UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 6-K

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16
of  the
Securities Exchange Act of 1934

October 30, 2007
Commission File Number: 333-142287


NXP B.V.
(Exact name of registrant as specified in charter)

The Netherlands
(Jurisdiction of  incorporation or organization)

60 High Tech Campus, 5656 AG, Eindhoven, The Netherlands
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F

x

 

Form 40-F

o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).

Yes

o

 

No

x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).

Yes

o

 

No

x

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes

o

 

No

x

 

Name and address of person authorized to receive notices
and communications from the Securities and Exchange Commission

Dr. Jean A.W. Schreurs
60 High Tech Campus
5656 AG Eindhoven — The Netherlands

 



 

This report contains the quarterly report of NXP B.V. (the “Company”) for the three months ended September 30, 2007, as furnished to the holders of the Company’s debt securities on October 30, 2007. This report also contains a copy of the press release entitled “NXP Semiconductors Announces Third Quarter 2007 Results”, dated October 30, 2007.

Exhibits

1.                                       Quarterly report of NXP Semiconductors Group

2.                                       Press release, dated October 30, 2007

 

2



 

 

Forward-looking statements

This document includes forward-looking statements which include statements regarding our 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, our ability to successfully introduce new technologies and products, the demand for the goods into which our products are incorporated, our ability to generate sufficient cash or raise sufficient capital to meet both our debt service and research and development and capital investment requirements, our ability to accurately estimate demand and match our production capacity accordingly or obtain supplies from third-party producers, our access to production from third-party outsourcing partners, and any events that might affect their business or our relationship with them, our ability to secure adequate and timely supply of equipment and materials from suppliers, our ability to avoid operational problems and product defects and, if such issues were to arise, to rectify them quickly, our ability to form strategic partnerships and joint ventures and successfully cooperate with our alliance partners, our ability to win competitive bid selection processes to develop products for use in our customers’ equipment and products, our ability to successfully establish a brand identity, our ability to successfully hire and retain key management and senior product architects; and, our ability to maintain good relationships with our suppliers.

Except for any ongoing obligation to disclose material information as required by the United States federal securities laws, we do not have any intention or obligation to update forward-looking statements after we distribute this document. In addition, this document contains information concerning the semiconductor industry, our market segments and business units generally, which is forward-looking in nature and is based on a variety of assumptions regarding the ways in which the semiconductor industry, our market segments and product areas will develop. We have based these assumptions on information currently available to us, if any one or more of these assumptions turn out to be incorrect, actual market results may differ from those predicted. While we do not know what impact any such differences may have on our business, if there are such differences, our future results of operations and financial condition, and the market price of the notes, could be materially adversely affected.

 

Use of non-US GAAP information

In presenting and discussing the NXP Group’s financial position, operating results and cash flows, management uses certain non-US GAAP financial measures.These non-US GAAP financial measures should not be viewed in isolation as alternatives to the equivalent US GAAP measure(s) and should be used in conjunction with the most directly comparable US GAAP measure(s)

A discussion of the non-US GAAP measures included in this document and a reconciliation of such measures to the most directly comparable US GAAP measure(s) are contained in this document.

 

Use of fair value measurements

In presenting the NXP Group’s financial position, fair values are used for the measurement of various items in accordance with the applicable accounting standards. These fair values are based on market prices, where available, and are obtained from sources that we consider to be reliable. Users are cautioned that these values are subject to changes over time and are only valid as of the balance sheet date. When a readily determinable market value does not exist, we estimate fair values using valuation models which we believe are appropriate for their purpose. These require management to make significant assumptions with respect to future developments which are inherently uncertain and may therefore deviate from actual developments. In certain cases independent valuations are obtained to support management’s determination of fair values.

 

 

Quarterly report of the NXP Group
for the 3rd quarter ended September 30, 2007

 

NXP announces sequential adjusted EBITDA rises to EUR 226 million

 

o    Third quarter sales at EUR 1,211 million compared to EUR 1,141 million in the second quarter of 2007

o    Comparable sequential sales growth of 7.4% (nominal growth 6.1%), comparable year-on-year decrease of 2.8%

o    Third quarter adjusted EBITDA, excluding effects of Purchase Price Accounting, at EUR 226 million (adjusted EBITA at EUR 97 million)

o    Cash position increased to EUR 681 million at end of the third quarter compared to EUR 514 million at the end of the second quarter of 2007

o    Cordless & VoIP Terminal operations exited as per the end of August

o    Book-to-bill ratio of 1.01 in third quarter

o    Factory loading increases to 85% in the third quarter from 74% in the second quarter and 69% in the first quarter of 2007

 

Frans van Houten, President and CEO of NXP:

 

“Against a background of continuing soft industry conditions, NXP has performed in line with our expectations. The improvements in Mobile and Personal continue with the group announcing the shipment of its 500 millionth AERO RF transceiver to the mobile handset market, reflecting the successful integration of the wireless operations of Silicon Labs acquired earlier in the year. The third quarter also witnessed a good performance from Multimarket Semiconductors and stabilization in the Home Business Unit after a series of challenging quarters. The Home group won some notable clients, particularly in the area of Digital TV with three leading television manufacturers of which the impact will become visible in the course of 2008. The Automotive business gained market share and the Identification business slowed in line with the industry as a whole.”

 

“The improved results in the third quarter can be attributed to normal seasonal sales growth leading to improved factory loading, as well as the impact of our Business Renewal Program, where we are well on our way to realize the EUR 100 million savings on a run rate basis by the end of 2007. Our active portfolio management program continued in particular with the divestment of the Cordless and VoIP Terminal operations. In addition we had a successful start of the assembly and test joint venture with ASE (called ASEN) in Suzhou, China, executing on our asset-light strategy.”

 

 

 



 

 

Table of Contents

 

 

 

Page

 

 

 

Introduction

 

3

 

 

 

Report on the performance of the NXP Group:

 

 

Third quarter 2007 compared to third quarter 2006

 

4

Group performance

 

4

Performance by segment

 

7

Third quarter 2007 compared to second quarter 2007

 

10

First nine months 2007 compared to first nine months 2006

 

11

Liquidity and capital resources

 

12

Outlook

 

12

 

 

 

Group Financial Statements:

 

 

Combined and Consolidated statements of operations

 

13

Combined and Consolidated balance sheets

 

14

Combined and Consolidated statements of cash flows

 

15

Consolidated statements of changes in shareholder’s equity and comprehensive income (loss)

 

16

Information by segments

 

17

Main countries

 

18

Reconciliation of non-US GAAP information

 

19

Supplemental Guarantor information

 

21

Quarterly statistics

 

24

 

 

2



 

Introduction

 

On September 29, 2006, Koninklijke Philips Electronics N.V. (“Philips”) sold 80.1% of its semiconductors businesses to a consortium of private equity investors (the “Private Equity Consortium”). These semiconductor businesses were transferred to NXP B.V. (“NXP” or the “Company”), a wholly-owned subsidiary of Philips, on September 28, 2006. All of NXP’s issued and outstanding shares were then acquired by KASLION Acquisition B.V. (“KASLION”), which was formed as an acquisition vehicle by the Private Equity Consortium and Philips. This transaction is referred to as the “Acquisition”. In order to fund the acquisition of NXP by KASLION, the Private Equity Consortium and Philips contributed cash to KASLION in exchange for 80.1% and 19.9%, respectively, of the total equity of KASLION.

 

As a result of the Acquisition, the financial statements are presented on a Predecessor and Successor basis: the predecessor periods reflect the combined financial results of NXP prior to the Acquisition. The successor periods reflect the consolidated financial results since the Acquisition. The Company also refers to the operations of NXP for both the predecessor and successor periods as NXP Semiconductors Group.

