We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type |
---|---|---|---|
Chartered Semiconductor Manufacturing Ltd. (MM) | NASDAQ:CHRT | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 19.01 | 0 | 01:00:00 |
Page | ||||
3 | ||||
25 | ||||
40 | ||||
41 | ||||
|
||||
42 | ||||
42 | ||||
42 | ||||
42 | ||||
42 | ||||
42 | ||||
|
||||
43 | ||||
|
1
2
As of | ||||||||
December 31, | September 30, | |||||||
2008 | 2009 | |||||||
|
||||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 524,501 | $ | 805,726 | ||||
Restricted cash
|
69,560 | 66,301 | ||||||
Marketable securities
|
950 | 1,175 | ||||||
Receivables, less allowances of $2,451 in 2008 and $1,680 in 2009
|
224,428 | 297,893 | ||||||
Inventories
|
189,498 | 154,895 | ||||||
Other investments
|
19,634 | 3,274 | ||||||
Other current assets
|
19,840 | 36,267 | ||||||
|
||||||||
Total current assets
|
1,048,411 | 1,365,531 | ||||||
|
||||||||
Investment in associated companies
|
28,924 | 34,662 | ||||||
Technology licenses and other intangible assets, net
|
48,178 | 35,376 | ||||||
Property, plant and equipment, net
|
2,845,668 | 2,768,222 | ||||||
Other non-current assets
|
53,992 | 34,466 | ||||||
|
||||||||
Total assets
|
$ | 4,025,173 | $ | 4,238,257 | ||||
|
||||||||
|
||||||||
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERENCE SHARES AND EQUITY
|
||||||||
Payables
|
$ | 311,264 | $ | 337,913 | ||||
Current installments of long-term debt and capital lease obligations
|
163,232 | 565,745 | ||||||
Other current liabilities
|
102,355 | 86,571 | ||||||
|
||||||||
Total current liabilities
|
576,851 | 990,229 | ||||||
|
||||||||
Long-term debt and capital lease obligations, excluding current installments
|
1,677,228 | 1,318,644 | ||||||
Other non-current liabilities
|
61,801 | 60,309 | ||||||
|
||||||||
Total liabilities
|
2,315,880 | 2,369,182 | ||||||
|
||||||||
Convertible redeemable preference shares
|
265,879 | 273,669 | ||||||
|
||||||||
Ordinary share capital
|
2,706,244 | 3,010,312 | ||||||
Accumulated deficit
|
(1,208,166 | ) | (1,351,019 | ) | ||||
Accumulated other comprehensive loss
|
(54,664 | ) | (53,724 | ) | ||||
|
||||||||
Total shareholders equity of Chartered
|
1,443,414 | 1,605,569 | ||||||
Noncontrolling interest in CSP
|
| (10,163 | ) | |||||
|
||||||||
Total equity
|
$ | 1,443,414 | $ | 1,595,406 | ||||
|
||||||||
|
||||||||
|
||||||||
Total liabilities, convertible redeemable preference shares and total equity
|
$ | 4,025,173 | $ | 4,238,257 | ||||
|
3
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
|
||||||||||||||||
Net revenue
|
$ | 463,648 | $ | 415,228 | $ | 1,309,440 | $ | 1,008,175 | ||||||||
Cost of revenue
|
398,068 | 327,254 | 1,109,407 | 916,747 | ||||||||||||
|
||||||||||||||||
Gross profit
|
65,580 | 87,974 | 200,033 | 91,428 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Other revenue
|
2,654 | 2,312 | 10,974 | 6,169 | ||||||||||||
|
||||||||||||||||
OPERATING EXPENSES
|
||||||||||||||||
Research and development
|
44,184 | 43,878 | 132,474 | 137,672 | ||||||||||||
Sales and marketing
|
19,493 | 14,914 | 54,921 | 41,390 | ||||||||||||
General and administrative
|
11,196 | 18,486 | 33,154 | 39,571 | ||||||||||||
Other operating expenses, net
|
1,364 | 6,480 | 5,116 | 15,013 | ||||||||||||
|
||||||||||||||||
Total operating expenses, net
|
76,237 | 83,758 | 225,665 | 233,646 | ||||||||||||
|
||||||||||||||||
Equity in income of associated companies, net
|
8,941 | 8,827 | 28,192 | 13,306 | ||||||||||||
Other income (loss), net
|
(941 | ) | 476 | 8,782 | 747 | |||||||||||
Interest income
|
2,992 | 3,145 | 11,608 | 5,736 | ||||||||||||
Interest expense and amortization of debt discount
|
(16,553 | ) | (16,374 | ) | (49,990 | ) | (46,865 | ) | ||||||||
|
||||||||||||||||
Income (loss) before income tax
|
(13,564 | ) | 2,602 | (16,066 | ) | (163,125 | ) | |||||||||
Income tax expense (benefit)
|
10,813 | (58 | ) | (37,497 | ) | (10,050 | ) | |||||||||
|
||||||||||||||||
Net income (loss)
|
(24,377 | ) | 2,660 | 21,431 | (153,075 | ) | ||||||||||
Less: Net income (loss) attributable to the
noncontrolling interest in CSP
|
| 7,356 | | (10,222 | ) | |||||||||||
|
||||||||||||||||
Net income (loss) attributable to Chartered
|
(24,377 | ) | (4,696 | ) | 21,431 | (142,853 | ) | |||||||||
|
||||||||||||||||
|
||||||||||||||||
Less: Accretion to redemption value of convertible
redeemable preference shares
|
2,522 | 2,622 | 7,495 | 7,790 | ||||||||||||
|
||||||||||||||||
Net income (loss) available to ordinary shareholders of
Chartered
|
$ | (26,899 | ) | $ | (7,318 | ) | $ | 13,936 | $ | (150,643 | ) | |||||
|
||||||||||||||||
|
||||||||||||||||
Basic and diluted net earnings (loss) per ordinary share*
|
$ | (0.07 | ) | $ | (0.01 | ) | $ | 0.04 | $ | (0.22 | ) | |||||
Basic and diluted net earnings (loss) per ADS*
|
$ | (0.70 | ) | $ | (0.08 | ) | $ | 0.36 | $ | (2.22 | ) | |||||
|
||||||||||||||||
Number of ordinary shares (in millions) used in
computing:*
|
||||||||||||||||
Basic net earnings (loss) per ordinary share
|
383.2 | 941.9 | 383.1 | 679.9 | ||||||||||||
Effect of dilutive securities
|
| | 0.2 | | ||||||||||||
|
||||||||||||||||
Diluted net earnings (loss) per ordinary share
|
383.2 | 941.9 | 383.3 | 679.9 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Number of ADSs (in millions) used in computing:*
|
||||||||||||||||
Basic net earnings (loss) per ADS
|
38.3 | 94.2 | 38.3 | 68.0 | ||||||||||||
Effect of dilutive securities
|
| | | | ||||||||||||
|
||||||||||||||||
Diluted net earnings (loss) per ADS
|
38.3 | 94.2 | 38.3 | 68.0 | ||||||||||||
|
* | The weighted average number of ordinary shares and ADS used in computing the basic and diluted net earnings per ordinary share and ADS, respectively, have been retroactively adjusted for the rights offering and the share consolidation see Note 5 of the unaudited condensed consolidated financial statements for more details. |
4
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
Net income (loss)
|
$ | (24,377 | ) | $ | 2,660 | $ | 21,431 | $ | (153,075 | ) | ||||||
Other comprehensive income (loss):
|
||||||||||||||||
Net unrealized gains (losses) on change in cash flow
hedging fair values
|
(338 | ) | (441 | ) | (294 | ) | 6 | |||||||||
Reclassification of cash flow hedging (gains) losses into
earnings
|
(319 | ) | 280 | (83 | ) | 282 | ||||||||||
Foreign currency translation
|
(487 | ) | 118 | (397 | ) | 121 | ||||||||||
Unrealized gains (losses) on available-for-sale securities
|
(766 | ) | (55 | ) | (2,107 | ) | 225 | |||||||||
Reclassification of realized losses on available-for-sale
securities into earnings
|
446 | | 1,287 | 365 | ||||||||||||
|
||||||||||||||||
Other comprehensive income (loss), net
|
(1,464 | ) | (98 | ) | (1,594 | ) | 999 | |||||||||
|
||||||||||||||||
Comprehensive income (loss), net
|
(25,841 | ) | 2,562 | 19,837 | (152,076 | ) | ||||||||||
Less: Comprehensive income (loss) attributable to the
noncontrolling interest in CSP
|
| 7,372 | | (10,163 | ) | |||||||||||
|
||||||||||||||||
Comprehensive income (loss) attributable to Chartered
|
$ | (25,841 | ) | $ | (4,810 | ) | $ | 19,837 | $ | (141,913 | ) | |||||
|
5
Shareholders of Chartered | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Compre- | ||||||||||||||||||||||||
hensive | Noncontrol- | |||||||||||||||||||||||
Accumulated | Income | ling interest | ||||||||||||||||||||||
Ordinary Share Capital | deficit | (Loss) | in CSP | Total Equity | ||||||||||||||||||||
Number | $ | $ | $ | $ | $ | |||||||||||||||||||
Balance at January 1, 2008
|
2,539,626 | 2,710,006 | (1,115,587 | ) | (53,270 | ) | | 1,541,149 | ||||||||||||||||
Net loss
|
| | (92,579 | ) | | | (92,579 | ) | ||||||||||||||||
Other comprehensive loss
|
| | | (1,394 | ) | | (1,394 | ) | ||||||||||||||||
Accretion to redemption value of
convertible redeemable
preference shares
|
| (10,042 | ) | | | | (10,042 | ) | ||||||||||||||||
Issuance of shares arising from
share-based awards
|
3,574 | 1,871 | | | | 1,871 | ||||||||||||||||||
Employee share-based compensation
|
| 4,432 | | | | 4,432 | ||||||||||||||||||
Non-employee share-based
compensation
|
| (23 | ) | | | | (23 | ) | ||||||||||||||||
|
||||||||||||||||||||||||
Balance at December 31, 2008
|
2,543,200 | 2,706,244 | (1,208,166 | ) | (54,664 | ) | | 1,443,414 | ||||||||||||||||
Net loss
|
| | (142,853 | ) | | (10,222 | ) | (153,075 | ) | |||||||||||||||
Other comprehensive income
|
| | | 940 | 59 | 999 | ||||||||||||||||||
Accretion to redemption value of
convertible redeemable
preference shares
|
| (7,790 | ) | | | | (7,790 | ) | ||||||||||||||||
Issuance of shares arising from
share-based awards
|
1,844 | 2,846 | | | | 2,846 | ||||||||||||||||||
Employee share-based compensation
|
| 2,352 | | | | 2,352 | ||||||||||||||||||
Non-employee share-based
compensation
|
| 32 | | | | 32 | ||||||||||||||||||
Issuance of ordinary shares, net
of direct issuance costs
|
6,869,926 | 306,628 | | | | 306,628 | ||||||||||||||||||
Adjustment for ten for one
share consolidation
|
(8,472,909 | ) | | | | | | |||||||||||||||||
|
||||||||||||||||||||||||
Balance at September 30, 2009
|
942,061 | 3,010,312 | (1,351,019 | ) | (53,724 | ) | (10,163 | ) | 1,595,406 | |||||||||||||||
|
6
Nine Months Ended | ||||||||
September 30, | September 30, | |||||||
2008 | 2009 | |||||||
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net income (loss)
|
$ | 21,431 | $ | (153,075 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
|
||||||||
Equity in income of associated companies, net
|
(28,192 | ) | (13,306 | ) | ||||
Cash dividends received from associated companies
|
28,457 | 7,689 | ||||||
Depreciation and amortization
|
433,698 | 380,142 | ||||||
Foreign exchange loss, net
|
1,366 | 2,071 | ||||||
(Gain) loss on disposal of property, plant and equipment, net
|
8 | (691 | ) | |||||
Deferred tax benefit
|
(23,052 | ) | (9,952 | ) | ||||
Others, net
|
12,425 | 15,452 | ||||||
Changes in assets and liabilities, net of effects from purchase
of a subsidiary in 2008:
|
||||||||
Receivables
|
(6,666 | ) | (68,489 | ) | ||||
Inventories
|
19,838 | 34,603 | ||||||
Other assets
|
(18,993 | ) | (3,666 | ) | ||||
Payables and other liabilities
|
(11,623 | ) | 35,202 | |||||
|
||||||||
|
||||||||
Net cash provided by operating activities
|
$ | 428,697 | $ | 225,980 | ||||
|
||||||||
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Payments for property, plant and equipment
|
(443,556 | ) | (280,234 | ) | ||||
Payments for technology licenses
|
(11,014 | ) | (4,381 | ) | ||||
Investment in associated companies
|
(8,041 | ) | | |||||
Purchase of a subsidiary, net of cash acquired of $6,523
|
(237,072 | ) | | |||||
Refund of deposits placed with a vendor
|
1,278 | 841 | ||||||
Proceeds from sale of property, plant, equipment
|
10,482 | 5,251 | ||||||
Proceeds from redemption of other investments
|
55,841 | 16,150 | ||||||
Others, net
|
(433 | ) | 675 | |||||
|
||||||||
|
||||||||
Net cash used in investing activities
|
$ | (632,515 | ) | $ | (261,698 | ) | ||
|
||||||||
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Debt
|
||||||||
Borrowings
|
389,072 | 167,905 | ||||||
Repayments
|
(433,631 | ) | (157,512 | ) | ||||
Capital lease payments
|
(3,972 | ) | (4,488 | ) | ||||
Receipts (refunds) of customer deposits
|
(5,609 | ) | 15 | |||||
Issuance of ordinary shares, net of direct issuance costs
|
989 | 306,817 | ||||||
