STMicroelectronics Reports 2007 Fourth Quarter and Full Year Revenues and Earnings

STMicroelectronics Reports 2007 Fourth Quarter and Full Year Revenues and
Earnings
- Fourth quarter net revenues increased 6.9% sequentially to $2.74 billion,
gross margin at 36.9%, diluted EPS was $0.27 before restructuring and one-time
charges

GENEVA, Jan. 22 /PRNewswire-FirstCall/ -- STMicroelectronics (NYSE: STM)
reported financial results for the fourth quarter and year ended December 31,
2007.
ST, in conjunction with Intel and Francisco Partners, entered into a
definitive agreement on May 22, 2007 to create an independent semiconductor
company, with ST contributing its Flash Memories Group (FMG). Subject to
satisfying the closing conditions, ST anticipates the completion of the
transaction during the 2008 first quarter. In this press release, ST presents
certain financial results for the Company as a whole, as well as for the
Company excluding FMG.
Net Revenues and Gross Profit Review
Net revenues for the fourth quarter increased 6.9% sequentially to $2.74
billion from the $2.57 billion reported in the prior quarter. Excluding FMG,
net revenues increased 7.7% sequentially with growth led by imaging products,
data storage, application-specific wireless, and industrial products.
Net revenues for the full year were $10.0 billion, an increase of 1.5%
compared to 2006 net revenues of $9.9 billion. ST's year-over-year net
revenues growth, excluding FMG, was about 4.3%, driven by MEMS (Micro-Electro-
Mechanical Systems), digital consumer, industrial, and application-specific
wireless products, indicating that the Company grew sales for its served
market in line with industry analysts' preliminary estimates.

In Billion US$ and % Q4 2007 Full year 2007
ST ST excluding ST ST excluding
FMG FMG

Net Revenues $2.74 $2.38 $10.00 $8.64
Sequential Growth 6.9 % 7.7 % n/a n/a
Year-over-Year Growth 10.4 % 13.0 % 1.5 % 4.3 %

President and CEO Carlo Bozotti commented, "Our fourth quarter financial
results exceeded the mid-point of our outlook, with revenues up 6.9%
sequentially and gross margin at 36.9%. Excluding FMG, revenues were up 7.7%
sequentially with a gross margin of 38.2%. Sequential sales growth was driven
by ST's strong industrial-products offering and improving wireless
positioning, both of which are areas of significant product-development focus
for us.
"Over the course of 2007 we made progress in strengthening our Application
Specific Product Groups (ASG). ASG's revenue growth of approximately 25%,
comparing fourth quarter 2007 results with those of the year's first quarter,
was in line with our earlier expectations and is clear evidence of our
strengthening portfolio. Additionally, our Industrial and Multisegment Sector
(IMS), which includes Advanced Analog, MEMS and Microcontrollers, had sales
growth over 10% in 2007, demonstrating the quality of ST's product portfolio
and capability to increase share in the industrial and analog markets."
Gross profit was $1.01 billion for the 2007 fourth quarter and the gross
margin was 36.9%. Sequentially, both gross profit and gross margin improved
from the prior quarter levels of $902 million and 35.2%, respectively. During
the fourth quarter, FMG gross profit realized the benefit of suspended
depreciation related to assets held for sale. Excluding FMG, gross profit was
$911 million for the 2007 fourth quarter, representing a gross margin of
38.2%, a decrease from the 39.1% in the third quarter due to severe exchange-
rate degradation and higher weighting of imaging devices in the product mix.
In the year-ago quarter, the gross profit for the entire Company was $901
million and the gross margin was 36.3%.
For the 2007 full year, ST's gross profit was $3.54 billion, with a gross
margin of 35.4% compared to 2006 gross profit and gross margin of $3.52
billion and 35.8% respectively.

In Billion US$ and % Q4 2007 Full year 2007
ST ST excluding ST ST excluding
FMG FMG

