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STMicroelectronics : STMicroelectronics : ST reports 2012 Fourth Quarter and Full Year Financial Results



 STMicroelectronics : STMicroelectronics : ST reports 2012 Fourth Quarter and
                         Full Year Financial Results

PR No. C2705C

  * Fourth quarter net revenues at $2.16 billion; above the midpoint of
    guidance 

  * Net financial position* at $1.19 billion; up from 2011 despite challenging
    environment 

  * Fourth quarter impairment charge of $544 million for Wireless goodwill and
    other intangible assets 

Geneva, January 30, 2013 - STMicroelectronics (NYSE: STM) reported financial
results for the fourth quarter and full year ended December 31, 2012.

Fourth quarter net revenues totaled $2.16 billion and gross margin was 32.3%.
Net loss attributable to parent company was $428 million, mainly due to a
charge of $544 million for the impairment of Wireless goodwill and other
intangible assets following the Company's decision to exit the
ST-Ericsson joint venture after the communicated transition period as part of
the Company's new strategic plan announced on December 10, 2012.

President and CEO Carlo Bozotti commented, "In the fourth quarter, both
revenue and gross margin results came in above the midpoint of our guidance
despite the ongoing softness in the semiconductor market. We extended our
leadership in key areas. Thanks to new product momentum, revenues from our
wholly-owned businesses increased 0.2% and 1.6% on a sequential and year-ago
basis driven by a very strong ramp of our MEMS products in the fourth quarter.

"Looking at 2012 overall, we improved our net financial position compared to
2011 despite the significant cash used by ST-Ericsson as well as the impact of
weak business conditions. We were able to end the year with significant
financial flexibility and strong cash balances while providing shareholders
with the same level of dividend compared to 2011.

"Important decisions were made in 2012 that are shaping a new, more focused,
higher-performing ST. In December, we announced our new strategic plan
targeting leadership in two product segments: Sense & Power and Automotive
Products and Embedded Processing Solutions. This new strategy includes a
sharper focus on five growth drivers: MEMS and sensors, Smart Power,
automotive products, microcontrollers, and application processors including
digital consumer products. Importantly, from a financial model perspective, we
are targeting an operating margin of 10% or more. A key component to achieving
this objective is bringing our net operating expenses to an average quarterly
rate in the range of $600 million to $650 million by the beginning of 2014.

"In connection with our strategic plan, we decided to exit ST-Ericsson after a
transition period and our actions this past quarter, including the further
impairment charge, are aligned with moving this decision forward."
-----
^(*) ST 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.

Summary Financial Highlights

 

U.S. GAAP                                        Q4 2012 Q3 2012 Q4 2011
(In Million US$)
Net Revenues ^(a)                                 2,162   2,166   2,191
Gross Margin                                      32.3%   34.8%   33.4%
Operating Income (Loss), as reported              (730)   (792)   (132)
Net Income (Loss) attributable to parent company  (428)   (478)   (11)

^(a)Net revenues include sales recorded by ST-Ericsson as consolidated by ST
 
 
 

Non-U.S. GAAP*
Before impairment, restructuring and one-time items Q4 2012 Q3 2012 Q4 2011
(In Million US$)
Operating Income (Loss)                              (142)   (79)    (123)
Operating Margin                                    (6.5%)  (3.6%)  (5.6%)
Operating Margin - attributable to ST               (3.3%)   0.3%   (0.2%)

 
 

Fourth Quarter Review

In the fourth quarter, ST's wholly-owned businesses' revenue increased 0.2%
and 1.6% on a sequential and year-ago basis, respectively. Wireless
product-segment revenues decreased by 2.2% sequentially, and included revenue
from IP licensing of $43 million compared to $35 million in the prior quarter.
The Japan & Korea and Greater China & South Asia regions grew sequentially 16%
and 1%, respectively, while the Americas and EMEA decreased 0.4% and 13%,
respectively.

 

Fourth quarter gross margin decreased 250 basis points sequentially to 32.3%
mainly due to negative price effect, lower volumes that were associated with
the planned reduction in inventory that resulted in the underloading of ST's
wafer fabs partially offset by favorable product mix; as a result of the
inventory reduction unsaturation charges in the fourth quarter of 2012 were
$66 million compared to $19 million and $99 million in the prior and year-ago
quarters, respectively.

Combined SG&A and R&D expenses increased 3% to $876 million compared to $852
million in the prior quarter mainly due to unfavorable seasonal effects.
Combined operating expenses as a percentage of sales were 40.5% in the 2012
fourth quarter compared to 39.3% in the prior quarter.

