans held for sale, and leases net of unearned income $9,689,955 $147,113 6.04% Held-to-maturity securities: Taxable 1,219,169 14,173 4.62% Tax-exempt 180,579 3,014 6.64% Available-for-sale securities: Taxable 901,023 9,025 3.98% Tax-exempt 75,917 1,344 7.04% Short-term investments 65,487 390 2.37% ------ --- Total interest earning assets and revenue 12,132,130 175,059 5.74% Other assets 1,304,430 Less: allowance for credit losses (131,621) -------- Total $13,304,939 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,492,942 $14,214 1.62% Savings 723,444 1,366 0.75% Other time 3,761,753 33,660 3.56% Short-term borrowings 1,790,760 7,879 1.75% Junior subordinated debt 160,312 3,064 7.60% Long-term debt 288,875 2,839 3.91% ------- ----- Total interest bearing liabilities and expense 10,218,086 63,022 2.45% Demand deposits - noninterest bearing 1,681,107 Other liabilities 174,396 ------- Total liabilities 12,073,589 Shareholders' equity 1,231,350 --------- Total $13,304,939 =========== -------- Net interest revenue $112,037 ======== Net interest margin 3.67% Net interest rate spread 3.29% Interest bearing liabilities to interest earning assets 84.22% Net interest tax equivalent adjustment $2,435

    BancorpSouth, Inc.

    CONTACT: William L. Prater, Treasurer and Chief Financial Officer,
    +1-662-680-2000, or Gary C. Bonds, Senior Vice President and Principal
    Accounting Officer, +1-662-680-2332, both of BancorpSouth, Inc.

    Web Site: http://www.bancorpsouth.com/




    NETGEAR(R) Reports Third Quarter 2009 ResultsHighlights: - Net revenue of $171.1 million, compared to $179.4 million in the comparable prior year quarter - Non-GAAP net income of $11.0 million, compared to net income of $6.9 million in the comparable prior year quarter - Non-GAAP diluted earnings per share of $0.31, compared to diluted earnings per share of $0.19 in the comparable prior year quarter - Fourth quarter 2009 net revenue guidance in the range of $170 million to $180 million, with non-GAAP operating margin guidance in the range of 7% to 9%

    SAN JOSE, Calif., Oct. 22 /PRNewswire-FirstCall/ -- NETGEAR, Inc. , a worldwide provider of technologically innovative, branded networking products, today reported financial results for the third quarter ended September 27, 2009.

    Net revenue for the third quarter ended September 27, 2009 was $171.1 million, compared to $179.4 million for the third quarter ended September 28, 2008, and $144.7 million in the second quarter ended June 28, 2009. Net income, computed in accordance with GAAP, for the third quarter of 2009 was $8.5 million, or $0.24 per diluted share. This compared to net income of $3.1 million for the third quarter of 2008, and a net loss of $3.3 million in the second quarter of 2009. Diluted earnings per share, computed in accordance with GAAP, was $0.09 for the third quarter of 2008 and diluted loss per share, computed in accordance with GAAP, was $0.10 for the second quarter of 2009.

    Gross margin on a non-GAAP basis in the third quarter of 2009 was 33.5%, compared to 35.5% in the third quarter of 2008, and 29.6% in the second quarter of 2009. Non-GAAP operating margin was 10.6% in the third quarter of 2009, compared to 11.1% in the third quarter of 2008, and 3.7% in the second quarter of 2009. Non-GAAP net income was $0.31 per diluted share in the third quarter of 2009, compared to non-GAAP net income of $0.19 per diluted share in the third quarter of 2008, and non-GAAP net loss of $0.02 per diluted share in the second quarter of 2009.

    The differences between GAAP and non-GAAP financial measures include adjustments, net of any tax effect, for amortization of purchased intangibles, stock-based compensation, restructuring, acquisition related compensation, and litigation reserves. The accompanying schedules provide a reconciliation of financial measures computed on a GAAP basis to financial measures computed on a non-GAAP basis.

    Patrick Lo, Chairman and Chief Executive Officer of NETGEAR commented, "We are extremely pleased with our business performance this quarter. The third quarter showed robust back to school demand and market share gain in the U.S., resulting in year-over-year growth in U.S. net revenue. SMB (small and medium-sized business) demand improved with quarter-over-quarter growth across all geographic regions. Combined with our continued cost savings, this net revenue growth resulted in significant operating margin improvement which exceeded our expectations."

    Mr. Lo continued, "We introduced 21 new products in the third quarter, a new record for us in product launches in a single quarter. Notable launches in home consumer products include the Digital Entertainer Live for viewing Internet video programs on TVs; Stora, our home multimedia network storage device accessible anywhere in the world via both laptops and smartphones; and the "ultimate networking machine" - a dual band, gigabit, super high speed WiFi router packed with state of the art features such as ReadyShare USB access and broadband usage metering. On the SMB front, we introduced the 12-Bay Super Performance Rackmount ReadyNAS capable of storing up to 12TB of secured data; and a full line of ProSecure security appliances ranging from UTMs for up to 25 users and Content Threat Managers for up to 600 users. We also debuted breakthrough products such as our new DOCSIS 3.0 cable WiFi gateway and revolutionary "configurable" unmanaged switches. We remain laser focused on product development and intend to roll out another 15-20 new products in the fourth quarter. This will further position us for future revenue growth and market share gain.

    During the quarter, our net revenue from service providers was approximately 25% of total net revenue, as compared to 18% in the third quarter of 2008, and 30% in the second quarter of 2009. In addition, we are excited to have added J:COM in Japan and Comhem in Sweden to our service provider customer list in the third quarter of 2009."

    Christine Gorjanc, Chief Financial Officer of NETGEAR, said, "We ended the third quarter of 2009 with $234.5 million in cash, cash equivalents and short-term investments, compared to $202.2 million at the end of the third quarter of 2008, and $224.5 million at the end of the second quarter of 2009. Our net inventory ended at $73.9 million, compared to $125.7 million at the end of the third quarter of 2008, and $75.0 million at the end of the second quarter of 2009. We are also pleased to announce that our current year-to-date operating expense cost reductions is approximately $8.8 million, as compared to our total 2009 operating expense cost reduction target of $10.0 million, which was based on our annualized fourth quarter 2008 run rate."

    Net revenue by geography comprises gross revenue less items such as marketing incentives paid to customers, sales returns and price protection. The following table shows net revenue by geography for the periods indicated:

    Net revenue by geography: Three months ended ------------------ September 27, 2009 June 28, 2009 September 28, 2008 ------------------ ------------- ------------------ North America $75,408 44% $69,438 48% $73,693 41% Europe, Middle-East and Africa 72,590 42% 54,249 37% 81,646 46% Asia Pacific 23,073 14% 20,987 15% 24,028 13% ------ -- ------ -- ------ -- $171,071 100% $144,674 100% $179,367 100% -------- ---- -------- ---- -------- ----

    Looking ahead, Mr. Lo commented, "During the fourth quarter of 2009, we anticipate continued revenue expansion in new categories such as consumer and high end network storage, DOCSIS 3.0 cable gateways, and security appliances, in addition to overall market share gain in retail and SMB channels worldwide. We believe we can continue to grow and gain market share in the U.S., Asia Pacific and other emerging markets. Specifically, for the fourth quarter 2009, we expect net revenue in the range of approximately $170 million to $180 million and non-GAAP operating margin to be in the range of 7% to 9%."

    Investor Conference Call / Webcast Details

    NETGEAR will review the third quarter 2009 results and discuss management's expectations for the fourth quarter of 2009 today, Thursday, October 22, 2009 at 5 p.m. EDT (2 p.m. PDT). The dial-in number for the live audio call is (201) 689-8560. A live webcast of the conference call will be available on NETGEAR's website at http://www.netgear.com/. A replay of the call will be available 2 hours following the call through midnight EDT (9 p.m. PDT) on Thursday, October 29, 2009 by telephone at (201) 612-7415 and via the web at http://www.netgear.com/. The account number to access the phone replay is 3055 and the conference ID number is 334701.

    About NETGEAR, Inc.

    NETGEAR designs innovative, branded technology solutions that address the specific networking, storage, and security needs of small- to medium-sized businesses and home users. The company offers an end-to-end networking product portfolio to enable users to share Internet access, peripherals, files, multimedia content, and applications among multiple computers and other Internet-enabled devices. Products are built on a variety of proven technologies such as wireless, Ethernet and powerline, with a focus on reliability and ease-of-use. NETGEAR products are sold in over 27,000 retail locations around the globe, and via more than 37,000 value-added resellers. The company's headquarters are in San Jose, Calif., with additional offices in 25 countries. NETGEAR is an ENERGY STAR® partner. More information is available by visiting http://www.netgear.com/ or calling (408) 907-8000. Follow NETGEAR at http://twitter.com/NETGEAR and http://www.facebook.com/netgear.

    © 2009 NETGEAR, Inc. NETGEAR, the NETGEAR logo, ProSecure, ReadyNAS and ReadyShare are trademarks or registered trademarks of NETGEAR, Inc. in the United States and/or other countries. The information contained herein is subject to change without notice. NETGEAR shall not be liable for technical or editorial errors or omissions contained herein. All rights reserved.

    Contact: Joseph Villalta The Ruth Group (646) 536-7003 jvillalta@theruthgroup.com

    Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 for NETGEAR, Inc.:

    This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words "anticipate", "expect", "believe", "will", "may", "should", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. The forward-looking statements represent NETGEAR, Inc.'s expectations or beliefs concerning future events based on information available at the time such statements were made and include statements, among others, regarding NETGEAR's expected revenue, earnings, gross and operating margin and operating income on both a GAAP and non-GAAP basis, our ability and intent to launch new product offerings and continue product development efforts, current and future demand for the Company's existing and anticipated new products, and our ability to increase distribution and market share for the Company's products domestically and worldwide. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including, without limitation, the following: future demand for the Company's products may be lower than anticipated; consumers may choose not to adopt the Company's new product offerings or adopt competing products; product performance may be adversely affected by real world operating conditions; the Company may be unsuccessful or experience delays in manufacturing and distributing its new and existing products; telecommunications service providers may choose to slow their deployment of the Company's products or utilize competing products; the Company may be unable to collect receivables as they become due; the Company may fail to manage costs, including the cost of developing new products and manufacturing and distribution of its existing offerings; the Company may fail to successfully continue to effect operating expense savings; channel inventory information reported is estimated based on the average number of weeks of inventory on hand on the last Saturday of the quarter, as reported by certain of NETGEAR's customers; changes in the level of NETGEAR's cash resources and the Company's planned usage of such resources; changes in the Company's stock price and developments in the business that could increase the Company's cash needs, fluctuations in foreign exchange rates, and the actions and financial health of the Company's customers. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Further information on potential risk factors that could affect NETGEAR and its business are detailed in the Company's periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled "Part II - Item 1A. Risk Factors," pages 35 through 49, in the Company's Quarterly Report on Form 10-Q for the quarter ended June 28, 2009, filed with the Securities and Exchange Commission on August 6, 2009. NETGEAR undertakes no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

    Use of Non-GAAP Financial Information:

    To supplement our consolidated financial statements presented on a GAAP basis, NETGEAR uses non-GAAP financial measures, which are adjusted to exclude certain expenses and tax benefits, where applicable. We believe non-GAAP financial measures are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of NETGEAR's underlying operational results and trends and our marketplace performance. For example, the non-GAAP results are an indication of our baseline performance before charges that are considered by management to be outside of our core operating results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial measures prepared in accordance with generally accepted accounting principles in the United States.

    -Financial Tables Attached- NETGEAR, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) September 27, December 31, 2009 2008 ---- ---- ASSETS Current assets: Cash and cash equivalents $159,647 $192,839 Short-term investments 74,893 10,170 Accounts receivable, net 123,529 138,275 Inventories 73,858 112,240 Deferred income taxes 11,750 13,129 Prepaid expenses and other current assets 16,345 22,695 ------ ------ Total current assets 460,022 489,348 Property and equipment, net 17,331 20,292 Intangibles, net 9,551 13,311 Goodwill 64,939 61,400 Other non-current assets 5,126 1,858 ----- ----- Total assets $556,969 $586,209 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $38,447 $60,073 Accrued employee compensation 7,549 7,177 Other accrued liabilities 76,663 87,747 Deferred revenue 11,355 21,508 ------ ------ Total current liabilities 134,014 176,505 Non-current income taxes payable 14,615 12,357 Other non-current liabilities 6,211 6,389 ----- ----- Total liabilities 154,840 195,251 Stockholders' equity: Common stock 35 34 Additional paid-in capital 276,123 266,070 Cumulative other comprehensive income (loss) (65) 67 Retained earnings 126,036 124,787 ------- ------- Total stockholders' equity 402,129 390,958 ------- ------- Total liabilities and stockholders' equity $556,969 $586,209 ======== ======== NETGEAR, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three months ended Nine months ended ------------------ ----------------- September June September September September 27, 28, 28, 27, 28, 2009 2009 2008 2009 2008 ---- ---- ---- ---- ---- Net revenue $171,071 $144,674 $179,367 $467,763 $581,985 Cost of revenue 115,326 103,414 117,074 327,827 389,420 ------- ------- ------- ------- ------- Gross profit 55,745 41,260 62,293 139,936 192,565 ------ ------ ------ ------- ------- Operating expenses: Research and development 7,353 7,496 8,267 22,202 25,589 Sales and marketing 25,710 24,464 30,220 76,076 94,440 General and administrative 8,502 7,855 8,048 24,594 23,238 Restructuring 104 18 964 798 964 Litigation reserves, net (480) 8 85 2,060 136 ---- - -- ----- --- Total operating expenses 41,189 39,841 47,584 125,730 144,367 ------ ------ ------ ------- ------- Income from operations 14,556 1,419 14,709 14,206 48,198 Interest income 66 178 976 548 3,528 Other income (expense), net (266) (443) (4,653) 338 (1,824) ---- ---- ------ --- ------ Income before income taxes 14,356 1,154 11,032 15,092 49,902 Provision for income taxes 5,826 4,434 7,929 13,612 24,509 ----- ----- ----- ------ ------ Net income (loss) $8,530 $(3,280) $3,103 $1,480 $25,393 ====== ======= ====== ====== ======= Net income (loss) per share: Basic $0.25 $(0.10) $0.09 $0.04 $0.72 ===== ====== ===== ===== ===== Diluted $0.24 $(0.10) $0.09 $0.04 $0.71 ===== ====== ===== ===== ===== Weighted average shares outstanding used to compute net income (loss) per share: Basic 34,523 34,399 35,412 34,425 35,361 ====== ====== ====== ====== ====== Diluted 34,948 34,399 35,721 34,749 35,834 ====== ====== ====== ====== ====== Stock-based compensation expense was allocated as follows: Cost of revenue $239 $238 $216 $719 $657 Research and development 473 512 835 $1,505 2,499 Sales and marketing 1,015 1,027 836 $3,097 2,564 General and administrative 954 919 1,044 $2,972 2,950 NETGEAR, INC. NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Excluding amortization of purchased intangibles, stock-based compensation, restructuring, acquisition related compensation, and litigation reserves, net of tax. (In thousands, except per share data) (Unaudited) Three months ended Nine months ended ------------------ ----------------- September June September September September 27, 28, 28, 27, 28, 2009 2009 2008 2009 2008 ---- ---- ---- ---- ---- Net revenue $171,071 $144,674 $179,367 $467,763 $581,985 Cost of revenue 113,834 101,922 115,683 323,348 385,221 ------- ------- ------- ------- ------- Gross profit 57,237 42,752 63,684 144,415 196,764 ------ ------ ------ ------- ------- Operating expenses: Research and development 6,880 6,984 7,346 20,697 22,403 Sales and marketing 24,695 23,437 29,384 72,979 91,876 General and administrative 7,548 6,936 7,004 21,622 20,288 ----- ----- ----- ------ ------ Total operating expenses 39,123 37,357 43,734 115,298 134,567 ------ ------ ------ ------- ------- Income from operations 18,114 5,395 19,950 29,117 62,197 Interest income 66 178 976 548 3,528 Other income (expense), net (266) (443) (4,653) 338 (1,824) ---- ---- ------ --- ------ Income before income taxes 17,914 5,130 16,273 30,003 63,901 Provision for income taxes 6,946 5,652 9,383 18,142 28,382 ----- ----- ----- ------ ------ Net income (loss) $10,968 $(522) $6,890 $11,861 $35,519 ======= ===== ====== ======= ======= Net income (loss) per share: Basic $0.32 $(0.02) $0.19 $0.34 $1.00 ===== ====== ===== ===== ===== Diluted $0.31 $(0.02) $0.19 $0.34 $0.99 ===== ====== ===== ===== ===== Weighted average shares outstanding used to compute net income (loss) per share: Basic 34,523 34,399 35,412 34,425 35,361 ====== ====== ====== ====== ====== Diluted 34,948 34,399 35,721 34,749 35,834 ====== ====== ====== ====== ====== NETGEAR, INC. RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (In thousands, except per share data) (Unaudited) STATEMENT OF OPERATIONS DATA: Three months ended ------------------ September 27, June 28, September 28, 2009 2009 2008 ---- ---- ---- GAAP gross profit $55,745 $41,260 $62,293 Amortization of intangible assets 1,253 1,254 1,175 Stock-based compensation expense 239 238 216 --- --- --- Non-GAAP gross profit $57,237 $42,752 $63,684 ======= ======= ======= Non-GAAP gross margin 33.5% 29.6% 35.5% GAAP research and development $7,353 $7,496 $8,267 Stock-based compensation expense (473) (512) (835) Acquisition related compensation - - (86) -- -- --- Non-GAAP research and development $6,880 $6,984 $7,346 ====== ====== ====== GAAP sales and marketing $25,710 $24,464 $30,220 Stock-based compensation expense (1,015) (1,027) (836) ------ ------ ---- Non-GAAP sales and marketing $24,695 $23,437 $29,384 ======= ======= ======= GAAP general and administrative $8,502 $7,855 $8,048 Stock-based compensation expense (954) (919) (1,044) ---- ---- ------ Non-GAAP general and administrative $7,548 $6,936 $7,004 ====== ====== ====== GAAP total operating expenses $41,189 $39,841 $47,584 Stock-based compensation expense (2,442) (2,458) (2,715) Restructuring (104) (18) (964) Acquisition related compensation - - (86) Litigation reserves 480 (8) (85) --- -- --- Non-GAAP total operating expenses $39,123 $37,357 $43,734 ======= ======= ======= Nine months ended ----------------- September 27, September 28, 2009 2008 ---- ---- GAAP gross profit $139,936 $192,565 Amortization of intangible assets 3,760 3,542 Stock-based compensation expense 719 657 --- --- Non-GAAP gross profit $144,415 $196,764 ======== ======== Non-GAAP gross margin 30.9% 33.8% GAAP research and development $22,202 $25,589 Stock-based compensation expense (1,505) (2,499) Acquisition related compensation - (687) - ---- Non-GAAP research and development $20,697 $22,403 ======= ======= GAAP sales and marketing $76,076 $94,440 Stock-based compensation expense (3,097) (2,564) ------ ------ Non-GAAP sales and marketing $72,979 $91,876 ======= ======= GAAP general and administrative $24,594 $23,238 Stock-based compensation expense (2,972) (2,950) ------ ------ Non-GAAP general and administrative $21,622 $20,288 ======= ======= GAAP total operating expenses $125,730 $144,367 Stock-based compensation expense (7,574) (8,013) Restructuring (798) (964) Acquisition related compensation - (687) Litigation reserves (2,060) (136) ------ ---- Non-GAAP total operating expenses $115,298 $134,567 ======== ======== NETGEAR, INC. RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED) (In thousands, except per share data) (Unaudited) STATEMENT OF OPERATIONS DATA (CONTINUED): Three months ended ------------------ September 27, June 28, September 28, 2009 2009 2008 ---- ---- ---- GAAP operating income $14,556 $1,419 $14,709 Amortization of intangible assets 1,253 1,254 1,175 Stock-based compensation expense 2,681 2,696 2,931 Restructuring 104 18 964 Acquisition related compensation - - 86 Litigation reserves (480) 8 85 ---- - -- Non-GAAP operating income $18,114 $5,395 $19,950 ======= ====== ======= Non-GAAP operating margin 10.6% 3.7% 11.1% GAAP net income (loss) $8,530 $(3,280) $3,103 Amortization of intangible assets 1,253 1,254 1,175 Stock-based compensation expense 2,681 2,696 2,931 Restructuring 104 18 964 Acquisition related compensation - - 86 Litigation reserves (480) 8 85 Tax effect (1,120) (1,218) (1,454) ------ ------ ------ Non-GAAP net income (loss) $10,968 $(522) $6,890 ======= ===== ====== Nine months ended ----------------- September 27, September 28, 2009 2008 ---- ---- GAAP operating income $14,206 $48,198 Amortization of intangible assets 3,760 3,542 Stock-based compensation expense 8,293 8,670 Restructuring 798 964 Acquisition related compensation - 687 Litigation reserves 2,060 136 ----- --- Non-GAAP operating income $29,117 $62,197 ======= ======= Non-GAAP operating margin 6.2% 10.7% GAAP net income (loss) $1,480 $25,393 Amortization of intangible assets 3,760 3,542 Stock-based compensation expense 8,293 8,670 Restructuring 798 964 Acquisition related compensation - 687 Litigation reserves 2,060 136 Tax effect (4,530) (3,873) ------ ------ Non-GAAP net income (loss) $11,861 $35,519 ======= ======= NET INCOME (LOSS) PER SHARE: Three months ended ------------------ September 27, June 28, September 28, 2009 2009 2008 ---- ---- ---- GAAP net income (loss) per diluted share $0.24 $(0.10) $0.09 Amortization of intangible assets 0.04 0.04 0.03 Stock-based compensation expense 0.08 0.08 0.08 Restructuring - - 0.03 Acquisition related compensation - - - Litigation reserves (0.01) - - Tax effect (0.04) (0.04) (0.04) ----- ----- ----- Non-GAAP net income (loss) per diluted share $0.31 $(0.02) $0.19 ===== ====== ===== Nine months ended ----------------- September 27, September 28, 2009 2008 ---- ---- GAAP net income (loss) per diluted share $0.04 $0.71 Amortization of intangible assets 0.11 0.10 Stock-based compensation expense 0.24 0.24 Restructuring 0.02 0.03 Acquisition related compensation - 0.02 Litigation reserves 0.06 - Tax effect (0.13) (0.11) ----- ----- Non-GAAP net income (loss) per diluted share $0.34 $0.99 ===== ===== NETGEAR, INC. SUPPLEMENTAL FINANCIAL INFORMATION (In thousands, except per share data) (Unaudited) Three months ended ------------------ September 27, June 28, March 29, December 31, September 28, 2009 2009 2009 2008 2008 ---- ---- ---- ---- ---- Cash, cash equivalents and short-term investments $234,540 $224,496 $200,298 $203,009 $202,187 Cash, cash equivalents and short-term investments per diluted share $6.71 $6.53 $5.79 $5.84 $5.66 Accounts receivable, net $123,529 $110,231 $127,984 $138,275 $150,552 Days sales outstanding (DSO) 66 69 74 81 76 Inventories $73,858 $75,039 $92,023 $112,240 $125,711 Ending inventory turns 6.2 5.5 4.7 4.0 3.7 Weeks of channel inventory: U.S. retail channel 10.0 12.6 10.0 9.6 11.4 U.S. distribution channel 5.2 3.8 5.4 5.2 5.5 EMEA distribution channel 4.3 5.0 5.6 5.7 5.1 APAC distribution channel 5.0 4.8 5.7 6.7 7.2 Deferred revenue $11,355 $15,267 $19,375 $21,508 $13,346 Headcount 574 567 568 579 568 Non-GAAP Diluted shares 34,948 34,399 34,602 34,780 35,721

    NETGEAR, Inc.

    CONTACT: Joseph Villalta, The Ruth Group, +1-646-536-7003,
    jvillalta@theruthgroup.com

    Web Site: http://www.netgear.com/




    CA Reports Second Quarter Fiscal Year 2010 Results

    ISLANDIA, N.Y., Oct. 22 /PRNewswire-FirstCall/ --

    -- GAAP EPS Up 11 Percent in Constant Currency, Up 5 Percent as Reported -- Non-GAAP EPS Up 8 Percent in Constant Currency, Up 5 Percent as Reported -- Revenue Up 1 Percent in Constant Currency, Down 3 Percent as Reported -- GAAP and Non-GAAP Operating Margins Up 2 Percentage Points and 3 Percentage Points, Respectively -- Updates Full Fiscal Year 2010 Outlook

    CA, Inc. , the world's leading independent IT management software company, today reported financial results for its second quarter of fiscal year 2010, ended Sept. 30, 2009.

    Financial Overview (in millions, Q2FY10 Q2FY09 Change Change in except Constant share data) Currency -------------------------------------------------------------------- Revenue $1,072 $1,107 (3%) 1% -------------------------------------------------------------------- GAAP Net Income $218 $202 8% 14% -------------------------------------------------------------------- Non-GAAP Income* $232 $219 6% 7% -------------------------------------------------------------------- GAAP Diluted EPS $0.41 $0.39 5% 11% -------------------------------------------------------------------- Non-GAAP EPS* $0.42 $0.40 5% 8% -------------------------------------------------------------------- Cash Flow from Operations $120 $218 (45%) (39%) --------------------------------------------------------------------

    *Non-GAAP income and earnings per share are non-GAAP financial measures, as noted in the discussion of non-GAAP results below. A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release.

    "Our first half performance leaves CA well positioned for the second half of the year," said John Swainson, CA's chief executive officer. "We grew revenue on a constant currency basis, focused on operational efficiencies that drove bottom line results on both a GAAP and non-GAAP basis and generated cash flow from operations up 62 percent in constant currency and 40 percent as reported from the first half of fiscal year 2009."

    "We are seeing some improvement in the economic climate, especially in North America, and a willingness by customers to discuss strategic projects that will help tightly align their IT and the management of their IT resources with business imperatives," he continued. "This trend plays to the strengths in CA's product portfolio and combined with our enterprise customer pipeline, significant renewal portfolio and continued focus on operational efficiencies, gives us confidence that we will have a strong second half."

    Revenue and Bookings

    Second quarter North American revenue was $628 million, up 3 percent in constant currency and 2 percent as reported, while international revenue was $444 million, down 2 percent in constant currency and down 10 percent as reported year-over-year. Total revenue backlog at the end of the second quarter was $7.706 billion, up 9 percent in constant currency and up 10 percent as reported over the prior year period.

    For the first half of fiscal year 2010, total revenue was $2.122 billion, up 2 percent in constant currency and down 3 percent as reported compared to the first half of fiscal year 2009.

    Total bookings in the second quarter were $947 million, down 37 percent in constant currency and 37 percent as reported, compared to the prior year period. The second quarter of fiscal year 2009 was positively affected by a multi-year contract renewal with a system integrator totaling more than $400 million in North America.

    During the second quarter, the Company signed 18 license agreements with aggregate values greater than $10 million for a total of $366 million, compared with 17 license agreements totaling $892 million in the second quarter of fiscal year 2009. Weighted average life of subscription and maintenance bookings for the quarter was 3.3 years, compared with 4.1 years for the same period in fiscal year 2009.

    North American bookings were down 40 percent in constant currency and 41 percent as reported, while international bookings were down 30 percent in constant currency and 29 percent as reported compared to the prior year period. Excluding the large second quarter fiscal year 2009 contract renewal with the systems integrator mentioned above, North America bookings were up 5 percent in constant currency and 4 percent as reported.

    For the first half of fiscal year 2010, total bookings were $2.145 billion, down 14 percent on a constant currency basis and down 15 percent as reported from the prior year period.

    CA continued to see improvement in its mainframe performance with significant growth in new product sales and demand for capacity and a benefit from customer decisions to rationalize their mainframe software and consolidate on fewer vendors. The Company also experienced healthy demand for its business governance, service management, security management and automation offerings.

    Total bookings were affected by an expected light inventory of scheduled contract renewals in the second quarter, especially in EMEA, a reduction in professional services bookings and a continued soft demand for channel products aimed at small and medium size businesses and the consumer market.

    Expenses and Margin

    Total GAAP expenses, before interest and income taxes, for the second quarter were $733 million, down 2 percent in constant currency and down 6 percent as reported from the prior year. GAAP operating income, before interest and income taxes, was $339 million, up 9 percent in constant currency and 3 percent as reported. The Company recorded a GAAP operating margin of 32 percent, a 2 percentage point improvement from the prior year period.

    Total GAAP expenses for the first half of fiscal year 2010, before interest and income taxes, were $1.458 billion, down 1 percent in constant currency and 6 percent as reported compared to the first half of fiscal year 2009.

    On a non-GAAP basis, which excludes purchased software and intangibles amortization, restructuring and other costs, and includes gains and losses of hedges that mature within the quarter, but excludes gains and losses of hedges that do not mature within the quarter, the Company reported second quarter operating expenses of $705 million, down 3 percent in constant currency and down 7 percent as reported year-over-year. Non-GAAP operating income, before interest and income taxes, was $367 million, up 8 percent in constant currency and 6 percent as reported. The Company recorded a second quarter non-GAAP operating margin of 34 percent, a 3 percentage point improvement from the second quarter of fiscal year 2009.

    The Company reported non-GAAP expenses for the first half of fiscal year 2010 of $1.393 billion, down 2 percent in constant currency and 8 percent as reported compared to the first half of fiscal year 2009.

    Both GAAP and non-GAAP operating expenses in the second quarter included an approximate $0.01 per share impact of expenses related to the transition to a new CEO. The Company expects the majority of these remaining expenses of approximately $0.01 per share to be incurred over the second half of the year.

    For the first half of the 2010 fiscal year, GAAP diluted earnings per share were $0.78, up 12 percent in constant currency and 3 percent as reported over the first half of fiscal year 2009. Non-GAAP earnings per share were $0.84, up 11 percent in constant currency and 5 percent as reported.

    In the second quarter, the Company recorded a GAAP tax rate of 31.2 percent and a non-GAAP tax rate of 35.5 percent.

    Cash Flow and Capital Structure

    The Company reported second quarter cash flow from operations of $120 million, compared with $218 million in the prior year period. Cash flow from operations was affected by a decrease in collections and an increase in cash taxes paid during the period offset by lower disbursements and restructuring payments. For the first half of fiscal year 2010, cash flow from operations was $382 million, compared to $272 million in the prior year.

    The balance of cash and cash equivalents at Sept. 30, 2009, was $3.025 billion. With $1.934 billion in total debt outstanding, the Company has a net cash position of $1.091 billion. During the quarter, the Company repurchased about $50 million of its common stock under its previously announced $250 million stock repurchase program.

