NXP Semiconductors Announces Second Quarter 2010 Results

August 17, 2010

43.6% comparable year on year sales growth and increased gross profit

Highlights:

  • Significant improvements in sales, Gross Profit and Income From Operations across the business
  • Second quarter sales* of $1,201M compared to $903M in the second quarter of 2009 and $1,165M in the first quarter of 2010
  • Comparable YoY sales* growth of 43.6%
  • Gross margin of 39.3% compared to 20.6% in Q2 2009 and 36.7% in the first quarter of 2010
  • Adjusted gross margin* of 40.1% compared to 30.7% in Q2 2009 and 38.2% in the first quarter of 2010
  • Income From Operations of $93M compared to a loss of $217M in Q2 2009 and breakeven in the first quarter of 2010
  • Adjusted Income From Operations* of $185M compared to a loss of $24M in Q2 2009 and a profit of $144M in the first quarter of 2010
  • Cash position of $842M, down sequentially from $870M – Cash flow from operating activities in the quarter improved to $81M
  • Factory loading based on wafer starts of 96%, compared to 62% in Q2 2009 and 93% in Q1 2010
  • In July of this year we completed bond transactions to extend maturities of approximately $1 billion of debt to 2018
  • In our Initial Public Offering announced on August 5, 2010 we issued 34M new shares; $476M of gross proceeds

    • * For the definition of Adjusted Gross profit/ margin, Adjusted Income From Operations and comparable sales refer to our registration statement on Form F-1, dated August 5 2010.

Eindhoven, The Netherlands – Further to the release of preliminary second quarter results ahead of its initial public offering on Nasdaq, NXP Semiconductors N.V. (Nasdaq: NXPI) today officially announces its second quarter 2010 results.

Key data: NXP

($ in millions) Q2 2009 Q1 2010 Q2 2010
       
Sales 903 1,165 1,201
Gross Profit 186 428 472
Adjusted Gross Profit 277 445 482
   As % of sales 30.7 38.2 40.1
Income (loss) From Operations (217) 0 93
Adjusted Income (loss) From Operations (24) 144 185
   As % of sales (2.7) 12.4 15.4
Adjusted EBITDA 89 231 269
Cash and cash equivalents 1,373 870 842
See US-GAAP reconciliation table in the investor presentation available on the NXP-website.

Sales were $1,201 million in the second quarter of 2010, a comparable increase of 43.6% from the second quarter of 2009 and a comparable increase of 6.5% compared to the first quarter of 2010. The increase was visible across all business segments and regions.

Income From Operations in the second quarter of 2010 was $93 million compared to a loss of $217 million in the second quarter of 2009 and breakeven in the first quarter of 2010.

Adjusted Income From Operations was a profit of $185 million in the second quarter of 2010, compared to a loss of $24 million in the corresponding period last year and a profit of $144 million in the first quarter of 2010. The increase was explained mainly by savings from our Redesign Program and our increased market share in High Performance Mixed Signal.

NXP’s cash position at the end of the second quarter of 2010 was $842 million compared to $870 million at the end of the first quarter of 2010. The cash position was impacted by interest payments in the second quarter amounting to $110 million, restructuring payments related to the Redesign Program of $35 million, and unfavourable translation effects on liquid assets of approximately $50 million. Since the beginning of the Redesign Program in September of 2008 to the end of the second quarter of 2010, $554 million of restructuring costs related to the Redesign Program and other restructuring activities has been paid out, and over $650 million in annualized savings has been achieved.

Richard Clemmer, Chief Executive Officer of NXP, said:

“We are certainly encouraged by the improvements in sales, gross profit and Income From Operations across the company, as well as the improvements in the overall business environment, particularly when compared with one year ago. The increased success in winning new designs in High Performance Mixed Signal combined with the improved economic environment together with our ability to quickly ramp up production to meet higher demand from our customers has been key to our 62% comparable growth from last year in High Performance Mixed Signal.”

“Lastly, I would like to welcome our new investors who participated in the IPO. We are confident that we are equipped to be successful going forward, focusing on the fastest growing sectors in electronics. By taking advantage of improved markets, together with our differentiated technology, world class cost structure and accelerated recent design wins, we can support a growth rate superior to the growth of the markets we serve.”

Key data: High Performance Mixed Signal

($ in millions) Q2 2009 Q1 2010 Q2 2010
       
Sales 454 695 719
Gross Profit 174 330 379
Adjusted Gross Profit 180 340 378
As % of sales 39.6 48.9 52.6
Income (loss) From Operations (43) 51 97
Adjusted Income From Operations 18 114 150
As % of sales 4.0 16.4 20.9
See US-GAAP reconciliation table in the investor presentation available on the NXP-website.

