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 |
(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 | ||||||
N/A |
☒ | 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 |
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. | |||||||
ASIC | Application specific integrated circuit | |||||||
ASU | Accounting Standards Update | |||||||
BEPS | Base Erosion Profit Shifting, as defined by the OECD | |||||||
DSP | Digital signal processing | |||||||
EPA | Environmental Protection Agency | |||||||
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 | |||||||
LED | Light-emitting diode | |||||||
LIBO Rate | 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 | |||||||
ODM | Original device manufacturers | |||||||
OECD | Organization for Economic Co-operation and Development | |||||||
OEM | Original equipment manufacturers | |||||||
PRP | Potentially Responsible Party | |||||||
Revolving Credit Facility | A $1.97 billion revolving credit facility created pursuant to the Amended Credit Agreement | |||||||
RSU | Restricted stock unit | |||||||
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 |
July 3, 2020 | December 31, 2019 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Receivables, net | |||||||||||
Inventories | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Deferred tax assets | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities, Non-Controlling Interest and Stockholders’ Equity | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses and other current liabilities | |||||||||||
Current portion of long-term debt | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Deferred tax liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 10) | |||||||||||
ON Semiconductor Corporation stockholders’ equity: | |||||||||||
Common stock ($ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Accumulated earnings | |||||||||||
Less: Treasury stock, at cost: | ( | ( | |||||||||
Total ON Semiconductor Corporation stockholders’ equity | |||||||||||
Non-controlling interest | |||||||||||
Total stockholders' equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ |
Quarters Ended | Six Months Ended | ||||||||||||||||||||||
July 3, 2020 | June 28, 2019 | July 3, 2020 | June 28, 2019 | ||||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
Cost of revenue (exclusive of amortization shown below) | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Selling and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Amortization of acquisition-related intangible assets | |||||||||||||||||||||||
Restructuring, asset impairments and other charges, net | |||||||||||||||||||||||
Intangible asset impairment | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Other income (expense), net: | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Interest income | |||||||||||||||||||||||
Loss on debt refinancing and prepayment | ( | ( | |||||||||||||||||||||
Other income (expense) | ( | ( | ( | ||||||||||||||||||||
Other income (expense), net | ( | ( | ( | ( | |||||||||||||||||||
Income (loss) before income taxes | ( | ( | |||||||||||||||||||||
Income tax (provision) benefit | ( | ( | ( | ||||||||||||||||||||
Net income (loss) | ( | ( | |||||||||||||||||||||
Less: Net income attributable to non-controlling interest | ( | ( | ( | ( | |||||||||||||||||||
Net income (loss) attributable to ON Semiconductor Corporation | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Comprehensive income (loss), net of tax: | |||||||||||||||||||||||
Net income (loss) | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Foreign currency translation adjustments | ( | ||||||||||||||||||||||
Effects of cash flow hedges | ( | ( | ( | ( | |||||||||||||||||||
Other comprehensive loss, net of tax | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Comprehensive income attributable to non-controlling interest | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive income (loss) attributable to ON Semiconductor Corporation | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Net income (loss) per share of common stock attributable to ON Semiconductor Corporation: | |||||||||||||||||||||||
Basic | $ | $ | $ | ( | $ | ||||||||||||||||||
Diluted | $ | $ | $ | ( | $ | ||||||||||||||||||
Weighted-average shares of common stock outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
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 April 3, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||
Shares issued pursuant to the ESPP | — | — | — | — | — | — | |||||||||||||||||||||||
RSUs and stock grant awards issued | — | — | — | — | — | — | — | ||||||||||||||||||||||
Payment of tax withholding for RSUs | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||
Comprehensive (loss) income | — | — | — | ( | ( | — | — | ( | |||||||||||||||||||||
Balance at July 3, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||
Shares issued pursuant to the ESPP | — | — | — | — | — | — | |||||||||||||||||||||||
RSUs and stock grant awards issued | — | — | — | — | — | — | — | ||||||||||||||||||||||
Payment of tax withholding for RSUs | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||
Comprehensive (loss) income | — | — | — | ( | ( | — | — | ( | |||||||||||||||||||||
Balance at July 3, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ |
Balance at March 29, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||
Stock option exercises | — | — | — | — | — | — | |||||||||||||||||||||||
Shares issued pursuant to the ESPP | — | — | — | — | — | — | |||||||||||||||||||||||
RSUs and stock grant awards issued | — | — | — | — | — | — | |||||||||||||||||||||||
Payment of tax withholding for RSUs | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||
Comprehensive (loss) income | — | — | — | ( | — | — | |||||||||||||||||||||||
Balance at June 28, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||
Stock option exercises | — | — | — | — | — | — | |||||||||||||||||||||||
Shares issued pursuant to the ESPP | — | — | — | — | — | — | |||||||||||||||||||||||
RSUs and stock grant awards issued | — | — | — | — | — | — | |||||||||||||||||||||||
Payment of tax withholding for RSUs | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||
Comprehensive (loss) income | — | — | — | ( | — | — | |||||||||||||||||||||||
Balance at June 28, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ |
Six Months Ended | |||||||||||
July 3, 2020 | June 28, 2019 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income (loss) | $ | ( | $ | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Non-cash (gain) loss on sale or disposal of fixed assets | ( | ||||||||||
Loss on debt refinancing and prepayment | |||||||||||
Amortization of debt discount and issuance costs | |||||||||||
Share-based compensation expense | |||||||||||
Non-cash interest on convertible notes | |||||||||||
Non-cash asset impairment charges | |||||||||||
Intangible asset impairment charges | |||||||||||
Change in deferred tax balances | ( | ||||||||||
Other | |||||||||||
Changes in assets and liabilities (exclusive of the impact of acquisitions): | |||||||||||
Receivables | ( | ||||||||||
Inventories | ( | ( | |||||||||
Other assets | ( | ||||||||||
Accounts payable | ( | ||||||||||
Accrued expenses and other current liabilities | ( | ( | |||||||||
Other long-term liabilities | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Purchase of property, plant and equipment | ( | ( | |||||||||
Proceeds from sale of property, plant and equipment | |||||||||||
Deposits utilized (made) for purchase of property, plant and equipment | ( | ||||||||||
Purchase of business, net of cash acquired | ( | ( | |||||||||
Purchase of license and deposit made for manufacturing facility | ( | ||||||||||
Release of escrow related to divestiture | |||||||||||
Settlement of purchase price from previous acquisition | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds for the issuance of common stock under the ESPP | |||||||||||
Proceeds from exercise of stock options | |||||||||||
Payment of tax withholding for RSUs | ( | ( | |||||||||
Repurchase of common stock | ( | ( | |||||||||
Borrowings under debt agreements | |||||||||||
Payment of debt issuance and other financing costs | ( | ||||||||||
Repayment of long-term debt | ( | ( | |||||||||
Acquisition related payments | ( | ||||||||||
Payment of finance lease obligations | ( | ||||||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | |||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
Cash, cash equivalents and restricted cash, beginning of period (Note 6) | |||||||||||
Cash, cash equivalents and restricted cash, end of period (Note 6) | $ | $ |
PSG | ASG | ISG | Total | ||||||||||||||||||||
For the quarter ended July 3, 2020: | |||||||||||||||||||||||
Revenue from external customers | $ | $ | $ | $ | |||||||||||||||||||
Gross profit | $ | $ | $ | $ | |||||||||||||||||||
For the quarter ended June 28, 2019: | |||||||||||||||||||||||
Revenue from external customers | $ | $ | $ | $ | |||||||||||||||||||
Gross profit | $ | $ | $ | $ | |||||||||||||||||||
For the six months ended July 3, 2020: | |||||||||||||||||||||||
Revenue from external customers | $ | $ | $ | $ | |||||||||||||||||||
Gross profit | $ | $ | $ | $ | |||||||||||||||||||
For the six months ended June 28, 2019: | |||||||||||||||||||||||
Revenue from external customers | $ | $ | $ | $ | |||||||||||||||||||
Gross profit | $ | $ | $ | $ |
Quarters Ended | Six Months Ended | ||||||||||||||||||||||
July 3, 2020 | June 28, 2019 | July 3, 2020 | June 28, 2019 | ||||||||||||||||||||
Gross profit for reportable segments | $ | $ | $ | $ | |||||||||||||||||||
Less: Unallocated manufacturing costs | ( | ( | ( | ( | |||||||||||||||||||
Consolidated gross profit | $ | $ | $ | $ |
Quarter Ended July 3, 2020 | |||||||||||||||||||||||
PSG | ASG | ISG | Total | ||||||||||||||||||||
Geographic Location | |||||||||||||||||||||||
Singapore | $ | $ | $ | $ | |||||||||||||||||||
Hong Kong | |||||||||||||||||||||||
United Kingdom | |||||||||||||||||||||||
United States | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Sales Channel | |||||||||||||||||||||||
Distributors | $ | $ | $ | $ | |||||||||||||||||||
OEM/ODM | |||||||||||||||||||||||
Electronic Manufacturing Service Providers | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Six Months Ended July 3, 2020 | |||||||||||||||||||||||
PSG | ASG | ISG | Total | ||||||||||||||||||||
Geographic Location | |||||||||||||||||||||||
Singapore | $ | $ | $ | $ | |||||||||||||||||||
Hong Kong | |||||||||||||||||||||||
United Kingdom | |||||||||||||||||||||||
United States | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Sales Channel | |||||||||||||||||||||||
Distributors | $ | $ | $ | $ | |||||||||||||||||||
OEM/ODM | |||||||||||||||||||||||
Electronic Manufacturing Service Providers | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Quarter Ended June 28, 2019 | |||||||||||||||||||||||
PSG | ASG | ISG | Total | ||||||||||||||||||||
Geographic Location | |||||||||||||||||||||||
Singapore | $ | $ | $ | $ | |||||||||||||||||||
Hong Kong | |||||||||||||||||||||||
United Kingdom | |||||||||||||||||||||||
United States | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Sales Channel | |||||||||||||||||||||||
Distributors | $ | $ | $ | $ | |||||||||||||||||||
