Long-Term Debt | Note 8: Long-Term Debt The Company's long-term debt consists of the following (annualized rates, dollars in millions): December 31, 2015 December 31, 2014 Senior Revolving Credit Facility due 2020, interest payable monthly at 1.69% as of December 31, 2014 $ — $ 350.0 1.00% Notes (1) 690.0 — 2.625% Notes, Series B (2) 356.9 356.9 Loan with Japanese bank due 2015 through 2018, interest payable quarterly at 2.36% and 2.01%, respectively (3) 198.2 235.9 U.S. real estate mortgages payable monthly through 2019 at an average rate of 3.35% and 3.35%, respectively (4) 50.0 54.8 Philippine term loans due 2016 through 2020, interest payable quarterly at 2.32% (5) 50.0 — Loan with Singapore bank, interest payable weekly at 1.67% and 1.42%, respectively (6) (11) 30.0 20.0 Loan with Hong Kong bank, interest payable weekly at 1.67% and 1.92%, respectively (6) (11) 25.0 35.0 Malaysia revolving line of credit, interest payable quarterly at 2.05% and 1.71%, respectively (5) (11) 25.0 25.0 Vietnam revolving line of credit, interest payable quarterly and annually at an average rate of 1.89% and 1.87%, respectively (5) (11) 20.8 10.7 Loan with Philippine bank due 2015 through 2019, interest payable monthly and quarterly at an average rate of 2.70% and 2.37%, respectively (7) 18.8 54.2 Canada revolving line of credit, interest payable quarterly at 2.01% and 1.84%, respectively (5) (11) 15.0 15.0 Loan with Japanese bank due 2016 through 2020, interest payable quarterly at 1.1% (5) 4.2 — Canada equipment financing payable monthly through 2017 at 3.81% (8) 2.4 4.2 U.S. equipment financing payable monthly through 2016 at 2.4% and 2.94%, respectively (8) 1.3 4.8 Capital lease obligations 28.2 40.8 Gross long-term debt, including current maturities 1,515.8 1,207.3 Less: Debt discount (9) (107.5 ) (14.7 ) Less: Debt issuance costs (10) (14.4 ) (0.9 ) Net long-term debt, including current maturities 1,393.9 1,191.7 Less: Current maturities (543.4 ) (209.6 ) Net long-term debt $ 850.5 $ 982.1 _______________________ (1) Interest is payable on June 1 and December 1 of each year at 1.00% annually. See below under the heading "1.00% Notes" for additional information. (2) Interest is payable on June 15 and December 15 of each year at 2.625% annually. The 2.625% Notes, Series B may be put back to the Company at the option of the holders of the notes on December 15 of 2016 and 2021 or called at the option of the Company on or after December 20, 2016. The Notes can be converted at any time on or after June 15, 2016. See below under the heading "2.625% Notes, Series B" for additional information. (3) This loan represents SCI LLC's non-collateralized loan with SMBC, which is guaranteed by the Company. See additional information below under the heading "Note Payable to SMBC." (4) Debt arrangement collateralized by real estate, including certain of the Company's facilities in California, Oregon and Idaho. See below under the heading "U.S. Real Estate Mortgages" for additional information with respect to recent activity. (5) Non-collateralized debt arrangement. (6) Collateralized by accounts receivable. (7) $18.8 million collateralized by equipment as of December 31, 2015 with $15.0 million non-collateralized and $39.2 million collateralized by equipment as of December 31, 2014 . (8) Debt arrangement collateralized by equipment. (9) Discount of $100.2 million for the 1.00% Notes as of December 31, 2015 and $7.3 million and $14.7 million for the 2.625% Notes, Series B as of December 31, 2015 and December 31, 2014 , respectively. (10) Debt issuance costs of $13.9 million for the 1.00% Notes as of December 31, 2015 and $0.5 million and $0.9 million for the 2.625% Notes, Series B as of December 31, 2015 and December 31, 2014 , respectively. (11) Debt arrangement renews annually. Expected maturities relating to the Company’s gross long-term debt as of December 31, 2015 are as follows (in millions): Annual Maturities 2016 $ 551.1 2017 69.4 2018 148.1 2019 47.5 2020 699.7 Thereafter — Total $ 1,515.8 For purposes of the table above, the 2.625% Notes, Series B are assumed to mature at the earliest conversion date. Loss on Debt Extinguishment As further described below, the Company recognized a loss of $0.4 million and $3.1 million for the years ended December 31, 2015 and 2013 , respectively, for the extinguishment of certain of its credit facilities. 2015 Revolver Amendment On May 1, 2015 , the Company and its wholly-owned subsidiary, SCI LLC, entered into an amendment to the $800.0 million , five -year senior revolving credit facility (the “Facility”) pursuant to the Amended and Restated Credit Agreement dated as of October 10, 2013 (the “Credit Agreement”), among the Company and a group of lenders. The amendment expanded the borrowing capacity of the Facility to $1.0 billion and reset the five -year maturity date. The Facility may be used for general corporate purposes including working capital, stock repurchase, and/or acquisitions. At issuance, the Company recorded $2.1 million of new debt issuance costs and wrote-off $0.4 million of existing debt issuance costs associated with the Facility, resulting in a loss on debt extinguishment during the year ended December 31, 2015 . 