Supplemental Guarantor Condensed Consolidating Financial Statements | 3 Months Ended |
Apr. 03, 2015 |
Disclosure Supplemental Guarantor Condensed Consolidating Financial Statements Additional Information [Abstract] | |
Supplemental Guarantor Condensed Consolidating Financial Statements | Supplemental Guarantor Condensed Consolidating Financial Statements |
Pursuant to the terms of our acquisition by a consortium of private equity funds (“Sponsors”) in a transaction referred to as the “Merger” in December 2006, Freescale Inc. continues as a wholly-owned indirect subsidiary of Freescale Ltd. The reporting entity subsequent to the Merger is Freescale Ltd. |
As a result of the Merger and subsequent debt redemption and refinancing transactions, we had $1,862 million aggregate principal amount of Senior Notes outstanding as of April 3, 2015, as further discussed in Note 4, “Debt.” The senior secured notes are jointly and severally guaranteed on a secured, senior basis, and the senior unsecured notes are jointly and severally guaranteed on an unsecured, senior basis, and in each case, are subject to certain exceptions, by Freescale Ltd., its wholly owned direct and indirect subsidiaries created in connection with the Merger, and SigmaTel, LLC (together, the “Guarantors”). Each Guarantor fully and unconditionally guarantees, jointly and severally with the other Guarantors, as a primary obligor and not merely as a surety, the due and punctual payment and performance of the obligations. As of April 3, 2015, other than SigmaTel, LLC, none of Freescale Inc.’s domestic or foreign subsidiaries (“Non-Guarantors”) guarantee the Senior Notes or Credit Facility. In the future, other subsidiaries may be required to guarantee all or a portion of the Senior Notes, if and to the extent they guarantee the Credit Facility. (The relationship between the Company and the parent companies is defined and discussed in Note 1, “Basis of Presentation and Principles of Consolidation,” to our consolidated financial statements in the Annual Report.) |
The following tables present our results of operations, financial position and cash flows of Freescale Ltd., the Guarantors, Freescale Inc., the Non-Guarantors and eliminations for the three months ended April 3, 2015 and April 4, 2014 and as of April 3, 2015 and December 31, 2014, to arrive at the information on a consolidated basis: |
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Supplemental Condensed Consolidating Statement of Operations |
For the Three Months Ended April 3, 2015 |
(in millions) | Freescale Ltd. | | Guarantors | | Freescale Inc. | | Non-Guarantors | | Eliminations | | Consolidated |
Net sales | $ | — | | | $ | — | | | $ | 1,487 | | | $ | 1,534 | | | $ | (1,852 | ) | | $ | 1,169 | |
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Cost of sales | — | | | — | | | 1,033 | | | 1,435 | | | (1,852 | ) | | 616 | |
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Gross margin | — | | | — | | | 454 | | | 99 | | | — | | | 553 | |
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Research and development | — | | | — | | | 148 | | | 74 | | | — | | | 222 | |
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Selling, general and administrative | 2 | | | — | | | 158 | | | 55 | | | (94 | ) | | 121 | |
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Amortization expense for acquired intangible assets | — | | | — | | | 5 | | | — | | | — | | | 5 | |
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Reorganization of business, merger expenses and other | — | | | — | | | 16 | | | 10 | | | — | | | 26 | |
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Operating (loss) earnings | (2 | ) | | — | | | 127 | | | (40 | ) | | 94 | | | 179 | |
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Loss on extinguishment or modification of long-term debt | — | | | — | | | (21 | ) | | — | | | — | | | (21 | ) |
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Other income (expense), net | 72 | | | 72 | | | (16 | ) | | 102 | | | (308 | ) | | (78 | ) |
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Earnings before income taxes | 70 | | | 72 | | | 90 | | | 62 | | | (214 | ) | | 80 | |
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Income tax benefit (expense) | — | | | — | | | 15 | | | (5 | ) | | — | | | 10 | |
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Net earnings | $ | 70 | | | $ | 72 | | | $ | 75 | | | $ | 67 | | | $ | (214 | ) | | $ | 70 | |
