NXP Semiconductors Reports Third Quarter 2013 Results

NXP Semiconductors Reports Third Quarter 2013 Results 
EINDHOVEN, THE NETHERLANDS -- (Marketwired) -- 10/23/13 --  NXP
Semiconductors N.V. (NASDAQ: NXPI) 


 
                                                                            
                                                              Q3 2013       
                                                        ------------------  
Revenue                                                 $    1,249 million  
GAAP Gross margin                                                     45.6% 
GAAP Operating margin                                                 13.5% 
GAAP Diluted earnings per share                         $             0.60  
                                                                            
Non-GAAP Gross margin                                                 46.8% 
Non-GAAP Operating margin                                             22.8% 
Non-GAAP Diluted earnings per share                     $             0.85  
                                                                            

 
--  Trailing twelve month adjusted EBITDA $1,279 million
--  Net debt reduced $124 million year-on-year to $2,756 million
--  Record quarterly non-GAAP free cash flow of $244 million, 20% of
    revenue

  
NXP Semiconductors N.V. (NASDAQ: NXPI) today reported financial results
for the third quarter of 2013, ended September 29, 2013, and provided
guidance for the fourth quarter 2013.  
"Our revenue results for the third quarter of 2013 came in
essentially in-line with the mid-point of our guidance, as NXP
delivered Product revenue of $1,213 million, approximately a five
percent sequential increase, and an eight percent increase from the
comparable prior year period. Total NXP revenue in the third quarter
was $1,249 million, a five percent sequential increase, and nearly a
seven percent increase from the comparable year ago period," said
Richard Clemmer, NXP Chief Executive Officer.  
"Our revenue performance during the quarter reflected record revenue
across nearly all of our HPMS end-markets as segment growth achieved
nearly 15% year-on-year growth. We experienced particularly strong
growth in our Infrastructure & Industrial and our Portable &
Computing businesses, a result of new desi
gn wins ramping into
production. Our Automotive business delivered good sequential growth
due to better than seasonal demand, combined record sales of our
entertainment and keyless-entry products, along with strong
sequential growth of in-vehicle networking products. Our
Identification business delivered in-line performance, as we
experienced the anticipated pause in banking and mobile transaction
programs, offset by good demand for our secure identification
products. The revenue performance of the Standard products segment
was slightly below our expectations as a result of weaker than
expected demand in mobile for both the Logic and Discrete businesses. 
"From an earnings perspective, we exceeded guidance due to a
combination of significantly improved sequential gross margin within
our Standard Products segment, better HPMS gross margin, and good
overall operating expense control. We are pleased to see the
operational challenges in our Standard Products segment resolved, and
the group making good progress toward our long-term model. Taken
together, our above market growth and improving margin performance
resulted in 20 percent non-GAAP free cash flow margin during the
quarter, a new record for NXP. Our strategy of providing unique and
differentiated product solutions continues to resonate with our
customers, and should result in continued long-term growth in excess
of the overall end market," said Clemmer. 
Summary of Third Quarter 2013 Results ($ millions, except EPS,
unaudited) 


 
                                                                            
                         Q3 2013     Q2 2013     Q3 2012     Q - Q    Y - Y 
                        ---------   ---------   ---------   ------   ------ 
                                                                            
Product Revenue         $   1,213   $   1,159   $   1,120        5%       8%
Manufacturing                                                               
 Operations             $      36   $      29   $      49       24%     -27%
Corporate & Other       $       -   $       -   $       1       NM       NM 
                        ---------   ---------   ---------                   
Total Revenue           $   1,249   $   1,188   $   1,170        5%       7%
GAAP Gross Profit       $     570   $     535   $     536        7%       6%
  Gross Profit                                                              
   Adjustments (1)      $     (15)  $      (5)  $      (7)                  
Non-GAAP Gross Profit   $     585   $     540   $     543        8%       8%
  GAAP Gross Margin            46%         45%         46%                  
  Non-GAAP Gross Margin        47%         46%         46%                  
GAAP Operating Income   $     168   $     170   $     168       -1%       0%
  Operating Income                                                          
   Adjustments (1)           (117)        (86)        (76)                  
Non-GAAP Operating                                                          
 Income                 $     285   $     256   $     244       11%      17%
  GAAP Operating Margin        13%         14%         14%                  
  Non-GAAP Operating                                                        
   Margin                      23%         22%         21%                  
GAAP Net Income /                                                           
 (Loss)                 $     155   $     111   $     115       40%      35%
  Net Income                                                                
   Adjustments (1)            (64)        (71)        (39)                  
Non-GAAP Net Income /                                                       
 (Loss)                 $     219   $     182   $     154       20%      42%
GAAP EPS                $    0.60   $    0.43   $    0.45       40%      33%
  EPS Adjustments (1)   $   (0.25)  $   (0.28)  $   (0.16)                  
Non-GAAP EPS            $    0.85   $    0.71   $    0.61       20%      39%

 
1. Please see "Discussion of GAAP to non-GAAP Reconciliation" on page
3 of this release.  
Supplemental Information ($ millions, unaudited) 


 
                                                                            
