PHOENIX, Ariz. – April 28, 2004 – ON Semiconductor Corporation (NASDAQ: ONNN) today announced that total revenues in the first quarter of 2004 were $308.2 million, an increase of 11 percent from the fourth quarter of 2003. During the first quarter of 2004, the company reported a net loss of $47.6 million, or $0.23 per share, that included restructuring, asset impairments 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, asset impairments and other charges of $29.9 million, or $0.14 per share and a loss on debt prepayment of $1.3 million, or $0.01 per share.
On a mix-adjusted basis, average selling prices in the first quarter of 2004 were up approximately 1 percent from the fourth quarter of 2003. The company’s gross margin in the first quarter was 31.1 percent, an increase of approximately 300 basis points as compared to the fourth quarter of 2003 due to a combination of increased average selling prices, improved product mix, increased unit volumes and cost reductions.
EBITDA for the first quarter of 2004 was $14.2 million and included restructuring, asset impairments and other charges of $13.1 million and the $33.0 million loss on debt prepayment. EBITDA for the fourth quarter of 2003 was $20.6 million and included restructuring, asset impairments and other charges of $29.9 million and the $1.3 million loss on debt prepayment. A reconciliation of this non-GAAP financial measure to the company’s net loss and net cash provided by operating activities prepared in accordance with U.S. GAAP is set out in the attached schedule.
The $13.1 million in restructuring, asset impairments and other charges for the first quarter of 2004 included approximately $12.0 million of non-cash charges for a loss on sale of fixed assets and approximately $1.1 million of cash charges, primarily for severance.
The $29.9 million in restructuring, asset impairments and other charges for the fourth quarter of 2003 included approximately $24.5 million 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,” said Keith Jackson ON Semiconductor president and CEO. “Revenue is the highest it has been since the second quarter of 2001 and gross margin is the highest since the fourth quarter of 2000, both clear indicators of the improving business environment for the company. In addition, we made significant strides during and subsequent to the end of the first quarter to improve our capital structure. While the effects of our actions had only a minimal impact on interest expense in the first quarter, on a projected annual basis, the interest expense savings from the repurchase of our Senior Secured Notes due in 2008 and 2010, the repurchase of our Senior Subordinated Notes due in 2009 and the refinancing of our credit facilities is approximately $53 million, which represents a 40 percent reduction as compared to our projected annual interest expense at the beginning of 2004.”
SECOND QUARTER 2004 OUTLOOK
“Based upon booking trends, backlog levels and estimated turns levels, we anticipate that total revenues will be up by 6 to 7 percent sequentially in the second quarter,” Jackson said. “Backlog levels at the beginning of the second quarter of 2004 were up significantly from backlog levels at the beginning of the first quarter of 2004 and represented greater than 90 percent of our anticipated second quarter revenues. We expect that average selling prices will be up for the second quarter of 2004 and that gross margins will increase by 150 to 200 basis points.”
ON Semiconductor will hold a conference call for the financial community at 5 p.m. Eastern time (EDT) today to discuss the first quarter results. The company will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at https://www.onsemi.com. The webcast will be available for 30 days following the conference call.
About ON Semiconductor
ON Semiconductor (Nasdaq: ONNN) offers an extensive portfolio of power and data management semiconductors and standard semiconductor components that address the design needs of today’s sophisticated electronic products, appliances and automobiles. For more information visit ON Semiconductor’s website at 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, such information on the website is not to be incorporated herein.
This news release includes “forward-looking statements” as that term is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are statements that could be deemed forward-looking statements and are often characterized by the use of words such as “believes,” “expects,” “estimates,” “projects,” “may,” “will,” “intends,” “plans,” or “anticipates,” or by discussions of strategy, plans or intentions. In this news release, forward-looking information relates to bookings trends, backlog levels, estimated turns levels, interest expense savings, second quarter 2004 revenues, gross margins and average selling prices, and similar matters. All forward-looking statements in this news release are made based on management's current expectations and estimates, which involve risks, uncertainties and other factors that could cause results to differ materially from those expressed in forward-looking statements. Among these factors are changes in overall economic conditions, the cyclical nature of the semiconductor industry, changes in demand for our products, changes in inventories at our 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 acquisitions and dispositions, risks associated with our substantial leverage and restrictive covenants in our debt agreements, risks associated with our international operations, the threat or occurrence of international armed conflict and terrorist activities both in the United States and internationally and risks involving environmental or other governmental regulation. Additional factors that could affect the company's future operating results are described in our amended Form 10-K for the year ended December 31, 2003 under the caption “Trends, Risks and Uncertainties” in the MD&A section, and other factors are described from time to time in our SEC filings. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information.