Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 02, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | ON Semiconductor Corporation | |
Entity Central Index Key | 1,097,864 | |
Current Fiscal Year End | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 416,962,802 |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Assets | ||
Cash and cash equivalents | $ 880.5 | $ 617.6 |
Receivables, net | 675.1 | 426.4 |
Inventories | 1,083.1 | 750.4 |
Other current assets | 163.7 | 97.1 |
Total current assets | 2,802.4 | 1,891.5 |
Property, plant and equipment, net | 2,074.6 | 1,274.1 |
Goodwill | 1,000.8 | 270.6 |
Intangible assets, net | 778.1 | 325.8 |
Deferred tax assets | 50.8 | 44.5 |
Other assets | 84.2 | 63.1 |
Total assets | 6,790.9 | 3,869.6 |
Liabilities, Non-Controlling Interest and Stockholders’ Equity | ||
Accounts payable | 407.5 | 337.7 |
Accrued expenses | 429.2 | 246.2 |
Deferred income on sales to distributors | 120.6 | 112 |
Current portion of long-term debt | 540.6 | 543.4 |
Total current liabilities | 1,497.9 | 1,239.3 |
Long-term debt | 3,095.7 | 850.5 |
Deferred tax liabilities | 248.2 | 17.3 |
Other long-term liabilities | 195.1 | 130.6 |
Total liabilities | 5,036.9 | 2,237.7 |
Commitments and contingencies | ||
ON Semiconductor Corporation stockholders’ equity: | ||
Common stock ($0.01 par value, 750,000,000 shares authorized, 540,067,760 and 534,134,721 shares issued, 416,863,599 and 412,039,805 shares outstanding, respectively) | 5.4 | 5.3 |
Additional paid-in capital | 3,478.1 | 3,420.3 |
Accumulated other comprehensive loss | (38.6) | (42.3) |
Accumulated deficit | (638.2) | (709.4) |
Less: Treasury stock, at cost: 123,204,161 and 122,094,916 shares, respectively | (1,076.1) | (1,065.7) |
Total ON Semiconductor Corporation stockholders’ equity | 1,730.6 | 1,608.2 |
Non-controlling interest in consolidated subsidiary | 23.4 | 23.7 |
Total stockholders' equity | 1,754 | 1,631.9 |
Total liabilities and stockholders' equity | $ 6,790.9 | $ 3,869.6 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Stockholders' Equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 750,000,000 | 750,000,000 |
Common stock, shares issued (in shares) | 540,067,760 | 534,134,721 |
Common stock, shares outstanding (in shares) | 416,863,599 | 412,039,805 |
Treasury stock, shares (in shares) | 123,204,161 | 122,094,916 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | |
Income Statement [Abstract] | ||||
Revenues | $ 950.9 | $ 904.2 | $ 2,645.9 | $ 2,655.5 |
Cost of revenues (exclusive of amortization shown below) | 621.9 | 595.7 | 1,733.5 | 1,742.2 |
Gross profit | 329 | 308.5 | 912.4 | 913.3 |
Operating expenses: | ||||
Research and development | 111.5 | 104.9 | 312.5 | 305.7 |
Selling and marketing | 56.7 | 52.3 | 158.6 | 156 |
General and administrative | 67.6 | 44.9 | 158.1 | 136.6 |
Amortization of acquisition-related intangible assets | 24.7 | 33.6 | 71.9 | 101.1 |
Restructuring, asset impairments and other, net | 21.8 | 3.3 | 28.7 | 4.5 |
Intangible asset impairment | 0 | 0.1 | 2.2 | 3.8 |
Total operating expenses | 282.3 | 239.1 | 732 | 707.7 |
Operating income | 46.7 | 69.4 | 180.4 | 205.6 |
Other (expense) income, net: | ||||
Interest expense | (46.7) | (14.9) | (104.4) | (34.8) |
Interest income | 1.4 | 0.2 | 3.8 | 0.8 |
Gain on divestiture of business | 92.2 | 0 | 92.2 | 0 |
Loss on modification or extinguishment of debt | (6.3) | 0 | (6.3) | (0.4) |
Other | 0 | 2.1 | (3.3) | 7.9 |
Other (expense) income, net | 40.6 | (12.6) | (18) | (26.5) |
Income before income taxes | 87.3 | 56.8 | 162.4 | 179.1 |
Income tax provision | (76.7) | (10) | (89.6) | (25.1) |
Net income | 10.6 | 46.8 | 72.8 | 154 |
Less: Net income attributable to Non-Controlling Interest | (0.5) | (0.5) | (1.6) | (1.9) |
Net income attributable to ON Semiconductor Corporation | 10.1 | 46.3 | 71.2 | 152.1 |
Comprehensive income (loss), net of tax: | ||||
Net income | 10.6 | 46.8 | 72.8 | 154 |
Foreign currency translation adjustments | 0.8 | 0.2 | 3.6 | 0.2 |
Effects of cash flow hedges | 0 | 0.4 | 0.1 | 1.7 |
Effects of available-for-sale securities | 0 | (1.1) | 0 | (4.5) |
Other comprehensive (loss) income, net of tax of $0.0 million | 0.8 | (0.5) | 3.7 | (2.6) |
Comprehensive income | 11.4 | 46.3 | 76.5 | 151.4 |
Comprehensive income attributable to non-controlling interest | (0.5) | (0.5) | (1.6) | (1.9) |
Comprehensive income attributable to ON Semiconductor Corporation | $ 10.9 | $ 45.8 | $ 74.9 | $ 149.5 |
Net income per common share attributable to ON Semiconductor Corporation: | ||||
Basic (in dollars per share) | $ 0.02 | $ 0.11 | $ 0.17 | $ 0.36 |
Diluted (in dollars per share) | $ 0.02 | $ 0.11 | $ 0.17 | $ 0.35 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 415.8 | 413.7 | 414.4 | 424 |
Diluted (in shares) | 419.8 | 417.5 | 417.6 | 431.3 |
Consolidated Statements of Ope5
Consolidated Statements of Operations and Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | |
Income Statement [Abstract] | ||||
Other comprehensive (loss) income, tax | $ 0 | $ 0 | $ 0 | $ 0 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Oct. 02, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 72.8 | $ 154 |
Adjustments to reconcile net income to net cash provided by operating activities and other adjustments: | ||
Depreciation and amortization | 244.1 | 267.8 |
Gain on divestiture of business | (92.2) | 0 |
(Gain) loss on sale or disposal of fixed assets | 0.6 | (4.1) |
Amortization of debt discount and issuance costs | 7.4 | 1.9 |
Loss on debt extinguishment or modification | 6.3 | 0.4 |
Payments for term debt modification | (26.4) | 0 |
Write-down of excess inventories | 40.1 | 38.4 |
Non-cash share-based compensation expense | 41.9 | 36.3 |
Non-cash interest on convertible notes | 19.6 | 11.2 |
Non-cash asset impairment charges | 0 | 0.2 |
Intangible asset impairment | 2.2 | 3.8 |
Change in deferred taxes | 65.5 | 0.1 |
Other | (2.7) | (5.5) |
Changes in assets and liabilities (exclusive of the impact of acquisitions): | ||
Receivables | (9.1) | (87.6) |
Inventories | (33.7) | (62.1) |
Other assets | (23.6) | (15.4) |
Accounts payable | 28.4 | (11.8) |
Accrued expenses | 3.4 | 19.4 |
Deferred income on sales to distributors | 10.1 | (34.7) |
Other long-term liabilities | (2.9) | 1.1 |
Net cash provided by operating activities | 351.8 | 313.4 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (160.8) | (204.8) |
Proceeds from divestiture of business | 104 | 0 |
Proceeds from sales of property, plant and equipment | 0.4 | 10.4 |
Deposits utilized for purchases of property, plant and equipment | 0.9 | 0.2 |
Purchase of business, net of cash acquired | (2,277.2) | (10.1) |
Cash placed in escrow | (67.7) | (0.8) |
Cash received from escrow | 23.8 | 0 |
Proceeds from sale of available-for-sale securities | 0 | 5.5 |
Proceeds from sale of held-to-maturity securities | 0 | 2 |
Purchases of held-to-maturity securities | 0 | (0.8) |
Other | 1.8 | 0 |
Net cash used in investing activities | (2,374.8) | (198.4) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock under the employee stock purchase plan | 10.9 | 10.9 |
Proceeds from exercise of stock options | 5.1 | 25.1 |
Payments of tax withholding for restricted shares | (10.4) | (12.4) |
Repurchase of common stock | 0 | (328.2) |
Proceeds from debt issuance | 2,581.9 | 808.1 |
Purchases of convertible note hedges | 0 | (108.9) |
Proceeds from issuance of warrants | 0 | 52 |
Payments of debt issuance and other financing costs | (6.5) | (20.4) |
Repayment of long-term debt | (287.6) | (478.4) |
Payment of capital lease obligations | (12.2) | (17.5) |
Dividend to non-controlling shareholder of consolidated subsidiary | (1.9) | 0 |
Net cash provided by (used in) financing activities | 2,279.3 | (69.7) |
Effect of exchange rate changes on cash and cash equivalents | 6.6 | (0.2) |
Net increase in cash and cash equivalents | 262.9 | 45.1 |
Cash and cash equivalents, beginning of period | 617.6 | 511.7 |
Cash and cash equivalents, end of period | $ 880.5 | $ 556.8 |
Background and Basis of Present
Background and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
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-owned and majority-owned subsidiaries ("ON Semiconductor," "ON," or the "Company"), uses a thirteen-week fiscal quarter accounting period for the first three fiscal quarters of each year, with the third quarter of 2016 ending on September 30, 2016 , and each fiscal year ending on December 31. The three months ended September 30, 2016 and October 2, 2015 both contained 91 days. The nine months ended September 30, 2016 and October 2, 2015 contained 274 and 275 days, respectively. The accompanying unaudited financial statements as of and for the quarter and nine months ended September 30, 2016 have been prepared in accordance with generally accepted accounting principles in the United States of America for unaudited interim financial information. Accordingly, the unaudited financial statements do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America for audited financial statements. The balance sheet as of December 31, 2015 was derived from the Company's audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America for audited financial statements. In the opinion of the Company's management, the interim information includes all adjustments, which consist of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The footnote disclosures related to the interim financial information included herein are also unaudited. Such financial information should be read in conjunction with the consolidated financial statements and related notes thereto for the year ended December 31, 2015 included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015 , filed with the SEC on February 24, 2016 (“ 2015 Form 10-K”). Financial results for interim periods are not necessarily indicative of the results of operations that may be expected for a full fiscal year. Acquisition of Fairchild On September 19, 2016, the Company completed its acquisition of Fairchild Semiconductor International, Inc., a Delaware corporation (“Fairchild”), pursuant to the Agreement and Plan of Merger (the "Fairchild Agreement") with each of Fairchild and Falcon Operations Sub, Inc., a Delaware corporation and the Company's wholly-owned subsidiary ("Merger Sub"), which provided for the acquisition of Fairchild by the Company (the “Fairchild Transaction”). Fairchild is a semiconductor company that delivers energy-efficient, easy-to-use and value-added semiconductor solutions for power and mobile designs. See Note 3: ''Acquisitions and Divestitures'' for additional information. Revenue Recognition Policy The Company generates revenue from sales of its semiconductor products to OEMs, electronic manufacturing service providers and distributors. The Company also generates revenue, to a much lesser extent, from manufacturing and design services provided to customers. Revenue is recognized when persuasive evidence of an arrangement exists, title and risk of loss pass to the customer (generally upon shipment), the price is fixed or determinable and collectability is reasonably assured. Revenues are recorded net of provisions for related sales returns and allowances. For products sold to distributors who are entitled to returns and allowances (generally referred to as “ship and credit rights” within the semiconductor industry), the Company recognizes the related revenue and cost of revenues depending on if the sale originated through an ON or legacy Fairchild process. If the sale originated through an ON process, revenue is recognized when ON is informed by the distributor that it has resold the products to the end-user. As a result of the Company’s inability to reliably estimate up front the effects of the returns and allowances with these distributors for sales originating through an ON process, the Company defers the related revenue and gross margin on sales to these distributors until it is informed by the distributor that the products have been resold to the end-user, at which time the ultimate sales price is known. Legacy Fairchild’s systems and processes enable the Company to estimate up front the effects of returns and allowances provided to the distributors and thereby record the net revenue at the time of sale related to a legacy Fairchild process. Although payment terms vary, most distributor agreements require payment within 30 days. Sales returns and allowances are estimated based on historical experience. The Company’s OEM customers do not have the right to return products, other than pursuant to the provisions of the Company’s standard warranty. Sales to distributors, however, are typically made pursuant to agreements that provide return rights with respect to discontinued or slow-moving products. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related revenues are recognized, and are netted against revenues. The Company reviews warranty and related claims activities and records provisions, as necessary. Freight and handling costs are included in cost of revenues and are recognized as period expense when incurred. Taxes assessed by government authorities on revenue-producing transactions, including value-added and excise taxes, are presented on a net basis (excluded from revenues) in the statement of operations. Segments During the third quarter of 2016, the Company realigned its segments into three operating segments, which also represents its three reporting segments: Power Solutions Group, Analog Solutions Group, and Image Sensor Group. The results of the System Solutions Group, which was previously the Company's fourth operating segment, are now part of the three operating segments and previously-reported information has been presented based on the new structure to reflect the current organizational structure. The Company's Power and Analog Solutions Groups include the business acquired in the Fairchild Transaction. See Note 3: “Acquisitions and Divestitures” for additional information with respect to the Company’s acquisition of Fairchild. See also Note 16: “Segment Information” for additional information on the Company’s reportable segments. Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Significant estimates have been used by management in conjunction with the following: (i) measurement of valuation allowances relating to trade receivables, inventories and deferred tax assets; (ii) estimates of future payouts for customer incentives and allowances, warranties, and restructuring activities; (iii) assumptions surrounding future pension obligations; (iv) fair values of share-based compensation and of financial instruments (including derivative financial instruments); (v) evaluations of uncertain tax positions; (vi) estimates and assumptions used in connection with business combinations; and (vii) future cash flows used to assess and test for impairment of goodwill and long-lived assets, if applicable. Actual results could differ from these estimates. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Note 2: Recent Accounting Pronouncements ASU's Adopted: ASU No. 2015-17 - "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17") In November 2015, the FASB issued ASU 2015-17, which requires that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. ASU 2015-17 is effective in fiscal years beginning after December 15, 2016. Early adoption is permitted on either a prospective or retrospective basis. The Company elected early adoption as of the interim period beginning October 3, 2015, effective for the annual period ended December 31, 2015 , and selected the prospective application. Prior periods have not been retrospectively adjusted. ASU 2015-05 - “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” ("ASU 2015-05") In April 2015, the FASB issued ASU 2015-05, which provides guidance regarding the accounting for fees paid by a customer in cloud computing arrangements. ASU 2015-05 amended ASC 350-40-25-16 by removing the language that stated licenses for internal-use software from third parties should be analogized to the subtopic 840-10 Leases. If a cloud computing arrangement includes the transfer of a software license, then the customer would account for the payment of fees as an acquisition of software. If there is no software license, the payment of fees would be accounted for as a service contract. This ASU is effective in fiscal years beginning after December 15, 2015. An entity can elect to adopt the amendments either prospectively for all arrangements entered into or materially modified after the effective date, or retrospectively. The Company adopted ASU 2015-05 as of the quarter ended April 1, 2016 and selected the prospective application. There was no material impact to the financial statements. ASU No. 2015-03 - "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03") and ASU No. 2015-15 - "Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements" ("ASU 2015-15") In April 2015, the FASB issued ASU 2015-03, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The new standard is effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. In August 2015, the FASB issued ASU 2015-15, which clarified that ASU 2015-03 does not address debt issuance costs related to line-of-credit agreements and stated that the SEC staff would not object to the deferral and presentation of debt issuance costs as an asset, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement, consistent with existing guidance. The Company elected early adoption of ASU 2015-03 as of the year ended December 31, 2015 , applicable to debt issuance costs related to its convertible notes, and retrospectively adjusted certain prior year amounts to reflect the effects of applying the new guidance. Pursuant to ASU 2015-15, debt issuance costs relating to the Company's revolving credit facility have been deferred and are included in other assets on the Company's Consolidated Balance Sheet. See Note 7: ''Long-Term Debt'' for additional information with respect to the Company's debt issuance costs. ASUs Pending Adoption: ASU No. 2016-15 - "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15") In August 2016, the FASB issued ASU 2016-15, which changes how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-15 may have on its consolidated financial statements and has not elected early adoption as of the quarter ended September 30, 2016 . ASU No. 2016-09 - "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09") In March 2016, the FASB issued ASU 2016-09, which is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. The amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-09 may have on its consolidated financial statements and has not elected early adoption as of the quarter ended September 30, 2016 . ASU No. 2016-02 - "Leases (Topic 842)" ("ASU 2016-02") In February 2016, the FASB issued ASU 2016-02, which amends the accounting treatment for leases. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees ( for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 may have on its consolidated financial statements and has not elected early adoption as of the quarter ended September 30, 2016 . ASU No. 2016-01 - “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”) In January 2016, the FASB issued ASU No. 2016-01, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-01 may have on its consolidated financial statements. ASU No. 2015-11 - "Inventory (Topic 330): Simplifying the Measurement of Inventory" ("ASU 2015-11") In July 2015, the FASB issued ASU 2015-11, which requires that an entity should measure in-scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2015-11 may have on its consolidated financial statements and has not elected early adoption as of the quarter ended September 30, 2016 . ASU No. 2014-09 - “Revenue from Contracts with Customers (Topic 606)" (“ASU 2014-09”), ASU No. 2015-14 - "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date" ("ASU 2015-14"), ASU No. 2016-08 - “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”), ASU No. 2016-10 - “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”) and ASU No. 2016-12 - “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”) In May 2014, the FASB issued ASU 2014-09, which applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other standards, superseding the existing revenue recognition requirements in ASC Topic 605 “Revenue Recognition.” Pursuant to ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange, as applied through a multi-step process to achieve that core principle. Subsequently, the FASB approved a deferral included in ASU 2015-14 that permits public entities to apply the amendments in ASU 2014-09 for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein, and that would also permit public entities to elect to adopt the amendments as of the original effective date as applicable to reporting periods beginning after December 15, 2016. The new guidance allows for the amendment to be applied either retrospectively to each prior reporting period presented or retrospectively as a cumulative-effect adjustment as of the date of adoption. In March 2016, the FASB issued ASU 2016-08, which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, which clarifies identifying performance obligations and the licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, which improves certain aspects of ASC Topic 606 "Revenue from Contracts with Customers." The effective date and transition requirements for ASU 2016-08, ASU 2016-10 and ASU 2016-12 are the same as the effective date and transition requirements of ASU 2014-09. The Company defers the revenue and cost of revenues on sales to certain distributors until it is informed by the distributor that the distributor has resold the products to the end customer. For additional information with respect to the Company's revenue recognition policy, see Note 1: "Background and Basis of Presentation." Upon adoption of ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10 and ASU 2016-12, the Company believes one of the more significant impacts will be that it is no longer permitted to defer revenue until sale by the distributor to the end customer, but rather, will be required to estimate the effects of returns and allowances provided to distributors and record revenue at the time of sale to the distributor. In anticipation of the adoption of the new standards, the Company has been enhancing and continues to enhance its internal systems, processes and controls for making the required estimates. During the quarter ended September 30, 2016, the Company continued the necessary updates and improvements to its systems, processes and controls and based on its progress intends to adopt the standard as of January 1, 2017. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Note 3: Acquisitions and Divestitures Acquisition of Fairchild On September 19, 2016, the Company acquired 100% of Fairchild, whereby Fairchild became a wholly-owned subsidiary of the Company. The purchase price totaled $2,532.2 million in cash and was funded by the Company's borrowings against its Term Loan "B" Facility and Revolving Credit Facility, as well as with cash on hand. See Note 7: ''Long-Term Debt" for additional information. The Company acquired Fairchild to expand its product offerings and to create a power semiconductor leader with strong capabilities in a rapidly consolidating semiconductor industry. The acquisition of Fairchild adds highly complementary product lines, allowing the Company to offer the full spectrum of high, medium and low voltage products and expands ON's footprint in wireless communication products, particularly in high efficiency power conversions and USB type C communication and power delivery. The acquisition also provides the Company with a platform to expand its profitability in a highly fragmented industry. For the period from September 19 to September 30, the Company recognized approximately $53.1 million of revenue and $17.0 million of net loss relating to Fairchild, which included charges for the amortization of fair market value step-up of inventory, the amortization of acquired intangible assets, and restructuring. The following table presents the provisional allocation of the purchase price of Fairchild for the assets acquired and liabilities assumed based on their fair values (in millions): Initial Estimate Cash and cash equivalents $ 255.0 Receivables 227.3 Inventories 342.3 Other current assets 59.3 Property, plant and equipment 813.5 Goodwill 733.6 Intangible assets (excluding IPRD) 423.4 In-process research and development 102.4 Other non-current assets 17.7 Total assets acquired 2,974.5 Accounts payable 79.4 Other current liabilities 160.1 Deferred tax liabilities 167.6 Other non-current liabilities 35.2 Total liabilities assumed 442.3 Net assets acquired/purchase price $ 2,532.2 Acquired intangible assets include $102.4 million of IPRD assets, which are to be amortized over the useful life upon successful completion of the related projects. The value assigned to IPRD was determined by considering the importance of products under development to the overall development plan, estimating costs to develop the purchased IPRD into commercially viable products, estimating the resulting net cash flows from the projects when completed and discounting the net cash flows to their present value. The Company utilized a discount rate of 14.5% and cash flows from its significant products are expected to commence from 2018 and beyond. Other acquired intangible assets of $423.4 million include developed technology of $267.6 million ( eleven year weighted-average useful life) and customer relationships of $153.4 million ( nine year weighted-average useful life). The total weighted average amortization period for the acquired intangibles is 10.2 years . The acquisition produced $733.6 million of goodwill of which $398.8 million was assigned to the Power Solutions Group and $334.8 million was assigned to the Analog Solutions Groups. The goodwill is attributable to a combination of Fairchild's assembled workforce, expectation regarding a more meaningful engagement by the customers due to the scale of the combined Company, and other synergies. Goodwill will not be amortized but instead tested for impairment at least annually (more frequently if certain indicators are present). Goodwill arising from the Fairchild acquisition is not deductible for tax purposes. During the nine months ended September 30, 2016 , the Company incurred $21.4 million in acquisition related costs for the Fairchild acquisition. These costs were recorded in general and administrative expense in the Consolidated Statements of Operations. The initial estimated purchase price allocation is subject to change as the company finalizes its determination relating to the valuation of net assets, finalization of key assumptions, approaches and judgments with respect to intangible assets acquired from Fairchild. Accordingly, future adjustments may impact the initial estimated amount of goodwill and other allocated amounts represented in the table above. See Note 10: ''Commitments and Contingencies'' for information on contingent liabilities assumed from the acquisition of Fairchild. Pro-Forma Results of Operations The following unaudited pro-forma consolidated results of operations for the quarters and nine months ended September 30, 2016 and October 2, 2015 have been prepared as if the acquisition of Fairchild had occurred on January 1, 2015 and includes adjustments for depreciation expense, amortization of intangibles, interest expense from financing, and the effect of purchase accounting adjustments including the step-up of inventory (in millions): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Revenues $ 1,260.2 $ 1,246.3 $ 3,636.1 $ 3,708.5 Net Income (loss) $ (10.6 ) $ 18.0 $ 49.8 $ 27.6 Net income (loss) attributable to ON Semiconductor Corporation $ (11.1 ) $ 17.5 $ 48.2 $ 25.7 Net income (loss) per common share attributable to ON Semiconductor Corporation: Basic $ (0.03 ) $ 0.04 $ 0.12 $ 0.06 Diluted $ (0.03 ) $ 0.04 $ 0.12 $ 0.06 Acquisition of AXSEM On July 15, 2015 (the "Acquisition Date"), the Company acquired 100% of AXSEM for $8.0 million in cash consideration, plus an additional unlimited contingent consideration (the "Earn-out") with a fair value of $5.0 million as of the Acquisition Date. The unlimited Earn-out payment, if any, is based on the achievement of certain revenue targets during two separate measurement periods consisting of the following: (i) the period from the first day of the Company's third fiscal quarter of 2016 to the last day of the Company's second fiscal quarter of 2017; and (ii) the period from the first day of the Company's third fiscal quarter of 2017 to the last day of the Company's second fiscal quarter of 2018. During the quarter ended September 30, 2016 , due to the revisions of the Company's expectations of the Earn-out achievement, the Earn-out estimated fair value was reduced by $1.3 million to $3.7 million . Pursuant to the terms of the Share Purchase Agreement between the Company and the sellers of AXSEM, $0.8 million of cash consideration was held in escrow and was included on the Company's Consolidated Balance Sheet to secure against certain indemnifiable events in connection with the acquisition of AXSEM. There were no indemnification events during the period identified under the Share Purchase Agreement. Therefore, during the quarter ended September 30, 2016 , the Company released the $0.8 million of cash consideration held in escrow to the sellers of AXSEM. AXSEM is incorporated into the Company's Analog Solutions Group for reporting purposes. The acquisition of AXSEM expands the Company's industrial and timing business and is another step forward in expanding the Company's presence in select segments of the industrial end-market. The estimated Earn-out fair value of $3.7 million , measured using Level 3 assumptions, was included in non-current liabilities on the Company's Consolidated Balance Sheet as of September 30, 2016 . See Note 11: ''Fair Value Measurements'' for additional information. The purchase price allocation of $13.0 million was finalized during the fourth quarter of 2015. Divestitures On August 25, 2016, the U.S. Federal Trade Commission ("FTC") accepted a proposed consent order whereby, prior to the closing of the acquisition of Fairchild, the FTC required the Company to dispose of its ignition planar insulated gate bipolar transistor ("IGBT") business. In satisfaction of this requirement, on August 29, 2016, the Company sold the ignition IGBT business to Littelfuse, Inc. ("Littelfuse"). On the same day the Company sold its transient voltage suppression diode and switching thyristor product lines (“Thyristor”) to Littelfuse. The sale of the ignition IGBT and Thyristor businesses was for $104.0 million in cash. In connection with the sale, the Company recorded a gain of $92.2 million after, among other things, transferring inventory of $4.1 million to Littelfuse, writing off goodwill of $3.4 million , and deferring $4.3 million of the proceeds to be recognized in the future. This gain has been presented separately as "Gain on divestiture of business" in the Consolidated Statements of the Operations. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 4: Goodwill and Intangible Assets Goodwill The following table summarizes goodwill by relevant reportable segments as of September 30, 2016 and December 31, 2015 (in millions): Balance as of September 30, 2016 Balance as of December 31, 2015 Goodwill Accumulated Impairment Losses Goodwill disposed Carrying Value Goodwill Accumulated Impairment Losses Carrying Value Reportable Segment: Analog Solutions Group $ 881.5 $ (418.9 ) — $ 462.6 $ 546.7 $ (418.9 ) $ 127.8 Image Sensor Group 95.4 — — 95.4 95.4 — 95.4 Power Solutions Group 474.8 (28.6 ) (3.4 ) 442.8 76.0 (28.6 ) 47.4 $ 1,451.7 $ (447.5 ) $ (3.4 ) $ 1,000.8 $ 718.1 $ (447.5 ) $ 270.6 Allocation of the $733.6 million of goodwill arising from the Fairchild acquisition to the Company's reportable segments is preliminary and is subject to change as the Company finalizes its determination relating to the valuation of net assets acquired from Fairchild. The following table summarizes the change in goodwill from December 31, 2015 to September 30, 2016 (in millions): Net balance as of December 31, 2015 $ 270.6 Addition due to business combination 733.6 Divestiture of buiness (3.4 ) Net balance as of September 30, 2016 $ 1,000.8 Goodwill is tested for impairment annually on the first day of the fourth quarter unless a triggering event would require an interim analysis. Adverse changes in operating results and/or unfavorable changes in economic factors used to estimate fair values may result in future non-cash impairment charges. While management did not identify any triggering events through September 30, 2016 that would require an interim impairment analysis, the Company's current projections include assumptions of current industry and market conditions, which could negatively change, and in turn, may adversely impact the fair value of the Company's goodwill, intangible assets and other long-lived assets. As a result, the carrying value of the reporting units containing the Company's goodwill may exceed their fair value in future impairment tests. The increase in goodwill is attributable to the Fairchild acquisition. See Note 3: "Acquisitions and Divestitures" for additional information. Intangible Assets Intangible assets, net, were as follows as of September 30, 2016 and December 31, 2015 (in millions): September 30, 2016 Original Cost Accumulated Amortization Foreign Currency Translation Adjustment Accumulated Impairment Losses Carrying Value Intellectual property $ 13.9 $ (11.1 ) $ — $ (0.4 ) $ 2.4 Customer relationships 579.6 (250.1 ) (27.4 ) (23.7 ) 278.4 Patents 43.7 (25.1 ) — (13.7 ) 4.9 Developed technology 541.8 (185.5 ) 0.2 (2.6 ) 353.9 Trademarks 17.2 (10.6 ) — (1.1 ) 5.5 Backlog 0.3 (0.3 ) — — — Favorable Leases 1.5 — — — 1.5 IPRD 137.5 — — (6.0 ) 131.5 Total intangibles $ 1,335.5 $ (482.7 ) $ (27.2 ) $ (47.5 ) $ 778.1 December 31, 2015 Original Cost Accumulated Amortization Foreign Currency Translation Adjustment Accumulated Impairment Losses Carrying Value Intellectual property $ 13.9 $ (10.6 ) $ — $ (0.4 ) $ 2.9 Customer relationships 426.2 (214.2 ) (27.9 ) (23.7 ) 160.4 Patents 43.7 (23.6 ) — (13.7 ) 6.4 Developed technology 268.0 (152.2 ) — (2.6 ) 113.2 Trademarks 16.3 (9.9 ) — (1.1 ) 5.3 Backlog 0.3 (0.3 ) — — — IPRD 41.4 — — (3.8 ) 37.6 Total intangibles $ 809.8 $ (410.8 ) $ (27.9 ) $ (45.3 ) $ 325.8 During the quarter and nine months ended September 30, 2016 , the Company completed certain of its IPRD projects, resulting in the reclassification of $4.3 million and $6.2 million to developed technology, respectively. During the quarter and nine months ended September 30, 2016 , the Company canceled certain of its previously capitalized IPRD projects and recorded an impairment loss of $2.2 million . The Company also acquired $525.8 million of intangibles from the acquisition of Fairchild and resulting purchase price accounting. See Note 3: "Acquisitions and Divestitures" for additional information. Amortization expense for acquisition-related intangible assets amounted to $ 24.7 million and $71.9 million for the quarter and nine months ended September 30, 2016 , respectively, and $33.6 million and $101.1 million for the quarter and nine months ended October 2, 2015 , respectively. Amortization expense for intangible assets, with the exception of the $131.5 million of IPRD assets that will be amortized once the corresponding projects have been completed, is expected to be as follows for remainder of 2016, each of the next four years, and thereafter (in millions): Period Estimated Amortization Expense Remainder of 2016 $ 32.8 2017 118.4 2018 100.2 2019 93.2 2020 76.8 Thereafter 225.2 Total estimated amortization expense $ 646.6 |
Restructuring, Asset Impairment
Restructuring, Asset Impairments and Other, Net | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring Charges [Abstract] | |
Restructuring, Asset Impairments and Other, Net | Note 5: Restructuring, Asset Impairments and Other, Net Summarized activity included in the “Restructuring, asset impairments and other, net” caption on the Company's Consolidated Statements of Operations and Comprehensive Income for the quarter and nine months ended September 30, 2016 is as follows (in millions): Restructuring Quarter ended September 30, 2016 Post Fairchild acquisition restructuring costs $ 20.9 Former System Solutions Group voluntary workforce reduction 0.1 Manufacturing relocation 0.9 Other (1) (0.1 ) Total $ 21.8 Restructuring Nine months ended September 30, 2016 Post Fairchild acquisition restructuring costs $ 20.9 Former System Solutions Group voluntary workforce reduction 5.3 Manufacturing relocation 2.1 General workforce reductions 0.3 Other 0.1 Total $ 28.7 (1) Includes amounts related to certain reductions in workforce, other facility closures, asset disposal activity and certain other activity which is not considered to be significant. Changes in accrued restructuring charges from December 31, 2015 to September 30, 2016 are summarized as follows (in millions): Balance as of December 31, 2015 Charges Usage Balance as of Estimated employee separation charges $ 5.3 $ 28.7 $ (9.6 ) $ 24.4 Estimated costs to exit 0.5 — (0.5 ) — Total $ 5.8 $ 28.7 $ (10.1 ) $ 24.4 Activity related to the Company’s restructuring programs that were either initiated during 2016 or had not been completed as of September 30, 2016 , is as follows: Post Fairchild Acquisition Restructuring Costs On September 19, 2016, following the acquisition of Fairchild, the Company approved the implementation of a cost-reduction plan, the first step of which was to eliminate approximately 130 positions from its workforce as a result of redundancies and position eliminations. The restructuring expense of $20.9 million , which was primarily attributable to severance and termination benefits, was recorded during the quarter ended September 30, 2016 and will primarily be paid over the remainder of 2016. Accrued severance for this program was $20.7 million as of September 30, 2016. Former System Solutions Group Voluntary Workforce Reduction During March 2016, the Company announced a voluntary resignation program for the former System Solutions Group. A total of 75 employees volunteered and signed employee separation agreements as of the end of the quarter ended September 30, 2016 . The total expense of the plan is expected to be approximately $5.3 million . A majority of the employees have exited as of September 30, 2016 , with the remaining employees expected to exit by the end of 2016. The expense for the quarter ended September 30, 2016 was $0.1 million and the accrued balance as of September 30, 2016 was $0.4 million . During the quarter and nine months ended September 30, 2016 , $3.9 million and $5.0 million was paid out to employees, respectively. Manufacturing Relocation During March 2016, the Company announced a plan to relocate certain of its manufacturing operations to another existing location. The transition will occur through 2017. Approximately 160 employees will be impacted by the relocation. The total expense, consisting of retention and severance, is expected to be approximately $5.7 million . The expense for the quarter and nine months ended September 30, 2016 was $0.9 million and $2.1 million , respectively, and the accrued balance as of September 30, 2016 was $2.1 million . A majority of the employees are expected to exit during the second half of 2017. General Workforce Reductions During the third quarter of 2015, management approved and commenced implementation of restructuring actions, primarily targeted workforce reductions. The Company had previously notified 150 employees of their employment termination, all of which have exited as of September 30, 2016 . The total expense of this program incurred is $5.1 million , with no additional expenses expected. The Company paid zero and $1.3 million during the quarter and nine months ended September 30, 2016 , respectively, and there is no remaining unpaid balance due to the completion of the program. European Marketing Organization Relocation In January 2015, the Company announced that it would relocate its European customer marketing organization from France to Slovakia and Germany. As a result, six positions were eliminated. There were no charges incurred during the quarter and nine months ended September 30, 2016 . The total expense of this program incurred to date is $3.5 million , with no additional expenses expected. During the quarter and nine months ended September 30, 2016 , $0.3 million and $2.7 million was paid out to the employees, respectively. As of September 30, 2016 , there was a $0.2 million accrued liability associated with employee separation charges which is expected to be paid out in the fourth quarter of 2016. |
Balance Sheet Information
Balance Sheet Information | 9 Months Ended |
Sep. 30, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Information | Note 6: Balance Sheet Information Certain amounts included in the Company's balance sheet as of September 30, 2016 and December 31, 2015 consist of the following. The balances as of September 30, 2016 includes the Fairchild amounts (dollars in millions): September 30, 2016 December 31, 2015 Receivables, net: Accounts receivable $ 677.4 $ 432.6 Less: Allowance for doubtful accounts (2.3 ) (6.2 ) $ 675.1 $ 426.4 Inventories: Raw materials $ 122.8 $ 79.3 Work in process 609.5 457.8 Finished goods 350.8 213.3 $ 1,083.1 $ 750.4 Property, plant and equipment, net: Land $ 123.7 $ 46.2 Buildings 710.6 513.6 Machinery and equipment 3,005.0 2,327.5 Total property, plant and equipment 3,839.3 2,887.3 Less: Accumulated depreciation (1,764.7 ) (1,613.2 ) $ 2,074.6 $ 1,274.1 Accrued expenses: Accrued payroll $ 160.1 $ 95.1 Sales related reserves 120.8 69.9 Acquisition consideration payable to seller 18.8 19.6 Other 129.5 61.6 $ 429.2 $ 246.2 Assets classified as held for sale, consisting of properties and machinery and equipment, are required to be recorded at the lower of carrying value or fair value less any costs to sell. The carrying value of these assets, as of September 30, 2016 and December 31, 2015, was $24.6 million and $0.3 million , respectively, and is reported as other current assets on the Company’s Consolidated Balance Sheet. The Company expects to dispose of the remaining assets within the next twelve months. Warranty Reserves Activity related to the Company's warranty reserves for the nine months ended September 30, 2016 and October 2, 2015 is as follows (in millions): Nine Months Ended September 30, 2016 October 2, 2015 Beginning Balance $ 5.3 $ 5.5 Provision 3.0 2.0 Usage (2.8 ) (1.5 ) Warranty reserves from acquired business 0.7 $ — Ending Balance $ 6.2 $ 6.0 Defined Benefit Plans The Company maintains defined benefit plans for certain of its foreign subsidiaries. The Company recognizes the aggregate amount of all overfunded plans as assets and the aggregate amount of all underfunded plans as liabilities in its financial statements. As of September 30, 2016 , the total accrued pension liability for underfunded plans was $ 105.1 million , of which the current portion of $ 0.1 million was classified as accrued expenses. The total liability at September 30, 2016 includes $8.3 million of accrued pension liabilities assumed by the Company in connection with the Fairchild acquisition. As of December 31, 2015 , the total accrued pension liability for underfunded plans was $ 87.2 million , of which the current portion of $ 0.1 million was classified as accrued expenses. The components of the Company's net periodic pension expense for the quarters and nine months ended September 30, 2016 and October 2, 2015 are as follows (in millions): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Service cost $ 2.3 $ 2.1 $ 6.8 $ 6.5 Interest cost 1.1 0.9 3.3 2.9 Expected return on plan assets (1.0 ) (0.9 ) (3.0 ) (2.7 ) Total net periodic pension cost $ 2.4 $ 2.1 $ 7.1 $ 6.7 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Note 7: Long-Term Debt The Company's long-term debt consists of the following (annualized rates, dollars in millions): September 30, 2016 December 31, 2015 Revolving Credit Facility due 2021 $ — $ — Term Loan "B" Facility due 2023, interest payable monthly at 3.78% 2,400.0 — 1.00% Notes due December 1, 2020 (1) 690.0 690.0 2.625% Notes, Series B (2) 356.9 356.9 Note payable to SMBC due 2016 through 2018, interest payable quarterly at 2.60% and 2.36%, respectively (3) 169.9 198.2 U.S. real estate mortgages payable monthly through 2019 at an average rate of 3.12% and 3.35%, respectively (4) 40.0 50.0 Philippine term loans due 2016 through 2020, interest payable quarterly at 2.69% and 2.32%, respectively (7) 47.0 50.0 Loan with Singapore bank, interest payable weekly at 1.77% and 1.67%, respectively (6)(10) 25.0 30.0 Loan with Hong Kong bank, interest payable weekly at 1.77% and 1.67%, respectively (6)(10) 25.0 25.0 Malaysia revolving line of credit, interest payable quarterly at 2.29% and 2.05%, respectively (7) (10) 25.0 25.0 Vietnam revolving line of credit, interest payable quarterly at an average rate of 2.17% and 1.89%, respectively (7) (10) 16.3 20.8 Loan with Philippine bank due 2016 through 2019, interest payable quarterly at 3.11% and 2.70%, respectively (5) 15.3 18.8 Canada revolving line of credit, interest payable quarterly at 0.00% and 2.01%, respectively (7) — 15.0 Loan with Japanese bank due 2016 through 2020, interest payable quarterly at 1.1% (7) 4.2 4.2 Canada equipment financing payable monthly through 2017 at 3.81% (5) 1.0 2.4 U.S. equipment financing payable monthly through 2016 at 2.40% (5) — 1.3 Capital lease obligations 15.7 28.2 Gross long-term debt, including current maturities 3,831.3 1,515.8 Less: Debt discount (8) (118.8 ) (107.5 ) Less: Debt issuance costs (9) (76.2 ) (14.4 ) Net long-term debt, including current maturities 3,636.3 1,393.9 Less: Current maturities (540.6 ) (543.4 ) Net long-term debt $ 3,095.7 $ 850.5 _______________________ (1) Interest is payable on June 1 and December 1 of each year at 1.00% annually. (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. (3) This loan represents SCI LLC's non-collateralized loan with SMBC, which is guaranteed by the Company. (4) Debt arrangement collateralized by real estate, including certain of the Company's facilities in California, Oregon and Idaho. (5) Debt collateralized by equipment. (6) Debt arrangement collateralized by accounts receivable. (7) Non-collateralized debt arrangement . (8) Debt discount of $86.2 million and $100.2 million for the 1.00% Notes as of September 30, 2016 and December 31, 2015 , respectively, $1.6 million and $7.3 million for the 2.625% Notes, Series B as of September 30, 2016 and December 31, 2015 , respectively, and $31.0 million and zero for the Term Loan "B" Facility as of September 30, 2016 and December 31, 2015 , respectively. (9) Debt issuance costs of $12.1 million and $13.9 million for the 1.00% Notes as of September 30, 2016 and December 31, 2015 , respectively, $0.1 million and $0.5 million for the 2.625% Notes, Series B as of September 30, 2016 and December 31, 2015 , respectively, and $64.0 million and zero for the Term Loan "B" Facility as of September 30, 2016 and December 31, 2015 , respectively. (10) The Company has historically renewed these arrangements annually. Expected maturities relating to the Company’s long-term debt (including current maturities) as of September 30, 2016 are as follows (in millions): Period Expected Maturities Remainder of 2016 $ 472.2 2017 93.3 2018 172.3 2019 71.7 2020 723.8 Thereafter 2,298.0 Total $ 3,831.3 For purposes of the table above, the 2.625% Notes, Series B are assumed to mature at the earliest conversion date. For additional information with respect to the Company's long-term debt, see Note 8: "Long-Term Debt" of the notes to the Company's audited consolidated financial statements included in Part IV, Item 15 of the 2015 Form 10-K. Fairchild Transaction Financing On April 15, 2016, the Company secured capital for the Fairchild Transaction purchase consideration and other general corporate purposes by entering into (1) a $600 million senior revolving credit facility (the “Revolving Credit Facility”) and a $2.2 billion term loan “B” facility (the “Term Loan “B” Facility”), the terms of which are set forth in a Credit Agreement (the “New Credit Agreement”), dated as of April 15, 2016, by and among the Company, as borrower, the several lenders party thereto, Deutsche Bank AG, New York Branch, as administrative agent and collateral agent (the “Agent”), and certain other parties, and (2) a Guarantee and Collateral Agreement (the “Guarantee and Collateral Agreement”) with certain of its domestic subsidiaries (the “Guarantors”), pursuant to which the New Credit Agreement was guaranteed by the Guarantors and secured by a pledge of substantially all of the assets of the Company and the Guarantors, including a pledge of the equity interests in certain of the Company’s domestic and first-tier foreign subsidiaries, subject to customary exceptions. The obligations under the New Credit Agreement are also collateralized by mortgages on certain real property assets of the Company and its domestic subsidiaries. The proceeds from the Term Loan "B" Facility, along with $67.7 million funded by the Company, were deposited into escrow accounts and included within restricted cash on the Company's Consolidated Balance Sheet until the close of the Fairchild Transaction. Upon the close of the Fairchild Transaction, the Company's then current senior revolving credit facility was terminated and replaced by the Revolving Credit Facility, which became immediately available to the Company. On September 19, 2016, the Company acquired 100% of Fairchild, whereby Fairchild became a wholly-owned subsidiary of the Company. The Company funded the acquisition with proceeds from the Term Loan “B” Facility and Company funded amounts previously deposited into escrow accounts, proceeds from a $200.0 million draw against the Company's Revolving Credit Facility, and existing cash on hand. Proceeds from the Term Loan "B" Facility were also used to pay for debt issuance costs, transaction fees and expenses. Amendment of the New Credit Agreement On September 30, 2016, the Company, the Guarantors, the several lenders party thereto and the Agent entered into the first amendment (the “First Amendment”) to the New Credit Agreement (the "Amended Credit Agreement"). The First Amendment reduced the applicable margins on Eurocurrency Loans to 2.75% and 3.25% for borrowings under the Revolving