PSIT Psi Tech Hldgs (MM)

SOUTH SAN FRANCISCO, Calif. and MANILA, Philippines, Aug. 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 second quarter ended June 30, 2005: Highlights * Consolidated revenues of $20.4 million, an increase of 6.1% on a quarter-over-quarter basis, and an increase of 1.4% on year-over-year basis. * China revenues of $2.1 million, an increase of 82.2% on a quarter-over-quarter basis. * Gross margin of 1.3%, versus (3.8)% in the first quarter of 2005 and 3.8% in second quarter of 2004. * Operating loss margin, of (10.9)% versus (15.6)% in the previous quarter. * EBITDA margin of 10.9%, versus 7.1% in the previous quarter and 8.0% in the same period last year. * EPS of $(0.21) per share, versus EPS of $(0.26) per share in the first quarter and $(0.19) in the second quarter of 2004 on an outstanding share basis. Second Quarter Financial Results Revenues for the second quarter of 2005 totaled $20.4 million, a 6.1% sequential increase compared to $19.2 million in the previous quarter, and a 1.4% increase compared to revenues of $20.1 million for the second quarter of 2004. Revenues from the Company's top 5 customers were $17.5 million, a 9.5% increase compared to $16.0 million in the previous quarter. During the quarter, Chengdu contributed $2.1 million in revenues. The Company's largest customers for the first 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, in particular for automotive systems, consumer electronics, communications equipment, industrial applications, home appliances and PC motherboards. Sales of power semiconductor packages comprised 96.7% of second quarter revenues, or $19.7 million, a 6.2% sequential increase versus $18.6 million in the previous quarter. "While we experienced a moderate level of growth during the quarter, loading trends were challenging and difficult nonetheless," said Arthur J. Young, Jr., Chairman and CEO. "On an aggregate basis, the volumes of our Philippine facilities declined by 4.6%. The decline was offset by a 5.9% increase in average selling prices, as we implemented price increases to mitigate the higher costs of commodities and raw materials. On the other hand, revenues from our Chengdu facility increased by 82.2% as a result of a 79.8% increase in loadings and 1.4% increase in average selling prices as our Chengdu facility started producing higher value packages." Consolidated gross margin was 1.3% in the second quarter, versus (3.8)% in the previous quarter and 3.8% in the same period last year. "The goal of establishing a revised business model more capable of optimizing assets and resources across the various business units remains our highest priority," said Young. "A business blueprint aimed at creating sufficiently robust operating conditions to contend with market swings is being developed." "On a quarter-on-quarter basis, China benefited from improved operating leverage, with cost of goods sold expanding by a lesser 52.3% versus the 82.2% increase in sales," said Young. "Sales in China contributed positively to consolidated gross profits in the second quarter." Operating expenses were higher by 9.6% to $2.5 million in the second quarter, due primarily to a 140.9% increase in Chengdu freight expenses and secondarily to additional technical support extended to Chengdu to support the ramp up in loadings. Research and development costs remained stable at $0.3 million. The activities related to the Company's QFN (Quad, Flat, No-Lead) Package is transitioning from research and development, the bulk of which occurred in prior quarters, to customer qualification and configuration activities prior to the formal introduction of this package by our customers into their respective markets. Operating loss margin was (10.9)% in the second quarter versus (15.6)% in the previous quarter and (10.8)% in the same period last year. "We are encouraged that the cost reduction measures in the Philippines and expansion in loadings in China resulted in a noticeable reduction in operating loss," said Young. EBITDA margin was 10.9% for the second quarter, up from 7.1% in the previous quarter. Second quarter net loss was $(2.7) million or $(0.21) per outstanding share, compared to net loss of $(3.5) million or $(0.26) per outstanding share in the previous quarter. Balance Sheet Highlights Cash and cash equivalents improved to $3.9 million in the second quarter, versus $2.2 million at the end of 2004. During the quarter, the Company's cash position was bolstered by the issuance of a 4-year $7.0 million senior exchangeable subordinated note to an affiliate of its majority shareholder, Merrill Lynch Global Emerging Markets Partners, L.P. Capital expenditures totaled $6.7 million year-to-date, which was partially offset by $1 million in proceeds from the sale of the Company's unutilized third site in the Philippines. Discussions are ongoing with third parties for the disposal of other unutilized properties and equipment. The long-term liability account of $8.8 million as of June 30, 2005 represents the carrying amount of the Exchangeable Notes issued in July 2003 and June 2005, net of the amortization of discount representing the embedded conversion feature of