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Supplemental Condensed Consolidating Statement of Comprehensive Earnings |
For the Three Months Ended April 3, 2015 |
(in millions) | Freescale Ltd. | | Guarantors | | Freescale Inc. | | Non-Guarantors | | Eliminations | | Consolidated |
Net earnings | $ | 70 | | | $ | 72 | | | $ | 75 | | | $ | 67 | | | $ | (214 | ) | | $ | 70 | |
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Other comprehensive (loss) earnings, net of tax: | | | | | | | | | | | |
Derivative instruments adjustments: | | | | | | | | | | | |
Unrealized losses arising during the period | — | | | — | | | (8 | ) | | — | | | — | | | (8 | ) |
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Reclassification adjustment for items in net earnings | — | | | — | | | 3 | | | — | | | — | | | 3 | |
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Post-retirement adjustments: | | | | | | | | | | | |
Amortization of actuarial gains in net earnings | — | | | — | | | — | | | 1 | | | — | | | 1 | |
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Other comprehensive (loss) earnings | — | | | — | | | (5 | ) | | 1 | | | — | | | (4 | ) |
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Comprehensive earnings | $ | 70 | | | $ | 72 | | | $ | 70 | | | $ | 68 | | | $ | (214 | ) | | $ | 66 | |
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Supplemental Condensed Consolidating Statement of Operations |
For the Three Months Ended April 4, 2014 |
(in millions) | Freescale Ltd. | | Guarantors | | Freescale Inc. | | Non-Guarantors | | Eliminations | | Consolidated |
Net sales | $ | — | | | $ | — | | | $ | 1,396 | | | $ | 1,505 | | | $ | (1,774 | ) | | $ | 1,127 | |
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Cost of sales | — | | | — | | | 1,030 | | | 1,366 | | | (1,774 | ) | | 622 | |
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Gross margin | — | | | — | | | 366 | | | 139 | | | — | | | 505 | |
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Research and development | — | | | — | | | 135 | | | 75 | | | — | | | 210 | |
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Selling, general and administrative | 2 | | | — | | | 166 | | | 58 | | | (100 | ) | | 126 | |
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Amortization expense for acquired intangible assets | — | | | — | | | 3 | | | — | | | — | | | 3 | |
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Reorganization of business, merger expenses and other | — | | | — | | | 1 | | | 10 | | | — | | | 11 | |
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Operating (loss) earnings | (2 | ) | | — | | | 61 | | | (4 | ) | | 100 | | | 155 | |
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Loss on extinguishment or modification of long-term debt | — | | | — | | | (59 | ) | | — | | | — | | | (59 | ) |
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Other (expense) income, net | (21 | ) | | (21 | ) | | (19 | ) | | 101 | | | (143 | ) | | (103 | ) |
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(Loss) earnings before income taxes | (23 | ) | | (21 | ) | | (17 | ) | | 97 | | | (43 | ) | | (7 | ) |
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Income tax expense | — | | | — | | | 4 | | | 12 | | | — | | | 16 | |
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Net (loss) earnings | $ | (23 | ) | | $ | (21 | ) | | $ | (21 | ) | | $ | 85 | | | $ | (43 | ) | | $ | (23 | ) |
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Supplemental Condensed Consolidating Statement of Comprehensive Earnings (Loss) |
For the Three Months Ended April 4, 2014 |
(in millions) | Freescale Ltd. | | Guarantors | | Freescale Inc. | | Non-Guarantors | | Eliminations | | Consolidated |
Net (loss) earnings | $ | (23 | ) | | $ | (21 | ) | | $ | (21 | ) | | $ | 85 | | | $ | (43 | ) | | $ | (23 | ) |
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Other comprehensive earnings, net of tax: | | | | | | | | | | | |
Derivative instrument adjustments: | | | | | | | | | | | |
Unrealized gains arising during the period | — | | | — | | | 3 | | | — | | | — | | | 3 | |
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Reclassification adjustment for items in net loss | — | | | — | | | 1 | | | — | | | — | | | 1 | |
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Other comprehensive earnings | — | | | — | | | 4 | | | — | | | — | | | 4 | |