    Business Highlights During the second quarter: -- CA announced that it signed a definitive agreement to acquire privately-held NetQoS® Inc., a leading provider of network performance management and service delivery solutions, for $200 million. NetQoS solutions will extend CA's capabilities in the areas of Application Performance Management and Network and System Management. -- CA and Affiliated Computer Services, Inc. (ACS) announced a multi-year agreement to utilize CA's mainframe and distributed Enterprise IT Management solutions across the ACS platform. CA's solutions will enable ACS to enhance its operational efficiency, expand the IT and business process services offered to ACS clients, and establish a foundation for the development of future new services. -- CA and Acxiom® Corporation announced a partnership to deliver enterprise-class, on-demand Information Governance solutions. The new cloud-based, hosted solution from CA and Acxiom offers customers an alternative to on-premise software deployments, while providing a single portal view to better manage email, archiving, litigation holds, search, records declaration, retention and disposition. Outlook for Fiscal Year 2010

    The Company updated its outlook for fiscal year 2010. The following represents "forward-looking statements" (as defined below).

    The Company expects the following: -- Total revenue growth in a range of 2 percent to 4 percent in constant currency, rather than at the high end of the range as previously forecast. At current exchange rates, this 2 percent to 4 percent range translates to reported revenue of $4.3 billion to $4.4 billion; -- GAAP diluted earnings per share growth increases in constant currency to a range of 18 percent to 27 percent from the previous 18 to 26 percent. At current exchange rates, this translates to reported diluted earnings per share of $1.47 to $1.58; -- Non-GAAP diluted earnings per share increases in constant currency to a range of 6 percent to 14 percent from the previous range of 6 to 13 percent. At current exchange rates, this translates to reported non-GAAP diluted earnings per share of $1.60 to $1.71; and, -- Cash flow from operations growth in a range of 12 percent to 19 percent in constant currency as previously forecast. At current exchange rates, this translates to reported cash flow from operations of $1.3 billion to $1.4 billion. The cash flow from operations outlook includes approximately $50 million in restructuring payments accrued during fiscal year 2009.

    Except as otherwise noted, guidance reflects current foreign currency exchange rates as of Sept. 30, 2009. This outlook also assumes no material acquisitions and a partial currency hedge of operating income. The Company also expects a full-year GAAP and non-GAAP tax rate in a range of 35 to 36 percent.

    The Company anticipates approximately 517 million shares outstanding at fiscal 2010 year-end and a weighted average diluted share count of approximately 535 million for the fiscal year. Guidance does not include the impact from any future stock repurchases.

    Webcast

    This news release and the accompanying tables should be read in conjunction with additional content that is available on the Company's website, including a supplemental financial package, as well as a webcast that the Company will host at 4:30 p.m. ET today to discuss its unaudited second quarter results. The webcast will be archived on the website. Individuals can access the webcast, as well as this press release and supplemental financial information, at http://ca.com/invest or listen to the call at 1-888-437-9315. The international participant number is 1-719-325-2191.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20090402/NYTH500LOGO ) About CA

    CA , the world's leading independent IT management software company, helps customers optimize IT for better business results. CA's Enterprise IT Management solutions for mainframe and distributed computing enable Lean IT--empowering organizations to more effectively govern, manage and secure their IT operations. For more information, visit http://www.ca.com/.

    Connect with CA -- CA Social Media Page -- CA Newsletters -- CA Press Releases -- CA Podcasts Non-GAAP Financial Measures

    This news release, the accompanying tables and the additional content that is available on the Company's website, including a supplemental financial package, includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). Non-GAAP metrics for operating expenses, operating income, operating margin, income from operations and diluted earnings per share exclude the following items: non-cash amortization of purchased software and other intangibles, charges for in-process research and development costs, restructuring and other charges and the gains and losses since inception of hedges that mature within the quarter, but excludes gains and losses of hedges that do not mature within the quarter. Non-GAAP income also excludes the interest on convertible bonds. The effective tax rate on GAAP and non-GAAP income from operations is the Company's provision for income taxes expressed as a percentage of pre-tax GAAP and non-GAAP income from operations, respectively. Such tax rates are determined based on an estimated effective full year tax rate, with the effective tax rate for GAAP generally including the impact of discrete items in the quarter such items arise and the effective tax rate for non-GAAP income generally allocating the impact of such items pro rata to the fiscal year's remaining reporting periods. Non-GAAP adjusted cash flow excludes restructuring and other payments. Free cash flow excludes capital expenditures. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than US dollars are converted into US dollars at the exchange rate in effect on March 31, 2009, which was the last day of our prior fiscal year. Constant currency excludes the impacts from the Company's hedging program. The constant currency calculation for annualized subscription and maintenance bookings is calculated by dividing the subscription and maintenance bookings in constant currency by the weighted average subscription and maintenance duration in years. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, non-GAAP financial measures facilitate management's internal comparisons to the Company's historical operating results and cash flows, to competitors' operating results and cash flows, and to estimates made by securities analysts. Management uses these non-GAAP financial measures internally to evaluate its performance and they are key variables in determining management incentive compensation. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, the Company has historically reported similar non-GAAP financial measures to its investors and believes that the inclusion of comparative numbers provides consistency in its financial reporting. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures, which are attached to this news release.

    Cautionary Statement Regarding Forward-Looking Statements

    We have assessed and will continue to assess the impact on our business of the general economic downturn and the related impact on the financial services sector in particular. Approximately one third of our revenue comes from arrangements with financial institutions (i.e., banking, brokerage and insurance companies). The majority of these arrangements are for the renewal of mainframe capacity and maintenance associated with transactions processed by such financial institutions. While we cannot predict what impact there may be on our business from further consolidation of the financial industry sector, or the impact from the economy in general on our business, to date the impact has not been material to our balance sheet, results of operations or cash flows. The vast majority of our subscription and maintenance revenue in any particular reporting period comes from contracts signed in prior periods, generally pursuant to contracts ranging in duration from three to five years.

    Certain statements in this communication (such as statements containing the words "believes," "plans," "anticipates," "expects," "estimates" and similar expressions) constitute "forward-looking statements" that are based upon the beliefs of, and assumptions made by, the Company's management, as well as information currently available to management. These forward-looking statements reflect the Company's current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: global economic factors or political events beyond the Company's control; general economic conditions, including concerns regarding a global recession and credit constraints, or unfavorable economic conditions in a particular region, industry or business sector; impact of revenue recognition accounting policies on operating results; failure to expand channel partner programs; ability to adequately manage and evolve financial reporting and managerial systems and processes; ability to successfully integrate acquired companies and products into existing businesses; competition in product and service offerings and pricing; ability to retain and attract qualified key personnel; rapid technological and market changes; dependence on third party operating systems and software; use of software from open source code sources; discovery of errors in the Company's software and potential product liability claims; significant amounts of debt and possible future credit rating changes; the failure to protect the Company's intellectual property rights and source code; the timing of orders from customers and channel partners; reliance upon large transactions with customers; sales to government customers; breaches of the Company's software products and the Company's and customers' data centers and IT environments; lack of market growth in key product areas; use of third party microcode; third party claims of intellectual property infringement or royalty payments; fluctuations in foreign currencies; failure to successfully execute restructuring plans and related sales model changes; successful outsourcing of various functions to third parties; potential tax liabilities; and these factors and the other factors described more fully in the Company's filings with the Securities and Exchange Commission. The Company assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

    Copyright © 2009 CA, Inc. All Rights Reserved. One CA Plaza, Islandia, N.Y. 11749. NetQoS is a registered trademark of NetQoS Inc. Acxiom is a registered trademark of Acxiom Corporation. All other trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

    Contacts: Dan Kaferle Carol Lu Public Relations Investor Relations (631) 342-2111 (212) 415-6920 daniel.kaferle@ca.com carol.lu@ca.com Table 1 CA, Inc. Condensed Consolidated Statements of Operations (in millions, except per share amounts) (unaudited) Three Months Ended Six Months Ended September 30, September 30, ------------- ------------- Revenue 2009 2008(1) 2009 2008(1) ---- ------- ---- ------- Subscription and maintenance revenue $973 $975 $1,919 $1,940 Professional services 71 94 142 187 Software fees and other 28 38 61 67 -- -- -- -- Total revenue 1,072 1,107 2,122 2,194 ----- ----- ----- ----- Expenses Costs of licensing and maintenance 73 80 139 155 Cost of professional services 59 84 126 163 Amortization of capitalized software costs 34 29 68 60 Selling and marketing 286 311 567 608 General and administrative 120 110 230 232 Product development and enhancements 115 120 234 243 Depreciation and amortization of other intangible assets 39 37 78 73 Other expenses, net 7 6 14 18 Restructuring and other - - 2 4 --- --- --- --- Total expenses before interest and income taxes 733 777 1,458 1,556 --- --- ----- ----- Income before interest and income taxes 339 330 664 638 Interest expense, net 22 13 39 24 -- -- -- -- Income before income taxes 317 317 625 614 Income tax expense 99 115 212 216 -- --- --- --- NET INCOME $218 $202 $413 $398 ==== ==== ==== ==== Basic income per common share (1) $0.42 $0.39 $0.79 $0.77 Basic weighted average shares used in computation (1) 518 514 517 513 Diluted income per common share (1) $0.41 $0.39 $0.78 $0.76 Diluted weighted average shares used in computation (1) 542 538 541 537 (1) Certain balances and the calculations of income per common share and weighted average shares of common stock have been revised to reflect the retrospective adoption of recent accounting pronouncements. For further information refer to the Quarterly report on Form 10-Q for the three and six months ended September 30, 2009. Table 2 CA, Inc. Condensed Consolidated Balance Sheets (in millions) (unaudited) September 30, March 31, 2009 2009 (1) ---- -------- Cash and cash equivalents $3,025 $2,712 Trade and installment accounts receivable, net 718 839 Deferred income taxes - current 482 513 Other current assets 134 105 --- --- Total current assets 4,359 4,169 Installment accounts receivable, due after one year, net 84 128 Property and equipment, net 462 442 Purchased software products, net 128 155 Goodwill 5,366 5,364 Deferred income taxes - noncurrent 269 268 Other noncurrent assets, net 733 715 --- --- Total assets $11,401 $11,241 ======= ======= Current portion of long-term debt and loans payable $643 $621 Deferred revenue (billed or collected) - current 2,186 2,431 Deferred income taxes - current 50 40 Other current liabilities 812 957 --- --- Total current liabilities 3,691 4,049 Long-term debt, net of current portion 1,291 1,287 Deferred income taxes - noncurrent 121 136 Deferred revenue (billed or collected) - noncurrent 1,065 1,000 Other noncurrent liabilities 423 407 --- --- Total liabilities 6,591 6,879 ----- ----- Common stock 59 59 Additional paid-in capital 3,611 3,686 Retained earnings 3,044 2,673 Accumulated other comprehensive loss (109) (183) Treasury stock (1,795) (1,873) ------ ------ Total stockholders' equity 4,810 4,362 ----- ----- Total liabilities and stockholders' equity $11,401 $11,241 ======= ======= (1) Certain balances have been revised to reflect the retrospective adoption of recent accounting pronouncements. For further information refer to the Quarterly report on Form 10-Q for the three and six months ended September 30, 2009. Table 3 CA, Inc. Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) Three Months Ended September 30, ------------- 2009 2008(1) ---- ------- OPERATING ACTIVITIES: Net income $218 $202 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 73 66 Provision for deferred income taxes 62 36 Provision for bad debts 3 11 Share based compensation expense 26 23 Amortization of discount on convertible debt 12 11 Loss (gain) on sale and disposal of assets 1 (1) Foreign currency transaction (gains) losses - before taxes, net (9) 4 Changes in other operating assets and liabilities, net of effect of acquisitions: (Increase) decrease in trade and installment accounts receivable, net (49) 16 Decrease in deferred revenue (billed or collected) (223) (176) (Decrease) increase in taxes payable, net (21) 66 Increase (decrease) in accounts payable, accrued expenses and other 1 (42) Increase in accrued salaries, wages and commissions 19 20 Decrease in accrued restructuring charges (14) (26) Changes in other operating assets and liabilities 21 8 -- - NET CASH PROVIDED BY OPERATING ACTIVITIES 120 218 --- --- INVESTING ACTIVITIES: Acquisitions, primarily goodwill, purchased software, and other intangible assets, net of cash acquired (2) (1) Purchases of property and equipment (17) (22) Capitalized software development costs (50) (35) Other investing activities - 5 --- --- NET CASH USED IN INVESTING ACTIVITIES (69) (53) --- --- FINANCING ACTIVITIES: Dividends paid (21) (20) Purchases of common stock (45) - Debt repayments, net (3) (4) Exercise of common stock options and other 2 2 --- --- NET CASH USED IN FINANCING ACTIVITIES (67) (22) --- --- (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS BEFORE EFFECT OF EXCHANGE RATE CHANGES ON CASH (16) 143 Effect of exchange rate changes on cash 63 (154) -- ---- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 47 (11) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,978 2,410 ----- ----- CASH AND CASH EQUIVALENTS AT END OF PERIOD $3,025 $2,399 ====== ====== (1) Certain balances have been revised to reflect the retrospective adoption of recent accounting pronouncements. For further information refer to the Quarterly report on Form 10-Q for the three and six months ended September 30, 2009. Table 4 CA, Inc. Constant Currency Summary ($ in millions) (unaudited) Three Months Ended September 30, -------------------------------- % Increase % Increase (Decrease) (Decrease) in Constant 2009 2008 in $ US Currency (1) ---- ---- ----------- ------------- Bookings $947 $1,502 (37%) (37%) Revenue: North America $628 $615 2% 3% International 444 492 (10%) (2%) --- --- ---- --- Total revenue $1,072 $1,107 (3%) 1% Revenue: Subscription and maintenance $973 $975 0% 4% Professional services 71 94 (24%) (21%) Software fees and other 28 38 (26%) (27%) -- -- ---- ---- Total revenue $1,072 $1,107 (3%) 1% Total expenses before interest and income taxes: Total Non-GAAP (2) $705 $762 (7%) (3%) Total GAAP $733 $777 (6%) (2%) Six Months Ended September 30, ------------------------------ % Increase % Increase (Decrease) (Decrease) in Constant 2009 2008 in $ US Currency (1) ---- ---- ----------- ------------- Bookings $2,145 $2,532 (15%) (14%) Revenue: North America $1,258 $1,211 4% 5% International 864 983 (12%) (1%) --- --- ---- --- Total revenue $2,122 $2,194 (3%) 2% Revenue: Subscription and maintenance $1,919 $1,940 (1%) 5% Professional services 142 187 (24%) (19%) Software fees and other 61 67 (9%) (9%) -- -- --- --- Total revenue $2,122 $2,194 (3%) 2% Total expenses before interest and income taxes: Total Non-GAAP (2) $1,393 $1,507 (8%) (2%) Total GAAP $1,458 $1,556 (6%) (1%) (1) Constant currency information is presented to provide a framework to assess how the underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than US dollars are converted into US dollars at the exchange rate in effect on March 31, 2009, which was the last day of fiscal year 2009. Constant currency excludes the impacts from the Company's hedging program. (2) Refer to table 6 for a reconciliation of total expenses before interest and income taxes on a GAAP basis to total expenses before interest and income taxes on a non-GAAP basis. Table 5 CA, Inc. Reconciliation of GAAP Results to Non-GAAP Net Income (in millions, except per share data) (unaudited) Three Months Six Months Ended Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Total revenue $1,072 $1,107 $2,122 $2,194 Total expenses before interest and income taxes 733 777 1,458 1,556 --- --- ----- ----- Income before interest and income taxes (1) 339 330 664 638 GAAP Operating Margin (% of revenue) 32% 30% 31% 29% Non-GAAP operating adjustments: Purchased software amortization 13 14 27 29 Intangibles amortization 13 13 27 26 Restructuring and other - - 2 4 Hedging losses/(gains), net (2) 2 (12) 9 (10) --- --- --- --- Total non-GAAP operating adjustments 28 15 65 49 -- -- -- -- Non-GAAP income before interest and income taxes 367 345 729 687 Non-GAAP Operating Margin (% of revenue)(3) 34% 31% 34% 31% Interest expense, net 22 13 39 24 Interest on dilutive convertible bonds (14) (13) (24) (22) --- --- --- --- Non-GAAP income before income taxes 359 345 714 685 Income tax provision (4) 127 126 253 252 --- --- --- --- Non-GAAP income (5) $232 $219 $461 $433 ==== ==== ==== ==== Non-GAAP diluted EPS (5)(6) $0.42 $0.40 $0.84 $0.80 ===== ===== ===== ===== Diluted weighted average shares used in computation(5) 542 538 541 537 (1) See the Condensed Consolidated Statement of Operations on Table 1 for a bridge from income before interest and income taxes to net income. (2) Consists of gains and losses on hedges of operating income relating to prior periods. (3) Excluding stock based compensation of $26 and $23, non-GAAP operating margin would have been 37% and 33% for the three months ended September 30, 2009 and 2008, respectively. On a year to date basis, excluding stock based compensation of $53 and $48, non-GAAP operating margin would have been 37% and 34% for the six months ended September 30, 2009 and 2008, respectively. (4) The effective tax rate on non-GAAP income from operations is the Company's provision for income taxes expressed as a percentage of pre-tax non-GAAP income from operations. This tax rate is determined based on an estimated effective full year tax rate, with the impact of discrete items allocated pro rata to the fiscal year's remaining reporting periods. (5) Non-GAAP income and the number of shares used in the computation of non-GAAP diluted EPS for all periods presented have been adjusted to reflect the dilutive impact of the Company's 1.625% Convertible Senior Notes and stock awards outstanding. (6) The calculation of the Non-GAAP diluted EPS includes certain adjustments required by ASC 260-10-45 which treats certain stock awards as participating securities for the computation of earnings per share. As a result, Non-GAAP diluted EPS may not equal the Non-GAAP income divided by the Diluted weighted average shares. Refer to the discussion of Non-GAAP financial measures included in the accompanying press release for additional information. Table 6 CA, Inc. Reconciliation of GAAP to Non-GAAP Operating Expenses and Diluted Income per Share (in millions) (unaudited) Three Months Ended Six Months Ended September 30, September 30, ------------- ------------- Operating Expenses 2009 2008 2009 2008 ---- ---- ---- ---- Total expenses before interest and income taxes $733 $777 $1,458 $1,556 Non-GAAP operating adjustments: Purchased software amortization 13 14 27 29 Intangibles amortization 13 13 27 26 Restructuring and other - - 2 4 Hedging losses/(gains), net (1) 2 (12) 9 (10) --- --- --- --- Total non-GAAP operating adjustments 28 15 65 49 -- -- -- -- Total non-GAAP operating expenses $705 $762 $1,393 $1,507 ==== ==== ====== ====== Three Months Ended Six Months Ended September 30, September 30, ------------- ------------- Diluted Income per Share 2009 2008 2009 2008 ------------------------ ---- ---- ---- ---- GAAP diluted income per share $0.41 $0.39 $0.78 $0.76 Non-GAAP adjustments, net of taxes Purchased software and intangibles amortization 0.03 0.03 0.06 0.07 Restructuring and other charges - - - - Hedging losses/(gains) (1) - (0.01) 0.01 (0.01) Non-GAAP effective tax rate adjustments (2) (0.02) (0.01) (0.01) (0.02) ----- ----- ----- ----- Non-GAAP diluted income per share $0.42 $0.40 $0.84 $0.80 ===== ===== ===== ===== (1) Consists of gains and losses on hedges of operating income relating to prior periods. (2) The effective tax rate on non-GAAP income from operations is the Company's provision for income taxes expressed as a percentage of pre-tax non-GAAP income from operations. This tax rate is determined based on an estimated effective full year tax rate, with the impact of discrete items allocated pro rata to the fiscal year's remaining reporting periods. Refer to the discussion of Non-GAAP financial measures included in the accompanying press release for additional information. Table 7 CA, Inc. Effective Tax Rate Reconciliation GAAP and Non-GAAP (in millions) (unaudited) Three Months Ended Six Months Ended September 30, 2009 September 30, 2009 ------------------ ------------------ GAAP Non-GAAP GAAP Non-GAAP ---- -------- ---- -------- Income before income taxes(1) $317 $359 $625 $714 Statutory tax rate 35.0% 35.0% 35% 35.0% Tax at statutory rate 111 126 219 250 Adjustments for discrete and permanent items (12) 1 (7) 3 --- --- -- --- Total tax expense $99 $127 $212 $253 Effective tax rate(2) 31.2% 35.5% 33.9% 35.5% (1) Refer to Table 5 for a reconciliation of income before interest and income taxes on a GAAP basis to income before income taxes on a non- GAAP basis. (2) The effective tax rate on GAAP and non-GAAP income from operations is the Company's provision for income taxes expressed as a percentage of pre-tax GAAP and non-GAAP income from operations, respectively. Such tax rates are determined based on an estimated effective full year tax rate, with the effective tax rate for GAAP generally including the impact of discrete items in the period such items arise and the effective tax rate for non-GAAP income generally allocating the impact of such items pro rata to the fiscal year's remaining reporting periods. Refer to the discussion of Non-GAAP financial measures included in the accompanying press release for additional information. Table 8 CA, Inc. Reconciliation of Projected GAAP Earnings per Share to Projected Non-GAAP Earnings per Share (unaudited) Fiscal Year Ending March 31, 2010 -------------- Projected GAAP diluted EPS range $1.47 to $1.58 Non-GAAP adjustments, net of taxes: Purchased software and intangibles amortization 0.13 0.13 ---- ---- Non-GAAP projected diluted operating EPS range $1.60 to $1.71 ===== ===== Refer to the discussion of Non-GAAP financial measures included in the accompanying press release for additional information.

    Photo: http://www.newscom.com/cgi-bin/prnh/20090402/NYTH500LOGO CA

    CONTACT: Dan Kaferle, Public Relations, +1-631-342-2111,
    daniel.kaferle@ca.com, Carol Lu, Investor Relations, +1-212-415-6920,
    carol.lu@ca.com

    Web Site: http://ca.com/




    Chubb Reports Third Quarter Net Income per Share of $1.69; Operating Income per Share Is Up 68% to $1.56; Combined Ratio Improves to 85.4%2009 Operating Income per Share Guidance Is Increased to Range of $5.90 to $6.00

    WARREN, N.J., Oct. 22 /PRNewswire-FirstCall/ -- The Chubb Corporation today reported that net income in the third quarter of 2009 was $596 million or $1.69 per share, compared to $264 million or $0.73 per share in the third quarter of 2008.

    Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, increased 63% to $552 million from $338 million in the third quarter of 2008. Operating income per share increased 68% to $1.56 from $0.93.

    Total net written premiums for the third quarter declined 7% to $2.7 billion from $2.9 billion; they declined 5% excluding the effect of foreign currency translation. Premiums were down 7% in the U.S. and down 7% outside the U.S. (up 1% in local currencies).

    The third quarter combined loss and expense ratio was 85.4% in 2009, compared to 98.1% in 2008. Catastrophe losses in the third quarter of 2009 accounted for 0.8 percentage points of the combined ratio, compared to 13.6 points in the third quarter of 2008 which included Hurricane Ike. Excluding catastrophe losses, the third quarter combined ratio was 84.6% in 2009 and 84.5% in 2008. The expense ratio for the third quarter was 31.2% in 2009 and 30.2% in 2008.

    Property and casualty investment income after taxes for the third quarter declined 3% to $317 million in 2009 from $327 million in 2008.

    During the third quarter, Chubb repurchased 8,666,502 shares of its common stock at a total cost of $412 million. As of September 30, 2009, there were 7,002,869 shares of common stock remaining under the current repurchase authorization.

    "Following a very strong second quarter, Chubb delivered even better financial results in the third quarter," said John D. Finnegan, Chairman, President and Chief Executive Officer. "While the difficult economic environment continued to adversely affect premium growth, we remained focused on bottom-line earnings and increasing shareholder value through disciplined underwriting, our conservative investment strategy and active capital management. Successful execution has enabled us to deliver consistent profits, excellent returns on equity and robust growth in book value. Results for the third quarter also benefited from a benign hurricane season," he said.

    "We were pleased by continued renewal rate increases for commercial and specialty insurance in the third quarter in what is a very competitive marketplace," said Mr. Finnegan. "Finally, our strong capital position allowed us to repurchase 8.7 million shares in the third quarter, and we expect to complete the repurchase of all remaining 7 million shares under our current authorization by the end of 2009," he said.

    "In light of these results, we are increasing our 2009 full-year operating income per share guidance to a range of $5.90 to $6.00 from the $5.20 to $5.50 range we provided in July. This revised guidance is based on operating income per share of $4.49 in the first nine months and our forecasted range of $1.41 to $1.51 for the fourth quarter," said Mr. Finnegan.

    The revised guidance for 2009 operating income per share assumes 2 percentage points of catastrophe losses in the fourth quarter, bringing the catastrophe loss assumption for the year to 1.3 points, compared to the assumption of 3 points in the July guidance.

    Guidance and related assumptions are subject to the risks outlined in the company's forward-looking information safe harbor statement below.

    Nine-Month Results

    For the first nine months of 2009, net income was $1.5 billion or $4.18 per share, compared with $1.4 billion or $3.78 per share for the first nine months of 2008.

    Operating income for the first nine months increased 8% to $1.6 billion in 2009 from $1.5 billion in 2008. Operating income per share for the first nine months increased 13% to $4.49 from $3.99.

    Total net written premiums for the first nine months declined 7% to $8.3 billion from $8.9 billion; they were down 4% excluding the effect of foreign currency translation. Premiums declined 5% in the U.S. and declined 11% outside the U.S. (increased 3% in local currencies).

    The combined loss and expense ratio for the first nine months was 86.5% in 2009, compared to 90.2% in 2008. Catastrophe losses in the first nine months accounted for 1.1 percentage points of the combined ratio in 2009, compared to 6.9 points in 2008. Excluding catastrophe losses, the combined ratio for the first nine months was 85.4% in 2009 and 83.3% in 2008. The expense ratio for the first nine months was 30.7% in 2009 and 30.2% in 2008.

    Property and casualty investment income after taxes for the first nine months declined 5% to $935 million in 2009 from $981 million in 2008.

    During the first nine months of 2009, Chubb repurchased 12,781,031 shares of its common stock at a total cost of $576 million.

    Third Quarter Operations Review

    Chubb Personal Insurance (CPI) net written premiums declined 5% in the third quarter of 2009 to $946 million. CPI's combined ratio for the quarter was 81.6%, compared to 100.7% in the third quarter of 2008. The impact of catastrophes for the third quarter of 2009 improved the combined ratio by 1 percentage point, largely due to subrogation recoveries. In the third quarter of 2008, catastrophe losses were 16.3 percentage points.

    Net written premiums for Homeowners declined 4%, and the combined ratio was 77.3%. Personal Automobile net written premiums declined 3%, and the combined ratio was 87.2%. Other Personal lines premiums were down 10%, and the combined ratio was 90.9%.

    Chubb Commercial Insurance (CCI) net written premiums declined 8% in the third quarter to $1.1 billion. CCI's combined ratio for the quarter was 90.5% in 2009 and 106.0% in 2008. Catastrophe losses accounted for 2.6 percentage points of the combined ratio in the third quarter of 2009 and 19.9 points in the third quarter of 2008.

    Average third quarter renewal rates in the U.S. were up 3% for CCI, which retained 82% of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 0.8 to 1.

    Chubb Specialty Insurance (CSI) net written premiums declined 6% in the third quarter to $669 million. CSI's combined ratio for the quarter was 83.6%, compared to 82.3% in the third quarter of 2008.

    Professional Liability (PL) net written premiums declined 5%, and the business had a combined ratio of 90.0%. Average third quarter renewal rates in the U.S. were up 3% for PL, which retained 84% of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 0.9 to 1.

    Surety net written premiums declined 12%, and the combined ratio was 32.5%.

    Webcast Conference Call to be Held Today at 5 P.M.

    Chubb's senior management will discuss the company's third quarter performance with investors and analysts today, October 22nd at 5 P.M. Eastern Daylight Time. The conference call will be webcast live on the Internet at http://www.chubb.com/ and archived later in the day for replay.

    About Chubb

    Founded in 1882, the Chubb Group of Insurance Companies provides property and casualty insurance for personal and commercial customers worldwide through 8,500 independent agents and brokers. Chubb's global network includes branches and affiliates throughout North America, Europe, Latin America, Asia and Australia.

    Chubb's Supplementary Investor Information Report has been posted on its Internet site at http://www.chubb.com/.

    All financial results in this release and attachments are unaudited. For further information contact: Investors: Glenn A. Montgomery (908) 903-2365 Media: Mark E. Greenberg (908) 903-2682 Definitions of Key Terms

    Operating Income: Operating income, a non-GAAP financial measure, is net income excluding after-tax realized investment gains and losses. Management uses operating income, among other measures, to evaluate its performance because the realization of investment gains and losses in any given period is largely discretionary as to timing and can fluctuate significantly, which could distort the analysis of trends.

    Underwriting Income (Loss): Management evaluates underwriting results separately from investment results. The underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. Performance of the business units is measured based on statutory underwriting results. Statutory accounting principles applicable to property and casualty insurance companies differ in certain respects from generally accepted accounting principles (GAAP). Under statutory accounting principles, policy acquisition and other underwriting expenses are recognized immediately, not at the time premiums are earned. Statutory underwriting income (loss) is arrived at by reducing premiums earned by losses and loss expenses incurred and statutory underwriting expenses incurred.

    Management uses underwriting results determined in accordance with GAAP, among other measures, to assess the overall performance of the underwriting operations. To convert statutory underwriting results to a GAAP basis, policy acquisition expenses are deferred and amortized over the period in which the related premiums are earned. Underwriting income (loss) determined in accordance with GAAP is defined as premiums earned less losses and loss expenses incurred and GAAP underwriting expenses incurred.

    Property and Casualty Investment Income After Income Tax: Management uses property and casualty investment income after income tax, a non-GAAP financial measure, to evaluate its investment performance because it reflects the impact of any change in the proportion of the investment portfolio invested in tax exempt securities and is therefore more meaningful for analysis purposes than investment income before income tax.

    Book Value per Common Share with Available-for-Sale Fixed Maturities at Amortized Cost: Book value per common share represents the portion of consolidated shareholders' equity attributable to one share of common stock outstanding as of the balance sheet date. Consolidated shareholders' equity includes, as part of accumulated other comprehensive income (loss), the after-tax appreciation or depreciation, including unrealized other-than-temporary impairment losses, of the Corporation's available-for-sale fixed maturities, which are carried at fair value. The appreciation or depreciation of available-for-sale fixed maturities is subject to fluctuation due to changes in interest rates and therefore could distort the analysis of trends. Management believes that book value per common share with available-for-sale fixed maturities at amortized cost, a non-GAAP financial measure, is an important measure of the underlying equity attributable to one share of common stock.

