Conexant Reports $267.6 Million in Revenue and Pro Forma EPS of $0.02 for Third Fiscal Quarter of 2004.RED BANK, N.J. -- Conexant Please wikify (format) this article or section as suggested in the Guide to layout and the Manual of Style. Remove this template after wikifying. This article has been tagged since September 2007. Systems, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CNXT), today announced revenues of $267.6 million for the third quarter of fiscal 2004, which ended July July: see month. 2, 2004. The company's third fiscal quarter performance was in line with its revised outlook provided on July 6, 2004. Third fiscal quarter 2004 revenues of $267.6 million decreased 9 percent from the second fiscal quarter revenues of $293.3 million the company would have reported if its merger with GlobespanVirata, which closed on February February: see month. 27, 2004, had closed on January January: see month. 1, 2004. Third fiscal quarter 2004 revenues increased 77 percent over third fiscal quarter 2003 revenues of $151.0 million. The net loss for the third quarter of fiscal 2004 was $71.4 million, or $0.15 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a net loss of $49.1 million, or $0.18 per diluted share, in the third quarter of fiscal 2003, and a net loss of $143.4 million, or $0.41 per diluted share, in the second quarter of fiscal 2004. Third fiscal quarter 2004 pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. was $8.1 million, or 3.0 percent of revenues, compared to $3.3 million in the year-ago quarter. Third fiscal quarter 2004 pro forma operating profit decreased by 40 percent from the $13.5 million the combined company would have reported in the second fiscal quarter of 2004 if the merger had closed on January 1, 2004. On a pro forma basis, net profit for the third fiscal quarter of 2004 was $0.02 per diluted share, compared to $0.02 per diluted share in the third fiscal quarter of 2003. "As we stated previously, Conexant's overall third fiscal quarter performance was adversely impacted by a shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. in demand in our wireless LAN A local area network that transmits over the air typically in the 2.4 GHz or 5 GHz unlicensed frequency band. It does not require line of sight between sender and receiver. Wireless base stations (access points) are wired to an Ethernet network and transmit a radio frequency over an area business," said Armando Geday, Conexant's chief executive officer. "We are intensifying in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: our effort to regain and expand our market position. "While our other businesses came in essentially flat for the third fiscal quarter, we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the growth prospects for our company," Geday added. As expected, gross margin for the third fiscal quarter of 2004 was 42 percent of net revenues. The company's cash, cash equivalents and short- and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. investments totaled $424.9 million at the end of the quarter. Conexant's pro forma results are a supplement to financial statements based on generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). Conexant uses pro forma information to evaluate its operating performance and believes this presentation provides investors with additional insight into its underlying operating results. A full reconciliation between the GAAP results from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the and pro forma net income is included in the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. financial data. Pro forma operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the third fiscal quarter of 2004 were $104.4 million, compared to the pro forma operating expenses of $110.6 million the company would have recorded for the second fiscal quarter of 2004 if the merger had closed on January 1, 2004. Fourth Fiscal Quarter 2004 Outlook "We expect revenues for Conexant's fourth fiscal quarter to be between $250 million and $255 million," Geday said. "We anticipate that gross margin will be in a range between 40 and 42 percent, and we expect to further reduce our pro forma operating expenses by $3 million to $4 million. Finally, we anticipate that our pro forma non-GAAP net earnings per share will be in a range from $0.00 to $0.02 per share based on approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 500 million fully diluted shares." Note to Editors, Analysts and Investors Conexant will hold a conference call on Thursday Thursday: see week. , July 29, 2004, at 5:00 p.m. Eastern Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time / 2:00 p.m. Pacific Daylight Time. To listen to the conference call via telephone, dial 866-710-0179 (domestic) or 334-323-9854 (international); security code: Conexant. To listen via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , visit the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of Conexant's Web site at www.conexant.com/ir. Playback Playback could mean:
About Conexant Conexant's innovative semiconductor solutions are driving broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). communications, enterprise networks and digital home networks worldwide. The company has leveraged its expertise and leadership position in modem modem [modulator/demodulator], an external device or internal electronic circuitry used to transmit and receive digital data over a communications line normally used for analog signals. technologies to enable more Internet connections than all of its competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. combined, and continues to develop highly integrated silicon solutions for broadband data and media processing See media control. networks. Key products include client-side Refers to any operation that is performed at the client workstation. Contrast with server-side. xDSL Refers to DSL technologies in general, including ADSL, HDSL, SDSL and VDSL. See DSL. xDSL - Digital Subscriber Line and cable modem cable modem Modem used to convert analog data signals to digital form and vise versa, for transmission or receipt over cable television lines, especially for connecting to the Internet. solutions, home network processors, broadcast video encoders and decoders, digital set-top box The cable TV box that sits on "top" of the TV "set," although it is often located several feet away in an equipment rack. The set-top box descrambles the premium channels and provides a tuner for the higher cable numbers that very old TVs did not support. components and systems solutions, and dial-up Refers to using the regular "dial-up" telephone network to send data from a computer to a remote network or to a remote device. The computer's digital data are converted to analog signals in the same frequency range as human voice by a modem. modems. Conexant's suite of networking components includes a leadership portfolio of IEEE (Institute of Electrical and Electronics Engineers, New York, www.ieee.org) A membership organization that includes engineers, scientists and students in electronics and allied fields. 