|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS (in millions, except per share data) |
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|
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| Quarter Ended | Six Months Ended | ||||||||||||||||||||
|
June 29,
|
March 30,
|
June 30,
|
June 29,
|
June 30,
|
|||||||||||||||||
| Revenue | $ | 1,455.9 | $ | 1,377.6 | $ | 1,338.0 | $ | 2,833.5 | $ | 2,774.7 | |||||||||||
| Cost of revenue (exclusive of amortization shown below) | 900.9 | 860.2 | 846.0 | 1,761.1 | 1,779.6 | ||||||||||||||||
| Gross profit | 555.0 | 517.4 | 492.0 | 1,072.4 | 995.1 | ||||||||||||||||
| Gross margin | 38.1 | % | 37.6 | % | 36.8 | % | 37.8 | % | 35.9 | % | |||||||||||
| Operating expenses: | |||||||||||||||||||||
| Research and development | 167.1 | 155.2 | 145.6 | 322.3 | 285.7 | ||||||||||||||||
| Selling and marketing | 81.7 | 77.8 | 79.5 | 159.5 | 157.0 | ||||||||||||||||
| General and administrative | 74.6 | 70.9 | 76.6 | 145.5 | 145.0 | ||||||||||||||||
| Amortization of acquisition-related intangible assets | 27.9 | 27.4 | 28.6 | 55.3 | 57.7 | ||||||||||||||||
| Restructuring, asset impairments and other, net | 3.2 | 0.4 | 5.9 | 3.6 | 6.4 | ||||||||||||||||
| Goodwill and intangible asset impairment | 3.3 | — | 1.8 | 3.3 | 6.2 | ||||||||||||||||
| Total operating expenses | 357.8 | 331.7 | 338.0 | 689.5 | 658.0 | ||||||||||||||||
| Operating income | 197.2 | 185.7 | 154.0 | 382.9 | 337.1 | ||||||||||||||||
| Other income (expense), net: | |||||||||||||||||||||
| Interest expense | (32.6 | ) | (31.5 | ) | (34.7 | ) | (64.1 | ) | (73.1 | ) | |||||||||||
| Interest income | 1.1 | 0.9 | 0.5 | 2.0 | 1.1 | ||||||||||||||||
| Loss on debt refinancing and prepayment | (4.0 | ) | — | — | (4.0 | ) | (26.2 | ) | |||||||||||||
| Gain on divestiture of business | 4.6 | — | — | 4.6 | — | ||||||||||||||||
| Licensing income | 28.1 | 3.8 | 23.9 | 31.9 | 23.9 | ||||||||||||||||
| Other expense | (1.0 | ) | (2.0 | ) | (0.5 | ) | (3.0 | ) | (4.6 | ) | |||||||||||
| Other income (expense), net | (3.8 | ) | (28.8 | ) | (10.8 | ) | (32.6 | ) | (78.9 | ) | |||||||||||
| Income before income taxes | 193.4 | 156.9 | 143.2 | 350.3 | 258.2 | ||||||||||||||||
| Income tax provision | (37.1 | ) | (16.4 | ) | (48.8 | ) | (53.5 | ) | (85.1 | ) | |||||||||||
| Net income | 156.3 | 140.5 | 94.4 | 296.8 | 173.1 | ||||||||||||||||
| Less: Net income attributable to non-controlling interest | (1.0 | ) | (0.9 | ) | (0.5 | ) | (1.9 | ) | (1.0 | ) | |||||||||||
| Net income attributable to ON Semiconductor Corporation | $ | 155.3 | $ | 139.6 | $ | 93.9 | $ | 294.9 | $ | 172.1 | |||||||||||
| Net income per common share attributable to ON Semiconductor Corporation: | |||||||||||||||||||||
| Basic | $ | 0.36 | $ | 0.33 | $ | 0.22 | $ | 0.69 | $ | 0.41 | |||||||||||
