UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 6‑K
 
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a‑16 OR 15d‑16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
 
Report on Form 6‑K dated July 25, 2018
 
Commission File Number:  1‑13546
 

 
STMicroelectronics N.V.
(Name of Registrant)
 
WTC Schiphol Airport
Schiphol Boulevard 265
1118 BH Schiphol Airport
The Netherlands
 
 
(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 Q          Form 40‑F £
 
Indicate by check mark if the registrant is submitting the Form 6‑K in paper as permitted by Regulation S‑T Rule 101(b)(1):
 
Yes £          No Q
 
Indicate by check mark if the registrant is submitting the Form 6‑K in paper as permitted by Regulation S‑T Rule 101(b)(7):
 
Yes £          No Q
 
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 Q
 
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3‑2(b):  82‑ __________
 
Enclosure:  A press release dated July 25, 2018, announcing STMicroelectronics’ Second Quarter 2018 Financial Results and First Half Financial Results.
 

 
 
 
 
 
 
PR No: C2855C

STMicroelectronics Reports Q2 2018 Financial Results

Q2 net revenues $2.27 billion (up 18.0% Y/Y), operating margin 12.7%, net income $261 million
Q2 Y/Y revenue performance balanced across product groups, regions and end markets
Q3 business outlook at mid-point: net revenues up about 10.0% Q/Q, gross margin about 40.0%
 
Geneva, July 25, 2018 - STMicroelectronics (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the second quarter ended June 30, 2018. In addition, this press release contains non-U.S. GAAP measures (see Appendix for additional information).

Second quarter net revenues and gross margin were above the mid-point of the Company’s outlook.  ST reported second quarter net revenues of $2.27 billion, gross margin of 40.2%, operating margin of 12.7%, and net income of $261 million or $0.29 diluted earnings per share.

Jean-Marc Chery, STMicroelectronics President & CEO, made the following comments:

“ST had another quarter of double-digit, year-over-year revenue growth, with improved performance across key financial metrics. We are on track with the goal set at our Capital Markets Day to grow year-over-year 2018 revenues between about 14% to 17%.
“Revenue increased 18% year-over-year on balanced growth across all product groups, regions and end markets, with an especially strong performance in Industrial.
“Operating income and net income were up sharply year-over-year, increasing respectively about 60% and 73%.
“ST’s third quarter outlook is for revenues to grow sequentially about 10.0%, reflecting year-over-year growth of 16.8%, and gross margin to be about 40.0%. This is driven by continued healthy demand in our end markets and, as anticipated, by growth in smartphone applications.”

Financial Summary (U.S. GAAP)(1)

($ in millions except earnings per share)
Q2 2018
Q1 2018
Q2 2017
Y/Y
Q/Q
Net Revenues
$2,269
$2,226
$1,923
18.0%
1.9%
Gross Margin
40.2%
39.9%
38.3%
190 bps
30 bps
Operating Income
$289
$269
$181
59.7%
7.4%
Operating Margin
12.7%
12.1%
9.4%
330 bps
60 bps
Net Income
$261
$239
$151
72.8%
9.2%
Diluted Earnings Per Share
$0.29
$0.26
$0.17
70.6%
11.5%

(1)
Certain amounts in the prior periods have been adjusted to reflect the January 1, 2018 adoption of ASU 2017-07 related to the reclassification of certain pension costs.


Second Quarter 2018 Summary Review

Effective January 1, 2018, the Subsystems business unit was transferred from Others to Analog, MEMS and Sensors Group (AMS). Prior periods have been restated accordingly.

Net Revenues By Product Group
(in US$ millions)
Q2 2018
Q1 2018
Q2 2017
Y/Y
Q/Q
Automotive and Discrete Group (ADG)
$870
$817
$755
15.2%
6.5%
Analog, MEMS and Sensors Group (AMS)
613
655
553
10.7
(6.4)
Microcontrollers and Digital ICs Group (MDG)
782
750
612
27.8
4.3
Others
4
4
3
24.1
5.9
Total Net Revenues
$2,269
$2,226
$1,923
18.0%
1.9%


Net revenues increased 1.9% sequentially, 40 basis points better than the mid-point of the Company’s guidance. On a year-over-year basis, second quarter net revenues increased 18.0% with all product groups delivering double-digit revenue growth. Year-over-year sales to OEMs and Distribution were up 9.8% and 33.4%, respectively.

