For the second quarter of 2015, highlights include:
- Total revenues of $880.5 million
- GAAP earnings per diluted share of
$0.12, non-GAAP earnings per diluted share of $0.22
- GAAP and non-GAAP gross margin of 34.6
percent
- GAAP operating margin of 7.7 percent
and non-GAAP operating margin of 12.3 percent
- Repurchased approximately 10.4 million
shares for approximately $131 million
ON Semiconductor Corporation (Nasdaq: ON), driving energy
efficient innovation, today announced that total revenues in the
second quarter of 2015 were $880.5 million, up approximately one
percent compared to the first quarter of 2015. During the second
quarter of 2015, the company reported GAAP net income of $50.7
million, or $0.12 per diluted share. The second quarter 2015 GAAP
net income was negatively impacted by approximately $44.7 million
of special items, details of which can be found in the attached
schedules.
Second quarter 2015 non-GAAP net income was $95.4 million, or
$0.22 per diluted share, compared to $87.1 million, or $0.20 per
diluted share, for the first 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 and non-GAAP gross margin in the second
quarter was 34.6 percent. For the second quarter of 2015, GAAP
operating margin was 7.7 percent, and non-GAAP operating margin was
12.3 percent.
Adjusted EBITDA for the second quarter of 2015 was $163.5
million. Adjusted EBITDA for the first quarter of 2015 was $155.9
million. During the second quarter, the company repurchased
approximately 10.4 million shares of common stock for approximately
$131 million.
"Despite a tough macro-economic backdrop during the second
quarter, we were able to deliver strong earnings performance driven
by solid execution and sharp focus on managing costs," said Keith
Jackson, president and CEO of ON Semiconductor. "The current
macro-economic uncertainty has impacted demand and order trends.
However, following a drop in orders towards the end of the second
quarter, we have recently seen stabilization in order trends.
"We believe that our strong product pipeline coupled with our
manufacturing and operational prowess should enable us to grow at a
faster pace than the semiconductor industry. Despite volatility in
the macro-economic environment, customer interest in our product
offerings for the automotive, industrial, and smartphone markets
continues to increase, and our design win pipeline and breadth of
costumer engagements continues to grow."
THIRD QUARTER 2015 OUTLOOK
"Based on product booking trends, backlog levels, and estimated
turns levels, we anticipate that total ON Semiconductor revenue
will be approximately $890 to $930 million in the third quarter of
2015," Jackson said. "Backlog levels for the third quarter of 2015
represent approximately 80 to 85 percent of our anticipated third
quarter 2015 revenue. The outlook for the third quarter of 2015
includes stock-based compensation expense of approximately $13
million to $15 million."
The following table outlines ON Semiconductor's projected third
quarter of 2015 GAAP and non-GAAP outlook.
ON SEMICONDUCTOR Q3 2015 BUSINESS
OUTLOOK
Total ON Semiconductor
GAAP
Special
Items ***
Total ON Semiconductor
Non-GAAP****
Revenue $890 to $930 million $890 to $930 million Gross Margin 34%
to 36% 34% to 36% Operating Expenses $232 to $244 million $35 to
$37 million $197 to $207 million Net Interest Expense / Other
Expenses $8 to $10 million $8 to $10 million Convertible Notes,
Non-cash Interest Expense* $6 million $6 million Tax $8 to $12
million $3 to $4 million $5 to $8 million Diluted Share Count **
430 million 430 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 the
company's convertible senior subordinated notes, and the repurchase
or the issuance of stock or convertible notes or the sale of
treasury shares. In periods when the quarterly average stock price
per share exceeds $18.50, the Non-GAAP diluted share count and
Non-GAAP net income per share includes the anti-dilutive impact of
the company’s hedge transactions, issued concurrently with the
1.00% Notes. At an average stock price per share between $18.50 and
$25.96, the hedging activity offsets the potentially dilutive
effect of the 1.00% Notes and warrants.
***
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 (EDT) on August 3, 2015, to
discuss this announcement and ON Semiconductor’s results for the
second 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
76241664.
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. 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.
