8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934




Date of Report (date of earliest event reported):   January 28, 2004 (January 28, 2004)

Conexant Systems, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction
of Incorporation) 000-24923
(Commission
File Number) 25-1799439
(I.R.S. Employer
Identification No.)

4000 MacArthur Boulevard
Newport Beach, California   92660-3095
(Address of principal executive offices) (Zip code)

(949) 483-4600
(Registrant’s telephone number, including area code)

INFORMATION TO BE INCLUDED IN THE REPORT

Item 12.   Results of Operations and Financial Condition.

Registrant’s press release dated January 28, 2004, announcing its financial results for the quarter ended January 2, 2004 is furnished herewith as Exhibit 99 and is incorporated herein by reference.

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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)
By	/s/ Dennis E. O'Reilly
	Dennis E. O'Reilly Senior Vice President, General Counsel      and Secretary

Date:  January 28, 2004

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EXHIBIT INDEX

Exhibit Number	Description
99	Press Release of Registrant dated January 28, 2004.

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EX-99

Exhibit 99

Editorial Contact:
Gwen Carlson
Conexant Systems, Inc.
(949) 483-7363 Investor Relations Contact:
Bruce Thomas
Conexant Systems, Inc.
(949) 483-2698

CONEXANT GROWS REVENUES 23 PERCENT YEAR OVER YEAR AND DELIVERS
10 PERCENT PRO FORMA OPERATING PROFIT IN FIRST FISCAL QUARTER

Record Shipments of ADSL, Satellite Set-top Box and
PC Video Solutions Drive Performance

        NEWPORT BEACH, Calif., Jan. 28, 2004 – Conexant Systems, Inc. (Nasdaq: CNXT), a worldwide leader in semiconductor system solutions for digital home information and entertainment networks, today announced revenues of $177.3 million for the first quarter of fiscal 2004, which ended January 2, 2004. First fiscal quarter 2004 revenues increased 23 percent over first fiscal quarter 2003 revenues of $144.2 million, and 8 percent over fourth fiscal quarter 2003 revenues of $164.7 million. First fiscal quarter pro forma operating profit was $17.2 million, or 9.7 percent of revenues, compared to $0.5 million in the year-ago quarter. First fiscal quarter 2004 pro forma operating profit increased by 158 percent from $6.7 million in the fourth fiscal quarter of 2003. On a pro forma basis, net profit for the first fiscal quarter of 2004 was $0.04 per diluted share, compared to $0.01 per diluted share in the fourth fiscal quarter of 2003.

        “Conexant first fiscal quarter revenues of $177.3 million grew 23 percent on a year-over-year basis and above expectations at 8 percent sequentially,” said Dwight W. Decker, Conexant chairman and chief executive officer. “This growth was driven by milestone performances in three of our key growth initiatives, with record unit shipments in each of our client-side ADSL, satellite set-top box and PC video businesses.

        “We also delivered another quarter of accelerated earnings growth, posting first fiscal quarter pro forma operating profit of $17.2 million, which is approximately 10 percent of sales and a sequential improvement of 158 percent. This marks the third consecutive quarter in which we have more than doubled our pro forma operating profit, and is a dramatic improvement from our essentially breakeven performance a year ago.”

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Conexant Grows Revenues 23 Percent Year Over Year and Delivers 10 Percent Pro Forma
Operating Profit in First Fiscal Quarter 2

        Conexant’s pro forma results are a supplement to financial statements based on generally accepted accounting principles (GAAP). Conexant uses pro forma information to evaluate its operating performance and believes this presentation provides investors with additional insight into its underlying operating results. A full reconciliation between the pro forma and GAAP results from continuing operations is included in the accompanying financial data. Presented on a GAAP basis, the net income for the first quarter of fiscal 2004 was $40.6 million, or $0.13 per diluted share, compared to a net loss of $4.8 million, or $0.02 per diluted share, in the first quarter of fiscal 2003, and a net income of $37.2 million, or $0.12 per diluted share, in the fourth fiscal quarter of 2003.

        Gross margin for the first fiscal quarter was 44.6 percent, up approximately one percent from the previous quarter. Pro forma operating expenses of $61.9 million were in line with the company’s expectations. Conexant’s cash, cash equivalents and short-term investments totaled $188.3 million at the end of the quarter, reflecting a sequential increase of $12.8 million.

