Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

($ in millions, unless otherwise stated)

			For the three months ended												For the nine months ended
			October 2, 2022						October 3, 2021						October 2, 2022						October 3, 2021
Revenue			3,445						2,861						9,893						8,024
Cost of revenue			(1,478)						(1,278)						(4,267)						(3,664)
Gross profit			1,967						1,583						5,626						4,360
Research and development			(548)						(492)						(1,608)						(1,429)
Selling, general and administrative			(289)						(243)						(805)						(699)
Amortization of acquisition-related intangible assets			(131)						(137)						(400)						(456)
Total operating expenses			(968)						(872)						(2,813)						(2,584)
Other income (expense)			2						—						4						—
Operating income (loss)			1,001						711						2,817						1,776
Financial income (expense):
Extinguishment of debt			—						—						(18)						—
Other financial income (expense)			(98)						(93)						(313)						(280)
Income (loss) before income taxes			903						618						2,486						1,496
Benefit (provision) for income taxes			(149)						(95)						(392)						(200)
Results relating to equity-accounted investees			(4)						3						5						—
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
Earnings per share data:
Net income (loss) per common share attributable to stockholders in $
Basic			2.81						1.95						7.86						4.66
Diluted			2.79						1.91						7.80						4.57
Weighted average number of shares of common stock outstanding during the period (in thousands):
Basic			262,180						266,557						262,620						272,314
Diluted			264,705						271,359						264,838						277,886

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

($ in millions, unless otherwise stated)

			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
Other comprehensive income (loss), net of tax:
Change in fair value cash flow hedges			(13)						(2)						(25)						(16)
Change in foreign currency translation adjustment			(78)						(23)						(165)						(56)
Change in net actuarial gain (loss)			1						—						—						—
Total other comprehensive income (loss)			(90)						(25)						(190)						(72)
Total comprehensive income (loss)			660						501						1,909						1,224
Less: Comprehensive income (loss) attributable to non-controlling interests			12						7						34						27
Total comprehensive income (loss) attributable to stockholders			648						494						1,875						1,197

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

($ in millions, unless otherwise stated)

						October 2, 2022						December 31, 2021
ASSETS
Current assets:
			Cash and cash equivalents			3,759						2,830
			Accounts receivable, net			1,012						923
			Inventories, net			1,581						1,189
			Other current assets			351						286
Total current assets						6,703						5,228
Non-current assets:
			Other non-current assets			1,940						1,346
			Property, plant and equipment, net of accumulated depreciation of $5,055 and $4,676			2,971						2,635
			Identified intangible assets, net of accumulated amortization of $2,729 and $3,021			1,417						1,694
			Goodwill			9,909						9,961
			Total non-current assets			16,237						15,636
Total assets						22,940						20,864
LIABILITIES AND EQUITY
Current liabilities:
			Accounts payable			1,534						1,252
			Restructuring liabilities-current			8						25
			Other current liabilities			1,677						1,175
Total current liabilities						3,219						2,452
Non-current liabilities:
			Long-term debt			11,162						10,572
			Restructuring liabilities			12						12
			Deferred tax liabilities			39						57
			Other non-current liabilities			1,123						1,001
Total non-current liabilities						12,336						11,642
Total liabilities						15,555						14,094
Equity:
			Non-controlling interests			279						242
			Stockholders’ equity:
			Common stock, par value €0.20 per share:			56						56
			Capital in excess of par value			13,996						13,727
			Treasury shares, at cost:
			14,130,857 shares (2021: 9,569,359 shares)			(2,765)						(1,932)
			Accumulated other comprehensive income (loss)			(142)						48
			Accumulated deficit			(4,039)						(5,371)
			Total stockholders’ equity			7,106						6,528
Total equity						7,385						6,770
Total liabilities and equity						22,940						20,864

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

($ in millions, unless otherwise stated)

