UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~April 3, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-34841

NXP Semiconductors N.V.

(Exact name of registrant as specified in its charter)


Netherlands						98-1144352
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification number)

60 High Tech Campus						5656 AG
Eindhoven
Netherlands
(Address of principal executive offices)						(Zip code)


	+31	40	2729999
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common shares, EUR 0.20 par value	NXPI	The Nasdaq Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of ~~October~~April 29, ~~2021,~~2022, there were ~~265,933,249~~262,564,790 shares of our common stock, €0.20 par value per share, issued and outstanding.

NXP Semiconductors N.V.

Form 10-Q

For the Fiscal Quarter Ended ~~October~~April 3, ~~2021~~2022

TABLE OF CONTENTS


		Page
Part I
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1513
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2521
Item 4.	Controls and Procedures	2521

Part II
Item 1.	Legal Proceedings	2522
Item 1A.	Risk Factors	2623
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2623
Item 5.	Other Information	2623
Item 6.	Exhibits	2724

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

($ in millions, unless otherwise stated)


		For the three months ended		For the nine months ended			For the three months ended
		October 3, 2021	September 27, 2020	October 3, 2021	September 27, 2020			April 3, 2022	April 4, 2021
Revenue	Revenue	2,861	2,267	8,024	6,105	Revenue		3,136	2,567
Cost of revenue	Cost of revenue	(1,278)	(1,177)	(3,664)	(3,158)	Cost of revenue		(1,359)	(1,212)
Gross profit	Gross profit	1,583	1,090	4,360	2,947	Gross profit		1,777	1,355
Research and development	Research and development	(492)	(438)	(1,429)	(1,265)	Research and development		(518)	(461)
Selling, general and administrative	Selling, general and administrative	(243)	(203)	(699)	(658)	Selling, general and administrative		(251)	(222)
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	(137)	(418)	(456)	(1,179)	Amortization of acquisition-related intangible assets		(135)	(180)
Total operating expenses	Total operating expenses	(872)	(1,059)	(2,584)	(3,102)	Total operating expenses		(904)	(863)
Other income (expense)	Other income (expense)	—	1	—	110	Other income (expense)		—	—
Operating income (loss)	Operating income (loss)	711	32	1,776	(45)	Operating income (loss)		873	492
Financial income (expense):	Financial income (expense):					Financial income (expense):

Other financial income (expense)	Other financial income (expense)	(93)	(106)	(280)	(280)	Other financial income (expense)		(105)	(87)
Income (loss) before income taxes	Income (loss) before income taxes	618	(74)	1,496	(325)	Income (loss) before income taxes		768	405
Benefit (provision) for income taxes	Benefit (provision) for income taxes	(95)	57	(200)	88	Benefit (provision) for income taxes		(114)	(40)
Results relating to equity-accounted investees	Results relating to equity-accounted investees	3	(1)	—	(3)	Results relating to equity-accounted investees		12	(1)
Net income (loss)	Net income (loss)	526	(18)	1,296	(240)	Net income (loss)		666	364
Less: Net income (loss) attributable to non-controlling interests	Less: Net income (loss) attributable to non-controlling interests	7	4	27	17	Less: Net income (loss) attributable to non-controlling interests		9	11
Net income (loss) attributable to stockholders	Net income (loss) attributable to stockholders	519	(22)	1,269	(257)	Net income (loss) attributable to stockholders		657	353

Earnings per share data:	Earnings per share data:					Earnings per share data:
Net income (loss) per common share attributable to stockholders in $	Net income (loss) per common share attributable to stockholders in $					Net income (loss) per common share attributable to stockholders in $
Basic	Basic	1.95	(0.08)	4.66	(0.92)	Basic		2.50	1.27
Diluted	Diluted	1.91	(0.08)	4.57	(0.92)	Diluted		2.48	1.25

Weighted average number of shares of common stock outstanding during the period (in thousands):	Weighted average number of shares of common stock outstanding during the period (in thousands):					Weighted average number of shares of common stock outstanding during the period (in thousands):
Basic	Basic	266,557	279,467	272,314	279,511	Basic		263,089	277,526
Diluted	Diluted	271,359	279,467	277,886	279,511	Diluted		265,109	283,263

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

($ in millions, unless otherwise stated)


		For the three months ended		For the nine months ended			For the three months ended
		October 3, 2021	September 27, 2020	October 3, 2021	September 27, 2020			April 3, 2022	April 4, 2021
Net income (loss)	Net income (loss)	526	(18)	1,296	(240)	Net income (loss)		666	364
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:					Other comprehensive income (loss), net of tax:
Change in fair value cash flow hedges	Change in fair value cash flow hedges	(2)	4	(16)	5	Change in fair value cash flow hedges		(4)	(14)
Change in foreign currency translation adjustment	Change in foreign currency translation adjustment	(23)	37	(56)	14	Change in foreign currency translation adjustment		(18)	(42)
Change in net actuarial gain (loss)	Change in net actuarial gain (loss)	—	(1)	—	(4)	Change in net actuarial gain (loss)		—	—

Total other comprehensive income (loss)	Total other comprehensive income (loss)	(25)	40	(72)	15	Total other comprehensive income (loss)		(22)	(56)
Total comprehensive income (loss)	Total comprehensive income (loss)	501	22	1,224	(225)	Total comprehensive income (loss)		644	308
Less: Comprehensive income (loss) attributable to non-controlling interests	Less: Comprehensive income (loss) attributable to non-controlling interests	7	4	27	17	Less: Comprehensive income (loss) attributable to non-controlling interests		9	11
Total comprehensive income (loss) attributable to stockholders	Total comprehensive income (loss) attributable to stockholders	494	18	1,197	(242)	Total comprehensive income (loss) attributable to stockholders		635	297

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

($ in millions, unless otherwise stated)


			October 3, 2021	December 31, 2020			April 3, 2022	December 31, 2021
ASSETS	ASSETS				ASSETS
Current assets:	Current assets:				Current assets:
		Cash and cash equivalents	2,303	2,275		Cash and cash equivalents	2,683	2,830
		Accounts receivable, net	979	765		Accounts receivable, net	925	923

		Inventories, net	1,173	1,030		Inventories, net	1,311	1,189
		Other current assets	266	254		Other current assets	356	286
Total current assets	Total current assets		4,721	4,324	Total current assets		5,275	5,228
Non-current assets:	Non-current assets:				Non-current assets:
		Other non-current assets	1,070	1,013		Other non-current assets	1,701	1,346
		Property, plant and equipment, net of accumulated depreciation of $4,565 and $4,237	2,510	2,284		Property, plant and equipment, net of accumulated depreciation of $4,805 and $4,676	2,814	2,635
		Identified intangible assets, net of accumulated amortization of $7,441 and $7,007	1,741	2,242		Identified intangible assets, net of accumulated amortization of $3,059 and $3,021	1,577	1,694
		Goodwill	9,968	9,984		Goodwill	9,954	9,961
		Total non-current assets	15,289	15,523		Total non-current assets	16,046	15,636
Total assets	Total assets		20,010	19,847	Total assets		21,321	20,864

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY				LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:				Current liabilities:
		Accounts payable	1,140	991		Accounts payable	1,369	1,252

		Restructuring liabilities-current	30	60		Restructuring liabilities-current	16	25
		Other current liabilities	1,269	966		Other current liabilities	1,460	1,175
		Short-term debt	999	—
Total current liabilities	Total current liabilities		3,438	2,017	Total current liabilities		2,845	2,452
Non-current liabilities:	Non-current liabilities:				Non-current liabilities:
		Long-term debt	8,594	7,609		Long-term debt	10,573	10,572
		Restructuring liabilities	13	14		Restructuring liabilities	14	12
		Deferred tax liabilities	84	85		Deferred tax liabilities	53	57
		Other non-current liabilities	909	971		Other non-current liabilities	1,076	1,001
Total non-current liabilities	Total non-current liabilities		9,600	8,679	Total non-current liabilities		11,716	11,642
Total liabilities	Total liabilities		13,038	10,696	Total liabilities		14,561	14,094
Equity:	Equity:				Equity:
		Non-controlling interests	234	207		Non-controlling interests	251	242

		Stockholders’ equity:				Stockholders’ equity:
		Common stock, par value €0.20 per share:	59	59		Common stock, par value €0.20 per share:	56	56
		Capital in excess of par value	14,392	14,133		Capital in excess of par value	13,819	13,727
		Treasury shares, at cost:				Treasury shares, at cost:
		23,179,725 shares (2020: 9,044,952 shares)	(4,028)	(1,037)		11,966,850 shares (2021: 9,569,359 shares)	(2,433)	(1,932)
		Accumulated other comprehensive income (loss)	45	117		Accumulated other comprehensive income (loss)	26	48
		Accumulated deficit	(3,730)	(4,328)		Accumulated deficit	(4,959)	(5,371)
		Total stockholders’ equity	6,738	8,944		Total stockholders’ equity	6,509	6,528
Total equity	Total equity		6,972	9,151	Total equity		6,760	6,770
Total liabilities and equity	Total liabilities and equity		20,010	19,847	Total liabilities and equity		21,321	20,864

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

($ in millions, unless otherwise stated)


		For the nine months ended			For the three months ended
		October 3, 2021	September 27, 2020		April 3, 2022	April 4, 2021
Cash flows from operating activities:	Cash flows from operating activities:			Cash flows from operating activities:
Net income (loss)	Net income (loss)	1,296	(240)	Net income (loss)	666	364
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:	Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:			Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization	Depreciation and amortization	952	1,672	Depreciation and amortization	310	341
Share-based compensation	Share-based compensation	265	295	Share-based compensation	89	91
Amortization of discount (premium) on debt, net	Amortization of discount (premium) on debt, net	1	(1)	Amortization of discount (premium) on debt, net	1	—
Amortization of debt issuance costs	Amortization of debt issuance costs	5	7	Amortization of debt issuance costs	2	2
Net (gain) loss on sale of assets	Net (gain) loss on sale of assets	—	(111)	Net (gain) loss on sale of assets	(1)	—
(Gain) loss on equity security, net	(Gain) loss on equity security, net	(2)	—	(Gain) loss on equity security, net	(4)	(3)

Results relating to equity-accounted investees	Results relating to equity-accounted investees	—	3	Results relating to equity-accounted investees	(12)	1
Deferred tax expense (benefit)	Deferred tax expense (benefit)	6	(274)	Deferred tax expense (benefit)	(33)	12
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:			Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current assets	(Increase) decrease in receivables and other current assets	(214)	(1)	(Increase) decrease in receivables and other current assets	(61)	(95)
(Increase) decrease in inventories	(Increase) decrease in inventories	(143)	129	(Increase) decrease in inventories	(122)	(26)
Increase (decrease) in accounts payable and other liabilities	Increase (decrease) in accounts payable and other liabilities	242	(14)	Increase (decrease) in accounts payable and other liabilities	266	51
Decrease (increase) in other non-current assets	Decrease (increase) in other non-current assets	(106)	(16)	Decrease (increase) in other non-current assets	(247)	(8)
Exchange differences	Exchange differences	(3)	6	Exchange differences	—	(1)
Other items	Other items	(7)	(2)	Other items	2	3
Net cash provided by (used for) operating activities	Net cash provided by (used for) operating activities	2,292	1,453	Net cash provided by (used for) operating activities	856	732
Cash flows from investing activities:	Cash flows from investing activities:			Cash flows from investing activities:
Purchase of identified intangible assets	Purchase of identified intangible assets	(99)	(95)	Purchase of identified intangible assets	(43)	(37)
Capital expenditures on property, plant and equipment	Capital expenditures on property, plant and equipment	(501)	(288)	Capital expenditures on property, plant and equipment	(280)	(150)
Purchase of equipment leased to others	Purchase of equipment leased to others	(14)	—	Purchase of equipment leased to others	(5)	—
Insurance recoveries received for equipment damage		7	—

Proceeds from disposals of property, plant and equipment	Proceeds from disposals of property, plant and equipment	1	3	Proceeds from disposals of property, plant and equipment	1	—
Purchase of interests in businesses, net of cash acquired	Purchase of interests in businesses, net of cash acquired	(17)	(21)	Purchase of interests in businesses, net of cash acquired	(4)	—
Proceeds from sale of interests in businesses, net of cash divested		—	161

Purchase of investments	Purchase of investments	(6)	(15)	Purchase of investments	—	(2)
Proceeds from sale of investments	Proceeds from sale of investments	8	—	Proceeds from sale of investments	—	8
Proceeds from return of equity investment	Proceeds from return of equity investment	3	—	Proceeds from return of equity investment	2	—
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	(618)	(255)	Net cash provided by (used for) investing activities	(329)	(181)
Cash flows from financing activities:	Cash flows from financing activities:			Cash flows from financing activities:

Proceeds from the issuance of long-term debt		2,000	2,000

Cash paid for debt issuance costs	Cash paid for debt issuance costs	(22)	(15)	Cash paid for debt issuance costs	(1)	—

Dividends paid to non-controlling interests		—	(34)

Dividends paid to common stockholders	Dividends paid to common stockholders	(412)	(315)	Dividends paid to common stockholders	(149)	(105)
Proceeds from issuance of common stock through stock plans	Proceeds from issuance of common stock through stock plans	60	64	Proceeds from issuance of common stock through stock plans	28	31
Purchase of treasury shares and restricted stock unit withholdings	Purchase of treasury shares and restricted stock unit withholdings	(3,265)	(370)	Purchase of treasury shares and restricted stock unit withholdings	(552)	(905)
Other, net		(1)	—

Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	(1,640)	1,330	Net cash provided by (used for) financing activities	(674)	(979)
Effect of changes in exchange rates on cash positions	Effect of changes in exchange rates on cash positions	(6)	(7)	Effect of changes in exchange rates on cash positions	—	(5)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	28	2,521	Increase (decrease) in cash and cash equivalents	(147)	(433)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	2,275	1,045	Cash and cash equivalents at beginning of period	2,830	2,275
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	2,303	3,566	Cash and cash equivalents at end of period	2,683	1,842

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)~~

~~($ in millions, unless otherwise stated)~~


Supplemental disclosures to the condensed consolidated cash flows	Supplemental disclosures to the condensed consolidated cash flows			Supplemental disclosures to the condensed consolidated cash flows
Net cash paid during the period for:	Net cash paid during the period for:			Net cash paid during the period for:
Interest	Interest	216	211	Interest	45	56
Income taxes, net of refunds	Income taxes, net of refunds	250	103	Income taxes, net of refunds	122	40
Net gain (loss) on sale of assets:	Net gain (loss) on sale of assets:			Net gain (loss) on sale of assets:
Cash proceeds from the sale of assets	Cash proceeds from the sale of assets	—	163	Cash proceeds from the sale of assets	1	—
Book value of these assets	Book value of these assets	—	(52)	Book value of these assets	—	—
Non-cash investing activities:	Non-cash investing activities:			Non-cash investing activities:
Non-cash capital expenditures	Non-cash capital expenditures	224	62	Non-cash capital expenditures	246	121

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

($ in millions, unless otherwise stated)


		Outstanding number of shares (in thousands)	Common stock	Capital in excess of par value	Treasury shares at cost	Accumulated other comprehensive income (loss)	Accumulated deficit	Total stock- holders’ equity	Non- controlling interests	Total equity		Outstanding number of shares (in thousands)	Common stock	Capital in excess of par value	Treasury shares at cost	Accumulated other comprehensive income (loss)	Accumulated deficit	Total stock- holders’ equity	Non- controlling interests	Total equity
Balance as of December 31, 2020		280,475	59	14,133	(1,037)	117	(4,328)	8,944	207	9,151
Balance as of December 31, 2021											Balance as of December 31, 2021	264,950	56	13,727	(1,932)	48	(5,371)	6,528	242	6,770
Net income (loss)	Net income (loss)						353	353	11	364	Net income (loss)						657	657	9	666
Other comprehensive income	Other comprehensive income					(56)		(56)		(56)	Other comprehensive income					(22)		(22)		(22)
Share-based compensation plans	Share-based compensation plans			91				91		91	Share-based compensation plans			92				92		92
Shares issued pursuant to stock awards	Shares issued pursuant to stock awards	361			37		(6)	31		31	Shares issued pursuant to stock awards	256			51		(23)	28		28
Treasury shares repurchased and retired	Treasury shares repurchased and retired	(5,087)			(905)			(905)		(905)	Treasury shares repurchased and retired	(2,653)			(552)			(552)		(552)

Dividends common stock ($0.5625 per share)							(155)	(155)		(155)
Balance as of April 4, 2021		275,749	59	14,224	(1,905)	61	(4,136)	8,303	218	8,521
Net income (loss)							397	397	9	406
Other comprehensive income						9		9		9
Share-based compensation plans				88				88		88
Shares issued pursuant to stock awards		64			6		(6)	—		—
Treasury shares and restricted stock unit withholdings		(6,103)			(1,203)			(1,203)		(1,203)
Dividends common stock ($0.845 per share)											Dividends common stock ($0.845 per share)						(222)	(222)		(222)
Balance as of April 3, 2022											Balance as of April 3, 2022	262,553	56	13,819	(2,433)	26	(4,959)	6,509	251	6,760

Dividends common stock ($0.5625 per share)							(152)	(152)		(152)
Balance as of July 4, 2021		269,710	59	14,312	(3,102)	70	(3,897)	7,442	227	7,669
Net income (loss)							519	519	7	526
Other comprehensive income						(25)		(25)		(25)
Share-based compensation plans				80				80		80
Shares issued pursuant to stock awards		2,430			231		(202)	29		29
Treasury shares and restricted stock unit withholdings		(5,800)			(1,157)			(1,157)		(1,157)

Dividends common stock ($0.5625 per share)							(150)	(150)		(150)
Balance as of October 3, 2021		266,340	59	14,392	(4,028)	45	(3,730)	6,738	234	6,972

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)~~

~~($ in millions, unless otherwise stated)~~


		Outstanding number of shares (in thousands)	Common stock	Capital in excess of par value	Treasury shares at cost	Accumulated other comprehensive income (loss)	Accumulated deficit	Total stock- holders’ equity	Non- controlling interests	Total equity		Outstanding number of shares (in thousands)	Common stock	Capital in excess of par value	Treasury shares at cost	Accumulated other comprehensive income (loss)	Accumulated deficit	Total stock- holders’ equity	Non- controlling interests	Total equity
Balance as of December 31, 2019		281,437	64	15,184	(3,037)	75	(2,845)	9,441	214	9,655
Balance as of December 31, 2020											Balance as of December 31, 2020	280,475	59	14,133	(1,037)	117	(4,328)	8,944	207	9,151
Net income (loss)	Net income (loss)						(21)	(21)	8	(13)	Net income (loss)						353	353	11	364
Other comprehensive income	Other comprehensive income					(61)		(61)		(61)	Other comprehensive income					(56)		(56)		(56)
Share-based compensation plans	Share-based compensation plans			108				108		108	Share-based compensation plans			91				91		91
Shares issued pursuant to stock awards	Shares issued pursuant to stock awards	497			47		(18)	29		29	Shares issued pursuant to stock awards	361			37		(6)	31		31
Treasury shares repurchased and retired	Treasury shares repurchased and retired	(2,933)			(355)			(355)		(355)	Treasury shares repurchased and retired	(5,087)			(905)			(905)		(905)
Expiration of stock purchase warrants				(56)			56	—		—
Dividends common stock ($0.375 per share)							(105)	(105)		(105)
Balance as of March 29, 2020		279,001	64	15,236	(3,345)	14	(2,933)	9,036	222	9,258
Net income (loss)							(214)	(214)	5	(209)
Other comprehensive income						36		36		36
Share-based compensation plans				104				104		104
Shares issued pursuant to stock awards		252			23		(15)	8		8
Treasury shares and restricted stock unit withholdings		(40)			(3)			(3)		(3)
Expiration of stock purchase warrants				(112)			112	—		—
Dividends non-controlling interests									(34)	(34)
Dividends common stock ($0.375 per share)							(105)	(105)		(105)
Balance as of June 28, 2020		279,213	64	15,228	(3,325)	50	(3,155)	8,862	193	9,055
Net income (loss)							(22)	(22)	4	(18)
Other comprehensive income						40		40		40
Share-based compensation plans				86				86		86
Shares issued pursuant to stock awards		611			58		(31)	27		27
Treasury shares and restricted stock unit withholdings		(95)			(12)			(12)		(12)
Dividends common stock ($0.5625 per share)											Dividends common stock ($0.5625 per share)						(155)	(155)		(155)
Balance as of April 4, 2021											Balance as of April 4, 2021	275,749	59	14,224	(1,905)	61	(4,136)	8,303	218	8,521

Dividends common stock ($0.375 per share)							(105)	(105)		(105)
Balance as of September 27, 2020		279,729	64	15,314	(3,279)	90	(3,313)	8,876	197	9,073

See accompanying notes to the Condensed Consolidated Financial Statements

NXP SEMICONDUCTORS N.V.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

All amounts in millions of $ unless otherwise stated

1 Basis of Presentation and Overview

We prepared our interim condensed consolidated financial statements that accompany these notes in conformity with U.S. generally accepted accounting principles, consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. The actual results that we experience may differ materially from our estimates. The interim financial information is unaudited, but reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

On October 12, 2021, NXP announced that Bill Betz, formerly the Company’s Senior Vice President, Business Finance, had been named as Executive Vice President and Chief Financial Officer. Mr. Betz will succeed Peter Kelly who will provide advice and assistance to the Company's CEO and transition assistance and support to Mr. Betz through his previously announced retirement date.2021.

2 Significant Accounting Policies and Recent Accounting Pronouncements

Significant Accounting Policies

~~Except for the changes below, no material changes have been made to the Company's~~For a discussion of our significant accounting policies ~~disclosed in Note 2 Significant~~see, “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – “Significant Accounting ~~Policies in~~Policies” of our Annual Report on Form 10-K for the year ended December 31, ~~2020. The~~2021. There have been no changes to our significant accounting ~~policy information below is to aid in~~policies since our Annual Report on Form 10-K for the ~~understanding of the financial information disclosed.~~year ended December 31, 2021.

Accounting standards recently adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 modifies ASC 740 to simplify the accounting for income taxes, removing certain exceptions to the general principles in ASC 740 and amending existing guidance to improve consistent application. ASU 2019-12 became effective for us on January 1, 2021. We have assessed our current positions and the interrelation to the amendments and the adoption of this update did not have a material impact on the Company's consolidated financial statements and related disclosures.

No ~~other~~ new accounting pronouncements were issued or became effective in the period that had, or are expected to have, a material impact on our Consolidated Financial Statements.

3 Acquisitions and Divestments

2022

There were no material acquisitions or divestments during the first three months of 2022.

2021

On July 6, 2021, we acquired Retune DSP for a total consideration of $15.7 million, net of closing adjustments.

~~2020~~

There were no material acquisitions during the first nine months of 2020. On February 3, 2020, we completed the sale of the Company's Voice and Audio Solutions (VAS) assets, pursuant to the definitive agreement dated August 16, 2019 and which was previously classified as held for sale, with Shenzhen Goodix Technology Co., Ltd. ("Goodix") from China, for a net cash amount of $161 million inclusive of final working capital adjustments. This resulted in a gain of $110 million recorded in Other income (expense) on the Consolidated Statements of Operations.

4 Supplemental Financial Information

Statement of Operations Information:

Disaggregation of revenue

The following table presents revenue disaggregated by sales channel:


		For the three months ended		For the nine months ended			For the three months ended
		October 3, 2021	September 27, 2020	October 3, 2021	September 27, 2020			April 3, 2022	April 4, 2021
Distributors	Distributors	1,631	1,243	4,617	3,286	Distributors		1,680	1,468
Original Equipment Manufacturers and Electronic Manufacturing Services	Original Equipment Manufacturers and Electronic Manufacturing Services	1,191	983	3,295	2,695	Original Equipment Manufacturers and Electronic Manufacturing Services		1,412	1,064
Other	Other	39	41	112	124	Other		44	35
Total	Total	2,861	2,267	8,024	6,105	Total		3,136	2,567

Depreciation, amortization and impairment


		For the three months ended		For the nine months ended			For the three months ended
		October 3, 2021	September 27, 2020	October 3, 2021	September 27, 2020			April 3, 2022	April 4, 2021
Depreciation of property, plant and equipment	Depreciation of property, plant and equipment	139	139	406	408	Depreciation of property, plant and equipment		142	132
Amortization of internal use software	Amortization of internal use software	1	1	5	4	Amortization of internal use software		2	2
Amortization of other identified intangible assets 1)	Amortization of other identified intangible assets 1)	166	449	541	1,260	Amortization of other identified intangible assets 1)		166	207
Total - Depreciation, amortization and impairment	Total - Depreciation, amortization and impairment	306	589	952	1,672	Total - Depreciation, amortization and impairment		310	341

1) For the ~~nine~~three month period ending ~~October 3,~~April 4, 2021, the amount includes an impairment charge as a result of the discontinuation of an IPR&D project for an amount of $36 million. ~~For the three and nine month periods ending September 27, 2020, the amounts include an impairment relative to IPR&D acquired as part of the acquisition of Freescale for an amount of $36 million.~~

~~Other income (expense)~~

Income derived from manufacturing service arrangements (“MSA”) and transitional service arrangements (“TSA”) that are put in place when we divest a business or activity, is included in other income (expense). These arrangements are short-term in nature and are expected to decrease as the divested business or activity becomes more established.

