SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
Report on Form 6-K dated January 25, 2007
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STMicroelectronics N.V.
(Name of Registrant)
39, Chemin du Champ-des-Filles
1228 Plan-les-Ouates, Geneva, Switzerland
(Address of Principal Executive Offices)
----------
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [_]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):
Yes [_] No [X]
Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- __________
Enclosure: A press release dated January 23, 2007 announcing 2006 fourth quarter
and full year revenues and earnings.
PR No. C2532C
STMicroelectronics Reports 2006 Fourth Quarter and Full Year
Revenues and Earnings
o Fourth quarter results: Revenues of $2.48 billion, 3.9% year-over-year
growth, 1.2% sequential decrease; gross margin of 36.3%
o 2006 revenues increase 11% to $9.85 billion
o Net income for 2006 nearly tripled to $782 million from $266 million
in the prior year
o Net operating cash flow for 2006 reached $666 million
Geneva, January 23rd, 2007 - STMicroelectronics (NYSE: STM) reported financial
results for the fourth quarter and full year ended December 31, 2006.
Revenues and Gross Profit
-------------------------
Net revenues for the fourth quarter were $2,483 million, representing an
increase of 3.9% over the $2,389 million reported in last year's fourth quarter.
Year-over-year growth was driven by double-digit increases in the industrial and
consumer market segments. Sequentially, net revenues decreased 1.2% from the
$2,513 million reported in the prior quarter, largely reflecting lower wireless
sales.
President and CEO Carlo Bozotti commented, "Looking at the fourth quarter and
near-term environment, the current market correction underway in some of the key
applications we serve is more pronounced than forecasted. Our wireless results,
in particular, came in well below historical seasonal revenue patterns and were
also negatively impacted by product mix shift towards the low end, which put
additional pressure on our margins and operating performance in the quarter."
Net revenues for the year ended December 31, 2006 were $9,854 million, an
increase of 11% over the $8,882 million recorded in 2005. Strong growth in
revenues was driven by double-digit increases in wireless and industrial, with
mid-single digit contributions from the automotive, consumer and computer
segments.
Carlo Bozotti continued, "For the full year, ST achieved double-digit,
year-over-year sales growth in a market that appears to be growing in the high
single digits. This is a clear signal that the evolution of our product
portfolio is delivering results - with higher revenues, improved profitability,
better leverage of our R&D and capital investments, and expansion of our market
share."
Gross profit was $901 million for the 2006 fourth quarter up from the
$872 million in last year's fourth quarter and a slight decrease from $904
million in the prior quarter. The gross margin was 36.3% in the fourth quarter,
showing some improvement from the 36.0% reported in the prior quarter, despite
the negative impact of fab closures and sequentially lower revenue. In the more
favorable currency environment for the year-ago quarter, the gross margin was
36.5%.
For the full year, gross profit increased 16% to $3,523 million, from $3,037
million in 2005. The gross margin improved by 160 basis points in 2006 to 35.8%
from 34.2% in 2005.
Operating Expenses
------------------
Combined selling, general & administrative and research & development expenses
represented 28.6% of net revenues in the fourth quarter, compared to 27.2% in
the third quarter of 2006, with the sequential increase largely coming from the
anticipated additional $12 million in stock-based compensation expenses. R&D
expenses were $430 million in the fourth quarter versus the $421 million in the
prior quarter. SG&A expenses reached $281 million for the 2006 fourth quarter
compared to $264 million in the third quarter.
For the full year, combined SG&A and R&D expenses improved to 27.7% of net
revenues versus 29.9% in 2005. Research and development expenses were $1,667
million and $1,630 million in 2006 and 2005, respectively. Selling, general &
administrative expenses were $1,067 million and $1,026 in 2006 and 2005,
respectively.
Operating Profit
----------------
For the 2006 fourth quarter, the Company reported operating income of $173
million and an operating margin of 7.0% (7.4% excluding restructuring and
impairment charges). In the prior quarter, the Company reported operating income
of $194 million and an operating margin of 7.7% (8.5% excluding restructuring
and impairment charges). In the year-ago quarter, the Company reported operating
income of $197 million, equal to an operating margin of 8.2% (8.9% excluding
restructuring and impairment charges).
For the full year 2006, operating income increased to $677 million, compared to
$244 million in 2005. The operating margin for 2006 expanded over 400 basis
points to 6.9% from 2.7% in the prior year.