| Diluted | $ | 0.35 | $ | 0.31 | $ | 0.22 | $ | 0.66 | $ | 0.40 | |||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||
| Basic | 427.0 | 425.9 | 420.8 | 426.5 | 420.4 | ||||||||||||||||
| Diluted | 444.3 | 444.2 | 425.9 | 444.4 | 426.0 | ||||||||||||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS (in millions) |
|||||||||||||
|
June 29, 2018 |
March 30, 2018 |
December 31,
|
|||||||||||
| Assets | |||||||||||||
| Cash and cash equivalents | $ | 850.2 | $ | 924.9 | $ | 949.2 | |||||||
| Receivables, net | 698.8 | 696.9 | 701.5 | ||||||||||
| Inventories | 1,204.4 | 1,160.0 | 1,089.5 | ||||||||||
| Other current assets | 173.6 | 185.2 | 193.0 | ||||||||||
| Total current assets | 2,927.0 | 2,967.0 | 2,933.2 | ||||||||||
| Property, plant and equipment, net | 2,387.2 | 2,336.4 | 2,279.1 | ||||||||||
| Goodwill | 928.8 | 916.9 | 916.9 | ||||||||||
| Intangible assets, net | 627.9 | 600.9 | 628.3 | ||||||||||
| Deferred tax assets | 298.9 | 333.3 | 339.1 | ||||||||||
| Other assets | 127.5 | 108.6 | 98.5 | ||||||||||
| Total assets | $ | 7,297.3 | $ | 7,263.1 | $ | 7,195.1 | |||||||
| Liabilities, Non-Controlling Interest and Stockholders’ Equity | |||||||||||||
| Accounts payable | $ | 584.7 | $ | 612.0 | $ | 548.0 | |||||||
| Accrued expenses | 563.9 | 585.8 | 612.8 | ||||||||||
| Current portion of long-term debt | 746.4 | 747.2 | 248.1 | ||||||||||
| Total current liabilities | 1,895.0 | 1,945.0 | 1,408.9 | ||||||||||
| Long-term debt | 2,020.4 | 2,084.4 | 2,703.7 | ||||||||||
| Deferred tax liabilities | 63.6 | 57.1 | 55.1 | ||||||||||
| Other long-term liabilities | 221.5 | 225.1 | 226.4 | ||||||||||
| Total liabilities | 4,200.5 | 4,311.6 | 4,394.1 | ||||||||||
| ON Semiconductor Corporation stockholders’ equity: | |||||||||||||
| Common stock | 5.6 | 5.5 | 5.5 | ||||||||||
| Additional paid-in capital | 3,646.1 | 3,615.5 | 3,593.5 | ||||||||||
| Accumulated other comprehensive loss | (34.9 | ) | (34.4 | ) | (40.6 | ) | |||||||
| Accumulated earnings | 646.9 | 491.7 | 351.5 | ||||||||||
| Less: Treasury stock, at cost | (1,191.0 | ) | (1,149.9 | ) | (1,131.1 | ) | |||||||
| Total ON Semiconductor Corporation stockholders’ equity | 3,072.7 | 2,928.4 | 2,778.8 | ||||||||||
| Non-controlling interest in consolidated subsidiary | 24.1 | 23.1 | 22.2 | ||||||||||
| Total stockholders' equity | 3,096.8 | 2,951.5 | 2,801.0 | ||||||||||
| Total liabilities and stockholders' equity | $ | 7,297.3 | $ | 7,263.1 | $ | 7,195.1 | |||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND NET CASH PROVIDED BY OPERATING ACTIVITIES (in millions) |
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| Quarter Ended | Six Months Ended | ||||||||||||||||||||
|
June 29,
|
March 30,
|
June 30,
|
June 29,
|
June 30,
|
|||||||||||||||||
| Net income | $ | 156.3 | $ | 140.5 | $ | 94.4 | $ | 296.8 | $ | 173.1 | |||||||||||
