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NXP Semiconductors reports second quarter 2019 results



<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "EINDHOVEN, The Netherlands, July 29, 2019 (GLOBE NEWSWIRE) – NXP Semiconductors NV ( NXPI ) today reported financial results for the second quarter of 2019, completed June 30, 2019. "data-reactid =" 11 "> EINDHOVEN, The Netherlands, July 29, 2019 (GLOBE NEWSWIRE) – NXP Semiconductors NV (NXPI) today reported second quarter 2019 financial results, ending June 30, 201
9.

“NXP delivered $ 2.2 billion in revenue during the second quarter. With sales slightly better than the center of our guidance, and good cost control, we delivered improved operational profitability across the high end of our guidance area. During the quarter, we also provided $ 716 million to our shareholders in accordance with our long-term return on investment policy. Looking ahead, we continue to be optimistic that investments in our product portfolio will meet customer long-term requirements, while in the short term the global demand environment has generally not improved, says Richard Clemmer, CEO of NXP.

<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Highlights " data-reactid = "13"> Highlights

  • Revenues were $ 2.2 billion, down 3 percent from a year earlier.
  • GAAP gross margin was 51.9 percent and GAAP operating margin was 7.1 percent;
  • Non-GAAP gross margin was 53.3 percent and non-GAAP operating margin was 28.9 percent;
  • Cash flow from operations was $ 517 million, with net capital injection of $ 106 million, resulting in non-GAAP free cash flow of $ 411 million;
  • 29. In May 2019, NXP announced that it had entered into a definitive agreement to purchase Marvell's Wireless Connectivity Portfolio in an all-cash asset transaction valued at $ 1.76 billion.

<p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8 cm) – sm" type = "text" content = " Summary of reported second quarter 2019 ($ million, unaudited) (1) "data-reactid =" 20 "> Summary of reported second quarter 2019 ($ million, unaudited) (1)

[19659421]
[19659041] Q2 2019 [19659003] Q1 2019 Q2 2018 [19659120] Q – Q [19659170] Y – Y
Total Income $ 2,217 $ 2,094 [19659027] $ 2,290 6 % -3 %
GAAP Gross Profit $ 1 151 $ 1,072 [19659060] $ [19659024] 1,180 7 % -2 %
Gross Performance Adjustment (i) $ (30 ) $ [19659046] (32 ) $ (30 )
Non-GAAP Gross Profit $ 1,181 $ 1 104 $ [19659024] 1,210 7 % -2 %
GAAP Gross Margin 51.9 % [19659046] 51.2 % 19659108] 51.5 %
Non-GAAP gross margin 53.3 % 52 , 7 % 52.8 %
GAAP Operating Income / (Loss) $ 157 [19659060] $ 54 $ [19659024] 137 191 % 15 %
Adjustments to revenue (i) (483 ) (505 ) (481 ) [19659041] Non-GAAP operating income $ 640 $ 559 [19659236] $ 618 14 % 4 %
GAAP Operating Margin 7.1 [19659110]% [19659048] 2.6 % 6.0 %
Non-GAAP Operating Margin 28.9 % [19659116] 26.7 % 27.0 % 19659288]
Additional Information

19659122]

Automotive $ 1,031 $ 1,036 $ 1,143 ] [19659133] 0% -10%
Industrial & IoT $ 390 $ ] 368 $ 45 4 6% -14%
Mobile $ 297 $ 19659109] 241 $ 238 23% 25%
Comm. Infra. & Other $ 499 $ 449 $ 419 11% 19%
Manufacturing Services ("MSA") $ $ – [19659110] $ 36 NM [19659170] NM
DIO 100 113 111
DPO 67 74 90
DSO 32 35 31 [19659041] Cash Conversion Cycle 65 74 [19659121] 52
Channel Inventory (months) 2.4 2.4 2.4 [19659121]
Financial Leverage (ii) 1.7x 1.7x 0.7x 19659457]
  1. Additional Information for Second Quarter 2019 :

    19659469] For one explanation of GAAP for non-GAAP adjustments, see "Non-GAAP Financial Measures" on page 2. of this release.

  2. Financial debt, is defined as net debt spread over subsequent twelve months adjusted EBITDA. [19659471] During the second quarter of 2019, NXP repurchased 6.6 million shares at a total cost of $ 645 million; and paid a cash dividend of $ 71 million.
  3. The weighted average number of diluted shares for the three-month period ended June 30, 2019 was 285.1 million.
  4. Cash paid for income tax related to ongoing operations was $ 30 million. Items not related to ongoing business resulted in additional cash payments of $ 36 million, mainly due to the sale of the Standard Products business.
  5. <p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8 em) – sm" type = "text" content = " Third Quarter Guide 2019: (Million Dollar) (1) "data-reactid =" 29 "> Third Quarter Guide 2019: (Million Dollar) (1)

    [19659018]
    Guidance Range
    [1 9459025]

    [19659121]
    GAAP ] Reconciliation non-GAAP
    low Mid High Low Mid High
    Total income $ 2,210 $ 2,240 $ 2,270 $ $ 2,210 $ [19659024] 2,240 $ 2,270
    QQ 0 % 1 % [19659048] 2 % 0 % 1 % [19659108] 2 %
    YY -10 % – 8 % -7 % -10 % -8 % -7 %
    Gross Prof it $ [19659024] 1 151 $ 1,173 $ 1,196 $ (29 ) $ 1,180 $ 1202 $ 1,225 [19659020]
    Gross Margin [19659048] 52.1 % 52.4 % 52.7 % [19659046] 53.4 % 53.7 % 54.0 [19659110]%
    Revenue (loss) $ 167 $ 180 [19659056] $ 193 $ (485 ) $ [19659024] 652 [19659060] $ 665 $ 678
    Operating Margin 7.6 % 8.0 % 19659109] 8.5 % 29.5 % 29.7 % 29.9 % [19659247] Financial income (Exp. ense) $ (84 ) $ (84 ) $ (84 ) $ (15 ) $ (69 ) $ (69 ) [19659018] $ (69 )
    [19659018]

    < p class = "canvas atom canvas text Mb (1.0 em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Note (1) Additional Information: [19659004] "data-reacti d =" 32 "> Note (1) Additional Information:

    1. GAAP Gross Profit Expected to Include Purchase Price Account (" PPA "), ($ 19 million ); Equity-based compensation ($ 10 million);
    2. GAAP Revenue (loss) is expected to include PPA effects, ($ 378 million); Equity-based compensation ($ 87 million); Merger-related costs ($ 10 million); Restructuring and other cases, ($ 10 million);
    3. GAAP Financial income (expenditure) is expected to include Other financial expenses ($ 15 million);
    4. Net cash paid for income tax related to ongoing business is expected to be approximately ($ 41 million);
    5. Non-controlling interest is expected to be approximately ($ 10 million);
    6. Weighted average diluted share is estimated to be about 284 million.

    <p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "NXP has based the guide included in this the release of judgments and estimates that management believes are reasonable given its assessment of historical trends and other information reasonably available from the date of this release. Please note that the guidance included in this release consists of predictions only and is subject to a a wide range of known and unknown risks and uncertainties, many of which are beyond the control of NXP. & nbsp; The guide ink Luded in this release should not be considered as representations by NXP that the estimated results will be achieved. & nbsp; Actual results may differ substantially from the guidance we provide today. & nbsp; For non-GAAP financial information, see the Note on "Non-GAAP Financial Measures" below. & nbsp; For factors, risks and uncertainties such as judgments, estimates and Forward-looking statements are generally subject, see the note for "Forward-looking statements." & nbsp; We assume no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein, to reflect future events or circumstances . & Nbsp; "data-reactid =" 40 "> 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 from the date of this release. Please note that the guidance included in this release consists of predictions only, and is subject to a host of known and unknown risks and uncertainties, many of which are outside NXP's control. The guidance included in this release should not be considered as representations of the NXP that the estimated results will be achieved Actual results may differ materially from the guidance we provide today. In relation to the use of non-GAAP financial information, see the note on "Non-GAAP Financial Measures" below. and uncertainties that are generally subject to judgments, estimates, and forward-looking statements, see the Note on "Forward-looking Statements." any obligations to update or revise any forward-looking statements, including the guidance provided herein, to reflect future events or circumstances .