(Increase) decrease in cash restricted for debt repayment
|
(24,468 | ) | 3,259 | |||||
|
||||||||
|
||||||||
Net cash provided by (used in) financing activities
|
$ | (77,619 | ) | $ | 315,996 | |||
|
||||||||
|
||||||||
Effect of exchange rate changes on cash and cash equivalents
|
189 | 947 | ||||||
Net increase (decrease) in cash and cash equivalents
|
(281,248 | ) | 281,225 | |||||
Cash and cash equivalents at the beginning of the period
|
743,173 | 524,501 | ||||||
|
||||||||
|
||||||||
Cash and cash equivalents at the end of the period
|
$ | 461,925 | $ | 805,726 | ||||
|
||||||||
|
||||||||
Non-cash investing activities
|
||||||||
Property, plant and equipment acquired through capital lease
|
$ | | $ | 31,092 |
7
1. | Basis of Presentation |
The unaudited interim condensed consolidated financial statements have been prepared in accordance with United States of America (U.S.) generally accepted accounting principles (U.S. GAAP) and, in the opinion of management, contain all adjustments necessary, all of which are of a normal recurring nature except for the rights offering completed in April 2009 and share consolidation in May 2009 which resulted in adjustments being made to the Companys share plans and agreements as discussed in Note 3 and retroactive adjustments to the net earnings (loss) per ordinary share and American Depositary Share (ADS) as discussed in Note 5, to present fairly the financial information included herein. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Companys annual report on Form 20-F for the year ended December 31, 2008. | ||
The condensed consolidated balance sheet as of December 31, 2008 and the condensed consolidated statement of total equity for the year ended December 31, 2008 included herein are derived from the audited consolidated financial statements in the Companys annual report on Form 20-F for the year ended December 31, 2008 and as reclassified upon adoption of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 810-10-65-1 on noncontrolling interests in consolidated financial statements, which requires the presentation of noncontrolling interests within equity. The interim condensed consolidated financial statements as of September 30, 2009 and for three and nine months ended September 30, 2008 and September 30, 2009, have not been audited. | ||
The unaudited interim condensed consolidated financial statements reflect the accounts of Chartered Semiconductor Manufacturing Ltd. (Chartered) and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||
On July 1, 2009, as a result of the FASBs Codification of U.S. GAAP, ASC became the single source of authoritative nongovernmental U.S. GAAP. The Codification became effective for financial statements that cover interim and annual periods ending after September 15, 2009. | ||
Prior to the adoption of ASC 810-10-65-1 on noncontrolling interests in consolidated financial statements, none of the losses from Chartered Silicon Partners Pte Ltd (CSP) had been allocated to the noncontrolling interest in the consolidated statements of operations since the first quarter of 2003 onwards as the obligations of the noncontrolling interest were reduced to zero in that quarter due to cumulative losses. CSP subsequently reported profits in the first quarter of 2008. Accordingly, profits applicable to the noncontrolling interest in CSP were taken to the consolidated statements of operation until the noncontrolling interests share of losses previously recorded in the consolidated statements of operations is fully recovered. The effect of not allocating profits (losses) of the noncontrolling interests in CSP in the three and nine months ended September 30, 2008 resulted in a decrease to the net income attributable to Chartered by $1,513 and an increase to the net income attributable to Chartered by $4,802, respectively. | ||
The cumulative net losses not allocated to the noncontrolling shareholders of CSP according to their proportionate ownership as of December 31, 2008 is $213,496. | ||
ASC 810-10-65-1 on noncontrolling interests in consolidated financial statements became effective for financial statements issued for fiscal years and interim periods beginning on or after December 15, 2008. It requires that accounting and reporting for minority interests be recharacterized as noncontrolling interests and classified as a component of equity. This ASC also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. | ||
Supplemental pro forma financial information is presented below as if ASC 810-10-65-1 on noncontrolling interests in consolidated financial statements was not adopted on January 1, 2009. |
Three Months Ended | Nine Months Ended | |||||||
September 30, 2009 | September 30, 2009 | |||||||
(In thousands, except per share data) | ||||||||
Pro forma net income (loss) attributable to Chartered
|
2,660 | (153,075 | ) | |||||
Pro forma net income (loss) available to ordinary shareholders of
Chartered
|
38 | (160,865 | ) | |||||
Pro forma basic net income (loss) per ordinary share
|
0.00 | (0.24 | ) | |||||
Pro forma diluted net income (loss) per ordinary share
|
0.00 | (0.24 | ) | |||||
Pro forma basic net income (loss) per ADS
|
0.00 | (2.37 | ) | |||||
Pro forma diluted net income (loss) per ADS
|
0.00 | (2.37 | ) |
8
2. | Proposed Acquisition |
On September 7, 2009, the respective boards of directors of Chartered and ATIC International Investment Company LLC (the Acquiror) announced the proposed acquisition of Chartered by the Acquiror by way of a scheme of arrangement under Section 210 of the Companies Act, Chapter 50 of Singapore (the Scheme). The Acquiror is a special purpose vehicle incorporated in Abu Dhabi and wholly-owned by Advanced Technology Investment Company LLC (ATIC). ATIC is a technology investment company wholly-owned by the Government of Abu Dhabi. On October 9, 2009, Chartered dispatched the scheme document to ordinary shareholders containing details of the Scheme (the Scheme Document) together with related documentation. | ||
As described in the Scheme Document, the Scheme requires the approval of Chartereds ordinary shareholders at a meeting convened at the direction of the High Court of the Republic of Singapore. In connection with the Scheme, Chartered has also given notice to convene an extraordinary general meeting and a class meeting of holders of convertible redeemable preference shares in the capital of Chartered to pass special resolutions relating to amendments of Chartereds Articles of Association specified in the proxy statements for these meetings dispatched together with the Scheme Document. These meetings are scheduled to be held on November 4, 2009. The Scheme will also require the subsequent sanction of the High Court of the Republic of Singapore and satisfaction (or, where applicable, waiver) of customary conditions, including regulatory conditions. Subject to the satisfaction (or, where applicable, waiver) of the other conditions set out in the Scheme Document, the Scheme is expected to become effective in December 2009. The accompanying unaudited condensed financial statements do not reflect any adjustments to the assets and liabilities that might occur if such shareholder approval is obtained and Chartered becomes a wholly-owned subsidiary of the Acquiror. |
3. | Rights Offering and Share Consolidation |
On March 9, 2009, the Company announced a rights offering of approximately 6,869,926,194 new ordinary shares (Shares), directly or in the form of ADS. | ||
Pursuant to the rights offering: |
| 27 new Shares were offered for every 10 Shares held at S$0.07 per rights share; and | ||
| 27 new ADSs were offered for every 10 ADSs held at a price of US$0.46 per rights ADS. |
The rights offering was completed on April 15, 2009 and final net proceeds from the rights offering were approximately $307 million. | ||
Subsequent to the completion of the rights offering, the Company held a ten for one share consolidation which was approved during an Extraordinary General Meeting of shareholders on April 30, 2009. The share consolidation took effect on May 21, 2009. | ||
In connection with the rights offering and the share consolidation, adjustments were made with respect to: |
| the exercise price of, and number of ordinary shares issuable upon exercise of, outstanding options issued under the 1999 employee share option plan (1999 Option Plan); | ||
| the number of ordinary shares issuable upon vesting of awards issued under the restricted share unit plan (RSU Plan) and the performance share unit plan (PSU Plan); | ||
| the conversion price of convertible redeemable preference shares (CRPS); and | ||
| the strike prices and number of ordinary shares issuable under the call option with Goldman Sachs International (GS). |
(a) | 1999 Option Plan |
As a result of the rights offering in March 2009, changes were made on March 18, 2009, being the modification date, to both the exercise price and the number of outstanding share options granted under the 1999 Option Plan. The adjustments were made by multiplying each existing option exercise price by 0.6632 and multiplying the number of outstanding share options by 1.5078. The number of share options granted under the 1999 Option Plan increased by 51,146 options immediately after the modification. | ||
Subsequently, as a result of the share consolidation in May 2009, further changes were made on May 21, 2009, being the modification date, to both the exercise price and the number of outstanding share options granted under the 1999 Option Plan. The adjustments were made by multiplying each existing option exercise price by 10 and multiplying the number of outstanding share options by 0.1. The number of share options granted under the 1999 Option Plan decreased by 132,499 options immediately after the modification. | ||
The modification to the 1999 Option Plan as a result of the rights offering in March 2009 and the share consolidation in May 2009 did not result in any incremental compensation cost as the fair value of the modified awards equals the fair value of the original awards immediately before the modification. As of September 30, 2009, the number of share options outstanding |
9
was 14,480. | ||
The 1999 Option Plan expired on January 28, 2009. |
(b) | RSU Plan |
As a result of the rights offering in March 2009, changes were made on March 18, 2009, being the modification date, to the number of outstanding RSUs granted under the RSU Plan. The adjustments were made by multiplying the number of outstanding RSUs by 1.5078. The number of RSUs granted under the RSU Plan increased by 5,468 RSUs immediately after the modification. | ||
Subsequently, as a result of the share consolidation in May 2009, further changes were made on May 21, 2009, being the modification date, to the number of outstanding RSUs granted under the RSU Plan. The adjustments were made by multiplying the number of outstanding RSUs by 0.1. The number of RSUs granted under the RSU Plan decreased by 14,504 RSUs immediately after the modification. | ||
The modification to the RSU Plan as a result of the rights offering in March 2009 and the share consolidation in May 2009 did not result in any incremental compensation cost as the fair value of the modified awards equals the fair value of the original awards immediately before the modification. As of September 30, 2009, the number of RSUs outstanding was 8,292. | ||
