Science & Technology
Science and TechnologyScience and Technology 
Tue, February 15, 2011
NXP Semiconductors Reports Fourth Quarter and Full Year 2010 Results
EINDHOVEN, THE NETHERLANDS--(Marketwire - February 15, 2011) -
Q4 2010 Year 2010 --------- --------- GAAP Gross margin 45.9% 41.4% GAAP Operating margin 9.8% 6.2% GAAP Loss per share ($0.47) ($1.99) Non-GAAP Gross margin 47.1% 42.6% Non-GAAP Operating margin 19.3% 15.6% Non-GAAP Earnings per share $0.37 $1.28 -- Trailing twelve month adjusted EBITDA $1,021 million -- Net debt reduced $604 million this year to $3,653 million -- $1 billion in maturities extended to 2018 -- Announced sale of Sound Solutions business for $855 million in cash
In this release NXP presents financial performance on both a GAAP and non-GAAP basis (defined later in this release). A reconciliation of GAAP to non-GAAP numbers can be found later in this release.
[ NXP Semiconductors N.V. ] (
Note: As announced on December 22, 2010, NXP and Dover Corporation (
"NXP had a very successful year in 2010, as we delivered full year Product Revenue growth of 43 percent, and exited the year with non-GAAP operating margin of over 19 percent in the fourth quarter, outpacing the growth of the broader semiconductor market as well as that of our immediate peers," said Richard Clemmer, NXP Chief Executive Officer. "We continue to execute on our strategy to invest in product differentiation within the High Performance Mixed Signal business and are delivering significant margin expansion through a combination of our redesign efforts as well as ongoing improvements in product mix, operational efficiency, and continued deliberate actions to improve our capital structure. The HPMS segment represented 77 percent of our Product Revenue in 2010.
"Within our HPMS segment full-year revenue grew 42 percent during 2010, while we expanded the segment operating margin by over 15 percentage points, resulting in full-year non-GAAP operating margin of 21 percent in this segment. We experienced robust growth across all of our focused end markets in HPMS, with particular strength in our Automotive, Identification and Wireless Infrastructure, Lighting and Industrial segments, which grew in aggregate at better than 50 percent on a year-on-year basis. We were able to achieve this success even as we experienced headwinds in the computing and television end-markets late in the year, a validation of the importance of successfully servicing a broad range of diverse end-market segments.
"We continue to make significant progress improving our capital structure. Our fourth quarter annualized adjusted EBITDA was $1.2 billion, lowering our implied net debt-to-adjusted EBITDA ratio to approximately 3 times. Additionally, during the fourth quarter, we announced the divesture of our Sound Solutions business. The divesture will enable continued improvement in our capital structure by providing additional capital to reduce our indebtedness and further demonstrates our focus on the HPMS market, which we believe will lead to increased long-term shareholder value," Clemmer said.
Fourth Quarter 2010 GAAP Results
Revenue from continuing operations was $1,078 million, an increase of 1.0 percent from the $1,067 million reported in fourth quarter of 2009 and a decrease of 3.8 percent from the $1,120 million reported in the third quarter of 2010. Revenue in our Manufacturing Operations and Corporate and Other segments declined $44 million sequentially due to lower revenue in our breakeven manufacturing services business and the previously disclosed sale of our Nutune business. Fourth quarter of 2009 revenue included $130 million related to our divested Home segment. Ongoing support for this divested business is now included in our Manufacturing Operations segment. All current and all prior periods have been restated to reflect the divesture of the Sound Solutions business.
Gross profit from continuing operations for the fourth quarter of 2010 was $495 million, or 45.9 percent of revenue. This compares to $370 million, or 34.7 percent of revenue reported in the fourth quarter of 2009 and $476 million, or 42.5 percent of revenue reported in the third quarter of 2010.
Operating income from continuing operations for the fourth quarter of 2010 was $106 million, or 9.8 percent of revenue. This compares to a loss of $216 million reported in the fourth quarter of 2009, or 20.2 percent of revenue, and an operating income of $106 million, or 9.5 percent of revenue as reported in the third quarter of 2010.
Net income for the fourth quarter of 2010 was a loss of $118 million, or a loss of $0.47 per share. This compares to a net loss of $368 million, or a loss of $1.71 per share reported in the fourth quarter of 2009, and net income of $369 million or $1.55 per share (diluted) reported in the third quarter of 2010.
Fourth Quarter 2010 non-GAAP Results
Revenue from continuing operations was $1,078 million, an increase of 1.0 percent from the $1,067 million reported in fourth quarter of 2009 and a decrease of 3.8 percent from the $1,120 million reported in the third quarter of 2010. Product Revenue from continuing operations was $938 million in the fourth quarter of 2010 compared to $820 million in the fourth quarter of 2009 and $936 million in the third quarter of 2010. Current and prior period Product Revenue has been restated to reflect the divesture of the Sound Solutions business in the amounts of $99 million for the fourth quarter of 2010, $94 million for the fourth quarter of 2009 and $93 million for the third quarter of 2010. Product Revenue from continuing operations is the combination of revenue from High Performance Mixed Signal (HPMS) and Standard Products segments.
Non-GAAP gross profit from continuing operations was $508 million, or 47.1 percent of revenue. This compares to $413 million, or 38.7 percent of revenue reported in the fourth quarter of 2009 and $488 million, or 43.6 percent of revenue reported in the third quarter of 2010.
