ON Semiconductor Reports Third Quarter 2014 Results


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

	Quarter Ended									Nine Months Ended
	September 26, 2014			June 27, 2014			September 27, 2013			September 26, 2014			September 27, 2013
Revenues	$	833.5		$	757.6		$	715.4		$	2,297.6		$	2,064.7
Cost of revenues	549.4			484.6			466.2			1,489.7			1,379.2
Gross profit	284.1			273.0			249.2			807.9			685.5
Gross margin	34.1		%	36.0		%	34.8		%	35.2		%	33.2		%
Operating expenses:
Research and development	93.4			84.2			84.0			255.7			255.5
Selling and marketing	51.1			47.9			44.2			143.4			127.3
General and administrative	48.5			44.7			34.5			134.2			110.9
Amortization of acquisition-related intangible assets	23.4			10.4			8.2			42.0			24.8
Restructuring, asset impairments and other, net	10.1			4.1			11.0			20.0			11.1
Total operating expenses	226.5			191.3			181.9			595.3			529.6
Operating income	57.6			81.7			67.3			212.6			155.9
Other income (expense), net:
Interest expense	(8.6		)	(7.9		)	(9.2		)	(24.6		)	(28.6		)
Interest income	0.2			0.2			0.3			0.6			1.0
Other	(0.9		)	(1.2		)	(1.4		)	(2.7		)	3.6
Loss on debt exchange	—			—			—			—			(3.1		)
Other income (expense), net	(9.3		)	(8.9		)	(10.3		)	(26.7		)	(27.1		)
Income before income taxes	48.3			72.8			57.0			185.9			128.8
Income tax benefit (provision)	(6.3		)	16.2			(4.2		)	3.7			(4.0		)
Net income	42.0			89.0			52.8			189.6			124.8
Less: Net income attributable to non-controlling interest	(0.4		)	(1.0		)	(1.0		)	(1.6		)	(2.7		)
Net income attributable to ON Semiconductor Corporation	$	41.6		$	88.0		$	51.8		$	188.0		$	122.1
Net income per common share attributable to ON Semiconductor Corporation:
Basic	$	0.09		$	0.20		$	0.12		$	0.43		$	0.27
Diluted	$	0.09		$	0.20		$	0.11		$	0.42		$	0.27
Weighted average common shares outstanding:
Basic	440.7			441.1			449.3			440.7			449.8
Diluted	444.9			444.5			452.1			444.6			452.6


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

	September 26, 2014			June 27, 2014			December 31, 2013
Assets
Cash and cash equivalents	$	492.1		$	598.9		$	509.5
Short-term investments	2.8			2.3			116.2
Receivables, net	488.7			437.3			383.4
Inventories	724.3			632.6			611.8
Other current assets	105.3			90.5			89.3
Total current assets	1,813.2			1,761.6			1,710.2
Property, plant and equipment, net	1,211.9			1,141.7			1,074.2
Goodwill	275.3			211.6			184.6
Intangible assets, net	480.4			245.5			223.4
Other assets	101.4			58.0			64.6
Total assets	$	3,882.2		$	3,418.4		$	3,257.0
Liabilities, Non-Controlling Interest and Stockholders’ Equity
Accounts payable	$	398.7		$	305.4		$	276.8
Accrued expenses	244.0			231.9			220.3
Deferred income on sales to distributors	167.0			162.6			140.5
Current portion of long-term debt	203.3			169.4			181.6
Total current liabilities	1,013.0			869.3			819.2
Long-term debt	980.3			735.5			760.6
Other long-term liabilities	214.6			174.1			190.4
Total liabilities	2,207.9			1,778.9			1,770.2
ON Semiconductor Corporation stockholders’ equity:
Common stock	5.2			5.2			5.2
Additional paid-in capital	3,269.0			3,250.6			3,210.8
Accumulated other comprehensive loss	(44.6		)	(45.3		)	(47.4		)
Accumulated deficit	(954.1		)	(995.7		)	(1,142.1		)
Less: treasury stock, at cost	(632.9		)	(608.1		)	(572.5		)
Total ON Semiconductor Corporation stockholders’ equity	1,642.6			1,606.7			1,454.0
Non-controlling interest in consolidated subsidiary	31.7			32.8			32.8
Total stockholders' equity	1,674.3			1,639.5			1,486.8
Total liabilities and equity	$	3,882.2		$	3,418.4		$	3,257.0


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
	September 26, 2014			June 27, 2014			September 27, 2013			September 26, 2014			September 27, 2013
Net income	$	42.0		$	89.0		$	52.8		$	189.6		$	124.8
Adjusted for:
Restructuring, asset impairments and other, net	10.1			4.1			11.0			20.0			11.1
Interest expense	8.6			7.9			9.2			24.6			28.6
Interest income	(0.2		)	(0.2		)	(0.3		)	(0.6		)	(1.0		)
Loss on debt exchange	—			—			—			—			3.1
Income tax (benefit) provision	6.3			(16.2		)	4.2			(3.7		)	4.0
Net income attributable to non-controlling interest	(0.4		)	(1.0		)	(1.0		)	(1.6		)	(2.7		)
Depreciation and amortization	74.5			57.9			52.9			184.8			156.5
Actuarial losses on pension plans and other pension benefits	—			—			—			—			13.6
Expensing of appraised inventory at fair market value step up	12.9			1.3			—			14.2			—
Third party acquisition related costs	4.0			3.7			—			8.0			—
Adjusted EBITDA*	157.8			146.5			128.8			435.3			338.0
Increase (decrease):
Restructuring, asset impairments and other, net	(10.1		)	(4.1		)	(11.0		)	(20.0		)	(11.1		)
Interest expense	(8.6		)	(7.9		)	(9.2		)	(24.6		)	(28.6		)
Interest income	0.2			0.2			0.3			0.6			1.0
Income tax benefit (provision)	(6.3		)	16.2			(4.2		)	3.7			(4.0		)
Net income attributable to non-controlling interest	0.4			1.0			1.0			1.6			2.7
Actuarial losses on pension plans and other pension benefits	—			—			—			—			(13.6		)
Expensing of appraised inventory at fair market value step up	(12.9		)	(1.3		)	—			(14.2		)	—
Third party acquisition related costs	(4.0		)	(3.7		)	—			(8.0		)	—
(Gain) loss on sale or disposal of fixed assets	(0.3		)	—			(0.5		)	(0.6		)	(7.6		)
Amortization of debt issuance costs	0.3			0.4			0.3			1.0			0.9
Provision for excess inventories	9.6			4.7			5.8			21.1			45.7
Non-cash asset impairment charges	—			1.8			2.9			1.8			3.5
Non-cash share-based compensation expense	11.1			13.4			7.0			33.0			23.4
Non-cash interest	1.8			1.7			2.7			5.1			8.5
Non-cash foreign currency translation gain	—			—			—			—			(21.0		)
Reversal of valuation allowance	(0.2		)	(21.5		)	—			(21.7		)	—
Other	3.5			0.9			0.8			6.2			(5.7		)
Changes in operating assets and liabilities	(50.0		)	3.3			(64.8		)	(101.5		)	(131.8		)
Net cash provided by operating activities	$	92.3		$	151.6		$	59.9		318.8			200.3

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