OEM/ODM | |||||||||||||||||||||||
Electronic Manufacturing Service Providers | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Six Months Ended June 28, 2019 | |||||||||||||||||||||||
PSG | ASG | ISG | Total | ||||||||||||||||||||
Geographic Location | |||||||||||||||||||||||
Singapore | $ | $ | $ | $ | |||||||||||||||||||
Hong Kong | |||||||||||||||||||||||
United Kingdom | |||||||||||||||||||||||
United States | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Sales Channel | |||||||||||||||||||||||
Distributors | $ | $ | $ | $ | |||||||||||||||||||
OEM/ODM | |||||||||||||||||||||||
Electronic Manufacturing Service Providers | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
As of | |||||||||||
July 3, 2020 | December 31, 2019 | ||||||||||
United States | $ | $ | |||||||||
South Korea | |||||||||||
Philippines | |||||||||||
China | |||||||||||
Japan | |||||||||||
Czech Republic | |||||||||||
Malaysia | |||||||||||
Other | |||||||||||
Total | $ | $ |
Quarters Ended | Six Months Ended | ||||||||||||||||
July 3, 2020 | June 28, 2019 | July 3, 2020 | June 28, 2019 | ||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||
Net income (loss) | ( | ( | |||||||||||||||
Net income (loss) attributable to ON Semiconductor Corporation | ( | ( | |||||||||||||||
Net income (loss) per share of common stock attributable to ON Semiconductor Corporation: | |||||||||||||||||
Basic | $ | $ | $ | ( | $ | ||||||||||||
Diluted | $ | $ | $ | ( | $ |
Restructuring | Asset Impairments (1) | Other | Total | |||||||||||||||||||||||
Quarter ended July 3, 2020 | ||||||||||||||||||||||||||
2020 Involuntary separation program | $ | $ | $ | $ | ||||||||||||||||||||||
Other | ( | |||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ | |||||||||||||||||||||
Restructuring | Asset Impairments (1) | Other | Total | |||||||||||||||||||||||
Six months ended July 3, 2020 | ||||||||||||||||||||||||||
Voluntary separation program | $ | $ | $ | $ | ||||||||||||||||||||||
2020 Involuntary separation program | ||||||||||||||||||||||||||
Other general workforce reduction | ||||||||||||||||||||||||||
Other | ( | |||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
As of | As of | |||||||||||||||||||||||||
December 31, 2019 | Charges | Usage | July 3, 2020 | |||||||||||||||||||||||
Employee separation charges | $ | $ | $ | ( | $ | |||||||||||||||||||||
Other | ( | |||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
Net balance as of December 31, 2019 | $ | |||||||
Addition due to business combination | ||||||||
Net balance as of July 3, 2020 | $ |
As of | |||||||||||
July 3, 2020 | December 31, 2019 | ||||||||||
Inventories: | |||||||||||
Raw materials | $ | $ | |||||||||
Work in process | |||||||||||
Finished goods | |||||||||||
$ | $ | ||||||||||
Quarters Ended | Six Months Ended | ||||||||||||||||||||||
July 3, 2020 | June 28, 2019 | July 3, 2020 | June 28, 2019 | ||||||||||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||||||||||
Interest cost | |||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
Curtailment gain | ( | ( | |||||||||||||||||||||
Total net periodic pension cost | $ | $ | $ | $ |
Quarters Ended | Six Months Ended | ||||||||||||||||||||||
July 3, 2020 | June 28, 2019 | July 3, 2020 | June 28, 2019 | ||||||||||||||||||||
Operating lease | $ | $ | $ | $ | |||||||||||||||||||
Variable lease | |||||||||||||||||||||||
Short-term lease | |||||||||||||||||||||||
Total lease expense | $ | $ | $ | $ |
As of | |||||||||||
July 3, 2020 | December 31, 2019 | ||||||||||
Accrued expenses and other current liabilities | $ | $ | |||||||||
Other long-term liabilities | |||||||||||
Total lease obligations | $ | $ |
Six Months Ended | ||||||||||||||
July 3, 2020 | June 28, 2019 | |||||||||||||
Non-cash investing activities: | ||||||||||||||
Capital expenditures in accounts payable and other long-term liabilities | $ | $ | ||||||||||||
Sale of property in exchange of note receivable | $ | |||||||||||||
Right-of-use assets obtained in exchange of lease liabilities | ||||||||||||||
Non-cash financing activity: | ||||||||||||||
Liability incurred for purchase of business | $ | $ | ||||||||||||
Cash (received) paid for: | ||||||||||||||
Interest income | $ | ( | $ | ( | ||||||||||
Interest expense | ||||||||||||||
Income taxes | ||||||||||||||
Operating lease payments in operating cash flows |
As of | ||||||||||||||||||||||||||
July 3, 2020 | December 31, 2019 | June 28, 2019 | December 31, 2018 | |||||||||||||||||||||||
Consolidated Balance Sheets: | ||||||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||||||||||||
Restricted cash (included in other current assets) | ||||||||||||||||||||||||||
Cash, cash equivalents and restricted cash in Consolidated Statements of Cash Flows | $ | $ | $ | $ |
As of | |||||||||||
July 3, 2020 | December 31, 2019 | ||||||||||
Amended Credit Agreement: | |||||||||||
Revolving Credit Facility due 2024, interest payable monthly at | $ | $ | |||||||||
Term Loan “B” Facility due 2026, interest payable monthly at | |||||||||||
Other long-term debt (3) | |||||||||||
Gross long-term debt, including current portion | $ | $ | |||||||||
Less: Debt discount (4) | ( | ( | |||||||||
Less: Debt issuance costs (5) | ( | ( | |||||||||
Net long-term debt, including current portion | $ | $ | |||||||||
Less: Current portion of long-term debt | ( | ( | |||||||||
Net long-term debt | $ | $ |
Period | Expected Maturities | |||||||
Remainder of 2020 | $ | |||||||
2021 | ||||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
Thereafter | ||||||||
Total | $ |
Quarters Ended | Six Months Ended | ||||||||||||||||||||||
July 3, 2020 | June 28, 2019 | July 3, 2020 | June 28, 2019 | ||||||||||||||||||||
Net income (loss) attributable to ON Semiconductor Corporation | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Basic weighted-average shares of common stock outstanding | |||||||||||||||||||||||
Dilutive effect of share-based awards | |||||||||||||||||||||||
Dilutive effect of convertible notes | |||||||||||||||||||||||
Diluted weighted-average shares of common stock outstanding | |||||||||||||||||||||||
Net income (loss) per share of common stock attributable to ON Semiconductor Corporation: | |||||||||||||||||||||||
Basic | $ | $ | $ | ( | $ | ||||||||||||||||||
Diluted | $ | $ | $ | ( | $ |
Quarters Ended | Six Months Ended | ||||||||||||||||||||||
July 3, 2020 | June 28, 2019 | July 3, 2020 | June 28, 2019 | ||||||||||||||||||||
Number of repurchased shares (1) | |||||||||||||||||||||||
Aggregate purchase price | $ | $ | $ | $ | |||||||||||||||||||
Fees, commissions and other expenses | |||||||||||||||||||||||
Total cash used for share repurchases | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average purchase price per share (2) | $ | $ | $ | $ |
Quarters Ended | Six Months Ended | ||||||||||||||||||||||
July 3, 2020 | June 28, 2019 | July 3, 2020 | June 28, 2019 | ||||||||||||||||||||
Cost of revenue | $ | $ | $ | $ | |||||||||||||||||||
Research and development | |||||||||||||||||||||||
Selling and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Share-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Income tax benefit | ( | ( | ( | ( | |||||||||||||||||||
Share-based compensation expense, net of taxes | $ | $ | $ | $ |
Number of Shares | Weighted-Average Grant Date Fair Value Per Share | |||||||||||||
Non-vested RSUs at December 31, 2019 | $ | |||||||||||||
Granted | ||||||||||||||
Released | ( | |||||||||||||
Forfeited | ( | |||||||||||||
Non-vested RSUs at July 3, 2020 |
As of | Fair Value Hierarchy | |||||||||||||||||||||||||
Description | July 3, 2020 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||||||||
Demand and time deposits | $ | $ | $ | $ | ||||||||||||||||||||||
As of | Fair Value Hierarchy | |||||||||||||||||||||||||
Description | December 31, 2019 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||||||||
Demand and time deposits | $ | $ | $ | $ | ||||||||||||||||||||||
As of | |||||||||||||||||||||||
July 3, 2020 | December 31, 2019 | ||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
Long-term debt, including current portion | |||||||||||||||||||||||
Convertible notes (1) | $ | $ | $ | $ | |||||||||||||||||||
Long-term debt (1) |
As of | ||||||||||||||||||||||||||
July 3, 2020 | December 31, 2019 | |||||||||||||||||||||||||
Buy (Sell) | Notional Amount | Buy (Sell) | Notional Amount | |||||||||||||||||||||||
Philippine Peso | $ | $ | $ | $ | ||||||||||||||||||||||
Japanese Yen | ||||||||||||||||||||||||||
Korean Won | ||||||||||||||||||||||||||
Euro | ||||||||||||||||||||||||||
Chinese Yuan | ||||||||||||||||||||||||||
Malaysian Ringgit | ||||||||||||||||||||||||||
Czech Koruna | ||||||||||||||||||||||||||
Other Currencies - Buy | ||||||||||||||||||||||||||
Other Currencies - Sell | ( | ( | ||||||||||||||||||||||||
$ | $ | $ | $ |
Currency Translation Adjustments | Effects of Cash Flow Hedges | Total | ||||||||||||||||||
Balance as of December 31, 2019 | $ | ( | $ | ( | $ | ( | ||||||||||||||
Other comprehensive income (loss) prior to reclassifications | ( | ( | ||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ( | ||||||||||||||||||
Net current period other comprehensive income (loss) (1) | ( | ( | ||||||||||||||||||
Balance as of July 3, 2020 | $ | ( | $ | ( | $ | ( |
Amounts Reclassified from Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||||||||
Quarters Ended | Six Months Ended | |||||||||||||||||||||||||||||||
July 3, 2020 | June 28, 2019 | July 3, 2020 | June 28, 2019 | To caption | ||||||||||||||||||||||||||||
Interest rate swaps | $ | $ | ( | $ | $ | ( | Interest expense | |||||||||||||||||||||||||
Total reclassifications | $ | $ | ( | $ | $ | ( |
Quarters Ended | |||||||||||||||||
July 3, 2020 | June 28, 2019 | Dollar Change | |||||||||||||||
Revenue | $ | 1,213.5 | $ | 1,347.7 | $ | (134.2) | |||||||||||
Cost of revenue (exclusive of amortization shown below) | 839.2 | 848.7 | (9.5) | ||||||||||||||
Gross profit | 374.3 | 499.0 | (124.7) | ||||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 156.1 | 147.0 | 9.1 | ||||||||||||||
Selling and marketing | 65.6 | 73.6 | (8.0) | ||||||||||||||
General and administrative | 62.9 | 74.1 | (11.2) | ||||||||||||||
Amortization of acquisition-related intangible assets | 29.1 | 27.5 | 1.6 | ||||||||||||||
Restructuring, asset impairments and other charges, net | 16.2 | 18.1 | (1.9) | ||||||||||||||
Intangible asset impairment | 1.3 | 0.4 | 0.9 | ||||||||||||||
Total operating expenses | 331.2 | 340.7 | (9.5) | ||||||||||||||
Operating income | 43.1 | 158.3 | (115.2) | ||||||||||||||
Other income (expense), net: | |||||||||||||||||
Interest expense | (41.9) | (33.7) | (8.2) | ||||||||||||||
Interest income | 1.5 | 3.0 | (1.5) | ||||||||||||||
Loss on debt refinancing and prepayment | — | (0.4) | 0.4 | ||||||||||||||
Other expense | (2.8) | (1.0) | (1.8) | ||||||||||||||
Other income (expense), net | (43.2) | (32.1) | (11.1) | ||||||||||||||
Income (loss) before income taxes | (0.1) | 126.2 | (126.3) | ||||||||||||||
Income tax provision | (0.8) | (23.3) | 22.5 | ||||||||||||||
Net income (loss) | (0.9) | 102.9 | (103.8) | ||||||||||||||
Less: Net income attributable to non-controlling interest | (0.5) | (1.1) | 0.6 | ||||||||||||||
Net income (loss) attributable to ON Semiconductor Corporation | $ | (1.4) | $ | 101.8 | $ | (103.2) |
