[ Back ]   [ More News ]   [ Home ]
STMicroelectronics Reports 2017 Fourth Quarter and Full Year Financial Results

 

PR No. C2842C

STMicroelectronics Reports 2017 Fourth Quarter
and Full Year Financial Results

Geneva, January 25, 2018 - STMicroelectronics (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported financial results for the fourth quarter and full year ended December 31, 2017.

Fourth quarter net revenues totaled $2.47 billion, gross margin was 40.6%, and net income was $308 million or $0.34 diluted earnings per share.

"ST delivered a strong finish to 2017. Fourth quarter net revenues were up 32.6% year-over-year with double-digit growth across all product groups, gross margin reached 40.6%, and operating margin was at 16.5%," commented Carlo Bozotti, STMicroelectronics President & CEO. "On a sequential basis, fourth quarter revenues grew significantly better than seasonal at 15.5% and were 200 basis points above the high-end of our guidance, mainly thanks to higher than expected revenues in Imaging products and Microcontrollers.

"Full Year 2017 net revenues increased 19.7% on strong growth across all product groups and geographies; gross margin expanded 400 basis points, operating margin increased 880 basis points to 11.9% and net income improved by $637 million to $802 million.

"This successful year also marked the 30th anniversary of the formation of ST. We celebrate this milestone with a solid product leadership in Internet of Things, Smartphones, Industrial and Smart Driving applications, a strong market position with major customers and in Distribution, a world-class team of engaged employees, a sustainable financial performance and an industry-leading return on invested capital."

Financial Summary (US$ Million)

U.S. GAAP

(Million US$) 		Q4 2017 Q3 2017 Q4

2016 		FY 2017 FY 2016
Net Revenues 2,466 2,136 1,859 8,347 6,973
Gross Margin 40.6% 39.5% 37.5% 39.2% 35.2%
Operating Income 408 278 129 993 214
Net Income attributable to parent company 308 236 112 802 165
Net cash from operating activities 587 463 378 1,707 1,043


Non-U.S. GAAP(1)

(Million US$) 		Q4

2017 		Q3

2017 		Q4
2016 		FY

2017 		FY

2016
Operating Income before impairment & restructuring charges 428 292 153 1,038 307
Free cash flow 145 80 135 338 316
Net financial position 489 446 513 489 513

(1) Non-U.S. GAAP measure. See Appendix for reconciliation to U.S. GAAP and additional information explaining why the Company believes these measures are important.

Quarterly Financial Summary by Product Group

Commencing in the fourth quarter of 2017, the Company transferred the Imaging Product Division, previously reported in Others, into the Analog and MEMS Group (AMG) to create the new organization Analog, MEMS and Sensors Group (AMS) led by Benedetto Vigna.

Product Group Revenues
(Million US$) 		Q4
2017 		Q3
2017 		Q4
2016 		FY
2017 		FY
2016
Automotive and Discrete Group (ADG) 821 775 716 3,059 2,813
Analog, MEMS and Sensors Group (AMS) (a) 896 652 527 2,613 1,847
Microcontrollers and Digital ICs Group (MDG) 740 701 610 2,646 2,285
Others (b) 9 8 6 29 28
Total 2,466 2,136 1,859 8,347 6,973

(a)  Reflects the transfer of the Imaging Product Division, previously reported in Others, to AMS as of the fourth quarter of 2017, the Company has reclassified prior-period revenues.
(b)  Net revenues of "Others" includes revenues from sales of Subsystems, assembly services, and other revenue.

Fourth Quarter Review

Fourth quarter net revenues increased 15.5% sequentially, a better than seasonal performance, and 200 basis points above the high-end of the Company's guidance range mainly due to higher than expected revenues in Imaging products and Microcontrollers. On a sequential basis, Analog, MEMS and Sensors Group (AMS) revenues increased 37.4% led by the Imaging Product Division which registered, as expected, triple-digit sequential growth. Automotive and Discrete Group (ADG) revenues were up 5.9% and Microcontrollers and Digital ICs Group (MDG) revenues increased 5.6%.

