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Solid sequential sales growth and gross margin improvement
* Excludes wafer sales to ST-E Wireless
** Excludes effects of Purchase Price Accounting, impairment charges and incidental items
*** Includes divested wireless business
Eindhoven, The Netherlands, February 26, 2010 - NXP Semiconductors today announced fourth quarter sales of USD 1,130 million, a comparable increase of 8.0% over the third quarter of 2009 (nominal 9.3%) and a comparable increase of 12.6% over the fourth quarter of 2008. Sales continued to improve across each segment and region, with the exception of the Home business segment.
Full year total sales amounted to USD 3,843 million versus USD 5,443 million in 2008. Sales in 2009 were lower by USD 792 million due to the divestment of our wireless activities in July 2008. The remaining decline in sales was mainly related to the severe global financial crisis and the weak economic environment that affected all business segments in the first half of the year.
Rick Clemmer, Chief Executive Officer of NXP, said, “In the fourth quarter, we saw for the first time in the last 6 quarters, a year on year growth on a comparable basis. We built on the momentum of Q3 and saw continued growth in almost all business segments. This was preceded by a tough first half of the year where the business was significantly impacted by the global economic and financial crisis. The success to date of the accelerated and expanded Redesign Program, the execution of our strategic focus on High Performance Mixed Signal, improvements in our capital structure and our agility to respond to market conditions, sees us enter 2010 with more confidence, better focused and better equipped to win.”
Adjusted EBITDA in the fourth quarter of 2009 was USD 171 million compared with USD 147 million in the third quarter and USD 41 million in the same period of 2008. This improvement is attributable to higher sales and improved gross margin. The company achieved a gross margin of 38.6%, up from 35.8% in the previous quarter and 21.6% in Q4 2008.
NXP's cash position at the end of Q4 2009 was USD 1,041 million compared with USD 1,061 million. at the end of the third quarter, taking into account payments for Redesign in the fourth quarter of USD 72 million. The difference in cash position between the end of Q4 2009 and the end of Q4 2008 (USD 1,796 million) is mainly explained by the Redesign payments for the full year 2009, which amounted to USD 385 million and USD 286 million which was spent on bond buy backs.
The company's Redesign Program is ahead of schedule. It is delivering more savings than originally anticipated, and the program has been expanded to cover additional areas, including employee termination costs stemming from the transaction with Trident and the closing of an additional wafer fab in Nijmegen (“ICN 6”). The annual savings that will be realized in the course of 2011 are expected to exceed USD 650 million (compared with the original target of USD 550 million by the end of 2010). The costs for the Redesign Program are now estimated to be no greater than USD 750 million by the end of 2011 (as opposed to USD 700 million by the end of 2010).
Effective January 1, 2010, NXP has decided to regroup its reportable business segments reflecting the decision to build leadership in High Performance Mixed Signal technology while maintaining a strong position in Standard Products and the divestment of a major portion of the Home business segment to Trident Microsystems. On February 8th we completed the transaction with Trident Microsystems, Inc. regarding our Set-top Box and Television Systems Business Lines. From this date, NXP will account for its investment in Trident under the equity method.
Outlook: Considering the current business development and the unusual seasonal characteristics of this first quarter, we expect sales to be flat to slightly up in the first quarter of 2010 on a business and currency comparable basis.
NXP Semiconductors provides High Performance Mixed Signal and Standard Product solutions that leverage its leading RF, Analog, Power, Digital Processing and manufacturing expertise. These innovations are used in a wide range of automotive, industrial, consumer, lighting, medical, computing and identification applications. Headquartered in Europe, the company has about 29,000 employees working in more than 30 countries and posted sales of USD 5.4 billion in 2008. For more information visit www.nxp.com.