Wolfson Microelectronics plc ("Wolfson" or "the Company"), a leading supplier of mixed-signal semiconductors and audio solutions for consumer electronic products, announces its financial results for the first quarter ended 31 March 2013.

Financial summary:

• Revenues up 59% year-on-year to $48.1m (Q1 2012: $30.3m)
• Gross margin reduced to 40.3% due to product mix as previously guided (Q1 2012: 49.0%), and is anticipated to improve during 2013 as product mix moves towards higher margin products
• Underlying* operating loss of $2.8m excluding restructuring and exceptional charges of $2.1m (Q1 2012: $6.4m loss)
• Operating loss of $6.3m (Q1 2012: $8.4m loss)

Operational summary:

• On 11 April 2013, Samsung and Wolfson signed a multi-year IP License and a Component Supply Agreement, which establishes Wolfson as a primary Samsung audio partner. As a result of this agreement, Wolfson expects to be a major audio component supplier for Samsung's GALAXY smartphones and tablets, including the Samsung GALAXY S4, in 2013
• Revenues from Mobile Audio Hubs grew over 100% year-on-year to 85% of Q1 2013 sales
• Micro-electro-mechanical systems (MEMS) microphones grew year-on-year, with further strong growth expected as 2013 progresses
• An existing North American smartphone customer has included Wolfson's Audio Hub in one of its recently announced flagship products
• Lenovo selected Wolfson audio products with integrated transmit path (Tx) and receive-path (Rx) noise reduction, and Ambient Noise Cancelling (ANC) technology, alongside an Intel® Atom Clover Trail+ processor, for its flagship IdeaPhone K900
• Continued expansion in China, shipping to three new smartphone customers, including Lenovo who were number two in smartphone share in China in 2012
• Two leading-brand manufacturers included Wolfson's audio solutions in their new gaming products

Outlook:

• Q2 2013 revenue is dependent on multiple customer new product launches and associated product ramps. Given normal variability in the timing of these, and some pre-shipments in Q1 2013 to support Q2 launches, Q2 2013 revenue is expected to be in the range of $44m - $54m, supporting strong year-on-year first half sales growth of between 33% and 44%
• Gross margin in Q2 2013 is expected to increase to around 43%, in line with a more favourable product mix, and is anticipated to improve further in the second half of 2013
• Based on continuing revenue and customer momentum, the Company remains well-positioned for a further step up in revenues in the second half of 2013 and strong full year revenue growth

Commenting on the results, Mike Hickey, CEO of Wolfson, said: "The growth momentum we built up last year has continued into the first quarter, with record first quarter sales up close to 60% year-on-year. This growth is being driven by our class-leading HD Audio solutions for smart mobile devices. We continue to build closer relationships with market leaders in smartphone and tablet applications and, encouragingly, we are also expanding our position in the fast-growing smartphone market in China and other emerging markets.

"With lots of exciting product launches by our customers, continued strong customer adoption and design-ins transitioning to revenue in line with our expectations, the Company remains well-positioned for another year of strong revenue growth in 2013."

*Underlying results exclude: charges for the amortisation of acquired intangible assets (Q1 2013: $0.4m; Q1 2012: $0.7m); share-based compensation charges, including associated payroll taxes (Q1 2013: $1.0m; Q1 2012: $1.3m); and, in Q1 2013, severance costs of $1.5m (Q1 2012: $nil) and an exceptional charge of $0.6m (Q1 2012: $nil). The term "underlying" is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies. Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures.

Enquiries:

Wolfson Microelectronics
Mike Hickey, CEO
Mark Cubitt, CFO
0131 272 7000

Luther Pendragon
Harry Chathli, Claire Norbury
020 7618 9100

Mike Hickey, CEO, and Mark Cubitt, CFO, will be hosting a conference call to investors and analysts at 09.00 BST today: UK dial-in 0808 237 0030; US dial-in 1 866 928 7517; International dial-in +44 (0)203 139 4830. A replay of the conference call will be available from 11.30 BST today: UK 0808 237 0026; US 1 866 535 8030; International on: +44 (0)203 426 2807; Access Pin 638406#

Wolfson Microelectronics plc ("Wolfson" or "the Company"), a world leader in Audio Solutions for consumer electronic products, announces fourth quarter and audited full year results for 2012.