    <p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Non-GAAP Financial Measures [19659004] "data-reactid =" 41 "> Non-GAAP financial measures

    In the management of NXP's business on a consolidated basis, the management develops an annual operating plan approved by our board of directors, uses non-GAAP financial measures. In measuring performance against this plan, management considers the actual or potential impacts of these non-GAAP financial measures from measures implemented to reduce costs with the goal of increasing our gross margin and operating margin and when assessing appropriate levels of research and development efforts. . In addition, management relies on these non-GAAP financial measures when making decisions about product spending, administrative budgets, and other operating expenses. We believe that these non-GAAP financial measures, together with the GAAP results and reconciliations with similar GAAP financial measures, provide a more complete understanding of the Company's results of operations and the factors and trends affecting NXP's operations. We believe that they allow investors to make further comparisons of our operating results, assess our liquidity and capital position, and analyze financial performance excluding the effect of non-operating expenses, certain non-cash expenses and stock-based compensation costs that may obscure. trends in NXP's underlying performance. This information also enables investors to compare financial performance between periods where certain items may vary independently of business performance, and allows for greater transparency with respect to key metrics used by management.

    <p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "These non-GAAP financial measures provided in in addition to, and not as a substitute for, or better than, financial performance measurements prepared in accordance with GAAP, the presentation of these and other similar items in NXP's non-GAAP financial performance shall not be interpreted as implying that these items are non-recurring , rare or unusual. & nbsp; Reconciliation of these non-GAAP measures to the most comparable measures calculated in accordance with GAAP is provided in the financial statements for this release in a schedule entitled "Financial Reconciliation of GAAP to Non-GAAP Results ( not revised). ”Please refer to the NXP Historical Financial Model file found on the Financial Information page of the Investor Relations section of our website at https://investors.nxp.com for further information. related to our justification for using these non-GAAP financial measures, as well as the impact of these measures on the presentation of NXP's business. "data-reactid =" 43 "> These non-GAAP financial measures are provided in addition to, and not as a substitute for, or better than, financial performance measures prepared in accordance with GAAP. The presentation of these and other similar elements in NXPs Non-GAAP financial results should not be construed as implying that these items are one-time, rare or unusual, and reconciliation of these non-GAAP measures with the most comparable measures calculated in accordance with GAAP is provided in the financial statements section of this release. schedule titled “Financial Reconciliation of GAAP to Non-GAAP Results (unaudited).” Please refer to the NXP Historical Financial Model File found on the Financial Information section of the Investor Relations section of our website at https: //investors.nxp. com for further information related to our rationale for using these non-GAAP financial measures., as well as the impact of these measures on the the ion of NXP's business.

    In addition to providing financial information on a basis consistent with United States generally accepted accounting principles ("GAAP"), NXP also provides the following selected financial measures on a non-GAAP basis: (i) Gross profit, (ii) Gross margin, (iii) Research and development, (iv) Sales, general and administrative, (v) Amortization of acquisition-related intangible assets, (vi) Other income, (vii) Operating income (loss), (viii) ) Operating margin, (ix) Financial income (expense), (x) adjusted net income, adjusted EBITDA and subsequent 12 months adjusted EBITDA, and (xi) free cash flow and free cash flow as a percentage of income. The non-GAAP information excludes amortization of acquisition-related intangible assets, purchase accounting effect on inventory and property, plant and equipment, merger-related costs (including integration costs), certain items related to sales, share-based compensation costs, restructuring and write-down of assets, non-current assets, non-GAAP extinguishing debt and foreign exchange gains and losses.

    <p class = "Canvas Atom Canvas Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Conference Call and Webcast Information [19659004] "data-reactid =" 49 "> Conference Call and Webcast Information

    NXP will host a conference call July 30, 2019, 8:00 AM Eastern time (2:00 PM Central European time) for to discuss the results for the second quarter of 2019 and to provide the outlook for the third quarter of 2019.

