UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 11-K
þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended: December 31, 2004
OR
o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 000-24923
CONEXANT SYSTEMS, INC.
RETIREMENT SAVINGS PLAN
CONEXANT SYSTEMS, INC.
4000 MACARTHUR BLVD
NEWPORT BEACH, CALIFORNIA 92660-3095
(Address of principal executive office)
CONEXANT SYSTEMS, INC.
RETIREMENT SAVINGS PLAN
Index
3 | ||||||||
4 | ||||||||
5 | ||||||||
6-15 | ||||||||
16-18 | ||||||||
(Schedules, other than those listed above, are omitted because
of the absence of conditions under which they are required.) |
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19 | ||||||||
EXHIBIT 23 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Conexant Systems, Inc.
Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits of the Conexant Systems, Inc. Retirement Savings Plan (the Plan) as of December 31, 2004 and 2003, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, and audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plans internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2004 and 2003, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets (held at end of year) as of December 31, 2004 and 2003, are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules are the responsibility of the Plans management. Such schedules have been subjected to the auditing procedures applied in the audit of the basic 2004 and 2003 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.
/s/ Deloitte & Touche LLP
Costa Mesa, California
June 21, 2005
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CONEXANT SYSTEMS, INC.
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004 AND 2003
2004 | 2003 | |||||||
ASSETS: |
||||||||
Investmentsat fair value (Note 3): |
||||||||
Conexant common stock funds |
$ | 17,518,008 | $ | 41,531,049 | ||||
Skyworks common stock fund |
8,037,925 | 8,571,863 | ||||||
Mindspeed common stock fund |
5,114,771 | 14,811,396 | ||||||
Shares of mutual funds |
152,753,414 | 57,306,283 | ||||||
Interest in collective trusts |
19,283,557 | 12,361,073 | ||||||
Participant loans receivable |
1,716,794 | 763,793 | ||||||
Total investments |
204,424,469 | 135,345,457 | ||||||
Contributions receivableother |
24,136 | 20,987 | ||||||
CASH |
272,527 | 604,970 | ||||||
Total assets |
204,721,132 | 135,971,414 | ||||||
LIABILITIES: |
||||||||
Payable for excess contributions |
19,439 | 4,627 | ||||||
Total liabilities |
19,439 | 4,627 | ||||||
NET ASSETS AVAILABLE FOR BENEFITS |
$ | 204,701,693 | $ | 135,966,787 | ||||
The accompanying notes are an integral part of these financial statements.
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CONEXANT SYSTEMS, INC.
RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2004 AND 2003
2004 | 2003 | |||||||
ADDITIONS: |
||||||||
Investment income: |
||||||||
Net appreciation (depreciation) in fair value of investments |
$ | (22,186,896 | ) | $ | 58,167,776 | |||
Interest and dividends |
2,827,668 | 1,338,350 | ||||||
Total investment income (loss) |
(19,359,228 | ) | 59,506,126 | |||||
Contributions: |
||||||||
Transfer in of assets (Note 1) |
83,051,000 | |||||||
Participant |
12,297,308 | 11,323,252 | ||||||
Employer |
4,950,945 | 4,777,313 | ||||||
Rollover |
775,138 | 301,274 | ||||||
Total contributions |
101,074,391 | 16,401,839 | ||||||
Total additions |
81,715,163 | 75,907,965 | ||||||
DEDUCTIONS: |
||||||||
Benefits paid and other distributions to participants |
(12,877,518 | ) | (18,131,888 | ) | ||||
Administrative fees and other deductions |
(102,739 | ) | (156,043 | ) | ||||
Total deductions |
(12,980,257 | ) | (18,287,931 | ) | ||||
NET INCREASE |
68,734,906 | 57,620,034 | ||||||
NET ASSETS AVAILABLE FOR BENEFITSBeginning of year |
135,966,787 | 78,346,753 | ||||||
NET ASSETS AVAILABLE FOR BENEFITSEnding of year |
$ | 204,701,693 | $ | 135,966,787 | ||||
The accompanying notes are an integral part of these financial statements.