Restructuring and impairment charges for the fourth and third quarters were
$588 million and $713 million, respectively, principally reflecting non-cash
impairment charges on Wireless goodwill and other intangible assets bringing
the investment value of ST-Ericsson on our books to a negligible amount.

 

Operating margin before impairment, restructuring and one-time items
attributable to ST decreased to negative 3.3% in the 2012 fourth quarter
compared to positive 0.3% in the prior quarter.*

Income tax expense in the fourth quarter was $39 million mainly due to the
write-off of ST-Ericsson deferred tax assets following ST's decision to exit
from the joint venture after a transition period.

 

In the fourth quarter of 2012, net loss attributable to non-controlling
interests was $361 million, which mainly included the 50% owned by Ericsson in
the ST-Ericsson joint venture, as consolidated by ST. In the third quarter of
2012, the corresponding amount was $351 million.

-----
^(*)Operating income (loss) before impairment, restructuring and one-time
items, operating margin before impairment, restructuring and one-time items,
operating margin before impairment, restructuring and one-time items
attributable to ST and adjusted net earnings per share are non-U.S. GAAP
measures. For additional information and reconciliation to U.S. GAAP, please
refer to Attachment A.
Fourth quarter net loss attributable to parent company was $428 million or
$(0.48) per share, compared to a net loss of $(0.54) and $(0.01) per share in
the prior and year-ago quarters, respectively. On an adjusted basis, net of
related taxes, ST reported a non-U.S. GAAP net loss per share of $(0.11),
excluding impairment, restructuring charges and one-time items in the fourth
quarter, compared to a net loss of $(0.03) and $(0.01) per share in the prior
and year-ago quarters, respectively.*

 

For the fourth quarter of 2012, the effective average exchange rate for the
Company was approximately $1.30 to €1.00, compared to $1.29 to €1.00 for the
third quarter of 2012, and $1.36 to €1.00 for the fourth quarter of 2011.

Net Revenues by Market Channel

 

Net Revenues By Market Channel(In %) Q4 2012 Q3 2012 Q4 2011
Total OEM                              77%     76%     80%
Distribution                           23%     24%     20%

 
 

 

Revenues and Operating Results by ST Product Segment

 

Operating Segment Q4 2012   Q4 2012    Q3 2012  Q3 2012    Q4 2011  Q4 2011  
                             Operating           Operating           Operating
                        Net                                               
                              Income     Net      Income     Net      Income
                  Revenues    (Loss)              (Loss)              (Loss)
          (In                          Revenues            Revenues
  Million US$)
 Automotive (APG)    368        20       391        34       383        41
Analog, MEMS &
Microcontrollers     864       120       804       101       747       116
(AMM)
 Digital             320       (51)      325       (30)      388        9
 Power Discrete      245        3        275        18       253        16
(PDP)
 Wireless ^(a)       351      (168)      359      (184)      409      (211)
 Others ^(b)(c)      14       (654)       12      (731)       11      (103)
 TOTAL              2,162     (730)     2,166     (792)     2,191     (132)

 
 

^(a) 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.
^(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, phase out and 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 other
costs that are not allocated to product groups, as well as operating earnings
of the Subsystems and Other Products Group. "Others" includes $66 million, $19
million and $99 million of unused capacity charges in the fourth and third
quarters of 2012 and fourth quarter of 2011, respectively; and $588 million,
$713 million and $9 million of impairment, restructuring charges and other
related closure costs in the fourth and third quarters of 2012 and fourth
quarter of 2011, respectively.

 

Automotive (APG) fourth quarter net revenues decreased 6.0% sequentially,
mainly driven by difficult market conditions. APG fourth quarter operating
margin was 5.6%, compared to 8.6% in the prior quarter due to lower revenues.

Analog, MEMS and Microcontrollers (AMM) fourth quarter net revenues increased
7.4% sequentially driven by MEMS, secure microcontrollers and analog
applications. AMM operating margin increased to 13.9% in the 2012 fourth
quarter, compared to 12.6% in the prior quarter mainly due to higher volumes
of motion MEMS.

-----
^(*)Operating income (loss) before impairment, restructuring and one-time
items, operating margin before impairment, restructuring and one-time items,
operating margin before impairment, restructuring and one-time items
attributable to ST and adjusted net earnings per share are non-U.S. GAAP
measures. For additional information and reconciliation to U.S. GAAP, please
refer to Attachment A.

 

Digital fourth quarter net revenues decreased 1.7% sequentially principally
due to weak demand for digital consumer products. Digital operating margin was
negative 15.8% in the 2012 fourth quarter mainly due to manufacturing
efficiencies related to a sharp decrease in loadings, compared to negative
9.0% in the prior quarter.

