Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis (MD&A) should be read in conjunction with our consolidated financial statements and notes and the MD&A in our Annual Report on Form 10-K for the year ended December 31, 2023, and the financial statements and the related notes that appear elsewhere in this document.

Overview

Quarter in Focus

• Revenue was $3.1 billion, up 0.2 percent year-on-year;

• GAAP gross margin was 57.0 percent, and GAAP operating margin was 27.4 percent;

• Non-GAAP gross margin was 58.2 percent, and non-GAAP operating margin was 34.5 percent;

• Cash flow from operations was $851 million, with net capital expenditures on property, plant and equipment of $224 million, resulting in non-GAAP free cash flow of $627 million;

• During the first quarter of 2024, NXP returned capital to shareholders with the payment of $261 million in cash dividends and the repurchase of $303 million of its common shares, for a total capital return of $564 million;

• On March 1, 2024, we fully retired at maturity our $1 billion aggregate principal amount of outstanding 4.875% senior unsecured notes using available cash on balance sheet;

• We published our annual Corporate Sustainability Report, reinforcing our commitment toward transparency and sustainable business practices;

Sequential Results

Q1 2024 compared to Q4 2023

Revenue for the three months ended March 31, 2024 was $3,126 million compared to $3,422 million for the three months ended December 31, 2023, a decrease of $296 million or 8.6% quarter-on-quarter, in line with management's expectations and spread across all end markets. Our Automotive end market decreased $95 million or 5.0%, the Industrial IoT end market decreased $88 million or 13.3%, the Mobile end market decreased $57 million or 14.0%, and our Communications Infrastructure & Other end market decreased $56 million or 12.3%.

When aggregating all end markets together and reviewing sales channel performance, revenues through NXP's third party distribution partners was $1,739 million, a decrease of $339 million or 16.3% compared to the previous period. Revenues through NXP's third party direct OEM and EMS customers was $1,355 million, an increase of $45 million or 3.4% versus the previous period.

From a geographic perspective, revenue decreased across the China and Americas regions, with increases in revenues in the EMEA and the Asia Pacific regions.

Our gross profit percentage for the three months ended March 31, 2024 of 57.0% was relatively consistent compared with 56.6% for the three months ended December 31, 2023.

Operating income for the three months ended March 31, 2024 was $856 million compared to $907 million for the three months ended December 31, 2023, a decrease of $51 million or 5.6%. Lower revenue drove the sequential decrease.

Results of operations

The following table presents operating results for each of the three-month periods ended March 31, 2024 and April 2, 2023, respectively:

($ in millions, unless otherwise stated)			Q1 2024						% of Revenue						Q1 2023						% of Revenue
Revenue			3,126												3,121
% nominal growth			0.2												(0.5)
Gross profit			1,783												1,770
Gross margin			57.0		%										56.7		%
Research and development			(564)						(18.0)		%				(577)						(18.5)		%
Selling, general and administrative			(306)						(9.8)		%				(280)						(9.0)		%
Amortization of acquisition-related intangible assets			(51)						(1.6)		%				(85)						(2.7)		%
Other income (expense)			(6)						(0.2)		%				(3)						(0.1)		%
Operating income (loss)			856						27.4		%				825						26.4		%
Financial income (expense)			(70)						(2.2)		%				(82)						(2.6)		%
Benefit (provision) for income taxes			(141)						(4.5)		%				(118)						(3.8)		%
Results relating to equity-accounted investees			(1)						—		%				(2)						(0.1)		%
Net income (loss)			644						20.6		%				623						20.0		%
Less: Net income (loss) attributable to non-controlling interests			5						0.2		%				8						0.3		%
Net income (loss) attributable to stockholders			639						20.4		%				615						19.7		%
Diluted earnings per share			2.47												2.35

Revenue

Q1 2024 Overview

Q1 2024 compared to Q1 2023

Revenue for the three months ended March 31, 2024 was $3,126 million compared to $3,121 million for the three months ended April 2, 2023, an increase of $5 million or 0.2%, in line with management’s expectations.

