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 OctoberApril 3, 20212022
or
☐ 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 OctoberApril 29, 2021,2022, there were 265,933,249262,564,790 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 OctoberApril 3, 20212022
TABLE OF CONTENTS
| | | | | | | | |
| Page |
|
| | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| | |
| | |
| | |
|
| | |
| | |
| | |
| | |
| | |
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'sFor a discussion of our significant accounting policies disclosed in Note 2 Significantsee, “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – “Significant Accounting Policies inPolicies” of our Annual Report on Form 10-K for the year ended December 31, 2020. The2021. There have been no changes to our significant accounting policy information below is to aid inpolicies 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 ninethree 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 millionQ1 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 waswere 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 millionQ1 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 waswere 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 OctoberApril 3, 20212022 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 OctoberApril 3, 20212022 (December 31, 2020: $312021: $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 OctoberApril 3, 20212022 (December 31, 2020: $1222021: $120 million).
Equity Investments
At OctoberApril 3, 20212022 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 OctoberApril 3, 20212022 and December 31, 20202021 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 20212022 and 20202021 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 thirdfirst quarter (not yet paid) is classified in the condensed consolidated balance sheet in other current liabilities as of OctoberApril 3, 20212022 and was subsequently paid on OctoberApril 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 millionThere were no restructuring costs incurred for the ninethree month period ended OctoberApril 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 ninethree months of 20212022 was $200of $114 million (13.4%(14.8% effective tax rate) compared to a benefitprovision from income taxes of ($88 million) (27.1%$40 million (9.9% effective tax rate) for the first ninethree 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 thirdfirst quarter of 20212022 by $3 million and decreased by $2$4 million for the thirdfirst 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 thirdfirst quarter of 2021 (YTD 2021: $0.04)2022 and $0.01 for the thirdfirst quarter of 2020 (YTD 2020: $0.03).2021.
7 Identified Intangible Assets
Identified intangible assets as of OctoberApril 3, 20212022 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 OctoberApril 3, 20212022 (December 31, 2020:2021: 4 years).
8 Debt
The following table summarizes the outstanding debt as of OctoberApril 3, 20212022 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 teamexecutive 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 OctoberApril 3, 2021,2022, the estimated fair value of current and non-current debt including the current portion, was $10.4$10.3 billion ($8.611.3 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 OctoberApril 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 datein 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 OctoberApril 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 OctoberApril 3, 2021,2022, the Company’s related balance of insurance reimbursements was $8$45 million (December 31, 2020: $82021: $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 OctoberApril 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 maximumaggregate 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, aA 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.
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 ObligationsInformation Regarding Guarantors of NXP - An updateFinancial 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, 2020a 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 2021Q1 2022 compared to Q3 2020Q1 2021
Revenue for the three months ended OctoberApril 3, 20212022 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 pandemicdemand for semiconductors in the first half of 2020. Growthcompany’s focused end markets, as well as positive mix effects within the automotive end-market was driven bycompany’s focused end markets, and increased demand across our entire automotive portfoliovolumes of products shipped. Additionally, the company continued to experience the effects of increased input costs from our distribution partners and demand from automotiveits 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 thirdfirst 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 thirdfirst quarter of 20212022 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-relatedinput costs.
We continue to generate strong operating cash flows, with $924$856 million in cash flows from operations for the thirdfirst quarter of 2021.2022. We returned $1,309$701 million to our shareholders during the thirdfirst quarter of 2021.2022. Our cash position at the end of the thirdfirst quarter of 20212022 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 $0.5625to $0.845 per common share for the thirdfirst 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.
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 $2 billion in Q2 2021 issued debt adding to our cash and cash equivalents.
Results of operations
The following table presents operating income for each of the three and nine month periods ended OctoberApril 3, 20212022 and September 27, 2020,April 4, 2021, respectively:
| ($ 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 2021Q1 2022 compared to Q3 2020Q1 2021
Revenue for the three months ended OctoberApril 3, 20212022 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. Revenue22% 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 | % | |
| | | | | | | | | | | | | | |
n | Automotive | | n | Mobile |
n | Industrial IoT | | n | Comm Infra & Other |
| | | | | | | | | | | | | | | | | |
| n | Distributors | | n | Other |
| n | 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 quarterin revenue is attributed to the continued recovery from the Covid pandemic in the same period a year ago and strengtheningcombination of ongoing demand, across NXP’s Automotive, Industrial IoT, and Mobile, end-markets, while the demand inand 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 revenueFrom 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 distributorsongoing 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 increasesan increase of 31.2% and 21.2%32.7% versus the thirdfirst quarter of 2020. Revenue2021.