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CONEXANT SYSTEMS, INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
1. | DESCRIPTION OF PLAN | |||
Effective January 1, 1999, Conexant Systems, Inc. (the Company or Plan Sponsor) adopted the Conexant Systems, Inc. Retirement Savings Plan (the Plan). The following description of the Plan provides only general information. Participants should refer to the Plan document for a more complete description of the Plans provisions. | ||||
See Transfer In of Assets item below for additional information on the additions to the Plan in 2004. | ||||
GeneralThe Plan is a defined-contribution plan designed to qualify under Internal Revenue Code (the Code) Section 401(a). The Plan covers substantially all employees of the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). At December 31, 2004, the Plan had 4,406 participants. | ||||
Fidelity Investments Institutional Operations Company, Inc. provides recordkeeping services to the Plan in its capacity as agent for the trustee, Fidelity Management Trust Company (Fidelity), pursuant to the terms of the Trust Agreement between Conexant Systems, Inc. Master Trust (the Trust) and Fidelity. All of the Plans assets are and, until April 1, 2004, the assets of the Conexant Systems, Inc. Hourly Employees Savings Plan were, kept in the Trust. As of December 31, 2004 and 2003, the Plan owned 100% and 98%, respectively, of the total net assets available for benefits in the Trust. Net assets of the Trust and plan-specific expenses are allocated to the Plans based on specific identification. Net investment income, gains and losses and general expenses are allocated based on the Plans proportional share of net assets in the Trust. | ||||
Transfer In of Assets Effective as of April 1, 2004, the Conexant Systems, Inc. Hourly Employees Savings Plan was merged with and into the Plan and all undistributed account balances and liabilities (including outstanding loan balances) associated therewith were transferred to the Plan. The activity in the Hourly Employees Savings Plan between January 1, 2004 and March 31, 2004 (date of merger) was as follows: |
Investment income |
$ | 185,824 | ||
Benefits paid and other distributions to participants |
(85,003 | ) | ||
Administrative fees |
(372 | ) | ||
Transfer to Retirement Savings Plan |
(2,832,423 | ) | ||
Net decrease in net assets |
(2,731,974 | ) | ||
Net
assetsJanuary 1, 2004 |
2,731,974 | |||
Net
assetsMarch 31, 2004 |
$ | | ||
Effective June 4, 2004, the GlobespanVirata, Inc. Retirement Savings Plan was merged with and into the Plan, at which time the net assets of $80,218,577 were transferred into the Plan. |
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ContributionsEffective October 1999, the Plan was amended to provide for employees to contribute from 1% to 17% of base compensation through payroll deductions on a pretax, post-tax, or combination basis, up to the annual maximum pretax dollar limit established by the Internal Revenue Service (IRS). Participants direct the investment of their contributions into various investment options offered by the Plan. The Plan currently offers 29 mutual funds, an interest in collective trusts, the Conexant Stock Fund, Skyworks Stock Fund and the Mindspeed Stock Fund as investment options for participants. | ||||
Until June 3, 2004, the Company matched 100% up to the first 4% of employee compensation contributed to the Plan, and, at its discretion, could make an additional variable match of between 0% and 100% on the first 4% an employee contributes, depending on the Companys overall financial performance. Until June 3, 2004, all Company contributions were directed to the Conexant Stock Fund A (not participant directed). Effective June 4, 2004, the Company changed its method for matching employee contributions to match 66.66% on the first 6% of eligible contributions made to the Plan, and also changed the way matching contributions are made. Matching contributions are no longer directed to the Conexant Stock Fund A, but are allocated based on participant investment elections in effect at the time of the Company matching contribution. Participants may re-allocate amounts held in the Conexant Stock Fund A to other investment options in the Plan. | ||||
The discretionary profit-sharing contribution is to be allocated to all eligible participants employed on the last day of the plan year on a pro-rata basis based on each participants compensation. | ||||
The amount allocated in each calendar year to any participant cannot exceed the lesser of $41,000 or 100% of the participants total compensation for the plan year ended December 31, 2004. For purposes of this limitation, amounts allocated shall comprise Company matching contributions and the participants pre-tax and post-tax contributions. No discretionary profit-sharing match was provided during the years ended December 31, 2004 and 2003. | ||||
Participant AccountsEach participants account reflects the participants contributions, the Companys matching contributions, an allocation of Plan earnings (losses), and an allocation of administrative expenses. Administrative expenses are equally allocated to all participants. | ||||
