PSIT Psi Tech Hldgs (MM)

MANILA, Philippines, Feb. 28 /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, 2007: Fourth Quarter Financial Results The fourth quarter revenue totaled $23.5 million, an increase of 4.3% as compared to $22.5 million in the previous quarter, and a decline of 5.6% as compared to the same quarter in 2006. The increase in sales over third quarter was largely driven by a steady increase in our standard package for high power, medium current and fast-switching power devices. The top five customers for the fourth quarter of 2007 (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 from $21.3 million in the third quarter of 2007 to $22.7 million in the fourth quarter. The increase is attributable to raw materials and the strong Philippine Peso. The higher cost of raw materials in the fourth quarter was largely driven by the increase in copper, gold and oil-based materials, and an increase in sales volume of packages with a higher raw materials component. As a result, gross profit was $0.8 million in the fourth quarter, down from $1.2 million during the third quarter. Operating expenses were higher by 8.8% in the fourth quarter of 2007, amounting to $2.6 million compared to $2.4 million in the previous quarter. Fourth quarter operating expenses included $0.2 million of employee separation/restructuring costs and a $0.3 million provision for disputed purchase orders. Net Other Expenses for the fourth quarter increased to $1.5 million from $0.9 million during the third quarter, due to the continued appreciation of the Philippine peso. Net loss increased to $3.3 million for the fourth quarter from $2.1 million in the third quarter. 2007 Full Year Financial Results Revenues were $93.3 million in 2007, representing an increase of 4.0% over revenues of $89.7 million excluding revenue from discontinued operations for the same period last year. In 2007, the continued appreciation of the Philippine currency against the U.S. dollar and an overall increase in the prices of raw materials, such as copper, gold and oil based materials had negatively affected our gross profit. The Philippine peso, on the average, has appreciated by 18.8%. Copper prices have increased by an average of 33%, from $5.3/kg in 2006 to $7.05/kg in 2007. These external factors weighed on the Company's financial operations during 2007. The cost reduction initiatives and productivity improvement programs implemented during the year has partly reduced the negative financial impact of these external factors. In 2007, gross profit increased to $4.1 million, a 10.8% increase over gross profit of $3.7 million in 2006. The operating expenses decreased to $9.3 million in 2007 from $10.6 million in 2006 due to managements focus on efficiency and on driving cost reductions. The foreign exchange loss partly offset the efficiency gains, resulting in an improved net loss of $9.97 million in 2007, down from $11.6 million in 2006. Balance Sheet Highlights Cash and cash equivalents totaled $5.9 million as of December 31, 2007, compared to $3.3 million as of December 31, 2006. The increase in cash is largely attributable to improved collections and reduced inventories. New acquisitions in property, plant and equipment totaled $3.3 million in 2007. These expenditures are mostly related to the purchase of machineries and equipment to improve capacity and support ramp up for new products. Total current liabilities decreased by $4.4 million, from $37.8 million as of December 31, 2006 to $33.4 million as of December 31, 2007, mainly due to payment of trade and capital liabilities. Non-current liabilities account includes the carrying amount of $6.8 million Exchangeable Notes issued in July 2003 and June 2005, net of discount representing the embedded conversion feature of the Note. Business Outlook Arthur J. Young, Jr., Chairman and CEO said, "During the fourth quarter, we were faced with the challenges related to product mix changes and the continuing appreciation of the Philippine Peso. Given these challenges, we continue to enhance our focus on productivity and cost reduction measures, in anticipation of a seasonally flat market during the first quarter. We have seen and identified areas of growth in our company that we are actively pursuing. Specifically, these are in the power management segment of our QFN and Single Gauge DPAK family of packages. We have done strategic hiring, such as our new VP of Marketing and Sales based in the United States, as well as our new Taiwan marketing organization to support the new areas of growth. Our initiatives have shown very positive developments though we continue to be cautiously optimistic given the current worldwide market situation." 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/. 