Gross profit totaled $911 million, representing a year-over-year increase of 23.6%. Gross margin was 40.2%, 20 basis points better than the mid-point of the Company’s guidance, and increasing 190 basis points year-over-year, largely driven by improved manufacturing efficiency and reflecting a favorable mix shift toward higher value products.

Operating income was $289 million, compared to $181 million in the year-ago quarter, with all product groups growing double-digit and delivering improved profitability. The Company’s operating margin increased 330 basis points to 12.7% of net revenues, compared to 9.4% in the 2017 second quarter.

By product group, compared with the year-ago quarter:

Automotive and Discrete Group (ADG):
Revenue grew double-digits, in both Automotive and Power Discrete.
Operating profit increased by 28.8% to $84 million, mainly due to higher revenue and associated gross profit. Operating margin increased to 9.7% from 8.7%.

Analog, MEMS and Sensors Group (AMS):

Revenue grew double-digits, in both Imaging and in Analog.
Operating profit increased by 24.1% to $64 million, mainly due to higher revenue and associated gross profit. Operating margin increased to 10.5% from 9.4%.

Microcontrollers and Digital ICs Group (MDG):
Revenue grew double-digits, in both Microcontrollers and Digital ICs.
Operating profit increased by 121.6% to $159 million mainly due to higher revenue and associated gross profit. Operating margin increased to 20.3% from 11.7%.

Net income and diluted earnings per share increased to $261 million and $0.29, respectively, compared to $151 million and $0.17, respectively, in the year-ago quarter.

2

Cash Flow and Balance Sheet Highlights

       
Trailing 12 Months
US$ in millions
Q2 2018
Q1 2018
Q2 2017
Q2 2018
Q2 2017
TTM Change
Net cash from operating activities
$360
$455
$369
$1,865
$1,368
36.3%
Free cash flow (non-U.S. GAAP)
$(40)
$95
$52
$280
$351
(20.2)%

Capital expenditure payments, net of proceeds from sales, in the second quarter were $390 million, in line with the Company’s CAPEX guidance of $1.2-$1.3 billion for the 2018 full year. In the year-ago quarter, capital expenditures were $307 million.

Inventory at the end of the quarter was $1.56 billion, up from $1.43 billion in the prior quarter, to support demand expected in the third quarter. Day sales of inventory at quarter-end was 103 days, up from 97 days in the prior quarter.

As a result, free cash flow (non-U.S. GAAP) was negative $40 million and positive $56 million in the year-to-date period.

In the second quarter of 2018, the Company paid cash dividends totaling $54 million. A cash dividend of $0.24 per common share payable in equal quarterly installments of $0.06 in each of the second, third and fourth quarters of 2018 and first quarter of 2019 was approved on May 31st at the 2018 Annual General Meeting of Shareholders.

ST’s net financial position (non-U.S. GAAP) was $411 million at June 30, 2018 compared to $522 million at March 31, 2018 and reflected total financial resources of $2.13 billion and total financial debt of $1.72 billion.


Business Outlook

The Company expects third quarter 2018 revenues to increase about 10.0% Q/Q (16.8% Y/Y) at the mid-point of the Company’s guidance, driven by continued healthy demand in the Automotive and Industrial end markets and, as anticipated, by growth in smartphone applications.

The Company’s guidance for the 2018 third quarter is:

Net revenue is expected to increase about 10.0% sequentially, plus or minus 350 basis points;
Gross margin of about 40.0%, plus or minus 200 basis points;
This outlook is based on an assumed effective currency exchange rate of approximately $1.19 = €1.00 for the 2018 third quarter and includes the impact of existing hedging contracts.
The third quarter will close on September 29, 2018.


Conference Call and Webcast Information

STMicroelectronics will conduct a conference call with analysts, investors and media to discuss its second quarter 2018 financial results and current business outlook today at 9:30 a.m. Central European Time (CET) / 3:30 a.m. U.S. Eastern Time (ET). A live webcast (listen-only mode) of the conference call will be accessible at ST’s website, http://investors.st.com, and will be available for replay until August 10, 2018.

3


Use of Supplemental Non-U.S. GAAP Financial Information

This press release contains supplemental non-U.S. GAAP financial information.

Readers are cautioned that these measures are unaudited and not prepared in accordance with U.S. GAAP and should not be considered as a substitute for U.S. GAAP financial measures. In addition, such non-U.S. GAAP financial measures may not be comparable to similarly titled information from other companies.

