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NXP Semiconductors Reports Fourth Quarter and Full-Year 2012 Results(Marketwire Via Acquire Media NewsEdge) EINDHOVEN, THE NETHERLANDS -- (Marketwire) -- 01/30/13 -- NXP Semiconductors N.V. (NASDAQ: NXPI) Q4 2012 Year 2012 ---------------- ---------------- Revenue $1,116 million $4,358 million GAAP Gross margin 43.9% 45.6% GAAP Operating margin 3.0% 9.5% GAAP Diluted earnings per share ($0.47) ($0.46) Non-GAAP Gross margin 46.1% 45.8% Non-GAAP Operating margin 18.7% 18.0% Non-GAAP Earnings per share $0.50 $1.70 Trailing twelve month adjusted EBITDA $1,042 million Net debt reduced $181 million year-on-year to $2,875 million Product revenue growth of 24 percent year-on-year, down 4 percent sequentially NXP Semiconductors N.V. (NASDAQ: NXPI) today reported financial results for the fourth quarter and the full-year of 2012, ended December 31, 2012, and provided guidance for the first quarter 2013. "Our results for the fourth quarter of 2012 came in at the higher end of our original guidance, as NXP delivered Product revenue of $1,066 million, a four percent sequential decline, and a twenty-four percent increase from the comparable year ago period. Total NXP revenue in the fourth quarter was $1,116 million, approximately a five percent sequential decline, and a twenty percent increase from the comparable year ago period," said Richard Clemmer, NXP Chief Executive Officer. "Looking at the full-year results, NXP delivered Product revenue of $4,114 million, better than a seven percent year-on-year growth, as key design opportunities we outlined at the beginning of the year came to fruition. Specifically, full-year revenue in our core HPMS segment increased thirteen percent year-on-year due to strong growth in our Identification and Portable & Computing end markets. However, as a result of challenging market conditions, NXP experienced slower than anticipated growth in other areas of our HPMS segment, and a 10 percent year-on-year decline in our Standard product segment. Taken together, total NXP revenue increased four percent year-on-year to $4,358 million. "As our recent actions demonstrate, we remain committed to improving our cost and expense structure, which should result in improved earnings growth and cash flow generation. Our strategy continues to be focused on providing unique and differentiated product solutions to enable our customer's success, which over the longer-term should allow NXP to outpace the cyclical growth of the overall semiconductor market," said Clemmer. Fourth Quarter 2012 Results ($ millions, except EPS, unaudited) ---------------------------------------------------------------------------- Q4 2012 Q3 2012 Q4 2011 Q - Q Y - Y -------- -------- -------- -------- -------- Product Revenue $ 1,066 $ 1,114 $ 857 -4% 24% Mfg. & Other Revenue $ 50 $ 56 $ 74 -11% -32% -------- -------- -------- Total Revenue $ 1,116 $ 1,170 $ 931 -5% 20% GAAP Gross Profit $ 490 $ 536 $ 389 -9% 26% Gross Profit Adjustments (1) $ (24) $ (6) $ (34) Non-GAAP Gross Profit $ 514 $ 542 $ 423 -5% 22% GAAP Gross Margin 43.9% 45.8% 41.8% Non-GAAP Gross Margin 46.1% 46.3% 45.4% GAAP Operating Income $ 33 $ 168 $ 7 -80% 371% Operating Income Adjustments (1) $ (176) $ (64) $ (141) Non-GAAP Operating Income $ 209 $ 232 $ 148 -10% 41% GAAP Operating Margin 3.0% 14.4% 0.8% Non-GAAP Operating Margin 18.7% 19.8% 15.9% GAAP Net Income / (Loss) $ (116) $ 115 $ (182) NM NM Net Income Adjustments (1) $ (242) $ (27) $ (241) Non-GAAP Net Income / (Loss) $ 126 $ 142 $ 59 -11% 114% GAAP EPS $ (0.47) $ 0.45 $ (0.73) NM NM EPS Adjustments (1) $ (0.97) $ (0.11) $ (0.97) Non-GAAP EPS $ 0.50 $ 0.56 $ 0.24 -11% 108% ---------------------------------------------------------------------------- --------------------------------------------------------- 2012 2011 Y - Y -------- -------- -------- Product Revenue $ 4,114 $ 3,831 7% Mfg. & Other Revenue $ 244 $ 363 -33% -------- -------- Total Revenue $ 4,358 $ 4,194 4% GAAP