STATS ChipPAC Reports Second Quarter 2013 Results

STATS ChipPAC Reports Second Quarter 2013 Results 
SINGAPORE--06 AUGUST 2013, UNITED STATES -- (Marketwired) -- 08/06/13
--  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 second
quarter 2013.  
Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC,
said, "We had a disappointing second quarter. Revenue for the second
quarter of 2013 decreased by 2.5% to $396.4 million from the prior
quarter and by 6.2% from second quarter of 2012. We saw weak demand
in wireless communications market targeted at high-end smartphone
segment that was partially offset by strength in the low-cost
smartphone segment."  
Gross margin for the second quarter of 2013 was 14.4% compared to
15.4% in the first quarter of 2013 and 17.0% in the second quarter of
2012 mainly due to the lower revenue compared to the first quarter of
2013 and second quarter of 2012. Operating margin for the second
quarter of 2013 was 0.9% and included $16.3 million of expenses
related to redemption of the outstanding $241.6 million of 7.5%
Senior Notes due 2015. Excluding these redemption expenses, operating
margin(1) for the second quarter of 2013 was 5.0% of revenue compared
to 6.1% in the first quarter of 2013 and 7.9% in the second quarter
of 2012.  
Net loss for the second quarter of 2013 was $52.2 million compared to
net profit of $3.5 million in the first quarter of 2013 and $8.9
million in the second quarter of 2012. In the second quarter of 2013,
the Company recorded plant closure costs of $36.5 million relating to
the announced plan for its Malaysia Plant as detailed in its press
release, STATS ChipPAC Announces Plan for its Malaysia Plant and
Provides Update for the Second Quarter 2013, on 28 June 2013. The
plant closure costs included employee severance and benefit costs of
$17.8 million, non-cash asset impairment charges of $17.7 million and
other associated costs of $1.0 million. Excluding the plant closure
costs and the redemption expenses, net profit was $0.6 million.  
John Lau, Chief Financial Officer of STATS ChipPAC, said, "Our
adjusted EBITDA(2) in the second quarter of 2013 was $92.5 million or
23.3% of revenue, compared to $96.4 millio
n or 23.7% of revenue in
the first quarter of 2013 and $97.3 million or 23.0% in the second
quarter of 2012. Capital spending in the second quarter of 2013 was
$105.8 million or 26.7% of revenue as we invested in long lead-time
equipment for wafer level packaging and test turnkey services,
compared to $92.4 million or 22.7% of revenue in the first quarter of
2013 and $96.8 million or 22.9% of revenue in the second quarter of
2012. We ended the second quarter of 2013 with cash, cash equivalents
and marketable securities of $184.2 million and debt of $874.7
million compared to $210.2 million and $843.3 million as of the end
of fourth quarter of 2012, respectively." 
Outlook
 Tan Lay Koon
commented, "Based on current visibility, we expect third quarter 2013
revenues to be flat to 6% higher compared to the prior quarter, with
adjusted EBITDA(2) in the range of 21% to 24% of revenue. We expect
capital expenditure(3) in the third quarter of 2013 to be
approximately $100 million to $120 million to expand our wafer level
packaging capacity in support of anticipated customer demand for
advanced packaging and test turnkey services." 
The outlook for the third 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 and six months ended 30 June 2013 filed with the Singapore
Exchange Securities Trading Limited ("SGX-ST") for the major
assumptions made in preparing our outlook for the third 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 Wednesday, 7
August 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 +65-6823-2299. 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 22 August 2013 at
www.statschippac.com and by telephone at 800-616-2127. The conference
ID number to access the conference call and replay is 3818159. 
(1)  Operating margin is stated before exceptional items which
comprised plant closure costs and flood related plan income
(expenses).  
(2) 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
announced plan for the Malaysia Plant. 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. 
(3)  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 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,
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; inabil
ity to consolidate
our Malaysia operations into our China operations and uncertainty as
to whether such plan will achieve the expected objectives and
results; the amount of recovery from the business interruption
insurance claim due to flooding of the Thailand plant; 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 second
quarter of 2013 ended on 30 June 2013, while our 13-week second
quarter of 2012, 14-week fourth quarter of 2012 and 13-week first
quarter of 2013 ended on 24 June 2012, 30 December 2012 and 31 March
2013, 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         Six Months Ended     
                         ------------------------  ------------------------ 
                           30 June      24 June      30 June      24 June   
                            2013         2012         2013         2012     
                            $'000        $'000        $'000        $'000    
                         -----------  -----------  -----------  ----------- 
Net revenues                 396,366      422,684      802,727      812,869 
Cost of revenues            (339,455)    (351,015)    (683,382)    (678,530)
                         -----------  -----------  -----------  ----------- 
Gross profit                  56,911       71,669      119,345      134,339 
                                                                            
