SOURCE: STATS ChipPAC

STATS ChipPAC

April 21, 2011 05:30 ET

STATS ChipPAC Reports First Quarter 2011 Results

SINGAPORE--4/21/2011, UNITED STATES--(Marketwire - Apr 21, 2011) - STATS ChipPAC Ltd. ("STATS ChipPAC" or the "Company") (SGX-ST: STATSChP), a leading semiconductor test and advanced packaging service provider, today announced results for the first quarter 2011.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "The first quarter of 2011 was a challenging one due to seasonally weaker demand and rising costs. Revenue for the first quarter of 2011 increased by 5.5% to $409.4 million over the first quarter of 2010 and decreased by 3.1% from prior quarter."

Net income for the first quarter of 2011 was $6.3 million or $0.00 of net income per diluted ordinary share compared to net income of $27.5 million or $0.01 of net income per diluted ordinary share in the first quarter of 2010 and net income of $19.0 million or $0.01 of net income per diluted ordinary share in the prior quarter. The net income for the first quarter of 2011 and fourth quarter of 2010 included interest expense of $11.2 million in each quarter from our offering of $600.0 million Senior Notes due 2015 to fund our capital reduction and debt issuance cost write off of $7.6 million and $2.0 million, respectively, from the $234.5 million and $60.0 million voluntary repayment of our senior credit facility.

John Lau, Chief Financial Officer of STATS ChipPAC, said, "Our gross margin in the first quarter of 2011 was 16.8% compared to 20.0% in the first quarter of 2010 due to unfavorable product mix, higher material costs and rise in labour costs arising primarily from the appreciation of Asian currencies against United States dollar. Operating margin for first quarter of 2011 was 5.7% of revenue compared to 11.2% in the first quarter of 2010. Our adjusted EBITDA(1) in the first quarter of 2011 was 24.8% of revenue compared to 28.1% in the first quarter of 2010. Capital spending in the first quarter of 2011 was $86.5 million or 21.1% of revenue, compared to $99.4 million or 25.6% of revenue in the first quarter of 2010, and reflected the front-end loaded capital spending this year. Post full repayment of the $234.5 million of loan outstanding under our $360.0 million senior credit facility and the issuance of $200.0 million of 5.375% Senior Notes due 2016, we ended the first quarter of 2011 with cash, cash equivalent and marketable securities of $234.5 million and debt of $828.0 million, compared to $301.7 million and $844.2 million, respectively, as of the end of fourth quarter of 2010."

Outlook

Tan Lay Koon commented, "Our current business visibility is clouded by the potential disruptions to the semiconductor supply chain due to the Japan earthquake of March 2011. Based on current visibility, we expect net revenues in the second quarter of 2011 to be flat to mid single digit level increase from prior quarter, with adjusted EBITDA(1) in the range of 21% to 26% of revenue. We expect capital expenditure(2) in the second quarter of 2011 will be approximately $100 million to $110 million as our capital spending is front-end loaded to support customers' forecast."

The outlook is subject to a number of risks and uncertainties that could cause actual events or results to differ materially from those disclosed in the outlook statements. These statements are based on our management's beliefs and assumptions, which involve judgments about future trends, events and conditions, all of which are subject to change and many of which are beyond our control. Please refer to our Financial Statements for the three months ended 27 March 2011 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the second quarter of 2011. Investors should consider these assumptions and make their own assessment of the future performance of STATS ChipPAC and note that there may not be a direct correlation between the net income of the Company with adjusted EBITDA as a percentage of revenue.

Investor Conference Call / Live Audio Webcast Details

A conference call has been scheduled for 8:00 a.m. in Singapore on Monday, 25 April 2011. 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 +65-6723-9381. A live audio 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 9 May 2011 at www.statschippac.com and by telephone at 800-616-3021. The conference ID number to access the conference call and replay is 60153347.

