For the fourth quarter of 2015, highlights include:
- Total revenues of $840.3 million
- GAAP earnings per diluted share of
$0.13, non-GAAP earnings per diluted share of $0.19
- GAAP gross margin of 33.3 percent,
non-GAAP gross margin of 33.2 percent
- GAAP operating margin of 6.6 percent,
non-GAAP operating margin of 11.1 percent
- Repurchased approximately 1.9 million
shares for approximately $20.0 million
- Announced acquisition of Fairchild
Semiconductor for $2.4 billion in cash
For 2015, highlights include:
- Total revenues of $3,495.8 million
- GAAP earnings per diluted share of
$0.48, non-GAAP earnings per diluted share of $0.83
- GAAP and non-GAAP gross margin of 34.1
percent
- GAAP operating margin of 7.5 percent,
non-GAAP operating margin of 11.7 percent
- Repurchased approximately 30.4 million
shares for approximately $348.2 million
- Announced acquisition of Fairchild
Semiconductor for $2.4 billion in cash
ON Semiconductor Corporation (Nasdaq: ON), today announced that
total revenues in the fourth quarter of 2015 were $840.3 million,
down approximately 7.1 percent compared to the third quarter of
2015. During the fourth quarter of 2015, the company reported GAAP
net income of $54.1 million, or $0.13 per diluted share. The fourth
quarter 2015 GAAP net income was negatively impacted by
approximately $24.8 million of special items. The complete special
items detail can be found in the attached schedules.
Fourth quarter 2015 non-GAAP net income was $78.9 million, or
$0.19 per diluted share, compared to $95.5 million, or $0.23 per
diluted share, for the third quarter of 2015. A reconciliation of
these non-GAAP financial measures (and other non-GAAP measures used
elsewhere in this release) to the company's most directly
comparable measures prepared in accordance with U.S. GAAP are set
forth in the attached schedules and on our website at
http://www.onsemi.com. Additional information on revenue by end
market, region, distribution channel and business unit, and share
count can be found on the "Investors" section of our website.
Total company GAAP gross margin in the fourth quarter was 33.3
percent, and total company non-GAAP gross margin in the fourth
quarter was 33.2 percent. For the fourth quarter of 2015, GAAP
operating margin was 6.6 percent, whereas non-GAAP operating margin
was 11.1 percent.
Adjusted EBITDA for the fourth quarter of 2015 was $147.3
million. Adjusted EBITDA for the third quarter of 2015 was $163.1
million. During the fourth quarter, the company repurchased
approximately 1.9 million shares of common stock for approximately
$20.0 million.
Total revenues for 2015 were $3,495.8 million, an increase of
approximately 10.6 percent from $3,161.8 million in 2014. During
2015, the company reported GAAP net income of $206.2 million, or
$0.48 per diluted share. The 2015 GAAP net income included charges
of $150.7 million from special items, including $135.7 million of
amortization of acquisition related intangible assets, which are
largely attributed to our acquisitions of Truesense Imaging and
Aptina Imaging. The remaining charges and special items detail can
be found in the attached schedules. During 2014, the company
reported GAAP net income of $189.7 million, or $0.43 per diluted
share. The 2014 GAAP net income included net charges of $144.6
million from special items.
Non-GAAP net income for 2015 was $356.9 million, or $0.83 per
diluted share. The non-GAAP net income for 2014 was $334.3 million,
or $0.75 per diluted share.
The company’s GAAP gross margin in 2015 was 34.1 percent. GAAP
gross margin in 2015 included a net benefit of approximately $0.8
million from special items. Non-GAAP gross margin in 2015 was 34.1
percent. The company’s GAAP gross margin in 2014 was 34.3 percent.
GAAP gross margin in 2014 included a net charge of approximately
$30.9 million, or approximately 100 basis points, from special
items. Non-GAAP gross margin in 2014 was 35.3 percent.
"We delivered strong performance in the fourth quarter by
exercising robust cost discipline in times of heightened
macroeconomic uncertainty and softening demand. In 2015, we
significantly expanded our footprint in our key strategic markets
and returned approximately $348 million to shareholders through our
share repurchase program," said Keith Jackson, president and CEO of
ON Semiconductor. "Our growth drivers remain intact, and we are
well positioned to again outgrow the industry in 2016."
"While forecasting trends in current environment is challenging,
we have noticed a strengthening in orders during the current
quarter. In the current environment of macroeconomic uncertainty,
we intend to maintain our costs and expenses discipline while
driving growth."