See Note 12 for details of new RSU grants during the nine months ended September 30, 2009. |
(c) | PSU Plan |
As a result of the rights offering in March 2009, changes were made on March 18, 2009, being the modification date, to the base number of outstanding PSUs granted under the PSU Plan. The adjustments were made by multiplying the base number of outstanding PSUs by 1.5078. The base number of outstanding PSUs granted under the PSU Plan increased by 2,234 PSUs immediately after the modification. | ||
Subsequently, as a result of the share consolidation in May 2009, further changes were made on May 21, 2009, being the modification date, to the base number of outstanding PSUs granted under the PSU Plan. The adjustments were made by multiplying the base number of outstanding PSUs by 0.1. The base number of outstanding PSUs granted under the PSU Plan decreased by 5,969 PSUs immediately after the modification. | ||
The modification to the PSU Plan as a result of the rights offering in March 2009 and the share consolidation in May 2009 did not result in any incremental compensation cost as the fair value of the modified awards equals the fair value of the original awards immediately before the modification. As of September 30, 2009, the number of PSUs outstanding was 980. | ||
See Note 12 for details of new PSU grants during the nine months ended September 30, 2009. |
(d) | CRPS |
As of September 30, 2009, there are 28 outstanding CRPS, each with a redemption price of US$10. Prior to the rights offering and the share consolidation, holders of the CRPS may convert the CRPS into new Shares or, subject to certain limitations, ADSs at a conversion price of $0.8719 per Share at any time before the close of business on the 7th business day prior to maturity or early redemption. | ||
Pursuant to the terms of the Articles of Association of the Company, such conversion price is required to be adjusted on account of the rights offering and the share consolidation. As a result of the rights offering, the conversion price was adjusted to $0.4120 per Share. This adjustment was made on March 18, 2009, being the modification date for the rights offering. | ||
Subsequently, as a result of the share consolidation, the conversion price was further adjusted to $4.12 per Share. This adjustment was made on May 21, 2009, being the modification date for the share consolidation. |
(e) | Call option with GS |
Pursuant to the original provisions of the call option agreement with GS, GS is entitled to purchase up to 214,800 of new ordinary shares (Options) at US$1.408 per share (Strike Price) and the Company may terminate the transaction early, in whole or in part, if the closing price of the Companys ordinary shares is equal to or higher than US$1.76 (equivalent to 125% of the US$1.408 exercise price termed as the Higher Soft Call Strike Price) on each of any 20 business days in any consecutive 30 business day period. As a result of the rights offering, the number of Options was adjusted from 214,800 to 323,883, the Strike Price was adjusted from $1.408 to $0.9338, and the Higher Soft Call Strike Price was adjusted from $1.76 to $1.1672 by GS on March 16, 2009. | ||
Subsequently, as a result of the share consolidation, the number of Options was further adjusted from 323,883 to 32,388, the Strike Price was adjusted from $0.9338 to $9.338, and the Higher Soft Call Strike Price was adjusted from $1.1672 to $11.672 by GS on May 21, 2009. |
10
4. | Use of Estimates |
The preparation of the unaudited interim condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure about contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the respective reporting periods. Significant items subject to judgment and estimates include the amount of income tax expense, the estimated useful lives and salvage values of long-lived assets, the recoverability of the carrying value of long-lived assets, other-than-temporary impairment assessments of other investments, available-for-sale securities and investments in other equity securities, the realization of deferred income tax assets, the valuation of accounts receivable and inventories, the determination of normal capacity of the Companys production facilities, the recognition of revenue, the recognition and measurement of sales credits and returns allowance, the likelihood of achieving the milestones attached to Government grants, managements projections of achievement of performance conditions for grants under the performance share units plan over the performance period, the fair value of share-based employee compensation awards and financial instruments, the amount of asset retirement obligations and costs, and the valuation of net assets acquired from purchase business combinations. These estimates and assumptions are based on managements best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets; volatile equity, foreign currency and energy markets; and declines in consumer spending have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. | ||
During 2008, the Company revised the estimated useful lives of its twelve-inch process equipment and machinery from five years to eight years and the related mechanical and electrical installations from ten years to fifteen years. In addition, the estimated salvage values of the related process equipment and machinery were reduced to zero. These changes were made to better reflect the expected pattern of economic benefits from the use of the equipment and machinery over time based on an analysis of the expected technology lifecycle, historical usage experience and industry practices. The change in estimated useful lives and residual values is a change in accounting estimate that was applied prospectively from October 1, 2008. The impact of this change was a decrease in the Companys net loss by $27,090 and $73,774 and a decrease in the Companys basic and diluted net loss per ADS by $0.29 and $1.09 for the three and nine months ended September 30, 2009, respectively. Basic and diluted net loss per ordinary share for the three and nine months ended September 30, 2009 decreased by $0.03 and $0.11, respectively. | ||
During 2008, the Company changed the estimated useful lives for certain technology-related intangible assets classified under Technology licenses in the consolidated balance sheets from three to five years. The change was made to better reflect the expected pattern of economic benefits from the use of the intangible assets over time based on an analysis of the expected future usage of the underlying technology and historical usage experience. The change in estimated useful lives is a change in accounting estimate that was applied prospectively from October 1, 2008. The impact of this change was a decrease in the net loss of the Company by $1,098 and $3,516 for the three and nine months ended September 30, 2009, respectively. Basic and diluted net loss per ADS for the three and nine months ended September 30, 2009 decreased by $0.01 and $0.05, respectively. Basic and diluted net loss per ordinary share for the three months ended September 30, 2009 were not affected by the impact of this change. Basic and diluted net loss per ordinary share for the nine months ended September 30, 2009 decreased by $0.01. |
5. | Net Earnings (Loss) Per Ordinary Share |
Basic net earnings (loss) per ordinary share is computed by deducting from (adding to) net income (loss) available to ordinary shareholders of Chartered the accretion to redemption value of the convertible redeemable preference shares and dividing the resulting amount of net income (loss) available to ordinary shareholders of Chartered by the weighted-average number of ordinary shares outstanding. Diluted net earnings (loss) per ordinary share is computed using the weighted-average number of ordinary shares outstanding plus potentially dilutive securities, which includes the dilutive effect of share options using the treasury stock method, the dilutive effect of restricted share units, the impact of contingently issuable share-based awards with performance conditions and the dilutive effect of ordinary shares issuable upon the assumed conversion of the Companys convertible securities. The accretion charges on convertible securities are added back to net income available to ordinary shareholders of Chartered when the related ordinary share equivalents are included in computing diluted net earnings (loss) per ordinary share. | ||
The weighted average number of ordinary shares and ADSs used in computing the comparative basic and diluted net earnings (loss) per ordinary share and ADS, respectively, for the three and nine months ended September 30, 2008, were retroactively adjusted to take effect of the following: |
11
| bonus element contained within the rights offering, and | ||
| the ten for one share consolidation as follows: |
Three Months
Ended |
Nine Months
Ended |
|||||||
September 30,
2008 |
September 30,
2008 |
|||||||
Basic net earnings (loss) per ordinary share
|
||||||||
before adjustment for rights offering and share consolidation
|
(0.01 | ) | 0.01 | |||||
retroactive adjustment for rights offering and share consolidation
|
(0.06 | ) | 0.03 | |||||
after adjustment for rights offering and share consolidation
|
(0.07 | ) | 0.04 | |||||
Diluted net earnings (loss) per ordinary share
|
||||||||
before adjustment for rights offering and share consolidation
|
(0.01 | ) | 0.01 | |||||
retroactive adjustment for rights offering and share consolidation
|
(0.06 | ) | 0.03 | |||||
after adjustment for rights offering and share consolidation
|
(0.07 | ) | 0.04 | |||||
Basic net earnings (loss) per ADS
|
||||||||
before adjustment for rights offering and share consolidation
|
(0.11 | ) | 0.05 | |||||
retroactive adjustment for rights offering and share consolidation
|
(0.59 | ) | 0.31 | |||||
after adjustment for rights offering and share consolidation
|
(0.70 | ) | 0.36 | |||||
Diluted net earnings (loss) per ADS
|
||||||||
before adjustment for rights offering and share consolidation
|
(0.11 | ) | 0.05 | |||||
retroactive adjustment for rights offering and share consolidation
|
(0.59 | ) | 0.31 | |||||
after adjustment for rights offering and share consolidation
|
(0.70 | ) | 0.36 | |||||
Number of ordinary shares (in millions) used in computing basic net earnings
(loss) per ordinary share:
|
||||||||
before adjustment for rights offering and share consolidation
|
2,541.6 | 2,540.8 | ||||||
retroactive adjustment for rights offering and share consolidation
|
(2,158.4 | ) | (2,157.7 | ) | ||||
after adjustment for rights offering and share consolidation
|
383.2 | 383.1 | ||||||
Number of ordinary shares (in millions) used in computing diluted net earnings
(loss) per ordinary share:
|
||||||||
before adjustment for rights offering and share consolidation
|
2,541.6 | 2,541.9 | ||||||
retroactive adjustment for rights offering and share consolidation
|
(2,158.4 | ) | (2,158.6 | ) | ||||
after adjustment for rights offering and share consolidation
|
383.2 | 383.3 | ||||||
Number of ADSs (in millions) used in computing basic net earnings (loss) per ADS:
|
||||||||
before adjustment for rights offering and share consolidation
|
254.2 | 254.1 | ||||||
retroactive adjustment for rights offering and share consolidation
|
(215.9 | ) | (215.8 | ) | ||||
