Document and Entity Information
Document and Entity Information (USD $) | |||
6 Months Ended
Apr. 02, 2010 | Apr. 30, 2010
| Apr. 03, 2009
| |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | SKYWORKS SOLUTIONS INC | ||
Entity Central Index Key | 0000004127 | ||
Document Type | 10-Q | ||
Document Period End Date | 2010-04-02 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,010 | ||
Document Fiscal Period Focus | Q2 | ||
Current Fiscal Year End Date | --10-02 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $1,467,316,160 | ||
Entity Common Stock, Shares Outstanding | 176,793,291 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) (USD $) | |||||||||||||||||||
In Thousands, except Per Share data | 3 Months Ended
Apr. 02, 2010 | 3 Months Ended
Apr. 03, 2009 | 6 Months Ended
Apr. 02, 2010 | 6 Months Ended
Apr. 03, 2009 | |||||||||||||||
Consolidated Statements of Operations [Abstract] | |||||||||||||||||||
Net revenues | $238,058 | $172,990 | [1] | $483,196 | $383,218 | [1] | |||||||||||||
Cost of goods sold | 138,204 | 108,115 | [1] | 280,788 | 234,476 | [1] | |||||||||||||
Gross profit | 99,854 | 64,875 | [1] | 202,408 | 148,742 | [1] | |||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 32,060 | 28,596 | [1] | 63,849 | 63,240 | [1] | |||||||||||||
Selling, general and administrative | 27,982 | 22,794 | [1] | 54,713 | 49,895 | [1] | |||||||||||||
Amortization of intangible assets | 1,500 | 1,246 | [1] | 3,001 | 2,395 | [1] | |||||||||||||
Restructuring and other charges | 15,982 | [1] | 15,982 | [1] | |||||||||||||||
Total operating expenses | 61,542 | 68,618 | [1] | 121,563 | 131,512 | [1] | |||||||||||||
Operating income (loss) | 38,312 | (3,743) | [1] | 80,845 | 17,230 | [1] | |||||||||||||
Interest expense | (1,183) | (1,897) | [1] | (2,752) | (4,353) | [1] | |||||||||||||
(Loss) gain on early retirement of convertible debt | (73) | (124) | 4,913 | [1] | |||||||||||||||
Other (loss) income, net | (208) | (13) | [1] | (319) | 1,389 | [1] | |||||||||||||
Income (loss) before income taxes | 36,848 | (5,653) | [1] | 77,650 | 19,179 | [1] | |||||||||||||
Provision for income taxes | 9,104 | 25 | [1] | 21,896 | 1,272 | [1] | |||||||||||||
Net income (loss) | $27,744 | ($5,678) | [1] | $55,754 | $17,907 | [1] | |||||||||||||
Per share information: | |||||||||||||||||||
Net income (loss), basic | 0.16 | -0.03 | [1] | 0.32 | 0.11 | [1] | |||||||||||||
Net income (loss), diluted | 0.15 | -0.03 | [1] | 0.31 | 0.11 | [1] | |||||||||||||
Number of weighted-average shares used in per share computations, basic | 174,449 | 165,997 | [1] | 173,583 | 165,426 | [1] | |||||||||||||
Number of weighted-average shares used in per share computations, diluted | 182,924 | 165,997 | [1] | 181,164 | 165,981 | [1] | |||||||||||||
[1]Effective October 3, 2009, we adopted ASC 470-20 - Debt, Debt with Conversions and Other Options ("ASC 470-20") in accordance with GAAP. Our financial statements and the accompanying footnotes for all prior periods presented have been adjusted to reflect the retrospective adoption of this new accounting principle. See Note 7 to the Consolidated Financial Statements for further discussion. |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) (USD $) | |||||||||||||||||||
In Thousands | 6 Months Ended
Apr. 02, 2010 | 12 Months Ended
Oct. 02, 2009 | |||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $405,410 | $364,221 | [1] | ||||||||||||||||
Restricted cash | 6,127 | 5,863 | [1] | ||||||||||||||||
Receivables, net of allowance for doubtful accounts of $3,105 and $2,845, respectively | 107,669 | 115,034 | [1] | ||||||||||||||||
Inventories | 104,421 | 86,097 | [1] | ||||||||||||||||
Prepaids and other current assets | 20,391 | 18,912 | [1] | ||||||||||||||||
Total current assets | 644,018 | 590,127 | [1] | ||||||||||||||||
Property, plant and equipment, net | 174,213 | 162,299 | [1] | ||||||||||||||||
Goodwill | 484,893 | 482,893 | [1] | ||||||||||||||||
Intangible assets, net | 15,244 | 18,245 | [1] | ||||||||||||||||
Deferred tax assets | 76,712 | 89,163 | [1] | ||||||||||||||||
Other assets | 8,389 | 9,864 | [1] | ||||||||||||||||
Total assets | 1,403,469 | 1,352,591 | [1] | ||||||||||||||||
Current liabilities: | |||||||||||||||||||
Short-term debt | 50,000 | 81,865 | [1] | ||||||||||||||||
Accounts payable | 76,597 | 69,098 | [1] | ||||||||||||||||
Accrued compensation and benefits | 29,108 | 29,449 | [1] | ||||||||||||||||
Other current liabilities | 14,508 | 15,831 | [1] | ||||||||||||||||
Total current liabilities | 170,213 | 196,243 | [1] | ||||||||||||||||
Long-term debt, less current maturities | 42,573 | 41,483 | [1] | ||||||||||||||||
