Q2 2013
--------------
Revenue $1,188 million
GAAP Gross margin 45.0%
GAAP Operating margin 14.3%
GAAP Diluted earnings per share $0.43
Non-GAAP Gross margin 45.5%
Non-GAAP Operating margin 21.5%
Non-GAAP Diluted Earnings per share $0.71
- Trailing twelve month adjusted EBITDA $1,235 million
- Net debt reduced $170 million year-on-year to $2,812 million
- Announced new 10 million share repurchase program
NXP Semiconductors N.V. (
"Our revenue results for the second quarter of 2013 came in at the higher end of our guidance, as NXP delivered Product revenue of $1,159 million, a ten percent sequential increase, and a twelve percent increase from the comparable year ago period. Total NXP revenue in the second quarter was $1,188 million, just over a nine percent sequential increase, and nearly a nine percent increase from the comparable year ago period," said Richard Clemmer, NXP Chief Executive Officer.
"Our revenue performance during the quarter reflected robust double digit sequential growth across all of our HPMS end-markets with a strong rebound in growth in our Infrastructure & Industrial and our Portable & Computing business. Our Identification business continues to perform very well, as a result of strong ongoing demand for our banking and transit products, offset slightly by product transitions in our mobile payments business. Our Automotive business delivered strong sequential growth due to better than seasonal demand, combined with the launch of a new customer entertainment program and the continued ramp of major keyless entry programs. During the second quarter both the Identification and Automotive business' achieved historic revenue record levels -- a positive reflection of the intense passion and customer focus both teams demonstrate in managing their business. The revenue performance of the Standard products segment was slightly below our expectations as a result of weaker than expected demand for certain Logic products within the mobile end-market. From an earnings perspective, we exceeded guidance primarily as a result of better operating expense control combined with strong revenue growth in our HPMS segment.
"Our focus continues to be delivering top-line growth in excess of our peers, while delivering best in class operating profitability. The overall performance of HPMS is very good, with operating margin solidly within our long-term target, and we are comfortable delivering on our intermediate profitability goals. Our strategy of providing unique and differentiated product solutions continues to resonate with our customers, and should result in continued long-term growth in excess of the overall end market," said Clemmer.
Summary of Second Quarter 2013 Results ($ millions, except EPS, unaudited)
Q2 2013 Q1 2013 Q2 2012 Q - Q Y - Y
------- ------- ------- ------ ------
Product Revenue $ 1,159 $ 1,055 $ 1,032 10% 12%
Manufacturing Operations $ 29 $ 29 $ 62 0% -53%
Corporate & Other $ - $ 1 $ - NM NM
------- ------- -------
Total Revenue $ 1,188 $ 1,085 $ 1,094 9% 9%
GAAP Gross Profit $ 535 $ 483 $ 538 11% -1%
Gross Profit Adjustments (1) $ (5) $ (54) $ 33
Non-GAAP Gross Profit $ 540 $ 537 $ 505 1% 7%
GAAP Gross Margin
45% 45% 49%
Non-GAAP Gross Margin
46% 50% 46%
GAAP Operating Income $ 170 $ 115 $ 156 48% 9%
Operating Income Adjustments
(1) (86) (140) (59)
Non-GAAP Operating Income $ 256 $ 255 $ 215 0% 19%
GAAP Operating Margin
14% 11% 14%
Non-GAAP Operating Margin
22% 24% 20%
GAAP Net Income / (Loss) $ 111 $ (14) $ (90) NM NM
Net Income Adjustments (1) (71) (200) (214)
Non-GAAP Net Income / (Loss) $ 182 $ 186 $ 124 -2% 47%
GAAP EPS $ 0.43 $ (0.06) $ (0.36) NM NM
EPS Adjustments (1) $ (0.28) $ (0.78) $ (0.85)
