STMICROELECTRONICS N.V. 
By PARIS, Jan. 24, 2011 /PRNewswire/ -- STMicroelectronics (NYSE: STM) reported financial results for the fourth quarter and full year ended December 31, 2010.
President and CEO Carlo Bozotti commented, "ST had a very strong finish to the year. Our fourth quarter revenues came in near the top end of our range, increasing 6.6% sequentially on broad-based strength in analog, MEMS, microcontrollers and automotive applications. Our gross margin further increased to 39.9%, up 70 basis points sequentially, coming in above the midpoint of our guidance.
"ACCI and IMS again achieved record sales this quarter, accompanied by further improvements at the operating profit level, with ACCI operating margin increasing to 11.9% and IMS rising to 22.5%. In wireless, while operating losses remain very significant, ST-Ericsson has completed its restructuring and is now well on its way to complete the transition to its new product portfolio. Overall, ST's strong sales results, driven by our innovative product portfolio combined with our restructuring efforts, enabled ST to generate net earnings of $830 million for the year.
"In 2010, we were well prepared to take advantage of significantly better industry conditions with the right portfolio and we have started to turn our vision of leadership in 'Sense and Power' applications and in multimedia convergence into reality. In the last eight quarters, ST went through the most severe economic recession in 2009 and successfully capitalized on the 2010 market recovery. Throughout this timeframe we remained focused on our growth and profitability objectives. Today, our innovative products, which have leadership positions in highly successful applications, customer base and solid capital structure, make us a much stronger company."
(*) Net financial position is a non-U.S. GAAP measure. Please refer to Attachment A for additional information explaining why the Company believes this measure is important and for reconciliation to U.S. GAAP.
Fourth Quarter Review
ST's net revenues for the fourth quarter of 2010 totaled $2,833 million and included sales recorded by ST-Ericsson as consolidated by ST.
Fourth quarter net revenues increased on a year-over-year basis by 30% in Industrial and Multisegment Sector (IMS), and 15% in Automotive/Consumer/Computer/Communication Infrastructure Sector (ACCI), while Wireless, reflecting the ongoing portfolio transition at ST-Ericsson, decreased by 21%. Overall fourth quarter net revenues increased by 9.7% on a year-over-year basis, geographically led by Greater China-South Asia with sales growth of 15% and the Americas with a 14% increase.
On a year-over-year basis, all market segments, except Telecom, posted growth, with Automotive up by 27%, Industrial & Other by 18%, Consumer by 14%, and Computer by 7%. Telecom declined by 7%. Distribution increased 25%.
Sequentially, revenues grew in all regions, led by Japan-Korea, Greater China-South Asia and Americas with 10%, 8% and 7% growth, respectively.
All market segments increased on a sequential basis, except Consumer, with Automotive higher by 16%, Industrial & Other by 13%, Computer by 10%, and Telecom by 7%. Consumer decreased by 6% on weakening demand. Distribution increased sequentially by 4%.
Net Revenues By Market Segment /Channel
(a) Q4 2010 Q3 2010 Q4 2009
(In %)
Market Segment / Channel:
Automotive 15% 14% 13%
Computer 14% 13% 14%
Consumer 11% 13% 11%
Industrial & Other 8% 7% 7%
Telecom 31% 31% 36%
Total OEM 79% 78% 81%
--------- --- --- ---
Distribution 21% 22% 19%
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(a) Sales recorded by ST-Ericsson and consolidated by ST are
included in Telecom and Distribution.
Gross margin increased again in the fourth quarter of 2010 to 39.9%, 70 basis points higher than the 39.2% reported in the prior quarter, thanks to manufacturing efficiencies and product innovation. Gross margin improved significantly compared to 37.0% in the year-ago period, principally reflecting higher volumes, strong fab loading, as well as ongoing improvements from new products.
Combined SG&A and R&D expenses were $914 million in the fourth quarter of 2010 compared to $839 million and $906 million in the prior and year-ago quarters, respectively. As anticipated, combined SG&A and R&D expenses in the fourth quarter increased, reflecting a longer quarter and unfavorable seasonal effects which were partially offset by cost-realignment initiatives. Combined operating expenses, as a percentage of sales, were 32.3% vs. 31.6% in the prior quarter, and 35.1% in the year-ago quarter.
Related to the Company's cost-realignment initiatives, primarily in ST-Ericsson, ST posted fourth quarter impairment and restructuring charges of $32 million. ST posted impairment and restructuring charges of $27 million and $96 million in the prior quarter and year-ago period, respectively.
ST reported an operating profit of $213 million or 7.5% of net revenues in the fourth quarter of 2010, compared to a profit of $193 million or 7.3% in the prior quarter and a loss of $6 million in the year-ago quarter.
Revenues and Operating Results by Product Segment
The following table provides a breakdown of revenues and operating results by product segment.
