Chartered Semiconductor Manufacturing Ltd. (Nasdaq:CHRT)(SGX-ST:CHARTERED), one of the world’s top dedicated semiconductor foundries, offers leading-edge technologies down to 65 nanometer (nm), enabling today’s system-on-chip designs. The company further serves its customers’ needs through a collaborative, joint development approach on a technology roadmap that extends to 22nm. Chartered’s strategy is based on open and comprehensive design enablement solutions, manufacturing enhancement strategies, and a commitment to flexible sourcing. In Singapore, the company operates a 300mm fabrication facility and five 200mm facilities. Information about Chartered can be found at www.charteredsemi.com.
Safe Harbor Statement under the provisions of the United States Private Securities Litigation Reform Act of 1995
This news release contains forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements, including without limitation, statements relating to our outlook for the fourth quarter of 2008; projected revenues and average selling prices (including Chartered's share of SMP), utilization rate, gross profit, net loss and loss per ADS; our estimated wafer capacity in fourth quarter of 2008; the expected weakness in the foundry industry; our near-term priorities to (i) bring down our breakeven utilization operationally to 75% by fourth quarter 2009, (ii) positioning ourselves for early phase of demand recovery, and (iii) preserving our cash and liquidity position, and our expectation that our capex will be significantly lower in 2009 relative to 2008, reflect our current views with respect to future events and financial performance and are subject to certain risks and uncertainties, which could cause actual results to differ materially from historical results or those anticipated. Among the factors that could cause actual results to differ materially are decreased consumer confidence, financial market turmoil and the deteriorating macro economic conditions in the United States as well as globally; changes in the demands from our major customers; excess inventory, life cycle, market outlook and trends for specific products; demand and supply outlook in the semiconductor market; competition from existing foundries and new foundry companies resulting in pricing pressures; products mix; unforeseen delays, interruptions, performance level of our fabrication facilities; our progress on leading-edge products; changes in capacity plans, allocation and process technology mix; the successful integration of Fab 3E operations into our operations; unavailability of materials, equipment, manpower and expertise; access to or delays in technological advances or our development of process technologies; the successful implementation of our partnership, technology and supply alliances (including our joint development agreements with IBM and the other joint development partners); the growth rate of fabless companies, the outsourcing strategy of integrated device manufacturers (“IDM”) and our expectation that IDMs will utilize foundry capacity more extensively. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained. In addition to the foregoing factors, a description of certain other risks and uncertainties which cause actual results to differ materially can be found in "Item 3. Key Information — D. Risk Factors" in our 2007 annual report on Form 20-F filed with the US SEC. You are cautioned not to place undue reliance on these forward-looking statements, which reflect management's current analysis of future events. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
All currency figures stated in this report are in US dollars.
The financial statement amounts in this report are determined in accordance with US GAAP.
In order to provide investors additional information regarding the Company’s financial results as determined in accordance with US GAAP, in this report Chartered also provides information on its total business base revenues, which include the Company’s share of Silicon Manufacturing Partners (“Revenues including Chartered’s share of SMP”). Silicon Manufacturing Partners (SMP or Fab 5) is a minority-owned joint-venture company and under US GAAP reporting, SMP revenues are not consolidated into Chartered’s revenues (“Revenues”). References to revenues including Chartered’s share of SMP in this report are therefore not in accordance with US GAAP. To ensure clarity, in Appendix A of this report we have included a reconciliation table which provides comparable data based on revenues determined in accordance with US GAAP, which do not include the Company’s share of SMP.