Non-GAAP EPS $ 0.71 $ 0.72 $ 0.49 -1% 45%
1. Please see "Discussion of GAAP to non-GAAP Reconciliation" on page 3 of this release.
Supplemental Information ($ millions, unaudited)
Percent
Q2 2013 Q1 2013 Q2 2012 Q2 Total Q - Q Y - Y
------- ------- ------- -------- ------- -------
Automotive $ 253 $ 230 $ 244 21% 10% 4%
Identification $ 339 $ 300 $ 234 29% 13% 45%
Infrastructure &
Industrial $ 180 $ 153 $ 156 15% 18% 15%
Portable & Computing $ 106 $ 93 $ 107 9% 14% -1%
------- ------- ------- --------
High Performance Mixed
Signal (HPMS) $ 878 $ 776 $ 741 74% 13% 18%
Standard Products (STDP) $ 281 $ 279 $ 291 24% 1% -3%
------- ------- ------- --------
Product Revenue $ 1,159 $ 1,055 $ 1,032 98% 10% 12%
Manufacturing Operations $ 29 $ 29 $ 62 2% 0% -53%
Corporate & Other $ - $ 1 $ - 0% NM NM
------- ------- ------- --------
Total Revenue $ 1,188 $ 1,085 $ 1,094 100% 9% 9%
Product Revenue is the combination of revenue from the High Performance Mixed Signal (HPMS) and Standard Products (STDP) segments.
Additional and Subsequent Information for the Second Quarter of 2013:
- Effective August 1, 2013, NXP adopted a stock repurchase program to repurchase shares to cover in part employee stock options and equity rights under its long term incentive plans. Under the new repurchase program approved by the Board of Directors, NXP may repurchase up to ten (10) million shares of its common stock from time to time in both privately negotiated and open market transactions, subject to management's evaluation of market conditions, terms of private transactions, the best interests of NXP shareholders, applicable legal requirements and other factors. There is no guarantee as to the exact number of shares that will be repurchased under the stock repurchase program, and NXP may terminate the repurchase program at any time. Repurchased shares would be returned to the status of authorized but un-issued shares of common stock of NXP.
- On May 20, 2013, NXP issued senior unsecured notes in the aggregate principal amount of $750 million, due June 2018, with a coupon of 3.75%. NXP has used the net proceeds of the offering together with cash on hand to repay its outstanding $616 million of U.S. dollar-denominated Senior Secured notes due November 2016 and the outstanding $243 million equivalent of Euro and U.S. dollar-denominated Floating Rate Notes due October 2013.
- Total gross debt at the end of the second quarter of 2013 was $3,381 million, a $59 million reduction from the prior quarter. Cash at the end of the second quarter of 2013 was $569 million, resulting in a net-debt position of $2,812 million, a $33 million reduction from the prior quarter.
- Net cash interest paid in the second quarter of 2013 was $25 million.
- NXP repurchased 1.7M shares in the second quarter of 2013 for a total cost of approximately $48 million.
- SSMC, NXP's consolidated joint-venture wafer fab with TSMC, reported second quarter 2013 operating income of $45 million, EBITDA of $57 million and a closing cash balance of $360 million.
- Utilization in NXP wafer fabs averaged 90 percent in the second quarter of 2013 compared to 92 percent in the year ago period and 83 percent in the prior quarter.
Guidance for the Third Quarter 2013: ($ millions, except share count and EPS) (1)
Guidance Range
Low Mid High
--------- --------- ---------
Product Revenue $ 1,205 $ 1,229 $ 1,252
Q-Q 4% 6% 8%
Mfg. & Other Revenue $ 34 $ 34 $ 34
--------- --------- ---------
Total Revenue $ 1,239 $ 1,263 $ 1,286
Q-Q 4% 6% 8%
Non-GAAP Gross Profit $ 564 $ 581 $ 598
Non-GAAP Gross Margin 46% 46% 47%
Non-GAAP Operating Income $ 268 $ 278 $ 288
Non-GAAP Operating Margin 22% 22% 22%
Interest Expense $ 44 $ 44 $ 44
Cash Taxes $ 7 $ 7 $ 7
Non-controlling Interest $ 16 $ 16 $ 16
--------- --------- ---------
Non-GAAP Net Income $ 201 $ 211 $ 221
Ave. Diluted Shares 258 258 258
Non - GAAP EPS $ 0.78 $ 0.82 $ 0.86
Note (1): NXP has based the guidance included in this release on judgments and estimates that management believes are reasonable given its assessment of historical trends and other information reasonably available as of the date of this release. The guidance included in this release consists of predictions only, and is subject to a wide range of known and unknown risks and uncertainties, many of which are beyond NXP's control. The guidance included in this release should not be regarded as representations by NXP that the estimated results will be achieved. Actual results may vary materially from the guidance we provide today. In relation to the use of non-GAAP financial information see the note regarding "Use of Non-GAAP Financial Information" elsewhere in this release. For the factors, risks and uncertainties to which judgments, estimates and forward-looking statements generally are subject see the note regarding "Forward-looking Statements." We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein, to reflect future events or circumstances. Considering the uncertain magnitude and variability of the foreign exchange consequences upon "PPA effects", "restructuring costs", "other incidental items" and any interest expense or taxes in future periods, management believes that GAAP financial measures are not available for NXP without unreasonable efforts on a forward looking basis.
