PSIT Psi Tech Hldgs (MM)

MANILA, Philippines, Feb. 13 /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 fourth quarter ended December 31, 2006: Year To Date Financial Results Our sales revenue for fiscal year 2006 totaled an all-time high of $91.8 million, compared to $80.3 million in 2005. This 14.2% increase occurred despite the ceasing of our operations in Chengdu, China during the end of the first quarter of 2006, in accordance with our Business Blueprint consolidation strategy. A new record was also achieved in terms of sales from our Philippine production facilities, with revenues from those facilities totaling $89.5 million, a 22.9% increase compared to $72.9 million in revenues generated from the Philippine facilities in 2005. Cost reduction programs implemented during 2006 were effective in bringing about a much lower increase in cost of goods sold at 2.3%, thereby resulting to an expansion and improvement in consolidated gross margins to 6% compared with (2.3%) in 2005. These cost reduction programs included consolidation, portfolio pruning, material substitutions and productivity initiatives. Operating expenses decreased by 16.1% to $8.2 million versus $9.8 million in 2005 thus achieving an improvement in reducing the Operating Loss Margins to (3.1%) in 2006 from (14.5%) in 2005. As a result of the ongoing progress in reducing cost and expenses and increasing sales, EBITDA increased by $5.1 million in 2006 rising from $6.4 million in 2005 to $11.5 million or an 80.4% increase. Moreover, operating losses declined from ($11.6) million in 2005 to ($2.8) million in 2006, an improvement of 76.1%. Another highlight during 2006 was the reduction in net loss from ($19.7) million in 2005 to ($8.0) million in 2006. The 2006 net loss includes losses on discontinued operations and special charges amounting to $1.5 million. Excluding the losses on discontinued operations and special charges, net loss would have reduced from ($14.4) million in 2005 to ($6.5) million in 2006. Fourth Quarter Financial Results The performance turnaround during the 2006 financial year concluded with the fourth quarter results consolidating the positive improvements witnessed in the previous quarters. Consistent with our expectations and despite a shorter working period due to the holiday season during the fourth quarter, revenues grew by 3.4% to $24.9 million, a sequential increase compared to $24.1 million in the previous quarter. The power semiconductor market remained buoyant and, coupled with the Blueprint activities, helped to provide the recovery in our financial results for the full year. Our Philippine operations alone increased revenues by 29.8% in the fourth quarter of 2006 compared to the same quarter last year, and revenues are now consistently higher from our two plants than they had been in prior quarters with three operational plants. These positive shifts in operating conditions have culminated in a reduction in operating loss from $1.5 million in the fourth quarter of 2005 to $0.5 million in the current quarter, although slightly higher than the $0.3 million operating loss in the previous quarter. However, EBITDA has improved by $0.8 million from $2.4 million in the fourth quarter last year to $3.2 million in the same period this year, approximating similar results in the previous quarter. "In relative terms, 2006 was an excellent year. Despite being confronted with the challenge of rapidly increasing copper prices, our strategies and revitalized focus on cost management delivered us much closer to our profitability goal which we expect to achieve in 2007," said Arthur J. Young, Jr., Chairman and Executive Officer. Further progress was made with respect to consolidated gross margins, where we witnessed a rise from 3.6% in the fourth quarter last year to 6.4% in the fourth quarter of 2006. While consolidated gross margins were slightly down by 1.3% compared with the previous quarter, this was not unexpected given the impact of fewer operating days in the fourth quarter. Reflecting the efforts to control costs, operating expenses decreased to $2.1 million during the fourth quarter of 2006, from $2.2 million in the previous quarter and $2.3 million in the fourth quarter last year. Net other expenses were