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STATS ChipPAC Reports Third Quarter 2014 Results(Marketwire Via Acquire Media NewsEdge) SINGAPORE--28 OCTOBER 2014, UNITED STATES -- (Marketwired) -- 10/28/14 -- 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 third quarter 2014. Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the third quarter of 2014 decreased by 1.5% to $403.8 million from prior quarter and increased by 0.7% from the third quarter of 2013. Third quarter revenue was affected by delay in wafer supply at several key customers and demand shift from the high-end smartphone space toward the low-cost smartphone segment. New business ramp for advanced packaging programs and seasonal strength in the consumer segment, helped to partially offset weakness in our wireless communication revenue." Adjusted EBITDA(1) in the third quarter of 2014 was $90.2 million or 22.3% of revenue, compared to $88.1 million or 21.5% of revenue in the prior quarter and $112.1 million and 28.0% in the third quarter of 2013. Net loss for the third quarter of 2014 was $5.3 million compared to net loss of $4.2 million in the prior quarter and net income of $13.3 million in third quarter of 2013. Dennis Chia, Chief Financial Officer of STATS ChipPAC, said, "Gross margin for the third quarter of 2014 was lower at 11.8% compared to 12.2% in the prior quarter due to lower revenue and mix change in the wireless communications business. Operating margin for the third quarter of 2014 improved to 3.6% of revenue compared to 3.4% in the prior quarter as higher cost savings in operating expenses made up for the lower gross margin. Excluding the new factory construction in Korea, capital expenditure(2) for the third quarter of 2014 was $74.9 million or 18.5% of revenue. Overall capital spending in the third quarter of 2014 was $161.0 million or 39.9% of revenue compared to $195.3 million or 47.7% of revenue in the second quarter of 2014. Cash, cash equivalents and bank deposits were $178.0 million compared to $185.3 million and debt was $1,137.3 million compared to $1,064.6 million at the end of third quarter of 2014 and second quarter of 2014, respectively." OutlookTan Lay Koon commented, "Based on current visibility, we expect fourth quarter 2014 revenues to be flat to 6% decrease compared to the prior quarter, with adjusted EBITDA(1) in the range of 20% to 24% of revenue. We expect capital expenditure(2) in the fourth quarter of 2014 to be approximately $65 million to $85 million, including approximately $20 million to $40 million for progressive construction of the new factory in Korea." The outlook for the fourth quarter of 2014 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 28 September 2014 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the fourth quarter of 2014. 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(1) as a percentage of revenue. Investor Conference Call / Live Audio Webcast DetailsA conference call has been scheduled for 8:00 a.m. in Singapore on Wednesday, 29 October 2014. 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 13 November 2014 at www.statschippac.com and by telephone at 800-616-2127. The conference ID number to access the conference call and replay is 7726616. Forward-looking Statements Certain statements in this release are forward-looking statements, including our outlook for the fourth quarter of 2014, 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; inability to consolidate our Malaysia operations into our China operations and uncertainty as to whether such plan will achieve the expected objectives and results; 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 third quarter of 2014 ended on 28 September while our third quarter of 2013, fourth quarter of 2013, first quarter of 2014 and second quarter of 2014 ended on 29 September 2013, 29 December 2013, 30 March 2014 and 29 June 2014, 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 Nine Months Ended -------------------------- -------------------------- 28 September 29 September 28 September 29 September 2014 $'000 2013 $'000 2014 $'000 2013 $'000 ------------ ------------ ------------ ------------ Net revenues 403,772 400,775 1,179,160 1,203,502 Cost of revenues (355,933) (343,963) (1,044,751) (1,027,345) ------------ ------------ ------------ ------------ Gross profit 47,839 56,812 134,409 176,157 Operating expenses: Selling, general 23,554 24,645 72,804 72,205 and administrative Research and 9,590 10,855 30,273 35,930 development Exchange offer and - - - 15,701 redemption expenses Write-off of debt - - - 2,392 issuance costs ------------ ------------ ------------ ------------ Operating 33,144 35,500 103,077 126,228 expenses ------------ ------------ ------------ ------------ Equipment impairment 1,452 - 3,713 - ------------ ------------ ------------ ------------ Total operating 34,596 35,500 106,790 126,228 expenses ------------ ------------ ------------ ------------ Operating income 13,243 21,312 27,619 49,929 before exceptional items Plant closure costs - (379) - (36,909) Flood related - 19,582 - 19,582 insurance settlement Flood related plan - (3,000) - (3,000) charges ------------ ------------ ------------ ------------ Operating income 13,243 37,515 