ON SEMICONDUCTOR CORPORATION AND
SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF
OPERATIONS
(in millions, except per share data)
Quarter Ended Six
Months Ended July 3, 2015 April 3, 2015
June 27, 2014 (1) July 3, 2015 June
27, 2014 (1) Revenues $ 880.5 $ 870.8 $ 757.6 $ 1,751.3 $
1,464.1 Cost of revenues (exclusive of amortization shown below)
576.1 570.4 479.5 1,146.5 937.8
Gross profit 304.4 300.4 278.1 604.8 526.3 Gross margin 34.6 % 34.5
% 36.7 % 34.5 % 35.9 % Operating expenses: Research and development
100.4 100.4 84.2 200.8 162.3 Selling and marketing 50.4 53.3 47.9
103.7 92.3 General and administrative 45.0 46.7 44.7 91.7 85.7
Amortization of acquisition-related intangible assets 33.6 33.9
10.4 67.5 18.6 Restructuring, asset impairments and other, net 3.5
(2.3 ) 4.1 1.2 9.9 Goodwill and intangible asset impairment 3.7
— — 3.7 —
Total operating expenses
236.6 232.0 191.3 468.6 368.8
Operating income 67.8 68.4 86.8 136.2
157.5 Other income (expense), net: Interest expense (10.7 )
(9.2 ) (7.9 ) (19.9 ) (16.0 ) Interest income 0.3 0.3 0.2 0.6 0.4
Other 2.1 3.7 (0.2 ) 5.8 (0.9 ) Loss on debt extinguishment (0.4 )
— — (0.4 ) — Other income (expense), net (8.7
) (5.2 ) (7.9 ) (13.9 ) (16.5 ) Income before income taxes 59.1
63.2 78.9 122.3 141.0 Income tax provision (benefit) (7.7 ) (7.4 )
16.2 (15.1 ) 10.0 Net income 51.4 55.8 95.1 107.2
151.0 Less: Net income attributable to non-controlling interest
(0.7 ) (0.7 ) (1.0 ) (1.4 ) (1.2 ) Net income (loss) attributable
to ON Semiconductor Corporation $ 50.7 $ 55.1 $ 94.1
$ 105.8 $ 149.8 Net income per common share
attributable to ON Semiconductor Corporation: Basic $ 0.12 $
0.13 $ 0.21 $ 0.25 $ 0.34 Diluted $
0.12 $ 0.13 $ 0.21 $ 0.24 $ 0.34
Weighted average common shares outstanding: Basic 426.9
431.4 441.1 429.2 440.7 Diluted 436.3
439.9 444.5 438.2 444.5
(1)Amounts have been revised; for additional information about
the revisions to prior periods, see our 2014 Form 10-K and our
second quarter 2015 Form 10-Q to be filed on or around
August 3, 2015.
ON SEMICONDUCTOR CORPORATION AND
SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE
SHEET
(in millions)
July 3,
2015 April 3, 2015 December 31, 2014 (1)
Assets Cash and cash equivalents $ 576.6 $ 428.1 $ 511.7
Short-term investments 1.3 1.3 6.1 Receivables, net 489.9 454.5
417.5 Inventories 743.0 746.9 729.9 Other current assets 121.3
128.1 140.6 Total current assets 1,932.1
1,758.9 1,805.8 Property, plant and equipment, net 1,225.5 1,208.4
1,203.9 Goodwill 263.8 263.8 263.8 Intangible assets, net 387.3
424.6 458.5 Other assets 106.7 90.6 91.0 Total
assets $ 3,915.4 $ 3,746.3 $ 3,823.0
Liabilities, Non-Controlling Interest and Stockholders’
Equity Accounts payable $ 335.5 $ 362.5 $ 378.2 Accrued
expenses 273.8 282.6 287.9 Deferred income on sales to distributors
155.1 156.0 165.1 Current portion of long-term debt 555.9
212.6 209.6 Total current liabilities 1,320.3 1,013.7
1,040.8 Long-term debt 822.3 950.2 983.0 Other long-term
liabilities 153.1 155.2 151.8 Total
liabilities 2,295.7 2,119.1 2,175.6 ON
Semiconductor Corporation stockholders’ equity: Common stock 5.3
5.3 5.2 Additional paid-in capital 3,387.8 3,317.6 3,281.2
Accumulated other comprehensive loss (43.6 ) (45.8 ) (41.5 )
Accumulated deficit (809.8 ) (860.5 ) (915.6 ) Less: Treasury
stock, at cost (942.3 ) (811.0 ) (702.8 ) Total ON Semiconductor
Corporation stockholders’ equity 1,597.4 1,605.6 1,626.5
Non-controlling interest in consolidated subsidiary 22.3
21.6 20.9 Total stockholders' equity 1,619.7
1,627.2 1,647.4 Total liabilities and equity $
3,915.4 $ 3,746.3 $ 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 Six Months Ended July
