Chartered Reports Results for First Quarter 2009

MILPITAS, Calif. — (BUSINESS WIRE) — April 23, 2009 Chartered Semiconductor Manufacturing Ltd. (Nasdaq: CHRT)(SGX-ST:CHARTERED), one of the world’s top dedicated semiconductor foundries, today announced its results for first quarter 2009.

“Chartered revenues in first quarter 2009 were down 31 percent, and revenues including our share of SMP were down 29 percent compared to the previous quarter, coming in at the high end of the guidance we had provided on March 9, 2009. Revenues from 65 nanometer (nm) and below technologies, including those from 45nm, accounted for approximately 24 percent of our total business base revenues. Revenues from 45nm alone represented approximately three percent of our total business base revenues. We ended the quarter with a net loss attributable to Chartered of $99 million, which was better than our previous guidance. Despite the low utilization of 38 percent, we were able to post an operating cash flow of approximately $59 million for the quarter,” said George Thomas, senior vice president & CFO of Chartered.

Summary of First Quarter 2009 Performance

  • Revenues were $243.9 million in first quarter 2009, including $36.8 million from Fab 3E. Revenues in first quarter 2009 were down 37.2 percent from $388.2 million in first quarter 2008. Revenues including Chartered’s share of SMP were $253.5 million, down 38.8 percent from $414.1 million in the year-ago quarter, primarily due to a significant decline in semiconductor demand across all sectors. Excluding Fab 3E, revenues in first quarter 2009 were down 46.6 percent, and revenues including Chartered’s share of SMP were down 47.7 percent compared to the year-ago quarter. Sequentially, revenues were down 30.6 percent compared to $351.7 million in fourth quarter 2008. Revenues including Chartered’s share of SMP were down 29.4 percent from $359.0 million in fourth quarter 2008, primarily due to a significant decline in semiconductor demand across all sectors.
  • Gross loss was $27.5 million, or negative 11.3 percent of revenues, compared to a gross profit of $64.6 million, or 16.6 percent of revenues in the year-ago quarter and gross profit of $13.8 million, or 3.9 percent of revenues in fourth quarter 2008, primarily due to lower revenues resulting from lower shipments and higher cost per wafer resulting from lower production volumes over which fixed costs are allocated, including the impact of significantly lower utilization of manufacturing assets. The fixed costs in first quarter 2009 included the impact of an upward revision of projected useful lives and a corresponding elimination of projected residual values for twelve-inch process equipment used for leading-edge technologies. This upward revision of projected useful lives and elimination of projected residual values, which was made in fourth quarter 2008, resulted in a favorable impact of $29.8 million for first quarter 2009 and $18.1 million for fourth quarter 2008.
  • Other revenue which primarily relates to rental income from SMP (Fab 5) was $1.8 million, down 67.6 percent from $5.6 million in the year-ago quarter, due to the renewal of the lease with SMP. The rental charged to SMP is arrived at based on the terms of the original joint-venture agreement, which is a function of recovering the cost of the building and facility machinery and equipment over the period of the joint-venture agreement. The lower rental starting from second quarter 2008 reflects Chartered’s recovery of the majority of these costs over the initial 10 years of the joint venture.
  • Research and development (R&D) expenses were $48.0 million, an increase of 5.6 percent from $45.4 million in the year-ago quarter and an increase of 5.8 percent from $45.4 million in fourth quarter 2008, primarily due to lower reimbursement of expenses from grants and higher cost of development activities related to the advanced 32nm technology.
  • Sales and marketing expenses were $12.8 million, down 27.0 percent compared to $17.6 million in the year-ago quarter, primarily due to lower payroll-related expenses and lower financial support for pre-contract customer design validation activities. Compared to the previous quarter, sales and marketing expenses were down 11.7 percent from $14.5 million, primarily due to lower financial support for pre-contract customer design validation activities and lower payroll-related expenses.
  • General and administrative (G&A) expenses were $10.6 million, down 1.8 percent compared to the year-ago quarter. Compared to the previous quarter, G&A expenses were up 7.1 percent from $9.9 million primarily due to lower reimbursement of expenses related to grants and higher costs for external services.
  • Other operating expenses, net, were $3.0 million, compared to $2.5 million in the year-ago quarter and $5.0 million in fourth quarter 2008. Other operating expenses in first quarter 2009 included recognition of a one-time charge of $5.9 million from the workforce re-sizing exercise.
  • Equity in loss of Chartered’s minority-owned joint-venture fab, SMP (Fab 5), was $1.7 million compared to equity in income of $9.9 million in the year-ago quarter, primarily due to lower revenues resulting from lower shipments and higher cost per wafer resulting from lower production volumes over which fixed costs are allocated. Compared to the previous quarter, equity in loss of SMP was down 15.0 percent from a loss of $2.0 million, primarily due to higher revenues resulting from higher selling prices and higher shipments in first quarter 2009.
  • Other income (loss), net, was an income of $0.2 million, compared to an income of $10.5 million in the year-ago quarter and a loss of $5.9 million in fourth quarter 2008. The income in first quarter 2008 was primarily due to the recognition of income arising from a technology licensing arrangement. The loss in fourth quarter 2008 was primarily due to impairment charges resulting from a decline in value of an investment in a private enhanced cash fund and to a lesser extent a decline in value of investments in equity securities.
  • Net interest expense was $13.9 million, compared to $10.6 million in the year-ago quarter, primarily due to lower interest income arising from lower interest rates and to a lesser extent lower principal balances.
  • The net loss of Chartered’s consolidated joint venture fab, Chartered Silicon Partners (CSP or Fab 6), for the first quarter 2009 was $31.5 million. As a result of the adoption of FAS160 with effect from January 1, 2009, a 49 percent share of CSP’s loss amounting to $15.5 million was allocated to noncontrolling interest in CSP. No profit or loss was allocated to the noncontrolling interest in CSP in first quarter 2008 and fourth quarter 2008.
  • Net loss was $114.2 million, or negative 46.9 percent of revenues, compared to a net income of $2.4 million, or 0.6 percent of revenues in the year-ago quarter, and a net loss of $114.0 million or negative 32.4 percent of revenues in the previous quarter. Net loss attributable to Chartered was $98.8 million in first quarter 2009. The net income in first quarter 2008 did not include Fab 3E, which was acquired on March 31, 2008.
  • Basic loss per American Depositary Share (ADS) and basic loss per share in first quarter 2009 were ($0.26) and ($0.03) respectively, compared with basic loss per ADS and basic loss per share of ($0.00) and ($0.00) respectively in first quarter 2008. Diluted loss per ADS and diluted loss per share in first quarter 2009 were ($0.26) and ($0.03) respectively, compared with diluted loss per ADS and diluted loss per share of ($0.00) and ($0.00) respectively in first quarter 2008. The basic and diluted loss per ADS and loss per share figures have been adjusted for the recent 27-for-10 rights offering.

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