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Prospectuses and communications, business combinations


Filed by NXP Semiconductors N.V.

Pursuant to Rule 425

under the Securities Act of 1933 and

deemed filed pursuant to Rule 14a-12 under

the Securities Exchange Act of 1934

Subject Company: Freescale Semiconductor, Ltd. (Commission File No. 001-35184)

No Offer or Solicitation

This communication does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a solicitation of any vote or approval. This communication relates to a proposed business combination between NXP Semiconductors N.V. ( NXP ) and Freescale Semiconductor, Ltd. ( FSL ).

Important Information For Investors and Shareholders

In connection with this proposed business combination, NXP has filed with the Securities and Exchange Commission (the SEC ) a registration statement on Form F-4 that includes a definitive joint proxy statement of NXP and FSL that also constitutes a definitive prospectus of NXP. The registration statement was declared effective by the SEC on June 1, 2015. Each of NXP and FSL may file with the SEC other documents in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF NXP AND FSL ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT ARE FILED OR MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION . The definitive joint proxy statement/prospectus will be delivered to shareholders of NXP and FSL on or about June 2, 2015. Investors and security holders are able to obtain free copies of the definitive joint proxy statement/prospectus and other documents filed with the SEC by NXP and/or FSL through the internet website maintained by the SEC at . Copies of the definitive joint proxy statement/prospectus and the other documents filed with the SEC by NXP are also available free of charge on NXPs Investor Relations internet website at or by contacting NXPs Investor Relations Contact by phone at 1-408-518-5411. Copies of the definitive joint proxy statement/prospectus and the other documents filed with the SEC by FSL are available free of charge on FSLs Investor Relations internet website at or by writing to Freescale Semiconductor, Ltd., c/o Freescale Semiconductor, Inc., 6500 William Cannon Drive West, Austin, Texas 78735, Attention: Investor Relations or by phone at 1-512-895-2454.

Forward Looking Statements

Certain statements in this communication regarding the proposed transaction between NXP and FSL are forward-looking statements. The words anticipate, believe, ensure, expect, if, intend, estimate, probable, project, forecasts, predict, outlook, aim, will, could, should, would, potential, may, might, anticipate, likely, plan, positioned, strategy, and similar expressions, and the negative thereof, are intended to identify forward-looking statements. These forward-looking statements, which are subject to numerous factors, risks and uncertainties about NXP and FSL, may include projections of their respective future business, strategies, financial condition, results of operations and market data. These statements are only predictions based on current expectations and projections about future events. There are important factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected, including the risk factors set forth in the definitive joint proxy statement/prospectus, NXPs most recent Form 20-F and FSLs most recent reports on Form 10-K, Form 10-Q and other documents on file with the SEC and the factors given below:

FSLs and NXPs forward-looking statements are based on assumptions that may not prove to be accurate. Neither FSL nor NXP can guarantee future results, level of activity, performance or achievements. Moreover, neither FSL nor NXP assumes responsibility for the accuracy and completeness of any of these forward-looking statements. FSL and NXP assume no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.


The following is a transcript of an investor conference call hosted by NXP Semiconductors N.V. on October 29, 2015.



NXPI - Q3 2015 NXP Semiconductors NV Earnings Call

OCTOBER 29, 2015 / 12:00PM GMT, NXPI - Q3 2015 NXP Semiconductors NV Earnings Call


Jeff Palmer NXP Semiconductors N.V. - VP of IR

Rick Clemmer NXP Semiconductors N.V. - President and CEO

Peter Kelly NXP Semiconductors N.V. - CFO


John Pitzer Credit Suisse - Analyst

Ross Seymore Deutsche Bank - Analyst

Blayne Curtis Barclays Capital - Analyst

William Stein SunTrust Robinson Humphrey - Analyst

Chris Caso Susquehanna Financial Group - Analyst

Stacy Rasgon Sanford C. Bernstein & Co. - Analyst

Ambrish Srivastava BMO Capital Markets - Analyst



Good day, ladies and gentlemen, and welcome to the third-quarter 2015 NXP Semiconductors earnings conference call. My name is Candace and Im your operator for today. As a reminder, this call is being recorded for replay purposes. Now I would like to hand it over to Mr. Jeff Palmer, Vice President of Investor Relations. Please proceed, sir.

Jeff Palmer - NXP Semiconductors N.V. - VP of IR

Thank you, Candace. And good morning, everyone. Welcome to the NXP Semiconductors third-quarter 2015 earnings call. With me on the call today is Rick Clemmer, NXPs President and CEO, and Peter Kelly, NXPs CFO.

