|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||
|
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS |
||||||||||||
|
(in millions, except per share data) |
||||||||||||
| Quarter Ended | ||||||||||||
| April 1, 2016 | December 31, 2015 | April 3, 2015 | ||||||||||
| Revenues | $ | 817.2 | $ | 840.3 | $ | 870.8 | ||||||
| Cost of revenues (exclusive of amortization shown below) | 541.7 | 560.4 | 570.4 | |||||||||
| Gross profit | 275.5 | 279.9 | 300.4 | |||||||||
| Gross margin | 33.7 | % | 33.3 | % | 34.5 | % | ||||||
| Operating expenses: | ||||||||||||
| Research and development | 98.0 | 91.0 | 100.4 | |||||||||
| Selling and marketing | 49.2 | 48.3 | 53.3 | |||||||||
| General and administrative | 44.5 | 45.7 | 46.7 | |||||||||
| Amortization of acquisition-related intangible assets | 23.7 | 34.6 | 33.9 | |||||||||
| Restructuring, asset impairments and other, net | 1.7 | 4.8 | (2.3 | ) | ||||||||
| Total operating expenses | 217.1 | 224.4 | 232.0 | |||||||||
| Operating income | 58.4 | 55.5 | 68.4 | |||||||||
| Other income (expense), net: | ||||||||||||
| Interest expense | (15.6 | ) | (14.9 | ) | (9.2 | ) | ||||||
| Interest income | 0.3 | 0.3 | 0.3 | |||||||||
| Other | (1.4 | ) | (0.2 | ) | 3.7 | |||||||
| Other (expense) income, net | (16.7 | ) | (14.8 | ) | (5.2 | ) | ||||||
| Income before income taxes | 41.7 | 40.7 | 63.2 | |||||||||
| Income tax (provision) benefit | (5.3 | ) | 14.3 | (7.4 | ) | |||||||
| Net income | 36.4 | 55.0 | 55.8 | |||||||||
| Less: Net income attributable to non-controlling interest | (0.4 | ) | (0.9 | ) | (0.7 | ) | ||||||
| Net income attributable to ON Semiconductor Corporation | $ | 36.0 | $ | 54.1 | $ | 55.1 | ||||||
| Net income per common share attributable to ON Semiconductor Corporation: | ||||||||||||
| Basic | $ | 0.09 | $ | 0.13 | $ | 0.13 | ||||||
| Diluted | $ | 0.09 | $ | 0.13 | $ | 0.13 | ||||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 412.6 | 412.5 | 431.4 | |||||||||
| Diluted | 415.5 | 416.9 | 439.9 | |||||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||
|
UNAUDITED CONSOLIDATED BALANCE SHEET |
||||||||||||
|
(in millions) |
||||||||||||
| April 1, 2016 | December 31, 2015 | April 3, 2015 | ||||||||||
| Assets | ||||||||||||
| Cash and cash equivalents | $ | 619.5 | $ | 617.6 | $ | 428.1 | ||||||
| Short-term investments | — | — | 1.3 | |||||||||
| Receivables, net | 428.2 | 426.4 | 454.5 | |||||||||
| Inventories | 759.7 | 750.4 | 746.9 | |||||||||
| Other current assets | 94.3 | 97.1 | 128.1 | |||||||||
| Total current assets | 1,901.7 | 1,891.5 | 1,758.9 | |||||||||
| Property, plant and equipment, net | 1,270.4 | 1,274.1 | 1,208.4 | |||||||||
| Goodwill | 270.6 | 270.6 | 263.8 | |||||||||
| Intangible assets, net | 302.3 | 325.8 | 424.6 | |||||||||
| Other assets | 110.1 | 107.6 | 89.8 | |||||||||
| Total assets | $ | 3,855.1 | $ | 3,869.6 | $ | 3,745.5 | ||||||
| Liabilities, Non-Controlling Interest and Stockholders’ Equity | ||||||||||||
| Accounts payable | $ | 305.9 | $ | 337.7 | $ | 362.5 | ||||||
| Accrued expenses | 245.2 | 246.2 | 282.6 | |||||||||
| Deferred income on sales to distributors | 112.9 | 112.0 | 156.0 | |||||||||
| Current portion of long-term debt | 525.4 | 543.4 | 212.6 | |||||||||
| Total current liabilities | 1,189.4 | 1,239.3 | 1,013.7 | |||||||||
| Long-term debt | 835.1 | 850.5 | 949.4 | |||||||||
| Other long-term liabilities | 152.5 | 147.9 | 155.2 | |||||||||
| Total liabilities | 2,177.0 | 2,237.7 | 2,118.3 | |||||||||
| ON Semiconductor Corporation stockholders’ equity: | ||||||||||||
| Common stock | 5.4 | 5.3 | 5.3 | |||||||||
| Additional paid-in capital | 3,437.0 | 3,420.3 | 3,317.6 | |||||||||
| Accumulated other comprehensive loss | (41.3 | ) | (42.3 | ) | (45.8 | ) | ||||||
| Accumulated deficit | (673.4 | ) | (709.4 | ) | (860.5 | ) | ||||||
| Less: Treasury stock, at cost | (1,073.7 | ) | (1,065.7 | ) | (811.0 | ) | ||||||
