Supplemental Financial Information

9 Months Ended

Oct. 02, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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
	October 2, 2022	October 3, 2021	October 2, 2022	October 3, 2021
Distributors	1,876	1,631	5,385	4,617
Original Equipment Manufacturers and Electronic Manufacturing Services	1,525	1,191	4,378	3,295
Other	44	39	130	112
Total	3,445	2,861	9,893	8,024

Depreciation, amortization and impairment


	For the three months ended		For the nine months ended
	October 2, 2022	October 3, 2021	October 2, 2022	October 3, 2021
Depreciation of property, plant and equipment	156	139	447	406
Amortization of internal use software	3	1	9	5
Amortization of other identified intangible assets 1)	162	166	492	541
Total - Depreciation, amortization and impairment	321	306	948	952

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.

Financial income and expense


	For the three months ended		For the nine months ended
	October 2, 2022	October 3, 2021	October 2, 2022	October 3, 2021
Interest income	21	1	29	3
Interest expense	(109)	(96)	(319)	(273)
Total interest expense, net	(88)	(95)	(290)	(270)
Extinguishment of debt	—	—	(18)	—
Foreign exchange rate results	(1)	3	2	3
Miscellaneous financing costs/income and other, net	(9)	(1)	(25)	(13)
Total other financial income/ (expense)	(10)	2	(41)	(10)
Total - Financial income and expenses	(98)	(93)	(331)	(280)

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
	October 2, 2022	October 3, 2021	October 2, 2022	October 3, 2021
Net income (loss)	750	526	2,099	1,296
Less: net income (loss) attributable to non-controlling interests	12	7	34	27
Net income (loss) attributable to stockholders	738	519	2,065	1,269

Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	262,180	266,557	262,620	272,314
Plus incremental shares from assumed conversion of:
Options 1)	275	378	297	397
Restricted Share Units, Performance Share Units and Equity Rights 2)	2,250	4,424	1,921	5,175
Dilutive potential common shares	2,525	4,802	2,218	5,572

Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	264,705	271,359	264,838	277,886

EPS attributable to stockholders in $:
Basic net income (loss)	2.81	1.95	7.86	4.66
Diluted net income (loss)	2.79	1.91	7.80	4.57

1) There were no stock options to purchase shares of NXP’s common stock that were outstanding in Q3 2022 and YTD 2022 (Q3 2021 and YTD 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 were greater than the weighted average number of shares underlying outstanding stock options.

2) There were 0.3 million unvested RSUs, PSUs and equity rights that were outstanding in Q3 2022 and 0.3 million outstanding YTD 2022 (Q3 2021 and YTD 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 were greater than the weighted average number of outstanding unvested RSUs, PSUs and equity rights or the performance goal has not been met yet.

Balance Sheet Information

Cash and cash equivalents

At October 2, 2022 and December 31, 2021, our cash balance was $3,759 million and $2,830 million, respectively, of which $215 million and $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 both first nine months of 2022 and 2021, no dividends were declared by SSMC.

Inventories

The portion of finished goods stored at customer locations under consignment amounted to $9 million as of October 2, 2022 (December 31, 2021: $12 million).

Inventories are summarized as follows:


	October 2, 2022	December 31, 2021
Raw materials	140	107
Work in process	1,133	846
Finished goods	308	236
	1,581	1,189

The amounts recorded above are net of allowance for obsolescence of $129 million as of October 2, 2022 (December 31, 2021: $120 million).

Equity Investments

At October 2, 2022 and December 31, 2021, the total carrying value of investments in equity securities is summarized as follows:


	October 2, 2022	December 31, 2021
Marketable equity securities	7	18
Non-marketable equity securities	14	19
Equity-accounted investments	81	75
	102	112

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


	October 2, 2022			December 31, 2021
	Shareholding %		Amount	Shareholding %		Amount
SMART Growth Fund, L.P.1)	8.41	%	44	8.41	%	31
Others	—		37	—		44
			81			75
1) Previously named “Wise Road Industry Investment Fund I, L.P.”

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
	October 2, 2022	October 3, 2021	October 2, 2022	October 3, 2021
Company's share in income (loss)	(5)	4	3	1
Other results	1	(1)	2	(1)
	(4)	3	5	—

Other current liabilities

Other current liabilities at October 2, 2022 and December 31, 2021 consisted of the following:


	October 2, 2022	December 31, 2021
Accrued compensation and benefits	508	476
Income taxes payable	232	82
Dividend payable	221	149
Other	716	468
	1,677	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, 2021	207	—	(159)	48
Other comprehensive income (loss) before reclassifications	(165)	(53)	—	(218)
Amounts reclassified out of accumulated other comprehensive income (loss)	—	19	—	19
Tax effects	—	9	—	9
Other comprehensive income (loss)	(165)	(25)	—	(190)
As of October 2, 2022	42	(25)	(159)	(142)

Cash dividends

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


	Fiscal year 2022		Fiscal year 2021
	Dividend per share	Amount	Dividend per share	Amount
First quarter	0.845	222	0.5625	155
Second quarter	0.845	222	0.5625	152
Third quarter	0.845	221	0.5625	150

The dividend declared in the third quarter (not yet paid) is classified in the condensed consolidated balance sheet in other current liabilities as of October 2, 2022 and was subsequently paid on October 6, 2022.