NXP Semiconductors Reports First Quarter 2018 Results

[ Back ] [ More News ] [ Home ]

	Q1 2018
Revenue	$2.269 billion
GAAP Gross margin	51.7%
GAAP Operating margin	6.1%

Non-GAAP Gross margin	52.9%
Non-GAAP Operating margin	27.2%

EINDHOVEN, The Netherlands, May 02, 2018 (GLOBE NEWSWIRE) -- NXP Semiconductors N.V. (NASDAQ:NXPI) today reported financial results for the first quarter 2018 ended April 1, 2018.

NXP delivered first quarter revenue of $2.27 billion, an increase of approximately 3 percent year on year, and a decrease of 8 percent as compared to the prior quarter, with the annual period comparison impacted by the divestment of the Standard Products business during the first quarter of 2017. HPMS segment revenue was $2.17 billion, an increase of 8 percent year on year, and a decrease of 8 percent on a sequential basis.

Within the Automotive group, first quarter revenue was $995 million, up 10 percent year on year, with auto MCU, advanced analog and infotainment all contributing to the year on year growth. Within the Secure Connected Devices group, first quarter revenue was $633 million, up 17 percent year on year driven by demand for general purpose, multi-market MCU and high performance application processor products, and continued year on year growth of mobile transaction products. In the Secure Interface and Infrastructure group, first quarter revenue was $396 million, down 12 percent year on year due to declines within the Digital Networking and RF-based product groups, with annual growth in Interface and Power products offsetting declines. Lastly, in Secure Identification Solutions group, first quarter revenue was $142 million, up 25 percent year on year due to growth in the mobility and retail, and government identification markets, and continued stabilization in the global bank-card market.

“We continue to believe that our transaction with Qualcomm is important to supporting our customers’ long term requirements in both autonomous driving and secure IoT given our complimentary product portfolios, Qualcomm’s strength in connectivity and high end processing. On April 19th, NXP agreed with Qualcomm to an extension of the purchase agreement to facilitate the final needed regulatory approval by the Ministry of Commerce (“MOFCOM”) of the Government of China, the last remaining regulatory requirement as all other regulatory authorities have cleared more than three and a half months ago. Once all required regulatory approvals are obtained, the companies can execute the final tender offer process to complete the transaction. Finally, I would like to personally thank all our employees for their focus and significant effort they have invested to assure NXP’s success and to thank all our customers for their commitment to NXP,” said Richard Clemmer, NXP Chief Executive Officer.

“In the first quarter, our GAAP operating margin was 6.1 percent, a decline from the 75.9 percent reported in the first quarter of 2017 due to the $1.6 billion realized gain related to the divestment of the Standard Products business during the first quarter of 2017. Our first quarter non-GAAP operating margin was 27.2 percent, essentially flat as compared to the first quarter of 2017. On a sequential basis, our first quarter GAAP operating margin declined 250-basis points from the 8.6 percent reported in the fourth quarter of 2017, and our non-GAAP operating margin declined 390-basis points due to the sequential revenue decline, associated gross profit fall-through, and increased product development costs. And finally, due to an improved net debt position and positive cash flow generation, our overall financial leverage was reduced to 0.82x,” said Peter Kelly, NXP Chief Financial Officer.

Summary of Reported First Quarter 2018 ($ millions, unaudited)



	Q1 2018			Q4 2017			Q1 2017			Q - Q		Y - Y

Product Revenue	$	2,166		$	2,348		$	2,129		-8	%	2	%

Corporate & Other	$	103		$	108		$	82		-5	%	26	%

Total Revenue	$	2,269		$	2,456		$	2,211		-8	%	3	%

GAAP Gross Profit	$	1,172		$	1,242		$	1,079		-6	%	9	%

Gross Profit Adjustments ⁽¹⁾	$	(28	)	$	(89	)	$	(65	)

Non-GAAP Gross Profit	$	1,200		$	1,331		$	1,144		-10	%	5	%

GAAP Gross Margin		51.7	%		50.6	%		48.8	%

Non-GAAP Gross Margin		52.9	%		54.2	%		51.7	%

GAAP Operating Income / (Loss)	$	138		$	210		$	1,679		-34	%	-92	%

Operating Income Adjustments⁽¹⁾		(479	)		(553	)		1,080

Non-GAAP Operating Income	$	617		$	763		$	599		-19	%	3	%

GAAP Operating Margin		6.1	%		8.6	%		75.9	%

Non-GAAP Operating Margin		27.2	%		31.1	%		27.1	%

(1) For an explanation of GAAP to non-GAAP adjustments, please see “Non-GAAP Financial Measures” on page 3 of this release.