2013 Convertible Note Exchange On March 22, 2013 , the Company closed an exchange offer for $60.0 million in principal value (approximately $57.4 million of carrying value) of its 2.625% Notes in exchange for $58.5 million in principal value of its 2.625% Notes, Series B plus accrued and unpaid interest on the 2.625% Notes. Subject to certain other terms and conditions, this exchange extended the first put date, for the exchanged amount, from December 2013 to December 2016. The exchanged amount of the 2.625% Notes, Series B was allocated between the fair value of the liability component and equity component of the convertible security. The amount allocated to the extinguishment of the liability component was based on the discounted cash flows using a rate of return an investor would have required on non-convertible debt with other terms substantially similar to the 2.625% Notes. The remaining consideration was recognized as re-acquisition of the equity component. The difference between the consideration allocated to the liability component and the remaining net carrying amount of the liability and unamortized debt issuance costs was recorded as a loss on debt exchange of $3.1 million , which included the write-off of approximately $0.2 million in unamortized debt issuance costs. The Company also recorded an adjustment to additional paid-in capital of approximately $5.9 million , net of adjustments, relating to the exchange of equity components. Note Payable to SMBC On January 31, 2013 , the Company amended and restated its seven -year, non-collateralized loan obligation with SANYO Electric. In connection with the amendment and restatement of the loan agreement, SANYO Electric assigned all of its rights under the loan agreement to SMBC. The loan had an original principal amount of approximately $377.5 million and had a principal balance of $198.2 million and $235.9 million as of December 31, 2015 and December 31, 2014 , respectively. The loan bears interest at a rate of 3-month LIBOR plus 1.75% per annum and provides for quarterly interest and $9.4 million in principal payments, with the unpaid balance of $122.7 million due in January 2018 . Amended and Restated Senior Revolving Credit Facility On May 1, 2015 , the Company and its wholly-owned subsidiary, SCI LLC, entered into an amendment to the Facility pursuant to the Credit Agreement among the Company and a group of lenders. The amendment expanded the borrowing capacity of the Facility to $1.0 billion and reset the five -year maturity date. The Facility may be used for general corporate purposes including working capital, stock repurchase, and/or acquisitions. On June 1, 2015, the Company and its wholly-owned subsidiary, SCI LLC, entered into a second amendment of the Facility that provides for, among other things, modifications to the Facility to allow for the issuance by the Company of its convertible senior notes, subject to the satisfaction of certain conditions, and to permit the Company to enter into certain hedging transactions relating to such notes or otherwise. In addition, the second amendment provides for the release of the pledged stock of certain of the Company’s subsidiaries upon the issuance of the convertible senior notes. The Facility includes $15.0 million availability for the issuance of letters of credit, $15.0 million availability for swingline loans for short-term borrowings and a foreign currency sublimit of $75.0 million . The Company has the ability to increase the size of the Facility in increments of $10.0 million provided that the aggregate amount of such increases does not exceed $500.0 million . Payments of the principal amounts of revolving loans under the Credit Agreement are due no later than May 1, 2020 , which is the maturity date of the Facility. Interest is payable based on either a LIBOR or base rate option, as established at the commencement of each borrowing period, plus an applicable rate that varies based on the total leverage ratio. The Company has also agreed to pay the lenders certain fees, including a commitment fee that varies based on the total leverage ratio. The Company may prepay loans under the Credit Agreement at any time, in whole or in part, upon payment of accrued interest and break funding payments, if applicable. The obligations under the Facility are guaranteed by certain of the Company's and SCI LLC's domestic subsidiaries and prior to the issuance of the 1.00% Notes, were collateralized by a pledge of the equity interests in certain of the Company's and SCI LLC's domestic subsidiaries and material first tier foreign subsidiaries. The Credit Agreement contains affirmative and negative covenants that are customary for credit agreements of this nature. The negative covenants include, among other things, limitations on asset sales, mergers and acquisitions, indebtedness, liens, investments and transactions with affiliates. The Company's business combinations described in Note 4: "Acquisitions," represent permitted activities pursuant to the Credit Agreement. The Credit Agreement contains only two financial covenants: (i) a maximum total leverage ratio of consolidated total indebtedness to consolidated earnings before interest, taxes, depreciation and amortization and other adjustments described in the Credit Agreement ("consolidated EBITDA") for the trailing four consecutive quarters of 3.75 to 1.00; and (ii) a minimum interest coverage ratio of consolidated EBITDA to consolidated interest expense for the trailing four consecutive quarters of 3.50 to 1.0. The Credit Agreement contains customary events of default that include, among other things, non-payment defaults, inaccuracy of representations and warranties, covenant defaults, cross default to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults and a change of control default. