PSi Technologies Reports Fourth Quarter 2004 Results SOUTH SAN
FRANCISCO, Calif. and MANILA, Philippines, Feb. 15
/PRNewswire-FirstCall/ -- 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 third quarter ended December 31, 2004:
Highlights * Revenue of $18.1 million, a decrease of (17.4)% on a
quarter-over-quarter basis, and an increase of 1.1% on
year-over-year basis. * Gross margin of (1.5)%, versus 5.5% in the
previous quarter and 6.5% in 4Q03. * Operating loss margin,
excluding China related expenses, of (13.4)% versus (5.8)% in the
previous quarter and (5.0)% in the same period last year. Operating
loss margin, including China related expenses, was (16.5)% in 4Q04
versus (10.9)% in 3Q04 and (5.0)% in 4Q03. * EBITDA margin,
excluding China related expenses, of 8.8%, versus 12.5% in the
previous quarter and 16.3% in 4Q03. * Fully diluted EPS of $(0.23)
per share, versus EPS of $(0.17) per share in the previous quarter
and $(0.07) in 4Q03. Fourth Quarter Financial Results Revenues for
the fourth quarter of 2004 totaled $18.1 million, a (17.4)%
sequential decline compared to $21.9 million in the previous
quarter, and a 1.1% increase compared to $17.9 million in revenues
for the fourth quarter of 2003. Revenues from the top 5 customers
of the Company were $15.0 million, a (21.0)% decline compared to
$19.0 million in the previous quarter, and a 2.6% increase over the
same period last year. The Company's largest customers for the
fourth quarter (in alphabetical order) were Infineon Technologies,
ON Semiconductor, Philips and ST Microelectronics. Products
packaged for those customers are used in a variety of end user
applications, with particular focus on automotive systems, consumer
electronics, communications equipment, industrial applications,
home appliances and PC motherboards. Sales of power semiconductor
packages comprised 96.4% of fourth quarter revenues, or $17.4
million, a 17.0% sequential decline versus $21.0 million in the
previous quarter, and a 2.8% increase compared to the same period
last year. "Looking back at the quarter, our results were a
reflection of challenging conditions that resulted in the
deterioration of PSi's loadings as the quarter progressed," said
Arthur J. Young, Jr., Chairman and CEO. "This progression was a
direct result of the reduced sales volumes and softer than expected
demand of our customers' end markets, causing a further pullback in
orders as customers aggressively reduced inventories and adjusted
for anticipated seasonality during the first quarter." Cost of
goods sold declined by (11.2)% on a sequential basis, due primarily
to the lower rate of decline in fixed costs -- specifically, fixed
depreciation expenses -- relative to the decline in revenues. Gross
profit margin was (1.5)% in the fourth quarter, versus 5.5% in the
third quarter and 6.5% in the same period last year. "While we were
successful in reducing variable costs by (15.1)% and removing
$437.4 thousand in labor and other fixed costs during the quarter,
depreciation as a component of COGS increased by 2.5%, leading to a
(4.6)% sequential reduction in our fixed costs," said Young."
Operating expenses, excluding China and freight related costs,
declined by (13.1)% during the quarter, due to tighter cost
controls. Operating loss for the fourth quarter was $(2.9) million,
compared to $(2.4) million in the previous quarter. Operating loss
margin was (16.5)%, compared to (10.9)% in the previous quarter and
(5.0)% in the year ago period. EBITDA margin was 6.1% for the
fourth quarter, down from 7.3% in the previous quarter. Fourth
quarter net loss was $(3.8) million or $(0.23) per diluted share,
compared to $(2.8) million in the previous quarter or $(0.17) per
diluted share. Full Year Financial Results Revenues for the full
year were higher by 1.6% to $78.2 million, compared to revenue of
$76.9 million in 2003. Gross profit margin was 3.5%, versus 2.3% in
2003. The increase in gross profit margin is attributable to
improved manufacturing efficiencies, better usage of supplies and
chemicals, deployment of labor and reduction of other fixed costs.
