PSIT Psi Tech Hldgs (MM)

MANILA, Philippines, July 31 /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, 2006: Second Quarter Financial Results Revenues for the second quarter of 2006 totaled $20.7 million, a 6.3% sequential decrease compared to $22.1 million in the previous quarter, and a 1.8% increase compared to revenues of $20.4 million in the second quarter of 2005. As the Chengdu facility was closed effective March 31, 2006, all the revenues of $20.7 million in the second quarter came from Philippine operations, a 4.0% sequential increase versus $19.9 million in the previous quarter. "The Company's revenues from its Philippine operations benefited from strong demand trends on key product segments. Furthermore, the consolidation of sites is also expected to result to more optimized capacity utilization and better operational efficiencies," said Arthur J. Young, Jr. Chairman and Chief Executive Officer. Cost of goods sold decreased at a 4.0% sequential rate, while consolidated gross margins were 4.1% versus 6.4% in the previous quarter and 1.3% in the same period last year. Operating expenses were lower by 9.4% on a sequential basis to $2.0 million in the second quarter versus $2.2 million in the previous quarter and $2.5 million in the same period last year. Operations realignment activities from administration and marketing contributed to the majority of cost savings in operating expenses. As a result of the above, operating loss margin was at (5.6%) in the second quarter, versus (3.6)% in the previous quarter and (10.9)% in the same period last year. EBITDA margin in the second quarter reached 11.7% or a total amount of $2.4 million compared with 11.6% in the previous quarter amounting to $2.6 million and 10.9% versus the same period last year at $2.2 million. Excluding a severance and liquidation charge related to the discontinuation of China operations, net other expenses is lower by $0.3 million due to the foreign exchange gains incurred during this quarter. 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 $0.56 million which did not change versus the previous quarter. Excluding the loss from discontinued operations in the previous quarter, second quarter net loss was ($1.9) million or $(0.14) per outstanding share compared with ($1.8) million or ($0.14) per outstanding share in the previous quarter and a 30.3% decrease versus ($2.7) million or ($0.21) per outstanding share in the same period last year. Net loss was $(1.9) million in the second quarter, a 26.5% decrease versus $(2.6) million in the previous quarter. Year To Date Financial Results Revenues for the first six months of 2006 totaled $42.9 million, an 8.3% increase compared to $39.6 million in the same period last year. Cost of goods sold increased at a lower 1.4% for the first six months of 2006 resulting in an expansion in consolidated gross margins at 5.3% compared with (1.2%) in the same period last year. Operating expenses were lower by 11.5% on the first six months of 2006 at $4.2 million versus $4.8 million in the same period last year. As a result of the above, operating loss margin is at (4.6%) in the first six months of 2006 versus (13.2)% in the same period last year. Operating loss declined by 62.6% to ($1.9) million for the first six months of 2006 versus ($5.3) million in the same period last year. EBITDA margin for the first six months of 2006 reached 11.6% or a total amount of $5.0 million compared with 9.1% in the same period last year amounting to $3.6 million. Package Development Revenues in our Power QFN line increased by 56% versus the previous quarter, with the line potentially reaching its optimized capacity by the end of the fourth quarter of 2006. Power QFN revenue is continuously being driven by loadings from a new customer with other potential customers under various stages of qualification. Balance Sheet Highlights Cash and cash equivalents totaled $2.1 million in the second quarter, compared to $3.0 million in the previous quarter. New acquisitions in property, plant and equipment totaled $2.1 million in the second quarter, mostly related to the purchase of equipment to improve capacity bottlenecks to accommodate new business. On June 28, 2006, the Company sold land it owned not currently in use to an unrelated company for $1.3 million. The proceeds of the sale were paid upon the execution of the contract on this date. Total current liabilities declined by $0.7 million to $35.3 million in the second quarter from $36.0 million as of March 31, 2006. The decline in current liabilities is attributable to the prepayment of $1.7 million in bank loans and trust receipts payable. Consequently, total bank debt declined to $10.5 million versus $12.2 million in the previous quarter. The long-term liability account of $3.6 million includes 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 June 30, 2006, tangible book value was $1.95 per share on 13,289,525 outstanding shares. Business Outlook "The order book of the Company's operations indicate continuous growth for the coming quarters and we are committed towards managing this growth and our operations towards further operational improvements," said Young. On June 19, 2006, the Company signed a Sales/Investment Agreement with a major customer whereby the customer will load guaranteed chips for one year on certain packages starting Q3 of 2006. This contract translates to an increase in revenue from this customer from $28 million in 2005 to $40 million in 2006, an increase of approximately 44%. The contract provides price adder and underutilization charge in case of shortfall on loading. In turn the Company has committed a total capital investment of approximately $4 million. The Company has also recently secured two financing facilities with two major Philippine banks amounting to $13 million. The first $3 million was covered by a Revolving Promissory Note Line Agreement while the terms and conditions of the $10 million facility are currently being finalized. Please also see for your information and reference the press releases issued by the Company in the previous month announcing a notification regarding a potential delisting from the Nasdaq SmallCap Market and certain accounting matters. 