Discussion of GAAP to non-GAAP Reconciliations
In addition to providing financial information on a basis consistent with U.S. generally accepted accounting principles ("GAAP"), NXP also provides the following selected financial measures on a non-GAAP basis: (i) "non-GAAP gross profit," (ii) "non-GAAP gross margin," (iii) "non-GAAP Research and development," (iv) "non-GAAP Selling, general and administrative," (v) non-GAAP Other income," (vi) "non-GAAP operating income (loss)," (vii) "non-GAAP operating margin," (viii) "non-GAAP net income/ (loss)," (ix) "PPA effects," (x) "Restructuring costs," (xi) "Stock based compensation," (xii) "Other incidental items," (xiii) "non-GAAP Financial Income (expense)," (xiv) "non-GAAP Results relating to equity-accounted investees," (xv) "non-GAAP Cash tax (expense)," (xvi) "non-GAAP EPS," (xvii) "EBITDA," "adjusted EBITDA" and "trailing 12 month adjusted EBITDA" and (xviii) "net debt."
In this release, references to:
- "non-GAAP gross profit," "non-GAAP research and development," "non-GAAP Selling, general and administrative," "non-GAAP Other income," "non-GAAP operating income (loss)," and "non-GAAP net income/ (loss)" are to NXP's gross profit, research and development, selling general and administrative, operating income and net income/ (loss) calculated on a basis consistent with GAAP, net of the effects of purchase price accounting ("PPA"), restructuring costs and certain other incidental items. "PPA effects" reflect the fair value adjustments impacting acquisition accounting and other acquisition adjustments charged to the income statement applied to the formation of NXP on September 29, 2006 and all subsequent acquisitions. "Restructuring costs" consist of costs related to restructuring programs and gains and losses resulting from divestment activities and impairment charges. "Stock based compensation" consists of incentive expense granted to eligible employees in the form of equity based instruments. "Other incidental items" consist of process and product transfer costs (which refer to the costs incurred in transferring a production process and products from one manufacturing site to another) and certain charges related to acquisitions and divestitures. "Other adjustments" include or exclude certain items that management believes provides insight into our core operating results, our ability to generate cash and underlying business trends affecting our performance.
- "non-GAAP gross margin" and "non-GAAP operating margin" are to our non-GAAP gross profit or our non-GAAP operating income as a percentage of our sales, respectively;
- "non-GAAP Financial Income (expense)" is the interest income or expense net of impacts due foreign exchange changes on our Euro-denominated debt, gains or losses due to the extinguishment of long-term debt and less other financial expenses deemed to be one-time in nature;
- "non-GAAP Cash tax (expense)" is the difference between our GAAP tax provision and the cash taxes paid during the period;
- "non-GAAP EPS" attributable to stockholders are to non-GAAP net income or loss attributable to NXP's stockholders, divided by the weighted average number of common shares outstanding during the period, adjusted for treasury shares held;
- "EBITDA" are to NXP's earnings before interest, taxes, depreciation and amortization. "EBITDA" excludes certain tax payments that may represent a reduction in cash available to us, does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future, does not reflect changes in, or cash requirements for, our working capital needs and does not reflect the significant financial expense, or the cash requirements necessary to service interest payments, on our debts;
- "adjusted EBITDA" are to EBITDA after adjustments for "restructuring costs," "other incidental items" and results related to equity accounted investees.
- "trailing 12 month adjusted EBITDA" are to adjusted EBITDA for the last 12 months; and
- "net debt" is to the sum total of long and short term debt less total cash and cash equivalents, as reflected on the balance sheet.
Reconciliations of these non-GAAP measures to the most comparable measures calculated in accordance with GAAP are provided in the financial statements portion of this release in a schedule entitled "Financial Reconciliation of GAAP to non-GAAP Results (unaudited)."
NXP provides non-GAAP measures because management believes that they are helpful to understand the underlying operating and profit structure of NXP's operations, to provide additional insight as to how management assesses the performance and allocation of resources among its various segments and because the financial community uses them in its analysis of NXP's operating and/or financial performance, historical results and projections of NXP's future operating results. NXP presents "non-GAAP gross profit," "non-GAAP research and development," "non-GAAP Selling, general and administrative," "non-GAAP Other income," "non-GAAP operating income," "non-GAAP net income/ (loss)," "non-GAAP gross margin," "non-GAAP operating margin" and "non-GAAP EPS" because these financials measures are net of "PPA effects," "restructuring costs," "stock based compensation," "other incidental items," and "other adjustments" which have affected the comparability of NXP's results over the years. NXP presents "EBITDA," "adjusted EBITDA" and "trailing 12 month adjusted EBITDA" because these financials measures enhance an investor's understanding of NXP's financial performance.