Operating expenses:                                                         
  Selling, general and                                                      
   administrative             24,268       25,893       47,560       50,714 
  Research and                                                              
   development                12,700       12,485       25,075       24,226 
  Exchange offer and                                                        
   redemption expenses        14,129           --       15,701           -- 
  Write-off of debt                                                         
   issuance costs              2,176           --        2,392           -- 
                         -----------  -----------  -----------  ----------- 
    Total operating                                                         
     expenses                 53,273       38,378       90,728       74,940 
                         -----------  -----------  -----------  ----------- 
                                                                            
Operating income before                                                     
 exceptional items             3,638       33,291       28,617       59,399 
  Plant closure costs*       (36,530)          --      (36,530)          -- 
  Flood related plan                                                        
   charges                        --       (2,720)          --       (7,316)
                         -----------  -----------  -----------  ----------- 
Operating income (loss)                                                     
 after exceptional items     (32,892)      30,571       (7,913)      52,083 
                         -----------  -----------  -----------  ----------- 
                                                                            
Other income (expenses),                                                    
 net:                                                                       
  Interest income                353          436          680          877 
  Interest expense           (13,536)     (14,676)     (28,794)     (29,386)
  Foreign currency                                                          
   exchange loss                  (8)        (605)        (324)        (387)
  Share of loss of                                                          
   associate                      --         (196)          --         (654)
  Other non-operating                                                       
   income, net                    53           92           45          140 
                         -----------  -----------  -----------  ----------- 
    Total other                                                             
     expenses, net           (13,138)     (14,949)     (28,393)     (29,410)
                         -----------  -----------  -----------  ----------- 
                                                                            
Income (loss) before                                                        
 income taxes                (46,030)      15,622      (36,306)     
 22,673 
Income tax expense            (3,850)      (4,030)      (8,521)      (6,482)
                         -----------  -----------  -----------  ----------- 
Net income (loss)            (49,880)      11,592      (44,827)      16,191 
Less: Net income                                                            
 attributable to the                                                        
 non-controlling                                                            
 interest                     (2,368)      (2,675)      (3,892)      (4,490)
                         -----------  -----------  -----------  ----------- 
Net income (loss)                                                           
 attributable to STATS                                                      
 ChipPAC Ltd.                (52,248)       8,917      (48,719)      11,701 
                         ===========  ===========  ===========  =========== 
                                                                            
Net income (loss) per                                                       
 ordinary share                                                             
 attributable to STATS                                                      
 ChipPAC Ltd.:                                                              
  Basic                  $     (0.02) $      0.00  $     (0.02) $      0.01 
  Diluted                $     (0.02) $      0.00  $     (0.02) $      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                  2,202,218    2,202,223    2,202,218    2,202,226 
                                                                            
Key Ratios and                                                              
 Information:                                                               
Gross Margin                    14.4%        17.0%        14.9%        16.5%
Operating Expenses as a                                                     
 % of Revenue                   13.5%         9.1%        11.3%         9.2%
Operating Margin                 0.9%         7.9%         3.6%         7.3%
                                                                            
Depreciation &                                                              
 Amortisation, including                                                    
 Amortisation of Debt                                                       
 Issuance Costs               76,486       70,846      148,930      141,724 
Capital Expenditures         105,774       96,752      198,180      195,087 

 
* Plant closure costs relate to the restructuring, plant shutdown and
associated charges related to the announced plan for the Malaysia
plant. 