Additional Information for the First Quarter 2018:

On October 27, 2016 Qualcomm, Incorporated (NASDAQ:QCOM), (“Qualcomm”) and NXP Semiconductors N.V. (NASDAQ:NXPI), announced a definitive agreement, unanimously approved by the boards of directors of both companies, under which Qualcomm will acquire NXP. Under the terms of the revised definitive agreement, a subsidiary of Qualcomm will commence a tender offer to acquire all the issued and outstanding shares of NXP for $127.50 per share in cash. The tender offer commenced on November 18, 2016.
On April 19, 2018 Qualcomm and NXP entered into an amendment to their purchase agreement, extending the end date of the purchase agreement until July 25, 2018. The amendment also provides that if the parties have not received all required regulatory approvals, including from the Ministry of Commerce in China (MOFCOM), by 11:59 p.m. New York City time on July 25, 2018, Qualcomm will pay the previously agreed termination fee to NXP no later than 9:00 a.m. New York City time on July 26, 2018.
Total gross debt was $6.58 billion, up from the $6.57 billion at the end of the fourth quarter of 2017, and up from the $6.51 billion at the end of the first quarter of 2017. Cash was $3.98 billion, an increase from the $3.55 billion at the end of the fourth quarter of 2017, and an increase from the $2.24 at the end of the first quarter of 2017. Net debt at the end of the first quarter was $2.60 billion, a decline from the $3.02 billion at the end of the fourth quarter of 2017, and decline from $4.27 billion at the end of the first quarter of 2017. Trailing twelve months, adjusted EBITDA was $3.18 billion, an increase from $3.16 billion at the end of the fourth quarter of 2017, and an increase from $3.06 billion at the end of the first quarter of 2017. Financial leverage, defined as net debt divided by trailing twelve months adjusted EBITDA was 0.82x, an improvement from 0.96x at the end of the fourth quarter of 2017, and an improvement from 1.40x reported at the end of the first quarter of 2017.
Cash flow from operations was $620 million, a decrease from the $738 million at the end of the fourth quarter of 2017. Net capital expenditures on property, plant and equipment was $156 million, an increase from the $132 million at the end of the fourth quarter of 2017. Non-GAAP free cash flow, defined as cash flow from operations, less net capital expenditures on property, plant and equipment was $464 million, a decrease from the $606 million at the end of the fourth quarter of 2017.
During the first quarter NXP repurchased 0.3 million shares for a total cost of $30 million. Weighted average number of diluted shares (after deduction of treasury shares) for the three-month period ended April 1, 2018 was 347 million. Due to the pending acquisition by Qualcomm, NXP has suspended its open market share repurchases. Shares are currently only repurchased in relation to employee equity award transactions.
Net cash paid for interest was $21 million in the first quarter.
Net cash paid for income taxes related to on-going operations was $16 million, with an additional $28 million paid related to the divestment of the Standard Products business, for a total of $44 million.
SSMC, NXP’s consolidated joint-venture wafer fab with TSMC, reported first quarter 2018 operating income of $31 million, EBITDA of $43 million and a closing cash balance of $241 million.
NXP combined wafer-fab utilization averaged 93 percent, as compared to 91 percent in the prior quarter, and 95% in the first quarter of 2017.
Working capital metrics and channel inventory was:
- Days of inventory held by NXP was 106 days, up 7 days sequentially versus the fourth quarter;
- Days payable was 83 days, down 9 days sequentially from the fourth quarter;
- Days sales was 32 days a decline of 1 day sequentially from the fourth quarter;
- The cash conversion cycle was 55 days, an increase of 15 days versus the fourth quarter;
- Channel inventory held by NXP’s distribution partners was 2.4 months, essentially flat on a sequential basis, and in line with NXPs long-term channel target of 2.5 months, plus or minus a half month;
- Sales into the distribution channel were down 14 percent sequentially;
- Sales out of the distribution channel were down 8 percent sequentially.

