Earnings Release • Jan 26, 2010
Earnings Release
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- Fourth quarter net revenues up 13.6% sequentially to \$2,583 million
PARIS, Jan. 26 -- 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."
(*) 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.
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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.
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
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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.
(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.
___________
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.
(*)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."
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 underloading, 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.
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.
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.
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.
In digital TV chips, ST launched a new generation of high-performance, full highdefinition (HD) H.264/MPEG SoCs with world-class Faroudja™ 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.
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 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.
• 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.
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.
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.
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:
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.
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.
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)
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-thantemporary 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 and cents per share) |
Gross Profit | Operating Income (Loss) |
(Loss) | Net Earnings Corresponding 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 and cents per share) |
Gross Profit | Operating Income (Loss) |
(Loss) | Net Earnings Corresponding EPS |
|---|---|---|---|---|
| ------- | ------------ --------- ------------ ------------- | |||
| U.S. GAAP NXP Wireless |
822 | (139) | (366) | (0.42) |
| 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\$ millions) |
2009 | 2009 | December 31, September 26, December 31, 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) | |||
| ----------- --------- 2009 ---- |
December, 31 December, 31 2008 ---- |
||
| Net sales Other revenues |
2,570 13 |
2,264 12 |
|
| NET REVENUES Cost of sales |
--- 2,583 (1,626) |
--- 2,276 (1,454) |
|
| GROSS PROFIT Selling, general and administrative Research and development Other income and expenses, net |
------ 957 (303) (603) 39 |
------ 822 (304) (572) 6 |
|
| Impairment, restructuring charges and other related closure costs |
(96) --- |
(91) --- |
|
| Total Operating Expenses | (963) ---- |
(961) ---- |
|
| OPERATING LOSS Oher-than-temporary impairment charge and |
(6) | (139) | |
| realized losses on financial assets Interest income, net |
(68) 3 |
(55) 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) | |||
| 2009 ---- |
----------- --------- December, 31 December, 31 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 Gain on conv. debt buyback |
(8) 3 |
15 - |
|---|---|---|
| LOSS BEFORE INCOME TAXES AND NONCONTROLLING INTEREST |
--- (1,496) |
--- (823) |
| Income tax benefit | 95 | 43 |
| LOSS BEFORE NONCONTROLLING INTEREST Net loss (income) attributable to noncontrolling |
--- (1,401) |
--- (780) |
| interest | 270 | (6) |
| NET LOSS ATTRIBUTABLE TO PARENT COMPANY | --- (1,131) ====== |
--- (786) ==== |
| LOSS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY SHAREHOLDERS LOSS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT |
(1.29) | (0.88) |
| COMPANY SHAREHOLDERS | (1.29) | (0.88) |
| NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING LOSS PER SHARE |
876.9 | 892.0 |
STMicroelectronics N.V. CONSOLIDATED BALANCE SHEETS
| As at In million of U.S. dollars |
December 31, 2009 |
September 26, 2009 |
December 31, 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 |
| ------ | ------ | ------ | |
| LIABILITIES AND SHAREHOLDERS' | |||
| EQUITY ============================= |
|||
| Current liabilities: | |||
| Bank overdrafts | 0 | 0 | 20 |
| Current portion of long-term | |||
| debt | 176 | 230 | 123 |
| Trade accounts payable | 883 | 954 | 847 |
| Other payables and accrued | |||
| liabilities | 1,049 | 1,058 | 996 |
| Dividends payable to | |||
| shareholders | 26 | 53 | 79 |
| Deferred tax liabilities | 20 | 8 | 28 |
| Accrued income tax | 126 | 136 | 125 |
| --- | --- | --- | |
| Total current liabilities | 2,280 | 2,439 | 2,218 |
| Long-term debt | 2,316 | 2,455 | 2,554 |
| Reserve for pension and | |||
| termination indemnities | 317 | 340 | 332 |
| Long-term deferred tax | |||
| liabilities | 37 | 23 | 27 |
| Other non-current liabilities | 342 | 375 | 350 |
| --- | --- | --- | |
| 3,012 | 3,193 | 3,263 | |
| Total liabilities | 5,292 | 5,632 | 5,481 |
| 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, 910,319,305 shares | |||
| issued, 878,333,566 shares | |||
| outstanding) | |||
| Capital surplus | 2,481 | 2,470 | 2,324 |
| Accumulated result | 2,723 | 2,793 | 4,064 |
| Accumulated other comprehensive | |||
| income | 1,164 | 1,255 | 1,094 |
| Treasury stock | (377) | (377) | (482) |
| ---- | ---- | ---- | |
| Total parent company | |||
| shareholders' equity | 7,147 | 7,297 | 8,156 |
| Noncontrolling interest | 1,216 | 1,273 | 276 |
| ----- | ----- | --- | |
| Total equity | 8,363 | 8,570 | 8,432 |
| ----- | ----- | ----- | |
| Total liabilities and equity | 13,655 | 14,202 | 13,913 |
| ---------------------------- | ------ | ------ | ------ |
STMicroelectronics N.V.
| Cash Flow Data (in US\$ millions) | Q4 2009 Q3 2009 Q4 2008 | ||
|---|---|---|---|
| -------------------------------- Net Cash from operating activities Net Cash used in investing activities Net Cash from (used in) financing |
------- ------- ------- 449 (207) |
225 (311) |
390 (172) |
| activities | (218) | (36) | 2 |
| Net Cash increase (decrease) | 12 | (109) | 141 |
| Selected Cash Flow Data (in US\$ millions) ------------------------------- |
Q4 2009 Q3 2009 Q4 2008 ------- ------- ------- |
||
| Depreciation & amortization | 355 | 342 | 357 |
| Payment for Capital expenditures | (190) | (98) | (206) |
| Dividends paid | (27) | (26) | (79) |
| Change in inventory, net | 11 | 174 | (166) |
CONTACT: INVESTOR RELATIONS: Tait Sorensen, Director, Investor Relations, +1-602-485- 2064, [email protected]; or MEDIA RELATIONS: Maria Grazia Prestini, Group VP, Corporate Media and Public Relations, STMicroelectronics, + 41 22 929 6945, [email protected]
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