Skyworks Solutions, Inc. (NASDAQ: SWKS), an innovator of high
reliability analog and mixed signal semiconductors enabling a broad
range of end markets, today reported first fiscal quarter 2011
results. Revenue for the quarter was $335.1 million, up 37 percent
when compared to $245.1 million in the first fiscal quarter of 2010
and versus $313.3 million last quarter.
On a non-GAAP basis, operating income for the first fiscal
quarter of 2011 was $92.8 million, up from $52.3 million in the
prior-year period, reflecting a 78 percent increase. Non-GAAP
diluted earnings per share for the first fiscal quarter was $0.45
representing a 67 percent improvement when compared to $0.27 for
the same period a year ago. On a GAAP basis, operating income and
margin for the first fiscal quarter of 2011 were $77.3 million and
23.1 percent, respectively, and diluted earnings per share was
$0.32.
“Skyworks is enabling wireless broadband connectivity across
multiple high growth platforms including smartphones, tablets,
smart grids and home automation systems, as well as within the
supporting network infrastructure,” said David J. Aldrich,
president and chief executive officer of Skyworks. “At a higher
level, our goal remains to diversify across new vertical markets,
develop differentiated products and deliver operational excellence,
positioning us to outperform our addressed markets and increase
shareholder returns.”
Business Highlights
- Expanded gross margin by 250 basis
points year-over-year to 44.7 percent on a non-GAAP basis (44.3
percent GAAP)
- Supported the rapidly emerging tablet
market with wireless connectivity solutions compatible with all
major mobile operating systems
- Ramped production of analog components
supporting Cisco and Motorola’s fiber to the home applications
- Secured design wins with Johnson
Controls in support of their HomeLink™ automotive system being
adopted by leading vehicle manufacturers worldwide
- Partnered with Ember to deliver
innovative ZigBee® solutions for the energy management, home area
network and industrial automation markets
- Launched analog control ICs for the
Nintendo 3DS gaming system
- Unveiled silicon RF limiters for
military radar receiver applications
- Captured multiple base station
transceiver sockets with global infrastructure providers supporting
LTE, GSM and femtocell platforms
- Powered HTC’s next generation
smartphones with highly integrated front-end modules
- Enabled first commercial LTE handset on
a 4G network to allow consumers anytime, anywhere connectivity at
data rates up to 100 mega bits per second
Second Fiscal Quarter 2011 Outlook
“Based on overall business momentum and the ramp of new
applications, we anticipate 30 to 34 percent year-over-year revenue
growth in the second fiscal quarter of 2011,” said Donald W.
Palette, vice president and chief financial officer of Skyworks.
“Specifically, we expect revenue in the $310 to $320 million range,
significantly better than normal seasonality for the March quarter,
with non-GAAP diluted earnings per share of $0.38 to $0.40.”
For further information regarding use of non-GAAP measures in
this press release, please refer to the Discussion Regarding the
Use of Non-GAAP Financial Measures set forth below.
Skyworks' First Fiscal Quarter 2011 Conference Call
Skyworks will host a conference call with analysts to discuss
its first fiscal quarter 2011 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 888-211-4430 (domestic) or 913-312-0678 (international),
confirmation code: 1099493.
Playback of the conference call will begin at 9:00 p.m. Eastern
time on January 20, and end at 9:00 p.m. Eastern time on January
27. The replay will be available on Skyworks' Web site or by
calling 888-203-1112 (domestic) or 719-457-0820 (international),
pass code: 1099493.
About Skyworks
Skyworks Solutions, Inc. is an innovator of high reliability
analog and mixed signal semiconductors. Leveraging core
technologies, Skyworks offers diverse standard and custom linear
products supporting automotive, broadband, cellular infrastructure,
energy management, industrial, medical, military and mobile handset
applications. The Company’s portfolio includes amplifiers,
attenuators, detectors, diodes, directional couplers, front-end
modules, hybrids, infrastructure RF subsystems,
mixers/demodulators, phase shifters, PLLs/synthesizers/VCOs, power
dividers/combiners, 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; 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; 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; 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;
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 Quarter Ended Dec.