Operating Q4 Q4 Q3 Q3 Q4 Q4
Segment 2010 2010 2010 2010 2009 2009
(In
Million
US$) Net Operating Net Operating Net Operating
Income Income Income
Revenues (Loss) Revenues (Loss) Revenues (Loss)
ACCI (a) 1,128 135 1,086 128 980 62
IMS (a) 1,131 254 1,012 199 871 85
Wireless
(b) 562 (136) 546 (94) 712 (48)
Others
(c)(d) 12 (40) 13 (40) 20 (105)
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TOTAL 2,833 213 2,657 193 2,583 (6)
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(a)Reflecting the transfer of a small business unit from ACCI to IMS as of January 1, 2010, the Company has reclassified prior period revenues and operating income results from ACCI to IMS.
(b) Starting February 3, 2009, "Wireless" includes the portion of sales and operating results of ST-Ericsson as consolidated in the Company's revenues and operating results, as well as other items affecting operating results related to the wireless business.
(c) Net revenues of "Others" includes revenues from sales of Subsystems, assembly services and other revenues.
(d) Operating income (loss) of "Others" includes items such as unused capacity charges, impairment, restructuring charges and other related closure costs, start-up and phase-out 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 $2 million, $0 million and $13 million of unused capacity charges in the fourth and third quarters of 2010 and fourth quarter of 2009, respectively; and $32 million, $27 million, and $96 million of impairment and restructuring charges in the fourth and third quarters of 2010 and fourth quarter of 2009, respectively.
ACCI (Automotive/Consumer/Computer/Communication Infrastructure Product Groups) fourth quarter net revenues increased 15% year-over-year to a record $1,128 million driven by strong growth in Automotive and Telecom applications. Sequentially, ACCI grew net revenues 4%, also led by robust demand in Automotive and Telecom while, as expected, Digital Consumer decreased due to weaker market conditions. ACCI operating margin improved, both sequentially and year-on-year, to 11.9%, from 11.7% and 6.3%, in the prior and year-ago quarters, respectively.
IMS (Industrial and Multisegment Product Sector) fourth quarter net revenues increased 30% year-over-year to a record $1,131 million. Revenue growth was strong in all segments and in distribution. Sequentially, IMS grew net revenues 12%, led by MEMS, microcontrollers, power and industrial products. IMS operating margin improved, both sequentially and year-on-year, to 22.5% from 19.7% and 9.8% in the prior and year-ago quarters, respectively.
Wireless net revenues in the fourth quarter increased 3% sequentially to $562 million, reflecting continued strong performance from ST-Ericsson's new 2G/EDGE platforms and initial HSPA+ modem sales offset by weakness in the TD-SCDMA market and the anticipated decrease in legacy products. Wireless operating loss, excluding $24 million of restructuring charges, in the fourth quarter was $136 million. Wireless operating loss, excluding non-controlling interest, was $64 million in the fourth quarter compared to a loss of $37 million and $11 million in the prior and year-ago periods. Sequentially, Wireless results reflect increased losses at ST-Ericsson due to anticipated seasonality and currency effects, as well as price erosion due to their ongoing legacy product transition.
ST recorded $83 million of income in the fourth quarter of 2010 compared to $60 million and $59 million in the prior and year-ago quarters, respectively, reflecting the net results 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 primarily Ericsson's 50% share in the joint venture's results, as consolidated by ST.
For additional information, including key design wins, on ST-Ericsson, see www.stericsson.com
Net Results
ST reported net income of $219 million in the fourth quarter of 2010, or $0.24 per diluted share, compared to net income of $198 million in the prior quarter and a net loss of $70 million in the year-ago period. On an adjusted basis, excluding restructuring charges and loss on the sale of Micron shares, ST reported fourth quarter 2010 net earnings of $0.27 per diluted share. In the third quarter of 2010 and fourth quarter of 2009, the Company reported on an adjusted basis a net income of $0.23 per diluted share and of $0.04 per diluted share, respectively.*
For the 2010 fourth quarter, the effective average exchange rate for the Company was approximately $1.34 to euro 1.00 compared to $1.34 to euro 1.00 for the 2010 third quarter and $1.43 to euro 1.00 for the 2009 fourth quarter.
Cash Flow and Balance Sheet Highlights
Net operating cash flow was $349 million compared to $224 million and $247 million in the prior and year ago periods, respectively. For the full year 2010, net operating cash flow was $961 million.*
In the fourth quarter ST realized net proceeds of $319 million from selling a substantial part of the Micron shares received in 2010 as a result of its final divestiture of the Flash memory business. The approximately 20 million remaining shares are fully hedged.
Capital expenditures were $423 million during the fourth quarter of 2010 compared to $298 million in the prior quarter. Expenditures were principally for front-end equipment to support various technologies and to support the ramp of new products for the current and upcoming quarters for MEMS, the U8500 smartphone platform as well as a capacity increase for automotive products. For the 2010 full year period, capital expenditures totaled $1,034 million. Combined capital expenditures for the years 2009-10 were 7.9% as a percentage of net revenues.
Inventory was $1.50 billion at quarter end compared to $1.43 billion at September 25, 2010. In the fourth quarter inventory turns were 4.6.
ST, during the quarter, continued its debt buy-back programs related to its outstanding 2016 convertible bonds and 2013 Eurobond. In the year, $510 million have been repurchased, out of which $121 million were repurchased in the fourth quarter.
