Skyworks Solutions, Inc. (NASDAQ: SWKS), an innovator of high
performance analog semiconductors enabling a broad range of end
markets, today reported third fiscal quarter 2012 results. Revenue
for the quarter ending June 29, 2012, was $389.0 million, up 7
percent sequentially and 9 percent when compared to revenue of
$356.1 million in the third fiscal quarter of 2011 and exceeding
the Company’s previous guidance for the quarter of $383.0
million.
On a non-GAAP basis, operating income for the third fiscal
quarter was $91.7 million and diluted earnings per share was $0.45,
$0.01 better than prior guidance. On a GAAP basis, operating income
for the third fiscal quarter of 2012 was $62.0 million and diluted
earnings per share was $0.26.
“Skyworks outperformed our addressable markets last quarter and
the stage is set for a strong back half of 2012,” said David J.
Aldrich, president and chief executive officer of Skyworks. “Our
strategic diversification across OEMs and chipset partners is
enabling us to produce consistently strong operating results
despite the macro economy. Specifically, we are gaining share
within adjacent vertical markets including automotive, medical,
avionics, military, location services and broadband communications.
At the same time, our innovative solutions are powering the world’s
most popular smartphones, tablets, home automation platforms and
network infrastructure systems. In short, we have created a
differentiated business model that is delivering demonstrable, best
in class mobile internet growth with analog semiconductor
shareholder returns.”
Q3 Business Highlights
- Unveiled SkyOne™ - a breakthrough
front-end system for mobile platforms integrating all RF and analog
content between the transceiver and antenna
- Commenced volume production of wireless
networking solutions in support of Broadcom’s 802.11ac
platforms
- Expanded portfolio of ultra low noise
amplifiers for smart energy, public safety radio, cellular
infrastructure and other ISM band applications
- Ramped nine connectivity devices within
a recently introduced ultra thin notebook
- Captured a receiver protection design
win with Medtronic for heart monitor applications
- Secured initial power management design
wins at three new OEM customers with suite of LED drivers
- Deployed analog solutions for low-noise
receivers being used in automotive toll tag transponder
systems
- Introduced high power linear control
ICs for TD-LTE base stations, repeaters and low frequency
military/microwave UHF and UVF radios
Fourth Fiscal Quarter 2012 Outlook
“Based on new program ramps and the depth of our product
pipeline, we expect to outpace market growth in the second half of
2012,” said Donald W. Palette, vice president and chief financial
officer of Skyworks. “For the fourth fiscal quarter we expect
record revenue in the range of $415 to $420 million with diluted
non-GAAP earnings per share of $0.50 to $0.51, up more than 10
percent sequentially.”
For further information regarding the 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’ Third Fiscal Quarter 2012 Conference Call
Skyworks will host a conference call with analysts to discuss
its third 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’
Web site. To listen to the conference call via telephone, please
call 800-230-1059 (domestic) or 612-234-9959 (international),
confirmation code: 253196.
Playback of the conference call will begin at 9:00 p.m. Eastern
time on July 18, and end at 9:00 p.m. Eastern time on July 25. The
replay will be available on Skyworks’ Web site or by calling
800-475-6701 (domestic) or 320-365-3844 (international), access
code: 253196.
