NXP Semiconductors Announces Realignment of Business Segments

NXP Semiconductors N.V.

today announced the realignment of several product lines to better reflect underlying market dynamics, product complexity and the management of the business. The changes include: Movement of product line General Purpose Logic (GPL) from segment High Performance Mixed Signal (HPMS), end-market Portable & Computing to segment Standard Products. Movement of product line NXP Software from Corporate and Other to segment HPMS, end-market Industrial & Infrastructure. In addition, to enable improved comparisons of underlying operating performance relative to industry peers, the company will exclude stock-based compensation from its GAAP to non-GAAP reconciliation. The impact of these changes are reflected in the summary tables below and detailed in the attached tables based on the company's most recent reported financial results for the fourth quarter and full-year 2012, ended December 31, 2012. A full reconciliation of the impact of the changes to reported historical financial results is provided on NXP's investor relations website, under the "Financial Results" section at http://investors.nxp.com. Reclassified Results for the Fourth Quarter and Full Year 2012 ($ millions, except EPS, unaudited) Q4 Q3 Q4 2012 2012 2011 Q - Q Y - Y 2012 2011 Y - Y ------ ------ ------ ----- ----- ------ ------ ----- Product Revenue $1,072 $1,120 $ 868 -4.3% 23.5% $4,144 $3,869 7.1% Manufacturing Operations $ 43 $ 49 $ 62 -12.2% -30.6% $ 211 $ 316 -33.2% Corporate & Other $ 1 $ 1 $ 1 0.0% 0.0% $ 3 $ 9 -66.7% ------ ------ ------ ------ ------ Total Revenue $1,116 $1,170 $ 931 -4.6% 19.9% $4,358 $4,194 3.9% GAAP Gross Profit $ 490 $ 536 $ 389 -8.6% 26.0% $1,988 $1,906 4.3% Gross Profit Adjustments (1) $ (25) $ (7) $ (34) $ (8) $ (81) Non-GAAP Gross Profit $ 515 $ 543 $ 423 -5.2% 21.7% $1,996 $1,987 0.5% GAAP Gross Margin 43.9% 45.8% 41.8% 45.6% 45.4% Non-GAAP Gross Margin 46.1% 46.4% 45.4% 45.8% 47.4% GAAP Operating Income $ 33 $ 168 $ 7 -80.4% 371.4% $ 412 $ 357 15.4% Operating Income Adjustments (1) $ (192) $ (76) $ (150) $ (422) $ (476) Non-GAAP Operating Income $ 225 $ 244 $ 157 -7.8% 43.3% $ 834 $ 833 0.1% GAAP Operating Margin 3.0% 14.4% 0.8% 9.5% 8.5% Non-GAAP Operating Margin 20.2% 20.9% 16.9% 19.1% 19.9% GAAP Net Income / (Loss) $ (116) $ 115 $ (182) NM NM $ (115) $ 390 NM Net Income Adjustments (1) $ (258) $ (39) $ (250) $ (592) $ (65) Non-GAAP Net Income / (Loss) $ 142 $ 154 $ 68 -7.8% 108.8% $ 477 $ 455 4.8% GAAP EPS $(0.47) $ 0.45 $(0.73) NM NM $(0.46) $ 1.57 NM EPS Adjustments (1) $(1.03) $(0.16) $(1.00) $(2.34) $(0.23) Non-GAAP EPS $ 0.56 $ 0.61 $ 0.27 -8.2% 107.4% $ 1.88 $ 1.80 4.4% 1) Please see "Discussion of GAAP to non-GAAP Reconciliation" Reclassified Supplemental Information (revenue, $ millions, unaudited) Percent Q4 Q3 Q4 Q4 2012 2012 2011 Total Q - Q Y - Y 2012 2011 Y - Y ------ ------ ---- ------- ----- ----- ------ ------ ----- Automotive $ 227 $ 239 $218 20% -5% 4% $ 939 $ 930 1% Identification $ 290 $ 275 $155 26% 5% 87% $ 986 $ 698 41% Infrastructure & Industrial $ 162 $ 171 $160 15% -5% 1% $ 634 $ 655 -3% Portable & Computing $ 106 $ 119 $ 75 9% -11% 41% $ 417 $ 370 13% ------ ------ ---- ------- ----- ----- ------ ------ High Performance Mixed Signal (HPMS) $ 785 $ 804 $608 70% -2% 29% $2,976 $2,653 12% Standard Products (STDP)$ 287 $ 316 $260 26% -9% 10% $1,168 $1,216 -4% ------ ------ ---- ------- ----- ----- ------ ------ Product Revenue $1,072 $1,120 $868 96% -4% 24% $4,144 $3,869 7% Manufacturing Operations $ 43 $ 49 $ 62 4% -12% -31% $ 211 $ 316 -33% Corporate & Other $ 1 $ 1 $ 1 0% 0% 0% $ 3 $ 9 -67% ------ ------ ---- ------- ----- ----- ------ ------ Total Revenue $1,116 $1,170 $931 100% -5% 20% $4,358 $4,194 4% Product Revenue is the combination of revenue from the High Performance Mixed Signal (HPMS) and Standard Products (STDP) segments. Reconciliation of Supplemental and Segment Information (revenue, $ millions, unaudited) High Infrastructure Performance & Portable & Mixed Signal Industrial + Computing + Automotive + Identification = (HPMS) Prior Current Prior Current Prior Current Prior Current Prior Current ----- ------- ----- ------ ----- ------ ----- ------- ------ ------ 4Q12 $ 156 $ 162 $ 195 $ 106 $ 227 $ 227 $ 290 $ 290 $ 868 $ 785 3Q12 $ 165 $ 171 $ 222 $ 119 $ 239 $ 239 $ 275 $ 275 $ 901 $ 804 4Q11 $ 149 $ 160 $ 137 $ 75 $ 218 $ 218 $ 155 $ 155 $ 659 $ 608 2012 $ 604 $ 634 $ 753 $ 417 $ 939 $ 939 $ 986 $ 986 $3,282 $2,976 2011 $ 617 $ 655 $ 661 $ 370 $ 930 $ 930 $ 698 $ 698 $2,906 $2,653 High Performance Mixed Signal