ON Semiconductor Reports Fourth Quarter and 2017 Annual Results


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

	Quarter Ended									Year Ended
	December 31, 2017			September 29, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Revenues	$	1,377.5		$	1,390.9		$	1,261.0		$	5,543.1		$	3,906.9
Cost of revenues (exclusive of amortization shown below)	863.3			866.7			876.5			3,509.3			2,610.0
Gross profit	514.2			524.2			384.5			2,033.8			1,296.9
Gross margin	37.3		%	37.7		%	30.5		%	36.7		%	33.2		%
Operating expenses:
Research and development	158.0			150.9			139.8			594.4			452.3
Selling and marketing	80.3			78.6			79.4			315.9			238.0
General and administrative	71.0			68.9			72.2			284.9			230.3
Amortization of acquisition-related intangible assets	28.8			37.3			32.9			123.8			104.8
Restructuring, asset impairments and other, net	4.7			9.7			4.5			20.8			33.2
Intangible asset impairment	5.4			1.5			—			13.1			2.2
Total operating expenses	348.2			346.9			328.8			1,352.9			1,060.8
Operating income	166.0			177.3			55.7			680.9			236.1
Other income (expense), net:
Interest expense	(33.2		)	(34.9		)	(40.9		)	(141.2		)	(145.3		)
Interest income	1.2			0.7			0.7			3.0			4.5
Gain on divestiture of business	—			12.5			—			12.5			92.2
Licensing income	2.2			21.5			—			47.6			—
Loss on debt refinancing and prepayment	(14.3		)	(6.7		)	—			(47.2		)	(6.3		)
Other income (expense)	(0.9		)	(2.1		)	2.7			(8.1		)	(0.6		)
Other expense, net	(45.0		)	(9.0		)	(37.5		)	(133.4		)	(55.5		)
Income before income taxes	121.0			168.3			18.2			547.5			180.6
Income tax benefit (provision)	410.0			(59.4		)	93.5			265.5			3.9
Net income	531.0			108.9			111.7			813.0			184.5
Less: Net income attributable to non-controlling interest	(1.1		)	(0.2		)	(0.8		)	(2.3		)	(2.4		)
Net income attributable to ON Semiconductor Corporation	$	529.9		$	108.7		$	110.9		$	810.7		$	182.1
Net income per common share attributable to ON Semiconductor Corporation:
Basic	$	1.25		$	0.26		$	0.27		$	1.92		$	0.44
Diluted	$	1.22		$	0.25		$	0.26		$	1.89		$	0.43
Weighted average common shares outstanding:
Basic	424.3			422.2			417.3			421.9			415.2
Diluted	433.3			427.5			426.9			428.3			420.0


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

	December 31, 2017			September 29, 2017			December 31, 2016
Assets
Cash and cash equivalents	$	949.2		$	901.2		$	1,028.1
Receivables, net	701.5			695.6			629.8
Inventories	1,089.5			1,029.0			1,030.2
Other current assets	193.0			189.6			181.0
Total current assets	2,933.2			2,815.4			2,869.1
Property, plant and equipment, net	2,279.1			2,238.2			2,159.1
Goodwill	916.9			916.9			924.7
Intangible assets, net	628.3			662.5			762.1
Deferred tax assets	339.1			148.8			138.9
Other assets	98.5			79.5			70.5
Total assets	$	7,195.1		$	6,861.3		$	6,924.4
Liabilities, Non-Controlling Interest and Stockholders’ Equity
Accounts payable	$	548.0		$	590.3		$	434.0
Accrued expenses	612.8			580.5			405.0
Deferred income on sales to distributors	—			—			109.8
Current portion of long-term debt	248.1			258.5			553.8
Total current liabilities	1,408.9			1,429.3			1,502.6
Long-term debt	2,703.7			2,684.4			3,068.5
Deferred tax liabilities	55.1			309.1			288.9
Other long-term liabilities	226.4			203.1			186.5
Total liabilities	4,394.1			4,625.9			5,046.5

