e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 28, 2007
OR
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission
file number 1-5560
SKYWORKS SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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04-2302115 |
(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.) |
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20 Sylvan Road, Woburn, Massachusetts
(Address of principal executive offices)
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01801
(Zip Code) |
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Registrants
telephone number, including area code: (781) 376-3000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. þ Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company. See the
definitions of large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
þ
Accelerated filer o
Non-accelerated filer
o (Do not check if a smaller reporting company)
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
o Yes þ No
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date.
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Class |
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Outstanding
at January 31, 2008 |
Common Stock, par value $.25 per share
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162,076,599 |
SKYWORKS SOLUTIONS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 28, 2007
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
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Three-months Ended |
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December 28, |
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December 29, |
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2007 |
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2006 |
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Net revenues |
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$ |
210,533 |
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$ |
196,030 |
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Cost of goods sold (includes share-based compensation expense of $834 and
$125 for the three-month period ended December 28, 2007 and December 29,
2006, respectively) |
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128,195 |
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120,714 |
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|
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Gross profit |
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82,338 |
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75,316 |
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Operating expenses: |
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Research and development (includes share-based compensation expense of
$1,146 and $486 for the three-month period ended December 28, 2007 and
December 29, 2006, respectively) |
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34,094 |
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30,412 |
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Selling, general and administrative (includes share-based compensation
expense of $3,027 and $1,415 for the three-month period ended December
28, 2007 and December 29, 2006,
respectively)
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25,287 |
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24,028 |
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Amortization of intangible assets |
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1,932 |
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536 |
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Restructuring and special charges |
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5,473 |
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Total operating expenses |
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61,313 |
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60,449 |
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Operating income |
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21,025 |
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14,867 |
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Interest expense |
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(2,208 |
) |
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(3,249 |
) |
Other income, net |
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2,050 |
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|
2,155 |
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Income before income taxes |
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20,867 |
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13,773 |
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Provision for income taxes |
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1,789 |
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1,736 |
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Net income |
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$ |
19,078 |
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$ |
12,037 |
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Per share information: |
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Net income, basic and diluted |
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$ |
0.12 |
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$ |
0.07 |
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Number of weighted-average shares used in per share computations, basic |
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160,319 |
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161,183 |
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Number of weighted-average shares used in per share computations, diluted |
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162,836 |
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162,880 |
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The accompanying notes are an integral part of these consolidated financial statements.
3
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
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As of |
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December 28, |
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September 28, |
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2007 |
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2007 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
198,714 |
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$ |
241,577 |
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Short-term investments |
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2,464 |
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5,700 |
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Restricted cash |
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6,302 |
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6,502 |
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Receivables, net of allowance for doubtful accounts of $1,604 and
$1,662, respectively |
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166,647 |
|
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|
167,319 |
|
Inventories |
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85,912 |
|
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|
82,109 |
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Other current assets |
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9,299 |
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10,511 |
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Total current assets |
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469,338 |
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513,718 |
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Property, plant and equipment, less accumulated depreciation and
amortization of $291,585 and $280,738, respectively |
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162,497 |
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153,516 |
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Goodwill |
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495,429 |
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480,890 |
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Intangible assets, less accumulated amortization of $15,131 and $13,199,
respectively |
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22,520 |
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13,442 |
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Deferred tax assets |
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14,524 |
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14,459 |
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Other assets |
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13,475 |
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13,883 |
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Total assets |
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$ |
1,177,783 |
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$ |
1,189,908 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Short-term debt |
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$ |
50,000 |
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$ |
99,335 |
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Accounts payable |
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69,227 |
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56,417 |
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Accrued compensation and benefits |
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29,951 |
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28,392 |
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Other current liabilities |
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10,198 |
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13,079 |
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Total current liabilities |
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159,376 |
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197,223 |
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Long-term debt, less current maturities |
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200,000 |
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200,000 |
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Other long-term liabilities |
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7,305 |
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6,338 |
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Total liabilities |
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366,681 |
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403,561 |
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Commitments and contingencies (Note 10) |
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Stockholders equity: |
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Preferred stock, no par value: 25,000 shares authorized, no shares issued |
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Common stock, $0.25 par value: 525,000 shares authorized; 166,661 shares
issued and 162,020 shares outstanding at December 28, 2007 and 165,593
shares issued and 161,101 shares outstanding at September 28, 2007 |
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40,505 |
|
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40,275 |
|
Additional paid-in capital |
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1,389,743 |
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1,382,230 |
|
Treasury stock |
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(33,184 |
) |
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(31,855 |
) |
Accumulated deficit |
|
|
(585,011 |
) |
|
|
(604,089 |
) |
Accumulated other comprehensive loss |
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|
(951 |
) |
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|
(214 |
) |
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Total stockholders equity |
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811,102 |
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|
786,347 |
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Total liabilities and stockholders equity |
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$ |
1,177,783 |
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$ |
1,189,908 |
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The accompanying notes are an integral part of these consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
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Three-months Ended |
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December 28, |
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December 29, |
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2007 |
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2006 |
|
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Cash flows from operating activities: |
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|
|
|
|
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Net income |
|
$ |
19,078 |
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|
$ |
12,037 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
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|
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Share-based compensation expense |
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|
5,007 |
|
|
|
2,026 |
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Depreciation |
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10,916 |
|
|
|
9,502 |
|
Charge in lieu of income tax expense |
|
|
1,465 |
|
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|
1,344 |
|
Amortization of intangible assets |
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|
1,932 |
|
|
|
536 |
|
Amortization of deferred financing costs |
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|
481 |
|
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|
311 |
|
Contribution of common shares to savings and retirement
plans |
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|
828 |
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|
1,000 |
|
Non-cash restructuring expense |
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|
419 |
|
Deferred income taxes |
|
|
(257 |
) |
|
|
(656 |
) |
Loss on sales of assets |
|
|
6 |
|
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|
10 |
|
Provision for recoveries on accounts receivable |
|
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(58 |
) |
|
|
(165 |
) |
Changes in assets and liabilities, net of acquired amounts: |
|
|
|
|
|
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Receivables |
|
|
730 |
|
|
|
(4,299 |
) |
Inventories |
|
|
1,580 |
|
|
|
10,265 |
|
Other assets |
|
|
1,331 |
|
|
|
(652 |
) |
Accounts payable |
|
|
12,810 |
|
|
|
(17,004 |
) |
Other liabilities |
|
|
(355 |
) |
|
|
1,086 |
|
|
|
|
|
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|
Net cash provided by operating activities |
|
|
55,494 |
|
|
|
15,760 |
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|
|
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|
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|
|
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Cash flows from investing activities: |
|
|
|
|
|
|
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Capital expenditures |
|
|
(19,903 |
) |
|
|
(6,284 |
) |
Payments for acquisitions |
|
|
(32,617 |
) |
|
|
|
|
Sale of short-term investments |
|
|
22,800 |
|
|
|
163,983 |
|
Purchase of short-term investments |
|
|
(20,300 |
) |
|
|
(198,933 |
) |
|
|
|
|
|
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Net cash used in investing activities |
|
|
(50,020 |
) |
|
|
(41,234 |
) |
|
|
|
|
|
|
|
|
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|
|
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|
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|
Cash flows from financing activities: |
|
|
|
|
|
|
|
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Retirement of Junior Notes |
|
|
(49,335 |
) |
|
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|
|
Change in restricted cash |
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|
200 |
|
|
|
|
|
Repurchase of common stock |
|
|
(1,329 |
) |
|
|
(503 |
) |
Exercise of stock options |
|
|
2,127 |
|
|
|
3,160 |
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(48,337 |
) |
|
|
2,657 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net decrease in cash and cash equivalents |
|
|
(42,863 |
) |
|
|
(22,817 |
) |
Cash and cash equivalents at beginning of period |
|
|
241,577 |
|
|
|
136,749 |
|
|
|
|
|
|
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|
Cash and cash equivalents at end of period |
|
$ |
198,714 |
|
|
$ |
113,932 |
|
|
|
|
|
|
|
|
|
Supplemental cash flow disclosures: |
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|
|
|
|
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Taxes paid |
|
$ |
171 |
|
|
$ |
382 |
|
|
|
|
|
|
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Interest paid |
|
$ |
1,834 |
|
|
$ |
5,143 |
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|
|
|
|
|
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|
The accompanying notes are an integral part of these consolidated financial statements.
5
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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NOTE 1. |
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DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
Skyworks Solutions, Inc. (Skyworks or the Company) designs, manufactures and markets a broad
range of high performance analog and mixed signal semiconductors that enable wireless connectivity.
Our power amplifiers (PAs), front-end modules (FEMs) and integrated radio frequency (RF) solutions
can be found in many of the cellular handsets sold by the worlds leading manufacturers. Leveraging
our core analog technologies, we also offer a diverse portfolio of linear integrated circuits (ICs)
that support automotive, broadband, cellular infrastructure, industrial and medical applications.
The accompanying unaudited consolidated financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission (the SEC). Certain information
and footnote disclosures, normally included in annual consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States of America, have been
condensed or omitted pursuant to those rules and regulations. However, in the opinion of
management, the financial information reflects all adjustments, consisting of adjustments of a
normal recurring nature necessary to present fairly the financial position, results of operations,
and cash flows of the Company. The results of operations for the three-month period ended December
28, 2007 are not necessarily indicative of the results to be expected for the full year. This
information should be read in conjunction with the Companys financial statements and notes thereto
contained in the Companys Form 10-K for the fiscal year ended September 28, 2007 as filed with the
SEC.
The Companys fiscal year ends on the Friday closest to September 30. Fiscal 2007 consisted of 52
weeks and ended on September 28, 2007, and the first quarters of fiscal 2008 and fiscal 2007 each
consisted of 13 weeks and ended on December 28, 2007 and December 29, 2006, respectively. Fiscal
2008 will consist of 53 weeks and end on October 3, 2008, with the first three quarters of fiscal
2008 consisting of 13 weeks, and the fourth quarter of fiscal 2008 consisting of 14 weeks.
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NOTE 2. |
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COMPREHENSIVE INCOME (LOSS) |
The Company accounts for comprehensive income (loss) in accordance with the provisions of SFAS No.
130, Reporting Comprehensive Income (SFAS No. 130). SFAS No. 130 is a financial statement
presentation standard that requires the Company to disclose non-owner changes included in equity
but not included in net income or loss. Other items of comprehensive income (loss) presented in the
financial statements consists of adjustments to the Companys minimum pension liability as follows
(in thousands):
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Accumulated |
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Other |
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Pension |
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Comprehensive |
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Adjustments |
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Loss |
|
Balance as of September 28, 2007 |
|
|
(214 |
) |
|
|
(214 |
) |
Change in period |
|
|
|
|
|
|
(737 |
) |
|
|
|
|
|
|
|
Balance as of December 28, 2007 |
|
$ |
(214 |
) |
|
$ |
(951 |
) |
|
|
|
|
|
|
|
The Company recorded an unrealized loss against its auction rate securities in the first quarter of
fiscal 2008 and consistent with the provisions of SFAS No. 115, Accounting for Certain Investments
in Debt and Equity Securities accounted for the unrealized loss in Other Comprehensive Income
(Loss).
