Anticipates June Quarterly Revenue to Be up More Than 5 Percent
Sequentially with 50 to 60 Percent Growth in Pro Forma Operating
Income Skyworks Solutions, Inc. (NASDAQ:SWKS), an industry leader
in radio solutions and precision analog semiconductors, today
announced revenue of $185.2 million for the second fiscal quarter
ended March 31, 2006, compared to $198.3 million in the seasonally
strong December quarter and $190.5 million in the same period a
year ago. Excluding the company's baseband product area and legacy
assembly and test services operation, revenue was up 11 percent
year-over-year, from $154.9 million in the second fiscal quarter of
2005 to $172.3 million in the most recent period. On a pro forma
basis, operating income was $6.7 million in the second fiscal
quarter, yielding net income of $4.6 million, or $0.03 of pro forma
diluted earnings per share, $0.01 better than consensus estimates.
GAAP operating income for the second fiscal quarter was $2.5
million and includes a $3.6 million charge related to the expensing
of equity-based compensation in accordance with FASB Statement No.
123(R), resulting in net income of $0.9 million or $0.01 in diluted
earnings per share. Pro forma results, which are a supplement to
financial results based on GAAP, exclude certain charges including
equity-based compensation, amortization of intangible assets and
non-recurring items. The company believes these non-GAAP financial
measures provide useful information to both management and
investors by excluding certain charges and non-recurring items that
may not be indicative of Skyworks' ongoing operations and economic
performance. "Strengthening demand across our portfolio of
front-end modules, RF solutions and linear products offset typical
handset seasonality of the second fiscal quarter and enabled us to
deliver revenue and operating income above our guidance," said
David J. Aldrich, Skyworks' president and chief executive officer.
"Looking forward, we are in the midst of multiple strategic product
ramps highlighted by Helios(TM) EDGE radios at Samsung, CDMA RF
subsystems at LG, WEDGE front-end modules at Sony Ericsson, and
several new platforms at Motorola. Additionally, we are introducing
a suite of highly innovative analog semiconductors in support of a
diverse set of customers. Accordingly, we are anticipating solid
growth and operating margin leverage moving into the June quarter
with an even stronger back half of 2006." Corporate Highlights --
Retired $51 million of convertible debt at less than par value in
an accretive transaction -- Powered a suite of Samsung's recently
introduced handsets, including the E900, E770 and S400i series,
with Helios(TM) EDGE radios -- Supported LG's revolutionary
"Chocolate" series of handsets with complete radio solutions for
both CDMA and GPRS model versions -- Ramped front-end modules in
support of Sony Ericsson's highly successful family of GPRS, EDGE
and WCDMA Walkman handsets -- Commenced WCDMA transmit module
volume shipments at a fourth tier-one handset OEM Business Outlook
"We are forecasting June quarterly revenue to increase more than 5
percent sequentially driven by increasing demand across our EDGE,
CDMA and WCDMA portfolio coupled with the launch of our newest
linear products," said Allan M. Kline, Skyworks' vice president and
chief financial officer. "At the same time, we plan to improve pro
forma operating income by approximately 50 to 60 percent
sequentially and deliver $0.05 of pro forma diluted earnings per
share, demonstrating our earnings leverage and setting the stage
for a higher degree of profitability going forward." Pro forma
operating income and diluted earnings per share excludes an
estimated $4.0 million of FASB Statement No. 123(R) related
expense. Skyworks will discuss its business outlook in more detail
on its conference call to be held with investors and analysts today
at 5:00 p.m. eastern time (ET). Skyworks' Second Fiscal Quarter
2006 Conference Call Skyworks will host a conference call at 5:00
p.m. ET time today to discuss results for the second fiscal quarter
of 2006 and current business prospects. To listen to the conference
call via the Internet, please visit the Investor Relations section
of Skyworks' Web site at www.skyworksinc.com. To listen to the
conference call via telephone, please call 800.263.8506 (domestic)
or 719.457.2681 (international), security code: Skyworks. Playback
of the conference call will begin at 9 p.m. ET on Monday, April 24,
and end at 9 p.m. ET on Monday, May 1, 2006. The replay will be
available on Skyworks' Web site or by calling 888.203.1112
(domestic) or 719.457.0820 (international); access code: 4478033#.
About Skyworks Skyworks Solutions, Inc. is an industry leader in
radio solutions and precision analog semiconductors servicing a
diversified set of mobile communications applications. The
company's power amplifiers, front-end modules and direct conversion
transceivers are at the heart of many of today's leading-edge
multimedia handsets, cellular base stations and wireless networking
platforms. Skyworks also offers a portfolio of highly innovative
linear products, supporting a diverse set of automotive, broadband,
industrial and medical customers. Headquartered in Woburn, Mass.,
Skyworks is worldwide with engineering, manufacturing, sales and
service facilities throughout Asia, Europe and North America. For
more information, please visit Skyworks' Web site at:
www.skyworksinc.com. Safe Harbor Statement This news release
includes "forward-looking statements" intended to qualify for the
safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include information relating to future results of Skyworks
(including certain projections and business trends).
