AUSTIN, Texas--(BUSINESS WIRE)--
Freescale Semiconductor, Ltd. (NYSE:FSL) today announced financial
results for the second quarter ended July 3, 2015. Highlights include:
GAAP Results |
|
|
|
|
| Non-GAAP Results* |
-
Net sales of $1.20 billion
-
Earnings per share of $0.38
| | | | | | -
Adjusted earnings per share of $0.57
|
Debt Redemption
-
Announced redemption of $302 million of remaining 10.75% Notes during
the third quarter.
-
Freescale will have reduced debt by approximately $1.40 billion and
annualized interest expense by $160 million, since January 2014.
“Second quarter results represented record performance for Freescale,”
said Gregg Lowe, president and CEO. “Gross margins of 48.1 percent
established a new record and were 300 basis points ahead of the prior
year’s quarter. Gross margins have now increased sequentially for 10
consecutive quarters. Adjusted earnings per share of $0.57 were also a
record and were 50 percent ahead of the second quarter last year. The
execution on gross margin, combined with operating expense discipline
and de-leveraging work we have done, have helped generate record
operating cash flow as well as record free cash flow in the quarter.”
*Adjusted for various items as indicated and defined in Note 1 to the
Notes to the Consolidated Financial Information attached to this press
release.
**Reflects EBITDA excluding the effect of other items.
Second Quarter Highlights
Net sales for the second quarter of 2015 were $1.20 billion, compared to
$1.17 billion in the first quarter of 2015 and $1.19 billion in the
second quarter of 2014.
Operating earnings for the period were $226 million, compared to $179
million in the first quarter of 2015 and $180 million in the second
quarter of 2014. Operating earnings increased due to higher revenues,
improving gross margins and lower operating expenses. Operating expenses
as a percentage of sales were 28.3 percent in the quarter, 100 basis
points lower than the preceding quarter and 80 basis points lower than
second quarter of 2014. Second quarter 2015 operating earnings included
$6 million of reorganization of business costs comprised of expenses
associated with the company’s planned merger with NXP Semiconductors and
severance.
Net earnings for the second quarter were $122 million, or $0.38 per
share, compared to net earnings of $70 million, or $0.22 per share, in
the first quarter of 2015 and $86 million, or $0.28 per share, in the
second quarter of 2014. Included in second quarter 2015 net earnings was
$9 million of costs associated with the company’s redemption of $100
million of debt securities during the second quarter.
Adjusted operating earnings (defined in Note 1 to the Consolidated
Financial Information attached to this press release) for the three
months ended July 3, 2015 were $258 million compared to adjusted
operating earnings of $234 million in the first quarter of 2015 and $208
million in the second quarter of 2014.
Adjusted net earnings (defined in Note 1 to the Consolidated Financial
Information attached to this press release) for the second quarter of
2015 were $182 million, or $0.57 per share, compared to $150 million, or
$0.48 per share, in the first quarter of 2015 and $117 million, or $0.38
per share, in the second quarter of 2014. Adjusted net earnings per
share grew 50 percent year over year and 19 percent sequentially due to
improving sales, higher gross margins, lower operating expense and lower
interest expense.
Descriptions of EBITDA excluding the effects of other items, Adjusted
EBITDA, adjusted operating earnings and adjusted net earnings and the
reconciliations to our GAAP results are included in the tables and notes
attached to this press release.
Product Group Revenues
The company’s net sales figures for the second quarter of 2015 were as
follows:
-
Microcontrollers net sales were $291 million, compared to $235 million
in the first quarter of 2015 and $246 million in the second quarter of
last year. On a sequential and year-over-year basis, Microcontroller
revenues benefitted from increased sales of its 32-bit microcontroller
products into distribution and higher sales of applications processors
into the automotive market.
-
RF net sales, which include sales of power amplifiers to the wireless
infrastructure market, were $177 million, compared to $184 million in
the first quarter of 2015 and $120 million in the second quarter of
last year. RF sales increased over the prior year due to increased
spending on 3G and 4G wireless networks. The sequential decline in
revenue is a result of slowing wireless capital expenditure spending
in major markets including China.