 

Power Discrete (PDP) fourth quarter net revenues decreased 11.0% sequentially
due to weak market demand. PDP operating margin decreased to 1.1% in the 2012
fourth quarter compared to 6.4% in the prior quarter due to lower revenues.

 

Wireless net revenues in the fourth quarter decreased 2.2%, compared to the
prior quarter. Revenue results reflected ST-Ericsson's continued ramp of
NovaThor platforms as well as $43 million from IP licensing, which was more
than offset by the decrease in legacy products sales. Wireless operating loss,
excluding ST-Ericsson impairment and restructuring charges, was $168 million
in the fourth quarter, compared to a loss of $184 million in the prior
quarter. For additional information, see ST-Ericsson's Q4 2012 earnings
results press release at www.st.com and at www.stericsson.com

Cash Flow and Balance Sheet Highlights

The Company significantly reduced capital expenditures, net of proceeds from
sales, in 2012, at $476 million compared to $1.26 billion in 2011. During the
fourth quarter capital expenditures net of proceeds from sales were $78
million in line with the year-ago period and, as expected, significantly below
the prior quarter.

 

Managing inventory levels during 2012 was a key priority with inventory at
December 31, 2012, of $1.35 billion, compared to $1.53 billion at December 31,
2011. Inventory  in the fourth quarter of 2012 was at 4.3 turns or 84 days,
compared to the year-ago period of 3.8 turns or 95 days.

During 2012, dividends paid to stockholders totaled $355 million, including
the fourth quarter dividend of $89 million.

For the full year, free cash flow* was slightly positive. Reversing two
quarters of negative cash flow and despite significant cash still used at
ST-Ericsson, free cash flow in the fourth quarter was $145 million compared to
negative $80 million in the prior quarter and positive $47 million in the
year-ago period.

ST continued to maintain a solid attributable net financial position* with a
net cash position of $1.19 billion at December 31, 2012, compared to $1.17
billion, adjusted to balance out the 50% of ST-Ericsson's debt, at December
31, 2011. ST's cash and cash equivalents, marketable securities, short-term
deposits and restricted cash equaled $2.49 billion and total debt was $1.30
billion. During the fourth quarter, ST and Ericsson waived their loan to
ST-Ericsson for an amount of $1,546 million. As a consequence, the Ericsson
portion of $773 million was recorded as a contribution from noncontrolling
interest and reduced ST's consolidated debt.

 

Total equity, including non-controlling interest, was $6.36 billion at year
end.

 

 

 

 

----------
^(*)Free cash flow and net financial position are non-U.S. GAAP measures. For
additional information and reconciliation to U.S. GAAP, please refer to
Attachment A.

2012 Full Year Results

Net revenues for 2012 decreased 12.8% to $8.49 billion mainly due to lower
unit volumes which were driven by a significant drop in sales at our former
largest customer and weaker market conditions.

Gross profit and gross margin decreased 22% to $2.78 billion and 390 basis
points to 32.8% respectively. The principal components of the gross margin
decrease were negative price effect and unused capacity charges of $172
million compared to $149 million in 2011, as well as a one-time $53 million
charge to ST's cost of sales due to an arbitration award recorded in the first
quarter 2012, partially offset by positive currency effects.

ST's income taxes for the full year 2012 in part reflected the write-off of
ST-Ericsson deferred tax assets in the fourth quarter. Excluding the
ST-Ericsson impact and certain discrete items, ST's annual effective tax rate
in 2012 would have been about 16%.

Net loss as reported was $1.16 billion in 2012, or $(1.31) per share. On an
adjusted basis, net of related taxes, ST reported a non-U.S. GAAP net loss per
share of $(0.33) excluding impairment, restructuring charges and one-time
items. In 2011, net income was $650 million, or $0.72 diluted earnings per
share, and on an adjusted basis was $0.41 non-GAAP diluted earnings per
share.*

The effective average exchange rate for the Company was approximately $1.31 to
€1.00 for 2012, compared to $1.37 to €1.00 for 2011.

