ON Semiconductor Reports Fourth Quarter and 2012 Annual Results

  ON Semiconductor Reports Fourth Quarter and 2012 Annual Results

For the fourth quarter of 2012, highlights include:

  *Total revenues of $680.2 million
  *GAAP gross margin of 30.9 percent
  *Non-GAAP gross margin of 31.0 percent
  *GAAP net loss per share of $0.31
  *Non-GAAP net income per diluted share of $0.08
  *Repurchased 4.7 million shares of common stock

For 2012, highlights include:

  *Total revenues of $2,894.9 million
  *Adjusted EBITDA of $461.0 million
  *GAAP net loss per share of $0.20
  *Non-GAAP net income per diluted share of $0.47
  *Retired $96.2 million of Zero Coupon Convertible Senior Subordinated Notes
    due 2024
  *Extended earliest debt maturity of $99.9 million of 2.625% Convertible
    Senior Subordinated Notes due 2026 from December 2013 to December 2016 via
    a notes exchange
  *Repurchased 8.8 million shares of common stock

Business Wire

PHOENIX -- February 7, 2013

ON Semiconductor Corporation (Nasdaq: ONNN) today announced that total
revenues in the fourth quarter of 2012 were $680.2 million, down approximately
six percent compared to the third quarter of 2012. During the fourth quarter
of 2012, the company reported a GAAP net loss of $138.2 million, or $0.31 per
share. The fourth quarter 2012 GAAP net loss was impacted by $175.2 million of
special items, including $150.4 million of estimated non-cash asset impairment
charges, which are largely attributed to the SANYO Semiconductor Products
Group. The remaining non-cash charges and special items detail can be found in
the attached schedules. The company will report final results for the fourth
quarter and full year upon completion of the impairment analysis and the
filing of its Form 10-K with the SEC for the fiscal year ended December 31,
2012.

Fourth quarter 2012 non-GAAP net income was $37.0 million, or $0.08 per
diluted share, compared to $53.5 million, or $0.12 per diluted share, for the
third quarter of 2012. A reconciliation of these non-GAAP financial measures
(and other non-GAAP measures used elsewhere in this release, such as non-GAAP
gross margin and adjusted EBITDA) 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.

On a mix-adjusted basis, average selling prices for ON Semiconductor in the
fourth quarter of 2012 were down approximately one to two percent when
compared to the third quarter of 2012. Total company GAAP gross margin in the
fourth quarter was 30.9 percent. Non-GAAP gross margin in the fourth quarter
was 31.0 percent.

Adjusted EBITDA for the fourth quarter of 2012 was $96.3 million. Adjusted
EBITDA for the third quarter of 2012 was $115.7 million.

Total revenues for 2012 were $2,894.9 million, a decrease of approximately 16
percent from $3,442.3 million in 2011. During 2012, the company reported a
GAAP net loss of $90.6 million, or $0.20 per share. The 2012 GAAP net loss
included charges of $303.6 million from special items, including $152.5
million of estimated non-cash asset impairment charges, which are largely
attributed to the SANYO Semiconductor Products Group. The remaining non-cash
charges and special items detail can be found in the attached schedules. The
company will report final results for the fourth quarter and full year upon
completion of the impairment analysis and the filing of its Form 10-K with the
SEC for the fiscal year ended December 31, 2012. During 2011, the company
reported GAAP net income of $11.6 million, or $0.03 per diluted share. The
2011 GAAP net income included net charges of $383.5 million from special
items, the details of which can be found in the attached schedules.

The non-GAAP net income for 2012 was $213.0 million, or $0.47 per diluted
share. The non-GAAP net income for 2011 was $395.1 million, or $0.86 per
diluted share.

The company’s GAAP gross margin in 2012 was 32.9 percent. GAAP gross margin in
2012 included a net charge of approximately $11.1 million, or approximately 40
basis points, from special items. Non-GAAP gross margin in 2012 was 33.3
percent. The company’s GAAP gross margin in 2011 was 29.3 percent. GAAP gross
margin in 2011 included a net charge of approximately $190.8 million, or
approximately 550 basis points, from special items. Non-GAAP gross margin in
2011 was 34.8 percent. The special item details can be found in the attached
schedules.

