| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
| Delaware | 36-3840979 | |||||||
|
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, par value $0.01 per share | ON | The Nasdaq Stock Market LLC | ||||||
| Large Accelerated Filer |
☒
|
Accelerated filer |
☐
|
||||||||
| Non-accelerated filer |
☐
|
Smaller reporting company | ☐ | ||||||||
| Emerging growth company | ☐ | ||||||||||
| Title of Each Class | Number of Shares | |||||||
| Common Stock, par value $0.01 per share | 410,722,135 | |||||||
| Part I: Financial Information | |||||||||||
| Item 1. Financial Statements (unaudited) | |||||||||||
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||||||||
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | |||||||||||
| Item 4. Controls and Procedures | |||||||||||
| Part II: Other Information | |||||||||||
| Item 1. Legal Proceedings | |||||||||||
| Item 1A. Risk Factors | |||||||||||
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |||||||||||
| Item 3. Defaults Upon Senior Securities | |||||||||||
| Item 4. Mine Safety Disclosures | |||||||||||
| Item 5. Other Information | |||||||||||
| Item 6. Exhibits | |||||||||||
| Signatures | |||||||||||
| Abbreviated Term | Defined Term | |||||||
| 1.00% Notes | 1.00% Convertible Senior Notes due 2020 | |||||||
| 1.625% Notes | 1.625% Convertible Senior Notes due 2023 | |||||||
| Amended Credit Agreement | Credit Agreement, dated as of April 15, 2016, as subsequently amended, by and among the Company, as borrower, the several lenders party thereto, Deutsche Bank AG, New York Branch, as administrative agent and collateral agent, and certain other parties, providing for the Revolving Credit Facility and the Term Loan “B” Facility | |||||||
| Amended and Restated SIP | ON Semiconductor Corporation Amended and Restated Stock Incentive Plan, as amended | |||||||
| AMIS | AMIS Holdings, Inc. | |||||||
| Aptina | Aptina, Inc. | |||||||
| ASU | Accounting Standards Update | |||||||
| ASC | Accounting Standards Codification | |||||||
| ASIC | Application specific integrated circuit | |||||||
| CMOS | Complementary metal oxide semiconductor | |||||||
| DSP | Digital signal processing | |||||||
| ESPP | ON Semiconductor Corporation 2000 Employee Stock Purchase Plan, as amended | |||||||
| Exchange Act | Securities Exchange Act of 1934, as amended | |||||||
| Fairchild | Fairchild Semiconductor International, Inc. | |||||||
| FASB | Financial Accounting Standards Board | |||||||
| Freescale | Freescale Semiconductor, Inc. | |||||||
| IC | Integrated circuit | |||||||
| IoT | Internet-of-Things | |||||||
| IP | Intellectual property | |||||||
| IPRD | In-process research and development | |||||||
| LED | Light-emitting diode | |||||||
| LIBOR | A base rate per annum equal to the London Interbank Offered Rate as administered by the International Exchange Benchmark Administration | |||||||
| LiDAR | Light detection and ranging | |||||||
| MCU | Microcontroller unit | |||||||
| MOSFET | Metal oxide semiconductor field effect transistor | |||||||
| Motorola | Motorola Inc. | |||||||
| ODM | Original device manufacturers | |||||||
| OEM | Original equipment manufacturers | |||||||
| Revolving Credit Facility | A $1.97 billion revolving credit facility created pursuant to the Amended Credit Agreement | |||||||
| RSU | Restricted stock unit | |||||||
| SCI LLC | Semiconductor Components Industries, LLC, a wholly-owned subsidiary of ON Semiconductor Corporation | |||||||
| SEC | Securities and Exchange Commission | |||||||
| SoC | System on chip | |||||||
| Securities Act | Securities Act of 1933, as amended | |||||||
| Term Loan “B” Facility | A $2.4 billion term loan “B” facility created pursuant to the Amended Credit Agreement | |||||||
| Wi-Fi | Wireless radio technologies compliant with Institute of Electrical and Electronics Engineers Standard 802.11b and commonly used in wireless local area networking devices | |||||||
| WSTS | World Semiconductor Trade Statistics | |||||||
|
September 27,
2019 |
December 31,
2018 |
||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 928.7 | $ | 1,069.6 | |||||||
| Receivables, net | 716.6 | 686.0 | |||||||||
| Inventories | 1,240.7 | 1,225.2 | |||||||||
| Other current assets | 187.0 | 187.0 | |||||||||
| Total current assets | 3,073.0 | 3,167.8 | |||||||||
| Property, plant and equipment, net | 2,602.1 | 2,549.6 | |||||||||
| Goodwill | 1,659.2 | 932.5 | |||||||||
| Intangible assets, net | 622.6 | 566.4 | |||||||||
| Deferred tax assets | 291.5 | 266.2 | |||||||||
| Other assets | 273.9 | 105.1 | |||||||||
| Total assets | $ | 8,522.3 | $ | 7,587.6 | |||||||
| Liabilities, Non-Controlling Interest and Stockholders’ Equity | |||||||||||
| Accounts payable | $ | 534.1 | $ | 671.7 | |||||||
| Accrued expenses and other current liabilities | 730.9 | 659.1 | |||||||||
| Current portion of long-term debt | 736.6 | 138.5 | |||||||||
| Total current liabilities | 2,001.6 | 1,469.3 | |||||||||
| Long-term debt | 2,878.8 | 2,627.6 | |||||||||
| Deferred tax liabilities | 59.8 | 54.8 | |||||||||
| Other long-term liabilities | 342.5 | 241.8 | |||||||||
| Total liabilities | 5,282.7 | 4,393.5 | |||||||||
| Commitments and contingencies (Note 11) | |||||||||||
| ON Semiconductor Corporation stockholders’ equity: | |||||||||||
|
Common stock ($0.01 par value, 1,250,000,000 shares authorized, 564,323,095 and 558,701,620 issued, 410,171,176 and 413,834,227 outstanding, respectively)
|
5.6 | 5.6 | |||||||||
| Additional paid-in capital | 3,779.1 | 3,702.3 | |||||||||
| Accumulated other comprehensive loss | (55.6) | (37.9) | |||||||||
| Accumulated earnings | 1,134.8 | 979.6 | |||||||||
|
Less: Treasury stock, at cost: 154,151,919 and 144,867,393 shares, respectively
|
(1,648.6) | (1,478.0) | |||||||||
| Total ON Semiconductor Corporation stockholders’ equity | 3,215.3 | 3,171.6 | |||||||||
| Non-controlling interest | 24.3 | 22.5 | |||||||||
| Total stockholders' equity | 3,239.6 | 3,194.1 | |||||||||
| Total liabilities and stockholders' equity | $ | 8,522.3 | $ | 7,587.6 | |||||||
| Quarters Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
|
September 27,
2019 |
September 28,
2018 |
September 27,
2019 |
September 28,
2018 |
||||||||||||||||||||||||||||||||
| Revenue | $ | 1,381.8 | $ | 1,541.7 | $ | 4,116.1 | $ | 4,375.2 | |||||||||||||||||||||||||||
| Cost of revenue (exclusive of amortization shown below) | 906.6 | 945.1 | 2,628.2 | 2,706.2 | |||||||||||||||||||||||||||||||
| Gross profit | 475.2 | 596.6 | 1,487.9 | 1,669.0 | |||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Research and development | 172.8 | 166.2 | 471.6 | 488.5 | |||||||||||||||||||||||||||||||
| Selling and marketing | 74.7 | 83.1 | 225.4 | 242.6 | |||||||||||||||||||||||||||||||
| General and administrative | 67.8 | 73.3 | 214.8 | 218.8 | |||||||||||||||||||||||||||||||
| Litigation settlement (Note 11) | 169.5 | — | 169.5 | — | |||||||||||||||||||||||||||||||
| Amortization of acquisition-related intangible assets | 29.9 | 28.0 | 83.1 | 83.3 | |||||||||||||||||||||||||||||||
| Restructuring, asset impairments and other, net | 4.4 | 4.4 | 28.1 | 8.0 | |||||||||||||||||||||||||||||||
| Goodwill and intangible asset impairment | — | — | 1.6 | 3.3 | |||||||||||||||||||||||||||||||
| Total operating expenses | 519.1 | 355.0 | 1,194.1 | 1,044.5 | |||||||||||||||||||||||||||||||
| Operating income (loss) | (43.9) | 241.6 | 293.8 | 624.5 | |||||||||||||||||||||||||||||||
| Other income (expense), net: | |||||||||||||||||||||||||||||||||||
| Interest expense | (40.7) | (31.2) | (106.1) | (95.3) | |||||||||||||||||||||||||||||||
| Interest income | 2.3 | 1.3 | 7.8 | 3.3 | |||||||||||||||||||||||||||||||
| Loss on debt refinancing and prepayment | (5.8) | (0.6) | (6.2) | (4.6) | |||||||||||||||||||||||||||||||
| Gain on divestiture of business | — | 0.4 | — | 5.0 | |||||||||||||||||||||||||||||||
| Licensing income | — | 1.0 | — | 32.9 | |||||||||||||||||||||||||||||||
| Other income (expense) | 3.5 | 3.5 | 4.6 | 0.5 | |||||||||||||||||||||||||||||||
| Other income (expense), net | (40.7) | (25.6) | (99.9) | (58.2) | |||||||||||||||||||||||||||||||
| Income (loss) before income taxes | (84.6) | 216.0 | 193.9 | 566.3 | |||||||||||||||||||||||||||||||
| Income tax (provision) benefit | 24.6 | (48.9) | (36.9) | (102.4) | |||||||||||||||||||||||||||||||
| Net income (loss) | (60.0) | 167.1 | 157.0 | 463.9 | |||||||||||||||||||||||||||||||
| Less: Net income attributable to non-controlling interest | (0.7) | (0.2) | (1.8) | (2.1) | |||||||||||||||||||||||||||||||