Credit Facility and the Term Loan "B" Facility, respectively, and reduced applicable margins on ABR Loans to 1.75% and 2.25% for borrowings under the Revolving Credit Facility and the Term Loan "B" Facility, respectively. Additionally, the First Amendment included the following: (i) the Term Loan “B” Facility was increased to $2.4 billion , (ii) certain restructuring transactions and intercompany intellectual property transfers are permitted in order to achieve efficient integration of the Company, its subsidiaries and acquired entities; and (iii) certain changes were made to the provisions regarding hedge agreements to allow the Company and each of the Guarantors to enter into certain hedge arrangements that shall be deemed to be “obligations” for purposes of the Amended Credit Agreement which may be collateralized by the collateral granted pursuant to the Guarantee and Collateral Agreement. The Company used the additional $200.0 million proceeds under the Term Loan "B" Facility to pay off the outstanding balance under the Company's Revolving Credit Facility. As of September 30, 2016 , the Company had no amounts outstanding under the Revolving Credit Facility. Pursuant to the Amended Credit Agreement, the Term Loan “B” Facility matures on March 31, 2023 and the Revolving Credit Facility will mature on September 19, 2021, the fifth year anniversary of the closing of the Fairchild Transaction. As of September 30, 2016 , the Company has borrowed an aggregate of $2.4 billion under the Term Loan “B” Facility. The Term Loan “B” Facility had an original issuance discount (“OID”) of $33.0 million , which was withheld from the proceeds. The OID is amortized using the effective interest rate method over the term of the Term Loan “B” Facility. The $67.7 million funded by the Company and deposited into escrow accounts is treated as an investing cash outflow. The proceeds from the Term Loan "B" Facility deposited into escrow accounts are treated as non-cash activities. The release from escrow of the $67.7 million funded by the Company, plus $2.1 million of interest income, is treated as an investing cash inflow, and the release from escrow of the Term Loan “B” Facility proceeds is treated as a financing cash inflow. See Note 15: “Supplemental Disclosures” and the Company's Consolidated Statements of Cash Flows for additional information. All borrowings under the Amended Credit Agreement may, at the Company’s option, be incurred as either eurocurrency loans (“Eurocurrency Loans”) or alternate base rate loans (“ABR Loans”). Eurocurrency Loans will accrue interest for any interest period ending after the date of the First Amendment, at (a) a base rate per annum equal to the Adjusted LIBO Rate (as defined in the Amended Credit Agreement) plus (b) an applicable margin equal to (i) 2.75% with respect to borrowings under the Revolving Credit Facility or (ii) 3.25% with respect to borrowings under the Term Loan “B” Facility. ABR Loans will accrue interest, for any interest period ending after the date of the First Amendment, at (a) a base rate per annum equal to the highest of (i) the Federal funds rate plus 1/2 of 1%, (ii) the prime commercial lending rate announced by Deutsche Bank AG, New York Branch, from time to time as its prime lending rate and (iii) the Adjusted LIBO Rate for a one month interest period (determined after giving effect to any applicable “floor”) plus 1.00% ; provided that, the Adjusted LIBO Rate for any day shall be based on the LIBO Rate (as defined in the Amended Credit Agreement), subject to the interest rate floors set forth in the Amended Credit Agreement plus (b) an applicable margin equal to (i) 1.75% with respect to borrowings under the Revolving Credit Facility or (ii) 2.25% with respect to borrowings under the Term Loan “B” Facility. The applicable margin for borrowings under the Revolving Credit Facility will vary based on a defined net leverage ratio, which is defined in the Amended Credit Agreement. After the completion of the Company’s first full fiscal quarter occurring six months after the closing date of the Fairchild Transaction, the applicable margin for borrowings under the Revolving Credit Facility may be decreased if the Company’s consolidated net leverage ratio decreases. The Amended Credit Agreement also requires us to pay a commitment fee for the unused portion of the Revolving Credit Facility, which will be a minimum of 0.25% and a maximum of 0.35% , depending on the Company’s defined net leverage ratio. The obligations under the Amended Credit Agreement are guaranteed by the Guarantors and secured by a pledge of substantially all of the assets of the Company and the Guarantors, including a pledge of the equity interests in certain of the Company’s domestic and first-tier foreign subsidiaries, subject to customary exceptions. The obligations under the Amended Credit Agreement are also collateralized by mortgages on certain real property assets of the Company and its domestic subsidiaries. The Term Loan "B" Facility requires quarterly principal payments equal to 0.25% of the principal amount of the Term Loan "B" Facility starting December 2016. At the maturity date of the Term Loan "B" Facility, any remaining unpaid principal amount shall be due and payable in full. The Amended Credit Agreement includes financial maintenance covenants including a maximum consolidated total net leverage ratio and a minimum interest coverage ratio. It also contains other customary affirmative and negative covenants and events of default. The Company was in compliance with its covenants as of September 30, 2016 . Debt Extinguishment, Modification, and Issuance Costs The Company incurred debt issuance costs consisting of legal, underwriting and other fees of $66.6 million related to the Term Loan “B” Facility, including $22.0 million toward lender fees for the First Amendment. A portion of the debt issuance costs were paid directly from escrowed funds per the terms of the escrow agreement and is reflected as a non-cash activity. See Note 15: “Supplemental Disclosures” for more information. The Company recorded the Term Loan “B” Facility debt issuance costs as a direct deduction from the carrying amount of the debt and is amortizing them using the effective interest rate method over the term of the loan. The Company performed a debt extinguishment vs. modification analysis on a lender by lender basis upon the execution of the First Amendment. The Company recorded a debt extinguishment charge of $4.7 million during the quarter and nine months ended September 30, 2016 , which included a $0.3 million write off of unamortized debt issuance costs, $4.3 million in third party fees, and $0.1 million of lender fees. The Company incurred debt issuance costs consisting of legal, underwriting and other fees of $8.2 million for the Revolving Credit Facility. The Company recognized the Revolving Credit Facility underwriter fees and debt issuance costs as deferred costs, which are included in other assets on the Company's Consolidated Balance Sheet. The Company amortizes these deferred costs on a straight line basis over the term of the Revolving Credit Facility from the acquisition closing date, which was the date the revolver became available to the Company. The Company accounted for the termination and replacement of its senior revolving credit facility by the Revolving Credit Facility as a debt modification and wrote off $1.6 million in unamortized debt issuance costs. The remaining unamortized costs of $2.0 million related to the terminated senior revolving credit facility are being amortized over the term of the Revolving Credit Facility. |
Earnings Per Share and Equity
Earnings Per Share and Equity | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share and Equity | Note 8: Earnings Per Share and Equity Earnings Per Share Calculations of net income per common share attributable to ON Semiconductor are as follows (in millions, except per share data): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Net income attributable to ON Semiconductor Corporation $ 10.1 $ 46.3 $ 71.2 $ 152.1 Basic weighted-average common shares outstanding 415.8 413.7 414.4 424.0 Dilutive effect of share-based awards 4.0 3.8 3.2 4.7 Dilutive effect of Convertible Notes — — — 2.6 Diluted weighted-average common shares outstanding 419.8 417.5 417.6 431.3 Net income per common share attributable to ON Semiconductor Corporation: Basic $ 0.02 $ 0.11 $ 0.17 $ 0.36 Diluted $ 0.02 $ 0.11 $ 0.17 $ 0.35 Basic net income per common share is computed by dividing net income attributable to ON Semiconductor Corporation by the weighted-average number of common shares outstanding during the period. The number of incremental shares from the assumed exercise of stock options and assumed issuance of shares relating to restricted stock units 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 0.3 million and 2.2 million for the quarters ended September 30, 2016 and October 2, 2015 , respectively, and 2.3 million and 1.5 million for the nine months ended September 30, 2016 and October 2, 2015 , respectively. The dilutive impact related to the Company's 1.00% Notes and 2.625% Notes, Series B is determined in accordance with the net share settlement requirements prescribed by ASC Topic 260, Earnings Per Share . Under the net share settlement calculation, 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. A dilutive effect occurs when the stock price exceeds the conversion price for each of the convertible notes. In periods when the share price is lower than the conversion price, the impact is anti-dilutive and therefore has no impact on the Company's earnings per share calculations. Additionally, if the average price of the Company's common stock exceeds $25.96 per share for a reporting period, the Company will also include the effect of the additional potential shares, using the treasury stock method, that may be issued related to the warrants that were issued concurrently with the issuance of the 1.00% Notes. Prior to conversion, the convertible note hedges are not considered for purposes of the earnings per share calculations, as their effect would be anti-dilutive. Upon conversion, the convertible note hedges are expected to offset the dilutive effect of the 1.00% Notes when the stock price is above $18.50 per share. See Note 8: "Long-Term Debt" of the notes to the Company's audited Consolidated Financial Statements included in Part IV, Item 15 of the 2015 Form 10-K for a discussion of the conversion prices and other features of the 2.625% Notes, Series B and the 1.00% Notes . Equity Share Repurchase Program There were no repurchases of the Company's common stock under its share repurchase program during the quarter and nine months ended September 30, 2016 as the Company focused on building up cash reserves for the Fairchild Transaction, which was completed on September 19, 2016. Information relating to the Company's share repurchase programs during the quarter and nine months ended October 2, 2015 is as follows (in millions, except per share data): Quarter Ended Nine Months Ended October 2, 2015 October 2, 2015 Number of repurchased shares (1)(5) 9.4 28.4 Beginning accrued share repurchases (2) $ 3.0 $ — Aggregate purchase price 100.1 328.2 Less: ending accrued share repurchases (3) — — Total cash used for share repurchases $ 103.1 $ 328.2 Weighted-average purchase price per share (4) $ 10.64 $ 11.53 Available for future purchases at October 2, 2015 $ 648.2 $ 648.2 (1) None of these shares had been reissued or retired as of September 30, 2016 , but may be reissued or retired by the Company at a later date. (2) Represents unpaid amounts recorded in accrued expenses on the Company's Consolidated Balance Sheet as of the beginning of the period. (3) Represents unpaid amounts recorded in accrued expenses on the Company's Consolidated Balance Sheet as of the end of the period. (4) Exclusive of fees, commissions and other expenses. (5) Includes 5.4 million shares, totaling $70.0 million , repurchased concurrently with the issuance of the 1.00% Notes. Shares for Restricted Stock Units Tax Withholding Treasury stock is recorded at cost and is presented as a reduction of stockholders' equity in the accompanying unaudited consolidated financial statements. Shares, with a fair market value equal to the applicable statutory minimum amount of the employee withholding taxes due, are withheld by the Company upon the vesting of restricted stock units to pay the applicable statutory minimum amount of employee withholding taxes and are considered common stock repurchases. The Company then pays the applicable statutory minimum amount of withholding taxes in cash. The amount remitted for the quarter and nine months ended September 30, 2016 , was $ 2.2 million and $10.4 million , respectively, for which the Company withheld 0.2 million and 1.1 million shares of common stock, respectively, that were underlying the restricted stock units that vested. The amount remitted for the quarter and nine months ended October 2, 2015 was $1.0 million and $12.4 million , respectively, for which the Company withheld less than 0.1 million and 1.0 million shares of common stock, respectively, that were underlying the restricted stock units that vested. None of these shares had been reissued or retired as of September 30, 2016 ; however, these shares may be reissued or retired by the Company at a later date. Non-Controlling Interest The Company's entity which operates assembly and test operations in Leshan, China is owned by a joint venture company, Leshan-Phoenix Semiconductor Company Limited (“Leshan”). The Company owns a majority of the outstanding equity interests in Leshan, and the Company's investment in Leshan has been consolidated in its financial statements. At December 31, 2015 , the non-controlling interest balance was $ 23.7 million . This balance decreased to $23.4 million as of September 30, 2016 , resulting from the non-controlling interest's $1.6 million share of the earnings for the nine months ended September 30, 2016 , offset by $1.9 million of dividends paid to the non-controlling shareholder. At December 31, 2014 , the non-controlling interest balance was $20.9 million . This balance was $22.8 million as of October 2, 2015 due to the non-controlling interest's $1.9 million share of the earnings for the nine months ended October 2, 2015 . |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Note 9: Share-Based Compensation Total share-based compensation expense related to the Company's employee stock options, restricted stock units, stock grant awards and ESPP for the quarters and nine months ended September 30, 2016 and October 2, 2015 was comprised as follows (in millions): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Cost of revenues $ 2.0 $ 2.0 $ 6.0 $ 5.8 Research and development 2.9 2.2 8.3 7.0 Selling and marketing 2.6 2.2 7.2 6.7 General and administrative 6.7 4.5 20.4 16.8 Share-based compensation expense before income taxes $ 14.2 $ 10.9 $ 41.9 $ 36.3 Related income tax benefits (1) — — — — Share-based compensation expense, net of taxes $ 14.2 $ 10.9 $ 41.9 $ 36.3 ____________________ (1) A majority of the Company’s share-based compensation relates to its domestic subsidiaries; therefore, no related deferred income tax benefits are recorded due to historical net operating losses at those subsidiaries. As of September 30, 2016 , total estimated unrecognized share-based compensation expense, net of estimated forfeitures, related to non-vested stock options granted prior to that date was $ 0.1 million , which is expected to be recognized over a weighted-average period of 5 months. As of September 30, 2016 , total estimated unrecognized share-based compensation expense, net of estimated forfeitures, related to non-vested restricted stock units with time-based service conditions and performance-based vesting criteria granted prior to that date was $ 64.7 million , which is expected to be recognized over a weighted-average period of 1.9 years. The total intrinsic value of stock options exercised during the quarter and nine months ended September 30, 2016 was $ 1.4 million and $2.2 million , respectively. The Company recorded cash received from the exercise of stock options of $2.9 million and $5.1 million , respectively, during the quarter and nine months ended September 30, 2016 . The Company recorded no related income tax benefits during the quarter and nine months ended September 30, 2016 . Share-Based Compensation Information Share-based compensation expense recognized in the Consolidated Statements of Operations and Comprehensive Income is based on awards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The annualized pre-vesting forfeiture rate for stock options was estimated to be 11% and 11% during the quarters and nine months ended September 30, 2016 and October 2, 2015 , respectively. The annualized pre-vesting forfeiture rate for restricted stock units was estimated to be 5% and 5% during the quarters and nine months ended September 30, 2016 and October 2, 2015 , respectively. Shares Available As of December 31, 2015 , there was an aggregate of 28.7 million shares of common stock available for grant under the Company's Amended and Restated SIP and 6.7 million shares available for issuance under the ESPP. As of September 30, 2016 , there was an aggregate of 21.0 million shares of common stock available for grant under the Amended and Restated SIP and 5.3 million shares available for issuance under the ESPP. Stock Options Summarized stock option information for the nine months ended September 30, 2016 is as follows (in millions, except per share and contractual term data): Nine Months Ended September 30, 2016 Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (In-The-Money) Outstanding at December 31, 2015 5.2 $ 7.85 Granted — — Exercised (0.7 ) 7.13 Canceled — — Outstanding at September 30, 2016 4.5 $ 7.96 1.74 $ 19.5 Exercisable at September 30, 2016 4.4 $ 7.99 1.71 $ 19.0 Additional information with respect to stock options outstanding as of September 30, 2016 , with exercise prices less than or above $ 12.32 per share, the closing price of the Company's common stock at September 30, 2016 , is as follows (number of shares in millions): Exercisable Unexercisable Total Exercise Prices Number of Shares Weighted-Average Exercise Price Number of Shares Weighted-Average Exercise Price Number of Shares Weighted-Average Exercise Price Less than $12.32 4.4 $ 7.99 0.1 $ 6.65 4.5 $ 7.96 Above $12.32 — $ — — $ — — $ — Total outstanding 4.4 $ 7.99 0.1 $ 6.65 4.5 $ 7.96 Restricted Stock Units Restricted stock units generally vest over three years with service-based requirements or performance-based requirements or a combination of service-based and performance-based requirements and are payable in shares of the Company's common stock upon vesting. The following table presents summarized information with respect to the Company's restricted stock units as of September 30, 2016 and changes during the nine months ended September 30, 2016 (number of shares in millions): Number of Shares Weighted-Average Grant Date Fair Value Non-vested shares underlying restricted stock units at December 31, 2015 8.5 $ 10.52 Granted 5.3 9.06 Released (3.6 ) 9.98 Forfeited (0.6 ) 12.08 Non-vested shares underlying restricted stock units at September 30, 2016 9.6 $ 9.83 Stock Grant Awards During the quarter and nine months ended September 30, 2016 , the Company granted 0.2 million shares of stock under stock grant awards to certain directors of the Company with immediate vesting at a weighted-average grant date fair value of $9.81 per share. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10: Commitments and Contingencies Leases The following represents future minimum lease obligations under non-cancelable operating leases as of September 30, 2016 (in millions): Remainder of 2016 $ 9.5 2017 33.2 2018 23.9 2019 16.9 2020 12.7 Thereafter 46.4 Total $ 142.6 Environmental Contingencies The Company’s headquarters in Phoenix, Arizona is located on property that is a “Superfund” site, which is a property listed on the National Priorities List and subject to clean-up activities under the Comprehensive Environmental Response, Compensation, and Liability Act. Motorola and Freescale have been involved in the clean-up of on-site solvent contaminated soil and groundwater and off-site contaminated groundwater pursuant to consent decrees with the State of Arizona. As part of the Company's August 4, 1999 recapitalization (the "Recapitalization"), Motorola retained responsibility for this contamination, and Motorola and Freescale have agreed to indemnify the Company with respect to remediation costs and other costs or liabilities related to this matter. As part of the Recapitalization, the Company received various manufacturing facilities, one of which is located in the Czech Republic. The Company has ongoing remediation projects at this site to respond to releases of hazardous substances that occurred prior to the Recapitalization during the years that this facility was operated by government-owned entities. In each case, the remediation project consists primarily of monitoring groundwater wells located on-site and off-site with additional action plans developed to respond in the event activity levels are exceeded at each of the respective locations. The government of the Czech Republic has agreed to indemnify the Company and the respective subsidiaries, subject to specified limitations, for remediation costs associated with this historical contamination. Based upon the information available, total future remediation costs to the Company are not expected to be material. The Company’s design center in East Greenwich, Rhode Island is located on property that has localized soil contamination. In connection with the purchase of the facility, the Company entered into a settlement agreement and covenant not to sue with the State of Rhode Island. This agreement requires that remedial actions be undertaken and a quarterly groundwater monitoring program be initiated by the former owners of the property. Based on the information available, any costs to the Company in connection with this matter have not been, and are not expected to be, material. As a result of its acquisition of AMIS, the Company is a "primary responsible party" to an environmental remediation and clean-up at AMIS's former corporate headquarters in Santa Clara, California. Costs incurred by AMIS have included implementation of the clean-up plan, operations and maintenance of remediation systems, and other project management costs. However, AMIS's former parent company, a subsidiary of Nippon Mining, contractually agreed to indemnify AMIS and the Company for any obligations relating to environmental remediation and clean-up at this location. Based on the information available, any costs to the Company in connection with this matter have not been, and are not expected to be, material. The Company's former manufacturing location in Aizu, Japan is located on property where soil and ground water contamination has been detected. The Company believes that the contamination originally occurred during a time when the facility was operated by a prior owner. The Company has worked with local authorities to implement a remediation plan and expects remaining remediation costs to be covered by insurance. Based on information available, any costs to the Company in connection with this matter have not been, and are not expected to be, material. The Company was notified by the Environmental Protection Agency (“EPA”) that it has been identified as a “potentially responsible party” (“PRP”) in the Chemetco Superfund matter. Chemetco is a defunct reclamation services supplier who operated in Illinois at what is now a Superfund site. The Company used Chemetco for reclamation services. The EPA is pursuing Chemetco customers for contribution to the site cleanup activities. The Company has joined a PRP group which is cooperating with the EPA in the evaluation and funding of the cleanup. Based on the information available, any costs to the Company in connection with this matter have not been, and are not expected to be, material. The Company, through the acquisition of Fairchild, acquired facilities in South Portland, Maine and West Jordan, Utah. These two facilities have ongoing environmental remediation projects to respond to certain releases of hazardous substances that occurred prior to the leveraged recapitalization of Fairchild from National Semiconductor Corporation. Pursuant to the Asset Purchase Agreement with National Semiconductor Corporation, National Semiconductor Corporation has agreed to indemnify Fairchild for the future costs of these projects. The terms of the indemnification are without time limit and without maximum amount. The costs incurred to respond to these conditions have not been, and are not expected to be, material. National Semiconductor Corporation was purchased by Texas Instruments Incorporated during the fourth quarter of 2011. Pursuant to the 1999 asset agreement by which Fairchild purchased the power device business of Samsung Electronics Co., Ltd., Samsung agreed to indemnify Fairchild for remediation costs and other liabilities related to historical contamination at its Bucheon, South Korea operations, up to $150.0 million . Any future payments are not expected to be material. Financing Contingencies In the normal 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 such as, but not limited to, material purchase commitments, agreements to mitigate collection risk, leases, utilities or customs guarantees. As of September 30, 2016 , the Company's Revolving Credit Facility included $15.0 million of availability for the issuance of letters of credit. There were no letters of credit outstanding under the Revolving Credit Facility as of September 30, 2016 . The Company also had outstanding guarantees and letters of credit outside of its Revolving Credit Facility totaling $7.3 million as of September 30, 2016 . As part of obtaining financing in the normal course of business, the Company issued guarantees related to certain of its capital lease obligations, equipment financing, lines of credit and real estate mortgages, which totaled $135.7 million as of September 30, 2016 . The Company is also a guarantor of SCI LLC's non-collateralized loan with SMBC, which had a balance of $169.9 million as of September 30, 2016 . See Note 7: ''Long-Term Debt'' for additional information. 