    Combined Loss and Expense Ratio or Combined Ratio: The combined loss and expense ratio, expressed as a percentage, is the key measure of underwriting profitability. Management uses the combined loss and expense ratio calculated in accordance with statutory accounting principles applicable to property and casualty insurance companies to evaluate the performance of the underwriting operations. It is the sum of the ratio of losses and loss expenses to premiums earned (loss ratio) plus the ratio of statutory underwriting expenses to premiums written (expense ratio) after reducing both premium amounts by dividends to policyholders.

    Net Written Premiums Growth (Decrease) Excluding the Impact of Currency Fluctuation: Management uses net written premiums growth (decrease) excluding the impact of currency fluctuation, a non-GAAP financial measure, to evaluate the trends in net written premiums, exclusive of the effect of fluctuations in exchange rates between the U.S. dollar and the currencies in which our international business is transacted.

    FORWARD-LOOKING INFORMATION

    Certain statements in this document are "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 (PSLRA). These forward-looking statements are made pursuant to the safe harbor provisions of the PSLRA and include statements regarding management's 2009 operating income per share guidance and related assumptions as well as Chubb's share repurchase program. Forward-looking statements are made based upon management's current expectations and beliefs concerning trends and future developments and their potential effects on Chubb. These statements are not guarantees of future performance. Actual results may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties, which include, among others, those discussed or identified from time to time in Chubb's public filings with the Securities and Exchange Commission and those associated with:

    -- global political conditions and the occurrence of terrorist attacks, including any nuclear, biological, chemical or radiological events; -- the effects of the outbreak or escalation of war or hostilities; -- premium pricing and profitability or growth estimates overall or by lines of business or geographic area, and related expectations with respect to the timing and terms of any required regulatory approvals; -- adverse changes in loss cost trends; -- our ability to retain existing business and attract new business; -- our expectations with respect to cash flow and investment income and with respect to other income; -- the adequacy of our loss reserves, including: -- our expectations relating to reinsurance recoverables; -- the willingness of parties, including us, to settle disputes; -- developments in judicial decisions or regulatory or legislative -- actions relating to coverage and liability, in particular, for -- asbestos, toxic waste and other mass tort claims; -- development of new theories of liability; -- our estimates relating to ultimate asbestos liabilities; -- the impact from the bankruptcy protection sought by various asbestos -- producers and other related businesses; and -- the effects of proposed asbestos liability legislation, including -- the impact of claims patterns arising from the possibility of -- legislation and those that may arise if legislation is not passed; -- the availability and cost of reinsurance coverage; -- the occurrence of significant weather-related or other natural or human-made disasters, particularly in locations where we have concentrations of risk; -- the impact of economic factors on companies on whose behalf we have issued surety bonds, and in particular, on those companies that file for bankruptcy or otherwise experience deterioration in creditworthiness; -- the effects of disclosures by, and investigations of, companies relating to possible accounting irregularities, practices in the financial services industry, investment losses or other corporate governance issues, including: -- claims and litigation arising out of stock option "backdating," -- "spring loading" and other equity grant practices by public -- companies; -- the effects on the capital markets and the markets for directors and -- officers and errors and omissions insurance; -- claims and litigation arising out of actual or alleged accounting or -- other corporate malfeasance by other companies; -- claims and litigation arising out of practices in the financial -- services industry; -- claims and litigation relating to uncertainty in the credit and -- broader financial markets; and -- legislative or regulatory proposals or changes; -- the effects of changes in market practices in the U.S. property and casualty insurance industry, in particular contingent commissions and loss mitigation and finite reinsurance arrangements, arising from any legal or regulatory proceedings, related settlements and industry reform, including changes that have been announced and changes that may occur in the future; -- the impact of legislative and regulatory developments on our business, including those relating to terrorism, catastrophes and the financial markets; -- any downgrade in our claims-paying, financial strength or other credit ratings; -- the ability of our subsidiaries to pay us dividends; -- general economic and market conditions including: -- changes in interest rates, market credit spreads and the performance -- of the financial markets; -- currency fluctuations; -- the effects of inflation; -- changes in domestic and foreign laws, regulations and taxes; -- changes in competition and pricing environments; -- regional or general changes in asset valuations; -- the inability to reinsure certain risks economically; and -- changes in the litigation environment; -- our ability to implement management's strategic plans and initiatives.

    Chubb assumes no obligation to update any forward-looking information set forth in this document, which speak as of the date hereof.

    THE CHUBB CORPORATION SUPPLEMENTARY FINANCIAL DATA (Unaudited) Periods Ended September 30 Third Quarter Nine Months 2009 2008 2009 2008 (in millions) PROPERTY AND CASUALTY INSURANCE Underwriting Net Premiums Written............. $2,705 $2,900 $8,294 $8,883 Decrease in Unearned Premiums.... 131 64 196 43 Premiums Earned............... 2,836 2,964 8,490 8,926 Losses and Loss Expenses......... 1,534 2,006 4,721 5,339 Operating Costs and Expenses..... 841 871 2,541 2,669 Decrease (Increase) in Deferred Policy Acquisition Costs........ 31 7 11 (29) Dividends to Policyholders....... 7 11 22 29 Underwriting Income.............. 423 69 1,195 918 Investments Investment Income Before Expenses........................ 400 418 1,180 1,254 Investment Expenses.............. 10 7 24 23 Investment Income................ 390 411 1,156 1,231 Other Income (Charges)............ (12) 4 (7) 7 Property and Casualty Income...... 801 484 2,344 2,156 CORPORATE AND OTHER................ (61) (53) (182) (159) CONSOLIDATED OPERATING INCOME BEFORE INCOME TAX................. 740 431 2,162 1,997 Federal and Foreign Income Tax..... 188 93 563 521 CONSOLIDATED OPERATING INCOME...... 552 338 1,599 1,476 REALIZED INVESTMENT GAINS (LOSSES) AFTER INCOME TAX.................. 44 (74) (111) (79) CONSOLIDATED NET INCOME............ $ 596 $ 264 $1,488 $1,397 PROPERTY AND CASUALTY INVESTMENT INCOME AFTER INCOME TAX........... $ 317 $ 327 $ 935 $ 981 Periods Ended September 30 Third Quarter Nine Months 2009 2008 2009 2008 OUTSTANDING SHARE DATA (in millions) Average Common and Potentially Dilutive Shares............... 353.5 362.3 356.4 369.2 Actual Common Shares at End of Period................. 341.6 355.7 341.6 355.7 DILUTED EARNINGS PER SHARE DATA Operating Income............... $1.56 $ .93 $4.49 $ 3.99 Realized Investment Gains (Losses)...................... .13 (.20) (.31) (.21) Net Income..................... $1.69 $ .73 $4.18 $ 3.78 Effect of Catastrophes......... $(.04) $(.72) $(.17) $(1.09) Sept. 30 Dec. 31 Sept. 30 2009 2008 2008 BOOK VALUE PER COMMON SHARE.............. $45.43 $38.13 $38.25 BOOK VALUE PER COMMON SHARE, with Available-for-Sale Fixed Maturities at Amortized Cost............ 42.31 38.38 39.14 PROPERTY AND CASUALTY UNDERWRITING RATIOS PERIODS ENDED SEPTEMBER 30 Third Quarter Nine Months 2009 2008 2009 2008 Losses and Loss Expenses to Premiums Earned......................... 54.2% 67.9% 55.8% 60.0% Underwriting Expenses to Premiums Written........................ 31.2 30.2 30.7 30.2 Combined Loss and Expense Ratio.......... 85.4% 98.1% 86.5% 90.2% Effect of Catastrophes on Combined Loss and Expense Ratio......... .8% 13.6% 1.1% 6.9% PROPERTY AND CASUALTY LOSSES AND LOSS EXPENSES COMPONENTS PERIODS ENDED SEPTEMBER 30 Third Quarter Nine Months 2009 2008 2009 2008 (in millions) Paid Losses and Loss Expenses.......... $1,399 $1,633 $4,415 $4,546 Increase in Unpaid Losses and Loss Expenses......................... 135 373 306 793 Total Losses and Loss Expenses......... $1,534 $2,006 $4,721 $5,339 PROPERTY AND CASUALTY PRODUCT MIX Combined Loss and Net Premiums Written Expense Ratios 2009 2008 %Decrease 2009 2008 (in millions) NINE MONTHS ENDED SEPTEMBER 30 Personal Insurance Automobile............. $ 428 $ 457 (6)% 89.1% 88.5% Homeowners............. 1,771 1,859 (5) 81.9 85.8 Other.................. 551 571 (4) 92.8 100.5 Total Personal..... 2,750 2,887 (5) 85.2 89.1 Commercial Insurance Multiple Peril......... 835 915 (9) 85.5 87.0 Casualty............... 1,161 1,281 (9) 96.4 94.6 Workers' Compensation.. 610 666 (8) 91.5 80.5 Property and Marine.... 953 957 - 85.0 116.0 Total Commercial... 3,559 3,819 (7) 89.9 95.6 Specialty Insurance Professional Liability. 1,725 1,847 (7) 90.4 84.0 Surety................. 243 276 (12) 36.5 76.1 Total Specialty.... 1,968 2,123 (7) 84.2 83.2 Total Insurance.... 8,277 8,829 (6) 87.0 90.5 Reinsurance Assumed...... 17 54 (69) * * Total.............. $8,294 $8,883 (7) 86.5 90.2 QUARTERS ENDED SEPTEMBER 30 Personal Insurance Automobile............. $ 150 $ 154 (3)% 87.2% 85.7% Homeowners............. 620 646 (4) 77.3 102.9 Other.................. 176 195 (10) 90.9 105.8 Total Personal..... 946 995 (5) 81.6 100.7 Commercial Insurance Multiple Peril......... 274 308 (11) 91.0 103.6 Casualty............... 346 385 (10) 93.9 99.8 Workers' Compensation.. 186 205 (9) 95.7 81.3 Property and Marine.... 280 280 - 83.0 133.3 Total Commercial... 1,086 1,178 (8) 90.5 106.0 Specialty Insurance Professional Liability. 588 617 (5) 90.0 84.3 Surety................. 81 92 (12) 32.5 65.0 Total Specialty.... 669 709 (6) 83.6 82.3 Total Insurance.... 2,701 2,882 (6) 85.8 98.4 Reinsurance Assumed...... 4 18 (78) * * Total.............. $2,705 $2,900 (7) 85.4 98.1 * Combined loss and expense ratios are no longer presented for Reinsurance Assumed since this business is in run-off.

    Chubb Corporation

    CONTACT: Investors, Glenn A. Montgomery, +1-908-903-2365, or Media, Mark
    E. Greenberg, +1-908-903-2682

    Web Site: http://www.chubb.com/




    Federated Investors, Inc. Reports Third Quarter 2009 Earnings- Equity and fixed-income assets increase $6.3 billion to reach $61 billion for Q3 2009 - Net bond fund sales reach $1.8 billion for Q3 2009 - Board declares quarterly dividend of $0.24 per share

    PITTSBURGH, Oct. 22 /PRNewswire-FirstCall/ -- Federated Investors, Inc. , one of the nation's largest investment managers, today reported earnings per diluted share from continuing operations (EPS) of $0.56 for the quarter ended Sept. 30, 2009 compared to $0.52 for the same quarter last year. Income from continuing operations was $57.0 million for Q3 2009 compared to $56.2 million for Q3 2008.

    Federated reported YTD 2009 EPS of $1.42 compared to $1.62 for the same period in 2008. For the nine months ended Sept. 30, 2009, income from continuing operations was $145.4 million compared to $167.2 million for the same period in 2008. Earnings for YTD 2009 included $20.8 million in non-cash impairment charges recognized primarily in Q1 2009.

    Federated's total managed assets were $392.3 billion at Sept. 30, 2009, up $48.3 billion or 14 percent from $344.0 billion at Sept. 30, 2008 and down $9.5 billion or 2 percent from $401.8 billion reported at June 30, 2009. Average managed assets for Q3 2009 were $408.1 billion, up $73.0 billion or 22 percent from $335.1 billion reported for Q3 2008 and down $6.3 billion or 2 percent from $414.4 billion reported for Q2 2009.

    "Federated's fluctuating fund sales have increased more than 50 percent from the same time last year," said J. Christopher Donahue, president and chief executive officer. "Investors continue to recognize Federated's reputation for managing a broad line of stock, bond and alternative strategies that can help them meet their investing needs."

    Federated's board of directors declared a quarterly dividend of $0.24 per share. The dividend is payable on Nov. 13, 2009 to shareholders of record as of Nov. 9, 2009. During Q3 2009, Federated purchased 470,581 shares of Federated class B common stock for $12.0 million.

    Federated's fixed-income assets were $32.0 billion at Sept. 30, 2009, up $9.3 billion or 41 percent from $22.7 billion at Sept. 30, 2008 and up $3.3 billion or 11 percent from $28.7 billion at June 30, 2009. Federated experienced continued strong net positive flows into its bond funds with $1.8 billion during Q3 2009, bringing total bond fund inflows to $5.6 billion so far in 2009, an increase of $4.0 billion over the first nine months of 2008. Net sales were driven by strong flows into ultrashort bond funds and intermediate-term bond funds including Federated Total Return Bond Fund.

    Federated's equity assets were $29.1 billion at Sept. 30, 2009, down $2.6 billion or 8 percent from $31.7 billion at Sept. 30, 2008 and up $2.9 billion or 11 percent from $26.2 billion at June 30, 2009. During Q3 2009, Federated's net flows into equity funds were $126 million. Net sales were led by Federated Prudent Bear Fund and Federated Market Opportunity Fund, both of which invest in alternative-asset classes, and Federated Kaufmann Small Cap Fund, a growth fund.

    Money market assets in both funds and separate accounts were $318.1 billion at Sept. 30, 2009, up $30.3 billion or 11 percent from $287.8 billion at Sept. 30, 2008 and down $28.3 billion or 8 percent from $346.4 billion at June 30, 2009. Money market mutual fund assets were $287.6 billion at Sept. 30, 2009, up $28.4 billion or 11 percent from $259.2 billion at Sept. 30, 2008 and down $25.2 billion or 8 percent from $312.8 billion at June 30, 2009.

    Financial Summary Q3 2009 vs. Q3 2008

    For Q3 2009, revenue decreased by $12.3 million or 4 percent from the same quarter last year. The decrease in revenue primarily reflects $36.5 million in voluntary fee waivers related to certain money market funds in order to maintain positive or zero net yields. The fee waivers were partially offset by a related reduction in marketing and distribution expenses of $27.9 million such that the net impact on operating income was a decrease of $8.6 million. Lower average equity managed assets also contributed to decreased revenue. These decreases were partially offset by increased revenue from higher average money market and fixed-income managed assets.

    Fee waivers to produce positive or zero net yields may increase and such increases could be significant. The amount of these waivers will be determined by a variety of factors including available yields on instruments held by the money market funds, changes in assets within money market funds, actions by the Federal Reserve and the U.S. Department of the Treasury, changes in the mix of money market customer assets, changes in expenses of the money market funds and Federated's willingness to continue these waivers.

    For Q3 2009, Federated derived 63 percent of its revenue from money market assets, 24 percent from equity assets, 12 percent from fixed-income assets and 1 percent from other products and services.

    Operating expenses for Q3 2009 were $198.9 million compared to $212.7 million for Q3 2008. Marketing and distribution expenses decreased because of the aforementioned fee-waiver-related reductions, partially offset by the impact of increases in average money market managed assets.

    Q3 2009 vs. Q2 2009

    Compared to the prior quarter, revenue decreased by $13.3 million or 4 percent. The decrease in revenue primarily reflects a $19.6 million increase in voluntary fee waivers on certain money market funds in order to maintain positive or zero net yields. The fee waivers were offset by a related decrease in marketing and distribution expenses of $16.5 million such that the net impact on operating income was a decrease of $3.1 million compared to the prior quarter. In addition, revenue decreased due to lower average money market managed assets. These decreases were partially offset by the impact of increased average equity and fixed-income managed assets.

    Compared to Q2 2009, operating expenses decreased by $20.0 million or 9 percent. Changes from the prior period include a decrease in marketing and distribution expenses primarily related to the aforementioned fee-waiver-related reductions.

    YTD 2009 vs. YTD 2008

    Revenue for the first nine months of 2009 decreased by $10.8 million or 1 percent compared to the same period last year. The decrease in revenue primarily reflects voluntary fee waivers of $63.1 million on certain money market funds in order to maintain positive or zero net yields. The fee waivers were partially offset by a related reduction in marketing and distribution expenses of $43.8 million such that the net impact on operating income was a decrease of $19.3 million. In addition, revenue decreased due to lower average equity managed assets. These decreases were partially offset by the impact of increased average money market and fixed-income managed assets.

    For YTD 2009, Federated derived 67 percent of its revenue from money market assets, 21 percent from equity assets, 11 percent from fixed-income assets and 1 percent from other products and services.

    Operating expenses for the first nine months of 2009 increased by $21.8 million or 3 percent compared to the same period of last year primarily due to $20.8 million in non-cash impairment charges recorded primarily in Q1 2009.

    Federated's level of business activity and financial results are dependent upon many factors including market conditions, investment performance and investor behavior. These factors and others including asset levels, product sales and redemptions, market appreciation or depreciation, revenues, fee waivers and expenses can impact Federated's activity levels and financial results significantly. Risk factors and uncertainties that can influence Federated's financial results are discussed in the company's annual and quarterly reports as filed with the Securities and Exchange Commission.

    Federated will host an earnings conference call at 9 a.m. Eastern on Friday, Oct. 23, 2009. Investors are invited to listen to Federated's earnings teleconference by calling 877-407-0782 (domestic) or 201-689-8567 (international) prior to the 9 a.m. start time for the teleconference. The call may also be accessed in real time on the Internet via the About Us section of FederatedInvestors.com. A replay will be available after 12:30 p.m. and until Oct. 30, 2009 by calling 877-660-6853 (domestic) or 201-612-7415 (international) and entering codes 286 and 334400.

    Federated Investors, Inc. is one of the largest investment managers in the United States, managing $392.3 billion in assets as of Sept. 30, 2009. With 150 funds and a variety of separately managed account options, Federated provides comprehensive investment management to nearly 5,300 institutions and intermediaries including corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Federated ranks in the top 2 percent of money market fund managers in the industry, the top 6 percent of fixed-income fund managers and the top 8 percent of equity fund managers(1). For more information, visit FederatedInvestors.com.

    (1) Strategic Insight, August 31, 2009. Based on assets under management in open-end funds.

    Federated Securities Corp. is distributor of the Federated funds.

    Separately managed accounts are made available through Federated Global Investment Management Corp., Federated Investment Counseling and Federated MDTA LLC, each a registered investment advisor.

    Certain statements in this press release, such as those related to the level of fee waivers incurred by the company, and asset flows, constitute or may constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the company, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Other risks and uncertainties include the ability of the company to predict the level of fee waivers in future quarters, which could vary significantly depending on a variety of factors identified above, and include the ability of the company to sustain asset flows, which could vary significantly depending on market conditions, investment performance and investor behavior. Other risks and uncertainties also include the risk factors discussed in the company's annual and quarterly reports as filed with the Securities and Exchange Commission. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither the company nor any other person assumes responsibility for the accuracy and completeness of such statements in the future.

    Unaudited Condensed Consolidated Statements of Income(1) (in thousands, except per share data) Quarter Ended %Change Quarter %Change Sept. 30, Q3 2008 Ended Q2 2009 ------------------- to Q3 June 30, to Q3 2009 2008 2009 2009 2009 Revenue Investment advisory fees, net $190,012 $194,653 (2)% $193,757 (2)% Administrative service fees, net 65,267 53,551 22 67,514 (3) Other service fees, net 36,957 56,007 (34) 44,586 (17) Other, net 1,367 1,702 (20) 1,037 32 ---------- ----- ----- --- ----- -- Total Revenue 293,603 305,913 (4) 306,894 (4) ------------- ------- ------- -- ------- -- Operating Expenses Compensation and related 62,232 60,482 3 63,609 (2) General and administrative Marketing and distribution 95,452 106,742 (11) 114,138 (16) Professional service fees 10,089 10,259 (2) 9,777 3 Systems and communications 6,517 5,996 9 6,331 3 Office and occupancy 6,001 5,619 7 5,647 6 Advertising and promotional 2,529 3,787 (33) 3,059 (17) Travel and related 2,316 3,228 (28) 2,872 (19) Other 4,677 4,409 6 4,455 5 ----- ----- ----- - ----- - Total general and administrative 127,581 140,040 (9) 146,279 (13) Amortization of deferred sales commissions 5,104 7,762 (34) 4,960 3 Intangible asset amortization and impairment 3,953 4,369 (10) 3,981 (1) ----------------- ----- ----- --- ----- -- Total Operating Expenses 198,870 212,653 (6) 218,829 (9) ------------------------ ------- ------- -- ------- -- Operating Income 94,733 93,260 2 88,065 8 ---------------- ------ ------ - ------ - Nonoperating Income (Expenses) Investment income, net 1,685 190 787 1,210 39 Debt expense--recourse (1,112) (757) 47 (1,146) (3) Debt expense--nonrecourse (314) (622) (50) (368) (15) Other, net (101) (152) (34) 34 (397) ---------- ---- ---- --- -- ---- Total Nonoperating Income (Expenses), net 158 (1,341) (112) (270) (159) ----------------------- --- ------ ---- ---- ---- Income before income taxes 94,891 91,919 3 87,795 8 Income tax provision 34,604 33,253 4 31,712 9 -------------------- ------ ------ - ------ - Net income including noncontrolling interests in subsidiaries 60,287 58,666 3 56,083 7 Less: Net income attributable to noncontrolling interests in subsidiaries 3,301 2,455 34 2,809 18 ---------------- ----- ----- -- ----- -- Net Income $56,986 $56,211 1 % $53,274 7% ---------- ------- ------- -- ------- - Amounts Attributable to Federated Earnings Per Share Basic(2) $0.56 $0.53 6% $0.52 8% Diluted(2) $0.56 $0.52 8% $0.52 8% ---------------- ----- ----- - ----- - Weighted-average shares outstanding Basic 99,958 99,367 100,041 Diluted 100,086 100,036 100,164 ------- ------- ------- ------- Dividends declared per share $0.24 $3.00 $0.24 ---------------------- ----- ----- ----- 1) Provisions of a new accounting standard adopted on Jan. 1, 2009 require that minority interest be renamed noncontrolling interest and that companies present a consolidated net income that includes the amount attributable to noncontrolling interests for all periods presented. 2) Under a new accounting standard adopted on Jan. 1, 2009, unvested share-based payment awards that receive non-forfeitable dividend rights are considered participating securities and are now required to be included in the computation of earnings per share under the "two-class method." As a result current and prior periods have been adjusted to reflect this new standard. Total income available to participating restricted shareholders was $1.4 million, $4.0 million and $1.3 million for the quarterly periods ended Sept. 30, 2009, Sept. 30, 2008 and June 30, 2009, respectively. Unaudited Condensed Consolidated Statements of Income(1) (in thousands, except per share data) Nine Months Ended Sept. 30, ------------------- 2009 2008 ---- ---- % Change Revenue Investment advisory fees, net $574,238 $587,697 (2)% Administrative service fees, net 199,726 157,828 27 Other service fees, net 132,874 170,438 (22) Other, net 4,302 5,949 (28) ---------- ----- ----- --- Total Revenue 911,140 921,912 (1) ------------- ------- ------- -- Operating Expenses Compensation and related 192,068 180,967 6 General and administrative Marketing and distribution 331,897 324,799 2 Professional service fees 29,873 30,356 (2) Systems and communications 19,275 17,927 8 Office and occupancy 18,315 18,067 1 Advertising and promotional 8,238 11,495 (28) Travel and related 7,631 10,166 (25) Other 17,396 13,121 33 ----- ------ ------ -- Total general and administrative 432,625 425,931 2 Amortization of deferred sales commissions 14,936 25,923 (42) Intangible asset amortization and impairment 28,665 13,673 110 --------------------------------- ------ ------ --- Total Operating Expenses 668,294 646,494 3 ------------------------ ------- ------- - Operating Income 242,846 275,418 (12) ---------------- ------- ------- --- Nonoperating Income (Expenses) Investment income, net 2,493 2,365 5 Debt expense--recourse (3,370) (961) 251 Debt expense--nonrecourse (1,114) (2,232) (50) Other, net (47) (356) (87) ---------- --- ---- --- Total Nonoperating Expenses, net (2,038) (1,184) 72 -------------------------------- ------ ------ -- Income from continuing operations before income taxes 240,808 274,234 (12) Income tax provision 86,970 101,126 (14) -------------------- ------ ------- --- Income from continuing operations including noncontrolling interests in subsidiaries 153,838 173,108 (11) Discontinued operations, net of tax - 2,808 (100) ----------------------------------- - ----- ---- Net Income including noncontrolling interests in subsidiaries 153,838 175,916 (13) Less: Net income attributable to the noncontrolling interest in subsidiaries 8,444 5,861 44 ------------------------------------ ----- ----- -- Net income $145,394 $170,055 (15)% ---------- -------- -------- ----- Amounts Attributable to Federated Income from continuing operations $145,394 $167,247 (13)% Discontinued operations, net of tax - 2,808 (100) ----------------------------------- - ----- ---- Net Income $145,394 $170,055 (15)% ---------- -------- -------- ---- Earnings Per Share-Basic(2) Income from continuing operations $1.42 $1.64 (13)% Income from discontinued operations - 0.03 (100) ----------------------------------- - ---- ---- Net income(3) $1.42 $1.66 (14)% ------------------- ----- ----- ---- Earnings Per Share-Diluted(2) Income from continuing operations $1.42 $1.62 (12)% Income from discontinued operations - 0.03 (100) ----------------------------------- - ---- ---- Net income $1.42 $1.65 (14)% ---------- ----- ----- ---- Weighted-average shares outstanding Basic 99,976 99,508 Diluted 100,096 100,518 ------- ------- ------- Dividends declared per share $0.72 $3.45 ---------------------------- ----- ----- 1) Provisions of a new accounting standard adopted on Jan. 1, 2009 require that minority interest be renamed noncontrolling interest and that companies present a consolidated net income that includes the amount attributable to noncontrolling interests for all periods presented. 2) Under a new accounting standard adopted on Jan. 1, 2009, unvested share-based payment awards that receive non-forfeitable dividend rights are considered participating securities and are now required to be included in the computation of earnings per share under the "two-class method." As a result current and prior periods have been adjusted to reflect this new standard. Total income available to participating restricted shareholders was $3.4 million and $4.6 million for the year-to-date periods ended Sept. 30, 2009 and Sept. 30, 2008 respectively. 3) May not sum due to rounding. Unaudited Condensed Consolidated Balance Sheets (in thousands) Sept. 30, Dec. 31, 2009 2008 ---- ---- Assets Cash and other short-term investments $87,274 $58,647 Other current assets 47,443 58,185 Deferred sales commissions, net 17,607 30,261 Intangible assets, net and goodwill 656,807 657,321 Other long-term assets 40,110 42,196 ---------------------- ------ ------ Total Assets $849,241 $846,610 ------------ -------- -------- Liabilities and Equity Current liabilities $182,676 $217,838 Long-term debt--recourse 110,250 126,000 Long-term debt--nonrecourse 15,803 30,497 Other long-term liabilities 35,452 47,705 Equity excluding treasury stock(1) 1,310,359 1,229,051 Treasury stock (805,299) (804,481) -------------- -------- -------- Total Liabilities and Equity $849,241 $846,610 ---------------------------- -------- -------- 1) Provisions of a new accounting standard adopted on Jan. 1, 2009 require that minority interest be renamed noncontrolling interest and companies present it as a component of equity for all periods presented. Noncontrolling interest was previously included in other long-term liabilities, but is now included in Equity excluding treasury stock. Changes in Equity and Fixed-Income Fund Managed Assets (in millions) Quarter Ended Nine Months Ended ------------- ----------------- Sept. 30, Sept. 30, June 30, Sept. 30, Sept. 30, 2009 2008 2009 2009 2008 ---- ---- ---- ---- ---- Equity Funds Beginning assets $17,966 $25,569 $15,902 $17,562 $29,145 ---------------- ------- ------- ------- ------- ------- Sales 1,503 1,060 1,177 4,005 4,009 Redemptions (1,377) (2,031) (1,151) (4,119) (5,453) ----------- ------ ------ ------ ------ ------ Net sales (redemptions) 126 (971) 26 (114) (1,444) Net exchanges (12) (68) 8 (79) (163) Acquisition related 257 0 0 257 42 Market gains and losses/ reinvestments(1) 2,013 (2,947) 2,030 2,724 (5,997) --------------------- ----- ------ ----- ----- ------ Ending assets $20,350 $21,583 $17,966 $20,350 $21,583 ------------- ------- ------- ------- ------- ------- Fixed-Income Funds Beginning assets $24,100 $19,065 $20,752 $19,321 $17,943 ---------------- ------- ------- ------- ------- ------- Sales 4,789 2,354 4,597 12,537 6,509 Redemptions (2,971) (1,826) (1,997) (6,978) (4,911) ----------- ------ ------ ------ ------ ------ Net sales 1,818 528 2,600 5,559 1,598 Net exchanges 53 26 6 101 80 Market gains and losses/ reinvestments(1) 989 (483) 742 1,979 (485) ------------------ --- ---- --- ----- ---- Ending assets $26,960 $19,136 $24,100 $26,960 $19,136 ------------- ------- ------- ------- ------- ------- 1) Reflects changes in the market value of the securities held by the funds and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates. Changes in Equity and Fixed-Income Separate Account Assets(2) (in millions) Quarter Ended Nine Months Ended ------------- ----------------- Sept. 30, Sept. 30, June 30, Sept. 30, Sept. 30, 2009 2008 2009 2009 2008 ---- ---- ---- ---- ---- Equity Separate Accounts Beginning assets $8,245 $11,712 $7,509 $9,099 $13,017 ---------------- ------ ------- ------ ------ ------- Net customer flows(3) (261) (426) (204) (1,026) (621) Acquisition related(4) (257) 0 0 (257) 0 Market gains and losses/reinvestments(5) 1,047 (1,218) 940 958 (2,328) --------------------------- ----- ------ --- --- ------ Ending assets $8,774 $10,068 $8,245 $8,774 $10,068 ------------- ------ ------- ------ ------ ------- Fixed-Income Separate Accounts Beginning assets $4,583 $3,924 $4,219 $4,165 $3,754 ---------------- ------ ------ ------ ------ ------ Net customer flows(3) 188 (150) 74 269 (93) Market gains and losses/reinvestments(5) 308 (172) 290 645 (59) --------------------------- --- ---- --- --- --- Ending assets $5,079 $3,602 $4,583 $5,079 $3,602 ------------- ------ ------ ------ ------ ------ 2) Includes separately managed accounts, institutional accounts and sub-advised funds (both variable annuity and other) and other managed products. Flows for liquidation portfolios have been removed from Changes in Equity and Fixed-Income Separate Account Assets and are detailed on the following page. 3) For certain accounts, Net customer flows are calculated as the remaining difference between beginning and ending assets after the calculation of Market gains and losses/reinvestments. 4) Includes assets that were reclassified from Equity Separate Accounts to Equity Funds as a result of the transaction with the Touchstone Funds, which was completed during Q3 2009. See related press release dated Aug. 31, 2009 for more information about the Touchstone transaction. 5) Reflects the approximate changes in the market value of the securities held in the portfolios, and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates. Changes in Liquidation Portfolios(1) (in millions) Quarter Ended Nine Months Ended ------------- ----------------- Sept. 30, Sept. 30, June 30, Sept. 30, Sept. 30, 2009 2008 2009 2009 2008 ---- ---- ---- ---- ---- Liquidation Portfolios Beginning assets $556 $2,083 $700 $1,505 $1,127 ---------------- ---- ------ ---- ------ ------ Net customer flows(2) 12,516 (222) (151) 11,563 856 Market gains and losses/reinvestments(3) 1 (84) 7 5 (206) --------------------------- - --- - - ---- Ending assets $13,073 $1,777 $556 $13,073 $1,777 ------------- ------- ------ ---- ------- ------ 1) Federated added liquidation portfolios as an asset category beginning in Q1 2009. Liquidation portfolios include portfolios of distressed fixed-income securities and liquidating collateralized debt obligation (CDO) products. In the distressed security category, Federated has been retained by a third party to manage these assets through an orderly liquidation process that will generally occur over a multi-year period. In the case of liquidating CDOs, the CDO structure has unwound earlier than expected due to events of default related to certain distressed securities in the portfolio. The new category was established because management fee rates earned from these portfolios are significantly different than those of traditional separate account mandates. 2) For certain accounts, Net customer flows are calculated as the remaining difference between beginning and ending assets after the calculation of Market gains and losses/reinvestments. 3) Reflects the approximate changes in the market value of the securities held in the portfolios, and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates. (in millions) Sept. 30, June 30, March 31, Dec. 31, Sept. 30, MANAGED ASSETS 2009 2009 2009 2008 2008 -------- -------- -------- -------- --------- By Asset Class -------------- Equity $29,124 $26,211 $23,411 $26,661 $31,651 Fixed-income 32,039 28,683 24,971 23,486 22,738 Money market 318,064 346,354 360,127 355,658 287,836 Liquidation portfolios(1) 13,073 556 700 1,505 1,777 ------------------ ------ --- --- ----- ----- Total Managed Assets $392,300 $401,804 $409,209 $407,310 $344,002 -------------------- -------- -------- -------- -------- -------- By Product Type --------------- Mutual Funds: Equity $20,350 $17,966 $15,902 $17,562 $21,583 Fixed-income 26,960 24,100 20,752 19,321 19,136 Money market 287,634 312,808 328,780 327,267 259,172 ------------ ------- ------- ------- ------- ------- Total Fund Assets $334,944 $354,874 $365,434 $364,150 $299,891 ----------------- -------- -------- -------- -------- -------- Separate Accounts: Equity $8,774 $8,245 $7,509 $9,099 $10,068 Fixed-income 5,079 4,583 4,219 4,165 3,602 Money market 30,430 33,546 31,347 28,391 28,664 ------------ ------ ------ ------ ------ ------ Total Separate Accounts $44,283 $46,374 $43,075 $41,655 $42,334 ----------------------- ------- ------- ------- ------- ------- Total Liquidation Portfolios(1) $13,073 $556 $700 $1,505 $1,777 -------------------------- ------- ---- ---- ------ ------ Total Managed Assets $392,300 $401,804 $409,209 $407,310 $344,002 -------------------- -------- -------- -------- -------- -------- AVERAGE MANAGED ASSETS Quarter Ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 2009 2009 2009 2008 2008 -------- --------- -------- -------- --------- By Asset Class -------------- Equity $27,872 $25,287 $24,219 $24,870 $35,136 Fixed-income 30,376 26,978 24,218 22,546 23,143 Money market 336,530 361,502 362,269 320,684 274,840 Liquidation portfolios(1) 13,370 637 975 1,650 1,944 ------------------ ------ --- --- ----- ----- Total Avg. Assets $408,148 $414,404 $411,681 $369,750 $335,063 ----------------- -------- -------- -------- -------- -------- By Product Type --------------- Mutual Funds: Equity $19,215 $17,220 $16,240 $16,904 $24,180 Fixed-income 25,499 22,545 20,009 18,674 19,347 Money market 304,959 326,280 330,294 293,428 245,304 ------------ ------- ------- ------- ------- ------- Total Avg. Fund Assets $349,673 $366,045 $366,543 $329,006 $288,831 ---------------------- -------- -------- -------- -------- -------- Separate Accounts: Equity $8,657 $8,067 $7,979 $7,966 $10,956 Fixed-income 4,877 4,433 4,209 3,872 3,796 Money market 31,571 35,222 31,975 27,256 29,536 ------------ ------ ------ ------ ------ ------ Total Avg. Separate Accts. $45,105 $47,722 $44,163 $39,094 $44,288 ------------------- ------- ------- ------- ------- ------- Total Avg. Liquidation Portfolios(1) $13,370 $637 $975 $1,650 $1,944 ------------------- ------- ---- ---- ------ ------ Total Avg. Assets $408,148 $414,404 $411,681 $369,750 $335,063 ----------------- -------- -------- -------- -------- -------- 1) Federated added liquidation portfolios as an asset category beginning in Q1 2009. Liquidation portfolios include portfolios of distressed fixed-income securities and liquidating collateralized debt obligation (CDO) products. In the distressed security category, Federated has been retained by a third party to manage these assets through an orderly liquidation process that will generally occur over a multi-year period. In the case of liquidating CDOs, the CDO structure has unwound earlier than expected due to events of default related to certain distressed securities in the portfolio. The new category was established because the management fee rates earned from these portfolios are significantly different than those of traditional separate account mandates. Federated discontinued reporting administered assets as of June 30, 2009 as they are no longer a material source of revenue for the firm.

