Skyworks Reports First Fiscal Quarter 2006 Results; Grows Core Business 10 Percent Sequentially; Generates $22 Million in Cash Flow from Operations
Operating income computed in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for the first fiscal quarter was $8.5 million compared to $7.1 million in the fourth fiscal quarter of 2005. GAAP operating income in the corresponding period a year ago was $22.9 million. On a pro forma basis, operating income for the first fiscal quarter was $13.9 million, a 56 percent sequential increase against guidance of a 50 percent improvement, and versus $23.7 million in the same period a year ago. GAAP diluted earnings per share during the quarter was $0.03, while pro forma diluted earnings per share was $0.07, in line with consensus estimates.
Pro forma results, which are a supplement to financial results based on GAAP, exclude certain charges including share-based compensation, amortization of intangible assets and non-recurring items. The company believes these non-GAAP financial measures provide useful information to both management and investors by excluding certain charges and non-recurring items that may not be indicative of Skyworks' ongoing operations and economic performance.
For the first time, GAAP operating income includes a $3.0 million charge related to the expensing of equity-based incentives in accordance with FASB Statement No. 123®, which requires that the company account for all share-based compensation in its statement of operations.
"Ten percent sequential revenue growth across our RF solutions and linear products portfolio signals growing demand for our newest semiconductor solutions. At the same time, we strengthened our balance sheet through the generation of $22 million in cash flow from operations," said David J. Aldrich, Skyworks' president and chief executive officer. "Our Helios EDGE radios are now supporting the majority of top tier OEMs, with aggressive ramps ongoing at LG, beginning at Samsung, and to be followed later this year at Motorola. Our WCDMA front-end module and multimode radio traction, coupled with the launch of our newest precision analog solutions, are setting the stage for a strong second half of 2006," concluded Aldrich.
First Fiscal Quarter 2006 Product Highlights
Mobile Platforms
- Signed a strategic agreement with Motorola for the supply of
Helios DigRF radios in support of next generation EDGE
platforms
- Initiated volume production of Helios Mini radios at
Samsung for integration within nine forthcoming EDGE models
- Powered LG Electronics' EDGE handsets with Helios radios
- Introduced the world's smallest and lowest cost GPRS radio at
LG Electronics as they target emerging markets
- Supported Sony Ericsson's highly successful suite of GPRS/EDGE Walkman handsets with highly customized power amplifier modules
Linear Products
- Commenced volume production of our newly released innovative
CMOS switch solutions for satellite receivers
- Ramped front-end modules as part of Broadcom's 54g WLAN
reference design
- Secured amplifier sockets at Alcatel in support of 3G base
stations
- Launched ultra-low power transmit chain solutions for cellular infrastructure applications
Business Outlook
"Despite traditional handset market seasonality of a 10 to 15 percent sequential unit decline, we are forecasting better performance with March quarterly revenue down only nine percent sequentially to approximately $180 million, driven by our ability to capture increasing semiconductor content per platform," said Allan M. Kline, Skyworks' vice president and chief financial officer.
Skyworks will discuss its business outlook in more detail on its conference call to be held with investors and analysts today at 5 p.m.
Skyworks' First Fiscal Quarter 2006 Conference Call
Skyworks will host a conference call at 5 p.m. Eastern time today to discuss results for the first fiscal quarter of 2006. 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 800-819-9193 (domestic) or 913-981-4911 (international), security code: Skyworks.
Playback of the conference call will begin at 9 p.m. ET on Wednesday, Jan. 25, and end at 9 p.m. ET on Wednesday, Feb. 1, 2006. The replay will be available on Skyworks' Web site or by calling 888-203-1112 (domestic) or 719-457-0820 (international); access code: 5044277#.
About Skyworks
Skyworks Solutions, Inc. is an industry leader in radio solutions and precision analog semiconductors servicing a diversified set of mobile communications applications. The company's power amplifiers, front-end modules and direct conversion transceivers are at the heart of many of today's leading-edge multimedia handsets, cellular base stations and wireless networking platforms. Skyworks also offers a portfolio of highly innovative linear products, supporting a diverse set of automotive, broadband, industrial and medical customers.
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 the 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 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 security and health 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.
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 GAAP CONSOLIDATED STATEMENT OF OPERATIONS
Quarter Ended
-------------------
Dec. 30, Dec. 31,
(in thousands) 2005 2004
--------- ---------
Net revenues $198,325 $220,160
Cost of goods sold 123,602 132,141
--------- ---------
Gross profit 74,723 88,019
Operating expenses:
Research and development 42,430 37,113
Selling, general and administrative 23,253 27,224
Amortization of intangibles 536 737
--------- ---------
Total operating expenses 66,219 65,074
Operating income 8,504 22,945
Interest expense (3,812) (3,533)
Other income, net 2,319 1,121
--------- ---------
Income before income taxes 7,011 20,533
Provision for income taxes 2,724 6,616
--------- ---------
--------- ---------
Net income $4,287 $13,917
========= =========
Earnings per share:
Basic $0.03 $0.09
Diluted $0.03 $0.09
Weighted average shares:
Basic 158,573 156,440
Diluted 158,827 158,905
SKYWORKS SOLUTIONS, INC.
