Document and Entity Information
Document and Entity Information | |
Dec. 31, 2009
| |
Entity Common Stock, Shares Outstanding | 878,333,566 |
Consolidated Statements of Inco
Consolidated Statements of Income (USD $) | |||
In Millions, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Statements of Income [Abstract] | |||
Net sales | $8,465 | $9,792 | $9,966 |
Other revenues | 45 | 50 | 35 |
Net revenues | 8,510 | 9,842 | 10,001 |
Cost of sales | (5,884) | (6,282) | (6,465) |
Gross profit | 2,626 | 3,560 | 3,536 |
Selling, general and administrative | (1,159) | (1,187) | (1,099) |
Research and development | (2,365) | (2,152) | (1,802) |
Other income and expenses, net | 166 | 62 | 48 |
Impairment, restructuring charges and other related closure costs | (291) | (481) | (1,228) |
Operating loss | (1,023) | (198) | (545) |
Other-than-temporary impairment charge and realized losses on financial assets | (140) | (138) | (46) |
Interest income, net | 9 | 51 | 83 |
Earnings (loss) on equity investments | (337) | (553) | 14 |
Gain (loss) on financial assets | (8) | 15 | |
Gain on convertible debt buyback | 3 | ||
Loss before income taxes and noncontrolling interest | (1,496) | (823) | (494) |
Income tax benefit | 95 | 43 | 23 |
Loss before noncontrolling interest | (1,401) | (780) | (471) |
Net loss (income) attributable to noncontrolling interest | 270 | (6) | (6) |
Net loss attributable to parent company | ($1,131) | ($786) | ($477) |
Loss per share (Basic) attributable to parent company shareholders | -1.29 | -0.88 | -0.53 |
Loss per share (Diluted) attributable to parent company shareholders | -1.29 | -0.88 | -0.53 |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Millions | Dec. 31, 2009
| Dec. 31, 2008
|
Current assets : | ||
Cash and cash equivalents | $1,588 | $1,009 |
Marketable securities | 1,032 | 651 |
Trade accounts receivable, net | 1,367 | 1,064 |
Inventories, net | 1,275 | 1,840 |
Deferred tax assets | 298 | 252 |
Assets held for sale | 31 | 0 |
Other receivables and assets | 753 | 685 |
Total current assets | 6,344 | 5,501 |
Goodwill | 1,071 | 958 |
Other intangible assets, net | 819 | 863 |
Property, plant and equipment, net | 4,081 | 4,739 |
Long-term deferred tax assets | 333 | 373 |
Equity investments | 273 | 510 |
Restricted cash | 250 | 250 |
Non-current marketable securities | 42 | 242 |
Other investments and other non-current assets | 442 | 477 |
Total non-current assets | 7,311 | 8,412 |
Total assets | 13,655 | 13,913 |
Current liabilities: | ||
Bank overdrafts | 0 | 20 |
Current portion of long-term debt | 176 | 123 |
Trade accounts payable | 883 | 847 |
Other payables and accrued liabilities | 1,049 | 996 |
Dividends payable to shareholders | 26 | 79 |
Deferred tax liabilities | 20 | 28 |
Accrued income tax | 126 | 125 |
Total current liabilities | 2,280 | 2,218 |
Long-term debt | 2,316 | 2,554 |
Reserve for pension and termination indemnities | 317 | 332 |
Long-term deferred tax liabilities | 37 | 27 |
Other non-current liabilities | 342 | 350 |
Total non-current liabilities | 3,012 | 3,263 |
Total liabilities | 5,292 | 5,481 |
Parent company shareholders' 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, 910,319,305 shares issued, 878,333,566 shares outstanding) | 1,156 | 1,156 |
Capital surplus | 2,481 | 2,324 |
Accumulated result | 2,723 | 4,064 |
Accumulated other comprehensive income | 1,164 | 1,094 |
Treasury stock | (377) | (482) |
Total parent company shareholders' equity | 7,147 | 8,156 |
Noncontrolling interest | 1,216 | 276 |
Total equity | 8,363 | 8,432 |
Total liabilities and equity | $13,655 | $13,913 |
1_Consolidated Balance Sheets
Consolidated Balance Sheets (Parenthetical) | ||||
Dec. 31, 2009
EUR (€) | Dec. 31, 2009
| Dec. 31, 2008
EUR (€) | Dec. 31, 2008
| |
Liabilities and shareholders' equity | ||||
Preferred stock, shares authorized | 540,000,000 | 540,000,000 | ||
Preferred stock, shares issued | 0 | 0 | ||
Common stock, nominal value | 1.04 | 1.04 | ||
Common stock, shares authorized | 1,200,000,000 | 1,200,000,000 | ||
Common stock, shares issued | 910,319,305 | 910,319,305 | ||
Common stock, shares outstanding | 878,333,566 | 874,276,833 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Cash flows from operating activities: | |||
Net loss | ($1,401) | ($780) | ($471) |
Items to reconcile net loss and cash flows from operating activities: | |||
Depreciation and amortization | 1,367 | 1,366 | 1,413 |
Amortization of discount on convertible debt | 13 | 18 | 18 |
Other-than-temporary impairment charge and realized losses on financial assets | 140 | 138 | 46 |
Unrealized gain on financial assets | (15) | ||
Loss on sale of financial assets | 8 | ||
Gain on convertible debt buyback | (3) | ||
Other non-cash items | (64) | 159 | 109 |
Deferred income tax | (24) | (69) | (148) |
(Earnings) loss on equity investments | 337 | 553 | (14) |
Impairment, restructuring charges and other related closure costs, net of cash payments | (4) | 371 | 1,173 |
Changes in assets and liabilities: | |||
Trade receivables, net | (300) | 565 | 2 |
Inventories, net | 553 | (299) | 24 |
Trade payables | (54) | (34) | 19 |
Other assets and liabilities, net | 248 | (251) | 17 |
Net cash from operating activities | 816 | 1,722 | 2,188 |
Cash flows from investing activities: | |||
Payment for purchase of tangible assets | (451) | (983) | (1,140) |
Payment for purchase of marketable securities | (1,730) | (708) | |
Proceeds from sale of marketable securities | 1,371 | 351 | 101 |
Proceeds from sale of non current marketable securities | 75 | ||
Proceeds from matured short-term deposits | 250 | ||
Restricted cash | (32) | ||
Disposal of financial instrument | 26 | ||
Investment in intangible and financial assets | (138) | (91) | (208) |
Proceeds received in business combinations | 1,155 | ||
Payment for business acquisitions, net of cash and cash equivalents acquired | (18) | (1,694) | |
Net cash from (used in) investing activities | 290 | (2,417) | (1,737) |
Cash flows from financing activities: | |||
Proceeds from long-term debt | 1 | 663 | 102 |
Buyback of convertible debt | (103) | ||
Repayment of long-term debt | (134) | (187) | (125) |
Increase (decrease) in short-term facilities | (20) | 20 | |
Capital increase | 2 | ||
Repurchase of common stock | (313) | ||
Dividends paid to shareholders | (158) | (240) | (269) |
Dividends paid to noncontrolling interests | (5) | (10) | (6) |
Purchase of equity from noncontrolling interests | (92) | ||
Other financing activities | (2) | ||
Net cash used in financing activities | (513) | (67) | (296) |
Effect of changes in exchange rates | (14) | (84) | 41 |
Net cash increase (decrease) | 579 | (846) | 196 |
Cash and cash equivalents at beginning of the period | 1,009 | 1,855 | 1,659 |
Cash and cash equivalents at end of the period | 1,588 | 1,009 | 1,855 |
Supplemental cash information: | |||
Interest paid | 34 | 63 | 52 |
Income tax paid (refund) | ($141) | $154 | $133 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders Equity (USD $) | |||||||
In Millions | Common Stock
| Capital Surplus
| Treasury Stock
| Accumulated Result
| Accumulated Other Comprehensive income (loss)
| Noncontrolling interest
| Total
|
Beginning Balance at Dec. 31, 2006 | $1,156 | $2,021 | ($332) | $6,086 | $816 | $52 | $9,799 |
Cumulative effect of FIN 48 adoption | (8) | (8) | |||||
Capital increase | 2 | 2 | |||||
Stock-based compensation expense | 74 | 58 | (58) | 74 | |||
Comprehensive income (loss): | |||||||
Net loss | (477) | 6 | (471) | ||||
Other comprehensive income (loss), net of tax | 504 | 1 | 505 | ||||
Comprehensive income (loss) | 34 | ||||||
Dividends, $0.30, $0.36, $0.12, per share for the years 2007, 2008, 2009 respectively | (269) | (6) | (275) | ||||
Ending Balance at Dec. 31, 2007 | 1,156 | 2,097 | (274) | 5,274 | 1,320 | 53 | 9,626 |
Repurchase of common stock | (313) | (313) | |||||
Issuance of shares by subsidiary | 152 | 246 | 398 | ||||
Stock-based compensation expense | 75 | 105 | (105) | 75 | |||
Comprehensive income (loss): | |||||||
Net loss | (786) | 6 | (780) | ||||
Other comprehensive income (loss), net of tax | (226) | (19) | (245) | ||||
Comprehensive income (loss) | (1,025) | ||||||
Dividends, $0.30, $0.36, $0.12, per share for the years 2007, 2008, 2009 respectively | (319) | (10) | (329) | ||||
Ending Balance at Dec. 31, 2008 | 1,156 | 2,324 | (482) | 4,064 | 1,094 | 276 | 8,432 |
Purchase of equity from noncontrolling interest | 119 | (211) | (92) | ||||
Business combination | 1,411 | 1,411 | |||||
Stock-based compensation expense | 38 | 105 | (105) | 38 | |||
Comprehensive income (loss): | |||||||
Net loss | (1,131) | (270) | (1,401) | ||||
Other comprehensive income (loss), net of tax | 70 | 15 | 85 | ||||