~~The following table presents the split of other income (expense):~~

For the three months ended For the nine months ended
October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020
Result from MSA and TSA arrangements 1 — (1) (1)
Other, net (1) 1 1 111
Total - Other income (expense) — 1 — 110

Financial income and expense


		For the three months ended		For the nine months ended			For the three months ended
		October 3, 2021	September 27, 2020	October 3, 2021	September 27, 2020			April 3, 2022	April 4, 2021
Interest income	Interest income	1	3	3	11	Interest income		2	1
Interest expense	Interest expense	(96)	(100)	(273)	(276)	Interest expense		(104)	(87)
Total interest expense, net	Total interest expense, net	(95)	(97)	(270)	(265)	Total interest expense, net		(102)	(86)

Foreign exchange rate results	Foreign exchange rate results	3	(5)	3	(6)	Foreign exchange rate results		—	1

Miscellaneous financing costs/income and other, net	Miscellaneous financing costs/income and other, net	(1)	(4)	(13)	(9)	Miscellaneous financing costs/income and other, net		(3)	(2)
Total other financial income/ (expense)	Total other financial income/ (expense)	2	(9)	(10)	(15)	Total other financial income/ (expense)		(3)	(1)
Total - Financial income and expenses	Total - Financial income and expenses	(93)	(106)	(280)	(280)	Total - Financial income and expenses		(105)	(87)

Earnings per share

The computation of earnings per share (EPS) is presented in the following table:


		For the three months ended		For the nine months ended			For the three months ended
		October 3, 2021	September 27, 2020	October 3, 2021	September 27, 2020			April 3, 2022	April 4, 2021
Net income (loss)	Net income (loss)	526	(18)	1,296	(240)	Net income (loss)		666	364
Less: net income (loss) attributable to non-controlling interests	Less: net income (loss) attributable to non-controlling interests	7	4	27	17	Less: net income (loss) attributable to non-controlling interests		9	11
Net income (loss) attributable to stockholders	Net income (loss) attributable to stockholders	519	(22)	1,269	(257)	Net income (loss) attributable to stockholders		657	353

Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	266,557	279,467	272,314	279,511	Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)		263,089	277,526
Plus incremental shares from assumed conversion of:	Plus incremental shares from assumed conversion of:					Plus incremental shares from assumed conversion of:
Options 1)	Options 1)	378	—	397	—	Options 1)		321	416
Restricted Share Units, Performance Share Units and Equity Rights 2)	Restricted Share Units, Performance Share Units and Equity Rights 2)	4,424	—	5,175	—	Restricted Share Units, Performance Share Units and Equity Rights 2)		1,699	5,321
Dilutive potential common shares	Dilutive potential common shares	4,802	—	5,572	—	Dilutive potential common shares		2,020	5,737

Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	271,359	279,467	277,886	279,511	Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)		265,109	283,263

EPS attributable to stockholders in $:	EPS attributable to stockholders in $:					EPS attributable to stockholders in $:
Basic net income (loss)	Basic net income (loss)	1.95	(0.08)	4.66	(0.92)	Basic net income (loss)		2.50	1.27
Diluted net income (loss)	Diluted net income (loss)	1.91	(0.08)	4.57	(0.92)	Diluted net income (loss)		2.48	1.25

1) There were no stock options to purchase shares of NXP’s common stock that were outstanding in ~~Q3 2021 and YTD 2021 (Q3 2020: 0.9 million shares; YTD 2020: 0.9 million~~Q1 2022 (Q1 2021: no shares) that were anti-dilutive and were not included in the computation of diluted EPS because the exercise price was greater than the average fair market value of the common stock or the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense and exercise prices ~~was~~were greater than the weighted average number of shares underlying outstanding stock options.

2) There were no0.2 million unvested RSUs, PSUs and equity rights that were outstanding in ~~Q3 2021 and YTD 2021 (Q3 2020: 7.4 million shares; YTD 2020: 7.4 million~~Q1 2022 (Q1 2021: no shares) that were anti-dilutive and were not included in the computation of diluted EPS because the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense ~~was~~were greater than the weighted average number of outstanding unvested RSUs, PSUs and equity rights or the performance goal has not been met yet.

Balance Sheet Information

Cash and cash equivalents

At ~~October~~April 3, ~~2021~~2022 and December 31, ~~2020,~~2021, our cash balance was ~~$2,303~~$2,683 million and ~~$2,275~~$2,830 million, respectively, of which ~~$217~~$185 million and ~~$185~~$208 million was held by SSMC, our consolidated joint venture company with TSMC. Under the terms of our joint venture agreement with TSMC, a portion of this cash can be distributed by way of a dividend to us, but 38.8% of the dividend will be paid to our joint venture partner. During the first nine months of 2021, no dividend was declared by SSMC. In 2020, $90 million has been declared by SSMC, which was distributed in the third quarter of 2020, with 38.8% being paid to our joint venture partner.

Inventories

The portion of finished goods stored at customer locations under consignment amounted to ~~$13~~$9 million as of ~~October~~April 3, ~~2021~~2022 (December 31, ~~2020: $31~~2021: $12 million).

Inventories are summarized as follows:


		October 3, 2021	December 31, 2020		April 3, 2022	December 31, 2021
Raw materials	Raw materials	96	66	Raw materials	118	107
Work in process	Work in process	894	786	Work in process	974	846
Finished goods	Finished goods	183	178	Finished goods	219	236
		1,173	1,030		1,311	1,189

The amounts recorded above are net of allowance for obsolescence of ~~$115~~$121 million as of ~~October~~April 3, ~~2021~~2022 (December 31, ~~2020: $122~~2021: $120 million).

Equity Investments

At ~~October~~April 3, ~~2021~~2022 and December 31, ~~2020,~~2021, the total carrying value of investments in equity securities is summarized as follows:


		October 3, 2021	December 31, 2020		April 3, 2022	December 31, 2021
Marketable equity securities	Marketable equity securities	21	19	Marketable equity securities	17	18
Non-marketable equity securities	Non-marketable equity securities	23	40	Non-marketable equity securities	11	19
Equity-accounted investments	Equity-accounted investments	74	61	Equity-accounted investments	89	75
		118	120		117	112

The total carrying value of investments in equity-accounted investees is summarized as follows:


		October 3, 2021			December 31, 2020				April 3, 2022			December 31, 2021
		Shareholding %		Amount	Shareholding %		Amount		Shareholding %		Amount	Shareholding %		Amount
Wise Road Industry Investment Fund I, L.P.	Wise Road Industry Investment Fund I, L.P.	9.66	%	37	10.17	%	29	Wise Road Industry Investment Fund I, L.P.	8.41	%	43	8.41	%	31
Others	Others	—		37	—		32	Others	—		46	—		44
				74			61				89			75

Results related to equity-accounted investees at the end of each period were as follows:


		For the three months ended		For the nine months ended			For the three months ended
		October 3, 2021	September 27, 2020	October 3, 2021	September 27, 2020			April 3, 2022	April 4, 2021
Company’s share in income (loss)	Company’s share in income (loss)	4	(1)	1	(3)	Company’s share in income (loss)		11	(1)
Other results	Other results	(1)	—	(1)	—	Other results		1	—
		3	(1)	—	(3)			12	(1)

Other current liabilities

Other current liabilities at ~~October~~April 3, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following:


		October 3, 2021	December 31, 2020		April 3, 2022	December 31, 2021
Accrued compensation and benefits	Accrued compensation and benefits	516	286	Accrued compensation and benefits	537	476
Income taxes payable	Income taxes payable	82	140	Income taxes payable	100	82
Dividend payable	Dividend payable	150	105	Dividend payable	222	149
Other	Other	521	435	Other	601	468
		1,269	966		1,460	1,175

Accumulated other comprehensive income (loss)

Total comprehensive income (loss) represents net income (loss) plus the results of certain equity changes not reflected in the condensed consolidated statements of operations. The after-tax components of accumulated other comprehensive income (loss) and their corresponding changes are shown below:

Currency
translation
differences Change in fair
value
cash flow hedges Net actuarial
gain/(losses) Accumulated
Other
Comprehensive
Income (loss)
As of December 31, 2020 281 11 (175) 117
Other comprehensive income (loss) before
reclassifications (56) (13) — (69)
Amounts reclassified out of accumulated other
comprehensive income (loss) — (9) — (9)
Tax effects — 6 — 6
Other comprehensive income (loss) (56) (16) — (72)
As of October 3, 2021 225 (5) (175) 45


	Currency translation differences	Change in fair value cash flow hedges	Net actuarial gain/(losses)	Accumulated Other Comprehensive Income (loss)
As of December 31, 2021	207	—	(159)	48
Other comprehensive income (loss) before reclassifications	(18)	(6)	—	(24)
Amounts reclassified out of accumulated other comprehensive income (loss)	—	1	—	1
Tax effects	—	1	—	1
Other comprehensive income (loss)	(18)	(4)	—	(22)
As of April 3, 2022	189	(4)	(159)	26

Cash dividends

The following dividends were declared during the first ~~three~~ quarters of ~~2021~~2022 and ~~2020~~2021 under NXP’s quarterly dividend program:

Fiscal year 2021 Fiscal year 2020
Dividend per share Amount Dividend per share Amount
First quarter 0.5625 155 0.375 105
Second quarter 0.5625 152 0.375 105
Third quarter 0.5625 150 0.375 105
1.6875 457 1.125 315

Fiscal year 2022

Fiscal year 2021

Dividend per share

Amount

Dividend per share

Amount

First quarter

0.845

222

0.5625

155

The dividend declared in the ~~third~~first quarter (not yet paid) is classified in the condensed consolidated balance sheet in other current liabilities as of ~~October~~April 3, ~~2021~~2022 and was subsequently paid on ~~October~~April 6, ~~2021.~~2022.

5 Restructuring

At each reporting date, we evaluate our restructuring liabilities, which consist primarily of termination benefits, to ensure that our accruals are still appropriate.

The following table presents the changes in restructuring liabilities in ~~2021:~~2022:

As of January 1, 2021 Additions Utilized Released Other
changes As of October 3, 2021
Restructuring liabilities 74 1 (32) — — 43


	As of January 1, 2022	Additions	Utilized	Released	Other changes	As of April 3, 2022
Restructuring liabilities	37	—	(5)	(1)	(1)	30

~~The restructuring charges consist of personnel lay-off costs of $1 million~~There were no restructuring costs incurred for the ~~nine~~three month period ended ~~October~~April 3, ~~2021 (September 27, 2020~~: ~~$40 million)~~2022 and the utilization of the restructuring liabilities mainly reflects the execution of ongoing restructuring programs the Company initiated in earlier years (April 4, 2021: no restructuring costs incurred).

These restructuring charges recorded in operating income, for the periods indicated, are included in the following line items in the statement of operations:

For the three months ended For the nine months ended
October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020
Cost of revenue — 12 — 15
Research and development — 7 1 17
Selling, general and administrative — 2 — 8
Net restructuring charges — 21 1 40


	For the three months ended
		April 3, 2022	April 4, 2021
Cost of revenue		—	—
Research and development		(1)	—
Selling, general and administrative		—	—

Net restructuring charges		(1)	—

6 Income Taxes

Benefit/provision for income taxes:


		For the three months ended				For the nine months ended					For the three months ended
		October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020				April 3, 2022		April 4, 2021
Tax expense (benefit)	Tax expense (benefit)	95		(57)		200		(88)		Tax expense (benefit)		114		40
Effective tax rate	Effective tax rate	15.4	%	77.0	%	13.4	%	27.1	%	Effective tax rate		14.8	%	9.9	%

Our provision for income taxes for the first ~~nine~~three months of ~~2021~~2022 was ~~$200~~of $114 million ~~(13.4%~~(14.8% effective tax rate) compared to a ~~benefit~~provision from income taxes of ~~($88 million) (27.1%~~$40 million (9.9% effective tax rate) for the first ~~nine~~three months of ~~2020.~~2021. The increase in the income tax expense was due to higher income before income taxes ~~offset by the net change in the valuation allowance between the two periods and an increase in tax incentives (both~~ as a result of the improved operational performance of the ~~company).~~company which was partly offset by an increase in tax incentives also taking into account the effect of specific US tax law that became effective as from 2022. In addition to this, in the first three months of 2021 there was an income tax benefit due to changes in estimates of prior positions and due to a net change in the valuation allowance.

The Company benefits from income tax incentives in certain jurisdictions which provide that we pay reduced income taxes in those jurisdictions for a fixed period of time that varies depending on the jurisdiction. The predominant income tax holiday is expected to expire at the end of 2026. The impact of this tax holiday decreased foreign income taxes for the ~~third~~first quarter of ~~2021~~2022 by $3 million and decreased by $2$4 million for the ~~third~~first quarter ~~2020 (YTD 2021: a decrease of $10 million and YTD 2020: a decrease of $7 million).~~2021. The benefit of this tax holiday on net income per share (diluted) was $0.01 for the ~~third~~first quarter of ~~2021 (YTD 2021: $0.04)~~2022 and $0.01 for the ~~third~~first quarter of ~~2020 (YTD 2020: $0.03).~~2021.

7 Identified Intangible Assets

Identified intangible assets as of ~~October~~April 3, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, were composed of the following:


		October 3, 2021		December 31, 2020			April 3, 2022		December 31, 2021
		Gross carrying amount	Accumulated amortization	Gross carrying amount	Accumulated amortization		Gross carrying amount	Accumulated amortization	Gross carrying amount	Accumulated amortization
In-process R&D (IPR&D) 1)	In-process R&D (IPR&D) 1)	111	—	147	—	In-process R&D (IPR&D) 1)	53	—	96	—
Marketing-related	Marketing-related	81	(81)	81	(81)	Marketing-related	—	—	81	(81)
Customer-related	Customer-related	910	(371)	957	(381)	Customer-related	851	(336)	852	(325)
Technology-based	Technology-based	8,080	(6,989)	8,064	(6,545)	Technology-based	3,732	(2,723)	3,686	(2,615)
Identified intangible assets	Identified intangible assets	9,182	(7,441)	9,249	(7,007)	Identified intangible assets	4,636	(3,059)	4,715	(3,021)

(1) IPR&D is not subject to amortization until completion or abandonment of the associated research and development effort.	(1) IPR&D is not subject to amortization until completion or abandonment of the associated research and development effort.					(1) IPR&D is not subject to amortization until completion or abandonment of the associated research and development effort.

The estimated amortization expense for these identified intangible assets for each of the five succeeding years is:


2021 (remaining)		166
2022		579
2022 (remaining)			2022 (remaining)	457
2023	2023	343	2023	397
2024	2024	156	2024	212
2025	2025	102	2025	113
2026			2026	68
Thereafter	Thereafter	395	Thereafter	330

All intangible assets, excluding IPR&D and goodwill, are subject to amortization and have no assumed residual value.

