ChipPAC Reports First Quarter Results

Apr 30, 2001, 01:00 ET from ChipPAC, Inc.

    SANTA CLARA, Calif., April 30 /PRNewswire/ --
 ChipPAC, Inc. (Nasdaq: CHPC), one of the world's largest and most diversified
 providers of semiconductor packaging, test and distribution services, today
 announced results for the first quarter ended March 31, 2001.
     Net revenues for the three months ended March 31, 2001 were $89.9 million
 compared to $97.5 million in the same period a year ago.  The decline is
 attributable to the continued semiconductor industry demand slowdown and
 inventory overhang caused by ongoing economic weakness.  The pro-forma net
 loss for the quarter was $(7.3) million or $(0.11) per share, 3 cents better
 than analysts' consensus, compared to a net loss of $(0.6) million or
 $(0.01) per share in the year ago period.  First quarter 2001 pro-forma
 results exclude a previously announced one-time charge of $3.0 million related
 to the restructuring of the company's labor force.  The restructuring has
 improved productivity and is designed to bring resources in line with demand
 levels.
     Dennis McKenna, Chairman and Chief Executive Officer of ChipPAC, Inc.
 commented, "Overall, our efforts enabled us to achieve first quarter results
 slightly ahead of the guidance we gave at the end of the fourth quarter.  Our
 concentration over the past 2 years on advanced packages, customer
 diversification and end-market balancing is helping us weather the cyclical
 nature of the business.  Because of this balance, our exposure to the weakness
 in the wire line communications end market had less of an impact to us versus
 others in our industry."
     Robert Krakauer, Chief Financial Officer of ChipPAC, Inc., said, "We took
 decisive action to reduce our cost structure this quarter in response to the
 changing economic conditions, reducing our costs significantly from the prior
 quarter.  Total savings amounted to roughly 8.5% of revenue, excluding
 depreciation and material cost savings.  We initiated restructuring activities
 in our global workforce to quickly align our activities to customer demand
 levels. We achieved significant progress in cost reduction and expect to see
 continuing benefits to our financial performance as unit volumes recover.
 While we continue to maintain the cost controls put in place at the start of
 the quarter, we have continued to invest in Research and Development
 activities supporting design wins in advanced packaging to support growth with
 current and prospective customers."
     Krakauer continued, "We have taken actions to reduce capital expenditures
 and improve working capital management without sacrificing future growth.
 Specifically, our 2001 forecast for capital expenditures was reduced to
 $45 million, from $90 million previously.  Our capital investments are focused
 on high return projects supporting advanced packaging technologies and
 programs tied to specific customer programs."
 
     Operational Details
     Revenue by end market for the three months ended March 31, 2001, was 23.1%
 computing, 35.6% communications, with the majority supporting the wireless
 market, and 41.3% multi-applications, supporting the consumer and general
 industrial markets.  Revenue in the first quarter from leaded products was
 $39.0 million, an 18.4% decline from the prior quarter.  The continuing ramp
 up of several new power customers helped to increase power product revenue
 during the quarter, helping to offset the decline in leaded IC products.
 Revenue in the first quarter from laminate products was $38.6 million, a
 43.9% decline from the prior quarter. Revenue in the first quarter from test
 and distribution services was $12.3 million, a 21.2% decline from the prior
 quarter.
     Total packaging unit volume for the first quarter was 423.0 million units,
 a 21.6% increase from the same period a year ago and a 20.4% decline from the
 fourth quarter.  Leaded products unit volume in the first quarter increased
 25.1% from the prior year period and decreased 18.6% from the fourth quarter.
 Laminate products unit volume in the first quarter decreased 7.l% from the
 same period a year ago and 36.0% from the fourth quarter.
     Gross profit during the three months ended March 31, 2001 was
 $11.7 million, representing a gross margin of 13.0%.  The company's labor and
 overhead expenses were reduced by $5.4 million from the prior quarter levels
 as a result of cost reduction activities.
     Total selling, general, administrative and research & development expenses
 for the three months ended March 31, 2001 were $12.8 million, a reduction of
 $2.0 million from the prior quarter.  A one-time restructuring charge of
 $3.0 million is charged to operating expenses and will be utilized to pay
 severance and other costs.
     As a result of lower revenue levels, operating margin for the quarter,
 excluding the one-time restructuring charge, was a loss of $1.1 million or
 (1.2%).
     Depreciation and amortization expense was $14.0 million for the first
 quarter ended March 31, 2001.  First quarter EBITDA, excluding the one-time
 charge, was $13.0 million, compared to $19.2 million in the first quarter of
 2000.  EBITDA was calculated as earnings before income taxes, foreign currency
 gain or loss, net interest expense, depreciation and amortization expense.
 EBITDA is not defined by generally accepted accounting principles.
 
