SOURCE: STATS ChipPAC

STATS ChipPAC

January 27, 2011 04:30 ET

STATS ChipPAC Reports Fourth Quarter and Full Year 2010 Results

SINGAPORE -- 1/27/2011, UNITED STATES--(Marketwire - January 27, 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 fourth quarter and full year 2010.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "We are pleased to report record revenue and profits in 2010 making it the best year in our company's history. Revenue for the fourth quarter and full year 2010 increased by 7.0% and 26.6% to $422.4 million and $1,677.8 million compared to the fourth quarter and full year 2009, respectively. Compared to prior quarter, revenue for the fourth quarter 2010 decreased by 2.3% as weakness in the personal computing and consumer market offset strong demand in the communications market.

"With strong revenue growth, richer product mix and higher savings realised from our cost improvement initiatives, profitability for the year significantly improved over prior year. Gross margin and operating margin increased to 20.3% and 11.2%, respectively, for the full year 2010 compared to 15.7% and 4.0% in the prior year."

Net income for the fourth quarter and full year 2010 was $19.0 million and $108.0 million or $0.01 and $0.05 of net income per diluted ordinary share compared to net income of $33.8 million and $10.1 million or $0.02 and $0.00 of net income per diluted ordinary share in fourth quarter and full year 2009, respectively. The net income for the fourth quarter and full year 2010 included interest expense of $11.2 million and $16.8 million, respectively, from our recent offering of $600.0 million Senior Notes due 2015 to fund our capital reduction.

John Lau, Chief Financial Officer of STATS ChipPAC, said, "Our gross margin in the fourth quarter 2010 was 19.3% compared to 21.2% in the fourth quarter 2009 and 20.2% in the prior quarter. Operating margin for fourth quarter 2010 was 9.9% of revenue compared to 11.4% in the fourth quarter 2009 and 10.6% in the prior quarter. Capital spending in the fourth quarter and full year 2010 was $53.2 million and $276.7 million or 12.6% and 16.5% of revenue, respectively, compared to $76.2 million and $159.2 million or 19.3% and 12.0% of revenue in the fourth quarter and full year 2009. Post the capital reduction of $600.0 million, we ended the fourth quarter 2010 with cash, cash equivalent and marketable securities of $301.7 million and debt of $844.2 million, compared to $368.1 million and $458.0 million, respectively, as of the end of fourth quarter 2009."

Outlook

Tan Lay Koon commented, "Based on current visibility, we expect net revenues in the first quarter of 2011 to decline by mid single-digit level from prior quarter, with adjusted EBITDA(1) in the range of 22% to 25% of revenue. We expect capital expenditure(2) in the first quarter of 2011 will be approximately $80 million to $90 million."

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 and twelve months ended 26 December 2010 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the first 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. Please read the "Risk Factors" section in our 2009 Annual Report on Form 20-F furnished to the U.S. Securities and Exchange Commission on 5 March 2010 for a discussion of the factors that could cause our actual results to differ materially from our expectations.

Forward-looking Statements

Certain statements in this release are forward-looking statements, including our outlook for the first 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, 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; shortages in supply of key components; 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 SGX-ST; and other risks described from time to time in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F dated 5 March 2010. 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 fourth quarter of 2010 and fiscal year 2010 ended on 26 December 2010, while our fourth quarter of 2009 and fiscal year 2009 ended on 27 December 2009. 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"). This is STATS ChipPAC's first quarter and full year condensed financial statements prepared in accordance with FRS. The financial statements of STATS ChipPAC had previously been prepared in accordance with the accounting principles generally accepted in the United States of America ("US GAAP").

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.


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

                           Three Months Ended        Twelve Months Ended
                        ------------------------  ------------------------
                        26 December  27 December  26 December  27 December
                            2010         2009         2010         2009
                        -----------  -----------  -----------  -----------
Net revenues            $   422,359  $   394,734  $ 1,677,834  $ 1,325,685
Cost of revenues           (340,857)    (311,195)  (1,337,950)  (1,117,308)
                        -----------  -----------  -----------  -----------
Gross profit                 81,502       83,539      339,884      208,377

Operating expenses:
  Selling, general and
   administrative            25,195       24,689       98,744       95,516
  Research and
   development               12,425       13,918       47,462       43,358
  Tender offer expense            -            -        3,107            -
  Restructuring
   charges                        -            -        1,421       16,072
  Write-off of debt
   issuance costs             1,970            -        1,970            -
                        -----------  -----------  -----------  -----------
    Total operating
     expenses                39,590       38,607      152,704      154,946
                        -----------  -----------  -----------  -----------

Operating income             41,912       44,932      187,180       53,431

Other income
 (expenses), net:
  Interest income               855          643        2,328        2,169
  Interest expense          (16,461)      (7,569)     (43,460)     (31,056)
  Foreign currency
   exchange gain
   (loss)                      (323)         394       (2,587)      (6,469)
  Share of (loss)
   profit of associate         (324)          21          465       (1,321)
  Other non-operating
   income (expense),
   net                         (245)          73       (1,601)      (2,016)
                        -----------  -----------  -----------  -----------
    Total other income
     (expenses), net        (16,498)      (6,438)     (44,855)     (38,693)
                        -----------  -----------  -----------  -----------