See the Appendix of this press release for a reconciliation of the Company’s non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with the Company’s consolidated financial statements prepared in accordance with U.S. GAAP.


Forward-looking Information

Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management’s current views and assumptions, and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those anticipated by such statements, due to, among other factors:

Uncertain macro-economic and industry trends, which may impact end-market demand for our products;
Customer demand that differs from projections;
The ability to design, manufacture and sell innovative products in a rapidly changing technological environment;
Changes in economic, social, labor, political, or infrastructure conditions in the locations where we, our customers, or our suppliers operate, including as a result of macro-economic or regional events, military conflicts, social unrest, labor actions, or terrorist activities;
The Brexit vote and the perceptions as to the impact of the withdrawal of the U.K. may adversely affect business activity, political stability and economic conditions in the U.K., the Eurozone, the EU and elsewhere. While we do not have material operations in the U.K. and have not experienced any material impact from Brexit on our underlying business to date, we cannot predict its future implications;
Financial difficulties with any of our major distributors or significant curtailment of purchases by key customers;
The loading, product mix, and manufacturing performance of our production facilities;
The functionalities and performance of our IT systems, which support our critical operational activities including manufacturing, finance and sales, and any breaches of our IT systems or those of our customers or suppliers;
Variations in the foreign exchange markets and, more particularly, the U.S. dollar exchange rate as compared to the Euro and the other major currencies we use for our operations;
The impact of intellectual property (“IP”) claims by our competitors or other third parties, and our ability to obtain required licenses on reasonable terms and conditions;
Changes in our overall tax position as a result of changes in tax rules, new or revised legislation, the outcome of tax audits or changes in international tax treaties which may impact our results of operations as well as our ability to accurately estimate tax credits, benefits, deductions and provisions and to realize deferred tax assets;
 
4

The outcome of ongoing litigation as well as the impact of any new litigation to which we may become a defendant;
Product liability or warranty claims, claims based on epidemic or delivery failure, or other claims relating to our products,  or recalls by our customers for products containing our parts;
Natural events such as severe weather, earthquakes, tsunamis, volcano eruptions or other acts of nature, health risks and epidemics in locations where we, our customers or our suppliers operate;
Availability and costs of raw materials, utilities, third-party manufacturing services and technology, or other supplies required by our operations;
Industry changes resulting from vertical and horizontal consolidation among our suppliers, competitors, and customers;
The ability to successfully ramp up new programs that could be impacted by factors beyond our control, including the availability of critical third party components and performance of subcontractors in line with our expectations; and
Theft, loss, or misuse of personal data about our employees, customers, or other third parties, and breaches of global privacy legislation, including the EU’s General Data Protection Regulation (“GDPR”).

Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of our business to differ materially and adversely from the forward-looking statements. Certain forward-looking statements can be identified by the use of forward looking terminology, such as “believes,” “expects,” “may,” “are expected to,” “should,” “would be,” “seeks” or “anticipates” or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions.

Some of these risk factors are set forth and are discussed in more detail in “Item 3. Key Information — Risk Factors” included in our Annual Report on Form 20-F for the year ended December 31, 2017, as filed with the SEC on March 1, 2018. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this release as anticipated, believed, or expected. We do not intend, and do not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.


About STMicroelectronics

ST is a global semiconductor leader delivering intelligent and energy-efficient products and solutions that power the electronics at the heart of everyday life. ST’s products are found everywhere today, and together with our customers, we are enabling smarter driving and smarter factories, cities and homes, along with the next generation of mobile and Internet of Things devices.
By getting more from technology to get more from life, ST stands for life.augmented.
In 2017, the Company’s net revenues were $8.35 billion, serving more than 100,000 customers worldwide.
Further information can be found at www.st.com.

5


For further information, please contact:

INVESTOR RELATIONS:
Tait Sorensen
Group VP, Investor Relations
STMicroelectronics
Tel: +1 602 485 2064
tait.sorensen@st.com



MEDIA RELATIONS:
Alexis Breton          
Director, PR & Media Operations
STMicroelectronics
Tel: + 33 6 59 16 79 08
alexis.breton@st.com


6


 
 
STMicroelectronics N.V.
           
