UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K/A
Amendment No. 2 to
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 29, 2002 (June 25, 2002)
CONEXANT SYSTEMS, INC.
| Delaware (State of Incorporation) |
000-24923 (Commission File Number) |
25-1799439 (I.R.S. Employer Identification No.) |
4311 Jamboree Road
Newport Beach, California 92660-3095
(Address of principal executive offices) (Zip code)
(949) 483-4600
(Registrant’s telephone number, including area code)
Item 5. Other Events
This Amendment No. 2 to Current Report on Form 8-K/A supplements and amends the Current Report on Form 8-K dated July 1, 2002, as amended by Amendment No. 1 to Current Report on Form 8-K/A dated July 10, 2002, of Conexant Systems, Inc. (“Conexant”) to provide the Unaudited Pro Forma Condensed Consolidated Financial Information of Conexant at pages F-1 through F-7 of this report.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CONEXANT SYSTEMS, INC. (Registrant) |
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| Date: July 29, 2002 | By | /s/ Balakrishnan S. Iyer | ||
| Balakrishnan S. Iyer Senior Vice President and Chief Financial Officer |
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| Date: July 29, 2002 | By | /s/ J. Scott Blouin | ||
| J. Scott Blouin Senior Vice President and Chief Accounting Officer |
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3
Conexant Systems, Inc.
Unaudited Pro Forma Condensed Consolidated
Financial Information
On June 25, 2002, Conexant Systems, Inc. (“Conexant”) completed the distribution to Conexant shareowners of outstanding shares of Washington Sub, Inc. (“Washington”), a wholly-owned subsidiary of Conexant to which Conexant contributed its wireless communications business, other than certain assets and liabilities (together, the “Spin-off Transaction”). Immediately thereafter, Washington merged with and into Alpha Industries, Inc. (“Alpha”), with Alpha the surviving corporation (the “Merger”). As a result of the Spin-off Transaction and the Merger, Conexant shareowners received 0.351 of a share of Alpha common stock for each Conexant share held and continued to hold their Conexant shares.
Upon completion of the Merger, Alpha purchased Conexant’s semiconductor assembly, module manufacturing and test facility located in Mexicali, Mexico and Conexant’s Package Design Team that supports the Mexicali facility for $150 million. As consideration for the purchase, Alpha and a subsidiary of Alpha delivered to Conexant promissory notes for $150 million guaranteed by Alpha and certain Alpha subsidiaries and secured by substantially all the assets of Alpha. For financial accounting purposes, the sale of the Mexicali operations by Conexant to Alpha has been treated as if Conexant had contributed the Mexicali operations to Washington as part of the Spin-off Transaction, and the $150 million purchase price has been treated as a return of capital to Conexant.
Effective June 26, 2002, Alpha changed its name to Skyworks Solutions, Inc.
The following Unaudited Pro Forma Condensed Consolidated Financial Information of Conexant gives effect to the Spin-off Transaction and the Merger (including the sale of the Mexicali operations). The historical financial information of Conexant set forth below has been derived from the historical audited and unaudited consolidated financial statements of Conexant included in its annual report on Form 10-K for the year ended September 30, 2001 and its quarterly report on Form 10-Q for the quarter ended March 31, 2002. The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2002 includes pro forma adjustments giving effect to the Spin-off Transaction and the Merger as if they had occurred on that date. The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended September 30, 2001, 2000 and 1999 and for the six months ended March 31, 2002 include pro forma adjustments giving effect to the Spin-off Transaction and the Merger as if they had occurred as of October 1, 1998.
The Unaudited Pro Forma Condensed Consolidated Financial Information is provided for informational purposes only and does not purport to present the consolidated financial position or results of operations of Conexant had the Spin-off Transaction and the Merger occurred on the dates specified, nor is it necessarily indicative of the consolidated financial position or results of operations of Conexant that may be expected in the future. The Unaudited Pro Forma Condensed Consolidated Financial Information should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included in Conexant’s annual report on Form 10-K for the year ended September 30, 2001 and its quarterly report on Form 10-Q for the quarter ended March 31, 2002.
