Reg No.: 199407932D FINANCIAL STATEMENTS AND RELATED ANNOUNCEMENT Financial Statements for the Three and Nine Months Ended. These figures have not been audited. ( or the Company and together with its subsidiaries, the Group ) is an independent provider of a full range of semiconductor packaging design, bump, probe, assembly, test and distribution solutions. The Group is headquartered in Singapore and has manufacturing facilities in South Korea, Singapore, China, Malaysia, Thailand and Taiwan (which includes the facilities of s 52%-owned Taiwan subsidiary, Taiwan Semiconductor Corporation). markets its services through its direct sales force in the United States, South Korea, Japan, China, Singapore, Malaysia, Taiwan and Switzerland. The financial statements included in this announcement have been prepared in accordance with the Singapore Financial Reporting Standards ( FRS ). The results of operations for interim periods are not necessarily indicative of the results of operations that may be expected for any other period. Our third quarter of ended on, while our first quarter of, second quarter of, first quarter of, second quarter of, third quarter of and fiscal year ended on 25 March, 24 June, 27 March, 26 June, and 25 December, respectively. All amounts are expressed in United States dollars unless otherwise indicated. Certain of the statements in this report are forward-looking statements, including our outlook for the three months ending 30 December, that are based on management s current views and assumptions and involve a number of risks and uncertainties which could cause actual results to differ materially. In some cases, you can identify forward-looking statements by terminology such as may, will, should, expect, plan, intend, target, anticipate, believe, estimate, predict, project, potential, continue or the negative of these terms or other comparable terminology. Factors that could cause actual results to differ include, but are not limited to, the timing and impact of the expected closure of the Thailand plant as well as the estimated associated cost for the closure; the amount of business interruption insurance claim due to flooding of the Thailand plant; the ability to shift production to other manufacturing locations, 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, policy and political instability in other countries in Asia; natural calamities and disasters, including outbreaks of epidemics and communicable diseases; and 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. 1
PART I INFORMATION REQUIRED FOR QUARTERLY (Q1, Q2, Q3), HALF-YEAR AND FULL YEAR ANNOUNCEMENTS 1(a) An income statement and statement of comprehensive income, or a statement of comprehensive income, for the Group together with a comparative statement for the corresponding period of the immediately preceding financial year. Consolidated Income Statement Three Months Ended Nine Months Ended Net revenues... 408,323 443,414 1,221,192 1,279,789 Cost of revenues... (343,145) (368,186) (1,021,675) (1,062,150) Gross profit... 65,178 75,228 199,517 217,639 Operating expenses: Selling, general and administrative... 24,997 24,683 75,711 75,114 Research and development... 12,518 13,709 36,744 39,406 Restructuring charges... 1,113 1,113 Write-off of debt issuance costs... 7,593 Operating expenses... 38,628 38,392 113,568 122,113 Goodwill impairment... 24,100 24,100 Equipment impairment... 3,819 3,819 Total operating expenses 66,547 38,392 141,487 122,113 Operating income (loss) before flood related income (expenses)... (1,369) 36,836 58,030 95,526 Property damage insurance settlement... 26,741 26,741 Flood related plan charges... (1,908) (9,224) Operating income after flood related income (expenses)... 23,464 36,836 75,547 95,526 Other income (expenses), net: Interest income... 283 396 1,160 1,150 Interest expense... (14,637) (14,911) (44,023) (45,065) exchange gain (loss)... 613 (1,076) 226 2,537 of loss of associate... (85) (476) (739) (151) Other non-operating income, net... 186 22 326 140 Total other expenses, net... (13,640) (16,045) (43,050) (41,389) Income before income taxes... 9,824 20,791 32,497 54,137 Income tax expense... (5,471) (1,892) (11,953) (7,175) Net income... 4,353 18,899 20,544 46,962 Less: Net income the non-controlling interest... (1,184) (908) (5,674) (3,472) Net income... 3,169 17,991 14,870 43,490 Consolidated Statement of Comprehensive Income Three Months Ended Nine Months Ended Net income... 4,353 18,899 20,544 46,962 Other comprehensive income (loss): Available-for-sale financial assets... (453) Cash flow hedges... 4,120 (23,902) 14,765 (19,192) translation adjustment... 1,826 (3,491) 3,377 (2,182) Comprehensive income (loss), net of tax... 5,946 (27,393) 18,142 (21,827) Total comprehensive income (loss), net of tax... 10,299 (8,494) 38,686 25,135 Comprehensive income (loss), net of tax attributable to:... 8,274 (7,684) 31,472 20,713 Non-controlling interest... 2,025 (810) 7,214 4,422 10,299 (8,494) 38,686 25,135 2
