Item 1. Financial Statements

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Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

($ in millions, unless otherwise stated)


	For the three months ended		For the six months ended
	June 30, 2024	July 2, 2023	June 30, 2024	July 2, 2023
Revenue	3,127	3,299	6,253	6,420
Cost of revenue	(1,335)	(1,418)	(2,678)	(2,769)
Gross profit	1,792	1,881	3,575	3,651
Research and development	(594)	(589)	(1,158)	(1,166)
Selling, general and administrative	(270)	(274)	(576)	(554)
Amortization of acquisition-related intangible assets	(28)	(81)	(79)	(166)
Total operating expenses	(892)	(944)	(1,813)	(1,886)
Other income (expense)	(4)	—	(10)	(3)
Operating income (loss)	896	937	1,752	1,762
Financial income (expense):
Extinguishment of debt	—	—	—	—
Other financial income (expense)	(75)	(74)	(145)	(156)
Income (loss) before income taxes	821	863	1,607	1,606
Benefit (provision) for income taxes	(154)	(158)	(295)	(276)
Results relating to equity-accounted investees	(3)	(1)	(4)	(3)
Net income (loss)	664	704	1,308	1,327
Less: Net income (loss) attributable to non-controlling interests	6	6	11	14
Net income (loss) attributable to stockholders	658	698	1,297	1,313

Earnings per share data:
Net income (loss) per common share attributable to stockholders in $
Basic	2.58	2.69	5.07	5.06
Diluted	2.54	2.67	5.01	5.03

Weighted average number of shares of common stock outstanding during the period (in thousands):
Basic	255,478	259,160	256,023	259,369
Diluted	258,732	261,303	258,963	261,278

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 six months ended
	June 30, 2024	July 2, 2023	June 30, 2024	July 2, 2023
Net income (loss)	664	704	1,308	1,327
Other comprehensive income (loss), net of tax:
Change in fair value cash flow hedges	—	(13)	(8)	(10)
Change in foreign currency translation adjustment	(16)	2	(54)	21
Change in net actuarial gain (loss)	2	—	2	—

Total other comprehensive income (loss)	(14)	(11)	(60)	11
Total comprehensive income (loss)	650	693	1,248	1,338
Less: Comprehensive income (loss) attributable to non-controlling interests	6	6	11	14
Total comprehensive income (loss) attributable to stockholders	644	687	1,237	1,324

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

($ in millions, unless otherwise stated)


		June 30, 2024	December 31, 2023
ASSETS
Current assets:
	Cash and cash equivalents	2,859	3,862
	Short-term deposits	400	409
	Accounts receivable, net	927	894

	Inventories, net	2,148	2,134
	Other current assets	546	565
Total current assets		6,880	7,864
Non-current assets:
	Other non-current assets	2,290	2,289
	Property, plant and equipment, net of accumulated depreciation of $5,902 and $5,660	3,289	3,323
	Identified intangible assets, net of accumulated amortization of $972 and $1,342	796	922
	Goodwill	9,941	9,955
	Total non-current assets	16,316	16,489
Total assets		23,196	24,353

LIABILITIES AND EQUITY
Current liabilities:
	Accounts payable	929	1,164

	Restructuring liabilities-current	62	92
	Other current liabilities	1,622	1,855
	Short-term debt	499	1,000
Total current liabilities		3,112	4,111
Non-current liabilities:
	Long-term debt	9,681	10,175
	Restructuring liabilities	7	9
	Deferred tax liabilities	48	44
	Other non-current liabilities	1,003	1,054
Total non-current liabilities		10,739	11,282
Total liabilities		13,851	15,393
Equity:
	Non-controlling interests	327	316

	Stockholders’ equity:
	Common stock, par value €0.20 per share:	56	56
	Capital in excess of par value	14,730	14,501
	Treasury shares, at cost:
	19,543,790 shares (2023: 17,329,585 shares)	(3,762)	(3,210)
	Accumulated other comprehensive income (loss)	30	90
	Accumulated deficit	(2,036)	(2,793)
	Total stockholders’ equity	9,018	8,644
Total equity		9,345	8,960
Total liabilities and equity		23,196	24,353

