Delivers Record Quarterly Revenue
of $233 Million vs. Guidance of $225 Million
Expands Non-GAAP Gross Margin to
40.8 Percent and Operating Margin to 15.5
Percent
Posts Record Non-GAAP Diluted EPS
of $0.21
Generates $52 Million in Cash Flow
from Operations and Retires $62 Million
of 2010 and 2012 Convertible Debt
Guides to Sequential Revenue and
Earnings Growth in December Quarter
WOBURN, Mass.--(BUSINESS WIRE)--Nov.
6, 2008--Skyworks Solutions, Inc. (NASDAQ:
SWKS), an innovator of high performance analog
and mixed signal semiconductors enabling mobile
connectivity, today announced record fourth
fiscal quarter and year-end 2008 results. Revenue
for the quarter was $232.6 million, a 22 percent
increase when compared to $190.5 million in
the year-ago period.
On a non-GAAP basis,
operating income for the fourth fiscal quarter
was $36.0 million, up 59 percent from $22.7
million in the prior year. Non-GAAP diluted
earnings per share for the quarter was $0.21
and $0.01 better than company guidance. On a
GAAP basis, operating income for the fourth
fiscal quarter was $28.0 million compared to
$18.2 million in the year-ago timeframe. GAAP
diluted earnings per share was $0.33 for the
period, which included a $34.4 million benefit
primarily relating to a tax valuation allowance
reversal for deferred tax assets.
For
fiscal 2008, revenue was $860.0 million up 16
percent year-over-year from $741.7 million.
Non-GAAP operating income was $120.9 million,
up 51 percent year-over-year from $80.2 million,
while diluted earnings per share was $0.71,
up 48 percent from $0.48 in fiscal 2007. GAAP
operating income was $90.4 million as compared
to $58.5 million in fiscal 2007, with diluted
earnings per share of $0.68 versus $0.36, respectively.
"Skyworks' record performance and growth
outlook despite the slowing global economy demonstrates
solid progress in our strategic plans to diversify,
gain market share and deliver continued operational
improvements," said David J. Aldrich, president
and chief executive officer of Skyworks. "In
fact, the weakening industry backdrop is accelerating
vendor share consolidation as both our linear
and cellular handset customers increasingly
award programs based on highly integrated, low-cost
architectures, innovative roadmaps, operational
scale and balance sheet strength. As a result,
we are making faster strides towards realizing
our vision of becoming the leader in analog-intensive,
mobile connectivity semiconductor solutions
and creating shareholder value."
Business
Highlights
Expanded quarterly gross margin
to 40.8 percent on a non-GAAP basis (40.3
percent on a GAAP basis) - a 140 basis point
year-over-year increase and the sixth consecutive
quarter of improvement
Increased operating margin to 15.5
percent on a non-GAAP basis (12.0 percent
on a GAAP basis) - a 360 basis point year-over-year
improvement
Generated $174 million of cash flow
from operations in fiscal 2008
Retired $62 million of 2010 and
2012 convertible debt in the fourth quarter,
reducing future potential dilution by approximately
7 million equity shares
Doubled year-over-year smart phone
front-end module shipments with over 40
million units in fiscal 2008
Secured a multi-year defense contract
with Lockheed Martin to supply high-precision
microwave components for the Aegis weapon
system
Launched portfolio of voltage controlled
oscillators, frequency synthesizers, mixers
and amplifiers targeting home area networks
and industrial automation applications
Ramped smart meter reader solutions
in support of Itron and Sensus
First Fiscal Quarter 2009 Outlook
"Diversification and new program ramps coupled
with strong execution are enabling Skyworks
to continue to grow our top and bottom lines
even in the face of the broader industry downturn,"
said Donald W. Palette, vice president and chief
financial officer of Skyworks. "Specifically,
we are forecasting December quarterly revenue
to be $240 million as growth in new customer
platforms more than offsets broad market softness.
Operationally, we plan to further expand both
gross and operating margins and expect to deliver
non-GAAP diluted earnings per share of $0.23
for the quarter. We believe our guidance incorporates
current market uncertainty and, at the same
time, reflects Skyworks' ability to outperform
our addressable markets."