F-1
Conexant Systems, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 2002
(in thousands)
| Historical | Pro forma | Pro forma | ||||||||||||
| Conexant | adjustments | Conexant | ||||||||||||
ASSETS |
||||||||||||||
Current assets: |
||||||||||||||
Cash and cash equivalents |
$ | 151,790 | $ | — | $ | 151,790 | ||||||||
Short-term investments |
108,276 | — | 108,276 | |||||||||||
Refundable deposits |
150,000 | — | 150,000 | |||||||||||
Receivables, net |
107,811 | (35,348 | )(2) | 72,463 | ||||||||||
Notes receivable from Skyworks |
— | 150,000 | (3) | 150,000 | ||||||||||
Inventories |
99,423 | (36,461 | )(1) | 62,962 | ||||||||||
Deferred income taxes |
68,368 | — | 68,368 | |||||||||||
Other current assets |
57,426 | (1,949 | )(1) | 54,271 | ||||||||||
| (1,206 | )(2) | |||||||||||||
Current assets of discontinued operations |
— | 36,554 | (2) | 36,554 | ||||||||||
Total current assets |
743,094 | 111,590 | 854,684 | |||||||||||
Property, plant and equipment, net |
298,737 | (157,083 | )(1) | 141,654 | ||||||||||
Goodwill and intangible assets, net |
1,072,231 | (51,585 | )(1) | 1,020,646 | ||||||||||
Deferred income taxes |
194,289 | — | 194,289 | |||||||||||
Other assets |
149,549 | (3,968 | )(1) | 145,581 | ||||||||||
Total assets |
$ | 2,457,900 | $ | (101,046 | ) | $ | 2,356,854 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||||
Current liabilities: |
||||||||||||||
Accounts payable |
$ | 121,709 | $ | (4,236 | )(2) | $ | 117,473 | |||||||
Deferred revenue |
17,042 | (2 | )(1) | 17,040 | ||||||||||
Accrued compensation and benefits |
59,750 | (16,511 | )(1) | 43,239 | ||||||||||
Other current liabilities |
89,350 | (18,700 | )(1) | 70,650 | ||||||||||
Current liabilities of discontinued operations |
— | 4,236 | (2) | 4,236 | ||||||||||
Total current liabilities |
287,851 | (35,213 | ) | 252,638 | ||||||||||
Convertible subordinated notes |
709,849 | — | 709,849 | |||||||||||
Other long-term liabilities |
49,793 | (3,855 | )(1) | 45,938 | ||||||||||
Total liabilities |
1,047,493 | (39,068 | ) | 1,008,425 | ||||||||||
Shareholders’ equity: |
||||||||||||||
Preferred and junior preferred stock |
— | — | — | |||||||||||
Common stock |
257,998 | — | 257,998 | |||||||||||
Additional paid-in capital |
3,156,230 | — | 3,156,230 | |||||||||||
Accumulated deficit |
(1,971,401 | ) | (212,573 | )(1) | (2,033,974 | ) | ||||||||
| 150,000 | (3) | |||||||||||||
Accumulated other comprehensive loss |
(27,226 | ) | 386 | (1) | (26,840 | ) | ||||||||
Unearned compensation |
(5,194 | ) | 209 | (1) | (4,985 | ) | ||||||||
Total shareholders’ equity |
1,410,407 | (61,978 | ) | 1,348,429 | ||||||||||
Total liabilities and shareholders’ equity |
$ | 2,457,900 | $ | (101,046 | ) | $ | 2,356,854 | |||||||
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.