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

($ in millions, unless otherwise stated)


	For the six months ended
	June 30, 2024	July 2, 2023
Cash flows from operating activities:
Net income (loss)	1,308	1,327
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization	448	564
Share-based compensation	229	201
Amortization of discount (premium) on debt, net	2	1
Amortization of debt issuance costs	3	4
Net (gain) loss on sale of assets	(2)	(1)
(Gain) loss on equity security, net	5	(5)

Results relating to equity-accounted investees	4	3
Deferred tax expense (benefit)	(87)	(137)
Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current assets	(15)	(158)
(Increase) decrease in inventories	(14)	(325)
Increase (decrease) in accounts payable and other liabilities	(322)	(92)
Decrease (increase) in other non-current assets	46	—
Exchange differences	8	10
Other items	(1)	(4)
Net cash provided by (used for) operating activities	1,612	1,388
Cash flows from investing activities:
Purchase of identified intangible assets	(87)	(93)
Capital expenditures on property, plant and equipment	(411)	(452)

Insurance recoveries received for equipment damage	2	—
Proceeds from disposals of property, plant and equipment	3	1


Proceeds of short-term deposits	9	—

Purchase of investments	(34)	(62)
Proceeds from sale of investments	5	—

Net cash provided by (used for) investing activities	(513)	(606)
Cash flows from financing activities:
Repurchase of long-term debt	(1,000)	—




Dividends paid to common stockholders	(521)	(483)
Proceeds from issuance of common stock through stock plans	40	34
Purchase of treasury shares and restricted stock unit withholdings	(613)	(313)
Other, net	(1)	(1)
Net cash provided by (used for) financing activities	(2,095)	(763)
Effect of changes in exchange rates on cash positions	(7)	(1)
Increase (decrease) in cash and cash equivalents	(1,003)	18
Cash and cash equivalents at beginning of period	3,862	3,845
Cash and cash equivalents at end of period	2,859	3,863


Supplemental disclosures to the condensed consolidated cash flows
Net cash paid during the period for:
Interest	124	140
Income taxes, net of refunds	391	533
Net gain (loss) on sale of assets:
Cash proceeds from the sale of assets	3	1
Book value of these assets	(1)	—
Non-cash investing activities:
Non-cash capital expenditures	166	165

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	Accumu- lated other compre- hensive income (loss)	Accumu- lated deficit	Total stock- holders’ equity	Non- con- trolling interests	Total equity
Balance as of December 31, 2023	257,190	56	14,501	(3,210)	90	(2,793)	8,644	316	8,960
Net income (loss)						639	639	5	644
Other comprehensive income (loss)					(46)		(46)		(46)
Share-based compensation plans			118				118		118
Shares issued pursuant to stock awards	228			44		(7)	37		37
Treasury shares repurchased and retired	(1,323)			(303)			(303)		(303)
Dividends common stock ($1.014 per share)						(260)	(260)		(260)
Balance as of March 31, 2024	256,095	56	14,619	(3,469)	44	(2,421)	8,829	321	9,150
Net income (loss)						658	658	6	664
Other comprehensive income (loss)					(14)		(14)		(14)
Share-based compensation plans			111				111		111
Shares issued pursuant to stock awards	89			17		(14)	3		3
Treasury shares repurchased and retired	(1,208)			(310)			(310)		(310)

Dividends common stock ($1.014 per share)						(259)	(259)		(259)
Balance as of June 30, 2024	254,976	56	14,730	(3,762)	30	(2,036)	9,018	327	9,345


	Outstanding number of shares (in thousands)	Common stock	Capital in excess of par value	Treasury shares at cost	Accumu- lated other compre- hensive income (loss)	Accumu- lated deficit	Total stock- holders’ equity	Non- con- trolling interests	Total equity
Balance as of December 31, 2022	259,463	56	14,091	(2,799)	76	(3,975)	7,449	291	7,740
Net income (loss)						615	615	8	623
Other comprehensive income (loss)					22		22		22
Share-based compensation plans			101				101		101
Shares issued pursuant to stock awards	309			61		(28)	33		33
Treasury shares repurchased and retired	(37)			(7)			(7)		(7)
Dividends common stock ($1.014 per share)						(264)	(264)		(264)
Balance as of April 2, 2023	259,735	56	14,192	(2,745)	98	(3,652)	7,949	299	8,248
Net income (loss)						698	698	6	704
Other comprehensive income (loss)					(11)		(11)		(11)
Share-based compensation plans			99				99		99
Shares issued pursuant to stock awards	71			13		(12)	1		1
Treasury shares repurchased and retired	(1,681)			(302)			(302)		(302)

