ST-Ericsson reports fourth quarter 2012 financial results

Wed Jan 30, 2013 5:06pm EST

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*Net sales $358 million, in line with outlook 
*Adjusted operating loss1) $133  million, 55% improvement since Q1 2012 
*NovaThor(TM) shipments grew 45% sequentially 

Geneva, Switzerland, January 30, 2013 - ST-Ericsson, a joint venture of STMicroelectronics
(NYSE:STM) and Ericsson (NASDAQ:ERIC), reported financial results for the fourth fiscal quarter
ending December 31, 2012.

Sales in the fourth quarter were approximately flat sequentially, in line with the guidance
provided, reflecting growing contribution from NovaThor platform shipments as well as $43 million
revenues from IP licensing. NovaThor ModAp shipments grew by 45% sequentially to 10.7 million
units.

Adjusted operating loss decreased to $133 million as a further result of the execution of the
strategic plan announced in April. Since the first quarter 2012 operating losses have been reduced
by 55%, decreasing by $164 million.

Didier Lamouche, President and CEO, commented: "The fourth quarter was again a quarter of solid
execution for us with revenues coming in as expected and a major growth of the shipments of our
NovaThor platform, in part thanks to the new Samsung GALAXY S III mini. We have continued to
execute steadily and aggressively on our strategy and delivered on our commitments to improve our
financial results, further reducing our losses and controlling expenses. However, we recognize
that the level of losses and use of cash remains very high." 

Samples of ST-Ericsson's first LTE ModAp products became available in December and the first
NovaThor L8580 ModAp platform based on STMicroelectronics' advanced 28nm FD-SOI process was
demonstrated on January 7 at CES.  

"We are also continuing to execute relentlessly against our committed roadmap," continued
Lamouche. "We have reached key maturity milestones with our advanced LTE modem which is in testing
with customers and is anticipated to be commercialized as part of our NovaThor L8540 ModAp
platform in 2013. As promised less than a year ago we also unveiled our newest chipset - the
NovaThor L8580 ModAp - which is the first product to use FD-SOI technology and is the world's
fastest and lowest power integrated LTE modem and application processor platform, confirming the
disruptive nature of FD-SOI technology."

2012 fourth quarter financial summary (unaudited)

 $ million                                           Q4 2012  Q3 2012  Q4 2011 
 Income Statement*                                                             
 NET SALES                                               358      359      409 
 OPERATING INCOME/(LOSS) ADJUSTED1) for:               (133)    (148)    (207) 
 - amortization of acquisition-related intangibles      (19)     (19)     (25) 
 - restructuring charges                                (17)      (7)      (9) 
 OPERATING INCOME / (LOSS) as reported                 (169)    (174)    (241) 
 NON-GAAP NET INCOME /(LOSS)                            71**    (190)    (231) 


* Please refer to footnote n. 4 on page 6         
** Includes $1531 million gain from shareholders' debt forgiveness and $1060 million charges for
impairment of goodwill and intangible assets

 $ million                                                Q4 2012  Q3 2012  Q4 2011 
 Additional financial data                                                          
 Net Financial Position                                                             
 Cash, cash equivalents & short-term deposits/debt, net        37       39        9 
 Parent companies short-term debt                               0   (1390)    (807) 
 Net financial position²)                                      37   (1351)    (798) 
 
Net operating cash flow 3)                              
 (152)  
 (146)  
 (204) 


Additional financial information
During the fourth quarter Ericsson and ST waived their credit of $1546 million under the parents'
loan.

Non-GAAP net income in the fourth quarter 2012 was $71 million, including gain from the debt
forgiveness, impairment of intangible assets and write off of certain deferred tax assets.

The net financial position2) at the end of the fourth quarter was positive $37 million, reflecting
the cancellation of the parents' loan facility.

Inventory decreased by $33 million reaching $147 million at the end of the fourth quarter.
Net operating cash flow decreased slightly, reaching a negative $152 million.  

The fourth quarter 2012 closing is based on a going concern assumption. In the month of December
2012 ST-Ericsson shareholders issued press releases about their future intent with respect to
ST-Ericsson. Following the uncertainty resulting from these announcements we cannot exclude that
the ST-Ericsson Financial Statements could be further negatively affected by ST-Ericsson's future
scenario.

