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Share Name | Share Symbol | Market | Type |
---|---|---|---|
STMicroelectronics NV | NYSE:STM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.89 | 2.27% | 40.07 | 40.48 | 39.80 | 40.30 | 2,717,908 | 01:00:00 |
· |
Operating and Financial Review and Prospects;
|
· |
Unaudited Interim Consolidated Statements of Income, Statements of Comprehensive Income, Balance Sheets, Statements of Cash Flow, and Statements of Equity and related Notes for the three months and nine months ended October 1, 2016; and
|
· |
Certifications pursuant to Sections 302 (Exhibits 12.1 and 12.2) and 906 (Exhibit 13.1) of the Sarbanes‑Oxley Act of 2002, submitted to the Commission on a voluntary basis.
|
· |
Critical Accounting Policies using Significant Estimates.
|
· |
Business Overview, a discussion of our business and overall analysis of financial and other relevant highlights of the three months and nine months ended October 1, 2016 designed to provide context for the other sections of the MD&A, including our expectations for selected financial items for the fourth quarter of 2016.
|
· |
Other Developments in the third quarter of 2016.
|
· |
Results of Operations, containing a year-over-year and sequential analysis of our financial results for the three months and nine months ended October 1, 2016, as well as segment information.
|
· |
Legal Proceedings.
|
· |
Discussion of the impact of changes in exchange rates, interest rates and equity prices on our activity and financial results.
|
· |
Liquidity and Capital Resources, presenting an analysis of changes in our balance sheets and cash flows, and discussing our financial condition and potential sources of liquidity.
|
· |
Impact of Recently Issued U.S. Accounting Standards.
|
· |
Backlog and Customers, discussing the level of backlog and sales to our key customers.
|
· |
Disclosure Controls and Procedures.
|
· |
Cautionary Note Regarding Forward-Looking Statements.
|
Q1
|
Q2
|
Q3
|
Q4
|
|
Days
|
||||
2015
|
87
|
91
|
91
|
96
|
2016
|
93
|
91
|
91
|
91
|
Three Months Ended
|
% Variation
|
|||||||||||||||||||
October 1,
2016
|
July 2,
2016
|
September 26,
2015
|
Sequential
|
Year‑Over‑Year
|
||||||||||||||||
(In millions, except per share amounts)
|
||||||||||||||||||||
Net revenues
|
$
|
1,797
|
$
|
1,703
|
$
|
1,764
|
5.5
|
%
|
1.9
|
%
|
||||||||||
Gross profit
|
643
|
577
|
613
|
11.4
|
%
|
4.8
|
%
|
|||||||||||||
Gross margin as percentage of net revenues
|
35.8
|
%
|
33.9
|
%
|
34.8
|
%
|
+190bps
|
+100bps
|
||||||||||||
Operating income
|
90
|
28
|
91
|
-
|
-
|
|||||||||||||||
Net income attributable to parent company
|
71
|
23
|
90
|
-
|
-
|
|||||||||||||||
Earnings per share
|
$
|
0.08
|
$
|
0.03
|
$
|
0.10
|
-
|
-
|
· |
Automotive and Discrete Group (ADG)
, comprised of all automotive dedicated ICs, both digital and analog, and discrete products.
|
· |
Analog and MEMS Group (AMG)
, comprised of low-power analog ICs, both general purpose and high-end, smart power products for industrial and power conversion, and micro-machinery activity.
|
· |
Microcontrollers and Digital ICs Group (MDG)
, comprised of general purpose and secure microcontrollers, EEPROM memories, and digital ICs outside of automotive.
|
Three Months Ended | ||||||||||||||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
||||||||||||||||||||||
$ million
|
% of net revenues
|
$ million
|
% of net revenues
|
$ million
|
% of net revenues
|
|||||||||||||||||||
Net sales
|
$
|
1,794
|
99.8
|
%
|
$
|
1,698
|
99.7
|
%
|
$
|
1,755
|
99.5
|
%
|
||||||||||||
Other revenues
|
3
|
0.2
|
5
|
0.3
|
9
|
0.5
|
||||||||||||||||||
Net revenues
|
1,797
|
100.0
|
1,703
|
100.0
|
1,764
|
100.0
|
||||||||||||||||||
Cost of sales
|
(1,154
|
)
|
(64.2
|
)
|
(1,126
|
)
|
(66.1
|
)
|
(1,151
|
)
|
(65.2
|
)
|
||||||||||||
Gross profit
|
643
|
35.8
|
577
|
33.9
|
613
|
34.8
|
||||||||||||||||||
Selling, general and administrative
|
(224
|
)
|
(12.5
|
)
|
(229
|
)
|
(13.5
|
)
|
(218
|
)
|
(12.4
|
)
|
||||||||||||
Research and development
|
(318
|
)
|
(17.7
|
)
|
(336
|
)
|
(19.7
|
)
|
(331
|
)
|
(18.8
|
)
|
||||||||||||
Other income and expenses, net
|
18
|
1.0
|
28
|
1.6
|
38
|
2.2
|
||||||||||||||||||
Impairment, restructuring charges and other related closure costs
|
(29
|
)
|
(1.6
|
)
|
(12
|
)
|
(0.7
|
)
|
(11
|
)
|
(0.6
|
)
|
||||||||||||
Operating income
|
90
|
5.0
|
28
|
1.6
|
91
|
5.2
|
||||||||||||||||||
Interest expense, net
|
(5
|
)
|
(0.3
|
)
|
(6
|
)
|
(0.3
|
)
|
(5
|
)
|
(0.3
|
)
|
||||||||||||
Income (loss) on equity‑method investments
|
(1
|
)
|
(0.0
|
)
|
9
|
0.5
|
(1
|
)
|
(0.1
|
)
|
||||||||||||||
Income before income taxes and noncontrolling interest
|
84
|
4.7
|
31
|
1.8
|
85
|
4.8
|
||||||||||||||||||
Income tax benefit (expense)
|
(12
|
)
|
(0.7
|
)
|
(6
|
)
|
(0.4
|
)
|
8
|
0.5
|
||||||||||||||
Net income
|
72
|
4.0
|
25
|
1.4
|
93
|
5.3
|
||||||||||||||||||
Net income attributable to noncontrolling interest
|
(1
|
)
|
(0.1
|
)
|
(2
|
)
|
-
|
(3
|
)
|
(0.2
|
)
|
|||||||||||||
Net income attributable to parent company
|
$
|
71
|
3.9
|
%
|
$
|
23
|
1.4
|
%
|
$
|
90
|
5.1
|
%
|
Three Months Ended
|
% Variation | |||||||||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
Sequential
|
Year‑Over‑Year
|
||||||||||||||||
(In millions)
|
||||||||||||||||||||
Net sales
|
$
|
1,794
|
$
|
1,698
|
$
|
1,755
|
5.6
|
%
|
2.2
|
%
|
||||||||||
Other revenues
|
3
|
5
|
9
|
-29.2
|
-62.6
|
|||||||||||||||
Net revenues
|
$
|
1,797
|
$
|
1,703
|
$
|
1,764
|
5.5
|
%
|
1.9
|
%
|
Three Months Ended
|
% Variation
|
|||||||||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
Sequential
|
Year-Over-Year
|
||||||||||||||||
(In millions)
|
||||||||||||||||||||
Automotive and Discrete Group (ADG)
|
$
|
704
|
$
|
721
|
$
|
706
|
(2.3
|
)%
|
(0.2
|
)%
|
||||||||||
Analog and MEMS Group (AMG)
|
403
|
376
|
411
|
7.1
|
(2.0
|
)
|
||||||||||||||
Microcontrollers and Digital ICs Group (MDG)
|
587
|
556
|
590
|
5.5
|
(0.4
|
)
|
||||||||||||||
Others
|
103
|
50
|
57
|
106.8
|
78.2
|
|||||||||||||||
Total consolidated net revenues
|
$
|
1,797
|
$
|
1,703
|
$
|
1,764
|
5.5
|
%
|
1.9
|
%
|
Three Months Ended
|
|||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
|||||||||||
OEM
|
67
|
%
|
66
|
%
|
67
|
%
|
|||||||
Distribution
|
33
|
34
|
33
|
||||||||||
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
(1) |
Original Equipment Manufacturers (“OEM”) are the end-customers to which we provide direct marketing application engineering support, while Distribution customers refers to the distributors and representatives that we engage to distribute our products around the world.
|
Three Months Ended
|
% Variation
|
|||||||||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
Sequential
|
Year-Over-Year
|
||||||||||||||||
(In millions) | ||||||||||||||||||||
EMEA
|
$
|
459
|
$
|
485
|
$
|
453
|
(5.4
|
)%
|
1.4
|
%
|
||||||||||
Americas
|
269
|
270
|
300
|
(0.1
|
)
|
(10.2
|
)
|
|||||||||||||
Asia Pacific
(2)
|
1,069
|
948
|
1,011
|
12.7
|
5.6
|
|||||||||||||||
Total
|
$
|
1,797
|
$
|
1,703
|
$
|
1,764
|
5.5
|
%
|
1.9
|
%
|
(1) |
Net revenues by location of shipment are classified by location of customer invoiced or reclassified by shipment destination in line with customer demand. For example, products ordered by U.S.‑based companies to be invoiced to Asia Pacific affiliates are classified as Asia Pacific revenues. Furthermore, the comparison among the different periods may be affected by shifts in shipment from one location to another, as requested by our customers.
