Chartered Reports Better Than Expected Results.Business Editors/High-Tech Writers MILPITAS Milpitas (mĭl'pē`təs), city (1990 pop. 50,686), Santa Clara co., W Calif., a suburb of San Jose, southeast of San Francisco; inc. 1954. Manufactures include computers and paint. , Calif.--(BUSINESS WIRE)--July 18, 2002 Chartered Semiconductor Manufacturing Chartered Semiconductor Manufacturing SGX: C27 NASDAQ: CHRT (abbreviated CSM) is the world's fourth largest dedicated independent semiconductor foundry, with its headquarters and main operations located in the Woodlands Industrial Park, Kranji Singapore. (Nasdaq:CHRT CHRT Canadian Human Rights Tribunal CHRT Chert (lithological term) CHRT Consolidated Human Resource Technology ) (SGX-ST:CHARTERED).
Second Quarter Results Exceed Revenue and Profit Guidance;
Strong Momentum in Leading-edge Shipments Drive Revenue Growth;
0.18-micron Revenues More Than Triple to 24 Percent of Total Revenues
-- Revenues of $127.5 million, up 51% sequentially, compared to
guidance of up approximately 40%
-- Capacity utilization 42%, compared to guidance of high-30s
-- Loss per ADS of $0.65, compared to guidance of approximately
$0.76 to $0.77 loss
-- Loss per ordinary share of $0.07
Chartered Semiconductor Manufacturing (Nasdaq:CHRT) (SGX-ST:CHARTERED), one of the world's top three silicon foundries See foundry. , today announced stronger than expected results for its second quarter 2002, reflecting increased demand from customers and an increase in leading-edge shipments. "During the quarter, demand from our customers in the communications and computer markets grew rapidly, and we were able to react quickly. Revenues from the communications segment essentially doubled sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen and revenues from computer customers reached the highest level since fourth quarter 2000. Contributing to the strong growth was increased shipments of Chartered's 0.18-micron leading-edge technology wafers wafers compressed roughage in flat plates useful for feeding to animals in transit. and growing momentum from new customer engagements. Revenues from 0.18-micron shipments increased from 10% of total in the first quarter to 24% in the second quarter and are expected to be at least 35% in the third quarter," said Chia Song Hwee, president & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Chartered. "We also continued to broaden our service offering during the quarter and now have announced six new agreements this year that provide customers greater flexibility, higher probability probability, in mathematics, assignment of a number as a measure of the "chance" that a given event will occur. There are certain important restrictions on such a probability measure. of first-time silicon success and improved time to market." Commenting on the market outlook, Chia said, "While there are some mixed signs in the end markets right now, we expect the overall semiconductor market will continue to grow in the second half of this year, but at a somewhat slower pace than previously expected. Looking beyond this year, we expect semiconductor market growth to be robust in 2003 and 2004 and we believe that all signs continue to point toward the foundry A semiconductor manufacturer that makes chips for third parties. It may be a large chip maker that sells its excess manufacturing capacity or one that makes chips exclusively for other companies. market expanding at approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. twice the rate of the semiconductor market, driven by the strong growth of fabless companies Fabless Company The Fabless Semiconductor Association (FSA) defines fabless as follows: Fabless (without fab) refers to the business methodology of outsourcing the manufacturing of silicon wafers, which hundreds of semiconductor companies have adopted. and accelerated strategic outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. by integrated device manufacturers See IDM. . We believe that Chartered's focus on technology, broadening broad·en tr. & intr.v. broad·ened, broad·en·ing, broad·ens To make or become broad or broader. broad our customer base, and service offering position us well to take advantage of these positive trends." Summary of Second Quarter 2002 Performance -- Revenues: up approximately 5% sequentially and approximately 70% year-over-year (including Chartered's share of SMP, up approximately 10% sequentially and approximately 75% year-over-year) -- ASP: up a few percentage points sequentially -- Utilization: in the low 40s (comprehending a capacity increase of 4%) -- Gross loss: approximately $29 million to $31 million -- Net loss: approximately $87 million to $90 million -- Loss per ADS: approximately $0.63 to $0.65 Wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. Shipments and Average Selling Prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. -- Revenues: up approximately 5% sequentially and approximately 70% year-over-year (including Chartered's share of SMP, up approximately 10% sequentially and approximately 75% year-over-year) -- ASP: up a few percentage points sequentially -- Utilization: in the low 40s (comprehending a capacity increase of 4%) -- Gross loss: approximately $29 million to $31 million -- Net loss: approximately $87 million to $90 million -- Loss per ADS: approximately $0.63 to $0.65 Market Dynamics The following tables provide a quarterly breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. of revenues by market segment, region and technology. These tables include revenues from Chartered's share of its minority-owned joint-venture company, SMP (Symmetric MultiProcessing) A multiprocessing architecture in which multiple CPUs, residing in one cabinet, share the same memory. SMP systems provide scalability. As business increases, additional CPUs can be added to absorb the increased transaction volume. (Fab 5), which under the Company's US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). reporting are not consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: .
