|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||||||
|
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS |
||||||||||||||||||||||||
|
(in millions, except per share data) |
||||||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||||||
|
December
|
September
|
December
|
December
|
December
|
||||||||||||||||||||
| Revenues | $ | 1,377.5 | $ | 1,390.9 | $ | 1,261.0 | $ | 5,543.1 | $ | 3,906.9 | ||||||||||||||
| Cost of revenues (exclusive of amortization shown below) | 863.3 | 866.7 | 876.5 | 3,509.3 | 2,610.0 | |||||||||||||||||||
| Gross profit | 514.2 | 524.2 | 384.5 | 2,033.8 | 1,296.9 | |||||||||||||||||||
| Gross margin | 37.3 | % | 37.7 | % | 30.5 | % | 36.7 | % | 33.2 | % | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Research and development | 158.0 | 150.9 | 139.8 | 594.4 | 452.3 | |||||||||||||||||||
| Selling and marketing | 80.3 | 78.6 | 79.4 | 315.9 | 238.0 | |||||||||||||||||||
| General and administrative | 71.0 | 68.9 | 72.2 | 284.9 | 230.3 | |||||||||||||||||||
| Amortization of acquisition-related intangible assets | 28.8 | 37.3 | 32.9 | 123.8 | 104.8 | |||||||||||||||||||
| Restructuring, asset impairments and other, net | 4.7 | 9.7 | 4.5 | 20.8 | 33.2 | |||||||||||||||||||
| Intangible asset impairment | 5.4 | 1.5 | — | 13.1 | 2.2 | |||||||||||||||||||
| Total operating expenses | 348.2 | 346.9 | 328.8 | 1,352.9 | 1,060.8 | |||||||||||||||||||
| Operating income | 166.0 | 177.3 | 55.7 | 680.9 | 236.1 | |||||||||||||||||||
| Other income (expense), net: | ||||||||||||||||||||||||
| Interest expense | (33.2 | ) | (34.9 | ) | (40.9 | ) | (141.2 | ) | (145.3 | ) | ||||||||||||||
| Interest income | 1.2 | 0.7 | 0.7 | 3.0 | 4.5 | |||||||||||||||||||
| Gain on divestiture of business | — | 12.5 | — | 12.5 | 92.2 | |||||||||||||||||||
| Licensing income | 2.2 | 21.5 | — | 47.6 | — | |||||||||||||||||||
| Loss on debt refinancing and prepayment | (14.3 | ) | (6.7 | ) | — | (47.2 | ) | (6.3 | ) | |||||||||||||||
| Other income (expense) | (0.9 | ) | (2.1 | ) | 2.7 | (8.1 | ) | (0.6 | ) | |||||||||||||||
| Other expense, net | (45.0 | ) | (9.0 | ) | (37.5 | ) | (133.4 | ) | (55.5 | ) | ||||||||||||||
| Income before income taxes | 121.0 | 168.3 | 18.2 | 547.5 | 180.6 | |||||||||||||||||||
| Income tax benefit (provision) | 410.0 | (59.4 | ) | 93.5 | 265.5 | 3.9 | ||||||||||||||||||
| Net income | 531.0 | 108.9 | 111.7 | 813.0 | 184.5 | |||||||||||||||||||
| Less: Net income attributable to non-controlling interest | (1.1 | ) | (0.2 | ) | (0.8 | ) | (2.3 | ) | (2.4 | ) | ||||||||||||||
| Net income attributable to ON Semiconductor Corporation | $ | 529.9 | $ | 108.7 | $ | 110.9 | $ | 810.7 | $ | 182.1 | ||||||||||||||
| Net income per common share attributable to ON Semiconductor Corporation: | ||||||||||||||||||||||||
| Basic | $ | 1.25 | $ | 0.26 | $ | 0.27 | $ | 1.92 | $ | 0.44 | ||||||||||||||
| Diluted | $ | 1.22 | $ | 0.25 | $ | 0.26 | $ | 1.89 | $ | 0.43 | ||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||||
| Basic | 424.3 | 422.2 | 417.3 | 421.9 | 415.2 | |||||||||||||||||||
| Diluted | 433.3 | 427.5 | 426.9 | 428.3 | 420.0 | |||||||||||||||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||||
|
UNAUDITED CONSOLIDATED BALANCE SHEETS |
||||||||||||||
|
(in millions) |
||||||||||||||
|
December 31,
|
September 29,
|
December 31,
|
||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | 949.2 | $ | 901.2 | $ | 1,028.1 | ||||||||
| Receivables, net | 701.5 | 695.6 | 629.8 | |||||||||||
| Inventories | 1,089.5 | 1,029.0 | 1,030.2 | |||||||||||
| Other current assets | 193.0 | 189.6 | 181.0 | |||||||||||
| Total current assets | 2,933.2 | 2,815.4 | 2,869.1 | |||||||||||
