Embedded Processing Solutions revenues were $1.82 billion and reflected mixed results. MMS revenues increased 4.9% to $1.17 billion, while DPG net revenues decreased significantly including ST-Ericsson and set-top box legacy products and commodity camera modules. EPS operating margin in the first nine months of 2015 was negative 5.8%, improving from a negative 9.8%, excluding the non-recurring catch-up of grants in the 2014 first nine months, mainly reflecting improved product mix, favorable currency impact and lower net operating expenses.

Net income, as reported, was $102 million in the first nine months of 2015, or $0.12 per share, compared to a net income of $85 million, or $0.10 per share in the first nine months of 2014 which included the non-recurring catch-up of grants of $97 million. On an adjusted basis, ST reported a non-U.S. GAAP net income per share of $0.18 excluding impairment, restructuring charges and one-time items in the first nine months of 2015, compared to a net income per share of $0.23 in the first nine months of 2014.*

The effective average exchange rate for the Company was approximately $1.19 to €1.00 for the first nine months of 2015, compared to $1.35 to €1.00 for the first nine months of 2014.

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* Adjusted net earnings per share is a non-US GAAP measure. For additional information and reconciliation to U.S. GAAP, please refer to Attachment A. 

Nine Months Revenue and Operating Results by Product Segment

^(a) Net revenues of "Others" include revenues from sales of Subsystems, assembly services, and other revenue. Operating income (loss) of "Others" includes items such as impairment, restructuring charges and other related closure costs, phase out and start-up costs, and other unallocated expenses such as: strategic or special research and development programs, certain corporate-level operating expenses, patent claims and litigations, and other costs that are not allocated to product groups, as well as operating earnings of the Subsystems and Other Products Group.

Fourth Quarter 2015 Business Outlook

Mr. Bozotti commented, "The softer market demand during the third quarter has led us to adjust down our manufacturing plan for the fourth quarter.

"We expect in the fourth quarter, revenues to decrease sequentially by about 6% at the mid-point, and the gross margin to be about 33.5% at the mid-point. The mid-point of the gross margin outlook incorporates an estimated 2 percentage points from fab under-loading, and further progress on the underlying gross margin.

"With respect to our Digital Product Group, we are making progress in narrowing the options and we have the objective to announce a final decision in early 2016."

The Company expects fourth quarter 2015 revenues to decrease about 6% on a sequential basis, plus or minus 3.5 percentage points. Gross margin in the fourth quarter is expected to be about 33.5%, plus or minus 2.0 percentage points.

This outlook is based on an assumed effective currency exchange rate of approximately $1.13 = €1.00 for the 2015 fourth quarter and includes the impact of existing hedging contracts. The fourth quarter will close on December 31, 2015.

Recent Corporate Developments 

• On August 20, ST announced that it had posted its IFRS 2015 Semi Annual Accounts for the six-month period ended June 27, 2015, on its website and filed them with the Netherlands Authority for the Financial Markets.

Q3 2015 - Product and Technology Highlights

Embedded Processing Solutions (EPS)

Microcontroller, Memory and Secure MCU (MMS)

• Launched STM32L4 ultra-low-power MCU in the mass market and began production ramp for a wearable band at a major OEM;
• Captured STM32F0 MCU design-in at a major Japanese consumer OEM;
• Continued expanding the STM32 development environment with releases of STM32L4 Ecosystem, the STM32Cube Qualified HAL Firmware, and an STM32F3 Motor-Control Nucleo Pack;
• Began production of STM32F0 and STM32F4 MCU for several consumer drones for a major Asian OEM;
• Qualified and certified the ST31H320 contact secure MCU for banking, ID, and pay-TV smartcards;
• Supported major pay-TV smartcard roll-out for China digital-TV market;
• Joined Entrust Datacard's Card Validation Program for STPay EMV smart-card solutions. 

Digital Products (DPG)

• Continued to expand Time-of-Flight photonic sensor business in Asia, with now more than 20 phone models available from several leading Asian smart-phone manufacturers;
• Unveiled DOCSIS 3.1 chipset solution;
• Revealed new family of SoCs for broadcast and connected HD HEVC for entry set-top boxes;
• Introduced world's first set-top-box SoC with integrated Wi-Fi and support for High Dynamic Range. 

Sense & Power and Automotive Products (SP&A)

Analog, MEMS and Sensors (AMS)

• Revealed that the flagship OnePlus 2 smartphone is using an ST gyroscope for optical image stabilization;
• Continued to ship large volume of Fingertip, Pressure Sensor, and 6-axis ultra-low-power MEMS accelerometer and gyroscope for the latest flagship model of Samsung Galaxy smartphones;
• Confirmed presence of low-noise Gyro in a market-leading tablet from a top maker;
• Ramped additional shipments of MEMS micro-mirrors for Perceptual Computing Initiatives with multiple computer manufacturers;
• Introduced industry's lowest-power, smallest-packaged, dual-channel 6-axis gyro/accelerometer inertial measurement unit that is capable of handling both gesture sensing and image stabilization;
• Launched a "medical-grade" ultra-low-power 3-axis accelerometer, available now in volume, specifically for medical applications, including implantable devices;
• Captured a design-win from a major automotive tier one with a high-g accelerometer for airbag applications in China;
• Completed airbag-electronics kit with the release of a pair of automotive central-airbag crash sensors suited for mounting in the airbag control unit to evaluate sensor data and trigger the appropriate restraint system;
• Started volume shipment of BlueNRG-MS for the enablement of data connection/exchange for automotive telematics services in China and for wearable devices from a leading activity-monitoring company;
• Captured socket for sub-GHz SPIRIT1 RF transceiver in a Smart-Home heat allocator/concentrator from a European-manufacturer;
• Expanded our presence with a top global brand with the start of shipments of high-end microphones and analog ICs for a TV remote controller;
• Enriched analog catalog offering with release to production of new 36V high-performance BiCMOS Op Amp.