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 The Company is a party to a variety of agreements entered into in the ordinary course of business pursuant to which it may be obligated to indemnify the other parties for certain liabilities that arise out of or relate to the subject matter of the agreements. Some of the agreements entered into by the Company require it to indemnify the other party against losses due to IP infringement, property damage including environmental contamination, personal injury, failure to comply with applicable laws, the Company’s negligence or willful misconduct, or breach of representations and warranties and covenants related to such matters as title to sold assets. The Company faces risk of exposure to warranty and product liability claims in the event that its products fail to perform as expected or such failure of its products results, or is alleged to result, in economic damage, bodily injury or property damage. In addition, if any of the Company’s designed products are alleged to be defective, the Company may be required to participate in their recall. Depending on the significance of any particular customer and other relevant factors, the Company may agree to provide more favorable rights to such customer for valid defective product claims. The Company and its subsidiaries provide for indemnification of directors, officers and other persons in accordance with limited liability agreements, certificates of incorporation, by-laws, articles of association or similar organizational documents, as the case may be. The Company maintains directors’ and officers’ insurance, which should enable it to recover a portion of any future amounts paid. On February 19, 2016, the Board of Directors of the Company approved a form of indemnification agreement (the “Indemnification Agreement”) and authorized the Company to enter into an indemnification agreement in substantially the form of the Indemnification Agreement with each of its directors and executive officers (each, an “Indemnitee”). The Indemnification Agreement clarifies and supplements the indemnification rights and obligations of the Indemnitee and Company already included in the Company’s Certificate of Incorporation and Bylaws. Under the terms of the Indemnification Agreement, subject to certain exceptions specified in the Indemnification Agreement, the Company will indemnify the Indemnitee to the fullest extent permitted by Delaware law in the event the Indemnitee becomes subject to or a participant in certain claims or proceedings as a result of the Indemnitee’s service as a director or officer. The Company will also, subject to certain exceptions and repayment conditions, advance to the Indemnitee specified indemnifiable expenses incurred in connection with such claims or proceedings. The Fairchild Agreement provides for indemnification and insurance rights in favor of Fairchild’s then current and former directors, officers and employees. Specifically, the Company has agreed that, for no fewer than six years following the Fairchild acquisition, (a) it will indemnify and hold harmless each such indemnitee against losses and expenses (including advancement of attorneys’ fees and expenses) in connection with any proceeding asserted against the indemnified party in connection with such person’s servings as a director, officer, employee or other fiduciary of Fairchild or its subsidiaries prior to the effective time of the acquisition, (b) it will maintain in effect all provisions of the certificate of incorporation or bylaws of Fairchild or any of its subsidiaries or any other agreements of Fairchild or any of its subsidiaries with any indemnified party regarding elimination of liability, indemnification of officers, directors and employees and advancement of expenses in existence on the date of the Fairchild Agreement for acts or omissions occurring prior to the effective time of the acquisition and (c) subject to certain qualifications, it will provide to Fairchild’s then current directors and officers an insurance and indemnification policy that provides coverage for events occurring prior to the effective time of the acquisition that is no less favorable than Fairchild’s then-existing policy, or, if insurance coverage that is no less favorable is unavailable, the best available coverage. While the Company’s future obligations under certain agreements may contain limitations on liability for indemnification, other agreements do not contain such limitations and under such agreements it is not possible to predict the maximum potential amount of future payments due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under any of these indemnities have not had a material effect on the Company’s business, financial condition, results of operations or cash flows. Additionally, the Company does not believe that any amounts that it may be required to pay under these indemnities in the future will be material to the Company’s business, financial position, results of operations or cash flows. Legal Matters From time to time, we are 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 intellectual property rights, claims of alleged non-compliance with contract provisions and claims related to alleged violations of laws and regulations. We regularly evaluate the status of the legal proceedings in which we are 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 determine if accruals are appropriate. If accruals are not appropriate, we further evaluate 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. It is possible, nevertheless, 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. 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 and administrative process at the Patent and Trademark Office are inherently uncertain, and the Company cannot guarantee that the outcome of these matters will be favorable for it. Patent Litigation with Power Integrations, Inc. There are seven outstanding proceedings with Power Integrations (“PI”), five of which were pending between PI and Fairchild prior to the acquisition of Fairchild. The Company is vigorously defending the lawsuits filed by PI and believes that it has strong defenses. Power Integrations v. Fairchild Semiconductor International, Inc. et al. (October 20, 2004, Delaware, 1:04-cv-01371-LPS) : PI filed this lawsuit in 2004 in the U.S. District Court for the District of Delaware against Fairchild and its wholly owned subsidiary, Fairchild Semiconductor Corporation. PI alleged that certain of Fairchild’s pulse width modulation (PWM) integrated circuit products infringed four PI U.S. patents and sought a permanent injunction preventing Fairchild from manufacturing, selling or offering the products for sale in the United States, or from importing the products into the U.S., as well as money damages for past infringement. In the first phase of the trial, in October 2006, a jury returned a verdict finding that thirty-three of Fairchild’s PWM products willfully infringed one or more of seven claims asserted in the four patents and assessed damages against Fairchild. Fairchild voluntarily stopped U.S. sales and importation of those products in 2007 and has been offering replacement products since 2006. Subsequent phases of the trial conducted during 2007 and 2008 focused on the validity and enforceability of the patents. In December 2008, the judge overseeing the case reduced the jury’s 2006 damages award from $34.0 million to approximately $6.1 million and ordered a new trial on the issue of willfulness. Following the new trial held in June 2009, the court found Fairchild’s infringement to have been willful, and in January 2011 the court awarded PI final damages in the amount of $12.2 million . Fairchild appealed the final damages award, willfulness finding, and other issues to the U.S. Court of Appeals for the Federal Circuit. In March 2013, the Court of Appeals vacated almost the entire damages award, ruling that there was no basis upon which a reasonable jury could find Fairchild liable for induced infringement. The Court of Appeals also vacated the earlier judgment of willful patent infringement. The full Court of Appeals and the Supreme Court of the United States have since denied PI’s request to review the Court of Appeals ruling. The Court of Appeals instructed the lower court to conduct further proceedings to determine damages based upon approximately $500,000 to $750,000 worth of sales and imports of affected products, and this case remains in the District Court of Delaware on that basis. The Company believes that damages on the basis of that level of infringing activity would not be material. Power Integrations v. Fairchild Semiconductor International, Inc. et al. (May 23, 2008, Delaware, 1:08-cv-00309-LPS) : This lawsuit was initiated by PI in 2008 in the U.S. District Court for the District of Delaware against Fairchild, Fairchild Semiconductor Corporation and its wholly owned subsidiary, System General Corporation (now named Fairchild (Taiwan) Corporation), alleging infringement of three patents. Of the three patents asserted in this lawsuit, two had been asserted against Fairchild and Fairchild Semiconductor Corporation in the October 2004 lawsuit described above. In 2011, PI added a fourth patent to this case. On October 14, 2008, Fairchild Semiconductor Corporation and System General Corporation filed a patent infringement lawsuit against PI in the U.S. District Court for the District of Delaware, alleging that certain PWM integrated circuit products infringe one or more claims of two U.S. patents owned by System General Corporation. The lawsuit seeks monetary damages and an injunction preventing the manufacture, use, sale, offer for sale or importation of PI products found to infringe the asserted patents. The lawsuits were consolidated and heard together in a jury trial in April 2012, and in April 2012, the jury found that PI infringed one of the two U.S. patents owned by System General Corporation and upheld the validity of both of the System General Corporation patents. In the same verdict, the jury found that Fairchild infringed two of four U.S. patents asserted by PI and that Fairchild had induced its customers to infringe the asserted patents. (The court later ruled that Fairchild infringed one other asserted PI patent that the jury found was not infringed.) The jury also upheld the validity of the asserted PI patents. The verdict concluded the first phase of trial in this case. On June 30, 2014, the court issued an order enjoining Fairchild from making, using, selling, offering to sell or importing into the United States the products found to infringe the PI patents in the case as well as certain products that were similar to the products found to infringe. Willfulness and damages in the case will be determined in a second phase, which has yet to be scheduled and will occur after appeals of the first phase. Fairchild and PI have appealed the liability phase of this trial to the U.S. Court of Appeals for the Federal Circuit, and the appellate court heard arguments held in July 2016. Power Integrations v. Fairchild Semiconductor International Inc. et al. (November 4, 2009, Northern District of California, 3:09-cv-05235-MMC) : In 2009, PI sued Fairchild in the U.S. District Court for the Northern District of California, alleging that several of Fairchild’s products infringe three of PI’s patents. Fairchild filed counterclaims asserting that PI infringes two Fairchild patents. A trial was held in February 2014 on two PI patents and one Fairchild patent. In March 2014, the jury returned a verdict finding that Fairchild willfully infringed both PI patents, awarding PI $105.0 million in damages and finding that PI did not infringe the Fairchild patent. Both parties filed various post-trial motions, which were denied by the court with the exception of Fairchild’s motion to set aside the jury’s determination that it acted willfully. On September 9, 2014, the court granted Fairchild’s motion and determined that, as a matter of law, Fairchild’s actions were not willful. In addition to the ruling on willfulness, Fairchild continued to challenge several other aspects of the verdict during post-trial review. Specifically, Fairchild asserted that the damages award included legal and evidentiary defects that were inconsistent with recent rulings by the U.S. Court of Appeals for the Federal Circuit. In November 2014, the trial court ruled that the jury lacked sufficient evidence on which to base its damages award and, consequently, vacated the $105.0 million verdict and ordered a second trial on damages. In February 2015, the court denied PI’s request to enjoin the Fairchild products that were found to infringe, finding, among other things, that the evidence at trial failed to establish a causal connection between the alleged harm and the alleged infringement. The court ruled that PI can request an injunction after the second trial on damages. The second damages trial was held in December 2015. On December 17, 2015, a jury returned a verdict awarding PI $139.8 million in damages. Fairchild filed a number of post-trial motions challenging the verdict on several grounds, including several that are similar to challenges to the earlier damages verdict in the case, and the court ruled against Fairchild on these motions. The Company plans to appeal the current damages award as well as the 2014 verdict finding that the asserted PI’s patents were infringed and valid. Fairchild Semiconductor International Inc. et al. v. Power Integrations (May 1, 2012, Delaware, 1:12-cv-00540-LPS) : In May 2012, Fairchild sued PI in the U.S. District Court for the District of Delaware. The lawsuit accuses PI’s LinkSwitch-PH LED power conversion products of violating three of Fairchild’s patents. PI filed counterclaims of patent infringement against Fairchild, asserting five PI patents. Of those five patents, the court granted Fairchild summary judgment of no infringement on one, PI voluntarily withdrew a second and was forced to remove a third patent during the trial, which began in May 2015. In June 2015, the jury found that PI induced infringement of Fairchild’s patent rights and awarded Fairchild $2.4 million in damages. The same jury found that Fairchild infringed a PI patent and awarded PI damages of $100,000 . Power Integrations v. Fairchild Semiconductor International Inc. et al. (October 21, 2015, Northern District of California, 3:15-cv-04854 MMC) : In 2015, PI filed another complaint for patent infringement against Fairchild in the U.S. District Court for the Northern District of California. Fairchild answered and counterclaimed with its own patents. The lawsuit is in its earliest stages. ON Semiconductor Corporation and Semiconductor Components Industries, LLC v. Power Integrations, Inc. (August 11, 2016, Arizona, 2:16-CV-02720-SPL) : The Company and Semiconductor Components Industries, LLC, a wholly owned subsidiary of the Company (collectively “ON Semi”), filed a lawsuit against PI in the U.S. District Court for the District of Arizona. In the lawsuit, ON Semi is asserting claims of patent infringement on five of its patents directed to aspects of PI’s power conversion products. The lawsuit also seeks a claim for a declaratory judgment of non-infringement on three of PI’s patents. Separately, ON Semi filed petitions for inter partes review with the U.S. Patent and Trademark Office seeking to invalidate claims of those three patents. Power Integrations v. ON Semiconductor Corporation, and Semiconductor Components Industries, LLC (November 1, 2016, Northern District of California, 3:16-cv-06371) : This lawsuit was initiated by PI in 2016 in the U.S. District Court for the Northern District of California against the Company and Semiconductor Components Industries, LLC, a wholly owned subsidiary of the Company (collectively “ON Semi”), alleging infringement of six patents. Of the six patents asserted in this lawsuit, two had been asserted against POWI by ON Semi in the August 2016 lawsuit in Arizona described above. In the complaint, POWI alleges infringement and seeks a permanent injunction, unspecified damages, a trebling of damages, an accounting and costs and fees. The lawsuit is in its earliest stages. 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. in the U.S. District Court for the District of Massachusetts. The lawsuit alleges 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. Acbel seeks damages “in an amount not less than $30 million ,” punitive damages, costs and attorneys’ fees. The Company is vigorously defending the lawsuit and believes that it has strong defenses. Litigation Related to the Acquisition of Fairchild On December 14, 2015, the Company was named as a defendant in a shareholder class action lawsuit filed in state court in Delaware against the Company, Merger Sub, Fairchild and certain directors of Fairchild with respect to the Fairchild Agreement entered into between our Merger Sub and Fairchild in November 2015, by which the Company commenced a tender offer to acquire all of the outstanding shares of Fairchild. The lawsuit alleged breach of duty by the individual defendants and aiding and abetting by the Company and the Merger Sub and was docketed in the Court of Chancery of the State of Delaware as Woo v. Fairchild Semiconductor International, Inc. et al, Case # 11798VCL. In March 2016, the plaintiff amended the complaint to allege that Fairchild’s failure to accept the proposal from a third party constituted a breach of fiduciary duty and that certain disclosures filed on Form 14D-9 were misleading or inaccurate. As relief, the amended complaint sought, among other things, an injunction against the tender offer and the merger that are part of the Fairchild Transaction, an accounting for damages, and an award of attorneys’ fees and costs. On October 26, 2016, the plaintiff voluntarily dismissed the lawsuit. On December 16, 2015, a purported stockholder in the Company filed a complaint challenging the tender offer for Fairchild and the merger in the Superior Court of the State of California, County of Santa Clara. The complaint is captioned Cody Laidlaw v. Fairchild Semiconductor International, Inc., et al., Case No. 15-cv-289120. The complaint lists as defendants Fairchild, its board of directors, Goldman Sachs and unnamed representatives of Goldman Sachs. The complaint alleges that the board of directors of Fairchild breached its fiduciary duties by failing to maximize the price to be paid for Fairchild and that Fairchild and the board of directors of Fairchild failed to provide Fairchild’s stockholders with all material information needed to make an informed decision whether to tender their shares of Fairchild common stock in the tender offer. The complaint further alleges that Goldman Sachs and its unnamed representatives aided and abetted the purported breaches of fiduciary duty of Fairchild’s board of directors. As relief, the complaint seeks, among other things, an injunction against the tender offer and the merger of Fairchild with and into Falcon Operations Sub, Inc. and an award of attorneys’ fees and costs. Fairchild filed a motion to dismiss on July 15, 2016. The plaintiff opposed the motion to dismiss on September 16, 2016, and a case management conference is scheduled for December 16, 2016. The Company believes that the suit is without merit and intends to defend the litigation vigorously. See description of our indemnification obligations to Fairchild officers and directors under the heading “Indemnification Contingencies” above in this Note 10. Intellectual Property Matters The Company faces risk to exposure from claims of infringement of the IP rights of others. In the ordinary course of business, the Company receives letters asserting that its products or components breach another party’s rights. These threats may seek that the Company make royalty payments, that it stop use of such rights, or other remedies. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 11: Fair Value Measurements Fair Value of Financial Instruments Summarized information with respect to certain of the Company's financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 is as follows (in millions): Fair Value Measurements as of September 30, 2016 Description Balance as of September 30, 2016 Level 1 Level 2 Level 3 Assets: Cash and Cash equivalents: Demand and time deposits $ 66.2 $ 66.2 $ — $ — Money market funds 51.4 51.4 — — Liabilities: Contingent consideration (See Note 3) 3.7 — — 3.7 During the quarter ended September 30, 2016 , the contingent consideration for the AXSEM acquisition was reduced from $5.0 million to $3.7 million due to the revision of the Company's expectations of the Earn-out achievement. See Note 3: ''Acquisitions and Divestitures'' for further information. Fair Value Measurements as of December 31, 2015 Description Balance as of December 31, 2015 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents: Demand and time deposits $ 9.5 $ 9.5 $ — $ — Money market funds 33.2 33.2 — — Liabilities: Designated cash flow hedges $ 0.2 $ — $ 0.2 $ — Foreign currency exchange contracts 0.1 — 0.1 — Contingent consideration (See Note 3) 5.0 — — 5.0 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 capital lease obligations, real estate mortgages and equipment financing) as of September 30, 2016 and December 31, 2015 are as follows (in millions): September 30, 2016 December 31, 2015 Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt, including current portion Convertible notes $ 946.9 $ 1,130.0 $ 925.0 $ 1,041.9 Long-term debt $ 2,632.7 $ 2,738.6 $ 386.9 $ 386.6 The fair value of the Company's 2.625% Notes, Series B, 1.00% Notes, and Term Loan "B" Facility 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) as of September 30, 2016 and December 31, 2015 . Cost Method Investments Investments in equity securities that do not qualify for fair value accounting are accounted for under the cost method. Accordingly, the Company accounts for investments in companies that it does not control, or have significant influence over, under the cost method, as applicable. If a decline in the fair value of a cost method investment is determined to be other than temporary, an impairment charge is recorded, and the fair value becomes the new cost basis of the investment. The Company evaluates all of its cost method investments for impairment; however, it is not required to determine the fair value of its investment unless impairment indicators are present. As of September 30, 2016 and December 31, 2015 , the Company’s cost method investments had a carrying value of $13.3 million and $12.3 million , respectively. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
