NXP Semiconductors Reports Fourth Quarter and Full-Year 2015 Results
  • 2015 revenue up 8 percent year-on-year
  • Continued strong earnings growth
  • Freescale merger complete and synergies on track                                                             
  Q4 2015   FY 2015
Revenue $1,606 million   $6,101 million
GAAP Gross margin   38.5 %     45.7 %
GAAP Operating margin   63.1 %     33.0 %
GAAP Diluted earnings per share $ 3.56     $ 6.10  
       
Non-GAAP Gross margin   50.2 %     49.2 %
Non-GAAP Operating margin   27.0 %     27.6 %
Non-GAAP Diluted earnings per share $ 1.25     $ 5.60  

EINDHOVEN, The Netherlands, Feb. 03, 2016 (GLOBE NEWSWIRE) --  NXP Semiconductors N.V. (NASDAQ:NXPI) today reported financial results for the fourth quarter and the full-year 2015, ended December 31, 2015, as well as provided guidance for the first quarter of 2016. 

“The end of 2015 brought to a close a year filled with significant accomplishments and a few challenges for NXP.  During the fourth quarter we successfully completed the previously announced merger with Freescale Semiconductor.  NXP is now the clear market leader in automotive, microcontroller and security semiconductor solutions.  Notwithstanding our success, we faced an uncertain macro demand environment during the second-half of 2015.  Despite this, we continued to outperform the overall industry.  Looking forward, our task is to continue to outgrow the market despite the uncertain environment,” said Richard Clemmer, NXP Chief Executive Officer.

On a full-year basis, NXP delivered revenue of $6.1 billion, up 8 percent from 2014, including the benefit of approximately one month of revenue contribution from Freescale.  Revenue from our strategic HPMS segment was $4.72 billion, up 12 percent year-on-year, with nearly all of the operating segments delivering positive growth for the year.  Standard Product segment revenue was $1.24 billion, down 3 percent versus the prior year.  Full-year non-GAAP operating profit and non-GAAP earnings were both up strongly versus 2014.  Non-GAAP operating income was $1.68 billion, up 19 percent versus the prior year, and non-GAAP earnings per share were $5.60, up nearly 18 percent versus 2014, and non-GAAP free cash flow was $996 million

Looking at our results for the fourth quarter 2015, revenue was $1.61 billion, up 4 percent year-on-year, and up nearly 6 percent versus the prior quarter.  HPMS segment revenue was $1.31 billion, up 12 percent from the same period a year ago, as well as sequentially.  Standard Product segment revenue was $271 million, down 18 percent from same period a year ago and down 17 percent sequentially.  In spite of weaker revenue trends, non-GAAP diluted earnings per share were $1.25, reflective of better gross margin and solid expense control resulting in improved profit fall-through. Additionally we generated $180 million non-GAAP free cash flow. 

“In summary, we believe NXP is ideally positioned in the right markets, with the right customers and highly competitive portfolio of solutions. I would like to personally thank all of our employees for their tireless efforts in bringing the merger to a successful conclusion. I would further like to thank our customers for the positive inputs and confidence in the vision of the combined company.  We believe the merger will result in significant value creation both in terms of giving us an even more competitive cost structure as well broadening the product portfolio we can offer our customers,” said Clemmer.

Summary of Fourth Quarter and Full-year 2015 Results ($ millions, except diluted EPS, unaudited)

                                         
                                         
        Q4 2015   Q3 2015   Q4 2014   Q - Q   Y - Y     2015       2014     Y - Y    
                                         
    Product Revenue   $   1,577     $   1,489     $   1,500       5.9 %     5.1 %   $   5,961     $   5,483       8.7 %    
                                                                         
    Corporate & Other   $   29     $   33     $   37       -12.1 %     -21.6 %   $   140     $   164       -14.6 %    
                                                                         
    Total Revenue   $    1,606     $    1,522     $    1,537       5.5 %     4.5 %   $    6,101     $    5,647       8.0 %    
                                         
    GAAP Gross Profit   $    619     $    740     $    704       -16.4 %     -12.1 %   $    2,787     $    2,640       5.6 %    
                                         
    Gross Profit Adjustments (1) $   (187 )   $   (8 )   $   (12 )           $   (212 )   $   (73 )        
                                         
    Non-GAAP Gross Profit $    806     $    748     $    716       7.8 %     12.6 %   $    2,999     $    2,713       10.5 %    
                                         
    GAAP Gross Margin     38.5 %     48.6 %     45.8 %                     45.7 %     46.8 %        
                                         
    Non-GAAP Gross Margin   50.2 %     49.1 %     46.6 %             49.2 %     48.0 %        
                                         
    GAAP Operating Income $    1,013     $    375     $    310       170.1 %     226.8 %   $    2,015     $    1,049       92.1 %    
                                         
    Operating Income Adjustments (1)     580         (74 )       (79 )               330         (365 )        
                                         
