Combined R&D and SG&A expenses in the first quarter were $568 million compared to $570 million and $571 million in the sequential and year-ago quarter, respectively.

First quarter other income and expenses, net, registered income of $17 million compared to $25 million and $28 million in the prior and year-ago quarter, respectively, mainly due to lower R&D funding.

Impairment and restructuring charges in the first quarter were $5 million compared to $24 million and $28 million in the prior and year-ago quarter, respectively, mostly related to the set-top box restructuring plan announced in January 2016. The Company continued to make progress on its restructuring of the set-top box business. Exiting the first quarter of 2017, the restructuring plan was on track and achieved a run-rate of about $126 million of the total $170 million of targeted annualized savings expected upon completion.

Operating income in the first quarter of $129 million was stable in comparison to the prior quarter and increased by $162 million on a year-over-year basis.

First quarter operating income before impairment and restructuring charges⁽¹⁾ was $134 million, equivalent to 7.4% of net revenues, decreasing from $153 million, or 8.2% of net revenues in the 2016 fourth quarter mainly due to lower revenues. On a year-over-year basis, operating income before impairment and restructuring charges⁽¹⁾ improved by $139 million reflecting  higher revenues, improved product mix, manufacturing efficiencies, better fab loading and benefits from the set-top box restructuring plan.

First quarter net income was $108 million, equivalent to $0.12 per share, compared to a net income of $112 million, equivalent to $0.13 per share, in the prior quarter. On a year-over-year basis, net income improved by $149 million from the net loss of $41 million in the year-ago quarter.

Cash Flow and Balance Sheet Highlights

Capital expenditure payments, net of proceeds from sales, were $219 million during the first quarter of 2017 compared to $100 million in the year-ago quarter.

Inventory was $1.20 billion at quarter end, up 2.5% from the prior quarter. Inventory in the first quarter of 2017 was at 3.8 turns or 95 days.

In the first quarter, the Company paid cash dividends totaling $53 million. Today, ST's Supervisory Board has proposed to the 2017 Annual General Meeting of Shareholders to declare a cash dividend of US$0.24 per outstanding share of the Company's common stock, to be distributed in quarterly installments of $0.06 in each of the second, third and fourth quarter of 2017 and first quarter of 2018 to shareholders of record in the month of each quarterly payment.

ST's net financial position⁽¹⁾ was $518 million at April 1, 2017 compared to $513 million at December 31, 2016. ST's financial resources equaled $1.98 billion and total debt was $1.46 billion at April 1, 2017.

Total equity, including non-controlling interest, was $4.77 billion at quarter end.

(1)    Non-U.S. GAAP measure. See Appendix for additional information and reconciliation to U.S. GAAP.

Second Quarter 2017 Business Outlook

Mr. Bozotti commented, "Entering the second quarter, we continue to see healthy demand, with strong booking trends across all our product groups and regions.

"As a result, we expect second quarter revenues to increase about 5.0% on a sequential basis, representing year-over-year growth of about 12.3% at the mid-point of our guidance range. We anticipate another quarter of margin expansion with second quarter gross margin of about 38.1% at the mid-point, leading to strong year-over-year improvement in operating and net income".

The Company expects second quarter 2017 revenues to increase about 5.0% on a sequential basis, plus or minus 3.5 percentage points. Gross margin in the second quarter is expected to be about 38.1% plus or minus 2.0 percentage points.

This outlook is based on an assumed effective currency exchange rate of approximately $1.08 = €1.00 for the 2017 second quarter and includes the impact of existing hedging contracts. The second quarter will close on July 1, 2017.

Q1 2017 - Product and Technology Highlights

Automotive and Discrete Group (ADG) 

• Started production of 32-bit Power Architecture 40nm microcontrollers for a new-generation gateway with leading-edge processing and extended-connectivity capability for an embedded-security hardware module for multiple customers;
• Captured a win for 40nm 32-bit Power Architecture-based microcontrollers for a battery-management system with a European car maker and for a seat-belt pre-tensioner application with a major European Tier-1;
• Landed an award for an infotainment processor and AM/FM tuner platform from a major Japanese Tier-1 for a Chinese car maker;
• Began production of latest-generation single-chip AM/FM CMOS tuners for a Japanese Tier-1;
• Continued to build on success with a parking brake application specific standard product with wins from multiple customers in all regions;
• Earned an important award for a lithium-cell balancing device for a battery-management system at a leading Asian maker;
• Maintained traction with a win for our Class AB amplifiers in wins for aftermarket Head Units for top Japanese Tier-1;
• Won the Gen 2 Power Control Unit for a door zone application at a major European Tier-1;
• Captured the Body Control Unit for a module being built by an American Tier-1 for a European carmaker;
• Won sockets for high-voltage MDmesh MOSFETs for an on-board charging application and for a low-voltage MOSFET for a battery-management system at an important American OEM;
• Recorded several design wins for low-voltage power transistors for a 48V dc/dc application and fuel pumps at important European and Asian Tier-1s;
• Received an important award for SiC MOSFETs for on-board chargers and dc/dc converters from a leading Asian OEM.
• Recorded several design wins with rectifiers, protection devices, and automotive-grade IPAD devices for powertrain, on-board charger, ADAS and Safety, and high-speed data-line networks with multiple global Tier-1s;
• Registered important design-wins for field-effect rectifier diodes from a leading power-supply maker in Asia for adaptors and gaming applications;
• Continued fast expansion of RF integrated passive device solution for RF connectivity module for the IoT market with several large customers;
• Earned important design wins with high-voltage MDmesh devices and low-voltage STripFET MOSFETs from an important customer in Asia for a gaming application.

Analog and MEMS Group (AMG)

• Ramped production of several products inside Samsung Galaxy S8 and S8+ flagship smartphones including 6-axis ultra-low-power MEMS inertial measurement unit integrating accelerometer and gyroscope, optical-image-stabilization gyroscope, barometric sensor, touch controller, and multifunction protection switch;
• Announced its motion sensors and touch-screen controller IC were selected for Nintendo Switch(TM) system, Nintendo's latest innovative gaming device;
• Continued to gain share with inertial and environmental sensors in smartphones and wearables worldwide and automotive car navigation systems;
• Launched a partnership with USound to produce world's first piezo-MEMS speaker with excellent sound quality, targeting IoT applications;
• Received recognition from Juniper Research for SensorTile as the best wearable platform for IoT Services;
• Introduced a new ultra-low power 3-axis smart accelerometer with many embedded smart functions that reduce overall system power consumption;
• Captured first ever production order for a 6-axis inertial sensor to be used in high-end industrial applications;
• Continued strong momentum in low-power radio solutions for IoT with BlueNRG Bluetooth^® low energy solutions as well as the SPIRIT sub-1GHz family for home and building automation;
• Won multiple designs for a range of Analog products for next-generation smart metering solutions;
• Captured several design wins for our STSPIN32 motion control family;
• Earned qualification from the United States Defense Logistics Agency (DLA) for two Rad-Hard high-frequency, high-current drivers for Space applications (RHRPM4424 & RHRPM4423); these are the first Rad-Hard products using a radiation-enhanced version of ST's proprietary BCD technology to get this certification.

Microcontrollers and Digital ICs Group (MDG)