Participants are permitted at any time to transfer all or a portion of the value of their interest in the Plans investment funds (including Conexant Stock Fund B), which are attributable to their own participant contributions into one or more of the other investment funds. A participant who has attained the age of 591/2, whether or not retired from the Company, is permitted to elect at any time to transfer all or a portion of the total value of their interest in Conexant Stock Fund A to any one or more of the other investment funds. For participants still employed with the Company, all subsequent Company-matching contributions and Company profit-sharing contributions, if any, until June 3, 2004 were made in Conexant common stock. Effective June 4, 2004, Company matching contributions are no longer directed to the Conexant Stock Fund A, but are allocated based on participant investment elections in effect at the time of the Company matching contribution. Participants may re-allocate amounts held in the Conexant Stock Fund A to other investment options in the Plan. |
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Investment OptionsAs of December 31, 2004 and 2003, the Plan offered investment options in the following funds (percentages are approximate, and descriptions are based on the information extracted from the related prospectus): |
a. | Conexant Stock Fund BConexant Systems, Inc. common stock, cash and the proceeds and income on such cash and common stock. | |||
b. | Skyworks Stock FundSkyworks common stock, cash and the proceeds and income on such cash and common stock. | |||
c. | Mindspeed Stock FundMindspeed common stock, cash and the proceeds and income on such cash and common stock. | |||
d. | Oakmark Select IThe fund invests primarily in domestic-equity securities. It may invest up to 25% of assets in securities of non-U.S. issuers, including foreign government obligations and foreign equity and debt securities traded over-the-counter (OTC) or on foreign exchanges; it may invest no more than 5% in securities of issuers in emerging markets. | |||
e. | Baron GrowthThe fund invests primarily in common stocks but may also invest in other equity-type securities such as convertible bonds and debentures, preferred stocks, warrants and convertible preferred stocks. It invests primarily in small sized companies with market values less than $1,500,000,000. | |||
f. | Ariel FundThe fund normally invests 80% of assets in equity securities with market capitalizations under $2 billion. It may invest the remaining 20% in investment grade debt securities. The fund seeks environmentally responsible companies; it may not invest in issuers primarily involved in the manufacture of weapons systems, nuclear energy, or tobacco. | |||
g. | T. Rowe Price Emerging Markets Stock FundNormally invests at least 80% of assets in securities of companies located in emerging markets. It invests primarily in common stocks but may also invest in preferred stocks, convertible securities, and fixed income securities. The funds investments are typically diversified across emerging markets in Latin America, Asia, Europe, Africa, and the Middle East. | |||
h. | Van Kampen Growth and Income Fund Class AInvests primarily in income-producing equity securities, including common stocks and convertible securities (although investments are also made in nonconvertible preferred stocks and debt securities). | |||
i. | Fidelity Low Price Stock FundNormally investing at least 80% of assets in low-priced stocks (those priced at or less than $35 per share), which can lead to investments in small and medium-sized companies. | |||
j. | Fidelity FundInvests primarily in common stocks. The fund potentially invests a portion of its assets in bonds, including lower-quality debt securities. Invests in domestic and foreign issuers. | |||
k. | Fidelity Growth Company FundInvests primarily in common stocks of domestic and foreign issuers. The fund invests in companies that it believes have above-average growth potential. | |||
l. | Fidelity OTC Portfolio FundNormally invests primarily in common stocks. Normally invests at least 65% of its assets in securities principally traded on the OTC market, which has more small and medium-sized companies than other markets. Potentially, the fund may invest in non-OTC |
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securities. The fund may invest in domestic and foreign issuers. Securities traded on the OTC market tend to be from smaller or newer companies, which generally involve greater investment risk than investments in larger, well-known companies.
m. | Fidelity Equity-Income FundPrimary investment focus on income-producing stocks, such as common and preferred stocks, with some limited focus on bonds producing income (in general, would avoid securities without proven earnings or credit). | |||
n. | Fidelity ContrafundInvests primarily in the common stock of companies whose value the fund believes is not fully recognized by the public. The fund invests in foreign and domestic issuers. | |||
o. | Fidelity Diversified International FundPrimary focus is stocks of larger companies which are located outside the United States and which are viewed as being undervalued. | |||
p. | Fidelity Dividend Growth FundStocks of companies that have potential to increase the amount of their dividends or to begin paying them if none are currently paid. | |||
q. | Fidelity MagellanInvests primarily in common stock of domestic and foreign issuers with a focus on capital appreciation. | |||
