<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT
TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2000
COMMISSION FILE NUMBER 000-27811
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
(Exact name of registrant as specified in its charter)
NOT APPLICABLE
(Translation of registrant's name into English)
REPUBLIC OF SINGAPORE
(Jurisdiction of incorporation or organization)
60 Woodlands Industrial Park D
Street 2, Singapore 738406
(65) 362-2838
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to registrant in
connection with Rule 12g3-2(b). Not applicable.
<PAGE> 2
CURRENCY OF PRESENTATION AND CERTAIN DEFINED TERMS
Unless the context otherwise requires, references herein to "we," "us," the
"company" or "Chartered" are to Chartered Semiconductor Manufacturing Ltd, a
company organized under the laws of the Republic of Singapore.
In this Quarterly Report on Form 6-K ("Quarterly Report"), all references
to "$" are to the legal currency of the United States. References to a
particular "fiscal" year are to our fiscal year ended December 31 of that year.
Our financial statements are presented in accordance with United States
generally accepted accounting principles ("U.S. GAAP"). In this Quarterly
Report, any discrepancies in any table between totals and the sums of the
amounts listed are due to rounding.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This Quarterly Report contains forward-looking statements, as defined in the
safe harbor provisions of the United States Private Securities Litigation Reform
Act of 1995. These forward-looking statements, including without limitation,
statements relating to our new fabrication facility and our joint development
agreement with Lucent Technologies, reflect our current views with respect to
future events and financial performance, and are subject to certain risks and
uncertainties, which could cause actual results to differ materially from
historical results or those anticipated. For example, changes in the market
outlook, customer demands, availability of materials, equipment, manpower and
timely regulatory approvals, the availability of financing and the terms thereof
and delays in or non-completion of our joint development program with Lucent
Technologies could affect the foregoing forward-looking statements. Although we
believe the expectations reflected in such forward-looking statements are based
upon reasonable assumptions, we can give no assurance that our expectations will
be attained. In addition, a description of certain other risks and uncertainties
which could cause actual results to differ materially from those indicated in
the forward-looking statements can be found in the section captioned "Risk
Factors" in our Annual Report on Form 20-F filed with the Securities and
Exchange Commission. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
<PAGE> 3
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 2000 1999 2000
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenue $163,926 $271,382 $294,738 $509,791
Cost of revenue 129,130 176,586 247,257 330,926
-------- -------- -------- --------
Gross profit 34,796 94,796 47,481 178,865
-------- -------- -------- --------
Operating expenses:
Research and development 10,874 17,808 22,955 35,114
Fab start-up costs -- 5,574 -- 17,242
Sales and marketing 10,498 7,676 20,568 16,995
General and administrative 12,399 22,927 22,701 38,436
Costs incurred on termination of
development program -- -- 6,500 --
Stock-based compensation 1,645 732 3,289 1,841
-------- -------- -------- --------
Total operating expenses 35,416 54,717 76,013 109,628
-------- -------- -------- --------
Operating income (loss) (620) 40,079 (28,532) 69,237
Equity in loss of CSP (3,283) -- (5,937) --
Equity in income (loss) of SMP (6,213) 224 (12,051) (2,028)
Other income 329 359 650 2,643
Interest income 544 12,969 1,207 20,844
Interest expense (4,473) (4,090) (9,094) (7,787)
Exchange gain (loss) (455) 2,326 5,065 4,125
-------- -------- -------- --------
Income (loss) before income taxes (14,171) 51,867 (48,692) 87,034
Income tax (expense) benefit 528 (4,242) 172 (8,012)
-------- -------- -------- --------
Income (loss) before minority interest (13,643) 47,625 (48,520) 79,022
Minority interest in loss of CSP -- 10,336 -- 16,756
-------- -------- -------- --------
Net income (loss) $(13,643) $ 57,961 $(48,520) $ 95,778
======== ======== ========== ========
Net income (loss) per share and ADS
Basic net income (loss) per share $ (0.01) $ 0.04 $ (0.05) $ 0.07
