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NXP Semiconductors Reports Fourth Quarter and Full-year 2020 Results

/EIN News/ -- EINDHOVEN, The Netherlands, Feb. 01, 2021 (GLOBE NEWSWIRE) -- NXP Semiconductors N.V. (NASDAQ: NXPI) today reported financial results for the fourth quarter and full year ended December 31, 2020.

“NXP delivered full-year revenue of $8.6 billion, with 2020 being best characterized as two halves with completely different business trends. During the first half of the year, NXP was faced with the unprecedented shut down of our customers in most end markets and geographies because of the global pandemic. As we entered the second half of 2020, and our customers began to re-open, NXP experienced a very robust rebound in demand, which we anticipate continuing throughout 2021. In the fourth quarter, revenue was $2.5 billion, an increase of 9 percent year-on-year, and near the upper end of our guidance range. During this time, we experienced especially strong trends in the Automotive and Mobile end-markets,” said Kurt Sievers, NXP President and Chief Executive Officer.

“Notwithstanding a tumultuous 2020, revenue associated with key strategic growth areas accelerated throughout the year. We continued to maintain focused investments in critical R&D programs, which will assure the company’s long-term success, while simultaneously controlling non-essential, discretionary expenses, resulting in solid operating profitability and strong cash flow. Throughout the year, our number one priority was to assure the safety and health of all our employees. We are extremely proud of their adaptability, dedication and hard work in the face of adversity,” said Sievers.

Key Highlights

  • Fourth-quarter revenue was $2.5 billion, up 9.0 percent year-on-year;
  • Fourth-quarter GAAP gross margin was 51.4 percent, and GAAP operating margin was 18.5 percent;
  • Fourth-quarter non-GAAP gross margin was 52.9 percent, and non-GAAP operating margin was 30.5 percent;
  • Full-year cash flow from operations was $2,482 million, with net capex investments of $388 million, resulting in non-GAAP free cash flow of $2,094 million;
  • On November 19, 2020, the NXP Board of Directors approved the payment of an interim dividend for the fourth quarter 2020 of $0.375 per ordinary share;
  • In 2020, NXP returned $1,047 million to shareholders, through previously announced share repurchases and dividend payments;
  • On September 28, 2020, subsequent to the close of NXP's third quarter, the company fully redeemed the $1.35 billion of outstanding principal of the 4.125% Senior Notes due 2021 and the $400 million of outstanding principal of the 4.625% Senior Notes due 2022. The total amount of these redemptions, $1.83 billion, were paid from available cash on balance sheet.

Summary of Reported Fourth Quarter and Full-year 2020 ($ millions, unaudited) (1)

  Q4 2020 Q3 2020 Q4 2019 Q - Q Y - Y 2020 2019 Y-Y
Total Revenue $ 2,507   $ 2,267   $ 2,301   11% 9% $ 8,612   $ 8,877   -3%
GAAP Gross Profit $ 1,288   $ 1,090   $ 1,209   18% 7% $ 4,235   $ 4,618   -8%
Gross Profit Adjustments (i) $ (38 ) $ (45 ) $ (39 )     $ (165 ) $ (131 )  
Non-GAAP Gross Profit $ 1,326   $ 1,135   $ 1,248   17% 6% $ 4,400   $ 4,749   -7%
GAAP Gross Margin 51.4 % 48.1 % 52.5 %     49.2 % 52.0 %  
Non-GAAP Gross Margin 52.9 % 50.1 % 54.2 %     51.1 % 53.5 %  
GAAP Operating Income / (Loss) $ 463   $ 32   $ 197   1,347% 135% $ 418   $ 641   -35%
Operating Income Adjustments (i) $ (301 ) $ (554 ) $ (490 )     $ (1,810 ) $ (1,932 )  
Non-GAAP Operating Income $ 764   $ 586   $ 687   30% 11% $ 2,228   $ 2,573   -13%
GAAP Operating Margin 18.5 % 1.4 % 8.6 %     4.9 % 7.2 %  
Non-GAAP Operating Margin 30.5 % 25.8 % 29.9 %     25.9 % 29.0 %  


