Note 8: Earnings Per Share and Equity

Earnings Per Share

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



	Quarters Ended				Nine Months Ended
	September 28, 2018		September 29, 2017		September 28, 2018		September 29, 2017
Net income attributable to ON Semiconductor Corporation	$	166.9	$	108.7	$	461.8	$	280.8
Basic weighted-average common shares outstanding	425.5		422.2		426.1		421.0
Dilutive effect of share-based awards	3.9		5.3		4.7		5.5
Dilutive effect of convertible notes	5.9		—		10.4		—
Diluted weighted-average common shares outstanding	435.3		427.5		441.2		426.5

Net income per common share attributable to ON Semiconductor Corporation:
Basic	$	0.39	$	0.26	$	1.08	$	0.67
Diluted	$	0.38	$	0.25	$	1.05	$	0.66

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.

To calculate the diluted weighted-average common shares 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 under the treasury stock method were excluded from the diluted net income per share calculation. The excluded number of anti-dilutive shares subject to share-based awards was 0.1 million and zero for the quarters ended September 28, 2018 and September 29, 2017, respectively, and 0.2 million and 0.3 million for the nine months ended September 28, 2018 and September 29, 2017, respectively.

The dilutive impact related to the Company's 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. During the quarter ended September 28, 2018, the average share price exceeded the conversion price for both the 1.00% Notes and the 1.625% Notes, and the impact of the excess over par value is included in calculating the dilutive effect of the convertible notes. Additionally, if the average price of the Company's common stock exceeds $25.96 per share, with respect to the 1.00% Notes, or $30.70 per share, with respect to the 1.625% Notes, during the relevant reporting period, the effect of the additional potential shares that may be issued related to the warrants that were issued concurrently with the issuance of the convertible notes will also be included in the calculation of diluted weighted-average common shares outstanding. 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 and 1.625% Notes, respectively, when the stock price is above $18.50 per share, with respect to the 1.00% Notes, and $20.72 per share, with respect to the 1.625% Notes.

Equity

Share Repurchase Program

Under the Company's share repurchase program (the “Share Repurchase Program”), the Company may repurchase up to $1.0 billion (exclusive of fees, commissions and other expenses) of the Company’s common stock over a period of four years from December 1, 2014, subject to certain contingencies. The Share Repurchase Program expires on November 30, 2018. The Company may repurchase its common stock from time to time in privately negotiated transactions or open market transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act, or by any combination of such methods or other methods. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including the Company’s stock price, corporate and regulatory requirements, restrictions under the Company’s debt obligations and other market and economic conditions. The Share Repurchase Program does not require the Company to purchase any particular amount of common stock and is subject to the discretion of the Company’s board of directors (the “Board”).

During the quarter and nine months ended September 28, 2018, the Company repurchased common stock worth approximately $75.0 million and $115.0 million, respectively, under the Share Repurchase Program. There were zero and $25.0 million of repurchases of the Company's common stock under the Share Repurchase Program during the quarter and nine months ended September 29, 2017, respectively. As of September 28, 2018, the authorized amount remaining under the Share Repurchase Program was $488.2 million.

Information relating to the Share Repurchase Program during the quarter and nine months ended September 28, 2018 is as follows (in millions, except per share data):



	Quarter Ended		Nine Months Ended
	September 28, 2018		September 28, 2018
Number of repurchased shares (1)	3.6		5.3
Aggregate purchase price	$	75.0	$	115.0
Weighted-average purchase price per share (2)	$	20.92	$	21.7

(1) None of these shares had been reissued or retired as of September 28, 2018, but may be reissued or retired by

the Company at a later date.

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

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 RSUs 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 amount remitted for the quarter and nine months ended September 28, 2018 was $9.2 million and $29.2 million, respectively, for which the Company withheld approximately 0.4 million and 1.2 million shares of common stock, respectively, that were underlying the RSUs that vested. The amount remitted for the quarter and nine months ended September 29, 2017 was $11.4 million and $25.0 million, respectively, for which the Company withheld approximately 0.7 million and 1.6 million shares of common stock, respectively, that were underlying the RSUs that vested. None of these shares had been reissued or retired as of September 28, 2018, but may be reissued or retired by the Company at a later date. These repurchases do not count against the Share Repurchase Program.

Non-Controlling Interest

The Company's entity that operates assembly and test operations in Leshan, China is owned by Leshan-Phoenix Semiconductor Company Limited, a joint venture company in which the Company owns a majority of the outstanding equity interests (“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, 2017, the non-controlling interest balance was $22.2 million. This balance increased to $24.3 million as of September 28, 2018, resulting from the non-controlling interest's $2.1 million share of the earnings for the nine months ended September 28, 2018.

As a result of the Company’s acquisition of a majority ownership interest in Aizu Fujitsu Semiconductor Manufacturing Limited (“AFSM”) on October 1, 2018, the Company will, for future reporting periods, consolidate the results of AFSM with those of the Company, and the non-controlling interest held by the minority shareholder will be initially recognized at fair value. See Note 11: ''Fair Value Measurements'' for further information about the investment in AFSM.