As filed with the Securities and Exchange Commission on June 27, 2000

================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 ---------------
                                    FORM 20-F

[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
     EXCHANGE ACT OF 1934
                                       OR
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

                  For the fiscal year ended: December 31, 1999
                                       OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
     1934
                        For the transition period from      to

                         Commission file number: 1-13546

                                 ---------------
                             STMicroelectronics N.V.
             (Exact name of Registrant as specified in its charter)

         Not Applicable                                The Netherlands
  (Translation of Registrant's                 (Jurisdiction of incorporation
       name into English)                             or organization)

                                Route de Pre-Bois
                                 ICC Bloc A1215
                                    Geneva 15
                                   Switzerland

                    (Address of principal executive offices)

 Securities registered or to be registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>

                                                                           Name of each exchange on
       Title of each class:                                                    which registered:
---------------------------------------------------------                  ------------------------
<S>                                                                        <C>
Common Shares, nominal value EUR 3.12 per share*                           New York Stock Exchange
Liquid Yield OptionTM Notes due June 10, 2008                              New York Stock Exchange
Liquid Yield OptionTM Notes due September 22, 2009                         New York Stock Exchange
</TABLE>

     * (not adjusted to reflect the 3:1 split effected on May 5, 2000)

     Securities registered or to be registered pursuant to Section 12(g) of the
Act: None

                                 ---------------

     Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act: None

                                 ---------------

     Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the annual
report:

                           289,808,140 Common Shares*

     * (not adjusted to reflect the 3:1 split effected on May 5, 2000)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                              Yes [X]   No [ ]

     Indicate by check mark which financial statement item the registrant has
elected to follow:

                          Item 17 [ ]   Item 18 [X]

================================================================================
<PAGE>

                                TABLE OF CONTENTS


                                     PART I

                                                                       Page No.
Cautionary Statement Regarding Forward-Looking Statements..............    3
Presentation of Financial Information..................................    3
Item 1.  Description of Business.......................................    4
Item 2.  Description of Property.......................................    26
Item 3.  Legal Proceedings.............................................    29
Item 4.  Control of Registrant.........................................    29
Item 5.  Nature of Trading Market......................................    33
Item 6.  Exchange Controls and Other Limitations Affecting
          Security Holders.............................................    37
Item 7.  Taxation......................................................    37
Item 8.  Selected Consolidated Financial Data..........................    41
Item 9.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations..........................    41
Item 9A. Quantitative and Qualitative Disclosures About
          Market Risk..................................................    41
Item 10. Directors and Officers of Registrant..........................    45
Item 11. Compensation of Directors and Officers........................    52
Item 12. Options to Purchase Securities from Registrant or
          Subsidiaries.................................................    52
Item 13. Interest of Management in Certain Transactions................    53

                             PART II

Item 14. Description of Securities to be Registered *..................    54

                            PART III

Item 15. Defaults Upon Senior Securities *.............................    54
Item 16. Changes in Securities and Changes in Security for
          Registered Securities *......................................    54

                             PART IV

Item 17. Financial Statements *........................................    54
Item 18. Financial Statements..........................................    54
Item 19. Financial Statements and Exhibits.............................    55

Certain Terms .........................................................    56


*Omitted because item is not applicable.


<PAGE>


            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     Certain of the statements contained in this annual report that are not
historical facts, including without limitation, certain statements made in the
sections hereof entitled "Item 1: Description of Business" and "Item 9:
Management's Discussion and Analysis of Financial Condition and Results of
Operations," are statements of future expectations and other forward-looking
statements (within the meaning of Section 27A of the Securities Act of 1933, as
amended) that are based on management's current views and assumptions and
involve known and unknown risks and uncertainties that could cause actual
results, performance or events to differ materially from those in such
statements due to, among other factors, (i) inability to meet customer demand,
(ii) capital requirements, (iii) new product developments and technological
change, (iv) manufacturing risks, (v) inability to achieve timely ramp-up of
production, (vi) the loss of key personnel and the inability to recruit
additional personnel, (vii) the highly cyclical nature of the semiconductor
industry, (viii) competition, (ix) inability of the foundry suppliers to meet
order requirements, (x) variations in industry capacity, (xi) variability of
operating results, (xii) economic downturn in any of our major markets, (xiii)
possible acquisitions, (xiv) control of the Company and potential conflicts of
interest, (xv) loss of key customers and strategic relationships, (xvi)
intellectual property issues, (xvii) international operations and the related
regulatory environment, including changes in laws related to investment and
taxation, (xviii) currency fluctuations, (xix) dependence on certain sources of
supply and (xx) environmental regulations. See also "Risk Factors" included in
the Company's Prospectuses dated September 16, 1999.


                 PRESENTATION OF FINANCIAL AND OTHER INFORMATION

     References in this annual report to published industry data are references
to data published by Dataquest, Inc. ("Dataquest") and references to trade
association data are references to World Semiconductor Trade Statistics
("WSTS"). Except as otherwise disclosed herein, all references to the Company's
market positions in this annual report are based on 1999 revenues according to
published industry data. Certain terms used in this annual report are defined in
"Certain Terms."

     In this annual report, references to the "EU" are to the European Union,
references to the "EUR" and the "euro" are to the euro currency of the EU,
references to the "United States" are to the United States of America and
references to "$" or to "U.S. dollars" are to United States dollars.

                                       3
<PAGE>

                                     PART I

                         Item 1: Description of Business

The Company

         STMicroelectronics N.V. (the "Company") is a global independent limited
liability semiconductor company that designs, develops, manufactures and markets
a broad range of semiconductor integrated circuits and discrete devices used in
a wide variety of microelectronic applications, including automotive products,
computer peripherals, telecommunications systems, consumer products, industrial
automation and control systems. The Company believes it was eighth among
worldwide suppliers of semiconductor devices in 1999, based on various
independent market research institutes and published company reports. On this
basis, STMicroelectronics was the world's leading supplier of differentiated
analog and mixed-signal ICs (ASICs and ASSPs), digital decoder ICs (MPEG), disk
drive ICs, special automotive ICs, EPROM memories and protection devices, and
the second leading supplier of total analog and mixed-signal ICs, ADSL Kits,
EEPROM memories, thyristors and triacs, and smartcard MCUs. The Company
currently offers more than 3,000 main types of products to approximately 800
direct customers. Major customers include Alcatel, Bosch, DaimlerChrysler,
Ericsson, Gemplus, Hewlett-Packard, IBM, Marelli, Matsushita, Maxtor, Motorola,
Nokia, Nortel Networks, Philips, Pioneer, Samsung, Schlumberger, Scientific
Atlanta, Seagate, Siemens, Sony, Thomson Multimedia and Western Digital. The
Company also sells its products through distributors.

         The Company offers a diversified product portfolio and develops
products for a wide range of market applications to reduce its dependence on any
single product, industry or application market. Within its diversified
portfolio, the Company has focused on developing products that exploit its
technological strengths in creating customized, system-level solutions with
substantial analog and mixed-signal content. Products include differentiated ICs
(which the Company defines as being its dedicated products, semicustom devices
and microcontrollers) and analog ICs (including mixed-signal ICs), the majority
of which are also differentiated ICs. As a leading provider of differentiated
ICs, the Company has developed close relationships with customers, resulting in
early knowledge of their evolving requirements and opportunities to access their
markets for other products. Differentiated ICs, which are less vulnerable to
competitive pressures than standard commodity products, accounted for
approximately 63% of the Company's net revenues in 1999 compared to
approximately 62% in 1998. The Company also targets applications that require
substantial analog and mixed-signal content and can exploit the Company's system
level expertise. Analog ICs accounted for approximately 51% of the Company's
1999 net revenues compared to approximately 50% in 1998, while discrete devices
accounted for approximately 12% of the Company's net revenues in 1999 compared
to approximately 13% in 1998. In general, differentiated ICs, in particular
analog ICs, experience less volatility in sales growth rates and average selling
prices than the overall semiconductor industry.

         STMicroelectronics' products are manufactured and designed using a
broad range of manufacturing processes and proprietary design methods.
STMicroelectronics uses all of the prevalent function-oriented process
technologies, including CMOS, bipolar and nonvolatile memory technologies. In
addition, by combining basic processes, the Company has developed advanced
systems-oriented technologies that enable it to produce differentiated and
application-specific products, including BiCMOS technologies (bipolar and CMOS)
for mixed-signal applications, BCD technologies (bipolar, CMOS and DMOS) for
intelligent power applications and embedded memory technologies. This broad
technology portfolio, a cornerstone of the Company's strategy for many years,
enables the Company to meet the increasing demand for "system-on-a-chip"
solutions. To complement this depth and diversity of process and design
technology, the Company also possesses a broad intellectual property portfolio
that it uses to enter into cross-licensing agreements with many major
semiconductor manufacturers.

         In 1999, several prestigious awards were accorded to the Company's
regional subsidiaries, underscoring its long-standing commitment to business
excellence: the prestigious Malcolm Baldrige National Quality Award in the U.S.,
the Singapore Quality Award, the Moroccan National Quality Award, and the EPA
Climate Protection Award (US). These, together with the Company's previous
honors - the Malaysian Prime Minister Quality Award, the Malta Quality Award and
the European Quality Award for Business Excellence in the category of large
businesses awarded in 1997 by the European Foundation for Quality Management -
illustrate the success of the Company's unified Total Quality and Environmental
Management philosophy on four continents. Total Quality and Environmental
Management or "TQEM" defines a common set of objectives and performance
measurements for

                                       4
<PAGE>

employees in all geographic regions, at every stage of product design,
development and production for all product lines. See "Strategy" below and "Item
2: Description of Property--Manufacturing."

         The Company introduced in 1999 several new products and plans to
further develop and produce superintegrated, system-level silicon solutions for
a set of targeted applications such as computer peripherals (including hard disk
drives, optical storage devices, inkjet printers, monitors, LCD displays and
webcams), digital consumer devices (including set-top boxes, DVDs, digital
television, digital cameras and MP3 digital music players), wireless
telecommunications products (including digital cellular handsets), digital
networks (including xDSL, ATM, voice over Internet protocol ("VoIP") and optical
network ICs) as well as automotive electronics (including injection control,
safety, car radio and car multimedia) and smartcards (including
telecommunications, banking, pay TV and personal identification).

         In addition to the many dedicated and semicustom ICs developed using
power analog, digital and mixed-signal technologies, the Company has focused its
research and manufacturing efforts on developing an advanced range of the key
technological building blocks required by targeted applications. These building
blocks include (i) MPEG2 decoder ICs, (ii) a family of 16 bit (ST10, super 10),
32 bit (ST20) and 64 bit (ST50) microcontrollers, (iii) a family of general
purpose DSP cores for embedded applications based on the current D950 solution
and the ST100 (currently being sampled to customers) as well as several
dedicated DSP cores (MMDSP, SAFIRE, EMIRALDA) for specific applications, and
(iv) embedded volatile (DRAM and SRAM) and nonvolatile (EPROM, EEPROM and Flash)
memories.

         Applying its broad range of technologies and its expertise in diverse
application domains, the Company is currently embedding dedicated, semicustom
circuits and these advanced building blocks on the same chip. Superintegrated
products developed to date include the STi55XX Omega platform (a platform for
digital consumer applications such as set-top boxes and DVDs), which has
achieved significant design wins and production volumes in 1999.

         At the beginning of 1999, the Company implemented organizational
changes to better orient its product groups to end use applications. As a
result, the former Dedicated Products Group ("DPG") has become the
Telecommunications, Peripherals and Automotive Groups ("TPA"), while the former
Programmable Products Group has become the Consumer and Microcontroller Groups
("CMG"). Consequently, the Company's products are now organized into the
following principal groups:

         o        Telecommunications, Peripherals and Automotive

         o        Consumer and Microcontroller

         o        Memory Products

         o        Discrete and Standard ICs

         As part of its activities outside the above principal product groups,
the Company also has a New Ventures Group, which identifies and develops new
business opportunities to complement the Company's existing businesses, and a
Subsystems Product Group, which produces subsystems for industrial and other
applications.

         The Company has five 8-inch wafer production facilities of which two at
Crolles, France and Catania, Italy are operating at full capacity and currently
being expanded, one in Phoenix, Arizona, is almost saturated, and two in
Rousset, France and Agrate, Italy, are currently in start up mode with volume
production expected at the end of the second quarter of 2000. Construction of a
new 8-inch submicron facility is underway in Singapore. An additional 8-inch
submicron fabrication plant in Catania, Italy is planned to become operational
by the year 2002.

         In 1999, to face the sudden increase in demand, the Company bought a
new facility in Singapore preparing for production of 6-inch wafer by the end of
2000, performed expansion of its production of 6-inch wafers in Carrollton,
Texas and Rancho Bernardo, California, and completed three conversions from 5 to
6-inch in Rennes and Tours, France, and Catania, Italy.

                                       5
<PAGE>

         In line with its expansion of front-end facilities, the Company is also
expanding all its back-end plants at its existing facilities in Morocco, Malta,
Malaysia, Singapore, and China and started in early 2000 to equip a newly
acquired back-end plant in Tuas, Singapore.

         The Company has historically subcontracted part of its back-end
operations (in the range of 15% of total volumes) to external suppliers. In
1999, to cope with a sudden surge in demand, the Company has decided to
significantly increase the qualification of external foundries for front-end
manufacturing, with the aim of having the possibility to satisfy in the range of
15% of its total wafer demand through sub-contracts.

         The Company has also announced its decision to build an advanced
12-inch wafer pilot-line fab in Crolles, France which will be funded and
operated jointly with Philips Semiconductors. This new agreement expands the
existing technological cooperation agreement that has been in place with Philips
Semiconductors since 1992. The pilot line will initially be designed to produce
up to 1000 wafer per week, with potential to ramp up to 2000 wafers per week as
needed. Site preparation has commenced, with the first 12-inch wafers expected
to be processed around two years time. Furthermore, the Company will continue
its very productive cooperation program with France Telecom R&D (formerly CNET)
and with Leti (research lab of the French Commissariat a l'Energie Atomique -
CEA) as part of its contribution to the new joint pilot line in Crolles.

         STMicroelectronics is international in scope. The Company operates
front-end and/or back-end manufacturing facilities in Europe, the United States,
the Mediterranean and Asia Pacific regions, and conducts research and
development primarily in France and Italy and design, marketing and sales
activities in each of the electronics industry's major economic regions: Europe,
the United States, the Asia Pacific region and Japan. In 1999, approximately
36.3% of the Company's net revenues originated in Europe (compared to 41.6% in
1998), approximately 22.9% in North America (compared to 22.1% in 1998),
approximately 32.8% in the Asia Pacific region (compared to 29.4% in 1998),
approximately 4.7% in Japan (compared to 4.3% in 1998) and approximately 3.3% in
Region Five (including emerging markets such as South America, Africa, Eastern
Europe, India and the Middle East) (compared to 2.6% in 1998). See "--Sales,
Marketing and Distribution". In 1999, approximately 38% of the 6-inch equivalent
wafers manufactured by the Company were manufactured outside Europe and
approximately 45% of the Company's employees were located outside Europe.

         STMicroelectronics believes that strategic alliances are critical to
success in the semiconductor industry, and has entered into strategic alliances
with customers, other semiconductor manufacturers and major suppliers of design
software. The Company has entered into several strategic customer alliances,
including alliances with Alcatel, Bosch, Hewlett-Packard, Marelli, Nortel
Networks, Pioneer, Seagate, Thomson Multimedia and Western Digital, among
others. Customer alliances provide the Company with valuable systems and
application know-how and access to markets for key products, while allowing the
Company's customers to share some of the risks of product development with the
Company and gain access to the Company's process technologies and manufacturing
infrastructure. Alliances with other semiconductor manufacturers, such as the
cooperation with Philips Semiconductors in Crolles, France, for the development
of advanced CMOS logic manufacturing processes, as well as the building and
operations of a 12-inch wafer pilot line fab in Crolles, France, the agreement
with Mitsubishi for CMOS flash memory processes using 0.20 through 0.18 micron
lithography and the agreement with Hitachi on SuperH microprocessors, permit
costly research and development and manufacturing resources to be shared to
mutual advantage for joint technology development. The Company has established
joint development programs with leading suppliers such as Air Liquide, Applied
Materials, ASM Lithography, Canon, Hewlett-Packard, KLA-Tencor, LAM Research,
MEMC, Schlumberger, Teradyne and Wacker and with CAD tool producers including
Cadence and Synopsys. It is a participant in Sematech I 300I for the development
of 300 millimeter wafer manufacturing processes. STMicroelectronics is active in
joint European research efforts such as the MEDEA program, and also cooperates
with major research institutions and universities.

         In 1999, STMicroelectronics started development of 0.15 micron drawn
(0.13 micron effective gate length) CMOS process technology, at Crolles, France.
At the same time, STMicroelectronics has recently started production of its 0.15
micron effective gate length (0.18 micron drawn) CMOS technology, known as
HCMOS-8. This process is aimed at producing "system-on-chip" products
incorporating up to tens of millions of transistors combined with embedded
memory for telecom, digital consumer and computer applications.

                                       6
<PAGE>

Industry Background

         Semiconductors are the basic building blocks used to create an
increasing variety of electronic products and systems. Since the invention of
the transistor in 1948, continuous improvements in semiconductor process and
design technologies have led to smaller, more complex and more reliable devices
at a lower cost per function. As performance has increased and size and cost
have decreased, semiconductors have expanded beyond their original primary
applications (military applications and computer systems), to applications such
as telecommunications systems, consumer goods, automotive products and
industrial automation and control systems. In addition, system users and
designers have demanded systems with more functionality, higher levels of
performance, greater reliability and shorter design cycle times, all in smaller
packages at lower costs. These demands have resulted in increased semiconductor
content as a percentage of system cost. Calculated on the basis of the total
available market (the "TAM"), which includes all semiconductor products, as a
percentage of worldwide revenues from production of electronic equipment
according to published industry data, semiconductor pervasiveness has increased
from approximately 9% in 1991 to approximately 18% in 1999. The demand for
electronic systems has also expanded geographically with the emergence of new
markets, particularly in the Asia Pacific region.

         Semiconductor sales have increased significantly over the long term but
have experienced significant cyclical variations in growth rates. According to
trade association data the TAM increased from $17.8 billion in 1983 to $149.4
billion in 1999 (growing at a compound annual rate of approximately 14%). At the
same time the serviceable available market (the "SAM"), which prior to 1995
consisted of the TAM without DRAMS, microprocessors and opto-electronic products
and commencing in 1995 and for all subsequent periods presented, includes
microprocessors, increased from approximately $15.0 billion in 1983 to $122.9
billion in 1999 (growing at a compound annual rate of approximately 14%). In
1999, the TAM increased by 18.9%. Based on preliminary trade association data
for the first quarter of 2000, the TAM increased in the first quarter of 2000 by
33.8% compared to the first quarter of 1999. The SAM increased 14.9% in 1999
compared to 1998; however, based on preliminary trade association data for the
first quarter of 2000, the SAM increased by 33.2% compared to the first quarter
of 1999. In 1999, approximately 31.8% of all semiconductors were shipped to the
Americas, 21.9% to Japan, 21.3% to Europe, and 25% to the Asia Pacific region.

         Although cyclical changes in production capacity in the semiconductor
industry and demand for electronic systems have resulted in pronounced cyclical
changes in the level of semiconductor sales and fluctuations in prices and
margins for semiconductor products from time to time, the semiconductor industry
has experienced substantial growth over the long term. Factors that are
contributing to long-term growth include the development of new semiconductor
applications, increased semiconductor content as a percentage of total system
cost, emerging strategic partnerships and growth in the electronic systems
industry in the Asia Pacific region.

         Semiconductor Classifications

         The process technologies, levels of integration, design specificity,
functional technologies and applications for different semiconductor products
vary significantly. As differences in these characteristics have increased, the
semiconductor market has become highly diversified as well as subject to
constant and rapid change. Semiconductor product markets may be classified
according to each of these characteristics.

         Semiconductors can be manufactured using different process
technologies, each of which is particularly suited to different applications.
Since the mid-1970s, the two dominant processes have been bipolar (the original
technology used to produce integrated circuits) and CMOS (complementary
metal-oxide-silicon). Bipolar devices typically operate at higher speeds than
CMOS devices, but CMOS devices consume less power and permit more transistors to
be integrated on a single IC. While bipolar semiconductors were once used
extensively in large computer systems, CMOS has become the prevalent technology,
particularly for devices used in personal computer systems. In connection with
the development of new semiconductor applications and the demands of system
designers for more integrated semiconductors, advanced technologies have been
developed during the last decade that are particularly suited to more
systems-oriented semiconductor applications. For mixed-signal applications,
BiCMOS technologies have been developed to combine the high speed and high
voltage characteristics of bipolar technologies with the low power consumption
and high integration of CMOS technologies. For intelligent power applications,
BCD technologies have been developed that combine bipolar, CMOS and DMOS
technologies. Such systems-oriented technologies require more process steps and
mask levels, and are more complex than the basic

                                       7
<PAGE>

function-oriented technologies. The use of systems-oriented technologies
requires knowledge of system design and performance characteristics (in
particular, analog and mixed-signal systems and power systems) as well as
expertise and experience with several semiconductor process technologies.

         Semiconductors are often classified as either discrete devices (such as
individual diodes, thyristors, transistors as well as opto-electronic products)
or integrated circuits (in which thousands of functions are combined on a single
"chip" of silicon to form a more complex circuit). Compared to the market for
ICs, there is typically less differentiation among discrete products supplied by
different semiconductor manufacturers. Also, discrete markets have generally
grown at slower, but more stable, rates than IC markets.

         Semiconductors may also be classified as either standard components or
application-specific ICs ("ASICs"). Standard components are used by a large
group of systems designers for a broad range of applications, while ASICs are
designed to perform specific functions in specific applications. Generally,
there are three types of ASICs: full-custom devices, semicustom devices and
application-specific standard products ("ASSPs"). Full custom devices are
typically designed to meet the particular requirements of one specific customer.
Semicustom devices are more standardized ICs that can be customized with
efficient CAD tools within a short design cycle time to perform specific
functions. ASSPs are standardized ASICs that are designed to perform specific
functions in a specific application, but are not proprietary to a single
customer.

         The two basic functional technologies for semiconductor products are
analog and digital. Analog (or linear) devices monitor, condition, amplify or
transform analog signals, which are signals that vary continuously over a wide
range of values. Analog circuits are critical as an interface between electronic
systems and a variety of real world phenomena such as sound, light, temperature,
pressure, weight or speed. Electronics systems continuously translate analog
signals into digital data, and vice versa.

         The analog semiconductor market consists of a large and growing group
of specific markets that serve numerous and widely differing applications,
including applications for automotive systems, instrumentation, computer
peripheral equipment, industrial controls, communications devices, video
products and medical systems. Because of the varied applications for analog
circuits, manufacturers typically offer a greater variety of devices to a more
diverse group of customers. Compared to the market for commodity digital devices
such as standard memory and logic devices, the analog market is characterized by
longer product life cycles, products that are less vulnerable to technological
obsolescence, and lower capital requirements due to the use of mature
manufacturing technologies. Such characteristics have resulted in growth rates
that have been less volatile than growth rates for the overall semiconductor
industry.

         Digital devices perform binary arithmetic functions on data represented
by a series of on/off states. Historically, the digital IC market has been
primarily focused on the fast growing markets for computing and information
technology systems. Increasing demands for high-throughput computing and
networking and the proliferation of more powerful personal computers and
workstations in recent years have led to dramatic increases in digital device
density and integration. As a result, significant advances in electronic system
integration have occurred in the design and manufacture of digital devices.

         There are two major types of digital ICs: memory products and logic
devices. Memory products, which are used in electronic systems to store data and
program instructions, are generally classified as either volatile memories
(which lose their data content when power supplies are switched off) or
nonvolatile memories (which retain their data content without the need for
constant power supply). Volatile memories are used to store data in virtually
all computer systems, from large and mid-range computers to personal computers
and workstations. Memory products are typically standard, general purpose ICs
that can be manufactured in high volumes using basic CMOS processes, and they
are generally differentiated by cost and physical and performance
characteristics, including data capacity, die size, power consumption and access
speed.

         The primary volatile memory devices are DRAMs, which accounted for
13.8% of semiconductor memory sales in 1999, and SRAMs (static RAMs). DRAMs are
volatile memories that lose their data content when power supplies are switched
off, whereas SRAMs are volatile memories that allow the storage of data in the
memory array but without the need for clock or refresh logic circuitry. SRAMs
are roughly four times as complex as DRAMs (four transistors per bit of memory
compared to one transistor) and are significantly more expensive than DRAMs per
unit

                                       8
<PAGE>

of storage. DRAMs are used in a computer's main memory to temporarily store data
retrieved from low cost external mass memory devices such as hard disk drives.
SRAMs are principally used as caches and buffers between a computer's
microprocessor and its DRAM-based main memory.

