filings.toolsItem 1. Financial Statements (unaudited)
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Item 1. Financial Statements (unaudited)
ON SEMICONDUCTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
(unaudited)
| April 4, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 2,762.5 | $ | 2,691.3 | |||||||
| Short-term investments | 250.0 | 300.0 | |||||||||
| Receivables, net | 825.0 | 1,160.1 | |||||||||
| Inventories | 2,078.2 | 2,242.0 | |||||||||
| Assets held-for-sale | 45.7 | 5.3 | |||||||||
| Other current assets | 365.1 | 353.3 | |||||||||
| Total current assets | 6,326.5 | 6,752.0 | |||||||||
| Property, plant and equipment, net | 3,840.5 | 4,361.4 | |||||||||
| Goodwill | 1,641.6 | 1,587.9 | |||||||||
| Intangible assets, net | 309.2 | 257.9 | |||||||||
| Deferred tax assets | 745.5 | 729.9 | |||||||||
| ROU financing lease assets | 39.9 | 40.5 | |||||||||
| Other assets | 350.7 | 360.2 | |||||||||
| Total assets | $ | 13,253.9 | $ | 14,089.8 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Accounts payable | $ | 496.6 | $ | 574.5 | |||||||
| Accrued expenses and other current liabilities | 781.3 | 760.0 | |||||||||
| Current portion of financing lease liabilities | 0.4 | 0.3 | |||||||||
| Total current liabilities | 1,278.3 | 1,334.8 | |||||||||
| Long-term debt | 3,348.3 | 3,345.9 | |||||||||
| Deferred tax liabilities | 45.6 | 37.6 | |||||||||
| Long-term financing lease liabilities | 21.6 | 20.7 | |||||||||
| Other long-term liabilities | 511.2 | 536.3 | |||||||||
| Total liabilities | 5,205.0 | 5,275.3 | |||||||||
| Commitments and contingencies (Note 10) | |||||||||||
| ON Semiconductor Corporation stockholders’ equity: | |||||||||||
| Common stock ($0.01 par value, 1,250,000,000 shares authorized, 624,118,249 and 622,655,553 issued, 417,866,634 and 422,955,173 outstanding, respectively) | 6.2 | 6.2 | |||||||||
| Additional paid-in capital | 5,411.4 | 5,372.2 | |||||||||
| Accumulated other comprehensive loss | (56.5) | (62.4) | |||||||||
| Accumulated earnings | 7,634.8 | 8,120.9 | |||||||||
| Less: Treasury stock, at cost: 206,251,615 and 199,700,380 shares, respectively | (4,966.0) | (4,640.5) | |||||||||
| Total ON Semiconductor Corporation stockholders’ equity | 8,029.9 | 8,796.4 | |||||||||
| Non-controlling interest | 19.0 | 18.1 | |||||||||
| Total stockholders’ equity | 8,048.9 | 8,814.5 | |||||||||
| Total liabilities and stockholders’ equity | $ | 13,253.9 | $ | 14,089.8 |
See accompanying notes to consolidated financial statements
ON SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions, except per share data)
(unaudited)
| Quarters Ended | |||||||||||||||||||||||
| April 4, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Revenue | $ | 1,445.7 | $ | 1,862.7 | |||||||||||||||||||
| Cost of revenue | 1,151.9 | 1,009.1 | |||||||||||||||||||||
| Gross profit | 293.8 | 853.6 | |||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 164.1 | 150.0 | |||||||||||||||||||||
| Selling and marketing | 68.3 | 69.1 | |||||||||||||||||||||
| General and administrative | 84.4 | 95.3 | |||||||||||||||||||||
| Amortization of acquisition-related intangible assets | 11.4 | 12.6 | |||||||||||||||||||||
| Restructuring, asset impairments and other charges, net | 539.3 | 1.4 | |||||||||||||||||||||
| Total operating expenses | 867.5 | 328.4 | |||||||||||||||||||||
| Operating income (loss) | (573.7) | 525.2 | |||||||||||||||||||||
| Other income (expense), net: | |||||||||||||||||||||||
| Interest expense | (18.0) | (15.6) | |||||||||||||||||||||
| Interest income | 26.6 | 27.6 | |||||||||||||||||||||
| Other income | 4.1 | 1.0 | |||||||||||||||||||||
| Other income (expense), net | 12.7 | 13.0 | |||||||||||||||||||||
| Income (loss) before income taxes | (561.0) | 538.2 | |||||||||||||||||||||
| Income tax (provision) benefit | 75.8 | (84.5) | |||||||||||||||||||||
| Net income (loss) | (485.2) | 453.7 | |||||||||||||||||||||
| Less: Net income attributable to non-controlling interest | (0.9) | (0.7) | |||||||||||||||||||||
| Net income (loss) attributable to ON Semiconductor Corporation | $ | (486.1) | $ | 453.0 | |||||||||||||||||||
| Net income (loss) per share of common stock attributable to ON Semiconductor Corporation: | |||||||||||||||||||||||
| Basic | $ | (1.15) | $ | 1.06 | |||||||||||||||||||
| Diluted | $ | (1.15) | $ | 1.04 | |||||||||||||||||||
| Weighted-average shares of common stock outstanding: | |||||||||||||||||||||||
| Basic | 421.3 | 428.1 | |||||||||||||||||||||
| Diluted | 421.3 | 436.5 | |||||||||||||||||||||
| Comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Net income (loss) | $ | (485.2) | $ | 453.7 | |||||||||||||||||||
| Foreign currency translation adjustments | 1.4 | (2.3) | |||||||||||||||||||||
| Effects of cash flow hedges and other adjustments | 4.5 | (4.7) | |||||||||||||||||||||
| Other comprehensive income (loss), net of tax | 5.9 | (7.0) | |||||||||||||||||||||
| Comprehensive income (loss) | (479.3) | 446.7 | |||||||||||||||||||||
| Comprehensive income attributable to non-controlling interest | (0.9) | (0.7) | |||||||||||||||||||||
| Comprehensive income (loss) attributable to ON Semiconductor Corporation | $ | (480.2) | $ | 446.0 |
See accompanying notes to consolidated financial statements
ON SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in millions, except share data)
(unaudited)
| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Treasury Stock | Non-Controlling Interest | |||||||||||||||||||||||||||||||||||||||||||||||||
| Number of shares | At Par Value | Accumulated Earnings | Number of shares | At Cost | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | 622,655,553 | $ | 6.2 | $ | 5,372.2 | $ | (62.4) | $ | 8,120.9 | (199,700,380) | $ | (4,640.5) | $ | 18.1 | $ | 8,814.5 | |||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to the ESPP | 153,378 | — | 5.3 | — | — | — | — | — | 5.3 | ||||||||||||||||||||||||||||||||||||||||||||
| RSUs released and stock grant awards issued | 1,309,315 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Partial settlement - 0% Notes | 2 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Partial settlement of Warrants - 0% Notes | 1 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Payment of tax withholding for RSUs | — | — | — | — | — | (472,730) | (22.9) | — | (22.9) | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | 33.9 | — | — | — | — | — | 33.9 | ||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | (6,078,505) | (302.6) | — | (302.6) | ||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | — | — | — | 5.9 | (486.1) | — | — | 0.9 | (479.3) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at April 4, 2025 | 624,118,249 | $ | 6.2 | $ | 5,411.4 | $ | (56.5) | $ | 7,634.8 | (206,251,615) | $ | (4,966.0) | $ | 19.0 | $ | 8,048.9 | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | 616,281,996 | $ | 6.2 | $ | 5,210.9 | $ | (45.2) | $ | 6,548.1 | (189,895,570) | $ | (3,937.4) | $ | 18.0 | $ | 7,800.6 | |||||||||||||||||||||||||||||||||||||
| RSUs released and stock grant awards issued | 1,280,614 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Partial settlement - 0% Notes | 36 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Partial settlement of bond hedges - 0% Notes | — | — | — | — | — | (35) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Partial settlement of warrants - 0% Notes | 10 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Partial settlement of warrants - 1.625% Notes | 4,028,216 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Payment of tax withholding for RSUs | — | — | — | — | — | (488,261) | (37.7) | — | (37.7) | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | 33.0 | — | — | — | — | — | 33.0 | ||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | (1,272,673) | (100.0) | — | (100.0) | ||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | — | — | — | (7.0) | 453.0 | — | — | 0.7 | 446.7 | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 29, 2024 | 621,590,872 | $ | 6.2 | $ | 5,243.9 | $ | (52.2) | $ | 7,001.1 | (191,656,539) | $ | (4,075.1) | $ | 18.7 | $ | 8,142.6 | |||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements
ON SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
| Quarters Ended | |||||||||||