Comprehensive income (loss) | (1,316) | ||||||
Dividends, $0.30, $0.36, $0.12, per share for the years 2007, 2008, 2009 respectively | (105) | (5) | (110) | ||||
Ending Balance at Dec. 31, 2009 | $1,156 | $2,481 | ($377) | $2,723 | $1,164 | $1,216 | $8,363 |
2_Consolidated Statements of Ch
Consolidated Statements of Changes in Shareholders Equity (Parenthetical) (USD $) | |||
12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | 12 Months Ended
Dec. 31, 2006 | |
Dividends, per share | 0.12 | 0.36 | 0.3 |
Accumulated Result | |||
Dividends, per share | 0.12 | 0.36 | 0.3 |
The Company (Accumulated Other
The Company (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
The Company [Abstract] | |
THE COMPANY | 1. THE COMPANY STMicroelectronics N.V. (the Company) is registered in The Netherlands with its corporate legal seat in Amsterdam, the Netherlands, and its corporate headquarters located in Geneva, Switzerland. The Company is a global independent semiconductor company that designs, develops, manufactures and markets a broad range of semiconductor integrated circuits (ICs) and discrete devices. The Company offers a diversified product portfolio and develops products for a wide range of market applications, including automotive products, computer peripherals, telecommunications systems, consumer products, industrial automation and control systems. Within its diversified portfolio, the Company is focused on developing products that leverage its technological strengths in creating customized, system-level solutions with high-growth digital and mixed-signal content. |
Accounting Policies (Accumulate
Accounting Policies (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Accounting Policies [Abstract] | |
ACCOUNTING POLICIES | 2. ACCOUNTING POLICIES The accounting policies of the Company conform to generally accepted accounting principles in the UnitedStates of America (U.S.GAAP). All balances and values in the current and prior periods are in millions of dollars, except share and per-share amounts. Under Article35 of the Companys Articles of Association, the financial year extends from January 1 to December31, which is the period-end of each fiscal year. 2.1 Principles of consolidation The consolidated financial statements of the Company have been prepared in conformity with U.S.GAAP. The Companys consolidated financial statements include the assets, liabilities, results of operations and cash flows of its majority-owned subsidiaries. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases. Intercompany balances and transactions have been eliminated in consolidation. In compliance with U.S.GAAP guidance, the Company assesses for consolidation any entity identified as a Variable Interest Entity (VIE) and consolidates any VIEs, for which the Company is determined to be the primary beneficiary, as described in Note2.19. When the Company owns some, but not all, of the voting stock of an entity, the shares held by third parties represent a noncontrolling interest. The consolidated financial statements are prepared based on the total amount of assets and liabilities and income and expenses of the consolidated subsidiaries. However, the portion of these items that does not belong to the Company is reported on the line Noncontrolling interest in the consolidated financial statements. 2.2 Use of estimates The preparation of financial statements in accordance with U.S.GAAP requires management to make estimates and assumptions. The primary areas that require significant estimates and judgments by management include, but are not limited to: sales returns and allowances, determination of best estimate of selling price for deliverables in multiple element sale arrangements, inventory reserves and normal manufacturing capacity thresholds to determine costs capitalized in inventory, accruals for litigation and claims, valuation at fair value of acquired assets including intangibles and assumed liabilities in a business combination, goodwill, investments and tangible assets as well as the impairment of their related carrying values, the assessment in each reporting period of events, which could trigger interim impairment testing, estimated value of the consideration to be received and used as fair value for asset groups classified as assets to be disposed of by sale and the assessment of probability to realize the sale, measurement of the fair value of debt and equity securities classified as available-for-sale, including debt securities, for which no observable market price is obtainable, the assessment of credit losses and other-than-temporary impairment charges on financial assets, the valuation of noncontrolling |
Marketable Securities (Accumula
Marketable Securities (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Marketable Securities [Abstract] | |
MARKETABLE SECURITIES | 3. MARKETABLE SECURITIES Changes in the value of marketable securities, as reported in current and non-current assets on the consolidated balance sheets as at December31, 2009 and December31, 2008 are detailed in the table below: Increase in Other than fair value temporary included in impairment OCI* for charge Foreign available- and realized exchange Foreign for-sale losses result exchange December31, marketable on marketable through result December31, 2008 securities securities Purchase Sale PL through OCI 2009 In millions of U.S. dollars Aaa debt securities issued by the U.S. Treasury 1,060 (720 ) 340 Aaa debt securities issued by foreign governments 670 (543 ) 14 3 144 Senior debt Floating Rate Notes issued by financial institutions 651 8 (108 ) (3 ) 548 Auction Rate Securities 242 15 (140 ) (75 ) 42 Total 893 23 (140 ) 1,730 (1,446 ) 14 1,074 * Other Comprehensive Income The floating rate notes and the government bonds are reported as current assets on the line Marketable Securities on the consolidated balance sheet as at December31, 2009, since they represent investments of funds available for current operations. The auction-rate securities, which have a final maturity up to 40years, were purchased in the Companys account by Credit Suisse Securities LLC contrary to the Companys instructions; they are classified as non-current assets on the line Non-current marketable securities on the consolidated balance sheet as at December31, 2009. On February16, 2009, the Company announced that an arbitration panel of the Financial Industry Regulatory Authority (FINRA), in a full and final resolution of the issues submitted for determination, awarded the Company, in connection with such unauthorized auction rate securities, approximately $406million, comprising compensatory damages, as well as interest, attorneys fees and consequential damages, which were assessed against Credit Suisse. In addition, the Company is entitled to retain an interest award of approximately $27million, out of which $25million has already been paid, plus interest at the rate of 4.64% on the par value of the portfolio from December31, 2008 until the award is paid in full. The Company has petitioned the United States District Court for the Southern District of New York seeking enforcement of the award. Credit Suisse has responded by se |
Trade Accounts Receivable, Net
Trade Accounts Receivable, Net (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Trade Accounts Receivable, Net [Abstract] | |
TRADE ACCOUNTS RECEIVABLE, NET | 4. TRADE ACCOUNTS RECEIVABLE, NET Trade accounts receivable, net consisted of the following: December31, December31, 2009 2008 Trade accounts receivable 1,386 1,089 Less valuation allowance (19 ) (25 ) Total 1,367 1,064 Bad debt expense in 2009, 2008 and 2007 was $2million, $1million and $1million respectively. In 2009, 2008 and 2007, one customer, the Nokia group of companies, represented 16.1%, 17.5% and 21.1% of consolidated net revenues, respectively. In 2009, $11million of receivables due to ST Ericsson in 2009 were sold without recourse, with a financial cost of less than 0.2% of the factored amount. The Company enters into factoring transactions to accelerate the realization in cash of some trade accounts receivable. |
Inventories, Net (Accumulated O
Inventories, Net (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Inventories, Net [Abstract] | |
INVENTORIES, NET | 5. INVENTORIES, NET Inventories, net of reserve, consisted of the following: December31, December31, 2009 2008 Raw materials 73 76 Work-in-process 769 1,124 Finished products 433 640 Total 1,275 1,840 As at December31, 2008, inventories included $203million related to the consolidation of the NXP wireless business. The fair value adjustment arising from the purchase accounting for the acquisition as discussed in Note7 was totally expensed in cost of sales as at December31, 2008. |