Fourth quarter 2012 summary:

• Revenue up 52% to $56.1m (Q4 2011: $36.9m)
• Gross margin of 43.9% (Q4 2011: 49.9%, before exceptional charges)
• Underlying* operating profit of $1.5m (Q4 2011: $2.9m loss)
• Operating profit of $0.5m** (Q4 2011: $7.2m loss)

Full year financial summary:

• Revenue up 15% to $179.7m (2011: $156.9m)
• Gross margin of 46.9% (2011: 48.5%, before exceptional charges)
• Underlying* operating loss of $2.9m (2011: $7.5m loss)
• Operating loss of $9.3m** (2011: $24.2m loss)
• Underlying* diluted loss per share of 1.0 cents (2011: 4.9 cents loss)
• Diluted loss per share of 5.2 cents (2011: 15.4 cents loss)
• Cash and short-term deposits at 30 December 2012 of $48.0m (1 Jan 2012: $53.4m), no debt

Full year 2012 operational summary:

• Built strong revenue momentum as 2012 progressed with year-on-year sales growing 52% in Q4 and 15% for the full year supporting a return to profitability in the second half of 2012
• Sales to mobile phones and tablet computer applications grew 60% year-on-year
• Strong performance from Audio Hubs and Micro-Electro-Mechanical Systems (MEMS) microphone product lines with Audio Hubs growing 27% overall, Mobile Audio Hubs growing by around 60% and MEMS microphones growing to 6% of Q4 2012 revenues
• Launched 21 new products, including the world's first quad core HD Audio System-on-a-Chip (SoC) and the world's first high performance integrated MEMS microphone
• Record estimated revenue value for new design-ins set in 2012 with Q4 2012 the best ever quarter for design-in value. The majority of the value of design-ins is for Audio Hubs with around 10% for MEMS microphones

Outlook:

In Q1 2013, given normal seasonality, the Company anticipates:

• Continuing revenue momentum with year-on-year revenue growth in the range of 40% - 60% ($42m to $48m) dependent on timing of customers' new product ramps
• Gross margin to be around 41% driven by near-term product mix

Looking further ahead:

• Gross margins are expected to improve strongly towards traditional levels as 2013 progresses primarily due to mix shifting to more value-added products and MEMS production reaching economic scale
• Strong end-markets in smartphones and tablet computers, the shift to higher added value products and design-in value at record levels in 2012, means the Company is well positioned for further strong growth in revenues and profitability during 2013

Commenting on the results, Mike Hickey, CEO of Wolfson Microelectronics, said:

"By penetrating the most dynamic and fast-growing segments of the consumer electronics market, we have established strong revenue momentum, growing more than 50% year-on-year in the fourth quarter and, as anticipated, returned to profit in the second half of the year.

"We are increasing our market presence in smartphones and tablet computers, and are now shipping to most of the world's brand-leading mobile phone and tablet computer manufacturers. This, combined with our class-leading portfolio of audio products delivering another record year for new design-ins, positions the Company well for further strong growth in 2013."

*Underlying full year results exclude: charges for the amortisation of acquired intangible assets (2012: $1.7m; 2011: $5.5m) and share-based compensation charges, including associated payroll taxes (2012: $3.3m; 2011: $3.6m). Also, in 2012, an exceptional charge of $1.4m is excluded (2011: net exceptional charges of $7.6m are excluded). The term "underlying" is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies. Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures.

** After exceptional charge for 2012 of $1.4m (2011: after net exceptional charges $7.6m) of which $1.4m was in Q4 2012 (Q4 2011: $2.4m charge).

Enquiries:

Wolfson Microelectronics
Mike Hickey, CEO
Mark Cubitt, CFO
020 7618 9100 On the day
0131 272 7000 Thereafter

Luther Pendragon
Harry Chathli
Claire Norbury
020 7618 9100

Download the Fourth Quarter and Full Year Results Presentation 2012 (PDF)

Mike Hickey, CEO, and Mark Cubitt, CFO, will be hosting a presentation to investors and analysts at 0900 GMT at JP Morgan, Holborn Bars, 138-142 Holborn, London EC1N 2NQ. An audio webcast of the Wolfson Microelectronics plc Full Year Results presentation can be heard LIVE from 0900 GMT via: http://www.wolfsonmicro.com/investor/

Additionally, there is a dial-in facility: UK freephone 0800 634 5205; US freephone +1 866 629 2704; International +44 (0)208 817 9301. A replay of the conference call is available from 1130 GMT on +44 (0)207 769 6425 or US +1 630 652 3111, Access Pin 9819393#

Q3 revenues up 32% and return to profitability

 Financial summary:

• Revenues increased 32% sequentially and 31% year-on-year to $53.0m (Q2 2012: $40.3m; Q3 2011: $40.4m)
• Gross margin of 47.5% (Q2 2012: 48.5%; Q3 2011: 49.7%)
• Underlying* operating profit improved to $3.4m (Q2 2012: $1.3m loss; Q3 2011: $0.7m loss)
• Operating profit improved to $1.6m (Q2 2012: $3.0m loss; Q3 2011: $10.0m loss)
• Cash and short-term deposits increased to $49.2m (Q2 2012: $48.7m; Q3 2011: $48.2m), no debt

 Operational summary:

• Very strong sales growth in Mobile Audio Hubs, which increased 53% year-on-year

• Sales into mobile phones grew by 71% and tablet computers by 88% year-on-year. Overall strong Company growth was slightly moderated by reduced sales in gaming and home entertainment