|
(2) |
As of the first quarter of 2016, we have three regional sales organizations: EMEA; Americas; and Asia Pacific. Asia Pacific was created from the merger of the former Japan & Korea and Greater China-South Asia regional sales organizations.
|
Three Months Ended
|
Variation
|
|||||||||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
Sequential
|
Year‑Over‑Year
|
||||||||||||||||
(In millions) | ||||||||||||||||||||
Cost of sales
|
$
|
(1,154
|
)
|
$
|
(1,126
|
)
|
$
|
(1,151
|
)
|
(2.5
|
)%
|
(0.3
|
)%
|
|||||||
Gross profit
|
643
|
577
|
613
|
11.4
|
%
|
4.8
|
%
|
|||||||||||||
Gross margin (as percentage of net revenues)
|
35.8
|
%
|
33.9
|
%
|
34.8
|
%
|
+190bps
|
+100bps
|
Three Months Ended
|
Variation
|
|||||||||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
Sequential
|
Year‑Over‑Year
|
||||||||||||||||
(In millions)
|
||||||||||||||||||||
Selling, general and administrative expenses
|
$
|
(224
|
)
|
$
|
(229
|
)
|
$
|
(218
|
)
|
2.3
|
%
|
(2.7
|
)%
|
|||||||
Research and development expenses
|
(318
|
)
|
(336
|
)
|
(331
|
)
|
5.3
|
%
|
4.0
|
%
|
||||||||||
Total operating expenses
|
$
|
(542
|
)
|
$
|
(565
|
)
|
$
|
(549
|
)
|
4.1
|
%
|
1.3
|
%
|
|||||||
As percentage of net revenues
|
(30.2
|
)%
|
(33.2
|
)%
|
(31.1
|
)%
|
+300bps
|
+90bps
|
Three Months Ended
|
||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
||||||||||
(In millions)
|
||||||||||||
Research and development funding
|
$
|
19
|
$
|
26
|
$
|
31
|
||||||
Phase-out and start-up costs
|
-
|
-
|
(1
|
)
|
||||||||
Exchange gain (loss), net
|
-
|
2
|
1
|
|||||||||
Patent costs, net of reversal of unused provisions
|
(2
|
)
|
(1
|
)
|
-
|
|||||||
Gain on sale of businesses and non‑current assets
|
-
|
-
|
7
|
|||||||||
Other, net
|
1
|
1
|
-
|
|||||||||
Other income and expenses, net
|
$
|
18
|
$
|
28
|
$
|
38
|
||||||
As percentage of net revenues
|
1.0
|
%
|
1.6
|
%
|
2.2
|
%
|
Three Months Ended
|
||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
||||||||||
(In millions)
|
||||||||||||
Impairment, restructuring charges and other related closure costs
|
$
|
(29
|
)
|
$
|
(12
|
)
|
$
|
(11
|
)
|
Three Months Ended
|
||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
||||||||||
(In millions)
|
||||||||||||
Operating income
|
$
|
90
|
$
|
28
|
$
|
91
|
||||||
In percentage of net revenues
|
5.0
|
%
|
1.6
|
%
|
5.2
|
%
|
Three Months Ended
|
||||||||||||||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
||||||||||||||||||||||
$ million
|
% of net revenues
|
$ million
|
% of net revenues
|
$ million
|
% of net revenues
|
|||||||||||||||||||
Automotive and Discrete Group (ADG)
|
$
|
58
|
8.2
|
%
|
$
|
61
|
8.5
|
%
|
$
|
68
|
9.7
|
%
|
||||||||||||
Analog and MEMS Group (AMG)
|
23
|
5.8
|
1
|
0.2
|
34
|
8.3
|
||||||||||||||||||
Microcontrollers and Digital ICs Group (MDG)
|
44
|
7.5
|
9
|
1.5
|
22
|
3.6
|
||||||||||||||||||
Others
(1)
|
(35
|
)
|
-
|
(43
|
)
|
-
|
(33
|
)
|
-
|
|||||||||||||||
Total operating income
|
$
|
90
|
5.0
|
%
|
$
|
28
|
1.6
|
%
|
$
|
91
|
5.2
|
%
|
(1) |
Operating result of “Others” includes operating earnings of the Imaging Product Division, Subsystems and other products, as well as items not allocated to the segments such as impairment, restructuring charges and other related closure costs, unused capacity charges, strategic or special research and development programs and other minor unallocated expenses such as: certain corporate-level operating expenses, patent claims and litigation, and other costs that are not allocated to the segments.
|
Three Months Ended
|
||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
||||||||||
(In millions)
|
||||||||||||
Total operating income of product groups
|
$
|
125
|
$
|
71
|
$
|
124
|
||||||
Impairment, restructuring charges and other related closure costs
|
(29
|
)
|
(12
|
)
|
(11
|
)
|
||||||
Manufacturing results
|
(9
|
)
|
(8
|
)
|
(7
|
)
|
||||||
Operating results of other businesses
|
16
|
(25
|
)
|
(12
|
)
|
|||||||
Strategic and other research and development programs and other non-allocated provisions
|
(13
|
)
|
2
|
(3
|
)
|
|||||||
Total operating loss Others
|
(35
|
)
|
(43
|
)
|
(33
|
)
|
||||||
Total consolidated operating income
|
$
|
90
|
$
|
28
|
$
|
91
|
Three Months Ended
|
||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
||||||||||
(In millions)
|
||||||||||||
Interest expense, net
|
$
|
(5
|
)
|
$
|
(6
|
)
|
$
|
(5
|
)
|
Three Months Ended
|
||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
||||||||||
(In millions)
|
||||||||||||
Income (loss) on equity-method investments
|
$
|
(1
|
)
|
$
|
9
|
$
|
(1
|
)
|
Three Months Ended
|
||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
||||||||||
(In millions)
|
||||||||||||
Income tax benefit (expense)
|
$
|
(12
|
)
|
$
|
(6
|
)
|
$
|
8
|
Three Months Ended
|
||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
||||||||||
(In millions)
|
||||||||||||
Net income attributable to parent company
|
$
|
71
|
$
|
23
|
$
|
90
|
||||||
As percentage of net revenues
|
3.9
|
%
|
1.4
|
%
|
5.1
|
%
|
Three Months Ended
|
||||||||||||
October 1, 2016
|
July 2, 2016
|
September 26, 2015
|
||||||||||
(In U.S. dollars per share)
|
||||||||||||
Earnings per share (U.S. GAAP measure)
|
$
|
0.08
|
$
|
0.03
|
$
|
0.10
|
||||||
Impairment, restructuring and one-time charges effect, net of tax
|
0.03
|
0.01
|
0.02
|
|||||||||
Adjusted Earnings per Share (non U.S. GAAP measure)
|
$
|
0.11
|
$
|
0.04
|
$
|
0.12
|
Nine months ended
|
Nine months ended
|
|||||||||||||||
October 1, 2016
|
September 26, 2015
|
|||||||||||||||
$ million
|
% of net revenues
|
$ million
|
% of net revenues
|
|||||||||||||
Net sales
|
$
|
5,097
|
99.7
|
%
|
$
|
5,202
|
99.5
|
%
|
||||||||
Other revenues
|
16
|
0.3
|
27
|
0.5
|
||||||||||||
Net revenues
|
5,113
|
100.0
|
5,229
|
100.0
|
||||||||||||
Cost of sales
|
(3,355
|
)
|
(65.6
|
)
|
(3,455
|
)
|
(66.1
|
)
|
||||||||
Gross profit
|
1,758
|
34.4
|
1,774
|
33.9
|
||||||||||||
Selling, general and administrative
|
(681
|
)
|
(13.3
|
)
|
(666
|
)
|
(12.7
|
)
|
||||||||
Research and development
|
(996
|
)
|
(19.5
|
)
|
(1,073
|
)
|
(20.5
|
)
|
||||||||
Other income and expenses, net
|
73
|
1.4
|
110
|
2.1
|
||||||||||||
Impairment, restructuring charges and other related closure costs
|
(69
|
)
|
(1.3
|
)
|
(61
|
)
|
(1.2
|
)
|
||||||||
Operating income
|
85
|
1.7
|
84
|
1.6
|
||||||||||||
Interest expense, net
|
(15
|
)
|
(0.3
|
)
|
(16
|
)
|
(0.3
|
)
|
||||||||
Income on equity-method investments
|
8
|
0.1
|
1
|
-
|
||||||||||||
Income before income taxes and noncontrolling interest
|
78
|
1.5
|
69
|
1.3
|
||||||||||||
Income tax benefit (expense)
|
(21
|
)
|
(0.4
|
)
|
38
|
0.8
|
||||||||||
Net income
|
57
|
1.1
|
107
|
2.1
|
||||||||||||
Net income attributable to noncontrolling interest
|
(4
|
)
|
(0.1
|
)
|
(5
|
)
|
(0.1
|
)
|
||||||||
Net income attributable to parent company
|
$
|
53
|
1.0
|
%
|
$
|
102
|
2.0
|
%
|
Nine months ended
|
||||||||||||
October 1, 2016
|
September 26, 2015
|
% Variation
|
||||||||||
(In millions)
|
||||||||||||
Net sales
|
$
|
5,097
|
$
|
5,202
|
(2.0
|
)%
|
||||||
Other revenues
|
16
|
27
|
(41.6
|
)%
|
||||||||
Net revenues
|
$
|
5,113
|
$
|
5,229
|
(2.2
|
)%
|
Nine months ended
|
||||||||||||
October 1, 2016
|
September 26, 2015
|
% Variation
|
||||||||||
(In millions)
|
||||||||||||
Automotive and Discrete Group (ADG)
|
$
|
2,096
|
$
|
2,094
|
0.1
|
%
|
||||||
Analog and MEMS Group (AMG)
|
1,148
|
1,301
|
(11.7
|
)
|
||||||||
Microcontrollers and Digital ICs Group (MDG)
|
1,676
|
1,678
|
(0.1
|
)
|
||||||||
Others
|
193
|
156
|
23.3
|
|||||||||
Total consolidated net revenues
|
$
|
5,113
|
$
|
5,229
|
(2.2
|
)%
|
Nine months ended
|
||||||||
October 1, 2016
|
September 26, 2015
|
|||||||
OEM
|
67
|
%
|
68
|
%
|
||||
Distribution
|
33
|
32
|
||||||
Total
|
100
|
%
|
100
|
%
|
(1) |
Original Equipment Manufacturers (“OEM”) are the end-customers to which we provide direct marketing application engineering support, while Distribution customers refers to the distributors and representatives that we engage to distribute our products around the world.
