Skyworks Achieves 45 Percent Year-Over-Year Revenue Growth to $218 Million for the Fourth Fiscal Quarter of 2004; Delivers Record Operating Income, Net Income and EPS
On a pro forma basis, operating income for the fourth fiscal quarter was $21.2 million versus a loss of $4.8 million during the same period a year ago. GAAP operating income for the fourth fiscal quarter of 2004 was $18.8 million, reversing a loss of $37.9 million in the corresponding quarter a year ago. Fourth fiscal quarter pro forma diluted earnings per share was $0.12, while GAAP diluted earnings per share was $0.11.
For the 2004 fiscal year, revenues grew 27 percent to $784.0 million from $617.8 million in the prior fiscal year. Pro forma operating income improved to $64.0 million for the fiscal year, up from $3.2 million during the same period a year ago, while GAAP operating income improved to $42.7 million from an operating loss of $33.6 million. Pro forma diluted EPS for fiscal 2004 was $0.31 versus a loss of $0.13 in the prior year, with GAAP diluted EPS of $0.17 compared to a loss of $3.24 per share, respectively.
"Our 45 percent year-over-year revenue growth clearly reflects the successful launch and volume production of our innovative semiconductor solutions as well as continued market share gains across key product lines, geographies and customers," said David J. Aldrich, Skyworks' president and chief executive officer. "As we enter our new fiscal year, the ramp of our EDGE and WCDMA solutions is positioning us to once again outgrow the wireless market. In addition, we intend to leverage our analog, mixed signal and digital integration competencies beyond handsets into other high-margin segments as we continue to aggressively grow both our top and bottom lines."
Financial Achievements
-- Delivered record net income with pro forma EPS of $0.12
-- Generated $28 million of cash flow from operations
-- Reduced DSO by 3 days and increased inventory turns to 6.6
times
-- Increased cash balance to $215 million
Product Highlights
Front-End Modules
-- Gained power amplifier module market share with unit volumes
up more than 75 percent year over year
-- Ramped production of transmit modules in support of WCDMA
platforms at a tier-one handset supplier
Radio Solutions
-- Received initial volume purchase order for Helios(TM) EDGE
radio system from a large Korean handset provider
-- Surpassed 100 millionth unit milestone for complete RF
subsystems
Cellular Systems
-- Achieved record revenues and unit shipments highlighted by new
platform ramps at Arima, CECT, Lenovo, NEC and Sanyo
-- Scored a complete system solution design win with another
leading Japanese handset OEM
Infrastructure and Wireless Data
-- Introduced the industry's most comprehensive RF subsystem for
3G and 4G wideband base stations
-- Secured a front-end module design win at Sony-Ericsson in
support of machine-to-machine applications
First Fiscal Quarter 2005 Outlook
"We expect share gains and our increasing content per handset to more than offset market softness in China, enabling modest revenue growth in the first fiscal quarter," said Allan M. Kline, Skyworks' vice president and chief financial officer. "We also anticipate expanded gross margins and reduced operating expenses as a percentage of sales to drive a 10 percent sequential improvement in operating income."
Skyworks' Fourth Quarter Conference Call
Skyworks will host a conference call at 5 p.m. Eastern time (ET) today to discuss fourth quarter 2004 fiscal year results. To listen to the conference call via the Internet, please visit the Investor Relations section of Skyworks' Web site at www.skyworksinc.com. To listen to the conference call via telephone, please call 800-289-0544 (domestic) or 913-981-5533 (international), security code: Skyworks.
Playback of the conference call will begin at 9 p.m. ET today and end at 9 p.m. ET on November 3, 2004. The replay will be available on Skyworks' Web site or by calling 888-203-1112 (domestic) or 719-457-0820 (international); access code: 924980#.
About Skyworks
Skyworks Solutions, Inc. is the industry's leading wireless semiconductor company focused on RF and complete cellular system solutions for mobile communications applications. The company provides front-end modules, RF subsystems and cellular systems to handset, WLAN and infrastructure customers.