| Property, plant and equipment, net | 2,279.1 | 2,238.2 | 2,159.1 | |||||||||||
| Goodwill | 916.9 | 916.9 | 924.7 | |||||||||||
| Intangible assets, net | 628.3 | 662.5 | 762.1 | |||||||||||
| Deferred tax assets | 339.1 | 148.8 | 138.9 | |||||||||||
| Other assets | 98.5 | 79.5 | 70.5 | |||||||||||
| Total assets | $ | 7,195.1 | $ | 6,861.3 | $ | 6,924.4 | ||||||||
| Liabilities, Non-Controlling Interest and Stockholders’ Equity | ||||||||||||||
| Accounts payable | $ | 548.0 | $ | 590.3 | $ | 434.0 | ||||||||
| Accrued expenses | 612.8 | 580.5 | 405.0 | |||||||||||
| Deferred income on sales to distributors | — | — | 109.8 | |||||||||||
| Current portion of long-term debt | 248.1 | 258.5 | 553.8 | |||||||||||
| Total current liabilities | 1,408.9 | 1,429.3 | 1,502.6 | |||||||||||
| Long-term debt | 2,703.7 | 2,684.4 | 3,068.5 | |||||||||||
| Deferred tax liabilities | 55.1 | 309.1 | 288.9 | |||||||||||
| Other long-term liabilities | 226.4 | 203.1 | 186.5 | |||||||||||
| Total liabilities | 4,394.1 | 4,625.9 | 5,046.5 | |||||||||||
| 2.625% Notes, Series B - Redeemable conversion feature | — | — | 32.9 | |||||||||||
| ON Semiconductor Corporation stockholders’ equity: | ||||||||||||||
| Common stock | 5.5 | 5.5 | 5.4 | |||||||||||
| Additional paid-in capital | 3,593.5 | 3,557.1 | 3,473.3 | |||||||||||
| Accumulated other comprehensive loss | (40.6 | ) | (43.8 | ) | (50.2 | ) | ||||||||
| Accumulated earnings (deficit) | 351.5 | (178.4 | ) | (527.3 | ) | |||||||||
| Less: Treasury stock, at cost | (1,131.1 | ) | (1,128.0 | ) | (1,078.0 | ) | ||||||||
| Total ON Semiconductor Corporation stockholders’ equity | 2,778.8 | 2,212.4 | 1,823.2 | |||||||||||
| Non-controlling interest in consolidated subsidiary | 22.2 | 23.0 | 21.8 | |||||||||||
| Total stockholders' equity | 2,801.0 | 2,235.4 | 1,845.0 | |||||||||||
| Total liabilities and equity | $ | 7,195.1 | $ | 6,861.3 | $ | 6,924.4 | ||||||||
|
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
|
September
|
December
|
December
|
December
|
||||||||||||||||||||
| Net income | $ | 531.0 | $ | 108.9 | $ | 111.7 | $ | 813.0 | $ | 184.5 | ||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||
| Licensing income | (2.2 | ) | (21.5 | ) | — | (47.6 | ) | — | ||||||||||||||||
| R&D costs related to licensing income | 3.7 | 2.2 | — | 10.0 | — | |||||||||||||||||||
| Restructuring, asset impairments and other, net | 4.7 | 9.7 | 4.5 | 20.8 | 33.2 | |||||||||||||||||||
| Intangible asset impairment | 5.4 | 1.5 | — | 13.1 | 2.2 | |||||||||||||||||||
| Interest expense | 33.2 | 34.9 | 40.9 | 141.2 | 145.3 | |||||||||||||||||||
| Interest income | (1.2 | ) | (0.7 | ) | (0.7 | ) | (3.0 | ) | (4.5 | ) | ||||||||||||||
| Loss on debt refinancing and prepayment | 14.3 | 6.7 | — | 47.2 | 6.3 | |||||||||||||||||||
| Income tax (benefit) provision | (410.0 | ) | 59.4 | (93.5 | ) | (265.5 | ) | (3.9 | ) | |||||||||||||||
| Net income attributable to non-controlling interest | (1.1 | ) | (0.2 | ) | (0.8 | ) | (2.3 | ) | (2.4 | ) | ||||||||||||||
| Depreciation and amortization | 123.4 | 127.7 | 120.0 | 481.9 | 364.1 | |||||||||||||||||||
| Amortization of fair market value step-up of inventory | — | 2.5 | 55.6 | 13.6 | 67.5 | |||||||||||||||||||
| Sell-through to sell-in adjustment | — | — | — | (59.0 | ) | — | ||||||||||||||||||
| Gain on divestiture of business | — | (12.5 | ) | — | (12.5 | ) | (92.2 | ) | ||||||||||||||||
| Adjustment to contingent consideration | (0.2 | ) | (0.3 | ) | 0.8 | 1.8 | (0.5 | ) | ||||||||||||||||
| Actuarial losses on pension plans and other pension benefits | 1.9 | — | 10.0 | 1.9 | 10.0 | |||||||||||||||||||
