FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2001
STMicroelectronics N.V.
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(Translation of registrant's name into English)
Route de Pre-Bois, ICC Bloc A, 1215 Geneva 15, Switzerland
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(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F]
Form 20-F X Form 40-F
--- ---
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934]
Yes No X
--- ---
[If "Yes" is marked, indicate below the file number assigned to the
Registrant in connection with Rule 12g3-2(b): 82-______]
Enclosures:
STMicroelectronics' third quarter/nine month 2001 revenues and
earnings.
STMicroelectronics Reports Third Quarter/Nine Month 2001
Revenues and Earnings
-- Third Quarter 2001 Net Revenues Total $1.4 Billion
-- Third Quarter Gross Margin Was 33%, and Diluted Earnings Per Share
Equaled $0.04.
-- Initial Stock Buy-Back Completed; Second Stock Repurchase
Announced
GENEVA--Oct. 18, 2001--STMicroelectronics (NYSE: STM) reported results for
the third quarter and first nine months ended September 29, 2001.
Third Quarter Results
Net revenues for the 2001 third quarter were $1,400.7 million, firmly within
the Company's guidance range of $1,350 million to $1,430 million provided in its
second quarter earnings release of July 12, 2001. Third quarter revenue results
represent a 11.8% sequential decline from the $1,587.2 million reported in the
prior quarter. In last year's third quarter, net revenues were $2,042.0 million.
Revenues from differentiated products declined 4.9% on a sequential basis,
reaching $ 974.3 million for the period.
Pasquale Pistorio, President and Chief Executive Officer, commented, "As
anticipated, market conditions further deteriorated in the third quarter, with
pricing pressures driven by industry overcapacity negatively affecting virtually
all of ST's product families. During this time, we believe that ST's revenue
performance was in line with the overall industry average. However, we believe
we gained market share in our targeted applications, as illustrated by the
strength of the Company's differentiated product sales."
Differentiated product sales were the major contributors in the 2001 third
quarter, accounting for 69.6% of the period's net revenues. Logic and Memories
were $202.3 million, representing 14.4%, of net revenues, after a 33.4%
sequential sales decline. Discretes were $142.2 million (10.2% of net revenues)
and Standard and Commodities were $81.9 million, 5.8% of net revenues), after
posting sequential sales declines of 18.1% and 4.7%, respectively.
Telecom, Consumer and Computer applications registered sequential revenue
performance better than that of the Company as a whole. Telecom, which was down
4.2%, accounted for 35.5% of third quarter net revenues; Consumer was down 8.9%
and represented 19.9% of net revenues; and Computer, declined 11.3% and was 21%
of net revenues. Automotive, while virtually flat on a nine-month comparative
basis, declined 12.1% sequentially and represented 11.4% of net revenues.
Industrial, which includes smart cards and distribution, accounted for 12.3% of
third quarter 2001 revenues after posting a 31.3% sequential sales decline.
The Company posted gross profit for the 2001 third quarter of $462.1
million, and gross margin stood at 33% for the period. In the prior quarter, pro
forma gross profit was $603.3 million, or 38% of net revenues, and as-reported
gross profit was $532.6 million, or 33.6% of net revenues.
Mr. Pistorio noted "Difficult business conditions persisted in the third
quarter with several of our end markets being negatively affected by declining
product demand exacerbated in certain areas by
1
excess inventory conditions. As expected, gross margin was penalized by reduced
revenue levels as well as by our program to decrease inventory levels even at
the expense of fab utilization rates."
Mr. Pistorio continued, "I am pleased to report that ST was able to post
significant sequential declines in SG&A costs and non-core R&D expenditures,
which aggregated $62.5 million. These savings resulted from the cost control
programs, hiring freeze and optimization activities that were initiated earlier
in the year."
Selling, general and administrative expenses declined 20% on a sequential
basis to $144.2 million, and represented 10.3% of net revenues compared with
$180.2 million, or 11.4% of net revenues, reported in the second quarter of
2001. In the similar year-ago period, the Company's SG&A expenses were $174.0
million, or 8.5% of net revenues.
