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STATS ChipPAC Reports First Quarter 2013 Results


STATS ChipPAC Reports First Quarter 2013 Results

SINGAPORE--24 APRIL 2013, UNITED STATES -- (Marketwired) -- 04/24/13 -- 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 first quarter 2013.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the first quarter of 2013 increased by 4.2% to $406.4 million over the first quarter of 2012 and decreased by 15.4% from the prior quarter which had the benefit of an extra week. Excluding the extra week, the first quarter revenue decrease was 8.9% compared to the prior quarter. The first quarter revenue saw seasonal demand weakness, tight inventory control in the wireless handset, tablet and consumer markets, and continued softness in the personal computer market."

Gross margin for the first quarter of 2013 decreased to 15.4% compared to 16.1% in the first quarter of 2012 and 18.3% in the fourth quarter of 2012 mainly due to higher material costs, and lower revenue compared to the fourth quarter of 2012. Operating margin(1) for the first quarter of 2013 was 6.1% of revenue compared to 6.7% in the first quarter of 2012 and 4.4% in the fourth quarter of 2012. Net income for the first quarter of 2013 was $3.5 million compared to $2.8 million in the first quarter of 2012 and $1.7 million in the fourth quarter of 2012. Operating margin(1) and net income for the fourth quarter of 2012 included litigation settlement charges(2).

John Lau, Chief Financial Officer of STATS ChipPAC, said, "Our adjusted EBITDA(2,3) in the first quarter of 2013 was $96.4 million or 23.7% of revenue, compared to $89.6 million or 23.0% in the first quarter of 2012, and $100.1 million or 20.8% of revenue in the fourth quarter of 2012. Excluding the litigation settlement charges, adjusted EBITDA in the fourth quarter of 2012 was $122.1 million or 25.4% of revenue. Capital spending in the first quarter of 2013 was $92.4 million or 22.7% of revenue, compared to $55.2 million or 11.5% of revenue in the fourth quarter of 2012 and $98.3 million or 25.2% of revenue in the first quarter of 2012."

"In the first quarter of 2013, we issued $611.2 million of new 4.5% Senior Notes d ue 2018 to refinance our existing $600.0 million of 7.5% Senior Notes due 2015. As of the end of the first quarter of 2013, our debt of $1,032.8 million was higher than $843.3 million as of the end of fourth quarter of 2012 mainly due to the outstanding $241.6 million of 7.5% Senior Notes due 2015 which were redeemed on 19 April 2013. We ended the first quarter of 2013 with cash, cash equivalents and marketable securities of $342.0 million compared to $210.2 million as of fourth quarter of 2012, mainly due to the proceeds from the $255.0 million of 4.5% Senior Notes due 2018 issued in March 2013, which were utilised on 19 April 2013 to redeem the outstanding $241.6 million of 7.5% Senior Notes due 2015. Redemption premium of $14.1 million and debt issuance costs of $2.2 million will be expensed in the income statement for second quarter of 2013."

Outlook Tan Lay Koon commented, "Based on current visibility, we expect net revenues in the second quarter of 2013 to increase approximately 2% to 6% compared to the prior quarter, with adjusted EBITDA(3) in the range of 21% to 25% of revenue. We expect capital expenditure(4) in the second quarter of 2013 to be approximately $100 million to $120 million as we prepare for long lead-time equipment to support anticipated demand later this year for advanced packaging and test turnkey services."

The outlook for the second quarter of 2013 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 months ended 31 March 2013 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the second quarter of 2013. 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 Thursday, 25 April 2013. 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 10 May 2013 at www.statschippac.com and by telephone at 800-616-2305. The conference ID number to access the conference call and replay is 33176384.

Forward-looking Statements

Certain statements in this release are forward-looking statements, including our outlook for the second quarter of 2013, 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, the amount of recovery from the business interruption insurance claim due to flooding of the 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 our 13-week first quarter of 2013 ended on 31 March 2013, while our 13-week first quarter of 2012 and 14-week fourth quarter of 2012 ended on 25 March 2012 and 30 December 2012, respectively. References to "$" are to the lawful currency of the United States of America.