Gross Profit $1.01 $0.91 $3.54 $3.29
Gross Margin 36.9 % 38.2 % 35.4 % 38.1 %

Operating Expenses
In the 2007 fourth quarter, R&D expenses were $480 million and SG&A
expenses were $295 million. Combined selling, general & administrative and
research & development expenses represented 28.3% of net revenues in the
fourth quarter, compared to 27.8% in the third quarter of 2007, and below the
28.6% level in the year-ago quarter. In the 2007 fourth quarter, combined SG&A
and R&D expenses reflected an additional $25 million in sequential currency
effects, $8 million sequential increase in stock-based compensation charges
and $7 million in additional R&D expenses from the acquisition of the Nokia
design team, which closed on November 5th.
Research and development expenses were $1.80 billion and $1.67 billion in
2007 and 2006, respectively, while selling, general and administrative
expenses were $1.10 billion and $1.07 billion during the same respective
periods. For the 2007 full year, combined SG&A and R&D expenses were 29.0% of
net revenues compared to 27.7% in 2006, reflecting an estimated year-over-year
currency impact of approximately $180 million.
Impairment and Restructuring Charges
Fourth quarter impairment and restructuring charges totaled $279 million,
with $30 million primarily coming from previously announced restructuring
programs and $249 million in non-cash impairment charges for the FMG assets
held for sale. The additional impairment charges related to the Numonyx
transaction result from revised terms of the Numonyx deal, exchange rate
effects, and an updated calculation of ST's expected equity value at closing.
For the full year 2007, FMG non-cash impairment charges totaled $1.11 billion,
while restructuring charges for previous plans were $116 million.
Other-than-temporary Impairment Charges on Marketable Securities
Since May 2006, ST has granted a specific mandate to a global financial
institution to invest a portion of its cash position in a US federally-
guaranteed student loan program. In mid 2007, ST became aware that the
managing financial institution deviated from its specific authorization and
that ST had been credited with investments in unauthorized auction rate
securities. As a direct result of these unauthorized investments, and the
current market conditions for the underlying asset based securities, the
company has recognized an impairment to the fair value of these securities in
the fourth quarter of $46 million. The Company is pursuing all available
options to recover its losses from these investments.
Operating Income and Profit Margin, Net Income and Earnings per Share
For the 2007 fourth quarter, the Company reported an operating loss of $15
million (operating income was $264 million, an operating margin of 9.6%,
excluding restructuring and impairment charges of $279 million), and net
income of $20 million, or $0.02 per diluted share ($0.27 excluding
restructuring and impairment charges that are equivalent, net of taxes, to
$0.20 per diluted share, and other-than-temporary impairment charges on
marketable securities of $46 million, an after tax impact of $0.05 per
diluted share). In the year-ago quarter, the Company reported operating income
of $173 million, equal to an operating margin of 7.0% (7.4% excluding
restructuring and impairment charges), and net income of $276 million or $0.30
per diluted share ($0.21 excluding restructuring and impairment charges and
benefits from a one-time tax claim). In the prior quarter, the Company
reported operating income of $181 million, an operating margin of 7.0% (9.1%
excluding one-time charges of $52 million), and net income of $187 million, or
$0.20 per diluted share ($0.24 excluding one-time charges).
Largely reflecting the non-cash impairment charges in connection with the
agreement to divest FMG, ST's operating loss was $545 million for full year
2007, compared to operating income of $677 million in the full year 2006. Net
loss was $477 million, or $ -0.53 per share, compared to net income of $782
million, or $0.83 per diluted share in 2006. 2007 results included impairment,
restructuring charges, other related closure costs and other one-time charges
equivalent, net of taxes, to $1.29 per diluted share.
In the fourth quarter of 2007, the effective average exchange rate for the
Company was approximately $1.425 to euro 1, compared to $1.356 to euro 1 in
the third quarter of 2007 and $1.28 to euro 1 in the year-ago quarter. The
Company's effective exchange rate reflects actual exchange rate levels
combined with the impact of hedging programs.
For the full year 2007, the effective average exchange rate for the
Company was approximately $1.35 to euro 1.00, compared to $1.24 to euro 1.00
for the full year 2006.
Carlo Bozotti, President and CEO, stated, "While we continue to make
significant improvements in a number of areas -- such as our product portfolio
competitiveness, capital intensity, manufacturing performance and cost
structure -- the financial benefits of our actions are difficult to see, as a
rapidly weakening US dollar absorbs much of our progress. We estimate that on
a constant currency basis our 2007 operating profit, excluding restructuring
and impairment charges, would have been about $310 million higher than the
reported figure of $683 million and would have been about $240 million higher
than the comparable operating profit figure of $754 million in 2006.
Therefore, ST will continue to take the necessary actions and portfolio
efforts required to further improve the Company's operating leverage."
Cash Flow and Balance Sheet Highlights
Net cash from operating activities was $737 million in the fourth quarter
and $2.19 billion for the full year 2007. Net operating cash flow* was $188
million for the fourth quarter, compared to $255 million in the prior quarter
and $157 million in the year-ago quarter. In the 2007 fourth quarter, cash
flow included a negative impact of approximately $250 million related to
purchasing a portion of the Crolles2 equipment and the Nokia agreement
announced in August. For the full year, net operating cash flow* totaled $840
million, up from $666 million in 2006.
Carlo Bozotti added, "We continue to emphasize a lighter asset strategy,
and are reconfirming our target to have capex represent approximately 10% of
sales in 2008. Importantly, we have significantly increased our net operating
cash flow during 2007, improving 26% to $840 million."
Reflecting ST's successful progress in its lighter asset policy, capital
expenditures were significantly lower in 2007. Specifically, capital
expenditures were $1.14 billion, or 11.4% of sales, for the full year 2007,
compared to $1.53 billion, or 15.6% of sales, for 2006. Inventory turns,
excluding FMG, increased sequentially from 3.9 to 4.4 times.
At December 31, 2007, ST's cash and cash equivalents, marketable
securities both current and non-current, short-term deposits and restricted
cash equaled $3.49 billion. Total debt was $2.22 billion. ST's net financial
position** was $1.27 billion. Shareholders' equity was $9.57 billion.
* Net operating cash flow is a non-US GAAP metric, which the Company's
management utilizes as a measure of cash-generation capability. It is
defined as net cash from operating activities ($737 million in the
fourth quarter of 2007) minus net cash used in investing activities
(primarily capital expenditures) excluding restricted cash, payments
for purchase of and proceeds from the sale of marketable securities
(current and non-current) and investment in and proceeds from matured
short-term deposits ($549 million in the fourth quarter of 2007).
** Net financial position is a non-US GAAP metric used by the Company's
management to help assess financial flexibility. It is defined as cash
and cash equivalents, marketable securities (current and non-current),
short-term deposits and restricted cash ($3,488 million) minus total
debt (bank overdrafts $0 million + current portion of long-term debt
$103 million + long-term debt $2,117 million).

