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Freescale Semiconductor Announces First Quarter 2007 Results
Highlights for the quarter include:
- Net sales of $1.36 billion;
- Adjusted EBITDA of $335 million;
- Cash, cash equivalents and short-term investments of $637
A description of Adjusted EBITDA and the reconciliations to our GAAP results are included in this press release and the accompanying tables.
Net sales for the first quarter of 2007 were $1.36 billion, compared to $1.53 billion in the first quarter of 2006. Net sales were negatively impacted in the quarter by a sales decline in the company's Wireless and Mobile Solutions segment. The decline in sales resulted from lower demand at the segment's largest customer.
"Our Transportation and Networking segments continue to generate solid sales and operational profitability," said Michel Mayer, chairman and CEO. "However, the challenging market conditions in the wireless market negatively impacted our overall first quarter results."
Operating earnings, net earnings and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) now include non-cash purchase accounting expenses related to the company's acquisition by a private equity consortium in December 2006. The company believes that providing operating earnings and EBITDA exclusive of these expenses is a more meaningful representation of the company's ongoing financial performance. Including the aforementioned expenses, the operating, net and EBITDA losses for the first quarter of 2007 were $654 million, $539 million and $119 million, respectively. Excluding these expenses, operating earnings were $149 million and EBITDA was $300 million. This compares to operating earnings of $207 million and EBITDA of $371 million in the first quarter of 2006.
The company also uses Adjusted EBITDA to measure compliance with certain of its debt covenants. Adjusted EBITDA for the first quarter of 2007 was $335 million. Adjusted EBITDA for the 12 months ended March 30, 2007 was $1.75 billion.
A table describing EBITDA and Adjusted EBITDA and reconciling net income to these measures is included in this press release.
The Transportation and Standard Products segment reported net sales of $665 million in the first quarter of 2007, compared to $653 million in the first quarter of 2006. First quarter 2007 sales benefited from growth in the company's sensor and analog products along with growth in the non-U.S. automotive business. EBITDA for the first quarter was a loss of $8 million. Excluding non-cash purchase accounting items, EBITDA was $178 million, or 27% of sales.
The Networking and Computing Systems segment reported net sales of $320 million, compared to $351 million in the first quarter of 2006. First quarter 2006 sales included revenue from product lines that have since been discontinued. Adjusting for these sales, revenues were essentially flat with the prior year. Net sales benefited from higher demand for the company's Digital Home solutions offset by slower sales into the wireless infrastructure markets. EBITDA for the first quarter was a loss of $88 million. Excluding non-cash purchase accounting items, EBITDA was $90 million, or 28% of sales.
The Wireless and Mobile Solutions segment reported net sales of $364 million in the first quarter of 2007, compared to $506 million in the first quarter of 2006. Net sales were negatively impacted by lower shipments to the segment's largest customer. EBITDA for the first quarter was a loss of $24 million. Excluding non-cash purchase accounting items, EBITDA was $28 million, or 8% of sales.
Cash, cash equivalents and short-term investments were $637 million on March 30, 2007. Capital expenditures were $92 million or 7% of net sales for the first quarter of 2007.
Conference Call and Webcast
Freescale's quarterly earnings call is scheduled to begin at 4 p.m. Central Daylight Time (USA) on April 25, 2007. 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, among other things, revenues, earnings, cash flows, capital expenditures, working capital and other financial items. These statements also relate to our business strategy, goals and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources. We have used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will" and similar terms and phrases to identify forward-looking statements in this release.
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, which are described in greater detail under "Risk Factors" in our Registration Statement on Form S-4 filed with the SEC on March 8, 2007. All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this release.
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