SOURCE: STATS ChipPAC

STATS ChipPAC

July 26, 2012 05:30 ET

STATS ChipPAC Reports Second Quarter 2012 Results

SINGAPORE--26/07/2012, UNITED STATES--(Marketwire - Jul 26, 2012) - 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 2012.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the second quarter of 2012 increased by 8.3% to $422.7 million from the prior quarter and decreased by 1.0% from the second quarter of 2011. Our second quarter revenue reflected growth from seasonal demand tempered by macroeconomic concerns. We saw higher demand in storage and strong demand for our advanced packaging services driven by demand for smartphones and tablets. Our customers however remained cautious and continued to tightly manage inventory due to the deteriorating macroeconomic conditions."

Net income for the second quarter of 2012 was $8.9 million, or $0.00 of net income per diluted ordinary share compared to net income of $19.2 million or $0.01 of net income per diluted ordinary share in the second quarter of 2011 and $2.8 million or $0.00 of net income per diluted ordinary share in the first quarter of 2012. The net income in the second quarter and first half of 2012 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 in 2010, and flood related plan charges of $2.7 million and $7.3 million, respectively, arising from the announced plan for our Thailand plant operations. The net income in the first quarter of 2011 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, "Gross profit for the second quarter of 2012 was $71.7 million or 17.0% of revenue, compared to $62.7 million or 16.1% in the first quarter of 2012 and $73.7 million or 17.2% in the second quarter of 2011. Operating margin before flood related plan charges for the second quarter of 2012 was 7.9% of revenue compared to 6.7% in the first quarter of 2012 and 8.3% in the second quarter of 2011. Our adjusted EBITDA1 in the second quarter of 2012 was 23.0% of revenue, compared to 23.0% in the first quarter of 2012 and 26.3% in the second quarter of 2011. Capital spending in the second quarter of 2012 was $96.8 million or 22.9% of revenue compared to $98.3 million or 25.2% in the first quarter of 2012 and $94.1 million or 22.0% in the second quarter of 2011 mainly for investments in advanced packaging and turnkey test and included $9.3 million for the new factory building in Singapore. We ended the second quarter of 2012 with cash, cash equivalents and marketable securities of $192.7 million and debt of $814.5 million compared to $238.1 million and $810.3 million as of the end of fourth quarter of 2011, respectively."

Outlook
Tan Lay Koon commented, "Based on current visibility, we expect net revenues in the third quarter of 2012 to be flat compared to the prior quarter, with adjusted EBITDA1 in the range of 21% to 23% of revenue. We expect capital expenditure2 in the third quarter of 2012 to be approximately $170 million to $190 million and includes approximately $20 million for the new factory building in Singapore. The capital intensity in the third quarter is unique as we stage capacity in advance to support anticipated demand later this year for advanced packaging and test turnkey services for customers in the high end smartphone market."

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 24 June 2012 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the third quarter of 2012. 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, 27 July 2012. 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 11 August 2012 at www.statschippac.com and by telephone at 800-616-3021. The conference ID number to access the conference call and replay is 93314053.

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 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, asset upgrades and infrastructure investments.

Forward-looking Statements
Certain statements in this release are forward-looking statements, including our outlook for the third quarter of 2012, 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, the timing and impact of the expected closure of the Thailand Plant as well as the estimated associated cost for the closure; the amount of the property damage and business interruption insurance claim due to flooding of the Thailand Plant; the ability to shift production to other manufacturing locations, 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 2012 ended on 24 June 2012, while our first quarter of 2012, first quarter of 2011, second quarter of 2011 and fiscal year 2011 ended on 25 March 2012, 27 March 2011, 26 June 2011 and 25 December 2011, respectively. References to "$" are to the lawful currency of the United States of America.

Overall equipment utilisation for the first quarter of 2012 and second quarter of 2012 is adjusted for the suspension of the Thailand Plant 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.

 
 
STATS ChipPAC Ltd.
Consolidated Income Statement
(Unaudited)
 
    Three Months Ended     Six Months Ended  
    24 June     26 June     24 June     26 June  
    2012
$'000
    2011
$'000
    2012
$'000
    2011
$'000
 
Net revenues     422,684       426,995       812,869       836,375  
Cost of revenues     (351,015 )     (353,342 )     (678,530 )     (693,964 )
Gross profit     71,669       73,653       134,339       142,411  
                                 
Operating expenses:                                
  Selling, general and administrative     25,893       24,879       50,714       50,431  
  Research and development     12,485       13,393       24,226       25,697  
  Write-off of debt issuance costs     -       -       -       7,593  
    Total operating expenses     38,378       38,272       74,940       83,721  
                                 
Operating income before flood related charges     33,291       35,381       59,399       58,690  
  Flood related plan charges *     2,720       -       7,316       -  
Operating income after flood related charges     30,571       35,381       52,083       58,690  
                                 
Other income (expenses), net:                                
  Interest income     436       365       877       754  
  Interest expense     (14,676 )     (15,089 )     (29,386 )     (30,154 )
  Foreign currency exchange gain (loss)     (605 )     4,182       (387 )     3,613  
  Share of profit (loss) of associate     (196 )     235       (654 )     325  
  Other non-operating income (expenses), net     92       34       140       118  
    Total other expenses, net     (14,949 )     (10,273 )     (29,410 )     (25,344 )
                                 