Estimated non-GAAP
diluted earnings per share for the first fiscal
quarter excludes approximately $6.6 million
of FASB Statement No. 123(R) - related expenses.
Non-GAAP results, which are a supplement
to financial results based on GAAP, exclude
certain charges including but not limited to
share-based compensation, baseband exit charges,
amortization of intangible assets, tax valuation
allowance reversals, and non-recurring items.
The company believes these non-GAAP financial
measures provide useful information to both
management and investors by excluding certain
charges and non-recurring items that may not
be indicative of Skyworks' ongoing operations
and financial performance.
Skyworks'
Fourth Fiscal Quarter 2008 Conference Call
Skyworks will host a conference call with
analysts to discuss its fourth fiscal quarter
2008 results and business outlook today at 5:00
p.m. Eastern time (ET). To listen to the conference
call via the Internet, please visit the investor
relations section of Skyworks' Web site. To
listen to the conference call via telephone,
please call 888-713-4486 (domestic) or 913-312-1415
(international), confirmation code: 1681714.
Playback of the conference call will begin
at 9 p.m. Eastern time on November 6, and end
at 9 p.m. Eastern time on November 13. The replay
will be available on Skyworks' Web site or by
calling 888-203-1112 (domestic) or 719-457-0820
(international), pass code: 1681714.
About Skyworks
Skyworks Solutions, Inc.
is an innovator of high performance analog and
mixed signal semiconductors enabling mobile
connectivity. The company's power amplifiers,
front-end modules and direct conversion radios
are at the heart of many of today's leading-edge
multimedia handsets. Leveraging core technologies,
Skyworks also offers a diverse portfolio of
linear products that support automotive, broadband,
cellular infrastructure, industrial and medical
applications.
Headquartered in Woburn,
Mass., Skyworks is worldwide with engineering,
manufacturing, sales and service facilities
throughout Asia, Europe and North America. For
more information, please visit Skyworks' Web
site at: www.skyworksinc.com.
Safe Harbor
Statement
This news release includes
"forward-looking statements" intended to qualify
for the safe harbor from liability established
by the Private Securities Litigation Reform
Act of 1995. These forward-looking statements
include information relating to future results
and expectations of Skyworks (including certain
projections and business trends). Forward-looking
statements can often be identified by words
such as "anticipates," "expects," "forecasts,"
"intends," "believes," "plans," "may," "will,"
"continue," similar expressions, and variations
or negatives of these words. All such statements
are subject to certain risks and uncertainties
that could cause actual results to differ materially
and adversely from those projected, and may
affect our future operating results, financial
position and cash flows.
These risks
and uncertainties include, but are not limited
to: unprecedented uncertainty regarding global
economic and financial market conditions; the
susceptibility of the wireless semiconductor
industry and the markets addressed by our, and
our customers', products to economic downturns;
the timing, rescheduling or cancellation of
significant customer orders and our ability,
as well as the ability of our customers, to
manage inventory; losses or curtailments of
purchases or payments from key customers, or
the timing of customer inventory adjustments;
changes in laws, regulations and/or policies
in the United States that could adversely affect
financial markets and our ability to raise capital;
our ability to develop, manufacture and market
innovative products in a highly price competitive
and rapidly changing technological environment;
economic, social and political conditions in
the countries in which we, our customers or
our suppliers operate, including security and
health risks, possible disruptions in transportation
networks and fluctuations in foreign currency
exchange rates; fluctuations in our manufacturing
yields due to our complex and specialized manufacturing
processes; delays or disruptions in production
due to equipment maintenance, repairs and/or
upgrades; our reliance on several key customers
for a large percentage of our sales; fluctuations
in the manufacturing yields of our third party
semiconductor foundries and other problems or
delays in the fabrication, assembly, testing
or delivery of our products; the availability
and pricing of third party semiconductor foundry,
assembly and test capacity and raw materials;
our ability to timely and accurately predict
market requirements and evolving industry standards,
and to identify opportunities in new markets;
uncertainties of litigation, including potential
disputes over intellectual property infringement
and rights, as well as payments related to the
licensing and/or sale of such rights; our ability
to rapidly develop new products and avoid product
obsolescence; our ability to retain, recruit
and hire key executives, technical personnel
and other employees in the positions and numbers,
with the experience and capabilities, and at
the compensation levels needed to implement
our business and product plans; lengthy product
development cycles that impact the timing of
new product introductions; unfavorable changes
in product mix; the quality of our products
and any remediation costs; shorter than expected
product life cycles; problems or delays that
we may face in shifting our products to smaller
geometry process technologies and in achieving
higher levels of design integration; and our
ability to continue to grow and maintain an
intellectual property portfolio and obtain needed
licenses from third parties, as well as other
risks and uncertainties, including but not limited
to those detailed from time to time in our filings
with the Securities and Exchange Commission.