Other long-term liabilities | 7,637 | 6,086 | [1] | ||||||||||||||||
Total liabilities | 220,423 | 243,812 | [1] | ||||||||||||||||
Commitments and contingencies (Note 9) | [1] | ||||||||||||||||||
Stockholders' equity: | |||||||||||||||||||
Preferred stock, no par value: 25,000 shares authorized, no shares issued | 0 | 0 | [1] | ||||||||||||||||
Common stock, $0.25 par value: 525,000 shares authorized; 181,980 shares issued and 176,613 shares outstanding at April 2, 2010 and 177,873 shares issued and 172,815 shares outstanding at October 2, 2009 | 44,153 | 43,204 | [1] | ||||||||||||||||
Additional paid-in capital | 1,589,554 | 1,568,416 | [1] | ||||||||||||||||
Treasury stock | (39,881) | (36,307) | [1] | ||||||||||||||||
Accumulated deficit | (409,400) | (465,154) | [1] | ||||||||||||||||
Accumulated other comprehensive loss | (1,380) | (1,380) | [1] | ||||||||||||||||
Total stockholders' equity | 1,183,046 | 1,108,779 | [1] | ||||||||||||||||
Total liabilities and stockholders' equity | $1,403,469 | $1,352,591 | [1] | ||||||||||||||||
[1]Effective October 3, 2009, we adopted ASC 470-20 - Debt, Debt with Conversions and Other Options ("ASC 470-20") in accordance with GAAP. Our financial statements and the accompanying footnotes for all prior periods presented have been adjusted to reflect the retrospective adoption of this new accounting principle. See Note 7 to the Consolidated Financial Statements for further discussion. |
1_Consolidated Balance Sheets (
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | |||||||||||||||||||
In Thousands | Apr. 02, 2010
| Oct. 02, 2009
| |||||||||||||||||
Current assets: | |||||||||||||||||||
Allowance for doubtful accounts | $3,105 | $2,845 | [1] | ||||||||||||||||
Stockholders' equity: | |||||||||||||||||||
Preferred stock, par value | 0 | 0 | [1] | ||||||||||||||||
Preferred stock, shares authorized | 25,000 | 25,000 | [1] | ||||||||||||||||
Preferred stock, shares issued | 0 | 0 | [1] | ||||||||||||||||
Common stock, par value | 0.25 | 0.25 | [1] | ||||||||||||||||
Common stock, shares authorized | 525,000 | 525,000 | [1] | ||||||||||||||||
Common stock, shares issued | 181,980 | 177,873 | [1] | ||||||||||||||||
Common stock, shares outstanding | 176,613 | 172,815 | [1] | ||||||||||||||||
[1]Effective October 3, 2009, we adopted ASC 470-20 - Debt, Debt with Conversions and Other Options ("ASC 470-20") in accordance with GAAP. Our financial statements and the accompanying footnotes for all prior periods presented have been adjusted to reflect the retrospective adoption of this new accounting principle. See Note 7 to the Consolidated Financial Statements for further discussion. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) (USD $) | |||||||||||||||||||
In Thousands | 6 Months Ended
Apr. 02, 2010 | 6 Months Ended
Apr. 03, 2009 | |||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income | $55,754 | $17,907 | [1] | ||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Share-based compensation expense | 16,804 | 10,853 | [1] | ||||||||||||||||
Depreciation | 22,250 | 22,815 | [1] | ||||||||||||||||
Amortization of intangible assets | 3,001 | 2,395 | [1] | ||||||||||||||||
Amortization of deferred financing costs | 134 | 292 | [1] | ||||||||||||||||
Amortization of discount on convertible debt | 1,702 | 2,560 | [1] | ||||||||||||||||
Contribution of common shares to savings and retirement plans | 5,600 | 4,430 | [1] | ||||||||||||||||
Non-cash restructuring expense | 955 | [1] | |||||||||||||||||
Deferred income taxes | 12,430 | 1,239 | [1] | ||||||||||||||||
Loss on disposals of assets | 96 | 47 | [1] | ||||||||||||||||
Inventory write-downs | 3,458 | [1] | |||||||||||||||||
Asset impairments | 5,616 | [1] | |||||||||||||||||
Provision for recoveries on accounts receivable | 260 | 584 | [1] | ||||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||||
Receivables | 7,105 | 33,996 | [1] | ||||||||||||||||
Inventories | (18,366) | 8,369 | [1] | ||||||||||||||||
Other current and long-term assets | (2,118) | (1,577) | [1] | ||||||||||||||||
Accounts payable | 7,499 | (10,429) | [1] | ||||||||||||||||
Other current and long-term liabilities | 1,026 | (3,836) | [1] | ||||||||||||||||
Net cash provided by operating activities | 113,177 | 99,674 | [1] | ||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Capital expenditures | (34,260) | (18,694) | [1] | ||||||||||||||||
Payments for acquisitions | (1,000) | (1,220) | [1] | ||||||||||||||||
Net cash used in investing activities | (35,260) | (19,914) | [1] | ||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Retirement of 2007 Convertible Notes | (32,477) | (34,125) | [1] | ||||||||||||||||