Full Year Revenue and Operating Results by ST Product Segment

 

Operating Segment           FY 2012       FY 2012     FY 2011      FY 2011  
                                          Operating                Operating  
                              Net            Income     Net           Income
              (In Million       Revenues    (Loss)                   (Loss)
           US$)                                        Revenues
 Automotive (APG)              1,554         129         1,678        227
Analog, MEMS &                 3,200         418         3,377        606
Microcontrollers(AMM)
 Digital                       1,334        (154)        1,839        108
 Power Discrete (PDP)          1,015          18         1,240        139
 Wireless                      1,345        (885)        1,552       (812)
 Others                          45        (1,607)        49         (222)
 TOTAL                         8,493       (2,081)       9,735         46

 
 

First Quarter 2013 Business Outlook  

Mr. Bozotti stated, "In the first quarter, we expect our wholly-owned
businesses to deliver a better than seasonal revenue performance, with a
sequential decrease of about 3% at the midpoint, despite weak macro-economic
conditions. Including Wireless, we expect an overall revenue decrease of about
7% at the midpoint of our guidance as ST-Ericsson anticipates a very
significant sequential decrease in net sales.

-----
^(*) Adjusted net earnings per share are a non-U.S. GAAP measure. For
additional information and reconciliation to U.S. GAAP, please refer to
Attachment A.

"More broadly, semiconductor market conditions are expected to improve in
2013, driven by a more favorable economic environment. Even today, there are
initial signs of a mild recovery. At ST, we expect to outperform the market
with our Sense & Power and Automotive Products and Embedded Processing
Solutions segments. In particular, we expect imaging, microcontrollers, analog
and MEMS to be the highest contributors to our revenue performance.

"With respect to ST-Ericsson, we are finalizing our decision regarding
available strategic options. While we do not underestimate the challenges
related to the transition, we are committed to ensure a smooth and timely
exit.

"Overall, ST will be a much stronger Company with a re-sized cost base,
sharpened product focus and stronger market position."

The Company expects first quarter 2013 revenues to decrease sequentially in
the range of about -7%, plus or minus 3.5 percentage points. Reflecting lower
unsaturation charges but no revenues from licensing compared to the fourth
quarter, gross margin in the first quarter is expected to be about 31.4%, plus
or minus 2.0 percentage points.

ST, following its announcement to exit ST-Ericsson after a transition period
that is expected to end during the third quarter of 2013, is finalizing its
decision regarding available strategic options. Our current best estimate is
that ST could have funding requirements, including the ongoing operations of
ST-Ericsson during the transition period and restructuring costs, in the range
of approximately $300 million to $500 million during 2013, taking into account
the impact of the strategic options.

This outlook is based on an assumed effective currency exchange rate of
approximately $1.31 =€1.00 for the 2013 first quarter and includes the impact
of existing hedging contracts. The first quarter will close on March 30, 2013.

Recent Corporate Developments  

  * On December 10, ST announced its new strategic plan, vision and financial
    model. The outcome of a strategic review started more than a year ago as
    the company saw major changes in the dynamics of the wireless market. The
    plan is aimed at making the new ST more focused, leaner and better
    positioned to deliver value to customers and shareholders. The plan
    emphasizes two product-segment organizations that together address a
    growing $140 billion market shared roughly equally: Sense & Power and
    Automotive Products and Embedded Processing Solutions.  

The Sense & Power and Automotive Products Sector builds on ST's leading
positions in MEMS and sensors, power discrete and advanced analog products, as
well as automotive powertrain, safety, body and infotainment products. The
Embedded Processing Solutions Sector focuses on the core of the electronics
systems rather than on wireless broadband access and includes
microcontrollers, imaging products, digital consumer products, application
processors and digital ASICs.

As part of the new plan, ST said it would exit its investment in ST-Ericsson
after a transition period. ST emphasized that it would continue to pursue
significant growth opportunities in wireless through its leading product
portfolio and would continue to support ST-Ericsson as its supply-chain
partner, advanced process-technology partner (FD-SOI) and
application-processor IP provider.

In the announcement, ST also revealed its new financial model, in which the
company is targeting an operating margin of 10 percent or more. In order to
achieve the new financial model, ST is targeting a reduction in quarterly net
operating expenses to an average quarterly rate in the range of $600 million
to $650 million by the beginning of 2014.

  * On December 11, ST announced its progress in making available its 28nm
    FD-SOI Technology Platform from its Crolles (France) 300mm manufacturing
    facility. The silicon-verified process technology has now proven that it
    can deliver 30% higher speed at the same power and up to 50% greater power
    efficiency at the same performance as bulk processes at comparable cost.
    Ready for pre-production, this step confirms ST's ability to provide its
    planar fully-depleted technology from the 28nm technology node, essential
    to meeting the industry's highest performance and lowest power demands. 

Q4 2012 - Product and Technology Highlights

During the quarter, ST made strong progress with important new-product
introductions and significant design wins.