Revenue by end market was as follows:

($ in millions, unless otherwise stated)			Q1 2024						Q1 2023						% change
Automotive			1,804						1,828						(1.3)		%
Industrial & IoT			574						504						13.9		%
Mobile			349						260						34.2		%
Communication Infrastructure & Other			399						529						(24.6)		%
Total Revenue			3,126						3,121						0.2		%

Revenue by sales channel was as follows:

($ in millions, unless otherwise stated)			Q1 2024						Q1 2023						% change
Distributors			1,739						1,491						16.6		%
OEM/EMS			1,355						1,594						(15.0)		%
Other			32						36						(11.1)		%
Total Revenue			3,126						3,121						0.2		%

Revenue by geographic region, which is based on the customer’s shipped-to location was as follows:

($ in millions, unless otherwise stated)			Q1 2024						Q1 2023						% change
China 1)			1,014						947						7.1		%
APAC, excluding China			910						975						(6.7)		%
EMEA (Europe, the Middle East and Africa)			743						725						2.5		%
Americas			459						474						(3.2)		%
Total Revenue			3,126						3,121						0.2		%
1) China includes Mainland China and Hong Kong

Q1 2024 compared to Q1 2023

From an end market perspective, NXP experienced growth in its Mobile and Industrial IoT end markets which were offset by declines in the Communication Infrastructure & Other and Automotive end markets versus the year ago period.

Revenue in the Automotive end market was $1,804 million, a decrease of $24 million or 1.3% versus the year ago period. The decrease in the Automotive end market revenue was attributable to declines in our automotive processors and ADAS – Safety products, which were offset by growth in our advanced analog portfolio.

Revenue in the Industrial & IoT end market was $574 million, an increase of $70 million or 13.9% versus the year ago period. Within the Industrial & IoT end market the year-on-year increase was across the entire product portfolio, including processors, connectivity, advanced analog, and security.

Revenue in the Mobile end market was $349 million, an increase of $89 million or 34.2% versus the year ago period. The increase in the Mobile end market revenue was across the entire product portfolio, including mobile wallet and advanced analog.

Revenue in the Communication Infrastructure & Other end market was $399 million, a decrease of $130 million or 24.6% versus the year ago period. The decrease in revenue in secure cards and RF power products was due to weak end market demand. Communication Infrastructure & Other processors experienced anticipated end-of-life trends.

When aggregating all end markets together, and reviewing sales channel performance, revenues through NXP’s third party distribution partners was $1,739 million, an increase of 16.6% versus the year ago period. Revenues through direct OEM and EMS customers was $1,355 million, a decrease of 15.0% versus the year ago period.

From a geographic perspective, revenue increased year-on-year in the China and in the EMEA regions, while revenue decreased in APAC and the Americas regions.

Gross profit

Q1 2024 compared to Q1 2023

Gross profit for the three months ended March 31, 2024 was $1,783 million, or 57.0% of revenue, compared to $1,770 million, or 56.7% of revenue for the three months ended April 2, 2023, was relatively consistent with revenue and costs, both of which were comparatively flat year on year.

Operating expenses

Q1 2024 compared to Q1 2023

Operating expenses for the three months ended March 31, 2024 totaled $921 million, or 29.5% of revenue, compared to $942 million, or 30.2% of revenue, for the three months ended April 2, 2023.

• Research and development

($ in millions, unless otherwise stated)			Q1 2024						Q1 2023						% change
Research and development			564						577						(2.3)		%
As a percentage of revenue			18.0		%				18.5		%				(0.5)		ppt

Q1 2024 compared to Q1 2023

R&D costs for the three months ended March 31, 2024 decreased by $13 million, or 2.3%, when compared to the three months ended April 2, 2023 mainly driven in the form of subsidies and R&D tax credits in Q1 2024 of $19 million.