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 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.

(1) Operating margin is stated before exceptional items which comprised flood related plan income (expenses), goodwill and equipment impairment.

(2) Litigation settlement charges are recorded based on the discounted value of the scheduled payments.

(3) 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. 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.

(4) Capital expenditure refers to acquisitions of production equipment, asset upgrades and infrastructure investments.


 
                             STATS ChipPAC Ltd.                             
                        Consolidated Income Statement                       
                                (Unaudited)                                 
                                                                            
                                                    Three Months Ended      
                                               ---------------------------- 
                                                  31 March       25 March   
                                                    2013           2012     
                                                   $'000          $'000     
                                               -------------  ------------- 
Net revenues                                         406,361        390,185 
Cost of revenues                                    (343,927)      (327,515)
                                               -------------  ------------- 
Gross profit                                          62,434         62,670 
                                                                            
Operating expenses:                                                         
  Selling, general and administrative                 23,292         24,821 
  Research and development                            12,375         11,741 
  Exchange offer expenses                              1,572              - 
  Write-off of debt issuance costs                       216              - 
                                               -------------  ------------- 
    Total operating expenses                          37,455         36,562 
                                               -------------  ------------- 
                                                                            
Operating income before exceptional items             24,979         26,108 
  Flood related plan charges                               -         (4,596)
                                               -------------  ------------- 
Operating income after exceptional items              24,979         21,512 
                                               -------------  ------------- 
                                                                            
Other income (expenses), net:                                               
  Interest income                                        327            441 
  Interest expense                                   (15,258)       (14,710)
  Foreign currency exchange gain (loss)                 (316)           218 
  Share of loss of associate                               -           (458)
  Other non-operating income (expenses), net              (8)            48 
                                               -------------  ------------- 
    Total other expenses, net                        (15,255)       (14,461)
                                               -------------  ------------- 
                                                                            
Income before income taxes                             9,724          7,051 
Income tax expense                                    (4,671)        (2,452)
                                               -------------  ------------- 
Net income                                             5,053          4,599 
Less: Net income attributable to the non-                                   
 controlling interest                                 (1,524)        (1,815)
                                               -------------  ------------- 
Net income attributable to STATS ChipPAC Ltd.          3,529          2,784 
                                               =============  ============= 
                                                                            
Net income per ordinary share attributable to                               
 STATS ChipPAC Ltd.:                                                        
  Basic                                        $        0.00  $        0.00 
  Diluted                                      $        0.00  $        0.00 
                                                                            
Ordinary shares (in thousands) used in per                                  
 ordinary share calculation:                                                
  Basic                                            2,202,218      2,202,218 
  Diluted                                          2,202,219      2,202,226 
 
                                                                            
Key Ratios and Information:                                                 
Gross Margin                                            15.4%          16.1%
Operating Expenses as a % of Revenue                     9.3%           9.4%
Operating Margin before exceptional items                6.1%           6.7%
                                                                            
Depreciation & Amortisation, including                                      
 Amortisation of Debt Issuance Costs                  72,444         70,878 
Capital Expenditures                                  92,406         98,335 
                                                                            
                                                                            
                             STATS ChipPAC Ltd.                             
                Consolidated Statement of Financial Position                
                                (Unaudited)                                 
                                                                            