 

Basis of Presentation

 

The combined and consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), which are presented in footnote 3 of our Annual Report 2006.

 

Predecessor period

The combined financial statements of the Company have been derived from the consolidated financial statements and accounting records of Philips prior to the Acquisition, principally using the historical results of operations and the historical basis of assets and liabilities of the semiconductor businesses. The combined financial statements include an allocation of the costs of certain corporate functions historically provided by Philips but not recorded by its semiconductors businesses. Additionally, the combined financial statements include allocated cash, debt and related interest income and expense, which have not been historically reported by Philips’ semiconductors businesses. Furthermore, the combined financial statements present income taxes calculated on a basis as if the Company had filed a separate income tax return.

 

The combined financial statements may not necessarily reflect the Company’s results of operations, financial position and cash flows in the future or what its results of operations, financial position and cash flows would have been, if the Company had been stand-alone during the predecessor periods.

 

Since a direct ownership relationship did not exist among the various worldwide entities comprising the Company prior to the legal separation from Philips, Philips’ net investment in the Company is shown as business’ equity in lieu of shareholder’s equity in the combined financial statements for the predecessor period.

 

Successor period

The consolidated financial statements include the accounts of NXP B.V. and its subsidiaries since the Acquisition. As a result of the purchase accounting applied to the Acquisition, the assets and liabilities reported in the consolidated balance sheet have changed substantially for the successor periods.

 

 

3



 

Third quarter 2007 compared to third quarter 2006

 

                 all amounts in millions of euros unless otherwise stated; data included are unaudited

                 financial reporting in accordance with US GAAP

                 the impact on the 2007 financial results of the purchase price accounting (“purchase price accounting”, or “PPA”) used in connection with the Acquisition and subsequent acquisitions and divestments has been separately provided; financial results are also provided as adjusted to eliminate the impact of these accounting effects. This presentation does not comply with US GAAP, however, the Company believes it provides investors with a useful basis of comparison with prior year results. Also the impact of cost allocations to the predecessor period and the actual stand-alone costs of the successor period have been described, where relevant to the analysis

                 Earnings before Interest and Taxes (“EBIT”) as applied by the Company, has the same meaning as income from operations as presented in the accompanying consolidated financial statements

                 comparable sales growth reflects relative changes in sales between periods adjusted for the effects of foreign currency exchange rate changes, acquisitions and divestments (consolidation changes) and reclassified product lines

                 currency comparable sales growth reflects relative changes in sales between periods adjusted for the effects of foreign currency exchange rate changes

 

Group performance

 

 

 

PREDECESSOR

 

SUCCESSOR

 

Operational items

 

Q3
2006

 

Q3
2007

 

Effects of
PPA

 

Q3 2007
excl. PPA

 

Sales

 

1,282

 

1,211

 

 

1,211

 

% nominal growth

 

3.9

 

(5.5

)

 

(5.5

)

% comparable growth

 

15.1

 

(2.8

)

 

(2.8

)

Gross margin

 

504

 

444

 

26

 

470

 

Selling expenses

 

(85

)

(68

)

 

(68

)

General and administrative expenses

 

(102

)

(224

)

121

 

(103

)

Research and development expenses

 

(257

)

(240

)

 

(240

)

Other income

 

6

 

86

 

 

86

 

EBIT

 

66

 

(2

)

147

 

145

 

 

 

 

 

 

 

 

 

 

 

EBITA

 

56

 

109

 

26

 

135

 

EBITDA

 

203

 

264

 

 

264

 

Adjusted EBITA

 

120

 

71

 

26

 

97

 

Adjusted EBITDA

 

267

 

226

 

 

226

 

 

 

 

 

 

 

 

 

 

 

Employees in FTE

 

38,144

 

38,116

 

 

38,116

 

 

Sales

Sales were EUR 1,211 million for the period July through September 2007 (the “reporting period”), compared to EUR 1,282 million for the 3rd  quarter of 2006, a nominal decrease of 5.5% and a decrease of 2.8% on a comparable basis. Currency movements had a negative effect of 4.2%. Sales increased in Mobile & Personal (5.3% comparable growth), Automotive & Identification (9.0% comparable growth).  Home decreased by 22.3% compared to the 3rd quarter of 2006, mainly caused by the continued CRT market decline. MultiMarket Semiconductors decreased by 4.4%.

Exited product lines were mainly Cordless & VoIP Terminal operations, DVD-R, mobile display drivers, large display drivers and PA-FM.

 

4



 

 

 

Gross margin

Excluding the effects of PPA, gross margin in the 3rd quarter of 2007 amounted to EUR 470 million, a decrease of EUR 34 million, compared to EUR 504 million in the 3rd quarter of 2006. This decrease was caused mainly by lower sales. Incidental items had a negative impact of EUR 6 million in total of which EUR 3 million restructuring charges, versus EUR 28 million in the 3rd quarter 2006 including EUR 6 million for restructuring. Excluding these incidental items, gross margin decreased from 41.5% to 39.3%. Utilization of our manufacturing base was slightly higher compared to last year (85% in the 3rd quarter of 2007 versus 84% in the corresponding quarter of 2006).

 

The financial impact of purchase price accounting for the reporting period was EUR 26 million and was attributable to depreciation of tangible fixed assets.

 

Selling expenses

Selling expenses as a percentage of sales for the 3rd quarter of 2007 were 5.6% versus 6.6% in the same period of last year. The 3rd quarter 2007 selling expenses were mainly reduced by the effects from our Business Renewal program .

 

General and administrative expenses

Excluding the PPA effects, general and administrative (“G&A”) expenses amounted to EUR 103 million (8.5% of sales), compared to EUR 102 million (8.0% of sales) in the 3rd quarter of 2006. G&A expenses in the reporting period included restructuring and IT disentanglement charges of EUR 16 million compared to EUR 10 million in the corresponding period of 2006.

 

Excluding restructuring and IT disentanglement charges the G&A expenses declined by EUR 5 million, mainly as a result of our Business Renewal program. This was partly offset by increased pension costs.

 

PPA effects in G&A amounted to EUR 121 million and were related to amortization of intangible fixed assets.

 

Research and development expenses

Research and development expenses (“R&D”)  amounted to EUR 240 million (19.8% of sales) compared to EUR 257 million (20.0% of sales) for the 3rd quarter of 2006. The lower investments in R&D were mainly driven by reduced spending in the Crolles2 alliance and resulting from exited product lines.

 

Other income

For the reporting period, other income amounted to EUR 86 million, primarily consisting of the gain of EUR 87 million related to the divestment of the Cordless & VoIP Terminal operations. Other income totaled EUR 6 million in the corresponding period of 2006.

 

EBIT

Excluding PPA effects of EUR 147 million, EBIT amounted to a profit of EUR 145 million. This compares to a profit of EUR 66 million in the third quarter of 2006. The higher EBIT in the reporting period included amongst others the gain on the divestment of the Cordless & VoIP Terminal operations, restructuring charges of EUR 7 million and EUR 28 million for IT disentanglement and incidentals. In the 3rd quarter of 2006 the incidental charges totaled EUR 38 million including EUR 6 million for restructuring. Excluding these incidental items, EBIT in the reporting period was a profit of EUR 93 million compared to a profit of EUR 104 million in the 3rd quarter of 2006.

 

Adjusted EBITA

Excluding the PPA effects, adjusted EBITA amounted to EUR 97 million, compared to EUR 120 million for the third quarter in 2006. Next to the adjustments mentioned in the adjusted EBITDA the difference of EUR 23 million is mainly explained by the lower EBIT.

 

 

5



 

Adjusted EBITDA

Adjusted EBITDA amounted to EUR 226 million, compared to EUR 267 million in the third quarter of 2006. This decrease of EUR 41 million was mainly caused by a lower gross margin in the reporting period.