1(a) An income statement and statement of comprehensive income, or a statement of comprehensive income, for the Group together with a comparative statement for the corresponding period of the immediately preceding financial year. Net income of the Group is arrived at after charging (crediting): Three Months Ended Nine Months Ended Depreciation and amortisation, including amortisation of debt issuance cost... 70,545 74,013 212,269 221,819 Equipment impairment... 3,819 3,819 Goodwill impairment... 24,100 24,100 Allowance for doubtful debts... 535 634 1,114 941 Bad debts written off... 40 40 1 Write-off for stock obsolescence... 157 903 698 1,087 Adjustment for overprovision of tax in respect of prior years... (4,774) (1,393) (11,015) (Write-back) additions for liability on unrecognised tax benefits for uncertain tax positions in respect of prior years... (847) 965 Gain on sale of property, plant and equipment... (523) (333) (1,639) (2,300) Flood related plan charges... 1,908 9,224 Property damage insurance settlement... (26,741) (26,741) Flood related plan charges of $1.9 million in the third quarter of and $9.2 million in the first three quarters of 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 the Group. 3
1(b)(i) A statement of financial position (for the Company and Group), together with a comparative statement as at the end of the immediately preceding financial year. Group Company 25 December 25 December ASSETS Current assets: Cash and cash equivalents... 153,766 194,811 76,010 53,755 Financial assets, available-for-sale... 41,696 43,249 Insurance settlement receivable... 26,741 Accounts receivable, net... 247,611 223,082 89,499 83,915 Other receivables... 21,964 13,879 1,792 150 Inventories... 92,004 89,434 16,738 16,378 Short-term restricted cash... 58 Prepaid expenses and other current assets... 29,167 19,071 12,781 8,142 Short-term amounts due from subsidiaries... 465,347 437,963 Total current assets... 612,949 583,584 662,167 600,303 Non-current assets: Property, plant and equipment, net... 1,263,857 1,123,061 410,343 305,351 Investment in associate... 7,778 8,407 10,154 10,154 Investment in subsidiaries... 732,284 732,284 Intangible assets... 36,585 37,179 24,125 21,957 Goodwill... 381,487 405,587 Long-term restricted cash... 484 410 Prepaid expenses and other non-current assets... 3,229 5,550 90 2,171 Total non-current assets... 1,693,420 1,580,194 1,176,996 1,071,917 Total assets 2,306,369 2,163,778 1,839,163 1,672,220 LIABILITIES Current liabilities: Accounts and other payables... 171,634 132,852 22,487 13,604 Payables related to property, plant and equipment purchases... 92,943 19,864 37,909 5,498 Accrued operating expenses... 115,834 150,342 51,280 67,136 Income taxes payable... 10,021 13,344 Short-term borrowings... 50,341 20,000 50,341 20,000 Short-term amounts due to related parties... 38 28 38 28 Short-term amounts due to subsidiaries... 151,794 42,755 Total current liabilities... 440,811 336,430 313,849 149,021 Non-current liabilities: Long-term borrowings... 792,077 790,339 792,077 790,339 Deferred tax liabilities... 52,164 49,509 6,944 7,338 Other non-current liabilities... 2,107 1,805 Total non-current liabilities... 846,348 841,653 799,021 797,677 Total liabilities 1,287,159 1,178,083 1,112,870 946,698 EQUITY... 873,666 873,666 872,766 872,766 Retained earnings... 97,278 82,408 (137,391) (125,980) Other reserves... (1,379) (17,981) (9,082) (21,264) Equity equity holders of STATS ChipPAC... 969,565 938,093 726,293 725,522 Non-controlling interest... 49,645 47,602 1,019,210 985,695 726,293 725,522 Total liabilities and equity 2,306,369 2,163,778 1,839,163 1,672,220 4
1(b)(ii) In relation to the aggregate amount of the Group s borrowings and debt securities, specify the following at the end of the current financial period reported on with comparative figures as at the end of the immediately preceding financial year. 25 December Secured Unsecured Secured Unsecured (a) Repayable within 1 year... 50,341 20,000 (b) Repayable after 1 year... 792,077 790,339 842,418 810,339 As of, the Group s total debt outstanding consisted of $842.4 million of borrowings, which included $600.0 million of the Company s 7.5% Senior Notes due 2015, $200.0 million of the Company s 5.375% Senior Notes due 2016 and other short-term borrowings. (c) Details of the collaterals: The long-term debts as at and 25 December were unsecured. The Company s 7.5% Senior Notes due 2015 and 5.375% Senior Notes due 2016 are fully and unconditionally guaranteed, jointly and severally, on a senior basis, by certain subsidiaries of the Company. 5
