SOURCE: STATS ChipPAC

STATS ChipPAC

October 28, 2011 05:30 ET

STATS ChipPAC Reports Third Quarter 2011 Results

SINGAPORE--10/28/2011, UNITED STATES--(Marketwire - Oct 28, 2011) - ChipPAC Ltd. ("STATS ChipPAC" or the "Company") (SGX-ST: STATSChP), a leading semiconductor test and advanced packaging service provider, today announced results for the third quarter 2011.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the third quarter of 2011 increased by 3.8% to $443.4 million over the prior quarter and increased by 2.6% over the third quarter of 2010, at the high end of our guidance. Our third quarter revenue reflected higher demand in the communications market offset by weakness in the consumer market. Our customers were more cautious as they continued to aggressively manage inventory in view of the uncertain macroeconomic outlook."

Net income for the third quarter of 2011 was $18.0 million or $0.01 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 net income of $24.2 million or $0.01 of net income per diluted ordinary share in the third quarter of 2010. The net income in the third quarter and first three quarters of 2011 included interest expense of $11.2 million and $33.6 million, respectively, from our offering of $600.0 million Senior Notes due 2015 to fund our capital reduction.

John Lau, Chief Financial Officer of STATS ChipPAC, said, "Our third quarter gross margin was 17.0% compared to 17.2% in the second quarter of 2011 and 20.2% in the third quarter of 2010 mainly due to unfavorable product mix and higher material costs. Operating margin for third quarter of 2011 was 8.3% of revenue compared to 8.3% in the second quarter of 2011 and 10.6% in the third quarter of 2010. Our adjusted EBITDA1 in the third quarter of 2011 was 24.3% of revenue compared to 26.3% in the second quarter of 2011 and 27.0% in the third quarter of 2010. Capital spending in the third quarter of 2011 was $70.3 million or 15.9% of revenue compared to $94.1 million or 22.0% of revenue in the second quarter of 2011 and $56.4 million or 13.1% of revenue in the third quarter of 2010. We ended the third quarter of 2011 with cash, cash equivalents and marketable securities of $212.4 million and debt of $820.2 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 and current assessment of the ongoing flood situation in Thailand, we expect net revenues in the fourth quarter of 2011 to be single digit decrease from prior quarter, with adjusted EBITDA1 in the range of 20% to 25% of revenue. We expect capital expenditure2 in the fourth quarter of 2011 to be approximately $50 million to $60 million. Solely for this guidance purpose, we have assumed that our Thailand Plant operations will continue to be suspended until the beginning of December 2011."

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 nine months ended 25 September 2011 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the fourth 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.

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 amortization, 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 and asset upgrades.

Investor Conference Call / Live Audio Webcast Details
A conference call has been scheduled for 8:00 a.m. in Singapore on Monday, 31 October 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 14 November 2011 at www.statschippac.com and by telephone at 800-616-3021. The conference ID number to access the conference call and replay is 12952553.

Forward-looking Statements
Certain statements in this release are forward-looking statements, including our outlook for the fourth 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, uncertainty surrounding the ongoing impact of the flood in Thailand and its impact to STATS ChipPAC (Thailand) Ltd. ("Thailand Plant"), 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 third quarter of 2011 ended on 25 September 2011, while our first quarter of 2011, second quarter of 2011, third quarter of 2010 and fiscal year 2010 ended on 27 March 2011, 26 June 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 the overall equipment utilization for the second and third quarter of 2011 based on total equipment operating capacity adjusted for set-up and maintenance time. We have similarly disclosed overall equipment utilization for the third quarter of 2010. We have previously reported overall equipment utilization 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.

