SOURCE: STATS ChipPAC

April 25, 2007 16:00 ET

STATS ChipPAC Reports First Quarter 2007 Results

Revenue Increased 1.2% Year-Over-Year to $390.5 Million; Net Income Increased 41.9% Year-Over-Year to $17.0 Million

UNITED STATES -- (MARKET WIRE) -- April 25, 2007 -- SINGAPORE -- 4/26/2007 -- STATS ChipPAC Ltd. ("STATS ChipPAC" or the "Company") (NASDAQ: STTS) and (SGX-ST: STATSChP), a leading independent semiconductor test and advanced packaging service provider, today announced results for the first quarter 2007.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC said, "Despite the seasonal weakness and lingering inventory correction by our customers, we were able to achieve the high end of our guidance for both revenue and profitability. Our customer diversification, more balanced end markets exposure, improved operational efficiency and better material management helped us mitigate much of the seasonal revenue and gross margin pressure."

Revenue for the first quarter of 2007 increased 1.2% to $390.5 million, compared to $385.7 million in the first quarter of 2006. This represents a sequential decline of 6.1% compared to the fourth quarter of 2006. On a US GAAP basis, net income for the first quarter of 2007 was $17.0 million or $0.08 per diluted ADS, compared to net income of $12.0 million or $0.06 per diluted ADS in the first quarter of 2006. Net income for the first quarter of 2007 included $2.9 million in share-based compensation expense as required under SFAS 123(R), and also approximately $6.8 million in expenses related to the ongoing tender offer from Singapore Technologies Semiconductors Pte Ltd, a wholly-owned subsidiary of Temasek Holdings (Private) Limited.

Michael G. Potter, Chief Financial Officer of STATS ChipPAC said, "Our end market leadership and customer diversification helped us to keep revenue fairly consistent across the quarter. The combination of ongoing prudent capital expenditure spending and continued strong cash flow enabled us to pay down an additional $60.5 million in net debt in the quarter. In the first quarter of 2007, we incurred approximately $56.8 million in capital expenditures which were 14.5% of revenue compared to 21.6% of revenue in year 2006."

Investor Conference Call / Webcast Details

A conference call has been scheduled for 8:00 a.m. in Singapore on Thursday, April 26, 2007. This will be 8:00 p.m. in New York on Wednesday, April 25, 2007. During the call, time will be set-aside for analysts and interested investors to ask questions of executive officers.

The call may be accessed by dialing +1-201-689-8560. A live webcast of the conference call will be available on STATS ChipPAC's website at www.statschippac.com. A replay of the call will be available 2 hours after the live call through noon on Thursday, May 3, 2007 (in Singapore) or midnight on Wednesday, May 2, 2007 (in New York) at www.statschippac.com and by telephone at +1-201-612-7415. The account number to access the replay is 3055 and the conference ID number is 237457.

Forward Looking Statements

Certain statements in this release are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described or implied in this release. A variety of factors could cause actual events to differ from our expectations including general business and economic conditions and the state of the semiconductor industry; level of competition; demand for end-use applications products such as communications equipment and personal computers; decisions by customers to discontinue outsourcing of test and packaging services; reliance on a small group of principal customers; continued success in technological innovations; availability of financing; pricing pressures including declines in average selling prices; tender offer by Singapore Technologies Semiconductors Pte Ltd, a subsidiary of Temasek Holdings (Private) Limited (Temasek Holdings); our substantial level of indebtedness; potential impairment charges; adverse tax and other financial consequences if the South Korean taxing authorities do not agree with our interpretation of the applicable tax laws; ability to develop and protect our intellectual property; rescheduling or canceling of customer orders; changes in products mix; intellectual property rights disputes and litigation; capacity utilization; delays in acquiring or installing new equipment; limitations imposed by our financing arrangements which may limit our ability to maintain and grow our business; changes in customer order patterns; shortages in supply of key components; disruption of our operations; loss of key management or other personnel; defects or malfunctions in our testing equipment or packages; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; significant ownership by Temasek Holdings that may result in conflicting interests with Temasek Holdings and our affiliates; unsuccessful acquisitions and investments in other companies and businesses; our ability to successfully integrate the operations of former STATS and ChipPAC and their employees; labor union problems in South Korea; uncertainties of conducting business in China; natural calamities and disasters, including outbreaks of epidemics and communicable diseases; and other risks described from time to time in the Company's SEC filings, including its annual report on Form 20-F dated March 12, 2007. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Since the beginning of fiscal 2005, we employed quarterly and fiscal year reporting periods that end on the Sunday nearest to end of each calendar quarter or calendar year, as the case may be. Our first quarter of 2007 ended on April 1, 2007, while our first quarter of 2006 ended on March 26, 2006. References to "US GAAP" are to Generally Accepted Accounting Principles as practiced in the United States of America and references to "$" are to the lawful currency of the United States of America.


