Conexant Reports Second Quarter Results for Fiscal Year 2001.Business Editors & High-Tech Writers NEWPORT BEACH Newport Beach, residential and resort city (1990 pop. 66,643), Orange co., S Calif., on Newport Bay and the Pacific Ocean; inc. 1906. It is a popular seaside resort and yachting center. Manufactures include electrical and medical equipment, computers, boats, and adhesives. , Calif.--(BUSINESS WIRE)--April 19, 2001 Conexant Systems, Inc. (Nasdaq:CNXT) today announced revenues of $251.0 million for the second quarter of fiscal 2001, which ended March 31, 2001. Revenues were down 39 percent from first quarter fiscal 2001 revenues of $410.4 million, and in line with the company's revised March outlook. The 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 net loss for the second quarter was $187.5 million, or $0.77 per share, compared with a pro forma net loss of $57.4 million, or $0.24 per share in the prior quarter. The pro forma net loss for the second quarter of fiscal 2001 includes a pre-tax charge for inventory reserves of $148.6 million. Excluding this inventory charge, the second-quarter pro forma net loss was $95.0 million, or $0.39 per share, and within the range of the company's revised March outlook. Pro forma results exclude amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. and special charges. "Conexant's second fiscal quarter results reflect the broad slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in the technology sector, particularly in the networking equipment market, and abnormally high customer inventory levels," said Dwight W. Decker, Conexant's chairman and chief executive officer. "In our personal networking business, comprised of wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. , digital infotainment (INFOrmation enterTAINMENT) Refers to all the information and entertainment services delivered to the home, which are essentially telephone, TV and Internet access. , personal imaging, and personal computing Refers to users working on their own computers rather than a terminal to a mainframe. Sometimes, the term refers to using computers at home for work and/or entertainment in contrast to business use only. See personal computer. , we experienced continued weakness across all of our end-market segments. "In Mindspeed Technologies, our Internet infrastructure business, we experienced a steep revenue decline across our access product lines and, to a lesser extent, in wide area networking products." In the second fiscal quarter, Conexant's personal networking business recorded revenues of $169.7 million, down 31 percent sequentially. Mindspeed Technologies delivered revenues of $81.3 million during the second fiscal quarter, down 51 percent sequentially. "As a result of these reduced revenue levels, we are implementing a series of previously announced cost-reduction initiatives and strategic restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). actions," Decker said. "We remain focused on executing new product development initiatives and capturing new design wins in order to further strengthen our market share positions in the high-growth, high-margin markets we address." The personal networking business continues to gain design wins and product traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. in mobile communications and broadband access See broadband and wireless broadband. , its two strategic growth vectors. In mobile communications, the company announced new products for next-generation GSM/GPRS handsets, and introduced a suite of high-performance radio components for wireless infrastructure applications. In broadband access, Conexant obtained CableLabs(R) certification for four new platforms based on its InfoSurge(TM) product family. The company also signed an agreement with Samsung Electronics Samsung Electronics (SEC, Hangul:삼성전자; KSE: 005930, KSE: 005935, LSE: SMSN, LSE: SMSD) is a South Korean multinational corporation and the world's largest and leading electronics and information technology company. to develop an extensive portfolio of 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. products. In addition, early this week Conexant and Motorola signed an agreement to jointly develop and manufacture system silicon solutions for broadband communications devices Typically refers to a terminal used to send voice, video or text. Mobile phones, wireless PDAs and personal computers equipped with microphones, speakers and cameras are all considered communications devices. See modem. including cable modems, set-top boxes 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. , and voice-over-IP products. Mindspeed scored a record number of design wins across its WAN transport portfolio and continued the expansion of its T/E T/E Test Equipment T/E Thermoelectric T/E Transient Event T/E Transporter Erector T/E Twin-Engined Aircraft T/E Table of Equipment product line with the launch of the industry's highest density, lowest power, 12-port line interface solution. Mindspeed expanded its optical networking Communications between computers, telephones and other electronic devices using light. An optical network is far more reliable and has far greater potential transmission capacity than networking in the electrical domain. See optical fiber. portfolio with shipments to multiple customers of the industry's first semiconductor solution implementing resilient packet ring See RPR. (RPR (Resilient