|
Nine months ended
|
||||||||||||
October 1, 2016
|
September 26, 2015
|
% Variation
|
||||||||||
(In millions)
|
||||||||||||
EMEA
|
$
|
1,408
|
$
|
1,367
|
3.0
|
%
|
||||||
Americas
|
785
|
847
|
(7.3
|
)%
|
||||||||
Asia Pacific
(2)
|
2,920
|
3,015
|
(3.2
|
)%
|
||||||||
Total
|
$
|
5,113
|
$
|
5,229
|
(2.2
|
)%
|
(1) |
Net revenues by location of shipment are classified by location of customer invoiced or reclassified by shipment destination in line with customer demand. For example, products ordered by U.S.‑based companies to be invoiced to Asia Pacific affiliates are classified as Asia Pacific revenues. Furthermore, the comparison among the different periods may be affected by shifts in shipment from one location to another, as requested by our customers.
|
(2) |
As of the first quarter of 2016, we have three regional sales organizations: EMEA; Americas; and Asia Pacific. Asia Pacific was created from the merger of the former Japan & Korea and Greater China-South Asia regional sales organizations.
|
Nine months ended
|
||||||||||||
October 1, 2016
|
September 26, 2015
|
% Variation
|
||||||||||
(In millions) | ||||||||||||
Cost of sales
|
$
|
(3,355
|
)
|
$
|
(3,455
|
)
|
2.9
|
%
|
||||
Gross profit
|
1,758
|
1,774
|
(0.9
|
)%
|
||||||||
Gross margin (as percentage of net revenues)
|
34.4
|
%
|
33.9
|
%
|
+50bps
|
Nine months ended
|
||||||||||||
October 1, 2016
|
September 26, 2015
|
% Variation
|
||||||||||
(In millions)
|
||||||||||||
Selling, general and administrative expenses
|
$
|
(681
|
)
|
$
|
(666
|
)
|
(2.3
|
)%
|
||||
Research and development expenses
|
(996
|
)
|
(1,073
|
)
|
7.2
|
|||||||
Total operating expenses
|
$
|
(1,677
|
)
|
$
|
(1,739
|
)
|
3.5
|
%
|
||||
As percentage of net revenues
|
(32.8
|
)%
|
(33.3
|
)%
|
50bps
|
Nine months ended
|
||||||||
October 1, 2016
|
September 26, 2015
|
|||||||
(In millions)
|
||||||||
Research and development funding
|
$
|
70
|
$
|
102
|
||||
Phase-out and start-up costs
|
(3
|
)
|
(3
|
)
|
||||
Exchange gain (loss), net
|
4
|
-
|
||||||
Patent costs
|
(3
|
)
|
-
|
|||||
Gain on sale of businesses and non‑current assets
|
1
|
8
|
||||||
Other, net
|
4
|
3
|
||||||
Other income and expenses, net
|
$
|
73
|
$
|
110
|
||||
As percentage of net revenues
|
1.4
|
%
|
2.1
|
%
|
Nine months ended
|
||||||||
October 1, 2016
|
September 26, 2015
|
|||||||
(In millions)
|
||||||||
Impairment, restructuring charges and other related closure costs
|
$
|
(69
|
)
|
$
|
(61
|
)
|
Nine months ended
|
||||||||
October 1, 2016
|
September 26, 2015
|
|||||||
(In millions)
|
||||||||
Operating income
|
$
|
85
|
$
|
84
|
||||
As percentage of net revenues
|
1.7
|
%
|
1.6
|
%
|
Nine months ended (unaudited)
|
||||||||||||||||
October 1, 2016
|
September 26, 2015
|
|||||||||||||||
$ million
|
% of net revenues
|
$ million
|
% of net revenues
|
|||||||||||||
Automotive and Discrete Group (ADG)
|
$
|
158
|
7.5
|
%
|
$
|
150
|
7.2
|
%
|
||||||||
Analog and MEMS Group (AMG)
|
26
|
2.2
|
102
|
7.8
|
||||||||||||
Microcontrollers and Digital ICs Group (MDG)
|
49
|
2.9
|
(8
|
)
|
(0.5
|
)
|
||||||||||
Others
(1)
|
(148
|
)
|
-
|
(160
|
)
|
-
|
||||||||||
Total consolidated operating income
|
$
|
85
|
1.7
|
%
|
$
|
84
|
1.6
|
%
|
(1) |
Operating result of “Others” includes operating earnings of the Imaging Product Division, Subsystems and other products, as well as items not allocated to the segments such as impairment, restructuring charges and other related closure costs, unused capacity charges, strategic or special research and development programs and other minor unallocated expenses such as: certain corporate-level operating expenses, patent claims and litigation, and other costs that are not allocated to the segments.
|
Nine months ended
|
||||||||
October 1, 2016
|
September 26, 2015
|
|||||||
(In millions)
|
||||||||
Total operating income of product groups
|
$
|
233
|
$
|
244
|
||||
Impairment, restructuring charges and other related closure costs
|
(69
|
)
|
(61
|
)
|
||||
Manufacturing results
|
(30
|
)
|
(35
|
)
|
||||
Operating results of other businesses
|
(33
|
)
|
(60
|
)
|
||||
Strategic and other research and development programs and other non-allocated provisions
|
(16
|
)
|
(4
|
)
|
||||
Total operating loss Others
|
(148
|
)
|
(160
|
)
|
||||
Total consolidated operating income
|
$
|
85
|
$
|
84
|
Nine months ended
|
||||||||
October 1, 2016
|
September 26, 2015
|
|||||||
(In millions)
|
||||||||
Interest expense, net
|
$
|
(15
|
)
|
$
|
(16
|
)
|
Nine months ended
|
||||||||
October 1, 2016
|
September 26, 2015
|
|||||||
(In millions)
|
||||||||
Income on equity-method investments
|
$
|
8
|
$
|
1
|
Nine months ended
|
||||||||
October 1, 2016
|
September 26, 2015
|
|||||||
(In millions)
|
||||||||
Income tax benefit (expense)
|
$
|
(21
|
)
|
$
|
38
|
Nine months ended
|
||||||||
October 1, 2016
|
September 26, 2015
|
|||||||
(In millions)
|
||||||||
Net income attributable to parent company
|
$
|
53
|
$
|
102
|
||||
As percentage of net revenues
|
1.0
|
%
|
2.0
|
%
|
Nine months ended
|
||||||||
October 1, 2016
|
September 26, 2015
|
|||||||
(In millions)
|
||||||||
Net cash from operating activities
|
$
|
662
|
$
|
597
|
||||
Net cash used in investing activities
|
(484
|
)
|
(418
|
)
|
||||
Net cash used in financing activities
|
(274
|
)
|
(317
|
)
|
||||
Effect of changes in exchange rates
|
-
|
(10
|
)
|
|||||
Net cash decrease
|
$
|
(96
|
)
|
$
|
(148
|
)
|
Three Months Ended
|
Nine months ended
|
|||||||||||
October 1, 2016
|
October 1, 2016
|
September 26, 2015
|
||||||||||
(In millions)
|
||||||||||||
Net cash from operating activities
|
$
|
330
|
$
|
662
|
$
|
597
|
||||||
Net cash used in investing activities
|
(230
|
)
|
(484
|
)
|
(418
|
)
|
||||||
Excluding:
|
||||||||||||
Payment for purchase and proceeds from sale of marketable securities, change in short term deposits, restricted cash, net and net variation for JV deconsolidation
|
-
|
-
|
-
|
|||||||||
Payment for purchase and proceeds from sale of tangible and intangible assets
(1)
|
(230
|
)
|
(484
|
)
|
(418
|
)
|
||||||
Free Cash Flow (non U.S. GAAP measure)
|
$
|
100
|
$
|
178
|
$
|
179
|
(1) |
Reflects the total of the following line items reconciled with our Consolidated Statements of Cash Flows relating to the investing activities: Payment for purchase of tangible assets, Proceeds from sale of tangible assets, Payment for purchase of intangible assets, Payment for purchase of financial assets, Proceeds from sale of financial assets, Cash paid for business combinations, Proceeds received in sale of businesses.