Automotive

·   Confirmed its leadership position in car-door electronics with an
exclusive-supplier contract for a new generation of door-zone modules at a
major equipment manufacturer.
·   Became a long-term supplier of audio amplifiers in car infotainment
systems for the world's largest automotive players.
·   Awarded a design win in the next-generation braking platform at a leading
automotive equipment maker.
·        Secured design wins for a multi-standard digital-radio chipset with
several large car-manufacturing groups.
·   Collected multiple design wins in China for 32-bit automotive
microcontrollers that manage transmission control, vehicle diagnostics, and
steering systems in the car.

Digital Sector

Digital Convergence
·   Earned multiple design wins for broadcast set-top box chips at leading
Chinese set-top box makers Jiuzhou and Inspur.
·        Collected a design win for the world's most powerful set-top box
system-on-chip (Orly) in an IPTV set-top box platform at a major Asian
equipment producer.
·        Saw increased traction for high-resolution multimedia-monitor
controllers in premium monitors and public displays: ST's innovative
systems-on-chip power, among others, LG's new 29-inch cinema display and
27-inch ultra-high-resolution monitor, and a public display from Samsung.
·   Earned multiple design wins for high-speed media-routing devices for
docking stations and dongles at several top PC OEMs.
·   Earned an important design win for a 32nm digital ASIC for
software-defined networks from a global networking giant.

Imaging, Bi-CMOS, ASIC and Silicon Photonics
·   Provided cutting-edge image-sensing technology for a new optical
navigation device at a leading consumer and PC peripherals maker.
·   Ramped volume production of innovative high-performance image sensors for
mobile applications, using ST's proprietary backside-illumination (BSI)
technology.

Analog, MEMS and Microcontrollers

  *    Announced that ST and PNI sensors are selected for Nintendo's Wii
    U^TM. 

·   Ramped production of extreme high-accuracy analog chips to monitor the
battery state in a range of smartphones from a worldwide leader.
·        Volume shipments to 1^st-tier Chinese manufacturers contributed to a
rebound in market share for Sound-Terminal audio devices for flat-panel TV.
·        Started production of Motion MEMS and iNEMO-Engine Sensor Fusion
Software for Windows 8^TM based tablets and smartphones.
·   Collected numerous design wins for the low-power SPIRIT1 radio
transceivers that transmit sensor data in industrial applications.
·   Shipped 60 million MEMS microphones by the end of 2012 across a broad
range of applications, including mobile phones, tablets and laptops.  
·   Earned a design win for a pressure sensor with a major phone manufacturer.
·   Awarded a design win for high-efficiency switching regulators in car
infotainment systems from a major European manufacturer.
·   Collected multiple wins for electronic fuses in hard-disk drives, set-top
boxes and DVD players from major Asian OEMs.
·   ST's smart-power (BCD8) device selected by a major Japanese manufacturer
for the next-generation 5mm and 7mm hard-disk drive platforms.
·   Built further STM32 momentum with an important design win for the STM32F4
at a major Chinese telecom-infrastructure OEM. The STM32 design-win run rate
has seen a steady increase with the new product series introduced in 2012.
·        Won the main controller slot for the STM8 low-power microcontroller
from a leading Japanese entertainment device manufacturer.
·        Collected multiple design wins for a dual-interface secure
microcontroller in the new EMV® (Europay/MasterCard/Visa) migration program in
China.
·   Awarded a design win from a key European industrial OEM for the
dual-interface wireless memory in an energy-management application.

Power Discretes

·   Collected multiple wins for MOSFET devices in power supplies and adapters
for leading PC makers.
·   Increased share of IGBT devices at large automotive customers in EMEA and
Japan for electronic ignition, air conditioning, and High Intensity Discharge
lamps.
·   Collected multiple design wins for dedicated rectifiers and protection
devices in various automotive applications at leading Asian OEMs.
·   Won new sockets for Integrated Passive & Active Devices (IPAD) at major
Chinese smartphone makers.
·   Secured multiple wins for power diodes in high-power industrial welding
equipment and TV adapters.