“This past year marked one of the most protracted down cycles for the
semiconductor industry and the company since ON Semiconductor's inception in
1999,” said Keith Jackson, president and CEO of ON Semiconductor. “The weak
demand environment throughout 2012 proved to be challenging - especially
following a year in which both ON Semiconductor and our SANYO Semiconductor
Products Group were negatively impacted by two catastrophic natural disasters
and the strengthening of the Yen. In response, we took several strategic
actions to reduce our cost structure. In 2013, we will continue to take
additional actions at our SANYO Semiconductor Products Group to reduce the
break-even level and return this operating segment to profitability.

"As we look forward into 2013, we continue to see improvement in our bookings
trends. Our new product and technology offerings are gaining traction with our
customers and we achieved significant design wins for the company in 2012,
especially in automotive and handset applications. This improvement, along
with increasingly lean inventory levels at our customers and distributors,
leads us to believe that we are seeing the bottoming of the down cycle. We
believe we are positioned well to take advantage of the next up cycle."

FIRST QUARTER 2013 OUTLOOK

“Based upon product booking trends, backlog levels, and estimated turns
levels, we anticipate that total ON Semiconductor revenues will be
approximately $645 to $685 million in the first quarter of 2013,” Jackson
said. “Backlog levels for the first quarter of 2013 represent approximately 80
to 85 percent of our anticipated first quarter 2013 revenues. We expect that
average selling prices for the first quarter of 2013 will be down
approximately two percent when compared to the fourth quarter of 2012. The
non-GAAP outlook for the first quarter of 2013 includes stock-based
compensation expense of approximately $6 to $8 million.”

The following table outlines ON Semiconductor's projected first quarter of
2013 GAAP and non-GAAP outlook.

ON SEMICONDUCTOR Q1 2013 BUSINESS OUTLOOK
                                                      
                        Total ON              Special        Total ON
                        Semiconductor                    Semiconductor
                                              Items ***
                        GAAP                                 Non-GAAP****
Revenue                 $645 to $685                         $645 to $685
                        million                              million
Gross Margin            30.5% to 32.5%                       30.5% to 32.5%
Operating Expenses      $212 to $222          $55            $157 to $167
                        million               million        million
Net Interest
Expense / Other         $10 million                          $10 million
Expenses
Convertible Notes,
Non-cash Interest       $3 million            $3 million     $0 million
Expense*
Tax                     $2 to $4 million                     $2 to $4 million
Diluted Share Count     450 million                          450 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. Please refer to
       the table on our website for potential changes to the diluted share
       count. This table can be found on our website at http://www.onsemi.com
       under Investors - Investor Relations, Quarterly Results.
       
       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
8:00 a.m. Eastern Time (ET) on February7, 2013 to discuss this announcement
and ON Semiconductor’s results for the fourth quarter and full year of 2012.
The company will also provide a real-time audio webcast of the teleconference
on the Investor Relations 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 92188076.Approximately one hour following the live broadcast, the
company will provide a dial-in replay that will continue to be available
through February 14, 2013. To listen to the teleconference replay, call (855)
859-2056 (U.S./Canada) or (404) 537-3406 (International). You will be required
to provide the Conference ID Number – which is 92188076.

About ON Semiconductor

ON Semiconductor (Nasdaq: ONNN) is driving innovation in energy efficient
electronics, empowering design engineers to reduce global energy use. The
company offers a comprehensive portfolio of energy efficient power and signal
management, logic, discrete and custom solutions to help customers solve their
unique design challenges in automotive, communications, computing, consumer,
industrial, LED lighting, medical, military/aerospace and power supply
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
information available to us as of the date of this release, 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, poor 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, 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 restructurings (including the voluntary retirement program for employees
in our SANYO Semiconductor Products Group and our recent global workforce
reduction), significant litigation, risks associated with decisions to expend
cash reserves for various uses 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 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 such as the flooding in Thailand or
the Japan earthquake and tsunami 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. Information
concerning additional factors that could cause results to differ materially
from those projected in the forward-looking statements is contained in ON
Semiconductor's 2011 Annual Report on Form 10-K filed with the SEC on February
22, 2012, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
other of our filings with the SEC. 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 investors could lose all or part
of their investment. Readers are cautioned not to place undue reliance on
forward-looking statements. These forward-looking statements should not be
relied upon as representing our views as of any subsequent date and we do not
undertake any obligation to update forward-looking statements to reflect
events or circumstances after the date they were made.

ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

(in millions, except per share data)
                                                                    
                          Quarter Ended                                    Year Ended
                          December         September       December        December          December
                          31,           28,          31,             31,            31,
                          2012             2012            2011            2012              2011
Revenues                  $ 680.2          $ 725.5         $ 767.9         $ 2,894.9         $ 3,442.3
Cost of revenues          469.8           487.5          528.7          1,943.0          2,433.5   
Gross profit              210.4            238.0           239.2           951.9             1,008.8
Gross margin              30.9     %       32.8    %       31.1    %       32.9      %       29.3      %
Operating expenses:
Research and              88.2             90.1            90.7            367.5             362.5
development
Selling and               44.1             44.2            46.1            180.9             195.1
marketing
General and               40.9             36.8            41.1            160.6             192.4
administrative
Amortization of
acquisition-related       11.1             11.1            11.0            44.4              42.7
intangible assets
Restructuring,
asset impairments         108.0            11.2            19.8            165.3             102.7
and other, net
Goodwill and
intangible asset          49.5            —              —              49.5             —         
impairment
Total operating           341.8           193.4          208.7          968.2            895.4     
expenses
Operating income          (131.4   )       44.6           30.5           (16.3     )       113.4     
(loss)
Other income
(expenses), net:
Interest expense          (12.7    )       (13.6   )       (16.4   )       (56.1     )       (68.9     )
Interest income           0.4              0.3             0.3             1.5               1.1
Other                     2.4              (3.6    )       (2.3    )       5.8               (8.9      )
Loss on debt
repurchase or             —                (7.8    )       (17.9   )       (7.8      )       (23.2     )
exchange
Gain on SANYO
Semiconductor             —               —              —              —                24.3      
acquisition
Other income              (9.9     )       (24.7   )       (36.3   )       (56.6     )       (75.6     )
(expenses), net
Income (loss)             (141.3   )       19.9            (5.8    )       (72.9     )       37.8
before income taxes
Income tax benefit        4.4             (6.5    )       (1.6    )       (13.4     )       (22.9     )
(provision)
Net income (loss)         (136.9   )       13.4            (7.4    )       (86.3     )       14.9
Less: Net income
attributable to           (1.3     )       (0.9    )       (1.4    )       (4.3      )       (3.3      )
non-controlling
interest
Net income (loss)
attributable to ON        $ (138.2 )       $ 12.5         $ (8.8  )       $ (90.6   )       $ 11.6    
Semiconductor
Corporation
Net income (loss)
per common share
attributable to ON
Semiconductor
Corporation:
Basic                     $ (0.31  )       $ 0.03         $ (0.02 )       $ (0.20   )       $ 0.03    
Diluted                   $ (0.31  )       $ 0.03         $ (0.02 )       $ (0.20   )       $ 0.03    
Weighted average
common shares
outstanding:
Basic                     448.6           454.6          450.4          452.6            446.7     
Diluted                   448.6           456.2          450.4          452.6            457.2     
                                                                                                       

ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEET

(in millions)
                                                      