         Nonvolatile memories are typically used to store program instructions
that control the operation of microprocessors and electronic systems. Among such
nonvolatile memories, read-only memories ("ROMs") are permanently programmed
when they are manufactured while programmable ROMs (PROMs) can be programmed by
system designers or end-users after they are manufactured. Erasable PROMs
(EPROMs) may be erased and reprogrammed several times, but to do so EPROMs must
be physically removed from electronic systems, exposed to ultraviolet light,
reprogrammed using an external power supply and then returned to the systems.
Electrically erasable PROMs (EEPROMs) can be erased byte by byte and
reprogrammed "in-system" without the need for removal. Using EEPROMs, a system
designer or user can program or reprogram systems at any time. "Flash" memories
are products that represent an intermediate solution for system designers
between EPROMs and EEPROMs based on their cost and functionality.

         Flash memories are typically less expensive per bit of stored
information than EEPROMs, and can also be erased and rewritten. The entire
content of a flash memory or large blocks of data (not individual bytes) can be
erased with a "flash" of current. Because flash memories can be erased and
reprogrammed electrically and in-system, they are more flexible than EPROMs and,
therefore, progressively replace EPROMs in many of their current applications.
Flash memories are typically used in high volume in digital mobile phones and
digital consumer applications (set-top boxes, DVDs, digital cameras, MP3 digital
music players) and are also suitable for solid state mass storage of data and
emerging high volume application.

         Logic devices process digital data to control the operation of
electronic systems. The largest segment of the logic market, standard logic
devices, includes microprocessors, microcontrollers and digital signal
processors. Microprocessors are the central processing units of computer
systems. Microcontrollers are complete computer systems contained on single
integrated circuits that are programmed to specific customer requirements. They
contain microprocessor cores as well as logic circuitry and memory capacity.
Microcontrollers control the operation of electronic and electromechanical
systems by processing input data from electronic sensors and generating
electronic control signals, and are used in a wide variety of consumer products
(including alarm systems, household appliance controls and video products),
automotive systems (including engine control and dashboard instrumentation),
computer peripheral equipment (including disk drives, facsimile machines,
printers and optical scanners), industrial applications (including motor drives
and process controllers), and telecommunications systems (including telephones,
answering machines and digital cellular phones). Digital signal processors
("DSPs") are parallel processors used for high complexity, high speed real-time
computations in a wide variety of applications, including answering machines,
modems, digital cellular telephone systems, audio processors and data
compression systems. Standard devices are intended to be utilized by a large
group of systems designers for a broad range of applications. Consequently,
standard devices usually contain more functions than are actually required and,
therefore, may not be cost-effective for certain specific applications. In
addition to standard logic devices, a broad range of full-custom, semicustom and
ASSP logic devices is developed for a wide variety of applications. These
devices are typically designed to meet particular customer requirements.
Compared to memory markets, logic device markets are much more differentiated
and dependent upon intellectual property and advanced product design skills.

         Analog/digital (or "mixed-signal") ICs combine analog and digital
devices on a single chip to process both analog signals and digital data.
Historically, analog and digital devices have been developed separately as they
are fundamentally different and it has been technically difficult to combine
analog and digital devices on a single IC. System manufacturers have generally
addressed mixed-signal requirements using printed circuit boards containing many
separate analog and digital circuits acquired from multiple suppliers. However,
system designers are increasingly demanding system level integration in which
complete electronic systems containing both analog and digital functions are
integrated on a single IC.

         Mixed-signal ICs are typically characterized as analog ICs due to their
similar market characteristics, including longer product life cycles, diverse
applications and customers and more stable growth through economic cycles as
compared to digital devices. However, certain parts of the mixed-signal market
are becoming higher volume markets as the increasing use of mixed-signal devices
has enhanced the options of system designers and

                                       9
<PAGE>

contributed to the development of new applications, including multimedia, video
conferencing, automotive, mass storage and personal communications.

The Semiconductor Market

         The following table sets forth information with respect to worldwide
semiconductor sales by type of semiconductor and geographic region:
<TABLE>
<CAPTION>

                              Worldwide Semiconductor Sales(1)                  Compound Annual Growth Rates(2)
                             1983      1993       1997       1998      1999       83-93      93-97     97-98   98-99
                             ----      ----       ----       ----      ----       -----      -----     -----   -----
                                           (in billions of $)                        (expressed as percentages)
                                           ------------------                        --------------------------
<S>                           <C>       <C>        <C>       <C>        <C>           <C>       <C>      <C>      <C>
Integrated Circuits..         $13.3     $66.0      $119.5    $109.1     $130.3        17.4%     16.0%   (8.8)%   19.3%
Analog (linear and
   Mixed-signal).....           2.8      10.7        19.7      19.1       22.1        14.3      16.5    (3.4)    15.7
Digital Logic........           6.7      34.1        70.4      67.0       75.9        17.7      19.9    (4.9)    13.3
   Memory:
     DRAM............           1.7      13.1        19.7      14.0       20.7        22.7      10.7   (29.2)    47.8
     Others..........           2.0       8.1         9.6       9.0       11.6        15.0       4.4    (5.8)    28.9
                              -----     -----      ------    ------     ------       -----     -----   ------   ------
   Total Memory......           3.7      21.2        29.3      23.0       32.3        19.1       8.4   (21.6)    40.3
Total digital........          10.4      55.3        99.6      90.0      108.2        18.2      15.8    (9.8)    20.0
Discrete.............           3.7       8.6        13.1      11.9       13.4         8.8      11.1      2.5    12.6
Opto-electronics.....           0.7       2.6         4.5       4.6        5.7        14.0      14.7      2.5    23.9
                              -----     -----      ------    ------     ------       -----     -----   ------    -----
     TAM.............         $17.8     $77.3      $137.2    $125.6     $149.4        15.8%     15.4%   (8.4)%   18.9%
                              =====     =====      ======    ======     ======       =====     ======  ======    =====

Europe...............           3.3      14.6        29.1      29.4       31.9        16.0      18.8      1.1     8.5
Americas.............           7.8      24.7        45.9      41.4       47.5        12.2      16.8    (9.6)    14.7
Asia Pacific.........           1.2      14.2        30.1      28.9       37.2        28.0      20.7    (4.4)    28.7
Japan................           5.5      23.8        32.1      25.9       32.8        15.8       7.8   (19.2)    26.6
                              -----     -----      ------    ------     ------       -----     -----   ------    -----
     TAM.............         $17.8     $77.3      $137.2    $125.6     $149.4        15.8%     15.4%   (8.4)%   18.9%
                              =====     =====      ======    ======     ======       =====     ======  ======    =====
</TABLE>

--------------
(1)      Source: WSTS.
(2)      Calculated using end points of the periods specified.

         During the 1960s and 1970s, the development of semiconductor process
technologies was critical to the success of participants in the industry. As
process technologies matured, manufacturing sciences became important; in the
1980s, the emphasis shifted to increasing production volumes and yields and
lowering production costs. The large capital expenditures and other resources
required during this period to develop advanced manufacturing capabilities
resulted in a stratification of the industry between broad range suppliers
operating multiple front-end and back-end manufacturing facilities and specialty
niche players operating small wafer fabs or subcontracting wafer production.

         With the continuing development of new semiconductor applications and
increasing demands of system designers for more integrated systems-oriented
products, semiconductor manufacturers must continually improve their core
technology and manufacturing competencies. In addition, the increasing diversity
and complexity of semiconductor products, the demands of technological change,
and the costs associated with keeping pace with industry developments have
contributed to the growth of cooperation in product design and development and
manufacturing alliances with customers as well as among semiconductor suppliers.
Alliances with customers provide the manufacturer with valuable system and
application know-how and access to markets for key products, while allowing the
manufacturer's customers to share some of the risks and benefits of product
development. Customers also gain access to the manufacturer's process
technologies and manufacturing infrastructure. Alliances with other
semiconductor manufacturers permit costly research and development and
manufacturing resources to be shared to mutual advantage for joint technology
development.

         The Company believes that as part of the new "e-society", major new
growth segments in the semiconductor market are developing, in particular for
digital multimedia, networking and wireless communications

                                       10
<PAGE>

applications. New applications have emerged, such as set-top boxes, digital
television, digital video discs, digital mobile computing and communications,
smartcards, automotive multimedia, digital still imaging and mass storage, that
are requiring new and rapidly evolving semiconductor technologies. The Company
believes many of these new products will require a high level of semiconductor
integration, combining various technologies such as bipolar, CMOS, DMOS and
memory, on a single chip.

         To compete as a leading player for system-on-chip applications,
management believes that it is necessary to combine (i) a broad and diverse
customer base; (ii) system knowhow; (iii) strategic alliances; (iv) broad range
of product technologies; (v) world-class volume manufacturing; (vi) software
expertise; (vii) design methodology; (viii) broad IP portfolio; and (ix)
powerful engines DSP and microcontroller cores and that the Company possesses
all the aforementioned ingredients. The Company also believes that its
independence from any single system group manufacturer is an advantage for
STMicroelectronics in working closely with customers in different market
segments.

Strategy

         The key elements of the Company's strategy are set forth below.

         Broad Product Portfolio. The Company offers a diversified product
portfolio and develops products for a wide range of market applications to
reduce its dependence on any single product, industry or application market.
Within its diversified portfolio, the Company has focused on developing products
that exploit its technological strengths in creating customized, system-level
solutions with substantial analog and mixed-signal content. Products include
differentiated ICs (which the Company defines as being its dedicated products,
semicustom devices and microcontrollers) and analog ICs (including mixed-signal
ICs), the majority of which are also differentiated ICs. As a leading provider
of differentiated ICs, the Company has developed close relationships with
customers, resulting in early knowledge of their evolving requirements and
opportunities to access their markets for other products. Differentiated ICs,
which are less vulnerable to competitive pressures than standard commodity
products, accounted for approximately 63% of the Company's net revenues in 1999
compared to approximately 62% in 1998. The Company also targets applications
that require substantial analog and mixed-signal content and can exploit the
Company's system level expertise. Analog ICs accounted for approximately 51% of
the Company's 1999 net revenues compared to approximately 50% in 1998, while
discrete devices accounted for approximately 12% of the Company's net revenues
in 1999 compared to approximately 13% in 1998. In general, differentiated ICs,
in particular analog ICs, have experienced less volatility in sales growth rates
and average selling prices than the overall semiconductor industry.

         However, as a broad range supplier, the Company can also benefit from
selling standard products. Consistent with this view, the Company has
established the Gold Standard program to promote the sale of certain standard
products meeting specified quality, cost and lead-time criteria. The related
initiatives include worldwide advertising, promotional task forces in all
regions, special distribution initiatives and worldwide training of sales and
marketing personnel.

         Total standard products (including all nonvolatile memories, discrete
devices, and all standard logical and linear ICs) represented approximately 37%
of the Company's sales in 1999 and, in management's view, increased sales of
these products represent an opportunity to improve cash flow because the
manufacture of standard products requires moderate capital investment.

         Broad Range of Process and Design Technologies. The Company intends to
continue to exploit its expertise and experience with a wide range of process
and design technologies to develop its capabilities. The Company is committed to
continuing to increase research and development expenditures in the future as
well as continuing to develop alliances with other semiconductor companies and
suppliers of software development tools. Technological advances in the areas of
transistor performance and interconnection technologies are being developed
through the Company's logic products and semicustom devices. The Company
continually works with key suppliers to develop advanced and standardized design
methodologies for its CMOS processes as well as libraries of macrofunctions and
megafunctions for many of its products, and is focusing on improving its
concurrent engineering practices to better coordinate design activities and
reduce overall time-to-market. It is also working closely with many of its key
suppliers to develop easy-to-use design tools for specific applications.
Alliances with

                                       11
<PAGE>

other semiconductor manufacturers are generally designed both to permit costly
research and development and manufacturing resources to be shared to mutual
advantage for joint technology development and to reduce time to market.

         Leading Global Customer Base with Focus on Strategic Alliances. The
Company works with its key customers to identify evolving needs and new
applications and to develop innovative products and product features. The
Company also seeks to use its access to key customers as a supplier of
application-specific products to establish itself as a supplier across a broad
range of products. Alliances with customers allow the Company and its customers
to share some of the risks of product development and the customers to gain
access to the Company's process technologies and manufacturing infrastructure.
The Company has targeted alliances with customers in each of its key application
markets of telecommunications, automotive, consumer and computer. It has
established alliances with, among others, Alcatel, Bosch, Hewlett-Packard,
Marelli, Nortel Networks, Pioneer, Seagate, Thomson Multimedia and Western
Digital. In establishing these alliances, the Company has also aimed to cover
its key geographical markets.

         Integrated Presence in Key Regional Markets. The Company has
consistently sought to develop a competitive advantage by building an integrated
presence in each of the world's three major economic zones: Europe, Asia and
North America. An integrated presence means having manufacturing, design, sales
and marketing capabilities in each region, in order to ensure that the Company
is well positioned to anticipate and meet its customers' business requirements
in local markets. Therefore, the Company has established front-end manufacturing
facilities in the United States (in Phoenix, Carrollton and Rancho Bernardo), in
Europe (Agrate, Castelletto, Catania, Crolles, Rennes, Rousset and Tours) and in
Asia (Singapore); the more labor-intensive back-end facilities have been located
in Malaysia, Malta, Morocco, Singapore and China, enabling the Company to take
advantage of favorable production costs (particularly labor costs). With major
design centers and local sales and marketing groups within close proximity of
key customers in each region, the Company believes it can maintain strong
relationships with its customers. STMicroelectronics intends to continue to
build its integrated local presence in each region where it competes in its
efforts to better serve its customers and to develop an early presence in
potential high growth markets such as China, where the Company has both a
back-end facility and a design center, and India, where the Company has a design
center.

         Balanced Sales by Application and Region in High Growth Market
Segments. The Company has developed a strong product portfolio across major
application markets including computer peripherals, wireless communications,
digital consumer electronics, smartcards, automotive and power management. While
the Company is consolidating its position in its established high volume
businesses, including switching, engine management, car safety, traditional
analog TV, VCR, computer peripherals, power and industrial and consumer
appliances, it has also been investing research and development and design
resources to develop the next generation of high growth applications, such as
smartcards, portable computing, digital consumer (DVD, new generations of
set-top boxes, digital TV, digital cameras and MP3 digital music players),
wireless communications (digital cellular phones), data transport (fiber optic
ICs and voice over IP), Internet (xDSL), new automotive products (car
multimedia) and new generations of mass storage devices. The Company also
maintains a geographically diverse customer base across a broad range of market
applications.

         Pervasive TQEM Culture. STMicroelectronics is fostering a
corporate-wide TQEM culture that defines a common set of objectives and
performance measurements for employees in all geographic regions, at every stage
of product design, development, production and consignment for all product
lines. TQEM in STMicroelectronics is based on five key principles: management
commitment, employee empowerment, continuous improvement, management by fact and
customer focus. TQM has become an integral part of the STMicroelectronics'
culture and it is designed to develop a self-directed work force with a common
set of values, objectives and problem-solving processes. Since 1987, the Company
has continually improved average AIQ (electrical) status levels. Most of the
Company's manufacturing facilities have been certified to conform to ISO
international quality standards and Eco Management and Audit Scheme ("EAMS").
Several major customers, including Hewlett-Packard, Nokia, Sharp,
DaimlerChrysler and Sanyo have recognized STMicroelectronics' commitment to
quality and have honored the Company with quality awards in the recent past. In
1999, several prestigious awards were accorded to the Company's regional
subsidiaries, underscoring its long-standing commitment to business excellence:
the prestigious Malcolm Baldrige National Quality Award in the U.S., the
Singapore Quality Award, the Moroccan National Quality Award, and the EPA
Climate Protection Award (US). These, together with the Company's previous
honors

                                       12
<PAGE>

- the Malaysian Prime Minister Quality Award, the Malta Quality Award and the
European Quality Award for Business Excellence in the category of large
businesses awarded in 1997 by the European Foundation for Quality Management -
illustrate the success of the Company's unified Total Quality and Environmental
Management philosophy on four continents.

         Pioneer in System-on-chip. Since its inception, the Company has
leveraged its know-how of a broad range of industries to integrate different
system functions on a single chip, pionneering the trend towards system
evolutions on silicon and superintegration. A modular approach is being utilized
to develop options to the main manufacturing processes and blocks of
intellectual property; strategic partnerships are the main lever for
acquisitions of the system know-how to be embedded on the chip. The Company
currently supplies highly integrated products in all its main applications, and
particularly in high volume domains such as hard disk drives (disk controllers),
set-top boxes and Digital video drives.

         To date, the Company's growth has been attributable primarily to
internal growth. However, in 1999, the Company completed the acquisition from
Adaptec of Peripheral Technology Solutions Group which is specialized in the
design of products for the hard disk drive market, as well as the purchase of
Vision Group, a leading designer and supplier of CMOS sensors. In 1999, the
Company also acquired Arithmos, a company which designs controller ICs for flat
panel displays and LCD monitors. In June 2000, the Company also acquired from
Nortel Networks its semiconductor business and in particular its manufacturing
activity in Ottawa. Furthermore, the Company may, from time to time, consider
making selected acquisitions that the Company believes would complement or
expand its existing business. Announcements concerning potential acquisitions
could be made at any time. Acquisitions involve a number of risks that could
adversely affect the Company's operating results, including: (i) the diversion
of management's attention; (ii) the assimilation of the operations and personnel
of the acquired companies; (iii) the assumption of potential liabilities,
disclosed or undisclosed, associated with the business acquired, which
liabilities may exceed the amount of indemnification available from the seller;
(iv) the risk that the financial and accounting systems utilized by the business
acquired will not meet the Company's standards; (v) the risk that the businesses
acquired will not maintain the quality of products and services that the Company
has historically provided; (vi) the inability to attract and retain qualified
management for the acquired business; and (vii) the inability of the Company to
retain customers of the acquired entity. There can be no assurance that (a) the
Company will be able to consummate future acquisitions on satisfactory terms, if
at all, (b) adequate financing will be available for future acquisitions on
terms acceptable to the Company, if at all, or (c) any operations acquired will
be successfully integrated or that such operations will ultimately have a
positive impact on the Company. See "Item 9: Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources."

Customers and Applications

         STMicroelectronics designs, develops, manufactures and markets over
3,000 main types of products that it sells to approximately 800 direct
customers. The Company also sells its products through distributors. To many of
its key customers the Company provides a wide range of products, including
dedicated products, discrete devices, memory products and programmable products.
The Company's position as a strategic supplier of application-specific products
to certain customers fosters close relationships that provide it with
opportunities to supply such customers' requirements for other products,
including discrete devices, programmable products and memory products.

         The following table sets forth certain of the Company's significant
customers and certain applications for its products:

                                       13
<PAGE>

<TABLE>
<CAPTION>
<S>                <C>                  <C>                  <C>              <C>

------------------------------------------------------------------------------------------------------
Telecommunications
Customers:         Alcatel              Italtel              Nokia            Sagem
                   Bosch                Lucent Technologies  Nortel Networks  Samsung
                   Ericsson             Motorola             Philips          Siemens
Applications:      Central office switching systems          Telephone terminals (corded and cordless)
                   Digital cellular telephones               Internet access (xDSL)
                   Wireless networking (Bluetooth)           Data transport (routing, switching
                                                             for electronic and optical networks)
------------------------------------------------------------------------------------------------------
Computer Systems
Customers:         ACER                 Creative Technology  Maxtor             Seagate
                   Bull                 Hewlett-Packard      Olivetti           3D Labs
                   Compaq               IBM                  Quantum            Western Digital
                                        Logitech             Samsung
Applications:      Data storage                              Webcams
                   Monitors and displays                     Printers
                   Graphics                                  Imaging
                                                             Power management
------------------------------------------------------------------------------------------------------
Automotive
Customers:         Bosch                 Denso               Motorola         Valeo
                   DaimlerChrysler       Kenwood             Pioneer          VDO
                   Delphi                Marelli             Siemens          Visteon

Applications:      Airbags                                   Engine management systems (ignition and
                                                             injection)
                   Antiskid braking systems                  Multiplex wiring kits
                   Car radio                                 Global positioning systems
                   Body and chassis electronics              Car multimedia
------------------------------------------------------------------------------------------------------
Consumer Products
Customers:         Bose Corporation     Lucky Goldstar       Pace             Scientific Atlanta
                   Grundig              Matsushita           Philips          Sony
                   Huges                Nokia                Pioneer          Thomson Multimedia
                   Kenwood                                   Samsung
Applications:      Audio processing (CD, DVD, Hi-Fi)         DVDs
                   Digital cameras                           Set-top boxes
                   Digital music players                     Analog TVs
                   Digitial TVs                              VCRs
------------------------------------------------------------------------------------------------------
Industrial and Other Applications
Customers:         Astec                Gemplus              Oberthur         Schneider
                   Autostrade           Giescke & Devrient   Orga             SCI
                   Bull                 Liton                Philips          Siemens
                   Delta                Nagra                Schlumberger     Toshiba
Applications:      Battery chargers                          Motor controllers
                   Smartcards ICs                            Power supplies
                   Industrial automation and control systems Switch mode power supplies
                   Intelligent power
                   switches
                   Lighting systems (lamp ballasts)
------------------------------------------------------------------------------------------------------
</TABLE>

         In 1999, the Company's largest customer, Nokia, represented
approximately 11% of the Company's net revenues. No other single customer
accounted for more than 10% of the Company's net revenues. Sales to the
Company's top ten customers accounted for approximately 45% of the Company's net
sales in 1999 (43% in 1998). The Company has several large customers, certain of
whom have entered into strategic alliances with the Company. Many of the
Company's key customers operate in cyclical businesses and have in the past, and
may in the future, vary order levels significantly from period to period. In
addition, as in 1998, approximately 18% of the Company's net revenues in 1999
were made through distributors. There can be no assurance that such customers or
distributors,

                                       14
<PAGE>

or any other customers, will continue to place orders with the Company in the
future at the same levels as in prior periods. The loss of one or more of the
Company's customers or distributors, reduced bookings or product returns by its
key customers or distributors, could adversely affect the Company's operating
results. In addition, in a declining market the Company has been in the past and
may in the future be driven to lower prices in response to competitive pressures
and may expect a higher number of order cancellations, particularly by
distributors and for commodity products.

Products and Technology

         STMicroelectronics designs, develops, manufactures and markets a broad
range of products used in a wide variety of microelectronic applications,
including telecommunications systems, computer systems, consumer goods,
automotive products and industrial automation and control systems. The Company's
products include standard commodity components, full custom devices, semicustom
devices and ASSPs for analog, digital and mixed-signal applications.
Historically, the Company has not produced DRAMs or x86 microprocessors.

         In 1999, the Company had four principal products groups,
Telecommunications Peripherals and Automative, Consumer and Microcontroller,
Memory Products and Discrete and Standard ICs. Certain information with respect
to revenues for these product groups for 1999 is shown in the table below. For a
breakdown of the Company's net revenues by Group and geography for the last
three years, see "Item 9: Management's Discussion and Analysis of Financial
Condition and Results of Operations--Results of Operations." Revenues for future
periods will be calculated according to the new groups described below.
<TABLE>
<CAPTION>

                                                                           1999 Group Revenues by Region
                                                             -----------------------------------------------------------
                                                                         (percentage of Group net revenues)
                                                   Total
                                                (% of total
                                     Total          net                   North      Asia          Region
                                 (in millions)   revenues)      Europe    America  Pacific(1)       Five       Japan
                                 -------------  ----------      ------    -------  -----------     ------      -----
<S>                                <C>             <C>          <C>        <C>        <C>           <C>        <C>

Telecommunications, Peripherals
    and Automotive...............  $ 2,305.5       45.6%        31.0%      23.3%      38.7%         2.6%        4.4%
Consumer and Microcontroller
Products.........................      881.7       17.4         32.4       29.6       29.7          5.0         3.3
Memory Products..................      835.9       16.5         46.6       18.8       20.9          2.5        11.2
Discrete and Standard ICs........      927.9       18.4         38.5       20.7       34.6          4.6         1.6

</TABLE>

-------------------
(1)   Many of the products sold in the Asia Pacific region are sold to
      U.S.-based original equipment manufacturers located in the region.


         At the beginning of 1999, the Company implemented organizational
changes to better orient its products groups to end use applications. Its
products are now organized into the following principal product groups:
Telecommunications, Peripherals and Automotive (formerly Dedicated Products),
Consumer and Microcontroller (formerly Programmable Products), Memory Products
and Discrete and Standard ICs. As part of its activities outside the principal
product groups, the Company also has a New Ventures Group, which identifies and
develops new business opportunities to complement the Company's existing
businesses, and a Subsystem Product Group, which produces subsystems for
industrial and other applications.