Non-GAAP measures should not be considered a substitute for any information derived or calculated in accordance with GAAP, are not intended to be measures of financial performance or condition, liquidity, profitability or operating cash flows in accordance with GAAP, and should not be considered as alternatives to net income (loss), operating income or any other performance measures determined in accordance with GAAP. These non-GAAP measures can vary from other participants in the semiconductor industry. They have limitations as analytical tools and should not be considered in isolation for analysis of NXP's financial results as reported under GAAP.
Conference Call and Webcast Information
NXP will host a conference call on August 1, 2013 at 8:00 a.m. U.S. Eastern Daylight Time (2:00 p.m. Central European Central Time) to discuss its second quarter 2013 financial results and provide an outlook for the third quarter of 2013.
Interested parties may join the conference call by dialing 1 - 800 - 901 - 5213 (within the U.S.) or 1 - 617 - 786 - 2962 (outside the U.S.). The participant pass-code is 70452866. To listen to a webcast of the event, please visit the Investor Relations section of the NXP website at www.nxp.com/investor. The webcast will be recorded and available for replay shortly after the call concludes.
About NXP Semiconductors
NXP Semiconductors N.V. (
Forward-looking Statements
This document includes forward-looking statements which include statements regarding NXP's business strategy, financial condition, results of operations, and market data, as well as any other statements which are not historical facts. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include the following: market demand and semiconductor industry conditions; the ability to successfully introduce new technologies and products; the end-market demand for the goods into which NXP's products are incorporated; the ability to generate sufficient cash, raise sufficient capital or refinance corporate debt at or before maturity; the ability to meet the combination of corporate debt service, research and development and capital investment requirements; the ability to accurately estimate demand and match manufacturing production capacity accordingly or obtain supplies from third-party producers; the access to production capacity from third-party outsourcing partners; any events that might affect third-party business partners or NXP's relationship with them; the ability to secure adequate and timely supply of equipment and materials from suppliers; the ability to avoid operational problems and product defects and, if such issues were to arise, to correct them quickly; the ability to form strategic partnerships and joint ventures and to successfully cooperate with alliance partners; the ability to win competitive bid selection processes to develop products for use in customers' equipment and products; the ability to successfully establish a brand identity; the ability to successfully hire and retain key management and senior product architects; and, the ability to maintain good relationships with our suppliers. In addition, this document contains information concerning the semiconductor industry and NXP's business segments generally, which is forward-looking in nature and is based on a variety of assumptions regarding the ways in which the semiconductor industry, NXP's market segments and product areas may develop. NXP has based these assumptions on information currently available, if any one or more of these assumptions turn out to be incorrect, actual market results may differ from those predicted. While NXP does not know what impact any such differences may have on its business, if there are such differences, its future results of operations and its financial condition could be materially adversely affected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak to results only as of the date the statements were made. Except for any ongoing obligation to disclose material information as required by the United States federal securities laws, NXP does not have any intention or obligation to publicly update or revise any forward-looking statements after we distribute this document, whether to reflect any future events or circumstances or otherwise. For a discussion of potential risks and uncertainties, please refer to the risk factors listed in our SEC filings. Copies of our SEC filings are available on our Investor Relations website,
www.nxp.com/investor or from the SEC website,
www.sec.gov.