r. | Fidelity Mid-Cap Stock FundPrimary focus in stocks of mid-size companies with capitalizations within the range of the Standard & Poors MidCap 400 (approximate capitalization of $110,000,000 to $5,000,000,000). | |||
s. | Fidelity Freedom Income Fund20% in Fidelity stock mutual funds, 40% in Fidelity bond mutual funds and 40% in Fidelity money market mutual funds. | |||
t. | Fidelity Freedom 2000 Fund25% in Fidelity stock mutual funds, 43% in Fidelity bond mutual funds and 32% in Fidelity money market mutual funds. Percentage mix will gradually become more conservative over time. | |||
u. | Fidelity Freedom 2005 Fund20% in Fidelity domestic stock mutual funds, 35% in Fidelity investment-grade fixed-income mutual funds, 5% in Fidelity high-yield fixed-income mutual funds and 40% in Fidelity money market mutual funds. Percentage mix will gradually become more conservative over time. | |||
v. | Fidelity Freedom 2010 Fund45% in Fidelity stock mutual funds, 46% in Fidelity bond mutual funds and 9% in Fidelity money market mutual funds. Percentage mix will gradually become more conservative over time. | |||
w. | Fidelity Freedom 2015 Fund20% in Fidelity domestic stock mutual funds, 35% in Fidelity investment-grade fixed-income mutual funds, 5% in Fidelity high-yield fixed-income mutual funds and 40% in Fidelity money market mutual funds. Percentage mix will gradually become more conservative over time. | |||
x. | Fidelity Freedom 2020 Fund69% in Fidelity stock mutual funds and 31% in Fidelity bond mutual funds. Percentage mix will gradually become more conservative over time. | |||
y. | Fidelity Freedom 2025 Fund20% in Fidelity domestic stock mutual funds, 35% in Fidelity investment-grade fixed-income mutual funds, 5% in Fidelity high-yield fixed-income mutual funds |
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and 40% in Fidelity money market mutual funds. Percentage mix will gradually become more conservative over time. | ||||
z. | Fidelity Freedom 2030 Fund82% in Fidelity stock mutual funds and 18% in Fidelity bond mutual funds. Percentage mix will gradually become more conservative over time. | |||
aa. | Fidelity Freedom 2035 Fund20% in Fidelity domestic stock mutual funds, 35% in Fidelity investment-grade fixed-income mutual funds, 5% in Fidelity high-yield fixed-income mutual funds and 40% in Fidelity money market mutual funds. Percentage mix will gradually become more conservative over time. | |||
bb. | Fidelity Freedom 2040 FundInvests in a combination of Fidelity equity, fixed-income and money market funds (underlying Fidelity funds) and allocates its assets among these funds according to an asset allocation strategy. | |||
cc. | Fidelity U.S. Bond Index FundInvestment-grade (medium to high quality) or above with maturities of at least one year, including U.S. Treasury and U.S. government securities, corporate bonds, asset-backed and mortgage-backed securities and U.S. dollar-denominated foreign securities. | |||
dd. | Fidelity Intermediate Gov. IncNormally invests at least 80% of total assets in U.S. Government securities and repurchase agreements for those securities. Invests in instruments related to U.S. Government securities while normally maintaining a dollar-weighted average maturity of three to ten years. | |||
ee. | Fidelity Retirement Money MarketInvests in U.S. dollar-denominated money market securities of domestic and foreign issuers and reverse repurchase agreements. More than 25% of the funds total assets will be invested in the financial services industries. | |||
ff. | Spartan U.S. Equity Index FundPrimary investment focus on the 500 domestic companies that make up the S&P 500 and in other securities that are based on the value of that Index. | |||
gg. | Fidelity Managed Income Portfolio (Stable Value) FundThis is a collection which primarily invests in investment contracts providing a stated rate of interest, which is offered by major insurance companies, with some investment in certain types of fixed income securities to provide daily liquidity. |
VestingUntil June 3, 2004, Participant elective deferral contributions and Company contributions were fully vested at all times. | ||||
Effective June 4, 2004, the Company changed the method in which participants vest in Company matching contributions. Company matching contributions, and related earnings thereon, will vest as follows: 40% after two years of services, 70% after three years of service, and 100% after four years of service, or in the event of death, disability, or the attainment of age 60. Any Company matching contributions made prior to June 4, 2004 will remain 100% vested. | ||||
Payment of BenefitsBalances may be withdrawn when participants become disabled, die, retire, or terminate employment. Such balances may be kept in the Plan, in any of the Plans investment options, if the balance is greater than $5,000. Upon retirement, a participant may elect to receive a lump-sum amount or ten or fewer annual installments equal to the value of his or her account. |
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Forfeited AccountsAt December 31, 2004 and 2003, there were no material forfeited nonvested accounts. These accounts would be used to reduce employer contributions. During the years ended December 31, 2004 and 2003, employer contributions were not reduced by any forfeited nonvested accounts. | ||||