Net Revenues by Market Segment for Q4 and Full Year 2007
The following table estimates, within a variance of 5% to 10% in the
absolute dollar amount, the relative weighting of each of the Company's target
market segments for the 2007 fourth quarter and full year.

As % of Net Revenues Q4 2007 Full year 2007
Market Segment ST ST excluding ST ST excluding
FMG FMG

Automotive 15 % 16 % 15 % 17 %
Consumer 16 % 16 % 17 % 17 %
Computer 16 % 17 % 16 % 17 %
Telecom 38 % 35 % 37 % 32 %
Industrial & Other 15 % 16 % 15 % 17 %

For the combined Company Q4 2007 results, Telecom was up 11% sequentially,
Industrial & Others was up 9%, and Automotive and Computer were each up 6%.
Consumer was down 1% sequentially. For the full year 2007, Industrial & Others
grew 8%, while Automotive and Consumer were both up about 4%. Telecom was down
about 1% due to memory products, and Computer was down about 2%.
Excluding FMG reduces the telecom market segment weighting by three to
five percentage points, due to FMG's strong positioning within wireless.
Financial and Operating Data by Product Segment for Q4 and Full Year 2007
The following table provides a breakdown of revenues and operating income
by product segment.

In Million US$ and % Q4 2007
Operating
Net % of Net income
Segment Revenues Revenues (loss)

ASG (Application Specific Product Groups) $1,521 55.5 % $108
IMS (Industrial and Multisegment Sector) 846 30.9 % 131
FMG (Flash Memories Group) 358 13.0 % 26
Others (1)(2) 17 0.6 % (280)

TOTAL $2,742 100 % $(15)

(1) Net revenues of "Others" include revenues from sales of Subsystems and
other products not allocated to product segments.
(2) Operating loss of "Others" includes items such as impairment,
restructuring charges, and other related closure costs, start-up
costs, and other unallocated expenses such as strategic or special
research and development programs, certain corporate-level operating
expenses, certain patent claims and litigations, and other costs that
are not allocated to the product segments, as well as operating
earnings or losses of the Subsystems and Other Products segment.

ASG's revenues grew 9.1% sequentially and 13.3% year-over-year, led by
imaging products, data storage and application-specific wireless products.
ASG's operating profit declined sequentially due to the sequential increase in
imaging device weighting and currency impact. IMS's sales grew 5.3%
sequentially and 11.3% year-over-year reflecting strength in MEMS and advanced
analog products while operating profit improved to $131 million. FMG sales
grew 1.6% sequentially, but were down 4% year-over-year. FMG operating profit
improved as a result of suspended depreciation.