NXP Semiconductors
Table 1: Condensed consolidated statement of operations (unaudited)
---------------------------------------------------------------------------
($ in millions except share
data) Three Months Ended
----------------------------------------------
June 30, 2013 March 31, 2013 July 1, 2012
-------------- -------------- --------------
Revenue $ 1,188 $ 1,085 $ 1,094
Cost of revenue (653) (602) (556)
-------------- -------------- --------------
Gross profit 535 483 538
Research and development (155) (153) (156)
Selling, general and
administrative (211) (222) (231)
-------------- -------------- --------------
Total operating expenses (366) (375) (387)
Other income (expense) 1 7 5
-------------- -------------- --------------
Operating income (loss) 170 115 156
Financial income (expense):
Interest income (expense)
- net (47) (49) (70)
Foreign exchange gain
(loss) 32 (53) (104)
Gain (loss) on
extinguishment of long
term debt (23) (37) -
Other financial expense (8) (13) (4)
-------------- -------------- --------------
Income (loss) before taxes 124 (37) (22)
Benefit (provision) for
income taxes 2 (11) (7)
Results relating to equity-
accounted investees 3 47 (45)
-------------- -------------- --------------
Income (loss) from
continuing operations 129 (1) (74)
Income (loss) on
discontinued operations,
net of tax - - -
-------------- -------------- --------------
Net income (loss) 129 (1) (74)
Net (income) loss
attributable to non-
controlling interests (18) (13) (16)
-------------- -------------- --------------
Net income (loss)
attributable to
stockholders 111 (14) (90)
Earnings per share data:
Net income (loss)
attributable to
stockholders per common
share
Basic earnings per common
share in $ $ 0.44 $ (0.06) $ (0.36)
Diluted earnings per common
share in $ $ 0.43 $ (0.06) $ (0.36)
Weighted average number of
shares of common stock (in
thousands):
Basic 249,449 249,668 248,272
Diluted 255,265 249,668 248,272
---------------------------------------------------------------------------
NXP Semiconductors
Table 2: Condensed consolidated balance sheet (unaudited)
----------------------------------------------------------------------------
($ in millions) As of
----------------------------------------------
June 30, 2013 March 31, 2013 July 1, 2012
-------------- -------------- --------------
Current assets:
Cash and cash equivalents $ 569 $ 595 $ 837
Accounts receivable - net 495 464 451
Other receivables 49 48 16
Assets held for sale 10 10 17
Inventories 742 730 644
Other current assets 132 109 96
-------------- -------------- --------------
Total current assets 1,997 1,956 2,061
Non-current assets:
Investments in equity-
accounted investees 47 46 39
Other non-current assets 128 131 145
Property, plant and
equipment 1,030 1,039 1,044
Identified intangible
assets 841 888 1,061
Goodwill 2,253 2,221 2,186
-------------- -------------- --------------
Total non-current assets 4,299 4,325 4,475
Total assets 6,296 6,281 6,536
Current liabilities:
Accounts payable 521 513 524
Liabilities held for sale - - 5
Accrued liabilities 610 599 524
Short-term debt 50 291 52
-------------- -------------- --------------
Total current liabilities 1,181 1,403 1,105
Non-current liabilities:
Long-term debt 3,331 3,149 3,767
Other non-current
liabilities 451 454 447
-------------- -------------- --------------
Total non-current
liabilities 3,782 3,603 4,214
Non-controlling interests 219 248 201
Stockholders' equity 1,114 1,027 1,016
-------------- -------------- --------------
Total equity 1,333 1,275 1,217
Total liabilities and equity 6,296 6,281 6,536
----------------------------------------------------------------------------
NXP Semiconductors
Table 3: Condensed consolidated statement of cash flows (unaudited)
---------------------------------------------------------------------------
($ in millions) Three Months Ended
----------------------------------------------
June 30, 2013 March 31, 2013 July 1, 2012
-------------- -------------- --------------
Cash Flows from operating
activities
Net income (loss) $ 129 $ (1) $ (74)
Adjustments to reconcile net
income (loss):
Depreciation and
amortization 132 132 139
Stock-based compensation 20 17 15
Net (gain) loss on sale of
assets (1) (1) -
(Gain) loss on
extinguishment of debt 23 37 -
Results relating to equity
accounted investees (3) (47) 45
Changes in operating assets
and liabilities:
(Increase) decrease in
trade receivables (26) (15) (57)
(Increase) decrease in
inventories (10) (20) (12)