                                                 Percent                    
                                                    Q3                      
                       Q3 2013  Q2 2013  Q3 2012  Total     Q - Q    Y - Y  
                      -------- -------- -------- -------   ------   ------  
  Automotive          $    261 $    253 $    239      21%       3%       9% 
  Identification      $    329 $    339 $    275      26%      -3%      20% 
  Infrastructure &                                                          
   Industrial         $    202 $    180 $    171      16%      12%      18% 
  Portable &                                                                
   Computing          $    130 $    106 $    119      10%      23%       9% 
                      -------- -------- -------- -------                    
High Performance                                                            
 
Mixed Signal (HPMS)  $    922 $    878 $    804      74%       5%      15% 
Standard Products                                                           
 (STDP)               $    291 $    281 $    316      23%       4%      -8% 
                      -------- -------- -------- -------                    
Product Revenue       $  1,213 $  1,159 $  1,120      97%       5%       8% 
Manufacturing                                                               
 Operations           $     36 $     29 $     49       3%      24%     -27% 
Corporate & Other     $      - $      - $      1       0%      NM       NM  
                      -------- -------- -------- -------                    
Total Revenue         $  1,249 $  1,188 $  1,170     100%       5%       7% 

 
Product Revenue is the combination of revenue from the High
Performance Mixed Signal (HPMS) and Standard Products (STDP)
segments. Percent of quarterly total amounts may not add to 100
percent due to rounding. 
Additional and Subsequent Information for the Third Quarter of 2013: 


 
--  On September 24, 2013, NXP issued senior unsecured notes in the
    aggregate principal amount of $500 million, due September 2016, with a
    coupon of 3.5%. As of October 15, 2013 NXP has used the net proceeds
    of the offering to repay its outstanding $422 million of U.S.
    dollar-denominated 9.75% senior secured notes due August 2018.
--  Total gross debt at the end of the third quarter of 2013 was $3,697
    million, a $316 million increase from the prior quarter as a result of
    timing between the issuance of the new 2016 senior unsecured notes,
    and the subsequent repayment of the $422 million 9.75% senior secured
    notes. Cash at the end of the third quarter of 2013 was $941 million,
    resulting in a net-debt position of $2,756 million, a $56 million
    reduction from the prior quarter.
--  Net cash interest paid in the third quarter of 2013 was $51 million.
--  NXP repurchased approximately 4.3 million shares in the third quarter
    of 2013 for a total cost of approximately $159 million.
--  SSMC, NXP's consolidated joint-venture wafer fab with TSMC, reported
    third quarter 2013 operating income of $44 million, EBITDA of $56
    million and a closing cash balance of $291 million. During the third
    quarter SSMC paid a dividend of $120 million, of which $47 million was
    paid to TSMC
--  Utilization in NXP wafer fabs averaged 90 percent in the third quarter
    of 2013 compared to 91 percent in the year ago period and 90 percent
    in the prior quarter.

  
Guidance for the Fourth Quarter 2013: ($ millions, except share count
and EPS) (1) 


 
                                                                            
                                                 Guidance Range             
                                          Low          Mid         High     
                                      ----------   ----------   ----------  
                                                                            
Product Revenue                       $    1,189   $    1,231   $    1,256  
  Q-Q                                         -2%           1%           4% 
Mfg. & Other Revenue                  $       34   $       34   $       34  
                                      ----------   ----------   ----------  
Total Revenue                         $    1,223   $    1,265   $    1,290  
  Q-Q                                         -2%           1%           3% 
Non-GAAP Gross Profit                 $      594   $      624   $      645  
  Non-GAAP Gross Margin                       49%          49%          50% 
Non-GAAP Operating Income             $      288   $      312   $      332  
  Non-GAAP Operating Margin                   24%          25%          26% 
  Interest Expense                    $       40   $       40   $       40  
  Cash Taxes                          $       13   $       13   $       13  
  Non-controlling Interest            $       17   $       17   $       17  
                                      ----------   ----------   ----------  
Non-GAAP Net Income                   $      218   $      242   $      262  
Ave. Diluted Shares                          256          256          256  
  Non - GAAP EPS                      $     0.85   $     0.95   $     1.02  

 
Note (1): NXP has based the guidance included in this release on
judgments and estimates that management believes are reasonable given
its assessment of historical trends and other information reasonably
available as of the date of this release. The guidance included in
this release consists of predictions only, and is subject to a wide
range of known and unknown risks and uncertainties, many of which are
beyond NXP's control. The guidance included in this release should
not be regarded as representations by NXP that the estimated results
will be achieved. Actual results may vary materially from the
guidance we provide today. In relation to the use of non-GAAP
financial information see the note regarding "Use of Non-GAAP
Financial Information" elsewhere in this release. For the factors,
risks and uncertainties to which judgments, estimates and
forward-looking statements generally are subject see the note
regarding "Forward-looking Statements." We undertake no obligation to
publicly update or revise any forward-looking statements, including
the guidance set forth herein, to reflect future events or
circumstances. Considering the uncertain magnitude and variability of
the foreign exchange consequences upon "PPA effects", "restructuring
costs", "other incidental items" and any interest expense or taxes in
future periods, management believes that GAAP financial measures are
not available for NXP without unreasonable efforts on a forward
looking basis.  
Discussion of GAAP to non-GAAP Reconciliations 
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) "non-GAAP gross profit," (ii) "non-GAAP gross margin,"
(iii) "non-GAAP Research and development," (iv) "non-GAAP Selling,
general and administrative," (v) non-GAAP Other income," (vi)
"non-GAAP operating income (loss)," (vii) "non-GAAP operating
margin," (viii) "non-GAAP net income/ (loss)," (ix) "PPA effects,"
(x) "Restructuring costs," (xi) "Stock based compensation," (xii)
"Other incidental items," (xiii) "non-GAAP Financial Income
(expense)," (xiv) "non-GAAP Results relating to equity-accounted
investees," (xv) "non-GAAP Cash tax (expense)," (xvi) "non-GAAP EPS,"
(xvii) "EBITDA," "adjusted EBITDA" and "trailing 12 month adjusted
EBITDA," (xviii) "net debt" and (xix) "non-GAAP free cash flow." 
In this release, references to: 