1(c) A statement of cash flows (for the Group), together with a comparative statement for the corresponding period of the immediately preceding financial year. Three Months Ended Nine Months Ended Cash Flows From Operating Activities Net income... 4,353 18,899 20,544 46,962 Adjustments to reconcile net income to net cash provided by operating activities: Income tax expense... 5,471 1,892 11,953 7,175 Depreciation and amortisation... 69,910 73,135 210,152 219,276 Gain on sale of property, plant and equipment... (523) (333) (1,639) (2,300) Goodwill impairment... 24,100 24,100 Equipment impairment... 3,819 3,819 Write-off of debt issuance costs... 7,593 exchange (gain) loss... 365 (4,747) 330 (7,888) of loss of associate... 85 476 739 151 Interest income... (283) (396) (1,160) (1,150) Interest expense... 14,637 14,911 44,023 45,065 Others... (66) (871) (46) (1,340) Changes in operating working : Accounts receivable... 5,826 (12,504) (24,529) (31,198) Amounts due from related parties... 17,105 Inventories... (2,918) (7,869) (2,795) (35,686) Other receivables, prepaid expense and other assets... (15,252) (23,779) (26,432) (26,684) Accounts payable, accrued operating expenses and other payables (5,589) 28,765 11,455 41,373 Amounts due to related parties... 8 10 10 17 Income tax received (paid)... (1,324) 2,324 (9,327) (3,080) Net cash provided by operating activities... 102,619 89,913 261,197 275,391 Cash Flows From Investing Activities Proceeds from sales of financial assets, available-for-sale... 16,656 Proceeds from maturity of financial assets, available-for-sale... 21,754 7,183 62,577 128,126 Purchases of financial assets, available-for-sale... (15,061) (13,788) (59,727) (81,486) Acquisition of intangible assets... (1,401) (1,750) (4,091) (5,466) Purchases of property, plant and equipment... (101,241) (99,629) (281,626) (255,539) Interest received... 89 467 844 1,373 Others, net... 1,344 857 3,579 2,765 Net cash used in investing activities... (94,516) (106,660) (278,444) (193,571) Cash Flows From Financing Activities Repayment of short-term debts... (31,000) (15,000) (67,300) (29,500) Repayment of long-term debts... (1,107) (245,653) Proceeds from issuance of senior notes, net of expenses... 197,964 Proceeds from bank borrowings, net of expenses... 59,000 20,000 98,300 42,520 Capital distribution by subsidiary to non-controlling interest... (22,673) Distribution to non-controlling interest in subsidiary... (5,054) (3,654) (5,054) (3,654) Grants received... 947 Interest paid... (22,601) (22,524) (50,661) (48,609) Increase (decrease) in restricted cash... 374 14 (16) Net cash provided by (used in) financing activities... 719 (22,271) (23,784) (109,605) Net increase (decrease) in cash and cash equivalents... 8,822 (39,018) (41,031) (27,785) Effect of exchange rate changes on cash and cash equivalents... (26) (2) (14) (34) Cash and cash equivalents at beginning of the period... 144,970 207,596 194,811 196,395 Cash and cash equivalents at end of the period... 153,766 168,576 153,766 168,576 6
1(d)(i) A statement (for the Company and Group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from isation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. Statement of Changes in Equity Group Three Months Ended Retained earnings Attributable to equity holders of translation Hedging value reserve reserve reserve Noncontrolling interest Balances at 25 June... 873,666 94,109 (3,800) (2,684) 961,291 47,620 1,008,911 Total comprehensive income, net of tax... 3,169 985 4,120 8,274 2,025 10,299 Balance at... 873,666 97,278 (2,815) 1,436 969,565 49,645 1,019,210 Three Months Ended Retained earnings Attributable to equity holders of translation Hedging value reserve reserve reserve Noncontrolling interest Balances at 27 June... 873,666 110,409 (2,207) 4,827 986,695 48,192 1,034,887 Total comprehensive income (loss), net of tax... 17,991 (1,773) (23,902) (7,684) (810) (8,494) Balance at... 873,666 128,400 (3,980) (19,075) 979,011 47,382 1,026,393 Nine Months Ended Retained earnings Attributable to equity holders of translation Hedging value reserve reserve reserve Noncontrolling interest Balances at 26 December... 873,666 82,408 (4,652) (13,329) 938,093 47,602 985,695 Total comprehensive income, net of tax... 14,870 1,837 14,765 31,472 7,214 38,686 Dividends paid by subsidiary... (5,171) (5,171) Balance at... 873,666 97,278 (2,815) 1,436 969,565 49,645 1,019,210 Nine Months Ended Retained earnings Attributable to equity holders of translation Hedging value reserve reserve reserve Noncontrolling interest Balances at 27 December 2010... 873,666 84,910 (848) 117 453 958,298 69,416 1,027,714 Total comprehensive income (loss), net of tax... 43,490 (3,132) (19,192) (453) 20,713 4,422 25,135 Dividends paid by subsidiary... (3,783) (3,783) Capital distribution by subsidiary... (22,673) (22,673) Balance at... 873,666 128,400 (3,980) (19,075) 979,011 47,382 1,026,393 7