Net Income and Earnings per Share
---------------------------------
For the 2006 fourth quarter net income totaled $276 million, or $0.30 per
diluted share, compared to the prior quarter net income of $207 million or $0.22
per diluted share and the year-ago quarter where net income totaled $183 million
or $0.20 per share. 2006 fourth quarter income tax benefited from the favorable
resolution of a tax claim by approximately $90 million, or $0.10 per diluted
share, as well as from the beneficial impact of an adjustment to the full year
effective tax rate.
2
Net results included $10 million of impairment, restructuring charges, and other
related closure costs during the 2006 fourth quarter, representing an after-tax
impact of approximately $0.01 per share. In the prior quarter,
restructuring-related expenses were $20 million ($0.02 per share impact) and $16
million ($0.01 per share impact) in the year-ago quarter. Other income and
expenses, net, in the 2006 fourth quarter amounted to a $7 million loss, due to
a combination of lower than anticipated grant income and higher legal costs.
For 2006 net income increased to $782 million, or $0.83 per diluted share,
compared to net income of $266 million, or $0.29 per share in 2005. Net income
included impairment, restructuring charges and other related closure costs of
$77 million and $128 million in 2006 and 2005, respectively, representing
after-tax impacts of approximately $0.07 for 2006 and $0.13 per share for 2005.
In the fourth quarter of 2006, the effective average exchange rate for the
Company was approximately $1.28 to (euro)1, compared to $1.255 to (euro)1 in the
third quarter of 2006 and $1.20 to (euro)1 in the year-ago quarter.
For the full year 2006, the effective average exchange rate for the Company was
approximately $1.24 to (euro)1, compared to $1.28 to (euro)1 in 2005. The
Company's effective exchange rate reflects actual exchange rate levels combined
with the impact of hedging programs.
Carlo Bozotti, President and CEO, stated, "During 2006 ST made significant
headway in delivering on our most important business and strategic imperatives:
o Our product portfolio continues to strengthen. I believe we are
developing the strongest pipeline of new products in our history, with
important implications for both our market share and margins.
o We are driving a significant reduction in our capital intensity. This
is visible in our 2006 results, with our capex to sales ratio down to
15.6% from over 20% just a few years ago. Further, we have initiated a
new target of 12% through a combination of a less capital-intensive
product portfolio, increased usage of foundries for non-proprietary
technologies and optimization of our manufacturing facilities.
o As of January 1, 2007, we have organized our NOR and NAND FLASH
business into a stand-alone segment and are moving ahead on creating a
separate legal entity in connection with our strategic repositioning
of this business.
o And, we generated well over $650 million in net operating cash flow
during the year.
"In summary, we achieved our primary objectives for 2006: gaining market share
while simultaneously improving financial performance in terms of return on
assets and cash flow."
3
Cash Flow and Balance Sheet Highlights
--------------------------------------
Net cash from operating activities was $559 million in the fourth quarter and
$2,491 million for the full year 2006. Capital expenditures were $386 million in
the 2006 fourth quarter and $1,533 million for the full year, compared to $230
million and $1,441 million in the 2005 similar periods, respectively. Net
operating cash flow* was $157 million for the fourth quarter, compared to $290
million in the year-ago quarter, and $81 million in the prior quarter.
For the full year 2006, ST generated $666 million in net operating cash flow*
compared to $270 million in 2005.
At December 31, 2006, ST's cash and cash equivalents, marketable securities,
short-term deposits and restricted cash equaled $2.9 billion. Total debt was
$2.1 billion. ST's net financial position** improved by approximately $536
million in 2006 to $761 million. Shareholders' equity was $9.7 billion at
December 31, 2006.
(*) Net operating cash flow is a non-US GAAP metric, which the Company's
management utilizes as a measure of cash generation capability. It is
defined as net cash from operating activities ($559 million in the fourth
quarter of 2006) minus net cash used in investing activities (primarily
capital expenditures) excluding restricted cash, payments for purchase of
and proceeds from the sale of marketable securities and investment in and
proceeds from matured short-term deposits ($402 million in the fourth
quarter of 2006).
(**) Net financial position is a non-US GAAP metric used by the Company's
management to help assess financial flexibility. It is defined as cash and
cash equivalents, marketable securities, and short-term deposits and
restricted cash ($2,891 million) minus total debt (bank overdrafts $0
million + current portion of long-term debt $136 million + long-term debt
$1,994 million).
Net Revenues by Market Segment for Q4 and Full Year 2006
--------------------------------------------------------
The following table estimates, within a variance of 5% to 10% in the absolute
dollar amount, the relative weighting of each of the Company's target market
segments for the fourth quarter and full year 2006.