Reacquisition of equity instruments | (15,148) | (9,253) | [1] | ||||||||||||||||
Change in restricted cash | (265) | ||||||||||||||||||
Repurchase of common stock | (3,574) | (1,850) | [1] | ||||||||||||||||
Net proceeds from exercise of stock options | 14,736 | 2,315 | [1] | ||||||||||||||||
Net cash used in financing activities | (36,728) | (42,913) | [1] | ||||||||||||||||
Net increase in cash and cash equivalents | 41,189 | 36,847 | [1] | ||||||||||||||||
Cash and cash equivalents at beginning of period | 364,221 | [1] | 225,104 | [1] | |||||||||||||||
Cash and cash equivalents at end of period | 405,410 | 261,951 | [1] | ||||||||||||||||
Supplemental cash flow disclosures: | |||||||||||||||||||
Taxes paid | 11,518 | 510 | [1] | ||||||||||||||||
Interest paid | $669 | $1,225 | [1] | ||||||||||||||||
[1]Effective October 3, 2009, we adopted ASC 470-20 - Debt, Debt with Conversions and Other Options ("ASC 470-20") in accordance with GAAP. Our financial statements and the accompanying footnotes for all prior periods presented have been adjusted to reflect the retrospective adoption of this new accounting principle. See Note 7 to the Consolidated Financial Statements for further discussion. |
Description of Business and Bas
Description of Business and Basis of Presentation | |
6 Months Ended
Apr. 02, 2010 | |
Description of Business and Basis of Presentation [Abstract] | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Skyworks Solutions, Inc. together with its consolidated subsidiaries, (Skyworks or the Company) is an innovator of high reliability analog and mixed signal semiconductors. Leveraging core technologies, Skyworks offers diverse standard and custom linear products supporting automotive, broadband, cellular infrastructure, energy management, industrial, medical, military and cellular handset applications. The Companys portfolio includes amplifiers, attenuators, detectors, diodes, directional couplers, front-end modules, hybrids, infrastructure RF subsystems, mixers/demodulators, phase shifters, PLLs/synthesizers/VCOs, power dividers/combiners, receivers, switches and technical ceramics. The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) for interim financial reporting. Certain information and footnote disclosures, normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), have been condensed or omitted pursuant to those rules and regulations. However, in the opinion of management, the financial information reflects all adjustments, consisting of adjustments of a normal recurring nature necessary to present fairly the financial position, results of operations, and cash flows of the Company for the periods presented. The results of operations for the three and six-month periods ended April2, 2010 are not necessarily indicative of the results to be expected for the full year. This information should be read in conjunction with the Companys financial statements and notes thereto contained in the Companys Form 10-K for the fiscal year ended October2, 2009 as filed with the SEC. The Company evaluates its estimates on an ongoing basis using historical experience and other factors, including the current economic environment. The current volatility in the capital markets and the global economy has increased the uncertainty in our estimates, including our estimates impacting marketable securities and long-lived assets. Significant judgment is required in determining the fair value of marketable securities in inactive markets as well as determining when declines in fair value constitute an other-than-temporary impairment. In addition, significant judgment is required in determining whether a potential indicator of impairment of our long-lived assets exists and in estimating future cash flows for any necessary impairment tests. As future events unfold and their effects cannot be determined with precision, actual results could differ significantly from managements estimates. The Companys fiscal year ends each year on the Friday closest to September30. Fiscal 2010 consists of 52weeks and ends on October1, 2010. Fiscal 2009 consisted of 52weeks and ended on October2, 2009. The second quarters of fiscal 2010 and fiscal 2009 each consisted of 13weeks and ended on April2, 2010 and April3, 2009, respectively. |
Marketable Securities
Marketable Securities | |
6 Months Ended
Apr. 02, 2010 | |
Marketable Securities [Abstract] | |