                         December 31,          September           December
                         2012                  28, 2012            31, 2011
Assets
Cash and cash            $  486.9              $ 421.4             $ 652.9
equivalents
Short-term               144.8                 221.6               248.6
investments
Receivables, net         357.8                 415.4               457.2
Inventories              581.7                 644.3               637.4
Other current            111.7                 121.9               121.6
assets
Deferred income          10.5                 10.4               10.0      
taxes
Total current            1,693.4               1,835.0             2,127.7
assets
Property, plant
and equipment,           1,103.3               1,231.6             1,109.5
net
Deferred income          31.2                  34.6                34.2
taxes
Goodwill                 184.6                 198.7               198.7
Intangible               257.0                 303.9               337.2
assets, net
Other assets             58.9                 66.1               76.2      
Total assets             $  3,328.4           $ 3,669.9          $ 3,883.5 
Liabilities,
Non-Controlling
Interest and
Stockholders’
Equity
Accounts payable         $  279.5              $ 349.9             $ 451.8
Accrued expenses         228.3                 248.7               239.8
Income taxes             4.9                   6.2                 7.5
payable
Accrued interest         0.6                   4.1                 0.7
Deferred income
on sales to              134.5                 149.9               172.0
distributors
Deferred income          22.9                  33.9                33.6
taxes
Current portion
of long-term             353.6                260.9              370.1     
debt
Total current            1,024.3               1,053.6             1,275.5
liabilities
Long-term debt           658.3                 802.5               836.9
Other long-term          232.2                 252.8               260.1
liabilities
Deferred income          22.9                 21.4               17.5      
taxes
Total                    1,937.7              2,130.3            2,390.0   
liabilities
ON Semiconductor
Corporation
stockholders’
equity:
Common stock             5.1                   5.1                 5.0
Additional               3,156.4               3,143.2             3,113.5
paid-in capital
Accumulated
other                    (41.1       )         (45.2     )         (46.7     )
comprehensive
loss
Accumulated              (1,292.9    )         (1,154.7  )         (1,202.3  )
deficit
Less: treasury           (466.4      )         (437.1    )         (401.3    )
stock, at cost
Total ON
Semiconductor
Corporation              1,361.1               1,511.3             1,468.2
stockholders’
equity
Non-controlling
interest in              29.6                 28.3               25.3      
consolidated
subsidiary
Total equity             1,390.7              1,539.6            1,493.5   
Total
liabilities and          $  3,328.4           $ 3,669.9          $ 3,883.5 
equity
                                                                             

ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA* AND

CASH PROVIDED BY OPERATING ACTIVITIES

(in millions)
                                                                 
                        Quarter Ended                                    Year Ended            
                        December         September       December        December       December
                        31,           28,          31,             31,         31,
                        2012             2012            2011            2012           2011
Net income              $ (136.9 )       $  13.4         $ (7.4  )       (86.3  )       14.9
(loss)
Adjusted for:
Restructuring,
asset                   108.0            11.2            19.8            165.3          102.7
impairments and
other, net
Goodwill and
intangible              49.5             —               —               49.5           —
asset
impairment
Interest                12.7             13.6            16.4            56.1           68.9
expense
Interest income         (0.4     )       (0.3    )       (0.3    )       (1.5   )       (1.1   )
Loss on debt
repurchase or           —                7.8             17.9            7.8            23.2
exchange
Income tax
provision               (4.4     )       6.5             1.6             13.4           22.9
(benefit)
Net income
attributable to         (1.3     )       (0.9    )       (1.4    )       (4.3   )       (3.3   )
non-controlling
interest
Depreciation
and                     60.9             61.3            62.6            243.6          229.4
amortization
Non-cash
manufacturing
expenses
associated with         —                —               —               —              80.4
favorable
supply
agreement
Gain on
acquisition of          —                —               —               —              (24.3  )
SANYO
Semiconductor
Actuarial
losses on
pension plans           8.2              —               0.8             11.6           6.5
and other
pension
benefits
SANYO
Semiconductor           —                3.1             —               8.0            41.5
inventory item
SANYO
Semiconductor
purchase
agreement               —                —               —               (2.2   )       —
amounts due
from SANYO
Electric
Thailand
inventory write         —                —               6.7             —              6.7
down
Expensing of
appraised
inventory fair          —               —              5.3            —             58.3   
market value
step up
Adjusted                96.3             115.7           122.0           461.0          626.7
EBITDA*
Increase
(decrease):
Restructuring,
asset                   (108.0   )       (11.2   )       (19.8   )       (165.3 )       (102.7 )
impairments and
other, net
Interest                (12.7    )       (13.6   )       (16.4   )       (56.1  )       (68.9  )
expense
Interest income         0.4              0.3             0.3             1.5            1.1
Income tax
benefit                 4.4              (6.5    )       (1.6    )       (13.4  )       (22.9  )
(provision)
Net income
attributable to         1.3              0.9             1.4             4.3            3.3
non-controlling
interest
Actuarial
losses on
pension plans           (8.2     )       —               (0.8    )       (11.6  )       (6.5   )
and other
pension
benefits
SANYO
Semiconductor           —                (3.1    )       —               (8.0   )       (41.5  )
inventory item
SANYO
Semiconductor
purchase
agreement               —                —               —               2.2            —
amounts due
from SANYO
Electric
Thailand
inventory write         —                —               (6.7    )       —              (6.7   )
down
Expensing of
appraised
inventory fair          —                —               (5.3    )       —              (58.3  )
market value
step up
Gain on sale or
disposal of             (4.8     )       (2.7    )       (1.8    )       (9.5   )       (8.7   )
fixed assets
Amortization of
debt issuance           0.4              0.6             0.5             2.1            2.3
costs
Provision for
excess                  21.3             3.3             30.4            51.9           49.1
inventories
Non-cash asset
impairment              100.9            2.1             25.1            103.0          86.3
charges
Non-cash
share-based             5.8              2.1             6.6             20.5           33.5
compensation
expense
Non-cash
interest on             4.7              5.5             8.4             23.4           34.9
convertible
notes
Recovery from
insurance
proceeds on             —                —               (13.3   )       —              (13.3  )
property, plant
and equipment
Non-cash
portion of              —                —               (23.9   )       —              (23.9  )
insurance
recovery
Deferred income         (6.5     )       1.4             3.0             (3.1   )       (4.2   )
taxes
Other                   (0.2     )       (0.8    )       (0.3    )       (1.6   )       0.7
Changes in
operating               41.5            (82.1   )       56.9           (125.3 )       65.2   
assets and
liabilities
Net cash
provided by             $ 136.6         $  11.9        $ 164.7        276.0         545.5  
operating
activities
                                                                                               