Packet Ring) A packet-based protocol that provides fault tolerance and statistical multiplexing for the metropolitan and national SONET and Ethernet networks of the carriers. ) technology. In Mindspeed's access product lines, the business announced an expansion to the ZipWire(TM) family of multimode broadband transceiver (TRANSmitter reCEIVER) An electronic device or circuit that transmits and receives analog or digital signals. It comes in many forms; for example, a transponder on a satellite, a network adapter in the computer or the circuits in a cellphone. solutions, which supports the full range of business class, symmetric DSL See DSL. standards. "The many uncertainties of the current business environment make it particularly difficult to provide an outlook for our third fiscal quarter," Decker said. "However, in our personal networking business we are seeing early signs of a firming in demand for our mobile communications, personal computer and PC peripheral products. As a result, we expect that personal networking revenues for the current quarter will be flat to slightly down from the previous quarter. "On the Mindspeed side, we are not yet seeing signs of a market stabilization Stabilization The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders , and we continue to experience order push-outs and cancellations, as well as delays in the ramp of new customer platforms. In our WAN transport product lines we expect revenues to decline by 25 to 35 percent from the prior quarter," Decker said. "In our access product lines, we expect the decline to be steeper as a result of exceptionally high channel inventory levels. Accordingly, we expect Mindspeed revenues overall to be down 35 to 45 percent from the prior quarter. In total, we expect Conexant revenues for the current quarter to decline by approximately 15 percent sequentially." The company anticipates gross margins of approximately 20 percent in the current quarter as a result of a lower component of Mindspeed revenue and lower levels of manufacturing utilization. Pro forma loss per share is expected to be $0.40 to $0.45, excluding the impact of one-time charges associated with the previously announced expense-reduction initiatives and restructuring activities. "While we clearly face significant near-term challenges, we remain well-positioned within the Internet infrastructure, mobile communications, and broadband access markets, which are some of the semiconductor industry's most attractive long-term growth segments," added Decker. Second Quarter and Recent Highlights: Mindspeed Technologies announced LoopWizard, a software technology that detects and diagnoses DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary line failures, and incorporates the recently announced ZipWireMulti CX28985 chipset A group of chips designed to work as a unit to perform a function. For example, a modem chipset contains all the primary circuits for transmitting and receiving. A PC chipset provides the electronic interfaces between all subsystems (see PC chipset for illustration). . Additional new products include: a crosspoint switch Also known as a crossbar or NxN switch, it is a switching device that provides for a fixed number of inputs and outputs. For example, a 32x32 switch is able to keep 32 nodes communicating at full speed to 32 other nodes. device, the CX20487, which quadruples the volume of networking traffic that can be routed through a single chip in optical networking equipment; the CX29950 Ringmaker ring processing unit (RPU RPU Rochester Public Utilities (Rochester, NY) RPU Revenue Per User (telecommunications) RPU Remote Processing Unit RPU Ray Processing Unit (computer graphics; ray tracing) ), a semiconductor solution used to implement resilient packet ring (RPR) technology; and the CX28355, a 12-port line interface unit that enables telecom equipment manufacturers to increase the density of electrical network For electrical power transmission and distribution networks, see . An electrical network is an interconnection of electrical elements such as resistors, inductors, capacitors, transmission lines, voltage sources, current sources, and switches. connections that can be aggregated onto the Internet's optical core. Wireless Communications announced a new direct conversion transceiver (DCR DCR Department of Conservation and Recreation DCR Decrease DCR Digital Cable Ready (television) DCR Dark Crisis (Yu-Gi-Oh! cards) DCR Debt Coverage Ratio DCR Dacryocystorhinostomy ) that reduces the cost, size and power requirements of GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. handsets, and reduces the external component count required in each handset The part of the telephone that contains the speaker and the microphone. On a desktop phone, the part you hold in your hand is the handset. On a cellphone, the entire phone is the handset. See multihandset cordless and headset. by one-third. The new DCR is a part of Conexant's recently announced GSM/GPRS total system solution. A family of radio-frequency components for the wireless infrastructure market was also announced. Initial products consist of power amplifiers Power amplifier The final stage in multistage amplifiers, such as audio amplifiers and radio transmitters, designed to deliver appreciable power to the load. and a front-end receiver. Personal Computing joined forces with Chinese ISPs, PC OEMs, peripheral hardware manufacturers and