Quarter Ended July 3, 2020 | As a % of Total Revenue (1) | Quarter Ended June 28, 2019 | As a % of Total Revenue (1) | ||||||||||||||||||||
PSG | $ | 618.4 | 51.0 | % | $ | 700.9 | 52.0 | % | |||||||||||||||
ASG | 426.7 | 35.2 | % | 462.0 | 34.3 | % | |||||||||||||||||
ISG | 168.4 | 13.9 | % | 184.8 | 13.7 | % | |||||||||||||||||
Total revenue | $ | 1,213.5 | $ | 1,347.7 |
Quarter Ended July 3, 2020 | As a % of Total Revenue (1) | Quarter Ended June 28, 2019 | As a % of Total Revenue (1) | ||||||||||||||||||||
Singapore | $ | 439.4 | 36.2 | % | $ | 379.9 | 28.2 | % | |||||||||||||||
Hong Kong | 323.3 | 26.6 | % | 348.4 | 25.9 | % | |||||||||||||||||
United Kingdom | 140.9 | 11.6 | % | 229.4 | 17.0 | % | |||||||||||||||||
United States | 151.8 | 12.5 | % | 223.5 | 16.6 | % | |||||||||||||||||
Other | 158.1 | 13.0 | % | 166.5 | 12.4 | % | |||||||||||||||||
Total | $ | 1,213.5 | $ | 1,347.7 |
Quarter Ended July 3, 2020 | As a % of Segment Revenue (1) | Quarter Ended June 28, 2019 | As a % of Segment Revenue (1) | ||||||||||||||||||||
PSG | $ | 184.2 | 29.8 | % | $ | 255.7 | 36.5 | % | |||||||||||||||
ASG | 156.1 | 36.6 | % | 184.7 | 40.0 | % | |||||||||||||||||
ISG | 50.3 | 29.9 | % | 65.9 | 35.7 | % | |||||||||||||||||
Gross profit for all segments | $ | 390.6 | $ | 506.3 | |||||||||||||||||||
Unallocated manufacturing costs | (16.3) | (1.3) | % | (7.3) | (0.5) | % | |||||||||||||||||
Total gross profit | $ | 374.3 | 30.8 | % | $ | 499.0 | 37.0 | % |
Six Months Ended | |||||||||||||||||
July 3, 2020 | June 28, 2019 | Dollar Change | |||||||||||||||
Revenue | $ | 2,491.4 | $ | 2,734.3 | $ | (242.9) | |||||||||||
Cost of revenue (exclusive of amortization shown below) | 1,714.4 | 1,721.6 | (7.2) | ||||||||||||||
Gross profit | 777.0 | 1,012.7 | (235.7) | ||||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 327.1 | 298.8 | 28.3 | ||||||||||||||
Selling and marketing | 142.4 | 150.7 | (8.3) | ||||||||||||||
General and administrative | 134.1 | 147.0 | (12.9) | ||||||||||||||
Amortization of acquisition-related intangible assets | 61.4 | 53.2 | 8.2 | ||||||||||||||
Restructuring, asset impairments and other charges, net | 49.0 | 23.7 | 25.3 | ||||||||||||||
Intangible asset impairment | 1.3 | 1.6 | (0.3) | ||||||||||||||
Total operating expenses | 715.3 | 675.0 | 40.3 | ||||||||||||||
Operating income | 61.7 | 337.7 | (276.0) | ||||||||||||||
Other income (expense), net: | |||||||||||||||||
Interest expense | (84.4) | (65.4) | (19.0) | ||||||||||||||
Interest income | 3.4 | 5.5 | (2.1) | ||||||||||||||
Loss on debt refinancing and prepayment | — | (0.4) | 0.4 | ||||||||||||||
Other income (expense) | (2.7) | 1.1 | (3.8) | ||||||||||||||
Other income (expense), net | (83.7) | (59.2) | (24.5) | ||||||||||||||
Income (loss) before income taxes | (22.0) | 278.5 | (300.5) | ||||||||||||||
Income tax benefit (provision) | 7.4 | (61.5) | 68.9 | ||||||||||||||
Net income (loss) | (14.6) | 217.0 | (231.6) | ||||||||||||||
Less: Net income attributable to non-controlling interest | (0.8) | (1.1) | 0.3 | ||||||||||||||
Net income (loss) attributable to ON Semiconductor Corporation | $ | (15.4) | $ | 215.9 | $ | (231.3) |
Six Months Ended July 3, 2020 | As a % of Total Revenue (1) | Six Months Ended June 28, 2019 | As a % of Total Revenue (1) | ||||||||||||||||||||
PSG | $ | 1,242.3 | 49.9 | % | $ | 1,405.1 | 51.4 | % | |||||||||||||||
ASG | 893.8 | 35.9 | % | 956.1 | 35.0 | % | |||||||||||||||||
ISG | 355.3 | 14.3 | % | 373.1 | 13.6 | % | |||||||||||||||||
Total revenue | $ | 2,491.4 | $ | 2,734.3 |
Six Months Ended July 3, 2020 | As a % of Total Revenue (1) | Six Months Ended June 28, 2019 | As a % of Total Revenue (1) | ||||||||||||||||||||
Singapore | $ | 847.7 | 34.0 | % | $ | 805.1 | 29.4 | % | |||||||||||||||
Hong Kong | 639.5 | 25.7 | % | 686.4 | 25.1 | % | |||||||||||||||||
United Kingdom | 367.9 | 14.8 | % | 476.3 | 17.4 | % | |||||||||||||||||
United States | 336.3 | 13.5 | % | 437.1 | 16.0 | % | |||||||||||||||||
Other | 300.0 | 12.0 | % | 329.4 | 12.0 | % | |||||||||||||||||
Total | $ | 2,491.4 | $ | 2,734.3 |
Six Months Ended July 3, 2020 | As a % of Segment Revenue (1) | Six Months Ended June 28, 2019 | As a % of Segment Revenue (1) | ||||||||||||||||||||
PSG | $ | 362.8 | 29.2 | % | $ | 504.7 | 35.9 | % | |||||||||||||||
ASG | 330.9 | 37.0 | % | 384.8 | 40.2 | % | |||||||||||||||||
ISG | 113.1 | 31.8 | % | 140.8 | 37.7 | % | |||||||||||||||||
Gross profit | $ | 806.8 | $ | 1,030.3 | |||||||||||||||||||
Unallocated manufacturing costs | (29.8) | (1.2) | % | (17.6) | (0.6) | % | |||||||||||||||||
Consolidated gross profit | $ | 777.0 | 31.2 | % | $ | 1,012.7 | 37.0 | % |
Period (1) | Total Number of Shares Purchased (2) | Average Price Paid per Share ($) (3) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar value of Shares that May Yet be Purchased Under the Plans or Programs (in millions) ($) | ||||||||||||||||||||||
April 4, 2020 - May 1, 2020 | 4,758 | 15.11 | — | 1,295.8 | ||||||||||||||||||||||
May 2, 2020 - May 29, 2020 | 7,139 | 15.73 | — | 1,295.8 | ||||||||||||||||||||||
May 30, 2020 - July 3, 2020 | 19,783 | 19.11 | — | 1,295.8 | ||||||||||||||||||||||
Total | 31,680 | 17.75 | — |
Exhibit No. | Exhibit Description* | ||||||||||||||||
3.1 | |||||||||||||||||
4.1 | |||||||||||||||||
10.1 | |||||||||||||||||
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) | ||||||||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document(1) | ||||||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document(1) | ||||||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document(1) | ||||||||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document(1) | ||||||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document(1) | ||||||||||||||||
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | ||||||||||||||||
* | 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: | August 10, 2020 | By: | /s/ BERNARD GUTMANN | ||||||||
Bernard Gutmann | |||||||||||
Executive Vice President, Chief Financial Officer & Treasurer | |||||||||||
(Principal Financial Officer and officer duly authorized to sign this report) | |||||||||||
By: | /s/ BERNARD R. COLPITTS JR. | ||||||||||
Bernard R. Colpitts Jr. | |||||||||||
Chief Accounting Officer | |||||||||||
(Principal Accounting Officer and officer duly authorized to sign this report) | |||||||||||
Date: August 10, 2020 | /s/ KEITH D. JACKSON | ||||
Keith D. Jackson | |||||
Chief Executive Officer |
Date: August 10, 2020 | /s/ BERNARD GUTMANN | ||||
Bernard Gutmann | |||||
Chief Financial Officer |
Dated: August 10, 2020 | /s/ KEITH D. JACKSON | ||||
Keith D. Jackson | |||||
President and Chief Executive Officer | |||||
Dated: August 10, 2020 | /s/ BERNARD GUTMANN | ||||
Bernard Gutmann | |||||
Executive Vice President, | |||||
Chief Financial Officer, and | |||||
Treasurer |
Consolidated Balance Sheets - Parenthetical - $ / shares |
Jul. 03, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,250,000,000 | 1,250,000,000 |
Common stock, shares issued (in shares) | 569,611,277 | 565,562,607 |
Common stock, shares outstanding (in shares) | 410,809,621 | 411,312,664 |
Treasury stock, shares (in shares) | 158,801,656 | 154,249,943 |
Background and Basis of Presentation |
6 Months Ended |
---|---|
Jul. 03, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background and Basis of Presentation | Note 1: Background and Basis of Presentation ON Semiconductor Corporation, together with its wholly and majority-owned subsidiaries ("ON Semiconductor," "we," “us,” “our,” or the "Company"), uses a thirteen-week fiscal quarter accounting period for the first three fiscal quarters of each year, with the second quarter of 2020 having ended on July 3, 2020 and each fiscal year ending on December 31. The quarters ended July 3, 2020 and June 28, 2019 each contained 91 days. The six months ended July 3, 2020 and June 28, 2019 contained 185 and 179 days, respectively. As of July 3, 2020, the Company was organized into the following three operating and reportable segments: the Power Solutions Group ("PSG"), the Advanced Solutions Group ("ASG") and the Intelligent Sensing Group ("ISG"). Additional details on the Company’s operating and reportable segments are included in Note 2: ''Revenue and Segment Information.'' The accompanying unaudited financial statements as of and for the quarter and six months ended July 3, 2020 have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for unaudited interim financial information. Accordingly, the unaudited financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. The balance sheet as of December 31, 2019 was derived from the Company's audited financial statements but does not include all disclosures required by GAAP for audited financial statements. In the opinion of the Company's management, the interim information includes all adjustments, which includes 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, 2019 included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on February 19, 2020 (the “2019 Form 10-K”). Use of Estimates The preparation of financial statements in accordance with GAAP 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 revenue and expenses during the reporting period. Management evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonable under the circumstances. Significant estimates have been used by management in conjunction with the following: (i) future payouts for customer incentives and amounts subject to allowances and returns; (ii) valuation and obsolescence relating to inventories; (iii) fair values of share-based compensation; and (iv) measurement of valuation allowances against deferred tax assets and evaluations of unrecognized tax benefits. Even though the novel coronavirus disease 2019 (“COVID-19”) pandemic impacted the demand for the Company's products and gross margin, it did not have a significant impact on these estimates. Additionally, during periods where it becomes applicable, significant estimates will be used by management in determining the future cash flows used to assess and test for impairment of indefinite-lived intangible assets, long-lived assets and goodwill and in assumptions used in connection with business combinations. Actual results may differ from the estimates and assumptions used in the consolidated financial statements. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in the context of the information reasonably available and the unknown future impact of the COVID-19 pandemic as of July 3, 2020, and through the date of this Form 10-Q. The accounting matters assessed included, but were not limited to, the allowance for doubtful accounts, share based compensation, inventory valuation and corresponding reserves, carrying value of indefinite-lived assets, other long-lived assets and goodwill, valuation allowance for tax assets, contingencies and revenue recognition. While there was not a material impact to the consolidated financial statements as of and for the quarter and six months ended July 3, 2020, resulting from these assessments, future assessment of the current expectations, including of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in a material adverse impact to the consolidated financial statements in future reporting periods.
