For the first quarter of 2010, highlights include:
- Total revenues of approximately $550.2 million an increase of approximately 11 percent from the fourth quarter of 2009
- Record GAAP gross margin of 41.5 percent
- Record non-GAAP gross margin of 42.1 percent
- GAAP net income of $0.14 per fully diluted share
- Non-GAAP net income of $0.19 per fully diluted share which includes stock based compensation expense
- Acquired California Micro Devices on Jan. 27, 2010 in an all-cash transaction for approximately $113 million
PHOENIX, Ariz. – May 5, 2010 – ON Semiconductor Corporation (Nasdaq: ONNN) today announced that total revenues in the first quarter of 2010 were $550.2 million, an increase of approximately 11 percent from the fourth quarter of 2009. During the first quarter of 2010, the company reported GAAP net income of $63.0 million, or $0.14 per fully diluted share. The first quarter 2010 GAAP net income included net charges of $22.3 million, or $0.05 per fully diluted share, from special items. The special item details can be found in the attached schedules. During the fourth quarter of 2009, the company reported a GAAP net income of $68.0 million, or $0.15 per fully diluted share.
First quarter 2010 non-GAAP net income was $85.3 million, or $0.19 per share on a fully diluted basis and includes stock based compensation expense. Fourth quarter 2009 non-GAAP net income was $84.9 million, or $0.19 per share on a fully diluted basis and includes stock-based compensation expense. A reconciliation of these non-GAAP financial measures (and other non-GAAP measures used elsewhere in this release, such as non-GAAP gross margin and adjusted EBITDA) to the company’s most directly comparable measures prepared in accordance with U.S. GAAP are set forth in the attached schedules and on our website at www.onsemi.com.
On a mix-adjusted basis, average selling prices in the first quarter of 2010 were down approximately one to two percent when compared to the fourth quarter of 2009. GAAP gross margin in the first quarter was 41.5 percent. Non-GAAP gross margin in the first quarter of 2010 was 42.1 percent, including stock based compensation expense. GAAP gross margin in the first quarter included a net charge of approximately $3.7 million, or approximately 60 basis points, from special items. The special item details can be found in the attached schedules.
Adjusted EBITDA for the first quarter of 2010 was $127.3 million and includes stock-based compensation expense. Adjusted EBITDA for the fourth quarter of 2009 was $123.5 million and includes stock-based compensation expense.
“In the first quarter of 2010, we recorded the highest quarterly gross margin percent in the company’s history,” said Keith Jackson, ON Semiconductor president and CEO. “Through new product development, as well as products and capabilities gained from our successful acquisitions, we continue to transform our product portfolio and increase our value proposition to customers. Even with the cash purchase of California Micro Devices (CMD) on Jan. 27, 2010, the company exited the first quarter with approximately $560.7 million of cash and cash equivalents. In addition to the transformation of our product portfolio, we also continue to transform our balance sheet. Today, our Board of Directors approved the prepayment of ON Semiconductor’s $169.8 million Senior Secured Credit Facility. The repayment of this facility represents a significant milestone for the company. Through various amendments, this facility has remained with the company since the initial buy-out from Motorola more than a decade ago. With the repayment of this facility, we expect to save annual cash interest expense of approximately $3.4 million based on today’s LIBOR rate and have additional financial and business flexibility to continue to improve value for our shareholders.”
SECOND QUARTER 2010 OUTLOOK
“Based upon product booking trends, backlog levels and estimated turns levels, we anticipate that total revenues will be approximately $565 to $580 million in the second quarter of 2010,” Jackson said. “Backlog levels at the beginning of the second quarter of 2010 were up from backlog levels at the beginning of the first quarter of 2010 and represent over 90 percent of our anticipated second quarter 2010 revenues. We expect that average selling prices for the second quarter of 2010 will be down approximately one percent sequentially. The non-GAAP outlook for the second quarter of 2010 includes stock based compensation expense of approximately $13 to $14 million.”
The following table outlines ON Semiconductor’s second quarter 2010 GAAP and non-GAAP outlook.
* Convertible Notes, Non-cash Interest Expense are included in FASB’s Accounting Standards Codification (“ASC”) Topic 470 Debt.
** Fully diluted share count can vary for, among other things, the actual exercise of options or restricted stock units, the incremental dilutive shares from all of the company’s convertible senior subordinated notes, and the repurchase or the issuance of stock or the sale of treasury shares. Please refer to the table on our website for potential changes to the Fully Diluted Share Count.
