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Electronics Production | January 19, 2005

Freescale improves financial performance

Freescale Semiconductor reported its financial results for the fourth quarter and fiscal year ended December 31, 2004. Net sales in the fourth quarter of 2004 were $1.43 billion, compared to $1.37 billion in the fourth quarter of 2003 and $1.43 billion in the third quarter of 2004. Fiscal year 2004 revenues were $5.72 billion, compared to $4.86 billion in fiscal year 2003.
Net income for the fourth quarter of 2004 was $5 million, or $.01 per fully diluted share, compared to $98 million in the fourth quarter of 2003 and $57 million in the third quarter of 2004. The fourth quarter 2004 results include pre-tax charges of $5 million related to the separation from Motorola, Inc. and $79 million for restructuring. Excluding these costs, fourth quarter 2004 net income was $72 million or $.17 per fully diluted share. Net income exclusive of restructuring, separation expenses and gains on sale of securities was $25 million and $71 million in the fourth quarter of 2003 and the third quarter of 2004, respectively.

Net income for fiscal year 2004 was $211 million, or $.62 per fully diluted share, compared to a loss of ($366) million in fiscal year 2003. Excluding separation expenses, restructuring charges and gains on sale of securities, net income was $292 million or $.86 per fully diluted share in fiscal year 2004. Earnings per share are based on the pro forma 2004 fully diluted shares of 339 million.

Gross margins, inclusive of fourth quarter 2004 restructuring charges, were 36.0%. Excluding the impact of the restructuring charge in both periods, gross margins for the fourth quarter of 2004 were 38.3%, compared to 34.3% in the fourth quarter of 2003 and 39.0% in the third quarter of 2004. Excluding restructuring charges, fiscal year 2004 gross margins were 38.0%
compared to 29.5% in fiscal year 2003.

"We are encouraged by the improvement of our financial performance across all businesses during 2004," said Michel Mayer, Chairman and CEO. "But we recognize there is a lot of work left to be done to reach our potential as an independent, leading technology company."
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