ST-Ericsson

·   Samples of ST-Ericsson's first FD-SOI product, manufactured by ST, became
available in December and the NovaThor L8580 ModAp platform was announced on
January 7, 2013.
·   Samsung GALAXY S III mini is powered by an ST-Ericsson NovaThor ModAp,
making it the fourth Samsung smartphone using the NovaThor platform.
·   With the new NovaThor L8580 ModAp ST-Ericsson introduced eQuad technology.
eQuad is a CPU architecture in which each processor core can operate as an
industry-leading high performance core or a very low-power core for less
computing-intensive tasks running at 0.6 V.
 ·   ST-Ericsson tested and demonstrated its VoLTE (Voice over LTE) technology
with key operators during the quarter.
·   ST-Ericsson announced that it is ready to support Jolla's Sailfish OS in
its NovaThor platforms.

iNEMO, IPAD, Orly, Sound Terminal, STM8 and STM32 are trademarks of
STMicroelectronics. NovaThor is a trademark of ST-Ericsson. All other
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 operating income (loss) before impairment, restructuring and
one-time items, operating margin before impairment, restructuring and one-time
items, operating margin before impairment, restructuring and one-time items
attributable to ST, adjusted net earnings, adjusted net earnings per share,
free cash flow, net financial position and net financial position, adjusted to
account for 50% investment in
ST-Ericsson.

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 anticipated by
such statements, due to, among other factors:

  * future risks to our core business as well as our ability to accurately
    estimate our share of costs and the required cash resources which ensue
    from our decision to exit ST-Ericsson; 

  * our ability to competitively address market demand for the products which
    we design manufacture and sell;  

  * changes in the market for our products, including the actual demand for
    products where we have achieved design wins and/or demand for applications
    where we are targeting growth, which is also dependent on our customers'
    ability to successfully compete in the application markets they serve with
    our products; 

  * our ability in periods of reduced market demand or visibility, to reduce
    our expenses as required, as well as our ability to operate our
    manufacturing facilities at sufficient levels with existing process
    technologies to cover our fixed operating costs; 

  * our ability, in an intensively competitive environment, to identify and
    allocate necessary design resources to successfully develop and secure
    customer acceptance for new products meeting their expectations;  

  * our ability to achieve our pricing expectations for high-volume supplies
    of new products in whose development we have been, or are currently,
    investing; 

  * the financial impact of obsolete or excess inventories if actual demand
    differs from our expectations; 

  * our ability to maintain or improve our competitiveness especially in light
    of 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 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; 

  * restructuring charges and associated cost savings that differ in amount or
    timing from our estimates; 

  * changes in our overall tax position as a result of changes in tax laws,
    the outcome of tax audits or changes in international tax treaties which
    may impact our results of operations as well as our ability to accurately
    estimate tax credits, benefits, deductions and provisions and to realize
    deferred tax assets; 

  * natural events such as severe weather, earthquakes, tsunami, volcano
    eruptions or other acts of nature, health risks and epidemics in locations
    where we, our customers or our suppliers operate; 

  * changes in economic, social, political or infrastructure conditions in the
    locations where we, our customers or our suppliers operate including as a
    result of macro-economic or regional events, military conflict, social
    unrest or terrorist activities;  

  * availability and costs of raw materials, utilities, third-party
    manufacturing services, or other supplies required by our operations; 

  * the outcome of ongoing litigation as well as any new litigation to which
    we may become a defendant; 

  * product warranty or liability claims based on epidemic, security or
    delivery failures or  recalls by our customers for a product containing
    one of our parts or claims arising out of  breaches of our information
    technology systems.  

 

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, 2011, as filed with the SEC on March 5,
2012. 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 Conference Call and Webcast Information

On January 31, 2013, the management of STMicroelectronics will host an
earnings presentation in Paris and will also conduct a conference call to
discuss performance for the fourth quarter and full year of 2012.

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

ST is a global leader in the semiconductor market serving customers across the
spectrum of sense and power and automotive products and embedded processing
solutions. From energy management and savings to trust and data security, from
healthcare and wellness to smart consumer devices, in the home, car and
office, at work and at play, ST is found everywhere microelectronics make a
positive and innovative contribution to people's life. By getting more from
technology to get more from life, ST stands for life.augmented.
Further information on ST can be found at www.st.com

                              (tables attached)

For further information, please contact:

INVESTOR RELATIONS:
Tait Sorensen        
Group VP, Investor Relations  
Tel: +1 602 485 2064
tait.sorensen@st.com

MEDIA RELATIONS:
Maria Grazia Prestini        
Group VP, Corporate Media and Public Relations
STMicroelectronics
Tel: + 41 22 929 6945

(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

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.

Operating income (loss) before, impairment, restructuring and one-time items
is used by 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 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, and other one-time items net of the relevant
tax impact.

