NXP Semiconductors Reports Fourth Quarter and Full-year 2018 Results

EINDHOVEN, The Netherlands, Feb. 06, 2019 (GLOBE NEWSWIRE) -- NXP Semiconductors N.V. (NASDAQ: NXPI) today reported financial results for the fourth quarter and full year 2018, ended December 31, 2018.

“NXP delivered greater than 5 percent growth in Auto and Secure Connected Devices, resulting in total revenue of $9.41 billion, an increase of 2 percent year-on-year. Our teams continue to be fully focused on driving our long-term strategy, with a very strong pipeline of innovative solutions and excellent customer traction. However, demand has weakened for the first quarter, primarily in the automotive and industrial end-markets in China.” said Richard Clemmer, NXP Chief Executive Officer.

Key Highlights

  • Fourth-quarter revenue was $2.4 billion, down 2 percent year-on-year;
  • Fourth-quarter GAAP gross margin was 51.7 percent, and GAAP operating margin was 9.3 percent;
  • Fourth-quarter non-GAAP gross margin was 53.1 percent, and non-GAAP operating margin was 30.4 percent;
  • Full-year cash flow from operations was $4.37 billion, with net capex investments of $610 million, resulting in non-GAAP free cash flow of $3.76 billion;
  • In 2018 NXP returned $5.08 billion to shareholders through previously announced share repurchases and dividend payments, reducing our diluted share count by 15 percent or 52 million shares.

Summary of Reported Fourth Quarter and Full-year 2018 ($ millions, unaudited) (1)

  Q4 2018   Q3 2018   Q4 2017   Q - Q   Y - Y    2018     2017    Y - Y
Automotive $ 960     $ 990     $ 970     -3 %   -1 %   $ 3,953     $ 3,762     5 %
Secure Connected Devices (SCD) $ 729     $ 717     $ 745     2 %   -2 %   $ 2,723     $ 2,587     5 %
Secure Interface & Infrastructure (SI&I) $ 487     $ 511     $ 497     -5 %   -2 %   $ 1,792     $ 1,873     -4 %
Secure Identification Solutions (SIS) $ 136     $ 133     $ 136     2 %   0 %   $ 554     $ 523     6 %
High Performance Mixed Signal (HPMS) $ 2,312     $ 2,351     $ 2,348     -2 %   -2 %   $ 9,022     $ 8,745     3 %
Standard Products (STDP) $  -     $  -     $  -     $  -     $ 118     NM  
Product Revenue $ 2,312     $ 2,351     $ 2,348     -2 %   -2 %   $ 9,022     $ 8,863     2 %
Corporate & Other $ 91     $ 94     $ 108     -3 %   -16 %   $ 385     $ 393     -2 %
Total Revenue(i) $ 2,403     $ 2,445     $ 2,456     -2 %   -2 %   $ 9,407     $ 9,256     2 %
GAAP Gross Profit $ 1,243     $ 1,256     $ 1,242     -1 %   0 %   $ 4,851     $ 4,619     5 %
Gross Profit Adjustments (ii) $ (32 )   $ (39 )   $ (89 )   $ (129 )   $ (306 )  
Non-GAAP Gross Profit $ 1,275     $ 1,295     $ 1,331     -2 %   -4 %   $ 4,980     $ 4,925     1 %
GAAP Gross Margin   51.7 %     51.4 %     50.6 %     51.6 %     49.9 %  
Non-GAAP Gross Margin   53.1 %     53.0 %     54.2 %     52.9 %     53.2 %  
GAAP Operating Income / (Loss) $ 224     $ 2,211     $ 210     -90 %   7 %   $ 2,710     $ 2,102     29 %
Operating Income Adjustments (ii)   (507     1,478       (553     11       (620  
Non-GAAP Operating Income $ 731     $ 733     $ 763     0 %   -4 %   $ 2,699     $ 2,722     -1 %
GAAP Operating Margin   9.3 %     90.4 %     8.6 %     28.8 %     22.7 %  
Non-GAAP Operating Margin   30.4 %     30.0 %     31.1 %     28.7 %     29.4 %  
 
