Skyworks Solutions, Inc. (NASDAQ:SWKS), an innovator of high
performance analog and mixed signal semiconductors enabling mobile
connectivity, today announced fourth fiscal quarter pro forma
revenue of $198.2 million, within the guidance range of $197 to
$200 million previously communicated. Revenue in the core analog
and RF business was $194 million, up 18 percent year-over-year and
4 percent sequentially. On October 2, 2006, Skyworks announced it
was immediately ceasing its baseband operations and implementing a
strategic restructuring (please see
www.skyworksinc.com/pressroom.asp for more details). GAAP revenue
in the fourth fiscal quarter was $193.1 million and includes a
restructuring-related revenue reserve of $5.0 million for future
potential baseband product returns as the company exited this
business. On a pro forma basis, operating income was $11.6 million
in the fourth fiscal quarter, up 31 percent year-over-year and 15
percent sequentially, while net income was $10.4 million, or $0.07
of diluted earnings per share - - - $0.02 ahead of consensus
estimates. The GAAP operating loss for the fourth fiscal quarter of
$83.2 million includes $90 million of asset impairments, severance
and shut-down costs related to the company�s previously announced
exit of the baseband product area, as well as $3.9 million of
equity-based compensation in accordance with FASB Statement No.
123R. Additionally, the company recorded a $12.0 million non-cash
charge as part of an international tax reorganization designed to
lower future cash tax liabilities. In turn, the GAAP net loss in
the fourth fiscal quarter was $96.4 million. More than two thirds
of the restructuring charges were non-cash. Skyworks generated $22
million of cash flow from operations and the company�s cash and
cash equivalents as well as short-term investments increased by $17
million sequentially in the fourth fiscal quarter to $171.2
million. �Skyworks enters fiscal 2007 a stronger and far more
profitable company. Following our decision to exit the baseband
product area and the successful implementation of our global
restructuring, we are now focused exclusively on our core analog
and RF business where Skyworks possesses a clear competitive
advantage,� said David J. Aldrich, Skyworks� president and chief
executive officer. �Post restructuring, we plan to deliver
above-market growth driven by our portfolio of differentiated
linear products, leadership front-end modules and highly integrated
Helios� radios. At the same time, we intend to demonstrate our
financial leverage through gross margin expansion, increased asset
turns and significant cash flow generation - - - all towards
becoming the most profitable company in the sector.� Fourth Fiscal
Quarter Highlights Increased dollar content at Sony Ericsson
through highly integrated Intera� front-end modules spanning their
GSM/GPRS, EDGE and WCDMA Walkman� platforms Powered Cingular�s
increasingly popular Pantech C300 platform, the world�s smallest
camera flip phone, with ultra compact power amplifiers More than
doubled WCDMA power amplifier shipments sequentially Received
production orders from Motorola for front-end modules in support of
next-generation EDGE handsets Shipped more than five million
Helios� transceivers, up from two million in the prior quarter and
100 thousand units a year ago Ramped Helios� EDGE radios at Samsung
across 20 models Introduced a new line of active mixers with broad
frequency ranges powering infrastructure, medical, scientific and
industrial applications Awarded high volume contract for high
isolation switches for 3G base station reference designs Commenced
shipments of 802.11n wireless networking solutions in support of
Broadcom�s Intensifi� chipset Business Outlook �For the first
fiscal quarter of 2007, we intend to sequentially expand gross
margins by 100 basis points to 38.5 percent, approximately double
pro forma operating income and deliver pro forma diluted earnings
per share in the range of $0.12 to $0.14. We plan to achieve this
financial performance with modest revenue growth in our core
business, reflecting our share gains and new product ramps, as well
as the realities of the broader market,� said Allan M. Kline,
Skyworks� vice president and chief financial officer. �Further, we
plan to again generate positive cash flow from operations even as
we complete our strategic restructuring.� Estimated pro forma
earnings per share exclude approximately $7 million of charges
primarily for lease terminations related to the previously
announced restructuring and $3 million of FASB Statement No.
123R-related expenses. Pro forma results, which are a supplement to
financial results based on GAAP, exclude certain charges including
equity-based compensation, amortization of intangible assets,
baseband exit charges, 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. Skyworks�
Fourth Fiscal Quarter 2006 Conference Call Skyworks will host a
conference call at 5:00 p.m. Eastern time today to discuss results
for the fourth fiscal quarter of 2006 and its business outlook. To
listen to the conference call via the Internet, please visit the
investor relations section of Skyworks' Web site. To listen to the
conference call via telephone, please call 877.704.5386 (domestic)
or 913.312.1302 (international), security code: Skyworks. Playback
of the conference call will begin at 9 p.m. Eastern time on
Wednesday, Nov. 1, and end at 9 p.m. ET on Wednesday, Nov. 8, 2006.
The replay will be available on Skyworks' Web site or by calling
888.203.1112 (domestic) or 719.457.0820 (international); access
code: 4001057. About Skyworks Skyworks Solutions, Inc. is an
innovator of high performance analog and mixed signal
semiconductors enabling mobile connectivity. The company's power
amplifiers, front-end modules and direct conversion radios are at
the heart of many of today's leading-edge multimedia handsets.
Leveraging core technologies, Skyworks also offers a diverse
portfolio of linear products that support automotive, broadband,
cellular infrastructure, industrial and medical applications.
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 and expectations 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 our, and our customers',
products; our ability to develop, manufacture and market innovative
products in a highly price competitive and rapidly changing
technological environment; fluctuations in our manufacturing yields
due to our complex and specialized manufacturing processes;
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
availability and pricing of third party semiconductor foundry,
assembly and test capacity and raw materials; our ability to timely
and accurately predict market requirements and evolving industry
standards, and to identify opportunities in new markets; our
ability to rapidly develop new products and avoid product
obsolescence; 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; lengthy product development cycles that impact the
timing of new product introductions; losses or curtailments of
purchases or payments from key customers, or the timing of customer
inventory adjustments; the timing, rescheduling or cancellation of
significant customer orders and our ability, as well as the ability
of our customers, to manage inventory; our reliance on a several
key customers for a large percentage of our sales; unfavorable
changes in product mix; the quality of our products and any
remediation costs; shorter than expected product life cycles;
problems or delays that we may face in shifting our products to
smaller geometry process technologies and in achieving higher
levels of design integration; economic, social and political
conditions in the countries in which we, our customers or our
suppliers operate, including security and health risks, possible
disruptions in transportation networks and fluctuations in foreign
currency exchange rates; our ability to continue to grow and
maintain an intellectual property portfolio and obtain needed
licenses from third parties; and the uncertainties of litigation,
including disputes over intellectual property, as well as other
risks and uncertainties, including but not limited to those
detailed from time to time in our filings with the Securities and
Exchange Commission. These forward-looking statements are made only
as of the date hereof, and we undertake 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, Helios and Intera 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. SKYWORKS
SOLUTIONS, INC. UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS � �
� � � � � � Three Months Ended Year Ended � Sept. 29, Sept. 30,
Sept. 29, Sept. 30, (in thousands, except per share amounts) 2006�
2005� 2006� 2005� � Pro forma net revenues $ 198,171� $ 190,174� $
778,788� $ 792,371� Baseband exit adjustments * (5,038) -� (5,038)
-� GAAP net revenues $ 193,133� $ 190,174� $ 773,750� $ 792,371� �
� Net revenues $ 193,133� $ 190,174� $ 773,750� $ 792,371� Cost of
goods sold 147,874� 120,894� 511,071� 484,599� Gross profit 45,259�
69,280� 262,679� 307,772� � Operating expenses: Research and
development 40,500� 36,603� 164,106� 152,215� Selling, general and
administrative 60,505� 25,043� 135,801� 103,070� Restructuring
& other charges 26,955� -� 26,955� -� Amortization of
intangibles 536� 536� 2,144� 2,354� Total operating expenses
128,496� 62,182� 329,006� 257,639� � Operating (loss) income
(83,237) 7,098� (66,327) 50,133� � Interest expense (3,308) (3,746)
(14,797) (14,597) Other income, net 1,779� 1,729� 8,350� 5,453�
(Loss) income before income taxes (84,766) 5,081� (72,774) 40,989�
Provision for income taxes 11,604� 2,020� 15,378� 15,378� Net
(loss) income $ (96,370) $ 3,061� $ (88,152) $ 25,611� � (Loss)
earnings per share: Basic $ (0.60) $ 0.02� $ (0.55) $ 0.16� Diluted
$ (0.60) $ 0.02� $ (0.55) $ 0.16� Weighted average shares: Basic
160,278� 158,488� 159,408� 157,453� Diluted 160,278� 159,803�
159,408� 158,857� � * Revenue adjustments of $5.0 million resulted
from the exit of our baseband product area. SKYWORKS SOLUTIONS,
INC. UNAUDITED RECONCILIATION OF PRO FORMA NON-GAAP MEASURES � � �
� � � � � Three Months Ended Year Ended � Sept. 29, Sept. 30, Sept.
