10-Q 1 nxpi-20211003.htm 10-Q nxpi-20211003
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) 
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 3, 2021
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 October 29, 2021, there were 265,933,249 shares of our common stock, €0.20 par value per share, issued and outstanding.



NXP Semiconductors N.V.
Form 10-Q
For the Fiscal Quarter Ended October 3, 2021
TABLE OF CONTENTS





PART I — FINANCIAL INFORMATION
Item 1.    Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
($ in millions, unless otherwise stated)
For the three months endedFor the nine months ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Revenue2,861 2,267 8,024 6,105 
Cost of revenue(1,278)(1,177)(3,664)(3,158)
Gross profit1,583 1,090 4,360 2,947 
Research and development(492)(438)(1,429)(1,265)
Selling, general and administrative(243)(203)(699)(658)
Amortization of acquisition-related intangible assets(137)(418)(456)(1,179)
Total operating expenses(872)(1,059)(2,584)(3,102)
Other income (expense) 1  110 
Operating income (loss)711 32 1,776 (45)
Financial income (expense):
Other financial income (expense)(93)(106)(280)(280)
Income (loss) before income taxes618 (74)1,496 (325)
Benefit (provision) for income taxes(95)57 (200)88 
Results relating to equity-accounted investees3 (1) (3)
Net income (loss)526 (18)1,296 (240)
Less: Net income (loss) attributable to non-controlling interests7 4 27 17 
Net income (loss) attributable to stockholders519 (22)1,269 (257)
Earnings per share data:
Net income (loss) per common share attributable to stockholders in $
Basic1.95 (0.08)4.66 (0.92)
Diluted1.91 (0.08)4.57 (0.92)
Weighted average number of shares of common stock outstanding during the period (in thousands):
Basic266,557 279,467 272,314 279,511 
Diluted271,359 279,467 277,886 279,511 

See accompanying notes to the Condensed Consolidated Financial Statements
1

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
($ in millions, unless otherwise stated)
For the three months endedFor the nine months ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Net income (loss)526 (18)1,296 (240)
Other comprehensive income (loss), net of tax:
Change in fair value cash flow hedges(2)4 (16)5 
Change in foreign currency translation adjustment(23)37 (56)14 
Change in net actuarial gain (loss) (1) (4)
Total other comprehensive income (loss)(25)40 (72)15 
Total comprehensive income (loss)501 22 1,224 (225)
Less: Comprehensive income (loss) attributable to non-controlling interests7 4 27 17 
Total comprehensive income (loss) attributable to stockholders494 18 1,197 (242)

See accompanying notes to the Condensed Consolidated Financial Statements
2

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

($ in millions, unless otherwise stated)
October 3, 2021December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents2,303 2,275 
Accounts receivable, net979 765 
Inventories, net1,173 1,030 
Other current assets266 254 
Total current assets4,721 4,324 
Non-current assets:
Other non-current assets1,070 1,013 
Property, plant and equipment, net of accumulated depreciation of $4,565 and $4,237
2,510 2,284 
Identified intangible assets, net of accumulated amortization of $7,441 and $7,007
1,741 2,242 
Goodwill9,968 9,984 
Total non-current assets15,289 15,523 
Total assets20,010 19,847 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable1,140 991 
Restructuring liabilities-current30 60 
Other current liabilities1,269 966 
Short-term debt999  
Total current liabilities3,438 2,017 
Non-current liabilities:
Long-term debt8,594 7,609 
Restructuring liabilities13 14 
Deferred tax liabilities84 85 
Other non-current liabilities909 971 
Total non-current liabilities9,600 8,679 
Total liabilities13,038 10,696 
Equity:
Non-controlling interests234 207 
Stockholders’ equity:
Common stock, par value €0.20 per share:
59 59 
Capital in excess of par value14,392 14,133 
Treasury shares, at cost:
 23,179,725 shares (2020: 9,044,952 shares)
(4,028)(1,037)
Accumulated other comprehensive income (loss)45 117 
Accumulated deficit(3,730)(4,328)
Total stockholders’ equity6,738 8,944 
Total equity6,972 9,151 
Total liabilities and equity20,010 19,847 

See accompanying notes to the Condensed Consolidated Financial Statements
3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

($ in millions, unless otherwise stated)

