STMicroelectronics (NYSE: STM) reported financial results for the fourth quarter and fiscal year ended December 31, 2005.
Revenues, Gross Profit, and Margin Review
Net revenues for the fourth quarter were $2,389 million, up 6.3% sequentially from the $2,247 million reported in the prior quarter, and 2.6% above the $2,328 million reported in last year's fourth quarter. Sales growth was primarily driven by wireless applications which generated double-digit percentage increases both sequentially and year-over-year.
Gross profit was $872 million, compared to $766 million in the third quarter of 2005, and $852 million in last year's fourth quarter. Gross margin was 36.5% in the fourth quarter compared to 34.1% in the prior quarter and 36.6% in last year's fourth quarter. Volume, enhanced product mix and manufacturing performance along with currency drove the improvements in gross profit and gross margin.
Operating Expenses
ST achieved its target of operating expenses below 28% of sales for the quarter with combined selling, general, & administrative and research & development expenses representing 27.7% of net revenues in the fourth quarter, improving from 28.9% in the third quarter. R&D expenses of $402 million in the fourth quarter, which included $3 million in stock-based compensation costs, were essentially flat with the $401 million in the prior quarter and $402 million in the year-ago quarter. SG&A expenses were $259 million for the 2005 fourth quarter and included $5 million in stock-based compensation costs and $4 million in one-time pension accruals. SG&A was $248 million in the prior quarter and $245 million in the year-ago quarter.
Operating Income, Net Income, and Earnings per Share
For the 2005 fourth quarter, the Company reported operating income of $197 million and net income of $183 million, or $0.20 per share. In the prior quarter, the Company reported operating income of $102 million and net income of $89 million or $0.10 per share. In the year-ago quarter the Company reported operating income, net income, and earnings per share of $210 million, $187 million and $0.20 respectively.
The Company posted $16 million of impairment, restructuring charges, and other related closure costs during the 2005 fourth quarter. In the prior quarter, restructuring-related expenses were $12 million. In the year-ago quarter, the Company incurred $18 million in impairment, restructuring charges, and other related closure costs.
In the fourth quarter, the effective average exchange rate for the Company was approximately $1.20 to euro 1.
Cash Flow and Balance Sheet Highlights
Net cash from operating activities in the fourth quarter was $555 million compared to $475 million in the prior quarter. Capital expenditures were $230 million in the 2005 fourth quarter, compared to $284 million in the prior quarter. Net operating cash flow* increased to $290 million for the fourth quarter, up from $173 million in the third quarter.
At December 31, 2005, ST had cash and cash equivalents of $2.03 billion and total debt was $1.80 billion. Net financial position** improved by $233 million over the prior year, to a net cash position of $225 million after the payment of $107 million in cash dividends in the second quarter. Shareholders' equity was $8.5 billion at December 31, 2005.
* ( ) Net operating cash flow is defined as net cash from operating
activities ($555 million in the fourth quarter of 2005) minus net
cash used in investing activities excluding payments for purchase of
and proceeds from the sale of marketable securities ($265 million in
the fourth quarter of 2005).
** ( ) Net financial position is defined as cash and cash equivalents
($2,027 million) minus total debt (bank overdrafts $11 million +
current portion of long term debt $1,522 million + long term debt
$269 million).
President and CEO Remarks
Carlo Bozotti, President and Chief Executive Officer commented, "We continued to make steady progress in improving the financial performance of ST, with both revenue and gross margin results solidly in line with our objectives in the fourth quarter. Sequential revenue growth was driven by strong performance in wireless, where ST's product offerings provide important functionality to a wide range of handset requirements. Sequential improvement in our gross margin reflected, in addition to currency, the impact of previously announced actions and programs. Through a sharper focus on both R&D and marketing and sales, operating expenses met our targeted objectives. Additionally, cash generation in the quarter was strong and at year end our financial position improved to a net cash balance of over $200 million. In summary, we are seeing progress across our most important financial metrics.
"2005 has been a year devoted to strengthening and reshaping ST into a stronger and more competitive industry leader. Key organizational changes have been implemented. The cost saving actions we announced at the beginning of last year delivered the expected benefits in 2005, and are on track to deliver additional results this year. New product designs have accelerated. Customer base expansion efforts have been developed and are being carried out.
"Therefore, as we move forward, I am confident that we will continue to strengthen our financial performance and product leadership based upon execution of our corporate performance roadmap."
