SOURCE: STATS ChipPAC

STATS ChipPAC

October 28, 2014 05:30 ET

STATS ChipPAC Reports Third Quarter 2014 Results

SINGAPORE--28 OCTOBER 2014, UNITED STATES--(Marketwired - Oct 28, 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 third quarter 2014.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the third quarter of 2014 decreased by 1.5% to $403.8 million from prior quarter and increased by 0.7% from the third quarter of 2013. Third quarter revenue was affected by delay in wafer supply at several key customers and demand shift from the high-end smartphone space toward the low-cost smartphone segment. New business ramp for advanced packaging programs and seasonal strength in the consumer segment, helped to partially offset weakness in our wireless communication revenue."

Adjusted EBITDA1 in the third quarter of 2014 was $90.2 million or 22.3% of revenue, compared to $88.1 million or 21.5% of revenue in the prior quarter and $112.1 million and 28.0% in the third quarter of 2013. Net loss for the third quarter of 2014 was $5.3 million compared to net loss of $4.2 million in the prior quarter and net income of $13.3 million in third quarter of 2013.

Dennis Chia, Chief Financial Officer of STATS ChipPAC, said, "Gross margin for the third quarter of 2014 was lower at 11.8% compared to 12.2% in the prior quarter due to lower revenue and mix change in the wireless communications business. Operating margin for the third quarter of 2014 improved to 3.6% of revenue compared to 3.4% in the prior quarter as higher cost savings in operating expenses made up for the lower gross margin. Excluding the new factory construction in Korea, capital expenditure(2) for the third quarter of 2014 was $74.9 million or 18.5% of revenue. Overall capital spending in the third quarter of 2014 was $161.0 million or 39.9% of revenue compared to $195.3 million or 47.7% of revenue in the second quarter of 2014. Cash, cash equivalents and bank deposits were $178.0 million compared to $185.3 million and debt was $1,137.3 million compared to $1,064.6 million at the end of third quarter of 2014 and second quarter of 2014, respectively."

Outlook
Tan Lay Koon commented, "Based on current visibility, we expect fourth quarter 2014 revenues to be flat to 6% decrease compared to the prior quarter, with adjusted EBITDA1 in the range of 20% to 24% of revenue. We expect capital expenditure2 in the fourth quarter of 2014 to be approximately $65 million to $85 million, including approximately $20 million to $40 million for progressive construction of the new factory in Korea."

The outlook for the fourth 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 and nine months ended 28 September 2014 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the fourth 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, 29 October 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 13 November 2014 at www.statschippac.com and by telephone at 800-616-2127. The conference ID number to access the conference call and replay is 7726616.

Forward-looking Statements

Certain statements in this release are forward-looking statements, including our outlook for the fourth 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 third quarter of 2014 ended on 28 September while our third quarter of 2013, fourth quarter of 2013, first quarter of 2014 and second quarter of 2014 ended on 29 September 2013, 29 December 2013, 30 March 2014 and 29 June 2014, 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 Income Statement
(Unaudited)
   
 Three Months Ended
   
 Nine Months Ended
    28 September     29 September     28 September     29 September
    2014 $'000     2013 $'000     2014 $'000     2013 $'000
Net revenues     403,772       400,775       1,179,160     1,203,502
Cost of revenues     (355,933 )     (343,963 )     (1,044,751 )   (1,027,345)
Gross profit     47,839       56,812       134,409     176,157
                             
Operating expenses:                            
  Selling, general and administrative     23,554       24,645       72,804     72,205
  Research and development     9,590       10,855       30,273     35,930
  Exchange offer and redemption expenses     -       -       -     15,701
  Write-off of debt issuance costs     -       -       -     2,392
    Operating expenses     33,144       35,500       103,077     126,228
                             
Equipment impairment     1,452       -       3,713     -
Total operating expenses     34,596       35,500       106,790     126,228
Operating income before exceptional items     13,243       21,312       27,619     49,929
  Plant closure costs     -       (379 )     -     (36,909)
  Flood related insurance settlement     -       19,582       -     19,582
  Flood related plan charges     -       (3,000 )     -     (3,000)
Operating income after exceptional items     13,243       37,515       27,619     29,602
                             
Other income (expenses), net:                            
  Interest income     380       296       1,330     976
  Interest expense     (12,881 )     (12,747 )     (37,932 )   (41,541)
  Foreign currency exchange gain (loss)     62       244       (495 )   (80)
  Other non-operating income (expenses), net     77       (20 )     238     25
    Total other expenses, net     (12,362 )     (12,227 )     (36,859 )   (40,620)
                             