Statement of Changes in Equity Company Three Months Ended Attributable to equity holders of Retained translation Hedging value earnings reserve reserve reserve Balances at 25 June... 872,766 (137,140) (9,733) (2,542) 723,351 Total comprehensive income (loss), net of tax... (251) 3,193 2,942 Balance at... 872,766 (137,391) (9,733) 651 726,293 Three Months Ended Attributable to equity holders of Retained translation Hedging value earnings reserve reserve reserve Balances at 27 June... 872,766 (106,610) (9,733) 1,252 757,675 Total comprehensive loss, net of tax... (3,394) (16,354) (19,748) Balance at... 872,766 (110,004) (9,733) (15,102) 737,927 Nine Months Ended Attributable to equity holders of Retained translation Hedging value earnings reserve reserve reserve Balances at 26 December... 872,766 (125,980) (9,733) (11,531) 725,522 Total comprehensive income (loss), net of tax... (11,411) 12,182 771 Balance at... 872,766 (137,391) (9,733) 651 726,293 Nine Months Ended Attributable to equity holders of Retained translation Hedging value earnings reserve reserve reserve Balances at 27 December 2010... 872,766 (101,523) (9,733) 171 453 762,134 Total comprehensive loss, net of tax... (8,481) (15,273) (453) (24,207) Balance at... 872,766 (110,004) (9,733) (15,102) 737,927 8
1(d)(ii) Details of any changes in the Company s share arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the Company, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. Number of shares Issued shares outstanding at 26 December and 27 December 2010... 2,202,218,293 2,202,218,293 Issue of shares pursuant to share plans... Issued shares outstanding at and... 2,202,218,293 2,202,218,293 Options outstanding... 3,856,898 7,295,706 Convertible Notes The Group did not have any outstanding convertible notes as at and. Treasury s The Group did not have any treasury shares as at and. 1(d)(iii) Total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. 25 December Total number of issued shares excluding treasury shares... 2,202,218,293 2,202,218,293 1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on. 2 Whether the figures have been audited or reviewed, and in accordance with which auditing standard or practice. The figures, prepared in accordance with Singapore FRS, have not been audited or reviewed by the Group s auditors. 3 Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of matter). 4 Whether the same accounting policies and methods of computation as in the Company s most recently audited annual financial statements have been applied. The Group has applied the same accounting policies and methods of computation in the financial statements for the current reporting period as those used in the most recently audited annual financial statements. See also item 5 below. 9
5 If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. The Group adopted various new/revised FRS which took effect for fiscal :- The Conceptual Framework for Financial Reporting 2010 (Chapters 1 and 3) (effective for annual periods beginning on or after 1 March ) Amendments to FRS 12 : Deferred Tax - Recovery of Underlying Assets (effective for annual periods beginning on or after 1 January ) Amendments to FRS 101 : Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters (effective for annual periods beginning on or after 1 July ) Amendments to FRS 107 Disclosures : Transfers of Financial Assets (effective for annual periods beginning on or after 1 July ) The adoption of these new/revised FRS did not result in any significant impact on the financial statements of the Group. 6 Earnings per ordinary share ( EPS ) of the Group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends:- (a) based on the weighted average number of ordinary shares on issue; and (b) on a fully diluted basis (detailing any adjustments made to the earnings). Three Months Ended Nine Months Ended Net income per ordinary shares - Basic... US$ 0.00 US$ 0.01 US$ 0.01 US$ 0.02 - Diluted... US$ 0.00 US$ 0.01 US$ 0.01 US$ 0.02 Ordinary shares (in thousands) used in per ordinary shares calculation: - Basic... 2,202,218 2,202,218 2,202,218 2,202,218 - Diluted... 