SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 2, 2004
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number 000-30419
ON SEMICONDUCTOR CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 36-3840979 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
5005 E. McDowell Road
Phoenix, AZ 85008
(602) 244-6600
(Address and telephone number of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12-b-2 of the Exchange Act). Yes x No ¨
The number of shares outstanding of each of the issuer’s classes of common stock as of the close of business on May 1, 2004:
| Class |
Number of Shares | |
| Common Stock; $.01 par value | 253,313,254 |
| Page | ||
| Part I | ||
| 3 | ||
| 3 | ||
| Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations |
27 | |
| Item 3 Quantitative and Qualitative Disclosures About Market Risk |
47 | |
| 48 | ||
| Part II | ||
| 49 | ||
| 49 | ||
| 50 | ||
| 50 | ||
| 50 | ||
| 50 | ||
| 50 | ||
| 53 | ||
| 54 | ||
2
| Item 1. | Financial Statements |
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions, except share data)
(unaudited)
| April 2, 2004 |
December 31, 2003 |
|||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 221.4 | $ | 186.6 | ||||
| Receivables, net |
153.4 | 136.1 | ||||||
| Inventories, net |
183.8 | 171.6 | ||||||
| Other current assets |
32.5 | 25.7 | ||||||
| Deferred income taxes |
3.1 | 2.7 | ||||||
| Total current assets |
594.2 | 522.7 | ||||||
| Property, plant and equipment, net |
497.2 | 499.1 | ||||||
| Deferred income taxes |
1.7 | 1.3 | ||||||
| Goodwill |
77.3 | 77.3 | ||||||
| Other assets |
43.0 | 61.0 | ||||||
| Total assets |
$ | 1,213.4 | $ | 1,161.4 | ||||
| Liabilities, Minority Interests, Redeemable Preferred Stock and Stockholders’ Deficit |
||||||||
| Accounts payable |
$ | 126.5 | $ | 115.7 | ||||
| Accrued expenses |
102.7 | 89.9 | ||||||
| Income taxes payable |
1.7 | 1.7 | ||||||
| Accrued interest |
16.1 | 25.3 | ||||||
| Deferred income on sales to distributors |
81.1 | 66.2 | ||||||
| Current portion of long-term debt |
15.3 | 11.4 | ||||||
| Total current liabilities |
343.4 | 310.2 | ||||||
| Long-term debt |
1,125.9 | 1,291.5 | ||||||
| Other long-term liabilities |
56.9 | 58.2 | ||||||
| Total liabilities |
1,526.2 | 1,659.9 | ||||||
| Commitments and contingencies (See Note 9) |
— | — | ||||||
| Minority interests in consolidated subsidiaries |
26.4 | 26.4 | ||||||
| Series A cumulative, convertible, redeemable preferred stock ($0.01 par value 100,000 shares authorized, 10,000 shares issued and outstanding; 8% annual dividend rate; redemption value — $163.8 and $131.7 |
123.9 | 119.7 | ||||||
| Common stock ($0.01 par value, 500,000,000 shares authorized, 253,166,766 and 217,299,893 shares issued and outstanding) |
2.5 | 2.2 | ||||||
| Additional paid-in capital |
1,118.2 | 891.3 | ||||||
| Accumulated other comprehensive loss |
(2.5 | ) | (4.4 | ) | ||||
| Accumulated deficit |
(1,581.3 | ) | (1,533.7 | ) | ||||
| Total stockholders’ deficit |
(463.1 | ) | (644.6 | ) | ||||
| Total liabilities, minority interests, redeemable preferred stock and stockholders’ deficit |
$ | 1,213.4 | $ | 1,161.4 | ||||
See accompanying notes to consolidated financial statements.