On a year-over-year basis, fourth quarter net revenues increased by 32.6% on double-digit growth across all product groups with strong traction of new products. Analog, MEMS and Sensors Group (AMS) fourth quarter revenues grew 70.1% year-over-year due to triple-digit growth in Imaging, a sharp recovery in Analog and solid growth in MEMS. Microcontrollers and Digital ICs Group (MDG) fourth quarter revenues grew 21.4% year-over-year on very strong growth for general purpose microcontrollers, in part offset by lower sales of businesses undergoing phase-out. Automotive and Discrete Group (ADG) fourth quarter revenues increased 14.6% compared to the year-ago quarter on strong results for both Automotive and Power Discrete.

By region of shipment, revenues grew on a sequential basis across all regions. Specifically, Asia Pacific revenues grew by 24.5%, EMEA increased by 2.2% and the Americas was up by 0.4%. On a year-over-year basis, Asia Pacific revenues were up by 43.1%, EMEA increased by 21.5% and the Americas grew by 8.0%.

Fourth quarter gross profit was $1.00 billion and gross margin was 40.6%. On a sequential basis, gross margin increased 110 basis points due to improved product mix and increased manufacturing efficiency, partially offset mainly by normal price pressure and negative currency effects, net of hedging. Gross margin increased 310 basis points year-over-year largely driven by improved manufacturing efficiency and better product mix partially offset mainly by normal price pressure as well as negative currency effects, net of hedging.

Combined R&D and SG&A expenses were $592 million compared to $558 million and $570 million in the prior and year-ago quarter, respectively, increasing mainly due to seasonality and inflationary dynamics.

Fourth quarter other income and expenses, net, registered income of $18 million compared to $5 million in the prior quarter due to higher than anticipated R&D funding.

Impairment and restructuring charges in the fourth quarter were $20 million compared to $14 million and $24 million in the prior and year-ago quarter, respectively, mainly related to the set-top box restructuring plan announced in January 2016.

Operating income in the fourth quarter rose sharply on a sequential and year-over-year basis to $408 million compared to $278 million and $129 million in the prior quarter and year-ago quarter, respectively.  By product group, MDG operating margin increased to 19.6% from 17.9% in the prior quarter. ADG operating margin improved to 12.3% compared to 10.9% in the prior quarter. AMS operating margin expanded to 20.9% from 13.2% in the prior quarter, benefiting from an improved product mix, as well as leveraging higher revenues and improved manufacturing performance.

Fourth quarter operating income before impairment and restructuring charges(1) increased sequentially by $136 million to $428 million, equivalent to 17.3% of net revenues, driven by a higher level of revenues and improved gross margin and resulted in a return on invested capital of 35.7%. On a year-over-year basis, operating income before impairment and restructuring charges(1) increased by $275 million reflecting higher revenues, manufacturing efficiencies and improved product mix.

In the fourth quarter of 2017, the Company recorded a one-time, non-cash charge of $46 million as a result of the recently enacted Tax Cuts and Jobs Act (TCJA) in the United States. This charge results from the revaluation of the Company's deferred tax assets as of December 31, 2017.

Fourth quarter net income increased significantly both on a sequential and year-over-year basis to $308 million, or $0.34 diluted earnings per share, compared to net income of $236 million, or $0.26 diluted earnings per share, in the prior quarter and net income of $112 million, or $0.13 diluted earnings per share, in the year-ago quarter.

(1)Non-U.S. GAAP measure. See Appendix for additional information and reconciliation to U.S. GAAP.

Full Year 2017 Review

Net revenues for the full year 2017 increased 19.7% to $8.35 billion from $6.97 billion in 2016. By product group, full year 2017 Analog, MEMS and Sensors Group (AMS) revenues were up 41.4%, on triple-digit growth in Imaging and strong growth in both Analog and MEMS. Microcontrollers and Digital ICs Group (MDG) revenues increased 15.8% compared to 2016 on strong growth in general purpose microcontrollers partially offset by lower revenues for products undergoing phase-out. Automotive and Discrete Group (ADG) revenues increased 8.8% for the full year of 2017 compared to the full year of 2016 on growth in both Automotive and Discrete.