    Non-GAAP Operating Income $    433     $    449     $    389       -3.6 %     11.3 %   $    1,685     $    1,414       19.2 %    
                                         
    GAAP Operating Margin   63.1 %     24.6 %     20.2 %                     33.0 %     18.6 %        
                                         
    Non-GAAP Operating Margin   27.0 %     29.5 %     25.3 %             27.6 %     25.0 %        
                                         
    GAAP Net Income / (Loss) $    972     $    361     $    149       169.3 %     552.3 %   $    1,526     $    539       183.1 %    
                                         
    Net Income Adjustments (1)     631         (19 )       (178 )               126         (644 )        
                                         
    Non-GAAP Net Income / (Loss) $    341     $    380     $    327       -10.3 %     4.3 %   $    1,400     $    1,183       18.3 %    
                                         
    GAAP EPS   $    3.56     $    1.49     $    0.61       138.9 %     483.6 %   $    6.10     $    2.17       181.1 %    
    EPS Adjustments (1)   $   2.31     $   (0.08 )   $   (0.74 )           $   0.50     $   (2.59 )        
    Non-GAAP EPS   $    1.25     $    1.57     $    1.35       -20.4 %     -7.4 %   $    5.60     $    4.76       17.6 %    
                                         
                                         

Please see “Non-GAAP Financial Measures” on page 3 of this release.

Additional Information for the Fourth Quarter and full-year 2015:

  • On December 7, 2015, NXP completed its merger with Freescale Semiconductor, Ltd. (“FSL Merger”).  NXP’s fourth quarter 2015 results include the operating results of FSL from that date forward.  As a result of the FSL Merger, NXP recognized a restructuring charge of $239 million.  The charge is comprised of employee related severance accruals and contract termination costs.  In addition, NXP recognized $49 million of stock based compensation charges related to employees terminated as a result of the FSL Merger.
  • On November 7, 2015, in connection with the FSL Merger, NXP entered into a $2.7 billion secured term loan (“Term Loan B”). Proceeds from the issuance, together with cash-on-hand were used to (i) pay the cash consideration in connection with the FSL Merger, (ii) effect the repayment of any amounts under Freescale’s outstanding credit facility and (iii) pay certain transaction costs, in each case simultaneously with the issuance of the Term Loan.
  • On December 7, 2015 NXP completed the divestiture of its RF Power business to Jianguang Asset Management Co. Ltd.
  • On November 9, 2015, NXP and Jianguang Asset Management Co. Ltd. completed its previously announced creation of WeEn Semiconductors, a Bipolar Power joint venture (JV) in China following the clearance of regulators.
  • During the fourth quarter of 2015, NXP repurchased approximately 1.8 million shares for a total cost of approximately $151 million. For the full-year of 2015, NXP repurchased approximately 5.3 million shares for a total cost of approximately $475 million.  
  • During the fourth quarter of 2015, SSMC, NXP’s consolidated joint-venture wafer fab with TSMC, reported fourth quarter 2015 operating income of $40 million, EBITDA of $56 million and a closing cash balance of $485 million.  For the full-year 2015, SSMC reported operating income of $181 million, EBITDA of $241 million and a closing cash balance of $485 million
  • During the fourth quarter of 2015, utilization in the combined NXP wafer-fabs averaged 86 percent.  For the full-year 2015 utilization in the combined NXP wafer-fabs averaged 94 percent.

Supplemental Information ($ millions, unaudited) (1, 2)

                                           
                                           
        Q4 2015   Q3 2015   Q4 2014   % Q4 Total   Q - Q   Y - Y     2015       2014     Y - Y
   
                                               
    Automotive $   422     $   308     $   292       26 %     37 %     45 %   $   1,342     $   1,144       17 %  
                                           
    Secure Identificantion Solutions (SIS) $   225     $   269     $   223       14 %     -16 %     1 %   $   973     $   996       -2 %  
                                           
    Secure Connected Devices (SCD) $   379     $   317     $   349       24 %     20 %     9 %   $   1,261     $   1,028       23 %  
                                           
    Secure Interface & Infrastructure (SI&I) $   280     $   270     $   305       17 %     4 %     -8 %   $   1,144     $   1,040       10 %  
                                           
    High Performance Mixed Signal (HPMS) $   1,306     $   1,164     $   1,169       81 %     12 %     12 %   $   4,720     $   4,208       12 %  
                                           
    Standard Products (STDP) $   271     $   325     $   331       17 %     -17 %     -18 %   $   1,241     $   1,275       -3 %  
                                           
    Product Revenue $    1,577     $    1,489     $    1,500       98 %     6 %     5 %   $    5,961     $    5,483       9 %  
                                           
    Corporate & Other $   29     $   33     $   37       2 %     -12 %     -22 %   $   140     $   164       -15 %  
                                           