----------------------------------------------- -------------------------------
Market Segment % of Net Revenues
----------------------------------------------- --------------- ---------------
Q4 2006 FY 2006
----------------------------------------------- --------------- ---------------
Automotive 15% 15%
Consumer 17% 16%
Computer 17% 17%
Telecom 36% 38%
Industrial & Others 15% 14%
----------------------------------------------- --------------- ---------------
For the fourth quarter, Consumer was the fastest growing segment sequentially,
increasing by about 5%. Industrial and Others and Computer were both up
approximately 2% over the prior quarter. Automotive was essentially flat while
Telecom declined 6.5% from the prior quarter.
4
For the year, Telecom was the fastest growing segment, increasing nearly 19%,
followed by Industrial and Others, which was up 10%. Automotive, Computer and
Consumer all increased approximately 6%.
Financial and Operating Data by Product Segment for Q4 and Full Year 2006
-------------------------------------------------------------------------
The following tables and commentary provide a breakdown of revenues and
operating income by product segment.
In Million US$ Q4 2006
--------------------------------------------------------------------------------
Operating
Net % of Net income
Segment Revenues Revenues (loss)
--------------------------------------------------------------------------------
ASG (Application Specific Product Groups)* $1,342 54.0% $111
MPA (Micro, Power & Analog)** 597 24.1% 103
MPG (Memory Products Group) 525 21.1% 0
Others (1)(2) 19 0.8% (41)
--------------------------------------------------------------------------------
TOTAL $2,483 100% $173
--------------------------------------------------------------------------------
Sequentially, Application Specific Product Groups' revenues decreased 2%, MPG
sales declined 0.8%, and MPA sales increased 0.3%. Operating profit declined to
$111 million for Application Specific Product Groups and $103 million for MPA.
MPG was breakeven. Flash memory sales declined 1.6% from the prior quarter to
$369 million.
--------------------------------------------------------------------------------
In Million US$ Full Year 2006
--------------------------------------------------------------------------------
Operating
Net % of Net income
Segment Revenues Revenues (loss)
--------------------------------------------------------------------------------
ASG (Application Specific Product Groups)* $5,396 54.7% $439
MPA (Micro, Power & Analog)** 2,243 22.8% 362
MPG (Memory Products Group) 2,137 21.7% 34
Others (1)(2) 78 0.8% (158)
--------------------------------------------------------------------------------
TOTAL $9,854 100% $677
--------------------------------------------------------------------------------
* Automotive; Computer Peripheral; and Home, Personal, and Communication
products
** Effective January 1, 2006 the Microcontroller, Linear and Discrete (MLD)
Group was renamed as the Micro, Power and Analog (MPA) product segment to
better reflect product portfolio focus and increased capabilities in
advanced Analog. No change occurred in the Group's perimeter or
organization.
(1) Net revenues of "Others" include revenues from sales of Subsystems and
other products not allocated to product segments.
(2) Operating loss of "Others" includes items such as 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, certain patent claims
and litigations, and other costs that are not allocated to the product
segments, as well as operating earnings or losses of the Subsystems and
Other Products segment. Certain costs, mainly R&D, formerly in the "Others"
category, have been allocated to the segments.
5
For the full year, ASG revenues increased 8%, MPA revenues increased 19%, and
MPG revenues increased nearly 10%. Operating profit increased 24% to $439
million in ASG, grew 34% to $362 million in MPA, and went from a loss of $118
million to a profit of $34 million in MPG.
Outlook
-------
Mr. Bozotti stated, "Notwithstanding the current tougher environment as the
market works through inventory in selected applications in the first half of
2007, ST is poised to make further important progress in our ongoing key
initiatives for sales expansion, new product introduction and asset leverage,
which will strengthen the Company's market opportunities and financial position.
"For the first quarter, we expect sales to sequentially decline in the range
between -3% and -11%. This sales range, coupled with our intention to control
the absolute level of inventory, will result in adverse fab loading conditions
in the quarter, leading to a first quarter gross margin of about 35% plus or
minus one percentage point.
"In 2007, we are currently budgeting about $1.2 billion for ST's capital
spending which is expected to further reduce the Company's capex to sales ratio
from the 2006 level."
These objectives are based on an assumed currency exchange rate for the Company
of approximately $1.29 = (euro)1 for the 2007 first quarter, which reflects
current exchange rate levels combined with the impact of existing hedging
contracts.
