ON Semiconductor Corp. (ONNN)
Q4 2010 Earnings Call
February 3, 2011 8:00 a.m. ET
Ken Rizvi - Director of Finance
Keith Jackson - President, Chief Executive Officer and Director
Donald Colvin - Executive Vice President and Chief Financial Officer
James Schneider - Goldman Sachs
Chris Danely - JP Morgan
Ross Seymore - Deutsche Bank
Steve Smidgy - Raymond James
John Barton - Cowen
Craig Ellis - Caris & Company
Sujeeva De Silva - ThinkEquity
Parag Agarwal - UBS
Craig Berger - FBR Capital Markets
John Vinh - Collins Stewart
Kevin Cassidy - Stifel Nicolaus
Ramesh Misra - Brigantine Advisors
Tristan Gerra - Robert Baird
Patrick Wong - Wedbush Securities
Previous Statements by ONNN
» ON Semiconductor CEO Discusses Q3 2010 Results - Earnings Call Transcript
» ON Semiconductor Q2 2010 Earnings Call Transcript
» ON Semiconductor Q1 2010 Earnings Call Transcript
Thank you Nicole. Good morning and thank you for joining ON Semiconductor's fourth quarter and 2010 annual results conference call. I'm joined today by Keith Jackson, our President and CEO, and Donald Colvin, our CFO. This call is being web cast on the investor relations section of our Web site at onsemi.com and a replay will be available for approximately 30 days following this conference call along with our earnings release for the fourth quarter and the year ended 2010.
The script for today's call is posted on our Web site and will be furnished via a Form 8-K filing. Our earnings release and this presentation include 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 on our Web site in the investor relations section. For the upcoming quarter, we will be attending the Goldman Sachs Technology and Internet Conference on February 15th and presenting at the Morgan Stanley Technology, Media and Telecom Conference on March 3rd.
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 events or results 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-Qs 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 2010 results. Donald.
Thank you Ken and thanks to everyone joining us today. ON Semiconductor Corporation today announced that total revenues in the fourth quarter of 2010 were approximately $579 million, a decrease of approximately 4% from the third quarter of 2010. During the fourth quarter of 2010 the company reported GAAP net income of $61 million or 14 cents per fully diluted share. The fourth quarter 2010 GAAP net income included net charges of 38.2 million or 9 cents per fully diluted share from special items, which are detailed in schedules included in our earnings press release.
GAAP gross margin in the fourth quarter was 41%. Non-GAAP gross margin in the fourth quarter was 41.2%. Fourth quarter 2010 non-GAAP net income was 99.2 million or 22 cents per share on a fully diluted basis including stock based compensation expense. We exited the fourth quarter with cash, cash equivalents and restricted cash of approximately $765 million, an increase of approximately 203 million from the previous quarter.
We also exited the quarter with the lowest net debt position in the company’s history at approximately $123 million. At the end of the fourth quarter total days sales outstanding were approximately 46 days, down approximately two days compared with the third quarter of 2010. ON Semiconductor’s internal inventory increased slightly from third quarter levels on a day basis to 96 days. Included in our total internal inventory is approximately $16 million of bridge inventory related to our announced closure of front end manufacturing lines.
Net of the bridge inventory our inventory days would have been approximately 92 days at the end of the fourth quarter. As expected, distribution inventories increased slightly to approximately 10 weeks exiting the fourth quarter. Cash capital expenditures during the fourth quarter were approximately $43 million bringing 2010 capital expenditures to approximately $189 million. We currently anticipate total capital expenditures for 2011 of approximately $250 million. Now I would like to turn it over to Keith Jackson for additional comments on the business environment.
Thanks Don. Now for an overview of our end markets. During the fourth quarter of 2010 our end market splits were as follows. The computing end market represented approximately 23% of fourth quarter sales. The automotive end market represented approximately 22% of fourth quarter sales. Industrial, military and aerospace end market represented approximately 19% of sales. The consumer end market represented approximately 16% of sales. The communications end market, which includes wireless and networking, represented approximately 16% of sales and the medical end market represented approximately 4% of sales.