STATS ChipPAC Reports Fourth Quarter and Full Year 2014 Results

SINGAPORE 29 JANUARY 2015 UNITED STATES--(Marketwired - Jan 29, 2015) - 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 fourth quarter and full year 2014.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the fourth quarter of 2014 increased 0.7% to $406.7 million from the third quarter of 2014. Fourth quarter came in better than our earlier guidance due to higher wireless communications revenue driven by new high-end smartphone ramps and stronger than seasonal demand in China lower tier smartphones."

Adjusted EBITDA¹ in the fourth quarter of 2014 improved to $96.7 million or 23.8% of revenue compared to $90.2 million or 22.3% in the prior quarter and $91.3 million or 23.1% in the fourth quarter of 2013. Net income for the fourth quarter of 2014 was $3.5 million compared to net loss of $5.3 million in the prior quarter and $12.1 million in fourth quarter of 2013.

For the full year 2014, adjusted EBITDA¹ was $353.4 million or 22.3% of revenue compared to $392.4 million or 24.5% in 2013, and net loss was $21.8 million compared to $47.5 million in 2013.

Dennis Chia, Chief Financial Officer of STATS ChipPAC, said, "Gross margin for the fourth quarter of 2014 was higher at 12.1% compared to 11.8% in the prior quarter due to higher revenue and favorable mix change in the wireless communications business. Operating margin for the fourth quarter of 2014 was 3.1% of revenue compared to 3.6% in the prior quarter. Excluding the new factory construction in Korea, capital expenditure² for the fourth quarter was $30.1 million or 7.4% of revenue. We ended fourth quarter of 2014 with cash, cash equivalents and bank deposits of $185.2 million and debt of $1,203.3 million compared to $178.0 million and $1,137.3 million at the end of third quarter of 2014."

Investor Conference Call / Live Audio Webcast Details
A conference call has been scheduled for 8:00 a.m. in Singapore on Friday, 30 January 2015. 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 14 February 2015 at www.statschippac.com and by telephone at 800-616-2127. The conference ID number to access the conference call and replay is 5322157.

Forward-looking Statements

Certain statements in this release are forward-looking statements 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 fourth quarter of 2014 and year 2014 ended on 28 December 2014, while our third quarter of 2014, fourth quarter of 2013 and year 2013 ended on 28 September 2014, 29 December 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 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								Twelve Months Ended
			28 December				29 December				28 December				29 December
			2014				2013				2014				2013
			$'000				$'000				$'000				$'000
Net revenues				406,674				395,020				1,585,834				1,598,522
Cost of revenues				(357,580	)			(353,596	)			(1,402,331	)			(1,380,941	)
Gross profit				49,094				41,424				183,503				217,581
Operating expenses:
	Selling, general and administrative			23,360				23,935				96,164				96,140
	Research and development			8,927				10,502				39,200				46,432
	Restructuring charges			4,319				1,886				4,319				1,886
	Exchange offer and redemption expenses			�				�				�				15,701
	Write-off of debt issuance costs			�				�				�				2,392
		Operating expenses		36,606				36,323				139,683				162,551
Equipment impairment				�				�				3,713				�
Total operating expenses				36,606				36,323				143,396				162,551
Operating income before exceptional items				12,488				5,101				40,107				55,030
	Plant closure costs			�				�				�				(36,909	)
	Flood related insurance settlement			�				�				�				19,582
	Flood related plan charges			�				�				�				(3,000	)
Operating income after exceptional items				12,488				5,101				40,107				34,703
Other income (expenses), net:
	Interest income			362				358				1,692				1,334
	Interest expense			(13,500	)			(12,918	)			(51,432	)			(54,459	)
	Foreign currency exchange gain			3,640				3,721				3,145				3,641
	Other non-operating expenses, net			(785	)			(1,994	)			(547	)			(1,969	)
		Total other expenses, net		(10,283	)			(10,833	)			(47,142	)			(51,453	)
Income (loss) before income taxes				2,205				(5,732	)			(7,035	)			(16,750	)
Income tax benefit (expense)				3,419				(4,193	)			(6,515	)			(22,329	)
Net income (loss)				5,624				(9,925	)			(13,550	)			(39,079	)
Less: Net income attributable to the non- controlling interest				(2,139	)			(2,147	)			(8,245	)			(8,414	)
Net income (loss) attributable to STATS ChipPAC Ltd.				3,485				(12,072	)			(21,795	)			(47,493	)
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				12.1	%			10.5	%			11.6	%			13.6	%
Operating Expenses as a % of Revenue				9.0	%			9.2	%			8.8	%			10.2	%
Operating Margin				3.1	%			1.3	%			2.8	%			3.4	%
Depreciation & Amortisation, including Amortisation of Debt Issuance Costs				80,927				84,434				318,034				308,564
Capital Expenditures				64,813				200,592				534,729				507,466