|
Revenue and Segment Information |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue and Segment Information | Note 2: Revenue and Segment Information The Company is organized into three operating and reportable segments consisting of PSG, ASG and ISG. Because many products are sold into different end-markets, the total revenue reported for a segment is not indicative of actual sales in the end-market associated with that segment, but rather is the sum of the revenue from the product lines assigned to that segment. These segments represent the Company’s view of the business and its gross profit is used to evaluate progress of major initiatives and allocation of resources. Revenue and gross profit for the Company’s operating and reportable segments are as follows (in millions):
The Company had one customer, a distributor, whose revenue accounted for approximately 11% and 10% of the total revenue for the quarter and six months ended July 3, 2020, respectively. Gross profit is exclusive of the amortization of acquisition-related intangible assets. Depreciation expense is included in segment gross profit. Reconciliation of segment gross profit to consolidated gross profit is provided below (in millions):
Revenue for the Company's operating and reportable segments disaggregated into geographic locations based on sales billed from the respective country and sales channels are as follows (in millions):
The Company operates in various geographic locations. Sales to unaffiliated customers have little correlation with the location of manufacturers. It is, therefore, not meaningful to present operating profit by geographical location. The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information. The Company’s consolidated assets are not specifically ascribed to its individual reportable segments. Rather, assets used in operations are generally shared across the Company’s operating and reportable segments. Property, plant and equipment, net by geographic location, is summarized as follows (in millions):
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Recent Accounting Pronouncements |
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Jul. 03, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Note 3: Recent Accounting Pronouncements Adopted: ASU 2020-04 – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) In March 2020, the FASB issued ASU 2020-04 to address constituents’ concerns about certain accounting consequences that could result from the global markets’ anticipated transition away from the use of the LIBO Rate and other interbank offered rates to alternative reference rates. ASU 2020-04 includes optional expedients and the relief provided is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBO Rate or another reference rate expected to be discontinued because of reference rate reform. These amendments are effective for entities as of March 12, 2020 through December 31, 2022. The Company elected to apply the provisions of ASU 2020-04 for its contracts and hedging relationships as of March 12, 2020. The adoption of ASU 2020-04 did not have a material impact on its consolidated financial statements. ASU 2019-12 – Income taxes (Topic 740): Simplifying the accounting for income taxes (“ASU 2019-12”) In December 2019, the FASB issued ASU 2019-12 which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Income taxes (Topic 740). The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company early adopted ASU 2019-12 during the quarter ended April 3, 2020. The adoption of ASU 2019-12 did not have a material impact on its consolidated financial statements. Pending adoption: ASU 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) In August 2020, the FASB issued ASU 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.
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Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Note 4: Acquisitions Acquisition of Quantenna On June 19, 2019, the Company acquired 100% of the outstanding shares of Quantenna Communications, Inc. ("Quantenna"), a global leader and innovator of high performance Wi-Fi solutions, whereby Quantenna became a wholly-owned subsidiary of the Company. The purchase price consideration for the acquisition totaled $1,039.3 million. Pro-Forma Results of Operations The following unaudited pro-forma consolidated results of operation for the quarters and six months ended July 3, 2020 and June 28, 2019 have been prepared as if the acquisition of Quantenna had occurred on January 1, 2018 and includes adjustments for amortization of intangibles, interest expense from financing, restructuring, and the effect of purchase accounting adjustments including the step-up of inventory (in millions):
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Restructuring, Asset Impairments and Other, Net |
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Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring, Asset Impairments and Other, Net | Note 5: Restructuring, Asset Impairments and Other, Net Details of restructuring, asset impairments and other charges, net are as follows (in millions):
(1) Impairment of certain property, plant and equipment and lease right-of-use assets. Summary of changes in accrued restructuring from December 31, 2019 to July 3, 2020 is as follows (in millions):
Voluntary Separation Program During the first quarter of 2020, the Company offered a voluntary separation program (the "VSP") to employees that met certain criteria. Participation was subject to management review and approval. The purpose of the VSP was to allow employees to voluntarily separate employment during a specific time and with enhanced separation compensation and benefits, thereby enabling the Company to optimize its cost structure and progress towards its target financial model. Management approved 243 employees for participation in the VSP during the quarter ended April 3, 2020, after which the VSP was terminated. During the quarter ended April 3, 2020, the aggregate expense for the VSP amounted to $27.5 million for the 243 employees, all of whom had exited the Company as of July 3, 2020. During the quarter ended July 3, 2020, the Company paid $20.4 million of the aggregate expense and had $7.1 million accrued as of July 3, 2020, which is expected to be paid during the third quarter of 2020. 2020 Involuntary Separation Program During the second quarter of 2020, the Company implemented an involuntary separation program (the “ISP”) . Under the ISP, the Company notified approximately 191 employees of their employment termination with aggregate severance costs and other benefits amounting to $11.8 million, of which $6.8 million remained accrued as of July 3, 2020. This amount is expected to be paid during the third and fourth quarters of 2020 depending on the exit date of the notified employees. The Company currently does not anticipate additional employee terminations under the ISP. Other General Workforce Reduction In addition to the VSP and the ISP, the Company took other general workforce reduction measures (including the post-Quantenna acquisition restructuring) during the first quarter of 2020. In connection with such measures, the Company notified approximately 98 employees of their employment termination, all of whom exited by April 3, 2020. During the quarter ended April 3, 2020, the aggregate expense for these other general workforce reduction measures amounted to $3.8 million and were paid out within the quarter. There was no activity under this program during the second quarter of 2020. The Company continues to evaluate employee positions and locations for potential efficiencies under this program and may incur additional charges in the future.