Diluted net income (loss) per share (0.01) 0.04 (0.05) 0.07
Basic net income (loss) per ADS $ (0.14) $ 0.43 $ (0.49) $ 0.73
Diluted net income (loss) per ADS (0.14) 0.43 (0.49) 0.72
Number of shares (in millions) used in computing:
-- basic net income (loss) per share 985.9 1,334.1 985.8 1,307.0
-- effect of dilutive options -- 24.6 -- 26.3
-------- -------- -------- --------
-- diluted net income (loss) per share 985.9 1,358.7 985.8 1,333.3
-------- -------- -------- --------
Number of ADS (in millions) used in computing:
-- basic net income (loss) per ADS 98.6 133.4 98.6 130.7
-- effect of dilutive options -- 2.5 -- 2.6
-------- -------- -------- --------
-- diluted net income (loss) per ADS 98.6 135.9 98.6 133.3
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE> 4
<TABLE>
<CAPTION>
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF US DOLLARS)
AS OF
---------------------------
DECEMBER 31, JUNE 30,
1999 2000
------------ -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 544,996 $1,005,298
Accounts receivable 141,226 146,702
Inventories 33,619 36,038
Other current assets 9,946 14,301
---------- ----------
Total current assets 729,787 1,202,339
Property, plant and equipment, net 1,282,106 1,561,237
Investment in SMP 47,036 65,251
Other non-current assets 73,979 49,499
---------- ----------
Total assets $2,132,908 $2,878,326
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 152,401 $ 101,334
Current installments of obligations under capital leases 5,767 6,199
Current installments of long-term debt 119,991 148,920
Accrued operating expenses 127,147 164,201
Other current liabilities 29,919 40,948
---------- ----------
Total current liabilities 435,225 461,602
Obligations under capital leases, excluding current
installments 7,822 4,645
Long-term debt, excluding current installments 423,668 455,998
Other liabilities 67,279 55,401
---------- ----------
Total liabilities 933,994 977,646
Minority interests 57,164 86,406
Shareholders' equity 1,141,750 1,814,274
---------- ----------
Total liabilities and shareholders' equity $2,132,908 $2,878,326
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE> 5
<TABLE>
<CAPTION>
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF US DOLLARS)
FOR THE SIX MONTHS ENDED
-----------------------------
JUNE 30, JUNE 30,
1999 2000
-------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(48,520) $95,778
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Equity in loss of CSP 5,937 --
Equity in loss of SMP 12,051 2,027
Depreciation and amortization 142,617 153,567
Foreign exchange gain on financing activities (4,314) (1,243)
Minority interest in loss of CSP -- (16,756)
Loss on disposal of property, plant and equipment 3,426 3,426
Stock-based compensation 3,289 1,841
Other (1,120) (1,747)
Changes in operating working capital:
Accounts receivable (14,216) (6,839)
Amount due to ST, ST affiliates, CSP and SMP, net (7,234) (3,416)
Inventories 2,533 (2,419)
Prepaid expenses (1,573) (625)
Trade accounts payable (2,874) (1,124)
Accrued operating expenses 2,694 43,213
Other current liabilities 3,152 5,110
-------- ----------
Net cash provided by operating activities: 95,848 270,793
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment 3,513 8,651
Purchase of property, plant and equipment (89,802) (486,000)
Technology license fees paid (8,500) (6,180)
Investment in SMP (19,877) (20,242)
-------- ----------
Net cash used in investing activities: (114,666) (503,771)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdrafts (1,872) --
Customer deposits, net (27,001) (4,861)
Loans from ST and ST affiliates, net 1,877 --
Long term deb
Borrowings 122,753
Repayments (4,664) (42,399)
Issuance of shares by the Company, net 324 574,869
Issuance of shares by CSP to minority shareholders -- 45,998
Capital lease payments (2,131) (2,692)
-------- ----------
Net cash provided by (used in) financing activities: (33,467) 693,668
-------- ----------
Net increase (decrease) in cash and cash equivalents (52,285) 460,690
Effect of exchange rate changes on cash and cash equivalents . 214 (388)
Cash at the beginning of the period 99,619 544,996
-------- ----------
Cash at the end of the period $ 47,548 $1,005,298
======== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE> 6
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
1. Business and Organization
Chartered Semiconductor Manufacturing Ltd currently owns, or has an
interest in, five fabrication facilities, all of which are located in Singapore.