Recent Corporate Developments
-----------------------------
On October 10, 2006, ST and Hynix Semiconductor officially opened their joint
front-end memory-manufacturing facility in Wuxi City, Jiangsu Province, China.
The new leading-edge facility manufactures both NAND Flash and DRAM memories.
On November 27, 2006, the Supervisory Board of STMicroelectronics N.V. approved
entering into an option agreement with an independent foundation, Stichting
Continuiteit ST, to replace a substantially similar option agreement dated May
31, 1999, as amended, between STMicroelectronics and one of its shareholders,
STH II B.V. The new option agreement is entered into to reflect changes in
Netherlands' legal requirements. It is not adopted in response to any hostile
takeover attempt.
In an effort to better align the Company to meet the requirements of the market,
together with the pursuit of strategic repositioning in Flash Memory, on
December 13, 2006, the Company announced a reorganization of its product
segments into three main areas: Flash Memory products, Application Specific
products, and Industrial and Multisegment products. The Flash Memory Group
incorporates all Flash Memory operations, including R&D and product-related
activities, front- and back-end manufacturing, marketing, and sales. The
Application Specific product groups include the existing Automotive Products
Group and Computer Peripherals Group and the newly created Mobile, Multimedia &
Communications Group and Home Entertainment & Displays Group. The Industrial and
Multisegment Sector contains the Microcontrollers, Memories & Smartcards Group
and the Analog, Power & MEMS Group. The new product segments became effective on
January 1, 2007.
6
The following table provides the 2006 quarterly revenue performance for this new
organizational footprint. Operating profit data will be provided commencing with
the first quarter 2007 financial results release.
-----------------------------------------------------------------------------------------------------------------------------------
In Million US$
-----------------------------------------------------------------------------------------------------------------------------------
Segment Revenues Q1 2006 Q2 2006 Q3 2006 Q4 2006 FY 06
-----------------------------------------------------------------------------------------------------------------------------------
ASG (Application Specific Groups) $1,317 $1,367 $1,370 $1,342 $5,396
IMS (Industrial and Multisegment Sector) 621 707 754 760 2,842
FMG (Flash Memory Group) 412 407 379 372 1,570
Other 14 14 10 8 46
TOTAL $2,364 $2,495 $2,513 $2,483 $9,854
-----------------------------------------------------------------------------------------------------------------------------------
Totals are correct, rounding accounts for any inconsistencies
Products, Technology and Design Wins
------------------------------------
Application-Specific Product Highlights
---------------------------------------
o In mobile communications, ST signed an agreement with Ericsson Mobile
Platforms to supply third-generation (3G) digital baseband processors
to OEMs that are licensees of Ericsson Mobile Platforms' leading-edge
3G mobile-phone technology. And in the infrastructure area, ST has
started shipment in volume of a 90nm ASIC with embedded DRAM to a
world-leading communications infrastructure customer.
o In mobile multimedia, ST announced that its Nomadik(TM) multimedia
application processor had been chosen by Samsung Electronics for use
in several new digital TV mobile phone models for the Korea market.
The new phones will receive Terrestrial Digital Multimedia
Broadcasting (T-DMB) signals and deliver to consumers TV and radio
channels as well as data services. Additionally, a leading handset
manufacturer has introduced a Symbian-based Smartphone, using the
Nomadik platform, that combines 3.5G communications with advanced
multimedia features such as dual cameras and videoconferencing
capability.
o In digital consumer, ST delivered the first samples of its new
flagship 65nm single-chip dual HDTV decoder, the STi7200, which is
aimed at the entire digital video market from dual-TV set-top boxes
(STBs) to combined Blu-ray and HD-DVD products and integrated digital
TVs. Design-ins for the STi7200 are already underway in Japan and the
US. ST also gained several design wins for a new cost-optimized
chipset in digital STBs across all regions.
o Also in consumer, ST consolidated its leading position in shipments of
single-chip MPEG-4 decoders, which included one million STi710x-based
MPEG-4 STBs shipped by Sagem. ST also consolidated its leading
position in the China digital cable market with record shipments of
7
its QAMi516 front-end decoder, which has become a de-facto standard in
the fast growing market, and deployed its STi5100-based DVR solution
in volume for the new Freeview-Playback platform, which is widely
accepted in the UK's terrestrial STB retail market. ST continued to
lead the MHP (Multimedia Home Platform) market in Europe with volume
deployment of STi5517-based interactive terrestrial STBs in Austria.
o In automotive powertrain and safety applications, ST further
consolidated its worldwide leadership in airbag devices with a design
win from a major North American tier-one company for model-year 2009.