 
--  "non-GAAP gross profit," "non-GAAP research and development,"
    "non-GAAP Selling, general and administrative," "non-GAAP Other
    income," "non-GAAP operating income (loss)," and "non-GAAP net income/
    (loss)" are to NXP's gross profit, research and development, selling
    general and administrative, operating income and net income/ (loss)
    calculated on a basis consistent with
 GAAP, net of the effects of
    purchase price accounting ("PPA"), restructuring costs and certain
    other incidental items. "PPA effects" reflect the fair value
    adjustments impacting acquisition accounting and other acquisition
    adjustments charged to the income statement applied to the formation
    of NXP on September 29, 2006 and all subsequent acquisitions.
    "Restructuring costs" consist of costs related to restructuring
    programs and gains and losses resulting from divestment activities and
    impairment charges. "Stock based compensation" consists of incentive
    expense granted to eligible employees in the form of equity based
    instruments. "Other incidental items" consist of process and product
    transfer costs (which refer to the costs incurred in transferring a
    production process and products from one manufacturing site to
    another) and certain charges related to acquisitions and divestitures.
    "Other adjustments" include or exclude certain items that management
    believes provides insight into our core operating results, our ability
    to generate cash and underlying business trends affecting our
    performance.
    
    
--  "non-GAAP gross margin" and "non-GAAP operating margin" are to our
    non-GAAP gross profit or our non-GAAP operating income as a percentage
    of our sales, respectively;
    
    
--  "non-GAAP Financial Income (expense)" is the interest income or
    expense net of impacts due foreign exchange changes on our
    Euro-denominated debt, gains or losses due to the extinguishment of
    long-term debt and less other financial expenses deemed to be one-time
    in nature;
    
    
--  "non-GAAP Cash tax (expense)" is the difference between our GAAP tax
    provision and the cash taxes paid during the period;
    
    
--  "non-GAAP EPS" attributable to stockholders are to non-GAAP net income
    or loss attributable to NXP's stockholders, divided by the weighted
    average number of common shares outstanding during the period,
    adjusted for treasury shares held;
    
    
--  "EBITDA" are to NXP's earnings before interest, taxes, depreciation
    and amortization. "EBITDA" excludes certain tax payments that may
    represent a reduction in cash available to us, does not reflect any
    cash capital expenditure requirements for the assets being depreciated
    and amortized that may have to be replaced in the future, does not
    reflect changes in, or cash requirements for, our working capital
    needs and does not reflect the significant financial expense, or the
    cash requirements necessary to service interest payments, on our
    debts;
    
    
--  "adjusted EBITDA" are to EBITDA after adjustments for "restructuring
    costs," "other incidental items" and results related to equity
    accounted investees.
    
    
--  "trailing 12 month adjusted EBITDA" are to adjusted EBITDA for the
    last 12 months; and
    
    
--  "net debt" is to the sum total of long and short term debt less total
    cash and cash equivalents, as reflected on the balance sheet.
    
    
--  "non-GAAP free cash flow" is the sum of our Net cash provided by (used
    for) operating activities and our net Capital expenditure on property,
    plant and equipment, as reflected on the cash flow statement

  
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)." 
NXP provides non-GAAP measures because management believes that they
are helpful to understand the underlying operating and profit
structure of NXP's operations, to provide additional insight as to
how management assesses the performance and allocation of resources
among its various segments and because the financial community uses
them in its analysis of NXP's operating and/or financial performance,
historical results and projections of NXP's future operating results.
NXP presents "non-GAAP gross profit," "non-GAAP research and
development," "non-GAAP Selling, general and administrative,"
"non-GAAP Other income," "non-GAAP operating income," "non-GAAP net
income/ (loss)," "non-GAAP gross margin," "non-GAAP operating margin"
and "non-GAAP EPS" because these financials measures are net of "PPA
effects," "restructuring costs," "stock based compensation," "other
incidental items," and "other adjustments" which have affected the
comparability of NXP's results over the years. NXP presents "EBITDA,"
"adjusted EBITDA" and "trailing 12 month adjusted EBITDA" because
these financials measures enhance an investor's understanding of
NXP's financial performance.  
Non-GAAP measures should not be considered a substitute for any
information derived or calculated in accordance with GAAP, are not
intended to be measures of financial performance or condition,
liquidity, profitability or operating cash flows in accordance with
GAAP, and should not be considered as alternatives to net income
(loss), operating income or any other performance measures determined
in accordance with GAAP. These non-GAAP measures can vary from other
participants in the semiconductor industry. They have limitations as
analytical tools and should not be considered in isolation for
analysis of NXP's financial results as reported under GAAP. 
Conference Call and Webcast Information 
NXP will host a conference call on October 24, 2013 at 8:00 a.m. U.S.
Eastern Daylight Time (2:00 p.m. Central European Central Time) to
discuss its third quarter 2013 financial results and provide an
outlook for the fourth quarter of 2013.  
Interested parties may join the conference call by dialing 1 - 800 -
688 - 0836 (within the U.S.) or 1 - 617 - 614 - 4072 (outside the
U.S.). The participant pass-code is 33604871. 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) creates solutions that enable
secure connections for a smarter world. Building on its expertise in
High Performance Mixed Signal electronics, NXP is driving innovation
in the automotive, identification and mobile industries, and in
application areas including wireless infrastructure, lighting,
healthcare, industrial, consumer tech and computing. NXP has
operations in more than 25 countries, and posted revenue of $4.36
billion in 2012. 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. 