after adjustment for rights offering and share consolidation
|
38.3 | 38.3 | ||||||
Number of ADSs (in millions) used in computing diluted net earnings (loss) per ADS:
|
||||||||
before adjustment for rights offering and share consolidation
|
254.2 | 254.2 | ||||||
retroactive adjustment for rights offering and share consolidation
|
(215.9 | ) | (215.9 | ) | ||||
after adjustment for rights offering and share consolidation
|
38.3 | 38.3 |
i. | The exercise price or conversion price of the securities exceeded the average fair value of the Companys share price; or | ||
ii. | The total assumed proceeds under the treasury stock method resulted in negative incremental shares; or | ||
iii. | The accretion to redemption value of convertible securities per ordinary share obtainable on conversion was higher than the basic net earnings per ordinary share, as adjusted for the effect of any potentially dilutive securities which were more dilutive than the convertible securities; or | ||
iv. | The conditions for the vesting of the performance share units were not expected to be met; or | ||
v. | The Company has net losses available to ordinary shareholders of Chartered. |
12
The below information, including those of the comparative periods, reflect the effects of the rights offering and the share consolidation. | ||
A summary of the excluded potentially dilutive securities is as follows: |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
Convertible redeemable preference shares
|
68,803 | 68,803 | 68,803 | 68,803 | ||||||||||||
Call option with Goldman Sachs International
|
32,388 | 32,388 | 32,388 | 32,388 | ||||||||||||
Employee share options
|
16,184 | 14,480 | 16,146 | 14,480 | ||||||||||||
Performance share units
|
734 | 980 | 734 | 980 | ||||||||||||
Restricted share units
|
1,747 | 8,292 | 1,747 | 8,292 |
As of September 30, 2009, the conversion price of the convertible redeemable preference shares, the per share exercise price of the call option with GS and the weighted-average exercise price of employee stock options outstanding was $4.12, $9.338 and $12.18, respectively, as adjusted for the rights offering and the share consolidation. |
6. | Jobs Credit Scheme |
In the first quarter of 2009, to encourage employers to preserve jobs and help Singaporeans stay employed, the Singapore government introduced the Jobs Credit Scheme in the 2009 Budget. Employers receive cash grants up to 12% on the first S$2,500 of the qualifying monthly wages of each employee paid from October 2008 to September 2009 on a quarterly basis. In October 2009, the Singapore government announced that the Jobs Credit Scheme will be extended for six months with another two payments in March and June 2010 at stepped down rates, of 6% and 3%, respectively, on the first S$2,500 of the qualifying monthly wages of each employee. The condition of the grant is that the employee must continue to be on the Companys payroll in the following month subsequent to a quarter. These payments have been granted tax exemption by the Singapore government. | ||
The Company recognizes the grant at the end of each quarter when there is reasonable assurance that the condition will be complied with and that the grant will be received. | ||
For the three and nine months ended September 30, 2009, $2,390 and $9,280, respectively, were recorded as a reduction of the related payroll expenses, which the Jobs Credit Scheme intended to reimburse. Out of the total grant which was recorded, $2,383, $2,286 and $2,294 were received on March 31, 2009, June 30, 2009, and September 30, 2009, respectively, with the remaining amount expected to be received in December 2009. |
7. | Marketable Securities |
In the second quarter of 2009, the Company adopted ASC 320-10-65-1 on investments debt and equity securities which requires the Company to provide all disclosures required by ASC 320-10-50 in interim reporting periods. | ||
The Companys investments in available-for-sale equity securities consist of investments in the common stock of two companies in the semiconductor industry. The fair value of the investments is based on quoted market prices in active markets at the respective balance sheet dates. |
At December 31, 2008 | ||||||||||||||||
Unrealized | Unrealized | |||||||||||||||
Current | Cost | Gains | (Losses) | Fair Value | ||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Equity securities
|
$ | 1,238 | $ | | $ | (288 | ) | $ | 950 | |||||||
|
At September 30, 2009 | ||||||||||||||||
Unrealized | Unrealized | |||||||||||||||
Current | Cost | Gains | (Losses) | Fair Value | ||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Equity securities
|
$ | 874 | $ | 301 | $ | | $ | 1,175 | ||||||||
|
The Company realized losses amounting to $446 and $1,287 as a result of other-than-temporary impairment assessments for the three and nine months ended September 30, 2008, respectively. No realized gains and losses were recorded for the three months ended September 30, 2009. The Company realized losses amounting to $365 as a result of other-than-temporary |
13
impairment assessments for the nine months ended September 30, 2009. |
The following table shows the fair value and gross unrealized gains and (losses) recorded in accumulated other comprehensive income (loss) related to the Companys available-for-sale equity securities, aggregated by the length of time the securities have been in a continuous unrealized gain and (loss) position. |
At December 31, 2008 | Less than 12 months | Total | ||||||||||||||
Unrealized | Unrealized | |||||||||||||||
Fair Value | (Losses) | Fair Value | (Losses) | |||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Equity securities
|
$ | 950 | $ | (288 | ) | $ | 950 | $ | (288 | ) | ||||||
|
At September 30, 2009 | Less than 12 months | Total | ||||||||||||||
Unrealized | Unrealized | |||||||||||||||
Fair Value | Gains | Fair Value | Gains | |||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Equity securities
|
$ | 1,175 | $ | 301 | $ | 1,175 | $ | 301 | ||||||||
|
As of December 31, 2008, one of the investments was in an unrealized gain position while the other was in an unrealized loss position. Based on the Companys evaluation, the investment in a net unrealized loss position was not considered to be other-than-temporarily impaired. | ||
As of September 30, 2009, both of the investments were in unrealized gain positions. | ||
As of December 31, 2008 and September 30, 2009, none of the investments were in continuous unrealized loss positions for a period greater than twelve months. |
8. | Inventories |
Inventories consist of the following: |
As of | ||||||||
December 31, | September 30, | |||||||
2008 | 2009 | |||||||
Raw materials
|
$ | 12,509 | $ | 6,856 | ||||
Work-in-progress
|
169,002 | 139,785 | ||||||
Consumable supplies and spares
|
7,987 | 8,254 | ||||||
|
||||||||
|
$ | 189,498 | $ | 154,895 | ||||
|
9. | Other Investments |
The Company has an investment in a private enhanced cash fund (Fund), which is managed by an external financial institution and consists primarily of corporate debt, mortgage-backed securities and asset-backed securities. Due to the nature of the securities that the Fund invests in, the Funds underlying securities have been exposed to adverse market conditions that have affected the value of the collateral and the liquidity of the Fund. As a result, in December 2007, the investment manager of the Fund halted demand redemptions and announced its intention to liquidate the Fund. The investment in the Fund, which was classified as cash equivalent since the time of placement in 2003, was reclassified to Other investments as of December 31, 2007. | ||
The Company received cash proceeds of $13,481 and $55,841 in redemptions from the Fund for the three and nine months ended September 30, 2008, respectively, resulting in a realized loss of $92 and $132 on the redemptions for the three and nine months ended September 30, 2008, respectively. For the three and nine months ended September 30, 2009, the Company received cash proceeds of $8,626 and $16,150, respectively, in redemptions from the Fund, resulting in realized gains of $530 and $613 on the redemptions for the three and nine months ended September 30, 2009, respectively. The Company recorded an other-than-temporary impairment loss of $429 and $1,466 for the three and nine months ended September 30, 2008, respectively. No other-than-temporary impairment loss was recorded for the Fund for the three and nine months ended September 30, 2009. The fair value of the Companys pro-rata share of the remaining investment in the Fund was $19,634 and $4,376, as of December 31, 2008 and September 30, 2009, respectively. As of December 31, 2008, the carrying value of the Companys pro-rata share of the remaining investment in the Fund of $19,634 was classified in Other |
14
investments. As of September 30, 2009, the carrying value of the Companys pro-rata share of the remaining investment in the Fund was $4,097. As the redemption of a portion of the Fund is not expected to be within the next 12 months, $823 was reclassified from Other investments to Other non-current assets as of September 30, 2009. |
10. | Income Taxes |
In the second quarter of 2009, the Company recorded additional amounts of deferred tax assets due primarily to the unabsorbed wear and tear allowances and tax losses of Chartered Semiconductor Manufacturing (Tampines) Pte. Ltd. (CST or Fab 3E) of approximately $493,203 and $29,732, respectively, which became available for carry forward upon approval from the Singapore tax authorities. A net tax benefit of $9,964 is recognized based on a portion of the deferred tax assets that is assessed as more likely than not to be realizable through offset against existing deferred tax liabilities. A valuation allowance is established for the remaining deferred tax assets which are assessed as more likely than not to be unrealizable for offset against future taxable income. Such future taxable income is based on the projection of the Company which is contingent upon future market conditions. | ||
There is no significant change in the liability for unrecognized tax benefits, as provided under ASC 740-10 on income taxes, as of September 30, 2009 as compared to December 31, 2008. The Company anticipates that the liabilities for unrecognized tax benefits recorded for the Year of Assessment 2003 (fiscal year 2002) amounting to $377 would be reversed out within the next 12 months as the statute of limitations for the Comptroller of Income Tax to raise additional assessments for that tax year will lapse by December 31, 2009. | ||
The Company is subject to taxation in Singapore and other foreign tax jurisdictions. A summary
of the tax years that remain
subject to examination in the Companys major tax jurisdictions are: |
Fiscal years that remain subject to examination as of | ||||
Major tax jurisdiction | September 30, 2009 | |||
Singapore
|
2003 and forward | |||
United States of America | 2006 and forward |
11. | Long-term Debt and Obligations under Capital Leases |
Long-term debt consists of: |
As of | ||||||||
December 31, | September 30, | |||||||
2008 | 2009 | |||||||
Floating rate loans:
|
||||||||
$653,131 EXIM Guaranteed Loan
|
$ | 459,771 | $ | 335,981 | ||||
$609,733 EXIM Guaranteed Loan
|
90,463 | 262,400 | ||||||
Société Générale Term Loan
|
119,234 | 95,387 | ||||||