2.625% Notes, Series B - Redeemable conversion feature	—			—			32.9

ON Semiconductor Corporation stockholders’ equity:
Common stock	5.5			5.5			5.4
Additional paid-in capital	3,593.5			3,557.1			3,473.3
Accumulated other comprehensive loss	(40.6		)	(43.8		)	(50.2		)
Accumulated earnings (deficit)	351.5			(178.4		)	(527.3		)
Less: Treasury stock, at cost	(1,131.1		)	(1,128.0		)	(1,078.0		)
Total ON Semiconductor Corporation stockholders’ equity	2,778.8			2,212.4			1,823.2
Non-controlling interest in consolidated subsidiary	22.2			23.0			21.8
Total stockholders' equity	2,801.0			2,235.4			1,845.0
Total liabilities and equity	$	7,195.1		$	6,861.3		$	6,924.4


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

	Quarter Ended									Year Ended
	December 31, 2017			September 29, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Net income	$	531.0		$	108.9		$	111.7		$	813.0		$	184.5
Adjusted for:
Licensing income	(2.2		)	(21.5		)	—			(47.6		)	—
R&D costs related to licensing income	3.7			2.2			—			10.0			—
Restructuring, asset impairments and other, net	4.7			9.7			4.5			20.8			33.2
Intangible asset impairment	5.4			1.5			—			13.1			2.2
Interest expense	33.2			34.9			40.9			141.2			145.3
Interest income	(1.2		)	(0.7		)	(0.7		)	(3.0		)	(4.5		)
Loss on debt refinancing and prepayment	14.3			6.7			—			47.2			6.3
Income tax (benefit) provision	(410.0		)	59.4			(93.5		)	(265.5		)	(3.9		)
Net income attributable to non-controlling interest	(1.1		)	(0.2		)	(0.8		)	(2.3		)	(2.4		)
Depreciation and amortization	123.4			127.7			120.0			481.9			364.1
Amortization of fair market value step-up of inventory	—			2.5			55.6			13.6			67.5
Sell-through to sell-in adjustment	—			—			—			(59.0		)	—
Gain on divestiture of business	—			(12.5		)	—			(12.5		)	(92.2		)
Adjustment to contingent consideration	(0.2		)	(0.3		)	0.8			1.8			(0.5		)
Actuarial losses on pension plans and other pension benefits	1.9			—			10.0			1.9			10.0
Third party acquisition and divestiture related costs	1.0			0.5			3.5			3.2			25.8
Adjusted EBITDA	303.9			318.8			252.0			1,157.8			735.4
Increase (decrease):
Licensing income	2.2			21.5			—			47.6			—
R&D costs related to licensing income	(3.7		)	(2.2		)	—			(10.0		)	—
Restructuring, asset impairments and other, net	(4.7		)	(9.7		)	(4.5		)	(20.8		)	(33.2		)
Interest expense	(33.2		)	(34.9		)	(40.9		)	(141.2		)	(145.3		)
Interest income	1.2			0.7			0.7			3.0			4.5
Income tax benefit (provision)	410.0			(59.4		)	93.5			265.5			3.9
Net income attributable to non-controlling interest	1.1			0.2			0.8			2.3			2.4
Amortization of fair market value step-up of inventory	—			(2.5		)	(55.6		)	(13.6		)	(67.5		)
Sell-through to sell-in adjustment	—			—			—			59.0			—
Adjustment to contingent consideration	0.2			0.3			(0.8		)	(1.8		)	0.5


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

	Quarter Ended									Quarter Ended
	December 31, 2017			September 29, 2017			December 31, 2016			December 31, 2017			December 31, 2016

