SGS-THOMSON Microelectronics Reports 7.1% Increase In Third Quarter Revenues
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ST. GENIS-POUILLY, FRANCE, October 17, 1996
SGS-THOMSON Microelectronics today announced financial results for the third quarter and nine months ended September 28, 1996.
Net revenues for the three months ended September 28, 1996 totalled $988.4 million, a 7.1% increase over 1995 third quarter net revenues of $922.6 million.
Net earnings for the period were $132.4 million, compared to $129.0 million for the 1995 third quarter. On a per share basis, net earnings in the 1996 third quarter were $0.95 based upon 138.8 million weighted average shares outstanding, compared to $1.00 based upon 129.1 million weighted average shares outstanding in the 1995 third quarter. Included in net revenues for the recent quarter was $16.7 million in license fees which contributed $13.4 million to net earnings and $0.10 to per share earnings in the quarter.
The gross profit margin was 40.4% in the third quarter of 1996, compared to 40.1% in the 1995 third quarter. Gross margin, net of licensing revenues, was 39.4% in the 1996 third quarter.
Operating profit was $167.4 million or 16.9% of revenues in the third quarter. Research and development expenses increased 23% to $134.5 million, or 13.6% of net revenues, up from $109.3 million, or 11.8% of net revenues in the 1995 third quarter; SG&A expenses were $104.0 million, virtually flat with last year's level and represented 10.5% of net revenues.
Mr. Pasquale Pistorio, President and Chief Executive Officer of SGS-THOMSON, commented, "We believe our results for the quarter set us apart from the industry average during this difficult market environment. As expected, net revenues were lower on a sequential quarterly basis, however differentiated products continued to grow as a percentage of revenues, reaching almost 60% in the third quarter. Therefore, while we are experiencing pricing pressures of varying degrees throughout our product portfolio, we have been able, so far, to maintain reasonable gross margins. In fact, the Company remains overall capacity-constrained in its leading-edge submicron products."
For the nine months ended September 28, 1996 net revenues rose 19% to $3.1 billion, up from $2.6 billion in the respective 1995 period. Net earnings increased 35% to $483.5 million in the 1996 nine-month period, compared to $358.5 million for the nine months ended September 30, 1995. Earnings per share increased 26% to $3.49 in the 1996 nine-month period on a higher level of weighted average shares outstanding.
At September 28, 1996, cash, cash equivalents and marketable securities totalled $469.6 million; shareholders' equity was $3.1 billion. Total debt was $595.6 million, of which long-term debt equaled $172.1 million, representing 5.5% of total equity.
In the third quarter SGS-THOMSON reached several important technological and marketing milestones. During the period, the Company successfully processed its first test vehicles using advanced 0.25 Micron CMOS technology and expects to have full process qualification by mid-1997.
Design wins for the period included several key products such as 16 bit ST10 and 32 bit ST20 high-end microcontrollers, and semi-custom and dedicated products serving high growth applications such as set-top boxes, DVD, automotive air bags and hard disk drives.
Recently, Dataquest ranked SGS-THOMSON No. 1 in MPEG decoder ICs with a worldwide market share of 44% in 1995 and No. 1 in MPEG-2 decoders, with a 71.4% 1995 worldwide market share. MPEG-2 decoders are used in Digital Video Disks (DVD) and digital set-top boxes.
SGS-THOMSON Microelectronics is a global independent semiconductor company listed on the New York Stock Exchange and on the Bourse de Paris. It designs, develops, manufactures and markets a broad range of semiconductor integrated circuits (ICs) and discrete devices used in a wide variety of microelectronic applications, including telecommunication systems, computer systems, consumer products, automotive products and industrial automation and control systems.