Published: July 28, 2008
PSi Technologies Reports Second Quarter 2008 Results
MANILA, Philippines, July 28 /PRNewswire-FirstCall/ -- PSi Technologies
Holdings, Inc., (Nasdaq: PSIT), an independent provider of assembly and test
services for the power semiconductor market, today announced financial results
for the second quarter ended June 30, 2008.
Second Quarter Financial Results
Second quarter revenue totaled $22.9 million, an increase of 6.7% compared
to $21.5 million in the first quarter of 2008, and an increase of 1.0% as
compared to the same quarter in 2007. The sequential increase in sales
compared to the first quarter was largely driven by a steady month-to-month
increase in the Company's standard package for high power, medium current and
fast-switching power devices. These are commonly used for home appliances,
office and industrial equipment, and personal and consumer electronic
applications.
The top five customers for the second quarter of 2008 (in alphabetical
order) were Infineon Technologies, NXP Semiconductors, ON Semiconductors,
Power Integrations, and ST Microelectronics. The products assembled and
tested for these customers are used in various end user applications, such as
automotive systems, consumer electronics, communications equipment, industrial
applications, home appliances and PC motherboards.
The cost of sales increased by 2.7% from $21.1 million in the first
quarter of 2008 to $21.7 million in the second quarter of 2008, due to higher
sales volumes. However, as a percentage of sales, the cost of sales improved
by 3.7 percentage points-from 98.4% of sales in the first quarter to 94.7% of
sales in the second quarter of 2008. Compared to the second quarter of 2007,
cost of sales improved by 1.7 percentage points-from 96.4% of sales in the
second quarter of 2007 to 94.7% of sales in the second quarter of 2008.
The reduction in cost of sales as a percentage of sales for second quarter
of 2008 is attributable to the cost savings arising from operational
efficiencies in raw materials usage; improvement in equipment productivity;
better manpower deployment and management; and continued energy conservation
efforts complemented by reduction in power rates per kilowatt-hour.
The increase in sales, combined with the savings brought by the
improvement in cost of sales as percentage of sales in the second quarter of
2008, resulted to a 245% increase in gross profit, from $0.4 million in the
first quarter to $1.2 million in the second quarter of 2008. Compared to the
same period in 2007, gross profit grew by 48.5%.
Total operating expenses of $2.2 million in the second quarter of 2008
were lower by 10.8% as compared to $2.5 million in the first quarter. The
increase in research and development expenditures and marketing initiatives,
were offset by a 19.1% reduction in administrative expenses from the first
quarter of 2008 amounting to $2.0 million, down to $1.6 million in the second
quarter of 2008.
Net loss decreased by 56% to $1.4 million for the second quarter of 2008
from $3.2 million in the first quarter of 2008. This is largely due to the
245% increase in gross profit and supplemented by favorable foreign exchange
and a reduction in financing interest expenses.
Balance Sheet Highlights
Cash and cash equivalents totaled $2.0 million as of June 30, 2008,
compared to $3.4 million as of December 31, 2007. The decrease in cash and
cash equivalents is largely attributable to increase in payments for purchases
of raw materials driven by the increase in sales volume. Cash held in escrow
was restricted for withdrawal and is classified as "Restricted Cash" in the
consolidated balance sheet, since the balance of the outstanding trade
receivables assigned was not adequate to cover the Company's outstanding loan
payable.
New acquisitions of property, plant and equipment totaled $1.8 million in
the first half of 2008, mostly related to the purchase of machinery and
equipment to improve capacity and support ramp up for new products.
Total current liabilities increased by $4.6 million, from $37.4 million as
of December 31, 2007 to $42.0 million as of June 30, 2008, mainly due to the
reclassification as current liability of our 2005 Exchangeable Senior
Subordinated Note which will mature on June 1, 2009.