Standard Manufacturing Corporate & (HPMS) Products (STDP) Operations Other Prior Current Prior Current Prior Current Prior Current ------- -------- ------- -------- ------- -------- ------- -------- 4Q12 $ 868 $ 785 $ 198 $ 287 $ 43 $ 43 $ 7 $ 1 3Q12 $ 901 $ 804 $ 213 $ 316 $ 49 $ 49 $ 7 $ 1 4Q11 $ 659 $ 608 $ 198 $ 260 $ 62 $ 62 $ 12 $ 1 2012 $ 3,282 $ 2,976 $ 832 $ 1,168 $ 211 $ 211 $ 33 $ 3 2011 $ 2,906 $ 2,653 $ 925 $ 1,216 $ 316 $ 316 $ 47 $ 9 Discussion of GAAP to non-GAAP Reconciliations In addition to providing financial information on a basis consistent with U.S. generally accepted accounting principles ("GAAP"), NXP also provides the following selected financial measures on a non-GAAP basis: (i) "non-GAAP gross profit," (ii) "non-GAAP gross margin," (iii) "non-GAAP Research and development," (iv) "non-GAAP Selling, general and administrative," (v) non-GAAP Other income," (vi) "non-GAAP operating income (loss)," (vii) "non-GAAP operating margin," (viii) "non-GAAP net income/ (loss)," (ix) "PPA effects," (x) "Restructuring costs," (xi) "Stock based compensation", (xii) "Other incidental items," (xiii) "non-GAAP Financial Income (expense)," (xiv) "non-GAAP Results relating to equity-accounted investees," (xv) "non-GAAP Cash tax (expense)," (xvi) "non-GAAP EPS," (xvii) "EBITDA", "adjusted EBITDA" and "trailing 12 month adjusted EBITDA" and (xviii) "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. "Stock based compensation" consists of incentive expense granted to eligible employees in the form of equity based instruments. "Other incidental items" consist of process and product transfer costs (which refer to the costs incurred in transferring a production process and products from one manufacturing site to another) and certain charges related to acquisitions and divestitures. "Other adjustments" include or exclude certain items that management believes provides insight into our core operating results, our ability to generate cash and underlying business trends affecting our performance. "non-GAAP gross margin" and "non-GAAP operating margin" are to our non-GAAP gross profit or our non-GAAP operating income as a percentage of our sales, respectively; "non-GAAP Financial Income (expense)" is the interest income or expense net of impacts due foreign exchange changes on our Euro-denominated debt, gains or losses due to the extinguishment of long-term debt and less other financial expenses deemed to be one-time in nature; "non-GAAP Cash tax (expense)" is the difference between our GAAP tax provision and the cash taxes paid during the period; "non-GAAP EPS" attributable to stockholders are to non-GAAP net income or loss attributable to NXP's stockholders, divided by the weighted average number of common shares outstanding during the period, adjusted for treasury shares held; "EBITDA" are to NXP's earnings before interest, taxes, depreciation and amortization. "EBITDA" excludes certain tax payments that may represent a reduction in cash available to us, does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future, does not reflect changes in, or cash requirements for, our working capital needs and does not reflect the significant financial expense, or the cash requirements necessary to service interest payments, on our debts; "adjusted EBITDA" are to EBITDA after adjustments for "restructuring costs," "other incidental items" and results related to equity accounted investees. "trailing 12 month adjusted EBITDA" are to adjusted EBITDA for the last 12 months 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," "stock based compensation," "other incidental items," and "other adjustments" which have affected the comparability of NXP's results over the years. NXP presents "EBITDA," "adjusted EBITDA" and "trailing 12 month adjusted EBITDA" because these financials measures enhance an investor's understanding of NXP's financial performance. Non-GAAP measures should not be considered a substitute for any information derived or calculated in accordance with GAAP, are not intended to be measures of financial performance or condition, liquidity, profitability or operating cash flows in accordance with GAAP, and should not be considered as alternatives to net income (loss), operating income or any other performance measures determined in accordance with GAAP. These non-GAAP measures can vary from other participants in the semiconductor industry. They have limitations as analytical tools and should not be considered in isolation for analysis of NXP's financial results as reported under GAAP. About NXP Semiconductors NXP Semiconductors N.V.