Operating expenses excluding asset impairment charges, were higher
by 26.1% to $10.8 million, due to $2.3 million in China expenses
incurred during the year. Excluding this, operating expenses would
have been lower by (0.6)% against the previous quarter, to $8.5
million. Operating loss excluding asset impairment charge and other
special charges would have decreased to $(5.8) million, from a
$(6.8) million operating loss in 2003. Full year net loss was
$(14.9) million versus $(21.0) million in 2003. The net loss figure
includes asset impairment charges of $12.9 million and $4.4 million
for 2003 and 2004, respectively, that were incurred after a review
of long-lived assets determined that the carrying amount of such
assets may not be recoverable based on estimated undiscounted
future cash flows to be generated by the assets. A further $0.7
million charge representing the amortization of the existing $4
million Exchangeable Note's embedded conversion feature was
incurred in 2004. Such amortization has increased the carrying
amount of the Exchangeable Note as shown in the Long-term liability
line item in the Balance Sheet. China PSi Chengdu currently has
eight production lines installed in China, with four lines
allocated for SOT78, two lines for SOT82, one for SOT186B and
another for SOT399. All of the SOT78 & SOT82 lines in Chengdu
have been given production release by Philips, and we are building
risk build lots for SOT186B. Another SOT78 line is scheduled for
transfer in February. For the quarter, PSi incurred $0.6 million in
China related expenses, equivalent to 3.1% of consolidated sales.
Excluding these expenses, PSi's operating loss would have been
$(2.4) million, versus $ (1.3) million in the previous quarter. Net
loss for the fourth quarter would have been $(3.3) million or
($0.20) per diluted share. Net loss margin would have been (18.0)%.
Balance Sheet Highlights Cash and cash equivalents totaled $1.9
million on December 31, 2004, versus $0.9 million at the end of
2003. The Company spent $13.3 million in capital expenditures,
including $2.6 million for China. This was offset by $11.6 million
in cash generated from operating activities and $3.1 million in
cash generated from financing activities. We have made progress in
disposing and realizing values on unutilized assets and equipment
by entering into a contract on January 28, 2005 to sell our
unutilized third site in Laguna to an unrelated Philippine
corporation in the business of commercial and industrial property
development and leasing, for $2.5 million. Of this amount, $1
million was paid upon the signing of the agreement, with the
balance payable every 6 months in six equal payments. Because of
this transaction, we have written down the carrying value of such
properties by recognizing an asset impairment charge in 2004
amounting to $0.9 million. We are still in discussion with third
parties for the disposal of other unutilized properties and
equipments. The Long-term liability account of $1.6 million as of
December 31, 2004 represents the carrying amount of the
Exchangeable Note raised in July 2003, net of the amortization of
discount representing the embedded conversion feature of the Note.
As of December 31, 2004, PSi is in violation of two loan covenants
relating to its $10 million Receivable Financing Facility from the
Singapore Branch of Raiffeisen Zentralbank Osterreich
(RZB-Austria). The loan covenants were established in 2002, prior
to the asset impairment charges of 2003, and require the
maintenance of a 1:1 current ratio and a minimum stockholders'
equity, including $1.6 million Long-term liability account, of not
less than $50 million, with which we are not in compliance. Without
the non-cash asset impairment charges incurred in 2003 and 2004,
our stockholders equity including the $1.6 million Long-term
liability account relating to the Senior Subordinated Exchangeable
Note issued in 2003, would have been $59.9 million. On December 31,
2004, RZB-Austria waived the violations and extended the Facility
to December 2005, subject to a review in the first quarter and the
possibility of a capital injection from our major shareholder in
2005. As of December 31, 2004, tangible book value was $3.08 per
share on 13,289,525 outstanding shares, or $2.44 per share on a
fully diluted basis. Business Outlook Commenting on the Company's
business outlook and going-forward strategies, Young said: "Today,
existing customer loadings appear to be recovering from their