• Notable new customer products shipping with Wolfson devices inside during Q3 2012 included:
  • A new  leading consumer electronics customer in a smartphone accessory
  • Samsung’s GALAXY S III LTE smartphone, GALAXY Note II  and GALAXY Note 10.1 tablet device
  • Microsoft’s  new Surface tablet computer
  • A Tier 1 customer for its new range of high volume smartphones
  • Nokia’s Reaction Bluetooth^® Headset
  • A large consumer electronics company’s range of  tablet computers

• Micro-electro-mechanical-systems (MEMS) microphones are shipping to three major mobile device manufacturers and to multiple other customers in a wide range of consumer products, including a top of the range Japanese SLR digital camera

• Design-in value continued to increase year-on-year driven by increasing adoption of Wolfson’s Audio Hub and MEMS microphone products at both existing and new customers

• Product development performance maintained in Q3 2012 with the launch of six new products

• Gross profit increased by 29% sequentially and 25% year-on-year supporting a return to operating profitability

• Gross margin reduced sequentially from 48.5% to 47.5% being impacted by  product mix, a high volume product reaching volume price breaks quicker than anticipated and ahead of planned product cost reductions and costs associated with the volume production ramp of MEMS microphones

Outlook:

Near term

• Strong revenue momentum is anticipated to continue into Q4 2012 and the Company expects revenues to be in the range of  $50m to $60m dependent on customer new product ramps and end product sell through 

• Gross margin will continue to be impacted over the next couple of quarters as product mix is expected to shift to higher margin products, product cost reductions on a high volume product are realised and the MEMS volume production ramp period is completed. Gross margin is expected to be around 45% in Q4 2012 and around 47.5% for the full year 2012

Longer term

• Wolfson’s strong revenue and design-in momentum positions the Company well for further strong revenue growth in 2013

• Gross margin percentage is expected to return to traditional levels during 2013 

Commenting on the results, Mike Hickey, CEO of Wolfson, said:  “We are delighted to report that strong revenue growth has continued in the third quarter with revenues up over 30%, delivering the anticipated return to profitability. This growth is being driven by the increasing adoption of our industry-leading Audio Hubs and MEMS microphone products by brand-leading mobile phone and tablet computer manufacturers. 

“We expect this trend to continue into the fourth quarter, with incremental revenue from product adoptions supporting growth in full-year revenue and profit despite persistent macro-economic headwinds.”

*Underlying results exclude: charges for the amortisation of acquired intangible assets (Q3 2012: $0.3m; Q2 2012: $0.3m; Q3 2011: $1.3m) and share-based compensation charges (Q3 2012: $1.5m; Q2 2012: $1.4m; Q3 2011: $1.0m). Also in Q3 2011, exceptional charges of $7.0m are excluded. For earnings per share purposes, this is calculated by adding back to net profit/loss such items net of the estimated tax impact and dividing by the number of dilutive shares in issue. The term "underlying" is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies.  Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures. 

Enquiries:

Mike Hickey, CEO, and Mark Cubitt, CFO, will be hosting a conference call to investors and analysts at 0900 GMT today. There is a dial-in facility: UK freephone: 0800 634 5205; US freephone: +1 866 629 2704; International: +44 (0)208 817 9301.  Replay of the conference call will be available from 1000 GMT today:

UK: +44 (0)207 769 6425, US: + 1630 652 3111 Passcode: 8924206#

An audio webcast of the call can be heard LIVE from 0900 GMT today via: http://www.wolfsonmicro.com/investor

This document contains certain statements that are not historical facts, including statements about Wolfson’s expectations and beliefs and statements with respect to its business plan, operations and financial performance and condition and other objectives.  Such statements are forward-looking statements.  These statements typically contain words such as “intends”, “expects” “anticipates”, “estimates”, “aims”, “believes”, “assumes”, “should”, and words of similar import, which are predictions of or indicate future events and future trends.  Undue reliance should not be placed on such statements, which are based on Wolfson’s current plans, estimates, projections and assumptions.  By their nature, forward-looking statements involve known and unknown risk and uncertainty because they relate to events and depend on circumstances which may occur in the future and which in some cases are beyond Wolfson’s control.  There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements.  These factors include, but are not limited, to future revenues being lower than expected; increasing competitive pressures within the industry; general economic conditions or conditions affecting the relevant industries, both domestically and internationally, being less favourable than expected.

Professor Sessler will receive the award from HRH Prince Philip at the Royal Society of Edinburgh (RSE), Scotland's National Academy, in recognition of his pioneering contributions to electroacoustics, including the invention of the first polymer electric condenser microphone, and the design of the first micro-electro-mechanical systems (MEMS) condenser microphone. Tomorrow (Thursday), Professor Sessler will visit Wolfson's Edinburgh headquarters, where he will meet the team behind Wolfson's MEMS microphone technology, which features in leading consumer electronic applications.

This is the sixth year that Wolfson has co-funded this joint award with the Royal Society of Edinburgh (RSE) and the Institute of Electronics and Electrical Engineers (IEEE), which recognises ground-breaking contributions by those who follow in Scottish scientist James Clerk Maxwell's footsteps.