Plan TerminationAlthough it has not expressed any intent to do so, the Company has the right under the Plan to discontinue contributions at any time and to amend or terminate the Plan subject to the provisions of ERISA. | ||||
Participant Loans ReceivableParticipants who are active employees of the Company may borrow up to the lesser of 50% of their account balance in the Plan or $50,000. The minimum loan is $1,000. Loans are repayable ratably through biweekly payroll deductions over a period not to exceed five years, except for loans for the purchase or construction of a participants principal residence, which provide for repayment over a reasonable period of time that may not exceed ten years. Loans bear interest at the prime rate, as published by the Wall Street Journal on the last day of the preceding quarter in which the loan funds, plus 1% (6.25% at December 31, 2004). During the year ended December 31, 2004, $123,173 in defaulted loans were converted to taxable distributions and included in benefits paid to participants in the accompanying financial statements. There were no loans in default outstanding at December 31, 2004 and 2003. | ||||
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Basis of Accounting and PresentationThe accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America, and present the net assets available for benefits and changes in those net assets. | ||||
Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan administrator to make estimates and assumptions that affect the reported amounts and disclosures. Accordingly, actual results may differ from those estimates. | ||||
Investment Valuation and Income RecognitionThe Plans investments are stated at fair value. The Plans investments are valued at their quoted market price. Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. | ||||
Payment of BenefitsBenefits are recorded when paid. | ||||
Administrative ExpensesThe costs of administering the Plan are paid for by the Company, with the exception of a per participant fee charged by Fidelity Investments, which is applied equally to all participant accounts on a quarterly basis. | ||||
Derivative Financial InstrumentsDerivative financial instruments are accounted for in accordance with Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133 requires that the Plan recognize all derivatives as either assets or liabilities in the statement of net assets available for benefits and measure those instruments at fair value. As of December 31, 2004 and 2003, the Plan had no derivative financial instruments. |
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3. | INVESTMENTS | |||
The following is a summary of investments held as of December 31: |
2004 | 2003 | |||||||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||||
Conexant Stock Fund A* |
$ | 15,059,857 | $ | 10,030,807 | $ | 15,686,513 | $ | 27,393,589 | ||||||||
Conexant Stock Fund B |
12,666,931 | 7,487,201 | 10,424,375 | 14,137,460 | ||||||||||||
Skyworks Stock Fund |
26,678,782 | 8,037,925 | 30,717,553 | 8,571,863 | ||||||||||||
Mindspeed Stock Fund |
3,079,451 | 5,114,771 | 3,569,460 | 14,811,396 | ||||||||||||
Oakmark Select I |
3,030,863 | 3,439,470 | 1,589,490 | 1,787,419 | ||||||||||||
Baron Growth |
3,337,162 | 3,968,506 | 648,147 | 744,375 | ||||||||||||
Ariel Fund |
2,013,550 | 2,148,403 | 144,302 | 163,235 | ||||||||||||
TRP Emerging Mkt Fund |
107,803 | 127,598 | ||||||||||||||
VK Growth & Income Fund |
1,234,746 | 1,379,497 | 232,640 | 266,707 | ||||||||||||
Fidelity Low Price Stock Fund |
4,181,041 | 4,855,289 | 1,271,528 | 1,518,716 | ||||||||||||
Fidelity Fund |
638,731 | 655,094 | ||||||||||||||
Fidelity Growth Company |
4,120,368 | 4,488,653 | 3,406,132 | 3,333,797 | ||||||||||||
Fidelity OTC Portfolio |
1,117,358 | 1,146,045 | 981,757 | 936,868 | ||||||||||||
Fidelity Equity Income |
8,119,066 | 8,613,786 | ||||||||||||||
Fidelity Contrafund |
9,753,012 | 10,761,203 | ||||||||||||||
Fidelity Diversified
International |
11,857,735 | 14,272,306 | 3,563,393 | 4,177,439 | ||||||||||||
Fidelity Dividend Growth |
11,571,441 | 11,493,609 | ||||||||||||||
Fidelity Magellan |
12,147,496 | 12,802,097 | ||||||||||||||
Fidelity Mid-Cap Stock |
8,575,839 | 9,425,064 | 7,740,506 | 7,861,901 | ||||||||||||
Fidelity Freedom Income |
891,893 | 911,720 | 576,386 | 583,819 | ||||||||||||
Fidelity Freedom 2000 |
885,498 | 899,877 | 606,488 | 601,347 | ||||||||||||
Fidelity Freedom 2005 |
3,142 | 3,346 | ||||||||||||||
Fidelity Freedom 2010 |
3,122,831 | 3,226,782 | 2,100,429 | 2,056,014 | ||||||||||||
Fidelity Freedom 2015 |
183,560 | 192,806 | ||||||||||||||
Fidelity Freedom 2020 |
12,298,868 | 13,040,396 | 3,689,674 | 3,568,434 | ||||||||||||
Fidelity Freedom 2025 |
91,449 | 94,292 | ||||||||||||||
Fidelity Freedom 2030 |
4,838,743 | 5,118,502 | 2,872,442 | 2,762,098 | ||||||||||||
Fidelity Freedom 2035 |
123,284 | 131,895 | ||||||||||||||
Fidelity Freedom 2040 |
989,948 | 1,070,758 | 74,167 | 82,193 | ||||||||||||
Fidelity U.S. Bond Index |
6,332,876 | 6,426,154 | 5,329,583 | 5,451,520 | ||||||||||||
Fidelity Intermediate Govt. |
298,343 | 297,609 | 140,536 | 139,055 | ||||||||||||
Fidelity Retirement Money Market |
19,151,780 | 19,151,780 | ||||||||||||||
Spartan U.S. Equity Index |
23,548,006 | 24,887,178 | 9,462,918 | 8,995,045 | ||||||||||||
Fidelity Managed Income
Portfolio (stable value) |
