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): October 31, 2007
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
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.) |
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4000 MacArthur Boulevard, Newport
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:
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 1.01 Entry into a Material Definitive Agreement.
Conexant Systems, Inc. (the “Company”), Conexant USA, LLC, a wholly owned subsidiary of the Company
(“Conexant USA”), and Wachovia Bank, National Association (“Wachovia”) have amended the Credit and
Security Agreement dated as of November 29, 2005 (the “Credit Agreement”) by and between Conexant
USA and Wachovia. This amendment extends the termination date of the Credit Agreement to November
28, 2008 and correspondingly extends the terms of the Receivables Purchase Agreement and the
Servicing Agreement, each dated as of November 29, 2005, by and between the Company and Conexant
USA. The amendment became effective upon satisfaction of certain conditions precedent, including
Conexant USA’s renewal of its international credit insurance policy, which occurred on October 31,
2007.
Item 2.02 Results of Operations and Financial Condition.
On November 1, 2007, Registrant released its earnings for the fourth 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)
restructuring, asset impairment and other charges related to the Company’s business restructurings
and transition of resources to low cost regions and (iv) 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 (l) 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 (g) and (l) 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 (h) through
(k) and (m) 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.