Skyworks Solutions, Inc. (NASDAQ: SWKS), an innovator of high
reliability analog and mixed signal semiconductors enabling a broad
range of end markets, today reported fourth fiscal quarter and year
end 2011 results. Revenue for the quarter was $402.3 million versus
guidance of $400 million, and was up 28 percent year-over-year and
13 percent sequentially. For fiscal year 2011, revenue was $1.419
billion versus $1.072 billion in fiscal 2010, a 32 percent
increase.
On a non-GAAP basis, operating income for the fourth fiscal
quarter was $109.4 million, up from $81.8 million in the prior-year
period, reflecting a 34 percent increase. Non-GAAP diluted earnings
per share for the fourth fiscal quarter was $0.54 compared to $0.43
for the same period a year ago, a 26 percent improvement. On a GAAP
basis, operating income for the fourth fiscal quarter of 2011 was
$77.7 million and diluted earnings per share was $0.34.
For fiscal 2011, operating income was $384.7 million on a
non-GAAP basis, up 56 percent from $246.3 million in fiscal 2010,
while non-GAAP diluted earnings per share for the year was $1.89
compared to $1.26 in fiscal 2010, a 50 percent improvement. On a
GAAP basis, operating income for fiscal 2011 was $295.3 million and
diluted earnings per share was $1.19.
“Skyworks’ solid performance demonstrates the strength of our
diversified business model, continued share gains and operational
leverage,” said David J. Aldrich, president and chief executive
officer of Skyworks. “At a higher level, despite the current
economic environment, we believe that long-term industry
fundamentals remain strong as analog content and complexity
continue to increase. Given our differentiated product portfolio,
technology leadership, broad customer engagements and scale,
Skyworks is strategically well positioned to capitalize on the
growing number of platforms that are becoming wirelessly enabled
and, in turn, to outperform our addressed markets.”
Q4 Business Highlights
- Expanded gross margin by 90 basis
points year-over-year to 44.7 percent on a non-GAAP basis (43.4
percent GAAP)
- Improved operating margin by 110 basis
points year-over-year to 27.2 percent on a non-GAAP basis (19.3
percent GAAP)
- Ramped 3G/LTE multimode, multiband
solutions for Samsung’s next generation Galaxy S™ II smart phone
platforms
- Supported ZTE’s launch of tablets and
notebooks with EDGE and WCDMA/LTE front-end solutions
- Introduced a family of low noise
amplifiers for wireless infrastructure and networking
applications
- Shipped switch matrix solutions to
Siemens Healthcare for deployment in their Magnetic Resonance
Imaging (MRI) scanners
- Designed into a leading manufacturer’s
platform for hearing aids using ultra low power amplifiers
- Commenced volume shipments of
ZigBee®-enabled solutions to multiple ODMs in support of home
security applications
First Fiscal Quarter 2012 Outlook
“We anticipate revenue in the first fiscal quarter of 2012 to be
up 16 percent year-over-year in the $390 million range,” said
Donald W. Palette, vice president and chief financial officer of
Skyworks. “Our guidance reflects near term market weakness largely
offset by new program ramps. Operationally, we expect to deliver
non-GAAP diluted earnings per share of $0.50. Note, our outlook
excludes any contribution from Advanced Analogic Technologies.”
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’ Fourth Fiscal Quarter 2011 Conference Call
Skyworks will host a conference call with analysts to discuss
its fourth 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 888-312-3052 (domestic) or 719-325-2107 (international),
confirmation code: 1214860.
Playback of the conference call will begin at 9:00 p.m. Eastern
time on November 3, and end at 9:00 p.m. Eastern time on November
10. The replay will be available on Skyworks’ Web site or by
calling 888-203-1112 (domestic) or 719-457-0820 (international),
pass code: 1214860.
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, circulators, detectors, diodes, directional couplers,
front-end modules, hybrids, infrastructure RF subsystems,
isolators, mixers/demodulators, optocouplers, optoisolators, 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: whether, as a result of the outcome of an
arbitration proceeding in Delaware chancery court scheduled for the
end of November 2011, we are required to close the acquisition of
Advanced Analogic Technologies; whether we are able to successfully
integrate Advanced Analogic Technologies’ operations if we are
required to close such acquisition; 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; 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 Year Ended Sept. 30, Oct. 1, Sept.
