Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Our second quarter was impacted by weak demand from certain large customers. As a result, our revenue declined about 5.2% from prior quarter. In general, we saw strong growth in our consumer and multi-applications market in applications like NAND flash, portable multimedia devices, digital TV and camera. Wireless communications were generally strong. Our personal computer business was weaker but improved towards the end of the second quarter on recovery of storage devices and graphics chipsets."
Revenue for the second quarter of 2007 decreased 11.5% to $370.2 million, compared to $418.1 million in the second quarter of 2006. This represents a sequential decline of 5.2% compared to the first quarter of 2007. Net income for the second quarter of 2007 was $7.4 million or $0.04 per diluted ADS, compared to net income of $18.0 million or $0.09 per diluted ADS in the second quarter of 2006. Net income for the second quarter of 2007 included approximately $2.0 million in share-based compensation expense as required under SFAS 123(R), $4.1 million in non-recurring expenses related to the tender offer from Singapore Technologies Semiconductors Pte Ltd, a wholly owned subsidiary of Temasek Holdings (Private) Limited, $1.7 million in impairment on the Company's assets used to manufacture discrete power packages that are classified as held for sale and $1.0 million in restructuring expenses.
Tham Kah Locke, acting Chief Financial Officer of STATS ChipPAC said, "We continue to focus our capital spending on strategic customer programs and to emphasize the generation of cash flow from our operations. In the second quarter of 2007, we spent approximately $55.4 million in capital expenditures, which was 15.0% of revenue compared to 26.9% of revenue in the second quarter of 2006. Gross margin in this quarter was 18.1% compared to 19.9% in prior quarter. The margin declined due to lower revenue."
Outlook
Tan Lay Koon commented, "For the third quarter, we expect revenue to be approximately in the range of $389.0 million to $408.0 million or in the range of 5% to 10% higher than the second quarter of 2007, with US GAAP net income in the range of $18.0 million to $24.0 million, which represents US GAAP net income per diluted ADS of $0.08 to $0.11, including the impact of approximately $0.01 per diluted ADS for the expensing of share-based compensation."
Investor Conference Call / Webcast Details
A conference call has been scheduled for 8:00 a.m. in Singapore on Thursday, July 26, 2007. This will be 8:00 p.m. in New York on Wednesday, July 25, 2007. During the call, time will be set aside for analysts and interested investors to ask questions of executive officers.
The call may be accessed by dialing +1-201-689-8560. A live 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 noon on Thursday, August 2, 2007 (in Singapore) or midnight on Wednesday, August 1, 2007 (in New York) at www.statschippac.com and by telephone at +1-201-612-7415. The account number to access the replay is 3055 and the conference ID number is 246519.
About STATS ChipPAC Ltd.
STATS ChipPAC Ltd. ("STATS ChipPAC" or the "Company") (
Forward-Looking Statements
Certain statements in this release, including statements regarding expected future financial results and industry growth, are forward-looking statements 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 from our expectations include, but are not limited to, general business and economic conditions and the state of the semiconductor industry; level of competition; demand for end-use applications products such as communications equipment and personal computers; decisions by customers to discontinue outsourcing of test and packaging services; reliance on a small group of principal customers; continued success in technological innovations; availability of financing; pricing pressures including declines in average selling prices; ability to meet specific conditions imposed for the continued trading or listing of the Company's securities on the SGX-ST and the NASDAQ; our substantial level of indebtedness; potential impairment charges; adverse tax and other financial consequences if the South Korean taxing authorities do not agree with our interpretation of the applicable tax laws; ability to develop and protect our intellectual property; rescheduling or canceling of customer orders; changes in products mix; intellectual property rights disputes and litigation; capacity utilization; delays in acquiring or installing new equipment; limitations imposed by our financing arrangements which may limit our ability to maintain and grow our business; changes in customer order patterns; shortages in supply of key components; disruption of our operations; loss of key management or other personnel; defects or malfunctions in our testing equipment or packages; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; significant ownership by Temasek Holdings that may result in conflicting interests with Temasek Holdings and our affiliates; unsuccessful acquisitions and investments in other companies and businesses; our ability to continue to successfully integrate the operations of the former separate STATS and ChipPAC companies and their employees; labor union problems in South Korea; uncertainties of conducting business in China; natural calamities and disasters, including outbreaks of epidemics and communicable diseases; and other risks described from time to time in the Company's SEC filings, including its annual report on Form 20-F dated March 12, 2007. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
STATS ChipPAC Ltd.