    Federated Investors, Inc.

    CONTACT: MEDIA, Meghan McAndrew, +1-412-288-8103, or J.T. Tuskan,
    +1-412-288-7895, or ANALYSTS, Ray Hanley, +1-412-288-1920, all of Federated
    Investors, Inc.

    Web Site: http://federatedinvestors.com/




    Gen-Probe Completes Acquisition of Prodesse, Leader in Molecular Testing for Respiratory Infectious Diseases

    SAN DIEGO, Oct. 22 /PRNewswire-FirstCall/ -- Gen-Probe announced today that the Company has completed its acquisition of Prodesse, Inc., a leader in molecular testing for influenza and other infectious diseases, for approximately $60 million in cash.

    Gen-Probe's purchase price could increase to up to $85 million if Prodesse achieves certain financial and regulatory milestones in 2010 and 2011.

    "We are delighted to complete this acquisition ahead of schedule and welcome Prodesse's employees to Gen-Probe," said Carl Hull, Gen-Probe's president and chief operating officer. "Prodesse has had great success introducing clinically differentiated assays for infectious diseases, including influenza, and we believe our global commercial infrastructure will both facilitate and accelerate their next stage of growth."

    Financial Detail Gen-Probe financed the transaction with cash on its balance sheet.

    The Company expects to record, under US GAAP, charges for non-recurring cash and non-cash costs related to the acquisition. The magnitude of these charges will not be determined, under the rules of purchase accounting, until an independent, third party valuation has been completed to allocate the purchase price to the assets and liabilities acquired. The Company has therefore not yet provided GAAP financial guidance regarding the transaction. In addition, transaction-related professional fees will be expensed as incurred, under the rules of SFAS 141R.

    Excluding the charges discussed above, and on a non-GAAP basis, Gen-Probe expects the acquisition to add approximately $0.05 to the Company's 2010 earnings per share (EPS), based on approximately $15 million in total revenues. Gen-Probe expects to update its 2009 financial guidance to include the effects of the acquisition in its third quarter earnings release on October 29.

    About Prodesse

    Prodesse develops molecular diagnostic reagents for a variety of infectious disease applications. Prodesse sells three FDA 510(k) cleared products in the United States, and two additional CE-marked products in Europe. The company's products can be used in conjunction with various nucleic acid extraction and real-time PCR (polymerase chain reaction) platforms, including Cepheid's SmartCycler® II System.

    Prodesse's ProFlu+(TM) test was cleared by the U.S. Food and Drug Administration (FDA) in January 2008 for the detection and discrimination of Influenza A Virus, Influenza B Virus and Respiratory Syncytial Virus. It is the only commercially available, FDA-cleared molecular test for these respiratory viruses that uses real-time PCR technology. Test results can be obtained in as little as three hours using the assay - a significant improvement over culture-based methods. During a public health emergency, this speed to result and the high sensitivity of molecular tests can make important contributions to effective infection control efforts.

    Prodesse also sells FDA-approved, real-time PCR assays for the clinical diagnosis of Clostridium difficile (C. diff), a bacteria that is the most serious cause of antibiotic-associated diarrhea, and human metapneumovirus, a common cause of lower respiratory infection in children.

    About Gen-Probe

    Gen-Probe Incorporated is a global leader in the development, manufacture and marketing of rapid, accurate and cost-effective nucleic acid tests (NATs) that are used primarily to diagnose human diseases and screen donated human blood. Gen-Probe has more than 25 years of NAT expertise, and received the 2004 National Medal of Technology, America's highest honor for technological innovation, for developing NAT assays for blood screening. Gen-Probe is headquartered in San Diego and employs approximately 1,200 people. For more information, go to http://www.gen-probe.com/.

    About Non-GAAP Financial Measures

    This announcement contains certain financial measures that are not calculated in accordance with GAAP, including non-GAAP EPS. Non-GAAP EPS excludes all non-cash charges such as intangible amortization and stock compensation expense, as well as transaction expenses. Gen-Probe's management believes these U.S. non-GAAP financial measures provide investors meaningful supplemental information regarding the expected financial results of the acquisition.

    Caution Regarding Forward-Looking Statements

    Any statements in this news release relating to Gen-Probe's expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as believe, will, expect, anticipate, estimate, intend, plan and would. For example, statements concerning the expected benefits of the acquisition and expected financial results are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from those expressed or implied. Some of these risks, uncertainties and assumptions include but are not limited to: (i) the risk that Gen-Probe will not successfully integrate Prodesse or achieve expected strategic or financial benefits, (ii) the risk that facts relating to Prodesse that may affect strategic and other benefits of the acquisition may be unknown to Gen-Probe, and (iii) the risk that Gen-Probe may not achieve its expected 2009 or 2010 growth, revenue, earnings or other financial targets that are assumed in its accretion analysis. The foregoing list sets forth some, but not all, of the factors that could affect the Company's ability to achieve results described in any forward-looking statements. For additional information about risks and uncertainties Gen-Probe faces and a discussion of its financial statements and footnotes, see documents filed with the SEC, including the most recent annual report on Form 10-K and all subsequent periodic reports. Gen-Probe assumes no obligation and expressly disclaims any duty to update forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of subsequent events.

    Contact: Michael Watts Vice president, investor relations and corporate communications 858-410-8673

    Gen-Probe Incorporated

    CONTACT: Michael Watts, Vice president, investor relations and corporate
    communications of Gen-Probe Incorporated, +1-858-410-8673

    Web Site: http://www.gen-probe.com/




    Micrel Reports 2009 Third Quarter Financial Results- Revenues and earnings continue to rebound - Revenues grew 14% on a sequential quarter basis to $58.9 million, exceeding Company expectations - Book-to-bill above one - Gross margin of 52.5%, up 1.2 percentage points from the prior quarter - GAAP net income increased 76% on a sequential quarter basis - GAAP earnings per diluted share nearly doubled on a sequential quarter basis to $0.11 per share - Dividend approved by Micrel's Board of Directors at $0.035 per share

    SAN JOSE, Calif., Oct. 22 /PRNewswire-FirstCall/ -- Micrel, Incorporated , an industry leader in analog, high bandwidth communications and Ethernet IC solutions, today announced financial results for the third quarter ended September 30, 2009.

    Third quarter revenues of $58.9 million increased by $7.1 million, or 14%, from $51.8 million in the second quarter of 2009 and significantly outpaced the Company's third quarter revenue guidance range, which anticipated a 3% to 7% sequential increase. Compared to the same period last year, revenues were lower by $8.7 million, or 13%. The sequential increase in revenue was due to strength in all major segments of the Company's business with primary growth coming from stronger demand in the industrial, automotive and handset end markets. The year-over-year decrease in revenues was due to the reduction in overall demand from customers in nearly all geographies due to the worldwide economic slowdown that has significantly impacted all consumer related markets.

    Third quarter 2009 GAAP net income of $6.8 million, or $0.11 per diluted share compares to second quarter 2009 GAAP net income of $3.9 million, or $0.06 per diluted share, and GAAP net income of $7.7 million or $0.11 per diluted share in the same period in 2008. Third quarter 2009 non-GAAP net income was $7.6 million, or $0.12 per diluted share. A reconciliation of the GAAP net income to non-GAAP net income is provided in the financial tables of this press release. Non-GAAP results exclude the impact of stock-based compensation expense and their related tax effects for the third quarter.

    "I am extremely pleased with the strong demand we experienced in the third quarter," stated Ray Zinn, president and CEO of Micrel. "At the top line, third quarter revenues of $58.9 million increased 14% on a sequential quarter basis while earnings per share nearly doubled and significantly exceeded our expectations. In addition, we posted another solid quarter of bookings, with a book-to-bill ratio above one for the third quarter in a row. Gross margin also increased on a sequential basis and recent strategic initiatives, coupled with our ongoing investment in research and development, are expected to result in a growing number of new, high performance products that will drive customer demand going forward."

    Mr. Zinn continued, "I am also pleased that through strategic cost cutting measures we were able to remain profitable during the entire economic downturn. After two quarters in a row of improving customer demand, we are confident that the global economy is in the early stages of a recovery and we expect to benefit further from our improved cost structure. We are encouraged with the growth from our Analog and Ethernet products. We are seeing the benefits of our green initiative with our new HyperLight Load Switchers. The strategic initiatives that we made to develop low cost power management products for the handset market are gaining significant market traction."

    Outlook

    Commenting on Micrel's business outlook, Mr. Zinn said, "Looking ahead to the fourth quarter, we anticipate strength coming predominately from the industrial, wire line communication and automotive sectors, with softness in the handset sector. Overall, we expect customers to maintain consistent inventory levels compared to the prior quarter. I continue to be encouraged with Micrel's design win momentum, along with our relentless focus on cost containment that puts us on-track in 2009 to achieve our 30th full-year of profitability in the Company's 31-year history. The Company has returned over $380 million to shareholders since initiation of the share buyback and dividend programs in 2001. We're pleased to announce that we will maintain our dividend and that Micrel remains on a healthy financial footing."

    For the fourth quarter of 2009, the Company estimates that revenues will be in the range of up 1% to 5% on a sequential basis. Gross profit margin is expected to be approximately 53%. In addition, the Company estimates that GAAP net income will be approximately $0.11 to $0.13 per diluted share.

    Dividend

    The Company announced today that Micrel's Board of Directors has authorized a quarterly cash dividend of $0.035 per share of common stock. The payment of this dividend will be made on November 25, 2009, to shareholders of record as of November 11, 2009.

    Conference Call

    The Company will host a conference call at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) on October 22, 2009. Chief Executive Officer Raymond Zinn and Chief Financial Officer Ray Wallin will present an overview of third quarter 2009 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 877-941-8609. For international callers, please dial 480-629-9818. Interested callers should dial in at least five minutes before the scheduled start time and ask to be connected to the Micrel, Incorporated Conference Call. A live webcast will also be available through http://www.vcall.com/. An audio replay of the conference call will be available through October 29, 2009, by dialing 800-406-7325 or 303-590-3030, and entering access code number 4170719. The webcast replay will also be available on the Company's website at: http://www.micrel.com/.

    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, turns-fill requirements, earnings per share, gross margin, average selling prices, the effect of cost-reduction efforts, development of new products, design wins and customer order patterns; and the nature of macro-economic and industry trends. Forward-looking statements are subject to certain risks and uncertainties that could cause 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, reschedule, or delay 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 networking or high bandwidth communications products; the impact of competitive products and pricing and alternative technological advances; the accuracy of estimates used to prepare the Company's financial statements; 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; and Micrel's operating cash flow. 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, 2008. 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 revenues and cost of revenues related to intellectual property settlements, stock-based compensation expense, proxy contest expenses, restructuring charges or credits, other income related to litigation settlements and their respective related tax effects. 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 analog, Ethernet and high bandwidth 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: http://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: http://www.micrel.com/.

    Contact: Ray Wallin Micrel, Incorporated 2180 Fortune Drive San Jose, CA 95131 Phone: (408) 944-0800 Financial Tables to Follow MICREL, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended September June September Nine Months Ended 30, 30, 30,(1) September 30, ---- -------- ------ ------------- 2009 2009 2008 2009 2008 ---- ---- ---- ---- ---- Net revenues $58,872 $51,798 $67,549 $157,656 $204,194 Cost of revenues* 27,936 25,232 30,194 76,537 89,873 ------ ------ ------ ------ ------ Gross profit 30,936 26,566 37,355 81,119 114,321 ------ ------ ------ ------ ------- Operating expenses: Research and development* 11,405 11,484 13,832 35,378 42,716 Selling, general and administrative* 9,507 8,913 11,307 27,278 34,789 Proxy contest expense - - 349 - 3,070 Restructuring charges (credits) - - - - (842) --- --- --- --- ---- Total operating expenses 20,912 20,397 25,488 62,656 79,733 ------ ------ ------ ------ ------ Income from operations 10,024 6,169 11,867 18,463 34,588 Other income (expense): Interest income 164 197 652 677 2,382 Interest expense (116) (60) (1) (176) (2) Other income 5 56 10 85 57 --- --- --- --- --- Total other income 53 193 661 586 2,437 --- --- --- --- ----- Income before income taxes 10,077 6,362 12,528 19,049 37,025 Provision for income taxes 3,276 2,495 4,871 6,835 13,662 ----- ----- ----- ----- ------ Net income $6,801 $3,867 $7,657 $12,214 $23,363 ====== ====== ====== ======= ======= Net income per share: Basic $0.11 $0.06 $0.11 $0.19 $0.33 ===== ===== ===== ===== ===== Diluted $0.11 $0.06 $0.11 $0.19 $0.33 ===== ===== ===== ===== ===== Shares used in computing per share amounts: Basic 62,322 63,525 70,299 63,993 71,243 ====== ====== ====== ====== ====== Diluted 62,545 63,573 70,427 64,063 71,365 ====== ====== ====== ====== ====== * Includes amortization of stock-based compensation as follows: Cost of revenues $184 $142 $244 $470 $759 Research and development 425 417 544 1,133 1,716 Selling, general and administrative 427 416 544 1,116 1,785 (1) During the fourth quarter of 2008, the Company identified errors primarily related to calculating deferred income for sell-through distributors. The Company has determined that these errors were not material to any of the prior periods presented but would have been material to the three and twelve months ended December 31, 2008 if corrected in that period. The financial statements for the three and nine months ended September 30, 2008 have been revised to correct for the immaterial errors. MICREL, INCORPORATED SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS (In thousands, except per share amounts) (Unaudited) Three Months Ended September June September Nine Months Ended 30, 30, 30,(1) September 30, ---- -------- ------ ------------- 2009 2009 2008 2009 2008 ---- ---- ---- ---- ---- GAAP Net income $6,801 $3,867 $7,657 $12,214 $23,363 Adjustments to GAAP Net Income: Stock-based compensation included in: Cost of revenues 184 142 244 470 759 Research and development 425 417 544 1,133 1,716 Selling, general and administrative 427 416 544 1,116 1,785 Proxy contest expense - - 349 - 3,070 Restructuring charges (credits) - - - - (842) Tax effect of adjustments to GAAP income (272) (240) (432) (723) (1,766) ---- ---- ---- ---- ------ Total Adjustments to GAAP Net Income 764 735 1,249 1,996 4,722 --- --- ----- ----- ----- Non-GAAP income** $7,565 $4,602 $8,906 $14,210 $28,085 ====== ====== ====== ======= ======= Non-GAAP shares used in computing non-GAAP income per share (in thousands): Basic 62,322 63,525 70,299 63,993 71,243 ====== ====== ====== ====== ====== Diluted* 62,521 63,660 70,553 64,063 71,446 ====== ====== ====== ====== ====== GAAP income per share -Basic $0.11 $0.06 $0.11 $0.19 $0.33 Total Adjustments to GAAP Net Income $0.01 $0.01 $0.02 $0.03 $0.06 ----- ----- ----- ----- ----- Non-GAAP income per share -Basic $0.12 $0.07 $0.13 $0.22 $0.39 ===== ===== ===== ===== ===== GAAP income per share -Diluted $0.11 $0.06 $0.11 $0.19 $0.33 Total Adjustments to GAAP Net Income $0.01 $0.01 $0.02 $0.03 $0.06 ----- ----- ----- ----- ----- Non-GAAP income per share -Diluted* $0.12 $0.07 $0.13 $0.22 $0.39 ===== ===== ===== ===== ===== * Non-GAAP shares have been adjusted from diluted outstanding shares calculated under FAS123R. ** Non-GAAP results were reached by excluding revenues and cost of revenues related to intellectual property settlements, stock-based compensation expense, other operating income or expense items, proxy contest expenses, restructuring charges or credits, other income related to litigation settlements and their related tax-effects. 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 (In thousands) (Unaudited) September December 30, 2009 31, 2008 -------- -------- ASSETS CURRENT ASSETS: Cash, cash equivalents and short-term investments $65,726 $74,195 Accounts receivable, net 29,829 20,643 Inventories 34,622 37,440 Income taxes receivable 569 6,783 Deferred income taxes 19,181 17,752 Other current assets 1,480 1,781 ----- ----- Total current assets 151,407 158,594 LONG-TERM INVESTMENTS 12,572 12,628 PROPERTY, PLANT AND EQUIPMENT, NET 69,514 76,200 INTANGIBLE ASSETS, NET 573 1,338 DEFERRED INCOME TAXES 9,754 11,135 OTHER ASSETS 457 448 --- --- TOTAL $244,277 $260,343 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $13,473 $15,365 Deferred income on shipments to distributors 22,889 21,136 Current portion of Long-term debt 8,571 - Other current liabilities 6,533 10,696 ----- ------ Total current liabilities 51,466 47,197 LONG-TERM DEBT 5,000 - LONG-TERM TAXES PAYABLE 4,949 4,468 OTHER LONG-TERM OBLIGATIONS 203 272 SHAREHOLDERS' EQUITY: TOTAL SHAREHOLDERS' EQUITY 182,659 208,406 ------- ------- TOTAL $244,277 $260,343 ======== ========

    Micrel, Incorporated

    CONTACT: Ray Wallin of Micrel, Incorporated, +1-408-944-0800

    Web Site: http://www.micrel.com/




    comScore Announces Date for Third Quarter 2009 Financial Results

    RESTON, Va., Oct. 22 /PRNewswire-FirstCall/ -- comScore, Inc. , a leader in measuring the digital world, today announced it will report its third quarter 2009 financial results after U.S. financial markets close on Thursday, October 29, 2009. In conjunction with this announcement, management will host a conference call and webcast on Thursday, October 29, 2009 at 5:00 p.m. (ET) to discuss the Company's financial results.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20080115/COMSCORELOGO)

    To access this call, dial 888-680-0879 (domestic) or 617-213-4856 (international). The pass code for the call is 77402338. Investors are advised to dial in at least ten minutes prior to the call to register.

    In order to bypass the operator upon connection, participants may pre-register for the conference call at: https://www.theconferencingservice.com/prereg/key.process?key=P9XDCAE39. Pre-registrants will be issued a pin number to use for quick access to the live call.

    Additionally, a live webcast of the conference call will be available on the "Investor Relations" page on the Company's Web site http://www.comscore.com/.

    Following the conference call, a replay will be available at 888-286-8010 (domestic) or 617-801-6888 (international). The replay pass code for this call is 26085287. An archived webcast of this conference call will also be available at http://ir.comscore.com/events.cfm. The replay conference call and webcast will be available until November 12, 2009.

    About comScore

    comScore, Inc. is a global leader in measuring the digital world and preferred source of digital marketing intelligence. For more information, please visit http://www.comscore.com/companyinfo.

    Photo: http://www.newscom.com/cgi-bin/prnh/20080115/COMSCORELOGO
    AP Archive: http://photoarchive.ap.org/
    PRN Photo Desk, photodesk@prnewswire.com comScore, Inc.

    CONTACT: Public Relations, Andrew Lipsman, +1-312-775-6510,
    press@comscore.com, or Investor Relations, Kenneth Tarpey, +1-703-438-2305,
    ktarpey@comscore.com, both of comScore, Inc.

    Web Site: http://www.comscore.com/




    Isilon Systems Announces 2009 Third Quarter Results

    SEATTLE, Oct. 22 /PRNewswire-FirstCall/ -- Isilon® Systems , the leader in scale-out NAS, today announced its financial results for the third quarter ended September 30, 2009. Revenue for the quarter was $30.5 million, up 5 percent sequentially compared with $29.0 million in the second quarter of 2009 and up 1 percent compared with $30.3 million in the third quarter of 2008.

    "Isilon performed well in the third quarter. In addition to continued improvement on EPS, I am encouraged both by our sequential revenue growth in what has traditionally been a seasonally-slower quarter, and by our continued firm control of costs," said Sujal Patel, President and Chief Executive Officer, Isilon Systems. "Customer buying patterns began to stabilize during the quarter, leading to balanced sales across our entire range of products and solid gross margins. These results underscore the value that Isilon's scale-out NAS platform is creating for customers across a broad and growing spectrum of enterprise data storage needs."

    Financial results for the third quarter of 2009 included the following: -- Gross margin for the third quarter of 2009 was 56.9 percent, compared with 57.0 percent in the second quarter of 2009 and 57.2 percent in the third quarter of 2008. -- Net loss for the third quarter of 2009 was $4.9 million, or $0.08 per share, compared with net loss of $3.7 million, or $0.06 per share in the second quarter of 2009. Net loss in the third quarter of 2008 was $4.8 million, or $0.08 per share. Non-GAAP net loss for the third quarter of 2009 was $1.4 million, or $0.02 per share, compared with non-GAAP net loss of $2.0 million, or $0.03 per share in the second quarter of 2009. Non-GAAP net loss in the third quarter of 2008 was $3.3 million, or $0.05 per share. -- In the third quarter of 2009, the Company entered into a memorandum of understanding to settle and resolve a shareholder class action lawsuit that was initially filed in November 2007 against the Company and current and former officers and directors. The settlement provides for a payment to the plaintiff class of $15.0 million, of which the Company will contribute $2.0 million and the balance of which will be paid by the Company's insurers. The $2.0 million for which the Company is responsible is included in the Company's results of operations for the quarter ended September 30, 2009 and impacted GAAP loss per share by $0.03. The class action settlement is subject to preliminary and final approval by the United States District Court for the Western District of Washington. -- As of September 30, 2009, cash, cash equivalents and marketable securities were $77.0 million, compared with $75.5 million as of June 30, 2009. Conference Call

    Isilon management will host a conference call today at 2:00 p.m. PT (5:00 p.m. ET) to discuss Isilon's financial results for the third quarter of 2009. The conference call will be webcast on the Investor Relations section of Isilon's website at http://www.isilon.com/company where it will be archived. In addition, the live conference call will be accessible by telephone at 866-203-3436 or 617-213-8849, passcode 55260256. A replay of the call will be available by telephone approximately two hours after the call ends until 9:00 p.m. PT (12:00 midnight ET), October 29, 2009, at 888-286-8010 or 617-801-6888. The replay passcode is 41609571.

    About Isilon Systems

    Isilon Systems is the proven leader in scale-out NAS. Isilon's clustered storage and data management solutions drive unique business and economic value for customers by maximizing the performance of their mission-critical applications, workflows, and processes. Isilon enables enterprises and research organizations worldwide to manage large and rapidly growing amounts of file-based data in a highly scalable, easy-to-manage, and cost-effective way. Information about Isilon can be found at http://www.isilon.com/.

    Use of Non-GAAP Financial Measures

    To supplement our consolidated financial statements prepared in accordance with GAAP, this press release includes non-GAAP gross margin, non-GAAP loss from operations, non-GAAP net loss, and non-GAAP loss per share. Isilon provides non-GAAP information to enhance investors' overall understanding of the company's current financial performance and the company's prospects for the future and to aid in comparing current operating results with those of past periods. The company believes the non-GAAP measures provide useful information to management and investors by excluding certain items that may not be indicative of Isilon's core operating results and business outlook.

    Non-GAAP gross margin, non-GAAP loss from operations, non-GAAP net loss, and non-GAAP loss per share exclude stock-based compensation expenses, restructuring charges and expenses related to the settlement of our shareholder litigation. Isilon excludes stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that Isilon does not believe reflect core operating results. Stock-based compensation expense is dependent on a number of factors over which management has limited control and is not a factor management utilizes in operating the business. Non-GAAP results also exclude a restructuring charge related to expenses incurred during the second quarter in connection with a reduction in the company's workforce, and charges from the settlement of the shareholder class action incurred during the third quarter. The restructuring and legal settlement charges are excluded because management believes that they are not indicative of on-going results.

    These non-GAAP measures are not calculated in accordance with GAAP and should be considered supplemental to, and not a substitute for, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Isilon believes that non-GAAP measures have inherent limitations in that they do not reflect all of the amounts associated with Isilon's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Isilon's results of operations in conjunction with the corresponding GAAP measures. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis, prominently disclosing GAAP results and providing reconciliations from GAAP results to operational measures. Except as noted above, we expect to continue to incur expenses similar to the non-GAAP adjustments described above, and the exclusion or inclusion of these items from our non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent.

    A table following the financial statements provides a reconciliation of the most directly comparable GAAP measures to the non-GAAP measures used by management.