JBIC/SMBC Term Loan (Tranche B)
|
71,841 | 71,841 | ||||||
Fixed rate loans:
|
||||||||
5.645% JBIC/SMBC Term Loan (Tranche A)
|
71,841 | 71,841 | ||||||
5.75% senior notes due 2010
|
373,546 | 374,215 | ||||||
6.00% amortizing bonds due 2010
|
20,351 | 10,476 | ||||||
6.25% senior notes due 2013
|
298,125 | 298,418 | ||||||
6.375% senior notes due 2015
|
247,397 | 247,641 | ||||||
Others
|
7,775 | 6,388 | ||||||
|
||||||||
|
1,760,344 | 1,774,588 | ||||||
Less: Current installments of long-term debt
|
(157,512 | ) | (558,568 | ) | ||||
|
||||||||
Long-term debt, excluding current installments
|
$ | 1,602,832 | $ | 1,216,020 | ||||
|
15
Obligations under capital leases: |
As of | ||||||||
December 31, | September 30, | |||||||
2008 | 2009 | |||||||
Minimum future lease payments
|
$ | 121,497 | $ | 166,804 | ||||
Amount representing interest at rates of 5.1% to 7.8%
|
(41,381 | ) | (57,003 | ) | ||||
|
||||||||
Present value of minimum future lease payments
|
80,116 | 109,801 | ||||||
Less: Current installments
|
(5,720 | ) | (7,177 | ) | ||||
|
||||||||
Obligations under capital leases, excluding current installments
|
$ | 74,396 | $ | 102,624 | ||||
|
||||||||
Current installments of:
|
||||||||
Long-term debt
|
$ | 157,512 | $ | 558,568 | ||||
Obligations under capital leases
|
5,720 | 7,177 | ||||||
|
||||||||
|
$ | 163,232 | $ | 565,745 | ||||
|
||||||||
Non-current portion, excluding current installments:
|
||||||||
Long-term debt
|
$ | 1,602,832 | $ | 1,216,020 | ||||
Obligations under capital leases
|
74,396 | 102,624 | ||||||
|
||||||||
|
$ | 1,677,228 | $ | 1,318,644 | ||||
|
Weighted Average | ||||||||
Interest Rates as of | ||||||||
December 31, | September 30, | |||||||
2008 | 2009 | |||||||
Debt obligations at floating rates
|
3.25 | % | 1.00 | % | ||||
Debt obligations at fixed rates
|
6.05 | % | 6.05 | % | ||||
Obligations under capital leases
|
7.10 | % | 6.54 | % |
The Company made a repayment of $61,895 each in both January 2009 and July 2009 on the $653,131 Export-Import Bank of the United States (EXIM) Guaranteed Loan. | ||
The Company made the second and third drawdowns of $91,229 and $80,708 in February 2009 and September 2009, respectively, from the first tranche of the $609,733 EXIM Guaranteed Loan. As of September 30, 2009, the remaining amount available for drawdown under this facility is $347,333. | ||
The Company made a principal repayment of $11,923 each in both March 2009 and September 2009 on tranche A of the $189,871 term loan facility from Société Générale, with Atradius Dutch State Business NV (Atradius) as the export credit insurer. | ||
In the second quarter of 2009, the Company entered into a new contract for supply of gases used by the fabrication facilities of the Company, which was included as obligations under capital leases. The Company has assessed that this supply contract contains a lease pursuant to ASC 840-10 on leases, and accounts for this as a capital lease. As of September 30, 2009, the present value of the remaining minimum lease payments under this contract is $32,386. |
12. | Share Unit Plans |
(a) | RSU Plan |
In May 2009, 2,659 RSUs were granted under the RSU Plan, including 22 RSUs which were granted to employees of Silicon Manufacturing Partners Pte Ltd (SMP). In August 2009, an additional 161 RSUs were granted under the RSU Plan, of which none were granted to employees of SMP. | ||
The RSUs vest according to the vesting schedule, and ordinary shares will be issued provided the employee remains employed by the Company through the vesting dates; otherwise the unvested RSUs are forfeited. The grant-date fair value of awards granted under the RSU Plan is based on the average of the high and low quotes of the Companys ordinary shares at the date of grant. SMP reimburses the Company for the share-based compensation expense in respect of the RSUs that were granted to its employees. | ||
The weighted-average grant-date fair value of RSUs granted in May 2009 and in August 2009 is $1.54 and $1.57, respectively. Total share-based compensation expense recognized for the RSUs granted in May 2009 and August 2009 for the |
16
three and nine months ended September 30, 2009 was $340 and $450, respectively. As of September 30, 2009, the total compensation expense related to unvested RSUs not yet recognized is estimated at approximately $3,719 which is expected to be recognized over the weighted-average period of 2.7 years. | ||
Pre-vesting forfeitures for RSUs granted in May 2009 and in August 2009 were estimated to be approximately 0% to 3.08% for both the three and nine months ended September 30, 2009 based on historical and expected attrition rates. | ||
As share-based compensation expense does not satisfy the conditions for tax deduction in Singapore, the recognition of the share-based compensation expense did not result in recognition of an income tax benefit. |
(b) | PSU Plan |
In May 2009, a total of 376 base number of PSUs was granted under the PSU Plan that may be awarded at the end of a three-year performance period except for 36 PSUs which vested immediately upon grant date. The offer of PSUs is communicated to eligible employees via the grant notice (PSU Agreement). | ||
The vesting of the PSUs granted in May 2009, except for PSUs which vested immediately upon grant date, is contingent upon the achievement of pre-determined levels of Longer Term Break-Even Utilisation (BEU), Absolute Total Shareholder Return (TSR) and Relative TSR as those measures are defined in the PSU Agreement. All pre-determined levels have been established at the grant date. All conditions are determined based on the BEU to be achieved for the financial year of 2011, the average of three financial years Absolute TSR and the average of three financial years Relative TSR. The BEU is calculated by measuring the breakeven utilization rate of the Company. The Absolute TSR is calculated by adding the dividend yield to the change in the opening and closing share price of the Companys ordinary shares for the performance period. The Relative TSR is calculated by comparing the TSR of the Company against the TSR of a pre-defined peer in the semiconductor industry. The achievement of BEU is a performance condition while the achievement of Absolute TSR and Relative TSR are market conditions. 50% of the base number of PSUs will vest according to the achievement of the BEU, 25% will vest according to the achievement of the Absolute TSR and 25% will vest according to the achievement of the Relative TSR. The number of PSUs that will ultimately vest range from 0% to 150% of the base number of PSUs awarded, or zero, subject to the achievement of either of the abovementioned performance condition or market conditions, as applicable. | ||
The weighted-average grant-date fair value of PSUs granted in May 2009 is $1.64. Total share-based compensation expense recognized for the PSUs granted in May 2009 for the three and nine months ended September 30, 2009 was $22 and $85, respectively. Depending upon the Companys performance against target performance measures specified in the award agreements, as of September 30, 2009, the total compensation expense related to unvested PSUs not yet recognized is estimated to be approximately $255 which is expected to be recognized over a weighted-average period of 2.8 years. | ||
The grant-date fair value for the performance-based portion of the award was based on the average of the high and low quotes of the Companys ordinary shares at the date of grant. | ||
The grant-date fair value for the market-based portions of the award is calculated by an independent third-party appraiser which adopted the Monte-Carlo valuation model with the following assumptions: |
Three and Nine Months | ||||
ended September 30, | ||||
2009 | ||||
Risk-free interest rate
|
0.78 | % | ||
Expected volatility
|
50.0 | % | ||
Dividend yield
|
0.0 | % |
The risk-free rate is based upon observed interest rates appropriate for the term of the Companys PSUs. Expected volatility is based on historical volatility rates of the Companys ordinary shares. | ||
Pre-vesting forfeitures for PSUs granted in May 2009 were estimated to be approximately 0% to 3.86% for both the three and nine months ended September 30, 2009 based on historical and expected attrition rates. | ||
As share-based compensation expense does not satisfy the conditions for tax deduction in Singapore, the recognition of the share-based compensation expense did not result in recognition of an income tax benefit. |
(c) | Supplement Retention Plan |
In June 2009, the Company approved an additional retention plan (supplemental plan) intended to act as a supplement to the Companys existing retention plan which was implemented in 2007. This supplemental plan only covers selected management personnel. | ||
The supplemental plan is comprised of a cash and a RSU component. The cash component is awarded in accordance to an approved schedule, and will be paid over 4 years based on the specified payment dates provided the employee remains |
17
employed by the Company through the approved payment dates, otherwise the unpaid amount is forfeited. | ||
4,501 RSUs have been awarded pursuant to the RSU component with vesting based on performance and service conditions of two to three year period. The RSUs grants and conditions have been communicated to eligible employees via the letter of award (RSU Agreement). | ||
These RSUs vest according to the vesting schedule, and ordinary shares will be issued provided the employee remains employed by the Company through the vesting dates; otherwise the unvested RSUs are forfeited. The grant-date fair value for the award was based on the average of the high and low quotes of the Companys ordinary shares at the date of the grant. | ||
The vesting of the RSUs granted in June 2009 is contingent upon the achievement of pre-determined levels of technological roadmap progress and market share for high-end products as those measures defined in the RSU Agreement. All conditions are determined based on the technological roadmap progress and market share for high-end products to be achieved at the end of a two year period in December 31, 2010. The technological roadmap progress is measured against pre-determined targets on certain selected technology nodes. The market share for high-end products is calculated by the average of the Companys total revenue and the sum of total revenue of pre-determined peers in the semiconductor industry at the end of financial year of 2010. The achievement of the technological roadmap progress and market share for high-end products are performance conditions. 50% of the base number of RSUs will vest according to the achievement of the technological roadmap progress and 50% will vest according to the achievement of the market share for high-end products. | ||
Total share-based compensation expense recognized for the RSUs granted in June 2009 for the three and nine months ended September 30, 2009 was $561 and $748, respectively. As of September 30, 2009, the total compensation expense related to unvested RSUs not yet recognized is estimated at approximately $5,988 which is expected to be recognized over the weighted-average period of 2.7 years. | ||
Pre-vesting forfeitures for RSUs granted in June 2009 were estimated to be nil based on
historical and expected attrition rates.