| Adjusted for: | |||||||||||||||||||||
| Licensing income | (28.1 | ) | (3.8 | ) | (23.9 | ) | (31.9 | ) | (23.9 | ) | |||||||||||
| R&D costs related to licensing income | 3.7 | 2.8 | 4.1 | 6.5 | 4.1 | ||||||||||||||||
| Restructuring, asset impairments and other, net | 3.2 | 0.4 | 5.9 | 3.6 | 6.4 | ||||||||||||||||
| Goodwill and intangible asset impairment | 3.3 | — | 1.8 | 3.3 | 6.2 | ||||||||||||||||
| Interest expense | 32.6 | 31.5 | 34.7 | 64.1 | 73.1 | ||||||||||||||||
| Interest income | (1.1 | ) | (0.9 | ) | (0.5 | ) | (2.0 | ) | (1.1 | ) | |||||||||||
| Loss on debt refinancing and prepayment | 4.0 | — | — | 4.0 | 26.2 | ||||||||||||||||
| Income tax provision | 37.1 | 16.4 | 48.8 | 53.5 | 85.1 | ||||||||||||||||
| Net income attributable to non-controlling interest | (1.0 | ) | (0.9 | ) | (0.5 | ) | (1.9 | ) | (1.0 | ) | |||||||||||
| Depreciation and amortization | 125.5 | 119.9 | 116.5 | 245.4 | 230.8 | ||||||||||||||||
| Amortization of fair market value step-up of inventory | 0.2 | — | 1.3 | 0.2 | 11.1 | ||||||||||||||||
| Sell-through to sell-in adjustment | — | — | — | — | (59.0 | ) | |||||||||||||||
| Gain on divestiture of business | (4.6 | ) | — | — | (4.6 | ) | — | ||||||||||||||
| Adjustment to contingent consideration | — | (2.1 | ) | 0.8 | (2.1 | ) | 2.3 | ||||||||||||||
| Third party acquisition and divestiture related costs | 2.1 | 0.4 | 0.7 | 2.5 | 1.7 | ||||||||||||||||
| Adjusted EBITDA | 333.2 | 304.2 | 284.1 | 637.4 | 535.1 | ||||||||||||||||
| Increase (decrease): | |||||||||||||||||||||
| Licensing income | 28.1 | 3.8 | 23.9 | 31.9 | 23.9 | ||||||||||||||||
| R&D costs related to licensing income | (3.7 | ) | (2.8 | ) | (4.1 | ) | (6.5 | ) | (4.1 | ) | |||||||||||
| Restructuring, asset impairments and other, net | (3.2 | ) | (0.4 | ) | (5.9 | ) | (3.6 | ) | (6.4 | ) | |||||||||||
| Interest expense | (32.6 | ) | (31.5 | ) | (34.7 | ) | (64.1 | ) | (73.1 | ) | |||||||||||
| Interest income | 1.1 | 0.9 | 0.5 | 2.0 | 1.1 | ||||||||||||||||
| Income tax provision | (37.1 | ) | (16.4 | ) | (48.8 | ) | (53.5 | ) | (85.1 | ) | |||||||||||
| Net income attributable to non-controlling interest | 1.0 | 0.9 | 0.5 | 1.9 | 1.0 | ||||||||||||||||
| Amortization of fair market value step-up of inventory | (0.2 | ) | — | (1.3 | ) | (0.2 | ) | (11.1 | ) | ||||||||||||
| Sell-through to sell-in adjustment | — | — | — | — | 59.0 | ||||||||||||||||
| Adjustment to contingent consideration | — | 2.1 | (0.8 | ) | 2.1 | (2.3 | ) | ||||||||||||||
| Third party acquisition and divestiture related costs | (2.1 | ) | (0.4 | ) | (0.7 | ) | (2.5 | ) | (1.7 | ) | |||||||||||
| Loss (gain) on sale or disposal of fixed assets | 1.1 | 1.3 | (1.1 | ) | 2.4 | 1.8 | |||||||||||||||
| Amortization of debt discount and issuance costs | 3.4 | 3.3 | 3.9 | 6.7 | 8.4 | ||||||||||||||||
