NEWPORT BEACH, Calif.—(BUSINESS WIRE)—October 30, 2008— Conexant Systems, Inc. (NASDAQ:CNXT) today announced financial results for the fourth quarter of fiscal 2008 that met the updated guidance provided on Sept. 30, 2008 when the company increased its earnings outlook.

Fourth Fiscal Quarter Financial Results

Conexant presents financial results based on Generally Accepted Accounting Principles (GAAP) as well as select non-GAAP financial measures intended to reflect its core results of operations. The company believes these core financial measures provide investors with additional insight into its underlying operating results. Core financial measures exclude non-cash and other non-core items as fully described in the GAAP to non-GAAP reconciliation in the accompanying financial data.

On August 11, 2008 Conexant announced that it completed the sale of its Broadband Media Processing (BMP) product lines to NXP Semiconductors. The financial results of the BMP business unit are classified as discontinued operations in the company’s financial statements for all periods.

Excluding results from discontinued operations, revenues for the fourth quarter of fiscal 2008 were $122.6 million. Core gross margins were 54.5 percent of revenues. Core operating expenses were $47.0 million, and core operating income was $19.9 million. Core net income was $13.0 million, or $0.26 per diluted share.

On a GAAP basis, gross margins were 54.1 percent of revenues. GAAP operating expenses were $57.2 million. GAAP operating income was $9.2 million, and GAAP net loss from continuing operations was $2.2 million, or $0.04 per share. GAAP net income was $0.4 million, or $0.1 per diluted share. GAAP net income in the quarter included a loss of $3.7 million from discontinued operations related to the BMP business, which was offset by a gain on the sale of that business of $6.3 million.

The company ended the quarter with $105.9 million in cash and cash equivalents, a sequential decrease of approximately $30 million. The decrease was related to several events including the company’s retirement of $80 million of its floating rate senior notes due in November 2010, the reduction of a short-term receivables facility by $37 million, and a $16 million cash payment for the purchase of Freescale’s “SigmaTel” multifunction printer business. These items were partially offset by $95 million in cash received from the sale of the company’s BMP business to NXP.

Business Perspective

“The Conexant team delivered another outstanding quarter, meeting the increased guidance we provided at the end of September,” said Scott Mercer, Conexant’s chairman and chief executive officer. “Revenues of $122.6 million were consistent with the range we anticipated. Core gross margins of 54.5 percent of revenues were in line with our revised expectations and represented a sequential improvement of 390 basis points over the previous quarter. Core operating income of $19.9 million and core net income of $0.26 per share both met the high end of the updated guidance we provided in September.

“During our recently concluded fiscal year, we dramatically improved our financial performance by exiting or selling unprofitable businesses and significantly improving the performance of our continuing businesses, expanding core gross margins, and reducing core operating expenses,” Mercer said. “As a result, we delivered $58 million in core operating income for fiscal 2008, led by outstanding performance in our IPM product lines. We also strengthened our balance sheet by retiring nearly $175 million in debt during the year.

“Because of the financial improvements the Conexant team delivered over the past fiscal year, we are a stronger, more competitive company today, and we are in a much better position to work through the current economic challenges,” Mercer said. “Moving forward, we remain committed to driving further improvements in our business model, generating positive cash flow, and strengthening our long-term capital structure. We will also continue to focus our investments on market segments where we lead or have an opportunity to lead, and we will continue to evaluate opportunities to augment our internal product-development efforts with select acquisitions.”

Business Outlook

Conexant expects revenues for the first quarter of fiscal 2009 to be in a range between $103 million and $108 million, or 12 to 16 percent lower sequentially, as a result of the effects of the overall economic environment and the fact that the company’s fourth fiscal quarter included one extra week. Core gross margins for the first fiscal quarter are expected to be between 54.5 and 55.5 percent of revenues. The company anticipates that first fiscal quarter core operating income will be in a range between $11 million and $13 million, resulting in core net income of $0.09 to $0.12 per share.

Conference Call Today

Financial analysts, members of the media, and the public are invited to participate in a conference call that will take place today at 5:00 p.m. Eastern Time (ET)/ 2:00 p.m. Pacific Time (PT). Scott Mercer, chairman and chief executive officer, Christian Scherp, president, and Karen Roscher, senior vice president and chief financial officer, will discuss fourth quarter and fiscal year 2008 financial results and the company’s outlook. To listen to the conference call via telephone, dial 866-650-4882 (in the US and Canada) or 706-679-7338 (from other international locations); participant pass code: Conexant; Conference ID number: 68166163.