Other Receivables and Assets (A
Other Receivables and Assets (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Other Receivables and Assets [Abstract] | |
OTHER RECEIVABLES AND ASSETS | 6. OTHER RECEIVABLES AND ASSETS Other receivables and assets consisted of the following: December31, December31, 2009 2008 Receivables from government agencies 208 125 Taxes and other government receivables 272 238 Advances 79 83 Prepayments 50 64 Loans and deposits 14 18 Interest receivable 10 16 Financial instruments 36 37 Held-for-trading cancellable swaps 34 Other current assets 84 70 Total 753 685 Due to the high volatility in the interest rates generated by the recent financial turmoil, the Company assessed in 2008 that the swaps, entered into to hedge the fair value of a portion of the convertible bonds due 2016, had been no longer effective since November1, 2008 and the fair value hedge relationship was discontinued. Consequently, the swaps were classified as held-for-trading financial assets and reported at fair value as a component of Other receivables and current assets in the consolidated balance sheet as at December31, 2008 since the Company intended to hold the derivative instruments for a short period of time which will not exceed twelve months. An unrealized gain was recognized in earnings from discontinuance date totaling $15million and was reported on the line Gain (loss) on financial assets of the consolidated statement of income for the year ended December31, 2008. During the first quarter of 2009, the Company sold these cancellable swaps and generated a loss of $8million, which is included in the line Gain (loss) on financial assets. |
Business Combinations (Accumula
Business Combinations (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | 7. BUSINESS COMBINATIONS Genesis Microchip Inc. On January17, 2008, the Company acquired effective control of Genesis Microchip Inc. (Genesis Microchip) under the terms of a tender offer announced on December11, 2007. Payment of approximately $340million for the acquired shares was made through a wholly-owned subsidiary of the Company that was merged with and into Genesis Microchip promptly thereafter and received $170million of cash and cash equivalents from Genesis Microchip. Additional direct costs associated with the acquisition amounting to approximately $6million were paid in 2008. On closing, Genesis Microchip became part of the Companys Home Entertainment Displays business activity which is part of the Automotive Consumer Computer and Communications Infrastructure Product Groups segment. The acquisition of Genesis Microchip was performed to expand the Companys leadership in the digital TV market. Genesis Microchip will enhance the Companys technological capabilities for the transition to fully digital solutions in the segment and strengthen its product intellectual property portfolio. Purchase price allocation resulted in the recognition of $11million in marketable securities, $14million in property, plant and equipment, $44million of deferred tax assets, net of valuation allowance, while intangible assets included $44million of core technologies, $27million related to customer relationships, $2million of trademarks, $15million of goodwill primarily related to the workforce, and not deductible for tax purposes, and $2million of liabilities net of other assets. During the course of 2008, the company reduced its estimate of direct cost associated with the acquisition and made a corresponding reduction in the amount of purchased goodwill. The Company also recorded in 2008 $21million of acquired IP RD with no alternative future use that the Company immediately wrote off. Such in-process research and development charge was recorded on the line research and development expenses in the consolidated statement of income in the first quarter of 2008. The core technologies have an average useful life of approximately four years, the customers relationship of seven years and the trademarks of approximately two years. The Company obtained a third party independent appraisal to assist in making its purchase price allocation although the Company takes full responsibility for such allocation. NXP Wireless On August2, 2008, ST-NXP Wireless, a joint venture owned 80% by the Company, began operations based on contributions of the wireless businesses of the Company and NXP, as the noncontrolling interest holder. The Company paid to NXP $1.55billion for the 80% stake, which included a control premium, and received cash from the NXP businesses of $33million. The consideration also included a contribution in kind, measured at fair value, corresponding to a 20% interest in the Companys wireless business. Additional direct costs associated with the acquisition amounted to $21million and were fully paid as at December31, 2009. On closing, ST-NXP Wireless was determined to be included in the Wireless segment. Purchase |
Goodwill (Accumulated Other Com
Goodwill (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Goodwill [Abstract] | |
GOODWILL | 8. GOODWILL Following the segment reorganization as described in Note27, the Company has restated its results in prior periods for illustrative comparisons of its allocation of goodwill by product segment. Changes in the carrying amount of goodwill were as follows: Automotive Consumer Computer and Industrial and Communication Wireless Multisegment Infrastructure Sector Sector (ACCI) (Wireless) (IMS) Other Total December31, 2007 41 147 100 2 290 Business Combination 15 669 684 PGI goodwill impairment (4 ) (2 ) (6 ) Incard goodwill impairment (7 ) (7 ) Foreign currency translation (1 ) (2 ) (3 ) December31, 2008 51 816 91 958 Business Combination 131 131 Vision goodwill impairment (6 ) (6 ) Foreign currency translation (2 ) (11 ) 1 (12 ) December31, 2009 43 936 92 1,071 Gross goodwill recognized amounted to respectively $1,138million and $1,019million as at December31, 2009 and 2008. Accumulated impairment amounted to respectively $67million and $61million as at December31, 2009 and 2008. On February3, 2009, the Company closed a transaction to combine the businesses of Ericsson Mobile Platforms (EMP) and ST-NXP Wireless into a new venture, named ST-Ericsson. An amount of $143million of the purchase price for this transaction was allocated to goodwill. This business combination is discussed in details in Note7. Additionally, at the beginning of the third quarter of 2009, the Company made final adjustments to the NXP business combination and decreased goodwill by $12million. In 2008, the Company acquired 100% of Genesis Microchip Inc. and 80% of the NXP wireless business. Amounts of $15million and $669million, respectively, of the purchase price for these two transactions were allocated to goodwill. These business combinations are discussed in details in Note7. During the first half of 2009, the Company performed an impairment test on goodwill and based on this test, impairment charge totaling $6million was recorded on the line Impairment, restructuring charges and other related closure costs of the consolidated statement of income for the period ended December, 2009. This impairment charge is further described in Note19. In the third quarter of 2009 and 2008, the Company performed its annual impairment test on goodwill and indefinite long-lived assets, which did not evidence any additional impairment charge to be recorded in 2009 and charges totaling $13million |
Other Intangible Assets (Accumu
Other Intangible Assets (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Other Intangible Assets [Abstract] | |
OTHER INTANGIBLE ASSETS | 9. OTHER INTANGIBLE ASSETS Other intangible assets consisted of the following: Gross Accumulated Net December31, 2009 Cost Amortization Cost Technologies licences 787 (501 ) 286 Contractual customer relationships 485 (70 ) 415 Purchased software 302 (226 ) 76 Other intangible assets 119 (77 ) 42 Total 1,693 (874 ) 819 Gross Accumulated Net December31, 2008 Cost Amortization Cost Technologies licences 707 (365 ) 342 Contractual customer relationships 436 (22 ) 414 Purchased software 253 (200 ) 53 Other intangible assets 125 (71 ) 54 Total 1,521 (658 ) 863 The line Other intangible assets in the table above consists primarily of internally developed software. The amortization expense on capitalized software costs in 2009, 2008 and 2007 was $20million, $15million, and $11million, respectively. On February3, 2009, the Company closed a transaction to combine the businesses of Ericsson Mobile Platforms (EMP) and ST-NXP Wireless into a new venture, named ST-Ericsson. An amount of $48million of the purchase price for this transaction was allocated to customer relationships. This business combination is discussed in details in Note7. The amortization expense in 2009, 2008 and 2007 was $208million, $141million, and $82million, respectively. The estimated amortization expense of the existing intangible assets for the following years is: Year 2010 235 2011 215 2012 155 2013 58 2014 39 Thereafter 117 Total 819 |
