SINGAPORE–10/28/2011, UNITED STATES — (Marketwire) — 10/28/11 — 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 EBITDA(1) 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.”
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 EBITDA(1) in the range of 20% to 25% of revenue. We expect capital expenditure(2) 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.
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 . A replay of the call will be available 2 hours after the live call through 14 November 2011 at and by telephone at 800-616-3021. The conference ID number to access the conference call and replay is 12952553.
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.
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.
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 . Information contained in this website does not constitute a part of this release.
Tham Kah Locke
Vice President of Corporate Finance
Tel: (65) 6824 7788
Fax: (65) 6720 7826
email:
Lisa Lavin
Deputy Director of Corporate Communications
Tel: (208) 867 9859
email:
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