- 43.2% Revenue growth year-over-year - 2Q04 Revenue expected to grow approximately 28% to 34% year over year
Revenue for the three months ended March 31, 2004 increased 43.2% to $126.9 million, compared to $88.6 million in the same quarter a year ago. While this represents a sequential decline of 1.2% compared to the quarter ended December 31, 2003, it is in line with prior guidance and better than typical sequential seasonal declines. On a GAAP basis, net loss was $764,000 or $(0.01) per diluted share, compared to a net loss of $9.7 million or $(0.10) per diluted share in the same quarter a year ago. Included in the first quarter results are $3.3 million in costs associated with the Company's proposed merger announced on February 10, 2004 with ST Assembly Test Services Ltd. ("STATS" - Nasdaq: STTS and SGX: ST Assembly). Excluding the special item, net income in the first quarter ended March 31, 2004 was $2.6 million, compared to a net loss of $9.7 million for the same period a year ago, or net income of $0.03 per diluted share, compared to a net loss of $(0.10) per diluted share in the same quarter a year ago.
Dennis McKenna, Chairman and Chief Executive Officer of ChipPAC, commented, "We are pleased with our results in the first quarter. Quarter one is normally seasonally weak but this year it was even more challenging due to a strong wafer pull in during the fourth quarter of 2003. It was not until late February that wafers started arriving in ample and consistent quantities to meet demand forecasts. Thereafter, we operated all of our manufacturing sites at high capacity levels. As a result, March achieved record unit levels, wire bonds and equipment utilization levels. All market segments were strong during the first quarter, with the exception of computing. It appears computing had an inventory overhang during the first quarter of 2004."
"During the first quarter, we had successful ramps of new programs in all of our factories. Unit volumes of our multi-die stacked packages continued to grow for the fifth quarter in a row, growing 55.3% over the prior quarter. In addition, our strategy to improve the rate of test attach to what we assemble continued to drive improved profit contribution at all our factories. Our capacity expansion plans and overall execution have been timely in meeting continued customer demands during the first quarter. Despite these successes, we continue to see areas for improvement and opportunities for revenue and profit growth. Finally, I am pleased to announce the appointment of Michael G. Potter as Acting Chief Financial Officer. Michael will continue to report to Robert Krakauer, Executive Vice President of Corporate Operations."
Michael G. Potter, Acting Chief Financial Officer of ChipPAC, said, "The Company is executing well. As we saw in the month of March, with higher utilization of our assets, we had a strong profit flow through to the bottom-line. Even with the slow start to the first quarter, we were able to deliver strong results due to our strategic mix of customers, products and capacity expansion. We met our EPS goal despite the impact of an unfavorable currency environment and increased materials costs. These external cost pressures were offset by a better product mix and improved operating efficiencies. Selling prices were stable, as capacity assurance has become the priority of customers. To the credit of our organization, our operations remained focused on volume, program and financial execution even with the February 10, 2004 announcement of a proposed merger with STATS. We are confident of our continued execution and improvements going into the second quarter of 2004."
Outlook:
McKenna continued, "We expect sequential quarterly and year-over-year improvements for the second quarter 2004. We continue to see strong forecasts across our communications and consumer/industrial end markets and expect an improvement in computing. Specifically, we expect revenues for the second quarter of 2004 will be in the range of $137 million to $143 million, with a further improvement in net income in the range of $0.05 to $0.07 per share, excluding additional merger-related costs. We believe our Company's overall strategies of broad product engagements, increasing test attach rates and technology focus in communication, broadband and consumer products, position us well for the strengthening semiconductor demand cycle we are now in."
On February 10, 2004, ChipPAC, Inc. and STATS announced that they had entered into a definitive merger agreement for the companies to merge in a stock-for-stock transaction to create one of the world's premier independent semiconductor assembly and test solutions companies. Under the terms of the merger agreement, ChipPAC stockholders will receive 0.87 STATS American Depositary Shares for each share of ChipPAC common stock. On March 19, 2004, the companies received early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Consummation of the merger is subject to certain additional conditions, including approval of the STATS and ChipPAC shareholders, receipt of a private letter ruling from U.S. tax authorities relating to the tax treatment of the merger for ChipPAC stockholders and other customary conditions. The transaction is expected to close by the end of the second quarter of calendar year 2004.
Investor Conference Call / Webcast Details
ChipPAC will review detailed first quarter 2004 results and future guidance on April 29, 2004 at 5PM EDT. The conference call-in number is (973) 321-1070. A replay will be available from 8 PM EDT on April 29 through midnight EDT, May 6. The replay number is (973) 341-3080. The confirmation identification for both the live call and replay is 4681991. The live call and replay will also be accessible over the web at http://www.chippac.com/.
About ChipPAC, Inc.
ChipPAC is a full-portfolio provider of semiconductor packaging design, assembly, test and distribution services. The company combines a history of innovation and service with more than a decade of experience satisfying some of the largest customers in the industry. With advanced process technology capabilities and a global manufacturing presence spanning Korea, China, Malaysia and the United States, ChipPAC has a reputation for providing dependable, high quality packaging solutions. For more information, visit the company's Web site at http://www.chippac.com/.
CONTACT: David Pasquale, 646-536-7006, or Jim Olecki, 646-536-7021 Both with The Ruth Group, http://www.theruthgroup.com/ Forward-Looking Statements:
This press release includes forward-looking statements, as that term is defined in the Private Securities Reform Act of 1995, which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These forward-looking statements include statements (i) that the Company expects revenue, for the second quarter ending June 30, 2004, to be in the range of $137 million to $143 million, which would result in net income of $0.05 to $0.07 per share, excluding additional merger expenses, (ii) that we believe our overall strategies of broad product engagements, increasing test attach rates and technology focus in communication, broadband and consumer products, position us well for the strengthening semiconductor demand cycle we are now in, and (iii) that the expected closing of the proposed merger will occur by the end of the second quarter of 2004. Some of these risks and uncertainties are detailed in documents filed with the Securities and Exchange Commission, and include, but may not necessarily be limited to, the competitive conditions in the semiconductor foundry industry, our ability to develop and market new technologies, the timing and success of new product introductions, customer demand, the Company's ability to meet volume production and development time, the ongoing quality of the Company's services, the ability of the Company's suppliers to provide materials, equipment and services on a timely and cost competitive basis, the ability of the Company to pursue, complete and successfully integrate strategic acquisitions, dispositions and/or business combinations, exchange rates, industry improvement, growth in electronic product demand, general market conditions, and general economic and political conditions. Additional risks and uncertainties are discussed in exhibit 99.1 (Risk Factors) to our annual report on Form 10-K for the period ended December 31, 2003. The Company undertakes no obligation to update the information in this press release.
Additional Information About the Proposed Merger and Where to Find It