These forward-looking statements are made
only as of the date hereof, and we undertake
no obligation to update or revise the forward-looking
statements, whether as a result of new information,
future events or otherwise.
Note to Editors:
Skyworks, Skyworks Solutions are trademarks
or registered trademarks of Skyworks Solutions,
Inc. or its subsidiaries in the United States
and in other countries. All other brands and
names listed are trademarks of their respective
companies.
SKYWORKS SOLUTIONS, INC.
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended Year Ended
------------------- -------------------
(in thousands, except per Oct. 3, Sept. 28, Oct. 3, Sept. 28,
share amounts) 2008 2007 2008 2007
--------- --------- --------- ---------
Net revenues $232,566 $190,454 $860,017 $741,744
Cost of goods sold 138,742 115,719 517,054 454,359
--------- --------- --------- ---------
Gross profit 93,824 74,735 342,963 287,385
Operating expenses:
Research and development 38,777 33,731 146,013 126,075
Selling, general and
administrative 25,399 22,298 100,007 94,950
Restructuring & other
charges 567 - 567 5,730
Amortization of intangibles 1,101 536 6,005 2,144
--------- --------- --------- ---------
Total operating expenses 65,844 56,565 252,592 228,899
Operating income 27,980 18,170 90,371 58,486
Interest expense (1,695) (2,662) (7,330) (12,026)
Other income, net 986 3,050 5,983 10,874
Early retirement of
convertible debt (6,836) - (6,836) (564)
--------- --------- --------- ---------
Income before income taxes 20,435 18,558 82,188 56,770
Benefit from income taxes (34,354) (3,435) (28,818) (880)
--------- --------- --------- ---------
Net income $ 54,789 $ 21,993 $111,006 $ 57,650
========= ========= ========= =========
Earnings per share:
Basic $ 0.33 $ 0.14 $ 0.69 $ 0.36
Diluted $ 0.33 $ 0.14 $ 0.68 $ 0.36
Weighted average shares: (a)
Basic 163,948 159,496 161,878 159,993
Diluted 166,527 167,006 164,755 161,064
(a)The diluted earnings per share calculation for the fiscal year
ended October 3, 2008 and for the three months ended September
28, 2007 includes the impact of the Company's 4.75% convertible
subordinated notes which were retired during the first quarter
of fiscal 2008.
SKYWORKS SOLUTIONS, INC.
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES
Three Months Year Ended
Ended
---------------- -----------------
Oct. 3, Sept. Oct. 3, Sept.
28, 28,
(in thousands) 2008 2007 2008 2007
-------- ------- -------- --------
GAAP gross profit $ 93,824 $74,735 $342,963 $287,385
Share-based compensation expense
(a) 812 398 2,974 1,274
Revenue adjustments (b) - - - 105
Cost of goods sold adjustments
(b) - - - (1,249)
Acquisition related expense (c) 308 - 1,589 -
-------- ------- -------- --------
Non-GAAP gross profit $ 94,944 $75,133 $347,526 $287,515
======== ======= ======== ========
Non-GAAP gross margin % 40.8% 39.4% 40.4% 38.8%
----------------------------------------------------------------------
Three Months Year Ended
Ended
---------------- -----------------
Oct. 3, Sept. Oct. 3, Sept.
