EXHIBIT 99
[ON logo appears here]
Everett Tackett, APR Scott Sullinger
Public Relations Investor Relations
ON Semiconductor ON Semiconductor
(602) 244-4534 (602) 244-3437
everett.tackett@onsemi.com scott.sullinger@onsemi.com
ON SEMICONDUCTOR REPORTS FOURTH QUARTER AND 2002 ANNUAL RESULTS;
2003 OUTLOOK
PHOENIX, ARIZ. - FEB. 6, 2003 - ON Semiconductor Corporation (NASDAQ: ONNN)
today announced that total revenues in the fourth quarter of 2002 were $266
million, a decrease of $6 million, or 2 percent, from the third quarter of 2002
and a decrease of $1 million, or 0.5 percent, from the fourth quarter of 2001.
On a mix adjusted basis, average selling prices were down 2.5 percent quarter
over quarter. The company reported a net loss of $42 million in the fourth
quarter of 2002, which included $17.5 million of restructuring and other
charges, as compared to a net loss of $23 million in the third quarter of 2002.
On a per share basis, the company reported a loss of $0.24 per share in the
fourth quarter of 2002, which included $0.10 per share of restructuring and
other charges, as compared to a loss of $0.13 per share in the third quarter of
2002. The company also reported an income tax benefit of $1.2 million in the
fourth quarter of 2002 compared to an income tax provision of $3 million for the
third quarter of 2002, or $0.02 per share. During the fourth quarter of 2002,
the gross margin declined by 110 basis points to 27.6 percent from 28.7 percent
in the third quarter of 2002. This margin decline from the prior quarter is
primarily the result of pricing pressure during the fourth quarter.
Adjusted EBITDA for the fourth quarter of 2002 was $47.5 million and adjusted
EBITDA for 2002 was $179.5 million compared to adjusted EBITDA for the fourth
quarter of 2001 of $10.8 million and for 2001 of $75.2 million. A reconciliation
of this non-GAAP financial measure to U.S. GAAP net income (loss) is set out in
the attached adjusted EBITDA reconciliation schedule.
In the fourth quarter of 2002, the company announced a new cost-reduction
initiative that is expected to reduce costs by $80 million in 2003 and achieve
an estimated $125 million in annualized cost savings by the end of 2003, both as
compared to the company's annualized costs for the third quarter of 2002. This
cost-reduction initiative resulted in the company taking a net $12.6 million of
restructuring and other charges in the fourth quarter of 2002 (including $1
million of non-cash
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charges) associated with worldwide workforce reductions and other cost-reduction
actions. The company also recognized $4.9 million of other severance-related
charges in the quarter, including $2.9 million of non-cash stock compensation
charges. The company expects to fund the majority of the cash components of
these charges in the first and second quarters of 2003. During the fourth
quarter, cash and cash equivalents increased to $182 million from $180 million
in the third quarter of 2002.
Total revenue for 2002 was $1.1 billion, down 11 percent from $1.2 billion in
2001. The net loss for 2002 was $150 million, which included restructuring and
other charges of $27.7 million and an extraordinary loss on debt prepayment of
$6.5 million, compared to a net loss for 2001 of $847 million, which included
restructuring and other charges of $150 million, a cumulative effect of an
accounting change of $116 million and a non-recurring charge of $367 million to
establish a valuation allowance relating to the company's net deferred tax
assets. The gross margin increased by 860 basis points to 26.3 percent in 2002
from 17.7 percent in 2001. This increase in gross margin was driven by
manufacturing cost reductions as well as the release of newer, higher-margin
products.
BUSINESS REVIEW
"Because of stronger than expected turns business during the fourth quarter,
our revenues and gross margins were better than the guidance that was provided
in October," said Keith Jackson, ON Semiconductor president and CEO. "The fourth
quarter provided us with the challenge of a slightly down market, increased
pricing pressure and compressed lead times. We continue to drive costs down to
help offset the impact of price erosion, and during 2002 we completed actions to
achieve an estimated $365 million in annual cost savings as compared to our cost
structure during the first quarter of 2001. In addition, we have several
programs underway to further reduce costs by moving certain administrative
functions offshore and decommissioning older manufacturing lines.