Supplemental Information ($ millions, unaudited)



	Q1 2018		Q4 2017		Q1 2017		Q-Q		Y-Y

Automotive	$	995	$	970	$	906	3	%	10	%

Secure Identification Solutions (SIS)	$	142	$	136	$	114	4	%	25	%

Secure Connected Devices (SCD)	$	633	$	745	$	541	-15	%	17	%

Secure Interface & Infrastructure (SI&I)	$	396	$	497	$	450	-20	%	-12	%

High Performance Mixed Signal (HPMS)	$	2,166	$	2,348	$	2,011	-8	%	8	%

Standard Products (STDP)	$	-	$	-	$	118	NM		NM

Product Revenue	$	2,166	$	2,348	$	2,129	-8	%	2	%

Corporate & Other	$	103	$	108	$	82	-5	%	26	%

Total Revenue	$	2,269	$	2,456	$	2,211	-8	%	3	%

Guidance and Conference Call

As previously announced, NXP will not hold an earnings call nor provide forward guidance for the second quarter of 2018 due to the pending acquisition of NXP by Qualcomm.

Non-GAAP Financial Measures

In managing NXP's business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In measuring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken 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 upon 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, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company’s results of operations and the factors and trends affecting NXP’s business. We believe that they enable investors to perform additional comparisons of our operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to operations, certain non-cash expenses and share-based compensation expense, which may obscure trends in NXP's underlying performance. This information also enables investors to compare financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management.

These non-GAAP financial measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The presentation of these and other similar items in NXP’s non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent, or unusual. 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).” Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at www.nxp.com/investor for additional information related to our rationale for using these non-GAAP financial measures, as well as the impact of these measures on the presentation of NXP's operations.

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) Gross profit, (ii) Gross margin, (iii) Research and development, (iv) Selling, 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) EBITDA, adjusted EBITDA and trailing 12 month adjusted EBITDA, and (xi) free cash flow and free cash flow as a percent of Revenue. The non-GAAP information excludes the amortization of acquisition related intangible assets, the purchase accounting effect on inventory and property, plant and equipment, merger related costs (including integration costs), certain items related to divestitures, share-based compensation expense, restructuring and asset impairment charges, non-cash interest expense on convertible notes, extinguishment of debt, changes in the fair value of the warrant liability prior to January 1, 2016 and foreign exchange gains and losses.

About NXP Semiconductors

NXP Semiconductors N.V. (NASDAQ:NXPI) enables secure connections and infrastructure for a smarter world, advancing solutions that make lives easier, better and safer. As the world leader in secure connectivity solutions for embedded applications, NXP is driving innovation in the secure connected vehicle, end-to-end security & privacy and smart connected solutions markets. Built on more than 60 years of combined experience and expertise, the company has over 30,000 employees in more than 30 countries and posted revenue of $9.26 billion in 2017. Find out more at www.nxp.com

Forward-looking Statements

This document includes forward-looking statements which include statements regarding NXP’s business strategy, financial condition, results of operations, and market data, as well as any other statements which are not historical facts. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include the following: market demand and semiconductor industry conditions; the ability to successfully introduce new technologies and products; the end-market demand for the goods into which NXP’s products are incorporated; the ability to generate sufficient cash, raise sufficient capital or refinance corporate debt at or before maturity; the ability to meet the combination of corporate debt service, research and development and capital investment requirements; the ability to accurately estimate demand and match manufacturing production capacity accordingly or obtain supplies from third-party producers; the access to production capacity from third-party outsourcing partners; any events that might affect third-party business partners or NXP’s relationship with them; the ability to secure adequate and timely supply of equipment and materials from suppliers; the ability to avoid operational problems and product defects and, if such issues were to arise, to correct them quickly; the ability to form strategic partnerships and joint ventures and to successfully cooperate with alliance partners; the ability to win competitive bid selection processes to develop products for use in customers’ equipment and products; the ability to successfully establish a brand identity; the ability to successfully hire and retain key management and senior product architects, our ability to complete merger and acquisition related activity including risks and uncertainties associated with the pending offer by Qualcomm River Holdings B.V., a wholly owned subsidiary of QUALCOMM Incorporated, to purchase all of NXP’s outstanding common shares; 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.

For further information, please contact:

Investors: Media:
Jeff Palmer Jacey Zuniga
jeff.palmer@nxp.com jacey.zuniga@nxp.com
+1 408 518 5411 +1 512 895 7398


NXP Semiconductors
Table 1: Condensed consolidated statement of operations (unaudited)



($ in millions except share data)	Three Months Ended
	April 1, 2018			December 31, 2017			April 2, 2017
Revenue	$	2,269		$	2,456		$	2,211

Cost of revenue		(1,097	)		(1,214	)		(1,132	)

Gross profit		1,172			1,242			1,079

Research and development		(426	)		(414	)		(367	)
Selling, general and administrative		(248	)		(269	)		(266	)
Amortization of acquisition-related intangible assets		(360	)		(347	)		(365	)
Total operating expenses		(1,034	)		(1,030	)		(998	)

