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Editorial Contact
    
    Investor Relations Contact:Gwen Carlson
    
    Ryan BrightConexant Systems, Inc.
    
    Shelton Group(949) 483-7363
    
    (972) 239-5119, ext. 159
 CONEXANT REPORTS FINANCIAL RESULTS FOR THE
SECOND QUARTER OF FISCAL 2008
 Company Exceeds Expectations for Financial Performance
 NEWPORT BEACH, Calif., April 29, 2008 
 Second Fiscal Quarter Financial Results




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Conexant Reports Financial Results for the Second Quarter of Fiscal 2008
    
    2
  Business Perspective
   Business Outlook
  Conference Call Today
   About Conexant
  Safe Harbor Statement




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Conexant Reports Financial Results for the Second Quarter of Fiscal 2008
    
    3
    Conexant is a registered trademark of Conexant Systems, Inc. Other brands and names contained in
this release are the property of their respective owners.




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CONEXANT SYSTEMS, INC.
GAAP Condensed Consolidated Statements of Operations
 Three Months Ended
    
    
    Six Months EndedMarch 28,
    
    
    December 28,
    
    
    March 30,
    
    
    March 28,
    
    
    March 30,2008
    
    
    2007
    
    
    2007
    
    
    2008
    
    
    2007Net revenues
    
    $
    173,992
    
    
    $
    196,958
    
    
    $
    199,865
    
    
    $
    370,950
    
    
    $
    445,399Cost of goods sold
    
    
    94,979
    
    
    
    97,687
    
    
    
    110,016
    
    
    
    192,666
    
    
    
    246,061Gross margin
    
    
    79,013
    
    
    
    99,271
    
    
    
    89,849
    
    
    
    178,284
    
    
    
    199,338Operating expenses:Research and development
    
    
    52,477
    
    
    
    60,390
    
    
    
    69,345
    
    
    
    112,867
    
    
    
    140,795Selling, general and administrative
    
    
    23,540
    
    
    
    23,101
    
    
    
    26,803
    
    
    
    46,641
    
    
    
    54,279Amortization of intangible assets
    
    
    3,069
    
    
    
    4,781
    
    
    
    6,254
    
    
    
    7,850
    
    
    
    12,492Asset impairments (Note 1)
    
    
    121,655
    
    
    
    130
    
    
    
    155,000
    
    
    
    121,785
    
    
    
    155,000Special charges
    
    
    3,973
    
    
    
    5,784
    
    
    
    5,121
    
    
    
    9,757
    
    
    
    8,019Total operating expenses
    
    
    204,714
    
    
    
    94,186
    
    
    
    262,523
    
    
    
    298,900
    
    
    
    370,585Operating (loss) income
    
    
    (125,701
    )
    
    
    5,085
    
    
    
    (172,674
    )
    
    
    (120,616
    )
    
    
    (171,247
    )Interest expense
    
    
    10,969
    
    
    
    11,563
    
    
    
    13,220
    
    
    
    22,532
    
    
    
    26,256Other expense (income), net
    
    
    4,148
    
    
    
    5,345
    
    
    
    (9,660
    )
    
    
    9,493
    
    
    
    (22,721
    )Loss before income taxes and gain of equity method investments
    
    
    (140,818
    )
    
    
    (11,823
    )
    
    
    (176,234
    )
    
    
    (152,641
    )
    
    
    (174,782
    )Provision for income taxes
    
    
    972
    
    
    
    1,168
    
    
    
    1,232
    
    
    
    2,140
    
    
    
    1,703Loss before gain of equity method investments
    
    
    (141,790
    )
    
    
    (12,991
    )
    
    
    (177,466
    )
    
    
    (154,781
    )
    
    
    (176,485
    )(Loss) gain of equity method investments (Note 2)
    
    
    (214
    )
    
    
    3,773
    
    
    
    44,020
    
    
    
    3,559
    
    
    
    44,015Net loss
    
    $
    (142,004
    )
    
    $
    (9,218
    )
    
