STMICROELECTRONICS N.V. 
By PARIS, Jan. 26 /PRNewswire-FirstCall/ -- STMicroelectronics (NYSE: STM) reported financial results for the 2009 fourth quarter and full year ended December 31, 2009.
President and CEO Carlo Bozotti commented, "ST's fourth quarter financial results reflect a positive finish to a very difficult year for ST, the semiconductor industry and the global economy.
"Our fourth quarter net revenues increased 13.6% sequentially, above our outlook range and our gross margin came in at 37%, above the midpoint of our outlook range. Excluding restructuring charges, ST returned to an operating income of $90 million for the quarter.*
"The Company's stronger than forecasted quarterly sequential revenue performance was thanks to growth in all regions and market segments, with all segments, except Telecom, posting double-digit growth.
"Despite the challenging economic environment, ST made significant progress over the course of 2009 by successfully delivering on key actions announced earlier in the year. First, we protected and then enhanced our cash position, improving our net financial position by $965 million to end the year with a net cash position of $420 million.* Second, we made excellent progress in lowering our cost base with a $1 billion savings plan to be completed by about mid-2010. As a result, we improved our financial performance having generated, as anticipated, some points of operating margin and net operating cash flow equal to 8.6% of sales despite an unfavorable currency environment.*
"2009 has been a year of severe losses for ST but we are encouraged by the progress we made throughout the year. 2010 will be a year of great opportunities for ST. Our efforts to strengthen our product portfolio will allow us to grow organically and to participate in new markets and the completion of our major restructuring program will continue to substantially improve our cost structure and competitiveness."
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((*) )Net operating cash flow, net financial position and operating income excluding restructuring charges are non-U.S. GAAP measures. Please refer to Attachment A for additional information explaining why the Company believes these measures are important and for a reconciliation to U.S. GAAP.
Fourth Quarter Review
ST's net revenues for the fourth quarter of 2009 total $2,583 million and include sales recorded by ST-Ericsson as consolidated by ST. Net revenues increased 13.6% sequentially, reflecting an increase in demand across all of ST's served market segments, as well as in all regions, with particular strength in Japan, Greater China and the Americas. Net revenues increased in comparison to the year-ago quarter in all market segments except Consumer and Industrial, and in all regions except Japan, reflecting the broad-based recovery in the semiconductor market.
Net Revenues By Market Segment /Channel(a)
(In %) Q4 2009 Q3 2009 Q4 2008
------------------------------------------- ------- ------- -------
Market Segment / Channel:
Automotive 13% 12% 12%
Computer 14% 13% 11%
Consumer 11% 11% 14%
Industrial & Other 7% 7% 9%
Telecom 36% 41% 35%
Total OEM 81% 84% 81%
Distribution 19% 16% 19%
(a) Sales recorded by ST-Ericsson and consolidated by ST are included in
Telecom and Distribution.
On a sequential basis, all market segments posted growth, with Computer increasing by 22%, Industrial by 19%, Automotive by 19%, Consumer by 12% and Telecom by 1%. Distribution increased 35%, reflecting strong demand and improving market conditions. In comparison to the year-ago quarter, all segments increased except for Consumer and Industrial, down by 11% and 7%, respectively. Automotive was up by 23%, Telecom by 17% and Computer by 37%. Distribution increased 12% in comparison to the year-ago period reflecting the realignment of stock with demand and improved industry conditions.
Gross margin in the fourth quarter of 2009 was 37.0%, significantly higher than the 31.3% reported in the third quarter of 2009, due to higher volumes, increased fab loading and improved efficiencies. As anticipated, ST's manufacturing performance improved in the fourth quarter as the company continued to ramp towards, but has not yet reached full capacity. Gross margin in the year-ago period was 36.1%.
Combined SG&A and R&D expenses were $906 million in the fourth quarter of 2009, compared to $885 million in the prior quarter and $876 million in the year-ago quarter, which did not include the activities related to Ericsson Mobile Platforms. As anticipated, combined SG&A and R&D expenses in the fourth quarter increased reflecting a longer quarter as well as a negative currency impact but were partially offset by ongoing cost-savings. Combined operating expenses, as a percentage of sales, posted better than expected results as that ratio in the fourth quarter improved to 35.1% from 38.9% in the prior quarter.
In the fourth quarter, ST continued certain ongoing restructuring activities and headcount-reduction programs to streamline its cost structure. The Company's $1 billion savings and productivity plan, encompassing manufacturing, the rationalization of sites and capturing synergies in wireless, is about three-fourths complete at the end of the year. On December 3, 2009, ST-Ericsson expanded its restructuring plan, targeting additional annualized savings of $115 million in operating expenses and spending, along with an extensive R&D efficiency program. The targeted time of completion of this new plan is the end of 2010.
Related to the Company's cost-realignment initiatives, ST posted fourth quarter restructuring and impairment charges of $96 million, of which $61 million are related to ST-Ericsson. ST posted restructuring and impairment charges of $53 million and $91 million in the prior quarter and year-ago period, respectively.
Revenue and Operating Results by Product Segment
The following table provides a breakdown of revenues and operating results by product segment. Unused capacity charges are reflected in the segment "Others" in the respective quarters.
