Weak wireless unit forces Freescale in the red

"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.