Dividends common stock ($1.014 per share)						(262)	(262)		(262)
Balance as of July 2, 2023	258,125	56	14,291	(3,034)	87	(3,228)	8,172	305	8,477

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, 2023.

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, 2023.

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, 2023. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended December 31, 2023.

Recent accounting standards

Accounting standards not yet adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, requiring disclosure of certain incremental segment information on an annual and interim basis, including (among other items) additional disclosure about significant segment expenses and that a public entity that has a single reportable segment provide all the disclosures required by this ASU. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We will adopt ASU 2023-07 for our annual periods starting in fiscal year 2024 (and interim periods thereafter) on a retrospective basis and continue to evaluate the impact on our disclosures.

In December 2023, the FASB issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, requiring to disclose annually certain additional disaggregated income tax information related to the effective tax rate reconciliation and income taxes paid, among other items. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We will adopt the new requirements starting for our annual period starting in 2025 and continue to evaluate the basis of adoption and impact on our disclosures.

No other 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

2024

There were no material acquisitions or divestments during the first six months of 2024.

2023

There were no material acquisitions or divestments during the first six months of 2023.

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 six months ended
	June 30, 2024	July 2, 2023	June 30, 2024	July 2, 2023
Distributors	1,804	1,679	3,543	3,170
Original Equipment Manufacturers and Electronic Manufacturing Services	1,294	1,596	2,649	3,190
Other	29	24	61	60
Total Revenue	3,127	3,299	6,253	6,420

Depreciation, amortization and impairment


	For the three months ended		For the six months ended
	June 30, 2024	July 2, 2023	June 30, 2024	July 2, 2023
Depreciation of property, plant and equipment	146	162	291	322
Amortization of internal use software	7	5	14	9
Amortization of other identified intangible assets	60	114	143	233
Total - Depreciation, amortization and impairment	213	281	448	564

Effective January 2024, we increased the estimated useful lives of certain manufacturing equipment from 5 to 10 years. This change has resulted in an insignificant increase in gross margin in the first two quarters of 2024 when compared to what would have been the impact using the estimated useful life in place prior to this change.

Financial income and expense


	For the three months ended		For the six months ended
	June 30, 2024	July 2, 2023	June 30, 2024	July 2, 2023
Interest income	39	43	89	85
Interest expense	(97)	(109)	(202)	(220)




Total other financial income/ (expense)	(17)	(8)	(32)	(21)
Total	(75)	(74)	(145)	(156)

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 30, 2024	July 2, 2023	June 30, 2024	July 2, 2023
Net income (loss)	664	704	1,308	1,327
Less: net income (loss) attributable to non-controlling interests	6	6	11	14
Net income (loss) attributable to stockholders	658	698	1,297	1,313

Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	255,478	259,160	256,023	259,369
Plus incremental shares from assumed conversion of:
Options 1)	157	189	165	197
Restricted Share Units, Performance Share Units and Equity Rights 2)	3,097	1,954	2,775	1,712
Dilutive potential common shares	3,254	2,143	2,940	1,909

Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	258,732	261,303	258,963	261,278

EPS attributable to stockholders in $:
Basic net income (loss)	2.58	2.69	5.07	5.06
Diluted net income (loss)	2.54	2.67	5.01	5.03

There were no stock options to purchase shares of NXP’s common stock that were outstanding in Q2 2024 and YTD 2024 (Q2 2023 and YTD 2023: 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.
There were no unvested RSUs, PSUs and equity rights that were outstanding in Q2 2024 and YTD 2024 (Q2 2023 and YTD 2023: 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 June 30, 2024 and December 31, 2023, our cash balance was $2,859 million and $3,862 million, respectively, of which $241 million and $214 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 six months of 2024 and 2023, no dividends were declared by SSMC.