    $
    (133,446
    )
    
    $
    (151,222
    )
    
    $
    (132,470
    )Basic and diluted net loss per share
    
    $
    (0.29
    )
    
    $
    (0.02
    )
    
    $
    (0.27
    )
    
    $
    (0.31
    )
    
    $
    (0.27
    )Shares used in basic and diluted per-share computations
    
    
    493,122
    
    
    
    492,363
    
    
    
    489,302
    
    
    
    492,743
    
    
    
    487,630
 
 Note 1 
    
    Asset impairments for the three and six months ended March 28, 2008 consist primarily of
a non-cash goodwill impairment charge related to our Broadband Media Processing business of
$119.6 million. Asset impairments for the three and six months ended March 30, 2007 include
non-cash goodwill and intangible asset impairment charges related to our Embedded Wireless
Networking business of $135.0 million and $20.0 million.Note 2 
    
    Gain (loss) of equity method investments for the three and six months ended March 30,
2007 includes a gain on the sale of our investment in Jazz Semiconductor, Inc. of $43.5 million.




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Conexant Reports Financial Results for Second Quarter of Fiscal 2008
    
    2
 CONEXANT SYSTEMS, INC.
Reconciliation of GAAP Financial Measures to Non-GAAP Core Financial Measures
 Three Months Ended
    
    
    Six Months EndedMarch 28,
    
    
    December 28,
    
    
    March 30,
    
    
    March 28,
    
    
    March 30,2008
    
    
    2007
    
    
    2007
    
    
    2008
    
    
    2007GAAP gross margin
    
    $
    79,013
    
    
    $
    99,271
    
    
    $
    89,849
    
    
    $
    178,284
    
    
    $
    199,338Stock-based compensation (a)
    
    
    81
    
    
    
    114
    
    
    
    115
    
    
    
    195
    
    
    
    218Other (f)
    
    
    (797
    )
    
    
    
    
    
    
    
    
    
    
    (797
    )
    
    
    Non-GAAP Core gross margin
    
    
    78,297
    
    
    
    99,385
    
    
    
    89,964
    
    
    
    177,682
    
    
    
    199,556Royalty buyout (k)
    
    
    
    
    
    
    (14,700
    )
    
    
    
    
    
    
    (14,700
    )
    
    
    Non-GAAP Core gross margin less impact of royalty buyout
    
    $
    78,297
    
    
    $
    84,685
    
    
    $
    89,964
    
    
    $
    162,982
    
    
    $
    199,556GAAP operating expenses
    
    $
    204,714
    
    
    $
    94,186
    
    
    $
    262,523
    
    
    $
    298,900
    
    
    $
    370,585Stock-based compensation (a)
    
    
    (3,685
    )
    
    
    (3,170
    )
    
    
    (4,656
    )
    
    
    (6,855
    )
    
    
    (8,890
    )Transitional salaries and benefits (b)
    
    
    
    
    
    
    
    
    
    
    (1,591
    )
    
    
    
    
    
    
    (2,331
    )Amortization of intangible assets (c)
    
    
    (3,069
    )
    
    
    (4,781
    )
    
    
    (6,254
    )
    
    
    (7,850
    )
    
    
    (12,492
    )Asset impairments (d)
    
    
    (121,655
    )
    
    
    (130
    )
    
    
    (155,000
    )
    
    
    (121,785
    )
    
    
    (155,000
    )Special charges (e)
    
    
    (3,973
    )
    
    
    (5,784
    )
    
    
    (5,121
    )
    
    
    (9,757
    )
    
    
    (8,019
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (400
    )Non-GAAP Core operating expenses
    
    $
    72,332
    
    
    $
    80,321
    
    
    $
    89,901
    
    
    $
    152,653
    
    
    $
    183,453GAAP operating (loss) income
    
    $
    (125,701
    )
    
    $
    5,085
    
    
    $
    (172,674
    )
    
    $
    (120,616
    )
    
    $
    (171,247
    )Gross margin adjustment (a,f)
    
