ON Semiconductor finds a firmer financial position

ON Semiconductor Corp has recorded total revenues in the fourth quarter of 2004 of $306.8 million, a decrease of 4% from the third quarter of 2004.

ON Semiconductor Corp has recorded total revenues in the fourth quarter of 2004 of $306.8 million, a decrease of 4% from the third quarter of 2004.

During the fourth quarter of 2004, the company reported a net loss of $88.3 million, or $0.36 per share that included a loss on debt prepayment of $96.3 million, or $0.38 per share, and restructuring, asset impairments and other charges of $5.6 million, or $0.02 per share.

During the third quarter of 2004, the company reported net income of $15.7 million, or $0.04 per share that included a loss on debt prepayment of $3.0 million, or $0.01 per share.

On a mix-adjusted basis, average selling prices in the fourth quarter of 2004 were down approximately 1% from the third quarter of 2004.

The company's gross margin in the fourth quarter was 32.1%, a decrease of approximately 20 basis points as compared with the third quarter of 2004.

EBITDA for the fourth quarter of 2004 was a $39.7 million deficit and included the $96.3 million loss on debt prepayment and the restructuring, asset impairments and other charges of $5.6 million.

EBITDA for the third quarter of 2004 was $64.2 million and included the $3.0 million loss on debt prepayment.

The $96.3 million loss on debt prepayment in the fourth quarter of 2004 was due to the company's repurchase of $325 million principal amount of its senior secured notes and the refinancing of the its senior secured credit facilities.

The $5.6 million in restructuring, asset impairments and other charges for the fourth quarter of 2004 included approximately $2.3 million of cash charges, primarily related to contract termination and severance costs, and approximately $3.3 million of non-cash charges for asset impairments.

Total revenues for 2004 were $1.267 billion, an increase of approximately 19% as compared with $1.069 billion of revenues for 2003.

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.

During 2003, the company reported a net loss of $166.7 million that included a loss on debt prepayment of $7.7 million, restructuring, asset impairments and other charges of $61.2 million and the cumulative effect of accounting change of $21.5 million.

The company's gross margin increased by approximately 430 basis points to 32.4% in 2004 from 28.1% in 2003 primarily as a result of increased average selling prices, increased unit volume and manufacturing cost reductions.

"During the fourth quarter of 2004, we maintained our gross margins above 32%, while driving down inventory levels internally and in the distribution network", said Keith Jackson, ON Semiconductor President and CEO.

"2004 was a year that we significantly improved our capital structure, refinancing approximately $760 million in principal of high-interest-bearing bonds while keeping our cash and short-term investment balances relatively flat on a year-over-year basis".

"The actions taken during the year to improve our capital structure are expected to reduce our annual cash interest expense by approximately $50 million in 2005 as compared with 2004".

"We have put the company in a firmer financial position, and as we move into 2005, look to continue our success of driving new product innovations in the power-solutions market".

"Based on booking trends, backlog levels and estimated turns levels, we anticipate that total revenues will be down approximately 4 to 5% sequentially in the first quarter", Jackson said.

"Backlog levels at the beginning of the first quarter of 2005 were down from backlog levels at the beginning of the fourth quarter of 2004".

"Backlog represented approximately 85% of our anticipated first quarter revenues".

"We expect that average selling prices will be down approximately 2 to 3% for the first quarter of 2005".

"We also expect cost reductions to partially offset a decline in average selling prices and that gross margins will be approximately 30% in the first quarter of 2005".

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