The Company is currently in the process of constructing a sixth fabrication
facility in Singapore. Fabs 1, 2 and 3 are wholly-owned by the Company. Fab 5 is
operated by Silicon Manufacturing Partners, known as SMP, which is jointly-owned
with Lucent Technologies Microelectronics Pte Ltd. Fab 6, known as Chartered
Silicon Partners, or CSP, is jointly-owned with an affiliate of the Government
of Singapore and a subsidiary of Agilent Technologies B.V. Fab 7, which is also
wholly-owned by the Company, is currently under construction.
We were incorporated in Singapore in 1987. As of June 30, 2000, we were
61.0% owned by Singapore Technologies Pte Ltd, or ST, and its affiliates. ST is
one of Singapore's largest industrial conglomerates and is indirectly
wholly-owned by the Government of Singapore.
2. Basis of Presentation
The results of operations reflect the interim adjustments, all of which are
of a normal recurring nature and which, in the opinion of management, are
necessary for a fair presentation of the results for such interim period. The
results reported in these condensed consolidated financial statements should not
be regarded as necessarily indicative of results that may be expected for the
entire year. These unaudited condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial statements
included in the Company's Annual Report on Form 20-F for the year ended
December 31, 1999.
3. Principles of Consolidation
The accompanying condensed quarterly financial statements reflect the
consolidated financial statements of Chartered Semiconductor Manufacturing Ltd
and its majority owned and controlled affiliates. All significant transactions
among the parent and consolidated affiliates have been eliminated.
4. Investment in CSP and SMP
The equity accounting method is applied for the investment in SMP as well
as for the investment in CSP for the period prior to October 1, 1999.
5. Contingencies
As is typical in the semiconductor industry, the Company has from time to
time received communications from third parties asserting patents that cover
certain of the Company's technologies and alleging infringements of certain
intellectual property rights of others. The Company has acquired certain
technology licenses for use in its business and may seek to obtain other
licenses in the future. There can be no assurance that the Company will be able
to obtain such future licenses on commercially reasonable terms, or at all.
<PAGE> 7
The Company has accrued a liability for, and charged to its results of
operations, the estimated costs of obtaining such licenses for third party
technology. The amount accrued was $10.6 million as of June 30, 2000. No
assurance can be given that such provisions are adequate.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
The following table sets forth certain operating data as a percentage of net
revenue for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 2000 1999 2000
----- ----- ----- -----
(AS A PERCENTAGE OF NET REVENUE)
<S> <C> <C> <C> <C>
Net revenue 100.0% 100.0% 100.0% 100.0%
Cost of revenue 78.8 65.1 83.9 64.9
----- ----- ----- -----
Gross profit 21.2 34.9 16.1 35.1
----- ----- ----- -----
Operating expenses:
Research and development 6.6 6.6 7.8 6.9
Fab start-up costs -- 2.1 -- 3.4
Sales and marketing 6.4 2.8 7.0 3.3
General and administrative 7.6 8.4 7.7 7.5
Costs incurred on termination of
development program -- -- 2.2 --
Stock-based compensation 1.0 0.3 1.1 0.4
----- ----- ----- -----
Total operating expenses 21.6 20.2 25.8 21.5
----- ----- ----- -----
Operating income (loss) (0.4) 14.7 (9.7) 13.6
Equity in loss of CSP (2.0) -- (2.0) --
Equity in income (loss) of SMP (3.8) 0.1 (4.1) (0.4)
Other income 0.2 0.1 0.2 0.5
Interest income 0.3 4.8 0.4 4.1
Interest expense (2.7) (1.5) (3.0) (1.5)
Exchange gain (loss) (0.3) 0.9 1.7 0.8
----- ----- ----- -----
Income (loss) before income taxes (8.7) 19.1 (16.5) 17.1
Income tax (expenses) benefit 0.3 (1.6) 0.0 (1.6)
----- ----- ----- -----
Income (loss) before minority interest (8.4) 17.5 (16.5) 15.5
Minority interest in loss of CSP -- 3.9 -- 3.3
----- ----- ----- -----
Net income (loss) (8.4)% 21.4% (16.5)% 18.8%
===== ===== ===== =====
</TABLE>
Three months ended June 30, 1999 and June 30, 2000
Net revenue. Net revenue grew 65.6% from $163.9 million for the three
months ended June 30, 1999 to $271.4 million for the three months ended June 30,
2000. The increase in revenue was due primarily to higher shipments, improved
customer and product mix, and enhanced pricing.