Non-GAAP operating income from continuing operations was $208 million, or 19.3 percent of revenue. This compares to non-GAAP operating income of $59 million, or 5.5 percent of revenue, reported in the fourth quarter of 2009 and non-GAAP operating income of $185 million, or 16.5 percent of revenue reported in the third quarter of 2010.
Non-GAAP net income for the fourth quarter of 2010 was $95 million, or a $0.37 per share (diluted). This compares to a loss of $54 million, or a loss of $0.25 per share reported in the fourth quarter of 2009, and a profit of $94 million or $0.39 per share (diluted) reported in the third quarter of 2010.
2010 Full-Year GAAP Results
Revenue from continuing operations was $4,402 million, an increase of 25.1 percent from the $3,519 million reported for the full year of 2009.
Gross profit from continuing operations was $1,823 million, or 41.4 percent of revenue. This compares to $898 million, or 25.5 percent of revenue reported in 2009.
Operating income from continuing operations was $273 million, or 6.2 percent of revenue. This compares to a loss of $931 million a year ago, or 26.5 percent of revenue reported in 2009.
Net income was a loss of $456 million or a loss of $1.99 per share, as compared to a loss of $167 million or a loss of $0.78 per share reported in 2009.
2010 Full-Year non-GAAP Results
Revenue from continuing operations was $4,402 million, an increase of 25.1 percent from the $3,519 million reported for the full year of 2009.
Product Revenue from continuing operations was $3,694 million compared to $2,578 million reported in 2009. Current and prior period Product Revenue has been restated to reflect the divesture of the Sound Solutions business in the amounts of $354 million for 2010 and $324 million for 2009. Product Revenue from continuing operations is the combination of revenue from HPMS and Standard Products segments.
Non-GAAP gross profit from continuing operations was $1,875 million, or 42.6 percent of revenue. This compares to $1,125 million, or 32.0 percent of revenue reported in 2009.
Non-GAAP operating income from continuing operations was $685 million, or 15.6 percent of revenue. This compares to a loss of $147 million, or 4.2 percent of revenue reported in 2009.
Non-GAAP net income was $298 million or $1.28 per share (diluted), as compared to a loss of $570 million or a loss of $2.65 per share reported in 2009.
Additional Information
-- Utilization in our wafer fabs averaged 97 percent in the fourth quarter 2010 compared to 76 percent a year ago and 99 percent in the prior quarter. Capacity expansion plans began in the fourth quarter of 2010 and will continue throughout 2011. The largest investments are in our SSMC wafer fab in Singapore which primarily supports the high growth areas of our HPMS business. -- Cash balance at the end of the year was $898 million. -- For the full year 2010, NXP generated $359 million of operating cash flow from continuing operations, net of $223 million in payments related to the Redesign Program, the Company's ongoing restructuring program, which began in September 2008. During 2010 net purchases of property, plant and equipment were $227 million. -- Cash paid out for the Redesign Program was $42 million in the fourth quarter, bringing the cumulative total since the beginning of the program to $656 million. We continue to estimate that total program costs through its expected completion at the end of 2011 will be no greater than $725 million. -- SSMC, our consolidated joint-venture wafer fab with TSMC, reported fourth quarter operating income of $40 million, EBITDA of $50 million and had an ending cash balance of $338 million. -- Stock-based compensation was a $9 million benefit in the fourth quarter of 2010, as a result of an adjustment of estimated forfeitures to actual forfeitures, and a $12 million expense for full year 2010. None of the fourth quarter benefit is included in the non-GAAP results. -- NXP announced during the fourth quarter of 2010 the signing of a definitive agreement whereby Knowles Electronics will purchase NXP's Sound Solutions business for $855 million in cash. -- NXP completed its initial public offering (IPO) of 34 million shares on the NASDAQ Global Select Market during the third quarter of 2010. -- NXP completed a bond transaction during the year to extend the maturities of approximately $1 billion of debt to 2018. -- Proceeds from the IPO and the bond transaction, plus cash generated from operations, were used to repurchase $461 million of outstanding debt from a limited number of holders in privately negotiated transactions and to repay $200 million on our revolving credit facility.
First Quarter 2011 Outlook
-- Product Revenue from continuing operations for the first quarter of 2011 is anticipated to be relatively flat as compared to the fourth quarter of 2010. Product Revenue from continuing operations is the combination of revenue from HPMS and Standard Products segments. -- Revenue in our Manufacturing Operations and Corporate and Other segments is anticipated to decline about $50 million in the first quarter due to lower revenue in our breakeven manufacturing services business and, to a lesser degree, the sale of our Nutune business in the fourth quarter. -- Non-GAAP operating income from continuing operations is anticipated to be flat to slightly up compared to the fourth quarter of 2010.
Discussion of GAAP to non-GAAP Reconciliations
NXP provides financial information on both a U.S. generally accepted accounting principles (GAAP) and non-GAAP basis. Reconciliations of these non-GAAP measures to the most comparable measure calculated in accordance with GAAP are provided in this release.
Non-GAAP information should not be considered a substitute for any information derived or calculated in accordance with GAAP. NXP provides this information as an additional insight as to how management assesses the performance and allocation of resources among its various segments and because the financial community uses it in its analysis of NXP's operating performance, historical results and projections of NXP's future operating results.
The non-GAAP measures used herein are not intended to be measures of financial performance or condition, liquidity or profitability 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.