"Our emphasis on new products was a contributing factor in growing our
margins from 13.8 percent in the fourth quarter of 2001 to 27.6 percent in the
fourth quarter of 2002," Jackson said. "We have generated cash in each of the
last three quarters which has enabled us to improve our cash position to more
than $182 million at the end of the fourth quarter.
"Last year we reduced costs in every functional area, but managed to maintain
our research and development expenditures at more than 6 percent of sales,"
Jackson continued. "During 2003 we plan to continue to introduce products,
processes and technologies that will define the future of our company. Last
year, our design team in Toulouse, France completed the platform for our power
management ASICs - our most sophisticated products to date. These products
enable our
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customers to design and bring to market highly differentiated cell phones and
PDAs. We plan to follow this successful launch with the introduction of our
first trench-technology MOSFETs later in this quarter. These products should
have best-in-class `on-resistance' characteristics that will enable the
extension of battery life in wireless devices. Our new trench products also are
expected to deliver leading-edge performance for many computing and automotive
applications.
"Continuing our success in China, we began the construction of our 6-inch
wafer fab at the site of our joint venture in Leshan, Sichuan province," Jackson
continued. "During 2003, we plan to spend approximately $5 million on
construction of the fab building with the timing for additional capital
expenditures subject to end-market demand and our overall capacity utilization.
As stated previously, China continues to be an integral component of our growth
plans. Last year we experienced 23 percent revenue growth in China as many local
and multinational customers in this fast growing market selected our products to
meet their design needs. This keeps us on track with our original 5-year plan
for capitalizing on the China opportunity."
2003 OUTLOOK
"We have conservative expectations for 2003 first quarter revenues based upon
our backlog of $211 million, calculated on a sell-in basis, going into the
quarter," Jackson said. "We anticipate that total revenues will be flat to down
4 percent from the fourth quarter of 2002, and that the 2003 first quarter gross
margin will be down 200 to 300 basis points from the fourth quarter of 2002
primarily resulting from pricing pressure. We renegotiated pricing contracts in
the fourth quarter of 2002 and as a result we expect that pricing will continue
to decline during the first half of 2003, with price declines expected to level
off towards the end of the year. We expect that our gross margin should exceed
30 percent per quarter by the end of 2003 and that we will have positive
earnings per share in the fourth quarter of 2003.
"During 2003, our R&D expenses should be approximately 6 percent of revenues;
our sales and marketing expenses should be approximately 5 percent of revenues;
and, our G&A expenses should sequentially decline until these expenses reach
approximately 6 percent of revenues in the fourth quarter of 2003. For 2003, we
anticipate capital expenditures to be in the range of $50 to $60 million.
"We are confident that with our continued focus on the business basics and
leveraging the strength of our new products, we can successfully grow the
company. We're continuing to execute on our strategy and we're focused on
improving the financial health of the company."
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TELECONFERENCE
ON Semiconductor will hold a conference call for the financial community at 5
p.m. Eastern Time (EST) today 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 Web site at http://www.onsemi.com. The Web cast will be
available for one week 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 Web site at
http://www.onsemi.com.
# # #
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 Web site in this news
release, such information on the Web site 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 first quarter 2003 revenues, gross
margin, pricing pressure, turns business in the distributor channel, cost
reductions/savings 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 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, 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, our transfer to the
NASDAQ SmallCap Market (including impairment of the marketability and liquidity
of our common stock, the impairment of our ability to raise capital and other
risks associated with trading on the SmallCap), risks associated with our
international operations 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, 2001
under the caption "Trends, Risk 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.