Excluding $161 million of Micron shares currently held as marketable securities, ST's net financial position increased significantly to a net cash position of $1,152 million at December 31, 2010 compared to $878 million at September 25, 2010 and $420 million at December 31, 2009. ST's cash and cash equivalents, short-term deposits, marketable securities (current and non-current, excluding remaining Micron shares) equaled $2.92 billion. Total debt was $1.77 billion.*
Total equity was $8.50 billion, including non-controlling interest of $0.9 billion.
In the fourth quarter the Company posted a return on net assets (RONA) attributable to ST of 20.7%.*
Mr. Bozotti said "Over the last two years we have completed our product portfolio repositioning and funded the restructuring of operations. Our net financial position has improved significantly by about $1.7 billion while, at the same time, making the appropriate level of investment to fuel revenue growth."
Legal proceedings with respect to the collection of approximately $358 million due to ST by Credit Suisse pursuant to the FINRA award are continuing, with trial before the Court of Appeals of the Federal Circuit currently set to occur as from the last week of March 2011.
(*)Adjusted net earnings, net operating cash flow, net financial position and RONA attributable to ST are non-U.S. GAAP measures. For additional information, please refer to Attachment A.
2010 Full Year Results
Net revenues for the full year 2010 increased 21.6% to a record $10,346 million from $8,510 million in the prior year, thanks to a broad and deep product portfolio and significantly better industry conditions, with IMS and ACCI increasing 45% and 32%, respectively.
IMS revenue growth benefited from two structural changes which have been well underway. First, advanced analog and MEMS products are becoming an increasing proportion of the overall IMS portfolio. Second, IMS is benefiting from the success of its general-purpose and secure microcontroller families.
ACCI revenue growth was driven by all key products families: ICs for automotive, set-top-boxes, computer peripherals, printers in particular, and communication infrastructure applications.
Wireless revenues in 2010 decreased by 14% compared to the prior year. ST-Ericsson is well on its way to completing its transformation to focus on expanding its product portfolio to serve the smartphone and tablet markets with best-in-class modems and application solutions. ST-Ericsson is seeing increasing traction in these markets with products such as their U8500 smartphone platform, which they plan to ramp in the second half of the year with several Tier 1 customers.
Gross margin for ST was 38.8% of net revenues, compared to 30.9% of net revenues in 2009, reflecting significantly improved fab loading and the success of the Company's product offering.
Net income, as reported, was $830 million in 2010, or $0.92 per diluted share, compared to a net loss of $1,131 million, or $1.29 per share in 2009.
On a year-over-year basis, the effective average exchange rate for the Company was approximately $1.36 to euro 1.00 for 2010, compared to $1.37 to euro 1.00 for 2009.
Mr. Bozotti commented, "In 2010, our continued effort to develop new and exciting products has started to translate into profitability with substantial leverage as operating results improved in 2010 by $1.31 billion on $1.84 billion of higher sales."
2010 Full Year Revenue and Operating Results by Product Segment
In Million
US$ Full Year 2010 Full Year 2009
Product
Segment Net Operating Net Operating
Revenues Income Revenues Income
(Loss) (Loss)
ACCI 4,169 410 3,152 (69)
IMS 3,899 681 2,687 91
Wireless 2,219 (483) 2,585 (356)
Others 59 (132) 86 (689)
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TOTAL 10,346 476 8,510 (1,023)
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First Quarter 2011 Business Outlook
Mr. Bozotti stated, "As we enter 2011 key new products continuing to ramp will include gyroscopes, accelerometers, 32-bit microcontrollers, and automotive products among others. New products that will contribute to our growth in the coming quarters include SoCs for 3-D and connected TVs, MEMS microphones and pressure sensors and advanced analog products for medical and smart grid applications. Also, ST-Ericsson will ramp new products, such as their thin modem and, in the second half of the year, U8500 smartphone platform.
"While the semiconductor industry is expected to grow in 2011, although at a much more moderate rate compared to the strong growth in 2010, we expect to deliver above-market revenue growth accompanied by further year-over-year improvements in quarterly operating profitability. We are well positioned for success in our traditional and new growth markets, including energy savings, data security, healthcare and wellness as well as smart consumer devices."
In order to support ST's innovative product portfolio and to fuel revenue growth faster than the served market dynamic, particularly for MEMS, automotive and the U8500 smartphone platform, the Company expects to invest approximately $1.1 billion to $1.5 billion in 2011 based on revenue growth.
In-line with normal seasonality, the high exposure to New-Year holidays in Asia and the accounting calendar, the Company expects first quarter 2011 revenues to be lower sequentially by about 7% to 12%, which at the midpoint equates to a 10% increase when compared to the year-over-year period. As a result, and based on prices entering the new year contracts, gross margin in the first quarter is expected to be about 39.0%, plus or minus 1 percentage point.
This outlook is based on an assumed effective currency exchange rate of approximately $1.32 = euro 1.00 for the 2011 first quarter. The first quarter will close on April 2, 2011.