lows." The Company is also undertaking the following initiatives to
address profitability: 1. Increase research and development
emphasis on more advanced packages such as PowerQFN and powermite
and allocate a larger portion of capital expenditures to support
these emerging businesses. The PowerQFN family of packages is
expected to represent a new source of growth for PSi. To this end,
we signed a multi-year patent licensing agreement in December 2004
that allows PSi to practice under Amkor's portfolio of
MicroLeadframe(R) patents and will grant Amkor access to the
intellectual property being developed by PSi related to its
PowerQFN technology; 2. Conduct a package portfolio review to
determine additional measures to improve the profitability of
loss-making and marginal packages, including the substitution to
lower cost materials and suppliers, reduction in packaging costs
through strategic and China sourcing, sale of capacity to non-IDM
customers, and negotiated price increases with existing customers;
3. Set the Philippine business up to consistently make profits at
lower run-rates and mitigate the impact of a sudden and
unanticipated decline in revenues as had occurred in the fourth
quarter, through further reductions in manpower and other fixed and
administrative expenses; 4. Grow PSi Chengdu into a self-sustaining
and independent business unit through the completion of the
transfer of remaining manufacturing lines from Philips and the ramp
up of volumes towards capacity; 5. To execute the above, we are
strengthening management and re-assigning responsibilities and
accountabilities through the: a. Appointment of a Chief Operating
Officer to plan, oversee and manage the day-to-day operations of
PSi's three main manufacturing facilities. We will make a formal
announcement of such appointment in the coming months; b.
Appointment of Mr. Ruffy Granada for Senior Vice President for
Sales, Marketing and Customer Service. Mr. Granada was formerly
Amkor's Executive Director for Sales & Customer Service. Mr.
Granada has been given the mandate of diversifying PSi's customer
base and managing business relationships for consistent
profitability and market share growth. Conference Call and Webcast
Company management will hold a conference call to discuss its
fourth quarter 2004 operating results on Tuesday, February 15,
2005, at 5:00 p.m. Eastern/2:00 p.m. Pacific. Interested parties
should call 800-218-0713 (for domestic callers) or 303-262-2052
(for international callers) at least 5 minutes before start time,
and ask the operator for the PSi conference call. A live webcast
will also be available through http://www.companyboardroom.com/,
and the Investor Relations section of the Company's website at
http://www.psitechnologies.com/. A replay of the conference call
will be available at 800-405-2236 (for domestic callers) and
303-590-3000 (for international callers) through February 22, 2005;
the access code is 11023587. The webcast replay will be available
for 90 days. 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
At Financial Relations Board: Amy Cozamanis (310) 854 8314 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. PSi Technologies Holdings, Inc. Unaudited
Income Statement (In US Dollars) 3 Months 12 Months Unaudited
Audited 31-Dec-04 31-Dec-03 31-Dec-04 31-Dec-03 Sales $18,087,852
$17,895,277 $78,196,111 $76,932,587 Cost of Sales $18,356,510
$16,738,526 $75,457,606 $75,172,428 Gross Profit $(268,658)
$1,156,751 $2,738,505 $1,760,159 Operating Expense Research and
Development $222,892 $275,040 $942,254 $722,857 Stock compensation
cost $59,988 $59,988 $239,953 $239,953 Administrative Expenses
$1,674,075 $1,553,029 $6,572,738 $6,846,354 Special Charges
$4,436,594 $12,895,769 China Expenses $569,105 $-- $2,287,355 $--
Marketing Expenses $195,777 $168,173 $767,190 $762,071 Subtotal
$2,721,837 $2,056,231 $15,246,084 $21,467,004 Operating Profit/
(Loss) $(2,990,496) $(899,480) $(12,507,579) $(19,706,845) Other
Income/ (Charges) $(830,672) $(310,894) $(2,559,264) $(1,458,618)
Loss before Income Tax $(3,821,168) $(1,210,374) $(15,066,843)
$(21,165,463) Provision for (Benefit From) Income Tax $508 $1,527
$(172,781) Loss before Minority Interest $(3,821,676) $(1,210,374)
$(15,068,370) $(20,992,682) Minority Interest $(16) $(3,671)
$205,960 $(10,840) Net Loss $(3,821,692) $(1,214,046) $(14,862,409)
$(21,003,522) EBITDA 1,098,360 $2,922,839 7,674,354 8,433,597 No.
of Shares Fully Diluted 16,767,786 16,767,786 16,767,786 16,767,786
EPS (0.23) (0.07) (0.89) (1.25) PSi Technologies Holdings, Inc.