			For the nine months ended
			October 2, 2022						October 3, 2021
Cash flows from operating activities:
Net income (loss)			2,099						1,296
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization			948						952
Share-based compensation			267						265
Amortization of discount (premium) on debt, net			2						1
Amortization of debt issuance costs			5						5
Net (gain) loss on sale of assets			(2)						—
(Gain) loss on equity security, net			6						(2)
(Gain) loss on extinguishment of debt			18						—
Results relating to equity-accounted investees			(5)						—
Deferred tax expense (benefit)			(196)						6
Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current assets			(165)						(214)
(Increase) decrease in inventories			(392)						(143)
Increase (decrease) in accounts payable and other liabilities			545						242
Decrease (increase) in other non-current assets			(325)						(106)
Exchange differences			(2)						(3)
Other items			16						(7)
Net cash provided by (used for) operating activities			2,819						2,292
Cash flows from investing activities:
Purchase of identified intangible assets			(122)						(99)
Capital expenditures on property, plant and equipment			(830)						(501)
Purchase of equipment leased to others			(5)						(14)
Insurance recoveries received for equipment damage			—						7
Proceeds from disposals of property, plant and equipment			2						1
Purchase of interests in businesses, net of cash acquired			(27)						(17)
Purchase of investments			(9)						(6)
Proceeds from sale of investments			12						8
Proceeds from return of equity investment			2						3
Net cash provided by (used for) investing activities			(977)						(618)
Cash flows from financing activities:
Repurchase of long-term debt			(917)						—
Proceeds from the issuance of long-term debt			1,496						2,000
Cash paid for debt issuance costs			(13)						(22)
Dividends paid to common stockholders			(594)						(412)
Proceeds from issuance of common stock through stock plans			58						60
Purchase of treasury shares and restricted stock unit withholdings			(920)						(3,265)
Other, net			(1)						(1)
Net cash provided by (used for) financing activities			(891)						(1,640)
Effect of changes in exchange rates on cash positions			(22)						(6)
Increase (decrease) in cash and cash equivalents			929						28
Cash and cash equivalents at beginning of period			2,830						2,275
Cash and cash equivalents at end of period			3,759						2,303

Supplemental disclosures to the condensed consolidated cash flows
Net cash paid during the period for:
Interest			217						216
Income taxes, net of refunds			432						250
Net gain (loss) on sale of assets:
Cash proceeds from the sale of assets			2						—
Book value of these assets			—						—
Non-cash investing activities:
Non-cash capital expenditures			176						224

See accompanying notes to the Condensed Consolidated Financial Statements

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, 2021						264,950						56						13,727						(1,932)						48						(5,371)						6,528						242						6,770
Net income (loss)																																				657						657						9						666
Other comprehensive income																														(22)												(22)												(22)
Share-based compensation plans																		92																								92												92
Shares issued pursuant to stock awards						256																		51												(23)						28												28
Treasury shares repurchased and retired						(2,653)																		(552)																		(552)												(552)
Dividends common stock ($0.845 per share)																																				(222)						(222)												(222)
Balance as of April 3, 2022						262,553						56						13,819						(2,433)						26						(4,959)						6,509						251						6,760
Net income (loss)																																				670						670						13						683
Other comprehensive income																														(78)												(78)												(78)
Share-based compensation plans																		85																								85												85
Shares issued pursuant to stock awards						57																		11												(11)						—												—
Treasury shares repurchased and retired						(15)																		(2)																		(2)												(2)
Dividends common stock ($0.845 per share)																																				(222)						(222)												(222)
Balance as of July 3, 2022						262,595						56						13,904						(2,424)						(52)						(4,522)						6,962						264						7,226
Net income (loss)																																				738						738						12						750
Other comprehensive income																														(90)												(90)												(90)
Share-based compensation plans																		92																								92												92
Shares issued pursuant to stock awards						295																		60												(30)						30												30
Treasury shares and restricted stock unit withholdings						(2,501)																		(401)																		(401)												(401)
Change in participation																																				(3)						(3)						3						—
Dividends common stock ($0.845 per share)																																				(222)						(222)												(222)
Balance as of October 2, 2022						260,389						56						13,996						(2,765)						(142)						(4,039)						7,106						279						7,385

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, 2020						280,475						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 plans																		91																								91												91
Shares issued pursuant to stock awards						361																		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, 2021						275,749						59						14,224						(1,905)						61						(4,136)						8,303						218						8,521
Net income (loss)																																				397						397						9						406
Other comprehensive income																														9												9												9
Share-based compensation plans																		88																								88												88
Shares issued pursuant to stock awards						64																		6												(6)						—												—
Treasury shares repurchased and retired						(6,103)																		(1,203)																		(1,203)												(1,203)
Dividends common stock ($0.5625 per share)																																				(152)						(152)												(152)
Balance as of July 4, 2021						269,710						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 plans																		80																								80												80
Shares issued pursuant to stock awards						2,430																		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, 2021						266,340						59						14,392						(4,028)						45						(3,730)						6,738						234						6,972

See accompanying notes to the Condensed Consolidated Financial Statements

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, 2021.

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, 2021.

2 Significant Accounting Policies and Recent Accounting Pronouncements

Significant Accounting Policies

For a discussion of our significant accounting policies see, “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – “Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended December 31, 2021.