28, 28,
(in thousands) 2008 2007 2008 2007
-------- ------- -------- --------
GAAP operating income $ 27,980 $18,170 $ 90,371 $ 58,486
Share-based compensation expense
(a) 6,450 4,021 23,212 13,737
Revenue adjustments (b) - - - 105
Cost of goods sold adjustments
(b) - - - (1,249)
Acquisition related expense (c) 308 - 1,589 -
Selling, general and
administrative adjustments (b) (823) - (1,325) 1,287
Restructuring & other charges
(b) 567 - 567 5,730
Deferred executive compensation 449 - 449 -
Amortization of intangible
assets (c) 1,101 536 6,005 2,144
-------- ------- -------- --------
Non-GAAP operating income $ 36,032 $22,727 $120,868 $ 80,240
======== ======= ======== ========
Non-GAAP operating margin % 15.5% 11.9% 14.1% 10.8%
----------------------------------------------------------------------
Three Months Year Ended
Ended
---------------- -----------------
Oct. 3, Sept. Oct. 3, Sept.
28, 28,
(in thousands) 2008 2007 2008 2007
-------- ------- -------- --------
GAAP net income $ 54,789 $21,993 $111,006 $ 57,650
Share-based compensation expense
(a) 6,450 4,021 23,212 13,737
Revenue adjustments (b) - - - 105
Cost of goods sold adjustments
(b) - - - (1,249)
Acquisition related expense (c) 308 - 1,589 -
Selling, general and
administrative adjustments (b) (823) - (1,325) 1,287
Restructuring & other charges
(b) 567 - 567 5,730
Deferred executive compensation 449 - 449 -
Amortization of intangible
assets (c) 1,101 536 6,005 2,144
Early retirement of convertible
debt (d) 6,836 - 6,836 564
Tax adjustments (e) (34,414) (3,563) (30,959) (2,048)
-------- ------- -------- --------
Non-GAAP net income $ 35,263 $22,987 $117,380 $ 77,920
======== ======= ======== ========
----------------------------------------------------------------------
Three Months Year Ended
Ended
---------------- -----------------
Oct. 3, Sept. Oct. 3, Sept.
28, 28,
2008 2007 2008 2007
-------- ------- -------- --------
GAAP net income per share, diluted $ 0.33 $ 0.14 $ 0.68 $ 0.36
Share-based compensation expense
(a) 0.04 0.02 0.14 0.09
Cost of goods sold adjustments
(b) - - - (0.01)
Acquisition related expense (c) - - - -
Selling, general and
administrative adjustments (b) - - - 0.01
Restructuring & other charges
(b) - - - 0.04
Amortization of intangible
assets (c) 0.01 - 0.04 -
Early retirement of convertible
debt (d) 0.04 - 0.04 -
Tax adjustments (e) (0.21) (0.02) (0.19) (0.01)
-------- ------- -------- --------
Non-GAAP net income per share,
diluted $ 0.21 $ 0.14 $ 0.71 $ 0.48
======== ======= ======== ========
----------------------------------------------------------------------
(a)These charges represent expense recognized in accordance with FASB
Statement No. 123(R), Share-Based Payment. Approximately $0.8
million, $2.5 million and $3.1 million were included in cost of
goods sold, research and development expense and selling, general
and administrative expense, respectively, for the three months
ended October 3, 2008. Approximately $3.0 million, $8.7 million
and $11.5 million were included in cost of goods sold, research
and development expense and selling, general and administrative
expense, respectively, for the fiscal year ended October 3, 2008.
For the three months ended September 28, 2007, approximately $0.4
million, $1.9 million and $1.7 million were included in cost of
goods sold, research and development expense and selling, general
and administrative expense, respectively. For the fiscal year
ended September 28, 2007, approximately $1.3 million, $5.6 million
and $6.8 million were included in cost of goods sold, research and
development expense and selling, general and administrative
expense, respectively.
(b)On October 2, 2006, the Company announced that it was exiting its
baseband product area in order to focus on its core business
encompassing linear products, power amplifiers, front-end modules
and radio solutions. For the three months and fiscal year ended
October 3, 2008, selling, general and administrative adjustments
of $0.8 million and $1.3 million, respectively, represent a
recovery of bad debt expense on specific accounts receivable
associated with baseband product.