Certain information referred to in this release, including "comparable growth", "non-GAAP gross margin", "non-GAAP operating margin", "EBITDA" and "Adjusted EBITDA", has not been derived in accordance with GAAP and can vary from other participants in our industry. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of NXP's financial results as reported under GAAP. In this release the use of the terms:
-- "Comparable growth" is a non-GAAP financial measure that reflects the relative changes in revenue growth between periods adjusted for the effects of foreign currency exchange rate changes, material acquisitions and divestments. NXP revenue is translated from foreign currencies into our reporting currency, the U.S. dollar, at monthly exchange rates and is impacted by significant foreign currency movement on a period to period basis. In addition, reported revenue may be impacted by material acquisitions and divestments. NXP believe that an understanding of our underlying sales performance on a comparable basis year over year is enhanced after these effects are excluded. -- "Non-GAAP gross profit," "non-GAAP gross margin," "non-GAAP operating margin," "non-GAAP operating income" and "non-GAAP net income" are all non-GAAP financial measures that reflect the underlying operating and profit structure of NXP operations net of purchase price accounting ("PPA"), restructuring, other incidental items and the impact of other non-cash adjustments. -- "EBITDA" and "Adjusted EBITDA" are not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments, debt service requirements and replacement of fixed assets. -- "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. -- "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), gains and losses resulting from our divestment activities. We present other incidental items in our analysis of our results of operations because these costs, gains and losses, have affected the comparability of our results over the years. Conference Call and Webcast Information
NXP will host a conference call to discuss its fourth quarter 2010 results and outlook for the first quarter of 2011 today at 8:00 a.m. U.S. Eastern Time (2:00 p.m. Central European Time). To listen to the webcast, 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. (
Forward-looking Statements
This document includes forward-looking statements which include statements regarding our business strategy, financial condition, results of operations, and market data, as well as any other statements which are not historical facts. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include the following: market demand and semiconductor industry conditions, our ability to successfully introduce new technologies and products, the demand for the goods into which our products are incorporated, our ability to generate sufficient cash, raise sufficient capital or refinance our debt at or before maturity to meet both our debt service and research and development and capital investment requirements, our ability to accurately estimate demand and match our production capacity accordingly or obtain supplies from third-party producers, our access to production from third-party outsourcing partners, and any events that might affect their business or our relationship with them, our ability to secure adequate and timely supply of equipment and materials from suppliers, our ability to avoid operational problems and product defects and, if such issues were to arise, to correct them quickly, our ability to form strategic partnerships and joint ventures and successfully cooperate with our alliance partners, our ability to win competitive bid selection processes to develop products for use in our customers' equipment and products, our ability to successfully establish a brand identity, our ability to successfully hire and retain key management and senior product architects, and, our ability to maintain good relationships with our suppliers. In addition, this document contains information concerning the semiconductor industry and our 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, our market segments and product areas will develop. We have based these assumptions on information currently available to us. If any one or more of these assumptions turn out to be incorrect, actual market results may differ from those predicted. While we do not know what impact any such differences may have on our business, if there are such differences, our future results of operations and our 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, we do 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 Condensed consolidated statements of operations (unaudited) Table 1 -------------------------------------------------------------------------- ($ in millions, except For the three months For the twelve share data) ended months ended ------------------------- ---------------- Q4 2009 Q3 2010 Q4 2010 2009 2010 ------- ------- ------- ------- ------- Revenue 1,067 1,120 1,078 3,519 4,402 Cost of revenue (697) (644) (583) (2,621) (2,579) ------- ------- ------- ------- ------- Gross profit 370 476 495 898 1,823 Research and development expenses (227) (146) (138) (764) (568) Selling expenses (73) (63) (73) (271) (265) General and administrative expenses (296) (162) (178) (781) (701) ------- ------- ------- ------- ------- Total operating expenses (596) (371) (389) (1,816) (1,534) Other income (expense) 10 1 - (13) (16) ------- ------- ------- ------- ------- Operating income (loss) (216) 106 106 (931) 273 Financial income (expense): Interest income (expense), net (83) (80) (80) (359) (318) Foreign exchange gain (loss) (74) 