| April 4, 2025 | March 29, 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | (485.2) | $ | 453.7 | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 168.2 | 154.9 | |||||||||
| Amortization of debt discount and issuance costs | 2.9 | 2.7 | |||||||||
| Share-based compensation | 33.9 | 33.0 | |||||||||
| Non-cash asset impairment charges | 431.5 | — | |||||||||
| Change in deferred tax balances | (13.7) | (48.6) | |||||||||
| Other | 1.8 | 1.9 | |||||||||
| Changes in assets and liabilities (exclusive of acquisitions): | |||||||||||
| Receivables | 334.1 | 55.0 | |||||||||
| Inventories | 184.6 | (35.7) | |||||||||
| Other assets | (36.8) | (88.2) | |||||||||
| Accounts payable | 1.4 | 3.0 | |||||||||
| Accrued expenses and other current liabilities | 1.3 | (5.9) | |||||||||
| Other long-term liabilities | (21.7) | (27.1) | |||||||||
| Net cash provided by operating activities | 602.3 | 498.7 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Payments for acquisition of property, plant and equipment | (147.6) | (233.9) | |||||||||
| Purchase of short-term investments | (250.0) | — | |||||||||
| Proceeds from the maturity of short-term investments | 300.0 | — | |||||||||
| Purchase of a business, net of cash acquired | (117.5) | — | |||||||||
| Other | 0.2 | (1.4) | |||||||||
| Net cash used in investing activities | (214.9) | (235.3) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds for the issuance of common stock under the ESPP | 5.3 | 7.6 | |||||||||
| Payment of tax withholding for RSUs | (22.4) | (37.5) | |||||||||
| Repurchase of common stock | (300.1) | (100.0) | |||||||||
| Payment of financing lease obligations | (0.4) | (0.9) | |||||||||
| Net cash used in financing activities | (317.6) | (130.8) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2.0 | (0.9) | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 71.8 | 131.7 | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period (Note 6) | 2,693.4 | 2,485.0 | |||||||||
| Cash, cash equivalents and restricted cash, end of period (Note 6) | $ | 2,765.2 | $ | 2,616.7 |
See accompanying notes to consolidated financial statements
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
Note 1: Background and Basis of Presentation
ON Semiconductor Corporation (“onsemi,” “we,” “us,” “our,” or the “Company”), with its wholly and majority-owned subsidiaries, operates under the onsemiTM brand. The Company is organized into three operating and reportable segments: the Power Solutions Group ("PSG"), the Analog and Mixed-Signal Group ("AMG"), and the Intelligent Sensing Group ("ISG").
The Company's fiscal calendar year begins on January 1 and ends on December 31, with each fiscal quarter containing a thirteen-week accounting period. The quarters ended April 4, 2025 and March 29, 2024 contained 94 and 89 days, respectively.
The accompanying unaudited financial statements as of and for the quarter ended April 4, 2025 have been prepared following generally accepted accounting principles in the United States of America ("GAAP") for interim financial reporting and the rules and regulations of the SEC for interim reporting. Accordingly, the unaudited financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. The balance sheet as of December 31, 2024 was derived from the Company's audited financial statements but does not include all disclosures required by GAAP for annual financial statements. In management's opinion, the interim information contains all adjustments, which include normal recurring adjustments necessary for a fair statement of the results for the interim periods. The footnote disclosures related to the interim financial information contained 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, 2024, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 10, 2025 (the "2024 Form 10-K"). Certain reclassifications within the Consolidated Balance Sheets and Statements of Cash Flows have been made to prior period amounts to conform to current period presentation.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Management evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, third-party evaluations, and various other assumptions that management believes are reasonable under the circumstances. Significant estimates have been used by management in conjunction with the following: (i) calculation of future payouts for customer incentives and amounts subject to allowances and returns; (ii) valuation and obsolescence relating to inventories; (iii) measurement of valuation allowances against deferred tax assets and evaluations of uncertain tax positions; (iv) testing for impairment of long-lived assets and goodwill; and (v) assumptions used in business combinations and the valuation of assets held-for-sale. Actual results may differ from the estimates and assumptions used in the consolidated financial statements.
Significant Accounting Policies
The Company’s accounting policy surrounding property, plant and equipment as disclosed in the 2024 Form 10-K is included under the heading "Property, Plant and Equipment." Certain enhancements to the policy under the heading "Long-Lived Assets Held and Used" and "Assets Held-for-Sale" are provided herein in light of events that occurred during the quarter ended April 4, 2025, and do not represent significant changes.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost and are depreciated over estimated useful lives of 30 years for buildings and 3-20 years for computers, machinery and equipment using straight-line methods. Expenditures for maintenance and repairs are charged to operations in the period in which the expenses are incurred. When assets are retired or otherwise disposed of, the related costs and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized.
Long-Lived Assets Held and Used
The Company evaluates the recoverability of the carrying amount of its long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset group may not be fully recoverable. For assets to be held and used, the Company groups a long-lived asset or assets with other assets and liabilities at the lowest level for which identifiable cash flows
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
are largely independent of the cash flows of other assets and liabilities. Estimates of future cash flows used to test the recoverability of a long-lived asset group include only the future cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset group. A potential impairment charge is evaluated when the undiscounted expected cash flows derived from an asset group are less than its carrying amount. Impairment losses, if applicable, are measured as the amount by which the carrying value of an asset group exceeds its fair value. Judgment is used when applying these impairment rules to determine the timing of the impairment test, the undiscounted cash flows used to assess impairments and the fair value of the asset group.
Assets Held-for-Sale
The Company classifies assets as held-for-sale in the period when all of the following conditions are met: (i) management, having the authority to approve the action, commits to a plan to sell the assets; (ii) the assets are available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the assets have been initiated; (iv) the sale of the assets is probable, and transfer of the assets is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond the Company's control extend the period of time required to sell the assets beyond one year; (v) the assets are being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
The assets that are classified as held-for-sale are initially measured at the lower of their carrying value or fair value less any costs to sell. The determination of the fair value less costs to sell may require management to make judgments on significant estimates and assumptions including, but not limited to, indicative sales values, current market conditions and available data for transactions for similar assets. The Company may use third-party valuation specialists to assist in the determination of such estimates. Any impairment loss resulting from this measurement is recorded in Restructuring, asset impairments and other charges, net on the Consolidated Statements of Operations and the assets held-for-sale are recorded as a separate line within the Consolidated Balance Sheets. Gains or losses are not recognized on assets held-for-sale until the date of sale.