The expected weighted average remaining life of identified intangibles is 4 years as of ~~October~~April 3, ~~2021~~2022 (December 31, ~~2020:~~2021: 4 years).

8 Debt

The following table summarizes the outstanding debt as of ~~October~~April 3, ~~2021~~2022 and December 31, ~~2020:~~2021:


			October 3, 2021		December 31, 2020				April 3, 2022		December 31, 2021
		Maturities	Amount	Effective rate	Amount	Effective rate		Maturities	Amount	Interest rate	Amount	Interest rate
Fixed-rate 3.875% senior unsecured notes		Sep, 2022	1,000	3.875	1,000	3.875
Fixed-rate 4.625% senior unsecured notes	Fixed-rate 4.625% senior unsecured notes	Jun, 2023	900	4.625	900	4.625	Fixed-rate 4.625% senior unsecured notes	Jun, 2023	900	4.625	900	4.625
Fixed-rate 4.875% senior unsecured notes	Fixed-rate 4.875% senior unsecured notes	Mar, 2024	1,000	4.875	1,000	4.875	Fixed-rate 4.875% senior unsecured notes	Mar, 2024	1,000	4.875	1,000	4.875
Fixed-rate 2.7% senior unsecured notes	Fixed-rate 2.7% senior unsecured notes	May, 2025	500	2.700	500	2.700	Fixed-rate 2.7% senior unsecured notes	May, 2025	500	2.700	500	2.700
Fixed-rate 5.35% senior unsecured notes	Fixed-rate 5.35% senior unsecured notes	Mar, 2026	500	5.350	500	5.350	Fixed-rate 5.35% senior unsecured notes	Mar, 2026	500	5.350	500	5.350
Fixed-rate 3.875% senior unsecured notes	Fixed-rate 3.875% senior unsecured notes	Jun, 2026	750	3.875	750	3.875	Fixed-rate 3.875% senior unsecured notes	Jun, 2026	750	3.875	750	3.875
Fixed-rate 3.15% senior unsecured notes	Fixed-rate 3.15% senior unsecured notes	May, 2027	500	3.150	500	3.150	Fixed-rate 3.15% senior unsecured notes	May, 2027	500	3.150	500	3.150
Fixed-rate 5.55% senior unsecured notes	Fixed-rate 5.55% senior unsecured notes	Dec, 2028	500	5.550	500	5.550	Fixed-rate 5.55% senior unsecured notes	Dec, 2028	500	5.550	500	5.550
Fixed-rate 4.3% senior unsecured notes	Fixed-rate 4.3% senior unsecured notes	Jun, 2029	1,000	4.300	1,000	4.300	Fixed-rate 4.3% senior unsecured notes	Jun, 2029	1,000	4.300	1,000	4.300
Fixed-rate 3.4% senior unsecured notes	Fixed-rate 3.4% senior unsecured notes	May, 2030	1,000	3.400	1,000	3.400	Fixed-rate 3.4% senior unsecured notes	May, 2030	1,000	3.400	1,000	3.400
Fixed-rate 2.5% senior unsecured notes	Fixed-rate 2.5% senior unsecured notes	May, 2031	1,000	2.500	—	—	Fixed-rate 2.5% senior unsecured notes	May, 2031	1,000	2.500	1,000	2.500
Fixed-rate 2.65% senior unsecured notes							Fixed-rate 2.65% senior unsecured notes	Feb, 2032	1,000	2.650	1,000	2.650
Fixed-rate 3.25% senior unsecured notes							Fixed-rate 3.25% senior unsecured notes	May, 2041	1,000	3.250	1,000	3.250
Fixed-rate 3.125% senior unsecured notes							Fixed-rate 3.125% senior unsecured notes	Feb, 2042	500	3.125	500	3.125
Fixed-rate 3.25% senior unsecured notes	Fixed-rate 3.25% senior unsecured notes	May, 2041	1,000	3.250	—	—	Fixed-rate 3.25% senior unsecured notes	Nov, 2051	500	3.250	500	3.250
Floating-rate revolving credit facility (RCF)	Floating-rate revolving credit facility (RCF)	Jun, 2024	—	—	—	—	Floating-rate revolving credit facility (RCF)	Jun, 2024	—	—	—	—
Total principal	Total principal		9,650		7,650		Total principal		10,650		10,650

Unamortized discounts, premiums and debt issuance costs	Unamortized discounts, premiums and debt issuance costs		(57)		(41)		Unamortized discounts, premiums and debt issuance costs		(77)		(78)
Total debt, including unamortized discounts, premiums, debt issuance costs and fair value adjustments	Total debt, including unamortized discounts, premiums, debt issuance costs and fair value adjustments		9,593		7,609		Total debt, including unamortized discounts, premiums, debt issuance costs and fair value adjustments		10,573		10,572
Current portion of long-term debt	Current portion of long-term debt		999		—		Current portion of long-term debt		—		—
Long-term debt	Long-term debt		8,594		7,609		Long-term debt		10,573		10,572

9 Related-Party Transactions

The Company's related parties are the members of the board of directors of NXP Semiconductors N.V., the ~~members of the management team~~executive officers of NXP Semiconductors N.V. and equity-accounted investees.

The following table presents the amounts related to revenue and other income and purchase of goods and services incurred in transactions with these related parties:


		For the three months ended		For the nine months ended			For the three months ended
		October 3, 2021	September 27, 2020	October 3, 2021	September 27, 2020			April 3, 2022	April 4, 2021
Revenue and other income	Revenue and other income	2	16	6	52	Revenue and other income		3	2
Purchase of goods and services	Purchase of goods and services	1	9	3	35	Purchase of goods and services		1	1

The following table presents the amounts related to receivable and payable balances with these related parties:


		October 3, 2021	December 31, 2020		April 3, 2022	December 31, 2021
Receivables	Receivables	2	3	Receivables	1	1
Payables	Payables	3	7	Payables	3	3

10 Fair Value Measurements

The following table summarizes the estimated fair value of our financial instruments which are measured at fair value on a recurring basis:


			Estimated fair value				Estimated fair value
		Fair value hierarchy	October 3, 2021	December 31, 2020		Fair value hierarchy	April 3, 2022	December 31, 2021
Assets:	Assets:				Assets:
Money market funds	Money market funds	1	1,520	1,469	Money market funds	1	1,763	2,111
Marketable equity securities	Marketable equity securities	1	21	19	Marketable equity securities	1	17	18
Derivative instruments-assets	Derivative instruments-assets	2	1	18	Derivative instruments-assets	2	9	5

Liabilities:	Liabilities:				Liabilities:

Derivative instruments-liabilities	Derivative instruments-liabilities	2	(13)	—	Derivative instruments-liabilities	2	(8)	(3)

The following methods and assumptions were used to estimate the fair value of financial instruments:

Assets and liabilities measured at fair value on a recurring basis

Investments in money market funds (as part of our cash and cash equivalents) and marketable equity securities (as part of other non-current assets) have fair value measurements which are all based on quoted prices in active markets for identical assets or liabilities. For derivatives (as part of other current assets or accrued liabilities) the fair value is based upon significant other observable inputs depending on the nature of the derivative.

Assets and liabilities recorded at fair value on a non-recurring basis

We measure and record our non-marketable equity securities, equity method investments and non-financial assets, such as intangible assets and property, plant and equipment, at fair value when an impairment charge is required.

Assets and liabilities not recorded at fair value on a recurring basis

Financial instruments not recorded at fair value on a recurring basis include non-marketable equity securities and equity method investments that have not been remeasured or impaired in the current period and debt.

As of ~~October~~April 3, ~~2021,~~2022, the estimated fair value of current and non-current debt ~~including the current portion,~~ was ~~$10.4~~$10.3 billion ($~~8.6~~11.3 billion as of December 31, ~~2020)~~2021). The fair value is estimated on the basis of broker-dealer quotes, which are Level 2 inputs. Accrued interest is included under accrued liabilities and not within the carrying amount or estimated fair value of debt.

11 Commitments and Contingencies

Purchase Commitments

The Company maintains purchase commitments with certain suppliers, primarily for raw materials, semi-finished goods and manufacturing services and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time-horizon as mutually agreed upon between the parties. This forecasted time-horizon can vary for different suppliers. As of ~~October~~April 3, ~~2021,~~2022, the Company had purchase commitments of ~~$4,364~~$3,925 million, which are due through 2044. Our long-term obligations increased substantially ~~year to date~~in 2021 as we locked in long-term supply with our key manufacturing partners.

Litigation

We are regularly involved as plaintiffs or defendants in claims and litigation relating to a variety of matters such as contractual disputes, personal injury claims, employee grievances and intellectual property litigation. In addition, our acquisitions, divestments and financial transactions sometimes result in, or are followed by, claims or litigation. Some of these claims may possibly be recovered from insurance reimbursements. Although the ultimate disposition of asserted claims cannot be predicted with certainty, it is our belief that the outcome of any such claims, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position. However, such outcomes may be material to our condensed consolidated statement of operations for a particular period. The Company records an accrual for any claim that arises whenever it considers that it is probable that it is exposed to a loss contingency and the amount of the loss contingency can be reasonably estimated. The Company does not record a gain contingency until the period in which all contingencies are resolved and the gain is realized or realizable. Legal fees are expensed when incurred.

Based on the most current information available to it and based on its best estimate, the Company also reevaluates at least on a quarterly basis the claims that have arisen to determine whether any new accruals need to be made or whether any accruals made need to be adjusted. Based on the procedures described above, the Company has an aggregate amount of ~~$20~~$61 million accrued for potential and current legal proceedings pending as of ~~October~~April 3, ~~2021,~~2022, compared to ~~$17~~$65 million accrued at December 31, ~~2020.~~2021 (without reduction for any related insurance reimbursements). The accruals are included in “Other current liabilities” and “Other non-current liabilities”. As of ~~October~~April 3, ~~2021,~~2022, the Company’s related balance of insurance reimbursements was $8$45 million (December 31, ~~2020: $8~~2021: $46 million) and is included in “Other current assets” and “Other non-current assets”.

The Company also estimates the aggregate range of reasonably possible losses in excess of the amount accrued based on currently available information for those cases for which such estimate can be made. The estimated aggregate range requires significant judgment, given the varying stages of the proceedings, ~~(including the fact that many of them are currently in preliminary stages),~~ the existence of multiple defendants (including the Company) in such claims whose share of liability has yet to be determined, the numerous yet-unresolved issues in many of the claims, and the attendant uncertainty of the various potential outcomes of such claims. Accordingly, the Company’s estimate will change from time to time, and actual losses may be more than the current estimate. As at ~~October~~April 3, ~~2021,~~2022, the Company believes that for all litigation pending its potential aggregate exposure to loss in excess of the amount accrued (without reduction for any amounts that may possibly be recovered under insurance programs) could range between $0 and ~~$20~~$63 million. Based upon our past experience with these matters, the Company would expect to receive additional insurance reimbursement of up to $49 million on certain of these claims that would partially offset the potential ~~maximum~~aggregate exposure to loss in excess of ~~up to $15 million.~~the amount accrued.

In addition, the Company is currently assisting Motorola in the defense of personal injury lawsuits due to indemnity obligations included in the agreement that separated Freescale from Motorola in 2004. The multi-plaintiff Motorola lawsuits are pending in the Circuit Court of Cook County, Illinois. These claims allege a link between working in semiconductor manufacturing clean room facilities and birth defects in 1817 individuals. The Motorola suits allege exposures between 1981 and ~~2005.~~2006. Each claim seeks an unspecified amount of damages for the alleged injuries; however, legal counsel representing the plaintiffs has indicated they will seek substantial compensatory and punitive damages from Motorola for the entire inventory of claims which, if proven and recovered, the Company considers to be material. ~~In the Motorola suits, a~~A portion of any indemnity due to Motorola will be reimbursed to NXP if Motorola receives an indemnification payment from its insurance coverage. Motorola has potential insurance coverage for many of the years indicated above, but with differing types and levels of coverage, self-insurance retention amounts and deductibles. We are in discussions with Motorola and their insurers regarding the availability of applicable insurance coverage for each of the individual cases. Motorola and NXP have denied liability for these alleged injuries based on numerous defenses.

~~Loss recovery~~

In February 2021, NXP’s two wafer manufacturing facilities in Austin, Texas were negatively impacted by unusually severe winter weather conditions that corresponded with a widespread disruption of gas, electricity, and water. The Company has insurance coverage for the repair or replacement of assets that suffered damage or loss and business interruption coverage, including lost profits, and the reimbursement of other expenses and costs that have been incurred relating to the damages and losses suffered.

For the three months ended October 3, 2021, the Company recognized $59 million in insurance proceeds directly offsetting the loss from operations that were incurred in the period. The Company continues to work closely with its insurance carriers and claims adjusters to ascertain the full amount of insurance recoveries due as a result of the damage and loss.

1513

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This interim Management’s Discussion and Analysis ("MD&A") should be read in conjunction with our consolidated financial statements and notes and the MD&A in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. This discussion contains forward-looking statements that involve a number of risks and uncertainties, including any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, uncertain events or assumptions, and other characterizations of future events or circumstances, including the expected timeline to remediate the identified material weakness in our internal control over financial reporting, the uncertain nature, magnitude, and duration of hostilities stemming from Russia's recent military invasion of the Ukraine, and our response to the current global pandemic and the potential impact the pandemic will have on our operations, liquidity, customers, facilities and supply chain. Such statements are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing, and in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K. Our actual results may differ materially from those contained in any forward-looking statements. We undertake no obligation to update any forward-looking statement to reflect subsequent events or circumstances.

