FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of July 2000
STMicroelectronics N.V.
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(Translation of registrant's name into English)
Route de Pre-Bois, ICC Bloc A, 1215 Geneva 15, Switzerland
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(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F]
Form 20-F X Form 40-F
--- ---
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934]
Yes No X
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[If "Yes" is marked, indicate below the file number assigned to the
Registrant in connection with Rule 12g3-2(b): 82-______]
Enclosure:
STMicroelectronics Management's Discussion and Analysis for the first
quarter of 2000.
<PAGE>
STMicroelectronics N.V.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in millions of dollars, except per share data ($))
Three Months Ended
------------------
April 1, 2000(1) April 3, 1999
---------------- -------------
Net sales ................................. $ 1,693.7 $ 1,103.6
Other revenues ............................ 8.5 9.7
------------ ------------
Net revenues ..................... 1,702.2 1,113.3
Cost of sales(2) .......................... (985.1) (685.4)
------------ ------------
Gross profit(2) .................. 717.1 427.9
Selling, general and administrative ....... (159.5) (119.1)
Research and development(3) ............... (235.1) (193.5)
Other income and expenses(3) .............. (30.5) 16.1
------------ ------------
Total operating expenses .................. (425.1) (296.5)
Operating income ................. 292.0 131.4
Net interest income (expense) ............. 16.4 3.7
------------ ------------
Income before income taxes and
minority interests ............... 308.4 135.1
Income tax expense ........................ (69.4) (29.9)
------------ ------------
Income before minority interests . 239.0 105.2
Minority interests(4) ..................... (0.6) (0.1)
------------ ------------
Net income ....................... $ 238.4 $ 105.1
============ ============
Earnings per share (basic)(5) .... $ 0.81 $ 0.37
============ ============
Earnings per share (diluted)(5) .. $ 0.78 $ 0.36
============ ============
----------------------
(1) Results of operations for interim periods are not necessarily
indicative of results to be expected for the full year.
(2) Cost of sales is net of certain funds received through government
agencies for industrialization costs (which include certain costs
incurred to bring prototype products to the production stage) included
therein.
(3) Other income and expenses include, among other things, funds received
through government agencies for research and development expenses, and
the cost of new plant start-ups, as well as foreign currency gains and
losses, the costs of certain activities relating to intellectual
property and goodwill amortization. The Company's reported research and
development expenses do not include design center, process engineering,
pre-production or industrialization costs.
(4) In 1994, the Company created a joint venture with a subsidiary of the
Shenzhen Electronics Group ("SEG"). The Company owns a 60% interest in
the joint venture, with a subsidiary of SEG owning the remaining 40%.
Minority interests also include other minor investments made by the
Company.
(5) All share information has been adjusted to reflect the 2-for-1 stock
split effected in June 1999. See Note 4 to the Interim Consolidated
Financial Statements.
<PAGE>
STMicroelectronics N.V.
CONSOLIDATED BALANCE SHEETS
(in millions of dollars)
<TABLE>
<CAPTION>
As at April 1, 2000 As at December 31, 1999
------------------- -----------------------
(unaudited) (audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................... $ 1,185.6 $ 1,823.1
Marketable securities ................................... 526.0 --
Trade accounts and notes receivable ..................... 1,099.5 913.3
Inventories ............................................. 594.5 619.4
Other receivables and current assets .................... 506.7 435.8
---------- ----------
Total current assets ........................ 3,912.3 3,791.6
Intangible assets, net .................................. 178.8 179.9
Property, plant and equipment, net ...................... 4,223.3 3,873.0
Investments and other non-current assets ................ 80.1 85.8
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4,482.2 4,138.7
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Total assets ................................ $ 8,394.5 $ 7,930.3
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdrafts ......................................... $ 157.3 $ 26.5
Current portion of long-term debt ....................... 90.5 96.7
Trade accounts and notes payable ........................ 1,086.3 998.9
Other payables and accrued liabilities .................. 422.7 381.8
Accrued and deferred income tax ......................... 272.8 189.3
