SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 March 31, 2000
ST ASSEMBLY TEST SERVICES LTD
(Exact name of the registrant as specified in its charter)
Republic of Singapore
(Jurisdiction of incorporation or organization)
5 Yishun Street 23, Singapore 768442
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of 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 the
registrant in connection with Rule 12g3-2(b): 82-________)
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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.
ST ASSEMBLY TEST SERVICES LTD
By: /s/ Tan Bock Seng
---------------------------------
Name: Tan Bock Seng
Title: Chairman and Chief Executive Officer
Date: [May 12, 2000]
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EXHIBIT INDEX
Exhibit Description of Exhibit
- ------- ----------------------
1. Report for Three Months Ended March 31, 2000
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EXHIBIT 1
Report for Three Months Ended March 31, 2000
ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
As of December 31, 1999 and March 31, 2000
(Unaudited)
In thousands of US Dollars
December 31, March 31,
1999 2000
------------ ----------
ASSETS
Current assets:
Cash and cash equivalents ...................... $ 16,568 $ 263,792
Accounts receivable, net ....................... 37,404 59,017
Amounts due from ST affiliates ................. 6,532 5,504
Other receivables .............................. 9,572 10,804
Inventories .................................... 11,313 11,474
Prepaid expenses ............................... 7,079 7,067
--------- ---------
Total current assets ........................ 88,468 357,658
Property, plant and equipment, net ................. 251,298 303,047
Other receivables .................................. 1,835 --
Prepaid expenses ................................... 10,364 8,940
--------- ---------
Total Assets ................................ $ 351,965 $ 669,645
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt ................................ $ 60,000 $ --
Current installments of long-term debt ......... 7,420 15,032
Accounts payable ............................... 13,070 6,875
Amounts due to ST and ST affiliates ............ 5,533 1,419
Accrued operating expenses ..................... 20,559 25,115
Other payables ................................. 55,238 34,882
Income taxes payable ........................... 678 1,112
--------- ---------
Total current liabilities ................... 162,498 84,435
Deferred grant ..................................... 1,923 3,007
Long-term debt, excluding current installments ..... 46,360 37,581
--------- ---------
Total Liabilities ........................... 210,781 125,023
--------- ---------
Shareholders' Equity
Share capital:
Ordinary shares - par value S$0.25
Authorized ordinary shares- 1,200,000,000
Issued ordinary shares -
785,427,695 as of December 31, 1999
and 982,245,035 as of March 31, 2000 ........ 129,827 158,895
Additional paid-in capital ......................... 26,305 384,877
Accumulated other comprehensive income (loss) ...... (9,731) (9,731)
Retained earnings (deficit) ........................ (5,217) 10,581
--------- ---------
Total Shareholders' Equity ..................... 141,184 544,622
--------- ---------
Total Liabilities and Shareholders' Equity ..... $ 351,965 $ 669,645
========= =========
See accompanying notes to unaudited consolidated financial statements.
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ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1999 and 2000
(Unaudited)
In thousands of US Dollars (except share and per share data)
For the three months ended March 31,
------------------------------------
1999 2000
--------- ---------
Net revenues .............................. $ 36,677 $ 72,176
Cost of revenues .......................... (28,435) (45,054)
--------- ---------
Gross profit .............................. 8,242 27,122
--------- ---------
Operating expenses:
Selling, general and administrative ... 5,456 9,586
Research and development .............. 1,230 2,618
Stock-based compensation .............. 899 247
Other general expenses (net) .......... (2) (6)
--------- ---------
Total operating expenses ........... 7,583 12,445
--------- ---------
Operating income .......................... 659 14,677
--------- ---------
Other income (expense):
Interest income (expense), net ........ (1,398) 152
Foreign currency exchange gain ........ 2,157 860
Other non-operating income, net ....... 193 598
--------- ---------
Total other income ................. 952 1,610
--------- ---------
Income before income taxes ................ 1,611 16,287
Income tax expense ........................ (239) (489)
--------- ---------
Net income ................................ $ 1,372 $ 15,798
========= =========
Other comprehensive income (loss) ......... $ -- $ --
--------- ---------
Comprehensive income ...................... $ 1,372 $ 15,798
========= =========
Basic and diluted net income per
ordinary share ........................ $ -- $ 0.02
========= =========
Basic net income per ADS .................. $ 0.02 $ 0.18
========= =========
Diluted net income per ADS ................ $ 0.02 $ 0.17
--------- ---------
Ordinary shares (in thousands) used in per
ordinary share calculation:
- - basic ................................... 768,985 897,468
- - effect of dilutive options .............. 10,665 14,785
--------- ---------
- - diluted ................................. 779,650 912,253
--------- ---------
ADS (in thousands) used in per ADS
calculation:
- - basic ................................... 76,899 89,747
- - effect of dilutive options .............. 1,066 1,479
--------- ---------
- - diluted ................................. 77,965 91,226
--------- ---------
See accompanying notes to unaudited consolidated financial statements.