Income before income
 taxes                       25,414       38,494      142,325       14,738
Income tax expense           (4,387)      (3,245)     (26,977)      (3,712)
                        -----------  -----------  -----------  -----------
Net income                   21,027       35,249      115,348       11,026
Less: Net income
 attributable to the
 non-controlling
 interest                    (2,016)      (1,414)      (7,370)        (973)
                        -----------  -----------  -----------  -----------
Net income
 attributable to
 STATS ChipPAC Ltd.     $    19,011  $    33,835  $   107,978  $    10,053
                        ===========  ===========  ===========  ===========

Net income per ordinary
 share attributable to
 STATS ChipPAC Ltd.:
  Basic                 $      0.01  $      0.02  $      0.05  $      0.00
  Diluted               $      0.01  $      0.02  $      0.05  $      0.00

Ordinary shares (in
 thousands) used in
 per ordinary share
 calculation:
  Basic                   2,202,218    2,202,218    2,202,218    2,202,218
  Diluted                 2,202,238    2,202,236    2,202,234    2,202,230

Key Ratios and
 Information:
Gross Margin                   19.3%        21.2%        20.3%        15.7%
Operating Expenses as a
 % of Revenue                   9.4%         9.8%         9.1%        11.7%
Operating Margin                9.9%        11.4%        11.2%         4.0%

Depreciation &
 Amortisation,
 including
 Amortisation
 of Debt Issuance
 Costs                  $    73,348  $    67,169  $   282,267  $   268,349
Capital Expenditures    $    53,211  $    76,223  $   276,676  $   159,222





                            STATS ChipPAC Ltd.
          Condensed Consolidated Statement of Financial Position
                      (In thousands of U.S. Dollars)
                               (Unaudited)



                                                    26 December 27 December
                                                       2010        2009
                                                    ----------- -----------
ASSETS
Current assets:
  Cash, cash equivalents and financial assets,
   available-for-sale                               $   285,037 $   351,195
  Accounts receivable, net                              230,777     208,766
  Inventories                                            69,791      61,859
  Other current assets                                   43,767      47,134
                                                    ----------- -----------
    Total current assets                                629,372     668,954
Non-current assets:
  Financial assets, available-for-sale                   16,646      16,929
  Property, plant and equipment, net                  1,123,809   1,115,497
  Investment in associate                                 8,104       7,743
  Goodwill and intangible assets                        468,991     470,127
  Other non-current assets                                2,994       6,369
                                                    ----------- -----------
    Total non-current assets                          1,620,544   1,616,665
                                                    ----------- -----------
    Total assets                                    $ 2,249,916 $ 2,285,619
                                                    ----------- -----------

LIABILITIES AND EQUITY
Current liabilities:
  Accounts and other payables                       $   194,207 $   182,704
  Other current liabilities                             125,991      99,043
  Short-term borrowings                                  61,768     224,786
                                                    ----------- -----------
    Total current liabilities                           381,966     506,533
Non-current liabilities:
  Long-term borrowings                                  782,434     233,181
  Other non-current liabilities                          57,802      43,357
                                                    ----------- -----------
    Total non-current liabilities                       840,236     276,538
                                                    ----------- -----------
    Total liabilities                                 1,222,202     783,071
                                                    ----------- -----------
Equity attributable to equity holders of STATS
 ChipPAC Ltd.                                           958,298   1,443,671
                                                    ----------- -----------
Non-controlling interest                                 69,416      58,877
                                                    ----------- -----------
    Total liabilities and equity                    $ 2,249,916 $ 2,285,619
                                                    ----------- -----------





                             STATS ChipPAC Ltd.
                      Other Supplemental Information
                                (Unaudited)



                                              4Q 2010   3Q 2010   4Q 2009
Net Revenues by Product Line
Packaging - laminate                              57.9%     56.5%     56.7%
Packaging - leaded                                12.4%     15.2%     15.2%
Test                                              20.3%     20.0%     22.8%
Wafer level processing and other services          9.4%      8.3%      5.3%
                                              --------  --------  --------
                                                 100.0%    100.0%    100.0%
                                              ========  ========  ========
Net Revenues by End User Market
Communications                                    57.4%     53.9%     48.8%
Personal Computers                                11.6%     13.0%     17.7%
Consumer, Multi-applications and Others           31.0%     33.1%     33.5%
                                              --------  --------  --------
                                                 100.0%    100.0%    100.0%
                                              ========  ========  ========
Net Revenues by Region
United States of America                          63.0%     64.7%     65.5%
Asia                                              26.7%     26.7%     26.2%
Europe                                            10.3%      8.6%      8.3%
                                              --------  --------  --------
                                                 100.0%    100.0%    100.0%
                                              ========  ========  ========

Number of Testers                                  942       957       962
Number of Wirebonders                            4,460     4,458     4,538

Overall Equipment Utilisation Rate                  62%       66%       64%




(1) Adjusted EBITDA is not required by, or presented in accordance with FRS. We define adjusted EBITDA as net income (loss) 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.

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