 

To arrive at adjusted EBITDA of EUR 226 million in the third quarter of 2007, the following adjustments amounting to EUR 38 million to EBITDA were made:

 

minority interests and results of unconsolidated companies of EUR 15 million negative, and

restructuring costs of EUR 7 million and legal disentanglement related costs of EUR 13 million, and

other items totaled EUR 73 million positively including amongst others the EUR 87 million gain related to the Cordless & VoIP Terminal divestment and several other items loss of EUR 14 million.

 

The corresponding EBITDA adjustments in the 3rd quarter of 2006 totaled EUR 64 million negative, consisting of minority interests and results of unconsolidated companies (EUR 14 million), exited product lines (EUR 12 million) restructuring costs (EUR 6 million) and other items (EUR 32 million).

 

Net income

 

 

 

PREDECESSOR

 

SUCCESSOR

 

 

 

Q3
2006

 

Q3
2007

 

Effects of
PPA

 

Q3 excl.
PPA 2007

 

 

 

 

 

 

 

 

 

 

 

EBIT

 

66

 

(2

)

147

 

145

 

Financial income (expense)

 

(4

)

39

 

 

39

 

Income tax (expense benefit)

 

(21

)

(29

)

(8

)

(37

)

Result unconsolidated companies

 

 

(4

)

 

(4

)

Minority interest

 

(14

)

(11

)

 

(11

)

Net income (loss)

 

27

 

(7

)

139

 

132

 

 

Financial income and expense

Net financial income and expense amounted to EUR 39 million positive and included a profit of EUR 120 million as a result of currency exchange rates, predominantly related to our USD denominated notes. Net interest expense amounted to EUR 82 million. Net financial income and expense for the corresponding period in 2006 amounted to EUR 4 million negative, mainly consisting of net interest expenses on funding provided by Philips.

 

Income tax (expense) benefit

Excluding PPA effects the Company recognized an income tax expense of EUR 37 million. For EUR 21 million this was caused by the income tax expense resulting from the divestment of the Cordless & VoIP Terminal operations. For the same period of 2006 income tax expense amounted to EUR 21 million..

 

Minority interests

The loss of EUR 11 million reflects the share of minority shareholders in the profits of consolidated companies. In the third quarter of 2006, the loss was EUR 14 million. For both periods this was mainly related to the SSMC joint venture.(currently 61.2% versus 50.5% last year).

 

 

6



 

Performance by segment

 

Mobile & Personal

 

Key data

 

Q3
2006

 

Q3
2007

 

Q3 2007
Excl. PPA

 

Sales

 

411

 

429

 

429

 

% nominal growth

 

(0.2

)

4.4

 

4.4

 

% comparable growth

 

3.7

 

5.3

 

5.3

 

EBIT

 

15

 

50

 

95

 

EBITA

 

15

 

93

 

95

 

 

Sales amounted to EUR 429 million compared to EUR 411 million for the third quarter of 2006, a nominal increase of 4.4% (5.3% on a comparable basis). Cordless & VoIP Terminal operations have been included until the end of August. Stronger sales in Cellular Systems and Sound Solutions were partly offset by lower sales in Connected Entertainment.

 

Excluding the PPA effects, EBIT was a profit of EUR 95 million (including the gain on the divestment of the Cordless & VoIP Terminal operations of EUR 87 million). This compares to a profit of EUR 15 million in the third quarter of 2006. EBIT was affected by ongoing price erosion, especially in Connected Entertainment, which was not fully compensated by cost reductions. Selling and G&A expenses were reduced compared to the third quarter last year.

 

Home

 

Key data

 

Q3
2006

 

Q3
2007

 

Q3 2007
Excl. PPA

 

Sales

 

246

 

178

 

178

 

% nominal growth

 

(10.5

)

(27.6

)

(27.6

)

% comparable growth

 

7.1

 

(22.3

)

(22.3

)

EBIT

 

(15

)

(44

)

(23

)

EBITA

 

(15

)

(24

)

(23

)

 

Sales amounted to EUR 178 million, compared to EUR 246 million in the third quarter of 2006, a decrease of 27.6% (22.3% decline on a comparable basis). This negative development was primarily driven by the continued decline in the CRT TV-market, weak sales in Digital TV and our exit from the DVD-R market & Large Display Drivers (LDD).

 

Excluding PPA effects, EBIT (including EUR 3 million restructuring costs)  amounted to a loss of EUR 23 million, compared to a loss of EUR 15 million in the same period last year. Next to the lower sales level the decline in EBIT is primarily related to our ongoing R&D investments in Digital TV and Set Top Boxes.

 

 

7



 

 

Automotive & Identification

 

 

Key data

 

Q3
2006

 

Q3
2007

 

Q3 2007
Excl. PPA

 

Sales

 

214

 

242

 

242

 

% nominal growth

 

21.6

 

13.1

 

13.1

 

% comparable growth

 

23.4

 

9.0

 

9.0

 

EBIT

 

46

 

29

 

57

 

EBITA

 

46

 

53

 

54

 

 

Sales amounted to EUR 242 million, compared with EUR 214 million in the third quarter of 2006, an increase of 13.1% (9.0% increase on a comparable basis). The automotive operations showed solid growth in the quarter, while the market share of our identification operations remained stable in an overall slowing down market. Nominal sales were positively impacted by the reclassification of our sensor operations from the MultiMarket Semiconductors business to the Automotive & Identification business in the second quarter.

 

Excluding PPA effects, EBIT amounted to EUR 57 million, an improvement of EUR 11 million compared to the third quarter of 2006 primarily as a result of higher sales. Furthermore an amount of approximately EUR 6 million was included as a compensation for our contribution of development efforts in a joint venture in the area of secure contactless mobile chips.

 

 

MultiMarket Semiconductors

 

 

Key data

 

Q3
2006

 

Q3
2007

 

Q3 2007
Excl. PPA

 

Sales

 

347

 

302

 

302

 

% nominal growth

 

8.8

 

(13.0

)

(13.0

)

% comparable growth

 

27.9

 

(4.4

)

(4.4

)

EBIT

 

71

 

33

 

62

 

EBITA

 

71

 

59

 

62

 

 

Sales amounted to EUR 302 million compared to EUR 347 million in the third quarter of 2006, a decrease of 13.0% (4.4% decrease on comparable basis). This negative nominal growth relates to the discontinuation of the mobile display drivers product line and power rectifiers, and the reclassification of the automotive sensor operations to Automotive & Identification in the second quarter.

 

Excluding PPA effects, EBIT amounted to EUR 62 million compared to EUR 71 million for the third quarter of  2006. The weaker performance in Power Management and Standard ICs was partly compensated by strong operational performance in General Applications.

 

8



 

IC Manufacturing Operations

 

 

Key data

 

Q3
2006

 

Q3
2007

 

Q3 2007
Excl. PPA

 

Sales (1)

 

44

 

37

 

37

 

% nominal growth

 

12.8

 

(15.9

)

(15.9

)

% comparable growth

 

18.3

 

(28.2

)

(28.2

)

EBIT

 

(22

)

(8

)

16

 

EBITA

 

(22

)

(3

)

16

 


(1) Excluding internal supplies to other Business Units.

 

Sales decreased to EUR 37 million from EUR 44 million in the third quarter of 2006. This mainly reflects the lower sales of SSMC to TSMC.

 

Excluding PPA effects, EBIT amounted to EUR 16 million, compared to a loss of EUR 22 million in the third quarter in 2006. Cost savings contributed considerably to the improved EBIT level.

The utilization rate was 85.3% versus 83.8% in the third quarter of 2006.