Outlook
For the first quarter 2013, ST-Ericsson expects a very significant sequential decline in net
sales, mainly resulting, in addition to the first quarter seasonality, from a combination of no
revenues from licensing expected in the quarter and further weakening of legacy product sales.

Highlights - Recent products, technology and wins 

*Products 
*Customers 
*Partners/technology 

Financial results appendix (unaudited)

Annual financial results

 $ million                                              2012     2011 
                                                      ACTUAL   ACTUAL 
 Income Statement *                                                   
 NET SALES                                            1351       1650 
 OPERATING INCOME/(LOSS) ADJUSTED1) for:             (814)      (732) 
 - amortization of acquisition-related intangibles    (75)      (101) 
 - restructuring charges                              (89)       (34) 
 OPERATING INCOME / (LOSS) as reported               (978)      (867) 
 NON-GAAP NET INCOME / (LOSS)                       (749)**     (841) 
                                                                      


2012  financial results by quarter

 $ million                                           Q4 2012  Q3 2012  Q2 2012  Q1 2012 
 Income Statement *                                                                     
 NET SALES                                               358      359      344      290 
 OPERATING INCOME/(LOSS) ADJUSTED1) for:               (133)    (148)    (235)    (297) 
 - amortization of acquisition-related intangibles      (19)     (19)     (19)     (19) 
 - restructuring charges                                (17)      (7)     (56)     (10) 
 OPERATING INCOME / (LOSS) as reported                 (169)    (174)    (309)    (326) 
 NON-GAAP NET INCOME / (LOSS)                           71**    (190)    (318)    (312) 


* Please refer to footnote n. 4 on page 6 
** Includes $1531 million gain from shareholders' debt forgiveness and $1060 million charges for
impairment of goodwill and intangible assets

Consolidated balance sheet *

 In $ million   December 31, 2012  December 31, 2011 


 ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
 Current assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
 Cash and cash equivalents   37   9    Trade accounts receivable, net   35   97    Inventories, net   147   223    Deferred tax assets   1   8    Other receivables and assets   90   102   Total current assets 309 439                                                                                                                                                                                                                                                                           
 Goodwill   0   745    Other intangible assets, net   12   437    Property, plant and equipment, net   286   364    Long-term deferred tax assets   8   188    Other investments and other non-current assets   44   70  349 1,804  Total assets 659 2,243                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
 LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                              
 Current liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
 Short-term borrowings and current portion of long-term debt                  0            807   Trade accounts payable              155             175   Other payables and accrued liabilities              253             292   Deferred tax liabilities                  0                 0   Accrued income tax                  6                 8  Total current liabilities            414         1,282                                                                               
 Reserve for pension and termination indemnities                                                                                                                                                                                                                85                                                                                    87                                                                                                                                           
 Long-term deferred tax liabilities                                                                                                                                                                                                                              0                                                                                     3                                                                                                                                           
 Other non-current liabilities                                                                                                                                                                                                                                  29                                                                                    25                                                                                                                                           
                                                                                                                                                                                                                                                               114                                                                                   115                                                                                                                                           
 Total liabilities                                                                                                                                                                                                                                             528                                                                                 1,397                                                                                                                                           
 Total equity                                                                                                                                                                                                                                                  131                                                                                   846                                                                                                                                           
 Total equity and liabilities                                                                                                                                                                                                                                  659                                                                                 2,243                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   


44

70

349

1,804

Total assets

659

2,243

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

 Short-term borrowings and current portion of long-term debt   0    807   
 Trade accounts payable                                       155   175   
 Other payables and accrued liabilities                       253   292   
 Deferred tax liabilities                                      0     0    
 Accrued income tax                                            6     8    
 Total current liabilities                                    414  1,282  