                            STATS ChipPAC Ltd.
              Condensed Consolidated Statements of Operations
      (In thousands of U.S. Dollars, except share and per share data)
                                (Unaudited)


                                                     Three Months Ended
                                                  ------------------------
                                                    March 26,    April 1,
                                                      2006         2007
                                                  -----------  -----------
Net revenues                                      $   385,709  $   390,470
Cost of revenues                                     (309,116)    (312,911)
                                                  -----------  -----------
Gross profit                                           76,593       77,559

Operating expenses:
   Selling, general and administrative                 39,711       27,999
   Research and development                             6,973        8,185
   Tender offer expenses                                    -        6,808
                                                  -----------  -----------
      Total operating expenses                         46,684       42,992
                                                  -----------  -----------

Operating income                                       29,909       34,567

Other income (expenses), net                           (9,430)      (8,719)
                                                  -----------  -----------

Income before income taxes                             20,479       25,848
Income tax expense                                     (5,918)      (7,651)
                                                  -----------  -----------
Income before minority interest                        14,561       18,197
Minority interest                                      (2,545)      (1,150)
                                                  -----------  -----------
Net income                                        $    12,016  $    17,047
                                                  ===========  ===========

Net income per ordinary share:
   Basic                                          $      0.01  $      0.01
   Diluted                                        $      0.01  $      0.01

Net income per ADS:
   Basic                                          $      0.06  $      0.08
   Diluted                                        $      0.06  $      0.08

Ordinary shares (in thousands) used in per
 ordinary share calculation:
   Basic                                            1,981,209    2,009,832
   Diluted                                          2,155,584    2,191,760

ADS (in thousands) used in per ADS calculation:
   Basic                                              198,121      200,983
   Diluted                                            215,558      219,176

Key Ratios and Information:
Gross Margin                                             19.9%        19.9%
Operating Expenses as a % of Revenue                     12.1%        11.0%
Operating Margin                                          7.8%         8.9%

Depreciation & Amortization, including            $    69,520  $    61,397
   Amortization of Debt Issuance Costs
Capital Expenditures                              $   132,854  $    56,786

Share-based compensation expense included
 under SFAS 123(R) were as follows:
   Cost of revenues                               $     1,514  $     1,488
   Selling, general and administrative                  2,470        1,018
   Research and development                               461          376
                                                  -----------  -----------
                                                  $     4,445  $     2,882
                                                  ===========  ===========





                            STATS ChipPAC Ltd.
                  Condensed Consolidated Balance Sheets
                      (In thousands of U.S. Dollars)


                                                  December 31,   April 1,
                                                      2006         2007
                                                  ------------ ------------
                                                               (Unaudited)
ASSETS
Current assets:
   Cash, cash equivalents and marketable
    securities                                    $    216,583 $    187,640
   Accounts receivable, net                            243,779      242,765
   Inventories                                         111,614       97,139
   Other current assets                                 27,845       26,051
                                                  ------------ ------------
   Total current assets                                599,821      553,595

   Marketable securities                                15,358       15,535
   Property, plant and equipment, net                1,192,830    1,186,372
   Investment in equity investee                        10,292        9,996
   Goodwill and intangible assets                      555,358      553,677
   Other non-current assets *                           84,621       74,264
                                                  ------------ ------------
      Total assets                                $  2,458,280 $  2,393,439
                                                  ------------ ------------

LIABILITIES AND SHAREHOLDERS'  EQUITY
Current liabilities:
   Accounts and other payables                    $    201,999 $    171,696
   Other current liabilities                           104,482       98,179
   Short-term debts                                     65,373       19,159
                                                  ------------ ------------
      Total current liabilities                        371,854      289,034
Long-term debts                                        697,523      682,120
Other non-current liabilities                           84,807       88,363
                                                  ------------ ------------
      Total liabilities                              1,154,184    1,059,517
                                                  ------------ ------------
Minority interest                                       57,946       58,393
                                                  ------------ ------------
Shareholders' equity                                 1,246,150    1,275,529
                                                  ------------ ------------
      Total liabilities and shareholders' equity  $  2,458,280 $  2,393,439
                                                  ------------ ------------

* Includes $977 and $981 of non-current restricted cash as of April 1, 2007
  and December 31, 2006, respectively.




                            STATS ChipPAC Ltd.
                      Other Supplemental Information
                                (Unaudited)



                                               1Q 2006   4Q 2006   1Q 2007
Net Revenues by Product Line
Packaging - array                                 54.6%     57.8%     58.6%
Packaging - leaded                                18.6%     17.1%     16.9%
Test and other services                           26.8%     25.1%     24.5%
                                              --------  --------  --------
                                                 100.0%    100.0%    100.0%
                                              ========  ========  ========
Net Revenues by End User Market
Communications                                    55.4%     57.0%     52.5%
Personal Computers                                20.2%     17.5%     16.1%
Consumer, Multi-applications and Others           24.4%     25.5%     31.4%
                                              --------  --------  --------
                                                 100.0%    100.0%    100.0%
                                              ========  ========  ========
Net Revenues by Region
United States of America                          73.1%     74.3%     77.1%
Europe                                             2.9%      3.2%      2.2%
Asia                                              24.0%     22.5%     20.7%
                                              --------  --------  --------
                                                 100.0%    100.0%    100.0%
                                              ========  ========  ========

Number of Testers                                  974       985       938
Number of Wirebonders                            3,677     3,812     3,808

Overall Equipment Utilization Rate                  76%       75%       75%

Contact Information

  • Contact:
    Singapore Contact:

    Tham Kah Locke
    Tel: (65) 6824 7635
    Fax: (65) 6720 7826
    email: Email Contact

    US Contacts:

    Lisa Lavin
    Marcom Manager
    Tel: (208) 939 3104
    Fax: (208) 939 4817
    email: Email Contact

    The Ruth Group
    David Pasquale - Executive Vice President
    Tel: (646) 536 7006
    email: Email Contact