Earnings Per Share and Equity

9 Months Ended

Oct. 02, 2020

Note 8: Earnings Per Share and Equity

Earnings Per Share

Net income (loss) per share of common stock attributable to ON Semiconductor Corporation is calculated as follows (in millions, except per share data):


	Quarters Ended				Nine Months Ended
	October 2, 2020		September 27, 2019		October 2, 2020		September 27, 2019
Net income (loss) attributable to ON Semiconductor Corporation	$	160.6	$	(60.7)	$	145.2	$	155.2
Basic weighted-average shares of common stock outstanding	410.8		410.4		410.5		411.0
Dilutive effect of share-based awards	1.8		—		1.6		1.7
Dilutive effect of convertible notes	5.7		—		2.3		2.6
Diluted weighted-average shares of common stock outstanding	418.3		410.4		414.4		415.3

Net income (loss) per share of common stock attributable to ON Semiconductor Corporation:
Basic	$	0.39	$	(0.15)	$	0.35	$	0.38
Diluted	$	0.38	$	(0.15)	$	0.35	$	0.37

Basic income (loss) per share of common stock is computed by dividing net income (loss) attributable to the Company 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 number of incremental shares from the assumed exercise of stock options and assumed issuance of shares relating to RSUs is calculated by applying the treasury stock method. Share-based awards whose impact is considered to be anti-dilutive were excluded from the diluted weighted-average shares of common stock outstanding. The excluded number of anti-dilutive share-based awards was zero and 2.1 million for the quarters ended October 2, 2020 and September 27, 2019, respectively, and 1.0 million and 2.1 million for the nine months ended October 2, 2020 and September 27, 2019, respectively.

The dilutive impact related to the 1.00% Notes and 1.625% Notes is determined in accordance with the net share settlement requirements, under which 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. The average share price for the quarter ended October 2, 2020 exceeded the conversion price for both the 1.00% Notes and 1.625% Notes and the impact of the excess over par value was included in calculating the dilutive effect of the convertible notes.

Equity

Share Repurchase Program

Under the Company's share repurchase program announced on November 15, 2018 (the “Share Repurchase Program”), the Company may repurchase up to $1.5 billion (exclusive of fees, commissions and other expenses) of the Company’s common stock from December 1, 2018 through December 31, 2022.

There were no repurchases and $13.1 million in repurchases of the Company's common stock under the Share Repurchase Program during the quarters ended October 2, 2020 and September 27, 2019, respectively. There were $65.3 million and $138.9 million in repurchases of the Company's common stock under the Share Repurchase Program during the nine months ended October 2, 2020 and September 27, 2019, respectively. As of October 2, 2020, the authorized amount remaining under the Share Repurchase Program was $1,295.8 million.

Activity under the Share Repurchase Program during the quarter and nine months ended October 2, 2020 and September 27, 2019 were as follows (in millions, except per share data):


	Quarters Ended				Nine Months Ended
	October 2, 2020		September 27, 2019		October 2, 2020		September 27, 2019
Number of repurchased shares (1)	—		0.8		3.6		7.8
Aggregate purchase price	$	—	$	13.1	$	65.3	$	138.9
Fees, commissions and other expenses	—		0.1		0.1		0.1

Total cash used for share repurchases	$	—	$	13.2	$	65.4	$	139.0
Weighted-average purchase price per share (2)	$	—	$	17.18	$	18.08	$	17.89

(1) None of these shares had been reissued or retired as of October 2, 2020, but may be reissued or retired later.

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

Shares for Restricted Stock Units Tax Withholding

The amounts remitted for employee withholding taxes during the quarter and nine months ended October 2, 2020 were $0.5 million and $17.1 million, respectively, for which the Company withheld less than 0.1 million and approximately 1.0 million shares of common stock, respectively, that were underlying the RSUs that vested. The amounts remitted during the quarter and nine months ended September 27, 2019 were $4.4 million and $31.6 million, respectively, for which the Company withheld approximately 0.2 million and 1.5 million shares of common stock, respectively, that were underlying the RSUs that vested. None of these shares had been reissued or retired as of October 2, 2020, but may be reissued or retired by the Company at a later date.

Non-Controlling Interest

The Company owns 80% of the outstanding equity interests in a joint venture, Leshan-Phoenix Semiconductor Company Limited (“Leshan”), which operates assembly and test operations in Leshan, China. The results of Leshan have been consolidated in the Company's financial statements. As of December 31, 2019, the non-controlling interest balance was $22.4 million. This balance increased to $23.8 million as of October 2, 2020, resulting from the non-controlling interest’s $1.4 million share of the earnings for the nine months ended October 2, 2020.

During the quarter ended April 3, 2020, the Company acquired the remaining 40% of the equity interest in ON Semiconductor Aizu Co., Ltd., ("OSA") from Fujitsu Semiconductor Limited (“FSL”), whereby OSA became a wholly-owned subsidiary of the Company. OSA operates a front-end wafer fabrication facility in Aizuwakamatsu, Japan. The purchase price payable to FSL for the remaining 40% equity, offset by the purchase price adjustment, resulted in the Company receiving $26.0 million in settlement of the purchase price from FSL during the quarter ended April 3, 2020. The results of OSA have been consolidated in the Company’s financial statements since the fourth quarter of 2018, when the Company acquired the majority equity interest.

Stockholders' Rights Plan

On June 7, 2020, the Company's Board of Directors authorized and declared a dividend of one preferred share purchase right (a “Right”) to be issued as of 5:00 p.m. New York City time on June 18, 2020 for each outstanding share of common stock to the stockholders of record on that date. In connection with the Rights, the Company and Computershare Trust Company, N.A., as rights agent, entered into a Rights Agreement, dated as of June 8, 2020 (the “Rights Agreement”). Each Right entitles the registered holder of common stock to purchase from the Company one one-hundred-thousandth of a share (a “Unit”) of Series B Junior Participating Preferred Stock, par value $0.01 per share, at a purchase price of $100.80 per Unit (the “Purchase Price”), subject to adjustment as provided in the Rights Agreement. Subject to certain exceptions, if a person or group becomes the beneficial owner of more than 15% of the Company’s outstanding shares of common stock, the Rights will become exercisable for that number of shares of Common Stock having a market value of two times the Purchase Price. The Rights, which have a de minimis value as of October 2, 2020, expire on the earlier of (i) the close of business on June 7, 2021, (ii) the time at which the Rights are redeemed pursuant to the Rights Agreement, (iii) the closing of any merger or other acquisition transaction involving the Company that has been approved by the Company’s Board of Directors, at which time the Rights are terminated, and (iv) the time at which the Rights are exchanged pursuant to the Rights Agreement. The Rights are in all respects subject to and governed by the provisions of the Rights Agreement.