    <p class = "canvas-atom canvas text Mb (1.0 em) Mb (0) – sm Mt (0.8 em) – sm "type =" text "content =" Interested parties can participate in the conference call by calling 1 – 888 – 603 – 7644 (in the United States) or 1 – 484 – 747 – 6631 (outside the United States). The participant's passcode is 6381567. To listen to a webcast of the event, please visit the Investor Relations section of the NXP website at https://investors.nxp.com The webcast will be recorded and available for playback shortly after that the call has ended. "Data-reactid =" 51 "> Interested parties can participate in the conference call by calling 1 – 888 – 603 – 7644 (in the United States) or 1 – 484 – 747 – 6631 (outside the United States). The participant's password code is 6381567. To listen For a webcast of the event, please visit the Investor Relations section of NXP's website at https://investors.nxp.com The webcast will be recorded and available for playback shortly after the call has ended.

    <p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " About NXP Semiconductors "data-reactid =" 52 "> About NXP Semiconductors

    <p class =" canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" NXP Semiconductors NV ( NXPI ) enables secure connections and infrastructure for a smarter world, promoting solutions that make life as Asian, better and safer. As the world leader in secure connectivity solutions for embedded applications, NXP drives innovation in the secure connected vehicle, end-to-end security & amp; privacy and smart connected solutions markets. Built on more than 60 years of combined experience and expertise, it has approximately 30,000 employees in more than 30 countries and sales for $ 9.41 billion in 2018. Find out more at www.nxp.com . "Data -reactid =" 53 "> NXP Semiconductors NV (NXPI) enables secure connections and infrastructure for a smarter world, and promotes solutions that make life easier, better and safer. As a world leader in secure connectivity solutions for embedded applications, NXP drives innovation in based on more than 60 years of combined experience and expertise, the company has approximately 30,000 employees in more than 30 countries and generated sales of $ 9.41 billion in 2018. Find out more at www.nxp.com .

    <p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Forward-looking statements [19659004] "data-reactid =" 54 "> Forward-looking statements

    <p class =" canvas-atom canvas-text Mb ( 1.0em) Mb (0) – sm Mt (0.8 em) – sm "type =" text "content =" This document contains future Statements that include statements about NXP's business strategy, financial condition, operating results and market data, as well as other statements that are not historical. facts & nbsp; By their nature, forward-looking statements are subject to many factors, risks and uncertainties that may cause actual outcomes and results to be significantly different from those estimated. & Nbsp; These factors, risks and uncertainties include the following: market demand and semiconductor industry conditions; the opportunity to introduce new technologies and products to successfully end-market demand for the products in which NXP's products are incorporated; the ability to generate sufficient cash, raise sufficient capital or refinance the company's debt on or before maturity; the ability to meet the combination of requirements for the company's debt services, research and development and capital investment; the ability to accurately estimate demand and match production capacity accordingly, or obtain supplies from third-party manufacturers; access to production capacity from third-party outsourcing partners; any events that may affect third-party business partners or NXP's relationship with them; & nbsp; the ability to ensure adequate and timely supply of equipment and materials from suppliers; the ability to avoid operational problems and product defects and, if such problems occur, to remedy them quickly; the ability to form strategic partnerships and joint ventures and to collaborate with alliance partners. the ability to win competitive bid selection processes to develop products for use in customer equipment and products; the ability to achieve targeted efficiency and cost savings; & nbsp; the ability to hire and retain key management and senior product architects; and the ability to maintain good relationships with our suppliers. & nbsp; In addition, this document contains information about the semiconductor industry and NXP's business in general, which is forward-looking and builds on a number of assumptions about the ways the semiconductor industry, NXP's markets and product areas can evolve. & Nbsp; NXP has based these assumptions on information that is currently available. If one or more of these assumptions prove to be incorrect, actual results may differ from those predicted. & Nbsp; Although NXP does not know the impact such differences may have on its business, future operating results and financial conditions could be significantly affected if such differences occur. & Nbsp; Readers are cautioned not to place undue reliance on these forward-looking statements, which only speak to the results from the date the statements were issued. & Nbsp; Except for any ongoing obligation to disclose material information required by US federal securities law, NXP has no intention or obligation to publicly update or revise any forward-looking statements after we distribute this document, whether to reflect future events or circumstances or other . & nbsp; 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 the Investor Relations website, https://investors.nxp.com or from the SEC website, www.sec.gov . "Data-reactid =" 55 "> This document includes forward-looking statements that include statements about NXP's business strategy, financial condition, operating results and market data, as well as other statements that are not historical facts. Actual outcomes and results are 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 # 39; s products are incorporated; the ability to generate sufficient cash, raise sufficient capital or refinance corporate debt or maturity; the ability to meet the combination of corporate debt service, research and development and capital investment requirements; 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 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 achieve targeted efficiencies and cost savings; 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 regarding the semiconductor industry and NXP's business 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 markets 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 results may differ from those predicted. While NXP does not know the impact any such differences may have on its business, if such differences exist, 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, https://investors.nxp.com or from the SEC website, www.sec.gov.

