Skyworks Solutions, Inc. (NASDAQ:SWKS), an innovator of high
reliability analog semiconductors enabling a broad range of end
markets, today reported second fiscal quarter 2012 results. Revenue
for the quarter was $364.7 million, up 12 percent when compared to
revenue of $325.4 million in the second fiscal quarter of 2011 and
exceeding the Company’s guidance of $360.0 million.
On a non-GAAP basis, operating income for the second fiscal
quarter was $83.9 million and diluted earnings per share was $0.42
vs. guidance of $0.40. On a GAAP basis, operating income for the
second fiscal quarter of 2012 was $43.8 million and diluted
earnings per share was $0.18.
“Skyworks continues to outperform our addressable markets
through diversification, content growth and market share gains,”
said David J. Aldrich, president and chief executive officer of
Skyworks. “At the highest level, we’re capitalizing on the mobile
Internet and demand for ubiquitous connectivity by solving our
customers’ size, performance, complexity and battery life
challenges. As a result, Skyworks is at the heart of the world’s
most popular smartphones, tablets, ultrabooks and e-readers as well
as within the supporting network infrastructure. Looking forward,
based on recent design win momentum and the depth of our product
pipeline, we’re well positioned to deliver accelerating
growth.”
Q2 Business Highlights
- Released family of LTE SkyHi™ front-end
modules with the world’s best power efficiency
- Captured connectivity sockets in next
generation Sony PlayStations
- Supported Delphi with automotive
satellite radio receiver ICs
- Launched breakthrough 802.11ac wireless
networking solutions with the industry’s leading chipset
provider
- Won remote gas meter reading platforms
at Aclara
- Introduced innovative GPS solutions
enabling navigation functionality insmartphones, tablets and
ultrabooks for a second half 2012 ramp
- Enabled implantable defibrillator
applications with optocoupler portfolio
- Commenced volume shipments of custom
camera flash drivers for multiple smartphone ramps at Samsung and
other OEMs
- Secured RF subsystem design wins at
Alcatel-Lucent, Ericsson, Huawei, Nokia Siemens and ZTE for 4G
network infrastructure upgrades
Third Fiscal Quarter 2012 Outlook
“We expect both top and bottom line sequential growth in the
current quarter driven by LTE and smartphone program ramps as well
as increasing traction in adjacent high performance analog
applications,” said Donald W. Palette, vice president and chief
financial officer of Skyworks. “Specifically, we expect revenue of
$383 million with $0.44 of non-GAAP diluted earnings per
share.”
For further information regarding use of non-GAAP financial
measures in this press release, please refer to the Discussion
Regarding the Use of Non-GAAP Financial Measures set forth
below.
Skyworks' Second Fiscal Quarter 2012 Conference Call
Skyworks will host a conference call with analysts to discuss
its second fiscal quarter 2012 results and business outlook today
at 5:00 p.m. Eastern time. To listen to the conference call via the
Internet, please visit the investor relations section of Skyworks'
website. To listen to the conference call via telephone, please
call 877-857-6144 (domestic) or 719-325-4819 (international),
confirmation code: 7714870.
Playback of the conference call will begin at 9:00 p.m. Eastern
time on April 26, and end at 9:00 p.m. Eastern time on May 3. The
replay will be available on Skyworks' Web site or by calling
888-203-1112 (domestic) or 719-457-0820 (international), pass code:
7714870.
About Skyworks
Skyworks Solutions, Inc. is an innovator of high reliability
analog semiconductors. Leveraging core technologies, Skyworks
offers high performance analog products supporting automotive,
broadband, cellular infrastructure, energy management, industrial,
medical, military, networking, smartphone and tablet applications.
The Company’s portfolio includes amplifiers, attenuators,
circulators, detectors, diodes, directional couplers, front-end
modules, hybrids, infrastructure RF subsystems, isolators, lighting
and display solutions, mixers/demodulators, optocouplers,
optoisolators, phase shifters, PLLs/synthesizers/VCOs, power
dividers/combiners, power management devices, receivers, switches
and technical ceramics.
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 without limitation information
relating to future results and expectations of Skyworks (including
without limitation certain projections and business trends).
