6-K

 

 

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

February 7, 2019

 

 

NXP Semiconductors N.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 ☒                 Form 40-F ☐

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 ☐                 No ☒

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 ☐                 No ☒

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 ☐                No ☒

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 NXP Semiconductors N.V.’s press release dated February 7, 2019 entitled: “NXP Semiconductors Reports Fourth Quarter and Full-year 2018 Results”.

Exhibits

 

1.    Press release dated February 7, 2019 entitled: “NXP Semiconductors Reports Fourth Quarter and Full-year 2018 Results”.


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 7th of February 2019.

 

NXP Semiconductors N.V.

/s/ P. Kelly

Name: P. Kelly, CFO
EX-1

Exhibit 1

 

LOGO

NXP Semiconductors Reports Fourth Quarter and

Full-year 2018 Results

EINDHOVEN, The Netherlands, February 7, 2019 – 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


  1.

Additional Information for the Fourth Quarter and Full-year 2018:

 

  i.

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

 

  ii.

For an explanation of GAAP to non-GAAP adjustments, please see “Non-GAAP Financial Measures” on page 2 of this release.

 

  iii.

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.

 

2


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

 

3


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       —    

 

4


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  

 

5


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       —    

 

6


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 Revenu

           $ 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

 

7


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
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

1)

Other financial expense includes one time charges ($60 million) on certain financial instruments and the origination fees ($11 million) related to the $1 billion senior unsecured bridge term credit facility.

 

8


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

 

9