Operating Q4 2009 Q3 2009 Q4 2008
Segment Q4 2009 Operating Q3 2009 Operating Q4 2008 Operating
(In Million Net Income Net Income Net Income
US$) Revenues (Loss) Revenues (Loss) Revenues (Loss)
--------- -------- --------- -------- --------- -------- ---------
ACCI 997 57 852 (36) 899 18
IMS 854 90 694 27 791 101
Wireless (a) 712 (48) 704 (75) 575 (77)
Others (b)(c) 20 (105) 25 (112) 11 (181)
TOTAL 2,583 (6) 2,275 (196) 2,276 (139)
ACCI (Automotive/Consumer/Computer/Communication Infrastructure Product Groups) fourth quarter net revenues increased 17% sequentially to $997 million, mainly driven by automotive, set-top box and computer peripherals and reflected solid holiday sales and continuing improvement in industry conditions. In a significant turnaround, ACCI returned to profitability in the fourth quarter, posting operating income of $57 million, compared to a loss of $36 million in the prior quarter and a profit of $18 million in the year-ago quarter.
IMS (Industrial and Multisegment Product Sector) fourth quarter net revenues increased 23% sequentially to $854 million, driven by strong growth in microcontrollers, analog, smartcards and power discretes and reflected improved market conditions and solid growth in the multi-segment market and in distribution. IMS operating income returned to a double-digit margin, and increased significantly to $90 million in the fourth quarter, and compares to income of $27 million in the prior quarter and income of $101 million in the year-ago quarter.
Wireless net revenues in the fourth quarter increased 1% sequentially to $712 million. Net revenues were driven by continued demand in China. Wireless operating loss in the fourth quarter narrowed to $48 million benefiting from the ongoing cost restructuring plans, compared to an operating loss of $75 million in the prior quarter. Wireless operating results in the fourth quarter of 2009 exclude $61 million in restructuring charges related to ST-Ericsson, as consolidated by ST.
In the fourth quarter of 2009, ST booked $59 million of income, reflecting the net loss attributable to non-controlling interest, mainly related to the ST-Ericsson joint venture. This amount is posted below operating results in ST's Consolidated Income Statement and reflects Ericsson's 50% share in the joint venture's loss, as consolidated by ST.
For additional information on ST-Ericsson, see www.stericsson.com
In the fourth quarter of 2009, ST's loss on equity investments was $13 million including a charge of $5 million that represents ST's proportional share of the loss reported by Numonyx in its third quarter of 2009. As of December 31, 2009, Numonyx held approximately $572 million in cash on its balance sheet.
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(a) As of February 3, 2009, "Wireless" includes the portion of sales and operating results of the ST-Ericsson joint venture as consolidated in the Company's revenues and operating results, as well as other items affecting operating results related to the wireless business.
(b) Net revenues of "Others" includes revenues from sales of Subsystems, assembly services and other revenues.
(c) Operating income (loss) of "Others" includes items such as unused capacity charges, impairment, restructuring charges, and other related closure costs, start-up costs, and other unallocated expenses such as: strategic or special research and development programs, certain corporate-level operating expenses, patent claims and litigations, and the other costs that are not allocated to product groups, as well as operating earnings or losses of the Subsystems and Other Products Group. "Others" includes $13 million, $47 million and $57 million of unused capacity charges in the fourth and third quarters of 2009 and fourth quarter of 2008, respectively and $96 million, $53 million and $91 million of impairment and restructuring charges in the fourth and third quarters of 2009 and fourth quarter of 2008, respectively.
The fourth quarter of 2009 income statement includes a pre-tax non-cash loss of $68 million related to the sale of certain asset-backed securities. These securities were purchased by Credit Suisse Securities (USA) LLC without ST's authorization and were the subject of a favorable ruling by the Financial Industry Regulatory Authority issued on February 12, 2009, which ordered Credit Suisse Securities (USA) LLC to pay ST approximately $406 million plus interest against restitution of the securities. ST sold a part of the securities portfolio pursuant to correspondence from Credit Suisse Securities (USA) LLC, while the collection of the related award is still pending. As a result, the Company collected $75 million as a partial payment towards the collection of the awarded amount and posted the difference of $68 million as an Income Statement loss. Such amount comes in addition to the $245 million impairment that had been taken as of September 30, 2009 with respect to our portfolio of auction rate securities. These amounts should be recovered upon collection of the award. The Company is seeking confirmation of the award from the United States District Court of the Southern District of New York.
Income tax expense in the fourth quarter was $48 million, largely reflecting valuation allowances taken on loss carryforwards in certain jurisdictions and a year-end true-up on the final earnings distribution among jurisdictions.
ST's net loss narrowed to $70 million in the fourth quarter of 2009, or $-0.08 per share, compared to a net loss of $201 million and $366 million in the prior quarter and year-ago period, respectively. On an adjusted basis, ST reported a fourth quarter of 2009 net income, excluding impairment and restructuring and Other-Than-Temporary-Impairment (OTTI) charges and losses on financial assets attributable to parent Company's shareholders, of $36 million, or $0.04 per share.*
For the 2009 fourth quarter, the effective average exchange rate for the Company was approximately $1.43 to 1.00 euro compared to $1.38 to 1.00 euro for the 2009 third quarter and $1.40 to 1.00 euro for the 2008 fourth quarter.
Cash Flow and Balance Sheet Highlights
Net operating cash flow, excluding M&A transactions, was $221 million for the fourth quarter of 2009 compared to $100 million in the prior quarter and $161 million in the year-ago quarter*.
Capital expenditures were $190 million during the fourth quarter of 2009, compared to $98 million in the prior quarter and $206 million in the year-ago quarter. For the full year 2009, capital expenditures totaled $451 million, compared to $983 million in 2008 and were consistent with the Company's expectations and to the Company's new asset lighter model.
Inventory was $1.28 billion at quarter end, down from $1.30 billion at September 26, 2009 and $1.84 billion at December 31, 2008. Inventory turns in the fourth quarter improved to a record 5.1 turns compared to 4.8 turns sequentially and 3.1 turns in the year-ago quarter.
