For the first quarter of 2011, highlights include total:
PHOENIX, Ariz. – May 4, 2011 – ON Semiconductor Corporation (Nasdaq: ONNN) today announced that total revenues in the first quarter of 2011 were $870.6 million, an increase of more than 50 percent from the fourth quarter of 2010. As previously announced, the company completed its acquisition of SANYO Semiconductor on January 1, 2011. During the first quarter of 2011, the company reported GAAP net income of $74.8 million, or $0.16 per fully diluted share. The first quarter 2011 GAAP net income included net charges of $46.4 million, or $0.10 per fully diluted share, from special items. The special item details can be found in the attached schedules. During the fourth quarter of 2010, the company reported a GAAP net income of $61.0 million, or $0.14 per fully diluted share. Further information, including the unaudited results of operations for SANYO Semiconductor for the first quarter of 2011, is provided in the financial tables attached to this release.
First quarter 2011 results were negatively impacted from reduced production and increased expenses incurred as a result of the Japan earthquake and resulting tsunami. There were production disruptions but only limited physical damage to our Japanese manufacturing facilities post the March 11 Japan earthquake and tsunami. While revenue was within our original guidance provided on February 3, 2011, we currently estimate that production disruptions negatively impacted our net income approximately $10 million in the first quarter of 2011. Full stabilization and recovery of our operations in Japan is progressing well. Of ON Semiconductor’s six manufacturing facilities in Japan, five came back to full production capacity and the sixth factory is ramping towards full production.
First quarter 2011 non-GAAP net income was $121.2 million, or $0.27 per share on a fully diluted basis, which included approximately $0.06 per share on a fully diluted basis from SANYO Semiconductor. Fourth quarter 2010 non-GAAP net income was $99.2 million, or $0.22 per share on a fully diluted basis. A reconciliation of these non-GAAP financial measures (and other non-GAAP measures used elsewhere in this release, such as non-GAAP gross margin, non-GAAP gross profit and adjusted EBITDA) to the company’s most directly comparable measures prepared in accordance with U.S. GAAP are set forth in the attached schedules and on our website at https://www.onsemi.com/.
On a mix-adjusted basis, average selling prices for historical ON Semiconductor (excluding SANYO Semiconductor) in the first quarter of 2011 were approximately flat when compared to the fourth quarter of 2010. Total company GAAP gross margin in the first quarter was 27.8 percent. Total company GAAP gross margin in the first quarter included a net charge of approximately $70.9 million, or approximately 820 basis points, from special items. Total company non-GAAP gross margin in the first quarter was 36.0 percent.
Adjusted EBITDA for the first quarter of 2011 was $167.3 million. Adjusted EBITDA for the fourth quarter of 2010 was $145.4 million.
“ON Semiconductor continued its transformation in the first quarter of 2011 with the acquisition of SANYO Semiconductor,” said Keith Jackson, ON Semiconductor president and CEO. “In January, we closed the acquisition of SANYO Semiconductor and in our first quarter of operating the business, SANYO Semiconductor positively contributed to our earnings. This transaction broadens our product portfolio, adding new capabilities from microcontrollers and custom application specific integrated solutions (ASICs) to integrated power modules and motor control devices. In addition, in February we closed the acquisition of the CMOS Image Sensor Business Unit from Cypress Semiconductor Corporation which positions ON Semiconductor as a leading supplier of ultra-high-speed CMOS image sensors.”
“While total company revenues at the mid-point of our guidance for the second quarter of 2011 are anticipated to be up slightly from the first quarter of 2011, revenues, gross profit and earnings will be negatively impacted by the supply chain disruptions, reduced production and increased expenses in Japan as result of the earthquake and tsunami,” Jackson said. “Based on our current assessment, we believe the effects of the earthquake and tsunami could negatively impact total company sales by approximately $50 million and gross profit and earnings in excess of $30 million in the second quarter of 2011. This anticipated impact is already included in our guidance below. Longer term we believe we are well positioned in Japan as the country rebuilds from the tragic events of March 11.”
SECOND QUARTER 2011 OUTLOOK
The following table outlines ON Semiconductor’s second quarter 2011 GAAP and non-GAAP outlook.
* Convertible Notes, Non-cash Interest Expense are included in FASB’s Accounting Standards Codification (“ASC”) Topic 470 Debt.
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This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included or incorporated in this document could be deemed forward-looking statements, particularly statements about the future financial performance of ON Semiconductor. These forward-looking statements are often characterized by the use of words such as “believes,” “estimates,” “expects,” “projects,” “may,” “will,” “intends,” “plans,” or “anticipates,” or by discussions of strategy, plans or intentions. All forward-looking statements in this document are made based on information available to us as of the date of this release, our current expectations, forecasts and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. Among these factors are our revenues and operating performance, poor economic conditions and markets (including current credit and financial conditions), effects of exchange rate fluctuations, 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, enforcement and protection of our intellectual property rights and related risks, availability of raw materials, electricity, gas, water and other supply chain uncertainties, our ability to effectively shift production to other facilities in order to maintain supply continuity for our customers, variable demand and the aggressive pricing environment for semiconductor products, our ability to successfully manufacture in increasing volumes on a cost-effective basis and with acceptable quality for our current products, competitors’ actions including the adverse impact of competitive product announcements, pricing and gross profit pressures, loss of key customers, order cancellations or reduced bookings, changes in manufacturing yields, control of costs and expenses and realization of cost savings from restructurings and synergies, significant litigation, risks associated with decisions to expend cash reserves for various uses such as debt prepayment or acquisitions rather than to retain such cash for future needs, risks associated with acquisitions and dispositions (including from integrating and consolidating, and timely filing financial information with the Securities and Exchange Commission - for, recently acquired businesses, such as SANYO Semiconductor, and difficulties encountered in accurately predicting the future financial performance of recently acquired businesses, such as SANYO Semiconductor), risks associated with our substantial leverage and restrictive covenants in our debt agreements from time to time, risks associated with our worldwide operations including foreign employment and labor matters associated with unions and collective bargaining arrangements as well as natural disasters like the Japan earthquake and tsunami affecting our operations and finances/financials, the threat or occurrence of international armed conflict and terrorist activities both in the United States and internationally, risks and costs associated with increased and new regulation of corporate governance and disclosure standards (including pursuant to Section 404 of the Sarbanes-Oxley Act of 2002), risks related to new legal requirements and risks involving environmental or other governmental regulation. Information concerning additional factors that could cause results to differ materially from those projected in the forward-looking statements is contained in ON Semiconductor’s Annual Report on Form 10-K for the period ended December 31, 2010, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other of our filings with the Securities and Exchange Commission. If any of these trends, risks or uncertainties actually occurs or continues, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline, and investors could lose all or part of their investment. Readers are cautioned not to place undue reliance on forward-looking statements. These forward-looking statements should not be relied upon as representing our views as of any subsequent date and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made.