Increase (decrease) (continued):
Actuarial losses on pension plans and other pension benefits	(1.9		)	—			(10.0		)	(1.9		)	(10.0		)
Third party acquisition and divestiture related costs	(1.0		)	(0.5		)	(3.5		)	(3.2		)	(25.8		)
Loss on sale or disposal of fixed assets	1.1			1.0			0.9			3.9			1.5
Amortization of debt discount and issuance costs	3.8			3.8			4.6			16.0			12.0
Payments for term debt modification	(1.4		)	—			—			(3.8		)	(26.4		)
Write-down of excess inventories	10.2			21.2			26.1			67.0			66.2
Non-cash share-based compensation expense	17.1			16.8			14.2			69.8			56.1
Non-cash interest on convertible notes	8.9			8.6			6.4			30.8			26.0
Non-cash asset impairment charges	0.6			6.4			0.5			7.9			0.5
Change in deferred taxes	(444.4		)	38.9			(103.6		)	(348.3		)	(38.1		)
Other	(0.4		)	0.6			(1.9		)	2.2			(4.6		)
Changes in operating assets and liabilities	(45.3		)	(1.4		)	50.5			(94.0		)	23.1
Net cash provided by operating activities	$	224.3		$	328.2		$	229.4		1,094.2			581.2
Cash flows from investing activities:
Purchases of property, plant and equipment	$	(175.7	)	$	(90.1	)	$	(49.9	)	$	(387.5	)	$	(210.7	)
Proceeds from sales of property, plant and equipment	12.2			0.3			—			14.3			0.4
Deposits utilized for purchases of property, plant and equipment	(6.1		)	(3.2		)	(3.1		)	(8.2		)	(2.2		)
Purchase of business, net of cash acquired	—			—			(6.8		)	(0.8		)	(2,284.0		)
Proceeds from divestiture of business, net of cash transferred	—			20.0			—			20.0			104.0
Cash placed in escrow	—			—			—			—			(67.7		)
Cash received from escrow	—			—			—			—			23.8
Purchases of held-to-maturity securities	—			—			—			(1.6		)	—
Other	(1.0		)	—			—			(0.7		)	1.8
Net cash used in investing activities	$	(170.6	)	$	(73.0	)	$	(59.8	)	$	(364.5	)	$	(2,434.6	)
Cash flows from financing activities:
Proceeds from issuance of common stock under the employee stock purchase plan	$	12.2		$	0.1		$	4.1		$	23.6		$	15.0
Proceeds from exercise of stock options	7.1			1.7			9.8			18.0			14.9
Payments of tax withholding for restricted shares	(3.1		)	(11.4		)	(1.9		)	(28.1		)	(12.3		)
Repurchase of common stock	—			—			—			(25.0		)	—
Proceeds from debt issuance	405.0			5.3			5.0			1,106.2			2,586.9
Payments of debt issuance and other financing costs	—			—			(0.3		)	—			(6.8		)
Repayment of long-term debt	(419.8		)	(220.3		)	(26.2		)	(1,831.4		)	(313.8		)
Purchases of convertible note hedges	—			—			—			(144.7		)	—


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

	Quarter Ended									Quarter Ended
	December 31, 2017			September 29, 2017			December 31, 2016			December 31, 2017			December 31, 2016

Cash flows from financing activities (continued):
Proceeds from issuance of warrants	—			—			—			85.2			—
Payment of capital lease obligations	(1.2		)	(1.2		)	(2.7		)	(8.9		)	(14.9		)
Payment of contingent consideration	(3.9		)	—			—			(3.9		)	—
Dividend to non-controlling shareholder of consolidated subsidiary	(1.9		)	—			(2.4		)	(1.9		)	(4.3		)
Net cash provided by (used in) financing activities	$	(5.6	)	$	(225.8	)	$	(14.6	)	$	(810.9	)	$	2,264.7
Effect of exchange rate changes on cash and cash equivalents	$	(0.1	)	$	0.2		$	(7.4	)	$	2.3		$	(0.8	)
Net increase (decrease) in cash and cash equivalents	$	48.0		$	29.6		$	147.6		$	(78.9	)	$	410.5
Cash and cash equivalents, beginning of period	$	901.2		$	871.6		$	880.5		$	1,028.1		$	617.6
Cash and cash equivalents, end of period	$	949.2		$	901.2		$	1,028.1		$	949.2		$	1,028.1


ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES
(in millions, except per share and percentage data)