 
                                                                            
NXP Semiconductors                                                          
Table 1: Condensed consolidated statement of operations (unaudited)         
                                                                            
--------------------------------------------------------------------------- 
                                                                            
                                                                            
($ in millions except share data)                Three Months Ended         
                                         ---------------------------------- 
                                          Sept. 29,   June 30,    Sept. 30, 
                                            2013        2013        2012    
                                         ----------  ----------  ---------- 
                                                                            
Revenue                                  $    1,249  $    1,188  $    1,170 
                                                                            
Cost of revenue                                (679)       (653)       (634)
                                         ----------  ----------  ---------- 
                                                                            
Gross profit                                    570         535         536 
                                                                            
Research and development                       (163)       (155)       (153)
Selling, general and administrative            (239)       (211)       (236)
                                         ----------  ----------  ---------- 
Total operating expenses                       (402)       (366)       (389)
                                                                            
Other income (expense)                            -           1          21 
                                         ----------  ----------  ---------- 
                                                                            
Operating income (loss)                         168         170         168 
                                                                            
Financial income (expense):                                                 
  Interest income (expense) - net               (44)        (47)        (65)
  Foreign exchange gain (loss)                   52          32          48 
  Gain (loss) on extinguishment of long                                     
   term debt                                      -         (23)        (11)
  Other financial expense                        (5)         (8)         (5)
                                         ----------  ----------  ---------- 
                                                                            
Income (loss) before taxes                      171         124         135 
                                                                            
Benefit (provision) for income taxes             (1)          2          (6)
Results relating to equity-accounted                                        
 investees                                        2           3           2 
                                         ----------  ----------  ---------- 
                                                                            
Income (loss) from continuing operations        172         129         131 
Income (loss) on discontinued                                               
 operations, net of tax                           -           -           - 
                                         ----------  ----------  ---------- 
Net income (loss)                               172         129         131 
Net (income) loss attributable to non-                                      
 controlling interests                          (17)        (18)        (16)
                                         ----------  ----------  ---------- 
Net income (loss) attributable to                                           
 stockholders                                   155         111         115 
                                                                            
Earnings per share data:                                                    
Net income (loss) attributable to                                           
 stockholders per common share                                              
                                                                            
Basic earnings per common share in $     $     0.62  $     0.44  $     0.46 
Diluted earnings per common share in $   $     0.60  $     0.43  $     0.45 
                                                                            
Weighted average number of shares of                                        
 common stock (in thousands):                                               
Basic                                       248,794     249,449     247,498 
Diluted                                     256,777     255,265     253,060 
                                                                            
--------------------------------------------------------------------------- 
                                                                            
                                                                            
                                                                            
NXP Semiconductors                                                          
Table 2: Condensed consolidated balance sheet (unaudited)                   
                                                                            
----------------------------------------------------------------------------
                                                                            
($ in millions)                                         As of               
                                         -------------------------
----------
                                          Sept. 29,    June 30,   Sept. 30, 
                                             2013        2013        2012   
                                         ----------- ----------- -----------
                                                                            
Current assets:                                                             
  Cash and cash equivalents              $       941 $       569 $       702
  Accounts receivable - net                      530         495         470
  Other receivables                               52          49          15
  Assets held for sale                             9          10           8
  Inventories                                    754         742         671
  Other current assets                           127         132         105
                                         ----------- ----------- -----------
Total current assets                           2,413       1,997       1,971
                                                                            
Non-current assets:                                                         
  Investments in equity-accounted                                           
   investees                                      50          47          42
  Other non-current assets                       139         128         144
  Property, plant and equipment                1,032       1,030       1,086
  Identified intangible assets                   792         841       1,017
  Goodwill                                     2,318       2,253       2,241
                                         ----------- ----------- -----------
Total non-current assets                       4,331       4,299       4,530
                                                                            
Total assets                                   6,744       6,296       6,501
                                                                            
Current liabilities:                                                        
  Accounts payable                               545         521         549
  Liabilities held for sale                        -           -           3
  Accrued liabilities                            595         610         513
  Short-term debt                                465          50         244
                                         ----------- ----------- -----------
Total current liabilities                      1,605       1,181       1,309
                                                                            