Additional Information  
DIO   102       100       99     2     3    
DPO   80       74       92     6     (12  
DSO   30       32       33     (2   (3  
Cash Conversion Cycle   52       58       40     (6   12    
Channel Inventory (months)   2.4       2.4       2.3     -     0.1    
Financial Leverage (iii)   1.4x       1.4x       1.0x     -     0.4x    
  1. Additional Information for the Fourth Quarter and Full-year 2018:
     
    1. Beginning January 1, 2019, NXP will begin to provide supplemental revenue information by end-market, defined as Automotive; Industrial & IoT; Mobile; and Communication Infrastructure & Other. Additionally, NXP will report the net profit - revenue less costs and expenses - associated with its manufacturing service agreements related to previously divested assets in Other Income and Expense. To help investors better understand this supplemental information NXP provided the current and comparable period revenue in both the existing format and the new end market on its investor relations website at www.nxp.com/investor.
    2. For an explanation of GAAP to non-GAAP adjustments, please see “Non-GAAP Financial Measures” on page 2 of this release.
    3. Financial leverage, is defined as net debt divided by trailing twelve months adjusted EBITDA.
  • During the fourth quarter of 2018 NXP repurchased 5 million shares for a total cost of $393 million.
  • Weighted average number of diluted shares for the three-month period ended December 31, 2018 was 295 million, a reduction of 52 million shares as compared to the fourth quarter of 2017.
  • Cash paid for income taxes related to on-going operations was $29 million. Items not related to on-going operations resulted in additional cash payments of $32 million, which was mainly due to the divestment of the Standard Products business.

Guidance for the First Quarter 2019: ($ millions) (1)

     Guidance Range 
                             
    GAAP   Reconciliation   non-GAAP
    Low   Mid   High       Low   Mid   High
Total Revenue $    2,020     $    2,090     $    2,160     $   -     $    2,020     $    2,090     $    2,160  
Q-Q     -16 %     -13 %     -10 %         -16 %     -13 %     -10 %
Y-Y     -11 %     -8 %     -5 %         -11 %     -8 %     -5 %
Gross Profit $    1,010     $    1,060     $    1,112     $   (33 )   $    1,043     $    1,093     $    1,145  
Gross Margin   50.0 %     50.7 %     51.5 %         51.6 %     52.3 %     53.0 %
Operating Income (loss) $    6     $    44     $    84     $   (499 )   $    505     $    543     $    583  
Operating Margin   0.3 %     2.1 %     3.9 %         25.0 %     26.0 %     27.0 %
Financial income (expense) $   (76 )   $   (76 )   $   (76 )   $   (14 )   $   (62 )   $   (62 )   $   (62 )

Note (1) Additional Information:

  1. GAAP Gross Profit is expected to include Purchase Price Accounting (“PPA”) effects, ($16 million); Stock Based Compensation, ($11 million); Restructuring and Other Incidentals, ($6 million);
  2. GAAP Operating Income (loss) is expected to include PPA effects, ($380 million); Stock Based Compensation, ($86 million); Merger related costs ($3 million); Restructuring and Other Incidentals, ($30 million);
  3. GAAP Financial Income (expense) is expected to include Other financial expense ($14 million);
  4. Net cash paid for income taxes related to on-going operations is expected to be approximately ($24 million);
  5. Non-controlling interest is expected to be approximately ($7 million);
  6. Weighted average diluted share count is expected to be approximately 290 million.

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, 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 "Non-GAAP Financial Measures" below.  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

Non-GAAP Financial Measures

In managing NXP's business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In measuring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce costs with the goal of increasing our gross margin and operating margin and when assessing appropriate levels of research and development efforts. In addition, management relies upon these non-GAAP financial measures when making decisions about product spending, administrative budgets, and other operating expenses. We believe that these non-GAAP financial measures, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company’s results of operations and the factors and trends affecting NXP’s business. We believe that they enable investors to perform additional comparisons of our operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to operations, certain non-cash expenses and share-based compensation expense, which may obscure trends in NXP's underlying performance.  This information also enables investors to compare financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management. 