higher by $0.4 million during the fourth quarter of 2006, mainly due to a one-time non-recurring charge and higher financing charges related to our Exchangeable Notes. "While the usual challenges remain, our ability to respond much quicker to market forces has been enhanced, and we expect to strengthen our team further this year to ensure we realize the multitude of opportunities open to our business," said Gordon J. Stevenson, COO & Executive Vice President. Excluding the one-time charge, net loss decreased by 41.8% from ($2.8) million or ($0.21) per outstanding share in the fourth quarter of 2005 to ($1.6) million or ($0.12) per outstanding share in the fourth quarter of 2006. Balance Sheet Highlights Cash and cash equivalents totaled $3.3 million in 2006, compared to $1.6 million as of December 31, 2005. New acquisitions in property, plant and equipment during 2006 totaled $8.9 million, which consists of equipment purchased to accommodate the Sales/Investment Agreement with major customers (discussed further below) as well as to address the capabilities of our Power QFN line. Despite the capital expenditure and increased volume of business in 2006, total current liabilities declined to $35.9 million as of the end of 2006 from $36.9 million as of December 31, 2005. There was also a significant decline in the total bank loans and trust receipts payable from $14.9 million as of end December 31, 2005 to $10.5 million as of December 31, 2006. The long-term liability account of $4.5 million includes the carrying amount of the Exchangeable Notes issued in July 2003 and June 2005, net of the discount representing the embedded conversion feature of the Exchangeable Notes. As of December 31, 2006, tangible book value was $1.65 per share on 13,289,525 outstanding shares. Business Outlook Arthur J. Young, Jr., Chairman and CEO said, "We expect volumes in the first quarter of 2007 to be relatively stable, consistent with the general semiconductor market and the industry's cautious approach towards managing inventory. We do anticipate, however, incremental growth in the second quarter and better gains in the second half of 2007, leading to an overall satisfactory level of growth in the full year. Nevertheless, we are sufficiently prepared to respond to volatility in the market through our continuous drive towards reducing costs and improving efficiencies, productivity and asset utilization. We plan and expect to achieve profitability in 2007." 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.: Francis Suarez (63 2) 838 4872 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. -Financial Tables Follow- PSi Technologies Holdings, Inc. Unaudited Income Statement (In US Dollars) For the Three Months Ended 31-Dec-06 30-Sep-06 31-Dec-05 Unaudited Unaudited Unaudited REVENUES $24,859,222 $24,052,713 $21,250,623 COST OF SALES 19,520,467 18,556,448 16,530,386 DEPRECIATION 3,754,430 3,634,203 3,951,920 GROSS PROFIT (LOSS) 1,584,325 1,862,063 768,317 OPERATING EXPENSES Research and development 303,891 306,288 315,046 Stock compensation cost 26,227 28,715 59,988 Administrative expenses 1,629,519 1,672,073 1,690,397 Marketing expenses 165,444 187,035 216,481 Total Operating Expenses 2,125,081 2,194,111 2,281,913 LOSS FROM OPERATIONS (540,756) (332,049) (1,513,595) Interest and bank charges-net (258,093) (217,845) (322,330) Foreign exchange gains (losses)-net (235,797) (228,673) (221,584) Income on refund from a utility company -- -- -- Lease income 28,920 28,920 -- Exchangeable Note interest and financing charges (634,615) (595,280) (749,674) Loss on discontinued operation and special charges (42,442) -- (3,927,798) Miscellaneous (321,852) (2,303) (38,333) Net Other Expense (1,463,879) (1,015,181) (5,259,719) LOSS BEFORE INCOME TAX AND MINORITY INTEREST (2,004,635) (1,347,229) (6,773,314) PROVISION FOR INCOME TAX 16,969 -- -- NET LOSS $(2,021,604) $(1,347,229) $(6,773,314) EBITDA $3,180,742 $3,259,133 $2,410,177 No. of Shares Outstanding 13,289,525 13,289,525 13,289,525 EPS-based on Outstanding Shares (0.15) (0.10) (0.51) Years Ended December 31 31-Dec-06 31-Dec-05 Unaudited Audited REVENUES $89,525,679 $80,340,821 COST OF SALES 70,226,348 64,951,990 DEPRECIATION 13,891,373 17,271,123 GROSS PROFIT (LOSS) 5,407,958 (1,882,292) OPERATING EXPENSES Research and development 1,126,064 1,241,508 Stock compensation cost 157,922 (82,068) Administrative expenses 6,264,183 7,642,744 Marketing expenses 641,195 963,843 Total Operating Expenses 8,189,364 9,766,027 LOSS FROM OPERATIONS (2,781,406) (11,648,319) Interest and bank charges-net (1,007,872) (1,180,532) Foreign exchange gains (losses)-net (535,724) (158,292) Income on refund from a utility company -- 226,909 Lease income 134,650 110,340 Exchangeable Note interest and financing charges (2,307,874) (1,707,331) Loss on discontinued operation and special charges (1,169,308) (5,280,829) Miscellaneous (364,299) 8,995 Net Other Expense (5,250,427) (7,980,740) LOSS BEFORE INCOME TAX AND MINORITY INTEREST (8,031,833) (19,629,059) PROVISION FOR INCOME TAX 16,969 120,488 NET LOSS $(8,048,802) $(19,749,547) EBITDA $11,508,396 $6,380,136 No. of Shares Outstanding 13,289,525 13,289,525 EPS-based on Outstanding Shares (0.61) (1.49) * Summations/numbers may differ due to rounding. * The results of China Operations for the first quarter of 2006 until it had ceased operations are all included under Loss on Discontinued Operations in accordance with US GAAP. * 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) 31-Dec-06 31-Dec-05 Unaudited Audited ASSETS Current Assets Cash $3,340,562 $1,624,669 Accounts receivable-net 14,472,218 14,780,744 Notes receivable on sale of land and building Inventories-net 5,606,167 5,877,177 Other current assets-net 579,787 322,160 Asset held for sale -- 1,273,108 Total Current Assets 23,998,734 23,877,857 Noncurrent Assets Property, plant and equipment-net 38,169,751 44,023,066 Other noncurrent assets-net 1,190,724 1,629,839 Total Noncurrent Assets 39,360,475 45,652,906 $63,359,209 $69,530,762 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $22,898,859 $20,211,867 Accounts payable CAPEX 2,563,229 1,748,194 Loans Payable 10,524,743 11,400,000 Trust receipts payable -- 3,549,606 Total Current Liabilities 35,986,832 36,909,667 Noncurrent Liabilities Exchangeable Note 4,541,506 2,450,100 Accrued retirement benefit cost 874,743 807,848 Total Noncurrent Liabilities 5,416,249 3,257,949 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 79,543,495 79,385,573 Other comprehensive loss -- (483,861) Deficit (58,178,184) (50,129,382) Total Stockholders' Equity 21,956,128 29,363,147 $63,359,209 $69,530,762 PSi Technologies Holdings, Inc. Unaudited Consolidated Statement of Cash Flows (In US Dollars) For the Year Ended December 31, 2006 CASH FLOWS FROM OPERATING ACTIVITIES Net loss (8,048,802) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 14,425,838 Loss from discontinued operations 1,169,308 Stock compensation costs 157,922 Amortization of debt issuance costs and discount 901,939 Interest on exchangeable notes converted to principal 1,207,881 Accretion of interest receivable from sale of land, building and improvements (116,076) Loss on disposal of property and equipment 455 Interest income from Meralco (30,534) Provision for pension expense 514,824 Changes in operating assets and liabilities: Decrease (increase) in: Trade and other receivables 455,135 Inventories (846,314) Other current assets (286,155) Increase in trade and other payables 1,194,732 Net cash provided by (used in) operating activities 10,700,153 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of property and equipment (6,316,837) Proceeds from sale of property and equipment 1,342,695 Decrease (increase) in other noncurrent assets 414,745 Net cash used in investing activities (4,559,397) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from (payments of) trust receipts payable (3,549,606) Net proceeds from (payments of) loans payable (875,257) Net cash provided by financing activities (4,424,863) NET INCREASE (DECREASE) IN CASH 1,715,893 CASH AT BEGINNING OF YEAR 1,624,669 CASH AT END OF YEAR 3,340,562 SUPPLEMENTAL INFORMATION ON NONCASH INVESTING AND FINANCING ACTIVITIES Property and equipment acquired on account under accounts payable 2,563,229 DATASOURCE: PSi Technologies Holdings, Inc. CONTACT: Francis Suarez of PSi Technologies Holdings, Inc., (63 2) 838 4872, ; 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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