<PAGE> 8
The number of eight-inch equivalent wafers shipped increased from 156,500
(adjusted to exclude the terminated print-head business) for the three months
ended June 30, 1999 to 226,200 for the three months ended June 30, 2000. The
increase was primarily due to higher shipments of wafers to customers in the
networking and related communications markets.
Average selling price also contributed to the improvement in net revenue.
Average selling price increased from $1,007 per wafer (adjusted to exclude the
terminated print-head business) for three months ended June 30, 1999 to $1,200
per wafer for the three months ended June 30, 2000. Average selling price
improved as a result of customer and product mix enrichment and enhanced
pricing.
Cost of revenue and gross profit. Cost of revenue increased 36.8% from
$129.1 million in the three months ended June 30, 1999 to $176.6 million in the
three months ended June 30, 2000, principally due to the increase in production
volumes. Gross profit was $94.8 million, or 34.9% of net revenue, up from $34.8
million, or 21.2% of net revenue, in the same quarter a year ago, driven
primarily by higher revenue and lower unit costs.
Research and development expenses. Research and development expenses
increased by 63.8% from $10.9 million in the three months ended June 30, 1999
to $17.8 million in the three months ended June 30, 2000 primarily due to
additional investments in next generation technology and modules in support of
our strategy to provide a full suite of process technologies necessary for
enabling system level integration.
Fab start-up costs. As a result of the amendment in 1999 to the strategic
alliance agreement with Agilent Technologies Europe B.V. and EDB Investments
Pte Ltd, the Company has treated CSP as a consolidated subsidiary from
October 1, 1999 forward. The fab start-up costs for the three months ended
June 30, 2000 were primarily related to the start-up costs at CSP and to a
lesser extent at Fab 7.
Sales and marketing expenses. Sales and marketing expenses decreased by
26.9% from $10.5 million in the three months ended June 30, 1999 to
$7.7 million in the three months ended June 30, 2000.
General and administrative expenses. General and administrative expenses
increased by 84.9% from $12.4 million in the three months ended June 30, 1999
to $22.9 million in the three months ended June 30, 2000 due primarily to
increased staffing and other payroll related expenses.
Equity in loss of CSP. Prior to October 1, 1999, CSP was accounted for
using the equity method. Effective October 1, 1999, as a result of an
amendment to the CSP strategic alliance agreement, we have treated CSP as a
consolidated subsidiary. Our share of the losses in CSP was $3.3 million in the
three months ended June 30, 1999 (the period of time during which CSP was
accounted for using the equity method).
Equity in income (loss) of SMP. Our share of the loss in SMP was $6.2
million for the three months ended June 30, 1999. SMP recorded net income for
the first time during the three months ended June 30, 2000. As a result of
SMP's profitability, our share of the income of SMP for the three months ended
June 30, 2000 was $0.2 million.
