ON Semiconductor Reports Fourth Quarter and 2015 Annual Results

Notice to Investors

This press release is for informational purposes only, and it does not constitute an offer to purchase or a solicitation of an offer to sell any securities. The offer is being made pursuant to a Tender Offer Statement on Schedule TO filed by ON Semiconductor with the SEC on December 4, 2015. Fairchild filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC with respect to the tender offer on December 4, 2015. THE TENDER OFFER MATERIALS (INCLUDING THE OFFER TO PURCHASE, THE RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS) AND THE SOLICITATION / RECOMMENDATION STATEMENT, INCLUDING IN EACH CASE ANY AMENDMENTS OR SUPPLEMENTS THERETO, CONTAIN IMPORTANT INFORMATION. HOLDERS OF SHARES OF FAIRCHILD COMMON STOCK ARE URGED TO READ THESE DOCUMENTS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF SHARES OF FAIRCHILD COMMON STOCK SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR SHARES. The Offer to Purchase, the related Letter of Transmittal and certain other tender offer documents, as well as the Solicitation/Recommendation Statement, are being made available to all holders of shares of Fairchild common stock at no expense to them. The tender offer materials and the Solicitation/Recommendation Statement are available at no charge on the SEC’s website at www.sec.gov.


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

	Quarter Ended									Year Ended
	December 31,			October 2,			December 31,			December 31,			December 31,
	2015			2015			2014			2015			2014
Revenues	$	840.3		$	904.2		$	864.2		$	3,495.8		$	3,161.8
Cost of revenues (exclusive of amortization shown below)		560.4			595.7			586.5			2,302.6			2,076.9
Gross profit		279.9			308.5			277.7			1,193.2			1,084.9
Gross margin		33.3	%		34.1	%		32.1	%		34.1	%		34.3	%
Operating expenses:
Research and development		91.0			104.9			110.9			396.7			366.6
Selling and marketing		48.3			52.3			56.6			204.3			200.0
General and administrative		45.7			44.9			46.7			182.3			180.9
Amortization of acquisition-related intangible assets		34.6			33.6			28.8			135.7			68.4
Restructuring, asset impairments and other, net		4.8			3.3			10.5			9.3			30.5
Goodwill and intangible asset impairment		—			0.1			9.6			3.8			9.6
Total operating expenses		224.4			239.1			263.1			932.1			856.0
Operating income		55.5			69.4			14.6			261.1			228.9
Other income (expense), net:
Interest expense		(14.9	)		(14.9	)		(9.5	)		(49.7	)		(34.1	)
Interest income		0.3			0.2			0.9			1.1			1.5
Other		(0.2	)		2.1			(2.3	)		7.7			(4.4	)
Loss on debt extinguishment		—			—			—			(0.4	)		—
Other expense, net		(14.8	)		(12.6	)		(10.9	)		(41.3	)		(37.0	)
Income before income taxes		40.7			56.8			3.7			219.8			191.9
Income tax benefit (provision)		14.3			(10.0	)		(3.5	)		(10.8	)		0.2
Net income		55.0			46.8			0.2			209.0			192.1
Less: Net income attributable to non-controlling interest		(0.9	)		(0.5	)		(0.8	)		(2.8	)		(2.4	)
Net income (loss) attributable to ON Semiconductor Corporation	$	54.1		$	46.3		$	(0.6	)	$	206.2		$	189.7
Net income per common share attributable to ON Semiconductor Corporation:
Basic	$	0.13		$	0.11		$	—		$	0.49		$	0.43
Diluted	$	0.13		$	0.11		$	—		$	0.48		$	0.43
Weighted average common shares outstanding:
Basic		412.5			413.7			435.9			421.2			439.5
Diluted		416.9			417.5			435.9			427.8			443.5