Additional Fourth Quarter 2005 Financial and Operating Data
The following tables and commentary provide a breakdown of revenues and operating income (loss) by product group and segment revenues by targeted market.
Net Revenues and Operating Income (Loss) by Group:
In Million US$ Q4 2005
Operating
Net % of Net income
Group Revenues Revenues (loss)
Application Specific Product Groups* 1,305 54.6% 137
MLD (Microcontroller, Linear & Discrete Group) 494 20.7% 67
MPG (Memory Products Group) 573 24.0% 27
Others (1)(2) 17 0.7% (34)
TOTAL 2,389 100% 197
* Automotive; Computer Peripheral; and Home, Personal, and Communication
products
(1) Net revenues of "Others" include revenues from sales of Subsystems and
other products not allocated to product groups.
(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 groups, as well as operating earnings
or losses of the Subsystems and Other Products Group. Certain costs,
mainly R&D, formerly in the "Others" category, have been allocated to
the groups.
All product groups increased revenues on a sequential basis. Application Specific Product Groups' revenues increased 3.4% sequentially, and operating profit increased 69% to $137 million. MLD sales were up 4.6% and operating income was approximately flat. MPG sales grew 14.4% sequentially and the group had operating income of $27 million, a significant improvement from the $17 million loss in the prior quarter. Flash memory sales increased 23% sequentially to $424 million.
Carlo Bozotti added, "I was pleased to see the groups' operating performance in the fourth quarter. Application Specific Product Groups reached a double-digit operating margin, MLD maintained a nearly 14% margin level sequentially in somewhat tougher market conditions and, as we expected, MPG generated an operating profit."
Q4 2005 Net Revenues by Market Segment
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 in the fourth quarter of 2005.
% of Net Revenues
Automotive 14%
Consumer 17%
Computer 17%
Telecom 38%
Industrial & Others 14%
Four of the five market segments experienced sequential sales increases. Telecom, the Company's largest segment, grew almost 14% followed by Consumer and Industrial & Others, which each grew approximately 4%. Automotive was up 2% and Computer was essentially flat.
Full Year 2005 Results
Net revenues for the year ended December 31, 2005 were $8,882 million, an increase of 1.4% over the $8,760 million recorded in 2004. Year over year sales growth was driven by wireless and data storage applications, which both grew at double digit rates. Automotive applications also grew at a much faster rate than that of the Company year over year. Gross profit was $3,037 million, or 34.2% of net revenues, compared to $3,228 million or 36.8% in 2004. Operating income was $244 million, or 2.7% of net revenues, compared to $683 million or 7.8% of net revenues in 2004.
Research and development costs for 2005 were $1,630 million, or 18.3% of net revenues, compared to $1,532 million, or 17.5% of net revenues in 2004. Selling, general, and administrative expenses were $1,026 million or 11.6% of net revenues in 2005, compared to $947 million, or 10.8% of net revenues in 2004. 2005 SG&A expenses included $19 million in one-time compensation and pension charges and $5 million in stock-based compensation costs. The Company posted $128 million of impairment, restructuring charges, and other related closure costs in 2005, compared to $76 million in 2004.
Net income for 2005 was $266 million, or $0.29 per diluted share. In the prior year, net income was $601 million, or $0.65 per diluted share.
For ST, the effective average exchange rate of the Euro versus the U.S. dollar for the full year 2005 was approximately $1.28 to euro 1, compared to approximately $1.23 to euro 1 in 2004.
Net cash from operating activities for 2005 was $1,798 million compared to $2,342 million in 2004. Capital expenditures were $1,441 million in 2005, compared to $2,050 million in 2004. Net operating cash flow for 2005 was $270 million, compared to $208 million in 2004.
Upon the proposal of our Management Board, our Supervisory Board has decided to recommend for the 2006 Annual Shareholders Meeting, scheduled in Amsterdam on April 27, 2006, the distribution of a cash dividend of $0.12 a share, maintaining the same cash dividend level as in the prior year.
Full Year 2005 Net Revenues and Operating Income (Loss) by Group:
In Million US$ Full Year 2005
Operating
Net % of Net income
Group Revenues Revenues (loss)
Application Specific Product Groups* 4,991 56.2% 355
MLD (Microcontroller, Linear &
Discrete Group) 1,882 21.2% 271
MPG (Memory Products Group) 1,948 21.9% (118)
Others (1)(2) 61 0.7% (264)
TOTAL 8,882 100% 244
* (1) and (2) defined in previous tables.
