STM

Se

Microel

emi-Annu

 

ectron

ual Repo

nics N.

ort 2010

.V.

 

 

Semi--Annual Re

 

CONTENT

I. DIRECT

A. BUSI

B. SEGM

C. LIQUI

D. BUSI

E. OTHE

F. RELA

G. BUSI

II. INTERI

A. CONS

B. CONS

C. CONS

D. CONS

E. CONS

F. NOTE

III. SOLE M

IV. ABOUT

 

port 2010 –

S 

TORS’ REPO

NESS OVERVIE

MENT INFORMA

IDITY .............

NESS OUTLOO

ER DEVELOPME

ATED PARTY TR

NESS RISK INF

IM CONDENS

SOLIDATED INC

SOLIDATED STA

SOLIDATED STA

SOLIDATED STA

SOLIDATED STA

ES TO THE INTE

MEMBER OF

T STMICROE

– Contents

ORT ..............

EW .................

ATION .............

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K ..................

ENTS IN THE FI

RANSACTIONS .

ORMATION .....

SED CONSO

COME STATEME

ATEMENT OF C

ATEMENT OF F

ATEMENT OF C

ATEMENT OF C

ERIM CONDENS

F THE MANA

ELECTRONIC

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RST HALF OF 2

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OLIDATED FIN

ENT ...............

COMPREHENSIV

FINANCIAL POS

CHANGES IN EQ

CASH FLOWS ...

SED CONSOLID

AGING BOAR

CS .................

 

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2010 ............

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NANCIAL ST

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VE INCOME ....

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QUITY ............

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DATED FINANCI

RD’S STATEM

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TATEMENTS

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3

4

4

5 

Semi-Annnual Repo

I. DIREA.

The “TAM” as the markmajor devicoptoelectro

The growth characterizesemiconducover-year bincreased in38% for the

With referenstrong demdue to betteportfolio. Ouover the saInfrastructurevenues of

Our effectivcompared t

Our gross mregistered iunused capnearly 13 peimproved m

Our operatiresult for thimprovemerevenues, aour operatin

ort 2010 – D

ECTORS’ REBUSINES

is the total aket for produces such as nics devices

momentumed by a stronctor market,

basis. Basedn the first ha

e SAM to rea

nce to our band from ouer industry cur revenues me period inre (“ACCI”) af our Wireles

ve average ro $1.33 for €

margin for thn the first ha

pacity chargeercentage p

manufacturin

ng results foe first half ofnt comparedas well as anng expenses

 irectors’ Re

PORT SS OVERVIEW

available maucts produceMicroprocess and Flash

m of the seming demand the first half on publishe

alf of 2010 onach approxim

usiness perfur customersonditions anincreased to

n 2009, led band our Induss products

ate of the Eu€1.00 for the

he first half oalf of 2009. Hes, associateoints compag efficiencie

or the first haf 2010 was ad to the $724n overall imps.

eport

W

arket, while ted by us (whssors (“MPUMemories).

conductor inin almost allf of 2010 reged industry dn a year-ove

mately $145

formance, ds, which trannd good perfo $4,856 miby our Automustrial and Msegment de

uro to the U.e first half of

of 2010 was However, theed with poorared to the yes in the first

alf of 2010 rean operating4 million lossprovement of

 

 

he serviceabich consistss”), dynamic

ndustry contl market appgistered a sodata by WSTer-year basisbillion and $

uring the firsnslated in a hformance of llion in the fi

motive ConsMultisegmenecreased.

.S. dollar waf 2009.

34.6%, largee first half 20r loading. Ovyear ago per

half of 2010

eturn to a prg income of $s in the first f our manufa

ble available of the TAM c random ac

inued duringplications. Beolid comparaTS, semicons by approxi$81 billion, re

st half of 201higher level othe Group’srst half of 20umer Compt (“IMS”) pro

as $1.37 for

ely improving009 was largverall, the griod reflecting0.

rofit after las$107 millionhalf of 2009acturing perf

   

e market, theand exclude

ccess memo

g the first haecause of thative performductor indusmately 50% espectively.

10 we continof both orde

s customers 010, with a 3uter and Co

oduct segme

€1.00 for the

g comparedgely penalizeross margin g both highe

t year’s open, with a sign9 due to the hformance an

 

e “SAM”, is des PC motheries (“DRAM

lf of 2010, is strong

mance on a ystry revenuefor the TAM

nued to regisers and reven

and product32.9% increaommunicatioents, while

e first half of

to the 21.5%ed by significincreased b

er revenues

rating lossesnificant higher volumnd cost contr

3 

defined erboard

Ms”),

year-s

M and

ster a nues t ase n

f 2010

% cant y and

s. The

me of rol of

 

Semi-Annnual Repo

The first haNumonyx galso bookedTechnology

As a result,ST-Ericssonthe parent w

In summary

• solid• cont• prod• the

Micr

The aforem

• nega• the

We posted operating a

We were padelivered saWireless. Hwell as rest

Gross margfab loading

Net incomeas the impropositioned t

ort 2010 – D

lf of 2010 inenerated byd a gain of $y Inc (“Micro

our net incon JVS’ lossewas $349 m

y, our profita

d performantinued improduct mix impreversal of iron.

mentioned fac

ative pricinglosses of ST

a semester nd net incom

articularly pleales growth

However, we ructuring, to

gin increasedand perform

e reflected thoved profitato achieve o

 irectors’ Re

cluded the ry the divestit$18 million. Tn”) common

ome was $2es to nonconillion.

ability during

ce of our revovement of oprovements impairment a

ctors were p

g trend; T-Ericsson,

of improvemme all showi

eased with dof 52% yearare encoura

owards future

d 131 basis mance of the

he reversal obility of our cur financial t

eport

reversal of imure of this inThe compenn stocks, whi

14 million fontrolling inter

the first half

venues; our manufacin both ACCand the gain

partially offse

half of which

ment in our fing progress

demand for br-over-year. aged by ST-e progressiv

points year-e product por

of impairmencore businestargets.

 

 

mpairment fonvestment innsation we reich at closing

or the periodrest, the net

f of 2010 wa

cturing perforCI and IMS, an from the sa

et by the follo

h were attrib

inancial perfsive strength

both IMS an Obviously,

-Ericsson’s pve recovery.

-over-year tortfolio.

nt and gain osses. As our

or $162 million May 2010. eceived inclug were evalu

. After havinincome attri

as generated

rmances; and ale of our pro

owing eleme

buted to the

formance, wening comp

nd ACCI. In cwe are not s

progress in a

o 34.6% refle

on the sale or results dem

   

on on our inAs a result

uded sharesuated at $58

g attributed ibutable to th

d by the follo

oportional s

ents:

non-controll

with revenuesared to the f

combinationsatisfied withachieving ke

ecting signifi

of Numonyx tmonstrate, w

 

vestment in of this sale,

s of Micron 83 million.

$135 millionhe equity ho

owing factors

hare in Num

ing interest.

s, gross marfirst half of 2

, IMS and Ah the results

ey design-win

icantly impro

to Micron aswe are well

4 

we

n of the olders of

s:

monyx to

rgin, 2009.

ACCI s in ns as

oved

s well

 

Semi-Annnual Repo

Thanks to oposition to $

Innovative pproduct areperformancmicrocontro

Important mfamily enterincluding smautomotive electronics sampling toM3 microco

This sectionAnnual Repthe shareho

B.

We operate

In the Semiproducts, incircuits (“ASproducts (“Aparticipate iinclude the

The curren

• Autofour

oooo

• Induoo

ort 2010 – D

our consisten$745 million

products coneas, includingce at low powollers, as we

milestones anring volume martphones,32-bit MCUplatform from

o lead customontroller deliv

n should be port filed witholders at the

SEGMEN

e in two busi

conductors ncluding discSICs”), full-cASSPs”) for in the manufproduction a

nt organizatio

omotive Conr product lineo Automoto Computeo Home Eo Imaging ustrial and Mo Analog Po Microcon

 irectors’ Re

nt focus on ccompared t

ntinue to drivg advanced wer and leadll as power a

nd design wproduction. robotics, na family had cm a leading mers the STvering indus

read in conjh the AFM (A

e Annual Sha

NT INFORMAT

ness areas:

business arecrete and stacustom devic

analog, digifacturing valand sale of b

on is as follo

nsumer Comes: tive Productser and Commntertainmen(“IMG”).

MultisegmentPower and Mntrollers, non

eport

cash generato $517 millio

ve revenue m55nm set-to

ding-edge fuand analog,

wins were alsOur gyrosco

avigation, cacontinued suOEM. We aM32L series

stry-leading e

junction withAutoriteit Finareholders’ M

TION

Semicondu

ea, we desigandard commces and semtal and mixelue chain of both silicon c

ows:

mputer and

s Group (“APmunication It & Displays

t Sector (“IMMicro-Electron-flash, non-

 

 

ation we havon at the en

momentum. op-box solutinctionality, sgrew signifi

so achieved ope technoloameras, gamuccess with

also enlargeds, the industrenergy-savin

h the report onanciële MarMeeting on M

ctors and Su

gn, develop,modity comp

mi-custom deed-signal apSmartcard pchips and S

Communica

PG”); nfrastructure

s (“HED”); an

MS”), compriso-Mechanica-volatile Mem

e further stred of 2009 (s

In the first hions that offesuch as 3D gcantly.

in the first hogy is quite b

ming and memajor desigd our generary’s first ultrang performa

of the Managrkten) on ApMay 25, 201

ubsystems.

manufacturponents, appevices and aplications. Inproducts thromart cards.

ation Infrast

e (“CCI”); nd

sed of: al Systems (mory and Sm

   

engthened osee section C

half of 2010, er our custographics and

alf such as obroad with tadical device

gn-wins, inclual-purpose 3a-low-powernce.

ging Board inpril 16, 2010 10.

re and markeplication-spepplication-spn addition, wough our div

ructure (“AC

“APM”); andmart card pro

 

our financial C – Liquidity

several newmers top d 3D video,

our gyroscoparget applica

es. In additiouding a body

32-bit MCU far ARM® Cor

ncluded in thand approv

et a broad raecific integrapecific stand

we further visions, whic

CCI”), comp

d oducts (“MM

5 

y).

w

32-bit

pe ations n, our y amily, rtexTM-

he 2009 ved by

ange of ted

dard

ch

rised of

MS”).

 

Semi-Annnual Repo

• Wireooo

in wJVS

o

In the Subsmodules foraccessoriespayment. Bmeet the resegments o

For details aCondensed

C.

We maintaiwhich proviis our primamainly with

During the fdebt in anticresulted in aoperating apayments fopartial repu

ort 2010 – D

eless Segmeo 2G, EDGo 3G Multio LTE & 3

which since S as consolido Other W

related to

systems busir the telecoms, battery chased on its

equirements of an enterpr

about our red Consolidate

LIQUIDIT

n a solid finade us with a

ary source ofnet cash ge

first half of 2cipation of ita $320 millioctivities wasor purchaserchase of th

 irectors’ Re

ent (“WirelesGE, TD-SCDmedia & PlaG Modem SFebruary 3,

dated in our Wireless, in

o the wireles

iness area, wmmunicationargers, ISDNimmaterialityfor a reporta

rise and rela

evenues by sed Financial

TY

ancial structadequate finaf liquidity. O

enerated from

2010, we usets maturity aon decreases lower than s of tangiblee convertible

eport

ss”), comprisDMA & Connatforms;

Solutions; 2009, we rrevenue andwhich we rss business

we design, dns, automotivN power supy to our busiable segmenated informat

segment, plel Statements

ure, with a sancial flexibiur cash manm operating

ed available nd to pay div

e in our cashthe cash us

e and intangie debt and t

 

 

sed of: nectivity;

report the sd operating report other but outside

develop, mave and induspplies and ininess as a wnt as definedtion.

ease refer tos for the six

significant caility. As in thnagement poactivities.

cash and cavidends. The and cash eed in investiible assets athe payment

sales and opresults; andrevenues, the scope o

nufacture anstrial marketn-vehicle equwhole, the Sud in the guid

o Note 5 of omonths ende

ash position e past, our colicy is to fin

ash generateerefore, the quivalents. Ting and finanas well as fint of dividends

   

perating res

gross margof ST-Ericsso

nd market suts including muipment for eubsystems sance on disc

our Unauditeed June 26,

and a low dcash genera

nance our inv

ed from opeevolution ofThe cash gencing activitinancial asses to shareho

 

ults of ST-E

in and otheon JVS.

ubsystems amobile phonelectronic tosegment doeclosures abo

ed Interim 2010.

ebt to equityated by operavestment ne

erations to ref our cash floenerated fromies, due to

ets and due tolders.

6 

Ericsson

er items

and ne oll es not out

y ratio, ations

eeds

edeem ow m

to the

 

Semi-Annnual Repo

The evolutio

In millions oNet cash froNet cash froNet cash froEffect of chNet cash in 

Net cash fr

Net cash frochanges in improved coperformanc

• Net com

• Chafavodue

Net cash fr

Investing ac$313 millionmarketable $330 millionassets regiswere requirproducts. Inthe $1,129

ort 2010 – D

on of our ca

of USD om (used in)om (used in)om (used in)ange in exch

ncrease (de

rom (used i

om operatingassets and ompared to

ce.

result adjusmpared to $1anges in assorable chang

to a change

rom (used i

ctivities genen of paymensecurities le

n investmentstered a signred to upgradnvesting actimillion recei

 irectors’ Re

sh flow for e

) operating a) investing a) financing ahange rates

ecrease)

in) operating

g activities isliabilities. Ththe prior yea

sted for non 73 million in

sets and liabge in trade pe in inventor

in) investing

erated a casnts for tangibess proceedt in intangiblnificant increde our produvity in the firived from Er

eport

each period i

activities activities activities

g activities.

s (i) the net he net cash ar period du

cash items n the prior yebilities totaledpayables, coies.

g activities.

sh outflow ofble assets, $s from salesle and financease from thuction capacrst half of 20ricsson as pa

 

 

is as follows

(June 2

20101(8(4

(3

.

result adjustfrom operate to the ove

generated $ear period. d $231 millio

ompared to $

f $809 millio117 million o

s, a $62 millicial assets. Pe $163 millio

city in line wi009 generateart of a busin

s:

(unaudited)26, 0

Jun20

,017809)431)(97)320)

ted for certaing activitiesrall improve

$786 million

on in the firs$132 million

n in the first of net paymeon investmePayments foon registeredith the stronged net cash ness combin

   

e 27, 009

305 652

(246) (15) 696

in non-cash s in the first hment in our

of cash in t

st half of 20in the prior

half of 2010ents for the ent in short-tor the purchad in the priog increase inof $652 millination in Wir

 

items and (half of 2010 operating

he first half

10, mainly dyear period

0, associatedpurchase of term depositase of tangibr year periodn demand foion mainly dreless.

