MANILA, Philippines, Feb. 21 - PSi Technologies Holdings, Inc., (Nasdaq: PSIT), a leading independent provider of assembly and test services for the power semiconductor market, today announced financial results for the fourth quarter ended December 31, 2005:
Fourth Quarter Financial Results
Revenues for the fourth quarter of 2005 totaled $21.3 million, a 7.2% sequential increase compared to $19.8 million in the previous quarter, and a 17.5% increase compared to revenues of $18.1 million for the fourth quarter of 2004. Included in total fourth quarter revenues is $2.1 million contributed from the Company's China operations. Sales of power semiconductor packages comprised 97.4% of fourth quarter revenues, or $20.7 million, a 8.1% sequential increase versus $19.1 million in the previous quarter.
Revenues from the Company's top 5 customers were $19.0 million, a 7.1% increase compared to $17.8 million in the previous quarter. The Company's largest customers for the fourth quarter (in alphabetical order) were Infineon Technologies, ON Semiconductor, Philips, Power Integrations and ST Microelectronics. Products packaged for those customers are used in a variety of end-user applications, in particular for automotive systems, consumer electronics, communications equipment, industrial applications, home appliances and PC motherboards.
"Customer loadings increased substantially during the quarter due to strong end user demand and replenishment of inventory," said Arthur J. Young, Jr. Chairman and Chief Executive Officer.
Cost of goods sold increased at a lower 2.4% sequential rate, owing to initial cost savings from the Company's operations realignment blueprint, improved cost management and a focus on deriving gains in operating efficiency, all of which contributed to an expansion in consolidated gross margins to 3.6% in the fourth quarter versus (0.9)% in the previous quarter and (1.5)% in the same period last year.
Operating expenses were lower by $0.6 million or 20.7% sequentially, with the majority of cost savings originating from the reduction in administrative expenses, which declined by $0.5 million. Tighter cost controls in administrative and marketing expenses flowing from the operations realignment activities contributed net savings of $0.3 million. The Company did not incur additional expenses related to the cost of reorganization, which had increased administrative expenses by $0.3 million in the previous quarter. As a result of the above, operating loss margin declined to (7.1)% in the fourth quarter versus (15.4)% in the previous quarter, and (16.5)% in the same period last year.
"The margin trends indicate the Company is moving in the right direction with regards to controlling and reducing the cost of organization, as a direct result of initial operations realignment activities," said Gordon J. Stevenson, Chief Operating Officer. "We expect more substantial savings to flow through as we implement phase 2 of the operations realignment blueprint, covering product rationalization, average selling price adjustments and material substitution."
The expansion in gross and operating margins led directly to an increase in EBITDA to $2.4 million in the fourth quarter, equating to EBITDA margin of 11.3%. In the previous quarter, EBITDA and EBITDA margin was $0.9 million and 4.7%, respectively.
Net other expenses decreased by $0.2 million on a quarter-over-quarter basis primarily due to the recognition of employee separation/restructuring costs from $0.38 million in the third quarter to $0.04 million in the fourth quarter. In addition, the interest expense and debt issuance cost and discount amortization of the $4 million and $7 million senior subordinated exchangeable notes issued in July 2003 and in June 2005 was $0.83 million in the third quarter and $0.75 million in the fourth quarter. The Company historically applied debt instrument accounting with respect to our exchangeable notes. The Company is currently evaluating whether FAS 133 should be applied with regard to the terms and conditions of the Exchangeable Notes. The decrease in employee/restructuring costs and exchangeable notes' interest expense and debt issuance cost amortization is partially offset by the increase in net foreign exchange losses and increase in interest and bank charges.
Fourth quarter net loss was $(2.8) million or $(0.21) per outstanding share, compared to net loss of $(4.6) million or $(0.35) per outstanding share in the previous quarter.
Package Development
The Company's qualification activities on Power QFN has continued in the fourth quarter with various customers. We have started to generate sales with a new customer who launched the industry's smallest circuit protection thyristor housed in PSi's 3x3 and 3.3x3.3 Power QFN package. This new customer has indicated a ramp up in volume over the next twelve 12 months while other customers are currently finalizing their qualification programs.
Balance Sheet Highlights
Cash and cash equivalents totaled $1.7 million in the fourth quarter, compared to $2.2 million at the end of 2004.