FIRST QUARTER 2016 OUTLOOK
"Based upon product booking trends, backlog levels, and
estimated turns levels, we anticipate that total ON Semiconductor
revenue will be approximately $800 million to $840 million in the
first quarter of 2016," Jackson said. "Backlog levels for the first
quarter of 2016 represent approximately 80 to 85 percent of our
anticipated first quarter 2016 revenue. Average selling prices for
the first quarter of 2016 are expected to be down approximately two
percent when compared to the fourth quarter of 2015. The outlook
for the first quarter of 2016 includes stock-based compensation
expense of approximately $11 million to $13 million."
The following table outlines ON Semiconductor's projected first
quarter of 2016 GAAP and non-GAAP outlook.
ON SEMICONDUCTOR Q1 2016 BUSINESS
OUTLOOK
Total ON Semiconductor
Special Total ON Semiconductor GAAP Items ***
Non-GAAP**** Revenue $800 to $840 million $800 to $840
million Gross Margin 31.8% to 33.8% 31.8% to 33.8% Operating
Expenses $221 to $233 million $35 to $37 million $186 to $196
million Net Interest Expense / Other Expenses $7 to $10 million $7
to $10 million Convertible Notes, Non-cash Interest Expense* $6
million $6 million $0 Tax $2 to $6 million -$3 to -$4 million $5 to
$10 million Diluted Share Count ** 417 million 417 million *
Convertible Notes, Non-cash Interest Expense is
calculated pursuant to FASB's Accounting Standards Codification
(“ASC”) Topic 470: Debt. ** Diluted share count can vary
for, among other things, the actual exercise of options or vesting
of restricted stock units, the incremental dilutive shares from all
of the company's convertible senior subordinated notes, and the
repurchase or the issuance of stock or convertible notes or the
sale of treasury shares. *** Special items may include:
amortization of intangible assets; amortization of
acquisition-related intangibles; expensing of appraised inventory
fair market value step-up; inventory valuation adjustments;
purchased in-process research and development expenses;
restructuring, asset impairments and other, net; goodwill
impairment charges; gains and losses on debt prepayment; non-cash
interest expense; income tax adjustments to approximate cash taxes;
actuarial (gains) losses on pension plans and other pension
benefits; and certain other special items, as necessary.
**** Regulation G and other provisions of the securities laws
regulate the use of financial measures that are not prepared in
accordance with GAAP. We believe these non-GAAP measures provide
important supplemental information to investors. We use these
measures, together with GAAP measures, for internal managerial
purposes and as a means to evaluate period-to-period comparisons.
However, we do not, and you should not, rely on non-GAAP financial
measures alone as measures of our performance. We believe that
non-GAAP financial measures reflect an additional way of viewing
aspects of our operations that - when taken together with GAAP
results and the reconciliations to corresponding GAAP financial
measures that we also provide in our releases - provide a more
complete understanding of factors and trends affecting our
business. Because non-GAAP financial measures are not standardized,
it may not be possible to compare these financial measures with
other companies' non-GAAP financial measures, even if they have
similar names.
TELECONFERENCE
ON Semiconductor will host a conference call for the financial
community at 9:00 a.m. Eastern Time (EST) on February 8, 2016, to
discuss this announcement and ON Semiconductor’s results for the
fourth quarter of 2015. The company will also provide a real-time
audio webcast of the teleconference on the Investors page of its
website at http://www.onsemi.com. The webcast replay will be
available at this site approximately one hour following the live
broadcast and will continue to be available for approximately 30
days following the conference call. Investors and interested
parties can also access the conference call through a telephone
call by dialing (888) 291-2604 (U.S./Canada) or (760) 536-5202
(International). In order to join this conference call, you
will be required to provide the Conference ID Number - which is
23703701.
About ON Semiconductor
ON Semiconductor (Nasdaq: ON) is driving energy efficient
innovations, empowering customers to reduce global energy use. The
company is a leading supplier of semiconductor-based solutions,
offering a comprehensive portfolio of energy efficient power
and signal management, logic, standard and custom devices. The
company’s products help engineers solve their unique design
challenges in automotive, communications, computing, consumer,
industrial, medical and military/aerospace applications. ON
Semiconductor operates a responsive, reliable, world-class
supply chain and quality program, and a network of manufacturing
facilities, sales offices and design centers in key markets
throughout North America, Europe, and the Asia Pacific regions. For
more information, visit http://www.onsemi.com.