-
Automotive MCU net sales were $305 million, compared to $307 million
in the first quarter of 2015 and $308 million in the second quarter of
last year. Automotive MCU benefitted from growth in vehicle
semiconductor content offset by declines in worldwide automotive
production, particularly in emerging markets.
-
Analog and Sensors net sales were $223 million, compared to $207
million in the first quarter of 2015 and $205 million in the second
quarter of last year. Analog and Sensors sales benefitted from
increased vehicle semiconductor content along with sales of analog and
sensors sold into distribution and OEM accounts.
-
Digital Networking net sales were $184 million, compared to $214
million in the first quarter of 2015 and $291 million in the second
quarter of last year. Networking net sales declined compared to the
prior quarter and the prior year primarily due to lower sales to
certain service provider customers and lower sales into distribution.
-
Other net sales were $18 million, compared to $22 million in the first
quarter of 2015 and $21 million in the second quarter of last year.
Other Financial Information
-
Capital Expenditures for the quarter were $47 million;
-
Cash and Cash Equivalents were $588 million, inclusive of debt
redemption activities during the quarter totaling $108 million; and
-
Adjusted EBITDA* for the latest twelve months ended July 3, 2015 was
$1.20 billion.
*Adjusted for various items as indicated and defined in Note 1 to the
Notes to the Consolidated Financial Information attached to this press
release.
Third Quarter 2015 Outlook
For the third quarter of 2015, the company expects:
-
Net sales to be between $1.10 billion and $1.17 billion;
-
Gross margins to decline 80 to 100 basis points sequentially;
-
Operating expenses to decline again on a sequential basis;
-
Adjusted earnings per share to be in a range of $0.47 to $0.51.
Conference Call and Webcast
Freescale's quarterly earnings call is scheduled to begin at 4:00 p.m.
Central Daylight Time on July 23, 2015. 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 future revenues, 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; our ability to meet
unscheduled or temporary increases in demand in our target markets,
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; the inability to make necessary capital
expenditures; the 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 Part I, Item 1A:
"Risk Factors" in our Annual Report on Form 10-K for the period ending
December 31, 2014, Part II, Item 1A: “Risk Factors” in our Quarterly
Report on Form 10-Q for the period ending April 3, 2015 and within 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 (NYSE:FSL) enables secure, embedded processing
solutions for the Internet of Tomorrow. Freescale’s solutions drive a
more innovative and connected world, simplifying our lives and making us
safer. While serving the world’s largest companies, Freescale is also
committed to supporting science, technology, engineering and math (STEM)
education, enabling the next generation of innovators. www.freescale.com
Freescale and the Freescale logo are trademarks of Freescale
Semiconductor, Inc., Reg. U.S. Pat. & Tm. Off. All other product or
service names are the property of their respective owners. © 2015
Freescale Semiconductor, Inc.
|
| |
| |
| |
| Freescale Semiconductor, Ltd. |
| Condensed Consolidated Statements of Operations |
| (Unaudited) |
| | | | | |
|
| | | | | |
|
| | Three Months Ended |
|
(in millions, except per share amounts)
| | Jul 3, 2015 | | Apr 3, 2015 | | Jul 4, 2014 |
| | | | | |