Unaudited Consolidated Balance Sheet (In US Dollars) 31-Dec-04
31-Dec-03 ASSETS Unaudited Audited Cash & Cash Equivalents
1,862,069 935,792 Accounts Receivable 11,803,098 11,454,512
Inventories 8,141,131 5,868,621 Prepaid Expenses & Tax Credits
494,097 1,779,705 Total Current Assets 22,300,396 20,038,630
Property Plant & Equipment - Net 63,468,827 68,408,783
Investment & Advances 143,719 143,343 Other Assets 1,492,542
1,000,993 TOTAL ASSETS 87,405,483 89,591,749 LIABILITIES &
STOCKHOLDER'S EQUITY Accounts Payable and Other Expenses 23,211,512
15,466,239 Accounts Payable CAPEX 5,726,212 3,967,002 Bank Loans
11,800,000 8,600,000 Trust Receipts 3,237,411 2,348,943 Current
Portion of Long-term Debt 885,928 1,630,604 Current Portion of
Obligation under Capital Lease 32,021 135,403 Total Current
Liabilities 44,893,084 32,148,191 Long-term liability (net of
current) 1,564,306 1,649,884 Obligation Under Capital Leases (net
of current) -- 17,163 TOTAL LIABILITIES 46,457,389 33,815,239
Minority Interest (26,467) 179,493 Equity Subtotal Equity
72,038,923 71,798,970 Subtotal Retained Earnings (31,064,362)
(16,201,953) TOTAL EQUITY 40,974,561 55,597,017 TOTAL LIABILITIES
& S'HOLDERS' EQUITY 87,405,483 89,591,749 PSi Technologies
Holdings, Inc. Unaudited Consolidated Statement of Cash Flows (In
US Dollars) For the 12 Months ended 31-Dec-04 CASH FLOWS FROM
OPERATING ACTIVITIES -- Net Income (14,862,409) Adjustments to
reconcile net income to net cash provided by operating activities:
Minority interest (205,960) Equity in net loss (gain) of an
investee 2002 Stock compensation cost 239,953 Depreciation and
amortization 15,546,963 Loss on Asset Impairment 4,436,594
Provision for (benefit from) deferred income tax Equity in net loss
(gain) of an investee Change in assets and liabilities: Decrease
(increase) in: Accounts receivables (348,586) Inventories
(2,272,510) Other Current Assets and tax credit receivable
1,285,608 Increase (decrease) in: Accounts payable and other
expenses 7,745,273 Net cash provided by operating activities
11,564,925 CASH FLOWS FROM INVESTING ACTIVITIES Additions to
property and equipment (13,284,391) Proceeds from sale of Property
& Equipment -- Decrease (increase) in investments and advances
(376) Decrease (increase) in other assets (491,549) Net cash used
in investing activities (13,776,316) CASH FLOWS FROM FINANCING
ACTIVITIES Net availment/(payments) of short-term loans 3,200,000
Trust receipts and acceptances payable 888,468 Net
availment/(payments) of stock issuance cost -- Net
availment/(payments) of long term loan (830,255) Net
availment/(payments) of obligation under capital leases (120,545)
Net cash provided by (used in) financing activities 3,137,668 NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 926,277 CASH AND
CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 935,792 CASH AND CASH
EQUIVALENTS AT END OF PERIOD 1,862,069 SUPPLEMENTAL INFORMATION ON
NONCASH FINANCING & INVESTING ACTIVITIES Property and equipment
acquired (paid) on account under accounts payable 1,759,210
DATASOURCE: PSi Technologies Holdings, Inc. CONTACT: Edison G. Yap,
CFA of PSi Technologies Holdings, Inc., (63 917) 894 1335, ; or Amy
Cozamanis of Financial Relations Board, +1-310-854 8314, , for PSi
Technologies Holdings, Inc. Web site:
http://www.psitechnologies.com/
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