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES | ||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(In thousands of US Dollars, except share and per share data) | ||||||||||||||||
Determined in accordance with US GAAP |
||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2007 | 2008 | 2007 | 2008 | |||||||||||||
Net revenue |
$ |
354,821 |
$ |
463,648 |
$ |
1,002,909 |
$ |
1,309,440 |
||||||||
Cost of revenue | 287,577 | 398,068 | 803,723 | 1,109,407 | ||||||||||||
Gross profit | 67,244 | 65,580 | 199,186 | 200,033 | ||||||||||||
Other revenue | 5,713 | 2,654 | 16,925 | 10,974 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 38,929 | 44,184 | 115,010 | 132,474 | ||||||||||||
Sales and marketing | 14,608 | 19,493 | 42,210 | 54,921 | ||||||||||||
General and administrative | 9,347 | 11,196 | 28,943 | 33,154 | ||||||||||||
Other operating expense | 3,567 | 1,364 | 10,737 | 5,116 | ||||||||||||
Total operating expenses | 66,451 | 76,237 | 196,900 | 225,665 | ||||||||||||
Equity in income of associated companies, net | 8,790 | 8,941 | 24,997 | 28,192 | ||||||||||||
Other income (loss) | 200 | (941 | ) | (41 | ) | 8,782 | ||||||||||
Interest expense, net | (8,426 | ) | (13,561 | ) | (25,191 | ) | (38,382 | ) | ||||||||
Income (loss) before income taxes | 7,070 | (13,564 | ) | 18,976 | (16,066 | ) | ||||||||||
Income tax expense (benefit) | (107,689 | ) | 10,813 | (76,842 | ) | (37,497 | ) | |||||||||
Net income (loss) | 114,759 | (24,377 | ) | 95,818 | 21,431 | |||||||||||
Less: Accretion to redemption value of convertible redeemable preference shares | ||||||||||||||||
2,427 | 2,522 | 7,212 | 7,495 | |||||||||||||
Net income (loss) available to ordinary shareholders |
$ |
112,332 |
$ |
(26,899 |
) |
$ |
88,606 |
$ |
13,936 |
|||||||
Net earnings (loss) per ordinary share and ADS | ||||||||||||||||
Basic net earnings (loss) per ordinary share |
$ |
0.04 |
$ |
(0.01 |
) |
$ |
0.03 |
$ |
0.01 |
|||||||
Diluted net earnings (loss) per ordinary share |
$ |
0.04 |
$ |
(0.01 |
) |
$ |
0.03 |
$ |
0.01 |
|||||||
Basic net earnings (loss) per ADS |
$ |
0.44 |
$ |
(0.11 |
) |
$ |
0.35 |
$ |
0.05 |
|||||||
Diluted net earnings (loss) per ADS |
$ |
0.40 |
$ |
(0.11 |
) |
$ |
0.33 |
$ |
0.05 |
|||||||
Number of ordinary shares (in millions) used in computing: | ||||||||||||||||
Basic net earnings (loss) per ordinary share | 2,538.9 | 2,541.6 | 2,538.0 | 2,540.8 | ||||||||||||
Effect of dilutive securities | 328.8 |
- |
331.0 | 1.1 | ||||||||||||
Diluted net earnings (loss) per ordinary share | 2,867.7 | 2,541.6 | 2,869.0 | 2,541.9 | ||||||||||||
Number of ADS (in millions) used in computing: | ||||||||||||||||
Basic net earnings (loss) per ADS | 253.9 | 254.2 | 253.8 | 254.1 | ||||||||||||
Effect of dilutive securities | 32.9 |
- |
33.1 | 0.1 | ||||||||||||
Diluted net earnings (loss) per ADS | 286.8 | 254.2 | 286.9 | 254.2 |
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(In thousands of US Dollars) | ||||||
Determined in accordance with US GAAP |
||||||
As of |
||||||
December 31, |
September 30, |
|||||
2007 | 2008 | |||||
(Unaudited) |
||||||
ASSETS | ||||||
Cash and cash equivalents |
$ |
743,173 |
$ |
461,925 |
||
Restricted cash | 45,092 | 69,560 | ||||
Marketable securities | 2,822 | 715 | ||||
Receivables, net | 237,312 | 323,857 | ||||
Inventories | 213,524 | 210,999 | ||||
Other investments | 89,290 | 31,852 | ||||
Other current assets | 22,520 | 25,497 | ||||
Total current assets | 1,353,733 | 1,124,405 | ||||
Investment in associated companies | 30,112 | 37,491 | ||||
Technology licenses, net | 62,699 | 55,143 | ||||
Property, plant and equipment, net | 2,463,789 | 2,859,208 | ||||