| Net income (loss) attributable to ON Semiconductor Corporation | $ | (60.7) | $ | 166.9 | $ | 155.2 | $ | 461.8 | |||||||||||||||||||||||||||
| Comprehensive income (loss), net of tax: | |||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | (60.0) | $ | 167.1 | $ | 157.0 | $ | 463.9 | |||||||||||||||||||||||||||
| Foreign currency translation adjustments | (0.1) | (0.7) | 0.5 | 0.2 | |||||||||||||||||||||||||||||||
| Effects of cash flow hedges | (2.1) | 0.1 | (18.2) | 4.9 | |||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | (2.2) | (0.6) | (17.7) | 5.1 | |||||||||||||||||||||||||||||||
| Comprehensive income (loss) | (62.2) | 166.5 | 139.3 | 469.0 | |||||||||||||||||||||||||||||||
| Comprehensive income attributable to non-controlling interest | (0.7) | (0.2) | (1.8) | (2.1) | |||||||||||||||||||||||||||||||
| Comprehensive income (loss) attributable to ON Semiconductor Corporation | $ | (62.9) | $ | 166.3 | $ | 137.5 | $ | 466.9 | |||||||||||||||||||||||||||
| Net income (loss) per common share attributable to ON Semiconductor Corporation: | |||||||||||||||||||||||||||||||||||
| Basic | $ | (0.15) | $ | 0.39 | $ | 0.38 | $ | 1.08 | |||||||||||||||||||||||||||
| Diluted | $ | (0.15) | $ | 0.38 | $ | 0.37 | $ | 1.05 | |||||||||||||||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||||||||||||||
| Basic | 410.4 | 425.5 | 411.0 | 426.1 | |||||||||||||||||||||||||||||||
| Diluted | 410.4 | 435.3 | 415.3 | 441.2 | |||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Treasury Stock | Non-Controlling Interest | |||||||||||||||||||||||||||||||
| Number of shares | At Par Value | Accumulated Earnings | Number of shares | At Cost | Total Equity | ||||||||||||||||||||||||||||||
| Balance at June 28, 2019 | 563,192,019 | $ | 5.6 | $ | 3,757.6 | $ | (53.4) | $ | 1,195.5 | (153,141,121) | $ | (1,631.0) | $ | 23.6 | $ | 3,297.9 | |||||||||||||||||||
| Stock option exercises | 50,900 | — | 0.4 | — | — | — | — | — | 0.4 | ||||||||||||||||||||||||||
| Shares issued pursuant to the ESPP | 370,910 | — | 6.4 | — | — | — | — | — | 6.4 | ||||||||||||||||||||||||||
| RSUs and stock grant awards issued | 709,266 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Shares withheld for employee taxes on RSUs | — | — | — | — | — | (246,870) | (4.4) | — | (4.4) | ||||||||||||||||||||||||||
| Share-based compensation expense | — | — | 14.7 | — | — | — | — | — | 14.7 | ||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | (763,928) | (13.2) | — | (13.2) | ||||||||||||||||||||||||||
| Comprehensive (loss) income | — | — | — | (2.2) | (60.7) | — | — | 0.7 | (62.2) | ||||||||||||||||||||||||||
| Balance at September 27, 2019 | 564,323,095 | $ | 5.6 | $ | 3,779.1 | $ | (55.6) | $ | 1,134.8 | (154,151,919) | $ | (1,648.6) | $ | 24.3 | $ | 3,239.6 | |||||||||||||||||||
| Balance at December 31, 2018 | 558,701,620 | $ | 5.6 | $ | 3,702.3 | $ | (37.9) | $ | 979.6 | (144,867,393) | $ | (1,478.0) | $ | 22.5 | $ | 3,194.1 | |||||||||||||||||||
| Stock option exercises | 208,097 | — | 1.3 | — | — | — | — | — | 1.3 | ||||||||||||||||||||||||||
| Shares issued pursuant to the ESPP | 898,399 | — | 13.8 | — | — | — | — | — | 13.8 | ||||||||||||||||||||||||||
| RSUs and stock grant awards issued | 4,514,979 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Shares withheld for employee taxes on RSUs | — | — | — | — | — | (1,522,519) | (31.6) | — | (31.6) | ||||||||||||||||||||||||||
| Share-based compensation expense | — | — | 61.7 | — | — | — | — | — | 61.7 | ||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | (7,762,007) | (139.0) | — | (139.0) | ||||||||||||||||||||||||||
| Comprehensive (loss) income | — | — | — | (17.7) | 155.2 | — | — | 1.8 | 139.3 | ||||||||||||||||||||||||||
| Balance at September 27, 2019 | 564,323,095 | $ | 5.6 | $ | 3,779.1 | $ | (55.6) | $ | 1,134.8 | (154,151,919) | $ | (1,648.6) | $ | 24.3 | $ | 3,239.6 | |||||||||||||||||||
| Balance at June 29, 2018 | 555,619,904 | $ | 5.6 | $ | 3,646.1 | $ | (34.9) | $ | 646.9 | (129,259,916) | $ | (1,191.0) | $ | 24.1 | $ | 3,096.8 | |||||||||||||
| Stock option exercises | 15,605 | — | 0.1 | — | — | — | — | — | 0.1 | ||||||||||||||||||||
| Shares issued pursuant to the ESPP | 326,090 | — | 6.2 | — | — | — | — | — | 6.2 | ||||||||||||||||||||
| RSUs and stock grant awards issued | 1,182,642 | — | — | — | — | — | — | — | — | ||||||||||||||||||||
| Shares withheld for employee taxes on RSUs | — | — | — | — | — | (415,576) | (9.3) | — | (9.3) | ||||||||||||||||||||
| Share-based compensation expense | — | — | 17.9 | — | — | — | — | — | 17.9 | ||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | (3,583,884) | (75.0) | — | (75.0) | ||||||||||||||||||||
| Other | — | — | — | — | 0.2 | — | — | — | 0.2 | ||||||||||||||||||||
| Comprehensive (loss) income | — | — | — | (0.6) | 166.9 | — | — | 0.2 | 166.5 | ||||||||||||||||||||
| Balance at September 28, 2018 | 557,144,241 | $ | 5.6 | $ | 3,670.3 | $ | (35.5) | $ | 814.0 | (133,259,376) | $ | (1,275.3) | $ | 24.3 | $ | 3,203.4 | |||||||||||||
| Balance at December 31, 2017 | 551,873,115 | $ | 5.5 | $ | 3,593.5 | $ | (40.6) | $ | 351.5 | (126,754,921) | $ | (1,131.1) | $ | 22.2 | $ | 2,801.0 | |||||||||||||
| Impact of the adoption of ASU 2016-16 | — | — | — | — | (1.4) | — | — | — | (1.4) | ||||||||||||||||||||
| Impact of the adoption of ASC 606 | — | — | — | — | 2.1 | — | — | — | 2.1 | ||||||||||||||||||||
| Stock option exercises | 630,281 | — | 4.4 | — | — | — | — | — | 4.4 | ||||||||||||||||||||
| Shares issued pursuant to the ESPP | 710,137 | — | 13.0 | — | — | — | — | — | 13.0 | ||||||||||||||||||||
| RSUs and stock grant awards issued | 3,930,708 | 0.1 | — | — | — | — | — | — | 0.1 | ||||||||||||||||||||
| Shares withheld for employee taxes on RSUs | — | — | — | — | — | (1,207,441) | (29.2) | — | (29.2) | ||||||||||||||||||||
| Share-based compensation expense | — | — | 59.4 | — | — | — | — | — | 59.4 | ||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | (5,297,014) | (115.0) | — | (115.0) | ||||||||||||||||||||
| Comprehensive income | — | — | — | 5.1 | 461.8 | — | — | 2.1 | 469.0 | ||||||||||||||||||||
| Balance at September 28, 2018 | 557,144,241 | $ | 5.6 | $ | 3,670.3 | $ | (35.5) | $ | 814.0 | (133,259,376) | $ | (1,275.3) | $ | 24.3 | $ | 3,203.4 | |||||||||||||
| Nine Months Ended | |||||||||||||||||
|
September 27,
2019 |
September 28,
2018 |
||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||
| Net income | $ | 157.0 | $ | 463.9 | |||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities and other adjustments: | |||||||||||||||||
| Depreciation and amortization | 431.1 | 372.5 | |||||||||||||||
| Loss on sale or disposal of fixed assets | 0.5 | 3.6 | |||||||||||||||
| Gain on divestiture of business | — | (5.0) | |||||||||||||||
| Loss on debt refinancing and prepayment | 6.2 | 4.6 | |||||||||||||||
| Amortization of debt discount and issuance costs | 9.9 | 9.8 | |||||||||||||||
| Payments for term debt modification | — | (1.1) | |||||||||||||||
| Share-based compensation expense | 61.7 | 59.4 | |||||||||||||||
| Non-cash interest on convertible notes | 27.9 | 26.6 | |||||||||||||||
| Non-cash asset impairment charges | 2.9 | 4.6 | |||||||||||||||
| Goodwill and intangible asset impairment charges | 1.6 | 3.3 | |||||||||||||||
| Change in deferred tax balances | 10.8 | 79.9 | |||||||||||||||
| Other | (1.5) | (5.8) | |||||||||||||||
| Changes in assets and liabilities (exclusive of the impact of acquisition and divestiture): | |||||||||||||||||
| Receivables | (6.3) | (67.7) | |||||||||||||||
| Inventories | 26.4 | (105.1) | |||||||||||||||
| Other assets | (29.5) | (25.3) | |||||||||||||||
| Accounts payable | (78.0) | 19.3 | |||||||||||||||
| Accrued expenses and other current liabilities | (5.7) | 28.2 | |||||||||||||||
| Other long-term liabilities | (12.0) | (12.5) | |||||||||||||||
| Net cash provided by operating activities | 603.0 | 853.2 | |||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||
| Purchase of property, plant and equipment | (422.2) | (382.8) | |||||||||||||||
| Proceeds from sales of property, plant and equipment | 1.5 | 6.3 | |||||||||||||||
| Deposits made for purchase of property, plant and equipment | (0.2) | (5.6) | |||||||||||||||
| Purchase of business, net of cash acquired | (888.0) | (70.9) | |||||||||||||||
| Purchase of license and deposit made for manufacturing facility | (100.0) | — | |||||||||||||||
| Proceeds from divestiture of business and release of escrow | 5.0 | 7.3 | |||||||||||||||
| Proceeds from repayment of note receivable | — | 10.2 | |||||||||||||||
| Equity method investment | — | (19.8) | |||||||||||||||
