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BW)(AZ-ON-SEMICONDUCTOR)(ONNN) ON Semiconductor Reports FirstQuarter Results
Business Editors/High-Tech Writers
PHOENIX--(BUSINESS WIRE)--April 28, 2004--
Company grows revenues by 11 percent and increases gross margin by 300 basis points from prior quarter
ON Semiconductor Corp. (NASDAQ: ONNN) today announced thattotal revenues in the first quarter of 2004 were $308.2 million, anincrease of 11 percent from the fourth quarter of 2003. During thefirst quarter of 2004, the company reported a net loss of $47.6million, or $0.23 per share, that included restructuring, assetimpairments and other charges of $13.1 million, or $0.06 per share,and a loss on debt prepayment of $33.0 million, or $0.14 per share.During the fourth quarter of 2003, the company reported a net loss of$42.4 million, or $0.21 per share, that included restructuring, assetimpairments and other charges of $29.9 million, or $0.14 per share anda loss on debt prepayment of $1.3 million, or $0.01 per share.
On a mix-adjusted basis, average selling prices in the firstquarter of 2004 were up approximately 1 percent from the fourthquarter of 2003. The company´s gross margin in the first quarter was31.1 percent, an increase of approximately 300 basis points ascompared to the fourth quarter of 2003 due to a combination ofincreased average selling prices, improved product mix, increased unitvolumes and cost reductions.
EBITDA for the first quarter of 2004 was $14.2 million andincluded restructuring, asset impairments and other charges of $13.1million and the $33.0 million loss on debt prepayment. EBITDA for thefourth quarter of 2003 was $20.6 million and included restructuring,asset impairments and other charges of $29.9 million and the $1.3million loss on debt prepayment. A reconciliation of this non-GAAPfinancial measure to the company´s net loss and net cash provided byoperating activities prepared in accordance with U.S. GAAP is set outin the attached schedule.
The $13.1 million in restructuring, asset impairments and othercharges for the first quarter of 2004 included approximately $12.0million of non-cash charges for a loss on sale of fixed assets andapproximately $1.1 million of cash charges, primarily for severance.
The $29.9 million in restructuring, asset impairments and othercharges for the fourth quarter of 2003 included approximately $24.5million of non-cash charges for asset impairments and approximately$5.4 million of cash charges, primarily for severance.
"Our revenue and gross margin exceeded our expectations," saidKeith Jackson, ON Semiconductor president and CEO. "Revenue is thehighest it has been since the second quarter of 2001 and gross marginis the highest since the fourth quarter of 2000, both clear indicatorsof the improving business environment for the company. In addition, wemade significant strides during and subsequent to the end of the firstquarter to improve our capital structure. While the effects of ouractions had only a minimal impact on interest expense in the firstquarter, on a projected annual basis, the interest expense savingsfrom the repurchase of our Senior Secured Notes due in 2008 and 2010,the repurchase of our Senior Subordinated Notes due in 2009 and therefinancing of our credit facilities is approximately $53 million,which represents a 40 percent reduction as compared to our projectedannual interest expense at the beginning of 2004."
SECOND QUARTER 2004 OUTLOOK
"Based upon booking trends, backlog levels and estimated turnslevels, we anticipate that total revenues will be up by 6 to 7 percentsequentially in the second quarter," Jackson said. "Backlog levels atthe beginning of the second quarter of 2004 were up significantly frombacklog levels at the beginning of the first quarter of 2004 andrepresented greater than 90 percent of our anticipated second quarterrevenues. We expect that average selling prices will be up for thesecond quarter of 2004 and that gross margins will increase by 150 to200 basis points."
TELECONFERENCE
ON Semiconductor will hold a conference call for the financialcommunity at 5 p.m. Eastern time (EDT) today to discuss the firstquarter results. The company will provide a real-time audio broadcastof the teleconference on the Investor Relations page of its Web siteat
http://www.onsemi.com. The webcast will be available for 30 daysfollowing the conference call.
About ON Semiconductor
ON Semiconductor offers an extensive portfolio of power and datamanagement semiconductors and standard semiconductor components thataddress the design needs of today´s sophisticated electronic products,appliances and automobiles. For more information, visit ONSemiconductor´s Web site at
http://www.onsemi.com.
ON Semiconductor and the ON Semiconductor logo are registeredtrademarks of Semiconductor Components Industries, LLC. All otherbrand and product names appearing in this document are registeredtrademarks or trademarks of their respective holders. Although thecompany references its Web site in this news release, such informationon the Web site is not to be incorporated herein.