MARKETABLE SECURITIES | 2. MARKETABLE SECURITIES The Company accounts for its investment in debt and equity securities in accordance with ASC 320-Investments-Debt and Equity Securities, and classifies them as available for sale. At April 2, 2010, these securities consisted of $3.2million in auction rate securities (ARS), which are long-term debt instruments that provide liquidity through a Dutch auction process that resets interest rates each period. The uncertainties in the credit markets have caused the ARS to become illiquid, resulting in failed auctions. During the fiscal year ended October3, 2008, the Company performed a comprehensive valuation and discounted cash flow analysis on the ARS. The Company concluded the value of the ARS was $2.3 million, thus the carrying value of these securities was reduced by $0.9million, reflecting this change in fair value. The Company assessed the decline in fair value to be temporary and recorded this reduction in shareholders equity in accumulated other comprehensive loss. The Company will continue to closely monitor the ARS and evaluate the appropriate accounting treatment in each reporting period. If in a future period, the Company determines that the impairment is other than temporary, the Company will impair the security to its fair value and charge the loss to earnings. Conversely, if the fair value of the ARS increases in a future period the Company will write up the security to that fair value. The Company holds no other auction rate securities. |
Financial Instruments
Financial Instruments | |
6 Months Ended
Apr. 02, 2010 | |
Financial Instruments [Abstract] | |
FINANCIAL INSTRUMENTS | 3. FINANCIAL INSTRUMENTS Fair Value of Financial Instruments On October4, 2008, the Company adopted ASC 820-Fair Value Measurements and Disclosure (ASC 820) for financial assets and liabilities measured at fair value. The Company adopted ASC 820-10-55 for non-financial assets and liabilities including intangible assets and reporting units measured at fair value in the first step of a goodwill impairment test on October3, 2009. In accordance with ASC 820, the Company groups its financial assets and liabilities measured at fair value on a recurring basis in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: Level 1 Valuation is based upon quoted market price for identical instruments traded in active markets. Level 2 Valuation is based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 3 Valuation is generated from model-based techniques that use significant assumptions not observable in the market. Valuation techniques include use of discounted cash flow models and similar techniques. The Company has cash equivalents classified as Level 1 and has no Level 2 assets. The Companys ARS discussed in Note 2, Marketable Securities, are classified as Level 3 assets. There have been no transfers between Level 1, Level 2 or Level 3 assets during the three and six-month periods ended April2, 2010. There have been no purchases, sales, issuances or settlements of the marketable securities classified as Level 3 assets during the three and six-month periods ended April2, 2010. Financial Instruments Measured at Fair Value on a Recurring Basis The following table presents the balances of cash equivalents and marketable securities measured at fair value on a recurring basis as of April2, 2010 (in thousands): Fair Value Measurements Quoted Prices in Significant Significant Active Markets for Other Unobservable Identical Assets Observable Inputs Inputs Total (Level 1) (Level 2) (Level 3) Cash equivalents: Money market/repurchase agreements $ 391,780 $ 391,780 $ $ Auction rate security 2,288 2,288 Total $ 394,068 $ 391,780 $ $ 2,288 Financial Instruments Measured at Fair Value on a Nonrecurring Basis The Companys non-financial assets, such as goodwill, intangible assets, and property and equipment are measured at fair value at the date of acquisition and when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized. There was no impairment recognized during the three or six-month periods ended April2, 2010. |
Inventories
Inventories | |
6 Months Ended
Apr. 02, 2010 | |
Inventories [Abstract] | |
INVENTORIES | 4. INVENTORIES Inventories consist of the following (in thousands): April 2, October 2, 2010 2009 Raw materials $ 9,193 $ 9,889 Work-in-process 60,851 56,074 Finished goods 24,062 12,950 Finished goods held on consignment by customers 10,315 7,184 Total inventories $ 104,421 $ 86,097 |
Property Plant and Equipment
Property Plant and Equipment | |
6 Months Ended
