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STATS ChipPAC Reports Fourth Quarter and Full Year 2013 Results

SINGAPORE--29 JANUARY 2014, UNITED STATES -- (Marketwired) -- 01/29/14 -- 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 2013.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Revenue for the fourth quarter of 2013 decreased 1.4% sequentially to $395.0 million. We saw strength in demand from our wireless communication customers in the emerging market chipset space and new product ramps in the global handset space offset by seasonal weakness in the computing and consumer markets."

Revenue for the fourth quarter and full year 2013 decreased by 17.8% and 6.1% from the fourth quarter and full year 2012 respectively. Excluding the benefit of an extra week last year, revenue decrease in the fourth quarter and full year 2013 was 11.4% and 4.2% respectively.

Gross margin for the fourth quarter of 2013 was 12.0% compared to 14.2% in the prior quarter and 18.3% in the fourth quarter of 2012, mainly due to the lower fourth quarter 2013 revenue. Operating margin(1) for the fourth quarter of 2013 was 2.8% of revenue, compared to 5.3% in the prior quarter and 4.4% in the fourth quarter of 2012.

Net loss for the fourth quarter of 2013 was $6.1 million compared to net income of $13.3 million in the prior quarter and net income of $1.7 million in the fourth quarter of 2012. The net income in the prior quarter included gain from exceptional items of $16.2 million. Net loss for the full year 2013 of $41.5 million included senior notes redemption expenses of $18.1 million and exceptional items of $20.3 million (plant closure costs of $36.9 million, insurance settlement gain of $19.6 million and flood related plan charges of $3.0 million). Net income for the full year 2012 of $16.6 million included exceptional gain of $16.7 million (insurance settlement gain of $26.7 million and flood related plan charges of $10.1 million).

John Lau, Chief Financial Officer of STATS ChipPAC, said, "Our adjusted EBITDA(2) in the fourth quarter and full year 2013 was $91.3 million and $392.4 million or 23.1% and 24.5% of revenue, respectively, compared to $100.1 million and $408.9 million or 20.8% and 24.0% of revenue, respectively, in the fourth quarter and full year 2012. Capital spending in the fourth quarter and full year 2013 was $200.6 million and $507.5 million or 50.8% and 31.7% of revenue, respectively, compared to $55.2 million and $409.9 million or 11.5% and 24.1% of revenue in the fourth quarter and full year 2012. Excluding the new factory construction in Korea, capital expenditure for the fourth quarter and full year 2013 was $184.4 million or 46.7% of revenue and $478.9 million or 30.0% of revenue, respectively. Compared to our outlook guidance, the higher capital expenditure was for production capacity in advanced wafer level packaging, wirebond packaging and turnkey test to support ramp for the emerging market chipsets and global handset new products. We ended the fourth quarter of 2013 with cash, cash equivalents and bank deposits of $182.8 million and debt of $912.2 million compared to $210.6 million and $843.3 million as of the end of fourth quarter of 2012, respectively."

Outlook
Tan Lay Koon commented, "Based on current visibility, we expect first quarter 2014 revenues to be impacted by seasonality and decrease 8% to 14% compared to the prior quarter, with adjusted EBITDA(2) in the range of 18% to 24% of revenue. We expect capital expenditure(3) in the first quarter of 2014 to be approximately $105 million to $125 million for long lead-time equipment to support anticipated demand this year for advanced wafer level packaging services, and includes $45 million to $55 million for progressive construction of the new factory in Korea."

The outlook for the first quarter of 2014 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 twelve months ended 29 December 2013 filed with the Singapore Exchange Securities Trading Limited ("SGX-ST") for the major assumptions made in preparing our outlook for the first quarter of 2014. 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(2) 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, 30 January 2014. 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 2014 at www.statschippac.com and by telephone at 800-616-2127. The conference ID number to access the conference call and replay is 2312968.

