Skyworks Grows Third Quarter Fiscal 2004 Revenues 38 Percent Year-Over-Year and 13 Percent Sequentially to a Record $207 Million
On a pro forma basis, excluding amortization of intangible assets and special items, operating income for the third fiscal quarter was $18.6 million, up 41 percent sequentially and up from $0.2 million during the same period a year ago. GAAP operating income for the third fiscal quarter was $17.8 million, up from a loss of $4.4 million during the prior quarter and versus a loss of $1.1 million a year ago. Third fiscal quarter pro forma diluted earnings per share was $0.10, up 100 percent sequentially and $0.03 better than First Call consensus estimates. GAAP diluted earnings per share was $0.08.
"The market's acceptance of our newest wireless products along with the successful ramps of several key programs drove our strong third fiscal quarter performance. In particular, we gained market share across virtually all major product segments, delivered operating leverage, achieved record bottom line results and strengthened our balance sheet," said David J. Aldrich, Skyworks' president and chief executive officer. "Consistent with the strategy developed at the formation of Skyworks, we are effectively leveraging our analog, mixed signal and digital integration competencies, simplifying customers' system architectures and capturing a higher degree of semiconductor and software content. Looking to the future, design win traction for our portfolio of highly integrated EDGE and 3G WCDMA / UMTS semiconductor solutions is positioning us to outpace the wireless market growth rate and deliver a strong second half of 2004 and beyond."
Financial Achievements
-- Grew revenue 13 percent sequentially and 38 percent
year-over-year to an all-time high
-- Expanded gross margins by 70 basis points sequentially to 39
percent
-- Delivered record operating income, net income and EPS
-- Generated $18 million in cash flow from operations
-- Converted $45 million in long-term debt in an accretive
transaction
Product Highlights
Front-End Modules
-- Gained PA module market share with unit volume up over 75
percent year-over-year
-- Secured a key fully integrated transmit module design win in
support of a tier one handset OEM's WCDMA / UMTS platform
Radio Solutions
-- Captured a Helios(TM) EDGE radio system design win at a large
Korean handset OEM
-- Scored Quanta Computer Inc. as a key Helios(TM) EDGE customer
Cellular Systems
-- Commenced volume production at Sanyo, one of Japan's fastest
growing handset OEMs and a leading consumer brand
-- Launched complete solutions at Lenovo, a division of Legend,
the largest high technology enterprise in China
Infrastructure and Wireless Data Products
-- Ramped EDGE and 3G linear base station components driven by
service provider deployments throughout North America, Europe,
China and India
-- Introduced PA Plus(TM), a highly efficient short range
wireless power amplifier with on-board filtering
Fourth Fiscal Quarter 2004 Outlook
"Continued market share gains led by our portfolio of next generation front-end modules and Helios EDGE radios coupled with ramps at several new cellular systems customers are contributing to strong visibility. Accordingly, we are forecasting our top line to grow approximately 5 percent sequentially in the September quarter," said Allan M. Kline, Skyworks' vice president and chief financial officer. "Operationally, we once again anticipate that gross margins will expand with operating expenses declining as a percentage of sales. In turn, we intend to improve operating profitability by 15 percent sequentially."
Skyworks' Third Quarter Conference Call
Skyworks will host a conference call at 5 p.m. Eastern Time today to discuss third quarter FY04 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 800-946-0720 (domestic) or 719-457-2646 (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 July 28, 2004. The replay will be available on Skyworks' Web site or by calling 888-203-1112 (domestic) or 719-457-0820 (international); access code: 217637#.
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 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 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: 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 Securities and Exchange Commission filings.
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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) Three Months Ended
(in thousands,
except per share data) Pro Forma Pro Forma GAAP GAAP
July 2, Adjustments July 2, June 27,
2004 2004 2003
Net revenues $207,377 $ - $207,377 $150,199
Cost of goods sold 126,528 - 126,528 94,121
Gross profit 80,849 - 80,849 56,078
Operating expenses:
Research and development 36,964 - 36,964 36,428
Selling, general and
administrative 25,306 - 25,306 19,711
Amortization of intangible
assets - 768 768 1,075
Operating income (loss) 18,579 (768) 17,811 (1,136)
Interest expense (3,609) - (3,609) (5,069)
Other income, net 395 - 395 282
Income (loss) before income
taxes 15,365 (768) 14,597 (5,923)
Provision for income taxes 583 984 (a) 1,567 263
Net income (loss) $14,782 $(1,752) $13,030 $(6,186)
Net income (loss) per share,
basic $0.10 $0.09 $(0.04)
Net income (loss) per share,
diluted $0.10 $0.08 $(0.04)
Weighted average shares, basic 153,062 153,062 138,729
Weighted average shares,
diluted 155,274 155,274 138,729
(a) Represents a non-cash tax charge related to utilization of pre-
merger deferred tax assets.
Although the pro forma presentation is not intended to present results
of operations in accordance with GAAP, 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.