Other income (expense)		-			(2	)		1,598

Operating income (loss)		138			210			1,679

Financial income (expense):
Extinguishment of debt		-			-			(41	)
Other financial income (expense)		(68	)		(79	)		(95	)

Income (loss) before taxes		70			131			1,543

Benefit (provision) for income taxes		(2	)		629			(230	)
Results relating to equity-accounted investees		2			8			5

Net income (loss)		70			768			1,318
Less: Net income (loss) attributable to non-controlling interests		12			15			13
Net income (loss) attributable to stockholders		58			753			1,305

Earnings per share data:
Net income (loss) per common share attributable to stockholders in $:

Basic	$	0.17		$	2.20		$	3.88
Diluted	$	0.17		$	2.17		$	3.79

Weighted average number of shares of common stock outstanding during the period (in thousands):

Basic		343,661			342,088			336,396
Diluted		346,899			347,176			344,011


NXP Semiconductors
Table 2: Condensed consolidated balance sheet (unaudited)


($ in millions)	As of
	April 1, 2018		December 31, 2017		April 2, 2017
Current assets:
Cash and cash equivalents	$	3,983	$	3,547	$	2,238
Accounts receivable, net		791		879		983
Inventories, net		1,251		1,236		1,144
Other current assets		536		382		317
Total current assets		6,561		6,044		4,682

Non-current assets:
Other non-current assets		888		981		816
Property, plant and equipment, net		2,307		2,295		2,279
Identified intangible assets, net		5,494		5,863		6,983
Goodwill		8,877		8,866		8,854
Total non-current assets		17,566		18,005		18,932

Total assets		24,127		24,049		23,614

Current liabilities:
Accounts payable		984		1,146		975
Restructuring liabilities-current		67		74		95
Accrued liabilities		865		747		984
Short-term debt		1,249		751		11
Total current liabilities		3,165		2,718		2,065

Non-current liabilities:
Long-term debt		5,329		5,814		6,498
Restructuring liabilities		15		15		22
Deferred tax liabilities		650		701		1,489
Other non-current liabilities		1,078		1,085		917
Total non-current liabilities		7,072		7,615		8,926

Non-controlling interests		201		189		234
Stockholders’ equity		13,689		13,527		12,389
Total equity		13,890		13,716		12,623

Total liabilities and equity		24,127		24,049		23,614


NXP Semiconductors
Table 3: Condensed consolidated statement of cash flows (unaudited)



($ in millions)	Three Months Ended
	April 1, 2018			December 31, 2017			April 2, 2017
Cash Flows from operating activities
Net income (loss)	$	70		$	768		$	1,318
Adjustments to reconcile net income (loss):
Depreciation and amortization		491			542			534
Stock-based compensation		69			78			68
Amortization of discount on debt		10			10			10
Amortization of debt issuance costs		3			3			3
Net gain on sale of assets		-			(4	)		(1,597	)
Loss on extinguishment of debt		-			-			41
Results relating to equity accounted investees		(2	)		(8	)		(5	)
Changes in deferred taxes		(42	)		(593	)		25
Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current assets		81			(25	)		4
(Increase) decrease in inventories		(36	)		(31	)		(28	)
Increase (decrease) in accounts payable and accrued liabilities		(26	)		82			244
Decrease (Increase) in other non-current assets		-			(92	)		(1	)
Exchange differences		5			5			12
Other items		(3	)		3			(3	)
Net cash provided by (used for) operating activities		620			738			625

Cash flows from investing activities:
Purchase of identified intangible assets		(18	)		(10	)		(24	)
Capital expenditures on property, plant and equipment		(156	)		(133	)		(161	)
Proceeds from disposals of property, plant and equipment		-			1			-
Proceeds from sale of interests in businesses, net of cash divested		-			-			2,614
Other		-			7			(1	)
Net cash provided by (used for) investing activities		(174	)		(135	)		2,428

Cash flows from financing activities:
Repurchase of long-term debt		-			-			(2,728	)
Principal payments on long-term debt		-			(4	)		(4	)
Cash proceeds from exercise of stock options		20			129			36
Purchase of treasury shares		(30	)		(248	)		(26	)
Net cash provided by (used for) financing activities		(10	)		(123	)		(2,722	)

Effect of changes in exchange rates on cash positions		-			2			13
Increase (decrease) in cash and cash equivalents		436			482			344
Cash and cash equivalents at beginning of period		3,547			3,065			1,894
Cash and cash equivalents at end of period		3,983			3,547			2,238