     Outlook for 2001
     McKenna continued, "We are seeing positive signs that some segments,
 mainly computing and wireless, are working through inventories quicker than
 others.  Intel confirmed this view on its recent conference call, which is a
 positive for the second half of the year.  Power packages have been relatively
 stable in comparison to other end markets.  This resiliency and the prospects
 for the second half are encouraging based on the new customer qualifications
 and production ramps being forecasted.  In general, though, our visibility
 remains limited as both end markets and our customers are keeping inventories
 and forecasts at cautious levels.  We expect this will result in responsive,
 opportunistic demand being the norm in the second quarter.  We are currently
 in a 'turns' business environment.  Given current forecasts from customers and
 our internal estimates we expect revenue in the second quarter to be down 5%
 to 10% compared to the first quarter of 2001, with a reduced net loss of
 $0.08 to $0.11 per share."
     "Since we moved early to implement drastic cost cuts we were able to
 devote a good deal of time in the first quarter to meeting with existing and
 prospective customers to review business opportunities and the demand
 situation in various electronics end markets in an attempt to improve our
 visibility of demand.  Based on our observations we expect further delays in
 3G-infrastructure deployment by the telecom industry.  On the other hand,
 2.5G or CDMA 1X should become a demand driver for the second half of 2001 and
 more so in 2002, which will benefit ChipPAC.  ChipPAC is also positioned to
 benefit from continuing demand strength in set top boxes, game consoles and
 cable modems with increasing bandwidth to the home.  Specifically, we stand to
 benefit from the highly anticipated second half deployments of next generation
 game machines.  All indications are that demand out of China remains strong.
 Our 18-month head start -- combined with our competitors' delay in investing
 in China, due to the current market environment -- will give us additional
 momentum as the general recovery takes hold."
     "We view the Japanese wireless implementation as a preview to the future
 demand drivers for the global wireless market.  Teenagers and adults
 continuously using their handsets, but in many instances not primarily for
 making phone calls.  Handsets are being used to gather and send emails, play
 games, download music, take and review digital photos, purchase over the
 Internet, and participate in interactive contests.  These 'Internet terminals'
 will be in the U.S., Europe and other parts of Asia once the infrastructure is
 deployed.  The advanced functionality and increased penetration of these
 devices will drive increased volumes of semiconductors and advanced packages.
 Our product development efforts in LFCSP, enhanced BGA, and Flip Chip packages
 are capturing customer design wins for these system-on-a-chip and
 system-in-a-package applications."
     "Finally, in talking with Integrated Device Manufacturers' executives
 worldwide, the market downturn is causing them to critically review their
 investments in backend manufacturing facilities, and consider divestiture or
 increased outsourcing as a means to focus their investments on core
 competencies and to improve their return on assets in the future.
 Additionally, we believe industry consolidation will take place.  ChipPAC
 should benefit from both trends."
     ChipPAC will hold a conference call this evening at 5PM EDT to review its
 first quarter results.  The call-in number is 800-255-2466 (domestic) or
 212-676-4905 (international) confirmation 18354403.  A replay will be
 available from 7PM EDT on Monday, April 30 through 12PM EDT, Thursday, May 3.
 The replay numbers are 800-633-8284 (domestic) or 858-812-6440 (international)
 confirmation 18354403.  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, test and
 distribution services that combines a history of innovation and service with
 more than a decade of experience satisfying some of the largest -- and most
 demanding -- customers in the industry.  With advanced process technology
 capabilities and a global presence spanning Korea, China, Malaysia and the
 United States, ChipPAC has established a reputation for reliable, high quality
 service. For more information, visit the Web site, http://www.chippac.com
 