Q4 2010 Products, Technology and Design Wins
Automotive, Consumer, Computer and Communication Infrastructure (ACCI)
Product Highlights
Automotive
-- Power Train
-- Key design win in China for a full engine-control kit, including
microcontroller (MCU) and highly integrated ASIC, from a tier-one
player supplying all the major automotive OEMs in China.
-- Design win from a worldwide leader in hybrid/electric-vehicle
(HEV/EV) batteries to supply at least five major global car makers
from 2013, for a next-generation battery-manager ASIC
(application-specific IC), embedding new and innovative features.
-- Design win for two variants of ST's 32-bit automotive MCU from a
leader for engine-control systems in Europe, supplying three major
global car makers from 2013.
-- Tripartite cooperation between ST, a major Chinese car maker and a
major European tier-one OEM to generate a next-generation
direct-injection engine platform that is compliant with Euro 5 and
China 5 emission standards.
-- Body Electronics
-- Key design wins for body-control module (BCM) applications,
including: a win for VIPower chips from a tier-one OEM in Japan; and
a win for the SPC560B 32-bit MCU family from a US tier-one OEM for a
major European platform.
-- 24V-focused VIPower family gained strategically important design win
from a worldwide tier-one leader in body electronics for various
truck applications.
-- Design win from a major European OEM for a full-solution door-zone
platform.
-- Safety
-- Design win from a major OEM in Europe for an integrated-brake ASIC
that has been designed to complement all new electronic stability
control units from 2013.
-- Further design wins for ST's 32-bit automotive MCU family for airbag
and integrated-safety controllers for production at two major
premium-brand car makers in Europe.
-- Infotainment
-- Key design win for an OEM radio-navigation application for the
Cartesio+ navigation processor, a tuner IC and a digital audio
processor.
-- Design win for Teseo II, the first fully working single-chip IC for
multiple global navigation systems, to be integrated into a new
Personal Navigation Device (PND) for the market in Russia.
-- Design wins for audio chips for car-radio applications including: an
advanced digital class-D amplifier IC from a major consumer audio
leader in Japan; and a tuner IC for the next generation of premium
radios from a leading US audio maker.
Consumer
-- Set-Top Boxes (STBs)
-- Strengthened leadership position with shipment of 10 million units
of the second-generation STi7105 and STi7105-derivative STB
decoders.
-- Ramped-up new second-generation System-on-Chip (SoC) decoder ICs,
including: the STi7162 for high definition and the STi5262 for
standard definition, targeting free-to-air, cable and terrestrial
STBs, as well as hybrid products with added support for IPTV; and
the STi7197 for the US cable market.
-- Significant new deployments of second-generation STB decoders
achieved in Europe, Asia, China, Middle East, India and South
America, with more than 50 customers in production.
-- Enabled next-generation hybrid broadcast/broadband convergence STB
designs with 10 major designs for third-generation STi7108-based
STBs.
-- Integrated Digital TV (iDTV)
-- Two new design-ins for Freeman 100Hz single-chip 3DTV platforms for
European and emerging markets.
-- World's first demonstration to key customers of the Freeman Premier
single-chip TV SoC driving a 120Hz 3D TV, plus motion-judder
reduction, on a line-interleaved TV using 'passive' glasses.
-- Announced and demonstrated support of Adobe Flash Access 2.0 along
with Adobe AIR for both STBs and TV on a Freeman SoC platform as
part of the program for delivering rich media content and
applications to the TV.
-- DisplayPort and Monitors
-- Key design wins: for the STDP4028/20 chipset from a key US-based OEM
for a video-wall display application (up to 25 displays) using
DisplayPort interface technology; and for the high-quality STDP5300H
scaler chip from a leading US OEM for the fast-growing All-In-One PC
application.
-- Demonstration of ST's new Mobility DisplayPort (MYDP) interface
platform for efficient, full-HD video and audio connectivity between
mobile devices and TVs and displays.
-- Audio
-- Shipments began of a key Sound Terminal(TM) integrated digital audio
processor and amplifier IC to a leading maker of plasma TVs in
Korea.
-- Imaging
-- Design win for an 8-megapixel image sensor from a tier-one
mobile-phone maker. The product will use ST's latest
high-performance pixel technology and will be used in leading phones
in 2011 and 2012.
Computer and Communications Infrastructure
-- Design win for a cutting-edge ASIC, to be implemented in ST's 32nm CMOS
process technology, from a major communication-infrastructure maker for
a very high-capacity networking switch application.
-- ZT Systems announced the first ARM-based computing server, for use in
data centers, that embeds ST's leading-edge SPEAr1310 embedded
microprocessor, which is manufactured in low-power 55nm technology and
combines two ARM Cortex-A9 cores with a DDR3 memory interface.
-- Announced software development support for SPEAr embedded
microprocessors from both Green Hills Software and IAR.
Industrial and Multisegment Sector (IMS) Product Highlights
MEMS, Sensors and High-Performance Analog
-- MEMS (Micro-Electro-Mechanical Systems)
-- 3-axis digital MEMS gyroscope in production for a leading tablet
maker based in Korea.