    Total Revenue $    1,606     $    1,522     $    1,537       100 %     6 %     4 %   $   6,101     $   5,647       8 %  
                                           

Note:

  1. As a result of the FSL Merger, NXP has included previously reported Freescale Semiconductor (“Freescale”) product group revenue into its various existing High Performance Mixed Signal (HPMS) and Standard Products (STDP) segments. As of the fourth quarter 2015, the NXP HPMS operating segments include the following (1) Automotive includes revenue from Freescale’s Automotive MCU and Analog & Sensor product groups; (2) Secure Connected Devices includes revenue from Freescale’s Microcontroller product group; (3) Secure Interface & Infrastructure, previously known as Secure Interface & Power includes revenue from Freescale’s Digital Networking and RF product groups.  Additionally, certain portions of Freescale’s Analog & Sensor product group and Other revenue is apportioned to various NXP operating segments consistent with NXPs prior product and revenue classification approach, this included product-functionality alignment as well intellectual property (IP) sales and licensing revenue.
  2. Product revenue is the combination of revenue from the High Performance Mixed Signal (HPMS) and Standard Products (STDP) segments. Percent of quarterly total amounts may not add to 100 percent due to rounding.

            
Guidance for the First Quarter 2016: ($ millions) (1)

                 
      Low   Mid   High  
                 
  Product Revenue $    2,117     $    2,174     $    2,232    
                 
  Q-Q     34 %     38 %     42 %  
                             
  Other Revenue $   34     $   36     $   38    
                             
  Total Revenue $    2,150     $    2,210     $    2,270    
                             
  Q-Q     34 %     38 %     41 %  
                             
  Non-GAAP Gross Profit $    1,055     $    1,094     $    1,135    
                             
  Non-GAAP Gross Margin   49.0 %     49.5 %     50.0 %  
                             
  Non-GAAP Operating Margin   22.5 %     23.0 %     23.5 %  
                             
  Interest Expense $   (95 )   $   (95 )   $   (95 )  
                             
  Cash Taxes $   (15 )   $   (16 )   $   (17 )  
                             
  Non-controlling Interest $   (6 )   $   (10 )   $   (14 )  
                             
  Non-GAAP Net Income $    370     $    388     $    407    
                             
  Ave. Diluted Shares     354         354         354    
                             
  Non - GAAP EPS $    1.05     $    1.10     $    1.15    
                 
                 

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. Please note:

  • During 4Q15, results only include approximately one-month of Freescale revenue. Guidance growth rates based on absolute reported financial results.
  • 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.

Non-GAAP Financial Measures

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) Gross profit, (ii) Gross margin, (iii) Research and development, (iv) Selling, general and administrative, (v) Other income, (vi) Operating income (loss), (vii) Operating margin, (viii) Financial Income (expense), (ix) Cash tax expense, (x) Results relating to equity-accounted investees, (xi) Net income (loss), (xii) Net income (loss) attributable to stockholders, (xiii) Weighted average shares –diluted, (xiv) Diluted net income (loss) attributable to stockholders per share, (xv) EBITDA, adjusted EBITDA and trailing 12 month adjusted EBITDA, and (xvi) non-GAAP free cash flow. The non-GAAP information excludes the amortization of acquisition related intangible assets, the purchase accounting effect on inventory and property, plant and equipment, merger related costs (including integration costs), certain items  related to divestitures, share-based compensation expense, restructuring and asset impairment charges, process and product transfer costs, non-cash interest expense on convertible notes, extinguishment of debt, changes in the fair value of the warrant liability, foreign exchange differences on our debt and the non-cash impact on income tax expense. 

Management does not believe that these items are reflective of the Company’s underlying performance. The presentation of these and other similar items in NXP’s non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent or unusual. NXP believes this non-GAAP financial information provides additional insight into the Company’s on-going performance and has therefore chosen to provide this information to investors for a more consistent basis of comparison and to help them evaluate the results of the Company’s on-going operations and enable more meaningful period to period comparisons. These non-GAAP measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. 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).”

Conference Call and Webcast Information
NXP will host a conference call on February 4, 2016 at 8:00 a.m. U.S. Eastern Time (2:00 p.m. Central European Time) to discuss its fourth quarter and full-year 2015 results and provide an outlook for the first quarter of 2016. 

Interested parties may join the conference call by dialing 1 – 888 – 311 – 8119 (within the U.S.) or 1 – 330 – 863 - 3362 (outside of the U.S.).  The participant pass-code is 23904851.  To listen to a webcast of the event, please visit the Investor Relations section of the NXP website at www.nxp.com.  The webcast will be recorded and available for replay shortly after the call concludes.