---------- ----------
Total current liabilities ................... 2,029.6 1,693.2
Long-term debt .......................................... 1,101.1 1,348.5
Reserves for pension and termination indemnities ........ 106.4 108.3
Other non-current liabilities ........................... 168.8 191.7
---------- ----------
1,376.3 1,648.5
Total liabilities ........................... 3,405.9 3,341.7
Minority interests ...................................... 25.4 24.7
Capital stock ........................................... 1,130.3 1,112.7
Capital surplus ......................................... 1,628.6 1,395.3
Accumulated result ...................................... 2,790.2 2,551.8
Accumulated other comprehensive income .................. (585.9) (495.9)
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Shareholders' equity ........................ 4,963.2 4,563.9
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Total liabilities and shareholders' equity .. $ 8,394.5 $ 7,930.3
========== ==========
</TABLE>
<PAGE>
STMicroelectronics N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions of dollars)
<TABLE>
<CAPTION>
Three Months Ended
------------------
April 1, 2000 April 3, 1999
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<S> <C> <C>
Cash flows from operating activities:
Net income ............................................. $ 238.4 $ 105.1
Add (deduct) non-cash items:
Depreciation and amortization .................... 234.3 199.6
Other non-cash items ............................. 18.4 (7.0)
Minority interest in net income of subsidiaries... 0.6 0.1
Deferred taxes ................................... (10.1) 10.6
Change in assets and liabilities:
Trade receivables ................................ (202.9) (9.3)
Inventories ...................................... 6.1 (1.4)
Trade payables ................................... 54.5 27.4
Other assets and liabilites, net ................. 69.5 10.8
---------- ----------
Net cash from operating activities ..................... 408.8 335.9
Cash flows from investing activities:
Payments for purchases of tangible assets .............. (622.1) (189.9)
Other investing activities ............................. (36.8) (103.0)
Investment in marketable securities .................... (526.0) --
---------- ----------
Net cash used in investing activities .................. (1,184.9) (292.9)
Cash flows from financing activities:
Proceeds from issuance of long-term debt ............... 80.1 13.5
Repayment of long-term debt ............................ (81.6) (1.0)
Increase (decrease) in short term facilities ........... 142.7 43.6
Capital increase ....................................... 5.3 4.1
---------- ----------
Net cash from (used in) financing activities ........... 146.5 60.2
Effect of changes in exchange rates .................... (7.8) (8.3)
---------- ----------
Net cash increase (decrease) ........................... (637.5) 94.9
Cash and cash equivalents at beginning of period ....... $ 1,823.1 $ 1,100.7
---------- ----------
Cash and cash equivalents at end of period ............. $ 1,185.6 $ 1,195.6
========== ==========
</TABLE>
<PAGE>
STMicroelectronics N.V.
Notes to Interim Consolidated Financial Statements
1) The accompanying interim consolidated financial statements of
STMicroelectronics N.V. (the "Company") have been prepared in
conformity with accounting principles generally accepted in the United
States of America, consistent in all material respects with those
applied in the Annual Report on Form 20-F for the year ended December
31, 1999. Such interim financial information is unaudited, but reflects
those adjustments which are, in the opinion of management, necessary to
provide a fair statement of results for the interim periods presented.
The results of operations for the interim period are not necessarily
indicative of the results to be expected for the entire year.
2) On September 22, 1999, the Company completed an equity offering of
2,990,000 shares of capital stock at $74.625 per share (the "Share
Offering"). The net proceeds to the Company in connection with the
Share Offering were $216.8 million. On September 22, 1999, the Company
also completed a debt offering of $720.9 million aggregate initial
principal amount of zero-coupon convertible Liquid Yield OptionTM Notes
due 2009 (the "LYONs"), with yield to maturity of 2.4375% per annum
(the "LYONs Offering"). The net proceeds to the Company in connection
with the LYONs Offering were $708.3 million.
3) Basic Earnings Per Share is calculated based on net earnings available
to common shareholders and the weighted average number of shares
outstanding during the reported period. Diluted Earnings Per Share
includes additional dilution from potential stock, such as stock
issuable pursuant to the exercise of stock options outstanding and the
conversion of debt. The table below illustrates basic and diluted
Earnings Per Share for the periods presented.