• Selling, general and administrative

($ in millions, unless otherwise stated)			Q1 2024						Q1 2023						% change
Selling, general and administrative			306						280						9.3		%
As a percentage of revenue			9.8		%				9.0		%				0.8		ppt

Q1 2024 compared to Q1 2023

SG&A costs for the three months ended March 31, 2024 increased by $26 million, or 9.3%, when compared to the three months ended April 2, 2023 mainly due to a $16 million increase in legal expenses (related to ongoing litigation and a settlement, see Note 11 “Commitments and Contingencies”) and higher personnel-related costs of $7 million (attributable to higher salaries and wages of $6 million, higher share-based compensation costs of $7 million and lower restructuring costs of $5 million).

• Amortization of acquisition-related intangible assets

($ in millions, unless otherwise stated)			Q1 2024						Q1 2023						% change
Amortization of acquisition-related intangible assets			51						85						(40.0)		%
As a percentage of revenue			1.6		%				2.7		%				(1.1)		ppt

Q1 2024 compared to Q1 2023

Amortization of acquisition-related intangible assets for the three months ended March 31, 2024 decreased by $34 million, or 40.0%, when compared to the three months ended April 2, 2023 mainly due to the effect of certain acquisition-related intangibles becoming fully amortized (with regard to the former Freescale acquisition).

Financial income (expense)

The following table presents the details of financial income and expenses:

($ in millions, unless otherwise stated)			Q1 2024						Q1 2023
Interest income			50						42
Interest expense			(105)						(111)
Total other financial income/ (expense)			(15)						(13)
Total			(70)						(82)

Q1 2024 compared to Q1 2023

Financial income (expense) was an expense of $70 million for the three months ended March 31, 2024, compared to an expense of $82 million for the three months ended April 2, 2023. The change in financial income (expense) is attributable to an increase in interest income of $8 million as a result of higher interest rates. Interest expense decreased by $6 million mainly due to the retirement of the 4.875% senior unsecured notes on March 1, 2024.

Benefit (provision) for income taxes

Our provision for income taxes for 2024 is based on our EAETR of 17.5%, which is lower than the Netherlands statutory tax rate of 25.8%, primarily due to tax benefits from the Netherlands and foreign tax incentives.

			Q1 2024						Q1 2023
Tax benefit (provision) calculated at EAETR			(139)						(126)
Discrete tax benefit (provision) items			(2)						8
Benefit (provision) for income taxes			(141)						(118)
Effective tax rate			17.9		%				15.9		%

The effective tax rate of 17.9% for the first quarter of 2024 was higher than the EAETR due to the income tax expense for discrete items of $2 million. The discrete items are primarily related to changes in estimates for previous years, and the impact of foreign currency on income tax related items.

Q1 2024 compared to Q1 2023

The effective tax rate of 15.9% for the first quarter of 2023 was lower compared to the current period of 17.9% due to a different mix of the benefit (provision) for income taxes in the locations that we operate in, lower foreign tax incentives in the current period as a result of a decrease in qualifying income, and also due to the impact of the discrete items in the respective periods.

Results Relating to Equity-accounted Investees

Results relating to equity-accounted investees amounted to a loss of $1 million for the three months ended March 31, 2024, whereas the three months ended April 2, 2023 results relating to equity-accounted investees amounted to a loss of $2 million.

Non-controlling Interests

Non-controlling interests are related to the third-party share in the results of consolidated companies, predominantly SSMC. Their share of non-controlling interests amounted to a profit of $5 million for the three months ended March 31, 2024, compared to a profit of $8 million for the three months ended April 2, 2023.

Liquidity and Capital Resources

We derive our liquidity and capital resources primarily from our cash flows from operations. We continue to generate strong positive operating cash flows. At the end of the first quarter of 2024, our cash balance was $2,908 million, a decrease of $954 million compared to December 31, 2023 having fully retired our $1 billion aggregate principal amount of outstanding 4.875% senior unsecured notes due March 2024 during the quarter. Taking into account the available amount of the Unsecured Revolving Credit Facility of $2,500 million, we had access to $5,408 million of liquidity as of March 31, 2024. We currently use cash to fund operations, meet working capital requirements, for capital expenditures and for potential common stock repurchases, dividends and strategic investments. Based on past performance and current expectations, we believe that our current available sources of funds (including cash and cash equivalents, short-term deposits, RCF Agreement of $2.5 billion, plus anticipated cash generated from operations) will be adequate to finance our operations, working capital requirements, capital expenditures and potential dividends for at least the next twelve months.