As share-based compensation expense does not satisfy the conditions for tax deduction in Singapore, the recognition of the share-based compensation expense did not result in recognition of an income tax benefit. |
(d) | Effects of Proposed Acquisition |
Upon the Scheme becoming effective, the vesting period of all RSUs and PSUs awards will be accelerated, such that all granted and outstanding RSUs and PSUs will be fully vested. In addition, all outstanding share options granted under the 1999 Option Plan will be cancelled with no replacement award or other form of consideration. |
13. | Derivative Instruments and Hedging Activities |
ASC 815-10 on derivatives and hedging requires disclosures about a companys derivative activities and how the related hedged items affect a companys financial position, financial performance and cash flows. To meet the objectives, ASC 815-10 requires qualitative disclosures about the Companys objectives and strategies for using derivative instruments and quantitative disclosures for fair value amounts of gains and losses associated with derivative instruments. | ||
The Companys exposure to financial market risks is derived primarily from changes in interest rates and foreign exchange rates. The Company assesses interest rate cash flow risk and currency exchange cash flow risk by identifying and monitoring changes in interest rate or currency exchange rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. To manage interest rate risk, the Company may utilize interest rate derivative instruments to modify the interest characteristics of its outstanding debts. To protect against volatility of future cash flows caused by changes in exchange rates, the Company may use forward exchange contracts, currency options and currency swap instruments for forecasted transactions such as operating expenses and capital purchases. | ||
The Company is exposed to credit risk and market risk by using derivative instruments to hedge exposures of changes in foreign currency rates and interest rates. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, is not exposed to credit risk. The Company anticipates, however, that counterparties will be able to fully satisfy their obligations under the contracts. The Company does not obtain collateral or other security to support financial instruments subject to credit risk but monitors the credit standing of counterparties. | ||
Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates or currency exchange rates. The market risk associated with interest rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. | ||
The amounts related to derivative instruments which are subject to credit risk are generally limited to the amounts, if any, by which a counterpartys obligations exceed the obligations of the Company with that counterparty. |
18
On the date a derivative contract is entered into, the Company will consider if the derivative instrument is part of a hedging relationship. Once a hedging relationship is established, the Company designates the derivative as either a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge), a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge), or a foreign currency fair value or cash flow hedge (foreign currency hedge). The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions, at the hedges inception. This process includes linking all derivatives that are designated as fair value, cash flow, or foreign currency hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedges inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. | ||
Changes in the fair value of derivatives that are highly effective and that are designated and qualify as fair value hedges are recorded in earnings, along with the loss or gain on the hedged assets or liabilities or unrecognized firm commitment of the hedged item that are attributable to the hedged risks. Changes in the fair value of derivatives that are highly effective and that are designated and qualify as cash flow hedges are recorded in other comprehensive income (loss) until earnings are affected by the variability in cash flows of the designated hedged items. Changes in the fair value of derivatives that are highly effective as hedges and that are designated and qualify as foreign currency hedges are recorded in either earnings or other comprehensive income (loss), depending on whether the hedge transaction is a fair-value hedge or a cash flow hedge. Changes in the fair value of derivative instruments that are not designated as part of a hedging relationship are reported in current period earnings. | ||
The Company discontinues hedge accounting prospectively when it determines that a derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative expires or is sold, terminated, or exercised, the derivative is de-designated as a hedging instrument because it is unlikely that a forecasted transaction will occur, a hedged firm commitment no longer meets the definition of a firm commitment, or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair-value hedge, the Company no longer adjusts the hedged asset or liability for changes in fair value. The adjustment of the carrying amount of the hedged asset or liability is accounted for in the same manner as other components of the carrying amount of that asset or liability. When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, the Company removes any asset or liability that was recorded pursuant to recognition of the firm commitment from the balance sheet and recognizes any gain or loss in earnings. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, gains and losses that were accumulated in other comprehensive income (loss) are recognized immediately in earnings. In all situations in which hedge accounting is discontinued, the Company continues to carry the derivative at its fair value on the balance sheet, and recognizes any changes in its fair value in earnings. | ||
The Company uses foreign currency forward contracts to manage identified foreign currency risks resulting from its foreign currency purchase contracts or relating to groups of forecasted foreign currency denominated payments. Most of these foreign currency forward contracts are formally designated as foreign currency cash flow hedges which match the terms of the individual foreign currency exposures. As a result, any ineffectiveness of the Companys hedges is negligible. The maximum tenure for these transactions is 18 months. Amounts included in other comprehensive income (loss) related to hedges of foreign currency purchase contracts are reclassified into earnings (Cost of revenue) upon the commencement of depreciation of the asset related to the purchase contracts over the remaining useful life of the asset. | ||
There are certain foreign currency forward contracts and embedded foreign currency derivatives in purchase contracts which are not formally designated as hedges. These certain foreign currency forward contracts relate to groups of forecasted foreign currency denominated payments and a portion of the proceeds of the rights offerings which are primarily denominated in Singapore dollars. While the Company expects the forward contracts which have not been formally designated as hedges to be effective in hedging the variability in cash flows resulting from changes in foreign exchange rates, it does not believe it is practicable to formally document the hedging relationship and link the derivatives to specific forecasted transactions. The embedded foreign currency derivatives are in purchase contracts for which payments are denominated in currencies other than the functional currency or the local currency of the parties to the contracts or, in some cases, their parent company where the parent company provides the majority of resources required under the contract on behalf of the subsidiary who is a party to the contract. Gains and losses on these certain foreign currency forward contracts and embedded foreign currency derivatives in purchase contracts are included in Other operating expenses, net. The Company does not have any fair value hedges as of September 30, 2009. |
19
The table below provides information about the Companys derivative instruments as of September 30, 2009. |
Derivative Instrument | Average | |||||||||||
as of September 30, 2009 | Notional Amount | Rate/Price | Maturity | |||||||||
Forward Contracts
|
||||||||||||
(Receive Yen/Pay US$)
|
||||||||||||
Yen Forward Contracts
|
5,148,755 | 93.7331/USD | 2009/2010 | |||||||||
(Receive S$/Pay US$)
|
||||||||||||
SGD Forward Contracts
|
42,574 | 1.4191/USD | 2009 | |||||||||
(Receive Euro/Pay US$)
|
||||||||||||
Euro Forward Contracts
|
25,767 | 1.4145/Euro | 2009/2010 | |||||||||
|
||||||||||||
Embedded derivatives
|
||||||||||||
Denominated in Yen
|
368,597 | | |
The following table presents the fair values and locations of derivative instruments recorded in the balance sheet as of September 30, 2009: |
Fair Value of Derivative Instruments | ||||||||||||||||
Assets Derivatives | Liabilities Derivatives | |||||||||||||||
Balance Sheet | Balance Sheet | |||||||||||||||
As of September 30, 2009 | Location | Fair Value | Location | Fair Value | ||||||||||||
Derivatives designated as hedging
instruments under ASC 815-10
|
||||||||||||||||
Forward foreign exchange contracts
|
Other current assets | $ | 3,754 | Other current liabilities | $ | | ||||||||||
Total derivatives designated as
hedging instruments under ASC 815-10
|
$ | 3,754 | $ | | ||||||||||||
Derivatives not designated as hedging
instruments under ASC 815-10
|
||||||||||||||||
Forward foreign exchange contracts
|
Other current assets | $ | 276 | Other current liabilities | $ | 3 | ||||||||||
Other contracts
|
Other current assets | $ | | Other current liabilities | $ | 337 | ||||||||||
Total derivatives not designated as
hedging instruments under ASC 815-10
|
$ | 276 | $ | 340 | ||||||||||||
|
||||||||||||||||
Total derivatives
|
$ | 4,030 | $ | 340 | ||||||||||||
|
The following table presents the effect of derivative instruments on other comprehensive income (loss) (OCI) and results of operations for the three and nine months ended September 30, 2009: |
The Effect of Derivative Instruments on the Unaudited Condensed Consolidated Statement of Operations | ||||||||||||
for the Three Months Ended September 30, 2009 | ||||||||||||
Amount of Gains | ||||||||||||
(Losses) | Location of | Amount of Gains | ||||||||||
Recognized in | Gains (Losses) | (Losses) | ||||||||||
Accumulated | Reclassified from | Reclassified from | ||||||||||
OCI on | Accumulated | Accumulated | ||||||||||
Derivative | OCI into Income | OCI into Income | ||||||||||
(Effective | (Effective | (Effective | ||||||||||
Portion) | Portion) | Portion) | ||||||||||
Derivatives Designated as Hedging
Instruments under ASC 815-10
Cash Flow Hedging Relationships
|
||||||||||||
Forward foreign exchange contracts
|
$ | (441 | ) | Cost of revenue | $ | (280 | ) | |||||
|
||||||||||||
Total
|
$ | (441 | ) | $ | (280 | ) | ||||||
|
20
The Effect of Derivative Instruments on the Unaudited Condensed Consolidated Statement of Operations | ||||||||||||
for the Nine Months Ended September 30, 2009 | ||||||||||||
Amount of Gains | ||||||||||||
(Losses) | Location of | Amount of Gains | ||||||||||
Recognized in | Gains (Losses) | (Losses) | ||||||||||
Accumulated | Reclassified from | Reclassified from | ||||||||||
OCI on | Accumulated | Accumulated | ||||||||||
Derivative | OCI into Income | OCI into Income | ||||||||||