ST's net financial position improved significantly to a net cash position of $420 million at December 31, 2009 compared to a net debt position of $545 million at December 31, 2008*. ST's cash and cash equivalents, marketable securities (current and non-current), short-term deposits and restricted cash equaled $2.91 billion. Excluding cash and cash equivalents and marketable securities of $226 million related to ST-Ericsson, a $250 million restricted cash deposit as collateral for the Hynix-Numonyx loan and $42 million of non-current securities, the Company's liquidity totaled $2.39 billion. Total debt was $2.49 billion. On January 14, 2010, ST completed a program to repurchase about 30.6% of its 2016 convertible bonds. ST paid $314.6 million in outstanding cash to repurchase the bonds out of which $103 million was paid in the fourth quarter. Total equity was $8.36 billion, including non-controlling interest of $1.22 billion.
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((*))Adjusted earnings per share, net operating cash flow and net financial position are non-U.S. GAAP measures. For additional information please refer to Attachment A.
Mr. Bozotti said, "Our focus on strong capital management is clearly evidenced from our cash flow and balance sheet metrics. We took aggressive actions to generate cash by accelerating our cash conversion cycle, resulting in a $565 million reduction in inventory and record inventory turns above 5 times. We reduced capital expenditures to a capex-to-sales ratio of 5.3%, in line with our asset lighter strategy. We repurchased approximately 30% of our outstanding convertible bonds with no need of refinancing. And we closed the year with $2.9 billion in cash and marketable securities."
Full Year 2009 Results
Net revenues, as reported, for the full year 2009 were $8.51 billion compared to 2008 revenues of $9.84 billion, which included $299 million in Flash revenues that were deconsolidated on March 30, 2008.
Gross margin for the full year 2009 was 30.9% of net revenues, lower than the 36.2% reported in 2008, due to industry conditions that resulted in significant fab under-loading, operating inefficiencies and above normal price pressure. Unused capacity charges negatively impacted full year 2009 gross margin by approximately 4 percentage points in addition to the severe impact of an unprecedented volume discontinuity on fab operations and efficiency.
Combined SG&A and R&D expenses in 2009 were $3,524 million compared to $3,339 million in 2008, reflecting the expansion of the Company's activities through M&A and now in the ST-Ericsson joint venture owned 50% by ST, as consolidated by ST under the integral method.
Equity in earnings of joint ventures registered a net loss of $337 million in 2009, compared to $553 million in 2008, principally reflecting impairment charges related to Numonyx for both periods. In 2009, ST booked $270 million as income for losses attributable to non-controlling interests, but consolidated in ST's financial results.
Net loss, as reported, was $1,131 million in 2009, or $-1.29 per share, compared to a net loss of $786 million, or $-0.88 per share in 2008. On an adjusted basis, ST reported in 2009 a net loss, excluding impairment, restructuring and Other-Than-Temporary-Impairment (OTTI) charges and losses on financial assets attributable to parent Company's shareholders, of $627 million, or $-0.72 per share.*
In 2009, the effective average exchange rate for the Company was approximately $1.37 to 1.00 euro, compared to $1.49 to 1.00 euro for 2008. The Company estimates the strengthening of the U.S. dollar against the Euro to have had a positive impact of approximately $380 million for the full year 2009 operating results.
Full Year 2009 Revenue and Operating Results by Product Segment
The following table provides a breakdown of revenues and operating results by product segment. Unused capacity charges are reflected in the segment "Others".
In Million US$ Full Year 2009 Full Year 2008
-------------- -------------- --------------
Operating Operating
Net Income Net Income
Product Segment Revenues (Loss) Revenues (Loss)
--------------- -------- ------ -------- ------
ACCI 3,198 (91) 4,129 136
IMS 2,641 113 3,329 482
Wireless 2,585 (356) 2,030 (65)
FMG (Flash Memories Group) 0 0 299 16
Others 86 (689) 55 (767)
TOTAL 8,510 (1,023) 9,842 (198)
(*)Adjusted earnings per share is a non-U.S. GAAP measure. For additional information please refer to Attachment A.
First Quarter 2010 Business Outlook
Mr. Bozotti stated, "We started the first quarter with a solid backlog and we are working to serve our customers' demand. In-line with historical trends, we expect to register a sequential net revenue decrease between about -7% and -13% which equates to a positive 35% to 45% when compared to the year-over-year period. However, we expect a better than historical evolution in our gross margin to about 37.5%, plus or minus 1 percentage point thanks to better manufacturing loading and efficiency and an improved product mix.
"Looking forward, we believe ST is well positioned to benefit from the industry upturn because of the important work we have done in product and technology innovation. We plan to deliver the benefits of our innovation to our customers and we also expect ST-Ericsson to execute on its plan to transition to the new portfolio strategy they have devised for their next generation offering. ST's recent design-wins for digital consumer platforms, ASICs, and automotive products and our many promising offerings including 32-bit microcontrollers, MEMS, with our new families of gyroscopes and active microphones, and low-power sensors for healthcare and building automation applications support our efforts to continuously improve our product portfolio.
"In summary, we are excited about the many opportunities ahead of us. While we continue to make solid progress on reducing our cost structure, our innovative product portfolio is positioning us well to achieve sustainable profitability and cash flow generation."
This outlook is based on an assumed effective currency exchange rate of approximately $1.42 = 1.00 euro for the 2010 first quarter, which reflects an assumed exchange rate of $1.44 = 1.00 euro combined with the impact of existing hedging contracts averaging a hedged rate of about $1.41 = 1.00 euro. In addition, the first quarter will close on March 27, 2010.
