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 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 DATASOURCE: PSi
Technologies Holdings, Inc. CONTACT: Larry Cajucom of PSi
Technologies Holdings, Inc., +1-632-838-4489, ; or Lasse Glassen,
+1-213-486-6546, , for PSi Technologies Holdings, Inc. Web site:
http://www.psitechnologies.com/
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