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|
NOTE 3. |
|
BUSINESS COMBINATIONS |
In October 2007, the Company paid $32.6 million in cash to acquire certain assets from two separate
companies. We acquired raw materials, die bank, finished goods, proprietary GaAs PA/FEM designs
and related intellectual property in a business combination from Freescale Semiconductor. We also
acquired sixteen fundamental HBT and RF MEMs patents in an asset acquisition from another company.
The Company calculated the fair value of the tangible and intangible assets acquired to allocate
the purchase prices in accordance with SFAS 141. Based upon those calculations, the Company has
preliminarily concluded that customer relationships
have a fair value of $8.5 million, order backlog has a fair value of $1.6 million and the patents have a fair value of $0.9 million. These
6
intangible assets will be amortized over 5, .5 and 3 years, respectively. The fair value of
inventory acquired was approximately $5.6 million and the remaining purchase price, approximately $16 million, is allocated to
goodwill. The Company will finalize the purchase accounting on the business combination in the
second quarter of fiscal 2008.
The Companys primary reasons for the above acquisitions were to expand its market share in power
amplifiers and front end modules at certain existing customers, and increase the probability of
future design wins with these customers. The significant factors that resulted in recognition of
goodwill were: (a) the purchase price was based on cash flow projections assuming the sale of the
acquired inventory and the sale of the Companys next generation product (a derivative of the
acquired inventory); and (b) there were very few tangible and identifiable intangible assets that
qualified for recognition.
The Consolidated Financial Statements include the operating results of the acquired business from
the date of acquisition. Pro forma results of operations for the acquisitions completed during the
three-month period ended December 28, 2007 have not been presented because the effects of the
acquisitions were not material to the Companys financial results.
|
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|
NOTE 4. |
|
MARKETABLE SECURITIES |
Marketable securities are categorized as available for sale and are summarized as follows as of
December 28, 2007 (in thousands):
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Gross |
|
|
Gross |
|
|
|
|
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Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Market |
|
Short-term available for sale securities: |
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Auction rate securities |
|
$ |
3,200 |
|
|
$ |
|
|
|
$ |
(736 |
) |
|
$ |
2,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities |
|
$ |
3,200 |
|
|
$ |
|
|
|
$ |
(736 |
) |
|
$ |
2,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the first quarter of fiscal 2008, the Company recorded an unrealized loss on its auction rate
securities of approximately $0.7 million. The Company currently believes that these securities are
only temporarily impaired and thus continue to classify them as short-term available for sale
securities. The Company will monitor these securities in future periods and continue to
periodically assess their classification.
Marketable securities are categorized as available for sale and are summarized as follows as of
September 28, 2007 (in thousands):
|
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|
|
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|
|
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|
|
|
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|
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Gross |
|
|
Gross |
|
|
|
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Market |
|
Short-term available for sale securities: |
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Auction rate securities |
|
$ |
5,700 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
5,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities |
|
$ |
5,700 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
5,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 28, |
|
|
September 28, |
|
|
|
2007 |
|
|
2007 |
|
Raw materials |
|
$ |
8,276 |
|
|
$ |
6,624 |
|
Work-in-process |
|
|
55,136 |
|
|
|
48,128 |
|
Finished goods |
|
|
22,500 |
|
|
|
27,357 |
|
|
|
|
|
|
|
|
|
|
$ |
85,912 |
|
|
$ |
82,109 |
|
|
|
|
|
|
|
|
7
NOTE 6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 28, |
|
|
September 28, |
|
|
|
2007 |
|
|
2007 |
|
Land |
|
$ |
9,423 |
|
|
$ |
9,423 |
|
Land and leasehold improvements |
|
|
4,424 |
|
|
|
4,394 |
|
Buildings |
|
|
39,790 |
|
|
|
39,730 |
|
Furniture and
Fixtures |
|
|
24,763 |
|
|
|
24,485 |
|
Machinery and equipment |
|
|
354,057 |
|
|
|
343,551 |
|
Construction in progress |
|
|
21,625 |
|
|
|
12,671 |
|
|
|
|
|
|
|
|
|
|
|
454,082 |
|
|
|
434,254 |
|
Accumulated depreciation and amortization |
|
|
(291,585 |
) |
|
|
(280,738 |
) |
|
|
|
|
|
|
|
|
|
$ |
162,497 |
|
|
$ |
153,516 |
|
|
|
|
|
|
|
|
NOTE 7. GOODWILL AND INTANGIBLE ASSETS
Goodwill and intangible assets consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 28, 2007 |
|
|
September 28, 2007 |
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Gross |
|
|
|
|
|
|
Net |
|
|
Gross |
|
|
|
|
|
|
Net |
|
|
|
Amortization |
|
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
|
|
Period |
|
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|
|
(Years) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
|
|
$ |
495,429 |
|
|
$ |
|
|
|
$ |
495,429 |
|
|
$ |
480,890 |
|
|
$ |
|
|
|
$ |
480,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized intangible assets
Developed technology |
|
|
10 |
|
|
$ |
10,550 |
|
|
$ |
(6,617 |
) |
|
$ |
3,933 |
|
|
$ |
10,550 |
|
|
$ |
(6,399 |
) |
|
$ |
4,151 |
|
Customer relationships |
|
|
5-10 |
|
|
|
21,210 |
|
|
|
(7,421 |
) |
|
|
13,789 |
|
|
|
12,700 |
|
|
|
(6,678 |
) |
|
|
6,022 |
|
Patents |
|
|
3 |
|
|
|
900 |
|
|
|
(75 |
) |
|
|
825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
.5-3 |
|
|
|
1,722 |
|
|
|
(1,018 |
) |
|
|
704 |
|
|
|
122 |
|
|
|
(122 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,382 |
|
|
|
(15,131 |
) |
|
|
19,251 |
|
|
|
23,372 |
|
|
|
(13,199 |
) |
|
|
10,173 |
|
Unamortized intangible assets
Trademarks |
|
|
|
|
|
|
3,269 |
|
|
|
|
|
|
|
3,269 |
|
|
|
3,269 |
|
|
|
|
|
|
|
3,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets |
|
|
|
|
|
$ |
37,651 |
|
|
$ |
(15,131 |
) |
|
$ |
22,520 |
|
|
$ |
26,641 |
|
|
$ |
(13,199 |
) |
|
$ |
13,442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense related to intangible assets are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
December 29, |
|
|
2007 |
|
2006 |
Amortization expense |
|
$ |
1,932 |
|
|
$ |
536 |
|
8
The changes in the gross carrying amount of goodwill and intangible assets are as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and Intangible Assets |
|
|
|
Goodwill |
|
|
Developed
Technology |
|
|
Customer
Relationships |
|
|
Trademarks |
|
|
Patents and Other |
|
|
Total |
|
Balance as of September
28, 2007 |
|
$ |
480,890 |
|
|
$ |
10,550 |
|
|
$ |
12,700 |
|
|
$ |
3,269 |
|
|
$ |
122 |
|
|
$ |
507,531 |
|
Additions during period |
|
|
16,004 |
|
|
|
|
|
|
|
8,510 |
|
|
|
|
|
|
|
2,500 |
|
|
|
27,014 |
|
Deductions during period |
|
|
(1,465 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,465 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 28,
2007 |
|
$ |
495,429 |
|
|
$ |
10,550 |
|
|
$ |
21,210 |
|
|
$ |
3,269 |
|
|
$ |
2,622 |
|
|
$ |
533,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In October 2007, the Company paid $32.6 million in cash to acquire certain assets from two separate
companies resulting in the preliminary allocation of approximately $16.0 million to goodwill. For
additional information regarding these acquisitions see Note 3 Business Combinations.
Goodwill was reduced by $1.5 million in the three-month period ended December 28, 2007 as a result
of the realization of deferred tax assets. The benefit from the recognition of a portion of these
deferred items reduces the carrying value of goodwill instead of reducing income tax expense.
Accordingly, future realization of certain deferred tax assets will reduce the carrying value of
goodwill. The remaining deferred tax assets that could reduce goodwill in future periods are $17.1
million as of December 28, 2007.
Annual amortization expense related to intangible assets for the next five years is expected to be
as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2009 |
|
2010 |
|
2011 |
|
2012 |
Amortization
expense |
|
$ |
5,746 |
|
|
$ |
4,146 |
|
|
$ |
4,146 |
|
|
$ |
3,846 |
|
|
$ |
3,299 |
|
NOTE 8. BORROWING ARRANGEMENTS
LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 28, |
|
|
September 28, |
|
|
|
2007 |
|
|
2007 |
|
Junior Notes |
|
$ |
|
|
|
$ |
49,335 |
|
2007 Convertible
Notes |
|
|
200,000 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
Long-term debt |
|
$ |
200,000 |
|
|
$ |
249,335 |
|
Less-current maturities |
|
|
|
|
|
|
49,335 |
|
|
|
|
|
|
|
|
|
|
$ |
200,000 |
|
|
$ |
200,000 |
|
|
|
|
|
|
|
|
On March 2, 2007, the Company issued $200.0 million aggregate principal amount of convertible
subordinated notes (2007 Convertible Notes). The offering contained two tranches. The first
tranche consists of $100.0 million of 1.25% convertible subordinated notes due March 2010. The
second tranche consists of $100.0 million of 1.50% convertible subordinated notes due March 2012.
The conversion price of the 2007 Convertible Notes is 105.0696 shares per $1,000 principal amount
of notes to be redeemed, which is the equivalent of a conversion price of approximately $9.52 per
share, plus accrued and unpaid interest, if any, to the conversion date. Holders may require the
Company to repurchase the 2007 Convertible Notes upon a change in control of the Company. The
Company pays interest in cash semi-annually in arrears on March 1 and September 1 of each year. It
has been the Companys historical practice to cash settle the principal and interest components of
convertible debt instruments, and it is our intention to continue to do so in the future, including
settlement of the 2007 Convertible Notes.
