Earnings Per Share and Equity

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Earnings Per Share and Equity

Note 9: Earnings Per Share and Equity

Earnings Per Share

Calculations of net income per common share attributable to ON Semiconductor Corporation are as follows (in millions, except per share data):

	For the years ended December 31,
	2016		2015		2014
Net income attributable to ON Semiconductor Corporation	$	182.1	$	206.2	$	189.7
Basic weighted average common shares outstanding	415.2		421.2		439.5
Add: Incremental shares for:
Dilutive effect of share-based awards	3.8		4.6		4.0
Dilutive effect of convertible notes	1.0		2.0		—
Diluted weighted average common shares outstanding	420.0		427.8		443.5
Net income per common share attributable to ON Semiconductor Corporation:
Basic	$	0.44	$	0.49	$	0.43
Diluted	$	0.43	$	0.48	$	0.43

Basic income per common share is computed by dividing net income attributable to ON Semiconductor Corporation by the weighted average number of common shares outstanding during the period.

The number of incremental shares from the assumed exercise of stock options and assumed issuance of shares relating to restricted stock units is calculated by applying the treasury stock method. Share-based awards whose impact is considered to be anti-dilutive under the treasury stock method were excluded from the diluted net income per share calculation. The excluded number of anti-dilutive share-based awards was approximately 1.7 million, 1.3 million and 6.1 million for the years ended December 31, 2016, 2015 and 2014, respectively.

The dilutive impact related to the Company's 1.00% Notes and 2.625% Notes, Series B is determined in accordance with the net share settlement requirements prescribed by ASC Topic 260, Earnings Per Share. Under the net share settlement calculation, the Company's Convertible Notes are assumed to be convertible into cash up to the par value, with the excess of par value being convertible into common stock. A dilutive effect occurs when the stock price exceeds the conversion price for each of the convertible notes. In periods when the share price is lower than the conversion price, including 2014, the impact is anti-dilutive and therefore has no impact on the Company's earnings per share calculations. Additionally, if the average price of the Company's common stock exceeds $25.96 per share for a reporting period, the Company will also include the effect of the additional potential shares, using the treasury stock method, that may be issued related to the warrants that were issued concurrently with the issuance of the 1.00% Notes. 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 1.00% Notes when the stock price is above $18.50 per share. See Note 8: ''Long-Term Debt'' for a discussion of the conversion prices and other features of the 1.00% Notes and the 2.625% Notes, Series B.

Equity

Share Repurchase Program

Effective August 1, 2012, the Company implemented a share repurchase program for up to $300.0 million of its common stock over a three year period, exclusive of any fees, commissions or other expenses. This program was terminated on December 1, 2014 with approximately $46.3 million remaining of the total authorized amount.

On December 1, 2014, the Company announced a capital allocation policy (the "Capital Allocation Policy") under which the Company intends to return to stockholders approximately 80 percent of free cash flow, less repayments of long-term debt, subject to a variety of factors, including our strategic plans, market and economic conditions and the Board’s discretion. For the purposes of the Capital Allocation Policy, the Company defines free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. The Company also announced a new share repurchase program (the "2014 Share Repurchase Program") pursuant to the Capital Allocation Policy. Under the 2014 Share Repurchase Program, the Company intends to repurchase approximately $1.0 billion of its common shares over a four year period, exclusive of any fees, commissions or other expenses, subject to the same factors and considerations described above. The 2014 Share Repurchase Program was effective December 1, 2014.

There were no repurchases of the Company’s common stock under its share repurchase program during the year ended December 31, 2016 as the Company focused on building up cash reserves for the Fairchild Transaction, which was completed on September 19, 2016.

Information relating to the Company's share repurchase programs is as follows (in millions, except per share data):

	For the years ended December 31,
	2016		2015(5)		2014
Number of repurchased shares (1)	—		30.4		13.9
Beginning accrued share repurchases (2)	$	—	$	—	$	0.6
Aggregate purchase price	—		347.8		121.0
Fees, commissions and other expenses	—		0.4		0.2
Less: ending accrued share repurchases (3)	—		—		—
Total cash used for share repurchases	$	—	$	348.2	$	121.8
Weighted-average purchase price per share (4)	$	—	$	11.46	$	8.71
Available for future purchases at period end	$	628.2	$	628.2	$	976.0

_______________________

(1)    None of these shares had been reissued or retired as of December 31, 2016, but may be reissued or retired by

the Company at a later date.

(2)    Represents unpaid amounts recorded in accrued expenses on the Company's Consolidated Balance Sheet as         of the beginning of the period.

(3)    Represents unpaid amounts recorded in accrued expenses on the Company's Consolidated Balance Sheet as         of the end of the period.

(4)    Exclusive of fees, commissions and other expenses.

(5)    Includes 5.4 million shares, totaling $70.0 million, repurchased concurrently with the issuance of the 1.00%

Notes. See Note 8: ''Long-Term Debt'' for information with respect to the Company's long-term debt.

Shares for Restricted Stock Units Tax Withholding

Treasury stock is recorded at cost and is presented as a reduction of stockholders' equity in the accompanying consolidated financial statements. Shares, with a fair market value equal to the applicable statutory minimum amount of the employee withholding taxes due, are withheld by the Company upon the vesting of restricted stock units to pay the applicable statutory minimum amount of employee withholding taxes and are considered common stock repurchases. The Company then pays the applicable statutory minimum amount of withholding taxes in cash. The amounts remitted in the years ended December 31, 2016 and 2015 were $12.3 million and $14.7 million, respectively, for which the Company withheld approximately 1.3 million and 1.2 million shares of common stock, respectively, that were underlying the restricted stock units that vested. None of these shares had been reissued or retired as of December 31, 2016, but may be reissued or retired by the Company at a later date.

Non-Controlling Interest

The Company's entity which operates assembly and test operations in Leshan, China is owned by a joint venture company, Leshan-Phoenix Semiconductor Company Limited (“Leshan”). The Company owns 80%, of the outstanding equity interests in Leshan and its investment in Leshan has been consolidated in the Company's financial statements.

At December 31, 2016, the non-controlling interest balance was $21.8 million. This balance included the non-controlling interest's $2.4 million share of the earnings for the year ended December 31, 2016 offset by $4.3 million of dividends paid to the non-controlling shareholder.

At December 31, 2015, the non-controlling interest balance was $23.7 million. This balance included the non-controlling interest's $2.8 million share of the earnings for the year ended December 31, 2015.

During the year ended December 31, 2014, the Company acquired an additional 10% of the outstanding equity interest in Leshan for approximately $20.4 million, which was greater than the $10.1 million carrying value of the representative interest in Leshan at the time of the transaction. The Company recorded the $10.3 million difference between the purchase price and the carrying value of the non-controlling interest as additional paid-in capital for the year ended December 31, 2014. This balance was further decreased to $20.9 million at December 31, 2014 due to the non-controlling interest's $2.4 million share of the earnings for the year ended December 31, 2014, offset by approximately $4.2 million of dividends paid to the non-controlling stockholder.