Forward-looking Statements

Certain statements in this release are forward-looking statements, including our outlook for the second quarter of 2011, that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this release. Factors that could cause actual results to differ include, but are not limited to, shortages in supply of key components and disruption in supply chain; general business and economic conditions and the state of the semiconductor industry; prevailing market conditions; demand for end-use applications products such as communications equipment, consumer and multi-applications and personal computers; decisions by customers to discontinue outsourcing of test and packaging services; level of competition; our reliance on a small group of principal customers; our continued success in technological innovations; pricing pressures, including declines in average selling prices; intellectual property rights disputes and litigation; our ability to control operating expenses; our substantial level of indebtedness and access to credit markets; potential impairment charges; availability of financing; changes in our product mix; our capacity utilisation; delays in acquiring or installing new equipment; limitations imposed by our financing arrangements which may limit our ability to maintain and grow our business; returns from research and development investments; changes in customer order patterns; customer credit risks; disruption of our operations; loss of key management or other personnel; defects or malfunctions in our testing equipment or packages; rescheduling or cancelling of customer orders; adverse tax and other financial consequences if the taxing authorities do not agree with our interpretation of the applicable tax laws; classification of our Company as a passive foreign investment company; our ability to develop and protect our intellectual property; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; majority ownership by Temasek Holdings (Private) Limited ("Temasek") that may result in conflicting interests with Temasek and our affiliates; unsuccessful acquisitions and investments in other companies and businesses; labour union problems in South Korea; uncertainties of conducting business in China and changes in laws, currency policy and political instability in other countries in Asia; natural calamities and disasters, including outbreaks of epidemics and communicable diseases; the continued trading and listing of our ordinary shares on the Singapore Exchange Securities Trading Limited ("SGX-ST"). You should not unduly rely on such statements. We do not intend, and do not assume any obligation, to update any forward-looking statements to reflect subsequent events or circumstances.

Our 52-53 week fiscal year ends on the Sunday nearest and prior to 31 December. Our fiscal quarters end on a Sunday and are generally thirteen weeks in length. Our first quarter of 2011 ended on 27 March 2011, while our first quarter of 2010 and fiscal year 2010 ended on 28 March 2010 and 26 December 2010, respectively. References to "$" are to the lawful currency of the United States of America.

Basis of Preparation of Results

The financial statements included in this release have been prepared in accordance with the Singapore Financial Reporting Standards ("FRS").

About STATS ChipPAC Ltd.

STATS ChipPAC Ltd. is a leading service provider of semiconductor packaging design, assembly, test and distribution solutions in diverse end market applications including communications, digital consumer and computing. With global headquarters in Singapore, STATS ChipPAC has design, research and development, manufacturing or customer support offices in 10 different countries. STATS ChipPAC is listed on the SGX-ST. Further information is available at www.statschippac.com. Information contained in this website does not constitute a part of this release.

1. Adjusted EBITDA is not required by, or presented in accordance with Singapore Financial Reporting Standards ("FRS"). We define adjusted EBITDA as net income attributable to STATS ChipPAC Ltd. plus income tax expense, interest expense, net, depreciation and amortisation, restructuring charges, share-based compensation, held for sale asset impairment, tender offer expenses and write-off of debt issuance cost. We present adjusted EBITDA as a supplemental measure of our performance. Management believes the non- FRS financial measure is useful to investors in enabling them to perform additional analysis.

2. Capital expenditure refers to acquisitions of production equipment and asset upgrades.

                          STATS ChipPAC Ltd.
                     Consolidated Income Statement
                              (Unaudited)

                                                     Three Months Ended
                                                  ------------------------
                                                    27 March     28 March
                                                      2011         2010
                                                     $'000        $'000
                                                  -----------  -----------
Net revenues                                          409,380      387,947
Cost of revenues                                     (340,622)    (310,270)
                                                  -----------  -----------
Gross profit                                           68,758       77,677

Operating expenses:
  Selling, general and administrative                  25,552       22,583
  Research and development                             12,304       11,538
  Write-off of debt issuance costs                      7,593            -
                                                  -----------  -----------
    Total operating expenses                           45,449       34,121
                                                  -----------  -----------

Operating income                                       23,309       43,556

Other income (expenses), net:
  Interest income                                         389          414
  Interest expense                                    (15,065)      (7,467)
  Foreign currency exchange gain (loss)                  (569)        (928)
  Share of profit of associate                             90            6
  Other non-operating income (expense), net                84          111
                                                  -----------  -----------
    Total other expenses, net                         (15,071)      (7,864)
                                                  -----------  -----------

Income before income taxes                              8,238       35,692
Income tax expense                                       (379)      (6,983)
                                                  -----------  -----------
Net income                                              7,859       28,709
Less: Net income attributable to the
 non-controlling interest                              (1,587)      (1,259)
                                                  -----------  -----------
Net income attributable to STATS ChipPAC Ltd.           6,272       27,450
                                                  ===========  ===========

Net income per ordinary share attributable
   to STATS ChipPAC Ltd.:
  Basic                                           $      0.00  $      0.01
  Diluted                                         $      0.00  $      0.01

Ordinary shares (in thousands) used in
   per ordinary share calculation:
  Basic                                             2,202,218    2,202,218
  Diluted                                           2,202,234    2,202,238