| Net cash used in investing activities | (1,403.9) | (455.3) | |||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
| Proceeds for the issuance of common stock under the ESPP | 19.6 | 18.7 | |||||||||||||||
| Proceeds from exercise of stock options | 1.3 | 4.4 | |||||||||||||||
| Payment of tax withholding for RSUs | (31.6) | (29.2) | |||||||||||||||
| Repurchase of common stock | (139.0) | (115.0) | |||||||||||||||
| Borrowings under debt agreements | 1,404.8 | 8.2 | |||||||||||||||
| Payment of debt issuance and other financing costs | (21.9) | — | |||||||||||||||
| Repayment of long-term debt | (580.1) | (279.9) | |||||||||||||||
| Release of escrow related to prior acquisition | (10.4) | — | |||||||||||||||
| Payment of finance lease obligations | (0.6) | (3.3) | |||||||||||||||
| Net cash provided by (used in) financing activities | 642.1 | (396.1) | |||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0.4 | 0.1 | |||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (158.4) | 1.9 | |||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of period (Note 16) | 1,087.1 | 966.6 | |||||||||||||||
| Cash, cash equivalents and restricted cash, end of period (Note 16) | $ | 928.7 | $ | 968.5 | |||||||||||||
| PSG | ASG | ISG | Total | ||||||||||||||||||||
| For the quarter ended September 27, 2019: | |||||||||||||||||||||||
| Revenue from external customers | $ | 687.9 | $ | 508.9 | $ | 185.0 | $ | 1,381.8 | |||||||||||||||
| Gross profit | $ | 226.7 | $ | 207.7 | $ | 67.6 | $ | 502.0 | |||||||||||||||
| For the quarter ended September 28, 2018: | |||||||||||||||||||||||
| Revenue from external customers | $ | 810.2 | $ | 531.7 | $ | 199.8 | $ | 1,541.7 | |||||||||||||||
| Gross profit | $ | 297.9 | $ | 224.3 | $ | 80.7 | $ | 602.9 | |||||||||||||||
| For the nine months ended September 27, 2019: | |||||||||||||||||||||||
| Revenue from external customers | $ | 2,093.0 | $ | 1,465.0 | $ | 558.1 | $ | 4,116.1 | |||||||||||||||
| Gross profit | $ | 731.4 | $ | 592.5 | $ | 208.4 | $ | 1,532.3 | |||||||||||||||
| For the nine months ended September 28, 2018: | |||||||||||||||||||||||
| Revenue from external customers | $ | 2,251.0 | $ | 1,541.1 | $ | 583.1 | $ | 4,375.2 | |||||||||||||||
| Gross profit | $ | 804.2 | $ | 650.4 | $ | 245.0 | $ | 1,699.6 | |||||||||||||||
| Quarters Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 27, 2019 | September 28, 2018 | September 27, 2019 | September 28, 2018 | ||||||||||||||||||||||||||||||||
| Gross profit for reporting segments | $ | 502.0 | $ | 602.9 | $ | 1,532.3 | $ | 1,699.6 | |||||||||||||||||||||||||||
| Less: Unallocated manufacturing costs | (26.8) | (6.3) | (44.4) | (30.6) | |||||||||||||||||||||||||||||||
| Consolidated gross profit | $ | 475.2 | $ | 596.6 | $ | 1,487.9 | $ | 1,669.0 | |||||||||||||||||||||||||||
| Quarter Ended September 27, 2019 | |||||||||||||||||||||||||||||||||||||||||
| PSG | ASG | ISG | Total | ||||||||||||||||||||||||||||||||||||||
| Geographic Location | |||||||||||||||||||||||||||||||||||||||||
| Singapore | $ | 207.7 | $ | 195.7 | $ | 43.4 | $ | 446.8 | |||||||||||||||||||||||||||||||||
| Hong Kong | 216.2 | 105.8 | 34.9 | 356.9 | |||||||||||||||||||||||||||||||||||||
| United Kingdom | 111.4 | 77.3 | 34.3 | 223.0 | |||||||||||||||||||||||||||||||||||||
| United States | 92.2 | 73.4 | 27.7 | 193.3 | |||||||||||||||||||||||||||||||||||||
| Other | 60.4 | 56.7 | 44.7 | 161.8 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 687.9 | $ | 508.9 | $ | 185.0 | $ | 1,381.8 | |||||||||||||||||||||||||||||||||
| Sales Channel | |||||||||||||||||||||||||||||||||||||||||
| Distributors | $ | 430.6 | $ | 248.8 | $ | 113.7 | $ | 793.1 | |||||||||||||||||||||||||||||||||
| OEM/ODM | 206.9 | 228.2 | 61.5 | 496.6 | |||||||||||||||||||||||||||||||||||||
| Electronic Manufacturing Service Providers | 50.4 | 31.9 | 9.8 | 92.1 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 687.9 | $ | 508.9 | $ | 185.0 | $ | 1,381.8 | |||||||||||||||||||||||||||||||||
| Nine Months Ended September 27, 2019 | |||||||||||||||||||||||||||||||||||||||||
| PSG | ASG | ISG | Total | ||||||||||||||||||||||||||||||||||||||
| Geographic Location | |||||||||||||||||||||||||||||||||||||||||
| Singapore | $ | 646.0 | $ | 479.2 | $ | 126.7 | $ | 1,251.9 | |||||||||||||||||||||||||||||||||
| Hong Kong | 623.0 | 326.1 | 94.2 | 1,043.3 | |||||||||||||||||||||||||||||||||||||
| United Kingdom | 355.2 | 233.2 | 110.9 | 699.3 | |||||||||||||||||||||||||||||||||||||
| United States | 280.7 | 259.0 | 90.7 | 630.4 | |||||||||||||||||||||||||||||||||||||
| Other | 188.1 | 167.5 | 135.6 | 491.2 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 2,093.0 | $ | 1,465.0 | $ | 558.1 | $ | 4,116.1 | |||||||||||||||||||||||||||||||||
| Sales Channel | |||||||||||||||||||||||||||||||||||||||||
| Distributors | $ | 1,287.8 | $ | 713.7 | $ | 336.8 | $ | 2,338.3 | |||||||||||||||||||||||||||||||||
| OEM/ODM | 666.4 | 647.0 | 191.7 | 1,505.1 | |||||||||||||||||||||||||||||||||||||
| Electronic Manufacturing Service Providers | 138.8 | 104.3 | 29.6 | 272.7 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 2,093.0 | $ | 1,465.0 | $ | 558.1 | $ | 4,116.1 | |||||||||||||||||||||||||||||||||
| Quarter Ended September 28, 2018 | |||||||||||||||||||||||||||||||||||||||||
| PSG | ASG | ISG | Total | ||||||||||||||||||||||||||||||||||||||
| Geographic Location | |||||||||||||||||||||||||||||||||||||||||
| Singapore | $ | 332.8 | $ | 191.7 | $ | 48.6 | $ | 573.1 | |||||||||||||||||||||||||||||||||
| Hong Kong | 201.9 | 124.1 | 35.0 | 361.0 | |||||||||||||||||||||||||||||||||||||
| United Kingdom | 124.9 | 81.9 | 34.8 | 241.6 | |||||||||||||||||||||||||||||||||||||
| United States | 102.3 | 87.8 | 31.5 | 221.6 | |||||||||||||||||||||||||||||||||||||
| Other | 48.3 | 46.2 | 49.9 | 144.4 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 810.2 | $ | 531.7 | $ | 199.8 | $ | 1,541.7 | |||||||||||||||||||||||||||||||||
| Sales Channel | |||||||||||||||||||||||||||||||||||||||||
| Distributors | $ | 565.1 | $ | 280.4 | $ | 122.2 | $ | 967.7 | |||||||||||||||||||||||||||||||||
| OEM/ODM | 198.6 | 213.1 | 65.1 | 476.8 | |||||||||||||||||||||||||||||||||||||
| Electronic Manufacturing Service Providers | 46.5 | 38.2 | 12.5 | 97.2 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 810.2 | $ | 531.7 | $ | 199.8 | $ | 1,541.7 | |||||||||||||||||||||||||||||||||
| Nine Months Ended September 28, 2018 | |||||||||||||||||||||||||||||||||||||||||
| PSG | ASG | ISG | Total | ||||||||||||||||||||||||||||||||||||||
| Geographic Location | |||||||||||||||||||||||||||||||||||||||||
| Singapore | $ | 805.3 | $ | 510.7 | $ | 123.8 | $ | 1,439.8 | |||||||||||||||||||||||||||||||||
| Hong Kong | 636.5 | 379.7 | 110.6 | 1,126.8 | |||||||||||||||||||||||||||||||||||||
| United Kingdom | 368.0 | 243.4 | 106.2 | 717.6 | |||||||||||||||||||||||||||||||||||||
| United States | 295.0 | 251.9 | 91.4 | 638.3 | |||||||||||||||||||||||||||||||||||||
| Other | 146.2 | 155.4 | 151.1 | 452.7 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 2,251.0 | $ | 1,541.1 | $ | 583.1 | $ | 4,375.2 | |||||||||||||||||||||||||||||||||
| Sales Channel | |||||||||||||||||||||||||||||||||||||||||
| Distributors | $ | 1,499.7 | $ | 792.0 | $ | 352.4 | $ | 2,644.1 | |||||||||||||||||||||||||||||||||
| OEM/ODM | 616.5 | 640.7 | 198.6 | 1,455.8 | |||||||||||||||||||||||||||||||||||||
| Electronic Manufacturing Service Providers | 134.8 | 108.4 | 32.1 | 275.3 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 2,251.0 | $ | 1,541.1 | $ | 583.1 | $ | 4,375.2 | |||||||||||||||||||||||||||||||||
| As of | |||||||||||||||||
| September 27, 2019 | December 31, 2018 | ||||||||||||||||
| United States | $ | 608.3 | $ | 616.9 | |||||||||||||
| Korea | 460.7 | 383.1 | |||||||||||||||
| Philippines | 443.6 | 474.5 | |||||||||||||||
| China | 244.1 | 248.4 | |||||||||||||||
| Czech Republic | 231.3 | 194.5 | |||||||||||||||
| Japan | 220.7 | 205.0 | |||||||||||||||
| Malaysia | 212.6 | 229.1 | |||||||||||||||
| Other | 180.8 | 198.1 | |||||||||||||||
| Total | $ | 2,602.1 | $ | 2,549.6 | |||||||||||||
| Initial Estimate | Measurement Period Adjustments | Updated Allocation | ||||||||||||
| Cash and cash equivalents | $ | 133.4 | $ | — | $ | 133.4 | ||||||||
| Receivables | 21.2 | 1.0 | 22.2 | |||||||||||
| Inventories | 45.0 | (3.2) | 41.8 | |||||||||||
| Other current assets | 4.3 | — | 4.3 | |||||||||||
| Property, plant and equipment | 16.3 | 0.6 | 16.9 | |||||||||||
| Goodwill | 620.0 | 106.7 | 726.7 | |||||||||||
| Intangible assets (excluding IPRD) | 180.9 | (93.8) | 87.1 | |||||||||||