802.11a/b/g-compliant WLAN See wireless LAN. WLAN - wireless local area network chipsets, software and reference designs, as well as solutions for applications based on HomePlug A powerline network that is designed to run Ethernet over the existing electrical system and use AC wall outlets as connecting points. HomePlug provides a non-wireless alternative to stringing network cables to all the rooms in the house. (SM) and HomePNA (HOME Phoneline Networking Alliance) A phoneline network that is designed to run Ethernet over existing telephone lines and use RJ-11 wall jacks as connecting points. (TM). The company also offers a complete line of asymmetric A difference between two opposing modes. It typically refers to a speed disparity. For example, in asymmetric operations, it takes longer to compress and encrypt data than to decompress and decrypt it. Contrast with symmetric. See asymmetric compression and public key cryptography. and symmetric DSL See DSL. central office solutions, which are used by service providers worldwide to deliver broadband data, voice, and video over copper telephone lines. Conexant is a fabless semiconductor company A fabless semiconductor company specializes in the design and sale of hardware devices implemented on semiconductor chips. It achieves an advantage by outsourcing the fabrication of the devices to a specialized semiconductor manufacturer called a semiconductor foundry or "fab. with annual run-rate revenues of approximately $1.2 billion. The company has approximately 2,400 employees worldwide, and is headquartered in Red Bank, N.J. To learn more, please visit us at www.conexant.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This press release contains statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our future results (including certain projections and business trends) that are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to: the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of the semiconductor industry and the markets addressed by the company's and its customers' products; demand for and market acceptance of new and existing products; successful development of new products; the timing of new product introductions; the availability of manufacturing capacity; pricing pressures and other competitive factors; changes in product mix; product obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. ; the ability to develop and implement new technologies and to obtain protection for the related intellectual property; the uncertainties of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; and the risk that the businesses of Conexant and GlobespanVirata will not be integrated successfully, as well as other risks and uncertainties, including those detailed from time to time in our Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , 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: Conexant is a registered trademark of Conexant Systems, Inc. Other brands and names contained in this release are the property of their respective owners.
CONEXANT SYSTEMS, INC.
Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)
Three months ended Nine months ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
Net revenues $267,617 $150,950 $688,731 $435,274
Cost of goods sold 155,136 86,000 395,448 245,569
Gross margin 112,481 64,950 293,283 189,705
Operating expenses:
Research and
development (including
non-cash stock
compensation of $2,237
and $3,131 for the
three and nine months
ended June 30, 2004,
respectively, and $45
and $444 for the three
and nine months ended
June 30, 2003,
respectively) 74,317 38,849 167,205 117,827
Selling, general and
administrative
(including non-cash
stock compensation of
$743 and $1,029 for
the three and nine
months ended June 30,
2004, and $1,272 for
the nine months ended
June 30, 2003,
respectively) 36,371 22,915 89,782 69,471
Amortization of
intangible assets 7,956 925 12,564 2,523
In-process research and
development -- -- 160,818 --
Special charges (See
Note 1) 8,294 6,526 14,413 13,585
Total operating
expenses 126,938 69,215 444,782 203,406
Operating loss (14,457) (4,265) (151,499) (13,701)
Gain on extinguishment of
debt -- (7,376) -- (42,021)
Other (income) expense,
net 56,308 (544) 21,291 40,785
Income (loss) before
income taxes (70,765) 3,655 (172,790) (12,465)
Provision for income
taxes 661 488 1,368 1,185
Income (loss) from
continuing operations (71,426) 3,167 (174,158) (13,650)
Discontinued operations,
net of tax -- (52,297) -- (728,877)
Net loss $(71,426) $(49,130) $(174,158) $(742,527)
Income (loss) per share,
basic:
Continuing operations $(0.15) $0.01 $(0.48) $(0.05)
Discontinued
operations -- (0.19) -- (2.73)
Net loss $(0.15) $(0.18) $(0.48) $(2.78)
Income (loss) per share,
diluted:
Continuing operations $(0.15) $0.01 $(0.48) $(0.05)
Discontinued
operations -- (0.19) -- (2.73)
Net loss $(0.15) $(0.18) $(0.48) $(2.78)
Number of shares used in
per share computation -
basic 463,804 268,489 363,654 266,915
Number of shares used in
per share computation -
diluted 463,804 271,051 363,654 266,915
The consolidated statements of operations include the results of
operations of GlobespanVirata, Inc. from February 27, 2004, the date
of the company's merger with GlobespanVirata. No restatement has been
made to earlier periods.
