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Freescale Semiconductor Announces Second Quarter 2007 Results
Highlights for the quarter include:
Net sales of $1.38 billion;
Adjusted EBITDA of $367 million;
Cash, cash equivalents and short-term investments of $541 million.
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 second quarter of 2007 were $1.38 billion, compared to $1.60 billion in the second quarter of 2006. "The continued weakness in unit sales and demand from our largest wireless customer impacted our results," said Michel Mayer, chairman and CEO. "However, the flexibility of our business model allowed us to moderate the impact on profitability and cash flow."
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. In addition, during the second quarter of 2007 the company incurred a charge of $38 million, primarily for severance costs associated with a workforce reduction.
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 and net losses for the second quarter of 2007 were $268 million and $288 million, respectively. EBITDA for the second quarter of 2007 was $273 million.
Excluding the aforementioned expenses, operating earnings were $159 million and EBITDA was $311 million. This compares to operating earnings of $251 million and EBITDA of $413 million in the second quarter of 2006.
The company also uses Adjusted EBITDA to measure compliance with certain of its debt covenants. Adjusted EBITDA for the second quarter of 2007 was $367 million. Adjusted EBITDA for the 12 months ended June 29, 2007 was $1.7 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 $684 million in the second quarter of 2007, compared to $697 million in the second quarter of 2006. EBITDA for the second quarter was $185 million, or 27% of net sales.
The Networking and Computing Systems segment reported net sales of $328 million in the second quarter of 2007, compared to $370 million in the second quarter of 2006. EBITDA for the second quarter was $104 million, or 32% of net sales.
The Wireless and Mobile Solutions segment reported net sales of $353 million in the second quarter of 2007, compared to $514 million in the second quarter of 2006. Net sales were negatively impacted by lower shipments to the segment's largest customer. EBITDA for the second quarter was $29 million, or 8% of net sales.
Cash, cash equivalents and short-term investments were $541 million on June 29, 2007. Capital expenditures were $72 million or 5% of net sales for the second 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 July 19, 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/A filed with the SEC on June 22, 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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