Property, Plant and Equipment (
Property, Plant and Equipment (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | 10. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: Gross Accumulated Net December31, 2009 Cost Depreciation Cost Land 96 96 Buildings 1,004 (294 ) 710 Capital leases 79 (61 ) 18 Facilities leasehold improvements 3,158 (2,332 ) 826 Machinery and equipment 13,765 (11,632 ) 2,133 Computer and RD equipment 544 (458 ) 86 Other tangible assets 252 (146 ) 106 Construction in progress 106 106 Total 19,004 (14,923 ) 4,081 Gross Accumulated Net December31, 2008 Cost Depreciation Cost Land 89 89 Buildings 1,001 (264 ) 737 Capital leases 68 (53 ) 15 Facilities leasehold improvements 3,153 (2,115 ) 1,038 Machinery and equipment 13,700 (11,037 ) 2,663 Computer and RD equipment 528 (440 ) 88 Other tangible assets 187 (127 ) 60 Construction in progress 49 49 Total 18,775 (14,036 ) 4,739 As described in note7, an amount of $23million of the purchase price for the business of Ericsson Mobile Platforms (EMP) was allocated to property, plant and equipment. Upon the acquisition of Genesis, the Company recorded in January 2008 property, plant and equipment totaling $14million. The integration of NXP wireless business in 2008 resulted in the consolidation of long-lived assets totaling $302million, of which $25million corresponded to fair value step-up on the Companys 80% interest. In 2008, as described in Note19, the Company recorded $77million impairment charge on long-lived assets of the Companys manufacturing sites in Carrollton (Texas) and in Phoenix (Arizona), of which $75million on Phoenix site that had previously been designated for closure as part of the 2007 restructuring plan. The depreciation charge in 2009, 2008 and 2007 was $1,159million, $1,225million and $1,331million, respectively. Capital investment funding has totaled $4million, $4million and $9million in the years ended December 31, 2009, 2008 and 2007, respectively. Public funding reduced depreciation charges by $22million, $25million and $33million in 2009, 2008 and 2007 respectively. For the years ended December31, 2009, 2008 and 2007 the Company made equipment sales for cash proceeds of $10million, $8million and $4million respectively. |
Equity Investments (Accumulated
Equity Investments (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Equity Investments [Abstract] | |
EQUITY INVESTMENTS | 11. EQUITY INVESTMENTS Equity investments as at December31, 2009 and 2008 were as follows: 2009 2008 Carrying Ownership Carrying Ownership value Percentage value Percentage (In millions of USD, except percentages) Numonyx Holdings B.V 193 48.6 % 496 48.6 % ST-Ericsson AT Holding 67 49.9 % Other equity investments 13 14 Total 273 510 Numonyx In 2007, the Company entered into an agreement with Intel Corporation and Francisco Partners L.P. to create a new independent semiconductor company from the key assets of the Companys Flash Memory Group and Intels flash memory business (FMG deconsolidation). Under the terms of the agreement, the Company would sell its flash memory assets, including its NAND joint venture interest with Hynix as described below and other NOR resources, to the new company, which was called Numonyx Holdings B.V. (Numonyx), while Intel would sell its NOR assets and resources. In connection with this announcement, the Company reported in 2007 an impairment charge of $1,106million to adjust the value of these assets to fair value less costs to sell. The Numonyx transaction closed on March30, 2008. At closing, through a series of steps, the Company contributed its flash memory assets and businesses as previously announced, for 109,254,191 common shares of Numonyx, representing a 48.6% equity ownership stake valued at $966million, and $156million in long-term subordinated notes, as described in Note12. As a consequence of the final terms and balance sheet at the closing date and additional agreements on assets to be contributed, coupled with changes in valuation for comparable Flash memory companies, the Company incurred an additional pre-tax loss of $190million for the year ended December31, 2008, which was reported on the line Impairment, restructuring charges and other related closure costs of the consolidated statement of income. Upon creation, Numonyx entered into financing arrangements for a $450million term loan and a $100million committed revolving credit facility from two primary financial institutions. The loans have a four-year term. Intel and the Company have each granted in favor of Numonyx a 50% debt guarantee not joint and several. In the event of default, the banks will exercise the Companys rights, subordinated to the repayment to senior lenders, to recover the amounts paid under the guarantee through the sale of the assets. The debt guarantee was evaluated under the FASB guidance on guarantee liabilities. It resulted in the recognition of a $69million liability, corresponding to the fair value of the guarantee at inception of the transaction. The same amount was also added to the value of the equity investment. The debt guarantee obligation was reported on the line Other non-current liabilities in the consolidated balance sheet as at December31, 2009 and 2008. As at December31, 2 |
Other Investments and Other Non
Other Investments and Other Non-Current Assets (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Other Investments and Other Non-Current Assets [Abstract] | |
OTHER INVESTMENTS AND OTHER NON-CURRENT ASSETS | 12. OTHER INVESTMENTS AND OTHER NON-CURRENT ASSETS Other investments and other non-current assets consisted of the following: December31, December31, 2009 2008 Investments carried at cost 29 32 Available-for-sale equity securities 10 5 Long-term notes from equity investment 173 168 Held-for-trading equity securities 7 7 Long-term receivables related to funding 8 8 Long-term receivables related to tax refund 170 206 Debt issuance costs, net 4 7 Prepaid for pension 2 1 Deposits and other non-current assets 39 43 Total 442 477 Investments carried at cost are equity securities with no readily determinable fair value. In 2009, the Company incurred other-than-temporary impairment charge on one of its investments for $3million that was recorded on the line Impairment, restructuring charges and other related closure costs in the consolidated statements of income for the year ended December31, 2009. The impairment is based on a review of the valuation of the entity upon liquidation. In 2008, the Company incurred other-than-temporary impairment charges on two of its investments, which totaled $6million and were recorded on the line Impairment, restructuring charges and other related closure costs in the consolidated statements of income for the year ended December31, 2008. For one investment, the impairment charge was based on the valuation for the underlying investment of a new round of third party financing. For the other one, the valuation at fair value was based on the valuation of the entity upon liquidation. The aggregate carrying amount of cost method investments that the investor did not evaluate for impairment in 2009 and 2008 because there was no triggering event is $29million and $32million, respectively. The Company entered into a joint venture agreement in 2002 with Dai Nippon Printing Co, Ltd for the development and production of Photomask in which the Company holds a 19% equity interest. The joint venture, DNP Photomask Europe S.p.A, was initially capitalized with the Companys contribution of 2million of cash. Dai Nippon Printing Co, Ltd contributed 8million of cash for an 81% equity interest. In the event of the liquidation of the joint-venture, the Company is required to repurchase the land at cost, and the facility at 10% of its net book value, if no suitable buyer is identified. No provision for this obligation has been recorded to date. At December31, 2009, the Companys total contribution to the joint venture is $10million. The Company continues to maintain its 19% ownership of the joint venture, and therefore continues to account for this investment under the cost method. The Company has identified the joint venture as a Variable Interest Entity (VIE), but has determined that it is not the primary beneficiary of the VIE. The Companys current maximum exposure to loss as a resu |