Interest income. Interest income increased substantially from $0.5 million
in the three months ended June 30, 1999 to $13.0 million in the three months
ended June 30, 2000. The
<PAGE> 9
increase was due to interest earned from cash proceeds from our initial public
offering in October 1999 and our follow-on offering in May 2000 which were
placed in fixed deposits.
Interest expense. Interest expense decreased from $4.5 million in the
three months ended June 30, 1999 to $4.1 million in the three months ended
June 30, 2000 due to higher interest capitalization as a result of capacity
expansion.
Exchange gain (loss). We recognized an exchange loss of $0.5 million in
the three months ended June 30, 1999 and a gain of $2.3 million in the three
months ended June 30, 2000, due primarily to currency fluctuations between the
U.S. dollar against the Singapore dollar and the Japanese Yen.
Income tax (expense) benefit. Our income tax benefit for the three months
ended June 30, 1999 was $0.5 million compared to an expense of $4.2 million for
the three months ended June 30, 2000. The higher income tax expense was
primarily the result of taxes payable on the increase in interest income.
Minority interest in loss of CSP. The minority interest in loss of CSP of
$10.3 million for the three months ended June 30, 2000 resulted from the
consolidation of CSP as a subsidiary from October 1, 1999.
Six months ended June 30, 1999 and June 30, 2000
Net revenue. Net revenue increased 73.0% from $294.7 million in the six
months ended June 30, 1999 to $509.8 million in the six months ended June 30,
2000. The significant increase in revenue was due primarily to higher shipments,
improved customer and product mix, and enhanced pricing.
The number of eight-inch equivalent wafers shipped increased from 291,600
(adjusted to exclude the terminated print-head business) in the six months ended
June 30, 1999 to 436,400 in the six months ended June 30, 2000, an increase of
144,800 or 49.7%. The increase was primarily due to higher shipments of wafers
to customers in the networking and related communications markets.
Average selling price also contributed to the improvement in net revenue.
Average selling price increased from $965 per wafer (adjusted to exclude the
terminated print-head business) in the six months ended June 30, 1999 to $1,168
per wafer in the six months ended June 30, 2000. Average selling price improved
as a result of customer and product mix enrichment and enhanced pricing.
Cost of revenue and gross profit. Cost of revenue increased 33.8% from
$247.3 million in the six months ended June 30, 1999 to $330.9 million in the
six months ended June 30, 2000, principally due to the increase in production
volumes. Gross profit for the six months ended June 30, 2000 was $178.9 million,
or 35.1% of net revenue, up from $47.5 million for the six months ended June 30,
1999, or 16.1% of net revenue, driven primarily by higher revenue and lower unit
costs.
Research and development expenses. Research and development expenses
increased by 53.0% from $23.0 million for the six months ended June 30, 1999 to
$35.1 million for the six months ended June 30, 2000 primarily due to additional
investments in next generation technology and modules in support of our strategy
to provide a full suite of process technologies
<PAGE> 10
necessary for enabling system level integration. As a percentage of net revenue,
research and development expenses declined from 7.8% for the six months ended
June 30, 1999 to 6.9% for the six months ended June 30, 2000.
Fab start-up costs. As a result of the amendment to the strategic alliance
agreement with Agilent Technologies Europe B.V. and EDB Investments Pte Ltd, the
Company has treated CSP as a consolidated subsidiary from October 1, 1999
forward. The fab start-up costs for the six months ended June 30, 2000 were
primarily related to the start-up costs at CSP and to a lesser extent at Fab 7.
Sales and marketing expenses. Sales and marketing expenses decreased by
17.4% from $20.6 million for the six months ended June 30, 1999 to $17.0 million
for the six months ended June 30, 2000. As a percentage of net revenue, sales
and marketing expenses declined from 7.0% for the six months ended June 30, 1999
to 3.3% for the six months ended June 30, 2000.