F-2
Conexant Systems, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Six Months Ended March 31, 2002
(in thousands, except per share amounts)
| Historical | Pro forma | Pro forma | ||||||||||||
| Conexant | adjustments(4) | Conexant | ||||||||||||
Net revenues |
$ | 470,550 | $ | (180,689 | ) | $ | 289,861 | |||||||
Cost of goods sold |
319,468 | (135,975 | ) | 183,493 | ||||||||||
Gross margin |
151,082 | (44,714 | ) | 106,368 | ||||||||||
Operating expenses: |
||||||||||||||
Research and development |
226,483 | (63,801 | ) | 162,682 | ||||||||||
Selling, general and administrative |
109,662 | (22,002 | ) | 87,660 | ||||||||||
Amortization of intangible assets |
179,702 | (8,240 | ) | 171,462 | ||||||||||
Special charges |
22,384 | (65 | ) | 22,319 | ||||||||||
Total operating expenses |
538,231 | (94,108 | ) | 444,123 | ||||||||||
Operating loss |
(387,149 | ) | 49,394 | (337,755 | ) | |||||||||
Other expense, net |
(15,919 | ) | (59 | ) | (15,978 | ) | ||||||||
Loss before income taxes |
(403,068 | ) | 49,335 | (353,733 | ) | |||||||||
Provision (benefit) for income taxes |
2,124 | (4,270 | ) | (2,146 | ) | |||||||||
Net
loss |
$ | (405,192 | ) | $ | 53,605 | $ | (351,587 | ) | ||||||
Net
loss per share, basic and diluted |
$ | (1.59 | ) | $ | (1.38 | ) | ||||||||
Number of shares used in per share computation |
255,249 | 255,249 | ||||||||||||
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.
F-3
Conexant Systems, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended September 30, 2001
(in thousands, except per share amounts)
| Historical | Pro forma | Pro forma | ||||||||||||
| Conexant | adjustments(4) | Conexant | ||||||||||||
Net revenues |
$ | 1,062,558 | $ | (215,502 | ) | $ | 847,056 | |||||||
Cost of goods sold |
1,020,303 | (268,749 | ) | 751,554 | ||||||||||
Gross margin |
42,255 | 53,247 | 95,502 | |||||||||||
Operating expenses: |
||||||||||||||
Research and development |
482,995 | (111,053 | ) | 371,942 | ||||||||||
Selling, general and administrative |
302,075 | (51,267 | ) | 250,808 | ||||||||||
Amortization of intangible assets |
340,664 | (15,859 | ) | 324,805 | ||||||||||
Special charges |
478,492 | (88,876 | ) | 389,616 | ||||||||||
Total operating expenses |
1,604,226 | (267,055 | ) | 1,337,171 | ||||||||||
Operating loss |
(1,561,971 | ) | 320,302 | (1,241,669 | ) | |||||||||
Debt conversion costs |
(42,584 | ) | — | (42,584 | ) | |||||||||
Other income, net |
599 | (210 | ) | 389 | ||||||||||
Loss before income taxes |
(1,603,956 | ) | 320,092 | (1,283,864 | ) | |||||||||
Income tax benefit |
(151,338 | ) | 45,028 | (106,310 | ) | |||||||||
Loss before extraordinary item |
$ | (1,452,618 | ) | $ | 275,064 | $ | (1,177,554 | ) | ||||||
Loss before extraordinary item per share, basic and diluted |
$ | (5.94 | ) | $ | (4.81 | ) | ||||||||
Number of shares used in per share computation |
244,711 | 244,711 | ||||||||||||
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.