 

Crolles2 alliance showed a loss of EUR 11 million compared to a loss of EUR 14 million in the third quarter of 2006. This loss excludes R&D-related expenses for the reporting period which are reported under Corporate and Other.

 

Corporate and Other

 

 

Key data

 

Q3
2006

 

Q3
2007

 

Q3 2007
Excl. PPA

 

Sales

 

20

 

23

 

23

 

% nominal growth

 

66.7

 

15.0

 

15.0

 

% comparable growth

 

74.8

 

22.1

 

22.1

 

EBIT

 

(29

)

(62

)

(62

)

EBITA

 

(39

)

(69

)

(69

)

 

EBIT comprises mainly the costs of corporate overhead and amounted to a loss of EUR 62 million for the 3rd   quarter of 2007 compared to a loss of EUR 29 million in the third quarter of 2006.

 

The increased loss mainly reflects incidental costs of EUR 20 million of which EUR 13 million is related to the IT disentanglement from Philips and EUR 6 million to R&D expenses in the Crolles2 alliance.

 

 

9



 

Third quarter 2007 compared to second quarter 2007

 

Key data

 

Q2 2007
as published

 

Q3 2007
as published

 

Q2 2007
excl. PPA

 

Q3 2007
excl. PPA

 

Sales

 

1,141

 

1,211

 

1,141

 

1,211

 

% nominal growth*

 

2.3

 

6.1

 

2.3

 

6.1

 

% comparable growth*

 

1.8

 

7.4

 

1.8

 

7.4

 

 

 

 

 

 

 

 

 

 

 

EBIT

 

(252

)

(2

)

(117

)

145

 

as a % of sales

 

(22.1

)

(0.2

)

(10.3

)

12.0

 

EBITA

 

(149

)

109

 

(120

)

135

 

EBITDA

 

12

 

264

 

14

 

264

 

Adjusted EBITA

 

(22

)

71

 

7

 

97

 

Adjusted EBITDA

 

139

 

226

 

141

 

226

 


* sequential growth

 

Sales

Sales amounted to EUR 1,211 million for the reporting period compared to EUR 1,141 million for the second quarter of 2007, a nominal increase of 6.1%. On a comparable basis the increase was 7.4%. The comparable growth mainly reflects the normal seasonal pattern in sales. The sales of our Mobile & Personal business showed a comparable growth of 11.2%, the Home business and MultiMarket Semiconductors business increased by 13.3% and 7.0%, respectively. The Automotive & Identification business showed a negative comparable growth of 1.6%.

 

EBIT

Excluding PPA effects, EBIT amounted to a profit of EUR 145 million in the 3rd quarter of 2007 compared to a loss of EUR 117 million in the second quarter of 2007. EBIT in the reporting period included a gain of EUR 87 million from the divestment of the Cordless & VoIP Terminal operations, restructuring charges of EUR 7 million and incidental charges of EUR 27 million. The second quarter EBIT loss of EUR 117 million included restructuring charges of EUR 97 million and other incidental charges of EUR 17 million.

 

 

10



 

First nine months 2007 compared to first nine months 2006

 

 

 

 

January-September

 

 

 

PREDECESSOR

 

SUCCESSOR

 

Key data

 

2006
as published

 

2006
excl. PPA

 

2007
as published

 

2007
excl. PPA

 

Sales

 

3,770

 

3,770

 

3,467

 

3,467

 

% nominal growth

 

10.6

 

10.6

 

(8.0

)

(8.0

)

% comparable growth

 

16.9

 

16.9

 

(2.2

)

(2.2

)

 

 

 

 

 

 

 

 

 

 

EBIT

 

139

 

139

 

(476

)

(23

)

as a % of sales

 

3.7

 

3.7

 

(13.7

)

(0.7

)

Financial income (expense)

 

(22

)

(22

)

(107

)

(107

)

Income tax (expense) benefit

 

(65

)

(65

)

72

 

48

 

Result unconsolidated companies

 

3

 

3

 

(5

)

(5

)

Minority interest

 

(50

)

(50

)

(23

)

(23

)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

5

 

5

 

(539

)

(110

)

EBITA

 

111

 

111

 

(116

)

(36

)

EBITDA

 

563

 

563

 

361

 

363

 

Adjusted EBITA

 

255

 

255

 

27

 

107

 

Adjusted EBITDA

 

707

 

707

 

504

 

506

 

 

Sales

Sales amounted to EUR 3,467 million for the period January through September 2007, compared to EUR 3,770 million for the corresponding period in 2006, a decrease of 8.0% (on a comparable basis the decrease was 2.2%). This decrease in sales primarily relates to our Home business. This decline was only partly offset by the growth in our Automotive & Identification business.

 

EBIT

Excluding PPA effects, EBIT amounted to a loss of EUR 23 million for the period January through September 2007, compared to a profit of EUR 139 million in the first nine months of 2006. EBIT in the first nine months included restructuring charges of EUR 134 million and incidental charges of EUR 63 million. The EBIT in the corresponding period of 2006 amounted to EUR 139 million and included restructuring charges of EUR 17 million and incidental charges of EUR 45 million. In addition the contribution margin was negatively impacted by weaker sales and lower utilization rates of our manufacturing facilities (77.8% in the first nine months of 2007 compared to 85.0% in the corresponding period of 2006)

 

 

11



 

Liquidity and capital resources

At the end of the 3rd quarter of 2007 cash and cash equivalents amounted to EUR 681 million, compared to EUR 514 million at the end of the 2nd quarter of 2007. Net cash provided by operating activities in the reporting period was EUR 202 million. Reconciling net income to net cash provided by operating activities, EUR 120 million representing currency exchange profits were eliminated under other items. The cash proceeds from the sale of businesses, mainly Cordless & VoIP Terminal operations, amounted to EUR 128 million. Capital expenditures in the reporting period were EUR 108 million. Investments in various businesses consumed EUR 11 million.

 

Outlook

The market remains soft and visibility remains short. Given NXP’s book-to-bill ratio of 1.01 in the third quarter, the Company expects low single digit sequential sales growth for the fourth quarter 2007 on a currency comparable basis.

 

Eindhoven, October 30, 2007

Board of Management

 

12



Combined and Consolidated statements of operations

 

all amounts in millions of euros

 

 

 

 

PREDECESSOR

 

SUCCESSOR

 

PREDECESSOR

 

SUCCESSOR

 

 

 

 

 

3rd quarter

 

January to September

 

 

 

2006

 

2007

 

2006

 

2007

 

 

 

 

 

 

 

 

 

 

 

Sales

 

1,262

 

1,203

 

3,702

 

3,435

 

Sales to Philips companies

 

20

 

8

 

68

 

32

 

Total sales

 

1,282

 

1,211

 

3,770

 

3,467

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

(778

)

(767

)

(2,331

)

(2,416

)

 

 

 

 

 

 

 

 

 

 

Gross margin

 

504

 

444

 

1,439

 

1,051

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

(85

)

(68

)

(275

)

(237

)

General and administrative expenses

 

(102

)

(224

)

(306

)

(653

)

Research and development expenses

 

(257

)

(240

)

(737

)

(722

)

Write-off of acquired in-process research and development

 

 

 

 

(11

)

Other income (expense)

 

6

 

86

 

18

 

96

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

66

 

(2

)

139

 

(476

)

 

 

 

 

 

 

 

 

 

 

Financial income (expense)

 

(4

)

39

 

(22

)

(107

)

 

 

 

 

 

 

 

 

 

 

Income (loss) before taxes

 

62

 

37

 

117

 

(583

)

 

 

 

 

 

 

 

 

 

 

Income tax (expense) benefit

 

(21

)

(29

)

(65

)

72

 

 

 

 

 

 

 

 

 

 

 

Income (loss) after taxes

 

41

 

8

 

52

 

(511

)

 

 

 

 

 

