As Filed with the Securities and Exchange Commission on June 30, 1999
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As filed with the Securities and Exchange Commission on June 30, 1999 -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F |_| REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the fiscal year ended: December 31, 1998 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the transition period from to Commission file number: 1-13546 STMicroelectronics N.V. (Exact name of Registrant as specified in its charter) Not Applicable The Netherlands (Translation of Registrant's (Jurisdiction of incorporation name into English) or organization) Technoparc du Pays de Gex -- B.P. 112 Route de Pre-Bois 165, rue Edouard Branly ICC Bloc A 01637 Saint Genis Pouilly 1215 Geneva 15 France Switzerland (Addresses of principal executive offices) Securities registered or to be registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class: which registered: Common Shares, nominal value Euro 3.12 per share New York Stock Exchange Liquid Yield OptionTM Notes due June 10, 2008 New York Stock Exchange Securities registered or to be registered pursuant to Section 12(g) of the Act: None Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 142,478,106 Common Shares Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No __ Indicate by check mark which financial statement item the registrant has elected to follow: Item 17 __ Item 18 |X| -------------------------------------------------------------------------------- TABLE OF CONTENTS PART I Cautionary Statement Regarding Forward-Looking Statements..................... 3 Presentation of Financial Information......................................... 3 Item 1. Description of Business............................................. 4 Item 2. Description of Property.............................................31 Item 3. Legal Proceedings...................................................34 Item 4. Control of Registrant...............................................36 Item 5. Nature of Trading Market............................................40 Item 6. Exchange Controls and Other Limitations Affecting Security Holders..44 Item 7. Taxation............................................................44 Item 8. Selected Consolidated Financial Data................................48 Item 9. Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................48 Item 9A. Quantitative and Qualitative Disclosures About Market Risk..........48 Item 10. Directors and Officers of Registrant................................51 Item 11. Compensation of Directors and Officers..............................59 Item 12. Options to Purchase Securities from Registrant or Subsidiaries......60 Item 13. Interest of Management in Certain Transactions......................61 PART II Item 14. Description of Securities to be Registered *........................62 PART III Item 15. Defaults Upon Senior Securities *...................................62 Item 16. Changes in Securities and Changes in Security for Registered Securities * PART IV Item 17. Financial Statements *..............................................62 Item 18. Financial Statements................................................62 Item 19. Financial Statements and Exhibits...................................62 Certain Terms ................................................................64 * Omitted because item is not applicable. 2 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Certain of the statements contained in this annual report that are not historical facts, including without limitation, certain statements made in the sections hereof entitled "Item 1: Description of Business" and "Item 9: Management's Discussion and Analysis of Financial Condition and Results of Operations," are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended) that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those in such statements due to, among other factors, (i) the highly cyclical nature of the semiconductor industry, (ii) competition, (iii) increased industry capacity, (iv) variability of operating results, (v) capital requirements, (vi) new product developments and technological change, (vii) manufacturing risks, (viii) the loss of key personnel, (ix) economic downturn in any of our major markets, (x) possible acquisitions, (xi) control of the Company and potential conflicts of interest, (xii) key customers and strategic relationships, (xiii) intellectual property issues, (xiv) certain legal proceedings, (xv) the uncertainties of state support for research and development and other funding, (xvi) international operations, (xvii) currency fluctuations, (xviii) dependence on certain sources of supply, (xix) environmental regulations and (xx) year 2000 compliance. See "Risk Factors" included in the Company's Prospectuses dated June 5, 1998. PRESENTATION OF FINANCIAL AND OTHER INFORMATION References in this annual report to published industry data are references to data published by Dataquest, Inc. ("Dataquest") and references to trade association data are references to World Semiconductor Trade Statistics ("WSTS"). Except as otherwise disclosed herein, all references to the Company's market positions in this annual report are based on 1998 revenues according to published industry data. Certain terms used in this annual report are defined in "Certain Terms." In this annual report, references to the "EU" are to the European Union, references to the "Euro" and the "euro" are to the euro currency of the EU, references to the "United States" are to the United States of America and references to "$" or to "U.S. dollars" are to United States dollars. 3 PART I Item 1: Description of Business The Company STMicroelectronics N.V. (the "Company") is a global independent limited liability semiconductor company that designs, develops, manufactures and markets a broad range of semiconductor integrated circuits and discrete devices used in a wide variety of microelectronic applications, including automotive products, computer peripherals, telecommunications systems, consumer products, industrial automation and control systems. According to published industry data, in 1998 STMicroelectronics ranked ninth among worldwide suppliers of semiconductor devices. On the basis of 1998 revenues, STMicroelectronics was the world's leading supplier of MPEG 2 decoder ICs, smartcard MCUs, special automotive ICs and EPROM memories, the second leading supplier of EEPROM memories and the third leading supplier of analog monolithic and mixed-signal ICs and EEPROM memories. The Company currently offers more than 3,000 main types of products to approximately 800 direct customers. Major customers include Alcatel, Bosch, Chrysler, Ericsson, Ford, Gemplus, Hewlett-Packard, IBM, Matsushita, Motorola, Nokia, Nortel Networks, Philips, Pioneer, Samsung, Schlumberger, Seagate Technology, Siemens, Sony, Thomson Multimedia and Western Digital. The Company also sells its products through distributors. The Company offers a diversified product portfolio and develops products for a wide range of market applications to reduce its dependence on any single product, industry or application market. Within its diversified portfolio, the Company has focused on developing products that exploit its technological strengths in creating customized, system-level solutions with substantial analog and mixed-signal content. Products include differentiated ICs (which the Company defines as being its dedicated products, semicustom devices and microcontrollers) and analog ICs (including mixed-signal ICs), the majority of which are also differentiated ICs. As a leading provider of differentiated ICs, the Company has developed close relationships with customers, resulting in early knowledge of their evolving requirements and opportunities to access their markets for other products. Differentiated ICs, which are less vulnerable to competitive pressures than standard commodity products, accounted for approximately 62% of the Company's net revenues in 1998 compared to approximately 57% in 1997. The Company also targets applications that require substantial analog and mixed-signal content and can exploit the Company's system level expertise. Analog ICs accounted for approximately 51% of the Company's 1998 net revenues compared to approximately 49% in 1997, while discrete devices accounted for approximately 13% of the Company's net revenues in 1998 compared to approximately 14% in 1997. In recent years differentiated ICs, in particular analog ICs, have experienced less volatility