323 (102) 39 (331) Gain on extinguishment of long term debt - 55 - 1,020 57 Other financial expense (4) (19) (10) (18) (36) ------- ------- ------- ------- ------- Income (loss) before income taxes (377) 385 (86) (249) (355) Provision for income taxes 12 (27) 5 (10) (24) ------- ------- ------- ------- ------- Income (loss) after income taxes (365) 358 (81) (259) (379) Results relating to equity-accounted investees (1) (5) (26) 74 (86) ------- ------- ------- ------- ------- Income (loss) from continuing operations (366) 353 (107) (185) (465) Income (loss) on discontinued operations, net of tax 7 23 11 32 59 ------- ------- ------- ------- ------- Net income (loss) (359) 376 (96) (153) (406) Net income (loss) attributable to non-controlling interests (9) (7) (22) (14) (50) ------- ------- ------- ------- ------- Net income (loss) attributable to stockholders (368) 369 (118) (167) (456) Earnings per share data: (1) Net income (loss) attributable to stockholders per common share in $: Basic earnings per common share in $ Income (loss) from continuing operations (1.74) 1.46 (0.51) (0.93) (2.25) Income (loss) from discontinued operations 0.03 0.10 0.04 0.15 0.26 Net income (loss) (1.71) 1.56 (0.47) (0.78) (1.99) Diluted earnings per common share in $ Income (loss) from continuing operations (1.74) 1.45 (0.51) (0.93) (2.25) Income (loss) from discontinued operations 0.03 0.10 0.04 0.15 0.26 Net income (loss) (1.71) 1.55 (0.47) (0.78) (1.99) Weighted average number of shares of common stock used in computing per share amounts (in thousands): Basic 215,252 237,295 250,246 215,252 229,280 Diluted 215,252 238,735 250,246 215,252 229,280 ------- ------- ------- ------- ------- (1) As adjusted for the impact of the 1:20 reverse stock split. NXP Semiconductors Condensed consolidated balance sheets (unaudited) Table 2 -------------------------------------------------------------------------- ($ in millions) Dec 31, Oct 3, Dec 31, 2009 2010 2010 ------- ------- ------- Assets Current assets: Cash and cash equivalents 1,026 947 898 Receivables: Accounts receivable - net 393 449 396 Other receivables 55 48 42 ------- ------- ------- Total receivables 448 497 438 Assets held for sale 144 47 48 Current assets of discontinued operations 103 109 110 Inventories 522 486 513 Other current assets 270 137 129 ------- ------- ------- Total current assets 2,513 2,223 2,136 Non-current assets: Investments in equity-accounted investees 43 159 132 Other non-current financial assets 35 20 19 Non-current assets of discontinued operations 297 275 266 Other non-current assets 85 140 135 Property, plant and equipment 1,328 1,175 1,164 Intangible assets excluding goodwill 1,886 1,585 1,486 Goodwill 2,392 2,334 2,299 ------- ------- ------- Total non-current assets 6,066 5,688 5,501 Total assets 8,579 7,911 7,637 Liabilities and equity Current liabilities: Accounts payable 556 589 593 Liabilities held for sale 2 29 21 Current liabilities of discontinued operations 64 67 60 Accrued liabilities 666 524 461 Short-term provisions 268 132 95 Other current liabilities 87 47 95 Short-term debt 610 509 423 ------- ------- ------- Total current liabilities 2,253 1,897 1,748 Non-current liabilities: Long-term debt 4,673 4,140 4,128 Long-term provisions 423 432 415 Non-current liabilities of discontinued operations 30 26 20 Other non-current liabilities 159 111 107 ------- ------- ------- Total non-current liabilities 5,285 4,709 4,670 Non-controlling interests 198 226 233 Stockholder's equity 843 1,079 986 ------- ------- ------- Total equity 1,041 1,305 1,219 Total liabilities and equity 8,579 7,911 7,637 ------- ------- ------- NXP Semiconductors -- Condensed consolidated statements of cash flows (unaudited) Table 3 -------------------------------------------------------------------------- ($ in millions) For the three months For the twelve ended months ended ------------------------- ---------------- Q4 2009 Q3 2010 Q4 2010 2009 2010 ------- ------- ------- ------- ------- Cash Flows from operating activities Net income (loss) (359) 376 (96) (153) (406) (Income) loss from discontinued operations, net of tax (7) (23) (11) (32) (59) Adjustments to reconcile net income (loss) to net cash provided (used for): Depreciation and amortization 188 155 184 818 684 Impairment assets held for sale 69 - - 69 - Net (gain) loss on sale of assets (8) (7) 2 (58) 21 Gain on extinguishment of debt - (55) - (1,045) (57) Results relating to equity accounted investees - 6 26 - 86 Dividends paid to non-controlling interests - (1) (1) (29) (2) Changes in operating assets and Liabilities: (Increase) decrease in trade receivables 34 49 33 32 (46) (Increase) decrease in inventories 12 (26) (38) 31 8 Increase (decrease) in trade payables 78 (20) 19 (41) 60 (Increase) decrease in other receivables (57) 64 20 (29) 79 Increase (decrease) in other payables (34) (20) (26) (153) (177) Increase (decrease) in provisions 10 (29) (24) (136) (128) Changes in deferred taxes (4) 53 (46) (6) (73) Exchange differences 86 (382) 113 (39) 353 Other items 20 11 (5) 41 16 ------- ------- ------- ------- ------- Net cash provided by (used for) operating activities 28 151 150 (730) 359 Cash flows from investing activities: Purchase of intangible assets (2) (2) (3) (8) (7) Capital expenditures on property, plant and equipment (39) (61) (77) (92) (258) Proceeds from disposals of property, plant and equipment 8 2 1 21 31 Proceeds from disposals of assets held for sale - - 8 - 8 Proceeds from the sale of securities - - - 20 - Purchase of other non-current financial assets (2) (1) (1) (2) (2) Proceeds from the sale of other non-current financial assets 1 27 - 1 27 Purchase of interests in businesses - (8) - - (8) Proceeds from (cash payments related to) sale of interests in businesses 15 - (13) 123 (60) ------- ------- ------- ------- ------- Net cash (used for) provided by investing activities (19) (43) (85) 63 (269) Cash flows from financing activities: Net (repayments) borrowings of short-term debt - - 9 7 8 Amounts drawn under the revolving credit facility - - - 400 - Repayments under the revolving credit facility - (100) (100) (200) (200) Repurchase of long-term debt - (1,370) - (286) (1,383) Net proceeds from the issuance of long-term debt - 974 - - 974 Principal payments on long-term debt - (1) (1) (1) (2) Net proceeds from the issuance of common stock - 450 (2) - 448 ------- ------- ------- ------- ------- Net cash provided by (used for) financing activities - (47) (94) (80) (155) Net cash provided by (used for) continuing operations 9 61 (29) (747) (65) Cash flows from discontinued operations: Net cash provided by (used for) operating activities (5) 7 (5) (15) 10 Net cash provided by (used for) investing activities (1) (8) (2) 15 (17) Net cash provided by (used for) financing activities - - 2 - 2 ------- ------- ------- ------- ------- Net cash provided by (used for) discontinued operations (6) (1) (5) - (5) Net cash provided by (used for) continuing and discontinued operations 3 60 (34) (747) (70) Effect of changes in exchange rates on cash positions (23) 60 (20) (8) (63) Increase (decrease) in cash and cash equivalents (20) 120 (54) (755) (133) Cash and cash equivalents at beginning of period 1,061 842 962 1,796 1,041 Cash and cash equivalents at end of period 1,041 962 908 1,041 908 Less: cash and cash equivalents at end of period -- discontinued operations 15 15 10 15 10 ------- ------- ------- ------- ------- Cash and cash equivalents at end of period -- continuing operations 1,026 947 898 1,026 898 ------- ------- ------- ------- ------- For a number of reasons, principally the effects of translation differences and consolidation changes, certain items in the statements of cash flows do not correspond to the differences between the balance sheet amounts for the respective items. Financial Reconciliation -- GAAP to non-GAAP (unaudited) NXP Semiconductors Q4 2010 Table 4 ----------------------------------------------------------------------- ($ in millions, Other unless otherwise Non-cash stated) PPA Restru- Other Adjust- GAAP effects cturing Incidental ments Non-GAAP ------- ------- ------- ---------- ------ -------- Revenue 1,078 - - - - 1,078 Gross profit 495 (3) (7) (3) - 508 % of revenue 45.9% 47.1% Research and development (138) - (1) 1 - (138) Selling (73) - - - - (73) General and administrative (178) (66) (12) (9) - (91) ------- ------- ------- ---------- ------ -------- Total operating expense (389) (66) (13) (8) - (302) Other income (expense) - - 5 (7) - 2 ------- ------- ------- ---------- ------ -------- Operating income (loss) 106 (69) (15) (18) - 208 % of revenue 9.8% 19.3% Interest income (expense) net (80) (80) Provisions for income taxes 5 (11)(1) Income (loss) from continuing operations (107) (69) (15) (18) (122)(2) 117 Income (loss) on discontinued operations, net of tax 11 11 - Net income (loss) attributable to non-controlling interests (22) (22) ------- -------- Net income (loss) attributable to stockholders (118) (69) (15) (18) (111) 95(3) Weighted average diluted shares outstanding (in thousands): 250,246 253,761 Diluted earnings (loss) attributable to stockholders per common share in $ (0.47) 0.37 ------- ------- ------- ---------- ------ -------- (1) Cash income taxes. (2) Includes: Foreign exchange loss on debt: $(102) million; Other financial expense: $(10) million; Results relating to equity-accounted investees: $(26) million; and difference between book and cash income taxes: $16 million. (3) Stock based compensation benefit of $9 million, which resulted from an adjustment of estimated forfeitures to actual forfeitures, is not included in the non-GAAP results. Financial Reconciliation -- GAAP to non-GAAP (unaudited) NXP Semiconductors Q3 2010 Table 5 ----------------------------------------------------------------------- ($ in millions, Other unless otherwise Non-cash stated) PPA Restru- Other Adjust- GAAP effects cturing Incidental ments Non-GAAP ------- ------- ------- ---------- ------ -------- Revenue 1,120 - - - - 1,120 Gross profit 476 (3) (7) (2) - 488 % of revenue 42.5% 43.6% Research and development (146) - 7 (1) - (152) Selling (63) - - - - (63) General and administrative (162) (66) (1) (11) - (84) ------- ------- ------- ---------- ------ -------- Total operating expense (371) (66) 6 (12) - (299) Other income (expense) 1 - - 5 - (4) ------- ------- ------- ---------- ------ -------- Operating income (loss) 106 (69) (1) (9) - 185 % of revenue 9.5% 16.5% Interest income (expense) net (80) (80) Provisions for income taxes (27) (4)(1) Income (loss) from continuing operations 353 (69) (1) (9) 331(2) 101 Income (loss) on discontinued operations, net of tax 23 23 - Net income (loss) attributable to non-controlling interests (7) (7) ------- -------- Net income (loss) attributable to stockholders 369 (69) (1) (9) 354 94(3) Weighted average diluted shares outstanding (in thousands): 238,735 238,735 Diluted earnings (loss) attributable to stockholders per common share in $ 1.55 0.39 ------- ------- ------- ---------- ------ -------- (1) Cash income taxes. (2) Includes: Foreign exchange gain on debt: $323 million; Gain on extinguishment of long term debt: $55 million; Other financial expense: $(19) million; Results relating to equity-accounted investees: $(5) million; and