7 

ii) largely

of 2010

due to a , mainly

d with fts, a ble d as we or our ue to

 

Semi-Annnual Repo

Net cash fr

Net cash us$246 millionConvertiblemillion. Mor$73 million

Financial p

As at June mainly of:

• Casthe Conpaym

• Resdivethat reclastate

• Shoread

• CurrtreadebtAa3repoStat

• NonSeccollaconsaforwe lour YorkvacaprocCon

ort 2010 – D

rom (used i

sed in financn used in the

e Bonds whicreover, the fias repayme

position

26, 2010, ou

sh and cash position as

nvertible Bonments.

stricted cashestiture of N

this amountassified thisement of fina

ort-term depodily convertibrent availablsury bills frot floating ra

3/A+ from Morted at fair vtements. n-current avurities, purcateralized dsolidated strementionedlaunched a favor issuedk who reaffiate it. This ceedings agnsolidated Fi

 irectors’ Re

in) financing

cing activitiese first half ofch occurred irst half of 20

ent at maturit

ur total finan

equivalents at Decemb

nds for a tot

h of $250 umonyx andt will be reles amount francial positioosits of $62 ble in cash. le-for-sale qom the Frencate notes isMoody’s andvalue. See N

ailable-for-schased by Cebt obligatioatement of Auction Ralegal action

d by FINRA rmed the ar

ruling cangainst Crednancial Stat

eport

g activities.

s was $431f 2009, mainin January a010 includedty of long ter

ncial resourc

for $1,268 mber 31, 200al cash con

million relad the exercisased from arom non-curon as at Junmillion repr

uoted debt ich, German sued by pr

d S&P. BothNote 9 to ou

ale unquoteCredit Suisseons with a financial po

ate Securitieagainst Cre

in February rbitration aw

n be appeadit Suisse, tements.

 

 

.

million in thely due to the

and May 201d $88 millionrm debt.

ces amounte

million as at09, resulting sideration o

ated to the se by Hynix

any restrictiorrent to curne 26, 2010. resent a 12-

instruments,and U.S. goimary financ

h the treasur Unaudited

ed debt inse contrary topar value o

osition for $es were madedit Suisse, 2009 and a

ward in our aled by Cre

see Note 9

e first half ofe partial repu10 for a totaln as dividend

ed to $2,731

t June 26, 20from the p

f $267 millio

Numonyx-Hx of their calns within 12rrent financi

-month certif

, composed overnments,cial institutioury bills and

Interim Con

truments, co our instrucof $261 mill$57 million. de without owhich resul ruling by thfavor and d

edit Suisse. 9 to our U

   

f 2010 compurchase of ol cash considds paid to sh

million and w

010, the decpartial repuron and the $

Hynix joint ll option, we

2 months andial assets in

ficate of dep

of $708 mill $386 millioons with and the Floatinndensed Con

correspondinctions, reprelion, that wThe investmour authorizted into an

he Federal Ddenied Cred

For the dUnaudited I

 

pared to the our 2016 deration of $hareholders

were compr

crease comprchase of ou$88 million d

venture. Afe consider pd, as such, wn our cons

posit, which

lion investedn invested in

n average rang Rate Nonsolidated F

ng to Auctioesenting inteere carried ments madezation and, iarbitration a

District Courtit Suisse m

details of thnterim Con

8 

$267 and

rised

pared to ur 2016 dividend

fter the probable we have olidated

can be

d in Aaa n senior ating of

otes are Financial

on Rate erests in

on our e in the n 2008,

award in t of New otion to

he legal ndensed

 

Semi-Annnual Repo

At June 26,current port

• $554Feb

• $615• $652• $72 • $93

The EIB Lofor R&D in Fa total amosecond for for a total awe had unu$500 millionexcluding founcommitteamounts avaddition, ascommitted fEricsson’s B

D.

We expect equates to s

As we did inour custome

In addition, product porLooking aheperformanc

This outlook€1.00 for thcombined w2010.

ort 2010 – D

2010, the ation, was $1

4 million of oruary 2011 5 million of o2 million in Emillion in lomillion of ca

ans represeFrance, wasunt of $341 R&D projectmount of $3

utilized commn. Furthermooreign exchaed foreign exvailable undes the parent facility. The Board of Dir

BUSINES

a third quartsolid growth

n the first haers and are

we made sirtfolio, improead to the se

ce.

k is based ohe 2010 thirdwith the impa

 irectors’ Re

aggregate am,986 million,

our 2016 Co

our 2013 SeEuropean Inans from othapital leases

ent two comms fully drawn million, of wts in Italy, wa

380 million. Amitted mediuore, the aggrange credit fxchange facier the short-companies, withdrawal oectors.

SS OUTLOOK

ter revenue wh of 13% to 1

alf of 2010, wencouraged

gnificant proving our finaecond half o

on an assumd quarter, whact of existin

eport

mount of our, which inclu

onvertible Bo

nior Bonds (vestment Baher funding ps.

mitted credit in U.S. dolla

which $69 mias fully drawAs at June 2

um term credregate amoufacilities, wasilities totalingterm lines ofwe and Eric

of that line is

K

with a seque19% when co

we continue d by the qual

ogress durinancial perforof the year, w

ed effective hich reflects ng hedging c

 

 

r interest beauded:

onds for whic

(correspondank loans (thprograms, a

facilities as ars, betweenllion had bee

wn in U.S. do26, 2010, nodit facilities wunt of our tots approximag $718 milliof credit were

csson have gs subject to a

ential revenuompared to

to increase lity of our ba

g the first harmance and we expect to

currency exan assumed

contracts. Th

aring loans a

ch the holde

ing to €500he “EIB Loannd

part of R&Dn Decemberen paid backollars, betweo amount hadwith core relatal available ately $650 mon at June 2e not reducegranted ST-Eapproval of t

ue growth ofthe year-ove

capacity to sacklog.

alf of 2010 wstrengthenin

o see further

xchange rated exchange he third quar

   

and borrowin

ers may exer

million at issns”),

D funding pror 2006 and Fk as at June

een August ad been paid ationship bashort-term c

million and we6, 2010. At Jd by any boEricsson a $the parent c

f between 2%er-year perio

support the s

with respect tng our financpositive pro

e of approximrate of $1.23

rter will close

 

ngs, includin

rcise a put o

suance),

ograms. TheFebruary 200e 26, 2010. Tand Octoberback. Addit

anks totalingcredit facilitiee also maintJune 26, 20rrowing. In

$50 million ompanies at

% and 7%, wod.

strong dema

to enhancingcial positionogression in

mately $1.323 = €1.00 e on Septem

9 

ng the

option in

e first, 08, for The r 2008, ionally, es, tain 10, the

t ST-

which

and of

g our . our

2 =

mber 25,

 

Semi-Annnual Repo

These are fthat could cuncertaintieControl sec

E.

On Januaryjunction thinand Sharp, agreement Catania, Itato 160MW pJoint Ministproject, andthird of the jintangible acontributioncontribution

On FebruarChief Adminwas createdfunctions ofand Corpor

On Februarentered intoB.V. in an astake in Nuare recorde$8.75 per sthe value ofprotect the portion of thUnaudited Imillion due closing of thmillion was previously bconnection

ort 2010 – D

forward-lookcause actuales describedction of the R

OTHER D

y 4, 2010, wen-film photovthe signaturand our equ

aly factory. Tper year, is terial Commi

d project finajoint venture

assets, and hn of the M6 fn. Panel prod

ry 3, 2010, wnistrative Ofd with the aif Human Resrate Respons

ry 10, 2010, o a definitiveall-stock tranmonyx, we r

ed as an avahare, the vaf these sharevalue of the

he 66.88 milInterim Condto Francisco

his transactiorepaid in ful

booked on owith the dive

 irectors’ Re

king statemel results to d

d in “BusinesReport of the

DEVELOPMEN

e signed an voltaic panere of a bindinual share thrThe Catania to be financeittee for Ecoancing by leae’s equity, whold one thirfacility in Catduction at th

we announcefficer, reportim of generasources, Hesibility.

we, togethee agreement nsaction. On received app

ailable-for-saalue of the shes could be transaction

lion shares. densed Cono Partners aon, the senioll by Numony

our investmeestiture of N

eport

ents that are differ materiass risk informe Managing B

NTS IN THE F

agreement wls in Italy. Ong commitmree parties jofactory’s inited through a

onomic plannading banksith a commitrd of its shartania (see bee Catania p

ed that Tjerking to our Pr

ating synergiealth & Safet

er with our pawith MicronMay 7, 201

proximately ale financial ahares was $subject to m, we have heFor the detasolidated Fint the end of or credit faciyx. The ove

ent in NumonNumonyx, we

 

 

subject to kally; in particumation” hereiBoard includ

FIRST HALF O

with Enel ann August 2,

ment letter fooint venture, tial photovolta combinationing, which r. We, Enel atment of €70res. Our equelow) for a vlant is sched

k Hooghiemsresident andes among sty, Education

artners Intel n, in which M0, this transa66.88 millionasset. At the585 million.

material variaedged with cail of these hnancial Statethe shares’ ility that wasrall transact

nyx of $162 e also receiv

known and unular, refer toin and the Rded in our 20

OF 2010

nd Sharp for 2010, we anr a $150 milnamed 3Su

taic panel pron of self-finarecently comand Sharp ha0 million in city commitm

value of €60 duled to beg

stra joined ud CEO, Carloeveral staff on, Legal, Inte

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action closen shares of Me May 6, 201Due to the h

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s supported ion results inmillion and a

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nknown risko those knowRisk Manage009 Annual R

the manufannounced, tolion project f

un, began oproduction caancing, fund

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cash or in tanment will be s

million and gin in the sec

s as Executo Bozotti. Thorganizationernal Comm

n and Franci acquire Nud. In exchanMicron comm10 Micron clohigh volatilityherefore, in cial instrumerations, refe

e also have aock-up periodby our guaran a reversal a gain on saership of the

 

ks and uncerwn risks and ment and InReport.

acture of triplogether withfinancing perations at apacity, equivding from themillion to thi

nderwritten ongible and satisfied by t€10 million c

cond half of

ive Vice-Prehis new positns by optimiz

munication, S

sco Partnersmonyx Holdnge for our 4mon stock wosing share y in the sharorder to parents a signif

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10 

rtainties

nternal

le-h Enel

the valent

e Italian is one

the cash 2011.

esident, tion zing the

Security

s, ings

48.6% which

price of re price, rtially ficant d of our f $78 he 25 ent llion. In

M6

 

Semi-Annnual Repo

facility in Cajoint initiativ

Under the tedeposit withVenture’s dinto an agreto purchasetransaction,2010, Numothem. FollowNumonyx-HNumonyx’s

On March 1invested in New York ismillion, includistrict courpetition to aruling we shinterest to dselling a poAppeals forNew York Cclosing the New York Cpending respost a full sSuisse’s mo

At our annualia, were a

• AppStan

• The folloand

• The instaFeb

ort 2010 – D

atania, Italy,ve among En

erms of the h DBS Bank ebt financin

eement with e Numonyx’s, Numonyx wonyx notifiedwing these e

Hynix joint veequity intere

19, 2010, in unauthorizessued a rulinuding collectrt in New Yoaffirm the awhould receivdate, in additortion of thesr the SecondCourt for the case. On Ap

Court for the solution of Csupersedeasotion. The te

ual general mapproved by

proval of our ndards (IFRSreappointm

owing memb

distribution allments (in ruary/March

 irectors’ Re

which as nonel, Sharp a

agreement tLtd in Singag for such aMicron and

s interest in twill take oved us that on events, we centure will beest in the Hy

connection wed auction rang affirming ted interest, rk denied C

ward and diree approximation to the a

se securitiesd Circuit upo

Southern Dpril 15, 2010Southern D

Credit Suisses bond to guaerms of the b

meeting of shour shareho

2009 accouS);

ment for a thrers of the Su

of a cash diJune, Augus

h 2011 for th

eport

oted above, nd us.

to sell Numoapore, whichmount. ConNumonyx ththe Hynix jor all or part oMay 28, 201

consider likee released toynix-Numony

with our legaate securitiesthe unanimoentered in F

redit Suisseecting Creditately $358 mpproximately. This ruling

on resolutionDistrict issued0 following a District grantee’s motion toarantee the bond have n

hareholders olders:

unts reported

ee-year termupervisory B

ividend of Ust and Decee last install

 

 

we have co

onyx to Microh is intendedcurrent with hat providesint venture fof our obliga10, Hynix haly that our $o us upon thyx Joint Ven

al action to rs against ouous arbitratioFebruary 20's motion to t Suisse to p

million, whichy $75 millioncan be appe of all post jud a judgmenmotion from

ed a tempora amend; howexecution ofot yet been

held on Ma

d in accordan

m, expiring aBoard: Mr. R

S$0.28 per smber 2010 fment)

ntributed to

on, we contid to guarante

our divestitus that, in the following theations under ad delivered 250 million d

he completionture.

recover fromr instructionson award in 09 by FINRAvacate the a

pay us the unh include appn previously ealed by Creudgment mo

nt confirmingm Credit Suisary stay in ewever, the cf the judgmeagreed.

y 25, 2010,

nce with Inte

at the 2013 ARaymond Bin

share, to befor the first t

   

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nue to retainee the Hynixure of Numoevent Hynix

e closing of tthe guaranta call optiondeposit in fa

on of Hynix’s

m Credit Suiss, the federaour favor forA. The rulingaward, also npaid balancproximately received in

edit Suisse totions. On Mg the March sse dated Apexecution of court orderedent prior to ru

the following

ernational Fi

Annual Genengham and M

paid in fourhree installm

 

ew photovol

n the $250 mx-Numonyx Jonyx, we entx exercises ithe Numonyxtee. On Mayn exercise noavor of the s purchase o

sse the amoual district cour more than g of the fedegranting ource. Based on$27 million oDecember uto the Court

March 31, 2019, 2010 ordpril 12, 2010the judgmen

d Credit Suisuling on Cre

g proposals,

inancial Rep

eral MeetingMr. Alessand

r equal quartments and in

11 

ltaic

million Joint tered ts right x 31, otice to

of

unt urt in $431

eral r n the of upon of 10, the der and 0 the nt sse to edit

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porting

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terly n

 

Semi-Annnual Repo

F.

Please refe

G.