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement. The Company was in compliance with the various covenants contained in the Credit Agreement as of December 31, 2015 and expects to remain in compliance with all covenants over at least the next twelve months. There were no borrowings on the Facility during 2015 . During the third quarter of 2014, the Company drew down an additional amount of approximately $230.0 million to partially fund the purchase of Aptina. During the fourth quarter of 2013, the Company drew down approximately $120.0 million , for general corporate purposes, of available borrowings pursuant to the Facility. There was no outstanding balance on the Facility as of December 31, 2015 , except for a letter of credit in the amount of $0.2 million outstanding as of December 31, 2015 . Included in other assets as of December 31, 2015 were $4.3 million of debt issuance costs associated with the Facility. 1.00% Notes On June 8, 2015, the Company completed a private placement of $690.0 million of its 1.00% Notes to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The Company was the sole issuer in the private unregistered offering of the 1.00% Notes. The Company incurred issuance costs of $18.3 million in connection with the issuance of the notes, of which $15.4 million were recorded as debt issuance costs and are being amortized using the effective interest method and $2.9 million were allocated to the conversion option (as further described below) and were recorded to equity. The 1.00% Notes are governed by an indenture between the Company, as the issuer, and Wells Fargo Bank, National Association, as trustee. See Note 1: ''Background and Basis of Presentation'' for discussion of the adoption and retrospective application of ASU 2015-03 applicable to the presentation of debt issuance costs. The Company's use of the net proceeds from the offering included the following: (i) the funding of the cost of the convertible note hedge transactions described below (the cost of which was partially offset by the proceeds that the Company received from entering into the warrant transactions described below); (ii) funding the repurchase of $70.0 million of the Company's common stock which was acquired from purchasers of the 1.00% Notes in privately negotiated transactions effected through one or more of the initial purchasers or their affiliates conducted concurrently with the issuance of the 1.00% Notes ; and (iii) repayment of $350.0 million of borrowings outstanding under its revolving credit facility. The remainder of the proceeds is intended for general corporate purposes, including additional share repurchases and potential acquisitions. The notes bear interest at the rate of 1.00% per year from the date of issuance, payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2015 . The notes are fully and unconditionally guaranteed on a senior unsecured obligation basis by certain existing subsidiaries of the Company. The notes are convertible by holders into cash and shares of the Company’s common stock at a conversion rate of 54.0643 shares of common stock per $1,000 principal amount of notes (subject to adjustment in certain events), which is equivalent to an initial conversion price of $18.50 per share of common stock. The Company will settle conversion of all notes validly tendered for conversion in cash and shares of the Company’s common stock, if applicable, subject to the Company’s right to pay the share amount in additional cash. Holders may convert their notes only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2015, if the last reported sale price of common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business-day period immediately following any five consecutive trading-day period in which the trading price per $1,000 principal amount of notes for each day of such period was less than 98% of the product of the closing sale price of the Company’s common stock and the conversion rate; (iii) upon occurrence of the specified transactions described in the indenture relating to the notes; or (iv) on and after September 1, 2020 . Upon conversion of the notes, the Company will deliver cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company's election. For a discussion of the dilutive effects for earnings per share calculations, see Note 9: "Earnings Per Share and Equity." The notes will mature on December 1, 2020 . If a holder elects to convert its notes in connection with the occurrence of specified fundamental changes that occur prior to September 1, 2020 , the