On December 21, 2006, the Financial Acccounting Standards Board (FASB) issued FASB Staff Position
Emerging Issues Task Force 00-19-2 (FSP EITF 00-19-2). FSP EITF 00-19-2 specifies that the
contingent obligation to make future payments or otherwise transfer consideration under a
registration payment arrangement, should be separately recognized and measured in accordance with
FASB Statement No. 5, Accounting for Contingencies (FASB 5). The Company adopted FSP EITF 00-19-2
on September 29, 2007. The Company agreed to file a shelf registration statement under the
Securities Act not later than 120 days after the first date of original issuance of the 2007
Convertible Notes. The Company agreed to utilize commercially reasonable efforts to have this shelf
registration statement declared effective not later than 180 days after the first date of original
issuance of the notes, and to keep it effective until the earliest of: 1) two years from the
effective date of the shelf
9
registration statement; 2) the date when all registrable securities
have been registered under the Securities Act and disposed of; and 3) the date on which all
registrable securities held by non-affiliates are eligible to be sold to the public pursuant to
Rule 144(k) under the Securities Act. The Company filed the shelf registration statement within 120
days of the original issuance of the 2007 Convertible Notes and the shelf registration statement
was declared effective within 180 days after the first date of original issuance of the notes. If
the shelf registration statement ceases to be effective within two years from the effective date of
the shelf registration statement the Company will be obligated to pay an additional 0.25% interest
per annum for the first 90 days after the occurrence of the registration default and at the rate of
0.50% per annum thereafter. The Company has concluded that it is not probable that a contingent
liability has been incurred as of December 28, 2007 pursuant to the application of FASB 5 and thus
has not recorded a liability.
Junior Notes represent the Companys 4.75% convertible subordinated notes due November 2007.
During the three-month period ended December 28, 2007, the Company retired the entire $49.3 million
in aggregate principal amount of the Junior Notes at a price of $1,000 per $1,000 principal amount
of notes plus $1.2 million in accrued and unpaid interest.
SHORT-TERM DEBT
Short-term debt consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 28, |
|
|
September 28, |
|
|
|
2007 |
|
|
2007 |
|
Junior notes |
|
$ |
|
|
|
$ |
49,335 |
|
Credit Facility |
|
|
50,000 |
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
$ |
50,000 |
|
|
$ |
99,335 |
|
|
|
|
|
|
|
|
On July 15, 2003, the Company entered into a receivables purchase agreement under which it has
agreed to sell from time to time certain of its accounts receivable to Skyworks USA, Inc.
(Skyworks USA), a wholly-owned special purpose entity that is consolidated for accounting
purposes. Concurrently, Skyworks USA entered into an agreement with Wachovia Bank, N.A. providing
for a $50.0 million credit facility (Facility Agreement) secured by the purchased accounts
receivable. As a part of the consolidation, any interest incurred by Skyworks USA related to monies
it borrows under the Facility Agreement is recorded as interest expense in the Companys results of
operations. The Company performs collections and administrative functions on behalf of Skyworks
USA. Interest related to the Facility Agreement is at LIBOR plus 0.4%. As of December 28, 2007,
Skyworks USA had borrowed $50.0 million under this agreement.
NOTE 9. INCOME TAXES
In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxesan interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprises financial statements in accordance with
SFAS 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. This statement also provides guidance on derecognition,
classification, interest and penalties, accounting in the interim periods, disclosure, and
transition. The Company adopted FIN 48 on September 29, 2007.
The Company had no cumulative effect of the change impacting retained earnings as a result of the
adoption of FIN 48. The Company also recognized a $5.9 million decrease to deferred tax assets;
however, due to a valuation allowance against the Companys United States deferred taxes, there was
no retained earnings impact. As of the date of adoption, the Companys gross unrecognized tax
benefits totaled $7.3 million. There were no significant changes in the Companys gross
unrecognized tax benefits during the three-month period ended December 28, 2007. Of the total
unrecognized tax benefits at the date of adoption and December 28, 2007, $0.6 million and $0.6
million, respectively, would impact the effective tax rate, if recognized. The remaining
unrecognized tax benefits would not impact the effective tax rate, if recognized, as the company
has a valuation allowance against its United States deferred taxes.
10
Included in the balance of unrecognized tax benefits at the date of adoption is $0.6 million
related to tax positions for which it is reasonably possible that the total amounts could
significantly change in the next twelve months. This represents a possible decrease in unrecognized
tax benefits related to the expiration of a statute of limitations period.
The Companys major tax jurisdictions as of the adoption of FIN 48 are the United States,
California, and Iowa. For the United States, the Company has open tax years
dating back to fiscal year 1998 due to the carryforward of tax attributes. For California, the
Company has open tax years dating back to fiscal year 2002 due to the carryforward of tax
attributes. For Iowa, the Company has open tax years dating back to fiscal year 2002 due to the
carryforward of tax attributes.
The Companys policy is to recognize accrued interest and penalties, if incurred, on any
unrecognized tax benefits as a component of income tax expense. As of the date of adoption of FIN
48, the Company had $0.4 million of accrued interest and no accrued penalties associated with any
unrecognized tax benefits. There was no significant change in the Companys accrued interest and
penalties on unrecognized tax benefits during the three-month period ended December 28, 2007. To
the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts
accrued will be reduced and reflected as a reduction of the overall income tax provision.
NOTE 10. CONTINGENCIES
From time to time, various lawsuits, claims and proceedings have been, and may in the future be,
instituted or asserted against the Company, including those pertaining to patent infringement,
intellectual property, environmental, product liability, safety and health, employment and
contractual matters.
Additionally, the semiconductor industry is characterized by vigorous protection and pursuit of
intellectual property rights. From time to time, third parties have asserted and may in the future
assert patent, copyright, trademark and other intellectual property rights to technologies that are
important to our business and have demanded and may in the future demand that we license their
technology. The outcome of litigation cannot be predicted with certainty and some lawsuits, claims
or proceedings may be disposed of unfavorably to the Company. Intellectual property disputes often
have a risk of injunctive relief, which, if imposed against the Company, could materially and
adversely affect the Companys financial condition, or results of operations.
From time to time we are involved in legal proceedings in the ordinary course of business. We
believe that there is no such ordinary course litigation pending that will have, individually or in
the aggregate, a material adverse effect on our business.
NOTE 11. GUARANTEES AND INDEMNITIES
The Company does not currently have any guarantees. The Company generally indemnifies its customers
from third-party intellectual property infringement litigation claims related to its products, and,
on occasion, also provides other indemnities related to product sales. In connection with certain
facility leases, the Company has indemnified its lessors for certain claims arising from the
facility or the lease.
The Company indemnifies its directors and officers to the maximum extent permitted under the laws
of the state of Delaware. The duration of the indemnities varies, and in many cases is indefinite.
The indemnities to customers in connection with product sales generally are subject to limits based
upon the amount of the related product sales and in many cases are subject to geographic and other
restrictions. In certain instances, the Companys indemnities do not provide for any limitation of
the maximum potential future
payments the Company could be obligated to make. The Company has not recorded any liability for
these indemnities in the accompanying consolidated balance sheets.
NOTE 12. RESTRUCTURING AND SPECIAL CHARGES
Restructuring and special charges consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
|
December 28, |
|
|
December 29, |
|
|
|
2007 |
|
|
2006 |
|
Restructuring and special charges |
|
$ |
|
|
|
$ |
5,473 |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
5,473 |
|
|
|
|
|
|
|
|
11
Restructuring and special charges consist of charges for asset impairments and restructuring
activities, as follows:
2006 RESTRUCTURING CHARGES AND OTHER
On September 29, 2006, the Company implemented a plan to exit its baseband product area in order to
focus on its core products encompassing linear products, power amplifiers, front-end modules and
radio solutions. The Company recorded various charges associated with this action.
Activity and liability balances related to the fiscal 2006 restructuring actions are as follows (in
thousands):
|
|
|
|
|
|
License and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility |
|
|
Software |
|
|
Workforce |
|
|
Asset |
|
|
|
|
|
|
Closings |
|
|
Write-offs |
|
|
Reductions |
|
|
Impairments |
|
|
Total |
|
|
|
|
Charged to costs and expenses |
|
$ |
105 |
|
|
$ |
9,583 |
|
|
$ |
13,070 |
|
|
$ |
4,197 |
|
|
$ |
26,955 |
|
Non-cash items |
|
|
|
|
|
|
(6,426 |
) |
|
|
|
|
|
|
(4,197 |
) |
|
|
(10,623 |
) |
Cash payments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring balance, September 29, 2006 |
|
$ |
105 |
|
|
$ |
3,157 |
|
|
$ |
13,070 |
|
|
$ |
|
|
|
$ |
16,332 |
|
Charged to costs and expenses |
|
|
4,483 |
|
|
|
(83 |
) |
|
|
530 |
|
|
|
|
|
|
|
4,930 |
|
Reclassification of reserves |
|
|
(128 |
) |
|
|
(508 |
) |
|
|
636 |
|
|
|
|
|
|
|
|
|
Non-cash items |
|
|
|
|
|
|
(419 |
) |
|
|
|
|
|
|
|
|
|
|
(419 |
) |
Cash payments |
|
|
(1,690 |
) |
|
|
(1,847 |
) |
|
|
(13,242 |
) |
|
|
|
|
|
|
(16,779 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring balance, September 28, 2007 |
|
$ |
2,770 |
|
|
$ |
300 |
|
|
$ |
994 |
|
|
$ |
|
|
|
$ |
4,064 |
|
Cash payments |
|
|
(395 |
) |
|
|
|
|
|
|
(586 |
) |
|
|
|
|
|
|
(981 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring balance, December 28, 2007 |
|
$ |
2,375 |
|
|
$ |
300 |
|
|
$ |
408 |
|
|
$ |
|
|
|
$ |
3,083 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company anticipates that most of the remaining payments associated with the exit of the
baseband product area will be remitted during fiscal years 2008 and 2009.
NOTE 13. SEGMENT INFORMATION
The Company follows SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information (SFAS No. 131). SFAS No. 131 establishes standards for the way public business
enterprises report information about operating segments in annual financial statements and in
interim reports to shareholders. The method for determining what information to report is based on
the way that management organizes the segments within the Company for making operating decisions
and assessing financial performance. In evaluating financial performance, management uses sales and
operating profit as the measure of the segments profit or loss. Based on the guidance in SFAS No.
131, the Company has one operating segment for financial reporting purposes, which designs,
develops, manufactures and markets proprietary semiconductor products, including intellectual
property, for manufacturers of wireless communication products.
NOTE 14. EMPLOYEE STOCK BENEFIT PLANS
Net income for the three-month period ending December 28, 2007 and December 29, 2006 included
share-based compensation expense under SFAS 123(R) of $5.0 million and $2.0 million, respectively.
Share-based compensation expense for the three-month period ended December 28, 2007 included $2.3
million on employee stock options, $1.6 million on non-vested restricted stock with service and
market conditions, $0.3 million on non-vested restricted stock with service conditions, $0.4
million on performance shares, and $0.4 million on the Employee Stock Purchase Plan (ESPP).
Share-based compensation expense for the three-month period ended December 29, 2006 included $0.8
million on employee stock options, $0.6 million on non-vested restricted stock with service and
market conditions, $0.3 million on non-vested restricted stock with service conditions and $0.3
million on the ESPP.