|
|
Net sales
| |
$
|
1,198
| | |
$
|
1,169
| | |
$
|
1,191
| |
|
Cost of sales
| |
|
622
|
| |
|
616
|
| |
|
654
|
|
|
Gross margin
| | |
576
| | | |
553
| | | |
537
| |
|
Research and development
| | |
216
| | | |
222
| | | |
219
| |
|
Selling, general and administrative
| | |
123
| | | |
121
| | | |
128
| |
|
Amortization expense for acquired intangible assets
| | |
5
| | | |
5
| | | |
4
| |
|
Reorganization of business, merger expenses and other
| |
|
6
|
| |
|
26
|
| |
|
6
|
|
|
Operating earnings
| | |
226
| | | |
179
| | | |
180
| |
|
Loss on extinguishment or modification of long-term debt
| | |
(9
|
)
| | |
(21
|
)
| | |
-
| |
|
Other expense, net
| |
|
(71
|
)
| |
|
(78
|
)
| |
|
(83
|
)
|
|
Earnings before income taxes
| | |
146
| | | |
80
| | | |
97
| |
|
Income tax expense
| |
|
24
|
| |
|
10
|
| |
|
11
|
|
|
Net earnings
| |
$
|
122
|
| |
$
|
70
|
| |
$
|
86
|
|
| | | | | |
|
|
Earnings per common share:
| | | | | | |
|
Basic
| |
$
|
0.39
| | |
$
|
0.23
| | |
$
|
0.28
| |
|
Diluted
| |
$
|
0.38
| | |
$
|
0.22
| | |
$
|
0.28
| |
| | | | | |
|
|
Weighted average common shares outstanding:
| | | | | | |
|
Basic
| | |
310
| | | |
307
| | | |
303
| |
|
Diluted
| | |
318
| | | |
315
| | | |
308
| |
|
| |
| |
| |
| Freescale Semiconductor, Ltd. |
| Reconciliation of Non-GAAP Measures |
| (Unaudited) |
| | | | | |
|
| | Three Months Ended |
|
(in millions, except per share amounts)
| | Jul 3, 2015 | | Apr 3, 2015 | | Jul 4, 2014 |
| | | | | |
|
|
Adjusted operating earnings
| |
$
|
258
| |
$
|
234
| |
$
|
208
|
|
Amortization expense for acquired intangible assets (a)
| | |
5
| | |
5
| | |
5
|
|
Non-cash share-based compensation expense (b)
| | |
21
| | |
24
| | |
17
|
|
Reorganization of business, merger expenses and other (c)
| |
|
6
| |
|
26
| |
|
6
|
|
Operating earnings
| |
$
|
226
| |
$
|
179
| |
$
|
180
|
| | | | | |
|
| | | | | |
|
|
Adjusted net earnings
| |
$
|
182
| |
$
|
150
| |
$
|
117
|
|
Amortization expense for acquired intangible assets (a)
| | |
5
| | |
5
| | |
5
|
|
Non-cash share-based compensation expense (b)
| | |
21
| | |
24
| | |
17
|
|
Deferred and non-current tax impact (d)
| | |
19
| | |
4
| | |
3
|
|
Loss on extinguishment or modification of long-term debt (e)
| | |
9
| | |
21
| | |
-
|
|
Reorganization of business, merger expenses and other (c)
| |
|
6
| |
|
26
| |
|
6
|
|
Net earnings
| |
$
|
122
| |
$
|
70
| |
$
|
86
|
| | | | | |
|
|
Adjusted earnings per common share:
| | | | | | |
|
Basic
| |
$
|
0.59
| |
$
|
0.49
| |
$
|
0.39
|
|
Diluted
| |
$
|
0.57
| |
$
|
0.48
| |
$
|
0.38
|
| | | | | |
|
|
Weighted average common shares outstanding:
| | | | | | |
|
Basic
| | |
310
| | |
307
| | |
303
|
|
Diluted
| | |
318
| | |
315
| | |
308
|
|
|
|
| |
|
| |
|
| |
| Freescale Semiconductor, Ltd. |
| Product Group Net Sales Information |
| (Unaudited) |
| | | | | | | | | |
|
| | | | | | | | | |
|
| | | | | | | | | |
|
| | | | Three Months Ended |
|
(in millions)
| | | | Jul 3, 2015 | | | Apr 3, 2015 | | | Jul 4, 2014 |
| | | | | | | | | |
|
|
Microcontrollers (1) | | | |
$
|
291
| | |
$
|
235
| | |
$
|
246
|
|
Digital Networking (2) | | | | |
184
| | | |
214
| | | |
291
|
|
Automotive MCU (3) | | | | |
305
| | | |
307
| | | |
308
|
|
Analog & Sensors (4) | | | | |
223
| | | |
207
| | | |
205
|
|
RF (5) | | | | |
177
| | | |
184
| | | |
120
|
|
Other (6) | | | |
|
18
| | |
|
22
| | |
|
21
|
|
Total
| | | |
$
|
1,198
| | |
$
|
1,169
| | |
$
|
1,191
|
|
(1) Microcontrollers includes sales for industrial, multi-market,
smart energy, healthcare, connectivity and automotive & other
multimedia applications.