The fair values of assets less any costs to sell are assessed each reporting period for which they remain classified as held-for-sale, and any subsequent change is reported as an adjustment to the carrying value of the assets, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held-for-sale.
Note 2: Segments and Revenue
Segments
The Company is organized into three operating and reportable segments consisting of PSG, AMG and ISG. These segments represent management's view of the business for which separate financial information is available and evaluated regularly by the Chief Operating Decision Maker ("CODM"), which is the Company’s Chief Executive Officer. The CODM uses segment gross profit for evaluating product pricing, factory utilization, allocation of capital and the assessment of segment profitability.
Revenue and gross profit for the operating and reportable segments were as follows (in millions):
| PSG | AMG | ISG | Total | ||||||||||||||||||||
| For the quarter ended April 4, 2025: | |||||||||||||||||||||||
| Revenue from external customers | $ | 645.1 | $ | 566.4 | $ | 234.2 | $ | 1,445.7 | |||||||||||||||
| Cost of revenue | 521.9 | 265.5 | 364.5 | 1,151.9 | |||||||||||||||||||
| Segment gross profit (loss) | $ | 123.2 | $ | 300.9 | $ | (130.3) | $ | 293.8 | |||||||||||||||
| For the quarter ended March 29, 2024: | |||||||||||||||||||||||
| Revenue from external customers | $ | 874.2 | $ | 697.0 | $ | 291.5 | $ | 1,862.7 | |||||||||||||||
| Cost of revenue | 508.8 | 358.2 | 142.1 | 1,009.1 | |||||||||||||||||||
| Segment gross profit | $ | 365.4 | $ | 338.8 | $ | 149.4 | $ | 853.6 | |||||||||||||||
The Company had one customer, a distributor, whose revenue accounted for approximately 10% of total revenue for each of the quarters ended April 4, 2025 and March 29, 2024. No single customer accounted for more than 10% of the Company's accounts
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
receivable balance as of April 4, 2025, and one customer, a distributor, had an accounts receivable concentration of 13% as of December 31, 2024.
Revenue for the operating and reportable segments disaggregated into geographic locations based on sales billed from the respective country and sales channel was as follows (in millions):
| Quarter Ended April 4, 2025 | |||||||||||||||||||||||
| PSG | AMG | ISG | Total | ||||||||||||||||||||
| Geographic Location: | |||||||||||||||||||||||
| Hong Kong | $ | 165.1 | $ | 143.4 | $ | 61.6 | $ | 370.1 | |||||||||||||||
| Singapore | 140.4 | 114.2 | 19.2 | 273.8 | |||||||||||||||||||
| United Kingdom | 165.0 | 122.5 | 80.0 | 367.5 | |||||||||||||||||||
| United States | 123.0 | 142.0 | 27.6 | 292.6 | |||||||||||||||||||
| Other | 51.6 | 44.3 | 45.8 | 141.7 | |||||||||||||||||||
| Total | $ | 645.1 | $ | 566.4 | $ | 234.2 | $ | 1,445.7 | |||||||||||||||
| Sales Channel: | |||||||||||||||||||||||
| Distributors | $ | 335.6 | $ | 276.1 | $ | 97.4 | $ | 709.1 | |||||||||||||||
| Direct customers | 309.5 | 290.3 | 136.8 | 736.6 | |||||||||||||||||||
| Total | $ | 645.1 | $ | 566.4 | $ | 234.2 | $ | 1,445.7 | |||||||||||||||
| Quarter Ended March 29, 2024 | |||||||||||||||||||||||
| PSG | AMG | ISG | Total | ||||||||||||||||||||
| Geographic Location: | |||||||||||||||||||||||
| Hong Kong | $ | 203.4 | $ | 149.7 | $ | 52.3 | $ | 405.4 | |||||||||||||||
| Singapore | 206.7 | 186.1 | 40.4 | 433.2 | |||||||||||||||||||
| United Kingdom | 202.5 | 133.8 | 107.7 | 444.0 | |||||||||||||||||||
| United States | 205.3 | 159.5 | 54.2 | 419.0 | |||||||||||||||||||
| Other | 56.3 | 67.9 | 36.9 | 161.1 | |||||||||||||||||||
| Total | $ | 874.2 | $ | 697.0 | $ | 291.5 | $ | 1,862.7 | |||||||||||||||
| Sales Channel: | |||||||||||||||||||||||
| Distributors | $ | 450.4 | $ | 343.6 | $ | 112.0 | $ | 906.0 | |||||||||||||||
| Direct customers | 423.8 | 353.4 | 179.5 | 956.7 | |||||||||||||||||||
| Total | $ | 874.2 | $ | 697.0 | $ | 291.5 | $ | 1,862.7 | |||||||||||||||
The Company operates in various geographic locations. Sales to external customers have little correlation to where products are manufactured or the location of the end-customer. It is, therefore, not meaningful to present operating profit by geographical location.
The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information. The consolidated assets used in manufacturing are generally shared and are not specifically ascribed to operating and reportable segments.
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
Property, plant and equipment, net by geographic location, is summarized below (in millions):
| As of | |||||||||||||||||
| April 4, 2025 | December 31, 2024 | ||||||||||||||||
| South Korea | $ | 1,248.0 | $ | 1,423.8 | |||||||||||||
| United States | 1,214.0 | 1,410.8 | |||||||||||||||
| Czech Republic | 517.4 | 612.3 | |||||||||||||||
| China | 213.8 | 228.8 | |||||||||||||||
| Philippines | 192.5 | 208.1 | |||||||||||||||
| Malaysia | 175.4 | 183.1 | |||||||||||||||
| Vietnam | 151.0 | 155.3 | |||||||||||||||
| Other | 128.4 | 139.2 | |||||||||||||||
| Total | $ | 3,840.5 | $ | 4,361.4 |
Revenue
The Company's revenue derives primarily from product sales and to a much lesser extent from manufacturing services and product development agreements. For the quarters ended April 4, 2025 and March 29, 2024, revenue recognized from product sales as a percentage of total revenue was approximately 99% and 97%, respectively, and revenue recognized from manufacturing services and product development agreements was approximately 1% and 3%, respectively.
Revenue disaggregated by end-markets and product technologies was as follows (in millions):
| Quarters Ended | |||||||||||||||||||||||
| April 4, 2025 | March 29, 2024 | ||||||||||||||||||||||
| End-Markets: | |||||||||||||||||||||||
| Automotive | $ | 761.9 | $ | 1,017.2 | |||||||||||||||||||
| Industrial | 400.0 | 476.1 | |||||||||||||||||||||
| Other* | 283.8 | 369.4 | |||||||||||||||||||||
| Total | $ | 1,445.7 | $ | 1,862.7 | |||||||||||||||||||
| * Other primarily includes the end-markets of computing, consumer, networking and communications. | |||||||||||||||||||||||
| Product Technologies: | |||||||||||||||||||||||
| Intelligent Power | $ | 702.2 | $ | 953.4 | |||||||||||||||||||
| Intelligent Sensing | 299.9 | 362.9 | |||||||||||||||||||||
| Other | 443.6 | 546.4 | |||||||||||||||||||||
| Total | $ | 1,445.7 | $ | 1,862.7 |
Remaining Performance Obligations
A portion of the Company's orders are firm commitments that are non-cancellable, including certain orders or contracts with a duration of less than one year. Certain of the Company's customer contracts are multi-year agreements that include committed amounts ("Long-term Supply Agreements" or "LTSAs") for which the remaining performance obligations as of April 4, 2025 were approximately $10.6 billion (excluding the remaining performance obligations for contracts having a duration of one year or less). If products are shipped according to the terms of these contracts, the Company expects to recognize approximately 31% of this amount as revenue over the next 12 months. Total revenue estimates are based on negotiated contract prices and demand quantities, and could be influenced by risks and uncertainties, including manufacturing or supply chain constraints, modifications to customer agreements, and regulatory changes, among other factors. The timing, pricing or amounts of products delivered under LTSAs may be modified or canceled in certain circumstances, and the actual revenue recognized for the remaining performance obligations in future periods may significantly fluctuate from current estimates.