Forward-looking statements can often be identified by words such as
"anticipates," "expects," "forecasts," "intends," "believes,"
"plans," "may," "will," or "continue," and similar expressions and
variations or negatives of these words. All such statements are
subject to certain risks, uncertainties and other important factors
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, uncertainties and other important factors include,
but are not limited to: uncertainty regarding global economic and
financial market conditions; the susceptibility of the wireless
semiconductor industry and the markets addressed by our, and our
customers', products to economic downturns; the timing,
rescheduling or cancellation of significant customer orders and our
ability, as well as the ability of our customers, to manage
inventory; losses or curtailments of purchases or payments from key
customers, or the timing of customer inventory adjustments; the
availability and pricing of third party semiconductor foundry,
assembly and test capacity, raw materials and supplier components;
changes in laws, regulations and/or policies in the United States
that could adversely affect financial markets and our ability to
raise capital; our ability to develop, manufacture and market
innovative products in a highly price competitive and rapidly
changing technological environment; whether we are able to
successfully integrate Advanced Analogic Technologies’ operations;
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; fluctuations in
our manufacturing yields due to our complex and specialized
manufacturing processes; delays or disruptions in production due to
equipment maintenance, repairs and/or upgrades; our reliance on
several key customers for a large percentage of our sales;
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; our
ability to timely and accurately predict market requirements and
evolving industry standards, and to identify opportunities in new
markets; uncertainties of litigation, including potential disputes
over intellectual property infringement and rights, as well as
payments related to the licensing and/or sale of such rights; 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; 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;
and our ability to continue to grow and maintain an intellectual
property portfolio and obtain needed licenses from third parties,
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 and Skyworks Solutions 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 Six Months Ended March 30, April
1, March 30, April 1, (in thousands, except per share amounts) 2012
2011 2012 2011 Net revenue $
364,690 $ 325,411 $ 758,430 $ 660,531 Cost of goods sold 212,418
184,430 434,308 371,012 Gross profit
152,272 140,981 324,122 289,519 Operating expenses: Research
and development 52,986 39,618 99,927 78,161 Selling, general and
administrative 40,237 31,665 83,146 62,716 Amortization of
intangibles 9,340 1,638 15,652 3,240 Restructuring and other
charges 5,895 - 6,615 - Total operating
expenses 108,458 72,921 205,340 144,117 Operating income
43,814 68,060 118,782 145,402 Interest expense (107 ) (461 )
(588 ) (998 ) Gain on early retirement of convertible debt 63 - 139
- Other loss, net (310 ) (114 ) (211 ) (183 ) Income before income
taxes 43,460 67,485 118,122 144,221 Provision for income taxes
9,427 17,525 26,963 33,393 Net income $
34,033 $ 49,960 $ 91,159 $ 110,828
Earnings per share: Basic $ 0.18 $ 0.27 $ 0.49 $ 0.61
Diluted $ 0.18 $ 0.26 $ 0.48 $ 0.58 Weighted average shares: Basic
185,206 183,471 184,581 182,088 Diluted 191,016 191,961 190,348
190,251
SKYWORKS SOLUTIONS, INC. UNAUDITED
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Three Months Ended Six
Months Ended March 30, April 1, March 30, April 1, (in
thousands) 2012 2011 2012 2011
GAAP gross profit $ 152,272 $ 140,981 $ 324,122 $ 289,519
Share-based compensation expense [a] 2,402 1,874 4,919 3,219
Acquisition-related expense [b] 2,846 - 2,922
- Non-GAAP gross profit $ 157,520 $ 142,855 $
331,963 $ 292,738 Non-GAAP gross margin % 43.2
% 43.9 % 43.8 % 44.3 %
Three Months Ended Six Months Ended March 30, April 1, March
30, April 1, (in thousands) 2012 2011 2012
2011 GAAP operating income $ 43,814 $ 68,060 $
118,782 $ 145,402 Share-based compensation expense [a] 19,334
14,864 35,084 28,145 Acquisition-related expense [b] 4,813 203
12,096 648 Amortization of intangible assets 9,340 1,638 15,652
