STATS ChipPAC Reports First Quarter 2013 Results

SINGAPORE--24 APRIL 2013, UNITED STATES--(Marketwired - Apr 24, 2013) - 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 2013.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the first quarter of 2013 increased by 4.2% to $406.4 million over the first quarter of 2012 and decreased by 15.4% from the prior quarter which had the benefit of an extra week. Excluding the extra week, the first quarter revenue decrease was 8.9% compared to the prior quarter. The first quarter revenue saw seasonal demand weakness, tight inventory control in the wireless handset, tablet and consumer markets, and continued softness in the personal computer market."

Gross margin for the first quarter of 2013 decreased to 15.4% compared to 16.1% in the first quarter of 2012 and 18.3% in the fourth quarter of 2012 mainly due to higher material costs, and lower revenue compared to the fourth quarter of 2012. Operating margin¹ for the first quarter of 2013 was 6.1% of revenue compared to 6.7% in the first quarter of 2012 and 4.4% in the fourth quarter of 2012. Net income for the first quarter of 2013 was $3.5 million compared to $2.8 million in the first quarter of 2012 and $1.7 million in the fourth quarter of 2012. Operating margin¹ and net income for the fourth quarter of 2012 included litigation settlement charges².

John Lau, Chief Financial Officer of STATS ChipPAC, said, "Our adjusted EBITDA^2,3 in the first quarter of 2013 was $96.4 million or 23.7% of revenue, compared to $89.6 million or 23.0% in the first quarter of 2012, and $100.1 million or 20.8% of revenue in the fourth quarter of 2012. Excluding the litigation settlement charges, adjusted EBITDA in the fourth quarter of 2012 was $122.1 million or 25.4% of revenue. Capital spending in the first quarter of 2013 was $92.4 million or 22.7% of revenue, compared to $55.2 million or 11.5% of revenue in the fourth quarter of 2012 and $98.3 million or 25.2% of revenue in the first quarter of 2012."

"In the first quarter of 2013, we issued $611.2 million of new 4.5% Senior Notes due 2018 to refinance our existing $600.0 million of 7.5% Senior Notes due 2015. As of the end of the first quarter of 2013, our debt of $1,032.8 million was higher than $843.3 million as of the end of fourth quarter of 2012 mainly due to the outstanding $241.6 million of 7.5% Senior Notes due 2015 which were redeemed on 19 April 2013. We ended the first quarter of 2013 with cash, cash equivalents and marketable securities of $342.0 million compared to $210.2 million as of fourth quarter of 2012, mainly due to the proceeds from the $255.0 million of 4.5% Senior Notes due 2018 issued in March 2013, which were utilised on 19 April 2013 to redeem the outstanding $241.6 million of 7.5% Senior Notes due 2015. Redemption premium of $14.1 million and debt issuance costs of $2.2 million will be expensed in the income statement for second quarter of 2013."

Outlook
Tan Lay Koon commented, "Based on current visibility, we expect net revenues in the second quarter of 2013 to increase approximately 2% to 6% compared to the prior quarter, with adjusted EBITDA³ in the range of 21% to 25% of revenue. We expect capital expenditure⁴ in the second quarter of 2013 to be approximately $100 million to $120 million as we prepare for long lead-time equipment to support anticipated demand later this year for advanced packaging and test turnkey services."

The outlook for the second quarter of 2013 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 31 March 2013 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the second quarter of 2013. 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 Thursday, 25 April 2013. 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 2013 at www.statschippac.com and by telephone at 800-616-2305. The conference ID number to access the conference call and replay is 33176384.

Forward-looking Statements

Certain statements in this release are forward-looking statements, including our outlook for the second quarter of 2013, 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, the amount of recovery from the business interruption insurance claim due to flooding of the Thailand plant; 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 our 13-week first quarter of 2013 ended on 31 March 2013, while our 13-week first quarter of 2012 and 14-week fourth quarter of 2012 ended on 25 March 2012 and 30 December 2012, respectively. References to "$" are to the lawful currency of the United States of America.

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 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.

¹ Operating margin is stated before exceptional items which comprised flood related plan income (expenses), goodwill and equipment impairment.

² Litigation settlement charges are recorded based on the discounted value of the scheduled payments.

³ 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. 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.

⁴ Capital expenditure refers to acquisitions of production equipment, asset upgrades and infrastructure investments.