holder will be entitled to receive, in addition to cash and shares of common stock equal to the conversion rate, an additional number of shares of common stock, in each case as described in the indenture. Notwithstanding these conversion rate adjustments, these notes contain an explicit limit on the number of shares issuable upon conversion. In connection with the occurrence of specified fundamental changes, holders may require the Company to repurchase for cash all or part of their notes at a purchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but not including, the fundamental change repurchase date. The notes, which are the Company’s unsecured obligations, will rank equally in right of payment to all of the Company’s existing and future unsubordinated indebtedness and will be senior in right of payment to all of the Company’s existing and future subordinated obligations. The notes will also be effectively subordinated to any of the Company’s or its subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. ON Semiconductor was the sole issuer of the 1.00% Notes. In accordance with accounting guidance on embedded conversion features, the Company valued and bifurcated the conversion option associated with the 1.00% Notes from the respective host debt instrument, which is referred to as the debt discount, and initially recorded the conversion option of $110.4 million in stockholders' equity. The resulting debt discount is being amortized to interest expense at an effective interest rate of 4.29% over the contractual terms of the notes. Refer to Note 1: ''Background and Basis of Presentation'' for discussion of the adoption and retrospective application of ASU 2015-03 for the treatment of debt issuance costs and debt discounts. The Company used $56.9 million of the net proceeds from the offering of its 1.00% Notes to concurrently enter into convertible note hedge and warrant transactions with certain of the initial purchasers of the 1.00% Notes . Pursuant to these transactions, the Company has the option to purchase initially (subject to adjustment for certain specified transactions) a total of 37.3 million shares of its common stock at a price of $18.50 per share. The total cost of the convertible note hedge transactions was $108.9 million . In addition, the Company sold warrants to certain bank counterparties whereby the holders of the warrants have the option to purchase initially (subject to adjustment for certain specified events) a total of 37.3 million shares of the Company's common stock at a price of $25.96 per share. The Company received $52.0 million in cash proceeds from the sale of these warrants. In aggregate, the purchase of the convertible note hedges and the sale of the warrants are intended to offset potential dilution from the conversion of these notes. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders' equity and are not accounted for as derivatives. The net cost incurred in connection with the convertible note hedge and warrant transactions was recorded as a reduction to additional paid in capital in the Consolidated Balance Sheet. A portion of the shares subject to the conversion of the 1.00% Notes and hedging transactions were reserved in the form of the Company's treasury stock. 2.625% Notes, Series B As discussed above, the Company completed the following exchange offer for its 2.625% Notes in exchange for its 2.625% Notes, Series B. Subject to certain other terms and conditions, these exchanges extended the first put date for the exchanged amounts from December 2013 to December 2016. The 2.625% Notes, Series B bear interest at the rate of 2.625% per year from the date of issuance. Interest is payable on June 15 and December 15 of each year. The 2.625% Notes, Series B are fully and unconditionally guaranteed on a non-collateralized senior subordinated basis by certain existing domestic subsidiaries of the Company (dollars in millions): For the year ended December 31, 2013 Exchange date March 22, 2013 Principal value of 2.625% Notes $ 60.0 Principal value of 2.625% Notes, Series B $ 58.5 Capitalized exchange expenses (1) $ 0.1 Effective interest rate 4.70 % (1) Represents exchange expenses capitalized as debt issuance costs that are amortized using the effective interest method through the first put date of December 15, 2016 . The 2.625% Notes, Series B are convertible by holders into cash and shares of the Company's common stock at a conversion rate of 95.2381 shares of common stock per $1,000 principal amount of notes (subject to adjustment upon the occurrence of certain events), which was equivalent to an initial conversion price of approximately $10.50 per share of common stock. The Company will settle conversion of all notes validly tendered for conversion in cash and shares of the Company's common stock, if applicable, subject to the Company's right to pay the share amount in additional cash. Holders have the option to convert their 2.625% Notes, Series B under the following circumstances: (i) during the five business-day period immediately following any five consecutive trading-day period in which the trading price per $1,000 principal amount of notes for each day of such period was less