Additional information                
Automotive $ 1,193   $ 964   $ 1,097   24% 9% $ 3,825   $ 4,212   -9%
Industrial & IoT $ 511   $ 514   $ 415   -1% 23% $ 1,836   $ 1,599   15%
Mobile $ 409   $ 337   $ 332   21% 23% $ 1,248   $ 1,191   5%
Comm. Infra. & Other $ 394   $ 452   $ 457   -13% -14% $ 1,703   $ 1,875   -9%
DIO 78
  84
    102            
DPO 75
  55
    81            
DSO 28
  30
    26            
Cash Conversion Cycle 31
  59
    47            
Channel Inventory (months) 1.6
  2.4
    2.3            
Financial Leverage (ii) 1.9x
  2.1x
    2.0x            


1. Additional Information for the Fourth Quarter and Full-year 2020:
    i. For an explanation of GAAP to non-GAAP adjustments, please see “Non-GAAP Financial Measures”.
    ii. Financial leverage is defined as net debt divided by trailing twelve months adjusted EBITDA.
  During the fourth quarter of 2020, NXP repurchased 1.8 million shares for a total cost of $257 million and paid cash dividends of $105 million. Full year 2020, NXP repurchased 4.8 million shares for a total cost of $627 million, paid cash dividends of $420 million.
  Weighted average number of diluted shares for the three-month period ended December 31, 2020 was 285.3 million. Weighted average number of diluted shares for the twelve-month period ended December 31, 2020 was 283.8 million.
  Net cash paid for income taxes related to on-going operations was $30 million. Net cash paid for income taxes not related to on-going operations resulted in additional cash payments of $15 million. Full year 2020 net cash paid for income taxes related to on-going operations was $103 million, not related to on-going operations was $45 million.
  Peter Kelly, NXP’s Chief Financial Officer has notified the company of his intent to retire from NXP as of February 2022. The company will undertake a search for qualified candidates both internally and externally.
     

Guidance for the First Quarter 2021: ($ millions) (1)

  Guidance Range
  GAAP   Reconciliation   non-GAAP
  Low   Mid   High       Low   Mid   High
Total Revenue $ 2,475     $ 2,550     $ 2,625         $ 2,475     $ 2,550     $ 2,625  
Q-Q -1 %   2 %   5 %       -1 %   2 %   5 %
Y-Y 22 %   26 %   30 %       22 %   26 %   30 %
Gross Profit $ 1,283     $ 1,331     $ 1,378     $ (34 )     $ 1,317     $ 1,365     $ 1,412  
Gross Margin 51.8 %   52.2 %   52.5 %       53.2 %   53.5 %   53.8 %
Operating Income (loss) $ 468     $ 506     $ 543     $ (269 )     $ 737     $ 775     $ 812  
Operating Margin 18.9 %   19.8 %   20.7 %       29.8 %   30.4 %   30.9 %
Financial Income (expense) $ (87 )   $ (87 )   $ (87 )   $ (2 )     $ (85 )   $ (85 )   $ (85 )

Note (1) Additional Information:

  1. GAAP Gross Profit is expected to include Purchase Price Accounting (“PPA”) effects, $(16) million; Stock Based Compensation, $(12) million; Other Incidentals, $(6) million;
  2. GAAP Operating Income (loss) is expected to include PPA effects, $(162) million; Stock Based Compensation, $(88) million; Restructuring and Other Incidentals, $(19) million;
  3. GAAP Financial Income (expense) is expected to include Other financial expense $(2) million;
  4. Net cash paid for income taxes related to on-going operations is expected to be approximately $(56) million;
  5. Non-controlling interest is expected to be approximately $(10) million;
  6. Weighted average diluted share count is expected to be approximately 284 million.

NXP has based the guidance included in this release on judgments and estimates that management believes are reasonable given its assessment of historical trends and other information reasonably available as of the date of this release. Please note, the guidance included in this release consists of predictions only, and is subject to a wide range of known and unknown risks and uncertainties, many of which are beyond NXP's control. The guidance included in this release should not be regarded as representations by NXP that the estimated results will be achieved. Actual results may vary materially from the guidance we provide today. In relation to the use of non-GAAP financial information see the note regarding "Non-GAAP Financial Measures" below. For the factors, risks, and uncertainties to which judgments, estimates and forward-looking statements generally are subject see the note regarding "Forward-looking Statements." We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein, to reflect future events or circumstances.