<PAGE>
4) In millions except Earnings per Share:
Three months ended
------------------
April 1, 2000 April 3, 1999
------------- -------------
Basic Earnings Per Share:
Net income....................................... $ 238.4 $ 105.1
Weighted average share outstanding............... 292.7 285.0
Earnings Per Share (basic)....................... $ 0.81 $ 0.37
Diluted Earnings Per Share:
Net income....................................... $ 238.4 $ 105.1
Interest, net of tax, on convertible debt........ 5.8 2.1
Net income, adjusted............................. $ 244.2 $ 107.1
Weighted average shares outstanding.............. 292.7 285.0
Dilutive potential of stock options.............. 4.9 1.8
Dilutive potential of convertible debt........... 13.5 9.2
Weighted average shares outstanding, adjusted 311.1 296.0
Earnings Per Share (diluted)..................... $ 0.78 $ 0.36
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Business Outlook
Business conditions during the first quarter of 2000 continued to
experience a strong recovery which began in 1999 after the difficult environment
experienced by the semiconductor industry in 1997 and 1998. Based on preliminary
trade association data for the first quarter of 2000, the total available market
(the "TAM") and the serviceable available market (which consists of the TAM
without DRAMs and opto-electronic products) (the "SAM") increased by 33.8% and
33.2%, respectively, compared to the first quarter of 1999. The Company's net
revenues for the first quarter of 2000 were $1,702.2 million, a 52.9% increase
over the first quarter of 1999. First quarter 2000 year-over-year growth in net
revenues reflected higher sales in all major product groups.
Despite the seasonal factors that usually affect first quarter sales,
the Company's net revenues for the first quarter of 2000 increased 15.2%
sequentially compared to the fourth quarter of 1999. Significant sequential net
revenue growth was achieved in all key applications. The consumer sector
experienced one of its stongest quarters, posting a 22.1% sequential revenue
gain. Telecom, computer and automotive applications recorded sequential revenue
gains of 14.6%, 14.0% and 12.7%, respectively. Industrial and others, which
includes smartcards, increased 8.9% over the fourth quarter of 1999 levels.
The accelerating market recovery combined with the structural strength
of the Company's product portfolio resulted in unprecedented demand during the
period. The first quarter 2000 net revenues was achieved through increased
internal capacity, which began production at the end of the quarter, the
efficient deployment of the Company's manufacturing resources and the addition
of external foundry sources.
Based on preliminary trade association data for the first quarter of
2000, the Company gained market share against the TAM and the SAM compared with
the first quarter of 1999 and with the fourth quarter of 1999.
The Company, however, believes increased competition in its core
product markets is generating greater pricing pressure, increased competition
for market share in the SAM, and resulting in a challenging market environment
for the Company. There can be no assurance that the Company will experience
revenue growth at or above the growth rate for the TAM or the SAM, or that
increased competition in the Company's core product markets will not lead to
further price erosion, lower revenue growth rates and lower margins for the
Company.
The Company has seen strong order rates and extended lead times in
almost every product category and application served. The Company ended the
first quarter of 2000 with record backlog and the highest level of incoming
order rates ever attained. While increasing capacity, over the short term, the
Company will continue to maintain the maximum utilization of its manufacturing
infrastructure in an effort to respond to customer demand.
<PAGE>
Past investments in research and development and strategic partnerships
have enabled the Company to emerge from the recent industry downturn with a
technologically advanced product portfolio that redefines its competitive
position in key high-growth applications. This structural change is expected to
result in the expansion in the Company's gross margin. By benefitting from
improved product mix and price increases and from maximized utilization of its
worldwide manufacturing facilities, the Company posted a first quarter gross
margin in excess of 42%.
The start-up of the new 8-inch modules in Rousset (France) and Agrate
(Italy) will significantly improve the production capacity of the Company, and
they are expected to reach volume production at the end of the second quarter of
2000.
Some of the above statements contained in this "Business Outlook" and
in the rest of this document are forward looking statements that involve a
number of risks and uncertainties. In addition to factors discussed herein,
among the other factors that could cause actual results to differ materially are
the following: general business and economic conditions; the cyclicality of the
semiconductor and electronic systems industries; capital requirements and the
availability of funding; competition; excess or obsolete inventory and
variations in inventory valuation; new product development and technological
change, including acceptance of new products by particular market segments;
manufacturing risks; changes in customer order patterns, including loss of key
customers, order cancellations or reduced bookings; intellectual property
developments, international events and currency fluctuations; problems in
obtaining adequate raw materials on a timely basis; and the loss of key
personnel. Unfavorable changes in the above or other factors listed under "Risk
Factors" from time to time in the Company's SEC filings, including in the
Prospectuses dated September 16, 1999, could materially affect the Company.