Second Quarter Fiscal 2004 Outlook

        “Our second fiscal quarter is a seasonally weak period for most of the markets Conexant addresses, with typical revenue declines of approximately 5 to 10 percent,” Decker said. “However, even from our higher-than-expected prior-quarter revenue base, continued strength in our growth initiatives is expected to drive a less-than-seasonal revenue decline of 3 to 5 percent. We anticipate that gross margin will remain between 44 and 45 percent, and we expect to hold pro forma operating expenses flat at approximately $62 million.”

About the Conexant and GlobespanVirata Merger

        In November 2003, Conexant and GlobespanVirata, Inc. (Nasdaq: GSPN) signed a definitive agreement to combine the two companies in a strategic merger that will create the worldwide leader in semiconductor solutions for broadband communications and the digital home. In December 2003, the U.S. Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for the pending merger of the two companies. Earlier this month, the Securities and Exchange Commission declared effective the registration statement on Form S-4, and the two companies completed and mailed to shareowners the joint proxy statement/prospectus pertaining to the merger.

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Conexant Grows Revenues 23 Percent Year Over Year and Delivers 10 Percent Pro Forma
Operating Profit in First Fiscal Quarter 3

        The merger transaction is subject to customary closing conditions, including shareowner approval. Shareowners of both companies will vote on the proposed merger on February 25, 2004. The merger is expected to be completed promptly after shareowner approval is received. The combined company will retain the Conexant name and be headquartered in Red Bank, New Jersey. Its stock will continue to trade on the Nasdaq national market under the ticker symbol “CNXT.”

Note to Editors, Analysts and Investors

        The Conexant first fiscal quarter 2004 conference call will take place on Wednesday, January 28, 2004, at 2:00 p.m. PST/5:00 p.m. EST. To listen to the conference call via telephone, call 866-710-0179 (domestic) or 334-323-9854 (international); security code: Conexant. To listen via the Internet, visit the Investor Relations section of Conexant’s Web site at www.conexant.com/ir. Playback of the conference call will be available shortly after the call concludes and will be accessible on Conexant’s Web site at www.conexant.com/ir or by calling 800-858-5309 (domestic) or 334-323-7226 (international); access code: 40313, pass code: 16809

About Conexant

        Conexant’s innovative semiconductor system solutions are driving digital home information and entertainment networks worldwide. The company has leveraged its expertise and leadership position in modem technologies to enable more Internet connections than all of its competitors combined, and continues to develop leading integrated silicon solutions for cable, satellite, terrestrial data and digital video networks.

        Key products include digital subscriber line (DSL) and cable modem solutions, home network processors, broadcast video encoders and decoders, digital set-top box components and systems solutions, and dial-up modems. The company also offers a suite of wireless data and networking components solutions that includes HomePlug®, HomePNA™ and WLAN (802.11) components and reference designs.

        Conexant is a fabless semiconductor company and has approximately 1,400 employees. The company is headquartered in Newport Beach, Calif. To learn more, visit us at www.conexant.com.

Safe Harbor Statement

        This press release contains statements relating to future results of Conexant (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to: the cyclical nature of the semiconductor industry and the markets addressed by the company’s and its customers’ products; demand for and market acceptance of new and existing products; successful development of new products; the timing of new product introductions; changes in product mix; product obsolescence; the availability of manufacturing capacity; fluctuations in manufacturing yields; pricing pressures and other competitive factors; the ability to develop and implement new technologies and to obtain protection for the related intellectual property; the uncertainties of litigation; our ability to attract and retain qualified personnel; costs related to our proposed merger with GlobespanVirata, Inc.; the successful completion of our proposed merger with GlobespanVirata, and the risk that our and GlobespanVirata’s businesses will not be successfully integrated, as well as other risks and uncertainties, including those detailed from time to time in Conexant’s Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

# # #

Conexant is a trademark of Conexant Systems, Inc. The GlobespanVirata name and logo are trademarks of GlobespanVirata, Inc. Other brands and names contained in this release are the property of their respective owners.