(Effective | (Effective | (Effective | ||||||||||
Portion) | Portion) | Portion) | ||||||||||
Derivatives Designated as Hedging
Instruments under ASC 815-10 Cash Flow Hedging Relationships
|
||||||||||||
Forward foreign exchange contracts
|
$ | 6 | Cost of revenue | $ | (282 | ) | ||||||
|
||||||||||||
Total
|
$ | 6 | $ | (282 | ) | |||||||
|
Note: | No amount of ineffectiveness was recorded in the condensed consolidated statements of operations for these designated cash flow hedges and all components of each derivatives gain or loss were included in the assessment of hedge effectiveness. |
The net unrealized cash flow hedging gains (losses) are not adjusted for income taxes because such gains (losses) are not taxable (deductible) to the Company under relevant tax laws. |
Amount of Gains (Losses) | ||||||||||||
Recognized in Income on | ||||||||||||
Derivative | ||||||||||||
Three months | Nine months | |||||||||||
Location of Gains (Losses) | ended | ended | ||||||||||
Recognized in Income on | September 30, | September 30, | ||||||||||
Derivative | 2009 | 2009 | ||||||||||
Derivatives Not Designated as
Hedging Instruments under ASC
815-10
|
||||||||||||
Forward foreign exchange contracts
|
Other operating expenses, net | $ | 362 | $ | 26 | |||||||
Other contracts
|
Other operating expenses, net | $ | (232 | ) | $ | (58 | ) | |||||
|
||||||||||||
Total
|
$ | 130 | $ | (32 | ) | |||||||
|
The components of accumulated other comprehensive income (loss) related to derivative and hedging activities consist of the following: |
Three Months Ended | Nine Months Ended | |||||||
September 30, 2009 | September 30, 2009 | |||||||
Beginning
|
$ | (1,144 | ) | $ | (1,593 | ) | ||
Reclassification of cash flow hedging losses into earnings
|
280 | 282 | ||||||
Net unrealized gains (losses) on change in cash flow
hedging fair values
|
(441 | ) | 6 | |||||
|
||||||||
Ending
|
$ | (1,305 | ) | $ | (1,305 | ) | ||
|
21
14. | Fair Value of Financial Instruments |
In 2008, the Company adopted ASC 820-10 on fair value measurements and disclosures, except for certain non-financial assets and non-financial liabilities that are not recorded at fair value on a recurring basis as described in ASC 820-10-65-1. The Company adopted ASC 820-10 for these non-financial assets and non-financial liabilities in the first quarter of 2009. In the second quarter of 2009, the Company adopted ASC 820-10-65-4 which relates to determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. | ||
The following table presents the Companys financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2009 and the amounts as they correspond to the respective level within the fair value hierarchy established by ASC 820-10 on fair value measurements and disclosures. |
Fair Value Measurements as of September 30, 2009 | ||||||||||||||||
Quoted Prices | ||||||||||||||||
Active | ||||||||||||||||
Markets | ||||||||||||||||
Identical | Significant | Significant | ||||||||||||||
Assets | Observable | Unobservable | ||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Assets:
|
||||||||||||||||
Marketable securities (See Note 7)
|
$ | 1,175 | $ | 1,175 | $ | | $ | | ||||||||
Forward foreign exchange contracts
|
4,030 | | | 4,030 | ||||||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Forward foreign exchange contracts
|
$ | 3 | $ | | $ | | $ | 3 | ||||||||
Embedded derivatives
|
337 | | | 337 |
Marketable securities are recorded at fair value, which is based on quoted market prices in active markets. | ||
The fair values of forward foreign exchange contracts are determined using quantitative models, which use multiple market inputs including interest rates, prices and maturity dates to generate pricing curves, which are used to value the positions. The market inputs are generally actively quoted and can be validated through external sources, including brokers. For forward foreign exchange contract asset and liability positions with maturity dates which fall between the dates of quoted prices, interpolation of rate or maturity scenarios are used in determining fair values. | ||
The fair values of embedded derivatives are determined in a similar manner as forward foreign exchange contracts, except that the Company makes certain assumptions about the maturity dates of such embedded derivatives as maturity dates are generally not included in the host contracts. | ||
The table below presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and nine months ended September 30, 2009. |
Fair Value Measurements for the Three Months Ended | ||||||||||||
September 30, 2009 | ||||||||||||
Forward | ||||||||||||
Foreign | ||||||||||||
Embedded | Exchange | |||||||||||
derivatives | Contracts | Total | ||||||||||
Assets/(Liabilities)
|
||||||||||||
Balance, July 1, 2009:
|
$ | (104 | ) | $ | 111 | $ | 7 | |||||
Total gains (losses)
(realized/unrealized)
|
||||||||||||
Included in earnings (other
operating
expenses, net)
|
(233 | ) | 228 | (5 | ) | |||||||
Included in other
comprehensive income
|
| 3,688 | 3,688 | |||||||||
|
||||||||||||
Balance, September 30, 2009:
|
$ | (337 | ) | $ | 4,027 | $ | 3,690 | |||||
|
||||||||||||
Amount of total gains or
losses for the period
included in earnings
attributable to the change
in unrealized gains
(losses) relating to
assets/(liabilities) still
held at reporting date
|
$ | (337 | ) | $ | 273 | $ | (64 | ) | ||||
|
22
Fair Value Measurements for the Nine Months Ended | ||||||||||||
September 30, 2009 | ||||||||||||
Forward | ||||||||||||
Foreign | ||||||||||||
Embedded | Exchange | |||||||||||
derivatives | Contracts | Total | ||||||||||
Assets/(Liabilities)
|
||||||||||||
Balance, January 1, 2009:
|
$ | (469 | ) | $ | (36 | ) | $ | (505 | ) | |||
Total gains (losses)
(realized/unrealized)
|
||||||||||||
Included in earnings (other
operating
expenses, net)
|
132 | 247 | 379 | |||||||||
Included in other
comprehensive income
|
| 3,816 | 3,816 | |||||||||
|
||||||||||||
Balance, September 30, 2009:
|
$ | (337 | ) | $ | 4,027 | $ | 3,690 | |||||
|
||||||||||||
Amount of total gains or
losses for the period
included in earnings
attributable to the change
in unrealized gains
(losses) relating to
assets/(liabilities) still
held at reporting date
|
$ | (337 | ) | $ | 273 | $ | (64 | ) | ||||
|
There are no assets or liabilities measured at fair value on a non-recurring basis as of September 30, 2009. | ||
In the second quarter of 2009, the Company adopted ASC 825-10-65-1 which requires the Company to provide disclosures in interim reporting periods about the fair value of financial instruments, including those financial instruments for which the Company did not elect the fair value option, which are within the scope of ASC 825-10 on financial instruments. | ||
Fair values of other financial instruments are as follows: |
As of | ||||||||||||||||
December 31, 2008 | September 30, 2009 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated fair | |||||||||||||
amount | fair value | amount | value | |||||||||||||
Asset/(Liability)
|
||||||||||||||||
Other investments (see Note 9)
|
$ | 19,634 | $ | 19,634 | $ | 4,097 | $ | 4,376 | ||||||||
Long-term debt
|
(1,760,344 | ) | (1,557,853 | ) | (1,774,588 | ) | (1,750,978 | ) |
Cash and cash equivalents, restricted cash, related party receivables and payables, accounts receivable, other current receivables, accounts payable and other current payables. The carrying amounts approximate fair value in view of the short-term nature of these balances. | ||
Other investments. The fair value is assessed by utilizing market prices as provided by independent pricing services, or when such prices are not available, by using a valuation approach based on the current investment ratings, valuation parameters and estimates of the underlying debt and securities, redemptions and the subsequent distribution of cash. | ||
Long-term debt. The fair value is estimated based on the type of loan and maturity. The Company uses valuations from brokers when available, and when these are not available, the Company estimates the fair value using market interest rates for its debts with similar maturities. | ||
Limitations. Fair value estimates are made at a specific point in time, and are based on relevant market information and information about the financial instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
23
15. | Recently Issued Accounting Pronouncements Not Yet Adopted |
In June 2009, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 166, Accounting for Transfers of Financial Assets an amendment of FASB Statement No. 140. SFAS No. 166 removes the concept of a qualifying special-purpose entity from SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities a replacement of FASB Statement No. 125 and removes the exception from applying FASB Interpretations (FIN) No. 46(R), Consolidation of Variable Interest Entities , to qualifying special-purpose entities. SFAS No. 166 clarifies that one objective of SFAS No. 140 is to determine whether a transferor and all of the entities included in the transferors financial statements being presented have surrendered control over transferred financial assets. SFAS No. 166 also modifies the financial-components approach used in SFAS No. 140 and limits the circumstances in which a financial asset, or portion of a financial asset, should be derecognized when the transferor has not transferred the entire original financial asset to an entity that is not consolidated with the transferor in the financial statements being presented and/or when the transferor has continuing involvement with the transferred financial asset. SFAS No. 166 also defines the term participating interest to establish specific conditions for reporting a transfer of a portion of a financial asset as a sale. SFAS No. 166 requires that a transferor recognize and initially measure at fair value all assets obtained (including a transferors beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. Enhanced disclosures are also required by SFAS No. 166. SFAS No. 166 must be applied as of the beginning of each reporting entitys first interim and annual reporting period that begins after November 15, 2009. SFAS No. 166 must be applied to transfers occurring on or after the effective date. The Company is currently assessing the impact of adopting SFAS No. 166, which was subsequently codified in ASC 860-10. | ||
In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R). SFAS No. 167 addresses the (1) the effects on certain provisions of FIN 46(R), as a result of the elimination of the qualifying special-purpose entity concept in SFAS No. 166, and (2) constituent concerns about the application of certain key provisions of FIN 46(R), including those in which the accounting and disclosures under FIN 46(R) do not always provide timely and useful information about an enterprises involvement in a variable interest. SFAS No. 167 retains the scope of FIN 46(R) with the addition of entities previously considered qualifying special-purpose entities, as the concept of these entities was eliminated in SFAS No. 166. SFAS No. 167 shall be effective as of the beginning of each reporting entitys first interim and annual reporting period that begins after November 15, 2009. Earlier application is prohibited. The Company is currently assessing the impact of adopting SFAS No. 167, which was subsequently codified in ASC 810-10. | ||
