Skyworks Implements Strategic Actions to Capture Merger Synergies; On Track to Achieve Profitability by Year-End
Key elements of this plan include consolidating manufacturing and test operations in Maryland and Massachusetts; relocating assembly operations to a Skyworks facility in Mexicali, Mexico; and eliminating excess equipment capacity. As a result, the company will reduce its workforce by approximately 8 percent and expects to lower its quarterly break-even sales level to $140 million from the $170 million level exiting 2001, excluding Mexicali assembly and test service revenues.
"Following more than six months of detailed integration planning by over 100 Alpha and Conexant wireless team members, today we are implementing a set of cost reduction actions designed to provide us with a significantly lower cost structure, putting us on a path to profitability right out of the gate," said Aldrich. "Skyworks' mission is to provide customers with increasing levels of product integration by providing the industry's broadest array of CDMA and GSM semiconductor solutions. These strategic initiatives focus our merged resources on those product areas with the highest growth and margin potential while improving our capacity utilization, shortening our manufacturing cycle time and eliminating duplicate operations, functions and processes."
Key Initiatives
Facility Consolidations: Skyworks will close a test and assembly facility in Haverhill, Mass. by the end of 2002. Some of these operations will be transferred to the company's wafer fabrication facility in Woburn, Mass. as well as to Skyworks' high-volume assembly and test operation in Mexicali, Mexico. The company's Newport Beach, Calif. facilities will be consolidated into one location in Irvine. In addition, the company will close the Frederick, Md. facility operated by its subsidiary, Trans-Tech, Inc. and fold the operation into the nearby Adamstown, Md. location by the end of this year.
Workforce Reduction: Cost-cutting measures will include a reduction in workforce involving employees across the company. When the workforce reduction is complete, the company's worldwide headcount will be reduced by approximately 8 percent to 3,850 from approximately 4,200.
Business Outlook for September Quarter
"Based on continuing market share gains across all of our key product areas coupled with our ability to capture increasing content within the cellular handset, we expect Skyworks to generate September-ending quarterly revenues of approximately $150 million, including roughly $15 million from Mexicali assembly and test service revenues," said Aldrich. "We anticipate that our gross margin will improve significantly and expand to the 35 to 37 percent range as a result of the initiatives we are currently implementing. Excluding Mexicali assembly and test service revenues, the gross margin will be approximately 40 percent.
"At the same time, we have reduced quarterly operating expenses to a $60 million run-rate. In turn, we expect to approach operating break-even in the September quarter. Further, we anticipate continued growth and operational improvements in the December quarter, enabling us to achieve profitability by year-end," Aldrich concluded.
The September quarter will represent the company's fourth fiscal quarter of 2002 and the first time it will report financials on a combined basis.
Company to Host Live Webcast
Skyworks plans to broadcast its financial analyst briefing live via webcast today from 10:00 a.m. to noon Eastern Time (ET). Investors and interested parties may access the webcast via the Investor Relations section of Skyworks' website at www.skyworksinc.com or on www.companyboardroom.com. Replays will be available until 5:00 p.m. ET on Wednesday, July 3, 2002.
About Skyworks
Skyworks Solutions, Inc. (Nasdaq: SWKS) is the industry's leading wireless semiconductor company focused on radio frequency (RF) and complete semiconductor system solutions for mobile communications applications. The company began operations in June 2002, following the completion of the merger between Alpha Industries, Inc. and Conexant Systems, Inc.'s wireless communications business. Skyworks is focused on providing front-end modules, RF subsystems and complete system solutions to wireless handset and infrastructure customers worldwide.
Skyworks is headquartered in Woburn, Mass., with executive offices in Newport Beach, Calif. The company has design, engineering, manufacturing, marketing, sales and service facilities throughout North America, Europe, Japan and Asia Pacific. 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). All such statements are subject to certain risks and uncertainties that could cause actual results to differ materially 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: the uncertainty of the product synergies, operational efficiencies, savings and other benefits anticipated by the company's strategic initiatives; the company's ability to implement its initiatives in the manner intended without material adverse operational or financial effects; global economic and market conditions, such as the cyclical nature of the wireless communications 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 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 and Skyworks Solutions are trademarks or registered trademarks of Skyworks Solutions, Inc. or its subsidiaries in the U.S. and in other countries. All other brands and names listed are trademarks of their respective companies.
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| CONTACT: | Skyworks Solutions, Inc. |
|---|---|
| Editorial Contact: | |
| Lisa Briggs, 949/231-4553 or 949/285-5582 | |
| or | |
| Investor Relations Contact: | |
| Thomas Schiller, 949/231-4700 | |