For full year 2005, MPG sales grew 3.2% followed by a 1.8% increase in Application Specific Product Groups' revenue. MLD sales were down 1.1%.
Outlook
Mr. Bozotti stated, "As is typical for ST's seasonality, we expect net revenues for the first quarter of 2006 to decline from 2005 fourth quarter levels, but to be significantly higher than first quarter 2005 results. Specifically, we expect sales to decrease between 1% and 7% sequentially. Given the seasonal mix and volume impacts we expect the gross margin to be about 35%, plus or minus 1 percentage point.
"ST's capital expenditures are targeted to be $1.8 billion for 2006, with flexibility to modulate due to market conditions."
This guidance is based on an effective currency exchange rate for the Company of $1.205 = euro 1, which reflects current exchange rate levels combined with the impact of existing hedging contracts.
Recent Corporate Developments
-- In December, 2005, Piero Mosconi retired from the Company, leaving his
role of Corporate Vice President and Treasurer, a position he had
occupied since 1987. Accordingly, Treasury moved under the
responsibility of our CFO, Carlo Ferro. Giuseppe Notarnicola joined ST
and has been appointed Group Vice President, Corporate Treasurer.
-- Giordano Seragnoli, Corporate Vice President and General Manager of
ST's worldwide back-end manufacturing operations, is also retiring from
the Company, at the end of Q2, 2006. Effective April 3, 2006, Jeffrey
See, who is currently General Manager of ST's manufacturing complex in
Singapore, will take over worldwide back-end manufacturing
responsibilities. Jeffrey See will continue to be based in Singapore,
close to where the largest part of ST's assembly and test production is
located.
Products, Technology and Design Wins
-- In digital consumer, ST launched the STB7109, the company's second-
generation H.264 high-definition TV (HDTV) AVC and VC-1 decoder.
Building on the success of the STB7100, the world's first single-chip
AVC and MPEG-2 decoder, the STB7109 adds VC-1 decoding, improved
security, connectivity features, and support for emerging DVD formats
and security standards.
-- Adding to the multiple design wins already achieved by both the STB7100
and STB7109, Loewe GmbH adopted the STB7100 for use across its high-end
integrated DTV product range and Sagem and ST announced the
availability of the world's first MPEG-4 set-top boxes (STBs) based on
a single-chip decoder, enabling broadcasters and service operators
worldwide to offer end users HDTV and/or many more TV channels, by
using their existing broadcast network. The new STB7100-based boxes are
being rolled out for satellite, IPTV, and terrestrial broadcast by
several operators including Canal+, France-Telecom and Telecom Italia.
Additionally, the STB7100, together with ST's STB0899 front-end
satellite demodulator, is being used in a Philips STB for Premiere.
-- ST announced that it had developed an affordable, ready-to-implement
HDTV platform for the Japanese market with BHA Corporation. The two
companies plan to use this platform to catalyze the adoption of digital
TV in Japan. In China, ST's affiliate company Shanghai-BMC released a
complete middleware solution for STBs intended for the Chinese market,
as well as for international operators. And for the first time in
Brazil, the transmission of a digital terrestrial TV (DTT) signal in
HDTV format was publicly demonstrated from a transmitter to an end-user
terminal, by ST working in conjunction with leading Brazilian
laboratories and universities.
-- In mobile communications, ST unveiled the industry's most comprehensive
solution for pico-cell base-station modems, combining the market's
first SoC baseband processor for wireless infrastructure applications,
the STW51000, with multi-standard software libraries, optimized for
GSM, EDGE, W-CDMA, and WiMAX networks.
-- ST announced, with Intel, a common flash-memory subsystem to lower
development costs for handset OEMs and enable them to get to market
faster with feature-rich phones. The two companies will provide
hardware- and software-compatible memory products based on common
specifications, enabling shorter development times and lower costs for
cell phone makers. Accordingly, ST introduced its first 90nm NOR Flash-
based multi-chip memory subsystems, which combine the company's 512-
and 256M-bit NOR devices with PSRAM or LPSDRAM memory.
-- ST's single-chip STLC2500A Bluetooth IC is now in volume production in
multiple cellular phones from several manufacturers in Asia and Europe.
