Freescale Semiconductor Holdings I, Ltd. Segment EBITDA Excluding the Effects of Purchase Accounting and Other Items Non-GAAP Basis (Unaudited) (in millions) Nine Months Ended ------------------------- September September 28, 29, 2007 2006 --------- --------- Transportation and Standard Products $540(a) $601 Networking and Computing Systems 297(b) 383 Wireless and Mobile Solutions 128(c) 272 Other (1)(d) (37)(e) --------- --------- Segment totals $964 $1,219 --------- --------- (a) Adjustment reflects add back of $186 million from incremental expense related to the recognition of the step-up of inventory to fair value at the merger date. (b) Adjustment reflects add back of $178 million from incremental expense related to the recognition of the step-up of inventory to fair value at the merger date. (c) Adjustment reflects add back of $52 million from incremental expense related to the recognition of the step-up of inventory to fair value at the merger date. (d) Adjustment reflects add back of $3 million related to transaction expenses arising from the merger and $38 million related to reorganization expenses. (e) Adjustment reflects add back of $7 million related to transaction expenses arising from the merger.
Freescale Semiconductor Holdings I, Ltd. Adjusted EBITDA (Unaudited) Provided below is a reconciliation of net loss to EBITDA to Adjusted EBITDA: ---------- ------------ Three Twelve months months ended ended September September (in millions) 28, 2007 28, 2007 ---------- ------------ Net (loss) $(261) $(3,811) Interest expense, net 196 630 Income tax (benefit) (135) (744) Depreciation and amortization (a) 553 1,911 ---------- ------------ EBITDA 353 (2,014) Non-cash stock-based employee compensation (1) 11 357 Other non-cash charges (2) - 2,820 Non-recurring/one-time items (3) 5 255 Cost savings (4) 6 54 Other defined terms (5) 21 98 ---------- ------------ Adjusted EBITDA $396 $1,570 ========== ============ (a) Excludes amortization of debt issuance costs, which are included in interest expense, net. (1) Reflects non-cash stock-based employee compensation expense under the provisions of SFAS No. 123(R), Share-based Payments. (2) Reflects the non-cash charges related to purchase accounting adjustments for in-process research and development, inventory and other non-cash items. (3) Reflects costs associated with Predecessor debt extinguishment, one-time Merger expenses and our reorganization of business program. (4) Reflects cost savings that we expect to achieve from certain initiatives where actions have begun or have already been completed. (5) Reflects other adjustments required in calculating our debt covenant compliance. Adjusted earnings before cumulative effect of accounting change, interest, taxes, depreciation and amortization (EBITDA) is a non-U.S. GAAP measure used to determine our compliance with certain covenants contained in the Credit Facilities and the indentures governing the Senior Notes and Senior Subordinated Notes. Adjusted EBITDA is defined as EBITDA adjusted to add back certain non-cash, non- recurring and other items that are included in EBITDA and/or net income (loss), as required by various covenants in the indentures and the Credit Facilities. We believe that the presentation of Adjusted EBITDA for the twelve months ended September 28, 2007 is appropriate to provide additional information to investors to demonstrate compliance with our financing covenants. Our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is tied to ratios based on Adjusted EBITDA. Adjusted EBITDA does not represent, and should not be considered an alternative to, net income (loss), operating income (loss), 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 Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements by other companies, our use of Adjusted EBITDA is not necessarily comparable to such other similarly titled captions of other companies. The definition of Adjusted EBITDA in the indentures and the Credit Facilities allows us to add back certain charges that are deducted in calculating EBITDA and/or net income (loss). However, some of these expenses may recur, vary greatly and are difficult to predict. Further, our debt instruments required that Adjusted EBITDA be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year.