F-4
Conexant Systems, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended September 30, 2000
(in thousands, except per share amounts)
| Historical | Pro forma | Pro forma | ||||||||||||
| Conexant | adjustments (4) | Conexant | ||||||||||||
Net revenues |
$ | 2,103,599 | $ | (312,983 | ) | $ | 1,790,616 | |||||||
Cost of goods sold |
1,133,647 | (207,450 | ) | 926,197 | ||||||||||
Gross margin |
969,952 | (105,533 | ) | 864,419 | ||||||||||
Operating expenses: |
||||||||||||||
Research and development |
414,471 | (91,616 | ) | 322,855 | ||||||||||
Selling, general and administrative |
289,411 | (52,422 | ) | 236,989 | ||||||||||
Amortization of intangible assets |
160,154 | (5,475 | ) | 154,679 | ||||||||||
Purchased in-process research and development |
215,710 | (24,362 | ) | 191,348 | ||||||||||
Total operating expenses |
1,079,746 | (173,875 | ) | 905,871 | ||||||||||
Operating loss |
(109,794 | ) | 68,342 | (41,452 | ) | |||||||||
Special charges—litigation |
(35,000 | ) | — | (35,000 | ) | |||||||||
Other income, net |
6,471 | (142 | ) | 6,329 | ||||||||||
Loss before income taxes |
(138,323 | ) | 68,200 | (70,123 | ) | |||||||||
Provision for income taxes |
52,604 | 10,432 | 63,036 | |||||||||||
Net loss |
$ | (190,927 | ) | $ | 57,768 | $ | (133,159 | ) | ||||||
Net loss per share, basic and diluted |
$ | (0.90 | ) | $ | (0.63 | ) | ||||||||
Number of shares used in per share computation |
211,840 | 211,840 | ||||||||||||
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.
F-5
Conexant Systems, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended September 30, 1999
(in thousands, except per share amounts)
| Historical | Pro forma | Pro forma | |||||||||||||
| Conexant | adjustments (4) | Conexant | |||||||||||||
Net revenues |
$ | 1,444,114 | $ | (176,015 | ) | $ | 1,268,099 | ||||||||
Cost of goods sold |
863,252 | (96,699 | ) | 766,553 | |||||||||||
Gross margin |
580,862 | (79,316 | ) | 501,546 | |||||||||||
Operating expenses: |
|||||||||||||||
Research and development |
310,042 | (66,457 | ) | 243,585 | |||||||||||
Selling, general and administrative |
227,729 | (27,202 | ) | 200,527 | |||||||||||
Amortization of intangible assets |
8,364 | — | 8,364 | ||||||||||||
Special charges |
37,906 | (1,432 | ) | 36,474 | |||||||||||
Total operating expenses |
584,041 | (95,091 | ) | 488,950 | |||||||||||
Operating income (loss) |
(3,179 | ) | 15,775 | 12,596 | |||||||||||
Other income, net |
5,935 | 54 | 5,989 | ||||||||||||
Income before income taxes |
2,756 | 15,829 | 18,585 | ||||||||||||
Provision (benefit) for income taxes |
(10,173 | ) | 15,748 | 5,575 | |||||||||||
Net income |
$ | 12,929 | $ | 81 | $ | 13,010 | |||||||||
Net income per share: |
|||||||||||||||
Basic |
$ | 0.07 | $ | 0.07 | |||||||||||
Diluted |
$ | 0.06 | $ | 0.06 | |||||||||||
Number of shares used in per share computation: |
|||||||||||||||
Basic |
192,551 | 192,551 | |||||||||||||
Diluted |
203,484 | 203,484 | |||||||||||||
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.
F-6
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
Pro forma adjustments for the unaudited pro forma condensed consolidated financial information are as follows:
(1) Reflects Conexant’s contribution of the assets and liabilities of its wireless communications business (other than certain assets and liabilities) to its wholly-owned subsidiary Washington, the sale of the Mexicali operations and the distribution of outstanding shares of Washington to Conexant’s shareholders.
(2) Reflects the reclassification of certain assets and liabilities of the wireless communications business retained by Conexant as assets and liabilities of discontinued operations.
(3) Reflects the receipt of short-term promissory notes for $150 million from Skyworks (as consideration for the purchase of the Mexicali operations) as a return of capital to Conexant.
(4) Reflects the historical results of operations of the wireless communications business contributed to Washington and the Mexicali operations. Such historical results of operations include allocations of certain operating expenses, determined on bases which management considers to be reasonable reflections of the utilization of services provided to, or the benefit received by, the wireless communications business and the Mexicali operations. Income taxes have been calculated by reference to the statutory tax rate, adjusted for the effect of permanent differences and operating losses for which no tax benefits were recognized.
F-7