difference between book and cash income taxes: $(23) million. (3) Includes stock based compensation expense $7 million. Financial Reconciliation -- GAAP to non-GAAP (unaudited) NXP Semiconductors Q4 2009 Table 6 ----------------------------------------------------------------------- ($ in millions, Other Non- unless otherwise Other Impair- cash stated) PPA Restru- Inci- ment Adjust- Non- GAAP effects cturing dental charges ments GAAP ------- ------- ------- ------- ------- ------ ------- Revenue 1,067 - - - - - 1,067 Gross profit 370 (8) 12 (47) - - 413 % of revenue 34.7% 38.7% Research and development (227) - (41) (4) - - (182) Selling (73) - (9) - - - (64) General and administrative (296) (73) (7) (35) (69) - (112) ------- ------- ------- ------- ------- ------ ------- Total operating expense (596) (73) (57) (39) (69) - (358) Other income (expense) 10 - 1 5 - - 4 ------- ------- ------- ------- ------- ------ ------- Operating income (loss) (216) (81) (44) (81) (69) - 59 % of revenue (20.2)% 5.5% Interest income (expense) net (83) (83) Provisions for income taxes 12 (21)(1) Income (loss) from continuing operations (366) (81) (44) (81) (69) (46)(2) (45) Income (loss) on discontinued operations, net of tax 7 7 - Net income (loss) attributable to non-controlling interests (9) (9) ------- ------- Net income (loss) attributable to stockholders (368) (81) (44) (81) (69) (39) (54)(3) Weighted average diluted shares outstanding (in thousands): 215,252 215,252 Diluted earnings (loss) attributable to stockholders per common share in $ (1.71) (0.25) ------- ------- ------- ------- ------- ------ ------- (1) Cash income taxes. (2) Includes: Foreign exchange loss on debt: $(74) million; Other financial expense: $(4) million; Results relating to equity-accounted investees: $(1) million; and difference between book and cash income taxes: $33 million. (3) Includes stock based compensation expense $8 million. Financial Reconciliation -- GAAP to non-GAAP (unaudited) NXP Semiconductors Full year 2010 Table 7 ----------------------------------------------------------------------- ($ in millions, Other unless otherwise Non-cash stated) PPA Restru- Other Adjust- GAAP effects cturing Incidental ments Non-GAAP ------- ------- ------- ---------- ------ -------- Revenue 4,402 - - - - 4,402 Gross profit 1,823 (21) (12) (19) - 1,875 % of revenue 41.4% 42.6% Research and development (568) - 7 (1) - (574) Selling (265) - 2 - - (267) General and administrative (701) (281) (22) (46) - (352) ------- ------- ------- ---------- ------ -------- Total operating expense (1,534) (281) (13) (47) - (1,193) Other income (expense) (16) - 5 (24) - 3 ------- ------- ------- ---------- ------ -------- Operating income (loss) 273 (302) (20) (90) - 685 % of revenue 6.2% 15.6% Interest income (expense) net (318) (318) Provisions for income taxes (24) (19)(1) Income (loss) from continuing operations (465) (302) (20) (90) (401)(2) 348 Income (loss) on discontinued operations, net of tax 59 59 - Net income (loss) attributable to non-controlling interests (50) (50) ------- -------- Net income (loss) attributable to stockholders (456) (302) (20) (90) (342) 298(3) Weighted average diluted shares outstanding (in thousands): 229,280 232,795 Diluted earnings (loss) attributable to stockholders per common share in $ (1.99) 1.28 ------- ------- ------- ---------- ------ -------- (1) Cash income taxes. (2) Includes: Foreign exchange loss on debt: $(331) million; Gain on extinguishment of long term debt: $57 million; Other financial expense: $(36) million; Results relating to equity-accounted investees: $(86) million; and difference between book and cash income taxes: $(5) million. (3) Includes stock based compensation expense $21 million. Financial Reconciliation -- GAAP to non-GAAP (unaudited) NXP Semiconductors Full year 2009 Table 8 -------------------------------------------------------------------------- ($ in millions, Other Non- unless otherwise Other Impair- cash stated) PPA Restru- Inci- ment Adjust- Non- GAAP effects cturing dental charges ments GAAP ------- ------- ------- ------- ------- ------ ------- Revenue 3,519 - - - - - 3,519 Gross profit 898 (69) 5 (163) - - 1,125 % of revenue 25.5% 32.0% Research and development (764) - (61) (8) - - (695) Selling (271) - (11) 2 - - (262) General and administrative (781) (302) (36) (52) (69) - (322) ------- ------- ------- ------- ------- ------ ------- Total operating expense (1,816) (302) (108) (58) (69) - (1,279) Other income (expense) (13) - - (20) - - 7 ------- ------- ------- ------- ------- ------ ------- Operating income (loss) (931) (371) (103) (241) (69) - (147) % of revenue (26.5)% (4.2)% Interest income (expense) net (359) (359) Provisions for income taxes (10) (50)(1) Income (loss) from continuing operations (185) (371) (103) (241) (69) 1,155(2) (556) Income (loss) on discontinued operations, net of tax 32 32 - Net income (loss) attributable to non-controlling interests (14) (14) ------- ------- Net income (loss) attributable to stockholders (167) (371) (103) (241) (69) 1,187 (570)(3) Weighted average diluted shares outstanding (in thousands): 215,252 215,252 Diluted earnings (loss) attributable to stockholders per common share in $ (0.78) (2.65) ------- ------- ------- ------- ------- ------ ------- (1) Cash income taxes. (2) Includes: Foreign exchange gain on debt: $39 million; Gain on extinguishment of long term debt: $1,020 million; Other financial expense: $(18) million; Results relating to equity-accounted investees: $74 million; and difference between book and cash income taxes: $40 million. (3) Includes stock based compensation expense $28 million.