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
Certain LTSAs include non-cancellable capacity payments from the customer, which are generally due within 30 days of the agreement. These payments reserve production availability or are prepayments for the same purpose and are not recognized as revenue until the performance obligations are satisfied. Payments received in advance of the satisfaction of performance obligations are recorded as contract liabilities. The Company fulfilled certain performance obligations and recognized revenue of $24.0 million and $12.1 million for the quarters ended April 4, 2025 and March 29, 2024, respectively, related to contract liabilities outstanding as of December 31, 2024 and 2023, respectively.
Contract Balances
Contract assets and contract liabilities were as follows (in millions):
| As of | |||||||||||
| April 4, 2025 | December 31, 2024 | ||||||||||
| Contract assets included in: | |||||||||||
| Other current assets | $ | 28.0 | $ | 39.9 | |||||||
| Contract liabilities included in: | |||||||||||
| Accrued expenses and other current liabilities | $ | 112.7 | $ | 98.2 | |||||||
| Other long-term liabilities | 97.3 | 120.9 | |||||||||
| Total | $ | 210.0 | $ | 219.1 |
Note 3: Recent Accounting Pronouncements and Other Developments
Pending Adoption
Income Statement (Subtopic 220-40): Reporting Comprehensive Income - Expense Disaggregation Disclosures ("ASU 2024-03")
In November 2024, the Financial Accounting Standards Board ("FASB") issued ASU 2024-03, which requires public business entities to expand disclosures about specific expense categories. The amendments in this ASU require a public entity to disclose, in tabular format, in the notes to the financial statements, specific information about certain costs and expenses. Although the ASU does not change the expense captions an entity presents on the face of the statement of operations, it requires disaggregation of certain expense captions into specified categories. For public business entities, the provisions of ASU 2024-03 are effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. Management is currently evaluating the requirements under this new standard.
Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09")
In December 2023, the FASB issued ASU 2023-09 to enhance disclosures about income taxes. The amendments in this ASU require a public entity to disclose in tabular format, using both percentages and reporting currency amounts, specific categories in the rate reconciliation and to provide additional information for reconciling items that meet a quantitative threshold. The amendments in this ASU also require taxes paid (net of refunds received) to be disaggregated by federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold. For public business entities, the provisions of ASU 2023-09, which are required on an annual basis, are effective for fiscal years beginning after December 15, 2024. This standard will impact the Company's disclosures but is not expected to have a material impact on the Company's results of operations or financial condition. Early adoption is permitted. Management is currently evaluating the requirements under this new standard.
Note 4: Acquisition
On January 14, 2025, the Company acquired all of the outstanding equity of the SiC JFET technology business from Qorvo US, Inc., and certain of its subsidiaries, for $118.8 million in cash, subject to working capital adjustments. The Company believes the acquired SiC JFET technology complements the Company's EliteSiC power portfolio within the PSG reportable segment
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
and enables the Company to help address the need for high energy efficiency and power density in the AC-DC stage in power supply units for AI data centers.
The preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their relative fair values, was as follows (in millions):
| Purchase Price Allocation | |||||
| Cash | $ | 1.3 | |||
| Inventories | 20.8 | ||||
| Property, plant and equipment | 4.5 | ||||
| Intangible assets | 64.0 | ||||
| Goodwill | 53.7 | ||||
| Other assets | 3.0 | ||||
| Total assets acquired | 147.3 | ||||
| Accounts payable and other accrued liabilities | 20.6 | ||||
| Deferred tax liabilities | 7.9 | ||||
| Total liabilities assumed | 28.5 | ||||
| Net assets acquired/purchase price | $ | 118.8 |
Acquired intangible assets consisted primarily of developed technology of $56.0 million, customer relationships of $7.0 million and a trade name of $1.0 million.
The goodwill generated from the acquisition is primarily attributable to synergies that are expected to be achieved from the integration of the business and is not deductible for tax purposes. Consistent with the assignment of goodwill, the consolidated results of the acquired business are included within the Company's PSG operating and reportable segment following the acquisition.
The purchase price allocation is considered preliminary as the Company finalizes its determination relating to the valuation of assets and liabilities and finalizes key assumptions, approaches and judgments with respect to intangible assets acquired and the related tax effects.
Unaudited pro-forma consolidated results of operations are not included considering the level of significance of the acquisition to the results of the Company. Acquisition-related costs of approximately $3 million were expensed as incurred.
Note 5: Restructuring, Asset Impairments and Other Charges, Net
Details of restructuring, asset impairments and other charges, net were as follows (in millions):
| Restructuring | Asset Impairments | Other Charges | Total | |||||||||||||||||||||||||||||||||||
| Quarter ended April 4, 2025: | ||||||||||||||||||||||||||||||||||||||
| 2025 Manufacturing Realignment Program | $ | 60.2 | $ | 431.5 | $ | 44.9 | $ | 536.6 | ||||||||||||||||||||||||||||||
| 2024 Business Realignment | 0.9 | — | 1.8 | 2.7 | ||||||||||||||||||||||||||||||||||
| Total | $ | 61.1 | $ | 431.5 | $ | 46.7 | $ | 539.3 | ||||||||||||||||||||||||||||||
| Quarter ended March 29, 2024: | ||||||||||||||||||||||||||||||||||||||
| Other | $ | 1.0 | $ | — | $ | 0.4 | $ | 1.4 | ||||||||||||||||||||||||||||||
| Total | $ | 1.0 | $ | — | $ | 0.4 | $ | 1.4 |
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
A summary of changes in the accrued restructuring balance by program was as follows (in millions):
| As of | As of | ||||||||||||||||||||||
| December 31, 2024 | Charges | Usage | April 4, 2025 | ||||||||||||||||||||
| 2025 Manufacturing Realignment Program | $ | — | $ | 60.2 | $ | (17.9) | $ | 42.3 | |||||||||||||||
| 2024 Business Realignment | 54.4 | 0.9 | (11.0) | 44.3 | |||||||||||||||||||
| Total | $ | 54.4 | $ | 61.1 | $ | (28.9) | $ | 86.6 |
2025 Manufacturing Realignment Program
During the first quarter of 2025, the Company announced restructuring and cost reduction initiatives based on an evaluation of its operating structure, business strategy, manufacturing technologies and internal capabilities to realign internal manufacturing capacity and capabilities with anticipated long-term needs. The program also included certain business strategy changes primarily related to headcount reductions in the sales and engineering teams within the ISG reportable segment. These initiatives resulted in a reduction of global workforce, impairments of certain long-lived assets that met the held-for-sale criteria, inventory obsolescence and certain other charges during the quarter ended April 4, 2025.
Restructuring
Restructuring charges include estimated severance payments and related benefit expenses for employees who were notified of their employment termination or terminated during the period.
On February 24, 2025, the Company initiated a restructuring plan that involves reducing its global workforce by approximately 2,400 employees, and in connection with such plan, the Company expects to incur total severance and other related benefit expenses of approximately $63 million. Of this, approximately $60.2 million was recognized during the quarter ended April 4, 2025. Substantially all of the remaining charges are expected to be recognized during 2025.