Other Payables and Accrued Liab
Other Payables and Accrued Liabilities (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Other Payables and Accrued Liabilities [Abstract] | |
OTHER PAYABLES AND ACCRUED LIABILITIES | 13. OTHER PAYABLES AND ACCRUED LIABILITIES Other payables and accrued liabilities consisted of the following: December31, December31, 2009 2008 Payroll 325 319 Social charges 149 146 Taxes other than income taxes 80 91 Advances 47 51 Payables to equity investments 30 7 Obligations for capacity rights 21 29 Financial instruments 34 5 Provision for restructuring 180 197 Pension and long-term benefits 30 21 Royalties 35 14 Acquisition-related expenses 0 17 Others 118 99 Total 1,049 996 The terms of the agreement for the inception of Numonyx included rights granted to Numonyx to use certain assets retained by the Company. As at December31, 2009 and 2008 the value of such rights totaled $65million and $87million respectively, of which $18million and $24million respectively were reported as a current liability. The remaining obligations for capacity rights is due to the terms of the agreement for the integration of NXP wireless business that included rights for NXP to obtain products from the Company at preferential pricing. Other payables and accrued liabilities also include individually insignificant amounts as of December31, 2009 and December31, 2008. |
Long-Term Debt (Accumulated Oth
Long-Term Debt (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Long-Term Debt [Abstract] | |
LONG-TERM DEBT | 14. LONG-TERM DEBT Long-term debt consisted of the following: December31, December31, 2009 2008 Bank loans: 2.10% due 2009, floating interest rate at Libor + 0.40% 50 1.79% due 2010, floating interest rate at Libor + 1.0% 40 50 Funding program loans: 2.00% (weighted average), due 2009, fixed interest rate 4 0.90% (weighted average), due 2010, fixed interest rate 12 24 3.27% (weighted average), due 2012, fixed interest rate 6 10 0.50% (weighted average), due 2013, fixed interest rate 3 2 0.50% (weighted average), due 2014, fixed interest rate 8 10 0.50% (weighted average), due 2016, fixed interest rate 2 3.24% (weighted average), due 2017, fixed interest rate 67 72 0.27% due 2014, floating interest rate at Libor + 0.017% 100 120 0.31% due 2015, floating interest rate at Libor + 0.026% 56 65 0.33% due 2016, floating interest rate at Libor + 0.052% 136 136 0.57% due 2016, floating interest rate at Libor + 0.317% 180 180 0.49% due 2016, floating interest rate at Libor + 0.213% 200 200 Capital leases: 5.39% (weighted average), due 2011, fixed interest rate 8 13 6.00% (weighted average), due 2014, fixed interest rate 9 5.29% (weighted average), due 2017, fixed interest rate 2 2 Senior Bonds: 1.12%, due 2013, floating interest rate at Euribor + 0.40% 720 703 Convertible debt: -0.50% convertible bonds due 2013 1.50% convertible bonds due 2016 943 1,036 Total long-term debt 2,492 2,677 Less current portion (176 ) (123 ) Total long-term debt, less current portion 2,316 2,554 Long-term debt is denominated in the following currencies: December31, December31, 2009 2008 U.S. dollar 1,666 1,840 Euro 826 837 Other Total 2,492 2,677 The European Investment Banks loans denominated in EUR, but drawn in USD, are classified as USD denominated debt. The 2008 figures have been updated accordingly. Aggregate future maturities of total long-term debt outstanding (including current portion) are as follows: December31, 2009 2010 176 2011 1,063 2012 119 2013 836 2014 114 Thereafter 184 Total 2,492 In August 2003, the Company issued $1,332million principal amount a |
Post-Retirement and Other Long-
Post-Retirement and Other Long-Term Employees Benefits (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Post-Retirement and Other Long-Term Employees Benefits [Abstract] | |
POST-RETIREMENT AND OTHER LONG-TERM EMPLOYEES BENEFITS | 15. POST-RETIREMENT AND OTHER LONG-TERM EMPLOYEES BENEFITS The Company and its subsidiaries have a number of defined benefit pension plans, mainly unfunded, and other long-term employees benefits covering employees in various countries. The defined benefit plans provide for pension benefits, the amounts of which are calculated based on factors such as years of service and employee compensation levels. The other long-term employees plans provide for benefits due during the employees period of service after certain seniority levels. The Company uses a December 31 measurement date for the majority of its plans. Eligibility is generally determined in accordance with local statutory requirements. For Italian termination indemnity plan (TFR), generated before July1, 2007, the Company continues to measure the vested benefits to which Italian employees are entitled as if they retired immediately as of December31, 2009, in compliance with U.S.GAAP guidance on determining vested benefit obligations for defined benefit pension plans. The changes in benefit obligation and plan assets were as follows: Pension Benefits Other Long-Term Benefits December31, December31, December31, December31, 2009 2008 2009 2008 Change in benefit obligation: Benefit obligation at beginning of year 587 590 42 42 Service cost 22 20 4 4 Interest cost 25 32 2 3 Employee contributions 4 3 Benefits paid (25 ) (35 ) (2 ) (8 ) Effect of settlement (16 ) (5 ) (3 ) Effect of curtailment (2 ) (1 ) Actuarial (gain) loss 29 15 (1 ) 1 Transfer in 12 70 1 8 Transfer out (5 ) (53 ) (1 ) (5 ) Plan amendment (3 ) Foreign currency translation adjustment 23 (46 ) 1 (3 ) Benefit obligation at end of year 654 587 43 42 Change in plan assets: Plan assets at fair value at beginning of year 262 278 Expected return on plan assets 16 18 Employer contributions 46 16 Employee contributions 5 2 Benefits paid (13 ) (11 ) Effect of settlement (14 ) (2 ) Actuarial gain (loss) 25 (59 ) Transfer in 7 54 Transfer out (6 ) (5 ) Foreign currency tran |
Shareholders Equity (Accumulate
Shareholders Equity (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Shareholders' Equity [Abstract] | |
SHAREHOLDERS' EQUITY | 16. SHAREHOLDERS EQUITY 16.1 Outstanding shares The authorized share capital of the Company is EUR1,810million consisting of 1,200,000,000 common shares and 540,000,000 preference shares, each with a nominal value of EUR1.04. As at December31, 2009 the number of shares of common stock issued was 910,319,305shares (910,307,305 at December31, 2008). As of December31, 2009 the number of shares of common stock outstanding was 878,333,566 (874,276,833 at December31, 2008). 16.2 Preference shares The 540,000,000 preference shares, when issued, will entitle a holder to full voting rights and to a preferential right to dividends and distributions upon liquidation. On January22, 2008, a new option agreement was concluded between the Company and Stichting Continuteit ST. This new option agreement provides for the issuance of 540,000,000 preference shares. Any such shares should be issued by the Company to the Foundation, upon its request and in its sole discretion, upon payment of at least 25% of the par value of the preference shares to be issued. The issuing of the preference shares is conditional upon (i)the Company receiving an unsolicited offer or there being the threat of such an offer; (ii)the Companys Managing and Supervisory Boards deciding not to support such an offer and; (iii)the Board of the Foundation determining that such an offer or acquisition would be contrary to the interests of the Company and its stakeholders. The preference shares may remain outstanding for no longer than two years. There were no preference shares issued as of December31, 2009. 16.3 Treasury stock Following the authorization by the Supervisory Board, announced on April2, 2008, to repurchase up to 30million shares of its common stock, the Company acquired 29,520,220shares as at December31, 2008, for a total amount of approximately $313million, also reflected at cost as a reduction of the shareholders equity. This repurchase intends to cover the transfer of shares to employees upon vesting of future share based remuneration programs. The treasury shares have been designated for allocation under the Companys share based remuneration programs of non-vested shares including such plans as approved by the 2005, 2006, 2007, 2008 and 2009 Annual General Meeting of Shareholders. As of December31, 2009, 10,934,481 of these treasury shares were transferred to employees under the Companys share based remuneration programs of which 4,044,733 in the year ended December31, 2009, following the full vesting of the 2006 stock-award plan, the vesting of the first and second tranches of the 2007 stock-award plan, the vesting of the first tranche of the 2008 stock-award plan together with the acceleration of the vesting of a limited number of stock-awards. As of December31, 2009, the Company owned a number of treasury shares equivalent to 31,985,739. 16.4 Stock option plans In 1995, the Shareholders voted to adopt the 1995 Employee Stock Option Plan (the 1995 Plan) whereby options for up to 33,000,000shares may be granted in installments over a five-year period. Under the 1995 Plan, the options may be granted t |
