STMicroelectronics Reports 2012 Third Quarter and Nine Month Financial Results

Third quarter gross margin increased 50 basis points sequentially to 34.8% mainly due to improved manufacturing efficiencies, a favorable product mix and currency effects. Unsaturation charges in the third quarter were $19 million compared to $16 million in the second quarter.

Combined SG&A and R&D expenses decreased 6% to $852 million compared to $909 million in the prior quarter due to positive seasonal and currency effects and ST-Ericsson's ongoing cost-realignment initiatives. Combined operating expenses as a percentage of sales, improved to 39.3% in the 2012 third quarter compared to 42.3% in the prior quarter.

Restructuring and impairment charges significantly increased to $713 million compared to $56 million in the prior quarter, mainly due to the non-cash impairment charge of Wireless goodwill.

Reflecting losses at ST-Ericsson, operating margin before impairment, restructuring and one-time items attributable to ST improved to 0.3% in the 2012 third quarter compared to negative 1.3% in the prior quarter.*

In the third quarter of 2012, net loss attributable to non-controlling interests was $351 million, which mainly included the 50% owned by Ericsson in the ST-Ericsson joint venture, as consolidated by ST. In the second quarter of 2012, the corresponding amount was $160 million.

Third quarter net loss attributable to parent company was $478 million or $(0.54) per share, compared to a net loss of $(0.08) per share and diluted earnings of $0.08 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 $(0.03), excluding impairment, restructuring charges and one-time items in the third quarter, compared to a net loss of $(0.05) per share and diluted earnings of $0.09 per share in the prior and year-ago quarters, respectively.*

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(*)Operating income 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.

For the third quarter of 2012, the effective average exchange rate for the Company was approximately $1.29 to EUR 1.00 compared to $1.32 to EUR 1.00 for the second quarter of 2012 and $1.40 to EUR 1.00 for the third quarter of 2011.

Net Revenues by Market Segment / Channel

----------------------------------------------------------------------------
Net Revenues By Market Segment / Channel           Q3 2012  Q2 2012  Q3 2011
 (*)(Estimated and In %)                                                    
----------------------------------------------------------------------------
Market Segment / Channel:                                                   
----------------------------------------------------------------------------
  Automotive                                         18%      19%      17%  
----------------------------------------------------------------------------
  Computer                                           13%      13%      14%  
----------------------------------------------------------------------------
  Consumer                                           11%      10%      10%  
----------------------------------------------------------------------------
  Industrial & Other                                 9%       9%       9%   
----------------------------------------------------------------------------
  Telecom                                            25%      27%      28%  
----------------------------------------------------------------------------
Total OEM                                            76%      78%      78%  
----------------------------------------------------------------------------
Distribution                                         24%      22%      22%  
----------------------------------------------------------------------------

(*) Sales recorded by ST-Ericsson and consolidated by ST are included in Telecom and Distribution.

On a sequential basis, Computer, Consumer and Industrial & Other grew 3%, 1% and 1%, respectively, while Automotive and Telecom decreased 3% and 8%, respectively. Distribution increased 6%.

Revenues and Operating Results by ST Product Segment

Commencing January 1, 2012, the Company began reporting the former ACCI Product Segment (Automotive/Consumer/Computer/Communication Infrastructure) into the other segments. The new product segments are Automotive Segment ("APG") and Digital Sector ("Digital") comprised of the Digital Convergence Group ("DCG") and Imaging, BiCMOS ASIC and Silicon Photonics Group ("IBP").

----------------------------------------------------------------------------
 Operating Segment   Q3 2012  Q3 2012   Q2 2012  Q2 2012   Q3 2011  Q3 2011 
  (In Million US$)     Net   Operating    Net   Operating    Net   Operating
                    Revenues   Income  Revenues   Income  Revenues   Income 
                               (Loss)             (Loss)             (Loss) 
----------------------------------------------------------------------------
Automotive (APG)       391       34       404       38       404       46   
----------------------------------------------------------------------------
Analog, MEMS &                                                              
 Microcontrollers                                                           
 (AMM)                 804      101       774       98       856      147   
----------------------------------------------------------------------------
Digital                325      (30)      353      (36)      442       20   
----------------------------------------------------------------------------
Power Discrete                                                                                                   
  (PDP)                                  275              18              262              4                316              33      
----------------------------------------------------------------------------
Wireless  (a)                      359          (184)            344          (240)            412          (215)    
----------------------------------------------------------------------------
Others  (b)(c)                    12            (731)            11              (71)            12              (54)    
----------------------------------------------------------------------------
TOTAL                                  2,166        (792)          2,148        (207)          2,442          (23)    
----------------------------------------------------------------------------
 

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