| Payments for term debt modification | (1.1 | ) | — | — | (1.1 | ) | (2.4 | ) | |||||||||||||
| Write-down of excess inventories | 14.4 | 9.4 | 21.4 | 23.8 | 35.6 | ||||||||||||||||
| Share-based compensation expense | 23.1 | 18.4 | 20.8 | 41.5 | 35.9 | ||||||||||||||||
| Non-cash interest on convertible notes | 8.9 | 8.7 | 8.6 | 17.6 | 13.3 | ||||||||||||||||
| Change in deferred taxes | 35.7 | 7.5 | 21.0 | 43.2 | 57.2 | ||||||||||||||||
| Other | 0.2 | (1.2 | ) | 0.5 | (1.0 | ) | 2.0 | ||||||||||||||
| Changes in operating assets and liabilities | (101.7 | ) | (81.3 | ) | 45.4 | (183.0 | ) | (46.4 | ) | ||||||||||||
| Net cash provided by operating activities | $ | 268.5 | $ | 226.5 | $ | 333.2 | 495.0 | $ | 541.7 | ||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||
| Purchases of property, plant and equipment | $ | (152.9 | ) | $ | (99.5 | ) | $ | (69.0 | ) | $ | (252.4 | ) | $ | (121.7 | ) | ||||||
| Proceeds from sales of property, plant and equipment | 0.4 | 5.6 | 1.6 | 6.0 | 1.8 | ||||||||||||||||
| Deposits made (utilized) for purchases of property, plant and equipment | (2.1 | ) | (11.6 | ) | 1.3 | (13.7 | ) | 1.1 | |||||||||||||
| Purchase of business, net of cash acquired | (70.7 | ) | — | — | (70.7 | ) | (0.8 | ) | |||||||||||||
| Proceeds from divestiture of business, net of cash transferred | 5.6 | — | — | 5.6 | — | ||||||||||||||||
| Proceeds from repayment of note receivable | 10.2 | — | — | 10.2 | — | ||||||||||||||||
| Equity method investment | (19.8 | ) | — | — | (19.8 | ) | — | ||||||||||||||
| Purchase of held-to-maturity securities | — | — | — | — | (1.6 | ) | |||||||||||||||
| Net cash used in investing activities | $ | (229.3 | ) | $ | (105.5 | ) | $ | (66.1 | ) | $ | (334.8 | ) | $ | (121.2 | ) | ||||||
| Cash flows from financing activities: | |||||||||||||||||||||
| Proceeds from issuance of common stock under the ESPP | 6.9 | $ | — | $ | 5.4 | $ | 6.9 | $ | 11.3 | ||||||||||||
| Proceeds from exercise of stock options | 0.7 | 3.6 | 1.7 | 4.3 | 9.2 | ||||||||||||||||
| Payment of tax withholding for restricted shares | (1.1 | ) | (18.8 | ) | (0.6 | ) | (19.9 | ) | (13.6 | ) | |||||||||||
| Repurchase of common stock | (40.0 | ) | — | — | (40.0 | ) | (25.0 | ) | |||||||||||||
| Proceeds from debt issuance | 2.2 | 5.3 | 6.9 | 7.5 | 695.9 | ||||||||||||||||
| Repayment of long-term debt | (79.5 | ) | (135.9 | ) | (136.9 | ) | (215.4 | ) | (1,191.3 | ) | |||||||||||
| Purchases of convertible note hedges | — | — | — | — | (144.7 | ) | |||||||||||||||
| Proceeds from issuance of warrants | — | — | — | — | 85.2 | ||||||||||||||||
| Payment of capital lease obligations | (2.1 | ) | (1.1 | ) | (1.1 | ) | (3.2 | ) | (6.5 | ) | |||||||||||