About Skyworks
Skyworks Solutions, Inc. is an innovator of high performance
analog semiconductors. Leveraging core technologies, Skyworks
supports automotive, broadband, cellular infrastructure, energy
management, GPS, industrial, medical, military, wireless
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 Nine Months Ended
June 29,
July 1,
June 29,
July 1,
(in thousands, except per share amounts) 2012 2011 2012 2011
Net revenue $ 389,038 $ 356,075 $ 1,147,468 $ 1,016,606 Cost of
goods sold 223,736 199,850
658,044 570,862 Gross profit 165,302 156,225
489,424 445,744 Operating expenses: Research and development
56,050 43,067 155,977 121,228 Selling, general and administrative
37,463 35,451 120,609 98,167 Amortization of intangibles 8,608
4,006 24,260 7,246 Restructuring and other charges 1,137
1,475 7,752 1,475
Total operating expenses 103,258 83,999 308,598 228,116
Operating income 62,044 72,226 180,826 217,628 Interest
expense (10 ) (465 ) (598 ) (1,463 ) Gain on early retirement of
convertible debt - - 139 - Other income (loss), net 96
(2 ) (115 ) (185 ) Income before income
taxes 62,130 71,759 180,252 215,980 Provision for income taxes
12,813 20,211 39,776
53,604 Net income $ 49,317 $ 51,548 $
140,476 $ 162,376 Earnings per share: Basic $
0.26 $ 0.28 $ 0.76 $ 0.89 Diluted $ 0.26 $ 0.27 $ 0.74 $ 0.85
Weighted average shares: Basic 186,269 183,750 185,144 182,642
Diluted 192,457 191,380 191,051 190,628
SKYWORKS
SOLUTIONS, INC. UNAUDITED RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES Three Months
Ended Nine Months Ended
June 29,
July 1,
June 29,
July 1,
(in thousands) 2012 2011 2012 2011 GAAP gross profit $
165,302 $ 156,225 $ 489,424 $ 445,744 Share-based compensation
expense [a] 2,111 2,178 7,030 5,397 Acquisition-related expenses
[b] 652 1,617 3,574
1,617 Non-GAAP gross profit $ 168,065 $
160,020 $ 500,028 $ 452,758 Non-GAAP
gross margin % 43.2 % 44.9 % 43.6 % 44.5 % Three
Months Ended Nine Months Ended
June 29,
July 1,
June 29,
July 1,
(in thousands) 2012 2011 2012 2011 GAAP operating income $
62,044 $ 72,226 $ 180,826 $ 217,628 Share-based compensation
expense [a] 18,569 14,543 53,653 42,688 Acquisition-related
(credits) expenses [b] (4,040 ) 2,857 8,056 3,505 Amortization of
intangible assets 8,608 4,006 24,260 7,246 Restructuring &
other charges [c] 1,137 1,475 7,752 1,475 Litigation settlement
gains and losses [d] 5,261 2,300 5,778 2,300 Deferred executive
compensation 143 143 429
451 Non-GAAP operating income $ 91,722 $
97,550 $ 280,754 $ 275,293 Non-GAAP
operating margin % 23.6 % 27.4 % 24.5 % 27.1 % Three
Months Ended Nine Months Ended
June 29,
July 1,
June 29,
July 1,
(in thousands) 2012 2011 2012 2011 GAAP net income $ 49,317
$ 51,548 $ 140,476 $ 162,376 Share-based compensation expense [a]
18,569 14,543 53,653 42,688 Acquisition-related (credits) expenses
[b] (4,040 ) 2,857 8,056 3,505 Amortization of intangible assets
8,608 4,006 24,260 7,246 Restructuring & other charges [c]
1,137 1,475 7,752 1,475 Litigation settlement gains and losses [d]
5,261 2,300 5,778 2,300 Deferred executive compensation 143 143 429
451 Gain on early retirement of convertible debt [e] - - (139 ) -
Amortization of discount on convertible debt [f] - 339 428 1,000
Tax adjustments [g] 7,083 15,827
21,388 35,423 Non-GAAP net income $ 86,078
$ 93,038 $ 262,081 $ 256,464
Three Months Ended Nine Months Ended
June 29,
July 1,
June 29,
July 1,
2012 2011 2012 2011 GAAP net income per share, diluted $
0.26 $ 0.27 $ 0.74 $ 0.85 Share-based compensation expense [a] 0.10
0.08 0.28 0.22 Acquisition-related (credits) expenses [b] (0.02 )
0.02 0.04 0.02 Amortization of intangible assets 0.04 0.02 0.13
0.04 Restructuring & other charges [c] - 0.01 0.04 0.01
Litigation settlement gains and losses [d] 0.03 0.01 0.03 0.01
Amortization of discount on convertible debt [f] - - - 0.01 Tax
adjustments [g] 0.04 0.08 0.11
0.19 Non-GAAP net income per share, diluted $
0.45 $ 0.49 $ 1.37 $ 1.35
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 (credits) expenses. We calculate non-GAAP
operating income by excluding from GAAP operating income, stock
compensation expense, restructuring-related charges,
acquisition-related (credits) 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 (credits) 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 (Credits) 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 fourth quarter of our
2012 fiscal year (“Q4 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 Q4 2012 non-GAAP diluted earnings per share to a
forward looking estimate of Q4 2012 GAAP diluted earnings per share
because certain information needed to make a reasonable forward
looking estimate of GAAP diluted earnings per share for Q4 2012
(other than estimated stock compensation expense of $0.10 per
diluted share, certain tax items of $0.07 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 $2.1 million, $7.5 million and $9.0 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively, for
the three months ended June 29, 2012. Approximately $7.0 million,
$20.6 million and $26.0 million were included in cost of goods
sold, research and development expense and selling, general and
administrative expense, respectively, for the nine months ended
June 29, 2012.