than 103% of the product of the closing sale price of the Company's common stock and the conversion rate; (ii) upon occurrence of the specified transactions described in the Indenture relating to the 2.625% Notes, Series B; or (iii) after June 15, 2016. ON Semiconductor was the sole issuer of the 2.625% Notes, Series B. Beginning December 20, 2016, the Company can redeem the 2.625% Notes, Series B, in whole or in part, for cash at a price of 100% of the principal amount plus accrued and unpaid interest to, but excluding, the redemption date. If a holder elects to convert its 2.625% Notes, Series B in connection with the occurrence of specified fundamental changes that occur prior to December 15, 2016, the holder will be entitled to receive, in addition to cash and shares of common stock equal to the conversion rate, an additional number of shares of common stock, in each case as described in the Indenture. Notwithstanding these conversion rate adjustments, these 2.625% Notes, Series B contain an explicit limit on the number of shares issuable upon conversion. Holders may require the Company to repurchase the 2.625% Notes, Series B for cash on December 15, 2016 and 2021 at a repurchase price equal to 100% of the principal amount of such 2.625% Notes, Series B, plus accrued and unpaid interest, to, but excluding, the repurchase date. Upon the occurrence of certain corporate events, each holder could require the Company to purchase all or a portion of such holder's 2.625% Notes, Series B for cash at a price equal to the principal amount of such notes, plus accrued and unpaid interest, to, but excluding, the repurchase date. Debt issuance costs associated with the 2.625% Notes, Series B are amortized using the effective interest method through December 2016. See Note 1: ''Background and Basis of Presentation'' for discussion of the adoption and retrospective application of ASU 2015-03 applicable to the presentation of debt issuance costs. Philippine Term Loans During the second quarter of 2015, the Company's wholly-owned Philippine subsidiaries and ON Semiconductor, as guarantor, entered into two non-collateralized term loans with an aggregate borrowing capacity of $50.0 million , the terms of which were set forth in agreements by and between the Company’s Philippine subsidiaries and a Philippine bank. During the third quarter of 2015, the Company borrowed the full $50.0 million available under the term loans. Borrowings under the loans bear interest based on 3-month LIBOR plus 2.0% per annum, with interest payable quarterly in arrears. The total borrowed amount must be repaid within five years over 17 equal quarterly principal installments starting at the end of the fourth quarter from the initial drawdown date. U.S. Real Estate Mortgages On August 4, 2014, one of the Company’s U.S. subsidiaries entered into an amended and restated loan agreement with a Scottish Bank for approximately $49.4 million , which was collateralized by certain of the Company's real estate. The loan bears interest payable monthly at an interest rate of approximately 3.12% per annum, with a balloon payment of approximately $26.7 million in 2019 . Malaysia Revolving Line of Credit On September 23, 2014, one of the Company’s wholly-owned Malaysian subsidiaries and ON Semiconductor, as guarantor, entered into a non-collateralized and uncommitted $25.0 million line of credit (the “Malaysia Line of Credit”), the terms of which were set forth in an agreement by and between the Company’s Malaysian subsidiary and a Japanese bank. During the third quarter of 2014, the Company’s Malaysian subsidiary borrowed the full $25.0 million available under the Malaysia Line of Credit. The balance as of December 31, 2015 was $25.0 million . Borrowings under the Malaysia Line of Credit bear interest based on 3-month LIBOR, as established at the commencement of each borrowing period, plus 1.45% per annum, with interest payable quarterly. The borrowed amount is payable within 21 business days of demand. Vietnam Revolving Line of Credit On September 3, 2014, one of the Company’s wholly-owned Vietnamese subsidiaries and ON Semiconductor, as guarantor, entered into a non-collateralized and uncommitted $25.0 million line of credit (the “Vietnam Line of Credit”), the terms of which were set forth in an agreement by and between the Company’s Vietnamese subsidiary and a Japanese bank. As of December 31, 2015 , the Company’s Vietnamese subsidiary had an outstanding balance of $20.8 million under the Vietnam Line of Credit. Borrowings under the Vietnam Line of Credit bear interest based on 3-month LIBOR and 12-month LIBOR, as established at the commencement of each borrowing period, plus 1.45% per annum, with interest payable quarterly and annually. The borrowed amount is payable within 5 business days of demand. Capital Lease Obligations The Company has various capital lease obligations primarily for software, which as of December 31, 2015 totaled $28.2 million , with interest rates ranging from 1.7% to 6.0% and maturities from the first quarter of 2016 until the fourth quarter of 2019 . Future payments for the Company's capital lease obligations are included in the annual maturities table. |