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ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
UNAUDITED STATEMENTS OF OPERATIONS
(in millions, except share data)
Quarter Ended Year Ended
--------------------------------------- --------------------------
December 31, September 27, December 31, December 31, December 31,
2002 2002 2001 2002 2001
----------- ------------ ----------- ----------- -----------
Total revenues $ 265.7 $ 272.0 $ 266.9 $ 1,084.5 $ 1,214.6
Cost of sales 192.4 194.0 230.2 799.0 1,000.0
-------- --------- --------- --------- ---------
Gross profit 73.3 78.0 36.7 285.5 214.6
-------- --------- --------- --------- ---------
Operating expenses:
Research and development 17.5 16.9 17.0 67.9 80.9
Selling and marketing 16.5 14.9 15.4 61.2 74.8
General and administrative 22.4 23.8 26.6 102.1 130.9
Amortization of goodwill and other intangibles 2.9 3.0 5.6 11.9 22.6
Restructuring and other charges 17.5 -- 16.6 27.7 150.4
-------- --------- --------- --------- ---------
Total operating expenses 76.8 58.6 81.2 270.8 459.6
-------- --------- --------- --------- ---------
Operating income (loss) (3.5) 19.4 (44.5) 14.7 (245.0)
-------- --------- --------- --------- ---------
Other income (expenses), net:
Interest expense (37.5) (36.7) (40.1) (145.2) (133.5)
Equity in earnings of joint ventures 0.5 (0.3) 0.8 3.9 4.0
Gain on sale of investment in joint venture -- -- -- -- 3.1
-------- --------- --------- --------- ---------
Other income (expenses), net (37.0) (37.0) (39.3) (141.3) (126.4)
-------- --------- --------- --------- ---------
Loss before income taxes, minority interests,
extraordinary loss and cumulative effect of
accounting change (40.5) (17.6) (83.8) (126.6) (371.4)
(Provision) benefit for income taxes 1.2 (3.0) (368.4) (8.8) (345.7)
Minority interests (0.3) 0.1 1.3 -- 2.1
-------- --------- --------- --------- ---------
Net loss before extraordinary loss
and cumulative effect of accounting change (39.6) (20.5) (450.9) (135.4) (715.0)
Extraordinary loss on debt prepayment
(net of tax) -- -- -- (6.5) --
Cumulative effect of accounting change
(net of tax) -- -- -- -- (116.4)
-------- --------- --------- --------- ---------
Net loss (39.6) (20.5) (450.9) (141.9) (831.4)
Less: Accretion of beneficial conversion feature on
redeemable preferred stock -- -- -- -- (13.1)
Less: Redeemable preferred stock dividends (2.2) (2.1) (1.9) (8.5) (2.4)
-------- --------- --------- --------- ---------
Net loss applicable to common stock (41.8) $ (22.6) $ (452.8) $ (150.4) $ (846.9)
======== ========= ========= ========= =========
Earnings (loss) per common share:
Basic:
Net loss before extraordinary loss and
cumulative effect of accounting change applicable
to common stock (0.24) $ (0.13) $ (2.60) $ (0.82) $ (4.21)
Extraordinary loss on debt prepayment -- -- -- (0.04) --
Cumulative effect of accounting change -- -- -- -- (0.67)
-------- --------- --------- --------- ---------
Net loss (0.24) $ (0.13) $ (2.60) $ (0.86) $ (4.88)
======== ========= ========= ========= =========
Diluted:
Net loss before extraordinary loss and
cumulative effect of accounting change applicable
to common stock (0.24) $ (0.13) $ (2.60) $ (0.82) $ (4.21)
Extraordinary loss on debt prepayment -- -- -- (0.04) --
Cumulative effect of accounting change -- -- -- -- (0.67)
-------- --------- --------- --------- ---------
Net loss (0.24) $ (0.13) $ (2.60) $ (0.86) $ (4.88)
======== ========= ========= ========= =========
Weighted average common shares outstanding:
Basic 176.1 175.8 174.3 175.6 173.6
======== ========= ========= ========= =========
Diluted 176.1 175.8 174.3 175.6 173.6
======== ========= ========= ========= =========
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ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions)
December 31, September 27, December 31,
2002 2002 2001
----------- ------------ -----------
(unaudited) (unaudited)
ASSETS
