Slide 1: Agenda
Agenda o Our Financial Results o Our Opportunities o Our Target Financial Model 2
Slide 2: Agenda
Agenda = Our Financial Results = Our Opportunities = Our Target Financial Model Vi als On
Slide 3: Financial results summary Q308-Q110, FY09, FY08
In US$M, except EPS Q308 Q409 Q110 FY09 FY08 Net Revenues 2,696 2,583 2,325 8,510 9,842 Gross Margin 35.6% 37.0% 37.7% 30.9% 36.2% Adjusted Operating 210 128 81 (499) 468 Profit before Restructuring attributable to Parent*(1) Adjusted Operating Margin*(1) 7.8% 5.7% 4.0% -6.8% 4.8% EPS Diluted (0.32)
Slide 4: Years of Progress Masked by Currency
4 Years of Progress Masked by Currency o Divested flash memories o 3-step merger and 50% JV in Wireless o Technology alliance o Reduced CapEx / Sales o Savings from restructuring initiatives: ~$1.1B o Front-end fabs reduced from 17 to 9 o Product R&D focus: o Advanced Analog o New ASSP and ASICs o M
Slide 5: Net Operating Cash Flow
Net Operating Cash Flow Net Operating Cash Flow (ex M&A)* *Net Operating Cash Flow (ex M&A) is a non-GAAP measure that, the Company believes, provides useful information. See appendix for definition. 6
Slide 6: A Solid Financial Foundation
A Solid Financial Foundation (US$ million) Dec. 31, 2008 Dec. 31, 2009 Mar. 27, 2010 Available Cash 1,640 2,394 2,342 Restricted Cash 250 476 368 Marketable Securities, Non-current 242 42 47 TOTAL 2,132 2,912 2,757 Total Financial Debt (2,677) (2,492) (2,191) Net Financial Position (545) 420 566 DIV
Slide 7: Dividend Evolution
Dividend Evolution Dividend Yield as of May 31, 2010: Dividend increased to $0.28 per share representing 3.6% yield* * 2009 annualized dividend is payable in four equal installments: May, August and November 2010 and February 2011. ** Source: Capital IQ 8
Slide 8: Dividend Evolution
Dividend Evolution ky $0.40 3% $0.35 $0.30 $0.25 2% $0.20 $0.15 ie $0.10 $0.05 $0.00 0% BP PW gH gH? qoO* go 9% qT os? go” == Dividend =e=Yield Dividend Yield as of May 31, 2010: Company __% Yield** MCHP 4.85% TSM 4.58% MxIM 4.45% LTC 3.16% INTC 2.74% XLNX 2.49% NSM 2.24% AMAT 1.91% KLAC 1.92% TXN 1
Slide 9: Assets Lighter Strategy
Assets Lighter Strategy o Sustainable 5% to about 7% capex-to-sales ratio in a cycle o Targeting ~20% increase in capacity (internal & external) Q409 vs. Q410 CapEx to Sales Ratio Depreciation by Wafer *Based on assumed (euro)/$ rate of about 1.30. Continuous Focus on Cost Reduction 10
Slide 10: Continuous Focus on Cost Reduction
Continuous Focus on Cost Reduction o Manufacturing focused to reduce wafer costs, after return to full loading o Currency, cash costs efficiency and roll-over depreciation expected to contribute to about 10% wafer cost reduction from Q110 thru Q410* o Further cost reduction after the final phase-out
Slide 11: Completing the On-Going Restructuring
Completing the On-Going Restructuring 12
Slide 12: Currency Exposure
Currency Exposure Total Costs (COGS+OpEx) By Currency (Q110) Quarterly Currency Effect: +1% change o $4 to $5 million impact to gross profit o $4 to $5 million impact on operating expenses o $8 to $10 million on operating profit Hedging: % of Euro exposure currently hedged** Other 5% SEK 5% *Euro ((
Slide 13: ACCI: Performance & Targets
ACCI: Performance & Targets* GROUP Q110 Short T MID TERM TARGET APG ~5% HSD Mid Teens CCI >10% ~ flat Low Teens HED ~ 5% ~ 10% Low /Mid Teens IMG Neg B/even Low *Q410 assumes revenues based on a substantial continuity in market demand trends and an effective exchange rate between 1.25 (euro)/$ to 1.
Slide 14: IMS: Performance & Targets
IMS: Performance & Targets* GROUP Q110 Short T MID TERM TARGET APM >10% High Teens 20%+ MMS >10% High Teens 20%+ *Q410 assumes revenues based on a substantial continuity in market demand trends and an effective exchange rate between 1.25 (euro)/$ to 1.30 (euro)/$. **Segment operating results exclude
Slide 15: Wireless: Performance & Targets
Wireless: Performance & Targets* ST-Ericsson plans profitability at quarterly revenue run rate of (greater or equal)$750 million, after restructuring is complete *Q410 assumes revenues based on substantial continuity in market demand trends and an effective exchange rate between 1.25 (euro)/$ to 1.3
Slide 16: Wireless: Performance & Targets
Wireless: Performance & Targets* ky Mid-term nee ussM a Q410* 1000 + Mitigate losses + 10% Q110 500 7 o% -19.9% + -10% O+ + + + -20% Q308 Q109 Q409 Q110 ST-Ericsson plans profitability at Loud Opa sig quarterly revenue run rate of $750 million, after restructuring is complete 70410 assumes revenues
Slide 17: Financial Model
Financial Model* Transitional Model: All segments at / above break-even Low / mid-single-digit operating margin Back to net operating cash flow of 6% to 10% of sales Q409 - Q110 Achievements Operating Margin: 3.5% in Q4 down to 0.5% in Q110 on seasonally lower Revenues Excluding Wireless: Operating
Slide 18: Achievable in Short Term
....achievable in Short Term Price OpEx Leverage New Products Manufacturing Restructuring Currency Operating Margin* Q110 Operating Margin* * Operating Margin before Restructuring Charges. It is not a GAAP measure, please see Appendix. 19
Slide 19: By Improvements at All Segments
....by Improvements at All Segments* IMS: from 11% to High Teens* ACCI: from 5% to High Single Digit* Wireless: substantial reduction of losses* Operating Margin** Q110 Target Operating Margin** *Product Segment targets assume substantial continuity in market demand trends and an effective exchange
Slide 20: Appendix
Appendix o Net operating cash flow is defined as net cash from operating activities minus net cash used in investing activities, excluding payment for purchases of and proceeds from the sale of marketable securities (both current and non-current), short-term deposits and restricted cash. We believe
Slide 21: Signatures
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, STMicroelectronics N.V. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. STMicroelectronics N.V. Date: August 3, 2010 By: /s/ Carlo Ferro Name: Carlo Ferro Title: Exec