|
|
(2) Digital Networking includes sales of communication and wireless
infrastructure processors serving the networking and communications
markets.
|
|
(3) Automotive MCU includes microcontroller sales serving the
automotive market.
|
|
(4) Analog & Sensors includes sales of automotive analog,
mixed-signal analog and sensor products.
|
|
(5) RF includes sales of high power transistors.
|
|
(6) Other includes licensing and sales of intellectual property,
sales of products 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)
| | Jul 3, 2015 | | Apr 3, 2015 | | Jul 4, 2014 |
| ASSETS | | | | | | |
|
Cash and cash equivalents
| |
$
|
588
| | |
$
|
501
| | |
$
|
744
| |
|
Accounts receivable, net
| | |
560
| | | |
559
| | | |
583
| |
|
Inventory, net
| | |
740
| | | |
749
| | | |
701
| |
|
Other current assets
| |
|
174
|
| |
|
174
|
| |
|
158
|
|
|
Total current assets
| | |
2,062
| | | |
1,983
| | | |
2,186
| |
| | | | | |
|
|
Property, plant and equipment, net
| | |
761
| | | |
758
| | | |
707
| |
|
Intangible assets, net
| | |
55
| | | |
55
| | | |
59
| |
|
Other assets, net
| |
|
287
|
| |
|
300
|
| |
|
313
|
|
|
Total assets
| |
$
|
3,165
|
| |
$
|
3,096
|
| |
$
|
3,265
|
|
| | | | | |
|
| LIABILITIES AND SHAREHOLDERS' DEFICIT | | | | | | |
|
Current portion of long-term debt and capital lease obligations
| |
$
|
35
| | |
$
|
35
| | |
$
|
35
| |
|
Accounts payable
| | |
441
| | | |
425
| | | |
438
| |
|
Accrued liabilities and other
| |
|
329
|
| |
|
349
|
| |
|
379
|
|
|
Total current liabilities
| | |
805
| | | |
809
| | | |
852
| |
| | | | | |
|
|
Long-term debt
| | |
5,169
| | | |
5,277
| | | |
5,750
| |
|
Other liabilities
| | |
364
| | | |
464
| | | |
391
| |
| | | | | |
|
|
Shareholders' deficit
| |
|
(3,173
|
)
| |
|
(3,454
|
)
| |
|
(3,728
|
)
|
|
Total liabilities and shareholders' deficit
| |
$
|
3,165
|
| |
$
|
3,096
|
| |
$
|
3,265
|
|
|
| |
| |
| |
| Freescale Semiconductor, Ltd. |
| Cash Flow Summary |
| (Unaudited) |
| | | | | |
|
| | | | | |
|
| | Three Months Ended |
|
(in millions)
| | Jul 3, 2015 | | Apr 3, 2015 | | Jul 4, 2014 |
| | | | | |
|
|
Cash flows from operating activities
| |
$
|
241
| | |
$
|
134
| | |
$
|
118
| |
| | | | | |
|
|
Cash flows from investing activities
| |
$
|
(71
|
)
| |
$
|
(75
|
)
| |
$
|
(92
|
)
|
| | | | | |
|
|
Cash flows from financing activities
| |
$
|
(87
|
)
| |
$
|
(241
|
)
| |
$
|
8
| |
| | | | | |
|
|
Effect of exchange rate changes on cash and cash equivalents
| |
$
|
4
| | |
$
|
(13
|
)
| |
$
|
1
| |
|
| |
| |
| |
| Freescale Semiconductor, Ltd. |
| EBITDA, Adjusted EBITDA, Free Cash Flow and Adjusted Cash Flows
from Operating Activities Reconciliations |
| (Unaudited) |
| | | | | |
|
| | Three Months Ended |
|
(in millions)
| | Jul 3, 2015 | | Apr 3, 2015 | | Jul 4, 2014 |
| | | | | |
|
|
EBITDA excluding the effects of other items
| |
$
|
320
| |
$
|
294
| |
$
|
265
|
|
Non-cash share-based compensation expense (b)
| | |
21
| | |
24
| | |
17
|
|
Loss on extinguishment or modification of long-term debt (e)
| | |
9
| | |
21
| | |
-
|
|
Reorganization of business, merger expenses and other (c)
| |
|
6
| |
|
26
| |
|
6
|
|
EBITDA
| | |
284
| | |
223
| | |
242
|
|
Depreciation
| | |
43
| | |
43
| | |
42
|
|
Amortization*
| | |
23
| | |
22
| | |
21
|
|
Interest expense, net
| | |
72
| | |
78
| | |
82
|
|
Income tax expense
| |
|
24
| |
|
10
| |
|
11
|
|
Net earnings
| |
$
|
122
| |
$
|
70
| |
$
|
