We believe that non-GAAP financial measures reflect an additional way of viewing aspects of our operations that – when taken together with GAAP results and the reconciliations to corresponding GAAP financial measures that we also provide in our press releases – provide a more complete understanding of factors and trends affecting our business. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with non-GAAP financial measures used by our company or other companies, even if they have similar names.
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
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ANALYSIS OF GAAP VERSUS NON-GAAP DISCLOSURES |
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(in millions, except per share and percentage data) |
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Quarter Ended | Year Ended | ||||||||||||||||||||||
December 31, |
October 2, |
December 31, | December 31, | December 31, | |||||||||||||||||||
2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
Reconciliation of GAAP gross profit to non-GAAP gross profit: | |||||||||||||||||||||||
GAAP gross profit | $ | 279.9 | $ | 308.5 | $ | 277.7 | $ | 1,193.2 | $ | 1,084.9 | |||||||||||||
Special items: | |||||||||||||||||||||||
a) | Actuarial (gains) losses on pension plans and other pension benefits | (0.8 | ) | — | 3.9 | (0.8 | ) | 3.9 | |||||||||||||||
b) | Expensing of appraised inventory at fair market value step up | — | — | 12.8 | — | 27.0 | |||||||||||||||||
Total special items | (0.8 | ) | — | 16.7 | (0.8 | ) | 30.9 | ||||||||||||||||
Non-GAAP gross profit | $ | 279.1 | $ | 308.5 | $ | 294.4 | $ | 1,192.4 | $ | 1,115.8 | |||||||||||||
Reconciliation of GAAP gross margin to non-GAAP gross margin: | |||||||||||||||||||||||
GAAP gross margin | 33.3 | % | 34.1 | % | 32.1 | % | 34.1 | % | 34.3 | % | |||||||||||||
Special items: | |||||||||||||||||||||||
a) | Actuarial (gains) losses on pension plans and other pension benefits | (0.1 | )% | — | % | 0.5 | % | — | % | 0.1 | % | ||||||||||||
b) | Expensing of appraised inventory at fair market value step up | — | % | — | % | 1.5 | % | — | % | 0.9 | % | ||||||||||||
Total special items | (0.1 | )% | — | % | 2.0 | % | — | % | 1.0 | % | |||||||||||||
Non-GAAP gross margin | 33.2 | % | 34.1 | % | 34.1 | % | 34.1 | % | 35.3 | % | |||||||||||||
Reconciliation of GAAP operating expenses to non-GAAP operating expenses: | |||||||||||||||||||||||
GAAP operating expenses | $ | 224.4 | $ | 239.1 | $ | 263.1 | $ | 932.1 | $ | 856.0 | |||||||||||||
Special items: | |||||||||||||||||||||||
a) | Amortization of acquisition related intangible assets | (34.6 | ) | (33.6 | ) | (28.8 | ) | (135.7 | ) | (68.4 | ) | ||||||||||||
b) | Actuarial gains (losses) on pension plans and other pension benefits | 4.2 | — | (8.4 | ) | 4.2 | (8.4 | ) | |||||||||||||||
c) | Restructuring, asset impairments and other, net | (4.8 | ) | (3.3 | ) | (10.5 | ) | (9.3 | ) | (30.5 | ) | ||||||||||||
d) | Goodwill and intangible asset impairments | — | (0.1 | ) | (9.6 | ) | (3.8 | ) | (9.6 | ) | |||||||||||||
e) | Third party acquisition related costs | (3.3 | ) | (0.2 | ) | (0.1 | ) | (3.5 | ) | (8.1 | ) | ||||||||||||
Total special items | (38.5 | ) | (37.2 | ) | (57.4 | ) | (148.1 | ) | (125.0 | ) | |||||||||||||
Non-GAAP operating expenses | $ | 185.9 | $ | 201.9 | $ | 205.7 | $ | 784.0 | $ | 731.0 | |||||||||||||
Reconciliation of GAAP operating income to non-GAAP operating income: | |||||||||||||||||||||||
GAAP operating income | $ | 55.5 | $ | 69.4 | $ | 14.6 | $ | 261.1 | $ | 228.9 | |||||||||||||
Special items: | |||||||||||||||||||||||
a) | Actuarial (gains) losses on pension plans and other pension benefits (cost of revenues) | (0.8 | ) | — | 3.9 | (0.8 | ) | 3.9 | |||||||||||||||
b) | Expensing of appraised inventory at fair market value step up | — | — | 12.8 | — | 27.0 | |||||||||||||||||
c) | Amortization of acquisition related intangible assets | 34.6 | 33.6 | 28.8 | 135.7 | 68.4 | |||||||||||||||||
