Freescale Semiconductor Announces Fourth Quarter and Full-Year 2012 Results
AUSTIN, Texas--(BUSINESS WIRE)--
Freescale Semiconductor, Ltd. (NYSE:FSL) today announced financial
results for the fourth quarter and full-year ended December 31, 2012.
Highlights include:
“Looking forward, we have built a good foundation for future growth by
charting a new course that has the buy-in of our customers and our
employees,” said Gregg Lowe, president and CEO. “We've assembled a
strong management team that is committed to helping deliver long-term
growth and profitability.”
Fourth Quarter and Calendar Year 2012 Highlights
Net sales for the fourth quarter of 2012 were $957 million, compared to
$1.01 billion in the third quarter of 2012 and $1.01 billion in the
fourth quarter of 2011. Net sales for calendar year 2012 were $3.95
billion compared to $4.57 billion in calendar year 2011.
Income from operations for the three months ended December 31, 2012 was
$56 million, compared to $127 million in the third quarter of 2012 and
$136 million in the fourth quarter of 2011. Income from operations for
calendar year 2012 was $463 million compared to income of $274 million
in calendar year 2011.
The net loss for the fourth quarter 2012 was $35 million, or $. 14 per
share, compared to a loss of $24 million, or $. 10 per share, in the
third quarter of 2012 and a loss of $6 million, or $. 02 per share, in
the same period last year. The net loss for calendar year 2012 was $102
million or $. 41 per share, compared to a loss of $410 million, or $1.82
per share, in calendar year 2011.
Adjusted operating earnings (defined in Note 1 to the Notes to the
Consolidated Financial Information attached to this press release) for
the three months ended December 31, 2012 were $79 million compared to
earnings of $127 million in the third quarter of 2012 and $144 million
in the fourth quarter of 2011. Adjusted operating earnings for calendar
year 2012 were $461 million compared to $761 million in calendar year
2011.
The adjusted net loss (defined in Note 1 to the Consolidated Financial
Information attached to this press release) for the three months ended
December 31, 2012 was $37 million, or $. 15 per share, compared to
earnings of $10 million, or $. 04 per share, in the third quarter of 2012
and earnings of $18 million, or $. 07 per share, in the fourth quarter of
2011. The adjusted net loss for calendar year 2012 was $19 million, or
$. 08 per share, compared to adjusted net earnings of $217 million, or
$. 96 per share in calendar year 2011.
Descriptions of EBITDA, Adjusted EBITDA, adjusted operating earnings and
adjusted net earnings (loss) and the reconciliations to our GAAP results
are included in the tables and notes attached to this press release.
Product Group Revenues
Following a strategic review completed during the third quarter of 2012,
the company realigned its product groups and, effective with the fourth
quarter of 2012, the company will report net sales based on the
following product groups: Microcontrollers, Digital Networking,
Automotive Microcontrollers, Analog & Sensors, RF and Other.
The company’s net sales figures for the fourth quarter and calendar year
2012 were as follows:
Microcontroller net sales, which includes sales for industrial,
multi-market, smart energy, healthcare and multimedia applications
were $197 million in the fourth quarter, compared to $192 million in
the third quarter of 2012 and $172 million in fourth quarter last
year. For the year, net sales were $707 million compared to $790
million in 2011.
Digital Networking net sales, which includes sales of communications
and digital signal processors sold to the networking and
communications markets, were $195 million, compared to $226 million in
the third quarter of 2012 and $209 million in fourth quarter last
year. For the year, net sales were $852 million compared to $928
million in 2011.
Automotive Microcontroller net sales, which includes microcontroller
sales to the global automotive market, were $236 million, compared to
$252 million in the third quarter of 2012 and $253 million in fourth
quarter last year. For the year, net sales were $986 million compared
to $1.07 billion in 2011.
Analog & Sensor net sales, which includes sales of automotive analog,
mixed signal analog and sensor products to the automotive and consumer
markets, were $175 million, compared to $180 million in the third
quarter of 2012 and $191 million in fourth quarter last year. For the
year, net sales were $722 million compared to $785 million in 2011.
RF net sales, which includes sales of power amplifiers to the wireless
infrastructure market, were $97 million, compared to $73 million in
the third quarter of 2012 and $101 million in fourth quarter last
year. For the year, net sales were $303 million compared to $418
million in 2011.
Other net sales, which includes primarily IP licensing revenue and
wireless handset sales, were $57 million compared to $86 million in
the third quarter of 2012 and $87 million in fourth quarter last year.
