ON Semiconductor Reports Second Quarter 2016 Results


ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data)

	Quarter Ended									Six Months Ended
	July 1, 2016			April 1, 2016			July 3, 2015			July 1, 2016			July 3, 2015
Revenues	$	877.8		$	817.2		$	880.5		$	1,695.0		$	1,751.3
Cost of revenues (exclusive of amortization shown below)	569.9			541.7			576.1			1,111.6			1,146.5
Gross profit	307.9			275.5			304.4			583.4			604.8
Gross margin	35.1		%	33.7		%	34.6		%	34.4		%	34.5		%
Operating expenses:
Research and development	103.0			98.0			100.4			201.0			200.8
Selling and marketing	52.7			49.2			50.4			101.9			103.7
General and administrative	46.0			44.5			45.0			90.5			91.7
Amortization of acquisition-related intangible assets	23.5			23.7			33.6			47.2			67.5
Restructuring, asset impairments and other, net	5.2			1.7			3.5			6.9			1.2
Intangible asset impairment	2.2			—			3.7			2.2			3.7
Total operating expenses	232.6			217.1			236.6			449.7			468.6
Operating income	75.3			58.4			67.8			133.7			136.2
Other income (expense), net:
Interest expense	(42.1		)	(15.6		)	(10.7		)	(57.7		)	(19.9		)
Interest income	2.1			0.3			0.3			2.4			0.6
Other	(1.9		)	(1.4		)	2.1			(3.3		)	5.8
Loss on debt extinguishment	—			—			(0.4		)	—			(0.4		)
Other (expense) income, net	(41.9		)	(16.7		)	(8.7		)	(58.6		)	(13.9		)
Income before income taxes	33.4			41.7			59.1			75.1			122.3
Income tax (provision) benefit	(7.6		)	(5.3		)	(7.7		)	(12.9		)	(15.1		)
Net income	25.8			36.4			51.4			62.2			107.2
Less: Net income attributable to non-controlling interest	(0.7		)	(0.4		)	(0.7		)	(1.1		)	(1.4		)
Net income attributable to ON Semiconductor Corporation	$	25.1		$	36.0		$	50.7		$	61.1		$	105.8
Net income per common share attributable to ON Semiconductor Corporation:
Basic	$	0.06		$	0.09		$	0.12		$	0.15		$	0.25
Diluted	$	0.06		$	0.09		$	0.12		$	0.15		$	0.24
Weighted average common shares outstanding:
Basic	414.9			412.6			426.9			413.7			429.2
Diluted	417.6			415.5			436.3			416.5			438.2


ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS (in millions)

	July 1, 2016			April 1, 2016			July 3, 2015
Assets
Cash and cash equivalents	$	588.1		$	619.5		$	576.6
Short-term investments	—			—			1.3
Receivables, net	487.4			428.2			489.9
Inventories	750.2			759.7			743.0
Other current assets	96.1			94.3			121.3
Total current assets	1,921.8			1,901.7			1,932.1
Restricted cash	2,235.8			—			—
Property, plant and equipment, net	1,277.2			1,270.4			1,225.5
Goodwill	270.6			270.6			263.8
Intangible assets, net	276.8			302.3			387.3
Other assets	115.6			110.1			90.8
Total assets	$	6,097.8		$	3,855.1		$	3,899.5
Liabilities, Non-Controlling Interest and Stockholders’ Equity
Accounts payable	$	302.5		$	305.9		$	335.5
Accrued expenses	302.6			245.2			273.8
Deferred income on sales to distributors	118.7			112.9			155.1
Current portion of long-term debt	536.7			525.4			555.9
Total current liabilities	1,260.5			1,189.4			1,320.3
Long-term debt	2,935.1			835.1			806.4
Other long-term liabilities	176.5			152.5			153.1
Total liabilities	4,372.1			2,177.0			2,279.8
ON Semiconductor Corporation stockholders’ equity:
Common stock	5.4			5.4			5.3
Additional paid-in capital	3,457.1			3,437.0			3,387.8
Accumulated other comprehensive loss	(39.4		)	(41.3		)	(43.6		)
Accumulated deficit	(648.3		)	(673.4		)	(809.8		)
Less: Treasury stock, at cost	(1,073.9		)	(1,073.7		)	(942.3		)
Total ON Semiconductor Corporation stockholders’ equity	1,700.9			1,654.0			1,597.4
Non-controlling interest in consolidated subsidiary	24.8			24.1			22.3
Total stockholders' equity	1,725.7			1,678.1			1,619.7
Total liabilities and equity	$	6,097.8		$	3,855.1		$	3,899.5


ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES *UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND NET CASH PROVIDED BY OPERATING ACTIVITIES** (in millions)

	Quarter Ended									Six Months Ended
	July 1, 2016			April 1, 2016			July 3, 2015			July 1, 2016			July 3, 2015
Net income	$	25.8		$	36.4		$	51.4		$	62.2		$	107.2
Adjusted for:
Restructuring, asset impairments and other, net	5.2			1.7			3.5			6.9			1.2
Intangible asset impairment	2.2			—			3.7			2.2			3.7
Interest expense	42.1			15.6			10.7			57.7			19.9
Interest income	(2.1		)	(0.3		)	(0.3		)	(2.4		)	(0.6		)
Loss on debt extinguishment	—			—			0.4			—			0.4
Gain on sale of available-for-sale securities	—			—			(1.3		)	—			(4.7		)
Income tax provision (benefit)	7.6			5.3			7.7			12.9			15.1
Net income attributable to non-controlling interest	(0.7		)	(0.4		)	(0.7		)	(1.1		)	(1.4		)
Depreciation and amortization	79.6			80.7			88.4			160.3			178.6
Third party acquisition related costs	2.0			2.5			—			4.5			—
Adjusted EBITDA*	161.7			141.5			163.5			303.2			319.4
Increase (decrease):
Restructuring, asset impairments and other, net	(5.2		)	(1.7		)	(3.5		)	(6.9		)	(1.2		)
Interest expense	(42.1		)	(15.6		)	(10.7		)	(57.7		)	(19.9		)
Interest income	2.1			0.3			0.3			2.4			0.6
Gain on sale of available-for-sale securities	—			—			1.3			—			4.7
Income tax provision	(7.6		)	(5.3		)	(7.7		)	(12.9		)	(15.1		)
Net income attributable to non-controlling interest	0.7			0.4			0.7			1.1			1.4
Third party acquisition related costs	(2.0		)	(2.5		)	—			(4.5		)	—
Loss (gain) on sale or disposal of fixed assets	0.3			(0.1		)	(0.5		)	0.2			(4.5		)
Amortization of debt issuance costs	2.1			1.0			0.6			3.1			0.9
Amortization of debt discount	0.9			—			—			0.9			—
Write-down of excess inventories	17.8			17.9			10.5			35.7			28.2
Non-cash asset impairment charges	—			—			0.2			—			0.2
Non-cash share-based compensation expense	16.1			11.6			14.1			27.7			25.4
Non-cash interest on convertible notes	6.5			6.5			3.0			13.0			4.8
Change in deferred taxes	2.1			1.1			—			3.2			(0.4		)
Other	(4.9		)	1.5			(2.1		)	(3.4		)	(5.1		)
Changes in operating assets and liabilities	(44.3		)	(41.7		)	(68.1		)	(86.0		)	(154.3		)
Net cash provided by operating activities	$	104.2		$	114.9		$	101.6		$	219.1		$	185.1

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