the Note. As of June 30, 2005, tangible book value was $2.67 per share on 13,289,525 outstanding shares. Business Outlook Commenting on the Company's going-forward strategies, Young said: "While we have made strides in lowering the Company's cost base in the Philippines, there is much more that can be done to return us to profitability. To this end, we are pleased to announce the appointment of Gordon J. Stevenson as our Executive Vice President and Chief Operating Officer. He joined us on August 1, 2005. Gordon has over 18 years experience in developing and executing strategies to return operating units to profitability in various Philips assignments in Hazel Grove (UK), Manila (Philippines), Surabaya (Indonesia) and Shanghai (China). A business blueprint will be developed in the third quarter, for implementation in the fourth quarter and beyond." 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 30-Jun-05 31-Mar-05 30-Jun-04 REVENUES $20,378,310 $19,210,744 $20,088,828 COST OF SALES 20,116,894 19,937,014 19,334,810 GROSS PROFIT 261,416 (726,270) 754,018 OPERATING EXPENSES Research and development 331,555 332,302 242,427 Stock compensation cost 59,988 59,988 59,988 Administrative expenses 1,707,224 1,621,267 1,748,495 China expenses 674,480 Marketing expenses 261,833 204,353 200,974 Freight out 130,941 54,359 Total Operating Expenses 2,491,541 2,272,269 2,926,364 LOSS FROM OPERATIONS 2,230,124 2,998,539 2,172,346 OTHER INCOME (EXPENSES) (495,510) (491,160) (306,158) LOSS BEFORE INCOME TAX AND MINORITY INTEREST 2,725,634 3,489,699 2,478,504 PROVISION FOR INCOME TAX -- -- 511 MINORITY INTEREST -- -- 3,136 NET LOSS $2,725,634 $3,489,699 $2,475,879 EBITDA $2,226,703 $1,359,816 $1,613,287 Common Shares Outstanding 13,289,525 13,289,525 13,289,525 Earnings per Outstanding Share (0.21) (0.26) (0.19) Note: * 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) 30-Jun-05 31-Dec-04 Unaudited Audited ASSETS Current Assets Cash $3,892,327 $2,152,942 Accounts receivable-net 12,919,050 10,932,923 Notes receivable on sale of land and building 1,173,462 -- Inventories-net 6,560,835 8,292,326 Other current assets-net 594,466 426,726 Total Current Assets 25,140,140 21,804,917 Noncurrent Assets Investment and advances 142,587 143,609 Property, plant and equipment-net 58,036,646 65,468,721 Other noncurrent assets-net 1,319,443 1,271,504 Total Noncurrent Assets 59,498,676 66,883,834 $84,638,816 $88,688,751 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses 22,357,869 23,252,579 Accounts payable CAPEX 2,701,379 6,185,099 Loans Payable 11,400,000 11,800,000 Trust receipts payable 3,369,849 3,237,411 Current portion of long-term liability due to a customer 147,131 709,947 Current portion of obligations under capital lease 400,928 460,674 Total Current Liabilities 40,377,156 45,645,710 Noncurrent Liabilities Exchangeable Note 8,838,758 1,524,782 Obligations under capital lease -- -- Total Noncurrent Liabilities 8,838,758 1,524,782 Minority Interest -- -- Stockhoders' 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 71,981,335 71,861,359 Deficit (37,149,251) (30,933,918) Total Stockholders' Equity 35,422,902 41,518,259 $84,638,816 $88,688,751 PSi Technologies Holdings, Inc. Unaudited Consolidated Statement of Cash Flows (In US Dollars) For the 6 Months ended 30-Jun-05 CASH FLOWS FROM OPERATING ACTIVITIES -- Net Income (6,215,333) Adjustments to reconcile net income to net cash provided by operating activities: Minority interest -- Equity in net loss (gain) of an investee 2002 -- Stock compensation cost 119,976 Depreciation and amortization 8,650,190 Retirement Expense 87,317 Loss on Asset Impairment -- Provision for (benefit from) deferred income tax -- Amortization of debt issuance cost and discount 322,634 Equity in net loss (gain) of an investee -- Change in assets and liabilities: Decrease (increase) in: Accounts receivables (1,986,127) Inventories 1,731,492 Other Current Assets and tax credit receivable (167,740) Increase (decrease) in: Accounts payable and other expenses (982,027) Net cash provided by operating activities 1,560,382 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property and equipment (6,693,609) Proceeds from sale of Property & Equipment 1,000,000 Decrease (increase) in investments and advances 1,022 Decrease (increase) in other assets (238,287) Net cash used in investing activities (5,930,874) CASH FLOWS FROM FINANCING ACTIVITIES Net availment/(payments) of short-term loans (400,000) Trust receipts and acceptances payable 132,438 Net availment/(payments) of stock issuance cost -- Net availment/(payments) of long-term loan 6,437,185 Net availment/(payments) of obligation under capital leases (59,746) Net cash provided by (used in) financing activities 6,109,877 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,739,385 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 2,152,942 CASH AND CASH EQUIVALENTS AT END OF PERIOD 3,892,327 SUPPLEMENTAL INFORMATION ON NONCASH FINANCING & INVESTING ACTIVITIES Property and equipment acquired (paid) on account under accounts payable (3,483,719) 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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