Full year 2017 gross profit was $3.27 billion. Gross margin improved by 400 basis points to 39.2% from 35.2% in full year 2016. Specifically, the 2017 gross margin benefited from manufacturing efficiencies, better product mix, and improved fab loading partially offset by normal price pressure.

Combined R&D and SG&A expenses increased 1.7% to $2.29 billion in 2017 compared to $2.25 billion in 2016.

Other income and expenses, net, registered income of $55 million in 2017 compared to $99 million in 2016 mainly due to a lower level of R&D grants.

In 2017, impairment and restructuring charges were $45 million compared to $93 million in 2016, mostly related to the set-top box restructuring plan.

Operating income in 2017 improved by $779 million to $993 million compared to 2016.

Full year 2017 operating income and operating margin before impairment and restructuring charges(1) increased sharply to $1.04 billion, equivalent to 12.4% of net revenues, compared to $307 million, equivalent to 4.4% of net revenues in 2016, on higher revenues, gross margin expansion and strong operating leverage.

Income tax expense in 2017 was $143 million, including the one-time impact related to tax reform in the United States, reflecting an effective tax rate of 15.0%. 

Full year 2017 net income was $802 million, or $0.89 fully diluted earnings per share, compared to net income of $165 million, or $0.19 fully diluted earnings per share for the full year 2016.

 (1)Non-U.S. GAAP measure. See Appendix for additional information and reconciliation to U.S. GAAP.

Cash Flow and Balance Sheet Highlights

Reflecting the strong growth in revenues and improvement in operating profitability, net cash from operating activities was $587 million and $1.71 billion for the fourth quarter and full year 2017, respectively. Full Year 2016 net cash from operating activities was $1.04 billion.

Capital expenditure payments, net of proceeds from sales, were $407 million and $1.30 billion during the fourth quarter and full year of 2017, respectively. Full year 2016 capital expenditures, net of proceeds from sales, were $607 million.

Free cash flow(1) was $145 million and $338 million during the fourth quarter and full year of 2017, respectively, favorably impacted by improved operating results and higher than expected revenues in the fourth quarter. Full year 2016 free cash flow was $316 million.

Inventory was $1.33 billion at December 31, 2017. Inventory in the fourth quarter of 2017 was at 4.4 turns or 82 days compared to 3.9 turns or 92 days in the third quarter.

The Company paid cash dividends to shareholders of $54 million and $214 million for the fourth quarter and full year 2017, respectively. In addition, the Company launched and completed over the course of 2017, a share buy-back program of 18.6 million shares for an aggregate amount of $297 million.

ST's net financial position(1) was $489 million at December 31, 2017 compared to $446 million at September 30, 2017. At December 31, 2017, ST's total financial resources were $2.19 billion; total financial debt was $1.70 billion; and total equity, including non-controlling interest, was $5.47 billion.

In 2017, ST issued a $1.5 billion dual-tranche offering at 0% of new senior unsecured convertible bonds due 2022 and 2024. The proceeds, net of the cost of the share buyback, were partially used to early redeem, via net share settlement, both the 2019 and the 2021 convertible bonds issued in 2014 for a total of $1 billion and 26.8 million shares from Treasury stock. As of the end of the year, the Company has significantly reduced its overall cash cost of debt to 0.44%. 

(1)Non-U.S. GAAP measure. See Appendix for additional information and reconciliation to U.S. GAAP.

First Quarter 2018 Business Outlook

Mr. Bozotti commented, "We exited 2017 with very strong revenue growth, and significant improvement in our operating profitability and net income. In 2018, our objective is to leverage our achievements to continue to drive sustainable and profitable growth thanks to our product leadership.

"We continue to see solid demand across product groups and geographies and in the first quarter we anticipate a better than seasonal trend for Smart Driving and Internet of Things applications, and the unfavorable seasonal dynamics for smartphone applications. Based upon that, as well as our much stronger than expected revenue growth in the previous quarter, we anticipate first quarter revenues to decrease by about 10% on a sequential basis, representing year-over-year growth of about 22% at the mid-point of our guidance range. We expect the gross margin to decrease to about 39.5% at the mid-point.

"In order to support our anticipated product portfolio mix and to fuel strong revenue growth in the second half of 2018 compared to the first half, we expect to invest this year approximately $1.0 to $1.1 billion."