Operating income (loss) before impairment, restructuring and one-time items
attributable to ST is calculated as operating income (loss) before impairment,
 restructuring and one-time items excluding 50% of ST-Ericsson operating
income (loss) before impairment, restructuring and one-time items as
consolidated by ST. Operating margin before impairment, restructuring and
one-time items attributable to ST is calculated as operating income (loss)
before restructuring attributable to ST divided by reported revenues excluding
50% of ST-Ericsson revenues 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 2012                        Gross    Operating     Net
(US$ millions  and  cents  per Profit Income (loss) Earnings Corresponding EPS
share)
U.S. GAAP                       697       (730)      (428)        (0.48)
Impairment & Restructuring                 588        307
Estimated Income Tax Effect                           (1)
Income Tax at ST Ericsson                              26
Non-U.S GAAP                    697       (142)       (96)        (0.11)

Q3 2012                        Gross    Operating     Net
(US$ millions  and  cents  per Profit Income (loss) Earnings Corresponding EPS
share)
U.S. GAAP                       753       (792)      (478)        (0.54)
Impairment & Restructuring                 713        456
Estimated Income Tax Effect                           (7)
Non-U.S GAAP                    753       (79)        (29)        (0.03)

 

 

Q4 2011                        Gross    Operating     Net
(US$ millions  and  cents  per Profit Income (loss) Earnings Corresponding EPS
share)
U.S. GAAP                       732       (132)       (11)        (0.01)
Impairment & Restructuring                  9          5
Estimated Income Tax Effect                           (2)
Non-U.S GAAP                    732       (123)       (8)         (0.01)

 

                                                                             
                  (continued)

(Attachment A - continued)       

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, marketable securities, short-term
deposits and 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$   December 31,     September 29,   December 31,
millions)                             2012           2012            2011
Cash and cash equivalents            2,250           1,686          1,912
Marketable securities                 238             237            413
Short-term deposits                    1               -              -
Restricted cash                        -               -              3
Non-current restricted cash            4               4              5
Total financial resources            2,493           1,927          2,333
Short-term borrowings and
current portion of                   (630)          (1,260)         (740)

long-term debt
Long-term debt                       (671)           (298)          (826)
Total financial debt                (1,301)         (1,558)        (1,566)
Net financial position               1,192            369            767
Net financial position, adjusted
to account for 50%                   1,192           1,064          1,167

investment in ST-Ericsson

Free 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, short-term deposits and restricted
cash. We believe free 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. Free
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 free cash flow may differ from
definitions used by other companies.

Free cash flow (in US$ millions)                     Q4 2012   Q3 2012 Q4 2011
Net cash from (used in) operating activities          252       148      137
Net cash from (used in) investing activities         (107)     (203)     43
Payment for purchases of (proceeds from sale of)
 marketable securities, short-term deposits and        -       (25)     (133)
restricted cash, net
Free cash flow                                        145      (80)      47

                                       

                                   --end---

                                       

STMicroelectronics N.V.
Consolidated Statements of Income
(in millions of U.S. dollars, except per share data
($))
                                                        Three Months Ended
                                                     (Unaudited)  (Unaudited)
                                                     December 31, December 31,
                                                             2012         2011
Net sales                                                   2,111        2,170
Other revenues                                                 51           21
  NET REVENUES                                              2,162        2,191
Cost of sales                                             (1,465)      (1,459)
  GROSS PROFIT                                                697          732
Selling, general and administrative                         (291)        (280)
Research and development                                    (585)        (614)
Other income and expenses, net                                 37           39
Impairment, restructuring charges and other related         (588)          (9)
closure costs
  Total Operating Expenses                                (1,427)        (864)
  OPERATING LOSS                                            (730)        (132)
Interest expense, net                                         (9)          (5)
Income (loss) on equity-method investments                   (11)          (6)
Gain on financial instruments, net                              -            3
LOSS BEFORE INCOME TAXES                                    (750)        (140)
   AND NONCONTROLLING INTEREST
Income tax expense                                           (39)         (70)
  NET LOSS                                                  (789)        (210)
Net loss (income) attributable to noncontrolling              361          199
interest
  NET LOSS ATTRIBUTABLE TO PARENT COMPANY                   (428)         (11)
  EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT        (0.48)       (0.01)
COMPANY STOCKHOLDERS
  EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO             (0.48)       (0.01)
PARENT COMPANY STOCKHOLDERS
  NUMBER OF WEIGHTED AVERAGE
  SHARES USED IN CALCULATING
  DILUTED EARNINGS PER SHARE                                887.9        885.0