Apr. 02, 2010 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following (in thousands): April 2, October 2, 2010 2009 Land $ 9,423 $ 9,423 Land and leasehold improvements 5,316 5,063 Buildings 40,104 39,992 Furniture and fixtures 24,711 24,450 Machinery and equipment 427,994 393,566 Construction in progress 17,155 19,209 Total property, plant and equipment, gross 524,703 491,703 Accumulated depreciation and amortization (350,490 ) (329,404 ) Total property, plant and equipment, net $ 174,213 $ 162,299 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | |
6 Months Ended
Apr. 02, 2010 | |
Goodwill and Intangible Assets [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | 6. GOODWILL AND INTANGIBLE ASSETS Goodwill and intangible assets consist of the following (in thousands): Weighted April 2, 2010 October 2, 2009 Average Gross Net Gross Net Amortization Carrying Accumulated Carrying Carrying Accumulated Carrying Period (Years) Amount Amortization Amount Amount Amortization Amount Goodwill $ 484,893 $ $ 484,893 $ 482,893 $ $ 482,893 Amortized intangible assets: Developed technology 5-10 $ 13,750 $ (9,813 ) 3,937 $ 13,750 $ (8,899 ) $ 4,851 Customer relationships 5-10 21,510 (14,296 ) 7,214 21,510 (12,697 ) 8,813 Patents 3 2,417 (1,593 ) 824 2,417 (1,105 ) 1,312 Other 0.5-3 3,549 (3,549 ) 3,549 (3,549 ) Amortized intangible assets 41,226 (29,251 ) 11,975 41,226 (26,250 ) 14,976 Unamortized intangible assets: Trademarks 3,269 3,269 3,269 3,269 Total intangible assets $ 44,495 $ (29,251 ) $ 15,244 $ 44,495 $ (26,250 ) $ 18,245 Amortization expense related to intangible assets are as follows (in thousands): Three-months Ended Six-months Ended April 2, April 3, April 2, April 3, 2010 2009 2010 2009 Amortization expense $ 1,500 $ 1,246 $3,001 $2,395 The changes in the gross carrying amount of goodwill and intangible assets are as follows (in thousands): Developed Customer Patents and Goodwill Technology Relationships Other Trademarks Total Balance as of October2, 2009 $ 482,893 $ 13,750 $ 21,510 $ 5,966 $ 3,269 $ 527,388 Additions during period 2,000 2,000 Balance as of April2, 2010 $ 484,893 $ 13,750 $ 21,510 $ 5,966 $ 3,269 $ 529,388 The Company tests its goodwill for impairment annually as of the first day of its fourth fiscal quarter and in interim periods if certain events occur indicating that the carrying value of goodwill may be impaired. Annual amortization expense related to intangible assets for the next five years is expected to be as follows (in thousands): 2010 2011 2012 2013 2014 Amortization expense $ 6,002 $ 5,052 $ 3,783 $ 139 $ |
Borrowing Arrangements
Borrowing Arrangements | |
6 Months Ended
Apr. 02, 2010 | |
Borrowing Arrangements [Abstract] | |
BORROWING ARRANGEMENTS | 7. BORROWING ARRANGEMENTS Long-Term Debt Long-term debt consists of the following (in thousands): April 2, October 2, 2010 2009 2007 Convertible Notes $ 42,573 $ 73,348 Less-current maturities 31,865 Total long-term debt $ 42,573 $ 41,483 On March2, 2007, the Company issued $200.0million aggregate principal amount of convertible subordinated notes (2007 Convertible Notes). The offering contained two tranches. The first tranche consisted of $100.0million of 1.25% convertible subordinated notes due March2010 (the 1.25% Notes). The Company cash settled the remaining principal balance on the 1.25% Notes ($27.6 million) during the quarter ended April 2, 2010. The second tranche consisted of $100.0million aggregate principal amount of 1.50% convertible subordinated notes due March2012 (the 1.50% Notes). The Company pays interest in cash semi-annually in arrears on March 1 and September 1 of each year. The conversion price of the 1.50% Notes is 105.0696 shares per $1,000 principal amount of notes to be redeemed, which is the equivalent of a conversion price of approximately $9.52 per share, plus accrued and unpaid interest, if any, to the conversion date. Holders of the 1.50% Notes may require the Company to repurchase the 2007 Convertible Notes upon a change in control of the Company. On October3, 2009, the Company adopted ASC 470-20 Debt, Debt with Conversions and Other Options (ASC 470-20). ASC 470-20 requires the issuer of convertible debt instruments with cash settlement features to separately account for the liability and equity components of the convertible debt instrument and requires retrospective application to all periods presented in the financial statements to which it is applicable. ASC 470-20 applies to the Companys 2007 Convertible Notes. Using a non-convertible borrowing rate of 6.86%, the Company estimated the fair value of the liability components of the 1.50% Notes to be $77.3million. As of the issuance date, the difference between the fair value of the liability component of the 1.50% Notes and the corresponding aggregate principal amount of such notes which is equal to