Earnings Release • Jan 24, 2011
Earnings Release
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- Fourth quarter net revenues increased 6.6% sequentially; 39.9% gross margin
- 2010 net income of \$830 million on highest ever net revenues of \$10.35 billion
- Net financial position improved \$732 million in 2010 to \$1.15 billion*
-Record year for the full range of ST's "Sense and Power" portfolio, namely advanced analog and MEMS, as well as microcontrollers and automotive applications
PARIS, Jan. 24, 2011 -- 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.
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) (In %) |
Q4 2010 | Q3 2010 | Q4 2009 |
|---|---|---|---|
| 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% |
(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.
The following table provides a breakdown of revenues and operating results by product segment.
| Operating Segment | Q4 2010 | Q4 2010 | Q3 2010 | Q3 2010 | Q4 2009 | Q4 2009 |
|---|---|---|---|---|---|---|
| (In Million US\$) | Net Revenues |
Operating Income (Loss) |
Net Revenues |
Operating Income (Loss) |
Net Revenues |
Operating Income (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) |
| TOTAL | 2,833 | 213 | 2,657 | 193 | 2,583 | (6) |
(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
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.
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.
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 generalpurpose 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."
| In Million US\$ | Full Year 2010 | Full Year 2009 | ||
|---|---|---|---|---|
| Operating | Operating | |||
| Net | Income | Net | Income | |
| Product Segment | Revenues | (Loss) | Revenues | (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) |
| TOTAL | 10,346 | 476 | 8,510 | (1,023) |
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.
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.
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 forwardlooking 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," "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.
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.
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, 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.
| Q4 2010 | Net Earnings | |||
|---|---|---|---|---|
| (US\$ millions and cents per share) | Gross Profit | Operating Income | Corresponding EPS (diluted) | |
| 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 |
| Q3 2010 | Net Earnings | |||
|---|---|---|---|---|
| (US\$ millions and cents per share) | Gross Profit | Operating Income | Corresponding EPS (diluted) | |
| 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 |
| Q4 2009 (US\$ millions and cents per share) |
Gross Profit | Operating Income (Loss) | Net Earnings (Loss) |
Corresponding EPS (diluted) |
|---|---|---|---|---|
| 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\$ millions) | December 31, 2010 |
September 25, 2010 |
December 31, 2009 |
|---|---|---|---|
| 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 | Q3 | Q4 |
|---|---|---|---|
| 2010 | 2010 | 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 Selling, general and administrative Research and development Other income and expenses, net Impairment, restructuring charges and other related closure costs |
1,129 (310) (604) 30 (32) |
957 (303) (603) 39 (96) |
| Total Operating Expenses | (916) | (963) |
| OPERATING INCOME (LOSS) Other-than-temporary impairment charge and realized losses on financial assets Interest income (expense), net Loss on equity investments Gain (loss) on financial instruments, net INCOME (LOSS) BEFORE INCOME TAXES |
213 - (5) (10) (12) 186 |
(6) (68) 3 (13) 3 (81) |
| AND NONCONTROLLING INTEREST | ||
| Income tax expense INCOME (LOSS) BEFORE NONCONTROLLING INTEREST |
(50) 136 |
(48) (129) |
| Net loss attributable to noncontrolling interest NET INCOME (LOSS) ATTRIBUTABLE TO PARENT COMPANY |
83 219 |
59 (70) |
| EARNINGS (LOSS) PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY SHAREHOLDERS EARNINGS (LOSS) PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY SHAREHOLDERS |
0.25 0.24 |
(0.08) (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 |
| 10,262 | 8,465 |
| 84 | 45 |
| 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 |
| 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 at | December 31, | September 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 Short-term borrowings and current portion of long-term debt |
720 | 717 | 0 176 |
| 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 |
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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