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STATS ChipPAC Reports First Quarter 2014 Results

April 22, 2014 - Singapore--22 April 2014, United States

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 first quarter 2014.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the first quarter of 2014 was better than expected, decreasing by 7.5% to $365.5 million from prior quarter, and reflected seasonally weaker demand in most end markets. During the quarter, we saw continued strength in demand in the emerging market wireless chipset space. We made good progress on strategic growth initiatives with new program qualifications and production volume ramp in advanced wafer level technologies such as embedded Wafer Level Ball Grid Array (eWLB). eWLB is gaining recognition as a technology of choice for high performance, super-thin packages with advanced system level integration for the mobile communications market."

Gross margin for the first quarter of 2014 was 10.0% compared to 10.5% in the prior quarter and 15.4% in the first quarter of 2013, mainly due to the lower first quarter 2014 revenue. Operating margin for the first quarter of 2014 was 0.7% of revenue, compared to 1.3% in the prior quarter and 6.1% in first quarter 2013. Net loss for the first quarter of 2014 was $15.8 million compared to net loss of $12.1 million in the prior quarter and net income of $3.5 million in first quarter 2013.

Dennis Chia, Chief Financial Officer of STATS ChipPAC, said, "Our adjusted EBITDA(1) in the first quarter was $78.4 million or 21.4% of revenue, compared to $91.3 million and $96.4 million or 23.1% and 23.7% of revenue in the prior quarter and the first quarter 2013, respectively. Excluding the new factory construction in Korea, capital expenditure for the first quarter 2014 was $98.0 million or 26.8% of revenue. Overall capital spending in the first quarter 2014 was $113.6 million or 31.1% of revenue compared to $92.4 million or 22.7% of revenue in the first quarter 2013. We ended the first quarter of 2014 with cash, cash equivalents and bank deposits of $176.9 million and debt of $1,011.9 million compared to $182.8 million and $912.2 million as of the end of fourth quarter of 2013, respectively."

Tan Lay Koon commented, "Based on current visibility, we expect second quarter 2014 revenues to increase 9% to 14% compared to the prior quarter, with adjusted EBITDA(1) in the range of 20% to 25% of revenue. We expect capital expenditure(2) in the second quarter of 2014 to be approximately $160 million to $180 million, including approximately $40 million to $55 million for progressive construction of the new factory in Korea."

The outlook for the second 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 months ended 30 March 2014 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the second 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 Details
A conference call has been scheduled for 8:00 a.m. in Singapore on Wednesday, 23 April 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 A replay of the call will be available 2 hours after the live call through 8 May 2014 at and by telephone at 800-616-2127. The conference ID number to access the conference call and replay is 8528135.

(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.

Forward-looking Statements
Certain statements in this release are forward-looking statements, including our outlook for the second 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 13-week first quarter of 2014 ended on 30 March 2014, while our 13-week first quarter of 2013 and 13-week fourth quarter of 2013 ended on 31 March 2013 and 29 December 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 Information contained in this website does not constitute a part of this release.

Consolidated Statement of Financial Position
Three Months Ended
30 March 31 March
2014 2013
$'000 $'000
-------------- --------------
Net revenues 365,476 406,361
Cost of revenues (328,956) (343,927)
-------------- --------------
Gross profit 36,520 62,434

Operating expenses:
Selling, general and administrative 24,122 23,292
Research and development 9,932 12,375
Exchange offer expenses - 1,572
Write-off of debt issuance costs - 216
-------------- --------------
Operating expenses 34,054 37,455
-------------- --------------

Equipment impairment 2,261 -
-------------- --------------
Total operating expenses 36,315 37,455
-------------- --------------
Operating income 205 24,979
-------------- --------------

Other income (expenses), net:
Interest income 562 327
Interest expense (12,375) (15,258)
Foreign currency exchange loss (210) (316)
Other non-operating income (expenses), net 9 (8)
-------------- --------------
Total other expenses, net (12,014) (15,255)
-------------- --------------

