Apr 18, 2003
�Conexant�s second fiscal quarter revenues of $158.4 million increased 7 percent from last year�s second quarter and were in line with the expectations we set at the beginning of the quarter,� said Dwight W. Decker, Conexant chairman and chief executive officer.� The $215 million early debt repayment from Skyworks Solutions, Inc. during our first fiscal quarter provided us with sufficient resources to retire a significant portion of our long-term convertible debt four years before its maturity. Since the beginning of this past quarter, we have invested $56 million to retire $100 million of this debt at very attractive rates, and improved the quality of our balance sheet.
�Our Broadband Communications business delivered second fiscal quarter revenues of $140 million in a seasonally weak period, an increase of 8 percent on a year-over-year basis,� Decker continued. �Broadband performance was driven by new product ramps and continuing market share gains in our growth initiatives, which include our ADSL modem solutions and our leadership home network processor and satellite set-top box families of products.
�Our Mindspeed Technologies segment delivered revenues of $18.3 million, which were in line with our expectations. Mindspeed continued to benefit from its focus on metropolitan area and access networks during the quarter, and its diversification into markets such as storage area networking that are outside traditional telecommunications applications.
"Mindspeed also lowered operating expenses by $4 million sequentially, a 9 percent improvement that reflects the continuing benefit of previously announced cost-reduction initiatives.
�In terms of operating results, our overall performance improved 8 percent sequentially on a pro forma basis, better than we expected at the beginning of the quarter and primarily due to the cost savings generated by Mindspeed�s restructuring program.�
The Conexant pro forma operating loss for the second fiscal quarter was $26.3 million, an improvement of 61 percent, or $40.5 million, over the pro forma operating loss in the same period a year ago. These pro forma results are a supplement to financial statements based on generally accepted accounting principles (GAAP). Conexant uses pro forma information to evaluate its segment operating performance and believes this presentation provides investors with additional insight into its underlying operating results. A full reconciliation between the pro forma and GAAP results from continuing operations is included in the accompanying financial data.
Presented on a GAAP basis, the Conexant operating loss for the second quarter of fiscal 2003 was $57.3 million, compared to operating losses of $174.6 million in the second quarter of fiscal 2002, and $55.1 million in the first quarter of fiscal 2003. The GAAP net loss for the second quarter of fiscal 2003 was $68.0 million, compared to a net loss of $200.7 million in the second quarter of fiscal 2002.
Third Quarter Fiscal 2003 Outlook
�We expect Broadband Communications business revenues to be up 3 to 7 percent sequentially as a result of continued traction in our key growth initiatives, which include ADSL modems, satellite set-top box solutions and home network processors,� Decker said. �We believe that we will hold both operating expenses and percent gross margin steady, and as a result, that our Broadband Communications business will improve its pro forma operating profitability.
�While visibility in Mindspeed�s end markets continues to be limited, customer order backlog has been improving steadily for the past few months and is better now than at the same point one quarter ago, and we accordingly anticipate that Mindspeed�s revenues will be up 5 to 10 percent sequentially. As a result of this revenue growth and the continuing benefits of our cost-reduction actions, we expect a further sequential improvement in the level of Mindspeed�s pro forma operating loss of approximately 10 percent.
"In the aggregate, we anticipate that Conexant�s third fiscal quarter revenues will be up 3 to 7 percent sequentially. We expect to maintain overall gross margin in the 47 percent range and, with the reduction in Mindspeed operating expenses, expect to deliver a further sequential improvement in pro forma operating loss of approximately 20 percent,� Decker concluded.
Note to Editors, Analysts and Investors
The Conexant second fiscal quarter 2003 conference call will take place on Thursday, April 17, at 2:00 p.m. PDT/5:00 p.m. EDT. To listen to the conference call via telephone, please call (800) 680-9685 (domestic) or 334-323-9854 (international); security code: Conexant. To listen via the Internet, please visit the investor relations section of Conexant�s Web site at http://www.conexant.com/ir. Playback of the conference call will begin at 5:00 p.m. PDT on Thursday, April 17, and end at 5:00 p.m. PDT on Monday, April 21. The replay will be available on Conexant�s Web site at http://www.conexant.com/ir or by calling (800) 858-5309 (domestic) or (334) 323-7226 (international); access code: 40313, pass code: 16809.
About Conexant
Conexant Systems, Inc., a worldwide leader in semiconductor system solutions for communications applications, leverages its expertise in mixed-signal processing to deliver integrated systems and semiconductor products through two separate businesses. The Broadband Communications business develops and delivers integrated semiconductor solutions that enable digital entertainment and information networks for the home and small office. Its product portfolio includes the building blocks required for bridging cable, satellite and terrestrial data and digital video networks. Mindspeed Technologies�, the company�s Internet infrastructure business, designs, develops and sells semiconductor networking solutions for communications applications in enterprise, access, metropolitan and wide area networks. Conexant is headquartered in Newport Beach, Calif. To learn more, visit us at http://www.conexant.com or http://www.mindspeed.com.
Safe Harbor Statement
This press release contains statements relating to future results of Conexant (including certain projections and business trends) that are �forward-looking statements� as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to: the cyclical nature of the semiconductor industry and the markets addressed by the company�s and its customers� products; demand for and market acceptance of new and existing products; successful development of new products; the timing of new product introductions; the availability of manufacturing capacity; pricing pressures and other competitive factors; changes in product mix; product obsolescence; the ability to develop and implement new technologies and to obtain protection for the related intellectual property; the successful implementation of the company�s expense reduction and restructuring initiatives; the successful separation of the company�s Broadband Communications and Mindspeed Technologies� businesses; the ability to attract and retain qualified personnel; and the uncertainties of litigation, as well as other risks and uncertainties, including those detailed from time to time in the company�s Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
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Conexant and Mindspeed are trademarks of Conexant Systems, Inc.
Other brands and names contained in this release are the property of their respective owners.
Editorial Contact:
Investor Relations Contact:
Gwen Carlson
Conexant Systems, Inc.
(949) 483-7363
Bruce Thomas
Conexant Systems, Inc.
(949) 483-2698
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