The table below sets forth information on the Company's net revenues by
product group and by geographic region:
Three Months Ended
------------------
April 1, 2000 April 3, 1999
------------- -------------
Net Revenues by Product Group(1): (in millions)
Telecommunications, Peripherals & Automotive...... $ 765.9 $ 530.5
Discrete and Standard ICs......................... 273.1 185.4
Memory Products................................... 309.4 175.2
Consumer & Microcontrollers....................... 330.2 196.9
New Ventures Group and Others(2).................. 23.6 25.3
--------- ---------
Total.................................... $ 1,702.2 $ 1,113.3
Net Revenues by Geographic Region:(3)
Europe............................................ $ 619.7 $ 423.5
North America..................................... 403.7 243.7
Asia Pacific...................................... 544.6 367.1
Japan............................................. 80.9 50.2
Region Five(3).................................... 53.3 28.8
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Total.................................... $ 1,702.2 $ 1,113.3
----------------------
(1) In January 1999, the Company implemented organizational changes to
better orient its product groups to end-use applications. As a result
net revenues have been restated for prior periods to reflect these
changes. In addition, the former Dedicated Products Group has become
the Telecommunications, Peripherals and Automotive Groups, while the
former Programmable Products Group has become the Consumer and
Microcontrollers Groups.
(2) Includes revenues from sales of subsystems and other products and from
the New Ventures Group, which was created in May 1994 to act as a
center for the Company's new business opportunities.
(3) Revenues are classified by location of customer invoiced. For example,
products ordered by U.S.-based companies to be invoiced to Asia Pacific
affiliates are classified as Asia Pacific revenues. Net revenues by
geographic region have been reclassified to reflect the creation of
Region Five in January 1998 which includes emerging markets such as
South America, Africa, Eastern Europe, the Middle East and India.
<PAGE>
The following table sets forth certain financial data from the
Company's consolidated statements of income, expressed in each case as a
percentage of net revenues:
Three Months Ended
------------------
April 1, 2000 April 3, 1999
------------- -------------
Net sales 99.5% 99.1%
Other revenues 0.5 0.9
------ ------
Net revenues 100.0 100.0
Cost of sales (57.9) (61.6)
------ ------
Gross profit 42.1 38.4
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Operating expenses:
Selling, general and administrative (9.4) (10.7)
Research and development (13.8) (17.4)
Other income and expenses (1.7) 1.5
------ ------
Total operating expenses (24.9) (26.6)
------ ------
Operating income 17.2 11.8
Net interest income (expense) 0.9 0.3
------ ------
Income before income taxes and minority interests 18.1 12.1
Income tax expense (4.1) (2.7)
------ ------
Income before minority interests 14.0 9.4
Minority interests -- --
------ ------
Net income 14.0% 9.4%
====== ======
First Quarter 2000 vs First Quarter 1999
During the first quarter of 2000, the semiconductor industry continued
the recovery already registered during 1999. Based on preliminary trade
association data for the first quarter of 2000, the TAM and the SAM increased by
33.8% and 33.2% respectively, compared to the first quarter of 1999. The Company
increased net revenues, operating income and net income by 52.9%, 122.2% and
126.8% respectively.
Net revenues. Net sales increased 53.5%, from $1,103.6 million in the
first quarter of 1999 to $1,693.7 million in the first quarter of 2000. In
comparison with first quarter 1999, the first quarter 2000 sales increase was
mainly due to higher volume and improved product mix. Other revenues consisting
primarily of co-development contract fees, certain contract indemnity payments
and patent royalty income decreased from $9.7 million in the first quarter of
1999 to $8.5 million in the first quarter of 2000. Net revenues increased 52.9%,
from $1,113.3 million in the first quarter of 1999 to $1,702.2 million in the
first quarter of 2000.
The Telecommunications, Peripherals & Automotive Groups' net revenues
increased 44.4% compared with the first quarter of 1999 primarily as a result of
higher sales of wireless telecommunications, wireline, automotive and computer
products such as printer products. The Discrete and Standard ICs Group's net
revenues increased 47.3% due to volume increases in transistors and discrete and
standard commodities products. This volume increase was partially offset by some
price declines which continued in all major product families. Net revenues of
the Memory Products Group
<PAGE>
increased 76.6% as a result of strong volume increase mainly in flash memories,
EPROM and EEPROM. The Consumer & Microcontrollers Groups' net revenues rose by
67.7% due to the strong volume growth in sales of digital consumer applications.