3,240 Restructuring and other charges [c] 5,895 - 6,615 -
Litigation settlement gains and losses [d] 517 - 517 - Deferred
executive compensation 143 143 286 308
Non-GAAP operating income $ 83,856 $ 84,908 $ 189,032
$ 177,743 Non-GAAP operating margin % 23.0 %
26.1 % 24.9 % 26.9 %
Three Months Ended Six Months Ended March 30, April 1, March
30, April 1, (in thousands) 2012 2011 2012
2011 GAAP net income $ 34,033 $ 49,960 $ 91,159 $
110,828 Share-based compensation expense [a] 19,334 14,864 35,084
28,145 Acquisition-related expense [b] 4,813 203 12,096 648
Amortization of intangible assets 9,340 1,638 15,652 3,240
Restructuring and other charges [c] 5,895 - 6,615 - Litigation
settlement gains and losses [d] 517 - 517 - Deferred executive
compensation 143 143 286 308 Gain on early retirement of
convertible debt [e] (63 ) - (139 ) - Amortization of discount on
convertible debt [f] 77 333 428 661 Tax adjustments [g] 5,673
11,598 14,305 19,596 Non-GAAP net
income $ 79,762 $ 78,739 $ 176,003 $ 163,426
Three Months Ended
Six Months Ended March 30, April 1, March 30, April 1, 2012
2011 2012 2011 GAAP net income
per share, diluted $ 0.18 $ 0.26 $ 0.48 $ 0.58 Share-based
compensation expense [a] 0.10 0.08 0.18 0.15 Acquisition-related
expense [b] 0.03 - 0.06 - Amortization of intangible assets 0.05
0.01 0.08 0.02 Restructuring and other charges [c] 0.03 - 0.04 -
Tax adjustments [g] 0.03 0.06 0.08 0.11
Non-GAAP net income per share, diluted $ 0.42 $ 0.41
$ 0.92 $ 0.86
SKYWORKS SOLUTIONS, INC.
DISCUSSION REGARDING THE USE OF NON-GAAP
FINANCIAL MEASURES
Our earnings release contains some or all of the following
financial measures which have not been calculated in accordance
with United States Generally Accepted Accounting Principles
("GAAP"): (i) non-GAAP gross profit and gross margin, (ii) non-GAAP
operating income and operating margin, (iii) non-GAAP net income,
and (iv) non-GAAP net income per share (diluted). As set forth in
the "Unaudited Reconciliation of Non-GAAP Financial Measures" table
found above, we derive such non-GAAP financial measures by
excluding certain expenses and other items from the
respective GAAP financial measure that is most directly comparable
to each non-GAAP financial measure. Management uses these non-GAAP
financial measures to evaluate our operating performance and
compare it against past periods, make operating decisions, forecast
for future periods, compare operating performance against peer
companies and determine payments under certain compensation
programs. These non-GAAP financial measures provide management with
additional means to understand and evaluate the operating results
and trends in our ongoing business by eliminating
certain non-recurring expenses (which may not occur in each period
presented) and other items that management believes might otherwise
make comparisons of our ongoing business with prior periods and
competitors more difficult, obscure trends in ongoing operations or
reduce management's ability to make useful forecasts.
We provide investors with non-GAAP gross profit and gross
margin, non-GAAP operating income and operating margin and non-GAAP
net income because we believe it is important for investors to be
able to closely monitor and understand changes in our ability to
generate income from ongoing business operations. We believe these
non-GAAP financial measures give investors an additional method to
evaluate historical operating performance and identify trends,
additional means of evaluating period-over-period operating
performance and a method to facilitate certain comparisons of
operating results to peer companies. We also believe that providing
non-GAAP operating income and operating margin allows investors to
assess the extent to which ongoing operations impact our overall
financial performance. We further believe that providing non-GAAP
net income and non-GAAP net income per share (diluted) allows
investors to assess the overall financial performance of ongoing
operations by eliminating the impact of certain financing decisions
related to our convertible debt and certain tax items which may not
occur in each period presented and which may represent non-cash
items or gains or losses unrelated to our ongoing operations. We
believe that disclosing these non-GAAP financial measures
contributes to enhanced financial reporting transparency and
provides investors with added clarity about complex financial
performance measures.