For the nine months ended
October 3, 2021September 27, 2020
Cash flows from operating activities:
Net income (loss)1,296 (240)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization952 1,672 
Share-based compensation265 295 
Amortization of discount (premium) on debt, net1 (1)
Amortization of debt issuance costs5 7 
Net (gain) loss on sale of assets (111)
(Gain) loss on equity security, net(2) 
Results relating to equity-accounted investees 3 
Deferred tax expense (benefit)6 (274)
Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current assets(214)(1)
(Increase) decrease in inventories(143)129 
Increase (decrease) in accounts payable and other liabilities242 (14)
Decrease (increase) in other non-current assets(106)(16)
Exchange differences(3)6 
Other items(7)(2)
Net cash provided by (used for) operating activities2,292 1,453 
Cash flows from investing activities:
Purchase of identified intangible assets(99)(95)
Capital expenditures on property, plant and equipment(501)(288)
Purchase of equipment leased to others(14) 
Insurance recoveries received for equipment damage7  
Proceeds from disposals of property, plant and equipment1 3 
Purchase of interests in businesses, net of cash acquired(17)(21)
Proceeds from sale of interests in businesses, net of cash divested 161 
Purchase of investments(6)(15)
Proceeds from sale of investments8  
Proceeds from return of equity investment3  
Net cash provided by (used for) investing activities(618)(255)
Cash flows from financing activities:
Proceeds from the issuance of long-term debt 2,000 2,000 
Cash paid for debt issuance costs(22)(15)
Dividends paid to non-controlling interests (34)
Dividends paid to common stockholders(412)(315)
Proceeds from issuance of common stock through stock plans60 64 
Purchase of treasury shares and restricted stock unit withholdings(3,265)(370)
Other, net(1) 
Net cash provided by (used for) financing activities(1,640)1,330 
Effect of changes in exchange rates on cash positions(6)(7)
Increase (decrease) in cash and cash equivalents28 2,521 
Cash and cash equivalents at beginning of period2,275 1,045 
Cash and cash equivalents at end of period2,303 3,566 
4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

($ in millions, unless otherwise stated)

Supplemental disclosures to the condensed consolidated cash flows
Net cash paid during the period for:
Interest216 211 
Income taxes, net of refunds250 103 
Net gain (loss) on sale of assets:
Cash proceeds from the sale of assets 163 
Book value of these assets (52)
Non-cash investing activities:
Non-cash capital expenditures224 62 

See accompanying notes to the Condensed Consolidated Financial Statements
5

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
Balance as of December 31, 2020280,475 59 14,133 (1,037)117 (4,328)8,944 207 9,151 
Net income (loss)353 353 11 364 
Other comprehensive income(56)(56)(56)
Share-based compensation plans91 91 91 
Shares issued pursuant to stock awards361 37 (6)31 31 
Treasury shares repurchased and retired(5,087)(905)(905)(905)
Dividends common stock ($0.5625 per share)
(155)(155)(155)
Balance as of April 4, 2021275,749 59 14,224 (1,905)61 (4,136)8,303 218 8,521 
Net income (loss)397 397 9 406 
Other comprehensive income9 9 9 
Share-based compensation plans88 88 88 
Shares issued pursuant to stock awards64 6 (6)  
Treasury shares and restricted stock unit withholdings(6,103)(1,203)(1,203)(1,203)
Dividends common stock ($0.5625 per share)
(152)(152)(152)
Balance as of July 4, 2021269,710 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 plans80 80 80 
Shares issued pursuant to stock awards2,430 231 (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, 2021266,340 59 14,392 (4,028)45 (3,730)6,738 234 6,972 

6

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
Balance as of December 31, 2019281,437 64 15,184 (3,037)75 (2,845)9,441 214 9,655 
Net income (loss)(21)(21)8 (13)
Other comprehensive income(61)(61)(61)
Share-based compensation plans108 108 108 
Shares issued pursuant to stock awards497 47 (18)29 29 
Treasury shares repurchased and retired
(2,933)(355)(355)(355)
Expiration of stock purchase warrants(56)56   
Dividends common stock ($0.375 per share)
(105)(105)(105)
Balance as of March 29, 2020279,001 64 15,236 (3,345)14 (2,933)9,036 222 9,258 
Net income (loss)(214)(214)5 (209)
Other comprehensive income36 36 36 
Share-based compensation plans104 104 104 
Shares issued pursuant to stock awards252 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, 2020279,213 64 15,228 (3,325)50 (3,155)8,862 193 9,055 
Net income (loss)(22)(22)4 (18)
Other comprehensive income40 40 40 
Share-based compensation plans86 86 86 
Shares issued pursuant to stock awards611 58 (31)27 27 
Treasury shares and restricted stock unit withholdings
(95)(12)(12)(12)
Dividends common stock ($0.375 per share)
(105)(105)(105)
Balance as of September 27, 2020279,729 64 15,314 (3,279)90 (3,313)8,876 197 9,073 

See accompanying notes to the Condensed Consolidated Financial Statements

7


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.

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.

