10-KPeriod: FY2017

NXP Semiconductors N.V. Annual Report, Year Ended Dec 31, 2017

Filed April 11, 2018For Securities:NXPI

Summary

NXP Semiconductors N.V. (NXPI) filed its 2017 Annual Report on Form 20-F on April 10, 2018. The report details significant events and financial performance for the fiscal year ending December 30, 2017. A major highlight is the amended agreement with Qualcomm River Holdings B.V. to acquire NXP for $127.50 per share, an increase from the initial offer, with an expected closing in the first half of 2018, subject to regulatory approvals. Financially, NXP reported revenue of $9.26 billion, a slight decrease from $9.50 billion in 2016, primarily due to the divestment of its Standard Products (SP) business on February 6, 2017, which generated $2.6 billion in cash proceeds. The High Performance Mixed Signal (HPMS) segment saw revenue growth of 8.1% driven by automotive and secure connected devices. Gross profit margin improved to 49.9% from 42.8% in the prior year, largely due to the absence of purchase accounting impacts on inventory from the Freescale acquisition. Net income attributable to stockholders was $2.215 billion, a significant increase from $200 million in 2016.

Financial Statements
Beta
Revenue$9.26B
Cost of Revenue$4.64B
Gross Profit$4.62B
R&D Expenses$1.55B
SG&A Expenses$1.09B
Operating Expenses$4.09B
Operating Income$2.10B
Interest Expense$310.00M
Net Income$2.21B
EPS (Basic)$6.54
EPS (Diluted)$6.41
Shares Outstanding (Basic)338.65M
Shares Outstanding (Diluted)345.80M

Key Highlights

  • 1NXP entered into an amended agreement with Qualcomm to be acquired for $127.50 per share, up from $110 per share, with a targeted closing in the first half of 2018.
  • 2The company divested its Standard Products (SP) business for $2.6 billion in cash, impacting 2017 revenue but improving gross profit margin due to the absence of purchase accounting adjustments.
  • 3Total revenue for 2017 was $9.26 billion, a 2.5% decrease from $9.50 billion in 2016, largely attributable to the SP divestiture.
  • 4The High Performance Mixed Signal (HPMS) segment revenue increased by 8.1% to $8.75 billion, driven by growth in Automotive and Secure Connected Devices.
  • 5Gross profit margin improved significantly to 49.9% in 2017 from 42.8% in 2016, primarily due to the elimination of Freescale acquisition-related inventory purchase accounting adjustments.
  • 6Net income attributable to stockholders was $2.215 billion in 2017, a substantial increase from $200 million in 2016.
  • 7Operating expenses decreased by $136 million, mainly due to synergies from the Freescale acquisition and lower amortization of acquisition-related intangibles.

Frequently Asked Questions

The most significant event was the amended acquisition agreement with Qualcomm River Holdings B.V., which increased the offer price to $127.50 per share and is expected to close in the first half of 2018. Additionally, the divestiture of the Standard Products (SP) business was completed in February 2017, generating $2.6 billion in cash.

The divestiture of the SP business led to a decrease in total revenue for 2017 to $9.26 billion from $9.50 billion in 2016. However, it positively impacted the gross profit margin, which rose to 49.9% from 42.8% in the prior year, primarily due to the absence of purchase accounting impacts on inventory related to the Freescale acquisition.

The High Performance Mixed Signal (HPMS) segment showed strong growth with an 8.1% increase in revenue to $8.75 billion, driven by demand in Automotive and Secure Connected Devices. The Standard Products (SP) segment revenue was significantly down due to its divestiture. The company remains focused on innovation in areas like the Connected Car, Internet of Things, and security.

As of December 31, 2017, NXP had $3.55 billion in cash and cash equivalents and $6.57 billion in total debt. The company's net debt was $3.02 billion. Management believes its current liquidity sources are sufficient to fund operations, capital expenditures, and debt service for at least the next twelve months. The pending Qualcomm acquisition is also a key factor impacting future liquidity and financial structure.