ON Semiconductor and the ON Semiconductor logo are registered
trademarks of Semiconductor Components Industries, LLC. All other
brand and product names appearing in this document are registered
trademarks or trademarks of their respective holders. Although the
company references its website in this news release, information on
the website is not to be incorporated herein.
This document contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts, included
or incorporated in this document could be deemed forward-looking
statements, particularly statements about the future financial
performance of ON Semiconductor. These forward-looking statements
are often characterized by the use of words such as "believes,"
"estimates," "expects," "projects," "may," "will," "intends,"
"plans," "should," or "anticipates," or by discussions of strategy,
plans or intentions. All forward-looking statements in this
document are made based on our current expectations, forecasts,
estimates and assumptions, and involve risks, uncertainties and
other factors that could cause results or events to differ
materially from those expressed in the forward-looking statements.
Among these factors are our revenues and operating performance,
economic conditions and markets (including current financial
conditions), effects of exchange rate fluctuations, the cyclical
nature of the semiconductor industry, changes in demand for our
products, changes in inventories at our customers and distributors,
technological and product development risks, enforcement and
protection of our intellectual property rights and related risks,
risks related to the security of our information systems and
secured network, availability of raw materials, electricity, gas,
water and other supply chain uncertainties, our ability to
effectively shift production to other facilities when required in
order to maintain supply continuity for our customers, variable
demand and the aggressive pricing environment for semiconductor
products, our ability to successfully manufacture in increasing
volumes on a cost-effective basis and with acceptable quality for
our current products, competitor actions including the adverse
impact of competitor product announcements, pricing and gross
profit pressures, loss of key customers, order cancellations or
reduced bookings, changes in manufacturing yields, control of costs
and expenses and realization of cost savings and synergies from
restructuring activities, significant litigation, risks associated
with decisions to expend cash reserves for various uses in
accordance with our capital allocation policy such as debt
prepayment, stock repurchases or acquisitions rather than to retain
such cash for future needs, risks associated with acquisitions and
dispositions (including from integrating and consolidating and
timely filing financial information with the Securities and
Exchange Commission ("SEC") for acquired businesses and
difficulties encountered in accurately predicting the future
financial performance of acquired businesses), risks associated
with our substantial leverage and restrictive covenants in our debt
agreements that may be in place from time to time, risks associated
with our worldwide operations, including foreign employment and
labor matters associated with unions and collective bargaining
arrangements, as well as man-made and/or natural disasters
affecting our operations and finances/financials, the threat or
occurrence of international armed conflict and terrorist activities
both in the United States and internationally, risks and costs
associated with increased and new regulation of corporate
governance and disclosure standards, risks related to new legal
requirements and risks involving environmental or other
governmental regulation. Additional factors that could cause
results to differ materially from those projected in the
forward-looking statements are contained in ON Semiconductor's 2014
Annual Report on Form 10-K filed with the SEC on February 27, 2015
("2014 Form 10-K"), Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and other of our filings with the SEC. You should
carefully consider the trends, risks and uncertainties described in
this document, the 2014 Form 10-K and other reports filed with or
furnished to the SEC before making any investment decision with
respect to our securities. If any of these trends, risks or
uncertainties actually occurs or continues, our business, financial
condition or operating results could be materially adversely
affected, the trading prices of our securities could decline, and
you could lose all or part of your investment. The company will
report final results for the fourth quarter 2015 and the fiscal
year ended December 31, 2015 in its annual report on Form 10-K to
be filed with the SEC. The company's fourth quarter 2015
results could change during the time between this announcement and
the filing of its annual report on Form 10-K with SEC. Readers are
cautioned not to place undue reliance on forward-looking
statements. We assume no obligation to update such information,
except as may be required by law. All forward-looking statements
attributable to us or persons acting on our behalf are expressly
qualified in their entirety by this cautionary statement.