12
Distribution and Dilutive Effect of Options
The following table illustrates the grant dilution and exercise dilution:
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
December 29, |
(In thousands) |
|
2007 |
|
2006 |
Shares of common stock outstanding |
|
|
162,020 |
|
|
|
163,020 |
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
2,706 |
|
|
|
2,550 |
|
Cancelled/forfeited |
|
|
(1,194 |
) |
|
|
(1,715 |
) |
Expired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net options granted |
|
|
1,512 |
|
|
|
835 |
|
Grant dilution (1) |
|
|
0.9 |
% |
|
|
0.5 |
% |
Exercised |
|
|
373 |
|
|
|
670 |
|
Exercise dilution (2) |
|
|
0.2 |
% |
|
|
0.4 |
% |
|
|
|
(1) |
|
The percentage for grant dilution is computed based on net options granted as a percentage of
shares of common stock outstanding. |
|
(2) |
|
The percentage for exercise dilution is computed based on options exercised as a
percentage of shares of common stock outstanding. |
During the three-month period ended December 28, 2007, the dilutive effect of in-the-money
equity-based awards was approximately 2.5 million shares or 1.5% of the basic shares outstanding
based on the Companys average share price of $8.81.
Valuation and Expense Information under SFAS 123(R)
The following table summarizes share-based compensation expense related to employee stock options,
employee stock purchases, and restricted stock grants under SFAS 123(R) for the three-month periods
ended December 28, 2007 and December 29, 2006 which was allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
|
December 28, |
|
|
December 29, |
|
(In thousands) |
|
2007 |
|
|
2006 |
|
Cost of sales |
|
|
834 |
|
|
|
125 |
|
Research and development |
|
|
1,146 |
|
|
|
486 |
|
Selling, general and administrative |
|
|
3,027 |
|
|
|
1,415 |
|
|
|
|
|
|
|
|
Share-based compensation expense included
in operating expenses |
|
$ |
5,007 |
|
|
$ |
2,026 |
|
|
|
|
|
|
|
|
As of December 28, 2007 and December 29, 2006, the Company had capitalized share-based compensation
expense of $0.4 million and $0.1 million in inventory. The Company did not recognize any tax
benefit on the share-based compensation recorded in the three-month periods ended December 28, 2007
and December 29, 2006 because we have established a valuation allowance against our net deferred
tax assets.
13
The weighted-average estimated fair value of employee stock options granted during the three-month
period ended December 28, 2007 and December 29, 2006 was $4.81 per share and $3.77 per share,
respectively, using the Black Scholes option-pricing model with the following weighted-average
assumptions:
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
December 29, |
|
|
2007 |
|
2006 |
Expected volatility |
|
|
51.56 |
% |
|
|
57.32 |
% |
Risk free interest rate (7 year
contractual life options) |
|
|
3.91 |
% |
|
|
4.64 |
% |
Risk free interest rate (10 year
contractual life options) |
|
|
4.07 |
% |
|
|
4.63 |
% |
Dividend yield |
|
|
0.00 |
|
|
|
0.00 |
|
Expected
option life (7 year contractual life
options) |
|
|
4.42 |
|
|
|
4.57 |
|
Expected option life (10 year contractual life options) |
|
|
5.80 |
|
|
|
5.86 |
|
The Company used an arithmetic average of historical volatility and implied volatility to calculate
its expected volatility at November 6, 2007. Historical volatility was determined by calculating
the mean reversion of the daily-adjusted closing stock price over the approximate 5.5 years between
June 25, 2002 and November 6, 2007. The implied volatility was calculated by analyzing the 52-week
minimum and maximum prices of publicly traded call options on the Companys common stock. The
Company concluded that an arithmetic average of these two calculations provided for the most
reasonable estimate of expected volatility under the guidance of SFAS 123(R).
The risk-free interest rate assumption is based upon observed Treasury bill interest rates (risk
free) appropriate for the term of the Companys employee stock options.
The expected life of employee stock options represents a calculation based upon the historical
exercise, cancellation and forfeiture experience for the Company over the approximate 5.5 years
between June 25, 2002 and November 6, 2007. The Company determined that it had two populations with
unique exercise behavior. These populations included stock options with a contractual life of 7
years and 10 years, respectively.
As share-based compensation expense recognized in the Consolidated Statement of Operations for the
three-month period ended December 28, 2007 is actually based on awards ultimately expected to vest,
it has been reduced for annualized estimated forfeitures of 11.79%. SFAS 123(R) requires
forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical
experience.
NOTE 15. EARNINGS PER SHARE
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
|
December 28, |
|
|
December 29, |
|
(In thousands, except per share amounts) |
|
2007 |
|
|
2006 |
|
Net income |
|
$ |
19,078 |
|
|
$ |
12,037 |
|
|
|
|
|
|
|
|
Weighted average shares outstanding
basic |
|
|
160,319 |
|
|
|
161,183 |
|
Effect of dilutive stock options and
restricted stock |
|
|
2,517 |
|
|
|
1,697 |
|
|
|
|
|
|
|
|
Weighted average shares outstanding
diluted |
|
|
162,836 |
|
|
|
162,880 |
|
|
|
|
|
|
|
|
|
Net income per share -
basic |
|
$ |
0.12 |
|
|
$ |
0.07 |
|
Effect of dilutive stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share -
diluted |
|
$ |
0.12 |
|
|
$ |
0.07 |
|
|
|
|
|
|
|
|
Basic earnings per share is calculated by dividing net income by the weighted average number of
common shares outstanding. Diluted earnings per share includes the dilutive effect of equity based
awards using the treasury stock method, the Junior Notes on an if-converted basis and the 2007
Convertible Notes using the treasury stock method, if their effect is dilutive.
14
Junior Notes convertible into approximately 2.9 million shares and equity based awards exercisable
for approximately 21.1 million shares were outstanding but not included in the computation of
earnings per share for the three-month period ended December 28, 2007 as their effect would have
been anti-dilutive. If the Company had earned in excess of $19.7 million in net income for the
three-month period ended December 28, 2007, the Junior Notes would have been dilutive to earnings
per share.
In addition, the Company issued $200.0 million aggregate principal amount of convertible
subordinated notes (2007 Convertible Notes) in March 2007. These 2007 Convertible Notes contain
cash settlement provisions, which permit the application of the treasury stock method in
determining potential share dilution of the conversion spread should the share price of the
Companys common stock exceed $9.52. It has been the Companys historical practice to cash settle
the principal and interest components of convertible debt instruments, and it is our intention to
continue to do so in the future, including settlement of the 2007 Convertible Notes issued in March
2007. These shares have not been included in the computation of earnings per share for the
three-month period ended December 28, 2007 as their effect would have been anti-dilutive. The
maximum potential dilution from the settlement of the 2007 Convertible Notes would be approximately
21.0 million shares.
Junior Notes convertible into approximately 19.8 million shares and equity based awards exercisable
into approximately 21.5 million shares were outstanding but not included in the computation of
earnings per share for the three-month period ended December 29, 2006 as their effect would have
been anti-dilutive. If the Company had earned at least $19.5 million in net income for the
three-month period ended December 29, 2006, the Junior Notes would have been dilutive to earnings
per share.
|
|
|
ITEM 2. |
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
This report and other documents we have filed with the Securities and Exchange Commission (SEC)
contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, and are subject
to the safe harbor created by those sections. Words such as believes, expects, may,
will, would, should, could, seek, intends, plans, potential, continue,
estimates, anticipates, predicts, and similar expressions or variations or negatives of such
words are intended to identify forward-looking statements, but are not the exclusive means of
identifying forward-looking statements in
this report. Additionally, statements concerning future matters such as the development of new
products, enhancements or technologies, sales levels, expense levels and other statements regarding
matters that are not historical are forward-looking statements. Although forward-looking
statements in this report reflect the good faith judgment of our management, such statements can
only be based on facts and factors currently known by us. Consequently, forward-looking statements
involve inherent risks and uncertainties and actual results and outcomes may differ materially and
adversely from the results and outcomes discussed in or anticipated by the forward-looking
statements. A number of important factors could cause actual results to differ materially and
adversely from those in the forward-looking statements. We urge you to consider the risks and
uncertainties discussed in our Annual Report on Form 10-K for the fiscal year ended September 28,
2007, under the heading Certain Business Risks and in the other documents filed with the SEC in
evaluating our forward-looking statements. We have no plans, and undertake no obligation, to
revise or update our forward-looking statements to reflect any event or circumstance that may arise
after the date of this report. We caution readers not to place undue reliance upon any such
forward-looking statements, which speak only as of the date made.
In this document, the words we, our, ours and us refer only to Skyworks Solutions, Inc. and
not any other person or entity.
15
RESULTS OF OPERATIONS
THREE-MONTHS ENDED DECEMBER 28, 2007 AND DECEMBER 29, 2006
The following table sets forth the results of our operations expressed as a percentage of net
revenues for the three-month periods ended December 28, 2007 and December 29, 2006:
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
December 29, |
|
|
2007 |
|
2006 |
Net revenues |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of goods sold |
|
|
60.9 |
|
|
|
61.6 |
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
39.1 |
|
|
|
38.4 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
|
16.2 |
|
|
|
15.5 |
|
Selling, general and administrative |
|
|
12.0 |
|
|
|
12.2 |
|
Amortization |
|
|
0.9 |
|
|
|
0.3 |
|
Restructuring and other charges |
|
|
0.0 |
|
|
|
2.8 |
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
29.1 |
|
|
|
30.8 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
10.0 |
|
|
|
7.6 |
|
Interest expense |
|
|
(1.0 |
) |
|
|
(1.7 |
) |
Other income, net |
|
|
0.9 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
9.9 |
|
|
|
7.0 |
|
Provision for income taxes |
|
|
0.8 |
|
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
9.1 |
% |
|
|
6.1 |
% |
|
|
|
|
|
|
|
|
|
GENERAL
During the three-month period ended December 28, 2007, certain key factors contributed to our
overall results of operations and cash flows from operations. More specifically:
|
§ |
|
We achieved cash provided by operations of $55.5 million for the three-month period
ended December 28, 2007 as compared to $15.8 million of cash provided by operations for
the three-month period ended December 29, 2006. |
|
|
§ |
|
We successfully leveraged our catalog business and worldwide distribution network
allowing us to expand into a broader set of end markets including broadband, industrial,
medical, computing, wireless networking and cellular infrastructure. This diversification
of both our linear products and handset product areas specifically translated into revenue
growth of 7.4% or $14.5 million in the first quarter of fiscal 2008 as compared to the
same period in the prior year. |
|
|
§ |
|
We achieved operating income of $21.0 million in the first quarter of fiscal 2008 as
compared to operating income of $14.9 million in the first quarter of fiscal 2007. This
41.4% increase in operating income was primarily the result of the aforementioned
increases in revenues as well as continuous expansion in gross profit margins. |
16
|
§ |
|
Gross profit in aggregate dollars and as a percentage of sales improved in the first
quarter of fiscal 2008 as compared to the corresponding period in the prior year due to
higher equipment efficiency and factory utilization, our continued progress on yield
improvement initiatives and double digit year-over year material cost reductions. More
specifically, gross margin as a percentage of revenue increased to 39.1% from 38.4% for
the quarter ended December 28, 2007 as compared to the three-month period ended December
29, 2006. |
|
|
§ |
|
In October 2007, we paid $32.6 million in cash to acquire certain assets from two
separate companies. We acquired raw materials, die bank, finished goods, proprietary GaAs
PA/FEM designs and related intellectual property in a business combination from Freescale
Semiconductor. We also acquired sixteen fundamental HBT and RF MEMs patents from another
company in an asset acquisition, and in November 2007 we retired the entire $49.3 million
balance of our Junior Notes and in the process reduced the future potential dilution of
our share base. |
NET REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
|
|
|
|
December 29, |
(dollars in thousands) |
|
2007 |
|
Change |
|
2006 |
|
|
|
Net revenues |
|
$ |
210,533 |
|
|
|
7.4 |
% |
|
$ |
196,030 |
|
We market and sell our mobile platforms and linear products to top tier Original Equipment
Manufacturers (OEMs) of communication electronic products, third-party Original Design
Manufacturers (ODMs) and contract manufacturers, and indirectly through electronic components
distributors. We periodically enter into strategic arrangements leveraging our broad intellectual
property portfolio by licensing or selling our patents or other intellectual property. We
anticipate continuing this intellectual property strategy in future periods.