-- MEMS-based digital microphones under qualification in notebook PCs.
-- MEMS e-compass now in volume production at smartphone maker in
China.
-- 3-axis analog MEMS gyroscope now under evaluation for
next-generation games platform.
-- Continued supply of accelerometers and gyroscopes to the world's
leading consumer brands.
-- Launched new family of high-g acceleration sensors for advanced
airbag systems.
-- Sensors
-- Announced cooperation with OMROM to provide solution for electronic
gas-meter flow sensors.
-- Launched extremely small silicon pressure sensor for use in
smartphones, sports watches and other portable equipment, in
addition to weather stations and various automotive and industrial
applications.
-- Launched S-Touch® FingerTip controller, offering smartphones true
multi-touch capability.
-- Ultra-sound chip design-in at leading US medical equipment maker.
-- Bio-sensor now in volume production at medical company in the US.
-- Analog
-- Increased market penetration for micro-power op amps in applications
such as glucose meters, LED light bulbs and hard-disk drive
applications.
-- Sharp growth in production demand for battery-monitoring 'fuel
gauge' IC from leading smartphone maker in Japan.
-- Design wins increasing for 'Rad-Hard' (radiation-hardened) analog
ICs.
Power Conversion and Energy Metering
-- Launched D-Spin platform, a new digital micro-stepping driver
system-on-chip IC with embedded motion controller now qualified and
ready for mass production.
-- Production started for new DC/DC converter ICs for AMOLED (Active-Matrix
Organic LED) applications for a leading mobile-phone manufacturer in
Korea.
-- Design wins including: converter ICs for major hard-disk-drive maker in
the US; and an ASIC for a leading gaming platform switched-mode
power-supply (SMPS) from a major OEM in Taiwan.
-- Launched SPV1001 for solar panels, designed to allow more of the energy
from each cell to reach the power grid.
-- Design win as the sole source for STarGRID(TM) power-line communication
SoCs for smart metering equipment from power utility company in Spain.
Power Transistors
-- Multiple design wins for power transistors, including: MDmesh(TM) V
MOSFETs for a leading European maker of solar panels; MDmesh II MOSFETs
for an important games platform power supply; and STripFET(TM) MOSFETs
for a DC/DC powered telecom application in China.
-- Design win for an IPM (Integrated Power Module) for a sewing-machine
platform in China.
-- Ramped-up PowerFLAT(TM) packaged devices for computer applications.
Power Diodes and AC Switching
-- Continued success with BC2 diode kit providing solar inverters and SMPS
applications with improved efficiency by recycling the energy usually
lost in these type of circuits.
-- Extended silicon-carbide (SiC) diode portfolio with a new range of
devices ideal for solar inverters and power supplies.
-- Reinforced leadership in high-junction-temperature Triacs with the first
30A 150 degree C devices, ideal for motor-control and
high-temperature-environment applications.
-- Introduced the most compact and flat packages for thyristors and
AC-switch devices that can save 55% of PCB space and offer footprint
compatibility with the SOT-223 package commonly used in home appliances,
industrial and lighting applications.
Microcontrollers
-- Extended the highly successful STM32 family with the launch of the new
STM32 F-2 series, the world's first 90nm-Flash ARM Cortex-M3 MCU family,
combining very high performance and state-of-the-art low current
consumption; and simultaneously unveiled the further extension of the
STM32 family to include ARM Cortex-M0 and -M4 cores.
-- Design win for the STM32W wireless (RF4CE protocol) MCU from Philips for
its 'Dual' remote control, which includes a full QWERTY keyboard that
provides easier web and content access from the TV.
-- Design wins for the new 1-Mbyte-Flash Access/Performance Line of 32-bit
STM32 MCUs at leading OEMs in consumer, healthcare and smart-metering
applications.
-- Applications using the STM32 are now in production at a major
telecom-equipment manufacturer in China and at a major OEM in Europe for
mobile-phone accessories.
-- Ultra-low-power 8-bit STM8L in production in China for a new smart meter
for a global deployment program.
Secure Microcontrollers
-- New NFC (Near-Field Communication)-enabled MIFARE DESFire SIM card from
Oberthur Technologies, based on the highly secure ST33 MCU, on the
MIFARE DESFire Library developed by ST.
-- Design wins gained at major smartcard manufacturers for an ST23
dual-interface secure MCU with crypto-processor and 16-Kbyte EEPROM for
use in government and ID applications.
-- ST23 secure MCU with crypto-processor and 48-Kbyte 90nm embedded-EEPROM
now in production for customers in banking and pay-TV applications.
Memories
-- Design win for ST's innovative dual-interface EEPROM for a consumer
healthcare product from a major OEM.
-- Launched 64-Kbit RFID memory for maintenance-history recording in
industrial, medical, automotive and avionics equipment.
ST-Ericsson Highlights
-- ST-Ericsson announced it is joining forces with Nokia to drive TD-LTE in
China. At Expo 2010 Shanghai China, ST-Ericsson and Nokia demonstrated
video streaming and other multimedia services on a TD-LTE Nokia booklet
containing ST-Ericsson's M700 TD-LTE modem.