Cash and cash equivalents $ 182.4 $ 179.8 $ 179.8
Receivables, net 121.6 141.9 142.3
Inventories, net 160.0 160.4 183.7
Other current assets 36.6 39.3 35.8
Deferred income taxes 6.4 11.7 9.2
-------- -------- --------
Total current assets 507.0 533.1 550.8
Property, plant and equipment, net 454.1 478.4 555.5
Deferred income taxes -- -- 1.3
Investments in and advances to joint ventures 99.3 98.8 95.4
Goodwill 77.3 77.3 77.3
Intangible assets, net 26.7 29.7 38.6
Other assets 38.7 39.3 41.5
-------- -------- --------
Total assets $1,203.1 $1,256.6 $1,360.4
======== ======== ========
LIABILITIES, MINORITY INTERESTS, REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' DEFICIT
Accounts payable $ 77.4 $ 90.0 $ 111.5
Accrued expenses 91.5 83.5 90.2
Income taxes payable 11.0 17.4 8.0
Accrued interest 43.6 46.5 13.4
Deferred income on sales to distributors 70.8 72.6 99.4
Current portion of long-term debt 9.3 11.0 12.4
-------- -------- --------
Total current liabilities 303.6 321.0 334.9
Long-term debt 1,393.9 1,392.1 1,374.5
Other long-term liabilities 51.3 47.8 62.7
Deferred income taxes 2.2 3.9 --
-------- -------- --------
Total liabilities 1,751.0 1,764.8 1,772.1
-------- -------- --------
Minority interests in consolidated subsidiaries 4.1 3.9 4.1
-------- -------- --------
Redeemable preferred stock 110.1 107.9 101.6
-------- -------- --------
Common stock 1.8 1.8 1.7
Additional paid-in capital 737.4 735.6 738.8
Accumulated other comprehensive income (34.3) (30.0) (32.8)
Accumulated deficit (1,367.0) (1,327.4) (1,225.1)
-------- -------- --------
Total stockholders' deficit (662.1) (620.0) (517.4)
-------- -------- --------
Total liabilities, minority interests, redeemable preferred stock
and stockholders' deficit $1,203.1 $1,256.6 $1,360.4
======== ======== ========
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ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
Adjusted EBITDA Reconciliation
(in millions)
Quarter Ended Year Ended
------------------------------------------- ---------------------------
December 31, September 27, December 31, December 31, December 31,
2002 2002 2001 2002 2001
----------- ------------ ----------- ----------- -----------
Net income (loss) $ (39.6) $ (20.5) $(450.9) $(141.9 $(831.4)
Increase (decrease):
Depreciation 28.2 28.4 31.1 115.0 135.0
Amortization 4.8 4.8 6.8 18.2 30.8
Interest expense 37.5 36.7 40.1 145.2 133.5
Income tax provision (benefit) (1.2) 3.0 368.4 8.8 345.7
------- ------- ------- ------- -------
EBITDA 29.7 52.4 (4.5) 145.3 (186.4)
Increase (decrease):
Minority interests 0.3 (0.1) (1.3) -- (2.1)
Gain on sale of investment in joint venture -- -- -- -- (3.1)
Cumulative effect of accounting change -- -- -- -- 116.4
Extraordinary loss on debt prepayment -- -- -- 6.5 --
Restructuring and other charges (cash) 13.6 -- 5.5 14.2 85.5
Restructuring and other charges (non-cash) 3.9 -- 11.1 13.5 64.9
------- ------- ------- ------- -------
Adjusted EBITDA* $ 47.5 $ 52.3 $ 10.8 $ 179.5 $ 75.2
======= ======= ======= ======= =======
* Adjusted EBITDA represents net income (loss) before interest expense,
provision (benefit) for income taxes, depreciation and amortization expense,
minority interests, extraordinary loss on debt prepayment, restructuring and
other charges, gain on sale of investment in joint venture and the cumulative
effect of accounting change. While adjusted EBITDA is not intended to represent
cash flow from operations as defined by generally accepted accounting principles
and should not be considered as an indicator of operating performance or an
alternative to cash flow as a measure of liquidity, it is included herein to
provide additional information with respect to our ability to meet our future
debt service, capital expenditure and working capital requirements. This
calculation may differ in method of calculation from similarly titled measures
used by other companies.
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