     CONTACT:
     David Pasquale, 646-536-7006, or Julie Prozeller, 646-536-7010
     Both with The Ruth Group, http://www.TheRuthGroup.com
 
     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 regarding the trends in our
 financial performance, expected second quarter 2001 results, market conditions
 in 2001, expected continued demand for our services and products, growth in
 our end markets, capital investment in 2001, revenue and earnings projections,
 and our position to capitalize on future growth in the semiconductor industry.
 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, fluctuations in customer demand, raw material costs, exchange
 rates, timing and success of new product and service introductions,
 competitive conditions in the semiconductor foundry industry, the ongoing
 quality of the Company's services, and the ability of the Company's principal
 suppliers to provide materials and equipment on a timely and cost competitive
 basis.  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,
 2000.  The Company undertakes no obligation to update the information in this
 press release.
 
                                  ChipPAC, Inc
           Condensed Consolidated Statements of Operations - Non GAAP
                  Excludes Severance and Restructuring Charge
            (In thousands, except for per share amounts; Unaudited)
 
                                                        Three Months Ended
                                                      March 31,      March 31,
                                                        2001            2000
 
     Revenue                                          $89,859        $97,469
 
     Cost of revenue                                   78,138         77,044
 
     Gross profit                                      11,721         20,425
 
     Operating expenses:
       Selling, general and administrative              9,282          7,099
       Research and development                         3,513          2,631
                                                       12,795          9,730
 
     Operating income                                 (1,074)         10,695
 
     Non-operating (income) expenses                    8,047          7,993
 
     Income before income taxes                       (9,121)          2,702
     Provision for (benefit from) income taxes        (1,824)            542
     Net income (loss)                                (7,297)          2,160
       Accretion of dividends on
        mandatorily redeemable preferred stock             --        (2,559)
       Accretion of recorded value of
        the Intel warrant                                  --          (156)
 
     Net income (loss) available
      to common shareholders                         $(7,297)         $(555)
 
     Net income per share available to
      common shareholders
       Basic                                         $ (0.11)       $ (0.01)
       Diluted                                       $ (0.11)       $ (0.01)
 
     Weighted Average shares used in
      per share calculation:
       Basic                                           68,588         57,502
       Diluted                                         68,588         60,056
 
     Key Ratios & Information:
     Gross Margin                                       13.0%          21.0%
     Operating Expenses as a % of Revenue               14.2%          10.0%
     Operating Margin                                   -1.2%          11.0%
 
     EBITDA                                            12,963         19,210
     Depreciation & Amortization Expense               14,037          8,515
     Capital Expenditures                               9,443         11,042
 
                                  ChipPAC, Inc
                Condensed Consolidated Statements of Operations
                  Includes Severance and Restructuring Charge
            (In thousands, except for per share amounts; Unaudited)
 
                                                        Three Months Ended
                                                      March 31,      March 31,
                                                        2001           2000
 
     Revenue                                          $89,859        $97,469
 
     Cost of revenue                                   78,138         77,044
 
     Gross profit                                      11,721         20,425
 
     Operating expenses:
       Selling, general and administrative              9,282          7,099
       Research and development                         3,513          2,631
       Severance and restructuring charge               2,962             --
                                                       15,757          9,730
 
     Operating income                                 (4,036)         10,695
 
     Non-operating (income) expenses                    8,047          7,993
 
     Income before income taxes                      (12,083)          2,702
     Provision for (benefit from) income taxes        (2,416)            542
     Net income (loss)                                (9,667)          2,160
       Accretion of dividends on mandatorily
        redeemable preferred stock                         --        (2,559)
       Accretion of recorded value of the Intel warrant    --          (156)
 