Non-current liabilities:                                                    
  Long-term debt                               3,232       3,331       3,338
  Other non-current liabilities                  469         451         450
                                         ----------- ----------- -----------
Total non-current liabilities                  3,701       3,782       3,788
                                                                            
Non-controlling interests                        236         219         217
Stockholders' equity                           1,202       1,114       1,187
                                         ----------- ----------- -----------
Total equity                                   1,438       1,333       1,404
                                                                            
Total liabilities and equity                   6,744       6,296       6,501
                                                                            
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
NXP Semiconductors                                                          
Table 3: Condensed consolidated statement of cash flows (unaudited)         
                                                                            
--------------------------------------------------------------------------- 
                                                                            
                                                                            
($ in millions)                                  Three Months Ended         
                                         ---------------------------------- 
                                          Sept. 29,   June 30,    Sept. 30, 
                                            2013        2013        2012    
                                         ----------  ----------  ---------- 
                                                                            
Cash Flows from operating activities                                        
Net income (loss)                        $      172  $      129  $      131 
Adjustments to reconcile net income                                         
 (loss):                                                                    
  Depreciation and amortization                 137         132         128 
  Stock-based compensation                       20          20          12 
  Net (gain) loss on sale of assets               -          (1)        (19)
  (Gain) loss on extinguishment of debt           -          23          11 
  Results relating to equity accounted                                      
   investees                                     (2)         (3)         (2)
Changes in operating assets and                                             
 liabilities:                                                               
  (Increase) decrease in trade                                              
   receivables                                  (20)        (26)         (8)
  (Increase) decrease in inventories             (5)        (10)        (20)
  Increase (decrease) in trade payables          17           6          19 
  (Increase) decrease in other                                              
   receivables                                    3          (4)          3 
  Increase (decrease) in other payables          29         (78)        (22)
  Changes in deferred taxes                       -           1           - 
Exchange differences                            (52)        (32)        (48)
Other items                                      (1)          3           7 
                                         ----------  ----------  ---------- 
Net cash provided by (used for)                                             
 operating activities                           298         160         192 
                                                                            
Cash flows from investing activities:                                       
  Purchase of identified intangible                                         
   assets                                       (10)        (11)         (7)
  Capital expenditures on property,                                         
   plant and equipment                          (54)        (49)        (92)
  Proceeds from disposals of property,                                      
   plant and equipment                            -           3           - 
  Proceeds from sale of interests in                                        
   businesses                                     -           -          27 
  Purchase of interests in businesses            (1)          -           - 
  Proceeds from return of equity                                            
   investment                                     -           1           - 
  Other                                          (1)          -           1 
                                         ----------  ----------  ---------- 
Net cash (used for) provided by                                             
 investing activities                           (66)        (56)    
    (71)
                                                                            
Cash flows from financing activities:                                       
  Net (repayments) borrowings of short-                                     
   term debt                                     (7)         (1)          4 
  Repayments under the revolving credit                                     
   facility                                    (175)       (155)       (200)
  Amounts drawn under the revolving                                         
   credit facility                                -         200           - 
  Repurchase of long-term debt                    -        (874)        (59)
  Principal payments on long-term debt           (2)         (5)         (5)
  Net proceeds from the issuance of                                         
   long-term debt                               495         742           - 
  Dividends paid to non-controlling                                         
   interests                                    (47)          -          (1)
  Cash proceeds from exercise of stock                                      
   options                                       29          10           6 
  Purchase of treasury shares                  (159)        (48)         (3)
                                         ----------  ----------  ---------- 
Net cash provided by (used for)                                             
 financing activities                           134        (131)       (258)
                                                                            
Net cash provided by (used for)                                             
 continuing operations                          366         (27)       (137)
                                                                            
Effect of changes in exchange rates on                                      
 cash positions                                   6           1           2 
                                         ----------  ----------  ---------- 
Increase (decrease) in cash and cash                                        
 equivalents                                    372         (26)       (135)
Cash and cash equivalents at beginning                                      
 of period                                      569         595         837 
                                         ----------  ----------  ---------- 
Cash and cash equivalents at end of                                         
 period                                         941         569         702 
                                                                            
--------------------------------------------------------------------------- 
                                                                            
                                                                            
                                                                            
NXP Semiconductors                                                          
Table 4: Reconciliation of GAAP to non-GAAP Segment Results (unaudited)     
                                                                            
--------------------------------------------------------------------------- 
                                                                            
($ in millions)                                  Three Months Ended         
                                         ---------------------------------- 
                                          Sept. 29,   June 30,    Sept. 30, 
                                            2013        2013        2012    
                                         ----------  ----------  ---------- 
                                                                            
High Performance Mixed Signal (HPMS)            922         878         804 
Standard Products                               291         281         316 
                                         ----------  ----------  ---------- 
  Product Revenue                             1,213       1,159       1,120 
    Manufacturing Operations                     36          29          49 
    Corporate and Other                           -           -           1 
                                         ----------  ----------  ---------- 
Total Revenue                            $    1,249  $    1,188  $    1,170 
                                         ==========  ==========  ========== 
                                                                            