| IPRD | 55.5 | (31.7) | 23.8 | |||||||||||
| Deferred tax assets | 3.3 | 25.9 | 29.2 | |||||||||||
| Other non-current assets | 10.5 | 2.2 | 12.7 | |||||||||||
| Total assets acquired | 1,090.4 | 7.7 | 1,098.1 | |||||||||||
| Accounts payable | 22.6 | — | 22.6 | |||||||||||
| Other current liabilities | 16.8 | 0.7 | 17.5 | |||||||||||
| Deferred tax liabilities | 3.9 | (0.6) | 3.3 | |||||||||||
| Other non-current liabilities | 7.8 | 7.6 | 15.4 | |||||||||||
| Total liabilities assumed | 51.1 | 7.7 | 58.8 | |||||||||||
| Net assets acquired/purchase price | $ | 1,039.3 | $ | — | $ | 1,039.3 | ||||||||
| Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2019 | September 28, 2018 | September 27, 2019 | September 28, 2018 | ||||||||||||||||||||
| Revenue | $ | 1,381.8 | $ | 1,601.0 | $ | 4,211.4 | $ | 4,533.1 | |||||||||||||||
| Net income (loss) | (43.1) | 160.1 | 160.9 | 407.8 | |||||||||||||||||||
| Net income (loss) attributable to ON Semiconductor Corporation | (43.8) | 159.9 | 159.1 | 405.7 | |||||||||||||||||||
| Net income (loss) per common share attributable to ON Semiconductor Corporation: | |||||||||||||||||||||||
| Basic | $ | (0.11) | $ | 0.38 | $ | 0.39 | $ | 0.95 | |||||||||||||||
| Diluted | $ | (0.11) | $ | 0.37 | $ | 0.38 | $ | 0.92 | |||||||||||||||
| As of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| September 27, 2019 | December 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill | Accumulated Impairment Losses | Carrying Value | Goodwill | Accumulated Impairment Losses | Carrying Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating and Reporting Segments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSG | $ | 432.2 | $ | (31.9) | $ | 400.3 | $ | 432.2 | $ | (31.9) | $ | 400.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ASG | 1,563.4 | (418.9) | 1,144.5 | 836.7 | (418.9) | 417.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ISG | 114.4 | — | 114.4 | 114.4 | — | 114.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 2,110.0 | $ | (450.8) | $ | 1,659.2 | $ | 1,383.3 | $ | (450.8) | $ | 932.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net balance as of December 31, 2018 | $ | 932.5 | ||||||
| Addition due to business combination | 726.7 | |||||||
| Net balance as of September 27, 2019 | $ | 1,659.2 | ||||||
| As of September 27, 2019 | |||||||||||||||||||||||||||||||||||||||||
|
Original
Cost |
Accumulated
Amortization |
Accumulated Impairment Losses |
Carrying
Value |
||||||||||||||||||||||||||||||||||||||
| Customer relationships | $ | 585.2 | $ | (379.2) | $ | (20.1) | $ | 185.9 | |||||||||||||||||||||||||||||||||
| Developed technology | 760.8 | (416.6) | (2.6) | 341.6 | |||||||||||||||||||||||||||||||||||||
| IPRD | 83.4 | — | (24.1) | 59.3 | |||||||||||||||||||||||||||||||||||||
| Licenses | 30.0 | — | — | 30.0 | |||||||||||||||||||||||||||||||||||||
| Other intangibles | 82.6 | (61.6) | (15.2) | 5.8 | |||||||||||||||||||||||||||||||||||||
| Total intangible assets | $ | 1,542.0 | $ | (857.4) | $ | (62.0) | $ | 622.6 | |||||||||||||||||||||||||||||||||
| As of December 31, 2018 | |||||||||||||||||||||||||||||||||||||||||
|
Original
Cost |
Accumulated
Amortization |
Accumulated Impairment Losses |
Carrying
Value |
||||||||||||||||||||||||||||||||||||||
| Customer relationships | $ | 556.7 | $ | (359.1) | $ | (20.1) | $ | 177.5 | |||||||||||||||||||||||||||||||||
| Developed technology | 698.0 | (356.4) | (2.6) | 339.0 | |||||||||||||||||||||||||||||||||||||
| IPRD | 64.1 | — | (22.5) | 41.6 | |||||||||||||||||||||||||||||||||||||
| Other intangibles | 82.3 | (58.8) | (15.2) | 8.3 | |||||||||||||||||||||||||||||||||||||
| Total intangible assets | $ | 1,401.1 | $ | (774.3) | $ | (60.4) | $ | 566.4 | |||||||||||||||||||||||||||||||||
| Period | Amortization Expense | |||||||
| Remainder of 2019 | $ | 31.6 | ||||||
| 2020 | 111.9 | |||||||
| 2021 | 93.0 | |||||||
| 2022 | 77.9 | |||||||
| 2023 | 61.9 | |||||||
| Thereafter | 187.0 | |||||||
| Total | $ | 563.3 | ||||||
| Restructuring | Asset Impairments | Other | Total | ||||||||||||||||||||||||||||||||||||||
| Quarter ended September 27, 2019 | |||||||||||||||||||||||||||||||||||||||||
| General workforce reduction | $ | 0.6 | $ | — | $ | — | $ | 0.6 | |||||||||||||||||||||||||||||||||
| Post-Quantenna acquisition restructuring | 1.8 | — | — | 1.8 | |||||||||||||||||||||||||||||||||||||
| Other | 0.8 | — | 1.2 | 2.0 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 3.2 | $ | — | $ | 1.2 | $ | 4.4 | |||||||||||||||||||||||||||||||||
| Restructuring | Asset Impairments (1) | Other | Total | ||||||||||||||||||||||||||||||||||||||
| Nine months ended September 27, 2019 | |||||||||||||||||||||||||||||||||||||||||
| General workforce reduction | $ | 8.4 | $ | — | $ | — | $ | 8.4 | |||||||||||||||||||||||||||||||||
| Post-Quantenna acquisition restructuring | 15.6 | — | — | 15.6 | |||||||||||||||||||||||||||||||||||||
| Other | 0.8 | 2.9 | 0.4 | 4.1 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 24.8 | $ | 2.9 | $ | 0.4 | $ | 28.1 | |||||||||||||||||||||||||||||||||
| As of | As of | |||||||||||||||||||||||||||||||
| December 31, 2018 | Charges | Usage | September 27, 2019 | |||||||||||||||||||||||||||||
| Estimated employee separation charges | $ | 0.3 | $ | 24.8 | $ | (22.6) | $ | 2.5 | ||||||||||||||||||||||||
| Other | 0.2 | — | (0.1) | 0.1 | ||||||||||||||||||||||||||||
| Total | $ | 0.5 | $ | 24.8 | $ | (22.7) | $ | 2.6 | ||||||||||||||||||||||||
| As of | |||||||||||||||||
| September 27, 2019 | December 31, 2018 | ||||||||||||||||
| Inventories: | |||||||||||||||||
| Raw materials | $ | 145.0 | $ | 137.3 | |||||||||||||
| Work in process | 782.4 | 760.7 | |||||||||||||||
| Finished goods | 313.3 | 327.2 | |||||||||||||||
| $ | 1,240.7 | $ | 1,225.2 | ||||||||||||||
| Quarters Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 27, 2019 | September 28, 2018 | September 27, 2019 | September 28, 2018 | ||||||||||||||||||||||||||||||||
| Service cost | $ | 2.4 | $ | 2.4 | $ | 7.1 | $ | 7.3 | |||||||||||||||||||||||||||
| Interest cost | 1.3 | 1.2 | 3.8 | 3.6 | |||||||||||||||||||||||||||||||
| Expected return on plan assets | (1.5) | (1.5) | (4.5) | (4.6) | |||||||||||||||||||||||||||||||
| Total net periodic pension cost | $ | 2.2 | $ | 2.1 | $ | 6.4 | $ | 6.3 | |||||||||||||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||
| September 27, 2019 | September 27, 2019 | ||||||||||
| Operating lease | $ | 9.2 | $ | 25.8 | |||||||
| Variable lease | 1.0 | 3.1 | |||||||||
| Short-term lease | 0.6 | 1.9 | |||||||||
| Total lease expense | $ | 10.8 | $ | 30.8 | |||||||
| As of | |||||
| September 27, 2019 | |||||
| Accrued expenses and other current liabilities | $ | 27.6 | |||
| Other long-term liabilities | 91.0 | ||||
| $ | 118.6 | ||||
| Remainder of 2019 | $ | 7.9 | |||
| 2020 | 31.3 | ||||
| 2021 | 24.7 | ||||
| 2022 | 20.4 | ||||
| 2023 | 14.7 | ||||
| Thereafter | 50.2 | ||||
| Total lease payments (1) | $ | 149.2 | |||
| Less: Interest | (30.6) | ||||
| Amounts recorded in the Consolidated Balance Sheet | $ | 118.6 | |||
| 2019 | $ | 36.8 | |||
| 2020 | 27.6 | ||||
| 2021 | 21.9 | ||||
| 2022 | 16.8 | ||||
| 2023 | 12.3 | ||||
| Thereafter | 45.4 | ||||
| Total (1) | $ | 160.8 | |||
| As of | |||||||||||||||||
| September 27, 2019 | December 31, 2018 | ||||||||||||||||
| Amended Credit Agreement: | |||||||||||||||||
|
Revolving Credit Facility due 2024, interest payable monthly at 3.54% and 3.77%, respectively
|
$ | 800.0 | $ | 400.0 | |||||||||||||
|
Term Loan “B” Facility due 2026, interest payable monthly at 4.04% and 4.27%, respectively
|
1,635.0 | 1,134.5 | |||||||||||||||
|
1.00% Notes due 2020 (1)
|
690.0 | 690.0 | |||||||||||||||
|
1.625% Notes due 2023 (2)
|
575.0 | 575.0 | |||||||||||||||
| Other long-term debt (3) | 64.6 | 139.5 | |||||||||||||||
| Gross long-term debt, including current maturities | $ | 3,764.6 | $ | 2,939.0 | |||||||||||||
| Less: Debt discount (4) | (113.1) | (139.4) | |||||||||||||||
| Less: Debt issuance costs (5) | (36.1) | (33.5) | |||||||||||||||
| Net long-term debt, including current maturities | $ | 3,615.4 | $ | 2,766.1 | |||||||||||||
| Less: Current maturities | (736.6) | (138.5) | |||||||||||||||
| Net long-term debt | $ | 2,878.8 | $ | 2,627.6 | |||||||||||||
| Period | Expected Maturities | |||||||
| Remainder of 2019 | $ | 14.5 | ||||||
| 2020 | 760.4 | |||||||
| 2021 | 16.4 | |||||||
| 2022 | 16.4 | |||||||
| 2023 | 591.4 | |||||||
| Thereafter | 2,365.5 | |||||||
| Total | $ | 3,764.6 | ||||||