Net cash paid during the period for:
Interest		21			81			53
Income taxes		44			67			56
Non-cash adjustment related to the adoption of ASC 606:
Receivables and other current assets		(36	)		-			-
Inventories		22			-			-


NXP Semiconductors
Table 4: Reconciliation of GAAP to non-GAAP Segment Results (unaudited)


($ in millions)	Three Months Ended
	April 1, 2018			December 31, 2017			April 2, 2017
High Performance Mixed Signal (HPMS)		2,166			2,348			2,011
Standard Products		-			-			118
Product Revenue		2,166			2,348			2,129
Corporate and Other		103			108			82
Total Revenue	$	2,269		$	2,456		$	2,211



HPMS Revenue	$	2,166		$	2,348		$	2,011
Percent of Total Revenue		95.5	%		95.6	%		91.0	%
HPMS segment GAAP gross profit		1,161			1,228			1,030
PPA effects		(18	)		(78	)		(58	)
Restructuring		-			-			-
Stock based compensation		(9	)		(10	)		(8	)
Other incidentals		-			-			-
HPMS segment non-GAAP gross profit	$	1,188		$	1,316		$	1,096

HPMS segment GAAP gross margin		53.6	%		52.3	%		51.2	%
HPMS segment non-GAAP gross margin		54.8	%		56.0	%		54.5	%

HPMS segment GAAP operating profit		161			246			81
PPA effects		(381	)		(430	)		(429	)
Restructuring		-			-			9
Stock based compensation		(69	)		(77	)		(67	)
Merger-related costs		(3	)		(3	)		(2	)
Other incidentals		-			-			-
HPMS segment non-GAAP operating profit	$	614		$	756		$	570

HPMS segment GAAP operating margin		7.4	%		10.5	%		4.0	%
HPMS segment non-GAAP operating margin		28.3	%		32.2	%		28.3	%



Standard Products Revenue	$	-		$	-		$	118
Percent of Total Revenue		-			-			5.3	%
Standard Products segment GAAP gross profit		-			-			45
PPA effects		-			-			-
Restructuring		-			-			-
Stock based compensation		-			-			(1	)
Other incidentals		-			-			4
Standard Products segment non-GAAP gross profit	$	-		$	-		$	42

Standard Products segment GAAP gross margin	NM			NM				38.1	%
Standard Products segment non-GAAP gross margin	NM			NM				35.6	%

Standard Products segment GAAP operating profit		-			-			31
PPA effects		-			-			-
Restructuring		-			-			-
Stock based compensation		-			-			(2	)
Other incidentals		-			-			4
Standard Products segment non-GAAP operating profit	$	-		$	-		$	29

Standard Products segment GAAP operating margin	NM			NM				26.3	%
Standard Products segment non-GAAP operating margin	NM			NM				24.6	%



Corporate and Other Revenue	$	103		$	108		$	82
Percent of Total Revenue		4.5	%		4.4	%		3.7	%
Corporate and Other segment GAAP gross profit		11			14			4
PPA effects		(1	)		(1	)		(1	)
Restructuring		-			-			(1	)
Stock based compensation		-			-			-
Other incidentals		-			-			-
Corporate and Other segment non-GAAP gross profit	$	12		$	15		$	6

Corporate and Other segment GAAP gross margin		10.7	%		13.0	%		4.9	%
Corporate and Other segment non-GAAP gross margin		11.7	%		13.9	%		7.3	%

Corporate and Other segment GAAP operating profit		(23	)		(36	)		1,567
PPA effects		(1	)		(1	)		(1	)
Restructuring		(1	)		-			(1	)
Stock based compensation		-			(1	)		1
Merger-related costs		(23	)		(29	)		(28	)
Other incidentals		(1	)		(12	)		1,596		¹	⁾
Corporate and Other segment non-GAAP operating profit	$	3		$	7		$	-

Corporate and Other segment GAAP operating margin		-22.3	%		-33.3	%		1911.0	%
Corporate and Other segment non-GAAP operating margin		2.9	%		6.5	%		0.0	%


1) Adjustment relates primarily to the gain on the sale of the SP business on February 6, 2017.


