Skyworks Solutions, Inc. (NASDAQ:SWKS), an innovator of high
performance analog and mixed signal semiconductors enabling mobile
connectivity today announced third fiscal quarter 2008 results for
the period ended June 27, 2008. Revenue for the quarter was $215.2
million, up 23 percent as compared to $175.1 million in the same
period a year ago and above the company�s guidance for $210.0
million. On a non-GAAP basis, operating income for the third fiscal
quarter was $30.3 million, up 79 percent from $17.0 million in the
prior year, while net income was $28.9 million versus $16.8 million
in Q3 of fiscal 2007. Non-GAAP diluted earnings per share was a
company record $0.18 and $0.01 better than consensus estimates. On
a GAAP basis, operating income for the third fiscal quarter was
$22.8 million as compared to $12.4 million in the year-ago
timeframe, while net income was $20.5 million versus $11.4 million,
respectively. GAAP diluted earnings per share was $0.12. �Skyworks
is delivering profitable growth driven by increasing
diversification in wireless and adjacent analog markets, share
gains and strong operational execution,� said David J. Aldrich,
president and chief executive officer of Skyworks. �We believe that
our unique technical breadth and manufacturing scale are
strategically differentiating Skyworks and positioning us for
sustainable, above market revenue growth with improving
fundamentals.� Third Fiscal Quarter Highlights Expanded gross
margin to 40.6 percent on a non-GAAP basis (40.2 percent on a GAAP
basis) � a 180 basis point year-over-year increase and the fifth
consecutive quarter of improvement Increased operating margin to
14.1 percent on a non-GAAP basis (10.6 percent on a GAAP basis) � a
440 basis point year-over-year increase Generated $26.2 million of
cash flow from operations Ramped energy management solutions in
support of automated meter reading (AMR), advanced metering
infrastructure (AMI) and ZigBee� applications Supported Microsoft�s
Sync� initiative with low power control ICs, enabling fully
integrated, voice-activated in-car communications for mobile phones
and digital music Captured strategic reference design wins at
Qualcomm for forthcoming CDMA2000, EDGE and 3G HSDPA architectures
Powered more than 10 new Samsung 3G handset models � including the
first European mobile TV slider phone Fourth Fiscal Quarter 2008
Outlook �New program launches, targeted design win ramps and market
share gains are translating into improving order visibility,� said
Donald W. Palette, vice president and chief financial officer of
Skyworks. �As a result, we are forecasting September quarterly
revenue to grow to $225 million. At the same time, we plan to
deliver further operational improvements in product yields,
equipment efficiency and cycle times. In turn, we intend to expand
gross and operating margins and deliver non-GAAP diluted earnings
per share of $0.20 for the period.� Estimated non-GAAP diluted
earnings per share for the fourth fiscal quarter excludes
approximately $6 million of FASB Statement No. 123(R) - related
expenses. Non-GAAP results, which are a supplement to financial
results based on GAAP, exclude certain charges including but not
limited to share-based compensation, baseband exit charges,
amortization of intangible assets and non-recurring items. The
company believes these non-GAAP financial measures provide useful
information to both management and investors by excluding certain
charges and non-recurring items that may not be indicative of
Skyworks� ongoing operations and financial performance. Skyworks'
Third Fiscal Quarter 2008 Conference Call Skyworks will host a
conference call with analysts to discuss its third fiscal quarter
2008 results and business outlook today at 5:00 p.m. Eastern time
(ET). 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
888-213-3934 (domestic) or 913-312-0934 (international),
confirmation code: 9614688. Playback of the conference call will
begin at 9 p.m. Eastern on July 17, and end at 9 p.m. Eastern on
July 24. The replay will be available on Skyworks' Web site or by
calling 888-203-1112 (domestic) or 719-457-0820 (international),