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 https://investors.nxp.com 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) adjusted net income, 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, and foreign exchange gains and losses.

Conference Call and Webcast Information
The company will host a conference call with the financial community on Tuesday, February 2, 2021 at 8:00 a.m. U.S. Eastern Standard Time (EST) to review the fourth quarter and full-year 2020 results in detail. Interested parties may join the scheduled conference call by dialing the following numbers:

Within the U.S.:   1 - 888 - 603 - 7644
Outside the U.S.:   1 - 484 - 747 - 6631
Participant Passcode:  6985554

The call will be webcast and can be accessed from the NXP Investor Relations website https://investors.nxp.com. A replay of the call will be available on the NXP Investor Relations website within 24 hours of the actual call.

About NXP Semiconductors

NXP Semiconductors N.V. (NASDAQ: NXPI) enables secure connections 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 automotive, industrial & IoT, mobile, and communication infrastructure markets. Built on more than 60 years of combined experience and expertise, the company has approximately 29,000 employees in more than 30 countries and posted revenue of $8.61 billion in 2020. 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: the duration and spread of the COVID-19 outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume; market demand and semiconductor industry conditions; the ability to successfully introduce new technologies and products; the demand for the goods into which NXP’s products are incorporated; trade disputes between the U.S. and China, potential increase of barriers to international trade and resulting disruptions to NXP's established supply chains; the ability to generate sufficient cash, raise sufficient capital or refinance corporate debt at or before maturity to meet both NXP's debt service and 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 potential impact of the outbreak of COVID-19 on NXP's business, operations, results of operations, financial condition, workforce or the operations or decisions of customers, suppliers or business customers; the access to production capacity from third-party outsourcing partners and any events that might affect their business or NXP’s relationship with them including the outbreak of COVID-19 or the requirements to suspend activities with customers or suppliers because of changing import and export regulations; 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; the ability to develop products for use in customers’ equipment and products; the ability to successfully hire and retain key management and senior product engineers; and, the ability to maintain good relationships with NXP's suppliers. In addition, this document contains information concerning the semiconductor industry and NXP’s market and 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 and NXP's market and business segments may develop. NXP has based these assumptions on information currently available, if any one or more of these assumptions turn out to be incorrect, actual results may differ from those predicted. While NXP does not know 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. There can be no assurances that a pandemic, epidemic or outbreak of a contagious diseases, such as COVID-19, will not have a material and adverse impact on our business, operating results and financial condition in the future. 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-CORP

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

($ in millions except share data) Three months ended   Full-year
  December 31,
2020
  September 27,
2020
  December 31,
2019
  2020   2019
                   
Revenue $ 2,507     $ 2,267     $ 2,301     $ 8,612     $ 8,877  
Cost of revenue (1,219 )   (1,177 )   (1,092 )   (4,377 )   (4,259 )
Gross profit 1,288     1,090     1,209     4,235     4,618  
Research and development (460 )   (438 )   (424 )   (1,725 )   (1,643 )
Selling, general and administrative (221 )   (203 )   (225 )   (879 )   (924 )
Amortization of acquisition-related intangible assets (148 )   (418 )   (365 )   (1,327 )   (1,435 )
Total operating expenses (829 )   (1,059 )   (1,014 )   (3,931 )   (4,002 )
Other income (expense) 4     1     2     114     25  
Operating income (loss) 463     32     197     418     641  
Financial income (expense):                  
Extinguishment of debt (60 )           (60 )   (11 )
Other financial income (expense) (77 )   (106 )   (93 )   (357 )   (339 )
Income (loss) before income taxes 326     (74 )   104     1     291  
Benefit (provision) for income taxes (5 )   57     20     83     (20 )
Results relating to equity-accounted investees (1 )   (1 )   (1 )   (4 )   1  
Net income (loss) 320     (18 )   123     80     272  
Less: Net income (loss) attributable to non-controlling interests 11     4     9     28     29  
Net income (loss) attributable to stockholders 309     (22 )   114     52     243  
                   