    Safe Harbor for Forward Looking Statements

    This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding Isilon's financial and operating results; the benefits of our products and services, and our ability to achieve our goals, plans and objectives; steps to reduce Isilon's costs, improve efficiencies and continue to progress toward and attain profitability; and the anticipated signing and submission of a stipulation of settlement in the shareholder class action lawsuit, the portion of the settlement that will be covered by insurance, and the need for final approval of the settlement by the court. These statements are not guarantees of future performance, but are based on management's expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve risks, uncertainties, and assumptions. If the risks or uncertainties ever materialize, or the assumptions prove incorrect, our actual results may differ materially from those expressed or implied by our forward-looking statements. There can be no assurances that forward-looking statements will be achieved. Important factors that could cause actual results to differ materially from those indicated in forward-looking statements include the following: risks associated with anticipated growth in the storage of file-based data and scale-out NAS category; demand for the Company's products and services; competitive factors, including changes in the competitive environment, pricing pressures, sales cycle time and increased competition; our ability to manage our supply chain and improve operational efficiency while building and expanding our direct sales, reseller and distribution channels; new product introductions and our ability to develop and deliver innovative products and provide high-quality service and support offerings; as well as U.S. and global macroeconomic and industry conditions, including expenditure trends for storage-related products. These and other important risk factors and assumptions are detailed in documents filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2008 filed February 20, 2009, subsequently filed Quarterly Reports on Form 10-Q and other filings, and could cause actual results to vary from expectations. The Company makes no commitment to revise or update any forward-looking statements in order to reflect subsequent events or circumstances.

    Isilon Systems, Inc. Condensed Consolidated Statements of Operations (unaudited) (in thousands, except per share data) Three Months Ended Nine Months Ended ------------------- ------------------- September September September September 30, 30, 30, 30, 2009 2008 2009 2008 -------- -------- -------- -------- Revenue: Product $22,835 $24,418 $64,531 $66,827 Services 7,669 5,914 21,849 15,811 ----- ----- ------ ------ Total revenue 30,504 30,332 86,380 82,638 ------ ------ ------ ------ Cost of revenue: Product 9,631 9,176 29,691 26,740 Services (1) 3,510 3,810 11,972 9,623 ----- ----- ------ ----- Total cost of revenue 13,141 12,986 41,663 36,363 ------ ------ ------ ------ Gross profit 17,363 17,346 44,717 46,275 ------ ------ ------ ------ Operating expenses: Research and development (1) 5,902 6,318 18,148 17,788 Sales and marketing (1) 10,843 11,341 32,443 35,546 General and administrative (1) 3,563 4,843 11,181 15,303 Restructuring charges - - 357 - Legal settlement 2,000 - 2,000 - ----- --- ----- --- Total operating expenses 22,308 22,502 64,129 68,637 ------ ------ ------ ------ Loss from operations (4,945) (5,156) (19,412) (22,362) Interest income and other 164 398 702 1,860 --- --- --- ----- Loss before income tax expense (4,781) (4,758) (18,710) (20,502) Income tax expense (86) (70) (304) (243) --- --- ---- ---- Net loss $(4,867) $(4,828) $(19,014) $(20,745) ======= ======= ======== ======== Net loss per share, basic and diluted $(0.08) $(0.08) $(0.30) $(0.33) ====== ====== ====== ====== Shares used in computing basic and diluted net loss per share 64,550 63,615 64,184 63,171 ====== ====== ====== ====== (1) Includes stock-based compensation as follows: Cost of revenue $60 $46 $202 $124 Research and development 402 376 1,256 788 Sales and marketing 418 470 1,339 1,655 General and administrative 545 681 1,536 1,799 Isilon Systems, Inc. Condensed Consolidated Balance Sheets (unaudited) (in thousands) As of ------- September 30, December 30, 2009 2008 ------------- -------------- ASSETS Current assets: Cash and cash equivalents $30,266 $34,342 Marketable securities 46,751 43,441 Trade receivables, net of allowances of $348 and $250, respectively 17,949 14,436 Inventories 5,966 12,433 Other current assets 4,523 4,243 ----- ----- Total current assets 105,455 108,895 Property and equipment, net 7,528 11,295 ----- ------ Total assets $112,983 $120,190 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $8,395 $9,779 Accrued liabilities 5,966 4,188 Accrued compensation and related benefits 6,374 5,879 Deferred revenue 22,013 18,209 ------ ------ Total current liabilities 42,748 38,055 Deferred revenue, net of current portion 10,543 8,954 Deferred rent, net of current portion 2,840 3,158 ----- ----- Total liabilities 56,131 50,167 ------ ------ Commitments and contingencies Stockholders' equity: Common stock 1 1 Additional paid-in capital 203,583 197,685 Accumulated other comprehensive income (loss) (50) 5 Accumulated deficit (146,682) (127,668) -------- -------- Total stockholders' equity 56,852 70,023 ------ ------ Total liabilities and stockholders' equity $112,983 $120,190 ======== ======== Isilon Systems, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Three Months Ended Nine Months Ended -------------------- ------------------- September September September September 30, 30, 30, 30, 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Cash flows from operating activities Net loss $(4,867) $(4,828) $(19,014) $(20,745) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 1,445 1,599 4,629 4,690 Amortization (accretion) of discount (premium) on marketable securities 187 (19) 327 (141) Stock-based compensation expense 1,425 1,573 4,333 4,366 Changes in operating assets and liabilities: Accounts receivable, net (2,361) 3,705 (3,519) 4,993 Inventories 62 967 6,467 (1,197) Other current assets (37) 1,129 (6) (144) Accounts payable 1,164 (976) (840) (1,694) Accrued liabilities, compensation payable and deferred rent 1,404 (284) 1,877 (530) Deferred revenue 2,457 423 5,394 5,503 ----- --- ----- ----- Net cash provided by (used in) operating activities 879 3,289 (352) (4,899) --- ----- ---- ------ Cash flows from investing activities Purchases of property and equipment (212) (1,605) (1,483) (4,594) Purchases of marketable securities (9,110) (7,597) (35,092) (31,665) Proceeds from sales and maturities of marketable securities 6,850 8,807 31,175 48,677 ----- ----- ------ ------ Net cash provided by (used in) investing activities (2,472) (395) (5,400) 12,418 ------ ---- ------ ------ Cash flows from financing activities Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan 1,139 91 1,566 453 Repurchases of unvested common stock - - - (13) --- --- --- --- Net cash provided by financing activities 1,139 91 1,566 440 ----- --- ----- --- Effect of exchange rate changes on cash and cash equivalents 9 (44) 110 (47) --- --- --- --- Net increase (decrease) in cash and cash equivalents (445) 2,941 (4,076) 7,912 Cash and cash equivalents at beginning of period 30,711 43,970 34,342 38,999 ------ ------ ------ ------ Cash and cash equivalents at end of period $30,266 $46,911 $30,266 $46,911 ======= ======= ======= ======= Isilon Systems, Inc. Reconciliation of GAAP to non-GAAP results (in thousands, except percentages and per share data) Net loss per common share, Gross Operating Loss from basic and margin % Expenses operations Net loss diluted -------- ---------- ---------- -------- ---------- Three Months Ended September 30, 2009 GAAP 56.9% $22,308 $(4,945) $(4,867) $(0.08) Adjustments: Stock-based compensation 0.2 (1,365) 1,425 1,425 0.03 Legal settlement - (2,000) 2,000 2,000 0.03 --- ------ ----- ----- ---- Non-GAAP 57.1% $18,943 $(1,520) $(1,442) $(0.02) ==== ======= ======= ======= ====== June 30, 2009 GAAP 57.0% $20,377 $(3,851) $(3,734) $(0.06) Adjustments: Stock-based compensation 0.3 (1,252) 1,346 1,346 0.02 Restructuring charges - (357) 357 357 0.01 --- ---- --- --- ---- Non-GAAP 57.3% $18,768 $(2,148) $(2,031) $(0.03) ==== ======= ======= ======= ====== September 30, 2008 GAAP 57.2% $22,502 $(5,156) $(4,828) $(0.08) Adjustments: Stock-based compensation 0.1 (1,527) 1,573 1,573 0.03 --- ------ ----- ----- ---- Non-GAAP 57.3% $20,975 $(3,583) $(3,255) $(0.05) ==== ======= ======= ======= ====== Nine Months Ended September 30, 2009 GAAP 51.8% $64,129 $(19,412) $(19,014) $(0.30) Adjustments: Stock-based compensation 0.2 (4,131) 4,333 4,333 0.07 Restructuring charges - (357) 357 357 0.01 Legal settlement - (2,000) 2,000 2,000 0.03 --- ------ ----- ----- ---- Non-GAAP 52.0% $57,641 $(12,722) $(12,324) $(0.19) ==== ======= ======== ======== ====== September 30, 2008 GAAP 56.0% $68,637 $(22,362) $(20,745) $(0.33) Adjustments: Stock-based compensation 0.1 (4,242) 4,366 4,366 0.07 --- ------ ----- ----- ---- Non-GAAP 56.1% $64,395 $(17,996) $(16,379) $(0.26) ==== ======= ======== ======== ======

    Isilon Systems

    CONTACT: Press, Chris Blessington, Senior Director of Marketing and
    Communications of Isilon Systems, +1-206-315-7500,
    chris.blessington@isilon.com, or Investors, +1-206-315-7500,
    investor-relations@isilon.com

    Web Site: http://www.isilon.com/




    Celestica announces third quarter financial results(All amounts in U.S. dollars. Per share information based on diluted shares outstanding unless noted otherwise).Third Quarter 2009 Summary --------------------------- Revenue of $1,556 million, compared to $2,031 million for the same period last year- GAAP loss of $0.6 million or $0.00 per share, compared to GAAP net earnings of $32.1 million or $0.14 per share last year- Adjusted net earnings of $0.17 per share, compared to $0.24 per share for the same period last year- Return on invested capital, including intangibles, of 21.9%, compared to 13.9% last year- Operating margin of 3.4%, compared to 3.2% last year- Adjusted gross margin of 7.0%, compared to 7.4% last year- Cash flow from operations of $146 million, free cash flow of $139 million- Fourth quarter revenue guidance of $1.55 billion - $1.70 billion, adjusted net earnings per share of $0.14 - $0.20

    TORONTO, Oct. 22 /PRNewswire-FirstCall/ -- Celestica Inc. (NYSE, TSX: CLS), a global leader in the delivery of end-to-end product lifecycle solutions, today announced financial results for the third quarter ended September 30, 2009.

    Revenue for the quarter was $1,556 million, compared to $2,031 million in the third quarter of 2008. GAAP net loss was $0.6 million, or $0.00 per share, compared to GAAP net earnings of $32.1 million, or $0.14 per share, for the same period last year. The year-over-year change reflects the impact of weaker end-market demand, as well as higher restructuring costs in 2009 associated with the company's previously announced restructuring program.

    Adjusted net earnings for the quarter were $39.5 million, or $0.17 per share, compared to adjusted net earnings of $54.3 million, or $0.24 per share, for the same period last year. The term adjusted net earnings is a non-GAAP measure defined as net earnings before other charges, amortization of intangible assets (excluding amortization of computer software), option expense, gains or losses related to the repurchase of shares and debt, net of tax and significant deferred tax write-offs or recoveries. Detailed GAAP financial statements and supplementary information related to adjusted net earnings appears at the end of this press release.

    The company's revenue and adjusted net earnings for the third quarter of 2009 met the high end of the company's published guidance, announced on July 23, 2009, of revenue of $1.425 billion to $1.575 billion and adjusted net earnings per share of $0.11 to $0.17.

    For the nine months ended September 30, 2009, revenue was $4,428 million, compared to $5,743 million for the same period in 2008. GAAP net earnings were $23.9 million, or $0.10 per share, compared to $101.7 million, or $0.44 per share, for the same period last year. Adjusted net earnings for the nine months ended September 30, 2009 were $93.8 million, or $0.41 per share, compared to $128.6 million, or $0.56 per share, for the same period in 2008.

    "Celestica continues to deliver improved operating performance and financial results despite a very challenging and volatile business environment," said Craig Muhlhauser, President & CEO. "One of the company's goals during this downturn was to continue to deliver on our commitments to our customers and increase our return on invested capital even at the low point of an economic cycle. We are very pleased with the performance we have achieved thus far."

    Debt Redemption ---------------

    In September 2009, the company announced its intention to redeem all of its outstanding 7.875% Senior Subordinated Notes due 2011 (Notes), with an aggregate principal amount of $339.4 million. In accordance with the terms of the Notes, the company will redeem the Notes at a price of 101.969% of the principal amount, plus accrued and unpaid interest to the redemption date. The company will complete the redemption in the fourth quarter of 2009 and expects to record a gain of approximately $10 million on redemption.

    The company plans to fund the redemption using existing cash resources. After giving effect to the completion of the Notes redemption as of September 30, 2009, the company's cash balance would have been $906 million, and our Senior Subordinated Notes due 2013 remains at $223 million. The company also estimates a reduction to its 2010 net interest expense of approximately $14 million.

    Fourth Quarter Outlook ----------------------

    For the fourth quarter ending December 31, 2009, the company anticipates revenue to be in the range of $1.55 billion to $1.70 billion, and adjusted net earnings per share to range from $0.14 to $0.20.

    Third Quarter Webcast ---------------------

    Management will host its quarterly results conference call today at 4:30 p.m. Eastern. The webcast can be accessed at http://www.celestica.com/.

    Supplementary Information -------------------------

    In addition to disclosing detailed results in accordance with Canadian generally accepted accounting principles (GAAP), Celestica provides supplementary non-GAAP measures as a method to evaluate the company's operating performance. See table below.

    Management uses adjusted net earnings as a measure of enterprise-wide performance. Management believes adjusted net earnings is a useful measure for management, as well as investors, to facilitate period-to-period operating comparisons. Adjusted net earnings do not include the effects of other charges, most significantly the write-down of goodwill and long-lived assets, gains or losses on the repurchase of shares or debt and the related income tax effect of these adjustments, and any significant deferred tax write-offs or recoveries. The company also excludes the following recurring charges: restructuring costs, option expense, the amortization of intangible assets (except amortization of computer software), and the related income tax effect of these adjustments. The term adjusted net earnings does not have any standardized meaning prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. Adjusted net earnings is not a measure of performance under Canadian or U.S. GAAP and should not be considered in isolation or as a substitute for net earnings prepared in accordance with Canadian or U.S. GAAP. The company has provided a reconciliation of adjusted net earnings, which is a non-GAAP measure, to Canadian GAAP net earnings below.

    About Celestica ---------------

    Celestica is dedicated to delivering end-to-end product lifecycle solutions to drive our customers' success. Through our simplified global operations network and information technology platform, we are solid partners who deliver informed, flexible solutions that enable our customers to succeed in the markets they serve. Committed to providing a truly differentiated customer experience, our agile and adaptive employees share a proud history of demonstrated expertise and creativity that provides our customers with the ability to overcome any challenge.

    For further information on Celestica, visit its website at http://www.celestica.com/. The company's security filings can also be accessed at http://www.sedar.com/ and http://www.sec.gov/.

    Safe Harbour and Fair Disclosure Statement ------------------------------------------

    This news release contains forward-looking statements related to our future growth, trends in our industry, our financial and/or operational results including anticipated expenses, the expected gains from our recently announced intention to redeem our 7.875% Senior Subordinated Notes due 2011, and our financial or operational performance. Such forward-looking statements are predictive in nature and may be based on current expectations, forecasts or assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially from the forward-looking statements themselves. Such forward-looking statements may, without limitation, be preceded by, followed by, or include words such as "believes", "expects", "anticipates", "estimates", "intends", "plans", or similar expressions, or may employ such future or conditional verbs as "may", "will", "should" or "would", or may otherwise be indicated as forward-looking statements by grammatical construction, phrasing or context. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995, and in any applicable Canadian securities legislation. Forward-looking statements are not guarantees of future performance. You should understand that the following important factors could affect our future results and could cause those results to differ materially from those expressed in such forward-looking statements: the challenges of effectively managing our operations during uncertain economic conditions, including significant changes in demand from our customers as a result of the impact of the global economic downturn and capital markets weakness; the risk of potential non-performance by counterparties, including but not limited to financial institutions, customers and suppliers; the effects of price competition and other business and competitive factors generally affecting the EMS industry, including changes in the trend for outsourcing; our dependence on a limited number of customers; variability of operating results among periods; the challenge of managing our financial exposures to foreign currency fluctuations; the challenge of responding to changes in customer demand; our inability to retain or grow our business due to execution problems resulting from significant headcount reductions, plant closures and product transfers associated with restructuring activities; our dependence on industries affected by rapid technological change; our ability to successfully manage our international operations; and the delays in the delivery and/or general availability of various components and materials used in our manufacturing process. These and other risks and uncertainties, as well as other information related to the company, are discussed in the Company's various public filings at http://www.sedar.com/ and http://www.sec.gov/, including our Annual Report on Form 20-F and subsequent reports on Form 6-K filed with the Securities and Exchange Commission and our Annual Information Form filed with the Canadian Securities Commissions. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. Except as required by applicable law, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

    As of its date, this press release contains any material information associated with the Company's financial results for the third quarter ended September 30, 2009 and revenue and adjusted net earnings guidance for the fourth quarter ending December 31, 2009. Revenue and earnings guidance is reviewed by the Company's Board of Directors. Our revenue and earnings guidance is based on various assumptions which management believes are reasonable under the current circumstances, but may prove to be inaccurate, and many of which involve factors that are beyond the control of the Company. The material assumptions may include the following: forecasts from our customers, which range from 30 to 90 days; timing and investments associated with ramping new business; general economic and market conditions; currency exchange rates; pricing and competition; anticipated customer demand; supplier performance and pricing; commodity, labor, energy and transportation costs; operational and financial matters; technological developments; and the timing and execution of our restructuring plan. These assumptions are based on management's current views with respect to current plans and events, and are and will be subject to the risks and uncertainties referred to above. It is Celestica's policy that revenue and earnings guidance is effective on the date given, and will only be updated through a public announcement.

    The following table sets forth, for the periods indicated, a reconciliation of Canadian GAAP net earnings to adjusted net earnings and other non-GAAP information (in millions of U.S. dollars, except per share amounts):