2
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ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1999 and 2000
(Unaudited)
In thousands of US Dollars
For the three months ended March 31,
------------------------------------
1999 2000
--------- ---------
Cash Flows From Operating Activities
Net income ................................. $ 1,372 $ 15,798
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization ........... 12,415 15,917
Gain on sale of property, plant
and equipment ...................... (2) (6)
Provision for doubtful accounts
receivable ......................... (2) 48
Provision for stock obsolescence ..... 437 (351)
Unrealized foreign currency exchange
gain ................................... (2,337) 2,939
Changes in working capital:
Accounts receivable ...................... 3,091 (21,661)
Amounts due from ST affiliates ........... 400 1,028
Inventories .............................. 347 190
Other receivables and prepaid expenses ... (1,946) 204
Accounts payable ......................... (3,772) (6,195)
Amounts due to ST and ST affiliates ...... 1,266 (4,114)
Accrued operating expenses and other
payables ................................ 907 6,208
--------- ---------
Net cash provided by operating activities .. 12,176 10,005
--------- ---------
Cash Flows From Investing Activities
Purchases of property, plant and equipment . (4,143) (87,934)
Sale of property, plant and equipment ...... 7 31
--------- ---------
Net cash used by investing activities ...... (4,136) (87,903)
--------- ---------
Cash Flows From Financing Activities
Repayment of short-term debt ............... -- (60,000)
Proceeds from issuance of shares ........... 65 387,393
--------- ---------
Net cash provided by financing activities .. 65 327,393
--------- ---------
Net increase in cash and cash equivalents
for the year ............................ 8,105 249,495
Effect of exchange rate changes on cash .... -- (2,271)
Cash and cash equivalents at beginning of
the period .............................. 12,692 16,568
--------- ---------
Cash and cash equivalents at end of the
period .................................. $ 20,797 $ 263,792
========= =========
Supplementary Cash Flow Information
Interest paid .............................. $ 801 $ 2,123
Income taxes paid .......................... $ 10 $ 55
Non-cash item
Share issue subscriptions receivable ... $ 1,225 $-
--------- ---------
See accompanying notes to unaudited consolidated financial statements.
3
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ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
In thousands of US Dollars
1. Basis of Preparation
(a) Accounting Principles
The interim consolidated financial statements of the Company have been
prepared in conformity with generally accepted accounting principles in
the United States ("US GAAP"). Certain information and footnote
disclosures normally included in Financial Statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. 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
periods. The results of operations for the three months ended March 31,
2000 are not necessarily indicative of the results to be expected for
the full year. These unaudited 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.
(b) Basis of Accounting
The interim consolidated financial statements have been prepared on the
historical cost basis. The interim consolidated financial statements
included the financial statements of ST Assembly Test Services Ltd and
its subsidiary. All significant intercompany balances and transactions
have been eliminated in consolidation.
(c) Use of Estimates in the Financial Statements
The preparation of the interim consolidated financial statements in
accordance with US GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported revenues and expenses during the
reporting period. Actual results could differ from these estimates.
(d) Significant Customers and Concentration of Credit Risks
The Company has a number of major customers in North America and Asia.