Income (loss) before income taxes     881       25,288       (9,240 )   (11,018)
Income tax expense     (3,723 )     (9,615 )     (9,934 )   (18,136)
Net income (loss)     (2,842 )     15,673       (19,174 )   (29,154)
Less: Net income attributable to the non- controlling interest     (2,449 )    
 (2,375)
      (6,106 )  
 (6,267)
Net income (loss) attributable to STATS ChipPAC Ltd.     (5,291 )    
 13,298
      (25,280 )  
 (35,421)
                             
Net income (loss) per ordinary share attributable to STATS ChipPAC Ltd.:                            
  Basic   $ (0.00 )   $ 0.01     $ (0.01 )   $(0.02)
  Diluted   $ (0.00 )   $ 0.01     $ (0.01 )   $(0.02)
                             
Ordinary shares (in thousands) used in per ordinary share calculation:                            
  Basic and Diluted     2,202,218       2,202,218       2,202,218     2,202,218
                             
Key Ratios and Information:                            
Gross Margin     11.8 %     14.2 %     11.4 %   14.6%
Operating Expenses as a % of Revenue     8.2 %     8.9 %     8.7 %   10.5%
Operating Margin     3.6 %     5.3 %     2.7 %   4.1%
                             
Depreciation & Amortisation, including Amortisation of Debt Issuance Costs     79,687       75,200       237,107     224,130
Capital Expenditures     160,951       108,694       469,916     306,874
                             
                             

STATS ChipPAC Ltd.
Consolidated Statement of Financial Position
(Unaudited)
           
      28 September   29 December
      2014   2013
    $'000   $'000
ASSETS        
Current assets:        
   Cash and cash equivalents   115,609   129,136
  Short-term bank deposits   61,987   42,042
  Accounts receivable, net   229,728   238,441
  Other receivables   33,785   15,239
  Inventories   77,888   71,055
  Prepaid expenses and other current assets   24,189   18,970
    Total current assets   543,186   514,883
Non-current assets:        
  Long-term bank deposits   425   11,604
  Property, plant and equipment, net   1,668,817   1,431,247
  Intangible assets   34,599   35,117
  Goodwill   381,487   381,487
  Deferred tax assets   185   186
  Prepaid expenses and other non-current assets   3,405   3,146
    Total non-current assets   2,088,918   1,862,787
   Total assets   2,632,104   2,377,670
         
LIABILITIES        
Current liabilities:        
  Accounts and other payables   185,181   138,004
  Payables related to property, plant and equipment purchases   183,681   141,998
  Accrued operating expenses   105,189   124,640
  Income taxes payable   14,518   18,207
  Short-term bank borrowings   73,000   37,947
  Short-term amounts due to related parties   29   100
    Total current liabilities   561,598   460,896
Non-current liabilities:        
  Long-term borrowings   1,064,314   874,281
  Deferred tax liabilities   46,559   47,476
  Other non-current liabilities   15,663   24,228
    Total non-current liabilities   1,126,536   945,985
  Total liabilities   1,688,134   1,406,881
         
EQUITY        
  Share capital   873,666   873,666
  Retained earnings   26,198   51,478
  Other reserves   (9,389)   (7,712)
    Equity attributable to equity holders of STATS ChipPAC Ltd.   890,475   917,432
  Non-controlling interest   53,495   53,357
  Total equity   943,970   970,789
  Total liabilities and equity   2,632,104   2,377,670
         
 
 
STATS ChipPAC Ltd.
Other Supplemental Information
(Unaudited)
             
             
    3Q 2014   2Q 2014   3Q 2013
Net Revenues by Product Line            
Advanced Packaging ##   46.7%   49.2%   44.9%
Wirebond Packaging   30.4%   30.0%   32.4%
Test   22.9%   20.8%   22.7%
    100.0%   100.0%   100.0%
Net Revenues by End User Market            
Communications   65.5%   67.5%   65.0%
Personal Computers   8.1%   8.5%   9.1%
Consumer, Multi-applications and Others   26.4%   24.0%   25.9%
    100.0%   100.0%   100.0%
Net Revenues by Region            
United States of America   64.4%   63.0%   71.8%
Asia   26.6%   28.8%   19.2%
Europe   9.0%   8.2%   9.0%
    100.0%   100.0%   100.0%
             
Number of Testers   968   943   947
Number of Wirebonders   3,682   4,164   4,107
             
             

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

(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.

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