Earnings (Loss) Per Share (Accu
Earnings (Loss) Per Share (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Earnings (Loss) Per Share [Abstract] | |
EARNINGS (LOSS) PER SHARE | 17. EARNINGS (LOSS) PER SHARE For the years ended December31, 2009, 2008 and 2007, earnings (loss) per share (EPS) was calculated as follows: Year Ended Year Ended Year Ended December31, December31, December31, 2009 2008 2007 Basic EPS Net income (loss) (1,131 ) (786 ) (477 ) Weighted average shares outstanding 876,928,190 891,955,940 898,731,154 Basic EPS (1.29 ) (0.88 ) (0.53 ) Diluted EPS Net income (loss) (1,131 ) (786 ) (477 ) Net income (loss) adjusted (1,131 ) (786 ) (477 ) Weighted average shares outstanding 876,928,190 891,955,940 898,731,154 Dilutive effect of stock options Dilutive effect of nonvested shares Dilutive effect of convertible debt Number of shares used in calculating diluted EPS 876,928,190 891,955,940 898,731,154 Diluted EPS (1.29 ) (0.88 ) (0.53 ) At December31, 2009, if the Company had reported an income, outstanding stock options would have included anti-dilutive shares totalling approximately 37,943,832shares. At December31, 2008 and 2007, outstanding stock options included anti-dilutive shares totalling approximately 39,431,433 and 46,722,255shares, respectively. There was also the equivalent of 38,404,118 common shares outstanding for convertible debt, out of which 5,624 for the 2013 bonds and 38,398,494 for the 2016 bonds, with no dilutive effect. None of these bonds have been converted to shares during 2009. |
Other Income and Expenses, Net
Other Income and Expenses, Net (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Other Income and Expenses, Net [Abstract] | |
OTHER INCOME AND EXPENSES, NET | 18. OTHER INCOME AND EXPENSES, NET Other income and expenses, net consisted of the following: Year Ended Year Ended Year Ended December31, December31, December31, 2009 2008 2007 Research and development funding 202 83 97 Start-up and phase-out costs (39 ) (17 ) (24 ) Exchange gain, net 11 20 1 Patent costs, net of gain from settlement (5 ) (24 ) (28 ) Gain on sale of long-lived assets, net 3 4 2 Other, net (6 ) (4 ) Total 166 62 48 The Company receives significant public funding from governmental agencies in several jurisdictions. Public funding for research and development is recognized ratably as the related costs are incurred once the agreement with the respective governmental agency has been signed and all applicable conditions have been met. Start-up costs represent costs incurred in the start-up and testing of the Companys new manufacturing facilities, before reaching the earlier of a minimum level of production or six months after the fabrication lines quality certification. Phase-out costs for facilities during the closing stage are treated in the same manner. Exchange gains and losses included in Other income and expenses, net represent the portion of exchange rate changes on transactions denominated in currencies other than an entitys functional currency and the changes in fair value of held-for-trading derivative instruments which are not designated as hedge and which have a cash flow effect related to operating transactions. Patent costs, net of settlement agreements, include legal and attorney fees and payment for claims, patent pre-litigation consultancy and legal fees, netted against settlements, which primarily includes reimbursements of prior patent litigation costs. As at December31, 2008 and 2007, the caption Other, net included a $3million and a $7million income respectively, net of attorney and consultancy fees that the Company received in its ongoing pursuit to recover damages related to the case with its former Treasurer as previously disclosed. |
Impairment, Restructuring Charg
Impairment, Restructuring Charges and Other Related Closure Costs (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Impairment, Restructuring Charges and Other Related Closure Costs [Abstract] | |
IMPAIRMENT, RESTRUCTURING CHARGES AND OTHER RELATED CLOSURE COSTS | 19. IMPAIRMENT, RESTRUCTURING CHARGES AND OTHER RELATED CLOSURE COSTS Impairment, restructuring charges and other related closure costs incurred in 2009, 2008, and 2007 are summarized as follows: Total impairment, restructuring charges and other Restructuring Other related related closure Year Ended December31, 2009 Impairment charges closure costs costs 2007 restructuring plan (25 ) (69 ) (32 ) (126 ) STE restructuring plan (99 ) (1 ) (100 ) Goodwill annual impairment test (6 ) (6 ) Other restructuring initiatives (4 ) (53 ) (2 ) (59 ) Total (35 ) (221 ) (35 ) (291 ) Total impairment, restructuring charges and other Restructuring Other related related closure Year Ended December31, 2008 Impairment charges closure costs costs 2007 restructuring plan (77 ) (79 ) (8 ) (164 ) FMG deconsolidation (190 ) (2 ) (24 ) (216 ) Goodwill annual impairment test (13 ) (13 ) Other restructuring initiatives (10 ) (75 ) (3 ) (88 ) Total (290 ) (156 ) (35 ) (481 ) Total impairment, restructuring charges and other Restructuring Other related related closure Year Ended December31, 2007 Impairment charges closure costs costs 2007 restructuring plan (11 ) (62 ) (73 ) FMG deconsolidation (1,107 ) (5 ) (1,112 ) Other restructuring initiatives (5 ) (8 ) (30 ) (43 ) Total (1,123 ) (70 ) (35 ) (1,228 ) Impairment charges and disposal loss In 2009, the Company recorded impairment charges for $35million relating primarily to: $25million impairment linked to the 2007 restructuring plan. These impairment charges were triggered by the reclassification of the Companys long-lived assets of its manufacturing site in Carrollton (Texas) (previously designated for closure as part of the 2007 restructuring plan) on the line Assets held for sale on the consolid |
Interest Income, Net (Accumulat
Interest Income, Net (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Interest Income, Net [Abstract] | |
INTEREST INCOME, NET | 20. INTEREST INCOME, NET Interest income, net consisted of the following: Year Ended Year Ended Year Ended December31, December31, December31, 2009 2008 2007 Income 59 132 156 Expense (50 ) (81 ) (73 ) Total 9 51 83 No borrowing cost was capitalized in 2009, 2008 and 2007. Interest income on floating rate notes classified as available-for-sale marketable securities amounted to $8million for the year ended December31, 2009, $37million for the year ended December31, 2008 and to $41million for the year ended December31, 2007. Interest income on auction rate securities totaled $7million, $14million and $24million for the years ended December31, 2009, 2008 and 2007 respectively. Interest income on Numonyx long term notes classified as available-for-sale amounted to $16million for the year ended December31, 2009 and $11million for the year ended December31, 2008. |
Income Tax (Accumulated Other C
Income Tax (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Income Tax [Abstract] | |
INCOME TAX | 21. INCOME TAX Income (loss) before income tax expense is comprised of the following: Year Ended Year Ended Year Ended December31, December31, December31, 2009 2008 2007 Loss recorded in The Netherlands (376 ) (1,232 ) (54 ) Income (loss) from foreign operations (1,120 ) 409 (440 ) Loss before income tax expense (1,496 ) (823 ) (494 ) STMicroelectronics N.V. and its subsidiaries are individually liable for income taxes in their jurisdictions. Tax losses can only offset profits generated by the taxable entity incurring such loss. Income tax benefit (expense) is comprised of the following: Year Ended Year Ended Year Ended December31, December31, December31, 2009 2008 2007 The Netherlands taxes current 4 (1 ) (4 ) Foreign taxes current (54 ) (25 ) (121 ) Current taxes (50 ) (26 ) (125 ) Foreign deferred taxes 145 69 148 Income tax benefit 95 43 23 The principal items comprising the differences in income taxes computed at the Netherlands statutory rate of 25.5% in 2009, 2008 and 2007, and the effective income tax rate are the following: Year Ended Year Ended Year Ended December31, December31, December31, 2009 2008 2007 Income tax benefit computed at statutory rate 382 210 126 Non-deductible, non-taxable and other permanent differences, net (34 ) (20 ) Loss on equity investment (84 ) (139 ) Valuation allowance adjustments (56 ) (18 ) (1 ) Impact of prior years adjustments 21 48 (17 ) Effects of change in enacted tax rate on deferred taxes (7 ) (21 ) Current year credits 76 66 63 Other tax and credits (4 ) 2 (3 ) Benefits from tax holidays 2 34 122 Current year tax risk (23 ) (31 ) Impact of FMG deconsolidation (77 ) (113 ) Earnings of subsidiaries taxed at different rates (178 ) (52 ) (113 ) Income tax benefit (expense) 95 43 23 The lines Impact of prior years adjustments and Current year tax risk include amounts that are furth |