         Telecommunications, Peripherals and Automotive Groups

         The Dedicated Products Groups was reorganized into the
Telecommunications Group, which has two applications divisions, and the
Automotive and Peripherals Group, which has four divisions. The video products
which formed part of the former Dedicated Products Group are today encompassed
within the Consumer and Microcontroller Groups. The Groups also have two support
divisions (i) digital signal processing and microcontrollers cores and (ii)
digital and mixed analog/digital semi-custom. The Telecommunications,
Peripherals and Automative Groups are responsible for the design, development
and manufacture of application-specific products using advanced bipolar, CMOS,
BiCMOS mixed-signal and power technologies as well as mixed analog/digital
semicustom devices. The Groups offer complete system solutions to customers in
several application markets. All of the Groups' products are ASSPs, full-custom
or semicustom devices that may also include DSP and micro-controllers cores.

                                       15
<PAGE>

         The Telecommunications, Peripherals and Automotive Groups work closely
with customers to develop application-specific products using
STMicroelectronics' technologies and manufacturing capabilities. The breadth of
the Groups' customer and application base provides it with a source of stability
in the cyclical semiconductor market. In addition, the Company's position as a
strategic supplier of application-specific products fosters close relationships
that provides them with opportunities to supply such customers' requirements for
other products, including discrete devices, microcontrollers and memory
products.

         The Telecommunications, Peripherals and Automotive Groups particularly
emphasize dedicated ICs for automotive, computer peripherals and industrial
application segments, as well as for communication, computing and networking
application segments.

         The Telecommunications Group has two divisions:

         (i)      Wireline Telecommunications Products. The Company's
                  telecommunications products are used in telephone sets,
                  modems, subscriber line interface cards (SLICs) for digital
                  central office switching equipment and high speed electronic
                  and optical communications networks. During 1999, significant
                  developments included the introduction of a modem chip set for
                  Asymmetric Digital Subscriber Loop (ADSL) and the delivery of
                  approximately 1,000,000 full-rate ADSL chip sets to leading
                  equipment manufacturers. The Company also announced a joint
                  development program with Virata for a complete ethernet/USB
                  reference design for ADSL. The Company also demonstrated a
                  chip set jointly developed with Telia Research AB for a Very
                  high bit-rate Digital Subscriber Loop (VDSL), a system
                  supporting broadband communications facilities for interactive
                  multimedia Internet access, video-on-demand, and other
                  advanced services, and which will be compatible with DMT-ADSL
                  currently on the market. In early 2000, the Company acquired
                  an equity interest of approximately 16% in Netergy Networks,
                  (formerly 8x8) to reinforce its position in VoIP.

         (ii)     Wireless Telecommunications Products. In wireless
                  telecommunications, the Company focuses its product offerings
                  on cellular phones, pagers and wireless local loop
                  applications, serving the major OEMs in each of these areas
                  with differentiated ICs. In cellular phones, the Company is
                  supplying products for both the analog and digital market
                  segments (including GSM and CDMA) and reinforcing its leading
                  position in energy management (91 million phones equipped in
                  1999), audio CODEC (44 million phones equipped in 1999), and
                  RF/IF ICs (83 million phones equipped in 1999). The Company
                  has gained experience and know-how with the major silicon
                  components of cellular phone applications, and is developing
                  system and software capabilities to provide full solutions for
                  specifically targeted applications, particularly in the
                  baseband processor, where in 1999 the Company shipped
                  approximately 7 million units and pursued the development of
                  its new ST100 DSP core which it has licensed to Alcatel
                  Microelectronics for various applications including VoIP.

         The Peripherals and Automotive Group has four divisions:

         (i)      Data Storage. STMicroelectronics produces ICs for several data
                  storage applications, in particular disk drives with advanced
                  solutions for read and write digital channels, controllers,
                  host interfaces, digital power processing and micromachinery.
                  The group is working actively on super-integrating these
                  macro-functions into system chip solutions. In 1999, the
                  Company completed its acquisition from Adaptec of Peripheral
                  Technology Solutions Group which is specialized in the design
                  of products for the hard disk drive market. The acquisition
                  complements the Company's activities with respect to (i)
                  product line, giving the Company access to leading disk
                  controller products and know-how, (ii) design teams,
                  contributing Adaptec's designers with CMOS read channel
                  product design expertise, (iii) geography, providing the
                  Company a base in Silicon Valley, and (iv) customer base,
                  adding customers in Asia Pacific and Japan. The Company has
                  developed a one-chip solution for the optical storage market
                  (DVD ROM) that will be launched in 2000.

         (ii)     Printers. STMicroelectronics is focusing on inkjet printer
                  components and is an important supplier of pen chips, motor
                  drivers, head drivers, high performance photo quality
                  applications

                                       16
<PAGE>


                  and digital color copiers. The Company is an important partner
                  of Hewlett-Packard for technology development and
                  manufacturing and is currently developing printer system on
                  chip platforms.

         (iii)    Audio and Automotive Products. STMicroelectronics' audio
                  products include audio power amplifiers, audio processors and
                  graphic equalizer ICs. In the second half of 1999, the Company
                  launched a digital music player platform for MP3, with more
                  than one million units shipped in the first three months of
                  2000. The Company's automotive products include alternator
                  regulators, airbag controls, antiskid braking systems,
                  ignition circuits, injection circuits, multiplex wiring kits
                  and products for body and chassis electronics, engine
                  management, instrumentation systems and car multimedia. The
                  Company believes it is the leader in the manufacturing of car
                  radio components. The Company is currently developing
                  solutions for global positioning systems (GPS) and multi-media
                  in the car. In 1999, the Company signed a strategic alliance
                  for car entertainment systems with Pioneer Electronics of
                  Japan. Due to its super-integration know-how, the Company has
                  successfully expanded its presence beyond Europe to the United
                  States and Japan, further accessing key customers such as
                  Mitsubishi and Denso.

                  In 1999, the Company achieved volume production and gained
                  design wins for 8.16 and 32 bit automotive graded embedded
                  Flash microcontrollers in 0.5, 0.35 and 0.18 micron
                  technologies.

         (iv)     Industrial and Power Supplies. STMicroelectronics designs and
                  manufactures products for industrial automation systems,
                  lighting applications (lamp ballast), battery chargers and
                  switch mode power supplies (SMPS). Its key products are power
                  ICs for motor controllers and read/write amplifiers,
                  intelligent power ICs for spindle motor control and head
                  positioning in computer disk drives and battery chargers for
                  portable electronic systems, particularly mobile telephone
                  sets.

         The Groups also have two support divisions (i) digital signal
processing and microcontroller cores and (ii) digital and mixed analog/digital
semicustom. These two divisions are centers of excellence to develop key
competences in the field of semicustom (digital and analog) as well as in DSP
and microcontrollers cores. The Company is currently developing superintegrated
solutions using its broad range of technologies (CMOS, BiCMOS, BCD) and its
expertise in microcontrollers/DSP cores, dedicated IC megacells and embedded
memory capability for hard disk drive applications. The same methodology is
being applied to develop ICs for other computer peripherals such as monitors and
inkjet printers.

         Consumer and Microcontroller Groups

         The Consumer and Microcontroller Groups are the successors to the
Programmable Products Group and are responsible for the design, development and
manufacture of microcomponents (including microcontrollers and digital signal
processors), digital semicustom devices, graphic controllers and MPEG decoder
ICs and image processing semicustom devices for many diverse products targeted
at high growth digital applications, including information technology,
automotive and multimedia.

         The Consumer and Microcontroller Groups are divided into the Consumer
Group and the Microcontrollers Group, each further divided into several
divisions.

         The Consumer Group has four divisions:

         (i)      Digital Video. Emerging digital video technologies offer a
                  number of advantages over traditional analog video, including
                  the ability to compress video data for transmission and
                  storage, to transmit and reproduce video data without
                  perceptible image degradation and to randomly access and edit
                  video data. In 1999, the digital consumer market grew mainly
                  due to the strong growth of digital TV satellite broadcasting
                  in the United States and Western Europe. This division
                  delivers large volumes of MPEG decoder ICs suitable for
                  several applications, including set-top boxes (cable,
                  satellite and terrestrial), DVDs and digital TVs. The majority
                  of these products implement the MPEG2 standard. In 1999,
                  STMicroelectronics reached volume production of the STi55
                  Omega chip, a family of highly integrated devices that combine
                  an MPEG2 audio/video decoder with a 32-bit microprocessor and
                  other functions to create a complete set-top box or DVD
                  back-end

                                       17
<PAGE>

                  section on a single chip. In the set-top box business, the
                  Company is preparing solutions for interactive and high-end
                  boxes based on the ST40 advanced microcontroller and the
                  STG4003 3D graphic ships, a product being co-developed with
                  Imagination Technologies, a U.K. company. In the DVD business,
                  the Company has started developing a one chip dip DVD and an
                  MPEG2 encoder that will provide recording capability.

         (ii)     Consumer Broad Band Division. This division develops chip sets
                  for the front-end section of all major digital video
                  applications. For example, this division designs and
                  manufactures semi-custom products for data input from compact
                  disc-audio and digital video players, digital broadcast and
                  data exchange on cable as well as for the IEEE 1394 serial
                  digital interface. The division provides Front-end solutions
                  for satellite and cable set-top boxes in relation to which it
                  has entered into partnership agreements with Netergy Networks
                  of the U.S. in the field of VoIP and Scientific Atlanta of the
                  U.S. in the field of digital cable modem.

         (iii)    TV, Monitor and Camera Division. This division targets analog
                  and digital television, video camera recorders, monitors and
                  flat panel displays and image capturing and transmission. In
                  1999, the Company finalized the acquisition of Vision Group
                  plc, a U.K. company based in Edinburgh, Scotland, which has
                  developed a technology for production of CMOS sensors. CMOS
                  sensors significantly reduce the cost of digital cameras; it
                  is thus possible to produce the principal features of a camera
                  on a single IC, which is significantly cheaper than using a
                  multi-component chip set based on traditional Charge Coupled
                  Devices (CCD) technology. The company is actively pursuing
                  applications in webcam and digital still camera business and
                  has started a research and development program for mobile
                  phone cameras. The Company is today supplying manufacturers of
                  High Definition Television (HDTV) and plans to pursue other
                  business opportunities for the next generation of products.

         (iv)     Graphics Products. In early 1999, the Company entered into a
                  partnership agreement with Imagination Technologies, (formerly
                  Videologic) of the United Kingdom for developing the next
                  generation 3D accelerator aimed at the PC and digital consumer
                  market. The first prototypes are expected in the middle of
                  2000.

         The Microcontroller Group has one division and two support groups:

         (i)      Microcontroller Division. This division provides competitive,
                  high-volume 8-bit microcontrollers for all major application
                  segments and 16-bit DSP for the mass market. This family of
                  products has been developed with a wide portfolio of processes
                  capable of embedding nonvolatile memories such as EPROM,
                  EEPROM and flash memories.

         Within the support groups, the Microcontroller Core Development group
develops 32- and 64-bit microcontroller cores. Current products include the
successful ST20 and ST40 products. The Company has entered an agreement with
Hitachi to co-develop a 64-bit microcontroller core (ST50) based on Hitachi
original Super H architecture and STMicroelectronics know-how in 64-bit
microprocessors for interactive set-top boxes, digital video products, car
multimedia systems and other consumer oriented products.

         The Microcontroller Development Tools group is concerned with software
and hardware development tools for microcontroller cores and with software
methodology for the microcontrollers and application divisions.

         Memory Products Group

         The Memory Products Group designs, develops and manufactures a broad
range of semiconductor memory products but does not produce DRAMs. According to
published industry data, on the basis of 1999 revenues, STMicroelectronics was
the leading producer of EPROMs, with a 48.0% market share, and the second
leading supplier of EEPROMs.

         According to published industry data, the total market for memory
devices in 1999 was approximately $32.3 billion including DRAMs (64.1%), SRAMs
(14.9%) and nonvolatile memories (21%).

                                       18
<PAGE>

         The Company's Memory Products Group is organized into the following
divisions: (i) EPROMs; (ii) flash memories; (iii) smartcard products; (iv)
EEPROMs and application-specific memories; and (v) NVRAMs.

         EPROMs. STMicroelectronics produces a broad range of EPROMs, from 16
Kbit to 32 Mbit. According to published industry data, STMicroelectronics
consolidated its world's leading market position for EPROMS in 1999, with
revenues of $206 million or approximately 48% of worldwide EPROM sales. The
Company currently produces EPROMs using 0.40 micron CMOS technologies.

         The EPROM market is relatively mature, and worldwide sales declined in
1999 according to published industry data. The Company has succeeded in
maintaining its market leadership because of its EPROM technology, which has
allowed the Company to build one of the broadest product portfolios currently
offered in the market. At the same time, this technology has permitted
continuous improvement of manufacturing yields and reduction of die size, giving
the Company an advantageous cost position. Efficient manufacturing in its
Singapore assembly plant together with STMicroelectronics' sales and
distribution channels have contributed to the exploitation of the Company's
technological advantage.

         Flash Memories. The Company currently supplies single voltage (down to
1.8 volt) NOR cell structure flash memory products up to 32 Mbit, and is
introducing into production a family of multi-level flash memories operating at
3.0 volt and manufactured using 0.18 micron technology. The market for flash
memories is growing fast, according to published industry data, driven by
cellular phones and digital consumer applications growth. The Company aims to
increase market share in flash memories by continuing investments in advanced
process technologies, new products development and state-of-the-art
manufacturing facilities in order to address a market which, according to
published industry data, is growing fast, driven by a broad range of high volume
applications such as cellular phones, networking and set top boxes. The Company
is also leveraging its strong network of customer alliances to enter several
long-term agreements to supply flash memories.

         Smartcard Products. Smartcards are credit card-like devices containing
integrated circuits that store data and provide an array of security
capabilities. They are used in a wide and growing variety of applications,
including public pay telephone systems (primarily in France and Germany),
cellular telephone systems and bank cards (primarily in Europe), as well as pay
television systems (primarily in the United States, United Kingdom and France).
Other applications include medical record applications, card-access security
systems, toll-payment secure transactions over the Internet and ID cards
applications. According to market estimates from independent analysts, the
Company's market share for microcontroller-based smartcard ICs in units was 46%
in 1999. On this basis, the Company believes to have maintained its leading
position in this market segment. In 1999, the Company achieved ISO 15408
certification for its ST 19 platform of microcontroller-based smartcard,
continuing its leadership in terms of independent security certification. The
Company also recently announced a 32 bit RISC microcontroller for
multi-application cards optimized for fast and secure execution of JavaCard(TM)
applets. The Company is currently developing biometric solutions based on
fingerprint recognition.

         EEPROMs and Application-Specific Memories. The Company offers serial
EEPROMs up to 512 Kbit and parallel EEPROMs up to 1 Mbit. Serial EEPROMs are the
most popular type of EEPROMs and are generally used in computer, automotive and
consumer applications. Parallel EEPROMs account for a smaller portion of the
EEPROM market, being used mainly in telecommunications equipment. The Company
intends to work closely with its key customers and strategic allies to identify
and develop added-value application-specific memories. In 1999, the sales of
this division represented, according to trade association data, approximately
23.2% of the world market for EEPROM and other nonvolatile memory compared to
approximately 16.9% in 1998.

         NVRAMS. The Company focuses on producing nonvolatile SRAMs (battery
back-up) used in computers and telecommunications equipment. According to
independent market analysts, the Company was the world's second largest supplier
of NVRAMs in 1999, with an estimated market share of 26.0%.

         Discrete and Standard ICs Group

         The Discrete and Standard ICs Group designs, develops and manufactures
discrete power devices, power transistors, standard linear and logic ICs, and RF
products. According to published industry data, based on 1999 revenues,
STMicroelectronics is the second supplier of thyristors and triacs and among the
leading suppliers of

                                       19
<PAGE>

power transistors, rectifiers, voltage regulators and amplifiers. Based on trade
association data, the Company believes it is the leader in protection diodes.

         The Group's discrete and standard products are manufactured using
mature technological processes. Although such products are less capital
intensive than the Company's other principal products, the Company is
continuously improving product performance and developing new product features.
The Group has a diverse customer base, and a large percentage of the Group's
products are sold through distributors.

         Discrete Power Devices. STMicroelectronics manufactures and sells a
variety of discrete power devices, including rectifiers, protection devices and
thyristors (SCRs and triacs). The Company's devices are used in various
applications, including in particular telecommunications systems (telephone
sets, modems and line cards), household appliances and industrial systems (motor
control and power control devices). More specifically, rectifiers are used in
voltage converters and voltage regulators, protection devices are used to
protect electronic equipment from power supply spikes or surges, and thyristors
are used to vary current flows through a variety of electrical devices,
including lamps and household appliances. The Company offers a highly successful
range of standard products built with its proprietary Application Specific
Discretes (ASDTM) technology, which allows a variety of discrete structures to
be merged into a single device optimized for specific applications such as EMI
filtering for cellular phones. The Company has recently started development of
electronic devices integrating both passive and active components on the same
chip (IPAD: Integrated Passive and Active Devices).

         Power Transistors. STMicroelectronics designs, manufactures and sells
power transistors, which (like the Company's discrete power devices) operate at
high current and voltage levels in a variety of switching and pulse mode
systems. The Company has three power transistor divisions: bipolar transistors,
power MOSFETs (metal-oxide-silicon field effect transistors) and new power
transistors such as IGBTs.

         The Company's bipolar power transistors are used in a variety of
high-speed, high-voltage applications, including SMPS (switch mode power supply)
systems, television/monitor deflection circuits and lighting systems. According
to published industry data, on the basis of 1999 revenues, STMicroelectronics is
among the leading suppliers of bipolar transistors, including RF power
transistors.

         The Company also offers a family of VIPower (vertical integration
power) products, as well as omnifets and application-specific devices. VIPower
products exhibit the operating characteristics of power transistors while
incorporating full thermal, short circuit and overcurrent protection and
allowing logic level input. VIPower products are used in consumer goods (lamp
ballasts) and automotive products (ignition circuits, central locking systems
and transmission circuits). Omnifets are power MOSFETs with fully integrated
protection devices that are used in a variety of sophisticated automotive and
industrial applications. Application-specific devices are semicustom ICs that
integrate diodes, rectifiers and thyristors on the same chip, thereby providing
cost-effective and space-saving components with a short design time.

         Standard Logic and Linear ICs. The Company produces a variety of
bipolar and HCMOS logic devices, including clocks, registers, gates and latches.
Such devices are used in a wide variety of applications, including increasingly
in portable computers, computer networks and telecommunications systems. The
Company also offers standard linear ICs covering a variety of applications,
including amplifiers, comparators, decoders, detectors, filters, modulators,
multipliers and voltage regulators.

         Radio Frequency Products. The Company supplies components for RF
transmission systems used in television broadcasting equipment, radar systems,
telecommunications systems and avionic equipment. The Company is targeting new
applications for its RF products, including two-way wireless communications
systems (in particular, cellular telephone systems) and commercial radio
communication networks for business and government applications.

Sales, Marketing and Distribution

         In 1999, the Company derived approximately 82% of its revenues from
sales directly to customers through its regional sales organizations (compared
to approximately 82% in 1998) and 18% of its net revenues from sales through
distributors (compared to approximately 18% in 1998). The Company operates
regional sales organizations

                                       20
<PAGE>

in Europe, North America, the Asia Pacific region, Japan and, since January 1,
1998, in "Region Five" which includes emerging markets such as South America,
Africa, Eastern Europe, the Middle East and India. In 1999, approximately 36.3%
of the Company's revenues originated in Europe (compared to approximately 41.6%
in 1998), while 22.9% originated in the Americas (compared to approximately
22.1% in 1998), 32.8% originated in the Asia Pacific region (compared to
approximately 29.4% in 1998), 4.7% originated in Japan (compared to
approximately 4.3% in 1998) and 3.3% originated in Region Five (compared to
approximately 2.6% in 1998). In 1999, the Company's largest customer, Nokia,
represented approximately 11% of the Company's net revenues. No other single
customer accounted for more than 10% of the Company's net revenues. Sales to the
Company's top ten customers accounted for approximately 45% of the Company's net
sales in 1999 (43% in 1998).

         The European region is divided into five businesses units: automotive,
communities, consumer and computers, industrial and smartcards, six
geographically configured units to cover mid-sized OEM customers (France and the
Benelux, Central Europe, Northern Europe, Southern Europe, Scandinavia and
Finland), and six regions (United Kingdom, France, Central Europe, Southern
Europe, Scandinavia and Finland) addressed through distributors.

         In North America, the sales and marketing team is organized into five
business units that are located near major centers of activity for either a
particular application or geographic region: automotive (Detroit, Michigan),
industrial and consumer (Chicago, Illinois), computer and peripheral equipment
(San Jose, California and Longmont, Colorado following the acquisition of
Adaptec), communications (Dallas, Texas) and distribution (Boston,
Massachusetts). Each business unit has a sales force that specializes in the
relevant business sector, providing local customer service, market development
and specialized application support for differentiated system oriented products.
This structure allows STMicroelectronics to monitor emerging applications, to
provide local design support, and to identify new products for development in
conjunction with the various product divisions as well as to develop new markets
and applications with its current product portfolio. A central product marketing
operation in Boston provides product support and training for standard products
for the North America region, while a logistics center in Phoenix supports
just-in-time delivery throughout North America. In addition, a comprehensive
distribution business unit provides product and sales support for the nationwide
distribution network.

         In the Asia Pacific region, sales and marketing is organized by country
and is managed from the Company's regional sales headquarters in Singapore. The
Company has sales offices in Taiwan, Korea, China, Hong Kong, Malaysia, Thailand
and Australia. The Singapore sales organization provides central marketing,
customer service, technical support, shipping, laboratory and design services
for the entire region. In addition, there are design centers in Taiwan, Korea,
Hong Kong and Shenzhen.

         In Japan, the large majority of the Company's sales are made through
distributors, as is typical for foreign suppliers to the Japanese market.
However, the Company's sales and marketing engineers in Japan work directly with
the customers as well as with the distributors to meet customers' needs. The
Company provides marketing and technical support services to customers through
sales offices in Tokyo and Osaka. In addition, the Company has established a
design center and application laboratory in Tokyo. The design center designs
custom ICs for Japanese clients, while the application laboratory allows
Japanese customers to test STMicroelectronics' products in specific
applications.

         Region Five was created as of January 1, 1998 and includes emerging
markets such as South America, Africa, Eastern Europe, the Middle East and
India. Prior to that time, these markets had been covered, where appropriate, by
the other existing sales and marketing organizations. Region Five also includes
the design center in India, which employs 428 people in a wide range of
activities. The Company intends to increase its focus on the new sales and
marketing region to enhance its presence in these new markets.

         The Company is pursuing the Gold Standard program, a long-term
commitment to excellence in standard products. The program consists of
manufacturing and offering standard products at the same price level as the
market but with a superior level of quality, service and lead time. The related
initiatives included worldwide advertising, promotional task forces in all
regions, special distribution initiatives and worldwide training of salespeople
and marketing personnel. In 1999, the Company launched the "Mare Nostrum"
program for Europe which involves (i) focusing on customers and applications,
(ii) using the Company's standard product portfolio

                                       21
<PAGE>

through technical support, (iii) product marketing and sales to develop an
application kit approach, (iv) encouraging a one stop shopping approach, as well
as (v) improving market coverage through a customer interface team.

         Each of the five regional sales organizations operate dedicated
distribution organizations. To support the distribution network,
STMicroelectronics operates logistic centers in Saint Genis, France; Phoenix,
Arizona; and Singapore, and has made considerable investments in warehouse
computerization and logistics support.

         The Company also uses distributors and representatives to distribute
its products around the world. Typically, distributors handle a wide variety of
products, including products that compete with STMicroelectronics' products, and
fill orders for many customers. Most of the Company's sales to distributors are
made under agreements allowing for price protection and/or the right of return
on unsold merchandise. The Company recognizes revenues when it ships products to
distributors. Sales representatives generally do not offer products that compete
directly with the Company's products, but may carry complementary items
manufactured by others. Representatives do not maintain a product inventory;
instead, their customers place large quantity orders directly with
STMicroelectronics and are referred to distributors for smaller orders.