--------------------------------------------------------------------------- 
                                                                            
HPMS Revenue                             $      922  $      878  $      804 
  Percent of Total Revenue                     73.8%       73.9%       68.7%
  HPMS segment GAAP gross profit                493         472         433 
    PPA effects                                   -           -          (1)
    Restructuring                                (4)          3           - 
    Stock based compensation                     (1)         (2)         (1)
    Other incidentals                            (1)         (1)         (1)
    Other adjustments                             -           -           - 
                                         ----------  ----------  ---------- 
  HPMS segment non-GAAP gross profit     $      499  $      472  $      436 
                                         ==========  ==========  ========== 
                                                                            
    HPMS segment GAAP gross margin             53.5%       53.8%       53.9%
    HPMS segment non-GAAP gross margin         54.1%       53.8%       54.2%
                                                                            
  HPMS segment GAAP operating profit            184         178         157 
    PPA effects                                 (46)        (45)        (45)
    Restructuring                                (4)          3           1 
    Stock based compensation                    (16)        (16)         (9)
    Other incidentals                            (1)         (2)         16 
    Other adjustments                             -           -           - 
                                         ----------  ----------  ---------- 
  HPMS segment non-GAAP operating profit $      251  $      238  $      194 
                                         ==========  ==========  ========== 
                                                                            
    HPMS segment GAAP operating margin         20.0%       20.3%       19.5%
    HPMS segment non-GAAP operating                                         
     margin                                    27.2%       27.1%       24.1%
                                                                            
                                                                            
--------------------------------------------------------------------------- 
                                                                            
Standard Products Revenue                $      291  $      281  $      316 
  Percent of Total Revenue                     23.3%       23.7%       27.0%
  Standard Products segment GAAP gross                                      
   profit                                        81          68         107 
    PPA effects                                   -           -          (1)
    Restructuring                                (2)          5           1 
    Stock based compensation                      -          (1)          - 
    Other incidentals                            (2)         (3)          - 
                                         ----------  ----------  ---------- 
  Standard Products segment non-GAAP                                        
   gross profit                          $       85  $       67  $    
  107 
                                         ==========  ==========  ========== 
                                                                            
    Standard Products segment GAAP gross                                    
     margin                                    27.8%       24.2%       33.9%
    Standard Products segment non-GAAP                                      
     gross margin                              29.2%       23.8%       33.9%
                                                                            
  Standard Products segment GAAP                                            
   operating profit                              21           9          43 
    PPA effects                                 (14)        (15)        (15)
    Restructuring                                (2)          5           - 
    Stock based compensation                     (4)         (4)         (2)
    Other incidentals                            (2)         (3)          2 
                                         ----------  ----------  ---------- 
  Standard Products segment non-GAAP                                        
   operating profit                      $       43  $       26  $       58 
                                         ==========  ==========  ========== 
                                                                            
    Standard Products segment GAAP                                          
     operating margin                           7.2%        3.2%       13.6%
    Standard Products segment non-GAAP                                      
     operating margin                          14.8%        9.3%       18.4%
                                                                            
                                                                            
--------------------------------------------------------------------------- 
                                                                            
                                                                            
                                                                            
NXP Semiconductors                                                          
Table 4: Reconciliation of GAAP to non-GAAP Segment Results (unaudited)     
 (con't)                                                                    
                                                                            
--------------------------------------------------------------------------- 
                                                                            
                                                                            
($ in millions)                                  Three Months Ended         
                                         ---------------------------------- 
                                          Sept. 29,   June 30,    Sept. 30, 
                                            2013        2013        2012    
                                         ----------  ----------  ---------- 
Manufacturing Operations Revenue         $       36  $       29  $       49 
  Percent of Total Revenue                      2.9%        2.4%        4.2%
  Manufacturing Operations segment GAAP                                     
   gross profit                                  (4)         (6)         (2)
    PPA effects                                  (2)         (3)         (2)
    Restructuring                                (1)         (2)         (1)
    Stock based compensation                      -           -           - 
    Other incidentals                            (2)         (1)         (1)
                                         ----------  ----------  ---------- 
  Manufacturing Operations segment non-                                     
   GAAP gross profit                     $        1  $        -  $        2 
                                         ==========  ==========  ========== 
                                                                            
    Manufacturing Operations segment                                        
     GAAP gross margin                        -11.1%      -20.7%       -4.1%
    Manufacturing Operations segment                                        
     non-GAAP gross margin                      2.8%        0.0%        4.1%
                                                                            
  Manufacturing Operations segment GAAP                                     
   operating profit                              (9)        (10)         (6)
    PPA effects                                  (6)         (6)         (5)
    Restructuring                                (1)         (2)         (1)
    Stock based compensation                      -           -           - 
    Other incidentals                            (2)         (1)         (2)
                                         ----------  ----------  ---------- 
  Manufacturing Operations segment non-                                     
   GAAP operating profit                 $        -  $       (1) $        2 
                                         ==========  ==========  ========== 
                                                                            
    Manufacturing Operations segment                                        
     GAAP operating margin                    -25.0%      -34.5%      -12.2%
    Manufacturing Operations segment                                        
     non-GAAP operating margin                  0.0%       -3.4%        4.1%
                                                                            