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 revenue of $4.36 billion in 2012. Additional information can be found by visiting www.nxp.com. Forward-looking Statements This document includes forward-looking statements which include statements regarding NXP's business strategy, financial condition, results of operations, and market data, as well as any other statements which are not historical facts. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include the following: market demand and semiconductor industry conditions; the ability to successfully introduce new technologies and products; the end-market demand for the goods into which 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: Reconciliation 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) 785 804 608 2,976 2,653 Standard Products 287 316 260 1,168 1,216 -------- -------- -------- -------- -------- Product Revenue 1,072 1,120 868 4,144 3,869 Manufacturing Operations 43 49 62 211 316 Corporate and Other 1 1 1 3 9 -------- -------- -------- -------- -------- Total Revenue $ 1,116 $ 1,170 $ 931 $ 4,358 $ 4,194 ======== ======== ======== ======== ======== HPMS Revenue $ 785 $ 804 $ 608 $ 2,976 $ 2,653 Percent of Total Revenue 70.3% 68.7% 65.3% 68.3% 63.3% HPMS segment GAAP gross profit 427 433 309 1,656 1,486 PPA effects - (1) (4) (9) (16) Restructuring (1) - (17) (1) (17) Stock based compensation - (1) - (1) 1 Other incidentals - (1) - (3) - Other adjustments - - - 46 - -------- -------- -------- -------- -------- HPMS segment non-GAAP gross profit $ 428 $ 436 $ 330 $ 1,624 $ 1,518 ======== ======== ======== ======== ======== HPMS segment GAAP gross margin 54.4% 53.9% 50.8% 55.6% 56.0% HPMS segment non-GAAP gross margin 54.5% 54.2% 54.3% 54.6% 57.2% HPMS segment GAAP operating profit 105 157 18 479 288 PPA effects (45) (45) (51) (190) (206) Restructuring (26) 1 (35) (24) (40) Stock based compensation (12) (9) (7) (37) (15) Other incidentals (3) 16 - 2 (2) Other adjustments - - - 46 - -------- -------- -------- -------- -------- HPMS segment non-GAAP operating profit $ 191 $ 194 $ 111 $ 682 $ 551 ======== ======== ======== ======== ======== HPMS segment GAAP operating margin 13.4% 19.5% 3.0% 16.1% 10.9% HPMS segment non-GAAP operating margin 24.3% 24.1% 18.3% 22.9% 20.8% Standard Products Revenue $ 287 $ 316 $ 260 $ 1,168 $ 1,216 Percent of Total Revenue 25.7% 27.0% 27.9% 26.8% 29.0% Standard Products segment GAAP gross profit 70 107 86 346 449 PPA effects - (1) (1) (3) (3) Restructuring (15) 1 (7) (15) (8) Stock based compensation (1) - - (1) - Other incidentals (1) - - (1) - -------- -------- -------- -------- -------- Standard Products segment non-GAAP gross profit $ 87 $ 107 $ 94 $ 366 $ 460 ======== ======== ======== ======== ======== Standard Products segment GAAP gross margin 24.4% 33.9% 33.1% 29.6% 36.9% Standard Products segment non-GAAP gross margin 30.3% 33.9% 36.2% 31.3% 37.8% Standard Products segment GAAP operating profit 2 43 22 89 200 PPA effects (15) (15) (16) (60) (69) Restructuring (19) - (8) (19) (9) Stock based compensation (4) (2) (2) (11) (6) Other incidentals (1) 2 (1) - - -------- -------- -------- -------- -------- Standard Products segment non-GAAP operating profit $ 41 $ 58 $ 49 $ 179 $ 284 ======== ======== ======== ======== ======== Standard Products segment GAAP operating margin 0.7% 13.6% 8.5% 7.6% 16.4% Standard Products segment non-GAAP operating margin 14.3% 18.4% 18.8% 15.3% 23.4% NXP Semiconductors Table 2: Reconciliation 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) (10) Stock based compensation - - - - (2) 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) (10) Stock based compensation - - - - (2) 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 $ 1 $ 1 $ 1 $ 3 $ 9 Percent of Total Revenue 0.1% 0.1% 0.1% 0.1% 0.2% Corporate and Other segment GAAP gross profit 