Research and development expenses totaled $229.2 million, or 16.4% of net
revenues, a 10.4% decline from the $255.7 million reported for the prior
quarter. In the 2000 third quarter R&D expenditures were $ 259.8 million, or
12.7% of net revenues.
ST is reviewing its strategy with respect to the Company's more mature 6"
wafer fabs. On May 31, 2001, ST announced the planned closing of its Ottawa fab
and the transfer of the related front-end wafer production to its other
facilities around the world. With the aim of reducing product costs, the Company
has initiated a plan for the closure of its 6" plant in Rancho Bernardo,
California. Therefore, in addition to the impairment charge taken in the second
quarter relating to this facility, ST accrued a further $23.3 million in
impairment charges in the 2001 third quarter.
Future actions may include the sale, wafer production curtailment or closure
of other similar facilities.
Operating income for the 2001 third quarter, which included the $23.3
million impairment charge, was $48.2 million. In the prior quarter, pro forma
operating income was $190.1 million and the Company incurred an as-reported
operating loss of $191.9 million. In the similar year-ago period, the Company
reported operating income of $511.8 million.
Net income for the period was $35.8 million, or $0.04 per diluted share. In
the prior quarter, the Company reported pro forma net income of $154.5 million
or $0.17 per diluted share. On an as-reported basis, ST incurred a net loss of
$164.5 million, or $0.18 per diluted share for the 2001 second quarter. In last
year's third quarter, ST posted net income of $415.3 million, or $0.45 per
diluted share.
Reviewing third quarter 2001 results, Mr. Pistorio stated, "We believe that
ST continued to distinguish itself during this period of unprecedented business
volatility and industry decline by increasing penetration in the markets we
serve while maintaining a solid financial structure. We worked diligently to
meet the changing needs of our strategic partners and key customers, efficiently
delivering customized and standard products from our worldwide manufacturing
facilities."
Pro Forma Nine-Month Results Excluding Restructuring and
Excess Inventory Charges
Net revenues for the nine months ended September 29, 2001 were $4,909.0
million, a decrease of 12.7% from the $5,621.5 million reported in the 2000
nine-month period. Gross profit was $1,921.1 million, or 39.1% of net revenues.
Operating income and net income,
2
which include pro forma results for the 2001 third quarter were $673.9 million,
and $545.6 million, respectively. On the same basis, nine-month pro forma
diluted earnings per share were $0.60.
Research and development costs were $757.0 million, or 15.4% of net revenues
compared to $740.0 million in the 2000 nine-months, or 13.2% of net revenues.
Selling, general and administrative expenses were $501.1 million, or 10.2% of
net revenues compared to $510.6 million, or 9.1% of net revenues in the 2000
period.
Nine-Month Results on an As-Reported Basis
Net revenues for the 2001 period were $4,909.0 million. Gross profit was
$1,850.4 million, or 37.7% of net revenues. Operating income was $268.6 million,
or 5.5% of net revenues. Net income was $212.1 million, or $0.23 per diluted
share.
Balance Sheet Highlights
At September 29, 2001, cash, cash equivalents and marketable securities
totaled $2,345.6 million; long-term debt was $2,781.9 million (78.9% of which
consists of convertible debt). Shareholders' equity was $6,306.0 million.
Capital expenditures were $ 336.0 million in the third quarter and $1,563.1
million in the first nine months of 2001. This compares with capital
expenditures of $873.3 million and $2,303.9 million in last year's third quarter
and nine months, respectively.
Recent Developments
On September 24, 2001, ST announced the planned repurchase of up to five
million common shares to partially cover existing stock option plans. Subsequent
to the end of the 2001 third quarter, the Company had completed the buy-back for
an amount equal to $105.9 million, of which $72.7 million was executed in the
third quarter.
The Company announced today that it plans to buy back an additional amount
of up to five million shares of its outstanding common stock for the same
purpose as the prior program. Share purchases may be made from time to time, on
the open market, through block trades or otherwise, depending on market
conditions or other factors.