Increase (decrease) in
trade payables 6 (44) 71
(Increase) decrease in
other receivables (4) (8) 18
Increase (decrease) in
other payables (78) 17 18
Changes in deferred taxes 1 1 (5)
Exchange differences (32) 53 104
Other items 3 (2) 7
-------------- -------------- --------------
Net cash provided by (used
for) operating activities 160 119 269
Cash flows from investing
activities:
Purchase of identified
intangible assets (11) (6) (7)
Capital expenditures on
property, plant and
equipment (49) (41) (74)
Proceeds from disposals of
property, plant and
equipment 3 2 1
Proceeds from sale of
interests in businesses - - -
Purchase of interests in
businesses - - (2)
Proceeds from return of
equity investment 1 - -
Other - 2 -
-------------- -------------- --------------
Net cash (used for) provided
by investing activities (56) (43) (82)
Cash flows from financing
activities:
Net (repayments)
borrowings of short-term
debt (1) (1) 1
Repayments under the
revolving credit facility (155) (280) (330)
Amounts drawn under the
revolving credit facility 200 180 330
Repurchase of long-term
debt (874) (980) -
Principal payments on
long-term debt (5) (4) (5)
Net proceeds from the
issuance of long-term
debt 742 990 1
Dividends paid to non-
controlling interests - - (39)
Cash proceeds from
exercise of stock options 10 40 -
Purchase of treasury
shares (48) (35) (37)
-------------- -------------- --------------
Net cash provided by (used
for) financing activities (131) (90) (79)
Net cash provided by (used
for) continuing operations (27) (14) 108
Cash flows from discontinued
operations:
Net cash provided by (used
for) operating activities - - -
Net cash provided by (used
for) investing activities - - (45)
Net cash provided by (used
for) financing activities - - -
-------------- -------------- --------------
Net cash provided by (used
for) discontinued
operations - - (45)
Net cash from continuing and
discontinued operations (27) (14) 63
Effect of changes in
exchange rates on cash
positions 1 (8) (8)
-------------- -------------- --------------
Increase (decrease) in cash
and cash equivalents (26) (22) 55
Cash and cash equivalents at
beginning of period 595 617 782
-------------- -------------- --------------
Cash and cash equivalents at
end of period 569 595 837
---------------------------------------------------------------------------
NXP Semiconductors
Table 4: Reconciliation of GAAP to non-GAAP Segment Results (unaudited)
---------------------------------------------------------------------------
($ in millions) Three Months Ended
----------------------------------------------
June 30, 2013 March 31, 2013 July 31, 2012
-------------- -------------- --------------
High Performance Mixed
Signal (HPMS) 878 776 741
Standard Products 281 279 291
-------------- -------------- --------------
Product Revenue 1,159 1,055 1,032
Manufacturing Operations 29 29 62
Corporate and Other - 1 -
-------------- -------------- --------------
Total Revenue $ 1,188 $ 1,085 $ 1,094
============== ============== ==============
---------------------------------------------------------------------------
HPMS Revenue $ 878 $ 776 $ 741
Percent of Total Revenue 73.9% 71.5% 67.7%
HPMS segment GAAP gross
profit 472 417 449
PPA effects - - (6)
Restructuring 3 (1) -
Stock based compensation (2) (1) -
Other incidentals (1) - (2)
Other adjustments - (46) 46
-------------- -------------- --------------
HPMS segment non-GAAP
gross profit $ 472 $ 465 $ 411
============== ============== ==============
HPMS segment GAAP gross
margin 53.8% 53.7% 60.6%
HPMS segment non-GAAP
gross margin 53.8% 59.9% 55.5%
HPMS segment GAAP
operating profit 178 123 154
PPA effects (45) (46) (52)
Restructuring 3 (1) 1
Stock based compensation (16) (12) (9)
Other incidentals (2) (1) (9)
Other adjustments - (46) 46
-------------- -------------- --------------
HPMS segment non-GAAP
operating profit $ 238 $ 229 $ 177
============== ============== ==============
HPMS segment GAAP
operating margin 20.3% 15.9% 20.8%
HPMS segment non-GAAP
operating margin 27.1% 29.5% 23.9%
---------------------------------------------------------------------------
Standard Products Revenue $ 281 $ 279 $ 291
Percent of Total Revenue 23.7% 25.7% 26.6%
Standard Products segment
GAAP gross profit 68 70 88
PPA effects - (1) (1)
Restructuring 5 (1) (1)
Stock based compensation (1) - -
Other incidentals (3) (1)
-------------- -------------- --------------
Standard Products segment
non-GAAP gross profit $ 67 $ 73 $ 90
============== ============== ==============