3 (2) 1 8 19 PPA effects - - - - - Restructuring - - - - - Stock based compensation - - - - - Other incidentals - - - - - -------- -------- -------- -------- -------- Corporate and Other segment non-GAAP gross profit $ 3 $ (2) $ 1 $ 8 $ 19 ======== ======== ======== ======== ======== 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) (23) (120) (71) PPA effects - - - - - Restructuring (49) (4) (18) (61) (22) Stock based compensation - (1) - (4) (8) Other incidentals (7) (11) (4) (31) (44) -------- -------- -------- -------- -------- Corporate and Other segment non-GAAP operating profit $ (3) $ (10) $ (1) $ (24) $ 3 ======== ======== ======== ======== ======== 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 3: Financial Reconciliation 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) (35) Stock Based Compensation (1) (1) - (2) (1) Other incidentals (2) (2) (5) (9) (18) Other adjustments - - - 46 - -------- -------- -------- -------- -------- Non-GAAP Gross profit $ 515 $ 543 $ 423 $ 1,996 $ 1,987 ======== ======== ======== ======== ======== GAAP Gross margin 43.9% 45.8% 41.8% 45.6% 45.4% Non-GAAP Gross margin 46.1% 46.4% 45.4% 45.8% 47.4% GAAP Research and development $ (171) $ (153) $ (151) $ (628) $ (635) PPA effects - - - - - Restructuring (23) - (18) (22) (22) Stock based compensation (2) (1) (1) (5) (2) Other incidentals (1) (3) - (12) (2) -------- -------- -------- -------- -------- Non-GAAP Research and development $ (145) $ (149) $ (132) $ (589) $ (609) ======== ======== ======== ======== ======== GAAP Selling, general and administrative $ (288) $ (236) $ (236) $ (977) $ (918) PPA effects (64) (61) (67) (253) (274) Restructuring (55) (4) (18) (67) (24) Stock based compensation (13) (10) (8) (45) (28) Other incidentals (8) (10) (7) (32) (30) -------- -------- -------- -------- -------- Non-GAAP Selling, general and administrative $ (148) $ (151) $ (136) $ (580) $ (562) ======== ======== ======== ======== ======== 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) (81) Stock based compensation (16) (12) (9) (52) (31) Other incidentals (12) 5 (9) (32) (63) Other adjustments - - - 46 - -------- -------- -------- -------- -------- Non-GAAP Operating income (loss) $ 225 $ 244 $ 157 $ 834 $ 833 ======== ======== ======== ======== ======== GAAP Operating margin 3.0% 14.4% 0.8% 9.5% 8.5% Non-GAAP Operating margin 20.2% 20.9% 16.9% 19.1% 19.9% 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) (81) Stock based compensation (16) (12) (9) (52) (31) Other incidentals (12) 5 (9) (32) (63) Other adjustments (66) 1) 37 (102) (125) 1) (23) -------- -------- -------- -------- -------- Non-GAAP Income (loss) from continuing operations $ 160 $ 170 $ 77 $ 540 $ 501 ======== ======== ======== ======== ======== 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) (81) Stock based compensation (16) (12) (9) (52) (31) Other incidentals (12) 5 (9) (32) (63) Other adjustments (66) 37 (100) (124) 411 -------- -------- -------- -------- -------- Non-GAAP Net income (loss) attributable to stockholders $ 142 $ 154 $ 68 $ 477 $ 455 ======== ======== ======== ======== ======== 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 $ 0.56 $ 0.61 $ 0.27 $ 1.88 $ 1.80 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: $27 million. NXP Semiconductors Table 4: Adjusted EBITDA (unaudited) ($ 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 76 Stock based compensation 16 12 9 52 31 Other incidental items 1) 11 (5) 8 30 62 Other adjustments - - - (46) - -------- -------- -------- -------- --------- Adjusted EBITDA $ 290 $ 306 $ 230 $ 1,090 $ 1,117 ======== ======== ======== ======== ========= Trailing twelve month adjusted EBITDA $ 1,090 $ 1,030 $ 1,117 $ 1,090 $ 1,117 1) Excluding depreciation property, plant and equipment related to: Restructuring - 1 4 2 5 Other incidental items 1 - 1 2 1