($ in millions, unless otherwise stated)			YTD 2023						YTD 2022
Cash from operations			851						632
Capital expenditures			226						251
Cash to shareholders			564						230

Cash and short-term deposits

At March 31, 2024, our cash and short-term deposits balance was $3,308 million of which $222 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.

Capital expenditures

Our cash outflows for capital expenditures were $226 million in the first three months of 2024, compared to $251 million in the first three months of 2023.

Capital return

Under our Quarterly Dividend Program, interim dividends of $1.014 per ordinary share were paid on January 5, 2024 ($261 million) and dividends of $1.014 per ordinary share were paid on April 10, 2024 ($260 million).

In the first three months of 2024 we repurchased approximately $303 million of shares.

Debt

Our total debt, inclusive of aggregate principal, unamortized discounts, premiums, debt issuance costs and fair value adjustments, amounted to $10,178 million as of March 31, 2024, a decrease of $997 million compared to December 31, 2023 ($11,175 million). On March 1, 2024, we fully retired at maturity our $1 billion aggregate principal amount of outstanding 4.875% senior unsecured notes using available cash on balance sheet.

As of March 31, 2024, we had outstanding fixed-rate notes with varying maturities for an aggregate principal amount of $10,250 million (collectively the “Notes”), none are payable within 12 months. Future interest payments associated with the Notes total $3,051 million, with $378 million payable within 12 months

Our net debt position (see section Use of Certain Non-GAAP Financial Measures) at March 31, 2024 amounted to $6,870 million, compared to $6,904 million as of December 31, 2023.

Additional Capital Requirements

Expected working and other capital requirements are described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. At March 31, 2024, other than for changes disclosed in the “Notes to Condensed Consolidated Financial Statements” and “Liquidity and Capital Resources” in this Quarterly Report, there have been no other material changes to our expected working and other capital requirements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Cash flows

Our cash and cash equivalents during the first three months of 2024 decreased by $951 million (excluding the effect of changes in exchange rates on our cash position of $(3) million) as follows:

($ in millions, unless otherwise stated)			YTD 2024						YTD 2023
Net cash provided by (used for) operating activities			851						632
Net cash (used for) provided by investing activities			(274)						(351)
Net cash provided by (used for) financing activities			(1,528)						(198)
Increase (decrease) in cash and cash equivalents			(951)						83

Cash Flow from Operating Activities

For the first three months of 2024 our operating activities provided $851 million in cash. This was primarily the result of net income of $644 million, adjustments to reconcile the net income of $290 million and changes in operating assets and liabilities of $(89) million. Adjustments to net income (loss) includes offsetting non-cash items, such as depreciation and amortization of $235 million, share-based compensation of $115 million and changes in deferred taxes of $(64) million. Changes in operating assets and liabilities were primarily driven by a $102 million decrease in accounts payable and other liabilities as a result of lower purchase volumes and timing related to payments, $25 million increase in receivables and other current assets from prepayments to secure production supply with multiple vendors; partially offset by a $32 million decrease in inventories as a result of inventory control efforts.

For the first three months of 2023 our operating activities provided $632 million in cash. This was primarily the result of net income of $623 million, adjustments to reconcile the net income of $326 million and changes in operating assets and liabilities of $(315) million. Adjustments to net income (loss) includes offsetting non-cash items, such as depreciation and amortization of $283 million, share-based compensation of $99 million and changes in deferred taxes of $(62) million. Changes in operating assets and liabilities were primarily driven by a $196 million increase in inventories due to increased production levels in order to align inventory on hand with expected demand, $138 million increase in receivables and other current assets due to the linearity of revenue between the two periods, customer mix, and the related timing of cash collection, $33 million increase in other non-current assets from prepayments to secure long-term production supply with multiple vendors; partially offset by $52 million increase in accounts payable and other liabilities as a result of timing related to payments.