    <p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For further information, please contact:" data-reactid="56">For further information, please contact:

                   
    NXP Semiconductors              
    Table 1: Condensed consolidated statement of operations (unaudited)          
                   
                   
    ($ in millions except sha re data)   Three Months Ended  
        June 30, 2019   March 31, 2019   July 1, 2018  
                   
    Revenue   $    2,217     $    2,094     $    2,290    
    Cost of revenue       (1,066 )       (1,022 )       (1,110 )  
                   
    Gross profit       1,15 1         1,072         1,180    
    Research and development       (408 )       (415 )       (438 )  
    Selling, general and administrative       (230 )       (248 )       (242 )  
    Amortization of acquisition-related intangible assets       (355 )       (357 )       (363 )  
    Total operating expenses       (993 )    [19659481]  (1,020 )       (1,043 )  
    Other income (expense)       (1 )       2         –    
                   
    Operating income (loss)       157         54         137    
    Financial income (expense):              
    Extinguishment of debt       (10 )        [1 9659480]    (26 )  
    Other financial income (expense)       (79 )       (83 )       (45 )  
    Income (loss) before taxes       68         (29 )       66    
    Benefit (provision) for income taxes       (21 )       9         (4 )  
    Results relating to equity-accounted investees       (1 )       4         4[19660009]   
                   
    Net income (loss)       46         (16 )       66    
    Less: Net income (loss) attributable to non-controlling interests       5         5         12    
    Net income (loss) attributable to stockholders       41         (21 )       54    
                   
    Earnings per share d ata:     [19659379]         
    Net income (loss) per common share attributable to stockholders in $:          
                   
    Basic   $   0.15     $   (0.07 )   $   0.16    
    Diluted   $   0.14     $   (0.07 )   $   0.16    
                   
    Weighted average number of shares of common stock outstanding during the period (in thousands):      
           [1 9659288]       
    Ba sic     281,241       287,227       344,120    
    Diluted     285,088       287,227       347,027    
                   
                   

     

                 
    NXP Semiconductors            
    Table 2: Condensed consolidated balance sheet (unaudited)          [19660402] 
                 [19659408]             
    ($ in millions)   As of
        June 30, 2019   March 31, 2019   July 1, 2018
                 
    Current assets:            
    Cash and cash equivalents   $   3,030   $   2,192   $   2,981
    Accounts receivable, net       780       800       790
    Assets held for sale       81       –       –
    Inventories, net       1,144[19659379]      1,241       1,326
    Other current assets       396       387       414
    Total current assets       5,431       4,620       5,511
                 
    Non-current assets:            
    Other non-current assets       706       699       793
    Property , plant and equipment, net       2,397       2,407       2,352[19659907]Identified intangible assets, net       3,737       4,094       5,127
    Goodwill       8,788       8,852       8,861
    Total non-current assets       15,628       16,052       17,133
                 
    Total assets       21,059       20 ,672       22,644
                 
    Current liabi lities:            
    Accounts payable       770       815       1,072
    Restructuring liabilities-current       53       66       64
    Other current liabilities       983       1,264       712
    Short-term debt       1,177       1,117       2
    Total current liabilities       2,983       3,262       1,850
         [19659379]       
    Non-current liabilities:            
    Long-term debt       7,361       6,223       5,341
    Restructuring liabilities       –       4       9
    Deferred tax liabilities       337       390       579
    Other non-current liabilities       858       862       976
    Total non-current liabilities       8,556       7,479       6,905
                 