Gross profit. The Company's gross profit increased 67.6%, from $427.9
million in the first quarter of 1999 to $717.1 million in the first quarter of
2000. As a percentage of net revenues, gross profit increased to 42.1% in the
first quarter of 2000 compared to 38.4% in the first quarter of 1999. This
improvement was mainly due to improved product mix and the Company's ability to
maximize the utilization of its worldwide manufacturing facilities.
Cost of sales increased from $685.4 million in the first quarter of
1999 to $985.1 million in the first quarter of 2000, principally due to an
increase in production volume, the increased depreciation associated with new
capital investments and the increase in purchases of wafers from external
foundries.
The impact of changes in exchange rates on gross profit in the first
quarter of 2000 compared to the first quarter of 1999 was estimated to be
favorable since the appreciation of the U.S. dollar versus the European
currencies generated a positive impact on the cost of sales. See "Impact of
Changes in Exchange Rates." Cost of sales in the first quarter of 1999 and the
first quarter of 2000 was net of $0.9 million and $1.6 million, respectively, of
funds received through government subsidies to offset industrialization costs
(which include certain costs incurred to bring prototype products to the
production stage) included in cost of sales.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 33.9 %, from $119.1 million in the first
quarter of 1999 to $159.5 million in the first quarter of 2000 due primarily to
increased efforts in the marketing area. As a percentage of net revenues,
selling, general and administrative expenses decreased from 10.7% in the first
quarter of 1999 to 9.4 % in the first quarter of 2000.
Research and development expenses. Research and development expenses
increased 21.5%, from $193.5 million in the first quarter of 1999 to $235.1
million in the first quarter of 2000. The Company continued to invest heavily in
research and development and plans to continue increasing its research and
development staff so as to increase research and development activities. The
Company's reported research and development expenses do not include design
center, process engineering, pre-production or industrialization costs. As a
percentage of net revenues, research and development expenses decreased from
17.4% in the first quarter of 1999 to 13.8% in the first quarter of 2000.
Other income and expenses. Other income and expenses represents the net
effect of certain income items and expenses. It includes primarily funds
received from government agencies in connection with the Company's research and
development programs, the cost of new plant start-ups, as well as foreign
currency gains and losses, the costs of certain activities relating to
intellectual property, including goodwill amortization related to recent
acquisitions, and miscellaneous revenues and expenses. In the first quarter of
2000, the net effect of these items resulted in expenses of $30.5 million
compared to income of $16.1 million in the first quarter of 1999. This decrease
resulted primarily from an increase in the cost of new plant start-ups; in
addition, higher patent expenses, lower funds received from government agencies
in connection with the Company's research and development programs and higher
goodwill amortization contributed to the expense increase.
Operating income. The Company's operating income increased 122.2%, from
$131.4 million in the first quarter of 1999 to $292.0 million in the first
quarter of 2000, primarily as a result of the increase in net revenues which was
offset, in part, by higher research and development expenses, selling, general
and administrative expenses and higher other expenses. The exchange rate impact
on operating income was estimated to be favorable, since the
<PAGE>
appreciation of the U.S. dollar generated a favorable impact on cost of sales
and operating expenses.
Net interest income (expense). Net interest income increased from $3.7
million in the first quarter of 1999 to $16.4 million in the first quarter of
2000 as a result of the favorable cash position following the Share Offering and
the LYONs Offering completed on September 22, 1999.
Income tax expense. Provision for income tax increased from $29.9
million in the first quarter of 1999 to $69.4 million in the first quarter of
2000, as a result of the increase in income before income taxes and minority
interests. The effective tax rate marginally increased from 22.1% in the first
quarter of 1999 to 22.5% in the first quarter of 2000. The still favorable 2000
rate was mainly due to the application of benefits in certain countries. As such
benefits may not be available after 2000, the effective tax rate could increase
in the coming years.
Net income. Net income for the period reached $238.4 million, 126.8%
above last year's fourth quarter levels of $105.1 million. Diluted earnings per
share for the first quarter of 2000 was $0.78, a 116.7% increase compared to
$0.36 for the corresponding 1999 period and a 25.8% increase compared to $0.62
for the prior quarter. All per share figures have been adjusted to reflect the
2-for-1 split stock effected in June 1999.