The Company expects first quarter 2018 revenues to decrease about 10% on a sequential basis, plus or minus 3.5 percentage points. Gross margin in the first quarter is expected to be about 39.5% plus or minus 2.0 percentage points.

This outlook is based on an assumed effective currency exchange rate of approximately $1.18 = €1.00 for the 2018 first quarter and includes the impact of existing hedging contracts. The first quarter will close on March 31, 2018.

Recent Corporate Developments

Q4 2017 - Product and Technology Highlights

Automotive and Discrete Group (ADG) 

 

Analog, MEMS and Sensors Group (AMS)

 Microcontrollers and Digital ICs Group (MDG)

 

Use of Supplemental Non-U.S. GAAP Financial Information

This press release contains supplemental non-U.S. GAAP financial information, including operating income (loss) before impairment and restructuring charges, operating margin before impairment and restructuring charges, adjusted net earnings per share, free cash flow and net financial position.

Readers are cautioned that these measures are unaudited and not prepared in accordance with U.S. GAAP and should not be considered as a substitute for U.S. GAAP financial measures. In addition, such non-U.S. GAAP financial measures may not be comparable to similarly titled information from other companies.

See the Appendix of this press release for a reconciliation of the Company's non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with the Company's consolidated financial statements prepared in accordance with U.S. GAAP.

Forward-looking information

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) that are based on management's current views and assumptions, and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those anticipated by such statements, due to, among other factors:

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 forward-looking statements can be identified by the use of forward looking terminology, such as "believes," "expects," "may," "are expected to," "should," "would be," "seeks" or "anticipates" or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions.

Some of these risk factors 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, 2016, as filed with the SEC on March 3, 2017. 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 industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.

STMicroelectronics Conference Call and Webcast Information

The management of STMicroelectronics will conduct a live webcast of its conference call on January 25, 2018 at 9:30 a.m. Central European Time (CET) / 3:30 a.m. U.S. Eastern Time (ET) / 12:30 a.m. U.S. Pacific Time (PT), to discuss performance for the fourth quarter and full year of 2017.
The live webcast of the conference call will be available by accessing 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 9, 2018.

About STMicroelectronics
ST is a global semiconductor leader delivering intelligent and energy-efficient products and solutions that power the electronics at the heart of everyday life. ST's products are found everywhere today, and together with our customers, we are enabling smarter driving and smarter factories, cities and homes, along with the next generation of mobile and Internet of Things devices.

By getting more from technology to get more from life, ST stands for life.augmented.

In 2017, the Company's net revenues were $8.35 billion, serving more than 100,000 customers worldwide.

Further information can be found at www.st.com.

For further information, please contact:

INVESTOR RELATIONS:
Tait Sorensen                                       
Group VP, Investor Relations
STMicroelectronics
Tel: +1 602 485 2064
tait.sorensen@st.com

MEDIA RELATIONS:
Alexis Breton                                        
Director, PR & Media Operations
STMicroelectronics
Tel: + 33 6 59 16 79 08
alexis.breton@st.com


 

STMicroelectronics N.V.    
Consolidated Statements of Income    
(in millions of U.S. dollars, except per share data ($))    
     
  Three Months Ended
  (Unaudited) (Unaudited)
  December 31, December 31,
  2017 2016
     
Net sales   2,457   1,846
Other revenues   9   13
  NET REVENUES   2,466   1,859
Cost of sales   (1,464)   (1,161)
  GROSS PROFIT   1,002   698
Selling, general and administrative   (265)   (230)
Research and development   (327)   (340)
Other income and expenses, net   18   25
Impairment, restructuring charges and other related closure costs   (20)   (24)
  Total Operating Expenses   (594)   (569)
  OPERATING INCOME   408   129
Interest expense, net   (6)   (5)
Income (loss) on equity-method investments   -   (1)
Loss on financial instruments, net   (11)   -
INCOME BEFORE INCOME TAXES   391   123
  AND NONCONTROLLING INTEREST    
Income tax expense   (81)   (9)
  NET INCOME   310   114
Net income attributable to noncontrolling interest   (2)   (2)
  NET INCOME ATTRIBUTABLE TO PARENT COMPANY   308   112
     
  EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS   0.35   0.13
  EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS   0.34   0.13
     
  NUMBER OF WEIGHTED AVERAGE    
  SHARES USED IN CALCULATING    
  DILUTED EARNINGS PER SHARE 910.2 888.9

 

 

STMicroelectronics N.V.    
Consolidated Statements of Income    
(in millions of U.S. dollars, except per share data ($))    
     
  Twelve Months Ended
  (Unaudited) (Audited)
  December 31, December 31,
  2017 2016
     
Net sales   8,308   6,944
Other revenues   39   29
  NET REVENUES   8,347   6,973
Cost of sales   (5,079)   (4,518)
  GROSS PROFIT   3,268   2,455
Selling, general and administrative   (983)   (911)
Research and development   (1,302)   (1,336)
Other income and expenses, net   55   99
Impairment, restructuring charges and other related closure costs   (45)    (93)
  Total Operating Expenses   (2,275)   (2,241)
  OPERATING INCOME   993   214
Interest expense, net   (22)   (20)
Income (loss) on equity-method investments   (2)   7
Loss on financial instruments, net   (16)   -
INCOME BEFORE INCOME TAXES   953    201
  AND NONCONTROLLING INTEREST    
Income tax expense   (143)   (31)
  NET INCOME   810   170
Net income attributable to noncontrolling interest   (8)   (5)
  NET INCOME ATTRIBUTABLE TO PARENT COMPANY   802   165
     
  EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS   0.91   0.19
  EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS   0.89   0.19
     
  NUMBER OF WEIGHTED AVERAGE    
  SHARES USED IN CALCULATING    
  DILUTED EARNINGS PER SHARE 906.1 886.3

 

 

STMicroelectronics N.V.      
CONSOLIDATED BALANCE SHEETS      
As at December 31, September 30, December 31,
In millions of U.S. dollars 2017 2017 2016
  (Unaudited) (Unaudited) (Audited)
ASSETS      
Current assets:      
Cash and cash equivalents 1,759 2,188 1,629
Marketable securities 431 433 335
Trade accounts receivable, net 1,149 1,057 939
Inventories 1,335 1,321 1,173
Other current assets 425 404 311
Total current assets 5,099 5,403 4,387
Goodwill 123 122 116
Other intangible assets, net 209 193 195
Property, plant and equipment, net 3,094 2,882 2,287
Non-current deferred tax assets 624 662 528
Long-term investments 57 57 57
Other non-current assets 475 442 434
  4,582 4,358 3,617
Total assets 9,681 9,761 8,004
       
LIABILITIES AND EQUITY      
Current liabilities:      
Short-term debt 118 486 117
Trade accounts payable 893 847 620
Other payables and accrued liabilities 897 867 750
Dividends payable to stockholders 60 112 59
Accrued income tax 52 47 42
Total current liabilities 2,020 2,359 1,588
Long-term debt 1,583 1,689 1,334
Post-employment benefit obligations 385 380 347
Long-term deferred tax liabilities 11 6 5
Other long-term liabilities 215 178 134
  2,194 2,253 1,820
Total liabilities 4,214 4,612 3,408
Commitment and contingencies      
Equity      
Parent company stockholders' equity      
Common stock (preferred stock: 540,000,000 shares authorized, not issued; common stock: Euro 1.04 nominal value, 1,200,000,000 shares authorized, 911,110,420 shares issued, 896,590,286 shares outstanding) 1,157 1,157 1,157
Capital surplus 2,718 2,866 2,818
Retained earnings 973 667 431
Accumulated other comprehensive income 688 677 371
Treasury stock (132) (285) (242)
Total parent company stockholders' equity 5,404 5,082 4,535
Noncontrolling interest 63 67 61
Total equity 5,467 5,149 4,596
Total liabilities and equity 9,681 9,761 8,004

 

 

STMicroelectronics N.V.      
       
SELECTED CASH FLOW DATA      
       
Cash Flow Data (in US$ millions) Q4 2017 Q3 2017 Q4 2016
       
Net Cash from operating activities   587   463   378
Net Cash used in investing activities   (442)   (482)   (243)
Net Cash used in financing activities   (576)   546   (163)
Net Cash increase (decrease)   (429)   534   (46)
       
Selected Cash Flow Data (in US$ millions) Q4 2017 Q3 2017 Q4 2016
       
Depreciation & amortization   179 165 161
Net payment for Capital expenditures   (407)   (365)   (228)
Dividends paid to stockholders   (54)   (59)   (53)
Change in inventories, net   (5)   (41)   35

 

Appendix
STMicroelectronics
Supplemental Financial Information

ST aligns its product families into three product groups to better leverage the product synergies around its strategic focus on Smart Driving and Internet of Things applications: Automotive and Discrete Group (ADG); Analog and MEMS Group (AMG); and Microcontrollers and Digital ICs Group (MDG). Commencing in the fourth quarter of 2017, the Company transferred the Imaging Product Division, previously reported in Others, into the Analog and MEMS Group (AMG) to create the new organization Analog, MEMS and Sensors Group (AMS).

Product Group Data

(Million US$) 		Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY

2017 		Q4 2016 Q3 2016 Q2

2016 		Q1 2016 FY 2016
Automotive & Discrete (ADG)                    
 - Net Revenues 821 775 755 708 3,059 716 704 721 671 2,813
 - Operating Income 101 85 65 38 289 53 58 61 39 211
Analog, MEMS & Sensors (AMS) (a)                    
 - Net Revenues 896 652 550 514 2,613 527 499 419 403 1,847
 - Operating Income 187 86 53 40 365 53 39 (24) (22) 46
Microcontrollers & Digital ICs (MDG)                    
 - Net Revenues 740 701 612 593 2,646 610 587 556 532 2,285
 - Operating Income (Loss) 145 125 71 60 402 59 44 9 (3) 108
Others (b)                    
 - Net Revenues 9 8 6 6 29 6 7 7 7 28
 - Operating Income (Loss) (25) (18) (11) (9) (63) (36) (51) (18) (47) (151)
Total                    
 - Net Revenues 2,466 2,136 1,923 1,821 8,347 1,859 1,797 1,703 1,613 6,973
 - Operating Income (Loss) 408 278 178 129 993 129 90 28 (33) 214

(a)   Reflects the transfer of the Imaging Product Division, previously reported in Others, to AMS as of the fourth quarter of 2017, the Company has reclassified prior-period revenues.
(b)   Net revenues of "Others" includes revenues from sales of Subsystems, assembly services, and other revenue. Operating income (loss) of "Others" includes items such as unused capacity charges, impairment, restructuring charges and other related closure costs, phase out and start-up costs, and other unallocated expenses such as: strategic or special research and development programs, certain corporate-level operating expenses, patent claims and litigations, and other costs that are not allocated to product groups, as well as operating earnings of Subsystems and other products. "Others" includes:

(Million US$) Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY

2017 		Q4 2016 Q3 2016 Q2 2016 Q1 2016 FY

2016
Unused Capacity Charges 1 1 1 1 3 4 11 8 10 33
Impairment & Restructuring Charges 20 14 6 5 45 24 29 12 28 93


  Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY

2017 		Q4 2016 Q3 2016 Q2 2016 Q1 2016 FY

2016
€/$ Effective Rate 1.15 1.13 1.09 1.08 1.11 1.10 1.12 1.12 1.10 1.11


Net Revenues By Market Channel(%) Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY

2017 		Q4 2016 Q3 2016 Q2 2016 Q1 2016 FY 2016
Total OEM 68% 66% 66% 66% 66% 67% 67% 66% 67% 67%
Distribution 32% 34% 34% 34% 34% 33% 33% 34% 33% 33%

(Appendix - continued)
STMicroelectronics
Supplemental Non-U.S. GAAP Financial Information
U. S. GAAP - Non-U.S. GAAP Reconciliation
In Million US$ Except Per Share Data

The supplemental non-U.S. GAAP information presented in this press release is unaudited and subject to inherent limitations. Such non-U.S. GAAP information is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for U.S. GAAP measurements. Also, our supplemental non-U.S. GAAP financial information may not be comparable to similarly titled non-U.S. GAAP measures used by other companies. Further, specific limitations for individual non-U.S. GAAP measures, and the reasons for presenting non-U.S. GAAP financial information, are set forth in the paragraphs below. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.