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Conexant Grows Revenues 23 Percent Year Over Year and Delivers 10 Percent Pro Forma
Operating Profit in First Fiscal Quarter 4

CONEXANT SYSTEMS, INC.
Pro Forma Consolidated Condensed Statements of Operations
(unaudited, in thousands, except per share amounts)

	Three months ended
	Dec. 31,     2003			Sept. 30,     2003			June 30,     2003			Dec. 31,     2002
Net revenues	$	177,333		$	164,703		$	150,950		$	144,201
Cost of goods sold		98,196			92,592			86,000			81,462
Gross margin		79,137			72,111			64,950			62,739
Operating expenses:
Research and development		39,131			41,494			38,804			39,769
Selling, general and administrative		22,809			23,955			22,915			22,434
Total operating expenses		61,940			65,449			61,719			62,203
Pro forma operating income		17,197			6,662			3,231			536
Other expense, net		(4,603	)		(3,789	)		(2,185	)		(1,929	)
Pro forma income (loss) before income
taxes		12,594			2,873			1,046			(1,393	)
Provision (benefit) for income taxes		248			(1,314	)		488			316
Pro forma income (loss) from
continuing operations	$	12,346		$	4,187		$	558		$	(1,709	)
Pro forma income (loss) per share from
continuing operations-basic	$	0.04		$	0.02		$	—		$	(0.01	)
Pro forma income (loss) per share from
continuing operations-diluted	$	0.04		$	0.01		$	—		$	(0.01	)
Number of shares used in per share
computation-basic		277,190			273,241			268,489			265,714
Number of shares used in per share
computation-diluted		300,181			296,124			271,051			265,714

Continuing operations exclude the results of the company’s discontinued Mindspeed Technologies Internet infrastructure business which was spun off in June 2003.

Pro forma operating income, pro forma income (loss) from continuing operations, and pro forma income (loss) per share from continuing operations exclude the amortization of intangible assets, special charges, stock compensation and certain non-operating gains and losses. The company believes these measures of earnings provide a better understanding of its underlying operating results and the company uses these measures internally to evaluate its underlying operating performance. These measures of earnings are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from pro forma measures used by other companies.

A reconciliation of pro forma income (loss) from continuing operations presented above with the company’s income (loss) from continuing operations as determined under generally accepted accounting principles is presented in the following table.

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Conexant Grows Revenues 23 Percent Year Over Year and Delivers 10 Percent Pro Forma
Operating Profit in First Fiscal Quarter 5

CONEXANT SYSTEMS, INC.
Reconciliation of Pro Forma Income (Loss) From
Continuing Operations to Reported Results
(unaudited, in thousands, except per share amounts)

	Three months ended
	Dec. 31,     2003			Sept. 30,     2003			June 30,     2003			Dec. 31,     2002
Pro forma income (loss) from
continuing operations	$	12,346		$	4,187		$	558		$	(1,709	)
Amortization of intangible assets
and special items:
Amortization of intangible assets		955			914			925			799
Special charges (a)		605			4,794			6,526			6,774
Stock compensation		23			33			45			813
Gain on debt extinguishment		—			—			(7,376	)		—
Environmental charge		—			1,202			—			—
Equity in losses (earnings) of
equity method investees		(10,165	)		(114	)		2,423			(1,303	)
Unrealized (gain) loss on note
receivable from Skyworks		4,911			(11,234	)		76			4,029
Unrealized gain on the
Mindspeed warrant		(24,630	)		(30,230	)		—			—
Gains on sales of certain
investments and assets		—			(3,390	)		(5,228	)		—
Write-down of investments		—			5,000			—			—
Income (loss) from continuing
operations	$	40,647		$	37,212		$	3,167		$	(4,763	)
Income (loss) per share, basic:
Pro forma income (loss) from
continuing operations	$	0.04		$	0.02		$	—		$	(0.01	)
Amortization of intangible assets
and special items		0.11			0.12			0.01			(0.01	)
Income (loss) from continuing
operations	$	0.15		$	0.14		$	0.01		$	(0.02	)
Income (loss) per share, diluted:
Pro forma income (loss) from
continuing operations	$	0.04		$	0.01		$	—		$	(0.01	)
Amortization of intangible assets
and special items		0.09			0.11			0.01			(0.01	)
Income (loss) from continuing
operations	$	0.13		$	0.12		$	0.01		$	(0.02	)

(a) Special charges consist of asset impairments, restructuring charges, integration costs, and gains and losses on the disposal of certain operating assets.