| Total ON Semiconductor Corporation stockholders’ equity | 1,654.0 | 1,608.2 | 1,605.6 | |||||||||
| Non-controlling interest in consolidated subsidiary | 24.1 | 23.7 | 21.6 | |||||||||
| Total stockholders' equity | 1,678.1 | 1,631.9 | 1,627.2 | |||||||||
| Total liabilities and equity | $ | 3,855.1 | $ | 3,869.6 | $ | 3,745.5 | ||||||
|
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||
|
UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA* AND |
||||||||||||
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
||||||||||||
|
(in millions) |
||||||||||||
| Quarter Ended | ||||||||||||
| April 1, 2016 | December 31, 2015 | April 3, 2015 | ||||||||||
| Net income | $ | 36.4 | $ | 55.0 | $ | 55.8 | ||||||
| Adjusted for: | ||||||||||||
| Restructuring, asset impairments and other, net | 1.7 | 4.8 | (2.3 | ) | ||||||||
| Interest expense | 15.6 | 14.9 | 9.2 | |||||||||
| Interest income | (0.3 | ) | (0.3 | ) | (0.3 | ) | ||||||
| Gain on sale of available-for-sale securities | — | — | (3.4 | ) | ||||||||
| Income tax provision (benefit) | 5.3 | (14.3 | ) | 7.4 | ||||||||
| Net income attributable to non-controlling interest | (0.4 | ) | (0.9 | ) | (0.7 | ) | ||||||
| Depreciation and amortization | 80.7 | 89.8 | 90.2 | |||||||||
| Actuarial gains on pension plans and other pension benefits | — | (5.0 | ) | — | ||||||||
| Third party acquisition related costs | 2.5 | 3.3 | — | |||||||||
| Adjusted EBITDA* | 141.5 | 147.3 | 155.9 | |||||||||
| Increase (decrease): | ||||||||||||
| Restructuring, asset impairments and other, net | (1.7 | ) | (4.8 | ) | 2.3 | |||||||
| Interest expense | (15.6 | ) | (14.9 | ) | (9.2 | ) | ||||||
| Interest income | 0.3 | 0.3 | 0.3 | |||||||||
| Gain on sale of available-for-sale securities | — | — | 3.4 | |||||||||
| Income tax provision | (5.3 | ) | 14.3 | (7.4 | ) | |||||||
| Net income attributable to non-controlling interest | 0.4 | 0.9 | 0.7 | |||||||||
| Actuarial gains on pension plans and other pension benefits | — | 5.0 | — | |||||||||
| Third party acquisition related costs | (2.5 | ) | (3.3 | ) | — | |||||||
| Loss (gain) on sale or disposal of fixed assets | (0.1 | ) | 0.2 | (4.0 | ) | |||||||
| Amortization of debt issuance costs | 1.0 | 0.9 | 0.3 | |||||||||
| Write-down of excess inventories | 17.9 | 14.0 | 17.7 | |||||||||
| Non-cash share-based compensation expense | 11.6 | 10.6 | 11.3 | |||||||||
| Non-cash interest | 6.5 | 6.3 | 1.8 | |||||||||
| Change in deferred taxes | 1.1 | (9.3 | ) | (0.4 | ) | |||||||
| Other | 1.5 | 2.7 | (3.0 | ) | ||||||||
| Changes in operating assets and liabilities | (41.7 | ) | (13.0 | ) | (86.2 | ) | ||||||
| Net cash provided by operating activities | $ | 114.9 | $ | 157.2 | $ | 83.5 | ||||||
| * 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 | ||||||||||||||
| April 1, 2016 | December 31, 2015 | April 3, 2015 | ||||||||||||
| Reconciliation of GAAP gross profit to non-GAAP gross profit: | ||||||||||||||
| GAAP gross profit | $ | 275.5 | $ | 279.9 | $ | 300.4 | ||||||||
| Special item: | ||||||||||||||
|
a) Actuarial gain on pension plans and other pension benefits |
— | (0.8 | ) | — | ||||||||||
| Non-GAAP gross profit | $ | 275.5 | $ | 279.1 | $ | 300.4 | ||||||||
| Reconciliation of GAAP gross margin to non-GAAP gross margin: | ||||||||||||||
| GAAP gross margin | 33.7 | % | 33.3 | % | 34.5 | % | ||||||||
| Special item: | ||||||||||||||
|
a) Actuarial gain on pension plans and other pension benefits |
— | % |
(0.1) |
% |
— | % | ||||||||
| Non-GAAP gross margin | 33.7 | % | 33.2 | % | 34.5 | % | ||||||||
| Reconciliation of GAAP operating expenses to non-GAAP operating expenses: | ||||||||||||||
| GAAP operating expenses | $ | 217.1 | $ | 224.4 | $ | 232.0 | ||||||||
| Special items: | ||||||||||||||
|
a) Amortization of acquisition related intangible assets |
(23.7 | ) | (34.6 | ) | (33.9 | ) | ||||||||
|
b) Actuarial losses on pension plans and other pension benefits |
— | 4.2 | — | |||||||||||
