(*)Adjusted earnings per share, net operating cash flow and net financial position are non-U.S. GAAP measures. For additional information please refer to Attachment A.
Mr. Bozotti said, "Our focus on strong capital management is clearly evidenced from our cash flow and balance sheet metrics. We took aggressive actions to generate cash by accelerating our cash conversion cycle, resulting in a $565 million reduction in inventory and record inventory turns above 5 times. We reduced capital expenditures to a capex-to-sales ratio of 5.3%, in line with our asset lighter strategy. We repurchased approximately 30% of our outstanding convertible bonds with no need of refinancing. And we closed the year with $2.9 billion in cash and marketable securities."
Full Year 2009 Results
Net revenues, as reported, for the full year 2009 were $8.51 billion compared to 2008 revenues of $9.84 billion, which included $299 million in Flash revenues that were deconsolidated on March 30, 2008.
Gross margin for the full year 2009 was 30.9% of net revenues, lower than the 36.2% reported in 2008, due to industry conditions that resulted in significant fab under-loading, operating inefficiencies and above normal price pressure. Unused capacity charges negatively impacted full year 2009 gross margin by approximately 4 percentage points in addition to the severe impact of an unprecedented volume discontinuity on fab operations and efficiency.
Combined SG&A and R&D expenses in 2009 were $3,524 million compared to $3,339 million in 2008, reflecting the expansion of the Company's activities through M&A and now in the ST-Ericsson joint venture owned 50% by ST, as consolidated by ST under the integral method.
Equity in earnings of joint ventures registered a net loss of $337 million in 2009, compared to $553 million in 2008, principally reflecting impairment charges related to Numonyx for both periods. In 2009, ST booked $270 million as income for losses attributable to non-controlling interests, but consolidated in ST's financial results.
Net loss, as reported, was $1,131 million in 2009, or $-1.29 per share, compared to a net loss of $786 million, or $-0.88 per share in 2008. On an adjusted basis, ST reported in 2009 a net loss, excluding impairment, restructuring and Other-Than-Temporary-Impairment (OTTI) charges and losses on financial assets attributable to parent Company's shareholders, of $627 million, or $-0.72 per share.*
In 2009, the effective average exchange rate for the Company was approximately $1.37 to 1.00 euro, compared to $1.49 to 1.00 euro for 2008. The Company estimates the strengthening of the U.S. dollar against the Euro to have had a positive impact of approximately $380 million for the full year 2009 operating results.
Full Year 2009 Revenue and Operating Results by Product Segment
The following table provides a breakdown of revenues and operating results by product segment. Unused capacity charges are reflected in the segment "Others".
In Million US$
Full Year 2009
Full Year 2008
FMG (Flash Memories Group)