Revenue and margin boost for ON Semiconductor

Total revenues in the first quarter of 2004 at ON Semiconductor Corp were $308.2 million, an increase of 11% from the fourth quarter of 2003.

Total revenues in the first quarter of 2004 at ON Semiconductor Corp were $308.2 million, an increase of 11% 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% from the fourth quarter of 2003.

The company's gross margin in the first quarter was 31.1%, an increase of approximately 300 basis points compared with 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.

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% reduction as compared to our projected annual interest expense at the beginning of 2004".

"Based upon booking trends, backlog levels and estimated turns levels, we anticipate that total revenues will be up by 6 to 7% 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% 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".

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