    
    (716
    )
    
    
    114
    
    
    
    115
    
    
    
    (602
    )
    
    
    218Operating expense adjustments (a-e)
    
    
    132,382
    
    
    
    13,865
    
    
    
    172,622
    
    
    
    146,247
    
    
    
    187,132Non-GAAP Core operating income
    
    
    5,965
    
    
    
    19,064
    
    
    
    63
    
    
    
    25,029
    
    
    
    16,103Royalty buyout (k)
    
    
    
    
    
    
    (14,700
    )
    
    
    
    
    
    
    (14,700
    )
    
    
    Non-GAAP Core operating income less impact of royalty buyout
    
    $
    5,965
    
    
    $
    4,364
    
    
    $
    63
    
    
    $
    10,329
    
    
    $
    16,103GAAP net loss
    
    $
    (142,004
    )
    
    $
    (9,218
    )
    
    $
    (133,446
    )
    
    $
    (151,222
    )
    
    $
    (132,470
    )Gross margin adjustments (a, f)
    
    
    (716
    )
    
    
    114
    
    
    
    115
    
    
    
    (602
    )
    
    
    218Operating expense adjustments (a-e)
    
    
    132,382
    
    
    
    13,865
    
    
    
    172,622
    
    
    
    146,247
    
    
    
    187,132Losses (gains) of equity method investments (g)
    
    
    214
    
    
    
    (3,773
    )
    
    
    (44,020
    )
    
    
    (3,559
    )
    
    
    (44,015
    )Losses (gains) on Mindspeed warrant (h)
    
    
    6,179
    
    
    
    8,364
    
    
    
    (3,882
    )
    
    
    14,543
    
    
    
    (6,924
    )Gains on sales of equity securities (i)
    
    
    
    
    
    
    
    
    
    
    (1,337
    )
    
    
    
    
    
    
    (6,469
    )Other (j)
    
    
    628
    
    
    
    
    
    
    
    
    
    
    
    628
    
    
    
    Non-GAAP Core net (loss) income
    
    $
    (3,317
    )
    
    $
    9,352
    
    
    $
    (9,948
    )
    
    $
    6,035
    
    
    $
    (2,528
    )Basic and diluted net (loss) income per share:GAAP
    
    $
    (0.29
    )
    
    $
    (0.02
    )
    
    $
    (0.27
    )
    
    $
    (0.31
    )
    
    $
    (0.27
    )Non-GAAP Core (l)
    
    $
    (0.01
    )
    
    $
    0.02
    
    
    $
    (0.02
    )
    
    $
    0.01
    
    
    $
    (0.01
    )




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Conexant Reports Financial Results for Second Quarter of Fiscal 2008
    

3
  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), which we adopted on October 1,
2005.(b)
    
    Transitional salaries and benefits represent amounts earned by employees who have been
notified of their termination as part of our restructuring activities, from the date of their
notification.(c)
    
    Amortization of intangible assets resulting from business combinations.(d)
    
    Asset impairment charges for the three and six months ended March 28, 2008 consist primarily
of a non-cash goodwill impairment charge related to our Broadband Media Processing business of
$119.6 million. Asset impairment charges for the three and six months ended March 30, 2007
include a non-cash goodwill impairment charge of $135.0 million and an intangible asset
impairment charge of $20.0 million, both of which were related to our Embedded Wireless
Networking business.(e)
    
    Special charges for the three and six months ended March 28, 2008, primarily consist of
restructuring charges. Special charges for the three and six months ended March 30, 2007
consist of restructuring charges and the expense related to the settlement of our Dutch tax
audit.(f)
    
    Other gains and losses which are not part of our core, on-going operations. For the three
and six months ended March 28, 2008, this amount relates to an environmental remediation
charge.(g)
    
    Gain (loss) of equity method investments for the three and six months ended March 30, 2007
includes a gain on the sale of our investment in Jazz Semiconductor, Inc. of $43.5 million.(h)
    
