Skyworks Exceeds Q1 FY12 Revenue and EPS Guidance
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Increases Revenue by 17 Percent Year-Over-Year to
$393.7 Million
-
Delivers Non-GAAP Gross Margin of 44.3% and Operating Margin of
26.7% (43.6% and 19.0%, respectively, GAAP)
-
Posts Non-GAAP Diluted Earnings per Share of
$0.51 ($0.30 GAAP)
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Generates
$77 Million in Cash Flow from Operations
On a non-GAAP basis, operating income for the first fiscal quarter was
“Skyworks’ solid performance against the current economic backdrop is
being driven by our expanding positions in adjacent analog semiconductor
markets, global demand for mobile internet applications and strong
operational execution,” said
Q1 Business Highlights
- Captured wireless networking sockets within General Electric’s smart appliances including washers, dryers, refrigerators, dishwashers and ovens
- Commenced volume production of advanced Antenna Switch Modules (ASMs) for Huawei
- Ramped GPS low noise amplifiers across leading smart phone OEMs
- Awarded TDD-LTE base station switch design wins at Ericsson
- Supported leading tablets, gaming consoles and LED TVs with connectivity solutions
- Secured designs within Medtronic’s next generation heart monitor/pacemaker and 2-way radio applications
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Received 2011
Global Partnership award fromZTE -
Repurchased 750,000 shares of common stock and retired
$9 million of convertible debt
Second Fiscal Quarter 2012 Outlook
“Based on our diverse customer and market base as well as share gains,
we are planning to outperform our addressable markets in the seasonally
low March quarter,” said Donald W. Palette, vice president and chief
financial officer of Skyworks. “Specifically, we expect revenue of
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’ First Fiscal Quarter 2012 Conference Call
Skyworks will host a conference call with analysts to discuss its first
fiscal quarter 2012 results and business outlook today at
Playback of the conference call will begin at
About Skyworks
Headquartered in
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: 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
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, INC. | ||||||||
| UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||
| Quarter Ended | ||||||||
| Dec. 30, | Dec. 31, | |||||||
| (in thousands) | 2011 | 2010 | ||||||
| Net revenue | $ | 393,740 | $ | 335,120 | ||||
| Cost of goods sold | 221,890 | 186,582 | ||||||
| Gross profit | 171,850 | 148,538 | ||||||
| Operating expenses: | ||||||||
| Research and development | 46,941 | 38,543 | ||||||
| Selling, general and administrative | 42,909 | 31,051 | ||||||
| Amortization of intangibles | 6,312 | 1,602 | ||||||
| Restructuring and other charges | 720 | - | ||||||
| Total operating expenses | 96,882 | 71,196 | ||||||
| Operating income | 74,968 | 77,342 | ||||||
| Interest expense | (481 | ) | (537 | ) | ||||
| Gain on early retirement of convertible debt | 76 | - | ||||||
| Other income (loss), net | 99 | (69 | ) | |||||
| Income before income taxes | 74,662 | 76,736 | ||||||
| Provision for income taxes | 17,536 | 15,868 | ||||||
| Net income | $ | 57,126 | $ | 60,868 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 0.31 | $ | 0.34 | ||||
| Diluted | $ | 0.30 | $ | 0.32 | ||||
| Weighted average shares: | ||||||||
| Basic | 183,956 | 180,706 | ||||||
| Diluted | 189,682 | 188,541 | ||||||
| SKYWORKS SOLUTIONS, INC. | ||||||||
| UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||
| Quarter Ended | ||||||||
| Dec. 30, | Dec. 31, | |||||||
| (in thousands) | 2011 | 2010 | ||||||
| GAAP gross profit | $ | 171,850 | $ | 148,538 | ||||
| Share-based compensation expense [a] | 2,517 | 1,345 | ||||||
| Acquisition-related expense [b] | 76 | - | ||||||
| Non-GAAP gross profit | $ | 174,443 | $ | 149,883 | ||||
| Non-GAAP gross margin % | 44.3 | % | 44.7 | % | ||||
| Quarter Ended | ||||||||
| Dec. 30, | Dec. 31, | |||||||
| (in thousands) | 2011 | 2010 | ||||||
| GAAP operating income | $ | 74,968 | $ | 77,342 | ||||
| Share-based compensation expense [a] | 15,750 | 13,281 | ||||||
| Acquisition-related expense [b] | 7,283 | 445 | ||||||
| Amortization of intangibles | 6,312 | 1,602 | ||||||
| Restructuring and other charges [c] | 720 | - | ||||||
| Deferred executive compensation | 143 | 165 | ||||||
| Non-GAAP operating income | $ | 105,176 | $ | 92,835 | ||||
| Non-GAAP operating margin % | 26.7 | % | 27.7 | % | ||||
| Quarter Ended | ||||||||
| Dec. 30, | Dec. 31, | |||||||
| (in thousands) | 2011 | 2010 | ||||||
| GAAP net income | $ | 57,126 | $ | 60,868 | ||||
| Share-based compensation expense [a] | 15,750 | 13,281 | ||||||
