Download full pdf version Singapore – 10/28/2010, United States – 10/28/2010
– 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 third quarter 2010.
Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, “Revenue for third quarter of 2010 increased by 10.9% to $432.2 million compared to the third quarter of 2009 and decreased by marginal 0.7% over the prior quarter. Our third quarter revenue reflected strong demand in the communications segment offset by weakness in the personal computing and certain segments of the consumer market.”
Net income for third quarter of 2010 was $24.2 million or $0.01 of net income per diluted ordinary share, compared to $25.1 million or $0.01 per diluted ordinary share in the third quarter of 2009 and net income of $37.3 million or $0.02 of net income per diluted ordinary share in the prior quarter. Net income for the third quarter of 2010 included tender offer expense for our 6.75% Senior Notes due 2011 of $3.1 million and interest expense from recent offering of $600.0 million of 7.5% Senior Notes due 2015.
John Lau, Chief Financial Officer of STATS ChipPAC, said, “Our gross margin in the third quarter of 2010 was 20.2%, similar to gross margin of 20.2% in the third quarter of 2009 and 21.5% in the prior quarter. Operating margin for third quarter of 2010 was 10.6% of revenue compared to 9.4% in the third quarter of 2009 and 12.9% in the prior quarter. Capital spending in the third quarter of 2010 was $56.4 million or 13.1% of revenue compared to $41.2 million or 10.6% of revenue in the third quarter of 2009. We ended the third quarter of 2010 with cash, cash equivalent and marketable securities of $966.8 million and debt of $995.7 million, compared to $368.1 million and $458.0 million, respectively, as of the end of fourth quarter of 2009. The proceeds from recent $600.0 million of 7.5% Senior Notes due 2015 offering completed for our capital reduction were included in our cash, cash equivalent and marketable securities as of the end of the third quarter of 2010.” Outlook
Tan Lay Koon commented, “In terms of outlook, we expect net revenues in the fourth quarter of 2010 to decline by single-digit level from prior quarter, with adjusted EBITDA in the range of 23% to 27% of revenue. We expect capital expenditure in the fourth quarter of 2010 will be approximately $50 million to $60 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 nine months ended September 26, 2010 filed with the Singapore Exchange Securities Trading Limited (“SGX-ST”) for the major assumptions made in preparing our outlook for the fourth quarter of 2010. 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. Please read the “Risk Factors” section in our 2009 Annual Report on Form 20-F furnished to the U.S. Securities and Exchange Commission on March 5, 2010 for a discussion of the factors that could cause our actual results to differ materially from our expectations. 1
Adjusted EBITDA is not required by, or presented in accordance with, U.S. GAAP. We define adjusted EBITDA as net income (loss) attributable to STATS ChipPAC Ltd. plus income tax expense, interest expense, net, depreciation and amortization, restructuring charges, stock-based compensation, held for sale asset 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-GAAP 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.
Certain statements in this release are forward-looking statements, including our outlook for the fourth quarter of 2010, 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, 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 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; returns from research and development investments; changes in customer order patterns; shortages in supply of key components; 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; labor 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 SGX-ST; and other risks described from time to time in the Company’s filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F dated March 5, 2010. 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.
Our 52-53 week fiscal year ends on the Sunday nearest and prior to December 31. Our fiscal quarters end on a Sunday and are generally thirteen weeks in length. Our third quarter of 2010 ended on September 26, 2010, while our third quarter of 2009 and fiscal year 2009 ended on September 27, 2009 and December 27, 2009, respectively. References to “US GAAP” are to Generally Accepted Accounting Principles as practiced in the United States of America and references to “$” are to the lawful currency of the United States of America.