Additional Information for the Third Quarter 2017:
- On October 27, 2016 Qualcomm, Incorporated (NASDAQ:QCOM) and NXP Semiconductors N.V. (NASDAQ:NXPI) announced a definitive agreement, unanimously approved by the boards of directors of both companies, under which Qualcomm will acquire NXP. Under the terms of the definitive agreement, a subsidiary of Qualcomm will commence a tender offer to acquire all the issued and outstanding shares of NXP for $110.00 per share in cash. The tender offer commenced on November 18, 2016.
- Total gross debt was $6.56 billion, essentially flat on a sequential basis. Cash was $3.06 billion, an increase from the $2.64 billion in the second quarter, resulting in net debt of $3.49 billion, a decline from the $3.91 billion in the second quarter. Trailing twelve months, adjusted EBITDA was $3.12 billion, an increase from $3.07 billion in the second quarter. Financial leverage, defined as net debt divided by trailing twelve months adjusted EBITDA was 1.12x, an improvement from 1.27x in the second quarter.
- Cash flow from operations was $643 million, an increase from the $441 million in the second quarter. Net capital expenditures on property, plant and equipment was $161 million, an increase from the $96 million in the second quarter. Non-GAAP free cash flow, defined as cash flow from operations, less net capital expenditures on property, plant and equipment was $482 million, an increase from the $345 million in the second quarter.
- NXP repurchased 19.5 thousand shares for a total cost of $2.1 million. Weighted average number of diluted shares (after deduction of treasury shares) for the three-month period ended October 1, 2017 was 346 million. Due to the pending acquisition by Qualcomm, NXP has suspended its open market share repurchases. Shares are currently only repurchased in relation to employee equity award transactions.
- Net cash paid for interest was $27 million.
- Net cash paid for income taxes related to on-going operations was $23 million, with an additional $91 million paid related to the divestment of the Standard Products business, for a total of $114 million.
- SSMC, NXP’s consolidated joint-venture wafer fab with TSMC, reported third quarter 2017 operating income of $38 million, EBITDA of $52 million and a closing cash balance of $217 million. During the quarter, SSMC paid a previously announced dividend of $228 million.
- NXP combined wafer-fab utilization averaged 93 percent, as compared to 94 percent in the prior quarter.
- Working capital metrics inclusive of assets and liabilities held for sale on the balance sheet were:
- Days of inventory was 99 days, a decline of 4 days sequentially versus the second quarter;
- Days payable was 86 days, a decline of 7 days sequentially from the second quarter;
- Days sales was 35 days a decline of 3 days sequentially from the second quarter; and
- The cash conversion cycle was 48 days, flat on a sequential basis versus the second quarter. - Channel inventory held by NXP’s distribution partners was 2.3 months, flat as compared to the second quarter, in line with NXPs long-term channel target of 2.5 months, plus or minus a half month. Reconciling for the divestment of the Standard Products business, sales into the distribution channel were up 17 percent, sales out of the distribution channel were up 15 percent and total distribution channel inventory on a dollar basis was up 10 percent.
Supplemental Information ($ millions, unaudited)
| Q3 2017 | Q2 2017 | Q3 2016 | Q-Q | Y-Y | |||||||||||||||
| Automotive | $ | 948 | $ | 938 | $ | 853 | 1 | % | 11 | % | |||||||||
| Secure Identification Solutions (SIS) | $ | 139 | $ | 134 | $ | 178 | 4 | % | -22 | % | |||||||||
| Secure Connected Devices (SCD) | $ | 713 | $ | 588 | $ | 592 | 21 | % | 20 | % | |||||||||
| Secure Interface & Infrastructure (SI&I) | $ | 488 | $ | 438 | $ | 476 | 11 | % | 3 | % | |||||||||
| High Performance Mixed Signal (HPMS) | $ | 2,288 | $ | 2,098 | $ | 2,099 | 9 | % | 9 | % | |||||||||
| Standard Products (STDP) | $ | - | $ | - | $ | 320 | NM | NM | |||||||||||
| Product Revenue | $ | 2,288 | $ | 2,098 | $ | 2,419 | 9 | % | -5 | % | |||||||||
| Corporate & Other | $ | 99 | $ | 104 | $ | 50 | -5 | % | 98 | % | |||||||||
| Total Revenue | $ | 2,387 | $ | 2,202 | $ | 2,469 | 8 | % | -3 | % | |||||||||