Summary and Outlook
Commenting on year-to-date results, Mr. Pistorio said, "ST's revenue
performance for the first nine months of 2001 illustrated our continued ability
to significantly outpace the industry average and, importantly, the market
segments we serve. This has been accomplished by adhering to a focused strategy
which includes the built-in flexibility to rapidly respond to dynamic industry
conditions."
"Global economic and political uncertainty have increased substantially in
the past month, rendering industry and Company-specific guidance that much more
difficult to provide," Mr. Pistorio said. "Based upon data available to us
today, our understanding of general industry trends, and input from key
customers, the current outlook is for ST's fourth quarter 2001 revenues and
gross margin to approximate third quarter 2001 levels. ST's longer term industry
position is further enhanced," Mr. Pistorio said, "by our strong balance sheet,
the growth potential of our key
3
application segments, and our leadership role in the evolving convergence of
applications and technologies."
Products, Technology and Design Wins
During the third quarter, ST continued to develop new technologies and
applications while strengthening its existing positions across the industry
segments. Highlights of the quarter included confirmation of ST's leading
position in digital consumer by independent market sources, a pioneering
development in the MP3 music industry and the introduction of leading-edge
products in all major industry segments.
In digital consumer, independent market analysts Gartner and Cahners In-Stat
again confirmed ST as the world's number one supplier of set-top box (STB) and
MPEG decoder chips. According to the In-Stat report, ST had the highest MPEG
video chip revenues for the third consecutive year, while the Gartner figures
showed not only that ST continued to lead the market for STB and MPEG chips, but
also that the Company was the leader in non-game digital consumer chips. ST also
announced that more than ten million STBs based on ST decoders and OpenTV
middleware had been deployed worldwide, confirming ST as the leading supplier
within OpenTV's successful interactive Television (iTV) technology with an
impressive 60% market share.
Reinforcing its technical and market leadership in digital consumer, ST also
introduced new DVD back-end SoC (System-on-Chip) devices that provide fully
integrated decoder/host processor solutions for DVD players. Addressing the
mainstream DVD market, the STi5519 is a cost-reduced version of ST's popular
STi5508, while the STi5580 is an enhanced version of the STi5508 targeting the
mid-range DVD market and the emerging audio+DVD combo market.
In addition, ST disclosed details of its cooperation with Coding
Technologies, the inventors of mp3PRO, the next generation of the MP3 audio
coding standard, which will accelerate the development of DSP-based (Digital
Signal Processing) chips destined for portable music players. ST is the first
chip manufacturer to develop a working silicon platform for the new mp3PRO
technology, which reduces file size and enhances audio quality, yet guarantees
both backward and forward compatibility. The new decoder chips are expected to
reach the market in early 2002.
Finally, ST delivered to Dataplay, Inc. prototypes of a super integrated
power combo device, which will further enhance the compactness and the
miniaturization of the Dataplay optical disk drive. This drive will allow up to
500MB of mass storage on a disk that has a one and a quarter inch diameter and
is designed to play and record all forms of digital content, including music,
images, software, eBooks, games and video.
In the computer peripherals field, ST continued to set the pace in the hard
disk drive (HDD) industry, in which it is the world's number one chip supplier.
During the quarter, ST introduced a high-performance MEMS-based
(Micro-Electro-Mechanical System) rotational accelerometer for PC and consumer
HDD applications. The device makes the drive more resistant to vibration,
thereby improving overall read/write speed and disk density.
ST also unveiled a prototype rotational microactuator, produced using MEMS
technology, which positions the HDD read/write head with unprecedented
precision, allowing the storage density of HDDs to be significantly increased.
In the communications arena, details were announced of an agreement between
ST and Huawei Technologies, China, for the joint
4
development of a key silicon chip for subscriber line interface cards in
telephone networks. Under the terms of the agreement, ST and Huawei engineers
will jointly develop the chip; it will be manufactured by ST and used
exclusively by Huawei in its telephone switching office equipment. Huawei is the
number one telecom equipment manufacturer in China, which is expected to be the
fastest growing major market for fixed-line telephone networks in the next
decade.