During the three-month periods ended March 31, 1999 and 2000, the five
largest customers collectively accounted for approximately 75.9% and
73.5% of revenues, respectively. The Company anticipates that
significant customer concentration will continue for the foreseeable
future, although the companies that constitute the Company's largest
customers may change. The Company believes that the concentration of
its credit risk in trade receivables is mitigated substantially by its
credit evaluation process, credit policies and credit control and
collection procedures.
(e) Risks and Uncertainties
The Company's future results of operations include a number of risks
and uncertainties. Factors that could affect the Company's future
operating results and cause actual results to vary materially from
expectations include, but are not limited to, dependence on the high
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cyclical nature of both the semiconductor and the communications and
personal computer industries, competitive pricing and declines in
average selling prices, reliance on a small group of principal
customers, timing and volume of orders relative to the Company's
production capacity, availability of manufacturing capacity and
fluctuations in manufacturing yields, availability of financing,
competition, dependence on raw material and equipment suppliers,
exchange rate fluctuations, dependence on key personnel, enforcement of
intellectual property rights, environmental regulations and
fluctuations in quarterly operating results.
2. Inventories
Inventories at March 31, 2000 and December 31, 1999 consist of:
December 31, March 31,
1999 2000
-------- --------
Raw materials ........................... $ 8,440 $ 7,827
Factory supplies ........................ 1,268 1,143
Work-in-progress ........................ 2,360 3,067
Finished goods .......................... 348 189
-------- --------
12,416 12,226
Allowance for inventory obsolescence..... (1,103) (752)
-------- --------
$ 11,313 $ 11,474
======== ========
5
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Forward-Looking Statements
Certain of the statements in this Form 6-K are forward-looking
statements that involve a number of risks and uncertainties that could cause
actual results to differ materially. Factors that could cause actual results to
differ include: general business and economic conditions and the state of the
semiconductor industry; demand for end-use applications products such as
communications equipment and personal computers; decisions by customers to
discontinue outsourcing of test and assembly services; changes in customer order
patterns; rescheduling or cancellation of customer orders; changes in product
mix; capacity utilization; level of competition; pricing pressures; continued
success in technological innovation; delays in acquiring or installing new
equipment; litigation and other risks described in "Item 9. Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Risk
Factors" section in the Form 20-F we filed on March 30, 2000.
Overview
We are a leading independent provider of a full range of semiconductor
test and assembly services, including:
o testing, including final testing and wafer probe, on a diverse
selection of test platforms, as well as additional test related
services such as burn-in process support, reliability testing,
thermal and electrical characterization, dry pack and tape and reel;
o assembly of leaded and laminate packages, as well as additional
assembly related services such as package design and leadframe and
substrate design;
o pre-production services, such as package development, supply chain
management and test software and related hardware development; and
o drop shipment services.
We derive revenues from test services and assembly of leaded and laminate
packages. Net revenue represents the invoiced value of services rendered,
excluding goods and services tax, net of returns, trade discounts and
allowances. We recognize revenue upon shipment of semiconductors for which we
have provided services. Our net revenues from assembly services have grown at a
faster rate than our net revenues from testing services and we expect this trend
to continue as we provide more turnkey services to our customers. When we
provide full turnkey services, we perform both test and assembly services on the
same device. For that device, the unit price charged for assembly is generally
twice that of the unit price charged for testing. Therefore revenues per unit
from assembly services increase in absolute dollars more than for testing
services. While test services typically command lower unit prices than assembly
services, test services generate higher gross margins than assembly services. We
provide a full range of test services and have developed substantial expertise
in testing mixed-signal and high performance digital semiconductors. We have
been successful in attracting new customers with these testing capabilities and
then expanding our relationship with such customers to include assembly services
tailored to their needs. We intend to continue to expand our test and assembly
operations in order to position ourselves to meet increased demand for
outsourced test and assembly services.