29, Sept. 30, (in thousands) 2006� 2005� 2006� 2005� � GAAP net
revenues $ 193,133� $ 190,174� $ 773,750� $ 792,371� Revenue
adjustments [b] 5,038� -� 5,038� -� Pro forma net revenues $
198,171� $ 190,174� $ 778,788� $ 792,371� � � � � � � � � Three
Months Ended Year Ended � Sept. 29, Sept. 30, Sept. 29, Sept. 30,
(in thousands) 2006� 2005� 2006� 2005� � GAAP operating (loss)
income $ (83,237) $ 7,098� $ (66,327) $ 50,133� Share-based
compensation expense [a] 3,930� -� 14,219� -� Revenue adjustments
[b] 5,038� -� 5,038� -� Cost of goods sold adjustments [b] 23,256�
998� 23,662� 998� Research and development adjustments [b] -� -�
1,211� -� Selling, general and administrative adjustments [b]
35,138� 267� 35,317� 267� Restructuring & other charges [b]
26,955� -� 26,955� -� Lease and leasehold improvements [c] -� -� -�
886� Amortization of intangible assets 536� 536� 2,144� 2,354� Pro
forma operating income $ 11,616� $ 8,899� $ 42,219� $ 54,638� � � �
� � � � � Three Months Ended Year Ended � Sept. 29, Sept. 30, Sept.
29, Sept. 30, (in thousands) 2006� 2005� 2006� 2005� � GAAP net
(loss) income $ (96,370) $ 3,061� $ (88,152) $ 25,611� Share-based
compensation expense [a] 3,930� -� 14,219� -� Revenue adjustments
[b] 5,038� -� 5,038� -� Cost of goods sold adjustments [b] 23,256�
998� 23,662� 998� Research and development adjustments [b] -� -�
1,211� -� Selling, general and administrative adjustments [b]
35,138� 267� 35,317� 267� Restructuring & other charges [b]
26,955� -� 26,955� -� Lease and leasehold improvements [c] -� -� -�
886� Amortization of intangible assets 536� 536� 2,144� 2,354�
Deferred financing expense adjustment [d] -� -� 572� -� Tax
adjustments [e] 11,966� 1,850� 12,938� 12,550� Pro forma net income
$ 10,449� $ 6,712� $ 33,904� $ 42,666� � � � � � � � � Three Months
Ended Year Ended � Sept. 29, Sept. 30, Sept. 29, Sept. 30, 2006�
2005� 2006� 2005� � GAAP net (loss) income per share, diluted $
(0.60) $ 0.02� $ (0.55) $ 0.16� Share-based compensation expense
[a] 0.02� -� 0.09� -� Revenue adjustments [b] 0.03� -� 0.03� -�
Cost of goods sold adjustments [b] 0.15� 0.01� 0.15� 0.01� Research
and development adjustments [b] -� -� 0.01� -� Selling, general and
administrative adjustments [b] 0.22� -� 0.22� -� Restructuring
& other charges [b] 0.17� -� 0.17� -� Lease and leasehold
improvements [c] -� -� -� 0.01� Amortization of intangible assets
-� -� 0.01� 0.01� Tax adjustments [e] 0.08� 0.01� 0.08� 0.08� Pro
forma net income per share, diluted $ 0.07� $ 0.04� $ 0.21� $ 0.27�
� � � � � � � � � � � � � � [a] These charges represent expense
recognized in accordance with FASB Statement No. 123R, Share-Based
Payment. Approximately $0.7 million, $1.8 million and $1.4 million
were included in cost of goods sold, research and development
expense and selling, general and administrative expense,
respectively, for the three months ended September 29, 2006.