Note 1 - Special charges consist of asset impairments, restructuring
charges, integration costs, other special items and gains and losses
on the disposal of certain operating assets.
CONEXANT SYSTEMS, INC.
Pro Forma (Non-GAAP) Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)
Three months ended Nine months ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
Net revenues $267,617 $150,950 $688,731 $435,274
Cost of goods sold 155,136 86,000 394,636 245,569
Gross margin 112,481 64,950 294,095 189,705
Operating expenses:
Research and development 71,503 38,769 163,332 117,332
Selling, general and
administrative 32,873 22,898 85,300 68,175
Total operating
expenses 104,376 61,667 248,632 185,507
Pro forma operating income 8,105 3,283 45,463 4,198
Other income, net (1,685) (4,048) (5,910) (14,843)
Pro forma income before
income taxes 9,790 7,331 51,373 19,041
Provision for income taxes 661 488 1,368 1,185
Pro forma net income $9,129 $6,843 $50,005 $17,856
Basic income per share pro
forma (non-GAAP) $0.02 $0.02 $0.13 $0.06
Diluted income per share
pro forma (non-GAAP) $0.02 $0.02 $0.12 $0.06
Number of shares used in
per share computation -
basic - pro forma (non-
GAAP) 489,145 284,310 385,850 283,735
Number of shares used in
per share computation -
diluted - pro forma
(non-GAAP) 510,889 286,872 410,104 284,966
The pro forma (non-GAAP) consolidated statements of operations include
the results of operations of GlobespanVirata, Inc. from February 27,
2004, the date of the company's merger with GlobespanVirata. No
restatement has been made to earlier periods.
Pro forma operating income, pro forma net income, and basic and fully
diluted income per share pro forma (non-GAAP) excludes certain
non-cash and special items related to operations, certain
non-operating gains and losses and interest expense on the convertible
subordinated notes. The company believes these measures of income
provide a better understanding of its underlying operating results and
the company uses these measures internally to evaluate its underlying
operating performance. These measures of income are not in accordance
with, or an alternative for, GAAP and may be different from pro forma
measures used by other companies.
Basic weighted-average shares of common stock outstanding assume
conversion of $711.8 million of convertible subordinated notes at
their applicable conversion prices. Diluted weighted-average shares of
common stock outstanding also includes the effect of outstanding
options and warrants using the treasury stock method.
A reconciliation of consolidated statements of operations, shares and
per share information as determined under GAAP with the pro forma net
income, pro forma share and per share information presented above is
presented in the following table.
CONEXANT SYSTEMS, INC.
Reconciliation of Consolidated Statements of Operations to
Pro Forma (Non-GAAP) Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)
Three months ended Nine months ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
Income (loss) from
continuing operations
(unaudited) $(71,426) $3,167 $(174,158) $(13,650)
Non-cash and special
items:
Amortization of
intangible assets 7,956 925 12,564 2,523
In-process research and
development -- -- 160,818 --
IP litigation support
costs 2,024 -- 2,594 --
Special charges (See
Note 2) 8,294 6,526 14,413 13,585
Stock compensation 2,980 45 4,160 1,716
Transitional salaries
and benefits (See
Note 3) 1,288 -- 1,288 --
Gain on debt
extinguishment -- (7,376) -- (42,021)
Interest expense on
convertible
subordinated notes 8,183 6,233 21,697 21,389
Payroll taxes
associated with stock
options exercised by
employees 20 52 313 75
Equity in losses
(earnings) of equity
method investees (1,934) 2,423 (12,750) 3,233
Unrealized loss on note
receivable from
Skyworks 17,837 76 6,292 1,832
Unrealized loss on
Mindspeed warrant 60,924 -- 38,379 --
Inventory impairment -- -- 812 --
Gains on sales of
investments and assets (27,017) (5,228) (27,017) (5,228)
Write-down of
investments -- -- 600 34,402
Pro forma net income $9,129 $6,843 $50,005 $17,856
Income (loss) per share,
basic:
Income (loss) from
continuing operations
(GAAP) $(0.15) $0.01 $(0.48) $(0.05)
Non-cash and special
items 0.17 0.01 0.61 0.11
Pro forma (non-GAAP)
income $0.02 $0.02 $0.13 $0.06
Income (loss) per share,
diluted:
Income (loss) from
continuing operations
(GAAP) $(0.15) $0.01 $(0.48) $(0.05)
Non-cash and special
items 0.17 0.01 0.60 0.11
Pro forma (non-GAAP)
income $0.02 $0.02 $0.12 $0.06
Number of shares used in
per share computation -
basic (GAAP) 463,804 268,489 363,654 266,915
Assumed conversion of
convertible subordinated
notes 25,341 15,821 22,196 16,820
Number of shares used in
per share computation -
basic - pro forma (non-
GAAP) 489,145 284,310 385,850 283,735
Effect of stock options
and warrants 21,744 2,562 24,254 1,231
Number of shares used in
per share computation -
diluted - pro forma (non-
GAAP) 510,889 286,872 410,104 284,966
Note 2 - Special charges consist of asset impairments, restructuring
charges, integration costs, other special items and gains and losses
on the disposal of certain operating assets.