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Comprehensive (loss) earnings | $ | (23 | ) | | $ | (21 | ) | | $ | (17 | ) | | $ | 85 | | | $ | (43 | ) | | $ | (19 | ) |
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Supplemental Condensed Consolidating Balance Sheet |
3-Apr-15 |
(in millions) | Freescale Ltd. | | Guarantors | | Freescale Inc. | | Non-Guarantors | | Eliminations | | Consolidated |
Assets | | | | | | | | | | | |
Cash and cash equivalents | $ | — | | | $ | — | | | $ | 53 | | | $ | 448 | | | $ | — | | | $ | 501 | |
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Inter-company receivable | 230 | | | — | | | 532 | | | 468 | | | (1,230 | ) | | — | |
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Accounts receivable, net | — | | | — | | | 137 | | | 422 | | | — | | | 559 | |
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Inventory, net | — | | | — | | | 318 | | | 431 | | | — | | | 749 | |
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Other current assets | — | | | — | | | 109 | | | 65 | | | — | | | 174 | |
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Total current assets | 230 | | | — | | | 1,149 | | | 1,834 | | | (1,230 | ) | | 1,983 | |
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Property, plant and equipment, net | — | | | — | | | 352 | | | 406 | | | — | | | 758 | |
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Investment in affiliates | (3,636 | ) | | (3,414 | ) | | 1,406 | | | — | | | 5,644 | | | — | |
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Intangible assets, net | — | | | — | | | 55 | | | — | | | — | | | 55 | |
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Inter-company note receivable | — | | | 124 | | | 1 | | | 390 | | | (515 | ) | | — | |
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Other assets, net | — | | | — | | | 139 | | | 161 | | | — | | | 300 | |
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Total assets | $ | (3,406 | ) | | $ | (3,290 | ) | | $ | 3,102 | | | $ | 2,791 | | | $ | 3,899 | | | $ | 3,096 | |
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Liabilities and shareholders’ (deficit) equity | | | | | | | | | | | |
Current portion of long-term debt and capital lease obligations | $ | — | | | $ | — | | | $ | 35 | | | $ | — | | | $ | — | | | $ | 35 | |
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Inter-company payable | — | | | — | | | 460 | | | 770 | | | (1,230 | ) | | — | |
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Accounts payable | — | | | — | | | 248 | | | 177 | | | — | | | 425 | |
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Accrued liabilities and other | 5 | | | — | | | 224 | | | 120 | | | — | | | 349 | |
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Total current liabilities | 5 | | | — | | | 967 | | | 1,067 | | | (1,230 | ) | | 809 | |
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Long-term debt | — | | | — | | | 5,277 | | | — | | | — | | | 5,277 | |
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Inter-company note payable | 43 | | | 346 | | | — | | | 126 | | | (515 | ) | | — | |
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Other liabilities | — | | | — | | | 272 | | | 192 | | | — | | | 464 | |
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Total liabilities | 48 | | | 346 | | | 6,516 | | | 1,385 | | | (1,745 | ) | | 6,550 | |
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Total shareholders’ (deficit) equity | (3,454 | ) | | (3,636 | ) | | (3,414 | ) | | 1,406 | | | 5,644 | | | (3,454 | ) |
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Total liabilities and shareholders’ (deficit) equity | $ | (3,406 | ) | | $ | (3,290 | ) | | $ | 3,102 | | | $ | 2,791 | | | $ | 3,899 | | | $ | 3,096 | |
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Supplemental Condensed Consolidating Balance Sheet |
31-Dec-14 |
(in millions) | Freescale Ltd. | | Guarantors | | Freescale Inc. | | Non-Guarantors | | Eliminations | | Consolidated |
Assets | | | | | | | | | | | |
Cash and cash equivalents | $ | 4 | | | $ | — | | | $ | 181 | | | $ | 511 | | | $ | — | | | $ | 696 | |
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Inter-company receivable | 161 | | | — | | | 509 | | | 472 | | | (1,142 | ) | | — | |
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Accounts receivable, net | — | | | — | | | 130 | | | 432 | | | — | | | 562 | |
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Inventory, net | — | | | — | | | 335 | | | 410 | | | — | | | 745 | |