Also to be honoured at the ceremony is Wolfson's founder Dr David Milne OBE FREng FRSE, who will be presented with a Royal Society of Edinburgh (RSE) Royal Medal from HRH Prince Philip for his outstanding contribution to business and commerce in Scotland.

Dr Milne founded Wolfson Microelectronics in 1984 as a spin out of Edinburgh University and was CEO until 2006, taking the company public in 2003. Wolfson has become a leading global supplier of high performance audio solutions for many of the world's leading consumer electronic products, including smartphones, tablet computers and eBook readers. Until his resignation earlier this month, Dr Milne served as a non-executive director on the Board of Wolfson.

Professor Sir Edwin Southern FRS HonFRSE, will also be presented with an RSE Royal Medal at the ceremony for his outstanding contribution to molecular biology.

Mike Hickey, CEO of Wolfson, said: "We are pleased to once again co-fund the IEEE/RSE/Wolfson James Clerk Maxwell Award, which this year was awarded to Professor Gerhard Sessler. Professor Sessler has pioneered silicon microphone technology and provided Wolfson with the building blocks to develop our MEMS microphone technology which features in some of the world's leading consumer electronic products including smartphones."

"We are also delighted that our founder, Dr David Milne, is being recognised for his work with a Royal Medal. By establishing Wolfson Microelectronics, David has created a fantastic legacy for the people of Edinburgh and made an outstanding contribution to the semiconductor industry as a whole. We would also like to extend our congratulations to Professor Sir Edwin Southern on receiving a Royal Medal for his exceptional contribution to molecular biology."

Note to Editors:

The IEEE/RSE/Wolfson James Clerk Maxwell Award and RSE Royal Medals are voted on by an independent judging panel, unconnected to any of the awards’ sponsors.

Contacts:

Harry Chathli / Claire Norbury
Luther Pendragon
Tel: +44 (0)20 7618 9100
Email: wolfson@luther.co.uk

Laura Moore
Wolfson Microelectronics plc
Tel: +44 (0)131 272 7000
Email: laura.moore@wolfsonmicro.com

Strong sequential revenue growth and expected return to profitability in second half of 2012

Key financials for the second quarter 2012:

• Revenue of $40.3m, up 33% sequentially and 5% year-on-year (Q2 2011: $38.6m; Q1 2012: $30.3m)
• Gross margin of 48.5% (Q2 2011: 47.4%; Q1 2012: 49.0%)
• Underlying* operating loss improved to $1.3m (Q2 2011: $2.9m loss; Q1 2012: $6.4m loss)
• Operating loss improved to $3.0m (Q2 2011: $3.5m loss; Q1 2012: $8.4m loss)
• Cash and short-term deposits of $48.7m, with no debt

Key financials for the first half 2012:

• Revenue of $70.6m (H1 2011: $79.7m)
• Gross margin increased by 140 basis points to 48.7% (H1 2011: 47.3%)
• Underlying* operating loss of $7.7m (H1 2011: $3.9m loss)
• Operating loss of $11.4m (H1 2011: $6.9m loss)
• Net cash inflow from operating activities of $0.3m (H1 2011: $33.7m cash outflow)

Operational highlights for the first half 2012:

• Sales in mobile phones grew 30% year-on-year, driven in particular by smartphones
• Design-in value increased year-on-year to record levels driven by the adoption of Wolfson’s Audio Hub and micro-electro-mechanical systems (MEMS) microphone products by existing and new customers mainly for smartphones, tablet computers and other smart devices
• Launched ten new products, including the world’s first quad-core Audio SoC and the world’s first high performance integrated MEMS microphone
• Three Tier 1 manufacturers have selected Wolfson MEMS microphones for next generation products due to launch in the second half of 2012
• Market penetration has increased with new products launched during the first half of 2012 with Wolfson solutions inside that include:
  • Samsung selecting a Wolfson High Definition (HD) Audio Hub for inclusion in its new smartphone, the GALAXY SIII, launched in May 2012
  • Fujitsu, LG, Motorola, RIM, Samsung and Sony all launching mobile devices that feature Wolfson audio solutions
• Significant new design-ins in Q2 2012 include:
  • Two Tier 1 manufacturers selecting multiple products (Audio Hubs and MEMS microphones) for their new tablet computers
  • A leading mobile phone manufacturer selecting Wolfson’s Ambient Noise Cancellation (ANC) technology for inclusion in their next generation phone platforms
  • Two leading mobile phone manufacturers selecting Wolfson’s MEMS microphones for their next generation platforms
    

Outlook:

• Q3 2012 revenues are expected to be in the range of $46m to $54m, depending on customer new product ramps
• Q3 2012 gross margin is expected to remain around 48% to 49%, depending on product mix
• In contrast to a loss making first half of 2012, the Company expects to return to underlying profitability in the second half of 2012
• As previously announced, Wolfson continues to expect five new smartphone customers to add incremental revenue during full year 2012
• Despite the macro-economic environment continuing to be challenging, the Company remains comfortable with consensus for full year 2012

Commenting on the results, Mike Hickey, CEO of Wolfson, said: “Despite consumer market headwinds persisting, our first half results are in line with previous guidance and we have achieved considerable revenue momentum. Our Audio Hubs and MEMS microphones continue to be adopted at record levels by brand-leading companies, particularly in smartphones and tablet computers. Consumer demand for great audio in smart devices is driving this product adoption success.