The Company also gained important design wins with Japanese tier-one
suppliers for power-steering solutions. Other significant design wins,
with volume production scheduled for the second half of 2007, were
achieved with a major Chinese OEM in powertrain, airbag and alternator
regulator applications.
o In the car body arena, ST achieved key design wins for its
industry-leading Vertically Integrated Power technology for
next-generation platforms in Europe and the US. ST also announced that
its ST7FMC microcontroller family has been Automotive-Grade qualified
and is ideal for use in various car-body applications such as fuel and
water pumps, cooling fans and interior blowers.
o In car radio and multimedia, a major European car maker selected ST's
single-chip GPS and Navigation system for new telematic equipment and
ST started a cooperative effort with a major European OEM for the
development of a new radio navigation system based on the Nomadik
platform. Another major European OEM selected ST's TDA7705 tuner and
STA1052 CD servo/MP3 decoder chips for its 2009 model-year car radios.
In digital radio broadcasting, ST announced an agreement with iBiquity
to develop an optimized baseband receiver SoC for HD Radio(TM), which
offers enhanced sound quality, more programming choice and new
wireless data services.
o In MEMs, while launching its new Wii(TM) games console, Nintendo
credited ST's three-axis accelerometer with dramatically changing the
way people play games. The MEMS-based technology detects the motion
and tilt of a player's hand in three dimensions and converts it into
game action. In November, ST also became the first major semiconductor
manufacturer to dedicate a 200mm semiconductor wafer fabrication line
to MEMS devices at its manufacturing site at Agrate, near Milan, to
help drive the increasing demand for MEMS technology in consumer
applications, such as gaming and mobile phones.
o Also in MEMS, ST introduced the first two devices in its new LIS302
family of low-g linear accelerometers, distinguished by small form
factor and low power consumption. The feature-rich sensors meet the
growing demand for smart functionality, such as hard-disk drive
protection and motion-controlled operation, in mobile phones, digital
audio players and laptops. Additionally in MEMS, ST and Ball-IT
announced a novel MEMS-based wireless motion-control device. The
smart golf-ball-sized object can operate as a free-hand personal
computer mouse, compass, measuring tape, pedometer, or a 3D-object
controller.
8
Multi-Segment and Memory Product Highlights
-------------------------------------------
o ST announced the availability of its entire NAND Flash memory family
in 70nm process technology. The transition of the 512-Mbit (Small
Page) and 1/2/4/8-Gbit (Large Page) devices to ST's advanced 70nm
process establishes the family at the leading edge of NAND Flash
technology, and enables lower prices and reduced power consumption.
o The secure microcontroller that is at the heart of the new Spanish
National ID Card scheme is to be provided by ST. Two million cards are
expected to be issued in 2007, and six million in 2008. Also in smart
cards, ST delivered the first product in its new ST21 platform, which
is aimed at large-volume applications such as 2.5G and 3G SIM cards.
Additionally, ST migrated its Trusted Platform Module (TPM) to
0.15-micron process technology to deliver increased cost benefits for
PC manufacturers.
o The ARM(R) Cortex(TM)-M3 processor is to be integrated into ST's
next-generation family of 32-bit microcontrollers. ST was a lead
partner in ARM's development of the Cortex-M3 and the licensing
agreement will enable ST to accelerate the market's transition from
16-bit MCUs to 32-bit solutions. Also in the 32-bit MCU market, ST
continued to gain major design wins, particularly with important wins
in the Korea and Taiwan consumer markets, for its STR7 ARM-based MCUs.
o In power applications, ST introduced the single-chip L6585, which
integrates a Power Factor Corrector (PFC) with a half-bridge
controller and all the relevant drivers and logic for an electronic
ballast IC for fluorescent lamps. ST also gained a design win for a
Power-Factor Correction device with a world leading company in
lighting and strengthened its market share with design wins in various
power management fields, including LCD TVs and notebook, desktop and
server applications with major US and Taiwanese OEMs. ST also gained
good traction in the fast-growing powerline-communications market with
a significant design win for the ST7540 powerline transceiver at
Landis & Gyr and for the ST7538Q in an ENEL automatic meter-management
platform for use by Italian utility companies.
o ST's new STD11NM60N power MOSFET family allows customers to
drastically reduce conduction losses and increase efficiency and
reliability of their lighting applications by achieving very low
ON-resistance and excellent dynamic and avalanche characteristics.