    2008 2009 Three months ----------------------------- ----------------------------- ended Adjust- Adjust- September 30 GAAP ments Adjusted GAAP ments Adjusted --------- --------- --------- --------- --------- --------- Revenue $2,030.8 $ - $2,030.8 $1,556.2 $ - $1,556.2 Cost of sales(1) 1,880.8 (0.5) 1,880.3 1,448.4 (0.5) 1,447.9 --------- --------- --------- --------- --------- --------- Gross profit 150.0 0.5 150.5 107.8 0.5 108.3 SG&A(1)(2) 83.0 (0.6) 82.4 54.0 (0.8) 53.2 Amortization of intangible assets(2) 6.3 (3.4) 2.9 4.7 (1.9) 2.8 Other charges 16.4 (16.4) - 43.5 (43.5) - --------- --------- --------- --------- --------- --------- Operating earnings - EBIAT(3) 44.3 20.9 65.2 5.6 46.7 52.3 Interest expense, net 9.8 - 9.8 8.4 - 8.4 --------- --------- --------- --------- --------- --------- Net earnings (loss) before tax 34.5 20.9 55.4 (2.8) 46.7 43.9 Income tax expense (recovery) 2.4 (1.3) 1.1 (2.2) 6.6 4.4 --------- --------- --------- --------- --------- --------- Net earnings (loss) $ 32.1 $ 22.2 $ 54.3 $ (0.6) $ 40.1 $ 39.5 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- W.A. no. of shares (in millions) - diluted 230.3 230.3 229.5 231.7 Earnings per share - diluted $ 0.14 $ 0.24 $ 0.00 $ 0.17 ROIC(4) 13.9% 21.9% Free cash flow(5) $ 57.4 $ 139.1 2008 2009 Nine months ----------------------------- ----------------------------- ended Adjust- Adjust- September 30 GAAP ments Adjusted GAAP ments Adjusted --------- --------- --------- --------- --------- --------- Revenue $5,742.8 $ - $5,742.8 $4,427.8 $ - $4,427.8 Cost of sales(1) 5,352.3 (2.3) 5,350.0 4,107.1 (1.8) 4,105.3 --------- --------- --------- --------- --------- --------- Gross profit 390.5 2.3 392.8 320.7 1.8 322.5 SG&A(1)(2) 215.1 (2.7) 212.4 183.3 (2.8) 180.5 Amortization of intangible assets(2) 20.5 (11.8) 8.7 15.3 (6.9) 8.4 Other charges 23.3 (23.3) - 76.7 (76.7) - --------- --------- --------- --------- --------- --------- Operating earnings - EBIAT(3) 131.6 40.1 171.7 45.4 88.2 133.6 Interest expense, net 28.8 - 28.8 29.3 - 29.3 --------- --------- --------- --------- --------- --------- Net earnings before tax 102.8 40.1 142.9 16.1 88.2 104.3 Income tax expense (recovery) 1.1 13.2 14.3 (7.8) 18.3 10.5 --------- --------- --------- --------- --------- --------- Net earnings $ 101.7 $ 26.9 $ 128.6 $ 23.9 $ 69.9 $ 93.8 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- W.A. no. of shares (in millions) - diluted 230.0 230.0 230.5 230.5 Earnings per share - diluted $ 0.44 $ 0.56 $ 0.10 $ 0.41 ROIC(4) 12.1% 18.1% Free cash flow(5) $ 144.4 $ 196.2 (1) Non-cash option expense included in cost of sales and SG&A is added back for adjusted net earnings. (2) Certain 2008 GAAP numbers have been restated to reflect the change in accounting for computer software effective January 1, 2009 as required under Canadian GAAP. For the third quarter of 2008, $2.9 million in amortization of computer software has been reclassified from SG&A expenses to amortization of intangible assets (first nine months of 2008 - $8.7 million). Amortization of computer software is not added back for EBIAT and adjusted net earnings. There is no impact to our current or previously reported EBIAT, adjusted net earnings or net earnings. (3) Management uses EBIAT as a measure to assess operating performance. Excluded from EBIAT are the effects of other charges, most significantly the write-down of goodwill and long-lived assets, gains or losses on the repurchase of shares or debt, the related income tax effect of these adjustments, and any significant deferred tax write-offs or recoveries. We also exclude the following recurring charges: restructuring costs, option expense, amortization of intangible assets (except amortization of computer software), interest expense or income, and the related income tax effect of these adjustments. Management believes EBIAT, which isolates operating activities before interest and taxes, is an appropriate measure for management, as well as investors, to compare the company's operating performance from period-to-period. The term EBIAT does not have any standardized meaning prescribed by Canadian or U.S. GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. EBIAT is not a measure of performance under Canadian or U.S. GAAP and should not be considered in isolation or as a substitute for net earnings prepared in accordance with Canadian or U.S. GAAP. (4) Management uses ROIC as a measure to assess the effectiveness of the invested capital it uses to build products or provide services to its customers. The ROIC metric used by the company includes operating margin, working capital management and asset utilization. ROIC is calculated by dividing EBIAT by average net invested capital. Net invested capital consists of total assets less cash, accounts payable, accrued liabilities and income taxes payable. The term ROIC does not have any standardized meaning prescribed by Canadian or U.S. GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. ROIC is not a measure of performance under Canadian or U.S. GAAP and should not be considered in isolation or as a substitute for any standardized measure. (5) Management uses free cash flow as a measure to assess cash flow performance. Free cash flow is calculated as cash generated from operations less capital expenditures (net of proceeds from the sale of surplus property and equipment). The term free cash flow does not have any standardized meaning prescribed by Canadian or U.S. GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. Free cash flow is not a measure of performance under Canadian or U.S. GAAP and should not be considered in isolation or as a substitute for any standardized measure. GUIDANCE SUMMARY 3Q 09 Guidance 3Q 09 Actual 4Q 09 Guidance(6) ----------------- ----------------- ----------------- Revenue $1.425B - $1.575B $1.556B $1.55B - $1.70B Adjusted net EPS $0.11 - $0.17 $0.17 $0.14 - $0.20 (6) Guidance for the fourth quarter is provided only on an adjusted net earnings basis. This is due to the difficulty in forecasting the various items impacting GAAP net earnings, such as the amount and timing of our restructuring activities. CELESTICA INC. CONSOLIDATED BALANCE SHEETS (in millions of U.S. dollars) December 31 September 30 2008 2009 ------------ ------------ Assets (unaudited) Current assets: Cash and cash equivalents (note 6)........... $ 1,201.0 $ 1,261.4 Accounts receivable (note 10(c))............. 1,074.0 854.0 Inventories (note 2)......................... 787.4 697.5 Prepaid and other assets (note 7(i))......... 87.1 55.3 Income taxes recoverable..................... 14.1 20.5 Deferred income taxes........................ 8.2 5.7 ------------ ------------ 3,171.8 2,894.4 Property, plant and equipment (note 1(i))...... 433.5 410.0 Intangible assets (note 1(i)).................. 54.1 40.7 Other long-term assets (note 7(ii))............ 126.8 124.7 ------------ ------------ $ 3,786.2 $ 3,469.8 ------------ ------------ ------------ ------------ Liabilities and Shareholders' Equity Current liabilities: Accounts payable............................. $ 1,090.6 $ 1,001.6 Accrued liabilities (notes 4 and 7(i))....... 463.1 302.4 Income taxes payable......................... 13.5 11.9 Deferred income taxes........................ 0.2 0.6 Current portion of long-term debt (note 3)... 1.0 357.4 ------------ ------------ 1,568.4 1,673.9 Long-term debt (note 3)........................ 732.1 223.7 Accrued pension and post-employment benefits... 63.2 71.9 Deferred income taxes.......................... 47.2 33.7 Other long-term liabilities.................... 9.8 9.4 ------------ ------------ 2,420.7 2,012.6 Shareholders' equity (note 8): Capital stock................................ 3,588.5 3,590.5 Contributed surplus.......................... 204.4 225.5 Deficit...................................... (2,436.8) (2,412.9) Accumulated other comprehensive income....... 9.4 54.1 ------------ ------------ 1,365.5 1,457.2 ------------ ------------ $ 3,786.2 $ 3,469.8 ------------ ------------ ------------ ------------ Guarantees and contingencies (note 9) See accompanying notes to unaudited consolidated financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the 2008 annual consolidated financial statements. CELESTICA INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions of U.S. dollars, except per share amounts) Three months ended Nine months ended September 30 September 30 2008 2009 2008 2009 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited) Revenue.................. $ 2,030.8 $ 1,556.2 $ 5,742.8 $ 4,427.8 Cost of sales............ 1,880.8 1,448.4 5,352.3 4,107.1 ----------- ----------- ----------- ----------- Gross profit............. 150.0 107.8 390.5 320.7 Selling, general and administrative expenses (note 1(i))............. 83.0 54.0 215.1 183.3 Amortization of intangible assets (note 1(i))............. 6.3 4.7 20.5 15.3 Other charges (note 4)... 16.4 43.5 23.3 76.7 Interest on long-term debt.................... 14.1 8.4 42.3 29.6 Interest income, net of interest expense........ (4.3) - (13.5) (0.3) ----------- ----------- ----------- ----------- Earnings (loss) before income taxes............ 34.5 (2.8) 102.8 16.1 Income tax expense (recovery): Current................ 6.4 1.7 5.1 7.8 Deferred............... (4.0) (3.9) (4.0) (15.6) ----------- ----------- ----------- ----------- 2.4 (2.2) 1.1 (7.8) ----------- ----------- ----------- ----------- Net earnings (loss) for the period.......... $ 32.1 $ (0.6) $ 101.7 $ 23.9 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Basic earnings per share............... $ 0.14 $ 0.00 $ 0.44 $ 0.10 Diluted earnings per share............... $ 0.14 $ 0.00 $ 0.44 $ 0.10 Shares used in computing per share amounts: Basic (in millions).... 229.4 229.5 229.2 229.5 Diluted (in millions).. 230.3 229.5 230.0 230.5 See accompanying notes to unaudited consolidated financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the 2008 annual consolidated financial statements. CELESTICA INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions of U.S. dollars) Three months ended Nine months ended September 30 September 30 2008 2009 2008 2009 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited) Net earnings (loss) for the period.......... $ 32.1 $ (0.6) $ 101.7 $ 23.9 Other comprehensive income, net of tax: Foreign currency translation gain (loss)................ (3.3) 5.5 2.8 0.4 Reclass foreign currency translation to other charges...... - 1.8 - 1.8 Net gain (loss) on derivatives designated as cash flow hedges... (11.4) 4.5 (9.0) 6.1 Reclass net loss (gain) on derivatives designated as cash flow hedges to operations............ (2.5) 2.0 (21.5) 36.4 ----------- ----------- ----------- ----------- Comprehensive income..... $ 14.9 $ 13.2 $ 74.0 $ 68.6 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- See accompanying notes to unaudited consolidated financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the 2008 annual consolidated financial statements. CELESTICA INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions of U.S. dollars) Three months ended Nine months ended September 30 September 30 2008 2009 2008 2009 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited) Cash provided by (used in): Operations: Net earnings (loss) for the period.......... $ 32.1 $ (0.6) $ 101.7 $ 23.9 Items not affecting cash: Depreciation and amortization.......... 27.2 24.4 81.5 74.5 Deferred income taxes.. (4.0) (3.9) (4.0) (15.6) Non-cash stock-based compensation.......... 3.7 6.7 16.5 21.4 Restructuring charges (note 4).............. 0.2 2.8 0.5 4.1 Other charges (note 4).............. - 1.5 - 8.0 Other.................... 4.9 1.0 8.0 (8.2) Changes in non-cash working capital items: Accounts receivable.... (146.8) (46.1) (98.9) 219.0 Inventories............ (31.3) (64.3) (51.4) 88.8 Prepaid and other assets.......... 9.8 13.6 25.0 36.0 Income taxes recoverable........... (1.5) (1.8) (14.6) (6.4) Accounts payable and accrued liabilities... 191.2 211.9 132.8 (195.4) Income taxes payable... 2.3 1.2 6.3 (1.6) ----------- ----------- ----------- ----------- Non-cash working capital changes....... 23.7 114.5 (0.8) 140.4 ----------- ----------- ----------- ----------- Cash provided by operations.............. 87.8 146.4 203.4 248.5 ----------- ----------- ----------- ----------- Investing: Purchase of property, plant and equipment... (30.8) (9.9) (63.2) (56.3) Proceeds from sale of assets............. 0.4 5.1 4.2 6.5 Other.................. (0.1) - (0.1) 0.5 ----------- ----------- ----------- ----------- Cash used in investing activities.............. (30.5) (4.8) (59.1) (49.3) ----------- ----------- ----------- ----------- Financing: Repurchase of Senior Subordinated Notes (Notes) (note 3(d))... - - - (149.7) Proceeds from termination of swap agreements (note 3(d))........... - - - 14.7 Financing costs........ - - - (2.3) Repayment of capital lease obligations..... - (0.1) (0.2) (1.0) Issuance of share capital............... 0.2 1.8 2.1 2.0 Other.................. (2.3) (1.2) (4.7) (2.5) ----------- ----------- ----------- ----------- Cash provided by (used in) financing activities.... (2.1) 0.5 (2.8) (138.8) ----------- ----------- ----------- ----------- Increase in cash......... 55.2 142.1 141.5 60.4 Cash and cash equivalents, beginning of period..... 1,203.0 1,119.3 1,116.7 1,201.0 ----------- ----------- ----------- ----------- Cash and cash equivalents, end of period........... $ 1,258.2 $ 1,261.4 $ 1,258.2 $ 1,261.4 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Supplemental cash flow information (note 6) See accompanying notes to unaudited consolidated financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the 2008 annual consolidated financial statements. CELESTICA INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in millions of U.S. dollars, except per share amounts) (unaudited) 1. Basis of presentation and significant accounting policies: We prepare our financial statements in accordance with generally accepted accounting principles (GAAP) in Canada. The disclosures contained in these unaudited interim consolidated financial statements do not include all requirements of Canadian GAAP for annual financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the 2008 annual consolidated financial statements. These unaudited interim consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly our financial position as at September 30, 2009 and the results of operations, comprehensive income, and cash flows for the three months and nine months ended September 30, 2008 and 2009. Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We applied significant estimates and assumptions to our valuations against accounts receivable, inventory and income taxes, to the amount and timing of restructuring charges or recoveries, to the fair values used in testing long-lived assets, and to valuing our financial instruments and pension costs. Actual results could differ materially from those estimates and assumptions, especially in light of the economic environment and uncertainties. These unaudited interim consolidated financial statements are based upon accounting principles consistent with those used and described in the 2008 annual consolidated financial statements, except for the following: Changes in accounting policies: (i) Goodwill and intangible assets: On January 1, 2009, we adopted CICA Handbook Section 3064, "Goodwill and intangible assets." This revised standard establishes guidance for the recognition, measurement and disclosure of goodwill and intangible assets, including internally generated intangible assets. As required by this standard, we have retroactively reclassified computer software assets on our consolidated balance sheet from property, plant and equipment to intangible assets. We have also reclassified computer software amortization on our consolidated statement of operations from depreciation expense, included in selling, general and administrative expenses, to amortization of intangible assets. There is no impact on previously reported net earnings or loss. Intangible assets: December 31 September 30 2008 2009 ------------ ------------ Intellectual property.......................... $ 0.6 $ - Other intangible assets........................ 19.5 12.6 Computer software assets....................... 34.0 28.1 ------------ ------------ $ 54.1 $ 40.7 ------------ ------------ ------------ ------------ Amortization expense is as follows: Three months ended Nine months ended September 30 September 30 2008 2009 2008 2009 ----------- ----------- ----------- ----------- Amortization of intellectual property... $ 0.3 $ - $ 0.9 $ 0.2 Amortization of other intangible assets....... 3.1 1.9 10.9 6.7 Amortization of computer software assets......... 2.9 2.8 8.7 8.4 ----------- ----------- ----------- ----------- $ 6.3 $ 4.7 $ 20.5 $ 15.3 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Recently issued accounting pronouncements: (a) International financial reporting standards (IFRS): In February 2008, the Canadian Accounting Standards Board announced the adoption of IFRS for publicly accountable enterprises. IFRS will replace Canadian GAAP effective January 1, 2011. IFRS is effective for our first quarter of 2011 and will require that we restate our 2010 comparative numbers. We have started an IFRS conversion project to evaluate the impact of implementing the new standards. Our transition plan is currently on track with our implementation schedule. Although we have identified key accounting differences that may potentially affect our financial statements or operations, we cannot at this time determine the impact on our consolidated financial statements. (b) Business combinations: In January 2009, the CICA issued Handbook Section 1582, "Business combinations," which replaces the existing standards. This section establishes the standards for the accounting of business combinations, and states that all assets and liabilities of an acquired business will be recorded at fair value. Obligations for contingent considerations and contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisition-related costs will be expensed as incurred and that restructuring charges will be expensed in the periods after the acquisition date. This standard is equivalent to the IFRS on business combinations. This standard is applied prospectively to business combinations with acquisition dates on or after January 1, 2011. Earlier adoption is permitted. We will consider the impact of adopting this standard on our consolidated financial statements if we have a business combination. (c) Consolidated financial statements: In January 2009, the CICA issued Handbook Section 1601, "Consolidated financial statements," which replaces the existing standards. This section establishes the standards for preparing consolidated financial statements and is effective for 2011. Earlier adoption is permitted. We will consider the impact of adopting this standard on our consolidated financial statements if we have a business combination. (d) Financial instruments - disclosures: In June 2009, the CICA issued amendments to Handbook Section 3862, "Financial instruments - disclosures," which requires enhanced disclosures on liquidity risk of financial instruments and new disclosures on fair value measurements of financial instruments. These requirements correspond to the IFRS on financial instruments disclosures. This amendment is effective for our 2009 annual consolidated financial statements. We are currently evaluating the impact of adopting this amendment on our consolidated financial statements. 2. Inventories: For the first nine months of 2009, we recorded a net inventory provision through cost of sales of $1.3 to write down the value of our inventory to net realizable value. 3. Long-term debt: December 31 September 30 2008 2009 ------------ ------------ Secured, revolving credit facility due 2009(a)................................... $ - $ - Senior Subordinated Notes due 2011 (2011 Notes)(b)(c)(d)(e)...................... 489.4 339.4 Senior Subordinated Notes due 2013 (2013 Notes)(b)............................... 223.1 223.1 Embedded prepayment option at fair value(d)(f).............................. (19.2) (0.7) Basis adjustments on debt obligation(f)........ 4.9 3.8 Unamortized debt issue costs................... (7.0) (4.3) Fair value adjustment of 2011 Notes attributable to interest rate risks(d)(e)(f).. 40.9 19.8 ------------ ------------ 732.1 581.1 Capital lease obligations...................... 1.0 - ------------ ------------ 733.1 581.1 Less current portion(e)........................ 1.0 357.4 ------------ ------------ $ 732.1 $ 223.7 ------------ ------------ ------------ ------------ (a) In April 2009, we renewed our revolving credit facility and reduced the size from $300.0 to $200.0, on generally similar terms and conditions, with a maturity of April 2011. Under the terms of the renewed facility, borrowings bear a higher interest rate than under the previous terms and we are required to comply with certain restrictive covenants relating to debt incurrence, the sale of assets, a change of control and certain financial covenants related to indebtedness, interest coverage and liquidity. There were no borrowings outstanding under the facility at September 30, 2009. Commitment fees for the first nine months of 2009 were $1.5. We were in compliance with all covenants at September 30, 2009. Based on the required financial ratios at September 30, 2009, we have full access to this facility. We also have uncommitted bank overdraft facilities available for operating requirements which total $65.0 at September 30, 2009. There were no borrowings outstanding under these facilities at September 30, 2009. (b) Our 2011 Notes bear a fixed interest rate of 7.875%. Our 2013 Notes bear a fixed interest rate of 7.625%. We are entitled to redeem our Notes at various premiums above face value. See note 3(e). The Notes are unsecured and subordinated in right of payment to all our senior debt. The Notes have restrictive covenants that limit our ability to pay dividends, repurchase our own stock or repay debt that is subordinated to these Notes. These covenants also place limitations on the sale of assets and our ability to incur additional debt. We were in compliance with all covenants at September 30, 2009. (c) In connection with the 2011 Notes, we entered into agreements to swap the fixed interest rate with a variable interest rate based on LIBOR plus a margin. In February 2009, we terminated our interest rate swap agreements. See note 3(d). Interest costs on the 2011 Notes were based on a fixed rate of 7.875% for the third quarter of 2009 and the average interest rate was 7.0% for the first nine months of 2009 (5.8% and 6.4%, respectively, for the third quarter and first nine months of 2008). (d) In March 2009, we paid $149.7, excluding accrued interest, to repurchase 2011 Notes with a principal amount at maturity of $150.0. During the first quarter of 2009, we recognized a gain of $9.1 on the repurchase of the 2011 Notes which we recorded in other charges. See note 4. The gain on the repurchase was measured based on the carrying value of the repurchased portion of the 2011 Notes on the date of repurchase. We also terminated our interest rate swap agreements in the amount of $500.0 related to the 2011 Notes and received $14.7 in cash, excluding accrued interest, as settlement of these agreements. In connection with the termination of the swap agreements, we discontinued fair value hedge accounting on the 2011 Notes and will amortize the historical fair value adjustment on the 2011 Notes as a reduction to interest expense on long-term debt, over the remaining term of the 2011 Notes, using the effective interest rate method. As a result of discontinuing fair value hedge accounting in the first quarter of 2009, we recorded a write-down of $15.6 in the carrying value of the embedded prepayment option on the 2011 Notes to reflect the change in fair value upon hedge de-designation, which we recorded in other charges. See note 4. (e) In September 2009, we announced our intent to redeem all of the outstanding 2011 Notes, with an aggregate principal amount of $339.4. In accordance with the terms of the 2011 Notes, we will redeem the 2011 Notes at a price of 101.969% of the principal amount, plus accrued and unpaid interest to the redemption date. We plan to complete the redemption in the fourth quarter of 2009. As a result, we reclassified our 2011 Notes from long-term debt on our consolidated balance sheet to current debt. At September 30, 2009, we carried our 2011 Notes at an amortized cost of $357.4. This carrying amount was comprised primarily of the principal component of $339.4 and the unamortized fair value adjustment attributable to interest rate risk of $19.8, net of unamortized debt issue costs. We expect to record a gain of approximately $10 on the redemption of the 2011 Notes in other charges during the fourth quarter of 2009. (f) The prepayment options in the Notes qualify as embedded derivatives which must be bifurcated for reporting under the financial instruments standards. As of September 30, 2009, the fair value of the embedded derivative asset for the 2013 Notes is $0.7 and is recorded against long-term debt. The decrease in the fair value of the embedded derivative asset from December 31, 2008 primarily reflects the write-down related to the hedge de-designation and debt repurchase described in note 3(d). In addition, in connection with our intent to redeem the remaining 2011 Notes as noted in note 3(e), we recorded a write-down of $1.1 in the carrying value of the embedded prepayment option on the 2011 Notes. This write-down is recorded in other charges. See note 4. As a result of bifurcating the prepayment option from these Notes, a basis adjustment was added to the cost of the long-term debt. This basis adjustment is amortized over the term of the debt using the effective interest rate method. The amortization of the basis adjustment is recorded as a reduction of interest expense on long-term debt. As of September 30, 2009, the unamortized fair value adjustment to the 2011 Notes attributable to the movement in the benchmark interest rates is $19.8. The decrease in this fair value adjustment from December 31, 2008 primarily reflects the debt repurchase and hedge de-designation described in note 3(d). After the hedge de-designation, this fair value adjustment is being amortized to interest expense on long-term debt over the remaining term of the 2011 Notes. As noted in note 3(e), in connection with the planned redemption of the 2011 Notes in the fourth quarter of 2009, the related basis adjustment, the unamortized debt issue costs and the unamortized fair value adjustment will be eliminated in determining the gain on redemption. We applied fair value hedge accounting to our interest rate swaps and our hedged debt obligation (2011 Notes) until February 2009. We also mark-to-market the bifurcated embedded prepayment options in our debt instruments until the options are extinguished. The changes in the fair values each period are recorded in interest expense on long-term debt, except for the write-down of the embedded prepayment option due to hedge de-designation or planned debt redemption which we recorded in other charges. The mark-to-market adjustment fluctuates each period as it is dependent on market conditions, including future interest rates, implied volatility and credit spreads. The impact on our results of operations is as follows: Three months ended Nine months ended September 30 September 30 2008 2009 2008 2009 ----------- ----------- ----------- ----------- Increase (decrease) in interest expense on long-term debt.......... $ 0.9 $ (3.7) $ 0.2 $ (7.0) 4. Other charges: Three months ended Nine months ended September 30 September 30 2008 2009 2008 2009 ----------- ----------- ----------- ----------- Restructuring(a)......... $ 16.8 $ 42.0 $ 23.7 $ 69.6 Release of cumulative translation adjustment(b)........... - 1.8 - 1.8 Gain on repurchase of Notes (notes 3(d)(e)(f))...... - - - (9.1) Write-down of embedded prepayment option (notes 3(d)(f))......... - 1.1 - 16.7 Other(c)................. (0.4) (1.4) (0.4) (2.3) ----------- ----------- ----------- ----------- $ 16.4 $ 43.5 $ 23.3 $ 76.7 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (a) Restructuring: In January 2008, we estimated that a restructuring charge of between $50 and $75 would be recorded throughout 2008 and 2009. In light of the continued uncertain economic environment, we determined that further restructuring actions were required to improve our overall utilization and reduce overhead costs, and in July 2009 we announced additional restructuring charges of between $75 and $100. Combined, we expect to incur total restructuring charges of between $150 and $175 associated with this program. During 2008 and through the third quarter of 2009, we recorded a total of $104.9 in restructuring charges. Of that amount, $42.0 was recorded in the third quarter of 2009. We expect to complete these restructuring actions by the end of 2010. We recognize the restructuring charges as the detailed plans are finalized. Our restructuring actions include consolidating facilities and reducing our workforce. The majority of the employees terminated are manufacturing and plant employees in the Americas and Europe. For leased facilities that we no longer use, the lease costs included in the restructuring costs represent future lease payments less estimated sublease recoveries. Adjustments are made to lease and other contractual obligations to reflect incremental cancellation fees paid for terminating certain facility leases and to reflect changes in the accruals for other leases due to delays in the timing of sublease recoveries, changes in estimated sublease rates, or changes in use, relating principally to facilities in the Americas. We expect our long-term lease and other contractual obligations to be paid out over the remaining lease terms through 2015. Our restructuring liability is recorded in accrued liabilities. Details of the 2009 activity are as follows: Lease and other Employee contrac- Facility termin- tual exit Total 2009 ation oblig- costs accrued non-cash 2009 costs ations and other liability charge charge --------- --------- --------- --------- --------- --------- December 31, 2008......... $ 18.7 $ 26.7 $ 0.2 $ 45.6 $ - $ - Cash payments..... (14.6) (2.2) (0.1) (16.9) - - Charges/ adjustments.. 10.4 (4.5) 0.2 6.1 0.6 6.7 --------- --------- --------- --------- --------- --------- March 31, 2009......... 14.5 20.0 0.3 34.8 0.6 6.7 Cash payments..... (14.9) (2.6) (0.3) (17.8) - - Charges/ adjustments.. 16.2 3.7 0.3 20.2 0.7 20.9 --------- --------- --------- --------- --------- --------- June 30, 2009......... 15.8 21.1 0.3 37.2 1.3 27.6 Cash payments..... (16.7) (3.6) (0.9) (21.2) - - Charges/ adjustments.. 33.8 4.2 1.2 39.2 2.8 42.0 --------- --------- --------- --------- --------- --------- September 30, 2009......... $ 32.9 $ 21.7 $ 0.6 $ 55.2 $ 4.1 $ 69.6 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- As of September 30, 2009, we have approximately $28 in assets that are held-for-sale, primarily land and buildings, as a result of the restructuring actions we have implemented. We have programs underway to sell these assets. (b) Release of cumulative translation adjustment: We recorded a net loss of $1.8 for the release of the cumulative foreign currency translation adjustment related to a liquidated foreign subsidiary. (c) Other: We recognized recoveries on the sale of certain assets that were previously written down through other charges. 5. Segment information: The accounting standards establish the criteria for the disclosure of certain information in the interim and annual financial statements regarding operating segments, products and services and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our operating segment is comprised of our electronics manufacturing services business. Our chief operating decision maker is our Chief Executive Officer. (i) The following table indicates revenue by end market as a percentage of total revenue. Our revenue fluctuates from period to period depending on numerous factors, including but not limited to: seasonality of business; the level of business from new, existing and disengaging customers; the level of program wins or losses; the phasing in or out of programs; and changes in customer demand. Three months ended Nine months ended September 30 September 30 2008 2009 2008 2009 ----------- ----------- ----------- ----------- Consumer............ 25% 32% 22% 28% Enterprise communications..... 25% 20% 26% 21% Servers............. 15% 13% 17% 13% Storage............. 10% 13% 10% 11% Telecommunications.. 14% 12% 15% 17% Industrial, aerospace and defense, and healthcare......... 11% 10% 10% 10% (ii) For the third quarter and first nine months of 2009, one customer represented more than 10% of total revenue (third quarter and first nine months of 2008 - no customer represented more than 10% of total revenue). 6. Supplemental cash flow information: Three months ended Nine months ended September 30 September 30 Paid during the period: 2008 2009 2008 2009 ----------- ----------- ----------- ----------- Interest(a).............. $ 30.2 $ 22.6 $ 64.1 $ 54.5 Taxes(b)................. $ 6.2 $ 2.2 $ 14.1 $ 17.0 (a) This includes interest paid on the Notes. Interest on these Notes is payable in January and July of each year until maturity. See notes 3(b) and (c). (b) Cash taxes paid is net of any income taxes recovered. Cash and cash equivalents are December 31 September 30 comprised of the following: 2008 2009 ------------ ------------ Cash(i)........................................ $ 406.2 $ 399.0 Cash equivalents(i)............................ 794.8 862.4 ------------ ------------ $ 1,201.0 $ 1,261.4 ------------ ------------ ------------ ------------ (i) Our current portfolio consists of certificates of deposit and certain money market funds that are secured exclusively by U.S. government securities. The majority of our cash and cash equivalents are held with financial institutions each of which had at September 30, 2009 a Standard and Poor's rating of A-1 or above. 7. Derivative financial instruments: (i) We enter into foreign currency contracts to hedge foreign currency risks primarily relating to cash flows. At September 30, 2009, we had forward exchange contracts covering various currencies in an aggregate notional amount of $469.6. All derivative financial instruments are recorded at fair value on our consolidated balance sheet. The fair value of our foreign currency contracts at September 30, 2009 was a net unrealized gain of $6.2 (December 31, 2008 - net unrealized loss of $38.9). This is comprised of $9.0 of derivative assets recorded in prepaid and other assets, and $2.8 of derivative liabilities recorded in accrued liabilities and other long-term liabilities. The unrealized gains and losses are a result of fluctuations in foreign exchange rates between the time the currency forward contracts were entered into and the valuation date at period end. The change in the net unrealized gains and losses of our foreign currency contracts during the first nine months of 2009 is due primarily to the favourable movement in the exchange rates for the currencies that we hedge and the settlement of contracts with significant losses. At September 30, 2009, we had forward exchange contracts to trade U.S. dollars in exchange for the following currencies: Weighted average Amount exchange Maximum of U.S. rate of U.S. period Fair value Currency dollars dollars in months gain/(loss) ------------------------- ----------- ----------- ----------- ----------- Canadian dollar.......... $ 189.2 $ 0.90 15 $ 4.6 British pound sterling... 84.3 1.62 4 1.5 Mexican peso............. 60.6 0.07 12 0.3 Thai baht................ 38.4 0.03 12 (0.1) Malaysian ringgit........ 35.9 0.28 12 0.2 Singapore dollar......... 21.8 0.69 12 0.4 Euro..................... 21.2 1.43 4 (0.3) Brazilian real........... 7.0 0.56 3 (0.3) Romanian lei............. 6.3 0.34 7 (0.1) Czech koruna............. 4.9 0.06 3 - ----------- ----------- Total.................... $ 469.6 $ 6.2 ----------- ----------- ----------- ----------- (ii) In connection with the issuance of our 2011 Notes in June 2004, we entered into agreements to swap the fixed rate of interest for a variable interest rate. The notional amount of the agreements was $500.0. The fair value of the interest rate swap agreements at December 31, 2008 was an unrealized gain of $17.3, which we recorded in other long-term assets. In connection with the debt repurchase (see notes 3(c) and (d)), we terminated our swap agreements. We received $14.7 in February 2009 representing the fair value of the swap agreements, excluding accrued interest, prior to termination. Notes 3(d) and (f) summarize the impact of our mark-to-market adjustments and our fair value hedge accounting. Fair value hedge ineffectiveness arose when the change in the fair values of our swap agreements, our hedged debt obligation and its embedded derivatives, and the amortization of the related basis adjustments did not offset each other during a reporting period. The fair value hedge ineffectiveness loss of $1.4 for our 2011 Notes was recorded in interest expense on long-term debt for the first nine months of 2009 (loss of $0.5 for the first nine months of 2008). This fair value hedge ineffectiveness was driven primarily by the difference in the credit risk used to value our hedged debt obligation as compared to the credit risk used to value our interest rate swaps. As a result of discontinuing our fair value hedge on our 2011 Notes in February 2009, no further fair value hedge ineffectiveness will occur in subsequent quarters with respect to the 2011 Notes. 8. Shareholders' equity: Capital Contributed stock Warrants surplus Deficit ----------- ----------- ----------- ----------- Balance - December 31, 2007.................... $ 3,585.2 $ 3.1 $ 190.3 $(1,716.3) Shares issued............ 3.3 - - - Warrants cancelled....... - (3.1) 3.1 - Stock-based compensation costs................... - - 12.2 - Other.................... - - 0.7 - Net earnings for first nine months of 2008..... - - - 101.7 ----------- ----------- ----------- ----------- Balance - September 30, 2008.................... $ 3,588.5 $ - $ 206.3 $(1,614.6) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balance - December 31, 2008.................... $ 3,588.5 $ - $ 204.4 $(2,436.8) Shares issued............ 2.0 - - - Stock-based compensation costs................... - - 19.6 - Other.................... - - 1.5 - Net earnings for first nine months of 2009..... - - - 23.9 ----------- ----------- ----------- ----------- Balance - September 30, 2009.................... $ 3,590.5 $ - $ 225.5 $(2,412.9) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Year Nine months ended ended Accumulated other comprehensive income, December 31 September 30 net of tax: 2008 2009 ------------ ------------ Opening balance of foreign currency translation account........................... $ 35.2 $ 46.7 Foreign currency translation gain.............. 11.5 0.4 Release of cumulative foreign currency translation to other charges (note 4(b))...... - 1.8 ------------ ------------ Closing balance................................ 46.7 48.9 Opening balance of unrealized net gain (loss) on cash flow hedges........................... $ 20.7 $ (37.3) Net gain (loss) on cash flow hedges(1)......... (53.1) 6.1 Net loss (gain) on cash flow hedges reclassified to operations(2)................. (4.9) 36.4 ------------ ------------ Closing balance(3)............................. (37.3) 5.2 ------------ ------------ Accumulated other comprehensive income......... $ 9.4 $ 54.1 ------------ ------------ ------------ ------------ (1) Net of income tax expense (benefit) of $0.1 and $(0.1) for the three and nine months ended September 30, 2009 ($0.8 income tax benefit for 2008). (2) Net of income tax expense of $0.1 and $0.6 for the three and nine months ended September 30, 2009 ($0.2 income tax expense for 2008). (3) Net of income tax expense of $0.1 as of September 30, 2009 ($0.4 income tax benefit as of December 31, 2008). We expect that all the gains on cash flow hedges reported in accumulated other comprehensive income at September 30, 2009 will be reclassified to operations during the next 12 months. 9. Guarantees and contingencies: We have contingent liabilities in the form of letters of credit, letters of guarantee and surety bonds which we have provided to various third parties. These guarantees cover various payments, including customs and excise taxes, utility commitments and certain bank guarantees. At September 30, 2009, these contingent liabilities amounted to $49.0 (December 31, 2008 - $55.4). In addition to the above guarantees, we have also provided routine indemnifications, the terms of which range in duration and often are not explicitly defined. These may include indemnifications against adverse impacts due to changes in tax laws and patent infringements by third parties. We have also provided indemnifications in connection with the sale of certain businesses and real property. The maximum potential liability from these indemnifications cannot be reasonably estimated. In some cases, we have recourse against other parties to mitigate our risk of loss from these indemnifications. Historically, we have not made significant payments relating to these types of indemnifications. Litigation: In the normal course of our operations, we are subject to litigation and claims from time to time. We may also be subject to lawsuits, investigations and other claims, including environmental, labor, product, customer disputes and other matters. Management believes that adequate provisions have been recorded in the accounts where required. Although it is not always possible to estimate the extent of potential costs, if any, management believes that the ultimate resolution of such contingencies will not have a material adverse impact on our results of operations, financial position or liquidity. In 2007, securities class action lawsuits were commenced against us and our former Chief Executive and Chief Financial Officers in the United States District Court of the Southern District of New York by certain individuals, on behalf of themselves and other unnamed purchasers of our stock, claiming that they were purchasers of our stock during the period January 27, 2005 through January 30, 2007. The plaintiffs allege violations of United States federal securities laws and seek unspecified damages. They allege that during the purported class period we made statements concerning our actual and anticipated future financial results that failed to disclose certain purportedly material adverse information with respect to demand and inventory in our Mexican operations and our information technology and communications divisions. In an amended complaint, the plaintiffs have added one of our directors and Onex Corporation as defendants. All defendants have filed motions to dismiss the amended complaint. These motions are pending. A parallel class proceeding has also been issued against us and our former Chief Executive and Chief Financial Officers in the Ontario Superior Court of Justice, but neither leave nor certification of the action has been granted by that court. We believe that the allegations in these claims are without merit and we intend to defend against them vigorously. However, there can be no assurance that the outcome of the litigation will be favorable to us or that it will not have a material adverse impact on our financial position or liquidity. In addition, we may incur substantial litigation expenses in defending these claims. We have liability insurance coverage that may cover some of our litigation expenses, potential judgments or settlement costs. We expect to receive a recovery of damages related to certain purchases we made in prior periods as a result of the settlement of a class action lawsuit. The distribution of the settlement funds is subject to court approval and, as a result, we have not yet recorded a gain. We intend to record the recovery, net of estimated costs and expenses, in other charges when the settlement is approved. We expect to record a net recovery of between $21 and $27 during the fourth quarter of 2009. Income taxes: We are subject to tax audits by local tax authorities of historical information which could result in additional tax expense in future periods relating to prior results. In addition, tax authorities could challenge the validity of our inter-company transactions, including financing and transfer pricing policies which generally involve subjective areas of taxation and a significant degree of judgment. If any of these tax authorities are successful with their challenges, our income tax expense may be adversely affected and we could also be subject to interest and penalty charges. In connection with ongoing tax audits in Canada, tax authorities have taken the position that income reported by one of our Canadian subsidiaries in 2001 and 2002 should have been materially higher as a result of certain inter-company transactions. The successful pursuit of that assertion could result in that subsidiary owing significant amounts of tax, interest and possibly penalties. We believe we have substantial defenses to the asserted position and have adequately accrued for any probable potential adverse tax impact. However, there can be no assurance as to the final resolution of this claim and any resulting proceedings, and if this claim and any ensuing proceedings are determined adversely to us, the amounts we may be required to pay could be material. 10. Financial instruments - financial risks: We have exposures to the following financial risks arising from financial instruments: market risk, credit risk and liquidity risk. Market risk is the risk that results in changes to market prices, such as foreign exchange rates and interest rates, that could affect our operations or the value of our financial instruments. (a) Currency risk: Due to the nature of our international operations, we are exposed to exchange rate fluctuations on our financial instruments denominated in various foreign currencies. We manage our currency risk through our hedging program using forecasts of future cash flows denominated in foreign currencies and our currency exposures. Our major currency exposures, as of September 30, 2009, are summarized in U.S. dollar equivalents in the following table. For purposes of this table, we have excluded items such as pension, post-employment benefits and income taxes, in accordance with the financial instruments standards. The local currency amounts have been converted to U.S. dollar equivalents using the spot rates as of September 30, 2009. Canadian Thai Mexican dollar baht peso ----------- ----------- ----------- Cash and cash equivalents............ $ 50.5 $ 0.3 $ 1.1 Accounts receivable.................. 0.1 - - Other financial assets............... 0.3 1.3 0.2 Accounts payable and accrued liabilities................. (33.7) (12.0) (11.4) Other financial liabilities.......... - (0.3) - ----------- ----------- ----------- Net financial assets (liabilities)... $ 17.2 $ (10.7) $ (10.1) ----------- ----------- ----------- ----------- ----------- ----------- At September 30, 2009, a one-percentage point strengthening or weakening of the following currencies against the U.S. dollar for our financial instruments denominated in non-functional currencies has the following impact: Canadian Thai Mexican dollar baht peso ----------- ----------- ----------- Increase (decrease) 1% Strengthening Net earnings....................... $ 0.2 $ (0.1) $ - Other comprehensive income......... 1.9 0.4 0.2 1% Weakening Net earnings....................... (0.2) 0.1 - Other comprehensive income......... (1.9) (0.4) (0.2) (b) Interest rate risk: We are exposed to interest rate risks as we have significant cash balances invested at floating rates. Borrowings under our revolving credit facility bear interest at LIBOR plus a margin. If we borrow under this facility, we will be exposed to interest rate risks due to fluctuations in the LIBOR rate. (c) Credit risk: Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss to us. To mitigate the risk of financial loss from defaults under our foreign currency forward contracts, these counterparty financial institutions each had a Standard and Poor's rating of A or above at September 30, 2009. The financial institution with which we have an accounts receivable sales program had a Standard and Poor's rating of A+ at September 30, 2009. At September 30, 2009, there were no outstanding accounts receivable that were sold under the program. See notes 14(c) and 18 to the 2008 annual consolidated financial statements. We also provide credit to our customers in the normal course of business. The carrying amount of financial assets recorded in the financial statements, net of any allowances or reserves for losses, represents our estimate of maximum exposure to this credit risk. As of September 30, 2009, less than 1% of our gross accounts receivable are over 90 days past due. Accounts receivable are net of an allowance for doubtful accounts of $10.8 at September 30, 2009 (December 31, 2008 - $13.7). (d) Liquidity risk: Liquidity risk is the risk that we may not have cash available to satisfy our financial obligations as they come due. The majority of our financial liabilities recorded in accounts payable and accrued liabilities are due within 90 days. The redemption of our 2011 Notes is planned for the fourth quarter of 2009 and will be funded from existing cash resources. Our 2013 Notes are scheduled to mature in July 2013. Management believes that cash flow from operations, together with cash on hand, cash from the sale of accounts receivable, and borrowings available under our credit facility and bank overdraft facilities will be sufficient to support our financial obligations. See note 14(d) to the 2008 annual consolidated financial statements. 11. Comparative information: We have reclassified certain prior period information to conform to the current period's presentation.

    Celestica Inc.