STATS ChipPAC Ltd.
Consolidated Income Statement
(Unaudited)
Three Months Ended Nine Months Ended
25 September 26 September 25 September 26 September
2011 2010 2011 2010
$'000 $'000 $'000 $'000
Net revenues 443,414 432,208 1,279,789 1,255,475
Cost of revenues (368,186 ) (345,097 ) (1,062,150 ) (997,093 )
Gross profit 75,228 87,111 217,639 258,382
Operating expenses:
Selling, general and administrative 24,683 25,576 75,114 73,549
Research and development 13,709 11,245 39,406 35,037
Tender offer expense - 3,107 - 3,107
Restructuring charges - 1,421 - 1,421
Write-off of debt issuance costs - - 7,593 -
Total operating expenses 38,392 41,349 122,113 113,114
Operating income 36,836 45,762 95,526 145,268
Other income (expenses), net:
Interest income 396 573 1,150 1,473
Interest expense (14,911 ) (12,081 ) (45,065 ) (26,999 )
Foreign currency exchange gain (loss) (1,076 ) (221 ) 2,537 (2,265 )
Share of profit (loss) of associate (476 ) 414 (151 ) 789
Other non-operating income (expense), net 22 (1,506 ) 140 (1,355 )
Total other expenses, net (16,045 ) (12,821 ) (41,389 ) (28,357 )
Income before income taxes 20,791 32,941 54,137 116,911
Income tax expense (1,892 ) (6,725 ) (7,175 ) (22,590 )
Net income 18,899 26,216 46,962 94,321
Less: Net income attributable to the non-controlling interest (908 ) (2,031 ) (3,472 ) (5,354 )
Net income attributable to STATS ChipPAC Ltd. 17,991 24,185 43,490 88,967
Net income per ordinary share attributable to STATS ChipPAC Ltd.:
Basic $ 0.01 $ 0.01 $ 0.02 $ 0.04
Diluted $ 0.01 $ 0.01 $ 0.02 $ 0.04
Ordinary shares (in thousands) used in per ordinary share calculation:
Basic 2,202,218 2,202,218 2,202,218 2,202,218
Diluted 2,202,229 2,202,274 2,202,232 2,202,251
Key Ratios and Information:
Gross Margin 17.0 % 20.2 % 17.0 % 20.6 %
Operating Expenses as a % of Revenue 8.7 % 9.6 % 9.5 % 9.0 %
Operating Margin 8.3 % 10.6 % 7.5 % 11.6 %
Depreciation & Amortisation, including Amortisation of Debt Issuance Costs 74,013 71,739 221,819 208,919
Capital Expenditures 70,329 56,428 250,991 223,465
STATS ChipPAC Ltd.
Consolidated Statement of Financial Position
(Unaudited)
25 September 26 December
2011 2010
$'000 $'000
ASSETS
Current assets:
Cash and cash equivalents 168,576 196,395
Financial assets, available-for-sale 43,827 88,642
Accounts receivable, net 261,975 230,777
Other receivables 16,435 9,435
Inventories 105,477 69,791
Prepaid expenses and other current assets 23,498 17,227
Short-term amount due from related party - 17,105
Total current assets 619,788 629,372
Non-current assets:
Financial assets, available-for-sale - 16,646
Property, plant and equipment, net 1,157,914 1,123,809
Investment in associate 8,842 8,104
Intangible assets 38,395 38,857
Goodwill 430,134 430,134
Long-term restricted cash 416 416
Prepaid expenses and other non-current assets 3,666 2,578
Total non-current assets 1,639,367 1,620,544
Total assets 2,259,155 2,249,916
LIABILITIES
Current liabilities:
Accounts and other payables 164,479 151,473
Payables related to property, plant and equipment purchases 38,185 42,734
Accrued operating expenses 138,931 113,584
Income taxes payable 3,222 12,385
Short-term borrowings 30,449 61,768
Short-term amounts due to related parties 39 22
Total current liabilities 375,305 381,966
Non-current liabilities:
Long-term borrowings 789,798 782,434
Deferred tax liabilities 56,098 44,335
Other non-current liabilities 11,561 13,467
Total non-current liabilities 857,457 840,236
Total liabilities 1,232,762 1,222,202
EQUITY
Share capital 873,666 873,666
Retained earnings 128,400 84,910
Other reserves (23,055 ) (278 )
Equity attributable to equity holders of STATS ChipPAC Ltd. 979,011 958,298
Non-controlling interest 47,382 69,416
Total equity 1,026,393 1,027,714
Total liabilities and equity 2,259,155 2,249,916
STATS ChipPAC Ltd.
Other Supplemental Information
(Unaudited)
3Q 2011 2Q 2011 3Q 2010
Net Revenues by Product Line
Packaging - laminate 54.4 % 52.8 % 56.5 %
Packaging - leaded 17.2 % 17.5 % 15.2 %
Test 19.5 % 19.5 % 20.0 %
Wafer level processing and other services 8.9 % 10.2 % 8.3 %
100.0 % 100.0 % 100.0 %
Net Revenues by End User Market
Communications 61.4 % 55.9 % 53.9 %
Personal Computers 14.3 % 14.5 % 13.0 %
Consumer, Multi-applications and Others 24.3 % 29.6 % 33.1 %
100.0 % 100.0 % 100.0 %
Net Revenues by Region
United States of America 66.3 % 65.2 % 64.7 %
Asia 22.3 % 23.5 % 26.7 %
Europe 11.4 % 11.3 % 8.6 %
100.0 % 100.0 % 100.0 %
Number of Testers 945 913 957
Number of Wirebonders 5,045 4,957 4,458
Overall Equipment Utilisation Rate 81 % 82 % 84 %

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