New acquisitions in property, plant and equipment totaled $5.3 million for the full year, mostly related to the purchase of equipment for the QFN program. Discussions are ongoing with third parties for the disposal of other unutilized properties and equipment.
Total current liabilities declined by $7.3 million to $38.3 million as of December 31, 2005 from $45.6 million at end 2004. The decline in current liabilities is attributable to the reduction in accounts payable to trade and equipment suppliers, and full payment of an equipment loan to a major customer. The long-term liability account of $2.9 million as of December 31, 2005 represents the carrying amount of the Exchangeable Notes issued in July 2003 and June 2005, net of discount representing the embedded conversion feature of the Note.
As of December 31, 2005, tangible book value was $2.61 per share on 13,289,525 outstanding shares.
Business Outlook
"Customer loadings are expected to remain robust over the coming months," said Young. "More significantly, we are focused on improving the Company's cost base through the implementation of the operations realignment blueprint activities while we continue specific focus on Power QFN."
About PSi Technologies
PSi Technologies is a focused independent semiconductor assembly and test service provider to the power semiconductor market. The Company provides comprehensive package design, assembly and test services for power semiconductors used in telecommunications and networking systems, computers and computer peripherals, consumer electronics, electronic office equipment, automotive systems and industrial products. Their customers include most of the major power semiconductor manufacturers in the world such as Fairchild Semiconductor, Infineon Technologies, ON Semiconductor, Philips Semiconductor, and ST Microelectronics. For more information, visit the Company's web site at http://www.psitechnologies.com or call:
At PSi Technologies Holdings, Inc.:
Edison G. Yap, CFA
(63 917) 894 1335
egyap@psitechnologies.com.ph
At Financial Relations Board:
Amy Cozamanis
(310) 854 8314
acozamanis@financialrelationsboard.com
Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties. Actual results and outcomes may differ materially. Factors that might cause a difference include, but are not limited to, those relating to the pace of development and market acceptance of PSi's products and the power semiconductor market generally, commercialization and technological delays or difficulties, the impact of competitive products and technologies, competitive pricing pressures, manufacturing risks, the possibility of our products infringing patents and other intellectual property of third parties, product defects, costs of product development, manufacturing and government regulation, risks inherent in emerging markets, including but not limited to, currency volatility and depreciation, restricted access to financing and political and social unrest and the possibility that the initiatives described herein may not produce the intended results. PSi undertakes no responsibility to update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect PSi's financial results is included in the documents PSi files from time to time with the Securities and Exchange Commission.
-Financial Tables Follow-
PSi Technologies Holdings, Inc.
Unaudited Income Statement
(In US Dollars)
For the Three Months Ended Year Ended December 31,
31-Dec-05 30-Sep-05 2005 2004
Unaudited Unaudited Unaudited Audited
REVENUES $21,250,623 $19,830,431 $80,519,900 $79,231,458
COST OF SALES 16,530,386 15,809,837 64,207,537 63,206,553
DEPRECIATION 3,951,920 4,190,597 17,015,443 15,883,445
GROSS PROFIT 768,317 (170,003) (703,081) 141,459
OPERATING EXPENSES
Research and
Development 315,046 334,135 1,243,510 1,008,075
Stock Compensation
cost 59,988 59,988 239,953 653,206
Administrative
expenses 1,563,077 2,105,542 7,139,625 8,438,246
Special charges 1,263,132
Marketing expenses 216,481 241,832 919,132 791,696
Freight out 127,320 136,763 449,383 86,300
Total Operating
Expenses 2,281,912 2,878,260 9,991,603 12,240,655
LOSS FROM
OPERATIONS 1,513,595 3,048,263 10,694,684 12,099,196
Interest and bank
charges - net (322,330) (267,096) (1,307,286) (1,045,751)
Foreign exchange
gains (losses) -
net (221,584) (31,456) (127,310) (304,956)
Early retirement
cost (43,857) (384,701) (395,061)
Exchangeable Note
interest and
financing charges (749,674) (834,490) (2,142,722) (1,093,384)
Miscellaneous 5,524 (52,354) 38,117 597
Net Other
expense (1,331,921) (1,570,096) (3,934,261) (2,443,494)
LOSS BEFORE INCOME
TAX AND MINORITY
INTEREST 2,845,516 4,618,359 14,628,945 14,542,690
PROVISION FOR
INCOME TAX -- -- -- 368,768
MINORITY INTEREST -- -- -- (179,493)
NET LOSS $2,845,516 $4,618,359 $14,628,945 $14,731,965
EBITDA $2,410,177 $933,456 $7,595,069 $6,478,118
No. of Shares
Outstanding 13,289,525 13,289,525 13,289,525 13,289,525
EPS - based on
Outstanding Shares $(0.21) $(0.35) $(1.10) $(1.11)
Note:
* Summations/numbers may differ due to rounding.