Skyworks is headquartered in Woburn, Mass., with executive offices in Irvine, Calif. The company has design, engineering, manufacturing, marketing, sales and service facilities throughout North America, Europe, Japan, China, Korea, Taiwan and India. For more information please visit www.skyworksinc.com.
Safe Harbor Statement
This press release, and related conference call, includes "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements included in this press release and related conference call, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements include information relating to future results of Skyworks (including certain projections and anticipated 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 expressed.
These risks and uncertainties include, but are not limited to: global economic and market conditions, such as the cyclical nature of the semiconductor industry and the markets addressed by the company's and its customers' products; demand for and market acceptance of new and existing products; the ability to develop, manufacture and market innovative products in a rapidly changing technological environment; the ability to compete with products and prices in an intensely competitive industry; product obsolescence; losses or curtailments of purchases from key customers or the timing of customer inventory adjustments; the timing of new product introductions; the availability and extent of utilization of raw materials, critical manufacturing equipment and manufacturing capacity; pricing pressures and other competitive factors; changes in product mix; fluctuations in manufacturing yields; the ability to continue to grow and maintain an intellectual property portfolio and obtain needed licenses from third parties; the ability to attract and retain qualified personnel; labor relations of the company, its customers and suppliers; economic, social and political conditions in the countries in which Skyworks, its customers or its suppliers operate, including health and security risks, possible disruptions in transportation networks and fluctuations in foreign currency exchange rates; and the uncertainties of litigation, as well as other risks and uncertainties, including but not limited to those detailed from time to time in the company's filings with the Securities and Exchange Commission.
These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
SKYWORKS SOLUTIONS, INC.
UNAUDITED GAAP CONSOLIDATED STATEMENT OF OPERATIONS
Quarter Ended Year Ended
Oct 1, Oct 3, Oct 1, Oct 3,
(in thousands) 2004 2003 2004 2003
Net revenues $218,067 $150,032 $784,023 $617,789
Cost of goods sold 130,407 94,915 470,807 370,940
Gross profit 87,660 55,117 313,216 246,849
Operating expenses:
Research and development 38,383 38,951 152,633 156,077
Selling, general and
administrative 28,095 21,227 97,522 85,432
Special charges 1,607 31,773 17,366 34,493
Amortization of intangibles 737 1,076 3,043 4,386
Total operating expenses 68,822 93,027 270,564 280,388
Operating income (loss) 18,838 (37,910) 42,652 (33,539)
Interest expense (3,561) (5,553) (17,947) (21,403)
Other income (expense), net 540 (414) 1,691 1,317
Income (loss) before income taxes 15,817 (43,877) 26,396 (53,625)
Provision (credit) for income
taxes (2,278) (950) 520 652
Net income (loss) before
cumulative effect of change in
accounting principle 18,095 (42,927) 25,876 (54,277)
Cumulative effect of change in
accounting principle, net of tax - - - (397,139)
Net income (loss) $18,095 $(42,927) $25,876 $(451,416)
Earnings per share:
Basic $0.12 $(0.30) $0.17 $(3.24)
Diluted $0.11 $(0.30) $0.17 $(3.24)
Weighted average shares:
Basic 155,860 142,498 152,090 139,376
Diluted 157,581 142,498 154,242 139,376
As the Company indicated in its third quarter fiscal 2004 earnings
conference call, certain expenses which were included in cost of
goods sold prior to the fourth quarter of fiscal 2004 have been
reclassified to either research and development or selling, general
and administrative expenses for all periods presented in the table
above.
SKYWORKS SOLUTIONS, INC.