About NXP Semiconductors
NXP Semiconductors N.V. (NASDAQ:NXPI) enables secure connections and infrastructure for a smarter world, advancing solutions that make lives easier, better and safer. As the world leader in secure connectivity solutions for embedded applications, NXP is driving innovation in the secure connected vehicle, end-to-end security & privacy and smart connected solutions markets. Built on more than 60 years of combined experience and expertise, the company has 45,000 employees in more than 35 countries, and posted revenue of $6.1 billion in 2015. Find out more at www.nxp.com.

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 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   Full Year
    Dec. 31, 
2015
  Oct. 4,
2015
  Dec. 31, 
2014
    2015       2014  
                     
Revenue   $    1,606     $    1,522     $    1,537     $    6,101     $    5,647  
                     
Cost of revenue     (987 )       (782 )       (833 )       (3,314 )       (3,007 )
                     
Gross profit     619         740         704         2,787         2,640  
                     
Research and development     (318 )       (178 )       (198 )       (890 )       (763 )
Selling, general and administrative     (413 )       (162 )       (167 )       (922 )       (686 )
Amortization of acquisition-related intangible assets     (133 )       (29 )       (31 )       (223 )       (152 )
Total operating expenses     (864 )       (369 )       (396 )       (2,035 )       (1,601 )
                     
Other income (expense)     1,258         4         2         1,263         10  
                     
Operating income (loss)     1,013         375         310         2,015         1,049  
                     
Financial income (expense):                
  Extinguishment of debt     -         -         -         -         (3 )
  Other financial income (expense)     (174 )       16         (137 )       (529 )       (407 )
                     
Income (loss) before taxes     839         391         173         1,486         639  
                     
Benefit (provision) for income taxes     148         (15 )       (9 )       104         (40 )
Results relating to equity-accounted investees     2         3         3         9         8  
                     
Net income (loss)     989         379         167         1,599         607  
Net (income) loss attributable to non-controlling interests     (17 )       (18 )       (18 )       (73 )       (68 )
Net income (loss) attributable to stockholders     972         361         149         1,526         539  
                     
Earnings per share data:                 
Net income (loss) attributable to stockholders per common share          
                     
Basic earnings per common share in $ $   3.70     $   1.56     $   0.64     $   6.36     $   2.27  
Diluted earnings per common share in $ $   3.56     $   1.49     $   0.61     $   6.10     $   2.17  
                     
Weighted average number of shares of common stock (in thousands):        
Basic     262,766       231,545       232,367       239,764       237,954  
Diluted     272,785       242,122       242,901       250,116       248,609  
                     

 

NXP Semiconductors 
Table 2: Condensed consolidated balance sheet (unaudited) 
             
             
($ in millions)   As of
    Dec. 31, 
2015
  Oct. 4,
2015
  Dec. 31, 
2014
             
Current assets:            
Cash and cash equivalents   $   1,614     $   2,492     $   1,185  
Accounts receivable, net       1,047         611         546  
Other receivables       83         46         47  
Assets held for sale       15         356         -  
Inventories, net       1,879         751         755  
Other current assets       174         143         107  
Total current assets       4,812         4,399         2,640  
             
Non-current assets:            
Other non-current assets       602         451         436  
Property, plant and equipment       2,922         1,097         1,123  
Identified intangible assets       8,790         465         573  
Goodwill       9,228         1,838         2,121  
Total non-current assets       21,542         3,851         4,253  
             
Total assets       26,354         8,250         6,893  
             
Current liabilities:            
Accounts payable       1,014         736         729  
Liabilities held for sale       -         8         -  
Restructuring liabilities-current     197         21         37  
Accrued liabilities       781         480         534  
Short-term debt       556         532         20  
Total current liabilities       2,548         1,777         1,320  
             
Non-current liabilities:            
Long-term debt       8,656         4,518         3,979  
Restructuring liabilities       43         3         3  
Deferred tax liabilities       2,293         72         76  
Other non-current liabilities       1,011         723         714  
Total non-current liabilities       12,003         5,316         4,772  
             
Non-controlling interests       288         268         263  
Stockholders’ equity       11,515         889         538  
Total equity       11,803         1,157         801  
             
Total liabilities and equity       26,354         8,250         6,893  
             

 

                     
NXP Semiconductors 
Table 3: Condensed consolidated statement of cash flows (unaudited) 
                     
                     
($ in millions)   Three Months Ended   Full Year
    Dec. 31, 
2015
  Oct. 4,
2015
  Dec. 31, 
2014
    2015       2014  
                     
