Conexant Meets Fourth Fiscal Quarter Expectations and Delivers Full-Year Revenue Growth of 34 Percent


These risks and uncertainties include, but are not limited to: the risk that capital needed for our business and to repay our indebtedness will not be available when needed; the risk that the value of our common stock may be adversely affected by market volatility; general economic and political conditions and conditions in the markets we address; the substantial losses we have incurred; the cyclical nature of the semiconductor industry and the markets addressed by our products and our customers' products; continuing volatility in the technology sector and the semiconductor industry; demand for and market acceptance of our new and existing products; our successful development of new products; the timing of our new product introductions and our product quality; our ability to anticipate trends and develop products for which there will be market demand; the availability of manufacturing capacity; pricing pressures and other competitive factors; changes in our product mix; product obsolescence; the ability of our customers to manage inventory; our ability to develop and implement new technologies and to obtain protection for the related intellectual property; the uncertainties of litigation, including claims of infringement of third-party intellectual property rights or demands that we license third-party technology and the demands it may place on the time and attention of our management and the expense it may place on our company; and possible disruptions in commerce related to terrorist activity or armed conflict, as well as other risks and uncertainties, including those detailed from time to time in our Securities and Exchange Commission filings.

The forward-looking statements are made only as of the date hereof. We undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Conexant is a registered trademark of Conexant Systems, Inc. Other brands and names contained in this release are the property of their respective owners.
                        CONEXANT SYSTEMS, INC.
         GAAP Condensed Consolidated Statements of Operations
         (unaudited, in thousands, except per share amounts)

                        Three Months Ended        Twelve Months Ended
                   ----------------------------- ---------------------

                   Sept. 30, June 30,  Sept. 30, Sept. 30,  Sept. 30,
                     2006      2006      2005      2006       2005
                   ----------------------------- ---------------------

Net revenues       $245,863  $251,635  $214,916   $970,787   $722,739
Cost of goods sold
 (Note 1)           133,385   137,598   128,312    542,309    493,973
Gain on
 cancellation of
 supply agreement
 (Note 2)                --   (17,500)       --    (17,500)        --
                   --------- --------- --------- ---------- ----------
Gross margin        112,478   131,537    86,604    445,978    228,766

Operating
 expenses:
  Research and
   development       70,450    70,096    58,634    269,736    267,996
  Selling, general
   and
   administrative    29,268    27,037    28,412    131,226    117,861
  Amortization of
   intangible
   assets             7,520     7,520     7,920     30,705     32,322
  Special charges
   (Note 3)             865    32,610     4,715     73,244     45,977
                   --------- --------- --------- ---------- ----------
      Total
       operating
       expenses     108,103   137,263    99,681    504,911    464,156
                   --------- --------- --------- ---------- ----------

Operating income
 (loss)               4,375    (5,726)  (13,077)   (58,933)  (235,390)

Interest expense      8,850    10,426     8,401     38,130     33,691
Other expense
 (income), net       16,213    49,907   (72,046)    22,636    (95,413)
                   --------- --------- --------- ---------- ----------

Income (loss)
 before income
 taxes              (20,688)  (66,059)   50,568   (119,699)  (173,668)

Provision for
 income taxes           410     1,031       487      2,892      2,322
                   --------- --------- --------- ---------- ----------

Net income (loss)  $(21,098) $(67,090)  $50,081  $(122,591) $(175,990)
                   ========= ========= ========= ========== ==========

Basic net income
 (loss) per share    $(0.04)   $(0.14)    $0.11     $(0.26)    $(0.37)
                   ========= ========= ========= ========== ==========

Diluted net income
 (loss) per share    $(0.04)   $(0.14)    $0.10     $(0.26)    $(0.37)
                   ========= ========= ========= ========== ==========

Shares used in
 basic per-share
 computations       484,171   481,626   472,828    479,325    470,658
                   ========= ========= ========= ========== ==========

Shares used in
 diluted per-share
 computations       484,171   481,626   484,825    479,325    470,658
                   ========= ========= ========= ========== ==========

Note 1- Includes $44.1 million of net inventory charges during the
 twelve months ended September 30, 2005.

Note 2- During the three months ended June 30, 2006, Conexant and Jazz
 Semiconductor, Inc. terminated a wafer supply and services agreement.
 In lieu of credits towards future purchases of product from Jazz, we
 received an additional investment in Jazz and recorded a gain of
 $17.5 million during the three months ended June 30, 2006 and twelve
 months ended September 30, 2006.

Note 3- Includes charges of $30.0 million and $70.0 million related to
 the litigation with Texas Instruments, Inc. during the three months
 ended June 30, 2006 and the twelve months ended September 30, 2006,
 respectively.