Recent Corporate Developments
On December 3, 2009, ST announced changes to its global sales and marketing organization, aimed at better serving its customers and improving the overall effectiveness of its sales and marketing structure. The moves, which became effective January 1, 2010, included the consolidation of ST's regions in Asia to two regions from three: Greater China & South Asia and Japan & Korea. The Greater China and South Asia region is now led by Corporate Vice President Francois Guibert and the Japan and Korea region is led by Corporate Vice President Marco Cassis. Corporate Vice President Bob Krysiak, moving from Greater China, is now leading the Americas region.
On January 4, 2010, ST, Enel Green Power and Sharp signed an agreement for the manufacture of triple-junction thin-film photovoltaic panels in Italy. The factory, located in Catania in the existing M6 facility to be contributed by STMicroelectronics, is expected to have an initial production capacity of 160 MW per year. The plant's capacity is targeted to be gradually increased to 480 MW per annum over the next years and right from its start will represent the single most important production facility for solar panels in Italy.
On January 14, 2010, ST completed a program to repurchase a portion of its outstanding Zero Coupon Senior Convertible Bonds due 2016 ("2016 Bonds"). A total of $298,174,000 nominal value of 2016 Bonds were repurchased representing approximately 30.6% of the total amount originally issued. The Company paid $314.6 million from outstanding cash to repurchase 2016 Bonds with an accreted value of $316.0 million. The repurchased Bonds have been cancelled in accordance with their terms.
Q4 2009 Products, Technology and Design Wins
Automotive, Consumer, Computer and Communication Infrastructure (ACCI)
Product Highlights
-- In automotive electronics, ST gained a major design win from a
world-leading US car maker for a 32-bit microcontroller (MCU) based
automatic-transmission platform to be deployed across all its models.
The 32-bit Power Architecture MCU implements ST's leading-edge
proprietary embedded-Flash technology. Together with Freescale, ST also
introduced a dual-core Power Architecture MCU family designed for
functional safety applications.
-- In the powertrain arena, ST achieved a design win for a single-chip
smart-power actuator chip, manufactured in ST's proprietary BCD
technology, from a major tier-one OEM in Europe for deployment in Europe
and America. ST also gained important design wins from major tier-one
OEMs in Europe and Japan for smart-IGBT based Electronic Ignition
Drivers, satisfying the stringent requirements of space, cost, and
enhanced functionality and diagnostics. Market demand for ST's
world-leading expertise in smart power technology is increasingly being
driven by the CO(2 )reduction plans currently being executed by car
makers.
-- In car body applications, ST consolidated its leadership position in
'door zone' applications, such as controls for windows, mirrors and
side-impact airbags, with a design win from a major OEM in Europe for
the market's largest generic platform, including all variants from low-
to high-end solutions.
-- In automotive infotainment, ST gained an important design win for its
second generation of highly integrated car-radio receiver ICs from a
leading car-infotainment manufacturer in Japan, with production to start
in H2 2010. ST also achieved a key design win, for its leading-edge
multi-standard tuner DSP family, from a leading infotainment OEM in
Europe. Additionally, ST gained an important design win for its GPS
solutions for road-tolling equipment in Germany from a leading European
manufacturer.
-- In home entertainment applications, ST announced its adoption of the
ARM® Cortex(TM)-A9 MPCore(TM) processor, in addition to the Mali®-400
graphics processor, for its upcoming set-top-box and digital TV
System-on-Chip (SoC) ICs. The Cortex-A9 processor will provide the
scalable high performance required to enable the high-bandwidth
broadband and broadcast content being streamed into homes, while also
enabling ST to leverage its expertise in mobile markets, in close
cooperation with ST-Ericsson, to deliver world-class power efficiency.
-- In set-top-box (STB) applications, ST has several projects in
development with key players, based on the STi7105 HD decoder running
middleware from NDS, allowing ST to gain an important piece of this
market. ST is also winning new designs on the STi7105, including, most
recently, a key broadcaster in France. ST also announced that its highly
integrated STi5197 cable STB decoder is now shipping in high volume to
leading STB makers in China.
-- Also in STBs, ST's satellite front-end STB demodulator ICs are now being
used by a leading US broadcaster in outdoor dish units, which gives it
the potential to be installed in every new subscriber's home in the US.
ST also achieved EuroDOCSIS 2.0 certification for its production-ready
reference design for feature-rich cable STBs using the STi7141 SoC.
-- In digital TV chips, ST launched a new generation of high-performance,
full high-definition (HD) H.264/MPEG SoCs with world-class Faroudja(TM)
video/audio enhancements, delivering full high-definition processing and
accelerated Internet-TV support for the next-generation of integrated
broadcast and broadband digital TVs. The new 'Freeman' SoCs will enable
compelling services and new business models for premium content, and
will deliver a rich and intuitive user experience. Additionally, ST
gained a design win for an advanced H.264/MPEG decoder to increase its
penetration of the emerging ISDB-T DTV market in Latin America.
-- In multimedia display chips, ST announced two new families of
Faroudja-based LCD controller SoCs with advanced color processing and
DisplayPort and HDMI receivers to support full-HD sources, such as
Blu-ray. The DisplayPort-based STDP8028 SoC is being designed into
multi-function monitors and public displays by leading OEMs around the
world, with two tier-one manufacturers starting mass production in the
quarter. In addition, two tier-one makers also started production with
the new STDP6000 SoC.
-- Also in displays, ST, in collaboration with LG Display, proposed the iDP
(Internal DisplayPort) interface standard, which is designed to replace
the current LVDS (Low Voltage Differential Signaling) standard, to the
Video Electronics Standards Association (VESA) TV Panel Task Group. This
new standard is being driven by the requirements for richer graphics, 3D
video and enhanced picture quality.