31, Jan. 1, (in thousands) 2010 2010
Net revenues $ 335,120 $ 245,138 Cost of goods sold
186,582 142,584 Gross profit 148,538 102,554
Operating expenses: Research and development 38,543 31,789
Selling, general and administrative 31,051 26,731 Amortization of
intangible assets 1,602 1,501 Total
operating expenses 71,196 60,021 Operating income 77,342
42,533 Interest expense (537 ) (1,569 ) Loss on early
retirement of convertible debt - (51 ) Other loss, net (69 )
(111 ) Income before income taxes 76,736 40,802 Provision
for income taxes 15,868 12,792 Net
income $ 60,868 $ 28,010 Earnings per share:
Basic $ 0.34 $ 0.16 Diluted $ 0.32 $ 0.16 Weighted average shares:
Basic 180,706 172,717 Diluted 188,541 179,404
SKYWORKS
SOLUTIONS, INC. UNAUDITED RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES Quarter Ended Dec. 31,
Jan. 1, (in thousands) 2010 2010
GAAP gross profit $ 148,538 $ 102,554 Share-based compensation
expense [a] 1,345 987 Non-GAAP gross
profit $ 149,883 $ 103,541 Non-GAAP gross
margin % 44.7 % 42.2 % Quarter Ended Dec. 31, Jan. 1,
(in thousands) 2010 2010 GAAP
operating income $ 77,342 $ 42,533 Share-based compensation expense
[a] 13,281 8,084 Acquisition related expense [b] 445 - Amortization
of intangible assets 1,602 1,501 Deferred executive compensation
165 173 Non-GAAP operating income $
92,835 $ 52,291 Non-GAAP operating margin %
27.7 % 21.3 % Quarter Ended Dec. 31, Jan. 1, (in
thousands) 2010 2010 GAAP net
income $ 60,868 $ 28,010 Share-based compensation expense [a]
13,281 8,084 Acquisition related expense [b] 445 - Amortization of
intangible assets 1,602 1,501 Deferred executive compensation 165
173 Loss on early retirement of convertible debt [c] - 51
Amortization of discount on convertible
debt [d]
328
989 Tax adjustments [e] 7,998 8,922
Non-GAAP net income $ 84,687 $ 47,730 Quarter
Ended Dec. 31, Jan. 1, 2010 2010
GAAP net income per share, diluted $ 0.32 $ 0.16 Share-based
compensation expense [a] 0.07 0.04 Amortization of intangible
assets 0.01 0.01
Amortization of discount on convertible
debt [d]
-
0.01 Tax adjustments [e] 0.05 0.05
Non-GAAP net income per share, diluted $ 0.45 $ 0.27
SKYWORKS SOLUTIONS, INC.
DISCUSSION REGARDING THE USE OF
NON-GAAP FINANCIAL MEASURES
Our earnings release contains 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
measure 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 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 a more
effective 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 better 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 better 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 for
which financial information is presented and which represent 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 and certain deferred
executive compensation. We calculate non-GAAP operating margin by
dividing non-GAAP operating income by GAAP revenue. We calculate
non-GAAP net income by excluding from GAAP net income, stock
compensation expense, restructuring-related charges,
acquisition-related expenses, 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 also present non-GAAP
net income per share on a fully diluted basis. 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.
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 accurately reflect the
performance of our ongoing operations for the period in which such
charges are incurred.
Acquisition-Related Expenses - including,
when applicable, amortization of acquired intangible assets and
one-time costs associated with acquisition transactions, 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.
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.
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.
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
second quarter of our 2011 fiscal year, or Q2 2011. 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 Q2 2011 non-GAAP diluted earnings per
share to a forward looking estimate of Q2 2011 GAAP diluted
earnings per share because certain information needed to make a
reasonable forward looking estimate of GAAP diluted earnings per
share for Q2 2011 (other than estimated stock compensation expense
of $0.08 per diluted share, certain tax items of $0.05 per diluted
share, estimated acquisition related expense of $0.01 per diluted
share and estimated deferred executive compensation expense 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 (e.g., gains and losses on
retirement of convertible debt). 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 $1.4 million, $4.4 million and $7.5 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively, for
the three months ended December 31, 2010.
For the three months ended January 1,
2010, approximately $1.0 million, $1.8 million and $5.3 million
were included in costs of goods sold, research and development
expense and selling, general and administrative expense,
respectively.
[b]
These charges represent one-time
transaction costs associated with an acquisition completed during
the three months ended December 31, 2010.
[c]
The loss recorded during the three months
ended January 1, 2010 relates to the early retirement of $5.0
million of the Company's 1.25% convertible subordinated notes due
in 2010.
[d]
These charges represent the amortization
expense recognized in accordance with ASC 470-20. Approximately,
$0.3 million and $1.0 million, respectively, of amortization
expense was recognized during the three months ended December 31,
2010 and January 1, 2010.
[e]
During the three months ended December 31,
2010, these amounts primarily represent the utilization of research
and development credit carryforwards and deferred tax expenses not
affecting current taxes payable.
During the three months ended January 1, 2010, these amounts
primarily represent the utilization of net operating loss
carryforwards.
SKYWORKS SOLUTIONS, INC. UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET Dec. 31,
Oct. 1, (in thousands) 2010 2010
Assets Current assets: Cash
and cash equivalents $ 450,716 $ 459,385 Accounts receivable, net
200,905 175,232 Inventories 142,463 125,059 Prepaid expenses and
other current assets 26,519 30,189 Property, plant and equipment,
net 223,813 204,363 Goodwill and intangible assets, net 500,801
498,096 Other assets 68,859 71,728 Total assets $
1,614,076 $ 1,564,052
Liabilities and Equity Current
liabilities: Credit facility $ - $ 50,000 Accounts payable 120,535
111,967 Accrued liabilities and other current liabilities 36,531
42,357 Long-term debt 25,071 24,743 Other long-term liabilities
20,532 18,389 Stockholders' equity 1,411,407
1,316,596 Total liabilities and equity $ 1,614,076 $ 1,564,052
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