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Balance Sheet Information and Other |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Information and Other | Note 6: Balance Sheet Information and Other Goodwill Changes in the goodwill balance from December 31, 2019 through July 3, 2020 were as follows (in millions):
Goodwill is tested for impairment annually on the first day of the fourth quarter or more frequently if events or changes in circumstances (each, a "triggering event") would more likely than not reduce the carrying value of goodwill below its fair value. Management considered the general economic decline and the impact of the COVID-19 pandemic, but did not identify any triggering events during the quarter and six months ended July 3, 2020 that would require an interim impairment analysis. Inventory Details of Inventory included in the Company’s Consolidated Balance Sheets are as follows (in millions):
Defined Benefit Plans As of July 3, 2020, the total accrued pension liability for underfunded plans was $133.5 million, of which the current portion of $0.3 million was classified as accrued expenses and other current liabilities. As of December 31, 2019, the total accrued pension liability for underfunded plans was $132.7 million, of which the current portion of $0.3 million was classified as accrued expenses and other current liabilities. The components of the net periodic pension expense were as follows (in millions):
Leases Operating lease arrangements are comprised primarily of real estate and equipment agreements. The components of lease expense were as follows (in millions):
The lease liabilities recognized in the Consolidated Balance Sheets are as follows (in millions):
Operating lease assets of $143.4 million and $110.2 million are included in other assets in the Consolidated Balance Sheets as of July 3, 2020 and December 31, 2019, respectively. As of July 3, 2020, the weighted-average remaining lease-term was 7.2 years and the weighted-average discount rate was 5.0%. Supplemental Disclosure of Cash Flow Information Certain of the Company's cash and non-cash activities were as follows (in millions):
Reconciliation of the captions in the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows (in millions):
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Long-Term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Note 7: Long-Term Debt The Company's long-term debt consists of the following (annualized interest rates, in millions):
(1) Interest is payable on June 1 and December 1 of each year at 1.00% annually. (2) Interest is payable on April 15 and October 15 of each year at 1.625% annually. (3) Consists of a term loan, finance lease and other facility at certain international locations where interest is payable monthly or quarterly, with interest rates ranging between 1.00% and 1.48% and maturity dates in 2020. (4) Debt discount of $9.6 million and $20.4 million for the 1.00% Notes, $63.3 million and $71.8 million for the 1.625% Notes and $9.8 million and $10.5 million for the Term Loan "B" Facility, in each case as of July 3, 2020 and December 31, 2019, respectively. (5) Debt issuance costs of $1.3 million and $2.8 million for the 1.00% Notes, $6.1 million and $6.9 million for the 1.625% Notes and $22.7 million and $24.3 million for the Term Loan "B" Facility, in each case as of July 3, 2020 and December 31, 2019, respectively. Expected maturities of gross long-term debt (including current portion) as of July 3, 2020 are as follows (in millions):
The Company was in compliance with its covenants under all debt agreements as of July 3, 2020. Eighth Amendment to the Amended Credit Agreement On June 23, 2020, the Company entered into the Eighth Amendment ("Eighth Amendment") to the Amended Credit Agreement with the subsidiary guarantors party thereto, Deutsche Bank AG New York Branch, as administrative agent and collateral agent, and certain Lenders party thereto constituting the Required Lenders (as defined in the Amended Credit Agreement). The Eighth Amendment provided for, among other things, (i) replace the defined term “Capital Lease Obligations” with a new defined term “Finance Lease Obligations” providing that such obligations only include property classified as finance leases under U.S. GAAP and (ii) make certain amendments in connection with the proposed domestication of ON Management Ltd. and Quantenna Ltd., each of which is a subsidiary of the Company that is not a Loan Party (as defined in the Amended Credit Agreement) and both of which hold economic rights in certain intellectual property, from Bermuda entities to Delaware entities, including, among other things, (a) to permit Investments (as defined in the Amended Credit Agreement) by any Loan Party in any Foreign Subsidiary (as defined in the Amended Credit Agreement) if the proceeds of such Investments are used for Capital Expenditures (as defined in the Amended Credit Agreement) (“Capital Expenditure Investments”) and (b) to increase the amount of certain permitted intercompany Investments by any Loan Party in any subsidiary that is not a Loan Party by an amount (which shall not be less than zero) equal to (A) Net Royalties (as defined in the Amended Credit Agreement) minus (B) the aggregate amount of Capital Expenditure Investments. See Note 15: ''Subsequent Event'' for more information on the domestication of certain foreign subsidiaries, which was completed on July 6, 2020. Credit Facility Draw On March 24, 2020, the Company borrowed $1,165.0 million under the Revolving Credit Facility as a precautionary measure in order to increase the Company’s cash position and provide financial flexibility in light of the uncertainty resulting from the impact of the COVID-19 pandemic (the “Credit Facility Draw”). As a result of the Credit Facility Draw, as of July 3, 2020, the Company had borrowed substantially all amounts available under the Revolving Credit Facility and has $4.0 million available for draw under the Revolving Credit Facility, subject to certain conditions. The proceeds from the Credit Facility Draw could be used to repay a portion of debt maturing in 2020, and for working capital, general corporate or other purposes.
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Earnings Per Share and Equity |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share and Equity | Note 8: Earnings Per Share and Equity Earnings Per Share Net income (loss) per share of common stock attributable to ON Semiconductor Corporation is calculated as follows (in millions, except per share data):
Basic income (loss) per share of common stock is computed by dividing net income (loss) attributable to the Company by the weighted average number of shares of common stock outstanding during the period. To calculate the diluted weighted-average shares of common stock 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 3.6 million and 0.6 million for the quarters ended July 3, 2020 and June 28, 2019, respectively, and 3.1 million and 0.6 million for the six months ended July 3, 2020 and June 28, 2019, respectively. The increase in the anti-dilutive share-based awards was due to the net loss for the quarter and six months ended July 3, 2020, as the inclusion would have the effect of decreasing the diluted net loss per share of common stock 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. In addition to the net loss for the quarter ended July 3, 2020, the average share price did not exceed the conversion price for both the 1.00% Notes and 1.625% Notes, and as a result, was not included in calculating the diluted weighted-average shares of common stock outstanding. 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 no repurchases and $50.0 million in repurchases of the Company's common stock under the Share Repurchase Program during the quarters ended July 3, 2020 and June 28, 2019, respectively. There were $65.3 million and $125.7 million in repurchases of the Company's common stock under the Share Repurchase Program during the six months ended July 3, 2020 and June 28, 2019, respectively. As of July 3, 2020, the authorized amount remaining under the Share Repurchase Program was $1,295.8 million. Activity under the Share Repurchase Program during the quarter and six months ended July 3, 2020 and June 28, 2019 were as follows (in millions, except per share data):
(1) None of these shares had been reissued or retired as of July 3, 2020, but may be reissued or retired at a later date. (2) 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 and six months ended July 3, 2020 were $0.6 million and $16.6 million, respectively, for which the Company withheld less than 0.1 million and approximately 0.9 million shares of common stock, respectively, that were underlying the RSUs that vested. The amounts remitted during the quarters and six months ended June 28, 2019 were $1.1 million and $27.2 million, respectively, for which the Company withheld approximately 0.1 million and 1.3 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 July 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 $23.2 million as of July 3, 2020, resulting from the non-controlling interest’s $0.8 million share of the earnings for the six months ended July 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 settlement of purchase price 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. Stockholders' Rights Plan On June 7, 2020, the Company's Board of Directors authorized and declared a dividend of one preferred share purchase right (a “Right”) to be issued as of 5:00 p.m. New York City time on June 18, 2020, for each outstanding share of common stock to the stockholders of record on that date. In connection with the Rights, the Company and Computershare Trust Company, N.A., as rights agent, entered into a Rights Agreement, dated as of June 8, 2020 (the “Rights Agreement”). Each Right entitles the registered holder of common stock to purchase from the Company one-hundred-thousandth of a share (a “Unit”) of Series B Junior Participating Preferred Stock, par value $0.01 per share, at a purchase price of $100.80 per Unit (the “Purchase Price”), subject to adjustment as provided in the Rights Agreement. Subject to certain exceptions, if a person or group becomes the beneficial owner of more than 15% of the Company’s outstanding shares of common stock, the Rights will become exercisable for that number of shares of Common Stock having a market value of two times the Purchase Price. The Rights, which have a de minimis value as of July 3, 2020, expire on the earlier of (i) the close of business on June 7, 2021, (ii) the time at which the Rights are redeemed pursuant to the Rights Agreement, (iii) the closing of any merger or other acquisition transaction involving the Company that has been approved by the Company’s Board of Directors, at which time the Rights are terminated, and (iv) the time at which the Rights are exchanged pursuant to the Rights Agreement. The Rights are in all respects subject to and governed by the provisions of the Rights Agreement.
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Share-Based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Note 9: Share-Based Compensation Total share-based compensation expense related to the Company's RSUs, stock grant awards and the ESPP were recorded within the Consolidated Statements of Operations and Comprehensive Income as follows (in millions):
As of July 3, 2020, total unrecognized share-based compensation expense, net of estimated forfeitures, related to non-vested RSUs with service, performance and market conditions was $90.9 million, which is expected to be recognized over a weighted-average period of 1.6 years. There were no stock options exercised during the quarter and six months ended July 3, 2020. Upon option exercise, vesting of RSUs, stock grant awards or completion of a purchase under the ESPP, the Company issues new shares of common stock. The annualized pre-vesting forfeiture rate for RSUs was estimated to be 5% for the quarters and six months ended July 3, 2020 and June 28, 2019. Shares Available As of July 3, 2020 and December 31, 2019, there was an aggregate of 17.3 million and 25.5 million shares of common stock, respectively, available for grant under the Amended and Restated SIP. As of July 3, 2020 and December 31, 2019, there was an aggregate of 3.6 million and 4.8 million shares of common stock, respectively, available for issuance under the ESPP. Restricted Stock Units RSUs generally vest ratably over three years for awards with service condition and over two years for awards with performance or market conditions, or a combination thereof, and are settled in shares of the Company's common stock upon vesting. A summary of the RSU transactions for the six months ended July 3, 2020 is as follows (in millions, except per share data):
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Commitments and Contingencies |
6 Months Ended |
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Jul. 03, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10: Commitments and Contingencies Environmental Contingencies There are no new environmental contingencies subsequent to the filing of the 2019 Form 10-K. Financing Contingencies In the ordinary course of business, the Company provides standby letters of credit or other guarantee instruments to certain parties initiated by either the Company or its subsidiaries, as required for transactions, including, but not limited to, material purchase commitments, agreements to mitigate collection risk, leases, utilities or customs guarantees. As of July 3, 2020, the Company's Revolving Credit Facility included $15.0 million of commitment subject to the available balance of the Revolving Credit Facility for the issuance of letters of credit, which, as of the date of this Form 10-Q was $4.0 million. There were $1.0 million letters of credit outstanding under the Revolving Credit Facility as of July 3, 2020, which reduced the Company's borrowing capacity. As of July 3, 2020, the Company also had outstanding guarantees and letters of credit outside of its Revolving Credit Facility totaling $6.8 million. As part of obtaining financing in the ordinary course of business, the Company issued guarantees related to certain of its subsidiaries' term loan financing and surety bond, which totaled $1.4 million as of July 3, 2020. Based on historical experience and information currently available, the Company believes that it will not be required to make payments under the standby letters of credit or guarantee arrangements for the foreseeable future. Indemnification Contingencies There are no new indemnification contingencies subsequent to the filing of the 2019 Form 10-K. Legal Matters From time to time, the Company is party to various legal proceedings arising in the ordinary course of business, including indemnification claims, claims of alleged infringement of patents, trademarks, copyrights and other IP rights, claims of alleged non-compliance with contract provisions and claims related to alleged violations of laws and regulations. The Company regularly evaluates the status of the legal proceedings in which it is involved to assess whether a loss is probable or there is a reasonable possibility that a loss, or an additional loss, may have been incurred and determines if accruals are appropriate. If accruals are not appropriate, the Company further evaluates each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made for disclosure. Although litigation is inherently unpredictable, the Company believes that it has adequate provisions for any probable and estimable losses. Nevertheless, it is possible that the Company’s consolidated financial position, results of operations or liquidity could be materially and adversely affected in any particular period by the resolution of a legal