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Skyworks Solutions Annual Report, Year Ended Sep 29, 2006

Filing Date
Filed December 13, 2006
Period End
September 29, 2006
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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  3. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed December 13, 2006. Cited figures are marked; the original filing is the authoritative source.

Skyworks Solutions, Inc. reported net revenues of $773.75 milliona for the fiscal year ended September 29, 2006, a slight decrease from $792.37 million in fiscal 2005, and a net loss of $88.15 million compared with net income of $25.61 million a year earlier.

The loss was driven by the fourth-quarter exit of its baseband product area, which carried total charges of $90.4 millionb, including $35.1 million of bad debt expense, $23.3 million of inventory charges, $27.0 million of restructuring and special charges, and $5.0 million of revenue adjustments. Gross margin fell to 33.9% from 38.8%. Excluding the baseband business, revenues in the core Mobile Platforms and Linear Products areas rose $77.9 million, or 11.9%, to $733.3 million, and units sold in those areas increased 26.9%.

Cash provided by operations fell to $27.2 millionc from $54.2 million, while cash and cash equivalents rose to $136.7 million at year-end. Total indebtedness was $229.3 million, or 25.2% of total capitalization, including $179.3 million of 4.75% convertible subordinated notes due November 2007 and a $50.0 million receivables-backed credit facility that was fully drawn. Management states that existing liquidity is expected to fund operations for at least the next 12 months.

The company also recorded a $14.2 milliond share-based compensation expense following its adoption of SFAS 123(R), and it does not anticipate paying cash dividends. The filing incorporates Part III information by reference from the proxy statement for the 2007 Annual Meeting of Stockholders. It notes that about 50.0% of fiscal 2006 net revenue came from its three largest customers, and that the company relies on a sole-source supplier for epitaxial wafers used in its gallium arsenide manufacturing.

02—Key points

Key Highlights

  1. Net revenues of $773.75 million in fiscal 2006, down from $792.37 million in fiscal 2005.
  2. Net loss of $88.15 million (($0.55) per share), compared with net income of $25.61 million in fiscal 2005, driven by baseband exit charges totaling $90.4 million.
  3. Core Mobile Platforms and Linear Products revenues increased 11.9% to $733.3 million, with units sold in those areas up 26.9%.
  4. Gross margin declined to 33.9% from 38.8%, including $23.3 million of inventory charges tied to the baseband exit.
  5. Bad debt expense of $35.1 million was recorded in the fourth quarter, mainly for Vitelcom Mobile and an Asian component distributor.
  6. Total indebtedness of $229.3 million (25.2% of total capitalization) includes $179.3 million of 4.75% convertible notes due November 2007.
  7. Cash from operations fell to $27.2 million from $54.2 million; year-end cash and equivalents were $136.7 million.

03—Questions

Frequently Asked Questions

  1. Why did Skyworks report a net loss in fiscal 2006?

    The loss mainly reflects the fourth-quarter exit of the baseband product area, which generated $90.4 million in total charges. These included $35.1 million of bad debt expense, $23.3 million of inventory charges, $27.0 million of restructuring and special charges, and $5.0 million of revenue adjustments. Net loss was $88.15 million, or $0.55 per share.

  2. How did the core business perform after the baseband exit?

    Revenues from the Mobile Platforms and Linear Products areas rose $77.9 million, or 11.9%, to $733.3 million. Units sold in these areas increased 26.9%, although average selling prices declined about 2% in Mobile Platforms and about 10% in Linear Products.

  3. What is Skyworks' debt and liquidity position?

    Total indebtedness was $229.3 million at September 29, 2006, or 25.2% of total capitalization. The company holds $179.3 million of 4.75% convertible subordinated notes due November 2007 and a $50.0 million Wachovia facility that is fully drawn. Management expects existing liquidity to fund operations for at least the next 12 months.

  4. How concentrated is Skyworks' customer base?

    Its three largest customers, including their manufacturing subcontractors, accounted for approximately 50.0% of fiscal 2006 net revenue. Management expects its largest customers to remain a substantial portion of revenue in fiscal 2007 and beyond.

  5. Does Skyworks pay dividends?

    No. Skyworks has not paid cash dividends on common stock since an Alpha dividend in fiscal 1986 and does not anticipate paying cash dividends in the foreseeable future. It plans to retain future earnings to finance growth.

04—Continue

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