ON Semiconductor Reports Third Quarter 2015 Results

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

	Quarter Ended									Nine Months Ended
	October 2, 2015			July 3, 2015			September 26, 2014 (1)			October 2, 2015			September 26, 2014 (1)
Revenues	$	904.2		$	880.5		$	833.5		$	2,655.5		$	2,297.6
Cost of revenues (exclusive of amortization shown below)	595.7			576.1			552.6			1,742.2			1,490.4
Gross profit	308.5			304.4			280.9			913.3			807.2
Gross margin	34.1		%	34.6		%	33.7		%	34.4		%	35.1		%
Operating expenses:
Research and development	104.9			100.4			93.4			305.7			255.7
Selling and marketing	52.3			50.4			51.1			156.0			143.4
General and administrative	44.9			45.0			48.5			136.6			134.2
Amortization of acquisition-related intangible assets	33.6			33.6			21.0			101.1			39.6
Restructuring, asset impairments and other, net	3.3			3.5			10.1			4.5			20.0
Goodwill and intangible asset impairment	0.1			3.7			—			3.8			—
Total operating expenses	239.1			236.6			224.1			707.7			592.9
Operating income	69.4			67.8			56.8			205.6			214.3
Other income (expense), net:
Interest expense	(14.9		)	(10.7		)	(8.6		)	(34.8		)	(24.6		)
Interest income	0.2			0.3			0.2			0.8			0.6
Other	2.1			2.1			(1.2		)	7.9			(2.1		)
Loss on debt extinguishment	—			(0.4		)	—			(0.4		)	—
Other (expense) income, net	(12.6		)	(8.7		)	(9.6		)	(26.5		)	(26.1		)
Income before income taxes	56.8			59.1			47.2			179.1			188.2
Income tax (provision) benefit	(10.0		)	(7.7		)	(6.3		)	(25.1		)	3.7
Net income	46.8			51.4			40.9			154.0			191.9
Less: Net income attributable to non-controlling interest	(0.5		)	(0.7		)	(0.4		)	(1.9		)	(1.6		)
Net income attributable to ON Semiconductor Corporation	$	46.3		$	50.7		$	40.5		$	152.1		$	190.3
Net income per common share attributable to ON Semiconductor Corporation:
Basic	$	0.11		$	0.12		$	0.09		$	0.36		$	0.43
Diluted	$	0.11		$	0.12		$	0.09		$	0.35		$	0.43
Weighted average common shares outstanding:
Basic	413.7			426.9			440.7			424.0			440.7
Diluted	417.5			436.3			444.9			431.3			444.6

⁽¹⁾		Amounts have been revised; for additional information about the revisions to prior periods, see our 2014 Form 10-K and our third quarter 2015 Form 10-Q to be filed on or around October 30, 2015.

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

	October 2, 2015			July 3, 2015			December 31, 2014 (1)
Assets
Cash and cash equivalents	$	556.8		$	576.6		$	511.7
Short-term investments	0.8			1.3			6.1
Receivables, net	505.9			489.9			417.5
Inventories	754.0			743.0			729.9
Other current assets	135.2			121.3			140.6
Total current assets	1,952.7			1,932.1			1,805.8
Property, plant and equipment, net	1,256.1			1,225.5			1,203.9
Goodwill	271.3			263.8			263.8
Intangible assets, net	360.1			387.3			458.5
Other assets	109.9			106.7			91.0
Total assets	$	3,950.1		$	3,915.4		$	3,823.0
Liabilities, Non-Controlling Interest and Stockholders’ Equity
Accounts payable	$	361.9		$	335.5		$	378.2
Accrued expenses	306.4			273.8			287.9
Deferred income on sales to distributors	130.4			155.1			165.1
Current portion of long-term debt	539.3			555.9			209.6
Total current liabilities	1,338.0			1,320.3			1,040.8
Long-term debt	868.4			822.3			983.0
Other long-term liabilities	162.6			153.1			151.8
Total liabilities	2,369.0			2,295.7			2,175.6
ON Semiconductor Corporation stockholders’ equity:
Common stock	5.3			5.3			5.2
Additional paid-in capital	3,404.0			3,387.8			3,281.2
Accumulated other comprehensive loss	(44.1		)	(43.6		)	(41.5		)
Accumulated deficit	(763.5		)	(809.8		)	(915.6		)
Less: Treasury stock, at cost	(1,043.4		)	(942.3		)	(702.8		)
Total ON Semiconductor Corporation stockholders’ equity	1,558.3			1,597.4			1,626.5
Non-controlling interest in consolidated subsidiary	22.8			22.3			20.9
Total stockholders' equity	1,581.1			1,619.7			1,647.4
Total liabilities and equity	$	3,950.1		$	3,915.4		$	3,823.0