-- In consumer audio, ST announced its next-generation STA370BWS
SoundTerminal(TM) chip, which delivers increased performance at a highly
competitive price. The new chip employs ST's leading-edge Full Flexible
Amplifier (FFX(TM)) technology to deliver high-quality stereo audio at
10W and above, in various consumer applications, including the latest
ultra-thin LED-backlit Flat TVs. ST's SoundTerminal family is currently
enjoying success with strong demand and increased market share at
leading OEMs in China, Taiwan, Korea and Japan.
-- In imaging, ST unveiled details of its roadmap for 5M-pixel CMOS image
sensors in the standard quarter-inch optical format commonly used in
camera-phone handsets. ST's latest leading-edge sensors offer a choice
of features creating the richest portfolio of sensors at the 5-megapixel
resolution.
-- In communications infrastructure applications, a device in ST's
SPEAr(TM) family of customizable processors was selected and qualified
by a major telecoms company in China, making it ready for implementation
in new designs from the manufacturer.
Industrial and Multisegment Sector (IMS) Product Highlights
-- In MEMS (Micro Electro-Mechanical Systems), ST launched several new
families of motion sensors for multiple consumer and portable
applications, including: a broad range of thirteen new single- and
two-axis gyroscopes; a high-performance single-package three-axis analog
gyroscope; a motion-sensor combo module integrating a three-axis digital
accelerometer with a two-axis analog gyroscope; and a range of
three-axis accelerometers with digital output that can detect
accelerations up to 24g. ST also introduced a high-accuracy sensor for
smart applications in vehicles such as adaptive front lights and
advanced anti-theft systems.
-- ST continued to gain numerous design wins for motion sensors in various
applications including: two digital camera manufacturers, one in Korea
and another in Japan; an important mobile phone maker in Korea; several
netbook and laptop manufacturers for free-fall protection; and a
customer in Japan for next-generation gaming platforms.
-- Also in MEMS, ST expanded its portfolio with next-generation acoustic
MEMS microphones that use technology from OMRON to significantly improve
sound quality, reliability, and cost-effectiveness for existing and
emerging audio applications in mobile phones, wireless devices and games
that respond to voice inputs.
-- In remote energy-metering applications, ST announced that it has been
chosen by Enel, Italy's largest power company, to provide the
semiconductor components for new electronic power meters destined for
distribution in Spain. The power meters are key elements of the new
remote management solution to be installed by Endesa, the largest
electricity supplier in Spain. ST also achieved a design win for a
powerline-modem based smart-metering project in Africa from a leading
meter manufacturer in Egypt.
-- In analog and mixed-signal ICs, ST introduced the first single-chip
audio subsystem IC to include 3D sound enhancement for improved stereo
effects in equipment such as notebook PCs, mobile internet devices and
gaming consoles. Also in the audio field, ST gained a key design win
from a world-leading mobile phone maker for a headset audio amplifier.
ST also announced a smart-reset chip that allows mobile products
experiencing 'system freeze' to be restarted safely without removing the
battery or pushing the recessed reset button. Additionally, ST attained
a number of design wins for temperature sensor ICs in solid-state disks
drives, e-Books and other portable applications.
-- In advanced analog, ST introduced a series of highly accurate LED
drivers with automatic power saving, enabling electronic signage such as
road signs, advertising, stadium displays, battery or solar-powered
signs and similar equipment to deliver better high-resolution viewing by
ensuring consistent brightness across the viewing area.
-- In power conversion ICs, ST gained design wins for controller and
high-voltage converter chips in LED-backlit LCD TV power supplies, most
significantly with a major TV maker in Korea. ST was also chosen to
supply power management ICs for a PC graphics-card platform and gained
an important design win for the ST1S10 DC-DC converter IC with an
important STB maker in Europe. Launched approximately two years ago,
this converter IC has met with considerable success in consumer
applications with top-tier OEMs and distributors. In addition, several
designs were won for power management ICs, on recently qualified
devices, both for linear and switching regulators, in various markets
and applications including netbooks, mobile phones, printers and gaming.
-- And in power transistors, ST introduced a series of IGBTs that reduce
the environmental impact of daily-use equipment such as home appliances,
industrial machines and HVAC (Heating/Ventilating/Air Conditioning)
systems. ST also gained design wins for ignition IGBTs from several car
manufacturers in India. These IGBTs are optimized for pencil coil
systems and can help cut noxious emissions and reduce fuel consumption.
ST also achieved design wins for power MOSFETs in a range of
applications, primarily in consumer and lighting applications. Also, a
leading automotive OEM in Europe selected ST's latest STripFET(TM) VI
DeepGATE(TM) power MOSFETs for use in Antilock Braking Systems.
-- In application-specific discrete devices, ST gained an increasing number
of design wins in areas such as telecom networking and solar panels for
its power Schottky diodes in PowerFlat halogen-free packages, which
offer a slim 1.05mm profile and very low thermal resistance, ideal for
power conversion applications. ST introduced its first ultra-low Vf
power Schoktty diodes for the 80 PLUS power-supply market. In addition,
ST introduced a family for protection against 'electrical over-stress'
and 'electrical static discharge', specified to IEC 61000-4-5, which is
applicable to most telecom and industrial equipment.
-- In standard microcontrollers, ST achieved an industry first for MCUs
based on ARM Cortex-M processor cores with devices featuring 90nm
embedded Flash, leveraging ST's investment in leading-edge
embedded-Flash technology for its secure and automotive MCUs to realize
performance and cost advantages for the STM32 family.
