SOURCE: STATS ChipPAC

STATS ChipPAC

April 22, 2014 05:35 ET

STATS ChipPAC Reports First Quarter 2014 Results

SINGAPORE--22 APRIL 2014, UNITED STATES--(Marketwired - Apr 22, 2014) - STATS ChipPAC Ltd. ("STATS ChipPAC" or the "Company") (SGX-ST: STATSChP) (SGX: S24), a leading provider of advanced semiconductor packaging and test services, today announced results for the first quarter 2014.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the first quarter of 2014 was better than expected, decreasing by 7.5% to $365.5 million from prior quarter, and reflected seasonally weaker demand in most end markets. During the quarter, we saw continued strength in demand in the emerging market wireless chipset space. We made good progress on strategic growth initiatives with new program qualifications and production volume ramp in advanced wafer level technologies such as embedded Wafer Level Ball Grid Array (eWLB). eWLB is gaining recognition as a technology of choice for high performance, super-thin packages with advanced system level integration for the mobile communications market."

Gross margin for the first quarter of 2014 was 10.0% compared to 10.5% in the prior quarter and 15.4% in the first quarter of 2013, mainly due to the lower first quarter 2014 revenue. Operating margin for the first quarter of 2014 was 0.7% of revenue, compared to 1.3% in the prior quarter and 6.1% in first quarter 2013. Net loss for the first quarter of 2014 was $15.8 million compared to net loss of $12.1 million in the prior quarter and net income of $3.5 million in first quarter 2013.

Dennis Chia, Chief Financial Officer of STATS ChipPAC, said, "Our adjusted EBITDA1 in the first quarter was $78.4 million or 21.4% of revenue, compared to $91.3 million and $96.4 million or 23.1% and 23.7% of revenue in the prior quarter and the first quarter 2013, respectively. Excluding the new factory construction in Korea, capital expenditure for the first quarter 2014 was $98.0 million or 26.8% of revenue. Overall capital spending in the first quarter 2014 was $113.6 million or 31.1% of revenue compared to $92.4 million or 22.7% of revenue in the first quarter 2013. We ended the first quarter of 2014 with cash, cash equivalents and bank deposits of $176.9 million and debt of $1,011.9 million compared to $182.8 million and $912.2 million as of the end of fourth quarter of 2013, respectively."

Outlook
Tan Lay Koon commented, "Based on current visibility, we expect second quarter 2014 revenues to increase 9% to 14% compared to the prior quarter, with adjusted EBITDA1 in the range of 20% to 25% of revenue. We expect capital expenditure(2) in the second quarter of 2014 to be approximately $160 million to $180 million, including approximately $40 million to $55 million for progressive construction of the new factory in Korea."

The outlook for the second quarter of 2014 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 30 March 2014 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the second quarter of 2014. 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 EBITDA1 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 Wednesday, 23 April 2014. During the call, time will be set-aside for analysts and investors to ask questions of executive officers.

The call may be accessed by dialing +65-6823-2299. 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 8 May 2014 at www.statschippac.com and by telephone at 800-616-2127. The conference ID number to access the conference call and replay is 8528135.

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, goodwill and equipment impairment, tender offer, debt exchange or debt redemption expenses and write-off of debt issuance costs. Adjusted EBITDA excludes the plant closure costs related to our Malaysia plant and our restructuring actions. 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, asset upgrades and infrastructure investments.

Forward-looking Statements
Certain statements in this release are forward-looking statements, including our outlook for the second quarter of 2014, that involve a number of risks and uncertainties that could cause actual results to differ materially from those described in this release. Factors that could cause actual results to differ include, but are not limited to, 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; shortages in supply of key components and disruption in supply chain; inability to consolidate our Malaysia operations into our China operations and uncertainty as to whether such plan will achieve the expected objectives and results; 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.

Basis of Preparation of Results

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

Our 52-53 week fiscal year ends on the Sunday nearest and prior to 31 December. Our fiscal quarters end on a Sunday and our 13-week first quarter of 2014 ended on 30 March 2014, while our 13-week first quarter of 2013 and 13-week fourth quarter of 2013 ended on 31 March 2013 and 29 December 2013, respectively. References to "$" are to the lawful currency of the United States of America.

About STATS ChipPAC Ltd.
STATS ChipPAC Ltd. (SGX-ST Code: S24) 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 throughout Asia, the United States and Europe. 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.