For the year, net sales were $375 million compared to $579 million in
2011.
Other Financial Information
Capital Expenditures were $38 million in the fourth quarter and $123
million for calendar year 2012;
Cash and Cash Equivalents were $711 million;
EBITDA* for the fourth quarter was $140 million;
Adjusted EBITDA* for the latest twelve months ending December 31, 2012
was $839 million.
*Adjusted for various items as indicated and defined in Note 1 to the
Notes to the Consolidated Financial Information attached to this press
release.
First Quarter 2013 Outlook
For the first quarter of 2013, the company expects:
Net sales to be between $945 million and $985 million;
Gross margins to increase approximately 75 to 100 basis points on a
sequential basis.
Conference Call and Webcast
Freescale's quarterly earnings call is scheduled to begin at 4:00 p.m.
Central Time on January 29, 2013. The company will offer a live webcast
of the conference call over the Internet at www.freescale.com/investor.
Caution Regarding Forward-Looking Statements
This press release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements relate to our business strategy, goals and expectations
concerning our strategic direction, key personnel, future operations,
margins, profitability, liquidity and capital resources. Although we
believe the assumptions upon which these forward-looking statements are
based are reasonable, any of these assumptions could prove to be
inaccurate and the forward-looking statements based on these assumptions
could be incorrect. Our operations involve risks and uncertainties, many
of which are outside our control, and any one of which, or a combination
of which, could materially affect our results of operations and whether
the forward-looking statements ultimately prove to be correct. Actual
results and trends in the future may differ materially from those
suggested or implied by the forward-looking statements depending on a
variety of factors. Some of the factors that we believe could affect our
results include our substantial indebtedness; our ability to service our
outstanding indebtedness and the impact such indebtedness may have on
the way we operate our business; the loss of one or more of our
significant customers or strategic relationships; general economic and
business conditions and any downturns in the cyclical industry in which
we operate; our competitive environment and our ability to make
technological advances; interruptions in our production or manufacturing
capacity and our ability to obtain supplies; economic conditions in the
industries in which our products are sold; maintenance and protection of
our intellectual property; political and economic conditions in the
countries where we conduct business; geological conditions in some of
the earthquake-prone countries where certain of our customers and
suppliers are based; the costs of environmental compliance and/or the
imposition of liabilities under environmental laws and regulations;
potential product liability or personal injury claims; inability to make
necessary capital expenditures; loss of key personnel; the financial
viability of our customers, distributors or suppliers; and our ability
to achieve cost savings as well as other matters described under
"Risk Factors" in our Annual Report on Form 10-K and other filings with
the SEC. We undertake no obligation to update any information contained
in this press release.
Non-GAAP Financial Measures
Included within this press release and the accompanying tables and notes
are non-GAAP financial measures that supplement the company's
consolidated financial information prepared under GAAP. The company
describes these non-GAAP financial measures and reconciles them to the
most directly comparable GAAP measures in the tables and notes attached
to this press release. The company's management believes that these
non-GAAP measures provide a more meaningful representation of the
company’s ongoing financial performance than GAAP measures alone. In
addition, the company uses Adjusted EBITDA to measure compliance with
certain of its debt covenants. These non-GAAP measures are included
solely for informational and comparative purposes and are not meant as a
substitute for GAAP. You should consider them together with the
consolidated financial information located in the tables attached to
this press release.
About Freescale Semiconductor
Freescale Semiconductor is a global leader in embedded processing
solutions, providing industry leading products that are advancing the
automotive, consumer, industrial and networking markets. From
microprocessors and microcontrollers to sensors, analog integrated
circuits and connectivity - our technologies are the foundation for the
innovations that make our world greener, safer, healthier and more
connected. Some of our key applications and end-markets include
automotive safety, hybrid and all-electric vehicles, next generation
wireless infrastructure, smart energy management, portable medical
devices, consumer appliances and smart mobile devices.