New accounting standards not yet adopted

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. ASU 2022-04, which require that a buyer in a supplier finance program to disclose sufficient information about the program, is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the implications of adoption on our Consolidated Financial Statements.

Accounting standards recently adopted

No 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

2022

On July 19, 2022, we acquired PL Sense for a total consideration of $22.1 million, net of closing adjustments. There were no material divestments during the first nine months of 2022.

2021

On July 6, 2021, we acquired Retune DSP for a total consideration of $15.7 million, net of closing adjustments.

4 Supplemental Financial Information

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.

5 Restructuring

At each reporting date, we evaluate our restructuring liabilities, which consist primarily of termination benefits, to ensure that our accruals are still appropriate.

The following table presents the changes in restructuring liabilities in 2022:

			As of January 1, 2022						Additions						Utilized						Released						Other changes						As of October 2, 2022
Restructuring liabilities			37						1						(9)						(6)						(3)						20

There were no significant restructuring costs incurred for both nine month periods ended October 2, 2022 and October 3, 2021 and the utilization of the restructuring liabilities mainly reflects the execution of ongoing restructuring programs the Company initiated in earlier years.

These restructuring charges recorded in operating income, for the periods indicated, are included in the following line items in the statement of operations:

			For the three months ended												For the nine months ended
			October 2, 2022						October 3, 2021						October 2, 2022						October 3, 2021
Cost of revenue			—						—						(3)						—
Research and development			—						—						(2)						1
Selling, general and administrative			—						—						—						—
Net restructuring charges			—						—						(5)						1

6 Income Taxes

Benefit/provision for income taxes:

			For the three months ended												For the nine months ended
			October 2, 2022						October 3, 2021						October 2, 2022						October 3, 2021
Tax expense (benefit)			149						95						392						200
Effective tax rate			16.5		%				15.4		%				15.8		%				13.4		%

Our provision for income taxes for the first nine months of 2022 was $392 million (15.8% effective tax rate) compared to a provision from income taxes of $200 million (13.4% effective tax rate) for the first nine months of 2021. The increase in the income tax expense was due to higher income before income taxes as a result of the improved operational performance of the Company which was partly offset by an increase in tax incentives also taking into account the effect of specific US tax law that became effective as from 2022. In addition to this, there is a higher tax expense in the first nine months of 2022 compared to the same period in 2021 due to unfavorable foreign currency effects in 2022 and favorable items in 2021 related to changes in estimates of prior positions, an excess tax benefit and a net change in the valuation allowance that led to a lower tax expense.

The Company benefits from income tax incentives in certain jurisdictions which provide that we pay reduced income taxes in those jurisdictions for a fixed period of time that varies depending on the jurisdiction. The predominant income tax holiday is expected to expire at the end of 2026. The impact of this tax holiday decreased foreign income taxes for the third quarter of 2022 by $4 million and decreased by $3 million for the third quarter 2021 (YTD 2022: a decrease of $12 million and YTD 2021: a decrease of $10 million). The benefit of this tax holiday on net income per share (diluted) was $0.01 for the third quarter of 2022 (YTD 2022: $0.04) and $0.01 for the third quarter of 2021 (YTD 2021: $0.04).

7 Identified Intangible Assets

Identified intangible assets as of October 2, 2022 and December 31, 2021, respectively, were composed of the following:

			October 2, 2022												December 31, 2021
			Gross carrying amount						Accumulated amortization						Gross carrying amount						Accumulated amortization
In-process R&D (IPR&D) 1)			72						—						96						—
Marketing-related			—						—						81						(81)
Customer-related			822						(330)						852						(325)
Technology-based			3,252						(2,399)						3,686						(2,615)
Identified intangible assets			4,146						(2,729)						4,715						(3,021)
1) IPR&D is not subject to amortization until completion or abandonment of the associated research and development effort.

The estimated amortization expense for these identified intangible assets for each of the five succeeding years is:

2022 (remaining)			143
2023			437
2024			263
2025			147
2026			80
Thereafter			347

All intangible assets, excluding IPR&D and goodwill, are subject to amortization and have no assumed residual value.

The expected weighted average remaining life of identified intangibles is 4 years as of October 2, 2022 (December 31, 2021: 4 years).

8 Debt

Revolving Credit Facility

On August 26, 2022, NXP B.V., together with NXP Funding LLC, amended and restated its revolving credit agreement entered into on June 11, 2019. The amended and restated revolving credit agreement provides for $2.5 billion of senior unsecured revolving credit commitments and is scheduled to mature on August 26, 2027.

