01—Abstract
Summary
Summary of the 10-K filed November 21, 2012. Cited figures are marked; the original filing is the authoritative source.
Skyworks Solutions, Inc. reported fiscal 2012 (year ended September 28, 2012) net revenue of $1,568.6 milliona, up from $1,418.9 million in fiscal 2011, with net income of $202.1 million compared with $226.6 million a year earlier.
Diluted earnings per share were $1.05b, versus $1.19 in fiscal 2011. Operating income fell to $255.6 million from $295.3 million, and operating margin declined to 16.3% from 20.8%. Management attributes the revenue growth to products from the SiGe and AATI acquisitions, while gross margin compressed to 42.5% from 43.7% due to lower average selling prices, product mix, acquired-inventory step-up charges and higher share-based compensation.
Research and development rose to $212.5 millionc, reflecting acquisition-related headcount. Cash and cash equivalents decreased to $306.3 million from $410.1 million, as operating cash flow of $285.2 million was outweighed by $229.6 million for the AATI acquisition, $94.1 million in capital expenditures, a $52.9 million payment of SiGe contingent consideration and $48.0 million to retire the remaining 1.50% convertible notes. The company had no long-term debt at year-end, and its total assets were $2.14 billion.
The Board approved a new $200.0 milliond share repurchase program on November 8, 2012. Foxconn and Samsung Electronics each accounted for more than ten percent of net revenue in fiscal 2012. The filing also notes risks including industry cyclicality, pricing pressure, reliance on a small number of customers, and the portion of cash held by foreign subsidiaries that the company does not intend to repatriate.
02—Key points
Key Highlights
- Net revenue rose to $1,568.6 million in fiscal 2012 from $1,418.9 million, an increase of 10.5%, driven by SiGe and AATI product sales.
- Net income declined to $202.1 million from $226.6 million, and diluted EPS fell to $1.05 from $1.19.
- Operating margin fell to 16.3% from 20.8%, while gross margin declined to 42.5% from 43.7%.
- Research and development expense increased 26.0% to $212.5 million, mainly from acquisition-related headcount.
- Cash and cash equivalents fell to $306.3 million; operating cash flow of $285.2 million was offset by the AATI acquisition ($229.6 million net of cash acquired) and $94.1 million in capital expenditures.
- Foxconn and Samsung Electronics each exceeded 10% of net revenue, and the company has no long-term debt at year-end.
- A new $200.0 million share repurchase program was approved on November 8, 2012, following the expiration of the prior program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Skyworks Solutions kept $0.13.
- Revenue$1.57B100.0%
- Cost of revenue−$901.5M57.5%
- Gross profit$667.1M42.5%
- Operating costs−$411.5M26.2%
- Operating income$255.6M16.3%
- Interest, other & tax−$53.6M3.4%
- Net income$202.0M12.9%
Where FY2012 revenue went
$1.57B- Cost of revenue: $901.5M, 57% of revenue
- R&D: $212.5M, 14% of revenue
- Net income: $202.0M, 13% of revenue
- SG&A: $158.4M, 10% of revenue
- Other operating costs: $40.6M, 2.6% of revenue
- Interest, other & tax: $53.6M, 3.4% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed November 21, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $1.57B$1.42B | +10.6% |
| Cost of Revenue | $901.50M$798.60M | +12.9% |
| Gross Profit | $667.10M$620.30M | +7.5% |
| R&D Expenses | $212.50M$168.60M | +26.0% |
| SG&A Expenses | $158.40M$137.30M | +15.4% |
| Operating Expenses | $411.50M$325.00M | +26.6% |
| Operating Income | $255.60M$295.30M | −13.4% |
| Interest Expense | $600K$1.90M | −68.4% |
| Net Income | $202.00M$226.60M | −10.9% |
| EPS (Basic) | $1.09$1.24 | −12.1% |
| EPS (Diluted) | $1.05$1.19 | −11.8% |
| Shares Outstanding (Basic) | 185.80M182.90M | +1.6% |
| Shares Outstanding (Diluted) | 191.80M190.70M | +0.6% |
05—Questions
Frequently Asked Questions
Why did profitability decline in fiscal 2012 despite higher revenue?
Operating income fell to $255.6 million from $295.3 million. The filing attributes the gross margin decline to erosion of average selling prices, unfavorable product mix, the fair value step-up of acquired inventory from AATI and SiGe, and higher share-based compensation. Operating expenses also rose, led by research and development at $212.5 million and amortization of intangibles at $32.7 million.
How much cash did the company use for acquisitions and debt repayment in fiscal 2012?
The company used $229.6 million, net of cash acquired, for the AATI acquisition, paid $52.9 million to settle SiGe contingent consideration, and spent $48.0 million to retire the remaining $26.7 million of 1.50% convertible notes due March 2012, including a cash premium of $21.3 million.
Who are the company's largest customers?
In fiscal 2012, Foxconn Technology Group and Samsung Electronics were the only customers each accounting for greater than ten percent of net revenue. The filing lists Foxconn and Samsung as the company's largest customers and notes that its revenue is concentrated among a limited number of customers.
Does the company pay dividends or have a share repurchase program?
The company has never paid cash dividends and does not anticipate paying them in the foreseeable future. On November 8, 2012, the Board approved a new program to repurchase up to $200.0 million of common stock through November 8, 2014, funded with working capital. The prior program expired on August 3, 2012, with $117.6 million remaining on the original amount.
How much cash is held overseas and is it available for use in the U.S.?
Of the $307.1 million in cash, cash equivalents and restricted cash at September 28, 2012, $138.0 million was held by foreign subsidiaries. Approximately $76.6 million of that is being and will be indefinitely reinvested outside the United States, and the company does not intend to repatriate these funds because doing so would have material tax effects.
06—Continue