These non-GAAP financial measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. 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.  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).” Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information related to our rationale for using these non-GAAP financial measures, as well as the impact of these measures on the presentation of NXP's operations.

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) Amortization of acquisition-related intangible assets, (vi) Other income, (vii) Operating income (loss), (viii) Operating margin, (ix) Financial Income (expense), (x) adjusted net income, adjusted EBITDA and trailing 12 month adjusted EBITDA, and (xi) free cash flow and free cash flow as a percent of Revenue. 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, non-cash interest expense on convertible notes, extinguishment of debt, and foreign exchange gains and losses.

Conference Call and Webcast Information

NXP will host a conference call on February 7, 2019 at 8:00 a.m. U.S. Eastern Time (2:00 p.m. Central European Time) to discuss its fourth quarter and full-year 2018 results and provide an outlook for the first quarter of 2019. 

Interested parties may join the conference call by dialing 1–888–603–7644 (within the U.S.) or 1–484–747-6631 (outside of the U.S.). The participant pass-code is 1899219. 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. (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 approximately 30,000 employees in more than 30 countries and posted revenue of $9.41 billion in 2018. 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/investor or from the SEC website, www.sec.gov.

For further information, please contact:

Investors:  Media:
Jeff Palmer Jacey Zuniga
jeff.palmer@nxp.com  jacey.zuniga@nxp.com 
+1 408 518 5411 +1 512 895 7398


NXP Semiconductors                    
Table 1: Condensed consolidated statement of operations (unaudited)                
                     
($ in millions except share data)   Three Months Ended   Full Year
    Dec. 31, 2018   Sept. 30, 2018   Dec. 31, 2017     2018       2017  
Revenue   $    2,403     $    2,445     $    2,456     $    9,407     $    9,256  
Cost of revenue       (1,160 )       (1,189 )       (1,214 )       (4,556 )       (4,637 )
Gross profit       1,243         1,256         1,242         4,851         4,619  
Research and development       (403 )       (433 )       (414 )       (1,700 )       (1,554 )
Selling, general and administrative       (251 )       (252 )       (269 )       (993 )       (1,090 )
Amortization of acquisition-related intangible assets       (364 )       (362 )       (347 )       (1,449 )       (1,448 )
Total operating expenses       (1,018 )       (1,047 )       (1,030 )       (4,142 )       (4,092 )
Other income (expense)       (1 )       2,002         (2 )       2,001         1,575  
Operating income (loss)       224         2,211         210         2,710         2,102  
Financial income (expense):                    
Extinguishment of debt       -         -         -         (26 )       (41 )
Other financial income (expense)       (77 )       (119 )       (79 )       (309 )       (325 )
Income (loss) before taxes       147         2,092         131         2,375         1,736  
Benefit (provision) for income taxes       141         (311 )       629         (176 )       483  
Results relating to equity-accounted investees       1         52         8         59         53  
Net income (loss)       289         1,833         768         2,258         2,272  
Less: Net income (loss) attributable to non-controlling interests       13         13         15         50         57  
Net income (loss) attributable to stockholders       276         1,820         753         2,208         2,215  
Earnings per share data:                     
Net income (loss) per common share attributable to stockholders in $:                
Basic   $   0.94     $   5.64     $   2.20     $   6.78     $   6.54  
Diluted   $   0.94     $   5.60     $   2.17     $   6.72     $   6.41  
Weighted average number of shares of common stock outstanding during the period (in thousands):            
Basic     293,170       322,533       342,088       325,781       338,646  
Diluted     294,947       325,267       347,176       328,606       345,802  
Cash dividends declared per share   $   0.25     $   0.25        -     $   0.50        -  

 

NXP Semiconductors          
Table 2: Condensed consolidated balance sheet (unaudited)          
($ in millions) As of
  Dec. 31, 2018   Sept. 30, 2018   Dec. 31, 2017
Current assets:          
Cash and cash equivalents $   2,789   $   1,944   $   3,547
Accounts receivable, net     792       845       879
Inventories, net     1,279       1,284       1,236
Other current assets     365       330       382
Total current assets     5,225       4,403       6,044
           