Some of theexpectationupon and aperformanc

• signby obusicurrcons

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• our integsign

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• the defe

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• the our

ort 2010 – D

RELATED

er to Note 18

BUSINES

e statementsns that are balso involve k

ce or events

nificant chanour productsiness activitrently experstraints in ce

ability to utirating costs duction efficical and com

ual demand d

ability to sugration and

nificant inves

ure by ST-Empete in a hnology solurges;

ability to cod and are inhe foreign e

mpared to the

outcome of endant;

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impact of inability to obt

 irectors’ Re

D PARTY TRA

8 of the Unau

SS RISK INFO

s contained ased on maknown and uto differ mat

ges in demas, which maies. In particriencing a sertain applica

lize and opeduring perioiently and ra

mpetitive inddiffers from

uccessfully ioperation

stment and r

Ericsson to rapidly cha

utions, which

mpete in thencurred in cuexchange mae other majo

f ongoing liti

overall tax ability to ac

eferred tax a

ntellectual prtain required

eport

ANSACTIONS

udited Interim

ORMATION

in this repornagement’s

unknown riskterially from

and in the keke it extremcular, followstrong surgeations;

erate our maods of reducapidly to res

dustry, and tour expecta

integrate theof the ST-E

risk for our b

complete itsanging markh may result

e semiconduurrencies otharkets and,

or currencies

igation as w

position as ccurately estassets;

roperty (“IP”d licenses on

 

 

S

m Condense

rt that are nocurrent view

ks and uncethose in suc

ey applicatiomely difficult wing a period

e in custom

anufacturingced customespond to inche financial tions;

e acquisitionEricsson Wusiness;

s on-going ket moving t in significa

uctor industrher than U.Smore partic

s we use for

well as any

a result of ctimate tax c

) claims by n reasonable

ed Consolida

ot historical fws and assurtainties thatch statemen

on markets ato accurate

d of significamer demand

g facilities ater demand, acreased cusimpact of o

ns we pursuWireless joint

restructurinfrom hardw

ant additiona

ry since a hiS. dollars, escularly, in theour operatio

new litigatio

changes in tcredits, bene

our compete terms and

   

ated Financi

facts are stamptions, ant could causts due to am

and from keyely forecast aant order cad, which ha

t sufficient leas well as outomer demabsolete or e

ue, in partict venture, w

g initiatives ware to moal impairmen

gh percentaspecially in e U.S. dollaons;

on to which

tax laws or efits, deducti

titors or otheconditions;

 

al Statemen

atements of fd are condit

se actual resmong factors

y customersand plan ou

ancellations, as led to c

evels to covur ability to rand, in an inexcess inven

cular the sucwhich repres

or to succore softwarent and restru

age of our colight of the vr exchange

we may be

the outcomions and pro

er third parti

12 

nts.

future tioned sults, s:

s served ur future

we are capacity

ver fixed ramp up ntensely ntories if

ccessful sents a

cessfully e-driven ucturing

osts are volatility rate as

ecome a

e of tax ovisions

ies, and

 

Semi-Annnual Repo

• proda pr

• our achideve

• avaisupp

• chanconfsuchof naope

Such forwaactual resullooking statlooking term“seeks” or “comparableare set forththe Report orisks or uncmay vary mexpected. Wforward-loo

ort 2010 – D

duct warrantroduct conta

ability in anieve our prelopment we

ilability and plies require

nges in the pflict, social uh as severe ature in, or arate.

rd-looking slts and perfotements. Ceminology, su“anticipates” e terminologyh and are disof the Mana

certainties mmaterially fromWe do not inking stateme

 irectors’ Re

ty or liability ining one of

n intensivelyricing expee have been

costs of rawed by our ope

political, socunrest and/orweather, he

affecting, the

tatements aormance of ortain forward

uch as “belie” or similar exy, or by discscussed in mging Board i

materialize, om those destend, and doents set forth

eport

claims baseour parts;

y competitivectations for

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w materialserations; and

cial or econor terrorist ac

ealth risks, ee countries i

re subject toour businessd-looking staves”, “expecxpressions o

cussions of smore detail inincluded in or should und

scribed in thio not assumh in this repo

 

 

ed on epide

e environmer high-volumrently, invest

, utilities, thd

omic environctivities, econpidemics, ean which we,

o various risks to differ maatements cancts”, “may”, “or the negatistrategy, plann the Risk Mour 2009 Anderlying assuis Semi-Ann

me any obligaort to reflect

mic failures

ent to secureme suppliesting;

hird-party ma

ment, includnomic turmoarthquakes, our key cus

ks and unceaterially and n be identifie“are expecteive thereof ons or intentio

Managementnnual Reportumptions proual Report aation, to updt subsequen

   

or recalls by

e customer s of new p

anufacturing

ding as a resoil, as well as

volcano erustomers or o

ertainties, whadversely fr

ed by the used to”, “shouor other variaons. Some ot and Internat. Should oneove incorrecas anticipatedate any indut events or c

 

y our custom

acceptanceproducts in

g services, o

sult of militars natural eve

uptions or othur suppliers

hich may caurom the forwse of forwardld”, “would bations thereoof these risk al Control see or more ofct, actual resed, believed ustry informacircumstance

13 

mers for

e and to whose

or other

ry ents her acts ,

use ward-d-be”, of or

k factors ection of f these sults or

ation or es.

 

Semi-Annnual Repo

II. INTE

The interim subsidiariesof the Mana

This chapte

• Inte2009

• Inte2010

• InteDec

• Inteand

• InteJune

• Note

ort 2010 – In

ERIM CONDE

condensed s (“the Groupaging Board

er includes:

rim consolid9 (unauditedrim consolid0 and June 2rim consolid

cember 31, 2rim consolidJune 27, 20

rim consolide 27, 2009 (es to the inte

 nterim Cond

NSED CONSO

consolidatep”) for the si, are unaudi

ated incomed) ated statem27, 2009 (unated statem

2009. ated statem

009 (unauditated statemunaudited) erim conden

densed Con

OLIDATED FI

ed financial sx months ented.

e statement

ment of compnaudited)

ment of financ

ment of changted)

ment of cash

nsed consolid

 

 

nsolidated F

NANCIAL ST

statements onded June 2

for the six m

prehensive in

cial position

ges in equity

flows for the

dated financ

Financial St

ATEMENTS

of STMicroel6, 2010, as

months ende

ncome for th

as at June 2

y for the six

e six months

cial statemen

   tatements

ectronics N.presented b

ed June 26, 2

he six month

26, 2010 (un

months end

s ended June

nts

 

.V. and its by the Sole M

2010 and Ju

s ended Jun

naudited) an

ed June 26,

e 26, 2010 a

14 

Member

une 27,

ne 26,

d

2010

and

 

Semi-Annnual Repo

A.

In millions except perSales Other reveTotal reveCost of saGross proSelling, geResearch Other incoOther expeImpairmencosts OperatingImpairmeninvestmenFinance inFinance coShare of ginvestmenImpairmeninvestmenProfit (LosIncome taxNet resultAttributablThe equityNon-controNet result Profit (Losholders of Profit (LosProfit (Los

The accompa

ort 2010 – In

CONSOL

of USD r share amo

enues enues les

ofit eneral and adand develop

ome enses nt on assets

g profit (lossnt and realizets

ncome osts

gain (loss) oft divestiture

nt or reversats in associass) before ix benefit / (et e to:

y holders of tolling interest

ss) per sharethe parent

ss) per sharess) per sharenying notes are

 nterim Cond

LIDATED INCO

unt

dministrativepment

held for sale

s) ed loss on a

f associates

al of impairmates ncome tax

expense)

the parent sts

e attributable

e (Basic) e (Diluted) e an integral pa

densed Con

OME STATEM

e

e and related

available-for-

and gain on

ent on

e to the equit

art of these inte

 

 

nsolidated F

MENT

Not

515

15151616

d

5-sale

n 6

6

ty

1717

erim condense

Financial St

tes

SixJune

2014

5 45 (3

15 5 6 6

5

6

6

7 7 d consolidated

   tatements

(unaudited)x months end26,

10 Jun

24,818

384,856,178)1,678(584)(940)

55(102)

-

107

-

46(65)

20

162

270(56)214

349(135)

214

0.400.40

d financial state

 

) ded ne 27, 2009

3,62726

3,653(2,867)

786(577)

(1,022)176(62)

(25)

(724)

(72)

40(29)

(67)

(215)

(1,067)144

(923)

(790)(133)(923)

(0.90)(0.90)

ements

15 

 

Semi-Annnual Repo

B.

In millions Net resultExchange Net movemIncome tax Net (loss)/Income tax Other comTotal comAttributablThe equityNon-controTotal com

The accompa

ort 2010 – In

CONSOL

of USD t differences

ment on casx effect

/gain on avax effect

mprehensive mprehensive

e to: y holders of tolling interes

mprehensivenying notes are

 nterim Cond

LIDATED STA

on translatioh flow hedge

ilable-for-sa

income, nete income, n

the parent sts e income, ne an integral pa

densed Con

ATEMENT OF

on of foreignes

le financial a

t of tax et of tax

et of tax art of these inte

 

 

nsolidated F

COMPREHEN

n operations

assets

erim condense

Financial St

NSIVE INCOM

d consolidated

   tatements

ME

(unaudSix month

June 26, 2010

214 (518)

(68) 6

(62) 77 (1) 76

(504) (290)

(125) (165) (290)

d financial state

 

dited) hs ended

June 27, 2009

(923)(15)

21(1)20(8)

-(8)(3)

(926)

(793)(133)(926)

ements

16 

 

Semi-Annnual Repo

C.

In millions Assets Non-curreProperty, pGoodwill Intangible InvestmenOther non-Deferred taOther non-Total nonCurrent asInventoriesTrade accoOther currOther receCash and Total currAssets helTotal asseEquity Equity attrNon-controTotal equNon-curreInterest-beOther non-Employee Deferred taNon-currenOther non-Total nonCurrent liaCurrent intTrade accoOther payaEmployee Current prOther currIncome taxTotal currTotal equ

The accompa

ort 2010 – In

CONSOL

of USD

ent assets plant and eq

assets nts in associa-current finaax assets -current ass-current assssets s ounts receivent financial

eivable and acash equiva

rent assets ld for sale ets

ibutable to tolling interesity ent liabilitieearing loans -current finabenefits ax liabilities nt provisions-current liab-current liaabilities terest-bearinounts payabables and acbenefits – covisions ent financialx payable rent liabilitieity and liabnying notes are

 nterim Cond

LIDATED STA

quipment

ates ancial assets

ets sets

vable l assets assets alents

he equity hosts

s and borrow

ancial liabilitie

s ilities bilities

ng loans andble ccrued liabilicurrent portio

l liabilities

es ilities e an integral pa

densed Con

ATEMENT OF

s

olders of the

wings es

d borrowings

ities on

art of these inte

 

 

nsolidated F

FINANCIAL P

Not

7876

9a

10

9a

11

parent

13

9c9b

14

s 9c

149b

erim condense

Financial St

POSITION

(unaud

tes June

201

7 38 7 26 a

7

0 11

a 1

1 16

14

71

3 9

c 1b

4

1

c 1

4 b

314

d consolidated

   tatements

dited) (au26, 0

Dec31,

3,701959

2,02166

301602243

7,893

1,3021,4421,967

6301,2686,609

294,531

7,9811,0989,079

1,280-

190189117

991,875

7061,345

597480243148

583,5774,531d financial state

 

udited) cember , 2009

4,178989

1,959303510642219

8,800

1,2751,3661,068

7181,5886,015

3114,846

8,3671,2639,630

2,19456

232204133

912,910

201883358504266

3460

2,30614,846

ements

17 

 

Semi-Annu

For th

In mAs aNet OtheincoTotaincoEmpschePurcnonNonariscomDiviAs a

The ac

ual Report 2010

D. CONS

he six months e

millions of USD at January 1, 2result er comprehensi

ome, net of tax al comprehensome ployee share aweme, net of tax chase of equity -controlling inte

n-controlling inteing on business

mbinations dends at June 27, 200ccompanying notes

0 – Interim Con

SOLIDATED STAT

ended June 27,

Note2009 (audited)

ive

sive

ward

from erests

erests s

13e09 (unaudited) s are an integral pa

ndensed Conso

TEMENT OF CHA

2009

e Ordinary shares

1,156-

-

-

-

-

-

e -1,156

art of these interim c

olidated Financ

ANGES IN EQUITY

Equit

Capital surplus

T

2,114-

-

-

-

319

-

-2,433

condensed consoli

cial Statement

Y

ty attributable toholders of the p

Treasury shares

Ores

(482)-

-

-

104

-

-

-(378)

dated financial stat

 s

o the equity parent

Other serves

Retaiearni

1,470 4- (7

(3)

(3) (7

21 (

-

-

- (1,488 3

tements

 

ned ngs

Non-controlliinterest

,501 4790) (13

-

790) (13

104)

- (4

- 1,4

105),502 1,3

 

ng ts

Total equity

474 9,23333) (923)

- (3)

33) (926)

- 21

11) (92)

411 1,411

- (105)341 9,542

18 

Semi-Annu

For th

In mAs aNet OtheincoTotaincoEmpscheShaof 2BonDiviAt J

The ac

ual Report 2010

he six months e

millions of USD at January 1, 2result er comprehensi

ome, net of tax al comprehensome ployee share aweme, net of tax

are conversion o016 Convertible

nds dends

June 26, 2010 (ccompanying notes

0 – Interim Con

ended June 26,

Notes2010 (audited)

ive 13d

sive

ward 13d

option e

13d

13e (unaudited) s are an integral pa

ndensed Conso

2010

s Ordinary shares 1,156

-

-

-

-

-

-1,156

art of these interim c

olidated Financ

Equi

Capital surplus 2,433

- -

- -

- -

- -

- -

- -6 2,433condensed consoli

cial Statement

ity attributable toholders of the

Treasury shares

Ores

(377) 1-

-

-

69

-

-(308)

dated financial stat

 s

o the equity parent

Other serves

Retaiearni

1,867 3,28-

(474)

(474)

17

(31)

- (1,379 3

tements

 

ined ings

Non-controllinteres

88 1,263349 (1

-

349 (1

(69)

-

(247)3,321 1,

 

-ing

sts Total equity

3 9,630 135) 214

(30) (504)

165) (290)

- 17

- (31)

- (247),098 9,079

19 

Semi-Ann

E.