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 Years Ended December 31 31-Dec-07 30-Sep-07 31-Dec-06 31-Dec-07 31-Dec-06 Unaudited Unaudited Unaudited Unaudited Audited REVENUES $23,460,578 $22,502,430 $24,859,222 $93,317,313 $89,736,608 COST OF SALES 22,674,157 21,335,464 23,274,897 89,230,232 86,048,216 GROSS PROFIT (LOSS) 786,422 1,166,966 1,584,325 4,087,081 3,688,392 OPERATING EXPENSES Research and development 374,991 308,405 303,891 1,209,451 1,150,922 Stock compensation cost 44,943 44,943 26,227 148,339 159,013 Administrative expenses 1,951,780 1,787,967 1,629,519 7,044,262 6,780,572 Special charges - - - 4,394 1,884,289 Marketing expenses 200,582 223,628 165,444 878,723 669,424 Total Operating Expenses 2,572,295 2,364,943 2,125,081 9,285,169 10,644,220 LOSS FROM CONTINUING OPERATIONS (1,785,874) (1,197,977) (540,756) (5,198,088) (6,955,828) Interest and bank charges -- net (221,217) (262,954) (258,093) (1,073,497) (1,021,763) Foreign exchange gains(losses) -- net (665,472) (123,317) (235,797) (1,394,569) (530,334) Lease income 41,370 41,370 28,920 165,480 134,650 Exchangeable Note interest and financing charges (657,283) (638,130) (634,615) (2,525,321) (2,336,003) Gain (loss) on disposal of property and equipment 8,811 - - 38,478 (7,066) Income on refund from Manila Electric Company (Meralco) - - - - 91,188 Miscellaneous 34,508 57,355 (321,852) 110,445 - Net Other Expense (1,459,283) (925,676) (1,421,437) (4,678,984) (3,669,328) LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX (3,245,157) (2,123,653) (1,962,193) (9,877,072) (10,625,156) PROVISION FOR INCOME TAX - - 16,969 - 191,033 NET LOSS FROM CONTINUING OPERATIONS (3,245,157) (2,123,653) (1,979,162) (9,877,072) (10,816,189) NET LOSS FROM DISCONTINUED OPERATIONS 66,000 23,904 42,442 89,904 784,861 NET LOSS $(3,311,157) $(2,147,557) $(2,021,604)$(9,966,976)$(11,601,050) 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 (0.25) (0.16) (0.15) (0.75) (0.87) PSi Technologies Holdings, Inc. Unaudited Consolidated Balance Sheet (In US Dollars) 31-Dec-07 31-Dec-06 Unaudited Audited ASSETS Current Assets Cash $5,861,426 $3,270,042 Restricted Cash - 102,969 Accounts receivable -- net 12,263,943 14,643,596 Inventories-net 4,823,987 5,901,366 Other current assets -- net 777,141 482,629 Total Current Assets 23,726,497 24,400,602 Noncurrent Assets Property, plant and equipment -- net 26,380,350 36,099,471 Other noncurrent assets -- net 970,568 1,277,391 Total Noncurrent Assets 27,350,918 37,376,862 $51,077,415 $61,777,464 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $22,407,087 $24,604,664 Accounts payable CAPEX 427,200 2,509,204 Loans Payable 10,020,000 10,524,743 Advance from customer 466,503 - Trust receipts payable 52,520 39,998 Income tax payable - 114,773 Total Current Liabilities 33,373,310 37,793,382 Noncurrent Liabilities Exchangeable Note 6,843,695 4,541,506 Accrued retirement benefit cost 4,081,877 3,092,841 Total Noncurrent Liabilities 10,925,572 7,634,347 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 79,692,925 79,544,586 Other comprehensive loss (1,807,801) (2,055,236) Deficit (71,697,409) (61,730,433) Total Stockholders' Equity 6,778,533 16,349,735 $51,077,415 $61,777,464 PSi Technologies Holdings, Inc. Unaudited Consolidated Statement of Cash Flows (In US Dollars) For the Year Ended December 31, 2007 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(9,966,976) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 12,991,099 Interest on exchangeable notes converted to principal 1,331,689 Stock compensation costs 148,339 Amortization of debt issuance costs and discount 990,338 Accretion of interest receivable from sale of land, building and improvements (30,281) Accretion of interest receivable from Manila Electric Company (32,594) Unrealized foreign exchange losses 955,930 Provision for pension expense 605,974 Provision for inventory losses 4,395 Provision for doubtful accounts 10,843 Changes in operating assets and liabilities: Decrease (increase) in: Trade and other receivables 1,479,164 Inventories 1,041,310 Other current assets (244,776) Decrease in trade and other payables (5,297,362) Net cash provided by (used in) operating activities 3,987,092 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of property and equipment (2,872,803) Decrease (increase) in other noncurrent assets 350,584 Net cash used in investing activities (2,522,219) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from (payments of) trust receipts payable 12,522 Net proceeds from (payments of) loans payable (504,743) Advance from customer 1,500,000 Decrease in restricted cash 102,969 Net cash provided by financing activities 1,110,748 EFFECT OF EXCHANGE RATE CHANGES ON CASH 15,763 NET INCREASE (DECREASE) IN CASH 2,591,384 CASH, BEGINNING OF PERIOD 3,270,042 CASH, END OF PERIOD $5,861,426 SUPPLEMENTAL INFORMATION ON NONCASH INVESTING AND FINANCING ACTIVITIES Property and equipment acquired on account under accounts payable $427,200 DATASOURCE: PSi Technologies Holdings, Inc. CONTACT: Larry Cajucom of PSi Technologies Holdings, Inc., +63 2 838 4489, ; or Lasse Glassen of Financial Relations Board, +1-213-486-6546, , for PSi Technologies Holdings, Inc. Web site: http://www.psitechnologies.com/

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