3, 2015 April 3, 2015
July 27, 2014 (1)
July 3, 2015
June 27, 2014 (1)
Net income $ 51.4 $ 55.8 $ 95.1 $ 107.2 $ 151.0 Adjusted for:
Restructuring, asset impairments and other, net 3.5 (2.3 ) 4.1 1.2
9.9 Goodwill and intangible asset impairment 3.7 — — 3.7 — Interest
expense 10.7 9.2 7.9 19.9 16.0 Interest income (0.3 ) (0.3 ) (0.2 )
(0.6 ) (0.4 ) Loss on debt extinguishment 0.4 — — 0.4 — Gain on
sale of available-for-sale securities (1.3 ) (3.4 ) — (4.7 ) —
Income tax provision (benefit) 7.7 7.4 (16.2 ) 15.1 (10.0 ) Net
income attributable to non-controlling interest (0.7 ) (0.7 ) (1.0
) (1.4 ) (1.2 ) Depreciation and amortization 88.4 90.2 57.9 178.6
110.3 Expensing of appraised inventory at fair market value — — 1.3
— 1.3 Third party acquisition related costs — — 3.7
— 4.0 Adjusted EBITDA* 163.5 155.9 152.6 319.4
280.9 Increase (decrease): Restructuring, asset impairments and
other, net (3.5 ) 2.3 (4.1 ) (1.2 ) (9.9 ) Interest expense (10.7 )
(9.2 ) (7.9 ) (19.9 ) (16.0 ) Interest income 0.3 0.3 0.2 0.6 0.4
Gain on sale of available-for-sale securities 1.3 3.4 — 4.7 —
Income tax provision (7.7 ) (7.4 ) 16.2 (15.1 ) 10.0 Net income
attributable to non-controlling interest 0.7 0.7 1.0 1.4 1.2
Expensing of appraised inventory at fair market value — — (1.3 ) —
(1.3 ) Third party acquisition related costs — — (3.7 ) — (4.0 )
Gain on sale or disposal of fixed assets (0.5 ) (4.0 ) — (4.5 )
(0.3 ) Amortization of debt issuance costs 0.6 0.3 0.4 0.9 0.7
Write-down of excess inventories 10.5 17.7 4.7 28.2 11.5 Non-cash
asset impairment charges 0.2 — 1.8 0.2 1.8 Non-cash share-based
compensation expense 14.1 11.3 13.4 25.4 21.9 Non-cash interest 3.0
1.8 1.7 4.8 3.3 Change in deferred taxes — (0.4 ) (21.5 ) (0.4 )
(19.6 ) Other (2.1 ) (3.0 ) (0.1 ) (5.1 ) (0.1 ) Changes in
operating assets and liabilities (68.1 ) (86.2 ) (1.8 ) (154.3 )
(54.0 ) Net cash provided by operating activities $ 101.6 $
83.5 $ 151.6 $ 185.1 $ 226.5
(1)Amounts have been revised; for additional information about
the revisions to prior periods, see our 2014 Form 10-K and our
second quarter 2015 Form 10-Q to be filed on or around
August 3, 2015.
* 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 Six Months Ended July 3, 2015
April 3, 2015
June 27, 2014 (1)
July 3, 2015
June 27, 2014 (1)
Reconciliation of GAAP gross profit to non-GAAP gross
profit: GAAP gross profit $ 304.4 $ 300.4 $ 278.1
$ 604.8 $ 526.3 Special item: a) Expensing of
appraised inventory at fair market value — — 1.3
— 1.3 Non-GAAP gross profit $ 304.4 $
300.4 $ 279.4 $ 604.8 $ 527.6
Reconciliation of GAAP gross margin to non-GAAP gross
margin: GAAP gross margin 34.6 % 34.5 % 36.7 % 34.5 % 35.9 %
Special item: a) Expensing of appraised inventory at fair market
value — % — % 0.2 % — % 0.1 % Non-GAAP gross margin 34.6 % 34.5 %
36.9 % 34.5 % 36.0 %
Reconciliation of GAAP operating expenses
to non-GAAP operating expenses: GAAP operating expenses $ 236.6
$ 232.0 $ 191.3 $ 468.6 $ 368.8
Special items: a) Amortization of acquisition related intangible
assets (33.6 ) (33.9 ) (10.4 ) (67.5 ) (18.6 ) b) Restructuring,
asset impairments and other, net (3.5 ) 2.3 (4.1 ) (1.2 ) (9.9 )
c)
Goodwill and intangible asset impairments (3.7 ) — — (3.7 ) — d)
Third party acquisition related costs — — (3.7 ) —
(4.0 ) Total special items (40.8 ) (31.6 ) (18.2 ) (72.4 )
(32.5 ) Non-GAAP operating expenses $ 195.8 $ 200.4 $
173.1 $ 396.2 $ 336.3
Reconciliation of
GAAP operating income to non-GAAP operating income: GAAP
operating income $ 67.8 $ 68.4 $ 86.8 $ 136.2
$ 157.5 Special items: a) Expensing of appraised