Standard Products
segment GAAP gross
margin 24.2% 25.1% 30.2%
Standard Products
segment non-GAAP gross
margin 23.8% 26.2% 30.9%
Standard Products segment
GAAP operating profit 9 7 26
PPA effects (15) (15) (15)
Restructuring 5 (1) -
Stock based compensation (4) (4) (3)
Other incidentals (3) (1) (1)
-------------- -------------- --------------
Standard Products segment
non-GAAP operating profit $ 26 $ 28 $ 45
============== ============== ==============
Standard Products
segment GAAP operating
margin 3.2% 2.5% 8.9%
Standard Products
segment non-GAAP
operating margin 9.3% 10.0% 15.5%
---------------------------------------------------------------------------
NXP Semiconductors
Table 4: Reconciliation of GAAP to non-GAAP Segment Results (unaudited)
(con't)
---------------------------------------------------------------------------
($ in millions) Three Months Ended
----------------------------------------------
June 30, 2013 March 31, 2013 July 1, 2012
-------------- -------------- --------------
Manufacturing Operations
Revenue $ 29 $ 29 $ 62
Percent of Total Revenue 2.4% 2.7% 5.7%
Manufacturing Operations
segment GAAP gross profit (6) (5) (3)
PPA effects (3) (2) (2)
Restructuring (2) - -
Stock based compensation - - -
Other incidentals (1) (1) (1)
-------------- -------------- --------------
Manufacturing Operations
segment non-GAAP gross
profit $ - $ (2) $ -
============== ============== ==============
Manufacturing Operations
segment GAAP gross
margin -20.7% -17.2% -4.8%
Manufacturing Operations
segment non-GAAP gross
margin 0.0% -6.9% 0.0%
Manufacturing Operations
segment GAAP operating
profit (10) (7) (5)
PPA effects (6) (6) (6)
Restructuring (2) - -
Stock based compensation - - -
Other incidentals (1) (1) 2
-------------- -------------- --------------
Manufacturing Operations
segment non-GAAP
operating profit $ (1) $ - $ (1)
============== ============== ==============
Manufacturing Operations
segment GAAP operating
margin -34.5% -24.1% -8.1%
Manufacturing Operations
segment non-GAAP
operating margin -3.4% 0.0% -1.6%
---------------------------------------------------------------------------
Corporate and Other Revenue $ - $ 1 $ -
Percent of Total Revenue 0.0% 0.1% 0.0%
Corporate and Other
segment GAAP gross profit 1 1 4
PPA effects - - -
Restructuring - - -
Stock based compensation - - -
Other incidentals - - -
-------------- -------------- --------------
Corporate and Other
segment non-GAAP gross
profit $ 1 $ 1 $ 4
============== ============== ==============
Corporate and Other
segment GAAP gross margin NM NM NM
Corporate and Other
segment non-GAAP gross
margin NM NM NM
Corporate and Other
segment GAAP operating
profit (7) (8) (19)
PPA effects - - -
Restructuring 4 (2) (2)
Stock based compensation - (1) (3)
Other incidentals (4) (3) (8)
-------------- -------------- --------------
Corporate and Other
segment non-GAAP
operating profit $ (7) $ (2) $ (6)
============== ============== ==============
Corporate and Other
segment GAAP operating
margin NM NM NM
Corporate and Other
segment non-GAAP
operating margin NM NM NM
---------------------------------------------------------------------------
NXP Semiconductors
Table 5: Financial Reconciliation of GAAP to non-GAAP Results (unaudited)
---------------------------------------------------------------------------
($ in millions except
share data) Three Months Ended
-------------------------------------------------
June 30, 2013 March 31, 2013 July 1, 2012
-------------- -------------- --------------
Revenue $ 1,188 $ 1,085 $ 1,094
GAAP Gross profit $ 535 $ 483 $ 538
PPA effects (3) (3) (9)
Restructuring 6 (2) (1)
Stock Based
Compensation (3) (1) -
Other incidentals (5) (2) (3)
Other adjustments - (46) 46
-------------- -------------- --------------
Non-GAAP Gross profit $ 540 $ 537 $ 505
============== ============== ==============
GAAP Gross margin 45.0% 44.5% 49.2%
Non-GAAP Gross margin 45.5% 49.5% 46.2%
GAAP Research and
development $ (155) $ (153) $ (156)
PPA effects - - -
Restructuring - - 1
Stock based
compensation (2) (3) (1)
Other incidentals (1) (1) (6)
-------------- -------------- --------------
Non-GAAP Research and
development $ (152) $ (149) $ (150)
============== ============== ==============
GAAP Selling, general
and administrative $ (211) $ (222) $ (231)
PPA effects (63) (64) (64)
Restructuring 4 (2) (2)
Stock based
compensation (15) (13) (14)
Other incidentals (4) (3) (9)
-------------- -------------- --------------
Non-GAAP Selling,
general and
