GAAP to Non-GAAP Core Adjustments:
(a) Stock-based compensation expense is based on the fair value of all stock options and employee stock purchase plan shares in accordance with SFAS No. 123(R).
(b) Amortization of intangible assets resulting from business combinations.
(c) Gain on sale of intellectual property which is not part of our core, on-going operations.
(d) Special charges consist primarily of restructuring charges. Special charges in the nine fiscal months ended July 3, 2009 also include a $3.7 million charge related to a legal settlement. Special charges in the fiscal quarter and nine fiscal months ended June 27, 2008 include a $6.3 million charge related to the termination of our voluntary early retirement plan.
(e) The fiscal quarter ended January 2, 2009 and nine fiscal months ended July 3, 2009 include the impact of environmental remediation charges and a charge from inventory acquired through the purchase of the “SigmaTel” multifunction printer imaging product lines. The fiscal quarter and nine fiscal months ended June 27, 2008 include the impact of environmental remediation charges.
(f) Unrealized gains and losses associated with the change in the fair value of our warrant to purchase 6 million shares of Mindspeed Technologies, Inc. common stock, which is accounted for as a derivative instrument.
(g) Gains on sales of equity securities and on the liquidation of companies in which we held equity securities.
(h) Losses from other than temporary impairment of marketable securities and cost based investments.
(i) Losses (gains) on equity method investments.
(j) The nine fiscal months ended June 27, 2008 includes $14.7 million of non-recurring revenue that resulted from the buyout of a future royalty stream.
(k) Other interest expense which is not part of our on-going operations. For the nine fiscal months ended June 27, 2008, the adjustment relates to the accelerated amortization of debt issuance costs related to the repurchase of $53.6 million of floating rate senior notes.
(l) BBA adjustments reflect the Non-GAAP Core net revenue, gross margin, operating expenses, interest expense and provision for income taxes which were classified as discontinued operations in the third quarter of fiscal 2009.
Non-GAAP Financial Measures:
We have presented non-GAAP net revenues, non-GAAP cost of goods sold, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP other income, non-GAAP (loss) income from continuing operations and non-GAAP basic and diluted (loss) income per share from continuing operations, on a basis consistent with our historical presentation to assist investors in understanding our core results of operations on an on-going basis. These non-GAAP financial measures also enhance comparisons of our core results of operations with historical periods. We are 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 our company. Management believes that these are important measures in the evaluation of our 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 us may be different than non-GAAP financial measures presented by other companies.
We do not present GAAP guidance due to our inability to project (i) future market prices of the common stock of a third party underlying a derivative financial instrument, (ii) realized gains or losses from the sale of equity securities in third parties, and (iii) the financial results of investments accounted for using the equity method of accounting.
CONEXANT SYSTEMS, INC.
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
|July 3,||October 3,|
|Cash and cash equivalents||$||123,394||$||105,883|
|Other current assets||34,306||37,938|
|Current assets held for sale||16,928||29,730|
|Total current assets||238,068||268,720|
|Property, plant and equipment, net||12,075||17,410|
|Intangible assets, net||6,314||10,611|
|LIABILITIES AND SHAREHOLDERS’ DEFICIT|
|Current portion of long-term debt||$||-||$||17,707|
|Accrued compensation and benefits||8,070||13,201|
|Other current liabilities||32,787||43,189|
|Current liabilities to be assumed||3,446||3,995|
|Total current liabilities||102,128||153,103|
|Total liabilities and shareholders’ deficit||$||399,998||$||446,403|
Selected Other Data
(unaudited, in thousands)
|Fiscal Quarter Ended||Nine Fiscal Months Ended|
|July 3,||April 3,||June 27,||July 3,||June 27,|
|Revenues By Region:|
|Europe, Middle East and Africa||604||751||1,515||2,356||5,632|
|Cash Flow Data:|
|Depreciation of PP&E||$||1,733||$||1,810||$||2,352||$||5,790||$||8,336|
|Cash provided by (used in) operations||$||4,938||$||1,372||$||(15,452||)||$||847||$||(13,419||)|