* Adjusted EBITDA represents net income (loss) 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         September       December        December        December
                            31,           28,          31,             31,          31,
                            2012             2012            2011            2012            2011
Reconciliation of
GAAP gross profit
to non-GAAP gross
profit:
GAAP gross profit           $ 210.4         $ 238.0        $ 239.2        $ 951.9        $ 1,008.8 
  Special items:
     Expensing of
  a) inventory fair         —                —               5.3             —               58.3
     market value
     step up
     Non-cash
     manufacturing
  b) expenses and           —                —               —               —               81.5
     amortization
     of intangibles
     Actuarial
     losses on
  c) pension plans          0.5              —               1.3             3.1             2.8
     and other
     pension
     benefits
     SANYO
  d) Semiconductor          —                3.1             —               8.0             41.5
     inventory item
     Thailand
  e) inventory              —               —              6.7            —              6.7       
     write down
     Total special          0.5             3.1            13.3           11.1           190.8     
     items
Non-GAAP gross              $ 210.9         $ 241.1        $ 252.5        $ 963.0        $ 1,199.6 
profit
Reconciliation of
GAAP gross margin
to non-GAAP gross
margin:
GAAP gross margin           30.9     %       32.8    %       31.1    %       32.9    %       29.3      %
  Special items:
     Expensing of
  a) inventory fair         —                —               0.7     %       —               1.7       %
     market value
     step up
     Non-cash
     manufacturing
  b) expenses and           —                —               —               —               2.4       %
     amortization
     of intangibles
     Actuarial
     losses on
  c) pension plans          0.1      %       —               0.2     %       0.1     %       0.1       %
     and other
     pension
     benefits
     SANYO
  d) Semiconductor          —                0.4     %       —               0.3     %       1.2       %
     inventory item
     Thailand
  e) inventory              —               —              0.9     %       —              0.2       %
     write down
     Total special          0.1      %       0.4     %       1.8     %       0.4     %       5.5       %
     items
Non-GAAP gross              31.0     %       33.2    %       32.9    %       33.3    %       34.8      %
margin
Reconciliation of
GAAP operating
expenses to
non-GAAP operating
expenses:
GAAP operating              341.8           193.4          208.7          968.2          895.4     
expenses
  Special items:
     Amortization
     of acquisition
  a) related                (11.1    )       (11.1   )       (11.0   )       (44.4   )       (42.7     )
     intangible
     assets
     Actuarial
     gains (losses)
  b) on pension             (7.7     )       —               0.5             (8.5    )       (3.7      )
     plans and
     other pension
     benefits
     Restructuring,
  c) asset                  (108.0   )       (11.2   )       (19.8   )       (165.3  )       (102.7    )
     impairments
     and other, net
     Goodwill and
  d) intangible             (49.5    )       —               —               (49.5   )       —
     asset
     impairments
     SANYO
  e) Semiconductor          —               —              —              —              (7.3      )
     acquisition
     related costs
     Total special          (176.3   )       (22.3   )       (30.3   )       (267.7  )       (156.4    )
     items
Non-GAAP operating          $ 165.5         $ 171.1        $ 178.4        $ 700.5        $ 739.0   
expenses
Reconciliation of
GAAP net income to
non-GAAP net
income:
GAAP net income
(loss) attributable         $ (138.2 )       $ 12.5         $ (8.8  )       $ (90.6 )       $ 11.6    
to ON Semiconductor
Corporation
  Special items:
     Expensing of
     inventory fair
  a) market value           —                —               5.3             —               58.3
     step up (cost
     of revenues)
     Non-cash
     manufacturing
     expenses and
  b) amortization           —                —               —               —               81.5
     of intangibles
     (cost of
     revenues)
     Actuarial
     losses on
     pension plans
  c) and other              0.5              —               1.3             3.1             2.8
     pension
     benefits (cost
     of revenues)
     SANYO
  d) Semiconductor          —                3.1             —               8.0             41.5
     inventory item
     Thailand
  e) inventory              —                —               6.7             —               6.7
     write down
     Amortization
     of acquisition
     related
  f) intangible             11.1             11.1            11.0            44.4            42.7
     assets
     (operating
     expenses)
     Actuarial
     (gains) losses
     on pension
  g) plans and              7.7              —               (0.5    )       8.5             3.7
     other pension
     benefits
     (operating
     expenses)
     Restructuring,
  h) asset                  108.0            11.2            19.8            165.3           102.7
     impairments
     and other, net
     Goodwill and
  i) intangible             49.5             —               —               49.5            —
     asset
     impairments
     SANYO
  j) Semiconductor          —                —               —               —               7.3
     acquisition
     related costs
     Gain on SANYO
  k) Semiconductor          —                —               —               —               (24.3     )
     acquisition
     SANYO
     Semiconductor
     purchase
  l) agreement              —                —               —               (2.2    )       —
     amounts due
     from SANYO
     Electric
     Loss on debt
  m) repurchase or          —                7.8             17.9            7.8             23.2
     exchange
     Non-cash
  n) interest on            4.7              5.5             8.4             23.4            34.9
     convertible
     notes
     Adjustment to
  o) reflect cash           (6.3     )       2.3            (2.7    )       (4.2    )       2.5       
     taxes
     Total special          175.2           41.0           67.2           303.6          383.5     
     items
Non-GAAP net income         $ 37.0          $ 53.5         $ 58.4         $ 213.0        $ 395.1   
Non-GAAP net income
per share:
     Basic                  $ 0.08          $ 0.12         $ 0.13         $ 0.47         $ 0.88    
     Diluted                $ 0.08          $ 0.12         $ 0.13         $ 0.47         $ 0.86    
Weighted average
common shares
outstanding:
     Basic                  448.6           454.6          450.4          452.6          446.7     
     Diluted                450.0           456.2          456.3          456.1          457.2     
                                                                                                       