In Million US$ and % Full Year 2007
Operating
Net % of Net income
Segment Revenues Revenues (loss)

ASG (Application Specific Product Groups) $5,439 54.4 % $303
IMS (Industrial and Multisegment Sector) 3,138 31.4 % 469
FMG (Flash Memories Group) 1,364 13.6 % (51)
Others (1)(2) 60 0.6 % (1,266)

TOTAL $10,001 100 % $(545)

(1) and (2) defined in earlier table.

For the full year, ASG sales were up 0.8%, IMS grew 10.4% while FMG
revenues declined 13.1%.
Outlook
Mr. Bozotti stated, "Looking to Q1 of 2008 -- in line with traditional
seasonality -- we expect net revenues to decline sequentially in the range
between -5% and -11%, which represents a year-over-year improvement of about
11% at the midpoint. The gross margin is expected to be about 36.3%, plus or
minus 1 percentage point. "
This outlook refers to the total Company, including expected results from
FMG for the full quarter and Genesis for the final two months, and is based on
an assumed currency exchange rate of approximately $1.46 = euro 1.00 for the
2008 first quarter, which reflects current exchange rate levels combined with
the impact of existing hedging contracts.
Recent Corporate Developments
-- On November 5, 2007, the Company and Nokia announced the closing of
their agreement, announced on August 8th, to deepen their collaboration
on the licensing and supply of integrated circuit designs and modem
technologies for 3G and its evolution.
-- On December 11, 2007, the Company and Genesis Microchip Inc. announced
that they had entered into a definitive agreement for
STMicroelectronics to acquire Genesis Microchip. The acquisition
confirms STMicroelectronics as a leading System-on-Chip (SoC)
technology provider to the rapidly growing digital television and
display markets. The tender offer closed on January 16, 2008 with ST
receiving 91% of Genesis shares. A subsequent offering period remains
open until 5:00 pm New York time on January 23, 2008.
-- On December 26, 2007, the Company announced that Intel, Francisco
Partners and ST agreed to extend the deadline for the closing of
Numonyx, the joint flash memory venture, to March 28, 2008. The three
parties continue to work to satisfy the conditions to closing for the
transaction, and expect the closing to take place in Q1 2008.
-- On January 15, 2008, the Company announced the appointment of new
executive officers, all reporting to President and Chief Executive
Officer Carlo Bozotti.

Products, Technology and Design Wins

Application-Specific Product Highlights
-- In car communications, ST released details of its Cartesio automotive-
grade embedded-GPS application processor. Primarily aimed at navigation
and telematics applications, Cartesio is based on ST's leading-edge
Nomadik(TM) multimedia processor platform, which is increasingly
gaining market penetration beyond mobile phones and in applications
such as automotive. Separately, Chrysler announced the introduction in
MiniVan vehicles of the Sirius Backseat TV service, which is enabled by
ST chips, from the RF to the baseband. ST also gained a major audio
power design win at a Japanese car radio OEM for a US car maker.
-- In automotive, ST and TIANJIN FAW Xiali Automobile, a China-based
automotive manufacturer, inaugurated their Joint Automotive Application
Laboratory in Tianjin, China, as part of the joint R&D cooperation to
develop advanced automotive solutions for TJ FAW and its vendors. ST
also gained important design wins in Direct Injection Engine
applications for a fully integrated lambda sensor with a major North
American OEM, a Japanese OEM and a major European OEM.
-- In car safety applications, ST acquired a major airbag platform from a
Japanese OEM, confirming ST's leadership in highly integrated smart-
power products for automotive applications. Additionally, four new
microcontrollers targeting power train, safety and car body
applications have been designed, together with Freescale, in 90nm
embedded flash process technology.
-- And in car body applications, ST gained contracts for the supply of
smart-power actuator kits by an OEM in the Middle East, and a very
significant win from a major North American supplier for four different
body control units. Additionally, various ST application specific
products for door modules and rear wipers were chosen by leading
European automotive players. ST also gained penetration in Japan with
tier one suppliers for body control units, demonstrating the
competitiveness of ST's Intelligent Power Switch portfolio.
-- In mobile connectivity, ST continued to increase its market share for
Bluetooth and wireless LAN ICs with additional design-ins and
continuing shipments to existing customers in the mobile phone market.
-- Also in mobile applications, ST's leading-edge 1/4-in 3-megapixel
autofocus camera was selected for a number of new mobile phones
shipping soon from two major handset makers.
-- In communications infrastructure, ST gained several significant design
wins for application-specific chips based on its leading-edge BiCMOS
(Bipolar-CMOS) technology, including major design wins with two leading
OEMs for next-generation fiber-optic transceivers, and a design win at
an innovative start-up for a new generation of parallel optical
interconnect systems.
-- In consumer, ST introduced the STi5202 low-cost set-top-box (STB)
decoder chip, intended for standard-definition (SD) terrestrial, cable,
satellite and IP (Internet Protocol) TV applications, and for both
retail and operator-supplied boxes. The chip shares the same
architecture, and is also software compatible, with ST's STi7109
single-chip H.264 high-definition (HD) decoder, which has been highly
successful in markets worldwide.
-- ST also announced that the leading Brazilian consumer manufacturer
Gradiente's new DHD800 HD STB -- the first to offer full compliance
with the new Brazilian SBTVD (Sistema Brasileiro de Televisao Digital)
digital terrestrial TV standard -- is based on ST's industry-leading
STi7100 single-chip HDTV decoder technology.
-- And in consumer audio, ST started shipments of its STA333W high-quality
digital audio Class D amplifier to a major Japanese LCD customer.
-- In computer peripherals, ST gained a design win for an analog ASIC
(Application-Specific IC) for a family of high-end inkjet printers from
a major customer. And ST's SPEAr(TM) (Structured Processor Enhanced
Architecture) family of customizable digital engines was selected by a
world leading OEM for multiple products in Human Machine Interface and
Programmable Logic Controller applications.
-- In hard-disk drives, ST shipped samples of its first 65nm iterative
read channel for the low-power mobile segment of hard-disk drives
(HDDs). The IC features enhanced signal-to-noise ratio gain and a 25%
lower power consumption, which is vital in mobile HDD applications. ST
also enabled a substantial advance in the security of data stored on
HDDs by becoming the first vendor of secure HDD System-on-Chip (SoC) IP
to be listed on the US National Institute of Standards and Testing
(NIST) Pre-Validation list for FIPS 140-2 Level 3. ST also won a
Visionary Company Award at the recent Storage Visions Conference,
recognizing ST's dedication to the development of state-of-the-art
storage technologies used in consumer electronics and the media and
entertainment industries.