In the mobile phone and wireless terminal arena, in addition to design wins
and production orders coming from its strategic alliances, ST gained numerous
design wins for audio codecs, production orders for energy management chips from
two top-tier manufacturers and a design win for a multimedia processor for a
next-generation mobile phone. In addition, a multiple memory product comprising
a stacked 32Mbit Flash + 8Mbit SRAM was qualified at a major CDMA phone
manufacturer.
In the automotive field, a study by Gartner confirmed ST's increasing
worldwide success. During 2000, ST moved from 4th to 3rd in the worldwide
automotive ranking and became the number one supplier in the fast growing
Asia/Rest of World region and the leading non-Japanese supplier in the Japanese
market.
With the launch of XM Satellite Radio's US digital satellite radio, ST
confirmed it had received volume orders for the two-chip receiver chipsets from
radio manufacturers including Sony, Pioneer and Alpine. ST is the sole supplier
of these critical chipsets. Also during the quarter, ST maintained its leading
position in automotive memory technology with the commercial release of advanced
32-bit-wide, 16Mbit Flash and 16-bit-wide, 128Kbit SRAM memories optimized for
automotive applications. ST also started production of a new family of advanced
amplifiers for car radios, for which a major design win has already been
achieved at Visteon for the car radio for the new Fiat Stilo.
In the industrial field, ST introduced the world's first DSP System Memory
device. Developed in conjunction with a leading supplier of stand-alone DSPs,
ST's chip integrates all the essential memory, interface and logic functions
required to provide a complete DSP system memory solution.
ST also maintained its momentum in the smart card market by introducing
three new products, including a device that combines massive on-chip memory with
the world's fastest contact-less communications interface. The Company has also
received the first volume production orders for this device for a Japanese
governmental card, which is one of the world's first uses of smart cards in this
type of application.
ST also maintained its e-Business investments and during the quarter
expanded its RosettaNet business-to-business capabilities with several
distributors in Europe and America and with OEMs in Europe and Asia Pacific.
Some of the above statements, that are not historical facts or include such
words as the Company "believes", "anticipates", "expects" or words of similar
impact, are statements of future expectations and other forward looking
statements (within the meaning of Section 27A of the Securities Act of 1933, as
amended) that are based on management's current views and assumptions and that
involve known and unknown risks and uncertainties that could cause actual
results or performances to differ materially from those in such statements. In
particular the following important factors could cause actual results to differ
materially from the expectations of the Company or its management:
5
- the impact of the slowdown in the overall economy and the uncertainty of the
current global political environment following the recent terrorist attacks;
- industry conditions, such as the strength of product demand, the intensity of
competition, pricing pressures and excess manufacturing capacity;
- operating factors, such as the continued success of product
development or inventory risks due to shifts in market
demand;
- order rescheduling or cancellations from our customers, as well as
changes in customer orders, patterns and requirements, and
- the general business and economic conditions, in the various markets,
business segments and countries in which we and our customers operate.
Unfavorable changes in any of the above or other factors listed under "Risk
Factors" from time to time in the Company's SEC reports including the Form 20F
for the year ended December 31, 2000 which was filed with the SEC on May 15,
2001 and in particular the factors listed on page 3 of such Form 20F, could
materially affect the Company.
The forward-looking statements included in this release are made only as of
the date of this release and the company undertakes no obligation to update the
forward-looking statements to reflect subsequent events or circumstances.
Conference Call Information:
The management of STMicroelectronics will conduct a conference call at 4
p.m. CET/10 a.m. ET to discuss operating performance for the third quarter ended
September 29, 2001.
The conference call will be available via the Internet by accessing the
following Web address: www.vcall.com
Please go to the website at least fifteen minutes prior to the call to
register, download and install any necessary audio software. The webcast will be
available until October 26, 2001.
About STMicroelectronics.
