8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

July 28, 2004

Commission file number

ChipPAC, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	000-31173	77-0463048
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

47400 Kato Road, Fremont, California 94538

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code (510) 979-8000

Item 7. Financial Statements and Exhibits

(c) Exhibits.

99.01 Press release issued by ChipPAC, Inc. dated July 28, 2004

Item 12. Results of Operations and Financial Condition

On July 28, 2004, ChipPAC, Inc., (the “Company”) announced via press release the Company’s results for its quarter ended June 30, 2004. A copy of the Company’s press release is attached hereto as Exhibit 99.01 and incorporated by reference. This Form 8-K and the attached exhibit are being furnished to, but not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any document filed under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, as of July 28, 2004.

CHIPPAC, INC.

(Registrant)

/s/ Michael G. Potter

MICHAEL G. POTTER

Vice President and Acting Chief Financial Officer

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EX-99.01

Exhibit 99.01

ChipPAC Reports 33% Second Quarter Revenue Growth

• Gross Margin Continues to Improve

• EPS Improves Sequentially and Year-Over-Year

Fremont, CA, July 28, 2004 – ChipPAC, Inc. (Nasdaq: CHPC), one of the world’s largest and most diversified providers of semiconductor assembly and test services, today announced results for the second quarter ended June 30, 2004.

Revenue for the three months ended June 30, 2004 increased 33% to $142.5 million, compared to $106.8 million in the same quarter a year ago. This represents a sequential increase of 12% compared to the quarter ended March 31, 2004, at the high-end of prior guidance.

On a GAAP basis, net income was $5.0 million or $0.05 per diluted share, compared to a net loss of $4.5 million or $(0.05) per diluted share in the same quarter a year ago. GAAP results for the second quarter of 2004 include $1.4 million in costs associated with the Company’s proposed merger with ST Assembly Test Services Ltd (“STATS” – Nasdaq: STTS and SGX: ST Assembly). GAAP results for the second quarter of 2003 include $1.2 million in costs incurred for the write-off of debt issuance costs. Excluding the special item in both periods, net income in the second quarter ended June 30, 2004 was $6.4 million, compared to a net loss of $3.3 million for the same period a year ago, or net income of $0.06 per diluted share, compared to a net loss of $(0.03) per diluted share in the same quarter a year ago.

Dennis McKenna, Chairman and Chief Executive Officer of ChipPAC, commented, “The 12% sequential and 33% year over year revenue growth continues to demonstrate excellent execution by our management team and employees. We continued to reap the benefits of our investments in stack–die, System-in-a-Package and test systems. As a result, our stack die units grew an impressive 25% sequentially. Our test units continued to grow at a faster pace than our overall assembly units. On a year-over-year basis, assembly units grew 33% and test units grew at 70%. The strong results validate our strategic product alignment and engagements with the fastest growth segments of semiconductors in wireless, broadband, consumer and computing.”

Michael G. Potter, Acting Chief Financial Officer of ChipPAC, said, “Our second quarter results benefited from higher volumes, along with continued strength in advanced packages and end market demand that was in-line with expectations at the start of the second quarter 2004. Utilization levels increased to 74%. Our China facility contributed, with record volumes in each month of the quarter. Our improved utilization rates and focus on product mix helped us achieve a gross margin of 20% in the second quarter of 2004 compared to 18% in the first quarter of 2004. In addition operating margins improved 67% sequentially as we continued to gain leverage within our operations. Our goal is to achieve additional improvements in operating efficiencies as we continue to implement our customer, product and service strategies.”

Outlook

McKenna continued, “We expect continued improvements in our business in the second half of 2004 and in the third quarter of 2004 based on existing customer forecasts. STATS ChipPAC currently plans to provide updated financial guidance shortly upon closing of the merger, which is expected to be August 4^th (U.S. time).” Separately, Institutional Shareholders Services Inc. (ISS), the world’s leading provider of proxy voting and corporate governance services, issued a report noting that the proposed merger agreement warrants shareholder support.