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, or 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 September 30, 2016 and December 31, 2015 , the Company had net outstanding foreign exchange contracts with notional amounts of $102.6 million and $ 89.8 million , respectively. Such contracts were obtained through financial institutions and were scheduled to mature within one 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 as of September 30, 2016 and December 31, 2015 (in millions): September 30, 2016 December 31, 2015 Buy (Sell) Notional Amount Buy (Sell) Notional Amount Euro $ (29.0 ) $ 29.0 $ (17.5 ) $ 17.5 Japanese Yen (28.0 ) 28.0 (30.0 ) 30.0 Malaysian Ringgit 6.2 6.2 7.1 7.1 Philippine Peso 18.4 18.4 13.7 13.7 Other Currencies - Buy 15.0 15.0 17.1 17.1 Other Currencies - Sell (6.0 ) 6.0 (4.4 ) 4.4 $ (23.4 ) $ 102.6 $ (14.0 ) $ 89.8 The Company is exposed to credit-related losses if counterparties to its foreign exchange contracts fail to perform their obligations. As of September 30, 2016 , the counterparties to the Company’s foreign currency hedge contracts as well as the cash flow hedges described below are held at financial institutions which the Company believes to be highly rated, and no credit-related losses are anticipated. Amounts receivable or payable under the contracts are included in other current assets or accrued expenses in the accompanying Consolidated Balance Sheet. For the quarters ended September 30, 2016 and October 2, 2015 , realized and unrealized foreign currency transactions totaled a $0.5 million loss and a $1.5 million gain, respectively. For the nine months ended September 30, 2016 , realized and unrealized foreign currency transactions totaled a $3.8 million loss. For the nine months ended October 2, 2015 , there was $1.4 million gain recognized from realized and unrealized foreign currency transactions. The realized and unrealized foreign currency transactions are included in other income and expenses in the Company's Consolidated Statements of Operations and Comprehensive Income. Cash Flow Hedges The Company is exposed to global market risks associated with fluctuations in interest rates and foreign currency exchange rates. The Company addresses these risks through controlled management that includes the use of derivative financial instruments to economically hedge or reduce these exposures. The Company does not enter into derivative financial instruments for trading or speculative purposes. 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. All the contracts mature within 12 months, and upon maturity, the amount recorded in accumulated other comprehensive income is reclassified into earnings. The Company documents all relationships between designated hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedge transactions. All derivatives are recognized on the balance sheet at their fair value and classified based on the instrument's maturity date. The Company did not have outstanding derivatives designated as cash flow hedges as of September 30, 2016 . For the quarter and nine months ended September 30, 2016 , the Company recorded a net loss of zero and $0.2 million , respectively, and a net loss of $2.8 million and $6.2 million for the quarter and nine months ended October 2, 2015 , respectively, associated with cash flow hedges recognized as a component of cost of revenues. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13: Income Taxes The Company has historically determined its interim income tax provision by applying the estimated effective income tax rate expected to be applicable for the full fiscal year to the income before income taxes for the period. The effective income tax rate is dependent upon several factors, such as tax rates in certain foreign jurisdictions and the relative amount of income the Company earns in such jurisdictions. In determining the full year estimate, the Company does not include the estimated impact of unusual and/or infrequent items, which may cause significant variations in the customary relationship between income tax expense and income before income taxes. Significant judgment is exercised in determining the income tax provision due to transactions, credits and calculations where the ultimate tax determination is uncertain. The Company’s effective tax rate for the nine months ended September 30, 2016 was 55.2% , which differs from the U.S. statutory federal income tax rate of 35% principally due to the discrete items recorded related to the reversal of the prior years’ indefinite reinvestment assertion and release of the U.S. federal valuation allowance. The Company continues to maintain a valuation allowance on part of its foreign tax credit carryforwards and a full valuation allowance on its capital loss carryforwards, U.S. state deferred tax assets and substantially all of its Japan-related deferred tax assets. The consummation of the Fairchild acquisition during the quarter ended September 30, 2016 caused the Company to reassess the prior years’ indefinite reinvestment assertion because of the U.S. debt incurred to fund the acquisition. See Note 7 “Long-Term Debt” for additional information. This resulted in a change in judgment regarding the future cash flows by jurisdiction and the reversal of prior years’ indefinite reinvestment assertion. The change in assertion, which resulted in recording a deferred tax liability for future U.S. taxes, had a direct impact on the judgment about the realizability of the U.S. federal deferred tax assets which resulted in a release of valuation allowance. The change in the prior years’ indefinite reinvestment assertion resulted in an increase to income tax expense of $310.8 million , which was partially offset by a benefit of $267.4 million relating to the release of valuation allowance. The reversal of the prior years’ indefinite reinvestment assertion and release of the U.S. federal valuation allowance did not have an effect on our cash taxes. As of December 31, 2015, the valuation allowance on the domestic deferred tax assets was approximately $330.4 million . The Company has not made an indefinite reinvestment assertion related to current year foreign earnings. The Company’s policy is to include net interest and penalties related to unrecognized tax benefits within the provision for taxes on the consolidated statements of operations. The Company had approximately $4.7 million and $4.6 million of net interest and penalties accrued at September 30, 2016 and October 2, 2015, respectively. Although the Company cannot predict the timing of resolution with taxing authorities, if any, it believes it is reasonably possible that $3.3 million of its unrecognized tax benefits will be reduced in the next twelve months due to settlement with tax authorities or expiration of the applicable statute of limitations. Tax years prior to 2012 are generally not subject to examination by the Internal Revenue Services (“IRS”) except for items involving tax attributes that have been carried forward to tax years whose statute of limitations remains open. The Company is not currently under IRS examination. For state returns, the Company is generally not subject to income tax examinations for years prior to 2011. The Company is also subject to routine examinations by various foreign tax jurisdictions in which it operates. With respect to significant jurisdictions outside the United States, the Company's subsidiaries are no longer subject to income tax audits for years prior to 2006. The Company is currently under audit in the following significant jurisdictions: Malaysia, China, Philippines, and Japan. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2016 | |
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 for the nine months ended September 30, 2016 are as follows (net of tax of $0 , in millions): Foreign Currency Translation Adjustments Effects of Cash Flow Hedges Total Balance as of December 31, 2015 $ (42.2 ) $ (0.1 ) $ (42.3 ) Other comprehensive income (loss) prior to reclassifications 3.6 0.3 3.9 Amounts reclassified from accumulated other comprehensive loss — (0.2 ) (0.2 ) Net current period other comprehensive income (loss) 3.6 0.1 3.7 Balance as of September 30, 2016 $ (38.6 ) $ — $ (38.6 ) Amounts which were reclassified from accumulated other comprehensive loss to the Company's Consolidated Statements of Operations and Comprehensive Income during the quarter and nine months ended September 30, 2016 and October 2, 2015 , respectively, were as follows (net of tax of $0 , in millions): Amounts Reclassified from Accumulated Other Comprehensive Loss Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Affected Line Item Where Net Income is Presented Effects of cash flow hedges $ — $ (2.8 ) $ 0.2 $ (6.2 ) Cost of revenues Gains and Losses on Available-for-Sale Securities — (0.7 ) — (4.1 ) Other income and expense Total reclassifications $ — $ (3.5 ) $ 0.2 $ (10.3 ) |
Supplemental Disclosures
Supplemental Disclosures | 9 Months Ended |
Sep. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Disclosures | Note 15: Supplemental Disclosures Supplemental Disclosure of Cash Flow Information Certain of the Company's non-cash activities along with cash payments for interest and income taxes are as follows (in millions): Nine Months Ended September 30, 2016 October 2, 2015 Non-cash activities: Debt issuance costs paid directly from escrow accounts $ 46.0 $ — Capital expenditures in accounts payable and other liabilities $ 88.3 $ 105.9 Equipment acquired or refinanced through capital leases $ — $ 2.1 Cash (received) paid for: Interest income $ (3.8 ) $ (0.8 ) Interest expense $ 72.7 $ 17.9 Income taxes $ 19.1 $ 15.0 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | Note 16: Segment Information During the third quarter of 2016, the Company realigned its segments into three operating segments to optimize efficiencies resulting from the acquisition of Fairchild. These operating segments also represent its three reporting segments: Power Solutions Group, Analog Solutions Group, and Image Sensor Group. The results of the System Solutions Group, which was previously the Company's fourth operating segment, and which did not have goodwill, are now part of the three operating segments and previously-reported information has been presented based on the new structure to reflect the current organizational structure. The Company's Power and Analog Solutions Groups include the business acquired in the Fairchild Transaction. See Note 3: “Acquisitions and Divestitures” for additional information with respect to the Company’s acquisition of Fairchild. Each of the Company's major product lines has been examined, and each product line has been assigned to a reportable segment based on the Company's operating strategy. 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 as such are used to evaluate progress of major initiatives and allocation of resources. Revenues and gross profit for the Company’s reportable segments for the quarters and nine months ended September 30, 2016 and October 2, 2015 are as follows (in millions): Power Solutions Group Analog Solutions Group Image Sensor Group Total For the quarter ended September 30, 2016: Revenues from external customers $ 407.8 $ 363.1 $ 180.0 $ 950.9 Segment gross profit $ 142.2 $ 144.4 $ 57.4 $ 344.0 For the quarter ended October 2, 2015: Revenues from external customers $ 359.0 $ 346.6 $ 198.6 $ 904.2 Segment gross profit $ 108.6 $ 138.9 $ 66.2 $ 313.7 For the nine months ended September 30, 2016: Revenues from external customers $ 1,088.4 $ 1,012.0 $ 545.5 $ 2,645.9 Segment gross profit $ 361.9 $ 404.1 $ 179.9 $ 945.9 For the nine months ended October 2, 2015: Revenues from external customers $ 1,075.6 $ 1,022.9 $ 557.0 $ 2,655.5 Segment gross profit $ 336.3 $ 415.3 $ 174.6 $ 926.2 Gross profit shown above and below is exclusive of the amortization of acquisition-related intangible assets. Depreciation expense is included in segment gross profit. Reconciliations of segment gross profit to consolidated gross profit are as follows (in millions): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Gross profit for reportable segments $ 344.0 $ 313.7 $ 945.9 $ 926.2 Less: unallocated manufacturing costs (15.0 ) (5.2 ) (33.5 ) (12.9 ) Consolidated Gross profit $ 329.0 $ 308.5 $ 912.4 $ 913.3 The Company's consolidated assets are not specifically ascribed to its individual reporting segments. Rather, assets used in operations are generally shared across the Company's reporting segments. 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 gross profit by geographical location. Revenues by geographic location, including local sales made by operations within each area, based on sales billed from the respective country, are summarized as follows (in millions): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 United States $ 140.7 $ 133.5 $ 421.1 $ 406.1 Japan 85.3 74.5 251.2 201.9 Hong Kong 258.9 232.7 654.0 647.9 Singapore 281.4 270.6 783.8 881.5 United Kingdom 132.4 131.5 407.6 380.4 Other 52.2 61.4 128.2 137.7 $ 950.9 $ 904.2 $ 2,645.9 $ 2,655.5 Property, plant and equipment, net by geographic location, is summarized as follows (in millions): September 30, 2016 December 31, United States $ 545.7 $ 326.2 Korea 371.7 0.2 Malaysia 217.6 226.5 Philippines 341.2 259.1 China 199.2 111.0 Other 399.2 351.1 $ 2,074.6 $ 1,274.1 For the quarters and nine months ended September 30, 2016 and October 2, 2015 , there were no individual customers, including distributors, which accounted for more than 10% of the Company's total consolidated revenues. |
Background and Basis of Prese23
Background and Basis of Presentation Background and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Update to Revenue Recognition policy | Revenue Recognition Policy The Company generates revenue from sales of its semiconductor products to OEMs, electronic manufacturing service providers and distributors. The Company also generates revenue, to a much lesser extent, from manufacturing and design services provided to customers. Revenue is recognized when persuasive evidence of an arrangement exists, title and risk of loss pass to the customer (generally upon shipment), the price is fixed or determinable and collectability is reasonably assured. Revenues are recorded net of provisions for related sales returns and allowances. For products sold to distributors who are entitled to returns and allowances (generally referred to as “ship and credit rights” within the semiconductor industry), the Company recognizes the related revenue and cost of revenues depending on if the sale originated through an ON or legacy Fairchild process. If the sale originated through an ON process, revenue is recognized when ON is informed by the distributor that it has resold the products to the end-user. As a result of the Company’s inability to reliably estimate up front the effects of the returns and allowances with these distributors for sales originating through an ON process, the Company defers the related revenue and gross margin on sales to these distributors until it is informed by the distributor that the products have been resold to the end-user, at which time the ultimate sales price is known. Legacy Fairchild’s systems and processes enable the Company to estimate up front the effects of returns and allowances provided to the distributors and thereby record the net revenue at the time of sale related to a legacy Fairchild process. Although payment terms vary, most distributor agreements require payment within 30 days. Sales returns and allowances are estimated based on historical experience. The Company’s OEM customers do not have the right to return products, other than pursuant to the provisions of the Company’s standard warranty. Sales to distributors, however, are typically made pursuant to agreements that provide return rights with respect to discontinued or slow-moving products. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related revenues are recognized, and are netted against revenues. The Company reviews warranty and related claims activities and records provisions, as necessary. Freight and handling costs are included in cost of revenues and are recognized as period expense when incurred. Taxes assessed by government authorities on revenue-producing transactions, including value-added and excise taxes, are presented on a net basis (excluded from revenues) in the statement of operations. |
Segments | Segments During the third quarter of 2016, the Company realigned its segments into three operating segments, which also represents its three reporting segments: Power Solutions Group, Analog Solutions Group, and Image Sensor Group. The results of the System Solutions Group, which was previously the Company's fourth operating segment, are now part of the three operating segments and previously-reported information has been presented based on the new structure to reflect the current organizational structure. The Company's Power and Analog Solutions Groups include the business acquired in the Fairchild Transaction. See Note 3: “Acquisitions and Divestitures” for additional information with respect to the Company’s acquisition of Fairchild. See also Note 16: “Segment Information” for additional information on the Company’s reportable segments. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Significant estimates have been used by management in conjunction with the following: (i) measurement of valuation allowances relating to trade receivables, inventories and deferred tax assets; (ii) estimates of future payouts for customer incentives and allowances, warranties, and restructuring activities; (iii) assumptions surrounding future pension obligations; (iv) fair values of share-based compensation and of financial instruments (including derivative financial instruments); (v) evaluations of uncertain tax positions; (vi) estimates and assumptions used in connection with business combinations; and (vii) future cash flows used to assess and test for impairment of goodwill and long-lived assets, if applicable. Actual results could differ from these estimates. |
Recent Accounting Pronouncements | Note 2: Recent Accounting Pronouncements ASU's Adopted: ASU No. 2015-17 - "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17") In November 2015, the FASB issued ASU 2015-17, which requires that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. ASU 2015-17 is effective in fiscal years beginning after December 15, 2016. Early adoption is permitted on either a prospective or retrospective basis. The Company elected early adoption as of the interim period beginning October 3, 2015, effective for the annual period ended December 31, 2015 , and selected the prospective application. Prior periods have not been retrospectively adjusted. ASU 2015-05 - “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” ("ASU 2015-05") In April 2015, the FASB issued ASU 2015-05, which provides guidance regarding the accounting for fees paid by a customer in cloud computing arrangements. ASU 2015-05 amended ASC 350-40-25-16 by removing the language that stated licenses for internal-use software from third parties should be analogized to the subtopic 840-10 Leases. If a cloud computing arrangement includes the transfer of a software license, then the customer would account for the payment of fees as an acquisition of software. If there is no software license, the payment of fees would be accounted for as a service contract. This ASU is effective in fiscal years beginning after December 15, 2015. An entity can elect to adopt the amendments either prospectively for all arrangements entered into or materially modified after the effective date, or retrospectively. The Company adopted ASU 2015-05 as of the quarter ended April 1, 2016 and selected the prospective application. There was no material impact to the financial statements. ASU No. 2015-03 - "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03") and ASU No. 2015-15 - "Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements" ("ASU 2015-15") In April 2015, the FASB issued ASU 2015-03, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The new standard is effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. In August 2015, the FASB issued ASU 2015-15, which clarified that ASU 2015-03 does not address debt issuance costs related to line-of-credit agreements and stated that the SEC staff would not object to the deferral and presentation of debt issuance costs as an asset, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement, consistent with existing guidance. The Company elected early adoption of ASU 2015-03 as of the year ended December 31, 2015 , applicable to debt issuance costs related to its convertible notes, and retrospectively adjusted certain prior year amounts to reflect the effects of applying the new guidance. Pursuant to ASU 2015-15, debt issuance costs relating to the Company's revolving credit facility have been deferred and are included in other assets on the Company's Consolidated Balance Sheet. See Note 7: ''Long-Term Debt'' for additional information with respect to the Company's debt issuance costs. ASUs Pending Adoption: ASU No. 2016-15 - "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15") In August 2016, the FASB issued ASU 2016-15, which changes how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-15 may have on its consolidated financial statements and has not elected early adoption as of the quarter ended September 30, 2016 . ASU No. 2016-09 - "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09") In March 2016, the FASB issued ASU 2016-09, which is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. The amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-09 may have on its consolidated financial statements and has not elected early adoption as of the quarter ended September 30, 2016 . ASU No. 2016-02 - "Leases (Topic 842)" ("ASU 2016-02") In February 2016, the FASB issued ASU 2016-02, which amends the accounting treatment for leases. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees ( for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 may have on its consolidated financial statements and has not elected early adoption as of the quarter ended September 30, 2016 . ASU No. 2016-01 - “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”) In January 2016, the FASB issued ASU No. 2016-01, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-01 may have on its consolidated financial statements. ASU No. 2015-11 - "Inventory (Topic 330): Simplifying the Measurement of Inventory" ("ASU 2015-11") In July 2015, the FASB issued ASU 2015-11, which requires that an entity should measure in-scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2015-11 may have on its consolidated financial statements and has not elected early adoption as of the quarter ended September 30, 2016 . ASU No. 2014-09 - “Revenue from Contracts with Customers (Topic 606)" (“ASU 2014-09”), ASU No. 2015-14 - "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date" ("ASU 2015-14"), ASU No. 2016-08 - “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”), ASU No. 2016-10 - “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”) and ASU No. 2016-12 - “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”) In May 2014, the FASB issued ASU 2014-09, which applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other standards, superseding the existing revenue recognition requirements in ASC Topic 605 “Revenue Recognition.” Pursuant to ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange, as applied through a multi-step process to achieve that core principle. Subsequently, the FASB approved a deferral included in ASU 2015-14 that permits public entities to apply the amendments in ASU 2014-09 for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein, and that would also permit public entities to elect to adopt the amendments as of the original effective date as applicable to reporting periods beginning after December 15, 2016. The new guidance allows for the amendment to be applied either retrospectively to each prior reporting period presented or retrospectively as a cumulative-effect adjustment as of the date of adoption. In March 2016, the FASB issued ASU 2016-08, which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, which clarifies identifying performance obligations and the licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, which improves certain aspects of ASC Topic 606 "Revenue from Contracts with Customers." The effective date and transition requirements for ASU 2016-08, ASU 2016-10 and ASU 2016-12 are the same as the effective date and transition requirements of ASU 2014-09. The Company defers the revenue and cost of revenues on sales to certain distributors until it is informed by the distributor that the distributor has resold the products to the end customer. For additional information with respect to the Company's revenue recognition policy, see Note 1: "Background and Basis of Presentation." Upon adoption of ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10 and ASU 2016-12, the Company believes one of the more significant impacts will be that it is no longer permitted to defer revenue until sale by the distributor to the end customer, but rather, will be required to estimate the effects of returns and allowances provided to distributors and record revenue at the time of sale to the distributor. In anticipation of the adoption of the new standards, the Company has been enhancing and continues to enhance its internal systems, processes and controls for making the required estimates. During the quarter ended September 30, 2016, the Company continued the necessary updates and improvements to its systems, processes and controls and based on its progress intends to adopt the standard as of January 1, 2017. |
Cost Method Investments | Cost Method Investments Investments in equity securities that do not qualify for fair value accounting are accounted for under the cost method. Accordingly, the Company accounts for investments in companies that it does not control, or have significant influence over, under the cost method, as applicable. If a decline in the fair value of a cost method investment is determined to be other than temporary, an impairment charge is recorded, and the fair value becomes the new cost basis of the investment. The Company evaluates all of its cost method investments for impairment; however, it is not required to determine the fair value of its investment unless impairment indicators are present. |
Acquisitions and Divestitures A
Acquisitions and Divestitures Acquisitions (Tables) - Fairchild | 9 Months Ended |
Sep. 30, 2016 | |
Business Acquisition [Line Items] | |
