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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 22, 1999 (July 21, 1999)
CONEXANT SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 000-24923 25-1799439
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
4311 Jamboree Road, Newport Beach, California 92660-3095
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (949) 483-4600
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
Registrant's press release dated July 21, 1999 is filed herewith as
Exhibit 20 and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
20 Press release of Registrant dated July 21, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONEXANT SYSTEMS, INC.
(Registrant)
By /s/ BALAKRISHNAN S. IYER
---------------------------------
Balakrishnan S.Iyer
Senior Vice President and
Chief Financial Officer
Dated: July 22, 1999
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EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
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20 Press release of Registrant dated July 21, 1999.
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EXHIBIT 20.1
[LETTERHEAD OF CONEXANT SYSTEMS, INC.]
Editorial contact: Investor relations contact:
Tom Stites Mike Cortright
Conexant Systems, Inc. Conexant Systems, Inc.
(949) 483-1492 (949) 483-6773
[email protected] [email protected]
CONEXANT ANNOUNCES SEQUENTIAL REVENUE GROWTH OF
20 PERCENT WITH THIRD QUARTER RESULTS
Expansion business revenues up 35 percent sequentially
NEWPORT BEACH, CALIF., JULY 21, 1999 - Conexant Systems, Inc. (NASDAQ:CNXT),
today announced revenues of $380.3 million for the third fiscal quarter ended
June 30, 1999, up 20 percent sequentially over the $316.9 million in revenues
reported for the second quarter of fiscal 1999. Net income for the quarter
increased 220 percent to $24.4 million, or $0.24 per diluted share, compared to
net income of $7.6 million, or $0.08 per diluted share, in the prior quarter.
Revenues were up 37 percent over the $277.8 million in the third
quarter of fiscal 1998. In the period a year ago, the company incurred a net
loss of $33.4 million, or $0.34 per share on a pro-forma basis.
"With sequential increases of 20 percent in revenue and more than 200
percent in profit, we are obviously pleased," said Dwight W. Decker, chairman
and chief executive officer of Conexant. "We are especially gratified by the
performance of our four expansion businesses: the Network Access, Digital
Infotainment, Personal Imaging and Wireless Communications divisions, which in
total grew 35 percent sequentially and 67 percent year-over-year. In addition,
for the third quarter in a row, our Personal Computing Division delivered solid
results and outperformed the market for analog modems."
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Conexant Announces Sequential Revenue Growth Of 20 Percent With
Third Quarter Results
Network Access revenues were up 76 percent sequentially to $82.6
million, fueled by the continuing expansion of the worldwide Internet
infrastructure. The division had record shipments across all three product
segments: broadband access devices including the ZipWire(TM) digital subscriber
line (DSL) family, AnyPort(TM) multi-service access chipsets, and wide area
network (WAN) transport including T1/E1 and asynchronous transfer mode (ATM)
solutions.
Wireless Communications revenues were up 23 percent sequentially to
$70.0 million, driven by unprecedented demand for power amplifiers and radio
frequency products for cellular phones, and strong seasonal demand for digital
spread-spectrum cordless telephone chipsets.
Revenues from Digital Infotainment increased 12 percent sequentially to
$47.9 million, led by demand for satellite set-top box tuners and demodulators,
video encoders for DVD and set-top boxes, and video decoders for TV in the PC
applications.
Personal Imaging revenues were up 23 percent sequentially to $25.4
million, with strong demand for fax products, and an increasing penetration of
the multifunction peripheral (MFP) market.
Personal Computing revenues increased 3 percent sequentially to $154.5
million dollars, with record PC modem shipments. The growth drivers were strong
sales of PC retail aftermarket products, especially in Europe and Asia, and
increased demand for software-based solutions for the rapidly expanding
sub-$1,000 market.
"I am enormously pleased by the performance our team has delivered this
quarter. In particular, our Network Access and Wireless Communications
businesses have now each surpassed a quarter-of-a-billion-dollar annualized
revenue run rate. Our current results demonstrate the significant progress we
are making in strengthening our positions in the wireline and wireless
communications industry, executing on our key product development initiatives
and improving our operating performance," Decker said.
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Conexant Announces Sequential Revenue Growth Of 20 Percent With
Third Quarter Results
"Based on current design wins and sales order momentum, we anticipate
top line sequential growth in excess of 10 percent for the fourth quarter. More
specifically, we expect aggregate sequential revenue growth to exceed 15 percent
for our expansion platform businesses, with a continuation of modest sequential
growth from the Personal Computing platform. We anticipate gross margins in the
range of 43-45 percent, and expect operating expenses to remain at current
levels as a percent of revenue. As a result, we expect to again deliver a
sequential improvement in operating margins in the current quarter," Decker
added.
THIRD QUARTER PRODUCT HIGHLIGHTS
o The Network Access Division introduced the ZipWire2(TM), the industry's
first high-bit-rate digital subscriber line 2 (HDSL2) standard-based
chipset solution delivering up to 4.6 megabits per second (Mbps) for
high-speed Internet access over a single pair of telephone wires.
o The Wireless Communications Division commenced volume shipments of
dual-band power amplifiers for Global System for Mobile Communications
(GSM) digital cellular phones. It also announced the Garnet(TM) power
management integrated circuit for Code Division Multiple Access (CDMA)
digital cellular phones that integrates into a single device most of the
power-supply functions that enable longer talk and standby times.
o The Digital Infotainment Division demonstrated the industry's first
programmable single-chip cable modem at the National Cable Television
Association trade show. InfoSurge(TM) is the most highly integrated cable
modem device in the industry.
o The Personal Imaging Division announced that Brother Industries had
selected the MFC1000 complete multifunction peripheral (MFP) system
solution for its new MFC-7050C MFP product. Conexant's MFC1000 enables
high-quality color inkjet printing, scan, copy, fax, voice messaging and
PC-fax functionality.
o The Personal Computing Division announced a 1Mbps home networking
Universal Serial Bus (USB) chipset solution. It also announced a home
networking cross-licensing agreement with Epigram for next-generation 10
Mbps technology.