-- ST-Ericsson announced collaboration with Quanta Computer on LTE modules
and USB dongles. The partnership was highlighted by a live video
demonstration on a Quanta Computer tablet over the TD-LTE network at the
closing ceremony of Expo 2010 Shanghai, China.
-- Samsung selected ST-Ericsson's single G4906 GSM/GPRS platform for its
Ch@t 322 Dual-SIM Dual-Standby mobile telephone, launched in Russia, the
Commonwealth of Independent States (CIS), Southeast Asia, India, China,
Middle East, and Africa.
-- Australian telecommunication operator Telstra, together with Acer and
Ericsson, launched the first netbook with a built-in 21Mbps HSPA+
mobile-broadband module, based on ST-Ericsson's M570 thin modem.
ST's press releases are available at http://www.st.com/internet/com/press/st_press_releases.jsp.
ST-Ericsson's press releases are available at www.stericsson.com/press/press_releases.jsp.
Sound Terminal, SPEAr, S-Touch, STarGRID, MDmesh, STripFET and PowerFLAT 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:
-- Changes in demand in the key application markets and from key customers
served by our products, which make it extremely difficult to accurately
forecast and plan our future business activities. In particular,
following a period of significant order cancellations in 2009, we have
over the last quarters, experienced a strong surge in customer demand,
which has led to capacity constraints in certain applications; however,
we may again in the future, in case of excessive inventory at customers
or distribution channels, experience order cancellations;
-- our ability to utilize and operate our manufacturing facilities at
sufficient levels to cover fixed operating costs during periods of
reduced customer demand, as well as our ability to ramp up production
efficiently and rapidly to respond to increased customer demand, in an
intensely cyclical and competitive industry, and the financial impact of
obsolete or excess inventories if actual demand differs from our
expectations;
-- the operations of the ST-Ericsson Wireless joint venture, which
represents a significant investment and risk for our business and which
may lead to significant additional impairment and restructuring charges,
in the event ST-Ericsson is unable to successfully compete in a rapidly
changing and increasingly competitive market;
-- our ability to compete in the semiconductor industry since a high
percentage of our costs are fixed and are incurred in Euros and
currencies other than U.S. dollars, especially in light of the
increasing volatility in the foreign exchange markets and, more
particularly, in the U.S. dollar exchange rate as compared to the Euro
and the other major currencies we use for our operations;
-- the outcome of ongoing litigation as well as any new litigation to which
we may become a defendant;
-- 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;
-- the impact of intellectual property ("IP") claims by our competitors or
other third parties, and our ability to obtain required licenses on
reasonable terms and conditions;
-- product warranty or liability claims based on epidemic failures or
recalls by our customers for a product containing one of our parts;
-- 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;
-- availability and costs of raw materials, utilities, third-party
manufacturing services, or other supplies required by our operations;
and
-- 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, earthquakes, volcano eruptions or other acts of
nature in, or affecting, the countries in which we, our key customers or
our suppliers, operate.
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," "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, 2009, as filed with the SEC on March 10, 2010. 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, Conference Call and Webcast Information
On January 25, 2011, the management of STMicroelectronics will host its annual earnings presentation in Paris and will also conduct a conference call to discuss the Company's operating performance for the fourth quarter and full year of 2010.
The earnings presentation will be held at 5:00 a.m. U.S. Eastern Time / 11:00 a.m. CET and the conference call at 9:00 a.m. U.S. Eastern Time / 3:00 p.m. CET. 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.
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, such as impairment, restructuring charges and other related closure costs. Adjusted net earnings and earnings per share (EPS) are used by our management to help enhance an understanding of ongoing operations and to communicate the impact of the excluded items like impairment, restructuring charges and other related closure costs attributable to ST, the impact of equity investment divestiture and subsequent sale of Micron shares, other-than-temporary impairment (OTTI) charges on financial assets, net of the relevant tax impact.
Return on net assets (RONA) is considered by our management to be the key financial and economic metric to measure the return on invested capital. RONA is the ratio of operating income before impairment and restructuring charges divided by average net assets used during the period. ST defines average net assets as average total assets net of total liabilities as reported in our consolidated balance sheet excluding all items related to our financial position such as cash and cash equivalents, marketable securities, short-term deposits, bank overdrafts, current portion of long-term debt and long-term debt.
Adjusted operating income attributable to ST is calculated as adjusted operating income (loss) excluding 50% of ST-Ericsson operating income (loss) before restructuring as consolidated by ST. Adjusted operating margin attributable to ST is calculated as adjusted operating income attributable to ST divided by reported revenues excluding 50% of ST-Ericsson revenues as consolidated by ST. RONA attributable to ST is calculated as annualized adjusted operating income attributable to ST divided by reported net assets excluding 50% of ST-Ericsson net assets as consolidated by ST.
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 profits 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.
