Skip to content
AnalystLens

On Semiconductor Annual Report, Year Ended Dec 31, 2003

Filing Date
Filed March 10, 2004
Period End
December 31, 2003
Security
ON
In the record · 2016–202610-K1110-Q338-K162

ON filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 162 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Oct ’18Oct ’18
  2. Leadership change8-K · Oct ’20Oct ’20
  3. Impairment8-K · Sep ’22Sep ’22
  4. Impairment8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed March 10, 2004. Cited figures are marked; the original filing is the authoritative source.

ON Semiconductor Corporation's annual report on Form 10-K for fiscal 2003 reports revenues of $1,069.1 milliona, down from $1,093.7 million in 2002 and $1,223.2 million in 2001, with a net loss of $166.7 million in 2003 compared with $141.9 million in 2002.

Gross profit improved to $301.0 millionb (28.2% of revenues) from $298.1 million (27.3%) in 2002, while operating income was $20.5 million versus $27.0 million the prior year. The company attributes the revenue declines primarily to lower average selling prices, and it cites restructuring, asset impairment and other charges of $61.2 million in 2003. Cash and cash equivalents were $186.6 million at December 31, 2003, and the stockholders' deficit was $644.6 million.

The company's balance sheet remains highly leveraged, with total long-term debt of $1,302.9 millionc at year-end 2003. Management reports improved end-market conditions, including manufacturing capacity utilization above 85% and a book-to-bill ratio above 1 in each quarter of 2003, and it expects first-quarter 2004 revenues to rise 5% to 6% over the fourth quarter of 2003. To reduce debt, the company completed a September 2003 equity offering of about 37.0 million shares at $4.50 per share, and a February 2004 offering of about 34.4 million shares at $6.98 per share, with net proceeds of $226.7 million used to redeem $175 million of secured notes.

Investors should weigh the company's cost-reduction programs and industry recovery signals against its heavy debt load, continued losses, and the pending securities class action settlement. The company also disclosed that it will phase out manufacturing at its East Greenwich, Rhode Island facility and its assembly and test operations in the Czech Republic by the end of 2004. Texas Pacific Group affiliates held over 51%d of the voting power as of March 1, 2004, giving that principal stockholder control over director elections and other matters submitted to stockholders.

02—Key points

Key Highlights

  1. Revenues were $1,069.1 million in 2003, down 2.2% from $1,093.7 million in 2002, with the decline attributed mainly to lower average selling prices.
  2. Gross margin rose to 28.2% in 2003 from 27.3% in 2002, and gross profit increased to $301.0 million.
  3. Net loss widened to $166.7 million in 2003 from $141.9 million in 2002, although the 2003 figure includes a $21.5 million cumulative effect of an accounting change.
  4. Total long-term debt was $1,302.9 million at December 31, 2003, and the company reported a stockholders' deficit of $644.6 million.
  5. Two equity offerings in September 2003 and February 2004 raised net proceeds of $156.8 million and $226.7 million, which were used to reduce debt.
  6. The company expects first-quarter 2004 revenues to increase 5% to 6% over the fourth quarter of 2003, with gross margin projected at 29% to 30%.
  7. Texas Pacific Group affiliates held over 51% of the voting power as of March 1, 2004.

03—Questions

Frequently Asked Questions

  1. Why did revenues decline in 2003 and what is the outlook?

    Revenues fell to $1,069.1 million from $1,093.7 million, primarily because average selling prices declined. The company expects first-quarter 2004 revenues to rise 5% to 6% from the fourth quarter of 2003, with backlog at the start of the quarter representing greater than 90% of expected revenue.

  2. How heavily indebted is the company?

    At December 31, 2003, total long-term debt including current maturities was $1,302.9 million, and the company had a stockholders' deficit of $644.6 million. Interest expense was $151.1 million in 2003, and the company reported a weighted-average interest rate on long-term debt of 10.8%.

  3. What steps did the company take to reduce debt?

    The company issued about 37.0 million common shares at $4.50 per share in September 2003, with net proceeds of $156.8 million used to prepay senior bank facilities. In February 2004, it sold about 34.4 million shares at $6.98 per share, with net proceeds of $226.7 million, and it planned to use $175 million of that to redeem first and second lien senior secured notes.

  4. What are the main risks disclosed in the filing?

    Key risks include the cyclical semiconductor industry, high leverage and restrictive debt covenants, dependence on a few large customers, and the securities class action litigation related to the company's 2000 initial public offering. The filing also notes that Texas Pacific Group's voting control limits other stockholders' influence over key matters.

  5. What cost-reduction actions are underway?

    Under the 2002 plan, the company estimated $114 million of cost savings achieved in 2003 and expects $151 million of annual savings beginning in 2004. It is also phasing out manufacturing in East Greenwich, Rhode Island and assembly and test operations in the Czech Republic by the end of 2004, with 2005 savings from those closures expected between $20 million and $25 million.

04—Continue

← View all 10-K filings