Approximately $2.2 million, $6.3 million and $5.7 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively, for
the fiscal year ended September 29, 2006. � [b] On October 2, 2006,
the Company announced that it was exiting its baseband product area
in order to focus on its core business encompassing linear
products, power amplifiers, front-end modules and radio solutions.
Due to accounting classifications, the charges associated with the
baseband product area are recorded in various lines and are
summarized as follows: � Revenue adjustments of $5.0 million
resulted from the exit of our baseband product area. � Cost of
goods sold adjustments includes approximately $19.8 million of
inventory charges and reserves and $3.5 million of inventory
related contractual obligations. � Selling, general and
administrative adjustments of $35.1 million represent bad debt
expense primarily related to two customers: Vitelcom Mobile and an
Asian component distributor, on specific accounts receivable
associated with baseband product. � Restructuring and other charges
recorded during the three months ended September 29, 2006 primarily
consisted of $13.1 million related to severance and benefits, $7.4
million related to the write-down of technology licenses and design
software associated with the baseband product area, $4.7 million
related to the write-down of baseband related long-lived assets and
$1.8 million related to other charges. � 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
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. � The charges recorded during the fourth
quarter of fiscal 2005 related to the exit of Conexant's Assembly
and Test business. Approximately, $1.0 million and $0.3 million
were included in cost of goods sold and selling, general and
administrative expenses, respectively. � Total charges recorded
during the three months ended September 29, 2006 associated with
the Company's announcement to exit its baseband product area
totaled $90.4 million. � [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 and the fiscal year ended September 29,
2006, this adjustment primarily relates to an international tax
reorganization. No other pro forma adjustments are tax-effected
because we have a full valuation allowance against our deferred tax
assets. During the fourth quarter of fiscal 2005 and fiscal year
ended September 30, 2005, these charges primarily represent a
non-cash tax charge related to the utilization of pre-merger
deferred tax assets. � � 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 � Sept. 29, Sept. 30, (in thousands)
2006� 2005� Assets Current assets: Cash and cash equivalents $
143,051� $ 122,535� Short-term investments 28,150� 113,325�
Accounts receivable, net 158,798� 171,454� Inventories 81,529�
77,400� Prepaid expenses and other current assets 9,315� 11,268�
Property, plant and equipment, net 149,906� 150,838� Goodwill and
intangible assets, net 508,975� 511,119� Other assets 10,295�
29,904� Total assets $ 1,090,019� $ 1,187,843� � Liabilities and
Equity Current liabilities: Short-term debt $ 50,000� $ 50,000�
Accounts payable 73,071� 72,276� Accrued liabilities and other
current liabilities 52,072� 35,959� Long-term debt 179,335�
230,000� Other long-term liabilities 6,448� 7,044� Stockholders'
equity 729,093� 792,564� Total liabilities and equity $ 1,090,019�
$ 1,187,843� Skyworks Solutions, Inc. (NASDAQ:SWKS), an innovator
of high performance analog and mixed signal semiconductors enabling
mobile connectivity, today announced fourth fiscal quarter pro
forma revenue of $198.2 million, within the guidance range of $197
to $200 million previously communicated. Revenue in the core analog
and RF business was $194 million, up 18 percent year-over-year and
4 percent sequentially. On October 2, 2006, Skyworks announced it
was immediately ceasing its baseband operations and implementing a
strategic restructuring (please see
www.skyworksinc.com/pressroom.asp for more details). GAAP revenue
in the fourth fiscal quarter was $193.1 million and includes a
restructuring-related revenue reserve of $5.0 million for future
potential baseband product returns as the company exited this
business. On a pro forma basis, operating income was $11.6 million
in the fourth fiscal quarter, up 31 percent year-over-year and 15
percent sequentially, while net income was $10.4 million, or $0.07
of diluted earnings per share - - - $0.02 ahead of consensus
estimates. The GAAP operating loss for the fourth fiscal quarter of
$83.2 million includes $90 million of asset impairments, severance
and shut-down costs related to the company's previously announced
exit of the baseband product area, as well as $3.9 million of
equity-based compensation in accordance with FASB Statement No.