In millions oCash flowsCash generInterests paIncome tax Net cash frCash flowsPayments fInvestmentsPayments ffinancial asProceeds frfinancial asDisposal of InvestmentsProceeds reInterests reNet cash frCash flowsProceeds frRepurchaseRepaymentborrowings Dividends pcompany Purchase oPayment foNet cash uEffect of chNet cash inCash and cof the perioCash and cperiod ReconciliatiCash and cstatement oBank overdloans and bCash and ccash flows The accompa

nual Report

CONSOL

of USD s from operrated from oaid refunded

rom operatis from invesfor purchases in short-terfor purchasesets rom sales ofsets a financial i

s in intangibeceived in bceived rom (used is from finanrom interest-e of convertit of interest-b

paid to equity

of equity fromor other finan

sed in finananges in exc

ncrease (decash equivaod cash equiva

ion of cash acash equivaleof financial prafts include

borrowings cash equivale

nying notes are

 2010 – Inte

LIDATED STA

rating activiperations

ing activitiesting activit

es of tangiblerm deposits

es of availab

f available-fo

nstrument le and finanusiness com

n) investingncing activit-bearing loaible debt bearing loan

y holders of

m non-controncing activitiencing activichange rate

ecrease) alents at the

alents at the

and cash eqents on the f

position ed in interest

ents used in

e an integral pa

rim Conden

ATEMENT OF

ties

es ties e assets

le-for-sale

or-sale

cial assetsmbinations

g activitiesties ns and borro

ns and

the parent

olling intereses ities s

e beginning

e end of the

uivalents face of the

t-bearing

n statement o

art of these inte

 

 

nsed Conso

CASH FLOW

Note

12

owings

sts

g e

of

erim condense

olidated Fin

S

(uSix m

June 262010

9

1,0

(3(

(7

6

(3

(8

(2

(

(

(4(

(31,

1,2

1,2

1,2

d consolidated

   nancial State

unaudited) months ende6, Jun

20

911(8)

114017

313)(62)

770)

653

-330)

-13

809)

1267)

(73)

(88)

-(4)

431)(97)320)588

268

268

-

268

d financial state

 ements

ed e 27, 009

300(21)

26305

(163)-

(890)

792

26(256)1,116

27652

--

(48)

(105)

(92)(1)

(246)(15)696989

1,685

1,009

(20)

989

ements

20 

Semi-AnnFinancial

F.

STMicroele265, Schiph

STMicroelesemiconducsemiconducportfolio andproducts, coautomation products thahigh-growth

STMicroeleEuronext Pa

The Group’purposes oended on Jend on Dec

These unauAugust 24,

These unau26, 2010 hathe Europea

The unaudiand disclosthe annual fIFRS, as ad16, 2010 an

nual Report Statements

NOTES T

1. C

ectronics N.Vhol Boulevar

ectronics andctor group thctor integrated develops pomputer perand control at leverage

h digital and

ectronics is aaris and on t

s fiscal yearn a thirteen-une 26, 201

cember 31, 2

udited interim2010 for iss

2. B

udited interimave been prean Union.

ted interim cures requirefinancial stadopted in thend approved

 2010 – Note

s

TO THE INTER

CORPORATE

V. (the “Comrd, Amsterda

d its subsidiahat designs, ed circuits (“products for ripherals, telsystems. W

its technologmixed-signa

a publicly trathe Borsa Ita

r ends on De-week basis.0, its third q

2010.

m condensedue by the Su

BASIS OF PR

m condensedepared in ac

condensed ced in the anntements for

e European d by the shar

es to the In

RIM CONDEN

INFORMATIO

pany”) is regam and its co

aries (togethdevelops, m

“ICs”) and dia wide rangecommunica

Within its divegical strengtal content.

ded companaliana (Italia

ecember 31.. The Groupuarter will en

d consolidatupervisory B

EPARATION

d consolidatccordance w

consolidatednual financiathe year endUnion, filed reholders at

 

 

terim Cond

NSED CONSO

ON

gistered in thorporate hea

her “the Groumanufacturesiscrete devicge of market ations systeersified portfths in creatin

ny, listed on an Stock Exc

Interim per’s first quartend on Septe

ted financial Board.

ted financial with IAS 34 In

d financial stal statementsded Decembwith the AFMthe Annual

densed Con

OLIDATED FIN

he Netherlanadquarters lo

up”) are a glos and markeces. The Groapplications

ms, consumfolio, the Grong customize

the New Yochange).

iods are estaer ended on

ember 25, 20

statements

statements nterim Finan

atements dos. They shouber 31, 2009M (AutoriteitShareholder

   solidated

NANCIAL STA

nds with its socated in Ge

obal indepenets a broad roup offers a s, including a

mer productsoup has focued, system-l

ork Stock Ex

ablished for n March 27, 2010 and its fo

have been a

for the six mncial Reportin

o not includeuld be read i9, prepared it Financiële rs’ Meeting o

 

ATEMENTS

statutory domeneva, Switz

ndent range of diversified pautomotive , industrial

used on deveevel solution

change, on

accounting 2010. Its firsourth quarte

approved on

months endeng, as adopt

e all the inforn conjunctioin accordancMarkten) onon May 25, 2

21 

micile in zerland.

product

eloping ns with

st half er will

n

ed June ted in

rmation on with ce with n April 2010.

Semi-AnnFinancial

The accounstatements statements amendmeneffective froconsolidate

The preparaestimates aof assets an

The Group

In the Semibroad rangeintegrated cstandard prparticipate iinclude the

In the Subssubsystemsmobile phonelectronic tosegment do

nual Report Statements

3. S

nting policiesare consistefor the yearts to Standa

om January ed financial s

4. E

ation of the sand assumptnd liabilities,

5. O

operates in

conductors e of productscircuits (“ASroducts (“ASin the manufproduction a

systems busis and modulne accessoroll payment.oes not meet

 2010 – Note

s

SIGNIFICANT

s adopted inent with thosr ended Deceards as at Ja1, 2010 werestatements.

ESTIMATES

semi-annuations that aff income and

OPERATING S

two busines

business ares, including ICs”), full-cu

SSPs”) for anfacturing valand sale of b

iness area, tes for the teries, battery Based on itt the require

es to the In

ACCOUNTIN

the preparase followed iember 31, 2

anuary 1, 20e not releva

l financial stfect the appld expenses.

SEGMENT IN

ss areas: Se

ea, the Groudiscrete and

ustom devicenalog, digitallue chain of both silicon c

the Group deelecommunicchargers, ISts immateriaements for a

 

 

terim Cond

NG POLICIES

ation of the inn the prepar

2009, except10. The adont or did not

atements reication of acActual resu

FORMATION

miconducto

up designs, dd standard ces and semi-l and mixed-smartcard pchips and sm

esigns, devecations, autoSDN power sality to our bu

reportable s

densed Con

nterim conderation of the t for the adopoption of newt have a mat

equires manaccounting polts may diffe

rs and Subs

develops, mommodity co-custom dev-signal applicproducts thromartcards.

elops, manuomotive and supplies andusiness as asegment as

   solidated

ensed consoGroup’s an

ption of neww standards terial impact

agement to molicies and ther from these

systems.

manufacturesomponents,

vices and apcations. In aough our div

factures andindustrial m

d in-vehicle ea whole, the defined by I

 

olidated finanual financia

w Standards and interpreon the Grou

make judgmhe reported ae estimates.

s and marketapplication-

pplication-speaddition, we fisions, which

d markets markets incluequipment foSubsystemsFRS 8.

22 

ncial al and

etations up’s

ments, amount

ts a -specific ecific further h

ding or s

Semi-AnnFinancial

The curren

• Autofour

oooo

• Induoo

• Wireooo

in wcons

o

The preparamanagemeincome of thprior periodbelow reflecreclassifiedbelieves thacomparative

The principafor expenditThese decisarea. All thecapacity for

nual Report Statements

nt organizatio

omotive Conr product lineo Automoto Computeo Home Eo Imaging ustrial and Mo Analog Po Microconeless Segmeo 2 G, EDGo 3G Multio LTE & 3

which since Fsolidated in o Other W

items rel

ation of segmnt to make she segmentss for illustratct the transfe the prior peat the restatees when ma

al investmentures on R&sions are noese product r most of the

 2010 – Note

s

on is as follo

nsumer Comes: tive Productser and Commntertainmen(“IMG”), sta

MultisegmentPower and Mntrollers, nonent (“WirelesGE, TD-SCDmedia & PlaG Modem SFebruary 3, the Group’s

Wireless, in wlated to the w

ment informasignificant ess for the priotive comparier of a small

eriod’s revened 2009 pre

anaging the G

nt and resouD and capita

ot made by psegments s

eir products.

es to the In

ows:

mputer and

s Group (“APmunication It & Displays

arting Januart Sector (“IMMicro-Electron-Flash, nonss”), comprisDMA & Connatforms;

Solutions; 2009, we rerevenue an

which the Gwireless bus

ation based stimates, assor reporting pisons of its pl business u

nues and opesentation is Group.

urce allocatioal investmen

product segmhare commo

 

 

terim Cond

Communica

PG”); nfrastructure

s (“HED”); anry 1, 2009.

MS”), compriso-Mechanican-volatile Mesed of: nectivity;

eport the salend operating Group reportssiness but ou

on the curresumptions aperiods. In 2performancenit from ACCerating incomconsistent w

on decisionsnts in front-ements, but oon R&D for p

densed Con

ation Infrast

e (“CCI”); nd

sed of: al Systems (emory and S

es and operresults; ands other reveutside ST-Er

ent segmentand judgmen2010, the Gre by product CI to IMS; acme results owith the 2010

s in the semiend and backn the basis oprocess tech

   solidated

ructure (“AC

“APM”); andSmartcard pr

rating resultsd enues, grossricsson JVS

t structure rents in determroup restatedsegment. T

ccordingly, tof ACCI and 0 presentatio

conductor bk-end manufof the semichnology and

 

CCI”), comp

d oducts (“MM

s of ST-Eric

s margin an.

equires mining the opd its results fhe tables sehe Group haIMS. Managon and uses

business areafacturing fac

conductor bumanufactur

23 

rised of

MS”).

sson as

nd other

perating from

et forth as gement s these

a are cilities. usiness ring

Semi-AnnFinancial

The followinincome by smeasuremechargeable a significanGroup’s interestructurinsome strateinitiatives, incharges.

The tables location of o

In millions oNet revenuAutomotive InfrastructuIndustrial anWireless Others2 Total cons

                       

1 Reflecting th

2  Includes  revsegments 

nual Report Statements

ng tables presemiconductents, the Groto the segmt part of reseernal policieg charges a

egic and spencluding cer

below set foorder shipme

of USD ues by prod

Consumer re (ACCI)1 nd Multisegm

olidated ne

                       

he transfer of a

venues  from 

 2010 – Note

s

esent the Grtor product soup uses ce

ments, includearch and des, certain cond other rela

ecial researcrtain corpora

orth informatent:

uct segmenComputer a

ment Sector

et revenues

              

a small busines

the  sales  of  S

es to the In

roup’s consosegment. Fortain interna

ding cost of sevelopment

ost items areated closure

ch and develate-level ope

ion on our n

nts nd Commun

r (IMS)

ss unit from AC

Subsystems,  a

 

 

terim Cond

olidated net or the compul rules of allo

sales, sellingexpenses. A

e not chargede costs, startopment prog

erating expen

et revenues

nication

CCI to IMS, we 

ssembly  servi

densed Con

revenues anutation of theocation for thg, general anAdditionally,d to the segt-up costs ofgrams or othnses and ce

s by product

SixJune

201

4

have reclassifi

ces  and  other

   solidated

nd consolidae segments’ he costs notnd administr in complianments, incluf new manufher corporateertain other m

segment, pr

(unauditedx months en26, 0

Ju

1,955

1,7551,112

344,856

ed prior period

r  products  no

 

ated operatininternal fina

t directly rative expensnce with the uding impairmfacturing face-sponsoredmiscellaneou

roduct line a

) nded une 27, 2009

1,332

1,1101,169

423,653

d revenues. 

ot  allocated  to

24 

ng ancial

ses and

ment, ilities, d us

and

o  product 

Semi-AnnFinancial

In millions oAutomotive Computer aHome EnteImaging (“IMOthers AutomotiveInfrastructAnalog, PowMicrocontroproducts (“MOthers Industrial a2G, EDGE, 3G MultimeLTE & 3G MOthers Wireless Others3 Total cons

                       

3 Includes rev

nual Report Statements

of USD products G

and Communrtainment & MG”)

e Consumeure (ACCI) wer and Micollers, non-FMMS”)

and MultiseTD-SCDMA

edia & PlatfoModem Solu

olidated ne

                       

venues from

 2010 – Note

s

roup (“APG”nication InfraDisplays (“H

er Computer

cro-Electro-Mlash, non-vo

egment SectA & Connectrms

utions

et revenues

              

sales of subs

es to the In

”) astructure (“HED”)

r and Comm

Mechanical Solatile Memo

tor tivity

systems and o

 

 

terim Cond

“CCI”)

munication

Systems (“Aory and Sma

other products

densed Con

PM”) artcard

s not allocate

   solidated

Six June 2

2010

1

1

1

1

4

ed to product

 

(unaudited)months end

26, 0

Jun2

651 539 492 250

23

,955

,224

530

1 ,755 453 645

13 1

,112 34

4,856

segments 

25 

ded ne 27, 2009

404368363189

8

1,332

779

330

11,110

457698

59

1,16942

3,653

Semi-AnnFinancial

In millions oNet revenuEMEA Americas Greater ChJapan and Total cons

                       

4 Net  revenueordered by U.and South Asshipment from

nual Report Statements

of USD ues by locat

ina and SouKorea olidated ne

                       

es by  location.S.‐based compia revenues. Fm one location

 2010 – Note

s

tion of orde

uth Asia

et revenues

              

 of order  shippanies to be inurthermore, tn to another, as

es to the In

er shipment

pment  are  clasnvoiced to Greahe comparisons requested by

 

 

terim Cond

t4

ssified by  locaater China andn among the dy our customer

densed Con

SixJune

201

2

4

ation of  customd South Asia afdifferent periodrs. 

   solidated

(unauditedx months en26, 0

Ju

1,277633

2,061885

4,856

mer  invoiced. ffiliates are clasds may be affe

 

) nded une 27, 2009

1,114431

1,392716

3,653

For  example, ssified as Greaected by shifts

26 

products ater China s  in order 

Semi-AnnFinancial

The operatidetailed as

In millions oAutomotive (ACCI) Industrial anWireless Sub-total oStrategic R&Phase-out aImpairment Unused capManufacturOther non-aSub-total oAdjustment Net impact Derivative iIFRS Other non-aSub-total IFTotal opera

                       

5 Includes una

nual Report Statements

ng income (follows:

of USD Consumer

nd Multi seg

operating in&D and otheand start-up and restruc

pacity chargring servicesallocated incoperating lo on acquiredof capitalizenstruments

allocated expFRS/US GAating incom

                       

allocated expen

 2010 – Note

s

(loss) by pro

Computer a

gment sector

ncome of prer R&D progcosts

cturing charges

s come and cooss Others d IP R&D ed developmnot designat

penses and AAP impact me (loss)

              

nses such as ce

es to the In

oduct group a

nd Commun

r

roduct grougrams

ges

osts5

ment costs ted as hedg

IFRS/US GAon operatin

ertain corporat

 

 

terim Cond

and reconcil

nication Infra

ps

e instrumen

AAP adjustmng income (

te level operat

densed Con

iation to ope

astructure

ts under

ments (loss)

ting expenses a

   solidated

erating incom

(Six m

June 262010

(2

(

((

(

and other cost

 

me (loss) ca

unaudited)months ende6, Jun

20

147

228 253) 122 (7) (5)

(45) (1)

2 5

(51) (23) 133

(72)

(2) 36

107

s 

27 

n be

ed ne 27, 009

(99)

(17)(233)(349)

(7)(34)

(142)(262)

6(33)

(472)(14)

68

29

1497

(724)

Semi-AnnFinancial

Investments

In millions oNumonyx ST-EricssonOthers Total

Numonyx

In 2007, thecreate a neGroup and

The Numoncontributed representinsubordinate

Upon creati$100 milliona four-year not joint andto the repayof the assetvalue of theof the equity

On FebruarFrancisco Pacquire Numwas highly was reclassbefore this years for animpairment

nual Report Statements

6. IN

s in associat

of USD

n AT Holding

e Group entew independeIntel’s flash

nyx transactiits flash meg a 48.6% e

ed notes, as

ion, Numonyn committedterm. Intel ad several. Inyment to sents. The debt

e guarantee y investmen

ry 10, 2010, Partners, it hmonyx Holdiprobable thasified as an areclassificatn amount of on investme

 2010 – Note

s

NVESTMENTS

tes as at Jun

g (“JVD”)

ered into an ent semiconmemory bus

ion closed oemory assetsequity owner

described in

yx entered in revolving cr

and the Groun the event onior lenders,guarantee wat inception

nt.

the Group ahad entered ings B.V. in at the sale wasset held foion, the Gro$162 millionents in asso

es to the In

S IN ASSOCIA

ne 26, 2010

agreement nductor compsiness (“FMG

n March 30,s and businership stake vn Note 9a.

nto financingredit facility fup have eacof default, the to recover twas recognizof the trans

announced tinto a definitan all-stock

would be comor sale and mup reversed

n. This reverciates”.