Of the aggregate expenses relating to the actions announced so far in 2025, the Company paid approximately $17.9 million to approximately 1,800 terminated employees and had approximately $42.3 million accrued as of April 4, 2025. The remaining employees subject to this restructuring program are expected to be terminated over the next 12 months and substantially all applicable severance and benefit payments are expected to be paid over the same time period.
Asset Impairment
The Company recorded impairment charges of $431.5 million during the quarter ended April 4, 2025 related to previous investments in manufacturing equipment at certain manufacturing facilities pursuant to held-for-sale accounting guidance. During the first quarter of 2025, it was determined that the Company met all criteria to be classified as assets held-for-sale with the expectation that these assets would be disposed of within 12 months. The impairment charges were determined as the difference between the carrying value of these long-lived assets and their estimated fair values, less estimated costs to sell such assets. Fair values were determined primarily using unobservable inputs such as estimated sales prices based on available market prices, underlying equipment condition and market demand for similar equipment, inputs categorized as Level 3 within the fair value hierarchy. The Company utilized a third-party valuation specialist to assist in the determination of assets held-for-sale.
Additional impairment charges for manufacturing equipment may be incurred in future periods pursuant to the timing of meeting the necessary criteria for being classified as held-for-sale.
Other Charges
Other charges of $44.9 million noted in the table above consisted primarily of estimated costs associated with selling the equipment and contract termination costs related to adjusting the Company's operating structure in connection with the 2025 Manufacturing Realignment Program. The estimated costs associated with selling equipment of $28.3 million were primarily comprised of dismantling costs and brokerage fees which have not yet been paid and are included within Accrued expenses and other current liabilities on the Consolidated Balance Sheet.
The Company also recorded $45.7 million related to the write-off of consumables, manufacturing supplies and obligations for certain unfulfilled purchase commitments due to the manufacturing capacity reduction actions taken under the 2025
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
Manufacturing Realignment Program. These charges were recorded within Cost of revenue in the Consolidated Statement of Operations.
During the quarter ended April 4, 2025, the Company recorded $237.7 million relating to excess and obsolete inventory charges, of which $232.2 million related to inventory primarily considered work in progress within the ISG reportable segment as a result of changes in business strategy due to the 2025 Manufacturing Realignment Program. These charges were recorded within Cost of revenue in the Consolidated Statement of Operations.
The Company continues to evaluate for potential operating improvements and efficiencies.
Note 6: Balance Sheet Information and Other Supplemental Disclosures
Goodwill
Goodwill is tested for impairment annually on the first day of the fourth quarter, or more frequently, if events or changes in circumstances (each, a "triggering event") would more likely-than-not reduce the fair value of a reporting unit below its carrying value.
The following table summarizes goodwill by operating and reportable segments (in millions):
| As of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| April 4, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill | Accumulated Impairment Losses | Carrying Value | Goodwill | Accumulated Impairment Losses | Carrying Value | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating and Reportable Segments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AMG | $ | 1,562.3 | $ | (748.9) | $ | 813.4 | $ | 1,562.3 | $ | (748.9) | $ | 813.4 | ||||||||||||||||||||||||||||||||||||||||||||
| PSG | 735.8 | (31.9) | 703.9 | 682.1 | (31.9) | 650.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ISG | 124.3 | — | 124.3 | 124.3 | — | 124.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 2,422.4 | $ | (780.8) | $ | 1,641.6 | $ | 2,368.7 | $ | (780.8) | $ | 1,587.9 |
The change in the goodwill balance from December 31, 2024 to April 4, 2025 was as follows (in millions):
| Net balance as of December 31, 2024 | $ | 1,587.9 | |||
| Addition related to business acquisition | 53.7 | ||||
| Net balance as of April 4, 2025 | $ | 1,641.6 |
See Note 4: ''Acquisition,'' for further discussion on the acquisition of the SiC JFET technology business from Qorvo US, Inc., and certain of its subsidiaries within the PSG operating and reportable segment.
Inventories
Details of inventories were as follows (in millions):
| As of | |||||||||||
| April 4, 2025 | December 31, 2024 | ||||||||||
| Inventories: | |||||||||||
| Raw materials | $ | 310.8 | $ | 349.8 | |||||||
| Work in process | 1,345.1 | 1,391.9 | |||||||||
| Finished goods | 422.3 | 500.3 | |||||||||
| Total | $ | 2,078.2 | $ | 2,242.0 |
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
Property, Plant and Equipment, net
Details of property, plant and equipment, net were as follows (in millions):
| As of | |||||||||||
| April 4, 2025 | December 31, 2024 | ||||||||||
| Land | $ | 116.5 | $ | 115.7 | |||||||
| Buildings and improvements | 1,446.2 | 1,423.2 | |||||||||
| Machinery, equipment and other | 6,269.7 | 6,781.3 | |||||||||
| Property, plant and equipment, gross | 7,832.4 | 8,320.2 | |||||||||
| Less: Accumulated depreciation | (3,991.9) | (3,958.8) | |||||||||
| Total | $ | 3,840.5 | $ | 4,361.4 |
The table above reflects the reduction to property, plant and equipment resulting from the post-impairment categorization of $45.7 million to Assets held-for-sale during the quarter ended April 4, 2025 on the Consolidated Balance Sheet. See Note 5: ''Restructuring, Asset Impairments and Other Charges, Net,'' for additional information.
Defined Benefit Plans
The Company recognizes the aggregate amount of all over-funded plans as assets and the aggregate amount of all underfunded plans as liabilities in its financial statements. As of April 4, 2025, the net assets for the over-funded plans totaled $24.0 million. The total accrued pension liability for underfunded plans was $36.1 million, of which the current portion of $3.1 million was classified as Accrued expenses and other current liabilities. During the quarter ended April 4, 2025, the Company incurred curtailment losses of $1.5 million in connection with the 2025 Manufacturing Realignment Program. See Note 5: ''Restructuring, Asset Impairments and Other Charges, Net,'' for additional information. As of December 31, 2024, the net funded status for all the plans was a liability of $36.9 million, of which the current portion of $1.9 million was classified as Accrued expenses and other current liabilities.
The components of the net periodic pension expense were as follows (in millions):
| Quarters Ended | |||||||||||||||||||||||
| April 4, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Service cost | $ | 1.1 | $ | 1.3 | |||||||||||||||||||
| Interest cost | 1.3 | 1.4 | |||||||||||||||||||||
| Expected return on plan assets | (1.2) | (1.2) | |||||||||||||||||||||
| Curtailment losses | 1.5 | — | |||||||||||||||||||||
| Total | $ | 2.7 | $ | 1.5 |
Leases
Operating lease arrangements are comprised primarily of real estate and equipment agreements. The components of lease expense were as follows (in millions):
| Quarters Ended | |||||||||||||||||||||||
| April 4, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Operating lease | $ | 17.8 | $ | 12.6 | |||||||||||||||||||
| Variable lease | 1.1 | 1.3 | |||||||||||||||||||||
| Short-term lease | 0.8 | 0.4 | |||||||||||||||||||||
| Total | $ | 19.7 | $ | 14.3 |
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
The operating lease liabilities and operating ROU assets recognized in the Consolidated Balance Sheets were as follows (in millions):
| As of | |||||||||||
| April 4, 2025 | December 31, 2024 | ||||||||||
| Operating lease liabilities included in: | |||||||||||
| Accrued expenses and other current liabilities | $ | 31.5 | $ | 31.5 | |||||||
| Other long-term liabilities | 251.0 | 244.7 | |||||||||
| Total | $ | 282.5 | $ | 276.2 | |||||||
| Operating ROU assets included in: | |||||||||||
| Other assets | $ | 248.9 | $ | 249.7 | |||||||
As of April 4, 2025, the weighted-average remaining lease-terms were 9.6 years and 16.8 years, and the weighted-average discount rates were 5.2% and 5.7%, for operating leases and financing leases, respectively.