Inventories

Inventories are summarized as follows:


	June 30, 2024	December 31, 2023
Raw materials	103	113
Work in process	1,568	1,633
Finished goods	477	388
	2,148	2,134

The amounts recorded above are net of allowance for obsolescence of $185 million as of June 30, 2024 (December 31, 2023: $189 million).

Equity Investments

At June 30, 2024 and December 31, 2023, the total carrying value of investments in equity securities is summarized as follows:


	June 30, 2024	December 31, 2023
Marketable equity securities	7	12
Non-marketable equity securities	66	55
Equity-accounted investments	117	101
	190	168

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


	June 30, 2024			December 31, 2023
	Shareholding %		Amount	Shareholding %		Amount
SMART Growth Fund, L.P.	8.41	%	41	8.41	%	42
SigmaSense, LLC	10.64	%	31	10.64	%	33
Others	—		45	—		26
			117			101

Results related to equity-accounted investees at the end of each period were as follows:


	For the three months ended		For the six months ended
	June 30, 2024	July 2, 2023	June 30, 2024	July 2, 2023
Company's share in income (loss)	(3)	(1)	(5)	(3)
Other results	—	—	1	—
	(3)	(1)	(4)	(3)

Other current liabilities

Other current liabilities at June 30, 2024 and December 31, 2023 consisted of the following:


	June 30, 2024	December 31, 2023
Accrued compensation and benefits	402	500
Customer programs	307	280
Income taxes payable	122	170
Dividend payable	259	261
Other	532	644
	1,622	1,855

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, 2023	177	1	(88)	90
Other comprehensive income (loss) before reclassifications	(54)	(20)	2	(72)
Amounts reclassified out of accumulated other comprehensive income (loss)	—	9	—	9
Tax effects	—	3	—	3
Other comprehensive income (loss)	(54)	(8)	2	(60)
As of June 30, 2024	123	(7)	(86)	30

Cash dividends

The following dividends were declared during the first six months of 2024 and 2023 under NXP’s quarterly dividend program:


	Fiscal Year 2024		Fiscal Year 2023
	Dividend per share	Amount	Dividend per share	Amount
First quarter	1.014	260	1.014	263
Second quarter	1.014	259	1.014	263

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 30, 2024 and was subsequently paid on July 10, 2024.

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 2024:


			As of January 1, 2024						Additions						Utilized						Released						Other changes						As of June 30, 2024
Restructuring liabilities			101						18						(45)						(4)						(1)						69

The total restructuring liability as of June 30, 2024 of $69 million is classified in the consolidated balance sheet under current liabilities ($62 million) and non-current liabilities ($7 million).

The restructuring charges for the six-month period ending June 30, 2024 consist of $17 million for personnel related costs for specific targeted actions, offset by a $4 million release for earlier programs. The restructuring charges for the six-month period ending July 2, 2023 consist of $21 million for personnel related costs for a restructuring program in 2023, offset by a $3 million release for an earlier program.

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 six months ended
	June 30, 2024	July 2, 2023	June 30, 2024	July 2, 2023
Cost of revenue	4	—	7	(2)
Research and development	4	—	7	14
Selling, general and administrative	(2)	—	(1)	6

Net restructuring charges	6	—	13	18

6 Income Tax

Each year NXP makes an estimate of its annual effective tax rate. This estimated annual effective tax rate ("EAETR") is then applied to the year-to-date Income (loss) before income taxes excluding discrete items, to determine the year-to-date benefit (provision) for income taxes. The income tax effects of any discrete items are recognized in the interim period in which they occur. As the year progresses, the Company continually refines the EAETR based upon actual events and the apportionment of our earnings (loss). This continual estimation process periodically may result in a change to our EAETR for the year. When this occurs, we adjust on an accumulated basis the benefit (provision) for income taxes during the quarter in which the change occurs.

Our provision for income taxes for 2024 is based on our EAETR of 17.8%, which is lower than the Netherlands statutory tax rate of 25.8%, primarily due to tax benefits from the Netherlands and foreign tax incentives.


