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Skyworks Solutions Annual Report, Year Ended Sep 27, 2002

Filing Date
Filed December 23, 2002
Period End
September 27, 2002
Security
SWKS
In the record · 2016–202610-K2110-Q338-K121

SWKS filed 21 annual reports (10-K), 33 quarterly reports (10-Q) and 121 current reports (8-K) between 2016 and 2026.

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01—Abstract

Summary

Summary of the 10-K filed December 23, 2002. Cited figures are marked; the original filing is the authoritative source.

Skyworks Solutions, Inc. (formerly Alpha Industries, Inc.) reports fiscal 2002 (year ended September 27, 2002) results following its June 25, 2002 merger with the wireless business of Conexant Systems, Inc. Total net revenues were $457.8 milliona, up from $260.5 million in fiscal 2001, with third-party revenues of $418.3 million.

The company posted an operating loss of $251.4 millionb and a net loss of $236.1 million, including $116.3 million of special charges (principally a $66.0 million Mexicali asset impairment and a $45.8 million write-off of Philsar goodwill and intangibles) and $65.5 million of purchased in-process R&D tied to the Merger. Samsung Electronics accounted for 38% of net revenues from customers other than Conexant, and Motorola for 12%. The balance sheet expanded substantially, with total assets of $1.35 billion versus $314.3 million a year earlier, driven by goodwill and intangible assets of $940.7 million.

Cash and cash equivalents were $53.4 millionc, and working capital was $79.8 million. Cash used in operating activities was $99.1 million. The filing notes that adopting SFAS No. 142 in fiscal 2003 may require a substantial transitional impairment charge against the approximately $907.5 million of goodwill and intangibles subject to testing.

Subsequent to year-end, on November 13, 2002, the company closed a $230 milliond private placement of 4.75% convertible subordinated notes due 2007 with a conversion price of approximately $9.05 per share. The proceeds were used to repay $170 million of debt owed to Conexant, leaving a $45 million 15% convertible note due June 30, 2005, and the company retained about $53 million for working capital. The company states that it expects existing liquidity and operating cash flow to be sufficient for at least the next twelve months.

02—Key points

Key Highlights

  1. Net revenues rose to $457.8 million in fiscal 2002 from $260.5 million in fiscal 2001; third-party revenues were $418.3 million.
  2. Net loss was $236.1 million, including $116.3 million in special charges and $65.5 million of purchased in-process R&D from the Merger.
  3. Mexicali asset impairment of $66.0 million and a $45.8 million write-off of Philsar goodwill and intangibles were the principal special charges.
  4. Samsung Electronics accounted for 38% and Motorola for 12% of net revenues from customers other than Conexant in fiscal 2002.
  5. Goodwill and intangible assets of $940.7 million; the SFAS No. 142 transitional impairment test may result in a substantial charge in fiscal 2003.
  6. November 2002 private placement of $230 million 4.75% convertible subordinated notes, with proceeds used to retire $170 million of Conexant-related debt.
  7. Cash used in operating activities was $99.1 million; cash and equivalents were $53.4 million at September 30, 2002.

03—Questions

Frequently Asked Questions

  1. Why did the company report such a large net loss in fiscal 2002?

    The net loss of $236.1 million reflects $116.3 million of special charges, principally the $66.0 million Mexicali impairment and $45.8 million Philsar goodwill write-off, plus $65.5 million of purchased in-process R&D expensed in connection with the Merger. Gross margin was $126.2 million on revenues of $457.8 million.

  2. How did the Merger with Conexant's wireless business affect the financial statements?

    The Merger was accounted for as a reverse acquisition, so Washington/Mexicali's historical financials became the company's historical financials. Alpha's results are included only from June 25, 2002. Total assets rose to $1.35 billion from $314.3 million, largely from goodwill and intangibles of $940.7 million.

  3. What is the company's debt position after the November 2002 financing?

    The company closed a $230 million 4.75% convertible subordinated note offering due 2007, with a conversion price of about $9.05 per share. It used the proceeds to prepay $105 million of the $150 million Mexicali note and repay the $65 million outstanding under the loan facility. The remaining $45 million was exchanged for 15% convertible notes due June 30, 2005.

  4. What risks does the filing highlight for fiscal 2003?

    The company must adopt SFAS No. 142 in fiscal 2003 and may record a substantial transitional impairment charge against the approximately $907.5 million of goodwill and intangibles subject to testing. It also cites cyclical industry conditions, customer concentration with Samsung and Motorola, and a minimum purchase obligation to Jazz Semiconductor of approximately $64 million in fiscal 2003.

04—Continue

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