Supplemental Disclosure of Cash Flow Information
Certain of the cash and non-cash activities were as follows (in millions):
| Quarters Ended | ||||||||||||||||||||
| April 4, 2025 | March 29, 2024 | |||||||||||||||||||
| Non-cash investing activities: | ||||||||||||||||||||
| Capital expenditures in accounts payable and other long-term liabilities | $ | 116.0 | $ | 232.2 | ||||||||||||||||
| Operating ROU assets obtained in exchange for lease liabilities | 12.3 | 15.5 | ||||||||||||||||||
| Cash paid for: | ||||||||||||||||||||
| Interest expense | $ | 23.2 | $ | 24.3 | ||||||||||||||||
| Income taxes | 21.5 | 23.6 | ||||||||||||||||||
| Operating lease payments in operating cash flows | 10.8 | 11.4 |
The following table shows a reconciliation of the captions in the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows (in millions):
| As of | |||||||||||||||||||||||
| April 4, 2025 | December 31, 2024 | March 29, 2024 | December 31, 2023 | ||||||||||||||||||||
| Consolidated Balance Sheets: | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 2,762.5 | $ | 2,691.3 | $ | 2,614.4 | $ | 2,483.0 | |||||||||||||||
| Restricted cash (included in other current assets) | 2.7 | 2.1 | 2.3 | 2.0 | |||||||||||||||||||
| Cash, cash equivalents and restricted cash in Consolidated Statements of Cash Flows | $ | 2,765.2 | $ | 2,693.4 | $ | 2,616.7 | $ | 2,485.0 |
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
Note 7: Long-Term Debt
Long-term debt consisted of the following (in millions, with annualized interest rates):
| As of | |||||||||||
| April 4, 2025 | December 31, 2024 | ||||||||||
| Revolving Credit Facility due 2028, interest payable monthly at 5.67% and 5.69% | $ | 375.0 | $ | 375.0 | |||||||
| 0.50% Notes due 2029 (1) | 1,500.0 | 1,500.0 | |||||||||
| 0% Notes due 2027 | 804.9 | 804.9 | |||||||||
| 3.875% Notes due 2028 (2) | 700.0 | 700.0 | |||||||||
| Gross long-term debt | 3,379.9 | 3,379.9 | |||||||||
| Less: Unamortized debt discount (3) | (3.1) | (3.4) | |||||||||
| Less: Unamortized debt issuance costs (4) | (28.5) | (30.6) | |||||||||
| Net long-term debt | $ | 3,348.3 | $ | 3,345.9 |
(1)Interest is payable on March 1 and September 1 of each year at 0.50% annually.
(2)Interest is payable on March 1 and September 1 of each year at 3.875% annually.
(3)Debt discount of $3.1 million and $3.4 million for the 3.875% Notes as of April 4, 2025 and December 31, 2024, respectively.
(4)Debt issuance costs of $20.5 million and $21.7 million for the 0.50% Notes, $6.9 million and $7.7 million for the 0% Notes and $1.1 million and $1.2 million for the 3.875% Notes, in each case as of April 4, 2025 and December 31, 2024, respectively.
Expected maturities of gross long-term debt as of April 4, 2025 were as follows (in millions):
| Period | Expected Maturities | |||||||
| Remainder of 2025 | $ | — | ||||||
| 2026 | — | |||||||
| 2027 | 804.9 | |||||||
| 2028 | 1,075.0 | |||||||
| 2029 | 1,500.0 | |||||||
| Thereafter | — | |||||||
| Total | $ | 3,379.9 |
The Company was in compliance with its covenants under all debt agreements as of April 4, 2025, and expects to remain in compliance with all covenants over at least the next 12 months.
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
Note 8: Earnings Per Share and Equity
Earnings Per Share
Net income per share of common stock for calculating basic and diluted earnings per share was calculated as follows (in millions, except per share data):
| Quarters Ended | |||||||||||||||||||||||
| April 4, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Net income (loss) for diluted earnings per share of common stock | $ | (486.1) | $ | 453.0 | |||||||||||||||||||
| Basic weighted-average shares of common stock outstanding | 421.3 | 428.1 | |||||||||||||||||||||
| Dilutive effect of share-based awards | — | 0.8 | |||||||||||||||||||||
| Dilutive effect of convertible notes and warrants | — | 7.6 | |||||||||||||||||||||
| Diluted weighted-average shares of common stock outstanding | 421.3 | 436.5 | |||||||||||||||||||||
| Net income (loss) per share of common stock attributable to ON Semiconductor Corporation: | |||||||||||||||||||||||
| Basic | $ | (1.15) | $ | 1.06 | |||||||||||||||||||
| Diluted | $ | (1.15) | $ | 1.04 |
Basic income (loss) per share of common stock is computed by dividing net income (loss) for basic earnings by the weighted-average number of shares of common stock outstanding during the period. To calculate the diluted weighted-average shares of common stock outstanding, the treasury stock method has been applied to calculate the number of incremental shares from the assumed issuance of shares relating to RSUs. The excluded number of anti-dilutive share-based awards was 1.8 million and 0.3 million for the quarters ended April 4, 2025 and March 29, 2024, respectively, as the inclusion would have the effect of decreasing the net loss per common share attributable to the Company. The increase in the anti-dilutive share-based awards for the quarter ended April 4, 2025 was due to the net loss for the quarter ended March 29, 2024.
The dilutive impacts related to the 0.50% Notes and 0% Notes have been calculated using the if-converted method for the quarters ended April 4, 2025 and March 29, 2024. The 0.50% Notes and the 0% Notes are repayable in cash up to the par value and in cash or shares of common stock for the excess over par value. 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 0.50% Notes and 0% Notes when the stock price is above $103.87 and $52.97 per share, respectively.
The dilutive impact of the warrants issued concurrently with the issuance of the 0.50% Notes and 0% Notes with exercise prices of $156.78 and $74.34, respectively, has been included in the calculation of diluted weighted-average common shares outstanding, if applicable.
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
Equity
Share Repurchase Program
Under the share repurchase program announced on February 6, 2023 (the "Share Repurchase Program"), the Company may repurchase up to $3.0 billion (exclusive of fees, commissions and other expenses) of the Company's common stock through December 31, 2025. Activity under the Share Repurchase Program during the quarters ended April 4, 2025 and March 29, 2024, respectively, was as follows (in millions, except per share data):
| Quarters Ended | |||||||||||||||||||||||
| April 4, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Number of repurchased shares (1) | 6.1 | 1.3 | |||||||||||||||||||||
| Aggregate purchase price | $ | 300.0 | $ | 100.0 | |||||||||||||||||||
| Fees, commissions and excise tax | 2.6 | — | |||||||||||||||||||||
| Total | $ | 302.6 | $ | 100.0 | |||||||||||||||||||
| Weighted-average purchase price per share (2) | $ | 49.35 | $ | 78.57 |
(1) None of these shares had been reissued or retired as of April 4, 2025, but may be reissued later.
(2) Exclusive of fees, commissions or other expenses.
As of April 4, 2025, the authorized amount remaining under the Share Repurchase Program was approximately $1,486.0 million.