Additionally, ST achieved several power MOSFET design wins for several
diverse applications including street lamps, desktop PC power
supplies, LED drivers and power metering.
o ST and Velox Semiconductor announced an agreement to jointly introduce
GaN (Gallium nitride) Schottky diodes into the market, with a
long-term goal of establishing both companies as dual-source suppliers
of the devices. Also in power applications, ST also gained numerous
design wins for its power bipolar, ESBT and IGBT transistors,
primarily in industrial applications, but also in communications and
automotive; and a design win with a leading hard-disk drive OEM for
the ST1S03 voltage regulator.
9
o In advanced analog and logic, ST launched the STLM20 ultra-low-power
precision temperature sensor, which has received both qualification
and orders from a major Asian mobile phone vendor, and qualification
at major mobile phone manufacturers in the US and Europe. ST's STLM75
device is now sampling at a leading PC manufacturer and has also been
qualified at a major server manufacturer, both of which are in the US.
ST also achieved a major design win with a leading Korean manufacturer
for its recently introduced STHDMI002 2:1 HDMI switch, which is a
1.65-Gbps device that supports up to the 1080-pixel video format.
Technology Highlights
---------------------
o ST announced that it has designed a complete prototype device able to
collect and manipulate specific biological molecules. Combined with
ST's proven laboratory-on-chip technology, ST's research project will
pave the way for the development of low-cost disposable chips that
automate the quick preparation, analysis and evaluation of medical and
forensic biological samples.
o ST participated at the International Electron Device Meeting (IEDM)
2006 as a presenter of 11 papers, ranging from mainstream CMOS
technology to non-volatile memories and CMOS image sensors.
All of STMicroelectronics' press releases (including all releases in Q4) are
available at www.st.com/stonline/press/news/latest.htm
Nomadik is a trademark of STMicroelectronics; HD Radio is a trademark of
iBiquity Digital Corporation; Wii is a trademark of Nintendo; ARM and Cortex are
trademarks of ARM Limited. All other mentioned trademarks or registered
trademarks are the property of their respective owners.
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) based on management's
current views and assumptions and 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:
10
o future developments of the world semiconductor market, in particular
the future demand for semiconductor products in the key application
markets and from key customers served by our products;
o pricing pressures, losses or curtailments of purchases from key
customers all of which are highly variable and difficult to predict;
o the financial impact of obsolete or excess inventories if actual
demand differs from our anticipations;
o changes in the exchange rates between the U.S. dollar and the Euro,
compared to our effective exchange rate of 1.29 = (euro)1.00 (as
assumed on January 23, 2007, the date we issued our fourth
quarter/full year results) and between the U.S. dollar and the
currencies of the other major countries in which we have our operating
infrastructure;
o our ability to manage in an intensely competitive and cyclical
industry where a high percentage of our costs are fixed and difficult
to reduce in the short term, including our ability to adequately
utilize and operate our manufacturing facilities at sufficient levels
to cover fixed operating costs;
o our ability to perform the announced strategic repositioning of our
Flash memory business in line with the requirements of our customers
and without adverse effect on existing alliances or other agreements
relating to this business;
o our ability in an intensive competitive environment, to secure
customer acceptance and to achieve our pricing expectations for high
volume supplies of new products in whose development we have or are
currently investing;
o the anticipated benefits of research and development alliances and
cooperative activities, as well as the uncertainties concerning the
modalities, conditions and financial impact beyond 2007 of the R&D
cooperative alliance in Crolles 2;
o the ability of our suppliers to meet our demands for supplies and
materials and to offer competitive pricing;
o our gross margin could vary significantly from expectations based on
changes in revenue levels, product mix and pricing, capacity
utilization, variations in inventory valuation, excess or obsolete
inventory, manufacturing yields, changes in unit costs, impairments of
long-lived assets, including manufacturing, assembly/test and
intangible assets, and the timing and execution of the manufacturing
ramp and associated costs, including start-up costs;
o changes in the economic, social or political environment, including
military conflict and/or terrorist activities, as well as natural
events such as severe weather, health risks, epidemics or earthquakes
in the countries in which we, our key customers and our suppliers
operate;
11
o changes in our overall tax position as a result of changes in tax laws
or the outcome of tax audits, and our ability to accurately estimate
tax credits, benefits, deductions and provisions and to realize
deferred tax assets;
o our ability to obtain required licenses on third-party intellectual
property on reasonable terms and conditions, the impact of potential
claims by third parties involving intellectual property rights
relating to our business, and the outcome of litigation;
o the results of actions by our competitors, including new product
offerings and our ability to react thereto.
