01—Abstract
Summary
Summary of the 10-K filed February 26, 2013. Cited figures are marked; the original filing is the authoritative source.
ON Semiconductor Corporation (ON Semiconductor, traded on NASDAQ as ONNN) reported total 2012 revenues of $2,894.9 milliona, down from $3,442.3 million in 2011, with a GAAP net loss attributable to the company of $90.6 million, or $0.20 per diluted share, compared with net income of $11.6 million in 2011.
Gross margin rose to 32.9% from 29.3%, mainly because the company did not repeat $138.7 millionb of 2011 SANYO Semiconductor-related expenses. Operating results were weighed down by $165.3 million of restructuring, asset impairment and other charges and $49.5 million of goodwill and intangible impairments, most of them tied to the SANYO Semiconductor Products Group, whose revenue fell to $771.0 million from $1,060.3 million. Operating loss was $16.3 million for 2012 versus operating income of $113.4 million in 2011.
Balance sheet and capital allocation items: cash, cash equivalents and short-term investments were $631.7 millionc at year-end, and long-term debt including current maturities was $1,011.9 million. The company repurchased 8.8 million shares for about $55.3 million under a $300.0 million program, retired the $96.2 million Zero Coupon Convertible Notes due 2024, and extended the earliest put date on $99.9 million of 2.625% Convertible Notes from December 2013 to December 2016. Net cash provided by operating activities fell to $276.0 million from $545.5 million, and capital expenditures were $256.3 million.
Outlook: the company estimated first-quarter 2013 revenue of approximately $645 million to $685 milliond and gross margin of approximately 30.5% to 32.5%. It also initiated a voluntary retirement program at SANYO Semiconductor subsidiaries expected to reduce employment by roughly 500 to 600 employees, with an estimated charge of $40.0 million to $50.0 million in 2013.
02—Key points
Key Highlights
- Revenue declined to $2,894.9 million in 2012 from $3,442.3 million in 2011, with the SANYO Semiconductor Products Group down the most (to $771.0 million from $1,060.3 million).
- GAAP net loss attributable to ON Semiconductor of $90.6 million, or $0.20 per diluted share, versus net income of $11.6 million in 2011.
- Gross margin improved to 32.9% from 29.3%, largely because 2011 included $138.7 million of SANYO-related expenses that did not recur in 2012.
- Operating loss of $16.3 million, driven by $165.3 million of restructuring and asset impairment charges and $49.5 million of goodwill and intangible impairments.
- Cash, cash equivalents and short-term investments of $631.7 million against long-term debt of $1,011.9 million at December 31, 2012.
- Operating cash flow fell to $276.0 million from $545.5 million; capital expenditures were $256.3 million.
- Q1 2013 outlook: revenue of approximately $645 million to $685 million and gross margin of approximately 30.5% to 32.5%; a SANYO voluntary retirement program is expected to cut 500 to 600 employees.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2012, On Semiconductor lost $0.03.
- Revenue$2.89B100.0%
- Cost of revenue−$1.95B67.3%
- Gross profit$946.3M32.7%
- Operating costs−$966.6M33.4%
- Operating income−$20.3M0.7%
- Interest, other & tax−$76.9M2.7%
- Net income−$97.2M3.4%
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 26, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $2.89B$3.44B | −15.9% |
| Cost of Revenue | $1.95B$2.43B | −19.9% |
| Gross Profit | $946.30M$1.01B | −6.2% |
| Operating Expenses | $966.60M$895.40M | +8.0% |
| Operating Income | -$20.30M$113.40M | −117.9% |
| Interest Expense | $56.10M$68.90M | −18.6% |
| Net Income | -$97.20M$11.60M | −937.9% |
| EPS (Basic) | $-0.21$0.03 | −800.0% |
| EPS (Diluted) | $-0.21$0.03 | −800.0% |
| Shares Outstanding (Basic) | 452.60M446.70M | +1.3% |
| Shares Outstanding (Diluted) | 452.60M457.20M | −1.0% |
05—Questions
Frequently Asked Questions
Why did ON Semiconductor report a net loss in 2012 after a profit in 2011?
Revenue fell 15.9% to $2,894.9 million, and the company recorded $165.3 million of restructuring and asset impairment charges plus $49.5 million of goodwill and intangible impairments. Most of these charges related to the SANYO Semiconductor Products Group, which was hurt by the October 2011 Thailand flooding, a softening Japanese consumer market and political tensions between Japan and China. The filing also cites lower segment operating income in that group.
Did gross margin improve in 2012?
Yes. Gross margin rose to 32.9% from 29.3%, mainly because 2011 included $138.7 million of SANYO Semiconductor-related expenses, including a $58.3 million inventory step-up and $80.4 million of non-cash manufacturing expenses, which did not recur in 2012.
How is the company managing its debt and share count?
During 2012 the company retired the $96.2 million Zero Coupon Convertible Notes due 2024, redeemed about $21.6 million of 1.875% Notes, and exchanged $99.9 million of 2.625% Notes due 2026 into Series B notes with the earliest put date extended to December 2016. It also repurchased about 8.8 million shares for roughly $55.3 million under a program authorizing up to $300.0 million, with about $244.7 million remaining at year-end.
What does the company expect for the first quarter of 2013?
The company estimates first-quarter 2013 revenue of approximately $645 million to $685 million, with backlog representing about 80% to 85% of expected revenue, average selling prices down about 2% from the fourth quarter, and gross margin of approximately 30.5% to 32.5%.
What further restructuring is planned for 2013?
In January 2013 the company initiated a voluntary retirement program at certain SANYO Semiconductor subsidiaries, expected to reduce employment by about 500 to 600 employees. The company estimates a charge of $40.0 million to $50.0 million in 2013, excluding pension effects that cannot yet be estimated.
06—Continue