123R. Additionally, the company recorded a $12.0 million non-cash
charge as part of an international tax reorganization designed to
lower future cash tax liabilities. In turn, the GAAP net loss in
the fourth fiscal quarter was $96.4 million. More than two thirds
of the restructuring charges were non-cash. Skyworks generated $22
million of cash flow from operations and the company's cash and
cash equivalents as well as short-term investments increased by $17
million sequentially in the fourth fiscal quarter to $171.2
million. "Skyworks enters fiscal 2007 a stronger and far more
profitable company. Following our decision to exit the baseband
product area and the successful implementation of our global
restructuring, we are now focused exclusively on our core analog
and RF business where Skyworks possesses a clear competitive
advantage," said David J. Aldrich, Skyworks' president and chief
executive officer. "Post restructuring, we plan to deliver
above-market growth driven by our portfolio of differentiated
linear products, leadership front-end modules and highly integrated
Helios(TM) radios. At the same time, we intend to demonstrate our
financial leverage through gross margin expansion, increased asset
turns and significant cash flow generation - - - all towards
becoming the most profitable company in the sector." Fourth Fiscal
Quarter Highlights -- Increased dollar content at Sony Ericsson
through highly integrated Intera(TM) front-end modules spanning
their GSM/GPRS, EDGE and WCDMA Walkman(R) platforms -- Powered
Cingular's increasingly popular Pantech C300 platform, the world's
smallest camera flip phone, with ultra compact power amplifiers --
More than doubled WCDMA power amplifier shipments sequentially --
Received production orders from Motorola for front-end modules in
support of next-generation EDGE handsets -- Shipped more than five
million Helios(TM) transceivers, up from two million in the prior
quarter and 100 thousand units a year ago -- Ramped Helios(TM) EDGE
radios at Samsung across 20 models -- Introduced a new line of
active mixers with broad frequency ranges powering infrastructure,
medical, scientific and industrial applications -- Awarded high
volume contract for high isolation switches for 3G base station
reference designs -- Commenced shipments of 802.11n wireless
networking solutions in support of Broadcom's Intensifi(TM) chipset
Business Outlook "For the first fiscal quarter of 2007, we intend
to sequentially expand gross margins by 100 basis points to 38.5
percent, approximately double pro forma operating income and
deliver pro forma diluted earnings per share in the range of $0.12
to $0.14. We plan to achieve this financial performance with modest
revenue growth in our core business, reflecting our share gains and
new product ramps, as well as the realities of the broader market,"
said Allan M. Kline, Skyworks' vice president and chief financial
officer. "Further, we plan to again generate positive cash flow
from operations even as we complete our strategic restructuring."