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Conexant Grows Revenues 23 Percent Year Over Year and Delivers 10 Percent Pro Forma
Operating Profit in First Fiscal Quarter 6

CONEXANT SYSTEMS, INC.
Consolidated Condensed Statements of Operations
(unaudited, in thousands, except per share amounts)

	Three months ended
	Dec. 31,     2003		Sept. 30,     2003			June 30,     2003			Dec. 31,     2002
Net revenues	$	177,333	$	164,703		$	150,950		$	144,201
Cost of goods sold		98,196		92,592			86,000			81,462
Gross margin		79,137		72,111			64,950			62,739
Operating expenses:
Research and development		39,154		41,527			38,849			40,237
Selling, general and administrative		22,809		23,955			22,915			22,779
Amortization of intangible assets		955		914			925			799
Special charges (b)		605		4,794			6,526			6,774
Total operating expenses		63,523		71,190			69,215			70,589
Operating income (loss)		15,614		921			(4,265	)		(7,850	)
Gain on extinguishment of debt		—		—			7,376			—
Other income, net		25,281		34,977			544			3,403
Income (loss) before income taxes		40,895		35,898			3,655			(4,447	)
Provision (benefit) for income taxes		248		(1,314	)		488			316
Income (loss) from continuing
operations		40,647		37,212			3,167			(4,763	)
Discontinued operations, net of tax		—		—			(52,297	)		(620,610	)
Net income (loss)	$	40,647	$	37,212		$	(49,130	)	$	(625,373	)
Income (loss) per share, basic:
Continuing operations	$	0.15	$	0.14		$	0.01		$	(0.02	)
Discontinued operations		—		—			(0.19	)		(2.33	)
Net income (loss)	$	0.15		0.14			(0.18	)		(2.35	)
Income (loss) per share, diluted:
Continuing operations	$	0.13	$	0.12		$	0.01		$	(0.02	)
Discontinued operations		—		—			(0.19	)		(2.33	)
Net income (loss)	$	0.13		0.12			(0.18	)		(2.35	)
Number of shares used in per share
computation-basic		277,190		273,241			268,489			265,714
Number of shares used in per share
computation-diluted		307,545		303,488			271,051			265,714

(b) Special charges consist of asset impairments, restructuring charges, integration costs and gains and losses on the disposal of certain operating assets.

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Conexant Grows Revenues 23 Percent Year Over Year and Delivers 10 Percent Pro Forma
Operating Profit in First Fiscal Quarter 7

CONEXANT SYSTEMS, INC.
Consolidated Condensed Balance Sheets
(unaudited, in thousands)

	December 31,     2003		September 30,   2003
ASSETS
Current assets:
Cash, cash equivalents, and short-term investments (c)	$	188,312	$	175,469
Receivables, net		85,614		79,557
Inventories		58,979		59,548
Deferred income taxes		13,641		13,600
Mindspeed warrant-current portion		21,350		—
Other current assets		27,917		26,524
Total current assets		395,813		354,698
Property, plant and equipment, net		37,739		36,310
Goodwill		56,865		56,865
Intangible assets, net		11,550		12,506
Deferred income taxes		241,440		241,260
Mindspeed warrant		122,510		119,230
Other assets		121,593		110,838
Total assets	$	987,510	$	931,707
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	68,092	$	55,909
Accrued compensation and benefits		30,990		28,865
Other current liabilities		34,227		36,907
Total current liabilities		133,309		121,681
Convertible subordinated notes		581,825		581,825
Other liabilities		58,772		61,435
Total liabilities		773,906		764,941
Shareholders' equity		213,604		166,766
Total liabilities and shareholders' equity	$	987,510	$	931,707

(c) Cash, cash equivalents, and short-term investments as of December 31, 2003 and September 30, 2003 includes the $51.0 million and $55.6 million, respectively, fair value of the 15% convertible notes receivable from Skyworks.

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Conexant Grows Revenues 23 Percent Year Over Year and Delivers 10 Percent Pro Forma
Operating Profit in First Fiscal Quarter 8

CONEXANT SYSTEMS, INC.
Selected Other Data
(unaudited, in thousands)

	Three months ended
	Dec. 31,     2003		Sept. 30,     2003		June 30,     2003		Dec. 31,     2002
Selected Data—From Continuing
Operations (a):
Depreciation (b)	$	3,155	$	3,252	$	3,648	$	5,540
Capital expenditures		4,857		6,289		5,197		3,197
Revenues By Region:
Americas	$	22,401	$	18,145	$	15,565	$	19,232
Asia-Pacific		140,362		128,474		125,606		113,113
Europe, Middle East and Africa		14,570		18,084		9,779		11,856
	$	177,333	$	164,703	$	150,950	$	144,201

(a) Continuing operations exclude the discontinued Mindspeed Technologies Internet infrastructure business which was spun off in June 2003.

(b) Does not include amortization of intangible assets, as applicable.