Research and Development

         Management believes that research and development is critical to the
Company's success and is committed to increasing research and development
expenditures in the future. Despite significant cost reductions following the
Company's formation in 1987, 1990 and 1991 when the Company experienced losses,
and during the recent industry downturn in 1997 and 1998, management did not
reduce research and development spending. This commitment to research and
development continues unabated, with the Company spending $836 million or 16.5%
of net revenues on research and development in 1999. The table below sets forth
information with respect to the Company's research and development spending
since 1994 (not including design center, process engineering, pre-production or
industrialization costs):
<TABLE>
<CAPTION>

                                                                       Year ended December 31,
                                                 -------------------------------------------------------------------
                                                   1995          1996           1997           1998           1999
                                                 --------      -------        -------         ------         -------
                                                                        (in millions, except percentages)
<S>                                              <C>           <C>            <C>            <C>            <C>

Expenditures................................     $440.3        $532.3         $610.9          $689.8        $836.0
as a percentage of net revenues.............       12.4%         12.9%          15.2%           16.2%         16.5%

</TABLE>

         As a result of the history of the Company, approximately 81% of the
Company's research and development expenses in 1999 were incurred in Europe,
primarily in France and Italy. See "--Public Funding." As of December 31, 1999,
approximately 5,350 employees were employed in research and development
activities.

         Central research and development units conduct research on the basic
VLSI technologies, packaging technologies and design tools that are used by all
product groups and the front-end manufacturing organization. STMicroelectronics'
central research and development activities are conducted in Crolles, France;
Agrate, Italy; Carrollton, Texas; Phoenix, Arizona; Berkeley, California; and
Noida, India. The central research and development units participate in several
strategic partnerships. The Company's manufacturing facility at Crolles, France
houses a research and development center that is operated in the legal form of a
French Groupement d'interet economique ("GIE") pursuant to a partnership
agreement in effect until the end of 1998 between the Company and France Telecom
R&D, the research laboratory of France Telecom, an indirect shareholder of the
Company. This center has developed submicron process technologies and is
currently working on the development of 0.18 micron and future generation
technologies, including copper interconnect, low k dielectric, silicon
germanium, embedded RAMs and RF options. The Company and France Telecom R&D have
decided to extend the GIE named Centre Commun de Microelectronique de Crolles to
include as a member the Laboratoire d'Electronique de Technologie
d'Instrumentation ("LETI"), a research laboratory of CEA-Industrie, one of the
indirect shareholders of the Company. The objectives of the cooperation are to
develop know-how on innovative aspects of VLSI technology evolution which can be
transferred to industrial applications, and to address the development of
innovative process steps and process modules to be used in sub 0.18 micron
technologies with a view to preparing the technology to begin production of
12-inch wafers and associated wafer fabrication processes. The tripartite
cooperation is intended to last until the end of 2002 The Company is also
cooperating with Philips Semiconductors to jointly develop sub-micron CMOS logic
processes in Crolles, France under an agreement which has been extended through

                                       22
<PAGE>

the year 2000. In April 2000, the Company announced its decision to build an
advanced 12 inch wafer pilot line in Crolles, France, which will be funded and
operated jointly with Philips Semiconductors.

         A technical center in Noida, India, develops design software and CAD
libraries and tools. At the Agrate, Italy site, the Company is developing
nonvolatile memory technologies and programmable logic processes using a pilot
line which is being upgraded to 8-inch with a capability of 0.25 micron and
below. See "Item 13: Interest of Management in Certain Transactions." The
Company has developed a wide network of cooperation with several universities in
the United Kingdom (Bristol and Newcastle), Italy (Bologna, Catania, Milan,
Pavia and Turin), France (Grenoble, Marseille, Toulouse and Tours), in the
United States (Carnegie Mellon, Stanford, Berkeley and UCLA) and Singapore for
basic research projects on design and process development.

         In addition to central research and development, each operating
division also conducts independent research and development activities on
specific processes and products.

Public Funding

         The Company participates in certain programs established by the
European Commission and individual countries in Europe (France and Italy).

         The main European programs in which the Company is involved include:
(i) the Micro-Electronics Development for European Application ("MEDEA")
cooperative research and development program, (ii) European Union research and
development projects such as ESPRIT (European Strategic Programme for
Information Technology) and RACE (Research and Development in Advanced
Communications Technologies for Europe), (iii) national programs for research
and development and industrialization in the electronics industries, and (iv)
investment incentive programs for the economic development of certain regions.
The pan-European programs are generally open to eligible companies operating and
investing in Europe and cover a period of several years. In Italy, both
electronics and economic development programs are open to eligible companies
regardless of their ownership or country of incorporation.

         The MEDEA cooperative research and development program was launched in
June 1996 by the Eureka Conference and is designed to bring together many of
Europe's top researchers in a 12,000 man-year program that will cover the period
1997-2000. The MEDEA program replaced the joint European research program called
JESSI, which was a European cooperative project in microelectronics among
several countries that covered the period 1988 through 1996 and involved more
than 80 companies. In Italy, the Programma Nazionale per la Microelettronica has
18 participants, and various programs for intervention in the Mezzogiorno
(southern Italy) are open to eligible companies, including non-European
companies, operating in the region and regulated by specific laws. Italian
programs often cover several years, but funding is typically subject to annual
budget appropriation. In France, support for microelectronics is provided to
over 30 companies manufacturing or using semiconductors. The amount of support
under French programs is decided annually and subject to budget appropriation.

         The Company has also entered into funding agreements with France and
Italy which set forth the parameters of state support under certain national
programs and require, among other things, compliance with European Commission
("EC") regulations and approval by EU authorities and annual and
project-by-project reviews and approvals.

         Funding of programs in France and Italy is subject to annual
appropriation, and if such governments were unable to provide anticipated
funding on a timely basis or if existing government-funded programs were
curtailed or discontinued, such an occurrence could have a material adverse
effect on the Company's business, operating results and financial condition.
From time to time the Company has experienced delays in the receipt of funding
under these programs. As the availability and timing of such funding are
substantially outside the Company's control, there can be no assurance that the
Company will continue to benefit from such government support, that funding will
not be delayed from time to time, that sufficient alternative funding would be
available if necessary or that any such alternative funding would be provided on
terms favorable to the Company as those previously provided.

         Public authority funding for research and development is reported in
"Other Income and Expenses" in the Company's consolidated statements of income.
See Note 17 to the consolidated audited financial statements for

                                       23
<PAGE>

each of the years in the three-year period ended December 31, 1999, including
the Notes thereto (collectively, the "Consolidated Financial Statements")
included elsewhere in this annual report on Form 20-F. Such funding has totaled
$55.3 million, $63.5 million and $60.4 million in the years 1997, 1998 and 1999,
respectively. Public funding for industrialization costs (which include certain
costs incurred to bring prototype products to the production stage) is offset
against expenses in computing cost of sales, and has the effect of increasing
the Company's gross profit. Such funding of industrialization costs has totaled
$6.2 million, $3.1 million and $2.4 million in 1997, 1998 and 1999,
respectively. See Note 17 to the Consolidated Financial Statements. Government
support for capital expenditures funding has totaled $30.2 million, $182.4
million and $53.4 million in the years 1997, 1998 and 1999, respectively. Such
funding has been used to support the Company's capital investment; while receipt
of these funds is not directly reflected in the Company's results of operations,
the resulting lower amounts recorded in property, plant and equipment reduce the
level of depreciation recognized by the Company.

         Low interest financing has been made available (principally in Italy)
under programs such as the Italian Republic's Fund for Applied Research,
established in 1968 for the purpose of supporting Italian research projects
meeting specified program criteria. At year-end 1997, 1998 and 1999, the Company
had $63.7 million, $49.4 million and $48.8 million respectively of indebtedness
outstanding under state-assisted financing programs at an average interest cost
of 2.1%, 2.1% and 1.6%, respectively.

         Due to change in legislation and/or review by the competent
administrative or judicial bodies, there can be no assurance that government
funding granted to the Company may not be revoked or challenged or discontinued
in whole or in part, by any competent state or European authority, until the
legal time period for challenging or revoking such funding has fully lapsed.

Intellectual Property

         Intellectual property rights which apply to various Company products
include patents, copyrights, trade secrets, trademarks and maskwork rights.
STMicroelectronics owns more than 19,000 patents or pending patent applications
corresponding to more than 11,000 original inventions, most of which have been
registered in several countries around the world. In 1999, the Company filed 751
patent applications around the world. Management believes that its intellectual
property represents valuable property and intends to protect the Company's
investment in technology by enforcing all of its intellectual property rights.
The Company has entered into several patent cross-licenses with several major
semiconductor companies.

         The Company's success depends in part on its ability to obtain patents,
licenses and other intellectual property rights covering its products and their
design and manufacturing processes. To that end, the Company has acquired
certain patents and patent licenses and intends to continue to seek patents on
its inventions and manufacturing processes. The process of seeking patent
protection can be long and expensive, and there can be no assurance that patents
will issue from currently pending or future applications or that, if patents are
issued, they will be of sufficient scope or strength to provide meaningful
protection or any commercial advantage to the Company. In addition, effective
copyright and trade secret protection may be unavailable or limited in certain
countries. Competitors may also develop technologies that are protected by
patents and other intellectual property rights and therefore such technologies
may be unavailable to the Company or available to the Company subject to adverse
terms and conditions. Litigation, which could demand financial and management
resources, may be necessary to enforce patents or other intellectual property
rights of the Company.

         Also, there can be no assurance that litigation will not be commenced
in the future against the Company regarding patents, maskworks, copyrights,
trademarks or trade secrets, or that any licenses or other rights to necessary
intellectual property could be obtained on acceptable terms. The failure to
obtain licenses or other intellectual property rights, as well as the expense or
outcome of litigation, could adversely affect the Company's results of
operations or financial condition. The Company has from time to time received,
and it may in the future receive, communications alleging possible infringement
of certain patents and other intellectual property rights of others. Regardless
of the validity or the successful assertion of such claims, the Company could
incur significant costs with respect to the defense thereof which could have a
material adverse effect on the Company's results of operations or financial
condition.

                                       24
<PAGE>

Backlog

         The Company's sales are made primarily pursuant to standard purchase
orders that are generally booked from one to twelve months in advance of
delivery. Quantities actually purchased by customers, as well as prices, are
subject to variations between booking and delivery to reflect changes in
customer needs or industry conditions. During periods of industry overcapacity
and declining selling prices, customer orders are not generally made as far in
advance of the scheduled shipment date as during periods of capacity constraint.
Such reduced lead time can reduce management's ability to forecast production
levels and revenues. During periods of industry undercapacity, which is the case
today, the backlog can exceed the Company's manufacturing capacity.

         Our backlog has increased steadily in 1999 to a record backlog for the
first quarter of 2000, with the highest level of incoming order rates in the
Company's history. In order to meet this backlog, the Company is aggressively
ramping up production at the new 8-inch facility at Rousset and Agrate
facilities and is increasing its use of front-end external foundry services.

         STMicroelectronics also sells certain products to key customers
pursuant to frame contracts. Frame contracts are annual fixed-price contracts
with customers setting forth the terms of purchase and sale of specific products
that may be ordered in the future. These contracts allow the Company to schedule
production capacity in advance and allow customers to manage their inventory
levels consistent with just-in-time principles while shortening the cycle times
required to produce ordered products. Orders under frame contracts are also
subject to risks of price reduction, order cancellation and modifications as to
quantities actually ordered.

Competition

         Markets for the Company's products are intensely competitive. While
only a few companies compete with STMicroelectronics in all of the Company's
product lines, the Company faces significant competition in each of its product
lines. STMicroelectronics competes with major international semiconductor
companies, some of which have substantially greater financial and other
resources than the Company with which to pursue engineering, manufacturing,
marketing and distribution of their products. Smaller niche companies are also
increasing their participation in the semiconductor market, and semiconductor
foundry companies have expanded significantly, particularly in Asia. Competitors
include manufacturers of standard semiconductors, application-specific ICs and
fully customized ICs, including both chip and board-level products, as well as
customers who develop their own integrated circuit products and foundry
operations. Some of the Company's competitors are also its customers.

         In 1999, the Company gained market share in 1999 versus the SAM, while
its market position remained unchanged versus the TAM. The Company's net sales
grew 19.0% while the TAM increased 18.9% and the SAM increased 14.9%, according
to trade association data. The Company gained market share in 1995 and 1996
against both the TAM and the SAM although it lost market share against both the
TAM and the SAM in 1997. The Company does not manufacture DRAMs, which are
commodity memory products sold in high volumes that have experienced severe
price cutting in 1996, 1997 and in 1998. The Company gained market share against
both the TAM and the SAM in the first quarter of 2000, when the Company's
revenues grew 52.9% compared to first quarter 1999 while the TAM grew 33.8% and
the SAM grew 33.2%.

         According to published industry data and other industry sources,
investment in worldwide semiconductor fabrication capacity totaled approximately
$40 billion in 1997, $28 billion in 1998 and $32 billion in 1999, or
approximately 29%, 22 % and 21.5%, respectively, of the TAM for such years. Such
capacity investment is made not only by international semiconductor companies,
but also companies specializing in operating semiconductor foundries,
particularly in Asia such as UMC, TSMC and Chartered Semiconductors.

         The primary international semiconductor companies which compete with
the Company include Advanced Micro Devices, Hitachi, Intel Corporation, Lucent
Technologies, Mitsubishi Electric Corporation, Motorola, National Semiconductor
Corporation, Nippon Electric Company, Philips Semiconductors, Samsung, Infineon
Technology, Texas Instruments and Toshiba.

         The Company competes in different product lines to various degrees on
the basis of price, technical performance, product features, product system
compatibility, customized design, availability, quality and sales and

                                       25
<PAGE>

technical support. In particular, standard products may involve greater risk of
competitive pricing, inventory imbalances and severe market fluctuations than
differentiated products. The Company's ability to compete successfully depends
on elements both within and outside of its control, including successful and
timely development of new products and manufacturing processes, product
performance and quality, manufacturing yields and product availability, customer
service, pricing, industry trends and general economic trends.

Employees

         At December 31, 1999, the Company employed approximately 34,500 people,
of whom approximately 7,200 were employed in France, 7,650 were employed in
Italy, 850 were employed in the rest of Europe, 3,250 were employed in the
United States, 6,000 were employed in Malta and Morocco and 9,550 were employed
in Singapore, Malaysia, Japan and the rest of Asia. As of December 31, 1999
approximately 5,350 employees were engaged in research and development, 1,900 in
marketing and sales, 23,800 in manufacturing, 1,800 in administration and
general services and 1,650 in divisional functions.

         The Company's future success, in particular in a period of strong
increased demand, like the current one, will also depend on its ability to
continue to attract, retain and motivate highly qualified technical, marketing,
engineering and management personnel. Unions are present in France, Italy,
Malta, Morocco and Singapore. The Company has not experienced any significant
strikes or work stoppages in recent years, other than in connection with
national strikes in Italy, and management believes that the Company's employee
relations are good.

         As part of its commitment to the principles of TQEM, the Company
decided in July 1994 to develop an internal education organization called "ST
University", responsible for organizing training courses to executives,
engineers, technicians and sales personnel within the Company and coordinating
all training for STMicroelectronics' employees. In 1999, ST University organized
over 96,006 hours of training for 3,600 employees and 10,000 hours for training
for external individuals.

Environmental Matters

         The Company's manufacturing operations use many chemicals and gases and
the Company is subject to a variety of governmental regulations related to the
use, storage, discharge and disposal of such chemicals and gases and other
emissions and wastes. Consistent with the Company's TQEM principles, the Company
has established proactive environmental policies with respect to the handling of
such chemicals and gases and emissions and waste disposals from its
manufacturing operations. The Company has engaged outside consultants to audit
its environmental activities and has created environmental management teams,
information systems, education and training programs, and environmental
assessment procedures for new processes and suppliers. All of the Company's
plants are validated for the Eco-Management and Audit Scheme ("EMAS") and have
also obtained ISO 14001 certification.

         Although the Company has not suffered material environmental claims in
the past and believes that its activities conform to presently applicable
environmental regulations, in all material respects, environmental claims or the
failure to comply with present or future regulations could result in the
assessment of damages or imposition of fines against the Company, suspension of
production or a cessation of operations.

                         Item 2: Description of Property

Manufacturing

         STMicroelectronics currently operates 17 main manufacturing facilities
around the world. In June 2000, the Company acquired a 6-inch microconductor
manufacturing facility owned by Nortel Networks in Ottawa, Canada. The table
below sets forth certain information with respect to STMicroelectronics' current
manufacturing facilities, products and technologies. Front-end manufacturing
facilities are wafer fabrication plants and back-end facilities are assembly,
packaging and final testing plants.

                                       26
<PAGE>

<TABLE>
<CAPTION>

        Location                          Products                                  Technologies
        --------                          --------                                  ------------
<S>                      <C>                                        <C>
Front-end Facilities:

Crolles, France          Semicustom devices, microcontrollers and   Fab: 8-inch 0.35/0.18 micron CMOS and
                         dedicated products                                 0.7/0.25 micron BiCMOS; R&D on VLSI
                                                                            submicron technologies in
                                                                            conjunction with France Telecom R&D
                                                                            and Philips Semiconductors
Phoenix, Arizona         Dedicated products                         Fab: 8-inch 0.5/0.35 micron CMOS,
                                                                            0.5/0.35 micron BiCMOS
Agrate, Italy            Nonvolatile memories, microcontrollers     Fab 1: 6-inch 2.0/0.5 micron CMOS, BiCMOS
                         and dedicated products                             and BCD
                                                                    Fab 2: 8-inch 0.35/0.18 micron CMOS, R&D on
                                                                            nonvolatile memories

Rousset, France          Microcontrollers, nonvolatile memories     Fab: 6-inch 0.8/0.5 micron CMOS
                         and
                         smartcard ICs
Catania, Italy           Power transistors, smart power ICs         Fab 1: 5-inch 3 micron bipolar power - RF
                         and nonvolatile memories                   Fab 2: 6-inch 4/1 micron MOS power
                                                                    Fab 3: 6-inch 4/1 micron pilot line
                                                                    Fab 4: 8-inch 0.35/0.25 CMOS
Rennes, France           Dedicated and power products               Fab: 6-inch 2 micron BiCMOS, BCD and bipolar
Castelletto, Italy       Smart power BCD                            Fab: 6-inch 4.0/0.8 micron BCD pilot line
Tours, France            Protection thyristors, diodes and          Fab 1: 5-6-inch discrete
                         application - specific discretes-power     Fab 2: 6-inch discrete
                         transitors
Ang Mo Kio, Singapore    Dedicated products, microcontrollers,      Fab 1: 5-inch power MOS, bipolar transitor, bipolar
                         power transistors and commodity products           bipolar ICs, standard linear 1.5 micron CMOS
Carrollton, Texas        Memories, microcontrollers, dedicated      Fab: 6-inch 1.2/0.6  micron BiCMOS, BCD and
                         products and semicustom devices                    CMOS
                         products and semicustom devices
Rancho Bernardo,         Dedicated products                         Fab: 6-inch 1.0 micron BCD
California
Back-end Facilities:
Muar, Malaysia           Dedicated and standard products,
                         microcontrollers
Kirkop, Malta            Dedicated products, microcontrollers,
                         semicustom devices
Toa Payoh, Singapore     Nonvolatile memories and power ICs
Ain Sebaa, Morocco       Discrete and standard products
Shenzhen, China (jointly Nonvolatile memories, discrete and
   operated with         standard products
   Shenzhen
   Electronics Group)
Bouskoura, Morocco       Subsystems, RF
</TABLE>

         STMicroelectronics has expanded its diversified manufacturing
infrastructure while improving the cost, quality and flexibility of its
operations. In 1999, STMicroelectronics has applied recent investments in its
manufacturing facilities to bring to full capacity and expand the 8-inch
front-end manufacturing facility in Crolles, France and Catania, Italy, to
continue the ramp up of an 8-inch front-end manufacturing facilities in Phoenix,
Arizona and Catania, Italy, and to build an equip the new 8-inch front-end
facilities in Rousset, France and Agrate, Italy, which are today starting
production, to expand 6-inch front-end facilities in Carrollton, Texas and
Rancho Bernardo, California, to purchase a 6-inch facility in Singapore, to
convert from 5 to 6-inch the front-end facilities in Tours and Rennes, France
and Catania, Italy and to expand its back-end facilities in Morocco, Malta,
Malaysia, Singapore and China.

         The Company currently expects capital spending for 2000 to exceed $2.5
billion, significantly higher than in 1998 and 1999 to pursue and, in some
cases, complete those projects mentioned above, as well as to start construction
of a new 8-inch wafer fabrication facility in Catania, Italy that is planned to
be operational by the year 2002 and a new 300 millimeter, 12-inch wafer research
fabrication and pilot line at Crolles, France. As of December 31, 1999, the
Company had commitments of approximately $1.2 billion for equipment purchases.
The

                                       27
<PAGE>

Company will continue to monitor its level of capital spending, however taking
into consideration factors such as trends in the semiconductors market, capacity
utilization and announced additions.

         Although each fabrication plant is dedicated to specific processes, the
Company's strategy is to develop local presences, better serve customers and
mitigate manufacturing risks by having key processes operated in different
manufacturing plants. The Company is also seeking to take advantage of current
industry capacity limitations by purchasing from subcontractors both wafer
foundry and back-end services and thereby minimizing its capital expenditure
needs.

         The Company's manufacturing processes are highly complex, require
advanced and costly equipment and are continuously being modified in an effort
to improve yields and product performance. Impurities or other difficulties in
the manufacturing process can lower yields, interrupt production or result in
losses of products in process. As system complexity has increased and sub-micron
technology has become more advanced, manufacturing tolerances have been reduced
and requirements for precision have become even more demanding. Although the
Company's increased manufacturing efficiency has been an important factor in its
improved results of operations, the Company has from time to time experienced
production difficulties that have caused delivery delays and quality control
problems, as is common in the semiconductor industry. No assurance can be given
that the Company will be able to increase manufacturing efficiency in the future
to the same extent as in the past or that the Company will not experience
production difficulties in the future.

         STMicroelectronics is fostering a corporate-wide TQEM culture that
defines a common set of objectives and performance measurements for employees in
all geographic regions, at every stage of product design, development,
production and consignment for all product lines. TQEM in STMicroelectronics is
based on five key principles: management commitment, employee empowerment,
continuous improvement, management by fact and customer focus. TQM has become an
integral part of the STMicroelectronics' culture and it is designed to develop a
self-directed work force with a common set of values, objectives and
problem-solving processes. Since 1987, the Company has improved average AIQ
(electrical) status levels. Most of the Company's manufacturing facilities have
been certified to conform to ISO international quality standards and EMAS.
Several major customers, including Hewlett-Packard, Nokia, Sharp,
DaimlerChrysler and Sanyo, have recognized STMicroelectronics' commitment to
quality and have honored the Company with quality awards in the recent past.

         STMicroelectronics' manufacturing processes use many raw materials,
including silicon wafers, lead frame, mold compound, ceramic packages and
chemicals and gases. The Company obtains its raw materials and supplies from
diverse sources on a just-in-time basis. Although supplies for the raw materials
used by the Company are currently adequate, shortages could occur in various
essential materials due to interruption of supply or increased demand in the
industry.

         As is common in the semiconductor industry, the Company has from time
to time experienced difficulty in ramping up production at new facilities or
effecting transitions to new manufacturing processes and, consequently, has
suffered delays in product deliveries or reduced yields. There can be no
assurance that the Company will not experience manufacturing problems in
achieving acceptable yields, product delivery delays or interruptions in
production in the future as a result of, among other things, capacity
constraints, construction delays, ramping up production at new facilities,
upgrading or expanding existing facilities, changing its process technologies,
or contamination or fires, storms, earthquakes or other acts of nature, any of
which could result in a loss of future revenues. In addition, the development of
larger fabrication facilities such as 8-inch or larger capabilities and require
state-of-the-art submicron technology has increased the potential for losses
associated with production difficulties, imperfections, or other causes of
defects. In the event of an incident leading to an interruption of production at
a fab, the Company may not be able to shift production to other facilities on a
timely basis or the customer may decide to purchase products from other
suppliers, and in either case the loss of revenues and impact on the Company's
relationship with its customers could be significant. The Company's operating
results could also be adversely affected by the increase in fixed costs and
operating expenses related to increases in production capacity if revenues do
not increase commensurately. Finally, in periods of high demand, the Company is
increasing its reliance on external contractors for foundry and back-end
service. Any failure to perform by such subcontractors could impact the
relationship of the Company with its customers and could materially affect its
results of operations.

                                       28
<PAGE>

Headquarters

         The Company has its headquarters and executive office located in the
vicinity of Geneva Airport at Route de Pre-Bois 20, ICC Bloc A, 1215 Geneva 15,
Switzerland. The Company has its corporate legal seat and is domiciled in
Amsterdam, The Netherlands. The Company also operates nine research and
development centers and 31 design centers. The Company maintains regional sales
headquarters in Geneva, Switzerland, Boston, Massachusetts, Singapore and Tokyo,
Japan, and has 71 sales offices in 26 countries throughout Europe, North
America, Japan, the Asia Pacific region and Region Five. In general, the Company
owns its manufacturing facilities and leases most of its sales offices.