Segment Results
Segment Revenue Table 9 -------------------------------------------------------------------------- ($ in millions) Q4 2009 Q3 2010 Q4 2010 2009 2010 ------- ------- ------- ------- ------- High Performance Mixed Signal 637 715 717 2,011 2,846 Standard Products 183 221 221 567 848 ------- ------- ------- ------- ------- Product Revenue 820 936 938 2,578 3,694 Manufacturing Operations 77 148 114 324 525 Corporate and Other 40 36 26 165 136 Divested Home Activities 130 - - 452 47 ------- ------- ------- ------- ------- Total NXP revenue 1,067 1,120 1,078 3,519 4,402 ------- ------- ------- ------- ------- High Performance Mixed Signal Segment Results Table 10 -------------------------------------------------------------------------- ($ in millions, unless otherwise stated) Q4 2009 Q3 2010 Q4 2010 2009 2010 ------- ------- ------- ------- ------- Revenue 637 715 717 2,011 2,846 % of Product Revenue 77.7% 76.4% 76.4% 78.0% 77.0% GAAP gross profit 271 403 413 785 1,525 % of revenue 42.5% 56.4% 57.6% 39.0% 53.6% Non-GAAP gross profit 307 404 413 848 1,535 % of revenue 48.2% 56.5% 57.6% 42.2% 53.9% Operating income (loss) (21) 120 119 (187) 387 % of revenue (3.3)% 16.8% 16.6% (9.3)% 13.6% Non-GAAP operating income 91 165 168 115 597 % of revenue 14.3% 23.1% 23.4% 5.7% 21.0% ------- ------- ------- ------- ------- Standard Products Segment Results Table 11 -------------------------------------------------------------------------- ($ in millions, unless otherwise stated) Q4 2009 Q3 2010 Q4 2010 2009 2010 ------- ------- ------- ------- ------- Revenue 183 221 221 567 848 % of Product Revenue 22.3% 23.6% 23.6% 22.0 % 23.0% GAAP gross profit 39 78 84 74 280 % of revenue 21.3% 35.3% 38.0% 13.1 % 33.0% Non-GAAP gross profit 44 79 85 88 282 % of revenue 24.0% 35.7% 38.5% 15.5 % 33.3% Operating income (loss) (17) 31 39 (120) 91 % of revenue (9.3)% 14.0% 17.6% (21.2)% 10.7% Non-GAAP operating income (loss) 2 44 52 (44) 147 % of revenue 1.1% 19.9% 23.5% (7.8)% 17.3% ------- ------- ------- ------- -------
Segments Reconciliation
Table 12 Q4 2010 -------------------------------------------------------------------------- PPA Other ($ in millions) GAAP effects Restructuring Incidentals Non-GAAP ---- ------- ------------- ----------- -------- Gross profit HPMS 413 (1) 2 (1) 413 Standard Products 84 - (1) - 85 Manufacturing Operations (11) (2) (9) (2) 2 Corporate and Other 9 - 1 - 8 Divested Home Activities - - - - - ---- ------- ------------- ----------- -------- Total NXP 495 (3) (7) (3) 508 Operating income (loss) HPMS 119 (53) 4 - 168 Standard Products 39 (12) (1) - 52 Manufacturing Operations (20) (5) (10) (3) (2) Corporate and Other (32) 1 (8) (15) (10) Divested Home Activities - - - - - ---- ------- ------------- ----------- -------- Total NXP 106 (69) (15) (18) 208 ---- ------- ------------- ----------- -------- Q3 2010 Table 13 -------------------------------------------------------------------------- PPA Other ($ in millions) GAAP effects Restructuring Incidentals Non-GAAP ---- ------- ------------- ----------- -------- Gross profit HPMS 403 (1) - - 404 Standard Products 78 - (1) - 79 Manufacturing Operations 2 (2) (6) (2) 12 Corporate and Other (7) - - - (7) Divested Home Activities - - - - - ---- ------- ------------- ----------- -------- Total NXP 476 (3) (7) (2) 488 Operating income (loss) HPMS 120 (48) 5 (2) 165 Standard Products 31 (12) (1) - 44 Manufacturing Operations (8) (7) (6) (2) 7 Corporate and Other (37) (2) 1 (5) (31) Divested Home Activities - - - - - ---- ------- ------------- ----------- -------- Total NXP 106 (69) (1) (9) 185 ---- ------- ------------- ----------- -------- Q4 2009 Table 14 -------------------------------------------------------------------------- ($ in millions) PPA Other GAAP effects Restructuring Incidentals Impairment Non-GAAP ---- ------- ------------- ----------- ---------- -------- Gross profit HPMS 271 1 (27) (10) - 307 Standard Products 39 1 (6) - - 44 Manufacturing Operations 30 (8) 37 (19) - 20 Corporate and Other (15) (2) 8 (18) - (3) Divested Home Activities 45 - - - - 45 ---- ------- ------------- ----------- ---------- -------- Total NXP 370 (8) 12 (47) - 413 Operating income (loss) HPMS (21) (54) (43) (15) - 91 Standard Products (17) (13) (6) - - 2 Manufacturing Operations 13 (12) 37 (22) - 10 Corporate and Other (79) - (20) (49) - (10) Divested Home Activities (112) (2) (12) 5 (69) (34) ---- ------- ------------- ----------- ---------- -------- Total NXP (216) (81) (44) (81) (69) 59 ---- ------- ------------- ----------- ---------- -------- 