Notice to Investors
This press release is for informational purposes only, and it
does not constitute an offer to purchase or a solicitation of an
offer to sell any securities. The offer is being made pursuant to a
Tender Offer Statement on Schedule TO filed by ON Semiconductor
with the SEC on December 4, 2015. Fairchild filed a
Solicitation/Recommendation Statement on Schedule 14D-9 with the
SEC with respect to the tender offer on December 4, 2015. THE
TENDER OFFER MATERIALS (INCLUDING THE OFFER TO PURCHASE, THE
RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER
DOCUMENTS) AND THE SOLICITATION / RECOMMENDATION STATEMENT,
INCLUDING IN EACH CASE ANY AMENDMENTS OR SUPPLEMENTS THERETO,
CONTAIN IMPORTANT INFORMATION. HOLDERS OF SHARES OF FAIRCHILD
COMMON STOCK ARE URGED TO READ THESE DOCUMENTS CAREFULLY BECAUSE
THEY CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF SHARES OF
FAIRCHILD COMMON STOCK SHOULD CONSIDER BEFORE MAKING ANY DECISION
REGARDING TENDERING THEIR SHARES. The Offer to Purchase, the
related Letter of Transmittal and certain other tender offer
documents, as well as the Solicitation/Recommendation Statement,
are being made available to all holders of shares of Fairchild
common stock at no expense to them. The tender offer materials and
the Solicitation/Recommendation Statement are available at no
charge on the SEC’s website at www.sec.gov.
ON SEMICONDUCTOR CORPORATION AND
SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
Quarter Ended Year Ended December
31,
October 2,
December 31, December 31, December
31, 2015 2015 2014 2015 2014
Revenues $ 840.3 $ 904.2 $ 864.2 $ 3,495.8 $ 3,161.8 Cost of
revenues (exclusive of amortization shown below) 560.4
595.7
586.5 2,302.6 2,076.9
Gross profit 279.9 308.5 277.7 1,193.2 1,084.9 Gross margin
33.3 % 34.1 % 32.1 % 34.1 % 34.3 % Operating expenses: Research and
development 91.0 104.9 110.9 396.7 366.6 Selling and marketing 48.3
52.3 56.6 204.3 200.0 General and administrative 45.7 44.9 46.7
182.3 180.9 Amortization of acquisition-related intangible assets
34.6 33.6 28.8 135.7 68.4 Restructuring, asset impairments and
other, net 4.8 3.3 10.5 9.3 30.5 Goodwill and intangible asset
impairment — 0.1 9.6
3.8 9.6 Total operating expenses
224.4 239.1 263.1 932.1
856.0 Operating income 55.5
69.4 14.6 261.1
228.9 Other income (expense), net: Interest expense (14.9 )
(14.9 ) (9.5 ) (49.7 ) (34.1 ) Interest income 0.3 0.2 0.9 1.1 1.5
Other (0.2 ) 2.1 (2.3 ) 7.7 (4.4 ) Loss on debt extinguishment
— — — (0.4 )
— Other expense, net (14.8 ) (12.6 )
(10.9 ) (41.3 ) (37.0 ) Income before income
taxes 40.7 56.8 3.7 219.8 191.9 Income tax benefit (provision)
14.3 (10.0 ) (3.5 ) (10.8 )
0.2 Net income 55.0 46.8 0.2 209.0 192.1 Less: Net
income attributable to non-controlling interest (0.9 )
(0.5 ) (0.8 ) (2.8 ) (2.4 ) Net income
(loss) attributable to ON Semiconductor Corporation $ 54.1 $
46.3 $ (0.6 ) $ 206.2 $ 189.7 Net income per
common share attributable to ON Semiconductor Corporation: Basic $
0.13 $ 0.11 $ — $ 0.49 $ 0.43
Diluted $ 0.13 $ 0.11 $ — $ 0.48 $ 0.43
Weighted average common shares outstanding: Basic
412.5 413.7 435.9 421.2
439.5 Diluted 416.9 417.5
435.9 427.8 443.5
ON SEMICONDUCTOR CORPORATION AND
SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEET
(in millions)
December 31,
October 2,
December 31, 2015
2015(1)
2014(1)
Assets Cash and cash equivalents $ 617.6 $ 556.8 $ 511.7
Short-term investments — 0.8 6.1 Receivables, net 426.4 505.9 417.5
Inventories 750.4 754.0 729.9 Other current assets 97.1
134.6 140.6 Total current assets
1,891.5 1,952.1 1,805.8 Property, plant and equipment, net 1,274.1
1,256.1 1,203.9 Goodwill 270.6 270.6 263.8 Intangible assets, net
325.8 360.5 458.5 Other assets 107.6 95.3
90.1 Total assets $ 3,869.6 $ 3,934.6
$ 3,822.1
Liabilities, Non-Controlling Interest
and Stockholders’ Equity Accounts payable $ 337.7 $ 361.9 $
378.2 Accrued expenses 246.2 306.4 287.9 Deferred income on sales