Earnings per share data:                  
Net income (loss) per common share attributable to stockholders in $      
Basic $ 1.10     $ (0.08 )   $ 0.41     $ 0.19     $ 0.86  
Diluted $ 1.08     $ (0.08 )   $ 0.40     $ 0.18     $ 0.85  
                   
Weighted average number of shares of common stock outstanding during the period (in thousands):    
Basic 280,484     279,467     280,766     279,763     282,056  
Diluted 285,258     279,467     285,518     283,809     285,911  
                   


NXP Semiconductors

Table 2: Condensed consolidated balance sheet (unaudited)

($ in millions) As of
  December 31,
2020
  September 27,
2020
  December 31,
2019
ASSETS          
Current assets:          
Cash and cash equivalents $ 2,275     $ 3,566     1,045  
Accounts receivable, net 765     755     667  
Assets held for sale         50  
Inventories, net 1,030     1,064     1,192  
Other current assets 254     219     313  
Total current assets 4,324     5,604     3,267  
           
Non-current assets:          
Other non-current assets 1,013     924     732  
Property, plant and equipment, net 2,284     2,255     2,448  
Identified intangible assets, net 2,242     2,380     3,620  
Goodwill 9,984     9,959     9,949  
Total non-current assets 15,523     15,518     16,749  
           
Total assets 19,847     21,122     20,016  
           
LIABILITIES AND EQUITY          
Current liabilities:          
Accounts payable 991     697     944  
Restructuring liabilities-current 60     25     32  
Other current liabilities 966     940     815  
Short-term debt     1,749      
Total current liabilities 2,017     3,411     1,791  
           
Non-current liabilities:          
Long-term debt 7,609     7,607     7,365  
Restructuring liabilities 14     15      
Deferred tax liabilities 85     136     282  
Other non-current liabilities 971     880     923  
Total non-current liabilities 8,679     8,638      8,570  
           
Non-controlling interests 207     197     214  
Stockholders’ equity 8,944     8,876     9,441  
Total equity 9,151     9,073     9,655  
           
Total liabilities and equity 19,847     21,122     20,016  
           


NXP Semiconductors

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

($ in millions) Three months ended   Full-year
  December 31,
2020
  September 27,
2020
  December 31,
2019
  2020   2019
Cash flows from operating activities:                  
Net income (loss) $ 320     $ (18 )   $ 123     $ 80     $ 272  
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:                  
Depreciation and amortization 316     589     522     1,988     2,047  
Stock-based compensation 89     83     89     384     346  
Amortization of discount (premium) on debt, net         8     (1 )   42  
Amortization of debt issuance costs 2     3     3     9     11  
Net (gain) loss on sale of assets (4 )   (1 )       (115 )   (20 )
(Gain) loss on extinguishment of debt 60             60     11  
Results relating to equity-accounted investees 1     1     1     4     (1 )
Gain (loss) on equity securities, net (21 )           (21 )    
Deferred tax expense (benefit) (75 )   (118 )   (49 )   (349 )   (175 )
Changes in operating assets and liabilities:                  
(Increase) decrease in receivables and other current assets (50 )   (252 )   144     (51 )   116  
(Increase) decrease in inventories 34     164     (7 )   163     128  
Increase (decrease) in accounts payable and other liabilities 333     82     (35 )   319     (460 )
(Increase) decrease in other non-current assets 23     (9 )   7     7     43  
Exchange differences 10     5     9     16     15  
Other items (9 )   (2 )   (1 )   (11 )   (2 )
Net cash provided by (used for) operating activities 1,029     527     814     2,482     2,373  
                   
Cash flows from investing activities:                  
Purchase of identified intangible assets (35 )   (22 )   (30 )   (130 )   (102 )
Capital expenditures on property, plant and equipment (104 )   (70 )   (138 )   (392 )   (526 )
Proceeds from the disposals of property, plant and equipment 1     2         4     23  
Purchase of interests in businesses, net of cash acquired (13 )       (1,698 )   (34 )   (1,698 )
Proceeds from sale of interests in businesses, net of cash divested             161     37  
Purchase of investments (15 )   (15 )       (30 )   (19 )
Proceeds from the sale of investments 2             2     1  
Proceeds from return of equity investments 1             1      
Net cash provided by (used for) investing activities (163 )   (105 )   (1,866 )   (418 )   (2,284 )
                   