86
|
| | | | | |
|
| | | | | |
|
| | | | | |
|
| | Twelve Months Ended Jul 3, 2015 | | | | |
|
(in millions)
| | | | | | |
| | | | | |
|
|
Net earnings
| |
$
|
380
| | | | |
|
Interest expense, net
| | |
309
| | | | |
|
Income tax expense
| | |
60
| | | | |
|
Depreciation and amortization expense*
| | |
263
| | | | |
|
Non-cash share-based compensation expense (b)
| | |
78
| | | | |
|
Loss on extinguishment or modification of long-term debt (e)
| | |
50
| | | | |
|
Reorganization of business, merger expenses and other (c)
| | |
52
| | | | |
|
Other terms (f)
| |
|
4
| | | | |
|
Adjusted EBITDA
| |
$
|
1,196
| | | | |
| | | | | |
|
|
*Excludes amortization of debt issuance costs, which are included in
interest expense, net.
|
| | | | | |
|
| | Three Months Ended |
|
(in millions)
| | Jul 3, 2015 | | Apr 3, 2015 | | Jul 4, 2014 |
| | | | | |
|
|
Free cash flow
| |
$
|
202
| |
$
|
101
| |
$
|
63
|
|
Purchases of property, plant and equipment
| |
|
47
| |
|
50
| |
|
56
|
|
Adjusted cash flows from operating activities
| | |
249
| | |
151
| | |
119
|
|
Excess tax benefits from share-based compensation (g)
| |
|
8
| |
|
17
| |
|
1
|
|
Cash flows from operating activities
| |
$
|
241
| |
$
|
134
| |
$
|
118
|
| NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION |
|
|
| Summary of Key Reconciling Items |
|
|
|
(a)
|
Reflects the effects of acquisition accounting, including our
acquisition by a consortium of investors in 2006, and the related
amortization expense for developed technology, trademarks/tradenames
and customer relationships along with inventory step-up recognition,
as applicable.
|
|
|
|
(b)
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Reflects non-cash, share-based compensation expense under the
provisions of ASC Topic 718, "Compensation - Stock Compensation.”
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(c)
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Reflects items related to our reorganization of business programs,
expenses associated with our proposed merger with NXP and other
items.
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(d)
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Adjustments to reflect cash income tax expense.
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(e)
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Reflects losses on extinguishments and modifications of our
long-term debt.
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(f)
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Reflects adjustments required by our debt instruments, including
business optimization expenses, relocation expenses and other items.
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(g)
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Reflects non-cash income tax benefit resulting when compensation
cost from non-qualified share-based compensation recognized on the
entity's tax return exceeds cost from equity-based compensation
recognized in the financial statements.
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| Note 1 |
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Adjusted operating earnings represents operating earnings adjusted
for the following, as necessary: the impact of acquisition
accounting, non-cash share-based compensation expense and
reorganization of business, merger expenses and other items.
Adjusted operating earnings is not a recognized term under U.S.