Industrial and Multi-Segment Product Highlights
-- Following the launch earlier in the year of ST's breakthrough STM32
32-bit Flash microcontroller (MCU), based on the ARM(R) Cortex(TM)-M3
core, ST announced several development kits, including ST's STM32
Primer kit and the STM32 PerformanceStick, together with kits from
multiple third-party providers. ST also announced a software library
for the STM32 that simplifies testing and end-product approval, in
addition to compliance with the IEC 60335-1 standard, for use in
household appliances.
-- In smartcard applications, ST introduced the ST21F384 secure MCU with
embedded-Flash for use in 2.5G and 3G mobile-phone SIM cards. The IC,
which is the first such device to be produced in 90nm technology, uses
Flash memory for its program memory to provide increased flexibility
and shorter lead times for manufacturers, coupled with increased cost-
efficiency from its 90nm production.
-- In RFID, a solution from leading company 3M, based on ST's LRI2K RFID
chip, was selected for use in 42 libraries in Paris to identify, manage
and protect documents with a total of three million wireless smart
tags.
-- In MEMS devices, ST extended its family of ultra-compact 'low-g' linear
accelerometers with the LIS344AL three-axis analog-output sensor, which
is ideally suited for battery-powered and space-constrained portable
devices. ST also launched the LIS331 'nano' low-power three-axis linear
accelerometers, the smallest in the world, measuring only 3 x 3 x 1mm.
-- In power conversion, ST gained several important design wins in various
markets, including: a power-supply solution for a major games console;
power management controllers from a major Chinese OEM for mobile PCs;
and switching regulators for an LCD TV from a Japanese customer and for
a telecom application from an OEM in India. ST also launched the L672xA
flexible and high-performance power controllers for use in servers and
PC motherboards, and introduced the VNI4140K quad-high-side intelligent
power switch, manufactured using ST's proprietary VIPower(TM)
technology.
-- In power MOSFETs, ST gained multiple design wins primarily in
automotive and switch-mode power-supply applications from numerous
manufacturers worldwide. ST also launched the STV300NH02L MOSFET,
featuring exceptionally low micro-Ohm ON-resistance to reduce losses
and increase efficiency in demanding power-supply systems. And in
bipolar, IGBT and RF products, ST gained multiple design wins from OEMs
worldwide in various applications, including industrial,
communications, consumer and home appliances.
-- In protection devices, meeting the demand for extreme miniaturization
in mobile, consumer and HDD applications, ST introduced several new ESD
(electro-static discharge) protection products in very thin packages,
including a range of ESD single-line devices that are only 0.4mm in
height, and two-line USB/DVI/HDMI port-protection devices in micro-QFN
packages. And in IPADs(TM) (Integrated Passive and Active Devices), ST
introduced new highly-integrated wide-bandwidth EMI filters for SIM
card protection and single- and dual-line EMI filters in micro-
packages.
-- In analog products, ST launched the STVM100 programmable Vcom
calibrator chip, which simplifies the process of removing flicker from
LCD panels during manufacture and the STDVE003A, the first HDMI switch
in the world to support a video data-transfer rate of up to 3.4-
Gigabits per second, enabling 65k colors to be maintained for a true
high-definition picture in LCD and Plasma TVs.