    CONTACT: Laurie Flanagan, Celestica Global Communications, (416)
    448-2200, media@celestica.com; Paul Carpino, Celestica Investor Relations,
    (416) 448-2211, clsir@celestica.com




    CyberSource Announces Third Quarter 2009 Financial ResultsReports record revenue of $65.7 million and record transaction volume of 611 million; Raises 2009 guidance for Net Income and EPS; Michael Walsh to become President and CEO; Bill McKiernan to become Executive Chairman on January 1, 2010

    MOUNTAIN VIEW, Calif., Oct. 22 /PRNewswire-FirstCall/ -- CyberSource Corporation , a leading provider of electronic payment and risk management solutions, today announced financial results for its third quarter ended September 30, 2009.

    (Logo: http://www.newscom.com/cgi-bin/prnh/19990513/CYBRSOURCELOGO) -- Third quarter revenue was $65.7 million, a 14% increase compared to $57.7 million in the same period the previous year. -- On a GAAP basis, net income for the third quarter of 2009 was $2.7 million and earnings per share was $0.04, compared to net income of $207,000 and breakeven earnings per share in the third quarter of 2008. -- Non-GAAP net income for the third quarter was $14.8 million, a 26% increase compared to $11.7 million for the third quarter of 2008. Non-GAAP earnings per share for the third quarter was $0.20, a 25% increase compared to $0.16 earnings per share for the third quarter of 2008. Non-GAAP net income excludes stock-based compensation expense, the non-cash portion of the tax provision, depreciation and amortization expense, and certain non-recurring items. A reconciliation of certain historical GAAP to non-GAAP measures is attached. -- During the third quarter, CyberSource processed a record 611 million billable transactions, a 30% increase over the same period the previous year. The value of transactions processed was $29.0 billion, a 6% increase over Q3 2008. -- CyberSource signed 35,000 new customers in the quarter, up 26% over the prior year, increasing its customer base to approximately 284,000 active customers.

    "Our strong results this quarter reflect our expanding customer base and our successful expansion internationally. Even with a turbulent economy, our transaction volumes were up 30% over the prior year, to a record 611 million transactions, and we added 35,000 new customers and over 500 new channel partners. I am very pleased with the strength and underlying trend of these numbers, which reflect our broad base of channel partners and the growth of new business formation in eCommerce. Our GAAP Gross Profit was $34.8 million, and Non-GAAP Gross Profit was $38.5 million, both up 18% over last year, primarily as a result of the strength in our gateway and small business offerings," said Bill McKiernan, Chairman and Chief Executive Officer of CyberSource.

    "I am also very excited to announce that effective January 1, 2010, the Board of Directors has promoted Michael Walsh to President & Chief Executive Officer of CyberSource. Mike has been with CyberSource for over ten years and has served as Senior Vice President of Worldwide Sales for the last five years. Prior to CyberSource, Mike was at Oracle and Merrill Lynch. Mike's sharp intellect, knowledge of the payment space, and embodiment of CyberSource values, make him the perfect candidate to be our new CEO," said Bill McKiernan, Chairman and Chief Executive Officer of CyberSource. "I founded CyberSource and have been CEO for the last 15 years, and I believe that change is good for an organization as it brings in new perspectives and fresh ideas. On January 1, I will give up the CEO role and focus on my duties as Executive Chairman. We have an excellent team with highly experienced leaders in all the key areas, and I'm confident that with Mike as CEO, we will keep the things that have made the company successful, and he will challenge all of us to achieve even greater success. In addition, Scott Cruickshank, our President and COO, will be leaving the company. We thank Scott for his many contributions to the business, and we wish him well in his future endeavors."

    Business Highlights -- Customers: CyberSource added approximately 35,000 new customers in the quarter, bringing its customer base to approximately 284,000. New enterprise customer wins this quarter include: GE Consumer & Industrial, Make A Wish International, Palm Inc., Rosetta Stone, Sierra Trading Post, and Sur La Table. Existing customers that added new services or renewed agreements during the quarter include: American Cancer Society, Citrix Online a division of Citrix Systems, and Check Point Software Technologies. -- International: CyberSource continues to drive strong growth outside the U.S. CyberSource's European operations processed a record 156.0 million transactions in the third quarter, an increase of 52% over the same period last year. The Company's European business is comprised of revenue generated by customers domiciled outside the US, and represented about 8% of revenue in the quarter. -- Global acquiring: CyberSource generated $20.3 million of global acquiring revenue during the third quarter, up 5% sequentially and 1% over the prior year. CyberSource added approximately 800 new acquiring customers during the quarter, and now has over 6,000 global acquiring customers. -- Channel Partners: CyberSource's partner program of over 4,500 resellers and affiliate partners continues to be a major driver for new customer leads and provides an increasingly broad base of partners selling CyberSource services. In the third quarter, CyberSource signed over 500 new Independent Sales Organizations (ISOs) and affiliate partners. Stock Buyback

    During the third quarter, we did not repurchase any shares of our common stock.

    Guidance for the fourth quarter and full year 2009

    CyberSource is providing guidance for the fourth quarter of 2009 and full year 2009 based on information available as of October 22, 2009. We assume no duty to update these numbers at any time.

    For the fourth quarter ending December 31, 2009: -- Total revenue is expected to be between $73.0 and $74.0 million. -- The company expects to process between 670 and 680 million billable transactions. -- GAAP gross profit is expected to between $36.7 and $37.0 million, while GAAP operating expenses are expected to be between $32.7 and $33.0 million. The company expects to record GAAP net income in the fourth quarter of between $2.1 and $2.6 million and earnings per share of between $0.03 and $0.04 based on a weighted average share count of 74 million shares. -- Non-GAAP net income for the fourth quarter is expected to be between $14.7 and $15.2 million and non-GAAP earnings per share to be between $0.20 and $0.21 based on a weighted average share count of 74 million shares. For the full year 2009: -- Total revenue for 2009 is expected to be between $262.0 and $263.0 million, compared to prior guidance of between $260.0 and $263.0 million. -- GAAP net income for 2009 is expected to be between $7.9 and $8.4 million, compared to prior guidance of between $6.5 and $7.0 million. -- GAAP earnings per share is expected to be $0.11 per share, based on a weighted average share count of 73 million shares, compared to prior guidance of between $0.09 and $0.10 per share. -- Non-GAAP net income for the full year 2009 is expected to be between $55.8 and $56.3 million, compared to prior guidance of $54.0 and $55.0 million. Non-GAAP earnings per share is expected to be between $0.76 and $0.77, based on a weighted average share count of 73 million shares, compared to prior guidance of between $0.74 and $0.75. Public call/web cast details

    CyberSource will host a public conference call today, October 22, 2009 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss the third quarter results. The call can be accessed in either of the following ways:

    Live conference call

    888-585-4496 (U.S. and Canada), 706-634-9580 (local and international). The call's conference ID number is: 32990443. A taped replay of this call will be available through December 31, 2009. The dial-in numbers for the taped replay are: 800-642-1687 (U.S.) 706-645-9291 (local and international). Conference ID is as above.

    Live web cast http://ir.cybersource.com/events.cfm

    A replay of this web cast will remain available at this location through December 31, 2009.

    About CyberSource

    CyberSource Corporation is a leading provider of electronic payment and risk management solutions. CyberSource solutions enable electronic payment processing for Web, call center, and POS environments. CyberSource also offers industry leading risk management solutions for merchants accepting card-not-present transactions. CyberSource Professional Services designs, integrates, and optimizes commerce transaction processing systems. Approximately 284,000 businesses use CyberSource solutions, including half the companies comprising the Dow Jones Industrial Average. The company is headquartered in Mountain View, California, and has sales and service offices in Japan, the United Kingdom, and other locations in the United States including Bellevue, Washington and American Fork, Utah. For more information on CyberSource please visit http://www.cybersource.com/ or email info@cybersource.com. For more information on Authorize.Net small business solutions, please visit http://www.authorize.net/ or email sales@authorize.net.

    GAAP versus non-GAAP Results and Guidance

    In addition to financial results presented on a GAAP basis, the company has provided non-GAAP measures of gross profit, operating expenses, net income and earnings per share, which are adjusted to exclude certain non-cash items. For purposes of this release, non-GAAP gross profit, operating expenses, net income and earnings per share exclude stock based compensation expense under SFAS 123R, the non-cash portion of the income tax provision, depreciation and amortization expense, and certain non-recurring items. A reconciliation of these historical GAAP to non-GAAP measures is attached with the financial statements. The company believes that presentation of non-GAAP financial measures may provide investors with additional meaningful and relevant financial information. Management believes the non-GAAP measures help indicate trends in the company's business, and management uses the non-GAAP measures to plan and forecast future periods. Non-GAAP information is not determined using GAAP and should not be considered superior to or as a substitute for GAAP measures or data prepared in accordance with GAAP. Furthermore, non-GAAP information may not be comparable across companies, as other companies may use different non-GAAP measures. The company does not provide guidance for certain financial measures such as depreciation and stock-based compensation expense, and, as a result, is not able to provide a reconciliation of GAAP and non-GAAP financial measures for forward-looking data. The company intends to calculate the various non-GAAP financial measures in future periods consistent with the methodology used in the three months ended September 30, 2009, as presented in this release.

    Cautionary Statement under the Private Securities Litigation Reform Act of 1995

    Statements in this release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, without limitation, statements regarding expectations, objectives, anticipations, plans, hopes, beliefs, intentions or strategies regarding the future. Forward-looking statements in this release include, without limitation, statements regarding: (1) strength of the third quarter results reflecting an expanding customer base and successful expansion internationally; (2) strength of the underlying trend of growth in transaction volume, customer count, and number of channel partners reflecting the Company's broad base of channel partners and the growth of new business formation in eCommerce; (3) strength in the Company's gateway and small business offerings; (4) Michael Walsh being the perfect candidate to the Company's new CEO; (5) change being good for an organization; (6) Michael Walsh being able to achieve even greater success; (7) the Company driving strong growth outside of the U.S.; and, (8) financial guidance including, without limitation, those regarding revenue, transaction volume, gross profit, operating expenses, net income, and earnings per share. There is no assurance that any forward-looking statement will be realized. Achievement of future results is subject to risks, uncertainties, and potentially inaccurate assumptions. These risks and uncertainties include, among others, those discussed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in CyberSource's most recent Annual Report on Form 10-K, filed on February 27, 2009, and subsequent Quarterly Reports on Form 10-Q as well as the consolidated financial statements, related Notes, and the other financial information appearing elsewhere in those reports and other CyberSource filings with the Securities and Exchange Commission. The factors that could cause actual results to differ materially from the forward-looking statements include risks and uncertainties such as: changes in Generally Accepted Accounting Principles and the application thereof; changes in customer needs; the risks of failures, disruptions or illiquidity in national and global banking, credit, and financial systems and the impact of those risks on CyberSource's business; the risk of the economy, in general, and online economy, in particular, slowing down; security breaches; new products and services offerings by CyberSource and its competitors; and any unforeseen system failures. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. Readers should bear this in mind when considering forward-looking statements. CyberSource undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.

    2009 CyberSource Corporation. All rights reserved. CyberSource is a registered trademark in the U.S. and other countries. All other brands and product names are trademarks or registered trademarks of their respective companies.

    CyberSource Corporation GAAP Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenues $65,662 $57,693 $189,042 $166,772 Cost of revenues 30,843 28,119 88,055 81,505 ------ ------ ------ ------ Gross profit 34,819 29,574 100,987 85,267 Operating expenses: Product development 7,407 5,826 20,473 16,936 Sales and marketing 18,073 17,466 53,229 51,023 General and administrative 5,970 6,460 18,947 17,748 ----- ----- ------ ------ Total operating expenses 31,450 29,752 92,649 85,707 ------ ------ ------ ------ Income (loss) from operations 3,369 (178) 8,338 (440) Other income, net 301 145 269 384 Interest income 29 346 236 1,104 --- --- --- ----- Income before income taxes 3,699 313 8,843 1,048 Income tax provision 1,005 106 2,958 353 ----- --- ----- --- Net income $2,694 $207 $5,885 $695 ====== ==== ====== ==== Basic net income per share $0.04 $- $0.08 $0.01 ===== === ===== ===== Diluted net income per share $0.04 $- $0.08 $0.01 ===== === ===== ===== Weighted average number of shares used in computing basic net income per share 69,714 69,444 69,308 69,157 ====== ====== ====== ====== Weighted average number of shares used in computing diluted net income per share 72,353 72,250 71,543 72,033 ====== ====== ====== ====== Non-GAAP Financial Metrics: Gross profit $38,521 $32,669 $110,955 $94,087 Operating expenses $23,387 $21,276 $68,102 $60,785 Net income $14,790 $11,714 $41,188 $34,518 Basic net income per share $0.21 $0.17 $0.59 $0.50 Diluted net income per share $0.20 $0.16 $0.58 $0.48 CyberSource Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- GAAP gross profit $34,819 $29,574 $100,987 $85,267 Add FAS123R expense 493 428 1,357 1,175 Add depreciation expense 1,852 1,217 4,540 3,295 Add amortization of intangible assets 1,357 1,450 4,071 4,350 ----- ----- ----- ----- Non-GAAP gross profit $38,521 $32,669 $110,955 $94,087 ======= ======= ======== ======= GAAP operating expenses $31,450 $29,752 $92,649 $85,707 Less FAS123R expense (2,193) (1,958) (6,223) (5,995) Less depreciation expense (587) (470) (1,542) (1,302) Less amortization of intangible assets (5,283) (5,719) (15,850) (17,155) Less restructuring charges - (329) (932) (470) --- ---- ---- ---- Non-GAAP operating expenses $23,387 $21,276 $68,102 $60,785 ======= ======= ======= ======= GAAP net income $2,694 $207 $5,885 $695 Add FAS123R expense 2,686 2,386 7,580 7,170 Add non-cash tax provision (benefit) 331 (64) 1,034 81 Add depreciation expense 2,439 1,687 6,082 4,597 Add amortization of intangible assets 6,640 7,169 19,921 21,505 Add restructuring charges - 329 932 470 Less settlement proceeds* - - (246) - --- --- ---- --- Non-GAAP net income $14,790 $11,714 $41,188 $34,518 ======= ======= ======= ======= GAAP basic net income per share $0.04 $- $0.08 $0.01 Add FAS123R expense 0.04 0.03 0.11 0.10 Add non-cash tax provision - - 0.01 - Add depreciation expense 0.03 0.03 0.09 0.07 Add amortization of intangible assets 0.10 0.10 0.29 0.31 Add restructuring charges - 0.01 0.01 0.01 --- ---- ---- ---- Non-GAAP basic net income per share $0.21 $0.17 $0.59 $0.50 ===== ===== ===== ===== GAAP diluted net income per share $0.04 $- $0.08 $0.01 Add FAS123R expense 0.04 0.03 0.11 0.10 Add non-cash tax provision - - 0.01 - Add depreciation expense 0.03 0.03 0.09 0.06 Add amortization of intangible assets 0.09 0.10 0.28 0.30 Add restructuring charges - - 0.01 0.01 --- --- ---- ---- Non-GAAP diluted net income per share $0.20 $0.16 $0.58 $0.48 ===== ===== ===== ===== *In May 2009, CyberSource received approximately $246,000 as consideration for dismissing a lawsuit that CyberSource filed against VeriSign, Inc. in June 2008. CyberSource Corporation Condensed Consolidated Balance Sheets (In thousands) (Unaudited) September 30, December 31, 2009 2008 ---- ---- Assets Current assets: Cash and cash equivalents $106,557 $73,292 Accounts receivable, net 19,176 18,251 Prepaid expenses and other current assets 7,293 5,310 Deferred income taxes 2,635 2,635 ----- ----- Total current assets 135,661 99,488 Property and equipment, net 22,742 16,188 Intangible assets, net 109,722 129,643 Goodwill 289,278 289,278 Non-current deferred income taxes 19,710 20,512 Other non-current assets 2,694 2,539 Restricted cash 1,516 1,548 ----- ----- Total assets $581,323 $559,196 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $1,189 $588 Funds due to merchants 12,876 12,162 Other accrued liabilities 16,747 18,272 Deferred revenue 5,650 4,519 Accrued restructuring 1,074 847 ----- --- Total current liabilities 37,536 36,388 Deferred revenue, less current portion 1,140 996 Other non-current liabilities - 1,099 Accrued restructuring, less current portion 706 832 Other non-current tax liabilities 2,015 1,928 ----- ----- Total liabilities 41,397 41,243 Total stockholders' equity 539,926 517,953 ------- ------- Total liabilities and stockholders' equity $581,323 $559,196 ======== ======== CyberSource Corporation Consolidated Statements of Cash Flows (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $2,694 $207 $5,885 $695 Adjustments to reconcile net income to net cash provided by operating activities: Amortization expense 6,640 7,169 19,921 21,505 Depreciation expense 2,439 1,687 6,082 4,597 Income on investment in joint venture (73) (62) (292) (161) Stock-based compensation 2,686 2,386 7,580 7,170 Changes in operating assets and liabilities: Accounts receivable (1,517) (594) (925) (646) Prepaid expenses and other current assets (149) (350) (1,983) (532) Deferred income taxes 317 - 802 - Other non-current assets 197 1,212 169 1,145 Accounts payable 527 (130) 601 525 Accrued liabilities 1,100 3,859 (2,523) 3,806 Funds due to merchants 570 1,195 714 1,770 Deferred revenues 153 352 1,275 1,115 Other non-current tax liabilities 29 (1,181) 87 (1,095) --- ------ --- ------ Net cash provided by operating activities 15,613 15,750 37,393 39,894 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (6,040) (5,151) (12,636) (10,425) ------ ------ ------- ------- Net cash used in investing activities (6,040) (5,151) (12,636) (10,425) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 4,167 1,610 7,727 6,996 Tax benefit from employee stock options 16 - 177 - Repurchase of common stock - (2,867) - (2,867) --- ------ --- ------ Net cash provided by (used in) financing activities 4,183 (1,257) 7,904 4,129 Effect of exchange rate changes on cash (252) (824) 604 (827) ---- ---- --- ---- Increase in cash and cash equivalents 13,504 8,518 33,265 32,771 Cash and cash equivalents at beginning of period 93,053 64,646 73,292 40,393 ------ ------ ------ ------ Cash and cash equivalents at end of period $106,557 $73,164 $106,557 $73,164 ======== ======= ======== =======

    Photo: http://www.newscom.com/cgi-bin/prnh/19990513/CYBRSOURCELOGO
    http://photoarchive.ap.org/
    PRN Photo Desk, photodesk@prnewswire.com CyberSource Corporation

    CONTACT: Katrina Rymill of CyberSource Corporation, +1-650-965-6154,
    krymill@cybersource.com

    Web Site: http://www.cybersource.com/




    Oclaro Achieves Non-GAAP Operating Profit in First Quarter Fiscal 2010Revenues Up; Gross Margin Increases to 26%; Adjusted EBITDA Reaches Positive $3.8 Million

    SAN JOSE, Calif., Oct. 22 /PRNewswire-FirstCall/ -- Oclaro, Inc. , a leading provider of optical components, modules and subsystems, today announced the financial results for its first quarter of fiscal 2010, which ended September 26, 2009.

    "In the first full quarter after our merger with Avanex we have generated positive non-GAAP operating profit. We're quite proud of this accomplishment," said Alain Couder, President and CEO of Oclaro, Inc. "This was driven by increasing revenues and improving our gross margins to 26%. As a result, Oclaro was cash flow positive in the September quarter, excluding $6.5 million of net deal related expenditures."

    Highlights For First Quarter Fiscal 2010: -- GAAP revenues were $85.1 million for the first quarter of fiscal 2010, compared to $66.9 million in the fourth quarter of fiscal 2009. -- GAAP revenues for the fourth quarter of fiscal 2009 exclude revenues from the Company's New Focus business of $5.1 million. As a result of the July 4, 2009 transfer of the New Focus business to Newport Corporation in exchange for their Spectra-Physics laser diode business and $3.0 million in cash, the historical results of New Focus are presented as discontinued operations in the GAAP financial statements. -- GAAP gross margin was 26% for the first quarter of fiscal 2010, compared to 25% in the fourth quarter of fiscal 2009, which included only two months of Avanex Corporation results. -- Non-GAAP revenues were $85.1 million for the first quarter of fiscal 2010, compared to $72.0 million for the fourth quarter of fiscal 2009, which included only two months of revenues of Avanex Corporation. -- Non-GAAP revenues for the fourth quarter of fiscal 2009 would have been $78.1 million including all three months of Avanex's revenues. -- Non-GAAP revenues include the revenues of New Focus, which is treated as a discontinued operation in our GAAP financial statements. -- A reconciliation table of non-GAAP measures to the most comparable GAAP measures is included in the financial tables section of this release and further discussion of these measures is also included later in this release. -- Non-GAAP gross margin was 26% for the first quarter of fiscal 2010, compared to 25% for the fourth quarter of fiscal 2009. -- Non-GAAP gross margin for the fourth quarter of fiscal 2009 would have been approximately 21% had we included the results of Avanex for the entire quarter and excluded certain non-recurring credits. -- Non-GAAP gross margin excludes $0.2 million of stock-based compensation in the first quarter of fiscal 2010 and $0.3 million in the fourth quarter of fiscal 2009. -- Non-GAAP operating income was $1.3 million for the first quarter of fiscal 2010, compared to a non-GAAP operating loss of $2.0 million in the fourth quarter of fiscal 2009. -- Adjusted EBITDA was positive $3.8 million for the first quarter of fiscal 2010, compared to positive $0.7 million in the fourth quarter of fiscal 2009. -- GAAP net loss for the first quarter of fiscal 2010 was $0.5 million, compared to a GAAP net loss of $14.6 million in the fourth quarter of fiscal 2009. -- Cash, cash equivalents, restricted cash and short-term investments were $52.5 million as of September 26, 2009 compared to $58.0 million at the end of the prior quarter. -- On September 30, 2009, Oclaro regained compliance with NASDAQ listing rule 5450(a)(1) based on the closing price of its common stock exceeding $1.00 for at least 10 consecutive business days. Second Quarter Fiscal 2010 Outlook

    "Revenues were up, we are moving beyond the integration phase of Oclaro, and we still have more synergies to come," said Mr. Couder. "While visibility still remains fairly short term, our pipeline suggests the extent of our December revenue growth opportunities may be supply constrained, which is reflected in our guidance range. Regardless, by delivering on this guidance we believe we have a reasonable chance of generating cash in the December quarter."

    The results of Oclaro, Inc. for the second quarter of fiscal 2010, which ends January 2, 2010, are expected to be:

    -- Revenues in the range of $87 million to $92 million. -- Non-GAAP gross margin in the range of 25% to 28%. -- Adjusted EBITDA in the range of $3.0 million to $7.0 million.

    The second quarter of fiscal 2010 will include 14 weeks of operations, compared to 13 weeks for the first quarter of fiscal 2010, due to the Company's fiscal year calendar. Our second quarter guidance includes the effects of the additional week on our results of operations.

    The foregoing guidance is based on current expectations. These statements are forward looking, and actual results may differ materially. Please see the Safe Harbor Statement in this earnings release for a description of certain important risk factors that could cause actual results to differ, and refer to Oclaro, Inc.'s most recent annual and quarterly reports on file with the Securities and Exchange Commission (SEC) for a more complete description of the risks. Furthermore, our outlook excludes items that may be required by GAAP, including, but not limited to, restructuring and related costs, acquisition or disposal related costs, expenses or income from certain legal actions, settlements and related costs outside our normal course of business, impairments of other long-lived assets, depreciation and amortization, extraordinary items, as well as the expensing of stock options and restricted stock grants.

    Conference Call

    Oclaro will hold a conference call to discuss financial results for the first quarter of fiscal 2010 today at 1:30 p.m. PT/4:30 p.m. ET. To listen to the live conference call, please dial (480) 629-9665. A replay of the conference call will be available through October 29, 2009. To access the replay, dial (303) 590-3030. The conference code for the replay is 4170717. A webcast of this call will be available in the investors section of Oclaro's website at http://www.oclaro.com/.

    About Oclaro

    Oclaro, Inc., with headquarters in San Jose, California, is a tier 1 provider of high performance optical components, modules and subsystems to the telecommunications market, and is one of the largest providers to metro and long haul network applications. The Company, formed on April, 27, 2009, following the combination of Bookham, Inc. and Avanex Corporation, leverages proprietary core technologies and vertically integrated product development to provide its customers with cost-effective and innovative optical devices, modules and subsystems. The company serves a broad customer base, combining in-house and outsourced manufacturing to maximize flexibility and drive improved gross margin. Its photonic technologies also serve selected high growth markets, including industrial, defense, life sciences, medical and scientific, with diversification providing both significant revenue streams and strategic technological advantage. Oclaro is a global company, with cutting edge chip fabrication facilities in the UK, Switzerland and Italy, and in Tucson, Arizona during the transition of related activities to Europe, and manufacturing sites in the US, Thailand and China.

    Oclaro and all other Oclaro product names and slogans are trademarks or registered trademarks of Oclaro, Inc. in the USA or other countries. Spectra-Physics is a registered trademark of Newport Corporation.

    Safe Harbor Statement

    This press release and the statements made by management contain statements about management's future expectations, plans or prospects of Oclaro, Inc. and its business, and the assumptions underlying these statements, constitute forward-looking statements for the purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements concerning (i) financial targets, including financial targets related to gross margin; research and development expenses; sales, general and administrative expenses and non-GAAP operating margin, (ii) financial guidance for the fiscal quarter ending January 2, 2010, including guidance regarding revenue, non-GAAP gross margin and adjusted EBITDA, (iii) the impact of the acquisition of Avanex Corporation and the Spectra-Physics asset swap on the combined entity's gross margin, (iv) sources for improvement of gross margin and operating expenses, including supply chain synergies, optimizing mix of product offerings, transition to higher margin product offerings, benefits of combined R&D and sales organizations and single public company costs, including statements regarding the expectation of further synergies, (v) opportunities to grow in adjacent markets and (vi) statements containing the words "target," "believe," "plan," "anticipate," "expect," "estimate," "will," "should," "ongoing," and similar expressions. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including the impact of continued uncertainty in world financial markets and the resulting reduction in demand for our products, the future performance of Oclaro, Inc. following the closing of the merger with Avanex Corporation and the Spectra-Physics asset swap, the inability to realize the expected benefits and synergies as a result of the of the merger with Avanex Corporation and the Spectra-Physics asset swap, increased costs related to downsizing and compliance with regulatory compliance in connection with such downsizing, the lack of availability of credit or opportunity for equity based financing, as well as the factors described in Oclaro's most recent registration statement on Form S-4, most recent annual report on Form 10-K, most recent quarterly reports on Form 10-Q and other documents we periodically file with the SEC. The forward-looking statements included in this announcement represent Oclaro's view as of the date of this presentation. Oclaro anticipates that subsequent events and developments may cause Oclaro's views and expectations to change. However, Oclaro specifically disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this release.

    Non-GAAP Financial Measures

    The Company provides certain supplemental non-GAAP financial measures to its investors as a complement to the most comparable GAAP measures. The GAAP measure most directly comparable to non-GAAP revenues is revenues. The GAAP measure most directly comparable to non-GAAP net income/loss is net income/loss. The GAAP measure most directly comparable to Adjusted EBITDA is net income/loss. The GAAP measure most directly comparable to non-GAAP gross margin rate is gross margin rate. An explanation and reconciliation of each of these non-GAAP financial measures to GAAP information is set forth below.

    The Company believes that providing these non-GAAP measures to its investors, in addition to corresponding income statement measures, provides investors the benefit of viewing the Company's performance using the same financial metrics that the management team uses in making many key decisions and understanding how the Company's "core operating performance" and its results of operations may look in the future. The Company believes that providing this information allows the Company's investors greater transparency and a better understanding of the Company's core financial performance. The Company believes its "core operating performance" represents the Company's on-going performance in the ordinary course of its operations. Management excludes from "core operating performance" those items, such as impairment charges, income taxes, restructuring and severance programs and costs relating to specific major projects which are non-recurring, expenses or income from certain legal actions, settlements and related costs, as well as non-cash compensation related to stock and options. Management does not believe these items, including recurring non-cash items, are reflective of the Company's ongoing operations and accordingly excludes those items from non-GAAP gross margin rate, non-GAAP operating loss and non-GAAP net income/loss. Additionally, each non-GAAP measure has historically been presented by the Company as a complement to its most comparable GAAP measure, and the Company believes that the continuation of this practice increases the consistency and comparability of the Company's earnings releases. The non-GAAP adjustments, and the basis for excluding them, are discussed further below.

    Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States of America. Non-GAAP measures should not be considered in isolation from or as a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies.

    Non-GAAP Revenues

    Non-GAAP revenues include the revenues of New Focus, which is treated as a discontinued operation in our GAAP financial statements. Management uses this non-GAAP measure to evaluate its performance relative to its previously established financial targets. Specifically, the Company previously reported New Focus in its revenues. The Company believes providing non-GAAP revenues to its investors, in addition to corresponding income statement measures, allows investors to evaluate the Company's results of operations compared to its previous financial results.

    Non-GAAP Gross Margin Rate

    Non-GAAP gross margin rate is calculated as gross margin rate as determined in accordance with GAAP (gross profit as a percentage of revenues) excluding non-cash compensation related to stock and options specifically identified in the non-GAAP reconciliation schedules set forth below.

    The Company evaluates its performance using non-GAAP gross margin rate to assess the Company's historical and prospective operating financial performance, as well as its operating performance relative to its competitors. Specifically, management uses this non-GAAP measure to further understand the Company's "core operating performance." The Company believes its "core operating performance" represents the Company's on-going performance in the ordinary course of its operations. Accordingly, the Company excludes from "core operating performance" those items such as non-cash compensation related to stock and options; and certain other significant non-recurring one-time charges and credits specifically identified. Management does not believe these items, including recurring non-cash items, are reflective of the Company's ongoing operations and accordingly excludes those items from non-GAAP gross margin rate.

    Non-GAAP Operating Income/Loss

    Non-GAAP operating loss is calculated as operating loss as determined in accordance with GAAP excluding the impact of amortization of intangible assets, restructuring and severance costs, non-cash compensation related to stock and options granted to employees and directors, and certain other one-time charges and credits specifically identified in the non-GAAP reconciliation schedules set forth below. The Company evaluates its performance using, among other things, non-GAAP operating income/loss in evaluating the Company's historical and prospective operating financial performance, as well as its operating performance relative to its competitors. Specifically, management uses this non-GAAP measure to further understand the Company's "core operating performance." The Company believes its "core operating performance" represents the Company's on-going performance in the ordinary course of its operations. Accordingly, management excludes from "core operating performance" those items such as restructuring and severance programs and costs relating to specific major projects which are non-recurring, expenses or income from certain legal actions, settlements and related costs outside our normal course of business, impairment charges, as well as non-cash compensation related to stock and options. Management does not believe these items are reflective of the Company's ongoing operations and accordingly excludes those items from non-GAAP operating loss.