Corresponding
Operating EPS
Q4 2010 Gross Profit Income Net Earnings (diluted)
(US$ millions and
cents per share)
U.S. GAAP 1,129 213 219 0.24
----
Impairment &
Restructuring 32 20
Loss on sale of
Micron shares 13
Estimated Income
Tax Effect (9)
---------------- ---
Non-U.S GAAP 1,129 245 243 0.27
------------ ----- --- --- ----
Corresponding
Operating EPS
Q3 2010 Gross Profit Income Net Earnings (diluted)
(US$ millions and
cents per share)
U.S. GAAP 1,041 193 198 0.22
----
Impairment &
Restructuring 27 18
Estimated Income
Tax Effect (5)
---------------- ---
Non-U.S GAAP 1,041 220 211 0.23
------------ ----- --- --- ----
Operating Corresponding
Income EPS
Q4 2009 Gross Profit (Loss) Net Earnings (diluted)
(US$ millions
and cents per
share) (Loss)
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
------------ --- --- --- ----
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, net of bank overdrafts, if any, current and non-current marketable securities excluding Micron shares received in connection with the sales of Numonyx, short-term deposits and non-current restricted cash, and our total financial debt includes short-term borrowings, current portion of long-term debt and long-term debt, all as reported 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 position 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$ September December 31,
millions) December 31, 25, 2009
2010 2010
Cash and cash equivalents, net of
bank overdrafts 1,892 1,473 1,588
Marketable securities, current (a) 891 1,176 1,032
Short-term deposits 67 67 -
Non-current restricted cash - - 250
Marketable securities, non-current
(a) 72 64 42
Total financial resources 2,922 2,780 2,912
----- ----- -----
Short-term borrowings and current
portion of long-term debt (720) (717) (176)
Long-term debt (1,050) (1,185) (2,316)
Total financial debt (1,770) (1,902) (2,492)
-------------------- ------ ------ ------
Net financial position 1,152 878 420
---------------------- ----- --- ---
(a) Excludes Micron shares received in connection with the sale of
Numonyx in Q210.
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 2010 Q3 2010 Q4 2009
Net cash from operating activities 492 548 449
Net cash from (used in) investing
activities 139 (120) (207)
Payment for purchases of (proceeds
from sale of) current and non-
current marketable securities,
short-term deposits and restricted
cash, net (282) (204) 5
Net operating cash flow 349 224 247
----------------------- --- --- ---
Net operating cash flow (ex M&A) 356 228 221
-------------------------------- --- --- ---
STMicroelectronics N.V.
Consolidated Statements of Income
(in million of U.S. dollars, except per share data ($))
Three Months Ended
------------------
(Unaudited) (Audited)
----------- ---------
December 31, December 31,
2010 2009
---- ----
Net sales 2,810 2,570
Other revenues 23 13
NET REVENUES 2,833 2,583
Cost of sales (1,704) (1,626)
GROSS PROFIT 1,129 957
Selling, general and administrative (310) (303)
Research and development (604) (603)
Other income and expenses, net 30 39
Impairment, restructuring charges
and other related closure costs (32) (96)
Total Operating Expenses (916) (963)
OPERATING INCOME (LOSS) 213 (6)
Other-than-temporary impairment
charge and realized losses on
financial assets - (68)
Interest income (expense), net (5) 3
Loss on equity investments (10) (13)
Gain (loss) on financial
instruments, net (12) 3
INCOME (LOSS) BEFORE INCOME TAXES 186 (81)
AND NONCONTROLLING INTEREST
Income tax expense (50) (48)
--- ---
INCOME (LOSS) BEFORE NONCONTROLLING
INTEREST 136 (129)
Net loss attributable to
noncontrolling interest 83 59
--- ---
NET INCOME (LOSS) ATTRIBUTABLE TO
PARENT COMPANY 219 (70)
=== ===
EARNINGS (LOSS) PER SHARE (BASIC)
ATTRIBUTABLE TO PARENT COMPANY
SHAREHOLDERS 0.25 (0.08)
EARNINGS (LOSS) PER SHARE (DILUTED)
ATTRIBUTABLE TO PARENT COMPANY
SHAREHOLDERS 0.24 (0.08)
NUMBER OF WEIGHTED AVERAGE
SHARES USED IN CALCULATING
DILUTED EARNINGS (LOSS) PER SHARE 908.2 878.3
STMicroelectronics N.V.