| Third party acquisition and divestiture related costs | 1.0 | 0.5 | 3.5 | 3.2 | 25.8 | |||||||||||||||||||
| Adjusted EBITDA | 303.9 | 318.8 | 252.0 | 1,157.8 | 735.4 | |||||||||||||||||||
|
Increase (decrease): |
||||||||||||||||||||||||
| Licensing income | 2.2 | 21.5 | — | 47.6 | — | |||||||||||||||||||
| R&D costs related to licensing income | (3.7 | ) | (2.2 | ) | — | (10.0 | ) | — | ||||||||||||||||
| Restructuring, asset impairments and other, net | (4.7 | ) | (9.7 | ) | (4.5 | ) | (20.8 | ) | (33.2 | ) | ||||||||||||||
| Interest expense | (33.2 | ) | (34.9 | ) | (40.9 | ) | (141.2 | ) | (145.3 | ) | ||||||||||||||
| Interest income | 1.2 | 0.7 | 0.7 | 3.0 | 4.5 | |||||||||||||||||||
| Income tax benefit (provision) | 410.0 | (59.4 | ) | 93.5 | 265.5 | 3.9 | ||||||||||||||||||
| Net income attributable to non-controlling interest | 1.1 | 0.2 | 0.8 | 2.3 | 2.4 | |||||||||||||||||||
| Amortization of fair market value step-up of inventory | — | (2.5 | ) | (55.6 | ) | (13.6 | ) | (67.5 | ) | |||||||||||||||
| Sell-through to sell-in adjustment | — | — | — | 59.0 | — | |||||||||||||||||||
| Adjustment to contingent consideration | 0.2 | 0.3 | (0.8 | ) | (1.8 | ) | 0.5 | |||||||||||||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||||||
|
UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND |
||||||||||||||||||||||||
|
NET CASH PROVIDED BY OPERATING ACTIVITIES (Continued) |
||||||||||||||||||||||||
|
(in millions) |
||||||||||||||||||||||||
|
Quarter Ended |
Quarter Ended |
|||||||||||||||||||||||
|
December
|
September
|
December
|
December
|
December
|
||||||||||||||||||||
|
Increase (decrease) (continued): |
||||||||||||||||||||||||
| Actuarial losses on pension plans and other pension benefits | (1.9 | ) | — | (10.0 | ) | (1.9 | ) | (10.0 | ) | |||||||||||||||
| Third party acquisition and divestiture related costs | (1.0 | ) | (0.5 | ) | (3.5 | ) | (3.2 | ) | (25.8 | ) | ||||||||||||||
| Loss on sale or disposal of fixed assets | 1.1 | 1.0 | 0.9 | 3.9 | 1.5 | |||||||||||||||||||
| Amortization of debt discount and issuance costs | 3.8 | 3.8 | 4.6 | 16.0 | 12.0 | |||||||||||||||||||
| Payments for term debt modification | (1.4 | ) | — | — | (3.8 | ) | (26.4 | ) | ||||||||||||||||
| Write-down of excess inventories | 10.2 | 21.2 | 26.1 | 67.0 | 66.2 | |||||||||||||||||||
| Non-cash share-based compensation expense | 17.1 | 16.8 | 14.2 | 69.8 | 56.1 | |||||||||||||||||||
| Non-cash interest on convertible notes | 8.9 | 8.6 | 6.4 | 30.8 | 26.0 | |||||||||||||||||||
| Non-cash asset impairment charges | 0.6 | 6.4 | 0.5 | 7.9 | 0.5 | |||||||||||||||||||
| Change in deferred taxes | (444.4 | ) | 38.9 | (103.6 | ) | (348.3 | ) | (38.1 | ) | |||||||||||||||
| Other | (0.4 | ) | 0.6 | (1.9 | ) | 2.2 | (4.6 | ) | ||||||||||||||||
| Changes in operating assets and liabilities | (45.3 | ) | (1.4 | ) | 50.5 | (94.0 | ) | 23.1 | ||||||||||||||||
| Net cash provided by operating activities | $ | 224.3 | $ | 328.2 | $ | 229.4 | 1,094.2 | 581.2 | ||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||
| Purchases of property, plant and equipment | $ | (175.7 | ) | $ | (90.1 | ) | $ | (49.9 | ) | $ | (387.5 | ) | $ | (210.7 | ) | |||||||||
| Proceeds from sales of property, plant and equipment | 12.2 | 0.3 | — | 14.3 | 0.4 | |||||||||||||||||||
| Deposits utilized for purchases of property, plant and equipment | (6.1 | ) | (3.2 | ) | (3.1 | ) | (8.2 | ) | (2.2 | ) | ||||||||||||||
| Purchase of business, net of cash acquired | — | — | (6.8 | ) | (0.8 | ) | (2,284.0 | ) | ||||||||||||||||
| Proceeds from divestiture of business, net of cash transferred | — | 20.0 | — | 20.0 | 104.0 | |||||||||||||||||||
| Cash placed in escrow | — | — | — | — | (67.7 | ) | ||||||||||||||||||