proceeding. The Company’s estimates do not represent its maximum exposure. Legal expenses related to defense, negotiations, settlements, rulings and advice of outside legal counsel are expensed as incurred. The Company is currently involved in a variety of legal matters that arise in the ordinary course of business. Based on information currently available, except as disclosed below, the Company is not involved in any pending or threatened legal proceedings that it believes could reasonably be expected to have a material adverse effect on its financial condition, results of operations or liquidity. The litigation process is inherently uncertain, and the Company cannot guarantee that the outcome of any litigation matter will be favorable to the Company. Litigation with AcBel Polytech, Inc. On November 27, 2013, Fairchild and Fairchild Semiconductor Corporation were named as defendants in a complaint filed by AcBel Polytech, Inc. (“AcBel”) in the U.S. District Court for the District of Massachusetts. The lawsuit alleged a number of causes of action, including breach of warranty, fraud, negligence and strict liability, and has been docketed as AcBel Polytech, Inc. v. Fairchild Semiconductor International, Inc. et al, Case # 1:13-CV-13046-DJC. On December 10, 2016, the Court issued an order on the Company’s motion for summary judgment dismissing all of AcBel’s claims except for claims alleging breach of implied warranties. A bench trial was held in June 2017. On December 27, 2017, the Court rendered a verdict in favor of the Fairchild defendants on the remaining implied warranty claims. AcBel appealed the Court’s ruling, and on September 11, 2018, the U.S. Court of Appeals for the First Circuit heard arguments in this matter from Fairchild and AcBel. On June 20, 2019, the First Circuit vacated the decision of the District Court in favor of Fairchild and remanded the matter for additional discovery and a new trial. The First Circuit also reversed the District Court’s dismissal of the fraud, fraudulent misrepresentation and negligent misrepresentation claims at the summary judgment phase and remanded those claims for trial. The District Court scheduled a new trial for July 6, 2020. In parallel to the litigation with AcBel, Fairchild filed an arbitration against its distributor, Synnex Technology International Corp (“Synnex”), in Hong Kong in response to Synnex’s failure to pass along Fairchild’s limited warranty to AcBel. The arbitration was held in December 2017. On August 17, 2018, the arbitrator ruled in favor of Fairchild and ordered Synnex to indemnify Fairchild for any damages Fairchild is required to pay AcBel in connection with the litigation between Fairchild and AcBel. On November 16, 2018, Synnex appealed the arbitrator’s ruling. A hearing was held on October 23, 2019, and on November 1, 2019, a Hong Kong court affirmed the arbitrator’s ruling in favor of Fairchild. Prior to the July 6, 2020 trial, AcBel, Fairchild and Synnex tentatively agreed to a settlement of all disputes related to the litigation. AcBel and Fairchild notified the Court of the potential settlement, and the Court adjourned the case until August 10, 2020. On July 31, 2020, the Company entered into a settlement agreement and release in respect of the dispute with Synnex and Acbel. As of the date of this Form 10-Q, the Company has paid its full aggregate liability of $6.0 million in accordance with the settlement agreement and all applicable claims have been released. Intellectual Property Matters The Company faces risk of exposure from claims of infringement of the IP rights of others. In the ordinary course of business, the Company receives letters asserting that the Company’s products or components breach another party’s rights. Such letters may request royalty payments from the Company, that the Company cease and desist using certain IP or other remedies.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Note 11: Fair Value Measurements Fair Value of Financial Instruments The following table summarizes the Company's financial assets and liabilities, excluding pension assets, measured at fair value on a recurring basis (in millions):
Other The carrying amounts of other current assets and liabilities, such as accounts receivable and accounts payable, approximate fair value based on the short-term nature of these instruments. Fair Value of Long-Term Debt, including Current Portion The carrying amounts and fair values of the Company’s long-term borrowings (excluding finance lease obligations) are as follows (in millions):
(1) Carrying amount shown is net of debt discount and debt issuance costs. The fair values of the Company's 1.00% Notes and 1.625% Notes were estimated based on market prices in active markets (Level 1). The fair value of other long-term debt was estimated based on discounting the remaining principal and interest payments using current market rates for similar debt (Level 2) at July 3, 2020 and December 31, 2019.
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Financial Instruments |
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Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Note 12: Financial Instruments Foreign Currencies As a multinational business, the Company’s transactions are denominated in a variety of currencies. When appropriate, the Company uses forward foreign currency contracts to reduce its overall exposure to the effects of currency fluctuations on its results of operations and cash flows. The Company’s policy prohibits trading in currencies for which there are no underlying exposures and entering into trades for any currency to intentionally increase the underlying exposure. The Company primarily hedges existing assets and liabilities associated with transactions currently on its balance sheet, which are undesignated hedges for accounting purposes. As of July 3, 2020 and December 31, 2019, the Company had net outstanding foreign exchange contracts with notional amounts of $172.5 million and $183.3 million, respectively. Such contracts were obtained through financial institutions and were scheduled to mature within to three months from the time of purchase. Management believes that these financial instruments should not subject the Company to increased risks from foreign exchange movements because gains and losses on these contracts should offset losses and gains on the underlying assets, liabilities and transactions to which they are related. The following summarizes the Company’s net foreign exchange positions in U.S. Dollars (in millions):
Amounts receivable or payable under the contracts are included in other current assets or accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets. During the quarters ended July 3, 2020 and June 28, 2019, realized and unrealized foreign currency transactions totaled a loss of $3.2 million and $1.0 million, respectively. During the six months ended July 3, 2020 and June 28, 2019, realized and unrealized foreign currency transactions totaled a loss of $3.4 million and $4.1 million, respectively. The realized and unrealized foreign currency transactions are included in other income (expense) in the Company's Consolidated Statements of Operations and Comprehensive Income. Cash Flow Hedges All derivatives are recognized on the Company’s Consolidated Balance Sheets at their fair value and classified based on the instrument's maturity date. Interest rate risk On April 17, 2020, the Company entered into interest rate swap agreements for notional amounts totaling $1.25 billion (effective as of April 30, 2020), $750.0 million (effective as of December 31, 2020) and $750.0 million (effective as of December 31, 2021) with maturity dates of December 31, 2020, December 31, 2021 and December 31, 2022, respectively. The Company uses interest rate swap contracts to mitigate its exposure to interest rate fluctuations. The Company did not identify any ineffectiveness with respect to the notional amounts of the interest rate swap contracts outstanding as of July 3, 2020 and June 28, 2019, amounting to $2.25 billion and $1.0 billion, respectively. Foreign currency risk The purpose of the Company's foreign currency hedging activities is to protect the Company from the risk that the eventual cash flows resulting from transactions in foreign currencies will be adversely affected by changes in exchange rates. The Company enters into forward contracts that are designated as foreign currency cash flow hedges of selected forecasted payments denominated in currencies other than U.S. Dollars. For the quarters and six months ended July 3, 2020 and June 28, 2019, the Company did not have outstanding derivatives for its foreign currency exposure designated as cash flow hedges. Convertible Note Hedges The Company entered into convertible note hedges in connection with the issuance of the 1.00% Notes and 1.625% Notes. Other At July 3, 2020, the Company had no outstanding commodity derivatives, currency swaps or options relating to either its debt instruments or investments. The Company does not hedge the value of its equity investments in its subsidiaries or affiliated companies. The Company is exposed to credit-related losses if counterparties to hedge contracts fail to perform their obligations. As of July 3, 2020, the counterparties to the Company’s hedge contracts were held at financial institutions that the Company believes to be highly-rated, and no credit-related losses are anticipated.
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Income Taxes |
6 Months Ended |
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Jul. 03, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13: Income Taxes The Company recognizes interest and penalties related to unrecognized tax benefits in tax expense on the Company's Consolidated Statements of Operations and Comprehensive Income. The Company had approximately $4.6 million and $4.2 million of net interest and penalties accrued at July 3, 2020 and June 28, 2019, respectively. It is reasonably possible that $3.4 million of its unrecognized tax benefits will be reduced in the next 12 months due to settlement with tax authorities or expiration of the applicable statute of limitations. The Company continues to maintain a full valuation allowance on its U.S. state deferred tax assets and a valuation allowance on foreign net operating losses and tax credits in certain foreign jurisdictions, a substantial portion of which relate to Japan net operating losses, which are projected to expire prior to utilization. Tax years prior to 2016 are generally not subject to examination by the Internal Revenue Service (the “IRS”) except for items involving tax attributes that have been carried forward to tax years whose statute of limitations remains open. The Company is currently under IRS examination for the 2017 tax year. For state tax returns, the Company is generally not subject to income tax examinations for tax years prior to 2015. The Company is also subject to routine examinations by various foreign tax jurisdictions in which it operates. With respect to jurisdictions outside the United States, the Company is generally not subject to examination for tax years prior to 2009. The Company believes that adequate provisions have been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with the Company's expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. See Note 15: ''Subsequent Event'' for more information on the domestication of certain foreign subsidiaries.
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Changes in Accumulated Other Comprehensive Loss |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Loss | Note 14: Changes in Accumulated Other Comprehensive Loss Amounts comprising the Company's accumulated other comprehensive loss and reclassifications are as follows (in millions):
(1) Effects of cash flow hedges are net of $3.7 million of tax benefit for the six months ended July 3, 2020. Amounts reclassified from accumulated other comprehensive loss to the specific caption within Consolidated Statements of Operations and Comprehensive Income were as follows:
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Subsequent Event |
6 Months Ended |
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Jul. 03, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 15: Subsequent Event On July 6, 2020, the Company completed a simplification of its corporate structure by repatriating the economic rights of its non-U.S. intellectual property to the United States via domestication of certain foreign subsidiaries (the "Domestication"). The Domestication more closely aligns the Company's corporate structure to its operating structure in accordance with the OECD’s BEPS conclusions and changes to U.S. and European tax laws. The impact of the Domestication, which is regarded as a change in tax status, will result in a benefit from recognizing certain deferred tax assets, net of deferred tax liabilities, in the estimated range of $50 million to $80 million. Additionally, the Domestication caused the Company to reassess the full valuation allowance recorded against its U.S. state deferred tax assets. As a result, the Company estimates it will release approximately $50 million of its valuation allowance recorded against its U.S. state deferred tax assets, which will be an additional discrete benefit and is not included in the disclosed range above. These discrete benefits will be recorded during the third quarter of 2020.
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Background and Basis of Presentation (Policies) |
6 Months Ended |
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Jul. 03, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP 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 revenue and expenses during the reporting period. Management evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonable under the circumstances. Significant estimates have been used by management in conjunction with the following: (i) future payouts for customer incentives and amounts subject to allowances and returns; (ii) valuation and obsolescence relating to inventories; (iii) fair values of share-based compensation; and (iv) measurement of valuation allowances against deferred tax assets and evaluations of unrecognized tax benefits. Even though the novel coronavirus disease 2019 (“COVID-19”) pandemic impacted the demand for the Company's products and gross margin, it did not have a significant impact on these estimates. Additionally, during periods where it becomes applicable, significant estimates will be used by management in determining the future cash flows used to assess and test for impairment of indefinite-lived intangible assets, long-lived assets and goodwill and in assumptions used in connection with business combinations. Actual results may differ from the estimates and assumptions used in the consolidated financial statements. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in the context of the information reasonably available and the unknown future impact of the COVID-19 pandemic as of July 3, 2020, and through the date of this Form 10-Q. The accounting matters assessed included, but were not limited to, the allowance for doubtful accounts, share based compensation, inventory valuation and corresponding reserves, carrying value of indefinite-lived assets, other long-lived assets and goodwill, valuation allowance for tax assets, contingencies and revenue recognition. While there was not a material impact to the consolidated financial statements as of and for the quarter and six months ended July 3, 2020, resulting from these assessments, future assessment of the current expectations, including of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in a material adverse impact to the consolidated financial statements in future reporting periods.