Cash Flows from operating activities                  
Net income (loss)    $    989     $    379     $    167     $    1,599     $    607  
Adjustments to reconcile net income (loss):                
Depreciation and amortization     230         94         97         517         405  
Stock-based compensation     111         34         34         216         133  
Change in fair value of the Warrant liability     1         (67 )       2         31         2  
Amortization of discount on debt     11         9         3         39         3  
Amortization of debt issuance costs     11        -          13         11         13  
(Gain) loss on extinguishment of debt     -         -         -         -         3  
Net (gain) loss on sale of assets     (1,258 )       (4 )       (3 )       (1,263 )       (10 )
Results relating to equity accounted investees     (2 )       (3 )       (3 )       (9 )       (8 )
Changes in deferred taxes       (69 )       4         (1 )       (63 )       1  
Changes in operating assets and liabilities:                
(Increase) decrease in receivables and other current assets     71         (96 )       108         (78 )       (111 )
(Increase) decrease in inventories     154         (5 )       (27 )       82         (42 )
Decrease (Increase) in other non-current assets     9         1         -         30         13  
Increase (decrease) in accounts payable and accrued liabilities     (10 )       (5 )       71         22         222  
Exchange differences       31         (6 )       91         193         246  
Other items       (8 )       5         4         3         (9 )
Net cash provided by (used for) operating activities     271         340         556         1,330         1,468  
                     
Cash flows from investing activities:                  
Purchase of identified intangible assets     (5 )       (1 )       (10 )       (12 )       (36 )
Capital expenditures on property, plant and equipment     (92 )       (78 )       (107 )       (341 )       (329 )
Proceeds from disposals of property, plant and equipment     1         4         2         7         4  
Proceeds from disposals of assets held for sale     -         -         3         -         6  
Purchase of interests in businesses     (1,587 )       -         (6 )       (1,692 )       (8 )
Proceeds from sale of interests in businesses     1,604         -         -         1,605         1  
Proceeds from return of equity investment     -                 1      
Other       2         (1 )       (14 )       2         (25 )
Net cash (used for) provided by investing activities     (77 )       (76 )       (132 )       (430 )       (387 )
                     
Cash flows from financing activities:                  
Net (repayments) borrowings of short-term debt     (1 )       (1 )       -         (2 )       (17 )
Repayments under the revolving credit facility     -         -         (750 )       -         (950 )
Amounts drawn under the revolving credit facility     -         -         -         -         800  
Repurchase of long-term debt     (3,586 )       -         -         (3,586 )       (92 )
Principal payments on long-term debt     (8 )       (6 )       (5 )       (32 )       (15 )
Proceeds from the issuance of long-term debt     2,680         -         1,150         3,680         1,150  
Cash paid for debt issuance costs     (22 )       -         (16 )       (32 )       (16 )
Proceeds from the sale of warrants     -         -         134         -         134  
Cash paid for Notes hedge derivatives     -         -         (208 )       -         (208 )
Dividends paid to non-controlling interests     -         (51 )       -         (51 )       (50 )
Cash proceeds from exercise of stock options     18         8         48         51         145  
Purchase of treasury shares     (151 )       (158 )       (180 )       (475 )       (1,435 )
Hold-back payments on prior acquisitions     -         -         -         (2 )       -  
Net cash provided by (used for) financing activities     (1,070 )       (208 )       173         (449 )       (554 )
                     
Effect of changes in exchange rates on cash positions     (2 )       1         (6 )       (22 )       (12 )
Increase (decrease) in cash and cash equivalents     (878 )       57         591         429         515  
Cash and cash equivalents at beginning of period     2,492         2,435         594         1,185         670  
Cash and cash equivalents at end of period     1,614         2,492         1,185         1,614         1,185  
                     
                     

 

NXP Semiconductors 
Table 4: Reconciliation of GAAP to non-GAAP Segment Results (unaudited) 
                     
                     
($ in millions)   Three Months Ended   Full Year
    Dec. 31, 
2015
  Oct. 4,
2015
  Dec. 31, 
2014
    2015       2014  
                     
High Performance Mixed Signal (HPMS)       1,306         1,164         1,169         4,720         4,208  
Standard Products       271         325         331         1,241         1,275  
Product Revenue       1,577         1,489         1,500         5,961         5,483  
Corporate and Other       29         33         37         140         164  
Total Revenue   $    1,606     $    1,522     $    1,537     $    6,101     $    5,647  
                     
                     
                     
HPMS Revenue   $    1,306     $    1,164     $    1,169     $    4,720     $    4,208  
Percent of Total Revenue     81.3 %     76.5 %     76.1 %     77.4 %     74.5 %
HPMS segment GAAP gross profit       534         626         595         2,367         2,253  
PPA effects 1)       (164 )       (1 )       (1 )       (166 )       (2 )
Restructuring 2)       (8 )       -         -         (9 )       -  
Stock based compensation 2)       (6 )       (2 )       (2 )       (12 )       (7 )
Other incidentals       (1 )       1         1         (1 )       -  
HPMS segment non-GAAP gross profit   $    713     $    628     $    597     $    2,555     $    2,262  
                     
HPMS segment GAAP gross margin     40.9 %     53.8 %     50.9 %     50.1 %     53.5 %
HPMS segment non-GAAP gross margin     54.6 %     54.0 %     51.1 %     54.1 %     53.8 %
                     
