Background And Basis Of Presentation

9 Months Ended

Sep. 30, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background And Basis Of Presentation

Background and Basis of Presentation

ON Semiconductor Corporation (“ON Semiconductor”), together with its wholly and majority-owned subsidiaries (the “Company”), is a premier supplier of high performance, silicon solutions for energy efficient electronics. The Company’s broad portfolio of power and signal management, logic, discrete and custom devices helps customers efficiently solve their design challenges in automotive, communications, computing, consumer, industrial, LED lighting, medical, military/aerospace and power applications.

On January 1, 2011, the Company completed the purchase of SANYO Semiconductor Co. Ltd. (“SANYO Semiconductor”), a subsidiary of SANYO Electric Co. Ltd. (“SANYO Electric”), and certain other assets related to SANYO Electric’s semiconductor business, whereby SANYO Semiconductor became a wholly-owned subsidiary of the Company (see Note 2: “Acquisitions” for further discussion).

On February 27, 2011, the Company completed the purchase of the CMOS Image Sensor Business Unit (“ISBU”) from Cypress Semiconductor Corporation (“Cypress Semiconductor”) (see Note 2: “Acquisitions” for further discussion).

The accompanying unaudited financial statements as of September 30, 2011, and for the three and nine months ended September 30, 2011 and October 1, 2010, respectively, have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for audited financial statements. In the opinion of the Company’s management, the interim information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The footnote disclosures related to the interim financial information included herein are also unaudited. Such financial information should be read in conjunction with the consolidated financial statements and related notes thereto for the year ended December 31, 2010, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (“2010 Form 10-K”). The results for the interim periods are not necessarily indicative of the results of operations that may be expected for the full year.

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Significant estimates have been used by management in conjunction with the measurement of valuation allowances relating to trade and tax receivables, inventories and deferred tax assets; estimates of future payouts for customer incentives, warranties, and restructuring activities; assumptions surrounding future pension obligations and related trust returns; the fair value of stock options and of financial instruments (including derivative financial instruments); and future cash flows associated with long-lived assets and goodwill impairment charges. Actual results could differ from these estimates.

Revision of Prior Period Financial Statements

In connection with the preparation of the Company's unaudited consolidated financial statements for the third quarter of 2011, the Company identified an error related to the amounts recognized for foreign exchange gains and losses reported during the quarters ended April 1, 2011 and July 1, 2011 that were associated with the SANYO Semiconductor business. These amounts are reported as other income and expense in the consolidated statement of operations. The effect of the error was that pre-tax (and net) income were overstated by $2.3 million and $6.7 million in the first and second quarters of 2011, respectively. In accordance with accounting guidance found in Accounting Standards Codification ("ASC") 250 "Accounting Changes and Error Corrections," the Company assessed the significance of the error and concluded that the error was not material to any of the Company's previously issued financial statements. Accordingly, management will revise in its subsequent quarterly filings on Form 10-Q, its previously reported Consolidated Statements of Operations for the quarters ended April 1, 2011 and July 1, 2011 . All comparisons to those periods will reflect the revised amounts. This non-cash revision does not impact the Company's previously reported consolidated cash flows from operations for any period and the impact on previously reported consolidated balance sheet amounts was not significant.

The following table presents the effects of this correction on the Company’s Consolidated Statements of Operations for all periods affected (in millions):

	For Quarter Ended						For Quarter Ended					For Six Months Ended
	April 1, 2011						July 1, 2011					July 1, 2011
	As reported			As revised			As reported		As revised			As reported		As revised
Other income (expenses), net:
Other	$	(0.2	)	$	(2.5	)	$	5.7	$	(1.0	)	$	5.5	$	(3.5	)
Net income attributable to ON Semiconductor Corporation	$	74.8		$	72.5		$	41.0	$	34.3		$	123.6	$	114.6
Net income per common share attributable to ON Semiconductor Corporation:
Basic	$	0.17		$	0.16		$	0.09	$	0.08		$	0.28	$	0.26
Diluted	$	0.16		$	0.16		$	0.09	$	0.07		$	0.27	$	0.25