| Cash received from escrow | — | — | — | — | 23.8 | |||||||||||||||||||
| Purchases of held-to-maturity securities | — | — | — | (1.6 | ) | — | ||||||||||||||||||
| Other | (1.0 | ) | — | — | (0.7 | ) | 1.8 | |||||||||||||||||
| Net cash used in investing activities | $ | (170.6 | ) | $ | (73.0 | ) | $ | (59.8 | ) | $ | (364.5 | ) | $ | (2,434.6 | ) | |||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||
| Proceeds from issuance of common stock under the employee stock purchase plan | $ | 12.2 | $ | 0.1 | $ | 4.1 | $ | 23.6 | $ | 15.0 | ||||||||||||||
| Proceeds from exercise of stock options | 7.1 | 1.7 | 9.8 | 18.0 | 14.9 | |||||||||||||||||||
| Payments of tax withholding for restricted shares | (3.1 | ) | (11.4 | ) | (1.9 | ) | (28.1 | ) | (12.3 | ) | ||||||||||||||
| Repurchase of common stock | — | — | — | (25.0 | ) | — | ||||||||||||||||||
| Proceeds from debt issuance | 405.0 | 5.3 | 5.0 | 1,106.2 | 2,586.9 | |||||||||||||||||||
| Payments of debt issuance and other financing costs | — | — | (0.3 | ) | — | (6.8 | ) | |||||||||||||||||
| Repayment of long-term debt | (419.8 | ) | (220.3 | ) | (26.2 | ) | (1,831.4 | ) | (313.8 | ) | ||||||||||||||
| Purchases of convertible note hedges | — | — | — | (144.7 | ) | — | ||||||||||||||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||||||
|
UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND |
||||||||||||||||||||||||
|
NET CASH PROVIDED BY OPERATING ACTIVITIES (Continued) |
||||||||||||||||||||||||
|
(in millions) |
||||||||||||||||||||||||
|
Quarter Ended |
Quarter Ended |
|||||||||||||||||||||||
|
December
|
September
|
December
|
December
|
December
|
||||||||||||||||||||
|
Cash flows from financing activities (continued): |
||||||||||||||||||||||||
| Proceeds from issuance of warrants | — | — | — | 85.2 | — | |||||||||||||||||||
| Payment of capital lease obligations | (1.2 | ) | (1.2 | ) | (2.7 | ) | (8.9 | ) | (14.9 | ) | ||||||||||||||
| Payment of contingent consideration | (3.9 | ) | — | — | (3.9 | ) | — | |||||||||||||||||
| Dividend to non-controlling shareholder of consolidated subsidiary | (1.9 | ) | — | (2.4 | ) | (1.9 | ) | (4.3 | ) | |||||||||||||||
| Net cash provided by (used in) financing activities | $ | (5.6 | ) | $ | (225.8 | ) | $ | (14.6 | ) | $ | (810.9 | ) | $ | 2,264.7 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | $ | (0.1 | ) | $ | 0.2 | $ | (7.4 | ) | $ | 2.3 | $ | (0.8 | ) | |||||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 48.0 | $ | 29.6 | $ | 147.6 | $ | (78.9 | ) | $ | 410.5 | |||||||||||||
| Cash and cash equivalents, beginning of period | $ | 901.2 | $ | 871.6 | $ | 880.5 | $ | 1,028.1 | $ | 617.6 | ||||||||||||||
| Cash and cash equivalents, end of period | $ | 949.2 | $ | 901.2 | $ | 1,028.1 | $ | 949.2 | $ | 1,028.1 | ||||||||||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||||||||||
|
RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES |
|||||||||||||||||||||||||||
|
(in millions, except per share and percentage data) |
|||||||||||||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||||||||
|
December
|
September
|
December
|
December
|
December
|
|||||||||||||||||||||||
| Reconciliation of GAAP revenue to non-GAAP revenue: | |||||||||||||||||||||||||||
| GAAP revenue | $ | 1,377.5 | $ | 1,390.9 | $ | 1,261.0 | $ | 5,543.1 | $ | 3,906.9 | |||||||||||||||||
| Special items: | |||||||||||||||||||||||||||
| a) | Sell-through to sell-in adjustment | — | — | — | (155.1 | ) | — | ||||||||||||||||||||
| Total special items | — | — | — | (155.1 | ) | — | |||||||||||||||||||||
| Non-GAAP revenue | $ | 1,377.5 | $ | 1,390.9 | $ | 1,261.0 | $ | 5,388.0 | $ | 3,906.9 | |||||||||||||||||