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Other current assets | — | | | — | | | 105 | | | 61 | | | — | | | 166 | |
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Total current assets | 165 | | | — | | | 1,260 | | | 1,886 | | | (1,142 | ) | | 2,169 | |
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Property, plant and equipment, net | — | | | — | | | 349 | | | 401 | | | — | | | 750 | |
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Investment in affiliates | (3,710 | ) | | (3,710 | ) | | 1,350 | | | — | | | 6,070 | | | — | |
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Intangible assets, net | — | | | — | | | 51 | | | 8 | | | — | | | 59 | |
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Inter-company note receivable | — | | | 123 | | | 1 | | | 166 | | | (290 | ) | | — | |
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Other assets, net | 7 | | | — | | | 131 | | | 159 | | | — | | | 297 | |
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Total assets | $ | (3,538 | ) | | $ | (3,587 | ) | | $ | 3,142 | | | $ | 2,620 | | | $ | 4,638 | | | $ | 3,275 | |
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Liabilities and shareholders’ (deficit) equity | | | | | | | | | | | |
Current portion of long-term debt and capital lease obligations | $ | — | | | $ | — | | | $ | 35 | | | $ | — | | | $ | — | | | $ | 35 | |
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Inter-company payable | — | | | — | | | 501 | | | 641 | | | (1,142 | ) | | — | |
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Accounts payable | — | | | — | | | 251 | | | 162 | | | — | | | 413 | |
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Accrued liabilities and other | — | | | — | | | 260 | | | 137 | | | — | | | 397 | |
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Total current liabilities | — | | | — | | | 1,047 | | | 940 | | | (1,142 | ) | | 845 | |
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Long-term debt | — | | | — | | | 5,535 | | | — | | | — | | | 5,535 | |
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Inter-company note payable | 43 | | | 123 | | | — | | | 124 | | | (290 | ) | | — | |
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Other liabilities | — | | | — | | | 270 | | | 206 | | | — | | | 476 | |
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Total liabilities | 43 | | | 123 | | | 6,852 | | | 1,270 | | | (1,432 | ) | | 6,856 | |
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Total shareholders’ (deficit) equity | (3,581 | ) | | (3,710 | ) | | (3,710 | ) | | 1,350 | | | 6,070 | | | (3,581 | ) |
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Total liabilities and shareholders’ (deficit) equity | $ | (3,538 | ) | | $ | (3,587 | ) | | $ | 3,142 | | | $ | 2,620 | | | $ | 4,638 | | | $ | 3,275 | |
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Supplemental Condensed Consolidating Statement of Cash Flows |
For the Three Months Ended April 3, 2015 |
(in millions) | Freescale Ltd. | | Guarantors | | Freescale Inc. | | Non-Guarantors | | Eliminations | | Consolidated |
Cash flow (used for) provided by operating activities | $ | (3 | ) | | $ | (222 | ) | | $ | 154 | | | $ | 205 | | | $ | — | | | $ | 134 | |
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Cash flows from investing activities: | | | | | | | | | | | |
Purchases of property, plant and equipment | — | | | — | | | (22 | ) | | (28 | ) | | — | | | (50 | ) |
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Acquisitions and strategic investment activity | — | | | — | | | (10 | ) | | — | | | — | | | (10 | ) |
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Payments for purchased licenses and other assets | — | | | — | | | (8 | ) | | (7 | ) | | — | | | (15 | ) |
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Inter-company loans and capital transactions | (20 | ) | | (21 | ) | | — | | | (223 | ) | | 264 | | | — | |
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Cash flow used for investing activities | (20 | ) | | (21 | ) | | (40 | ) | | (258 | ) | | 264 | | | (75 | ) |
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Cash flows from financing activities: | | | | | | | | | | | |
Retirements of and payments for long-term debt and capital lease obligations | — | | | — | | | (277 | ) | | — | | | — | | | (277 | ) |
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Proceeds from stock option exercises and ESPP share purchases | 24 | | | — | | | — | | | — | | | — | | | 24 | |