The company is based in Austin, Texas, and has design, research and
development, manufacturing and sales operations around the world. http://www.freescale.com
Amortization expense for acquired intangible assets
3
3
44
13
232
Reorganization of business and other
20
(3
)
(68
)
(15
)
82
Operating earnings
56
127
136
463
274
Loss on extinguishment or modification of long-term debt, net
(1
)
(3
)
-
(32
)
(97
)
Other expense, net
(127
)
(134
)
(131
)
(531
)
(559
)
(Loss) earnings before income taxes
(72
)
(10
)
5
(100
)
(382
)
Income tax (benefit) expense
(37
)
14
11
2
28
Net loss
$
(35
)
$
(24
)
$
(6
)
$
(102
)
$
(410
)
Loss per common share:
Basic
($0.14
)
($0.10
)
($0.02
)
($0.41
)
($1.82
)
Diluted
($0.14
)
($0.10
)
($0.02
)
($0.41
)
($1.82
)
Weighted average common shares outstanding:
Basic
249
249
246
248
226
Diluted
251
251
248
251
227
Freescale Semiconductor, Ltd.
Reconciliation of Non-GAAP Measures
(Unaudited)
Three Months Ended
Twelve Months Ended
(in millions, except per share amounts)
Dec 31,
Sept 28,
Dec 31,
Dec 31,
Dec 31,
2012
2012
2011
2012
2011
Adjusted gross margin
$
375
$
424
$
445
$
1,641
$
2,062
Incremental depreciation expense (a)
-
-
32
-
167
Gross margin
$
375
$
424
$
413
$
1,641
$
1,895
Adjusted operating earnings
$
79
$
127
$
144
$
461
$
761
Incremental depreciation expense (a)
-
-
32
-
173
Amortization expense for acquired intangible assets (a)
3
3
44
13
232
Reorganization of business and other (f)
20
(3
)
(68
)
(15
)
82
Operating earnings
$
56
$
127
$
136
$
463
$
274
Adjusted net (loss) earnings
$
(37
)
$
10
$
18
$
(19
)
$
217
Purchase price accounting impact (a)
3
3
76
13
400
Non-cash share-based compensation expense (b)
12
12
8
43
27
Fair value adjustment on interest rate and commodity derivatives (c)
-
7
-
17
-
Deferred and non-current tax impact (d)
(38
)
12
8
(7
)
16
Loss on extinguishment or modification of long-term debt, net (e)
1
3
-
32
97
Reorganization of business and other (f)
20
(3
)
(68
)
(15
)
82
Other (i)
-
-
-
-
5
Net loss
$
(35
)
$
(24
)
$
(6
)
$
(102
)
$
(410
)
Adjusted net earnings (loss) per common share:
Basic
($0.15
)
$
0.04
$
0.07
($0.08
)
$
0.96
Diluted
($0.15
)
$
0.04
$
0.07
($0.08
)
$
0.96
Weighted average common shares outstanding:
Basic
249
249
246
248
226
Diluted
251
251
248
251
227
Freescale Semiconductor, Ltd.
Product Group Net Sales Information
(Unaudited)
(in millions)
Three Months Ended
Twelve Months Ended
Dec 31,
Sept 28,
Dec 31,
Dec 31,
Dec 31,
2012
2012
2011
2012
2011
Microcontrollers (1)
$
197
$
192
$
172
$
707
$
790
Digital Networking (2)
195
226
209
852
928
Automotive MCU (2)
236
252
253
986
1,072
Analog & Sensors (4)
175
180
191
722
785
RF (5)
97
73
101
303
418
Other (6)
57
86
87
375
579
Total
$
957
$
1,009
$
1,013
$
3,945
$
4,572
(1) Microcontrollers includes sales for industrial, multi-market, smart
energy, healthcare, connectivity and multimedia applications.
(2) Digital Networking includes sales of communication and digital
signal processors serving the networking and communications markets.
(3) Automotive MCU includes microcontroller sales serving the automotive
market.
(4) Analog and Sensors includes sales of automotive analog, mixed-signal
analog and sensor products.
(5) RF includes sales of power amplifiers.
(6) Other includes licensing and sales of intellectual property, sales
serving the wireless handset market, sales of wafers to other
semiconductor companies and other miscellaneous items.
Freescale Semiconductor, Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
Dec 31,
Sept 28,
Dec 31,
2012
2012
2011
ASSETS
Cash and cash equivalents
$
711
$
763
$
772
Accounts receivable, net
384
440
459
Inventory, net
797
810
803
Other current assets
166
182
198
Total current assets
2,058
2,195
2,232
Property, plant and equipment, net
715
723
772
Intangible assets, net
64
77
84
Other assets, net
334
334
327
Total assets
$
3,171
$
3,329
$
3,415
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current portion of long-term debt and capital lease obligations
$
6
$
7
$
2
Accounts payable
323
371
347
Accrued liabilities and other
543
512
451
Total current liabilities
872
890
800
Long-term debt
6,375
6,476
6,589
Other liabilities
455
452
506
Shareholders' deficit
(4,531
)
(4,489
)
(4,480
)
Total liabilities and shareholders' deficit
$
3,171
$
3,329
$
3,415
Freescale Semiconductor, Ltd.