Cash Flow from Investing Activities

Net cash used for investing activities amounted to $274 million for the first three months of 2024 and principally consisted of the cash outflows for capital expenditures of $226 million, $34 million for the purchase of investments (driven primarily by the initial capital contribution of approximately $22 million into European Semiconductor Manufacturing Company (ESMC) GmbH), and $32 million for the purchase of identified intangible assets, including EDA (electronic design automation).

Net cash used for investing activities amounted to $351 million for the first three months of 2023 and principally consisted of the cash outflows for capital expenditures of $251 million, $42 million for the purchase of identified intangible assets, and $58 million for the purchase of investments.

Cash Flow from Financing Activities

Net cash used for financing activities was $1,528 million for the first three months of 2024 was primarily driven by the payment of $1 billion to retire at maturity our outstanding 4.875% senior unsecured notes due March 2024, dividend payment to common stockholders of $261 million, and purchase of treasury shares and restricted stock unit holdings of $303 million; partially offset by the proceeds from the issuance of common stock through stock plans of $37 million.

Net cash used for financing activities was $198 million for the first three months of 2023 was primarily driven by the dividend payment to common stockholders of $219 million; partially offset by the proceeds from the issuance of common stock through stock plans of $33 million.

Information Regarding Guarantors of NXP (unaudited)

Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries

All debt instruments are guaranteed, fully and unconditionally, jointly and severally, by NXP Semiconductors N.V. and issued or guaranteed by NXP USA, Inc., NXP B.V. and NXP LLC, (together, the “Subsidiary Obligors” and together with NXP Semiconductors N.V., the “Obligor Group”). Other than the Subsidiary Obligors, none of the Company’s subsidiaries (together the “Non-Guarantor Subsidiaries”) guarantee the Notes. The Company consolidates the Subsidiary Obligors in its consolidated financial statements and each of the Subsidiary Obligors are wholly owned subsidiaries of the Company.

All of the existing guarantees by the Company rank equally in right of payment with all of the existing and future senior indebtedness of the Obligor Group. There are no significant restrictions on the ability of the Obligor Group to obtain funds from respective subsidiaries by dividend or loan.

The following tables present summarized financial information of the Obligor Group on a combined basis, with intercompany balances and transactions between entities of the Obligor Group eliminated and investments and equity in the earnings of the Non-Guarantor Subsidiaries excluded. The Obligor Group’s amounts due from, amounts due to, and intercompany transactions with Non-Guarantor Subsidiaries have been disclosed below the table, when material.

Summarized Statements of Income

			For the three months ended
($ in millions)			March 31, 2024
Revenue			1,767
Gross Profit			914
Operating income			332
Net income			139

Summarized Balance Sheets

			As of
($ in millions)			March 31, 2024						December 31, 2023
Current assets			3,273						4,298
Non-current assets			11,780						11,773
Total assets			15,053						16,071
Current liabilities			897						2,005
Non-current liabilities			10,566						10,566
Total liabilities			11,463						12,571
Obligor's Group equity			3,590						3,500
Total liabilities and Obligor's Group equity			15,053						16,071

NXP Semiconductors N.V. is the head of a fiscal unity for the corporate income tax and VAT that contains the most significant Dutch wholly-owned group companies. The Company is therefore jointly and severally liable for the tax liabilities of the tax entity as a whole, and as such the income tax expense of the Dutch fiscal unity has been included in the Net income of the Obligor Group.

The financial information of the Obligor Group includes sales executed through a Non-Guarantor Subsidiary single-billing entity as a sales agent on behalf of an entity in the Obligor Group. The Obligor Group has sales to non-guarantors (for the three months ended March 31, 2024: $178 million). The Obligor Group has amounts due from equity financing (March 31, 2024: $7,299 million; December 31, 2023: $5,441 million) and due to debt financing (March 31, 2024: $2,692 million; December 31, 2023: $2,346 million) with non-guarantor subsidiaries.

