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ST-Ericsson reports fourth quarter 2012 financial results

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GENEVA, SWITZERLAND -- (Marketwire) -- 01/30/13 --

* Net sales $358 million, in line with outlook

* Adjusted operating loss(1)) $133 million, 55% improvement since Q12012

* NovaThor™ shipments grew 45% sequentially

Geneva, Switzerland, January 30, 2013 - ST-Ericsson, a joint ventureofSTMicroelectronics (NYSE: STM) and Ericsson (NASDAQ: ERIC), reportedfinancialresults for the fourth fiscal quarter ending December 31, 2012.

Sales in the fourth quarter were approximately flat sequentially, in linewiththe guidance provided, reflecting growing contribution from NovaThorplatformshipments as well as $43 million revenues from IP licensing. NovaThorModApshipments grew by 45% sequentially to 10.7 million units.

Adjusted operating loss decreased to $133 million as a further resultof theexecution of the strategic plan announced in April. Since the firstquarter2012 operating losses have been reduced by 55%, decreasing by $164 million.

Didier Lamouche, President and CEO, commented: "The fourth quarter wasagain aquarter of solid execution for us with revenues coming in as expectedand amajor growth of the shipments of our NovaThor platform, in part thanksto thenew Samsung GALAXY S III mini. We have continued to executesteadily andaggressively on our strategy and delivered on our commitments toimprove ourfinancial results, further reducing our losses and controllingexpenses.However, we recognize that the level of losses and use of cash remainsveryhigh."

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

"We are also continuing to execute relentlessly against our committedroadmap,"continued Lamouche. "We have reached key maturity milestones with ouradvancedLTE modem which is in testing with customers and is anticipatedto becommercialized as part of our NovaThor L8540 ModAp platform in 2013. Aspromisedless than a year ago we also unveiled our newest chipset - the NovaThorL8580ModAp - which is the first product to use FD-SOI technology and is theworld'sfastest and lowest power integrated LTE modem and applicationprocessorplatform, 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) ADJUSTED(1)) 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 position 2) 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 $1546millionunder the parents' loan.

Non-GAAP net income in the fourth quarter 2012 was $71 million, includinggainfrom the debt forgiveness, impairment of intangible assets and writeoff ofcertain deferred tax assets.

The net financial position(2) )at the end of the fourth quarter waspositive $37million, reflecting the cancellation of the parents' loan facility.

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

The fourth quarter 2012 closing is based on a going concern assumption. Inthemonth of December 2012 ST-Ericsson shareholders issued press releases abouttheir future intent with respect to ST-Ericsson. Following the uncertaintyresulting from these announcements we cannot exclude that the ST-EricssonFinancial Statements could be further negatively affected by ST-Ericsson'sfuture scenario.


For the first quarter 2013, ST-Ericsson expects a very significantsequentialdecline in net sales, mainly resulting, in addition to the firstquarterseasonality, from a combination of no revenues from licensing expectedin thequarter and further weakening of legacy product sales.