30, Oct. 1, (in thousands, except per share amounts) 2011 2010 2011
2010 Net revenue $ 402,316 $ 313,283 $ 1,418,922 $ 1,071,849
Cost of goods sold 227,756 177,124
798,618 615,016 Gross profit 174,560
136,159 620,304 456,833 Operating expenses: Research and
development 47,409 35,409 168,637 134,140 Selling, general and
administrative 39,071 33,689 137,238 117,853
Restructuring and other charges
(credits)
888 - 2,363 (1,040 ) Amortization of intangibles 9,496
1,634 16,742 6,136
Total operating expenses 96,864 70,732 324,980 257,089
Operating income 77,696 65,427 295,324 199,744 Interest
expense (473 ) (627 ) (1,936 ) (4,246 ) Loss on early retirement of
convertible debt - - - (79 ) Other income (loss), net 683
(45 ) 498 (345 ) Income before
income taxes 77,906 64,755 293,886 195,074 Provision for income
taxes 13,697 17,951 67,301
57,780 Net income $ 64,209 $ 46,804
$ 226,585 $ 137,294 Earnings per share:
Basic $ 0.35 $ 0.26 $ 1.24 $ 0.78 Diluted $ 0.34 $ 0.25 $ 1.19 $
0.75 Weighted average shares: Basic 183,591 177,418 182,879 175,020
Diluted 190,786 184,734 190,667 182,738
SKYWORKS
SOLUTIONS, INC. UNAUDITED RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES Three Months
Ended Year Ended Sept. 30, Oct. 1, Sept. 30, Oct. 1,
(in thousands) 2011 2010 2011 2010 GAAP gross profit $
174,560 $ 136,159 $ 620,304 $ 456,833 Share-based compensation
expense [a] 2,160 1,105 7,557 3,857 Acquisition-related expense [b]
2,955 - 4,572 -
Non-GAAP gross profit $ 179,675 $ 137,264 $
632,433 $ 460,690 Non-GAAP gross margin % 44.7
% 43.8 % 44.6 % 43.0 % Three Months Ended Year Ended
Sept. 30, Oct. 1, Sept. 30, Oct. 1, (in thousands) 2011 2010
2011 2010 GAAP operating income $ 77,696 $ 65,427 $ 295,324
$ 199,744 Share-based compensation expense [a] 15,650 14,503 58,338
40,742 Acquisition-related expense [b] 5,509 - 9,014 - Litigation
settlement gains and losses [c] - - 2,300 - Amortization of
intangible assets 9,496 1,634 16,742 6,136 Restructuring &
other charges (credits) [d] 888 - 2,363 (1,040 ) Deferred executive
compensation 143 233 594 752 Non-GAAP
operating income $ 109,382 $ 81,797 $ 384,675
$ 246,334 Non-GAAP operating margin % 27.2 % 26.1 %
27.1 % 23.0 % Three Months Ended Year Ended
Sept. 30, Oct. 1, Sept. 30, Oct. 1, (in thousands) 2011 2010 2011
2010 GAAP net income $ 64,209 $ 46,804 $ 226,585 $ 137,294
Share-based compensation expense [a] 15,650 14,503 58,338 40,742
Acquisition-related expense [b] 5,509 - 9,014 - Litigation
settlement gains and losses [c] - - 2,300 - Amortization of
intangible assets 9,496 1,634 16,742 6,136 Restructuring &
other charges (credits) [d] 888 - 2,363 (1,040 ) Deferred executive
compensation 143 233 594 752 Loss on early retirement of
convertible debt [e] - - - 79 Amortization of discount on
convertible debt [f] 345 322 1,345 2,502 Tax adjustments [g]
7,581 15,287 43,004
42,982 Non-GAAP net income $ 103,821 $ 78,783
$ 360,285 $ 229,447 Three Months Ended
Year Ended Sept. 30, Oct. 1, Sept. 30, Oct. 1, 2011 2010
2011 2010 GAAP net income per share, diluted $ 0.34 $ 0.25 $
1.19 $ 0.75 Share-based compensation expense [a] 0.08 0.08 0.31
0.22 Acquisition-related expense [b] 0.03 - 0.05 - Litigation
settlement gains and losses [c] - - 0.01 - Amortization of
intangible assets 0.05 0.01 0.09 0.04 Restructuring & other
charges (credits) [d] - - 0.01 - Amortization of discount on
convertible debt [f] - - - 0.01 Tax adjustments [g] 0.04
0.09 0.23 0.24
Non-GAAP net income per share, diluted $ 0.54 $ 0.43
$ 1.89 $ 1.26
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 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, 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 first quarter of our
2012 fiscal year (“Q1 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 Q1 2012 non-GAAP diluted earnings per share to a
forward looking estimate of Q1 2012 GAAP diluted earnings per share
because certain information needed to make a reasonable forward
looking estimate of GAAP diluted earnings per share for Q1 2012
(other than estimated stock compensation expense of $0.09 per
diluted share, certain tax items of $0.06 per diluted share,
estimated acquisition related expense of $0.04 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 gains and losses on
retirement of convertible debt, 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 $0.05 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 $2.2 million, $5.0 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 three months ended September 30,
2011.