| Quarters Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 27, 2019 | September 28, 2018 | September 27, 2019 | September 28, 2018 | ||||||||||||||||||||||||||||||||
| Net income (loss) attributable to ON Semiconductor Corporation | $ | (60.7) | $ | 166.9 | $ | 155.2 | $ | 461.8 | |||||||||||||||||||||||||||
| Basic weighted-average common shares outstanding | 410.4 | 425.5 | 411.0 | 426.1 | |||||||||||||||||||||||||||||||
| Dilutive effect of share-based awards | — | 3.9 | 1.7 | 4.7 | |||||||||||||||||||||||||||||||
| Dilutive effect of convertible notes | — | 5.9 | 2.6 | 10.4 | |||||||||||||||||||||||||||||||
| Diluted weighted-average common shares outstanding | 410.4 | 435.3 | 415.3 | 441.2 | |||||||||||||||||||||||||||||||
| Net income (loss) per common share attributable to ON Semiconductor Corporation: | |||||||||||||||||||||||||||||||||||
| Basic | $ | (0.15) | $ | 0.39 | $ | 0.38 | $ | 1.08 | |||||||||||||||||||||||||||
| Diluted | $ | (0.15) | $ | 0.38 | $ | 0.37 | $ | 1.05 | |||||||||||||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||
| September 27, 2019 | September 27, 2019 | ||||||||||
| Number of repurchased shares (1) | 0.8 | 7.8 | |||||||||
| Aggregate purchase price | $ | 13.1 | $ | 138.9 | |||||||
| Fees, commissions and other expenses | 0.1 | 0.1 | |||||||||
| Total cash used for share repurchases | $ | 13.2 | $ | 139.0 | |||||||
| Weighted-average purchase price per share (2) | $ | 17.18 | $ | 17.89 | |||||||
| Quarters Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 27, 2019 | September 28, 2018 | September 27, 2019 | September 28, 2018 | ||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 2.3 | $ | 1.7 | $ | 7.7 | $ | 5.1 | |||||||||||||||||||||||||||
| Research and development | 3.4 | 3.4 | 12.4 | 10.6 | |||||||||||||||||||||||||||||||
| Selling and marketing | 2.7 | 3.3 | 11.1 | 10.5 | |||||||||||||||||||||||||||||||
| General and administrative | 6.3 | 9.5 | 30.5 | 33.2 | |||||||||||||||||||||||||||||||
| Share-based compensation expense | $ | 14.7 | $ | 17.9 | $ | 61.7 | $ | 59.4 | |||||||||||||||||||||||||||
| Related income tax benefits at federal rate of 21% | (3.1) | (3.8) | (13.0) | (12.5) | |||||||||||||||||||||||||||||||
| Share-based compensation expense, net of taxes | $ | 11.6 | $ | 14.1 | $ | 48.7 | $ | 46.9 | |||||||||||||||||||||||||||
| Number of Shares | Weighted-Average Grant Date Fair Value Per Share | |||||||||||||
| Non-vested RSUs at December 31, 2018 | 8.6 | $ | 16.59 | |||||||||||
| Granted | 4.7 | 21.69 | ||||||||||||
| Achieved | 0.2 | 24.46 | ||||||||||||
| Released | (4.4) | 14.28 | ||||||||||||
| Forfeited | (0.4) | 19.61 | ||||||||||||
| Non-vested RSUs at September 27, 2019 | 8.7 | 20.56 | ||||||||||||
| As of | Fair Value Hierarchy | |||||||||||||||||||||||||||||||||||||
| Description | September 27, 2019 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents: | ||||||||||||||||||||||||||||||||||||||
| Demand and time deposits | $ | 26.0 | $ | 26.0 | $ | — | $ | — | ||||||||||||||||||||||||||||||
| Money market funds | 0.4 | 0.4 | — | — | ||||||||||||||||||||||||||||||||||
| As of | Fair Value Hierarchy | |||||||||||||||||||||||||||||||||||||
| Description | December 31, 2018 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents: | ||||||||||||||||||||||||||||||||||||||
| Demand and time deposits | $ | 21.2 | $ | 21.2 | $ | — | $ | — | ||||||||||||||||||||||||||||||
| Money market funds | 0.2 | 0.2 | — | — | ||||||||||||||||||||||||||||||||||
| As of | |||||||||||||||||||||||||||||||||||||||||
| September 27, 2019 | December 31, 2018 | ||||||||||||||||||||||||||||||||||||||||
|
Carrying
Amount |
Fair Value |
Carrying
Amount |
Fair Value | ||||||||||||||||||||||||||||||||||||||
| Long-term debt, including current portion | |||||||||||||||||||||||||||||||||||||||||
| Convertible notes | $ | 1,151.8 | $ | 1,491.1 | $ | 1,120.6 | $ | 1,368.5 | |||||||||||||||||||||||||||||||||
| Long-term debt | 2,463.2 | 2,431.3 | 1,615.1 | 1,585.9 | |||||||||||||||||||||||||||||||||||||
| As of | ||||||||||||||||||||||||||||||||||||||||||||
| September 27, 2019 | December 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||
| Buy (Sell) | Notional Amount | Buy (Sell) | Notional Amount | |||||||||||||||||||||||||||||||||||||||||
| Japanese Yen | 46.9 | 46.9 | 29.9 | 29.9 | ||||||||||||||||||||||||||||||||||||||||
| Philippine Peso | 35.6 | 35.6 | 30.1 | 30.1 | ||||||||||||||||||||||||||||||||||||||||
| Chinese Yuan | 29.6 | 29.6 | 20.4 | 20.4 | ||||||||||||||||||||||||||||||||||||||||
| Korean Won | 19.3 | 19.3 | 20.8 | 20.8 | ||||||||||||||||||||||||||||||||||||||||
| Czech Koruna | 13.7 | 13.7 | 9.2 | 9.2 | ||||||||||||||||||||||||||||||||||||||||
| Other Currencies - Buy | 39.5 | 39.5 | 39.4 | 39.4 | ||||||||||||||||||||||||||||||||||||||||
| Other Currencies - Sell | (4.3) | 4.3 | (7.5) | 7.5 | ||||||||||||||||||||||||||||||||||||||||
| $ | 180.3 | $ | 188.9 | $ | 142.3 | $ | 157.3 | |||||||||||||||||||||||||||||||||||||
| Currency Translation Adjustments | Effects of Cash Flow Hedges | Total | ||||||||||||||||||||||||
| Balance as of December 31, 2018 | $ | (42.5) | $ | 4.6 | $ | (37.9) | ||||||||||||||||||||
| Other comprehensive income prior to reclassifications | 0.5 | (21.2) | (20.7) | |||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | — | 3.0 | 3.0 | |||||||||||||||||||||||
| Net current period other comprehensive income (1) | 0.5 | (18.2) | (17.7) | |||||||||||||||||||||||
| Balance as of September 27, 2019 | $ | (42.0) | $ | (13.6) | $ | (55.6) | ||||||||||||||||||||
| Amounts Reclassified from Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| September 27, 2019 | September 28, 2018 | September 27, 2019 | September 28, 2018 | Statements of Operations and Comprehensive Income Line Item | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | $ | (0.3) | $ | (1.0) | $ | (3.0) | $ | (1.8) | Interest expense | |||||||||||||||||||||||||||||||||||||||||||||||
| Total reclassifications | $ | (0.3) | $ | (1.0) | $ | (3.0) | $ | (1.8) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended | ||||||||||||||||||||
| September 27, 2019 | September 28, 2018 | |||||||||||||||||||
| Non-cash financing activity: | ||||||||||||||||||||
| Liability incurred for purchase of business | $ | 17.9 | $ | — | ||||||||||||||||
| Non-cash activities: | ||||||||||||||||||||
| Capital expenditures in accounts payable and other liabilities | $ | 146.7 | $ | 204.5 | ||||||||||||||||
| Right-of-use assets obtained in exchange of lease liabilities (1) | 15.0 | |||||||||||||||||||
| Cash (received) paid for: | ||||||||||||||||||||
| Interest income | $ | (7.8) | $ | (3.3) | ||||||||||||||||
| Interest expense | 61.9 | 56.2 | ||||||||||||||||||
| Income taxes | 46.2 | 45.0 | ||||||||||||||||||
| Operating lease payments in operating cash flows (1) | 28.0 | |||||||||||||||||||
| As of | ||||||||||||||||||||||||||||||||||||||||||||
| September 27, 2019 | December 31, 2018 | September 28, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||||||||||||
| Consolidated Balance Sheets: | ||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 928.7 | $ | 1,069.6 | $ | 951.0 | $ | 949.2 | ||||||||||||||||||||||||||||||||||||
| Restricted cash (included in other current assets) | — | 17.5 | 17.5 | 17.4 | ||||||||||||||||||||||||||||||||||||||||
| Cash, cash equivalents and restricted cash in Consolidated Statements of Cash Flows | $ | 928.7 | $ | 1,087.1 | $ | 968.5 | $ | 966.6 | ||||||||||||||||||||||||||||||||||||
| Quarters Ended | |||||||||||||||||||||||
| September 27, 2019 | September 28, 2018 | Dollar Change | |||||||||||||||||||||
| Revenue | $ | 1,381.8 | $ | 1,541.7 | $ | (159.9) | |||||||||||||||||
| Cost of revenue (exclusive of amortization shown below) | 906.6 | 945.1 | (38.5) | ||||||||||||||||||||
| Gross profit | 475.2 | 596.6 | (121.4) | ||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 172.8 | 166.2 | 6.6 | ||||||||||||||||||||
| Selling and marketing | 74.7 | 83.1 | (8.4) | ||||||||||||||||||||
| General and administrative | 67.8 | 73.3 | (5.5) | ||||||||||||||||||||
| Litigation settlement | 169.5 | — | 169.5 | ||||||||||||||||||||
| Amortization of acquisition-related intangible assets | 29.9 | 28.0 | 1.9 | ||||||||||||||||||||
| Restructuring, asset impairments and other, net | 4.4 | 4.4 | — | ||||||||||||||||||||
| Total operating expenses | 519.1 | 355.0 | 164.1 | ||||||||||||||||||||
| Operating income (loss) | (43.9) | 241.6 | (285.5) | ||||||||||||||||||||
| Other income (expense), net: | |||||||||||||||||||||||
| Interest expense | (40.7) | (31.2) | (9.5) | ||||||||||||||||||||
| Interest income | 2.3 | 1.3 | 1.0 | ||||||||||||||||||||