* Effective in the first quarter, China-related revenues and expenses were
consolidated into the Income Statement of the Company, instead of
previous quarters' practice of classifying the net result under the
heading "China Expenses" in the Operating Expense section of the
Company's Income Statement.
* The accounts as presented herein have been revised to conform to their
presentation under the 2004 Audited Financial Statements. More detailed
information can be found in the documents (such as Form 20F) PSi files
from time to time with the Securities and Exchange Commission.
PSi Technologies Holdings, Inc.
Unaudited Consolidated Balance Sheet
(in US Dollars)
31-Dec-05 31-Dec-04
Unaudited Audited
ASSETS
Current Assets
Cash $1,720,753 $2,152,942
Accounts receivable - net 14,330,407 10,932,923
Notes receivable on sales of land
and building 940,903 --
Inventories - net 6,237,366 8,292,326
Other current assets - net 789,528 426,726
Total Current Assets 24,018,958 21,804,917
Noncurrent Assets
Investment and advances 143,273 143,609
Property, plant and equipment - net 50,909,478 65,468,721
Other noncurrent assets - net 838,923 1,271,504
Total Noncurrent Assets 51,891,674 66,883,834
$75,910,632 $88,688,751
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $21,802,445 $23,252,579
Accounts payable CAPEX 1,748,194 6,185,099
Loans Payable 11,400,000 11,800,000
Trust receipts payable 3,365,693 3,237,411
Current portion of long-term liability
due to a customer 709,947
Current portion of obligations under
capital lease -- 460,674
Total Current Liabilities 38,316,331 45,645,710
Noncurrent Liabilities
Exchangeable Note 2,858,753 1,524,782
Total Noncurrent Liabilities 2,858,753 1,524,782
Stockholders' Equity
Capital stock - Philippine peso 1-2/3
par value
Authorized - 37,058,100 shares
Issued and outstanding - 13,289,525
shares 590,818 590,818
Additional paid-in capital 79,707,594 71,861,359
Deficit (45,562,863) (30,933,918)
Total Stockholders' Equity 34,735,548 41,518,259
$75,910,632 $88,688,751
PSi Technologies Holdings, Inc.
Unaudited Consolidated Statement of Cash Flows
(In US Dollars)
For the Year Ended
December 31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income ($14,628,945)
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock compensation cost 239,953
Depreciation and amortization 17,873,306
Provision for retirement expense 237,630
Provision for inventory obsolescence 660,748
Amortization of debt issuance cost and discount 1,211,508
Interest expense on exchangeable note 769,167
Change in assets and liabilities:
Decrease (increase) in:
Accounts receivables (3,397,484)
Inventories 1,394,213
Other Current Assets and tax credit receivable (362,802)
Increase (decrease) in:
Accounts payable and other expenses (1,687,765)
Net cash provided by operating activities 2,309,528
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of property, plant and equipment (9,760,183)
Proceeds from sale of property and equipment 1,250,000
Decrease (increase) in investments and advances 336
Decrease (increase) in other assets 210,469
Net cash used in investing activities (8,299,378)
CASH FLOWS FROM FINANCING ACTIVITIES
Net availment/(payments) of short-term loans (400,000)
Trust receipts and acceptances payable 128,282
Net availment/(payments) of stock issuance cost --
Net availment/(payments) of liability due to a
customer (709,947)
Net availment/(payments) of exchangeable note 7,000,000
Net availment/(payments) of obligation under
capital leases (460,674)
Net cash provided by (used in) financing activities 5,557,661
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (432,189)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 2,152,942
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,720,753
SUPPLEMENTAL INFORMATION ON NONCASH FINANCING AND INVESTING
Property and equipment acquired (paid) on
account under accounts payable (4,436,905)
Notes receivable on sale of land & Bldg 940,903