| Reconciliation of GAAP gross profit to non-GAAP gross profit: | |||||||||||||||||||||||||||
| GAAP gross profit | $ | 514.2 | $ | 524.2 | $ | 384.5 | $ | 2,033.8 | $ | 1,296.9 | |||||||||||||||||
| Special items: | |||||||||||||||||||||||||||
| a) | Sell-through to sell-in adjustment | — | — | — | (59.0 | ) | — | ||||||||||||||||||||
| b) | Actuarial losses on pension plans and other pension benefits | 2.6 | — | 3.2 | 2.6 | 3.2 | |||||||||||||||||||||
|
c) |
|
Expensing of appraised inventory at fair market value step up | — | 2.5 | 55.6 | 13.6 | 67.5 | ||||||||||||||||||||
| Total special items | 2.6 | 2.5 | 58.8 | (42.8 | ) | 70.7 | |||||||||||||||||||||
| Non-GAAP gross profit | $ | 516.8 | $ | 526.7 | $ | 443.3 | $ | 1,991.0 | $ | 1,367.6 | |||||||||||||||||
| Reconciliation of GAAP gross margin to non-GAAP gross margin: | |||||||||||||||||||||||||||
| GAAP gross margin | 37.3 | % | 37.7 | % | 30.5 | % | 36.7 | % | 33.2 | % | |||||||||||||||||
| Special items: | |||||||||||||||||||||||||||
| a) | Sell-through to sell-in adjustment | — | % | — | % | — | % | 0.1 | % | — | % | ||||||||||||||||
| b) | Actuarial losses on pension plans and other pension benefits | 0.2 | % | — | % | 0.3 | % | — | % | 0.1 | % | ||||||||||||||||
|
c) |
|
Expensing of appraised inventory at fair market value step up | — | % | 0.2 | % | 4.4 | % | 0.2 | % | 1.7 | % | |||||||||||||||
| Total special items | 0.2 | % | 0.2 | % | 4.7 | % | 0.3 | % | 1.8 | % | |||||||||||||||||
| Non-GAAP gross margin | 37.5 | % | 37.9 | % | 35.2 | % | 37.0 | % | 35.0 | % | |||||||||||||||||
| Reconciliation of GAAP operating expenses to non-GAAP operating expenses: | |||||||||||||||||||||||||||
| GAAP operating expenses | $ | 348.2 | $ | 346.9 | $ | 328.8 | $ | 1,352.9 | $ | 1,060.8 | |||||||||||||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||||||||||
|
RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES (Continued) |
|||||||||||||||||||||||||||
|
(in millions, except per share and percentage data) |
|||||||||||||||||||||||||||
|
Quarter Ended |
Year Ended |
||||||||||||||||||||||||||
|
December
|
September
|
December
|
December
|
December
|
|||||||||||||||||||||||
| Special items: | |||||||||||||||||||||||||||
| a) | Actuarial gains (losses) on pension plans and other pension benefits | 0.7 | — | (6.8 | ) | 0.7 | (6.8 | ) | |||||||||||||||||||
|
b) |
Amortization of acquisition related intangible assets | (28.8 | ) | (37.3 | ) | (32.9 | ) | (123.8 | ) | (104.8 | ) | ||||||||||||||||
|
c) |
|
Restructuring, asset impairments and other, net | (4.7 | ) | (9.7 | ) | (4.5 | ) | (20.8 | ) | (33.2 | ) | |||||||||||||||
| d) | Intangible asset impairments | (5.4 | ) | (1.5 | ) | — | (13.1 | ) | (2.2 | ) | |||||||||||||||||
| e) | Third party acquisition and divestiture related costs | (1.0 | ) | (0.5 | ) | (3.5 | ) | (3.2 | ) | (25.8 | ) | ||||||||||||||||
| f) | R&D Costs related to licensing income | (3.7 | ) | (2.2 | ) | — | (10.0 | ) | — | ||||||||||||||||||
| Total special items | (42.9 | ) | (51.2 | ) | (47.7 | ) | (170.2 | ) | (172.8 | ) | |||||||||||||||||
| Non-GAAP operating expenses | $ | 305.3 | $ | 295.7 | $ | 281.1 | $ | 1,182.7 | $ | 888.0 | |||||||||||||||||
| Reconciliation of GAAP operating income to non-GAAP operating income: | |||||||||||||||||||||||||||
| GAAP operating income | $ | 166.0 | $ | 177.3 | $ | 55.7 | $ | 680.9 | $ | 236.1 | |||||||||||||||||
| Special items: | |||||||||||||||||||||||||||
| a) | Sell-through to sell-in adjustment | — | — | — | (59.0 | ) | — | ||||||||||||||||||||
| b) | Actuarial (gains) losses on pension plans and other pension benefits (cost of revenues) | 2.6 | — | 3.2 | 2.6 | 3.2 | |||||||||||||||||||||
