PHOENIX, Ariz. – Feb. 2, 2004 – ON Semiconductor Corporation (NASDAQ: ONNN) today announced that total revenues in the fourth quarter of 2003 were $279 million, an increase of 5 percent from the third quarter of 2003. During the fourth quarter of 2003, the company reported a net loss of $42 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. During the third quarter of 2003, the company reported a net loss of $16 million, or $0.10 per share, that included a net gain of $3.3 million, or $0.02 per share, from restructuring, asset impairments and other and a loss on debt prepayment of $2.9 million, or $0.02 per share.
On a mix-adjusted basis, average selling prices in the fourth quarter of 2003 were down 2.8 percent from the third quarter of 2003. Despite the decline in average selling prices, the company’s gross margin remained essentially flat in the fourth quarter due to a combination of increased cost reductions, improved product mix and increased unit volumes as compared to the third quarter of 2003.
EBITDA for the fourth quarter of 2003 was $21 million and included restructuring, asset impairments and other charges of $29.9 million and the $1.3 million loss on debt prepayment. EBITDA for the third quarter of 2003 was $51 million and included the net gain of $3.3 million from restructuring, asset impairments and other and the $2.9 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 $29.9 million in restructuring, asset impairments and other charges for the fourth quarter of 2003 included approximately $5.4 million of cash charges, primarily for severance, and approximately $24.5 million of non-cash charges for asset impairments. Total cash and non-cash charges included $19.1 million for asset impairments and employee severance at the company’s East Greenwich, R.I. facility; $5.4 million for asset impairments and employee severance at its Rosnov, Czech Republic facility; $2.3 million for the write-down of a note receivable relating to assets sold in 2001; $2.0 million for the write-down of a cost basis investment; and, approximately $1.1 million for other restructuring activities in the United States and Europe.
The net gain of $3.3 million in restructuring, asset impairments and other for the third quarter of 2003 included a $4.6 million gain on the sale of the company’s assembly and test facility in Guadalajara, Mexico offset by $1.3 million of net restructuring charges.
Total revenues for 2003 were $1.069 billion, a decrease of 2 percent from $1.094 billion in 2002. During 2003, the company reported a net loss of $167 million that included restructuring, asset impairments and other charges of $61.2 million, a loss on debt prepayment of $7.7 million and the cumulative effect of accounting change of $21.5 million. During 2002, the company reported a net loss of $142 million that included restructuring, asset impairments and other charges of $27.7 million and a loss on debt prepayment of $6.5 million. The company’s gross margin increased by 90 basis points to 28.1 percent in 2003 from 27.2 percent in 2002 primarily as a result of manufacturing cost reductions, which were partially offset by price declines.
“During the fourth quarter we took additional steps to improve our manufacturing efficiency by restructuring our facilities in Rhode Island and the Czech Republic,” said Keith Jackson, ON Semiconductor president and CEO. “We continue to focus on serving our customers, improving the efficiency of our manufacturing operations and reducing our debt and related interest expense. Looking forward, we are encouraged by the strength of our backlog and the improving pricing environment for our products.”
FIRST QUARTER 2004 OUTLOOK
“Based upon booking trends, backlog levels and estimated turns levels, we anticipate that total revenues will be up by 5 to 6 percent sequentially in the first quarter,” Jackson said. “Backlog levels at the beginning of the first quarter of 2004 were up from backlog levels at the beginning of the fourth quarter of 2003 and represented greater than 90 percent of our anticipated first quarter revenues. We expect that average selling prices will be up for the first quarter of 2004 and that gross margins will increase to between 29 and 30 percent.”
ON Semiconductor will hold a conference call for the financial community at 8:30 a.m. Eastern time (EST) tomorrow to discuss the fourth 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, first 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 Form 10-K for the year ended December 31, 2002 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.