     Net income (loss) available
      to common shareholders                        $ (9,667)         $(555)
 
 
     Net income per share available to
      common shareholders
       Basic                                          $(0.14)        $(0.01)
       Diluted                                        $(0.14)        $(0.01)
 
     Weighted Average shares used in
      per share calculation:
       Basic                                           68,588         57,502
       Diluted                                         68,588         60,056
 
     Key Ratios & Information:
     Gross Margin                                       13.0%          21.0%
     Operating Expenses as a % of Revenue               17.5%          10.0%
     Operating Margin                                   -4.5%          11.0%
 
     EBITDA                                            10,001         19,210
     Depreciation & Amortization Expense               14,037          8,515
     Capital Expenditures                               9,443         11,042
 
                                 ChipPAC, Inc.
                      Condensed Consolidated Balance Sheet
                           (In thousands; Unaudited)
 
                                                      March 31,    December 31,
                                                        2001           2000
     Assets
     Current assets:
       Cash and short-term investments                 $7,524        $18,850
       Accounts receivable, net                        35,521         45,904
       Inventories                                     19,558         21,250
       Other current assets                             7,882          6,720
         Total current assets                          70,485         92,724
 
     Property and equipment, net                      336,023        334,733
     Other non-current assets,
      including intangibles                            40,636         41,788
         Total assets                                $447,144       $469,245
 
     Liabilities and Equity
       Current liabilities:
       Current Liabilities                             74,254         98,562
       Short term loans                                20,000          7,800
       Current portion of long-term debt                9,800          6,800
         Total current liabilities                    104,054        113,162
 
     Long-term debt, less current portion             280,200        283,400
     Other long term liabilities                        5,475          6,986
         Total long term liabilities                  285,675        290,386
 
     Total liabilities                                389,729        403,548
 
     Stockholders' equity                              57,415         65,697
 
         Total liabilities and
          stockholders' equity                       $447,144       $469,245
 
 

SOURCE ChipPAC, Inc.
    SANTA CLARA, Calif., April 30 /PRNewswire/ --
 ChipPAC, Inc. (Nasdaq: CHPC), one of the world's largest and most diversified
 providers of semiconductor packaging, test and distribution services, today
 announced results for the first quarter ended March 31, 2001.
     Net revenues for the three months ended March 31, 2001 were $89.9 million
 compared to $97.5 million in the same period a year ago.  The decline is
 attributable to the continued semiconductor industry demand slowdown and
 inventory overhang caused by ongoing economic weakness.  The pro-forma net
 loss for the quarter was $(7.3) million or $(0.11) per share, 3 cents better
 than analysts' consensus, compared to a net loss of $(0.6) million or
 $(0.01) per share in the year ago period.  First quarter 2001 pro-forma
 results exclude a previously announced one-time charge of $3.0 million related
 to the restructuring of the company's labor force.  The restructuring has
 improved productivity and is designed to bring resources in line with demand
 levels.
     Dennis McKenna, Chairman and Chief Executive Officer of ChipPAC, Inc.
 commented, "Overall, our efforts enabled us to achieve first quarter results
 slightly ahead of the guidance we gave at the end of the fourth quarter.  Our
 concentration over the past 2 years on advanced packages, customer
 diversification and end-market balancing is helping us weather the cyclical
 nature of the business.  Because of this balance, our exposure to the weakness
 in the wire line communications end market had less of an impact to us versus
 others in our industry."
     Robert Krakauer, Chief Financial Officer of ChipPAC, Inc., said, "We took
 decisive action to reduce our cost structure this quarter in response to the
 changing economic conditions, reducing our costs significantly from the prior
 quarter.  Total savings amounted to roughly 8.5% of revenue, excluding
 depreciation and material cost savings.  We initiated restructuring activities
 in our global workforce to quickly align our activities to customer demand
 levels. We achieved significant progress in cost reduction and expect to see
 continuing benefits to our financial performance as unit volumes recover.
 While we continue to maintain the cost controls put in place at the start of
 the quarter, we have continued to invest in Research and Development
 activities supporting design wins in advanced packaging to support growth with
 current and prospective customers."
     Krakauer continued, "We have taken actions to reduce capital expenditures
 and improve working capital management without sacrificing future growth.
 Specifically, our 2001 forecast for capital expenditures was reduced to
 $45 million, from $90 million previously.  Our capital investments are focused
 on high return projects supporting advanced packaging technologies and
 programs tied to specific customer programs."
 