Note 3 - Transitional salaries and benefits represent amounts earned
by employees, from the beginning of the quarter ended June 30, 2004,
who have been notified of their termination as part of our merger
related restructuring activities.
CONEXANT SYSTEMS, INC.
Consolidated Condensed Balance Sheets
(unaudited, in thousands)
June September
30, 30,
2004 2003
ASSETS
Current assets:
Cash and cash equivalents (See Note 4) $78,549 $76,186
Marketable securities (See Note 4) 158,293 99,283
Receivables, net 213,904 79,557
Inventories 145,551 59,548
Deferred income taxes 13,631 13,600
Mindspeed warrant-current portion 11,700 --
Other current assets 31,828 26,524
Total current assets 653,456 354,698
Property, plant and equipment, net 84,251 36,310
Goodwill 705,689 56,865
Intangible assets, net 143,393 12,506
Deferred income taxes 242,445 241,260
Mindspeed warrant 69,151 119,230
Marketable securities - long term (See Note 4) 188,045 --
Other assets 133,083 110,838
Total assets $2,219,513 $931,707
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $128,211 $55,909
Accrued compensation and benefits 49,584 28,865
Restructuring and reorganization liabilities 20,798 12,091
Other current liabilities 68,111 24,816
Total current liabilities 266,704 121,681
Convertible subordinated notes 711,825 581,825
Other liabilities 74,436 61,435
Total liabilities 1,052,965 764,941
Shareholders' equity 1,166,548 166,766
Total liabilities and shareholders'
equity $2,219,513 $931,707
The consolidated condensed balance sheet at June 30, 2004, includes
the assets and liabilities at fair value of GlobespanVirata, Inc. and
allocation of purchase price to intangibles and goodwill as of
February 27, 2004, the date of the company's merger with
GlobespanVirata, adjusted for subsequent changes.
Note 4 - Total cash, cash equivalents and marketable securities at
June 30, 2004, and at September 30, 2003, are as follows:
June September
30, 30,
2004 2003
Cash and cash equivalents $78,549 $76,186
Skyworks 15% convertible senior subordinated
notes -- 55,566
Equity securities - Skyworks Solutions, Inc. (6.2
million shares at June 30, 2004, 0.5 million
shares at September 30, 2003) 50,824 4,576
Equity securities - SiRF Technologies, Inc. (5.9
million shares at June 30, 2004) 74,582 --
Other short-term marketable securities (primarily
U.S. government agencies and corporate debt
securities) 32,887 39,141
Long-term marketable securities (primarily U.S.
government agencies and corporate debt
securities) 188,045 --
$424,887 $175,469
CONEXANT SYSTEMS, INC.
Selected Other Data
(unaudited, in thousands)
Three months ended Nine months ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
Selected Data - From
Continuing Operations (See
Note 5):
Depreciation (See Note 6) $4,512 $3,648 $11,337 $13,576
Capital expenditures 4,020 5,197 13,922 13,555
Revenues By Region:
Americas $29,499 $15,565 $77,442 $50,593
Asia-Pacific 215,797 125,606 554,457 352,581
Europe, Middle East and
Africa 22,321 9,779 56,832 32,100
$267,617 $150,950 $688,731 $435,274
Note 5 - Continuing operations exclude the discontinued Mindspeed
Technologies Internet infrastructure business, which was spun off in
June 2003.
Note 6 - Does not include amortization of intangible assets, as
applicable.
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