Net revenues increased 7.4% or $14.5 million overall for the first fiscal quarter of 2008 as
compared to the first fiscal quarter of 2007. Overall average selling prices declined by 4.5%
in the first quarter of fiscal 2008 as compared to a decline of 8.3% in the corresponding period in
the prior year. The slowing decline in average selling prices is due to the increasingly
technologically complex content and design of our front end modules. Net revenues from our top
three customers decreased to $99.4 million or 47.2% in the first quarter of fiscal 2008 from $106.6
million or 54.3% in the first quarter of fiscal 2007 reflecting an increasingly diversified
customer profile and product portfolio.
GROSS PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
|
|
|
|
December 29, |
(dollars in thousands) |
|
2007 |
|
Change |
|
2006 |
|
|
|
Gross profit |
|
$ |
82,338 |
|
|
|
9.3 |
% |
|
$ |
75,316 |
|
% of net revenues |
|
|
39.1 |
% |
|
|
|
|
|
|
38.4 |
% |
Gross profit represents net revenues less cost of goods sold. Cost of goods sold consists primarily
of purchased materials, labor and overhead (including depreciation and equity based compensation
expense) associated with product manufacturing and sustaining engineering expenses pertaining to
products sold.
Gross profit in aggregate dollars and as a percentage of sales improved in the first quarter of
fiscal 2008 as compared to the corresponding period in the prior year due to higher equipment
efficiency and factory utilization, continued progress on yield improvement initiatives and double
digit year-over year material cost reductions. More specifically, gross margin as a percentage of
revenue increased to 39.1% from 38.4% for the quarter ended December 28, 2007 as compared to the
three-month period ended December 29, 2006. Increasingly, our product portfolio is characterized by
products with longer lifecycles and more complex, highly integrated technology which drives higher
gross margins. Furthermore, our established hybrid manufacturing model with multiple external
foundries allows us to maintain high internal capacity utilization by creating second-sources for
high fixed cost services like foundry and assembly. This approach provides supply chain
flexibility, lower capital investment and
17
the ability to meet upside demand and provides gross
margin advantages. In the first quarter of both fiscal 2008 and 2007, we also benefited from higher
contribution margins associated with the licensing and/or sale of intellectual property.
RESEARCH AND DEVELOPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
|
|
|
|
December 29, |
(dollars in thousands) |
|
2007 |
|
Change |
|
2006 |
|
|
|
Research and development |
|
$ |
34,094 |
|
|
|
12.1 |
% |
|
$ |
30,412 |
|
% of net revenues |
|
|
16.2 |
% |
|
|
|
|
|
|
15.5 |
% |
Research and development expenses consist principally of direct personnel costs, costs for
pre-production evaluation and testing of new devices, and design and test tool costs.
The increase in research and development expenses in aggregate dollars and as a percentage of sales
for the three-month period ended December 28, 2007 when compared to the corresponding period in the
previous fiscal year is primarily the result of higher recruiting and relocation costs, higher
variable materials and supplies expense and additional expense incurred for engineering lots and
masks.
SELLING, GENERAL AND ADMINISTRATIVE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
|
|
|
|
December 29, |
(dollars in thousands) |
|
2007 |
|
Change |
|
2006 |
|
|
|
Selling, general and administrative |
|
$ |
25,287 |
|
|
|
5.2 |
% |
|
$ |
24,028 |
|
% of net revenues |
|
|
12.0 |
% |
|
|
|
|
|
|
12.2 |
% |
Selling, general and administrative expenses include personnel costs (legal, accounting, treasury,
human resources, information systems, customer service, etc.), bad debt expense, sales
representative commissions, advertising and other marketing costs.
Selling, general and administrative expenses increased in aggregate dollars for the three-month
period ended December 28, 2007 when compared to the corresponding period in the previous fiscal
year primarily as the result of higher professional services expenses and higher commissions
expense on intellectual property sales. The decrease in selling, general and administrative
expenses as a percentage of revenues is due to the higher level of revenues in 2008.
AMORTIZATION OF INTANGIBLE ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
|
|
|
|
December 29, |
(dollars in thousands) |
|
2007 |
|
Change |
|
2006 |
|
|
|
Amortization |
|
$ |
1,932 |
|
|
|
260.5 |
% |
|
$ |
536 |
|
% of net revenues |
|
|
0.9 |
% |
|
|
|
|
|
|
0.3 |
% |
The increase in amortization expense during the first quarter of fiscal 2008 as compared to the
first quarter of fiscal 2007 is due to the acquisitions completed in October 2007 and the
associated amortizable customer relationships, patents and order backlog that was acquired.
In the first quarter of fiscal 2008, the base of our amortizable intangible assets increased by
approximately $11.0 million due to acquired customer relationships, patents and order backlog.
In 2002, we recorded $36.4 million of intangible assets consisting of developed technology,
customer relationships and a trademark acquired by the Company. These assets are principally being
amortized on a straight-line basis over a 10-year period.
18
RESTRUCTURING AND SPECIAL CHARGES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
|
|
|
|
December 29, |
(dollars in thousands) |
|
2007 |
|
Change |
|
2006 |
|
|
|
Restructuring and special charges |
|
$ |
0.0 |
|
|
|
100.0 |
% |
|
$ |
5,473 |
|
% of net revenues |
|
|
0.0 |
% |
|
|
|
|
|
|
2.8 |
% |
Restructuring and special charges consist of charges for asset impairments and restructuring
activities, as follows:
On September 29, 2006, the Company exited its baseband product area in order to focus on its core
business encompassing linear products, power amplifiers, front-end modules and radio solutions. The
Company recorded various charges associated with this action.
For the three-month period ended December 29, 2006, we recorded an additional $1.4 million related
to the write-down of technology licenses and design software, and $4.1 million related to lease
obligations associated with the shut-down of certain locations associated with the baseband product
area.
For additional information regarding restructuring charges and liability balances, see Note 12 of
Notes to Interim Consolidated Financial Statements.
INTEREST EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
|
|
|
|
December 29, |
(dollars in thousands) |
|
2007 |
|
Change |
|
2006 |
|
|
|
Interest expense |
|
$ |
2,208 |
|
|
|
(32.0 |
)% |
|
$ |
3,249 |
|
% of net revenues |
|
|
1.0 |
% |
|
|
|
|
|
|
1.7 |
% |
Interest expense is comprised principally of payments in connection with the $50.0 million credit
facility between Skyworks USA, Inc., our wholly owned subsidiary, and Wachovia Bank, N.A.
(Facility Agreement), the Companys 4.75% convertible subordinated notes (the Junior Notes),
and the Companys 1.50% and 1.25% convertible subordinated notes (the 2007 Convertible Notes).
The decrease in interest expense both in aggregate dollars and as a percentage of net revenues for
the three-month period ended December 28, 2007 when compared to the corresponding period in fiscal
2006, is due to the retirement of our higher interest rate Junior Notes replaced with the proceeds
of the issuance of the substantially lower interest rate 2007 Convertible Notes in March 2007.
See Note 8 of Notes to Interim Consolidated Financial Statements for information related to our
borrowing arrangements.
OTHER INCOME, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
|
|
|
|
December 29, |
(dollars in thousands) |
|
2007 |
|
Change |
|
2006 |
|
|
|
Other income, net |
|
$ |
2,050 |
|
|
|
(4.9 |
)% |
|
$ |
2,155 |
|
% of net revenues |
|
|
0.9 |
% |
|
|
|
|
|
|
1.1 |
% |
Other income, net is comprised primarily of interest income on invested cash balances, other
non-operating income and expense items and foreign exchange gains/losses.
19
PROVISION FOR INCOME TAXES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
|
December 28, |
|
|
|
|
|
December 29, |
(dollars in thousands) |
|
2007 |
|
Change |
|
2006 |
|
|
|
Provision for income taxes |
|
$ |
1,789 |
|
|
|
3.1 |
% |
|
$ |
1,736 |
|
% of net revenues |
|
|
0.8 |
% |
|
|
|
|
|
|
0.9 |
% |
In accordance with SFAS 109, Accounting for Income Taxes, we have determined that it is more
likely than not that a portion of our historic and current year income tax benefits will not be
realized. Accordingly, as of December 28, 2007, we have established a valuation allowance of
$147.0 million related to our United States deferred tax assets. Deferred tax assets have been
recognized for foreign operations when we believe that it is more likely than not that they will be
recovered during the carryforward period.
The provision for income taxes for the three-month periods ended December 28, 2007 and December 29,
2006 consists of approximately $1.9 million and $1.5 million, respectively, of United States income
taxes. Of the total United States income tax provision, $1.5 million and $1.3 million were
recorded as a charge reducing the carrying value of goodwill for the three-month periods ended
December 28, 2007 and December 29, 2006. As noted in our Annual Report on Form 10-K, no benefit
has been recognized for certain deferred tax assets. The benefit from the recognition of these
deferred items reduces the carrying value of goodwill instead of reducing income tax expense. We
will evaluate the realization of the deferred tax assets on a quarterly basis and adjust the
provision for income taxes accordingly. As a result, the effective tax rate may vary in subsequent
quarters.
In addition, the provision for the three-month periods ended December 28, 2007 and December 29,
2006, consists of approximately ($0.1) million and $0.2 million, respectively, of foreign income
taxes incurred by foreign operations.