Sales in the High Performance Mixed Signal segment were $719 million in the second quarter of 2010, reflecting comparable growth of 61.6% from the same quarter last year.

Gross margin was 52.7% in the second quarter of 2010, compared to 38.3% in the second quarter of 2009. Adjusted gross margin was 52.6% in the second quarter of 2010, compared to 39.6% in the second quarter of 2009.

Income From Operations for High Performance Mixed Signal in the second quarter of 2010 was $97 million, compared to a loss of $43 million in the second quarter of 2009. Adjusted Income From Operations for High Performance Mixed Signal in the second quarter of 2010 was $150 million, compared to $18 million in the second quarter of 2009.

Key data: Standard Products

($ in millions) Q2 2009 Q1 2010 Q2 2010
       
Sales 207 279 289
Gross Profit 43 77 89
Adjusted Gross Profit 44 76 90
   As % of sales 21.3 27.2 31.1
Income (loss) From Operations (12) 24 29
Adjusted Income From Operations 9 39 49
   As % of sales 4.3 14.0 17.0
See US-GAAP reconciliation table in the investor presentation available on the NXP-website.

Sales in the Standard Products segment were $289 million in the second quarter of 2010, reflecting comparable growth of 42.0% from the same quarter last year.

Gross margin was 30.8% in the second quarter of 2010, compared to 20.8% in the second quarter of 2009. The adjusted Gross margin was 31.1%, compared to 21.3% in the second quarter of 2009.

Income From Operations for Standard Products in the second quarter of 2010 was $29 million, compared to a loss of $12 million in the second quarter of 2009. Adjusted Income From Operations for Standard Products in the second quarter of 2010 amounted to $49 million, compared to $9 million in the second quarter of 2009.

Recent developments

New bond offering
On July 20, 2010, we issued $1,000 million aggregate principal amount of new 93/4% Senior Secured Notes due 2018 (the “New Secured Notes”). The New Secured Notes accrue interest at the rate of 93/4% per annum and mature on August 1, 2018. We have used the proceeds from the offering of New Secured Notes to repurchase approximately $968 million of Existing Secured Notes.

Initial Public Offering
On August 5, 2010, we announced the Company’s initial public offering of 34,000,000 shares of common stock priced at $14 per share. The shares began trading on August 6, 2010, on the NASDAQ Global Select Market under the ticker symbol “NXPI”. The offering’s underwriters will have a 30-day option to purchase up to 5,100,000 additional shares of common stock at the initial public offering price.

Third Quarter 2010 Outlook:
We continue to experience healthy demand from our broad base of customers, although with a few isolated customers we are receiving recent mixed signals that indicate some slowing. Our overall demand, bolstered by our increased design wins, is greater than our current capacity.

Additional capacity to meet the demand is underway, however this will have only limited impact in the third quarter. Therefore our expectation is that total comparable sales will be relatively flat on a sequential basis, and will show an increase of 20%-25% on a year over year basis.

Primarily as a result of continuing strong progress in our redesign program, we expect adjusted income from operations to increase 7% to 13% sequentially.

The full Q2 report is available on the NXP website www.nxp.com/investor.

Conference Call

The 2010 second quarter results conference call for analysts and investors will be held at 3:00 p.m.CEST (09:00 a.m. EDT) hosted by Richard Clemmer, President & CEO, and Karl-Henrik Sundström, Executive Vice-President & CFO, on August 17 2010.

  • Netherlands +31 20 794 8455
  • United States +1 480 629 9678
  • United Kingdom +44 207 190 1595

To ensure a prompt start to the call, we advise participants to dial in 10-15 minutes prior to the call.
In addition, the conference call will be available online via live audio webcast at www.nxp.com under “Investor Relations,” “Financial results.” A replay of the conference call will be available on our website (www.nxp.com/investor) until the date referred to on our website.

About NXP Semiconductors

NXP Semiconductors N.V. (Nasdaq: NXPI) provides High Performance Mixed Signal and Standard Product solutions that leverage its leading RF, Analog, Power Management, Interface, Security and Digital Processing expertise. These innovations are used in a wide range of automotive, identification, wireless infrastructure, lighting, industrial, mobile, consumer and computing applications. Headquartered in Europe, the company has approximately 28,000 employees working in more than 25 countries and posted sales of USD 3.8 billion in 2009. For more information visit www.nxp.com.

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