General and administrative expenses. General and administrative expenses
increased 69.3% from $22.7 million for the six months ended June 30, 1999 to
$38.4 million for the six months ended June 30, 2000, due primarily to higher
administrative headcount to support increased operating activities which
resulted in higher payroll and staff related expenses. As a percentage of net
reveune, general and administrative expenses declined marginally from 7.7% for
the six months ended June 30, 1999 to 7.5% for the six months ended June 30,
2000.
Equity in loss of CSP. Prior to October 1, 1999, CSP was accounted for
using the equity method. Effective October 1, 1999, as a result of an amendment
to the CSP strategic alliance agreement, we have treated CSP as a consolidated
subsidiary. Our share of the losses in CSP was $5.9 million for the six months
ended June 30, 1999 (the period of time during which CSP was accounted for using
the equity method).
Equity in income (loss) of SMP. Our share of the loss in SMP was $12.1
million in the six months ended June 30, 1999 and $2.0 million in the six months
ended June 30, 2000. The reduction in our share of the loss in SMP was due to
improved operating results in SMP for the three months ended June 30, 2000.
Other income. Other income increased from $0.7 million in the six months
ended June 30, 1999 to $2.6 million in the six months ended June 30, 2000 mainly
due to compensation from one of our customers for a shortfall in capacity
utilization.
Interest income. Interest income increased substantially from $1.2 million
in the six months ended June 30, 1999 to $20.8 million in the six months ended
June 30, 2000. The increase was due to interest earned from cash proceeds from
our initial public offering in October 1999 and our follow-on offering in May
2000 which were placed in fixed deposits.
Interest expense. Interest expense decreased from $9.1 million in the six
months ended June 30, 1999 to $7.8 million in the six months ended June 30, 2000
due to higher interest capitalization as a result of capacity expansion.
Exchange gain (loss). We recognized an exchange gain of $5.1 million in
the six months ended June 30, 1999 and $4.1 million in the six months ended
June 30, 2000 due primarily to currency fluctuations between the U.S. dollar
against the Singapore dollar and the Japanese Yen.
<PAGE> 11
Income tax (expense) benefit. Our income tax benefit for the six months
ended June 30, 1999 was $0.2 million compared to an expense of $8.0 million for
the six months ended June 30, 2000. The higher income tax expense was primarily
the result of taxes payable on the increase in interest income.
Minority interest in loss of CSP. The minority interest in loss of CSP of
$16.8 million for the six months ended June 30, 2000 resulted from the
consolidation of CSP as a subsidiary from October 1, 1999.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, our principal sources of liquidity included
$1,005.3 million in cash and cash equivalents and $291.9 million of unutilized
banking and credit facilities consisting of short-term advances and bank
guarantees.
Net cash provided by operating activities totaled $270.8 million for the
six months ended June 30, 2000 and $95.8 million for the six months ended
June 30, 1999. The $270.8 million of net cash generated from operating
activities for the six months ended June 30, 2000 was mainly attributable to
improved net income and an increase in accrued operating expenses.
Net cash used in investing activities totaled $503.8 million for the six
months ended June 30, 2000 and $114.7 million for the six months ended June 30,
1999. Our investing activities have consisted primarily of capital expenditures
totaling $486.0 million for the six months ended June 30, 2000 and $89.8 million
for the six months ended June 30, 1999. Capital expenditures consisted
principally of the purchase of semiconductor equipment for the equipping of our
fabs as well as construction costs for Fab 7.
Net cash provided by financing activities totaled $693.7 million for the
six months ended June 30, 2000. Cash generated from financing activities for the
six months ended June 30, 2000 was principally from the cash proceeds from our
follow-on offering in May 2000 and long term borrowings incurred to finance the
capital expenditures at CSP, partly offset by the return of customer deposits
and the repayment of loans. Net cash used in financing activities totaled
$33.5 million for the six months ended June 30, 1999. The cash outflow from
financing activities for the six months ended June 30, 1999 was principally due
to the return of customer deposits and the repayment of loans.