                            Item 3: Legal Proceedings

         As is the case with many companies in the semiconductor industry, the
Company has from time to time received communications alleging possible
infringement of certain intellectual property rights of others. Irrespective of
the validity or the successful assertion of such claims, the Company could incur
significant costs with respect to the defense thereof which could have a
material adverse effect on the Company's results of operations or financial
condition.

         The Company is currently involved in certain legal proceedings;
however, the Company does not believe that the ultimate resolution of pending
legal proceedings will have a material adverse effect on its financial
condition.

         On July 7, 1999 a judge for preliminary hearing in Catania, Sicily,
dismissed all charges against the members of the Board of Directors of Corimme
brought by the Public Prosecutor in Catania. This decision finally concluded the
criminal prosecution started in 1995 by the public prosecutor against certain
persons relating to alleged unauthorized use of public funds for research and
development. The judge stated that the charges against such persons for alleged
unauthorized use of public funds, had no legal basis and ordered that the files
relating to this matter be archived on the grounds that no factual basis existed
for any investigation. The Public Prosecutor did not file an appeal.

         Furthermore, in relation to the various tax proceedings started in
parallel by the tax authorities in Catania against Corimme for alleged
unauthorized VAT deductions and irregular invoicing, in a ruling dated March
2000, the Commissione Tributaria Centrale confirmed the previous decisions
favorable to Corimme entered by the Commissione Tributaria Provinciale and the
Commissione Tributaria Regionale, with respect to the years 1988 and 1989. This
decision is also final.

         The Commissione Tributaria Provinciale of Milan has also ruled in favor
of STMicroelectronics Italy on the various income tax proceedings for the period
1990-1992. The tax authorities have accepted these rulings by waiving their
right of appeal.

         The Company believes that the various criminal and judicial proceedings
previously disclosed regarding Corimme have now been finally concluded.

                          Item 4: Control of Registrant

Principal Shareholders

         The following table sets forth certain information with respect to the
ownership of the Company's Common Shares as of May 5, 2000.
<TABLE>
<CAPTION>

Shareholders                                                                               Common Shares Owned (1)
-------------------------------------------------------------------------       ---------------------------------------
                                                                                   Number                      %
                                                                                --------------           --------------
<S>                                                                             <C>                         <C>

 STMicroelectronics
   Holding II B.V. ("ST Holding II").....................................         389,483,280               43.91
</TABLE>

--------------
(1)  Following the 2:1 stock split and 3:1 stock split effected by the Company
     on June 16, 1999, and May 5, 2000, respectively.

                                       29
<PAGE>

         ST Holding is 50% owned by a group of French shareholders that are
indirectly controlled by the French government and 50% owned by a group of
Italian shareholders that are indirectly controlled by the Italian government.
The group of French shareholders is comprised of France Telecom, the French
state-controlled telephone company, and CEA-Industrie, a corporation controlled
by the French atomic energy commission, who hold through FT1CI. The group of
Italian shareholders is represented by Finmeccanica (following the merger with
MEI-Microelettronica Italiana s.r.l. ("MEI") which became effective on December
31, 1999), an Italian holding company owned by Istituto per la Ricostruzione
Industriale-IRI S.p.A. ("I.R.I.", the holding company for Italian state-owned
industrial and commercial interests), by the Italian Ministry of Treasury
(following the transfer, as of June 18, 1999, of the interest previously held by
Comitato per l'intervento nella SIR ed in settori ad alta tecnologia) and the
public. Following the sale of a substantial portion of the shareholding interest
of I.R.I. in Finmeccanica as part of a public offering of shares of
Finmeccanica, I.R.I. will transfer a sufficient number of shares to the Italian
Ministry of Treasury to ensure that the Italian Ministry of Treasury maintains
a minimum equity participation of 30% in Finmeccanica. The shares of France
Telecom are listed on the ParisBourse and the New York Stock Exchange.
Certificats d'investissement of CEA-Industrie are listed on the ParisBourse. The
shares of Finmeccanica are listed on the Milan Stock Exchange.

         The officers and directors of the Company as a group do not own a
material number of Common Shares.

         The chart below illustrates the current shareholding structure as of
May 5, 2000, prior to the previously mentioned sale of shares of Finmeccanica by
I.R.I. to the public:

         This information was represented by an organizational chart in the
original document.

         Description of Shareholding Structure: STMicroelectronics N.V. is owned
43.91% by STMicroelectronics Holding II B.V. and 56.09% by the public.
STMicroelectronics Holding II B.V. is a wholly-owned subsidiary of
STMicroelectronics Holding N.V. which is 50% owned by a group of French
shareholders and 50% owned by a group of Italian shareholders. The French
shareholder, FT1CI, is owned 51% by CEA-Industrie and 49% by France Telecom,
respectively. The Italian shareholder, Finmeccanica, is owned 54.2% by I.R.I.,
28.9% by the Italian Ministry of Treasury and 16.9% by the public.


--------------

(1)      Ministero del Tesoro del Bilancio e della Programmazione
         Economica-Dipartimento del Tesoro.


                                       30
<PAGE>


Shareholder Agreements

         In connection with the formation of the Company, Thomson-CSF and STET,
as shareholders of the Company, entered into a shareholders agreement on April
30, 1987. In connection with the formation of ST Holding in 1989, which
coincided with the acquisition by Thorn EMI of its interest in the Company, the
shareholders agreement (as amended, the "Holding Shareholders Agreement") was
amended to apply to the parties' ownership in ST Holding. The rights and
obligations of Thomson-CSF and STET under the Holding Shareholders Agreement
were subsequently transferred to or assumed by, as the case may be, FT2CI for
Thomson-CSF, and Finmeccanica and MEI for STET. As a result of the merger of
FT1CI and FT2CI, the rights and obligations of FT2CI under the Holdings
Shareholders Agreement have been transferred to FT1CI. In connection with the
transfer by Finmeccanica of its interest in ST Holding to MEI, the rights and
obligations of Finmeccanica under the Holding Shareholders Agreement were
transferred to or assumed by, as the case may be, MEI. Finally, following the
merger of MEI into Finmeccanica (effective on December 31, 1999), Finmeccanica
acquired all of the obligations and rights of MEI under the Holding Shareholders
Agreement.

         The Holding Shareholders Agreement contemplates that the parties shall
agree upon common proposals and jointly exercise their powers of decision and
their full control of the strategies and actions of ST Holding and the Company.
Under the Holding Shareholders Agreement, the Supervisory Board of ST Holding,
which is composed of three representatives of the French Owner and three
representatives of the Italian Owner, and the Supervisory Board of the Company,
each one within its respective sphere of competence, must give their respective
prior approval before ST Holding, the Company, or any subsidiary of the Company
may: (i) modify its articles of incorporation; (ii) change its authorized share
capital, issue, acquire or dispose of its own shares, change any shareholder
rights or issue any instruments granting an interest in its capital or profits;
(iii) be liquidated or dispose of all or a substantial and material part of its
assets or any shares it holds in any of its subsidiaries; (iv) enter into any
merger, acquisition or joint venture agreement (and, if substantial and
material, any agreement relating to intellectual property) or form a new
company; (v) approve such company's draft consolidated balance sheets and
financial statements or any profit distribution by such company; or (vi) enter
into any agreement with any of the direct or indirect French or Italian Owners
outside the normal course of business. The Holding Shareholders Agreement also
provides that long-term business plans and annual budgets of the Company and its
subsidiaries, as well as any significant modifications thereto, shall be
approved in advance by the Supervisory Board of ST Holding and of the Company,
each one within its respective sphere of competence. In addition, the
Supervisory Board of ST Holding shall also decide upon operations of exceptional
importance contained in the annual budget even after financing thereof shall
have been approved.

         Such agreement also provides that similar and adequate levels of
research, development and technological innovation shall be achieved by the
Company and its subsidiaries in France and Italy and that there shall be no
substantial discrepancy in the percentage of state financing compared to
research, development and technological innovation expenditures by the Company
and its subsidiaries in each such country. See "Item 1: Description of
Business--Public Funding." Pursuant to the terms of the Holding Shareholders
Agreement, ST Holding and the Company are not permitted, as a matter of
principle, to operate outside the field of semiconductor products. The parties
to the Holding Shareholders Agreement also undertake to refrain directly or
indirectly from competing with the Company in the area of semiconductor
products, subject to certain exceptions, and to offer the Company opportunities
to commercialize or invest in any semiconductor product developments by them.
Any financing or capital provided by the parties to ST Holding or the Company is
intended to be provided pro rata based on the parties' respective shareholdings
in ST Holding. In the Holding Shareholders Agreement, the parties state that it
is of the utmost importance that the French and Italian governments grant
sufficient and continuous financial support for research and development, and
undertake to take suitable actions with a view to obtaining such funding. See
"Item 1: Description of Business--Public Funding."

         The admission of a third party to the share capital of ST Holding,
whether through the sale of ST Holding's outstanding shares or through the issue
by ST Holding of new shares, or by any other means, must be unanimously agreed
upon. In the event of a disagreement that cannot be resolved between the parties
as to the conduct of the business and actions contemplated by the Holding
Shareholders Agreement, each party has the right to offer its interest in ST
Holding to the other, which then has the right to acquire, or to have a third
party acquire, such interest. If neither party agrees to acquire or have
acquired the other party's interest, then together the parties are obligated to
try to find a third party to acquire their collective interests, or such part
thereof as is suitable to change the decision

                                       31
<PAGE>

to terminate the agreement. The Holding Shareholders Agreement otherwise
terminates in the event that one of the parties thereto ceases to hold shares in
ST Holding.

         Pursuant to the terms of the Holding Shareholders Agreement and for the
duration of such agreement, FT1CI (the "French Owner"), on the one hand, and
Finmeccanica (the "Italian Owner") on the other hand, have agreed to maintain
equal interests in the Share capital of the Company.

         The Company has been informed that the shareholders of FT1CI have also
entered into a separate shareholder agreement that requires the consent of the
Board of Directors, with a two-thirds majority, for certain actions taken by ST
Holding, the Company and its subsidiaries. These agreements provide for the
management of the interests of CEA-Industrie and France Telecom in ST Holding
and the Company, with the object of defining between them the positions,
strategies and decisions to be taken by the French Owner in ST Holding affecting
the management of ST Holding, and the Company and its subsidiaries. The Company
is not a party to such agreement.

         The agreement between the shareholders of FT1CI (CEA-Industrie and
France Telecom) provides that the following acts with respect to ST Holding or
the Company must be approved by three-quarters of the Board of Directors of
FT1CI (which consists of five directors, three of whom are chosen by
CEA-Industrie and two of whom are chosen by France Telecom): (i) any
modification of the articles of association of ST Holding or the Company, (ii)
any change in the capital of ST Holding or the Company, or issuance, purchase or
sale by ST Holding or the Company of their shares or rights attached thereto, or
the issuance of any securities giving rights to a share in the capital or
profits of ST Holding or the Company, (iii) the liquidation or dissolution of ST
Holding or the Company or the sale of all or an important and material part of
the business or assets of ST Holding or the Company representing at least
$10,000,000 of the consolidated shareholders' equity of the Company, (iv) any
merger, acquisition, partnership in interest or the execution of any material
agreement relating to intellectual property rights, in each case in which ST
Holding or the Company participates or in which a proposal is made to
participate, or the establishment by ST Holding or the Company of new companies
or groups, (v) approval of the balance sheets and consolidated accounts of ST
Holding, the Company and its subsidiaries as well as the policies of
distributions of profits among the group, (vi) any agreement between ST Holding
and/or the Company and the shareholders of FT1CI which is out of the ordinary
course of business, (vii) the approval of, or material modifications to,
shareholders agreements with the Italian Owner with respect to ST Holding or the
Company and (viii) approval of strategic multi-year plans and annual
consolidated budgets of ST Holding and the Company. Transfers of shares in FT1CI
to third parties are subject to the approval of at least four members of the
Board of Directors, and are subject to a right of first refusal of the other
shareholders, as well as other provisions. In the event CEA-Industrie proposes
to sell its interest in FT1CI, in whole or in part, France Telecom has the right
to require the acquirer to purchase its interest as well. The FT1CI shareholders
agreement terminates upon the termination of FT1CI.

         As is the case with other companies controlled by the French
Government, the French Government has appointed a Commissaire du Gouvernement
and a Controleur d'Etat for FT1CI. Pursuant to Decree No. 94-214, dated March
10, 1994, these Government representatives have the right (i) to attend any
board meeting of FT1CI, and (ii) to veto any board resolution or any decision of
the president of FT1CI within 10 days of such board meeting (or, if they have
not attended the meeting, within 10 days of the receipt of the board minutes or
the notification of such president's decision); such veto lapses if not
confirmed within one month by the Ministry of the Economy or the Secretariat
d'Etat a l'Industrie (Secretary of Industry). FT1CI is subject to certain points
of the arrete of August 9, 1953 pursuant to which the Ministry of the Economy
and any other relevant ministries (a) have the authority to approve decisions of
FT1CI relating to budgets or forecasts of revenues, operating expenses and
capital expenditures, and (b) may set accounting principles and rules of
evaluation of fixed assets and amortization.

         Pursuant to the principal Italian privatization law, certain special
government powers may be introduced into the by-laws of firms considered
strategic by the Italian government. In the case of Finmeccanica, these powers
were established by decrees adopted by the Minister of the Treasury on November
8, 1999 and Finmeccanica's by-laws were subsequently amended on November 23,
1999. The special powers of the Minister of the Treasury (who will act in
agreement with the Minister of Industry) include (i) the approval or disapproval
of the acquisition of material interests in Finmeccanica's share capital, (ii)
approval of material shareholders' agreements relating to Finmeccanica's share
capital, (iii) appointment of members of Finmeccanica's board of directors and
board of statutory auditors, and (iv) veto powers to veto resolutions to
dissolve Finmeccanica, transfer its business, merge, conduct spin-offs, sell
businesses or lines of business, including the transfer of equity participations
in subsidiaries or affiliates, transfer its registered office outside of Italy,
change Finmeccanica's corporate purposes or amend or modify any of the Minister
of the Treasury's special powers.

                                       32
<PAGE>

         In connection with the Initial Public Offering, ST Holding II and the
Company entered into a registration rights agreement pursuant to which the
Company agreed that, upon request from ST Holding II, the Company will file a
registration statement under the Securities Act of 1933, as amended, to register
Common Shares held by ST Holding II, subject to a maximum number of five
requests in total as well as a maximum of one request in any twelve-month
period. Subject to certain conditions, the Company will grant ST Holding II the
right to include its Common Shares in any registration statements covering
offerings of Common Shares by the Company. ST Holding II will pay a portion of
the costs of any requested or incidental registered offering based upon its
proportion of the total number of Common Shares being registered, except that ST
Holding II will pay any underwriting commissions relating to Common Shares that
it sells in such offerings and any fees and expenses of its separate advisors,
if any. Such registration rights agreement will terminate upon the earlier of
December 15, 2004 and such time as ST Holding II and its affiliates own less
than 10% of the Company's outstanding Common Shares.

         The French and Italian shareholders of ST Holding have agreed in a
document dated August 31, 1999, to continue to manage their interest in the
Company through ST Holding until at least December 31, 2000, and accordingly
they have undertaken (i) to jointly hold 100% of ST Holding's capital and voting
rights, (ii) to maintain equality between the shareholdings of the French and
Italian shareholders, (iii) to ensure that ST Holding maintains more than 40% of
the Company's share capital and voting rights on a fully diluted basis after
exercise or conversion of all stock options and convertible securities, and (iv)
to jointly exercise their decision-making powers and monitor strategies and
actions as part of ST Holding's management bodies. Both the French and Italian
governments have the authority to veto certain decisions of the French and
Italian shareholders, respectively, as explained above.

         The Company has been informed that Finmeccanica has agreed not to sell
its indirect shareholding in the Company for a period of 90 days from the
closing of the public offering of Finmeccanica's shares by I.R.I. or to issue
any securities convertible into or exchangeable for shares of the Company,
without the prior consent of the joint global coordinators of the Finmeccanica
offering.

         On May 31, 1999, the Company's shareholders at the annual general
meeting approved the creation of 180,000,000 Preference Shares (540,000,000
Preference Shares, as adjusted for the 3:1 stock split implemented in May 2000).
These Preference Shares entitle a holder to full voting rights at any meeting of
shareholders and to a preferential right to dividends. On May 31, 1999, the
Company entered into an option agreement with ST Holding II, which provides that
Preference Shares shall be issued to ST Holding II upon request subject to the
adoption of a resolution of the Supervisory Board of the Company recognizing
that a hostile takeover or similar action exists and giving its consent to the
exercise of the option and upon payment of at least 25% of the par value of the
Preference Shares to be issued. The option is contingent upon ST Holding II
retaining at least 33% of the issued share capital of the Company.

                        Item 5: Nature of Trading Market

Common Shares

         Since 1994, the Common Shares have been traded on the New York Stock
Exchange under the symbol "STM" and on the ParisBourse and were quoted on SEAQ
International. On June 5, 1998, the Common Shares were also listed for the first
time on the Italian Stock Exchange, where they have been traded since that date.

         The Common Shares have been included in the CAC 40, the principal index
published by ParisBourseSBF SA (the "SBF"), since November 12, 1997. The CAC 40
is derived daily by comparing the total market capitalization of 40 stocks
included in the monthly settlement market of the ParisBourse to a baseline
established on December 31, 1987. Adjustments are made to allow for expansion of
the sample due to new issues. The CAC 40 indicates the trends in the French
stock market as a whole and is one of the most widely followed stock price
indices in France.

         Since June 5, 1998, the Common Shares have also been listed on the
Italian Stock Exchange.

         The table below indicates the range of the high and low prices in U.S.
dollars for the Common Shares on the New York Stock Exchange and the high and
low prices in euros for the Common Shares on the ParisBourse and

                                       33
<PAGE>

the Italian Stock Exchange during each quarter in 1998, 1999 and, to date in
2000. In December 1994, the Company completed the Initial Public Offering of
21,000,000 Common Shares at an initial price to the public of $22.25 per share.
On June 16, 1999, the Company effected a 2:1 stock split and on May 5, 2000, the
Company effected a 3:1 stock split. The table below has been adjusted to reflect
the split.
<TABLE>
<CAPTION>

                                           New York Stock         ParisBourse          Italian Stock
                                           Exchange Price          Price per           Exchange Price
                                          per Common Share       Common Share(1)     per Common Share(2)
                                       -------------------------------------------------------------------------
Calendar Period                           High       Low        High        Low          High              Low
---------------                        ---------  --------    --------    --------     --------        ---------
<S>                                    <C>        <C>         <C>         <C>          <C>             <C>

1998
   First quarter.....................  $39 3/8    $ 25 5/8    EUR 37.24   EUR 23.63       -             -
   Second quarter(3).................  $45 7/8    $ 32 1/4    EUR 42.46   EUR 29.42    EUR 32.79       EUR 30.38
   Third quarter.....................  $36 1/4    $ 22        EUR 33.26   EUR 18.37    EUR 32.53       EUR 19.92
   Fourth quarter....................  $41 7/16   $ 17 15/16  EUR 34.99   EUR 15.02    EUR 34.77       EUR 15.73

1999
   First quarter.....................  $53 13/16  $ 40 1/4    EUR 48.50   EUR 34.40    EUR 46.53       EUR 34.96
   Second quarter....................  $24 13/16  $ 16 5/16   EUR 23.00   EUR 14.83    EUR 23.33       EUR 14.83
   Third quarter.....................  $27 1/8    $ 21 1/4    EUR 26.07   EUR 20.03    EUR 26.15       EUR 20.27
   Fourth quarter....................  $51 5/16   $ 25        EUR 51.67   EUR 23.05    EUR 51.67       EUR 23.17

2000
   First quarter.....................  $73 7/8    $ 40 11/16  EUR 76.93   EUR 39.53    EUR 76.67       EUR 40.35
   Second quarter (through June 21)..  $69 1/4    $ 51 9/16   EUR 74.33   EUR 56.00    EUR 74.10       EUR 56.98

</TABLE>

--------------
(1)  For periods prior to January 1, 1999, the share prices on the ParisBourse
     have been converted into euro at the official exchange rate of EUR 1.00 =
     FF 6.55957.
(2)  For periods to January 1, 1999, the share prices on the Italian Stock
     Exchange have been converted into euro at the official exchange rate of
     EUR 1.00 = Lit. 1,936.27.
(3)  The shares have been listed on the Italian Stock Exchange since June 5,
     1998.

         At December 31, 1999, there were 289,808,140 Common Shares issued and
outstanding, of which 31,042,387 or 10.7% were registered in the Common Share
registry maintained on the Company's behalf in New York.

Dividends

         On April 26, 2000, the Company's shareholders approved the payment of a
cash dividend with respect to the year ended December 31, 1999 of $0.09 per
Common Share payable as of May 4, 2000 to shareholders of record on April 28,
2000.

                                       34
<PAGE>

         1998 Liquid Yield OptionTM Notes

         The 1998 Liquid Yield OptionTM Notes ("LYONs") of the Company are
traded on the New York Stock Exchange and the ParisBourse. The table below
indicates the range of the high and low prices on the New York Stock Exchange
and the high and low prices for the LYONs on the ParisBourse, in both cases as a
percentage of principal amount at maturity, during each quarter in 1999 and to
date in 2000.
<TABLE>
<CAPTION>

                                                New York Stock Exchange               ParisBourse
                                                    Price per LYON                    Price per LYON
                                                -----------------------           ---------------------
Calendar Period                                   High             Low              High            Low
---------------                                 --------         ------           -------         ------
<S>                                              <C>              <C>             <C>             <C>
1998
    Second quarter (since June 5).........       85.13%          83.50%            99%            85.50%
    Third quarter.........................       85.13%           80%             88.50%          72.10%
    Fourth quarter........................        83%             80%              89%             75%

1999
   First quarter..........................        94%             84%             97.50%           90%
   Second quarter.........................        130%            94%            122.10%          101.30%
   Third quarter..........................        154%            122%            157%            124%
   Fourth quarter.........................        277%            145%            278%            146%

2000
   First quarter..........................        390%            225%            445%            210%
   Second quarter (through June 21).......        367%            282%            443%            332%
</TABLE>


1999 Liquid Yield OptionTM Notes

         The 1999 Liquid Yield OptionTM Notes ("LYONs") of the Company are
traded on the New York Stock Exchange and the ParisBourse. The table below
indicates the range of the high and low prices on the New York Stock Exchange
and the high and low prices for the LYONs on the ParisBourse, in both cases as a
percentage of principal amount at maturity, during each quarter in 1999 and to
date in 2000.
<TABLE>
<CAPTION>

                                                    New York Stock                     ParisBourse
                                                Exchange Price per LYON              Price per LYON
                                            ------------------------------- -------------------------------
Calendar Period                                  High               Low         High                Low
---------------                             -------------      ------------ -------------      ------------
<S>                                              <C>              <C>          <C>              <C>
1999
     Third quarter (since September 16)....      84.06%            81.56%      80.83%             76.46%
     Fourth quarter........................       139%             78.48%        129%             78.48%

2000
     First quarter.........................       191%            119%           206%              126%
     Second quarter (through June 21)......       176%            138%           198%              156%

</TABLE>

                                       35
<PAGE>

ParisBourse

         The securities of most large public companies are listed on the Premier
Marche with the Second Marche available for small and medium-sized companies.
Both the Premier Marche and the Second Marche are operated by the SBF.
Securities are also traded on the Marche Libre-OTC which is also operated by the
SBF.

         The Common Shares are listed on the Premier Marche. Shares listed on
the ParisBourse are placed in one of four categories depending on the volume of
transactions. The Common Shares are listed in the category known as Continu A,
which includes the most actively traded shares (with a minimum daily trading
volume of FF 250,000 or twenty trades).

         Official trading of listed securities on the ParisBourse is transacted
through providers of investment services (investment companies and other
financial institutions) and takes place continuously on each business day from
9:00 a.m. to 5:00 p.m., with a pre-opening session from 7:30 a.m. to 9:00 a.m.
and a closing auction at 5:35 p.m. Any trade effected after the close of a stock
exchange session will be recorded, on the next ParisBourse trading day, at the
closing price for the relevant security at the end of the previous day's
session. The SBF publishes a daily Official Price List that includes price
information on each listed security. The ParisBourse has introduced continuous
trading by computer for most listed securities.

         Trading in the listed securities of an issuer may be suspended by the
SBF if quoted prices exceed certain price limits defined by the regulations of
the SBF. In particular, if the quoted price of a Continu A security varies by
more than 10 percent from the previous day's closing price, trading may be
suspended for up to 15 minutes. Further suspensions for up to 15 minutes are
also possible if the price again varies by more than five percent. The SBF may
also suspend trading of a listed security in certain other limited
circumstances, including, for example, the occurrence of unusual trading
activity in such security.