|
As at
|
||||||||||||
October 1, 2016
|
December 31, 2015
|
September 26, 2015
|
||||||||||
(In millions)
|
||||||||||||
Cash and cash equivalents
|
$
|
1,675
|
$
|
1,771
|
$
|
1,869
|
||||||
Marketable securities
|
342
|
335
|
338
|
|||||||||
Total financial resources
|
2,017
|
2,106
|
2,207
|
|||||||||
Short-term debt
|
(117
|
)
|
(191
|
)
|
(191
|
)
|
||||||
Long‑term debt
|
(1,436
|
)
|
(1,421
|
)
|
(1,557
|
)
|
||||||
Total financial debt
|
(1,553
|
)
|
(1,612
|
)
|
(1,748
|
)
|
||||||
Net Financial Position (non U.S. GAAP measure)
|
$
|
464
|
$
|
494
|
$
|
459
|
Payments Due by Period
|
||||||||||||||||||||||||||||
Total
|
2016
|
2017
|
2018
|
2019
|
2020
|
Thereafter
|
||||||||||||||||||||||
(In millions)
|
||||||||||||||||||||||||||||
Long-term debt (including current portion)
|
$
|
1,632
|
$
|
115
|
$
|
116
|
$
|
114
|
$
|
714
|
$
|
114
|
$
|
459
|
· |
Uncertain macro-economic and industry trends, which may impact end-market demand for our products;
|
· |
Customer demand that differs from projections;
|
· |
The ability to design, manufacture and sell innovative products in a rapidly changing technological environment;
|
· |
Unanticipated events or circumstances, which may impact our ability to execute the planned reductions in our net operating expenses and / or meet the objectives of our R&D Programs, which benefit from public funding;
|
· |
Changes in economic, social, labor, 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 conflicts, social unrest, labor actions, or terrorist activities;
|
· |
The Brexit vote and the perceptions as to the impact of the withdrawal of the U.K. may adversely affect business activity, political stability and economic conditions in the U.K., the Eurozone, the EU and elsewhere. While we do not have material operations in the U.K. and have not experienced any material impact from Brexit on our underlying business to date, we cannot predict its future implications;
|
· |
Financial difficulties with any of our major distributors or significant curtailment of purchases by key customers;
|
· |
The loading, product mix, and manufacturing performance of our production facilities;
|
· |
The functionalities and performance of our IT systems, which support our critical operational activities including manufacturing, finance and sales, and any breaches of our IT systems or those of our customers or suppliers;
|
· |
Variations in the foreign exchange markets and, more particularly, 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;
|
· |
The ability to successfully restructure underperforming business lines and associated restructuring charges and 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;
|
· |
The outcome of ongoing litigation as well as the impact of any new litigation to which we may become a defendant;
|
· |
Product liability or warranty claims, claims based on epidemic or delivery failure, or other claims relating to our products, or recalls by our customers for products containing our parts;
|
· |
Natural events such as severe weather, earthquakes, tsunamis, volcano eruptions or other acts of nature, health risks and epidemics in locations where we, our customers or our suppliers operate;
|
· |
Availability and costs of raw materials, utilities, third-party manufacturing services and technology, or other supplies required by our operations; and
|
· |
Industry changes resulting from vertical and horizontal consolidation among our suppliers, competitors, and customers.
|
|
Pages
|
Consolidated Statements of Income for the Three and Nine Months ended October 1, 2016 and September 26, 2015 (unaudited)
|
F-1
|
Consolidated Statements of Comprehensive Income for Three and Nine Months ended October 1, 2016 and September 26, 2015 (unaudited)
|
F-3
|
Consolidated Balance Sheets as of October 1, 2016 (unaudited) and December 31, 2015 (audited)
|
F-5
|
Consolidated Statements of Cash Flows for the Nine Months ended October 1, 2016 and September 26, 2015 (unaudited)
|
F-6
|
Consolidated Statements of Equity (unaudited)
|
F-7
|
Notes to Interim Consolidated Financial Statements (unaudited)
|
F-8
|
STMicroelectronics N.V.
|
||||||||
CONSOLIDATED STATEMENTS OF INCOME
|
||||||||
Three months ended
|
||||||||
(Unaudited)
|
||||||||
October 01,
|
September 26,
|
|||||||
In million of U.S. dollars except per share amounts
|
2016
|
2015
|
||||||
Net sales
|
1,794
|
1,755
|
||||||
Other revenues
|
3
|
9
|
||||||
Net revenues
|
1,797
|
1,764
|
||||||
Cost of sales
|
(1,154
|
)
|
(1,151
|
)
|
||||
Gross profit
|
643
|
613
|
||||||
Selling, general and administrative
|
(224
|
)
|
(218
|
)
|
||||
Research and development
|
(318
|
)
|
(331
|
)
|
||||
Other income and expenses, net
|
18
|
38
|
||||||
Impairment, restructuring charges and other related closure costs
|
(29
|
)
|
(11
|
)
|
||||
Operating income
|
90
|
91
|
||||||
Interest expense, net
|
(5
|
)
|
(5
|
)
|
||||
Income (loss) on equity-method investments
|
(1
|
)
|
(1
|
)
|
||||
Income before income taxes and noncontrolling interest
|
84
|
85
|
||||||
Income tax benefit (expense)
|
(12
|
)
|
8
|
|||||
Net income
|
72
|
93
|
||||||
Net loss (income) attributable to noncontrolling interest
|
(1
|
)
|
(3
|
)
|
||||
Net income attributable to parent company
|
71
|
90
|
||||||
Earnings per share (Basic) attributable to parent company stockholders
|
0.08
|
0.10
|
||||||
Earnings per share (Diluted) attributable to parent company stockholders
|
0.08
|
0.10
|
STMicroelectronics N.V.
|
||||||||
CONSOLIDATED STATEMENTS OF INCOME
|
||||||||
Nine months ended
|
||||||||
(Unaudited)
|
||||||||
October 01,
|
September 26,
|
|||||||
In million of U.S. dollars except per share amounts
|
2016
|
2015
|
||||||
Net sales
|
5,097
|
5,202
|
||||||
Other revenues
|
16
|
27
|
||||||
Net revenues
|
5,113
|
5,229
|
||||||
Cost of sales
|
(3,355
|
)
|
(3,455
|
)
|
||||
Gross profit
|
1,758
|
1,774
|
||||||
Selling, general and administrative
|
(681
|
)
|
(666
|
)
|
||||
Research and development
|
(996
|
)
|
(1,073
|
)
|
||||
Other income and expenses, net
|
73
|
110
|
||||||
Impairment, restructuring charges and other related closure costs
|
(69
|
)
|
(61
|
)
|
||||
Operating income
|
85
|
84
|
||||||
Interest expense, net
|
(15
|
)
|
(16
|
)
|
||||
Income (loss) on equity-method investments
|
8
|
1
|
||||||
Income before income taxes and noncontrolling interest
|
78
|
69
|
||||||
Income tax benefit (expense)
|
(21
|
)
|
38
|
|||||
Net income
|
57
|
107
|
||||||
Net loss (income) attributable to noncontrolling interest
|
(4
|
)
|
(5
|
)
|
||||
Net income attributable to parent company
|
53
|
102
|
||||||
Earnings per share (Basic) attributable to parent company stockholders
|
0.06
|
0.12
|
||||||
Earnings per share (Diluted) attributable to parent company stockholders
|
0.06
|
0.12
|
STMicroelectronics N.V.
|
||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||
Three months ended
|
||||||||
(Unaudited)
|
||||||||
October 01,
|
September 26,
|
|||||||
In million of U.S. dollars
|
2016
|
2015
|
||||||
Net income
|
72
|
93
|
||||||
Other comprehensive income (loss), net of tax :
|
||||||||
Currency translation adjustments arising during the period
|
6
|
(10
|
)
|
|||||
Foreign currency translation adjustments
|
6
|
(10
|
)
|
|||||
Unrealized gains (losses) arising during the period
|
(2
|
)
|
4
|
|||||
Unrealized gains (losses) on securities
|
(2
|
)
|
4
|
|||||
Unrealized gains (losses) arising during the period
|
-
|
(10
|
)
|
|||||
Less : reclassification adjustment for (income) losses included in net income
|
1
|
36
|
||||||
Unrealized gains (losses) on derivatives
|
1
|
26
|
||||||
Net gains (losses) arising during the period
|
1
|
1
|
||||||
Defined benefit pension plans
|
1
|
1
|
||||||
Other comprehensive income (loss), net of tax
|
6
|
21
|
||||||
Comprehensive income (loss)
|
78
|
114
|
||||||
Less : comprehensive income (loss) attributable to noncontrolling interest
|
1
|
3
|
||||||
Comprehensive income (loss) attributable to the company’s stockholders
|
77
|
111
|
STMicroelectronics N.V.