The single-chip Enhanced-Data-Rate STLC2500C with V2.0 capability has
been adopted in more than 15 mobile-phone designs by several customers,
including a tier-one cellphone manufacturer. Additionally, volume
production has started on ST's compact STLC4370 IEEE802.11g wireless
local area network (WLAN) module IC, which is being used in a new
cellular phone from a tier-one manufacturer.
-- ST announced that it is working with Mobileye to develop, produce, and
commercialize chips for the visual-aid driving-assistance segment of
the automotive market. ST also made available new software libraries
for its STA2051 32-bit GPS baseband controller, enabling the delivery
of both higher performance and additional functionality for GPS and
telematics applications.
-- In the powertrain, safety, and car-body areas, ST gained many new
designs: in next-generation braking systems from Bosch for 2009 models;
power steering applications, with production in 2008, with a major
Japanese tier-one customer; acquisition of a smart-power socket for
engine control from a major European system maker to be used in 2008
models from GM, Ford, and Chrysler; a new car networking kit for a
major European manufacturer, for the U.S. market; and several awards
for high-power drivers for European and U.S. markets.
-- Notable successes in car radio included: a new audio-processor design
from a major Japanese car-radio maker, for production in Q4 2006;
selection by a major U.S. maker for a low-cost car-radio platform;
further enlargement of ST's presence in the car communication market
with its digital audio processor for single- and double-antenna
interfaces with a tier-one European manufacturer; and further
penetration in the digital satellite broadcast market with many major
manufacturers equipping models with XM Radio.
-- In peripherals, the Company revealed the successful validation and
release of SPEAr Head, a new member of the company's SPEAr (Structured
Processor Enhanced Architecture) family of configurable SoCs that
address various applications, including digital engines for printers,
scanners, and other embedded-control applications. Also in this area,
ST's partnership with one of its major customers reached a new level
with the winning of two new digital engine designs in next-generation
printer and MultiFunction platforms. And in disk drives, ST leveraged
its technologies and proprietary IP to continue its leadership position
in data storage by winning both motor controller and preamplifier
designs for desktop and mobile applications with one of the top HDD
manufacturers.
-- ST and On Track Innovations (OTI) announced that OTI's contactless
smartcard, based on ST's ST19WR02 contactless, secure microcontroller,
was the first to be approved by Visa International for use in its
contactless program in the U.S. ST also revealed its ongoing
collaboration with SmardTech to develop an extremely efficient
smartcard solution, based on ST's ST19W contactless secure
microcontrollers, as part of an electronic ticketing system for a
German transport application.
-- In microcontrollers, ST introduced a 32-bit ARM7-based device optimized
for multiple industrial applications, including factory automation,
appliances, and security systems. ST also brought out the final release
of its STR7 Software Library supporting its 32-bit ARM7-based
microcontrollers. Additionally, ST gained design wins for its ST7MC
microcontroller in a new generation of brushless electric motors for
refrigerators with China's leading home-appliance maker and with one of
the world's top five refrigeration compressor manufacturers.
-- In power, ST introduced an innovative and patented DC/DC converter chip
that for the first time, allows two different output voltages to be
generated using a single external coil. The STw4141 is specifically
designed to efficiently supply power to digital baseband and multimedia
processors in portable applications.
-- ST introduced the PM6685 mobile PC power management IC, a dual step-
down controller that provides the four output voltages necessary for
notebook system power. Also in this area, ST introduced its L6668
current-mode primary-controller IC for single-ended switching power
converters to be used in high-end AC/DC adapters and chargers for
notebook or laptop PCs.
-- The Company won numerous power designs including: several design-ins
for its L6714 voltage regulator IC with a major Taiwanese motherboard
maker; new projects in display and lighting applications; an important
win for discrete IGBTs with a major Japanese air-conditioner maker; the
supply of dedicated low-voltage power MOSFETs for a leading Universal
Power Supply manufacturer; and finally an agreement with a major
manufacturer for the supply of STripFET(TM) III based power MOSFETs for
a DC/DC converter application in a games console. Additionally, ST
introduced the HD1 family of high-voltage power bipolar transistors
specifically designed for horizontal deflection in high-definition and
'Super-Slim' CRT displays.
-- ST introduced its NEATSwitch(TM) portfolio of application-specific
analog, digital, and power switches and extended its supervisor and
reset IC family with the STM1061 low-power precision voltage detectors
for applications in systems where signal levels need to be monitored.
Also in this area, ST gained a design win for a multiple-voltage
microprocessor reset IC with a major Set Top Box manufacturer. In
addition, ST introduced the STM1404, the world's first FIPS (Federal
Information Processing Standard) level 4 security supervisor for point-
of-sale equipment.