d) | Actuarial (gains) losses on pension plans and other pension benefits (operating expenses) | (4.2 | ) | — | 8.4 | (4.2 | ) | 8.4 | |||||||||||||||
e) | Restructuring, asset impairments and other, net | 4.8 | 3.3 | 10.5 | 9.3 | 30.5 | |||||||||||||||||
f) | Goodwill and intangible asset impairments | — | 0.1 | 9.6 | 3.8 | 9.6 | |||||||||||||||||
g) | Third party acquisition related costs | 3.3 | 0.2 | 0.1 | 3.5 | 8.1 | |||||||||||||||||
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Total special items | 37.7 | 37.2 | 74.1 | 147.3 | 155.9 | |||||||||||||||||
Non-GAAP operating income | $ | 93.2 | $ | 106.6 | $ | 88.7 | $ | 408.4 | $ | 384.8 | |||||||||||||
Reconciliation of GAAP operating margin to non-GAAP operating margin (operating income / revenues) : | |||||||||||||||||||||||
GAAP operating margin | 6.6 | % | 7.7 | % | 1.7 | % | 7.5 | % | 7.2 | % | |||||||||||||
Special items: | |||||||||||||||||||||||
a) | Actuarial (gains) losses on pension plans and other pension benefits (cost of revenues) | (0.1 | )% | — | % | 0.5 | % | — | % | 0.1 | % | ||||||||||||
b) | Expensing of appraised inventory at fair market value step up | — | % | — | % | 1.5 | % | — | % | 0.9 | % | ||||||||||||
c) | Amortization of acquisition related intangible assets | 4.1 | % | 3.7 | % | 3.3 | % | 3.9 | % | 2.2 | % | ||||||||||||
d) | Actuarial (gains) losses on pension plans and other pension benefits (operating expenses) | (0.5 | )% | — | % | 1.0 | % | (0.1 | )% | 0.3 | % | ||||||||||||
e) | Restructuring, asset impairments and other, net | 0.6 | % | 0.4 | % | 1.2 | % | 0.3 | % | 1.0 | % | ||||||||||||
f) | Goodwill and intangible asset impairments | — | % | — | % | 1.1 | % | 0.1 | % | 0.3 | % | ||||||||||||
g) | Third party acquisition related costs | 0.4 | % | — | % | — | % | 0.1 | % | 0.3 | % | ||||||||||||
Total special items | 4.5 | % | 4.1 | % | 8.6 | % | 4.2 | % | 4.9 | % | |||||||||||||
Non-GAAP operating margin | 11.1 | % | 11.8 | % | 10.3 | % | 11.7 | % | 12.2 | % | |||||||||||||
Reconciliation of GAAP net income to non-GAAP net income: | |||||||||||||||||||||||
GAAP net income attributable to ON Semiconductor Corporation | $ | 54.1 | $ | 46.3 | $ | (0.6 | ) | $ | 206.2 | $ | 189.7 | ||||||||||||
Special items: | |||||||||||||||||||||||
a) | Actuarial losses (gains) on pension plans and other pension benefits (cost of revenues) | (0.8 | ) | — | 3.9 | (0.8 | ) | 3.9 | |||||||||||||||
b) | Expensing of appraised inventory at fair market value step up | — | — | 12.8 | — | 27.0 | |||||||||||||||||
c) | Amortization of acquisition related intangible assets (operating expenses) | 34.6 | 33.6 | 28.8 | 135.7 | 68.4 | |||||||||||||||||
d) | Actuarial losses (gains) on pension plans and other pension benefits (operating expenses) | (4.2 | ) | — | 8.4 | (4.2 | ) | 8.4 | |||||||||||||||
e) | Restructuring, asset impairments and other, net | 4.8 | 3.3 | 10.5 | 9.3 | 30.5 | |||||||||||||||||
f) | Goodwill and intangible asset impairments | — | 0.1 | 9.6 | 3.8 | 9.6 | |||||||||||||||||
g) | Third party acquisition related costs | 3.3 | 0.2 | 0.1 | 3.5 | 8.1 | |||||||||||||||||
h) | Loss on debt extinguishment | — | — | — | 0.4 | — | |||||||||||||||||
i) | Gain on sale of available-for-sale securities | — | (0.7 | ) | — | (5.4 | ) | — | |||||||||||||||
j) | Non-cash interest on convertible notes | 6.3 | 6.4 | 1.9 | 17.5 | 7.0 | |||||||||||||||||
k) | Adjustment to reflect cash taxes | (19.2 | ) | 6.3 | 0.9 | (9.1 | ) | (18.3 | ) | ||||||||||||||
Total special items | 24.8 | 49.2 | 76.9 | 150.7 | 144.6 | ||||||||||||||||||
Non-GAAP net income | $ | 78.9 | $ | 95.5 | $ | 76.3 | $ | 356.9 | $ | 334.3 | |||||||||||||
Non-GAAP net income per share: | |||||||||||||||||||||||
Basic | $ | 0.19 | $ | 0.23 | $ | 0.18 | $ | 0.85 | $ | 0.76 | |||||||||||||
Diluted | $ | 0.19 | $ | 0.23 | $ | 0.18 | $ | 0.83 | $ | 0.75 | |||||||||||||
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 | ||||||||||||||||||