We calculate non-GAAP gross profit by excluding from GAAP gross
profit, stock compensation expense, restructuring-related charges
and acquisition-related expenses. We calculate non-GAAP operating
income by excluding from GAAP operating income, stock compensation
expense, restructuring-related charges, acquisition-related
expenses, litigation settlement gains and losses and certain
deferred executive compensation. We calculate non-GAAP net income
and net income per share (diluted) by excluding from GAAP net
income and net income per share (diluted), stock compensation
expense, restructuring-related charges, acquisition-related
expenses, litigation settlement gains and losses, amortization of
discount on convertible debt, and certain deferred executive
compensation, as well as certain items related to the retirement of
convertible debt, and certain tax items, which may not occur in all
periods for which financial information is presented. We exclude
the items identified above from the respective non-GAAP financial
measure referenced above for the reasons set forth with respect to
each such excluded item below:
Stock Compensation - because (1) the total amount of expense is
partially outside of our control because it is based on factors
such as stock price volatility and interest rates, which may be
unrelated to our performance during the period in which the expense
is incurred, (2) it is an expense based upon a valuation
methodology premised on assumptions that vary over time, and (3)
the amount of the expense can vary significantly between companies
due to factors that can be outside of the control of such
companies.
Acquisition-Related Expenses - including such items as, when
applicable, amortization of acquired intangible assets, fair value
adjustments to contingent consideration, fair value charges
incurred upon the sale of acquired inventory, acquisition-related
professional fees and deemed compensation expenses, because they
are not considered by management in making operating decisions and
we believe that such expenses do not have a direct correlation to
future business operations and thereby including such charges does
not accurately reflect the performance of our ongoing operations
for the period in which such charges are incurred.
Litigation Settlement Gains and Losses - including gains and
losses related to the resolution of other than ordinary course
threatened and actually filed lawsuits and other than ordinary
course contractual disputes, because (1) they are not considered by
management in making operating decisions, (2) such gains and losses
tend to be infrequent in nature, (3) such gains and losses are
generally not directly controlled by management, (4) we believe
such gains and losses do not necessarily reflect the performance of
our ongoing operations for the period in which such charges are
recognized and (5) the amount of such gains or losses can vary
significantly between companies and make comparisons difficult.
Restructuring-Related Charges - because, to the extent such
charges impact a period presented, we believe that they have no
direct correlation to future business operations and including such
charges does not necessarily reflect the performance of our ongoing
operations for the period in which such charges are incurred.
Deferred Executive Compensation - including charges related to
any contingent obligation pursuant to an executive severance
agreement because we believe the period over which the obligation
is amortized may not reflect the period of benefit and that such
expense has no direct correlation with our recurring business
operations and including such expenses does not accurately reflect
the compensation expense for the period in which incurred.
Amortization of Discount on Convertible Debt - comprised of the
amortization of the debt discount recorded at inception of the
convertible debt borrowing related to the adoption of ASC 470-20,
because the expense is dependent on fair value assessments and is
not considered by management when making operating decisions.
Gains and Losses on Retirement of Convertible Debt - because, to
the extent that gains or losses from such repurchases impact a
period presented, we do not believe that they reflect the
underlying performance of ongoing business operations for such
period.
Certain Income Tax Items - including certain deferred tax
charges and benefits which do not result in a current tax payment
or tax refund and other adjustments which are not indicative of
ongoing business operations.
The non-GAAP financial measures presented in the table above
should not be considered in isolation and are not an alternative
for, the respective GAAP financial measure that is most directly
comparable to each such non-GAAP financial measure. Investors are
cautioned against placing undue reliance on these non-GAAP
financial measures and are urged to review and consider carefully
the adjustments made by management to the most directly comparable
GAAP financial measures to arrive at these non-GAAP financial
measures. Non-GAAP financial measures may have limited value as
analytical tools because they may exclude certain expenses that
some investors consider important in evaluating operating
performance or ongoing business. Further, non-GAAP financial
measures are likely to have limited value for purposes of drawing
comparisons between companies because different companies may
calculate similarly titled non-GAAP financial measures in different
ways because non-GAAP measures are not based on any comprehensive
set of accounting rules or principles.
