NON-GAAP MEASURES
To supplement the consolidated financial results prepared in accordance with GAAP, onsemi
uses certain non-GAAP measures, which are adjusted from the most directly comparable GAAP measures to exclude items related to the amortization of acquisition-related intangibles, expensing of
appraised inventory fair market value step-up, inventory valuation adjustments, in-process research and development expenses, restructuring, asset impairments
and other, net, goodwill and intangible asset impairment charges, gains and losses on debt prepayment, non-cash interest expense, actuarial (gains) losses on pension plans and other pension benefits,
third party acquisition and divestiture-related costs, tax impact of these items, and certain other non-recurring items, as necessary. Management does not consider the effects of these items in
evaluating the core operational activities of onsemi. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results, and evaluate onsemis current
performance. In addition, the Company believes that most analysts covering onsemi use the non-GAAP measures to evaluate onsemis performance. Given managements and other relevant use of these non-GAAP measures, onsemi believes these measures are important to investors in understanding onsemis current and future operating results as seen through the eyes of management. In addition,
management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in onsemis core business across different time periods. These non-GAAP measures are not prepared in accordance with, and should not be considered alternatives or necessarily superior to, GAAP financial data and may be different
from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these
financial measures with other companies non-GAAP financial measures, even if they have similar names.
Non-GAAP Revenue
The use of non-GAAP revenue allows management to evaluate, among other things, the revenue from the
Companys core businesses and trends across different reporting periods on a consistent basis, independent of special items. In addition, non-GAAP revenue is an important component of managements
internal performance measurement and incentive and reward process as it is used to assess the current and historical financial results of the business and for strategic decision making, preparing budgets, obtaining targets and forecasting future
results. Management presents this non-GAAP financial measure to enable investors and analysts to evaluate the Companys revenue generation performance relative to the direct costs of operations of
onsemis core businesses.
Non-GAAP Gross Profit and Gross Margin
The use of non-GAAP gross profit and gross margin allows management to evaluate, among other
things, the gross margin and gross profit of the Companys core businesses and trends across different reporting periods on a consistent basis, independent of non-cash items including, generally
speaking, amortization of acquisition-related intangibles, expensing of appraised inventory fair market value step-up, impact of business wind-down and
non-recurring facility costs. In addition, it is an important component of managements internal performance measurement and incentive and reward process as it is used to assess the current and historical
financial results of the business and for strategic decision making, preparing budgets, obtaining targets, and forecasting future results. Management presents this non-GAAP financial measure to
enable investors and analysts to evaluate our revenue generation performance relative to the direct costs of revenue of onsemis core businesses.
Non-GAAP Operating Income and Operating Margin
The use of non-GAAP operating income and operating margin allows management to evaluate,
among other things, the operating margin and operating income of the Companys core businesses and trends across different reporting periods on a consistent basis, independent of non-cash items
including, generally speaking, expensing of appraised inventory fair market value step-up, impact of business wind-down, non-recurring facility costs,
amortization and impairments of intangible assets, goodwill and intangible asset impairment charges, third party acquisition and divestiture related costs, restructuring charges and certain other special items as necessary. In addition, it is an
important component of managements internal performance measurement and incentive and reward process as it is used to assess the current and historical financial results of the business and for strategic decision making, preparing budgets,
obtaining targets, and forecasting future results. Management presents this non-GAAP financial measure to enable investors and analysts to evaluate the Companys revenue generation performance
relative to the direct costs of operations of onsemis core businesses.
Non-GAAP Net
Income Attributable to onsemi and Non-GAAP Diluted Earnings Per Share
The use of non-GAAP net income attributable to onsemi and non-GAAP diluted earnings per share allows management to evaluate the operating results of onsemis core
businesses and trends across different reporting periods on a consistent basis, independent of non-cash items including, generally, the amortization and impairments of intangible assets, goodwill and
intangible asset impairment charges, expensing of appraised inventory fair market value step-up, impact of business wind down, non-recurring facility costs,
restructuring, gains and losses on debt prepayment, non-cash interest expense, actuarial (gains) losses on pension plans and other pension benefits, third party acquisition and divestiture-related
costs, discrete tax items and other non-GAAP tax adjustments and certain other special items, as necessary. In addition, these items are important components of managements internal performance
measurement and incentive and reward process, as they are used to assess the current and historical financial results of the business and for strategic decision making, preparing budgets, setting targets, and forecasting future results. Management
presents these non-GAAP financial measures to enable investors and analysts to understand the results of operations of onsemis core businesses and, to the extent comparable, to compare our
results of operations on a more consistent basis against those of other companies in our industry.
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