Earnings Per Share and Equity

3 Months Ended

Apr. 03, 2020

Note 7: Earnings Per Share and Equity

Earnings Per Share

Net income (loss) per common share attributable to ON Semiconductor Corporation is calculated as follows (in millions, except per share data):


	Quarters Ended
	April 3, 2020		March 29, 2019
Net income (loss) attributable to ON Semiconductor Corporation	$	(14.0)	$	114.1
Basic weighted-average common shares outstanding	410.6		410.6
Dilutive effect of share-based awards	—		3.2
Dilutive effect of convertible notes	—		3.9
Diluted weighted-average common shares outstanding	410.6		417.7

Net income (loss) per common share attributable to ON Semiconductor Corporation:
Basic	$	(0.03)	$	0.28
Diluted	$	(0.03)	$	0.27

Basic income (loss) per common share is computed by dividing net income (loss) attributable to the Company by the weighted average number of common shares outstanding during the period.

To calculate the diluted weighted-average common shares outstanding, the number of incremental shares from the assumed exercise of stock options and assumed issuance of shares relating to RSUs is calculated by applying the treasury stock method. Share-based awards whose impact is considered to be anti-dilutive under the treasury stock method were excluded from the diluted net income per share calculation. The excluded number of anti-dilutive share-based awards was 2.6 million and 0.6 million for the quarters ended April 3, 2020 and March 29, 2019. The increase in the anti-dilutive share-based awards for the quarter ended April 3, 2020 was due to the net loss for the quarter ended April 3, 2020, as the inclusion would have the effect of decreasing the net loss per common share attributable to the Company.

The dilutive impact related to the 1.00% Notes and 1.625% Notes is determined in accordance with the net share settlement requirements, under which the Company's convertible notes are assumed to be convertible into cash up to the par value, with the excess of par value being convertible into common stock. During the quarter ended April 3, 2020, although the average share price exceeded the conversion price for the 1.00% Notes, the impact of the excess over par value was excluded in calculating the dilutive effect of the convertible notes as the impact would be anti-dilutive due to the net loss for the quarter ended April 3, 2020.

Equity

Share Repurchase Program

Under the Company's share repurchase program announced on November 15, 2018 (the “Share Repurchase Program”), the Company may repurchase up to $1.5 billion (exclusive of fees, commissions and other expenses) of the Company’s common stock from December 1, 2018 through December 31, 2022.

There were $65.3 million and $75.7 million in repurchases of the Company's common stock under the Share Repurchase Program during the quarters ended April 3, 2020 and March 29, 2019, respectively. As of April 3, 2020, the authorized amount remaining under the Share Repurchase Program was $1,295.8 million.

Information relating to the Share Repurchase Program during the quarter ended April 3, 2020 and March 29, 2019 is as follows (in millions, except per share data):


	Quarters Ended
	April 3, 2020		March 29, 2019
Number of repurchased shares (1)	3.6		4.4
Aggregate purchase price	$	65.3	$	75.7
Fees, commissions and other expenses	0.1		0.1
Less: Ending accrued share repurchases (2)	—		(0.8)
Total cash used for share repurchases	$	65.4	$	75.0
Weighted-average purchase price per share (3)	$	18.08	$	17.17

(1) None of these shares had been reissued or retired as of April 3, 2020, but may be reissued or retired by the Company at a later date.

(2) Represents unpaid amounts recorded in accrued expenses and other current liabilities.

(3) Exclusive of fees, commissions and other expenses.

Shares for Restricted Stock Units Tax Withholding

Shares with a fair market value equal to the applicable amount of the employee withholding taxes due are withheld by the Company upon the vesting of RSUs to pay the applicable amount of employee withholding taxes and are considered common stock repurchases. The Company then pays the applicable amount of withholding taxes in cash. The amounts remitted during the quarters ended April 3, 2020 and March 29, 2019 were $16.0 million and $26.1 million, respectively, for which the Company withheld approximately 0.9 million and 1.2 million shares of common stock, respectively, that were underlying the RSUs that vested. Treasury stock is recorded at cost and is presented as a reduction of stockholders' equity in the accompanying consolidated financial statements. None of these shares had been reissued or retired as of April 3, 2020, but may be reissued or retired by the Company at a later date. These repurchases in connection with tax withholding upon vesting were not made under the Share Repurchase Program, and the amounts spent in connection with such deemed repurchases did not reduce the authorized amount remaining under the Share Repurchase Program.

Non-Controlling Interest

The Company owns 80% of the outstanding equity interests in a joint venture, Leshan-Phoenix Semiconductor Company Limited (“Leshan”), which operates assembly and test operations in Leshan, China. The results of Leshan have been consolidated in the Company's financial statements. As of December 31, 2019, the non-controlling interest balance was $22.4

million. This balance increased to $22.7 million as of April 3, 2020, resulting from the non-controlling interest’s $0.3 million share of the earnings for the quarter ended April 3, 2020.During the quarter ended April 3, 2020, the Company acquired the remaining 40% of the equity interest in ON Semiconductor Aizu Co., Ltd., ("OSA") from Fujitsu Semiconductor Limited (“FSL”), whereby OSA became a wholly-owned subsidiary of the Company. OSA operates a front-end wafer fabrication facility in Aizuwakamatsu, Japan. The purchase price payable to FSL for the remaining 40% equity, offset by the purchase price adjustment, resulted in the Company receiving $26.0 million from FSL during the quarter ended April 3, 2020. The results of OSA have been consolidated in the Company’s financial statements since the fourth quarter of 2018, when the Company acquired the majority equity interest.