As of December 31, 2007, the 2003 Exchangeable Senior Subordinated Note
(the "2003 Note") was classified as current liability in the Company's
consolidated balance sheet. The 2003 Note issued to Merrill Lynch LLC was
amended to mature on July 31, 2008. All other terms and conditions remained
the same. On July 31, 2008, Merrill Lynch LLC may redeem the note together
with the accrued interest and any unpaid interest. However, the Company's
Board of Directors, at its May 26, 2008 meeting, after reviewing our financial
condition and in consideration of the 2003 Note's maturity date, delegated
authority to the Company's Audit Committee to negotiate with Merrill Lynch LLC
an extension of the 2003 Note to June 2009. The Audit Committee and Merrill
Lynch LLC have reached a non-binding agreement to extend the maturity date of
the 2003 Note and we are currently working on finalizing the documents to
effect such extension. The Company expect to execute the final documents on
or before July 31, 2008.
Business Outlook
Commenting on PSi's business outlook, Arthur J. Young, Jr., Chairman and
CEO said, "Given the existing environment in our market today, I am pleased
that our PSi team executed our business plan in the face of the challenges of
the second quarter of 2008. Keeping focused on our deliverables resulted in
improved efficiencies in all operating indices, which translated in better
margins. We identified opportunities, continued to invest in research and
development, and implemented our marketing initiatives in line with our
business plan. Our efforts to diversify our customer base and introduce new
product packages to our already extensive package portfolio continue to remain
on track and we expect to start seeing results from these initiatives in the
third and fourth quarters of 2008. We have seen our sales revenues trend
upward, and we are cautiously optimistic that we can maintain that trend
through the third quarter of 2008. We continue to watch a very fluid market
environment with customer forecasts changing frequently in either direction.
The price of oil and our basic raw material costs, as well as weakening
consumer sentiment, continue to be major issues on our radar screen."
In addition, George A. Shaw, COO commented, "We continue to focus on
strengthening the systems and processes of our organization especially in
areas of logistics and supply chain. With the price of oil driving up the
costs of our basic raw materials, our execution to low cost alternatives
remains a major initiative of our company. The successful qualification and
production ramp up of our single gauge dpak package to four new Taiwanese
customers was achieved in record time. The introduction of this package
enabled us to reduce our copper content on this package by almost 38%. Moving
forward we are completing the development of our ECO family of packages in our
TO 220, TO 247 and Fullpak platforms. This development will reduce the copper
content by 35% to 40% on these selected packages. We hope to bring these
packages into the market by the fourth quarter.
"Our Power QFN family of packages continues to gain market acceptance and
we continue to see a wide range of end product applications for this. From the
standard applications in power protection devices to multi-die applications in
power management devices to optical applications in solar chargers.
"We are also working on customer specific applications in different
customer proprietary package technologies in high-power applications for
industrial, automotive and medical products. Finally, we expect to introduce
to the market our new high-voltage family of packages in our SOT 227
configuration by the end of the third quarter of 2008. This family of high-
power packages will have the capability of achieving isolation voltages of up
to 3000 volts. We expect to provide samples to our customers by the end of the
third quarter of 2008."
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.: At Financial Relations Board:
Larry Cajucom Lasse Glassen
(632) 838 4489 (213) 486 6546
lvcajucomjr@psitechnologies.com.ph lglassen@frbir.com
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 our ability to negotiate final documentation with Merrill Lynch
LLC to extend the 2003 Note, 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 For the Six Months Ended
30-Jun-08 31-Mar-08 30-Jun-07 30-Jun-08 30-Jun-07
Unaudited Unaudited Unaudited Unaudited Unaudited
REVENUES $22,897,981 $21,458,501 $22,675,639 $44,356,482 $47,354,304
COST OF
SALES 21,678,534 21,104,906 21,854,639 42,783,440 45,220,610
GROSS
PROFIT 1,219,447 353,595 821,000 1,573,042 2,133,694
OPERATING
EXPENSES
Research
and
development 397,350 330,709 274,256 728,059 526,055
Administrative
expenses 1,606,729 1,986,388 1,690,132 3,593,117 3,367,363
Marketing
expenses 239,191 196,380 225,038 435,571 454,513
Total
Operating
Expenses 2,243,270 2,513,477 2,189,426 4,756,747 4,347,931
LOSS FROM
CONTINUING
OPERATIONS (1,023,823) (2,159,882) (1,368,426) (3,183,705) (2,214,237)
Interest
and bank
charges
-net (144,694) (235,157) (336,662) (379,851) (589,326)
Foreign
exchange
gains
(losses)
-net 447,891 (153,964) (472,747) 293,927 (605,780)
Lease income 41,370 41,370 41,370 82,740 82,740
Exchangeable
Note
interest
and financ-
ing charges (732,827) (716,049) (612,979) (1,448,876) (1,229,908)
Gain on
disposal of
assets (33,719) 3,900 - ( 29,819)
Miscellaneous 36,428 19,258 35,267 55,686 47,530
Net Other
Expense (385,551) (1,040,642) (1,345,751) (1,426,193) (2,294,744)
NET LOSS $(1,409,374)$(3,200,524) $(2,714,177)$(4,609,898)$(4,508,981)
No. of
Shares
Outstand-
ing 13,289,525 13,289,525 13,289,525 13,289,525 13,289,525
EPS-based on
Outstanding
Shares $(0.11) $(0.24) $(0.20) $(0.35) $(0.34)
PSi Technologies Holdings, Inc.