UNAUDITED RECONCILIATION OF PRO FORMA NON-GAAP FINANCIAL MEASURES
Quarter Ended Year Ended
Oct 1, Oct 3, Oct 1, Oct 3,
(in thousands) 2004 2003 2004 2003
GAAP Operating income (loss) $18,838 $(37,910) $42,652 $(33,539)
Reduction to purchase
obligation (a) - - - (4,805)
Asset impairments (b) - 28,269 13,906 28,269
Restructuring charges (c) 1,607 3,754 4,434 8,856
Amortization of intangible
assets 737 1,076 3,043 4,386
Pro forma operating income
(loss) $21,182 $(4,811) $64,035 $3,167
Quarter Ended Year Ended
Oct 1, Oct 3, Oct 1, Oct 3,
(in thousands) 2004 2003 2004 2003
GAAP net income (loss) $18,095 $(42,927) $25,876 $(451,416)
Reduction to purchase
obligation (a) - - - (4,805)
Asset impairments (b) - 28,269 13,906 28,269
Restructuring charges (c) 1,607 3,754 4,434 8,856
Amortization of intangible
assets 737 1,076 3,043 4,386
Goodwill impairment (d) - - - 397,139
Pre-merger tax adjustments (1,002) - (18) -
Pro forma net income (loss) $19,437 $(9,828) $47,241 $(17,571)
Quarter Ended Year Ended
Oct 1, Oct 3, Oct 1, Oct 3,
2004 2003 2004 2003
GAAP net income (loss) per
share, diluted $0.11 $(0.30) $0.17 $(3.24)
Reduction to purchase
obligation (a) - - - (0.03)
Asset impairments (b) - 0.20 0.10 0.20
Restructuring charges (c) 0.01 0.03 0.03 0.06
Amortization of intangible
assets 0.01 - 0.01 0.03
Goodwill impairment (d) - - - 2.85
Pre-merger tax adjustments (0.01) - - -
Pro forma net income (loss) per
share, diluted $0.12 $(0.07) $0.31 $(0.13)
(a)Represents a change in the estimate of the Company's excess costs
related to its purchase obligation with Jazz Semiconductor Inc.
which was included in cost of goods sold.
(b)In fiscal 2004, these charges primarily consist of a write-down of
legacy technology licenses related to the Company's cellular
systems business which was included in operating expenses, except
for $0.7 million which was included in cost of goods sold.
In fiscal 2003, these charges primarily consist of a write-down of
assets related to the Company's infrastructure business which was
included in operating expenses.
(c)Represents certain costs incurred to implement facility
consolidations which was included in special charges, except for
$0.3 million and $2.6 million which were included in selling,
general and administrative expenses in the fourth quarter of
fiscal 2003 and the year ended October 3, 2003, respectively, and
$0.3 million which was included in cost of goods sold for the year
ended October 1, 2004.
(d)The Company adopted SFAS No. 142, "Goodwill and Other Intangible
Assets" during fiscal 2003. As a result of the adoption of SFAS
No. 142, the Company was required to evaluate for impairment
goodwill and intangible assets that have indefinite lives. Based
on this evaluation, the Company determined that its goodwill was
impaired. The amount of this impairment charge was $397.1 million.
The above pro forma non-GAAP financial measures are based upon our
unaudited consolidated statements of operations for the periods
shown. These financial measures are not in accordance with, or an
alternative for, U.S. Generally Accepted Accounting Principles
(GAAP). However, the Company believes this information is useful in
understanding the results of operations. Therefore, Skyworks provides
this supplemental information to enable investors to perform
additional comparisons of operating results and as a means to provide
additional insight into the Company's ongoing operations and economic
performance.
SKYWORKS SOLUTIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
Oct 1, Oct 3,
(in thousands) 2004 2003
Assets
Current assets:
Cash, cash equivalents and short-term
investments $214,552 $170,806
Accounts receivable, net 157,772 144,267
Inventories 79,572 58,168
Prepaid expenses and other current
assets 11,968 12,854
Property, plant and equipment, net 150,009 127,765
Goodwill and intangible assets, net 524,388 527,695
Other assets 34,009 49,113
Total assets $1,172,270 $1,090,668
Liabilities and Equity
Current liabilities:
Short-term debt $50,000 $41,681
Accounts payable 73,405 50,369
Accrued liabilities and other current
liabilities 57,846 44,766
Long-term debt 230,000 275,000
Other long-term liabilities 5,932 5,677
Stockholders' equity 755,087 673,175
Total liabilities and equity $1,172,270 $1,090,668
CONTACT:
Skyworks Solutions
Pilar Barrigas (Media), 949-231-3061
or
Thomas Schiller (Investors), 949-231-4700
SOURCE: Skyworks Solutions