Forward-looking statements can often be identified by words such as
"anticipates," "expects," "intends," "believes," "plans," "may,"
"will," "continue," similar expressions, and variations or
negatives of these words. All such statements are subject to
certain risks and uncertainties that could cause actual results to
differ materially and adversely from those projected, and may
affect our future operating results, financial position and cash
flows. These risks and uncertainties include, but are not limited
to: global economic and market conditions, such as the cyclical
nature of the semiconductor industry and the markets addressed by
the company's and its customers' products; demand for and market
acceptance of new and existing products; the ability to develop,
manufacture and market innovative products in a rapidly changing
technological environment; the ability to compete with products and
prices in an intensely competitive industry; product obsolescence;
losses or curtailments of purchases from key customers or the
timing of customer inventory adjustments; the timing of new product
introductions; the availability and extent of utilization of raw
materials, critical manufacturing equipment and manufacturing
capacity; pricing pressures and other competitive factors; changes
in product mix; fluctuations in manufacturing yields; the ability
to continue to grow and maintain an intellectual property portfolio
and obtain needed licenses from third parties; the ability to
attract and retain qualified personnel; labor relations of the
company, its customers and suppliers; economic, social and
political conditions in the countries in which Skyworks, its
customers or its suppliers operate, including security and health
risks, possible disruptions in transportation networks and
fluctuations in foreign currency exchange rates; and the
uncertainties of litigation, as well as other risks and
uncertainties, including but not limited to those detailed from
time to time in the company's filings with the Securities and
Exchange Commission. These forward-looking statements are made only
as of the date hereof, and the company undertakes no obligation to
update or revise the forward-looking statements, whether as a
result of new information, future events or otherwise. Note to
Editors: Skyworks, Skyworks Solutions and Helios are trademarks or
registered trademarks of Skyworks Solutions, Inc. or its
subsidiaries in the United States and in other countries. All other
brands and names listed are trademarks of their respective
companies. -0- *T SKYWORKS SOLUTIONS, INC. UNAUDITED GAAP
CONSOLIDATED STATEMENT OF OPERATIONS -------------------
------------------- Three Months Ended Six Months Ended
------------------- ------------------- March 31, April 1, March
31, April 1, (in thousands, except per share amounts) 2006 2005
2006 2005 --------- --------- --------- --------- Net revenues
$185,234 $190,505 $383,559 $410,665 Cost of goods sold 115,884
117,906 239,486 250,047 --------- --------- --------- ---------
Gross profit 69,350 72,599 144,073 160,618 Operating expenses:
Research and development 40,557 38,676 82,987 75,789 Selling,
general and administrative 25,710 25,058 48,963 52,282 Amortization
of intangibles 536 545 1,072 1,282 --------- --------- ---------
--------- Total operating expenses 66,803 64,279 133,022 129,353
Operating income 2,547 8,320 11,051 31,265 Interest expense (4,446)
(3,635) (8,258) (7,168) Other income, net 2,430 1,067 4,749 2,188
--------- --------- --------- --------- Income before income taxes
531 5,752 7,542 26,285 (Credit) provision for income taxes (395)
4,508 2,329 11,124 --------- --------- --------- --------- Net
income $926 $1,244 $5,213 $15,161 ========= ========= =========
========= Earnings per share: Basic $0.01 $0.01 $0.03 $0.10 Diluted
$0.01 $0.01 $0.03 $0.10 Weighted average shares: Basic 159,084
157,235 158,828 156,837 Diluted 159,629 158,435 159,212 158,426
SKYWORKS SOLUTIONS, INC. UNAUDITED RECONCILIATION OF PRO FORMA
NON-GAAP MEASURES ------------------ ------------------ Three
Months Ended Six Months Ended ------------------ ------------------
March 31, April 1, March 31, April 1, (in thousands) 2006 2005 2006
2005 --------- -------- --------- -------- GAAP operating income
$2,547 $8,320 $11,051 $31,265 Stock-based compensation expense (a)
3,588 - 6,619 - Restructuring charges (b) - - 1,796 - Lease and
leasehold improvements (c) - 886 - 886 Amortization of intangible
assets 536 545 1,072 1,282 --------- -------- --------- --------
Pro forma operating income $6,671 $9,751 $20,538 $33,433 =========
======== ========= ======== ------------------ ------------------
Three Months Ended Six Months Ended ------------------
------------------ March 31, April 1, March 31, April 1, (in
thousands) 2006 2005 2006 2005 --------- -------- ---------
-------- GAAP net income $926 $1,244 $5,213 $15,161 Stock-based
compensation expense (a) 3,588 - 6,619 - Restructuring charges (b)
- - 1,796 - Lease and leasehold improvements (c) - 886 - 886