On October 1, 2007, Mexico enacted a new flat tax regime which will become effective January 1,
2008. SFAS 109, Accounting for Income Taxes, prescribes that the effect of the new tax on
deferred taxes must be included in tax expense in the period that includes the enactment date. The
effect of recording deferred taxes in the first fiscal quarter of 2008 to the foreign tax provision
is a benefit of ($0.2) million.
For the three-month period ended December 28, 2007, United States income tax was provided on
current earnings attributable to our Mexico operations. No provision has been made for United
States federal, state, or additional foreign income taxes, which would be due upon the actual or
deemed distribution of undistributed earnings of the other foreign subsidiaries, which have been or
are, intended to be permanently reinvested. The effect on our financial statements is immaterial.
Realization of benefits from our net operating losses is dependent upon generating United States
source taxable income in the future, which may result in the existing valuation reserve being
reversed in the near term to the extent that the related deferred tax assets no longer require a
valuation allowance under the provisions of SFAS 109.
We adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan
interpretation of FASB Statement No. 109 (FIN 48), as of the beginning of fiscal year 2008. We
had no cumulative effect of the change impacting retained earnings as a result of the adoption of
FIN 48. We also recognized a $5.9 million decrease to deferred tax assets; however, due to a
valuation allowance against our United States deferred taxes, there was no retained earnings
impact. As of the date of adoption, our gross unrecognized tax benefits totaled $7.3 million.
There were no significant changes in our gross unrecognized tax benefits during the three-month
period ended December 28, 2007. Of the total unrecognized tax benefits at the date of adoption and
December 28, 2007, $0.6 million and $0.6 million, respectively, would impact the effective tax
rate, if recognized. The remaining unrecognized tax benefits would not impact the effective tax
rate, if recognized, as we have a valuation allowance against its United States deferred taxes.
Included in the balance of unrecognized tax benefits at the date of adoption is $0.6 million
related to tax positions for which it is reasonably possible that the total amounts could
significantly change in the next twelve months. This represents a possible decrease in unrecognized
tax benefits related to the expiration of a statute of limitations period.
The Companys major tax jurisdictions as of the adoption of FIN 48 are the United States,
California, and Iowa. For the United States, we have open tax years dating back to fiscal year
1998 due to the carryforward of tax attributes. For California, we have open tax years dating back
to fiscal year 2002 due to the carryforward of tax
20
attributes. For Iowa, we have open tax years
dating back to fiscal year 2002 due to the carryforward of tax attributes.
Our policy is to recognize accrued interest and penalties, if incurred, on any unrecognized tax
benefits as a component of income tax expense. As of the date of adoption of FIN 48, we had $0.4
million of accrued interest and no accrued penalties associated with any unrecognized tax benefits.
There was no significant change in our accrued interest and penalties on unrecognized tax benefits
during the three-month period ended December 28, 2007. To the extent interest and penalties are
not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected
as a reduction of the overall income tax provision.
LIQUIDITY AND CAPITAL RESOURCES
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended |
|
(dollars in thousands) |
|
December 28, 2007 |
|
|
December 29, 2006 |
|
Cash and cash equivalents at
beginning of period |
|
$ |
241,577 |
|
|
$ |
136,749 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating
activities |
|
|
55,494 |
|
|
|
15,760 |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities |
|
|
(50,020 |
) |
|
|
(41,234 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by (used
in) financing
activities |
|
|
(48,337 |
) |
|
|
2,657 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end
of period |
|
$ |
198,714 |
|
|
$ |
113,932 |
|
|
|
|
|
|
|
|
Based on our results of operations for fiscal 2007 and the first quarter of fiscal 2008 along with
current trends, we expect our existing sources of liquidity, together with cash expected to be
generated from operations and short term investments, will allow us to sufficiently fund our
research and development, capital expenditures, debt obligations, purchase obligations, working
capital and other cash requirements for at least the next 12 months. However, we cannot assure you
that the capital required to fund these expenses will be available in the future. In addition, any
strategic investments and acquisitions that we may make to help us grow our business may require
additional capital resources. If we are unable to obtain enough capital to meet our capital needs
on a timely basis or at all, our business and operations could be materially adversely affected.
Cash, cash equivalent balances and short-term investments decreased $46.3 million to $207.5 million
at December 28, 2007 from $253.8 million at September 28, 2007. This overall decrease was the
result of payments for acquisitions of $32.6 million and the retirement of the entire balance of
the Junior Notes of $49.3 million offset by cash generated from operating activities of $55.5
million. The number of days sales outstanding for the three-months ended December 28, 2007
decreased to 72 from 76 for the corresponding period in the previous fiscal year. Annualized
inventory turns for the three-months ended December 28, 2007 were 6.0 compared to 6.8 for the
corresponding period in the previous fiscal year.
During the three-months ended December 28, 2007, we generated $55.5 million in cash from operating
activities as we achieved net income of $19.1 million, experienced an increase in accounts payable
balances of $12.8 million, a decrease in inventories of $1.6 million, a decrease in receivables of
$0.7 million and a decrease in other assets of $1.3 million. We incurred multiple non-cash charges
(e.g., depreciation, amortization, charge in lieu of income tax expense, contribution of common
shares to savings and retirement plans and share-based compensation expense) totaling $20.6
million.
Cash used in investing activities for the three-months ended December 28, 2007, consisted of net
sales of $2.5 million in auction rate securities and capital expenditures of $19.9 million
primarily for fabrication and assembly and test capacity. In addition, we paid $32.6 million in
cash to acquire certain assets from two separate companies. We acquired raw materials, die bank,
finished goods, proprietary GaAs PA/FEM designs and related intellectual property in a business
combination from Freescale Semiconductor. We also acquired sixteen fundamental HBT and RF MEMs
patents from another company in an asset acquisition. We believe a focused program of capital
expenditures will be required to sustain our current manufacturing capabilities. Future capital
expenditures will be
21
funded by the generation of positive cash flows from operations. We may also
consider additional future acquisition opportunities to extend our technology portfolio and design
expertise and to expand our product offerings.
Cash used in financing activities for the three-months ended December 28, 2007, consisted of the
retirement of the remaining $49.3 million in Junior notes, repurchase of common stock of $1.3
million and cash provided by stock option exercises of $2.1 million.
In connection with our exit of the baseband product area, we anticipate making remaining cash
payments of approximately $3.1 million in future periods. Certain payments on long-term lease
obligations resulting from facility closures and severance payments will be remitted in fiscal 2008
and beyond. We expect our existing sources of liquidity, together with cash expected to be
generated from operations and short-term investments, will be sufficient to fund these costs
associated with the exit of our baseband product area.
Our invested cash balances primarily consist of highly rated commercial paper, United States
treasury obligations, United States agency obligations, overnight repurchase agreements backed by
United States treasuries or United States agency obligations, certificates of deposit and foreign
bank obligations. At December 28, 2007, we also held a $3.2 million auction rate security. In the
first quarter of fiscal 2008, we recorded an unrealized loss on our auction rate security of
approximately $0.7 million. We believe that
this security is currently only temporarily impaired and thus continue to classify it as a
short-term available for sale security. We will monitor this security in future periods and
continue to periodically assess its classification.
CONTRACTUAL OBLIGATIONS
Our contractual obligations disclosure in our annual report on Form 10-K for the year ended
September 28, 2007 has not materially changed since we filed that report, with the exception that
we retired $49.3 million of Junior Notes on November 15, 2007. Our short-term and long-term debt
are more fully described in Note 8 of this Form 10-Q.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
FIN 48
In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxesan interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting and
disclosure for uncertainty in tax positions, as defined. FIN 48 seeks to reduce the diversity in
practice associated with certain aspects of the recognition and measurement related to accounting
for income taxes. The Company adopted FIN 48 during the quarter ended December 28, 2007 and its
adoption did not materially impact its results from operations or financial position.
SFAS 157
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157) which
defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements. SFAS 157 is effective
for financial statements issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. The Company has not yet determined the impact that SFAS 157 will
have on its results from operations or financial position.
SFAS 159
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities (SFAS 159) including an amendment of SFAS No. 115, which permits entities
to choose to measure many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value. SFAS 159 is effective for the Company beginning in
fiscal 2009. The Company is currently evaluating SFAS 159 and the impact that it may have on
results of operations or financial position.
SFAS141(R)
In December
2007, the FASB issued SFAS No. 141(R), Business Combinations. SFAS No. 141(R) applies to any
transaction or other event that meets the definition of a business combination. Where applicable,
SFAS No. 141(R) establishes principles and requirements for how the acquirer recognizes and
measures identifiable assets acquired, liabilities assumed, noncontrolling interest in the acquiree
and goodwill or gain from a bargain purchase. In
22
addition, SFAS 141(R) determines what information
to disclose to enable users of the financial statements to evaluate the nature and financial
effects of the business combination. This statement is to be applied prospectively for fiscal
years beginning after December 15, 2008. The Company is in the process of evaluating the impact of
SFAS No. 141(R) on its Consolidated Financial Statements.
SFAS 160
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements, An Amendment of ARB No. 51. SFAS No. 160 amends ARB 51 to establish accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of
a subsidiary. It also amends certain of ARB 51s consolidation procedures for consistency with the
requirements of FASB Statement No. 141(R). This statement is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15, 2008. The statement
shall be applied prospectively as of the beginning of the fiscal year in which the statement is
initially adopted. The Company is currently evaluating SFAS 160 and the impact that it may have on
results of operations or financial position.
|
|
|
ITEM 3. |
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We are subject to market risks, such as changes in foreign currency exchange rates and interest
rates. Our financial instruments include cash and cash equivalents, short-term investments,
short-term debt and long-term debt. Our main investment objective is the preservation of investment
capital. Consequently, we invest with only high-credit-quality issuers and we limit the amount of
our credit
exposure to any one issuer. We do not use derivative instruments for speculative or investment
purposes. There have been no material changes in market risk exposures from those disclosed in our
Annual Report on Form 10-K for the fiscal year ended September 28, 2007.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
Our management, with the participation of our chief executive officer and chief financial officer,
evaluated the effectiveness of our disclosure controls and procedures as of December 28, 2007. The
term disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, means controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time periods specified in
the SECs rules and forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed by a company in the
reports that it files or submits under the Exchange Act is accumulated and communicated to the
companys management, including its principal executive and principal financial officers, as
appropriate to allow timely decisions regarding required disclosure. Management recognizes that any
controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving their objectives and management necessarily applies its judgment in
evaluating the cost-benefit relationship of possible controls and procedures. Based on the
evaluation of our disclosure controls and procedures as of December 28, 2007, our chief executive
officer and chief financial officer concluded that, as of such date, our disclosure controls and
procedures were effective at the reasonable assurance level.
(b) Changes in internal controls over financial reporting.
No changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act) occurred during the fiscal quarter ended December 28, 2007 that has
materially affected, or is reasonably likely to materially affect, Skyworks internal control over
financial reporting.
23
PART II OTHER INFORMATION
ITEM 1A. RISK FACTORS
There have been no significant changes in the risk factors disclosed in Item 1A of our Annual Report
on Form 10-K for the year ended September 28, 2007.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c)
The following table provides information regarding repurchases of common stock made by us during
the fiscal quarter ended December 28, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Number (or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximately |
|
|
|
|
|
|
|
|
|
|
Total Number of |
|
Dollar Value) of |
|
|
|
|
|
|
|
|
|
|
Shares Purchased as |
|
Shares that May Yet |
|
|
|
|
|
|
|
|
|
|
Part of Publicly |
|
Be Purchased Under |
|
|
Total Number of |
|
Average Price Paid |
|
Announced Plans or |
|
the Plans or |
Period |
|
Shares Purchased |
|
per Share |
|
Programs |
|
Programs |
October 7, 2007 |
|
|
3,575 |
(1) |
|
$ |
9.10 |
|
|
|
N/A |
(2) |
|
|
N/A |
(2) |
November 6, 2007 |
|
|
65,809 |
(1) |
|
$ |
9.33 |
|
|
|
N/A |
(2) |
|
|
N/A |
(2) |
November 8, 2007 |
|
|
76,473 |
(1) |
|
$ |
8.44 |
|
|
|
N/A |
(2) |
|
|
N/A |
(2) |
December 19, 2007 |
|
|
4,447 |
(1) |
|
$ |
8.43 |
|
|
|
N/A |
(2) |
|
|
N/A |
(2) |
|
|
|
(1) |
|
All shares of common stock reported in the table above were repurchased by Skyworks at the
fair market value of the common stock on October 7, 2007, November 6, 2007, November 8, 2007, and
December 19, 2007, respectively, in connection with the satisfaction of tax withholding obligations
under restricted stock agreements between Skyworks and certain of its key employees. |
|
(2) |
|
We have no publicly announced plans or programs. |
ITEM 6. EXHIBITS
|
|
|
Number |
|
Description |
10.Q*
|
|
Fiscal 2008 Executive Incentive Compensation Plan |
|
|
|
10.JJ*
|
|
Form of Performance Share Agreement under the Companys 2005 Long-Term Incentive Plan |
|
|
|
31.1*
|
|
Certification of the Companys Chief Executive Officer pursuant to Securities
Exchange Act of 1934, as amended, Rules 13a- 14(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2*
|
|
Certification of the Companys Chief Financial Officer pursuant to Securities
Exchange Act of 1934, as amended, Rules 13a-14(a) and 15d-14(a), as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.1*
|
|
Certification of the Companys Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2*
|
|
Certification of the Companys Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
SKYWORKS SOLUTIONS, INC.
|
|
Date: February 6, 2008 |
By: |
/s/ David J. Aldrich
|
|
|
David J. Aldrich, President and Chief |
|
|
Executive Officer (Principal Executive Officer) |
|
|
|
|
|
|
By: |
/s/ Donald W. Palette
|
|
|
Donald W. Palette, Chief Financial Officer |
|
|
Vice President (Principal Accounting and Financial Officer) |
|
|
25
EXHIBIT INDEX
|
|
|
Number |
|
Description |
10.Q
|
|
Fiscal 2008 Executive Incentive Compensation Plan |
|
|
|
10.JJ
|
|
Form of Performance Share Agreement under the Companys 2005 Long-Term Incentive Plan |
|
|
|
31.1
|
|
Certification of the Companys Chief Executive Officer pursuant to Securities
Exchange Act of 1934, as amended, Rules 13a- 14(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2
|
|
Certification of the Companys Chief Financial Officer pursuant to Securities
Exchange Act of 1934, as amended, Rules 13a-14(a) and 15d-14(a), as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.1
|
|
Certification of the Companys Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2
|
|
Certification of the Companys Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
26
exv10wq
EXHIBIT
10.Q
FY08 Executive Incentive Plan
1. |
|
Purpose: The FY08 Executive Incentive Plan (theFY08 Plan) is designed to reward key
management employees for achieving certain financial and business objectives. |
|
2. |
|
Plan Period: The FY08 Plan covers the period from September 29, 2007 through September 26,
2008. |
|
3. |
|
Eligibility: This program applies to the Chief Executive Officer and his direct reporting
senior executives. Other key employees may be added based upon the recommendation of the
Chief Executive Officer and subsequent approval of the Compensation Committee. Those
employees not covered by this plan may be eligible for other programs established by Skyworks. |
|
4. |
|
Incentive Targets: Participants are eligible to earn a percentage of their base salary for
attaining certain performance objectives. Nominal, target and stretch incentive awards have
been established as follows (shown as a percentage of the participants base salary): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive At |
|
Incentive At |
|
Incentive |
Name |
|
Nominal |
|
Target |
|
At Stretch |
CEO |
|
|
30 |
% |
|
|
100 |
% |
|
|
200 |
% |
CFO, VP
Sales, Business Unit
General Managers, VP
Ops |
|
|
20 |
% |
|
|
60 |
% |
|
|
120 |
% |
Other VPs |
|
|
20 |
% |
|
|
50 |
% |
|
|
100 |
% |
Special Participants |
|
|
10 |
% |
|
|
40 |
% |
|
|
80 |
% |
5. |
|
FY08 Metrics: The performance metrics for FY08 are as follows: |
1st Half Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric |
|
Nominal |
|
Target |
|
Stretch |
Revenue |
|
REDACTED |
|
REDACTED |
|
REDACTED |
Gross Margin |
|
REDACTED |
|
REDACTED |
|
REDACTED |
Operating Income ($) |
|
REDACTED |
|
REDACTED |
|
REDACTED |
Cash |
|
REDACTED |
|
REDACTED |
|
REDACTED |
2nd Half Financial1
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric |
|
Nominal |
|
Target |
|
Stretch |
Revenue |
|
REDACTED |
|
REDACTED |
|
REDACTED |
Gross Margin |
|
REDACTED |
|
REDACTED |
|
REDACTED |
Operating Income ($) |
|
REDACTED |
|
REDACTED |
|
REDACTED |
Cash |
|
REDACTED |
|
REDACTED |
|
REDACTED |
The quality metric for FY07 will focus on drivers of our Six Sigma initiative.
Performance periods are semi-annual. The individual metrics above are for normal operations
and any extraordinary events and/or charges will be brought to the Compensation Committee
for review and approval.
Metrics will be weighted based on corporate performance for FY08 as follows:
1st Half
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
GMs |
|
Ops |
|
Other |
Revenue Growth |
|
|
30 |
% |
|
30% (BU) |
|
|
20 |
% |
|
|
20 |
% |
Gross Margin |
|
|
30 |
% |
|
30% (BU) |
|
|
40 |
% |
|
|
20 |
% |
Operating Income ($) |
|
|
20 |
% |
|
|
20 |
% |
|
|
20 |
% |
|
|
40 |
% |
Cash |
|
|
10 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
10 |
% |
Quality |
|
|
10 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
10 |
% |
2nd Half
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
GMs |
|
Ops |
|
Other |
Revenue Growth |
|
|
40 |
% |
|
40% (BU) |
|
|
30 |
% |
|
|
30 |
% |
Gross Margin |
|
|
20 |
% |
|
20% (BU) |
|
|
30 |
% |
|
|
20 |
% |
Operating Income ($) |
|
|
20 |
% |
|
|
20 |
% |
|
|
20 |
% |
|
|
30 |
% |
Cash |
|
|
10 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
10 |
% |
Quality |
|
|
10 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
|
1 |
|
Preliminary. To be updated after second quarter |
2 of 3
FY08 EIP
6. |
|
How the Plan Works: Upon completion of the first six months of the Fiscal Year, the Chief
Executive Officer will provide the Compensation Committee with recommendations for incentive
award payments to the named participants of the plan. The Committee will review the
recommendations and approve the actual amount to be paid to each participant. The Committee
will rely upon the CEO for the appropriate distribution of the authorized incentive pool. The
same process will occur for the second six months of the Fiscal Year. All incentive award
payments, if earned, for a Fiscal Year will be paid by the following December 15th. |
7. |
|
Administration: Actual performance between the Nominal and Target metrics will be paid on a
linear sliding scale beginning at the Nominal percentage and moving up to the Target
percentage. The same linear scale will apply for performance between Target and Stretch
metrics. In order to fund the incentive plans and insure the overall Companys financial
performance, the following terms apply. |
|
|
|
No incentive award will be paid unless the Company meets its Nominal operating
income goal after accounting for any incentive award payments. |
|
|
|
|
Payout for the first six month performance period will be capped at 80% of earnings
with 20% being held back until the end of the fiscal year based on sustained
performance. |
|
|
|
|
Skyworks CEO, subject to approval by the Compensation Committee, retains discretion
to award below nominal or above Stretch. |
|
|
|
|
Any payout shall be conditioned upon the Participants employment by the Company on
the date of payment; provided, however, that the Compensation Committee may make
exceptions to this requirement, in its sole discretion, including, without limitation,
in the case of a participants termination of employment, retirement, death or
disability. |
8. |
|
Taxes: All awards are subject to federal, state, local and social security taxes. Payments
under this Plan will not affect the base salary, which is used as the basis for Skyworks
benefits program. |
9. |
|
Amendments: The Company reserves the right to amend or terminate the FY08 Plan at any time
in its sole discretion. |
3 of 3
FY08 EIP
exv10wjj
EXHIBIT
10.JJ
Skyworks Solutions, Inc.
Performance Share Agreement
Granted Under 2005 Long-Term Incentive Plan
1. Grant of Award.
This Agreement evidences the grant by Skyworks Solutions, Inc., a Delaware corporation
(Skyworks or the Company) on [DATE] (the Grant Date) to [NAME] (the Participant)
of up to [# of SHARES] performance shares of the Company. Each performance share represents the
right to receive one share of the common stock, $0.25 par value per share, of the Company (Common
Stock) upon, and to the extent of, the achievement of the performance targets, as provided in this
Agreement. The shares of Common Stock that are issuable upon, and to the extent, of the
achievement of the performance targets are referred to in this Agreement as Shares. No Shares
shall be issued by the Company and delivered to the Participant unless, and until, all conditions
set forth herein for such issuance and delivery are met, including but not limited to the
achievement of an applicable performance target.
2. Vesting; Forfeiture.
(a) The Participants right to receive the Shares shall vest if, and to the extent, the
performance targets described in Exhibit A to this award (the Targets) are satisfied before the
date set forth in Exhibit A (the Termination Date). If none of the Targets are met before the
Termination Date, the Company shall have no obligation to issue any Shares and this award shall be
forfeited.
(b) In the event that the Participants employment with the Company terminates for any reason
before the Termination Date, the Company shall have no obligation to issue any Shares and this
award shall be forfeited.