Non-current assets:          
Other non-current assets     545       632       981
Property, plant and equipment, net     2,436       2,394       2,295
Identified intangible assets, net     4,467       4,762       5,863
Goodwill     8,857       8,865       8,866
Total non-current assets     16,305       16,653       18,005
           
Total assets     21,530       21,056       24,049
           
Current liabilities:          
Accounts payable     999       949       1,146
Restructuring liabilities-current     60       62       74
Accrued liabilities     1,219       1,583       747
Short-term debt     1,107       1,002       751
Total current liabilities     3,385       3,596       2,718
Non-current liabilities:          
Long-term debt     6,247       5,354       5,814
Restructuring liabilities     5       9       15
Deferred tax liabilities     450       502       701
Other non-current liabilities     753       790       1,085
Total non-current liabilities     7,455       6,655       7,615
Non-controlling interests     185       172       189
Stockholders’ equity     10,505       10,633       13,527
Total equity     10,690       10,805       13,716
Total liabilities and equity     21,530       21,056       24,049

 

NXP Semiconductors                    
Table 3: Condensed consolidated statement of cash flows (unaudited)                
($ in millions)   Three Months Ended   Full Year
    Dec. 31, 2018   Sept. 30, 2018   Dec. 31, 2017     2018       2017  
Cash Flows from operating activities                    
Net income (loss)    $    289     $    1,833     $    768     $    2,258     $    2,272  
Adjustments to reconcile net income (loss):                    
Depreciation and amortization       503         497         542         1,987         2,173  
Stock-based compensation       93         83         78         314         281  
Amortization of discount on debt       11         10         10         42         40  
Amortization of debt issuance costs       3         2         3         10         12  
Net gain on sale of assets       -         -         (4 )       -         (1,615 )
Loss on extinguishment of debt       -         -         -         26         41  
Results relating to equity accounted investees       (1 )       (52 )       (8 )       (54 )       (22 )
Changes in deferred taxes       (52 )       (50 )       (593 )       (211 )       (797 )
Changes in operating assets and liabilities:                    
(Increase) decrease in receivables and other current assets       51         (31 )       (25 )       187         31  
(Increase) decrease in inventories       5         42         (31 )       (65 )       (120 )
Increase (decrease) in accounts payable and accrued liabilities     (188 )       310         82         (129 )       225  
Decrease (Increase) in other non-current assets       4         (36 )       (92 )       (22 )       (100 )
Exchange differences       13         1         5         14         30  
Other items       -         6         3         12         (4 )
Net cash provided by (used for) operating activities       731         2,615         738         4,369         2,447  
                     
Cash flows from investing activities:                    
Purchase of identified intangible assets       (4 )       (18 )       (10 )       (50 )       (66 )
Capital expenditures on property, plant and equipment       (170 )       (156 )       (133 )       (611 )       (552 )
Proceeds from disposals of property, plant and equipment       -         1         1         1         2  
Purchase of interests in businesses, net of cash acquired       -         -         -         (18 )       -  
Proceeds from sale of interests in businesses, net of cash divested       -         127         -         159         2,682  
Purchase of available-for-sale securities       (2 )       -         -         (9 )       -  
Proceeds from the sale of securities       2         -         -         2         -  
Proceeds from return of equity investment       -         4         -         4         -  
Other       -         -         7         -         6  
Net cash provided by (used for) investing activities       (174 )       (42 )       (135 )       (522 )       2,072  
                     