19,283,557 | 19,283,557 | 12,361,073 | 12,361,073 | ||||||||||||
Participant loans receivable
(bearing interest from 5.00%
to 10.50%) |
1,716,794 | 1,716,794 | 763,793 | 763,793 | ||||||||||||
$ | 220,733,829 | $ | 204,424,469 | $ | 130,271,260 | $ | 135,345,457 | |||||||||
* | Nonparticipant directed until June 3, 2004. |
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The following table presents investments that represent 5% or more of the Plans net assets at fair value as of December 31:
2004 | 2003 | |||||||
Conexant Stock Fund A* |
$ | | $ | 27,393,589 | ||||
Conexant Stock Fund B |
14,137,460 | |||||||
Skyworks Stock Fund |
8,571,863 | |||||||
Mindspeed Stock Fund |
14,811,396 | |||||||
Fidelity Diversified International |
14,272,306 | |||||||
Fidelity Dividend Growth |
11,493,609 | |||||||
Fidelity Mid-Cap Stock |
7,861,901 | |||||||
Fidelity Magellan |
12,802,097 | |||||||
Fidelity Contrafund |
10,761,203 | |||||||
Fidelity Freedom 2020 |
13,040,396 | |||||||
Fidelity Retirement Money Market |
19,151,780 | |||||||
Spartan U.S. Equity Index |
24,887,178 | 8,995,045 | ||||||
Fidelity Managed Income Portfolio
(stable value) |
19,283,557 | 12,361,073 |
* | Nonparticipant directed until June 3, 2004 |
The Plans investments (including gains and losses on investments bought and sold, as well as held) (depreciated) appreciated in value as follows for the years ended December 31:
2004 | 2003 | |||||||
Conexant Stock Fund A * |
$ | (17,198,305 | ) | $ | 19,266,815 | |||
Conexant Stock Fund B |
(8,017,249 | ) | 15,989,029 | |||||
Skyworks Stock Fund |
754,379 | 85,453 | ||||||
Mindspeed Stock Fund |
(7,671,192 | ) | 11,529,603 | |||||
Mutual funds |
9,945,471 | 11,276,876 | ||||||
$ | (22,186,896 | ) | $ | 58,147,776 | ||||
* | Nonparticipant directed until June 3, 2004. |
4. | FEDERAL INCOME TAX STATUS | |||
The IRS has determined and informed the Company by a letter dated December 13, 2000, that the Plan and related trust were designed in accordance with the applicable regulations of the Internal Revenue Code. The Plan has been amended since receiving the determination letter; however, the Company and the plan administrator believe that the Plan is currently designed and operated in compliance with the applicable requirements of the Internal Revenue Code and that the Plan and related trust continue to be tax-exempt. Therefore, no provision for income taxes has been included in the Plans financial statements. |
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5. | RISKS AND UNCERTAINTIES | |||
The Plan provides for various investment options in any combination of stocks, bonds, fixed-income securities and mutual funds. Investment securities are exposed to various risks, such as interest rate, market and credit. Because of the risks associated with certain investment securities and the uncertainties related to changes in the value of investment securities, it is possible that changes in the value of such securities may materially affect participants account balances and the amounts reported in the statements of net assets available for benefits and the statements of changes in net assets available for benefits. | ||||
6. | NONPARTICIPANT-DIRECTED INVESTMENTS | |||
Until June 3, 2004, employer contributions to the Plan were in the form of Conexant common stock, and such investments could not be transferred to other funds, except as described in Note 1. Therefore, until that date, these investments were considered nonparticipant-directed investments. Effective June 4, 2004, employer contributions are made in cash and are allocated based on participant investment elections in effect at the time of the employer contribution. | ||||
Information about the net assets and significant components of the changes in net assets relating to nonparticipant-directed investments is as follows at December 31: |
2004 | 2003 | |||||||
Net assets: |
||||||||
Conexant Stock Fund A* |
$ | 10,030,807 | $ | 27,393,589 | ||||
Changes in net assets: |
||||||||
Employer contributions |
$ | 1,608,491 | $ | 4,775,733 | ||||
Net appreciation (depreciation) in fair value
of investments |
(6,958,685 | ) | 19,266,815 | |||||
Benefits paid to participants |
(1,300,875 | ) | (3,964,969 | ) | ||||
Net transfers to participant-directed investments June 3, 2004 |
(20,742,520 | ) | ||||||
Net change |
(27,393,589 | ) | 20,077,579 | |||||
Conexant Stock Fund A*Beginning of year |
27,393,589 | 7,316,010 | ||||||
Nonparticipant-directed balances in |
||||||||
Conexant Stock Fund A*End of year |
$ | | $ | 27,393,589 | ||||
* | Nonparticipant directed until June 3, 2004 |
7. | EXEMPT PARTY-IN-INTEREST | |||
Certain Plan investments are shares of mutual funds managed by an affiliate of Fidelity. Fidelity is the trustee as defined by the Plan, and therefore, these transactions qualify as party-in-interest transactions. Administrative fees paid by the Plan for investment management services amounted to $102,724 and $156,043 for the years ended December 31, 2004 and 2003, respectively. | ||||
At December 31, 2004 and 2003, the Plan held 7,132,530 and 6,829,356 shares of common stock of Conexant Systems, Inc., the sponsoring employer, with a cost basis of $27,726,788 and $26,110,888, |
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respectively. During the years ended December 31, 2004 and 2003, the Plan recorded no dividend income.