⁽¹⁾			The Company has retrospectively adjusted certain amounts shown above for the period ended December 31, 2014 related to adjustments to the purchase price allocation of our recent acquisitions.

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

	Quarter Ended									Nine Months Ended
	October 2, 2015			July 3, 2015			September 26, 2014 (1)			October 2, 2015			September 26, 2014 (1)
Net income	$	46.8		$	51.4		$	40.9		$	154.0		$	191.9
Adjusted for:
Restructuring, asset impairments and other, net	3.3			3.5			10.1			4.5			20.0
Goodwill and intangible asset impairment	0.1			3.7			—			3.8			—
Interest expense	14.9			10.7			8.6			34.8			24.6
Interest income	(0.2		)	(0.3		)	(0.2		)	(0.8		)	(0.6		)
Loss on debt extinguishment	—			0.4			—			0.4			—
Gain on sale of available-for-sale securities	(0.7		)	(1.3		)	—			(5.4		)	—
Income tax provision (benefit)	10.0			7.7			6.3			25.1			(3.7		)
Net income attributable to non-controlling interest	(0.5		)	(0.7		)	(0.4		)	(1.9		)	(1.6		)
Depreciation and amortization	89.2			88.4			72.1			267.8			182.4
Expensing of appraised inventory at fair market value	—			—			12.9			—			14.2
Third party acquisition related costs	0.2			—			4.0			0.2			8.0
Adjusted EBITDA*	163.1			163.5			154.3			482.5			435.2
Increase (decrease):
Restructuring, asset impairments and other, net	(3.3		)	(3.5		)	(10.1		)	(4.5		)	(20.0		)
Interest expense	(14.9		)	(10.7		)	(8.6		)	(34.8		)	(24.6		)
Interest income	0.2			0.3			0.2			0.8			0.6
Gain on sale of available-for-sale securities	0.7			1.3			—			5.4			—
Income tax provision	(10.0		)	(7.7		)	(6.3		)	(25.1		)	3.7
Net income attributable to non-controlling interest	0.5			0.7			0.4			1.9			1.6
Expensing of appraised inventory at fair market value	—			—			(12.9		)	—			(14.2		)
Third party acquisition related costs	(0.2		)	—			(4.0		)	(0.2		)	(8.0		)
Loss (gain) on sale or disposal of fixed assets	0.4			(0.5		)	(0.3		)	(4.1		)	(0.6		)
Amortization of debt issuance costs	1.0			0.6			0.3			1.9			1.0
Write-down of excess inventories	10.2			10.5			9.6			38.4			21.1
Non-cash asset impairment charges	—			0.2			—			0.2			1.8
Non-cash share-based compensation expense	10.9			14.1			11.1			36.3			33.0
Non-cash interest	6.4			3.0			1.8			11.2			5.1
Change in deferred taxes	0.5			—			2.9			0.1			(16.7		)
Other	(0.4		)	(2.1		)	0.7			(5.5		)	0.6
Changes in operating assets and liabilities	(36.8		)	(68.1		)	(46.8		)	(191.1		)	(100.8		)
Net cash provided by operating activities	$	128.3		$	101.6		$	92.3		$	313.4		$	318.8

⁽¹⁾

Amounts have been revised; for additional information about the revisions to prior periods, see our 2014 Form 10-K and our third quarter 2015 Form 10-Q to be filed on or around October 30, 2015.

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