|
c) |
|
Expensing of appraised inventory at fair market value step up | — | 2.5 | 55.6 | 13.6 | 67.5 | ||||||||||||||||||||
| d) | Amortization of acquisition related intangible assets | 28.8 | 37.3 | 32.9 | 123.8 | 104.8 | |||||||||||||||||||||
| e) | Actuarial (gains) losses on pension plans and other pension benefits (operating expenses) | (0.7 | ) | — | 6.8 | (0.7 | ) | 6.8 | |||||||||||||||||||
| f) | Restructuring, asset impairments and other, net | 4.7 | 9.7 | 4.5 | 20.8 | 33.2 | |||||||||||||||||||||
| g) | Intangible asset impairments | 5.4 | 1.5 | — | 13.1 | 2.2 | |||||||||||||||||||||
| h) | Third party acquisition and divestiture related costs | 1.0 | 0.5 | 3.5 | 3.2 | 25.8 | |||||||||||||||||||||
| i) | R&D Costs related to licensing income | 3.7 | 2.2 | — | 10.0 | — | |||||||||||||||||||||
|
|
Total special items | 45.5 | 53.7 | 106.5 | 127.4 | 243.5 | |||||||||||||||||||||
| Non-GAAP operating income | $ | 211.5 | $ | 231.0 | $ | 162.2 | $ | 808.3 | $ | 479.6 | |||||||||||||||||
|
|
|||||||||||||||||||||||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||||||||||
|
RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES (Continued) |
|||||||||||||||||||||||||||
|
(in millions, except per share and percentage data) |
|||||||||||||||||||||||||||
|
Quarter Ended |
Year Ended |
||||||||||||||||||||||||||
|
December
|
September
|
December
|
December
|
December
|
|||||||||||||||||||||||
|
Reconciliation of GAAP operating margin to non-GAAP operating margin (operating income / revenues) : |
|||||||||||||||||||||||||||
| GAAP operating margin | 12.1 | % | 12.7 | % | 4.4 | % | 12.3 | % | 6.0 | % | |||||||||||||||||
| Special items: | |||||||||||||||||||||||||||
| a) | Sell-through to sell-in adjustment | — | % | — | % | — | % | (0.7 | )% | — | % | ||||||||||||||||
| b) | Actuarial losses on pension plans and other pension benefits (cost of revenues) | 0.2 | % | — | % | 0.3 | % | — | % | 0.1 | % | ||||||||||||||||
|
c) |
|
Expensing of appraised inventory at fair market value step up | — | % | 0.2 | % | 4.4 | % | 0.2 | % | 1.7 | % | |||||||||||||||
| d) | Amortization of acquisition related intangible assets | 2.1 | % | 2.7 | % | 2.6 | % | 2.2 | % | 2.7 | % | ||||||||||||||||
| e) | Actuarial (gains) losses on pension plans and other pension benefits (operating expenses) | (0.1 | )% | — | % | 0.5 | % | — | % | 0.2 | % | ||||||||||||||||
| f) | Restructuring, asset impairments and other, net | 0.3 | % | 0.7 | % | 0.4 | % | 0.4 | % | 0.8 | % | ||||||||||||||||
| g) | Intangible asset impairments | 0.4 | % | 0.1 | % | — | % | 0.2 | % | 0.1 | % | ||||||||||||||||
| h) | Third party acquisition and divestiture related costs | 0.1 | % | — | % | 0.3 | % | 0.1 | % | 0.7 | % | ||||||||||||||||
| i) | R&D Costs related to licensing income | 0.3 | % | 0.2 | % | — | % | 0.2 | % | — | % | ||||||||||||||||
| Total special items | 3.3 | % | 3.9 | % | 8.5 | % | 2.7 | % | 6.3 | % | |||||||||||||||||
| Non-GAAP operating margin | 15.4 | % | 16.6 | % | 12.9 | % | 15.0 | % | 12.3 | % | |||||||||||||||||
| Reconciliation of GAAP income before income taxes to non-GAAP income before income taxes: | |||||||||||||||||||||||||||
| GAAP income before income taxes | $ | 121.0 | $ | 168.3 | $ | 18.2 | $ | 547.5 | $ | 180.6 | |||||||||||||||||
| Special items: | |||||||||||||||||||||||||||
| a) | Sell-through to sell-in adjustment | — | — | — | (59.0 | ) | — | ||||||||||||||||||||
| b) | Actuarial losses on pension plans and other pension benefits (cost of revenues) | 2.6 | — | 3.2 | 2.6 | 3.2 | |||||||||||||||||||||
|
c) |
|
Expensing of appraised inventory at fair market value step up | — | 2.5 | 55.6 | 13.6 | 67.5 | ||||||||||||||||||||