Highlights - Recent products, technology and wins* Products * Samples of ST-Ericsson's first FD-SOI product became available in December and the NovaThor L8580 ModAp platform was announced on January 7, 2013. The NovaThor L8580 ModAp is a multimode LTE-enabled integrated smartphone platform which features an eQuad-powered application processor running at up to 2.5Ghz and includes a full connectivity suite.* Customers * Samsung GALAXY S III mini is powered by an ST-Ericsson NovaThor ModAp, making it the fourth Samsung smartphone using the NovaThor platform.* Partners/technology * With the new NovaThor L8580 ModAp ST-Ericsson introduced eQuad technology. eQuad is a CPU architecture in which each processor core can operate as an industry-leading high performance core or a very low-power core for less computing-intensive tasks running at 0.6V. This is achieved by transistor-level electrical bias switching to allow each of two physical cores to run in two different modes, creating an electrically-enabled quad core. The eQuad processor delivers both the fastest processor speed at 2.5Ghz as well as by far the industry leading power efficiency with cores running at 1Ghz at only 0.65V. * ST-Ericsson tested and demonstrated its VoLTE (Voice over LTE) technology with key operators during the quarter. A white paper was published discussing VoLTE battery life and the benefits to be expected in upcoming modem generations such as ST-Ericsson solutions. * ST-Ericsson published a white paper on IMS Fusion. Through the invention of IMS Fusion, ST-Ericsson makes it possible for mobile devices to support an arbitrary number of downloaded or pre-installed IMS apps. This solves the problem of multiple IMS registrations without the need for a new modem API. * ST-Ericsson announced that it is ready to support Jolla's Sailfish OS in its NovaThor platforms.Financial results appendix (unaudited)Annual financial results 2012 2011 $ million ACTUAL ACTUAL Income Statement * NET SALES 1351 1650 OPERATING INCOME/(LOSS) ADJUSTED(1)) 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) ADJUSTED(1)) 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 assetsConsolidated 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 --------------------- ------------------------------------------------* Please refer to footnote n. 4 on page 6


1) The adjusted operating income/(loss) is defined as theoperatingincome/(loss) reported before amortization of acquisition-relatedintangiblesand restructuring charges and is used by management to helpenhance theunderstanding of ongoing operations and to communicate the impact of theitemson the operating loss as reported.

2) Net financial position represents the balance between financial assets,whichcomprise cash, cash equivalents and short-term deposits, and financialdebtwhich includes bank overdrafts and parent companies short-term bridgecreditfacilities.

3) Net operating cash flow is defined as net cash from operatingactivities,less capital expenditure and less restructuring charges.

4) The fourth quarter 2012 closing is based on a going concernassumption. Thevaluation of several items in the financial report is based upon ourbestestimate using preliminary information available to us and under thisgoingconcern assumption. In the month of December 2012 ST-Ericsson'shareholdersissued press releases about their future intent with respect to ST-Ericsson, onDecember 10(th) by STMicroelectronics and on December 20(th) by Ericsson.

Following the uncertainty resulting from these announcements, thecarryingamounts of goodwill and intangible assets have been substantiallyimpaired. Wecannot exclude that the ST-Ericsson Financial Statements could befurthernegatively affected by ST-Ericsson's future scenario.

Notes to editors

ST-Ericsson invites journalists, analysts and investors to a conferencecallscheduled on January 31 at 5 p.m. CET. Call-in numbers, a live webcast oftheconference call, as well as supporting slides, will be available

About ST-Ericsson

ST-Ericsson is a world leader in developing and delivering a completeportfolioof innovative mobile platforms and cutting-edge wireless semiconductorsolutionsacross the broad spectrum of mobile technologies. ST-Ericsson wasestablished asa 50/50 joint venture by STMicroelectronics (NYSE: STM) andEricsson(NASDAQ: ERIC) in February 2009, with headquarters in Geneva, Switzerland.

The ST-Ericsson results reported in this press release do not reflect intheir 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 involveinherent risks and uncertainties. We have identified certain important factors thatmaycause actual results to differ materially from those contained in suchforward- looking statements. For a detailed description of risk factors seeSTMicroelectronics' (NYSE: STM) and Ericsson's (NASDAQ: ERIC) filings withthe USSecurities and Exchange Commission, particularly each company's latestpublished Annual Report on Form 20-F.

Forward looking statements contained in this press release and the fourthquarter 2012 closing are based on a going concern assumption. In the monthofDecember 2012 ST-Ericsson' shareholders issued press releases about theirfutureintent with respect to ST-Ericsson, on December 10(th) bySTMicroelectronics andon December 20(th) by Ericsson.Please read this press release in conjunction with this information.

Fourth Quarter 2012 financial results:

This announcement is distributed by Thomson Reuters on behalf ofThomson Reuters clients. The owner of this announcement warrants that:

(i) the releases contained herein are protected by copyright and other applicable laws; and

(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Ericsson via Thomson Reuters ONE[HUG#1674392]

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