Our MD&A is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flows. MD&A is organized as follows:

•Overview - Overall analysis of financial and other highlights to provide context for the MD&A

•Results of Operations - An analysis of our financial results

•Liquidity and Capital Resources - An analysis of changes in our balance sheets and cash flows

•~~Contractual Obligations~~Information Regarding Guarantors of NXP - ~~An update~~Financial information of the Obligor Group on ~~contractual obligations as of December 31, 2020~~

•~~Off-balance Sheet Arrangements -~~ ~~An update on off-balance sheet arrangements as of December 31, 2020~~a combined basis

Overview


($ in millions, unless otherwise stated)	($ in millions, unless otherwise stated)	Q3 2021	Q3 2020	YTD 2021	YTD 2020	($ in millions, unless otherwise stated)	Q1 2022	Q1 2021

Revenue	Revenue	2,861	2,267	8,024	6,105	Revenue	3,136	2,567
Gross profit	Gross profit	1,583	1,090	4,360	2,947	Gross profit	1,777	1,355
Operating income (loss)	Operating income (loss)	711	32	1,776	(45)	Operating income (loss)	873	492
Cash flow from operating activities	Cash flow from operating activities	924	527	2,292	1,453	Cash flow from operating activities	856	732
Total debt	Total debt	9,593	9,356	9,593	9,356	Total debt	10,573	7,611
Net debt	Net debt	7,290	5,790	7,290	5,790	Net debt	7,890	5,769
Diluted weighted average number of shares outstanding	Diluted weighted average number of shares outstanding	271,359	279,467	277,886	279,511	Diluted weighted average number of shares outstanding	265,109	283,263
Diluted net income per share	Diluted net income per share	1.91	(0.08)	4.57	(0.92)	Diluted net income per share	2.48	1.25
Dividends per common share	Dividends per common share	0.5625	0.375	1.6875	1.125	Dividends per common share	0.8450	0.5625

~~Q3 2021~~Q1 2022 compared to ~~Q3 2020~~Q1 2021

Revenue for the three months ended ~~October~~April 3, ~~2021~~2022 was ~~$2,861~~$3,136 million compared to ~~$2,267~~$2,567 million for the three months ended ~~September 27, 2020,~~April 4, 2021, an increase of ~~$594~~$569 million or an increase of ~~26.2%~~22% year-on-year. ~~Revenue in the third quarter of 2021 represented a historical record for NXP, which is consistent with the trend seen in the second quarter of 2021.~~ The ~~continued~~ strong revenue growth isduring the quarter was primarily due to ongoing industry-wide ~~growth in our end-markets as they continue to rebound from the initial shock and widespread market disruption caused by the emergence of the COVID-19 pandemic~~demand for semiconductors in the ~~first half of 2020. Growth~~company’s focused end markets, as well as positive mix effects within the ~~automotive end-market was driven by~~company’s focused end markets, and increased ~~demand across our entire automotive portfolio~~volumes of products shipped. Additionally, the company continued to experience the effects of increased input costs from ~~our distribution partners and demand from automotive~~its suppliers which were passed along to end customers ~~to support the secular shift of electrification, advanced driver safety and assistance, and driver connectivity systems. This growth~~ in the ~~automotive end-market and strong demand in the Industrial & IoT end-market helped to drive the increased year-on-year performance.~~form of higher average selling prices.

Our gross profit percentage for the ~~third~~first quarter of 2022 increased from 52.8% in the first quarter of 2021 ~~increased from 48.1% in the third quarter of 2020~~ to ~~55.3%~~56.7%, primarily from the continued significant acceleration of revenue in the ~~third~~first quarter of ~~2021~~2022 when compared to the same period in ~~2020,~~2021, which led to improved loading and cost reductions, combined with sales price increases due to shortage and ~~efficiencies,~~high demand, partly offset by higher ~~personnel-related~~input costs.

We continue to generate strong operating cash flows, with ~~$924~~$856 million in cash flows from operations for the ~~third~~first quarter of ~~2021.~~2022. We returned ~~$1,309~~$701 million to our shareholders during the ~~third~~first quarter of ~~2021.~~2022. Our cash position at the end of the ~~third~~first quarter of ~~2021~~2022 was ~~$2,303~~$2,683 million. On ~~August 26, 2021,~~January 31, 2022, the NXP Board of Directors approved a 50% increase in the quarterly cash dividend ~~of $0.5625~~to $0.845 per common share for the ~~third~~first quarter of ~~2021.~~2022.

~~YTD 2021 compared to YTD 2020~~

Revenue for the nine months ended October 3, 2021 was $8,024 million compared to $6,105 million for the nine months ended September 27, 2020, an increase of $1,919 million or an increase of 31.4%. Revenue in the first nine months of 2021 represented a historical record for NXP. The YTD 2021 growth compared to YTD 2020 was a result of the industry-wide growth after the initial shock and widespread disruption caused by the emergence of the COVID-19 pandemic, combined with company specific content growth in the automotive end-market as the automotive customers focus on secular shift due electrification, advanced driver safety and assistance, and driver connectivity. Additionally, strong performance in the Industrial & IoT and Mobile end-markets helped to underpin the year-on-year performance. The rebound in NXP’s revenue growth began to clearly emerge at the end of the calendar third quarter of 2020, and has continued to accelerate through the third quarter of 2021.

1614

Our gross profit percentage for the nine months ended October 3, 2021 increased from 48.3% for the nine months ended September 27, 2020 to 54.3%, primarily from the significant acceleration of revenue in 2021 after the Covid crisis, and as such, improved loading and manufacturing efficiencies offset by higher personnel-related cost and a less favorable product mix.

Cash flow from operations for the first nine months of 2021 was $2,292 million. Total shareholder return for the first nine months of 2021 was $3,677 million. Our cash position remains solid, with the net proceeds of the $2 billion in Q2 2021 issued debt adding to our cash and cash equivalents.

Results of operations

The following table presents operating income for each of the three ~~and nine~~ month periods ended ~~October~~April 3, ~~2021~~2022 and ~~September 27, 2020,~~April 4, 2021, respectively:


($ in millions, unless otherwise stated)	($ in millions, unless otherwise stated)	Q3 2021	Q3 2020	YTD 2021	YTD 2020	($ in millions, unless otherwise stated)	Q1 2022	Q1 2021

Revenue	Revenue	2,861	2,267	8,024	6,105	Revenue	3,136	2,567
% nominal growth	% nominal growth	26.2	0.1	31.4	(7.2)	% nominal growth	22.2	27.0
Gross profit	Gross profit	1,583	1,090	4,360	2,947	Gross profit	1,777	1,355
Research and development	Research and development	(492)	(438)	(1,429)	(1,265)	Research and development	(518)	(461)
Selling, general and administrative	Selling, general and administrative	(243)	(203)	(699)	(658)	Selling, general and administrative	(251)	(222)
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	(137)	(418)	(456)	(1,179)	Amortization of acquisition-related intangible assets	(135)	(180)
Other income (expense)	Other income (expense)	—	1	—	110	Other income (expense)	—	—
Operating income (loss)	Operating income (loss)	711	32	1,776	(45)	Operating income (loss)	873	492

Revenue

~~Q3 2021~~Q1 2022 compared to ~~Q3 2020~~Q1 2021

Revenue for the three months ended ~~October~~April 3, ~~2021~~2022 was ~~$2,861~~$3,136 million compared to ~~$2,267~~$2,567 million for the three months ended ~~September 27, 2020,~~April 4, 2021, an increase of ~~$594~~$569 million or an increase of ~~26.2% year-on-year. Revenue~~22% year-on-year, with growth in the third quarter of 2021 represented a historical record for NXP. The continued strong revenue growth was a result of industry-wide growth as NXP began to recover in the year ago period from the challenging economic environment as a resultall of the COVID-19 pandemic. Growth within the automotive end-market was driven by increased demand across our entire automotive portfolio from our distribution partners and demand from automotive customers to support the secular shift of electrification, advanced driver safety and assistance, and driver connectivity systems. This growth in the automotive end-market and strong demand in the Industrial & IoT market helped to drive the increased year-on-year performance.Company’s four focus end markets.

By end-market; revenue within Automotive was $1,455 million, an increase of 50.9% versus the year ago period. Within Industrial & IoT, revenue was $607 million, an increase of 18.1% versus the third quarter of 2020. In Mobile, revenue was $345 million, an increase of 2.4% versus the year ago period, and within Communications Infrastructure & Other, revenue was $454 million, an increase of 0.4% versus the year ago period. When aggregating all end-markets together, and reviewing sales channel performance, business transacted through NXP's third party distribution partners, which primarily services the long-tail, mass market, was $1,631 million, an increase of 31.2%. Sales to NXP's direct OEM and EMS customers was $1,191 million, an increase of 21.2% versus the third quarter of 2020. Revenue increased across all regions.

~~YTD 2021 compared to YTD 2020~~

Revenue for the nine months ended October 3, 2021 was $8,024 million compared to $6,105 million for the nine months ended September 27, 2020, an increase of $1,919 million or an increase of 31.4%. Revenue in the first nine months of 2021 represented a historical record for NXP. The YTD 2021 growth compared to YTD 2020 was a result of the industry-wide growth from the continued demand in a supply constrained economic environment in 2021, while 2020 was negatively impacted by the challenging economic environment as a result of the COVID-19 pandemic. This combined with company specific content growth in the automotive end-market as the automotive customers focus on secular shift due electrification, advanced driver safety and assistance, and driver connectivity, and strong demand in the Industrial & IoT and Mobile markets helped to drive the growth in the year to date performance. The rebound in NXP’s revenue growth began to clearly emerge at the end of the calendar third quarter of 2020, and has continued to accelerate through the third quarter of 2021. ~~Revenue increased in all regions.~~

Revenue by end-market was as follows:


($ in millions, unless otherwise stated)	($ in millions, unless otherwise stated)	Q3 2021	Q3 2020	Change		YTD 2021	YTD 2020	Change		($ in millions, unless otherwise stated)	Q1 2022	Q1 2021	Change
Automotive	Automotive	1,455	964	50.9	%	3,946	2,632	49.9	%	Automotive	1,557	1,229	26.7	%
Industrial & IoT	Industrial & IoT	607	514	18.1	%	1,749	1,325	32.0	%	Industrial & IoT	682	571	19.4	%
Mobile	Mobile	345	337	2.4	%	1,038	839	23.7	%	Mobile	401	346	15.9	%
Communication Infrastructure & Other	Communication Infrastructure & Other	454	452	0.4	%	1,291	1,309	(1.4)	%	Communication Infrastructure & Other	496	421	17.8	%
Revenue	Revenue	2,861	2,267	26.2	%	8,024	6,105	31.4	%	Revenue	3,136	2,567	22.2	%

Revenue by sales channel was as follows:


($ in millions, unless otherwise stated)	($ in millions, unless otherwise stated)	Q3 2021	Q3 2020	Change		YTD 2021	YTD 2020	Change		($ in millions, unless otherwise stated)	Q1 2022	Q1 2021	Change
Distributors	Distributors	1,631	1,243	31.2	%	4,617	3,286	40.5	%	Distributors	1,680	1,468	14.4	%
OEM/EMS	OEM/EMS	1,191	983	21.2	%	3,295	2,695	22.3	%	OEM/EMS	1,412	1,064	32.7	%
Other	Other	39	41	(4.9)	%	112	124	(9.7)	%	Other	44	35	25.7	%
Revenue	Revenue	2,861	2,267	26.2	%	8,024	6,105	31.4	%	Revenue	3,136	2,567	22.2	%

Revenue by geographic region, which is based on the customer’s shipped-to location was as follows:


($ in millions, unless otherwise stated)	($ in millions, unless otherwise stated)	Q3 2021	Q3 2020	Change		YTD 2021	YTD 2020	Change		($ in millions, unless otherwise stated)	Q1 2022	Q1 2021	Change
Greater China and Asia Pacific	Greater China and Asia Pacific	1,653	1,404	17.7	%	4,638	3,637	27.5	%	Greater China and Asia Pacific	1,700	1,482	14.7	%
EMEA (Europe, the Middle East and Africa)	EMEA (Europe, the Middle East and Africa)	536	383	39.9	%	1,464	1,089	34.4	%	EMEA (Europe, the Middle East and Africa)	638	467	36.6	%
Americas	Americas	346	264	31.1	%	1,003	685	46.4	%	Americas	432	321	34.6	%
Japan	Japan	210	142	47.9	%	587	458	28.2	%	Japan	218	189	15.3	%
South Korea	South Korea	116	74	56.8	%	332	236	40.7	%	South Korea	148	108	37.0	%
Revenue	Revenue	2,861	2,267	26.2	%	8,024	6,105	31.4	%	Revenue	3,136	2,567	22.2	%

Automotive

Mobile

Industrial IoT

Comm Infra & Other

Distributors

Other

OEM/EMS

~~Q3 2021 compared to Q3 2020~~

~~Revenue for the three months ended October 3, 2021 was $2,861 million compared to $2,267 millionfor the three months ended September 27, 2020, an increase of $594 million or an increase of 26.2% year-on-year.~~ The increase ~~within the third quarter~~in revenue is attributed to the ~~continued recovery from the Covid pandemic in the same period a year ago and strengthening~~combination of ongoing demand, across NXP’s Automotive, Industrial IoT, ~~and~~ Mobile, ~~end-markets, while the demand in~~and the Communications Infrastructure & Other ~~end-market stayed flat.~~end-markets, as well as the effects of increased input costs from NXP suppliers which were passed along to our end customers in the form of higher average selling prices.