| d) | Amortization of acquisition related intangible assets | 28.8 | 37.3 | 32.9 | 123.8 | 104.8 | |||||||||||||||||||||
| e) | Actuarial losses (gains) on pension plans and other pension benefits (operating expenses) | (0.7 | ) | — | 6.8 | (0.7 | ) | 6.8 | |||||||||||||||||||
| f) | Restructuring, asset impairments and other, net | 4.7 | 9.7 | 4.5 | 20.8 | 33.2 | |||||||||||||||||||||
| g) | Intangible asset impairments | 5.4 | 1.5 | — | 13.1 | 2.2 | |||||||||||||||||||||
| h) | Third party acquisition and divestiture related costs | 1.0 | 0.5 | 3.5 | 3.2 | 25.8 | |||||||||||||||||||||
| i) | R&D Costs related to licensing income | 3.7 | 2.2 | — | 10.0 | — | |||||||||||||||||||||
| j) | Loss on debt refinancing and prepayment | 14.3 | 6.7 | — | 47.2 | 6.3 | |||||||||||||||||||||
| k) | Non-cash interest on convertible notes | 8.9 | 8.6 | 6.5 | 30.8 | 26.0 | |||||||||||||||||||||
| l) | Pre-acquisition interest expense, net | — | — | — | — | 48.3 | |||||||||||||||||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||||||||||
|
RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES (Continued) |
|||||||||||||||||||||||||||
|
(in millions, except per share and percentage data) |
|||||||||||||||||||||||||||
|
Quarter Ended |
Year Ended |
||||||||||||||||||||||||||
|
December
|
September
|
December
|
December
|
December
|
|||||||||||||||||||||||
|
Special items (continued): |
|||||||||||||||||||||||||||
|
m) |
|
Adjustment to contingent consideration | (0.2 | ) | (0.3 | ) | 0.8 | 1.8 | (0.5 | ) | |||||||||||||||||
| n) | Licensing income | (2.2 | ) | (21.5 | ) | — | (47.6 | ) | — | ||||||||||||||||||
| o) | Gain on divestiture of business | — | (12.5 | ) | — | (12.5 | ) | (92.2 | ) | ||||||||||||||||||
| Total special items | 66.3 | 34.7 | 113.8 | 147.1 | 231.4 | ||||||||||||||||||||||
| Non-GAAP income before income taxes | $ | 187.3 | $ | 203.0 | $ | 132.0 | $ | 694.6 | $ | 412.0 | |||||||||||||||||
| Reconciliation of GAAP net income to non-GAAP net income: | |||||||||||||||||||||||||||
|
GAAP net income attributable to ON Semiconductor Corporation |
$ | 529.9 | $ | 108.7 | $ | 110.9 | $ | 810.7 | $ | 182.1 | |||||||||||||||||
| Special items: | |||||||||||||||||||||||||||
| a) | Sell-through to sell-in adjustment | — | — | — | (59.0 | ) | — | ||||||||||||||||||||
| b) | Actuarial losses on pension plans and other pension benefits (cost of revenues) | 2.6 | — | 3.2 | 2.6 | 3.2 | |||||||||||||||||||||
|
c) |
|
Expensing of appraised inventory at fair market value step up | — | 2.5 | 55.6 | 13.6 | 67.5 | ||||||||||||||||||||
| d) | Amortization of acquisition related intangible assets | 28.8 | 37.3 | 32.9 | 123.8 | 104.8 | |||||||||||||||||||||
| e) | Actuarial losses (gains) on pension plans and other pension benefits (operating expenses) | (0.7 | ) | — | 6.8 | (0.7 | ) | 6.8 | |||||||||||||||||||
| f) | Restructuring, asset impairments and other, net | 4.7 | 9.7 | 4.5 | 20.8 | 33.2 | |||||||||||||||||||||
| g) | Intangible asset impairments | 5.4 | 1.5 | — | 13.1 | 2.2 | |||||||||||||||||||||
| h) | Third party acquisition and divestiture related costs | 1.0 | 0.5 | 3.5 | 3.2 | 25.8 | |||||||||||||||||||||
| i) | R&D Costs related to licensing income | 3.7 | 2.2 | — | 10.0 | — | |||||||||||||||||||||
| j) | Loss on debt refinancing and prepayment | 14.3 | 6.7 | — | 47.2 | 6.3 | |||||||||||||||||||||
| k) | Non-cash interest on convertible notes | 8.9 | 8.6 | 6.5 | 30.8 | 26.0 | |||||||||||||||||||||
| l) | Pre-acquisition interest expense, net | — | — | — | — | 48.3 | |||||||||||||||||||||
|
m) |
|
Adjustment to contingent consideration | (0.2 | ) | (0.3 | ) | 0.8 | 1.8 | (0.5 | ) | |||||||||||||||||
