SOURCE: NXP Semiconductors

NXP Semiconductors

April 11, 2013 16:15 ET

NXP Semiconductors Announces Realignment of Business Segments

EINDHOVEN, THE NETHERLANDS--(Marketwired - Apr 11, 2013) - NXP Semiconductors N.V. (NASDAQ: NXPI) 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 2012     Q3 2012     Q4 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)

  Q4 2012   Q3 2012   Q4 2011   Percent Q4 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)

                                               
  Infrastructure &
Industrial
+   Portable &
Computing
+   Automotive +   Identification =   High Performance Mixed Signal (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 (HPMS)   Standard Products (STDP)   Manufacturing
Operations
  Corporate &
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. (NASDAQ: NXPI) provides High Performance Mixed Signal and Standard Product solutions that leverage its leading RF, Analog, Power Management, Interface, Security and Digital Processing expertise. These innovations are used in a wide range of automotive, identification, wireless infrastructure, lighting, industrial, mobile, consumer and computing applications. A global semiconductor company with operations in more than 25 countries, NXP posted 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, 2012     Sept 30, 2012     Dec 31, 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, 2012     Sept 30, 2012     Dec 31, 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, 2012     Sept 30, 2012     Dec 31, 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, 2012           Sept 30, 2012     Dec 31, 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, 2012     Sept 30, 2012     Dec 31, 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