STMicroelectronics is the world's third largest independent semiconductor
company. The Company shares are traded on the New York Stock Exchange, on
Euronext Paris and on the Milan Stock Exchange. The Company designs, develops,
manufactures and markets a broad range of semiconductor integrated circuits
(ICs) and discrete devices used in a wide variety of microelectronic
applications, including telecommunications systems, computer systems, consumer
products, automotive products and industrial automation and control systems.
Further information on ST can be found at www.st.com
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For further information please contact :
Investor Relations Europe:
Benoit de Leusse
Investor Relations Manager Europe
Tel: +33.4.50.40.24.30
Fax: +33.4.50.40.25.80
Or
Investor Relations USA:
6
Stan March
Director of Investor Relations, USA
Tel: +1.212.821.8939
Fax: +1.212.821.8923
Or
Media Relations Corporate:
Maria Grazia Prestini
Director, Corporate Media Relations
Tel: +33.4.50.40.25.32
Fax: +33.4.50.40.25.40
Or
Media Relations USA:
Michael Markowitz
Director of US Media Relations
Tel: +1.212.821.8959
Fax: +1.212.821.8922
STMicroelectronics N.V.
Consolidated Statement of Income
(in millions of U.S. dollars, except per share data)
Three Months Ended Nine Months Ended
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Sept. 29 Sept. 30 Sept. 29 Sept. 30
2001 2000 2001 2000
---- ---- ---- ----
Net sales 1 384,5 2 027,3 4 865,5 5 589,6
Other revenues 16,2 14,7 43,5 31,9
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NET REVENUES 1 400,7 2 042,0 4 909,0 5 621,5
Cost of sales (938,6) (1 077,1) (3 058,6) (3 063,8)
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GROSS PROFIT 462,1 964,9 1 850,4 2 557,7
Selling, general &
administrative (144,2) (174,0) (501,1) (510,6)
Research &
development (229,2) (259,8) (757,0) (740,0)
Other income and
expenses (17,2) (19,3) 10,9 (87,6)
Impairment and
restructuring
charges (23,3) 0,0 (334,6) 0,0
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Total Operating
Expenses (413,9) (453,1) (1 581,8) (1 338,2)
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OPERATING INCOME 48,2 511,8 268,6 1 219,5
Net interest
income (expense) (4,8) 7,3 (1,3) 37,7
Equity in earnings
of joint ventures (1,2) 0,0 (1,2) 0,0
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INCOME BEFORE INCOME
TAXES AND MINORITY
INTERESTS 42,2 519,1 266,1 1 257,2
Income tax expense (6,2) (103,6) (51,8) (265,6)
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INCOME BEFORE
MINORITY INTERESTS 36,0 415,5 214,3 991,6
Minority interests (0,2) (0,2) (2,2) (1,4)
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NET INCOME 35,8 415,3 212,1 990,2
=================================================
EARNINGS PER SHARE
(BASIC)(*) 0,04 0,47 0,24 1,12
EARNINGS PER SHARE
(DILUTED)(*) 0,04 0,45 0,23 1,08
NUMBER OF WEIGHTED
AVERAGE SHARES
USED IN
CALCULATING
DILUTED EARNINGS
PER SHARE IN
MILLIONS 905,1 934,0 903,3 934,0
(*) All share information has been adjusted to reflect the 3-for-1 stock
split effected in May 2000.