Operating income (loss) before impairment and restructuring charges and one-time items is used by management to help enhance an understanding of ongoing operations and to communicate the impact of the excluded items, such as impairment, restructuring charges and other related closure costs. Adjusted net earnings and earnings per share (EPS) are used by management to help enhance an understanding of ongoing operations and to communicate the impact of the excluded items like impairment, restructuring charges and other related closure costs attributable to ST and other one-time items, net of the relevant tax impact.

The Company believes that these non-GAAP financial measures provide useful information for investors and management because they measure the Company's capacity to generate profits from its business operations, excluding the effect of acquisitions and expenses related to the rationalizing of its activities and sites that it does not consider to be part of its on-going operating results, thereby offering, when read in conjunction with the Company's GAAP financials, (i) the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results, (ii) the ability to better identify trends in the Company's business and perform related trend analysis, and (iii) an easier way to compare the Company's results of operations against investor and analyst financial models and valuations, which usually exclude these items.

Q4 2017

(US$ millions, except per share data ($)) 		Gross Profit Operating Income Net Earnings Corresponding EPS
U.S. GAAP 1,002 408 308 0.34
Impairment & Restructuring   20 20  
Estimated Income Tax Effect     (1)
Non-U.S GAAP 1,002 428 327 0.36


Q3 2017

(US$ million, except per share data ($)) 		Gross Profit Operating Income Net Earnings Corresponding EPS
U.S. GAAP 845 278 236 0.26
Impairment & Restructuring   14 14  
Estimated Income Tax Effect     (1)
Non-U.S GAAP 845 292 249 0.28


Q4 2016

(US$ millions, except per share data ($)) 		Gross Profit Operating Income Net Earnings

  		Corresponding EPS
U.S. GAAP 698 129 112 0.13
Impairment & Restructuring   24 24  
Estimated Income Tax Effect     1
Non-U.S GAAP 698 153 137 0.15


(Appendix - continued)

Net financial position: resources (debt), represents the balance between our total financial resources and our total financial debt. Our total financial resources include cash and cash equivalents, marketable securities, short-term deposits and restricted cash, and our total financial debt includes short-term borrowings, current portion of long-term debt and long-term debt, all as reported in our consolidated balance sheet. We believe our net financial position provides useful information for investors and management because it gives evidence of our global position either in terms of net indebtedness or net cash position by measuring our capital resources based on cash, cash equivalents and marketable securities and the total level of our financial indebtedness. Net financial position is not a U.S. GAAP measure.

Net Financial Position (in US$ millions) December 31, 2017 September 30, 2017 December 31, 2016
Cash and cash equivalents 1,759 2,188 1,629
Marketable securities 431 433 335
Total financial resources 2,190 2,621 1,964
Short-term debt (118) (486) (117)
Long-term debt (1,583) (1,689) (1,334)
Total financial debt (1,701) (2,175) (1,451)
Net financial position - Non-U.S. GAAP 489 446 513

Free cash flow is defined as net cash from operating activities minus net cash from (used in) investing activities, excluding payment for purchases (proceeds from the sale of) marketable securities, short-term deposits and restricted cash. We believe free cash flow provides useful information for investors and management because it measures our capacity to generate cash from our operating and investing activities to sustain our operating activities. Free cash flow is not a U.S. GAAP measure and does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of free cash flow may differ from definitions used by other companies.

Free cash flow (in US$ millions) Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2017 Q4 2016 Q3 2016 Q2 2016 Q1 2016 FY 2016
Net cash from operating activities 587 463 369 289 1,707 378 332 192 141 1,043
Net cash used in investing activities (442) (482) (317) (227) (1,468) (243) (230) (144) (110) (727)
Payment for purchase and proceeds from sale of marketable securities, investment in short-term deposits, restricted cash - 99 - - 99 - - - - -
Free cash flow - Non-U.S. GAAP 145 80 52 62 338 135 102 48 31 316

Attachments:

http://www.globenewswire.com/NewsRoom/AttachmentNg/78ef2b15-56ef-42b4-8ec0-bf2b7e0fcf24