     Operational Details
     Revenue by end market for the three months ended March 31, 2001, was 23.1%
 computing, 35.6% communications, with the majority supporting the wireless
 market, and 41.3% multi-applications, supporting the consumer and general
 industrial markets.  Revenue in the first quarter from leaded products was
 $39.0 million, an 18.4% decline from the prior quarter.  The continuing ramp
 up of several new power customers helped to increase power product revenue
 during the quarter, helping to offset the decline in leaded IC products.
 Revenue in the first quarter from laminate products was $38.6 million, a
 43.9% decline from the prior quarter. Revenue in the first quarter from test
 and distribution services was $12.3 million, a 21.2% decline from the prior
 quarter.
     Total packaging unit volume for the first quarter was 423.0 million units,
 a 21.6% increase from the same period a year ago and a 20.4% decline from the
 fourth quarter.  Leaded products unit volume in the first quarter increased
 25.1% from the prior year period and decreased 18.6% from the fourth quarter.
 Laminate products unit volume in the first quarter decreased 7.l% from the
 same period a year ago and 36.0% from the fourth quarter.
     Gross profit during the three months ended March 31, 2001 was
 $11.7 million, representing a gross margin of 13.0%.  The company's labor and
 overhead expenses were reduced by $5.4 million from the prior quarter levels
 as a result of cost reduction activities.
     Total selling, general, administrative and research & development expenses
 for the three months ended March 31, 2001 were $12.8 million, a reduction of
 $2.0 million from the prior quarter.  A one-time restructuring charge of
 $3.0 million is charged to operating expenses and will be utilized to pay
 severance and other costs.
     As a result of lower revenue levels, operating margin for the quarter,
 excluding the one-time restructuring charge, was a loss of $1.1 million or
 (1.2%).
     Depreciation and amortization expense was $14.0 million for the first
 quarter ended March 31, 2001.  First quarter EBITDA, excluding the one-time
 charge, was $13.0 million, compared to $19.2 million in the first quarter of
 2000.  EBITDA was calculated as earnings before income taxes, foreign currency
 gain or loss, net interest expense, depreciation and amortization expense.
 EBITDA is not defined by generally accepted accounting principles.
 