STATS ChipPAC Ltd.
Consolidated Income Statement
(Unaudited)
			Three Months Ended
			31 March				25 March
			2013				2012
			$'000				$'000
Net revenues				406,361				390,185
Cost of revenues				(343,927	)			(327,515	)
Gross profit				62,434				62,670
Operating expenses:
	Selling, general and administrative			23,292				24,821
	Research and development			12,375				11,741
	Exchange offer expenses			1,572				�
	Write-off of debt issuance costs			216				�
		Total operating expenses		37,455				36,562
Operating income before exceptional items				24,979				26,108
	Flood related plan charges			�				(4,596	)
Operating income after exceptional items				24,979				21,512
Other income (expenses), net:
	Interest income			327				441
	Interest expense			(15,258	)			(14,710	)
	Foreign currency exchange gain (loss)			(316	)			218
	Share of loss of associate			�				(458	)
	Other non-operating income (expenses), net			(8	)			48
		Total other expenses, net		(15,255	)			(14,461	)
Income before income taxes				9,724				7,051
Income tax expense				(4,671	)			(2,452	)
Net income				5,053				4,599
Less: Net income attributable to the non-controlling interest				(1,524	)			(1,815	)
Net income attributable to STATS ChipPAC Ltd.				3,529				2,784
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			2,202,219				2,202,226
Key Ratios and Information:
Gross Margin				15.4	%			16.1	%
Operating Expenses as a % of Revenue				9.3	%			9.4	%
Operating Margin before exceptional items				6.1	%			6.7	%
Depreciation & Amortisation, including Amortisation of Debt Issuance Costs				72,444				70,878
Capital Expenditures				92,406				98,335

STATS ChipPAC Ltd.
Consolidated Statement of Financial Position
(Unaudited)
			31 March			30 December
			2013			2012
			$'000			$'000
ASSETS
Current assets:
	Cash and cash equivalents		297,261			170,558
	Financial assets, available-for-sale		44,709			39,601
	Accounts receivable, net		236,723			258,043
	Other receivables		15,233			20,726
	Inventories		89,155			90,203
	Prepaid expenses and other current assets		27,017			24,559
		Total current assets	710,098			603,690
Non-current assets:
	Property, plant and equipment, net		1,262,115			1,242,950
	Intangible assets		35,985			36,361
	Goodwill		381,487			381,487
	Long-term restricted cash		445			489
	Deferred tax assets		65			�
	Prepaid expenses and other non-current assets		3,048			3,299
		Total non-current assets	1,683,145			1,664,586
	Total assets		2,393,243			2,268,276
LIABILITIES
Current liabilities:
	Accounts and other payables		139,349			164,301
	Payables related to property, plant and equipment purchases		32,918			42,746
	Accrued operating expenses		79,686			113,476
	Income taxes payable		13,149			13,155
	Short-term borrowings		254,379			50,690
	Short-term amounts due to related parties		29			28
		Total current liabilities	519,510			384,396
Non-current liabilities:
	Long-term borrowings		778,466			792,609
	Deferred tax liabilities		50,062			47,141
	Other non-current liabilities		21,685			21,532
		Total non-current liabilities	850,213			861,282
	Total liabilities		1,369,723			1,245,678
EQUITY
	Share capital		873,666			873,666
	Retained earnings		102,500			98,971
	Other reserves		(4,506	)		(1,828	)
		Equity attributable to equity holders of STATS ChipPAC Ltd.	971,660			970,809
	Non-controlling interest		51,860			51,789
	Total equity		1,023,520			1,022,598
	Total liabilities and equity		2,393,243			2,268,276

STATS ChipPAC Ltd.
Other Supplemental Information
(Unaudited)
	1Q 2013			4Q 2012			1Q 2012
Net Revenues by Product Line
Advanced Packaging #	49.0	%		51.2	%		41.6	%
Wirebond Packaging	29.6	%		27.9	%		37.4	%
Test	21.4	%		20.9	%		21.0	%
	100.0	%		100.0	%		100.0	%
Net Revenues by End User Market
Communications	74.1	%		75.8	%		63.5	%
Personal Computers	6.7	%		6.0	%		10.3	%
Consumer, Multi-applications and Others	19.2	%		18.2	%		26.2	%
	100.0	%		100.0	%		100.0	%
Net Revenues by Region
United States of America	68.9	%		70.0	%		69.5	%
Asia	16.4	%		15.9	%		20.7	%
Europe	14.7	%		14.1	%		9.8	%
	100.0	%		100.0	%		100.0	%
Number of Testers	963			950			967
Number of Wirebonders	3,723			4,352			4,598
Overall Equipment Utilisation Rate	68	%		78	%		71	%
# Advanced Packaging includes flip-chip and wafer level packaging.