In August 2009, the FASB issued Accounting Standards Update No. 2009-05, Measuring Liabilities at Fair Value (ASU 2009-05). The update provides clarification for circumstances in which a quoted price in an active market for an identical liability is not available. ASU 2009-05 is effective for the first reporting period (including interim period) beginning after issuance. The Company is currently assessing the impact of adopting ASU 2009-05. | ||
In October 2009, the FASB issued Accounting Standards Update No. 2009-13 (ASU 2009-13) addressing arrangements with multiple deliverables. ASU 2009-13 contains the amendments made to the FASBs ASC for the final consensus reached by the EITF in Issue No. 08-1, Revenue Arrangements with Multiple Deliverables, which addresses how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting, and how the arrangement consideration should be allocated among the separate units of accounting. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company is currently assessing the impact of adopting ASU 2009-13. |
16. | Subsequent Event |
The Company has evaluated and given effect to ASC 855-10 on subsequent events, up through to October 30, 2009, being the issuance date of these unaudited interim condensed consolidated financial statements. |
24
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
Consolidated Statements of Operations data:
|
||||||||||||||||
Net revenue
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of revenue
|
85.9 | 78.8 | 84.7 | 90.9 | ||||||||||||
|
||||||||||||||||
Gross profit
|
14.1 | 21.2 | 15.3 | 9.1 | ||||||||||||
|
||||||||||||||||
Other revenue
|
0.6 | 0.6 | 0.8 | 0.6 | ||||||||||||
|
||||||||||||||||
OPERATING EXPENSES
|
||||||||||||||||
Research and development
|
9.5 | 10.6 | 10.1 | 13.7 | ||||||||||||
Sales and marketing
|
4.2 | 3.6 | 4.2 | 4.1 | ||||||||||||
General and administrative
|
2.4 | 4.5 | 2.5 | 3.9 | ||||||||||||
Other operating expenses, net
|
0.3 | 1.6 | 0.4 | 1.5 | ||||||||||||
|
||||||||||||||||
Total operating expenses, net
|
16.4 | 20.3 | 17.2 | 23.2 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Equity in income of associated companies, net
|
1.9 | 2.1 | 2.1 | 1.3 | ||||||||||||
Other income (loss), net
|
(0.2 | ) | 0.1 | 0.7 | 0.1 | |||||||||||
Interest income
|
0.7 | 0.8 | 0.9 | 0.6 | ||||||||||||
Interest expense and amortization of debt discount
|
(3.6 | ) | (3.9 | ) | (3.8 | ) | (4.7 | ) | ||||||||
|
||||||||||||||||
Income (loss) before income tax
|
(2.9 | ) | 0.6 | (1.2 | ) | (16.2 | ) | |||||||||
Income tax expense (benefit)
|
2.4 | 0.0 | (2.9 | ) | (1.0 | ) | ||||||||||
|
||||||||||||||||
Net income (loss)
|
(5.3 | )% | 0.6 | % | 1.7 | % | (15.2 | )% | ||||||||
|
||||||||||||||||
Less: Net income (loss) attributable to the
noncontrolling interest in CSP
|
| 1.7 | | (1.0 | ) | |||||||||||
|
||||||||||||||||
Net income (loss) attributable to Chartered
|
(5.3 | ) | (1.1 | ) | 1.7 | (14.2 | ) | |||||||||
Less: Accretion to redemption value of
convertible redeemable preference shares
|
0.5 | 0.7 | 0.6 | 0.8 | ||||||||||||
|
||||||||||||||||
Net income (loss) available to ordinary
shareholders of Chartered
|
(5.8 | )% | (1.8 | )% | 1.1 | % | (15.0 | )% |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
Communications
|
52 | % | 55 | % | 50 | % | 52 | % | ||||||||
Computer
|
13 | 10 | 14 | 8 | ||||||||||||
Consumer
|
31 | 30 | 32 | 35 | ||||||||||||
Other
|
4 | 5 | 4 | 5 | ||||||||||||
|
||||||||||||||||
Total
|
100 | % | 100 | % | 100 | % | 100 | % | ||||||||
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
Americas
|
62 | % | 55 | % | 64 | % | 55 | % | ||||||||
Europe
|
10 | 10 | 9 | 9 | ||||||||||||
Asia-Pacific
|
19 | 30 | 21 | 28 | ||||||||||||
Japan
|
9 | 5 | 6 | 8 | ||||||||||||
|
||||||||||||||||
Total
|
100 | % | 100 | % | 100 | % | 100 | % | ||||||||
|
25
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
0.045 and below
|
| % | 1 | % | | % | 2 | % | ||||||||
Up to 0.065
|
19 | 32 | 15 | 28 | ||||||||||||
Up to 0.09
|
3 | 1 | 4 | 1 | ||||||||||||
Up to 0.13
|
36 | 36 | 36 | 37 | ||||||||||||
Up to 0.15
|
| 1 | | 1 | ||||||||||||
Up to 0.18
|
14 | 8 | 14 | 11 | ||||||||||||
Up to 0.25
|
11 | 7 | 13 | 7 | ||||||||||||
Up to 0.35
|
10 | 8 | 11 | 7 | ||||||||||||
Above 0.35
|
7 | 6 | 7 | 6 | ||||||||||||
|
||||||||||||||||
Total
|
100 | % | 100 | % | 100 | % | 100 | % | ||||||||
|
26
27
28
Three Months Ended | ||||||||
September 30, | ||||||||
2008 | 2009 | |||||||
(In millions) | ||||||||
Net revenue (U.S. GAAP)
|
$ | 463.7 | $ | 415.2 | ||||
Chartereds share of SMP revenue
|
$ | 23.5 | $ | 24.6 | ||||
Net revenue including Chartereds share of SMP
|
$ | 487.2 | $ | 439.8 |
Three Months Ended September 30, | ||||||||||||||||
2008 | 2009 | |||||||||||||||
Excluding | Including | Excluding | Including | |||||||||||||
Chartered's | Chartered's | Chartered's | Chartered's | |||||||||||||
Share of SMP | Share of SMP | Share of SMP | Share of SMP | |||||||||||||
Shipments (in thousands)*
|
514 | .3 | 544 | .5 | 449 | .3 | 482 | .4 | ||||||||
ASP per wafer
|
$ | 878 | $ | 873 | $ | 879 | $ | 870 |
Note: | ||
* | Eight-inch equivalent wafers |
29
30
31
32
Nine Months Ended | ||||||||
September 30, | ||||||||
2008 | 2009 | |||||||
(In millions) | ||||||||
Net revenue (U.S. GAAP)
|
$ | 1,309.4 | $ | 1,008.2 | ||||
Chartereds share of SMP revenue
|
$ | 74.4 | $ | 54.0 | ||||
Net revenue including Chartereds share of SMP
|
$ | 1,383.8 | $ | 1,062.2 |
Nine Months Ended September 30, | ||||||||||||||||
2008 | 2009 | |||||||||||||||
Excluding | Including | Excluding | Including | |||||||||||||
Chartereds | Chartereds | Chartereds | Chartereds | |||||||||||||
Share of SMP | Share of SMP | Share of SMP | Share of SMP | |||||||||||||
Shipments (in thousands)*
|
1,456 | .4 | 1,550 | .2 | 1,039 | .4 | 1,109 | .3 | ||||||||
ASP per wafer
|
$ | 877 | $ | 872 | $ | 904 | $ | 896 |
Note: | ||
* | Eight-inch equivalent wafers |
33
34
As of | ||||||||
December 31, | September 30, | |||||||
2008 | 2009 | |||||||
(In thousands) | ||||||||
Floating rate loans:
|
||||||||
$653,131 EXIM Guaranteed Loan
|
$ | 459,771 | $ | 335,981 | ||||
$609,733 EXIM Guaranteed Loan
|
90,463 | 262,400 | ||||||
Société Générale Term Loan
|
119,234 | 95,387 | ||||||
JBIC/SMBC Term Loan (Tranche B)
|
71,841 | 71,841 | ||||||
Fixed rate loans:
|
||||||||
5.645% JBIC/SMBC Term Loan (Tranche A)
|
71,841 | 71,841 | ||||||
5.75% senior notes due 2010
|
373,546 | 374,215 | ||||||
6.00% amortizing bonds due 2010
|
20,351 | 10,476 | ||||||
6.25% senior notes due 2013
|
298,125 | 298,418 | ||||||
6.375% senior notes due 2015
|
247,397 | 247,641 | ||||||
Others
|
7,775 | 6,388 | ||||||
|
||||||||
Long-term debt outstanding
|
$ | 1,760,344 | $ | 1,774,588 | ||||
|
35
|
27 new Shares were offered for every 10 Shares held at S$0.07 per rights share; and
|
||
| 27 new ADSs were offered for every 10 ADSs held at a price of US$0.46 per rights ADS. |
36
Nine Months Ended | ||||||||
September 30, | ||||||||
2008 | 2009 | |||||||
(In thousands) | ||||||||
Net cash provided by operating activities
|
$ | 428,697 | $ | 225,980 | ||||
Net cash used in investing activities
|
$ | (632,515 | ) | $ | (261,698 | ) | ||
Net cash provided by (used in) financing activities
|
$ | (77,619 | ) | $ | 315,996 |
37
38
As of | ||||||||
December 31, | September 30, | |||||||
2008 | 2009 | |||||||
(In thousands) | ||||||||
Cost (net of return of capital)
|
$ | 80,936 | $ | 80,936 | ||||
Share of retained post-formation gains
|
75,780 | 89,595 | ||||||
Dividends received
|
(135,397 | ) | (143,086 | ) | ||||
|
||||||||
|
$ | 21,319 | $ | 27,445 | ||||
|
As of | ||||||||
December 31, | September 30, | |||||||
2008 | 2009 | |||||||
(In thousands) | ||||||||
Amounts due from SMP
|
$ | 12,175 | $ | 10,617 | ||||
Amounts due to SMP
|
$ | 1,140 | $ | 412 |
As of | ||||||||
December 31, | September 30, | |||||||
2008 | 2009 | |||||||
(In thousands) | ||||||||
Current assets
|
$ | 48,079 | $ | 56,835 | ||||
Property, plant and equipment
|
20,369 | 16,679 | ||||||
Other assets
|
316 | 102 | ||||||
Current liabilities
|
(22,489 | ) | (23,154 | ) | ||||
Other liabilities
|
(157 | ) | (287 | ) | ||||
|
||||||||
Shareholders equity
|
$ | 46,118 | $ | 50,175 | ||||
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Net revenue
|
$ | 38,862 | $ | 35,979 | $ | 123,176 | $ | 85,274 | ||||||||
Gross profit
|
$ | 9,566 | $ | 9,363 | $ | 30,852 | $ | 14,660 | ||||||||
Net income
|
$ | 8,732 | $ | 8,858 | $ | 28,217 | $ | 11,746 |
39
As of September 30, 2009 | ||||||||||||||||||||||||||||||||
Expected Maturity Date | ||||||||||||||||||||||||||||||||
(In thousands, except interest rates) | ||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | Thereafter | Total | Fair Value | |||||||||||||||||||||||||
Long-term debt:
|
||||||||||||||||||||||||||||||||
Floating rate debt
(US$)
|
$ | | $ | 173,877 | $ | 214,485 | $ | 149,630 | $ | 120,162 | $ | 107,456 | $ | 765,610 | $ | 765,610 | ||||||||||||||||
Weighted average
interest rate
|
| % | 1.041 | % | 1.026 | % | 0.998 | % | 0.976 | % | 0.939 | % | 1.004 | % (1) | ||||||||||||||||||
Fixed rate debt
(US$)
|
$ | | $ | 385,476 | $ | 14,368 | $ | 14,368 | $ | 314,368 | $ | 278,737 | $ | 1,007,317 | $ | 985,368 | ||||||||||||||||
Weighted average
interest rate
|
| % | 5.757 | % | 5.645 | % | 5.645 | % | 6.222 | % | 6.300 | % | 6.049 | % (1) | ||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Total
|
$ | | $ | 559,353 | $ | 228,853 | $ | 163,998 | $ | 434,530 | $ | 386,193 | $ | 1,772,297 | $ | 1,750,978 | ||||||||||||||||
|
As of | ||||||||
December 31, 2008 | ||||||||
(In thousands) | ||||||||
Total | Fair Value | |||||||
Long-term debt:
|
||||||||
Floating rate debt
|
$ | 741,309 | $ | 741,309 | ||||
Fixed rate debt
|
1,017,192 | 816,544 | ||||||
|
||||||||
Total
|
$ | 1,758,501 | $ | 1,557,853 | ||||
|
Notes: | ||
(1) | Average interest rates under Total are the weighted average interest rates of long-term debt outstanding as of September 30, 2009. |
40
As of September 30, 2009 | As of | |||||||||||||||||||||||||||
Expected Maturity Date of Notional Amounts | December 31, 2008 | |||||||||||||||||||||||||||
(In thousands, except exchange rates) | (In thousands) | |||||||||||||||||||||||||||
2009 | 2010 | Thereafter | Total | Fair Value | Total | Fair Value | ||||||||||||||||||||||
Forward foreign
exchange agreements:
|
||||||||||||||||||||||||||||
(Receive Yen/Pay US$)
|
||||||||||||||||||||||||||||
Contract Amount
|
$ | 14,833 | $ | 42,462 | | $ | 57,295 | $ | 2,516 | $ | 9,491 | $ | (65 | ) | ||||||||||||||
Average
Contractual
Exchange Rate
|
93.7331/USD | |||||||||||||||||||||||||||
(Receive S$/Pay US$)
|
||||||||||||||||||||||||||||
Contract Amount
|
$ | 30,066 | $ | | | $ | 30,066 | $ | 240 | $ | 5,002 | $ | 29 | |||||||||||||||
Average
Contractual
Exchange Rate
|
1.4191/USD | |||||||||||||||||||||||||||
(Receive Euro/Pay US$)
|
||||||||||||||||||||||||||||
Contract Amount
|
$ | 17,330 | $ | 20,513 | | $ | 37,843 | $ | 1,271 | $ | | $ | | |||||||||||||||
Average
Contractual
Exchange Rate
|
1.4145/Euro | |||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Total Contract Amount
|
$ | 62,229 | $ | 62,975 | | $ | 125,204 | $ | 4,027 | $ | 14,493 | $ | (36 | ) | ||||||||||||||
|
41
42
CHARTERED SEMICONDUCTOR
MANUFACTURING LTD. |
||||
By: | /s/ Chia Song Hwee | |||
Name: | Chia Song Hwee | |||
Title: | President and Chief Executive Officer | |||
By: | /s/ George Thomas | |||
Name: | George Thomas | |||
Title: | Senior Vice President and Chief Financial Officer |
43
1 Year Chartered Semiconductor Manufacturing Ltd. (MM) Chart |
1 Month Chartered Semiconductor Manufacturing Ltd. (MM) Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions