Freescale Semiconductor Announces Fourth Quarter and Full-Year 2012 Results

Freescale Semiconductor Announces Fourth Quarter and Full-Year 2012 Results

AUSTIN, Texas--(BUSINESS WIRE)-- Freescale Semiconductor, Ltd. (NYS: 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:

  • 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

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.

 
 
Freescale Semiconductor, Ltd.
Condensed Consolidated Statements of Operations
(Unaudited)
            
Three Months EndedTwelve Months Ended
(in millions, except per share amounts)Dec 31,Sept 28,Dec 31,Dec 31,Dec 31,
 2012  2012  2011  2012  2011 
 
Net sales$957$1,009$1,013$3,945$4,572
Cost of sales 582  585  600  2,304  2,677 
Gross margin3754244131,6411,895
Selling, general and administrative110110113438510
Research and development186187188742797
Amortization expense for acquired intangible assets334413232
Reorganization of business and other 20  (3) (68) (15) 82 
Operating earnings56127136463274
Loss on extinguishment or modification of long-term debt, net(1)(3)-(32)(97)
Other expense, net (127) (134) (131) (531) (559)
(Loss) earnings before income taxes(72)(10)5(100)(382)
Income tax (benefit) expense (37) 14  11  2  28 
Net loss$(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:
Basic249249246248226
Diluted251251248251227

 
 
Freescale Semiconductor, Ltd.
Reconciliation of Non-GAAP Measures
(Unaudited)
            
Three Months EndedTwelve 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)334413232
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)337613400
Non-cash share-based compensation expense (b)121284327
Fair value adjustment on interest rate and commodity derivatives (c)-7-17-
Deferred and non-current tax impact (d)(38) Read Full Story

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