Supplemental Financial Information

6 Months Ended

Jun. 28, 2020

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 six months ended
	June 28, 2020	June 30, 2019	June 28, 2020	June 30, 2019
Distributors	1,059	1,083	2,043	2,045
Original Equipment Manufacturers and Electronic Manufacturing Services	712	1,112	1,712	2,226
Other	46	22	83	40
Total	1,817	2,217	3,838	4,311

Depreciation, amortization and impairment


	For the three months ended			For the six months ended
	June 28, 2020	June 30, 2019	June 28, 2020	June 30, 2019
Depreciation of property, plant and equipment	136	128	269	252
Amortization of internal use software	1	2	3	4
Amortization of other identified intangible assets	406	376	811	752
Total - Depreciation, amortization and impairment	543	506	1,083	1,008

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 ended			For the six months ended
	June 28, 2020	June 30, 2019	June 28, 2020	June 30, 2019


Result from MSA and TSA arrangements	(1)	—	(1)	2
Other, net	—	(1)	110	(1)
Total - Other income (expense)	(1)	(1)	109	1

Financial income and expense


	For the three months ended			For the six months ended
	June 28, 2020	June 30, 2019	June 28, 2020	June 30, 2019
Interest income	4	12	8	25
Interest expense	(94)	(89)	(176)	(176)
Total interest expense, net	(90)	(77)	(168)	(151)
Extinguishment of debt	—	(10)	—	(10)
Foreign exchange rate results	(5)	(1)	(1)	(7)

Miscellaneous financing costs/income and other, net	(1)	(1)	(5)	(4)
Total other financial income/ (expense)	(6)	(12)	(6)	(21)
Total - Financial income and expenses	(96)	(89)	(174)	(172)

Earnings per share

The computation of earnings per share (EPS) is presented in the following table:


	For the three months ended			For the six months ended
	June 28, 2020	June 30, 2019	June 28, 2020	June 30, 2019
Net income (loss)	(209)	46	(222)	30
Less: net income (loss) attributable to non-controlling interests	5	5	13	10
Net income (loss) attributable to stockholders	(214)	41	(235)	20

Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	279,142	281,241	279,533	284,217
Plus incremental shares from assumed conversion of:
Options ¹⁾	—	767	—	771
Restricted Share Units, Performance Share Units and Equity Rights ²⁾	—	3,080	—	1,870
Warrants ³⁾	—	—	—	—
Dilutive potential common shares	—	3,847	—	2,641

Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	279,142	285,088	279,533	286,858

EPS attributable to stockholders in $:
Basic net income (loss)	(0.77)	0.15	(0.84)	0.07
Diluted net income (loss)	(0.77)	0.14	(0.84)	0.07

¹⁾ Stock options to purchase up to 0.9 million shares of NXP’s common stock that were outstanding in Q2 2020 (Q2 2019: 0.1 million shares) and stock options to purchase up to 0.9 million shares of NXP's common stock that were outstanding YTD 2020 (YTD 2019: 0.1 million shares) 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⁾ Unvested RSUs, PSUs and equity rights of 7.7 million shares that were outstanding in Q2 2020 (Q2 2019: 0.3 million shares) and unvested RSUs, PSUs and equity rights of 7.7 million shares that were outstanding YTD 2020 (YTD 2019: 0.3 million shares) 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.

³⁾ Warrants to purchase up to 11.3 million shares of NXP's common stock at a price of $131.84 per share were outstanding in Q2 2019, no warrants were outstanding at the end of Q2 2020. At the end of Q2 2019, the warrants were not included in the computation of diluted EPS because the warrants exercise price was greater than the average fair market value of the common shares.

Balance Sheet Information

Cash and cash equivalents

At June 28, 2020 and December 31, 2019, our cash balance was $3,266 million and $1,045 million, respectively, of which $250 million and $188 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 six months of 2020, $90 million has been declared by SSMC, distributed subsequent to the end of the second quarter of 2020, with 38.8% being paid to our joint venture partner. In 2019, no dividend was declared by SSMC.

Inventories

The portion of finished goods stored at customer locations under consignment amounted to $36 million as of June 28, 2020 (December 31, 2019: $41 million).

Inventories are summarized as follows:


	June 28, 2020	December 31, 2019
Raw materials	71	52
Work in process	933	894
Finished goods	224	246
	1,228	1,192

The amounts recorded above are net of allowance for obsolescence of $129 million as of June 28, 2020 (December 31, 2019: $114 million).

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, 2019	203	2	(130)	75
Other comprehensive income (loss) before reclassifications	(23)	(7)	6	(24)
Amounts reclassified out of accumulated other comprehensive income (loss)	—	8	—	8
Tax effects	—	—	(9)	(9)
Other comprehensive income (loss)	(23)	1	(3)	(25)
As of June 28, 2020	180	3	(133)	50

Cash dividends

The following dividends were declared during the first two quarters of 2020 and 2019 under NXP’s quarterly dividend program:


	Fiscal year 2020			Fiscal year 2019
	Dividend per share	Amount	Dividend per share	Amount
First quarter	0.375	105	0.25	71
Second quarter	0.375	105	0.25	70
	0.750	210	0.50	141

The dividend declared in the second quarter (not yet paid) is classified in the condensed consolidated balance sheet in other current liabilities as of June 28, 2020 and subsequently paid on July 6, 2020.