UNAUDITED RECONCILIATION OF PRO FORMA NON-GAAP MEASURES
Quarter Ended
-----------------
Dec. 30, Dec. 31,
(in thousands) 2005 2004
-------- --------
GAAP operating income $8,504 $22,945
Stock-based compensation expense (a) 3,031 -
Restructuring charges (b) 1,796 -
Amortization of intangible assets 536 737
-------- --------
Pro forma operating income $13,867 $23,682
======== ========
Quarter Ended
-----------------
Dec. 30, Dec. 31,
(in thousands) 2005 2004
-------- --------
GAAP net income $4,287 $13,917
Stock-based compensation expense (a) 3,031 -
Restructuring charges (b) 1,796 -
Amortization of intangible assets 536 737
Tax adjustments (c) 1,167 5,890
-------- --------
Pro forma net income $10,817 $20,544
======== ========
Quarter Ended
-----------------
Dec. 30, Dec. 31,
2005 2004
-------- --------
GAAP net income per share, diluted $0.03 $0.09
Stock-based compensation expense (a) 0.02 -
Restructuring charges (b) 0.01 -
Amortization of intangible assets - 0.01
Tax adjustments (c) 0.01 0.03
-------- --------
Pro forma net income per share, diluted $0.07 $0.13
======== ========
(a) These charges represent expense recognized in accordance with FASB
Statement No. 123(R), Share-Based Payment. Approximately $0.3
million, $1.4 million and $1.3 million were included in cost of
goods sold, research and development expense and selling, general
and administrative expense, respectively.
(b) The charges recorded during the first quarter of fiscal 2006
primarily related to a continued reduction in the level of
activity within the Company's cellular baseband product area.
Approximately $0.4 million, $1.2 million and $0.2 million were
included in cost of goods sold, research and development expense
and selling, general and administrative expense, respectively.
(c) During the first quarter of fiscal 2006, these charges primarily
represented a non-cash tax charge related to the utilization of
pre-merger deferred tax assets. During the first quarter of fiscal
2005, these charges primarily represented a non-cash tax charge
related to the utilization of pre-merger deferred tax assets and a
reduction in the expected benefit of foreign deferred tax assets
resulting from a change in regulated foreign tax rates.
The above pro forma non-GAAP measures are based upon our unaudited
consolidated statements of operations for the periods shown. These
non-GAAP financial measures are provided to enhance the user's overall
understanding of our current financial performance and our prospects
for the future. Specifically, we believe the non-GAAP financial
measures provide useful information to both management and investors
by excluding certain charges and non-recurring items that we believe
are not indicative of our ongoing operations and economic performance.
Additionally, since we have historically reported non-GAAP results to
the investment community, the inclusion of non-GAAP financial measures
provides consistency in our financial reporting. Further, these
non-GAAP financial measures are one of the primary indicators
management uses for planning and forecasting in future periods. The
presentation of this additional information should not be considered
in isolation or as a substitute for results prepared in accordance
with accounting principles generally accepted in the United States.
SKYWORKS SOLUTIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
Dec. 30, Sept. 30,
(in thousands) 2005 2005
----------- -----------
Assets
Current assets:
Cash and cash equivalents $129,505 $122,535
Short-term investments 114,970 113,325
Accounts receivable, net 171,065 171,454
Inventories 79,031 77,400
Prepaid expenses and other current
assets 10,482 11,268
Property, plant and equipment, net 155,331 150,838
Goodwill and intangible assets, net 509,166 511,119
Other assets 30,390 29,904
----------- -----------
Total assets $1,199,940 $1,187,843
=========== ===========
Liabilities and Equity
Current liabilities:
Short-term debt $50,000 $50,000
Accounts payable 72,296 72,276
Accrued liabilities and other current
liabilities 39,416 35,959
Long-term debt 230,000 230,000
Other long-term liabilities 7,115 7,044
Stockholders' equity 801,113 792,564
----------- -----------
Total liabilities and equity $1,199,940 $1,187,843
=========== ===========
CONTACT: Skyworks Solutions, Inc.
Pilar Barrigas (Media Relations), 949-231-3061
or
Thomas Schiller (Investor Relations), 949-231-4700
SOURCE: Skyworks Solutions, Inc.