                                                   31 March     30 December 
                                                     2013          2012     
                                                     $'000         $'000    
                                                 ------------  ------------ 
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                           297,261       170,558 
  Financial assets, available-for-sale                 44,709        39,601 
  Accounts receivable, net                            236,723       258,043 
  Other receivables                                    15,233        20,726 
  Inventories                                          89,155        90,203 
  Prepaid expenses and other current assets            27,017        24,559 
                                                 ------------  ------------ 
    Total current assets                              710,098       603,690 
Non-current assets:                                                         
  Property, plant and equipment, net                1,262,115     1,242,950 
  Intangible assets                                    35,985        36,361 
  Goodwill                                            381,487       381,487 
  Long-term restricted cash                               445           489 
  Deferred tax assets                                      65             - 
  Prepaid expenses and other non-current assets         3,048         3,299 
                                                 ------------  ------------ 
    Total non-current assets                        1,683,145     1,664,586 
                                                 ------------  ------------ 
  Total assets                                      2,393,243     2,268,276 
                                                 ============  ============ 
                                                                            
LIABILITIES                                                                 
Current liabilities:                                                        
  Accounts and other payables                         139,349       164,301 
  Payables related to property, plant and                                   
   equipment purchases                                 32,918        42,746 
  Accrued operating expenses                           79,686       113,476 
  Income taxes payable                                 13,149        13,155 
  Short-term borrowings                               254,379        50,690 
  Short-term amounts due to related parties                29            28 
                                                 ------------  ------------ 
    Total current liabilities                         519,510       384,396 
Non-current liabilities:                                                    
  Long-term borrowings                                778,466       792,609 
  Deferred tax liabilities                             50,062        47,141 
  Other non-current liabilities                        21,685        21,532 
                                                 ------------  ------------ 
    Total non-current liabilities                     850,213       861,282 
                                                 ------------  ------------ 
  Total liabilities                                 1,369,723     1,245,678 
                                                 ------------  ------------ 
                                                                            
EQUITY                                                                      
  Share capital                                       873,666       873,666 
  Retained earnings                                   102,500        98,971 
  Other reserves                                       (4,506)       (1,828)
                                                 ------------  ------------ 
    Equity attributable to equity holders of                                
     STATS ChipPAC Ltd.                               971,660       970,809 
  Non-controlling interest                             51,860        51,789 
                                                 ------------  ------------ 
  Total equity                                      1,023,520     1,022,598 
                                                 ------------  ------------ 
  Total liabilities and equity                      2,393,243     2,268,276 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                             STATS ChipPAC Ltd.                             
                       Other Supplemental Information                       
                                (Unaudited)                                 
                                                                            
                                                                            
                                           1Q 2013     4Q 2012     1Q 2012  
Net Revenues by Product Line                                                
Advanced Packaging #                           49.0%       51.2%       41.6%
Wirebond Packaging                             29.6%       27.9%       37.4%
Test                                           21.4%       20.9%       21.0%
                                         ----------  ----------  ---------- 
                                              100.0%      100.0%      100.0%
                                         ==========  ==========  ========== 
Net Revenues by End User Market                                             
Communications                                 74.1%       75.8%       63.5%
Personal Computers                              6.7%        6.0%       10.3%
Consumer, Multi-applications and Others        19.2%       18.2%       26.2%
                                         ----------  ----------  ---------- 
                                              100.0%      100.0%      100.0%
                                         ==========  ==========  ========== 
Net Revenues by Region                                                      
United States of America                       68.9%       70.0%       69.5%
Asia                                           16.4%       15.9%       20.7%
Europe                                         14.7%       14.1%        9.8%
                                         ----------  ----------  ---------- 
                                              100.0%      100.0%      100.0%
 
                                        ==========  ==========  ========== 
                                                                            
Number of Testers                               963         950         967 
Number of Wirebonders                         3,723       4,352       4,598 
                                                                            
Overall Equipment Utilisation Rate               68%         78%         71%
                                                                            
# Advanced Packaging includes flip-chip and wafer level packaging.          

Investor Relations Contact: Tham Kah Locke Vice President of Corporate Finance Tel: (65) 6824 7788 Fax: (65) 6720 7826 email: kahlocke.tham@statschippac.com

Media Contact: Lisa Lavin Deputy Director of Marketing Communications Tel: (208) 867-9859 email: lisa.lavin@statschippac.com

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