Other non-current assets | 115,228 | 88,032 | ||||
Total assets |
$ |
4,025,561 |
$ |
4,164,279 |
||
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERENCE | ||||||
SHARES AND SHAREHOLDERS' EQUITY | ||||||
Payables |
$ |
212,618 |
$ |
364,217 |
||
Short-term debt | 270,000 |
- |
||||
Current installments of long-term debt and capital lease obligations | 78,663 | 163,224 | ||||
Other current liabilities | 114,630 | 108,862 | ||||
Total current liabilities | 675,911 | 636,303 | ||||
Long-term debt and capital lease obligations, excluding current installments | ||||||
1,499,917 | 1,649,399 | |||||
Other non-current liabilities | 52,747 | 57,056 | ||||
Total liabilities | 2,228,575 | 2,342,758 | ||||
Convertible redeemable preference shares | 255,837 | 263,332 | ||||
Shareholders' equity | 1,541,149 | 1,558,189 | ||||
Total liabilities, convertible redeemable preference shares and shareholders' equity | ||||||
$ |
4,025,561 |
$ |
4,164,279 |
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands of US Dollars) | ||||||||
Determined in accordance with US GAAP |
||||||||
For The Nine Months Ended |
||||||||
September 30, |
September 30, |
|||||||
2007 | 2008 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income |
$ |
95,818 |
$ |
21,431 |
||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Equity in income of associated companies, net | (24,997 | ) | (28,192 | ) | ||||
Cash dividends received from associated companies | 24,686 | 28,457 | ||||||
Depreciation and amortization | 367,286 | 433,698 | ||||||
Foreign exchange (gain) loss, net | (601 | ) | 1,366 | |||||
(Gain) loss on disposal of property, plant and equipment | (936 | ) |
8 |
|||||
Others, net | (14,766 | ) | (10,627 | ) | ||||
Changes in assets and liabilities: | ||||||||
Receivables | (6,809 | ) | (6,666 | ) | ||||
Inventories | (41,220 | ) | 19,838 | |||||
Other assets | (79,954 | ) | (18,993 | ) | ||||
Payables and other liabilities | 1,928 | (11,623 | ) | |||||
Net cash provided by operating activities | 320,435 | 428,697 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Payments for property, plant and equipment | (587,283 | ) | (443,556 | ) | ||||
Payments for technology licenses | (6,707 | ) | (11,014 | ) | ||||
Purchase of a subsidiary, net of cash acquired | - | (237,072 | ) | |||||
Payments for deposits and other assets | 15 | 1,278 | ||||||
Proceeds from sale of property, plant and equipment | 4,845 | 10,482 | ||||||
Proceeds from redemption of other investments | - | 55,841 | ||||||
Purchase of an associate | (1,216 | ) | (8,041 | ) | ||||
Return of capital from associated companies | 4,900 |
- |
||||||
Others, net | 55 | (433 | ) | |||||
Net cash used in investing activities | (585,391 | ) | (632,515 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Debt | ||||||||
Borrowings | 146,109 | 389,072 | ||||||
Repayments | (123,629 | ) | (433,631 | ) | ||||
Capital lease payments | (2,911 | ) | (3,972 | ) | ||||
Receipts of customer deposits | 202 |
- |
||||||
Refund of customer deposits | (17,128 | ) | (5,609 | ) | ||||
Issuance of ordinary shares | 2,478 | 989 | ||||||
Increase in cash restricted for debt repayments | (1,457 | ) | (24,468 | ) | ||||
Others, net | (900 | ) |
- |
|||||
Net cash provided by (used in) financing activities | 2,764 | (77,619 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 2,724 | 189 | ||||||
Net decrease in cash and cash equivalents | (259,468 | ) | (281,248 | ) | ||||
Cash and cash equivalents at the beginning of the period | 718,982 | 743,173 | ||||||
Cash and cash equivalents at the end of the period |
$ |
459,514 |
$ |
461,925 |