Cash Flow Summary
(Unaudited)
Three Months Ended
Twelve Months Ended
(in millions)
Dec 31,
Sept 28,
Dec 31,
Dec 31,
Dec 31,
2012
2012
2011
2012
2011
Cash flows from operations
$
82
$
16
$
48
$
350
$
99
Cash flows from investing activities
$
(33
)
$
(47
)
$
(17
)
$
(176
)
$
(89
)
Cash flows from financing activities
$
(100
)
$
(91
)
$
(1
)
$
(232
)
$
(290
)
Effect of exchange rate changes on cash and cash equivalents
$
(1
)
$
4
$
(2
)
$
(3
)
$
9
Freescale Semiconductor, Ltd.
EBITDA and Adjusted EBITDA Reconciliations
(Unaudited)
Three Months Ended
Twelve Months Ended
(in millions)
Dec 31,
Sept 28,
Dec 31,
Dec 31,
Dec 31,
2012
2012
2011
2012
2011
EBITDA excluding the effects of other items
$
140
$
186
$
216
$
701
$
1,066
Fair value adjustment on interest rate and commodity derivatives (c)
-
7
-
17
-
Loss on extinguishment or modification of long-term debt, net (e)
1
3
-
32
97
Reorganization of business and other (f)
20
(3
)
(68
)
(15
)
82
EBITDA
119
179
284
667
887
Depreciation
45
44
83
179
393
Amortization*
19
20
63
78
313
Interest expense, net
127
125
133
510
563
Income tax (benefit) expense
(37
)
14
11
2
28
Net loss
$
(35
)
$
(24
)
$
(6
)
$
(102
)
$
(410
)
Twelve Months Ended Dec 31, 2012
(in millions)
Net loss
$
(102
)
Interest expense, net
510
Income tax expense
2
Depreciation and amortization expense*
257
Non-cash share-based compensation expense (b)
43
Fair value adjustment on interest rate and commodity derivatives (c)
17
Loss on extinguishment or modification of long-term debt, net (e)
32
Reorganization of business and other (f)
(15
)
Cost savings (g)
78
Other terms (h)
17
Adjusted EBITDA
$
839
*Excludes amortization of debt issuance costs, which are included in
interest expense, net.
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
Summary of Key Reconciling Items
(a) Includes the effects of purchase price accounting relating to our
acquisition by a consortium of investors in 2006 and our acquisition of
SigmaTel, Inc. in 2008, including, as applicable, depreciation expense
associated with the property, plant and equipment step up to fair value
and amortization expense for acquired intangible assets related to
developed technology and tradenames/trademarks.
(b) Reflects non-cash, share-based compensation expense under the
provisions of ASC Topic 718, "Compensation - Stock Compensation.”
(c) Reflects the change in fair value of our interest rate and commodity
derivatives which are not designated as cash flow hedges under the
provisions of ASC Topic 815, "Derivatives and Hedging.”
(d) Adjustments to reflect cash income tax expense.
(e) Reflects losses on extinguishments and modifications of our
long-term debt, net.
(f) Reflects items related to our reorganization of business programs
and other charges.
(g) Reflects costs savings that we expect to achieve from initiatives
commenced prior to December 31, 2009 under our reorganization of
business programs that are in process or have already been completed.
(h) Reflects adjustments required by our debt instruments, including
business optimization expenses, relocation expenses and other items.
(i) Includes the acceleration of depreciation relating to the closure of
certain of our 150mm manufacturing facilities.