Forward-looking Statements
Certain statements in this release are forward-looking statements, including our outlook for the first quarter of 2014, 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 2013 and year 2013 ended on 29 December 2013, while our third quarter of 2013, fourth quarter of 2012 and year 2012, ended on 29 September 2013, 30 December 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. (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
                     --------------------------  --------------------------
                      29 December   30 December   29 December   30 December
                      2013 $'000    2012 $'000    2013 $'000    2012 $'000
                     ------------  ------------  ------------  ------------
Net revenues              395,020       480,357     1,598,522     1,701,549
Cost of revenues         (347,617)     (392,370)   (1,374,962)   (1,414,045)
                     ------------  ------------  ------------  ------------
Gross profit               47,403        87,987       223,560       287,504

Operating expenses:
  Selling, general
   and administrative      23,935        47,247        96,140       122,958
  Research and
   development             10,502        14,978        46,432        51,722
  Restructuring
   charges                  1,886         4,602         1,886         5,715
  Exchange offer and
   redemption
   expenses                    --            --        15,701            --
  Write-off of debt
   issuance costs              --            --         2,392            --
                     ------------  ------------  ------------  ------------
    Operating
     expenses              36,323        66,827       162,551       180,395
                     ------------  ------------  ------------  ------------

Goodwill impairment            --            --            --        24,100
Equipment impairment           --            --            --         3,819
                     ------------  ------------  ------------  ------------
Total operating
 expenses                  36,323        66,827       162,551       208,314
                     ------------  ------------  ------------  ------------

Operating income
 before exceptional
 items                     11,080        21,160        61,009        79,190
  Plant closure
   costs*                      --            --       (36,909)           --
  Flood related
   insurance
   settlement                  --            --        19,582        26,741
  Flood related plan
   charges **                  --          (837)       (3,000)      (10,061)
                     ------------  ------------  ------------  ------------
Operating income
 after exceptional
 items                     11,080        20,323        40,682        95,870
                     ------------  ------------  ------------  ------------

Other income
 (expenses), net:
  Interest income             358           358         1,334         1,518
  Interest expense        (12,918)      (15,806)      (54,459)      (59,829)
  Foreign currency
   exchange gain            3,721           357         3,641           583
  Share of loss of
   associate                   --            --            --          (739)
  Other non-operating
   income (expenses),
   net***                  (1,994)          151        (1,969)          477
                     ------------  ------------  ------------  ------------
    Total other
     expenses, net        (10,833)      (14,940)      (51,453)      (57,990)
                     ------------  ------------  ------------  ------------

Income (loss) before
 income taxes                 247         5,383       (10,771)       37,880
Income tax expense         (4,193)       (2,070)      (22,329)      (14,023)
                     ------------  ------------  ------------  ------------
Net income (loss)          (3,946)        3,313       (33,100)       23,857
Less: Net income
 attributable to the
 non-controlling
 interest                  (2,147)       (1,620)       (8,414)       (7,294)
                     ------------  ------------  ------------  ------------
Net income (loss)
 attributable to
 STATS ChipPAC Ltd.        (6,093)        1,693       (41,514)       16,563
                     ============  ============  ============  ============

Net income (loss) per
 ordinary share
 attributable to
 STATS ChipPAC Ltd.:
  Basic              $      (0.00) $       0.00  $      (0.02) $       0.01
  Diluted            $      (0.00) $       0.00  $      (0.02) $       0.01

Ordinary shares (in
 thousands) used in
 per ordinary share
 calculation:
  Basic                 2,202,218     2,202,218     2,202,218     2,202,218
  Diluted               2,202,218     2,202,218     2,202,218     2,202,220

Key Ratios and
 Information:
Gross Margin                 12.0%         18.3%         14.0%         16.9%
Operating Expenses as
 a % of Revenue               9.2%         13.9%         10.2%         10.6%
Operating Margin              2.8%          4.4%          3.8%          6.3%
Depreciation &
 Amortisation,
 including
 Amortisation of Debt
 Issuance Costs            78,455        76,938       302,585       289,207
Capital Expenditures      200,592        55,244       507,466       409,949

* Plant closure costs relate to the restructuring, plant shutdown and associated charges for the Malaysia plant.

** Flood related plan charges of $3.0 million in the full year of 2013 primarily relate to additional land and building impairment on the Thailand plant. Flood related plan charges of $0.8 million in the fourth quarter of 2012 and $10.1 million in the full year of 2012 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.

*** Other non-operating expenses in the fourth quarter and full year of 2013 primarily relate to lease termination cost of $2.0 million incurred in restructuring.