HPMS segment GAAP operating profit       995         331         277         1,885         983  
PPA effects 1)       (283 )       (14 )       (16 )       (329 )       (84 )
Restructuring 2)       (195 )       1         (2 )       (211 )       (3 )
Stock based compensation 2)       (99 )       (28 )       (27 )       (184 )       (104 )
Other incidentals 3)       1,191         1         1         1,191         6  
HPMS segment non-GAAP operating profit   $    381     $    371     $    321     $    1,418     $    1,168  
                     
HPMS segment GAAP operating margin     76.2 %     28.4 %     23.7 %     39.9 %     23.4 %
HPMS segment non-GAAP operating margin     29.2 %     31.9 %     27.5 %     30.0 %     27.8 %
                     
                     
                     
Standard Products Revenue   $    271     $    325     $    331     $    1,241     $    1,275  
Percent of Total Revenue     16.9 %     21.4 %     21.5 %     20.3 %     22.6 %
Standard  Products segment GAAP gross profit       90         108         103         417         382  
PPA effects       (1 )       -         -         (3 )       (2 )
Restructuring       (4 )       (4 )       (6 )       (9 )       (31 )
Stock based compensation       (1 )       (1 )       (1 )       (3 )       (3 )
Other incidentals       (1 )       (2 )       (3 )       (6 )       (10 )
Standard Products segment non-GAAP gross profit   $    97     $    115     $    113     $    438     $    428  
                     
Standard Products segment GAAP gross margin     33.2 %     33.2 %     31.1 %     33.6 %     30.0 %
Standard Products segment non-GAAP gross margin     35.8 %     35.4 %     34.1 %     35.3 %     33.6 %
                     
Standard Products segment GAAP operating profit       103         56         41         264         120  
PPA effects       (12 )       (12 )       (12 )       (50 )       (58 )
Restructuring       (4 )       (4 )       (6 )       (9 )       (37 )
Stock based compensation       (11 )       (6 )       (7 )       (31 )       (29 )
Other incidentals 3)       66         (2 )       (3 )       61         (10 )
Standard Products segment non-GAAP operating profit   $    64     $    80     $    69     $    293     $    254  
                     
Standard Products segment GAAP operating margin     38.0 %     17.2 %     12.4 %     21.3 %     9.4 %
Standard Products segment non-GAAP operating margin     23.6 %     24.6 %     20.8 %     23.6 %     19.9 %
                     
                     
                     
Corporate and Other Revenue   $    29     $    33     $    37     $    140     $    164  
Percent of Total Revenue     1.8 %     2.1 %     2.4 %     2.3 %     2.9 %
Corporate and Other segment GAAP gross profit       (5 )       6         6         3         5  
PPA effects       (2 )       (2 )       (2 )       (9 )       (8 )
Restructuring       (1 )       -         1         -         (12 )
Other incidentals       2         3         1         6         2  
Corporate and Other segment non-GAAP gross profit   $    (4 )   $    5     $    6     $    6     $    23  
                     
Corporate and Other segment GAAP gross margin   -17.2 %     18.2 %     16.2 %     2.1 %     3.0 %
Corporate and Other segment non-GAAP gross margin   -13.8 %     15.2 %     16.2 %     4.3 %     14.0 %
                     
Corporate and Other segment GAAP operating profit       (85 )       (12 )       (8 )       (134 )       (54 )
PPA effects       (5 )       (6 )       (6 )       (22 )       (25 )
Restructuring 2)       (40 )       (1 )       (4 )       (44 )       (17 )
Stock based compensation       (1 )       -         -         (1 )       -  
Merger-related costs       (27 )       (3 )       -         (42 )       -  
Other incidentals       -         -         3         1         (4 )
Corporate and Other segment non-GAAP operating profit   $    (12 )   $    (2 )   $    (1 )   $    (26 )   $    (8 )
                     
Corporate and Other segment GAAP operating margin   -293.1 %     -36.4 %     -21.6 %     -95.7 %     -32.9 %
Corporate and Other segment non-GAAP operating margin   -41.4 %     -6.1 %     -2.7 %     -18.6 %     -4.9 %
                     
                     
                     
1) Includes Purchase Accounting effect on inventory that will be amortized over 4 months. 
                     
2) Includes severance, contract termination costs and accelerated vesting charges related to the acquisition of Freescale. 
                     
3) Includes the recognition of the gain on the sale of the RF Power and Bipolar businesses.      