Condensed Consolidated Statements of Operations
(In thousands of U.S. Dollars, except share and per share data)
(Unaudited)
Three Months Ended Six Months Ended
-------------------- --------------------
June 25, July 1, June 25, July 1,
2006 2007 2006 2007
--------- --------- --------- ---------
Net revenues $ 418,133 $ 370,183 $ 803,842 $ 760,653
Cost of revenues (331,327) (303,236) (640,443) (616,147)
--------- --------- --------- ---------
Gross profit 86,806 66,947 163,399 144,506
Operating expenses:
Selling, general and
administrative 39,914 28,036 79,625 56,035
Research and development 7,909 8,985 14,882 17,170
Tender offer expenses - 4,114 - 10,922
Held for sale asset
impairment - 1,725 - 1,725
Restructuring charges - 990 - 990
--------- --------- --------- ---------
Total operating expenses 47,823 43,850 94,507 86,842
--------- --------- --------- ---------
Operating income 38,983 23,097 68,892 57,664
Other income (expenses), net (10,575) (8,503) (20,005) (17,222)
--------- --------- --------- ---------
Income before income taxes 28,408 14,594 48,887 40,442
Income tax expense (7,211) (5,782) (13,129) (13,433)
--------- --------- --------- ---------
Income before minority interest 21,197 8,812 35,758 27,009
Minority interest (3,177) (1,383) (5,722) (2,533)
--------- --------- --------- ---------
Net income $ 18,020 $ 7,429 $ 30,036 $ 24,476
========= ========= ========= =========
Net income per ordinary share:
Basic $ 0.01 $ 0.00 $ 0.02 $ 0.01
Diluted $ 0.01 $ 0.00 $ 0.01 $ 0.01
Net income per ADS:
Basic $ 0.09 $ 0.04 $ 0.15 $ 0.12
Diluted $ 0.09 $ 0.04 $ 0.14 $ 0.12
Ordinary shares (in thousands)
used in per ordinary share
calculation:
Basic 1,988,133 2,031,435 1,984,671 2,020,633
Diluted 2,158,312 2,186,078 2,156,948 2,180,555
ADS (in thousands) used in per
ADS calculation:
Basic 198,813 203,144 198,467 202,063
Diluted 215,831 218,608 215,695 218,056
Key Ratios and Information:
Gross Margin 20.8% 18.1% 20.3% 19.0%
Operating Expenses as a % of
Revenue 11.5% 11.9% 11.7% 11.4%
Operating Margin 9.3% 6.2% 8.6% 7.6%
Depreciation & Amortization,
including
Amortization of Debt
Issuance Costs $ 72,036 $ 62,687 $ 141,556 $ 124,084
Capital Expenditures $ 112,453 $ 55,373 $ 245,307 $ 112,159
Share-based compensation
expense included under
SFAS 123(R) were as follows:
Cost of revenues $ 1,629 $ 1,069 $ 3,143 $ 2,557
Selling, general and
administrative 763 722 3,233 1,740
Research and development 391 196 852 572
--------- --------- --------- ---------
$ 2,783 $ 1,987 $ 7,228 $ 4,869
========= ========= ========= =========
STATS ChipPAC Ltd.
Condensed Consolidated Balance Sheets
(In thousands of U.S. Dollars)
December
31, July 1,
2006 2007
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and marketable securities $ 216,583 $ 229,832
Accounts receivable, net 243,779 224,354
Inventories 111,614 89,645
Other current assets 27,845 23,635
----------- -----------
Total current assets 599,821 567,466
Marketable securities 15,358 15,133
Property, plant and equipment, net 1,192,830 1,171,505
Investment in equity investee 10,292 10,171
Goodwill and intangible assets 555,358 553,078
Other non-current assets * 84,621 78,367
----------- -----------
Total assets $ 2,458,280 $ 2,395,720
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts and other payables $ 201,999 $ 168,504
Other current liabilities 104,482 93,017
Short-term debts 65,373 152,024
----------- -----------
Total current liabilities 371,854 413,545
Long-term debts 697,523 534,052
Other non-current liabilities 84,807 92,200
----------- -----------
Total liabilities 1,154,184 1,039,797
----------- -----------
Minority interest 57,946 54,115
----------- -----------
Shareholders' equity 1,246,150 1,301,808
----------- -----------
Total liabilities and shareholders' equity $ 2,458,280 $ 2,395,720
----------- -----------
* Includes $980 and $981 of non-current restricted cash as of July 1,
2007 and December 31, 2006, respectively.
STATS ChipPAC Ltd.
Other Supplemental Information
(Unaudited)
2Q 2006 1Q 2007 2Q 2007
Net Revenues by Product Line
Packaging - array 55.3% 58.6% 56.0%
Packaging - leaded 18.4% 16.9% 18.6%
Test and other services 26.3% 24.5% 25.4%
--------- --------- ---------
100.0% 100.0% 100.0%
========= ========= =========
Net Revenues by End User Market
Communications 57.3% 52.5% 50.0%
Personal Computers 19.1% 16.1% 14.8%
Consumer, Multi-applications and Others 23.6% 31.4% 35.2%
--------- --------- ---------
100.0% 100.0% 100.0%
========= ========= =========
Net Revenues by Region
United States of America 72.3% 77.1% 71.6%
Europe 2.9% 2.2% 3.5%
Asia 24.8% 20.7% 24.9%
--------- --------- ---------
100.0% 100.0% 100.0%
========= ========= =========
Number of Testers 996 938 912
Number of Wirebonders 3,801 3,808 3,759
Overall Equipment Utilization Rate 77% 75% 74%