| Loss on debt refinancing and prepayment | (5.8) | (0.6) | (5.2) | ||||||||||||||||||||
| Gain on divestiture of business | — | 0.4 | (0.4) | ||||||||||||||||||||
| Licensing income | — | 1.0 | (1.0) | ||||||||||||||||||||
| Other income (expense) | 3.5 | 3.5 | — | ||||||||||||||||||||
| Other income (expense), net | (40.7) | (25.6) | (15.1) | ||||||||||||||||||||
| Income (loss) before income taxes | (84.6) | 216.0 | (300.6) | ||||||||||||||||||||
| Income tax (provision) benefit | 24.6 | (48.9) | 73.5 | ||||||||||||||||||||
| Net income (loss) | (60.0) | 167.1 | (227.1) | ||||||||||||||||||||
| Less: Net income attributable to non-controlling interest | (0.7) | (0.2) | (0.5) | ||||||||||||||||||||
| Net income (loss) attributable to ON Semiconductor Corporation | $ | (60.7) | $ | 166.9 | $ | (227.6) | |||||||||||||||||
| Quarter Ended September 27, 2019 |
As a % of
Total Revenue (1)
|
Quarter Ended September 28, 2018 |
As a % of
Total Revenue (1)
|
||||||||||||||||||||
| PSG | $ | 687.9 | 49.8 | % | $ | 810.2 | 52.6 | % | |||||||||||||||
| ASG | 508.9 | 36.8 | % | 531.7 | 34.5 | % | |||||||||||||||||
| ISG | 185.0 | 13.4 | % | 199.8 | 13.0 | % | |||||||||||||||||
| Total revenue | $ | 1,381.8 | $ | 1,541.7 | |||||||||||||||||||
| Quarter Ended September 27, 2019 |
As a % of
Total Revenue (1)
|
Quarter Ended September 28, 2018 |
As a % of
Total Revenue (1)
|
||||||||||||||||||||
| Singapore | $ | 446.8 | 32.3 | % | $ | 573.1 | 37.2 | % | |||||||||||||||
| Hong Kong | 356.9 | 25.8 | % | 361.0 | 23.4 | % | |||||||||||||||||
| United Kingdom | 223.0 | 16.1 | % | 241.6 | 15.7 | % | |||||||||||||||||
| United States | 193.3 | 14.0 | % | 221.6 | 14.4 | % | |||||||||||||||||
| Other | 161.8 | 11.7 | % | 144.4 | 9.4 | % | |||||||||||||||||
| Total | $ | 1,381.8 | $ | 1,541.7 | |||||||||||||||||||
| Quarter Ended September 27, 2019 |
As a % of
Segment Revenue (1)
|
Quarter Ended September 28, 2018 |
As a % of
Segment Revenue (1)
|
||||||||||||||||||||
| PSG | $ | 226.7 | 33.0 | % | $ | 297.9 | 36.8 | % | |||||||||||||||
| ASG | 207.7 | 40.8 | % | 224.3 | 42.2 | % | |||||||||||||||||
| ISG | 67.6 | 36.5 | % | 80.7 | 40.4 | % | |||||||||||||||||
| Gross profit | $ | 502.0 | $ | 602.9 | |||||||||||||||||||
| Unallocated manufacturing costs | (26.8) | (1.9) | % | (6.3) | (0.4) | % | |||||||||||||||||
| Consolidated gross profit | $ | 475.2 | 34.4 | % | $ | 596.6 | 38.7 | % | |||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||
| September 27, 2019 | September 28, 2018 | Dollar Change | |||||||||||||||||||||
| Revenue | $ | 4,116.1 | $ | 4,375.2 | $ | (259.1) | |||||||||||||||||
| Cost of revenue (exclusive of amortization shown below) | 2,628.2 | 2,706.2 | (78.0) | ||||||||||||||||||||
| Gross profit | 1,487.9 | 1,669.0 | (181.1) | ||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 471.6 | 488.5 | (16.9) | ||||||||||||||||||||
| Selling and marketing | 225.4 | 242.6 | (17.2) | ||||||||||||||||||||
| General and administrative | 214.8 | 218.8 | (4.0) | ||||||||||||||||||||
| Litigation settlement | 169.5 | — | 169.5 | ||||||||||||||||||||
| Amortization of acquisition-related intangible assets | 83.1 | 83.3 | (0.2) | ||||||||||||||||||||
| Restructuring, asset impairments and other, net | 28.1 | 8.0 | 20.1 | ||||||||||||||||||||
| Goodwill and intangible asset impairment | 1.6 | 3.3 | (1.7) | ||||||||||||||||||||
| Total operating expenses | 1,194.1 | 1,044.5 | 149.6 | ||||||||||||||||||||
| Operating income | 293.8 | 624.5 | (330.7) | ||||||||||||||||||||
| Other income (expense), net: | |||||||||||||||||||||||
| Interest expense | (106.1) | (95.3) | (10.8) | ||||||||||||||||||||
| Interest income | 7.8 | 3.3 | 4.5 | ||||||||||||||||||||
| Loss on debt refinancing and prepayment | (6.2) | (4.6) | (1.6) | ||||||||||||||||||||
| Gain on divestiture of business | — | 5.0 | (5.0) | ||||||||||||||||||||
| Licensing income | — | 32.9 | (32.9) | ||||||||||||||||||||
| Other income (expense) | 4.6 | 0.5 | 4.1 | ||||||||||||||||||||
| Other income (expense), net | (99.9) | (58.2) | (41.7) | ||||||||||||||||||||
| Income before income taxes | 193.9 | 566.3 | (372.4) | ||||||||||||||||||||
| Income tax provision | (36.9) | (102.4) | 65.5 | ||||||||||||||||||||
| Net income | 157.0 | 463.9 | (306.9) | ||||||||||||||||||||
| Less: Net income attributable to non-controlling interest | (1.8) | (2.1) | 0.3 | ||||||||||||||||||||
| Net income attributable to ON Semiconductor Corporation | $ | 155.2 | $ | 461.8 | $ | (306.6) | |||||||||||||||||
| Nine Months Ended September 27, 2019 |
As a % of
Total Revenue (1)
|
Nine Months Ended September 28, 2018 |
As a % of
Total Revenue (1)
|
||||||||||||||||||||
| PSG | $ | 2,093.0 | 50.8 | % | $ | 2,251.0 | 51.4 | % | |||||||||||||||
| ASG | 1,465.0 | 35.6 | % | 1,541.1 | 35.2 | % | |||||||||||||||||
| ISG | 558.1 | 13.6 | % | 583.1 | 13.3 | % | |||||||||||||||||
| Total revenue | $ | 4,116.1 | $ | 4,375.2 | |||||||||||||||||||
| Nine Months Ended September 27, 2019 |
As a % of
Total Revenue (1)
|
Nine Months Ended September 28, 2018 |
As a % of
Total Revenue (1)
|
||||||||||||||||||||
| Singapore | $ | 1,251.9 | 30.4 | % | $ | 1,439.8 | 32.9 | % | |||||||||||||||
| Hong Kong | 1,043.3 | 25.3 | % | 1,126.8 | 25.8 | % | |||||||||||||||||
| United Kingdom | 699.3 | 17.0 | % | 717.6 | 16.4 | % | |||||||||||||||||
| United States | 630.4 | 15.3 | % | 638.3 | 14.6 | % | |||||||||||||||||
| Other | 491.2 | 11.9 | % | 452.7 | 10.3 | % | |||||||||||||||||
| Total | $ | 4,116.1 | $ | 4,375.2 | |||||||||||||||||||
| Nine Months Ended September 27, 2019 |
As a % of
Segment Revenue (1)
|
Nine Months Ended September 28, 2018 |
As a % of
Segment Revenue (1)
|
||||||||||||||||||||
| PSG | $ | 731.4 | 34.9 | % | $ | 804.2 | 35.7 | % | |||||||||||||||
| ASG | 592.5 | 40.4 | % | 650.4 | 42.2 | % | |||||||||||||||||
| ISG | 208.4 | 37.3 | % | 245.0 | 42.0 | % | |||||||||||||||||
| Gross profit | $ | 1,532.3 | $ | 1,699.6 | |||||||||||||||||||
| Unallocated manufacturing costs | (44.4) | (1.1) | % | (30.6) | (0.7) | % | |||||||||||||||||
| Consolidated gross profit | $ | 1,487.9 | 36.1 | % | $ | 1,669.0 | 38.1 | % | |||||||||||||||
|
Period (1)
|
Total Number of Shares Purchased (2)
|
Average Price Paid per Share ($) (3)
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar value of Shares that May Yet be Purchased Under the Plans or Programs (in millions) ($) | ||||||||||||||||||||||
| June 29, 2019 - July 26, 2019 | 11,610 | 19.94 | — | 1,374.3 | ||||||||||||||||||||||
| July 27, 2019 - August 23, 2019 | 989,928 | 17.35 | 763,928 | 1,361.1 | ||||||||||||||||||||||
| August 24, 2019 - September 27, 2019 | 9,260 | 18.31 | — | 1,361.1 | ||||||||||||||||||||||
| Total | 1,010,798 | 17.38 | 763,928 | |||||||||||||||||||||||
| Exhibit No. |
Exhibit Description*
|
||||||||||||||||||||||||||||
| 10.1 | |||||||||||||||||||||||||||||
| 10.2 | |||||||||||||||||||||||||||||
| 31.1 | |||||||||||||||||||||||||||||
| 31.2 | |||||||||||||||||||||||||||||
| 32 | |||||||||||||||||||||||||||||
| 101.INS |
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.(1)
|
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| 101.SCH |
XBRL Taxonomy Extension Schema Document(1)
|
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| 101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document(1)
|
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| 101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document(1)
|
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| 101.LAB |
XBRL Taxonomy Extension Label Linkbase Document(1)
|
||||||||||||||||||||||||||||
| 101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document(1)
|
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| 104 |
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
|
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|
*
|
Reports filed under the Exchange Act (Form 10-K, Form 10-Q and Form 8-K) are filed under File No. 000-30419. | ||||
|
(1)
|
Filed herewith. | ||||
|
(2)
|
Furnished herewith. | ||||
|
ON SEMICONDUCTOR CORPORATION
(Registrant) |
||||||||||||||||||||
| Date: | October 28, 2019 | By: | /s/ BERNARD GUTMANN | |||||||||||||||||
| Bernard Gutmann | ||||||||||||||||||||
| Executive Vice President, Chief Financial Officer & Treasurer (Principal Financial Officer, Principal Accounting Officer and officer duly authorized to sign this report) | ||||||||||||||||||||
Exhibit 10.1
SIXTH AMENDMENT TO CREDIT AGREEMENT