the fair value of the equity component of such notes ($22.7million for the 1.50% Notes), was retrospectively recorded as a debt discount and as an increase to additional paid-in capital, net of tax. The discount of the liability component of the 1.50% Notes is being amortized over the respective terms of such notes. During the six-month period ended April2, 2010, the Company redeemed in full the aggregate principal amount of $32.6million of the 1.25% Notes at a cash premium of $15.1million. After applying ASC 470-20, the Company recorded a loss on the transactions of approximately $0.1million (including commissions and deferred financing). The following tables provide additional information about the Companys 2007 Convertible Notes (in thousands): April 2, October 2, 2010 2009 Carrying amount of the equity component of the convertible notes outstanding $8,471 $6,487 Principal amount of the |
Income Taxes
Income Taxes | |
6 Months Ended
Apr. 02, 2010 | |
Income Taxes [Abstract] | |
INCOME TAXES | 8. INCOME TAXES The Company recorded tax provisions of $9.1million and $21.9million for the three and six-month periods ended April2, 2010, and $0.0million and $1.3million for the three and six-month periods ended April3, 2009, respectively. The Companys effective tax rates were 24.7% and 28.2% for the three and six-month periods ended April2, 2010, and 0.4% and 6.6% for the three and six-month periods ended April3, 2009, respectively. For the three and six-month periods ended April2, 2010, the difference between the Companys effective tax rate and the 35% federal statutory rate resulted primarily from expected foreign earnings for fiscal year 2010 taxed at rates lower than the federal statutory rate and the change in assessment as to reinvestment of earnings to United States deferred taxes related to the transfer of assets to an affiliated foreign company. For the three and six-month periods ended April3, 2009, the difference between the Companys effective tax rate and the 35% federal statutory rate resulted primarily from a tax benefit related to a reduction in the federal and state deferred tax asset valuation allowance, and from foreign earnings taxed at rates lower than the federal statutory rate. As noted in the Companys most recent Annual Report on Form 10-K, filed with the SEC on November 30, 2009, as amended on February1, 2010, no benefit has been recognized for certain acquisition related deferred tax assets. The benefit from the recognition of these deferred items reduces the carrying value of goodwill instead of reducing income tax expense. The Company will evaluate the realization of the acquisition related deferred tax assets on a quarterly basis and adjust the provision for income taxes accordingly. As a result, the effective tax rate may vary in subsequent quarters. The Company utilizes the asset and liability method of accounting for income taxes as set forth in ASC 740 Income Taxes (formerly referenced as Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109) (ASC 740). Under the asset and liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In accordance with GAAP, management has determined that it is more likely than not that a portion of the Companys historic and current year income tax benefits will not be realized. Accordingly, as of April2, 2010, the Company has maintained a valuation allowance of $25.0million related to certain of its United States deferred tax assets. Deferred tax assets are also recognized for foreign operations when management believes that it is more likely than not that they will be recovered during the carryforward period. Management has also previously determined that it is more likely than not that a portion of the Companys foreign income tax benefits w |
Commitments and Contingencies
Commitments and Contingencies | |
6 Months Ended
Apr. 02, 2010 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 9. COMMITMENTS AND CONTINGENCIES Legal Matters From time to time, various lawsuits, claims and proceedings have been, and may in the future be, instituted or asserted against the Company, including those pertaining to patent infringement, intellectual property, environmental, product liability, safety and health, employment and contractual matters. Additionally, the semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights. From time to time, third parties have asserted and may in the future assert patent, copyright, trademark and other intellectual property rights to technologies that are important to the Companys business and have demanded and may in the future demand that the Company license their technology. The