8. | SUBSEQUENT EVENT | |||
In February 2005, the Company, certain of its current and former directors and officers, and Plan Committee Members were named as defendants in a complaint filed in the U.S. District Court for the District of New Jersey. The complaint alleges that the defendants breached their fiduciary duties by allowing and encouraging Plan participants to invest in Conexant common stock as a Plan investment alternative. The Company believes that this lawsuit and its allegations are without merit and the defendants will vigorously defend the litigation. |
******
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CONEXANT SYSTEMS, INC.
RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2004
(a) | (b) | (c) | (d) | (e) | ||||||||
Identity of | Description of Investment, | |||||||||||
Issue, Borrower, | Including Maturity Date, | |||||||||||
Lessor or Similar | Rate of Interest, Collateral, | Current | ||||||||||
Party | Par or Maturity Value | Cost | Value | |||||||||
* | Fidelity Investments | Conexant Stock Fund A^ |
$ | 15,059,857 | $ | 10,030,807 | ||||||
* | Fidelity Investments | Conexant Stock Fund B |
12,666,931 | 7,487,201 | ||||||||
* | Fidelity Investments | Skyworks Stock Fund |
26,678,782 | 8,037,925 | ||||||||
* | Fidelity Investments | Mindspeed Stock Fund |
3,079,451 | 5,114,771 | ||||||||
Oakmark Funds | Oakmark Select I |
3,030,863 | 3,439,470 | |||||||||
Baron Funds | Baron Growth |
3,337,162 | 3,968,506 | |||||||||
* | Fidelity Investments | Ariel Fund |
2,013,550 | 2,148,403 | ||||||||
* | Fidelity Investments | VK Growth & Income Fund |
1,234,746 | 1,379,497 | ||||||||
* | Fidelity Investments | Fidelity Low Price Stock Fund |
4,181,041 | 4,855,289 | ||||||||
* | Fidelity Investments | Fidelity Growth Company |
4,120,368 | 4,488,653 | ||||||||
* | Fidelity Investments | Fidelity OTC Portfolio |
1,117,358 | 1,146,045 | ||||||||
* | Fidelity Investments | Fidelity Equity Income |
8,119,066 | 8,613,786 | ||||||||
* | Fidelity Investments | Fidelity Contrafund |
9,753,012 | 10,761,203 | ||||||||
* | Fidelity Investments | Fidelity Diversified
International |
11,857,735 | 14,272,306 | ||||||||
* | Fidelity Investments | Fidelity Magellan |
12,147,496 | 12,802,097 | ||||||||
* | Fidelity Investments | Fidelity Mid-Cap Stock |
8,575,839 | 9,425,064 | ||||||||
* | Fidelity Investments | Fidelity Freedom Income |
891,893 | 911,720 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2000 |
885,498 | 899,877 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2005 |
3,142 | 3,346 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2010 |
3,122,831 | 3,226,782 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2015 |
183,560 | 192,806 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2020 |
12,298,868 | 13,040,396 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2025 |
91,449 | 94,292 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2030 |
4,838,743 | 5,118,502 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2035 |
123,284 | 131,895 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2040 |
989,948 | 1,070,758 | ||||||||
* | Fidelity Investments | Fidelity U.S. Bond Index |
6,332,876 | 6,426,154 | ||||||||
* | Fidelity Investments | Fidelity Intermediate Govt. |
298,343 | 297,609 | ||||||||
* | Fidelity Investments | Fidelity Retirement Money Market |
19,151,780 | 19,151,780 | ||||||||
* | Fidelity Investments | Spartan U.S. Equity Index |
23,548,006 | 24,887,178 | ||||||||
* | Fidelity Investments | Fidelity Managed Income
Portfolio (stable value) |
19,283,557 | 19,283,557 | ||||||||
Participant loans receivable
(bearing interest from 5.00%
to 10.50%) |
1,716,794 | 1,716,794 | ||||||||||
$ | 220,733,829 | $ | 204,424,469 | |||||||||
^ | Nonparticipant directed until June 3, 2004 | |
* | Identified as a party-in-interest to the Plan. |
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CONEXANT SYSTEMS, INC.
RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2003
(a) | (b) | (c) | (d) | (e) | ||||||||
Identity of | Description of Investment, | |||||||||||
Issue, Borrower, | Including Maturity Date, | |||||||||||
Lessor or Similar | Rate of Interest, Collateral, | Current | ||||||||||
Party | Par or Maturity Value | Cost | Value | |||||||||
* | Fidelity Investments | Conexant Stock Fund A ^ |
$ | 15,686,513 | $ | 27,393,589 | ||||||
* | Fidelity Investments | Conexant Stock Fund B |
10,424,375 | 14,137,460 | ||||||||
* | Fidelity Investments | Skyworks Stock Fund |
30,717,553 | 8,571,863 | ||||||||
* | Fidelity Investments | Mindspeed Stock Fund |
3,569,460 | 14,811,396 | ||||||||
Oakmark Funds | Oakmark Select I |
1,589,490 | 1,787,419 | |||||||||
Baron Funds | Baron Growth |
648,147 | 744,375 | |||||||||
* | Fidelity Investments | Ariel Fund |
144,302 | 163,235 | ||||||||
Franklin Resources, Inc. | Trp Emg Mkt Fund |
107,803 | 127,598 | |||||||||
* | Fidelity Investments | VK Growth & Income |
232,640 | 266,707 | ||||||||
* | Fidelity Investments | Fidelity Low Price Stock Fund |
1,271,528 | 1,518,716 | ||||||||
* | Fidelity Investments | Fidelity Fund |
638,731 | 655,094 | ||||||||
* | Fidelity Investments | Fidelity Growth Company |
3,406,132 | 3,333,797 | ||||||||
* | Fidelity Investments | Fidelity OTC Portfolio |
981,757 | 936,868 | ||||||||
* | Fidelity Investments | Fidelity Diversified International |
3,563,393 | 4,177,439 | ||||||||
* | Fidelity Investments | Fidelity Dividend Growth |
11,571,441 | 11,493,609 | ||||||||
* | Fidelity Investments | Fidelity Mid-Cap Stock |
7,740,506 | 7,861,901 | ||||||||
* | Fidelity Investments | Fidelity Freedom Income |
576,386 | 583,819 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2000 |
606,488 | 601,347 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2010 |
2,100,429 | 2,056,014 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2020 |
3,689,674 | 3,568,434 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2030 |
2,872,442 | 2,762,098 | ||||||||
* | Fidelity Investments | Fidelity Freedom 2040 |
74,167 | 82,193 | ||||||||
* | Fidelity Investments | Fidelity U.S. Bond Index |
5,329,583 | 5,451,520 | ||||||||
* | Fidelity Investments | Fidelity Intermediate Govt. |
140,536 | 139,055 | ||||||||
* | Fidelity Investments | Spartan U.S. Equity Index |
9,462,918 | 8,995,045 | ||||||||
* | Fidelity Investments | Fidelity Managed Income Portfolio
(stable value) |
12,361,073 | 12,361,073 | ||||||||
Participant loans receivable
(interest rates ranging from 5.00%
to 10.50%) |
763,793 | 763,793 | ||||||||||
$ | 130,271,260 | $ | 135,345,457 | |||||||||
^ | Nonparticipant directed | |
* | Identified as a party-in-interest to the Plan. |
-18-
SIGNATURE
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
CONEXANT SYSTEMS, INC. RETIREMENT SAVINGS PLAN |
||||
Date: June 23, 2005 | By: | /s/ J. Scott Blouin | ||
J. Scott Blouin | ||||
Senior Vice President and Chief Financial Officer of Conexant Systems, Inc. and Member of the Plan Committee |
-19-
INDEX TO EXHIBITS
Exhibit | ||
Number | Description | |
23
|
Consent of Independent Registered Public Accounting Firm |