Exchange Offers

On April 14, 2022, we initiated a registered exchange offering of our outstanding Senior Unsecured Notes (the “Notes”) for new issues of substantially identical registered debt securities (the “Exchange Offers”). The Exchange Offers expired on May 16, 2022, at which time substantially all of the Notes were exchanged for registered senior unsecured notes.

Debt Issuance and redemption

On May 16, 2022, NXP B.V., together with NXP Funding LLC and NXP USA, Inc., issued $500 million of 4.4% senior unsecured notes due June 1, 2027 and $1 billion of 5.0% senior unsecured notes due January 15, 2033.

On May 27, 2022 we redeemed the $900 million aggregate principal amount of outstanding dollar-denominated 4.625% Senior Unsecured Notes due 2023 in accordance with the terms of the indenture.

The following table summarizes the outstanding debt as of October 2, 2022 and December 31, 2021:

									October 2, 2022												December 31, 2021
			Maturities						Amount						Interest rate						Amount						Interest rate
Fixed-rate 4.625% senior unsecured notes			Jun, 2023						—						4.625						900						4.625
Fixed-rate 4.875% senior unsecured notes			Mar, 2024						1,000						4.875						1,000						4.875
Fixed-rate 2.7% senior unsecured notes			May, 2025						500						2.700						500						2.700
Fixed-rate 5.35% senior unsecured notes			Mar, 2026						500						5.350						500						5.350
Fixed-rate 3.875% senior unsecured notes			Jun, 2026						750						3.875						750						3.875
Fixed-rate 3.15% senior unsecured notes			May, 2027						500						3.150						500						3.150
Fixed-rate 4.40% senior unsecured notes			June, 2027						500						4.400						—						—
Fixed-rate 5.55% senior unsecured notes			Dec, 2028						500						5.550						500						5.550
Fixed-rate 4.3% senior unsecured notes			Jun, 2029						1,000						4.300						1,000						4.300
Fixed-rate 3.4% senior unsecured notes			May, 2030						1,000						3.400						1,000						3.400
Fixed-rate 2.5% senior unsecured notes			May, 2031						1,000						2.500						1,000						2.500
Fixed-rate 2.65% senior unsecured notes			Feb, 2032						1,000						2.650						1,000						2.650
Fixed-rate 5.00% senior unsecured notes			Jan, 2033						1,000						5.000						—						—
Fixed-rate 3.25% senior unsecured notes			May, 2041						1,000						3.250						1,000						3.250
Fixed-rate 3.125% senior unsecured notes			Feb, 2042						500						3.125						500						3.125
Fixed-rate 3.25% senior unsecured notes			Nov, 2051						500						3.250						500						3.250
Floating-rate revolving credit facility (RCF)			Aug, 2027						—						—						—						—
Total principal									11,250												10,650
Unamortized discounts, premiums and debt issuance costs									(88)												(78)
Total debt, including unamortized discounts, premiums, debt issuance costs and fair value adjustments									11,162												10,572
Current portion of long-term debt									—												—
Long-term debt									11,162												10,572

9 Related-Party Transactions

The Company's related parties are the members of the board of directors of NXP Semiconductors N.V., the executive officers of NXP Semiconductors N.V. and equity-accounted investees.

The following table presents the amounts related to revenue and other income and purchase of goods and services incurred in transactions with these related parties:

			For the three months ended												For the nine months ended
			October 2, 2022						October 3, 2021						October 2, 2022						October 3, 2021
Revenue and other income			2						2						7						6
Purchase of goods and services			1						1						3						3

The following table presents the amounts related to receivable and payable balances with these related parties:

			October 2, 2022						December 31, 2021
Receivables			1						1
Payables			3						3

10 Fair Value Measurements

The following table summarizes the estimated fair value of our financial instruments which are measured at fair value on a recurring basis:

									Estimated fair value
			Fair value hierarchy						October 2, 2022						December 31, 2021
Assets:
Money market funds			1						2,741						2,111
Marketable equity securities			1						7						18
Derivative instruments-assets			2						7						5
Liabilities:
Derivative instruments-liabilities			2						(31)						(3)

The following methods and assumptions were used to estimate the fair value of financial instruments:

Assets and liabilities measured at fair value on a recurring basis

Investments in money market funds (as part of our cash and cash equivalents) and marketable equity securities (as part of other non-current assets) have fair value measurements which are all based on quoted prices in active markets for identical assets or liabilities. For derivatives (as part of other current assets or accrued liabilities) the fair value is based upon significant other observable inputs depending on the nature of the derivative.

