Fourth Quarter and Calendar 2013 Highlights
Net sales for the fourth quarter of 2013 were $1.08 billion, compared to $1.09 billion in the third quarter of 2013 and $957 million in the fourth quarter of 2012. Net sales for calendar year 2013 were $4.19 billion, compared to $3.95 billion in calendar year 2012. Net sales benefited from year-over-year growth in each of the company’s five product groups.
Operating earnings for the three months ended December 31, 2013 were $145 million, compared to $157 million in the third quarter of 2013 and $56 million in the fourth quarter of 2012. Operating earnings for calendar year 2013 were $531 million, compared to income of $463 million in calendar year 2012. Operating earnings benefited from higher sales and increasing gross margins.
The net loss for the fourth quarter 2013 was $118 million, or $0.46 per share, compared to net earnings of $23 million, or $0.09 per share, in the third quarter of 2013 and a net loss of $35 million, or $0.14 per share, in the same period in the prior year. The net loss for calendar 2013 was $208 million or $0.81 per share, compared to a loss of $102 million or $0.41 per share in calendar year 2012. Included in the net loss in 2013 is $217 million of costs associated with debt refinancing transactions completed during the year. The refinancing transactions will reduce our annual interest expense by approximately $75 million, based on current interest rates.
Adjusted operating earnings (defined in Note 1 to the Notes to the Consolidated Financial Information attached to this press release) for both the third and fourth quarters of 2013 were $174 million and $91 million in the fourth quarter of 2012. Adjusted operating earnings for calendar 2013 were $616 million, compared to $504 million in calendar 2012. Adjusted operating earnings benefited from higher sales and improving gross margins.
Adjusted net earnings (defined in Note 1 to the Consolidated Financial Information attached to this press release) for the period were $50 million, or $0.19 per share, compared to earnings of $51 million, or $0.20 per share, in the third quarter of 2013 and an adjusted net loss of $37 million or a loss of $0.15 per share in the fourth quarter of 2012. Adjusted net earnings for calendar year 2013 were $116 million or $0.45 per share, compared to an adjusted net loss of $19 million or a loss of $0.08 for calendar year 2012. Adjusted net earnings benefited from higher sales, improving gross margins and lower interest expense associated with the company’s debt refinancing efforts.
Descriptions of EBITDA, Adjusted EBITDA, adjusted operating earnings and adjusted net earnings (loss) 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 fourth quarter and calendar year 2013 were as follows:
- Microcontroller net sales were $220 million in the fourth quarter, compared to $230 million in the third quarter of 2013 and $197 million in the fourth quarter of 2012. The sequential decline in sales was consistent with typical seasonality. For the year, Microcontroller net sales were $826 million, compared to $707 million in 2012, growth of 17 percent. The year-over-year increase was driven by growth in 32-bit microcontrollers sold to both OEMs and distributors worldwide. In addition, sales of applications processors into the automotive market and the distribution channel also grew year over year.
- Digital Networking net sales were $246 million, compared to $238 million in the third quarter of 2013 and $195 million in the fourth quarter of 2012. For the year, net sales were $915 million, compared to $852 million in 2012, growth of 7 percent. Sequentially, revenues benefited from growth in wireless infrastructure spending, particularly in China, and growth in enterprise. On a year-over-year basis, the growth was broad based with growth in service provider and the enterprise market as well as growth in distribution for general embedded products.
- Automotive Microcontroller net sales were $267 million, compared to $270 million in the third quarter of 2013 and $236 million in the fourth quarter of 2012. For the year, net sales were $1.06 billion, compared to $986 million in 2012, growth of 8 percent. Automotive Microcontroller sales benefited from solid production and sales levels in North America and China and modestly improving conditions in Europe.
- Analog and Sensor net sales were $190 million, compared to $181 million in the third quarter of 2013 and $175 million in the fourth quarter of 2012. For the year, net sales were $736 million, compared to $722 million in 2012, growth of 2 percent. The sequential and year-over-year growth was due primarily to an increase in automotive production during 2013.
- RF sales were $96 million, compared to $89 million in the third quarter of 2013 and $97 million in the fourth quarter of 2012. For the year, net sales were $352 million, compared to $303 million in 2012, growth of 16 percent. The increase in RF sales was due to growth in wireless infrastructure investment, particularly in China.
- Other net sales, which includes primarily IP sales and licensing revenue and wireless handset sales, were $63 million, compared to $77 million in the third quarter of 2013 and $57 million in the fourth quarter of 2012. For the year, net sales were $294 million, compared to $375 million in 2012. Both intellectual property revenue and cellular net sales declined sequentially. On a full-year basis, other net sales declined 22 percent due to the planned wind down of our cellular handset business.