2,202,218 2,202,229 2,202,223 2,202,232 7 Net asset value (for the Company and Group) per ordinary share based on the total number of issued shares excluding treasury shares of the Company at the end of the:- (a) current financial period reported on; and (b) immediately preceding financial year. Group 25 December Company 25 December Net asset value per ordinary share... US$ 0.46 US$ 0.45 US$ 0.33 US$ 0.33 The net asset value per ordinary share of the Group and the Company as at and 25 December is calculated based on the total issued number of ordinary shares of 2,202,218,293. 8 A review of performance of the Group, to the extent necessary for a reasonable understanding of the Group s business. It must include a discussion of the following:- (a) any significant factors that affected the turnover, costs and earnings of the Group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and (b) any material factors that affected the cash flow, working, assets or liabilities of the Group during the current financial period reported on. Please refer to attached appendix: Management s Discussion and Analysis of Financial Condition and Results of Operations. 10
9 Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. The Group s net revenues for the three months ended decreased 3.4% from the three months ended 24 June compared to revised guidance for net revenues to be 3% to 5% decrease from the three months ended 24 June. As a percentage of net revenues, the adjusted EBITDA for the three months ended was 29.9%, compared to revised guidance of adjusted EBITDA to be in the range of 28% to 30%. The Group s expenditure in the three months ended amounted to $160 million, compared to revised expenditure guidance of approximately $160 million to $170 million. 10 A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the Group operates and any known factors or events that may affect the Group in the next reporting period and the next 12 months. Please refer to attached appendix: Management s Discussion and Analysis of Financial Condition and Results of Operations. 11 If a decision regarding dividend has been made:- (a) Whether an interim (final) ordinary dividend has been declared (recommended); and (b)(i) Amount per share (cents) (b)(ii) Previous corresponding period (cents) (c) Whether the dividend is before tax, net of tax or tax exempt. If before tax or net of tax, state the tax rate and the country where the dividend is derived. (If the dividend is not taxable in the hands of shareholders, this must be stated). (d) The date the dividend is payable. (e) Book closure date. 12 If no dividend has been declared (recommended), a statement to that effect. No dividend has been declared or recommended for the current reporting period. 13 If the Group has obtained a general mandate from shareholders for IPTs, the aggregate value of such transaction as required under Rule 920(1)(a)(ii). If no IPT mandate has been obtained, a statement to that effect. No Interested Party Transactions (IPT) mandate has been obtained from shareholders. 14 Negative confirmation pursuant to Rule 705(5). The Directors hereby confirm that, to the best of their knowledge, nothing has come to their attention which may render the unaudited financial statements for the three months ended to be false or misleading in any material aspect. 11
PART II ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT 15 Segmented revenue and results for business or geographical segments (of the Group) in the form presented in the Company s most recently audited annual financial statements, with comparative information for the immediately preceding year. 16 In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments. Please refer to attached appendix: Management Discussion and Analysis of Financial Condition and Results of Operations. 17 A breakdown of the Group s sales. 18 A breakdown of the total annual dividend (in dollar value) for the Company s latest full year and its previous full year. 19 Disclosure of person occupying a managerial position in the Company or any of its principal subsidiaries who is a relative of a director or chief executive officer or substantial shareholder of the Company pursuant to Rule 704(13) in the format below. If there are no such persons, the Company must make an appropriate negative statement. Name Age Family relationship with any director and/or substantial shareholder Current position and duties, and the year the position was held Details of changes in duties and position held, if any, during the year Disclosure of person occupying a managerial position in the Company or any of its principal subsidiaries who is a relative of a director or chief executive officer or substantial shareholder of the Company pursuant to Rule 704(13) will be made in the full year announcement. ON BEHALF OF THE BOARD OF DIRECTORS Charles R. Wofford Chairman Tan Lay Koon President and Chief Executive Officer BY ORDER OF THE BOARD Janet T. Taylor Company Secretary 25 October 12