Note 1
Adjusted gross margin and adjusted operating earnings (loss) represent
gross margin and operating earnings (loss) adjusted for the following as
necessary: incremental depreciation expense for property, plant and
equipment fair value step-up and associated with reduction in lives of
certain manufacturing assets, amortization of acquired intangible
assets, and reorganization of businesses and other charges. Adjusted
gross margin and adjusted operating earnings (loss) are not recognized
terms under U.S. GAAP. Adjusted gross margin and adjusted operating
earnings (loss) do not represent gross margin and operating earnings
(loss), as those terms are defined under U.S. GAAP, and should not be
considered as alternatives to gross margin or operating earnings (loss)
as an indicator of our operating performance. We have included
information concerning adjusted gross margin and adjusted operating
earnings (loss) because we use such information when evaluating gross
margin and operating earnings (loss) to better evaluate the underlying
performance of the Company. Adjusted gross margin and adjusted operating
earnings (loss) as presented herein are not necessarily comparable to
similarly titled measures. A reconciliation of adjusted gross margin to
gross margin and adjusted operating earnings (loss) to operating
earnings (loss), the most directly comparable U.S. GAAP measures, has
been included in the preceding tables.
Adjusted net earnings (loss) is net earnings (loss), adjusted for
certain items that we believe are not indicative of the performance of
our ongoing operations. We present adjusted net earnings (loss) as a
supplemental performance measure. We believe adjusted net earnings
(loss) is helpful to an understanding of our business and provides a
means of evaluating our performance from period to period on a more
consistent basis. This presentation should not be construed as an
indication that similar items will not recur or that our future results
will be unaffected by other items that we consider to be outside the
ordinary course of our business. Because adjusted net earnings (loss)
facilitates internal comparisons of our historical financial position
and operating performance on a more consistent basis, we also use
adjusted net earnings (loss) for business planning purposes, in
measuring our performance relative to that of our competitors and in
evaluating the effectiveness of our operational strategies. Adjusted net
earnings (loss) has limitations as an analytical tool, and you should
not consider it in isolation or as a substitute for an analysis of our
results as reported under U.S. GAAP. We compensate for these limitations
by relying primarily on our U.S. GAAP results and using adjusted net
earnings (loss) only supplementally. A reconciliation of adjusted net
earnings (loss) to net earnings (loss), the most directly comparable
U.S. GAAP performance measure, has been included in the preceding tables.
EBITDA (earnings before interest, taxes, depreciation and amortization)
excluding the effects of other items is a non-U.S. GAAP financial
measure. We have included information concerning EBITDA excluding the
effects of other items because we use such information to supplementally
evaluate the underlying performance of the Company. EBITDA excluding the
effects of other items does not represent, and should not be considered
an alternative to, net earnings (loss), operating earnings (loss), or
cash flow from operations as those terms are defined by U.S. GAAP and
does not necessarily indicate whether cash flows will be sufficient to
fund cash needs. While EBITDA excluding the effects of other items and
similar measures are frequently used as measures of operations and the
ability to meet debt service requirements by other companies, our use of
this financial measure is not necessarily comparable to such other
similarly titled captions of other companies.
Adjusted EBITDA as shown in the preceding tables is calculated in
accordance with the agreement and indentures governing Freescale
Semiconductor, Inc.’s existing notes and senior credit facilities.
Adjusted EBITDA is net earnings (loss) adjusted for certain non-cash and
other items that are included in net earnings (loss). The ability of our
subsidiaries to engage in activities such as incurring additional
indebtedness, making investments and paying dividends is tied to ratios
under the indentures and the senior credit facilities based on Adjusted
EBITDA calculated for the most recent four fiscal quarters. Accordingly,
we believe it is useful to provide the calculation of Adjusted EBITDA to
investors for purposes of determining our ability to engage in these
activities. Adjusted EBITDA is a non-U.S. GAAP financial measure.
Adjusted EBITDA does not represent, and should not be considered an
alternative to, net earnings (loss), operating earnings (loss), or cash
flow from operations as those terms are defined by U.S. GAAP and does
not necessarily indicate whether cash flows will be sufficient to fund
cash needs. Although Adjusted EBITDA and similar measures are frequently
used as measures of operations and the ability to meet debt service
requirements by other companies, our calculation of Adjusted EBITDA is
not necessarily comparable to such other similarly titled captions of
other companies. The calculation of Adjusted EBITDA in the indentures
and the senior credit facilities allows us to add back certain charges
that are deducted in calculating net earnings (loss). However, some of
these expenses may recur, vary greatly and are difficult to predict.
Further, our debt instruments require that Adjusted EBITDA be calculated
for the most recent four fiscal quarters. We do not report Adjusted
EBITDA on a quarterly basis. In addition, the measure can be
disproportionately affected by quarterly fluctuations in our operating
results, and it may not be comparable to the measure for any subsequent
quarter, four-quarter period or any complete fiscal year. A
reconciliation of net earnings (loss), which is a U.S. GAAP measure of
our operating results, to Adjusted EBITDA, calculated as described
above, has been included in the preceding tables.