 

 

terim Cond

ATES

and Decem

Caam

with Intel Copany from thG deconsoli

2008. At cloesses for 109valued at $96

g arrangemefrom two prih granted ine banks will the amountszed as a $69action. The

hat, togethetive agreemetransaction.

mpleted withmeasured at partially the

rsal is presen

densed Con

mber 31, 200

(unauditedJune 26, 20rrying

mount %

int-

541266

orporation anhe key assetdation”).

osing, throug9,254,191 c66 million, a

ents for a $4mary financ favor of Nuexercise the

s paid under 9 million liabsame amou

er with its parent with Mic. As soon asin 12 montht fair value lee impairmennted in the li

   solidated

9 were as fo

d) 010 D% of erests

Caa

- 49.9%

nd Franciscots of the Gro

gh a series oommon shand $156 mil

50 million teial institutionmonyx a 50e Group’s rigthe guarant

bility, correspunt was also

rtners Intel Cron, in whichs the Group s, the investess costs to t recorded inine “Impairm

 

ollows:

(auditedDecember 31arrying mount in

2236713

303

o Partners Loup’s Flash M

of steps, theres of Numolion in long-t

erm loan andns. The loan% debt guarghts, subordtee through tponding to thadded to th

Corporation h Micron woconsidered ttment in Numsell. Immed

n the previoument or rever

28 

d) , 2009 % of

nterests 48.6%49.9%

L.P. to Memory

e Group onyx, term

d a s have rantee

dinated the sale he fair e value

and uld that it monyx iately us rsal of

Semi-AnnFinancial

On May 7, 2Numonyx, topening of tHence, the million to resubstantial also has a pup period. Aguarantee ogain after tadivestiture”.

ST-Ericsso

On FebruarEricsson Mopart of the twas valued Ericsson, isST-Ericssonequity methinvestment

In millions oShare of JVNon-currenCurrent assEquity Non-currenCurrent liabShare of JVRevenue Profits Carrying aInitial valueCumulated Amortizatio

nual Report Statements

2010, the trathe Group rethe US finanvalue of the

eflect the locportion of supayable of $Also, at the cof $225 millioax of $18 mi.

on AT Holdi

ry 3, 2009, thobile Platfortransaction, at $99 millio

s the parent n venture. T

hod. The folloin JVD:

of USD VD’s unaudt assets

sets

t liabilities bilities VD’s unaud

mount of th of investmeshare of pron of basis di

 2010 – Note

s

ansaction wieceived apprncial market e shares at ck-up period uch Micron s

$78 million dclosing of thon has beenllion include

ing

he Group anrms (“EMP”) the Group reon. JVD, in wcompany of he Group haowing table

dited IFRS s

dited IFRS re

he investmeent ofit or loss ifference

es to the In

th Micron efroximately 6on May 7, 2

closing date wrestriction a

shares is heue to Franciis transactio

n repaid in fud in line “Sh

nnounced thand ST-NX

eceived an iwhich the Gra group of e

as a significaillustrates su

statement of

evenue and

ent

 

 

terim Cond

ffectively clo6.88 million

2010, the priwas $583 mpplicable to dged. In consco Partners

on the seniorull by Numonhare of gain (

e closing of P Wireless interest in STroup owns 5entities that ant influenceummarized f

(Jun

f financial p

d profit (loss

densed Con

osed. In exchshares of Mce of Micron

million taking these share

nnection withs at the end r credit facilitnyx. The ove(loss) of ass

a transactionto a new veT-Ericsson A

50% less a cperform funde and therefofinancial info

(unaudited)ne 26, 2010position:

2316

85

26s):

571

5499(7)

(38)

   solidated

hange for its Micron commn’s shares winto accoun

es. As descrih this transaof the share

ty that was serall transacsociates and

on to combinenture, namAT Holding Acontrolling shdamental R&ore accountsormation of t

(audDecembe

 

48.6% stakmon stock. Atwas $8.75 pent a discountibed in note

action, the Ges’ six monthsupported bytion resultedgain on inve

e the businemed ST-EricsAG (“JVD”) thare held by&D activitiess for JVD unthe Group’s

dited) r 31, 2009

261710

627

121(8)6799(8)

(24)

29 

ke in t the

er share. t of $2 9d, a roup h lock-y our d in a estment

esses of sson. As that y s for the nder the

Semi-AnnFinancial

Changes indetailed as

In millions oNet book vAdditions Disposals ImpairmentAmortizatioForeign curNet book v

Goodwill sp

In millions oBalance at2010 (auditForeign curtranslation Balance at 2010 (unau

nual Report Statements

7. P

the net carrfollows:

of USD value as at J

n / Depreciarrency translvalue as at J

8. G

plit by operat

of USD January 1,ted) rrency

June 26, udited)

 2010 – Note

s

PROPERTY, P

rying amoun

January 1, 2

ation expensation

June 26, 20

GOODWILL

ting segmen

AutCo

CompCommInfra

(“A

es to the In

PLANT AND E

nt of property

2010 (audite

se

10 (unaudit

nt are as follo

omotive nsumer puter and

munication structure ACCI”)

25

-

25

 

 

terim Cond

EQUIPMENT A

y, plant and

Pran

ed)

ted)

ows:

Wirelesssector

(“Wireless

8

(1

8

densed Con

AND INTANG

equipment a

roperty, plannd equipmen

4,14(2

(53(383,7

s

s”)

Indusand MsegmSec(“IM

890

19)

871

   solidated

IBLE ASSETS

and intangib

nt nt Intang78

46022)(5)30)80)701

strial Multi ment ctor

MS”)

74

(11)

63

 

S

ble assets ar

ible assets1,959

334-

(55)(215)

(2)2,021

Total

989

(30)

959

30 

e

Semi-AnnFinancial

In millions oOther finanOther finan

Available-securitiesAvailable-securitiesAvailable-securitiesQuoted eqloss RestrictedShort-termOther

Total otherCurrent Non-currenDerivative Cash flow h

Forward fPurchaseContingen

Derivatives CombinedForward f

Total derivCurrent Non-currenTotal otherTotal currenTotal non-c

nual Report Statements

9. O

a

of USD ncial assetsncial assets-for-sale inve

s -for-sale inve

s -for-sale inve

s quity securit

d cash m deposits

r financial a

t financial in

hedges foreign exched currency ont zero-cost not designa

d options foreign exchvatives finan

t r financial ant

current

 2010 – Note

s

OTHER FINAN

a) OTHE

s (includings estments – q

estments – u

estments – u

ties at fair va

assets

nstruments

ange contraoptions collar

ated as hedg

ange contrancial instrum

assets (inclu

es to the In

NCIAL ASSET

ER FINANCIA

derivatives

quoted debt

unquoted de

unquoted eq

alue through

acts

ges

acts ments

uding deriv

 

 

terim Cond

TS AND FINA

AL ASSETS

s)

and equity

ebt

quity

profit or

vatives)

densed Con

NCIAL LIABIL

(unaudJune 26

   solidated

LITIES

dited) 6, 2010 D

1,735

135

31

22

250 62

8 2,243 1,952

291

1 -

18

3 3

25 15 10

2,268 1,967

301

 

(audited) December 31

2009

1,04

2

2

25

1,541,0

5

3

1,571,0

5

31 

1,

42

15

29

-

50-6

423210

99-

-183636

-786810

Semi-AnnuFinancial S

Moveme

In millioGovernTreasuGoverngovernSenior financiQuotedSub-toinvestequityAuctionLong-teCurrenNumonSub-toinvestsecuriAvailabunquotEquity profit oRestricShort-tOther cTotal o(exclu

*OCI

ual Report 2010Statements

ents in other fin

ons of USD nment bonds issury nment bonds issnments r debt floating raal institutions d equity instrumotal Available-fments – quote

y securities n rate securitieserm subordinate

nt Subordinated nyx otal Available-fments – unquoties ble-for-sale inveted equity secursecurities at fai

or loss cted cash term deposits current financiaother financial ding derivative: Other compre

0 – Notes to th

ancial assets (e

sued by the U.S

sued by foreign

ate note issued

ments for-sale ed debt and

s ed notes Notes from

for-sale oted debt

estments – rities ir value through

l assets assets

es) hensive income

e Interim Cond

excluding deriva

Jan 1, 2010

(audited)S. 340

144

by 548

10

1,042

42173

-

215

29

-

250-6

1,542

e

 

densed Consol

atives) recorded

Change in fair value included in OCI*

0 -

4 -

8 2

0 48

2 50

2 153 2

- -

5 17

9 2

- -

0 -- -6 -

2 69

lidated

in the first six m

Change in fair value included

in income statement P

-

-

-

-

-

-6

-

6

-

2

--2

10

   

months of 2010

urchase Sa

490 (

280 (

- (

-

770 (

- -

-

-

-

- 62

-

832 (

 

are summarize

ale

Foreigexchan

resurecogniz

OCI*

380)

133)

140)

-

653)

--

-

-

-

---

653)

 

ed as follows:

gn nge lt

zed in *

Numonydisposa

-

(33)

(24)

- 58

(57) 58

-- (18

- 7

- (103

- 2

---

(57) 50

 

32 

yx al

June 26, 2010 (un-audited)

- 450

- 258

- 386

83 641

83 1,735

- 57 1) -

78 78

3) 135

31

20 22

- 250 - 62 - 8

00 2,243

Semi-AnnFinancial

Available-f

As at June aggregate vrating. As aaggregate vreceived asmonth lock-contingent zJune 26, 20non-current

Available-f

The auctionGroup’s acc

On FebruaRegulatory awarded themillion, comdamages, winterest awinterest at tis paid in fuYork seekinaward.

In DecembeGroup and that the amsum to be cto legal advAuction Rat

On March amount invedistrict courmore than ruling of thegranting thebalance. Ba

nual Report Statements

for-sale inve

26, 2010, thvalue of $1,0

at June 26, 2value of $64s a result of t-up period. Azero-cost co010. As a cot equity instr

for-sale inve

n-rate secucount by Cre

ry 16, 2009Authority (“Fe Group, in

mprising comwhich were aard of approhe rate of 4.ull. The Groung enforcem

er 2009, Creissued by D

mount that wocollected by vice, and whte Securities

19, 2010, inested in unart in New Y$431 million

e federal diste Group’s pased on the

 2010 – Note

s

estments –

he Group had094 million (2010, the Gro1 million (Dethe disposal As describedollars. Certainsequence

ruments for a

estments –

rities, whichedit Suisse S

9, the GrouFINRA”), in aconnection w

mpensatory assessed agoximately $.64% on theup petitioned

ment of the a

edit Suisse, Deutsche Baould be recethe Group ifhile reservins with a face

n connectionauthorized aork issued an, including trict court in petition to ae ruling the

es to the In

quoted deb

d investmenDec 31, 200oup also hadec 31, 2009:of the Grou

d in note 9d,n of these cthe underlyia total amou

unquoted d

h have a finSecurities LL

p announcea full and finwith such undamages, against Credi27 million, o

e par value od the Unitedaward. Cred

because of nk, requesteeived by thef and when

ng its legal re value of $1

n with the Gauction rate a ruling affircollected inNew York d

affirm the aGroup shou

 

 

terim Cond

bt and equit

nts in quoted09: $1,032 md investmen: $10 millionp’s investme a significanollars have ang shares h

unt of $189 m

debt instrum

nal maturityLC contrary

ed that an anal resolutionnauthorized as well as init Suisse. In out of which

of the portfold States Disdit Suisse re

its contingeed that the Ge Group pursthe FINRA arights, the G54 million an

Group’s legasecurities arming the un

nterest, entedenied Crediward and duld receive

densed Con

ty instrume

marketablemillion). Gove

ts in quoted), consistingent in Numo

nt portion of ta maturity loedged with t

million.

ments

y up to 40 to the Group

arbitration pn of the issuauction ratenterest, attoaddition, th

h $25 millioio from Dece

strict Court foesponded by

ent interest iGroup eithersuant to sucaward is conGroup particnd collected

al action to rgainst the Gnanimous a

ered into in it Suisse’s mdirecting Creapproximate

   solidated

ents

e debt instrumernment bon equity secu

g mainly of Monyx. These these shares

onger than 1these collars

years, werep’s instructio

panel of theues submittee securities, aorney’s fees he Group is en has alreaember 31, 2or the Southy seeking to

n certain ser tender the ch tender benfirmed and cipated in th $75 million.

recover fromGroup’s instrrbitration awFebruary 20

motion to vacedit Suisse ely $358 mi

 

ments for annds have a Aurities for an Micron share

shares haves are hedge2 months ass are classifi

e purchasedons.

e Financial d for determapproximateand conse

entitled to ready been pa2008 until thehern District o vacate the

ecurities heldsecurities or

e deducted fenforced. Pe tender off.

m Credit Suiructions, theward in its fa009 by FINRcate the awa

to pay the llion, which

33 

n Aaa

es e a six-d with

s at ied as

d in the

Industry mination, ely $406 quential etain an aid, plus e Award of New

e FINRA

d by the r accept from the

Pursuant fer, sold

isse the e federal avor for

RA. The ard, also

unpaid include

Semi-AnnFinancial

approximatereceived in appealed bjudgment m

Upon receiprate securitAuction Ratperiods. Sintheoretical mof these secand compacollateralizeapproximatecould furthevalue meas

Long-term

The Group million at inlong-term nThese noteThe remainNotes from which the Gand the Gro1, 2010.