Shares for Restricted Stock Units Tax Withholding
The amounts remitted for employee withholding taxes during the quarters ended April 4, 2025 and March 29, 2024 were $22.9 million and $37.7 million, respectively, for which the Company withheld 0.5 million and 0.5 million shares of common stock, respectively, that were underlying the RSUs that vested. This tax withholding activity is separate from the Share Repurchase Program.
Non-Controlling Interest in Leshan-Phoenix Semiconductor Company Limited (“Leshan”)
The results of Leshan have been consolidated in the Company's financial statements. The Leshan non-controlling interest balance was $19.0 million as of April 4, 2025 after including its $0.9 million share of earnings for the quarter ended April 4, 2025. As of December 31, 2024, the Leshan non-controlling interest balance was $18.1 million.
Note 9: Share-Based Compensation
Total share-based compensation expense related to the RSUs, stock grant awards and the ESPP was recorded within the Consolidated Statements of Operations and Comprehensive Income as follows (in millions):
| Quarters Ended | |||||||||||||||||||||||
| April 4, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Cost of revenue | $ | 6.0 | $ | 5.4 | |||||||||||||||||||
| Research and development | 6.3 | 5.7 | |||||||||||||||||||||
| Selling and marketing | 4.7 | 5.2 | |||||||||||||||||||||
| General and administrative | 16.9 | 16.7 | |||||||||||||||||||||
| Share-based compensation expense | 33.9 | 33.0 | |||||||||||||||||||||
| Income tax benefit | (7.1) | (6.9) | |||||||||||||||||||||
| Share-based compensation expense, net of tax | $ | 26.8 | $ | 26.1 |
As of April 4, 2025, the total unrecognized expected share-based compensation expense, net of estimated forfeitures, related to non-vested RSUs with service, performance and market conditions was $164.8 million, which is expected to be recognized over
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
a weighted-average period of 1.9 years. Upon vesting of RSUs or stock grant awards or completion of a purchase under the ESPP, new shares of common stock are issued. The annualized pre-vesting forfeiture rate for RSUs was estimated to be 8% for each of the quarters ended April 4, 2025 and March 29, 2024.
Shares Available
As of April 4, 2025 and December 31, 2024, there was an aggregate of 32.0 million and 33.6 million shares of common stock, respectively, available for grant under the Amended and Restated SIP.
Restricted Stock Units
RSUs generally vest ratably over three years for awards with service conditions and over three or five years for awards with performance, service and market conditions, or a combination thereof, and are settled in shares of common stock upon vesting. A summary of the RSU transactions for the quarter ended April 4, 2025 was as follows (in millions, except per share data):
| Number of Shares | Weighted-Average Grant Date Fair Value Per Share | ||||||||||
| Non-vested RSUs at December 31, 2024 | 3.5 | $ | 76.27 | ||||||||
| Granted | 0.9 | 53.18 | |||||||||
| Achieved | 0.2 | 73.27 | |||||||||
| Released | (1.3) | 73.64 | |||||||||
| Forfeited | (0.1) | 76.51 | |||||||||
| Non-vested RSUs at April 4, 2025 | 3.2 | 70.32 |
Note 10: Commitments and Contingencies
Environmental Contingencies
The Company has encountered and dealt with a number of environmental issues over time relating to the various locations where it conducts its operations and has incurred certain costs related to clean-up activities and environmental remediation efforts. In certain instances, the Company has been indemnified for such costs, often from third parties who were the prior owners of such facilities. Any costs to the Company in connection with such environmental matters have generally not been, and based on the information available, are not expected to be material.
Financing Contingencies
In the ordinary 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, including, but not limited to, material purchase commitments, agreements to mitigate collection risk, leases, utilities arrangements and/or customs guarantees. The Revolving Credit Facility includes $25.0 million available for the issuance of letters of credit, of which $0.9 million was outstanding as of April 4, 2025, which reduced the borrowing capacity under such facility. As of April 4, 2025, the Company also had outstanding guarantees and letters of credit outside of its Revolving Credit Facility totaling $6.8 million.
As part of obtaining financing in the ordinary course of business, the Company issued guarantees related to certain of its subsidiaries, which totaled $0.9 million as of April 4, 2025. 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.
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
Indemnification Contingencies
The Company is a party to a variety of agreements entered into in the ordinary course of business, including acquisition agreements, 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. In the case of certain acquisition agreements, these agreements may require us to maintain such indemnification provisions for the acquiree’s directors, officers and other employees and agents, in certain cases for a number of years following the acquisition.
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
The Company is currently involved in a variety of legal matters that arise in the ordinary course of business. Based on information currently available, 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. However, the litigation process is inherently uncertain, and the Company cannot guarantee that the outcome of any litigation matter will be favorable to the Company.
Securities Class Action And Derivative Litigation Concerning the Company's SiC Business
On December 13, 2023, a putative class action captioned Hubacek v. On Semiconductor Corp., et al., Case No. 1:23-cv-01429 (D. Del.), was filed by an alleged stockholder of the Company in the U.S. District Court for the District of Delaware against the Company and certain of its officers. This action was transferred to the U.S. District Court for the District of Arizona in March of 2024. The initial complaint asserted claims for alleged violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The initial complaint alleged that the defendants made misleading statements regarding the Company's SiC business. An amended complaint was filed on May 31, 2024. The amended complaint again asserts claims for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The plaintiff seeks a ruling that this case may proceed as a class action, and seeks damages, attorneys’ fees and costs. The Company filed a motion to dismiss the amended complaint on July 30, 2024. Upon reviewing the Company’s motion to dismiss the amended complaint, plaintiff deemed it necessary to further amend their complaint. On September 6, 2024, plaintiff filed their second amended complaint. The Company filed a motion to dismiss this second amended complaint on October 10, 2024. Full briefing for this motion to dismiss the second amended complaint was completed on December 20, 2024. Oral arguments for this Motion to Dismiss are scheduled to be heard by the court on June 26, 2025. The Company believes that it has strong legal defenses to the claims asserted in plaintiff’s second amended complaint.
On January 3, 2024, a purported stockholder derivative action captioned Silva v. El-Khoury, et al., Case No. 1:24-cv-00007 (D. Del.), was filed by a purported stockholder of the Company in the U.S. District Court for the District of Delaware. On February 12, 2024, a purported stockholder derivative action captioned Smalley et al. v. El-Khoury et al. Case No. 1:24-cv-00183 (D. Del.), was filed by a purported stockholder of the Company in the U.S. District Court for the District of Delaware. Both aforementioned derivative actions, Silva and Smalley, were voluntarily dismissed without prejudice on April 15, 2024. On February 28, 2024, a purported stockholder derivative action captioned Mumme et al. v. El-Khoury et al. Case No. CV2024-003974 (D. AZ.), was filed by a purported stockholder of the Company in the Superior Court of the State of Arizona in and for the County of Maricopa and on March 15, 2024, a purported stockholder derivative action captioned Chan et al. v. Abe et al. Case No. 2:24-cv-00552 (D. AZ.), was filed by a purported stockholder of the Company in the U.S. District Court for the District of Arizona. The allegations in these derivative complaints are substantially similar to the allegations in the securities class action complaint discussed above. The derivative suits purport to assert claims (1) on behalf of the Company against certain of its officers for contribution under the federal securities laws and (2) against all of the defendants for breach of fiduciary duty, aiding and abetting, unjust enrichment, abuse of control, gross mismanagement, and waste. The plaintiffs seek an award of damages, pre-judgment interest, punitive damages, attorneys’ fees, and other costs and expenses related to the
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
litigation. The Company believes that the plaintiffs lack standing to assert claims on the Company’s behalf. These two pending derivative actions, Mumme and Chan, were stayed by court order, pending the resolution of Hubacek v. On Semiconductor Corp.
