01—Abstract
Summary
Summary of the 10-K filed November 30, 2009. Cited figures are marked; the original filing is the authoritative source.
Skyworks Solutions, Inc. (NASDAQ: SWKS) reported net revenues of $802.6 milliona for the fiscal year ended October 2, 2009, down 6.7% or $57.4 million from $860.0 million in fiscal 2008.
Management attributed the decline principally to weaker end-market demand from adverse global macroeconomic conditions and the exit from certain product areas such as mobile transceivers, partly offset by market share gains in high-dollar-content 3G and multimode segments. Gross margin held at 39.6% versus 39.9% in the prior year, and operating income was $71.7 millionb compared with $90.4 million. Net income was $93.3 million, or $0.55 per diluted share, compared with $111.0 million, or $0.68 per diluted share, in fiscal 2008.
Balance sheet and cash generation were a bright spot. Cash provided by operations rose to $210.1 millionc from $173.7 million, and cash and cash equivalents ended the year at $364.2 million. The company retired $57.9 million of its 2007 Convertible Notes, reducing that balance to $79.7 million, and it reported total stockholders' equity of $1.105 billion.
Management noted that its net cash position improved from $43.5 million to $240.4 milliond over the year. Investors should also note several items. A January 2009 restructuring reduced headcount by about 4% (150 employees) and produced $16.0 million of restructuring charges plus $3.5 million of inventory write-downs.
The company recorded a $27.5 million income tax benefit driven by a $45.5 million reduction in the valuation allowance. Adoption of ASC 470-20 on October 3, 2009 is expected to significantly increase non-cash interest expense in fiscal 2010 and beyond. The top three OEM/distribution customers represented approximately 38% of fiscal 2009 net revenues, and the company's gross margin is cited as relatively consistent at approximately 40%.
02—Key points
Key Highlights
- Net revenues of $802.6 million, down 6.7% (or $57.4 million) from $860.0 million in fiscal 2008.
- Gross profit of $318.2 million, with gross margin of 39.6% versus 39.9% in fiscal 2008.
- Operating income of $71.7 million versus $90.4 million in fiscal 2008; R&D expense fell to $124.0 million from $146.0 million after exiting non-core product areas.
- Net income of $93.3 million, or $0.55 per diluted share, compared with $111.0 million, or $0.68 per diluted share, in fiscal 2008.
- Cash from operations increased to $210.1 million from $173.7 million; cash and cash equivalents ended at $364.2 million.
- Retired $57.9 million of 2007 Convertible Notes in fiscal 2009, reducing the outstanding balance to $79.7 million; net cash position improved to $240.4 million from $43.5 million.
- January 2009 restructuring cut about 150 employees (4% of headcount) and recorded $16.0 million in restructuring and other charges; ASC 470-20 adoption will significantly raise non-cash interest expense from fiscal 2010.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Skyworks Solutions kept $0.12.
- Revenue$802.6M100.0%
- Cost of revenue−$484.4M60.4%
- Gross profit$318.2M39.6%
- Operating costs−$246.5M30.7%
- Operating income$71.7M8.9%
- Interest, other & tax$23.3M2.9%
- Net income$95.0M11.8%
Where FY2009 revenue went
$802.6M- Cost of revenue: $484.4M, 60% of revenue
- R&D: $124.0M, 15% of revenue
- SG&A: $100.4M, 13% of revenue
- Operating income: $71.7M, 8.9% of revenue
- Other operating costs: $22.1M, 2.8% of revenue
Kept 8.9% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed November 30, 2009Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $802.58M$860.02M | −6.7% |
| Cost of Revenue | $484.36M$517.05M | −6.3% |
| Gross Profit | $318.22M$342.96M | −7.2% |
| R&D Expenses | $124.00M$146.01M | −15.1% |
| SG&A Expenses | $100.42M$100.01M | +0.4% |
| Operating Expenses | $246.52M$252.59M | −2.4% |
| Operating Income | $71.70M$90.37M | −20.7% |
| Interest Expense | $8.29M$16.32M | −49.2% |
| Net Income | $94.98M$111.01M | −14.4% |
| EPS (Basic) | $0.57$0.69 | −17.4% |
| EPS (Diluted) | $0.56$0.67 | −16.4% |
| Shares Outstanding (Basic) | 167.05M161.88M | +3.2% |
| Shares Outstanding (Diluted) | 169.66M164.75M | +3.0% |
05—Questions
Frequently Asked Questions
How did Skyworks perform financially in fiscal 2009?
Net revenues declined 6.7% to $802.6 million from $860.0 million, principally due to reduced end-market demand from adverse global macroeconomic conditions and the exit from certain product areas such as mobile transceivers. Net income fell to $93.3 million, or $0.55 per diluted share, from $111.0 million, or $0.68 per diluted share, in fiscal 2008.
How strong is the company's cash position and liquidity?
Cash and cash equivalents increased $139.1 million to $364.2 million at October 2, 2009, supported by $210.1 million of cash from operations. Management stated that existing liquidity and cash from operations are expected to be sufficient for at least the next 12 months. The company also has a $50.0 million Facility Agreement with Wachovia Bank, N.A., of which $50.0 million was borrowed at year end.
What debt obligations does Skyworks have?
Total long-term debt was $79.7 million of 2007 Convertible Notes, of which $32.6 million is classified as current maturities. Total short-term debt was $82.6 million, including the $50.0 million borrowed under the Facility Agreement. The notes contain cash settlement provisions, and the company's stated practice is to cash settle principal and interest.
What restructuring actions did Skyworks take and what did they cost?
In January 2009, Skyworks exited its mobile transceiver product area and reduced global headcount by approximately 4%, or 150 employees, with an estimated annual operating expense reduction of about $20 million. The company recorded $16.0 million of restructuring and other charges, including $4.5 million for severance and benefits and $5.6 million for asset impairments, plus $3.5 million in inventory write-downs charged to cost of goods sold.
What accounting change could affect future reported results?
On October 3, 2009, Skyworks adopted ASC 470-20, which alters the accounting for convertible debt instruments that allow for either mandatory or optional cash settlements. The company stated this will significantly increase non-cash interest expense associated with its 1.25% and 1.50% convertible notes and previously held 4.75% convertible notes, including in prior periods, resulting in significantly higher non-cash interest expense in fiscal 2010 and beyond.
06—Continue