to distributors 112.0 130.4 165.1 Current portion of long-term debt
543.4 538.7 209.6 Total
current liabilities 1,239.3 1,337.4 1,040.8 Long-term debt 850.5
853.8 982.1 Other long-term liabilities 147.9
162.3 151.8 Total liabilities 2,237.7
2,353.5 2,174.7 ON Semiconductor
Corporation stockholders’ equity: Common stock 5.3 5.3 5.2
Additional paid-in capital 3,420.3 3,404.0 3,281.2 Accumulated
other comprehensive loss (42.3 ) (44.1 ) (41.5 ) Accumulated
deficit (709.4 ) (763.5 ) (915.6 ) Less: Treasury stock, at cost
(1,065.7 ) (1,043.4 ) (702.8 ) Total ON
Semiconductor Corporation stockholders’ equity 1,608.2 1,558.3
1,626.5 Non-controlling interest in consolidated subsidiary
23.7 22.8 20.9 Total
stockholders' equity 1,631.9 1,581.1
1,647.4 Total liabilities and equity $ 3,869.6
$ 3,934.6 $ 3,822.1
(1)
The Company retrospectively adjusted
certain amounts shown above for the periods ended October 2, 2015
and December 31, 2014, related to measurement period adjustments
with respect to the purchase price allocation of our recent
acquisitions and for the adoption of Accounting Standards Update
No. 2015-03 - "Simplifying the Presentation of Debt Issuance
Costs."
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA*
AND NET CASH PROVIDED BY OPERATING ACTIVITIES
(in millions)
Quarter Ended Year Ended December
31,
October 2,
December 31, December 31, December
31, 2015 2015 2014 2015
2014 Net income $ 55.0 $ 46.8 $ 0.2 $ 209.0 $ 192.1 Adjusted
for: Restructuring, asset impairments and other, net 4.8 3.3 10.5
9.3 30.5 Goodwill and intangible asset impairment — 0.1 9.6 3.8 9.6
Interest expense 14.9 14.9 9.5 49.7 34.1 Interest income (0.3 )
(0.2 ) (0.9 ) (1.1 ) (1.5 ) Loss on debt extinguishment — — — 0.4 —
Gain on sale of available-for-sale securities — (0.7 ) — (5.4 ) —
Income tax (benefit) provision (14.3 ) 10.0 3.5 10.8 (0.2 ) Net
income attributable to non-controlling interest (0.9 ) (0.5 ) (0.8
) (2.8 ) (2.4 ) Depreciation and amortization 89.8 89.2 86.4 357.6
268.8 Actuarial (gains) losses on pension plans and other pension
benefits (5.0 ) — 12.3 (5.0 ) 12.3 Expensing of appraised inventory
at fair market value step up — — 12.8 — 27.0 Third party
acquisition related costs 3.3 0.2
0.1 3.5 8.1 Adjusted
EBITDA* 147.3 163.1 143.2 629.8 578.4 Increase (decrease):
Restructuring, asset impairments and other, net (4.8 ) (3.3 ) (10.5
) (9.3 ) (30.5 ) Interest expense (14.9 ) (14.9 ) (9.5 ) (49.7 )
(34.1 ) Interest income 0.3 0.2 0.9 1.1 1.5 Gain on sale of
available-for-sale securities — 0.7 — 5.4 — Income tax benefit
(provision) 14.3 (10.0 ) (3.5 ) (10.8 ) 0.2 Net income attributable
to non-controlling interest 0.9 0.5 0.8 2.8 2.4 Actuarial gains
(losses) on pension plans and other pension benefits 5.0 — (12.3 )
5.0 (12.3 ) Expensing of appraised inventory at fair market value
step up — — (12.8 ) — (27.0 ) Third party acquisition related costs
(3.3 ) (0.2 ) (0.1 ) (3.5 ) (8.1 ) Loss (gain) on sale or disposal
of fixed assets 0.2 0.4 (0.8 ) (3.9 ) (1.4 ) Amortization of debt
issuance costs 0.9 1.0 0.4 2.8 1.4 Write-down of excess inventories
14.0 10.2 19.5 52.4 40.6 Non-cash asset impairment charges — — 4.7
0.2 6.5 Non-cash share-based compensation expense 10.6 10.9 12.8
46.9 45.8 Non-cash interest 6.3 6.4 1.9 17.5 7.0 Change in deferred
taxes (9.3 ) 0.5 (3.9 ) (9.2 ) (18.8 ) Other 2.7 (0.4 ) 3.0 (2.8 )
1.8 Changes in operating assets and liabilities (13.0 )
(36.8 ) 28.7 (204.1 ) (72.1 )
Net cash provided by operating activities $ 157.2 $ 128.3
$ 162.5 470.6 481.3
* Adjusted EBITDA represents net income before interest expense,
interest income, provision for income taxes, depreciation and
amortization expense and special items. We use the adjusted EBITDA
measure for internal managerial evaluation purposes, as a means to
evaluate period-to-period comparisons and as a performance metric
for the vesting/releasing of certain of our performance-based
equity awards. Adjusted EBITDA is a non-GAAP financial measure.