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 such
forward-looking statements can be identified by the use of forward-looking
terminology such as "believes", "may", "will", "should", "would be" 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, 2005, as filed with the SEC on
March 3, 2006. 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.
Unfavorable changes in the above or other factors listed under "Risk Factors"
from time to time in our SEC filings, including our Form 20-F, could have a
material adverse effect on our business or financial condition.
Conference Call Information
---------------------------
The management of STMicroelectronics will conduct a conference call on January
24, 2007, at 9:00 a.m. U.S. Eastern Time / 3:00 p.m. CET, to discuss performance
for the fourth quarter and full year of 2006.
The conference call will be available via the Internet by accessing the
following Web address: http://investors.st.com. Those viewing 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 2, 2007.
About STMicroelectronics
------------------------
STMicroelectronics is a global leader in developing and delivering semiconductor
solutions across the spectrum of microelectronics applications. An unrivalled
combination of silicon and system expertise, manufacturing strength,
Intellectual Property (IP) portfolio and strategic partners positions the
Company at the forefront of System-on-Chip (SoC) technology and its products
play a key role in enabling today's convergence markets. The Company's shares
12
are traded on the New York Stock Exchange, on Euronext Paris and on the Milan
Stock Exchange. Further information on ST can be found at www.st.com.
For further information, please contact:
INVESTOR RELATIONS:
Stanley March
Group Vice President, Investor Relations
Tel: +1.212.821.89.39
Fax: +1.212.821.89.23
stan.march@st.com
MEDIA RELATIONS:
Maria Grazia Prestini
Senior Director, Corporate Media and Public Relations
STMicroelectronics
Tel: + 41 22 929 6945
mariagrazia.prestini@st.com
13
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,
2006 2005
---- ----
Net sales 2,482 2,388
Other revenues 1 1
----------------
NET REVENUES 2,483 2,389
Cost of sales (1,582) (1,517)
----------------
GROSS PROFIT 901 872
Selling, general and administrative (281) (259)
Research and development (430) (402)
Other income and expenses, net (7) 2
Impairment, restructuring charges and other related closure costs (10) (16)
----------------
Total Operating Expenses (728) (675)
----------------
OPERATING INCOME 173 197
Interest income, net 25 11
Loss on equity investments (1) 0
----------------
INCOME BEFORE INCOME TAXES 197 208
AND MINORITY INTERESTS
Income tax benefit (expense) 80 (25)
----------------
INCOME BEFORE MINORITY INTERESTS 277 183
Minority interests (1) 0
----------------
NET INCOME 276 183
================
EARNINGS PER SHARE (BASIC) 0.31 0.20
EARNINGS PER SHARE (DILUTED) 0.30 0.20
NUMBER OF WEIGHTED AVERAGE
SHARES USED IN CALCULATING 940.7 937.3
DILUTED EARNINGS PER SHARE
STMicroelectronics N.V.
Consolidated Statements of Income
(in million of U.S. dollars, except per share data ($))
Twelve Months Ended
------------------
(Unaudited) (Audited)
------------------
December 31, December 31,
2006 2005
---- ----
Net sales 9,838 8,876
Other revenues 16 6
-------------------
NET REVENUES 9,854 8,882
Cost of sales (6,331) (5,845)
-------------------
GROSS PROFIT 3,523 3,037
Selling, general and administrative (1,067) (1,026)
Research and development (1,667) (1,630)
Other income and expenses, net (35) (9)
Impairment, restructuring charges and other related closure costs (77) (128)
-------------------
Total Operating Expenses (2,846) (2,793)
--------------------
OPERATING INCOME 677 244
Interest income, net 93 34
Loss on equity investments (6) (3)
--------------------
INCOME BEFORE INCOME TAXES 764 275
AND MINORITY INTERESTS
Income tax benefit (expense) 20 (8)
--------------------
INCOME BEFORE MINORITY INTERESTS 784 267
Minority interests (2) (1)
--------------------
NET INCOME 782 266
====================
EARNINGS PER SHARE (BASIC) 0.87 0.30
EARNINGS PER SHARE (DILUTED) 0.83 0.29
NUMBER OF WEIGHTED AVERAGE
SHARES USED IN CALCULATING 958.5 935.6
DILUTED EARNINGS PER SHARE
14
STMicroelectronics N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended Twelve Months Ended
------------------ -------------------
December 31, December 31, December 31,
In million of U.S. dollars 2006 2006 2005
(Unaudited) (Unaudited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income 276 782 266
Items to reconcile net income and cash flows from operating activities