|
||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||
Nine months ended
|
||||||||
(Unaudited)
|
||||||||
October 01,
|
September 26,
|
|||||||
In million of U.S. dollars
|
2016
|
2015
|
||||||
Net income
|
57
|
107
|
||||||
Other comprehensive income (loss), net of tax :
|
||||||||
Currency translation adjustments arising during the period
|
43
|
(159
|
)
|
|||||
Less : reclassification adjustment for gains on disposal of equity investment
|
-
|
(10
|
)
|
|||||
Foreign currency translation adjustments
|
43
|
(169
|
)
|
|||||
Unrealized gains (losses) arising during the period
|
7
|
3
|
||||||
Unrealized gains (losses) on securities
|
7
|
3
|
||||||
Unrealized gains (losses) arising during the period
|
21
|
(93
|
)
|
|||||
Less : reclassification adjustment for (income) losses included in net income
|
5
|
150
|
||||||
Unrealized gains (losses) on derivatives
|
26
|
57
|
||||||
Net gains (losses) arising during the period
|
4
|
4
|
||||||
Defined benefit pension plans
|
4
|
4
|
||||||
Other comprehensive income (loss), net of tax
|
80
|
(105
|
)
|
|||||
Comprehensive income (loss)
|
137
|
2
|
||||||
Less : comprehensive income (loss) attributable to noncontrolling interest
|
4
|
5
|
||||||
Comprehensive income (loss) attributable to the company’s stockholders
|
133
|
(3
|
)
|
STMicroelectronics N.V.
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
As at
|
||||||||
October 01,
|
December 31,
|
|||||||
In million of U.S. dollars
|
2016
|
2015
|
||||||
(Unaudited)
|
(Audited)
|
|||||||
Assets
|
||||||||
Current assets :
|
||||||||
Cash and cash equivalents
|
1,675
|
1,771
|
||||||
Restricted cash
|
-
|
4
|
||||||
Marketable securities
|
342
|
335
|
||||||
Trade accounts receivable, net
|
1,009
|
820
|
||||||
Inventories
|
1,238
|
1,251
|
||||||
Deferred tax assets
|
83
|
91
|
||||||
Assets held for sale
|
1
|
1
|
||||||
Other current assets
|
377
|
407
|
||||||
Total current assets
|
4,725
|
4,680
|
||||||
Goodwill
|
119
|
76
|
||||||
Other intangible assets, net
|
199
|
166
|
||||||
Property, plant and equipment, net
|
2,289
|
2,321
|
||||||
Non-current deferred tax assets
|
465
|
436
|
||||||
Long-term investments
|
57
|
57
|
||||||
Other non-current assets
|
424
|
459
|
||||||
3,553
|
3,515
|
|||||||
Total assets
|
8,278
|
8,195
|
||||||
Liabilities and equity
|
||||||||
Current liabilities:
|
||||||||
Short-term debt
|
117
|
191
|
||||||
Trade accounts payable
|
674
|
525
|
||||||
Other payables and accrued liabilities
|
728
|
703
|
||||||
Dividends payable to stockholders
|
112
|
97
|
||||||
Deferred tax liabilities
|
-
|
2
|
||||||
Accrued income tax
|
45
|
42
|
||||||
Total current liabilities
|
1,676
|
1,560
|
||||||
Long-term debt
|
1,436
|
1,421
|
||||||
Post-employment benefit obligations
|
362
|
351
|
||||||
Long-term deferred tax liabilities
|
8
|
12
|
||||||
Other long-term liabilities
|
151
|
158
|
||||||
1,957
|
1,942
|
|||||||
Total liabilities
|
3,633
|
3,502
|
||||||
Commitment and contingencies
|
||||||||
Equity
|
||||||||
Parent company stockholders’ equity
|
||||||||
Common stock (preferred stock: 540,000,000 shares authorized, not issued; common stock: Euro 1.04 par value, 1,200,000,000 shares authorized, 911,015,420 shares issued, 883,333,039 shares outstanding)
|
1,157
|
1,157
|
||||||
Capital surplus
|
2,806
|
2,779
|
||||||
Retained earnings
|
320
|
525
|
||||||
Accumulated other comprehensive income
|
540
|
460
|
||||||
Treasury stock
|
(243
|
)
|
(289
|
)
|
||||
Total parent company stockholders’ equity
|
4,580
|
4,632
|
||||||
Noncontrolling interest
|
65
|
61
|
||||||
Total equity
|
4,645
|
4,693
|
||||||
Total liabilities and equity
|
8,278
|
8,195
|
STMicroelectronics N.V.
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
Nine Months Ended
|
||||||||
(Unaudited)
|
(Unaudited)
|
|||||||
October 01,
|
September 26,
|
|||||||
In million of U.S. dollars
|
2016
|
2015
|
||||||
Cash flows from operating activities:
|
||||||||
Net income
|
57
|
107
|
||||||
Items to reconcile net income and cash flows from operating activities:
|
||||||||
Depreciation and amortization
|
535
|
542
|
||||||
Interests and amortization of issuance costs on convertible bonds
|
16
|
15
|
||||||
Non-cash stock-based compensation
|
29
|
27
|
||||||
Other non-cash items
|
(83
|
)
|
(104
|
)
|
||||
Deferred income tax
|
(19
|
)
|
(74
|
)
|
||||
Loss (income) on equity-method investments
|
(8
|
)
|
(1
|
)
|
||||
Impairment, restructuring charges and other related closure costs, net of cash payments
|
23
|
26
|
||||||
Changes in assets and liabilities:
|
||||||||
Trade receivables, net
|
(180
|
)
|
(86
|
)
|
||||
Inventories
|
28
|
(28
|
)
|
|||||
Trade payables
|
73
|
127
|
||||||
Other assets and liabilities, net
|
191
|
46
|
||||||
Net cash from operating activities
|
662
|
597
|
||||||
Cash flows from investing activities:
|
||||||||
Payment for purchase of tangible assets
|
(382
|
)
|
(414
|
)
|
||||
Proceeds from sale of tangible assets
|
3
|
36
|
||||||
Payment for purchase of intangible assets
|
(27
|
)
|
(27
|
)
|
||||
Payment for disposal of equity investment
|
-
|
(13
|
)
|
|||||
Payment for business acquisitions, net of cash and cash equivalents acquired
|
(78
|
)
|
-
|
|||||
Net cash used in investing activities
|
(484
|
)
|
(418
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Repayment of long-term debt
|
(76
|
)
|
(59
|
)
|
||||
Dividends paid to stockholders
|
(197
|
)
|
(258
|
)
|
||||
Other financing activities
|
(1
|
)
|
-
|
|||||
Net cash used in financing activities
|
(274
|
)
|
(317
|
)
|
||||
Effect of changes in exchange rates
|
-
|
(10
|
)
|
|||||
Net cash decrease
|
(96
|
)
|
(148
|
)
|
||||
Cash and cash equivalents at beginning of the period
|
1,771
|
2,017
|
||||||
Cash and cash equivalents at end of the period
|
1,675
|
1,869
|
STMicroelectronics N.V.