|
c) Restructuring, asset impairments and other, net |
(1.7 | ) | (4.8 | ) | 2.3 | |||||||||
|
d) Third party acquisition related costs |
(2.5 | ) | (3.3 | ) | — | |||||||||
| Total special items | (27.9 | ) | (38.5 | ) | (31.6 | ) | ||||||||
| Non-GAAP operating expenses | $ | 189.2 | $ | 185.9 | $ | 200.4 | ||||||||
| Reconciliation of GAAP operating income to non-GAAP operating income: | ||||||||||||||
| GAAP operating income | $ | 58.4 | $ | 55.5 | $ | 68.4 | ||||||||
| Special items: | ||||||||||||||
|
a) Actuarial losses on pension plans and other pension benefits (cost of revenues) |
— | (0.8 | ) | — | ||||||||||
|
b) Amortization of acquisition related intangible assets |
23.7 | 34.6 | 33.9 | |||||||||||
|
c) Actuarial losses on pension plans and other pension benefits (operating expenses) |
— | (4.2 | ) | — | ||||||||||
|
d) Restructuring, asset impairments and other, net |
1.7 | 4.8 | (2.3 | ) | ||||||||||
|
e) Third party acquisition related costs |
2.5 | 3.3 | — | |||||||||||
| Total special items | 27.9 | 37.7 | 31.6 | |||||||||||
| Non-GAAP operating income | $ | 86.3 | $ | 93.2 | $ | 100.0 | ||||||||
| Quarter Ended | ||||||||||||||
| April 1, 2016 | December 31, 2015 | April 3, 2015 | ||||||||||||
| Reconciliation of GAAP operating margin to non-GAAP operating margin (operating income / revenues) : | ||||||||||||||
| GAAP operating margin | 7.1 | % | 6.6 | % | 7.9 | % | ||||||||
| Special items: | ||||||||||||||
|
a) Actuarial (gains) pension plans and other pension benefits (cost of revenues) |
— | % |
(0.1) |
% |
— | % | ||||||||
|
b) Amortization of acquisition related intangible assets |
2.9 | % | 4.1 | % | 3.9 | % | ||||||||
|
c) Actuarial (gains) on pension plans and other pension benefits (operating expenses) |
— | % |
(0.5) |
% |
— | % | ||||||||
|
d) Restructuring, asset impairments and other, net |
0.2 | % | 0.6 | % | (0.3 | )% | ||||||||
|
e) Third party acquisition related costs |
0.3 | % | 0.4 | % | — | % | ||||||||
| Total special items | 3.4 | % | 4.5 | % | 3.6 | % | ||||||||
| Non-GAAP operating margin | 10.6 | % | 11.1 | % | 11.5 | % | ||||||||
| Reconciliation of GAAP net income to non-GAAP net income: | ||||||||||||||
| GAAP net income attributable to ON Semiconductor Corporation | $ | 36.0 | $ | 54.1 | $ | 55.1 | ||||||||
| Special items: | ||||||||||||||
|
a) Actuarial losses on pension plans and other pension benefits (cost of revenues) |
— | (0.8 | ) | — | ||||||||||
|
b) Amortization of acquisition related intangible assets (operating expenses) |
23.7 | 34.6 | 33.9 | |||||||||||
|
c) Actuarial losses on pension plans and other pension benefits (operating expenses) |
— | (4.2 | ) | — | ||||||||||
|
d) Restructuring, asset impairments and other, net |
1.7 | 4.8 | (2.3 | ) | ||||||||||
|
e) Third party acquisition related costs |
2.5 | 3.3 | — | |||||||||||
|
f) Gain on sale of available-for-sale securities |
— | — | (3.4 | ) | ||||||||||
|
g) Non-cash interest on convertible notes |
6.5 | 6.3 | 1.8 | |||||||||||
|
h) Adjustment to reflect cash taxes |
(0.1 | ) | (19.2 | ) | 2.0 | |||||||||
|
Total special items |
34.3 | 24.8 | 32.0 | |||||||||||
| Non-GAAP net income | $ | 70.3 | $ | 78.9 | $ | 87.1 | ||||||||
| Non-GAAP net income per share: | ||||||||||||||
| Basic | $ | 0.17 | $ | 0.19 | $ | 0.20 | ||||||||
| Diluted | $ | 0.17 | $ | 0.19 | $ | 0.20 | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||
| Basic | 412.6 | 412.5 | 431.4 | |||||||||||
| Diluted | 415.5 | 416.9 | 439.9 | |||||||||||
| 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 | |||||||||||
| April 1, 2016 | December 31, 2015 | April 3, 2015 | |||||||||
| Cost of revenues | $ | 1.9 | $ | 1.9 | $ | 1.9 | |||||
| Research and development | 2.5 | 2.2 | 2.3 | ||||||||
| Selling and marketing | 2.1 | 1.8 | 2.2 | ||||||||
| General and administrative | 5.1 | 4.7 | 4.9 | ||||||||
| Total share-based compensation expense | $ | 11.6 | $ | 10.6 | $ | 11.3 | |||||