~~NXP’s revenue~~From an end market perspective, within the automotive end-market the year-on-year growth was driven by strong demand across the entire automotive product portfolio - both our distribution partners and OEM customers - in support of the secular shift of electrification, advanced driver safety and assistance, and driver connectivity systems. Growth within the Industrial & IoT market reflects the successful continuation of adoption of our complete secure, connected edge processing solutions which leverage our broad processor portfolio, complimented by connectivity, analog attach and security products. Growth within the Mobile end market was due to ~~distributors~~ongoing adoption of our secure embed transaction solutions across all regions primarily in the Greater China including Asia Pacific regions, as well as early adoption of the company’s new secure ultra-wide-band (“UWB”) solutions.

When aggregating all end-markets together, and reviewing sales channel performance, business transacted through NXP's third party distribution partnerswas $1,680 million, an increase of 14.4%. Sales to NXP's direct OEM and EMS customers was ~~$1,631~~$1,412 million, ~~and $1,191 million, respectively, representing increases~~an increase of ~~31.2% and 21.2%~~32.7% versus the ~~third~~first quarter of ~~2020. Revenue~~2021.

From a geographic perspective, revenue increased across all regions.

Revenue from the Automotive end-market was ~~$1,455~~$1,557 million, an increase of ~~$491~~$328 million or ~~50.9%~~26.7% year-on-year. Within Automotive, customers are focused on the key functional pillars of safety, electrification and improved driver comfort to accelerate competitive differentiation. These broad functional areas are fundamentally enabled by the secular adoption of new and increased levels of semiconductor content, which is layered on top of a strong base of existing electronic content in modern automobiles. Furthermore, the increase in Automotive revenue during the ~~third~~first quarter of ~~2021~~2022 can be ~~partially~~ attributed to the ongoing ~~recovery from the impacts of the COVID-19 pandemic, which began to rebound in the third quarter of 2020.~~demand for our automotive products.

Revenue from the Industrial & IoT end-market was ~~$607~~$682 million, an increase of ~~$93~~$111 million or ~~18.1%~~19.4% year-on-year. The Industrial & IoT market is driven by the secular trend of multi-market OEMs seeking to enable secure, connected, high performance processing solutions at the edge of the network, whether it is in factory automation, smart building/smart home or the exploding plethora of connected IoT devices. The innovation in this market is being driven by thousands of relatively smaller customers, which NXP effectively services through its extended global distribution channel. During the ~~third~~first quarter of ~~2021,~~2022, the year-on-year increase was driven by the continued growth in demand of NXP’s high performance industrial application processors, hybrid multi-core crossover processors, and low-power embedded microcontrollers, in addition to strong demand for the company’s analog high-speed interface devices and system security solutions.

Revenue from the Mobile end-market was ~~$345~~$401 million with an increase of $8$55 million or ~~2.4%~~15.9% year-on-year. The year-on-year increase was driven by the continued strong adoption of secure mobile wallet solutions and ~~the~~ increased demand for ~~embedded power solutions,~~UWB Mobile, which ~~were~~was offset by declines in ~~our semi-custom secure interfaces sold to a premium handset customer.~~ advanced power systems driven by load switch demand decline.Our mobile customers are primarily serviced through our global distribution channels.

Revenue in the Communication Infrastructure and Other end-market was ~~$454~~$496 million, an increase of $2$75 million or ~~0.4%~~17.8% year-on-year. The Communication Infrastructure and Other end-market is an amalgamation of three separate product portfolios, which service multiple markets, including cellular base stations; the network edge equipment, and the secure access, transit and government sponsored identification market. The increased demand for our secure identification, tagging, and access products, as well as access point connectivity solutions outweighed the year-on-year decline in demand for multi-core processors within the mass market for network edge solutions, as well as reduced revenue for smart RF antenna solutions within our cellular base station portfolio.

~~YTD 2021 compared to YTD 2020~~

Revenue for the nine months ended October 3, 2021 was $8,024 million compared to $6,105 for the nine months ended September 27, 2020, an increase of $1,919 million or an increase of 31.4%. The revenue level in the first nine months of 2021 represented a historical record for NXP. The YTD 2021 growth compared to YTD 2020 was a result of the industry-wide growth resulting from the continued demand in a supply constraint driven economic environment in 2021, while 2020 was negatively impacted by the challenging economic environment as a

1916

~~result of the COVID-19 pandemic. This combined with company specific content~~The year-on-year growth in the automotive end-market as the automotive customers focus on secular shift due electrification, advanced driver safety and assistance, and driver connectivity, and strong demand in the Industrial & IoT and Mobile markets helped to drive the growth in the year-to-date performance, while Communications Infrastructure & Other remained flat. The rebound in NXP’s revenue growth began to clearly emerge at the end of the calendar third quarter of 2020 and has continued to accelerate through the third quarter of 2021.

NXP’s revenue to distributors and direct OEM and EMS customers was $4,617 million and $3,295 million, respectively, representing increases of 40.5% and 22.3% versus nine months ended of 2020. Revenue increased across all regions.

Revenue from the Automotive end-market was $3,946 million, an increase of $1,314 million or 49.9% from $2,632 million for the nine months ended September 27, 2020. The increase was due to increases across the entire automotive end-market product portfolio. From a channel perspective, the year-to-date increase was due to increased demand from the Company’s distribution partners and direct automotive customers.

Revenue from the Industrial & IoT end-market was $1,749 million for the nine months ended October 3, 2021, an increase of $424 million or 32.0%. The year-to-date- increase comparable to the nine months ended a year ago was driven by the continued strong adoption of NXP's high performance industrial application processors, hybrid multi-core crossover processors, and low-power embedded microcontrollers, and analog high-speed interface devices and system security solutions.

Revenue from the Mobile end-market, revenue was $1,038 million for the nine months ended October 3, 2021, an increase of $199 million or 23.7%. The YTD 2021 increase compared to the YTD 2020 was driven primarily by the continued adoption of secure mobile wallet solutions, and to a lesser degree increased demand for embedded mobile power solutions. The year-to-date increase comparison was modestly offset by the divestment of the Voice and Audio Solutions, which closed early in the first quarter of ~~2020. Our mobile customers are primarily serviced through our global distribution channels.~~

~~Revenue in the Communication Infrastructure and Other end-market~~2022 was ~~$1,291 million for the nine months ended October 3, 2021, declined $18 million or 1.4% year-to-date. The YTD 2021 decline compared to the YTD 2020 was due to~~driven by a combination of ~~reduced~~high performance RF Power amplifier products for cellular base-station applications, broad based demand for secure access and identification solutions, and multi-core ~~processors within the mass market for network edge solutions, as well as reduced revenue for smart antenna solutions. This was offset by increased~~processors. Offsetting these positive growth trends were declines in demand for ~~our secure identification, tagging, and access~~the company’s smart antennae products ~~as well as access point connectivity solutions.~~used in the Android mobile handset market

Gross profit

~~Q3 2021~~Q1 2022 compared to ~~Q3 2020~~Q1 2021

Gross profit for the three months ended ~~October~~April 3, ~~2021~~2022 was ~~$1,583~~$1,777 million, or ~~55.3%~~56.7% of revenue, compared to ~~$1,090~~$1,355 million, or ~~48.1%~~52.8% of revenue for the three months ended ~~September 27, 2020.~~April 4, 2021. The increase of ~~$493~~$422 million in gross profit was driven by improved factory loading, increased manufacturing volumes, and higher ~~revenue as a result of accelerating demand and as such, improved loading and manufacturing efficiencies, partly~~sales prices which were offset by higher ~~personnel-related costs, including variable compensation cost.~~input costs.

~~YTD 2021 compared to YTD 2020~~

Gross profit for the nine months ended October 3, 2021 was $4,360 million, or 54.3% of revenue, compared to $2,947 million, or 48.3% of revenue for the nine months ended September 27, 2020. The increase of $1,413 million was primarily driven by the significant higher revenue in the first nine months of 2021 compared to the first nine months of 2020 which is the result of accelerating demand and as such, improved loading and manufacturing efficiencies offset by higher personnel-related cost, including variable compensation cost, and a less favorable product mix.

Operating expenses

~~Q3 2021~~Q1 2022 compared to ~~Q3 2020~~Q1 2021

Operating expenses for the three months ended ~~October~~April 3, ~~2021~~2022 totaled ~~$872~~$904 million, or ~~30.5%~~28.8% of revenue, compared to ~~$1,059~~$863 million, or ~~46.7%~~33.6% of revenue, for the three months ended ~~September 27, 2020.~~

~~YTD 2021 compared to YTD 2020~~

~~Operating expenses for the nine months ended October 3, 2021 totaled $2,584 million, or 32.2% of revenue, compared to $3,102 million, or 50.8% of revenue, for the nine months ended September 27, 2020.~~April 4, 2021.

The following table below presents the composition of operating expenses by line item in the statement of operations:


($ in millions, unless otherwise stated)	($ in millions, unless otherwise stated)	Q3 2021	Q3 2020	YTD 2021	YTD 2020	($ in millions, unless otherwise stated)	Q1 2022	Q1 2021
Research and development	Research and development	492	438	1,429	1,265	Research and development	518	461
Selling, general and administrative	Selling, general and administrative	243	203	699	658	Selling, general and administrative	251	222
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	137	418	456	1,179	Amortization of acquisition-related intangible assets	135	180
Total operating expenses	Total operating expenses	872	1,059	2,584	3,102	Total operating expenses	904	863

R&D

SG&A

Amortization acquisition-related

~~Q3 2021~~

Q1 2022 compared to ~~Q3 2020~~Q1 2021

The ~~decrease~~increase in operating expenses was a result of the following items:

Research and development (R&D) costs primarily consist of engineer salaries and wages (including share based compensation and other variable compensation), engineering related costs (including outside services, fixed-asset, IP and other licenses related costs), shared service center costs and other pre-production related expenses. R&D costs for the three months ended ~~October~~April 3, ~~2021~~2022 increased by ~~$54~~$57 million, or ~~12.3%~~12.4%, when compared to the three months ended ~~September 27, 2020~~April 4, 2021 driven by:

+ higher personnel-related costs, including variable compensation costs; and

-+ ~~lower restructuring costs.~~higher pre-production related expenses.

Selling, general and administrative (SG&A) costs primarily consist of personnel salaries and wages (including share based compensation and other variable compensation), communication and IT related costs, fixed-asset related costs and sales and marketing costs (including travel expenses). SG&A costs for the three months ended ~~October~~April 3, ~~2021~~2022 increased by ~~$40~~$29 million, or ~~19.7%~~13.1%, when compared to the three months ended ~~September 27, 2020~~April 4, 2021 mainly due to:

+ higher personnel-related costs, including variable compensation ~~costs.~~costs;

+ higher legal expense; and

+ higher professional services.

Amortization of acquisition-related intangible assets decreased by ~~$281~~$45 million, or ~~67.2%~~25.0%, when compared to the three months ended ~~September 27, 2020~~April 4, 2021 driven by:

- ~~certain intangibles became fully amortized during 2020.~~

~~YTD~~an impairment charge in Q1 2021 ~~compared to YTD 2020~~

~~The decrease in operating expenses was a result of the following items:~~

Research and development (R&D) costs primarily consist of engineer salaries and wages (including share based compensation and other variable compensation), engineering related costs (including outside services, fixed-asset, IP and other licenses related costs), shared service center costs and other pre-production related expenses. R&D costs for the nine months ended October 3, 2021 increased by $164 million, or 13.0%, when compared to the nine months ended September 27, 2020 driven by:

+ ~~higher personnel-related costs, including variable compensation costs;~~

-~~higher subsidies, offsetting research and development costs; and~~

-~~lower restructuring costs.~~

Selling, general and administrative (SG&A) costs primarily consist of personnel salaries and wages (including share based compensation and other variable compensation), communication and IT related costs, fixed-asset related costs and sales and marketing costs (including travel expenses). SG&A costs for the nine months ended October 3, 2021 increased with $41 million, or 6.2%, when compared to the nine months ended September 27, 2020 mainly due to:

+ ~~higher personnel-related costs, including variable compensation costs; and~~

-~~lower share-based compensation expenses~~ as a result of the ~~CEO transition in 2020.~~

~~Amortization~~discontinuation of ~~acquisition-related intangible assets decreased by $723 million, or 61.3%, when compared to the nine months ended September 27, 2020 driven by:~~

- ~~certain intangibles became fully amortized during 2020.~~

~~Other income (expense)~~

Income and expenses derived from manufacturing service arrangements (“MSA”) and transitional service arrangements (“TSA”) that are put into place when we divest a business or activity, are included in other income (expense). These arrangements are short-term in nature and are expected to decrease as the divested business or activity becomes more established.

~~The following table presents the split of other income (expense) for each of the three and nine month periods ended October 3, 2021 and September 27, 2020:~~

($ in millions) Q3 2021 Q3 2020 YTD 2021 YTD 2020
Result from MSA and TSA arrangements 1 — (1) (1)
Other, net (1) 1 1 111
Total — 1 — 110

~~Q3 2021 compared to Q3 2020~~

~~Other income (expense) reflects nil for the three month period ended October 3, 2021 and~~ an ~~income of $1 million for the three month period ended September 27, 2020.~~

IPR&D project.