CONSOLIDATED STATEMENTS OF INCOME
           
(in millions of U.S. dollars, except per share data ($))
           
             
   
Three months ended
 
   
June 30,
   
July 1,
 
   
2018
   
2017
 
   
(Unaudited)
   
(Unaudited)
 
             
Net sales
   
2,250
     
1,911
 
Other revenues
   
19
     
12
 
NET REVENUES
   
2,269
     
1,923
 
Cost of sales
   
(1,358
)
   
(1,186
)
GROSS PROFIT
   
911
     
737
 
Selling, general and administrative
   
(277
)
   
(239
)
Research and development
   
(356
)
   
(326
)
Other income and expenses, net
   
11
     
15
 
Impairment, restructuring charges and other related closure costs
   
-
     
(6
)
Total operating expenses
   
(622
)
   
(556
)
OPERATING INCOME
   
289
     
181
 
Interest expense, net
   
(2
)
   
(4
)
Other components of pension benefit costs
   
(3
)
   
(3
)
Income (loss) on equity-method investments
   
-
     
(2
)
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST
   
284
     
172
 
Income tax expense
   
(21
)
   
(19
)
NET INCOME
   
263
     
153
 
Net income attributable to noncontrolling interest
   
(2
)
   
(2
)
NET INCOME ATTRIBUTABLE TO PARENT COMPANY
   
261
     
151
 
                 
EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS
   
0.29
     
0.17
 
EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS
   
0.29
     
0.17
 
                 
NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EARNINGS PER SHARE
   
915.6
     
911.1
 

7



 
STMicroelectronics N.V.
           
CONSOLIDATED STATEMENTS OF INCOME
           
(in millions of U.S. dollars, except per share data ($))
           
             
   
Six months ended
 
   
June 30,
   
July 1,
 
   
2018
   
2017
 
   
(Unaudited)
   
(Unaudited)
 
             
Net sales
   
4,463
     
3,728
 
Other revenues
   
31
     
16
 
NET REVENUES
   
4,494
     
3,744
 
Cost of sales
   
(2,695
)
   
(2,320
)
GROSS PROFIT
   
1,799
     
1,424
 
Selling, general and administrative
   
(542
)
   
(473
)
Research and development
   
(705
)
   
(659
)
Other income and expenses, net
   
26
     
32
 
Impairment, restructuring charges and other related closure costs
   
(20
)
   
(11
)
Total operating expenses
   
(1,241
)
   
(1,111
)
OPERATING INCOME
   
558
     
313
 
Interest expense, net
   
(5
)
   
(9
)
Other components of pension benefit costs
   
(5
)
   
(6
)
Income (loss) on equity-method investments
   
-
     
(2
)
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST
   
548
     
296
 
Income tax expense
   
(44
)
   
(34
)
NET INCOME
   
504
     
262
 
Net income attributable to noncontrolling interest
   
(4
)
   
(4
)
NET INCOME ATTRIBUTABLE TO PARENT COMPANY
   
500
     
258
 
                 
EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS
   
0.56
     
0.29
 
EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS
   
0.55
     
0.28
 
                 
NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EARNINGS PER SHARE
   
915.1
     
906.5
 

8



 
STMicroelectronics N.V.
                 
CONSOLIDATED BALANCE SHEETS
                 
As at
 
June 30,
   
March 31,
   
December 31,
 
In millions of U.S. dollars
 
2018
   
2018
   
2017
 
   
(Unaudited)
   
(Unaudited)
   
(Audited)
 
ASSETS
                 
Current assets:
                 
Cash and cash equivalents
   
1,683
     
1,791
     
1,759
 
Short-term deposits
   
15
     
14
     
-
 
Marketable securities
   
429
     
429
     
431
 
Trade accounts receivable, net
   
1,106
     
1,042
     
1,149
 
Inventories
   
1,559
     
1,435
     
1,335
 
Other current assets
   
405
     
449
     
425
 
Total current assets
   
5,197
     
5,160
     
5,099
 
Goodwill
   
121
     
125
     
123
 
Other intangible assets, net
   
198
     
205
     
209
 
Property, plant and equipment, net
   
3,410
     
3,371
     
3,094
 
Non-current deferred tax assets
   
674
     
632
     
624
 
Long-term investments
   
58
     
58
     
57
 
Other non-current assets
   
391
     
517
     
475
 
     
4,852
     
4,908
     
4,582
 
Total assets
   
10,049
     
10,068
     
9,681
 
                         
LIABILITIES AND EQUITY
                       
Current liabilities:
                       