“Customer new product launches, mainly smartphones with Wolfson devices inside, enabled strong sequential revenue growth of 33% in the second quarter. This momentum, coupled with further customer new product launches expected this year, positions the Company well to achieve a further step up in revenue and an anticipated return to underlying profitability in the second half of 2012.” 

*Underlying means after adding back amortisation of acquired intangible assets, share-based compensation charges and, in H1 2011 and in Q2 2011, the curtailment gain on the defined benefit pension plan. For loss per share purposes, this is calculated by adding back to net loss such items net of the estimated tax impact and dividing by the number of dilutive shares in issue. The term “underlying” is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies. Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures.

Download the 2012 2nd Quarter and Interim Results Presentation (PDF)

Enquiries:

Mike Hickey, CEO, and Mark Cubitt, CFO, will be hosting an audio webcast of the Wolfson Microelectronics plc 2012 Interim Results and presentation from 09.00 BST via http://www.wolfsonmicro.com/investor

Additionally, there is a dial in facility: UK freephone: 0800 634 5205; US toll free: 1 866 629 2704; International: +44 208 817 9301. Replay of conference call available from 11.30 BST on: +44 (0) 207 769 6425 or 00 3531 436 4267; Access Pin 7808730#

This document contains certain statements that are not historical facts, including statements about Wolfson’s expectations and beliefs and statements with respect to its business plan, operations and financial performance and condition and other objectives.  Such statements are forward-looking statements.  These statements typically contain words such as “intends”, “expects” “anticipates”, “estimates”, “aims”, “believes”, “assumes”, “should”, and words of similar import, which are predictions of or indicate future events and future trends.  Undue reliance should not be placed on such statements, which are based on Wolfson’s current plans, estimates, projections and assumptions.  By their nature, forward-looking statements involve known and unknown risk and uncertainty because they relate to events and depend on circumstances which may occur in the future and which in some cases are beyond Wolfson’s control.  There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements.  These factors include, but are not limited, to future revenues being lower than expected; increasing competitive pressures within the industry; general economic conditions or conditions affecting the relevant industries, both domestically and internationally, being less favourable than expected.

Wolfson Microelectronics plc (“Wolfson” or “the Company”), a leading supplier of mixed-signal semiconductors for consumer electronic products, announces its financial results for the first quarter ended 1 April 2012.

Financial summary:

• Revenues of $30.3m (Q1 2011: $41.1m) in line with previous guidance
• Gross margin of 49.0% (Q1 2011: 47.1%)
• Underlying* operating loss of $6.4m (Q1 2011: $0.9m loss)
• Operating loss of $8.4m (Q1 2011: $3.4m loss)
• Net cash inflow from operating activities of $2.7m (Q1 2011: $24.5m outflow)
• Cash and short term deposits of $53.5m (unchanged from 2011 closing position), with no debt

Operational summary:

• Record quarterly design-in value from a combination of existing and new customers
• The three new top tier mobile phone manufacturer customers announced in the Company’s full year 2011 results are on track to add incremental revenue in 2012
• Six new products launched including a High Definition (HD) Audio System-on-a-Chip (SoC) and multiple micro-electro-mechanical systems (MEMS) microphones
• Increased design-ins for MEMS microphones as Wolfson benefits from its leading technology position and the microphone market transition to MEMS
• Increased market penetration with Fujitsu, LG, Motorola, RIM, Samsung and Sony, all launching mobile devices that featured Wolfson products inside
• Notable design-ins with new customers in the quarter included:
  • A major Chinese computer and telecommunications enterprise selecting a Wolfson audio solution for its range of mobile phones
  • A Japanese multinational corporation selecting Wolfson’s Audio Hubs for a selection of its new mobile phone platforms
  • A large consumer electronics manufacturer selecting Wolfson’s Audio Digital Signal Processor (DSP) and Audio Hub for its latest media player

Outlook:

• Q2 2012 revenue is expected to be in the range of $36m - $42m. The sequential revenue growth is expected to be driven by new and existing smartphone and tablet computer customers ramping to volume manufacturing
• Gross margin in Q2 2012 is expected to be around 48% - 49% dependant on product mix
• As previously reported, as 2012 progresses and as design-ins translate into volume production, the Company expects a step up in revenues and a return to sustainable growth and underlying profitability
• The Company remains comfortable with current market consensus for the full year

Commenting on the results, Mike Hickey, CEO of Wolfson, said: “Revenue for the first quarter of 2012 was in line with previous guidance and reflected normal seasonality. The underlying fundamentals of the business have continued to improve as consumers demand better audio from their electronics products, such as smartphones, tablet computers and gaming devices. This is driving some quite disruptive technology trends that favour Wolfson products – resulting in a record design-in performance in the first quarter."