Technology Highlights
-- ST announced that it has successfully manufactured the first functional
devices to be built using its 45nm CMOS radio-frequency technology,
which will be essential for next-generation wireless applications.

All of STMicroelectronics' press releases (including all releases in Q4)
are available at www.st.com/stonline/press/news/latest.htm
Nomadik, SPEAr and IPAD are trademarks of STMicroelectronics. All other
trademarks or registered trademarks are the property of their respective
owners.
Some of the statements contained in this release that are not historical
facts are statements of future expectations and other forward-looking
statements (within the meaning of Section 27A of the Securities Act of 1933 or
Section 21E of the Securities Exchange Act of 1934, each as amended) based on
management's current views and assumptions and involve known and unknown risks
and uncertainties that could cause actual results, performance or events to
differ materially from those in such statements due to, among other factors:
-- future developments of the world semiconductor market, in particular
the future demand for semiconductor products in the key application
markets and from key customers served by our products;
-- pricing pressures, losses or curtailments of purchases from key
customers all of which are highly variable and difficult to predict;
-- the financial impact of obsolete or excess inventories if actual demand
differs from our anticipations;
-- the impact of intellectual property claims by our competitors or other
third parties, and our ability to obtain required licenses on
reasonable terms and conditions;
-- changes in the exchange rates between the US dollar and the Euro,
compared to an assumed effective exchange rate of US $1.46 = euro 1.00
and between the U.S. dollar and the currencies of the other major
countries in which we have our operating infrastructure;
-- our ability to manage in an intensely competitive and cyclical
industry, where a high percentage of our costs are fixed and difficult
to reduce in the short term, including our ability to adequately
utilize and operate our manufacturing facilities at sufficient levels
to cover fixed operating costs;
-- our ability to close our agreement with Intel and Francisco Partners
concerning the creation of Numonyx, currently targeted for the first
quarter of 2008, if the financial, business or other conditions to
closing as contractually provided are not met;
-- the charge of $1.11 billion posted so far in relation to our Flash
memory business may materially change if closing does not occur as
currently planned, or due to adverse developments in the credit
markets ;
-- our ability in an intensively competitive environment to secure
customer acceptance and to achieve our pricing expectations for high-
volume supplies of new products in whose development we have been, or
are currently, investing;
-- the attainment of anticipated benefits of research and development
alliances and cooperative activities, as well as the uncertainties
concerning the modalities, conditions and financial impact beyond 2007
of future R&D activities in Crolles2;
-- the ability of our suppliers to meet our demands for supplies and
materials and to offer competitive pricing;
-- significant differences in the gross margins we achieve compared to
expectations, based on changes in revenue levels, product mix and
pricing, capacity utilization, variations in inventory valuation,
excess or obsolete inventory, manufacturing yields, changes in unit
costs, impairments of long-lived assets (including manufacturing,
assembly/test and intangible assets), and the timing and execution of
our manufacturing investment plans and associated costs, including
start-up costs;
-- changes in the economic, social or political environment, including
military conflict and/or terrorist activities, as well as natural
events such as severe weather, health risks, epidemics or earthquakes
in the countries in which we, our key customers and our suppliers,
operate;
-- changes in our overall tax position as a result of changes in tax laws
or the outcome of tax audits, and our ability to accurately estimate
tax credits, benefits, deductions and provisions and to realize
deferred tax assets;
-- the outcome of litigation;
-- the results of actions by our competitors, including new product
offerings and our ability to react thereto.