|
||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF EQUITY
|
||||||||||||||||||||||||||||
In million of U.S. dollars, except per share amounts
|
||||||||||||||||||||||||||||
Common
Stock
|
Capital
Surplus
|
Treasury
Stock
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Noncontrolling
Interest
|
Total
Equity
|
||||||||||||||||||||||
Balance as of December 31, 2014 (Audited)
|
1,157
|
2,741
|
(334
|
)
|
817
|
613
|
61
|
5,055
|
||||||||||||||||||||
Stock-based compensation expense
|
38
|
45
|
(45
|
)
|
38
|
|||||||||||||||||||||||
Comprehensive income (loss):
|
||||||||||||||||||||||||||||
Net income
|
104
|
6
|
110
|
|||||||||||||||||||||||||
Other comprehensive income (loss), net of tax
|
(153
|
)
|
(153
|
)
|
||||||||||||||||||||||||
Comprehensive income (loss)
|
(43
|
)
|
||||||||||||||||||||||||||
Dividends to noncontrolling interest
|
(6
|
)
|
(6
|
)
|
||||||||||||||||||||||||
Dividends, $0.40 per share
|
(351
|
)
|
(351
|
)
|
||||||||||||||||||||||||
Balance as of December 31, 2015 (Audited)
|
1,157
|
2,779
|
(289
|
)
|
525
|
460
|
61
|
4,693
|
||||||||||||||||||||
Stock-based compensation expense
|
27
|
46
|
(46
|
)
|
27
|
|||||||||||||||||||||||
Comprehensive income (loss):
|
||||||||||||||||||||||||||||
Net income
|
53
|
4
|
57
|
|||||||||||||||||||||||||
Other comprehensive income (loss), net of tax
|
80
|
80
|
||||||||||||||||||||||||||
Comprehensive income (loss)
|
137
|
|||||||||||||||||||||||||||
Dividends, $0.24 per share
|
(212
|
)
|
(212
|
)
|
||||||||||||||||||||||||
Balance as of October 1, 2016 (Unaudited)
|
1,157
|
2,806
|
(243
|
)
|
320
|
540
|
65
|
4,645
|
1. |
The Company
|
2. |
Fiscal Year
|
3. |
Basis of Presentation
|
4. |
Use of Estimates
|
· |
sales returns and allowances,
|
· |
inventory obsolescence reserves and normal manufacturing capacity thresholds to determine costs capitalized in inventory,
|
· |
recognition and measurement of loss contingencies,
|
· |
valuation at fair value of assets acquired or sold, including intangibles, goodwill, investments and tangible assets,
|
· |
annual and trigger-based impairment review of goodwill and intangible assets, as well as an assessment, in each reporting period, of events, which could trigger interim impairment testing on long-lived assets,
|
· |
assessment of other-than-temporary impairment charges on financial assets, including equity-method investments,
|
· |
recognition and measurement of restructuring charges and other related exit costs,
|
· |
assumptions used in assessing the number of awards expected to vest on stock-based compensation plans,
|
· |
assumptions used in calculating pension obligations and other long-term employee benefits, and
|
· |
determination of the income tax expenses estimated on the basis of the projected tax amount for the full year, including deferred income tax assets, valuation allowance and provisions for uncertain tax positions and claims.
|
5. |
Recent Accounting Pronouncements
|
6. |
Other Income and Expenses, Net
|
Three months ended
|
Nine months ended
|
|||
October 1, 2016
|
September 26, 2015
|
October 1, 2016
|
September 26, 2015
|
|
Research and development funding
|
19
|
31
|
70
|
102
|
Start-up and phase-out costs
|
-
|
(1)
|
(3)
|
(3)
|
Exchange gain, net
|
-
|
1
|
4
|
-
|
Patent costs, net of reversal of unused provisions
|
(2)
|
-
|
(3)
|
-
|
Gain on sale of long-lived assets, net
|
-
|
7
|
1
|
8
|
Other, net
|
1
|
-
|
4
|
3
|
Total
|
18
|
38
|
73
|
110
|
7. |
Impairment, Restructuring Charges and Other Related Closure Costs
|
Three months ended on October 1, 2016 | ||||
Impairment
|
Restructuring charges
|
Other related closure costs
|
Total impairment, restructuring charges and other related closure costs
|
|
Set-top Box restructuring plan
|
-
|
(25)
|
(1)
|
(26)
|
Long-lived asset impairment charge
|
(3)
|
-
|
-
|
(3)
|
Total
|
(3)
|
(25)
|
(1)
|
(29)
|
Nine months ended on October 1, 2016 | ||||
Impairment
|
Restructuring charges
|
Other related closure costs
|
Total impairment, restructuring charges and other related closure costs
|
|
Set-top Box restructuring plan
|
-
|
(51)
|
(9)
|
(60)
|
EPS restructuring plan
|
-
|
(1)
|
-
|
(1)
|
Long-lived asset impairment charge
|
(8)
|
-
|
-
|
(8)
|
Total
|
(8)
|
(52)
|
(9)
|
(69)
|
Three months ended on September 26, 2015 | ||||
Impairment
|
Restructuring charges
|
Other related closure costs
|
Total impairment, restructuring charges and other related closure costs
|
|
$600-650 million net opex plan
|
-
|
-
|
(1)
|
(1)
|
EPS restructuring plan
|
-
|
-
|
3
|
3
|
Intangible asset impairment charge
|
(13)
|
-
|
-
|
(13)
|
Total
|
(13)
|
-
|
2
|
(11)
|
Nine months ended on September 26, 2015 | ||||
Impairment
|
Restructuring charges
|
Other related closure costs
|
Total impairment, restructuring charges and other related closure costs
|
|
Manufacturing consolidation
|
-
|
(1)
|
(11)
|
(12)
|
$600-650 million net opex plan
|
-
|
-
|
(1)
|
(1)
|
EPS restructuring plan
|
-
|
(35)
|
-
|
(35)
|
Intangible asset impairment charge
|
(13)
|
-
|
-
|
(13)
|
Total
|
(13)
|
(36)
|
(12)
|
(61)
|
$600-650 million net opex plan
|
EPS restructuring plan
|
Set-top Box restructuring plan
|
Other restructuring initiatives
|
Total
|
|
Provision as at December 31, 2015
|
6
|
18
|
-
|
10
|
34
|
Charges incurred in 2016
|
-
|
1
|
60
|
-
|
61
|
Liability settlement
|
-
|
-
|
-
|
(3)
|
(3)
|
Amounts paid
|
(2)
|
(11)
|
(33)
|
-
|
(46)
|
Currency translation effect
|
(1)
|
-
|
-
|
-
|
(1)
|
Provision as at October 1, 2016
|
3
|
8
|
27
|
7
|
45
|
· |
EPS restructuring plan
|
· |
Set-top Box restructuring plan
|
8. |
Interest expense, Net
|
Three months ended
|
Nine months ended
|
|||
October 1, 2016
|
September 26, 2015
|
October 1, 2016
|
September 26, 2015
|
|
Income
|
5
|
5
|
15
|
13
|
Expense
|
(10)
|
(10)
|
(30)
|
(29)
|
Total
|
(5)
|
(5)
|
(15)
|
(16)
|
9. |
Income Taxes
|
Three months ended
|
Nine months ended
|
|||
October 1, 2016
|
September 26, 2015
|
October 1, 2016
|
September 26, 2015
|
|
Income tax benefit (expense)
|
(12)
|
8
|
(21)
|
38
|
10. |
Earnings per share
|
Three months ended
|
Nine months ended
|
|||
October 1, 2016
|
September 26, 2015
|
October 1, 2016
|
September 26, 2015
|
|
Basic EPS
|
||||
Net income attributable to parent company
|
71
|
90
|
53
|
102
|
Weighted average shares outstanding
|
883,289,046
|
878,492,172
|
880,544,472
|
875,793,142
|
Basic EPS
|
0.08
|
0.10
|
0.06
|
0.12
|
Diluted EPS
|
||||
Net income attributable to parent company
|
71
|
90
|
53
|
102
|
Convertible debt interest
|
-
|
-
|
-
|
-
|
Net income attributable to parent company adjusted
|
71
|
90
|
53
|
102
|
Weighted average shares outstanding
|
883,289,046
|
878,492,172
|
880,544,472
|
875,793,142
|
Dilutive effect of stock awards
|
3,444,203
|
2,216,254
|
4,814,207
|
4,193,673
|
Dilutive effect of convertible debt
|
-
|
-
|
-
|
-
|
Number of shares used in calculating diluted earnings per share
|
886,733,249
|
880,708,426
|
885,358,679
|
879,986,815
|
Diluted EPS
|
0.08
|
0.10
|
0.06
|
0.12
|
11. |
Accumulated Other Comprehensive Income (“AOCI”)
|
Gains (Losses) on Cash Flow Hedges
|
Gains (Losses) on Available-For-Sale Securities
|
Defined Benefit Pension Plan Items
|
Foreign Currency Translation Adjustments (“CTA”)
|
Total
|
|
December 31, 2015
|
(23)
|
2
|
(160)
|
601
|
420
|
Cumulative tax impact
|
-
|
-
|
40
|
-
|
40
|
December 31, 2015, net of tax
|
(23)
|
2
|
(120)
|
601
|
460
|
OCI before reclassifications
|
21
|
8
|
-
|
43
|
72
|
Amounts reclassified from AOCI
|
5
|
-
|
6
|
-
|
11
|
OCI for the nine months ended October 1, 2016
|
26
|
8
|
6
|
43
|
83
|
Cumulative tax impact
|
-
|
(1)
|
(2)
|
-
|
(3)
|
OCI for the nine months ended October 1, 2016, net of tax
|
26
|
7
|
4
|
43
|
80
|
October 1, 2016
|
3
|
10
|
(154)
|
644
|
503
|
Cumulative tax impact
|
-
|
(1)
|
38
|
-
|
37
|
October 1, 2016, net of tax
|
3
|
9
|
(116)
|
644
|
540
|
Details about AOCI components
|
Amounts reclassified from AOCI
|
Affected line item in the statement where net income (loss) is presented
|
Gains (losses) on cash flow hedges
|
||
Foreign exchange derivative contracts
|
(6)
|
Cost of sales
|
Foreign exchange derivative contracts
|
1
|
Research and development
|
-
|
Income tax expense
|
|
(5)
|
Net of tax
|
|
Defined benefit pension plan items
|
||
Amortization of actuarial gains (losses)
|
(3)
|
Research and development
(1)
|
Amortization of actuarial gains (losses)
|
(3)
|
Selling, general and administrative
(1)
|
2
|
Income tax benefit (expense)
|
|
(4)
|
Net of tax
|
|
Total reclassifications for the period attributable to the Company’s stockholders
|
(9)
|
Net of tax
|
(1) |
These items are included in the computation of net periodic pension cost, as described in Note 22.