GAAP. Adjusted operating earnings does not represent operating
earnings, as that term is defined under U.S. GAAP, and should not be
considered an alternative to operating earnings as an indicator of
our operating performance. We have included information concerning
adjusted operating earnings because we use such information to
better evaluate the underlying performance of the Company. Adjusted
operating earnings as presented herein is not necessarily comparable
to similarly titled measures. A reconciliation of adjusted operating
earnings to operating earnings, the most directly comparable U.S.
GAAP measure, has been included in the preceding tables.
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Adjusted net earnings is net earnings adjusted for the impact of
acquisition accounting, non-cash share-based compensation expense,
deferred and non-current tax expense, losses on extinguishment or
modification of long-term debt and reorganization of business,
merger expenses and other items, which we believe are not indicative
of the performance of our ongoing operations. Adjusted earnings per
common share is calculated by dividing adjusted net earnings by the
basic or diluted weighted average common shares outstanding for the
period. We present adjusted net earnings and adjusted earnings per
share as supplemental performance measures. We believe adjusted net
earnings and adjusted earnings per share are helpful to an
understanding of our business and provide 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 and adjusted earnings
per share facilitate internal comparisons of our historical
financial position and operating performance on a more consistent
basis, we also use adjusted net earnings and adjusted earnings per
share 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
and adjusted earnings per share have limitations as analytical tools
and should not be considered in isolation or as a substitute for an
analysis of our results as reported under U.S. GAAP. A
reconciliation of adjusted net earnings to net earnings, the most
directly comparable U.S. GAAP performance measure, has been included
in the preceding tables.
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EBITDA (earnings before interest, taxes, depreciation and
amortization) excluding the effects of other items, is a non-U.S.
GAAP financial measure and represents net earnings adjusted for
depreciation, amortization, interest expense, net, income tax
expense, non-cash share-based compensation expense, losses on
extinguishment or modification of long-term debt, and reorganization
of business, merger expenses and other items, as necessary. 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, operating earnings, 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. A reconciliation of EBITDA excluding the effects of
other items to net earnings, the most directly comparable U.S. GAAP
measure, has been included in the preceding tables.
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Adjusted EBITDA as shown in the preceding tables is calculated in
accordance with the agreement and indentures governing Freescale
Semiconductor, Inc.’s notes and senior credit facilities. Adjusted
EBITDA is net earnings adjusted for interest expense, net, income
tax expense, depreciation and amortization expense, non-cash
share-based compensation expense, losses on extinguishment and
modification of long-term debt, reorganization of business, merger
expenses and other items and other charges 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, operating earnings, 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. 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, 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.
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Free cash flow represents adjusted cash flows from operating
activities, less purchases of property, plant and equipment, and is
a measure that takes into consideration the capital investments
required to maintain the operations of our business and execute our
strategy, as cash flows from operating activities adds back non-cash
depreciation expense to earnings but does not reflect a charge for
necessary capital expenditures. Adjusted cash flows from operating
activities represents cash flows from operating activities, plus
excess tax benefits from share-based compensation. U.S. GAAP
requires the excess tax benefits from share-based compensation to be
reported as a financing cash flow rather than as an operating cash
flow. We have added this benefit back to our calculation of adjusted
cash flows from operating activities and free cash flow in order to
generally classify cash flows arising from income taxes as operating
cash flows. We believe adjusted cash flows from operating activities
and free cash flow provide useful information to investors regarding
our ability to generate cash from business operations that is
available for acquisitions and other investments and service of debt
principal. We use adjusted cash flows from operating activities and
free cash flow as measures to monitor and evaluate operating
performance. Adjusted cash flows from operating activities and free
cash flow presented herein is not necessarily comparable to
similarly titled measures of other companies. A reconciliation of
adjusted cash flows from operating activities and free cash flow to
cash flows from operating activities, the most directly comparable
U.S. GAAP measures, have been included in the preceding tables.
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View source version on businesswire.com: http://www.businesswire.com/news/home/20150723006485/en/
Freescale Semiconductor, Ltd.
Media:
Jacey Zuniga, 512-895-7398
jacey.zuniga@freescale.com
or
Investors:
Mitch
Haws, 512-895-2454
mitch.haws@freescale.com
Source: Freescale Semiconductor, Ltd.