Gross Profit $ 1,988 $ 1,906 4% Gross Profit Adjustments (1) $ (6) $ (82) Non-GAAP Gross Profit $ 1,994 $ 1,988 0% GAAP Gross Margin 45.6% 45.4% Non-GAAP Gross Margin 45.8% 47.4% GAAP Operating Income $ 412 $ 357 15% Operating Income Adjustments (1) $ (374) $ (453) Non-GAAP Operating Income $ 786 $ 810 -3% GAAP Operating Margin 9.5% 8.5% Non-GAAP Operating Margin 18.0% 19.3% GAAP Net Income / (Loss) $ (115) $ 390 NM Net Income Adjustments (1) $ (544) $ (42) Non-GAAP Net Income / (Loss) $ 429 $ 432 -1% GAAP EPS $ (0.46) $ 1.57 NM EPS Adjustments (1) $ (2.16) $ (0.14) Non-GAAP EPS $ 1.70 $ 1.71 -1% --------------------------------------------------------- (1) Please see "Discussion of GAAP to non-GAAP Reconciliation" on page 3 of this release. Supplemental Information ($ millions, unaudited) ---------------------------------------------------------------------------- Percent Q4 2012 Q3 2012 Q4 2011 Q4 Total Q - Q Y - Y --------- --------- --------- -------- -------- -------- Automotive $ 227 $ 239 $ 218 20% -5% 4% Identification $ 290 $ 275 $ 155 26% 5% 87% Infrastructure & Industrial $ 156 $ 165 $ 149 14% -5% 5% Portable & Computing $ 195 $ 222 $ 137 18% -12% 42% --------- --------- --------- -------- -------- -------- High Performance Mixed Signal (HPMS) $ 868 $ 901 $ 659 78% -4% 32% Standard Products (STDP) $ 198 $ 213 $ 198 18% -7% 0% --------- --------- --------- -------- -------- -------- Product Revenue $ 1,066 $ 1,114 $ 857 96% -4% 24% Manufacturing & Other $ 50 $ 56 $ 74 4% -11% -32% --------- --------- --------- -------- -------- -------- Total Revenue $ 1,116 $ 1,170 $ 931 100% -5% 20% ---------------------------------------------------------------------------- ---------------------------------------------- 2012 2011 Y - Y --------- --------- -------- Automotive $ 939 $ 930 1% Identification $ 986 $ 698 41% Infrastructure & Industrial $ 604 $ 617 -2% Portable & Computing $ 753 $ 661 14% --------- --------- High Performance Mixed Signal (HPMS) $ 3,282 $ 2,906 13% Standard Products (STDP) $ 832 $ 925 -10% --------- --------- Product Revenue $ 4,114 $ 3,831 7% Manufacturing & Other $ 244 $ 363 -33% --------- --------- Total Revenue $ 4,358 $ 4,194 4% ---------------------------------------------- Product Revenue is the combination of revenue from the High Performance Mixed Signal (HPMS) and Standard Products (STDP) segments. Additional Information for the Fourth Quarter of 2012: Total gross debt at the end of the fourth quarter 2012 was $3,492 million, a reduction of $90 million from the $3,582 million in the prior quarter. Cash balance at the end of the fourth quarter of 2012 was $617 million, resulting in a net-debt position of $2,875 million. On December 11, 2012, NXP tendered and retired $500 million of its U.S.-dollar denominated 9 3/4 Senior Secured notes. In a subsequent transaction NXP entered into a new $500 million senior secured term loan facility ("Term Loan C") due January 2020, which carries a coupon of LIBOR + 350bps, and a LIBOR floor of 125bps. The proceeds of the new term loan was drawn under the terms and conditions of the existing senior secured loan facility. Net cash interest paid in the fourth quarter of 2012 was $55 million. SSMC, NXP's consolidated joint-venture wafer fab with TSMC, reported fourth quarter 2012 operating income of $46 million, EBITDA of $58 million and a closing cash balance of $288 million. Utilization in NXP wafer fabs averaged 85 percent in the fourth quarter 2012 compared to 71 percent in the year ago period and 91 percent in the prior quarter. During the fourth quarter of 2012 NXP booked a $98 million charge associated with a restructuring initiative designed to improve operational efficiency and to competitively position the company for sustainable growth. The components of the restructuring initiative were: $55 million in SG&A to assist in driving SG&A to 12 percent of revenue; $23 million in R&D to refocus resources; and $20 million in cost of goods sold, mainly related to