Cash flows from financing activities:                    
Repayment of Bridge loan       (1,000 )       -         -         (1,000 )       -  
Proceeds from Bridge loan       -         1,000         -         1,000         -  
Repurchase of long-term debt       -         -         -         (1,273 )       (2,728 )
Principal payments on long-term debt       -         -         (4 )       (1 )       (16 )
Proceeds from the issuance of long-term debt       1,997         -         -         1,997         -  
Cash paid for debt issuance costs       (12 )       (11 )       -         (23 )       -  
Cash paid for terminated acquisition adjustment event       (60 )       -         -         (60 )       -  
Dividends paid to non-controlling interests       -         (54 )       -         (54 )       (89 )
Dividends paid to common stockholders       (74 )       -         -         (74 )       -  
Cash proceeds from exercise of stock options       3         6         129         39         233  
Purchase of treasury shares and restricted stock unit withholdings     (424 )       (4,550 )       (248 )       (5,006 )       (286 )
Cash paid on behalf of shareholders for tax on repurchased shares       (142 )       -         -         (142 )       -  
Net cash provided by (used for) financing activities       288         (3,609 )       (123 )       (4,597 )       (2,886 )
                     
Effect of changes in exchange rates on cash positions       -         (1 )       2         (8 )       20  
Increase (decrease) in cash and cash equivalents       845         (1,037 )       482         (758 )       1,653  
Cash and cash equivalents at beginning of period       1,944         2,981         3,065         3,547         1,894  
Cash and cash equivalents at end of period       2,789         1,944         3,547         2,789         3,547  
                     
Net cash paid during the period for:                    
Interest     74       7       81       177       245  
Income taxes     61       80       67       188       356  
Non-cash adjustment related to the adoption of ASC 606:                    
Receivables and other current assets       -         -         -         (36 )       -  
Inventories       -         -         -         22         -  

 

NXP Semiconductors                    
Table 4: Reconciliation of GAAP to non-GAAP Segment Results (unaudited)                
($ in millions)   Three Months Ended   Full Year
    Dec. 31, 2018   Sept. 30, 2018   Dec. 31, 2017     2018       2017  
                     
High Performance Mixed Signal (HPMS)       2,312         2,351         2,348         9,022         8,745  
Standard Products       -         -         -         -         118  
Corporate and Other       91         94         108         385         393  
Total Revenue   $    2,403     $    2,445     $    2,456     $    9,407     $    9,256  
                     
                     
HPMS Revenue   $    2,312     $    2,351     $    2,348     $    9,022     $    8,745  
Percent of Total Revenue     96.2 %     96.2 %     95.6 %     95.9 %     94.5 %
HPMS segment GAAP gross profit       1,234         1,254         1,228         4,822         4,527  
PPA effects       (18 )       (19 )       (78 )       (74 )       (268 )
Stock based compensation       (12 )       (10 )       (10 )       (39 )       (33 )
Merger-related costs       (1 )       (1 )       -         (3 )       (1 )
HPMS segment non-GAAP gross profit   $    1,265     $    1,284     $    1,316     $    4,938     $    4,829  
HPMS segment GAAP gross margin     53.4 %     53.3 %     52.3 %     53.4 %     51.8 %
HPMS segment non-GAAP gross margin     54.7 %     54.6 %     56.0 %     54.7 %     55.2 %
HPMS segment GAAP operating profit       246         240         246         807         656  
PPA effects       (384 )       (383 )       (430 )       (1,531 )       (1,737 )
Restructuring        -         (4 )       -         (4 )       9  
Stock based compensation       (93 )       (82 )       (77 )       (312 )       (278 )
Merger-related costs       (7 )       (23 )       (3 )       (40 )       (10 )
HPMS segment non-GAAP operating profit   $    730     $    732     $    756     $    2,694     $    2,672  
HPMS segment GAAP operating margin     10.6 %     10.2 %     10.5 %     8.9 %     7.5 %
HPMS segment non-GAAP operating margin     31.6 %     31.1 %     32.2 %     29.9 %     30.6 %
Standard Products Revenue                   $    118  
Percent of Total Revenue                     1.3 %
Standard Products segment GAAP gross profit                       45  
Stock based compensation                       (1 )
Merger-related costs                       4  
Standard Products segment non-GAAP gross profit                   $    42  
Standard Products segment GAAP gross margin                     38.1 %
Stamdard Products segment non-GAAP gross margin                     35.6 %
Standard Products segment GAAP operating profit                       31  
Stock based compensation                       (2 )
Merger-related costs                       4  
Standard Products segment non-GAAP operating profit                   $    29  
Standard Products segment GAAP operating margin                     26.3 %
Standard Products segment non-GAAP operating margin                     24.6 %
                     