| Acquisition-related expense [b] | 7,283 | 445 | ||||||
| Amortization of intangibles | 6,312 | 1,602 | ||||||
| Restructuring and other charges [c] | 720 | - | ||||||
| Deferred executive compensation | 143 | 165 | ||||||
| Gain on early retirement of convertible debt [d] | (76 | ) | - | |||||
|
Amortization of discount on convertible debt [e] |
351 |
328 | ||||||
| Tax adjustments [f] | 8,632 | 7,998 | ||||||
| Non-GAAP net income | $ | 96,241 | $ | 84,687 | ||||
| Quarter Ended | ||||||||
| Dec. 30, | Dec. 31, | |||||||
| 2011 | 2010 | |||||||
| GAAP net income per share, diluted | $ | 0.30 | $ | 0.32 | ||||
| Share-based compensation expense [a] | 0.08 | 0.07 | ||||||
| Acquisition-related expense [b] | 0.04 | - | ||||||
| Amortization of intangibles | 0.03 | 0.01 | ||||||
| Restructuring and other charges [c] | 0.01 | - | ||||||
| Tax adjustments [f] | 0.05 | 0.05 | ||||||
| Non-GAAP net income per share, diluted | $ | 0.51 | $ | 0.45 | ||||
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
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 second quarter of our 2012 fiscal
year (“Q2 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 Q2 2012 non-GAAP
diluted earnings per share to a forward looking estimate of Q2 2012 GAAP
diluted earnings per share because certain information needed to make a
reasonable forward looking estimate of GAAP diluted earnings per share
for Q2 2012 (other than estimated stock compensation expense of
| [a] |
These charges represent expense recognized in accordance with ASC 718 - Compensation, Stock Compensation. Approximately $2.5 million, $5.6 million and $7.7 million were included in cost of goods sold, research and development expense and selling, general and administrative expense, respectively, for the three months ended December 30, 2011. |
|
|
For the three months ended December 31, 2010, approximately $1.4 million, $4.4 million and $7.5 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 ended December 30, 2011 includes a $0.1 million charge to cost of sales related to the sale of acquired inventory. Also included in acquisition-related expense is $7.2 million and $0.4 million in transaction costs included in general and administrative expense associated with acquisitions, and an arbitration, completed or contemplated during the three months ended December 30, 2011 and December 31, 2010, respectively. |
|
| [c] |
During the fiscal year ended September 30, 2011, the Company implemented a restructuring plan to reduce headcount associated with its acquisition of SiGe Semiconductor, Inc. A $0.7 million charge to restructuring was recorded during the three months ended December 30, 2011 related to this plan. |
|
| [d] |
The gain recorded during the three months ended December 30, 2011 relates to the early retirement of $9.4 million of the Company's 1.50% convertible subordinated notes due on March 1, 2012. |
|
| [e] |
These charges represent the amortization expense recognized in accordance with ASC 470-20. Approximately, $0.4 million and $0.3 million of amortization expense was recognized during the three months ended December 30, 2011 and December 31, 2010, respectively. |
|
| [f] |
During the three months ended December 30, 2011, these amounts primarily represent the utilization of research and development tax credit carryforwards and non-cash expense related to uncertain tax positions. |
|
|
During the three months ended December 31, 2010, these amounts primarily represent the utilization of research and development credit carryforwards and deferred tax expenses not affecting current taxes payable. |
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| SKYWORKS SOLUTIONS, INC. | ||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET | ||||||
| Dec. 30, | Sept. 30, | |||||
| (in thousands) | 2011 | 2011 | ||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 446,498 | $ | 410,799 | ||
| Accounts receivable, net | 199,010 | 177,940 | ||||
| Inventory | 177,520 | 198,183 | ||||
| Other current assets | 33,314 | 29,412 | ||||
| Property, plant and equipment, net | 240,401 | 251,365 | ||||
| Goodwill and intangible assets, net | 744,223 | 749,849 | ||||
| Other assets | 73,667 | 72,841 | ||||
| Total assets | $ | 1,914,633 | $ | 1,890,389 | ||
| Liabilities and Equity | ||||||
| Current liabilities: | ||||||
| Short-term debt | $ | 17,123 | $ | 26,089 | ||
| Accounts payable | 96,030 | 115,290 | ||||
| Accrued and other current liabilities | 99,349 | 105,717 | ||||
| Other long-term liabilities | 38,466 | 34,198 | ||||
| Stockholders' equity | 1,663,665 | 1,609,095 | ||||
| Total liabilities and equity | $ | 1,914,633 | $ | 1,890,389 | ||
Source:
Skyworks Media Relations:
Pilar Barrigas, 949-231-3061
or
Skyworks
Investor Relations:
Stephen Ferranti, 781-376-3056