government officials at a launch event in Beijing to promote the widespread adoption of the V.92 International Telecommunication Union International Telecommunication Union (ITU), specialized agency of the United Nations, with headquarters at Geneva. It was created in 1934 as a result of the merging of the International Telegraph Union (est. (ITU (International Telecommunication Union, Geneva, Switzerland, www.itu.ch) A telecommunications standards body that is under the auspices of the United Nations. Comprising more than 185 member countries, the ITU sets standards for global telecom networks. ) modem standard. V.92 improves the dial-up modem experience in three ways: quicker handshake handshake - handshaking time, a faster upstream From the consumer to the provider. See downstream. (networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger data rate, and "modem-on-hold," which allows users to take phone calls during Internet sessions. Digital Infotainment announced an agreement with Motorola to jointly develop and manufacture system silicon solutions for broadband communications devices. Four more customers, including Samsung Electronics, received CableLabs(R) certification for products based on Conexant's InfoSurge(TM) single-chip, programmable cable modem solution. This brings the total number of design wins based on InfoSurge to more than 15 across DOCSIS (Data Over Cable Service Interface Specification) A cable modem standard from the CableLabs research consortium (www.cablelabs.com), which provides equipment certification for interoperability. , DVB (Digital Video Broadcasting) An international digital television (DTV) standard that is the European and Far Eastern counterpart of the North American ATSC standard. and MMDS (Multichannel Multipoint Distribution Service or Microwave Multipoint Distribution Service) A digital wireless transmission system that works in the 2.2-2.4 GHz range. . Conexant also announced an agreement with Samsung Electronics to help Samsung develop an extensive portfolio of cable modem products using Conexant's InfoSurge product family. Microsoft selected Conexant's CX25871 video encoder A hardware device or software that assigns a code to represent data. See encode. 1. (algorithm, hardware) encoder - Any program, circuit or algorithm which encodes. Example usages: "MPEG encoder", "NTSC encoder", "RealAudio encoder". 2. solution to connect the Xbox(TM) video game system to television sets. Note to Editors, Analysts and Investors The Conexant Q2 FY01 conference call will take place Thursday, April 19, 2001, at 2 p.m. PDT/5 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . To listen to the conference call via telephone, call 800/680-9685 (Domestic) or 334/323-9854 (International); security code: Conexant. To listen via the Internet, visit either www.conexant.com or www.streetfusion.com. Playback Playback could mean:
abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT on Thursday, April 19, and end at 5 p.m. PDT on Friday, April 20. The replay will be available on Conexant's Web site at www.conexant.com or by calling 800/858-5309 (Domestic) or 334/260-0890 (International); access code: 40313; pass code: 16809. About Conexant Systems, Inc. Conexant Systems is a worldwide leader in semiconductor system solutions for communications applications. Conexant leverages its expertise in mixed-signal processing to deliver integrated systems and semiconductor products through two separate businesses: Conexant and Mindspeed Technologies. Conexant's personal networking business is focused on digital infotainment, personal imaging, wireless communications and personal computing products that are used in mobile communications and the broadband digital home. Mindspeed Technologies is focused on Internet infrastructure products including WAN transport, multiservice access and broadband access for applications that extend from the edge of the Internet all the way to its optical core. Conexant has headquarters in Newport Beach and delivered revenues of $2.1 billion for fiscal 2000. The company is a member of the S&P 500 and Nasdaq-100 indices. To learn more, visit the company 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 news release contains statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future results of Conexant (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: maintaining a consistent and reliable source of energy; global economic and market conditions, such as 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 and extent of utilization of manufacturing capacity; pricing pressures and other competitive factors; changes in product mix; fluctuations in manufacturing yields; 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 successful separation of the company's Internet infrastructure and personal networking businesses; the ability to attract and retain qualified personnel; labor relations of the company, its customers and suppliers; and 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. , as well as other risks and uncertainties, including but not limited to those detailed from time to time in the company's 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 the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Note to Editors: Conexant and Mindspeed Technologies are trademarks of Conexant Systems, Inc. Other brands and names contained in this release are the property of their respective owners.