Corporate and Other Revenue   $    91     $    94     $    108     $    385     $    393  
Percent of Total Revenue     3.8 %     3.8 %     4.4 %     4.1 %     4.2 %
Corporate and Other segment GAAP gross profit       9         2         14         29         47  
PPA effects       (1 )       (1 )       (1 )       (4 )       (5 )
Restructuring       -         -         -         -         (3 )
Stock based compensation       -         (1 )       -         (1 )       1  
Merger-related costs       -         (7 )       -         (8 )       -  
Corporate and Other segment non-GAAP gross profit   $    10     $    11     $    15     $    42     $    54  
Corporate and Other segment GAAP gross margin     9.9 %     2.1 %     13.0 %     7.5 %     12.0 %
Corporate and Other segment non-GAAP gross margin     11.0 %     11.7 %     13.9 %     10.9 %     13.7 %
Corporate and Other segment GAAP operating profit       (22 )       1,971         (36 )       1,903         1,415  
PPA effects       (1 )       (1 )       (1 )       (4 )       (5 )
Restructuring        (1 )       (1 )       -         (2 )       (10 )
Stock based compensation       -         (1 )       (1 )       (2 )       (1 )
Merger-related costs       (8 )       1,937         (29 )       1,888         (129 )
Other incidentals       (13 )       36         (12 )       18         1,539  
Corporate and Other segment non-GAAP operating profit   $    1     $    1     $    7     $    5     $    21  
Corporate and Other segment GAAP operating margin     -24.2 %     2096.8 %     -33.3 %     494.3 %     360.1 %
Corporate and Other segment non-GAAP operating margin     1.1 %     1.1 %     6.5 %     1.3 %     5.3 %

 

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, 2018   Sept. 30, 2018   Dec. 31, 2017     2018       2017  
Revenue   $    2,403     $    2,445     $    2,456     $    9,407     $    9,256  
GAAP Gross profit   $    1,243     $    1,256     $    1,242     $    4,851     $    4,619  
PPA effects       (19 )       (20 )       (79 )       (78 )       (273 )
Restructuring       -         -         -         -         (3 )
Stock Based Compensation       (12 )       (11 )       (10 )       (40 )       (33 )
Merger-related costs       (1 )       (8 )       -         (11 )       (1 )
Other incidentals       -         -         -         -         4  
Non-GAAP Gross profit   $    1,275     $    1,295     $    1,331     $    4,980     $    4,925  
GAAP Gross margin     51.7 %     51.4 %     50.6 %     51.6 %     49.9 %
Non-GAAP Gross margin     53.1 %     53.0 %     54.2 %     52.9 %     53.2 %
GAAP Research and development   $   (403 )   $   (433 )   $   (414 )   $   (1,700 )   $   (1,554 )
Restructuring       -         -         -         -         12  
Stock based compensation       (36 )       (34 )       (35 )       (133 )       (122 )
Merger-related costs       (3 )       (18 )       (1 )       (24 )       (2 )
Non-GAAP Research and development   $   (364 )   $   (381 )   $   (378 )   $   (1,543 )   $   (1,442 )
GAAP Selling, general and administrative   $   (251 )   $   (252 )   $   (269 )   $   (993 )   $   (1,090 )
PPA effects       (2 )       (2 )       (5 )       (8 )       (21 )
Restructuring       (1 )       (5 )       -         (7 )       (10 )
Stock based compensation       (45 )       (38 )       (33 )       (141 )       (126 )
Merger-related costs       (11 )       (21 )       (31 )       (78 )       (136 )
Other incidentals       (13 )       (4 )       (10 )       (21 )       (34 )
Non-GAAP Selling, general and administrative   $   (179 )   $   (182 )   $   (190 )   $   (738 )   $   (763 )
GAAP amortization of acquisition-related intangible assets   $   (364 )   $   (362 )   $   (347 )   $   (1,449 )   $   (1,448 )
PPA effects       (364 )       (362 )       (347 )       (1,449 )       (1,448 )
Non-GAAP amortization of acquisition-related intangible assets $   -     $   -     $   -     $   -     $   -  
GAAP Other income (expense)   $   (1 )   $   2,002     $   (2 )   $   2,001     $   1,575  
Restructuring       -         -         -         1         -  
Merger-related costs       -         1,961         -         1,961         -  
Other incidentals       -         40         (2 )       39         1,573  
Non-GAAP Other income (expense)   $   (1 )   $   1     $   -     $   -     $   2  
GAAP Operating income (loss)   $    224     $    2,211     $    210     $    2,710     $    2,102  
PPA effects       (385 )       (384 )       (431 )       (1,535 )       (1,742 )
Restructuring       (1 )       (5 )       -         (6 )       (1 )
Stock based compensation       (93 )       (83 )       (78 )       (314 )       (281 )
Merger-related costs       (15 )       1,914         (32 )       1,848         (139 )
Other incidentals       (13 )       36         (12 )       18         1,543  
Non-GAAP Operating income (loss)   $    731     $    733     $    763     $    2,699     $    2,722  
GAAP Operating margin     9.3 %     90.4 %     8.6 %     28.8 %     22.7 %
Non-GAAP Operating margin     30.4 %     30.0 %     31.1 %     28.7 %     29.4 %
GAAP Financial income (expense)   $   (77 )   $   (119 )   $   (79 )   $   (335 )   $   (366 )
Non-cash interest expense on convertible notes       (11 )       (11 )       (10 )       (44 )       (41 )
Foreign exchange gain (loss)       (5 )       (3 )       (3 )       (11 )       (16 )
Extinguishment on debt       -         -         -         (26 )       (41 )
Other financial expense       (1 )       (71 )  1  )     (11 )       (78 )       (22 )
Non-GAAP Financial income (expense)   $    (60 )   $    (34 )   $    (55 )   $    (176 )   $    (246 )
                     