Income before income taxes     15,622       25,108       22,673       33,346  
Income tax expense     (4,030 )     (4,904 )     (6,482 )     (5,283 )
Net income     11,592       20,204       16,191       28,063  
Less: Net income attributable to the non-controlling interest     (2,675 )     (977 )     (4,490 )     (2,564 )
Net income attributable to STATS ChipPAC Ltd.     8,917       19,227       11,701       25,499  
                                 
Net income per ordinary share attributable to STATS ChipPAC Ltd.:                                
  Basic   $ 0.00     $ 0.01     $ 0.01     $ 0.01  
  Diluted   $ 0.00     $ 0.01     $ 0.01     $ 0.01  
                                 
Ordinary shares (in thousands) used in per ordinary share calculation:                                
  Basic     2,202,218       2,202,218       2,202,218       2,202,218  
  Diluted     2,202,223       2,202,232       2,202,226       2,202,233  
                                 
Key Ratios and Information:                                
Gross Margin     17.0 %     17.2 %     16.5 %     17.0 %
Operating Expenses as a % of Revenue     9.1 %     8.9 %     9.2 %     10.0 %
Operating Margin     7.9 %     8.3 %     7.3 %     7.0 %
                                 
Depreciation & Amortisation, including Amortisation of Debt Issuance Costs     70,846       74,274       141,724       147,806  
Capital Expenditures     96,752       94,118       195,087       180,662  
                                 

* Flood related plan charges of $2.7 million in the second quarter of 2012 and $7.3 million in the first half of 2012 primarily relate to depreciation on suspended production operations and labour and other expenses to support production shift from the Thailand plant to other manufacturing locations of STATS ChipPAC.

   
   
STATS ChipPAC Ltd.  
Consolidated Statement of Financial Position
(Unaudited)
 
             
    24 June     25 December  
    2012     2011  
    $'000     $'000  
ASSETS            
Current assets:            
  Cash and cash equivalents   144,970     194,811  
  Financial assets, available-for-sale   47,741     43,249  
  Accounts receivable, net   253,437     223,082  
  Other receivables   16,488     13,879  
  Inventories   89,311     89,434  
  Short-term restricted cash   382     58  
  Prepaid expenses and other current assets   28,891     19,071  
    Total current assets   581,220     583,584  
Non-current assets:            
  Property, plant and equipment, net   1,180,778     1,123,061  
  Investment in associate   7,850     8,407  
  Intangible assets   36,792     37,179  
  Goodwill   405,587     405,587  
  Long-term restricted cash   476     410  
  Prepaid expenses and other non-current assets   3,647     5,550  
    Total non-current assets   1,635,130     1,580,194  
 Total assets   2,216,350     2,163,778  
             
LIABILITIES            
Current liabilities:            
  Accounts and other payables   168,144     132,852  
  Payables related to property, plant and equipment purchases   34,566     19,864  
  Accrued operating expenses   130,144     150,342  
  Income taxes payable   7,517     13,344  
  Short-term borrowings   23,000     20,000  
  Short-term amounts due to related parties   30     28  
    Total current liabilities   363,401     336,430  
Non-current liabilities:            
  Long-term borrowings   791,453     790,339  
  Deferred tax liabilities   51,262     49,509  
  Other non-current liabilities   1,323     1,805  
    Total non-current liabilities   844,038     841,653  
 Total liabilities   1,207,439     1,178,083  
             
EQUITY            
  Share capital   873,666     873,666  
  Retained earnings   94,109     82,408  
  Other reserves   (6,484 )   (17,981 )
    Equity attributable to equity holders of STATS ChipPAC Ltd.   961,291     938,093  
  Non-controlling interest   47,620     47,602  
  Total equity   1,008,911     985,695  
  Total liabilities and equity   2,216,350     2,163,778  
             
   
STATS ChipPAC Ltd.  
Other Supplemental Information  
(Unaudited)  
                   
                   
    2Q 2012     1Q 2012     2Q 2011  
Net Revenues by Product Line                  
Packaging - laminate   55.1 %   56.9 %   52.8 %
Packaging - leaded   14.0 %   11.6 %   17.5 %
Test   18.8 %   21.0 %   19.5 %
Wafer level processing and other services   12.1 %   10.5 %   10.2 %
    100.0 %   100.0 %   100.0 %
Net Revenues by End User Market                  
Communications   61.9 %   63.5 %   55.9 %
Personal Computers   11.6 %   10.3 %   14.5 %
Consumer, Multi-applications and Others   26.5 %   26.2 %   29.6 %
    100.0 %   100.0 %   100.0 %
Net Revenues by Region                  
United States of America   67.4 %   69.5 %   65.2 %
Asia   19.1 %   20.7 %   23.5 %
Europe   13.5 %   9.8 %   11.3 %
    100.0 %   100.0 %   100.0 %
                   
Number of Testers   976     967     913  
Number of Wirebonders   4,252     4,598     4,957  
                   
Overall Equipment Utilisation Rate   76 %   71 %   82 %
                   
                   

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