			Quarter Ended									Year Ended
			December 31, 2017			September 29, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Reconciliation of GAAP revenue to non-GAAP revenue:
GAAP revenue			$	1,377.5		$	1,390.9		$	1,261.0		$	5,543.1		$	3,906.9
	Special items:
	a)	Sell-through to sell-in adjustment	—			—			—			(155.1		)	—
		Total special items	—			—			—			(155.1		)	—
Non-GAAP revenue			$	1,377.5		$	1,390.9		$	1,261.0		$	5,388.0		$	3,906.9
Reconciliation of GAAP gross profit to non-GAAP gross profit:
GAAP gross profit			$	514.2		$	524.2		$	384.5		$	2,033.8		$	1,296.9
	Special items:
	a)	Sell-through to sell-in adjustment	—			—			—			(59.0		)	—
	b)	Actuarial losses on pension plans and other pension benefits	2.6			—			3.2			2.6			3.2
	c)	Expensing of appraised inventory at fair market value step up	—			2.5			55.6			13.6			67.5
		Total special items	2.6			2.5			58.8			(42.8		)	70.7
Non-GAAP gross profit			$	516.8		$	526.7		$	443.3		$	1,991.0		$	1,367.6
Reconciliation of GAAP gross margin to non-GAAP gross margin:
GAAP gross margin			37.3		%	37.7		%	30.5		%	36.7		%	33.2		%
	Special items:
	a)	Sell-through to sell-in adjustment	—		%	—		%	—		%	0.1		%	—		%
	b)	Actuarial losses on pension plans and other pension benefits	0.2		%	—		%	0.3		%	—		%	0.1		%
	c)	Expensing of appraised inventory at fair market value step up	—		%	0.2		%	4.4		%	0.2		%	1.7		%
		Total special items	0.2		%	0.2		%	4.7		%	0.3		%	1.8		%
Non-GAAP gross margin			37.5		%	37.9		%	35.2		%	37.0		%	35.0		%
Reconciliation of GAAP operating expenses to non-GAAP operating expenses:
GAAP operating expenses			$	348.2		$	346.9		$	328.8		$	1,352.9		$	1,060.8


ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES (Continued)
(in millions, except per share and percentage data)

			Quarter Ended									Year Ended
			December 31, 2017			September 29, 2017			December 31, 2016			December 31, 2017			December 31, 2016
	Special items:
	a)	Actuarial gains (losses) on pension plans and other pension benefits	0.7			—			(6.8		)	0.7			(6.8		)
	b)	Amortization of acquisition related intangible assets	(28.8		)	(37.3		)	(32.9		)	(123.8		)	(104.8		)
	c)	Restructuring, asset impairments and other, net	(4.7		)	(9.7		)	(4.5		)	(20.8		)	(33.2		)
	d)	Intangible asset impairments	(5.4		)	(1.5		)	—			(13.1		)	(2.2		)
	e)	Third party acquisition and divestiture related costs	(1.0		)	(0.5		)	(3.5		)	(3.2		)	(25.8		)
	f)	R&D Costs related to licensing income	(3.7		)	(2.2		)	—			(10.0		)	—
		Total special items	(42.9		)	(51.2		)	(47.7		)	(170.2		)	(172.8		)
Non-GAAP operating expenses			$	305.3		$	295.7		$	281.1		$	1,182.7		$	888.0
Reconciliation of GAAP operating income to non-GAAP operating income:
GAAP operating income			$	166.0		$	177.3		$	55.7		$	680.9		$	236.1
	Special items:
	a)	Sell-through to sell-in adjustment	—			—			—			(59.0		)	—
	b)	Actuarial (gains) losses on pension plans and other pension benefits (cost of revenues)	2.6			—			3.2			2.6			3.2
	c)	Expensing of appraised inventory at fair market value step up	—			2.5			55.6			13.6			67.5
	d)	Amortization of acquisition related intangible assets	28.8			37.3			32.9			123.8			104.8
	e)	Actuarial (gains) losses on pension plans and other pension benefits (operating expenses)	(0.7		)	—			6.8			(0.7		)	6.8
	f)	Restructuring, asset impairments and other, net	4.7			9.7			4.5			20.8			33.2
	g)	Intangible asset impairments	5.4			1.5			—			13.1			2.2
	h)	Third party acquisition and divestiture related costs	1.0			0.5			3.5			3.2			25.8
	i)	R&D Costs related to licensing income	3.7			2.2			—			10.0			—
		Total special items	45.5			53.7			106.5			127.4			243.5
Non-GAAP operating income			$	211.5		$	231.0		$	162.2		$	808.3		$	479.6


ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES (Continued)
(in millions, except per share and percentage data)