| n) | Licensing income | (2.2 | ) | (21.5 | ) | — | (47.6 | ) | — | ||||||||||||||||||
| o) | Gain on divestiture of business | — | (12.5 | ) | — | (12.5 | ) | (92.2 | ) | ||||||||||||||||||
|
p) |
|
Adjustment of income taxes | (428.9 | ) | 46.0 | (101.7 | ) | (333.3 | ) | (31.2 | ) | ||||||||||||||||
| Total special items | (362.6 | ) | 80.7 | 12.1 | (186.2 | ) | 200.2 | ||||||||||||||||||||
| Non-GAAP net income attributable to ON Semiconductor Corporation | $ | 167.3 | $ | 189.4 | $ | 123.0 | $ | 624.5 | $ | 382.3 | |||||||||||||||||
| Adjustment of income taxes: | |||||||||||||||||||||||||||
| Tax adjustment for Special Items (1) | $ | (23.2 | ) | $ | (12.1 | ) | $ | (39.8 | ) | $ | (51.5 | ) | $ | (81.0 | ) | ||||||||||||
| Other non-GAAP tax adjustment (2) | 44.2 | 58.1 | (61.9 | ) | 168.1 | 49.8 | |||||||||||||||||||||
| Non-cash impact of U.S. tax reform (3) | (449.9 | ) | — | — | (449.9 | ) | — | ||||||||||||||||||||
| $ | (428.9 | ) | $ | 46.0 | $ | (101.7 | ) | $ | (333.3 | ) | $ | (31.2 | ) | ||||||||||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||||||||||
|
RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES (Continued) |
||||||||||||||||||||||||||||
|
(in millions, except per share and percentage data) |
||||||||||||||||||||||||||||
| (1 | ) | Tax impact of non-GAAP Special Items (a)-(o), calculated using the federal statutory rate of 35% | ||||||||||||||||||||||||||
| (2 | ) | The income tax adjustment primarily represents the use of the net operating loss, non-cash impact of not asserting indefinite reinvestment on earnings of our foreign subsidiaries, deferred tax expense not affecting taxes payable, and non-cash expense (benefit) related to uncertain tax positions. | ||||||||||||||||||||||||||
| (3 | ) | Non-cash tax impacts of U.S. tax reform legislation, H.R.1, commonly referred to as the Tax Cuts and Jobs Act. | ||||||||||||||||||||||||||
|
Quarter Ended |
Year Ended |
|||||||||||||||||||||||||||
|
December
|
September
|
December
|
December
|
December
|
||||||||||||||||||||||||
| Reconciliation of GAAP diluted share count to non-GAAP diluted share count: | ||||||||||||||||||||||||||||
| GAAP diluted share count | 433.3 | 427.5 | 426.9 | 428.3 | 420.0 | |||||||||||||||||||||||
| Special items: | ||||||||||||||||||||||||||||
| a) | Dilutive share count attributable to convertible notes | (3.4 | ) | — | — | (0.9 | ) | — | ||||||||||||||||||||
| Total Special items | (3.4 | ) | — | — | (0.9 | ) | — | |||||||||||||||||||||
| Non-GAAP diluted share count | 429.9 | 427.5 | 426.9 | 427.4 | 420.0 | |||||||||||||||||||||||
| Non-GAAP diluted earnings per share: | ||||||||||||||||||||||||||||
|
Non-GAAP net income attributable to ON Semiconductor Corporation |
$ | 167.3 | $ | 189.4 | $ | 123.0 | $ | 624.5 | $ | 382.3 | ||||||||||||||||||
| Non-GAAP diluted share count | 429.9 | 427.5 | 426.9 | 427.4 | 420.0 | |||||||||||||||||||||||
| Non-GAAP diluted earnings per share | $ | 0.39 | $ | 0.44 | $ | 0.29 | $ | 1.46 | $ | 0.91 | ||||||||||||||||||
| Reconciliation of Net cash provided by operating activities to free cash flow: | ||||||||||||||||||||||||||||
| Net cash provided by operating activities | $ | 224.3 | $ | 328.2 | $ | 229.4 | $ | 1,094.2 | $ | 581.2 | ||||||||||||||||||
| Special items: | ||||||||||||||||||||||||||||
| a) | Purchases of property, plant and equipment | (175.7 | ) | (90.1 | ) | (49.9 | ) | (387.5 | ) | (210.7 | ) | |||||||||||||||||
| Total special items | (175.7 | ) | (90.1 | ) | (49.9 | ) | (387.5 | ) | (210.7 | ) | ||||||||||||||||||
| Free cash flow | $ | 48.6 | $ | 238.1 | $ | 179.5 | $ | 706.7 | $ | 370.5 | ||||||||||||||||||