Acquisitions Schedule of Purchase Price Allocation | The following table presents the provisional allocation of the purchase price of Fairchild for the assets acquired and liabilities assumed based on their fair values (in millions): Initial Estimate Cash and cash equivalents $ 255.0 Receivables 227.3 Inventories 342.3 Other current assets 59.3 Property, plant and equipment 813.5 Goodwill 733.6 Intangible assets (excluding IPRD) 423.4 In-process research and development 102.4 Other non-current assets 17.7 Total assets acquired 2,974.5 Accounts payable 79.4 Other current liabilities 160.1 Deferred tax liabilities 167.6 Other non-current liabilities 35.2 Total liabilities assumed 442.3 Net assets acquired/purchase price $ 2,532.2 |
Schedule of Pro Forma Information | The following unaudited pro-forma consolidated results of operations for the quarters and nine months ended September 30, 2016 and October 2, 2015 have been prepared as if the acquisition of Fairchild had occurred on January 1, 2015 and includes adjustments for depreciation expense, amortization of intangibles, interest expense from financing, and the effect of purchase accounting adjustments including the step-up of inventory (in millions): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Revenues $ 1,260.2 $ 1,246.3 $ 3,636.1 $ 3,708.5 Net Income (loss) $ (10.6 ) $ 18.0 $ 49.8 $ 27.6 Net income (loss) attributable to ON Semiconductor Corporation $ (11.1 ) $ 17.5 $ 48.2 $ 25.7 Net income (loss) per common share attributable to ON Semiconductor Corporation: Basic $ (0.03 ) $ 0.04 $ 0.12 $ 0.06 Diluted $ (0.03 ) $ 0.04 $ 0.12 $ 0.06 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Goodwill by Operating Segment | The following table summarizes goodwill by relevant reportable segments as of September 30, 2016 and December 31, 2015 (in millions): Balance as of September 30, 2016 Balance as of December 31, 2015 Goodwill Accumulated Impairment Losses Goodwill disposed Carrying Value Goodwill Accumulated Impairment Losses Carrying Value Reportable Segment: Analog Solutions Group $ 881.5 $ (418.9 ) — $ 462.6 $ 546.7 $ (418.9 ) $ 127.8 Image Sensor Group 95.4 — — 95.4 95.4 — 95.4 Power Solutions Group 474.8 (28.6 ) (3.4 ) 442.8 76.0 (28.6 ) 47.4 $ 1,451.7 $ (447.5 ) $ (3.4 ) $ 1,000.8 $ 718.1 $ (447.5 ) $ 270.6 The following table summarizes the change in goodwill from December 31, 2015 to September 30, 2016 (in millions): Net balance as of December 31, 2015 $ 270.6 Addition due to business combination 733.6 Divestiture of buiness (3.4 ) Net balance as of September 30, 2016 $ 1,000.8 |
Summary of Intangible Assets, Net | Intangible assets, net, were as follows as of September 30, 2016 and December 31, 2015 (in millions): September 30, 2016 Original Cost Accumulated Amortization Foreign Currency Translation Adjustment Accumulated Impairment Losses Carrying Value Intellectual property $ 13.9 $ (11.1 ) $ — $ (0.4 ) $ 2.4 Customer relationships 579.6 (250.1 ) (27.4 ) (23.7 ) 278.4 Patents 43.7 (25.1 ) — (13.7 ) 4.9 Developed technology 541.8 (185.5 ) 0.2 (2.6 ) 353.9 Trademarks 17.2 (10.6 ) — (1.1 ) 5.5 Backlog 0.3 (0.3 ) — — — Favorable Leases 1.5 — — — 1.5 IPRD 137.5 — — (6.0 ) 131.5 Total intangibles $ 1,335.5 $ (482.7 ) $ (27.2 ) $ (47.5 ) $ 778.1 December 31, 2015 Original Cost Accumulated Amortization Foreign Currency Translation Adjustment Accumulated Impairment Losses Carrying Value Intellectual property $ 13.9 $ (10.6 ) $ — $ (0.4 ) $ 2.9 Customer relationships 426.2 (214.2 ) (27.9 ) (23.7 ) 160.4 Patents 43.7 (23.6 ) — (13.7 ) 6.4 Developed technology 268.0 (152.2 ) — (2.6 ) 113.2 Trademarks 16.3 (9.9 ) — (1.1 ) 5.3 Backlog 0.3 (0.3 ) — — — IPRD 41.4 — — (3.8 ) 37.6 Total intangibles $ 809.8 $ (410.8 ) $ (27.9 ) $ (45.3 ) $ 325.8 |
Summary of Amortization Expense | Amortization expense for intangible assets, with the exception of the $131.5 million of IPRD assets that will be amortized once the corresponding projects have been completed, is expected to be as follows for remainder of 2016, each of the next four years, and thereafter (in millions): Period Estimated Amortization Expense Remainder of 2016 $ 32.8 2017 118.4 2018 100.2 2019 93.2 2020 76.8 Thereafter 225.2 Total estimated amortization expense $ 646.6 |
Restructuring, Asset Impairme26
Restructuring, Asset Impairments and Other, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring Charges [Abstract] | |
Schedule of Activity Included in Restructuring, Asset Impairments, and Other, Net | Summarized activity included in the “Restructuring, asset impairments and other, net” caption on the Company's Consolidated Statements of Operations and Comprehensive Income for the quarter and nine months ended September 30, 2016 is as follows (in millions): Restructuring Quarter ended September 30, 2016 Post Fairchild acquisition restructuring costs $ 20.9 Former System Solutions Group voluntary workforce reduction 0.1 Manufacturing relocation 0.9 Other (1) (0.1 ) Total $ 21.8 Restructuring Nine months ended September 30, 2016 Post Fairchild acquisition restructuring costs $ 20.9 Former System Solutions Group voluntary workforce reduction 5.3 Manufacturing relocation 2.1 General workforce reductions 0.3 Other 0.1 Total $ 28.7 (1) Includes amounts related to certain reductions in workforce, other facility closures, asset disposal activity and certain other activity which is not considered to be significant. |
Schedule of Restructuring Reserve Roll Forward | Changes in accrued restructuring charges from December 31, 2015 to September 30, 2016 are summarized as follows (in millions): Balance as of December 31, 2015 Charges Usage Balance as of Estimated employee separation charges $ 5.3 $ 28.7 $ (9.6 ) $ 24.4 Estimated costs to exit 0.5 — (0.5 ) — Total $ 5.8 $ 28.7 $ (10.1 ) $ 24.4 |
Balance Sheet Information (Tabl
Balance Sheet Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental Balance Sheet Information | Certain amounts included in the Company's balance sheet as of September 30, 2016 and December 31, 2015 consist of the following. The balances as of September 30, 2016 includes the Fairchild amounts (dollars in millions): September 30, 2016 December 31, 2015 Receivables, net: Accounts receivable $ 677.4 $ 432.6 Less: Allowance for doubtful accounts (2.3 ) (6.2 ) $ 675.1 $ 426.4 Inventories: Raw materials $ 122.8 $ 79.3 Work in process 609.5 457.8 Finished goods 350.8 213.3 $ 1,083.1 $ 750.4 Property, plant and equipment, net: Land $ 123.7 $ 46.2 Buildings 710.6 513.6 Machinery and equipment 3,005.0 2,327.5 Total property, plant and equipment 3,839.3 2,887.3 Less: Accumulated depreciation (1,764.7 ) (1,613.2 ) $ 2,074.6 $ 1,274.1 Accrued expenses: Accrued payroll $ 160.1 $ 95.1 Sales related reserves 120.8 69.9 Acquisition consideration payable to seller 18.8 19.6 Other 129.5 61.6 $ 429.2 $ 246.2 |
Schedule of Product Warranty Liability | Activity related to the Company's warranty reserves for the nine months ended September 30, 2016 and October 2, 2015 is as follows (in millions): Nine Months Ended September 30, 2016 October 2, 2015 Beginning Balance $ 5.3 $ 5.5 Provision 3.0 2.0 Usage (2.8 ) (1.5 ) Warranty reserves from acquired business 0.7 $ — Ending Balance $ 6.2 $ 6.0 |
Schedule of Net Benefit Costs | The components of the Company's net periodic pension expense for the quarters and nine months ended September 30, 2016 and October 2, 2015 are as follows (in millions): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Service cost $ 2.3 $ 2.1 $ 6.8 $ 6.5 Interest cost 1.1 0.9 3.3 2.9 Expected return on plan assets (1.0 ) (0.9 ) (3.0 ) (2.7 ) Total net periodic pension cost $ 2.4 $ 2.1 $ 7.1 $ 6.7 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | The Company's long-term debt consists of the following (annualized rates, dollars in millions): September 30, 2016 December 31, 2015 Revolving Credit Facility due 2021 $ — $ — Term Loan "B" Facility due 2023, interest payable monthly at 3.78% 2,400.0 — 1.00% Notes due December 1, 2020 (1) 690.0 690.0 2.625% Notes, Series B (2) 356.9 356.9 Note payable to SMBC due 2016 through 2018, interest payable quarterly at 2.60% and 2.36%, respectively (3) 169.9 198.2 U.S. real estate mortgages payable monthly through 2019 at an average rate of 3.12% and 3.35%, respectively (4) 40.0 50.0 Philippine term loans due 2016 through 2020, interest payable quarterly at 2.69% and 2.32%, respectively (7) 47.0 50.0 Loan with Singapore bank, interest payable weekly at 1.77% and 1.67%, respectively (6)(10) 25.0 30.0 Loan with Hong Kong bank, interest payable weekly at 1.77% and 1.67%, respectively (6)(10) 25.0 25.0 Malaysia revolving line of credit, interest payable quarterly at 2.29% and 2.05%, respectively (7) (10) 25.0 25.0 Vietnam revolving line of credit, interest payable quarterly at an average rate of 2.17% and 1.89%, respectively (7) (10) 16.3 20.8 Loan with Philippine bank due 2016 through 2019, interest payable quarterly at 3.11% and 2.70%, respectively (5) 15.3 18.8 Canada revolving line of credit, interest payable quarterly at 0.00% and 2.01%, respectively (7) — 15.0 Loan with Japanese bank due 2016 through 2020, interest payable quarterly at 1.1% (7) 4.2 4.2 Canada equipment financing payable monthly through 2017 at 3.81% (5) 1.0 2.4 U.S. equipment financing payable monthly through 2016 at 2.40% (5) — 1.3 Capital lease obligations 15.7 28.2 Gross long-term debt, including current maturities 3,831.3 1,515.8 Less: Debt discount (8) (118.8 ) (107.5 ) Less: Debt issuance costs (9) (76.2 ) (14.4 ) Net long-term debt, including current maturities 3,636.3 1,393.9 Less: Current maturities (540.6 ) (543.4 ) Net long-term debt $ 3,095.7 $ 850.5 _______________________ (1) Interest is payable on June 1 and December 1 of each year at 1.00% annually. (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. (3) This loan represents SCI LLC's non-collateralized loan with SMBC, which is guaranteed by the Company. (4) Debt arrangement collateralized by real estate, including certain of the Company's facilities in California, Oregon and Idaho. (5) Debt collateralized by equipment. (6) Debt arrangement collateralized by accounts receivable. (7) Non-collateralized debt arrangement . (8) Debt discount of $86.2 million and $100.2 million for the 1.00% Notes as of September 30, 2016 and December 31, 2015 , respectively, $1.6 million and $7.3 million for the 2.625% Notes, Series B as of September 30, 2016 and December 31, 2015 , respectively, and $31.0 million and zero for the Term Loan "B" Facility as of September 30, 2016 and December 31, 2015 , respectively. (9) Debt issuance costs of $12.1 million and $13.9 million for the 1.00% Notes as of September 30, 2016 and December 31, 2015 , respectively, $0.1 million and $0.5 million for the 2.625% Notes, Series B as of September 30, 2016 and December 31, 2015 , respectively, and $64.0 million and zero for the Term Loan "B" Facility as of September 30, 2016 and December 31, 2015 , respectively. (10) The Company has historically renewed these arrangements annually. |
Annual Maturities Relating To Long-Term Debt | Expected maturities relating to the Company’s long-term debt (including current maturities) as of September 30, 2016 are as follows (in millions): Period Expected Maturities Remainder of 2016 $ 472.2 2017 93.3 2018 172.3 2019 71.7 2020 723.8 Thereafter 2,298.0 Total $ 3,831.3 |
Earnings Per Share and Equity (
Earnings Per Share and Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Calculations of net income per common share attributable to ON Semiconductor are as follows (in millions, except per share data): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Net income attributable to ON Semiconductor Corporation $ 10.1 $ 46.3 $ 71.2 $ 152.1 Basic weighted-average common shares outstanding 415.8 413.7 414.4 424.0 Dilutive effect of share-based awards 4.0 3.8 3.2 4.7 Dilutive effect of Convertible Notes — — — 2.6 Diluted weighted-average common shares outstanding 419.8 417.5 417.6 431.3 Net income per common share attributable to ON Semiconductor Corporation: Basic $ 0.02 $ 0.11 $ 0.17 $ 0.36 Diluted $ 0.02 $ 0.11 $ 0.17 $ 0.35 |
Schedule of Share Repurchase Program | Information relating to the Company's share repurchase programs during the quarter and nine months ended October 2, 2015 is as follows (in millions, except per share data): Quarter Ended Nine Months Ended October 2, 2015 October 2, 2015 Number of repurchased shares (1)(5) 9.4 28.4 Beginning accrued share repurchases (2) $ 3.0 $ — Aggregate purchase price 100.1 328.2 Less: ending accrued share repurchases (3) — — Total cash used for share repurchases $ 103.1 $ 328.2 Weighted-average purchase price per share (4) $ 10.64 $ 11.53 Available for future purchases at October 2, 2015 $ 648.2 $ 648.2 (1) None of these shares had been reissued or retired as of September 30, 2016 , but may be reissued or retired by the Company at a later date. (2) Represents unpaid amounts recorded in accrued expenses on the Company's Consolidated Balance Sheet as of the beginning of the period. (3) Represents unpaid amounts recorded in accrued expenses on the Company's Consolidated Balance Sheet as of the end of the period. (4) Exclusive of fees, commissions and other expenses. (5) Includes 5.4 million shares, totaling $70.0 million , repurchased concurrently with the issuance of the 1.00% Notes. |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary Of Share-Based Compensation Expense | Total share-based compensation expense related to the Company's employee stock options, restricted stock units, stock grant awards and ESPP for the quarters and nine months ended September 30, 2016 and October 2, 2015 was comprised as follows (in millions): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Cost of revenues $ 2.0 $ 2.0 $ 6.0 $ 5.8 Research and development 2.9 2.2 8.3 7.0 Selling and marketing 2.6 2.2 7.2 6.7 General and administrative 6.7 4.5 20.4 16.8 Share-based compensation expense before income taxes $ 14.2 $ 10.9 $ 41.9 $ 36.3 Related income tax benefits (1) — — — — Share-based compensation expense, net of taxes $ 14.2 $ 10.9 $ 41.9 $ 36.3 ____________________ (1) A majority of the Company’s share-based compensation relates to its domestic subsidiaries; therefore, no related deferred income tax benefits are recorded due to historical net operating losses at those subsidiaries. |
Schedule of Share-based Compensation, Stock Options, Activity | Summarized stock option information for the nine months ended September 30, 2016 is as follows (in millions, except per share and contractual term data): Nine Months Ended September 30, 2016 Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (In-The-Money) Outstanding at December 31, 2015 5.2 $ 7.85 Granted — — Exercised (0.7 ) 7.13 Canceled — — Outstanding at September 30, 2016 4.5 $ 7.96 1.74 $ 19.5 Exercisable at September 30, 2016 4.4 $ 7.99 1.71 $ 19.0 |
Additional Information On Stock Options Outstanding | Additional information with respect to stock options outstanding as of September 30, 2016 , with exercise prices less than or above $ 12.32 per share, the closing price of the Company's common stock at September 30, 2016 , is as follows (number of shares in millions): Exercisable Unexercisable Total Exercise Prices Number of Shares Weighted-Average Exercise Price Number of Shares Weighted-Average Exercise Price Number of Shares Weighted-Average Exercise Price Less than $12.32 4.4 $ 7.99 0.1 $ 6.65 4.5 $ 7.96 Above $12.32 — $ — — $ — — $ — Total outstanding 4.4 $ 7.99 0.1 $ 6.65 4.5 $ 7.96 |
Summary Of Restricted Stock Units Transactions | The following table presents summarized information with respect to the Company's restricted stock units as of September 30, 2016 and changes during the nine months ended September 30, 2016 (number of shares in millions): Number of Shares Weighted-Average Grant Date Fair Value Non-vested shares underlying restricted stock units at December 31, 2015 8.5 $ 10.52 Granted 5.3 9.06 Released (3.6 ) 9.98 Forfeited (0.6 ) 12.08 Non-vested shares underlying restricted stock units at September 30, 2016 9.6 $ 9.83 |
Commitments And Contingencies (
Commitments And Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating Leases Future Minimum Payments Receivable | The following represents future minimum lease obligations under non-cancelable operating leases as of September 30, 2016 (in millions): Remainder of 2016 $ 9.5 2017 33.2 2018 23.9 2019 16.9 2020 12.7 Thereafter 46.4 Total $ 142.6 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Of Assets And Liabilities Measured On Recurring Basis | Summarized information with respect to certain of the Company's financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 is as follows (in millions): Fair Value Measurements as of September 30, 2016 Description Balance as of September 30, 2016 Level 1 Level 2 Level 3 Assets: Cash and Cash equivalents: Demand and time deposits $ 66.2 $ 66.2 $ — $ — Money market funds 51.4 51.4 — — Liabilities: Contingent consideration (See Note 3) 3.7 — — 3.7 During the quarter ended September 30, 2016 , the contingent consideration for the AXSEM acquisition was reduced from $5.0 million to $3.7 million due to the revision of the Company's expectations of the Earn-out achievement. See Note 3: ''Acquisitions and Divestitures'' for further information. Fair Value Measurements as of December 31, 2015 Description Balance as of December 31, 2015 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents: Demand and time deposits $ 9.5 $ 9.5 $ — $ — Money market funds 33.2 33.2 — — Liabilities: Designated cash flow hedges $ 0.2 $ — $ 0.2 $ — Foreign currency exchange contracts 0.1 — 0.1 — Contingent consideration (See Note 3) 5.0 — — 5.0 |
Fair Value, by Balance Sheet Grouping | The carrying amounts and fair values of the Company’s long-term borrowings (excluding capital lease obligations, real estate mortgages and equipment financing) as of September 30, 2016 and December 31, 2015 are as follows (in millions): September 30, 2016 December 31, 2015 Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt, including current portion Convertible notes $ 946.9 $ 1,130.0 $ 925.0 $ 1,041.9 Long-term debt $ 2,632.7 $ 2,738.6 $ 386.9 $ 386.6 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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 as of September 30, 2016 and December 31, 2015 (in millions): September 30, 2016 December 31, 2015 Buy (Sell) Notional Amount Buy (Sell) Notional Amount Euro $ (29.0 ) $ 29.0 $ (17.5 ) $ 17.5 Japanese Yen (28.0 ) 28.0 (30.0 ) 30.0 Malaysian Ringgit 6.2 6.2 7.1 7.1 Philippine Peso 18.4 18.4 13.7 13.7 Other Currencies - Buy 15.0 15.0 17.1 17.1 Other Currencies - Sell (6.0 ) 6.0 (4.4 ) 4.4 $ (23.4 ) $ 102.6 $ (14.0 ) $ 89.8 |
Changes in Accumulated Other 34
Changes in Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | Amounts comprising the Company's accumulated other comprehensive loss and reclassifications for the nine months ended September 30, 2016 are as follows (net of tax of $0 , in millions): Foreign Currency Translation Adjustments Effects of Cash Flow Hedges Total Balance as of December 31, 2015 $ (42.2 ) $ (0.1 ) $ (42.3 ) Other comprehensive income (loss) prior to reclassifications 3.6 0.3 3.9 Amounts reclassified from accumulated other comprehensive loss — (0.2 ) (0.2 ) Net current period other comprehensive income (loss) 3.6 0.1 3.7 Balance as of September 30, 2016 $ (38.6 ) $ — $ (38.6 ) Amounts which were reclassified from accumulated other comprehensive loss to the Company's Consolidated Statements of Operations and Comprehensive Income during the quarter and nine months ended September 30, 2016 and October 2, 2015 , respectively, were as follows (net of tax of $0 , in millions): Amounts Reclassified from Accumulated Other Comprehensive Loss Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Affected Line Item Where Net Income is Presented Effects of cash flow hedges $ — $ (2.8 ) $ 0.2 $ (6.2 ) Cost of revenues Gains and Losses on Available-for-Sale Securities — (0.7 ) — (4.1 ) Other income and expense Total reclassifications $ — $ (3.5 ) $ 0.2 $ (10.3 ) |
Supplemental Disclosures (Table
Supplemental Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | Certain of the Company's non-cash activities along with cash payments for interest and income taxes are as follows (in millions): Nine Months Ended September 30, 2016 October 2, 2015 Non-cash activities: Debt issuance costs paid directly from escrow accounts $ 46.0 $ — Capital expenditures in accounts payable and other liabilities $ 88.3 $ 105.9 Equipment acquired or refinanced through capital leases $ — $ 2.1 Cash (received) paid for: Interest income $ (3.8 ) $ (0.8 ) Interest expense $ 72.7 $ 17.9 Income taxes $ 19.1 $ 15.0 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information of Revenues, Gross Profit and Operating Income | Revenues and gross profit for the Company’s reportable segments for the quarters and nine months ended September 30, 2016 and October 2, 2015 are as follows (in millions): Power Solutions Group Analog Solutions Group Image Sensor Group Total For the quarter ended September 30, 2016: Revenues from external customers $ 407.8 $ 363.1 $ 180.0 $ 950.9 Segment gross profit $ 142.2 $ 144.4 $ 57.4 $ 344.0 For the quarter ended October 2, 2015: Revenues from external customers $ 359.0 $ 346.6 $ 198.6 $ 904.2 Segment gross profit $ 108.6 $ 138.9 $ 66.2 $ 313.7 For the nine months ended September 30, 2016: Revenues from external customers $ 1,088.4 $ 1,012.0 $ 545.5 $ 2,645.9 Segment gross profit $ 361.9 $ 404.1 $ 179.9 $ 945.9 For the nine months ended October 2, 2015: Revenues from external customers $ 1,075.6 $ 1,022.9 $ 557.0 $ 2,655.5 Segment gross profit $ 336.3 $ 415.3 $ 174.6 $ 926.2 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | Gross profit shown above and below is exclusive of the amortization of acquisition-related intangible assets. Depreciation expense is included in segment gross profit. Reconciliations of segment gross profit to consolidated gross profit are as follows (in millions): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 Gross profit for reportable segments $ 344.0 $ 313.7 $ 945.9 $ 926.2 Less: unallocated manufacturing costs (15.0 ) (5.2 ) (33.5 ) (12.9 ) Consolidated Gross profit $ 329.0 $ 308.5 $ 912.4 $ 913.3 |
Revenues by Geographic Location Including Local Sales and Exports | Revenues by geographic location, including local sales made by operations within each area, based on sales billed from the respective country, are summarized as follows (in millions): Quarter Ended Nine Months Ended September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 United States $ 140.7 $ 133.5 $ 421.1 $ 406.1 Japan 85.3 74.5 251.2 201.9 Hong Kong 258.9 232.7 654.0 647.9 Singapore 281.4 270.6 783.8 881.5 United Kingdom 132.4 131.5 407.6 380.4 Other 52.2 61.4 128.2 137.7 $ 950.9 $ 904.2 $ 2,645.9 $ 2,655.5 |
Summary of Property, Plant and Equipment by Geographic Location | Property, plant and equipment, net by geographic location, is summarized as follows (in millions): September 30, 2016 December 31, United States $ 545.7 $ 326.2 Korea 371.7 0.2 Malaysia 217.6 226.5 Philippines 341.2 259.1 China 199.2 111.0 Other 399.2 351.1 $ 2,074.6 $ 1,274.1 |
Background and Basis of Prese37
Background and Basis of Presentation (Narrative) (Details) - segment | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Fiscal quarter, number of days | 91 days | 91 days | 274 days | 275 days |
Number of operating segments | 3 | |||
Number of reporting segments | 3 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Narrative) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 19, 2016 | Aug. 29, 2016 | Jul. 15, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | Dec. 31, 2015 |
Business Acquisition [Line Items] | |||||||||
Weighted average useful life | 10 years 2 months 24 days | ||||||||
Goodwill acquired during period | $ 733.6 | ||||||||
Goodwill | $ 1,000.8 | $ 1,000.8 | 1,000.8 | $ 270.6 | |||||
Acquisition consideration payable to seller | 18.8 | 18.8 | 18.8 | 19.6 | |||||
Proceeds from divestiture of business | 104 | $ 0 | |||||||
Gain on divestiture of business | 92.2 | $ 0 | $ 92.2 | $ 0 | |||||
Fairchild | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage acquired | 100.00% | ||||||||
Purchase price | $ 2,532.2 | ||||||||
Revenue recognized | 53.1 | ||||||||
Net income (loss) recognized | (17) | ||||||||
In-process research and development | 102.4 | ||||||||
Discount rate (as a percentage) | 14.50% | ||||||||
Intangible assets, net | 525.8 | 423.4 | 525.8 | $ 525.8 | |||||
Goodwill acquired during period | 733.6 | ||||||||
Goodwill | 733.6 | ||||||||
Acquisition costs | 21.4 | ||||||||
Acquired net assets | $ 2,532.2 | ||||||||
AXSEM | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage acquired | 100.00% | ||||||||
Purchase price | $ 8 | ||||||||
Acquisition consideration payable to seller | 3.7 | $ 5 | 3.7 | 3.7 | |||||
Increase (decrease) in earn-out fair value | 1.3 | ||||||||
Consideration placed in escrow | $ 0.8 | $ 0.8 | $ 0.8 | ||||||
Acquired net assets | $ 13 | ||||||||
Developed technology | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average useful life | 11 years | ||||||||
Developed technology | Fairchild | |||||||||
Business Acquisition [Line Items] | |||||||||
Intangible assets, net | $ 267.6 | ||||||||
Customer relationships | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average useful life | 9 years | ||||||||
Customer relationships | Fairchild | |||||||||
Business Acquisition [Line Items] | |||||||||
Intangible assets, net | $ 153.4 | ||||||||
Power Solutions Group | Fairchild | |||||||||
Business Acquisition [Line Items] | |||||||||