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

	December 31,			October 2,			December 31,
	2015			2015 ⁽¹⁾			2014 ⁽¹⁾
Assets
Cash and cash equivalents	$	617.6		$	556.8		$	511.7
Short-term investments		—			0.8			6.1
Receivables, net		426.4			505.9			417.5
Inventories		750.4			754.0			729.9
Other current assets		97.1			134.6			140.6
Total current assets		1,891.5			1,952.1			1,805.8
Property, plant and equipment, net		1,274.1			1,256.1			1,203.9
Goodwill		270.6			270.6			263.8
Intangible assets, net		325.8			360.5			458.5
Other assets		107.6			95.3			90.1
Total assets	$	3,869.6		$	3,934.6		$	3,822.1
Liabilities, Non-Controlling Interest and Stockholders’ Equity
Accounts payable	$	337.7		$	361.9		$	378.2
Accrued expenses		246.2			306.4			287.9
Deferred income on sales to distributors		112.0			130.4			165.1
Current portion of long-term debt		543.4			538.7			209.6
Total current liabilities		1,239.3			1,337.4			1,040.8
Long-term debt		850.5			853.8			982.1
Other long-term liabilities		147.9			162.3			151.8
Total liabilities		2,237.7			2,353.5			2,174.7
ON Semiconductor Corporation stockholders’ equity:
Common stock		5.3			5.3			5.2
Additional paid-in capital		3,420.3			3,404.0			3,281.2
Accumulated other comprehensive loss		(42.3	)		(44.1	)		(41.5	)
Accumulated deficit		(709.4	)		(763.5	)		(915.6	)
Less: Treasury stock, at cost		(1,065.7	)		(1,043.4	)		(702.8	)
Total ON Semiconductor Corporation stockholders’ equity		1,608.2			1,558.3			1,626.5
Non-controlling interest in consolidated subsidiary		23.7			22.8			20.9
Total stockholders' equity		1,631.9			1,581.1			1,647.4
Total liabilities and equity	$	3,869.6		$	3,934.6		$	3,822.1

⁽¹⁾		The Company retrospectively adjusted certain amounts shown above for the periods ended October 2, 2015 and December 31, 2014, related to measurement period adjustments with respect to the purchase price allocation of our recent acquisitions and for the adoption of Accounting Standards Update No. 2015-03 - "Simplifying the Presentation of Debt Issuance Costs."


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,			October 2,			December 31,			December 31,			December 31,
	2015			2015			2014			2015			2014
Net income	$	55.0		$	46.8		$	0.2		$	209.0		$	192.1
Adjusted for:
Restructuring, asset impairments and other, net		4.8			3.3			10.5			9.3			30.5
Goodwill and intangible asset impairment		—			0.1			9.6			3.8			9.6
Interest expense		14.9			14.9			9.5			49.7			34.1
Interest income		(0.3	)		(0.2	)		(0.9	)		(1.1	)		(1.5	)
Loss on debt extinguishment		—			—			—			0.4			—
Gain on sale of available-for-sale securities		—			(0.7	)		—			(5.4	)		—
Income tax (benefit) provision		(14.3	)		10.0			3.5			10.8			(0.2	)
Net income attributable to non-controlling interest		(0.9	)		(0.5	)		(0.8	)		(2.8	)		(2.4	)
Depreciation and amortization		89.8			89.2			86.4			357.6			268.8
Actuarial (gains) losses on pension plans and other pension benefits		(5.0	)		—			12.3			(5.0	)		12.3
Expensing of appraised inventory at fair market value step up		—			—			12.8			—			27.0
Third party acquisition related costs		3.3			0.2			0.1			3.5			8.1
Adjusted EBITDA*		147.3			163.1			143.2			629.8			578.4
Increase (decrease):
Restructuring, asset impairments and other, net		(4.8	)		(3.3	)		(10.5	)		(9.3	)		(30.5	)
Interest expense		(14.9	)		(14.9	)		(9.5	)		(49.7	)		(34.1	)
Interest income		0.3			0.2			0.9			1.1			1.5
Gain on sale of available-for-sale securities		—			0.7			—			5.4			—
Income tax benefit (provision)		14.3			(10.0	)		(3.5	)		(10.8	)		0.2
Net income attributable to non-controlling interest		0.9			0.5			0.8			2.8			2.4
Actuarial gains (losses) on pension plans and other pension benefits		5.0			—			(12.3	)		5.0			(12.3	)
Expensing of appraised inventory at fair market value step up		—			—			(12.8	)		—			(27.0	)
Third party acquisition related costs		(3.3	)		(0.2	)		(0.1	)		(3.5	)		(8.1	)
Loss (gain) on sale or disposal of fixed assets		0.2			0.4			(0.8	)		(3.9	)		(1.4	)
Amortization of debt issuance costs		0.9			1.0			0.4			2.8			1.4
Write-down of excess inventories		14.0			10.2			19.5			52.4			40.6
Non-cash asset impairment charges		—			—			4.7			0.2			6.5
Non-cash share-based compensation expense		10.6			10.9			12.8			46.9			45.8
Non-cash interest		6.3			6.4			1.9			17.5			7.0
Change in deferred taxes		(9.3	)		0.5			(3.9	)		(9.2	)		(18.8	)
Other		2.7			(0.4	)		3.0			(2.8	)		1.8
Changes in operating assets and liabilities		(13.0	)		(36.8	)		28.7			(204.1	)		(72.1	)
Net cash provided by operating activities	$	157.2		$	128.3		$	162.5			470.6			481.3

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