ON Semiconductor Corp. (ONNN)
Q4 2009 Earnings Call
February 03, 2010 5:00 pm ET
Ken Rizvi - IR
Donald Colvin - EVP, CFO and Treasurer
Keith Jackson - President and CEO
Robert MacKenzie - FBR Capital Markets
Parag Agarwal - UBS
John Barton - Cowen
Chris Danely - JPMorgan
Bob Gujavarty - Deutsche Bank
Ramesh Misra - Brigantine Advisors
Terence Whalen - Citi
Steve Smigie - Raymond James
Kevin Cassidy - Thomas Weisel Partners
Patrick Wang - Wedbush Securities
Gus Richard - Piper Jaffray
Previous Statements by ONNN
» ON Semiconductor Corporation Q3 2009 Earnings Call Transcript
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I would now like to turn the conference over to Ken Rizvi. Please go ahead, sir.
Thank you, [Stephanie]. Good afternoon and thank you for joining ON Semiconductor Corporation's fourth quarter 2009 conference call. I am joined today by Keith Jackson, our President and CEO; and Donald Colvin, our CFO.
This call is being webcast on the Investor Relations section of our website at www.onsemi.com and will be available for approximately 30 days following this conference call along with our earnings release for the fourth quarter of 2009. The script for today's call is posted on our website and will be furnished via a Form 8-K filing.
Our earnings release in this presentation includes certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable measures under GAAP are in our earnings release and posted separately on our website in the Investor Relations section.
In the upcoming quarter, we will present at the Deutsche Bank Small and Mid-Cap Conference on February 9th, Morgan Stanley Technology, Media and Telecom Conference on March 3rd and we will be hosting our Analyst Day in Scottsdale, Arizona on February 26th.
During the course of this conference call, we will make projections or other forward-looking statements regarding future events or the future financial performance of the company. The words believe, estimate, anticipate, intend, expect, plan or similar expressions are intended to identify forward-looking statements. We wish to caution that such statements are subject to risks and uncertainties that could cause actual results or events to differ materially.
Important factors relating to our business, including factors that could cause actual results to differ from our forward-looking statements are described in our Form 10-K, Form 10-Q's and other filings with the SEC. The company assumes no obligation to update forward-looking statements to reflect actual results, change assumptions or other factors.
Now, let's hear from Donald Colvin, who will provide an overview of the fourth quarter and 2009 annual results. Donald?
Thanks Ken, and thanks to everyone who is joining us today. ON Semiconductor Corporation today announced the total revenues in the fourth quarter of 2009 were $497.1 million, an increase of approximately 5% from the third quarter of 2009.
During the fourth quarter of 2009, the company reported GAAP net income of $68 million or $0.15 per fully diluted share. The fourth quarter 2009 GAAP net income included net charges of $16.9 million, or $0.04 per fully diluted share, from special items, which are detailed and scheduled to our earnings release.
Fourth quarter 2009 non-GAAP net income was $84.9 million or $0.19 per share on a fully diluted basis. And includes stock based compensation expense. Stock based compensation expense was previously excluded in our non-GAAP net income and fourth quarter 2009 outlook. We intend to include stock based compensation expense on a go forward in our non-GAAP outlook, based upon practices of our industry peers and feedback from the analyst community.
Net income during the fourth quarter of 2009 benefited from an accrued gain on our overseas pension plans and received a recession development grants during the quarter resulting on a net benefit to income to a fully diluted share of approximately $0.03 during the fourth quarter. We do not expect to see a similar benefit in the first quarter of 2010 and therefore our operating expense guidance reflects an increase over fourth quarter 2009 levels.
We exited the fourth quarter of 2009 with cash, cash equivalents and short-term investments of approximately $571.2 million, a record high in the company's history. In addition, we exited the fourth quarter with the lowest net debt position in our history as a publicly traded company with approximately $362 million in net debt or less than one time on last 12 months adjusted EBITDA.
At the end of the fourth quarter, total days sales outstanding decreased from the third quarter by approximately three days to approximately 48 days. ON Semiconductor's total internal inventory was flat with third quarter levels on a day's basis at approximately 81 days. Included in our total inventory is approximately $2 million of inventory written-up to fair value related to our acquisitions and approximately $27 million of bridge inventory related to our announced closure of front-end manufacturing lines.
Net of the bridge inventory and inventory written up to fair value, our inventory days would have been approximately 73 days at the end of the fourth quarter. Distribution inventories were at the lowest level in the company's history exiting the fourth quarter on a week's basis at approximately eight weeks.
Cash capital expenditures during the fourth quarter were approximately $9 million, which was approximately $15 million below our initial expectations. As a result, this $15 million delta will roll into our 2010 capital expenditures plan for 2010 therefore we anticipate approximately $135 million in cash capital expenditures.