Consolidated Statements of Income
(in million of U.S. dollars, except per share data ($))
Twelve months ended
-------------------
(Unaudited) (Audited)
----------- ---------
December 31, December 31,
2010 2009
---- ----
Net sales 10,262 8,465
Other revenues 84 45
NET REVENUES 10,346 8,510
Cost of sales (6,331) (5,884)
GROSS PROFIT 4,015 2,626
Selling, general and
administrative (1,175) (1,159)
Research and development (2,350) (2,365)
Other income and expenses, net 90 166
Impairment, restructuring charges
and other related closure costs (104) (291)
Total Operating Expenses (3,539) (3,649)
OPERATING INCOME (LOSS) 476 (1,023)
Other-than-temporary impairment
charge and realized losses on
financial assets - (140)
Interest income (loss), net (3) 9
Loss on equity investments and
gain on investment divestiture 242 (337)
Loss on financial instruments, net (24) (5)
INCOME (LOSS) BEFORE INCOME TAXES 691 (1,496)
AND NONCONTROLLING INTEREST
Income tax benefit (expense) (149) 95
---- ---
INCOME (LOSS) BEFORE
NONCONTROLLING INTEREST 542 (1,401)
Net loss attributable to
noncontrolling interest 288 270
--- ---
NET INCOME (LOSS) ATTRIBUTABLE TO
PARENT COMPANY 830 (1,131)
=== ======
EARNINGS (LOSS) PER SHARE (BASIC)
ATTRIBUTABLE TO PARENT COMPANY
SHAREHOLDERS 0.94 (1.29)
EARNINGS (LOSS) PER SHARE
(DILUTED) ATTRIBUTABLE TO PARENT
COMPANY SHAREHOLDERS 0.92 (1.29)
NUMBER OF WEIGHTED AVERAGE
SHARES USED IN CALCULATING
DILUTED EARNINGS (LOSS) PER SHARE 911.1 876.9
STMicroelectronics N.V.
SELECTED CASH FLOW DATA
-----------------------
Cash Flow Data (in US$ millions) Q4 2010 Q3 2010 Q4 2009
-------------------------------- ------- ------- -------
Net Cash from operating activities 492 548 449
---------------------------------- --- --- ---
Net Cash from (used in) investing
activities 139 (120) (207)
--------------------------------- --- ---- ----
Net Cash used in financing activities (199) (246) (218)
------------------------------------- ---- ---- ----
Net Cash increase (decrease) 419 205 12
---------------------------- --- --- ---
Selected Cash Flow Data (in US$
millions) Q4 2010 Q3 2010 Q4 2009
------------------------------- ------- ------- -------
Depreciation & amortization 327 294 355
--------------------------- --- --- ---
Payment for Capital expenditures (423) (298) (190)
-------------------------------- ---- ---- ----
Dividends paid to shareholders (62) (62) (27)
------------------------------ --- --- ---
Change in inventories, net (65) (84) 11
-------------------------- --- --- ---
STMicroelectronics N.V.
CONSOLIDATED BALANCE SHEETS
As September
at December 31, 25, December 31,
In million of
U.S. dollars 2010 2010 2009
---- ---- ----
(Unaudited) (Unaudited) (Audited)
ASSETS
======
Current
assets:
Cash and cash
equivalents 1,892 1,473 1,588
Restricted
cash 7 43 -
Short-
term
deposits 67 67 -
Marketable
securities 1,052 1,556 1,032
Subordinated
notes - - -
Trade accounts
receivable,
net 1,230 1,424 1,367
Inventories,
net 1,497 1,432 1,275
Deferred
tax
assets 218 219 298
Assets
held
for
sale 28 29 31
Other
receivables
and assets 609 727 753
--- --- ---
Total
current
assets 6,600 6,970 6,344
Goodwill 1,054 1,060 1,071
Other
intangible
assets, net 731 747 819
Property,
plant and
equipment,
net 4,046 3,868 4,081
Long-term
deferred tax
assets 329 375 333
Equity
investments 133 143 273
Restricted
cash - - 250
Non-current
marketable
securities 72 165 42
Other investments and
other non-current assets 384 378 442
--- --- ---
6,749 6,736 7,311
Total
assets 13,349 13,706 13,655
------ ------ ------
LIABILITIES AND
SHAREHOLDERS' EQUITY
=====================
Current
liabilities:
Bank
overdrafts 0
Short-term borrowings and
current portion of long-
term debt 720 717 176
Trade
accounts
payable 1,233 1,411 883
Other payables
and accrued
liabilities 1,004 1,140 1,049
Dividends
payable to
shareholders 62 123 26
Deferred
tax
liabilities 7 3 20
Accrued
income
tax 96 203 126
Total
current
liabilities 3,122 3,597 2,280
Long-
term
debt 1,050 1,185 2,316
Reserve for pension and
termination indemnities 326 299 317
Long-term
deferred tax
liabilities 59 30 37
Other non-
current
liabilities 295 242 342
--- --- ---
1,730 1,756 3,012
Total
liabilities 4,852 5,353 5,292
Commitment and
contingencies
Equity
Parent company
shareholders'
equity
Common stock (preferred
stock: 540,000,000 shares
authorized, not issued; 1,156 1,156 1,156
common stock: Euro 1.04
nominal value,
1,200,000,000 shares
authorized, 910,420,305
shares
issued, 881,686,303 shares
outstanding)
Capital
surplus 2,515 2,506 2,481
Accumulated
result 3,241 3,022 2,723
Accumulated other
comprehensive income 979 969 1,164
Treasury
stock (304) (304) (377)
---- ---- ----
Total parent company
shareholders' equity 7,587 7,349 7,147
Noncontrolling
interest 910 1,004 1,216
--- ----- -----
Total
equity 8,497 8,353 8,363
----- ----- -----
Total
liabilities
and equity 13,349 13,706 13,655
------ ------ ------
SOURCE STMicroelectronics