This news release includes "forward-looking statements" as thatterm is defined in Section 27A of the Securities Act of 1933 andSection 21E of the Securities Exchange Act of 1934. All statementsother than statements of historical fact are statements that could bedeemed forward-looking statements and are often characterized by theuse of words such as "believes," "expects," "estimates," "projects,""may," "will," "intends," "plans," or "anticipates," or by discussionsof strategy, plans or intentions. In this news release,forward-looking information relates to bookings trends, backloglevels, estimated turns levels, interest expense savings, secondquarter 2004 revenues, gross margins and average selling prices, andsimilar matters. All forward-looking statements in this news releaseare made based on management´s current expectations and estimates,which involve risks, uncertainties and other factors that could causeresults to differ materially from those expressed in forward-lookingstatements. Among these factors are changes in overall economicconditions, the cyclical nature of the semiconductor industry, changesin demand for our products, changes in inventories at our customersand distributors, technological and product development risks,availability of raw materials, competitors´ actions, pricing and grossmargin pressures, loss of key customers, order cancellations orreduced bookings, changes in manufacturing yields, control of costsand expenses, significant litigation, risks associated withacquisitions and dispositions, risks associated with our substantialleverage and restrictive covenants in our debt agreements, risksassociated with our international operations, the threat or occurrenceof international armed conflict and terrorist activities both in theUnited States and internationally, and risks involving environmentalor other governmental regulation. Additional factors that could affectthe company´s future operating results are described in our amendedForm 10-K for the year ended Dec. 31, 2003 under the caption "Trends,Risks and Uncertainties" in the MD&A section, and other factors aredescribed from time to time in our SEC filings. Readers are cautionednot to place undue reliance on forward-looking statements. We assumeno obligation to update such information.
ON SEMICONDUCTOR CORP. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS (in millions, except per share data) Quarter Ended ----------------------------- April 2, Dec. 31, April 4, 2004 2003 2003 --------- --------- ---------Revenues $308.2 $278.6 $269.5Cost of revenues 212.3 200.2 194.7 --------- --------- ---------Gross profit 95.9 78.4 74.8 --------- --------- ---------Operating expenses: Research and development 23.5 24.0 21.1 Selling and marketing 18.4 16.5 16.1 General and administrative 17.2 15.3 19.6 Amortization of intangible asset - - 3.0 Restructuring, asset impairments and other, net 13.1 29.9 - --------- --------- --------- Total operating expenses 72.2 85.7 59.8 --------- --------- ---------Operating income (loss) 23.7 (7.3) 15.0 --------- --------- ---------Other income (expenses), net: Interest expense (34.3) (34.9) (39.1) Interest income 0.4 0.5 0.7 Realized and unrealized foreign currency gains and losses (1.7) 2.3 1.3 Loss on debt prepayment (33.0) (1.3) (3.5) --------- --------- --------- Other income (expenses), net (68.6) (33.4) (40.6) --------- --------- ---------Loss before income taxes, minority interests and cumulative effect of accounting change (44.9) (40.7) (25.6)Provision for income taxes (1.6) (1.4) (2.2)Minority interests (1.1) (0.3) (1.2) --------- --------- ---------Loss before cumulative effect of accounting change (47.6) (42.4) (29.0)Cumulative effect of accounting change - - (21.5) --------- --------- ---------Net loss (47.6) (42.4) (50.5)Less: Accretion to redemption value of convertible redeemable preferred stock (1.8) (0.5) -Less: Redeemable preferred stock dividends (2.4) (2.4) (2.2) --------- --------- ---------Net loss applicable to common stock $(51.8) $(45.3) $(52.7) ========= ========= =========Loss per common share: Basic: Net loss applicable to common stock before cumulative effect of accounting change $(0.23) $(0.21) $(0.18) Cumulative effect of accounting change - - (0.12) --------- --------- --------- Net loss applicable to common stock $(0.23) $(0.21) $(0.30) ========= ========= ========= Diluted: Net loss applicable to common stock before