Estimated pro forma earnings per share exclude approximately $7
million of charges primarily for lease terminations related to the
previously announced restructuring and $3 million of FASB Statement
No. 123R-related expenses. Pro forma results, which are a
supplement to financial results based on GAAP, exclude certain
charges including equity-based compensation, amortization of
intangible assets, baseband exit charges, 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. Skyworks'
Fourth Fiscal Quarter 2006 Conference Call Skyworks will host a
conference call at 5:00 p.m. Eastern time today to discuss results
for the fourth fiscal quarter of 2006 and its business outlook. To
listen to the conference call via the Internet, please visit the
investor relations section of Skyworks' Web site. To listen to the
conference call via telephone, please call 877.704.5386 (domestic)
or 913.312.1302 (international), security code: Skyworks. Playback
of the conference call will begin at 9 p.m. Eastern time on
Wednesday, Nov. 1, and end at 9 p.m. ET on Wednesday, Nov. 8, 2006.
The replay will be available on Skyworks' Web site or by calling
888.203.1112 (domestic) or 719.457.0820 (international); access
code: 4001057. About Skyworks Skyworks Solutions, Inc. is an
innovator of high performance analog and mixed signal
semiconductors enabling mobile connectivity. The company's power
amplifiers, front-end modules and direct conversion radios are at
the heart of many of today's leading-edge multimedia handsets.
Leveraging core technologies, Skyworks also offers a diverse
portfolio of linear products that support automotive, broadband,
cellular infrastructure, industrial and medical applications.
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 and expectations 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 our, and our customers',
products; our ability to develop, manufacture and market innovative
products in a highly price competitive and rapidly changing
technological environment; fluctuations in our manufacturing yields
due to our complex and specialized manufacturing processes;
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
availability and pricing of third party semiconductor foundry,
assembly and test capacity and raw materials; our ability to timely
and accurately predict market requirements and evolving industry
standards, and to identify opportunities in new markets; our
ability to rapidly develop new products and avoid product
obsolescence; 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; lengthy product development cycles that impact the
timing of new product introductions; losses or curtailments of
purchases or payments from key customers, or the timing of customer
inventory adjustments; the timing, rescheduling or cancellation of
significant customer orders and our ability, as well as the ability
of our customers, to manage inventory; our reliance on a several
key customers for a large percentage of our sales; unfavorable
changes in product mix; the quality of our products and any
remediation costs; shorter than expected product life cycles;
problems or delays that we may face in shifting our products to
smaller geometry process technologies and in achieving higher
levels of design integration; economic, social and political
conditions in the countries in which we, our customers or our
suppliers operate, including security and health risks, possible
disruptions in transportation networks and fluctuations in foreign
currency exchange rates; our ability to continue to grow and
maintain an intellectual property portfolio and obtain needed
licenses from third parties; and the uncertainties of litigation,
including disputes over intellectual property, as well as other
risks and uncertainties, including but not limited to those
detailed from time to time in our filings with the Securities and
Exchange Commission. These forward-looking statements are made only
as of the date hereof, and we undertake 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, Helios and Intera 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 CONSOLIDATED STATEMENT OF
OPERATIONS -------------------- -------------------- Three Months
Ended Year Ended -------------------- -------------------- Sept.