|
12. |
Marketable Securities
|
13. |
Trade Accounts Receivable, Net
|
As at October 1, 2016
|
As at December 31, 2015
|
|
Trade accounts receivable
|
1,021
|
827
|
Allowance for doubtful accounts
|
(12)
|
(7)
|
Total
|
1,009
|
820
|
14. |
Inventories
|
As at October 1, 2016
|
As at December 31, 2015
|
|
Raw materials
|
80
|
74
|
Work-in-process
|
804
|
804
|
Finished products
|
354
|
373
|
Total
|
1,238
|
1,251
|
15. |
Business Combinations
|
Fair value recognized at acquisition date
|
|
Property, plant and equipment
|
2
|
Technology
|
6
|
In-process R&D
|
40
|
Goodwill
|
42
|
Total net assets at fair value
|
90
|
Purchase consideration
|
90
|
16. |
Goodwill
|
Automotive and Discrete Group (ADG)
|
Microcontrollers and Digital ICs Group (MDG)
|
Analog and MEMS Group (AMG)
|
Others
|
Total
|
|
December 31, 2015
|
-
|
74
|
2
|
-
|
76
|
Business combination
|
-
|
42
|
-
|
-
|
42
|
Foreign currency translation
|
-
|
1
|
-
|
-
|
1
|
October 1, 2016
|
-
|
117
|
2
|
-
|
119
|
17.
|
Other intangible assets
|
October 1, 2016
|
Gross Cost
|
Accumulated Amortization
|
Net Cost
|
Technologies & licences
|
614
|
(528)
|
86
|
Contractual customer relationships
|
4
|
(4)
|
-
|
Purchased & internally developed software
|
403
|
(344)
|
59
|
Construction in progress
|
54
|
-
|
54
|
Other intangible assets
|
65
|
(65)
|
-
|
Total
|
1,140
|
(941)
|
199
|
December 31, 2015
|
Gross Cost
|
Accumulated Amortization
|
Net Cost
|
Technologies & licences
|
593
|
(511)
|
82
|
Contractual customer relationships
|
4
|
(4)
|
-
|
Purchased & internally developed software
|
387
|
(321)
|
66
|
Construction in progress
|
18
|
-
|
18
|
Other intangible assets
|
65
|
(65)
|
-
|
Total
|
1,067
|
(901)
|
166
|
Year
|
|
Remainder of 2016
|
21
|
2017
|
68
|
2018
|
48
|
2019
|
31
|
2020
|
17
|
Thereafter
|
14
|
Total
|
199
|
18.
|
Property, plant and equipment
|
October 1, 2016
|
Gross
Cost
|
Accumulated Depreciation
|
Net
Cost
|
Land
|
76
|
-
|
76
|
Buildings
|
821
|
(424)
|
397
|
Facilities & leasehold improvements
|
2,824
|
(2,572)
|
252
|
Machinery and equipment
|
13,221
|
(11,793)
|
1,428
|
Computer and R&D equipment
|
377
|
(338)
|
39
|
Other tangible assets
|
108
|
(100)
|
8
|
Construction in progress
|
89
|
-
|
89
|
Total
|
17,516
|
(15,227)
|
2,289
|
December 31, 2015
|
Gross
Cost
|
Accumulated Depreciation
|
Net
Cost
|
Land
|
75
|
-
|
75
|
Buildings
|
806
|
(399)
|
407
|
Facilities & leasehold improvements
|
2,746
|
(2,482)
|
264
|
Machinery and equipment
|
12,885
|
(11,408)
|
1,477
|
Computer and R&D equipment
|
377
|
(339)
|
38
|
Other tangible assets
|
104
|
(99)
|
5
|
Construction in progress
|
55
|
-
|
55
|
Total
|
17,048
|
(14,727)
|
2,321
|
19. |
Long-Term Investments
|
October 1, 2016
|
December 31, 2015
|
|
Equity-method investments
|
44
|
44
|
Cost-method investments
|
13
|
13
|
Total
|
57
|
57
|
Equity-method investments as at October 1, 2016 and December 31, 2015 were as follows:
|
October 1, 2016
|
December 31, 2015
|
|||
Carrying value
|
Ownership percentage
|
Carrying value
|
Ownership percentage
|
|
ST-Ericsson SA, in liquidation
|
44
|
50.0%
|
44
|
50.0%
|
Total
|
44
|
44
|
20. |
Other Non-current Assets
|
As at October 1, 2016
|
As at December 31, 2015
|
|
Available-for-sale equity securities
|
11
|
11
|
Trading equity securities
|
8
|
8
|
Long-term State receivables
|
367
|
403
|
Long-term receivables from third parties
|
1
|
1
|
Prepaid for pension
|
11
|
8
|
Deposits and other non-current assets
|
26
|
28
|
Total
|
424
|
459
|
21. |
Long-term debt
|
October 1, 2016
|
December 31, 2015
|
|
Funding program loans from European Investment Bank:
|
||
0.38% due 2016, floating interest rate at Libor + 0.052%
|
-
|
19
|
1.10% due 2016, floating interest rate at Libor + 0.477%
|
-
|
26
|
1.01% due 2016, floating interest rate at Libor + 0.373%
|
-
|
29
|
1.90% due 2020, floating interest rate at Libor + 1.199%
|
63
|
63
|
1.89% due 2020, floating interest rate at Libor + 1.056%
|
138
|
138
|
0.62% due 2020, floating interest rate at Euribor + 0.917%
|
69
|
68
|
1.44% due 2021, floating interest rate at Libor + 0.525%
|
180
|
180
|
1.54% due 2021, floating interest rate at Libor + 0.572%
|
173
|
173
|
Dual tranche senior unsecured convertible bonds
|
||
Zero-coupon, due 2019 (Tranche A)
|
561
|
550
|
1.0% due 2021 (Tranche B)
|
360
|
354
|
Other funding program loans:
|
||
0.39% (weighted average), due 2016-2023, fixed interest rate
|
3
|
4
|
Other long-term loans:
|
||
1.95% (weighted average), due 2017, fixed interest rate
|
3
|
4
|
0.79% (weighted average), due 2018, fixed interest rate
|
1
|
1
|
0.87% (weighted average), due 2020, fixed interest rate
|
2
|
2
|
Capital leases:
|
||
10.07% (weighted average), due 2017-2019, fixed interest rate
|
-
|
1
|
Total long-term debt
|
1,553
|
1,612
|
Less current portion
|
(117)
|
(191)
|
Total long-term debt, less current portion
|
1,436
|
1,421
|
22. |
Post Employment and Other Long-term Employee Benefits
|
Pension Benefits
|
Pension Benefits
|
|||
Three months ended
|
Nine months ended
|
|||
October 1, 2016
|
September 26, 2015
|
October 1, 2016
|
September 26, 2015
|
|
Service cost
|
(7)
|
(7)
|
(20)
|
(22)
|
Interest cost
|
(6)
|
(6)
|
(19)
|
(19)
|
Expected return on plan assets
|
5
|
5
|
15
|
16
|
Amortization of actuarial net (loss) gain
|
(2)
|
(2)
|
(6)
|
(5)
|
Net periodic benefit cost
|
(10)
|
(10)
|
(30)
|
(30)
|
Other long-term benefits
|
Other long-term benefits
|
|||
Three months ended
|
Nine months ended
|
|||
October 1, 2016
|
September 26, 2015
|
October 1, 2016
|
September 26, 2015
|
|
Service cost
|
(1)
|
(1)
|
(3)
|
(3)
|
Interest cost
|
(1)
|
-
|
(1)
|
(1)
|
Net periodic benefit cost
|
(2)
|
(1)
|
(4)
|
(4)
|
23. |
Dividends
|
24. |
Treasury Stock
|
25. |
Contingencies, Claims and Legal proceedings
|
26. |
Derivative Instruments and Hedging Activities
|
In millions of Euros
|
Notional amount for hedge on forecasted R&D and other operating expenses
|
Notional amount for hedge on forecasted manufacturing costs
|
Forward contracts
|
199
|
314
|
Currency collars
|
230
|
340
|
In millions of Singapore dollars
|
Notional amount for hedge on forecasted R&D and other operating expenses
|
Notional amount for hedge on forecasted manufacturing costs
|
Forward contracts
|
-
|
89
|
As at October 1, 2016
|
As at December 31, 2015
|
|||
Asset Derivatives
|
Balance sheet location
|
Fair value
|
Balance sheet location
|
Fair value
|
Derivatives designated as a hedge:
|
||||
Foreign exchange forward contracts
|
Other current assets
|
4
|
Other current assets
|
3
|
Currency collars
|
Other current assets
|
2
|
Other current assets
|
1
|
Currency collars
|
Other non-current assets
|
-
|
Other non-current assets
|
1
|
Total derivatives designated as a hedge:
|
6
|
5
|
||
Derivatives not designated as a hedge:
|
||||
Foreign exchange forward contracts
|
Other current assets
|
2
|
Other current assets
|
1
|
Total derivatives not designated as a hedge:
|
2
|
1
|
||
Total Derivatives
|
8
|
6
|
As at October 1, 2016
|
As at December 31, 2015
|
|||
Liability Derivatives
|
Balance sheet location
|
Fair value
|
Balance sheet location
|
Fair value
|
Derivatives designated as a hedge:
|
||||
Foreign exchange forward contracts
|