Intellectual Property Matters
The Company faces risk of exposure from claims of infringement of the IP rights of others. In the ordinary course of business, the Company receives letters asserting that the Company’s products or components breach another party’s rights. Such letters may request royalty payments from the Company, that the Company cease and desist using certain IP, and/or request other remedies.
Note 11: Fair Value Measurements
Fair Value of Financial Instruments
The following tier level hierarchy is used to determine fair values of the financial instruments:
-
Level 1: based on observable inputs that reflect quoted prices for identical assets or liabilities in active markets.
-
Level 2: based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly.
-
Level 3: based on the use of unobservable inputs for the assets and liabilities and other types of analyses.
The carrying values of cash and cash equivalents, which include money market funds and demand and time deposits, approximate fair value because of the short-term maturity of these instruments. Money market funds and demand deposits are classified as Level 1 while time deposits are classified as Level 2 within the fair value hierarchy. The carrying amounts of other current assets, excluding assets held-for-sale, and liabilities, such as accounts receivable and accounts payable, approximate fair value due to the short-term maturity of the amounts, and such amounts are considered Level 2 in the fair value hierarchy.
The Company held $250.0 million and $300.0 million of short-term investments in time deposits as of April 4, 2025 and December 31, 2024, respectively.
Fair Value of Long-Term Debt, including Current Portion
The carrying amounts and fair values of the Company's long-term borrowings were as follows (in millions):
| As of | |||||||||||||||||||||||
| April 4, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
| Long-term debt, including current portion (1) | |||||||||||||||||||||||
| 0% Notes | $ | 798.0 | $ | 802.8 | $ | 797.2 | $ | 1,054.4 | |||||||||||||||
| 0.50% Notes | 1,479.5 | 1,254.8 | 1,478.2 | 1,450.4 | |||||||||||||||||||
| 3.875% Notes | 695.8 | 649.2 | 695.5 | 656.3 | |||||||||||||||||||
| Revolving Credit Facility | 375.0 | 375.7 | 375.0 | 373.4 |
(1) Carrying amounts shown are net of unamortized debt discount, if applicable, and unamortized debt issuance costs.
Fair values of the 0% Notes, 0.50% Notes and 3.875% Notes were estimated based on market prices in active markets (Level 1), and the Revolving Credit Facility was estimated based on discounting the remaining principal and interest payments using current market rates for similar debt (Level 2).
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
Note 12: Financial Instruments
Foreign Currencies
As a multinational business, the Company engages in transactions that 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 and 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. The Company is exposed to credit-related losses if counterparties to hedge contracts fail to perform their obligations.
As of April 4, 2025 and December 31, 2024, the Company had net outstanding foreign exchange contracts with notional amounts of $245.9 million and $256.8 million, respectively. Such contracts were obtained through financial institutions and were scheduled to mature within one month 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 (in millions):
| As of | ||||||||||||||||||||||||||
| April 4, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| Buy (Sell) | Notional Amount | Buy (Sell) | Notional Amount | |||||||||||||||||||||||
| Euro | $ | 53.3 | $ | 53.3 | $ | 71.1 | $ | 71.1 | ||||||||||||||||||
| Philippine Peso | 41.8 | 41.8 | 41.0 | 41.0 | ||||||||||||||||||||||
| Korean Won | (58.7) | 58.7 | (39.5) | 39.5 | ||||||||||||||||||||||
| Japanese Yen | 23.3 | 23.3 | 35.0 | 35.0 | ||||||||||||||||||||||
| Czech Koruna | 20.0 | 20.0 | 24.0 | 24.0 | ||||||||||||||||||||||
| Other Currencies - Buy | 45.7 | 45.7 | 39.6 | 39.6 | ||||||||||||||||||||||
| Other Currencies - Sell | (3.1) | 3.1 | (6.6) | 6.6 | ||||||||||||||||||||||
| $ | 122.3 | $ | 245.9 | $ | 164.6 | $ | 256.8 |
Amounts receivable or payable under the contracts were not material as of April 4, 2025 or December 31, 2024. During the quarters ended April 4, 2025 and March 29, 2024, net of the impact of the hedge positions, the realized and unrealized foreign currency transactions totaled a gain of $1.2 million and $1.4 million, respectively. The realized and unrealized foreign currency transactions are included in Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income.
Cash Flow Hedges
Foreign currency risk
The Company's foreign currency forward contracts generally mature within 12 months and are designated as cash flow hedges for accounting purposes. As of April 4, 2025, the notional value of outstanding foreign currency forward contracts designated as cash flow hedges was $132.7 million, with a fair value of $2.3 million recorded as Accrued expenses and other current liabilities. A loss of $3.5 million was recognized as a component of cost of revenue for the quarter ended April 4, 2025. The Company did not identify any ineffectiveness with respect to the notional amounts of the foreign currency forward contracts effective as of April 4, 2025.
Other
As of April 4, 2025, the Company had no outstanding commodity derivatives, currency swaps, options or equity investments held at subsidiaries or affiliated companies. The Company does not hedge the value of its equity investments in its subsidiaries or affiliated companies. The Company is exposed to credit-related losses if its hedge counterparties fail to perform their obligations.
ON SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
As of April 4, 2025, the counterparties to the Company's hedge contracts were held at financial institutions which the Company believes to be highly rated, and no credit-related losses are anticipated.
Note 13: Income Taxes
The Company recognizes interest and penalties accrued related to uncertain tax positions in tax expense in the Consolidated Statements of Operations and Comprehensive Income.
The Company maintains a partial valuation allowance on its U.S. state deferred tax assets and a valuation allowance on foreign net operating losses and tax credits that primarily expire in 2025.
The Company is currently under IRS examination for the 2022 and 2023 tax years. Tax years prior to 2021 are generally not subject to examination by the IRS. For state tax returns, the Company is generally not subject to income tax examinations for tax years prior to 2020. With respect to jurisdictions outside the United States, the Company is generally not subject to examination for tax years prior to 2014.
Note 14: Changes in Accumulated Other Comprehensive Loss
Amounts comprising accumulated other comprehensive loss and reclassifications were as follows (in millions):
| Currency Translation Adjustments | Effects of Cash Flow Hedges | Total | |||||||||||||||||||||
| Balance as of December 31, 2024 | $ | (55.9) | $ | (6.5) | $ | (62.4) | |||||||||||||||||
| Other comprehensive income prior to reclassifications | 1.4 | 8.0 | 9.4 | ||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | — | (3.5) | (3.5) | ||||||||||||||||||||
| Net current period other comprehensive income (1) | 1.4 | 4.5 | 5.9 | ||||||||||||||||||||
| Balance as of April 4, 2025 | $ | (54.5) | $ | (2.0) | $ | (56.5) |
(1) Effects of cash flow hedges were net of tax impact of $1.3 million for the quarter ended April 4, 2025.
Amounts reclassified from accumulated other comprehensive loss to the specific caption within Consolidated Statements of Operations and Comprehensive Income were as follows (in millions):
| Quarters Ended | |||||||||||||||||||||||||||||
| April 4, 2025 | March 29, 2024 | To caption | |||||||||||||||||||||||||||
| Cash flow hedges | $ | (3.5) | $ | (1.8) | Cost of revenue | ||||||||||||||||||||||||
| Interest rate swaps | — | (3.0) | Interest expense | ||||||||||||||||||||||||||
| Total reclassifications | $ | (3.5) | $ | (4.8) |
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