                                                                            
--------------------------------------------------------------------------- 
                                                                            
Corporate and Other Revenue              $        -  $        -  $        1 
  Percent of Total Revenue                      0.0%        0.0%        0.1%
  Corporate and Other segment GAAP gross                                    
   profit                                         -           1          (2)
    PPA effects                                   -           -           - 
    Restructuring                                 -           -           - 
    Stock based compensation                      -           -           - 
    Other incidentals                             -           -           - 
                                         ----------  ----------  ---------- 
  Corporate and Other segment non-GAAP                                      
   gross profit                          $        -  $        1  $       (2)
                                         ==========  ==========  ========== 
                                                                            
  Corporate and Other segment GAAP gross                                    
   margin                                        NM          NM          NM 
  Corporate and Other segment non-GAAP                                      
   gross margin                                  NM          NM          NM 
                                                                            
  Corporate and Other segment GAAP                                          
   operating profit                             (28)         (7)        (26)
    PPA effects                                   -           -           - 
    Restructuring                               (16)          4          (4)
    Stock based compensation                      -           -          (1)
    Other incidentals                            (3)         (4)        (11)
                                         ----------  ----------  ---------- 
  Corporate and Other segment non-GAAP                                      
   operating profit                      $       (9) $       (7) $      (10)
                                         ==========  ==========  =======
=== 
                                                                            
  Corporate and Other segment GAAP                                          
   operating margin                              NM          NM          NM 
  Corporate and Other segment non-GAAP                                      
   operating margin                              NM          NM          NM 
                                                                            
--------------------------------------------------------------------------- 
                                                                            
                                                                            
                                                                            
NXP Semiconductors                                                          
Table 5: Financial Reconciliation of GAAP to non-GAAP Results (unaudited)   
                                                                            
--------------------------------------------------------------------------- 
                                                                            
                                                                            
($ in millions except share data)               Three Months Ended          
                                       ------------------------------------ 
                                        Sept. 29,     June 30,    Sept. 30, 
                                          2013          2013        2012    
                                       ----------    ----------  ---------- 
                                                                            
Revenue                                $    1,249    $    1,188  $    1,170 
                                                                            
GAAP Gross profit                      $      570    $      535  $      536 
  PPA effects                                  (2)           (3)         (4)
  Restructuring                                (7)            6           - 
  Stock Based Compensation                     (1)           (3)         (1)
  Other incidentals                            (5)           (5)         (2)
  Other adjustments                             -             -           - 
                                       ----------    ----------  ---------- 
Non-GAAP Gross profit                  $      585    $      540  $      543 
                                       ==========    ==========  ========== 
                                                                            
GAAP Gross margin                            45.6%         45.0%       45.8%
                                                                            
Non-GAAP Gross margin                        46.8%         45.5%       46.4%
                                                                            
  GAAP Research and development        $     (163)   $     (155) $     (153)
    PPA effects                                 -             -           - 
    Restructuring                               -             -           - 
    Stock based compensation                   (3)           (2)         (1)
    Other incidentals                           -            (1)         (3)
                                       ----------    ----------  ---------- 
  Non-GAAP Research and development    $     (160)   $     (152) $     (149)
                                       ==========    ==========  ========== 
                                                                            
  GAAP Selling, general and                                                 
   administrative                      $     (239)   $     (211) $     (236)
    PPA effects                               (64)          (63)        (61)
    Restructuring                             (16)            4          (4)
    Stock based compensation                  (16)          (15)        (10)
    Other incidentals                          (3)           (4)        (10)
                                       ----------    ----------  ---------- 
  Non-GAAP Selling, general and                                             
   administrative                      $     (140)   $     (133) $     (151)
                                       ==========    ==========  ========== 
                                                                            
  GAAP Other income (expense)          $        -    $        1  $       21 
    PPA effects                                 -             -           - 
    Restructuring                               -             -           - 
    Other incidentals                           -             -          20 
                                       ----------    ----------  ---------- 
  Non-GAAP Other income (expense)      $        -    $        1  $        1 
                                       ==========    ==========  ========== 
                                                                            
GAAP Operating income (loss)           $      168    $      170  $      168 
  PPA effects                                 (66)          (66)        (65)
  Restructuring                               (23)           10          (4)
  Stock based compensation                    (20)          (20)        (12)
  Other incidentals                            (8)          (10)          5 
  Other adjustments                             -             -           - 
                                       ----------    ----------  ---------- 
Non-GAAP Operating income (loss)       $      285    $      256  $      244 
                                       ==========    ==========  ========== 
                                                                            
GAAP Operating margin                        13.5%         14.3%       14.4%
                                                                            
Non-GAAP Operating margin                    22.8%         21.5%       20.9%
                                                                            
GAAP Financial income (expense)        $        3    $      (46) $      (33)
  Foreign exchange gain (loss) on debt         52            32          48 
  Gain (loss) on extinguishment of                                          
   long term debt                               -           (23)        (11)
  Other financial expense                      (5)           (8)         (5)
                                       ----------    ----------  ---------- 
Non-GAAP Financial income (expense)    $      (44)   $      (47) $      (65)
                                       ==========    ==========  ========== 
                                                                            
GAAP Income tax benefit (provision)    $       (1)   $        2  $       (6)
  Other adjustments                             4            11           3 
                                       ----------    ----------  ---------- 
Non-GAAP Cash tax (expense)            $       (5)   $       (9) $       (9)
                                       ==========    ==========  ========== 
                                                                            