2010 Table 15 -------------------------------------------------------------------------- PPA Other ($ in millions) GAAP effects Restructuring Incidentals Non-GAAP ----- ------- ------------- ----------- -------- Gross profit HPMS 1,525 (13) 5 (2) 1,535 Standard Products 280 - (1) (1) 282 Manufacturing Operations (24) (8) (20) (16) 20 Corporate and Other 26 - 4 - 22 Divested Home Activities 16 - - - 16 ----- ------- ------------- ----------- -------- Total NXP 1,823 (21) (12) (19) 1,875 Operating income (loss) HPMS 387 (222) 15 (3) 597 Standard Products 91 (54) (1) (1) 147 Manufacturing Operations (57) (25) (20) (15) 3 Corporate and Other (117) (1) (10) (45) (61) Divested Home Activities (31) - (4) (26) (1) ----- ------- ------------- ----------- -------- Total NXP 273 (302) (20) (90) 685 ----- ------- ------------- ----------- -------- 2009 Table 16 -------------------------------------------------------------------------- ($ in millions) PPA Other GAAP effects Restructuring Incidentals Impairment Non-GAAP ---- ------- ------------- ----------- ---------- -------- Gross profit HPMS 785 (2) (32) (29) - 848 ---- ------- ------------- ----------- ---------- -------- Standard Products 74 - (8) (6) - 88 Manufacturing Operations (70) (65) 45 (114) - 64 Corporate and Other (21) (2) - (14) - (5) Divested Home Activities 130 - - - - 130 ---- ------- ------------- ----------- ---------- -------- Total NXP 898 (69) 5 (163) - 1,125 Operating income (loss) HPMS (187) (218) (53) (31) - 115 ---- ------- ------------- ----------- ---------- -------- Standard Products (120) (61) (9) (6) - (44) Manufacturing Operations (175) (83) 43 (144) - 9 Corporate and Other (188) (2) (65) (62) - (59) Divested Home Activities (261) (7) (19) 2 (69) (168) ---- ------- ------------- ----------- ---------- -------- Total NXP (931) (371) (103) (241) (69) (147) ---- ------- ------------- ----------- ---------- -------- NXP Semiconductors -- EBITDA and Adjusted EBITDA Table 17 -------------------------------------------------------------------------- ($ in millions) Q4 2009 Q3 2010 Q4 2010 2009 2010 ------- ------- ------- ------- ------- Net Income (359) 376 (96) (153) (406) Income (loss) on discontinued operations 7 23 11 32 59 ------- ------- ------- ------- ------- Income (loss) on continuing operations (366) 353 (107) (185) (465) Reconciling items to EBITDA: Financial income (expense) 161 (279) 192 (682) 628 Provision for income taxes (12) 27 (5) 10 24 Depreciation 110 86 115 490 389 Amortization 147 69 69 397 295 ------- ------- ------- ------- ------- EBITDA 40 256 264 30 871 Results of equity-accounted investees 1 5 26 (74) 86 Restructuring(1) 41 - (5) 99 (20) Other incidental items(1) 65 9 15 199 84 ------- ------- ------- ------- ------- Adjusted EBITDA 147 270 300 254 1,021 Adjusted EBITDA - last 12 months 254 868 1,021 254 1,021 ------- ------- ------- ------- ------- (1) Excluding depreciation property, plant and equipment related to: restructuring 3 1 20 4 40 other incidental items 16 - 3 42 6 Comparable revenue growth calculation Table 18 -------------------------------------------------------------------------- Q4 2010 versus Q4 2009 -------------------------------------------- Nominal Currency Consolidation Comparable Percent growth effects changes growth ------- -------- ------------- ---------- HPMS 12.6 2.3 - 14.9 Standard Products 20.8 3.0 - 23.8 Product Revenue 14.4 2.5 - 16.9 Manufacturing Operations 48.1 - (70.1) (22.0) Corporate and Other (35.0) 0.2 18.9 (15.9) Total NXP 1.0 2.2 9.3 12.5 ------- -------- ------------- ---------- Q4 2010 versus Q3 2010 -------------------------------------------- Nominal Currency Consolidation Comparable Percent growth effects changes growth ------- -------- ------------- ---------- HPMS 0.3 (1.8) - (1.5) Standard Products 0.0 (2.1) - (2.1) Product Revenue 0.2 (1.9) - (1.7) Manufacturing Operations (23.0) - - (23.0) Corporate and Other (27.8) (0.4) 44.4 16.2 Total NXP (3.8) (1.6) 1.0 (4.4) ------- -------- ------------- ---------- Table 19 -------------------------------------------------------------------------- 2010 versus 2009 -------------------------------------------- Nominal Currency Consolidation Comparable Percent growth effects changes growth ------- -------- ------------- ---------- HPMS 41.5 1.9 - 43.4 Standard Products 49.6 2.4 - 52.0 Product Revenue 43.3 2.0 - 45.3 Manufacturing Operations 62.0 - (75.3) (13.3) Corporate and Other (17.6) 0.1 4.8 (12.7) Total NXP 25.1 1.7 9.3 36.1 ------- -------- ------------- ----------