Regulation G and other provisions of the securities laws regulate
the use of financial measures that are not prepared in accordance
with generally accepted accounting principles. We believe this
measure provides important supplemental information to investors.
However, we do not, and you should not, rely on non-GAAP financial
measures alone as measures of our performance.
We believe that non-GAAP financial measures reflect an
additional way of viewing aspects of our operations that – when
taken together with GAAP results and the reconciliations to
corresponding GAAP financial measures that we also provide in our
press releases – provide a more complete understanding of factors
and trends affecting our business. Because non-GAAP financial
measures are not standardized, it may not be possible to compare
these financial measures with non-GAAP financial measures used by
our company or other companies, even if they have similar
names.
ON SEMICONDUCTOR CORPORATION AND
SUBSIDIARIES
ANALYSIS OF GAAP VERSUS NON-GAAP
DISCLOSURES
(in millions, except per share and
percentage data)
Quarter Ended Year Ended
December 31,
October 2,
December 31, December 31, December
31, 2015 2015 2014 2015 2014
Reconciliation of GAAP gross profit to non-GAAP gross
profit: GAAP gross profit $ 279.9 $ 308.5 $ 277.7
$ 1,193.2 $ 1,084.9 Special items: a)
Actuarial (gains) losses on pension plans and other pension
benefits (0.8 ) — 3.9 (0.8 ) 3.9 b) Expensing of appraised
inventory at fair market value step up — —
12.8 — 27.0 Total
special items (0.8 ) — 16.7
(0.8 ) 30.9 Non-GAAP gross profit $ 279.1
$ 308.5 $ 294.4 $ 1,192.4 $ 1,115.8
Reconciliation of GAAP gross margin to non-GAAP gross
margin: GAAP gross margin 33.3 % 34.1 %
32.1 % 34.1 % 34.3 % Special items: a) Actuarial
(gains) losses on pension plans and other pension benefits (0.1 )%
— % 0.5 % — % 0.1 % b) Expensing of appraised inventory at fair
market value step up — % — % 1.5 % — %
0.9 % Total special items (0.1 )% — %
2.0 % — % 1.0 % Non-GAAP gross margin 33.2 %
34.1 % 34.1 % 34.1 % 35.3 %
Reconciliation of GAAP operating expenses to non-GAAP operating
expenses: GAAP operating expenses $ 224.4 $ 239.1
$ 263.1 $ 932.1 $ 856.0 Special items: a)
Amortization of acquisition related intangible assets (34.6 ) (33.6
) (28.8 ) (135.7 ) (68.4 ) b) Actuarial gains (losses) on pension
plans and other pension benefits 4.2 — (8.4 ) 4.2 (8.4 ) c)
Restructuring, asset impairments and other, net (4.8 ) (3.3 ) (10.5
) (9.3 ) (30.5 ) d) Goodwill and intangible asset impairments —
(0.1 ) (9.6 ) (3.8 ) (9.6 ) e) Third party acquisition related
costs (3.3 ) (0.2 ) (0.1 ) (3.5 )
(8.1 ) Total special items (38.5 ) (37.2 )
(57.4 ) (148.1 ) (125.0 ) Non-GAAP operating
expenses $ 185.9 $ 201.9 $ 205.7 $ 784.0
$ 731.0
Reconciliation of
GAAP operating income to non-GAAP operating income: GAAP
operating income $ 55.5 $ 69.4 $ 14.6 $ 261.1
$ 228.9 Special items: a) Actuarial (gains) losses on
pension plans and other pension benefits (cost of revenues) (0.8 )
— 3.9 (0.8 ) 3.9 b) Expensing of appraised inventory at fair market
