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Skyworks - Press Release 11-6-2008


Click to visit the Skyworks websiteSkyworks Reports 22% Revenue Growth and 59%
Operating Income Improvement in Q4 FY08

  • 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.

 
 
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