    Non-controlling interests       195       190       159
    Stockholders’ equity       9,325       9,741       13,730
    Total equity       9,520       9,931       13,889
               
    Total liabilities and equity       21,059       20,672       [19659030]22,644
                 

     

                 
    NXP Semiconductors            
    Table 3: Condensed consolidated statement of cash flows (unaudited)        
                 
                 
             [1 9659249]   
    ($ in millions)   Three Months Ended
        June 30, 2019   March 31, 2019   July 1, 2018
                 [19659386]Cash Flows from operating activities            
    Net income (loss)    $    46     $    (16 )   $    66  
    Adjustments to reconcile net income (loss):            
    Depreciation and amortization       506    [19659276]    502         496  
    Stock-based compensation       87         86         69  
    Amortization of discount on debt  [19659480]    11         11         11  
    Amortization of debt issuance costs       3         3         2  
    Net (gain) loss on sale of assets       1         –         –  
    (Gain) loss on extinguishment of debt       10         –       26  
    Results relating to equity accounted investees       1         (4 )       1  
    Changes in deferred taxes    [19659498]  (30 )       (63 )       (67 )
    Changes in operating assets and liabilities:            
    (Increase) decrease in receivables and other current assets       31         (42 )       86  
    (Increase) decrease in inventories       84         38         (76 )
    Increase (decrease) in accounts payable and other current liabilities       (218 )       (250 )       (225 )
    Decrease (Increase) in other non-current assets    [19659498]  (14 )       20         10  
    Exchange differences       1         6         (5 )
    Other items       (2 )       5         9  
    Net cash provided by (used for) operating activities       517         296         403  
                 
    Cash flows from investing activities:            
    Purchase of identified intangible assets       (23 )       (28 )       (10 )
    Capital expenditures on property, plant and equipment       (106 )       (144 )       (129 )
    Purchase of interests in businesses, net of cash acquired       –         –         (18 )
    Proceeds from sale of interests in businesses, net of cash divested       –         37         32  
    Purchase of available-for-sale securities       (15 )       (2 )[19659379]      (7 )
    Proceeds from the sale of securities       –         1         –  
    Net cash provided by (used for) investing activities       (144 )       (136 )       (132 )
         [19659249]       
    Cash flows from financing activities:            
    Repurchase of long-term debt       (553 )       –         (1,273 )
    Principal payments on long-term debt       –         –         (1 )
    Proceeds from the issuance of long-term debt       1,750         –         –  
    Cash paid for debt issuance costs       (23 )       –         –  
    Dividends paid to c ommon stockholders       (71 )       (73 )       –  
    Cash proceeds from exercise of stock options       5         32         10  [19659907]Purchase of treasury shares       (645 )       (715 )       (2 )
    Net cash provided by (used for) financing activities       463         (756 )       (1,266 )
                 
    Effect of changes in exchang e rates on cash positions       2         (1 )       (7 )
    Increase (decrease) in cash and cash equivalents       838         (597 )[19659379]      (1,002 )
    Cash and cash equivalents at beginning of period       2,192         2,789         3,983  
    Cash and cash equivalents at end of period       3,030         [19659058]2,192         2,981  
                 
                 
    Net cash paid during the period for:            [19659416]Interest     78       25       75  
    Income taxes     66       209       3  

     

                 
    NXP Semiconductors            
    Table 4: Financial Reconciliation of GAAP to non-GAAP Results (unaudited)        
                 
                 
    ($ in millions except share data)   Three Months Ended
        June 30, 2019   March 31, 2019   July 1, 2018
                 
    Revenue   $    2,217     $    2,094     $    2,290  
                 
    GAAP Gross profi t   $    1,151     $    1,072     $    1,180  
    PPA effects       (20 )       (17 )       (20 )[19659907]Restructuring       –         (4 )       –  
    Stock Based Compensation       (10 )       (10 )       (8 )
    Merger-related costs       –         (1 )       (2 )
    Non-GAAP Gross profit   $    1,181     $    1,104     $    1,210  
                 
