SOURCE: STATS ChipPAC

STATS ChipPAC

July 28, 2011 05:30 ET

STATS ChipPAC Reports Second Quarter 2011 Results

SINGAPORE -- 7/28/2011, UNITED STATES--(Marketwire - Jul 28, 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 second quarter 2011.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the second quarter of 2011 increased by 4.3% to $427.0 million over the prior quarter and decreased by 1.9% over the second quarter of 2010, at the high end of our guidance. Our second quarter revenue reflected weakened demand toward the end of the quarter as our customers managed their inventory position more aggressively in view of the uncertain macroeconomic outlook and some over ordering due to concern about potential supply disruptions from the Japan earthquake."

Net income for the second quarter of 2011 was $19.2 million or $0.01 of net income per diluted ordinary share compared to net income of $6.3 million or $0.00 of net income per diluted ordinary share in the first quarter of 2011 and net income of $37.3 million or $0.02 of net income per diluted ordinary share in the second quarter of 2010. The net income in the second quarter and first half of 2011 included interest expense of $11.2 million and $22.4 million, respectively, from our offering of $600.0 million Senior Notes due 2015 to fund our capital reduction. The net income in the first quarter of 2011 also included debt issuance cost write-off of $7.6 million from the voluntary repayment of our senior credit facility of $234.5 million.

John Lau, Chief Financial Officer of STATS ChipPAC, said, "Despite higher material costs and appreciation of Asian currencies, our second quarter gross margin was 17.2% compared to 16.8% in the first quarter of 2011 and 21.5% in the second quarter of 2010. Operating margin for second quarter of 2011 was 8.3% of revenue compared to 5.7% in the first quarter of 2011 and 12.9% in the second quarter of 2010. Our adjusted EBITDA(1) in the second quarter of 2011 was 26.3% of revenue compared to 24.8% in the first quarter of 2011 and 28.0% in the second quarter of 2010. Capital spending in the second quarter of 2011 was $94.1 million or 22.0% of revenue reflecting investments to support growth of copper wire and advanced packaging technology demand compared to $86.5 million or 21.1% of revenue in the first quarter of 2011 and $67.7 million or 15.5% of revenue in the second quarter of 2010. We ended the second quarter of 2011 with cash, cash equivalent and marketable securities of $246.4 million and debt of $815.3 million compared to $301.7 million and $844.2 million as of the end of fourth quarter of 2010, respectively."

Outlook

Tan Lay Koon commented, "Based on current visibility, we expect net revenues in the third quarter of 2011 to be low to a mid single digit increase from prior quarter, with adjusted EBITDA(1) in the range of 22% to 26% of revenue. We expect capital expenditure(2) in the third quarter of 2011 to be approximately $70 million to $80 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 six months ended 26 June 2011 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the third 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 Friday, 29 July 2011. 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 +65-6723-9381. 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 12 August 2011 at www.statschippac.com and by telephone at 800-616-3021. The conference ID number to access the conference call and replay is 79771474.

Forward-looking Statements

Certain statements in this release are forward-looking statements, including our outlook for the third 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.

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 are generally thirteen weeks in length. Our second quarter of 2011 ended on 26 June 2011, while our first quarter of 2011, second quarter of 2010 and fiscal year 2010 ended on 27 March 2011, 27 June 2010 and 26 December 2010, respectively. References to "$" are to the lawful currency of the United States of America.

Commencing with the second quarter of 2011, we are reporting overall equipment utilisation based on our available equipment operating capacity as adjusted for set-up and maintenance time. We have similarly disclosed overall equipment utilisation for the first quarter of 2011 and the second quarter of 2010. We have previously reported overall equipment utilisation based on total equipment operating capacity.

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, equipment 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     Six Months Ended
                                --------------------  --------------------
                                 26 June    27 June    26 June    27 June
                                   2011       2010       2011       2010
                                  $'000      $'000      $'000      $'000
                                ---------  ---------  ---------  ---------
Net revenues                      426,995    435,320    836,375    823,267
Cost of revenues                 (353,342)  (341,726)  (693,964)  (651,996)
                                ---------  ---------  ---------  ---------
Gross profit                       73,653     93,594    142,411    171,271

Operating expenses:
  Selling, general and
   administrative                  24,879     25,390     50,431     47,973
  Research and development         13,393     12,254     25,697     23,792
  Write-off of debt issuance
   costs                                -          -      7,593          -
                                ---------  ---------  ---------  ---------
    Total operating expenses       38,272     37,644     83,721     71,765
                                ---------  ---------  ---------  ---------

Operating income                   35,381     55,950     58,690     99,506

Other income (expenses), net:
  Interest income                     365        486        754        900
  Interest expense                (15,089)    (7,451)   (30,154)   (14,918)
  Foreign currency exchange
   gain (loss)                      4,182     (1,116)     3,613     (2,044)
  Share of profit of associate        235        369        325        375
  Other non-operating income
   (expense), net                      34         40        118        151
                                ---------  ---------  ---------  ---------
    Total other expenses, net     (10,273)    (7,672)   (25,344)   (15,536)
                                ---------  ---------  ---------  ---------

