ON Semiconductor Corp. announced that total revenues in the third quarter of 2006 were $420.9 million, an increase of approximately 12% from the second quarter of 2006. Total revenues during the quarter included approximately $372.2 million of product revenues and approximately $48.7 million of manufacturing services revenue. During the third quarter of 2006, the company reported net income of $76.8 million, or $0.23 per share on a fully diluted basis. Third quarter 2006 results include approximately $2.9 million associated with stock based compensation expense primarily due to the company's adoption of FAS 123® Share Based Payment.
During the second quarter of 2006, the company reported net income of $67.5 million, or $0.19 per share on a fully diluted basis, which included approximately $3.3 million of restructuring, asset impairments and other charges. Second quarter 2006 results included approximately $2.4 million associated with stock based compensation expense. On a mix-adjusted basis, average selling prices in the third quarter of 2006 were approximately flat with the second quarter of 2006. The company's gross margin in the third quarter was 38.1%, as anticipated, a decrease of approximately 270 basis points as compared to the second quarter of 2006 primarily due to an increase in lower margin manufacturing services revenue. Gross margins for product revenue were approximately 40.0% during the third quarter of 2006 compared to 41.6 % during the second quarter of 2006.
EBITDA for the third quarter of 2006 was $106.3 million. EBITDA for the second quarter of 2006 was $96.8 million, which included approximately $3.3 million of restructuring, asset impairments and other charges. A reconciliation of this non-GAAP financial measure to the company's net income and net cash provided by operating activities prepared in accordance with U.S. GAAP is set forth in the attached schedule.
"ON Semiconductor had another quarter of strong revenue growth driven by our portfolio of analog and power products targeted towards the Computing, Consumer and Wireless end-markets as well as an increase in our manufacturing services revenue" said Keith Jackson, ON Semiconductor President and CEO. "The company grew net income for the seventh consecutive quarter to a record level of $76.8 million in the third quarter of 2006 and continues to deliver strong gross margin and cash flow from operations. During the third quarter, we used cash on hand to prepay approximately $60 million of our senior secured credit facility reducing our debt levels to a record low. We intend to continue paying down our debt with free cash flow from operations, consistent with our long-term financial strategy."