 

 

 

 

 

Results relating to unconsolidated companies

 

 

(4

)

3

 

(5

)

 

 

 

 

 

 

 

 

 

 

Minority interests

 

(14

)

(11

)

(50

)

(23

)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

27

 

(7

)

5

 

(539

)

 

 

13



 

Combined and Consolidated balance sheets

 

all amounts in millions of euros

 

 

 

 

PREDECESSOR

 

SUCCESSOR

 

 

 

September 28,
2006

 

December 31,
2006

 

September 30,
2007

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

159

 

939

 

681

 

Receivables

 

683

 

563

 

627

 

Inventories

 

710

 

646

 

618

 

Other current assets

 

96

 

125

 

149

 

Total current assets

 

1,648

 

2,273

 

2,075

 

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

 

Investments in unconsolidated companies

 

53

 

44

 

61

 

Other non-current financial assets

 

9

 

12

 

52

 

Non-current receivables

 

 

 

1

 

Other non-current assets

 

140

 

157

 

261

 

Property, plant and equipment

 

1,969

 

2,284

 

1,990

 

Intangible assets excluding goodwill

 

54

 

3,065

 

2,707

 

Goodwill

 

200

 

2,032

 

2,231

 

Total non-current assets

 

2,425

 

7,594

 

7,303

 

 

 

 

 

 

 

 

 

Total assets

 

4,073

 

9,867

 

9,378

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts and notes payable

 

486

 

489

 

621

 

Accrued liabilities

 

634

 

485

 

724

 

Short-term provisions

 

59

 

54

 

39

 

Other current liabilities

 

30

 

45

 

31

 

Short-term debt

 

18

 

23

 

4

 

Loans with Philips companies, current portion

 

518

 

 

 

Total current liabilities

 

1,745

 

1,096

 

1,419

 

 

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

 

 

Long-term debt

 

11

 

4,426

 

4,228

 

Loans with Philips companies, non-current portion

 

23

 

 

 

Long-term provisions

 

91

 

368

 

378

 

Other non-current liabilities

 

18

 

130

 

120

 

Total non-current liabilities

 

143

 

4,924

 

4,726

 

 

 

 

 

 

 

 

 

Minority interests

 

208

 

162

 

171

 

Business’ equity

 

1,977

 

 

 

Shareholder’s equity

 

 

3,685

 

3,062

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

4,073

 

9,867

 

9,378

 

 

14



 

Combined and Consolidated statements of cash flows

 

all amounts in millions of euros

 

 

 

 

PREDECESSOR

 

SUCCESSOR

 

PREDECESSOR

 

SUCCESSOR

 

 

 

 

 

3rd quarter

 

January to September

 

 

 

2006

 

2007

 

2006

 

2007

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income (loss)

 

27

 

(7

)

5

 

(539

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

151

 

281

 

471

 

865

 

Net gain on sale of assets

 

(1

)

(83

)

(7

)

(87

)

Results relating to unconsolidated companies

 

 

4

 

(3

)

5

 

Minority interests (net of dividends paid to minority shareholders)

 

14

 

11

 

50

 

21

 

Decrease (increase) in receivables and other current assets

 

(82

)

(35

)

(131

)

(113

)

Decrease (increase) in inventories

 

(22

)

(28

)

(68

)

7

 

Increase (decrease) in accounts payable, accrued and other liabilities

 

26

 

172

 

154

 

370

 

Decrease (increase) in current accounts Philips

 

(48

)

 

(25

)

 

Decrease (increase) in non-current receivables/other assets

 

(65

)

19

 

(24

)

(105

)

Increase (decrease) in provisions

 

51

 

(12

)

33

 

 

Other items

 

2

 

(120

)

13

 

(149

)

Net cash provided by (used for) operating activities

 

53

 

202

 

468

 

275

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Purchase of intangible assets

 

(4

)

(17

)

(12

)

(23

)

Capital expenditures on property, plant and equipment

 

(187

)

(108

)

(465

)

(276

)

Proceeds from disposals of property, plant and equipment

 

18

 

11

 

26

 

29

 

Purchase of other non-current financial assets

 

(3

)

(1

)

(3

)

(1

)

Proceeds from the sale of other non-current financial assets

 

 

2

 

 

2

 

Purchase of interest in businesses

 

 

(11

)

(3

)

(325

)

Proceeds from the sale of businesses

 

 

128

 

 

128

 

Net cash provided by (used for) investing activities

 

(176

)

4

 

(457

)

(466

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

PREDECESSOR

 

 

 

 

 

 

 

 

 

(Decrease) increase in debt

 

(213

)

 

(322

)

 

Net repayments of loans to Philips companies

 

(6

)

 

(497

)

 

Net changes in Business’ equity

 

321

 

 

867

 

 

SUCCESSOR

 

 

 

 

 

 

 

 

 

(Decrease) increase in debt

 

 

 

 

(14

)

Net cash provided by (used for) financing activities

 

102

 

 

48

 

(14

)

Effect of changes in exchange rates on cash positions

 

(2

)

(39

)

(10

)

(53

)

Increase (decrease) in cash and cash equivalents

 

(23

)

167

 

49

 

(258

)

Cash and cash equivalents at beginning of period

 

182

 

514

 

110

 

939

 

Cash and cash equivalents at end of period

 

159

 

681

 

159

 

681

 

 

15



 

 

Consolidated statements of changes in
shareholder’s equity and comprehensive income (loss)

 

all amounts in millions of euros

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUCCESSOR

 

 

 

January to September 2007

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income (loss)

 

 

 

 

 

Common
stock

 

Capital in
excess
of par
value

 

Retained earnings

 

Currency translation differences

 

Unrealized gain (loss) on
available-for-sale securities

 

Changes in
fair value of
cash flow
hedges

 

Total

 

Total share-
holder’s equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2006

 

 

4,305

 

(616

)

(10

)

 

6

 

(4

)

3,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

(539

)

 

 

 

 

 

 

 

 

(539

)

Current period change

 

 

 

 

 

 

 

(82

)

(6

)

5

 

(83

)

(83

)

Reclassifications into income (loss)

 

 

 

 

 

 

 

1

 

 

 

(2

)

(1

)

(1

)

Total comprehensive income (loss), net of tax

 

 

 

 

 

(539

)

(81

)

(6

)

3

 

(84

)

(623

)

Balance as of September 30, 2007

 

 

4,305

 

(1,155

)

(91

)

(6

)

9

 

(88

)

3,062

 

 

 

 

 

16


 


 

Information by segments

all amounts in millions of euros unless otherwise stated

 

Sales, R&D expenses and income from operations

 

 

 

 

PREDECESSOR

 

SUCCESSOR

 

 

 

3rd quarter

 

 

 

2006

 

2007

 

 

 



Sales

 

Research
 and development expenses

 


Income (loss)
from operations

 



Sales

 

Research
and development expenses

 


Income (loss)
from operations

 

 

 

 

 

 

 

amount

 

as a % of
sales

 

 

 

 

 

amount

 

as a % of
sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile & Personal

 

411

 

92

 

15

 

3.6

 

429

 

94

 

50

 

11.7

 

Home

 

246

 

47

 

(15

)

(6.1

)

178

 

49

 

(44

)

(24.7

)

Automotive & Identification

 

214

 

34

 

46

 

21.5

 

242

 

34

 

29

 

12.0

 

MultiMarket Semiconductors

 

347

 

24

 

71

 

20.5

 

302

 

20

 

33

 

10.9

 

IC Manufacturing Operations

 

44

 

23

 

(22

)

(1)

37

 

9

 

(8

)

(1) 

Corporate and Other

 

20

 

37

 

(29

)

(1)

23

 

34

 

(62

)

(1)

Total

 

1,282

 