SIXTH AMENDMENT TO CREDIT AGREEMENT, dated as of August 15, 2019 (the “Sixth Amendment”), among ON SEMICONDUCTOR CORPORATION, a Delaware corporation (the “Borrower”), the Subsidiary Guarantors party hereto, DEUTSCHE BANK AG NEW YORK BRANCH (“DBNY”), as administrative agent (in such capacity, and together with its successors and assigns in such capacity, the “Administrative Agent”), DBNY, as collateral agent (in such capacity, and together with its successors and assigns in such capacity, the “Collateral Agent”) under the Credit Agreement referred to below and Barclays Bank PLC as the incremental revolving lender (the “Incremental Revolving Lender”) (with capitalized terms used, but not defined, in this paragraph and the recitals below to be defined as provided in Section 1 below).
R E C I T A L S
WHEREAS, the Borrower, the Administrative Agent, the Collateral Agent, the lenders from time to time party thereto (the “Lenders”) and various other parties have previously entered into that certain Credit Agreement, dated as of April 15, 2016, as amended by that certain First Amendment to Credit Agreement, dated as of September 30, 2016, that certain Second Amendment to Credit Agreement, dated as of March 31, 2017, that certain Third Amendment to Credit Agreement, dated as of November 30, 2017, that certain Fourth Amendment to Credit Agreement, dated as of May 31, 2018 and that certain Fifth Amendment to Credit Agreement, dated as of June 12, 2019 (as so amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Credit Agreement”);
WHEREAS, pursuant to Section 3.16(a) of the Credit Agreement, the Borrower may, by written notice delivered to the Administrative Agent, request an increase to the existing Revolving Commitments by requesting and obtaining Incremental Revolving Commitments;
WHEREAS, the Borrower has requested that the Incremental Revolving Lender provide Incremental Revolving Commitments to the Revolving Facility pursuant to Section 2.4(a)(i) of the Credit Agreement in an aggregate principal amount of $70,000,000 on the terms and subject to the conditions set forth herein;
WHEREAS, the Incremental Revolving Lender has indicated a willingness to provide the Incremental Revolving Commitments on the terms and subject to the conditions set forth herein; and
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Defined Terms; Rules of Construction. Capitalized terms used herein and not otherwise defined herein have the meanings assigned to such terms in the Credit Agreement or, if not defined therein, the Credit Agreement as amended hereby. The rules of construction specified in Section 1.2 of the Credit Agreement shall apply to this Sixth Amendment, including the terms defined in the preamble and recitals hereto.
SECTION 2. Amendments to the Credit Agreement.
(a) On the Sixth Amendment Effective Date (as defined below), the Incremental Revolving Lender hereby agrees to provide the Incremental Revolving Commitment set forth opposite its name on Schedule 1 attached hereto. Each such Incremental Revolving Commitment provided pursuant to this Section 2(a) shall be added to and become part of the existing Revolving Facility and shall be subject to all of the terms and conditions set forth in the Credit Agreement with respect to Revolving Commitments and Incremental Revolving Commitments under the Revolving Facility, including, without limitation, Section 3 of the Credit Agreement. The Borrower, the Administrative Agent and the Incremental Revolving Lender hereby agree that this Sixth Amendment shall be deemed to constitute an “Increase Revolving Joinder” in satisfaction of Section 3.16 of the Credit Agreement, and the Administrative Agent and each Issuing Lender hereby consent to the joinder of the Incremental Revolving Lender as a Revolving Lender under the Credit Agreement.
(b) After giving effect to this Sixth Amendment on the Sixth Amendment Effective Date, there shall be an automatic adjustment to the Revolving Credit Exposure of each Revolving Lender in the aggregate principal amount the outstanding Revolving Loans and the L/C Exposure (and the participation of the Revolving Lenders therein) to reflect the new Revolving Credit Exposure of each Revolving Lender in the aggregate principal amount of outstanding Revolving Loans and L/C Exposure (and the participation of the Revolving Lenders therein) resulting from the Incremental Revolving Commitment.
SECTION 3. Representations and Warranties. To induce the other parties hereto to enter into this Sixth Amendment, the Borrower hereby represents and warrants to each other party hereto that, as of the Sixth Amendment Effective Date (as defined below): (i) the Sixth Amendment has been duly authorized, executed and delivered by it and each of this Sixth Amendment and the Credit Agreement (as amended hereby on the Sixth Amendment Effective Date) constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law); (ii) after giving effect to this Sixth Amendment and the transactions contemplated by this Sixth Amendment, no Default or Event of Default has occurred and is continuing; and (iii) the execution, delivery and performance of this Sixth Amendment and the performance of the Credit Agreement (as amended hereby on the Sixth Amendment Effective Date) shall not (a) violate its Organizational Documents or the Loan Documents, (b) violate any Requirement of Law, Governmental Authorization or any Contractual Obligation of the Borrower or any Restricted Subsidiary (including, without limitation, the Convertible Notes Indentures and, in each case any Permitted Refinancings thereof) and (c) will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to its Organizational Documents, any Requirement of Law or any such Contractual Obligation (including, without limitation, the Convertible Notes Indentures and, in each case, any Permitted Refinancings thereof) (other than the Liens created by the Security Documents and the Liens permitted by Section 8.3 of the Credit Agreement), except for any violation set forth in clauses (b) or (c) which could not reasonably be expected to have a Material Adverse Effect.
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SECTION 4. Conditions of Effectiveness of this Sixth Amendment.
(a) This Sixth Amendment shall become effective as of the first date (the “Sixth Amendment Effective Date”) when each of the conditions set forth in this Section 4(a) shall have been satisfied (which, in the case of clause (ii) below, may be substantially concurrent with the satisfaction of the condition specified in clause (i) below):
(i) The Administrative Agent shall have received duly executed counterparts hereof that, when taken together, bear the signatures of the Borrower, each of the other Loan Parties, the Incremental Revolving Lender, each Issuing Lender and the Administrative Agent and the Collateral Agent.
(ii) The Borrower shall have paid all costs, fees and other amounts due and payable to the Agents and the Lenders, including, to the extent invoiced, reimbursement or payment of reasonable and documented out-of-pocket expenses in connection with this Sixth Amendment and any other reasonable and documented out-of-pocket expenses of the Agents, including the reasonable and documented out-of-pocket fees, charges and disbursements of counsel for the Administrative Agent, in each case as required to be paid or reimbursed pursuant to the Credit Agreement.
(iii) On the Sixth Amendment Effective Date and after giving effect to this Sixth Amendment, (A) no Default or Event of Default shall have occurred and be continuing or would result from the borrowings to be made on the Sixth Amendment Effective Date and (B) each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of the Sixth Amendment Effective Date (except to (I) the extent made as of a specific date, in which case such representation and warranty shall be true and correct in all material respects on and as of such specific date and (II) representations and warranties qualified by materiality shall be true and correct in all respects).
(iv) The Administrative Agent shall have received from the Borrower a certificate executed by a Responsible Officer of the Borrower, certifying compliance with (A) the requirements of the immediately preceding clause (iii) and (B) as to compliance with the requirements of Section 11.1 of the Credit Agreement and compliance with Section 3.16 of the Credit Agreement relating to Incremental Revolving Commitments.
(v) The Administrative Agent shall have received a legal opinion, dated the Sixth Amendment Effective Date, of Morrison & Foerster LLP, counsel to the Borrower and its Subsidiaries, reasonably acceptable to the Administrative Agent.
