STMicroelectronics Reports 2013 Second Quarter and First Half Financial Results

GENEVA -- (Marketwired) -- Jul 22, 2013 -- STMicroelectronics (NYSE: STM)

  • Second quarter net revenues $2.05 billion, gross margin 32.8%
  • ST revenues excluding Wireless product line increased 6.8% sequentially, in line with expectations
  • Second quarter operating expenses excluding restructuring charges $736 million; down from $808 million and $887 million in the sequential and year-ago periods, respectively
  • ST-Ericsson transaction to close in early August

STMicroelectronics (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported financial results for the second quarter and first half ending June 29, 2013.

Second quarter net revenues totaled $2.05 billion and gross margin was 32.8%. Net loss attributable to ST was $152 million.

"In the second quarter we saw sequential progress towards our objectives of sales growth, gross margin improvement and expense reduction," said ST President and CEO Carlo Bozotti.

"Sales were in line with our guidance, despite an accelerated decline of ST-Ericsson's existing product revenues. Gross margin came in above the midpoint of our guidance due to manufacturing efficiencies and increased volumes. Our quarterly operating expense run rate continues to decrease substantially both on a sequential and year-over-year basis.

"Our strong sequential increase in sales of 6.8%, excluding Wireless product line, came from growth in several key product areas including Microcontrollers, Industrial and Power, Automotive and Imaging. These results are due to both the introduction of new products and the changes we made last year to expand our geographic and customer coverage, with new major accounts and distributors, with the latter further increasing as a percentage of sales.

"We again made solid progress towards our quarterly net operating expenses target range as we exited the second quarter with operating expenses excluding restructuring charges of $736 million, or $72 million and $151 million lower than the prior and year-ago quarters."

Summary Financial Highlights

                                                                            
----------------------------------------------------------------------------
U.S. GAAP                                                                   
(Million US$)                                        Q2 2013 Q1 2013 Q2 2012
----------------------------------------------------------------------------
Net Revenues (a)                                      2,045   2,009   2,148 
----------------------------------------------------------------------------
Gross Margin                                          32.8%   31.3%   34.3% 
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Operating Income (Loss), as reported                  (107)   (281)   (207) 
----------------------------------------------------------------------------
Net Income (Loss) attributable to parent company (b)  (152)   (171)    (75) 
----------------------------------------------------------------------------
                                                                            

(a) Net revenues include sales recorded by ST-Ericsson as consolidated by ST
(b) Includes a loss on equity-method investment of $89 million, $13 million and $2 million in the second and first quarters of 2013 and the second quarter of 2012, respectively

                                                                            
----------------------------------------------------------------------------
Non-U.S. GAAP*                                                              
Before impairment, restructuring and one-time items                         
(Million US$)                                        Q2 2013 Q1 2013 Q2 2012
----------------------------------------------------------------------------
Operating Income (Loss)                                (64)   (180)   (151) 
----------------------------------------------------------------------------
Operating Margin                                      (3.1%)  (8.9%)  (7.0%)
----------------------------------------------------------------------------
Operating Margin - Attributable to ST                 (2.6%)  (5.3%)  (1.3%)
----------------------------------------------------------------------------
                                                                            

ST-Ericsson Information

As announced on March 18, 2013, ST and Ericsson have agreed to the transfer of certain ST-Ericsson employees and assets to the respective parent companies and to the wind-down of the remaining joint venture. The formal transfer of the parts of ST-Ericsson to the parent companies is expected to be completed in early August, 2013. As already communicated, from March 2, 2013 and until completion of the wind-down, Ericsson is taking on the expenses of the LTE Modem activities, and ST is taking on the existing products and related business as well as expenses for resources working on ST programs. Both parents are assuming equal funding of the wind-down activities.

During the first half of 2013, ST funded $145 million under the ST-Ericsson parent facility. Based upon its latest review, ST estimates its total cash costs from beginning 2013 thru the end of the JV, including covering its share of ST-Ericsson's ongoing operations during the transition period and restructuring costs in ST-Ericsson and ST related to the exit from the JV, at between $300 million and $350 million. This is lower than the previous estimate as a result of the timely restructuring and the transfer of certain teams to third-party companies.

ST-Ericsson's net revenues in the second quarter of 2013 decreased 31% sequentially to $176 million reflecting, as anticipated, the decline of legacy products.

Second Quarter Review

Net revenues increased 1.8% sequentially and decreased 4.8% on a year-over-year basis. Greater China & South Asia led all regions with 6.0% sequential revenue growth while the Americas increased by 5.6% and EMEA increased 5.2%. Japan & Korea was lower by 12.8% driven by business dynamics at certain key wireless global accounts.

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