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 thirdfirst quarter of 20212022 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 thirdfirst 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 werewas 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
result of the COVID-19 pandemic. This combined with company specific contentThe 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-market2022 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 todriven by a combination of reducedhigh 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 increasedprocessors. Offsetting these positive growth trends were declines in demand for our secure identification, tagging, and accessthe company’s smart antennae products as well as access point connectivity solutions.used in the Android mobile handset market
Gross profit
Q3 2021Q1 2022 compared to Q3 2020Q1 2021
Gross profit for the three months ended OctoberApril 3, 20212022 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, partlysales 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 2021Q1 2022 compared to Q3 2020Q1 2021
Operating expenses for the three months ended OctoberApril 3, 20212022 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 | | |
| | | | | | | | | | | | | | | | | |
n | R&D | n | SG&A | n | Amortization acquisition-related |
Q3 2021
Q1 2022 compared to Q3 2020Q1 2021
The decreaseincrease 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 OctoberApril 3, 20212022 increased by $54$57 million, or 12.3%12.4%, when compared to the three months ended September 27, 2020April 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 OctoberApril 3, 20212022 increased by $40$29 million, or 19.7%13.1%, when compared to the three months ended September 27, 2020April 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, 2020April 4, 2021 driven by:
- certain intangibles became fully amortized during 2020.
YTDan 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.
Amortizationdiscontinuation 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 2021Q1 2022 compared to Q3 2020Q1 2021
Financial income (expense) was an expense of $93$105 million in the thirdfirst quarter of 20212022 compared to an expense of $106$87 million in the thirdfirst quarter of 2020.2021. The change in financial income (expense) is primarily attributable to fair value adjustments in equity-accounted investees ($3 million), a decreasean 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 2021Q1 2022 compared to Q3 2020Q1 2021
Our provision for income taxes was $95$114 million (15.4%(14.8% effective tax rate) for the thirdfirst quarter of 20212022 compared to a benefit fromprovision for income taxes of ($57 million) (77.0%$40 million (9.9% effective tax rate) for the thirdfirst 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 comparedcompany 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 forthis, in the first ninethree months of 2021 there was $200 million (13.4% effectivean income tax rate) comparedbenefit 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 thirdfirst quarter of 2021,2022, our cash balance was $2,303$2,683 million, an increasea 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 OctoberApril 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 ninethree months of 2021,2022, compared to $288$150 million in the first ninethree months of 2020.2021. During the ninethree month period ended OctoberApril 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, 20202021 ($7,60910,572 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 OctoberApril 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 ninethree months of 20212022 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 ninethree months of 20212022 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 primarilymainly driven by the increaseincreases 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 comparedvarious other assets with the same periodmost 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 attemptas 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 ninethree months ended OctoberApril 3, 20212022 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 ninethree months of 20202021 our operating activities provided $1,453$732 million in cash. This was primarily the result of net lossincome of ($240)$364 million, adjustments to reconcile the net lossincome of $1,591$444 million and changes in operating assets and liabilities of $98($78) million. Adjustments to net lossincome (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 saleequity 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 ninethree 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 $99and $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 ninethree months of 20212022 compared to net cash provided by financing activities of $1,330$979 million for the first ninethree months of 2020,2021, detailed in the table below:
| ($ 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 ObligationsAdditional 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.
The Company maintains purchase commitments with certain suppliers, primarily for raw materials, semi-finished goods and manufacturing services and for some non-production items. As of October 3, 2021, the Company had purchase commitments of $4,364 million, which are due through 2044.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
($ 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 endfinancial information of the third quarterObligor 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 resultingan 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 likelyequity 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 ninethree 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 OctoberApril 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
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 OctoberApril 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.
Item 1A. Risk Factors
ThereOur 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 noa material changesadverse 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 inplease 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 20212022 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 OctoberApril 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.
Item 6. Exhibits
| | | | | | | | | | | | | | |
Exhibit Number | | Exhibit Description | | |
3.1 | | | | |
10.1+10.1*+ | | | | |
10.2+ | | | | |
10.3*+ | | | | |
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 OctoberApril 3, 2021,2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three and nine months ended OctoberApril 3, 20212022 and September 27, 2020;April 4, 2021; (ii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended OctoberApril 3, 20212022 and September 27, 2020;April 4, 2021; (iii) Condensed Consolidated Balance Sheets as of OctoberApril 3, 20212022 and December 31, 2020;2021; (iv) Condensed Consolidated Statements of Cash Flows for the ninethree months ended OctoberApril 3, 20212022 and September 27, 2020;April 4, 2021; (v) Condensed Consolidated Statements of Changes in Equity for the three and nine months ended OctoberApril 3, 20212022 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. |
| |
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, 2021May 3, 2022
| | | | | |
NXP Semiconductors N.V. |
|
| /s/ William J. Betz |
Name: William J. Betz, CFO |
|
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, 2021May 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.;
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, 2021May 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 OctoberApril 3, 20212022 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, 2021May 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 OctoberApril 3, 20212022 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, 2021May 3, 2022
| | | | | | | | |
By: | | /s/ William J. Betz |
| | William J. Betz |
| | Chief Financial Officer |