INVESTMENT IN SMP
The investment in SMP as of December 31, 1999 and June 30, 2000 consisted
of the following:
<TABLE>
<CAPTION>
AS OF
----------------------------
DECEMBER 31, JUNE 30,
1999 2000
------------ ---------
(IN THOUSANDS OF US DOLLARS)
<S> <C> <C>
Cost $ 85,175 $ 105,417
Share of retained post-formation loss (38,139) (40,166)
-------- ---------
$ 47,036 $ 65,251
======== =========
</TABLE>
<PAGE> 12
The Company accounts for its 49% investment in SMP using the equity method.
Under the terms of the strategic alliance agreement, the Company is committed to
making an equity investment in SMP of up to $122.2 million, of which $105.4
million had been invested as of June 30, 2000. The balance of $16.8 million was
invested in July 2000.
Under the strategic alliance agreement with the majority shareholder of
SMP, in arriving at the share of net income attributable to the Company, the
Company is entitled to the margins from sales to customers directed to SMP by
the Company, after deducting a 49% share of the overhead costs of SMP.
Accordingly, SMP's net results are not expected to be shared in the same ratio
as the equity holding. The Company accounts for its due share of SMP's net
results in accordance with the terms of the strategic alliance agreement.
SMP recorded net income in the quarter ended June 30, 2000.
Shown below is summarized financial information for SMP.
<TABLE>
<CAPTION>
AS OF
-----------------------------
DECEMBER 31, JUNE 30,
1999 2000
------------ --------
(IN THOUSANDS OF US DOLLARS)
<S> <C> <C>
Current assets $ 40,495 $ 52,211
Property, plant and equipment 300,556 476,687
Current liabilities 52,821 100,495
Long term debt 187,000 290,000
Shareholders' equity 101,230 138,403
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 2000 1999 2000
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Net revenue $ 3,512 $47,004 $ 3,512 $81,505
Gross profit (loss) (10,762) 6,865 (10,762) 5,610
Operating profit (loss) (11,894) 3,877 (23,694) 2,068
Net profit (loss) (12,680) 457 (24,594) (4,140)
</TABLE>
SMP has a term loan facility of $445 million with several banks and
financial institutions for capital expenditures, equipment and operating costs.
As of June 30, 2000, $290 million from Tranche A had been drawn on this
facility. The loan matures on March 17, 2005 and bears interest at a margin rate
of 1% to 1.35% above LIBOR (depending on the debt to equity ratio). Interest is
payable quarterly and principal is payable in seven equal semi-annual
installments commencing March 17, 2002 (for Tranche A of $300 million) and
December 3, 2002 (for Tranche B of $145 million). Borrowings under this facility
are secured by a debenture, giving the holder thereof, a first floating charge
on all of the SMP's assets.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For a discussion of the above, please see the section captioned
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations -- Quantitative and Qualitative
<PAGE> 13
Disclosures About Market Risk" in our Annual Report on Form 20-F dated March 20,
2000, which is incorporated herein by reference.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not involved in any legal proceedings that we believe
would be harmful to the Company.
Item 2. Changes in Securities and Use of Proceeds
As of June 30, 2000, of the net proceeds from our initial public
offering, approximately $47.9 million has been used for an equity injection in
CSP, $20.2 million has been used for an equity injection in SMP and
$182.5 million has been used for capital expenditures. The remaining proceeds
are invested in various time deposits with institutions.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
On May 25, 2000, the Company held its annual shareholders' meeting at
which the following matters were duly approved:
1) Adoption of the Audited Accounts of the Company for the year ended
December 31, 1999, including the reports of the Directors and the Auditors.
2a) Re-election of Ms. Ho Ching, Messrs. Lim Ming Seong and Sum Soon Lim
pursuant to Article 94 of the Company's Articles of Association.
