Skyworks Solutions, Inc. (NASDAQ: SWKS), an innovator of high
reliability analog and mixed signal semiconductors enabling a broad
range of end markets, today announced second fiscal quarter 2009
results. Revenue for the quarter was $173.0 million, a 14 percent
decrease from $201.7 million in the year-ago period and versus
guidance of $168.0 million.
Non-GAAP operating income was $21.2 million in the second fiscal
quarter with diluted earnings per share of $0.12, $0.02 better than
consensus estimates. On a GAAP basis, operating loss for the second
fiscal quarter was $3.7 million and diluted loss per share was
$0.03, including $19.4 million of previously disclosed charges
relating to the Company�s operating expense reduction
initiatives.
�Despite the challenging economic backdrop, Skyworks delivered
solid financial results in the second fiscal quarter of 2009 driven
by our diversification, scale advantages, fab-lite strategy and
improved cost structure,� said David J. Aldrich, president and
chief executive officer of Skyworks. �Offsetting general market
weakness, our performance was highlighted by strength in energy
management and smart grid technologies, China 3G base stations,
smart phones and push-to-talk applications. At a higher level, we
believe our results demonstrate that Skyworks is gaining share in
the broader analog semiconductor market and is creating a highly
differentiated business model.�
Business Highlights
- Maintained non-GAAP gross margin
of 40 percent (38 percent on a GAAP basis)
- Reduced operating expenses by
more than $25 million on an annualized basis
- Partnered with Itron, a leading
energy technology provider, to meet increasing demand for smart
meter technology
- Captured key design wins at
Huawei and ZTE for 3G and 4G base station solutions
- Unveiled a suite of low noise
amplifiers targeting ultra-high performance infrastructure, GPS and
satellite radio applications
- Supported an increasingly
popular e-book reading platform developed by one of the world�s
largest online retailers
- Expanded Qualcomm baseband
partnership leveraging higher value front-end modules and
encompassing a growing number of 2G, 3G and HSDPA reference
designs
- Named Supplier of the Year for
the second consecutive time by LG Electronics
Third Fiscal Quarter 2009 Outlook
�Although we remain cautious on the macro-economy, Skyworks
intends to resume top and bottom line growth in the current quarter
through share gains and participation in new markets,� said Donald
W. Palette, vice president and chief financial officer of Skyworks.
�Specifically, we expect June quarterly revenue to be up 5 percent
sequentially with expanding margins driving non-GAAP diluted
earnings per share of $0.14 - - - a 15 percent sequential
improvement in profitability.�
Estimated non-GAAP diluted earnings per share for the third
fiscal quarter excludes approximately $4.6 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, business restructuring charges,
amortization of intangible assets, tax valuation allowance
reversals, 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' Second Fiscal Quarter 2009 Conference Call
Skyworks will host a conference call with analysts to discuss
its second fiscal quarter 2009 results and business outlook today
at 5:00 p.m. Eastern Daylight Time (EDT). 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 888-397-5350 (domestic)
or 719-325-2208 (international), confirmation code: 5805435.
Playback of the conference call will begin at 9:00 p.m. EDT on
April 23, and end at 9:00 p.m. EDT on April 30. The replay will be
available on Skyworks' Web site or by calling 888-203-1112
(domestic) or 719-457-0820 (international), pass code: 5805435.