STMicroelectronics N.V.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(in millions of U.S. dollars, except per share data)
(Unaudited)
Nine Months Ended
----------------------------
Sept. 29 Sept. 30
2001 2000
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NET REVENUES 4 909,0 5 621,5
Cost of sales (2 987,9) (3 063,8)
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GROSS PROFIT 1 921,1 2 557,7
Selling, general and administrative (501,1) (510,6)
Research and development (757,0) (740,0)
Other income and expenses 10,9 (87,6)
Impairment and restructuring charges 0,0 0,0
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Total Operating Expenses (1 247,2) (1 338,2)
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OPERATING INCOME 673,9 1 219,5
Net interest income (1,3) 37,7
Equity in earnings of joint ventures (1,2) 0,0
INCOME BEFORE INCOME
TAXES AND MINORITY INTERESTS 671,4 1 257,2
8
Income tax expense (123,6) (265,6)
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INCOME BEFORE MINORITY INTERESTS 547,8 991,6
Minority interests (2,2) (1,4)
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NET INCOME 545,6 990,2
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EARNINGS PER SHARE (BASIC)(*) 0,61 1,12
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----------------------------
EARNINGS PER SHARE (DILUTED)(*) 0,60 1,08
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NUMBER OF WEIGHTED AVERAGE SHARES
USED IN CALCULATING DILUTED
EARNINGS PER SHARE (*) IN MILLIONS
SHARES 930,7 934,0
(*) All share information has been adjusted to reflect the 3-for-1 stock
split effected in May 2000.
The pro forma amounts have been adjusted to eliminate the following :
(Unaudited)
Nine Months Ended
----------------------------------
Sept. 29 Sept. 30
2001 2000
---- ---
Excess inventory charge 70,7 ---
Impairment and restructuring charges 334,6 ---
Income tax effect (71,8) ---
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TOTAL 333,5 ---
==================================
STMicroelectronics N.V.
CONSOLIDATED BALANCE SHEET
(in millions of U.S. dollars)
As at Sept. 29, Dec. 31,
2001 2000
----------------------
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents 1 210,0 2 295,7
Marketable securities 1 135,6 35,2
Trade accounts and notes receivable 1 057,3 1 496,4
Inventories 877,0 876,5
Other receivables and assets 597,5 554,0
----------------------
Total current assets 4 877,4 5 257,8
Intangible assets, net 220,2 286,1
Property, plant and equipment, net 6 241,2 6 201,1
9
Investments and other non-current assets 125,8 135,5
----------------------
----------------------
6 587,2 6 622,7
----------------------
----------------------
Total assets 11 464,6 11 880,5
----------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdrafts 24,1 35,6
Current portion of long-term debt 116,6 106,0
Trade accounts and notes payable 985,2 1 745,6
Other payables and accrued liabilities 650,0 509,2
Accrued and deferred income tax 251,5 299,6
----------------------
Total current liabilities 2 027,4 2 696,0
Long-term debt 2 781,9 2 700,5
Reserves for pension and termination indemnities 119,1 110,2
Other non-current liabilities 195,1 216,2
----------------------
3 096,1 3 026,9
Total liabilities 5 123,5 5 722,9
Minority interests 35,1 33,0
Capital Stock 1 141,5 1 133,7
Capital surplus 1 820,0 1 689,8
Accumulated result 4 153,6 3 977,3
Accumulated other comprehensive income (736,4) (676,2)
Treasury stock (72,7) 0,0
----------------------
Shareholders' equity 6 306,0 6 124,6
----------------------
----------------------
Total liabilities and shareholders' equity 11 464,6 11 880,5
----------------------
STMicroelectronics N.V.
Selected Consolidated Financial Data
(in millions of U.S. dollars)
Consolidated Balance Sheet Data Sept. 29, Dec. 31,
(End of period) 2001 2000
---- ----
Cash, cash equivalents and
marketable securitites 2 345,6 2 330,9
Working capital 645,1 372,5
Total assets 11 464,6 11 880,5
Short-term debt (including current
portion of long-term debt) 140,7 141,6
Long-term debt (excluding
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current portion) 2 781,9 2 700,5
Shareholders' equity 6 306,0 6 124,6
Consolidated Operating Data Sept. 29, Sept. 30,
(Nine months ended) 2001 2000
---- ----
Payment for purchases of tangible assets 1 563,1 2 303,9
Net cash from operating activities 1 580,3 1 537,8
Net operating cash flow (91,8) (951,3)
Depreciation and amortization 973,1 790,7
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
STMicroelectronics N.V. has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: October 18, 2001 STMicroelectronics N.V.
By: /s/ Pasquale Pistorio
----------------------------------
Name: Pasquale Pistorio
Title: President and Chief
Executive Officer