Our earnings release contains a forward looking estimate of
non-GAAP diluted earnings per share for the third quarter of our
2012 fiscal year ("Q3 2012"). We provide this non-GAAP measure to
investors on a prospective basis for the same reasons (set forth
above) that we provide them to investors on a historical basis. We
are unable to provide a reconciliation of our forward looking
estimate of Q3 2012 non-GAAP diluted earnings per share to a
forward looking estimate of Q3 2012 GAAP diluted earnings per share
because certain information needed to make a reasonable forward
looking estimate of GAAP diluted earnings per share for Q3 2012
(other than estimated stock compensation expense of $0.10 per
diluted share, certain tax items of $0.05 per diluted share,
estimated acquisition related expense of $0.05 per diluted share
and estimated deferred executive compensation expense and
restructuring and other charges with a de minimis impact per
diluted share) is difficult to predict and estimate and is often
dependent on future events which may be uncertain or outside of our
control. Such events may include unanticipated one time charges
related to asset impairments (fixed assets, intangibles or
goodwill), unanticipated acquisition related costs, unanticipated
litigation settlement gains and losses and other unanticipated
non-recurring items not reflective of ongoing operations. We
believe the probable significance of these unknown items, in
aggregate, to be in the range of $0.00 to $0.10 in quarterly
earnings per diluted share on a GAAP basis. Our forward looking
estimates of both GAAP and non-GAAP measures of our financial
performance may differ materially from our actual results and
should not be relied upon as statements of fact.
[a] These charges represent expense recognized in accordance
with ASC 718 - Compensation, Stock Compensation. Approximately $2.4
million, $7.5 million and $9.4 million were included in cost of
goods sold, research and development expense and selling, general
and administrative expense, respectively, for the three months
ended March 30, 2012. Approximately $4.9 million, $13.1 million and
$17.1 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 30, 2012.
For the three months ended April 1, 2011, approximately $1.9
million, $4.4 million and $8.6 million were included in cost of
goods sold, research and development expense and selling, general
and administrative expense, respectively. For the six months ended
April 1, 2011, approximately $3.2 million, $8.8 million and $16.1
million were included in cost of goods sold, research and
development expense and selling, general and administrative
expense, respectively. [b] The acquisition-related expense
recognized during the three months and six months ended March 30,
2012 includes a $2.8 million and $2.9 million charge to cost of
sales related to the sale of acquired inventory, respectively. Also
included in acquisition-related expense is $2.0 million and $9.2
million in transaction costs included in general and administrative
expense associated with acquisitions, and an arbitration, completed
or contemplated during the three months and six months ended March
30, 2012, respectively. Approximately $0.2 million and $0.6
million in transaction costs were included in general and
administrative expense associated with acquisitions completed or
contemplated during the three months and six months ended April 1,
2011, respectively. [c] During the three months ended March
30, 2012, the Company implemented a restructuring plan to reduce
headcount associated with its acquisition of Advanced Analogic
Technologies, Inc. and recorded a $5.9 million charge for the
period. During the fiscal year ended September 30, 2011, the
Company implemented a restructuring plan to reduce headcount
associated with its acquisition of SiGe Semiconductor, Inc. and
recorded a $0.7 million charge for the six months ended March 30,
2012. [d] During the three months ended March 30, 2012, the
Company recognized a $0.5 million charge primarily related to the
resolution of a contractual dispute. [e] The gain recorded
during the three months and six months ended March 30, 2012 relates
to the retirement of the Company's 1.50% convertible subordinated
notes due on March 1, 2012. [f] These charges represent the
amortization expense recognized in accordance with ASC 470-20.
Approximately $0.1 million and $0.4 million of amortization expense
was recognized during the three months and six months ended March
30, 2012, respectively. Approximately $0.3 and $0.7 million
of amortization expense was recognized during the three months and
six months ended April 1, 2011, respectively. [g] For the
three months and six months ended March 30, 2012, these amounts
primarily represent the utilization of net operating loss and
research and development tax credit carryforwards and non-cash
expense related to uncertain tax positions. For the three
months and six months ended April 1, 2011, these amounts primarily
represent the utilization of net operating loss and research and
development credit carryforwards.
SKYWORKS SOLUTIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
March 30, Sept. 30, (in thousands) 2012 2011
Assets Current
assets: Cash and cash equivalents $ 307,336 $ 410,799 Accounts
receivable, net 211,488 177,940 Inventories 196,558 198,183 Prepaid
expenses and other current assets 36,950 29,412 Property, plant and
equipment, net 252,312 251,365 Goodwill and intangible assets, net
913,920 749,849 Other assets 88,762 72,841 Total assets $ 2,007,326
$ 1,890,389
Liabilities and Equity Current
liabilities: Convertible notes $ - $ 26,089 Accounts payable
136,677 115,290 Accrued liabilities and other current liabilities
105,965 105,717 Other long-term liabilities 44,440 34,198
Stockholders' equity 1,720,244 1,609,095 Total liabilities and
equity $ 2,007,326 $ 1,890,389
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