Restricted

In 2004, theend memorHynix Semicontributed grant $250 collateral ofamounted t

Due to regwith the $25entered into

nual Report Statements

ely $27 millDecember uy Credit Sui

motions.

pt of the awaies to Creditte Securitiesnce the begimodel usingcurities wererable/similared debt obliges the orderer decrease surement info

subordinat

received upception, beaotes yield 9s were partiing amount Numonyx s

Group has cooup. Numony

cash

e Group signry manufactuconductor In$250 millionmillion in lonf the joint veo $291 millio

ulatory and w50 million lono a ten-year

 2010 – Note

s

ion of intereupon sellingisse to the C

ard, the Grot Suisse. Uns and, consenning of 200

g yields obtae publicly avr underlying gation, ITraxrly exit valuedue to a detormation is f

ted notes

on the creataring interes.5% interestally repaid aof $78 millioince it repreommitted to yx effectivel

ned a joint veuring facility nc. contributn for a 33% ng-term finanture’s asseon at the tim

withholding ng-term finaterm debt g

es to the In

est to date, i a portion of

Court of App

up will transtil the award

equently, will08, the fair vinable for co

vailable indexcollaterals o

xx and IBoxxe in the curreterioration offurther detai

tion of Numot at market r, generally p

as a result ofon as at Junesents the futcontribute toy contribute

enture agreein Wuxi City

ted $500 milequity interencing to the

ets. On Marcme, was trans

tax issues thancing as origuarantee ag

 

 

terim Cond

in addition tf the securitpeals for the

fer ownershd is executedl account for

value measuomparable axes of securor industries x for the credent market. Tf the specificled in Note 9

onyx long-terates and wipayable in kif the transace 26, 2010 isture full owno a new phod the M6 fac

ement with Hy, Jiangsu Prlion for a 67

est. Additionnew joint ve

ch 30, 2008, sferred to Nu

he Group coginally plann

greement wit

densed Con

to the approies, as desc

e Second Ci

ip of the pord, the Groupr them in there of these sssets. The vrities with theexposure (s

dit-linked notThe estimatec indexes us9e.

rm subordinth a maturitynd for seven

ction with Mis presented

nership of theotovoltaic joincility to a com

Hynix Semicrovince, Chi

7% equity intally, the Gro

enture guarathe investm

umonyx upo

ould not direcned. As a resth an externa

   solidated

oximately $7cribed abovercuit upon re

rtfolio of unap will continue same mansecurities havalue inputs e same ratinsuch as ABXtes), which ted value of tsed for the e

nated notes ay as at Marcn years and cron as descas Current

e M6 facility nt initiative ampany called

conductor Incna. Under thterest and thoup originallyanteed by the

ment in the joon the forma

ctly provide sult, in 2006al financial i

 

5 million pree. This rulingesolution of

authorized auue to own thener as in theas been basefor the evalu

ng, similar duX for the he Group behese securitvaluation. F

amounting toch 30, 2038.

in cash thercribed in NoSubordinatein Catania,

among Enel,d 3Sun Srl o

c. to build a he agreemenhe Group y committede subordinat

oint venture, tion of that e

the joint ven6, the Group nstitution thr

34 

eviously g can be

all post

uction e e prior ed on a uation uration

elieves ties air

o $156 These

reafter. ote 6. ed Italy, Sharp

on July

front-nt,

to ted which

entity.

nture

rough

Semi-AnnFinancial

which the Gguarantee aThe guaranwith $250 mcould be reqthe bank withe amountguarantee rguarantee a

Under the tecontinued toguarantee tjoint venturehave certainThe Group that Hynix eclosing of thunder the gdelivered a completed aquarter of 2liabilities” in

Short-term

In the first hmaturity of oInterest on deposit. The

 

nual Report Statements

Group guaranagreement inntee deposit million as thequired to mall exercise ths paid underesulted in that inception

erms of the o retain the the Hynix-Nue agreemenn rights to buhas entered

exercises itshe Numonyxuarantee. Ocall option e

and the Com2010. The den the consoli

m deposits

half of 2010, one year. Ththis deposit e principal w

 2010 – Note

s

nteed the rencludes the will be used

e maximum pake. In the ehe Group’s rr the guaranhe recognitioof the transa

recently sign$250 millionumonyx jointt with Hynixuy or sell or

d into an agre right to purc

x transactionOn May 31, 2exercise notmpany will beebt guarantedated balan

the Compahese deposiis paid at m

will be repaid

es to the In

epayment of Group placi

d by the bankpotential am

event of defarights, suborntee throughon of a $17 maction.

ned agreemn deposit witht venture’s d, upon the ccause the oeement withchase Numo

n, Numonyx 2010, Numonice to them. e released o

ee obligationce sheet as

ny invested ts are held aaturity with i

d at final mat

 

 

terim Cond

the loan by ng up to $25k in case of

mount of futurault and failurdinated to th the sale of million liabilit

ent to sell Nh DBS Bank

debt financinlosing of the

other party toh Micron andonyx’s interewill take ovenyx notified As at June

of its obligati is now repoat June 26,

$62 million oat one bank interest rateturity.

densed Con

the joint ven50 million in repayment fre paymentsre to repay the repaymethe joint venty, correspo

Numonyx to Mk Ltd. in Singng for such ae sale of Numo buy or sell d Numonyx test in the Hyer all or part the Compan26, 2010, thons under th

orted on the 2010.

of cash in shwith minimus fixed at inc

   solidated

nture to the bcash on a d

failure from ts the Group,the loan fromnt to senior

nture’s assetnding to the

Micron, the Cgapore, whicamount. Undmonyx, Hynitheir intereshat providesynix joint venof the Group

ny that on Mhe transactiohe guaranteeline “Other c

hort-term deum long-termception for th

 

bank. The deposit accothe joint ven as the guar

m the joint velenders, to rts. The debt fair value of

Company hach is intendeder the termsx and Numo

sts in the Hys that, in thenture followinp’s obligatioay 28, 2010

on is not yet e during thecurrent finan

posits with am rating of Aahe duration

35 

unt. nture, rantor, enture, recover

f the

as ed to s of the onyx nix JV. event ng the ns , Hynix

third ncial

a a2/AA. of the

Semi-AnnFinancial

In millions oOther finanOther finanDebt financDebt financTotal otherCurrent Non-currenDerivative Cash flow h

Forward fPurchase

Derivatives Forward fPurchase

Total derivCurrent Non-currenTotal otherderivativesTotal currenTotal non-c

nual Report Statements

b

of USD ncial liabilitncial liabilitcial guarantecial guaranter financial li

t financial in

hedges foreign exched currency o

not designaforeign exched currency ovatives finan

t r financial lis) nt

current

 2010 – Note

s

b) OTHE

ies (includiies

ee Numonyx ee Hynix iabilities

nstruments

ange contraoptions ated as hedgange contraoptions ncial instrum

iabilities (in

es to the In

ER FINANCIA

ng derivativ

acts

ges acts

ments

ncluding

 

 

terim Cond

AL LIABILITIE

ves)

densed Con

ES

(unaudite

June 26, 2

   solidated

ed)

2010 De

- 17 17 17

-

61 3

65

2 131 131

-

148

148 -

 

(audited) ecember 31

2009

3

3

9

36 

,

391756

-56

118

-153434

-

90

3456

Semi-AnnFinancial

In millions oBank loans1.79% due Funding pr0.27% (w.a0.31% (w.a0.33% (w.a0.57% (w.a0.49% (w.aOther Fund0.90% (w.a3.27% (w.a0.50% (w.a0.50% (w.a0.50% (w.a3.24% (w.aFinance lea5.39% (w.a5.00% (w.a6.00% (w.a5.29% (w.aSenior Bon1.12%, dueConvertible4.92% convTotal intereTotal currenTotal non-c* Weighted

nual Report Statements

c

of USD s 2010, floatinrogram loan.*), floating i.*), floating i.*), floating i.*), floating i.*), floating iding progra.*), due 201.*), due 201.*), due 201.*), due 2014.*), due 201.*), due 201ases: .*), due 201.*), due 201.*), due 2014.*), due 201

nds e 2013, floatie Bonds vertible bondest-bearingnt

current average

 2010 – Note

s

c) INTER

ng rate at LIBns from Eurinterest rate interest rate interest rate interest rate interest rate

am loans 0, fixed inter2, fixed inter3, fixed inter4, fixed inter6, fixed inter7, fixed inter

1, fixed inter3, fixed inter4, fixed inter7, fixed inter

ng interest r

ds due 2016 loans and

es to the In

REST-BEARI

BOR + 1.0%ropean Inveat LIBOR + at LIBOR + at LIBOR + at LIBOR + at LIBOR +

rest rate rest rate rest rate rest rate rest rate rest rate

rest rate rest rate rest rate rest rate

rate Euribor

borrowings

 

 

terim Cond

NG LOANS A

% estment Ban

0.017% 0.026% 0.052% 0.317% 0.213%

+ 0.40%

s

densed Con

AND BORRO

(unaudite

June 26, 20

nk

2

1,9

1,

   solidated

OWINGS

ed) (au

010Decem

2

-

10056

116180200

56262

51

479

82

615

554986706280

 

udited) mber 31, 009

40

10056

136180200

126382

67

893

92

720

7532,395

2012,194

37 

Semi-AnnFinancial

Convertible

In Februaryconvertible maturity of bonds are c43.363087 equivalent sprice of $1,0of $1,126.9

In Decembeamount of $allocated thconsistent wreceived byis summariz

In millions oPrincipal amDecrease in2016 conveDecrease in2016 conveLoss on rebonds Cash consid

Derivative

The Group result, the with respecand recognforward conassociated the Compa

nual Report Statements

e debt

y 2006, the Gbonds due i1.5% and reconvertible bshares per oshares. The 077.58, on F9 per one th

er 2009 and $350 million he considerawith that usey the Group wzed as follow

of USD mount repurcn value of liaertible bondsn value of eertible bondsepurchase o

deration

d

instrument

conducts itGroup is ex

ct to the Eunized assets ntracts and crisk arising

any's subsid

 2010 – Note

s

Group issuedin February

esulted in neby the holderone thousanholders can

February 23housand doll

during the fprincipal am

ation paid to ed in the origwhen the cows:

chased ability compos quity compo

s of 2016 con

d) HEDG

ts not desig

ts business xposed to aro. Foreign and liabilitie

currency optfrom the de

diaries. Thes

es to the In

d $1,131 mil2016. The b

et proceeds tr at any time

nd dollar facen also redeem, 2012 at a par face valu

first half of 2mount for a to

the separateginal allocationvertible ins

D

onent of

onent of

nvertible

GING ACTIVIT

gnated as he

on a globaldverse movexchange r

es at the Cotions to redu

enomination se instrume

 

 

terim Cond

llion principabonds were ito the Groupe prior to mae value of thm the conveprice of $1,0e of the bon

010, the Grootal cash coe componenon to the sestrument wa

December 2009

98

85

11

7

103

TIES AND DE

edges

basis in vavements in fisk mainly a

ompany’s suuce its exposof certain a

ents do not

densed Con

al amount at ssued at 10

p of $974 milaturity at the

e bonds corertible bonds93.81 and o

nds.

oup repurchonsideration nts of the conparate comps issued. Th

January 2010

20

17

2

1

21

ERIVATIVES

arious majorforeign currearises from fubsidiaries. Tsure to chanssets and liaqualify as

   solidated

maturity of 0% of princillion less traadjusted co

rresponding s on Februaron February

ased for an of $370 millinvertible bonponents of thhe result of t

May 200

73

25

14

12

r internationency exchanfuture commThe Group enges in exchabilities in fohedging in

 

zero couponpal with a yinsaction feenversion ratto 42,235,64

ry 23, 2011 a24, 2014 at

aggregated ion. The Gronds using a he proceedshese transa

2010 To

252

46

6

3

55

al currencienge rates, pmercial transenters into change rates oreign currestruments a

38 

n senior eld to

es. The te of 46 at a a price

oup method

s ctions

otal for 2010

252

219

31

17

267

es. As a primarily sactions currency and the ncies at and are

Semi-AnnFinancial

marked-to-mincome” or

To reduce idenominatedevelopmencontracts aforecasted developmenqualify as hchanges in statement.