Press Release $FSL Freescale Semiconductor, Ltd.
AUSTIN, Texas--(BUSINESS WIRE)-- Freescale Semiconductor, Ltd. (NYSE:FSL) today announced financial results for the fourth quarter and full-year ended December 31, 2012. Highlights include:
Fourth Quarter 2012
GAAP Results
Non-GAAP Results*
• Net sales of $957 million
• Adjusted operating earnings of $79 million
• Gross margin of 39.2%
• Adjusted loss per share of $. 15
• Operating earnings of $56 million
• Loss per share of $. 14
Calendar Year 2012
GAAP Results
Non-GAAP Results*
• Net sales of $3.95 billion
• Adjusted operating earnings of $461 million
• Gross margin of 41.6%
• Adjusted loss per share of $. 08
• Operating earnings of $463 million
• Loss per share of $. 41
“Looking forward, we have built a good foundation for future growth by charting a new course that has the buy-in of our customers and our employees,” said Gregg Lowe, president and CEO. “We've assembled a strong management team that is committed to helping deliver long-term growth and profitability.”
Fourth Quarter and Calendar Year 2012 Highlights
Net sales for the fourth quarter of 2012 were $957 million, compared to $1.01 billion in the third quarter of 2012 and $1.01 billion in the fourth quarter of 2011. Net sales for calendar year 2012 were $3.95 billion compared to $4.57 billion in calendar year 2011.
Income from operations for the three months ended December 31, 2012 was $56 million, compared to $127 million in the third quarter of 2012 and $136 million in the fourth quarter of 2011. Income from operations for calendar year 2012 was $463 million compared to income of $274 million in calendar year 2011.
The net loss for the fourth quarter 2012 was $35 million, or $. 14 per share, compared to a loss of $24 million, or $. 10 per share, in the third quarter of 2012 and a loss of $6 million, or $. 02 per share, in the same period last year. The net loss for calendar year 2012 was $102 million or $. 41 per share, compared to a loss of $410 million, or $1.82 per share, in calendar year 2011.
Adjusted operating earnings (defined in Note 1 to the Notes to the Consolidated Financial Information attached to this press release) for the three months ended December 31, 2012 were $79 million compared to earnings of $127 million in the third quarter of 2012 and $144 million in the fourth quarter of 2011. Adjusted operating earnings for calendar year 2012 were $461 million compared to $761 million in calendar year 2011.
The adjusted net loss (defined in Note 1 to the Consolidated Financial Information attached to this press release) for the three months ended December 31, 2012 was $37 million, or $. 15 per share, compared to earnings of $10 million, or $. 04 per share, in the third quarter of 2012 and earnings of $18 million, or $. 07 per share, in the fourth quarter of 2011. The adjusted net loss for calendar year 2012 was $19 million, or $. 08 per share, compared to adjusted net earnings of $217 million, or $. 96 per share in calendar year 2011.
Descriptions of EBITDA, Adjusted EBITDA, adjusted operating earnings and adjusted net earnings (loss) and the reconciliations to our GAAP results are included in the tables and notes attached to this press release.
Product Group Revenues
Following a strategic review completed during the third quarter of 2012, the company realigned its product groups and, effective with the fourth quarter of 2012, the company will report net sales based on the following product groups: Microcontrollers, Digital Networking, Automotive Microcontrollers, Analog & Sensors, RF and Other.
The company’s net sales figures for the fourth quarter and calendar year 2012 were as follows:
Other Financial Information
*Adjusted for various items as indicated and defined in Note 1 to the Notes to the Consolidated Financial Information attached to this press release.
First Quarter 2013 Outlook
For the first quarter of 2013, the company expects:
Conference Call and Webcast
Freescale's quarterly earnings call is scheduled to begin at 4:00 p.m. Central Time on January 29, 2013. The company will offer a live webcast of the conference call over the Internet at www.freescale.com/investor.