*** Special Items can include: restructuring, asset impairments and other, net; expensing of appraised inventory fair market value (FMV) step up; amortization of intangibles; goodwill impairments; income tax adjustments to approximate cash taxes; non-cash interest expense and certain other special items as necessary.
**** Regulation G and other provisions of the securities laws regulate the use of financial measures that are not prepared in accordance with GAAP. We believe these non-GAAP measures provide important supplemental information to investors. We use these measures, together with GAAP measures, for internal managerial purposes and as a means to evaluate period-to-period comparisons. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance. We believe that non-GAAP financial measures reflect an additional way of viewing aspects of our operations that – when taken together with GAAP results and the reconciliations to corresponding GAAP financial measures that we also provide in our releases – provide a more complete understanding of factors and trends affecting our business. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names.
ON Semiconductor will host a conference call for the financial community at 5:00 p.m. Eastern Time (ET) on May 5, 2010 to discuss this announcement and ON Semiconductor’s results for the first quarter of 2010. The company will also provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at https://www.onsemi.com. The webcast replay will be available at this site approximately one hour following the live broadcast and will continue to be available for approximately 30 days following the conference call. Investors and interested parties can also access the conference call through a telephone call by dialing (888) 546-9664 (U.S./Canada) or (973) 935-8144 (International). In order to join this conference call, you will be required to provide the Conference ID Number – which is 69488949. Approximately one hour following the live broadcast, the company will provide a dial-in replay that will continue to be available through May 12, 2010. To listen to the teleconference replay, call (800) 642-1687 (U.S./Canada) or (706) 645-9291 (International). You will be required to provide the Conference ID Number – which is 69488949.
About ON Semiconductor
ON Semiconductor (Nasdaq: ONNN) is a premier supplier of high performance, energy efficient, silicon solutions for green electronics. The company's broad portfolio of power and signal management, logic, discrete and custom devices helps customers effectively solve their design challenges in automotive, communications, computing, consumer, industrial, LED lighting, medical, military/aerospace and power applications. ON Semiconductor operates a world-class, value-added supply chain and a network of manufacturing facilities, sales offices and design centers in key markets throughout North America, Europe, and the Asia Pacific regions. For more information, visit https://www.onsemi.com.
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ON Semiconductor and the ON Semiconductor logo are registered trademarks of Semiconductor Components Industries, LLC. All other brand and product names appearing in this document are registered trademarks or trademarks of their respective holders. Although the company references its website in this news release, information on the website is not to be incorporated herein.
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements related to the future financial performance of ON Semiconductor and our ability to increase cash flow from current levels. These forward-looking statements are based on information available to us as of the date of this release and current expectations, forecasts and assumptions and involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. Such risks and uncertainties include a variety of factors, some of which are beyond our control. In particular, such risks and uncertainties include, but are not limited to, difficulties encountered in integrating acquired businesses; the variable demand and the aggressive pricing environment for semiconductor products; dependence on our company’s ability to successfully manufacture in increasing volumes on a cost-effective basis and with acceptable quality for our current products; the adverse impact of competitive product announcements; revenues and operating performance; poor economic conditions and markets, including the current credit markets; the cyclical nature of the semiconductor industry; changes in demand for our products; changes in inventories at customers and distributors; technological and product development risks; availability of raw materials; competitors' actions; pricing and gross margin pressures; loss of key customers; order cancellations or reduced bookings; changes in manufacturing yields; control of costs and expenses; significant litigation; risks associated with decisions to expend cash reserves for various uses such as debt prepayment rather than to retain such cash for future needs; risks associated with acquisitions and dispositions; risks associated with leverage and restrictive covenants in debt agreements; risks associated with international operations, including foreign employment and labor matters associated with unions and collective bargaining agreements; the threat or occurrence of international armed conflict and terrorist activities both in the United States and internationally; risks related to new legal requirements such as new health care reform; risks and costs associated with increased and new regulation of corporate governance and disclosure standards; and risks involving environmental or other governmental regulation. Information concerning additional factors that could cause results to differ materially from those projected in the forward-looking statements is contained in ON Semiconductor’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other of our filings with the Securities and Exchange Commission. These forward-looking statements should not be relied upon as representing our views as of any subsequent date and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made.