-- The Company was active in its research efforts, unveiling first details
of a breakthrough technology that significantly increases junction
capacitance density in thin-film passive integration and which extends
the capabilities of its IPAD (Integrated Passive and Active Devices)
technology. In addition, ST's engineers presented or co-authored 13
papers at the prestigious IEDM conference, including one that announced
a 65nm NOR Flash technology with the smallest cell size of any
previously announced NOR Flash memory.
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:
-- 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;
-- pricing pressures, losses, or curtailments of purchases from key
customers;
-- the financial impact of inadequate or excess inventories if actual
demand differs from our anticipations;
-- changes in the exchange rates between the U.S. Dollar and the Euro,
compared to the effective exchange rate of $1.205= euro 1, and between
the U.S. Dollar and the currencies of the other major countries in
which we have our operating infrastructure;
-- our ability to be successful in our strategic R&D initiatives to
develop new products to meet anticipated market demand, as well as our
ability to achieve our corporate performance roadmap by completing
successfully and in a timely manner our other various announced
initiatives to improve our overall efficiency and performance;
-- the anticipated benefits of research & development alliances and
cooperative activities and the continued pursuit of our various
alliances, in the field of development of new advanced technologies or
products;
-- the ability of our suppliers to meet our demands for products and to
offer competitive pricing;
-- changes in the economic, social, or political environment, as well as
natural events such as severe weather, health risks, epidemics or
earthquakes in the countries in which we and our key customers operate;
-- changes in our overall tax position as a result of changes in tax laws
or the outcome of tax audits;
-- our ability to obtain required licenses on third-party intellectual
property, the outcome of litigations and the results of actions by our
competitors.
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," "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, 2004, as filed with the SEC on March 23, 2005. 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 in 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 25, 2006, at 9:00 a.m. U.S. Eastern Time / 3:00 p.m. CET, to discuss operating performance for the fourth quarter and full year of 2005.
The conference call will be available via the Internet by accessing the following Web address: http://www.vcall.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 3, 2006.
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 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 http://www.st.com .
(tables attached)
For further information, please contact:
INVESTOR RELATIONS:
Stanley March Benoit de Leusse
Vice President, Investor Relations Director, Investor Relations
Tel: +1.212.821.89.39 Tel : +41.22.929.58.12
Fax : +1.212.821.89.23 Fax : +41.22.929.69.61
Email: stan.march@st.com Email: benoit.de-leusse@st.com
Fabrizio Rossini
Investor Relations Senior Manager
Tel : +41.22.929.69.73
Fax : +41.22.929.69.61
Email: fabrizio.rossini@st.com
MEDIA RELATIONS:
Maria Grazia Prestini Michael Markowitz
Senior Director, Corporate Media Director, U.S. Media Relations
and Public Relations Tel: +1.212.821.8959
Tel: +41.2.29.29.69.45 Fax: +1.212.821.8922
Fax: +41.2.29.29.69.50 Email: michael.markowitz@st.com
Email: mariagrazia.prestini@st.com
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,
2005 2004
Net sales 2,388 2,326
Other revenues 1 2
NET REVENUES 2,389 2,328
Cost of sales -1,517 -1,476
GROSS PROFIT 872 852
Selling, general and administrative -259 -245
Research and development -402 -402
Other income and expenses, net 2 23
Impairment, restructuring charges
and other related closure costs -16 -18
Total Operating Expenses -675 -642
OPERATING INCOME 197 210
Interest income, net 11 5
Loss on equity investments 0 -2
INCOME BEFORE INCOME TAXES 208 213
AND MINORITY INTERESTS
Income tax expense -25 -26
INCOME BEFORE MINORITY INTERESTS 183 187
Minority interests 0 0
NET INCOME 183 187
EARNINGS PER SHARE (BASIC) 0.20 0.21
EARNINGS PER SHARE (DILUTED) 0.20 0.20