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Excess tax benefits from share-based compensation plans | | | | — | | | 15 | | | 2 | | | — | | | 17 | |
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Purchases of treasury shares | (5 | ) | | | | | | | | | | | | | | (5 | ) |
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Inter-company loans, dividends and capital transactions | — | | | 243 | | | 20 | | | 1 | | | (264 | ) | | — | |
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Cash flow provided by (used for) financing activities | 19 | | | 243 | | | (242 | ) | | 3 | | | (264 | ) | | (241 | ) |
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Effect of exchange rate changes on cash and cash equivalents | — | | | — | | | — | | | (13 | ) | | — | | | (13 | ) |
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Net decrease in cash and cash equivalents | (4 | ) | | — | | | (128 | ) | | (63 | ) | | — | | | (195 | ) |
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Cash and cash equivalents, beginning of period | 4 | | | — | | | 181 | | | 511 | | | — | | | 696 | |
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Cash and cash equivalents, end of period | $ | — | | | $ | — | | | $ | 53 | | | $ | 448 | | | $ | — | | | $ | 501 | |
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Supplemental Condensed Consolidating Statement of Cash Flows |
For the Three Months Ended April 4, 2014 |
(in millions) | Freescale Ltd. | | Guarantors | | Freescale Inc. | | Non-Guarantors | | Eliminations | | Consolidated |
Cash flow provided by (used for) operating activities | $ | 12 | | | $ | — | | | $ | (73 | ) | | $ | 87 | | | $ | — | | | $ | 26 | |
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Cash flows from investing activities: | | | | | | | | | | | |
Purchases of property, plant and equipment | — | | | — | | | (26 | ) | | (30 | ) | | — | | | (56 | ) |
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Acquisitions and strategic investment activity | — | | | — | | | 1 | | | — | | | — | | | 1 | |
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Payments for purchased licenses and other assets | — | | | — | | | (10 | ) | | (10 | ) | | — | | | (20 | ) |
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Inter-company loans and capital transactions | (750 | ) | | (751 | ) | | — | | | (1 | ) | | 1,502 | | | — | |
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Cash flow used for investing activities | (750 | ) | | (751 | ) | | (35 | ) | | (41 | ) | | 1,502 | | | (75 | ) |
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Cash flows from financing activities: | | | | | | | | | | | |
Retirements of and payments for long-term debt and capital lease obligations | — | | | — | | | (1,324 | ) | | — | | | — | | | (1,324 | ) |
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Debt issuance proceeds, net of debt issuance costs | — | | | — | | | 590 | | | — | | | — | | | 590 | |
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Proceeds from equity offering, net of offering costs | 717 | | | — | | | — | | | — | | | — | | | 717 | |
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Excess tax benefits from share-based compensation plans | — | | | — | | | 4 | | | — | | | — | | | 4 | |
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Proceeds from stock option exercises and ESPP share purchases | 23 | | | — | | | — | | | — | | | — | | | 23 | |
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Inter-company loans, dividends and capital transactions | — | | | 751 | | | 750 | | | 1 | | | (1,502 | ) | | — | |
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Cash flow provided by financing activities | 740 | | | 751 | | | 20 | | | 1 | | | (1,502 | ) | | 10 | |
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Effect of exchange rate changes on cash and cash equivalents | — | | | — | | | — | | | 1 | | | — | | | 1 | |
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Net increase (decrease) in cash and cash equivalents | 2 | | | — | | | (88 | ) | | 48 | | | — | | | (38 | ) |
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Cash and cash equivalents, beginning of period | 1 | | | — | | | 235 | | | 511 | | | — | | | 747 | |
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Cash and cash equivalents, end of period | $ | 3 | | | $ | — | | | $ | 147 | | | $ | 559 | | | $ | — | | | $ | 709 | |
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