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STATS ChipPAC Reports Second Quarter 2011 Results

STATS ChipPAC Ltd. (“STATS ChipPAC” or the “Company”) (SGX-ST: STATSChP), a leading semiconductor test and advanced packaging service provider, today announced results for the second quarter 2011.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, “Revenue for the second quarter of 2011 increased by 4.3% to $427.0 million over the prior quarter and decreased by 1.9% over the second quarter of 2010, at the high end of our guidance. Our second quarter revenue reflected weakened demand toward the end of the quarter as our customers managed their inventory position more aggressively in view of the uncertain macroeconomic outlook and some over ordering due to concern about potential supply disruptions from the Japan earthquake.”

Net income for the second quarter of 2011 was $19.2 million or $0.01 of net income per diluted ordinary share compared to net income of $6.3 million or $0.00 of net income per diluted ordinary share in the first quarter of 2011 and net income of $37.3 million or $0.02 of net income per diluted ordinary share in the second quarter of 2010. The net income in the second quarter and first half of 2011 included interest expense of $11.2 million and $22.4 million, respectively, from our offering of $600.0 million Senior Notes due 2015 to fund our capital reduction. The net income in the first quarter of 2011 also included debt issuance cost write-off of $7.6 million from the voluntary repayment of our senior credit facility of $234.5 million.

John Lau, Chief Financial Officer of STATS ChipPAC, said, “Despite higher material costs and appreciation of Asian currencies, our second quarter gross margin was 17.2% compared to 16.8% in the first quarter of 2011 and 21.5% in the second quarter of 2010. Operating margin for second quarter of 2011 was 8.3% of revenue compared to 5.7% in the first quarter of 2011 and 12.9% in the second quarter of 2010. Our adjusted EBITDA(1) in the second quarter of 2011 was 26.3% of revenue compared to 24.8% in the first quarter of 2011 and 28.0% in the second quarter of 2010. Capital spending in the second quarter of 2011 was $94.1 million or 22.0% of revenue reflecting investments to support growth of copper wire and advanced packaging technology demand compared to $86.5 million or 21.1% of revenue in the first quarter of 2011 and $67.7 million or 15.5% of revenue in the second quarter of 2010. We ended the second quarter of 2011 with cash, cash equivalent and marketable securities of $246.4 million and debt of $815.3 million compared to $301.7 million and $844.2 million as of the end of fourth quarter of 2010, respectively.”

Outlook

Tan Lay Koon commented, “Based on current visibility, we expect net revenues in the third quarter of 2011 to be low to a mid single digit increase from prior quarter, with adjusted EBITDA(1) in the range of 22% to 26% of revenue. We expect capital expenditure(2) in the third quarter of 2011 to be approximately $70 million to $80 million.”

The outlook 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 six months ended 26 June 2011 filed with the Singapore Exchange Securities Trading Limited (“SGX-ST”) for the major assumptions made in preparing our outlook for the third quarter of 2011. 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 as a percentage of revenue.

Adapted from iStockAnalyst & MARKETWIRE.

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