29, Sept. 30, Sept. 29, Sept. 30, (in thousands, except per share
amounts) 2006 2005 2006 2005 --------- --------- ---------
--------- Pro forma net revenues $ 198,171 $ 190,174 $ 778,788 $
792,371 Baseband exit adjustments * (5,038) - (5,038) - ---------
--------- --------- --------- GAAP net revenues $ 193,133 $ 190,174
$ 773,750 $ 792,371 ========= ========= ========= ========= Net
revenues $ 193,133 $ 190,174 $ 773,750 $ 792,371 Cost of goods sold
147,874 120,894 511,071 484,599 --------- --------- ---------
--------- Gross profit 45,259 69,280 262,679 307,772 Operating
expenses: Research and development 40,500 36,603 164,106 152,215
Selling, general and administrative 60,505 25,043 135,801 103,070
Restructuring & other charges 26,955 - 26,955 - Amortization of
intangibles 536 536 2,144 2,354 --------- --------- ---------
--------- Total operating expenses 128,496 62,182 329,006 257,639
Operating (loss) income (83,237) 7,098 (66,327) 50,133 Interest
expense (3,308) (3,746) (14,797) (14,597) Other income, net 1,779
1,729 8,350 5,453 --------- --------- --------- --------- (Loss)
income before income taxes (84,766) 5,081 (72,774) 40,989 Provision
for income taxes 11,604 2,020 15,378 15,378 --------- ---------
--------- --------- Net (loss) income $ (96,370) $ 3,061 $ (88,152)
$ 25,611 ========= ========= ========= ========= (Loss) earnings
per share: Basic $ (0.60) $ 0.02 $ (0.55) $ 0.16 Diluted $ (0.60) $
0.02 $ (0.55) $ 0.16 Weighted average shares: Basic 160,278 158,488
159,408 157,453 Diluted 160,278 159,803 159,408 158,857 * Revenue
adjustments of $5.0 million resulted from the exit of our baseband
product area. *T -0- *T SKYWORKS SOLUTIONS, INC. UNAUDITED
RECONCILIATION OF PRO FORMA NON-GAAP MEASURES --------------------
-------------------- Three Months Ended Year Ended
-------------------- -------------------- Sept. 29, Sept. 30, Sept.
29, Sept. 30, (in thousands) 2006 2005 2006 2005 ---------
--------- --------- --------- GAAP net revenues $ 193,133 $ 190,174
$ 773,750 $ 792,371 Revenue adjustments (b) 5,038 - 5,038 -
--------- --------- --------- --------- Pro forma net revenues $
198,171 $ 190,174 $ 778,788 $ 792,371 ========= ========= =========
========= -------------------- -------------------- Three Months
Ended Year Ended -------------------- -------------------- Sept.
29, Sept. 30, Sept. 29, Sept. 30, (in thousands) 2006 2005 2006
2005 --------- --------- --------- --------- GAAP operating (loss)
income $ (83,237) $ 7,098 $ (66,327) $ 50,133 Share-based
compensation expense (a) 3,930 - 14,219 - Revenue adjustments (b)
5,038 - 5,038 - Cost of goods sold adjustments (b) 23,256 998
23,662 998 Research and development adjustments (b) - - 1,211 -
Selling, general and administrative adjustments (b) 35,138 267
35,317 267 Restructuring & other charges (b) 26,955 - 26,955 -
Lease and leasehold improvements (c) - - - 886 Amortization of
intangible assets 536 536 2,144 2,354 --------- --------- ---------
--------- Pro forma operating income $ 11,616 $ 8,899 $ 42,219 $
54,638 ========= ========= ========= ========= --------------------
-------------------- Three Months Ended Year Ended
-------------------- -------------------- Sept. 29, Sept. 30, Sept.
29, Sept. 30, (in thousands) 2006 2005 2006 2005 ---------
--------- --------- --------- GAAP net (loss) income $ (96,370) $
3,061 $ (88,152) $ 25,611 Share-based compensation expense (a)
3,930 - 14,219 - Revenue adjustments (b) 5,038 - 5,038 - Cost of
goods sold adjustments (b) 23,256 998 23,662 998 Research and
development adjustments (b) - - 1,211 - Selling, general and
administrative adjustments (b) 35,138 267 35,317 267 Restructuring
& other charges (b) 26,955 - 26,955 - Lease and leasehold
improvements (c) - - - 886 Amortization of intangible assets 536
536 2,144 2,354 Deferred financing expense adjustment (d) - - 572 -
Tax adjustments (e) 11,966 1,850 12,938 12,550 --------- ---------
--------- --------- Pro forma net income $ 10,449 $ 6,712 $ 33,904
$ 42,666 ========= ========= ========= =========
-------------------- -------------------- Three Months Ended Year
Ended -------------------- -------------------- Sept. 29, Sept. 30,
Sept. 29, Sept. 30, 2006 2005 2006 2005 --------- ---------
--------- --------- GAAP net (loss) income per share, diluted $
(0.60) $ 0.02 $ (0.55) $ 0.16 Share-based compensation expense (a)
0.02 - 0.09 - Revenue adjustments (b) 0.03 - 0.03 - Cost of goods
sold adjustments (b) 0.15 0.01 0.15 0.01 Research and development
adjustments (b) - - 0.01 - Selling, general and administrative
adjustments (b) 0.22 - 0.22 - Restructuring & other charges (b)
0.17 - 0.17 - Lease and leasehold improvements (c) - - - 0.01
Amortization of intangible assets - - 0.01 0.01 Tax adjustments (e)
0.08 0.01 0.08 0.08 --------- --------- --------- --------- Pro
forma net income per share, diluted $ 0.07 $ 0.04 $ 0.21 $ 0.27
========= ========= ========= =========
----------------------------------------------------------------------
*T -0- *T (a) These charges represent expense recognized in
accordance with FASB Statement No. 123R, Share-Based Payment.