CONEXANT SYSTEMS, INC.
Pro Forma Consolidated Condensed Statements of Operations
(unaudited, in thousands, except per share amounts)
Three Months Ended Six Months Ended
March 31, March 31,
2001 2000 2001 2000
Net revenues $ 251,003 $ 501,728 $ 661,364 $1,011,691
Cost of goods sold (1) 334,168 269,459 630,771 546,905
Gross margin (83,165) 232,269 30,593 464,786
Operating expenses:
Research and development 127,331 100,095 244,183 188,572
Selling, general
and administrative 89,070 66,024 168,645 134,192
Total operating expenses 216,401 166,119 412,828 322,764
Pro forma operating income
(loss) (299,566) 66,150 (382,235) 142,022
Other income (expense), net (1,021) 932 (377) 1,510
Pro forma income (loss)
before income taxes (300,587) 67,082 (382,612) 143,532
Provision (benefit) for
income taxes (113,133) 19,939 (137,741) 43,071
Pro forma income (loss) before
extraordinary item $ (187,454) $ 47,143 $ (244,871) $ 100,461
Pro forma income (loss) per share before extraordinary item (2):
Basic $ (0.77) $ 0.23 $ (1.02) $ 0.50
Diluted $ (0.77) $ 0.21 $ (1.02) $ 0.45
Number of shares used in per share computation:
Basic 243,515 205,207 239,813 200,962
Diluted 243,515 239,644 239,813 234,549
(1) Cost of goods sold for the three months ended March 31, 2001
includes inventory reserves of $148.6 million.
(2) Excluding the effect of the inventory reserves, pro forma
loss per share for the three months ended March 31, 2001 was
$0.39.
Pro forma operating income (loss), pro forma income (loss) before
extraordinary item and pro forma income (loss) per share before
extraordinary item exclude the amortization of intangible assets, debt
conversion costs and special charges. Pro forma income (loss) before
extraordinary item for the six months ended March 31, 2001 is computed
using a 36% pro forma income tax rate. These measures of earnings are
not in accordance with, or an alternative for, generally accepted
accounting principles and may not be consistent with measures used by
other companies. However, the company believes these measures of
earnings provide its investors additional insight on its underlying
operating results and the company uses these measures internally to
evaluate its operating performance.
A reconciliation of pro forma income (loss) before extraordinary
item presented above with the company's income (loss) before
extraordinary item as determined under generally accepted accounting
principles is presented on the following page.
CONEXANT SYSTEMS, INC.
Reconciliation of Pro Forma Income (Loss) Before
Extraordinary Item to Reported Results
(unaudited, in thousands, except per share amounts)
Three Months Ended Six Months Ended
March 31, March 31,
2001 2000 2001 2000
Pro forma income (loss) before
extraordinary item $ (187,454) $ 47,143 $ (244,871) $ 100,461
Amortization of intangible assets and special items:
Amortization of
intangible assets 84,040 25,337 166,344 27,742
Purchased in-process research
and development -- 145,900 -- 145,900
Debt conversion costs -- -- 42,584 --
Restructuring 7,578 -- 7,578 --
Separation costs 4,270 -- 12,197 --
Stock compensation 2,219 -- 4,706 --
Write-down of investments -- -- 5,000 --
Income taxes (23,550) 8,248 (14,409) 7,330
Loss before extraordinary
item $ (262,011) $ (132,342) $ (468,871) $ (80,511)
Basic income (loss) per share:
Pro forma income (loss) before
extraordinary item $ (0.77) $ 0.23 $ (1.02) $ 0.50
Amortization of intangible assets
and special items (0.31) (0.87) (0.94) (0.90)
Loss before extraordinary
item $ (1.08) $ (0.64) $ (1.96) $ (0.40)
Diluted income (loss) per share:
Pro forma income (loss) before
extraordinary item $ (0.77) $ 0.21 $ (1.02) $ 0.45
Amortization of intangible assets
and special items (0.31) (0.85) (0.94) (0.85)
Loss before extraordinary
item $ (1.08) $ (0.64) $ (1.96) $ (0.40)
CONEXANT SYSTEMS, INC.
