|
1. THE COMPANY
STMicroelectronics N.V. (the “Company”) was formed in 1987
with the name of SGS-THOMSON Microelectronics by the com-bination of the
semiconductor business of SGS Microelettronica (then owned by Società
Finanziaria Telefonica ( S.T.E.T.), an Italian corporation) and the nonmilitary
business of Thomson Semiconducteurs (then owned by Thomson-CSF, a French
cor-poration) whereby each company contributed their respective semiconductor
businesses in exchange for a 50% interest in the Company. The Company designs,
develops, manufactures and markets a broad range of semiconductor integrated
circuits and discrete devices that are used in a wide variety of
micro-electronic applications.
The Company is registered in The
Netherlands with its statutory domicile in Amsterdam.
At December 31,
2001, 35.64% of issued shares of the Company (December 31, 2000: 43.77%) was
owned by STMicroelectronics Holding II B.V., 63.31% was owned by the public
(December 31, 2000: 56.23%), and 1.05% constituted treasury shares (December
31, 2000: 0.00%).
At December 31, 2000, and at December 31, 2001,
STMicroelectronics Holding II B.V. was 100% owned by STMicroelectronics Holding
N.V.
At December 31, 2000, STMicroelectronics Holding N.V. was owned as
follows:
 50% by FT1CI, a French holding company, whose
sharehold-ers were CEA-Industrie (51%) and France Telecom (49%)
50% by Finmeccanica, an Italian holding company, whose
shareholders were the Istituto per la Ricostruzione Industriale S.p.a. (I.R.I.)
(5%), the Italian Ministry of Treasury (32%) and the public (63%)
At
December 31, 2001, STMicroelectronics Holding N.V. was owned as
follows:
49% by FT1CI, a French holding company, whose
sharehold-ers are Areva (64%) (formerly known as CEA-Industrie) and France
Telecom (36%)
51% by Finmeccanica, an Italian holding company, whose shareholders
are the Italian Ministry of Treasury (32%) and the public (68%).
Under a
shareholder’s agreement terminating in December 2003, the French
shareholder, FT1CI, and the Italian share-holder, Finmeccanica, have agreed to
manage their interest in the Company through STMicroelectronics Holding II B.V.
and to hold equal voting rights in STMicroelectronics Holding II
B.V.
|
 |
2. SUMMARY OF
ACCOUNTING POLICIES
2.1 PRINCIPLES OF
CONSOLIDATION
The accompanying consolidated financial
statements have been prepared in accordance with accounting principles
gener-ally accepted in the United States of America (U.S. GAAP). The
Company’s consolidated financial statements include the assets,
liabilities and results of operations of its majority-owned subsidiaries. The
ownership of other interest holders is reflected as minority interests.
Intercompany balances and transactions have been eliminated in
consolidation.
2.2 USE OF
ESTIMATES
The preparation of financial statements in
accordance with U.S. GAAP requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes to the financial statements. Actual results could differ from those
estimates and may affect amounts reported in future periods.
2.3 FOREIGN CURRENCY
The U.S. dollar is
the reporting currency for the Company because the dollar is the currency of
reference in terms of market pricing in the worldwide semiconductor industry.
Furthermore, there is no currency in which the majority of transactions are
denominated, and revenues from external sales in U.S. dollars exceed revenues
in any other currency. The functional currency of each subsidiary throughout
the group is generally the local currency. For consolidation purposes, assets
and liabilities of these subsidiaries are translated at current rates of
exchange at the balance sheet date. Income and expense items are translated at
the average exchange rate for the period. The effects of translating the
financial position and results of operations from local functional currencies
are included in “other comprehensive income”.
Assets,
liabilities, revenue, expenses, gains or losses arising from foreign currency
transactions are recorded in the func-tional currency of the recording entity
at the exchange rate in effect at the date of the transaction. At each balance
sheet date, recorded balances denominated in a currency other than the
recording entity’s functional currency are translated at the exchange rate
prevailing at that date. The related exchange gains and losses are recorded in
the income statement.
The Company conducts its business on a global
basis in various major international currencies. As a result, it is exposed to
adverse movements in foreign currency exchange rates. The Company does enter
into foreign exchange forward contracts and currency options to neutralize its
exposure to changes in exchange rates and the associated risk arising from the
denom-ination of certain assets and liabilities in foreign currencies in the
Company’s subsidiaries. |