         Trades of securities listed on the Premier Marche of the ParisBourse
are settled in either of two ways: in the cash settlement market or the monthly
settlement market. The Common Shares are settled in the marche a reglement
mensuel (monthly settlement market). In the monthly settlement market, the
purchaser may elect to settle on the third trading day following the trade
(reglement immediat or immediate settlement) or decide on the determination date
(date de liquidation), which is the fifth trading day prior to the end of the
month) either (i) to settle the trade no later than on the last trading day of
such month or (ii) upon payment of an additional fee, to extend to the
determination date of the following month the option either to settle no later
than the last trading day of such month or to postpone further the selection of
a settlement date until the next determination date (a procedure known as
report). Such purchaser may decide to renew its option on each subsequent
determination date upon payment of an additional fee. The majority of
transactions in equity securities on the ParisBourse are settled on the monthly
settlement market. In accordance with French securities regulation, any sale of
shares executed on the monthly settlement market during the month of a dividend
payment date is deemed to occur after payment of the dividend, and the
purchaser's account will be credited with an amount equal to the dividend paid
and the seller's account will be debited in the same amount.

Securities Trading in Italy

         The Mercato Telematico Azionario (the "MTA"), the Italian automated
screen-based quotation system on which the Company's Common Shares are listed,
is organized and administered by Borsa Italiana S.p.A. ("Borsa Italiana")
subject to the supervision and control of CONSOB, the public authority charged,
inter alia, with regulating investment companies, securities markets and public
offerings of securities in Italy to ensure the transparency and regularity of
dealings and protect investors. Borsa Italiana was established to manage the
Italian regulated financial markets (including the MTA) as part of the
implementation in Italy of the EU Investment Services Directive pursuant to
Legislative Decree No. 415 of July 23, 1996 (the "Eurosim Decree") as modified
by Legislative Decree 58 of February 24, 1998 (the "Financial Act"). Borsa
Italiana became operative in January 1998, replacing the administrative body
Consiglio di Borsa, and has issued rules governing the organization and the
administration of the Italian stock exchange, futures and options markets as
well as the admission to listing on and trading in these markets. The
shareholders of Borsa Italiana are primarily financial intermediaries.

                                       36
<PAGE>

         A three-day rolling cash settlement period applies to all trades of
equity securities in Italy effected on a regulated market. Any person, through
an authorized intermediary, may purchase or sell listed securities following (i)
in the case of sales, deposit of the securities; and (ii) in the case of
purchases, deposit of 100% of such securities' value in cash, or deposit of
listed securities or government bonds of an equivalent amount. No "closing
price" is reported for the electronic trading system, but an "official price",
calculated for each security as a weighted average of all trades effected during
the trading day net of trades executed on a "cross-order" basis, and a
"reference price", calculated for each security as a weighted average of the
last 10% of the trades effected during such day, are reported daily.

         If the opening price of a security (established each trading day prior
to the commencement of trading based on bids received) differs by more than 10%
(or such other amount established by Borsa Italiana) from the previous day's
reference price, trading in that security will not be permitted until Borsa
Italiana authorizes it. If in the course of a trading day the price of a
security fluctuates by more than 5% from the last reported sale price (or 10%
from the previous day's reference price), an automatic five minute suspension in
the trading of that security will be declared. In the event of such a
suspension, orders already placed may not be modified or cancelled and new
orders may not be processed. Borsa Italiana has the authority to suspend trading
in any security, among other things, in response to extreme price fluctuations.
In urgent circumstances, CONSOB may, where necessary, adopt measures required to
ensure the transparency of the market, orderly trading and protection of
investors.

         Italian law requires that trading of equity securities, as well as any
other investment services, may be carried out on behalf of the public only by
registered securities dealing firms and banks (with minor exceptions). Banks and
investment services firms organized in a member nation of the EU are permitted
to operate in Italy provided that the intent of the bank or investment services
firm to operate in Italy is communicated to (i) Bank of Italy and to (ii) Bank
of Italy and CONSOB, respectively, by the competent authority of the member
state. Non-EU banks and non-EU investment services firms may operate in Italy
subject to a specific authorization granted by a decree of the Italian Ministry
of Treasury and a resolution of the CONSOB, respectively.

         The settlement of stock exchange transactions is facilitated by Monte
Titoli, a centralized securities clearing system owned by the Banca d'Italia and
certain major Italian banks and financial institutions. Almost all Italian banks
and some registered securities dealing firms have securities accounts with Monte
Titoli. Beneficial owners of shares may hold their interests through specific
deposit accounts with any depositary having an account with Monte Titoli.
Beneficial owners of shares held with Monte Titoli may transfer their shares,
collect dividends, create liens and exercise other rights with respect to those
shares through such accounts.

         Participants in Euroclear and Cedelbank may hold their interests in
shares and transfer the shares, collect dividends and exercise their
shareholders' rights through Euroclear and Cedelbank. A holder may require
Euroclear and Cedelbank to transfer its shares to an account of such holder with
an Italian bank or any authorized broker having an account with Monte Titoli.

                 Item 6: Exchange Controls and Other Limitations
                           Affecting Security Holders

         None.

                                Item 7: Taxation

Certain Dutch tax consequences for holders of Common Shares

         This summary describes the tax consequences that will generally apply
in case of an investment in Common Shares under Dutch and United States tax laws
in force and in effect as of the date of this annual report on Form 20-F, and is
subject to changes in Dutch or U.S. law, including changes that could have
retroactive effect. Not every potential tax consequence of such investment under
the laws of The Netherlands or the United States will be addressed. PROSPECTIVE
INVESTORS SHOULD CONSULT THEIR TAX ADVISERS REGARDING THEIR PARTICULAR PERSONAL
TAX CONSEQUENCES OF ACQUIRING, OWNING AND DISPOSING OF COMMON SHARES.

                                       37
<PAGE>

         Dutch taxation of non-resident shareholders

         This section "Dutch taxation of non-resident shareholders" describes
certain Dutch tax consequences for a holder of Common Shares who is neither
resident, nor deemed to be resident in The Netherlands for purposes of Dutch
taxation (a "Non-Resident Shareholder").

         Withholding tax

         Dividends distributed by the Company generally are subject to a
withholding tax imposed by The Netherlands at a rate of twenty five per cent.
The expression "dividends distributed by the Company" used in this section
includes, but is not limited to:

         i. distributions in cash or in kind, deemed and constructive
distributions and repayments of paid-in capital not recognized for Dutch
dividend withholding tax purposes;

         ii. liquidation proceeds, proceeds of redemption of Common Shares or,
as a rule, consideration for the repurchase of Common Shares by the Company in
excess of the average paid-in capital recognized for Dutch dividend withholding
tax purposes;

         iii. the par value of Common Shares issued to a holder of Common Shares
or an increase of the par value of Common Shares, as the case may be, to the
extent that it does not appear that a contribution, recognized for Dutch
dividend withholding tax purposes, has been made or will be made; and

         iv. partial repayment of paid-in capital, recognized for Dutch dividend
withholding tax purposes, if and to the extent that there are net profits
(zuivere winst), unless (a) the general meeting of shareholders of the Company
has resolved in advance to make such repayment; and (b) the par value of the
Common Shares concerned has been reduced by an equal amount by way of an
amendment of the articles of association.

         If a double taxation convention is in effect between The Netherlands
and the country of residence of a Non-Resident Shareholder, such Non-Resident
Shareholder may, depending on the terms of that double taxation convention, be
eligible for a full or partial exemption from, or refund of, Dutch dividend
withholding tax.

         U.S. Shareholders. Under the Tax Convention of December 18, 1992,
concluded between the United States and The Netherlands (the "Convention"), the
withholding tax on dividends paid by the Company to a resident of the United
States (as defined in the Convention) who is entitled to the benefits of the
Convention under Article 26 may be reduced to 15% pursuant to Article 10 of the
Convention. Dividends paid by the Company to U.S. pension funds and U.S. exempt
organizations may be eligible for an exemption from dividend withholding tax.

         Relief/refund Procedure. If the 15% rate, or an exemption in case of a
qualifying U.S. pension fund, is applicable pursuant to the Convention, the
Company is allowed to pay out a dividend under deduction of 15%, or respectively
without any deduction, if, at the payment date, the relevant shareholders have
submitted the duly signed form IB 92 USA, which form includes a banker's
affidavit. Holders of Common Shares through DTC will initially receive dividends
subject to a withholding rate of 25%. An additional 10% of the dividend will be
paid to holders upon receipt by the dividend disbursing agent of notification
from the Participants in DTC that such holders are eligible for the reduced rate
under the Convention. Only where the applicant has not been able to claim full
or partial relief at source, will he be entitled to a refund of the excess tax
withheld. In that case he should mention in the Form IB 92 USA the circumstances
that prevented him from claiming relief at source.

         Qualifying U.S. exempt organizations can only ask for a full refund of
the tax withheld by using the Form IB 95 USA, which form also includes a
banker's affidavit.

                                       38
<PAGE>

         Taxes on income and capital gains

         A Non-Resident Shareholder will not be subject to any Dutch taxes on
income or capital gains in respect of dividends distributed by the Company
(other than the withholding tax described above) or in respect of any gain
realized on the disposal of Common Shares, provided that:

         (i)      such Non-Resident Shareholder does not have an enterprise or
                  an interest in an enterprise that is, in whole or in part,
                  carried on through a permanent establishment or a permanent
                  representative in The Netherlands and to which enterprise or
                  part of an enterprise, as the case may be, the Common Shares
                  are attributable; and

         (ii)     such Non-Resident Shareholder does not have a substantial
                  interest or a deemed substantial interest in the Company or,
                  if such holder does have such an interest, it forms part of
                  the assets of an enterprise.

         Generally, a holder of Common Shares will not have a substantial
interest if he, his spouse, certain other relatives (including foster children)
or certain persons sharing his household, do not hold, alone or together,
whether directly or indirectly, the ownership of, or certain other rights over,
shares representing five per cent or more of the total issued and outstanding
capital (or the issued and outstanding capital of any class of shares) of the
Company, or rights to acquire shares, whether or not already issued, that
represent at any time (and from time to time) five per cent or more of the total
issued and outstanding capital (or the issued and outstanding capital of any
class of shares) of the Company or the ownership of certain profit participating
certificates that relate to five per cent or more of the annual profit of the
Company and/or to five per cent or more of the liquidation proceeds of the
Company. A deemed substantial interest is present if (part of) a substantial
interest has been disposed of, or is deemed to have been disposed of, on a
non-recognition basis.

         Net wealth tax

         A Non-Resident Shareholder will not be subject to Dutch net wealth tax
in respect of the Shares, provided that such Non-Resident Shareholder is not an
individual or, if he is an individual, provided that such Non-Resident
Shareholder does not have an enterprise or an interest in an enterprise that is,
in whole or in part, carried on through a permanent establishment or a permanent
representative in The Netherlands and to which enterprise or part of an
enterprise, as the case may be, the Common Shares are attributable.

         Gift and inheritance taxes

         No gift or inheritance taxes will arise in The Netherlands with respect
to an acquisition of Common Shares by way of a gift by, or on the death of, a
Non-Resident Shareholder, unless:

         (i) such Non-Resident Shareholder at the time of the gift has or at the
time of his death had an enterprise or an interest in an enterprise that is or
was, in whole or in part, carried on through a permanent establishment or a
permanent representative in The Netherlands and to which enterprise or part of
an enterprise, as the case may be, the Common Shares are or were attributable;
or

         (ii) in the case of a gift of Common Shares by an individual who at the
time of the gift was a Non-Resident Shareholder, such individual dies within 180
days after the date of the gift, while being resident or deemed to be resident
in The Netherlands.

         For purposes of Dutch gift and inheritance tax, an individual who holds
the Dutch nationality will be deemed to be resident in The Netherlands if he has
been resident in The Netherlands at any time during the ten years preceding the
date of the gift or his death. For purposes of Dutch gift tax, an individual not
holding the Dutch nationality will be deemed to be resident in The Netherlands
if he has been resident in The Netherlands at any time during the twelve months
preceding the date of the gift.

                                       39
<PAGE>

         Capital tax

         Dutch capital tax will be payable by the Company at a rate of 0.9 per
cent of any contribution made in respect of the Common Shares.

         Other taxes and duties

         No Dutch registration tax, transfer tax, stamp duty or any other
similar documentary tax or duty will be payable in The Netherlands in respect of
or in connection with the subscription, issue, placement, allotment or delivery
of the Common Shares.

United States Taxation

         The following discussion is a summary of certain U.S. federal income
tax consequences of the ownership of Common Shares by U.S. Holders, as defined
below. This summary applies only to a beneficial owner of Common Shares (a) who
owns, directly or indirectly, less than 10% of the voting stock of the Company,
(b) who is (i) a citizen or resident of the United States for U.S. federal
income tax purposes, (ii) a U.S. domestic corporation or (iii) otherwise subject
to U.S. federal income taxation on a net income basis in respect of the Common
Shares, (c) who holds the Common Shares as capital assets, (d) whose functional
currency is the U.S. dollar, (e) who is a resident of the United States and not
also a resident of The Netherlands for purposes of the Convention, (f) who is
entitled under the "limitation on benefits" provisions contained in the
Convention to the benefits of the Convention and (g) who does not have a
permanent establishment or fixed base in The Netherlands (a "U.S. Holder").
Certain holders (including, but not limited to, United States expatriates,
tax-exempt organizations, persons subject to the alternative minimum tax,
securities broker-dealers and certain other financial institutions, persons
holding the Common Shares in a hedging transaction or as part of a straddle or
conversion transaction or holders whose functional currency is not the U.S.
dollar) may be subject to special rules not discussed below. Because this is a
general summary, prospective purchasers are advised to consult their own tax
advisors with respect to the U.S. federal, state, local and applicable foreign
tax consequences of the purchase, ownership and disposition of Common Shares.

         This summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), the Convention, judicial decisions, administrative pronouncements
and existing and proposed Treasury regulations as of the date hereof, all of
which are subject to change, possibly with retroactive effect.

         Dividends

         For U.S. federal income tax purposes, the gross amount of distributions
made by the Company with respect to the Common Shares (including the amount of
any Netherlands taxes withheld therefrom) will generally be includable in the
gross income of a U.S. Holder in the year received as foreign source dividend
income to the extent that such distributions are paid out of the Company's
current or accumulated earnings and profits as determined under U.S. federal
income tax principles. To the extent, if any, that the amount of any such
distribution exceeds the Company's current or accumulated earnings and profits,
it will be treated first as a tax-free return of the U.S. Holder's tax basis in
the Common Shares (thereby increasing the amount of any gain or decreasing the
amount of any loss realized on the subsequent sale or disposition of such Common
Shares) and thereafter as capital gain. No dividends received deduction will be
allowed with respect to dividends paid by the Company. The amount of any
distribution paid in Dutch guilders will be equal to the U.S. dollar value of
such Dutch guilders on the date of distribution, regardless of whether the
payment is in fact converted into U.S. dollars at that time. Gain or loss, if
any, realized on the sale or other disposition of such Dutch guilders will be
U.S. source ordinary income or loss. The amount of any distribution of property
other than cash will be the fair market value of such property on the date of
distribution.

         Subject to certain limitations, Netherlands taxes withheld from a
distribution at the rate provided in the Convention will be eligible for credit
against a U.S. Holder's U.S. federal income tax liability. Under current Dutch
law, the Company under certain circumstances may be permitted to deduct and
retain from such withholding a portion of the amount that would otherwise be
required to be remitted to the taxing authorities in The Netherlands. This
amount generally may not exceed 3% of the total dividend distributed by the
Company. To the extent that the Company has withheld an amount from dividends
paid to shareholders which it then is not required to remit to any

                                       40
<PAGE>

taxing authority in The Netherlands, such amount in all likelihood would not
qualify as a creditable tax for U.S. tax purposes. The Company will endeavor to
provide to U.S. Holders information concerning the extent to which it has
applied the reduction described above to dividends paid to U.S. Holders. The
limitation on foreign taxes eligible for credit is calculated separately with
respect to specific classes of income. For this purpose, dividends distributed
by the Company with respect to the Common Shares will generally constitute
"passive income" or, in the case of certain U.S. Holders, "financial services
income." The rules relating to the determination of the U.S. foreign tax credit
are complex and holders should consult their tax advisors to determine whether
and to what extent a credit would be available. U.S. Holders that do not elect
to claim a foreign tax credit may instead claim a deduction for all foreign
taxes paid in the taxable year.

         Sale or other disposition of Common Shares

         Upon a sale or other disposition of Common Shares, a U.S. Holder will
recognize gain or loss for U.S. federal income tax purposes in an amount equal
to the difference between the amount realized and the U.S. Holder's tax basis in
such Common Shares. Such gain or loss will be capital gain or loss. Any such
gain or loss, if any, will generally be U.S. source gain or loss. In the case of
a U.S. Holder who is an individual, any capital gain generally will be subject
to U.S. federal income tax at preferential rates if specified minimum holding
periods are met.

         U.S. information reporting and backup withholding

         Dividend payments with respect to Common Shares and proceeds from the
sale, exchange or redemption of Common Shares may be subject to information
reporting to the Internal Revenue Service ("IRS") and possible U.S. backup
withholding at a 31% rate. Backup withholding will not apply, however, to a
holder who furnishes a correct taxpayer identification number or certificate of
foreign status and makes any other required certification or who is otherwise
exempt from backup withholding. Persons required to establish their exempt
status generally must provide such certification on IRS Form W-9 (Request for
Taxpayer Identification Number and Certification) in the case of U.S. persons
and on IRS Form W-8 (Certificate of Foreign Status) in the case of non-U.S.
persons. Finalized Treasury regulations have generally expanded the
circumstances under which information reporting and backup withholding may apply
for payments made after December 31, 2000. Holders of Common Shares should
consult their tax advisors regarding the application of the information
reporting and backup withholding rules, including the finalized Treasury
regulations.

         Amounts withheld as backup withholding may be credited against a
holder's U.S. federal income tax liability, and a holder may obtain a refund of
any excess amounts withheld under the backup withholding rules by filing the
appropriate claim for refund with the IRS and furnishing any required
information.

                  Item 8: Selected Consolidated Financial Data

         Reference is made to the information appearing under the caption
"Selected Consolidated Financial Data" on page 34 of the Company's 1999 Annual
Report submitted as a Report on Form 6-K to the Securities and Exchange
Commission on June 19, 2000 (the "1999 Annual Report"), which information is
hereby incorporated by reference.

            Item 9: Management's Discussion and Analysis of Financial
                       Condition and Results of Operations

         Reference is made to the information appearing under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 35 through 43 of the 1999 Annual Report, which information
is hereby incorporated by reference.

       Item 9A: Quantitative and Qualitative Disclosures About Market Risk

         The Company is exposed to changes in financial market conditions in the
normal course of business due to its operations in different foreign currencies
and its ongoing investing and financing activities. Market risk is the
uncertainty to which future earnings or asset/liability values are exposed due
to operating cash flows denominated in foreign currencies and various financial
instruments used in the normal course of operations. The Company has

                                       41
<PAGE>

established policies, procedures and internal processes governing its management
of market risks and the use of financial instruments to manage its exposure to
such risks.

         The Company is exposed to changes in interest rates primarily as a
result of its borrowing activities which include long-term debt used to fund
business operations. The Company borrows in U.S. dollars as well as in other
currencies from banks and other sources. The Company primarily enters into debt
obligations to support general corporate and local purposes including capital
expenditures and working capital needs. The nature and amount of the Company's
long-term debt can be expected to vary as a result of future business
requirements, market conditions, and other factors. The principal interest rate
risks to which the Company is exposed relate to the Company's investment
portfolio and long-term debt obligations. The Company primarily utilizes
fixed-rate debt and does not expect changes in interest rates to have a material
effect on income or cash flows in 2000.

         The functional currency of the Company's subsidiaries is generally the
local currency. The Company's operating cash flows are denominated in various
foreign currencies as a result of its international business activities and
certain of its borrowings are exposed to changes in foreign exchange rates. The
Company continually evaluates its foreign currency exposure based on current
market conditions and the business environment. In order to mitigate the impact
of changes in foreign currency exchange rates, the Company enters into forward
exchange contracts. The magnitude and nature of such activities are explained
further in Note 22 to the Consolidated Financial Statements.

         The Company places its cash and cash equivalents with high credit
quality financial institutions. The Company manages the credit risks associated
with financial instruments through credit approvals, investment limits and
centralized monitoring procedures but does not normally require collateral or
other security from the parties to the financial instruments with off-balance
sheet risk. The Company is averse to principal loss and manages the safety and
preservation of its invested funds by limiting default risk, market risk and
reinvestment risk.

         The Company enters into forward contracts and foreign currency options
to protect against the volatility of foreign currency exchange rates and to
cover a portion of both its probable anticipated, but not firmly committed,
transactions and transactions with firm foreign currency commitments. The risk
of loss associated with purchased options is limited to premium amounts paid for
the option contracts. The risk of loss associated with forward contracts is
equal to the exchange rate differential from the date the contract is made until
the time it is settled.

         Forward contracts outstanding as of December 31, 1999 have remaining
terms of one to 13 months, maturing mainly during first quarter 2000. The
notional amounts of foreign exchange forward contracts totaled $611,567 at
December 31, 1999, and $634,870 at December 31, 1998. The principal currencies
covered are the Italian lira, the Japanese yen, the Euro, the British pound and
the Swiss franc.

         The Company does not anticipate any material adverse effect on its
financial position, result of operations or cash flows resulting from the use of
the Company's instruments in the future. There can be no assurance that these
strategies will be effective or that transaction losses can be minimized or
forecasted accurately. The Company does not use financial instruments for
speculative or trading purposes.

         The information below summarizes the Company's market risks associated
with cash equivalents, debt obligations, and other significant financial
instruments as of December 31, 1999. The information below should be read in
conjunction with Notes 13 and 22 to the Consolidated Financial Statements.

         The table below presents principal amounts and related weighted-average
interest rates by year of maturity for the Company's investment portfolio and
debt obligations (in thousands of U.S. dollars, except percentages):

<TABLE>
<CAPTION>

                                                                                                     Fair value at
                           2000      2001      2002      2003     2004    Thereafter   TOTAL       December 31, 1999
                         ------------------------------------------------ ----------   -----       -----------------
<S>                        <C>       <C>       <C>        <C>     <C>     <C>        <C>                   <C>
Assets:
   Cash equivalents      1,823,086                                                   1,823,086             1,823,086
   Average interest         6.18%                                                        6.18%
   rate
Long-term debt:

   Fixed rate              96,669    86,976    87,168     9,688   10,795  1,153,850  1,445,146             2,845,234
   Average interest         4.97%     5.54%     5.68%     4.25%    3.97%      2.20%      2.82%
   rate
</TABLE>

                                       42
<PAGE>

                                                         Amounts in thousands
                                                            of U.S. dollars
                                                        ------------------------

Long-term debt by currency as of December 31, 1999:
   U.S. dollar                                                    1,157,366
   Italian lira                                                     192,432
   French franc                                                      82,993
   Other currencies                                                  12,355
                                                                     ------
TOTAL in U.S. dollars                                             1,445,146
                                                                  =========

                                                         Amounts in thousands
                                                            of U.S. dollars
                                                        ------------------------
Long-term debt by currency as of December 31, 1998:
   U.S. dollar                                                      455,885
   Italian lira                                                     231,752
   French franc                                                      98,628
   Other currencies                                                  14,844
                                                                     ------
TOTAL in U.S. dollars                                               801,109
                                                                    =======

         The following table provides information about the Company's foreign
exchange forward contracts at December 31, 1999 (in thousands of U.S. dollars):

<TABLE>
<CAPTION>
                                                                                         Average Contractual
            Buy                     Sell                   Notional Amount              Forward Exchange Rate Fair Value
      -----------------     ---------------------    -----------------------------      --------------------  ----------
<S>                         <C>                                           <C>                  <C>                 <C>
Foreign currency forward exchange contracts to buy U.S. dollars for foreign
currencies:
      U.S. dollar           Euro                                           50,373                  1.02            (943)
      U.S. dollar           British pound                                  34,790                  1.62               61
      U.S. dollar           Italian lira                                  144,066              1,785.35            8,062
      U.S. dollar           Malaysian ringgit                             131,760                  3.79              185
                                                                          -------                                  -----
      Total                                                               360,989                                  7,365
                                                                          -------                                  -----

Foreign currency forward exchange contracts to buy Singapore dollars for foreign
currencies:
      Singapore dollar      Euro                                            4,968                  1.68               31
      Singapore dollar      Japanese yen (1)                               36,186                  1.61            (410)
      Singapore dollar      U.S. dollar                                    77,600                  1.66              180
                                                                          -------                                  -----
      Total                                                               118,754                                  (199)
                                                                          -------                                  -----

Foreign currency forward exchange contracts to buy French francs for foreign
currencies:
      French franc          U.S. dollar                                    43,000                  6.43            (547)
                                                                           ------                                  -----
      Total                                                                43,000                                  (547)
                                                                           ------                                  -----

Foreign currency forward exchange contracts to buy Japanese yen for foreign
currencies:
      Japanese yen          Euro                                           19,558                104.92              460
      Japanese yen(1)       French franc                                   17,015                  6.16              696
                                                                           ------                                  -----
      Total                                                                36,573                                  1,156
                                                                           ------                                  -----

Foreign currency forward exchange contracts to buy Euro for foreign currencies:
      Euro                  Malaysian ringgit                                 781                  3.85              (2)
      Euro                  U.S. dollar                                    23,000                  1.02              379
                                                                           ------                                    ---
      Total                                                                23,781                                    377
                                                                           ------                                    ---

Foreign currency forward exchange contracts to buy Swiss francs for foreign
currencies:
      Swiss franc             French franc                                  2,706                  4.09              (2)
      Swiss franc             U.S. dollar                                  16,345                  1.58            (236)
                                                                           ------                                  -----
      Total                                                                19,051                                  (238)
                                                                           ------                                  -----

Foreign currency forward exchange contracts to buy Swedish kroners for foreign
currencies:
      Swedish kroner          U.S. dollar                                   7,000                  8.43             (56)
                                                                            -----                                   ----
      Total                                                                 7,000                                   (56)
                                                                            -----                                   ----

Foreign currency forward exchange contracts to buy British pounds for foreign
currencies:
      British pound           French franc                                  2,419                 10.19               81
                                                                            -----                                     --
      Total                                                                 2,419                                     81
                                                                            -----                                  -  --

      TOTAL                                                               611,567                                  7,939
                                                                          =======                                  =====

(1)      Forward exchange rate for 100 Japanese yen.