257

 

66

 

5.1

 

1,211

 

240

 

(2

)

(0.2

)

 

 

 

 

 

 

PREDECESSOR

 

SUCCESSOR

 

 

 

 

January to September

 

 

 

 

2006

 

2007

 

 

 



Sales

 

Research
 and development expenses

 


Income (loss)
from operations

 



Sales

 

Research
and development expenses

 


Income (loss)
from operations

 

 

 

 

 

 

 

amount


 

as a % of
sales

 

 

 

 

 

amount


 

as a % of
sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile & Personal

 

1,172

 

280

 

23

 

2.0

 

1,173

 

282

 

(77

)

(6.6

)

Home

 

730

 

146

 

(37

)

(5.1

)

513

 

138

 

(128

)

(25.0

)

Automotive & Identification

 

662

 

92

 

151

 

22.8

 

739

 

109

 

88

 

11.9

 

MultiMarket Semiconductors

 

1,017

 

67

 

203

 

20.0

 

886

 

63

 

88

 

9.9

 

IC Manufacturing Operations

 

140

(2)

65

 

7

 

(1)

103

(2)

23

 

174

 

(1) 

Corporate and Other

 

49

 

87

 

(208

)

(1)

53

 

107

 

(273

)

(1)

Total

 

3,770

 

737

 

139

 

3.7

 

3,467

 

722

 

(476

)

(13.7

)

 


(1)                  Not meaningful

(2)                  For the nine months ended September 30, 2007, IC Manufacturing Operations supplied EUR 1,346 million to other businesses (for the nine months ended September 28, 2006: EUR 1,599 million), which have been eliminated in the above presentation.

 

 

17



 

 

Main countries

 

 

 

all amounts in millions of euros

 

Sales

 

 

 

PREDECESSOR

 

SUCCESSOR

 

 

 

January to September

 

 

 

2006

 

2007

 

 

 

 

 

 

 

China

 

853

 

685

 

Netherlands

 

606

 

560

 

Taiwan

 

270

 

288

 

United States

 

380

 

297

 

Singapore

 

438

 

300

 

Germany

 

196

 

216

 

South Korea *

 

312

 

381

 

Other Countries

 

715

 

740

 

Total

 

3,770

 

3,467

 

 

The allocation is based on invoicing organization.


* Singapore Korea branch sales, previously reported under Singapore, have been reclassified to South Korea.

 

 

 

18



Reconciliation of non-US GAAP information

 

all amounts in millions of euros unless otherwise stated

 

Certain non-US GAAP financial measures are presented when discussing the NXP Group’s financial position. In the following tables, a reconciliation to the most directly comparable US GAAP financial measure is made for each non-US GAAP performance measure.

 

Sales growth composition (in %)

 

 

Comparable
growth

 

Currency
effects

 

Consolidation
changes

 

Nominal
growth

 

Q3 2007 versus Q3 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile & Personal

 

5.3

 

(4.9

)

4.0

 

4.4

 

Home

 

(22.3

)

(4.9

)

(0.4

)

(27.6

)

Automotive & Identification

 

9.0

 

(2.9

)

7.0

 

13.1

 

MultiMarket Semiconductors

 

(4.4

)

(4.1

)

(4.5

)

(13.0

)

IC Manufacturing Operations

 

(28.2

)

(5.8

)

18.1

 

(15.9

)

Corporate and Other

 

22.1

 

(5.8

)

(1.3

)

15.0

 

 

 

 

 

 

 

 

 

 

 

NXP Group

 

(2.8

)

(4.2

)

1.5

 

(5.5

)

 

 

 

Comparable
growth

 

Currency
effects

 

Consolidation
changes

 

Nominal
growth

 

Q3 2006 versus Q3 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile & Personal

 

3.7

 

(4.0

)

0.1

 

(0.2

)

Home

 

7.1

 

(4.2

)

(13.4

)

(10.5

)

Automotive & Identification

 

23.4

 

(2.8

)

1.0

 

21.6

 

MultiMarket Semiconductors

 

27.9

 

(4.1

)

(15.0

)

8.8

 

IC Manufacturing Operations

 

18.3

 

(5.5

)

 

12.8

 

Corporate and Other

 

74.8

 

(8.1

)

 

66.7

 

 

 

 

 

 

 

 

 

 

 

NXP Group

 

15.1

 

(4.0

)

(7.2

)

3.9

 

 

Adjusted EBITA to EBITA to Net income (loss)

 

 

Q3
2006

 

Q3
2007

 

 

 

 

 

 

 

Adjusted EBITA

 

120

 

97

 

Add back:

 

 

 

 

 

Exit of product lines

 

(12

)

 

Restructuring costs and impairment

 

(6

)

(7

)

Minority interest and results of unconsolidated companies

 

(14

)

(15

)

Other

 

(32

)

60

 

Effects of PPA

 

 

(26

)

 

 

 

 

 

 

EBITA

 

56

 

109

 

 

 

 

 

 

 

Include:

 

 

 

 

 

Amortization intangible assets

 

(4

)

(126

)

Financial income (expenses)

 

(4

)

39

 

Income tax (expense) benefit

 

(21

)

(29

)

 

 

 

 

 

 

Net income (loss)

 

27

 

(7

)

 

19



 

Reconciliation of non-US GAAP information (continued)

 

Adjusted EBITDA to EBITDA to Net income (loss)

 

 

Q3
2006

 

Q3
2007

 

 

 

 

 

 

 

Adjusted EBITDA

 

267

 

226

 

Add back:

 

 

 

 

 

Exit of product lines

 

(12

)

 

Restructuring costs and impairment

 

(6

)

(7

)

Minority interest and results of unconsolidated companies

 

(14

)

(15

)

Other

 

(32

)

60

 

Effects of PPA

 

 

 

 

 

 

 

 

 

EBITDA

 

203

 

264

 

 

 

 

 

 

 

Include:

 

 

 

 

 

Amortization intangible assets

 

(4

)

(126

)

Depreciation property, plant and equipment

 

(147

)

(155

)

Financial income (expenses)

 

(4

)

39

 

Income tax (expense) benefit

 

(21

)

(29

)

 

 

 

 

 

 

Net income (loss)

 

27

 

(7

)

 

EBITA to EBIT

 

 

NXP
Group

 

Mobile &
Personal

 

Home

 

Automotive &
Identification

 

MultiMarket
Semiconductors

 

IC
Manufacturing
Operations

 

Corporate
and Other

 

Q3 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITA

 

109

 

93

 

(24

)

53

 

59

 

(3

)

(69

)

Amortization intangible assets

 

(126

)

(43

)

(20

)

(27

)

(26

)

(5

)

(5

)

Minority interest and results of unconsolidated companies

 

15

 

 

 

3

 

 

 

12

 

EBIT

 

(2

)

50

 

(44

)

29

 

33

 

(8

)

(62

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITA

 

56

 

15

 

(15

)

46

 

71

 

(22

)

(39

)

Amortization intangible assets

 

(4

)

 

 

 

 

 

(4

)

Minority interest and results of unconsolidated companies

 

14

 

 

 

 

 

 

14

 

EBIT

 

66

 

15

 

(15

)

46

 

71

 

(22

)

(29

)

 

Composition of net debt to group equity

 

 

December 31,
2006

 

September 30,
2007

 

 

 

 

 

 

 

Long-term debt

 

4,426

 

4,228

 

Short-term debt

 

23

 

4

 

Total debt

 

4,449

 

4,232

 

Cash and cash equivalents

 

(939

)

(681

)

Net debt (total debt less cash and cash equivalents)

 

3,510

 

3,551

 

 

 

 

 

 

 

Minority interests

 

162

 

171

 

Shareholder’s equity

 

3,685

 

3,062

 

Group equity

 

3,847

 

3,233

 

 

 

 

 

 

 

Net debt and group equity

 

7,357

 

6,784

 

Net debt divided by net debt and group equity (in %)

 

48

 

52

 

Group equity divided by net debt and group equity (in %)

 

52

 

48

 

 

20



 

Supplemental consolidated statement of
operations for the period January to September, 2007

 

all amounts in millions of euros

 

 


NXP B.V.