-- In secure MCUs, ST announced its AuKey brand-protection solution, based
on ST's ST23 highly secure MCUs, to help brand owners authenticate their
products in various applications, including computer accessories,
printer consumables, gaming peripherals and disposable medical
equipment. ST also introduced a robust low-power processor chip
dedicated to managing SIM data for machine-to-machine (M2M) cellular
communications applications.
-- In smart cards, ST achieved the world's first security certification at
level EAL6+ using Common Criteria 3.1 methodology, for a secure MCU that
targets security-demanding governmental applications such as passports
and identity cards.
-- In memory ICs, ST introduced a 2-Kbit IC enabling applications for
re-usable contactless tickets for mass transit services, increasing user
convenience and operator efficiency.
Technology Highlights
-- ST announced its cooperation with Mayo Clinic on a novel platform for
the remote monitoring of patients with chronic cardiovascular disease.
The platform will provide a comprehensive and unobtrusive solution that
monitors person-specific data and physiological parameters and
influences lifestyle and treatment choices.
ST-Ericsson Highlights
-- LG Electronics selected ST-Ericsson's mobile HSPA (High Speed Packet
Access) broadband modem, M340, to power the LG GW990 mobile internet
device, which will be launched in the second half of 2010. The M340 is
part of the mobile platforms solution, together with the Intel
Moorestown solution. The M340 is a small, flexible modem solution with
low-power consumption enabling high speed internet access.
-- Nokia and ST-Ericsson announced a long-term partnership for technology
and solutions in the area of TD-SCDMA, a 3G mobile communications
standard in China. The partnership will see Nokia using ST-Ericsson as a
key supplier of chipset platforms in its Symbian-based TD-SCDMA devices
and solutions portfolio.
-- ST-Ericsson, together with Ericsson, also announced the companies
successfully achieved first mobility between LTE (Long Term Evolution)
and HSPA networks, using a multimode LTE/HSPA device powered by
ST-Ericsson's M710 platform.
-- ST-Ericsson announced its cooperation with ARM to accelerate innovation
in mobile user experience. ST-Ericsson's U8500 is the first smartphone
platform to integrate a Mali-400 graphics processing unit providing
access to a leading-edge environment for graphics developers.
All of STMicroelectronics' press releases are available at www.st.com/stonline/press/news/latest.htm. All of ST-Ericsson's press releases are available at www.stericsson.com/press/press_releases.jsp.
Faroudja, SoundTerminal, FFX, SPEAr, STripFET VI and DeepGATE are trademarks of STMicroelectronics. All other trademarks or registered trademarks are the property of their respective owners.
Use of Supplemental Non-U.S. GAAP Financial Information
This press release contains supplemental non-U.S. GAAP financial information, including adjusted operating income (loss), adjusted net earnings (loss), adjusted net earnings (loss) per share, net operating cash flow and net financial position.
Readers are cautioned that these measures are unaudited and not prepared in accordance with U.S. GAAP and should not be considered as a substitute for U.S. GAAP financial measures. In addition, such non-U.S. GAAP financial measures may not be comparable to similarly titled information by other companies.
See Attachment A of this press release for a reconciliation of the Company's non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with the Company's consolidated financial statements prepared in accordance with U.S. GAAP.
Forward-looking information
Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management's current views and assumptions, and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those in such statements due to, among other factors:
-- Significant changes in demand in the key application markets and from
key customers served by our products make it extremely difficult to
accurately forecast and plan our future business activities. In
particular following a period of significant order cancellations, we
recently experienced a strong surge in customer demand, which is
leading to capacity constraints in certain applications;
-- our ability to utilize and operate our manufacturing facilities at
sufficient levels to cover fixed operating costs in periods of reduced
customer demand as well as to ramp up production efficiently and
rapidly to respond to increased customer demand, as well as the
financial impact of obsolete or excess inventories if actual demand
differs from our expectations;
-- the impact of intellectual-property claims by our competitors or other
third parties, and our ability to obtain required licenses on reasonable
terms and conditions;
-- our ability to successfully integrate the acquisitions we pursue, in
particular the successful integration and operation of the ST-Ericsson
joint venture;
-- we hold significant non-marketable equity investments in Numonyx, our
joint venture in the flash-memory market segment, and in the ST-Ericsson
joint venture. Additionally, we are a guarantor for certain Numonyx
debts. Therefore, further declines in these market segments or the
inability of Numonyx and /or ST-Ericsson to successfully compete could
result in further significant impairment charges, restructuring charges
and gains/losses on equity investments;
-- our ability to compete in our industry since a high percentage of our
costs are fixed and are incurred in currencies other than U.S. dollars,
especially in light of the volatility in the foreign exchange markets
and more particularly in the rate of the U.S. Dollar compared to the
other major currencies which we use for our operations;
-- our ability to execute our restructuring initiatives in accordance with
our plans if unforeseen events require adjustments or delays in
implementation or require new plans;
-- our ability in an intensively competitive environment to secure customer
acceptance and to achieve our pricing expectations for high-volume
supplies of new products in whose development we have been, or are
currently, investing;
-- changes in the political, social or economic environment, including as a
result of military conflict, social unrest and/or terrorist activities,
economic turmoil, as well as natural events such as severe weather,
health risks, epidemics or earthquakes in the countries in which we, our
key customers or our suppliers, operate;
-- the outcome of ongoing litigation as well as any new litigation to which
we may become a defendant; and
-- changes in our overall tax position as a result of changes in tax laws
or the outcome of tax audits, and our ability to accurately estimate tax
credits, benefits, deductions and provisions and to realize deferred tax
assets.
Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of our business to differ materially and adversely from the forward-looking statements. Certain forward-looking statements can be identified by the use of forward-looking terminology, such as "believes," "expects," "may," "are expected to," "will," "will continue," "should," "would be," "seeks" or "anticipates" or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions. Some of these risk factors are set forth and are discussed in more detail in "Item 3. Key Information -- Risk Factors" included in our Annual Report on Form 20-F for the year ended December 31, 2008, as filed with the SEC on May 13, 2009. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this release as anticipated, believed or expected. We do not intend, and do not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.
STMicroelectronics Earnings Presentation and Conference Call
On January 27, 2010, the management of STMicroelectronics will host its annual earnings presentation in Paris at 5:00 a.m. U.S. Eastern Time / 11:00 a.m. CET, and will also conduct a conference call at 9:00 a.m. U.S. Eastern Time / 3:00 p.m. CET, to discuss its operating performance for the fourth quarter and full year of 2009
Both the earnings presentation and conference call will be available live via the Internet by accessing: http://investors.st.com. Those accessing the webcast should go to the Web site at least 15 minutes prior to the call, in order to register, download and install any necessary audio software. The webcast will be available until February 5, 2010.
About STMicroelectronics
STMicroelectronics is a global leader serving customers across the spectrum of electronics applications with innovative semiconductor solutions. ST aims to be the undisputed leader in multimedia convergence and power applications leveraging its vast array of technologies, design expertise and combination of intellectual property portfolio, strategic partnerships and manufacturing strength. Further information on ST can be found at www.st.com.
(tables attached)
(Attachment A)
STMicroelectronics
Supplemental Non-U.S. GAAP Financial Information
U. S. GAAP - Non-U.S. GAAP Reconciliation
In Million US$ Except Per Share Data
Readers are cautioned that the supplemental non-U.S. GAAP information presented in this press release is unaudited and subject to inherent limitations. Such non-U.S. GAAP information is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for U.S. GAAP measurements. Also, our supplemental non-U.S. GAAP financial information may not be comparable to similarly titled non-U.S. GAAP measures used by other companies. Further, specific limitations for individual non-U.S. GAAP measures, and the reasons for presenting non-U.S. GAAP financial information, are set forth in the paragraphs below. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.
Adjusted operating income (loss) is used by our management to help enhance an understanding of ongoing operations and to communicate the impact of the excluded items. Adjusted operating income (loss) excludes impairment, restructuring charges and other related closure costs, the impact of purchase accounting (such as in-process R&D costs and inventory step-up charges) and related tax effects.
Adjusted net earnings and earnings per share are used by our management to help enhance an understanding of ongoing operations and to communicate the impact of the excluded items. Adjusted earnings exclude impairment, restructuring charges and other related closure costs attributable to parent Company's shareholders, the impact of purchase accounting (such as in-process R&D costs and inventory step-up charges), other-than-temporary impairment (OTTI) charges on financial assets, and impairment related to equity investments, net of the relevant tax impact.
The Company believes that these non-GAAP financial measures provide useful information for investors and management because they measure the Company's capacity to generate profitability from its business operations, excluding the effect of acquisitions and expenses related to the rationalizing of its activities and sites that it does not consider to be part of its on-going operating results, thereby offering, when read in conjunction with the Company's GAAP financials, (i) the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results, (ii) the ability to better identify trends in the Company's business and perform related trend analysis, and (iii) an easier way to compare the Company's results of operations against investor and analyst financial models and valuations, which usually exclude these items.
Q4 2009
(US$ millions Operating
and cents per Income Net Earnings Corresponding
share) Gross Profit (Loss) (Loss) EPS
------- ------------ --------- ------------ -------------
U.S. GAAP 957 (6) (70) (0.08)
Impairment &
Restructuring 96 65
Realized losses
on financial assets 68
Estimated Income
Tax Effect (27)
Non-U.S GAAP 957 90 36 0.04
Q3 2009
(US$ millions Operating
and cents per Income Net Earnings Corresponding
share) Gross Profit (Loss) (Loss) EPS
------- ------------ --------- ------------ -------------
U.S. GAAP 713 (196) (201) (0.23)
Impairment &
Restructuring 53 45
Estimated Income
Tax Effect 3
Non-U.S GAAP 713 (143) (153) (0.17)
Q4 2008
(US$ millions Operating
and cents per Income Net Earnings Corresponding
share) Gross Profit (Loss) (Loss) EPS
------- ------------ --------- ------------ -------------
U.S. GAAP 822 (139) (366) (0.42)
NXP Wireless
Inventory Step-Up 31 31 31
Impairment &
Restructuring 91 91
Other-Than-Temporary-
Impairment 55
Numonyx Impairment 180
Estimated Income Tax
Effect (48)
Non-U.S GAAP 853 (17) (57) (0.06)
Net financial position: resources (debt), represents the balance between our total financial resources and our total financial debt. Our total financial resources include cash and cash equivalents, current and non-current marketable securities, short-term deposits and restricted cash, and our total financial debt include bank overdrafts, the current portion of long-term debt and long-term debt, all as represented in our consolidated balance sheet. We believe our net financial position provides useful information for investors because it gives evidence of our global position either in terms of net indebtedness or net cash by measuring our capital resources based on cash, cash equivalents and marketable securities and the total level of our financial indebtedness. Net financial position is not a U.S. GAAP measure.