 

  NXP Semiconductors 
  Table 5: Financial Reconciliation of GAAP to non-GAAP Results (unaudited) 
                       
                       
                       
  ($ in millions except share data)   Three Months Ended   Full Year
      Dec. 31, 
2015
  Oct. 4,
2015
  Dec. 31, 
2014
   
2015
     
2014
 
                       
  Revenue   $    1,606     $    1,522     $    1,537     $    6,101     $    5,647  
                       
  GAAP Gross profit   $    619     $    740     $    704     $    2,787     $    2,640  
  PPA effects 1)       (167 )       (3 )       (3 )       (178 )       (12 )
  Restructuring 2)       (13 )       (4 )       (5 )       (18 )       (43 )
  Stock Based Compensation 2)       (7 )       (3 )       (3 )       (15 )       (10 )
  Other incidentals       -         2         (1 )       (1 )       (8 )
  Non-GAAP Gross profit   $    806     $    748     $    716     $    2,999     $    2,713  
                       
  GAAP Gross margin     38.5 %     48.6 %     45.8 %     45.7 %     46.8 %
                       
  Non-GAAP Gross margin     50.2 %     49.1 %     46.6 %     49.2 %     48.0 %
                       
  GAAP Research and development   $   (318 )   $   (178 )   $   (198 )   $   (890 )   $   (763 )
  Restructuring 2)       (79 )       1         (4 )       (91 )       (9 )
  Stock based compensation 2)       (21 )       (7 )       (7 )       (45 )       (20 )
  Other incidentals       1         -         -         1         (1 )
  Non-GAAP Research and development   $   (219 )   $   (172 )   $   (187 )   $   (755 )   $   (733 )
                       
  GAAP Selling, general and administrative   $   (413 )   $   (162 )   $   (167 )   $   (922 )   $   (686 )
  Restructuring 2)       (147 )       (1 )       (3 )       (155 )       (5 )
  Stock based compensation 2)       (83 )       (24 )       (24 )       (156 )       (103 )
  Merger-related costs       (27 )       (3 )       -         (42 )       -  
  Other incidentals       (1 )       (3 )       3         (4 )       (7 )
  Non-GAAP Selling, general and administrative   $   (155 )   $   (131 )   $   (143 )   $   (565 )   $   (571 )
                       
  GAAP amortization of acquisition-related intangible assets   $   (133 )   $   (29 )   $   (31 )   $   (223 )   $   (152 )
  PPA effects       (133 )       (29 )       (31 )       (223 )       (152 )
  Non-GAAP amortization of acquisition-related intangible assets   $    -      $    -      $   -      $    -      $    -   
                       
  GAAP Other income (expense)   $   1,258     $   4     $   2     $   1,263     $   10  
  PPA effects       -         -         -         -         (3 )
  Other incidentals 3)       1,257         -         (1 )       1,257         8  
  Non-GAAP Other income (expense)   $   1     $   4     $   3     $   6     $   5  
                       
  GAAP Operating income (loss)   $    1,013     $    375     $    310     $    2,015     $    1,049  
  PPA effects 1)       (300 )       (32 )       (34 )       (401 )       (167 )
  Restructuring 2)       (239 )       (4 )       (12 )       (264 )       (57 )
  Stock based compensation 2)       (111 )       (34 )       (34 )       (216 )       (133 )
  Merger-related costs       (27 )       (3 )       -         (42 )       -  
  Other incidentals 3)       1,257         (1 )       1         1,253         (8 )
  Non-GAAP Operating income (loss)   $    433     $    449     $    389     $    1,685     $    1,414  
                       
  GAAP Operating margin     63.1 %     24.6 %     20.2 %     33.0 %     18.6 %
                       
  Non-GAAP Operating margin     27.0 %     29.5 %     25.3 %     27.6 %     25.0 %
                       
  GAAP Financial income (expense)   $   (174 )   $   16     $   (137 )   $   (529 )   $   (410 )
  Non-cash interest expense on convertible notes       (10 )       (9 )       (3 )       (38 )       (3 )
  Foreign exchange gain (loss) on debt       (31 )       6         (91 )       (193 )       (246 )
  Gain (loss) on extinguishment of long term debt       -         -         -         -         (3 )
  Changes in fair value of warrant liability       (1 )       67         (2 )       (31 )       (2 )
  Other financial expense       (76 )       (4 )       (4 )       (95 )       (17 )
  Non-GAAP Financial income (expense)   $    (56 )   $    (44 )   $    (37 )   $    (172 )   $    (139 )
                       
  GAAP Income tax benefit (provision)   $    148     $    (15 )   $    (9 )   $    104     $    (40 )
  Other adjustments       167         (8 )       (2 )       144         (16 )
  Non-GAAP Cash tax (expense)   $    (19 )   $    (7 )   $    (7 )   $    (40 )   $    (24 )
                       
  GAAP Results relating to equity-accounted investees   $    2     $    3     $   3     $    9     $    8  
  Other adjustments       2         3         3         9         8  
  Non-GAAP Results relating to equity-accounted investees   $    -      $    -      $    -      $    -      $    -   
                       