On February 10, 2004, ChipPAC, Inc. and STATS announced that they had entered into a definitive merger agreement for the companies to merge in a stock-for-stock transaction to create one of the world’s

premier independent semiconductor assembly and test solutions companies. Under the terms of the merger agreement, ChipPAC stockholders will receive 0.87 STATS American Depositary Shares for each share of ChipPAC common stock. Consummation of the merger is subject to certain additional conditions, including approval of the STATS and ChipPAC shareholders and other customary conditions. The transaction is expected to close August 4, 2004 (U.S. time). The Companies have already:

• Received early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976;

• Received a favorable private letter ruling from the U.S. Internal Revenue Service notifying us that the exchange of ChipPAC Class A common stock for STATS American Depositary Shares in the pending merger involving the two companies will not result in the recognition of gain under Section 367 of the U.S. Internal Revenue Code, as amended. The receipt of the private letter ruling satisfies a closing condition of the merger;

• Announced June 16, 2004 as the record date for the special meeting of stockholders to vote on the merger agreement;

• Announced the extraordinary general meeting of STATS shareholders will take place on Wednesday, August 4, 2004 at 10:00 a.m., Singapore time, at 10 Ang Mo Kio Street 65, #04-18/20 Techpoint, Singapore 569059.

• Announced the special meeting of ChipPAC’s stockholders will take place on Wednesday, August 4, 2004 at 9:00 a.m., Pacific Time, at 47400 Kato Road, Fremont, California 94538.

Investor Conference Call / Webcast Details

ChipPAC will review detailed second quarter 2004 results on July 28, 2004 at 5PM EDT. The conference call-in number is (973) 582-2700. A replay will be available from 8 PM EDT on July 28 through midnight EDT, August 4. The replay number is (973) 341-3080. The confirmation identification for both the live call and replay is 4951851. The live call and replay will also be accessible over the web at www.chippac.com.

About ChipPAC, Inc.

ChipPAC is a full-portfolio provider of semiconductor packaging design, assembly, test and distribution services. The company combines a history of innovation and service with more than a decade of experience satisfying some of the largest customers in the industry. With advanced process technology capabilities and a global manufacturing presence spanning South Korea, China, Malaysia and the United States, ChipPAC has a reputation for providing dependable, high quality packaging solutions. For more information, visit the company’s Web site at www.chippac.com.

CONTACT:

David Pasquale, 646-536-7006, or Moon Lee, 646-536-7001

Both with The Ruth Group, www.TheRuthGroup.com

# # #

Forward-Looking Statements:

This press release includes forward-looking statements, as that term is defined in the Private Securities Reform Act of 1995, which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These forward-looking statements include statements that we will achieve additional improvements in operating efficiencies as it continues to implement our customer, product and service strategies, that we expect continued improvements in our business in the second half of 2004 and the third quarter of 2004, and that STATS ChipPAC currently plans to provide updated financial guidance shortly upon closing of the merger, which is expected to be August 4, 2004 (U.S. time). Some of these risks and uncertainties are detailed in documents filed with the Securities and Exchange Commission, and include, but may not necessarily be limited to, the competitive conditions in the semiconductor foundry industry, our ability to develop and market new technologies, the timing and success of new product introductions, customer demand, the Company’s ability to meet volume production and development time, the ongoing quality of the Company’s services, the ability of the Company’s suppliers to provide materials, equipment and services on a timely and cost competitive basis, the ability

of the Company to pursue, complete and successfully integrate strategic acquisitions, dispositions and/or business combinations, exchange rates, industry improvement, growth in electronic product demand, general market conditions, and general economic and political conditions. In addition, our merger is subject to a number of conditions, including the receipt of stockholder approval. Additional risks and uncertainties are discussed in exhibit 99.1 (Risk Factors) to our annual report on Form 10-K for the period ended December 31, 2003. The Company undertakes no obligation to update the information in this press release.