Consolidated Condensed Statements of Operations
(unaudited, in thousands, except per share amounts)
Three Months Ended Six Months Ended
March 31, March 31,
2001 2000 2001 2000
Net revenues $ 251,003 $ 501,728 $ 661,364 $1,011,691
Cost of goods sold 334,168 269,459 630,771 546,905
Gross margin (83,165) 232,269 30,593 464,786
Operating expenses:
Research and development 128,879 100,095 247,417 188,572
Selling, general and
administrative 89,741 66,024 170,117 134,192
Amortization of
intangible assets 84,040 25,337 166,344 27,742
Restructuring 7,578 -- 7,578 --
Separation costs 4,270 -- 12,197 --
Purchased in-process research
and development -- 145,900 -- 145,900
Total operating expenses 314,508 337,356 603,653 496,406
Operating loss (397,673) (105,087) (573,060) (31,620)
Debt conversion costs -- -- (42,584) --
Other income (expense), net (1,021) 932 (5,377) 1,510
Loss before income taxes (398,694) (104,155) (621,021) (30,110)
Provision (benefit) for
income taxes (136,683) 28,187 (152,150) 50,401
Loss before extraordinary
item (262,011) (132,342) (468,871) (80,511)
Extraordinary gain on extinguishment of debt,
net of income taxes of $4,426 -- -- 7,284 --
Net loss $ (262,011) $ (132,342) $ (461,587) $ (80,511)
Loss per share, basic and diluted:
Loss before extraordinary
item $ (1.08) $ (0.64) $ (1.96) $ (0.40)
Extraordinary item -- -- 0.04 --
Net loss $ (1.08) $ (0.64) $ (1.92) $ (0.40)
Number of shares used in
per share computation 243,515 205,207 239,813 200,962
CONEXANT SYSTEMS, INC.
Consolidated Condensed Balance Sheets
(unaudited, in thousands)
March 31, Sept. 30,
2001 2000
ASSETS
Current assets:
Cash, cash equivalents and
marketable securities $ 438,509 $ 848,497
Receivables, net 249,135 422,650
Inventories 253,657 341,002
Deferred income taxes 110,306 95,260
Other current assets 73,778 66,733
Total current assets 1,125,385 1,774,142
Marketable securities -- 95,876
Property, plant and equipment, net 852,087 828,511
Goodwill and intangible assets, net 1,355,089 1,507,326
Other assets 283,990 209,056
Deferred income taxes 151,064 1,286
Total assets $3,767,615 $4,416,197
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 123,204 $ 233,865
Deferred revenue 29,357 37,586
Accrued compensation and benefits 56,852 88,399
Other current liabilities 98,060 95,158
Total current liabilities 307,473 455,008
Convertible subordinated notes 709,849 999,997
Other long-term liabilities 55,446 54,433
Total liabilities 1,072,768 1,509,438
Shareholders' equity 2,694,847 2,906,759
Total liabilities and
shareholders' equity $3,767,615 $4,416,197
CONEXANT SYSTEMS, INC.
Selected Corporate Data
(unaudited, dollars in thousands)
Three Months Ended
March 31, 2001 Dec. 31, 2000 March 31, 2000
% of % of % of
Revenue Revenue Revenue Revenue Revenue Revenue
Revenue by Business
Mindspeed Technologies 32% $ 81,285 40% $165,905 25% $125,224
Personal Networking:
Personal Computing 27% 67,012 18% 75,115 36% 179,290
Personal Imaging 5% 11,200 6% 24,719 5% 28,116
Digital Infotainment 14% 35,185 15% 60,785 15% 73,140
Wireless Communications 22% 56,321 21% 83,837 19% 95,958
Revenue by Region
Americas 35% $ 87,075 39% $158,966 31% $156,787
Europe 13% 32,620 15% 60,817 12% 59,585
Japan 4% 10,956 6% 26,332 12% 58,706
Asia Pacific 48% 120,352 40% 164,246 45% 226,650
Three Months Ended
March 31, Dec. 31, March 31,
Other Data: 2001 2000 2000
Depreciation (1) $ 50,559 $ 47,691 $ 48,056
Capital expenditures 53,168 65,665 76,218
(1) Does not include amortization of intangible assets.
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