01—Abstract
Summary
Summary of the 10-K filed December 2, 2008. Cited figures are marked; the original filing is the authoritative source.
Skyworks Solutions, Inc. (NASDAQ: SWKS) reported fiscal 2008 results for the year ended October 3, 2008, a 53-week year.
Net revenues rose to $860.0 milliona, up 15.9% from $741.7 million in fiscal 2007. Gross margin improved to 39.9% from 38.7%, operating income rose to $90.4 million from $58.5 million, and net income reached $111.0 million, or $0.68 per diluted share, compared with $57.7 million in fiscal 2007. The filing attributes the growth to the ramp of new mobile platform products, new customers, entry into adjacent markets, and higher share in front-end modules at existing customers.
Net income was also helped by a $36.4 millionb income tax benefit from a partial release of the U.S. deferred tax valuation allowance. Cash generation was strong. Operating cash flow was $173.7 million, versus $84.8 million in fiscal 2007.
Cash and cash equivalents ended the year at $225.1 millionc, down from $241.6 million, after the company retired $49.3 million of Junior Notes and $62.4 million of 2007 Convertible Notes, spent $64.8 million on capital expenditures, and paid $32.6 million for acquisitions. Total indebtedness was about $187.6 million, or 17.3% of total capitalization. After year end, the company retired a further $40.5 million of 2007 Convertible Notes, leaving $97.1 million outstanding.
Management believes existing liquidity is sufficient for at least the next 12 months. Risks highlighted in the filing include cyclicality in the wireless semiconductor market, customer concentration (the three largest OEM customers represented approximately 40%d of fiscal 2008 net revenues), reliance on third-party foundries and sole-source epitaxial wafer supply, and pricing pressure from competitors.
Average selling prices declined 6.6% year over year. The filing also notes that FSP APB 14-1 will significantly increase non-cash interest expense on the company's convertible notes once adopted in fiscal 2010.
02—Key points
Key Highlights
- Net revenues of $860.0 million, up 15.9% from $741.7 million in fiscal 2007
- Gross margin of 39.9%, up from 38.7% in fiscal 2007; gross profit of $343.0 million
- Operating income of $90.4 million versus $58.5 million in fiscal 2007; net income of $111.0 million, or $0.68 per diluted share
- Net income includes a $36.4 million income tax benefit from a partial release of the U.S. valuation allowance
- Operating cash flow of $173.7 million, versus $84.8 million in fiscal 2007; cash and equivalents of $225.1 million at year end
- Debt reduction: retired $49.3 million of Junior Notes and $62.4 million of 2007 Convertible Notes in fiscal 2008, and a further $40.5 million after year end
- Top three OEM customers (Sony Ericsson, Samsung, AIT) accounted for approximately 40% of fiscal 2008 net revenues
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Skyworks Solutions kept $0.13.
- Revenue$860.0M100.0%
- Cost of revenue−$517.1M60.1%
- Gross profit$343.0M39.9%
- Operating costs−$252.6M29.4%
- Operating income$90.4M10.5%
- Interest, other & tax$20.6M2.4%
- Net income$111.0M12.9%
Where FY2008 revenue went
$860.0M- Cost of revenue: $517.1M, 60% of revenue
- R&D: $146.0M, 17% of revenue
- Operating income: $90.4M, 11% of revenue
- SG&A: $100.0M, 12% of revenue
- Other operating costs: $6.6M, 0.8% of revenue
Kept 11% as operating incomeOther operating costs $6.6M · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed December 2, 2008Financial Statements
| Revenue | $860.02M |
| Cost of Revenue | $517.05M |
| Gross Profit | $342.96M |
| R&D Expenses | $146.01M |
| SG&A Expenses | $100.01M |
| Operating Expenses | $252.59M |
| Operating Income | $90.37M |
| Interest Expense | $16.32M |
| Net Income | $111.01M |
| EPS (Basic) | $0.69 |
| EPS (Diluted) | $0.67 |
| Shares Outstanding (Basic) | 161.88M |
| Shares Outstanding (Diluted) | 164.75M |
05—Questions
Frequently Asked Questions
How did Skyworks perform financially in fiscal 2008?
Net revenues rose 15.9% to $860.0 million. Gross margin improved to 39.9%, operating income rose to $90.4 million from $58.5 million, and net income was $111.0 million, or $0.68 per diluted share, versus $57.7 million in fiscal 2007.
What drove the revenue growth?
The filing attributes the growth principally to the ramp of new mobile platform products, the addition of new customers, entry into new adjacent markets, and expanded market share in increasingly complex front-end modules at existing customers.
How much debt does Skyworks carry and how is it being reduced?
Total indebtedness was approximately $187.6 million at October 3, 2008, or 17.3% of total capitalization. The company retired debt during fiscal 2008 and an additional $40.5 million of 2007 Convertible Notes after year end, leaving $97.1 million of those notes outstanding as of November 12, 2008. Long-term debt maturities fall in 2010 and 2012, and the $50.0 million Wachovia facility was fully drawn at year end.
What are the main risks to investors?
Key risks include cyclicality in the wireless semiconductor industry, customer concentration with the top three OEMs representing about 40% of revenues, dependence on third-party foundries and a sole-source supplier for epitaxial wafers, declining average selling prices (down 6.6% year over year), and intense competition. The filing also notes that FSP APB 14-1 will significantly increase non-cash interest expense on convertible notes starting in fiscal 2010.
06—Continue