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 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.: Thelma G. Oribello (63 2) 838 44 89 At Financial Relations Board: Lasse Glassen (310) 854 8313 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) For the Three Months Ended For the Six Months Ended 30-Jun-06 31-Mar-06 30-Jun-05 30-Jun-06 30-June-05 Unaudited Unaudited Unaudited Unaudited Unaudited REVENUES $20,738,843 $22,129,046 $20,378,310 $42,867,889 $39,589,054 COST OF SALES 16,550,899 17,389,345 15,968,392 33,940,243 31,864,520 DEPRECIA- TION 3,340,935 3,324,088 4,148,502 6,665,023 8,189,396 GROSS PROFIT 847,009 1,415,612 261,416 2,262,622 (464,862) OPERATING EXPENSES Research and development 265,378 220,644 331,555 486,022 663,848 Stock compensation cost 39,992 59,988 59,988 99,980 119,976 Administrative expenses 1,528,986 1,629,998 1,707,224 3,158,984 3,328,490 Marketing expenses 169,504 164,977 261,833 334,481 466,187 Freight out -- 136,279 130,941 136,279 185,300 Total Operating Expenses 2,003,861 2,211,885 2,491,540 4,215,746 4,763,802 LOSS FROM OPERATIONS 1,156,852 796,273 2,230,124 1,953,125 5,228,663 Interest and bank charges -net (268,776) (259,517) (383,137) (528,292) (688,140) Foreign exchange gains (losses) -net 95,306 (216,159) 147,971 (120,853) 217,874 Exchangeable Note interest and financing charge (565,689) (561,632) (285,433) (1,127,321) (561,420) Loss on Discontinued Operation -- (757,753) -- (757,753) -- Miscellaneous (2,934) 7,750 25,090 4,816 45,015 Net Other Expense (742,093) (1,787,310) (495,510) (2,529,403) (986,670) NET LOSS $1,898,945 $2,583,583 $2,725,634 $4,482,528 $6,215,333 EBITDA $2,424,527 $2,568,202 $2,226,703 $4,992,729 $3,586,519 No. of Shares Out- standing 13,289,525 13,289,525 13,289,525 13,289,525 13,289,525 EPS- based on Outstanding Shares (0.14) (0.19) (0.21) (0.34) (0.47) * Summation/numbers may differ due to rounding. * The accounts as presented herein have been revised to conform to their presentation under the 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-06 31-Mar-06 Unaudited Unaudited ASSETS Current Assets Cash $2,064,566 $2,979,854 Accounts receivable-net 12,093,491 11,614,623 Notes receivable on sale of land and building 842,130 727,075 Inventories-net 5,462,667 5,344,495 Other current assets-net 701,448 652,246 Total Current Assets 21,164,302 21,318,293 Noncurrent Assets Investment and advances -- 143,364 Property, plant and equipment-net 41,904,894 45,490,912 Other noncurrent assets-net 1,921,915 1,014,231 Total Noncurrent Assets $43,826,809 46,648,508 $64,991,111 $67,966,801 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $21,960,665 $21,927,642 Accounts payable CAPEX 2,862,289 1,816,876 Loans Payable 9,750,000 10,000,000 Trust receipts payable 733,213 2,223,611 Total Current Liabilities 35,306,168 35,968,129 Noncurrent Liabilities Exchangeable Note 3,582,190 3,714,944 Total Noncurrent Liabilities 3,582,190 3,714,944 Stockholders' Equity Capital stock-Philippine peso 1-2/3 par value Authorized-37,058,100 shares Issued and outstanding-13,289,525 shares 590,819 590,818 Additional paid-in capital 79,485,552 79,767,582 Deficit (53,973,617) (52,074,672) Total Stockholders' Equity 26,102,754 28,283,728 $64,991,111 $67,966,801 PSi Technologies Holdings, Inc. Unaudited Consolidated Statement of Cash Flows (in US Dollars) For the Six Months Ended June 30, 2006 CASH FLOWS FROM OPERATING ACTIVITIES Net Income (4,482,956) Adjustments to reconcile net income to net cash provided by operating activities: Stock compensation cost 99,980 Depreciation and amortization 6,968,006 Retirement expense 92,912 Loss on discontinued operation 757,753 Amortization of debt issuance cost and discount 602,983 Interest expense on exchangeable note 553,056 Change in assets and liabilities Decrease (increase) in: Accounts receivables 2,687,253 Notes receivable on sale of land and building (842,130) Inventories 414,510 Other Current Assets and tax credit receivable (219,327) Increase (decrease) in: Accounts payable and other expenses 137,537 Net cash provided by operating activities 6,769,578 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of property, plant and equipment (3,223,686) Proceeds from sale of property and equipment 1,341,660 Decrease (increase) in other assets (155,905) Net cash used in investing activities (2,037,931) CASH FLOWS FROM FINANCING ACTIVITIES Net availment/(payments) of short-term loans (1,475,357) Trust receipts and acceptances payable (2,816,393) Net cash provided by (used in) financing activities (4,291,750) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 439,897 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 1,624,669 CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,064,566 DATASOURCE: PSi Technologies Holdings, Inc. CONTACT: Thelma G. Oribello of PSi Technologies Holdings, Inc., (63 2) 838 44 89, ; or Lasse Glassen of Financial Relations Board, +1-310-854 8313, , for PSi Technologies Holdings, Inc. Web site: http://www.psitechnologies.com/

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