ON Semiconductor Reports Fourth Quarter and 2006 Annual ResultsFebruary 06, 2007 by Jeff Shepard
ON Semiconductor Corp. announced that total revenues in the fourth quarter of 2006 were $401.6 million, an expected decrease of approximately 5% from the third quarter of 2006. Total revenues during the fourth quarter included approximately $364.5 million of product revenues and approximately $37.1 million of manufacturing services revenues.
During the fourth quarter of 2006, the company reported net income of $87.4 million, or $0.27 per share on a fully diluted basis, which included a $10.2 million benefit, or $0.03 per fully diluted share, in restructuring, asset impairments and other. The $10.2 million restructuring, asset impairments and other benefit for the fourth quarter of 2006 was primarily related to a favorable insurance settlement and gains on idle real property sales. Fourth quarter 2006 results include approximately $3.0 million associated with stock based compensation expense due to our adoption of FAS 123® Share Based Payment. 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 included approximately $2.9 million associated with stock based compensation expense.
On a mix-adjusted basis, average selling prices in the fourth quarter of 2006 were down approximately 2% from the third quarter of 2006. The company’s gross margin in the fourth quarter was 39.3%, an increase of approximately 120 basis points as compared to the third quarter of 2006, primarily due to less obsolescence from conversion to lead-free parts, improved product mix and higher than expected capacity utilization. Gross margins for product revenue were 42.1% during the fourth quarter of 2006 compared to 40.0% during the third quarter of 2006. EBITDA for the fourth quarter of 2006 was $114.4 million which included an approximately $10.2 million benefit from restructuring, asset impairments and other. EBITDA for the third quarter of 2006 was $106.3 million. 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.
Total revenues for 2006 were $1.532 billion, an increase of 22% from $1.261 billion in 2005. During 2006, the company reported net income of $272.1 million that included a restructuring, asset impairment and other benefit of $6.9 million. During 2005, the company reported net income of $100.6 million that included $3.3 million in restructuring, asset impairments and other charges. The company’s gross margin increased by approximately 530 basis points to 38.5% in 2006 from 33.2 percent in 2005.
"2006 was another strong year for the company," said Keith Jackson, ON Semiconductor President and CEO. "For the year, we achieved the highest gross margin, net income and earnings per fully diluted share in the company’s history and enter 2007 in a position to continue our strong financial performance." During the last quarter of 2006, we successfully executed a series of financial transactions enabling the company to reduce the overall cost of its debt and repurchase approximately 12% of the company’s then outstanding shares of common stock. As we enter 2007, we are excited about our financial prospects for the year which should be fueled by our new product pipeline and ongoing design wins in the Computing, Digital Consumer, Automotive and Power Regulation markets."