Such forward-looking statements are subject to various risks and
uncertainties, which may cause actual results and performance of our business
to differ materially and adversely from the forward-looking statements.
Certain such forward-looking statements can be identified by the use of
forward-looking terminology such as "believes", "may", "will", "should",
"would be" or "anticipates" or similar expressions or the negative thereof or
other variations thereof, or by discussions of strategy, plans or intentions.
Some of the risk factors we face are set forth and are discussed in more
detail in "Item 3. Key Information-Risk Factors" included in our Annual Report
on Form 20-F for the year ended December 31, 2006, as filed with the SEC on
March 14, 2007. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described in this release as anticipated,
believed or expected. We do not intend, and do not assume any obligation, to
update any information or forward-looking statements set forth in this release
to reflect subsequent events or circumstances.
Unfavorable changes in the above or other factors listed under "Risk
Factors" from time to time in our SEC filings, including our Form 20-F, could
have a material adverse effect on our results of operations or financial
condition.
Conference Call Information
The management of STMicroelectronics will conduct a conference call on
January 23, 2008, at 9:00 a.m. U.S. Eastern Time / 3:00 p.m. CET, to discuss
operating performance for the fourth quarter and full year of 2007.
The conference call will be available via the Internet by accessing
http://investors.st.com. Those accessing the webcast should go to the Web site
at least 15 minutes prior to the call, in order to register, download, and
install any necessary audio software. The webcast will be available until
February 1, 2008.
About STMicroelectronics
STMicroelectronics is a global leader in developing and delivering
semiconductor solutions across the spectrum of microelectronics applications.
An unrivalled combination of silicon and system expertise, manufacturing
strength, Intellectual Property (IP) portfolio and strategic partners
positions the Company at the forefront of System-on-Chip (SoC) technology and
its products play a key role in enabling today's convergence markets. The
Company's shares are traded on the New York Stock Exchange, on Euronext Paris
and on the Milan Stock Exchange. Further information on ST can be found at
www.st.com.

STMicroelectronics N.V.
CONSOLIDATED BALANCE SHEETS

As at December 31, September 29, December 31,
In million of U.S. dollars 2007 2007 2006
(Unaudited) (Unaudited) (Audited)

ASSETS
Current assets:
Cash and cash equivalents 1,855 1,650 1,659
Marketable securities 1,014 1,389 764
Short-term deposits 0 0 250
Trade accounts receivable, net 1,605 1,637 1,589
Inventories, net 1,354 1,370 1,639
Deferred tax assets 205 237 187
Assets held for sale 1,017 1,211 0
Other receivables and assets 612 669 498
Total current assets 7,662 8,163 6,586

Goodwill 290 230 223
Other intangible assets, net 238 165 211
Property, plant and equipment, net 5,044 4,904 6,426
Long-term deferred tax assets 237 124 124
Equity investments 0 0 261
Restricted cash for equity investments 250 250 218
Non-current marketable securities 369 0 0
Other investments and other
non-current assets 182 162 149
6,610 5,835 7,612
Total assets 14,272 13,998 14,198

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdrafts 0 0 0
Current portion of long-term debt 103 74 136
Trade accounts payable 1,065 1,015 1,044
Other payables and accrued liabilities 744 753 664
Deferred tax liabilities 11 11 7
Accrued income tax 154 72 112
Total current liabilities 2,077 1,925 1,963

Long-term debt 2,117 2,099 1,994
Reserve for pension and
termination indemnities 323 362 342
Long-term deferred tax liabilities 14 77 57
Other non-current liabilities 115 160 43
2,569 2,698 2,436
Total liabilities 4,646 4,623 4,399
Commitment and contingencies
Minority interests 53 51 52
Common stock (preferred stock:
540,000,000 shares authorized,
not issued; 1,156 1,156 1,156
common stock: Euro 1.04 nominal
value, 1,200,000,000 shares
authorized, 910,293,420 shares
issued, 899,760,539 shares
outstanding)
Capital surplus 2,097 2,070 2,021
Accumulated result 5,274 5,274 6,086
Accumulated other comprehensive
income 1,320 1,109 816
Treasury stock -274 -285 -332
Shareholders' equity 9,573 9,324 9,747
Total liabilities and
shareholders' equity 14,272 13,998 14,198

STMicroelectronics N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months
Ended Twelve Months Ended
December 31, December 31, December 31,
In million of U.S. dollars 2007 2007 2006
(Unaudited) (Unaudited) (Audited)

Cash flows from operating activities:
Net income (loss) 20 -477 782
Items to reconcile net income
(loss) and cash flows from
operating activities
Depreciation and amortization 334 1,413 1,766
Amortization of discount on
convertible debt 5 18 18
Other non-cash items 77 155 50
Minority interests 1 6 2
Deferred income tax -135 -148 -74
(Earnings) loss on equity
investments -2 -14 6
Impairment, restructuring
charges and other related
closure costs, net of cash
payments 268 1,173 1
Changes in assets and liabilities:
Trade receivables, net 38 2 -104
Inventories, net 15 24 -161
Trade payables 64 19 36
Other assets and liabilities, net 52 17 169
Net cash from operating activities 737 2,188 2,491