</TABLE>

                                       43
<PAGE>

         The following table provides information about the Company's foreign
exchange forward contracts at December 31, 1998 (in thousands of U.S. dollars):

<TABLE>
<CAPTION>

                                                                                              Average
                                                                                            Contractual
                                                                                         Forward Exchange
            Buy                      Sell                  Notional Amount                     Rate           Fair Value
     ------------------       -------------------    -----------------------------      --------------------  ----------

Foreign currency forward exchange contracts to buy U.S. dollars for foreign currencies:
<S>                           <C>                                          <C>                         <C>         <C>
     U.S. dollar              German mark                                  47,910                      1.70        (827)
     U.S. dollar              Euro                                          1,757                      1.19           26
     U.S. dollar              French franc                                 10,000                      5.53          118
     U.S. dollar              Italian lira                                121,832                  1,738.98     (10,124)
     U.S. dollar              Japanese yen                                  1,304                    121.55         (79)
     U.S. dollar              Malaysian ringgit                            10,142                      3.80            0
     U.S. dollar              Spanish peseta                                2,337                    144.50         (41)
                                                                            -----                               --------
     Total                                                                195,282                               (10,927)
                                                                          -------                               --------

Foreign currency forward exchange contracts to buy French francs for foreign
currencies:
     French franc             Singapore dollar                              1,136                      0.30          (4)
     French franc             U.S. dollar                                 130,000                      5.60        (418)
                                                                          -------                                  -----
     Total                                                                131,136                                  (422)
                                                                          -------                                  -----

Foreign currency forward exchange contracts to buy Italian lira for foreign
currencies:
     Italian lira(1)          Singapore dollar                                565                      1.00          (5)
     Italian lira             U.S. dollar                                 115,000                  1,662.10          187
     Italian lira(1)          Malaysian ringgit                                62                      2.35            0
                                                                               --                                    ---
     Total                                                                115,627                                    182
                                                                          -------                                    ---

Foreign currency forward exchange contracts to buy Singapore dollars for foreign
currencies:
     Singapore dollar         Japanese yen(2)                              25,653                      1.39        (839)
     Singapore dollar         U.S. dollar                                  78,000                      1.64        (274)
                                                                           ------                                  -----
     Total                                                                103,653                                (1,113)
                                                                          -------                                -------

Foreign currency forward exchange contracts to buy Swiss francs for foreign
currencies:
     Swiss franc              French franc                                  2,851                      4.11          (8)
     Swiss franc              Italian lira                                    731                  1,218.50            2
     Swiss franc              Singapore dollar                                202                      1.23          (5)
     Swiss franc              U.S. dollar                                  40,205                      1.36        (404)
                                                                           ------                                  -----
     Total                                                                 43,989                                  (415)
                                                                           ------                                  -----

Foreign currency forward exchange contracts to buy German marks for foreign
currencies:
     German marks             Malaysian ringgit                               396                      2.28            0
     German marks             Singapore dollar                              4,138                      1.02          114
     German marks             U.S. dollar                                  14,000                      1.69          132
                                                                           ------                                    ---
     Total                                                                 18,534                                    246
                                                                           ------                                    ---

Foreign currency forward exchange contracts to buy Euro for foreign currencies:
     Euro                     French franc                                  8,503                      6.58         (30)
                                                                            -----                                   ----
     Total                                                                  8,503                                   (30)
                                                                            -----                                   ----

Foreign currency forward exchange contracts to buy Japanese yen for foreign
currencies:
     Japanese yen             French franc                                  5,652                     21.69          380
     Japanese yen             Italian lira                                  1,739                     14.41           32
     Japanese yen(2)          Malaysian ringgit                               104                      3.20            0
                                                                              ---                                    ---
     Total                                                                  7,495                                    412
                                                                            -----                                    ---

Foreign currency forward exchange contracts to buy Malaysian ringgit for foreign
currencies:
     Malaysian ringgit        U.S. dollar                                   5,470                      3.80            0
                                                                            -----                                    ---
     Total                                                                  5,470                                      0
                                                                            -----                                    ---

Foreign currency forward exchange contracts to buy British pounds for foreign
currencies:
     British pound            French franc                                  3,510                      9.44         (32)
     British pound            Italian lira                                  1,671                  2,730.00           19
                                                                            -----                                    ---
     Total                                                                  5,181                                   (13)
                                                                            -----                                   ----

     TOTAL                                                                634,870                               (12,080)
                                                                          =======                               ========
-----------------
(1)      Forward exchange rate for 1000 Italian lira.
(2)      Forward exchange rate for 100 Japanese yen.


</TABLE>

                                       44
<PAGE>

                  Item 10: Directors and Officers of Registrant

Supervisory Board

         The management of the Company is entrusted to the Management Board
under the supervision of the Supervisory Board. The Supervisory Board advises
the Management Board and is responsible for supervising the policies pursued by
the Management Board and the general course of affairs of the Company and its
business. In fulfilling their duties under Dutch law, the members of the
Supervisory Board must serve the interests of the Company and its business.

         The Supervisory Board consists of such number of members as is resolved
by the general meeting of shareholders upon proposal of the Supervisory Board,
with a minimum of six members. The members of the Supervisory Board are
appointed upon proposal of the Supervisory Board by the general shareholders'
meeting by a majority of the votes cast at a meeting where at least one-third of
the outstanding share capital is present or represented.

         Pursuant to various shareholders agreements, the membership of the
Supervisory Board of the Company must include three members designated by the
French shareholders from the Board of Directors of FT1CI (following the merger
of FT2CI and FT1CI, a corporation owned by CEA-Industrie and France Telecom),
and three members designated by the Italian shareholder. See "Item 4: Control of
Registrant--Shareholder Agreements." The Supervisory Board of the Company
currently includes two members who are not affiliated with ST Holding and its
direct and indirect shareholders.

         The members of the Supervisory Board appoint a chairman and vice
chairman of the Supervisory Board from among the members of the Supervisory
Board (with approval of at least three-quarters of the members of the
Supervisory Board) and may appoint one or more members as a delegate supervisory
director to communicate on a regular basis with the Management Board.
Resolutions of the Supervisory Board require the approval of at least
three-quarters of its members. The Supervisory Board must meet upon request by
two or more of its members or by the Management Board. The Supervisory Board has
adopted internal regulations to clarify the manner by which it carries out the
supervisory duties imposed upon it by law, the Company's Articles of Association
and resolutions of the shareholders and the Supervisory Board itself. By such
resolution the Supervisory Board has authorized (i) the establishment of a
secretariat (headed by an individual approved by it and appointed for a one-year
renewable term) whose functions are to: (a) assist the Chairman and Vice
Chairman of the Supervisory Board in the operations of the Board, (b) implement
and oversee the execution within the Company of decisions adopted by the
Supervisory Board, and (c) cooperate in and contribute to the execution of the
functions of the designated Secretary and Assistant Secretary of the Supervisory
Board; (ii) (a) the possibility of the appointment by the members of the
Supervisory Board of assistants and (b) the appointment by such board of two
controllers to exercise operational and financial control over the operations of
the Company who, with assistants, will also review operation reports and the
implementation of Supervisory Board decisions; and (iii) the establishment by
the Supervisory Board of advisory committees. In addition, the Supervisory Board
has established procedures for the preparation of Supervisory Board resolutions
and the setting of the Board's calendar.

         Members of the Supervisory Board must retire no later than at the
ordinary general meeting of shareholders held after a period of three years
following their appointment, but may be re-elected. A member of the Supervisory
Board must retire at the ordinary general meeting of shareholders held in the
year in which he reaches the age prescribed by Dutch law for retirement of a
supervisory director (currently at age 72). Members of the Supervisory Board may
be suspended or dismissed by the general meeting of shareholders. The
Supervisory Board may make a proposal to the general meeting of shareholders for
the suspension or dismissal of one or more of its members. The members of the
Supervisory Board may receive compensation if authorized by the general meeting
of shareholders.

         The shareholders agreement between the group of French shareholders and
the group of Italian shareholders, as shareholders of ST Holding, also includes
certain provisions requiring the approval of the Supervisory Board of ST Holding
for certain actions by ST Holding, the Company and its subsidiaries. In
addition, pursuant to the shareholders agreement among the group of French
shareholders and a decree issued by certain Ministries of The Republic of
France, the approval by members of the Supervisory Board appointed by the French
shareholders of certain actions to be taken by the Company or its subsidiaries
requires the approval of the Board of

                                       45
<PAGE>

         Directors of FT1CI and is subject to a veto by certain Ministries of
The Republic of France. These requirements for the prior approval of various
actions to be taken by the Company and its subsidiaries may give rise to a
conflict of interest between the interests of the Company and the individual
shareholders approving such actions, and may result in a delay in the ability of
the Management Board to respond as quickly as may be necessary in the rapidly
changing environment of the semiconductor industry. Such approval process is
subject to the provisions of Dutch law requiring members of the Supervisory
Board to act independently in the supervision of the management of the Company.

         The members of the Supervisory Board are:

Name                          Position          Year Appointed               Age
----                          --------          --------------               ---
Jean-Pierre Noblanc           Chairman                1994                    61
Bruno Steve                   Vice Chairman           1989                    58
Tom de Waard                  Member                  1998                    53
Remy Dullieux                 Member                  1993                    49
Riccardo Gallo                Member                  1997                    56
Francis Gavois                Member                  1998                    64
Alessandro Ovi                Member                  1994                    56
Robert M. White               Member                  1996                    61


         Jean-Pierre Noblanc has been the Chairman of the Supervisory Board
since May 31, 1999, and has been a member of the Supervisory Board since 1994.
He served as Vice Chairman of the Supervisory Board from June 1996 to May 31,
1999. Mr. Noblanc is presently General Manager of the Components Sector of CEA
Industrie. Prior to joining CEA Industrie, Mr. Noblanc served at CNET, the
Research Center of France Telecom, as Director of the Applied Research Center of
Bagneux and of the Microelectronics Center of Grenoble. Mr. Noblanc holds a
degree in engineering from the Ecole Superieure d'Electricite and a doctoral
degree in physical sciences from the University of Paris. Mr. Noblanc is an
Associate Member of the Committee on Applications of the French Academy of
Sciences and a director of Thomson S.A. Mr. Noblanc also serves on the Board of
Directors of CEA Industrie, FT1CI and Picogiga S.A.

         Bruno Steve has been a member of the Company's Supervisory Board since
1989 and its Chairman until May 31, 1999. He served as Vice Chairman of the
Supervisory Board from 1989 to July 1990. From July 1990 to March 1993, Mr.
Steve served as Chairman of the Supervisory Board. He has been with I.R.I.,
Finmeccanica's parent company, Finmeccanica and other affiliates of I.R.I. in
various senior positions for over 17 years. Mr. Steve is currently President of
the board of statutory auditors of Alitalia S.p.a., Italia Express S.p.a. and
Iritecna S.p.a. in liquidazione and member of statutory auditors of Stretto di
Messina S.p.A. and Sigma S.p.A. Until December 1999, he served as Chairman of
MEI. He served as the Chief Operating Officer of Finmeccanica from 1988 to July
1997 and Chief Executive Officer from May 1995 to July 1997. He was Senior Vice
President of Planning, Finance and Control of I.R.I. from 1984 to 1988. Prior to
1984, Mr. Steve served in several key executive positions at Telecom Italia,
I.R.I.'s holding company for the telecommunications sector.

         Tom de Waard was appointed to the Supervisory Board in 1998. Mr. de
Waard is a partner of Clifford Chance, a leading English law firm, since March
2000. Prior to that, he was a partner at Stibbe, Simont, Monahan, & Duhot, where
he has held several positions since 1979 and has gained extensive experience
working with major international companies, particularly with respect to
corporate finance. He is a member of the Amsterdam bar and received his law
degree from Leiden University in 1979.

         Remy Dullieux has been a member of the Supervisory Board since 1993. He
is a graduate of the Ecole Polytechnique. Since June 1996, Mr. Dullieux has
served as a France Telecom Executive Manager for the Northern and Eastern areas
of France. From 1991 to June 1996, Mr. Dullieux served as Group Executive Vice
President for Strategic Procurement and Development of France Telecom. From 1985
to 1988, Mr. Dullieux served as Regional Manager of Creteil. Mr Dullieux also
serves on the Board of Directors of FT1CI.

         Riccardo Gallo was appointed to the Supervisory Board in 1997. He is
Associate Professor of Industrial Economics at the Engineering Faculty of "La
Sapienza" University in Rome. He has also been a member of the board of
directors of Comitato Sir from 1981 until the present. From 1982 to 1991, he
served as Director General at

                                       46
<PAGE>

the Italian Ministry of the National Budget. In the early 1990s, he served as
Vice Chairman of I.R.I. In 1994, he was appointed by the Italian Minister of
Industry as Extraordinary Commissioner of Fidia, a research-oriented
pharmaceutical company.

         Francis Gavois was appointed to the Supervisory Board in 1998. Mr.
Gavois is the Chairman of the Supervisory Board of ODDO et Cie. He is also a
member of the Board of Directors of Plastic Omnium, FT1CI and the Supervisory
Board of the Consortium de Realisation (CDR). From 1984 to 1997, Mr. Gavois held
several positions, including Chairman of the Board of Directors and President of
Banque Francaise du Commerce Exterieur (BFCE). Prior to that time Mr. Gavois
held positions in the French government. He is Inspecteur des Finances and a
graduate of the Institut d'Etudes Politiques de Paris and the Ecole Nationale
d'Administration.

         Alessandro Ovi has been a member of the Supervisory Board since 1994.
He received a doctoral degree in Nuclear Engineering from the Politecnico in
Milan and a masters degree in operations research from Massachusetts Institute
of Technology. He currently serves on the boards Italtel, Carnegie Mellon
University and Corporation Development Committee of the Massachusetts Institute
of Technology. Until April 2000, Mr. Ovi was the Chief Executive Officer of
Tecnitel S.p.a., a subsidiary of Telecom Italia Group. Prior to joining Tecnitel
S.p.A., Mr. Ovi was the Senior Vice President of International Affairs and
Communications at I.R.I.

         Robert M. White was appointed to the Supervisory Board in June 1996.
Mr. White is a University Professor and Director of the Data Storage Systems
Center at Carnegie Mellon University and serves as a member of several corporate
boards, including those of Ontrack Data Systems, Inc., and Read-Rite, Inc. He is
a member of the U.S. National Academy of Engineering. From 1990 to 1993, Mr.
White served as Under Secretary of Commerce for Technology in the United States
Government. Prior to 1990, Mr. White served in several key executive positions
at Xerox Corporation, Control Data Corporation and MCC. He received a doctoral
degree in physics from Stanford University and graduated with a degree in
physics from Massachusetts Institute of Technology.

The Supervisory Board has established an Audit Committee currently chaired by
Mr. de Waard and also comprised of Messrs. Gavois, Ovi and White, a Compensation
Committee comprised of the Chairman (Mr. Noblanc), the Vice Chairman (Mr. Steve)
and an independent director (Mr. White) and a Strategic Committee comprised of
Messrs. Noblanc and Steve.

Management Board

         The management of the Company is entrusted to the Management Board
under the supervision of the Supervisory Board. Under the Articles of
Association, the Management Board must obtain prior approval from the
Supervisory Board for (i) all proposals to be submitted to a vote at the general
meeting of shareholders; (ii) the formation of all companies, acquisition or
sale of any participation, and conclusion of any cooperation and participation
agreement; (iii) all multi-year plans of the Company and the budget for the
coming year, covering investment policy, policy regarding research and
development, as well as commercial policy and objectives, general financial
policy, and policy regarding personnel; and (iv) all acts, decisions or
operations covered by the foregoing and constituting a significant change with
respect to decisions already taken by the Supervisory Board. The Management
Board must seek approval from the general meeting of shareholders for decisions
relating to (i) the sale of all or of an important part of the Company's assets
or concerns; and (ii) all mergers, acquisitions or joint ventures which the
Company wishes to enter into and which the Supervisory Board considers to be of
material significance. In addition, under the Articles of Association, the
Supervisory Board may specify by resolution certain actions by the Management
Board that require its prior approval. Following the adoption of such a
resolution, the actions by the Management Board requiring such prior approval
include the following: (i) modification of its Articles of Association; (ii)
change in its authorized share capital, issue, acquisition or disposal of its
own shares, change in any shareholder rights or issue of any instruments
granting an interest in its capital or profits; (iii) liquidation or disposal of
all or a substantial and material part of its assets or any shares it holds in
any of its subsidiaries; (iv) entering into any merger, acquisition or joint
venture agreement (and, if substantial and material, any agreement relating to
intellectual property) or formation of a new company; (v) approval of such
company's draft consolidated balance sheets and financial statements or any
profit distribution by such company; (vi) entering into any agreement with any
of the direct or indirect French or Italian shareholders outside the normal
course of business; (vii) submission of documents reporting on (a) approved
policy, expected progress and results and (b) strategic long-term business plans
and consolidated annual budgets or any modifications to such; (viii) preparation
of long-term business plans and annual budgets; (ix) adoption and implementation
of such long-term business plans and

                                       47
<PAGE>

annual budgets; (x) approval of all operations outside the normal course of
business, including operations already provided for in the annual budget; and
(xi) approval of the quarterly, semi-annual and annual consolidated financial
statements prepared in accordance with internationally accepted accounting
principles. Such resolution also requires that the Management Board obtain prior
approval from the Supervisory Board for (i) the appointment of the members of
the statutory management, administration and control bodies of the Company's
French and Italian subsidiaries; and (ii) the nomination of the statutory
management, administration and control bodies of the Company and each of the
Company's other direct and indirect subsidiaries followed by confirmation to the
Supervisory Board of such nominees' appointments. The general meeting of
shareholders may also specify certain actions of the Management Board that
require shareholder approval. The Company's Articles of Association provide that
the Management Board must obtain shareholder approval prior to (i) the sale of
all or an important part of the Company's assets and concerns; and (ii) all
mergers, acquisitions or joint ventures which the Company wishes to enter into
and which the Supervisory Board considers to be of material significance. See
"Item 1: Description of Business" and "Item 13: Interest of Management in
Certain Transactions."

         The Management Board shall consist of such number of members as
resolved by the general meeting of shareholders upon the proposal of the
Supervisory Board. The members of the Management Board are appointed for three
year terms upon proposal by the Supervisory Board at the general shareholders'
meeting by a majority of the votes cast at a meeting where at least one-third of
the outstanding share capital is present or represented. The Supervisory Board
appoints one of the members of the Management Board to be chairman of the
Management Board (upon approval of at least three-quarters of the members of the
Supervisory Board). Resolutions of the Management Board require the approval of
a majority of its members. Mr. Pasquale Pistorio, the Company's President and
Chief Executive Officer, is currently the sole member of the Management Board.
His term expires in 2002.

         The general meeting of shareholders may suspend or dismiss one or more
members of the Management Board at a meeting at which at least one-half of the
outstanding share capital is present or represented. No quorum is required if a
suspension or dismissal is proposed by the Supervisory Board. The Supervisory
Board may suspend members of the Management Board, but a general meeting of
shareholders must be convened within three months after such suspension to
confirm or reject the suspension. The Supervisory Board shall appoint one or
more persons who shall, at any time, in the event of absence or inability to act
of all the members of the Management Board, be temporarily responsible for the
management of the Company. Upon delegation from the Supervisory Board, the
Compensation Committee determines the compensation and other terms and
conditions of employment of the members of the Management Board.

Executive Officers

         The executive officers of the Company support the Management Board in
its management of the Company, without prejudice to the Management Board's
ultimate responsibility. The Company is organized in a matrix structure with
geographical regions interacting with product divisions, bringing all levels of
management closer to the customer and facilitating communication among research
and development, production, marketing and sales organizations. The executive
officers of the Company are:

<TABLE>
<CAPTION>

                                                                                            Years in
                                                                            Years with     Semiconductor
                Name                          Position                      Company(1)      Industry        Age
                ----                          --------                      ----------     -------------    ---
<S>                        <C>                                                  <C>            <C>          <C>
Pasquale Pistorio          President and Chief Executive Officer                20             36           64
Georges Auguste            Corporate Vice President, Total Quality and          13             26           51
                           Environmental Management
Laurent Bosson             Corporate Vice President, Front-end                  17             17           57
                           Manufacturing
Carlo Bozotti              Corporate Vice President, Memory Products Group      23             23           47
Salvatore Castorina        Corporate Vice President, Discrete and               18             34           63
                           Standard ICs Group
</TABLE>

                                       48
<PAGE>

<TABLE>
<CAPTION>

                                                                                            Years in
                                                                            Years with     Semiconductor
                Name                          Position                      Company(1)      Industry     Age
                ----                          --------                      ----------      --------     ---

<S>                        <C>                                                  <C>            <C>        <C>
Alain Dutheil              Corporate Vice President, Strategic Planning         17             30         55
                           and Human Resources
Philippe Geyres            Corporate Vice President, Consumer and               16             24         48
                           Microcontroller Group
Maurizio Ghirga            Corporate Vice President, Chief Financial            17             17         62
                           Officer
Jean-Claude Marquet        Corporate Vice President, Asia/Pacific               14             33         58
                           Region
Pier Angelo Martinotti     Corporate Vice President, New Ventures               19             32         59
                           Group
Joel Monnier               Corporate Vice President, Central Research           17             26         54
                           and Development
Piero Mosconi              Corporate Vice President, Treasurer                  36             36         60
Carmelo Papa               Corporate Vice President, Region Five                16             16         51
Richard Pieranunzi         Corporate Vice President, Americas Region            19             34         61
Aldo Romano                Corporate Vice President, Telecommunications,        35             35         59
                           Peripherals and Automotive Group
Giordano Seragnoli         Corporate Vice President, Back-end                   35             37         63
                           Manufacturing and Subsystems Products Group
Keizo Shibata              Corporate Vice President, Japan Region                8             35         63
Enrico Villa               Corporate Vice President, European Region            32             32         59
</TABLE>

--------------
(1)  Including years with Thomson Semiconducteurs or SGS Microelettronica.


         Pasquale Pistorio has more than 36 years of experience in the
semiconductor industry. After graduating in Electrical Engineering from the
Polytechnical University of Turin in 1963, he started his career selling
Motorola products. Mr. Pistorio joined Motorola in 1967, becoming Director of
World Marketing in 1977 and General Manager of the International Semiconductor
Division in 1978. Mr. Pistorio joined SGS Microelettronica as President and
Chief Executive Officer in 1980 and became President and Chief Executive Officer
of the Company upon its formation in 1987.

         Georges Auguste has served as Corporate Vice President, Total Quality
and Environmental Management since 1999. Mr. Auguste received a degree in
engineering from the Ecole Superieure d'Electricite (SUPELEC) in 1974 and a
diploma in business administration from the Caen University in 1976. Prior to
joining the Company, Mr. Auguste worked with Philips Components from 1974 to
1986, in various positions in the field of manufacturing. From 1990 to 1997 he
headed the Company's operations in Morocco and from 1997 to 1999 Mr. Auguste
served as director of Total Quality and Environmental Management.