Commitments (Accumulated Other
Commitments (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Commitments [Abstract] | |
COMMITMENTS | 22. COMMITMENTS The Companys commitments as of December31, 2009 were as follows: Total 2010 2011 2012 2013 2014 Thereafter In million US$ Operating leases $ 481 $ 131 $ 98 $ 68 $ 43 $ 26 $ 115 Purchase obligations 741 604 62 37 20 18 of which: Equipment purchase 267 267 Foundry purchase 182 182 Software, technology licenses and design 292 155 62 37 20 18 Other obligations 532 263 135 125 6 2 1 Total 1,754 998 295 230 69 46 116 As a consequence of the Companys July10, 2007 announcement concerning the planned closures of certain of its manufacturing facilities, the shutdown of its plants in the United States is ongoing and negotiations with some of its suppliers continue. As no final date has been set, some of the contracts as reported above have been terminated. The termination fees for the sites still in operation have not been taken into account. Operating leases are mainly related to building and equipment leases. The amount disclosed is composed of minimum payments for future leases from 2010 to 2014 and thereafter. The Company leases land, buildings, plants and equipment under operating leases that expire at various dates under non-cancellable lease agreements. Operating lease expenses was $174million, $92million and $62million for the years ended December31, 2009, 2008 and 2007, respectively. Purchase obligations are primarily comprised of purchase commitments for equipment, for outsourced foundry wafers and for software licenses. Other obligations primarily relate to firm contractual commitments with respect to partnership and cooperation agreements. Other commitments The Company has issued guarantees totalling $733million related to its subsidiaries debt. Furthermore, the Company has umbrella facilities for an amount of $480million extendable to its subsidiaries on a fully guaranteed basis. In addition, the Company and Intel have each granted in favor of Numonyx, in which the Company holds a 48.6% equity investment, a 50% guarantee not joint and several, for indebtedness related to the financing arrangements entered into by Numonyx for a $450million term loan and a $100million committed revolving credit facility. Subject to the terms of the revolving facility agreement signed on December4, 2009 between the Company and Telefonaktiebolaget LM Ericsson as lenders on on |
Contingencies (Accumulated Othe
Contingencies (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Contingencies [Abstract] | |
CONTINGENCIES | 23. CONTINGENCIES The Company is subject to the possibility of loss contingencies arising in the ordinary course of business. These include but are not limited to: warranty cost on the products of the Company, breach of contract claims, claims for unauthorized use of third-party intellectual property, tax claims beyond assessed uncertain tax positions as well as claims for environmental damages. In determining loss contingencies, the Company considers the likelihood of a loss of an asset or the incurrence of a liability as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recorded when it is probable that a liability has been incurred and when the amount of the loss can be reasonably estimated. The Company regularly reevaluates claims to determine whether provisions need to be readjusted based on the most current information available to the Company. Changes in these evaluations could result in an adverse material impact on the Companys results of operations, cash flows or its financial position for the period in which they occur. |
Claims and Legal Proceedings (A
Claims and Legal Proceedings (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Claims and Legal Proceedings [Abstract] | |
CLAIMS AND LEGAL PROCEEDINGS | 24. CLAIMS AND LEGAL PROCEEDINGS The Company has received and may in the future receive communications alleging possible infringements, in particular in the case of patents and similar intellectual property rights of others. Furthermore, the Company periodically conducts patent cross license discussions with other industry participants. The Company may become involved in costly litigation brought against the Company regarding patents, mask works, copy-rights, trade-marks or trade secrets. In the event that the outcome of any litigation would be unfavorable to the Company, the Company may be required to license the patents and/or other intellectual property rights at economically unfavorable terms and conditions, and possibly pay damages for prior use and/or face an injunction, all of which individually or in the aggregate could have a material adverse effect on the Companys results of operations, cash flows or financial position and ability to compete. The Company is otherwise also involved in various lawsuits, claims, investigations and proceedings incidental to its business and operations. The Company is currently one amongst several co-defendants to legal proceedings initiated with the International Trade Commission (the ITC) by Tessera Technologies, Inc (Tessera). See Item8. Financial Information Legal Proceedings. On December4, 2009 the Company has received from the International Chamber of Commerce the notification of a request for arbitration filed by NXP Semiconductors Netherlands BV NXP against the Company, claiming in excess of $46million in alleged compensation for so called underloading costs, pursuant to a Manufacturing Services Agreement entered into between NXP and ST-NXP Wireless, at the time of the creation of the Companys wireless semiconductor products joint venture with NXP, in August 2008. The Company is contesting this claim vigorously and filed its answer with the ITC on February12, 2010. The arbitration tribunal has been constituted but has yet to meet. The Company accrues loss contingencies when a loss is probable and can be estimated. The Company regularly evaluates claims and legal proceedings together with their related probable losses to determine whether they need to be adjusted based on the current information available to the Company. Legal costs associated with claims are expensed as incurred. In the event of litigation which is adversely determined with respect to the Companys interests, or in the event the Company needs to change its evaluation of a potential third-party claim, based on new evidence or communications, a material adverse effect could impact its operations or financial condition at the time it were to materialize. As of December31, 2009 provisions have been recorded by the Company with respect to legal proceedings when it is probable that a liability has been incurred and the associated amount can be reasonably estimated. |
Financial Instruments and Risk
Financial Instruments and Risk Management (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Financial Instruments and Risk Management [Abstract] | |