| Net cash used in financing activities | $ | (112.9 | ) | $ | (146.9 | ) | $ | (124.6 | ) | $ | (259.8 | ) | $ | (579.5 | ) | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | $ | (0.9 | ) | $ | 1.6 | $ | (0.1 | ) | 0.7 | $ | 2.2 | ||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | (74.6 | ) | $ | (24.3 | ) | $ | 142.4 | $ | (98.9 | ) | $ | (156.8 | ) | |||||||
| Cash, cash equivalents and restricted cash, beginning of period | $ | 942.3 | $ | 966.6 | $ | 746.6 | $ | 966.6 | $ | 1,045.8 | |||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 867.7 | $ | 942.3 | $ | 889.0 | $ | 867.7 | $ | 889.0 | |||||||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS (in millions, except per share data) |
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| Quarter Ended | Six Months Ended | ||||||||||||||||||||
|
June 29,
|
March 30,
|
June 30,
|
June 29,
|
June 30,
|
|||||||||||||||||
| Reconciliation of GAAP revenue to non-GAAP revenue: | |||||||||||||||||||||
| GAAP revenue | $ | 1,455.9 | $ | 1,377.6 | $ | 1,338.0 | $ | 2,833.5 | $ | 2,774.7 | |||||||||||
| Special items: | |||||||||||||||||||||
|
a) Sell-through to sell-in adjustment |
— | — | — | — | (155.1 | ) | |||||||||||||||
| Total special items | — | — | — | — | (155.1 | ) | |||||||||||||||
| Non-GAAP revenue | $ | 1,455.9 | $ | 1,377.6 | $ | 1,338.0 | $ | 2,833.5 | $ | 2,619.6 | |||||||||||
| Reconciliation of GAAP gross profit to non-GAAP gross profit: | |||||||||||||||||||||
| GAAP gross profit | $ | 555.0 | $ | 517.4 | $ | 492.0 | $ | 1,072.4 | $ | 995.1 | |||||||||||
| Special items: | |||||||||||||||||||||
| a) Sell-through to sell-in adjustment | — | — | — | — | (59.0 | ) | |||||||||||||||
| b) Expensing of appraised inventory at fair market value step-up | 0.2 | — | 1.3 | 0.2 | 11.1 | ||||||||||||||||
| Total special items | 0.2 | — | 1.3 | 0.2 | (47.9 | ) | |||||||||||||||
| Non-GAAP gross profit | $ | 555.2 | $ | 517.4 | $ | 493.3 | $ | 1,072.6 | $ | 947.2 | |||||||||||
| Reconciliation of GAAP gross margin to non-GAAP gross margin: | |||||||||||||||||||||
| GAAP gross margin | 38.1 | % | 37.6 | % | 36.8 | % | 37.8 | % | 35.9 | % | |||||||||||
| Special items: | |||||||||||||||||||||
| a) Sell-through to sell-in adjustment | — | % | — | % | — | % | — | % | (0.1 | )% | |||||||||||
| b) Expensing of appraised inventory at fair market value step-up | — | % | — | % | 0.1 | % | — | % | 0.4 | % | |||||||||||
| Total special items | — | % | — | % | 0.1 | % | — | % | 0.3 | % | |||||||||||
| Non-GAAP gross margin | 38.1 | % | 37.6 | % | 36.9 | % | 37.9 | % | 36.2 | % | |||||||||||
| Reconciliation of GAAP operating expenses to non-GAAP operating expenses: | |||||||||||||||||||||
| GAAP operating expenses | $ | 357.8 | $ | 331.7 | $ | 338.0 | $ | 689.5 | $ | 658.0 | |||||||||||
| Special items: | |||||||||||||||||||||
| a) Amortization of acquisition-related intangible assets | (27.9 | ) | (27.4 | ) | (28.6 | ) | (55.3 | ) | (57.7 | ) | |||||||||||