~~YTD 2021 compared to YTD 2020~~

Other income (expense) reflects nil for the nine month period ended October 3, 2021, compared to an income of $110 million for the nine month period ended September 27, 2020. Included in 2020 is $110 million relating to the net gain on the sale of the Voice and Audio Solutions (VAS) assets.

Financial income (expense)

The following table presents the details of financial income and expenses:


($ in millions, unless otherwise stated)	($ in millions, unless otherwise stated)	Q3 2021	Q3 2020	YTD 2021	YTD 2020	($ in millions, unless otherwise stated)	Q1 2022	Q1 2021

Interest income	Interest income	1	3	3	11	Interest income	2	1
Interest expense	Interest expense	(96)	(100)	(273)	(276)	Interest expense	(104)	(87)
Total interest expense, net	Total interest expense, net	(95)	(97)	(270)	(265)	Total interest expense, net	(102)	(86)
Foreign exchange rate results	Foreign exchange rate results	3	(5)	3	(6)	Foreign exchange rate results	—	1

Miscellaneous financing costs/income and other, net	Miscellaneous financing costs/income and other, net	(1)	(4)	(13)	(9)	Miscellaneous financing costs/income and other, net	(3)	(2)
Total other financial income (expense)	Total other financial income (expense)	2	(9)	(10)	(15)	Total other financial income (expense)	(3)	(1)
Total	Total	(93)	(106)	(280)	(280)	Total	(105)	(87)

~~Q3 2021~~Q1 2022 compared to ~~Q3 2020~~Q1 2021

Financial income (expense) was an expense of ~~$93~~$105 million in the ~~third~~first quarter of ~~2021~~2022 compared to an expense of ~~$106~~$87 million in the ~~third~~first quarter of ~~2020.~~2021. The change in financial income (expense) is primarily attributable to ~~fair value adjustments in equity-accounted investees ($3 million), a decrease~~an increase in interest expense ~~($4 million)~~ as a result of ~~refinancing activities, a decrease in interest income ($2 million) as a result of declining interest rates and favorable foreign exchange results ($8 million).~~

~~YTD 2021 compared to YTD 2020~~

Financial income (expense) was an expense of $280 million in the first nine months of 2021 compared to an expense of $280 million in the first nine months of 2020. The change in financial income (expense) is primarily attributable to a decrease in interest expense ($3 million) as a result of refinancing activities, favorable foreign exchange results ($9 million), offset by a decrease in interest income ($8 million) as a result of declining interest rates and an increase of non-service pension cost ($4 million).(re)financing activities.

Benefit (provision) for income taxes

~~Q3 2021~~Q1 2022 compared to ~~Q3 2020~~Q1 2021

Our provision for income taxes was ~~$95~~$114 million ~~(15.4%~~(14.8% effective tax rate) for the ~~third~~first quarter of ~~2021~~2022 compared to a ~~benefit from~~provision for income taxes of ~~($57 million) (77.0%~~$40 million (9.9% effective tax rate) for the ~~third~~first quarter of ~~2020.~~2021. The increase in the income tax expense was due to higher income before income taxes ~~and due to the changes in certain estimates, offset by an increase in tax incentives~~ as a result of the improved operational performance of the ~~company.~~

~~YTD 2021 compared~~company which was partly offset by an increase in tax incentives also taking into account the effect of specific US tax law that became effective as from 2022. In addition to ~~YTD 2020~~

~~Our provision for income taxes for~~this, in the first ~~nine~~three months of 2021 there was ~~$200 million (13.4% effective~~an income tax ~~rate) compared~~benefit due to changes in estimates of prior positions and due to a benefit from income taxes of ($88 million) (27.1% effective tax rate) for the first nine months of 2020. The increase in the income tax expense was due to higher income before income taxes, offset by the net change in the valuation ~~allowance between the two periods and an increase in tax incentives (both as a result of the improved operational performance of the company).~~allowance.

Net income (loss)

The following table presents the composition of net income for the periods reported:


($ in millions, unless otherwise stated)	($ in millions, unless otherwise stated)	Q3 2021	Q3 2020	YTD 2021	YTD 2020	($ in millions, unless otherwise stated)	Q1 2022	Q1 2021

Operating income (loss)	Operating income (loss)	711	32	1,776	(45)	Operating income (loss)	873	492
Financial income (expense)	Financial income (expense)	(93)	(106)	(280)	(280)	Financial income (expense)	(105)	(87)
Benefit (provision) for income taxes	Benefit (provision) for income taxes	(95)	57	(200)	88	Benefit (provision) for income taxes	(114)	(40)
Results relating to equity-accounted investees	Results relating to equity-accounted investees	3	(1)	—	(3)	Results relating to equity-accounted investees	12	(1)
Net income (loss)	Net income (loss)	526	(18)	1,296	(240)	Net income (loss)	666	364

Liquidity and Capital Resources

We derive our liquidity and capital resources primarily from our cash flows from operations. We continue to generate strong positive operating cash flows. At the end of the ~~third~~first quarter of ~~2021,~~2022, our cash balance was ~~$2,303~~$2,683 million, ~~an increase~~a decrease of ~~$28~~$147 million compared to December 31, ~~2020.~~2021. Taking into account the available amount of the Unsecured Revolving Credit Facility of $1,500 million, we had access to ~~$3,803~~$4,183 million of liquidity as of ~~October~~April 3, ~~2021.~~2022.

We currently use cash to fund operations, meet working capital requirements, for capital expenditures and for potential common stock repurchases, dividends and strategic investments. Based on past performance and current expectations, we believe that our current available sources of funds (including cash and cash equivalents, RCF Agreement, plus anticipated cash generated from operations) will be adequate to finance our operations, working capital requirements, capital expenditures and potential dividends for at least the next twelve months. Our capital expenditures were ~~$501~~$280 million in the first ~~nine~~three months of ~~2021,~~2022, compared to ~~$288~~$150 million in the first ~~nine~~three months of ~~2020.~~2021. During the ~~nine~~three month period ended ~~October~~April 3, ~~2021,~~2022, we repurchased ~~$3,265~~$552 million, or 172.7 million shares of our common stock pursuant to our share buyback programs at a weighted average price of ~~$192.17~~$207.94 per share.

Our total debt amounted to ~~$9,593~~$10,573 million as of ~~Q3 2021,~~Q1 2022, an increase of ~~$1,984~~$1 million compared to December 31, ~~2020~~2021 ($~~7,609~~10,572 million). Of this, short-term debt amounted to $999 million as of Q3 2021, compared to no short-term debt at December 31, 2020. On May 11, 2021, NXP issued 2.5% senior notes due in 2031 ($1 billion) and 3.25% senior notes due in 2041 ($1 billion).

At ~~October~~April 3, ~~2021,~~2022, our cash balance was ~~$2,303~~$2,683 million of which ~~$217~~$185 million was held by SSMC, our consolidated joint venture company with TSMC. Under the terms of our joint venture agreement with TSMC, a portion of this cash can be distributed by way of a dividend to us, but 38.8% of the dividend will be paid to our joint venture partner. During the first nine months of 2021, no dividend was declared by SSMC. In 2020, $90 million has been declared by SSMC, which was distributed in the third quarter of 2020, with 38.8% being paid to our joint venture partner.

Cash flows

Our cash and cash equivalents during the first ~~nine~~three months of ~~2021~~2022 decreased by ~~$34~~$147 million ~~(excluding the effect of changes in exchange rates on our cash position of $(6) million)~~ as follows:


($ in millions, unless otherwise stated)	($ in millions, unless otherwise stated)	YTD 2021	YTD 2020	($ in millions, unless otherwise stated)	YTD 2022	YTD 2021

Net cash provided by (used for) operating activities	Net cash provided by (used for) operating activities	2,292	1,453	Net cash provided by (used for) operating activities	856	732
Net cash (used for) provided by investing activities	Net cash (used for) provided by investing activities	(618)	(255)	Net cash (used for) provided by investing activities	(329)	(181)
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	(1,640)	1,330	Net cash provided by (used for) financing activities	(674)	(979)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	34	2,528	Increase (decrease) in cash and cash equivalents	(147)	(428)

Cash Flow from Operating Activities

For the first ~~nine~~three months of ~~2021~~2022 our operating activities provided ~~$2,292~~$856 million in cash. This was primarily the result of net income of ~~$1,296~~$666 million, adjustments to reconcile the net income of ~~$1,227~~$352 million and changes in operating assets and liabilities of ($~~221)~~164) million. Adjustments to net income (loss) includes offsetting non-cash items, such as depreciation and amortization of ~~$952~~$310 million, share-based compensation of ~~$265~~$89 million and changes in deferred taxes of $6($33) million.

The change in operating assets and liabilities ~~(working capital accounts)~~ was attributable to the following:

The ~~$214~~$61 million increase in receivables and other current assets for the three months ended April 3, 2022 was ~~primarily~~mainly driven by ~~the increase~~increases in ~~accounts receivable due to the linearity of revenue between the two periods, customer mix, and the related timing of cash collections in the first nine months of 2021 compared~~various other assets with the ~~same period~~most significant activities relating to a $20 million other receivables and $10 million in ~~2020.~~IT prepayments.

The ~~$143~~$122 million increase in inventories for the three months ended April 3, 2022 was primarily related to increased production levels ~~in order to attempt~~as we work to align inventory on hand with the current revenue forecasts.

The ~~$242~~$266 million increase in accounts payable and other liabilities for the ~~nine~~three months ended ~~October~~April 3, ~~2021~~2022 was primarily related to the increase in the accrual for variable compensation of ~~$227~~$100 million as a result of improved operating results, ~~$149~~$117 million in trade accounts payable as a result of increased ~~demand,~~distributor rebates outstanding, and ~~$46~~$55 million in interest payable due to timing of interest payments; partially offset by the decrease of $14 million in lease liabilities, $37 million related to income and social tax payables, a $32 million reduction in restructuring liabilities, $24 million in personnel-related costs, all due to timing of payments, and ~~$73~~$1 million of other net movements including the non-cash adjustment for capital expenditures and purchased ~~IP.~~IP; partially offset by the $7 million reduction in restructuring liabilities.

The $247 million increase in other non-current assets for the three months ended April 3, 2022 was primarily related to prepayments to secure long-term production supply with multiple vendors.

For the first ~~nine~~three months of ~~2020~~2021 our operating activities provided ~~$1,453~~$732 million in cash. This was primarily the result of net ~~loss~~income of ~~($240)~~$364 million, adjustments to reconcile the net ~~loss~~income of ~~$1,591~~$444 million and changes in operating assets and liabilities of ~~$98~~($78) million. Adjustments to net ~~loss~~income (loss) includes offsetting non-cash items, such as depreciation and amortization of ~~$1,672~~$341 million, share-based compensation of ~~$295~~$91 million, amortization of the ~~discount (premium) on debt and~~ debt issuance costs of $6$2 million, a gain on ~~sale~~equity securities of ~~assets of ($111)~~$(3) million, results relating to equity-accounted investees of $3$1 million and changes in deferred taxes of ~~($274)~~$12 million.

Cash Flow from Investing Activities

Net cash used for investing activities amounted to ~~$618~~$329 million for the first ~~nine~~three months of 2022 and principally consisted of the cash outflows for capital expenditures of $280 million, $43 million for the purchase of identified intangible assets, $5 million for the purchase of equipment leased to others, $4 million for the net purchase of interests of businesses, partly offset by $2 million from the proceeds from return of equity investments and $1 million from the proceeds from disposals of property, plant and equipment.

Net cash used for investing activities amounted to $181 million for the first three months of 2021 and principally consisted of the cash outflows for capital expenditures of ~~$501~~$150 million ~~$99~~and $37 million for the purchase of identified intangible assets, ~~$14 million for the purchase of equipment leased to others, $17 million for the net purchase of interests of businesses,~~ partly offset by ~~$7 million of insurance recoveries received for equipment damage and~~ net proceeds of $6 million related to sales and purchases of investments.

Net cash used for investing activities amounted to $255 million for the first nine months of 2020 and principally consisted of the cash outflows for purchases of interests in businesses (net of cash) of $21 million, purchase of investments of $15 million, capital expenditures of $288 million and $95 million for the purchase of identified intangible assets, partly offset by proceeds of $161 million from the sale of businesses (net of cash), related to the the sale of our Voice and Audio Solutions assets.