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT | 25. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 25.1 Financial risk factors The Company is exposed to changes in financial market conditions in the normal course of business due to its operations in different foreign currencies and its ongoing investing and financing activities. The Companys activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Companys overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Companys financial performance. The Company uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out by a central treasury department (Corporate Treasury) reporting to the Chief Financial Officer. Simultaneously, a Treasury Committee, chaired by the CFO, steers treasury activities and ensures compliance with corporate policies approved by the Board of Directors. Treasury activities are thus regulated by the Companys policies, which define procedures, objectives and controls. The policies focus on the management of financial risk in terms of exposure to market risk, credit risk and liquidity risk. Treasury controls are subject to internal audits. Most treasury activities are centralized, with any local treasury activities subject to oversight from head treasury office. Corporate Treasury identifies, evaluates and hedges financial risks in close cooperation with the Companys operating units. It provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. The majority of cash and cash equivalent is held in U.S.dollars and Euro and is placed with financial institutions rated at least a single A long term rating from two of the major rating agencies, meaning at least A3 from Moodys Investor Service and A- from Standard Poors and Fitch Ratings. Marginal amounts are held in other currencies. Foreign currency operations and hedging transactions are performed only to hedge exposures deriving from industrial and commercial activities. Market risk Foreign exchange risk The Company conducts its business on a global basis in various major international currencies. As a result, the Company is exposed to adverse movements in foreign currency exchange rates, primarily with respect to the Euro. Foreign exchange risk mainly arises from future commercial transactions and recognized assets and liabilities at the Companys subsidiaries. Management has set up a policy to require the Companys subsidiaries to hedge their entire foreign exchange risk exposure with the Company through financial instruments transacted by Corporate Treasury. To manage their foreign exchange risk arising from foreign-currency-denominated assets and liabilities, entities in the Company use forward contracts and purchased currency options, |
Related Party Transactions (Acc
Related Party Transactions (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 26. RELATED PARTY TRANSACTIONS Transactions with significant shareholders, their affiliates and other related parties were as follows: December31, December31, December31, 2009 2008 2007 Sales other services 356 325 272 Research and development expenses (201 ) (63 ) (68 ) Other purchases (167 ) (77 ) (85 ) Other income and expenses (7 ) (11 ) Accounts receivable 58 63 44 Accounts payable 60 65 40 Other assets 2 For the years ended December31, 2009, December31, 2008 and 2007, the related party transactions were primarily with significant shareholders of the Company, or their subsidiaries and companies in which management of the Company perform similar policymaking functions. These include, but are not limited to: Areva, France Telecom Orange, Finmeccanica, Cassa Depositi e Prestiti, Flextronics, Oracle and Thomson. The related party transactions presented in the table above also include transactions between the Company and its equity investments as listed in Note11. Since the formation of ST-Ericsson, the Company purchases RD services from ST-Ericsson AT (JVD), a significant equity investment of the Company. For the year ended December31, 2009, the total RD services purchased from ST-Ericsson AT amounted to $150million and outstanding trade payables amounted to $30million as at December31, 2009. Upon FMG deconsolidation and the creation of Numonyx, the Company performed until November 2008 certain purchasing, service and revenue on-behalf of Numonyx. The Company had a net payable balance of $7million as at December31, 2008 as the result of these transactions. Additionally the Company recorded in 2007 costs amounting to $26million to create the infrastructure necessary to prepare Numonyx to operate immediately following the FMG deconsolidation. These costs were reimbursed by Numonyx in 2008 following the closing of the transaction. Upon creation, Numonyx also entered into financing arrangements for a $450million term loan and a $100million committed revolving credit facility from two primary financial institutions. Intel and the Company have each granted in favor of Numonyx a 50% debt guarantee not joint and several. This debt guarantee is described in details in Note11. The final terms at the closing date of the agreements on assets to be contributed included rights granted to Numonyx by the Company to use certain assets retained by the Company. The Company recorded a provision amounting respectively to $65million and $87million, as at December31, 2009 and 2008, to reflect the value of such rights granted to its equity investment. The parties also retained the obligation to fund the severance payment (trattamento di fine rapporto) due to certain transferred employees which qualifies as a defined benefit plan and was classified on the line Other non-current liabilities. The liability amounted to respectively |
Segment Information (Accumulate
Segment Information (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Segment Information [Abstract] | |
SEGMENT INFORMATION | 27. SEGMENT INFORMATION The Company operates in two business areas:Semiconductors and Subsystems. In the Semiconductors business area, the Company designs, develops, manufactures and markets a broad range of products, including discrete and standard commodity components, application-specific integrated circuits (ASICs), full custom devices and semi-custom devices and application-specific standard products (ASSPs) for analog, digital, and mixed-signal applications. In addition, the Company further participates in the manufacturing value chain of Smartcard products through its Incard division, which includes the production and sale of both silicon chips and Smartcards. In the Subsystems business area, the Company designs, develops, manufactures and markets subsystems and modules for the telecommunications, automotive and industrial markets including mobile phone accessories, battery chargers, ISDN power supplies and in-vehicle equipment for electronic toll payment. Based on its immateriality to its business as a whole, the Subsystems segment does not meet the requirements for a reportable segment as defined in the U.S.GAAP guidance. Since March31, 2008, following the creation with Intel of Numonyx, a new independent semiconductor company from the key assets of its and Intels Flash memory business (FMG deconsolidation), the Company has ceased reporting under the FMG segment. Starting August2, 2008, as a consequence of the creation of the joint venture company with NXP, the Company reorganized its groups. A new segment was created to report wireless operations; the product line Mobile, Multimedia Communications Group (MMC) which was part of segment Application Specific Groups (ASG) was abandoned and its divisions were reallocated to different product lines. The remaining part of ASG is now comprised of Automotive Consumer Computer and Telecom Infrastructure Product Groups (ACCI). The new organization is as follows: Automotive Consumer Computer and Communication Infrastructure (ACCI), comprised of four product lines: Home Entertainment Displays (HED), Automotive Products Group (APG); Computer and Communication Infrastructure (CCI);and Imaging (IMG, starting January1, 2009). Industrial and Multisegment Sector (IMS), comprised of: Analog, Power and Micro-Electro-Mechanical Systems (APM);and Microcontrollers, non-Flash, non-volatile Memory and Smart Card products (MMS). Starting February3, 2009, as a consequence of the merger of ST-NXP Wireless and Ericsson Mobile Platforms to create ST-Ericsson with Ericsson, the Wireless sector (Wireless) has been adjusted and is comprised of: Wireless Multi Media (WMM); Connectivity Peripherals (CP); Cellular Systems (CS); Mobile Platforms (MP); in which, since February3, 2009, the Company reports the portion of sales and operating results of ST-Ericsson as consolidated in the Companys revenue and operating results,and Other Wireless, in which the Company reports ma |
Subsequent Events (Accumulated
Subsequent Events (Accumulated Other Comprehensive income (loss)) | |
12 Months Ended
Dec. 31, 2009 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 28. SUBSEQUENT EVENTS On February10, 2010, the Company announced that, together with its partners Intel Corporation and Francisco Partners, has entered into a definitive agreement with Micron Technology Inc. (Micron), pursuant to which Micron will acquire Numonyx in an all-stock transaction. Upon the closing of the transaction, which is subject to customary regulatory approvals, and based on Microns closing stock price on February9, 2010 of $9.08 per share, the Company will receive in exchange for our 48.6% stake in Numonyx and the cancellation of the 30-year note due to the Company by Numonyx approximately 66.6million shares of Micron common stock (taking into account a payable of $77.8million due by the Company to Francisco Partners). At closing, Numonyx will repay the full amount of its outstanding $450million term loan, while simultaneously terminating the Companys $225million guarantee of its debt. There is no guaranty as to when, or if, the transaction will close. |