Caution Regarding Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our business strategy, goals and expectations concerning our strategic direction, key personnel, future operations, margins, profitability, liquidity and capital resources. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors. Some of the factors that we believe could affect our results include our substantial indebtedness; our ability to service our outstanding indebtedness and the impact such indebtedness may have on the way we operate our business; the loss of one or more of our significant customers or strategic relationships; general economic and business conditions and any downturns in the cyclical industry in which we operate; our competitive environment and our ability to make technological advances; interruptions in our production or manufacturing capacity and our ability to obtain supplies; economic conditions in the industries in which our products are sold; maintenance and protection of our intellectual property; political and economic conditions in the countries where we conduct business; geological conditions in some of the earthquake-prone countries where certain of our customers and suppliers are based; the costs of environmental compliance and/or the imposition of liabilities under environmental laws and regulations; potential product liability or personal injury claims; inability to make necessary capital expenditures; loss of key personnel; the financial viability of our customers, distributors or suppliers; and our ability to achieve cost savings as well as other matters described under "Risk Factors" in our Annual Report on Form 10-K and other filings with the SEC. We undertake no obligation to update any information contained in this press release.
Non-GAAP Financial Measures
Included within this press release and the accompanying tables and notes are non-GAAP financial measures that supplement the company's consolidated financial information prepared under GAAP. The company describes these non-GAAP financial measures and reconciles them to the most directly comparable GAAP measures in the tables and notes attached to this press release. The company's management believes that these non-GAAP measures provide a more meaningful representation of the company’s ongoing financial performance than GAAP measures alone. In addition, the company uses Adjusted EBITDA to measure compliance with certain of its debt covenants. These non-GAAP measures are included solely for informational and comparative purposes and are not meant as a substitute for GAAP. You should consider them together with the consolidated financial information located in the tables attached to this press release.
About Freescale Semiconductor
Freescale Semiconductor is a global leader in embedded processing solutions, providing industry leading products that are advancing the automotive, consumer, industrial and networking markets. From microprocessors and microcontrollers to sensors, analog integrated circuits and connectivity - our technologies are the foundation for the innovations that make our world greener, safer, healthier and more connected. Some of our key applications and end-markets include automotive safety, hybrid and all-electric vehicles, next generation wireless infrastructure, smart energy management, portable medical devices, consumer appliances and smart mobile devices.
The company is based in Austin, Texas, and has design, research and development, manufacturing and sales operations around the world. http://www.freescale.com
Freescale and the Freescale logo are trademarks of Freescale Semiconductor, Inc. All other product or service names are the property of their respective owners. © Freescale Semiconductor, Inc. 2013.
Other (i)
(1) Microcontrollers includes sales for industrial, multi-market, smart energy, healthcare, connectivity and multimedia applications.
(2) Digital Networking includes sales of communication and digital signal processors serving the networking and communications markets.
(3) Automotive MCU includes microcontroller sales serving the automotive market.
(4) Analog and Sensors includes sales of automotive analog, mixed-signal analog and sensor products.
(5) RF includes sales of power amplifiers.
(6) Other includes licensing and sales of intellectual property, sales serving the wireless handset market, sales of wafers to other semiconductor companies and other miscellaneous items.
Twelve Months Ended
Dec 31, 2012
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
Summary of Key Reconciling Items
(a) Includes the effects of purchase price accounting relating to our acquisition by a consortium of investors in 2006 and our acquisition of SigmaTel, Inc. in 2008, including, as applicable, depreciation expense associated with the property, plant and equipment step up to fair value and amortization expense for acquired intangible assets related to developed technology and tradenames/trademarks.
(b) Reflects non-cash, share-based compensation expense under the provisions of ASC Topic 718, "Compensation - Stock Compensation.”
(c) Reflects the change in fair value of our interest rate and commodity derivatives which are not designated as cash flow hedges under the provisions of ASC Topic 815, "Derivatives and Hedging.”
(d) Adjustments to reflect cash income tax expense.
(e) Reflects losses on extinguishments and modifications of our long-term debt, net.
(f) Reflects items related to our reorganization of business programs and other charges.
(g) Reflects costs savings that we expect to achieve from initiatives commenced prior to December 31, 2009 under our reorganization of business programs that are in process or have already been completed.
(h) Reflects adjustments required by our debt instruments, including business optimization expenses, relocation expenses and other items.
(i) Includes the acceleration of depreciation relating to the closure of certain of our 150mm manufacturing facilities.