	NXP Semiconductors
	Table 5: Financial Reconciliation of GAAP to non-GAAP Results (unaudited)



	($ in millions except share data)	Three Months Ended
		April 1, 2018			December 31, 2017			April 2, 2017
	Revenue	$	2,269		$	2,456		$	2,211

	GAAP Gross profit	$	1,172		$	1,242		$	1,079
	PPA effects		(19	)		(79	)		(59	)
	Restructuring		-			-			(1	)
	Stock Based Compensation		(9	)		(10	)		(9	)
	Other incidentals		-			-			4
	Non-GAAP Gross profit	$	1,200		$	1,331		$	1,144

	GAAP Gross margin		51.7	%		50.6	%		48.8	%

	Non-GAAP Gross margin		52.9	%		54.2	%		51.7	%

	GAAP Research and development	$	(426	)	$	(414	)	$	(367	)
	Restructuring		-			-			12
	Stock based compensation		(31	)		(35	)		(29	)
	Merger-related costs		(1	)		(1	)		(1	)
	Other incidentals		-			-			-
	Non-GAAP Research and development	$	(394	)	$	(378	)	$	(349	)

	GAAP Selling, general and administrative	$	(248	)	$	(269	)	$	(266	)
	PPA effects		(3	)		(5	)		(6	)
	Restructuring		(1	)		-			(3	)
	Stock based compensation		(29	)		(33	)		(30	)
	Merger-related costs		(25	)		(31	)		(29	)
	Other incidentals		-			(10	)		-
	Non-GAAP Selling, general and administrative	$	(190	)	$	(190	)	$	(198	)

	GAAP amortization of acquisition-related intangible assets	$	(360	)	$	(347	)	$	(365	)
	PPA effects		(360	)		(347	)		(365	)
	Non-GAAP amortization of acquisition-related intangible assets	$	-		$	-		$	-

	GAAP Other income (expense)	$	-		$	(2	)	$	1,598
	PPA effects		-			-			-
	Other incidentals		(1	)		(2	)		1,596
	Non-GAAP Other income (expense)	$	1		$	-		$	2

	GAAP Operating income (loss)	$	138		$	210		$	1,679
	PPA effects		(382	)		(431	)		(430	)
	Restructuring		(1	)		-			8
	Stock based compensation		(69	)		(78	)		(68	)
	Merger-related costs		(26	)		(32	)		(30	)
	Other incidentals		(1	)		(12	)		1,600		1	)
	Non-GAAP Operating income (loss)	$	617		$	763		$	599

	GAAP Operating margin		6.1	%		8.6	%		75.9	%

	Non-GAAP Operating margin		27.2	%		31.1	%		27.1	%

	GAAP Financial income (expense)	$	(68	)	$	(79	)	$	(136	)
	PPA effects		-			-			-
	Non-cash interest expense on convertible notes		(11	)		(10	)		(10	)
	Foreign exchange gain (loss)		(3	)		(3	)		(5	)
	Extinguishment on debt		-			-			(41	)
	Changes in fair value of warrant liability		-			-			-
	Other financial expense		(3	)		(11	)		(5	)
	Non-GAAP Financial income (expense)	$	(51	)	$	(55	)	$	(75	)


1) Adjustment relates primarily to the gain on the sale of the SP business on February 6, 2017.


NXP Semiconductors
Table 6: Adjusted EBITDA and Free Cash Flow (unaudited)



($ in millions)	Three Months Ended
	April 1, 2018			December 31, 2017			April 2, 2017
Net Income (loss)	$	70		$	768		$	1,318

Reconciling items to EBITDA
Financial (income) expense		68			79			136
(Benefit) provision for income taxes		2			(629	)		230
Depreciation		116			145			154
Amortization		375			397			380
EBITDA	$	631		$	760		$	2,218

Reconciling items to adjusted EBITDA
Results of equity-accounted investees		(2	)		(8	)		(5	)
Restructuring ¹⁾		1			-			(8	)
Stock based compensation		69			78			68
Merger-related costs ¹⁾		26			32			30
Other incidental items ¹⁾		1			12			(1,596	)
Adjusted EBITDA	$	726		$	874		$	707

Trailing twelve month adjusted EBITDA	$	3,176		$	3,157		$	3,056


¹⁾ Excluding depreciation property, plant and equipment and amortization of software related to:
Other incidental items		-			-			(4	)




($ in millions)	Three Months Ended
	April 1, 2018			December 31, 2017			April 2, 2017

Net cash provided by (used for) operating activities	$	620		$	738		$	625
Net capital expenditures on property, plant and equipment		(156	)		(132	)		(161	)

Non-GAAP free cash flow	$	464		$	606		$	464
Non-GAAP free cash flow as a percent of Revenue		21	%		25	%		21	%