Amortization of intangible assets 536 545 1,072 1,282 Deferred
financing expense adjustment (d) 572 - 572 - Tax adjustments (e)
(988) 3,299 179 9,189 --------- -------- --------- -------- Pro
forma net income $4,634 $5,974 $15,451 $26,518 ========= ========
========= ======== ------------------ ------------------ Three
Months Ended Six Months Ended ------------------ ------------------
March 31, April 1, March 31, April 1, 2006 2005 2006 2005 ---------
-------- --------- -------- GAAP net income per share, diluted
$0.01 $0.01 $0.03 $0.10 Stock-based compensation expense (a) 0.02 -
0.04 - Restructuring charges (b) - - 0.01 - Lease and leasehold
improvements (c) - 0.01 - - Amortization of intangible assets - -
0.01 0.01 Deferred financing expense adjustment (d) 0.01 - 0.01 -
Tax adjustments (e) (0.01) 0.02 - 0.06 --------- -------- ---------
-------- Pro forma net income per share, diluted $0.03 $0.04 $0.10
$0.17 ========= ======== ========= ======== (a) These charges
represent expense recognized in accordance with FASB Statement No.
123R, Share-Based Payment. Approximately $0.6 million, $1.5 million
and $1.5 million were included in cost of goods sold, research and
development expense and selling, general and administrative
expense, respectively, for the three months ended March 31, 2006.
Approximately $0.9 million, $2.9 million and $2.8 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively, for
the six months ended March 31, 2006. (b) The charges recorded
during the first quarter of fiscal 2006 primarily related to a
continued reduction in the level of activity within the Company's
cellular baseband product area. Approximately $0.4 million, $1.2
million and $0.2 million were included in cost of goods sold,
research and development expense and selling, general and
administrative expense, respectively. (c) These charges represent
an aggregate adjustment for the correction of an error in the
manner in which the Company accounted for scheduled rent increases
and amortization of leasehold improvements. (d) This charge
represents a reduction in deferred financing costs associated with
the redemption of $50.7 million of the Company's 4.75% convertible
subordinated notes. (e) During the three months ended March 31,
2006, this adjustment represents the reversal of the non-cash tax
charge primarily related to the utilization of pre-merger deferred
tax assets recorded in the first quarter of fiscal 2006. During the
six months ended March 31, 2006, this adjustment relates to foreign
exchange translation associated with the Company's foreign deferred
tax assets. During the second quarter of fiscal 2005 and for the
six months ended April 1, 2005, these charges primarily represent
non-cash charges related to the utilization of pre-merger deferred
tax assets and a reduction in the expected benefit of foreign
deferred tax assets resulting from a change in regulated foreign
tax rates. The above pro forma non-GAAP measures are based upon our
unaudited consolidated statements of operations for the periods
shown. These non-GAAP financial measures are provided to enhance
the user's overall understanding of our current financial
performance and our prospects for the future. Specifically, we
believe the non-GAAP financial measures provide useful information
to both management and investors by excluding certain charges and
non-recurring items that we believe are not indicative of our
ongoing operations and economic performance. Additionally, since we
have historically reported non- GAAP results to the investment
community, the inclusion of non-GAAP financial measures provides
consistency in our financial reporting. Further, these non-GAAP
financial measures are one of the primary indicators management
uses for planning and forecasting in future periods. The
presentation of this additional information should not be
considered in isolation or as a substitute for results prepared in
accordance with accounting principles generally accepted in the
United States. SKYWORKS SOLUTIONS, INC. UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEET March 31, Sept. 30, (in thousands) 2006
2005 ----------- ----------- Assets Current assets: Cash and cash
equivalents $122,767 $122,535 Short-term investments 60,255 113,325
Accounts receivable, net 172,792 171,454 Inventories 92,840 77,400
Prepaid expenses and other current assets 12,469 11,268 Property,
plant and equipment, net 158,986 150,838 Goodwill and intangible
assets, net 508,630 511,119 Other assets 29,657 29,904 -----------
----------- Total assets $1,158,396 $1,187,843 ===========
=========== Liabilities and Equity Current liabilities: Short-term
debt $50,000 $50,000 Accounts payable 74,732 72,276 Accrued
liabilities and other current liabilities 36,684 35,959 Long-term
debt 179,335 230,000 Other long-term liabilities 7,279 7,044
Stockholders' equity 810,366 792,564 ----------- ----------- Total
liabilities and equity $1,158,396 $1,187,843 ===========
=========== *T
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