Note 1
Adjusted gross margin and adjusted operating earnings (loss) represent gross margin and operating earnings (loss) adjusted for the following as necessary: incremental depreciation expense for property, plant and equipment fair value step-up and associated with reduction in lives of certain manufacturing assets, amortization of acquired intangible assets, and reorganization of businesses and other charges. Adjusted gross margin and adjusted operating earnings (loss) are not recognized terms under U.S. GAAP. Adjusted gross margin and adjusted operating earnings (loss) do not represent gross margin and operating earnings (loss), as those terms are defined under U.S. GAAP, and should not be considered as alternatives to gross margin or operating earnings (loss) as an indicator of our operating performance. We have included information concerning adjusted gross margin and adjusted operating earnings (loss) because we use such information when evaluating gross margin and operating earnings (loss) to better evaluate the underlying performance of the Company. Adjusted gross margin and adjusted operating earnings (loss) as presented herein are not necessarily comparable to similarly titled measures. A reconciliation of adjusted gross margin to gross margin and adjusted operating earnings (loss) to operating earnings (loss), the most directly comparable U.S. GAAP measures, has been included in the preceding tables.
Adjusted net earnings (loss) is net earnings (loss), adjusted for certain items that we believe are not indicative of the performance of our ongoing operations. We present adjusted net earnings (loss) as a supplemental performance measure. We believe adjusted net earnings (loss) is helpful to an understanding of our business and provides a means of evaluating our performance from period to period on a more consistent basis. This presentation should not be construed as an indication that similar items will not recur or that our future results will be unaffected by other items that we consider to be outside the ordinary course of our business. Because adjusted net earnings (loss) facilitates internal comparisons of our historical financial position and operating performance on a more consistent basis, we also use adjusted net earnings (loss) for business planning purposes, in measuring our performance relative to that of our competitors and in evaluating the effectiveness of our operational strategies. Adjusted net earnings (loss) has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for an analysis of our results as reported under U.S. GAAP. We compensate for these limitations by relying primarily on our U.S. GAAP results and using adjusted net earnings (loss) only supplementally. A reconciliation of adjusted net earnings (loss) to net earnings (loss), the most directly comparable U.S. GAAP performance measure, has been included in the preceding tables.
EBITDA (earnings before interest, taxes, depreciation and amortization) excluding the effects of other items is a non-U.S. GAAP financial measure. We have included information concerning EBITDA excluding the effects of other items because we use such information to supplementally evaluate the underlying performance of the Company. EBITDA excluding the effects of other items does not represent, and should not be considered an alternative to, net earnings (loss), operating earnings (loss), or cash flow from operations as those terms are defined by U.S. GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. While EBITDA excluding the effects of other items and similar measures are frequently used as measures of operations and the ability to meet debt service requirements by other companies, our use of this financial measure is not necessarily comparable to such other similarly titled captions of other companies.
Adjusted EBITDA as shown in the preceding tables is calculated in accordance with the agreement and indentures governing Freescale Semiconductor, Inc.’s existing notes and senior credit facilities. Adjusted EBITDA is net earnings (loss) adjusted for certain non-cash and other items that are included in net earnings (loss). The ability of our subsidiaries to engage in activities such as incurring additional indebtedness, making investments and paying dividends is tied to ratios under the indentures and the senior credit facilities based on Adjusted EBITDA calculated for the most recent four fiscal quarters. Accordingly, we believe it is useful to provide the calculation of Adjusted EBITDA to investors for purposes of determining our ability to engage in these activities. Adjusted EBITDA is a non-U.S. GAAP financial measure. Adjusted EBITDA does not represent, and should not be considered an alternative to, net earnings (loss), operating earnings (loss), or cash flow from operations as those terms are defined by U.S. GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Although Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements by other companies, our calculation of Adjusted EBITDA is not necessarily comparable to such other similarly titled captions of other companies. The calculation of Adjusted EBITDA in the indentures and the senior credit facilities allows us to add back certain charges that are deducted in calculating net earnings (loss). However, some of these expenses may recur, vary greatly and are difficult to predict. Further, our debt instruments require that Adjusted EBITDA be calculated for the most recent four fiscal quarters. We do not report Adjusted EBITDA on a quarterly basis. In addition, the measure can be disproportionately affected by quarterly fluctuations in our operating results, and it may not be comparable to the measure for any subsequent quarter, four-quarter period or any complete fiscal year. A reconciliation of net earnings (loss), which is a U.S. GAAP measure of our operating results, to Adjusted EBITDA, calculated as described above, has been included in the preceding tables.
Freescale Semiconductor, Ltd.
Media:
Rob Hatley, 512-996-5134
robert.hatley@freescale.com
or
Investors:
Mitch Haws, 512-895-2454
mitch.haws@freescale.com
Source: Freescale Semiconductor, Ltd.