STMicroelectronics Reports 2014 Second Quarter and First Half Financial Results
- Second quarter net revenues and gross margin improved sequentially to $1.86 billion and 34%, respectively
- Second quarter net result returned to profit
- Nano2017 R&D program approved by the European Union
- Capital structure strengthened with $1 billion senior unsecured convertible bond financing in July 2014
Geneva - STMicroelectronics (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported financial results for the second quarter and first half ended June 28, 2014. Second quarter net revenues totaled $1.86 billion and gross margin was 34.0%. Net income was $38 million and included Nano2017 R&D program funding.
“During the second quarter we made positive business and financial progress in key areas: from revenue and gross margin improvement as a result of our product, marketing and manufacturing initiatives, to a further strengthened capital structure,” commented ST President and CEO Carlo Bozotti.
“Our performance benefited from the combination of favorable macro-economic and market dynamics, especially in Industrial and Automotive, and from the traction of our innovative portfolio and mass-market initiatives. In our Sense & Power and Automotive segment, both Industrial & Power Discrete and Automotive delivered sequential growth and strong operating margin improvements. In total, SP&A’s operating margin reached double-digits. In our Embedded Processing Solutions segment, our leadership in microcontrollers continues to be a key driver of improvement as our general-purpose microcontroller business enjoyed its fifth consecutive quarter of record revenues. Also, as anticipated, our digital consumer and ASIC business started to grow sequentially after reaching an inflection point in the first quarter.
“To strengthen our capital structure and significantly enhance our financial flexibility, we took advantage of very favorable terms and raised $1 billion in July through a convertible bond offering. Proceeds from the issuance of the bonds will be used for general corporate purposes to boost growth. Additionally, by strengthening our capital structure we reinforce our objective to return capital to shareholders through dividends.”
Impairment, restructuring and other related closure costs for the second quarter were $20 million compared to $12 million in the prior quarter. Operating margin before impairment and restructuring was a positive 6.3% in the 2014 second quarter compared to a positive 0.4% in the prior quarter.* Loss on equity investments in the second quarter was $52 million, mostly related to ST’s investment in the 3Sun joint venture. In particular, the second quarter includes impairment and other charges in connection with ST’s decision to exit the joint venture. ST has signed an agreement yesterday, whereby the company will transfer all 3Sun ownership and obligations to Enel Green Power.
Second quarter net income was $38 million or $0.04 per share, compared to a net loss of $(0.03) and $(0.17) per share in the prior and year-ago quarter, respectively. On an adjusted basis, net of related taxes, ST reported non-U.S. GAAP net income per share of $0.11 in the second quarter, excluding impairment and restructuring charges and one-time items, compared to a net loss of $(0.01) and $(0.06) per share in the prior and year-ago quarter, respectively.*
For the second quarter of 2014, the effective average exchange rate for the Company was approximately $1.36 to €1.00 compared to $1.35 to €1.00 for the first quarter of 2014 and $1.30 to €1.00 for the second quarter of 2013.
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