The semiconductor industry is characterized by price erosion which can
impact our revenue and gross margin, unless we improve our capacity utilization
and reduce costs. Prices of our products of a given level of technology decline
over the product life cycle, commanding a premium in the
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earlier stages and declining towards the end of the cycle. We have to continue
to develop and offer increasingly complex test and assembly services that meet
the requirements of our customers.
Our results of operations are generally affected by the capital-intensive
nature of our business. Most of our costs are fixed, as our variable costs are
limited to the costs of materials, payroll and supplies. Our primary fixed costs
are for test and assembly equipment. Testers typically cost between $2.0 million
and $4.0 million each, compared with wire bonders which typically cost $100,000
each. Increases or decreases in capacity utilization rates can have a
significant effect on gross profit margins since the unit cost of test and
assembly services generally decreases as fixed charges, such as depreciation
expense for the equipment, are allocated over a larger number of units.
Depreciation expense for production equipment as a percentage of revenues was
29.8% and 20.9% for the three months ended March 31, 1999 and the three months
ended March 31, 2000, respectively. We begin depreciating our equipment when it
is placed into service. Often, there is a gap between when our equipment is
placed into service and when it achieves high levels of utilization. As a
result, placing into service new equipment can cause our gross profit margins to
vary significantly from quarter to quarter. Our results of operations are also
affected by declines over time in the average selling prices for packages. At
times in the past, we have been able to offset, at least in part, the effect of
such declines on our gross profit margins by successfully developing and
marketing new higher margin packages, such as advanced leadframe and laminate
packages, and by taking advantage of economies of scale and higher productivity
resulting from higher volumes. However, we cannot assure you that we will be
successful at offsetting any such declines in the future.
Our operating expenses consist principally of selling, general and
administrative expenses which include payroll-related expenses for
administrative staff, facilities-related expenses, management fees to our parent
Singapore Technologies Pte Ltd, marketing expenses and provisions for bad debts
on accounts receivable. Our operating expenses also include research and
development expenditures that have been focused in two areas:
o the development of new test equipment, software and processes to
enhance efficiency and reliability and to shorten test time of
semiconductors; and
o the development of new, advanced packages to meet the customized
needs of our existing customers.
Our quarterly results may vary significantly. Unfavorable changes may
adversely affect our business, financial condition and results of operations. In
addition, we intend to increase the level of operating expenses and investments
in manufacturing capacity in anticipation of future growth in net revenues. To
the extent our net revenues do not grow as anticipated, our financial condition
and operating results may be materially and adversely affected due to the fixed
nature of most of these expenses.
We are a part of the Singapore Technologies Group, which provides us with
certain direct and indirect benefits. We have benefited from our close working
relationship with Chartered Semiconductor Manufacturing Ltd, which is also
majority-owned by Singapore Technologies Pte Ltd and one of our major customers.
In addition, Singapore Technologies Pte Ltd provides us with certain management
services, including corporate secretarial, internal audit, training, executive
resources and treasury services. We paid Singapore Technologies Pte Ltd a
management fee of $0.7 million for the three months ended March 31, 2000 for
these services. Certain general and administrative expenses of ST Assembly Test
Services, Inc., our subsidiary, are borne and recharged to us by Chartered
Semiconductor Manufacturing Inc., a United States incorporated affiliate of
Singapore Technologies Pte Ltd. These expenses amounted to $0.2 million for the
three months ended March 31, 1999 and 2000.
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We have been granted pioneer enterprise status under the Singapore
Economic Expansion Incentives (Relief from Income Tax) Act, Chapter 86 ("Relief
from Income Tax Act"), for approved subcontract assembly and testing of
integrated circuits, including wafer probe services, in Singapore for a
five-year period from January 1, 1996. During the pioneer enterprise status
period income from subcontract assembly and testing of integrated circuits,
including wafer probe services, is exempt from Singapore income tax, subject to
compliance with the conditions stated in the pioneer certificate and the Relief
from Income Tax Act. Income from any other sources is taxed at prevailing
Singapore corporate tax rates. Our pioneer status is renewable for an additional
three years subject to compliance with certain conditions. We expect that we
will be in compliance with such renewal conditions at the time of determining
renewal eligibility.