Use of Certain Non-GAAP Financial Measures

Non-GAAP Financial Measures

In addition to providing financial information on a basis consistent with U.S. generally accepted accounting principles (“US GAAP” or “GAAP”), NXP also provides selected financial measures on a non-GAAP basis which are adjusted for specified items. The adjustments made to achieve these non-GAAP financial measures or the non-GAAP financial measures as specified are described below, including the usefulness to management and investors.

In managing NXP’s business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In measuring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce costs with the goal of increasing our gross margin and operating margin and when assessing appropriate levels of research and development efforts. In addition, management relies upon these non-GAAP financial measures when making decisions about product spending, administrative budgets, and other operating expenses. We believe that these non-GAAP financial measures, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company’s results of operations and the factors and trends affecting NXP’s business. We believe that they enable investors to perform additional comparisons of our operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to core operating performance, certain non-cash expenses and share-based compensation expense, which may obscure trends in NXP’s underlying performance. This information also enables investors to compare financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management.

The presentation of these and other similar items in NXP’s non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent, or unusual. These non-GAAP financial measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

Non-GAAP Adjustment or Measure						Definition						Usefulness to Management and Investors
Purchase price accounting effects						Purchase price accounting ("PPA") effects reflect the fair value adjustments impacting acquisition accounting and other acquisition adjustments charged to the Consolidated Statement of Operations. This typically relates to inventory, property, plant and equipment, as well as intangible assets, such as developed technology and marketing and customer relationships acquired. The PPA effects are recorded within both cost of revenue and operating expenses in our US GAAP financial statements. These charges are recorded over the estimated useful life of the related acquired asset, and thus are generally recorded over multiple years.						We believe that excluding these charges related to fair value adjustments for purposes of calculating certain non-GAAP measures allows the users of our financial statements to better understand the historic and current cost of our products, our gross margin, our operating costs, our operating margin, and also facilitates comparisons to peer companies.
Restructuring						Restructuring charges are costs primarily related to employee severance and benefit arrangements. Charges related to restructuring are recorded within both cost of revenue and operating expenses in our US GAAP financial statements						We exclude restructuring charges, including any adjustments to charges recorded in prior periods, for purposes of calculating certain non-GAAP measures because these costs do not reflect our core operating performance. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends.
Share-based compensation						Share-based compensation consists of incentive expense granted to eligible employees in the form of equity based instruments. Charges related to share-based compensation are recorded within both cost of revenue and operating expenses in our US GAAP financial statements.						We exclude charges related to share-based compensation for purposes of calculating certain non-GAAP measures because we believe these charges, which are non-cash, are not representative of our core operating performance as they can fluctuate from period to period based on factors that are not within our control, such as our stock price on the dates share-based grants are issued. We believe these adjustments provide investors with a useful view, through the eyes of management, of our core business model, how management currently evaluates core operational performance, and additional means to evaluate expense trends.
Other incidentals						Other incidentals consist of certain items which may be non-recurring, unusual, infrequent or directly related to an event that is distinct and non-reflective of the Company’s core operating performance. These may include such items as process and product transfer costs, certain charges related to acquisitions and divestitures, litigation and legal settlements, costs associated with the exit of a product line, factory or facility, environmental or governmental settlements, and other items of similar nature.						We exclude these certain items which may be non-recurring, unusual, infrequent or directly related to an event that is distinct and non-reflective of the Company’s core operating performance for purposes of calculating certain non-GAAP measures. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends.