Depreciation and amortization 429 1,766 1,944
Amortization of discount on convertible debt 5 18 5
Other non-cash items 37 50 10
Minority interest in net income of subsidiaries 1 2 1
Deferred income tax (34) (74) (31)
Loss on equity investments 0 6 3
Impairment, restructuring charges and other
related closure costs, net of cash payments (1) 1 72
Changes in assets and liabilities:
Trade receivables, net 59 (104) (117)
Inventories, net (26) (161) (174)
Trade payables (199) 36 (71)
Other assets and liabilities, net 12 169 (110)
--------------------------------------------
Net cash from operating activities 559 2,491 1,798
Cash flows from investing activities:
Payment for purchases of tangible assets (386) (1,533) (1,441)
Payment for purchases of marketable securities (360) (460) 0
Investment in short-term deposits 0 (903) 0
Proceeds from matured short-term deposits 252 653 0
Restricted cash for equity investments (218) (218) 0
Investment in intangible and financial assets (15) (86) (49)
Proceeds from the sale of Accent subsidiary 0 7 0
Capital contributions to equity investments (1) (213) (38)
--------------------------------------------
Net cash used in investing activities (728) (2,753) (1,528)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 182 1,744 50
Repayment of long-term debt (25) (1,522) (110)
Decrease in short-term facilities 0 (12) (47)
Capital increase 0 28 35
Dividends paid 0 (107) (107)
Other financing activities 1 1 1
--------------------------------------------
Net cash from (used in) financing activities 158 132 (178)
Effect of changes in exchange rates 16 66 (15)
--------------------------------------------
Net cash increase (decrease) 5 (64) 77
============================================
Cash and cash equivalents at beginning of the period 1,958 2,027 1,950
Cash and cash equivalents at end of the period 1,963 1,963 2,027
15
STMicroelectronics N.V.
CONSOLIDATED BALANCE SHEETS
As at December 31, September 30, December 31,
In million of U.S. dollars 2006 2006 2005
---- ---- ----
(Unaudited) (Unaudited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
------
Current assets:
Cash and cash equivalents 1,963 1,958 2,027
Marketable securities 460 100 0
Short-term deposits 250 501 0
Trade accounts receivable, net 1,589 1,643 1,490
Inventories, net 1,639 1,586 1,411
Deferred tax assets 187 192 152
Other receivables and assets 498 594 531
----------------------------------------------------
Total current assets 6,586 6,574 5,611
Goodwill 223 220 221
Other intangible assets, net 211 216 224
Property, plant and equipment, net 6,426 6,429 6,175
Long-term deferred tax assets 124 73 55
Equity investments 261 243 34
Restricted cash for equity investments 218 0 0
Other investments and other non-current assets 149 147 119
----------------------------------------------------
7,612 7,328 6,828
Total assets 14,198 13,902 12,439
====================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Bank overdrafts 0 0 11
Current portion of long-term debt 136 139 1,522
Trade accounts payable 1,044 1,344 965
Other payables and accrued liabilities 664 745 642
Deferred tax liabilities 7 5 7
Accrued income tax 112 179 152
----------------------------------------------------
Total current liabilities 1,963 2,412 3,299
Long-term debt 1,994 1,799 269
Reserve for pension and termination indemnities 342 288 270
Long-term deferred tax liabilities 57 64 55
Other non-current liabilities 43 18 16
----------------------------------------------------
2,436 2,169 610
Total liabilities 4,399 4,581 3,909
Commitment and contingencies
Minority interests 52 50 50
Common stock (preferred stock: 540,000,000 shares authorized, not issued;
common stock: Euro 1.04
nominal value, 1,200,000,000 shares authorized,
910,157,933 shares issued, 897,395,042 shares outstanding) 1,156 1,156 1,153
Capital surplus 2,021 2,004 1,967
Accumulated result 6,086 5,811 5,427
Accumulated other comprehensive income 816 632 281
Treasury stock (332) (332) (348)
----------------------------------------------------
Shareholders' equity 9,747 9,271 8,480
----------------------------------------------------
Total liabilities and shareholders' equity 14,198 13,902 12,439
====================================================
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
STMicroelectronics N.V. has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
STMicroelectronics N.V.
Date: January 25, 2007 By: /s/ Carlo Ferro
---------------------------------
Name: Carlo Ferro
Title: Executive Vice President
and Chief Financial Officer
17