Income (loss) before income taxes (11,809) 9,724
Income tax expense (2,938) (4,671)
-------------- --------------
Net income (loss) (14,747) 5,053
Less: Net income attributable to the non-
controlling interest (1,060) (1,524)
-------------- --------------
Net income (loss) attributable to STATS
ChipPAC Ltd. (15,807) 3,529
============== ==============

Net income (loss) per ordinary share
attributable to STATS ChipPAC Ltd.:
Basic $ (0.01) $ 0.00
Diluted $ (0.01) $ 0.00

Ordinary shares (in thousands) used in per
ordinary share calculation:
Basic 2,202,218 2,202,218
Diluted 2,202,218 2,202,219

Key Ratios and Information:
Gross Margin 10.0% 15.4%
Operating Expenses as a % of Revenue 9.3% 9.3%
Operating Margin before equipment impairment 0.7% 6.1%

Depreciation & Amortisation, including
Amortisation of Debt Issuance Costs 78,952 72,444
Capital Expenditures 113,620 92,406

Consolidated Statement of Financial Position

30 March 29 December
2014 2013
$'000 $'000
------------- -------------
Current assets:
Cash and cash equivalents 116,624 129,136
Short-term bank deposits 59,825 42,042
Accounts receivable, net 215,701 238,441
Other receivables 28,046 15,239
Inventories 71,169 71,055
Prepaid expenses and other current assets 24,675 18,970
------------- -------------
Total current assets 516,040 514,883
Non-current assets:
Long-term bank deposits 438 11,604
Property, plant and equipment, net 1,466,098 1,431,247
Intangible assets 35,207 35,117
Goodwill 381,487 381,487
Deferred tax assets 177 186
Prepaid expenses and other non-current
assets 2,925 3,146
------------- -------------
Total non-current assets 1,886,332 1,862,787
------------- -------------
Total assets 2,402,372 2,377,670
============= =============

Current liabilities:
Accounts and other payables 140,413 138,004
Payables related to property, plant and
equipment purchases 104,835 141,998
Accrued operating expenses 104,427 124,640
Income taxes payable 17,835 18,207
Short-term bank borrowings 122,541 37,947
Short-term amounts due to related parties 59 100
------------- -------------
Total current liabilities 490,110 460,896
Non-current liabilities:
Long-term borrowings 889,347 874,281
Deferred tax liabilities 48,592 47,476
Other non-current liabilities 21,244 24,228
------------- -------------
Total non-current liabilities 959,183 945,985
------------- -------------
Total liabilities 1,449,293 1,406,881
------------- -------------

Share capital 873,666 873,666
Retained earnings 35,671 51,478
Other reserves (9,697) (7,712)
------------- -------------
Equity attributable to equity holders of
STATS ChipPAC Ltd. 899,640 917,432
Non-controlling interest 53,439 53,357
------------- -------------
Total equity 953,079 970,789
------------- -------------
Total liabilities and equity 2,402,372 2,377,670
============= =============

Other Supplemental Information

1Q 2014 4Q 2013 1Q 2013
Net Revenues by Product Line
Advanced Packaging ## 49.1% 47.8% 49.0%
Wirebond Packaging 29.7% 29.2% 29.6%
Test 21.2% 23.0% 21.4%
---------- ---------- ----------
100.0% 100.0% 100.0%
========== ========== ==========
Net Revenues by End User Market
Communications 67.2% 66.7% 74.1%
Personal Computers 8.6% 8.1% 6.7%
Consumer, Multi-applications and Others 24.2% 25.2% 19.2%
---------- ---------- ----------
100.0% 100.0% 100.0%
========== ========== ==========
Net Revenues by Region
United States of America 65.1% 67.3% 68.9%
Asia 24.6% 22.6% 16.4%
Europe 10.3% 10.1% 14.7%
---------- ---------- ----------
100.0% 100.0% 100.0%
========== ========== ==========

Number of Testers 948 959 963
Number of Wirebonders 4,118 4,088 3,723

## Advanced Packaging includes flip-chip and wafer level packaging.

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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


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