Derivative

To reduce denominatemanufacturcurrency op

These derivtheir fair vathe hedge ithe same pincome stat

The principhedge betwmaximum lefor forecast

As at Juneentered into

In millions oForward coCurrency op 

nual Report Statements

market at ea“Other expe

its exposureed forecastent, selling,

and currencytransaction

nt expenseshedging instfair value re

instrument

its exposureed forecastering costs options.

vative instrulue in the cois reported i

period in whitement line i

ples regulatinween 40% aength of timeed transacti

e 26, 2010, o to hedge E

of Euros ntracts ptions

 2010 – Note

s

ach period-eenses” in the

e to U.S. doled transactiogeneral andy options. Ts that coves through thtruments anecognized in

ts designate

e to U.S. doed transact

of semi-finis

ments are donsolidated sn the statemch the hedgtem as the i

ng the hedgand 70% ofe over whichons is 12 mo

the Group Euro-denomi

es to the In

end with the e consolidate

lar exchangons that covd administraThe Compaer at reporhe use of cnd are markn “Other inc

ed as cash

ollar exchantions that ched goods

designated astatement of

ment of comged transactimpact of the

ging strategyf the total fh the Compaonths.

had the fonated foreca

 

 

terim Cond

associated ed income st

e rate fluctuver at reporative expensany also hedrting date aurrency forw

ked-to-markecome” or “Ot

flow hedge

nge rate fluccover at rethrough the

and qualify ff position. T

mprehensive ion affects ee hedged tra

y for derivatforecasted tany hedges

ollowing outsasted transa

densed Con

changes in tatement.

uations, the Crting date a ses throughdges certaina large parward contraet at each pther expens

s

ctuations, theporting date use of cu

for cash flowhe gain or loincome and

earnings, anansaction.

tives designtransactionsits exposure

standing deactions:

Notionforecas

   solidated

fair value re

Company helarge part o

h the use on Swedish rt of its fucts. These period-end wes” in the c

he Group hete a portiourrency forw

w hedge. Thoss from thed is reclassifd within the

nated as casfor manufa

e to the varia

erivative inst

nal amount fsted manufa

transactio

 

ecognized in

edges certaiof its resea

of currency krona-denomture researinstrumentswith the assonsolidated

edges certaion of its frward contra

hey are reflee effective pofied into earsame cons

sh flow hedgacturing cosability of cas

truments tha

for hedge onacturing costons

507

39 

n “Other

in Euro-rch and forward minated rch and do not sociated income

n Euro-ront-end cts and

ected at ortion of nings in olidated

ge is to sts. The sh flows

at were

n ts

0770

Semi-AnnFinancial

Interest rat

Borrowings issued at fixarises mainon a dynamexisting posinvested in rate liabilitie

Other mark

As part of icertain derivto hedge a option was entered intoexisting purhighly probinvestment as a cash fin “Finance the combine

In addition contingent zapproximateprobable trtransaction totaled $9 mconsolidatethese threecomprehenwhile changCosts” in thinstrumentsmillion was

 

nual Report Statements

te risk

issued at vxed rates ex

nly from longmic basis. Vasitions, alterfloating rate

es and floatin

ket risk

ts ongoing vative transapotential eqclassified aso a written crchased put able forecasas describelow hedge. Aincome” or

ed options h

to the combzero-cost coely 40 millioransactions, qualifies formillion, was

ed income ste collars issive incomeges due to he income ss were entirrecognized

 2010 – Note

s

variable ratexpose the G

g-term borrowarious scenarnative finane instrumentng rate asse

investing anactions. In thuity positions financial ascall option, w

in order to sted sale of

ed in note 6. As a result, “Finance co

has decrease

bined optionollars to hedgon shares. T

from incepr cash flow h excluded fratement on

s based one the changethe time va

statement. Dely due to cin “Finance

es to the In

es expose tGroup to fair wings at fixe

arios are simncing and hts, the Grouets.

nd financing he first half

n in Micron, fsset at fair vwith a notionstructure a

f Micron shaThe combinthe change

osts” in the ined by $4 mil

s as describge forecasteThe hedged

ption of the hedge. The crom effectivthe line “Fin

n their intrie in fair valuelue are imm

During the fichanges in income” in t

 

 

terim Cond

the Group tvalue intere

ed rates. Themulated takinhedging. Sinp’s interest

activities, thof 2010, thefor a total novalue througnal amount zero-cost co

ares to be rned options d

in fair valuencome statelion.

bed above, ed sales of Md forecasted

hedge andcontingency eness meas

nance costs”nsic value e of the hed

mediately recrst half of 2the time va

the income s

densed Con

to cash flowest rate riske Group anag into considce almost arate risk aris

he Group me Company potional amouh profit or loof 5 million ollar as a si

received upodid not meete of the hedgment. As at

the Group eMicron shared sales haved on an on-

premium pasurement an”. The hedge

and the Gging instrumcognized in

2010, changalue of the istatement.

   solidated

w interest ra. The Groupalyzes its intderation refiall the liquidses from the

may from timpurchased aunt of 10 millss. On Aprilshares, to bngle hedgin

on the sale t the criteria ging instrumJune 26, 20

entered in Aes for a totale been ass-going basisaid on thesend recorded e effectiveneGroup will rments due to

“Finance Ines in fair vainstruments

 

ate risk. Borp’s interest rterest rate exnancing, ren

dity of the Ge mismatch

e to time ena put option lion shares. 6, 2010, thebe combined

ng instrumenof Numonyxof IAS 39 to

ment will be r010, the fair v

April 2010 inl notional amessed to be

s, and the he instruments

immediateless measurerecognize i

o their intrinsncome” or “Falue of the hand a gain

40 

rrowings rate risk xposure newal of Group is

of fixed

nter into in order The put e Group d to the nt of the x equity o qualify reported value of

to three mount of e highly hedging s, which y in the

ement of n other

sic value Finance hedging

n of $18

Semi-AnnFinancial

Set out beloinstruments

In millions oFinancial aTrade receiOther receivAvailable foinvestmentsFinancial asthrough proderivatives)Restricted cOther financCash and cFinancial liInterest-beaborrowings portion) Other non-cliabilities Trade accoOther payaliabilities Other curre

nual Report Statements

e

ow is a comps that are ca

of USD assets vables vables and a

or sale financs ssets at fair

ofit or loss (e) cash cial assets

cash equivaleiabilities aring loans a(including c

current finan

unts payablebles and acc

ent financial l

 2010 – Note

s

e) FAIR

parison by crried in the f

assets cial

value excluding

ents

and current

ncial

e crued

liabilities

es to the In

VALUES

class of the cfinancial stat

Ca(unaudi

June 22010

 

 

terim Cond

carrying amotements.

arrying amoited) 26, 0

(aDec

1,442

630

1,901

22

250314

1,268

1,986

-

1,345

751

148

densed Con

ounts and fa

unt audited) ember 31, 2009

1,366718

1,286

-

250220

1,588

2,370

56

883

507

34

   solidated

ir value of th

F(unaudited

June 26,2010

1,4

6

1,9

23

1,2

2,0

1,3

7

1

 

he Group’s f

Fair value d) ,

(audDecem

20

442 630

901

22

250 314 268

014

-

345

751

148

41 

inancial

dited) mber 31, 009

1,366718

1,286

-

250220

1,588

2,473

56

883

507

34

Semi-AnnFinancial

The fair valcould be exliquidation s

• Tradaccrof th

• Othematu

• Avao

o

o

o

o

• The • The

pricediscborr

• The iden

nual Report Statements

ue of the finxchanged in sale. The fol

de receivablrued liabilitiehese instrumer receivableurities or to tilable for salo The fair

with the based uvalue ofreceived

o Since 20using yiethese sesimilar d(such aslinked ncurrent m

o The fair availableaccount

o The fair underlyin

o The fair adjusted

fair value offair value of

es, and bycounting therowing arran

fair value ontical instrum

 2010 – Note

s

ancial asseta current tralowing meth

les, cash anes approxim

ments. e and assetsthe fact that le financial ivalue of goexception opon quotedf the floatind from a majo008, the fairelds obtainaecurities weduration ands ABX for thotes), whichmarket. r value of the fixed interthe credit risvalue of unqng investme

value of qd to reflect anf restricted cf interest-bey estimatingse future ca

ngements. of derivativesments.

es to the In

ts and liabilitansaction behods and ass

nd cash equate their car

s approximathey are rec

nvestments:overnment boof the floating market pricg rate noteor credit ratir value of aable for comere publicly d comparablhe collaterah the Group

he long-termrest swap rask feature ofquoted equitnts on a newuoted equityny applicablecash is its caearing loans g future caash flows u

s instrument

 

 

terim Cond

ties are incluetween willinsumptions w

uivalents, trarrying amou

ate their carrcorded at the: onds, quoteg rate notes ces for the es issued bng entity bauction-rate sparable assavailable ine/similar unlized debt o

p believes a

m subordinaates for instf the issuer oty securitiesw round of thy securitiese restrictions

arrying amouand borrowi

ash flows osing the Gr

ts is determ

densed Con

uded at the ang parties, otwere used to

ade accountnts largely d

rying amouneir net disco

ed equity secissued by Lidentical insy Lehman sed on histosecurities is

sets. The vadexes of se

nderlying colobligation, ITapproximates

ated note istrument withof the debt s is estimatedhird party fin is based os. unt ings is deteron a borroroup’s borro

mined based

   solidated

amount at wther than in a estimate th

ts payable, odue to the s

nts due eitheounted prese

curities and Lehman Brotstruments. SBrothers re

orical recoves based on alue inputs foecurities witllaterals or iTraxx and IBs the orderl

s estimated h similar masecurities. d based on

nancing or upon the quote

rmined baseowing-by-borwing rates

upon quote

 

hich the insta forced or e fair values

other payabhort-term ma

er to their shent value.

floating ratethers, is deteSince 2008, lies on info

ery rates, a theoreticaor the evaluth the sameindustries exBoxx for thely exit value

based on aturities, tak

the valuatiopon liquidatied price pe

d on quotedrrowing basfor similar t

ed market pr

42 

trument

s:

bles and aturities

ort-term

e notes, ermined the fair

ormation

al model uation of e rating, xposure e credit-e in the

publicly king into

on of the on.

er share

d market sis and types of

rices for

Semi-AnnFinancial

Fair value h

The Group instruments

• Leve• Leve

fair v• Leve

that

As at June

In millions oAssets meFinancial as

Forward fQuoted eqCombined

Cash flow hForward fContingen

Available-foAvailable-securitiesAvailable-securitiesAvailable-securities

Liabilities mFinancial lia

Forward fPurchase

Cash flow hForward fPurchase

nual Report Statements

hierarchy

uses the fols by valuatio

el 1: quoted el 2: other tevalue are obel 3: techniqare not bas

26, 2010, th

of USD asured at fassets at fair foreign exchquity securitd options hedges foreign exchnt zero-cost or-sale finan-for-sale inve

s -for-sale inve

s -for-sale inve

s measured aabilities at faforeign exched currency ohedges foreign exched currency o

 2010 – Note

s

lowing hieran technique

(unadjustedechniques fobservable, eques which ued on obser

he Group hel

air value value througange contraties

ange contracollar cial assets estments – q

estments – u

estments – u

at fair valueair value throange contraoptions

ange contraoptions

es to the In

archy for dete:

d) prices in aor which all ither directly

use inputs wrvable marke

ld the follow

gh profit or loacts

acts

quoted debt

unquoted de

unquoted eq

e ough profit oracts

acts

 

 

terim Cond

ermining and

active markeinputs whic

y or indirectlywhich have a et data.

ing financial

oss

and equity

ebt

quity

r loss

densed Con

d disclosing

ets for identich have a sigy. significant e

instruments

June 262010

(unaudite

1,7

   solidated

the fair valu

cal assets orgnificant effe

effect on the

s measured

6,

ed) Level

1

3 322 22

3 3

118 18

735 1,724

135

31

65 652 2

61 63 3

 

ue of financia

r liabilities. ect on the re

e recorded fa

at fair value

l Level 2

3 -2 -3 -

1 -8 -

4 -

- -

- -

5 -2 -

1 -3 -

43 

al

ecorded

air value

e:

Level 3

---

--

11

135

31

--

--

Semi-AnnFinancial

During the rfair value m

For assets between Ja

In millions oAs at JanuChange in fChange in fPaid-in-kindChange in fbefore tax ExtinguishmAs at JuneAmount of tstatement adate

Inventories

In millions oRaw materiWork-in-proFinished proTotal

 

nual Report Statements

reporting pemeasurement

measured aanuary 1, 20

of USD ary 1, 2010 fair value of fair value of d interest onfair value on

ment of Nume 26, 2010 (utotal losses fattributable t

10. IN

consisted o

of USD als

ocess oducts

 2010 – Note

s

riod ending ts, and no tr

t fair value u10 and June

(audited) Auction Ratunquoted eq Numonyx s

n Numonyx s

monyx subordunaudited) for the perioo assets stil

NVENTORIES

f the followin

es to the In

June 26, 20ransfer into a

using significe 26, 2010 is

te Securitiesquity securit

subordinatedsubordinated

dinated note

od included inl held at the

S

ng:

 

 

terim Cond

010, there waand out of Le

cant unobses presented

s ties d notes d notes,

es

n the incomereporting

(unJ

densed Con

as no transfeevel 3 fair va

rvable inputsas follows:

Fair vasignific

e

naudited) une 26, 2010

68812422

1,302

   solidated

er between Lalue measur

s (Level 3),

alue measurecant unobse

(Level 3

(audited)Decembe31, 2009

74

1,2

 

Level 1 and rements.

the reconcili

ements usinrvable inputs3)

25

(1017

) er 9

73 769 433 275

44 

Level 2

iation

g s

5515

26

2

03)77

-

Semi-AnnFinancial

Cash and c

In millions oCash at banDeposits atTotal

Cash gener

In millions oNet result DepreciatioInterest expImpairment Loss / (GainLoss on conOther non-cDeferred incAccrued incShare of loson investmeImpairmentcash paymeTrade receiInventories,Trade payaOther assetCash gene

 

nual Report Statements

11. C

cash equivale

of USD nk and in ha call with ba

12. C

rated from o

of USD

on and amortpense on con

and realizen) on financinvertible debcash items come tax come tax ss of associaents in asso, restructurinents vables, net , net

ables ts and liabilit

erated from

 2010 – Note

s

CASH AND CA

ents consist

and nks

CASH GENER

perations is

tization nvertible debd losses on ial assets bt repurchas

ate, impairmciates ng and other

ties net operations

es to the In

ASH EQUIVA

ed of the fol

RATED FROM

detailed as

bt financial ass

se

ments or reve

r related clos

 

 

terim Cond

ALENTS

lowing:

(unJ

M OPERATION

follows:

sets

ersal of impa

sure costs, n

densed Con

naudited) June 26,

2010 366902

1,268

NS

airments

net of

   solidated

(audited)Decembe31, 2009

1,41,5

(unaJune 26,

2010 214745

15-

(4)17

71

(114)

(182)

(19)

(88)(103)

4175

911

 

) er 9

99 489 588

audited) June 27

20094 (925 785 - ) 7 7 1 ()

) 28

) (6

) (16) 367 5 (81 30

45 

7,

23)85

872

8-8

(7)-

82

65)

65)6818

89)00

Semi-AnnFinancial

The authoricommon shJune 26, 20910,319,30

As at June 31, 2009: 8

On Novembexisting optentered intothe same daagreement Dutch indepissuance ofto the Founvalue of the(i) the GrouSTMicroele(iii) the Boainterests of entitle a holliquidation. no preferen

 

nual Report Statements

13. Ea

zed share chares and 54010, the num5 shares).