     Outlook for 2001
     McKenna continued, "We are seeing positive signs that some segments,
 mainly computing and wireless, are working through inventories quicker than
 others.  Intel confirmed this view on its recent conference call, which is a
 positive for the second half of the year.  Power packages have been relatively
 stable in comparison to other end markets.  This resiliency and the prospects
 for the second half are encouraging based on the new customer qualifications
 and production ramps being forecasted.  In general, though, our visibility
 remains limited as both end markets and our customers are keeping inventories
 and forecasts at cautious levels.  We expect this will result in responsive,
 opportunistic demand being the norm in the second quarter.  We are currently
 in a 'turns' business environment.  Given current forecasts from customers and
 our internal estimates we expect revenue in the second quarter to be down 5%
 to 10% compared to the first quarter of 2001, with a reduced net loss of
 $0.08 to $0.11 per share."
     "Since we moved early to implement drastic cost cuts we were able to
 devote a good deal of time in the first quarter to meeting with existing and
 prospective customers to review business opportunities and the demand
 situation in various electronics end markets in an attempt to improve our
 visibility of demand.  Based on our observations we expect further delays in
 3G-infrastructure deployment by the telecom industry.  On the other hand,
 2.5G or CDMA 1X should become a demand driver for the second half of 2001 and
 more so in 2002, which will benefit ChipPAC.  ChipPAC is also positioned to
 benefit from continuing demand strength in set top boxes, game consoles and
 cable modems with increasing bandwidth to the home.  Specifically, we stand to
 benefit from the highly anticipated second half deployments of next generation
 game machines.  All indications are that demand out of China remains strong.
 Our 18-month head start -- combined with our competitors' delay in investing
 in China, due to the current market environment -- will give us additional
 momentum as the general recovery takes hold."
     "We view the Japanese wireless implementation as a preview to the future
 demand drivers for the global wireless market.  Teenagers and adults
 continuously using their handsets, but in many instances not primarily for
 making phone calls.  Handsets are being used to gather and send emails, play
 games, download music, take and review digital photos, purchase over the
 Internet, and participate in interactive contests.  These 'Internet terminals'
 will be in the U.S., Europe and other parts of Asia once the infrastructure is
 deployed.  The advanced functionality and increased penetration of these
 devices will drive increased volumes of semiconductors and advanced packages.
 Our product development efforts in LFCSP, enhanced BGA, and Flip Chip packages
 are capturing customer design wins for these system-on-a-chip and
 system-in-a-package applications."
     "Finally, in talking with Integrated Device Manufacturers' executives
 worldwide, the market downturn is causing them to critically review their
 investments in backend manufacturing facilities, and consider divestiture or
 increased outsourcing as a means to focus their investments on core
 competencies and to improve their return on assets in the future.
 Additionally, we believe industry consolidation will take place.  ChipPAC
 should benefit from both trends."
     ChipPAC will hold a conference call this evening at 5PM EDT to review its
 first quarter results.  The call-in number is 800-255-2466 (domestic) or
 212-676-4905 (international) confirmation 18354403.  A replay will be
 available from 7PM EDT on Monday, April 30 through 12PM EDT, Thursday, May 3.
 The replay numbers are 800-633-8284 (domestic) or 858-812-6440 (international)
 confirmation 18354403.  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, test and
 distribution services that combines a history of innovation and service with
 more than a decade of experience satisfying some of the largest -- and most
 demanding -- customers in the industry.  With advanced process technology
 capabilities and a global presence spanning Korea, China, Malaysia and the
 United States, ChipPAC has established a reputation for reliable, high quality
 service. For more information, visit the Web site, http://www.chippac.com
 
     CONTACT:
     David Pasquale, 646-536-7006, or Julie Prozeller, 646-536-7010
     Both with The Ruth Group, http://www.TheRuthGroup.com
 
     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 regarding the trends in our
 financial performance, expected second quarter 2001 results, market conditions
 in 2001, expected continued demand for our services and products, growth in
 our end markets, capital investment in 2001, revenue and earnings projections,
 and our position to capitalize on future growth in the semiconductor industry.
 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, fluctuations in customer demand, raw material costs, exchange
 rates, timing and success of new product and service introductions,
 competitive conditions in the semiconductor foundry industry, the ongoing
 quality of the Company's services, and the ability of the Company's principal
 suppliers to provide materials and equipment on a timely and cost competitive
 basis.  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,
 2000.  The Company undertakes no obligation to update the information in this
 press release.
 
                                  ChipPAC, Inc
           Condensed Consolidated Statements of Operations - Non GAAP
                  Excludes Severance and Restructuring Charge
            (In thousands, except for per share amounts; Unaudited)
 
                                                        Three Months Ended
                                                      March 31,      March 31,
                                                        2001            2000
 
     Revenue                                          $89,859        $97,469
 
     Cost of revenue                                   78,138         77,044
 
     Gross profit                                      11,721         20,425
 
     Operating expenses:
       Selling, general and administrative              9,282          7,099
       Research and development                         3,513          2,631
                                                       12,795          9,730
 