Revenue Breakdown by Market Segment
Percentage of Revenues (%)
Market Segment 2Q 2001 3Q 2001 4Q 2001 1Q 2002 2Q 2002
--------------- --------- --------- --------- --------- ---------
Communications 36 23 22 23 30
--------------- --------- --------- --------- --------- ---------
Computer 44 58 52 44 47
--------------- --------- --------- --------- --------- ---------
Consumer 9 10 16 22 13
--------------- --------- --------- --------- --------- ---------
Memory 10 7 8 9 9
--------------- --------- --------- --------- --------- ---------
Other 1 2 2 2 1
--------------- --------- --------- --------- --------- ---------
Revenue Breakdown by Region
Percentage of Revenues (%)
Region 2Q 2001 3Q 2001 4Q 2001 1Q 2002 2Q 2002
--------------- --------- --------- --------- --------- ---------
Americas 62 75 75 66 71
--------------- --------- --------- --------- --------- ---------
Europe 8 9 7 5 7
--------------- --------- --------- --------- --------- ---------
Asia-Pacific 26 10 7 11 11
--------------- --------- --------- --------- --------- ---------
Japan 4 6 11 18 11
--------------- --------- --------- --------- --------- ---------
Revenue Breakdown by Technology
Percentage of Revenues (%)
Technology Node (micron) 2Q 2001 3Q 2001 4Q 2001 1Q 2002 2Q 2002
------------------------ ------- ------- ------- -------- -------
0.18 and below 2 4 13 10 24
------------------------ ------- ------- ------- -------- -------
Up to 0.25 20 26 23 30 24
------------------------ ------- ------- ------- -------- -------
Up to 0.35 48 34 34 31 29
------------------------ ------- ------- ------- -------- -------
Above 0.35 30 36 30 29 23
------------------------ ------- ------- ------- -------- -------
Recent Highlights and Achievements -- Revenues: up approximately 5% sequentially and approximately 70% year-over-year (including Chartered's share of SMP, up approximately 10% sequentially and approximately 75% year-over-year) -- ASP: up a few percentage points sequentially -- Utilization: in the low 40s (comprehending a capacity increase of 4%) -- Gross loss: approximately $29 million to $31 million -- Net loss: approximately $87 million to $90 million -- Loss per ADS: approximately $0.63 to $0.65 Modification A change or alteration in existing materials. Modification generally has the same meaning in the law as it does in common parlance. The term has special significance in the law of contracts and the law of sales. of Agere Joint Development Agreement During the first quarter 2002, Chartered indicated that as a result of Agere Systems' (Agere) recent initiatives to increase manufacturing flexibility, Chartered and Agere would work together to develop potential modifications to their joint development agreement which would better align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. with Agere's evolving fab-lite strategy. An amendment to the original July July: see month. 2000 agreement, which covered 0.13-micron, 100-nanometer and 80-nanometer process technologies, was signed by the two parties in June June: see month. 2002. Development work on the first node node, in astronomy, point at which the orbit of a body crosses a reference plane. One reference plane that is often used is the plane of the earth's orbit around the sun (ecliptic). , 0.13-micron, is substantially completed. Chartered has taken sole responsibility for the second and third nodes and is staffing the activity accordingly. Under the amendment, if requested by Chartered, Agere will provide consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" on technical issues for the first and second nodes, on mutually agreeable terms. Chartered is free to engage with another technology partner on the second and subsequent nodes. "Our partnership with Agere, which dates to 1995, is built on trust and mutual dependence," said Chia. "I believe that Chartered's flexibility and willingness to adapt to Agere's changing business needs have been key to the success and longevity longevity (lŏnjĕv`ĭtē), term denoting the length or duration of the life of an animal or plant, often used to indicate an unusually long life. of the relationship. I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in pleased we were able to collaborate on a modification to the technology agreement and look forward to playing an important role in Agere's transition to a fab-lite model. During the last year, in order to build up our internal capability, we have been significantly increasing both the strength and caliber of Chartered's R&D organization. This is resulting in a smooth and effective transition process." Review and Outlook Based on our current assessment of market and customer trends, the Company's guidance for third quarter 2002 is as follows: -- Revenues: up approximately 5% sequentially and approximately 70% year-over-year (including Chartered's share of SMP, up approximately 10% sequentially and approximately 75% year-over-year) -- ASP: up a few percentage points sequentially -- Utilization: in the low 40s (comprehending a capacity increase of 4%) -- Gross loss: approximately $29 million to $31 million -- Net loss: approximately $87 million to $90 million -- Loss per ADS: approximately $0.63 to $0.65 "Chartered revenues grew almost 70% from fourth quarter 2001 to second quarter 2002, considerably outpacing both semiconductor and foundry market growth," said George Thomas George Thomas may refer to:
Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. turned positive for the first time since second quarter 2001. Additionally, our cash balance, currently over $830 million, provides us considerable strength and flexibility going forward. We are reiterating the target, first set in April, to double revenues from the first quarter to fourth quarter of this year, even though the current market environment makes it somewhat more challenging." Webcast Conference Call Today Chartered will be discussing its second-quarter 2002 results and outlook on a conference call today, July 19, 2002, at 8:30 a.m. Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). time (US time 5:30 p.m. PT/8:30 p.m. ET, July 18, 2002). A webcast of the conference call will be available to all interested parties on Chartered's Web site at www.charteredsemi.com, under Investor Information, Releases & Confcalls, or at www.charteredsemi.com/investor/index_financial.htm. Mid-Quarter Guidance The Company provides a guidance update midway Midway, island group (2 sq mi/5.2 sq km), central Pacific, c.1,150 mi (1,850 km) NW of Honolulu, comprising Sand and Eastern islands with the surrounding atoll. Discovered by Americans in 1859, Midway was annexed in 1867. A cable station was opened in 1903. through each quarter. For third quarter 2002, the Company anticipates issuing its mid-quarter guidance update, via news release, on Wednesday Wednesday: see week. , September September: see month. 4, 2002, Singapore time. About Chartered Chartered Semiconductor Manufacturing, one of the world's top three silicon foundries, is forging a customized approach to outsourced Outsourced is a modern day comedy of cross-cultural conflict and romance, directed by John Jeffcoat, released in 2007. Synopsis Todd Anderson (Josh Hamilton) spends his days managing a customer call center for American Novelty Products in Seattle, until his job, semiconductor manufacturing by building lasting and collaborative col·lab·o·rate intr.v. col·lab·o·rat·ed, col·lab·o·rat·ing, col·lab·o·rates 1. To work together, especially in a joint intellectual effort. 2. partnerships with its customers. The Company provides flexible and cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. manufacturing solutions for customers, enabling the convergence convergence Mathematical property of infinite series, integrals on unbounded regions, and certain sequences of numbers. An infinite series is convergent if the sum of its terms is finite. of communications, computing computing - computer and consumer markets. In Singapore, Chartered operates five fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. facilities and has a sixth fab in the process of being developed as a 300mm facility. A company with both global presence and perspective, Chartered is traded on both the Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. (Nasdaq:CHRT) and on the Singapore Exchange “SGX” redirects here. For other uses, see SGX (disambiguation). Singapore Exchange Limited SGX: S68 (SGX) is the stock exchange in Singapore. SGX was formed on December 1 1999, following the merger of two established and well-respected financial (SGX-ST:CHARTERED). Chartered's 4,000 employees are based at 12 locations around the world. Information about Chartered can be found at www.charteredsemi.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement under the provisions of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our near term and long term outlook for the year 2002 and beyond (including projected revenues of the Company and SMP, average selling price, utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be , gross loss, net loss, and loss per ADS); our revenues from 0.18-micron and 0.13-micron shipments in the second half of 2002; our 2002 fourth quarter revenue target; our role in Agere's evolving business model; our business strategy and financial position; and the growth of the foundry and semiconductor markets; 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: changes in market outlook and trends, specifically in the foundry services and communications and computer segments; economic conditions in the United States as well as globally; customer demands; unforeseen delays or interruptions in our plans for our fabrication facilities (including Fab 7); the performance level of and technology mix in our fabrication facilities; the successful implementation of our partnership, technology and supply alliances; and availability of financings and terms thereof. 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 at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. . In addition to the foregoing factors, a description of certain other risks and uncertainties which could cause actual results to differ materially can be found in the section captioned "Risk Factors" in our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of management on 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.