 


guarantors

 

non-guarantors

 

eliminations/ reclassifications

 


consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 

2,557

 

910

 

 

3,467

 

Intercompany sales

 

 

734

 

441

 

(1,175

)

 

Total sales

 

 

3,291

 

1,351

 

(1,175

)

3,467

 

Cost of sales

 

(82

)

(2,209

)

(1,261

)

1,136

 

(2,416

)

Gross margin

 

(82

)

1,082

 

90

 

(39

)

1,051

 

Selling expenses

 

 

(175

)

(65

)

3

 

(237

)

General and administrative expenses

 

(363

)

(245

)

(47

)

2

 

(653

)

Research and development expenses

 

 

(463

)

(294

)

35

 

(722

)

Write-off of acquired in-process research and development

 

(11

)

 

 

 

(11

)

Other income (loss)

 

(41

)

(235

)

373

 

(1

)

96

 

Income (loss) from operations

 

(497

)

(36

)

57

 

 

(476

)

Financial income and expenses

 

14

 

(111

)

(10

)

 

(107

)

Income (loss) before taxes

 

(483

)

(147

)

47

 

 

(583

)

Income tax (expense) benefit

 

25

 

63

 

(16

)

 

72

 

Income (loss) after taxes

 

(458

)

(84

)

31

 

 

(511

)

Income subsidiaries

 

(76

)

 

 

76

 

 

Results relating to unconsolidated companies

 

(5

)

 

 

 

(5

)

Minority interests

 

 

 

(23

)

 

(23

)

Net income (loss)

 

(539

)

(84

)

8

 

76

 

(539

)

 

21



 

Supplemental consolidated balance sheet at September 30, 2007

 

all amounts in millions of euros



 


NXP B.V.

 


guarantors

 

non-guarantors

 

eliminations/ reclassifications

 


consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

257

 

234

 

190

 

 

681

 

Receivables

 

10

 

411

 

206

 

 

627

 

Intercompany accounts receivable

 

92

 

894

 

138

 

(1,124

)

 

Inventories

 

 

536

 

82

 

 

618

 

Other current assets

 

41

 

71

 

37

 

 

149

 

Total current assets

 

400

 

2,146

 

653

 

(1,124

)

2,075

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

 

 

 

 

 

Investments in unconsolidated companies

 

52

 

5

 

4

 

 

61

 

Investments in affiliated companies

 

2,289

 

 

 

(2,289

)

 

Other non-current financial assets

 

47

 

3

 

2

 

 

52

 

Non-current receivables

 

 

 

1

 

 

1

 

Other non-current assets

 

79

 

161

 

21

 

 

261

 

Property, plant and equipment

 

323

 

1,009

 

658

 

 

1,990

 

Intangible assets excluding goodwill

 

2,661

 

39

 

7

 

 

2,707

 

Goodwill

 

2,231

 

 

 

 

2,231

 

Total non-current assets

 

7,682

 

1,217

 

693

 

(2,289

)

7,303

 

Total assets

 

8,082

 

3,363

 

1,346

 

(3,413

)

9,378

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholder’s equity

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts and notes payable

 

 

521

 

100

 

 

621

 

Intercompany accounts payable

 

342

 

568

 

214

 

(1,124

)

 

Accrued liabilities

 

235

 

335

 

154

 

 

724

 

Short-term provisions

 

 

27

 

12

 

 

39

 

Other current liabilities

 

1

 

9

 

21

 

 

31

 

Short-term debt

 

 

 

4

 

 

4

 

Intercompany financing

 

 

2,885

 

254

 

(3,139

)

 

Total current liabilities

 

578

 

4,345

 

759

 

(4,263

)

1,419

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

4,220

 

3

 

5

 

 

4,228

 

Long-term provisions

 

222

 

143

 

13

 

 

378

 

Other non-current liabilities

 

 

99

 

21

 

 

120

 

Total non-current liabilities

 

4,442

 

245

 

39

 

 

4,726

 

Minority interests

 

 

 

171

 

 

171

 

Shareholder’s equity

 

3,062

 

(1,227

)

377

 

850

 

3,062

 

Total liabilities and Shareholder’s equity

 

8,082

 

3,363

 

1,346

 

(3,413

)

9,378

 

 

22


 

 


 

Supplemental consolidated statement of cash flows for the period January to September, 2007

 

all amounts in millions of euros

 

 


NXP B.V.

 


guarantors

 

non-guarantors

 


eliminations

 

consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

(539

)

(84

)

8

 

76

 

(539

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

Elimination (income) loss subsidiaries

 

76

 

 

 

(76

)

 

Depreciation and amortization

 

450

 

234

 

181

 

 

865

 

Net gain on sale of assets

 

(34

)

(45

)

(8

)

 

(87

)

Results relating to unconsolidated companies

 

5

 

 

 

 

5

 

Minority interests (net of dividends paid to minority shareholders)

 

 

 

21

 

 

21

 

Decrease (increase) in receivables and other current assets

 

(37

)

(78

)

2

 

 

(113

)

Decrease (increase) in inventories

 

4

 

11

 

(8

)

 

7

 

Increase (decrease) in accounts payable, accrued and other liabilities

 

136

 

209

 

25

 

 

370

 

Decrease (increase) intercompany current accounts

 

113

 

(172

)

59

 

 

 

Decrease (increase) in non-current receivables/other assets

 

3

 

(90

)

(18

)

 

(105

)

Increase (decrease) in provisions

 

(24

)

23

 

1

 

 

 

Other items

 

(151

)

2

 

 

 

(149

)

Net cash provided by (used for) operating activities

 

2

 

10

 

263

 

 

275

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

Purchase of intangible assets

 

(14

)

(6

)

(3

)

 

(23

)

Capital expenditures on property, plant and equipment

 

 

(146

)

(130

)

 

(276

)

Proceeds from disposals of property, plant and equipment

 

 

22

 

7

 

 

29

 

Purchase of other non-current financial assets

 

 

 

(1

)

 

(1

)

Proceeds from the sale of other non-current financial assets

 

 

 

2

 

 

2

 

Purchase of interest in businesses

 

(321

)

 

(4

)

 

(325

)

Proceeds from sale of interests in unconsolidated businesses

 

78

 

43

 

7

 

 

128

 

Net cash provided by (used for) investing activities

 

(257

)

(87

)

(122

)

 

(466

)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

(Decrease) increase in debt

 

 

4

 

(18

)

 

(14

)

Net changes in intercompany financing

 

135

 

(53

)

(82

)

 

 

Net changes in intercompany equity

 

(225

)

214

 

11

 

 

 

Net cash provided by (used for) financing activities

 

(90

)

165

 

(89

)

 

(14

)

Effect of changes in exchange rates on cash positions

 

(11

)

(15

)

(27

)

 

(53

)

Increase (decrease) in cash and cash equivalents

 

(356

)

73

 

25

 

 

(258

)

Cash and cash equivalents at beginning of period

 

613

 

161

 

165

 

 

939

 

Cash and cash equivalents at end of period

 

257

 

234

 

190

 

 

681

 

 

23


 


 

Quarterly statistics

 

all amounts in millions of euros unless otherwise stated

 

 

 

PREDECESSOR

 

SUCCESSOR

 

 

 

 

 

 

 

 

 

2006

 

 

 

 

 

 

 