			Quarter Ended									Year Ended
			December 31, 2017			September 29, 2017			December 31, 2016			December 31, 2017			December 31, 2016
*Reconciliation of GAAP operating margin to non-GAAP operating margin (operating income / revenues)* :**
GAAP operating margin			12.1		%	12.7		%	4.4		%	12.3		%	6.0		%
	Special items:
	a)	Sell-through to sell-in adjustment	—		%	—		%	—		%	(0.7		)%	—		%
	b)	Actuarial losses on pension plans and other pension benefits (cost of revenues)	0.2		%	—		%	0.3		%	—		%	0.1		%
	c)	Expensing of appraised inventory at fair market value step up	—		%	0.2		%	4.4		%	0.2		%	1.7		%
	d)	Amortization of acquisition related intangible assets	2.1		%	2.7		%	2.6		%	2.2		%	2.7		%
	e)	Actuarial (gains) losses on pension plans and other pension benefits (operating expenses)	(0.1		)%	—		%	0.5		%	—		%	0.2		%
	f)	Restructuring, asset impairments and other, net	0.3		%	0.7		%	0.4		%	0.4		%	0.8		%
	g)	Intangible asset impairments	0.4		%	0.1		%	—		%	0.2		%	0.1		%
	h)	Third party acquisition and divestiture related costs	0.1		%	—		%	0.3		%	0.1		%	0.7		%
	i)	R&D Costs related to licensing income	0.3		%	0.2		%	—		%	0.2		%	—		%
		Total special items	3.3		%	3.9		%	8.5		%	2.7		%	6.3		%
Non-GAAP operating margin			15.4		%	16.6		%	12.9		%	15.0		%	12.3		%
Reconciliation of GAAP income before income taxes to non-GAAP income before income taxes:
GAAP income before income taxes			$	121.0		$	168.3		$	18.2		$	547.5		$	180.6
	Special items:
	a)	Sell-through to sell-in adjustment	—			—			—			(59.0		)	—
	b)	Actuarial losses on pension plans and other pension benefits (cost of revenues)	2.6			—			3.2			2.6			3.2
	c)	Expensing of appraised inventory at fair market value step up	—			2.5			55.6			13.6			67.5
	d)	Amortization of acquisition related intangible assets	28.8			37.3			32.9			123.8			104.8
	e)	Actuarial losses (gains) on pension plans and other pension benefits (operating expenses)	(0.7		)	—			6.8			(0.7		)	6.8
	f)	Restructuring, asset impairments and other, net	4.7			9.7			4.5			20.8			33.2
	g)	Intangible asset impairments	5.4			1.5			—			13.1			2.2
	h)	Third party acquisition and divestiture related costs	1.0			0.5			3.5			3.2			25.8
	i)	R&D Costs related to licensing income	3.7			2.2			—			10.0			—
	j)	Loss on debt refinancing and prepayment	14.3			6.7			—			47.2			6.3
	k)	Non-cash interest on convertible notes	8.9			8.6			6.5			30.8			26.0
	l)	Pre-acquisition interest expense, net	—			—			—			—			48.3


ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES (Continued)
(in millions, except per share and percentage data)

