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): July 26, 2007
Conexant Systems, Inc.
(Exact name of registrant as specified in its charter)
| |
|
|
|
|
| Delaware
|
|
000-24923
|
|
25-1799439 |
|
|
|
|
|
|
(State or other jurisdiction
of incorporation)
|
|
(Commission
File Number)
|
|
(I.R.S. Employer
Identification No.) |
| |
|
|
|
|
4000 MacArthur Boulevard, Newport
Beach, California
|
|
92660 |
| |
|
|
(Address of principal executive offices)
|
|
(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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 2.02 Results of Operations and Financial Condition.
On July 26, 2007, Registrant released its earnings for the third fiscal quarter of 2007 and is
furnishing a copy of the earnings 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) certain non-cash charges related
to the Company’s business combinations, primarily the merger with GlobespanVirata, (iii) one time
charges, integration costs and other expenses related to the Company’s merger with GlobespanVirata,
(iv) restructuring, asset impairment and other charges related to the Company’s business
restructurings and transition of resources to low cost regions and (v) non-cash stock-based
compensation expense. Management of the Company believes that the Company’s core results of
operations include (i) the sale of its products and related costs and gross margin, (ii) its
on-going cash operating expenses to develop products and related selling, general and
administrative functions, (iii) interest income from its cash and marketable securities and (iv)
its debt service and income tax expense. 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), (b) and (k) in the GAAP to
Non-GAAP Core Adjustments section of 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), (c) through (f) and (k) 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. 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.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press Release of Registrant dated July 26, 2007.