We experience foreign currency exchange gains and losses arising from
transactions in currencies, principally the Singapore dollar, other than our
functional currency, the U.S. dollar.
Results of Operations
The following table sets forth certain financial data as a percentage of
net revenues for the periods indicated:
Three Months Ended March 31,
----------------------------
1999 2000
----- -----
Net revenues.............................. 100.0% 100.0%
Cost of revenues.......................... 77.5 62.4
----- -----
Gross profit ............................. 22.5 37.6
----- -----
Operating expenses:
Selling, general and administrative..... 15.0 13.3
Research and development................ 3.3 3.6
Stock-based compensation................ 2.5 0.3
Other general expenses (income), net.... - -
----- -----
Total operating expenses.............. 20.8 17.2
----- -----
Operating income.......................... 1.7 20.4
Other income (expense):
Interest expense, net................... (3.8) 0.2
Foreign currency exchange gain.......... 5.9 1.2
Other non-operating income, net......... 0.5 0.8
----- -----
Total other income.................... 2.6 2.2
----- -----
Income (loss) before income taxes......... 4.3 22.6
Income tax expense........................ (0.6) (0.7)
----- -----
Net income (loss)......................... 3.7% 21.9%
----- -----
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 2000
Net revenues. Net revenues increased 96.7% from $36.7 million in the
three months ended March 31, 1999 to $72.2 million in the three months ended
March 31, 2000. This increase was primarily due to the increase in unit volumes
for test and assembly services. Net revenues from test services increased 127.3%
from $15.4 million in the three months ended March 31, 1999 to $35.0 million in
the three months ended March 31, 2000. The increase in test services net
revenues was attributable primarily to growth in test volumes reflecting
increased demand and expanded capacity. Revenues from assembly services
increased 74.6% from $21.3 million in the three months ended March 31, 1999 to
$37.2 million in the three months ended March 31, 2000. This increase was
primarily due to greater demand for both leadframe and laminate packages.
Cost of revenues and Gross profit margin. Cost of revenues increased
58.8% from $28.4 million in the three months ended March 31, 1999 to $45.1
million in the three months ended March 31, 2000, primarily due to higher
depreciation expense as a result of placing into service additional test and
assembly equipment and costs associated with increased test and assembly unit
volumes. Depreciation expense for production equipment increased from $10.9
million in the three months ended March 31, 1999 to $15.1 million in the three
months ended March 31, 2000. Gross profit
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margin increased from 22.5% in the three months ended March 31, 1999 to 37.6% in
the three months ended March 31, 2000. The increase in gross profit margin was
attributable primarily to improved utilization of materials and of test and
assembly equipment. Gross profit margin in the three months ended March 31, 2000
declined from 39.6% in the three months ended December 31, 1999 primarily due to
lower utilization of test and assembly equipment as a result of increased
capital expenditures on purchases of production equipment and the higher
depreciation expense as a result of placing such production equipment into
service in the three months ended March 31, 2000.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 74.5% from $5.5 million in the three months
ended March 31, 1999 to $9.6 million in the three months ended March 31, 2000.
However, selling, general and administrative expense as a percentage of net
revenue declined from 15.0% in the three months ended March 31, 1999 to 13.3% in
the three months ended March 31, 2000. The increase in absolute terms was mainly
due to the addition of 20 employees in sales and marketing positions and 30
employees in administrative positions.
Research and development expenses. Research and development expenses
increased 116.7% from $1.2 million, or 3.3% of net revenues, in the three months
ended March 31, 1999 to $2.6 million, or 3.6% of net revenues, in the three
months ended March 31, 2000. The increase was attributable to the addition of 50
employees in research and development positions and purchases of equipment to
develop new packages.
Stock-based Compensation. Stock-based compensation was $247,000 in the
three months ended March 31, 2000 compared to $899,000 in the three months ended
March 31, 1999. The difference is in part attributable to the impact of the
adoption by the company of a new employee share ownership scheme in December
1999.