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. Dollars, except share and per share data)
US GAAP
Three Months Ended Six Months Ended
June 30, June 30,
2001 2002 2001 2002
--------- --------- --------- ---------
Net revenue $ 100,672 $ 127,458 $ 307,361 $ 211,820
Cost of revenue 164,136 162,053 360,485 310,173
--------- --------- --------- ---------
Gross loss (63,464) (34,595) (53,124) (98,353)
--------- --------- --------- ---------
Operating expenses:
Research and development 20,664 21,605 41,855 46,313
Fab start-up costs 3,741 1,465 9,118 3,366
Sales and marketing 9,267 10,278 17,487 19,972
General and administrative 10,562 10,287 23,460 24,852
--------- --------- --------- ---------
Total operating expenses 44,234 43,635 91,920 94,503
--------- --------- --------- ---------
Operating loss (107,698) (78,230) (145,044) (192,856)
Equity in loss of SMP (25,220) (21,969) (43,852) (51,787)
Other income 5,457 6,771 13,048 11,980
Interest income 14,947 3,919 27,801 8,265
Interest expense (11,649) (10,551) (15,008) (21,298)
Exchange gain (loss) 2,952 (1,964) 1,556 (194)
--------- --------- --------- ---------
Loss before income taxes (121,211) (102,024) (161,499) (245,890)
Income tax expense (4,643) (1,023) (13,256) (2,602)
--------- --------- --------- ---------
Loss before minority
interest (125,854) (103,047) (174,755) (248,492)
Minority interest in
loss of CSP 18,297 12,375 36,290 29,452
--------- --------- --------- ---------
Net loss $(107,557) $ (90,672) $(138,465) $(219,040)
========= ========= ========= =========
Net loss per share and ADS
Basic net loss per share $ (0.08) $ (0.07) $ (0.10) $ (0.16)
Diluted net loss per share (0.08) (0.07) (0.10) (0.16)
Basic net loss per ADS $ (0.78) $ (0.65) $ (1.00) $ (1.58)
Diluted net loss per ADS (0.78) (0.65) (1.00) (1.58)
Number of shares (in millions) used in computing:
-- basic net loss per share 1,381.3 1,386.0 1,380.7 1,385.2
-- effect of dilutive options -- -- -- --
--------- --------- --------- ---------
-- diluted net loss per
share 1,381.3 1,386.0 1,380.7 1,385.2
--------- --------- --------- ---------
Number of ADS (in millions) used in computing:
-- basic net loss per ADS 138.1 138.6 138.1 138.5
-- effect of dilutive options -- -- -- --
--------- --------- --------- ---------
-- diluted net loss per ADS 138.1 138.6 138.1 138.5
--------- --------- --------- ---------
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars)
U.S. GAAP
As of
December 31, June 30,
2001 2002
---------- ----------
Assets
Cash and cash equivalents $1,041,616 $ 831,377
Accounts receivable 91,419 110,239
Inventories 12,766 18,915
Other current assets 16,439 18,721
---------- ----------
Total current assets 1,162,240 979,252
Property, plant and equipment, net 1,853,421 1,842,419
Investment in SMP 77,406 56,389
Other non-current assets 51,275 48,745
---------- ----------
Total assets $3,144,342 $2,926,805
========== ==========
Liabilities and Shareholders' Equity
Accounts payable $ 82,743 $ 131,378
Current installments of long-term debt 198,160 86,463
Accrued operating expenses 153,635 160,198
Other current liabilities 85,215 42,857
---------- ----------
Total current liabilities 519,753 420,896
Long-term debt, excluding current installments 914,070 1,033,329
Other liabilities 66,298 64,178
---------- ----------
Total liabilities 1,500,121 1,518,403
Minority interest 61,589 34,374
Shareholders' equity 1,582,632 1,374,028
---------- ----------
Total liabilities and shareholders' equity $3,144,342 $2,926,805
========== ==========
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. Dollars)
US GAAP
For The Six Months Ended
June 30, June 30,
2001 2002
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (138,465) $ (219,040)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Equity in loss of SMP 2,446 21,809
Depreciation and amortization 214,140 226,836
Foreign exchange gain on financing
activities (68) (1,472)
Minority interest in loss of CSP (36,290) (29,452)
Gain (loss) on disposal of property,
plant and equipment (57) 38
Other (11,004) (21)
Changes in operating working capital:
Accounts receivable 87,246 (12,054)
Amount due to (from) ST, ST affiliates
and SMP, net 42,598 (21,540)
Inventories 22,382 (6,149)
Prepaid expenses (914) (2,180)
Trade accounts payable (5,044) 7,161
Accrued operating expenses (45,142) 6,563
Other current liabilities 5,911 (1,514)
----------- -----------
Net cash provided by (used in)
operating activities 137,739 (31,015)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant,
equipment and other assets 14,589 17,245
Purchase of property, plant and equipment (307,382) (169,459)
Technology license fees paid (6,000) (6,000)
----------- -----------
Net cash used in investing activities (298,793) (158,214)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Customer deposits, net 14,633 (11,599)
Long-term debt
Borrowings 610,625 135,000
Repayments (77,850) (149,367)
Issuance of shares by the Company, net 3,343 4,748
Capital lease payments (2,129) --
----------- -----------
Net cash provided by (used in)
financing activities 548,622 (21,218)
----------- -----------
Net increase (decrease) in cash and
cash equivalents 387,568 (210,447)
Effect of exchange rate changes on
cash and cash equivalents (802) 208
Cash at the beginning of the period 924,116 1,041,616
----------- -----------
Cash at the end of the period $ 1,310,882 $ 831,377
=========== ===========
All currency figures stated in this report are in US dollars
The financial statements in this report are in conformity with US GAAP
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