  GAAP Net income (loss)   $    989     $    379     $    167     $    1,599     $    607  
  PPA effects 1)       (300 )       (32 )       (34 )       (401 )       (167 )
  Restructuring 2)       (239 )       (4 )       (12 )       (264 )       (57 )
  Stock based compensation 2)       (111 )       (34 )       (34 )       (216 )       (133 )
  Merger-related costs       (27 )       (3 )       -         (42 )       -  
  Other incidentals 3)       1,257         (1 )       1         1,253         (8 )
  Other adjustments       51   )     55         (99 )       (204 )       (279 )
  Non-GAAP Net income (loss)   $    358     $    398     $    345     $    1,473     $    1,251  
                       
  GAAP Net income (loss) attributable to stockholders   $    972     $    361     $    149     $    1,526     $    539  
  PPA effects 1)       (300 )       (32 )       (34 )       (401 )       (167 )
  Restructuring 2)       (239 )       (4 )       (12 )       (264 )       (57 )
  Stock based compensation 2)       (111 )       (34 )       (34 )       (216 )       (133 )
  Merger-related costs       (27 )       (3 )       -         (42 )       -  
  Other incidentals 3)       1,257         (1 )       1         1,253         (8 )
  Other adjustments       51    4 )     55         (99 )       (204 )       (279 )
  Non-GAAP Net income (loss) attributable to stockholders   $    341     $    380     $    327     $    1,400     $    1,183  
                       
  GAAP Weighted average shares - diluted       272,785         242,122         242,901         250,116         248,609  
  Non-GAAP Adjustment       -         -         -         -         -  
  Non-GAAP Weighted average shares - diluted       272,785         242,122         242,901         250,116         248,609  
                       
  GAAP Diluted net income (loss) attributable to stockholders per share   $    3.56     $    1.49     $    0.61     $    6.10     $    2.17  
  Non-GAAP Diluted net income (loss) attributable to stockholders per share   $    1.25     $    1.57     $    1.35     $    5.60     $    4.76  
                       
                       
  1) Includes Purchase Accounting effect on inventory that will be amortized over 4 months. 
                       
  2) Includes severance, contract termination costs and accelerated vesting charges related to the acquisition of Freescale. 
                                       
  3) Includes the recognition of the gain on the sale of the RF Power and Bipolar businesses. 
                                       
  4) Includes: During 4Q15: Non-cash interest expense on convertible Notes: ($10) million; Foreign exchange loss on debt: ($31) million; Changes in fair value of warrant liability: ($1) million; Other financial expense: ($76) million; Results relating to equity-accounted investees: $2 million; and difference between book and cash income taxes: $167 million. 

 

NXP Semiconductors 
Table 6: Adjusted EBITDA and Free Cash Flow (unaudited) 
                     
                     
                     
($ in millions)   Three Months Ended   Full Year
    Dec. 31, 
2015
  Oct. 4,
2015
  Dec. 31,
2014
  2015   2014
                     
                     
Net Income   $    989     $    379     $    167     $    1,599     $    607  
                     
Reconciling items to EBITDA                    
Financial (income) expense       174         (16 )       137         529         410  
(Benefit) provision for income taxes       (148 )       15         9         (104 )       40  
Depreciation       89         58         58         262         219  
Amortization       141         36         39         255         186  
EBITDA   $    1,245     $    472     $    410     $    2,541     $    1,462  
                     
Reconciling items to adjusted EBITDA                    
Results of equity-accounted investees       (2 )       (3 )       (3 )       (9 )       (8 )
Purchase accounting effect on inventory        149         -         -         149         -  
Restructuring 1)       239         4         11         264         56  
Stock based compensation       111         34         34         216         133  
Merger-related costs       27         3         -         42         -  
Other incidental items 1)       (1,254 )       4         (1 )       (1,245 )       7  
Adjusted EBITDA   $    515     $    514     $    451     $    1,958     $    1,650  
                     
Trailing twelve month adjusted EBITDA   $    1,958     $    1,894     $    1,650     $    1,958     $    1,650  
                     
                     
1) Excluding depreciation property, plant and equipment and amortization of software related to:              
                     
  Restructuring       -         -       1         -       1  
  Other incidental items     (3 )     (3 )       -       (8 )     1  
                     
                     
                     
                     
                     
($ in millions)   Three Months Ended   Full Year
    Dec. 31, 
2015
  Oct. 4,
2015
  Dec. 31, 
2014
    2015       2014  
                     
Net cash provided by (used for) operating activities    $    271     $    340     $    556     $    1,330     $    1,468  
Net capital expenditures on property, plant and equipment       (91 )       (74 )       (105 )       (334 )       (325 )
                     
Non-GAAP free cash flow   $    180     $    266     $    451     $    996     $    1,143  
Non-GAAP free cash flow as a percent of Revenue     11 %     17 %     29 %     16 %     20 %
                     
                     



 

For further information, please contact:
Investors:
Jeff Palmer
jeff.palmer@nxp.com
+1 408 518 5411

Media:
Joon Knapen
joon.knapen@nxp.com
+49 151 257 43 299

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