For the three months ended July 1, 2011,
approximately $2.2 million, $4.2 million and $8.1 million were
included in costs of goods sold, research and development expense
and selling, general and administrative expense, respectively. For
the nine months ended July 1, 2011 approximately $5.4 million,
$13.1 million and $24.2 million were included in costs 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 nine months ended June 29, 2012
includes a $0.7 million and $3.6 million charge to cost of sales
related to the sale of acquired inventory and $0.7 million and $9.9
million in transaction costs included in general and administrative
expenses associated with acquisitions, and an arbitration,
completed or contemplated during the three months and nine months
ended June 29, 2012, respectively. Also included in general and
administrative expenses for the three months and nine months ended
June 29, 2012 is a $5.4 million credit due to a reduction in the
estimated fair value of contingent consideration liabilities
associated with acquisitions.
The acquisition-related expense recognized during the three
months and nine months ended July 1, 2011 includes a $1.6 million
charge to cost of sales related to the sale of acquired inventory.
Also included in acquisition-related expense is $1.2 million and
$1.9 million in transaction costs associated with acquisitions
completed or contemplated during the three months and nine months
ended July 1, 2011, respectively.
[c]
During the nine months ended June 29,
2012, the Company implemented a restructuring plan to reduce the
headcount associated with its acquisition of Advanced Analogic
Technologies, Inc. For the three months and nine months ended June
29, 2012, the Company recorded $1.1 million and $7.8 million,
respectively, primarily related to this restructuring plan.
During the three months ended July 1, 2011, the Company
implemented a restructuring plan to reduce the headcount associated
with its acquisition of SiGe Semiconductor, Inc.
[d]
During the three months and nine months ended June 29, 2012, the
Company recognized a $5.3 million and $5.8 million charge,
respectively, related to the resolution of contractual disputes.
During the three months and nine months ended July 1, 2011,
the Company recognized a $2.3 million charge related to the
resolution of a contractual dispute.
[e]
The gain recorded during the nine months ended June 29, 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 $0.4 million of
amortization expense was recognized during the nine months ended
June 29, 2012. Approximately $0.3 and $1.0 million,
respectively, of amortization expense was recognized during the
three months and nine months ended July 1, 2011.
[g]
For the three months and nine months ended June 29, 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. During the three
months and nine months ended July 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 June 29, Sept. 30, (in thousands)
2012 2011
Assets Current assets: Cash and cash equivalents $
327,915 $ 410,799 Accounts receivable, net 246,894 177,940
Inventory 209,947 198,183 Prepaid expenses and other current assets
44,734 29,412 Property, plant and equipment, net 266,039 251,365
Goodwill and intangible assets, net 907,907 749,849 Other assets
86,457 72,841 Total assets $ 2,089,893 $ 1,890,389
Liabilities and Equity Current liabilities:
Convertible notes - 26,089 Accounts payable 135,597 115,290 Accrued
liabilities and other current liabilities 103,974 105,717 Other
long-term liabilities 48,657 34,198 Stockholders' equity
1,801,665 1,609,095 Total liabilities and equity $ 2,089,893
$ 1,890,389
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