Assets and liabilities recorded at fair value on a non-recurring basis

We measure and record our non-marketable equity securities, equity method investments and non-financial assets, such as intangible assets and property, plant and equipment, at fair value when an impairment charge is required.

Assets and liabilities not recorded at fair value on a recurring basis

Financial instruments not recorded at fair value on a recurring basis include non-marketable equity securities and equity method investments that have not been remeasured or impaired in the current period and debt.

As of October 2, 2022, the estimated fair value of current and non-current debt was $9.4 billion ($11.3 billion as of December 31, 2021). The fair value is estimated on the basis of broker-dealer quotes, which are Level 2 inputs. Accrued interest is included under accrued liabilities and not within the carrying amount or estimated fair value of debt.

11 Commitments and Contingencies

Purchase Commitments

The Company maintains purchase commitments with certain suppliers, primarily for raw materials, semi-finished goods and manufacturing services and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time-horizon as mutually agreed upon between the parties. This forecasted time-horizon can vary for different suppliers. As of October 2, 2022, the Company had purchase commitments of $3,750 million, which are due through 2044. Our long-term obligations increased substantially in 2021 as we locked in long-term supply with our key manufacturing partners.

Litigation

We are regularly involved as plaintiffs or defendants in claims and litigation relating to a variety of matters such as contractual disputes, personal injury claims, employee grievances and intellectual property litigation. In addition, our acquisitions, divestments and financial transactions sometimes result in, or are followed by, claims or litigation. Some of these claims may possibly be recovered from insurance reimbursements. Although the ultimate disposition of asserted claims cannot be predicted with certainty, it is our belief that the outcome of any such claims, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position. However, such outcomes may be material to our condensed consolidated statement of operations for a particular period. The Company records an accrual for any claim that arises whenever it considers that it is probable that it is exposed to a loss contingency and the amount of the loss contingency can be reasonably estimated. The Company does not record a gain contingency until the period in which all contingencies are resolved and the gain is realized or realizable. Legal fees are expensed when incurred.

Based on the most current information available to it and based on its best estimate, the Company also reevaluates at least on a quarterly basis the claims that have arisen to determine whether any new accruals need to be made or whether any accruals made need to be adjusted. Based on the procedures described above, the Company has an aggregate amount of $70 million accrued for potential and current legal proceedings pending as of October 2, 2022, compared to $65 million accrued at December 31, 2021 (without reduction for any related insurance reimbursements). The accruals are included in “Other current liabilities” and in “Other non-current liabilities”. As of October 2, 2022, the Company’s related balance of insurance reimbursements was $47 million (December 31, 2021: $46 million) and is included in “Other current assets” and in “Other non-current assets”.

The Company also estimates the aggregate range of reasonably possible losses in excess of the amount accrued based on currently available information for those cases for which such estimate can be made. The estimated aggregate range requires significant judgment, given the varying stages of the proceedings, the existence of multiple defendants (including the Company) in such claims whose share of liability has yet to be determined, the numerous yet-unresolved issues in many of the claims, and the attendant uncertainty of the various potential outcomes of such claims. Accordingly, the Company’s estimate will change from time to time, and actual losses may be more than the current estimate. As at October 2, 2022, the Company believes that for all litigation pending its potential aggregate exposure to loss in excess of the amount accrued (without reduction for any amounts that may possibly be recovered under insurance programs) could range between $0 and $78 million. Based upon our past experience with these matters, the Company would expect to receive additional insurance reimbursement of up to $97 million on certain of these claims that would partially offset the potential aggregate exposure to loss in excess of the amount accrued.

In addition, the Company is currently assisting Motorola in the defense of personal injury lawsuits due to indemnity obligations included in the agreement that separated Freescale from Motorola in 2004. The multi-plaintiff Motorola lawsuits are pending in the Circuit Court of Cook County, Illinois. These claims allege a link between working in semiconductor manufacturing clean room facilities and birth defects in 22 individuals. The Motorola suits allege exposures between 1980 and 2005. Each claim seeks an unspecified amount of damages for the alleged injuries; however, legal counsel representing the plaintiffs has indicated they will seek substantial compensatory and punitive damages from Motorola for the entire inventory of claims which, if proven and recovered, the Company considers to be material. A portion of any indemnity due to Motorola will be reimbursed to NXP if Motorola receives an indemnification payment from its insurance coverage. Motorola has potential insurance coverage for many of the years indicated above, but with differing types and levels of coverage, self-insurance retention amounts and deductibles. We are in discussions with Motorola and their insurers regarding the availability of applicable insurance coverage for each of the individual cases. Motorola and NXP have denied liability for these alleged injuries based on numerous defenses.