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 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," "forecasts,"
"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:
unprecedented 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, 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 � � April 3, March 28, April 3, March 28, (in
thousands, except per share amounts) 2009 � 2008 � 2009 � 2008 �
Net revenues $ 172,990 $ 201,708 $ 383,218 $ 412,241 Cost of goods
sold 108,115 � 121,341 � 234,476 � 249,536 � Gross profit 64,875
80,367 148,742 162,705 � Operating expenses: Research and
development 28,596 36,581 63,240 70,675 Selling, general and
administrative 22,794 23,346 49,895 48,633 Restructuring &
other charges 15,982 - 15,982 - Amortization of intangibles 1,246 �
1,871 � 2,395 � 3,803 � Total operating expenses 68,618 61,798
131,512 123,111 � Operating (loss) income (3,743 ) 18,569 17,230
39,594 � Interest expense (808 ) (1,769 ) (1,947 ) (3,977 ) Gain on
early retirement of convertible debt - - 2,035 - Other (expense)
income, net (13 ) 1,883 � 1,389 � 3,933 � (Loss) income before
income taxes (4,564 ) 18,683 18,707 39,550 Provision for income
taxes 25 � 2,010 � 1,272 � 3,799 � Net (loss) income $ (4,589 ) $
16,673 � $ 17,435 � $ 35,751 � � Earnings per share: Basic $ (0.03
) $ 0.10 $ 0.11 $ 0.22 Diluted $ (0.03 ) $ 0.10 $ 0.11 $ 0.22
Weighted average shares: Basic 165,997 161,165 165,426 160,742
Diluted 165,997 162,982 165,981 162,740
SKYWORKS SOLUTIONS,
INC. UNAUDITED RECONCILIATION OF NON-GAAP MEASURES � � �
� � � � � � � � � Three Months Ended Six Months Ended � � April 3,
March 28, April 3, March 28, (in thousands) 2009 2008 2009 2008 �
GAAP gross profit $ 64,875 $ 80,367 $ 148,742 $ 162,705
Share-based compensation expense
(a)
828 677 1,737 1,511
Cost of goods sold adjustments
(d)
3,458 - 3,458 -
Acquisition related expense
(c)
- � 336 � - � 951 � Non-GAAP gross profit $ 69,161 � $ 81,380 � $
153,937 � $ 165,167 � � Non-GAAP gross margin % 40.0 % 40.3 % 40.2
% 40.1 % � � � � � � � � Three Months Ended Six Months Ended �
April 3, March 28, April 3, March 28, (in thousands) 2009 2008 2009
2008 � GAAP operating (loss) income $ (3,743 ) $ 18,569 $ 17,230 $
39,594
Share-based compensation expense
(a)
4,264 5,643 10,853 10,650
Cost of goods sold adjustments
(d)
3,458 - 3,458 -
Selling, general and
administrative adjustments (b)
(150 ) (502 ) (399 ) (502 )
Acquisition related expense
(c)
- 336 - 951
Amortization of intangible assets
(c)
1,246 1,871 2,395 3,803 Deferred executive compensation 163 - 326 -
Restructuring & other charges
(d)
15,982 � - � 15,982 � - � Non-GAAP operating income $ 21,220 � $
25,917 � $ 49,845 � $ 54,496 � � � � � � � � � Three Months Ended
Six Months Ended � April 3, March 28, April 3, March 28, (in
thousands) 2009 2008 2009 2008 � GAAP net (loss) income $ (4,589 )
$ 16,673 $ 17,435 $ 35,751
Share-based compensation expense
(a)
4,264 5,643 10,853 10,650
Cost of goods sold adjustments
(d)
3,458 - 3,458 -
Selling, general and
administrative adjustments (b)
(150 ) (502 ) (399 ) (502 )
Acquisition related expense
(c)
- 336 - 951
Amortization of intangible assets
(c)
1,246 1,871 2,395 3,803 Deferred executive compensation 163 - 326 -
Restructuring & other charges
(d)
15,982 - 15,982 -
Gain on early retirement of
convertible debt (e)
- - (2,035 ) -
Tax adjustments (f)
(369 ) 1,313 � (369 ) 2,534 � Non-GAAP net income $ 20,005 � $
25,334 � $ 47,646 � $ 53,187 � � � � � � � � � Three Months Ended
Six Months Ended � April 3, March 28, April 3, March 28, 2009 2008
2009 2008 � GAAP net (loss) income per share, diluted $ (0.03 ) $
0.10 $ 0.11 $ 0.22
Share-based compensation expense
(a)
0.02 0.04 0.06 0.07
Cost of goods sold adjustments
(d)
0.02 - 0.02 -
Selling, general and
administrative adjustments (b)
- - - (0.01 )
Acquisition related expense
(c)
- - - 0.01
Amortization of intangible assets
(c)
0.01 0.01 0.01 0.02
Restructuring & other charges
(d)
0.10 - 0.10 -
Gain on early retirement of
convertible debt (e)
- - (0.01 ) -
Tax adjustments (f)
- � 0.01 � - � 0.02 � Non-GAAP net income per share, diluted $ 0.12
� $ 0.16 � $ 0.29 � $ 0.33 �
(a)
�
These charges represent expense
recognized in accordance with FASB Statement No. 123(R),
Share-Based Payment. Approximately $0.8 million, $1.2 million and
$2.3 million were included in cost of goods sold, research and
development expense and selling, general and administrative
expense, respectively, for the three months ended April 3, 2009.