Goodwill | 398.8 | ||||||||
Analog Solutions Group | Fairchild | |||||||||
Business Acquisition [Line Items] | |||||||||
Goodwill | $ 334.8 | ||||||||
IGBT and Thyristor | |||||||||
Business Acquisition [Line Items] | |||||||||
Proceeds from divestiture of business | $ 104 | ||||||||
Gain on divestiture of business | 92.2 | ||||||||
Transfer of inventory | 4.1 | ||||||||
Write off of goodwill | 3.4 | ||||||||
Deferred revenue | $ 4.3 |
Acquisitions and Divestitures39
Acquisitions and Divestitures (Schedule of Purchase Price Allocation) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 19, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | |||
Goodwill | $ 1,000.8 | $ 270.6 | |
Fairchild | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 255 | ||
Receivables | 227.3 | ||
Inventories | 342.3 | ||
Other current assets | 59.3 | ||
Property, plant and equipment | 813.5 | ||
Goodwill | 733.6 | ||
Intangible assets (excluding IPRD) | $ 525.8 | 423.4 | |
In-process research and development | 102.4 | ||
Other non-current assets | 17.7 | ||
Total assets acquired | 2,974.5 | ||
Accounts payable | 79.4 | ||
Other current liabilities | 160.1 | ||
Deferred tax liabilities | 167.6 | ||
Other non-current liabilities | 35.2 | ||
Total liabilities assumed | 442.3 | ||
Net assets acquired | $ 2,532.2 |
Acquisitions and Divestitures40
Acquisitions and Divestitures (Schedule of Pro Forma Information) (Details) - Fairchild - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | |
Business Acquisition, Pro Forma Information [Abstract] | ||||
Revenues | $ 1,260.2 | $ 1,246.3 | $ 3,636.1 | $ 3,708.5 |
Net Income | (10.6) | 18 | 49.8 | 27.6 |
Net income attributable to ON Semiconductor Corporation | $ (11.1) | $ 17.5 | $ 48.2 | $ 25.7 |
Net income per common share attributable to ON Semiconductor Corporation, Basic (in dollars per share) | $ (0.03) | $ 0.04 | $ 0.12 | $ 0.06 |
Net income per common share attributable to ON Semiconductor Corporation, Diluted (in dollars per share) | $ (0.03) | $ 0.04 | $ 0.12 | $ 0.06 |
Goodwill and Intangible Asset41
Goodwill and Intangible Assets (Summary of Changes in Goodwill) (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | |
Goodwill | |||
Goodwill | $ 1,451.7 | $ 718.1 | |
Accumulated Impairment Losses | (447.5) | (447.5) | |
Goodwill disposed | (3.4) | ||
Carrying Value | $ 270.6 | 1,000.8 | 270.6 |
Goodwill [Roll Forward] | |||
Net balance as of December 31, 2015 | 270.6 | ||
Addition due to business combination | 733.6 | ||
Divestiture of buiness | (3.4) | ||
Net balance as of September 30, 2016 | 1,000.8 | ||
Operating Segments | Analog Solutions Group | |||
Goodwill | |||
Goodwill | 881.5 | 546.7 | |
Accumulated Impairment Losses | (418.9) | (418.9) | |
Goodwill disposed | 0 | ||
Carrying Value | 127.8 | 462.6 | 127.8 |
Goodwill [Roll Forward] | |||
Net balance as of December 31, 2015 | 127.8 | ||
Net balance as of September 30, 2016 | 462.6 | ||
Operating Segments | Image Sensor Group | |||
Goodwill | |||
Goodwill | 95.4 | 95.4 | |
Accumulated Impairment Losses | 0 | 0 | |
Goodwill disposed | 0 | ||
Carrying Value | 95.4 | 95.4 | 95.4 |
Goodwill [Roll Forward] | |||
Net balance as of December 31, 2015 | 95.4 | ||
Net balance as of September 30, 2016 | 95.4 | ||
Operating Segments | Power Solutions Group | |||
Goodwill | |||
Goodwill | 474.8 | 76 | |
Accumulated Impairment Losses | (28.6) | (28.6) | |
Goodwill disposed | (3.4) | ||
Carrying Value | 47.4 | $ 442.8 | $ 47.4 |
Goodwill [Roll Forward] | |||
Net balance as of December 31, 2015 | 47.4 | ||
Net balance as of September 30, 2016 | $ 442.8 |
Goodwill and Intangible Asset42
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | Sep. 19, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill acquired during period | $ 733.6 | |||||
Amortization of acquisition-related intangible assets | $ 24.7 | $ 33.6 | 71.9 | $ 101.1 | ||
Intangible assets, net | 778.1 | 778.1 | $ 325.8 | |||
IPRD | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
IPRD projects reclassified to developed technology | 4.3 | 6.2 | ||||
Impairment loss | 2.2 | 2.2 | ||||
Intangible assets, net | 131.5 | 131.5 | $ 37.6 | |||
Fairchild | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill acquired during period | 733.6 | |||||
Intangible assets acquired | $ 525.8 | $ 525.8 | $ 423.4 |
Goodwill and Intangible Asset43
Goodwill and Intangible Assets (Summary of Intangible Assets, Net) (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Intangible Assets, Net | ||
Original Cost | $ 1,335.5 | $ 809.8 |
Accumulated Amortization | (482.7) | (410.8) |
Foreign Currency Translation Adjustment | (27.2) | (27.9) |
Accumulated Impairment Losses | (47.5) | (45.3) |
Carrying Value | 778.1 | 325.8 |
Intellectual property | ||
Intangible Assets, Net | ||
Original Cost | 13.9 | 13.9 |
Accumulated Amortization | (11.1) | (10.6) |
Foreign Currency Translation Adjustment | 0 | 0 |
Accumulated Impairment Losses | (0.4) | (0.4) |
Carrying Value | 2.4 | 2.9 |
Customer relationships | ||
Intangible Assets, Net | ||
Original Cost | 579.6 | 426.2 |
Accumulated Amortization | (250.1) | (214.2) |
Foreign Currency Translation Adjustment | (27.4) | (27.9) |
Accumulated Impairment Losses | (23.7) | (23.7) |
Carrying Value | 278.4 | 160.4 |
Patents | ||
Intangible Assets, Net | ||
Original Cost | 43.7 | 43.7 |
Accumulated Amortization | (25.1) | (23.6) |
Foreign Currency Translation Adjustment | 0 | 0 |
Accumulated Impairment Losses | (13.7) | (13.7) |
Carrying Value | 4.9 | 6.4 |
Developed technology | ||
Intangible Assets, Net | ||
Original Cost | 541.8 | 268 |
Accumulated Amortization | (185.5) | (152.2) |
Foreign Currency Translation Adjustment | 0.2 | 0 |
Accumulated Impairment Losses | (2.6) | (2.6) |
Carrying Value | 353.9 | 113.2 |
Trademarks | ||
Intangible Assets, Net | ||
Original Cost | 17.2 | 16.3 |
Accumulated Amortization | (10.6) | (9.9) |
Foreign Currency Translation Adjustment | 0 | 0 |
Accumulated Impairment Losses | (1.1) | (1.1) |
Carrying Value | 5.5 | 5.3 |
Backlog | ||
Intangible Assets, Net | ||
Original Cost | 0.3 | 0.3 |
Accumulated Amortization | (0.3) | (0.3) |
Foreign Currency Translation Adjustment | 0 | 0 |
Accumulated Impairment Losses | 0 | 0 |
Carrying Value | 0 | 0 |
Favorable Leases | ||
Intangible Assets, Net | ||
Original Cost | 1.5 | |
Accumulated Amortization | 0 | |
Foreign Currency Translation Adjustment | 0 | |
Accumulated Impairment Losses | 0 | |
Carrying Value | 1.5 | |
IPRD | ||
Intangible Assets, Net | ||
Original Cost | 137.5 | 41.4 |
Accumulated Amortization | 0 | 0 |
Foreign Currency Translation Adjustment | 0 | 0 |
Accumulated Impairment Losses | (6) | (3.8) |
Carrying Value | $ 131.5 | $ 37.6 |
Goodwill and Intangible Asset44
Goodwill and Intangible Assets (Summary of Amortization Expense) (Details) $ in Millions | Sep. 30, 2016USD ($) |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule | |
Remainder of 2016 | $ 32.8 |
2,017 | 118.4 |
2,018 | 100.2 |
2,019 | 93.2 |
2,020 | 76.8 |
Thereafter | 225.2 |
Total estimated amortization expense | $ 646.6 |
Restructuring, Asset Impairme45
Restructuring, Asset Impairments and Other, Net (Schedule of Activity Included in Restructuring, Asset Impairments, and Other, Net) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring | $ 21.8 | $ 28.7 |
Special termination benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring | 20.9 | 20.9 |
Workforce reduction | Former System Solutions Group voluntary workforce reduction | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring | 0.1 | 5.3 |
Workforce reduction | General workforce reductions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring | 0.3 | |
Employee severance | Manufacturing relocation | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring | 0.9 | 2.1 |
Other | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring | $ (0.1) | $ 0.1 |
Restructuring, Asset Impairme46
Restructuring, Asset Impairments and Other, Net (Rollforward of Accrued Restructuring Charges) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Restructuring Reserve [Roll Forward] | ||
Balance at Beginning of Period | $ 5.8 | |
Charges | $ 21.8 | 28.7 |
Usage | (10.1) | |
Balance at End of Period | 24.4 | 24.4 |
Estimated employee separation charges | ||
Restructuring Reserve [Roll Forward] | ||
Balance at Beginning of Period | 5.3 | |
Charges | 28.7 | |
Usage | (9.6) | |
Balance at End of Period | 24.4 | 24.4 |
Estimated costs to exit | ||
Restructuring Reserve [Roll Forward] | ||
Balance at Beginning of Period | 0.5 | |
Charges | 0 | |
Usage | (0.5) | |
Balance at End of Period | $ 0 | $ 0 |
Restructuring, Asset Impairme47
Restructuring, Asset Impairments and Other, Net (Narrative) (Details) | Sep. 19, 2016position | Mar. 31, 2016employee | Jan. 31, 2015employee | Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($)employee | Dec. 31, 2015USD ($) |
Restructuring Cost and Reserve [Line Items] | ||||||
Accrued liabilities | $ 24,400,000 | $ 24,400,000 | $ 5,800,000 | |||
Payments for restructuring | 10,100,000 | |||||
Cost Reduction Plan | Employee severance | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Expected reduction in employment levels | position | 130 | |||||
Restructuring Charges | 20,900,000 | |||||
Accrued liabilities | 20,700,000 | 20,700,000 | ||||
Systems Solutions Group Voluntary Workforce Reduction | Workforce reduction | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 100,000 | |||||
Accrued liabilities | 400,000 | 400,000 | ||||
Number of positions eliminated voluntarily | employee | 75 | |||||
Total charges expected to incur | 5,300,000 | 5,300,000 | ||||
Payments for restructuring | 3,900,000 | $ 5,000,000 | ||||
Manufacturing Relocation | Employee severance | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Expected reduction in employment levels | employee | 160 | |||||
Restructuring Charges | 900,000 | $ 2,100,000 | ||||
Accrued liabilities | 2,100,000 | 2,100,000 | ||||
Total charges expected to incur | 5,700,000 | 5,700,000 | ||||
General workforce reductions | Workforce reduction | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | 5,100,000 | |||||
Accrued liabilities | 0 | 0 | ||||
Payments for restructuring | 0 | $ 1,300,000 | ||||
Number of positions eliminated | employee | 150 | |||||
European marketing organization relocation | Employee severance | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Charges | $ 3,500,000 | |||||
Accrued liabilities | 200,000 | 200,000 | ||||
Payments for restructuring | $ 300,000 | $ 2,700,000 | ||||
Number of positions eliminated | employee | 6 |
Balance Sheet Information (Sche
Balance Sheet Information (Schedule of Balance Sheet Information) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Receivables, net: | ||
Accounts receivable | $ 677.4 | $ 432.6 |
Less: Allowance for doubtful accounts | (2.3) | (6.2) |
Receivables, net | 675.1 | 426.4 |
Inventories: | ||
Raw materials | 122.8 | 79.3 |
Work in process | 609.5 | 457.8 |
Finished goods | 350.8 | 213.3 |
Inventories | 1,083.1 | 750.4 |
Property, plant and equipment, net: | ||
Land | 123.7 | 46.2 |
Buildings | 710.6 | 513.6 |
Machinery and equipment | 3,005 | 2,327.5 |
Total property, plant and equipment | 3,839.3 | 2,887.3 |
Less: Accumulated depreciation | (1,764.7) | (1,613.2) |
Property, plant and equipment, net | 2,074.6 | 1,274.1 |
Accrued expenses: | ||
Accrued payroll | 160.1 | 95.1 |
Sales related reserves | 120.8 | 69.9 |
Acquisition consideration payable to seller | 18.8 | 19.6 |
Other | 129.5 | 61.6 |
Accrued expenses | $ 429.2 | $ 246.2 |
Balance Sheet Information (Warr
Balance Sheet Information (Warranty Reserves) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Oct. 02, 2015 | |
Warranty Reserves | ||
Beginning Balance | $ 5.3 | $ 5.5 |
Provision | 3 | 2 |
Usage | (2.8) | (1.5) |
Warranty reserves from acquired business | 0.7 | 0 |
Ending Balance | $ 6.2 | $ 6 |
Balance Sheet Information (Narr
Balance Sheet Information (Narrative) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Assets held for sale | $ 24.6 | $ 0.3 |
Accrued pension liability | 105.1 | 87.2 |
Current portion accrued pension liability | 0.1 | $ 0.1 |
Fairchild | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Accrued pension liability | $ 8.3 |
Balance Sheet Information (Peri
Balance Sheet Information (Periodic Pension Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | |
Balance Sheet Related Disclosures [Abstract] | ||||
Service cost | $ 2.3 | $ 2.1 | $ 6.8 | $ 6.5 |
Interest cost | 1.1 | 0.9 | 3.3 | 2.9 |
Expected return on plan assets | (1) | (0.9) | (3) | (2.7) |
Total net periodic pension cost | $ 2.4 | $ 2.1 | $ 7.1 | $ 6.7 |
Long-Term Debt (Long-Term Debt)
Long-Term Debt (Long-Term Debt) (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Oct. 02, 2015 |
Debt Instrument [Line Items] | |||
Long-term debt | $ 3,831,300,000 | $ 1,515,800,000 | |
Capital lease obligations | 135,700,000 | ||
Debt discount | (118,800,000) | (107,500,000) | |
Debt issuance costs | (76,200,000) | (14,400,000) | |
Net long-term debt, including current maturities | 3,636,300,000 | 1,393,900,000 | |
Less: Current maturities | (540,600,000) | (543,400,000) | |
Net long-term debt | $ 3,095,700,000 | 850,500,000 | |
1.00% Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate (as a percent) | 1.00% | ||
Revolving Credit Facility due 2021 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | 0 | |
Term Loan B Facility due 2023, interest payable monthly at 3.78% | |||
Debt Instrument [Line Items] | |||
Long-term debt | 2,400,000,000 | 0 | |
Debt discount | (31,000,000) | 0 | |
Debt issuance costs | $ (64,000,000) | $ 0 | |
Debt instrument, interest rate (as a percent) | 3.78% | 0.00% | |
1.00% Notes due December 1, 2020 | 1.00% Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 690,000,000 | $ 690,000,000 | |
Debt discount | (86,200,000) | (100,200,000) | |
Debt issuance costs | $ (12,100,000) | $ (13,900,000) | |
Debt instrument, interest rate (as a percent) | 1.00% | 1.00% | 1.00% |
2.625% Notes, Series B | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 356,900,000 | $ 356,900,000 | |
Debt discount | (1,600,000) | (7,300,000) | |
Debt issuance costs | $ (100,000) | $ (500,000) | |
Debt instrument, interest rate (as a percent) | 2.625% | 2.625% | |
Note payable to SMBC due 2016 through 2018, interest payable quarterly at 2.60% and 2.36%, respectively | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 169,900,000 | $ 198,200,000 | |
Debt instrument, interest rate (as a percent) | 2.60% | 2.36% | |
U.S. real estate mortgages payable monthly through 2019 at an average rate of 3.12% and 3.35%, respectively | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 40,000,000 | $ 50,000,000 | |
Debt instrument, interest rate (as a percent) | 3.12% | 3.35% | |
Philippine term loans due 2016 through 2020, interest payable quarterly at 2.69% and 2.32%, respectively | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 47,000,000 | $ 50,000,000 | |
Debt instrument, interest rate (as a percent) | 2.69% | 2.32% | |
Loan with Singapore bank, interest payable weekly at 1.77% and 1.67%, respectively | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 25,000,000 | $ 30,000,000 | |
Debt instrument, interest rate (as a percent) | 1.77% | 1.67% | |
Loan with Hong Kong bank, interest payable weekly at 1.77% and 1.67%, respectively | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 25,000,000 | $ 25,000,000 | |
Debt instrument, interest rate (as a percent) | 1.77% | 1.67% | |
Malaysia revolving line of credit, interest payable quarterly at 2.29% and 2.05%, respectively | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 25,000,000 | $ 25,000,000 | |
Debt instrument, interest rate (as a percent) | 2.29% | 2.05% | |
Vietnam revolving line of credit, interest payable quarterly at an average rate of 2.17% and 1.89%, respectively | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 16,300,000 | $ 20,800,000 | |
Debt instrument, interest rate (as a percent) | 2.17% | 1.89% | |
Loan with Philippine bank due 2016 through 2019, interest payable quarterly at 3.11% and 2.70%, respectively | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 15,300,000 | $ 18,800,000 | |
Debt instrument, interest rate (as a percent) | 3.11% | 2.70% | |
Canada revolving line of credit, interest payable quarterly at 0.00% and 2.01%, respectively | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | $ 15,000,000 | |
Debt instrument, interest rate (as a percent) | 0.00% | 2.01% | |
Loan with Japanese bank due 2016 through 2020, interest payable quarterly at 1.1% | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 4,200,000 | $ 4,200,000 | |
Debt instrument, interest rate (as a percent) | 1.10% | 1.10% | |
Canada equipment financing payable monthly through 2017 at 3.81% | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 1,000,000 | $ 2,400,000 | |
Debt instrument, interest rate (as a percent) | 3.81% | 3.81% | |
U.S. equipment financing payable monthly through 2016 at 2.40% | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | $ 1,300,000 | |
Debt instrument, interest rate (as a percent) | 2.40% | 2.40% | |
Capital lease obligations | |||
Debt Instrument [Line Items] | |||
Capital lease obligations | $ 15,700,000 | $ 28,200,000 |
Long-Term Debt (Annual Maturiti
Long-Term Debt (Annual Maturities Relating To Long-Term Debt) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
Remainder of 2016 | $ 472.2 | |
2,017 | 93.3 | |
2,018 | 172.3 | |
2,019 | 71.7 | |
2,020 | 723.8 | |
Thereafter | 2,298 | |
Total | $ 3,831.3 | $ 1,515.8 |
Long-Term Debt (Narrative) (Det
Long-Term Debt (Narrative) (Details) - USD ($) | Sep. 30, 2016 | Sep. 19, 2016 | Apr. 15, 2016 | Sep. 30, 2016 | Sep. 30, 2016 | Oct. 02, 2015 | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||||||||
Amount funded by the company | $ 67,700,000 | $ 800,000 | ||||||
Long-term debt | $ 3,831,300,000 | $ 3,831,300,000 | 3,831,300,000 | $ 1,515,800,000 | ||||
Proceeds from debt issuance | 2,581,900,000 | 808,100,000 | ||||||
Interest income | $ 3,800,000 | $ 800,000 | ||||||
2.625% Notes, Series B | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, interest rate (as a percent) | 2.625% | 2.625% | 2.625% | 2.625% | ||||
Long-term debt | $ 356,900,000 | $ 356,900,000 | $ 356,900,000 | $ 356,900,000 | ||||
Term Loan B Facility due 2023, interest payable monthly at 3.78% | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, interest rate (as a percent) | 3.78% | 3.78% | 3.78% | 0.00% | ||||
Long-term debt | $ 2,400,000,000 | $ 2,400,000,000 | $ 2,400,000,000 | $ 0 | ||||
Interest income | 2,100,000 | |||||||
Underwriting fees | 66,600,000 | 66,600,000 | 66,600,000 | |||||
Lender fees | 22,000,000 | 22,000,000 | 22,000,000 | |||||
Term Loan B Facility due 2023, interest payable monthly at 3.78% | Deutsche Bank AG, New York Branch | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amounts of debt | 2,400,000,000 | $ 2,200,000,000 | 2,400,000,000 | 2,400,000,000 | ||||
Amount funded by the company | 67,700,000 | |||||||
Original issuance discount | 33,000,000 | |||||||
Eurocurrency Loans | Term Loan B Facility due 2023, interest payable monthly at 3.78% | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from debt issuance | $ 200,000,000 | |||||||
Extinguishment of debt | 4,700,000 | $ 4,700,000 | ||||||
Write off of unamortized debt issuance cost | 300,000 | |||||||
Third party fees paid in cash | 4,300,000 | |||||||
Lender fees paid in cash | 100,000 | |||||||
Eurocurrency Loans | Term Loan B Facility due 2023, interest payable monthly at 3.78% | Deutsche Bank AG, New York Branch | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate (as a percent) | 3.25% | |||||||
Eurocurrency Loans | LIBOR | Term Loan B Facility due 2023, interest payable monthly at 3.78% | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate (as a percent) | 3.25% | |||||||
Adjustable Rate Loans | Term Loan B Facility due 2023, interest payable monthly at 3.78% | Deutsche Bank AG, New York Branch | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate (as a percent) | 2.25% | |||||||
Adjustable Rate Loans | LIBOR | Term Loan B Facility due 2023, interest payable monthly at 3.78% | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate (as a percent) | 2.25% | |||||||
Adjustable Rate Loans | Federal Funds Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate (as a percent) | 0.50% | |||||||
Adjustable Rate Loans | Adjusted LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate (as a percent) | 1.00% | |||||||
Revolving Credit Facility | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from line of credit | $ 200,000,000 | |||||||
Underwriting fees | $ 8,200,000 | 8,200,000 | $ 8,200,000 | |||||
Write off of unamortized debt issuance cost | 1,600,000 | |||||||
Unamortized debt issuance costs | 2,000,000 | 2,000,000 | 2,000,000 | |||||
Revolving Credit Facility | Line of Credit | Deutsche Bank AG, New York Branch | ||||||||
Debt Instrument [Line Items] | ||||||||
Credit facility, maximum borrowing capacity | $ 600,000,000 | |||||||
Revolving Credit Facility | Eurocurrency Loans | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term debt | $ 0 | $ 0 | $ 0 | |||||
Revolving Credit Facility | Eurocurrency Loans | LIBOR | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate (as a percent) | 2.75% | 2.75% | ||||||
Revolving Credit Facility | Adjustable Rate Loans | LIBOR | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate (as a percent) | 1.75% | 1.75% | ||||||
Fairchild | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage acquired | 100.00% | |||||||
Minimum | Revolving Credit Facility | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment fee percentage | 0.25% | |||||||
Maximum | Revolving Credit Facility | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment fee percentage | 0.35% | |||||||
Scenario, Forecast | Eurocurrency Loans | Term Loan B Facility due 2023, interest payable monthly at 3.78% | ||||||||
Debt Instrument [Line Items] | ||||||||
Quarterly principal payments, percentage of principal | 0.25% |
Earnings Per Share and Equity55
Earnings Per Share and Equity (Income per Share Calculations) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to ON Semiconductor Corporation | $ 10.1 | $ 46.3 | $ 71.2 | $ 152.1 |
Basic weighted average common shares outstanding (in shares) | 415.8 | 413.7 | 414.4 | 424 |
Dilutive effect of share-based awards (in shares) | 4 | 3.8 | 3.2 | 4.7 |
Dilutive effect of Convertible Notes (in shares) | 0 | 0 | 0 | 2.6 |
Diluted weighted average common shares outstanding (in shares) | 419.8 | 417.5 | 417.6 | 431.3 |
Net income per common share attributable to ON Semiconductor Corporation: | ||||
Basic (in dollars per share) | $ 0.02 | $ 0.11 | $ 0.17 | $ 0.36 |
Diluted (in dollars per share) | $ 0.02 | $ 0.11 | $ 0.17 | $ 0.35 |
Earnings Per Share and Equity56
Earnings Per Share and Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Dividends Payable [Line Items] | ||||||
Anti-dilutive shares | 300,000 | 2,200,000 | 2,300,000 | 1,500,000 | ||
Number of repurchased shares (in shares) | 0 | 9,400,000 | 0 | 28,400,000 | ||
Payments of tax withholding for restricted shares | $ 2.2 | $ 1 | $ 10.4 | $ 12.4 | ||
Common stock withheld underlying restricted stock units (less than) | 200,000 | 100,000 | 1,100,000 | 1,000,000 | ||
Treasury stock, shares, reissued or retired during period | 0 | |||||
Non-controlling interest in consolidated subsidiary | $ 23.4 | $ 22.8 | $ 23.4 | $ 22.8 | $ 23.7 | $ 20.9 |
Net income attributable to non-controlling interest | $ 0.5 | $ 0.5 | 1.6 | 1.9 | ||
Dividend to non-controlling shareholder of consolidated subsidiary | $ 1.9 | $ 0 | ||||
1.00% Notes | ||||||
Dividends Payable [Line Items] | ||||||
Debt instrument, interest rate (as a percent) | 1.00% | 1.00% | ||||
2.625% Notes, Series B | ||||||
Dividends Payable [Line Items] | ||||||
Debt instrument, interest rate (as a percent) | 2.625% | 2.625% | 2.625% | |||
Convertible Debt | 1.00% Notes | ||||||
Dividends Payable [Line Items] | ||||||
Debt instrument, interest rate (as a percent) | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | |
Average price of common stock to exceed to include effect of additional potential shares | $ 25.96 | |||||
Number of repurchased shares (in shares) | 5,400,000 | |||||
Convertible Debt | 1.00% Notes | Embedded Derivative Financial Instruments | ||||||
Dividends Payable [Line Items] | ||||||
Conversion price per share (in dollars per share) | $ 18.5 | $ 18.5 |
Earnings Per Share and Equity57
Earnings Per Share and Equity (Summary of Share Repurchase Program) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | Dec. 31, 2015 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Number of repurchased shares (in shares) | 0 | 9,400,000 | 0 | 28,400,000 | |
Beginning accrued share repurchases | $ 3 | $ 0 | |||
Aggregate purchase price | 100.1 | 328.2 | |||
Less: ending accrued share repurchases | 0 | 0 | |||
Total cash used for share repurchases | $ 103.1 | $ 328.2 | |||
Weighted-average purchase price per share (in dollars per share) | $ 10.64 | $ 11.53 | |||
Available for future purchases at October 2, 2015 | $ 648.2 | $ 648.2 | |||
1.00% Notes | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Debt instrument, interest rate (as a percent) | 1.00% | 1.00% | |||
Convertible Debt | 1.00% Notes | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Number of repurchased shares (in shares) | 5,400,000 | ||||
