01—Abstract
Summary
Summary of the 10-K filed February 25, 2010. Cited figures are marked; the original filing is the authoritative source.
ON Semiconductor Corporation (ON Semiconductor, filed as ON Semiconductor Corporation and its subsidiaries) reported 2009 revenues of $1,768.9 milliona, down from $2,054.8 million in 2008, a decline the filing attributes mainly to the global economic downturn.
The company returned to net income of $61.0 millionb attributable to ON Semiconductor Corporation in 2009, compared with a net loss of $428.9 million in 2008 that included a $544.5 million goodwill impairment charge. Gross margin was 35.1% in 2009 versus 36.3% in 2008, and operating income rose to $142.6 million from an operating loss of $365.9 million. Cash provided by operating activities was $276.9 million, and cash and cash equivalents ended the year at $525.7 million.
Total debt was reduced to $933.5 millionc at December 31, 2009, from $1,009.8 million at the end of 2008, and interest expense fell to $64.6 million from $79.9 million. The filing describes the company as having its lowest net debt position in its history. Management expects first-quarter 2010 revenues of approximately $515.0 million to $525.0 million and a gross profit percentage of roughly 40.0% to 41.0%.
The company also completed the acquisitions of PulseCore (November 2009, about $17 milliond) and California Micro Devices Corporation (January 27, 2010, about $110.0 million in cash). Key risks cited in the filing include semiconductor industry cyclicality, customer concentration (one customer accounted for 11% of 2009 revenues), reliance on distributors and high leverage with restrictive debt covenants, and ongoing exposure to acquisition integration and litigation. A securities class action relating to the 2001 IPO was settled for a total payment of $586 million across all defendants, with insurers covering ON Semiconductor's allocation.
02—Key points
Key Highlights
- Revenue of $1,768.9 million in 2009, down from $2,054.8 million in 2008; the filing attributes the decline mainly to the global economic downturn.
- Net income attributable to ON Semiconductor Corporation of $61.0 million ($0.14 diluted per share) in 2009, compared with a net loss of $428.9 million in 2008 that included a $544.5 million goodwill impairment charge.
- Gross margin of 35.1% in 2009 versus 36.3% in 2008; operating income of $142.6 million versus an operating loss of $365.9 million in 2008.
- Cash flow from operations of $276.9 million and year-end cash and cash equivalents of $525.7 million.
- Total debt reduced to $933.5 million at December 31, 2009 from $1,009.8 million a year earlier; interest expense declined to $64.6 million from $79.9 million.
- First-quarter 2010 outlook of revenues of approximately $515.0 million to $525.0 million and gross profit of roughly 40.0% to 41.0% of revenues.
- Acquisitions of PulseCore (November 2009, about $17 million) and California Micro Devices Corporation (January 27, 2010, about $110.0 million in cash).
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, On Semiconductor kept $0.03.
- Revenue$1.77B100.0%
- Cost of revenue−$1.15B64.9%
- Gross profit$620.7M35.1%
- Operating costs−$478.1M27.0%
- Operating income$142.6M8.1%
- Interest, other & tax−$81.6M4.6%
- Net income$61.0M3.4%
Where FY2009 revenue went
$1.77B- Cost of revenue: $1.15B, 65% of revenue
- Operating costs: $478.1M, 27% of revenue
- Net income: $61.0M, 3.4% of revenue
- Interest, other & tax: $81.6M, 4.6% of revenue
Kept 3.4% as net incomeNet income $61.0M · 3.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 25, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $1.77B$2.05B | −13.9% |
| Cost of Revenue | $1.15B$1.31B | −12.3% |
| Gross Profit | $620.70M$745.50M | −16.7% |
| Operating Expenses | $478.10M$1.11B | −57.0% |
| Operating Income | $142.60M-$365.90M | +139.0% |
| Interest Expense | $64.60M$79.90M | −19.1% |
| Net Income | $61.00M-$428.90M | +114.2% |
| EPS (Basic) | $0.14$-1.13 | +112.4% |
| EPS (Diluted) | $0.14$-1.13 | +112.4% |
| Shares Outstanding (Basic) | 420.80M379.00M | +11.0% |
| Shares Outstanding (Diluted) | 432.10M379.00M | +14.0% |
05—Questions
Frequently Asked Questions
Why did revenue decline in 2009?
The filing states that the majority of the 13.9% decline in revenue from $2,054.8 million to $1,768.9 million was due to a downturn in the global economic environment during 2009. Volume and mix fell 9.5% and average selling prices fell 5.7%, partially offset by $45.8 million of revenue from the Catalyst acquisition.
What drove the swing from a 2008 loss to 2009 profit?
2008 included a $544.5 million goodwill impairment charge related to AMIS, the PTC Business and Cherry. Operating income in 2009 was $142.6 million, compared with an operating loss of $365.9 million in 2008, and the company also recorded lower interest expense.
How is the company's debt position?
Total debt was $933.5 million at December 31, 2009, down from $1,009.8 million in 2008. The filing says the company was in compliance with its covenants at year end and expects to remain in compliance through December 31, 2010. Current maturities rose to $205.9 million, largely due to the April 2010 put date on the zero coupon convertible notes.
What are the main risks to investors?
The filing highlights semiconductor industry cyclicality, the effect of the global economic slowdown and tight credit markets, customer concentration (one customer was 11% of 2009 revenues), high leverage with restrictive covenants, integration risks from acquisitions including CMD, and ongoing litigation such as the Ricoh patent case.
06—Continue