Cash Flow from Financing Activities

Net cash used for financing activities was ~~$1,640~~$674 million for the first ~~nine~~three months of ~~2021~~2022 compared to net cash provided by financing activities of ~~$1,330~~$979 million for the first ~~nine~~three months of ~~2020,~~2021, detailed in the table below:


($ in millions)	($ in millions)	YTD 2021	YTD 2020	($ in millions)	YTD 2022	YTD 2021

Proceeds from the issuance of long-term debt		2,000	2,000

Cash paid for debt issuance costs	Cash paid for debt issuance costs	(22)	(15)	Cash paid for debt issuance costs	(1)	—
Dividends paid to non-controlling interests		—	(34)

Dividends paid to common stockholders	Dividends paid to common stockholders	(412)	(315)	Dividends paid to common stockholders	(149)	(105)
Cash proceeds from exercise of stock options and savings from ESPP	Cash proceeds from exercise of stock options and savings from ESPP	60	64	Cash proceeds from exercise of stock options and savings from ESPP	28	31
Purchase of treasury shares	Purchase of treasury shares	(3,265)	(370)	Purchase of treasury shares	(552)	(905)
Other, net		(1)	—

~~Contractual Obligations~~Additional Capital Requirements

Expected working and other capital requirements are described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. At April 3, 2022, other than for changes disclosed in the “Notes to Condensed Consolidated Financial Statements” and “Liquidity and Capital Resources” in this Quarterly Report, there have been no other material changes to our expected working and other capital requirements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Information Regarding Guarantors of NXP (unaudited)

Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries

The following debt instruments are guaranteed, fully and unconditionally, jointly and severally, by NXP Semiconductors N.V. and issued or guaranteed by NXP USA, Inc., NXP B.V. and NXP LLC, (together, the “Subsidiary Obligors” and together with NXP Semiconductors N.V., the “Obligor Group”): 4.625% Senior Notes due 2023, 4.875% Senior Notes due 2024, 2.700% Senior Notes due 2025, 5.350% Senior Notes due 2026, 3.875% Senior Notes due 2026, 3.150% Senior Notes due 2027, 5.550% Senior Notes due 2028, 4.300% Senior Notes due 2029, 3.400% Senior Notes due 2030, 2.500% Senior Notes due 2031, 2.650% Senior Notes due 2032, 3.250% Senior Notes due 2041, 3.125% Senior Notes due 2042, and the 3.250% Senior Notes due 2051 (together the “ Notes”). Other than the Subsidiary Obligors, none of the Company’s subsidiaries (together the “Non-Guarantor Subsidiaries”) guarantee the Notes. The Company consolidates the Subsidiary Obligors in its consolidated financial statements and each of the Subsidiary Obligors are wholly owned subsidiaries of the Company.

All of the existing guarantees by the Company rank equally in right of payment with all of the existing and future senior indebtedness of the Obligor Group. There are no significant restrictions on the ability of the Obligor Group to obtain funds from respective subsidiaries by dividend or loan.

The following tables present summarized financial information of the Obligor Group on a combined basis, with intercompany balances and transactions between entities of the Obligor Group eliminated and investments and equity in the earnings of the Non-Guarantor Subsidiaries excluded. The Obligor Group’s amounts due from, amounts due to, and intercompany transactions with Non-Guarantor Subsidiaries have been disclosed below the table, when material.

Summarized Statements of Income


			For the three months ended
($ in millions)			April 3, 2022

Revenue			1,813
Gross Profit			921
Operating income			366
Net income			178

Summarized Balance Sheets


	As of
($ in millions)	April 3, 2022	December 31, 2021

Current assets	2,570	2,535
Non-current assets	11,545	11,576
Total assets	14,115	14,111

Current liabilities	812	637
Non-current liabilities	10,856	10,792
Total liabilities	11,668	11,429

Obligor's Group equity	2,447	2,682
Total liabilities and Obligor's Group equity	14,115	14,111

NXP Semiconductors N.V. is the head of a fiscal unity for the corporate income tax and VAT that contains the most significant Dutch wholly-owned group companies. The Company is therefore jointly and severally liable for the tax liabilities of the tax entity as a whole, and as such the income tax expense of the Dutch fiscal unity has been included in the Net income of the Obligor Group.

($ in millions) Total 2021 2022 2023 2024 2025 2026 and thereafter
Long-term purchase obligations 4,364 467 1,114 729 590 580 884

~~Our long-term obligations increased substantially as we locked in long-term supply with our key manufacturing partners.~~

~~Off-balance Sheet Arrangements~~

~~At the end~~financial information of the ~~third quarter~~Obligor Group includes sales executed through a Non-Guarantor Subsidiary single-billing entity as a sales agent on behalf of ~~2021, we had no off-balance sheet arrangements other than commitments resulting~~an entity in the Obligor Group. The Obligor Group has sales to non-guarantors (for the three months ended April 3, 2022: $158 million). The Obligor Group has amounts due from ~~normal business operations. None of these arrangements has or is likely~~equity financing (April 3, 2022: $6,626 million; December 31, 2021: $5,167 million) and due to ~~have a material effect on our financial condition, results of operations or cash flows.~~debt financing (April 3, 2022: $3,162 million; December 31, 2021: $3,053 million) with non-guarantor subsidiaries.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the Company’s market risk during the first ~~nine~~three months of ~~2021.~~2022. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer (Certifying Officers), evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) on ~~October~~April 3, ~~2021.~~2022. Based on that evaluation, the Certifying Officers concluded the Company's disclosure controls and procedures were not effective as of ~~October 3,~~such date due to a material weakness in internal control over financial reporting that was disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Ongoing Remediation of Previously Identified Material Weakness

As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, we are implementing measures designed to ensure that control deficiencies contributing to the previously disclosed material weakness are remediated, such that these controls are designed, implemented, and operating effectively. In addition to those actions which are ongoing, we have been designing and continue to implement certain compensating controls, which allow for an additional layer of mitigation as we design, implement, and ensure effective operation of the measures addressing the material weakness.We expect these changes to materially improve our internal controls.

The weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Management believes the remediation of this material weakness will be completed prior to the end of fiscal 2022. However, there is no assurance as to when such remediation will be completed.

Changes in Internal Control Over Financial Reporting

~~There~~

As noted above, the Company has been implementing measures to remediate the material weakness in our internal control over financial reporting. Other than the remediation efforts underway, there were no changes in the Company's internal control over financial reporting during the three month period ended ~~October~~April 3, ~~2021,~~2022, which were identified in connection with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable.

2522

Item 1A. Risk Factors

~~There~~Our global business operations expose us to international business risks that could adversely affect our business

If any of the following international business risks were to materialize or become worse, they could have ~~been no~~a material ~~changes~~adverse effect on our business, financial condition and results of operations:

•negative economic developments in economies around the world and the instability of governments and international trade arrangements, such as the increase of barriers to international trade including the imposition of tariffs on imports by the United States and China, the withdrawal of the United Kingdom from the European Union, enhanced export controls on certain products and sanctions on certain industry sectors and parties in Russia and the sovereign debt crisis in certain European countries;

•social and political instability in a number of countries around the world, including continued hostilities and civil unrest in the Middle East and the Ukraine. The instability may have a negative effect on our business, financial condition and operations via our customers and global supply chain and volatility in energy prices and the financial markets;

•potential terrorist attacks;

•epidemics and pandemics, such as the coronavirus outbreak, which may adversely affect our workforce, as well as our suppliers and customers;

•adverse changes in government policies, especially those affecting trade and investment;

•volatility in foreign currency exchange rates, in particular with respect to the U.S. dollar, and transfer restrictions, in particular in China; and

•threats that our operations or property could be subject to nationalization and expropriation.

In addition, Russia’s recent invasion of Ukraine has led to sanctions, export controls and other penalties being levied by the United States, European Union and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets. Any Russian response could also disrupt commercial and financial transactions. Further, conflict between Ukraine and Russia could adversely impact the global supply chain, disrupt our operations, or negatively impact the demand for our products in our primary end markets. Any such disruption could result in an adverse impact to our financial results.

For a description of other applicable risk factors, ~~previously disclosed in~~please refer to Part I, Item 1A: “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

In ~~August 2021,~~January 2022, the board of directors of NXP (the “Board”) approved a new $2 billion ~~expansion of its 2021~~2022 share repurchase program. The new $2 billion share repurchase authorization is in addition to the $2$4 billion 2021 share repurchase program previously authorized by the ~~Board in March 2021.~~Board. In addition, the Company purchases shares from participants in the Company’s equity programs who trade shares as trade for taxes. Under Dutch tax law, the repurchase of a company’s shares by an entity domiciled in the Netherlands results in a taxable event, unless a tax exemption applies. The tax on the repurchased shares is attributed to the shareholders, with NXP making the payment on the shareholders’ behalf. As such, the tax on the repurchased shares is accounted for within stockholders’ equity.

The following share repurchase activity occurred under these programs during the three months ended ~~October~~April 3, ~~2021:~~2022:

Period

Total Number
of Shares
Purchased
Average Price
Paid per Share Number of Shares Purchased as Part of Publicly Announced Buy Back Programs Maximum Number of
Shares That May
Yet Be Purchased
Under the Buy Back Program Number of Shares Purchased as Trade for Tax (1)
July 5, 2021 – August 8, 2021 5,800,443 $199.37 5,037,477 1,789,023 762,966
August 9, 2021 – September 5, 2021 — $— — 11,185,519 —
September 6, 2021 – October 3, 2021 — $— — 12,351,100 —
Total 5,800,443 5,037,477 762,966


Period	Total Number of Shares Purchased	Average Price Paid per Share	Number of Shares Purchased as Part of Publicly Announced Buy Back Programs	Maximum Number of Shares That May Yet Be Purchased Under the Buy Back Program	Number of Shares Purchased as Trade for Tax (1)
January 1, 2022 – February 6, 2022	1,992,525	$212.48	1,975,744	16,833,194	16,781
February 7, 2022 – March 6, 2022	660,791	$194.24	650,462	18,184,668	10,329
March 7, 2022 – April 3, 2022	(320)	$199.90	—	17,628,198	(320)
Total	2,652,996		2,626,206		26,790

(1) Reflects shares surrendered by participants to satisfy tax withholding obligations in connection with the Company's equity programs.

Item 5. Other Information

The Compensation Committee of the Board of Directors of NXP Semiconductors N.V. (the “Company”) has approved a form of Performance Restricted Stock Unit Award Agreement (attached as Exhibit 10.3 to this Report) for the award of equity grants to our employees, including the Company’s named executive officers. These equity awards will be granted under the NXP Semiconductors N.V. 2019 Omnibus Incentive Plan which was previously approved by the Company’s annual general meeting of shareholders.Not applicable.

2623

Item 6. Exhibits

Exhibit

Number

Exhibit Description

3.1

Articles of Association of NXP Semiconductors N.V. dated June 9, 2020 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q of NXP Semiconductors N.V., filed on July 28, 2020)

~~10.1+~~10.1*+

Employment Agreement dated ~~August 25,~~May 10, 2021 between NXP USA, Inc. and ~~Jennifer Wuamett (incorporated by reference to 10.1 to the Company’s Current Report on Form 8-K of NXP Semiconductors N.V., filed on August 26, 2021)~~

~~10.2+~~

Employment Agreement dated October 12, 2021 between NXP USA, Inc. and Bill Betz (incorporated by reference to 10.1 to the Company’s Current Report on Form 8-K of NXP Semiconductors N.V., filed on October 12, 2021)

~~10.3*+~~

~~Form of Performance Restricted Stock Unit Award Agreement~~Andy Micallef

31.1*

Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer

31.2*

Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer

32.1*

Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

101

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~October~~April 3, ~~2021,~~2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~October~~April 3, ~~2021~~2022 and ~~September 27, 2020;~~April 4, 2021; (ii) Condensed Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~October~~April 3, ~~2021~~2022 and ~~September 27, 2020;~~April 4, 2021; (iii) Condensed Consolidated Balance Sheets as of ~~October~~April 3, ~~2021~~2022 and December 31, ~~2020;~~2021; (iv) Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~October~~April 3, ~~2021~~2022 and ~~September 27, 2020;~~April 4, 2021; (v) Condensed Consolidated Statements of Changes in Equity for the three ~~and nine~~ months ended ~~October~~April 3, ~~2021~~2022 and ~~September 27, 2020;~~April 4, 2021; and (vi) Notes to the Unaudited Condensed Consolidated Financial Statements.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


*			Filed or furnished herewith.
+			Indicates management contract or compensatory plan or arrangement.

2724

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: ~~November 2, 2021~~May 3, 2022


NXP Semiconductors N.V.

			/s/ William J. Betz
Name: William J. Betz, CFO

2825

Exhibit 31.1

CERTIFICATION

I, Kurt Sievers, certify that:

1.I have reviewed this quarterly report on Form 10-Q of NXP Semiconductors N.V.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: ~~November 2, 2021~~May 3, 2022


By:						/s/ Kurt Sievers
						Kurt Sievers
						President & Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, William J. Betz, certify that:

1.I have reviewed this quarterly report on Form 10-Q of NXP Semiconductors N.V.;

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: ~~November 2, 2021~~May 3, 2022


By:						/s/ William J. Betz
						William J. Betz
						Chief Financial Officer

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Kurt Sievers, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of NXP Semiconductors N.V. on Form 10-Q for the period ended ~~October~~April 3, ~~2021~~2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of NXP Semiconductors N.V. at the dates and for the periods indicated.

Date: ~~November 2, 2021~~May 3, 2022


By:						/s/ Kurt Sievers
						Kurt Sievers
						President & Chief Executive Officer

I, William J. Betz, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of NXP Semiconductors N.V. on Form 10-Q for the period ended ~~October~~April 3, ~~2021~~2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of NXP Semiconductors N.V. at the dates and for the periods indicated.

Date: ~~November 2, 2021~~May 3, 2022


By:						/s/ William J. Betz
						William J. Betz
						Chief Financial Officer


	Fiscal year 2021		Fiscal year 2020
	Dividend per share	Amount	Dividend per share	Amount
First quarter	0.5625	155	0.375	105
Second quarter	0.5625	152	0.375	105
Third quarter	0.5625	150	0.375	105

	1.6875	457	1.125	315


	As of January 1, 2021	Additions	Utilized	Released	Other changes	As of October 3, 2021
Restructuring liabilities	74	1	(32)	—	—	43