CHIPPAC INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2002.

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

(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 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 November 1, 2002
Class A common stock, $.01 par value		94,030,906
Class B common stock, $.01 par value		None

TABLE OF CONTENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

	September 30, 2002			December 31, 2001
ASSETS:
Current assets:
Cash and cash equivalents	$	96,337		$	41,872
Accounts receivable, less allowance for doubtful accounts of $384 and $449		37,883			32,034
Inventories		16,033			12,481
Prepaid expenses and other current assets		6,102			4,515

Total current assets		156,355			90,902
Property, plant and equipment, net		328,596			304,650
Other assets		34,528			35,163

Total assets	$	519,479		$	430,715

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Revolving loans	$	50,000		$	50,000
Accounts payable		35,066			31,045
Accrued expenses and other current liabilities		27,811			27,838

Total current liabilities		112,877			108,883
Long-term debt		217,887			283,627
Convertible subordinated note		50,000			50,000
Other long-term liabilities		16,227			11,431

Total liabilities		396,991			453,941

Stockholders’ equity (deficit):
Common stock, Class A—par value $0.01 per share; 250,000,000 shares authorized, 94,024,000 and 69,404,000 shares issued and outstanding at September 30, 2002 and December 31, 2001, respectively		940			694
Common stock, Class B—par value $0.01 per share; 250,000,000 shares authorized, no shares issued or outstanding at September 30, 2002 and December 31, 2001		—			—
Additional paid in capital		276,878			110,043
Receivable from stockholders		(480	)		(985	)
Accumulated other comprehensive income		9,169			9,169
Accumulated deficit		(164,019	)		(142,147	)

Total stockholders’ equity (deficit)		122,488			(23,226	)

Total liabilities and stockholders’ equity (deficit)	$	519,479		$	430,715

The accompanying notes are an integral part of these financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2002			2001			2002			2001
Revenue	$	94,659		$	74,662		$	270,958		$	251,894
Cost of revenue		78,699			72,637			227,679			226,688

Gross profit		15,960			2,025			43,279			25,206

Operating expenses:
Selling, general and administrative		9,362			5,877			28,982			22,639
Research and development		2,550			3,333			7,258			10,683
Restructuring and other charges		—			—			—			2,962

Total operating expenses		11,912			9,210			36,240			36,284

Operating income (loss)		4,048			(7,185	)		7,039			(11,078	)
Non-operating (income) expenses:
Interest expense		7,691			9,445			24,479			27,733
Interest income		(242	)		(167	)		(455	)		(389	)
Foreign currency (gains) losses		(547	)		16			860			(239	)
Other income, net		(175	)		(38	)		(478	)		(267	)

Total non-operating expenses		6,727			9,256			24,406			26,838

Loss before income taxes		(2,679	)		(16,441	)		(17,367	)		(37,916	)
Provision for (benefit from) income taxes		500			—			1,500			(4,295	)
Loss before extraordinary item		(3,179	)		(16,441	)		(18,867	)		(33,621	)

Loss from early extinguishment of debt, net of related income tax of $0		—			—			3,005			—

Net loss	$	(3,179	)	$	(16,441	)	$	(21,872	)	$	(33,621	)

Loss per share before extraordinary item
Basic	$	(0.03	)	$	(0.24	)	$	(0.22	)	$	(0.49	)
Diluted	$	(0.03	)	$	(0.24	)	$	(0.22	)	$	(0.49	)
Extraordinary item
Basic	$	—		$	—		$	(0.04	)	$	—
Diluted	$	—		$	—		$	(0.04	)	$	—
Net loss per share
Basic	$	(0.03	)	$	(0.24	)	$	(0.26	)	$	(0.49	)
Diluted	$	(0.03	)	$	(0.24	)	$	(0.26	)	$	(0.49	)
Weighted average shares used in per share calculation:
Basic		93,421			68,889			85,166			68,714
Diluted		93,421

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PART I	FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Unaudited Condensed Consolidated Balance Sheets	3

		Unaudited Condensed Consolidated Statements of Operations	4

		Unaudited Condensed Consolidated Statements of Cash Flows	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.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	22

	Item 4.	CONTROLS AND PROCEDURES	22

PART II	OTHER INFORMATION

	Item 1.	Legal Proceedings	23

	Item 2.	Changes in Securities and Use of Proceeds	23

	Item 3.	Defaults Upon Senior Securities	23

	Item 4.	Submission of Matters to a Vote of Security Holders	23

	Item 5.	Other Information	23

	Item 6.	Exhibits and Reports on Form 8-K	23

	Signatures		28

	Certifications		29

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Table of Contents

Table of Contents

Table of Contents