			Quarter Ended									Year Ended
			December 31, 2017			September 29, 2017			December 31, 2016			December 31, 2017			December 31, 2016
	Special items (continued):
	m)	Adjustment to contingent consideration	(0.2		)	(0.3		)	0.8			1.8			(0.5		)
	n)	Licensing income	(2.2		)	(21.5		)	—			(47.6		)	—
	o)	Gain on divestiture of business	—			(12.5		)	—			(12.5		)	(92.2		)
		Total special items	66.3			34.7			113.8			147.1			231.4
Non-GAAP income before income taxes			$	187.3		$	203.0		$	132.0		$	694.6		$	412.0
Reconciliation of GAAP net income to non-GAAP net income:
GAAP net income attributable to ON Semiconductor Corporation			$	529.9		$	108.7		$	110.9		$	810.7		$	182.1
	Special items:
	a)	Sell-through to sell-in adjustment	—			—			—			(59.0		)	—
	b)	Actuarial losses on pension plans and other pension benefits (cost of revenues)	2.6			—			3.2			2.6			3.2
	c)	Expensing of appraised inventory at fair market value step up	—			2.5			55.6			13.6			67.5
	d)	Amortization of acquisition related intangible assets	28.8			37.3			32.9			123.8			104.8
	e)	Actuarial losses (gains) on pension plans and other pension benefits (operating expenses)	(0.7		)	—			6.8			(0.7		)	6.8
	f)	Restructuring, asset impairments and other, net	4.7			9.7			4.5			20.8			33.2
	g)	Intangible asset impairments	5.4			1.5			—			13.1			2.2
	h)	Third party acquisition and divestiture related costs	1.0			0.5			3.5			3.2			25.8
	i)	R&D Costs related to licensing income	3.7			2.2			—			10.0			—
	j)	Loss on debt refinancing and prepayment	14.3			6.7			—			47.2			6.3
	k)	Non-cash interest on convertible notes	8.9			8.6			6.5			30.8			26.0
	l)	Pre-acquisition interest expense, net	—			—			—			—			48.3
	m)	Adjustment to contingent consideration	(0.2		)	(0.3		)	0.8			1.8			(0.5		)
	n)	Licensing income	(2.2		)	(21.5		)	—			(47.6		)	—
	o)	Gain on divestiture of business	—			(12.5		)	—			(12.5		)	(92.2		)
	p)	Adjustment of income taxes	(428.9		)	46.0			(101.7		)	(333.3		)	(31.2		)
		Total special items	(362.6		)	80.7			12.1			(186.2		)	200.2
Non-GAAP net income attributable to ON Semiconductor Corporation			$	167.3		$	189.4		$	123.0		$	624.5		$	382.3
Adjustment of income taxes:
Tax adjustment for Special Items (1)			$	(23.2	)	$	(12.1	)	$	(39.8	)	$	(51.5	)	$	(81.0	)
Other non-GAAP tax adjustment (2)			44.2			58.1			(61.9		)	168.1			49.8
Non-cash impact of U.S. tax reform (3)			(449.9		)	—			—			(449.9		)	—
			$	(428.9	)	$	46.0		$	(101.7	)	$	(333.3	)	$	(31.2	)


ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES (Continued)
(in millions, except per share and percentage data)

	(1	)	Tax impact of non-GAAP Special Items (a)-(o), calculated using the federal statutory rate of 35%
	(2	)	The income tax adjustment primarily represents the use of the net operating loss, non-cash impact of not asserting indefinite reinvestment on earnings of our foreign subsidiaries, deferred tax expense not affecting taxes payable, and non-cash expense (benefit) related to uncertain tax positions.

	(3	)	Non-cash tax impacts of U.S. tax reform legislation, H.R.1, commonly referred to as the Tax Cuts and Jobs Act.

				Quarter Ended									Year Ended
				December 31, 2017			September 29, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Reconciliation of GAAP diluted share count to non-GAAP diluted share count:
GAAP diluted share count				433.3			427.5			426.9			428.3			420.0
	Special items:
	a)		Dilutive share count attributable to convertible notes	(3.4		)	—			—			(0.9		)	—
			Total Special items	(3.4		)	—			—			(0.9		)	—
Non-GAAP diluted share count				429.9			427.5			426.9			427.4			420.0
Non-GAAP diluted earnings per share:
Non-GAAP net income attributable to ON Semiconductor Corporation				$	167.3		$	189.4		$	123.0		$	624.5		$	382.3
Non-GAAP diluted share count				429.9			427.5			426.9			427.4			420.0
Non-GAAP diluted earnings per share				$	0.39		$	0.44		$	0.29		$	1.46		$	0.91
Reconciliation of Net cash provided by operating activities to free cash flow:
Net cash provided by operating activities				$	224.3		$	328.2		$	229.4		$	1,094.2		$	581.2
	Special items:
	a)		Purchases of property, plant and equipment	(175.7		)	(90.1		)	(49.9		)	(387.5		)	(210.7		)
			Total special items	(175.7		)	(90.1		)	(49.9		)	(387.5		)	(210.7		)
Free cash flow				$	48.6		$	238.1		$	179.5		$	706.7		$	370.5

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