STATS ChipPAC Reports First Quarter 2012 Results

SINGAPORE--24/4/2012, UNITED STATES--(Marketwire - Apr 24, 2012) - 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 first quarter 2012.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the first quarter of 2012 decreased by 4.7% to $390.2 million over the first quarter of 2011 and decreased by 8.6% from the prior quarter. The first quarter revenue reflected seasonally weaker demand and tight inventory control as customers remained cautious."

First quarter of 2012 gross margin was 16.1% compared to 16.9% in the fourth quarter of 2011 and 16.8% in the first quarter of 2011. Operating margin before flood related plan charges for the first quarter of 2012 was 6.7% of revenue compared to 6.6% in the fourth quarter of 2011 and 5.7% in the first quarter of 2011.

Net income for the first quarter of 2012 was $2.8 million, or $0.00 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 loss of $46.0 million or $0.02 of net loss per diluted ordinary share in the fourth quarter of 2011. The net income in the first quarter of 2012 and the net loss in the fourth quarter of 2011 included interest expense of $11.2 million in each quarter from our offering of $600.0 million Senior Notes due 2015 to fund our capital reduction in 2010. The net income for the first quarter of 2012 included flood related plan charges of $4.6 million arising from the announced plan for our Thailand plant operations. The net loss for the fourth quarter of 2011 included flood related charges totalling $55.5 million comprising goodwill impairment ($24.5 million), plant and equipment impairment ($16.3 million), and other related charges ($14.7 million).

The Company has submitted the property damage and business interruption insurance claim in respect of the flooding of its Thailand plant in March 2012. The insurance claim is in progress and, as of the first quarter of 2012, the Company is unable to determine the amount of damages and losses that will be recovered through the insurance claim.

John Lau, Chief Financial Officer of STATS ChipPAC, said, "Gross profit for the first quarter of 2012 was $62.7 million or 16.1% of revenue, compared to $68.8 million or 16.8% in the first quarter of 2011. Our adjusted EBITDA¹ in the first quarter of 2012 was 23.0% of revenue, compared to 24.8% in the first quarter of 2011. Capital spending in the first quarter of 2011 was $98.3 million or 25.2% of revenue, respectively, compared to $86.5 million or 21.1% of revenue in the first quarter of 2011 as we further accelerate investments in advanced packaging and turnkey test based on the strength of future demand from our customers. We ended the first quarter of 2012 with cash, cash equivalents and marketable securities of $208.1 million and debt of $811.0 million compared to $238.1 million and $810.3 million as of the end of fourth quarter of 2011, respectively."

Outlook
Tan Lay Koon commented, "Based on current visibility, we expect net revenues in the second quarter of 2012 to be approximately 6% to 12% increase from the prior quarter, with adjusted EBITDA¹ in the range of 22% to 25% of revenue. We expect capital expenditure² in the second quarter of 2012 to be approximately $90 million to $100 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 months ended 25 March 2012 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the second quarter of 2012. 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 Wednesday, 25 April 2012. 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 10 May 2012 at www.statschippac.com and by telephone at 800-616-3021. The conference ID number to access the conference call and replay is 70785947.

Forward-looking Statements

Certain statements in this release are forward-looking statements, including our outlook for the second quarter of 2012, 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, the timing and impact of the expected closure of the Thailand Plant as well as the estimated associated cost for the closure; the amount of the property damage and business interruption insurance claim due to flooding of the Thailand Plant; the ability to shift production to other manufacturing locations, 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 first quarter of 2012 ended on 25 March 2012, while our first quarter of 2011 and fiscal year 2011 ended on 27 March 2011 and 25 December 2011, respectively. References to "$" are to the lawful currency of the United States of America.

