Product category: Power Supply ICs and Controllers
News Release from: ON Semiconductor
Edited by the Electronicstalk Editorial Team on 06 August 2003
Cost cutting pays dividends for ON
Semiconductor
ON Semiconductor Corp has reported that total revenues in the second quarter of 2003 were $256 million, a decline of 5% from the previous quarter.
ON Semiconductor Corp has reported that total revenues in the second quarter of 2003 were $256 million, a decline of 5% from the previous quarter As a result of cost-cutting measures, the company's gross margin increased by 100 basis points to 28.6% from 27.6% in the first quarter of 2003
This article was originally published on Electronicstalk on 31 Mar 2003 at 8.00am (UK)
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During the second quarter of 2003, the company reported a net loss of $58 million, or $0.34 per share that included $35 million, or $0.20 per share of restructuring and other charges.
The company reported a revised net loss of $51 million, or $0.30 per share for the first quarter of 2003 that included a $22 million, or $0.12 per share charge relating to a change, made in the second quarter but effective as of 1st January 2003, in the company's method of accounting for actuarial gains and losses relating to its defined benefit pension obligations.
The net loss for the first quarter of 2003 also included a $3.5 million, or $0.02 per share loss on debt prepayment.
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The decline in second quarter revenues was primarily the result of weakness in the automotive and wireless sectors coupled with higher than expected price declines in all markets.
On a mix adjusted basis, average selling prices in the second quarter of 2003 were down approximately 4% from the first quarter of 2003.
The restructuring and other charges of $35 million in the second quarter of 2003 included a $21 million non-cash impairment of developed technology from the 2000 acquisition of Cherry Semiconductor, $11 million of other non-cash asset impairments, and a $3 million cash charge for employee separation, contract and lease termination costs.
EBITDA for the second quarter of 2003 was $20 million and included $35 million of restructuring and other charges.
Revised EBITDA for the first quarter of 2003 was $26 million and included the $22 million charge relating to a change in the company's method of accounting as well as the $3.5 million loss on debt prepayment.
"Our cost-reduction efforts enabled us to improve our gross margin and to offset the weakness in some of our end-markets", said Keith Jackson, ON Semiconductor President and CEO.
"We have greatly improved our efficiencies through these efforts and we are working to increase our intellectual property and strengthen our new product portfolio as part of our efforts to drive higher margins and increase revenues".
In the second quarter of 2003, the company changed its method of accounting for actuarial gains and losses relating to its defined benefit pension obligations.
Historically, the company amortised a portion of its actuarial gains or losses to expense over future periods.
Effective 1st January 2003, the company will no longer defer actuarial gains or losses, but will recognise such gains or losses during the fourth quarter of each year, the period when the company prepares its annual pension plan actuarial valuations.
The cumulative effect of this accounting change required a $22 million or $0.12 per share charge in the company's revised first-quarter results.
In the second quarter of 2003, the company began consolidating the financial results of its majority-owned investment in Leshan Phoenix Semiconductor following recent guidance from the Financial Accounting Standards Board.
In the past, the company had accounted for this investment under the equity method.
Consolidation of the company's investment, required because its economic interest in Leshan is proportionately greater than its actual ownership interest, did not impact the company's previously reported operating results or stockholders' deficit.
Previously reported financial information will be revised for comparative purposes.
As a result of the Leshan consolidation, the company's second quarter revenues increased by approximately $2 million while EBITDA increased by approximately $5 million.
"Based upon booking trends, backlog levels and estimated turns levels, we anticipate that total revenues will be roughly flat in the third quarter", Jackson said.
"We expect that our gross margins will increase slightly as a result of our ongoing cost-reduction measures.
We have driven costs down faster than expected and reduced our break-even level, but we need price stability and stronger end-market growth to achieve profitability.
While price declines have moderated, we do not currently expect sufficient end-market growth to enable the company to achieve positive earnings per share in the fourth quarter of 2003".
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