(unaudited) Nine Months Ended
(in thousands, except Pro Forma Pro Forma GAAP GAAP
per share data) July 2, Adjustments July 2, June 27,
2004 2004 2003
Net revenues $565,956 $ - $565,956 $467,757
Cost of goods sold 348,089 974 (a) 349,063 283,040
Gross profit 217,867 (974) 216,893 184,717
Operating expenses:
Research and
development 109,650 - 109,650 113,838
Selling, general and
administrative 65,364 - 65,364 63,198
Amortization of
intangible assets - 2,306 2,306 3,310
Impairment and
restructuring (a) - 15,759 15,759 -
Operating income 42,853 (19,039) 23,814 4,371
Interest expense (14,386) - (14,386) (15,850)
Other income, net 1,151 - 1,151 1,731
Income (loss) before
income taxes 29,618 (19,039) 10,579 (9,748)
Provision for income taxes 1,814 984 (b) 2,798 1,602
Income (loss) before
cumulative effect of
change in accounting
principle $27,804 $(20,023) $7,781 $(11,350)
Cumulative effect of
change in accounting
principle (c) $ - $ - $ - $(397,139)
Net income (loss) $27,804 $(20,023) $7,781 $(408,489)
Loss per share before
cumulative effect of
change in accounting
principle, basic and
diluted $(0.08)
Cumulative effect of
change in accounting
principle per share,
basic and diluted $(2.87)
Net income (loss) per
share, basic $0.18 $0.05 $(2.95)
Net income (loss) per
share, diluted $0.18 $0.05 $(2.95)
Weighted average shares,
basic 150,414 150,414 138,255
Weighted average shares,
diluted 152,854 152,854 138,255
(a) Impairment and restructuring charges consist primarily of a write-
down of legacy technology licenses related to the Company's cellular
systems business and certain costs incurred to implement facility
consolidations.
(b) Represents a non-cash tax charge related to utilization of
pre-merger deferred tax assets.
(c) 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.
SKYWORKS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) July 2, Oct. 3,
(in thousands) 2004 2003
Assets
Current assets:
Cash, cash equivalents and short-term
investments $202,199 $170,806
Accounts receivable, net 156,530 144,267
Inventories 86,965 58,168
Prepaid expenses and other current assets 10,140 12,854
Property, plant and equipment, net 142,981 127,765
Goodwill and intangible assets, net 524,973 527,695
Other assets 37,881 49,113
Total assets $1,161,669 $1,090,668
Liabilities and Equity
Current liabilities:
Short-term debt $50,000 $41,681
Accounts payable 88,521 50,369
Accrued liabilities and other current
liabilities 53,697 44,766
Long-term debt 230,000 275,000
Other long-term liabilities 5,961 5,677
Stockholders' equity 733,490 673,175
Total liabilities and equity $1,161,669 $1,090,668
SKYWORKS SOLUTIONS, INC.
SUPPLEMENTAL INFORMATION FOR COMPARATIVE PURPOSES
(unaudited) Three Months Ended
(in thousands,
except per share data) Pro Forma Pro Forma GAAP
April 2, Adjustments April 2,
2004 2004
Net revenues $183,471 $ - $183,471
Cost of goods sold 113,193 974 (a) 114,167
Gross profit 70,278 (974) 69,304
Operating expenses 57,146 - 57,146
Amortization of intangible assets - 769 769
Impairment and restructuring (a) - 15,759 15,759
Operating income (loss) 13,132 (17,502) (4,370)
Interest expense and other, net (5,100) - (5,100)
Provision (credit) for income taxes 431 (480)(b) (49)
Net income (loss) $7,601 $(17,022) $(9,421)
Net income (loss) per share, basic and
diluted $0.05 $(0.06)
(a) Impairment and restructuring charges consist primarily of a write-
down of legacy technology licenses related to the Company's cellular
systems business and certain costs incurred to implement facility
consolidations.
(b) Represents the reversal of the non-cash tax charge related to the
utilization of pre-merger deferred tax assets recorded in the first
quarter of fiscal 2004.
(unaudited) Three Months Ended
(in thousands,
except per share data) Pro Forma Pro Forma GAAP
June 27, Adjustments June 27,
2003 2003
Net revenues $150,199 $ - $150,199
Cost of goods sold 94,121 - 94,121
Gross profit 56,078 56,078
Operating expenses 55,843 296 (c) 56,139
Amortization of intangible
assets - 1,075 1,075
Operating income (loss) 235 (1,371) (1,136)
Interest expense and other, net (4,787) - (4,787)
Provision for income taxes 263 263
Net loss $(4,815) $(1,371) $(6,186)
Net loss per share, basic and
diluted $(0.03) $(0.04)
(c) Represents certain costs incurred to implement consolidations.
Although the pro forma presentation is not intended to present results
of operations in accordance with GAAP, 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.
CONTACT:
Skyworks Solutions, Inc.
Pilar Barrigas (Media), 949-231-3061
or
Thomas Schiller (Investors), 949-231-4700
SOURCE: Skyworks Solutions, Inc.