STATS ChipPAC Reports First Quarter 2015 Results

SINGAPORE--21 APRIL 2015, UNITED STATES--(Marketwired - Apr 21, 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 first quarter 2015.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the first quarter of 2015 increased 1.5% to $371.1 million compared to a year ago and was 8.8% lower from the prior quarter, as we saw seasonal weakness in our personal computer and consumer end markets. In the wireless communication market, we continued to see strength in demand for emerging market handsets as well as product ramps for new high performance smartphones and wearable devices."

Gross margin for the first quarter of 2015 was 10.5% compared to 10.0% in the first quarter of 2014 and 12.1% in the prior quarter. Operating margin for the first quarter of 2015 was 2.1% of revenue, compared to 0.7% in the first quarter of 2014 and 3.1% in the prior quarter. Net loss for the first quarter of 2015 was $2.1 million compared to net loss of $15.8 million in the first quarter of 2014 and net income of $3.5 million in the prior quarter.

Dennis Chia, Chief Financial Officer of STATS ChipPAC, said, "Our adjusted EBITDA ¹ in the first quarter was $83.2 million or 22.4% of revenue, compared to $78.4 million and $96.7 million or 21.4% and 23.8% of revenue in the first quarter of 2014 and prior quarter, respectively. Capital expenditure ² for the first quarter 2015 was $37.0 million or 10.0% of revenue, compared to $113.6 million and $64.8 million or 31.1% and 15.9% of revenue in the first quarter of 2014 and prior quarter, respectively. Cash, cash equivalents and bank deposits increased to $197.1 million as of the end of the first quarter of 2015 compared to $185.2 million as of the end of the fourth quarter of 2014. During the quarter, we reduced debt to $1,168.9 million as of the end of the first quarter of 2015 compared to $1,203.3 million as of the end of the fourth quarter of 2014."

Investor Conference Call / Live Audio Webcast Details A conference call has been scheduled for 8:00 a.m. in Singapore on Wednesday, 22 April 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 7 May 2015 at www.statschippac.com and by telephone at 800-616-2127 . The conference ID number to access the conference call and replay is 8006233.

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; disruption of our operations and other difficulties related to the relocation of our China operations; loss of directors, 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; majority beneficial ownership by Jiangsu Changjiang Electronics Technology Co., Ltd. ("JCET") upon the voluntary conditional cash offer by JCET for all the ordinary shares of our Company ("the JCET Offer") and the consummation of the JCET Offer that may result in conflicting interests with other holders of our securities; our inability to capture all or any of the benefits from acquisitions and investments in other companies and businesses; loss of customers or failure to compete effectively with the divestment or spin-off of our subsidiaries or 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"); and the potential delisting of our ordinary shares on the SGX-ST following the consummation of the JCET Offer. 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 first quarter of 2015 ended on 29 March 2015, while our first quarter of 2014, and fourth quarter of 2014 ended on 30 March 2014 and 28 December 2014, 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
				29 March				30 March
				2015 $'000				2014 $'000
Net revenues					371,080				365,476
Cost of revenues					(332,144	)			(328,956	)
Gross profit					38,936				36,520
Operating expenses:
	Selling, general and administrative				22,711				24,122
	Research and development				8,514				9,932
		Operating expenses			31,225				34,054
Equipment impairment					�				2,261
Total operating expenses					31,225				36,315
Operating income					7,711				205
Other income (expenses), net:
	Interest income				437				562
	Interest expense				(14,325	)			(12,375	)
	Foreign currency exchange loss				(459	)			(210	)
	Other non-operating income (expenses), net				(1,389	)			9
		Total other expenses, net			(15,736	)			(12,014	)
Loss before income taxes					(8,025	)			(11,809	)
Income tax benefit (expense)					7,154				(2,938	)
Net loss					(871	)			(14,747	)
Less: Net income attributable to the non-controlling interest					(1,194	)			(1,060	)
Net loss attributable to STATS ChipPAC Ltd.					(2,065	)			(15,807	)
Net loss per ordinary share attributable to STATS ChipPAC Ltd.:
	Basic			$	(0.00	)		$	(0.01	)
	Diluted			$	(0.00	)		$	(0.01	)
Ordinary shares (in thousands) used in per ordinary share calculation:
	Basic				2,202,218				2,202,218
	Diluted				2,202,218				2,202,218
Key Ratios and Information:
Gross Margin					10.5	%			10.0	%
Operating Expenses as a % of Revenue					8.4	%			9.3	%
Operating Margin before equipment impairment					2.1	%			0.7	%
Depreciation & Amortisation, including Amortisation of Debt Issuance Costs					80,421				78,952
Capital Expenditures					36,956				113,620

STATS ChipPAC Ltd.
Consolidated Statement of Financial Position (Unaudited)
				29 March			28 December
				2015			2014
				$'000			$'000
ASSETS
Current assets:
	Cash and cash equivalents			150,665			117,456
	Short-term bank deposits			44,757			66,054
	Accounts receivable			221,031			238,684
	Other receivables			13,479			29,479
	Inventories			74,552			73,232
	Assets held for sale			11,373			11,373
	Prepaid expenses and other current assets			18,670			20,192
		Total current assets		534,527			556,470
Non-current assets:
	Long-term bank deposits			1,669			1,659
	Property, plant and equipment			1,595,659			1,637,195
	Intangible assets			33,781			33,617
	Goodwill			381,487			381,487
	Deferred tax assets			211			100
	Prepaid expenses and other non-current assets			8,504			3,306
		Total non-current assets		2,021,311			2,057,364
	Total assets			2,555,838			2,613,834
LIABILITIES
Current liabilities:
	Accounts and other payables			187,968			198,076
	Payables related to property, plant and equipment purchases			48,242			95,592
	Accrued operating expenses			93,729			107,312
	Income taxes payable			12,274			12,327
	Short-term bank borrowings			224,404			212,597
	Short-term amounts due to related parties			224			31
		Total current liabilities		566,841			625,935
Non-current liabilities:
	Long-term borrowings			944,501			990,688
	Deferred tax liabilities			32,154			38,689
	Deferred government compensation for plant relocation			49,347			�
	Other non-current liabilities			17,564			16,079
		Total non-current liabilities		1,043,566			1,045,456
	Total liabilities			1,610,407			1,671,391
EQUITY
	Share capital			873,666			873,666
	Retained earnings			27,618			29,683
	Other reserves			(10,852	)		(13,800	)
		Equity attributable to equity holders of STATS ChipPAC Ltd.		890,432			889,549
	Non-controlling interest			54,999			52,894
	Total equity			945,431			942,443
	Total liabilities and equity			2,555,838			2,613,834

STATS ChipPAC Ltd.
Other Supplemental Information
(Unaudited)
		1Q 2015		4Q 2014		1Q 2014
Net Revenues by Product Line
Advanced Packaging ##		49.1%		47.9%		49.1%
Wirebond Packaging		27.3%		27.6%		29.7%
Test		23.6%		24.5%		21.2%
		100.0%		100.0%		100.0%
Net Revenues by End User Market
Communications		66.2%		67.7%		67.2%
Personal Computers		8.0%		8.4%		8.6%
Consumer, Multi-applications and Others		25.8%		23.9%		24.2%
		100.0%		100.0%		100.0%
Net Revenues by Region
United States of America		62.6%		68.0%		65.1%
Asia		30.0%		24.3%		24.6%
Europe		7.4%		7.7%		10.3%
		100.0%		100.0%		100.0%
Number of Testers		873		880		948
Number of Wirebonders		3,402		3,512		4,118

^## 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. 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.