the consolidation of MOS technologies from our German fabrication facility to the company's 8-inch Dutch facility. Guidance for the First Quarter 2013: ($ millions, except share count and EPS) (1) ---------------------------------------------------------------------------- Guidance Range Low Mid High ---------- ---------- ---------- Product Revenue $ 1,027 $ 1,043 $ 1,058 Q-Q -4% -2% -1% Mfg. & Other Revenue $ 24 $ 24 $ 24 ---------- ---------- ---------- Total Revenue $ 1,051 $ 1,067 $ 1,082 Q-Q -6% -4% -3% Non-GAAP Gross Profit $ 497 $ 504 $ 511 Non-GAAP Gross Margin 47% 47% 47% Non-GAAP Operating Income $ 193 $ 198 $ 202 Non-GAAP Operating Margin 18.4% 18.6% 18.7% Interest Expense $ 50 $ 50 $ 50 Cash Taxes $ 9 $ 9 $ 9 Non-controlling Interest $ 13 $ 13 $ 13 ---------- ---------- ---------- Non-GAAP Net Income $ 121 $ 126 $ 130 Ave. Diluted Shares 255 255 255 Non - GAAP EPS $ 0.47 $ 0.49 $ 0.51 ---------------------------------------------------------------------------- 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 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) "Other incidental items," (xii) "non-GAAP Financial Income (expense)," (xiii) "non-GAAP Results relating to equity-accounted investees," (xiv) "non-GAAP Cash tax (expense)," (xv) "non-GAAP EPS," (xvi) "EBITDA", "adjusted EBITDA" and "trailing 12 month adjusted EBITDA" and (xvii) "net debt." 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. "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 from the date of this release; 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. 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", "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 InformationNXP will host a conference call on January 31, 2013 at 8:00 a.m. U.S. Eastern Standard Time (2:00 p.m. Central European Time) to discuss its fourth quarter 2012 results and provide an outlook for the first quarter of 2013. Interested parties may join the conference call by dialing 1 - 800 - 706 - 7749 (within the U.S.) or 1 - 617 - 614 - 3474 (outside the U.S.). The participant pass-code is 78451487. 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) provides High Performance Mixed Signal and Standard Product solutions that leverage its leading RF, Analog, Power Management, Interface, Security and Digital Processing expertise. These innovations are used in a wide range of automotive, identification, wireless infrastructure, lighting, industrial, mobile, consumer and computing applications. A global semiconductor company with operations in more than 25 countries, NXP posted unaudited revenue of $4.36 billion in 2012. Additional information can be found by visiting www.nxp.com. Forward-looking StatementsThis 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 NPX'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 operation (unaudited) --------------------------------------------------------------------------- ($ in millions except share data) Three Months Ended Full year ------------------------------- -------------------- Dec 31, Sept 30, Dec 31, 2012 2012 2011 2012 2011 --------- --------- --------- --------- --------- Revenue $ 1,116 $ 1,170 $ 931 $ 4,358 $ 4,194 Cost of revenue (626) (634) (542) (2,370) (2,288) --------- --------- --------- --------- --------- Gross profit 490 536 389 1,988 1,906 Research and development (171) (153) (151) (628) (635) Selling, general and administrative (288) (236) (236) (977) (918) --------- --------- --------- --------- --------- Total operating expenses (459) (389) (387) (1,605) (1,553) Other income (expense) 2 21 5 29 4 --------- --------- --------- --------- --------- Operating income (loss) 33 168 7 412 357 Financial income (expense): Interest income (expense) - net (55) (65) (74) (266) (307) Foreign exchange gain (loss) 31 48 (65) 28 128 Gain (loss) on extinguishment of long term debt (114) (11) (7) (161) (32) Other financial expense (15) (5) (19) (38) (46) --------- --------- --------- --------- --------- Income (loss) before taxes (120) 135 (158) (25) 100 Benefit (provision) for income taxes 7 (6) (2) (1) (21) Results relating to equity-accounted investees 15 2 (15) (27) (77) --------- --------- --------- --------- --------- Income (loss) from continuing operations (98) 131 (175) (53) 2 Income (loss) on discontinued operations, net of tax - - 2 1 434 --------- --------- --------- --------- --------- Net income (loss) (98) 131 (173) (52) 436 Net (income) loss attributable to non- controlling interests (18) (16) (9) (63) (46) --------- --------- --------- --------- --------- Net income (loss) attributable to stockholders (116) 115 (182) (115) 390 Earnings per share data: Net income (loss) attributable to stockholders per common share Basic earnings per common share in $ Income (loss) from continuing operations $ (0.47) $ 0.46 $ (0.74) $ (0.46) $ (0.17) Income (loss) from discontinued operations $ - $ - $ 0.01 $ - $ 1.74 --------- --------- --------- --------- --------- Net income (loss) $ (0.47) $ 0.46 $ (0.73) $ (0.46) $ 1.57 Diluted earnings per common share Income (loss) from continuing operations $ (0.47) $ 0.45 $ (0.74) $ (0.46) $ (0.17) Income (loss) on discontinued operations $ - $ - $ 0.01 $ - $ 1.74 --------- --------- --------- --------- --------- Net income (loss) $ (0.47) $ 0.45 $ (0.73) $ (0.46) $ 1.57 Weighted average number of shares of common stock (in thousands): Basic 248,505 247,498 247,586 248,064 248,812 Diluted 248,505 253,060 247,586 248,064 248,812 NXP Semiconductors Table 2: Condensed consolidated balance sheet (unaudited) ---------------------------------------------------------------------------- ($ in millions) ----------------------------------- Dec 31, Sept 30, Dec 31, 2012 2012 2011 ----------- ----------- ----------- Current assets: Cash and cash equivalents $ 617 $ 702 $ 743 Accounts receivable - net 459 470 441 Other receivables 51 15 38 Assets held for sale 10 8 39 Inventories 715 671 618 Other current assets 102 105 87 ----------- ----------- ----------- Total current assets 1,954 1,971 1,966 Non-current assets: Investments in equity-accounted investees 45 42 37 Other non-current assets 128 144 144 Property, plant and equipment 1,070 1,086 1,063 Identified intangible assets 965 1,017 1,171 Goodwill 2,277 2,241 2,231 ----------- ----------- ----------- Total non-current assets 4,485 4,530 4,646 Total assets 6,439 6,501 6,612 Current liabilities: Accounts payable 562 549 455 Liabilities held for sale - 3 21 Accrued liabilities 627 513 521 Short-term debt 307 244 52 ----------- ----------- ----------- Total current liabilities 1,496 1,309 1,049 Non-current liabilities: Long-term debt 3,185 3,338 3,747 Other non-current liabilities 474 450 459 ----------- ----------- ----------- Total non-current liabilities 3,659 3,788 4,206 Non-controlling interests 235 217 212 Stockholders' equity 1,049 1,187 1,145 ----------- ----------- ----------- Total equity 1,284 1,404 1,357 Total liabilities and equity 6,439 6,501 6,612 NXP Semiconductors Table 3: Condensed consolidated statement of cash flow (unaudited) --------------------------------------------------------------------------- ($ in millions) Three Months Ended Full year ------------------------------- -------------------- Dec 31, Sept 30, Dec 31, 2012 2012 2011 2012 2011 --------- --------- --------- --------- --------- Cash Flows from operating activities Net income (loss) $ (98) $ 131 $ (173) $ (52) 436 (Income) loss from discontinued operations, net of tax - - (2) (1) (434) Adjustments to reconcile net income (loss): Depreciation and amortization 132 128 151 533 591 Stock-based compensation 16 12 10 52 31 Net (gain) loss on sale of assets (1) (19) (2) (20) 10 (Gain) loss on extinguishment of debt 114 11 7 161 32 Results relating to equity accounted investees (15) (2) 15 27 77 Changes in operating assets and liabilities: (Increase) decrease in trade receivables 18 (8) (45) (6) (60) (Increase) decrease in inventories (41) (20) (14) (61) (104) Increase (decrease) in trade payables 10 19 (70) 101 (134) (Increase) decrease in other receivables 33 3 28 47 25 Increase (decrease) in other payables 34 (22) (11) (35) (198) Changes in deferred taxes (8) - 4 (18) 13 Exchange differences (31) (48) 65 (28) (128) Other items 1 7 3 22 18 --------- --------- --------- --------- --------- Net cash provided by (used for) operating activities 164 192 (34) 722 175 Cash flows from investing activities: Purchase of identified intangible assets (8) (7) (5) (29) (10) Capital expenditures on property, plant and equipment (46) (92) (41) (251) (221) Proceeds from disposals of property, plant and equipment 1 - 1 2 15 Proceeds from disposals of assets held for sale - - 11 - 11 Purchase of interests in businesses - - - (2) - Proceeds from sale of interests in businesses (1) 27 - 26 - Proceeds from return of equity investment 12 - - 12 - Other (3) 1 1 (1) 3 --------- --------- --------- --------- --------- Net cash (used for) provided by investing activities (45) (71) (33) (243) (202) Cash flows from financing activities: Net (repayments) borrowings of short-term debt - 4 (1) - 17 Repayments under the revolving credit facility - (200) - (530) (600) Amounts drawn under the revolving credit facility 100 - - 760 200 Repurchase of long- term debt (802) (59) (1,089) (1,676) (1,997) Principal payments on long-term debt (6) (5) (5) (20) (10) Net proceeds from the issuance of long-term debt 493 - 1,082 958 1,578 Dividends paid to non-controlling interests - (1) - (40) (67) Cash proceeds from exercise of stock options 6 6 1 14 10 Purchase of treasury shares - (3) - (40) (57) --------- --------- --------- --------- --------- Net cash provided by (used for) financing activities (209) (258) (12) (574) (926) Net cash provided by (used for) continuing operations (90) (137) (79) (95) (953) Cash flows from discontinued operations: Net cash provided by (used for) operating activities - - - - 20 Net cash provided by (used for) investing activities - - (31) (45) 791 Net cash provided by (used for) financing activities - - - - (2) --------- --------- --------- --------- --------- Net cash provided by (used for) discontinued operations - - (31) (45) 809 Net cash from continuing and discontinued operations (90) (137) (110) (140) (144) Effect of changes in exchange rates on cash positions 5 2 (12) 14 (21) --------- --------- --------- --------- --------- Increase (decrease) in cash and cash equivalents (85) (135) (122) (126) (165) Cash and cash equivalents at beginning of period 702 837 865 743 908 --------- --------- --------- --------- --------- Cash and cash equivalents at end of period 617 702 743 617 743 --------- --------- --------- --------- --------- NXP Semiconductors Table 4: Reconcilliation of GAAP to non-GAAP Segment Results (unaudited) --------------------------------------------------------------------------- ($ in millions) Three Months Ended Full year ------------------------------- -------------------- Dec 31, Sept 30, Dec 31, 2012 2012 2011 2012 2011 --------- --------- --------- --------- --------- High Performance Mixed Signal (HPMS) 868 901 659 3,282 2,906 Standard Products 198 213 198 832 925 --------- --------- --------- --------- --------- Product Revenue 1,066 1,114 857 4,114 3,831 Manufacturing Operations 43 49 62 211 316 Corporate and Other 7 7 12 33 47 --------- --------- --------- --------- --------- Total Revenue $ 1,116 $ 1,170 $ 931 $ 4,358 $ 4,194 ========= ========= ========= ========= ========= --------------------------------------------------------------------------- HPMS Revenue $ 868 $ 901 $ 659 $ 3,282 $ 2,906 Percent of Total Revenue 77.8% 77.0% 70.8% 75.3% 69.3% HPMS segment GAAP gross profit 453 463 321 1,745 1,573 PPA effects - (1) (4) (10) (18) Restructuring (1) - (20) (1) (20) Other incidentals (1) (1) - (4) - Other adjustments - - - 46 - --------- --------- --------- --------- --------- HPMS segment non- GAAP gross profit $ 455 $ 465 $ 345 $ 1,714 $ 1,611 ========= ========= ========= ========= ========= HPMS