Other payables and accrued liabilities
|
(3)
|
Other payables and accrued liabilities
|
(18)
|
Currency collars
|
Other payables and accrued liabilities
|
(1)
|
Other payables and accrued liabilities
|
(6)
|
Total derivatives designated as a hedge:
|
(4)
|
(24)
|
||
Derivatives not designated as a hedge:
|
||||
Foreign exchange forward contracts
|
Other payables and accrued liabilities
|
(1)
|
Other payables and accrued liabilities
|
(1)
|
Total derivatives not designated as a hedge:
|
(1)
|
(1)
|
||
Total Derivatives
|
(5)
|
(25)
|
Gain (loss) deferred in
OCI on derivative |
Location of gain (loss) reclassified from
OCI into earnings |
Gain (loss) reclassified from OCI into earnings
|
|||||
Three months ended
|
Nine months ended
|
||||||
October 1, 2016
|
December 31, 2015
|
October 1, 2016
|
September 26, 2015
|
October 1,
2016 |
September 26, 2015
|
||
Foreign exchange forward contracts
|
2
|
(14)
|
Cost of sales
|
(1)
|
(13)
|
(4)
|
(55)
|
Foreign exchange forward contracts
|
-
|
(1)
|
Selling, general and administrative
|
-
|
(1)
|
-
|
(7)
|
Foreign exchange forward contracts
|
-
|
(4)
|
Research and development
|
1
|
(5)
|
1
|
(25)
|
Currency collars
|
1
|
(3)
|
Cost of sales
|
-
|
(12)
|
(2)
|
(38)
|
Currency collars
|
-
|
-
|
Selling, general and administrative
|
-
|
(1)
|
-
|
(5)
|
Currency collars
|
-
|
(1)
|
Research and development
|
-
|
(4)
|
-
|
(20)
|
Total
|
3
|
(23)
|
-
|
(36)
|
(5)
|
(150)
|
|
27. |
Fair Value Measurements
|
Fair Value Measurements using
|
||||
October 1, 2016
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
|
Marketable securities – U.S. Treasury Bonds
|
342
|
342
|
-
|
-
|
Equity securities classified as available-for-sale
|
11
|
11
|
-
|
-
|
Equity securities classified as held-for-trading
|
8
|
8
|
-
|
-
|
Derivative instruments designated as cash flow hedge
|
6
|
-
|
6
|
-
|
Derivative instruments designated as cash flow hedge
|
(4)
|
-
|
(4)
|
-
|
Derivative instruments not designated as cash flow hedge
|
2
|
-
|
2
|
-
|
Derivative instruments not designated as cash flow hedge
|
(1)
|
-
|
(1)
|
-
|
Total
|
364
|
361
|
3
|
-
|
Fair Value Measurements using
|
||||
December 31, 2015
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
|
Marketable securities – U.S. Treasury Bonds
|
335
|
335
|
-
|
-
|
Equity securities classified as available-for-sale
|
11
|
11
|
-
|
-
|
Equity securities classified as held-for-trading
|
8
|
8
|
-
|
-
|
Derivative instruments designated as cash flow hedge
|
5
|
-
|
5
|
-
|
Derivative instruments designated as cash flow hedge
|
(24)
|
-
|
(24)
|
-
|
Derivative instruments not designated as cash flow hedge
|
1
|
-
|
1
|
-
|
Derivative instruments not designated as cash flow hedge
|
(1)
|
-
|
(1)
|
-
|
Total
|
335
|
354
|
(19)
|
-
|
Fair Value Measurements using Significant Unobservable Inputs (Level 3)
|
|
January 1, 2016
|
-
|
Contingent consideration on business combinations
|
(12)
|
October 1, 2016
|
(12)
|
Amount of total losses for the period included in earnings attributable to assets still held at the reporting date
|
-
|
Fair Value Measurements using Significant Unobservable Inputs (Level 3)
|
|
January 1, 2016
|
1
|
Impairment charge on Assets held for sale
|
(1)
|
Assets held for sale
|
1
|
Assets acquired on business combination, including goodwill
|
90
|
October 1, 2016
|
91
|
Amount of total losses for the period included in earnings attributable to assets still held at the reporting date
|
(3)
|
As at October 1, 2016
|
As at December 31, 2015
|
||||
Level
|
Carrying Amount
|
Estimated Fair Value
|
Carrying Amount
|
Estimated Fair Value
|
|
Cash equivalents (1)
|
1
|
1,175
|
1,175
|
1,099
|
1,099
|
Long-term debt
|
|||||
- Bank loans (including current portion)
|
2
|
632
|
632
|
708
|
708
|
- Senior unsecured convertible bonds (2)
|
1
|
921
|
1,001
|
904
|
960
|
(1) |
Cash equivalents primarily correspond to deposits at call with banks.
|
(2) |
The carrying amount of the senior unsecured convertible bonds as reported above corresponds to the liability component only, since, at initial recognition, an amount of $121 million was recorded directly in shareholders’ equity as the value of the equity instrument embedded in the issued convertible bonds.
|
28. |
Segment Reporting
|
· |
Automotive and Discrete Group (ADG),
comprised of all automotive dedicated ICs, both digital and analog, and discrete products.
|
· |
Analog and MEMS Group (AMG),
comprised of low-power analog ICs, both general purpose and high-end, smart power products for industrial and power conversion, and micro-machinery activity.
|
· |
Microcontrollers and Digital ICs Group (MDG),
comprised of general purpose and secure microcontrollers, EEPROM memories, and digital ICs outside of automotive.
|
Three months ended
|
Nine months ended
|
|||||||||||||||
October 1,
2016 |
September 26, 2015
|
October 1,
2016 |
September 26, 2015
|
|||||||||||||
Automotive and Discrete Group (ADG)
|
704
|
706
|
2,096
|
2,094
|
||||||||||||
Analog and MEMS Group (AMG)
|
403
|
411
|
1,148
|
1,301
|
||||||||||||
Microcontrollers and Digital ICs Group (MDG)
|
587
|
590
|
1,676
|
1,678
|
||||||||||||
Others
|
103
|
57
|
193
|
156
|
||||||||||||
Total consolidated net revenues
|
1,797
|
1,764
|
5,113
|
5,229
|
||||||||||||
Three months ended
|
Nine months ended
|
|||
October 1,
2016 |
September 26, 2015
|
October 1,
2016 |
September 26, 2015
|
|
Automotive and Discrete Group (ADG)
|
58
|
68
|
158
|
150
|
Analog and MEMS Group (AMG)
|
23
|
34
|
26
|
102
|
Microcontrollers and Digital ICs Group (MDG)
|
44
|
22
|
49
|
(8)
|
Others
(1)
|
(35)
|
(33)
|
(148)
|
(160)
|
Total consolidated operating income
|
90
|
91
|
85
|
84
|
(1) |
Operating result of “Others” includes operating earnings of the Imaging Product Division, Subsystems and other products, as well as items not allocated to the segments, such as impairment, restructuring charges and other related closure costs, unused capacity charges, strategic or special research and development programs and other minor unallocated expenses such as: certain corporate-level operating expenses, patent claims and litigation, and other costs that are not allocated to the segments
.
|
Three months ended
|
Nine months ended
|
|||
October 1,
2016 |
September 26, 2015
|
October 1,
2016 |
September 26, 2015
|
|
Reconciliation to consolidated operating income:
|
||||
Total operating income
of segments
|
125
|
124
|
233
|
244
|
Impairment, restructuring charges and other related closure costs
|
(29)
|
(11)
|
(69)
|
(61)
|
Manufacturing results
|
(9)
|
(7)
|
(30)
|
(35)
|
Operating results of other businesses
|
16
|
(12)
|
(33)
|
(60)
|
Strategic and other research and development programs and other non-allocated provisions
|
(13)
|
(3)
|
(16)
|
(4)
|
Total operating loss Others
|
(35)
|
(33)
|
(148)
|
(160)
|
Total consolidated operating income
|
90
|
91
|
85
|
84
|
|
|
STMicroelectronics N.V.
|
|
|
|
|
|
Date: November 10, 2016
|
By:
|
/s/ Carlo Bozotti
|
|
|
|
|
|
|
Name:
|
Carlo Bozotti
|
|
|
Title:
|
President and Chief Executive Officer and Sole Member of our Managing Board
|
1 Year STMicroelectronics NV Chart |
1 Month STMicroelectronics NV Chart |
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