If you have not obtained a copy of our third-quarter 2015 earnings release, it can be found on our Company website under the investor relations section at Additionally, we have posted on our investor relations website a supplemental earnings summary presentation and a document of our historical financials to assist you in your modeling efforts. This call is being recorded and will be available for replay from our corporate website.

Our call today will include forward-looking statements and involve risks and uncertainties that could cause NXPs results to differ materially from managements expectations. These risk and uncertainties include but are not limited to statements regarding the macro economic impact on specific end markets in which we operate, the sale of new and existing products, and our expectations for financial results for the fourth quarter of 2015. Please be reminded that NXP undertakes no obligation to revise or update publicly any forward-looking statements. For a full disclosure on forward-looking statements, please refer to our press release.

Additionally, during our call today, we will make reference to certain non-GAAP financial measures which exclude the impact of purchase price accounting, restructuring, stock-based compensation, impairment and other charges that are driven primarily by discrete events that management does not consider to be directly related to NXPs underlying core operating performance. Pursuant to Regulation G, NXP has provided reconciliations of the non-GAAP financial measures to the most directly comparably GAAP measures in our third-quarter 2015 earnings press release, which will be furnished to the SEC on Form 6-K and is available on NXPs website in the investor relations section at

I would now like to turn the call over to Rick.


OCTOBER 29, 2015 / 12:00PM GMT, NXPI - Q3 2015 NXP Semiconductors NV Earnings Call

Rick Clemmer - NXP Semiconductors N.V. - President and CEO

Thanks, Jeff. And thank each of you for joining us on our earnings call today.

Our profitability in third quarter was very strong, with non-GAAP operating margin of nearly 30% and we delivered total revenues of $1.52 billion. Revenue was approximately flat versus the same period in the prior year and increased about 1% sequentially from the prior quarter, and disappointingly below the lower end of our guidance. In spite of weaker revenue trends, non-GAAP diluted earnings per share were $1.57, above the high end of guidance, as a result of better gross margin and expense control resulting in improved profit fall-through.

As we noted on our last earnings call, we were seeing weakened demand from customers given their concerns with the uncertain economic environment. This trend accelerated from late August onwards across multiple end markets. This has resulted in lower-than-planned sell-through and an increase of channel inventory. As a result, our guidance for the fourth quarter reflects a much more reduced view of sales for the quarter.

Before I turn to the details of our quarterly performance, I would like to highlight that we are only providing limited guidance this quarter due to the expected merger close with Freescale. Our view is that when we actually report fourth quarter results, certain line items will materially change. This includes, but is not limited to the overall interest costs on our debt and the fully diluted share count at the end of the fourth quarter. As this approach to guidance it different than past periods, I will personally include the revenue guidance expectations for the fourth quarter later in my remarks.

Turning to our segment performance, HPMS segment revenue was $1.16 billion, up about 2% both on a year basis and a sequential basis. This was slightly weaker than our original expectations. We do not believe that weve lost any market share or key designs; rather, we believe our customers are taking a much more restrained approach to end demand. Clearly the growth of our customers expected and communicated to us early in the year has been significantly reduced.

Moving on to the end market details of the quarter, within automotive, revenue was $308 million and in line with our expectations. During the quarter revenue grew about 7% from the same period a year ago, and, while down 1% sequentially, we did experience better-than-planned for keyless entry and invehicle networking products. But the sale of entertainment products was weaker than expected, though still strong on a year-over-year basis.

We see the fourth quarter as being negatively impacted by the continued falloff in demand for the entertainment products within the automotive aftermarket segment, both in Japan and China. Normally we would have expected a seasonal uptick in demand within the auto entertainment area. As a result of the weaker demand, channel inventories have grown and we are lowering our expectations until we see substantially improved sell through.

Clearly in the second half demand for automotive products have been impacted by the fact that global auto unit production for the full year has been reduced from what had been anticipated earlier in the year, and we believe will settle in at about 1% unit growth versus the original 3% expectation as we entered the year. As we look to the fourth quarter, our expectation is for sales to be down in the high single to low double-digit range.

In secure connected devices, revenue was $317 million, up 5% from the same period in the prior year and up 15% sequentially. This was below our expectations driven by lower-than-anticipated sales of broad-based MCUs in the market in China.