26, 2010, th78,333,566

b

ber 27, 2006tion agreemeo in 1999 in ate, the Supby a new agpendent Fouf 540,000,00dation, upon

e preferencep receiving

ectronics’s Mard of the Fo

the Group alder to full voThe prefere

nce shares is

 2010 – Note

s

EQUITY a) OUTS

capital of STM40,000,000 pmber of comm

he number ofshares).

b) PREF

6 the Supervent betweenorder to prot

pervisory Boagreement of undation, Sti00 preferencn its request shares to ban unsolicite

Managing andundation de

and its stakeoting rights ance shares ssued as of J

es to the In

STANDING S

Microelectropreference smon shares

f common sh

FERENCE SH

visory Board n STMicroeletect the Groard of STMicsubstantiallychting Contie shares. Ant and in its so

be issued. Thed offer or thd Supervisotermining th

eholders. Theand to a prefmay remainJune 26, 20

 

 

terim Cond

HARES

onics is EURshares, eachissued was

hares outsta

HARES

of STMicroeectronics andup from a hocroelectronicy similar terminuïteit ST. Tny such shaole discretiohe issuing ofhere being thry Boards deat such an oe 540,000,0ferential righ outstanding10.

densed Con

R 1,810 millioh with a nom910,339,30

anding was 8

electronics ad STMicroelostile takeovcs approvedms betweenThe new optres would be

on, upon payf the preferehe threat of seciding not toffer or acqu00 preferenc

ht to dividendg for no long

   solidated

on consistingminal value of

5 shares (De

881,251,879

approved theectronics Ho

ver or other sd the substitu STMicroele

tion agreemee issued by

yment of at leence shares such an offeto support suuisition wouldce shares, wds and distri

ger than two

 

g of 1,200,00f EUR 1.04. ecember 31

9 shares (De

e terminationolding II B.Vsimilar actioution of suchectronics andent providesSTMicroeleceast 25% of is conditiona

er; (ii) uch an offer d be contrarywhen issuedbutions upoyears. Ther

46 

00,000 As at , 2009:

ecember

n of the V.

n. On h d a s for the ctronics the par

al upon

and; y to the , will n e was

Semi-AnnFinancial

As announcto 30 millionamount of areflected attransfer of s

The treasuremuneratio2007, 2008these trearemuneratio

As of June

Other reser

In millions oAs at Janu2010 (auditRepurchase2016 convebonds Share-basecompensatiexpense forperiod Net movemrecognized statement ocomprehenincome As at June2010 (unau

nual Report Statements

c

ced on April n shares of approximatet cost as a shares to em

ury shares on programs8 and 2009 Asury shareon programs

26, 2010, th

d

rves include

of USD

20c

ary 1, ted) e of ertible

ed ion r the

ment in the

of sive

e 26, udited)

 2010 – Note

s

c) TREA

2, 2008 folloits common

ely $313 millreduction o

mployees up

have been s of non-vesAnnual Genes were tra

s of which 2,

he Company

d) OTHE

the following

016 Share conversion

option reserve

260

(31)

-

-

229

es to the In

ASURY SHAR

owing the aun stock, the lion, of whic

of the sharehon vesting o

designatedsted shares eral Meetingansferred to898,313 in t

owned a nu

ER RESERVE

g componen

Share-based

compen-sation

reserve

432

17

-

449

 

 

terim Cond

RES

uthorization Group acqu

ch $231 milliholders’ equ

of future sha

d for allocaincluding su

g of Sharehoo employeethe first half

umber of trea

ES

nts as at Jun

Availablefor-sale (AFS)

reserve

(4

7

7

densed Con

by the Supeuired in 2008on was paid

uity. This rere based rem

ation under uch plans asolders. As oes under tof 2010.

asury shares

ne 26, 2010:

-Cash Flow

Hedge (CFH)

reserve

4) 5

-

6 (63

2 (58

   solidated

ervisory Boa8 29,520,220d in 2008. Tepurchase inmuneration

the Compas approved f June 26, 2the Compa

s equivalent

Foreigncurrenc

translatioreserve

5 1,1

-

) (48

) 6

 

rd to repurch0 shares, fo

The repurchantends to coprograms.

any’s shareby the 2005

2010, 13,832ny’s share

t to 29,087,4

n cy on e

Totaothe

reserv

174 1,8

(

-

87) (4

687 1,3

47 

hase up r a total

ase was over the

e based 5, 2006, 2,794 of

based

426.

al er ves

867

31)

17

74)

379

Semi-AnnFinancial

2016 Share

The 2016 SConvertible

Share-base

The share-bpayment traremuneratio

Cash Flow

The cash floincurred as portion of th

Available-f

This reserve

Foreign cu

The foreigntranslation o

At the Coma cash dividthe Compa$79 million per share c

At the Comcash divideCompany’s

nual Report Statements

e conversio

Share convere bond.

ed compens

based compansactions pon.

w hedge rese

ow hedge reat the repor

he gain or lo

for-sale (AF

e records fa

urrency tran

currency traof the financ

e

pany’s Annudend of $0.ny’s sharehincluding thash dividend

pany’s annund of $0.28 shareholde

 2010 – Note

s

on option

rsion option

sation rese

pensation resprovided to e

erve

eserve contarting date. Ass on hedgi

FS) reserve

ir value cha

nslation rese

anslation rescial statemen

e) DIVID

ual General 12 per commolders. Thro

he payment d totaling $2

ual general mper commonrs.

es to the In

reserve is u

rve

serve is useemployees, i

ains the effecAlso recorded

ng instrume

nges on ava

erve

serve is usednts of foreign

DENDS

Meeting of mon share tough Decemof $3 million

26 million wa

meeting of shn share to b

 

 

terim Cond

used to recog

d to recognincluding key

ctive portiond here as a snts in cash f

ailable-for-sa

d to record en subsidiarie

Shareholderto be paid in

mber 31, 200n for the rel

as paid in the

hareholderse paid in fou

densed Con

gnize the eq

ze the valuey manageme

of the cashseparate comflow hedges

ale financial

exchange dies.

rs held on Mn four equal09, paymentated withhoe first quarte

held on Maur equal insta

   solidated

quity compon

e of equity-seent personn

flow hedge mponent, is .

assets.

fferences ar

May 20, 2009l installmentts were madlding tax. Th

er of 2010.

y 25, 2010, allments wa

 

nent of the 2

ettled share-el, as part o

relationshipthe effective

rising from th

9, the distribts was approde for an amhe remainin

the distributs approved

48 

2016

-based f their

p e

he

bution of oved by

mount of g $0.03

tion of a by the

Semi-AnnFinancial

As at June of which $1mainly due

In millions oAs at Janu2010 (auditExpense recognized the period Amounts paDiscount exCurrency translation eAs at June2010 (unau

The Group ST-Ericssonprimarily re

nual Report Statements

14. P

26, 2010, pr17 million arto movemen

of USD ary 1, ted)

during

aid xpense

effect e 26, udited)

recorded in n restructurilate to on-go

 2010 – Note

s

PROVISIONS

rovisions for re classified nts in the pro

ManufacturiRestructuri

plan

(

the first halfng plan annoing termina

es to the In

FOR RESTRU

r risks amounas non-curr

ovisions for

ing ng

ST-Erestru

p

67

8

(18)1

-

58

f of 2010 resounced andtion benefits

 

 

terim Cond

UCTURING

nted to $360rent. Movemrestructuring

Ericsson ucturing plan

83

36

(25)-

(12)

82

structuring c expanded i

s for involunt

densed Con

0 million (Dements during g which are

Other restructuring

initiatives

5

(2

(

3

harges totaln 2009. Thetary leaves,

   solidated

ecember 31, for the first detailed as f

g Restruprov

53

3

2)-

4)

30

ing $36 milliese restructumainly in Eu

 

2009: $399 half 2010 arfollows:

cturing ision

203

47

(65)1

(16)

170

on, pursuanuring chargesuropean loca

49 

million) re

nt to the s ations.

Semi-AnnFinancial

Expenses radministrati

In millions oDepreciatioEmployee bPurchase oservices Changes inTransportatRoyalties aAdvertising Other expeTotal cost developmeadministra

Employee b

In millions oWages andSocial secuShare-basePension cosTotal emplOf which incCost of saleSelling, genResearch a

 

nual Report Statements

15. E

recorded as ive are detai

of USD on and amortbenefit expeof materials a

inventories tion nd patents costs

nses of sales, re

ent, and selative

benefit expe

of USD salaries

urity costs ed compensasts oyee benefcluded in: es neral and adand developm

 2010 – Note

s

EXPENSES BY

cost of salesiled as follow

tization nses and subcont

esearch andling, genera

nses are de

ation expens

fit expenses

ministrative ment

es to the In

Y NATURE

s and researws:

racting

d al and

tailed as foll

se

s

 

 

terim Cond

rch and deve

(unJune 26

201074

1,60

1,89

(1065

44

4,70

lows:

(uJune 26

20101,2

3

1,6

636

densed Con

elopment an

naudited) 6, June 2

20094502 1,

92 1,

3)6357

640

02 4,4

naudited) 6, June

20011 110146702 1

385806

   solidated

nd selling, ge

27, 9 785544

373

3685346

7290

466

27, 9 ,172312

3822

,544

589350605

 

eneral and

50 

Semi-AnnFinancial

Other incom

In millions oResearch aForeign excNet foreign Gain on salOther Total other

Other expe

In millions oStart-up / PPatent litigaForeign excChange in fOther expeTotal other

The Group Public fundonce the agconditions h

Start-up cosfacilities, befabrication lin the same

nual Report Statements

16. O

me consisted

of USD and developmchange forwexchange ge of non-cur

r income

nses consist

of USD Phase out coation costs change forwfair value of nses r expenses

receives siging for resea

greement withave been m

sts represenefore reachinline’s quality

e manner.

 2010 – Note

s

OTHER INCOM

d of the follow

ment fundingard contract

gain rrent assets

ted of the fo

sts

ard contractinterest swa

gnificant pubarch and devth the respe

met.

nt costs incung the earliey certification

es to the In

ME / EXPENS

wing:

g ts

ollowing:

ts ap

blic funding frvelopment isctive govern

rred in the ser of a minimn. Phase-out

 

 

terim Cond

SES

(June 26

2010

June 22010

rom governms recognizednmental age

start-up and mum level of

t costs for fa

densed Con

unaudited)6, Jun

2049

-321

55

(unaudited)26, 0

Ju2

55

90-2

102

mental agend ratably as tncy has bee

testing of thproduction o

acilities durin

   solidated

e 27, 009

131 31 13

- 1

176

ne 27, 2009

34 12

- 8 8

62

ncies in sevethe related c

en signed an

e Group’s neor six monthng the closin

 

eral jurisdictiocosts are incnd all applica

ew manufacs after the g stage are

51 

ons. curred able

cturing

treated

Semi-AnnFinancial

Patent costand legal felitigation co

For the pericalculated a

In millions oBasic EPS Net result Weighted aBasic EPS Diluted EPNet result Net result aWeighted aDilutive effeDilutive effeDilutive effeNumber of sDiluted EP

As at June were owned

As at June 37,050,935outstandingbonds. Non2010.

 

nual Report Statements

s include legees, netted asts.

17. E

iod ended Juas follows:

of USD

average shar

S

adjusted average sharect of stock oect of non-veect of convershares usedS

26, 2010, cod by the Gro

26, 2010, th common sh

g for convertne of these b

 2010 – Note

s

gal and attoragainst settle

EARNINGS PE

une 26, 2010

res outstand

res outstandoptions ested sharesrtible debt d for diluted

ommon sharoup as treasu

here were ouhares. Thereible debt, ou

bonds have b

es to the In

rney fees anements, whic

ER SHARE

0 and June 2

ding

ding

s

EPS

res issued wury shares.

utstanding ste was also thut of which 5been conver

 

 

terim Cond

nd payment fch primarily

27, 2009, ea

June 22010

879,115

879,115

2,5075

881,629

were 910,339

tock options he equivalen5,624 for 201rted into sha

densed Con

for claims, pincludes rei

arnings (loss

(unaudited)26, 0

Ju2

3495,791 8750.40

349349

5,791 875-

7,8045,6249,219 8750.40

9,305 shares

exercisablent of 27,361,13 bonds anares during th

   solidated

patent pre-litimbursemen

ses) per sha

une 27, 2009

(790)

5,473,813 (0.90)

(790) (790)

5,473,813 - - -

5,473,813 (0.90)

s, of which 2

e into the equ044 commod 27,355,42he six month

 

igation consts of prior pa

re (“EPS”) w

29,087,426 s

uivalent of n shares 0 for the 20hs ended Ju

52 

ultancy atent

were

shares

16 une 26,

Semi-AnnFinancial

Transaction

In millions oSales and oResearch aOther purchOther incomAccounts reAccounts paOther asset

For the periprimarily wimanagemeCompany’sCEA, one omember of executive CBoard memthe CEO of member of director of OTelecom ansupply certawith LETI, aARM, and hand a subsinegotiated ware made otransactionsassociates

nual Report Statements

18. R

ns with signif

of USD other serviceand developmhases me and expeeceivable ayable ts (liabilities)

iods ended Jth significannt of the Gro Supervisory

of the membethe Board o

Chairman of mbers are no

Groupe Bulthe Supervis

Oracle Corpond its subsidain services a wholly-ownhas conducteidiary of Growithout the p

on an arms-les presented as listed in N

 2010 – Note

s

RELATED PA

ficant shareh

es ment expens

enses

)

June 26, 201nt shareholdeoup perform y Board is mers of the Suf Directors othe Board on-executive ll until May 1sory Board ooration (“Oraiaries Equanto the Grou

ned subsidiaed transactio

oupe Bull. Eapersonal invength basis in the table

Note 6. 

es to the In

RTY

holders, thei

ses

10 and Juneers of the Grsimilar polic

managing dirupervisory Bof Technicolof Directors odirectors of

10, 2010, onof BESI and acle”), Flextrnt and Orangp. The Grou

ary of CEA. Tons with Soiach of the afvolvement ofin line with mabove also

 

 

terim Cond

ir affiliates a

June 22010

(

e 27, 2009, troup, or theicymaking fuector of Arev

Board is the Cor (formerly of ARM Holdf Soitec, onee of the memone of the m

ronics Internge, as well a

up has a longThe Group hitec and BESforementionef the Compamarket practinclude tran

densed Con

and other rela

(unaudited)26, 0

Ju2

154(129)

(18)(3)71

(50)-

he related pr subsidiarienctions. Oneva SA, whicChairman ofknown as T

dings PLC (“Ae of the Supembers of themembers of national and as Oracle’s ng-term joint Rhas certain liSI as well ased arrangemny’s Supervtices and cosactions bet

   solidated

ated parties

une 27, 2009

149 (112)

(33) (19) 129 (66)

(1)

party transaces and compe of the memh is a controf France Telhomson), anARM”), two ervisory Boae Supervisorthe SuperviDice Holdin

new subsidiaR&D partnericensing agrs with Technments and travisory Board nditions. Thtween the G

 

were as foll

ctions were panies in whmbers of the olled subsidiecom and a

nother is theof the Superrd members

ry Board is asory Board igs. France ary PeopleSrship agreemreements witnicolor, Flextansactions amembers ae related pa

Group and its

53 

ows:

ich

ary of a e non-rvisory s was also a is a

Soft ment th tronics are nd they

arty s

Semi-annu

III. SOL

The Sole Minterim condthe applicabassets, liabundertakinga fair reviewFinancial M

C. Bozotti, S

ual report 2

LE MEMBER O

Member of thdensed consble financial ilities, financ

gs included iw of the infor

Markets Supe

Sole Membe

 2010 – Sole

OF THE MAN

he Managingsolidated finreporting st

cial position n the consormation requervision Act (

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