Approximately $1.7 million, $2.8 million and $6.3 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 3, 2009.
� For the three months ended March 28, 2008, approximately $0.7
million, $2.6 million and $2.3 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 28, 2008, approximately $1.5 million, $3.8 million and $5.3
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. For the three months and six months ended
April 3, 2009, selling, general and administrative adjustments of
$0.2 million and $0.4 million, respectively, represent a recovery
of bad debt expense on specific accounts receivable associated with
baseband product. � For the three months and six months ended March
28, 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. �
(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 April 3, 2009 include $0.6 million amortization
of acquisition related intangibles. Amortization expense of $0.6
million primarily relates to a previous business combination. � The
purchase accounting charges recognized during the six months ended
April 3, 2009 include $1.2 million amortization of acquisition
related intangibles. Amortization expense of $1.2 million primarily
relates to a previous business combination. � The purchase
accounting charges recognized during the three months ended March
28, 2008 include $1.6 million amortization of acquisition related
intangibles. Of the $1.6 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 six months ended March 28, 2008 include a
$0.6 million charge to cost of sales related to the sale of
acquisition related inventory and $2.9 million amortization of
acquisition related intangibles. Of the $2.9 million, $0.3 million
was included in cost of sales. Amortization expense of $1.2 million
relates to a previous business combination. �
(d)
On January 22, 2009, the Company implemented a restructuring plan
to realign its costs given current business conditions. The plan
reduced global headcount by approximately 4%, or 150 employees. �
The total charges related to the plan were $19.4 million. Due to
accounting classifications, the charges associated with the plan
are recorded in various lines and are summarized as follows: � Cost
of goods sold adjustments include approximately $3.5 million of
inventory write-downs. � Restructuring and other charges primarily
consisted of $4.5 million related to severance and benefits, $5.6
million related to the impairment of long-lived assets, $2.0
million related to lease obligations, $2.3 million related to the
impairment of technology licenses and design software and $1.5
million related to other charges. �
(e)
The gain recorded during the first quarter of fiscal 2009 relates
to the early retirement of $40.5 million of the Company's 1.50%
convertible subordinated notes. The notes were retired at a gain of
approximately $2.9 million offset by a $0.9 million write-off of
deferred financing costs. �
(f)
During the three months and six months ended April 3, 2009, this
charge primarily relates to the Company's application of its annual
cash tax rate to non-GAAP income. � During the three months and six
months ended March 28, 2008, 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 � � � � April 3, Oct. 3, (in thousands) 2009 2008
Assets Current assets: Cash and cash equivalents $ 267,913 $
231,066 Accounts receivable, net 112,130 146,710 Inventories 91,753
103,791 Prepaid expenses and other current assets 14,838 13,089
Property, plant and equipment, net 163,576 173,360 Goodwill and
intangible assets, net 502,242 503,417 Other assets 61,852 64,666
Total assets $ 1,214,304 $ 1,236,099 �
Liabilities and
Equity Current liabilities: Credit facility $ 50,000 $ 50,000
Convertible notes 50,000 - Accounts payable 48,098 58,527 Accrued
liabilities and other current liabilities 35,195 40,213 Long-term
debt 47,116 137,616 Other long-term liabilities 4,965 5,527
Stockholders' equity 978,930 944,216 Total liabilities and equity $
1,214,304 $ 1,236,099
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