     Operating income                                 (1,074)         10,695
 
     Non-operating (income) expenses                    8,047          7,993
 
     Income before income taxes                       (9,121)          2,702
     Provision for (benefit from) income taxes        (1,824)            542
     Net income (loss)                                (7,297)          2,160
       Accretion of dividends on
        mandatorily redeemable preferred stock             --        (2,559)
       Accretion of recorded value of
        the Intel warrant                                  --          (156)
 
     Net income (loss) available
      to common shareholders                         $(7,297)         $(555)
 
     Net income per share available to
      common shareholders
       Basic                                         $ (0.11)       $ (0.01)
       Diluted                                       $ (0.11)       $ (0.01)
 
     Weighted Average shares used in
      per share calculation:
       Basic                                           68,588         57,502
       Diluted                                         68,588         60,056
 
     Key Ratios & Information:
     Gross Margin                                       13.0%          21.0%
     Operating Expenses as a % of Revenue               14.2%          10.0%
     Operating Margin                                   -1.2%          11.0%
 
     EBITDA                                            12,963         19,210
     Depreciation & Amortization Expense               14,037          8,515
     Capital Expenditures                               9,443         11,042
 
                                  ChipPAC, Inc
                Condensed Consolidated Statements of Operations
                  Includes Severance and Restructuring Charge
            (In thousands, except for per share amounts; Unaudited)
 
                                                        Three Months Ended
                                                      March 31,      March 31,
                                                        2001           2000
 
     Revenue                                          $89,859        $97,469
 
     Cost of revenue                                   78,138         77,044
 
     Gross profit                                      11,721         20,425
 
     Operating expenses:
       Selling, general and administrative              9,282          7,099
       Research and development                         3,513          2,631
       Severance and restructuring charge               2,962             --
                                                       15,757          9,730
 
     Operating income                                 (4,036)         10,695
 
     Non-operating (income) expenses                    8,047          7,993
 
     Income before income taxes                      (12,083)          2,702
     Provision for (benefit from) income taxes        (2,416)            542
     Net income (loss)                                (9,667)          2,160
       Accretion of dividends on mandatorily
        redeemable preferred stock                         --        (2,559)
       Accretion of recorded value of the Intel warrant    --          (156)
 
     Net income (loss) available
      to common shareholders                        $ (9,667)         $(555)
 
 
     Net income per share available to
      common shareholders
       Basic                                          $(0.14)        $(0.01)
       Diluted                                        $(0.14)        $(0.01)
 
     Weighted Average shares used in
      per share calculation:
       Basic                                           68,588         57,502
       Diluted                                         68,588         60,056
 
     Key Ratios & Information:
     Gross Margin                                       13.0%          21.0%
     Operating Expenses as a % of Revenue               17.5%          10.0%
     Operating Margin                                   -4.5%          11.0%
 
     EBITDA                                            10,001         19,210
     Depreciation & Amortization Expense               14,037          8,515
     Capital Expenditures                               9,443         11,042
 
                                 ChipPAC, Inc.
                      Condensed Consolidated Balance Sheet
                           (In thousands; Unaudited)
 
                                                      March 31,    December 31,
                                                        2001           2000
     Assets
     Current assets:
       Cash and short-term investments                 $7,524        $18,850
       Accounts receivable, net                        35,521         45,904
       Inventories                                     19,558         21,250
       Other current assets                             7,882          6,720
         Total current assets                          70,485         92,724
 
     Property and equipment, net                      336,023        334,733
     Other non-current assets,
      including intangibles                            40,636         41,788
         Total assets                                $447,144       $469,245
 
     Liabilities and Equity
       Current liabilities:
       Current Liabilities                             74,254         98,562
       Short term loans                                20,000          7,800
       Current portion of long-term debt                9,800          6,800
         Total current liabilities                    104,054        113,162
 
     Long-term debt, less current portion             280,200        283,400
     Other long term liabilities                        5,475          6,986
         Total long term liabilities                  285,675        290,386
 
     Total liabilities                                389,729        403,548
 
     Stockholders' equity                              57,415         65,697
 
         Total liabilities and
          stockholders' equity                       $447,144       $469,245
 
 SOURCE  ChipPAC, Inc.