Short-term debt
   
118
     
119
     
118
 
Trade accounts payable
   
991
     
979
     
893
 
Other payables and accrued liabilities
   
887
     
940
     
897
 
Dividends payable to stockholders
   
168
     
6
     
60
 
Accrued income tax
   
40
     
41
     
52
 
Total current liabilities
   
2,204
     
2,085
     
2,020
 
Long-term debt
   
1,598
     
1,593
     
1,583
 
Post-employment benefit obligations
   
374
     
393
     
385
 
Long-term deferred tax liabilities
   
11
     
12
     
11
 
Other long-term liabilities
   
208
     
216
     
215
 
     
2,191
     
2,214
     
2,194
 
Total liabilities
   
4,395
     
4,299
     
4,214
 
Commitment and contingencies
                       
Equity
                       
Parent company stockholders’ 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, 911,141,920 shares issued, 901,354,389 shares outstanding)
   
1,157
     
1,157
     
1,157
 
Capital surplus
   
2,766
     
2,743
     
2,718
 
Retained earnings
   
1,215
     
1,212
     
973
 
Accumulated other comprehensive income
   
538
     
724
     
688
 
Treasury stock
   
(89
)
   
(132
)
   
(132
)
Total parent company stockholders’ equity
   
5,587
     
5,704
     
5,404
 
Noncontrolling interest
   
67
     
65
     
63
 
Total equity
   
5,654
     
5,769
     
5,467
 
Total liabilities and equity
   
10,049
     
10,068
     
9,681
 


9


STMicroelectronics N.V.
     
       
SELECTED CASH FLOW DATA
     
       
Cash Flow Data (in US$ millions)
Q2 2018
Q1 2018
Q2 2017
       
Net Cash from operating activities
                    360
                    455
                    369
Net Cash used in investing activities
                   (401)
                  (374)
                   (317)
Net Cash used in financing activities
                     (60)
                     (54)
                     (53)
Net Cash increase (decrease)
                   (108)
                       32
                        13
       
Selected Cash Flow Data (in US$ millions)
Q2 2018
Q1 2018
Q2 2017
       
Depreciation & amortization
                     193
185
152
Net payment for Capital expenditures
                  (390)
                   (351)
                  (307)
Dividends paid to stockholders
                     (54)
                     (54)
                     (48)
Change in inventories, net
                   (157)
                     (84)
                     (26)


10



Appendix
STMicroelectronics
Supplemental Financial Information


 
Q2 2018
Q1 2018
Q4 2017
Q3 2017
Q2 2017
Net Revenues By Market Channel (%)
         
Total OEM
61%
63%
68%
66%
66%
Distribution
39%
37%
32%
34%
34%
           
€/$ Effective Rate
1.19
1.18
1.15
1.13
1.09
           
Product Group Data (a) (US$ Million)
         
Automotive & Discrete Group (ADG)
         
 - Net Revenues
$870
$817
$821
$775
$755
 - Operating Income
$84
$90
$102
$85
$65
Analog, MEMS & Sensors Group (AMS) (b)
         
 - Net Revenues
613
655
902
657
553
 - Operating Income
64
64
187
86
52
Microcontrollers & Digital ICs Group (MDG)
         
 - Net Revenues
782
750
740
701
612
 - Operating Income
159
146
146
126
72
Others (c)
         
 - Net Revenues
4
4
3
3
3
 - Operating Income (Loss)
(18)
(31)
(24)
(16)
(8)
Total
         
 - Net Revenues
$2,269
$2,226
$2,466
$2,136
$1,923
 - Operating Income
$289
$269
$411
$281
$181

(a)
Certain amounts in the prior periods have been adjusted to reflect the January 1, 2018 adoption of ASU 2017-07 related to the reclassification of certain pension costs.
(b)
Effective January 1, 2018, the Subsystems business unit was transferred from Others to Analog, MEMS and Sensors (AMS). Prior periods have been restated accordingly.
(c)
Net revenues of Others includes revenues from sales assembly services and other revenue. Operating income (loss) of Others includes items such as unused capacity charges, impairment, restructuring charges and other related closure costs, management reorganization costs, phase out and start-up costs, and other unallocated expenses such as: strategic or special research and development programs, certain corporate-level operating expenses, patent claims and litigations, and other costs that are not allocated to product groups, as well as operating earnings of other products. Others includes:

(US$ Million)
Q2 2018
Q1 2018
Q4 2017
Q3 2017
Q2 2017
Unused Capacity Charges
-
1
1
1
1
Impairment & Restructuring Charges
-
21
20
14
6


11

 
(Appendix – continued)
STMicroelectronics
Supplemental Non-U.S. GAAP Financial Information
U. S. GAAP – Non-U.S. GAAP Reconciliation

The supplemental non-U.S. GAAP information presented in this press release is unaudited and subject to inherent limitations. Such non-U.S. GAAP information is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for U.S. GAAP measurements. Also, our supplemental non-U.S. GAAP financial information may not be comparable to similarly titled non-U.S. GAAP measures used by other companies. Further, specific limitations for individual non-U.S. GAAP measures, and the reasons for presenting non-U.S. GAAP financial information, are set forth in the paragraphs below. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.