3
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE LOSS
(in millions, except per share data)
(unaudited)
| Quarter Ended |
||||||||
| April 2, 2004 |
April 4, 2003(1) |
|||||||
| Revenues |
$ | 308.2 | $ | 269.5 | ||||
| Cost of revenues |
212.3 | 194.7 | ||||||
| Gross profit |
95.9 | 74.8 | ||||||
| Operating expenses: |
||||||||
| Research and development |
23.5 | 21.1 | ||||||
| Selling and marketing |
18.4 | 16.1 | ||||||
| General and administrative |
17.2 | 19.6 | ||||||
| Amortization of intangible asset |
— | 3.0 | ||||||
| Restructuring, asset impairments and other, net |
13.1 | — | ||||||
| Total operating expenses |
72.2 | 59.8 | ||||||
| Operating income |
23.7 | 15.0 | ||||||
| Other income (expenses), net: |
||||||||
| Interest expense |
(34.3 | ) | (39.1 | ) | ||||
| Interest income |
0.4 | 0.7 | ||||||
| Realized and unrealized foreign currency gains or losses |
(1.7 | ) | 1.3 | |||||
| Loss on debt prepayment |
(33.0 | ) | (3.5 | ) | ||||
| Other income (expenses), net |
(68.6 | ) | (40.6 | ) | ||||
| Loss before income taxes, minority interests and cumulative effect of accounting change |
(44.9 | ) | (25.6 | ) | ||||
| Income tax provision |
(1.6 | ) | (2.2 | ) | ||||
| Minority interests |
(1.1 | ) | (1.2 | ) | ||||
| Loss before cumulative effect of accounting change |
(47.6 | ) | (29.0 | ) | ||||
| Cumulative effect of accounting change, net of tax of $0 |
— | (21.5 | ) | |||||
| Net loss |
(47.6 | ) | (50.5 | ) | ||||
| Less: Accretion to redemption value of convertible redeemable preferred stock |
(1.8 | ) | — | |||||
| Less: Convertible redeemable preferred stock dividends |
(2.4 | ) | (2.2 | ) | ||||
| Net loss applicable to common stock |
$ | (51.8 | ) | $ | (52.7 | ) | ||
| Comprehensive loss: |
||||||||
| Net loss |
$ | (47.6 | ) | $ | (50.5 | ) | ||
| Foreign currency translation adjustments |
0.7 | 0.7 | ||||||
| Additional minimum pension liability adjustment |
— | 19.6 | ||||||
| Effects of cash flows hedges |
1.2 | 1.4 | ||||||
| Comprehensive loss |
$ | (45.7 | ) | $ | (28.8 | ) | ||
| Loss per common share: |
||||||||
| Basic: |
||||||||
| Net loss applicable to common stock before cumulative effect of accounting change |
$ | (0.23 | ) | $ | (0.18 | ) | ||
| Cumulative effect of accounting change |
— | (0.12 | ) | |||||
| Net loss applicable to common stock |
$ | (0.23 | ) | $ | (0.30 | ) | ||
| Diluted: |
||||||||
| Net loss applicable to common stock before cumulative effect of accounting change |
$ | (0.23 | ) | $ | (0.18 | ) | ||
| Cumulative effect of accounting change |
— | (0.12 | ) | |||||
| Net loss applicable to common stock |
$ | (0.23 | ) | $ | (0.30 | ) | ||
| Weighted average common shares outstanding: |
||||||||
| Basic |
229.5 | 176.4 | ||||||
| Diluted |
229.5 | 176.4 | ||||||
| (1) | Amounts have been revised from those previously reported in the Quarterly Report on Form 10-Q for the quarter ended April 4, 2003 to reflect the consolidation of the Company’s majority-owned investment in Leshan-Phoenix Semiconductor Company Limited and the change in methodology for recognizing actuarial gains or losses relating to its defined benefit pension obligations, as described in Note 1. |
See accompanying notes to consolidated financial statements.
4
ON SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
| Quarter Ended |
||||||||
| April 2, 2004 |
April 4, 2003(1) |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (47.6 | ) | $ | (50.5 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
26.3 | 36.0 | ||||||
| Loss on sale of fixed assets |
12.1 | 0.3 | ||||||
| Loss on debt prepayment |
33.0 | 3.5 | ||||||
| Amortization of debt issuance costs and debt discount |
1.9 | 2.2 | ||||||
| Provision for excess inventories |
— | 4.0 | ||||||
| Cumulative effect of accounting change |
— | 21.5 | ||||||
| Non-cash interest on junior subordinated note payable to Motorola |
3.5 | 3.3 | ||||||
| Deferred income taxes |
(0.8 | ) | (2.5 | ) | ||||
| Stock compensation expense |
— | 0.1 | ||||||
| Other |
1.2 | 1.6 | ||||||
| Changes in assets and liabilities: |
||||||||
| Receivables |
(17.3 | ) | (12.0 | ) | ||||
| Inventories |
(12.2 | ) | (11.0 | ) | ||||
| Other assets |
6.0 | 7.6 | ||||||
| Accounts payable |
10.7 | 33.6 | ||||||
| Accrued expenses |
11.6 | (15.3 | ) | |||||
| Income taxes payable |
— | 3.8 | ||||||
| Accrued interest |
(9.2 | ) | (20.8 | ) | ||||
| Deferred income on sales to distributors |
14.9 | (2.6 | ) | |||||
| Other long-term liabilities |
(1.3 | ) | 1.8 | |||||
| Net cash provided by operating activities |
32.8 | 4.6 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchases of property, plant and equipment |
(30.6 | ) | (6.2 | ) | ||||
| Net cash used in investing activities |
(30.6 | ) | (6.2 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds from debt issuance, net of discount |
— | 190.9 | ||||||
| Proceeds from issuance of common stock under the employee stock purchase plan |
0.5 | 0.2 | ||||||
| Proceeds from stock option exercises and warrants |
3.9 | |||||||