Share repurchased value | $ 70 | ||||
Debt instrument, interest rate (as a percent) | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% |
Share-Based Compensation (Summa
Share-Based Compensation (Summary Of Share-Based Compensation Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense before income taxes | $ 14.2 | $ 10.9 | $ 41.9 | $ 36.3 |
Related income tax benefits | 0 | 0 | 0 | 0 |
Share-based compensation expense, net of taxes | 14.2 | 10.9 | 41.9 | 36.3 |
Cost of revenues | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense before income taxes | 2 | 2 | 6 | 5.8 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense before income taxes | 2.9 | 2.2 | 8.3 | 7 |
Selling and marketing | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense before income taxes | 2.6 | 2.2 | 7.2 | 6.7 |
General and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense before income taxes | $ 6.7 | $ 4.5 | $ 20.4 | $ 16.8 |
Share-Based Compensation (Narra
Share-Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Cash received from exercise of stock options | $ 5.1 | $ 25.1 | |||
Amended And Restated Stock Incentive Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Aggregate of common stock available for grant | 21 | 21 | 28.7 | ||
Employee Stock Options [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized share-based compensation expense on non-vested stock options | $ 0.1 | $ 0.1 | |||
Stock option, weighted average period for recognition | 5 years | ||||
Total Intrinsic value of stock options exercised | 1.4 | $ 2.2 | |||
Cash received from exercise of stock options | $ 2.9 | $ 5.1 | |||
Options pre-vesting forfeitures estimated | 11.00% | 11.00% | 99.00% | 11.00% | |
Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized share-based compensation expense on non-vested stock options | $ 64.7 | $ 64.7 | |||
Stock option, weighted average period for recognition | 1 year 11 months | ||||
Options pre-vesting forfeitures estimated | 5.00% | 5.00% | 9.00% | 5.00% | |
Maximum Award Vesting Period (in years) | 3 years | ||||
Equity awards granted in period (in shares) | 5.3 | ||||
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ 9.06 | ||||
Employee Stock Purchase Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Aggregate of common stock available for grant | 5.3 | 5.3 | 6.7 | ||
Restricted Stock | Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity awards granted in period (in shares) | 0.2 | 9.9 | |||
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ 9.81 | $ 9.99 |
Share-Based Compensation (Sum60
Share-Based Compensation (Summary Of Stock Option Plans) (Details) $ / shares in Units, shares in Millions, $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
Number of Shares | |
Number of Shares, Outstanding Beginning (in shares) | shares | 5.2 |
Number of Shares, Granted (in shares) | shares | 0 |
Number of Shares, Exercised (in shares) | shares | (0.7) |
Number of Shares, Canceled (in shares) | shares | 0 |
Number of Shares, Outstanding Ending (in shares) | shares | 4.5 |
Number of Shares, Exercisable (in shares) | shares | 4.4 |
Weighted-Average Exercise Price Per Share | |
Weighted-Average Exercise Price, Outstanding Beginning (in dollars per share) | $ / shares | $ 7.85 |
Weighted-Average Exercise Price. Granted (in dollars per share) | $ / shares | 0 |
Weighted-Average Exercise Price, Exercised (in dollars per share) | $ / shares | 7.13 |
Weighted-Average Exercise Price, Canceled (in dollars per share) | $ / shares | 0 |
Weighted-Average Exercise Price, Outstanding Ending (in dollars per share) | $ / shares | 7.96 |
Weighted-Average Exercise Price, Exercisable (in dollars per share) | $ / shares | $ 7.99 |
Weighted Average Remaining Contractual Term (in years), Outstanding | 1 year 8 months 27 days |
Weighted-Average Remaining Contractual Term (in years), Exercisable | 1 year 8 months 16 days |
Aggregate Intrinsic Value (In-The-Money), Outstanding | $ | $ 19.5 |
Aggregate Intrinsic Value (In-The-Money), Exercisable | $ | $ 19 |
Share-Based Compensation (Addit
Share-Based Compensation (Additional Information On Stock Options Outstanding) (Details) shares in Millions | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Share price (in dollars per share) | $ 12.32 |
Number of Shares, Exercisable (in shares) | shares | 4.4 |
Weighted Average Exercise Price, Exercisable (in dollars per share) | $ 7.99 |
Number of Shares, Unexercisable (in shares) | shares | 0.1 |
Weighted Average Exercise Price, Unexercisable (in dollars per share) | $ 6.65 |
Number of Shares, Total (in shares) | shares | 4.5 |
Weighted Average Exercise Price, Total (in dollars per share) | $ 7.96 |
Less than $12.32 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price range, upper range limit (in dollars per share) | $ 12.32 |
Number of Shares, Exercisable (in shares) | shares | 4.4 |
Weighted Average Exercise Price, Exercisable (in dollars per share) | $ 7.99 |
Number of Shares, Unexercisable (in shares) | shares | 0.1 |
Weighted Average Exercise Price, Unexercisable (in dollars per share) | $ 6.65 |
Number of Shares, Total (in shares) | shares | 4.5 |
Weighted Average Exercise Price, Total (in dollars per share) | $ 7.96 |
$12.32 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise rice range, lower range limit (in dollars per share) | $ 12.32 |
Number of Shares, Exercisable (in shares) | shares | 0 |
Weighted Average Exercise Price, Exercisable (in dollars per share) | $ 0 |
Number of Shares, Unexercisable (in shares) | shares | 0 |
Weighted Average Exercise Price, Unexercisable (in dollars per share) | $ 0 |
Number of Shares, Total (in shares) | shares | 0 |
Weighted Average Exercise Price, Total (in dollars per share) | $ 0 |
Share-Based Compensation (Sum62
Share-Based Compensation (Summary Of Restricted Stock Units Transactions) (Details) - Restricted Stock Units shares in Millions | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Nonvested shares underlying restricted stock units, beginning (in shares) | shares | 8.5 |
Number of Shares, Granted (in shares) | shares | 5.3 |
Number of Shares, Released (in shares) | shares | (3.6) |
Number of Shares, Forfeited (in shares) | shares | (0.6) |
Nonvested shares underlying restricted stock units, ending (in shares) | shares | 9.6 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |
Weighted Average Grant Date Fair Value, Nonvested, beginning (in dollars per share) | $ / shares | $ 10.52 |
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ / shares | 9.06 |
Weighted-Average Grant Date Fair Value, Released (in dollars per share) | $ / shares | 9.98 |
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | $ / shares | 12.08 |
Weighted Average Grant Date Fair Value, Nonvested, ending (in dollars per share) | $ / shares | $ 9.83 |
Commitments And Contingencies63
Commitments And Contingencies (Operating Leases Future Minimum Payments Receivable) (Details) $ in Millions | Sep. 30, 2016USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
Remainder of 2016 | $ 9.5 |
2,017 | 33.2 |
2,018 | 23.9 |
2,019 | 16.9 |
2,020 | 12.7 |
Thereafter | 46.4 |
Total | $ 142.6 |
Commitments And Contingencies64
Commitments And Contingencies (Narrative) (Details) | Nov. 01, 2016patent | Aug. 11, 2016patent | Dec. 17, 2015USD ($) | Nov. 27, 2013USD ($) | Oct. 14, 2008claim | Jun. 30, 2015USD ($) | Nov. 30, 2014USD ($) | Mar. 31, 2014USD ($)patent | May 31, 2012patent | Apr. 30, 2012claimpatent | Jan. 31, 2011USD ($) | Dec. 31, 2008USD ($) | Oct. 31, 2006claimproduct | Sep. 30, 2016USD ($)claim | Dec. 31, 2009patent | Dec. 31, 2008claim | Dec. 31, 2004USD ($)patent | Dec. 31, 2015USD ($) |
Loss Contingencies [Line Items] | ||||||||||||||||||
Outstanding guarantees and letters of credit | $ 7,300,000 | |||||||||||||||||
Guarantees related to capital lease obligations | 135,700,000 | |||||||||||||||||
Long-term debt | 3,831,300,000 | $ 1,515,800,000 | ||||||||||||||||
Notes Payable to Banks | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Long-term debt | 169,900,000 | $ 198,200,000 | ||||||||||||||||
Revolving Credit Facility | Line of Credit | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Line of credit, current borrowing capacity | 15,000,000 | |||||||||||||||||
Letter of Credit | Line of Credit | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Credit commitment outstanding | $ 0 | |||||||||||||||||
Power Integrations, Inc. | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Number of outstanding proceedings | claim | 7 | |||||||||||||||||
Power Integrations, Arizona, 2016 | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Gain contingency, number of patents allegedly infringed upon | patent | 5 | |||||||||||||||||
Number of patents requiring declaratory judgment | patent | 3 | |||||||||||||||||
Fairchild | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Maximum remediation cost recoveries receivable | $ 150,000,000 | |||||||||||||||||
Fairchild | Power Integrations, Inc. | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Number of outstanding proceedings | claim | 5 | |||||||||||||||||
Fairchild | Power Integrations, Delaware, 2004 | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Number of outstanding proceedings | claim | 7 | |||||||||||||||||
Loss contingency, number of patents allegedly infringed upon | 2 | 4 | ||||||||||||||||
Loss contingency, number of products that infringed upon patents | product | 33 | |||||||||||||||||
Litigation settlement, amount awarded to (against) entity | $ (12,200,000) | $ (6,100,000) | $ (34,000,000) | |||||||||||||||
Fairchild | Power Integrations, Delaware, 2004 | Minimum | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Value of sales and imports of affected products | $ 500,000 | |||||||||||||||||
Fairchild | Power Integrations, Delaware, 2004 | Maximum | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Value of sales and imports of affected products | $ 750,000 | |||||||||||||||||
Fairchild | Power Integrations, Delaware, 2008 | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Loss contingency, number of patents allegedly infringed upon | claim | 4 | 3 | ||||||||||||||||
Gain contingency, number of patents allegedly infringed upon | claim | 2 | |||||||||||||||||
Gain contingency, number of patents found infringed upon | claim | 1 | |||||||||||||||||
Loss contingency, number of patents infringed upon | patent | 3 | |||||||||||||||||
Fairchild | Power Integrations, Northern District of California, 2009 | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Loss contingency, number of patents allegedly infringed upon | patent | 3 | |||||||||||||||||
Litigation settlement, amount awarded to (against) entity | $ (139,800,000) | $ (105,000,000) | ||||||||||||||||
Gain contingency, number of patents allegedly infringed upon | patent | 2 | |||||||||||||||||
Loss contingency, number of patents infringed upon | patent | 2 | |||||||||||||||||
Gain contingency, number of patents not infringed upon | patent | 1 | |||||||||||||||||
Litigation settlement, amount vacated | $ 105,000,000 | |||||||||||||||||
Fairchild | Power Integrations, Delaware, 2012 | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Loss contingency, number of patents allegedly infringed upon | patent | 5 | |||||||||||||||||
Litigation settlement, amount awarded to (against) entity | $ 2,400,000 | |||||||||||||||||
Gain contingency, number of patents allegedly infringed upon | patent | 3 | |||||||||||||||||
Fairchild | Power Integrations, Delaware, 2012 | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Litigation settlement, amount awarded to (against) entity | $ 100,000 | |||||||||||||||||
Loss contingency, number of patents infringed upon | patent | 3 | |||||||||||||||||
Fairchild | Acbel Polytech, Inc. | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Loss contingency, estimate of possible loss | $ 30,000,000 | |||||||||||||||||
Subsequent Event | Power Integrations, Arizona, 2016 | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Gain contingency, number of patents allegedly infringed upon | patent | 2 | |||||||||||||||||
Subsequent Event | Power Integrations, Northern District of California, 2016 | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Gain contingency, number of patents allegedly infringed upon | patent | 6 | |||||||||||||||||
Fairchild | ||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||
Business acquisition, maximum indemnification period | 6 months |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value of Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Jul. 01, 2016 | Dec. 31, 2015 |
Liabilities | |||
Contingent consideration (See Note 3) | $ 18.8 | $ 19.6 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | |||
Liabilities | |||
Foreign currency exchange contracts/Designated cash flow hedges | 0 | ||
Contingent consideration (See Note 3) | 0 | 0 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Designated cash flow hedges | |||
Liabilities | |||
Foreign currency exchange contracts/Designated cash flow hedges | 0 | ||
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Demand and time deposits | |||
Assets | |||
Cash and cash equivalents | 66.2 | 9.5 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Money market funds | |||
Assets | |||
Cash and cash equivalents | 51.4 | 33.2 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | |||
Liabilities | |||
Foreign currency exchange contracts/Designated cash flow hedges | 0.1 | ||
Contingent consideration (See Note 3) | 0 | 0 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Designated cash flow hedges | |||
Liabilities | |||
Foreign currency exchange contracts/Designated cash flow hedges | 0.2 | ||
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Demand and time deposits | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Money market funds | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | |||
Liabilities | |||
Foreign currency exchange contracts/Designated cash flow hedges | 0 | ||
Contingent consideration (See Note 3) | 3.7 | 5 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Designated cash flow hedges | |||
Liabilities | |||
Foreign currency exchange contracts/Designated cash flow hedges | 0 | ||
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Demand and time deposits | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Money market funds | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Fair Value, Measurements, Recurring | Estimate of Fair Value | |||
Liabilities | |||
Foreign currency exchange contracts/Designated cash flow hedges | 0.1 | ||
Contingent consideration (See Note 3) | 3.7 | $ 5 | 5 |
Fair Value, Measurements, Recurring | Estimate of Fair Value | Designated cash flow hedges | |||
Liabilities | |||
Foreign currency exchange contracts/Designated cash flow hedges | 0.2 | ||
Fair Value, Measurements, Recurring | Estimate of Fair Value | Demand and time deposits | |||
Assets | |||
Cash and cash equivalents | 66.2 | 9.5 | |
Fair Value, Measurements, Recurring | Estimate of Fair Value | Money market funds | |||
Assets | |||
Cash and cash equivalents | $ 51.4 | $ 33.2 |
Fair Value Measurements (Carryi
Fair Value Measurements (Carrying Amounts and Fair Values of Long-Term Borrowings) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Convertible notes | ||
Carrying Amount | $ 946.9 | $ 925 |
Fair Value | 1,130 | 1,041.9 |
Long-term debt | ||
Carrying Amount | 2,632.7 | 386.9 |
Fair Value | $ 2,738.6 | $ 386.6 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Jul. 01, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | |||
Contingent consideration (See Note 3) | $ 18.8 | $ 19.6 | |
Cost method Investments, fair value | $ 13.3 | $ 12.3 | |
1.00% Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate (as a percent) | 1.00% | ||
2.625% Notes, Series B | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate (as a percent) | 2.625% | 2.625% | |
Fair Value, Measurements, Recurring | Estimate of Fair Value | |||
Debt Instrument [Line Items] | |||
Contingent consideration (See Note 3) | $ 3.7 | $ 5 | $ 5 |
Financial Instruments (Narrativ
Financial Instruments (Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | Dec. 31, 2015 | |
Derivatives, Fair Value [Line Items] | |||||
Foreign currency transaction gain (loss), realized | $ (500,000) | $ 1,500,000 | $ (3,800,000) | $ 1,400,000 | |
Effects of cash flow hedges | 0 | (400,000) | (100,000) | (1,700,000) | |
Cash Flow Hedging | Reclassification out of Accumulated Other Comprehensive Income | Cost of revenues | Effects of Cash Flow Hedges | |||||
Derivatives, Fair Value [Line Items] | |||||
Effects of cash flow hedges | 0 | $ 2,800,000 | 200,000 | $ 6,200,000 | |
Foreign currency exchange contracts | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional amount | $ 102,600,000 | $ 102,600,000 | $ 89,800,000 | ||
Foreign currency exchange contracts | Cash Flow Hedging | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative, term of contract (in months) | 12 months | ||||
Foreign currency exchange contracts | Minimum | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative, term of contract (in months) | 1 month | ||||
Foreign currency exchange contracts | Maximum | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative, term of contract (in months) | 3 months |
Financial Instruments (Schedule
Financial Instruments (Schedule Of Net Foreign Exchange Positions) (Details) - Foreign currency exchange contracts - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Buy (Sell) | $ (23.4) | $ (14) |
Notional Amount | 102.6 | 89.8 |
Other Currencies - Buy | ||
Derivatives, Fair Value [Line Items] | ||
Buy (Sell) | 15 | 17.1 |
Notional Amount | 15 | 17.1 |
Other Currencies - Sell | ||
Derivatives, Fair Value [Line Items] | ||
Buy (Sell) | (6) | (4.4) |
Notional Amount | 6 | 4.4 |
Euro | ||
Derivatives, Fair Value [Line Items] | ||
Buy (Sell) | (29) | (17.5) |
Notional Amount | 29 | 17.5 |
Japanese Yen | ||
Derivatives, Fair Value [Line Items] | ||
Buy (Sell) | (28) | (30) |
Notional Amount | 28 | 30 |
Malaysian Ringgit | ||
Derivatives, Fair Value [Line Items] | ||
Buy (Sell) | 6.2 | 7.1 |
Notional Amount | 6.2 | 7.1 |
Philippine Peso | ||
Derivatives, Fair Value [Line Items] | ||
Buy (Sell) | 18.4 | 13.7 |
Notional Amount | $ 18.4 | $ 13.7 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2016 | Dec. 31, 2015 | Oct. 02, 2015 | |
Valuation Allowance [Line Items] | |||
Effective income tax rate (as a percent) | 55.20% | ||
U.S. federal statutory rate (as a percent) | 35.00% | ||
Increase in income tax expense | $ 310.8 | ||
Release of valuation allowance | 267.4 | ||
Unrecognized tax benefits, income tax penalties and interest accrued | 4.7 | $ 4.6 | |
Possible reduction in unrecognized tax benefits in next twelve months | $ 3.3 | ||
Domestic Tax Authority | |||
Valuation Allowance [Line Items] | |||
Deferred tax assets, valuation allowance | $ 330.4 |
Changes in Accumulated Other 71
Changes in Accumulated Other Comprehensive Loss (Components of Other Comprehensive Income) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Income tax | $ 76.7 | $ 10 | $ 89.6 | $ 25.1 |
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Balance, beginning | (42.3) | |||
Other comprehensive income (loss) prior to reclassifications | 3.9 | |||
Amounts reclassified from accumulated other comprehensive loss | (0.2) | |||
Other comprehensive (loss) income, net of tax of $0.0 million | 0.8 | $ (0.5) | 3.7 | $ (2.6) |
Balance, ending | (38.6) | (38.6) | ||
Foreign Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Balance, beginning | (42.2) | |||
Other comprehensive income (loss) prior to reclassifications | 3.6 | |||
Amounts reclassified from accumulated other comprehensive loss | 0 | |||
Other comprehensive (loss) income, net of tax of $0.0 million | 3.6 | |||
Balance, ending | (38.6) | (38.6) | ||
Effects of Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Balance, beginning | (0.1) | |||
Other comprehensive income (loss) prior to reclassifications | 0.3 | |||
Amounts reclassified from accumulated other comprehensive loss | (0.2) | |||
Other comprehensive (loss) income, net of tax of $0.0 million | 0.1 | |||
Balance, ending | $ 0 | 0 | ||
Reclassification out of Accumulated Other Comprehensive Income | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Income tax | $ 0 |
Changes in Accumulated Other 72
Changes in Accumulated Other Comprehensive Loss (Reclassifications) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cost of revenues | $ 0 | $ 2,100,000 | $ (3,300,000) | $ 7,900,000 |
Other income and expense | 40,600,000 | (12,600,000) | (18,000,000) | (26,500,000) |
Reclassifications | 10,600,000 | 46,800,000 | 72,800,000 | 154,000,000 |
Effects of Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassifications, tax | 0 | 0 | 0 | 0 |
Reclassification out of Accumulated Other Comprehensive Income | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassifications | 0 | (3,500,000) | 200,000 | (10,300,000) |
Reclassification out of Accumulated Other Comprehensive Income | Effects of Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cost of revenues | 0 | (2,800,000) | 200,000 | (6,200,000) |
Reclassification out of Accumulated Other Comprehensive Income | Gains and Losses on Available-for-Sale Securities | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other income and expense | $ 0 | $ (700,000) | $ 0 | $ (4,100,000) |
Supplemental Disclosures (Non-C
Supplemental Disclosures (Non-Cash Financing Activities And Cash Payments) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Oct. 02, 2015 | |
Non-cash activities: | ||
Debt issuance costs paid directly from escrow accounts | $ 46 | $ 0 |
Capital expenditures in accounts payable and other liabilities | 88.3 | 105.9 |
Equipment acquired or refinanced through capital leases | 0 | 2.1 |
Cash (received) paid for: | ||
Interest income | (3.8) | (0.8) |
Interest expense | 72.7 | 17.9 |
Income taxes | $ 19.1 | $ 15 |
Segment Information (Segment In
Segment Information (Segment Information Of Revenues, Gross Profit And Operating Income) (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Oct. 02, 2015USD ($) | Sep. 30, 2016USD ($)segment | Oct. 02, 2015USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reporting segments | segment | 3 | |||
Segment Reporting Information [Line Items] | ||||
Revenues from external customers | $ 950.9 | $ 904.2 | $ 2,645.9 | $ 2,655.5 |
Segment gross profit | 344 | 313.7 | 945.9 | 926.2 |
Power Solutions Group | ||||
Segment Reporting Information [Line Items] | ||||
Revenues from external customers | 407.8 | 359 | 1,088.4 | 1,075.6 |
Segment gross profit | 142.2 | 108.6 | 361.9 | 336.3 |
Analog Solutions Group | ||||
Segment Reporting Information [Line Items] | ||||
Revenues from external customers | 363.1 | 346.6 | 1,012 | 1,022.9 |
Segment gross profit | 144.4 | 138.9 | 404.1 | 415.3 |
Image Sensor Group | ||||
Segment Reporting Information [Line Items] | ||||
Revenues from external customers | 180 | 198.6 | 545.5 | 557 |
Segment gross profit | $ 57.4 | $ 66.2 | $ 179.9 | $ 174.6 |
Segment Information (Reconcilia
Segment Information (Reconciliations Of Segment Gross Profit And Segment Operating Income) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Gross profit | $ 329 | $ 308.5 | $ 912.4 | $ 913.3 |
Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Gross profit | 344 | 313.7 | 945.9 | 926.2 |
Less: unallocated manufacturing costs | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Less: unallocated manufacturing costs | $ (15) | $ (5.2) | $ (33.5) | $ (12.9) |
Segment Information (Revenues B
Segment Information (Revenues By Geographic Location Including Local Sales And Exports) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2016 | Oct. 02, 2015 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 950.9 | $ 904.2 | $ 2,645.9 | $ 2,655.5 |
Reportable Geographical Components | United States | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 140.7 | 133.5 | 421.1 | 406.1 |
Reportable Geographical Components | Japan | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 85.3 | 74.5 | 251.2 | 201.9 |
Reportable Geographical Components | Hong Kong | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 258.9 | 232.7 | 654 | 647.9 |
Reportable Geographical Components | Singapore | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 281.4 | 270.6 | 783.8 | 881.5 |
Reportable Geographical Components | United Kingdom | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 132.4 | 131.5 | 407.6 | 380.4 |
Reportable Geographical Components | Other | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 52.2 | $ 61.4 | $ 128.2 | $ 137.7 |
Segment Information (Summary of
Segment Information (Summary of Property, Plant and Equipment by Geographic Location) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment, net | $ 2,074.6 | $ 1,274.1 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment, net | 545.7 | 326.2 |
Korea | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment, net | 371.7 | 0.2 |
Malaysia | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment, net | 217.6 | 226.5 |
Philippines | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment, net | 341.2 | 259.1 |
China | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment, net | 199.2 | 111 |
Other | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, plant and equipment, net | $ 399.2 | $ 351.1 |