“These favourable technology trends, strong customer adoption and with record design-ins transitioning to revenue in line with our expectations, position the Company well for a step up in revenues and a return to underlying profitability as 2012 progresses.”

*Underlying results exclude: charges for the amortisation of acquired intangible assets (Q1 2012: $0.7m; Q1 2011: $1.3m) and share-based compensation charges, including associated payroll taxes (Q1 2012: $1.3m; Q1 2011: $1.2m). The term "underlying" is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies. Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures. 

Enquiries:

Mike Hickey, CEO, and Mark Cubitt, CFO, will be hosting a conference call to investors and analysts at 10.00 BST today: UK Dial-in 0800 634 5205; US Dial-in 1 866 629 2704. Replay of conference call will be available from 11.30 BST today on: +44 207 769 6425 or +1 630 652 3111, Access Pin 7180194#

This document contains certain statements that are not historical facts, including statements about Wolfson’s expectations and beliefs and statements with respect to its business plan, operations and financial performance and condition and other objectives.  Such statements are forward-looking statements.  These statements typically contain words such as “intends”, “expects” “anticipates”, “estimates”, “aims”, “believes”, “assumes”, “should”, and words of similar import, which are predictions of or indicate future events and future trends.  Undue reliance should not be placed on such statements, which are based on Wolfson’s current plans, estimates, projections and assumptions.  By their nature, forward-looking statements involve known and unknown risk and uncertainty because they relate to events and depend on circumstances which may occur in the future and which in some cases are beyond Wolfson’s control.  There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements.  These factors include, but are not limited, to future revenues being lower than expected; increasing competitive pressures within the industry; general economic conditions or conditions affecting the relevant industries, both domestically and internationally, being less favourable than expected.

Registration:

Please register for the audio webcast and via this link (Opens in new window).

Enquiries:

Claire Norbury
Luther Pendragon
+44 (0)20 7618 9100

Sequential revenue growth with improving longer term outlook

Financial summary:

• Revenues up 5% sequentially to $40.4m (Q2 2011: $38.6m), down 14% year-on-year (Q3 2010: $47.1m)
• Gross margin, before exceptional inventory charge, improved sequentially to 49.7% (Q2 2011: 47.4%)
• Underlying* operating loss improved sequentially to $0.7m (Q2 2011: $2.9m loss)
• Underlying* diluted loss per share improved sequentially to 0.5 cents (Q2 2011: 1.8 cents loss)
• Exceptional charge of $7.0m: $3.5m restructuring as previously indicated and $3.5m inventory write-down following subsequent obsolescence of products by customers (Q2 2011: $1.8m pension curtailment gain)
• Operating loss of $10.0m, after exceptional charges (Q2 2011: $3.5m loss)
• Diluted loss per share of 6.4 cents (Q2 2011: 2.2 cents loss)

Operational summary:

• Strong sales growth in mobile Audio Hubs, which grew 24% sequentially and 34% year-on-year
• When compared to Q3 2010, sales to mobile phone applications grew by 9%, tablet/PCs grew by 95% and mobile gaming grew by 21%. This strong growth was offset by reduced sales in most other application areas due to this year’s much weaker end consumer demand environment
• In the first nine months to September, despite challenging end markets, revenues have grown by 8% over the comparable period last year, driven by:
  • Strong year-on-year sales growth in mobile Audio Hubs, which increased by over 100%
  • Strong year-on-year sales growth in mobile phones and tablet/PCs, which grew by 53% and 215% respectively
• Strong design-in performance maintained with 79 new design-ins in Q3 2011 giving a total of 272 for the nine months to end of September. This is mostly being driven by the adoption of Audio Hubs and is increasing share with existing customers (including design-ins this quarter for two new high volume 2012 smartphones) and winning share in new customers
• Product development performance was maintained in Q3 2011 with the launch of eight new products (19 new products to end of September)
• Started shipping micro-electro-mechanical-systems (MEMS) based silicon microphones in volume to a major mobile phone manufacturer
• Notable new Wolfson Audio Hub, DSP and subsystem product adoptions in Q3 2011 include selection by:
  • An existing high volume Tier 1 customer for its new 2012 smartphone platform
  • An existing Tier 1 customer for its next generation high volume 2012 smartphone platform (announced at Interim results in July)
  • Samsung for Droid and Epii handsets, a new Galaxy S2 model, the Galaxy R smartphone and various Samsung Galaxy tablets
  • LG for its Optimus range of mobile phones including the Sol, Q2, EX, Net and LTE handsets, and the LG V909 tablet
  • Sony Tablet S and Lenovo LePad tablet PCs
  • Fujitsu and Toshiba for new Japanese smartphones
• Power management subsystem selected for the new Sony eBook reader
• Headset reference solution and myZoneTM ambient noise cancellation (ANC) technology have been selected by Best Buy for its latest noise cancellation headphone designs, which are sold under its Rocketfish brand
• The Company acquired Dynamic Hearing PTY Ltd (“Dynamic Hearing”), an enhanced speech intelligibility and voice communications company, for $4.5m. This acquisition provides Wolfson with a complete platform-agnostic turnkey transmit and receive noise reduction solution