Non-GAAP Adjustment or Measure						Definition						Usefulness to Management and Investors
Non-GAAP Provision for income taxes						Non-GAAP provision for income taxes is NXP's GAAP provision for income taxes adjusted for the income tax effects of the adjustments to our GAAP measure, including the effects of purchase price accounting (“PPA”), restructuring costs, share-based compensation, other incidental items and certain other adjustments to financial income (expense) items. Additionally, adjustments are made for the income tax effect of any discrete items that occur in the interim period. Discrete items primarily relate to unexpected tax events that may occur as these amounts cannot be forecasted (e.g., the impact of changes in tax law and/or rates, changes in estimates or resolved tax audits relating to prior year tax provisions, the excess or deficit tax effects on share-based compensation, etc.).						The non-GAAP provision for income taxes is used to ascertain and present on a comparable basis NXP's provision for income tax after adjustments, the usefulness of which is described within this table. Additionally, the income tax effects of the adjustments to achieve the noted non-GAAP measures are used to determine NXP's non-GAAP net income (loss) attributable to stockholders and accordingly, our diluted non-GAAP earnings per share attributable to stockholders.
Free Cash Flow						Free Cash Flow represents operating cash flow adjusted for net additions to property, plant and equipment.						We believe that free cash flow provides insight into our cash-generating capability and our financial performance, and is an efficient means by which users of our financial statements can evaluate our cash flow after meeting our capital expenditure.
Net debt						Net debt represents total debt (short-term and long-term) after deduction of cash and cash equivalents and short-term deposits.						We believe this measure provides investors with useful supplemental information about the financial performance of our business, enables comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect of calculating our net leverage.

The following are reconciliations of our most comparable US GAAP measures to our non-GAAP measures presented:

($ in millions)			For the three months ended
			March 31, 2024						December 31, 2023						April 2, 2023
GAAP gross profit			$	1,783					$	1,937					$	1,770
PPA effects			(12)						(13)						(13)
Restructuring			(3)						(13)						2
Share-based compensation			(15)						(14)						(13)
Other incidentals			(5)						(33)						(22)
Non-GAAP gross profit			$	1,818					$	2,010					$	1,816
GAAP Gross Margin			57.0		%				56.6		%				56.7		%
Non-GAAP Gross Margin			58.2		%				58.7		%				58.2		%
GAAP research and development			$	(564)					$	(651)					$	(577)
Restructuring			(3)						(49)						(14)
Share-based compensation			(58)						(55)						(52)
Other incidentals			(1)						(1)						(1)
Non-GAAP research and development			$	(502)					$	(546)					$	(510)
GAAP selling, general and administrative			$	(306)					$	(311)					$	(280)
PPA effects			—						(1)						(1)
Restructuring			(1)						(22)						(6)
Share-based compensation			(42)						(38)						(34)
Other incidentals			(29)						(5)						(21)
Non-GAAP selling, general and administrative			$	(234)					$	(245)					$	(218)
GAAP operating income (loss)			$	856					$	907					$	825

($ in millions)			For the three months ended
			March 31, 2024						December 31, 2023						April 2, 2023
GAAP operating income (loss)			$	856					$	907					$	825
PPA effects			(63)						(77)						(99)
Restructuring			(7)						(84)						(18)
Share-based compensation			(115)						(107)						(99)
Other incidentals			(39)						(44)						(44)
Non-GAAP operating income (loss)			$	1,080					$	1,219					$	1,085
GAAP Operating Margin			27.4		%				26.5		%				26.4		%
Non-GAAP Operating Margin			34.5		%				35.6		%				34.8		%
GAAP Income tax benefit (provision)			$	(141)					$	(124)					$	(118)
Income tax effect			30						54						49
Non-GAAP Income tax benefit (provision)			$	(171)					$	(178)					$	(167)

($ in millions)			For the three months ended
			March 31, 2024						December 31, 2023						April 2, 2023
Net cash provided by (used for) operating activities			$	851					$	1,137					$	632
Net capital expenditures on property, plant and equipment			(224)						(175)						(251)
Non-GAAP free cash flow			$	627					$	962					$	381

($ in millions)			For the three months ended
			March 31, 2024						December 31, 2023						April 2, 2023
Long-term debt			$	10,178					$	10,175					$	10,169
Short-term debt			—						1,000						998
Total debt			10,178						11,175						11,167
Less: cash and cash equivalents			(2,908)						(3,862)						(3,930)
Less: short-term deposits			(400)						(409)						—
Net debt			$	6,870					$	6,904					$	7,237