| b) Restructuring, asset impairments and other, net | (3.2 | ) | (0.4 | ) | (5.9 | ) | (3.6 | ) | (6.4 | ) | |||||||||||
|
c) Goodwill and intangible asset impairment |
(3.3 | ) | — | (1.8 | ) | (3.3 | ) | (6.2 | ) | ||||||||||||
| d) Third party acquisition and divestiture related costs | (2.1 | ) | (0.4 | ) | (0.7 | ) | (2.5 | ) | (1.7 | ) | |||||||||||
| e) R&D costs related to licensing income | (3.7 | ) | (2.8 | ) | (4.1 | ) | (6.5 | ) | (4.1 | ) | |||||||||||
| Total special items | (40.2 | ) | (31.0 | ) | (41.1 | ) | (71.2 | ) | (76.1 | ) | |||||||||||
| Non-GAAP operating expenses | $ | 317.6 | $ | 300.7 | $ | 296.9 | $ | 618.3 | $ | 581.9 | |||||||||||
| Reconciliation of GAAP operating income to non-GAAP operating income: | |||||||||||||||||||||
| GAAP operating income | $ | 197.2 | $ | 185.7 | $ | 154.0 | $ | 382.9 | $ | 337.1 | |||||||||||
| Special items: | |||||||||||||||||||||
| a) Sell-through to sell-in adjustment | — | — | — | — | (59.0 | ) | |||||||||||||||
| b) Expensing of appraised inventory at fair market value step-up | 0.2 | — | 1.3 | 0.2 | 11.1 | ||||||||||||||||
|
c) Amortization of acquisition-related intangible assets |
27.9 | 27.4 | 28.6 | 55.3 | 57.7 | ||||||||||||||||
| d) Restructuring, asset impairments and other, net | 3.2 | 0.4 | 5.9 | 3.6 | 6.4 | ||||||||||||||||
| e) Goodwill and intangible asset impairment | 3.3 | — | 1.8 | 3.3 | 6.2 | ||||||||||||||||
| f) Third party acquisition and divestiture related costs | 2.1 | 0.4 | 0.7 | 2.5 | 1.7 | ||||||||||||||||
| g) R&D costs related to licensing income | 3.7 | 2.8 | 4.1 | 6.5 | 4.1 | ||||||||||||||||
| Total special items | 40.4 | 31.0 | 42.4 | 71.4 | 28.2 | ||||||||||||||||
| Non-GAAP operating income | $ | 237.6 | $ | 216.7 | $ | 196.4 | $ | 454.3 | $ | 365.3 | |||||||||||
| Reconciliation of GAAP operating margin to non-GAAP operating margin (operating income / revenues) : | |||||||||||||||||||||
| GAAP operating margin | 13.5 | % | 13.5 | % | 11.5 | % | 13.5 | % | 12.1 | % | |||||||||||
| Special items: | |||||||||||||||||||||
| a) Sell-through to sell-in adjustment | — | % | — | % | — | % | — | % | (1.3 | )% | |||||||||||
| b) Expensing of appraised inventory at fair market value step-up | — | % | — | % | 0.1 | % | — | % | 0.4 | % | |||||||||||
| c) Amortization of acquisition-related intangible assets | 1.9 | % | 2.0 | % | 2.1 | % | 2.0 | % | 2.1 | % | |||||||||||
| d) Restructuring, asset impairments and other, net | 0.2 | % | — | % | 0.4 | % | 0.1 | % | 0.2 | % | |||||||||||
| e) Goodwill and intangible asset impairment | 0.2 | % | — | % | 0.1 | % | 0.1 | % | 0.2 | % | |||||||||||
| f) Third party acquisition and divestiture related costs | 0.1 | % | — | % | 0.1 | % | 0.1 | % | 0.1 | % | |||||||||||
| g) R&D costs related to licensing income | 0.3 | % | 0.2 | % | 0.3 | % | 0.2 | % | 0.1 | % | |||||||||||