2 Significant Accounting Policies and Recent Accounting Pronouncements

Significant Accounting Policies
Except for the changes below, no material changes have been made to the Company's significant accounting policies disclosed in Note 2 Significant Accounting Policies in our Annual Report, 10-K for the year ended December 31, 2020. The accounting policy information below is to aid in the understanding of the financial information disclosed.

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

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 endedFor the nine months ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Distributors1,631 1,243 4,617 3,286 
Original Equipment Manufacturers and Electronic Manufacturing Services1,191 983 3,295 2,695 
Other
39 41 112 124 
Total2,861 2,267 8,024 6,105 
8



Depreciation, amortization and impairment

For the three months endedFor the nine months ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Depreciation of property, plant and equipment139 139 406 408 
Amortization of internal use software1 1 5 4 
Amortization of other identified intangible assets 1)
166 449 541 1,260 
Total - Depreciation, amortization and impairment306 589 952 1,672 
1) For the nine month period ending October 3, 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 endedFor the nine months ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Result from MSA and TSA arrangements1  (1)(1)
Other, net(1)1 1111 
Total - Other income (expense)1 110 

Financial income and expense

For the three months endedFor the nine months ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Interest income1 3 3 11 
Interest expense(96)(100)(273)(276)
Total interest expense, net(95)(97)(270)(265)
Foreign exchange rate results3 (5)3 (6)
Miscellaneous financing costs/income and other, net(1)(4)(13)(9)
Total other financial income/ (expense)2 (9)(10)(15)
Total - Financial income and expenses(93)(106)(280)(280)

9


Earnings per share

The computation of earnings per share (EPS) is presented in the following table:
For the three months endedFor the nine months ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Net income (loss)526 (18)1,296 (240)
Less: net income (loss) attributable to non-controlling interests7 4 27 17 
Net income (loss) attributable to stockholders519 (22)1,269 (257)
Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)266,557 279,467 272,314 279,511 
Plus incremental shares from assumed conversion of:
Options 1)
378  397  
Restricted Share Units, Performance Share Units and Equity Rights 2)
4,424  5,175  
Dilutive potential common shares4,802  5,572  
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 
EPS attributable to stockholders in $:
Basic net income (loss)1.95 (0.08)4.66 (0.92)
Diluted net income (loss)1.91 (0.08)4.57 (0.92)
1)    There were no stock options to purchase shares of NXP’s common stock that were outstanding in Q3 2021 and YTD 2021 (Q3 2020: 0.9 million shares; YTD 2020: 0.9 million shares) that were anti-dilutive and were not included in the computation of diluted EPS because the exercise price was greater than the average fair market value of the common stock or the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense and exercise prices was greater than the weighted average number of shares underlying outstanding stock options.
2)    There were no unvested RSUs, PSUs and equity rights that were outstanding in Q3 2021 and YTD 2021 (Q3 2020: 7.4 million shares; YTD 2020: 7.4 million shares) that were anti-dilutive and were not included in the computation of diluted EPS because the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense was greater than the weighted average number of outstanding unvested RSUs, PSUs and equity rights or the performance goal has not been met yet.

Balance Sheet Information

Cash and cash equivalents

At October 3, 2021 and December 31, 2020, our cash balance was $2,303 million and $2,275 million, respectively, of which $217 million and $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.
Inventories

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

Inventories are summarized as follows:
October 3, 2021December 31, 2020
Raw materials96 66 
Work in process894 786 
Finished goods183 178 
1,173 1,030 
The amounts recorded above are net of allowance for obsolescence of $115 million as of October 3, 2021 (December 31, 2020: $122 million).

Equity Investments

At October 3, 2021 and December 31, 2020, the total carrying value of investments in equity securities is summarized as follows:
10


October 3, 2021December 31, 2020
Marketable equity securities21 19 
Non-marketable equity securities23 40 
Equity-accounted investments74 61 
118 120 

The total carrying value of investments in equity-accounted investees is summarized as follows:
October 3, 2021December 31, 2020
Shareholding %AmountShareholding %Amount
Wise Road Industry Investment Fund I, L.P.9.66 %37 10.17 %29 
Others 37  32 
74 61 

Results related to equity-accounted investees at the end of each period were as follows:
For the three months endedFor the nine months ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Company’s share in income (loss)4 (1)1 (3)
Other results(1) (1) 
3 (1) (3)

Other current liabilities

Other current liabilities at October 3, 2021 and December 31, 2020 consisted of the following:
October 3, 2021December 31, 2020
Accrued compensation and benefits516 286 
Income taxes payable82 140 
Dividend payable150 105 
Other521 435 
1,269 966 

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, 2020281 11 (175)117 
Other comprehensive income (loss) before
   reclassifications
(56)(13) (69)
Amounts reclassified out of accumulated other
   comprehensive income (loss)