UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): January 24, 2008
Conexant Systems, Inc.
(Exact name of registrant as specified in its charter)
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| Delaware
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000-24923
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25-1799439 |
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| (State or other jurisdiction
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(Commission
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(I.R.S. Employer |
| of incorporation)
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File Number)
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Identification No.) |
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| 4000 MacArthur Boulevard, Newport |
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| Beach, California
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92660 |
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| (Address of principal executive offices)
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(Zip Code) |
Registrant’s telephone number, including area code: 949-483-4600
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On January 24 2008, Registrant disclosed its earnings for the first fiscal quarter of 2008 in a
press release and is furnishing a copy of the press release to the Securities and Exchange
Commission under Item 2.02 of this Current Report on Form 8-K. In addition, Registrant will discuss
its financial results during a webcast and teleconference call today at 5:00 p.m. (EST). To access
the webcast and teleconference call, go to Registrant’s website at
http://www.conexant.com/ir.
The press release is attached herewith as Exhibit 99.1 and is incorporated herein by reference.
The non-GAAP financial measures contained in the attached press release are a supplement to the
corresponding financial measures prepared in accordance with generally accepted accounting
principles (GAAP). The non-GAAP financial measures presented exclude non-cash and non-core
operating and non-operating items as described in the GAAP to Non-GAAP Core Adjustments section in
the press release and in the discussion below. The GAAP to Non-GAAP Core Adjustments exclude (i)
recognized gains and losses related to (a) the sale of equity securities, (b) changes in the fair
value of the warrant to purchase shares of Mindspeed Technologies, Inc. common stock, and (c) other
investments accounted for using the equity method of accounting, held as a result of a series of
transactions that transformed the Company from a broad based communications semiconductor supplier
into a family of focused companies serving distinct markets, (ii) restructuring, asset impairment
and other charges related to the Company’s business restructurings and transition of resources to
low cost regions and (iii) non-cash stock-based compensation expense. Management of the Company
believes that the Company’s core results of operations include (iv) the sale of its products and
related costs and gross margin, (v) its on-going cash operating expenses to develop products and
related selling, general and administrative functions, (vi) interest income from its cash and
marketable securities and (vii) its debt service and income tax expense. In addition, the Company
has presented its non-GAAP gross margin and non-GAAP operating income excluding the impact of a
non-recurring revenue that resulted from the buyout of a future royalty stream. Please refer to the
Reconciliation of GAAP Financial Measures to Non-GAAP Core Financial Measures in the press release
for a quantitative reconciliation of these non-GAAP financial measures to the most directly
comparable GAAP measures.
The Company has presented non-GAAP gross margin, non-GAAP total operating expenses, non-GAAP
operating income (loss), non-GAAP net income (loss) and non-GAAP basic and diluted net income
(loss) per share, on a basis consistent with its historical presentation to assist investors in
understanding the Company’s core results of operations on an on-going basis. The non-GAAP financial
measures also enhance comparisons of the Company’s core results of operations with historical
periods. The Company is providing these non-GAAP financial measures to investors to enable them to
perform additional financial analysis and because it is consistent with the financial models and
estimates published by analysts who follow the Company. Management believes that these are
important measures in the evaluation of the Company’s results of operations. Investors should
consider non-GAAP financial measures in addition to, and not as a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures
presented by the Company may be different from non-GAAP financial measures used by other companies.
The Company has presented the following non-GAAP financial measures:
1) Non-GAAP Core gross margin;
The use of this non-GAAP financial measure allows management of the Company to quantify and discuss
the core cost of goods sold and gross margins of the business on an on-going basis. Items excluded
from this non-GAAP financial measure consist of the non-cash and non-core expenses and credits more
fully described in items (a) and (b) in the GAAP to Non-GAAP Core Adjustments section of the press
release. The impact of a non-recurring revenue that resulted from the buyout of a future royalty
stream was excluded from the non-GAAP Core gross margin and is described in item (l) in the GAAP to
Non-GAAP Core Adjustments section in the press release. Management presents non-GAAP gross margin
to enable investors to understand the core on-going cost of goods sold and gross margins of the
Company. Management uses this non-GAAP financial measure in its evaluation of the Company’s core
gross margin and trends between fiscal periods and believes this measure is an important component
of its internal performance measurement process. In addition, the Company prepares and maintains
its budgets and forecasts for future periods on a basis consistent with this non-GAAP financial
measure. This non-GAAP financial measure has certain limitations in that it does not reflect all of
the cost of goods sold related to the Company’s business and may not be indicative of the cash
flows from operations as determined in accordance with GAAP. Management compensates for these
limitations by reviewing the Company’s cash flows from operations which include all costs of goods
sold of the Company.
2) Non-GAAP Core operating expenses:
The use of this non-GAAP financial measure allows management of the Company to quantify and discuss
the core operating expenses of the business on an on-going basis. Items excluded from this non-GAAP
financial measure consist of the non-cash and non-core operating expenses and credits more fully
described in items (a) and (b) through (f) in the GAAP to Non-GAAP Core Adjustments section of the
press release. Management presents non-GAAP operating expenses to enable investors to understand
the core on-going operating expenses of the Company. Management uses this non-GAAP financial
measure in its evaluation of the Company’s core results of operations and trends between fiscal
periods and believes this measure is an important component of its internal performance measurement
process. In addition, the Company prepares and maintains its budgets and forecasts for future
periods on a basis consistent with this non-GAAP financial measure. This non-GAAP financial measure
has certain limitations in that it does not reflect all of the operating costs and other costs and
expenses related to the Company’s business and may not be indicative of the cash flows from
operations as determined in accordance with GAAP. Management compensates for these limitations by
reviewing the Company’s cash flows from operations which include all operating expenses of the
Company.
3) Non-GAAP Core operating income (loss), Non-GAAP Core net income (loss), and Non-GAAP Core basic
and diluted net income (loss) per share:
These non-GAAP financial measures are mathematical subtotals, totals and resultant computations
after considering the non-GAAP adjustments and measures discussed above and in items (g) through
(j) in the GAAP to Non-GAAP Core Adjustments section of the press release. The impact of a
non-recurring revenue that resulted from the buyout of a future royalty stream was excluded from
the non-GAAP Core operating income and is described in item (l) in the GAAP to Non-GAAP Core
Adjustments section in the press release. Management presents these non-GAAP financial measures
to enable investors to understand the core on-going results of operations of the Company.
Management uses these non-GAAP financial measures in its evaluation of the Company’s core results
of operations and trends between fiscal periods and believes these measures are an important
component of its internal performance measurement process. In addition, the Company prepares and
maintains its budgets and forecasts for future periods on a basis consistent with these non-GAAP
financial measures. These non-GAAP financial measures have certain limitations in that they do not
reflect all of the operating costs and other income and expenses related to the Company’s business
and may not be indicative of the cash flows from operations as determined in accordance with GAAP.
Management compensates for these limitations by reviewing the Company’s cash flows from operations
which include all operating costs and other income and expenses of the Company.