PHOENIX, Ariz. – Feb. 2, 2006 – ON Semiconductor Corporation (NASDAQ: ONNN) today announced that total revenues in the fourth quarter of 2005 were $341.8 million, an increase of approximately 9 percent from the third quarter of 2005. During the fourth quarter of 2005, the company reported net income of $43.8 million. Fully diluted earnings per share for the fourth quarter of 2005 were $0.07 per share which included a deemed dividend charge of approximately $0.06 per share, associated with a premium, in the form of inducement shares, for the conversion of the Series A Cumulative Preferred Stock into common stock. During the third quarter of 2005, the company reported net income of $23.5 million, or $0.06 per share on a fully diluted basis.
On a mix-adjusted basis, average selling prices in the fourth quarter of 2005 were down approximately 2 percent from the third quarter of 2005. The company’s gross margin in the fourth quarter was 35.0 percent, an increase of approximately 180 basis points as compared to the third quarter of 2005.
EBITDA for the fourth quarter of 2005 was $76.8 million and included a $0.8 million restructuring, asset impairments and other benefit. EBITDA for the third quarter of 2005 was $65.4 million and included $0.2 million in restructuring, asset impairments and other charges. A reconciliation of this non-GAAP financial measure to the company’s net income (loss) and net cash provided by (used in) operating activities prepared in accordance with U.S. GAAP is set out in the attached schedule.
The $0.8 million in restructuring, asset impairments and other benefit for the fourth quarter of 2005 was primarily related to reversals of previously accrued costs associated with the closure of our East Greenwich manufacturing facility.
While total revenues for 2005 of $1.261 billion were approximately flat as compared to $1.267 billion of revenues for 2004, fourth quarter 2005 revenues of $341.8 million were up approximately 11 percent as compared to fourth quarter 2004 revenues of $306.8 million. During 2005 the company reported net income of $100.6 million that included $3.3 million in restructuring, asset impairments and other charges. During 2004 the company reported a net loss of $123.7 million that included a loss on debt prepayment of $159.7 million and restructuring, asset impairments and other charges of $19.6 million. The company’s gross margin increased by approximately 80 basis points to 33.2 percent in 2005 from 32.4 percent in 2004.
“2005 was a significant year for the company.” said Keith Jackson, ON Semiconductor president and CEO. “We exited the year with the highest gross margin and the first year of profitability since 2000. We also shipped record units during the fourth quarter at an annualized run rate of approximately 30 billion units. We look to continue to fuel our growth with new product designs and wins in the Computing, Consumer and Wireless end-markets and are excited about our prospects for the upcoming year.”
FIRST QUARTER 2006 OUTLOOK
“Based upon booking trends, backlog levels and estimated turns levels, we anticipate that total revenues will be approximately $330 million in the first quarter of 2006 as compared to revenues of $302.4 million in the first quarter of 2005 and revenues of $341.8 million in the fourth quarter of 2005,” Jackson said. “Backlog levels at the beginning of the first quarter were up from backlog levels at the beginning of the fourth quarter of 2005, and represented over 90 percent of our anticipated first quarter 2006 revenues. We expect that average selling prices will be down approximately 1 percent for the first quarter of 2006. We also expect cost reductions to offset the decline in average selling prices and that gross margins will be flat at approximately 35 percent in the first quarter of 2006. Beginning in the first quarter of 2006, we are required to expense stock based compensation. This is in accordance with the Statement of Financial Accounting Standards No. 123(R) Share Based Payment. We currently expect this expense to be approximately $2 million in the first quarter of 2006.”
ON Semiconductor will hold a conference call for the financial community at 4:00 p.m. Eastern time (EST) today to discuss the fourth quarter and 2005 annual 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 approximately 30 days following the conference call.
About ON Semiconductor
With its global logistics network and strong portfolio of power semiconductor devices, ON Semiconductor (Nasdaq: ONNN) is a preferred supplier of power solutions to engineers, purchasing professionals, distributors and contract manufacturers in the computer, cell phone, portable devices, automotive and industrial markets. For more information, please 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 the first quarter of 2006 and its bookings trends, backlog levels, estimated turns levels, revenues, gross margins and average selling prices, stock based compensation expense 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, risks and costs associated with increased and new regulation of corporate governance and disclosure standards (including pursuant to Section 404 of the Sarbanes-Oxley Act of 2002), 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, 2004 under the caption “Trends, Risks and Uncertainties” in the MD&A section, and other factors are described from time to time in our subsequent SEC filings. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information.