Operating income (loss) before impairment and restructuring charges and one-time items is used by management to help enhance an understanding of ongoing operations and to communicate the impact of the excluded items, such as impairment, restructuring charges and other related closure costs. Adjusted net earnings and earnings per share (EPS) are used by management to help enhance an understanding of ongoing operations and to communicate the impact of the excluded items like impairment, restructuring charges and other related closure costs attributable to ST and other one-time items, net of the relevant tax impact.

The Company believes that these non-U.S. GAAP financial measures provide useful information for investors and management because they measure the Company’s capacity to generate profits from its business operations, excluding the effect of acquisitions and expenses related to the rationalizing of its activities and sites that it does not consider to be part of its on-going operating results, thereby offering, when read in conjunction with the Company’s U.S. GAAP financials, (i) the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results, (ii) the ability to better identify trends in the Company’s business and perform related trend analysis, and (iii) an easier way to compare the Company’s results of operations against investor and analyst financial models and valuations, which usually exclude these items.

(US$ Million, except earnings per share in $)
Q2 2018
Q1 2018
Q4 2017
Q3 2017
Q2 2017
U.S. GAAP Net Earnings
261
239
308
236
151
U.S. GAAP Earnings Per Share
0.29
0.26
0.34
0.26
0.17
Impairment & Restructuring
-
21
20
14
6
Estimated Income Tax Effect
-
(3)
(1)
(1)
(1)
Non-U.S. GAAP Net Earnings
261
257
327
249
156
Non-U.S. GAAP Earnings Per Share
0.29
0.28
0.36
0.28
0.17
 
12

 
(Appendix – continued)
Net financial position (non-U.S. GAAP measure): resources (debt), represents the balance between our total financial resources and our total financial debt. Our total financial resources include cash and cash equivalents, marketable securities, short-term deposits and restricted cash, and our total financial debt includes short-term borrowings, current portion of long-term debt and long-term debt, all as reported in our consolidated balance sheet. We believe our net financial position provides useful information for investors and management because it gives evidence of our global position either in terms of net indebtedness or net cash position by measuring our capital resources based on cash, cash equivalents and marketable securities and the total level of our financial indebtedness.


(US$ Million)
Jun 30
2018
Mar 31 2018
Dec 31 2017
Sep 30 2017
Jul 1 2017
Cash and cash equivalents
1,683
1,791
1,759
2,188
1,654
Short term deposits
15
14
-
-
-
Marketable securities
429
429
431
433
335
Total financial resources
2,127
2,234
2,190
2,621
1,989
Short-term debt
(118)
(119)
(118)
(486)
(117)
Long-term debt
(1,598)
(1,593)
(1,583)
(1,689)
(1,348)
Total financial debt
(1,716)
(1,712)
(1,701)
(2,175)
(1,465)
Net financial position
411
522
489
446
524


Free cash flow (non-U.S. GAAP measure) is defined as net cash from operating activities minus net cash from (used in) investing activities, excluding payment for purchases (proceeds from the sale of) marketable securities, short-term deposits and restricted cash. We believe free cash flow provides useful information for investors and management because it measures our capacity to generate cash from our operating and investing activities to sustain our operating activities. Free cash flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of free cash flow may differ from definitions used by other companies.


(US$ Million)
Q2 2018
Q1 2018
Q4 2017
Q3 2017
Q2 2017
Net cash from operating activities
360
455
587
463
369
Net cash used in investing activities
(401)
(374)
(442)
(482)
(317)
Payment for purchase and proceeds from sale of marketable securities, investment in short-term deposits, restricted cash
1
14
-
99
-
Free cash flow
(40)
95
145
80
52

 
13

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
STMicroelectronics N.V.
 
 
 
 
Date:
   July 25, 2018
By:
          /s/ Lorenzo Grandi
 
 
 
 
 
 
Name:
Lorenzo Grandi
 
 
Title:
Chief Financial Officer
President, Finance, Infrastructure and Services