STATS ChipPAC Reports Second Quarter 2011 Results

SINGAPORE -- 7/28/2011, UNITED STATES -- (MARKET WIRE) -- Jul 28, 2011 -- STATS ChipPAC Ltd. ("STATS ChipPAC" or the "Company") (SGX-ST: STATSChP), a leading semiconductor test and advanced packaging service provider, today announced results for the second quarter 2011.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the second quarter of 2011 increased by 4.3% to $427.0 million over the prior quarter and decreased by 1.9% over the second quarter of 2010, at the high end of our guidance. Our second quarter revenue reflected weakened demand toward the end of the quarter as our customers managed their inventory position more aggressively in view of the uncertain macroeconomic outlook and some over ordering due to concern about potential supply disruptions from the Japan earthquake."

Net income for the second quarter of 2011 was $19.2 million or $0.01 of net income per diluted ordinary share compared to net income of $6.3 million or $0.00 of net income per diluted ordinary share in the first quarter of 2011 and net income of $37.3 million or $0.02 of net income per diluted ordinary share in the second quarter of 2010. The net income in the second quarter and first half of 2011 included interest expense of $11.2 million and $22.4 million, respectively, from our offering of $600.0 million Senior Notes due 2015 to fund our capital reduction. The net income in the first quarter of 2011 also included debt issuance cost write-off of $7.6 million from the voluntary repayment of our senior credit facility of $234.5 million.

John Lau, Chief Financial Officer of STATS ChipPAC, said, "Despite higher material costs and appreciation of Asian currencies, our second quarter gross margin was 17.2% compared to 16.8% in the first quarter of 2011 and 21.5% in the second quarter of 2010. Operating margin for second quarter of 2011 was 8.3% of revenue compared to 5.7% in the first quarter of 2011 and 12.9% in the second quarter of 2010. Our adjusted EBITDA(1) in the second quarter of 2011 was 26.3% of revenue compared to 24.8% in the first quarter of 2011 and 28.0% in the second quarter of 2010. Capital spending in the second quarter of 2011 was $94.1 million or 22.0% of revenue reflecting investments to support growth of copper wire and advanced packaging technology demand compared to $86.5 million or 21.1% of revenue in the first quarter of 2011 and $67.7 million or 15.5% of revenue in the second quarter of 2010. We ended the second quarter of 2011 with cash, cash equivalent and marketable securities of $246.4 million and debt of $815.3 million compared to $301.7 million and $844.2 million as of the end of fourth quarter of 2010, respectively."

Outlook

Tan Lay Koon commented, "Based on current visibility, we expect net revenues in the third quarter of 2011 to be low to a mid single digit increase from prior quarter, with adjusted EBITDA(1) in the range of 22% to 26% of revenue. We expect capital expenditure(2) in the third quarter of 2011 to be approximately $70 million to $80 million."

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 six months ended 26 June 2011 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the third 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.

Investor Conference Call / Live Audio Webcast Details

A conference call has been scheduled for 8:00 a.m. in Singapore on Friday, 29 July 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 www.statschippac.com. A replay of the call will be available 2 hours after the live call through 12 August 2011 at www.statschippac.com and by telephone at 800-616-3021. The conference ID number to access the conference call and replay is 79771474.

Forward-looking Statements

Certain statements in this release are forward-looking statements, including our outlook for the third 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, 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 are generally thirteen weeks in length. Our second quarter of 2011 ended on 26 June 2011, while our first quarter of 2011, second quarter of 2010 and fiscal year 2010 ended on 27 March 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 overall equipment utilisation based on our available equipment operating capacity as adjusted for set-up and maintenance time. We have similarly disclosed overall equipment utilisation for the first quarter of 2011 and the second quarter of 2010. We have previously reported overall equipment utilisation based on total equipment operating capacity.

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 in 10 different countries. 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) 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, 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.