Income before income taxes         25,108     48,278     33,346     83,970
Income tax expense                 (4,904)    (8,882)    (5,283)   (15,865)
                                ---------  ---------  ---------  ---------
Net income                         20,204     39,396     28,063     68,105
Less: Net income attributable
 to the non-controlling
 interest                            (977)    (2,064)    (2,564)    (3,323)
                                ---------  ---------  ---------  ---------
Net income attributable
   to STATS ChipPAC Ltd.           19,227     37,332     25,499     64,782
                                =========  =========  =========  =========

Net income per ordinary share
 attributable to STATS
 ChipPAC Ltd.:
    Basic                       $    0.01  $    0.02  $    0.01  $    0.03
    Diluted                     $    0.01  $    0.02  $    0.01  $    0.03

Ordinary shares (in thousands)
 used in per ordinary share
 calculation:
    Basic                       2,202,218  2,202,218  2,202,218  2,202,218
    Diluted                     2,202,232  2,202,240  2,202,233  2,202,239

Key Ratios and Information:
Gross Margin                         17.2%      21.5%      17.0%      20.8%
Operating Expenses as a % of
 Revenue                              8.9%       8.6%      10.0%       8.7%
Operating Margin                      8.3%      12.9%       7.0%      12.1%

Depreciation & Amortisation,
 including Amortisation of
 Debt Issuance Costs               74,274     69,365    147,806    137,180
Capital Expenditures               94,118     67,650    180,662    167,037



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


                                                    26 June    26 December
                                                      2011         2010
                                                     $'000        $'000
                                                  ------------ -----------
ASSETS
Current assets:
  Cash and cash equivalents                            207,596     196,395
  Financial assets, available-for-sale                  38,763      88,642
  Accounts receivable, net                             249,471     230,777
  Other receivables                                     14,125       9,435
  Inventories                                           97,608      69,791
  Prepaid expenses and other current assets             21,138      17,227
  Short-term amount due from related party                   -      17,105
                                                  ------------ -----------
    Total current assets                               628,701     629,372
Non-current assets:
  Financial assets, available-for-sale                       -      16,646
  Property, plant and equipment, net                 1,161,113   1,123,809
  Investment in associate                                8,415       8,104
  Intangible assets                                     38,502      38,857
  Goodwill                                             430,134     430,134
  Long-term restricted cash                                430         416
  Prepaid expenses and other non-current assets          3,109       2,578
                                                  ------------ -----------
    Total non-current assets                         1,641,703   1,620,544
                                                  ------------ -----------
  Total assets                                       2,270,404   2,249,916
                                                  ============ ===========

LIABILITIES
Current liabilities:
  Accounts and other payables                          167,926     151,473
  Payables related to property, plant and
   equipment purchases                                  67,487      42,734
  Accrued operating expenses                           115,156     113,584
  Income taxes payable                                   3,674      12,385
  Short-term borrowings                                 25,886      61,768
  Short-term amounts due to related parties                 29          22
                                                  ------------ -----------
    Total current liabilities                          380,158     381,966
Non-current liabilities:
  Long-term borrowings                                 789,459     782,434
  Deferred tax liabilities                              54,205      44,335
  Other non-current liabilities                         11,695      13,467
                                                  ------------ -----------
    Total non-current liabilities                      855,359     840,236
                                                  ------------ -----------
  Total liabilities                                  1,235,517   1,222,202
                                                  ------------ -----------

EQUITY
  Share capital                                        873,666     873,666
  Retained earnings                                    110,409      84,910
  Other reserves                                         2,620        (278)
                                                  ------------ -----------
    Equity attributable to equity holders of
     STATS ChipPAC Ltd.                                986,695     958,298
  Non-controlling interest                              48,192      69,416
                                                  ------------ -----------
  Total equity                                       1,034,887   1,027,714
                                                  ------------ -----------
  Total liabilities and equity                       2,270,404   2,249,916
                                                  ============ ===========



                            STATS ChipPAC Ltd.
                      Other Supplemental Information
                                (Unaudited)


                                            2Q 2011    1Q 2011    2Q 2010
Net Revenues by Product Line
Packaging - laminate                            52.8%      54.9%      55.6%
Packaging - leaded                              17.5%      15.3%      15.3%
Test                                            19.5%      19.7%      20.5%
Wafer level processing and other services       10.2%      10.1%       8.6%
                                           ---------  ---------  ---------
                                               100.0%     100.0%     100.0%
                                           =========  =========  =========
Net Revenues by End User Market
Communications                                  55.9%      52.4%      51.5%
Personal Computers                              14.5%      14.1%      16.1%
Consumer, Multi-applications and Others         29.6%      33.5%      32.4%
                                           ---------  ---------  ---------
                                               100.0%     100.0%     100.0%
                                           =========  =========  =========
Net Revenues by Region
United States of America                        65.2%      64.8%      56.7%
Asia                                            23.5%      26.5%      28.9%
Europe                                          11.3%       8.7%      14.4%
                                           ---------  ---------  ---------
                                               100.0%     100.0%     100.0%
                                           =========  =========  =========

Number of Testers                                913        914        940
Number of Wirebonders                          4,957      4,567      4,456

Overall Equipment Utilisation Rate                82%        79%        85%

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