    Non-GAAP Net Income/Loss

    Non-GAAP net income/loss is calculated as net income/loss excluding the impact of restructuring and severance costs, non-cash compensation related to stock and options granted to employees and directors, income taxes and certain other one-time charges and credits specifically identified in the non-GAAP reconciliation schedules set forth below. The Company uses non-GAAP net income/loss in evaluating the Company's historical and prospective operating financial performance, as well as its operating performance relative to its competitors. Specifically, management uses this non-GAAP measure to further understand the Company's "core operating performance."

    Adjusted EBITDA

    Adjusted EBITDA is calculated as net income/loss excluding the impact of taxes, net interest income/expense, depreciation and amortization, net foreign currency translation gains/losses, as well as restructuring and severance, impairment, non-cash compensation related to stock and options, expenses or income from certain legal actions, settlements and related costs outside our normal course of business, and certain other one-time charges and credits specifically identified in the non-GAAP reconciliation schedules set forth below. The Company uses Adjusted EBITDA in evaluating the Company's historical and prospective cash usage, as well as its cash usage relative to its competitors. Specifically, management uses this non-GAAP measure to further understand and analyze the cash used in/generated from the Company's core operations. The Company believes that by excluding these non-cash and non-recurring charges, more accurate expectations of its future cash needs can be assessed in addition to providing a better understanding of the actual cash used in or generated from core operations for the periods presented. The Company further believes that providing this information allows the Company's investors greater transparency and a better understanding of the Company's core cash position.

    OCLARO, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in thousands) September 26, June 27, ASSETS 2009 2009 -------------- --------- Current assets: Cash and cash equivalents $47,184 $44,561 Short-term investments 1,084 9,259 Restricted cash 4,238 4,208 Accounts receivable, net 70,472 58,483 Inventories 62,667 59,527 Prepaid expenses and other current assets 12,301 11,834 Assets held for sale - 10,442 --- ------ Total current assets 197,946 198,314 ------- ------- Property and equipment, net 30,327 29,875 Other intangible assets, net 1,883 1,951 Other non-current assets 2,438 3,248 ----- ----- Total assets $232,594 $233,388 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $34,763 $31,943 Accrued expenses and other liabilities 36,713 39,016 Liabilities held for sale - 2,028 --- ----- Total current liabilities 71,476 72,987 ------ ------ Deferred gain on sale-leaseback 14,719 15,088 Other long-term liabilities 4,312 4,923 ----- ----- Total liabilities 90,507 92,998 ------ ------ Stockholders' equity: Common stock 1,869 1,862 Additional paid-in capital 1,200,320 1,199,358 Accumulated other comprehensive income 32,422 30,905 Accumulated deficit (1,092,524) (1,091,735) ---------- ---------- Total stockholders' equity 142,087 140,390 ------- ------- Total liabilities and stockholders' equity $232,594 $233,388 ======== ======== OCLARO, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share amounts) Three Months Ended ------------------- September 26, June 27, September 27, 2009 2009 2008 --------- -------- --------- Revenues $85,110 $66,877 $59,430 Cost of revenues 63,029 50,296 44,777 ------ ------ ------ Gross profit 22,081 16,581 14,653 Operating expenses: Research and development 9,014 8,272 6,829 Selling, general and administrative 13,254 10,659 9,065 Amortization of intangible assets 52 58 197 Restructuring and related costs 1,183 5,157 1,486 Legal settlements - - (184) (Gain) loss on sale of property and equipment (532) (4) 16 ---- --- --- Total operating expenses 22,971 24,142 17,409 ------ ------ ------ Operating loss (890) (7,561) (2,756) Other income (expense): Other income (expense) 712 15 (600) Interest income 23 53 243 Interest expense (113) (110) (128) Foreign currency translation gain (loss), net (1,276) (4,670) 6,496 ------ ------ ----- Total other income (expense) (654) (4,712) 6,011 ---- ------ ----- Income (loss) from continuing operations before income taxes (1,544) (12,273) 3,255 Income tax provision (benefit) 223 1,406 (62) --- ----- --- Income (loss) from continuing operations (1,767) (13,679) 3,317 Income (loss) from discontinued operations, net of tax 1,270 (928) (1,124) ----- ---- ------ Net income (loss) $(497) $(14,607) $2,193 ===== ======== ====== Net income (loss) from continuing operations per share: Basic $(0.01) $(0.09) $0.03 Diluted $(0.01) $(0.09) $0.03 Net income (loss) per share: Basic $ - $(0.09) $0.02 Diluted $ - $(0.09) $0.02 Shares used in computing net income (loss) per share: Basic 186,199 158,537 100,080 Diluted 186,199 158,537 100,728 Stock-based compensation included in the following: Cost of revenues 195 279 363 Research and development 209 238 230 Selling, general and administrative 516 525 525 Income (loss) from discontinued operations, net of tax - 91 99 --- --- --- Total 920 1,133 1,217 === ===== ===== OCLARO, INC. RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (unaudited, in thousands, except per share amounts) Three Months Ended ------------------- September 26, June 27, September 27, 2009 2009 2008 --------- -------- --------- Reconciliation of GAAP revenues to non-GAAP revenues: GAAP revenues $85,110 $66,877 $59,430 Revenues from discontinued operations - 5,148 7,101 --- ----- ----- Non-GAAP Revenues $85,110 $72,025 $66,531 ======= ======= ======= Reconciliation of GAAP net income (loss) to non-GAAP net income (loss) and adjusted EBITDA: GAAP net income (loss) $(497) $(14,607) $2,193 Stock-based compensation 920 1,133 1,217 Restructuring and related costs: Continuing operations 1,183 5,157 1,486 Discontinued operations - 229 - Legal settlements - - (184) Income tax provision: Continuing operations 223 1,406 (62) Discontinued operations - - 50 Gain from bargain purchase (712) - - Gain on sale of New Focus business (1,270) - - ------ --- --- Non-GAAP net income (loss) (153) (6,682) 4,700 ---- ------ ----- Depreciation expense: Continuing operations 2,574 2,535 2,904 Discontinued operations - 66 77 Amortization expense: Continuing operations 52 58 197 Discontinued operations - - 266 Impairment of short-term investments - - 600 Interest income (expense), net 90 57 (120) Foreign currency translation (gain) loss, net 1,276 4,670 (6,496) ----- ----- ------ Adjusted EBITDA $3,839 $704 $2,128 ====== ==== ====== Non-GAAP net income (loss) per share: Basic $ - $(0.04) $0.05 Diluted $ - $(0.04) $0.05 Shares used in computing Non-GAAP net income (loss) per share: Basic 186,199 158,537 100,080 Diluted 186,199 158,537 100,728 OCLARO, INC. RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (unaudited, in thousands, except per share amounts) Three Months Ended ------------------- September 26, June 27, September 27, 2009 2009 2008 --------- -------- --------- Reconciliation of GAAP gross margin rate to non-GAAP gross margin rate: GAAP gross profit: Continuing operations $22,081 $16,581 $14,653 Discontinued operations - 1,410 1,976 Stock-based compensation included in cost of revenues: Continuing operations 195 279 363 Discontinued operations - 24 32 --- --- --- Non-GAAP gross profit $22,276 $18,294 $17,024 ======= ======= ======= GAAP gross margin rate 25.9% 24.8% 24.7% Non-GAAP gross margin rate 26.2% 25.4% 25.6% Reconciliation of GAAP operating loss to non-GAAP operating income (loss): GAAP operating loss: Continuing operations $(890) $(7,561) $(2,756) Discontinued operations 1,270 (977) (1,015) Gain on sale of New Focus business (1,270) - - Stock-based compensation 920 1,133 1,217 Restructuring and related costs: Continuing operations 1,183 5,157 1,486 Discontinued operations - 229 - Legal settlements - - (184) Amortization of intangible assets: Continuing operations 52 58 197 Discontinued operations - - 266 --- --- --- Non-GAAP operating income (loss) $1,265 $(1,961) $(789) ====== ======= =====

    Oclaro, Inc.

    CONTACT: Jerry Turin, Chief Financial Officer of Oclaro, Inc.,
    +1-408-383-1400, ir@oclaro.com; or Investors, Jim Fanucchi of Summit IR Group
    Inc., +1-408-404-5400, ir@oclaro.com, for Oclaro, Inc.

    Web Site: http://www.oclaro.com/




    Monolithic Power Systems Announces Results for the Quarter and Nine Months Ended September 30, 2009

    SAN JOSE, Calif., Oct. 22 /PRNewswire-FirstCall/ -- Monolithic Power Systems (MPS) , a leading fabless manufacturer of high-performance analog and mixed-signal semiconductors, today announced financial results for the quarter and nine months ended September 30, 2009.

    The results for the quarter ended September 30, 2009 are as follows: -- Net revenues of $48.0 million, up 16.5% sequentially from $41.2 million in the second quarter of 2009 and down 1.9% from $48.9 million in the third quarter of 2008 -- Gross margin of 60.7%, compared to 59.1% in the second quarter of 2009 and 62.8% in the third quarter of 2008 -- GAAP operating expenses of $16.0 million, including $19.5 million for research and development and selling, general and administrative expenses, which includes $3.1 million for stock-based compensation, $2.8 million for litigation expenses and a credit of $6.4 million for the net effect of a litigation provision reversal. -- Non-GAAP(1) operating expenses of $19.2 million, excluding $3.1 million for stock-based compensation and a credit of $6.4 million for the net effect of a litigation provision reversal, compared to $16.8 million for the three months ended September 30, 2008. -- GAAP net income of $12.6 million, with GAAP earnings per share of $0.34 per diluted share -- Non-GAAP(1) net income of $8.8 million, or $0.24 per diluted share, excluding stock-based compensation and related tax effects and a credit of $6.4 million for the net effect of a litigation provision reversal. The results for the nine months ended September 30, 2009 are as follows: -- Net revenues of $118.5 million, compared to $125.8 million for the nine months ended September 30, 2008, a decrease of 5.8% -- Gross margin of 59.4%, compared to 62.9% for the nine months ended September 30, 2008 -- GAAP operating expenses of $55.2 million, including $54.5 million for research and development and selling, general and administrative expenses, which includes $10.2 million for stock-based compensation, $7.1 million for litigation expenses and a credit of $6.4 million for the net effect of a litigation provision reversal. -- Non-GAAP(1) operating expenses of $51.4 million, excluding $10.2 million for stock-based compensation and a credit of $6.4 million for the net effect of a litigation provision reversal, compared to $49.7 million for the nine months ended September 30, 2008, an increase of 3.4% -- GAAP net income of $15.0 million, with GAAP EPS of $0.41 per diluted share -- Non-GAAP(1) net income of $17.2 million, or $0.47 per diluted share, excluding stock-based compensation and related tax effects and a credit of $6.4 million for the net effect of a litigation provision reversal.

    "MPS had an outstanding third quarter, as we almost matched our all time high in quarterly revenue" said Michael Hsing, chief executive officer and founder of MPS. "We are executing very well, as we released a record number of new products this quarter. The future for MPS continues to look great."

    Business Outlook

    The following are MPS' financial targets for the fourth quarter ending December 31, 2009:

    -- Revenues in the range of $43.0 million to $46.0 million. -- Gross margin at similar levels to the third quarter of 2009. -- Research and development and selling, general and administrative expenses between $19.3 million and $20.7 million. Non-GAAP(1) research and development and selling, general and administrative expenses between $16.2 million and $17.2 million. This excludes an estimate of stock-based compensation expense in the range of $3.1 million to $3.5 million. -- Litigation expense in the range of $2.6 million to $3.0 million.

    (1) Non-GAAP net income, non-GAAP operating expenses and non-GAAP research and development and selling, general and administrative expense differ from net income, operating expenses, and research and development and selling, general and administrative expense determined in accordance with GAAP (Generally Accepted Accounting Principles in the United States). Non-GAAP net income for the quarter and nine months ended September 30, 2009 and 2008 excludes the effect of stock-based compensation expense, a credit for the net effect of a litigation provision reversal and their related tax effects. Non-GAAP operating expenses for the quarter and nine months ended September 30, 2009 and 2008 exclude the effect of stock-based compensation expense and a credit for the net effect of a litigation provision reversal. Projected non-GAAP research and development and selling, general and administrative expenses exclude the effect of stock-based compensation expense. A schedule reconciling these amounts is included in this news release. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. MPS utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors' understanding of MPS' core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financials measures used by MPS.

    Conference Call

    MPS plans to conduct a management teleconference covering its quarter and nine months ended September 30, 2009 results at 2:00 p.m. PT / 5:00 p.m. ET today, October 22, 2009. To access the conference call and following replay, go to http://ir.monolithicpower.com/ and click the webcast link. From this site, you can listen to the teleconference, assuming that your computer system is configured properly. In addition to the webcast replay, which will be archived for all investors for one year on the MPS website, a phone replay will be available for seven days after the live call at 617-801-6888, code number 75482076. This press release and any other information related to the call will also be posted on the website.

    Safe Harbor Statement

    This press release contains forward-looking statements regarding targeted revenues, gross margin, GAAP and non-GAAP research and development and selling, general and administrative expenses, stock-based compensation expense and litigation expense for the quarter ending December 31, 2009, and our outlook for the long term prospects of the company. These statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, the risks, uncertainties and costs of litigation in which the company is involved; the outcome of any upcoming trials, hearings, motions, and appeals; any market disruptions or interruptions in MPS' schedule of new product release development; adverse changes in production and testing efficiency; adverse changes in government regulations in foreign countries where MPS has offices; acceptance of, or demand for, MPS' products being lower than expected; the adverse impact on MPS' financial performance if its tax and litigation provisions are inadequate; difficulty in predicting or budgeting for future expenses and financial contingencies; and other important risk factors identified in MPS' SEC filings, including, but not limited to, its Form 10-Q filed on July 30, 2009.

    The forward-looking statements in this press release represent MPS' targets, not predictions of actual performance. MPS assumes no obligation to update the information in this press release or in the accompanying conference call.

    About Monolithic Power Systems, Inc.

    Monolithic Power Systems, Inc. (MPS) develops and markets proprietary, advanced analog and mixed-signal semiconductors. The company combines advanced process technology with its highly experienced analog designers to produce high-performance power management integrated circuits (ICs) for DC to DC converters, LED drivers, Cold Cathode Fluorescent Lamp (CCFL) backlight controllers, Class D audio amplifiers, and Linear ICs. MPS products are used extensively in computing and network communications products, LCD monitors and TVs, and a wide variety of consumer and portable electronics products. MPS partners with world-class manufacturing organizations to deliver top quality, ultra-compact, high-performance solutions through the most productive, cost-efficient channels. Founded in 1997 and headquartered in San Jose, California, the company has expanded its global presence with sales offices in Taiwan, China, Korea, Japan, and Europe, which operate under MPS International, Ltd.

    Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries.

    Consolidated Balance Sheets (Unaudited, in thousands, except par value) September December 30, 2009 31, 2008 ---------- --------- ASSETS Current assets: Cash and cash equivalents $51,993 $83,266 Short-term investments 97,763 21,922 Accounts receivable, net of allowances of $7 and $0 in 2009 and 2008, respectively 19,493 9,115 Inventories 20,358 18,887 Deferred income tax assets, net - current 76 75 Prepaid expenses and other current assets 2,790 2,622 Restricted cash - 7,360 -- ----- Total current assets 192,473 143,247 ------- ------- Property and equipment, net 17,012 14,163 Long-term investments 19,465 37,425 Deferred income tax assets, net - long-term 19 19 Other assets 431 438 Restricted assets 7 7 -- -- Total assets $229,407 $195,299 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $8,867 $4,674 Accrued compensation and related benefits 6,351 7,848 Accrued liabilities 8,041 13,360 ----- ------ Total current liabilities 23,259 25,882 ------ ------ Non-current income tax liability 4,798 4,762 Other long-term liabilities 8 10 -- -- Total liabilities 28,065 30,654 ------ ------ Stockholders' equity: Common stock, $0.001 par value, $35 and $34 in 2009 and 2008, respectively; shares authorized: 150,000,000; shares issued and outstanding: 34,841,371 and 33,646,821 in 2009 and 2008, respectively 168,472 147,298 Retained earnings 32,431 17,411 Accumulated other comprehensive income (loss) 439 (64) --- --- Total stockholders' equity 201,342 164,645 ------- ------- Total liabilities and stockholders' equity $229,407 $195,299 ======== ======== Consolidated Income Statements (Unaudited, in thousands, except per share amounts) Three months ended Nine months ended September 30, September 30, ---------------- ----------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenue $47,966 $48,891 $118,461 $125,802 Cost of revenue* 18,868 18,201 48,122 46,620 ------ ------ ------ ------ Gross profit 29,098 30,690 70,339 79,182 ------ ------ ------ ------ Operating expenses: Research and development* 10,080 9,420 27,929 25,594 Selling, general and administrative* 9,438 9,560 26,567 27,200 Litigation expense 2,811 1,090 7,090 6,120 Litigation provision reversal, net (6,356) - (6,356) - ------ ------ ------ ------ Total operating expenses 15,973 20,070 55,230 58,914 ------ ------ ------ ------ Income from operations 13,125 10,620 15,109 20,268 Other income (expense): Interest and other income 161 684 827 2,928 Interest and other expense (76) (389) (355) (507) -- --- --- ----- Total other income, net 85 295 472 2,421 -- --- --- ----- Income before income taxes 13,210 10,915 15,581 22,689 Income tax provision 648 458 561 1,697 ------- ------- ------- ------- Net income $12,562 $10,457 $15,020 $20,992 ======= ======= ======= ======= Basic net income per share $0.36 $0.31 $0.44 $0.63 ===== ===== ===== ===== Diluted net income per share $0.34 $0.29 $0.41 $0.58 ===== ===== ===== ===== Weighted average common shares outstanding 34,552 33,869 34,082 33,482 Stock options and restricted stock 2,695 2,733 2,273 2,850 ----- ----- ----- ----- Diluted weighted-average common equivalent shares outstanding 37,247 36,602 36,355 36,332 ====== ====== ====== ====== * Stock-based compensation has been included in the following line items: Cost of revenue $69 $76 $217 $249 Research and development 1,409 1,471 4,656 4,074 Selling, general and administrative 1,688 1,787 5,558 5,141 ----- ----- ----- ----- Total $3,166 $3,334 $10,431 $9,464 ====== ====== ======= ====== RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME (in thousands, except per share amounts) ------- ------- ------- ------- Net income $12,562 $10,457 $15,020 $20,992 ======= ======= ======= ======= Adjustments to reconcile net income to non-GAAP net income Stock-based compensation $3,166 $3,334 $10,431 $9,464 Litigation provision reversal, net (6,356) - (6,356) - Tax effect (605) (1,679) (1,896) (3,603) ---- ------ ------ ------ Non-GAAP net income $8,767 $12,112 $17,199 $26,853 ------ ------- ------- ------- Non-GAAP earnings per share, excluding stock-based compensation and related tax effects: Basic $0.25 $0.36 $0.50 $0.80 Diluted $0.24 $0.33 $0.47 $0.74 Shares used in the calculation of non-GAAP earnings per share: Basic 34,552 33,869 34,082 33,482 Diluted 37,247 36,602 36,355 36,332 RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES (in thousands, except per share amounts) ------- ------- ------- ------- Total operating expenses $15,973 $20,070 $55,230 $58,914 ======= ======= ======= ======= Adjustments to reconcile total operating expenses to non-GAAP total operating expenses Stock-based compensation $(3,097) $(3,258) $(10,214) $(9,215) Litigation provision reversal, net 6,356 - 6,356 - ----- -- ----- -- Non-GAAP total operating expenses $19,232 $16,812 $51,372 $49,699 ------- ------- ------- ------- 2009 Fourth Quarter Outlook RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES (in thousands, except per share amounts) Three months ending December 31, 2009 Low High --- ---- R&D and SG&A $16,200 $17,200 ======= ======= Adjustments to reconcile R&D and SG&A to non-GAAP R&D and SG&A Stock-based compensation 3,100 3,500 ----- ----- Non-GAAP R&D and SG&A $19,300 $20,700 ------- -------

    Monolithic Power Systems, Inc.

    CONTACT: Rick Neely, Chief Financial Officer of Monolithic Power
    Systems, Inc., +1-408-826-0777, investors@monolithicpower.com

    Web Site: http://www.monolithicpower.com/




    Repligen Licenses Potential Treatment for Spinal Muscular AtrophyConference Call Scheduled for Friday, October 23 at 8:30 a.m. EDT

    WALTHAM, Mass., Oct. 22 /PRNewswire-FirstCall/ -- Repligen Corporation announced today that it has entered into an exclusive license agreement with Families of Spinal Muscular Atrophy (FSMA) for intellectual property covering compounds which may have utility in treating Spinal Muscular Atrophy (SMA). SMA is an inherited neurodegenerative disease in which a defect in the SMN1 ("survival motor neuron") gene results in low levels of the protein SMN and leads to progressive damage to motor neurons, loss of muscle function and, in many patients, early death. The licensed compounds increase the production of SMN in cells derived from patients. Further testing of these compounds in two transgenic mouse models of SMA demonstrated significantly increased survival suggesting potential clinical utility. There is currently no treatment or cure for SMA.

    "Families of SMA has made remarkable progress in defining a series of highly potent compounds which may be clinical candidates for SMA," stated Walter C. Herlihy, President and Chief Executive Officer of Repligen Corporation. "We look forward to working with FSMA and their collaborators in the development of what we hope will be an important new treatment for SMA."

    "At this point in the program, joining forces with a corporate partner to advance into clinical studies is the best way to meet our objective of accelerating drug development for SMA," stated Kenneth Hobby, President of Families of SMA. "We view Repligen as an ideal partner for this program with the necessary resources and expertise to invest in and focus on successfully developing an effective treatment for our patients."

    Patients lacking a functional SMN1 gene survive only because humans carry a second gene, known as SMN2, which produces an identical protein but at much lower levels. Genetic analysis of SMA patients has revealed a striking correlation between disease severity and the number of copies of SMN2 carried by the patient. Patients with 2 copies of the SMN2 gene are usually unable to ever sit without assistance while patients with 4 copies develop few symptoms before adulthood. Thus, a doubling of the SMN2 gene copy number dramatically alters disease course and suggests that a therapy which increases the level of SMN protein in motor neurons may provide a significant clinical benefit. Symptoms of SMA typically emerge before the age of 2 and often progress to severe physical disability or loss of life. SMA is diagnosed in approximately one in every 6,000 births in the United States and Europe where the estimated prevalence is approximately 20,000 patients.

    Conference Call Friday, October 23, 2009

    Repligen will host a conference call and webcast on Friday, October 23, 2009 at 8:30 a.m. EDT to provide an update on this corporate development. Walter Herlihy, President and CEO of Repligen will be joined on the call by Kenneth Hobby, President of FSMA, Dr. Jill Jarecki, Research Director of FSMA and Dr. Kathryn Swoboda, University of Utah School of Medicine who cares for SMA patients. This call may be accessed via Repligen's website at http://www.repligen.com/ or by calling (800) 901-5259 for domestic calls and (617) 786-4514 for international calls. Participants must provide the following passcode: 80325454.

    About Families of SMA

    Families of Spinal Muscular Atrophy is a non-profit organization dedicated to creating a treatment and cure by: funding and advancing a comprehensive research program; supporting SMA families through networking, information and services; improving care for all SMA patients; educating health professionals and the public about SMA; enlisting government support for SMA; embracing all touched by SMA in a caring community. FSMA's vision is a world where Spinal Muscular Atrophy is treatable and curable.

    About Repligen Corporation

    Repligen Corporation is a biopharmaceutical company focused on the development of novel therapeutics for diseases that affect the central nervous system. In addition, we are the world's leading supplier of recombinant Protein A, the sales of which partially fund the advancement of our development pipeline while supporting our financial stability. Repligen's corporate headquarters are located at 41 Seyon Street, Building #1, Suite 100, Waltham, MA 02453. Additional information may be requested from http://www.repligen.com/.

    This press release contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in this release do not constitute guarantees of future performance. Investors are cautioned that statements in this press release which are not strictly historical statements, including, without limitation, statements regarding current or future financial performance and position, management's strategy, plans and objectives for future operations, plans and objectives for product development, plans and objectives for present and future clinical trials and results of such trials, plans and objectives for regulatory approval, litigation, intellectual property, product development, manufacturing plans and performance such as the anticipated growth in the monoclonal antibody market and our other target markets and projected growth in product sales, constitute forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including, without limitation, risks associated with: the success of current and future collaborative relationships, the market acceptance of our products, our ability to compete with larger, better financed pharmaceutical and biotechnology companies, new approaches to the treatment of our targeted diseases, our expectation of incurring continued losses, our uncertainty of product revenues and profits, our ability to generate future revenues, our ability to raise additional capital to continue our drug development programs, the success of our clinical trials, our ability to develop and commercialize products, our ability to obtain required regulatory approvals, our compliance with all Food and Drug Administration regulations, our ability to obtain, maintain and protect intellectual property rights for our products, the risk of litigation regarding our intellectual property rights, our limited sales and manufacturing capabilities, our dependence on third-party manufacturers and value added resellers, our ability to hire and retain skilled personnel, our volatile stock price, and other risks detailed in Repligen's filings with the Securities and Exchange Commission. Repligen assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

    Repligen Corporation

    CONTACT: Walter C. Herlihy, Ph.D., President and Chief Executive
    Officer, +1-781-419-1900, or Laura Whitehouse, Vice President, Market
    Development, +1-781-419-1812, both of Repligen Corporation

    Web Site: http://www.repligen.com/




    Liberty Media Corporation Announces Third Quarter Earnings Release and Conference Call

    ENGLEWOOD, Colo., Oct. 22 /PRNewswire-FirstCall/ -- Liberty Media Corporation will release its third quarter earnings on Monday, November 9th at 11:30 a.m. (EST). Greg Maffei, Liberty Media's President and CEO, will host the call. During the call, Mr. Maffei may make observations regarding the company's financial performance, outlook and the pending split-off of a majority of the assets and liabilities of the Entertainment Group and the related, proposed business combination with The DIRECTV Group, Inc.

    Please call Premiere Conferencing at (877) 440-5803 or (719) 325-4888 at least 10 minutes prior to the call so that we can begin promptly at the start time. You will need to be on a touch-tone telephone to ask questions. The conference administrator will give you instructions on how to use the polling feature.

    Replays of the conference call can be accessed through 1:30 p.m. (ET) on November 23, by dialing (719) 457-0820 or (888) 203-1112 plus the pass code 3701402#.

    In addition, the third quarter earnings conference call will be broadcast live via the Internet. All interested participants should visit the Liberty Media Corporation website at http://www.libertymedia.com/events to register for the web cast. Links to the press release and replays of the call will also be available on the Liberty Media website. The conference call and related materials will be archived on the website for one year.

    Additional Information

    Nothing in this press release shall constitute a solicitation to buy or an offer to sell shares of LEI, any of the Liberty Media tracking stocks or shares of the new company to be issued pursuant to the Merger Agreement with DIRECTV. The offer and sale of shares in the proposed Split-Off and the DTV Business Combination will only be made pursuant to the effective registration statements on file with the SEC. Liberty Media stockholders and other investors are urged to read the effective registration statements, including the definitive proxy statement/prospectuses contained therein, because they contain important information about these transactions. Copies of the effective registration statements and the definitive proxy statement/prospectuses are available free of charge at the SEC's website (http://www.sec.gov/). Copies of the filings together with the materials incorporated by reference therein can also be obtained, without charge, by directing a request to Liberty Media Corporation, 12300 Liberty Boulevard, Englewood, Colorado 80112, Attention: Investor Relations, Telephone: (720) 875-5408.

    Participants in a Solicitation

    The directors and executive officers of Liberty Media and other persons may be deemed to be participants in the solicitation of proxies in respect of proposals to approve the transactions. Information regarding the directors and executive officers of each of Liberty Media, LEI and the new DIRECTV and other participants in the proxy solicitation and a description of their respective direct and indirect interests, by security holdings or otherwise are available in the definitive proxy materials filed with the SEC.

    About Liberty Media Corporation

    Liberty Media Corporation owns interests in a broad range of electronic retailing, media, communications and entertainment businesses. Those interests are attributed to three tracking stock groups: (1) the Liberty Interactive group , which includes Liberty's interests in QVC, Provide Commerce, Backcountry.com, BUYSEASONS, Bodybuilding.com, IAC/InterActiveCorp, and Expedia, (2) the Liberty Entertainment group , which includes Liberty's interests in The DIRECTV Group, Inc., Starz Entertainment, FUN Technologies, Inc., GSN, LLC, WildBlue Communications, Inc., and Liberty Sports Holdings LLC, and (3) the Liberty Capital group , which includes all businesses, assets and liabilities not attributed to the Interactive group or the Entertainment group including its subsidiaries Starz Media, LLC, Atlanta National League Baseball Club, Inc., and TruePosition, Inc., and minority equity investments in Time Warner Inc. and Sprint Nextel Corporation.

    Liberty Media Corporation

    CONTACT: Courtnee Ulrich, +1-720-875-5420, for Liberty Media
    Corporation

    Web Site: http://www.libertymedia.com/




    Tecumseh Products Company Announces Third Quarter 2009 Earnings Call

    ANN ARBOR, Mich., Oct. 22 /PRNewswire-FirstCall/ -- Tecumseh Products Company announced today that it will release its third quarter 2009 results after market close on Wednesday, November 4, 2009. The Company will broadcast its financial results conference call live over the Internet on Thursday, November 5, 2009 at 11:00 a.m. ET.

    Those who wish to listen to this conference call should visit the Investor Relations section of the Company's web site at http://tecumseh.investorroom.com/ at least ten minutes prior to the event. Please follow the instructions provided to assure that the necessary audio applications are downloaded and installed. These programs can be obtained at no charge to the user.

    Tecumseh Products Company is a full-line independent global manufacturer of hermetically sealed compressors for residential and commercial refrigerators, freezers, water coolers, dehumidifiers, window air conditioning units and residential and commercial central system air conditioners and heat pumps.

    Press releases and other investor information can be accessed via the Investor Relations section of Tecumseh Products Company's Internet web site at http://tecumseh.investorroom.com/.

    Contact: Teresa Hess Director, Investor Relations Tecumseh Products Company 734-585-9507

    Tecumseh Products Company

    CONTACT: Teresa Hess, Director, Investor Relations, Tecumseh Products
    Company, +1-734-585-9507

    Web Site: http://www.tecumseh.com/

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