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Recent Accounting Pronouncements | ASU 2020-04 – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) In March 2020, the FASB issued ASU 2020-04 to address constituents’ concerns about certain accounting consequences that could result from the global markets’ anticipated transition away from the use of the LIBO Rate and other interbank offered rates to alternative reference rates. ASU 2020-04 includes optional expedients and the relief provided is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBO Rate or another reference rate expected to be discontinued because of reference rate reform. These amendments are effective for entities as of March 12, 2020 through December 31, 2022. The Company elected to apply the provisions of ASU 2020-04 for its contracts and hedging relationships as of March 12, 2020. The adoption of ASU 2020-04 did not have a material impact on its consolidated financial statements. ASU 2019-12 – Income taxes (Topic 740): Simplifying the accounting for income taxes (“ASU 2019-12”) In December 2019, the FASB issued ASU 2019-12 which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Income taxes (Topic 740). The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company early adopted ASU 2019-12 during the quarter ended April 3, 2020. The adoption of ASU 2019-12 did not have a material impact on its consolidated financial statements. Pending adoption: ASU 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) In August 2020, the FASB issued ASU 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.
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Revenue and Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues and Gross Profit From Reportable Segments | Revenue and gross profit for the Company’s operating and reportable segments are as follows (in millions):
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated | Reconciliation of segment gross profit to consolidated gross profit is provided below (in millions):
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Disaggregation of Revenue | Revenue for the Company's operating and reportable segments disaggregated into geographic locations based on sales billed from the respective country and sales channels are as follows (in millions):
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Summary of Property, Plant and Equipment by Geographic Location | Property, plant and equipment, net by geographic location, is summarized as follows (in millions):
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Acquisitions - (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro Forma Information | The following unaudited pro-forma consolidated results of operation for the quarters and six months ended July 3, 2020 and June 28, 2019 have been prepared as if the acquisition of Quantenna had occurred on January 1, 2018 and includes adjustments for amortization of intangibles, interest expense from financing, restructuring, and the effect of purchase accounting adjustments including the step-up of inventory (in millions):
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Restructuring, Asset Impairments and Other, Net - (Tables) |
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Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Activity Included in Restructuring, Asset Impairments, and Other, Net | Details of restructuring, asset impairments and other charges, net are as follows (in millions):
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Schedule of Changes in Accrued Restructuring Reserve | Summary of changes in accrued restructuring from December 31, 2019 to July 3, 2020 is as follows (in millions):
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Balance Sheet Information and Other - (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Goodwill | Changes in the goodwill balance from December 31, 2019 through July 3, 2020 were as follows (in millions):
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Schedule of Inventory | Details of Inventory included in the Company’s Consolidated Balance Sheets are as follows (in millions):
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Schedule of Net Periodic Pension Expense | The components of the net periodic pension expense were as follows (in millions):
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Schedule of Components of Lease Expense | The components of lease expense were as follows (in millions):
The lease liabilities recognized in the Consolidated Balance Sheets are as follows (in millions):
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Schedule of Cash and Non-cash Activities | Certain of the Company's cash and non-cash activities were as follows (in millions):
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Schedule of Cash and Cash Equivalents | Reconciliation of the captions in the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows (in millions):
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Schedule of Restrictions on Cash and Cash Equivalents | Reconciliation of the captions in the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows (in millions):
|
Long-Term Debt - (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | The Company's long-term debt consists of the following (annualized interest rates, in millions):
(1) Interest is payable on June 1 and December 1 of each year at 1.00% annually. (2) Interest is payable on April 15 and October 15 of each year at 1.625% annually. (3) Consists of a term loan, finance lease and other facility at certain international locations where interest is payable monthly or quarterly, with interest rates ranging between 1.00% and 1.48% and maturity dates in 2020. (4) Debt discount of $9.6 million and $20.4 million for the 1.00% Notes, $63.3 million and $71.8 million for the 1.625% Notes and $9.8 million and $10.5 million for the Term Loan "B" Facility, in each case as of July 3, 2020 and December 31, 2019, respectively. (5) Debt issuance costs of $1.3 million and $2.8 million for the 1.00% Notes, $6.1 million and $6.9 million for the 1.625% Notes and $22.7 million and $24.3 million for the Term Loan "B" Facility, in each case as of July 3, 2020 and December 31, 2019, respectively.
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Schedule of Annual Maturities Relating To Long-Term Debt | Expected maturities of gross long-term debt (including current portion) as of July 3, 2020 are as follows (in millions):
|
Earnings Per Share and Equity - (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Earnings Per Share | Net income (loss) per share of common stock attributable to ON Semiconductor Corporation is calculated as follows (in millions, except per share data):
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Schedule of Share Repurchase Program | Activity under the Share Repurchase Program during the quarter and six months ended July 3, 2020 and June 28, 2019 were as follows (in millions, except per share data):
(1) None of these shares had been reissued or retired as of July 3, 2020, but may be reissued or retired at a later date. (2) Exclusive of fees, commissions and other expenses.
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Share-Based Compensation - (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Share-Based Compensation Expense | Total share-based compensation expense related to the Company's RSUs, stock grant awards and the ESPP were recorded within the Consolidated Statements of Operations and Comprehensive Income as follows (in millions):
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Summary Of Restricted Stock Units Transactions | A summary of the RSU transactions for the six months ended July 3, 2020 is as follows (in millions, except per share data):
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Fair Value Measurements - (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value of Assets and Liabilities | The following table summarizes the Company's financial assets and liabilities, excluding pension assets, measured at fair value on a recurring basis (in millions):
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Summary of Fair Value, by Balance Sheet Grouping | The carrying amounts and fair values of the Company’s long-term borrowings (excluding finance lease obligations) are as follows (in millions):
(1) Carrying amount shown is net of debt discount and debt issuance costs.
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Financial Instruments - (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Foreign Exchange Positions | The following summarizes the Company’s net foreign exchange positions in U.S. Dollars (in millions):
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Changes in Accumulated Other Comprehensive Loss - (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | Amounts comprising the Company's accumulated other comprehensive loss and reclassifications are as follows (in millions):
(1) Effects of cash flow hedges are net of $3.7 million of tax benefit for the six months ended July 3, 2020. Amounts reclassified from accumulated other comprehensive loss to the specific caption within Consolidated Statements of Operations and Comprehensive Income were as follows:
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Background and Basis of Presentation (Details) - segment |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 03, 2020 |
Jun. 28, 2019 |
Jul. 03, 2020 |
Jun. 28, 2019 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Fiscal period duration | 91 days | 91 days | 185 days | 179 days |
Number of operating segments | 3 | |||
Number of reportable segments | 3 |
Revenue and Segment Information Additional Information (Details) - segment |
3 Months Ended | 6 Months Ended |
---|---|---|
Jul. 03, 2020 |
Jul. 03, 2020 |
|
Segment Reporting Information [Line Items] | ||
Number of operating segments | 3 | |
Number of reportable segments | 3 | |
One Customer | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | ||
Segment Reporting Information [Line Items] | ||
Concentration risk, percentage | 11.00% | 10.00% |
Revenue and Segment Information - Segment Information Of Revenues, Gross Profit And Operating Income (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 03, 2020 |
Jun. 28, 2019 |
Jul. 03, 2020 |
Jun. 28, 2019 |
|
Segment Reporting Information [Line Items] | ||||
Revenue | $ 1,213.5 | $ 1,347.7 | $ 2,491.4 | $ 2,734.3 |
Gross profit for reportable segments | 390.6 | 506.3 | 806.8 | 1,030.3 |
PSG | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 618.4 | 700.9 | 1,242.3 | 1,405.1 |
Gross profit for reportable segments | 184.2 | 255.7 | 362.8 | 504.7 |
ASG | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 426.7 | 462.0 | 893.8 | 956.1 |
Gross profit for reportable segments | 156.1 | 184.7 | 330.9 | 384.8 |
ISG | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 168.4 | 184.8 | 355.3 | 373.1 |
Gross profit for reportable segments | $ 50.3 | $ 65.9 | $ 113.1 | $ 140.8 |