Outlook:

Near Term

• The Company expects revenues for Q4 2011 to be in the range of $35m to $40m
• Q4 2011 gross margin is expected to be around 50% and 2011 full-year gross margin is now expected to be around 48.5% (pre the Q3 exceptional inventory charge of $3.5m)

Looking further ahead

Whilst weak consumer demand, along with some customer product delays, have impacted the Company’s 2011 revenue growth expectations and prevented a return to full-year profitability, and although the Company expects headwinds for another couple of quarters until significant design-ins translate to revenue, the underlying fundamentals of the business continue to improve. This improvement is being driven by an accelerating technology trend in consumer electronics devices to “off board” audio from central processors to standalone audio devices where Wolfson Audio Hub products have a leadership position.

This fundamental technology transition is creating a large addressable market opportunity for Audio Hubs where Wolfson is strongly positioned to capture good share. This changeover is increasingly evident in smartphones and tablet PCs, and is also being adopted across other consumer electronics product applications. The Company is playing a leading part and already benefitting from this end-product architecture evolution.

This, plus high exposure to fast growing product applications, such as smartphones, tablet PCs, eBook readers and gaming, and with secured design-ins working their way through to revenue in the second half of 2012, positions the Company well to improve sales growth and profitability as its target markets continue to develop and overall consumer demand recovers.

Commenting on the results, Mike Hickey, CEO of Wolfson, said: “Against a backdrop of deteriorating macro-economic conditions and low consumer confidence, we were able to grow our third quarter revenue sequentially with incremental revenues from 2010 designs-ins offsetting general market reductions. The sharp reductions in customers’ near-term forecasts seen during the summer months have not been repeated, and order intake has stabilised, albeit at somewhat lower levels than previously anticipated. “Whilst visibility for Q4 2011 and into 2012 remains limited, our strong design-in performance continues, including the addition of two new high volume next generation smartphone design-ins this quarter, increasing our share with existing customers. Coupled with high exposure to still growing markets such as smartphones, tablet PCs, eBook readers and gaming, the Company is well positioned to weather the current challenging environment and improve sales growth and profitability as our target market continues to grow and once consumer spending picks up.”

*Underlying results exclude: charges for the amortisation of acquired intangible assets (Q3 2011: $1.3m; Q2 2011: $1.3m; Q3 2010: $1.3m) and share-based compensation charges (Q3 2011: $1.0m; Q2 2011: $1.1m; Q3 2010: $1.3m). Also in Q3 2011, exceptional charges of $7.0m are excluded (Q2 2011: $1.8m pension curtailment gain; Q3 2010: $nil). For loss per share purposes, this is calculated by adding back to net loss such items net of the estimated tax impact and dividing by the number of dilutive shares in issue. The term "underlying" is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies. Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures.

Enquiries:

Wolfson Microelectronics

Mike Hickey, Chief Executive Officer 0131 272 7000
Mark Cubitt, Chief Financial Officer

Luther Pendragon

Harry Chathli, Neil Thapar 020 7618 9100

Conference Call

Mike Hickey, CEO, and Mark Cubitt, CFO, will be hosting a conference call to investors and analysts at 0900 GMT today. There is a dial-in facility: UK freephone: 0800 634 5205; US freephone: 1 866 629 2704; International: +44 (0)208 817 9301. Replay of the conference call will be available from 10:00 GMT today: UK: +44 (0)207 769 6425, US: + 1 630 652 3111Passcode: 5838583# An audio webcast of the call can be heard LIVE from 0900 GMT today via: http://www.wolfsonmicro.com/investor (Link opens in new window)

This document contains certain statements that are not historical facts, including statements about Wolfson’s expectations and beliefs and statements with respect to its business plan, operations and financial performance and condition and other objectives. Such statements are forward-looking statements. These statements typically contain words such as “intends”, “expects” “anticipates”, “estimates”, “aims”, “believes”, “assumes”, “should”, and words of similar import, which are predictions of or indicate future events and future trends. Undue reliance should not be placed on such statements, which are based on Wolfson’s current plans, estimates, projections and assumptions. By their nature, forward-looking statements involve known and unknown risk and uncertainty because they relate to events and depend on circumstances which may occur in the future and which in some cases are beyond Wolfson’s control. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited, to future revenues being lower than expected; increasing competitive pressures within the industry; general economic conditions or conditions affecting the relevant industries, both domestically and internationally, being less favourable than expected.