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       September       December       December       December
                     31,         28,          31,            31,         31,
                     2012           2012            2011           2012           2011
Cost of              $  1.1         $  0.5          $  1.4         $ 3.7          $  6.3
revenues
Research and         1.4            0.6             1.4            4.5            6.9
development
Selling and          1.2            0.7             1.5            4.3            6.4
marketing
General and          2.1           0.3            2.3           8.0           13.9
administrative
Total
share-based          $  5.8        $  2.1         $  6.6        $ 20.5        $  33.5
compensation
expense
                                                                                     

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 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, 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. Most analysts covering ON Semiconductor use the non-GAAP
measures as well. Given management’s 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 this non-GAAP financial
measure allows management to evaluate the gross margin of the company’s core
businesses and trends across different reporting periods on a consistent
basis, independent of non-cash items including 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 reward process as it is used to assess the current and
historical financial results of the business, for strategic decision making,
preparing budgets 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 net income and net income per share. The use of these non-GAAP
financial measures allow 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 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, and certain other special items,
as necessary. In addition, they are important components of management’s
internal performance measurement and reward process as they are used to assess
the current and historical financial results of the business, for strategic
decision making, preparing budgets 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 compare our results of operations on a more consistent basis against that
of other companies in our industry.

Contact:

ON Semiconductor
Anne Spitza
Corporate Communications
602-244-6398
anne.spitza@onsemi.com
or
Sloan Boss
Investor Relations
602-244-3437
sloan.boss@onsemi.com
 
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