Other income (expense). Other income increased 60.0% from $1.0 million in
the three months ended March 31, 1999 to $1.6 million in the three months ended
March 31, 2000 primarily due to a decrease in interest expense. Interest
expense, net for the three months ended March 31, 1999 was $1.4 million compared
to interest income, net of $0.2 million in the three months ended March 31,
2000. This was primarily due to the interest income from the proceeds of the
initial public offering and from the repayment of short-term loans of $60.0
million in the three months ended March 31, 2000.
Income tax expense. Income tax expense increased from $0.2 million in the
three months ended March 31, 1999 to $0.5 million in the three months ended
March 31, 2000 due to higher interest income. The current income tax expense for
both periods is due to Singapore tax on rental and interest income and U.S. tax
on income generated by ST Assembly Test Services, Inc. in the United States.
Liquidity and Capital Resources
At March 31, 2000, our principal sources of liquidity included $263.8
million in cash and cash equivalents and $55.0 million of unutilized credit
facilities.
On June 5, 1998, we entered into a S$90.0 million ($54.3 million)
long-term loan agreement with the Economic Development Board. The long-term loan
is denominated in Singapore dollars and bears interest at 1% over the prevailing
rate per annum declared by the Central Provident Fund Board, a statutory board
of the Singapore Government. The prevailing rate at December 31, 1999 was 2.5%.
Interest is payable semi-annually commencing September 1, 1998. Principal is
payable in seven semi-annual, equal installments commencing September 1, 2000.
The loan agreement specifies that the proceeds are to be used solely for the
financing of fixed productive assets in the semiconductor business. This loan
matures on September 1, 2003 and is guaranteed by Singapore Technologies Pte
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Ltd. The loan agreement restricts us from paying dividends, from incurring
further indebtedness and from undertaking any form of reconstruction, including
amalgamation with another company, which would result in a change in the control
of the Company, in each case without prior lender consent. To reduce our
Singapore dollar exposure on this loan, in the first quarter of 1999 we hedged
the principal amount due under such loan and incurred an additional annual
financing charge of 1.7% of the principal amount of such loan with respect to
such hedging transaction. Subsequent to our initial public offering, we
terminated this arrangement and currently hold Singapore dollar cash balances,
proceeds from our initial public offering, as a hedge of the principal amount
due under the loan.
We have an uncommitted working capital facility with Citibank, N.A. for
$20.0 million. Interest on borrowings under this facility are charged at the
bank's prevailing rate.
We have two working capital facilities with Den Danske Bank. The first is
a committed facility expiring August 25, 2000 for $25.0 million with interest
charged on borrowings at 0.6% per annum above LIBOR. The second is an
uncommitted facility for $10.0 million with interest charged at a rate agreed on
the date of drawdown.
The $10.0 million of net cash provided by operating activities in the
three months ended March 31, 2000, was attributable to net operating cash
generated, before changes in operating working capital, of $34.3 million, offset
by an increase in operating working capital of $24.3 million.
Net cash used in investing activities for the three months ended March
31, 2000 was $87.9 million and represents amounts paid for property, plant and
equipment, of which $67.4 million relates to property, plant and equipment
acquired in the three months ended March 31, 2000, and the balance for property,
plant and equipment acquired in prior periods. We have budgeted capital
expenditures and investments of approximately $200.0 million for all of 2000.
From time to time we may acquire or make investments in additional businesses,
products and technologies or establish joint ventures or strategic partnerships
that we believe will complement our current and future business. Some of these
acquisitions or investments could be material.
Net cash provided by financing activities was $327.4 million in the three
months ended March 31, 2000, primarily due to proceeds of $387.4 million from
our initial public offering, which was offset by the repayment of short term
loans of $60.0 million.
Foreign Currency Exchange Exposure
We have adopted a hedging policy that we believe adequately covers any
material exposure to our non-U.S. dollar assets and liabilities. To minimize
foreign currency exchange risk, we selectively hedge our foreign currency
exposure through forward foreign currency swap contracts and options. However we
cannot assure you that sudden or rapid movement in exchange or interest rates
will not have a material adverse effect on our business, financial condition or
results of operations.
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