UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the quarterly period ended March 31, 2003.
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from ___________________ to ___________________ .
Commission file number 000-31173
ChipPAC, Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware |
77-0463048 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
47400 Kato Road, Fremont, California 94538
(Address of Principal Executive Offices, Zip Code)
Registrant’s Telephone Number, Including Area Code (510) 979-8000
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
| Class |
Outstanding as of May 5, 2003 | |
| Class A common stock, $.01 par value |
95,067,337 | |
| Class B common stock, $.01 par value |
None |
| Page | ||||||
| PART I FINANCIAL INFORMATION | ||||||
| Item 1. |
Financial Statements |
|||||
| 3 | ||||||
| 4 | ||||||
| 5 | ||||||
| Notes to Unaudited Condensed Consolidated Financial Statements |
6 | |||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 | ||||
| Item 3. |
21 | |||||
| Item 4. |
21 | |||||
| PART II OTHER INFORMATION | ||||||
| Item 1. |
22 | |||||
| Item 2. |
22 | |||||
| Item 3. |
22 | |||||
| Item 4. |
22 | |||||
| Item 5. |
22 | |||||
| Item 6. |
22 | |||||
| 26 | ||||||
| 27 | ||||||
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
| March 31, 2003 |
December 31, 2002 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
16,679 |
|
$ |
34,173 |
| ||
| Short-term investments |
|
10,000 |
|
|
10,000 |
| ||
| Accounts receivable, less allowances for doubtful accounts of $403 and $391 |
|
40,107 |
|
|
38,793 |
| ||
| Inventories |
|
15,388 |
|
|
15,299 |
| ||
| Prepaid expenses and other current assets |
|
6,105 |
|
|
5,285 |
| ||
| Total current assets |
|
88,279 |
|
|
103,550 |
| ||
| Property, plant and equipment, net |
|
333,443 |
|
|
336,397 |
| ||
| Other assets |
|
31,490 |
|
|
30,257 |
| ||
| Total assets |
$ |
453,212 |
|
$ |
470,204 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
40,151 |
|
$ |
39,755 |
| ||
| Accrued expenses and other current liabilities |
|
18,884 |
|
|
29,400 |
| ||
| Total current liabilities |
|
59,035 |
|
|
69,155 |
| ||
| Long-term debt |
|
217,887 |
|
|
217,887 |
| ||
| Convertible subordinated notes |
|
50,000 |
|
|
50,000 |
| ||
| Other long-term liabilities |
|
18,286 |
|
|
17,618 |
| ||
| Total liabilities |
|
345,208 |
|
|
354,660 |
| ||
| Stockholders’ equity : |
||||||||
| Common stock, Class A—par value $0.01 per share; 250,000 shares authorized, 94,984 and 94,093 shares issued and outstanding at March 31, 2003 and December 31, 2002 |
|
950 |
|
|
941 |
| ||
| Common stock, Class B—par value $0.01 per share; 250,000 shares authorized, no shares issued or outstanding at March 31, 2003 and December 31, 2002 |
|
— |
|
|
— |
| ||
| Additional paid in capital |
|
278,939 |
|
|
276,916 |
| ||
| Receivables from stockholders |
|
(388 |
) |
|
(480 |
) | ||
| Accumulated other comprehensive income |
|
9,169 |
|
|
9,169 |
| ||
| Accumulated deficit |
|
(180,666 |
) |
|
(171,002 |
) | ||
| Total stockholders’ equity |
|
108,004 |
|
|
115,544 |
| ||
| Total liabilities and stockholders’ equity |
$ |
453,212 |
|
$ |
470,204 |
| ||
The accompanying notes are an integral part of these financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| For the Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Revenue |
$ |
88,568 |
|
$ |
79,213 |
| ||
| Cost of revenue |
|
78,527 |
|
|
69,658 |
| ||
| Gross profit |
|
10,041 |
|
|
9,555 |
| ||
| Operating expenses: |
||||||||
| Selling, general and administrative |
|
9,466 |
|
|
9,774 |
| ||
| Research and development |
|
2,854 |
|
|
2,336 |
| ||
| Total operating expenses |
|
12,320 |
|
|
12,110 |
| ||
| Operating loss |
|
(2,279 |
) |
|
(2,555 |
) | ||
| Non-operating (income) expenses: |
||||||||
| Interest expense |
|
7,268 |
|
|
8,647 |
| ||
| Interest income |
|
(119 |
) |
|
(70 |
) | ||
| Foreign currency (gains) losses |
|
(222 |
) |
|
78 |
| ||
| Other income, net |
|
(42 |
) |
|
(165 |
) | ||
| Total non-operating expenses |
|
6,885 |
|
|
8,490 |
| ||
| Loss before income taxes |
|
(9,164 |
) |
|
(11,045 |
) | ||
| Provision for income taxes |
|
500 |
|
|
500 |
| ||
| Net loss |
$ |
(9,664 |
) |
$ |
(11,545 |
) | ||
| Net loss per share: |
||||||||
| Basic |
$ |
(0.10 |
) |
$ |
(0.15 |
) | ||
| Diluted |
$ |
(0.10 |
) |
$ |
(0.15 |
) | ||
| Weighted average shares used in per share calculation: |
||||||||
| Basic |
|
94,398 |
|
|
76,794 |
| ||
| Diluted |
|
94,398 |
|
|
76,794 |
| ||
The accompanying notes are an integral part of these financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| For the Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ |
(9,664 |
) |
$ |
(11,545 |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
|
16,029 |
|
|
13,389 |
| ||
| Amortization of debt issuance cost |
|
452 |
|
|
628 |
| ||
| Foreign currency (gains) losses |
|
(222 |
) |
|
78 |
| ||
| (Gain) loss on sale of equipment |
|
(39 |
) |
|
(30 |
) | ||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
|
(1,314 |
) |
|
976 |
| ||
| Inventories |
|
(89 |
) |
|
(570 |
) | ||
| Prepaid expenses and other current assets |
|
(820 |
) |
|
(435 |
) | ||
| Other assets |
|
(1,927 |
) |
|
62 |
| ||
| Accounts payable |
|
396 |
|
|
(3,544 |
) | ||
| Accrued expenses and other current liabilities |
|
(10,516 |
) |
|
(4,763 |
) | ||
| Other long-term liabilities |
|
369 |
|
|
756 |
| ||
| Net cash used in operating activities |
|
(7,345 |
) |
|
(4,998 |
) | ||
| Cash flows from investing activities: |
||||||||
| Purchase of short-term investments |
|
(7,998 |
) |
|
— |
| ||
| Proceeds from sale of short-term investments |
|
7,998 |
|
|
— |
| ||