 

NXP Semiconductors                    
Table 6: Adjusted EBITDA and Free Cash Flow (unaudited)                    
($ in millions)   Three Months Ended   Full Year
    Dec. 31, 2018   Sept. 30, 2018   Dec. 31, 2017     2018       2017  
Net Income (loss)   $    289     $    1,833     $    768     $    2,258     $    2,272  
Reconciling items to adjusted net income                    
Financial (income) expense       77         119         79         335         366  
(Benefit) provision for income taxes       (141 )       311         (629 )       176         (483 )
Depreciation       124         119         145         478         611  
Amortization       379         378         397         1,509         1,562  
Adjusted net income   $    728     $    2,760     $    760     $    4,756     $    4,328  
Reconciling items to adjusted EBITDA                    
Results of equity-accounted investees       (1 )       (52 )       (8 )       (59 )       (53 )
Restructuring       1         5         -         6         1  
Stock based compensation       93         83         78         314         281  
Merger-related costs       15         (1,914 )       32         (1,848 )       139  
Other incidental items 1)       13         (36 )       12         (18 )       (1,539 )
Adjusted EBITDA   $    849     $    846     $    874     $    3,151     $    3,157  
Trailing twelve month adjusted EBITDA   $    3,151     $    3,176     $    3,157     $    3,151     $    3,157  
                     
1) Excluding depreciation property, plant and equipment and amortization of software related to:            
  Other incidental items       -         -         -         -       (4 )
                     
($ in millions)   Three Months Ended   Full Year    
    Dec. 31, 2018   Sept. 30, 2018   Dec. 31, 2017     2018       2017  
                     
Net cash provided by (used for) operating activities    $    731     $    2,615     $    738     $    4,369     $    2,447  
Net capital expenditures on property, plant and equipment       (170 )       (155 )       (132 )       (610 )       (550 )
Non-GAAP free cash flow   $    561     $    2,460     $    606     $    3,759     $    1,897  
Non-GAAP free cash flow as a percent of Revenue     23 %     101 %     25 %     40 %     21 %

NXPJPEGLOGO.jpg

NXP USA, Inc.