                             STATS ChipPAC Ltd.
                Consolidated Statement of Financial Position
                                (Unaudited)

                                                  29 December   30 December
                                                     2013          2012
                                                     $'000         $'000
                                                 ------------  ------------
ASSETS
Current assets:
  Cash and cash equivalents                           129,136       170,558
  Short-term bank deposits                             42,042        39,601
  Accounts receivable, net                            238,441       258,043
  Other receivables                                    15,239        20,726
  Inventories                                          71,055        90,203
  Prepaid expenses and other current assets            18,970        24,559
                                                 ------------  ------------
    Total current assets                              514,883       603,690
Non-current assets:
  Long-term bank deposits                              11,604           489
  Property, plant and equipment, net                1,437,226     1,242,950
  Intangible assets                                    35,117        36,361
  Goodwill                                            381,487       381,487
  Deferred tax assets                                     186             -
  Prepaid expenses and other non-current assets         3,146         3,299
                                                 ------------  ------------
    Total non-current assets                        1,868,766     1,664,586
                                                 ------------  ------------
  Total assets                                      2,383,649     2,268,276
                                                 ============  ============

LIABILITIES
Current liabilities:
  Accounts and other payables                         138,004       164,301
  Payables related to property, plant and
   equipment purchases                                141,998        42,746
  Accrued operating expenses                          124,640       113,476
  Income taxes payable                                 18,207        13,155
  Short-term bank borrowings                           37,947        50,690
  Short-term amounts due to related parties               100            28
                                                 ------------  ------------
    Total current liabilities                         460,896       384,396
Non-current liabilities:
  Long-term borrowings                                874,281       792,609
  Deferred tax liabilities                             47,476        47,141
  Other non-current liabilities                        24,228        21,532
                                                 ------------  ------------
    Total non-current liabilities                     945,985       861,282
                                                 ------------  ------------
  Total liabilities                                 1,406,881     1,245,678
                                                 ------------  ------------

EQUITY
  Share capital                                       873,666       873,666
  Retained earnings                                    57,457        98,971
  Other reserves                                       (7,712)       (1,828)
                                                 ------------  ------------
    Equity attributable to equity holders of
     STATS ChipPAC Ltd.                               923,411       970,809
  Non-controlling interest                             53,357        51,789
                                                 ------------  ------------
  Total equity                                        976,768     1,022,598
                                                 ------------  ------------
  Total liabilities and equity                      2,383,649     2,268,276
                                                 ============  ============



                             STATS ChipPAC Ltd.
                       Other Supplemental Information
                                (Unaudited)


                                           4Q 2013     3Q 2013     4Q 2012
Net Revenues by Product Line
Advanced Packaging ##                          47.8%       44.9%       51.2%
Wirebond Packaging                             29.2%       32.4%       27.9%
Test                                           23.0%       22.7%       20.9%
                                         ----------  ----------  ----------
                                              100.0%      100.0%      100.0%
                                         ==========  ==========  ==========
Net Revenues by End User Market
Communications                                 66.7%       65.0%       75.8%
Personal Computers                              8.1%        9.1%        6.0%
Consumer, Multi-applications and Others        25.2%       25.9%       18.2%
                                         ----------  ----------  ----------
                                              100.0%      100.0%      100.0%
                                         ==========  ==========  ==========
Net Revenues by Region
United States of America                       67.3%       71.8%       70.0%
Asia                                           22.6%       19.2%       15.9%
Europe                                         10.1%        9.0%       14.1%
                                         ----------  ----------  ----------
                                              100.0%      100.0%      100.0%
                                         ==========  ==========  ==========

Number of Testers                               959         947         950
Number of Wirebonders                         4,088       4,107       4,352

Overall Equipment Utilisation Rate               65%         67%         78%

## Advanced Packaging includes flip-chip and wafer level packaging.

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

(2) 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. Adjusted EBITDA excludes the plant closure costs related to our Malaysia plant and our restructuring actions. 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.

(3) Capital expenditure refers to acquisitions of production equipment, asset upgrades and infrastructure investments.

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Tel: (65) 6824 7788
Fax: (65) 6720 7826
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