Overall equipment utilisation for the first quarter 2012 and fourth quarter 2011 is adjusted for the suspension of the Thailand Plant 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, goodwill and 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
				25 March				27 March
				2012 $'000				2011 $'000
Net revenues					390,185				409,380
Cost of revenues					(327,515	)			(340,622	)
Gross profit					62,670				68,758
Operating expenses:
	Selling, general and administrative				24,821				25,552
	Research and development				11,741				12,304
	Write-off of debt issuance costs				-				7,593
		Total operating expenses			36,562				45,449
Operating income before flood related plan charges					26,108				23,309
	Flood related plan charges *				4,596				-
Operating income after flood related plan charges					21,512				23,309
Other income (expenses), net:
	Interest income				441				389
	Interest expense				(14,710	)			(15,065	)
	Foreign currency exchange gain (loss)				218				(569	)
	Share of profit (loss) of associate				(458	)			90
	Other non-operating income, net				48				84
		Total other expenses, net			(14,461	)			(15,071	)
Income before income taxes					7,051				8,238
Income tax expense					(2,452	)			(379	)
Net income					4,599				7,859
Less: Net income attributable to the non-controlling interest					(1,815	)			(1,587	)
Net income attributable to STATS ChipPAC Ltd.					2,784				6,272
Net income per ordinary share attributable to STATS ChipPAC Ltd.:
	Basic			$	0.00			$	0.00
	Diluted			$	0.00			$	0.00
Ordinary shares (in thousands) used in per ordinary share calculation:
	Basic				2,202,218				2,202,218
	Diluted				2,202,226				2,202,234
Key Ratios and Information:
Gross Margin					16.1	%			16.8	%
Operating Expenses as a % of Revenue					9.4	%			11.1	%
Operating Margin before flood related plan charges					6.7	%			5.7	%
Depreciation & Amortisation, including Amortisation of Debt Issuance Costs					70,878				73,532
Capital Expenditures					98,335				86,544

* Flood related plan charges of $4.6 million primarily relate to depreciation on suspended production operations and labour and other expenses to support production shift from the Thailand plant to other manufacturing locations of STATS ChipPAC.

STATS ChipPAC Ltd.
Consolidated Statement of Financial Position (Unaudited)
				25 March			25 December
				2012			2011
				$'000			$'000
ASSETS
Current assets:
	Cash and cash equivalents			162,014			194,811
	Financial assets, available-for-sale			46,086			43,249
	Accounts receivable, net			229,366			223,082
	Other receivables			15,222			13,879
	Inventories			93,402			89,434
	Prepaid expenses and other current assets			32,637			19,129
		Total current assets		578,727			583,584
Non-current assets:
	Property, plant and equipment, net			1,154,272			1,123,061
	Investment in associate			8,047			8,407
	Intangible assets			37,196			37,179
	Goodwill			405,587			405,587
	Long-term restricted cash			481			410
	Prepaid expenses and other non-current assets			4,423			5,550
		Total non-current assets		1,610,006			1,580,194
Total assets				2,188,733			2,163,778
LIABILITIES
Current liabilities:
	Accounts and other payables			140,543			132,852
	Payables related to property, plant and equipment purchases			48,714			19,864
	Accrued operating expenses			120,352			150,342
	Income taxes payable			15,343			13,344
	Short-term borrowings			20,000			20,000
	Short-term amounts due to related parties			35			28
		Total current liabilities		344,987			336,430
Non-current liabilities:
	Long-term borrowings			790,950			790,339
	Deferred tax liabilities			47,877			49,509
	Other non-current liabilities			1,717			1,805
		Total non-current liabilities		840,544			841,653
Total liabilities				1,185,531			1,178,083
EQUITY
	Share capital			873,666			873,666
	Retained earnings			85,192			82,408
	Other reserves			(6,361	)		(17,981	)
		Equity attributable to equity holders of STATS ChipPAC Ltd.		952,497			938,093
	Non-controlling interest			50,705			47,602
	Total equity			1,003,202			985,695
	Total liabilities and equity			2,188,733			2,163,778

STATS ChipPAC Ltd.
Other Supplemental Information
(Unaudited)
		1Q 2012			4Q 2011			1Q 2011
Net Revenues by Product Line
Packaging - laminate		56.9	%		59.7	%		54.9	%
Packaging - leaded		11.6	%		10.7	%		15.3	%
Test		21.0	%		19.4	%		19.7	%
Wafer level processing and other services		10.5	%		10.2	%		10.1	%
		100.0	%		100.0	%		100.0	%
Net Revenues by End User Market
Communications		63.5	%		67.1	%		52.4	%
Personal Computers		10.3	%		9.4	%		14.1	%
Consumer, Multi-applications and Others		26.2	%		23.5	%		33.5	%
		100.0	%		100.0	%		100.0	%
Net Revenues by Region
United States of America		69.5	%		68.6	%		64.8	%
Asia		20.7	%		18.8	%		26.5	%
Europe		9.8	%		12.6	%		8.7	%
		100.0	%		100.0	%		100.0	%
Number of Testers		967			975			914
Number of Wirebonders		4,598			4,734			4,567
Overall Equipment Utilisation Rate		71	%		76	%		79	%