    Gains and losses associated with changes in the fair value of our warrant to
purchase 30 million shares of Mindspeed Technologies, Inc. common stock, which is accounted
for as a derivative instrument.(i)
    
    Gains on sales of equity securities or on the liquidation of companies in which we held
equity securities.(j)
    
    Other gains and losses which are not part of our core, on-going operations. For the three
and six months ended March 28, 2008, this amount primarily relates to the accelerated
amortization of debt issuance costs related to the repurchase of $53.6 million of floating
rate senior notes.(k)
    
    Our first quarter fiscal 2008 financial results included $14.7 million of non-recurring
revenue that resulted from the buyout of a future royalty stream.(l)
    
    The dilutive effect of stock options and warrants under the treasury method are added to
basic weighted average shares to compute diluted weighted average shares.




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Conexant Reports Financial Results for Second Quarter of Fiscal 2008
    

4
 Non-GAAP Financial Measures:
  GAAP Guidance:




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Conexant Reports Financial Results for Second Quarter of Fiscal 2008
    

5
 CONEXANT SYSTEMS, INC.
Condensed Consolidated Balance Sheets
 March 28,
    
    
    September 28,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    164,112
    
    
    $
    235,605Marketable securitiesRestricted cash
    
    
    8,800
    
    
    
    8,800Receivables
    
    
    73,084
    
    
    
    80,906Inventories
    
    
    55,387
    
    
    
    63,174Other current assets
    
    
    27,136
    
    
    
    20,361Total current assets
    
    
    328,519
    
    
    
    408,846Property, plant and equipment, net
    
    
    52,650
    
    
    
    67,967Goodwill
    
    
    286,037
    
    
    
    406,323Intangible assets, net
    
    
    28,218
    
    
    
    26,067Other assets
    
    
    53,157
    
    
    
    76,766Total assets
    
    $
    748,581
    
    
    $
    985,969LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    
    
    
    $
    58,000Short-term debt
    
    
    71,096
    
    
    
    80,000Accounts payable
    
    
    69,924
    
    
    
    80,667Accrued compensation and benefits
    
    
    22,809
    
    
    
    26,154Other current liabilities
    
    
    51,751
    
    
    
    70,631Total current liabilities
    
    
    215,580
    
    
    
    315,452Long-term debt
    
    
    471,400
    
    
    
    467,000Other liabilities
    
    
    59,669
    
    
    
    57,002Total liabilities
    
    
    746,649
    
    
    
    839,454Shareholders equity
    
    
    1,932
    
    
    
    146,515Total liabilities and shareholders equity
    
    $
    748,581
    
    
    $
    985,969




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Conexant Reports Financial Results for Second Quarter of Fiscal 2008
    

6
 CONEXANT SYSTEMS, INC.
Selected Other Data
 Three Months Ended
    
    
    Six Months EndedMarch 28,
    
    
    December 28,
    
    
    March 30,
    
    
    March 28,
    
    
    March 30,2008
    
    
    2007
    
    
    2007
    
    
    2008
    
    
    2007Revenues By Region:Americas
    
    $
    13,388
    
    
    $
    14,747
    
    
    $
    25,587
    
    
    $
    28,135
    
    
    $
    63,361Asia-Pacific
    
    
    151,210
    
    
    
    172,191
    
    
    
    160,574
    
    
    
    323,401
    
    
    
    355,331Europe, Middle East and Africa
    
    
    9,394
    
    
    
    10,020
    
    
    
    13,704
    
    
    
    19,414
    
    
    
    26,707$
    173,992
    
    
    $
    196,958
    
    
    $
    199,865
    
    
    $
    370,950
    
    
    $
    445,399Cash Flow Data:Depreciation of PP&E
    
    $
    5,825
    
    
    $
    5,709
    
    
    $
    6,143
    
    
    $
    11,534
    
    
    $
    11,989Capital expenditures
    
    $
    2,075
    
    
    $
    1,614
    
    
    $
    7,723
    
    
    $
    3,689
    
    
    $
    14,939