Key Ratios and Information:
Gross Margin                                             16.8%        20.0%
Operating Expenses as a % of Revenue                     11.1%         8.8%
Operating Margin                                          5.7%        11.2%

Depreciation & Amortisation, including
 Amortisation of Debt Issuance Costs                   73,532       67,815
Capital Expenditures                                   86,544       99,387



                         STATS ChipPAC Ltd.
             Consolidated Statement of Financial Position
                           (Unaudited)

                                                    27 March   26 December
                                                      2011         2010
                                                     $'000        $'000
                                                  ------------ -----------
ASSETS
Current assets:
  Cash and cash equivalents                            130,776     196,395
  Financial assets, available-for-sale                 103,737      88,642
  Accounts receivable, net                             243,785     230,777
  Short-term amounts due from related parties           17,105      17,105
  Other receivables                                      9,611       9,435
  Inventories                                           76,920      69,791
  Prepaid expenses and other current assets             22,304      17,227
                                                  ------------ -----------
    Total current assets                               604,238     629,372
Non-current assets:
  Financial assets, available-for-sale                       -      16,646
  Property, plant and equipment, net                 1,139,443   1,123,809
  Investment in associate                                8,181       8,104
  Intangible assets                                     38,511      38,857
  Goodwill                                             430,134     430,134
  Long-term restricted cash                                421         416
  Prepaid expenses and other non-current assets          1,939       2,578
                                                  ------------ -----------
    Total non-current assets                         1,618,629   1,620,544
                                                  ------------ -----------
  Total assets                                       2,222,867   2,249,916
                                                  ============ ===========

LIABILITIES
Current liabilities:
  Accounts and other payables                          152,050     151,473
  Payables related to property, plant and
   equipment purchases                                  41,449      42,734
  Accrued operating expenses                            87,757     113,584
  Income taxes payable                                   8,474      12,385
  Short-term borrowings                                 37,928      61,768
  Short-term amounts due to related parties                 41          22
                                                  ------------ -----------
    Total current liabilities                          327,699     381,966
Non-current liabilities:
  Long-term borrowings                                 790,081     782,434
  Deferred tax liabilities                              49,596      44,335
  Other non-current liabilities                         13,629      13,467
                                                  ------------ -----------
    Total non-current liabilities                      853,306     840,236
                                                  ------------ -----------
  Total liabilities                                  1,181,005   1,222,202
                                                  ============ ===========

EQUITY
  Share capital                                        873,666     873,666
  Retained earnings                                     91,182      84,910
  Other reserves                                         5,198        (278)
                                                  ------------ -----------
    Equity attributable to equity holders of
     STATS ChipPAC Ltd.                                970,046     958,298
  Non-controlling interest                              71,816      69,416
                                                  ------------ -----------
  Total equity                                       1,041,862   1,027,714
                                                  ------------ -----------
  Total liabilities and equity                       2,222,867   2,249,916
                                                  ============ ===========



                            STATS ChipPAC Ltd.
                      Other Supplemental Information
                                (Unaudited)


                                                 1Q 2011  4Q 2010  1Q 2010
Net Revenues by Product Line
Packaging - laminate                                54.9%    57.9%    55.5%
Packaging - leaded                                  15.3%    12.4%    15.3%
Test                                                19.7%    20.3%    22.2%
Wafer level processing and other services           10.1%     9.4%     7.0%
                                                 -------  -------  -------
                                                   100.0%   100.0%   100.0%
                                                 =======  =======  =======
Net Revenues by End User Market
Communications                                      52.4%    57.4%    52.3%
Personal Computers                                  14.1%    11.6%    15.4%
Consumer, Multi-applications and Others             33.5%    31.0%    32.3%
                                                 -------  -------  -------
                                                   100.0%   100.0%   100.0%
                                                 =======  =======  =======
Net Revenues by Region
United States of America                            64.8%    63.0%    61.5%
Asia                                                26.5%    26.7%    25.7%
Europe                                               8.7%    10.3%    12.8%
                                                 -------  -------  -------
                                                   100.0%   100.0%   100.0%
                                                 =======  =======  =======

Number of Testers                                    914      942      929
Number of Wirebonders                              4,567    4,460    4,538

Overall Equipment Utilisation Rate                    62%      62%      63%

Contact Information

  • Investor Relations Contact:

    Tham Kah Locke
    Vice President of Corporate Finance
    Tel: (65) 6824 7788
    Fax: (65) 6720 7826
    email: Email Contact

    Media Contact:

    Lisa Lavin
    Deputy Director of Corporate Communications
    Tel: (208) 867 9859
    email: Email Contact