	For the three months ended				For the six months ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Tax benefit (provision) calculated at EAETR	(147)		(147)		(286)		(273)
Discrete tax benefit (provision) items	(7)		(11)		(9)		(3)
Benefit (provision) for income taxes	(154)		(158)		(295)		(276)

Effective tax rate	18.8	%	18.3	%	18.4	%	17.2	%

The effective tax rate of 18.8% for the second quarter of 2024 was higher than the EAETR due to the income tax expense for discrete items of $7 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. In addition to this, there was a recapture of tax expense of $1 million due to a higher EAETR compared to prior quarter.

For the first six months ended 2024 the effective tax rate of 18.4% was higher than 17.8% due to a net result of unfavorable discrete items of $9 million.

The effective tax rate of 18.4% for the first six months of 2024 was higher compared to the rate for the first six months ended 2023 of 17.2% 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, newly enacted alternative minimum tax law as per 2024, and also due to the impact of the discrete items in the respective periods.

7 Identified Intangible Assets

Identified intangible assets as of June 30, 2024 and December 31, 2023, respectively, were composed of the following:


	June 30, 2024		December 31, 2023
	Gross carrying amount	Accumulated amortization	Gross carrying amount	Accumulated amortization
In-process R&D (IPR&D) 1)	33	—	70	—

Customer-related	791	(377)	788	(352)
Technology-based	944	(595)	1,406	(990)
Identified intangible assets	1,768	(972)	2,264	(1,342)

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:


2024 (remaining)			137
2025			178
2026			97
2027			69
2028			63
Thereafter			252

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 5 years as of June 30, 2024 (December 31, 2023: 4 years).

8 Debt

The following table summarizes the outstanding debt as of June 30, 2024 and December 31, 2023:


		June 30, 2024		December 31, 2023
	Maturities	Amount	Interest rate	Amount	Interest rate
Fixed-rate 4.875% senior unsecured notes	Mar, 2024	—	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	Jun, 2027	500	4.400	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 5.0% senior unsecured notes	Jan, 2033	1,000	5.000	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		10,250		11,250

Unamortized discounts, premiums and debt issuance costs		(70)		(75)
Total debt, including unamortized discounts, premiums, debt issuance costs and fair value adjustments		10,180		11,175
Current portion of long-term debt		(499)		(1,000)
Long-term debt		9,681		10,175

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 six months ended
	June 30, 2024	July 2, 2023	June 30, 2024	July 2, 2023
Revenue and other income	1	1	2	2
Purchase of goods and services	1	1	2	1

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


	June 30, 2024	December 31, 2023
Receivables	—	1
Payables	3	7

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	June 30, 2024	December 31, 2023
Assets:
Short-term deposits	1	400	409
Money market funds	1	2,033	3,137
Marketable equity securities	1	7	12
Derivative instruments-assets	2	2	12

Liabilities:



Derivative instruments-liabilities	2	(12)	(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 short-term deposits, representing liquid assets with original maturity beyond three months and having no significant risk of changes in fair value, are represented at carrying value as reasonable estimates of fair value due to the relatively short period of time between the origination of the instruments and their expected realization. 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 June 30, 2024, the estimated fair value of current and non-current debt was $9.1 billion ($10.3 billion as of December 31, 2023). 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 June 30, 2024, the Company had purchase commitments of $3,899 million, which are due through 2044.

Legal Proceedings

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.

Motorola Personal Injury Lawsuits

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 21 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.

Legal Proceedings Related Accruals and Insurance Coverage

The Company 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 most current information available to it and based on its best estimate. Based on the procedures described above, the Company has an aggregate amount of $95 million accrued for potential and current legal proceedings pending as of June 30, 2024, compared to $112 million accrued at December 31, 2023 (without reduction for any related insurance reimbursements). The accruals are included in “Other current liabilities” and in “Other non-current liabilities”. As of June 30, 2024, the Company’s related balance of insurance reimbursements was $67 million (December 31, 2023: $67 million) and is included 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 June 30, 2024, 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 $93 million. Based upon our past experience with these matters, the Company would expect to receive additional insurance reimbursement of up to $70 million on certain of these claims that would partially offset the potential aggregate exposure to loss in excess of the amount accrued.

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