Additional Information About the Proposed Merger and Where to Find It

STATS and ChipPAC have filed with the SEC a proxy statement/prospectus and other relevant materials in connection with the proposed merger (the “Merger”) involving STATS and ChipPAC pursuant to the terms of an Agreement and Plan of Merger and Reorganization among STATS and ChipPAC Merger, Inc., a wholly owned subsidiary of STATS, and ChipPAC. A shareholders’ circular issued by STATS has been mailed to the shareholders of STATS and the proxy statement/prospectus has been mailed to the stockholders of ChipPAC. Investors and security holders of STATS and ChipPAC are urged to read the STATS shareholders’ circular and the ChipPAC proxy statement/prospectus and the other relevant materials because they contain important information about STATS, ChipPAC and the proposed Merger. The proxy statement/prospectus and other relevant materials, and any other documents filed by STATS or ChipPAC with the SEC, may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by STATS by contacting STATS Investor Relations in the United States at telephone (408) 586-0608 or email daviesd@statsus.com, or in Singapore at telephone (65) 6824-7705 or email angelaine@stats.st.com.sg. Investors and security holders may obtain free copies of the documents filed with the SEC by ChipPAC by contacting ChipPAC Investor Relations, ChipPAC Incorporated, 47400 Kato Road, Fremont, CA 94538, telephone (510) 979-8220 or email ir@chippac.com or David Pasquale at telephone (646) 536-7006 or email dpasquale@theruthgroup.com. Investors and security holders of STATS and ChipPAC are urged to read the STATS shareholders’ circular, the proxy statement/prospectus and the other relevant materials before making any voting or investment decision with respect to the proposed Merger.

STATS, ChipPAC and certain of each of their executive officers and directors may be deemed to be participants in the solicitation of proxies of ChipPAC’s stockholders in connection with the proposed Merger. Investors and security holders may obtain more detailed information regarding the names, affiliations and interests of such persons in the solicitation by reading the proxy statement/prospectus statement.

ChipPAC, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except for per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Revenue	$	142,533		$	106,844		$	269,481		$	195,412
Cost of revenue		114,571			90,257			218,534			168,784
Gross profit		27,962			16,587			50,947			26,628
Operating expenses:
Selling, general and administrative		9,819			8,465			18,965			17,931
Research and development		3,007			3,106			5,991			5,960
Merger-related charges		1,405			—			4,735			—
		14,231			11,571			29,691			23,891
Operating income		13,731			5,016			21,256			2,737
Non-operating expenses		7,521			8,978			15,310			15,863
Income (loss) before income taxes		6,210			(3,962	)		5,946			(13,126	)
Provision for income taxes		1,242			500			1,742			1,000
Net income (loss)	$	4,968		$	(4,462	)	$	4,204		$	(14,126	)
Net income (loss) per share
Basic	$	0.05		$	(0.05	)	$	0.04		$	(0.15	)
Diluted	$	0.05		$	(0.05	)	$	0.04		$	(0.15	)
Weighted Average shares used in per share calculation:
Basic		98,456			95,076			98,061			94,742
Diluted		101,597			95,076			101,707			94,742
Key Ratios & Information:
Gross Margin		19.6	%		15.5	%		18.9	%		13.6	%
Operating Expenses as a % of Revenue		10.0	%		10.8	%		11.0	%		12.2	%
Operating Margin		9.6	%		4.7	%		7.9	%		1.4	%
Depreciation & Amortization Expense	$	21,438		$	17,120		$	41,022		$	33,149
Capital Expenditures	$	65,216		$	35,043		$	99,592		$	44,800

ChipPAC, Inc

Reconciliation of US GAAP Net Income (Loss) to

Non-GAAP Net Income (Loss )

(In thousands)

(Unaudited)

Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial statements presented on a GAAP basis, ChipPAC uses a non-GAAP measure of net income (loss), which is adjusted to exclude certain amounts referred to as special items. We believe that our non-GAAP net loss measure gives an indication of our baseline performance before other charges that are considered by management to be outside of our core operating results. In addition, our non-GAAP net loss measure is among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information should not be considered in isolation or as a substitute for net loss prepared in accordance with generally accepted accounting principles in the United States of America.