 
 
STATS ChipPAC Ltd.
Consolidated Statement of Financial Position
(Unaudited)
    Three Months Ended  
    30 March     31 March  
    2014
$'000
    2013
$'000
 
Net revenues     365,476       406,361  
Cost of revenues     (328,956 )     (343,927 )
Gross profit     36,520       62,434  
                 
Operating expenses:                
  Selling, general and administrative     24,122       23,292  
  Research and development     9,932       12,375  
  Exchange offer expenses           1,572  
  Write-off of debt issuance costs           216  
    Operating expenses     34,054       37,455  
                 
Equipment impairment     2,261        
Total operating expenses     36,315       37,455  
Operating income     205       24,979  
                 
Other income (expenses), net:                
  Interest income     562       327  
  Interest expense     (12,375 )     (15,258 )
  Foreign currency exchange loss     (210 )     (316 )
  Other non-operating income (expenses), net     9       (8 )
    Total other expenses, net     (12,014 )     (15,255 )
                 
Income (loss) before income taxes     (11,809 )     9,724  
Income tax expense     (2,938 )     (4,671 )
Net income (loss)     (14,747 )     5,053  
Less: Net income attributable to the non-controlling interest     (1,060 )     (1,524 )
Net income (loss) attributable to STATS ChipPAC Ltd.     (15,807 )     3,529  
                 
Net income (loss) per ordinary share attributable to STATS ChipPAC Ltd.:                
  Basic   $ (0.01 )   $ 0.00  
  Diluted   $ (0.01 )   $ 0.00  
                 
Ordinary shares (in thousands) used in per ordinary share calculation:                
  Basic     2,202,218       2,202,218  
  Diluted     2,202,218       2,202,219  
                 
Key Ratios and Information:                
Gross Margin     10.0 %     15.4 %
Operating Expenses as a % of Revenue     9.3 %     9.3 %
Operating Margin before equipment impairment     0.7 %     6.1 %
                 
Depreciation & Amortisation, including Amortisation of Debt Issuance Costs     78,952       72,444  
Capital Expenditures     113,620       92,406  
                 
                 
STATS ChipPAC Ltd.  
Consolidated Statement of Financial Position
(Unaudited)
 
               
      30 March     29 December  
      2014     2013  
    $'000     $'000  
ASSETS            
Current assets:            
  Cash and cash equivalents   116,624     129,136  
  Short-term bank deposits   59,825     42,042  
  Accounts receivable, net   215,701     238,441  
  Other receivables   28,046     15,239  
  Inventories   71,169     71,055  
  Prepaid expenses and other current assets   24,675     18,970  
    Total current assets   516,040     514,883  
Non-current assets:            
  Long-term bank deposits   438     11,604  
  Property, plant and equipment, net   1,466,098     1,431,247  
  Intangible assets   35,207     35,117  
  Goodwill   381,487     381,487  
  Deferred tax assets   177     186  
  Prepaid expenses and other non-current assets   2,925     3,146  
    Total non-current assets   1,886,332     1,862,787  
  Total assets   2,402,372     2,377,670  
             
LIABILITIES            
Current liabilities:            
  Accounts and other payables   140,413     138,004  
  Payables related to property, plant and equipment purchases   104,835     141,998  
  Accrued operating expenses   104,427     124,640  
  Income taxes payable   17,835     18,207  
  Short-term bank borrowings   122,541     37,947  
  Short-term amounts due to related parties   59     100  
    Total current liabilities   490,110     460,896  
Non-current liabilities:            
  Long-term borrowings   889,347     874,281  
  Deferred tax liabilities   48,592     47,476  
  Other non-current liabilities   21,244     24,228  
    Total non-current liabilities   959,183     945,985  
  Total liabilities   1,449,293     1,406,881  
             
EQUITY            
  Share capital   873,666     873,666  
  Retained earnings   35,671     51,478  
  Other reserves   (9,697 )   (7,712 )
    Equity attributable to equity holders of STATS ChipPAC Ltd.   899,640     917,432  
  Non-controlling interest   53,439     53,357  
  Total equity   953,079     970,789  
  Total liabilities and equity   2,402,372     2,377,670  
             
   
STATS ChipPAC Ltd.  
Other Supplemental Information  
(Unaudited)  
                   
                   
    1Q 2014     4Q 2013     1Q 2013  
Net Revenues by Product Line                  
Advanced Packaging ##   49.1 %   47.8 %   49.0 %
Wirebond Packaging   29.7 %   29.2 %   29.6 %
Test   21.2 %   23.0 %   21.4 %
    100.0 %   100.0 %   100.0 %
Net Revenues by End User Market                  
Communications   67.2 %   66.7 %   74.1 %
Personal Computers   8.6 %   8.1 %   6.7 %
Consumer, Multi-applications and Others   24.2 %   25.2 %   19.2 %
    100.0 %   100.0 %   100.0 %
Net Revenues by Region                  
United States of America   65.1 %   67.3 %   68.9 %
Asia   24.6 %   22.6 %   16.4 %
Europe   10.3 %   10.1 %   14.7 %
    100.0 %   100.0 %   100.0 %
                   
Number of Testers   948     959     963  
Number of Wirebonders   4,118     4,088     3,723  
                   
                   

## Advanced Packaging includes flip-chip and wafer level packaging.

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 Marketing Communications
    Tel: (208) 867-9859
    email: Email Contact