Approximately $7.6 million, $18.1 million
and $32.6 million were included in cost of goods sold, research and
development expense and selling, general and administrative
expense, respectively, for the fiscal year ended September 30,
2011.
For the three months ended October 1,
2010, approximately $1.1 million, $1.9 million and $11.5 million
were included in costs of goods sold, research and development
expense and selling, general and administrative expense,
respectively.
For the fiscal year ended October 1, 2010,
approximately $3.9 million, $7.4 million and $29.4 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 fiscal year ended September 30, 2011
includes a $2.9 million and $4.6 million charge, respectively, to
cost of sales related to the sale of acquired inventory. Also
included in acquisition-related expense is $2.6 million and $4.4
million, respectively, in transaction costs associated with
acquisitions completed or contemplated during the three months and
fiscal year ended September 30, 2011.
[c]
During the fiscal year ended September 30,
2011, the Company recognized a $2.3 million charge related to the
resolution of a contractual dispute.
[d]
During the fiscal year ended September 30,
2011, the Company implemented a restructuring plan to reduce the
headcount associated with its acquisition of SiGe Semiconductor,
Inc. Approximately $0.9 million and $2.4 million in restructuring
related charges were recorded during the three months and fiscal
year ended September 30, 2011, respectively.
For the fiscal year ended October 1, 2010,
the Company recorded a $1.0 million credit to restructuring and
other charges related to the sale of an impaired long-lived
asset.
[e]
The net loss recorded during the fiscal
year ended October 1, 2010 relates to a loss on the retirement of
$32.6 million of the Company's 1.25% convertible subordinated notes
due on March 1, 2010 offset by a gain on the retirement of $20.4
million 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
$0.3 million and $1.3 million, respectively, of amortization
expense was recognized during the three months and fiscal year
ended September 30, 2011.
Approximately $0.3 million and $2.5
million, respectively, of amortization expense was recognized
during the three months and fiscal year ended October 1, 2010.
[g]
During the three months and fiscal year
ended September 30, 2011, these amounts primarily represent
deferred tax expense not affecting taxes payable and non-cash
expense related to uncertain tax positions.
During the three months and fiscal year
ended October 1, 2010, these amounts primarily represent the
utilization of net operating loss and research and development
credit carryforwards.
SKYWORKS SOLUTIONS, INC. UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET Sept. 30,
Oct. 1, (in thousands) 2011 2010
Assets Current
assets: Cash and cash equivalents $ 410,799 $ 459,385 Accounts
receivable, net 177,940 175,232 Inventories 198,183 125,059 Prepaid
expenses and other current assets 29,412 30,189 Property, plant and
equipment, net 251,365 204,363 Goodwill and intangible assets, net
749,849 498,096 Other assets 72,841 71,728 Total
assets $ 1,890,389 $ 1,564,052
Liabilities and Equity
Current liabilities: Credit facility $ - $ 50,000 Convertible notes
26,089 - Accounts payable 115,290 111,967 Accrued liabilities and
other current liabilities 105,717 42,357 Long-term debt - 24,743
Other long-term liabilities 34,198 18,389 Stockholders' equity
1,609,095 1,316,596 Total liabilities and equity $
1,890,389 $ 1,564,052
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