	Three Months Ended					Six Months Ended
	June 30, 2004		June 30, 2003			June 30, 2004		June 30, 2003
Net income (loss)	$	4,968	$	(4,462	)	$	4,204	$	(14,126	)
Special Items
Merger-related charges		1,405		—			4,735		—
Write-off of debt issuance costs		—		1,182			—		1,182
Total special items		1,405		1,182			4,735		1,182
Net income (loss), excluding special items	$	6,373	$	(3,280	)	$	8,939	$	(12,944	)

Non-GAAP condensed consolidated statements of operations are intended to present the Company’s operating results, excluding special items. The special items excluded for the three months and six months ended June 30, 2004 and 2003 were:

• Since the announcement of the pending merger between STATS and ChipPAC, Inc in February 2004, we have incurred direct expense costs related to merger activity totaling $4.7 million for the year.

• In May and June 2003, ChipPAC, Inc. issued $125.0 million and $25.0 million, respectively, of convertible notes in a private placement. These convertible notes are subordinated to the senior debt and bear an annual interest rate of 2.5% and will mature on June 1, 2008.

A portion of the proceeds was used to pay down term loan B under our senior credit facilities and a foreign loan. As a result of these early extinguishment of debt, capitalized debt issuance costs of $1.1 million were written off in relation to term loan B, and an early payment penalty of $0.08 million was charged in relation to the foreign loan.

ChipPAC, Inc.

Non-GAAP Condensed Consolidated Statements of Operations

Excludes Special Items

(In thousands, except for per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Revenue	$	142,533		$	106,844		$	269,481		$	195,412
Cost of revenue		114,571			90,257			218,534			168,784
Gross profit		27,962			16,587			50,947			26,628
Operating expenses:
Selling, general and administrative		9,819			8,465			18,965			17,931
Research and development		3,007			3,106			5,991			5,960
		12,826			11,571			24,956			23,891
Operating income		15,136			5,016			25,991			2,737
Non-operating expenses		7,521			7,796			15,310			14,681
Income (loss) before income taxes		7,615			(2,780	)		10,681			(11,944	)
Provision for income taxes		1,242			500			1,742			1,000
Net income (loss), excluding special items	$	6,373		$	(3,280	)	$	8,939		$	(12,944	)
Net income (loss), excluding special items per share
Basic	$	0.06		$	(0.03	)	$	0.09		$	(0.14	)
Diluted	$	0.06		$	(0.03	)	$	0.09		$	(0.14	)
Weighted Average shares used in per share calculation:
Basic		98,456			95,076			98,061			94,742
Diluted		120,207			95,076			101,707			94,742
Key Ratios & Information:
Gross Margin		19.6	%		15.5	%		18.9	%		13.6	%
Operating Expenses as a % of Revenue		9.0	%		10.8	%		9.3	%		12.2	%
Operating Margin		10.6	%		4.7	%		9.6	%		1.4	%
Depreciation & Amortization Expense		21,438			17,120			41,022			33,149
Capital Expenditures		65,216			35,043			99,592			44,800

The format presented above is not in accordance with Generally Accepted Accounting Principles.

See Statement of Reconciliation of US GAAP Net Income (Loss) to Non-GAAP Net Income (Loss) and notes to the reconciliation.

ChipPAC, Inc.

Condensed Consolidated Balance Sheets

(In thousands - Unaudited)

	June 30, 2004		December 31, 2003
Assets
Current assets:
Cash and short-term investments	$	22,426	$	59,708
Accounts receivable, net		71,907		56,728
Inventories		32,256		26,060
Other current assets		6,672		7,411
Total current assets		133,261		149,907
Property and equipment, net		458,297		397,267
Other non-current assets, including intangibles		33,609		32,157
Total assets	$	625,167	$	579,331
Liabilities and Stockholders’ Equity
Current liabilities:
Foreign credit line		8,709		—
Accounts payable		85,170		69,251
Other current liabilities		33,425		27,724
Total current liabilities		127,304		96,975
Long-term debt		165,000		165,000
Convertible subordinated note		200,000		200,000
Other long-term liabilities		27,683		22,313
Total long-term liabilities		392,683		387,313
Total liabilities		519,987		484,288
Stockholders’ equity		105,180		95,043
Total liabilities and stockholders’ equity	$	625,167	$	579,331