segment GAAP gross margin 52.2% 51.4% 48.7% 53.2% 54.1% HPMS segment non- GAAP gross margin 52.4% 51.6% 52.4% 52.2% 55.4% HPMS segment GAAP operating profit 119 178 20 527 339 PPA effects (47) (47) (53) (198) (218) Restructuring (26) 1 (38) (24) (43) Other incidentals (4) 16 - - (1) Other adjustments - - - 46 - --------- --------- --------- --------- --------- HPMS segment non- GAAP operating profit $ 196 $ 208 $ 111 $ 703 $ 601 ========= ========= ========= ========= ========= HPMS segment GAAP operating margin 13.7% 19.8% 3.0% 16.1% 11.7% HPMS segment non- GAAP operating margin 22.6% 23.1% 16.8% 21.4% 20.7% --------------------------------------------------------------------------- Standard Products Revenue $ 198 $ 213 $ 198 $ 832 $ 925 Percent of Total Revenue 17.7% 18.2% 21.3% 19.1% 22.1% Standard Products segment GAAP gross profit 41 73 67 238 336 PPA effects - (1) (1) (2) (1) Restructuring (15) 1 (4) (15) (5) Other incidentals - - - - - --------- --------- --------- --------- --------- Standard Products segment non-GAAP gross profit $ 56 $ 73 $ 72 $ 255 $ 342 ========= ========= ========= ========= ========= Standard Products segment GAAP gross margin 20.7% 34.3% 33.8% 28.6% 36.3% Standard Products segment non-GAAP gross margin 28.3% 34.3% 36.4% 30.6% 37.0% Standard Products segment GAAP operating profit (12) 22 17 37 141 PPA effects (13) (13) (14) (52) (57) Restructuring (19) - (5) (19) (6) Other incidentals - 2 (1) 1 - --------- --------- --------- --------- --------- Standard Products segment non-GAAP operating profit $ 20 $ 33 $ 37 $ 107 $ 204 ========= ========= ========= ========= ========= Standard Products segment GAAP operating margin -6.1% 10.3% 8.6% 4.4% 15.2% Standard Products segment non-GAAP operating margin 10.1% 15.5% 18.7% 12.9% 22.1% --------------------------------------------------------------------------- NXP Semiconductors Table 4: Reconcilliation of GAAP to non-GAAP Segment Results (unaudited) (con't) --------------------------------------------------------------------------- ($ in millions) Three Months Ended Full year ------------------------------- -------------------- Dec 31, Sept 30, Dec 31, 2012 2012 2011 2012 2011 --------- --------- --------- --------- --------- Manufacturing Operations Revenue $ 43 $ 49 $ 62 $ 211 $ 316 Percent of Total Revenue 3.9% 4.2% 6.7% 4.8% 7.5% Manufacturing Operations segment GAAP gross profit (10) (2) (7) (22) (48) PPA effects (2) (2) (1) (8) (8) Restructuring (4) (1) 1 (7) (12) Other incidentals (1) (1) (5) (5) (18) --------- --------- --------- --------- --------- Manufacturing Operations segment non-GAAP gross profit $ (3) $ 2 $ (2) $ (2) $ (10) ========= ========= ========= ========= ========= Manufacturing Operations segment GAAP gross margin -23.3% -4.1% -11.3% -10.4% -15.2% Manufacturing Operations segment non-GAAP gross margin -7.0% 4.1% -3.2% -0.9% -3.2% Manufacturing Operations segment GAAP operating profit (15) (6) (10) (36) (60) PPA effects (6) (5) (6) (23) (26) Restructuring (4) (1) 2 (7) (12) Other incidentals (1) (2) (4) (3) (17) --------- --------- --------- --------- --------- Manufacturing Operations segment non-GAAP operating profit $ (4) $ 2 $ (2) $ (3) $ (5) ========= ========= ========= ========= ========= Manufacturing Operations segment GAAP operating margin -34.9% -12.2% -16.1% -17.1% -19.0% Manufacturing Operations segment non-GAAP operating margin -9.3% 4.1% -3.2% -1.4% -1.6% --------------------------------------------------------------------------- Corporate and Other Revenue $ 7 $ 7 $ 12 $ 33 $ 47 Percent of Total Revenue 0.6% 0.6% 1.2% 0.8% 1.1% Corporate and Other segment GAAP gross profit 6 2 8 27 45 PPA effects - - - - - Restructuring - - - - - Other incidentals - - - - - --------- --------- --------- --------- --------- Corporate and Other segment non-GAAP gross profit $ 6 $ 2 $ 8 $ 27 $ 45 ========= ========= ========= ========= ========= Corporate and Other segment GAAP gross margin NM NM NM NM NM Corporate