         Laurent Bosson has served as Corporate Vice President, Front-end
Manufacturing and VLSI Fabs since 1989 and from 1992 to 1996 he was given
additional responsibility as President and Chief Executive Officer of the
Company's operations in the Americas. Mr. Bosson received a Masters degree in
Chemistry from the University of Dijon in 1969. He joined Thomson-CSF in 1964
and has held several positions in engineering and manufacturing. In 1982, Mr.
Bosson was appointed General Manager of the Tours and Alencon facilities of
Thomson Semiconducteurs. In 1985, he joined the French subsidiary of SGS
Microelettronica as General Manager of the Rennes, France manufacturing
facility.

         Carlo Bozotti has served as Corporate Vice President, Memory Products
since August 1998. Mr. Bozotti joined SGS Microelettronica in 1977 after
graduating in Electronic Engineering from the University of Pavia. Mr. Bozotti
served as Product Manager for the Industrial, Computer Peripheral and Telecom
divisions and as Product

                                       49
<PAGE>

Manager for the Monolithic Microsystems' Telecom business unit from 1986 to
1987. He was appointed Director of Corporate Strategic Marketing and Key
Accounts for the Headquarters Region in 1988 and became Vice President,
Marketing and Sales, Americas Division in 1991. Mr. Bozotti has served as
Corporate Vice President, Memory Products since August 1998, after having served
as Corporate Vice President, Europe and Headquarters Region from 1994 to 1998.

         Salvatore Castorina has served as Corporate Vice President, Discrete
and Standard ICs Group since 1989. Mr. Castorina received his engineering degree
in Electronics from the Polytechnical University of Turin and began his career
as a teacher of electrical and electronic technologies prior to joining
Thomson-CSF in Milan in 1965. In 1967, he joined Motorola Semiconductors and
held various positions in sales and marketing. In 1981, Mr. Castorina joined the
Company as General Manager of Transistors in Catania and became the General
Manager of the Company's Discrete Division in 1989.

         Alain Dutheil has served as Corporate Vice President, Strategic
Planning and Human Resources since 1994 and 1992, respectively. Mr. Dutheil is
also President of the Company's French subsidiary. After graduating in
Electrical Engineering from the Ecole Superieure d'Ingenieurs de Marseilles
(ESIM), Mr. Dutheil joined Texas Instruments in 1969 as a Production Engineer,
becoming Director for Discrete Products in France and Human Resources Director
for Texas Instruments, France in 1980 and Director of Operations for Texas
Instruments, Portugal in 1982. He joined Thomson Semiconducteurs in 1983 as
General Manager of a plant in Aix-en-Provence, France and then became General
Manager of the Company's Discrete Products Division. From 1989 to 1994, Mr.
Dutheil served as Director for Worldwide Back-end Manufacturing, in addition to
serving as Corporate Vice President for Human Resources from 1992 until the
present.

         Philippe Geyres has served as Corporate Vice President, General Manager
Consumer and Microcontroller Group (formerly Programmable Products Group) since
1990. Mr. Geyres graduated from the Ecole Polytechnique in 1973 and began his
career with IBM in France before joining Schlumberger Group in 1980 as Data
Processing Director. He was subsequently appointed Deputy Director of the IC
Division at Fairchild Semiconductors. Mr. Geyres joined Thomson Semiconducteurs
in 1983 as Director of the Bipolar Integrated Circuits Division. He was
appointed Strategic Programs Director in 1987 and, later the same year, became
Corporate Vice President, Strategic Planning of the Company.

         Maurizio Ghirga became Corporate Vice President, Chief Financial
Officer in 1987, after having served as chief financial controller of SGS
Microelettronica since 1983. Mr. Ghirga has a degree in Business Administration
from the University of Genoa. He spent more than ten years of his career in
various financial capacities at ESSO Company (an Exxon subsidiary in Italy) and
prior to joining the Company was Financial Controller of one of the largest
refinery plants in Italy and of an ESSO chemical subsidiary.

         Jean-Claude Marquet has served as Corporate Vice President,
Asia/Pacific Region since July 1995. After graduating in Electrical and
Electronics Engineering from the Ecole Breguet Paris, Mr. Marquet began his
career in the French National Research Organisation and later joined Alcatel. In
1969, he joined Philips Components. He remained at Philips until 1978, when he
joined Ericsson, eventually becoming President of Ericsson's French operations.
In 1985, Mr. Marquet joined Thomson Semiconducteurs as Vice President Sales and
Marketing, France. Thereafter, Mr. Marquet served as Vice President Sales and
Marketing for France and Benelux, and Vice President Asia Pacific and Director
of Sales and Marketing for the region.

         Pier Angelo Martinotti has served as Corporate Vice President, General
Manager New Ventures Group since 1994. A graduate in Electronic Engineering from
the Polytechnical University of Turin, Mr. Martinotti began his career at the
Company in 1965 as an Application and Marketing Engineer. In 1968, he joined
Motorola Semiconductors in the area of strategic marketing in Europe, and in
1975 became the Marketing (Sales) Director for Europe. From 1986 to 1990, Mr.
Martinotti was Chief Executive Officer of Innovative Silicon Technology, a
former subsidiary of the Company. Mr. Martinotti was appointed Director of
Corporate Strategic Planning in 1990.

         Joel Monnier has served as Corporate Vice President, Director of
Central Research and Development since 1989. After graduating in Electrical
Engineering from the Institut National Polytechnique of Grenoble, Ecole
Nationale Superieure de Radio Electricite, Mr. Monnier obtained a doctoral
degree in microelectronics at LETI/CENG. He began his career in the
semiconductor industry in 1968 as a researcher with CENG, and

                                       50
<PAGE>

subsequently joined the research and development laboratories of Texas
Instruments in Villeneuve Loubet, France and Houston, Texas, eventually becoming
Engineering Manager and Operation Manager at Texas Instruments. Mr. Monnier
joined Thomson-CSF in 1983 as head of the research and manufacturing unit of
Thomson Semiconducteurs. In 1987, he was appointed Vice President and Corporate
Director of Manufacturing.

         Piero Mosconi has served as Corporate Vice President, Treasurer since
1987. After graduating in accounting from Monza in 1960, Mr. Mosconi joined the
faculty at the University of Milan. Mr. Mosconi worked with an Italian bank
before joining the Foreign Subsidiaries Department at SGS Microelettronica in
1964 and becoming Corporate Director of Finance in 1980.

         Carmelo Papa has served as Corporate Vice President, Region Five since
January 2000. Mr . Papa received his degree in nuclear physics at Catania
University. Mr. Papa joined the Company in 1983 and since 1986 has been Director
of Product Marketing and Customer Service for Transistors and Standard ICs.
During this time, he has overseen a substantial growth both in the product
portfolio and the sales volume. He has also played a key role both in the
expansion of the Company's facility in Catania, Italy, from its origin as a
low-cost assembly plant to its present position as one of the Company's most
important and dynamic centres, hosting advanced R&D in areas ranging from
process technology to fuzzy logic and other "soft computing" disciplines,
leading-edge wafer manufacturing and Sales and Marketing HQ for the Company's
Discrete and Standard Circuits division.

Richard Pieranunzi has served as Corporate Vice President, Americas Region since
August 1996. Mr. Pieranunzi received his BSEE from the University of Rhode
Island, and started his career in process engineering. Later, he joined
Motorola's international marketing organization, including in Europe where he
held management positions in sales and strategic marketing and applications. Mr.
Pieranunzi joined SGS Semiconducteurs in 1981 as Marketing and Sales Manager
and, upon the formation of the Company in 1987, he became Vice President
Marketing and Sales for the U.S. organization. For three years, Mr. Pieranunzi
headed the Company's Corporate Strategic Marketing and Corporate Key Account
programs.

         Aldo Romano has served as Corporate Vice President, General Manager
Telecommunications, Peripherals and Automotive Group (formerly Dedicated
Products Group) since 1987. Mr. Romano is also Managing Director of the
Company's Italian subsidiary. A graduate in Electronic Engineering from the
University of Padua in 1963, Mr. Romano joined SGS Microelettronica in 1965 as a
designer of linear ICs, becoming head of the linear IC design laboratory in 1968
and head of Marketing and Applications in 1976. Mr. Romano became Director of
the Bipolar IC Division (which has evolved into the Dedicated Products Group) in
1980.

         Giordano Seragnoli has served as Corporate Vice President, General
Manager Subsystems Products Group since 1987 and since 1994, Director for
Worldwide Back-end Manufacturing. After graduating in Electrical Engineering
from the University of Bologna, Mr. Seragnoli joined the Thomson Group as RF
Application Designer in 1962 and joined SGS Microelettronica in 1965.
Thereafter, Mr. Seragnoli served in various capacities within the Company,
including Strategic Marketing Manager and Subsystems Division Manager,
Subsystems Division Manager (Agrate), Technical Facilities Manager, Subsystems
Division Manager and Back-End Manager.

         Keizo Shibata has served as Corporate Vice President and President of
the Company's Japanese subsidiary since 1992. Mr. Shibata obtained bachelors and
masters degrees in Engineering from Osaka University and has 31 years of
experience in the semiconductor industry. Prior to joining the Company, Mr.
Shibata was employed with Toshiba Corporation since 1964 in various capacities.
From 1987 to 1988, Mr. Shibata served as Chairman of both World Semiconductor
Trade Statistics and the Trade Policy Committee of the Electric Industry
Association of Japan.

         Enrico Villa has served as Corporate Vice President, Region Five since
January 1, 1998. Mr. Villa has served in various capacities within the Company
since 1968 after obtaining a degree in Business Administration from the
University of Genoa and has 30 years of experience in the semiconductor
industry. He is currently a member of the European Electronics Component
Association ("EECA") for which he is now Chairman of the European Semiconductor
Council as well as Chairman for Europe at the Joint Steering Committee of the
World Semiconductor Council.

                                       51
<PAGE>

         As is common in the semiconductor industry, the Company's success
depends to a significant extent upon, among other factors, the continued service
of its key senior executives and research and development, engineering,
marketing, sales, manufacturing, support and other personnel, and on its ability
to continue to attract, retain and motivate qualified personnel. The competition
for such employees is intense, and the loss of the services of any of these key
personnel without adequate replacement or the inability to attract new qualified
personnel could have a material adverse effect on the Company. The Company does
not maintain insurance with respect to the loss of any of its key personnel.

                 Item 11: Compensation of Directors and Officers

         The aggregate cash compensation payable for 1999 to the members of the
Supervisory Board by the Company was approximately $460,000. The amount of cash
compensation for 1999 paid to the executive officers of the Company and members
of the Management Board as a group by the Company and its subsidiaries was
approximately $8.5 million.

         In 1989, the Company established a Corporate Executive Incentive
Program (the "EIP") that entitles selected executives and members of the
Management Board to a yearly bonus based upon the individual performance of such
executives. The maximum bonus awarded under the EIP is based upon a percentage
of the executive's or member's salary and is adjusted to reflect the overall
performance of the Company. The participants in the EIP must satisfy certain
personal objectives that are focused on customer service, profit, cash flow and
market share.

         The executive officers and the Management Board were also covered in
1999 under certain group life and medical insurance programs provided by the
Company. The aggregate additional amount set aside by the Company in 1999 to
provide pension, retirement or similar benefits for executive officers and the
Management Board of the Company as a group is estimated to have been
approximately $3.3 million.

     Item 12: Options to Purchase Securities from Registrant or Subsidiaries

Stock Option Plans

         The following description of the Company's stock options plans has been
adjusted for the 2:1 stock split effected on June 16, 1999 and the 3:1 stock
split effected on May 5, 2000. Taking into account these stock splits, the total
options outstanding as of May 27, 2000 give the right to acquire 19,945,300
Common Shares by its employees and 319,500 Common Shares by members and
professionals of the Supervisory Board.

         All options to purchase Common Shares under the Company's first stock
option plan (the "1989 Stock Option Plan") expired on December 18, 1999.

         On October 20, 1995, the shareholders of the Company approved
resolutions authorizing the Supervisory Board for a period of five years to
adopt and administer a new stock option plan which provides for the granting to
managers and professionals of the Company of options to purchase up to a maximum
of 33.0 million Common Shares (the "1995 Stock Option Plan"). The Company has
granted options to acquire a total of 23,851,200 shares pursuant to the 1995
Stock Option Plan as follows:

         o        The Company granted options to purchase 7,200,000 Common
                  Shares with an exercise price per Common Share of $6.04. All
                  such options will expire on March 1, 2004. As of May 27, 2000,
                  options to purchase 3,352,910 shares were outstanding.

         o        The Company granted options to purchase 3,873,000 Common
                  Shares with an exercise price per Common Share of $14.23,
                  which will expire on September 12, 2005. As of May 27, 2000,
                  options to purchase 3,805,050 shares were outstanding.

         o        The Company granted options to purchase 3,900,000 Common
                  Shares with an exercise price per Common Share of $12.03,
                  which will expire on July 28, 2006. As of May 27, 2000,
                  options to purchase 3,861,300 shares were outstanding.


                                       52
<PAGE>

         o        The Company granted options to purchase 8,878,200 Common
                  Shares with an exercise price per Common Shares of $24.88,
                  which will expire on September 16, 2007. As of May 27, 2000,
                  options to purchase 8,779,200 shares were outstanding.

         The Company also made a special grant of options under the 1995 Stock
Option Plan to former employees of Arithmos, a company which designs controller
ICs for flat panel displays and LCD monitors with an exercise price of $55.25
and which will expire on January 24, 2008. As of May 27, 2000, options to
purchase 126,840 shares were outstanding pursuant to this grant.

         As of May 27, 2000, of the total options outstanding under the 1995
Stock Option Plan, options to purchase 4,868,280 shares were held by executive
officers as a group.

         In June 1996, the general meeting of shareholders approved the granting
of options to members and professionals of the Supervisory Board which
correspond to the right to purchase approximately 432,000 Common Shares of the
Company over a period of three years, beginning in 1996. The following options
have been granted:

         o        In 1996, the Company granted to members and professionals of
                  the Supervisory Board options to purchase 198,000 Common
                  Shares with an exercise price per Common Share of $9.00, which
                  will expire on October 22, 2004. As of May 27, 2000, options
                  to purchase 63,000 shares were outstanding.

         o        In 1997, the Company granted to members and professionals of
                  the Supervisory Board options to purchase 90,000 Common Shares
                  with an exercise price per Common Share of $14.23, which will
                  expire on September 12, 2005. As of May 27, 2000, options to
                  purchase 31,500 shares were outstanding.

         o        In 1998, the Company granted to members and professionals of
                  the Supervisory Board options to purchase 90,000 Common Shares
                  with an exercise price per Common Share of $12.03, which will
                  expire on July 28, 2006. As of May 27, 2000, options to
                  purchase 45,000 shares were outstanding.

         In 1999, the general meeting of the shareholders voted to renew the
Supervisory Board Option Plan whereby members of the Supervisory Board may
receive, during the three-year period 1999-2001, at least the same number of
options as were granted during the first three-year period. The following
options have been granted:

         o        The Company granted options to members and professionals of
                  the Supervisory Board to purchase 180,000 Common Shares with
                  an exercise price per Common Share of $24.88 which will expire
                  on September 16, 2007. As of May 27, 2000, options to purchase
                  180,000 shares were outstanding.

             Item 13: Interest of Management in Certain Transactions

         The Company has formed a joint venture research and development center
with France Telecom R&D in the form of a GIE. France Telecom R&D is a research
laboratory that is wholly owned by France Telecom, one of the indirect
shareholders of the Company. See "Item 1: Description of Business--Research and
Development" and "Item 4: Control of Registrant." The research center is housed
at the Company's Crolles, France manufacturing facility, and is developing
submicron process technologies. The joint venture between the Company and France
Telecom R&D was created in 1990 before France Telecom became an indirect
shareholder of the Company.

         The Company has signed an agreement providing for a research and
development cooperation with GRESSI, the research and development GIE formed by
France Telecom R&D and LETI, a research laboratory that is a department of
CEA-Industrie, the parent of one of the indirect shareholders of the Company.
See "Item 4: Control of Registrant." The objectives of the cooperation is to
develop basic know-how on innovative aspects of VLSI technology evolution which
can be transferred to industrial applications, and to address the development of
innovative process steps and process modules to be used in future generations of
VLSI products. The cooperation agreement was based upon a multi-year plan
through 1998, of which the Company bore half of the total cost. The cooperation
with GRESSI was superseded, as of January 1, 1999, by a tripartite cooperation
arrangement between the Company, France Telecom R&D and LETI, within the
framework of an extended GIE named Centre Commun de Microelectronique de
Crolles. This cooperation is directed towards sub 0.18 micron technologies with
a view to


                                       53
<PAGE>


preparing the technology to begin production of 12-inch wafers and associated
wafer fabrication processes. The tripartite cooperation is intended to last
until the end of 2002.

         The Company participates in certain programs sponsored by the French
and Italian governments for the funding of research and development and
industrialization through direct grants as well as low interest financing. See
"Item 1: Description of Business--Public Funding." The shareholders of ST
Holding, the corporate parent of the Company's principle shareholder, are
controlled, directly or indirectly, by the governments of the Republics of
France and Italy. See "Item 4: Control of Registrant."

         Sales to shareholders of the Company and their affiliates totaled $19.0
million in 1999.

                                     PART II

               Item 14: Description of Securities to be Registered

         Not applicable.

                                    PART III

                     Item 15: Default Upon Senior Securities

         None.

           Item 16: Changes in Securities and Changes in Security for
                    Registered Securities and Use of Proceeds

         On April 26, 2000, the Company's shareholders approved a 3:1 stock
split, changing the par value of each Common Share to EUR 1.04. The changes
became effective May 5, 2000. After these changes and as of May 27, 2000 the
Company's authorized share capital was EUR 1,809,600,000 consisting of
1,200,000,000 Common Shares and 540,000,000 Preference Shares of EUR 1.04
nominal value each.

                                     PART IV

                          Item 17: Financial Statements

         Not applicable.

                          Item 18: Financial Statements

         See "Item 19: Financial Statements and Exhibits" for a list of
financial statements filed pursuant to this Item 18.



                                       54
<PAGE>

                   Item 19: Financial Statements and Exhibits

         With the exception of the items incorporated by reference elsewhere in
this annual report, the 1999 Annual Report is not deemed to be filed as part of
this annual report.

(a)      Financial Statements

         The financial statements, together with the report thereon of
PricewaterhouseCoopers N.V. dated January 25, 2000, appearing on pages 44-59
of the 1999 Annual Report, are incorporated herein by reference.

<TABLE>
<CAPTION>

                                                                                             Reference Page
                                                                                    --------------------------------
                                                                                                     1999 Annual
                                                                                      Form 20-F         Report

                                                                                    -------------- -----------------
<S>                                                                                      <C>            <C>
Financial Statements:

Report of Independent Accountants for Years Ended
     December 31, 1999, 1998 and 1997..................................                  --               59
Consolidated Statement of Income for the Years Ended
     December 31, 1999, 1998 and 1997..................................                  --               44
Consolidated Balance Sheet as of December 31, 1999 and 1998............                  --               45
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997.......................................                  --               46
Consolidated Statement of Changes in Shareholders' Equity for the Years Ended
December 31, 1999, 1998 and 1997.......................................                  --               47
Notes to Consolidated Financial Statements.............................                  --             48-58

         Financial Statement Schedules:

For each of the three years in the period ended December 31, 1999
     Schedule II Valuation and Qualifying Accounts.....................                  S-1             --
All other schedules are omitted because they are not applicable
     or the required information is shown in the financial statements
     or notes thereto..................................................
Report of Independent Accountants on Financial Statement Schedule......                  S-2             --
</TABLE>

(b)      Exhibits

         1.1      Articles of Association, as amended as of May 5, 2000, of the
                  Company

         2.1      Subsidiaries of the Company (see Note 3 to the Consolidated
                  Financial Statements)

         2.2      Consent of PricewaterhouseCoopers N.V.

         99.1     Pages 34 to 59 of the 1999 Annual Report, submitted to the
                  Securities and Exchange Commission as a Report on Form 6-K by
                  STMicroelectronics N.V. on June 19, 2000. With the exception
                  of the information on these pages, the 1999 Annual Report is
                  not deemed filed as part of this annual report on Form 20-F.

                                       55
<PAGE>

                                  CERTAIN TERMS

<TABLE>
<CAPTION>
<S>                             <C>

ASD........................     application-specific discrete technology
ASIC.......................     application-specific IC
ASSP.......................     application-specific standard product
ATM........................     asynchronous transfer mode
BCD........................     bipolar, CMOS and DMOS process technology
BiCMOS.....................     bipolar and CMOS process technology
CAD........................     computer aided design
CIM........................     computer integrated manufacturing
CMOS.......................     complementary metal oxide silicon
DMOS.......................     diffused metal oxide silicon
DRAMS......................     dynamic random access memory
DSP........................     digital signal processor
EMAS.......................     The Eco-Management and Audit Scheme (EAMS) is the voluntary European
                                Community scheme for companies performing industrial activities for the
                                evaluation and improvement of environmental performance
EEPROM.....................     electrically erasable programmable read-only memory
EPROM......................     erasable programmable read-only memory
GPS........................     global positioning system
HCMOS......................     high-speed complementary metal-oxide-silicon
IC.........................     integrated circuit
IGBT.......................     insulated gate bipolar transistors
ISDN.......................     integrated services digital network
JavaCard(TM)applets........     application software for smartcard developed on Java platform
Java.......................     operating system developed by Sun Microsystems
Kbit.......................     Kilobit
Mbit.......................     Megabit
MCUs.......................     microcontroller units
MIPS.......................     million instructions per second
MOS........................     metal oxide silicon process technology
MOSFET.....................     metal oxide silicon field effect transistor
MPEG.......................     motion picture experts group
NVRAM......................     nonvolatile SRAM
OEM........................     original equipment manufacturer
OTP........................     one-time programmable
PROM.......................     programmable read-only memory
RAM........................     random access memory
RF.........................     radio frequency
RISC.......................     reduced instruction set computing
ROM........................     read-only memory
SAM........................     serviceable available market
SLIC.......................     subscriber line interface card
SPC........................     statistical process control
SRAM.......................     static random access memory
STB........................     set-top box
TAM........................     total available market
VLSI.......................     very large scale integration
VoIP.......................     Voice over Internet protocol
</TABLE>

                                       56
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                               STMICROELECTRONICS N.V.

Date:  June 27, 2000


                               By: /S/   PASQUALE PISTORIO
                                   -----------------------
                                   Name: Pasquale Pistorio
                                   Title: President and Chief Executive Officer













                                       57
<PAGE>

                             STMICROELECTRONICS N.V.
                        VALUATION AND QUALIFYING ACCOUNTS
                     (Currency - Thousands of U.S. dollars)


<TABLE>
<CAPTION>
                                               Balance
                                                  as                    Charged to                 Balance at
Valuation and qualifying accounts             beginning   Translation   costs and                   end of
deducted from the related asset accounts      of period    adjustment    expenses     Deductions     period
                                              ---------   -----------   ----------    ----------   ----------

1999

<S>                                             <C>           <C>         <C>        <C>             <C>
Inventories.........................            53,955          --         42,137    (53,955)        42,137
Accounts Receivable ................            10,494        (452)         1,662       (114)        11,590

1998
Inventories.........................            68,182         --          53,955    (68,182)        53,955
Accounts Receivable ................            15,228         89          (3,741)    (1,082)        10,494

1997
Inventories.........................            45,176         --          68,182    (45,176)        68,182
Accounts Receivable.................            18,152      (1,902)             7     (1,029)        15,228
</TABLE>










                                      S-1
<PAGE>

                      Report of Independent Accountants on
                          Financial Statement Schedule


To the Supervisory Board and Shareholders of STMicroelectronics N.V.

Our audits of the consolidated financial statements referred to in our report
dated January 25, 2000 appearing on page 59 of the 1999 Annual Report to
Shareholders of STMicroelectronics N.V. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 20-F)
also included an audit of the financial statement schedule listed in Item 19 of
this Form 20-F. In our opinion, this financial statement schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.

PricewaterhouseCoopers N.V.


Amsterdam, The Netherlands
January 25, 2000

















                                      S-2




<PAGE>

                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>

            Name                                                                                         Page
            ----                                                                                         ----
<S>        <C>                                                                                           <C>
1.1        Articles of Association, as amended as of May 5, 2000,
           of the Company..................................................................

2.2        Consent of PricewaterhouseCoopers N.V...........................................

99.1       Pages 34 to 59 of the 1999 Annual Report, submitted to the Securities and
           Exchange Commission as a Report on Form 6-K by STMicroelectronics N.V. on June
           19, 2000........................................................................
</TABLE>