pass code: 9614688. 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: uncertainty regarding global
economic and financial market conditions; 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; 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; 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; 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;
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 Nine Months Ended (in thousands, except per share amounts)
June 27, June 29, June 27, June 29, � 2008 2007 2008 2007 � � � � �
Net revenues $ 215,210 $ 175,050 $ 627,451 $ 551,290 Cost of goods
sold 128,776 � 106,418 � 378,312 � 338,640 � Gross profit 86,434
68,632 249,139 212,650 � Operating expenses: Research and
development 36,561 30,549 107,236 92,344 Selling, general and
administrative 25,975 24,874 74,608 72,652 Restructuring &
other charges - 257 - 5,730 Amortization of intangibles 1,101 � 536
� 4,904 � 1,608 � Total operating expenses 63,637 56,216 186,748
172,334 � Operating income 22,797 12,416 62,391 40,316 � Interest
expense (1,658 ) (2,565 ) (5,635 ) (9,928 ) Other income, net 1,064
� 2,766 � 4,997 � 7,824 � Income before income taxes 22,203 12,617
61,753 38,212 Provision for income taxes 1,737 � 1,194 � 5,536 �
2,555 � Net income $ 20,466 � $ 11,423 � $ 56,217 � $ 35,657 � �
Earnings per share: Basic $ 0.13 $ 0.07 $ 0.35 $ 0.22 Diluted $
0.12 $ 0.07 $ 0.34 $ 0.22 Weighted average shares: Basic 162,095
158,606 161,166 160,159 Diluted 164,649 160,032 163,323 161,278
SKYWORKS SOLUTIONS, INC. UNAUDITED RECONCILIATION OF NON-GAAP
MEASURES � � � � � � � � Three Months Ended Nine Months Ended �
June 27, June 29, June 27, June 29, (in thousands) 2008 2007 2008
2007 � GAAP gross profit $ 86,434 $ 68,632 $ 249,139 $ 212,650
Share-based compensation expense [a] 651 475 2,162 876 Revenue
adjustments [b] - 105 - 105 Cost of goods sold adjustments [b] -
(1,249 ) - (1,249 ) Acquisition related expense [c] 330 � - � 1,281
� - � Non-GAAP gross profit $ 87,415 � $ 67,963 � $ 252,582 � $
212,382 � � Non-GAAP gross margin % 40.6 % 38.8 % 40.3 % 38.5 % � �
� � � � Three Months Ended Nine Months Ended � June 27, June 29,
June 27, June 29, (in thousands) 2008 2007 2008 2007 � GAAP
operating income $ 22,797 $ 12,416 $ 62,391 $ 40,316 Share-based
compensation expense [a] 6,112 3,645 16,762 9,716 Revenue
adjustments [b] - 105 - 105 Cost of goods sold adjustments [b] -
(1,249 ) - (1,249 ) Acquisition related expense [c] 330 - 1,281 -
Selling, general and administrative adjustments [b] - 1,287 (502 )
1,287 Restructuring & other charges [b] - 257 - 5,730
Amortization of intangible assets [c] 1,101 � 536 � 4,904 � 1,608 �
Non-GAAP operating income $ 30,340 � $ 16,997 � $ 84,836 � $ 57,513
� � Non-GAAP operating margin % 14.1 % 9.7 % 13.5 % 10.4 % � � � �
� � Three Months Ended Nine Months Ended � June 27, June 29, June
27, June 29, (in thousands) 2008 2007 2008 2007 � GAAP net income $
20,466 $ 11,423 $ 56,217 $ 35,657 Share-based compensation expense
[a] 6,112 3,645 16,762 9,716 Revenue adjustments [b] - 105 - 105
Cost of goods sold adjustments [b] - (1,249 ) - (1,249 )
Acquisition related expense [c] 330 - 1,281 - Selling, general and
administrative adjustments [b] - 1,287 (502 ) 1,287 Restructuring
& other charges [b] - 257 - 5,730 Amortization of intangible
assets [c] 1,101 536 4,904 1,608 Deferred financing expense
adjustment [d] - - - 564 Tax adjustments [e] 921 � 842 � 3,455 �
1,515 � Non-GAAP net income $ 28,930 � $ 16,846 � $ 82,117 � $
54,933 � � � � � � � Three Months Ended Nine Months Ended � June
27, June 29, June 27, June 29, 2008 2007 2008 2007 � GAAP net
income per share, diluted $ 0.12 $ 0.07 $ 0.34 $ 0.22 Share-based
compensation expense [a] 0.04 0.03 0.10 0.06 Cost of goods sold
adjustments [b] - (0.01 ) - (0.01 ) Acquisition related expense [c]
- - 0.01 - Selling, general and administrative adjustments [b] -
0.01 - 0.01 Restructuring & other charges [b] - - - 0.04
Amortization of intangible assets [c] 0.01 - 0.03 0.01 Tax
adjustments [e] 0.01 � 0.01 � 0.02 � 0.01 � Non-GAAP net income per
share, diluted $ 0.18 � $ 0.11 � $ 0.50 � $ 0.34 � � � � � � � � �
� � � � [a] These charges represent expense recognized in
accordance with FASB Statement No. 123(R), Share-Based Payment.