 
                                                                            
                                                                            
                             STATS ChipPAC Ltd.                             
                Consolidated Statement of Financial Position                
                                (Unaudited)                                 
                                                                            
                                                    30 June     30 December 
                                                     2013          2012     
                                                     $'000         $'000    
                                                 ------------  ------------ 
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                           144,767       170,558 
  Financial assets, available-for-sale                 39,408        39,601 
  Accounts receivable, net                            203,209       258,043 
  Other receivables                                    15,037        20,726 
  Inventories                                          92,330        90,203 
  Prepaid expenses and other current assets            27,967        24,559 
                                                 ------------  ------------ 
    Total current assets                              522,718       603,690 
Non-current assets:                                                         
  Property, plant and equipment, net                1,276,391     1,242,950 
  Intangible assets                                    35,565        36,361 
  Goodwill                                            381,487       381,487 
  Long-term restricted cash                               442           489 
  Deferred tax assets                                      37            -- 
  Prepaid expenses and other non-current assets         2,982         3,299 
                                                 ------------  ------------ 
    Total non-current assets                        1,696,904     1,664,586 
                                                 ------------  ------------ 
 Total assets                                       2,219,622     2,268,276 
                                                 ============  ============ 
                                                                            
LIABILITIES                                                                 
Current liabilities:                                                        
  Accounts and other payables                         142,223       164,301 
  Payables related to property, plant and                                   
   equipment purchases                                 37,778        42,746 
  Accrued operating expenses                           92,681       113,476 
  Income taxes payable                                  7,045        13,155 
  Short-term borrowings                                94,759        50,690 
  Short-term amounts due to related parties               223            28 
                                                 ------------  ------------ 
    Total current liabilities                         374,709       384,396 
Non-current liabilities:                                                    
  Long-term borrowings                                779,940       792,609 
  Deferred tax liabilities                             53,605        47,141 
  Other non-current liabilities                        43,579        21,532 
                                                 ------------  ------------ 
    Total non-current liabilities                     877,124       861,282 
                                                 ------------  ------------ 
Total liabilities                                   1,251,833     1,245,678 
                                                 ------------  ------------ 
                                                                            
EQUITY                                                                      
  Share capital                                       873,666       873,666 
  Retained earnings                                    50,252        98,971 
  Other reserves                                       (4,842)       (1,828)
                                                 ------------  ------------ 
    Equity attributable to equity holders of                                
     STATS ChipPAC Ltd.                               919,076       970,809 
  Non-controlling interest                             48,713        51,789 
                                                 ------------  ---
--------- 
  Total equity                                        967,789     1,022,598 
                                                 ------------  ------------ 
  Total liabilities and equity                      2,219,622     2,268,276 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                                                                            
                             STATS ChipPAC Ltd.                             
                       Other Supplemental Information                       
                                (Unaudited)                                 
                                                                            
                                                                            
                                        2Q 2013      1Q 2013      2Q 2012   
Net Revenues by Product Line                                                
Advanced Packaging #                         45.6%        49.0%        43.4%
Wirebond Packaging                           32.0%        29.6%        37.8%
Test                                         22.4%        21.4%        18.8%
                                      -----------  -----------  ----------- 
                                            100.0%       100.0%       100.0%
                                      ===========  ===========  =========== 
Net Revenues by End User Market                                             
Communications                               70.3%        74.1%        61.9%
Personal Computers                            8.5%         6.7%        11.6%
Consumer, Multi-applications and                                            
 Others                                      21.2%        19.2%        26.5%
                                      -----------  -----------  ----------- 
                                            100.0%       100.0%       100.0%
                                      ===========  ===========  =========== 
Net Revenues by Region                                                      
United States of America                     68.8%        68.9%        67.4%
Asia                                         19.6%        16.4%        19.1%
Europe                                       11.6%        14.7%        13.5%
                                      -----------  -----------  ----------- 
                                            100.0%       100.0%       100.0%
                                      ===========  ===========  =========== 
                                                                            
Number of Testers                             992          963          976 
Number of Wirebonders                       4,012        3,723        4,252 
                                                                            
Overall Equipment Utilisation Rate             66%          68%          76%

 
# 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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