27,619 29,602 after exceptional items ------------ ------------ ------------ ------------ Other income (expenses), net: Interest income 380 296 1,330 976 Interest expense (12,881) (12,747) (37,932) (41,541) Foreign currency 62 244 (495) (80) exchange gain (loss) Other non-operating 77 (20) 238 25 income (expenses), net ------------ ------------ ------------ ------------ Total other (12,362) (12,227) (36,859) (40,620) expenses, net ------------ ------------ ------------ ------------ Income (loss) before 881 25,288 (9,240) (11,018) income taxes Income tax expense (3,723) (9,615) (9,934) (18,136) ------------ ------------ ------------ ------------ Net income (loss) (2,842) 15,673 (19,174) (29,154) Less: Net income attributable to the (2,375) (6,267) non- controlling interest (2,449) (6,106) ------------ ------------ ------------ ------------ Net income (loss) attributable to 13,298 (35,421) STATS ChipPAC Ltd. (5,291) (25,280) ============ ============ ============ ============ Net income (loss) per ordinary share attributable to STATS ChipPAC Ltd.: Basic $ (0.00) $ 0.01 $ (0.01) $(0.02) Diluted $ (0.00) $ 0.01 $ (0.01) $(0.02) Ordinary shares (in thousands) used in per ordinary share calculation: Basic and Diluted 2,202,218 2,202,218 2,202,218 2,202,218 Key Ratios and Information: --------------------- Gross Margin 11.8% 14.2% 11.4% 14.6% Operating Expenses as 8.2% 8.9% 8.7% 10.5% a % of Revenue Operating Margin 3.6% 5.3% 2.7% 4.1% Depreciation & Amortisation, including Amortisation of Debt Issuance Costs 79,687 75,200 237,107 224,130 Capital Expenditures 160,951 108,694 469,916 306,874 STATS ChipPAC Ltd. Consolidated Statement of Financial Position (Unaudited) 28 September 29 December 2014 2013 $'000 $'000 --------------- --------------- ASSETS Current assets: Cash and cash equivalents 115,609 129,136 Short-term bank deposits 61,987 42,042 Accounts receivable, net 229,728 238,441 Other receivables 33,785 15,239 Inventories 77,888 71,055 Prepaid expenses and other current assets 24,189 18,970 --------------- --------------- Total current assets 543,186 514,883 Non-current assets: Long-term bank deposits 425 11,604 Property, plant and equipment, net 1,668,817 1,431,247 Intangible assets 34,599 35,117 Goodwill 381,487 381,487 Deferred tax assets 185 186 Prepaid expenses and other non-current assets 3,405 3,146 --------------- --------------- Total non-current assets 2,088,918 1,862,787 --------------- --------------- Total assets 2,632,104 2,377,670 =============== =============== LIABILITIES Current liabilities: Accounts and other payables 185,181 138,004 Payables related to property, plant and equipment purchases 183,681 141,998 Accrued operating expenses 105,189 124,640 Income taxes payable 14,518 18,207 Short-term bank borrowings 73,000 37,947 Short-term amounts due to related parties 29 100 --------------- --------------- Total current liabilities 561,598 460,896 Non-current liabilities: Long-term borrowings 1,064,314 874,281 Deferred tax liabilities 46,559 47,476 Other non-current liabilities 15,663 24,228 --------------- --------------- Total non-current liabilities 1,126,536 945,985 --------------- --------------- Total liabilities 1,688,134 1,406,881 --------------- --------------- EQUITY Share capital 873,666 873,666 Retained earnings 26,198 51,478 Other reserves (9,389) (7,712) --------------- --------------- Equity attributable to equity holders 890,475 917,432 of STATS ChipPAC Ltd. Non-controlling interest 53,495 53,357 --------------- --------------- Total equity 943,970 970,789 --------------- --------------- Total liabilities and equity 2,632,104 2,377,670 =============== =============== STATS ChipPAC Ltd. Other Supplemental Information (Unaudited) 3Q 2014 2Q 2014 3Q 2013 Net Revenues by Product Line ---------------------------- Advanced Packaging ## 46.7% 49.2% 44.9% Wirebond Packaging 30.4% 30.0% 32.4% Test 22.9% 20.8% 22.7% --------------- --------------- --------------- 100.0% 100.0% 100.0% =============== =============== =============== Net Revenues by End User Market ---------------------------- Communications 65.5% 67.5% 65.0% Personal Computers 8.1% 8.5% 9.1% Consumer, Multi-applications 26.4% 24.0% 25.9% and Others --------------- --------------- --------------- 100.0% 100.0% 100.0% =============== =============== =============== Net Revenues by Region ---------------------------- United States of America 64.4% 63.0% 71.8% Asia 26.6% 28.8% 19.2% Europe 9.0% 8.2% 9.0% --------------- --------------- --------------- 100.0% 100.0% 100.0% =============== =============== =============== Number of Testers 968 943 947 Number of Wirebonders 3,682 4,164 4,107 ## Advanced Packaging includes flip-chip and wafer level packaging. (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, 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 Malaysia plant and our restructuring actions. 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, asset upgrades and infrastructure investments. Investor Relations Contact: Tham Kah Locke Vice President of Corporate Finance Tel: (65) 6824 7788 Fax: (65) 6720 7826 email: Email Contact Media Contact: Lisa Lavin Deputy Director of Marketing Communications Tel: (208) 867-9859 email: Email Contact Source: STATS ChipPAC |