                            STATS ChipPAC Ltd.
                     Consolidated Income Statement
                                        (Unaudited)


                                                                  Three  Months  Ended          Six  Months  Ended
                                                                --------------------    --------------------
                                                                  26  June        27  June        26  June        27  June
                                                                      2011              2010              2011              2010
                                                                    $'000            $'000            $'000            $'000
                                                                ---------    ---------    ---------    ---------
Net  revenues                                            426,995        435,320        836,375        823,267
Cost  of  revenues                                  (353,342)    (341,726)    (693,964)    (651,996)
                                                                ---------    ---------    ---------    ---------
Gross  profit                                              73,653          93,594        142,411        171,271

Operating  expenses:
    Selling,  general  and
      administrative                                    24,879          25,390          50,431          47,973
    Research  and  development                  13,393          12,254          25,697          23,792
    Write-off  of  debt  issuance
      costs                                                                -                    -            7,593                    -
                                                                ---------    ---------    ---------    ---------
        Total  operating  expenses              38,272          37,644          83,721          71,765
                                                                ---------    ---------    ---------    ---------

Operating  income                                      35,381          55,950          58,690          99,506

Other  income  (expenses),  net:
    Interest  income                                          365                486                754                900
    Interest  expense                                (15,089)        (7,451)      (30,154)      (14,918)
    Foreign  currency  exchange
      gain  (loss)                                            4,182          (1,116)          3,613          (2,044)
    Share  of  profit  of  associate                235                369                325                375
    Other  non-operating  income
      (expense),  net                                            34                  40                118                151
                                                                ---------    ---------    ---------    ---------
        Total  other  expenses,  net          (10,273)        (7,672)      (25,344)      (15,536)
                                                                ---------    ---------    ---------    ---------

Income  before  income  taxes                  25,108          48,278          33,346          83,970
Income  tax  expense                                  (4,904)        (8,882)        (5,283)      (15,865)
                                                                ---------    ---------    ---------    ---------
Net  income                                                  20,204          39,396          28,063          68,105
Less:  Net  income  attributable
  to  the  non-controlling
  interest                                                        (977)        (2,064)        (2,564)        (3,323)
                                                                ---------    ---------    ---------    ---------
Net  income  attributable
      to  STATS  ChipPAC  Ltd.                      19,227          37,332          25,499          64,782
                                                                =========    =========    =========    =========

Net  income  per  ordinary  share
  attributable  to  STATS
  ChipPAC  Ltd.:
        Basic                                              $        0.01    $        0.02    $        0.01    $        0.03
        Diluted                                          $        0.01    $        0.02    $        0.01    $        0.03

Ordinary  shares  (in  thousands)
  used  in  per  ordinary  share
  calculation:
        Basic                                              2,202,218    2,202,218    2,202,218    2,202,218
        Diluted                                          2,202,232    2,202,240    2,202,233    2,202,239

Key  Ratios  and  Information:
Gross  Margin                                                  17.2%            21.5%            17.0%            20.8%
Operating  Expenses  as  a  %  of
  Revenue                                                            8.9%              8.6%            10.0%              8.7%
Operating  Margin                                            8.3%            12.9%              7.0%            12.1%

Depreciation  &  Amortisation,
  including  Amortisation  of
  Debt  Issuance  Costs                              74,274          69,365        147,806        137,180
Capital  Expenditures                              94,118          67,650        180,662        167,037



                                                        STATS  ChipPAC  Ltd.
                              Consolidated  Statement  of  Financial  Position
                                                              (Unaudited)