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Conexant Announces Sequential Revenue Growth Of 20 Percent With
Third Quarter Results
SAFE HARBOR STATEMENT
This press release contains statements relating to future results of
the company (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: global and market conditions, including, but
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 and extent
of utilization of manufacturing capacity; pricing pressures and other
competitive factors; changes in product mix; fluctuations in manufacturing
yields; 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 diversification strategy; labor
relations of the company, its customers and suppliers; timely completion of Year
2000 modifications by the company and its key suppliers and customers; and the
uncertainties of litigation, as well as other risks and uncertainties, including
but not limited to 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. Other brands and names contained in this release are
the property of their respective owners.
Conexant Systems Inc. is the $1.2 billion company that was created when
Rockwell International spun off its semiconductor systems business to
shareowners in December 1998. Conexant is the world's largest independent
company focused exclusively on providing semiconductor products for
communications electronics. With more than 30 years of experience in developing
communications technology, the company draws upon its expertise in mixed-signal
processing to deliver integrated systems and semiconductor products for a broad
range of communications applications. These products facilitate communications
worldwide through wireline voice and data communications networks, cordless and
cellular wireless telephony systems, personal imaging devices and equipment, and
emerging cable and wireless broadband communications networks. The company
aligns its business into five product platforms: Network Access, Wireless
Communications, Digital Infotainment, Personal Imaging, and Personal Computing.
Conexant is a member of the Nasdaq-100 Index, which represents the largest and
most active stocks listed on The Nasdaq Stock Market across major industry
groups.
# # #
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CONEXANT SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except for per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED,
-----------------------------------------
6/30/99 3/31/99 6/30/98(a)
--------- --------- ----------
<S> <C> <C> <C>
NET REVENUE $ 380,330 $ 316,932 $ 277,807
Cost of goods sold 216,114 186,677 183,497
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GROSS MARGIN 164,216 130,255 94,310
Research & development 77,927 68,802 90,802
Selling, general & administrative 52,163 48,893 62,895
Amortization of intangibles 2,059 2,063 2,771
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OPERATING EARNINGS (LOSS) 32,067 10,497 (62,158)
Other income, net 2,772 383 751
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INCOME (LOSS) BEFORE INCOME TAXES 34,839 10,880 (61,407)
Provision (benefit) for income taxes 10,449 3,263 (27,989)
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NET INCOME (LOSS) $ 24,390 $ 7,617 $ (33,418)
========= ========= =========
Earnings per share:
Basic $ 0.25 $ 0.08
Diluted $ 0.24 $ 0.08
Weighted average shares:
Basic 95,785 94,979
Diluted 103,202 97,732
Pro forma, basic and diluted:
Loss per share $ (0.34)
Weighted average shares 97,700
</TABLE>
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(a) Certain reclassification entries have been made to the prior period for
consistency purposes.
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CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
<TABLE>
<CAPTION>
6/30/99 3/31/99 9/30/98
----------- ----------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 411,741 $ 159,099 $ 14,000
Accounts receivable 181,739 145,961 166,386
Inventories 190,268 146,661 200,926
Assets held for disposal -- -- 42,346
Other current assets 116,949 101,523 163,294
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TOTAL CURRENT ASSETS 900,697 553,244 586,952
Property, plant & equipment, net 638,648 651,074 713,400
Other assets 116,648 112,200 118,178
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TOTAL ASSETS $1,655,993 $1,316,518 $1,418,530
========== ========== ==========
TOTAL CURRENT LIABILITIES $ 268,799 $ 314,361 $ 330,263
OTHER LONG-TERM OBLIGATIONS 436,975 90,833 78,892
TOTAL SHAREHOLDERS' EQUITY 950,219 911,324 1,009,375
---------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,655,993 $1,316,518 $1,418,530
========== ========== ==========
</TABLE>
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CONEXANT SYSTEMS, INC.
SELECTED CORPORATE DATA
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED,
----------------------------------------------------------------------------
6/30/99 3/31/99 6/30/98
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% of % of % of
BUSINESS PLATFORM OVERVIEW Revenue Revenue Revenue Revenue Revenue Revenue
- -------------------------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Personal Computing 41% $154,416 47% $149,557 51% $142,751
Personal Imaging 7% 25,398 7% 20,611 8% 21,951
Digital Infotainment 12% 47,868 13% 42,644 12% 32,508
Network Access 22% 82,601 15% 47,021 14% 38,941
Wireless Communications 18% 70,047 18% 57,099 15% 41,656
REVENUE BY REGION
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Americas 43% $162,740 32% $102,044 43% $119,952
Europe 8% 31,637 11% 33,794 12% 34,141
Japan 11% 41,278 13% 41,318 12% 31,793
Asia-Pacific 38% 144,675 44% 139,776 33% 91,921
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED,
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OTHER DATA 6/30/99 3/31/99 6/30/98
- ---------- ------- ------- -------
<S> <C> <C> <C>
Depreciation and Amortization $52,932 $52,422 $62,034
Capital Expenditures 42,064 18,522 62,894
</TABLE>