NUMBER OF WEIGHTED AVERAGE
SHARES USED IN CALCULATING 937.3 935.1
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,
2005 2004
Net sales 8,876 8,756
Other revenues 6 4
NET REVENUES 8,882 8,760
Cost of sales -5,845 -5,532
GROSS PROFIT 3,037 3,228
Selling, general and administrative -1,026 -947
Research and development -1,630 -1,532
Other income and expenses, net -9 10
Impairment, restructuring charges
and other related closure costs -128 -76
Total Operating Expenses -2,793 -2,545
OPERATING INCOME 244 683
Interest income (expense), net 34 -3
Loss on equity investments -3 -4
Loss on extinguishment of
convertible debt 0 -4
INCOME BEFORE INCOME TAXES 275 672
AND MINORITY INTERESTS
Income tax expense -8 -68
INCOME BEFORE MINORITY INTERESTS 267 604
Minority interests -1 -3
NET INCOME 266 601
EARNINGS PER SHARE (BASIC) 0.30 0.67
EARNINGS PER SHARE (DILUTED) 0.29 0.65
NUMBER OF WEIGHTED AVERAGE
SHARES USED IN CALCULATING 935.6 935.1
DILUTED EARNINGS PER SHARE
STMicroelectronics N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended
December 31, December 31,
In million of U.S. dollars 2005 2004
(Unaudited) (Audited)
Cash flows from operating
activities:
Net income 266 601
Items to reconcile net income
and cash flows from operating
activities
Depreciation and
amortization 1,944 1,837
Amortization of discount on
convertible debt 5 28
Loss on extinguishment of
convertible debt 0 4
Other non-cash items 10 5
Minority interest in net
income of subsidiaries 1 3
Deferred income tax -31 -6
Loss on equity investments 3 4
Impairment, restructuring
charges and other related
closure costs, net of cash
payments 72 8
Changes in assets and
liabilities:
Trade receivables, net -117 -119
Inventories, net -174 -144
Trade payables -71 128
Other assets and
liabilities, net -110 -7
Net cash from operating
activities 1,798 2,342
Cash flows from investing
activities:
Payment for purchases of
tangible assets -1,441 -2,050
Investment in intangible and
financial assets -87 -81
Payment for acquisitions 0 -3
Net cash used in investing
activities -1,528 -2,134
Cash flows from financing
activities:
Proceeds from issuance of
long-term debt 50 91
Repayment of long-term debt -110 -1,288
Increase (decrease) in short-
term facilities -47 10
Capital increase 35 23
Dividends paid -107 -107
Other financing activities 1 0
Net cash used in financing
activities -178 -1,271
Effect of changes in exchange rates -15 15
Net cash increase (decrease) 77 -1,048
Cash and cash equivalents at
beginning of the period 1,950 2,998
Cash and cash equivalents at end
of the period 2,027 1,950
STMicroelectronics N.V.
CONSOLIDATED BALANCE SHEETS
As at December 31, October 1, December 31,
In million of U.S. dollars 2005 2005 2004
(Unaudited) (Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents 2,027 1,242 1,950
Marketable securities 0 525 0
Trade accounts receivable, net 1,490 1,483 1,408
Inventories, net 1,411 1,398 1,344
Deferred tax assets 152 182 140
Other receivables and assets 531 610 785
Total current assets 5,611 5,440 5,627
Goodwill 221 223 264
Other intangible assets, net 224 227 291
Property, plant and equipment, net 6,175 6,412 7,442
Long-term deferred tax assets 55 53 59
Investments and other non-current
assets 153 137 117
6,828 7,052 8,173
Total assets 12,439 12,492 13,800
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdrafts 11 48 58
Current portion of long-term debt 1,522 1,527 133
Trade accounts payable 965 987 1,352
Other payables and accrued
liabilities 642 712 776
Deferred tax liabilities 7 9 17
Accrued income tax 152 163 176
Total current liabilities 3,299 3,446 2,512
Long-term debt 269 263 1,767
Reserve for pension and
termination indemnities 270 261 285
Long-term deferred tax
liabilities 55 69 63
Other non-current liabilities 16 20 15
610 613 2,130
Total liabilities 3,909 4,059 4,642
Commitment and contingencies
Minority interests 50 50 48
Common stock (preferred stock:
540,000,000 shares authorized,
not issued; 1,153 1,153 1,150
common stock: Euro 1.04 nominal
value, 1,200,000,000 shares
authorized, 907,824,279 shares
issued, 894,424,279 shares
outstanding)
Capital surplus 1,967 1,953 1,924
Accumulated result 5,427 5,244 5,268
Accumulated other comprehensive
income 281 381 1,116
Treasury stock -348 -348 -348
Shareholders' equity 8,480 8,383 9,110
Total liabilities and
shareholders' equity 12,439 12,492 13,800