Over the short term our growth is connected device revenue will likely be below our longer term growth target due to a number of factors. First, the mobile transaction market continues to develop at a slower-than-expected pace, though our sales in the area has grown about 30% year over year. We do not expect significant new customer acceleration until we see the China handset OEMs add more transaction solutions to their platforms.

There are encouraging signs and our engagement level is very high, especially due to our eco system knowledge and our ability to enable transit solutions in multiple large cities in China. However, growth related to these engagements will likely not materialize until sometime in 2016.

Secondly, we have a number of new general purpose MCU products where we are seeing good design win traction, especially in China, but the transition to revenue contribution is happening at a slower-than-originally-expected rate. Lastly, our mobile audio product growth is expected to slow as we have seen several of the Chinese handset EOMs reduce volumes while others have postponed the release of new handset platforms using our product due to the uncertain economic environment. Taken together, we expect secure, connected devices revenue in the fourth quarter to be down in the high single to low double-digit range.

In the secure interface and power group, revenue was $270 million, down 9% from the same period in the prior year and down 11% sequentially. This was below our expectations, primarily as a result of the weak demand in the base station market and to a lesser extent the continued weakness in power lighting.

Looking forward, we believe RF power business will continue to struggle in the very short term as new base station buildouts continue to be delayed, particularly in China. Although we believe it could be an overcorrection as it was with the significant requested upsides last year, which could again result in shortages at some point in the coming quarters.


OCTOBER 29, 2015 / 12:00PM GMT, NXPI - Q3 2015 NXP Semiconductors NV Earnings Call

Within our high speed interface business, we also expect to see significantly moderate in the fourth quarter as certain mobile customers reset run rates and rationalize inventory throughout their contract manufacturing supply chain, an unexpected change and a clear disappointment. Taking these factors together, we believe secure interface and power group revenue will be down in the high 20%s to low 30% range in fourth quarter.

Revenue in secure identification solutions was $269 million, up 7% from the same period in the prior year and up about 5% sequentially, in line with our expectations. During the quarter, we saw demand for bank card products above our original expectations, primarily for dual interface products in China. Sales of mobility and transit products increased sequentially, though slightly below planned.

We experienced a very modest ramp of new eGov programs but at a lower level than originally expected. The challenge we are facing in the eGov market is delayed tender awards as the market continues to be exceptionally lumpy and influenced by macro and economic conditions.

We also do not see a significant positive impact on our banking business from the EMV upgrade cycle in the US. Demand continues to be predominantly for contact solutions currently, but we have a multiple engagement for dual interface programs which should help growth in 2016. Looking to the fourth quarter, we expect SIS revenue to be down in the low double-digit to mid-teens range, primarily due to the expected seasonal decline in banking revenue and lower-than-expected sales in eGov and transit products.

Finally, turning to the standard product segment, revenue was $325 million, down 2% compared to the year-ago period and up 1% versus the prior quarter. We have always said our standard products business was the best litmus test of the overall health of the end markets. We are seeing trends to support this view with sell-through at our Asian distributors particularly weak.

As with our auto business, we will reduce our shipping to distributors during the fourth quarter until the view of end demand becomes clearer. Consequentially, looking into the fourth quarter, we expect standard product revenue to be down in the low double-digit to mid-teens range.

Taken together, this leads us to believe total NXP revenue in the fourth quarter will be down in the mid-teens range, inclusive of about $25 million of sales in the corporate and other segment. Peter will discuss expectations for margin and operating expenses in a few moments.

Turning to our distribution channel performance, we are seeing the biggest disruption in sell through. Total sales in distribution were up 8% to support expected sales. However, reflecting the reduced demand environment, we actually saw sales out of distribution channel down 5%.

The total months of inventory in the distribution channel were three months at the high end of our long-term target. Absolute dollars of inventory in the channel increased 25% on a sequential basis.

In summary, our Q3 results were good from a profitability perspective, but clearly a disappointment in terms of delivering revenue growth. However, even comprehending this, our HPMS business growth year to date is 12% versus the same period in 2014. The current demand environment in our target markets has clearly deteriorated and will continue to pose short-term challenges. Our guidance is a reflection of this uncertainty.

We believe we continue to have market-leading product offerings and our engagements with customers continue to be robust. We view the current environment more as a pause and would anticipate demand to improve in the coming quarters.

Notwithstanding the current business trends, we continue to be very positive on the intermediate and long-term benefits of the merger between NXP and Freescale, both from a financial, customer and product solution perspective. As you know, the new Company will have a combined revenue base of over $10 billion and will be the fourth largest non-memory semiconductor supplier...