Cash flows from investing activities:
Payment for purchases of
tangible assets -405 -1,140 -1,533
Payment for purchases of
marketable securities 0 -708 -864
Proceeds from sale of
marketable securities 1 101 100
Investment in short-term deposits 0 0 -903
Proceeds from matured short-term
deposits 0 250 653
Restricted cash for equity
investments 0 -32 -218
Investment in intangible and
financial assets -144 -208 -86
Proceeds from the sale of
Accent subsidiary 0 0 7
Capital contributions to equity
investments 0 0 -213
Net cash used in investing activities -548 -1,737 -3,057

Cash flows from financing activities:
Proceeds from issuance of
long-term debt 20 102 1,744
Repayment of long-term debt -13 -125 -1,522
Decrease in short-term facilities 0 0 -12
Capital increase 0 2 28
Dividends paid 0 -269 -107
Dividends paid to minority interests 0 -6 0
Other financing activities 0 0 1
Net cash from (used in) financing
activities 7 -296 132
Effect of changes in exchange rates 9 41 66
Net cash increase (decrease) 205 196 -368

Cash and cash equivalents at
beginning of the period 1,650 1,659 2,027
Cash and cash equivalents at end
of the period 1,855 1,855 1,659

STMicroelectronics N.V.
Consolidated Statements of Income
(in million of U.S. dollars, except per share data ($))

Three Months Ended
(Unaudited) (Unaudited)
December 31, December 31,
2007 2006

Net sales 2,733 2,482
Other revenues 9 1
NET REVENUES 2,742 2,483
Cost of sales -1,731 -1,582
GROSS PROFIT 1,011 901
Selling, general and administrative -295 -281
Research and development -480 -430
Other income and expenses, net 28 -7
Impairment, restructuring charges
and other related closure costs -279 -10
Total Operating Expenses -1,026 -728
OPERATING INCOME (LOSS) -15 173
Other-than-temporary impairment
charge on marketable securities -46 0
Interest income, net 25 25
Earnings (loss) on equity investments 2 -1
INCOME BEFORE INCOME TAXES
AND MINORITY INTERESTS -34 197
Income tax benefit 55 80
INCOME BEFORE MINORITY INTERESTS 21 277
Minority interests -1 -1
NET INCOME 20 276

EARNINGS PER SHARE (BASIC) 0.02 0.31
EARNINGS PER SHARE (DILUTED) 0.02 0.30

NUMBER OF WEIGHTED AVERAGE
SHARES USED IN CALCULATING
DILUTED EARNINGS PER SHARE 904.2 940.7

STMicroelectronics N.V.
Consolidated Statements of Income
(in million of U.S. dollars, except per share data ($))

Twelve Months Ended
(Unaudited) (Audited)
December 31, December 31,
2007 2006

Net sales 9,966 9,838
Other revenues 35 16
NET REVENUES 10,001 9,854
Cost of sales -6,465 -6,331
GROSS PROFIT 3,536 3,523
Selling, general and administrative -1,099 -1,067
Research and development -1,802 -1,667
Other income and expenses, net 48 -35
Impairment, restructuring charges
and other related closure costs -1,228 -77
Total Operating Expenses -4,081 -2,846
OPERATING INCOME (LOSS) -545 677
Other-than-temporary impairment
charge on marketable securities -46 0
Interest income, net 83 93
Earnings (loss) on equity investments 14 -6
INCOME (LOSS) BEFORE INCOME TAXES
AND MINORITY INTERESTS -494 764
Income tax benefit 23 20
INCOME (LOSS) BEFORE MINORITY INTERESTS -471 784
Minority interests -6 -2
NET INCOME (LOSS) -477 782

EARNINGS (LOSS) PER SHARE (BASIC) -0.53 0.87
EARNINGS (LOSS) PER SHARE (DILUTED) -0.53 0.83

NUMBER OF WEIGHTED AVERAGE
SHARES USED IN CALCULATING
DILUTED EARNINGS (LOSS) PER SHARE 898.7 958.5

SOURCE STMicroelectronics

Investors, Stanley March, Group Vice President, Investor Relations,
+1-212-821-8939, fax +1-212-821-8923, stan.march@st.com; or media, Maria
Grazia Prestini, Senior Director, Corporate Media and Public Relations,
+41-22-929-6945, mariagrazia.prestini@st.com; both of STMicroelectronics