STMicroelectronics N.V.
Consolidated Statements of Income
(in millions of U.S. dollars, except per share data
($))
                                                        Twelve Months Ended
                                                     (Unaudited)   (Audited)
                                                     December 31, December 31,
                                                             2012         2011
Net sales                                                   8,380        9,630
Other revenues                                                113          105
  NET REVENUES                                              8,493        9,735
Cost of sales                                             (5,710)      (6,161)
  GROSS PROFIT                                              2,783        3,574
Selling, general and administrative                       (1,166)      (1,210)
Research and development                                  (2,413)      (2,352)
Other income and expenses, net                                 91          109
Impairment, restructuring charges and other related       (1,376)         (75)
closure costs
  Total Operating Expenses                                (4,864)      (3,528)
  OPERATING INCOME (LOSS)                                 (2,081)           46
Other-than-temporary impairment charge and realized             -          318
gain on financial assets
Interest expense, net                                        (35)         (25)
Loss on equity-method investments                            (24)         (28)
Gain on financial instruments, net                              3           25
  INCOME (LOSS) BEFORE INCOME TAXES                       (2,137)          336
   AND NONCONTROLLING INTEREST
Income tax expense                                           (51)        (181)
  NET INCOME (LOSS)                                       (2,188)          155
Net loss (income) attributable to noncontrolling            1,030          495
interest
  NET INCOME (LOSS) ATTRIBUTABLE TO PARENT COMPANY        (1,158)          650
  EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT        (1.31)         0.74
COMPANY STOCKHOLDERS
  EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO             (1.31)         0.72
PARENT COMPANY STOCKHOLDERS
  NUMBER OF WEIGHTED AVERAGE
  SHARES USED IN CALCULATING
  DILUTED EARNINGS PER SHARE                                886.7        904.5

STMicroelectronics N.V.
CONSOLIDATED BALANCE SHEETS
As at                                  December 31, September 29, December 31,
In millions of U.S. dollars                2012         2012          2011
                                       (Unaudited)   (Unaudited)   (Audited)
ASSETS
Current assets:
Cash and cash equivalents                     2,250         1,686        1,912
Restricted cash                                   -             -            3
Short-term deposits                               1             -            -
Marketable securities                           238           237          413
Trade accounts receivable, net                1,005         1,040        1,046
Inventories, net                              1,353         1,484        1,531
Deferred tax assets                             137           155          141
Assets held for sale                              -             -           28
Other current assets                            518           612          506
Total current assets                          5,502         5,214        5,580
Goodwill                                        141           370        1,059
Other intangible assets, net                    213           554          645
Property, plant and equipment, net            3,481         3,611        3,920
Non-current deferred tax assets                 414           365          332
Restricted cash                                   4             4            5
Long-term investments                           119           114          121
Other non-current assets                        560           480          432
                                              4,932         5,498        6,514
Total assets                                 10,434        10,712       12,094
LIABILITIES AND EQUITY
Current liabilities:
Bank overdrafts                                   -             -            7
Short-term debt                                 630         1,260          733
Trade accounts payable                          797           864          656
Other payables and accrued liabilities          942           934          976
Dividends payable to stockholders                89           178           88
Deferred tax liabilities                         11             1           14
Accrued income tax                               86            84           95
Total current liabilities                     2,555         3,321        2,569
Long-term debt                                  671           298          826
Post-retirement benefit obligations             477           426          409
Long-term deferred tax liabilities               14            23           21
Other long-term liabilities                     353           315          273
                                              1,515         1,062        1,529
Total liabilities                             4,070         4,383        4,098
Commitment and contingencies
Equity
Parent company stockholders' equity
Common stock (preferred stock:                1,156         1,156        1,156
540,000,000 shares authorized, not
issued; common stock: Euro 1.04
nominal value, 1,200,000,000 shares
authorized, 910,559,805 shares issued,
887,953,202 shares outstanding)
Capital surplus                               2,555         2,549        2,544
Retained earnings                             1,959         2,388        3,504
Accumulated other comprehensive income          794           743          670
Treasury stock                                (239)         (240)        (271)
Total parent company stockholders'            6,225         6,596        7,603
equity
Noncontrolling interest                         139         (267)          393
Total equity                                  6,364         6,329        7,996
Total liabilities and equity                 10,434        10,712       12,094

STMicroelectronics N.V.
SELECTED CASH FLOW DATA
Cash Flow Data (in US$ millions)             Q4 2012 Q3 2012 Q4 2011
Net Cash from operating activities               252     148     137
Net Cash from (used in) investing activities   (107)   (203)      43
Net Cash from (used in) financing activities     406    (80)   (213)
Net Cash increase (decrease)                     564   (120)    (61)
Selected Cash Flow Data (in US$ millions)    Q4 2012 Q3 2012 Q4 2011
Depreciation & amortization                      272     266     315
Net payment for Capital expenditures            (78)   (203)    (76)
Dividends paid to stockholders                  (89)    (89)    (89)
Change in inventories, net                       143      24     139

ST FY 2012 Q4

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