2b) Re-election of Dr. Tsugio Makimoto pursuant to Article 99 of the Company's
Articles of Association.
3a) Re-appointment of Mr. Aubrey C. Tobey pursuant to Section 153(6) of the
Singapore Companies Act, Chapter 50.
3b) Re-appointment of Dr. James H. Van Tassel pursuant to Section 153(6) of the
Singapore Companies Act, Chapter 50.
3c) Re-appointment of Mr. Charles E. Thompson pursuant to Section 153(6) of the
Singapore Companies Act, Chapter 50.
4) Re-appointment of KPMG as the Company's Auditors and authorization of the
Board of Directors to fix their remuneration.
<PAGE> 14
5) Approval of Directors' fees up to $750,000 for the year ended December 31,
1999.
6a) Authorization of the Board of Directors to issue shares in the capital of
the Company.
6b) Authorization of the Board of Directors to create and issue securities and
to issue shares in connection therewith in the capital of the Company.
6c) Authorization of the Board of Directors to offer and grant options and to
issue additional shares in the capital of the Company pursuant to the
Chartered Semiconductor Manufacturing Ltd Share Option Plan 1999.
Item 5. Other Information
Effective July 31, 2000, the Company, Lucent Technologies Inc. and Lucent
Technologies Microelectronics Pte Ltd entered into an agreement to jointly
develop 0.12um, 0.10um and 0.08um CMOS logic process technologies.
Item 6. Exhibits and Reports on Form 6-K
(a) Exhibits
*10.1 Joint Development Agreement for Process Technologies effective as of
July 31, 2000 by and between the Company, Lucent Technologies Inc. and
Lucent Technologies Microelectronics Pte Ltd.
(b) Reports on Form 6-K
During the quarter ended June 30, 2000, the Company filed the following
current reports on Form 6-K:
1. On April 7, 2000, we filed a Form 6-K to report the announcement of
our unaudited preliminary results for the quarter ended March 31, 2000
and the filing of a registration statement on Form F-1 for a global
offering of ordinary shares, directly or in the form American
Depositary Shares.
2. On April 14, 2000, we filed a Form 6-K to file the proxy statement to
our shareholders for the annual shareholders' meeting to be held on
May 25, 2000.
3. On April 17, 2000, we filed a Form 6-K to report the announcement of
the postponement of the global offering we had announced on April 6,
2000.
4. On May 15, 2000, we filed a Form 6-K to report our quarterly
information for the quarter ended March 31, 2000.
5. On May 25, 2000, we filed a Form 6-K to report the exercise of share
options and the sale of ordinary shares by the Company's President and
Chief Executive Officer, Barry Waite, as reported to the Singapore
Exchange Securities Trading Limited.
--------
* Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions have been separately filed with the Commission.
<PAGE> 15
6. On May 31, 2000, we filed a Form 6-K to report the sale of ordinary
shares by the Company's Senior Vice-President and Chief Financial
Officer, Chia Song Hwee, as reported to the Singapore Exchange
Securities Trading Limited.
7. On June 30, 2000, we filed a Form 6-K to report the announcement of
our anticipation that our revenue and profits for the second quarter
ending June 30, 2000 would be above expectations.
<PAGE> 16
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, thereunder duly authorized.
Date: August 14, 2000
CHARTERED SEMICONDUCTOR
MANUFACTURING LTD
By: /s/ Barry Waite
-----------------------------------
Name: Barry Waite
Title: President and
Chief Executive Officer
By: /s/ Chia Song Hwee
-----------------------------------
Name: Chia Song Hwee
Title: Senior Vice President and
Chief Financial Officer
<PAGE> 17
EXHIBIT INDEX
*10.1 Joint Development Agreement for Process Technologies effective as of
July 31, 2000 by and between the Company, Lucent Technologies Inc. and Lucent
Technologies Microelectronics Pte Ltd.
------------
* Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions have been separately filed with the Commission.