and Other segment non-GAAP gross margin NM NM NM NM NM Corporate and Other segment GAAP operating profit (59) (26) (20) (116) (63) PPA effects - - - - - Restructuring (49) (4) (18) (61) (29) Other incidentals (7) (11) (4) (34) (44) --------- --------- --------- --------- --------- Corporate and Other segment non-GAAP operating profit $ (3) $ (11) $ 2 $ (21) $ 10 ========= ========= ========= ========= ========= Corporate and Other segment GAAP operating margin NM NM NM NM NM Corporate and Other segment non-GAAP operating margin NM NM NM NM NM NXP Semiconductors Table 5: Financial Reconcilliation of GAAP to non-GAAP Results (unaudited) --------------------------------------------------------------------------- ($ in millions except share data) Three Months Ended Full year ------------------------------ -------------------- Dec 31, Sept 30, Dec 31, 2012 2012 2011 2012 2011 -------- -------- -------- -------- -------- Revenue $ 1,116 $ 1,170 $ 931 $ 4,358 $ 4,194 GAAP Gross profit $ 490 $ 536 $ 389 $ 1,988 $ 1,906 PPA effects (2) (4) (6) (20) (27) Restructuring (20) - (23) (23) (37) Other incidentals (2) (2) (5) (9) (18) Other adjustments - - - 46 - -------- -------- -------- -------- -------- Non-GAAP Gross profit $ 514 $ 542 $ 423 $ 1,994 $ 1,988 ======== ======== ======== ======== ======== GAAP Gross margin 43.9% 45.8% 41.8% 45.6% 45.4% Non-GAAP Gross margin 46.1% 46.3% 45.4% 45.8% 47.4% GAAP Research and development $ (171) $ (153) $ (151) $ (628) $ (635) PPA effects - - - - - Restructuring (23) - (18) (22) (22) Other incidentals (1) (3) - (12) (2) -------- -------- -------- -------- -------- Non-GAAP Research and development $ (147) $ (150) $ (133) $ (594) $ (611) ======== ======== ======== ======== ======== GAAP Selling, general and administrative $ (288) $ (236) $ (236) $ (977) $ (918) PPA effects (64) (61) (67) (253) (274) Restructuring (55) (4) (18) (67) (31) Other incidentals (8) (10) (7) (36) (29) -------- -------- -------- -------- -------- Non-GAAP Selling, general and administrative $ (161) $ (161) $ (144) $ (621) $ (584) ======== ======== ======== ======== ======== GAAP Other income (expense) $ 2 $ 21 $ 5 $ 29 $ 4 PPA effects - - - - - Restructuring - - - 1 - Other incidentals (1) 20 3 21 (13) -------- -------- -------- -------- -------- Non-GAAP Other income (expense) $ 3 $ 1 $ 2 $ 7 $ 17 ======== ======== ======== ======== ======== GAAP Operating income (loss) $ 33 $ 168 $ 7 $ 412 $ 357 PPA effects (66) (65) (73) (273) (301) Restructuring (98) (4) (59) (111) (90) Other incidentals (12) 5 (9) (36) (62) Other adjustments - - - 46 - -------- -------- -------- -------- -------- Non-GAAP Operating income (loss) $ 209 $ 232 $ 148 $ 786 $ 810 ======== ======== ======== ======== ======== GAAP Operating margin 3.0% 14.4% 0.8% 9.5% 8.5% Non-GAAP Operating margin 18.7% 19.8% 15.9% 18.0% 19.3% GAAP Financial income (expense) $ (153) $ (33) $ (165) $ (437) $ (257) Foreign exchange gain (loss) on debt 31 48 (65) 28 128 Gain (loss) on extinguishment of long term debt (114) (11) (7) (161) (32) Other financial expense (15) (5) (19) (38) (46) -------- -------- -------- -------- -------- Non-GAAP Financial income (expense) $ (55) $ (65) $ (74) $ (266) $ (307) ======== ======== ======== ======== ======== GAAP Income tax benefit (provision) $ 7 $ (6) $ (2) $ (1) $ (21) Other adjustments 17 3 4 27 4 -------- -------- -------- -------- -------- Non-GAAP Cash tax (expense) $ (10) $ (9) $ (6) $ (28) $ (25) ======== ======== ======== ======== ======== GAAP Results relating to equity-accounted investees $ 15 $ 2 $ (15) $ (27) $ (77) Other adjustments 15 2 (15) (27) (77) -------- -------- -------- -------- -------- Non-GAAP Results relating to equity- accounted investees $ - $ - $ - $ - $ - ======== ======== ======== ======== ======== GAAP Income (loss) from continuing operations $ (98) $ 131 $ (175) $ (53) $ 2 PPA effects (66) (65) (73) (273) (301) Restructuring (98) (4) (59) (111) (90) Other incidentals (12) 5 (9) (36) (62) Other adjustments (66) 1) 37 (102) (125) 1) (23) -------- -------- -------- -------- -------- Non-GAAP Income (loss) from continuing operations $ 144 $ 158 $ 68 $ 492 $ 478 ======== ======== ======== ======== ======== GAAP Income (loss) on discontinued operations - net of tax $ - $ - $ 2 $ 1 $ 434 Other adjustments - - 2 1 434 -------- -------- -------- -------- -------- Non-GAAP Income (loss) from discontinued operations $ - $ - $ - $ - $ - ======== ======== ======== ======== ======== GAAP Net income (loss) attributable to stockholders $ (116) $ 115 $ (182) $ (115) $ 390 PPA effects (66) (65) (73) (273) (301) Restructuring (98) (4) (59) (111) (90) Other incidentals (12) 5 (9) (36) (62) Other adjustments (66) 37 (100) (124) 411 -------- -------- -------- -------- -------- Non-GAAP Net income (loss) attributable to stockholders $ 126 2)$ 142 $ 59 $ 429 2)$ 432 ======== ======== ======== ======== ======== GAAP Weighted average shares - diluted 248,505 253,060 247,586 248,064 248,812 Non-GAAP Adjustment 5,474 - 2,329 5,007 4,086 -------- -------- -------- -------- -------- Non-GAAP Weighted average shares - diluted 253,979 253,060 249,915 253,071 252,898 ======== ======== ======== ======== ======== GAAP Diluted net income (loss) attributable to stockholders per share $ (0.47) $ 0.45 $ (0.73) $ (0.46) $ 1.57 Non-GAAP Diluted net income (loss) attributable to stockholders per share $ 0.50 $ 0.56 $ 0.24 $ 1.70 $ 1.71 --------------------------------------------------------------------------- 1) Includes: During 4Q12: Foreign exchange gain on debt: $31 million; Loss on extinguishment of long-term debt: ($114) million; Other financial expense: ($15) million; Results relating to equity-accounted investees: $15 million; and difference between book and cash income taxes: $17 million; for the full year 2012: Other adjustments Cost of Revenue $46 million; Foreign exchange gain on debt: $28 million; Loss on extinguishment of long-term debt: $(161) million; Other financial expense: $(38) million; Results relating to equity-accounted investees: $(27) million; and difference between book and cash income taxes: $27 million. 2) During 4Q12: Includes stock based compensation expense of $16 million; for the full year 2012: Includes stock based compensation expense of $48 million. Stock based compensation expense of $4 million, which resulted from a modification, is not included in the full year 2012 non-GAAP results. NXP Semiconductors Table 6: Adjusted EBITDA (unaudited) ---------------------------------------------------------------------------- ($ in millions) Three Months Ended Full year ------------------------------- --------------------- Dec 31, Sept 30, Dec 31, 2012 2012 2011 2012 2011 --------- --------- --------- --------- ---------- Net Income $ (98) $ 131 $ (173) $ (52) $ 436 Income (loss) on discontinued operations - - 2 1 434 --------- --------- --------- --------- ---------- Income (loss) from continuing operations $ (98) $ 131 $ (175) $ (53) $ 2 ========= ========= ========= ========= ========== Reconciling items to EBITDA Financial (income) expense 153 33 165 437 257 Benefit (provision) for income taxes (7) 6 2 1 21 Depreciation 63 59 78 247 290 Amortization 69 69 73 286 301 --------- --------- --------- --------- ---------- EBITDA $ 180 $ 298 $ 143 $ 918 $ 871 ========= ========= ========= ========= ========== Reconciling items to adjusted EBITDA Results of equity- accounted investees (15) (2) 15 27 77 Restructuring 1) 98 3 55 109 85 Other incidental items 1) 11 (5) 8 34 61 Other adjustments - - - (46) - --------- --------- --------- --------- ---------- Adjusted EBITDA $ 274 $ 294 $ 221 $ 1,042 $ 1,094 ========= ========= ========= ========= ========== Trailing twelve month adjusted EBITDA $ 1,042 $ 989 $ 1,094 $ 1,042 $ 1,094 ---------------------------------------------------------------------------- 1) Excluding depreciation property, plant and equipment related to: Restructuring - 1 4 2 5 Other incidental items 1 - 1 2 1 Source: NXP Semiconductors |