value step up — — 12.8 — 27.0 c) Amortization of acquisition
related intangible assets 34.6 33.6 28.8 135.7 68.4 d) Actuarial
(gains) losses on pension plans and other pension benefits
(operating expenses) (4.2 ) — 8.4 (4.2 ) 8.4 e) Restructuring,
asset impairments and other, net 4.8 3.3 10.5 9.3 30.5 f) Goodwill
and intangible asset impairments — 0.1 9.6 3.8 9.6 g) Third party
acquisition related costs 3.3 0.2
0.1 3.5 8.1
Total special items 37.7 37.2
74.1 147.3 155.9 Non-GAAP
operating income $ 93.2 $ 106.6 $ 88.7 $ 408.4
$ 384.8
Reconciliation of GAAP operating margin to
non-GAAP operating margin (operating income / revenues): GAAP
operating margin 6.6 % 7.7 % 1.7 % 7.5
% 7.2 % Special items: a) Actuarial (gains) losses on
pension plans and other pension benefits (cost of revenues) (0.1 )%
— % 0.5 % — % 0.1 % b) Expensing of appraised inventory at fair
market value step up — % — % 1.5 % — % 0.9 % c) Amortization of
acquisition related intangible assets 4.1 % 3.7 % 3.3 % 3.9 % 2.2 %
d) Actuarial (gains) losses on pension plans and other pension
benefits (operating expenses) (0.5 )% — % 1.0 % (0.1 )% 0.3 % e)
Restructuring, asset impairments and other, net 0.6 % 0.4 % 1.2 %
0.3 % 1.0 % f) Goodwill and intangible asset impairments — % — %
1.1 % 0.1 % 0.3 % g) Third party acquisition related costs
0.4 % — % — % 0.1 % 0.3 % Total special
items 4.5 % 4.1 % 8.6 % 4.2 %
4.9 % Non-GAAP operating margin 11.1 % 11.8 %
10.3 % 11.7 % 12.2 %
Reconciliation of GAAP net income to non-GAAP net income:
GAAP net income attributable to ON Semiconductor Corporation $ 54.1
$ 46.3 $ (0.6 ) $ 206.2 $ 189.7 Special
items: a) Actuarial losses (gains) on pension plans and other
pension benefits (cost of revenues) (0.8 ) — 3.9 (0.8 ) 3.9 b)
Expensing of appraised inventory at fair market value step up — —
12.8 — 27.0 c) Amortization of acquisition related intangible
assets (operating expenses) 34.6 33.6 28.8 135.7 68.4 d) Actuarial
losses (gains) on pension plans and other pension benefits
(operating expenses) (4.2 ) — 8.4 (4.2 ) 8.4 e) Restructuring,
asset impairments and other, net 4.8 3.3 10.5 9.3 30.5 f) Goodwill
and intangible asset impairments — 0.1 9.6 3.8 9.6 g) Third party
acquisition related costs 3.3 0.2 0.1 3.5 8.1 h) Loss on debt
extinguishment — — — 0.4 — i) Gain on sale of available-for-sale
securities — (0.7 ) — (5.4 ) — j) Non-cash interest on convertible
notes 6.3 6.4 1.9 17.5 7.0 k) Adjustment to reflect cash taxes
(19.2 ) 6.3 0.9 (9.1 )
(18.3 ) Total special items 24.8 49.2
76.9 150.7 144.6
Non-GAAP net income $ 78.9 $ 95.5 $ 76.3 $
356.9 $ 334.3 Non-GAAP net income per share: Basic $
0.19 $ 0.23 $ 0.18 $ 0.85 $ 0.76
Diluted $ 0.19 $ 0.23 $ 0.18 $ 0.83 $
0.75 Weighted average common shares outstanding: Basic
412.5 413.7 435.9
421.2 439.5 Diluted 416.9
417.5 435.9 427.8 443.5
Certain of the amounts in the above table may not total due to
rounding of individual amounts.
Total share-based compensation expense, related to the company’s
stock options, restricted stock units, stock grant awards and
employee stock purchase plan is included below.
