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SGS-THOMSON MICROELECTRONICS REPORTS 30.7% INCREASE IN SECOND QUARTER REVENUES
For the 1995 second quarter net revenues grew 30.7% to $878.5 million from $672.4 million in the corresponding quarter of 1994. The revenue growth versus the first quarter of 1995 was 12.8%. Sales gains were strong in all major geographic markets, with the Asia Pacific region posting the largest increase in net revenues. Net revenues in the Asia Pacific region increased primarily as a result of increased sales of a broad range of products, with devices for computer peripherals, microcontrollers and EPROMs showing the largest growth. From a product family standpoint, differentiated products grew faster than standard and commodity devices and accounted for 50.1% of total revenues.
Operating profit for the 1995 second quarter rose 42.6% to $157.7million from $110.6 million in the second quarter of 1994, reflecting in particular the absence of provisions for restructuring costs and other factors. Net earnings in the second quarter of 1995 increased 41.7% to $122.6 million and reflect an effective tax rate of 19.7%. In the second quarter of 1994, net earnings totalled $86.5 million based upon an effective tax rate of 17.6%. On a per share basis, second quarter earnings increased 30.1% to $0.95 from $0.73 in the second quarter of 1994. Weighted average number of shares outstanding totalled 128.8 million for the 1995 second quarter compared to 119.0 million in the 1994 second quarter.
Pasquale Pistorio, President and Chief Executive Officer, commented, "Business conditions continue to be robust. Growth in net revenues for the second quarter reflect broad based demand for semiconductor products. While second and fourth quarters of the year are generally our strongest quarters, the results for this quarter are particularly good."
The gross profit margin for the second quarter of 1995 was 40.0% compared to 42.1% in the 1994 second quarter. For the six months ended July 1, 1995, the gross profit margin was 40.9% compared to 42.1% for the 1994 six-month period. The decrease in the gross profit margin for both periods was attributable to increased costs linked to the upgrading of some manufacturing facilities as well as to the negative influence of the weakening US dollar.
Research and development expenses totalled $105.1 million in the second quarter of 1995 and represented 12.0% of net revenues compared to $82.7 million or 12.3% of net revenues in the second quarter of 1994. The Company is continuing to invest heavily in R&D, with an increase of 7.8% between the first and the second quarters of 1995. Capital expenditures totalled $272.9 million in the 1995 second quarter and $538.3 million year-to-date.
Selling, general and administrative expenses in the 1995 second quarter totalled $99.8 million or 11.4% of net revenues compared to $82.1 million or 12.2% of net revenues in the year ago quarter.
SGS-THOMSON also announced that in July its latest front-end facility in Phoenix, Arizona has completed its critical qualification procedures ahead of schedule and is now starting to ramp-up production.
Mr. Pistorio commented, "We are pleased to report our progress at our Phoenix fab. We believe this represents one of the fastest start-ups of a leading edge wafer fab. This facility will help us meet the surging demand for our STX86 and other high end VLSI ICs."
During the quarter, SGS-THOMSON also announced its continued success in the analog sector of the semiconductor industry. Analysts at Dataquest Inc. confirmed the Company as the leading supplier of analog integrated circuits in 1994, with a market share of 7.8% worldwide.
The Company's presence in the multimedia sector was also strengthened, following the introduction of the STG2000 multimedia accelerator, a single chip video, audio and 3D graphics processor which has the potential to allow the PC to become the premier consumer multimedia platform. SGS-THOMSON's success in applying MPEG decoder ICs for PCs, video CD players and digital TV systems was once more confirmed, with cumulative shipments of those components very close to the level of 3 million units.
For the six months ended July 1, 1995, net revenues increased 30.3% to $1.66 billion from $1.27 billion, and operating profit increased 40.6% to $299.4 million from $212.9 million for the first six months of 1994. Reflecting an increase in the effective tax rate from 18.0% to 21.3%, net earnings for the first half of 1995 rose 38.3% to $229.5 million from $166.0 million in the 1994 period. On a per share basis, net earnings totalled $1.78 for the 1995 six-month period compared to $1.40 for the first six months of 1994. The weighted average number of shares outstanding for the recent six-month period was 128.7 million compared to 119.0 million in the 1994 period.
SGS-THOMSON Microelectronics is a global independent semiconductor Company listed on the New York Stock Exchange and on the Bourse de Paris. The Company designs, develops, manufactures and markets a broad range of semiconductor integrated circuits (ICs) and discrete devices used in a wide variety of microelectronics applications, including telecommunication systems, computer systems, consumer products, automotive products and industrial automation and control systems.