Additional Information for the First Quarter 2017:
• On October 27, 2016 Qualcomm, Incorporated (NASDAQ:QCOM) and NXP Semiconductors N.V. (NASDAQ:NXPI) announced a definitive agreement, unanimously approved by the boards of directors of both companies, under which Qualcomm will acquire NXP. Under the terms of the definitive agreement, a subsidiary of Qualcomm will commence a tender offer to acquire all the issued and outstanding shares of NXP for $110.00 per share in cash. The tender offer commenced on November 18, 2016.
• On February 7, 2017 NXP announced it has completed the divestment of its Standard Products business, receiving $2.75 billion in cash proceeds.
• On February 10, 2017 NXP announced that its subsidiaries NXP B.V. and NXP Funding LLC, delivered notice that it will pre-pay, together with accrued interest and applicable fees
- All its outstanding floating-rate term loan due March 2017 (“Term Loan E”) in an aggregate principal amount of $388 million;
- All its outstanding floating-rate term loan due January 2020 (“Term Loan D”) in an aggregate principal amount of $387 million;
- All its outstanding floating-rate term loan due December 2020 (“Term Loan F”) in an aggregate principal amount of $1,436 million.
Additionally, on March 9, 2017, NXP redeemed $500 million of the outstanding aggregate principal amount of its 5.75% Senior Notes due 2021 (the “Notes”), which represents all the outstanding aggregate principal amount of the Notes. The funds for these pre-payments and redemption came from the net proceeds of the completion of the divestiture of the Standard Products business of NXP, and available surplus cash.
• Total gross debt was $6.51 billion, a decline from the $9.19 billion in the fourth quarter. Cash was $2.24 billion, an increase from the $1.89 billion in the fourth quarter, resulting in net debt of $4.27 billion, a decline from the $7.29 billion in the fourth quarter. Trailing twelve months, adjusted EBITDA was $3.06 billion, an increase from $2.98 billion in the fourth quarter. Financial leverage, defined as net debt divided by trailing twelve months adjusted EBITDA was 1.40x, an improvement from 2.45x in the fourth quarter.
• Cash flow from operations was $625 million, a decline from the $737 million in the fourth quarter. Net capital expenditures on property, plant and equipment was $161 million, an increase from the $131 million in the fourth quarter. Non-GAAP free cash flow, defined as cash flow from operations, less net capital expenditures on property, plant and equipment was $464 million, a decline from the $606 million in the fourth quarter.
• NXP repurchased 0.26 million shares for a total cost of $26 million. Weighted average number of diluted shares (after deduction of treasury shares) for the three-month period ended April 2, 2017 was 344 million. Due to the pending acquisition by Qualcomm, NXP has suspended its open market share repurchases, shares are currently only repurchased in relation to employee equity award transactions.
• Net cash paid for interest was $53 million.
• Net cash paid for income taxes related to on-going operations was $29 million, with an additional $27 million paid related to the divestment of the Standard Products business, for a total of $56 million.
• SSMC, NXP’s consolidated joint-venture wafer fab with TSMC, reported first quarter 2017 operating income of $32 million, EBITDA of $45 million and a closing cash balance of $365 million.
• NXP combined wafer-fab utilization averaged 95 percent, as compared to 92 percent in the prior quarter.
• Working capital metrics inclusive of assets and liabilities held for sale on the balance sheet were:
- Days of inventory was 97 days, a decline of 4 days sequentially versus the fourth quarter;
- Days payable was 83 days flat sequentially from the fourth quarter;
- Days sales was 41 days an increase from 39 days in the fourth quarter; and
- The cash conversion cycle was 55 days, a decline from the 57 days in the fourth quarter.
• Channel inventory held by NXP’s distribution partners was 2.2 months as compared to 2.4 months in the fourth quarter. Reconciling for the divestment of the Standard Products business, sales into the distribution channel was down 8 percent, sales out of the distribution channel was down 6 percent and total distribution channel inventory on a dollar basis was down 1 percent.
Supplemental Information ($ millions, unaudited) (1)
|Q1 2017||Q4 2016||Q1 2016||Q-Q||Y-Y|
|Secure Identification Solutions (SIS)||$||114||$||147||$||212||-22%||-46%|
|Secure Connected Devices (SCD)||$||541||$||569||$||471||-5%||15%|
|Secure Interface & Infrastructure (SI&I)||$||450||$||483||$||423||-7%||6%|
|High Performance Mixed Signal (HPMS)||$||2,011||$||2,062||$||1,911||-2%||5%|
|Standard Products (STDP)||$||118||$||323||$||274||-63%||-57%|
|Corporate & Other||$||82||$||55||$||39||49%||110%|