Approximately $0.7 million, $1.8 million and $1.4 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively, for
the three months ended September 29, 2006. Approximately $2.2
million, $6.3 million and $5.7 million were included in cost of
goods sold, research and development expense and selling, general
and administrative expense, respectively, for the fiscal year ended
September 29, 2006. (b) On October 2, 2006, the Company announced
that it was exiting its baseband product area in order to focus on
its core business encompassing linear products, power amplifiers,
front-end modules and radio solutions. Due to accounting
classifications, the charges associated with the baseband product
area are recorded in various lines and are summarized as follows:
Revenue adjustments of $5.0 million resulted from the exit of our
baseband product area. Cost of goods sold adjustments includes
approximately $19.8 million of inventory charges and reserves and
$3.5 million of inventory related contractual obligations. Selling,
general and administrative adjustments of $35.1 million represent
bad debt expense primarily related to two customers: Vitelcom
Mobile and an Asian component distributor, on specific accounts
receivable associated with baseband product. Restructuring and
other charges recorded during the three months ended September 29,
2006 primarily consisted of $13.1 million related to severance and
benefits, $7.4 million related to the write-down of technology
licenses and design software associated with the baseband product
area, $4.7 million related to the write-down of baseband related
long-lived assets and $1.8 million related to other charges. 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 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. The charges recorded during
the fourth quarter of fiscal 2005 related to the exit of Conexant's
Assembly and Test business. Approximately, $1.0 million and $0.3
million were included in cost of goods sold and selling, general
and administrative expenses, respectively. Total charges recorded
during the three months ended September 29, 2006 associated with
the Company's announcement to exit its baseband product area
totaled $90.4 million. (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 and the fiscal year ended September 29,
2006, this adjustment primarily relates to an international tax
reorganization. No other pro forma adjustments are tax-effected
because we have a full valuation allowance against our deferred tax
assets. During the fourth quarter of fiscal 2005 and fiscal year
ended September 30, 2005, these charges primarily represent a non-
cash tax charge related to the utilization of pre-merger deferred
tax assets. 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. *T -0- *T SKYWORKS SOLUTIONS, INC. UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET Sept. 29, Sept. 30, (in
thousands) 2006 2005 ---------- ---------- Assets Current assets:
Cash and cash equivalents $ 143,051 $ 122,535 Short-term
investments 28,150 113,325 Accounts receivable, net 158,798 171,454
Inventories 81,529 77,400 Prepaid expenses and other current assets
9,315 11,268 Property, plant and equipment, net 149,906 150,838
Goodwill and intangible assets, net 508,975 511,119 Other assets
10,295 29,904 ---------- ---------- Total assets $1,090,019
$1,187,843 ========== ========== Liabilities and Equity Current
liabilities: Short-term debt $ 50,000 $ 50,000 Accounts payable
73,071 72,276 Accrued liabilities and other current liabilities
52,072 35,959 Long-term debt 179,335 230,000 Other long-term
liabilities 6,448 7,044 Stockholders' equity 729,093 792,564
---------- ---------- Total liabilities and equity $1,090,019
$1,187,843 ========== ========== *T
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