3. Distribution of Shares.
(a) The Company will distribute to the Participant (or to the Participants estate, in the
event that his or her death occurs after the Participants right to receive the Shares vests but
before distribution of the corresponding Shares), as soon as administratively practicable after the
Participants right to receive the Shares vests, the Shares of Common Stock represented by the
performance shares. In no event shall the issuance and distribution of the Shares be made later
than March 15 of the calendar year following the calendar year in which the Participants right to
receive the Shares vests.
(b) The Company shall not be obligated to issue and deliver the Shares to the Participant upon
the vesting of the Participants right to receive the Shares unless the issuance and delivery of
the Shares shall comply with all relevant provisions of law and other legal requirements including,
without limitation, any applicable federal or state securities laws and the requirements of any
stock exchange upon which shares of Common Stock may then be listed.
4. Restrictions on Transfer.
The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of,
by operation of law or otherwise, any performance shares, or any
interest therein, except by will or the laws of descent and distribution. The provisions of this Section 4 shall not
apply to any of the Shares.
5. Provisions of the Plan; Dividend and Other Shareholder Rights.
This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the
Participant with this Agreement. Except as set forth in the Plan, neither the Participant nor any
person claiming under or through the Participant shall be, or have any rights or privileges of, a
stockholder of the Company in respect of the Shares issuable pursuant to the performance shares
granted hereunder until the Shares have been issued by the Company and delivered to the
Participant.
6. Reorganization Event; Change in Control Event.
In the event of a Reorganization Event (as defined in the Plan) that is not also a Change of
Control (as defined below), the terms of the Plan shall govern the treatment of this award. In the
event of a Change of Control (as defined below), this award shall be deemed earned, and Shares
vested, as to the greater of (a) the target level of Shares described in Exhibit A to this award
or (b) the number of Shares that would have been earned pursuant to the terms of this award as of
the day immediately prior to the date of such Change of Control, and such shares shall be issued by
the Company immediately prior to such Change of Control transaction. For purposes of this award
agreement, the term Change of Control shall mean an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that constitutes a
Change of Control under one of such subsections but is specifically exempted from another such
subsection):
(a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) (a Person)
of beneficial ownership of any capital stock of Skyworks if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or more
of either (x) the then-outstanding shares of common stock of Skyworks (the Outstanding Company
Common Stock) or (y) the combined voting power of the then-outstanding securities of Skyworks
entitled to vote generally in the election of directors (the Outstanding Company Voting
Securities); provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition directly from Skyworks
(excluding an acquisition pursuant to the exercise, conversion or exchange of any security
exercisable for, convertible into or exchangeable for common stock or voting securities of
Skyworks, unless the Person exercising, converting or exchanging such security acquired such
security directly from Skyworks or an underwriter or agent of Skyworks), (ii) any acquisition by
Skyworks, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by Skyworks or any corporation controlled by Skyworks, or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i) and (ii) of subsection (c) of
this Section 1.2; or
(b) such time as the Continuing Directors (as defined below) do not constitute a majority of
the Board of Directors of Skyworks (the Board) (or, if applicable, the Board of Directors of a
successor corporation to Skyworks), where the term Continuing Director means at any date a member
of the Board (i) who was a member of the Board on the date of the execution of this Agreement or
(ii) who was nominated or elected subsequent to such date by at
- 2 -
least a majority of the directors who were Continuing Directors at the time of such nomination
or election or whose election to the Board was recommended or endorsed by at least a majority of
the directors who were Continuing Directors at the time of such nomination or election;
provided, however, that there shall be excluded from this clause (ii) any
individual whose initial assumption of office occurred as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the Board; or
(c) the consummation of a merger, consolidation, reorganization, recapitalization or statutory
share exchange involving Skyworks or a sale or other disposition of all or substantially all of the
assets of Skyworks in one or a series of transactions (a Business Combination), unless,
immediately following such Business Combination, each of the following two conditions is satisfied:
(i) all or substantially all of the individuals and entities who were the beneficial owners of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors, respectively, of the resulting
or acquiring corporation in such Business Combination (which shall include, without limitation, a
corporation which as a result of such transaction owns Skyworks or substantially all of Skyworks
assets either directly or through one or more subsidiaries) (such resulting or acquiring
corporation is referred to herein as the Acquiring Corporation) in substantially the same
proportions as their ownership, immediately prior to such Business Combination, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, respectively; and (ii) no Person
(excluding any employee benefit plan (or related trust) maintained or sponsored by Skyworks or by
the Acquiring Corporation) beneficially owns, directly or indirectly, 40% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of
the then-outstanding securities of such corporation entitled to vote generally in the election of
directors (except to the extent that such ownership existed prior to the Business Combination); or
(d) approval by the stockholders of Skyworks of a complete liquidation or dissolution of
Skyworks.
7. Withholding Taxes; No Section 83(b) Election.
(a) No Shares will be delivered pursuant to the vesting of the Participants
right to receive the Shares unless and until the Participant pays to the Company, or makes
provision satisfactory to the Company for payment of, any federal, state or local withholding
taxes required by law to be withheld in respect of this award and any Shares issued hereunder.
(b) The Participant acknowledges that no election under Section 83(b) of the
Internal Revenue Code of 1986 may be filed with respect to this award or the Shares issued hereunder.
8. Miscellaneous.
(a)No Rights to Employment. The Participant acknowledges and agrees that
the vesting of his or her right to receive Shares pursuant to Section 2 hereof is triggered only by
the achievement by the Company of the Target(s) and continuing service until the Company has
made a determination that such Target(s) has (have) been achieved. The Participant further
- 3 -
acknowledges and agrees that the transactions contemplated hereunder and the vesting events set
forth herein do not constitute an express or implied promise of continued engagement as an
employee or consultant for the vesting period, for any period, or at all.
(b) Non-Solicitation. The Participant agrees that while employed by the
Company and for one year thereafter, he or she will not, either directly or through others, raid,
solicit, or attempt to solicit any employee of the Company to terminate his or her relationship
with the Company in order to become an employee to or for any other person or entity.
Participant further agrees that he or she will not disrupt or interfere or attempt to disrupt or
interfere with the Companys relationships with such employees. Participant also agrees that in
addition to any damages that may be recovered, the prevailing party in any legal action to
enforce this agreement shall be entitled to recover its costs and attorneys fees from the other party.
(c) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this
Agreement, and each other provision of this Agreement shall be severable and enforceable to the
extent permitted by law.
(d) Waiver. Any provision for the benefit of the Company contained in this
Agreement may be waived, either generally or in any particular instance, by the Board of
Directors of the Company.
(e) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and the Participant and their respective heirs, executors, administrators,
legal representatives, successors and assigns, subject to the restrictions on transfer set forth in
Section 4 of this Agreement.
(f) Notice. All notices required or permitted hereunder shall be in writing
and deemed effectively given upon personal delivery or five days after deposit in the United
States Post Office, by registered or certified mail, postage prepaid, addressed to the other party
hereto at the address shown beneath his or its respective signature to this Agreement, or at such
other address or addresses as either party shall designate to the other in accordance with this
Section 8(e).
(g) Pronouns. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural, and vice versa.
(h) Entire Agreement. This Agreement and the Plan constitute the entire
agreement between the parties, and supersedes all prior agreements and understandings, relating
to the subject matter of this Agreement.
(i) Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Participant.
(j) Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the internal laws of the State of Delaware without regard to any
applicable conflicts of laws.
- 4 -
(k) Participants Acknowledgments. The Participant acknowledges that he or
she: (i) has read this Agreement; (ii) understands the terms and consequences of this Agreement;
and (iii) is fully aware of the legal and binding effect of this Agreement.
(l) Unfunded Rights. The right of the Participant to receive Common Stock
pursuant to this Agreement is an unfunded and unsecured obligation of the Company. The
Participant shall have no rights under this Agreement other than those of an unsecured general
creditor of the Company.
- 5 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
|
|
|
|
|
|
Skyworks Solutions, Inc.
|
|
|
|
|
|
Name: |
David Aldrich |
|
|
Title: |
President and CEO |
|
|
|
______________________________
Signed: [NAME]
|
|
|
|
|
|
|
|
|
|
|
- 6 -
Exhibit A
[PERFORMANCE
TARGETS]
- 7 -
exv31w1
EXHIBIT 31.1
CERTIFICATION OF THE CEO PURSUANT TO SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, RULES 13a-14(a) AND
15d-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David J. Aldrich, certify that:
|
1. |
|
I have reviewed this quarterly report on Form 10-Q of Skyworks Solutions, Inc.; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statement made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
|
|
3. |
|
Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
|
|
4. |
|
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
|
designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this
report is being prepared; |
|
|
b) |
|
designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted
accounting principles; |
|
|
c) |
|
evaluated the effectiveness of the registrants disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such
evaluation; |
|
|
d) |
|
disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting; and |
|
5. |
|
The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions): |
|
a) |
|
all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrants ability to record, process, summarize and report financial
information; and |
|
|
b) |
|
any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal control over financial
reporting. |
Date: February 6, 2008
/s/ David J. Aldrich
David J. Aldrich
Chief Executive Officer
President
exv31w2
EXHIBIT 31.2
CERTIFICATION OF THE CFO PURSUANT TO SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, RULES
13a-14(a) AND 15d-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Donald W. Palette, certify that:
|
1. |
|
I have reviewed this quarterly report on Form 10-Q of Skyworks Solutions, Inc.; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statement made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
|
|
3. |
|
Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report and |
|
|
4. |
|
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
|
designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this
report is being prepared; |
|
|
b) |
|
designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted
accounting principles; |
|
|
c) |
|
evaluated the effectiveness of the registrants disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such
evaluation; |
|
|
d) |
|
disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting; and |
|
5. |
|
The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions): |
|
a) |
|
all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrants ability to record, process, summarize and report financial
information; and |
|
|
b) |
|
any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal control over financial
reporting. |
Date: February 6, 2008
/s/ Donald W. Palette
Donald W. Palette
Chief Financial Officer
Vice President
exv32w1
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Skyworks Solutions, Inc. (the Company) on Form 10-Q
for the period ending December 28, 2007 as filed with the Securities and Exchange Commission on the
date hereof (the Report), I, David J. Aldrich, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
|
(1) |
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and |
|
|
(2) |
|
The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company. |
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
/s/ David J. Aldrich
David J. Aldrich
Chief Executive Officer
President
Date: February 6, 2008
exv32w2
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Skyworks Solutions, Inc. (the Company) on Form 10-Q
for the period ending December 28, 2007 as filed with the Securities and Exchange Commission on the
date hereof (the Report), I, Donald W. Palette, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
|
(1) |
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and |
|
|
(2) |
|
The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company. |
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
/s/ Donald W. Palette
Donald W. Palette
Chief Financial Officer
Vice President
Date: February 6, 2008