ON Semiconductor is taking additional cost reduction measures. In the fourth quarter of 2008, the company began taking initial actions to reduce overall spending levels. The actions included the reduction of 2009 planned capital expenditures to $50 to $60 million from normalized yearly levels of approximately $130 to $140 million, temporary site shutdowns during the fourth quarter of 2008, a hiring freeze, the elimination of second half of 2008 bonus payments and strict controls over all discretionary spending.

The company is also planning a series of additional permanent and temporary actions to reduce its overall cost structure. These planned actions include:

• Factory closures planned for the end of 2009 will be brought forward to the middle of 2009
• Evaluation of other front-end manufacturing locations are ongoing with the objective of closing an additional location by the end of 2009
• Factory shutdowns for 4 to 6 weeks in the first and second quarter of 2009
• Three weeks of unpaid time off for senior executives in both the first and second quarter of 2009 (Equates to an approximate 23 percent decrease in base salary)
• Two weeks of unpaid time off or a 4 day work week (based upon local legal requirements) for other employees in both the first and second quarter of 2009 (Equates to an approximate 15 percent decrease in base salary)
• No annual merit increases
• No bonus payments expected to be paid in 2009
• A reduction in worldwide personnel of approximately 1,500 which equates to a reduction of approximately 10 percent of total payroll expenses

The combination of these and other actions the company is taking is expected to reduce total fixed costs by approximately $40 to $50 million a quarter, of which approximately $10 to $15 million will be from temporary actions. These actions are expected to reduce operating expenses by approximately $20 million from the third quarter of 2008 run-rates and exclude the operating expense impact associated with the Catalyst Semiconductor acquisition which closed in the fourth quarter of 2008.

The company expects initial benefits from these actions to start in the first quarter of 2009 and to increase throughout the year. Once completed, these actions are expected to reduce the revenues required for cash breakeven to approximately $340 million a quarter. To execute these cost reduction actions, the company anticipates it will use approximately $20 to $30 million of cash over the next 5 quarters and incur restructuring and other charges, a portion of which will be recorded in the fourth quarter of 2008.