Reserve for pension and termination indemnities

85

87

Long-term deferred tax liabilities

0

3

Other non-current liabilities

29

25

114

115

Total liabilities

528

1,397

Total equity

131

846

Total equity and liabilities

659

2,243

* Please refer to footnote n. 4 on page 6 

Footnotes
1) The adjusted operating income/(loss) is defined as the operating income/(loss) reported before
amortization of acquisition-related intangibles and restructuring charges and is used by
management to help enhance the understanding of ongoing operations and to communicate the impact
of the items on the operating loss as reported.
2) Net financial position represents the balance between financial assets, which comprise cash,
cash equivalents and short-term deposits, and financial debt which includes bank overdrafts and
parent companies short-term bridge credit facilities.
3) Net operating cash flow is defined as net cash from operating activities, less capital
expenditure and less restructuring charges.
4) The fourth quarter 2012 closing is based on a going concern assumption. The valuation of
several items in the financial report is based upon our best estimate using preliminary
information available to us and under this going concern assumption. In the month of December 2012
ST-Ericsson' shareholders issued press releases about their future intent with respect to
ST-Ericsson, on December 10 http://www.st.com/internet/com/press_release/c2701.jsp th by
STMicroelectronics and on December 20 http://www.ericsson.com/news/1666557?idx=10 th
http://www.ericsson.com/news/1666557?idx=10  by Ericsson. 
Following the uncertainty resulting from these announcements, the carrying amounts of goodwill and
intangible assets have been substantially impaired. We cannot exclude that the ST-Ericsson
Financial Statements could be further negatively affected by ST-Ericsson's future scenario.

Notes to editors
ST-Ericsson invites journalists, analysts and investors to a conference call scheduled on January
31 at 5 p.m. CET. Call-in numbers, a live webcast of the conference call, as well as supporting
slides, will be available at www.stericsson.com/investors/investors.jsp
http://www.stericsson.com/investors/investors.jsp . 

About ST-Ericsson
ST-Ericsson is a world leader in developing and delivering a complete portfolio of innovative
mobile platforms and cutting-edge wireless semiconductor solutions across the broad spectrum of
mobile technologies. ST-Ericsson was established as a 50/50 joint venture by STMicroelectronics
(NYSE:STM) and Ericsson (NASDAQ:ERIC) in February 2009, with headquarters in Geneva, Switzerland.
www.stericsson.com http://www.stericsson.com/ 
www.twitter.com/STEricssonForum http://www.twitter.com/STEricssonForum 

FOR FURTHER INFORMATION, PLEASE CONTACT:

 Global Communications & Media Relations                                          Investor & Analyst Relations                                                        
 Claudia Levo, Geneva, Switzerland                                                Fabrizio Rossini, Geneva, Switzerland                                               
                                                                                  Phone: +41 22 929 6973                                                              
                                                                                  Email: investor.relations@stericsson.com mailto:investor.relations@stericsson.com   
 Pamela McCracken, Santa Clara, U.S.A.                                                                                                                                
 Phone: +1 408 398 8565                                                                                                                                               
 Email: media.relations@stericsson.com mailto:media.relations@stericsson.com                                                                                          
 Ericsson Investor Relations                                                      STMicroelectronics Investor Relations                                               
 Asa Konnbjer, Stockholm, Sweden                                                  Tait Sorensen, Phoenix AZ, US                                                       
 Phone:   +46 10 713 3928                                                         Phone: +1 602 485 2064                                                              
 E-mail: investor.relations@ericsson.com mailto:investor.relations@ericsson.com   
Celine Berthier, Geneva, Switzerland                                               
                                                                                  Phone: +41 22 929 5812                                                              
                                                                                  Email: investors@st.com mailto:investors@st.com                                     


###
The ST-Ericsson results reported in this press release do not reflect in their entirety the
results of the Wireless Segment of STMicroelectronics, which include other activities that are not
part of ST-Ericsson. 
###
This press release contains forward-looking statements that involve inherent risks and
uncertainties. We have identified certain important factors that may cause actual results to
differ materially from those contained in such forward-looking statements. For a detailed
description of risk factors see STMicroelectronics' (NYSE:STM) and Ericsson's (NASDAQ:ERIC)
filings with the US Securities and Exchange Commission, particularly each company's latest
published Annual Report on Form 20-F.

 

Forward looking statements contained in this press release and the fourth quarter 2012 closing are
based on a going concern assumption. In the month of December 2012 ST-Ericsson' shareholders
issued press releases about their future intent with respect to ST-Ericsson, on December 10
http://www.st.com/internet/com/press_release/c2701.jsp thby STMicroelectronics and on December 20
http://www.ericsson.com/news/1666557?idx=10 th http://www.ericsson.com/news/1666557?idx=10  by
Ericsson. 
Please read this press release in conjunction with this information.

Fourth Quarter 2012 financial results http://hugin.info/1061/R/1674392/545192.pdf 


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Source: Ericsson via Thomson Reuters ONE


HUG#1674392

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