outcome of any such litigation cannot be predicted with certainty and some such lawsuits, claims or proceedings may be disposed of unfavorably to the Company. Generally speaking, intellectual property disputes often have a risk of injunctive relief, which, if imposed against the Company, could materially and adversely affect the Companys financial condition, or results of operations. From time to time the Company is also involved in legal proceedings in the ordinary course of business. The Company believes that there is no litigation pending that will have, individually or in the aggregate, a material adverse effect on its business. Guarantees and Indemnifications The Company has made no contractual guarantees for the benefit of third parties. However, the Company generally indemnifies its customers from third-party intellectual property infringement litigation claims related to its products, and, on occasion, also provides other indemnities related to product sales. In connection with certain facility leases, the Company has indemnified its lessors for certain claims arising from the facility or the lease. The Company indemnifies its directors and officers to the maximum extent permitted under the laws of the state of Delaware. The duration of the indemnities varies, and in many cases is indefinite. The indemnities to customers in connection with product sales generally are subject to limits based upon the amount of the related product sales and in many cases are subject to geographic and other restrictions. In certain instances, the Companys indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. The Company has not recorded any liability for these indemnities in the accompanying consolidated balance sheets and does not expect that such obligations will have a material adverse impact on its financial condition or results of operations. |
Restructuring
Restructuring | |
6 Months Ended
Apr. 02, 2010 | |
Restructuring [Abstract] | |
RESTRUCTURING | 10. RESTRUCTURING 2009 RESTRUCTURING CHARGES AND OTHER On January22, 2009, the Company implemented a restructuring plan to realign its costs given current business conditions. The Company exited its mobile transceiver product area and reduced global headcount by approximately 4%, or 150 employees. The Company recorded various charges associated with this action. In total, the Company recorded $16.0million of restructuring and other charges and $3.5 million in inventory write-downs that were charged to cost of goods sold. The $16.0million restructuring charge includes the following charges: severance and employee benefits associated with termination, impairment of certain long-lived assets which were written down to their salvage values, the exit of certain operating leases, the impairment of technology licenses and design software, and other charges. The Company made cash payments related to the restructuring plan of $0.3million and $1.1million during the three and six-month periods ended April2, 2010, respectively. Activity and liability balances related to the fiscal 2009 restructuring actions are as follows (in thousands): License and Facility Software Write- Workforce Asset Closings offs and Other Reductions Impairments Total Charged to costs and expenses $ 1,967 $ 3,892 $ 4,507 $ 5,616 $ 15,982 Other 9 (368 ) 161 (198 ) Non-cash items (955 ) (5,616 ) (6,571 ) Cash payments (766 ) (983 ) (4,185 ) (5,934 ) Restructuring balance, October2, 2009 1,210 1,586 483 3,279 Cash payments (452 ) (372 ) (231 ) (1,055 ) Restructuring balance, April2, 2010 $ 758 $ 1,214 $ 252 $ $ 2,224 The remaining restructuring reserve at April2, 2010 of $2.2million is classified as other current liabilities. The Company anticipates the restructuring plan will be substantially completed by the end of fiscal year 2010. |
Segment Information
Segment Information | |
6 Months Ended
Apr. 02, 2010 | |
Segment Information [Abstract] | |
SEGMENT INFORMATION | 11. SEGMENT INFORMATION The Company follows ASC 280-Segment Reporting (ASC 280). ASC 280 establishes standards for the way public business enterprises report information about operating segments in annual financial statements and in interim reports to shareholders. The method for determining what information to report is based on the way that management organizes the segments within the Company for making operating decisions and assessing financial performance. Based on the guidance in ASC 280, the Company has one operating segment for financial reporting purposes, which designs, develops, manufactures and markets proprietary semiconductor products, including intellectual property, for manufacturers of wireless communication products. |