Impact of Changes in Exchange Rates
The appreciation registered by the U.S. dollar in the first quarter of
1999 against the principal European and Asian currencies (excluding the Japanese
yen, which appreciated compared to the U.S. dollar) that have a material impact
on the Company resulted in an estimated favorable impact on results of
operations for the first quarter of 2000, because of the favorable impact on
cost of sales and operating expenses.
Liquidity and Capital Resources
On September 22, 1999, the Company completed an equity offering of
2,990,000 shares of capital stock at $74.625 per share (the "Share Offering").
The net proceeds to the Company in connection with the Share Offering were
$216.8 million. On September 22, 1999, the Company also completed a debt
offering of $720.9 million aggregate initial principal amount of zero-coupon
convertible Liquid Yield OptionTM Notes due 2009 (the "LYONs"), with yield to
maturity of 2.4375% per annum (the "LYONs Offering"). The net proceeds to the
Company in connection with the LYONs Offering was $708.3 million. As a result of
the Share Offering and the LYONs Offering, the Company's net cash generated from
operations totalled $1,469.3 million in 1999 compared to $1,012.5 million in
1998 and $983.8 million in 1997. The Company had a positive net financial
position (cash, cash equivalents and marketable securities net of total debt) at
April 1, 2000 of $362.7 million compared to a positive net financial position of
$351.4 million at December 31, 1999. Cash and cash equivalents was $1,185.6
million at April 1, 2000 compared to $1,823.1 million at December 31, 1999.
The Company's net cash generated from operations totaled $408.8 million
in the first quarter of 2000, compared to $335.9 million in the first quarter of
1999. Capital expenditure payments totaled $622.1 million in the first quarter
of 2000 compared to $189.9 million in the same period of the previous year. Net
operating cash flows (cash flows from operating activities less cash flows from
investing activities) in the first quarter of 2000 was negative, in comparison
with the positive amount of the first quarter of 1999. The negative variation
was primarily a result of the significant increase in capital investments. Net
cash used in investing activities increased from $292.9 million in the first
quarter of 1999 to $1,184.9 million in the first quarter of 2000 primarily due
to an increase in payment for tangible
<PAGE>
assets and in investment in marketable securities. Net cash from financing
activities increased as a result of an increase of the proceeds from issuance of
long-term debt and an increase in short-term facilities partially offset by
repayment of long-term debt.
At April 1, 2000, the aggregate amount of the Company's long-term
credit facilities was approximately $1,191.6 million, and the aggregate amount
of the Company's short-term facilities was approximately $907.6 million, of
which approximately $157.3 million of indebtedness was outstanding. At April 1,
2000, the Company had approximately $90.5 million of long-term indebtedness that
will become due within one year and expects to fund such debt repayments from
available cash.
The Company expects to have significant capital requirements in the
coming years, and is expecting capital expenditure for 2000 to exceed $3
billion, largely surpassing 1999 levels. This record level of investment in
capacity is designed to enable the Company to take full advantage of growth
opportunities during the actual market recovery. In addition, the Company
intends to continue to devote a substantial portion of its net revenues to
research and development. The Company plans to fund its capital requirements
from cash from operations, available funds, available support from third parties
(including state support), borrowings under available credit lines and, to the
extent necessary or attractive based on market conditions prevailing at the
time, the sale of debt or additional equity securities. There can be no
assurance that additional financing will be available as necessary to fund the
Company's working capital requirements, research and development,
industrialization costs or expansion plans, or that any such financing, if
available, will be on terms acceptable to the Company.
Euro Conversion
On January 1, 1999, eleven of the fifteen member countries of the
European Union established fixed conversion rates between their existing
national currencies and the euro. The participating countries agreed to adopt
the euro as their common legal currency on that date. Until January 1, 2002,
either the euro or a participating country's present currency (a "national
currency") will be accepted as legal currency. On January 1, 2002,
euro-denominated bills and coins will be issued and national currencies will be
withdrawn from circulation during the subsequent six months. The Company does
not expect that the introduction and use of the euro will materially affect its
foreign exchange activities, or its use of derivatives and other financial
instruments, or will result in any material increase in costs to the Company.
The Company will continue to assess the impact of the introduction of the euro
currency over the transition period as well as the period subsequent to the
transition, as applicable.
<PAGE>
SIGNATURE
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.
Date: July 19, 2000 STMicroelectronics N.V.
By: /s/ Pasquale Pistorio
----------------------------------
Name: Pasquale Pistorio
Title: President and Chief
Executive Officer