Wolfson Microelectronics plc ("Wolfson" or "the Company"), a global leader in the supply of mixed-signal semiconductor HD Audio solutions for the consumer electronics market, today announces that it has signed a binding agreement, subject to certain customary closing conditions, to acquire the entire issued share capital of Australian-based software solutions company, Dynamic Hearing PTY Ltd ("Dynamic Hearing") for a consideration of up to AUD 5.0m (USD 5.2m), payable in cash.

Dynamic Hearing is a leading provider of high quality audio processing software for personal communication devices such as mobile phones, Bluetooth headsets and hearing aids. Having traded profitably in the year to June 2011, it has a proven track record of repeat business with established customers, all of which are leaders in their respective markets. Since it was founded in 2002, Dynamic Hearing has built a successful business from its base in Melbourne, Australia. The 22 employees will now become part of the Wolfson team and will continue to serve Dynamic Hearing's existing customers as well as provide sound processing software for Wolfson's HD Audio solutions.

Working closely with the Wolfson team during the past 18 months, Dynamic Hearing has developed and supplied a suite of audio enhancing transmit noise reduction and Acoustic Echo Cancellation (AEC) algorithms to run on Wolfson's Audio Hub products. Wolfson's WM2200, launched earlier this year, was the first product combining Dynamic Hearing's multi-microphone transmit path / voice capture noise reduction and AEC technologies, with Wolfson's unique receive Ambient Noise Cancellation (ANC) technology. This combination of audio processing technologies provides a complete platform-agnostic turnkey transmit and receive noise reduction solution. This will be further deployed across Wolfson's Audio Hub products for mobile phones and tablet PC applications.

Commenting on the acquisition, Mike Hickey, CEO of Wolfson, said: "We are delighted to welcome Dynamic Hearing's highly skilled team of employees into the Wolfson family. This acquisition secures important intellectual property, adds to our customer base and supports our leadership position in delivering HD Audio solutions for the consumer electronics market."

Anthony Shilton, CEO of Dynamic Hearing, said: "This is a great opportunity for Dynamic Hearing to become part of a leading global audio solutions company. We will have an expanded capacity to market and deploy our existing intellectual property and software around the world. Our team here in Australia are looking forward to developing industry-leading software to complement and enhance Wolfson's HD Audio solutions."

Enquiries:

Wolfson Microelectronics
Mike Hickey, CEO
Derek Milne
0131 272 7000

Corfin Public Relations
Harry Chathli, Claire Norbury, Neil Thapar
0207 596 2860

About Dynamic Hearing

Dynamic Hearing is a leading provider of high quality audio Digital Signal Processing technology for personal communication devices such as mobile phones, Bluetooth headsets and hearing aids. Dynamic Hearing's expertise is in optimising voice communications, with particular emphasis on supreme audio quality and enhanced speech intelligibility. The mission of Dynamic Hearing is to enhance the experience of sound for listeners in any environment, providing them with greater mobility and improved lifestyle.

Dynamic Hearing Website

Mr. Grant, aged 65, is a very experienced director who brings a wealth of international financial and operational management expertise to the Wolfson Board. During his executive career, he served in a range of senior international roles within the automotive and engineering industries. Mr. Grant held a number of senior positions within the Ford Motor Company in the USA and in Europe, including executive deputy chairman of Jaguar Cars and head of corporate strategy at Ford in the USA. His career at Ford spanned some 25 years. In 1992, Mr. Grant joined Lucas Industries plc (subsequently Lucas Varity plc) where he served as group finance director until 1996. Mr. Grant was chief executive of Ascot plc from 1997 to 2000 and then in 2000, until 2004, he became executive chairman of Hasgo Group Ltd, having led a successful management buyout of four specialist engineering businesses from Ascot plc.

Mr. Grant has been appointed as a non-executive director of several companies. He is non-executive chairman of Gas Turbine Efficiency Ltd. Mr. Grant also currently holds positions as: a non-executive director of both Pace plc and of MHP S.A., where he serves as chairman of their respective audit committees; and a non-executive director of Melrose plc.

During the last five years, Mr. Grant also held non-executive directorships at: Corac Group plc, Hasgo Group Ltd, National Grid plc, Royal Automobile Club Ltd, Surion Energy Ltd, and Torotrak plc. He holds a BSc in Economics from Queen’s University of Belfast and an MBA from Cranfield School of Management.

Commenting on Mr. Grant’s appointment, Michael Ruettgers, Chairman of Wolfson, said: “We are delighted to appoint someone of John’s standing and, with his extensive operational and financial management experience, John will add complementary skills and expertise to the existing Board and Audit Committee of Wolfson.”

No further details, as required under Paragraph LR 9.6.13R of the Listing Rules of the Financial Services Authority, remain to be disclosed in respect of John Grant’s appointment to the Board.

Contact:

Laura Moore
Wolfson Microelectronics plc
Tel: 0131 272 7000
Email: Laura.Moore@wolfsonmicro.com