| Total special items | 2.8 | % | 2.2 | % | 3.2 | % | 2.5 | % | 1.8 | % | |||||||||||
| Non-GAAP operating margin | 16.3 | % | 15.7 | % | 14.7 | % | 16.0 | % | 13.9 | % | |||||||||||
| Reconciliation of GAAP income before income taxes to non-GAAP income before income taxes: | |||||||||||||||||||||
| GAAP income before income taxes | $ | 193.4 | $ | 156.9 | $ | 143.2 | $ | 350.3 | $ | 258.2 | |||||||||||
|
Special items: |
|||||||||||||||||||||
| a) Sell-through to sell-in adjustment | — | — | — | — | (59.0 | ) | |||||||||||||||
| b) Expensing of appraised inventory at fair market value step-up | 0.2 | — | 1.3 | 0.2 | 11.1 | ||||||||||||||||
| c) Amortization of acquisition-related intangible assets | 27.9 | 27.4 | 28.6 | 55.3 | 57.7 | ||||||||||||||||
| d) Restructuring, asset impairments and other, net | 3.2 | 0.4 | 5.9 | 3.6 | 6.4 | ||||||||||||||||
| e) Goodwill and intangible asset impairment | 3.3 | — | 1.8 | 3.3 | 6.2 | ||||||||||||||||
| f) Third party acquisition and divestiture related costs | 2.1 | 0.4 | 0.7 | 2.5 | 1.7 | ||||||||||||||||
| g) R&D costs related to licensing income | 3.7 | 2.8 | 4.1 | 6.5 | 4.1 | ||||||||||||||||
| h) Loss on debt refinancing and prepayment | 4.0 | — | — | 4.0 | 26.2 | ||||||||||||||||
| i) Non-cash interest on convertible notes | 8.9 | 8.7 | 8.6 | 17.6 | 13.3 | ||||||||||||||||
| j) Adjustment to contingent consideration | — | (2.1 | ) | 0.8 | (2.1 | ) | 2.3 | ||||||||||||||
| k) Licensing income | (28.1 | ) | (3.8 | ) | (23.9 | ) | (31.9 | ) | (23.9 | ) | |||||||||||
| l) Gain on divestiture of business | (4.6 | ) | — | — | (4.6 | ) | — | ||||||||||||||
| Total special items | 20.6 | 33.8 | 27.9 | 54.4 | 46.1 | ||||||||||||||||
| Non-GAAP income before income taxes | $ | 214.0 | $ | 190.7 | $ | 171.1 | $ | 404.7 | $ | 304.3 | |||||||||||
| Reconciliation of GAAP net income to non-GAAP net income: | |||||||||||||||||||||
| GAAP net income attributable to ON Semiconductor Corporation | $ | 155.3 | $ | 139.6 | $ | 93.9 | $ | 294.9 | $ | 172.1 | |||||||||||
| Special items: | |||||||||||||||||||||
| a) Sell-through to sell-in adjustment | — | — | — | — | (59.0 | ) | |||||||||||||||
| b) Expensing of appraised inventory at fair market value step-up | 0.2 | — | 1.3 | 0.2 | 11.1 | ||||||||||||||||
| c) Amortization of acquisition-related intangible assets | 27.9 | 27.4 | 28.6 | 55.3 | 57.7 | ||||||||||||||||
| d) Restructuring, asset impairments and other, net | 3.2 | 0.4 | 5.9 | 3.6 | 6.4 | ||||||||||||||||
| e) Goodwill and intangible asset impairment | 3.3 | — | 1.8 | 3.3 | 6.2 | ||||||||||||||||
| f) Third party acquisition and divestiture related costs | 2.1 | 0.4 | 0.7 | 2.5 | 1.7 | ||||||||||||||||
| g) R&D costs related to licensing income | 3.7 | 2.8 | 4.1 | 6.5 | 4.1 | ||||||||||||||||
| h) Loss on debt refinancing and prepayment | 4.0 | — | — | 4.0 | 26.2 | ||||||||||||||||