cumulative effect of accounting change $(0.23) $(0.21) $(0.18) Cumulative effect of accounting change - - (0.12) --------- --------- --------- Net loss applicable to common stock $(0.23) $(0.21) $(0.30) ========= ========= ========= Weighted average common shares outstanding: Basic 229.5 216.9 176.4 ========= ========= ========= Diluted 229.5 216.9 176.4 ========= ========= ========= ON SEMICONDUCTOR CORP. AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEET (in millions) April 2, Dec. 31, 2004 2003 --------- ---------AssetsCash and cash equivalents $221.4 $186.6Receivables, net 153.4 136.1Inventories, net 183.8 171.6Other current assets 32.5 25.7Deferred income taxes 3.1 2.7 --------- --------- Total current assets 594.2 522.7Property, plant and equipment, net 497.2 499.1Deferred income taxes 1.7 1.3Goodwill 77.3 77.3Other assets 43.0 61.0 --------- --------- Total assets $1,213.4 $1,161.4 ========= =========Liabilities, Minority Interests, Redeemable Preferred Stock and Stockholders´ DeficitAccounts payable $126.5 $115.7Accrued expenses 102.7 89.9Income taxes payable 1.7 1.7Accrued interest 16.1 25.3Deferred income on sales to distributors 81.1 66.2Current portion of long-term debt 15.3 11.4 --------- --------- Total current liabilities 343.4 310.2Long-term debt 1,125.9 1,291.5Other long-term liabilities 56.9 58.2 --------- --------- Total liabilities 1,526.2 1,659.9 --------- ---------Minority interests in consolidated subsidiaries 26.4 26.4 --------- ---------Redeemable preferred stock 123.9 119.7 --------- ---------Common stock 2.5 2.2Additional paid-in capital 1,118.2 891.3Accumulated other comprehensive loss (2.5) (4.4)Accumulated deficit (1,581.3) (1,533.7) --------- --------- Total stockholders´ deficit (463.1) (644.6) --------- --------- Total liabilities, minority interests, redeemable preferred stock and stockholders´ deficit $1,213.4 $1,161.4 ========= ========= ON SEMICONDUCTOR CORP. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF NET LOSS TO EBITDA AND CASH PROVIDED BY OPERATING ACTIVITIES (in millions) Quarter Ended ------------------------------- April 2, Dec. 31, April 4, 2004 2003 2003 ---------- ---------- ---------Net loss $(47.6) $(42.4) $(50.5)Plus: Depreciation and amortization 26.3 27.2 36.0 Interest expense, net 33.9 34.4 38.4 Income tax provision 1.6 1.4 2.2 ---------- ---------- ---------EBITDA 14.2 20.6 26.1Increase (decrease): Interest expense, net (33.9) (34.4) (38.4) Income tax provision (1.6) (1.4) (2.2) Loss on sale of fixed assets 12.1 0.4 0.3 Loss on debt prepayment 33.0 1.3 3.5 Amortization of debt issuance costs and debt discount 1.9 1.8 2.2 Provision for excess inventories - 4.6 4.0 Cumulative effect of accounting change - - 21.5 Non-cash impairment of property, plant and equipment - 20.2 - Non-cash impairment of other long- lived assets - 4.3 - Non-cash interest on junior subordinated note payable to Motorola 3.5 3.2 3.3 Deferred income taxes (0.8) 5.1 (2.5) Stock compensation expense - - 0.1 Other 1.2 0.6 1.6 Changes in operating assets and liabilities 3.2 1.5 (14.9) ---------- ---------- ---------Net cash provided by operating activities $32.8 $27.8 $4.6 ========== ========== =========(a) EBITDA represents net income (loss) before interest expense, net, provision for income taxes and depreciation and amortization expense. While EBITDA is not intended to represent cash flow from operations as defined by generally accepted accounting principles and should not be considered as an indicator of operating performance or an alternative to cash flow as a measure of liquidity, we believe this measure is useful to investors to assess our ability to meet our future debt service, capital expenditure and working capital requirements. This calculation may differ in method of calculation from similarly titled measures used by other companies. The table above sets forth our EBITDA with a reconciliation to net cash provided by operating activities, the most directly comparable financial measure under generally accepted accounting principles.
--30--TWT/ix* CONTACT: ON Semiconductor, Phoenix Everett Tackett, APR, 602-244-4534 (Public Relations)
everett.tackett@onsemi.com Ken Rizvi, 602-244-3437 (Investor Relations)
ken.rizvi@onsemi.com KEYWORD: ARIZONA INDUSTRY KEYWORD: HARDWARE COMPUTERS/ELECTRONICS EARNINGS SOURCE: ON Semiconductor Corp.
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ON Semikonductor
ON Semiconductor