STATS ChipPAC Ltd.
Consolidated Statement of Financial Position
(Unaudited)
				28 December		29 December
				2014		2013
				$'000		$'000
ASSETS
Current assets:
	Cash and cash equivalents			117,456		129,136
	Short-term bank deposits			66,054		42,042
	Accounts receivable, net			238,684		238,441
	Other receivables			29,479		15,239
	Inventories			73,232		71,055
	Prepaid expenses and other current assets			31,565		18,970
		Total current assets		556,470		514,883
Non-current assets:
	Long-term bank deposits			1,659		11,604
	Property, plant and equipment, net			1,637,195		1,431,247
	Intangible assets			33,617		35,117
	Goodwill			381,487		381,487
	Deferred tax assets			100		186
	Prepaid expenses and other non-current assets			3,306		3,146
		Total non-current assets		2,057,364		1,862,787
Total assets				2,613,834		2,377,670
LIABILITIES
Current liabilities:
	Accounts and other payables			198,076		138,004
	Payables related to property, plant and equipment purchases			95,592		141,998
	Accrued operating expenses			107,312		124,640
	Income taxes payable			12,327		18,207
	Short-term bank borrowings			212,597		37,947
	Short-term amounts due to related parties			31		100
		Total current liabilities		625,935		460,896
Non-current liabilities:
	Long-term borrowings			990,688		874,281
	Deferred tax liabilities			38,689		47,476
	Other non-current liabilities			16,079		24,228
		Total non-current liabilities		1,045,456		945,985
Total liabilities				1,671,391		1,406,881
EQUITY
	Share capital			873,666		873,666
	Retained earnings			29,683		51,478
	Other reserves			(13,800)		(7,712)
		Equity attributable to equity holders of STATS ChipPAC Ltd.		889,549		917,432
	Non-controlling interest			52,894		53,357
	Total equity			942,443		970,789
	Total liabilities and equity			2,613,834		2,377,670

STATS ChipPAC Ltd.
Other Supplemental Information
(Unaudited)
		4Q 2014		3Q 2014		4Q 2013
Net Revenues by Product Line
Advanced Packaging ##		47.9	%	46.7	%	47.8	%
Wirebond Packaging		27.6	%	30.4	%	29.2	%
Test		24.5	%	22.9	%	23.0	%
		100.0	%	100.0	%	100.0	%
Net Revenues by End User Market
Communications		67.7	%	65.5	%	66.7	%
Personal Computers		8.4	%	8.1	%	8.1	%
Consumer, Multi-applications and Others		23.9	%	26.4	%	25.2	%
		100.0	%	100.0	%	100.0	%
Net Revenues by Region
United States of America		68.0	%	64.4	%	67.3	%
Asia		24.3	%	26.6	%	22.6	%
Europe		7.7	%	9.0	%	10.1	%
		100.0	%	100.0	%	100.0	%
Number of Testers		880		968		959
Number of Wirebonders		3,512		3,682		4,088

^## 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, asset impairment, tender offer, debt exchange or debt redemption expenses and write-off of debt issuance costs. Adjusted EBITDA excludes plant closure costs related to our Malaysia plant. 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.