administrative $ (133) $ (140) $ (142)
============== ============== ==============
GAAP Other income
(expense) $ 1 $ 7 $ 5
PPA effects - - -
Restructuring - - 1
Other incidentals - - 2
-------------- -------------- --------------
Non-GAAP Other income
(expense) $ 1 $ 7 $ 2
============== ============== ==============
GAAP Operating income
(loss) $ 170 $ 115 $ 156
PPA effects (66) (67) (73)
Restructuring 10 (4) (1)
Stock based
compensation (20) (17) (15)
Other incidentals (10) (6) (16)
Other adjustments - (46) 46
-------------- -------------- --------------
Non-GAAP Operating income
(loss) $ 256 $ 255 $ 215
============== ============== ==============
GAAP Operating margin 14.3% 10.6% 14.3%
Non-GAAP Operating margin 21.5% 23.5% 19.7%
GAAP Financial income
(expense) $ (46) $ (152) $ (178)
Foreign exchange gain
(loss) on debt 32 (53) (104)
Gain (loss) on
extinguishment of long
term debt (23) (37) -
Other financial expense (8) (13) (4)
-------------- -------------- --------------
Non-GAAP Financial income
(expense) $ (47) $ (49) $ (70)
============== ============== ==============
GAAP Income tax benefit
(provision) $ 2 $ (11) $ (7)
Other adjustments 11 (4) (2)
-------------- -------------- --------------
Non-GAAP Cash tax
(expense) $ (9) $ (7) $ (5)
============== ============== ==============
GAAP Results relating to
equity-accounted
investees $ 3 $ 47 $ (45)
Other adjustments 3 47 (45)
Non-GAAP Results relating
to equity-accounted
investees $ - $ - $ -
GAAP Income (loss) from
continuing operations $ 129 $ (1) $ (74)
PPA effects (66) (67) (73)
Restructuring 10 (4) (1)
Stock based
compensation (20) (17) (15)
Other incidentals (10) (6) (16)
Other adjustments 15 1) (106) (109)
-------------- -------------- --------------
Non-GAAP Income (loss)
from continuing
operations $ 200 $ 199 $ 140
============== ============== ==============
GAAP Income (loss) on
discontinued operations
- net of tax $ - $ - $ -
Other adjustments $ - - -
Non-GAAP Income (loss)
from discontinued
operations $ - $ - $ -
GAAP Net income (loss)
attributable to
stockholders $ 111 $ (14) $ (90)
PPA effects (66) (67) (73)
Restructuring 10 (4) (1)
Stock based
compensation (20) (17) (15)
Other incidentals (10) (6) (16)
Other adjustments 15 (106) (109)
-------------- -------------- --------------
Non-GAAP Net income
(loss) attributable to
stockholders $ 182 $ 186 $ 124
============== ============== ==============
GAAP Weighted average
shares - diluted 255,265 249,668 248,272
Non-GAAP Adjustment - 8,157 5,115
-------------- -------------- --------------
Non-GAAP Weighted average
shares - diluted 255,265 257,825 253,387
============== ============== ==============
GAAP Diluted net income
(loss) attributable to
stockholders per share $ 0.43 $ (0.06) $ (0.36)
Non-GAAP Diluted net
income (loss)
attributable to
stockholders per share $ 0.71 $ 0.72 $ 0.49
---------------------------------------------------------------------------
1) Includes: During 2Q13: Foreign exchange gain on debt: $32 million; Loss
on extinguishment of long-term debt: ($23) million; Other financial
expense: ($8) million; Results relating to equity-accounted investees: $3
million; and difference between book and cash income taxes: $11 million.
NXP Semiconductors
Table 6: Adjusted EBITDA (unaudited)
---------------------------------------------------------------------------
($ in millions) Three Months Ended
----------------------------------------------
June 30, 2013 March 31, 2013 July 1, 2012
-------------- -------------- --------------
-------------- -------------- --------------
Net Income $ 129 $ (1) $ (74)
============== ============== ==============
Reconciling items to EBITDA
Financial (income) expense 46 152 178
(Benefit) provision for
income taxes (2) 11 7
Depreciation 61 61 62
Amortization 71 71 77
-------------- -------------- --------------
EBITDA $ 305 $ 294 $ 250
============== ============== ==============
Reconciling items to
adjusted EBITDA
Results of equity-
accounted investees (3) (47) 45
Restructuring 1) (11) 4 1
Stock based compensation 20 17 15
Other incidental items 1) 9 5 15
Other adjustments - 46 (46)
-------------- -------------- --------------
Adjusted EBITDA $ 320 $ 319 $ 280
============== ============== ==============
Trailing twelve month
adjusted EBITDA $ 1,235 $ 1,195 $ 1,007
---------------------------------------------------------------------------
1) Excluding depreciation
property, plant and
equipment related to:
Restructuring 1 - -
Other incidental items 1 1 1