2007

 

 

 

1st quarter

 

2nd quarter

 

3rd quarter

 

4th quarter

 

1st quarter

 

2nd quarter

 

3rd quarter

 

4th quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

1,250

 

1,238

 

1,282

 

1,190

 

1,115

 

1,141

 

1,211

 

 

 

% increase

 

19.8

 

9.5

 

3.9

 

(12.4

)

(10.8

)

(7.8

)

(5.5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT

 

21

 

52

 

66

 

(779

)

(222

)

(252

)

(2

)

 

 

as a % of sales

 

1.7

 

4.2

 

5.1

 

(65.5

)

(19.9

)

(22.1

)

(0.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITA

 

15

 

40

 

56

 

(145

)

(76

)

(149

)

109

 

 

 

as a % of sales

 

1.2

 

3.2

 

4.4

 

(12.2

)

(6.8

)

(13.1

)

9.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

173

 

187

 

203

 

26

 

85

 

12

 

264

 

 

 

as a % of sales

 

13.8

 

15.1

 

15.8

 

2.2

 

7.6

 

1.1

 

21.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITA

 

71

 

64

 

120

 

69

 

3

 

7

 

97

 

 

 

as a % of sales

 

5.7

 

5.2

 

9.4

 

5.8

 

0.3

 

0.6

 

8.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

229

 

211

 

267

 

214

 

139

 

141

 

226

 

 

 

as a % of sales

 

18.3

 

17.0

 

20.8

 

18.0

 

12.5

 

12.4

 

18.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

(17

)

(5

)

27

 

(616

)

(266

)

(266

)

(7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

January- March

 

January-
June

 

January- September

 

January- December

 

January-March

 

January-
June

 

January- September

 

January- December

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

1,250

 

2,488

 

3,770

 

4,960

 

1,115

 

2,256

 

3,467

 

 

 

% increase

 

19.8

 

14.4

 

10.6

 

4.1

 

(10.8

)

(9.3

)

(8.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT

 

21

 

73

 

139

 

(640

)

(222

)

(474

)

(476

)

 

 

as a % of sales

 

1.7

 

2.9

 

3.7

 

(12.9

)

(19.9

)

(21.0

)

(13.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITA

 

15

 

55

 

111

 

(34

)

(76

)

(225

)

(116

)

 

 

as a % of sales

 

1.2

 

2.2

 

2.9

 

(0.7

)

(6.8

)

(10.0

)

(3.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

173

 

360

 

563

 

589

 

85

 

97

 

361

 

 

 

as a % of sales

 

13.8

 

14.5

 

14.9

 

11.9

 

7.6

 

4.3

 

10.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITA

 

71

 

135

 

255

 

324

 

3

 

10

 

107

 

 

 

as a % of sales

 

5.7

 

5.4

 

6.8

 

6.5

 

0.3

 

0.4

 

3.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

229

 

440

 

707

 

921

 

139

 

280

 

506

 

 

 

as a % of sales

 

18.3

 

17.7

 

18.8

 

18.6

 

12.5

 

12.4

 

14.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

(17

)

(22

)

5

 

(611

)

(266

)

(532

)

(539

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

period ending 2006

 

Period ending 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventories as a % of sales

 

14.3

 

14.0

 

13.8

 

13.0

 

13.3

 

13.0

 

13.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt: group equity ratio

 

(1)

(1)

(1)

48 : 52

 

52 : 48

 

54 : 46

 

52:48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees (in FTE)

 

35,472

 

36,996

 

38,144

 

37,468

 

37,620

 

38,176

 

38,116

 

 

 


(1) Not meaningful

 

24


 

 

 


 

 

 

 

CORPORATE NEWS FROM NXP

 

NXP Semiconductors Announces Third Quarter 2007 Results

 

Sequential adjusted EBITDA rises to EUR 226 million

 

Highlights

                  Third quarter sales at EUR 1,211 million vs EUR 1,141 million in the second quarter

                  Currency and business comparable sequential sales growth of 7.4% (nominal growth 6.1%), comparable year on year decrease of 2.8%*

                  Third quarter adjusted EBITDA, excluding effects of Purchase Price Accounting, at EUR 226 million (adjusted EBITA, excluding effects PPA at EUR 97 million)

                  Cash position increased to EUR 681 million at end of third quarter, compared to EUR 514 million at the end of the second quarter of 2007

                  Book to bill ratio of 1.01 in third quarter

                  Factory loading up to 85% in the third quarter from 74% in the second quarter and 69% in the first quarter of 2007

 

Eindhoven, The Netherlands, October 30 2007 — NXP Semiconductors today announced third quarter sales of EUR 1,211 million, a 7.4% currency and business comparable growth over the second quarter of 2007 (nominal 6.1%) and a 2.8% comparable decline* over the third quarter of 2006. Excluding the impact of Purchase Price Accounting, adjusted EBITDA was EUR 226 million compared to EUR 267 million in the third quarter of 2006 and 141 million in the second quarter of 2007.

 

Frans van Houten, President and CEO of NXP Semiconductors, commented:

 

“Against a background of continuing soft industry conditions, NXP has performed in line with our expectations. The improvements in Mobile and Personal continue with the group announcing the shipment of its 500 millionth AERO RF CMOS transceiver to the mobile handset market, reflecting the successful integration of the wireless operations of Silicon Labs, acquired earlier in the year. The third quarter also witnessed a good performance from MultiMarket Semiconductors and stabilisation in the Home Business Unit after a series of challenging quarters. The Home group won some notable clients, particularly in the area of Digital TV with three leading television manufacturers of which the impact will become visible in the course of 2008. The Automotive business gained market share and the Identification business slowed in line with the industry as a whole.”

 

“The improved results in the third quarter can be attributed to normal seasonal sales growth leading to improved factory loading, as well as the impact of our Business Renewal Program, where we are well on our way to realize the EUR 100 million savings on a run rate basis by the end of 2007. Our active portfolio management program continued in particular with the divestment of the Cordless and VoIP Terminal operations. In addition we had a successful start of the assembly and test joint venture with ASE (called ASEN) in Suzhou, China, executing on our asset-light strategy.”

 

 

1



 

 

 

At the end of the third quarter, NXP’s book to bill ratio stood at 1.01 whilst its cash amounted to EUR 681 million.

 

Outlook: The market remains soft and visibility remains short. Given NXP’s book-to-bill ratio of 1.01 in the third quarter, the company expects low single digit sequential sales growth for the fourth quarter 2007 on a currency comparable basis.

 

The full report is available on NXP website (www.nxp.com/investor).

 

*Cordless & VoIP Terminal operations deconsolidated as per the end of August following completion of the sale of the business

 

About NXP Semiconductors
NXP is a top semiconductor company founded by Philips more than 50 years ago. Headquartered in Europe, the company has 37,000 employees working in more than 20 countries and posted sales of EUR 5 billion in 2006. NXP creates semiconductors, system solutions and software that deliver better sensory experiences in mobile phones, personal media players, TVs, set-top boxes, identification applications, cars and a wide range of other electronic devices. News from NXP is located at www.nxp.com.

 

For further press information, please contact:

 

Media:
Lieke de Jong-Tops
Tel. +31 40 27 25202
lieke.de.jong-tops@nxp.com

Investors:
Jan Maarten Ingen Housz
Tel. +31 40 27 22315
janmaarten.ingen.housz@nxp.com

 

 

 

2



SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized at Eindhoven, on the  30th day of October 2007.

NXP B.V.

 

 

/s/ Frans van Houten

 

Frans van Houten

(President and Chief Executive Officer, Chairman of the Board of Management)

 

 

 

/s/ Peter van Bommel

 

Peter van Bommel

(Chief Financial Officer, Member of the Board of Management)