Cash flows from financing activities:                  
Payment of cash convertible note         (1,150 )       (1,150 )
Proceeds from settlement of cash convertible note hedge         144         144  
Payment of bond hedge derivatives - convertible option         (144 )       (145 )
Repurchase of long-term debt (1,809 )           (1,809 )   (600 )
Principal payments on long-term debt                  
Proceeds from the issuance of long-term debt             2,000     1,750  
Cash paid for debt issuance costs             (15 )   (24 )
Dividends paid to non-controlling interests (1 )   (34 )       (35 )    
Dividends paid to common stockholders (105 )   (105 )   (105 )   (420 )   (319 )
Proceeds from issuance of common stock through stock plans 8     27     14     72     84  
Purchase of treasury shares and restricted stock unit withholdings (257 )   (12 )   (74 )   (627 )   (1,443 )
Cash paid on behalf of shareholders for tax on repurchased shares         (128 )       (128 )
Other, net (1 )           (1 )    
Net cash provided by (used for) financing activities (2,165 )   (124 )   (1,443 )   (835 )   (1,831 )
                   
Effect of changes in exchange rates on cash positions 8     2     3     1     (2 )
Increase (decrease) in cash and cash equivalents (1,291 )   300      (2,492 )   1,230      (1,744 )
Cash and cash equivalents at beginning of period 3,566     3,266     3,537     1,045     2,789  
Cash and cash equivalents at end of period 2,275     3,566     1,045     2,275     1,045  
                   
Net cash paid during the period for:                  
Interest 125     54     95     336     242  
Income tax 45     39     34     148     368  
Net gain (loss) on sale of assets:                  
Cash proceeds from the sale of assets 2     2         165     21  
Book value of these assets 2     (1 )       (50 )   (1 )
Non-cash investing activities:                  
Non-cash capital expenditures 119     62     133     119     133  


NXP Semiconductors

Table 4: Financial Reconciliation of GAAP to non-GAAP Results (unaudited)