                        CONEXANT SYSTEMS, INC.
Reconciliation of GAAP Financial Measures to Non-GAAP Core Financial
                               Measures
         (unaudited, in thousands, except per share amounts)

                                      Three  Months  Ended                Twelve  Months  Ended
                                      -----------------------------  ---------------------
                                      Sept.  30,  June  30,    Sept.  30,  Sept.  30,    Sept.  30,
                                          2006            2006            2005            2006              2005
                                      -----------------------------  ---------------------

GAAP  gross  margin    $112,478    $131,537      $86,604      $445,978      $228,766
    Stock-based
      compensation
      (a)                                      34                31                --                494                  --
    Gain  on
      cancellation  of
      supply
      agreement  (b)                  --      (17,500)              --        (17,500)                --
    Other  (k)                            --            (245)              --          (1,128)                --
                                      ---------  ---------  ---------  ----------  ----------
Non-GAAP  Core
  gross  margin            $112,512    $113,823      $86,604      $427,844      $228,766
                                      =========  =========  =========  ==========  ==========


GAAP  operating
  expenses                    $108,103    $137,263      $99,681      $504,911      $464,156
    Stock-based
      compensation
      (a)                              (7,667)    (10,145)      (3,019)      (44,451)      (12,046)
    Transitional
      salaries  and
      benefits  (c)                (260)          (792)      (1,207)        (1,954)      (14,960)
    IP  litigation
      support  credits
      (costs)  (d)                      --          1,897        (2,875)      (10,993)      (10,513)
    Amortization  of
      intangible
      assets  (e)                (7,520)      (7,520)      (7,920)      (30,705)      (32,322)
    Special  charges
      (f)                                  (865)    (32,610)      (4,715)      (73,244)      (45,977)
    Other  (k)                            --              277                --            5,792                  --
                                      ---------  ---------  ---------  ----------  ----------
Non-GAAP  Core
  operating
  expenses                      $91,791      $88,370      $79,945      $349,356      $348,338
                                      =========  =========  =========  ==========  ==========


GAAP  operating
  income  (loss)              $4,375      $(5,726)  $(13,077)    $(58,933)  $(235,390)
    Cost  of  goods
      sold
      adjustments  (a-
      b,  k)                                  34      (17,714)              --        (18,134)                --
    Operating
      expense
      adjustments  (a,
      c-f,  k)                      16,312        48,893        19,736        155,555        115,818
                                      ---------  ---------  ---------  ----------  ----------
Non-GAAP  Core
  operating  income
  (loss)                          $20,721      $25,453        $6,659        $78,488    $(119,572)
                                      =========  =========  =========  ==========  ==========


GAAP  net  income
  (loss)                        $(21,098)  $(67,090)    $50,081    $(122,591)  $(175,990)
    Cost  of  goods
      sold
      adjustments  (a-
      b,  k)                                  34      (17,714)              --        (18,134)                --
    Operating
      expense
      adjustments  (a,
      c-f,  k)                      16,312        48,893        19,736        155,555        115,818
    Losses  of  equity
      method
      investments  (g)        4,861              648          2,055            8,164          10,642
    Unrealized
      (gains)  losses
      on  Mindspeed
      warrant  (h)              12,866        35,131      (21,951)        16,666          (7,147)
Gains  on  sales  of
  equity  securities
  (i)                                          --                --      (49,032)        (4,414)      (91,285)
    Impairment  of
      equity
      securities  (j)          1,416        18,456                --          19,872                  --
Other  (k)                                --              285            (576)        (1,725)        (1,233)
                                      ---------  ---------  ---------  ----------  ----------
Non-GAAP  Core  net
  income  (loss)            $14,391      $18,609            $313        $53,393    $(149,195)
                                      =========  =========  =========  ==========  ==========


Basic  net  income
  (loss)  per  share:
    GAAP                              $(0.04)      $(0.14)        $0.11          $(0.26)        $(0.37)
                                      =========  =========  =========  ==========  ==========
    Non-GAAP  Core              $0.03          $0.04          $0.00            $0.11          $(0.32)
                                      =========  =========  =========  ==========  ==========


Diluted  net  income
  (loss)  per  share:
    GAAP                              $(0.04)      $(0.14)        $0.10          $(0.26)        $(0.37)
                                      =========  =========  =========  ==========  ==========
    Non-GAAP  Core
      (l)                                $0.03          $0.04          $0.00            $0.11          $(0.32)
                                      =========  =========  =========  ==========  ==========

                        See  "GAAP  to  Non-GAAP  Core  Adjustments"  below
 


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