Approximately $0.7 million, $2.4 million and $3.0 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 27, 2008. Approximately $2.2 million,
$6.2 million and $8.4 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 27, 2008. � For the three months ended June 29, 2007,
approximately $0.5 million, $1.5 million and $1.6 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, 2007, approximately $0.9 million,
$3.6 million and $5.2 million were included in cost of goods sold,
research and development expense and selling, general and
administrative expense, respectively. � [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. For the
nine months ended June 27, 2008, selling, general and
administrative adjustments of $0.5 million represent a recovery of
bad debt expense on specific accounts receivable associated with
baseband product. � Due to accounting classifications, the
adjustments recorded during the three months ended June 29, 2007
associated with the baseband product area are recorded in various
lines and are summarized accordingly: revenue adjustments of $0.1
million, cost of goods sold credit adjustment of $1.2 million,
selling, general and administrative adjustments of $1.3 million and
restructuring and other charges of $0.3 million. � In addition to
the charges recorded in the third quarter of fiscal 2007, the nine
months ended June 29, 2007 included $1.4 million related to the
write-down of technology licenses and design software associated
with the baseband product area and $4.1 million related to lease
obligations associated with the closure of certain locations
associated with the baseband product area. � [c] During the first
quarter of fiscal 2008, Skyworks acquired Freescale Semiconductor's
power amplifier and front-end module product line. The purchase
accounting charges recognized during the three months ended June
27, 2008 include $0.8 million amortization of acquisition related
intangibles. Of the $0.8 million, $0.3 million was included in cost
of sales. Amortization expense of $0.6 million relates to a
previous business combination. � The purchase accounting charges
recognized during the nine months ended June 27, 2008 include a
$0.7 million charge to cost of sales related to the sale of
acquisition related inventory and $3.7 million amortization of
acquisition related intangibles. Of the $3.7 million, $0.6 million
was included in cost of sales. Amortization expense of $1.8 million
relates to a previous business combination. � [d] The charges
recorded during fiscal year 2007 represent a write-off in deferred
financing costs associated with the redemption of $130.0 million of
the Company's 4.75% convertible subordinated notes. � [e] During
the three months and nine months ended June 27, 2008, these charges
are primarily related to a non-cash tax charge related to the
utilization of pre-merger deferred tax assets and a non-cash tax
benefit related to other tax adjustments. � During the three months
and nine months ended June 29, 2007, these charges primarily
represent a non-cash tax charge related to the utilization of
pre-merger deferred tax assets. � The above 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 financial 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 � � � June 27, � Sept. 28, (in
thousands) 2008 2007 Assets Current assets: Cash and cash
equivalents $ 253,977 $ 248,079 Short-term investments - 5,700
Accounts receivable, net 169,289 167,319 Inventories 96,119 82,109
Prepaid expenses and other current assets 10,282 10,511 Property,
plant and equipment, net 171,636 153,516 Goodwill and intangible
assets, net 511,118 494,332 Other assets 28,587 28,342 Total assets
$ 1,241,008 $ 1,189,908 � Liabilities and Equity Current
liabilities: Credit facility $ 50,000 $ 50,000 Convertible notes -
49,335 Accounts payable 69,239 56,417 Accrued liabilities and other
current liabilities 37,612 41,471 Long-term debt 200,000 200,000
Other long-term liabilities 5,773 6,338 Stockholders' equity
878,384 786,347 Total liabilities and equity $ 1,241,008 $
1,189,908
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