Unaudited Consolidated Balance Sheet
(In US Dollars)
30-Jun-08 31-Dec-07
Unaudited Audited
ASSETS
Current Assets
Cash and cash equivalents $2,001,067 $3,414,322
Restricted cash 1,911,472 1,096,376
Accounts receivable-net 13,469,036 12,752,236
Inventories-net 5,405,639 4,477,486
Other current assets-net 527,636 438,430
Total Current Assets 23,314,850 22,178,850
Noncurrent Assets
Property, plant and equipment-net 22,940,482 26,723,243
Other noncurrent assets-net 1,117,476 876,565
Total Noncurrent Assets 24,057,958 27,599,808
$47,372,808 $49,778,658
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued
expenses $23,534,415 $21,647,112
Accounts payable CAPEX 487,018 425,120
Loans Payable 9,800,000 10,020,000
Exchangeable notes 8,186,416 4,816,349
Advance from customer - 466,503
Trust receipts payable - 52,520
Total Current Liabilities 42,007,849 37,427,604
Noncurrent Liabilities
Noncurrent portion of exchangeable
notes - 2,027,347
Accrued retirement benefit cost 1,122,721 1,475,276
Total Noncurrent Liabilities 1,122,721 3,502,623
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 79,425,279 79,421,574
Other comprehensive loss 280,257 280,257
Deficit (76,054,116) (71,444,218)
Total Stockholders' Equity 4,242,238 8,848,431
$47,372,808 $49,778,658
PSi Technologies Holdings, Inc.
Unaudited Consolidated Statement of
Cash Flows
(In US Dollars)
For the Six Months
Ended June 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(4,609,898)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 5,562,036
Stock compensation costs 3,705
Amortization of debt issuance costs and discount 639,682
Interest on exchangeable notes converted to principal 716,189
Accretion of interest receivable from Manila
Electric Company (17,779)
Unrealized foreign exchange gain (382,197)
Provision for pension expense 191,008
Loss on disposal of inventories 71,689
Changes in operating assets and liabilities:
Decrease (increase) in:
Trade and other receivables (1,182,305)
Inventories (999,842)
Other current assets (119,989)
Decrease in trade and other payables 1,388,707
Net cash provided by (used in)operating activities 1,261,006
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of property and equipment (1,292,258)
Decrease (increase) in other noncurrent assets (287,428)
Net cash used in investing activities (1,579,686)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from (payments of) trust receipts payable (220,000)
Net proceeds from (payments of) loans payable (52,520)
Decrease in restricted cash (815,097)
Net cash provided by financing activities (1,087,617)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (6,959)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (1,413,256)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,414,322
CASH AND CASH EQUIVALENTS, END OF PERIOD $2,001,066
SUPPLEMENTAL INFORMATION ON NONCASH INVESTING AND
FINANCING ACTIVITIES
Property and equipment acquired on account under
accounts payable $487,018
SOURCE PSi Technologies Holdings, Inc.
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