Employee Stock Benefit Plans
Employee Stock Benefit Plans | |
6 Months Ended
Apr. 02, 2010 | |
Employee Stock Benefit Plans [Abstract] | |
EMPLOYEE STOCK BENEFIT PLANS | 12. EMPLOYEE STOCK BENEFIT PLANS Net income for the three-month periods ended April2, 2010 and April3, 2009 included share-based compensation expense under ASC 718-Compensation-Stock Compensation (ASC 718) of $8.7million and $4.3million, respectively. Net income for the six-month periods ended April2, 2010 and April3, 2009 included share-based compensation expense under ASC 718 of $16.8million and $10.8million, respectively. The following table summarizes share-based compensation expense related to employee stock options, restricted stock grants, performance stock grants, employee stock purchases, and management incentive compensation under ASC 718 for the three and six-month periods ended April2, 2010 and April3, 2009, which were allocated as follows: Three-months Ended Six-months Ended April 2, April 3, April 2, April 3, (In thousands) 2010 2009 2010 2009 Stock options $ 4,260 $ 2,544 $ 8,178 $ 5,410 Non-vested restricted stock with service and market conditions 31 293 689 2,645 Non-vested restricted stock with service conditions 206 237 413 530 Performance shares 3,777 801 6,644 1,451 Employee Stock Purchase Plan 446 389 880 817 Total share-based compensation expense $ 8,720 $ 4,264 $ 16,804 $ 10,853 The Company utilized the following weighted average assumptions in calculating its share-based compensation expense using the Black Scholes model at April2, 2010 and April3, 2009: As of April 2, April 3, 2010 2009 Expected volatility 56.19 % 60.90 % Risk free interest rate (7year contractual life options) 2.02 % 2.17 % Dividend yield 0.00 0.00 Expected option life (7year contractual life options) 4.23 4.42 |
Earnings Per Share
Earnings Per Share | |
6 Months Ended
Apr. 02, 2010 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 13. EARNINGS PER SHARE Three-months Ended Six-months Ended April 2, April 3, April 2, April 3, (In thousands, except per share amounts) 2010 2009 2010 2009 Net income (loss) $ 27,744 $ (5,678 ) $ 55,754 $ 17,907 Weighted average shares outstanding basic 174,449 165,997 173,583 165,426 Effect of dilutive convertible debt 2,169 2,079 Effect of dilutive stock options 6,306 5,502 555 Weighted average shares outstanding diluted 182,924 165,997 181,164 165,981 Net income (loss)per share basic $ 0.16 $ (0.03 ) $ 0.32 $ 0.11 Effect of dilutive convertible debt Effect of dilutive stock options (0.01 ) (0.01 ) Net income (loss)per share diluted $ 0.15 $ (0.03 ) $ 0.31 $ 0.11 Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share includes the dilutive effect of equity based awards using the treasury stock method and the 2007 Convertible Notes using the treasury stock method, if their effect is dilutive. Equity based awards exercisable for approximately 5.8million shares and 5.9million shares were outstanding but not included in the computation of earnings per share for the three and six-month periods ended April2, 2010, respectively, as their effect would have been anti-dilutive. Equity based awards exercisable for approximately 22.0million shares and 23.3million shares were outstanding but not included in the computation of earnings per share for the three and six-month periods ended April3, 2009, respectively, as their effect would have been anti-dilutive. In addition, the Company issued $200.0million aggregate principal amount of convertible subordinated notes in March2007. These 2007 Convertible Notes contain cash settlement provisions, which permit the application of the treasury stock method in determining potential share dilution of the conversion spread should the share price of the Companys common stock exceed $9.52. It has been the Companys historical practice to cash settle the principal and interest components of convertible debt instruments, and it is our intention to continue to do so in the future. The Company retired $27.6million and $32.6million of aggregate principal amount of the 2007 Convertible Notes in the three and six-month periods ended April2, 2010, respectively. The Company retired $0.0million and $40.5million of aggregate principal amount of the 2007 Convertible Notes in the three and six-month periods ended April3, 2009, respectively. These shares have not been included in the computation of earnings per share for the three and six-month periods ended April3, 2009 as their effect would have been anti-dilutive. The maximum potential dilution from the settlement of the 2007 Con |