Quarter Ended Year Ended December
31,
October 2,
December 31, December 31, December
31, 2015 2015 2014 2015 2014
Cost of revenues $ 1.9 $ 2.0 $ 2.0 $ 7.7 $ 6.8 Research and
development 2.2 2.2 2.5 9.2 8.7 Selling and marketing 1.8 2.2 2.3
8.5 8.1 General and administrative 4.7 4.5
6.0 21.5 22.2 Total
share-based compensation expense $ 10.6 $ 10.9 $ 12.8
$ 46.9 $ 45.8
Non-GAAP Measures
To supplement the consolidated financial results prepared under
GAAP, ON Semiconductor uses non-GAAP measures which are adjusted
from the most directly comparable GAAP results to exclude items
related to the amortization of intangible assets, amortization of
acquisition-related intangibles, expensing of appraised inventory
fair market value step-up, inventory valuation adjustments,
purchased in-process research and development expenses,
restructuring, asset impairments and other, net, goodwill
impairment charges, gains and losses on debt prepayment, non-cash
interest expense, their related tax effects, actuarial (gains)
losses on pension plans and other pension benefits, third party
acquisition related costs, and certain other special items, as
necessary. Management does not consider these charges in evaluating
the core operational activities of ON Semiconductor. Management
uses these non-GAAP measures internally to make strategic
decisions, forecast future results and evaluate ON Semiconductor’s
current performance. In addition, we believe that most analysts
covering ON Semiconductor use the non-GAAP measures as well. Given
management’s and other relevant use of these non-GAAP measures, ON
Semiconductor believes these measures are important to investors in
understanding ON Semiconductor’s current and future operating
results as seen through the eyes of management. In addition,
management believes these non-GAAP measures are useful to investors
in enabling them to better assess changes in ON Semiconductor’s
core business across different time periods. These non-GAAP
measures are not in accordance with or an alternative to GAAP
financial data and may be different from non-GAAP measures used by
other companies. Because non-GAAP financial measures are not
standardized, it may not be possible to compare these financial
measures with other companies’ non-GAAP financial measures, even if
they have similar names.
Non-GAAP Gross Profit and Gross Margin
The use of non-GAAP gross profit and gross margin allows
management to evaluate, among other things, the gross margin and
gross profit of the company’s core businesses and trends across
different reporting periods on a consistent basis, independent of
non-cash items including, generally speaking, expensing of
appraised inventory fair market value step-up and amortization of
intangible assets. In addition, it is an important component of
management’s internal performance measurement and incentive and
reward process as it is used to assess the current and historical
financial results of the business, for strategic decision making,
preparing budgets, obtaining targets, and forecasting future
results. Management presents this non-GAAP financial measure to
enable investors and analysts to evaluate our revenue generation
performance relative to the direct costs of revenue of ON
Semiconductor’s core businesses.
Non-GAAP Operating Profit and Operating Margin
The use of non-GAAP operating profit and operating margin allows
management to evaluate, among other things, the operating margin
and operating profit of the company’s core businesses and trends
across different reporting periods on a consistent basis,
independent of non-cash items including, generally speaking,
expensing of appraised inventory fair market value step-up,
amortization of intangible assets, third party acquisition related
costs, and restructuring charges. In addition, it is an important
component of management’s internal performance measurement and
incentive and reward process as it is used to assess the current
and historical financial results of the business, for strategic
decision making, preparing budgets, obtaining targets, and
forecasting future results. Management presents this non-GAAP
financial measure to enable investors and analysts to evaluate our
revenue generation performance relative to the direct costs of
operations of ON Semiconductor’s core businesses.
Non-GAAP Net Income and Net Income Per Share
The use of non-GAAP net income and net income per share allows
management to evaluate the operating results of ON Semiconductor’s
core businesses and trends across different reporting periods on a
consistent basis, independent of non-cash items including,
generally speaking, the amortization of intangible assets,
amortization of acquisition-related intangibles, expensing of
appraised inventory fair market value step-up, purchased in-process
research and development expenses, restructuring, asset impairments
and other, net, goodwill impairment charges, gains and losses on
debt prepayment, non-cash interest expense, their related tax
effects, actuarial (gains) losses on pension plans and other
pension benefits, third party acquisition related costs, and
certain other special items, as necessary. In addition, they are
important components of management’s internal performance
measurement and incentive and reward process as they are used to
assess the current and historical financial results of the
business, for strategic decision making, preparing budgets,
obtaining targets, and forecasting future results. Management
presents these non-GAAP financial measures to enable investors and
analysts to understand the results of operations of ON
Semiconductor’s core businesses and, to the extent comparable, to
compare our results of operations on a more consistent basis
against that of other companies in our industry.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160206005009/en/
ON SemiconductorKris Martino, 312-909-0661Corporate/Media
Communicationskris.martino@onsemi.comorParag Agarwal,
602-244-3437Investor Relationsparag.agarwal@onsemi.com
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