(vi) The Administrative Agent shall have received (x) a solvency certificate substantially in the form of Exhibit I-2 to the Credit Agreement, executed as of the Sixth Amendment Effective Date by the chief financial officer of the Borrower and (y) a certificate of each Loan Party, dated as of the Sixth Amendment Effective Date, substantially in the form of Exhibit F-2 to the Credit Agreement, with appropriate insertions and attachments including the certificate of incorporation of each Loan Party
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certified by the relevant authority of the jurisdiction of organization of such Loan Party (or a certification from the applicable Loan Party that there has been no change to such organizational documents since June 12, 2019), good standings from the applicable secretary of state of organization of each Loan Party, a certificate of resolutions or other action, incumbency certificates of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Sixth Amendment and the other Loan Documents to which such Loan Party is a party or is to be a party on the Sixth Amendment Effective Date.
SECTION 5. Effect of Sixth Amendment. (a) Except as expressly set forth in this Sixth Amendment or in the Credit Agreement, this Sixth Amendment shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders or the Agents under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other provision of the Credit Agreement or of any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Without limiting the generality of the foregoing, the Security Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents (including all Incremental Revolving Commitments), in each case, as amended by this Sixth Amendment. Nothing herein shall be deemed to entitle the Borrower to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or different circumstances.
(b) On and after the Sixth Amendment Effective Date, each reference in (i) the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import, and each reference to the Credit Agreement in any other Loan Document shall be deemed a reference to the Credit Agreement as modified by this Sixth Amendment. This Sixth Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents.
(c) This Sixth Amendment, the Credit Agreement and the other Loan Documents constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties hereto with respect to the subject matter hereof.
(d) This Sixth Amendment may not be amended, modified or waived except in accordance with Section 11.1 of the Credit Agreement.
SECTION 6. Costs and Expenses. The Borrower hereby agrees to reimburse the Administrative Agent for its reasonable and documented out-of-pocket expenses in connection with this Sixth Amendment, including the reasonable and documented out-of-pocket fees, charges and disbursements of counsel for the Administrative Agent, in each case, as required to be reimbursed pursuant to the Credit Agreement.
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SECTION 7. Post-Closing Obligations. Within ninety (90) days after the Sixth Amendment Effective Date, unless extended in writing by the Administrative Agent in its reasonable discretion, the Borrower shall deliver or shall cause the applicable Loan Party to deliver, to the Administrative Agent, the following:
(a) an executed amendment to each existing Mortgage (a “Mortgage Amendment” and the existing Mortgage, as amended by such Mortgage Amendment, a “Mortgage”), in form and substance reasonably acceptable to the Administrative Agent, together with evidence of completion (or satisfactory arrangements for the completion) of all recordings and filings of each Mortgage Amendment as may be necessary to protect and preserve the Lien of the Mortgage;
(b) with respect to each Mortgage, a date down and modification endorsement (or to the extent a date down and modification endorsement is not available, a new title insurance policy) to the existing lender’s title insurance policy insuring such Mortgage, which shall be in form and substance reasonably satisfactory to the Administrative Agent and insures that the Mortgage is a valid and enforceable first priority lien on the Mortgaged Property, free and clear of all Liens other than Liens permitted under Section 8.3 of the Credit Agreement; and
(c) an opinion addressed to the Administrative Agent and the Secured Parties, in form and substance reasonably satisfactory to the Administrative Agent, from local counsel in the jurisdiction in which the Mortgaged Property is located which shall include, without limitation, the enforceability of the Mortgage.
SECTION 8. Reaffirmation. By executing and delivering a counterpart hereof, (i) the Borrower and the Subsidiary Guarantors party hereto hereby agree that all Loans incurred by the Borrower and the Incremental Revolving Commitments shall be guaranteed pursuant to the Guarantee and Collateral Agreement in accordance with the terms and provisions thereof and shall be secured pursuant to the Security Documents in accordance with the terms and provisions thereof and (ii) each of the Borrower and the Subsidiary Guarantors party hereto hereby (A) agrees that, notwithstanding the effectiveness of this Sixth Amendment, after giving effect to this Sixth Amendment, the Security Documents continue to be in full force and effect, (B) agrees that all of the Liens and security interests created and arising under each Security Document remain in full force and effect on a continuous basis, and the perfected status and priority of each such Lien and security interest continues in full force and effect on a continuous basis, unimpaired, uninterrupted and undischarged, as collateral security for its obligations, liabilities and indebtedness under the Credit Agreement and under its guarantees in the Loan Documents, in each case, to the extent provided in, and subject to the limitations and qualifications set forth in, such Loan Documents (as amended by this Sixth Amendment) and (C) affirms and confirms all of its obligations, liabilities and indebtedness under the Credit Agreement and each other Loan Document (including the Incremental Revolving Commitments), in each case after giving effect to this Sixth Amendment, including its guarantee of the Obligations and the pledge of and/or grant of a security interest in its assets as Collateral pursuant to the Security Documents to secure such Obligations, all as provided in the Security Documents, and acknowledges and agrees that such obligations, liabilities, guarantee, pledge and grant continue in full force and effect in respect of, and to secure, such Obligations under the Credit Agreement and the other Loan Documents, in each case, to the extent provided in, and subject to the limitations and qualifications set forth in, such Loan Documents (as amended by this Sixth Amendment).
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SECTION 9. GOVERNING LAW. THIS SIXTH AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SIXTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 10. Counterparts. This Sixth Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by facsimile or other electronic transmission (including in “.pdf” or “.tif” format) of an executed counterpart of a signature page to this Sixth Amendment shall be effective as delivery of an original executed counterpart of this Sixth Amendment.
SECTION 11. Headings. Section headings herein are included for convenience of reference only and shall not affect the interpretation of this Sixth Amendment.
SECTION 12. Severability. Section 11.9 of the Credit Agreement is hereby incorporated by reference into this Sixth Amendment and shall apply to this Sixth Amendment, mutatis mutandis.
[Remainder of page intentionally blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment to be duly executed by their duly authorized officers, all as of the date and year first above written.
|
ON SEMICONDUCTOR CORPORATION,
as Borrower |
||
| By: |
/s/ Bernard Gutmann |
|
| Name: | Bernard Gutmann | |
| Title: | Chief Financial Officer | |
| SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC, a Delaware limited liability company | ||
| By: |
/s/ Keith D. Jackson |
|
| Name: | Keith D. Jackson | |
| Title: | President and Chief Financial Officer | |
| APTINA, LLC, a Delaware limited liability company | ||
| By: |
/s/ Keith D Jackson |
|
| Name: | Keith D. Jackson | |
| Title: | President | |
|
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC., a Delaware corporation |
||
| By: |
/s/ Bernard Gutmann |
|
| Name: | Bernard Gutmann | |
| Title: | Chief Financial Officer | |
|
FAIRCHILD SEMICONDUCTOR CORPORATION, a Delaware corporation |
||
| By: |
/s/ B. Gutmann |
|
| Name: | Bernard Gutmann | |
| Title: | Chief Financial Officer | |
Signature Page to ON Semi Sixth Amendment (2019)
|
FAIRCHILD SEMICONDUCTOR CORPORATION OF CALIFORNIA, a Delaware corporation |
||
| By: |
/s/ Bernard Gutmann |
|
| Name: | Bernard Gutmann | |
| Title: | Chief Financial Officer | |
|
GIANT HOLDINGS, INC., a Delaware corporation |
||
| By: |
/s/ Bernard Gutmann |
|
| Name: | Bernard Gutmann | |
| Title: | Chief Financial Officer | |
|
SILICON PATENT HOLDINGS, a California corporation |
||
| By: |
/s/ Bernard Gutmann |
|
| Name: | Bernard Gutmann | |
| Title: | Chief Financial Officer | |
|
GIANT SEMICONDUCTOR CORPORATION, a North Carolina corporation |
||
| By: |
/s/ Bernard Gutmann |
|
| Name: | Bernard Gutmann | |
| Title: | Chief Financial Officer | |
|
MICRO-OHM CORPORATION, a North Carolina corporation |
||
| By: |
/s/ Bernard Gutmann |
|
| Name: | Bernard Gutmann | |
| Title: | Chief Financial Officer | |
Signature Page to ON Semi Sixth Amendment (2019)
|
FAIRCHILD ENERGY, LLC, a Maine corporation |
||
| By: |
/s/ Bernard Gutmann |
|
| Name: | Bernard Gutmann | |
| Title: | Chief Financial Officer | |
Signature Page to ON Semi Sixth Amendment (2019)
| DEUTSCHE BANK AG NEW YORK BRANCH, as Administrative Agent, Collateral Agent and Issuing Lender | ||
| By: |
/s/ Yumi Okabe |
|
| Name: | Yumi Okabe | |
| Title: | Vice President | |
| By: |
/s/ Michael Strobel |
|
| Name: | Michael Strobel | |
| Title: | Vice President | |
Signature Page to ON Semi Sixth Amendment (2019)
SCHEDULE 1
|
Incremental Revolving Lender |
Incremental Revolving
Commitment |
|||
|
Barclays Bank PLC |
$ | 70,000,000.00 | ||
|
TOTAL |
$ | 70,000,000.00 | ||
Exhibit 31.1
CERTIFICATIONS
I, Keith D. Jackson, certify that:
| 1. |
I have reviewed this quarterly report on Form 10-Q of ON Semiconductor Corporation; |
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: October 28, 2019 |
/s/ KEITH D. JACKSON |
|
| Keith D. Jackson | ||
| Chief Executive Officer |
Exhibit 31.2
CERTIFICATIONS
I, Bernard Gutmann, certify that:
| 1. |
I have reviewed this quarterly report on Form 10-Q of ON Semiconductor Corporation; |
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: October 28, 2019 |
/s/ BERNARD GUTMANN |
|
| Bernard Gutmann | ||
| Chief Financial Officer |
Exhibit 32
Certification
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
For purposes of Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of ON Semiconductor Corporation, a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:
The Quarterly Report on Form 10-Q for the fiscal quarter ended September 27, 2019 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: October 28, 2019 |
/s/ KEITH D. JACKSON |
|
| Keith D. Jackson | ||
| President and Chief Executive Officer | ||
| Dated: October 28, 2019 |
/s/ BERNARD GUTMANN |
|
| Bernard Gutmann | ||
| Executive Vice President, Chief Financial Officer, and Treasurer | ||