Restructuring and other charges of $0.6 million recorded during the
three months and fiscal year ended October 3, 2008 relate to lease
obligations associated with the closure of certain locations
associated with the baseband product area.
Due to accounting classifications, the adjustments recorded during
the fiscal year ended September 28, 2007 associated with the
baseband product area are recorded in various lines and are
summarized accordingly: revenue adjustments of $0.1 million, cost
of goods sold credit adjustment of $1.2 million, selling, general
and administrative adjustments of $1.3 million and restructuring
and other charges of $5.7 million.
(c)During the first quarter of fiscal 2008, Skyworks acquired
Freescale Semiconductor's power amplifier and front-end module
product line. The purchase accounting charges recognized during
the three months ended October 3, 2008 include $0.8 million
amortization of acquisition related intangibles. Of the $0.8
million, $0.3 million was included in cost of sales. Amortization
expense of $0.6 million relates to a previous business
combination.
The purchase accounting charges recognized during the fiscal year
ended October 3, 2008 include a $0.7 million charge to cost of
sales related to the sale of acquisition related inventory and
$4.5 million amortization of acquisition related intangibles. Of
the $4.5 million, $0.9 million was included in cost of sales.
Amortization expense of $2.4 million relates to a previous
business combination.
(d)The loss recorded during the three months ended October 3, 2008
relates to the early retirement of $62.4 million of the Company's
1.25% and 1.50% convertible subordinated notes. Approximately $5.8
million represents premium paid and $1.0 million represents a
write-off of deferred financing costs.
The charges recorded during fiscal year 2007 represent a write-off
of deferred financing costs associated with the redemption of
$130.0 million of the Company's 4.75% convertible subordinated
notes.
(e)During the three months and fiscal year ended October 3, 2008, this
adjustment primarily relates to the reversal of a valuation
allowance against our deferred tax assets.
During the three months and fiscal year ended September 28, 2007,
this adjustment primarily relates to the reversal of a valuation
allowance against our deferred tax assets.
The above non-GAAP measures are based upon our unaudited consolidated
statements of operations for the periods shown. These non-GAAP
financial measures are provided to enhance the user's overall
understanding of our current financial performance and our prospects
for the future. Specifically, we believe the non-GAAP financial
measures provide useful information to both management and investors
by excluding certain charges and non-recurring items that we believe
are not indicative of our ongoing operations and financial
performance. Additionally, since we have historically reported non-
GAAP results to the investment community, the inclusion of non-GAAP
financial measures provides consistency in our financial reporting.
Further, these non-GAAP financial measures are one of the primary
indicators management uses for planning and forecasting in future
periods. The presentation of this additional information should not
be considered in isolation or as a substitute for results prepared in
accordance with accounting principles generally accepted in the
United States.
SKYWORKS SOLUTIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
Oct. 3, Sept. 28,
(in thousands) 2008 2007
---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 231,066 $ 248,079
Short-term investments - 5,700
Accounts receivable, net 146,710 167,319
Inventories 103,791 82,109
Prepaid expenses and other current assets 13,089 10,511
Property, plant and equipment, net 173,360 153,516
Goodwill and intangible assets, net 503,417 494,332
Other assets 64,048 28,342
---------- ----------
Total assets $1,235,481 $1,189,908
========== ==========
Liabilities and Equity
Current liabilities:
Credit facility $ 50,000 $ 50,000
Convertible notes - 49,335
Accounts payable 58,527 56,417
Accrued liabilities and other current
liabilities 40,213 41,471
Long-term debt 137,616 200,000
Other long-term liabilities 4,909 6,338
Stockholders' equity 944,216 786,347
---------- ----------
Total liabilities and equity $1,235,481 $1,189,908
========== ==========
CONTACT: Skyworks Solutions, Inc.
Media
Relations:
Pilar Barrigas, 949-231-3061
Investor Relations:
Thomas Schiller, 949-231-4700
SOURCE: Skyworks Solutions, Inc. |