GAAP Results relating to equity-                                            
 accounted investees                   $        2    $        3  $        2 
  Other adjustments                             2             3           2 
                                       ----------    ----------  ---------- 
Non-GAAP Results relating to equity-                                        
 accounted investees                   $        -    $        -  $        - 
                                       ==========    ==========  ========== 
                                                                            
GAAP Income (loss) from continuing                                          
 operations                            $      172    $      129  $      13
1 
  PPA effects                                 (66)          (66)        (65)
  Restructuring                               (23)           10          (4)
  Stock based compensation                    (20)          (20)        (12)
  Other incidentals                            (8)          (10)          5 
  Other adjustments                            53 1)         15          37 
                                       ----------    ----------  ---------- 
Non-GAAP Income (loss) from continuing                                      
 operations                            $      236    $      200  $      170 
                                       ==========    ==========  ========== 
                                                                            
                                                                            
GAAP Net income (loss) attributable to                                      
 stockholders                          $      155    $      111  $      115 
  PPA effects                                 (66)          (66)        (65)
  Restructuring                               (23)           10          (4)
  Stock based compensation                    (20)          (20)        (12)
  Other incidentals                            (8)          (10)          5 
  Other adjustments                            53            15          37 
                                       ----------    ----------  ---------- 
Non-GAAP Net income (loss)                                                  
 attributable to stockholders          $      219    $      182  $      154 
                                       ==========    ==========  ========== 
                                                                            
GAAP Weighted average shares - diluted    256,777       255,265     253,060 
  Non-GAAP Adjustment                           -             -           - 
                                       ----------    ----------  ---------- 
Non-GAAP Weighted average shares -                                          
 diluted                                  256,777       255,265     253,060 
                                       ==========    ==========  ========== 
                                                                            
GAAP Diluted net income (loss)                                              
 attributable to stockholders per                                           
 share                                 $     0.60    $     0.43  $     0.45 
Non-GAAP Diluted net income (loss)                                          
 attributable to stockholders per                                           
 share                                 $     0.85    $     0.71  $     0.61 
                                                                            
--------------------------------------------------------------------------- 
                                                                            
                                                                            
1)  Includes: During 3Q13: Foreign exchange gain on debt: $52 million; Other
    financial expense: ($5) million; Results relating to equity-accounted   
    investees: $2 million; and difference between book and cash income      
    taxes: $4 million.                                                      
                                                                            
                                                                            
                                                                            
NXP Semiconductors                                                          
Table 6: Adjusted EBITDA and Free Cash Flow (unaudited)                     
                                                                            
--------------------------------------------------------------------------- 
                                                                            
                                                                            
($ in millions)                                  Three Months Ended         
                                         ---------------------------------- 
                                          Sept. 29,   June 30,    Sept. 30, 
                                            2013        2013        2012    
                                         ----------  ----------  ---------- 
                                                                            
Net Income                               $      172  $      129  $      131 
                                         ==========  ==========  ========== 
                                                                            
Reconciling items to EBITDA                                                 
  Financial (income) expense                     (3)         46          33 
  (Benefit) provision for income taxes            1          (2)          6 
  Depreciation                                   63          61          59 
  Amortization                                   74          71          69 
                                         ----------  ----------  ---------- 
EBITDA                                   $      307  $      305  $      298 
                                         ==========  ==========  ========== 
                                                                            
Reconciling items to adjusted EBITDA                                        
  Results of equity-accounted investees          (2)         (3)         (2)
  Restructuring 1)                               17         (11)          3 
  Stock based compensation                       20          20          12 
  Other incidental items 1)                       8           9          (5)
  Other adjustments                               -           -           - 
                                         ----------  ----------  ---------- 
Adjusted EBITDA                          $      350  $      320  $      306 
                                         ==========  ==========  ========== 
                                                                            
Trailing twelve month adjusted EBITDA    $    1,279  $    1,235  $    1,030 
                                                                            
--------------------------------------------------------------------------- 
                                                                            
1) Excluding depreciation property,                                         
 plant and equipment and amortization                                       
 software related to:                                                       
                                                                            
    Restructuring                                 6           1           1 
    Other incidental items                        -           1           - 
                                                                            
                                                                            
                                                                            
--------------------------------------------------------------------------- 
                                                                            
                                                                            
($ in millions)                                  Three Months Ended         
                                         ---------------------------------- 
                                          Sept. 29,   June 30,    Sept. 30, 
                                            2013        2013        2012    
                                         ----------  ----------  ---------- 
                                                                            
Net cash provided by (used for)                                             
 operating activities                    $      298  $      160  $      192 
 
                                         ==========  ==========  ========== 
Net capital expenditures on property,                                       
 plant and equipment                            (54)        (46)        (92)
                                         ----------  ----------  ---------- 
                                                                            
Non-GAAP free cash flow                  $      244  $      114  $      100 
Non-GAAP free cash flow as a percent of                                     
 Revenue                                         20%         10%          9%
                                                                            
--------------------------------------------------------------------------- 

  
For further information, please contact: 
Investors: 
Jeff Palmer 
jeff.palmer@nxp.com 
+1 408 518 5411  
Media:
Joon Knapen
joon.knapen@nxp.com
+31 619 303 857 
 
 
Press spacebar to pause and continue. Press esc to stop.