($ in millions) Three months ended   Full-year
  December 31,
2020
  September 27,
2020
  December 31,
2019
  2020   2019
Revenue $ 2,507     $ 2,267     $ 2,301     $ 8,612     $ 8,877  
GAAP Gross Profit $ 1,288     $ 1,090     $ 1,209     $ 4,235     $ 4,618  
PPA Effects (21 )   (22 )   (28 )   (99 )   (84 )
Restructuring     (12 )       (15 )   (3 )
Stock Based Compensation (12 )   (11 )   (11 )   (45 )   (42 )
Merger-related costs             (1 )   (2 )
Other incidentals (5 )           (5 )    
Non-GAAP Gross Profit $ 1,326     $ 1,135     $ 1,248     $ 4,400     $ 4,749  
GAAP Gross margin 51.4   48.1 %   52.5 %   49.2 %   52.0 %
Non-GAAP Gross margin 52.9   50.1 %   54.2 %   51.1 %   53.5 %
GAAP Research and development $ (460 )   $ (438 )   $ (424 )   $ (1,725 )   $ (1,643 )
Restructuring (22 )   (7 )       (39 )   (16 )
Stock based compensation (41 )   (39 )   (38 )   (159 )   (141 )
Merger-related costs         (1 )   (1 )   (7 )
Other incidentals (1 )   (5 )       (6 )    
Non-GAAP Research and development $ (396 )   $ (387 )   $ (385 )   $ (1,520 )   $ (1,479 )
GAAP Selling, general and administrative $ (221 )   $ (203 )   $ (225 )   $ (879 )   $ (924 )
PPA effects (2 )   (1 )   (1 )   (7 )   (9 )
Restructuring (16 )   (2 )   1     (24 )   (9 )
Stock based compensation (36 )   (33 )   (40 )   (180 )   (163 )
Merger-related costs     (1 )   (3 )   (6 )   (24 )
Other incidentals     (3 )   (4 )   (8 )   (16 )
Non-GAAP Selling, general and administrative $ (167 )   $ (163 )   $ (178 )   $ (654 )   $ (703 )
GAAP amortization of acquisition-related intangible assets $ (148 )   $ (418 )   $ (365 )   $ (1,327 )   $ (1,435 )
PPA effects (148 )   (418 )   (365 )   (1,327 )   (1,435 )
Non-GAAP amortization of acquisition-related intangible assets $     $     $     $     $  
GAAP Other income (expense) $ 4     $ 1     $ 2     $ 114     $ 25  
Other incidentals 3             112     19  
Non-GAAP Other income (expense) $ 1     $ 1     $ 2     $ 2     $ 6  
GAAP Operating income (loss) $ 463     $ 32     $ 197     $ 418     $ 641  
PPA effects (171 )   (441 )   (394 )   (1,433 )   (1,528 )
Restructuring (38 )   (21 )   1     (78 )   (28 )
Stock based compensation (89 )   (83 )   (89 )   (384 )   (346 )
Merger-related costs     (1 )   (4 )   (8 )   (33 )
Other incidentals (3 )   (8 )   (4 )   93     3  
Non-GAAP Operating income (loss) $ 764     $ 586     $ 687     $ 2,228     $ 2,573  
GAAP Operating margin 18.5 %   1.4  %   8.6 %   4.9 %   7.2 %
Non-GAAP Operating margin 30.5 %   25.8 %   29.9 %   25.9 %   29.0 %
GAAP Financial income (expense) $ (137 )   $ (106 )   $ (93 )   $ (417 )   $ (350 )
Non-cash interest expense on convertible notes         (8 )       (42 )
Foreign exchange gain (loss) (6 )   (3 )   (4 )   (12 )   (17 )
Gain (loss) on extinguishment of long-term debt (60 )           (60 )   (11 )
Other financial income (expense) 19     (3 )   (4 )   12     (15 )
Non-GAAP Financial income (expense) $ (90 )   $ (100 )   $ (77 )   $ (357 )   $ (265 )
                   


NXP Semiconductors

Table 5: Adjusted EBITDA and Free Cash Flow (unaudited)

($ in millions) Three months ended   Full-year
  December 31,
2020
  September 27,
2020
  December 31,
2019
  2020   2019
Net income (loss) $ 320     $ (18 )   $ 123     $ 80     $ 272  
Reconciling items to adjusted net income                  
Financial (income) expense 137     106     93     417     350  
(Benefit) provision for income taxes 5     (57 )   (20 )   (83 )   20  
Depreciation 139     139     131     547     518  
Amortization 177     450     391     1,441     1,529  
Adjusted net income $ 778     $ 620     $ 718     $ 2,402     $ 2,689  
Reconciling items to adjusted EBITDA                  
Results of equity-accounted investees 1     1     1     4     (1 )
Purchase accounting effect on inventory         8     17     8  
Restructuring 38     21     (1 )   78     28  
Stock based costs 89     83     89     384     346  
Merger-related costs     1     4     8     33  
Other incidental items 1) 1     2     4     (101 )   (3 )
Adjusted EBITDA $ 907     $ 728     $ 823     $ 2,792     $ 3,100  
Trailing twelve month adjusted EBITDA $ 2,792     $ 2,708     $ 3,100     $ 2,792     $ 3,100  
                   
1) Excluding amortization related to:                  
- other incidental items $ 2     $ 6     $     $ 8     $  
                   
                   
                   
                   
                   
($ in millions) Three months ended   Full-year
  December 31, 2020   September 27, 2020   December 31, 2019   2020   2019
Net cash provided by (used for) operating activities $ 1,029     $ 527     $ 814     $ 2,482     $ 2,373  
Net capital expenditures on property, plant and equipment (103 )   (68 )   (138 )   (388 )   (503 )
Non-GAAP free cash flow $ 926     $ 459     $ 676     $ 2,094     $ 1,870  
Non-GAAP free cash flow as percent of Revenue 37 %   20 %   29 %   24 %   21 %
                   


 


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