Net Financial Position (in US$ December 31, September December 31,
millions) 2009 26, 2009 2008
------------------------------ ------------ --------- ------------
Cash and cash equivalents, net of
bank overdrafts 1,588 1,576 989
Marketable securities, current 1,032 955 651
Restricted cash 250 250 250
Marketable securities, non-current 42 170 242
Total financial resources 2,912 2,951 2,132
Current portion of long-term debt (176) (230) (123)
Long-term debt (2,316) (2,455) (2,554)
Total financial debt (2,492) (2,685) (2,677)
Net financial position 420 266 (545)
Net operating cash flow is defined as net cash from operating activities minus net cash used in investing activities, excluding payment for purchases of and proceeds from the sale of marketable securities (both current and non-current), short-term deposits and restricted cash. We believe net operating cash flow provides useful information for investors and management because it measures our capacity to generate cash from our operating and investing activities to sustain our operating activities. Net operating cash flow is not a U.S. GAAP measure and does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of net operating cash flow may differ from definitions used by other companies.
Net Operating Cash Flow (in US$
millions) Q4 2009 Q3 2009 Q4 2008
------------------------------- ------- ------- -------
Net cash from operating activities 449 225 390
Net cash used in investing activities (207) (311) (172)
Payment for purchases of /proceeds
from sale of current and non-
current marketable securities,
short-term deposits and restricted
cash, net 5 181 (64)
Net operating cash flow 247 95 154
Net operating cash flow (ex M&A) 221 100 161
STMicroelectronics N.V.
Consolidated Statements of Income
(in million of U.S. dollars, except per share data ($))
Three Months Ended
------------------
(Unaudited) (Audited)
----------- ---------
December, December,
31 31
2009 2008
---- ----
Net sales 2,570 2,264
Other revenues 13 12
--- ---
NET REVENUES 2,583 2,276
Cost of sales (1,626) (1,454)
------ ------
GROSS PROFIT 957 822
Selling, general and administrative (303) (304)
Research and development (603) (572)
Other income and expenses, net 39 6
Impairment, restructuring charges and other
related closure costs (96) (91)
--- ---
Total Operating Expenses (963) (961)
---- ----
OPERATING LOSS (6) (139)
Oher-than-temporary impairment charge and
realized losses on financial assets (68) (55)
Interest income, net 3 3
Loss on equity investments (13) (204)
Gain on sale of financial assets - 15
Gain on convertible debt buyback 3
--- ---
LOSS BEFORE INCOME TAXES (81) (380)
AND NONCONTROLLING INTEREST
Income tax benefit (expense) (48) 9
--- ---
LOSS BEFORE NONCONTROLLING INTEREST (129) (371)
Net loss attributable to noncontrolling
interest 59 5
--- ---
NET LOSS ATTRIBUTABLE TO PARENT COMPANY (70) (366)
=== ====
LOSS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT
COMPANY SHAREHOLDERS (0.08) (0.42)
LOSS PER SHARE (DILUTED) ATTRIBUTABLE TO
PARENT COMPANY SHAREHOLDERS (0.08) (0.42)
NUMBER OF WEIGHTED AVERAGE
SHARES USED IN CALCULATING 878.3 878.1
LOSS PER SHARE
STMicroelectronics N.V.
Consolidated Statements of Income
(in million of U.S. dollars, except per share data ($))
Twelve Months Ended
-------------------
(Unaudited) (Audited)
----------- ---------
December, December,
31 31
2009 2008
---- ----
Net sales 8,465 9,792
Other revenues 45 50
--- ---
NET REVENUES 8,510 9,842
Cost of sales (5,884) (6,282)
------ ------
GROSS PROFIT 2,626 3,560
Selling, general and administrative (1,159) (1,187)
Research and development (2,365) (2,152)
Other income and expenses, net 166 62
Impairment, restructuring charges and other
related closure costs (291) (481)
---- ----
Total Operating Expenses (3,649) (3,758)
------ ------
OPERATING LOSS (1,023) (198)
Oher-than-temporary impairment charge and
realized losses on financial assets (140) (138)
Interest income, net 9 51
Loss on equity investments (337) (553)
Gain (loss) on sale of financial assets (8) 15
Gain on conv. debt buyback 3 -
--- ---
LOSS BEFORE INCOME TAXES (1,496) (823)
AND NONCONTROLLING INTEREST
Income tax benefit 95 43
--- ---
LOSS BEFORE NONCONTROLLING INTEREST (1,401) (780)
Net loss (income) attributable to noncontrolling
interest 270 (6)
--- ---
NET LOSS ATTRIBUTABLE TO PARENT COMPANY (1,131) (786)
====== ====
LOSS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT
COMPANY SHAREHOLDERS (1.29) (0.88)
LOSS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT
COMPANY SHAREHOLDERS (1.29) (0.88)
NUMBER OF WEIGHTED AVERAGE
SHARES USED IN CALCULATING 876.9 892.0
LOSS PER SHARE
STMicroelectronics N.V.
CONSOLIDATED BALANCE SHEETS
December September December
As at 31, 26, 31,
In million of U.S. dollars 2009 2009 2008
---- ---- ----
(Unaudited) (Unaudited) (Audited)
----------- ----------- ---------
ASSETS
======
Current assets:
Cash and cash equivalents 1,588 1,576 1,009
Marketable securities 1,032 955 651
Trade accounts receivable, net 1,367 1,422 1,064
Inventories, net 1,275 1,299 1,840
Deferred tax assets 298 252 252
Assets held for sale 31 33 -
Other receivables and assets 753 1,054 685
--- ----- ---
Total current assets 6,344 6,591 5,501
Goodwill 1,071 1,082 958
Other intangible assets, net 819 851 863
Property, plant and equipment,
net 4,081 4,177 4,739
Long-term deferred tax assets 333 360 373
Equity investments 273 286 510
Restricted cash 250 250 250
Non-current marketable
securities 42 170 242
Other investments and other
non-current assets 442 435 477
--- --- ---
7,311 7,611 8,412
Total assets 13,655 14,202 13,913