Revenue and Segment Information - Reconciliations Of Segment Gross Profit And Segment Operating Income (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 03, 2020 |
Jun. 28, 2019 |
Jul. 03, 2020 |
Jun. 28, 2019 |
|
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Gross profit for reportable segments | $ 390.6 | $ 506.3 | $ 806.8 | $ 1,030.3 |
Gross profit | 374.3 | 499.0 | 777.0 | 1,012.7 |
Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Gross profit for reportable segments | 390.6 | 506.3 | 806.8 | 1,030.3 |
Segment Reconciling Items | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Less: Unallocated manufacturing costs | $ (16.3) | $ (7.3) | $ (29.8) | $ (17.6) |
Acquisitions - Narrative (Details) - Quantenna $ in Millions |
Jun. 19, 2019
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Percentage of shares acquired | 100.00% |
Purchase price consideration | $ 1,039.3 |
Acquisitions - Pro Forma Information (Details) - Quantenna - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 03, 2020 |
Jun. 28, 2019 |
Jul. 03, 2020 |
Jun. 28, 2019 |
|
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Revenue | $ 1,213.5 | $ 1,385.3 | $ 2,491.4 | $ 2,829.6 |
Net income (loss) | (0.9) | 96.7 | (13.6) | 198.5 |
Net income (loss) attributable to ON Semiconductor Corporation | $ (1.4) | $ 95.6 | $ (14.4) | $ 197.4 |
Basic (in dollars per share) | $ 0.00 | $ 0.23 | $ (0.04) | $ 0.48 |
Diluted (in dollars per share) | $ 0.00 | $ 0.23 | $ (0.04) | $ 0.47 |
Restructuring, Asset Impairments and Other, Net - Summary of Changes in Accrued Restructuring Charges (Details) $ in Millions |
6 Months Ended |
---|---|
Jul. 03, 2020
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Balance at Beginning of Period | $ 0.2 |
Charges | 43.1 |
Usage | (29.3) |
Balance at End of Period | 14.0 |
Employee separation charges | |
Restructuring Reserve [Roll Forward] | |
Balance at Beginning of Period | 0.1 |
Charges | 43.1 |
Usage | (29.2) |
Balance at End of Period | 14.0 |
Other | |
Restructuring Reserve [Roll Forward] | |
Balance at Beginning of Period | 0.1 |
Charges | 0.0 |
Usage | (0.1) |
Balance at End of Period | $ 0.0 |
Balance Sheet Information and Other - Changes in Goodwill (Details) $ in Millions |
6 Months Ended |
---|---|
Jul. 03, 2020
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 1,659.2 |
Addition due to business combination | 4.2 |
Ending balance | $ 1,663.4 |
Balance Sheet Information and Other - Inventory (Details) - USD ($) $ in Millions |
Jul. 03, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventories: | ||
Raw materials | $ 148.0 | $ 138.4 |
Work in process | 848.0 | 772.9 |
Finished goods | 289.4 | 321.1 |
Inventories | $ 1,285.4 | $ 1,232.4 |
Balance Sheet Information and Other - Narrative (Details) - USD ($) $ in Millions |
Jul. 03, 2020 |
Dec. 31, 2019 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Accrued pension liability | $ 133.5 | $ 132.7 |
Current portion accrued pension liability | 0.3 | 0.3 |
Operating lease assets | $ 143.4 | $ 110.2 |
Remaining Lease Term (in years) | 7 years 2 months 12 days | |
Discount Rate (as a percent) | 5.00% |
Balance Sheet Information and Other - Pension Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 03, 2020 |
Jun. 28, 2019 |
Jul. 03, 2020 |
Jun. 28, 2019 |
|
Balance Sheet Related Disclosures [Abstract] | ||||
Service cost | $ 2.7 | $ 2.4 | $ 5.4 | $ 4.7 |
Interest cost | 1.1 | 1.2 | 2.3 | 2.5 |
Expected return on plan assets | (1.5) | (1.5) | (3.1) | (3.0) |
Curtailment gain | (1.6) | 0.0 | (1.6) | 0.0 |
Total net periodic pension cost | $ 0.7 | $ 2.1 | $ 3.0 | $ 4.2 |
Balance Sheet Information and Other - Lease Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 03, 2020 |
Jun. 28, 2019 |
Jul. 03, 2020 |
Jun. 28, 2019 |
Dec. 31, 2019 |
|
Balance Sheet Related Disclosures [Abstract] | |||||
Operating lease | $ 9.1 | $ 8.3 | $ 18.2 | $ 16.6 | |
Variable lease | 0.7 | 1.0 | 1.8 | 2.1 | |
Short-term lease | 1.2 | 0.6 | 2.4 | 1.3 | |
Total lease expense | 11.0 | $ 9.9 | 22.4 | $ 20.0 | |
Accrued expenses and other current liabilities | 27.6 | 27.6 | $ 26.1 | ||
Other long-term liabilities | 120.1 | 120.1 | 87.9 | ||
Total lease obligations | $ 147.7 | $ 147.7 | $ 114.0 | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent | us-gaap:AccruedLiabilitiesCurrent | |||
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
Balance Sheet Information and Other - Cash and Non-cash Activity (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jul. 03, 2020 |
Jun. 28, 2019 |
|
Non-cash investing activities: | ||
Capital expenditures in accounts payable and other long-term liabilities | $ 152.8 | $ 173.0 |
Sale of property in exchange of note receivable | 4.7 | 0.0 |
Right-of-use assets obtained in exchange of lease liabilities | 49.0 | 4.8 |
Non-cash financing activity: | ||
Liability incurred for purchase of business | 0.0 | 38.9 |
Cash (received) paid for: | ||
Interest income | (3.4) | (3.0) |
Interest expense | 58.4 | 40.3 |
Income taxes | 15.5 | 32.1 |
Operating lease payments in operating cash flows | $ 18.3 | $ 17.5 |
Balance Sheet Information and Other - Summary of Cash and Cash Equivalents (Details) - USD ($) $ in Millions |
Jul. 03, 2020 |
Dec. 31, 2019 |
Jun. 28, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||||
Cash and cash equivalents | $ 2,060.4 | $ 894.2 | $ 885.2 | $ 1,069.6 |
Restricted cash (included in other current assets) | 0.3 | 0.0 | 13.9 | 17.5 |
Cash, cash equivalents and restricted cash in Consolidated Statements of Cash Flows | $ 2,060.7 | $ 894.2 | $ 899.1 | $ 1,087.1 |
Long-Term Debt - Annual Maturities Relating To Long-Term Debt (Details) $ in Millions |
Jul. 03, 2020
USD ($)
|
---|---|
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Remainder of 2020 | $ 698.7 |
2021 | 16.3 |
2022 | 16.3 |
2023 | 591.4 |
2024 | 1,981.4 |
Thereafter | 1,549.1 |
Total | $ 4,853.2 |
Long-Term Debt Narrative (Details) - Revolving Credit Facility - Senior Revolving Credit Facility - USD ($) $ in Millions |
Mar. 24, 2020 |
Jul. 03, 2020 |
---|---|---|
Debt Instrument [Line Items] | ||
Borrowing under Revolving Credit Facility | $ 1,165.0 | |
Remaining borrowing capacity | $ 4.0 |
Earnings Per Share and Equity - Summary of earnings per share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 03, 2020 |
Jun. 28, 2019 |
Jul. 03, 2020 |
Jun. 28, 2019 |
|
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to ON Semiconductor Corporation | $ (1.4) | $ 101.8 | $ (15.4) | $ 215.9 |
Basic weighted average shares of common stock outstanding (in shares) | 410.1 | 411.9 | 410.3 | 411.3 |
Dilutive effect of share-based awards (in shares) | 0.0 | 1.9 | 0.0 | 2.6 |
Dilutive effect of convertible notes (in shares) | 0.0 | 3.9 | 0.0 | 3.9 |
Diluted weighted-average shares of common stock outstanding (in shares) | 410.1 | 417.7 | 410.3 | 417.8 |
Net income (loss) per share of common stock attributable to ON Semiconductor Corporation: | ||||
Basic (in dollars per share) | $ (0.00) | $ 0.25 | $ (0.04) | $ 0.52 |
Diluted (in dollars per share) | $ (0.00) | $ 0.24 | $ (0.04) | $ 0.52 |
Earnings Per Share and Equity - Schedule of Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 03, 2020 |
Jun. 28, 2019 |
Jul. 03, 2020 |
Jun. 28, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Aggregate purchase price | $ 65.4 | $ 125.8 | ||
Fees, commissions and other expenses | $ 0.0 | $ 0.0 | 0.1 | 0.1 |
Total cash used for share repurchases | $ 0.0 | $ 50.0 | $ 65.4 | $ 125.8 |
Treasury shares reissued or retired during period | 0 | |||
Share Repurchase Program | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of repurchased shares | 0 | 2,600,000 | 3,600,000 | 7,000,000.0 |
Aggregate purchase price | $ 0.0 | $ 50.0 | $ 65.3 | $ 125.7 |
Weighted-average purchase price per share (in dollars per share ) | $ 0 | $ 19.32 | $ 18.08 | $ 17.97 |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions |
Aug. 10, 2020 |
Jul. 03, 2020 |
---|---|---|
Loss Contingencies [Line Items] | ||
Outstanding guarantees and letters of credit | $ 6.8 | |
Guarantees | 1.4 | |
AcBel Polytech, Inc. | Subsequent Event | ||
Loss Contingencies [Line Items] | ||
Payments for legal settlements | $ 6.0 | |
Revolving Credit Facility | Senior Revolving Credit Facility | ||
Loss Contingencies [Line Items] | ||
Current borrowing capacity | 15.0 | |
Letter of Credit | Senior Revolving Credit Facility | ||
Loss Contingencies [Line Items] | ||
Current borrowing capacity | 4.0 | |
Credit commitment outstanding | $ 1.0 |
Fair Value Measurements - Summary of Fair Value of Assets and Liabilities (Details) - Fair Value, Measurements, Recurring - Demand and time deposits - USD ($) $ in Millions |
Jul. 03, 2020 |
Dec. 31, 2019 |
---|---|---|
Level 1 | ||
Assets: | ||
Cash and cash equivalents | $ 528.2 | $ 28.2 |
Level 2 | ||
Assets: | ||
Cash and cash equivalents | 0.0 | 0.0 |
Level 3 | ||
Assets: | ||
Cash and cash equivalents | 0.0 | 0.0 |
Estimate of Fair Value | ||
Assets: | ||
Cash and cash equivalents | $ 528.2 | $ 28.2 |
Fair Value Measurements - Summary of Fair Value, by Balance Sheet Grouping (Details) - USD ($) $ in Millions |
Jul. 03, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Amount | $ 4,853.2 | $ 3,749.2 |
Convertible notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Amount | 1,184.7 | 1,163.1 |
Fair Value | 1,479.2 | 1,730.2 |
Long-term debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Amount | 3,555.8 | 2,449.3 |
Fair Value | $ 3,365.5 | $ 2,427.8 |
Fair Value Measurements - Narrative (Details) - Convertible Debt |
Jul. 03, 2020 |
---|---|
1.00% Notes | |
Debt Instrument [Line Items] | |
Debt instrument, interest rate (as a percent) | 1.00% |
1.625% Notes | |
Debt Instrument [Line Items] | |
Debt instrument, interest rate (as a percent) | 1.625% |
Income Taxes - Additional Information (Details) - USD ($) $ in Millions |
Jul. 03, 2020 |
Jun. 28, 2019 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits, income tax penalties and interest accrued | $ 4.6 | $ 4.2 |
Possible reduction in unrecognized tax benefits in next twelve months | $ 3.4 |
Changes in Accumulated Other Comprehensive Loss - Reclassifications from Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 03, 2020 |
Jun. 28, 2019 |
Jul. 03, 2020 |
Jun. 28, 2019 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Interest expense | $ (2.8) | $ (1.0) | $ (2.7) | $ 1.1 |
Net income (loss) | (0.9) | 102.9 | (14.6) | 217.0 |
Reclassification out of Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Net income (loss) | 5.0 | (1.3) | 6.9 | (2.7) |
Effects of Cash Flow Hedges | Reclassification out of Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Interest expense | $ 5.0 | $ (1.3) | $ 6.9 | $ (2.7) |
Subsequent Event (Details) - Forecast - Subsequent Event $ in Millions |
3 Months Ended |
---|---|
Sep. 25, 2020
USD ($)
| |
Subsequent Event [Line Items] | |
Release of valuation allowance | $ 50 |
Minimum | |
Subsequent Event [Line Items] | |
Estimated benefit from change in tax status | 50 |
Maximum | |
Subsequent Event [Line Items] | |
Estimated benefit from change in tax status | $ 80 |
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