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
PHOENIX -- (Business Wire)
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 andOperating 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/
Contacts:
ON Semiconductor
Kris Martino, 312-909-0661
Corporate/Media
Communications
kris.martino@onsemi.com
or
Parag
Agarwal, 602-244-3437
Investor Relations
parag.agarwal@onsemi.com
Source: ON Semiconductor Corporation
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