inventory at fair market value step up — — 1.3 — 1.3 b)
Amortization of acquisition related intangible assets 33.6 33.9
10.4 67.5 18.6 c) Restructuring, asset impairments and other, net
3.5 (2.3 ) 4.1 1.2 9.9 d) Goodwill and intangible asset impairments
3.7 — — 3.7 — e) Third party acquisition related costs — —
3.7 — 4.0 Total special items 40.8
31.6 19.5 72.4 33.8 Non-GAAP
operating income $ 108.6 $ 100.0 $ 106.3 $
208.6 $ 191.3
Reconciliation of GAAP operating margin
to non-GAAP operating margin (operating income /
revenues):
GAAP operating margin 7.7 % 7.9 % 11.5 % 7.8 % 10.8 % Special
items: a) Expensing of appraised inventory at fair market value
step up — % — % 0.2 % — % 0.1 % b) Amortization of acquisition
related intangible assets 3.8 % 3.9 % 1.4 % 3.9 % 1.3 % c)
Restructuring, asset impairments and other, net 0.4 % (0.3 )% 0.5 %
0.1 % 0.7 % d) Goodwill and intangible asset impairments 0.4 % — %
— % 0.2 % — % e) Third party acquisition related costs — % — % 0.5
% — % 0.3 % Total special items 4.6 % 3.6 % 2.6 % 4.1 % 2.3 %
Non-GAAP operating margin 12.3 % 11.5 % 14.0 % 11.9 % 13.1 %
Reconciliation of GAAP net income to non-GAAP net income:
GAAP net income (loss) attributable to ON Semiconductor Corporation
$ 50.7 $ 55.1 $ 94.1 $ 105.8 $ 149.8
Special items: a) Expensing of appraised inventory at fair
market value — — 1.3 — 1.3 b) Amortization of acquisition related
intangible assets (operating expenses) 33.6 33.9 10.4 67.5 18.6 c)
Restructuring, asset impairments and other, net 3.5 (2.3 ) 4.1 1.2
9.9
d)
Goodwill and intangible asset impairments 3.7 — — 3.7 —
e)
Third party acquisition related costs — — 3.7 — 4.0
f)
Loss on debt extinguishment 0.4 — — 0.4 —
g)
Gain on sale of available-for-sale securities (1.3 ) (3.4 ) — (4.7
) —
h)
Non-cash interest on convertible notes 3.0 1.8 1.7 4.8 3.3
i)
Adjustment to reflect cash taxes 1.8 2.0 (19.5 ) 3.8
(18.6 ) Total special items 44.7 32.0 1.7
76.7 18.5 Non-GAAP net income $ 95.4 $
87.1 $ 95.8 $ 182.5 $ 168.3 Non-GAAP
net income per share: Basic $ 0.22 $ 0.20 $ 0.22
$ 0.43 $ 0.38 Diluted $ 0.22 $ 0.20
$ 0.22 $ 0.42 $ 0.38 Weighted average
common shares outstanding: Basic 426.9 431.4 441.1
429.2 440.7 Diluted 436.3 439.9
444.5 438.2 444.5
(1)Amounts have been revised; for additional information about
the revisions to prior periods, see our 2014 Form 10-K and our
second quarter 2015 Form 10-Q to be filed on or around
August 3, 2015.
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 Six Months
Ended July 3, 2015 April 3, 2015
June 27, 2014 July 3, 2015 June 27,
2014 Cost of revenues $ 1.9 $ 1.9 $ 1.7 $ 3.8 $ 3.1 Research
and development 2.5 2.3 2.2 4.8 4.0 Selling and marketing 2.3 2.2
2.2 4.5 3.7 General and administrative 7.4 4.9 7.3
12.3 11.1 Total share-based compensation expense $
14.1 $ 11.3 $ 13.4 $ 25.4 $ 21.9
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 and Operating 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. In periods when
the quarterly average stock price per share exceeds $18.50, the
Non-GAAP diluted share count and Non-GAAP net income per share
includes the anti-dilutive impact of the company’s hedge
transactions, issued concurrently with the 1.00% Notes. At an
average stock price per share between $18.50 and $25.96, the
hedging activity offsets the potentially dilutive effect of the
1.00% Notes and warrants.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150802005043/en/
ON SemiconductorAnne Spitza, 602-244-6398Corporate
Communicationsanne.spitza@onsemi.comorParag Agarwal (602)
244-3437Investor Relationsparag.agarwal@onsemi.com
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