    GAAP Gross margin     51.9 %     51.2 %     51.5 %
                 
    Non-GAAP Gross margin     53.3 %     52.7 %     52.8 %
       [19659288]         
    GAAP Research and development   $   (408 )   $   (415 )   $   (438 )
    Restructuring       (5 )       (11 )       –  
    Stock based compensation  [19659480]    (34 )       (35 )       (32 )
    Merger-related costs       (2 )       (3 )       (2 )
    Non-GAAP Research and development   $   (367 )   $   (366 )   $   (404 )
     [19659249]           
    GAAP Selling, general and administrative   $   (230 )   $   (248 )   $   (242 )
    PPA effects       (2 )       (1 )       (1 )
    Restructuring[19659379]      –         (10 )       –  
    Stock based compensation       (43 )       (41 )       (29 )
    Merger-related costs       (8 )       (9 )       (21 )
    Other incidentals       (3 )       (6 )       (4 )
    Non-GAAP Selling, general and administrative   $   (174 )   $   (181 )   $   (187 )
                 
    GAAP amo rtization of acquisition-related intangible assets   $   (355 )   $   (357 )   $   (363 )
    PPA effects       (355 )       (357 )       (363 )
    Non-GAAP amortization of acquisition-related intangible assets $   –      $   –      $   –   
                 
    GAAP Other income (expense)   $   (1 )   $   2     $   –  
    Restructuring   $   –     $   –    [19659480]$   1  
    Other incidentals       (1 )       –         –  
    Non-GAAP Other income (expense)   $   –      $   2     $   (1 )
                 
    GAAP Operating income (loss)   $    157     $    54     $    137  
    PPA effects       (377 )       (375 )       (384 )
    Restructuring  [19659480]    (5 )       (25 )       1  
    Stock based compensation       (87 )       (86 )       (69 )
    Merger-related costs       (10 )       (13 )       (25 )
    Other incidentals  [19659276]    (4 )       (6 )       (4 )
    Non-GAAP Operating income (loss)   $    640     $    559     $    618  
                 
    GAAP Operating margin     7.1 %     2.6 %     6.0 %
                 
    Non-GAAP Operating margin     28.9 %     26.7 %     27.0 %
                 
    GAAP Financial income (expense)   $   (89 )   $   (83 )   $   (71 )
    Non-cash interest expense on convertible note s       (11 )       (11 )       (11 )
    Foreign exchange gain (loss)       (4 )       (7 )       –  
    Gain (loss) on extinguishment of long-term debt       (10 )       -[19659278]        (26 )
    Other financial expense       (3 )       (4 )       (3 )
    Non-GAAP Financial income (expense)   $    (61 )   $    (61 )   $[19661044]   (31 )
                 
                 

     

                 
    NXP Semiconductors            
    Table 5: Adjusted EBITDA and Free Cash Flow (unaudited)            
                 
                 
    ($ in millions)   Three Months Ended
        June 30, 2019   March 31, 2019   July 1, 2018
                 
    Net Income (loss)   $    46     $    (16 )   $    66  
                 [19659499]Reconciling items to EBITDA            
    Financial (income) expense       89         83         71  
    (Benefit) provision for income taxes       21         (9 )       4  
    Depreciation       128         124         119  
    Amortization       378         378         377  
    EBITDA   $    662     $    560     $    637  
                 
    Reconciling items to adjusted EBITDA            
    Results of equity-accounted investees       1         (4 )       (4 )
    Restructuring       5[19659117]        25         (1 )
    Stock based compensation       87         86         69  
    Merger-related costs       10    [19659276]    13         25  
    Other incidental items       4         6         4  
    Adjusted EBITDA   $    769     $    686     $    730  
               [19659380] 
    Trailing twelve month adjusted EBITDA   $    3,150     $    3,111     $    3,176  
               
                 
                 
                 
    ($ in millions)   Three Months Ended
        June 30, 2019   March 31, 2019   July 1, 2018
                 
    Net cash provided by (used for) operating activities    $    517     $    296     $    403  
    Net capital expenditures on property, plant and equipment       ( 106 )       (144 )       (129 )
                 
    Non-GAAP free cash flow   $    411     $    152     $    274  
    Non-GAAP free cash flow as a percent of Revenue     19 %     7 %     12 %
                 

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