                                                                                                        26  June        26  December
                                                                                                            2011                  2010
                                                                                                          $'000                $'000
                                                                                                    ------------  -----------
ASSETS
Current  assets:
    Cash  and  cash  equivalents                                                        207,596          196,395
    Financial  assets,  available-for-sale                                    38,763            88,642
    Accounts  receivable,  net                                                          249,471          230,777
    Other  receivables                                                                          14,125              9,435
    Inventories                                                                                      97,608            69,791
    Prepaid  expenses  and  other  current  assets                          21,138            17,227
    Short-term  amount  due  from  related  party                                      -            17,105
                                                                                                    ------------  -----------
        Total  current  assets                                                              628,701          629,372
Non-current  assets:
    Financial  assets,  available-for-sale                                              -            16,646
    Property,  plant  and  equipment,  net                                  1,161,113      1,123,809
    Investment  in  associate                                                                8,415              8,104
    Intangible  assets                                                                          38,502            38,857
    Goodwill                                                                                          430,134          430,134
    Long-term  restricted  cash                                                                430                  416
    Prepaid  expenses  and  other  non-current  assets                    3,109              2,578
                                                                                                    ------------  -----------
        Total  non-current  assets                                                  1,641,703      1,620,544
                                                                                                    ------------  -----------
    Total  assets                                                                              2,270,404      2,249,916
                                                                                                    ============  ===========

LIABILITIES
Current  liabilities:
    Accounts  and  other  payables                                                    167,926          151,473
    Payables  related  to  property,  plant  and
      equipment  purchases                                                                    67,487            42,734
    Accrued  operating  expenses                                                      115,156          113,584
    Income  taxes  payable                                                                      3,674            12,385
    Short-term  borrowings                                                                  25,886            61,768
    Short-term  amounts  due  to  related  parties                                  29                    22
                                                                                                    ------------  -----------
        Total  current  liabilities                                                    380,158          381,966
Non-current  liabilities:
    Long-term  borrowings                                                                  789,459          782,434
    Deferred  tax  liabilities                                                            54,205            44,335
    Other  non-current  liabilities                                                  11,695            13,467
                                                                                                    ------------  -----------
        Total  non-current  liabilities                                            855,359          840,236
                                                                                                    ------------  -----------
    Total  liabilities                                                                    1,235,517      1,222,202
                                                                                                    ------------  -----------

EQUITY
    Share  capital                                                                                873,666          873,666
    Retained  earnings                                                                        110,409            84,910
    Other  reserves                                                                                  2,620                (278)
                                                                                                    ------------  -----------
        Equity  attributable  to  equity  holders  of
          STATS  ChipPAC  Ltd.                                                                986,695          958,298
    Non-controlling  interest                                                            48,192            69,416
                                                                                                    ------------  -----------
    Total  equity                                                                              1,034,887      1,027,714
                                                                                                    ------------  -----------
    Total  liabilities  and  equity                                              2,270,404      2,249,916
                                                                                                    ============  ===========



                                                        STATS  ChipPAC  Ltd.
                                            Other  Supplemental  Information
                                                                (Unaudited)


                                                                                        2Q  2011        1Q  2011        2Q  2010
Net  Revenues  by  Product  Line
Packaging  -  laminate                                                        52.8%            54.9%            55.6%
Packaging  -  leaded                                                            17.5%            15.3%            15.3%
Test                                                                                        19.5%            19.7%            20.5%
Wafer  level  processing  and  other  services              10.2%            10.1%              8.6%
                                                                                      ---------    ---------    ---------
                                                                                              100.0%          100.0%          100.0%
                                                                                      =========    =========    =========
Net  Revenues  by  End  User  Market
Communications                                                                    55.9%            52.4%            51.5%
Personal  Computers                                                            14.5%            14.1%            16.1%
Consumer,  Multi-applications  and  Others                  29.6%            33.5%            32.4%
                                                                                      ---------    ---------    ---------
                                                                                              100.0%          100.0%          100.0%
                                                                                      =========    =========    =========
Net  Revenues  by  Region
United  States  of  America                                                65.2%            64.8%            56.7%
Asia                                                                                        23.5%            26.5%            28.9%
Europe                                                                                    11.3%              8.7%            14.4%
                                                                                      ---------    ---------    ---------
                                                                                              100.0%          100.0%          100.0%
                                                                                      =========    =========    =========

Number  of  Testers                                                                913                914                940
Number  of  Wirebonders                                                    4,957            4,567            4,456

Overall  Equipment  Utilisation  Rate                                82%                79%                85%
 

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