| i) Non-cash interest on convertible notes | 8.9 | 8.7 | 8.6 | 17.6 | 13.3 | ||||||||||||||||
| j) Adjustment to contingent consideration | — | (2.1 | ) | 0.8 | (2.1 | ) | 2.3 | ||||||||||||||
| k) Licensing income | (28.1 | ) | (3.8 | ) | (23.9 | ) | (31.9 | ) | (23.9 | ) | |||||||||||
| l) Gain on divestiture of business | (4.6 | ) | — | — | (4.6 | ) | — | ||||||||||||||
|
m) Adjustment of income taxes |
23.8 | (2.7 | ) | 31.7 | 21.1 | 49.6 | |||||||||||||||
| Total special items | 44.4 | 31.1 | 59.6 | 75.5 | 95.7 | ||||||||||||||||
| Non-GAAP net income attributable to ON Semiconductor Corporation | $ | 199.7 | $ | 170.7 | $ | 153.5 | $ | 370.4 | $ | 267.8 | |||||||||||
| Adjustment of income taxes: | |||||||||||||||||||||
| Tax adjustment for Special Items (1) | $ | (4.3 | ) | $ | (7.1 | ) | $ | (9.8 | ) | $ | (11.4 | ) | $ | (16.1 | ) | ||||||
| Other non-GAAP tax adjustment (2) | 28.1 | 4.4 | 41.5 | 32.5 | 65.7 | ||||||||||||||||
| Total | $ | 23.8 | $ | (2.7 | ) | $ | 31.7 | $ | 21.1 | $ | 49.6 | ||||||||||
| Reconciliation of GAAP diluted share count to non-GAAP diluted share count: | |||||||||||||||||||||
| GAAP diluted share count | 444.3 | 444.2 | 425.9 | 444.4 | 426.0 | ||||||||||||||||
| Special items: | |||||||||||||||||||||
| a) Dilutive share count attributable to convertible notes | (12.7 | ) | (12.6 | ) | — | (12.7 | ) | — | |||||||||||||
| Total special items | (12.7 | ) | (12.6 | ) | — | (12.7 | ) | — | |||||||||||||
| Non-GAAP diluted share count | 431.6 | 431.6 | 425.9 | 431.7 | 426.0 | ||||||||||||||||
| Non-GAAP diluted earnings per share: | |||||||||||||||||||||
| Non-GAAP net income attributable to ON Semiconductor Corporation | $ | 199.7 | $ | 170.7 | $ | 153.5 | $ | 370.4 | $ | 267.8 | |||||||||||
| Non-GAAP diluted share count | 431.6 | 431.6 | 425.9 | 431.7 | 426.0 | ||||||||||||||||
| Non-GAAP diluted earnings per share | $ | 0.46 | $ | 0.40 | $ | 0.36 | $ | 0.86 | $ | 0.63 | |||||||||||
| Reconciliation of net cash provided by operating activities to free cash flow: | |||||||||||||||||||||
| Net cash provided by operating activities | $ | 268.5 | $ | 226.5 | $ | 333.2 | $ | 495.0 | $ | 541.7 | |||||||||||
| Special items: | |||||||||||||||||||||
| a) Purchases of property, plant and equipment | (152.9 | ) | (99.5 | ) | (69.0 | ) | (252.4 | ) | (121.7 | ) | |||||||||||
| Total special items | (152.9 | ) | (99.5 | ) | (69.0 | ) | (252.4 | ) | (121.7 | ) | |||||||||||
| Free cash flow | $ | 115.6 | $ | 127.0 | $ | 264.2 | $ | 242.6 | $ | 420.0 | |||||||||||
| (1) | Tax impact of non-GAAP Special Items (a) - (l) is calculated using the federal statutory rate of 21%, 21% and 35% for the quarters and six months ended June 29, 2018, March 30, 2018, and June 30, 2017, respectively. | ||
| (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. |
